UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 1-12297

Penske Automotive Group, Inc.

Delaware		22-3086739
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
2555 Telegraph Road,		48302-0954
Bloomfield Hills, Michigan		(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:
(248) 648-2500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer: þ		Accelerated filer: o		Non-accelerated filer: o		Smaller reporting company: o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ

As of October 22, 2008, there were 91,882,607 shares of voting common stock outstanding.

 

 

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of September 30, 2008 and December 31, 2007			3
Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2008 and 2007			4
Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2008 and 2007			5
Consolidated Condensed Statement of Stockholders’ Equity for the nine months ended September 30, 2008			6
Notes to Consolidated Condensed Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative & Qualitative Disclosures About Market Risk			48
Item 4. Controls and Procedures			48
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49
Item 5. Other Information			49
Item 6. Exhibits			50
Exhibit 4.1
Exhibit 4.2
Exhibit 4.4
Exhibit 10.1
Exhibit 12
Exhibit 31
Exhibit 32

PENSKE AUTOMOTIVE GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

		September 30,				December 31,
		2008				2007
		(Unaudited)
		(In thousands, except
		per share amounts)
ASSETS
Cash and cash equivalents		$	27,772			$	13,267
Accounts receivable, net of allowance for doubtful accounts of $2,314 and $2,917			371,557				447,717
Inventories, net			1,721,833				1,680,062
Other current assets			80,689				65,756
Assets held for sale			7,496				90,987
Total current assets			2,209,347				2,297,789
Property and equipment, net			701,480				617,707
Goodwill			1,444,061				1,430,431
Franchise value			246,941				237,732
Other assets			327,853				84,894
Total assets		$	4,929,682			$	4,668,553
LIABILITIES AND STOCKHOLDERS’ EQUITY
Floor plan notes payable		$	1,077,639			$	1,069,710
Floor plan notes payable — non-trade			537,095				476,028
Accounts payable			233,496				266,251
Accrued expenses			239,663				211,588
Current portion of long-term debt			13,444				14,522
Liabilities held for sale			11,419				57,940
Total current liabilities			2,112,756				2,096,039
Long-term debt			1,073,878				830,106
Other long-term liabilities			351,392				320,949
Total liabilities			3,538,026				3,247,094
Commitments and contingent liabilities
Stockholders’ Equity
Preferred Stock, $0.0001 par value; 100 shares authorized; none issued and outstanding			—				—
Common Stock, $0.0001 par value, 240,000 shares authorized; 91,878 shares issued at September 30, 2008; 95,020 shares issued at December 31, 2007			9				10
Non-voting Common Stock, $0.0001 par value, 7,125 shares authorized; none issued and outstanding			—				—
Class C Common Stock, $0.0001 par value, 20,000 shares authorized; none issued and outstanding			—				—
Additional paid-in-capital			690,711				733,895
Retained earnings			659,942				587,566
Accumulated other comprehensive income			40,994				99,988
Total stockholders’ equity			1,391,656				1,421,459
Total liabilities and stockholders’ equity		$	4,929,682			$	4,668,553

See Notes to Consolidated Condensed Financial Statements

PENSKE AUTOMOTIVE GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

		Three Months Ended September 30,								Nine Months Ended September 30,
		2008				2007				2008				2007
		(Unaudited)
		(In thousands, except per share amounts)
Revenue:
New vehicle		$	1,556,198			$	1,882,971			$	4,922,718			$	5,318,796
Used vehicle			721,075				785,598				2,339,925				2,387,664
Finance and insurance, net			68,135				78,400				218,474				221,130
Service and parts			363,067				355,348				1,088,277				1,055,177
Distribution			85,567				—				247,758				—
Fleet and wholesale vehicle			202,401				283,538				735,028				838,918
Total revenues			2,996,443				3,385,855				9,552,180				9,821,685
Cost of sales:
New vehicle			1,428,921				1,723,615				4,512,354				4,871,488
Used vehicle			668,443				723,137				2,159,328				2,200,786
Service and parts			161,252				157,734				479,678				466,327
Distribution			72,362				—				208,585				—
Fleet and wholesale vehicle			204,352				281,877				738,132				831,021
Total cost of sales			2,535,330				2,886,363				8,098,077				8,369,622
Gross profit			461,113				499,492				1,454,103				1,452,063
Selling, general and administrative expenses			384,533				390,523				1,179,670				1,143,756
Depreciation and amortization			14,133				12,556				41,125				37,657
Operating income			62,447				96,413				233,308				270,650
Floor plan interest expense			(15,557	)			(19,235	)			(49,378	)			(54,206	)
Other interest expense			(16,358	)			(12,409	)			(40,962	)			(44,053	)
Equity in earnings of affiliates			8,995				1,475				13,322				3,183
Loss on debt redemption			—				—				—				(18,634	)
Income from continuing operations before income taxes and minority interests			39,527				66,244				156,290				156,940
Income taxes			(14,190	)			(22,814	)			(55,632	)			(55,746	)
Minority interests			(189	)			(531	)			(1,052	)			(1,527	)
Income from continuing operations			25,148				42,899				99,606				99,667
(Loss) income from discontinued operations, net of tax			(932	)			501				(1,597	)			(1,330	)
Net income		$	24,216			$	43,400			$	98,009			$	98,337
Basic earnings per share:
Continuing operations		$	0.27			$	0.46			$	1.06			$	1.06
Discontinued operations			(0.01	)			0.01				(0.02	)			(0.01	)
Net income			0.26				0.46				1.04				1.05
Shares used in determining basic earnings per share			92,995				94,244				93,943				94,037
Diluted earnings per share:
Continuing operations		$	0.27			$	0.45			$	1.06			$	1.05
Discontinued operations			(0.01	)			0.01				(0.02	)			(0.01	)
Net income			0.26				0.46				1.04				1.04
Shares used in determining diluted earnings per share			93,134				94,614				94,215				94,512
Cash dividends per share		$	0.09			$	0.07			$	0.27			$	0.21

See Notes to Consolidated Condensed Financial Statements

PENSKE AUTOMOTIVE GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

		Nine Months Ended
		September 30,
		2008				2007
		(Unaudited)
		(In thousands)
Operating Activities:
Net income		$	98,009			$	98,337
Adjustments to reconcile net income to net cash from continuing operating activities:
Depreciation and amortization			41,125				37,657
Undistributed earnings of equity method investments			(13,322	)			(3,183	)
Loss from discontinued operations, net of tax			1,597				1,330
Deferred income taxes			14,464				11,323
Loss on debt redemption			—				18,634
Minority interests			1,052				1,527
Changes in operating assets and liabilities:
Accounts receivable			70,286				(28,201	)
Inventories			26,790				(30,856	)
Floor plan notes payable			102,257				196,947
Accounts payable and accrued expenses			(28,550	)			54,524
Other			44,536				(20,436	)
Net cash from continuing operating activities			358,244				337,603
Investing Activities:
Purchase of equipment and improvements			(165,370	)			(114,609	)
Proceeds from sale-leaseback transactions			19,740				105,730
Dealership acquisitions net, including repayment of sellers’ floor plan notes payable of $30,711 and $48,518, respectively			(142,054	)			(154,873	)
Purchase of Penske Truck Leasing Co., L.P. partnership interest			(219,000	)			—
Other			(1,500	)			15,518
Net cash from continuing investing activities			(508,184	)			(148,234	)
Financing Activities:
Proceeds from borrowings under U.S. revolving credit line			493,400				341,400
Repayments under U.S. revolving credit line			(493,400	)			(341,400	)
Redemption 9 5/8% Senior Subordinated debt			—				(314,439	)
Proceeds from U.S. credit agreement term loan			219,000				—
Proceeds from mortgage facility			32,875				—
Net repayments of other long-term debt			(13,909	)			(78,646	)
Net (repayments) borrowings of floor plan notes payable — non-trade			(33,261	)			143,468
Payment of deferred financing costs			(661	)			—
Proceeds from exercises of options, including excess tax benefit			820				2,517
Repurchases of common stock			(50,061	)			—
Dividends			(25,633	)			(19,898	)
Net cash from continuing financing activities			129,170				(266,998	)
Discontinued operations:
Net cash from discontinued operating activities			(584	)			19,841
Net cash from discontinued investing activities			64,678				34,395
Net cash from discontinued financing activities			(28,819	)			34,251
Net cash from discontinued operations			35,275				88,487
Net change in cash and cash equivalents			14,505				10,858
Cash and cash equivalents, beginning of period			13,267				17,045
Cash and cash equivalents, end of period		$	27,772			$	27,903
Supplemental disclosures of cash flow information:
Cash paid for:
Interest		$	85,085			$	97,228
Income taxes			4,574				16,781
Seller financed debt			4,728				4,953

See Notes to Consolidated Condensed Financial Statements

PENSKE AUTOMOTIVE GROUP, INC.

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY

																		Accumulated
		Common Stock								Additional								Other				Total
		Issued								Paid-In				Retained				Comprehensive				Stockholders’
		Shares				Amount				Capital				Earnings				Income				Equity
		(Unaudited)
		(Dollars in thousands)
Balances, January 1, 2008			95,019,763			$	10			$	733,895			$	587,566			$	99,988			$	1,421,459
Equity compensation			363,313				—				6,056				—				—				6,056
Dividends			—				—				—				(25,633	)			—				(25,633	)
Share repurchase			(3,565,143	)			(1	)			(50,060	)			—				—				(50,061	)
Exercise of stock options, including tax benefit of $253			60,336				—				820				—				—				820
Foreign currency translation			—				—				—				—				(57,187	)			(57,187	)
Other			—				—				—				—				(1,807	)			(1,807	)
Net income			—				—				—				98,009				—				98,009
Balances, September 30, 2008			91,878,269			$	9			$	690,711			$	659,942			$	40,994			$	1,391,656

See Notes to Consolidated Condensed Financial Statements

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)

1. Interim Financial Statements

Basis of Presentation

The following unaudited consolidated condensed financial statements of Penske Automotive Group, Inc. (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the SEC rules and regulations. The information presented as of September 30, 2008 and December 31, 2007 and for the three and nine month periods ended September 30, 2008 and 2007 is unaudited, but includes all adjustments which the management of the Company believes to be necessary for the fair presentation of results for the periods presented. The consolidated condensed financial statements for prior periods have been revised for entities which have been treated as discontinued operations through September 30, 2008. The results for the interim periods are not necessarily indicative of results to be expected for the year. These consolidated condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2007, which are included as part of the Company’s Annual Report on Form 10-K.

On June 26, 2008, we acquired a 9% limited partnership interest in Penske Truck Leasing Co., L.P., a leading global transportation services provider, in exchange for $219 million. PTL operates and maintains more than 200,000 vehicles and serves customers in North America, South America, Europe and Asia. Product lines include full-service leasing, contract maintenance, commercial and consumer truck rental and logistics services, including transportation and distribution center management and supply chain management.

Discontinued Operations

The Company accounts for dispositions as discontinued operations when it is evident that the operations and cash flows of a franchise being disposed of will be eliminated from the Company’s on-going operations and that the Company will not have any significant continuing involvement in its operations. In reaching the determination as to whether the cash flows of a dealership will be eliminated from ongoing operations, the Company considers whether it is likely that customers will migrate to similar franchises that it owns in the same geographic market. The Company’s consideration includes an evaluation of the brands sold at other dealerships it operates in the market and their proximity to the disposed dealership. When the Company disposes of franchises, it typically does not have continuing brand representation in that market. If the franchise being disposed of is located in a complex of Company dealerships, the Company does not treat the disposition as a discontinued operation if the Company believes that the cash flows generated by the disposed franchise will be replaced by expanded operations of the remaining franchises. Combined financial information regarding dealerships accounted for as discontinued operations follows:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2008				2007				2008				2007
Revenues		$	18,113			$	139,377			$	184,794			$	460,056
Pre-tax (loss) income			(845	)			764				(4,498	)			930
(Loss) Gain on disposal			(560	)			5				(794	)			(2,808	)

		September 30,				December 31,
		2008				2007
Inventories		$	6,365			$	55,726
Other assets			1,131				35,261
Total assets		$	7,496			$	90,987
Floor plan notes payable (trade and non-trade)		$	6,403			$	44,715
Other liabilities			5,016				13,225
Total Liabilities		$	11,419			$	57,940

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets and certain reserves.

Intangible Assets

The Company’s principal intangible assets relate to its franchise agreements with vehicle manufacturers, which represent the estimated value of franchises acquired in business combinations, and goodwill, which represents the excess of cost over the fair value of tangible and identified intangible assets acquired in connection with business combinations. Intangible assets are amortized over their estimated useful lives. The Company believes the franchise value of its dealerships have an indefinite useful life based on the following facts:

	•		Automotive retailing is a mature industry and is based on franchise agreements with the vehicle manufacturers;
	•		There are no known changes or events that would alter the automotive retailing franchise environment;
	•		Certain franchise agreement terms are indefinite;
	•		Franchise agreements that have limited terms have historically been renewed by us without substantial cost; and
	•		The Company’s history shows that manufacturers have not terminated our franchise agreements.

The following is a summary of the changes in the carrying amount of goodwill and franchise value for the nine months ended September 30, 2008:

						Franchise
		Goodwill				Value
Balances — January 1, 2008		$	1,430,431			$	237,732
Additions during period			56,852				20,164
Deletions during period			(356	)			(1,754	)
Foreign currency translation			(42,866	)			(9,201	)
Balances — September 30, 2008		$	1,444,061			$	246,941

As of September 30, 2008, approximately $789,664 of the Company’s goodwill is deductible for tax purposes. The Company has established deferred tax liabilities related to the temporary differences arising from such tax deductible goodwill.

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

New Accounting Pronouncements

SFAS No. 157, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure requirements relating to fair value measurements. The FASB provided a one year deferral of the provisions of this pronouncement for non-financial assets and liabilities, however, the relevant provisions of SFAS 157 required by SFAS 159 were adopted as of January 1, 2008. SFAS 157 thus becomes effective for the Company’s non-financial assets and liabilities on January 1, 2009. The Company continues to evaluate the impact of this pronouncement on our non-financial assets and liabilities, including but not limited to, the valuation of our reporting units for the purpose of assessing goodwill impairment, the valuation of our franchise agreements in connection with assessing franchise value impairments, the valuation of property and equipment in connection with assessing long-lived asset impairment, the valuation of liabilities in connection with exit or disposal activities, and the valuation of assets acquired and liabilities assumed in business combinations.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115” permits entities to choose to measure many financial instruments and certain other items at fair value and consequently report unrealized gains and losses on such items in earnings. The Company did not elect the fair value option with respect to any of its current financial assets or financial liabilities when the provisions of this statement became effective on January 1, 2008. As a result, there was no impact upon adoption.

SFAS No. 141(R) “Business Combinations” requires almost all assets acquired and liabilities assumed in business combinations to be recorded at fair value as of the acquisition date, liabilities related to contingent consideration to be remeasured at fair value in each subsequent reporting period, and all acquisition related costs to be expensed as incurred. The pronouncement also clarifies the accounting under various scenarios such as step purchases or situations in which the fair value of assets and liabilities acquired exceeds the consideration. SFAS 141(R) will be effective for the Company on January 1, 2009.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements an Amendment of ARB No. 51” clarifies that a noncontrolling interest in a subsidiary must be measured at fair value and classified as a separate component of equity. This pronouncement also outlines the accounting for changes in a parent’s ownership in a subsidiary. SFAS 160 will be effective for the Company on January 1, 2009 and will require the Company to reclassify its minority interest liabilities to shareholders equity for the Company’s non-wholly owned consolidated subsidiaries.

SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” to explain why and how an entity uses derivative instruments, how the hedged items are accounted for under the relevant literature and how the derivative instruments affect an entity’s financial position, financial performance and cash flows. SFAS 161 will be effective for the Company on January 1, 2009. This pronouncement will have no impact on the Company’s accounting, and the Company is currently evaluating the pronouncements additional disclosure requirements.

FASB Staff Position (“FSP”) APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” requires the issuer of a convertible debt instrument that may be settled in cash upon conversion, including partial cash settlement, to separately account for the debt and equity components of the instrument. The value to be ascribed to the debt portion of the instrument is determined using a fair value methodology, with the residual representing the equity component. The equity component will be recorded as an increase in stockholders equity, with the debt discount being amortized as additional interest expense over the expected life of the instrument. FSP APB 14-1 will be effective for our fiscal year beginning January 1, 2009, and requires retrospective application to all periods presented. The Company will apply this guidance to the accounting for its 3.5% Senior Subordinated Convertible Notes due 2026 (the “Notes”), which the Company issued in January 2006. It is expected that the Company will assign approximately $70 million to the equity component as of the Notes issuance date. In addition, interest expense will be restated for all periods presented, with an increase of approximately $15 million expected for the year ended December 31, 2009. Due to the prepayment features included within the Notes, the recording of incremental interest expense will be completed in April 2011.

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

2. Inventories

Inventories consisted of the following:

		September 30,				December 31,
		2008				2007
New vehicles		$	1,311,223			$	1,219,308
Used vehicles			324,384				377,318
Parts, accessories and other			86,226				83,436
Total inventories		$	1,721,833			$	1,680,062

The Company receives non-refundable credits from certain vehicle manufacturers which are treated as a reduction of cost of sales when the vehicles are sold. Such credits amounted to $20,950 and $24,162 during the nine months ended September 30, 2008 and 2007, respectively.

3. Business Combinations

The Company acquired eight and nine franchises during the nine months ended September 30, 2008 and 2007, respectively. The Company’s financial statements include the results of operations of the acquired dealerships from the date of acquisition. Purchase price allocations may be subject to final adjustment. A summary of the aggregate purchase price allocations for the nine months ended September 30, 2008 and 2007 follows:

		September 30,
		2008				2007
Accounts receivable		$	4,845			$	11,908
Inventory			68,561				48,308
Other current assets			1,043				465
Property and equipment			3,918				5,034
Goodwill			56,852				44,895
Franchise value			20,164				47,672
Other non-current assets			—				3,424
Current liabilities			(13,329	)			(6,833	)
Cash used in dealership acquisitions		$	142,054			$	154,873

The following unaudited consolidated pro forma results of operations of the Company for the three and nine months ended September 30, 2008 and 2007 give effect to acquisitions consummated during 2008 and 2007 as if they had occurred on January 1, 2007.

		Three Months Ended September 30,								Nine Months Ended September 30,
		2008				2007				2008				2007
Revenues		$	2,996,443			$	3,544,340			$	9,734,903			$	10,426,906
Income from continuing operations			25,148				42,702				100,940				102,525
Net income			24,216				43,203				99,343				101,195
Income from continuing operations per diluted common share		$	0.27			$	0.45			$	1.07			$	1.08
Earnings per diluted common share		$	0.26			$	0.46			$	1.05			$	1.07

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

4. Floor Plan Notes Payable — Trade and Non-trade

The Company finances the majority of its new and a portion of its used vehicle inventories under revolving floor plan arrangements with various lenders. In the U.S., the floor plan arrangements are due on demand; however, the Company is generally not required to repay floor plan advances prior to the sale of the vehicles that have been financed. The Company typically makes monthly interest payments on the amount financed. Outside the U.S., substantially all of the floor plan arrangements are payable on demand or have an original maturity of 90 days or less and the Company is generally required to repay floor plan advances at the earlier of the sale of the vehicles that have been financed or the stated maturity. All of the floor plan agreements grant a security interest in substantially all of the assets of the Company’s dealership subsidiaries and in the U.S. are guaranteed by the Company. Interest rates under the floor plan arrangements are variable and increase or decrease based on changes in various benchmarks. The Company classifies floor plan notes payable to a party other than the manufacturer of a particular new vehicle, and all floor plan notes payable relating to used vehicles, as floor plan notes payable — non-trade on its consolidated condensed balance sheets and classifies related cash flows as a financing activity on its consolidated condensed statements of cash flows.

5. Earnings Per Share

Basic earnings per share is computed using net income and weighted average shares of voting common stock outstanding. Diluted earnings per share is computed using net income and the weighted average shares of voting common stock outstanding, adjusted for the dilutive effect of stock options and restricted stock. A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2008 and 2007 follows:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2008				2007				2008				2007
Weighted average shares outstanding			92,995				94,244				93,943				94,037
Effect of stock options			64				156				98				210
Effect of restricted stock			75				214				174				265
Weighted average shares outstanding, including effect of dilutive securities			93,134				94,614				94,215				94,512

In addition, the Company has senior subordinated convertible notes outstanding which, under certain circumstances discussed in Note 6, may be converted to voting common stock. As of September 30, 2008 and 2007, no shares related to the senior subordinated convertible notes were included in the calculation of diluted earnings per share because the effect of such securities was not dilutive.

6. Long-Term Debt

Long-term debt consisted of the following:

		September 30,				December 31,
		2008				2007
U.S. credit agreement — revolving credit line		$	—			$	—
U.S. credit agreement — term loan			219,000				—
U.K. credit agreement			82,511				91,265
7.75% senior subordinated notes due 2016			375,000				375,000
3.5% senior subordinated convertible notes due 2026			375,000				375,000
Mortgage facilities			32,875				—
Other			2,936				3,363
Total long-term debt			1,087,322				844,628
Less: current portion			(13,444	)			(14,522	)
Net long-term debt		$	1,073,878			$	830,106

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

U.S. Credit Agreement

The Company is party to a $479,000 credit agreement with DCFS USA LLC and Toyota Motor Credit Corporation, as amended (the “U.S. Credit Agreement”), which provides for up to $250,000 in revolving loans for working capital, acquisitions, capital expenditures, investments and for other general corporate purposes, a $219,000 non-amortizing term loan and for an additional $10,000 of availability for letters of credit, through September 30, 2010. Pursuant to the “evergreen” provisions of the credit agreement, the term of the credit agreement was extended on September 10, 2008, by one year through September 30, 2011. The revolving loans bear interest at defined LIBOR plus 1.75%, subject to an incremental 0.50% for uncollateralized borrowings in excess of a defined borrowing base. The term loan, which bears interest at defined LIBOR plus 2.50%, may be prepaid at any time, but then may not be reborrowed.

On September 29, 2008, the Company amended the U.S. Credit Agreement to provide greater flexibility to enter into the mortgage facility referenced below under “Mortgage Facilities.” On October 30, 2008, the Company amended and restated the U.S. Credit Agreement (“the Amended U.S. Credit Agreement”) to incorporate the prior six amendments, eliminate the ratio of domestic debt to domestic earnings before interest, taxes, depreciation and amortization (“EBITDA”) covenant and the minimum stockholders’ equity covenant, change the financial ratio on the debt to EBITDA covenant from 2.75 to 2.5, provide for additional flexibility for incremental real estate mortgage borrowings, and make other changes designed to provide additional operating flexibility.

The Amended U.S. Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by the Company’s domestic subsidiaries and contains a number of significant covenants that, among other things, restrict the Company’s ability to dispose of assets, incur additional indebtedness, repay other indebtedness, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. The Company is also required to comply with specified financial and other tests and ratios, each as defined in the Amended U.S. Credit Agreement, including: a ratio of current assets to current liabilities, a fixed charge coverage ratio, a ratio of debt to stockholders’ equity and a ratio of debt to EBITDA. A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of the amounts owed. As of September 30, 2008, the Company was in compliance with all covenants under the U.S. Credit Agreement.

The Amended U.S. Credit Agreement also contains typical events of default, including change of control, non-payment of obligations and cross-defaults to the Company’s other material indebtedness. Substantially all of the Company’s domestic assets are subject to security interests granted to lenders under the Amended U.S. Credit Agreement. As of September 30, 2008, $219,000 of term loans and $500 of letters of credit were outstanding under this facility. No revolving loans were outstanding as of September 30, 2008.

U.K. Credit Agreement

On September 29, 2008, the Company’s subsidiaries in the U.K. (the “U.K. Subsidiaries”) amended their existing £130,000 multi-option credit agreement with the Royal Bank of Scotland plc, as agent for National Westminster Bank plc, to provide greater flexibility within the financial covenants and increase the borrowing rate paid under the facility. This facility consists of a funded term loan, a revolving credit agreement and a seasonally adjusted overdraft line of credit (collectively, the “U.K. Credit Agreement”) to be used to finance acquisitions, working capital, and general corporate purposes. The amended U.K. Credit Agreement provides for (1) up to £80,000 in revolving loans through August 31, 2011, which bears interest between defined LIBOR plus 1.0% and defined LIBOR plus 1.6%, (2) a £30,000 funded term loan which currently bears interest between 6.29% and 6.89% and is payable ratably in quarterly intervals until fully repaid on June 30, 2011, and (3) a seasonally adjusted overdraft line of credit for up to £20,000 that bears interest at the Bank of England Base Rate plus 1.75%, and matures on August 31, 2011.

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

The U.K. Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by the U.K. Subsidiaries, and contains a number of significant covenants that, among other things, restrict the ability of the U.K. Subsidiaries to pay dividends, dispose of assets, incur additional indebtedness, repay other indebtedness, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the U.K. Subsidiaries are required to comply with specified ratios and tests, each as defined in the U.K. Credit Agreement, including: a ratio of earnings before interest and taxes plus rental payments to interest plus rental payments (as defined), a measurement of maximum capital expenditures, and a debt to EBITDA ratio (as defined). A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of the amounts owed. As of September 30, 2008, the U.K. subsidiaries were in compliance with all covenants under the U.K. Credit Agreement.

The U.K. Credit Agreement also contains typical events of default, including change of control and non-payment of obligations and cross-defaults to other material indebtedness of the U.K. Subsidiaries. Substantially all of the U.K. Subsidiaries’ assets are subject to security interests granted to lenders under the U.K. Credit Agreement. As of September 30, 2008, outstanding loans under the U.K. Credit Agreement amounted to £46,412 ($82,511).

7.75% Senior Subordinated Notes

On December 7, 2006, the Company issued $375,000 aggregate principal amount of 7.75% Senior Subordinated Notes due 2016 (the “7.75% Notes”). The 7.75% Notes are unsecured senior subordinated notes and are subordinate to all existing and future senior debt, including debt under the Company’s credit agreements and floor plan indebtedness. The 7.75% Notes are guaranteed by substantially all wholly-owned domestic subsidiaries on an unsecured senior subordinated basis. Those guarantees are full and unconditional and joint and several. The Company can redeem all or some of the 7.75% Notes at its option beginning in December 2011 at specified redemption prices, or prior to December 2011 at 100% of the principal amount of the notes plus an applicable “make-whole” premium, as defined. In addition, the Company may redeem up to 40% of the 7.75% Notes at specified redemption prices using the proceeds of certain equity offerings before December 15, 2009. Upon certain sales of assets or specific kinds of changes of control, the Company is required to make an offer to purchase the 7.75% Notes. The 7.75% Notes also contain customary negative covenants and events of default. As of September 30, 2008, the Company was in compliance with all negative covenants and there were no events of default.

Senior Subordinated Convertible Notes

On January 31, 2006, the Company issued $375,000 aggregate principal amount of 3.50% senior subordinated convertible notes due 2026 (the “Convertible Notes”). The Convertible Notes mature on April 1, 2026, unless earlier converted, redeemed or purchased by the Company, as discussed below. The Convertible Notes are unsecured senior subordinated obligations and are subordinate to all future and existing debt under the Company’s credit agreements and floor plan indebtedness. The convertible notes are guaranteed on an unsecured senior subordinated basis by substantially all of the Company’s wholly-owned domestic subsidiaries. Those guarantees are full and unconditional and joint and several. The Convertible Notes also contain customary negative covenants and events of default. As of September 30, 2008, the Company was in compliance with all negative covenants and there were no events of default.

Holders of the convertible notes may convert them based on a conversion rate of 42.2052 shares of common stock per $1,000 principal amount of the Convertible Notes (which is equal to a conversion price of approximately $23.69 per share), subject to adjustment, only under the following circumstances: (1) in any quarterly period, if the closing price of the common stock for twenty of the last thirty trading days in the prior quarter exceeds $28.43 (subject to adjustment), (2) for specified periods, if the trading price of the Convertible Notes falls below specific thresholds, (3) if the Convertible Notes are called for redemption, (4) if specified distributions to holders of common stock are made or specified corporate transactions occur, (5) if a fundamental change (as defined) occurs, or (6) during the ten trading days prior to, but excluding, the maturity date.

Upon conversion of the Convertible Notes, for each $1,000 principal amount of the Convertible Notes, a holder will receive an amount in cash, in lieu of shares of the Company’s common stock, equal to the lesser of (i) $1,000 or (ii) the conversion value, determined in the manner set forth in the related indenture covering the Convertible Notes, of the number of shares of common stock equal to the conversion rate. If the conversion value exceeds $1,000, the Company will also deliver, at its election, cash, common stock or a combination of cash and common stock with respect to the remaining value deliverable upon conversion.

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

In the event of a change of control on or before April 6, 2011, the Company will, in certain circumstances, pay a make-whole premium by increasing the conversion rate used in that conversion. In addition, the Company will pay additional cash interest, commencing with six-month periods beginning on April 1, 2011, if the average trading price of a Convertible Note for certain periods in the prior six-month period equals 120% or more of the principal amount of the Convertible Notes.

On or after April 6, 2011, the Company may redeem the Convertible Notes, in whole at any time or in part from time to time, for cash at a redemption price of 100% of the principal amount of the Convertible Notes to be redeemed, plus any accrued and unpaid interest to the applicable redemption date. Holders of the Convertible Notes may require the Company to purchase all or a portion of their Convertible Notes for cash on each of April 1, 2011, April 1, 2016 or April 1, 2021 at a purchase price equal to 100% of the principal amount of the Convertible Notes to be purchased, plus accrued and unpaid interest, if any, to the applicable purchase date.

Mortgage Facilities

On September 29, 2008, the Company entered into a $42,400, seven year mortgage facility with Toyota Motor Credit Corporation with respect to certain of our dealership properties. The facility bears interest at a defined rate, requires monthly principal and interest payments, and includes the option to extend the term for successive periods of five years up to a maximum term of twenty-five years. In the event the Company exercises its option to extend the term, the interest rate will be renegotiated for each renewal period.

The mortgage facility contains typical events of default, including non-payment of obligations, cross-defaults to the Company’s other material indebtedness, certain change of control events, and loss or sale of certain franchises operated at the property. Substantially all of the buildings, improvements, fixtures and personal property of the properties under the mortgage facility are subject to security interests granted to the lender. As of September 30, 2008, $32,900 was outstanding under the mortgage facility. The Company expects to draw the remainder of the facility upon the completion of the dealership facilities and other funding requirements.

9.625% Senior Subordinated Notes

In March 2007, the Company redeemed its $300,000 aggregate principal amount of 9.625% Senior Subordinated Notes due 2012 (the “9.625% Notes”) at a price of 104.813%. The 9.625% Notes were unsecured senior subordinated notes and were subordinate to all existing senior debt, including debt under the Company’s credit agreements and floor plan indebtedness. The Company incurred an $18,634 pre-tax charge in connection with the redemption, consisting of a $14,439 redemption premium and the write-off of $4,195 of unamortized deferred financing costs.

7. Stockholders’ Equity

Share Repurchase

In 2007, the Company’s board of directors approved a stock repurchase program for up to $150,000 of outstanding common stock. During August, 2008, the Company repurchased 3.6 million shares of our outstanding common stock for $50,061, or $14.04 per share.

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

Comprehensive income

Other comprehensive income includes changes in the fair value of interest rate swap agreements, foreign currency translation gains and losses, and available for sale securities valuation adjustments that have been excluded from net income and reflected in equity. Total comprehensive income is summarized as follows:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2008				2007				2008				2007
Net income		$	24,216			$	43,400			$	98,009			$	98,337
Other comprehensive income
Foreign currency translation			(62,953	)			16,673				(57,187	)			26,882
Other			(886	)			100				(1,807	)			567
Comprehensive income		$	(39,623	)		$	60,173			$	39,015			$	125,786

8. Interest Rate Swaps

The Company is party to interest rate swap agreements through January 7, 2011 pursuant to which the LIBOR portion of $300,000 of the Company’s floating rate floor plan debt was fixed at 3.67%. We may terminate these arrangements at any time subject to the settlement of the then current fair value of the swap arrangements. The swaps are designated as cash flow hedges of future interest payments of LIBOR based U.S. floor plan borrowings. During the nine months ended September 30, 2008, the swaps increased the weighted average interest rate on floor plan borrowings by approximately 0.1%. As of September 30, 2008, the Company used Level 2 inputs as described under SFAS 157 to estimate the fair value of these contracts to be a $2,666 liability, and expects approximately $1,733 associated with the swaps to be recognized as an increase of interest expense over the next twelve months.

The Company was party to an interest rate swap agreement which expired in January 2008, pursuant to which a notional $200,000 of its U.S. floating rate debt was exchanged for fixed rate debt. The swap was designated as a cash flow hedge of future interest payments of the LIBOR based U.S. floor plan borrowings.

9. Commitments and Contingent Liabilities

The Company is involved in litigation which may relate to issues with customers, employment related matters, class action claims, purported class action claims, and claims brought by governmental authorities. As of September 30, 2008, the Company is not party to any legal proceedings, including class action lawsuits, that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’s results of operations, financial condition or cash flows. See MD&A -“Forward Looking Statements”.

The Company was party to a joint venture agreement with respect to one of the Company’s franchises pursuant to which the Company was required to repurchase its partner’s interest. The Company completed this repurchase on July 23, 2008 with a payment of $5.1 million.

The Company leases the majority of its dealership facilities and corporate offices under non-cancelable operating lease agreements with expirations through 2062, including all option periods available to the Company. The Company’s lease arrangements typically allow for a base term with options for extension in the Company’s favor and include escalation clauses tied to the Consumer Price Index.

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

10. Segment Information

The Company has two reportable operating segments as defined in SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information”: (i) Retail, consisting of our automotive retail operations, and (ii) Distribution, consisting of our distribution of the smart fortwo vehicle, parts and accessories in the U.S. and Puerto Rico. The Company’s operations are organized by management by line of business and geography. The Retail segment includes all automotive dealerships, regardless of geography, and includes all departments relevant to the operation of the dealerships. We believe the dealership operations included in the Retail segment are one reportable segment as their operations (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals) and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The accounting policies of both segments are the same and are described in Note 1.

The following table summarizes revenues and income from continuing operations before certain non-recurring items, income taxes and minority interest, which is the measure by which management allocates resources to its segments and which we refer to as adjusted segment income, for each of our reportable segments. Adjusted segment income excludes the item discussed below in order to enhance the comparability of segment income from period to period.

Three Months Ended September 30

										Intersegment
		Retail				Distribution				Elimination				Total
Revenues -
2008		$	2,910,876			$	101,125			$	(15,558	)		$	2,996,443
2007			3,385,855				—				—				3,385,855
Adjusted segment income -
2008		$	31,794			$	7,736			$	(3	)		$	39,527
2007			66,244				—				—				66,244

Nine Months Ended September 30

										Intersegment
		Retail				Distribution				Elimination				Total
Revenues -
2008		$	9,304,422			$	293,486			$	(45,728	)		$	9,552,180
2007			9,821,685				—				—				9,821,685
Adjusted segment income -
2008		$	134,881			$	21,990			$	(581	)		$	156,290
2007			175,574				—				—				175,574

The following table reconciles total adjusted segment income to consolidated income from continuing operations before income taxes and minority interests for the nine month period ended September 30. There are no reconciling items in the three month period ended September 30.

		Nine Months Ended
		September 30,
		2008				2007
Total adjusted segment income		$	156,290			$	175,574
Loss on debt redemption			—				(18,634	)
Income from continuing operations before income taxes and minority interests		$	156,290			$	156,940

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

11. Consolidating Condensed Financial Information

The following tables include consolidating condensed financial information as of September 30, 2008 and December 31, 2007 and for the three and nine month periods ended September 30, 2008 and 2007 for Penske Automotive Group, Inc. (as the issuer of the Convertible Notes and the 7.75% Notes), guarantor subsidiaries and non-guarantor subsidiaries (primarily representing foreign entities). The condensed consolidating financial information includes certain allocations of balance sheet, income statement and cash flow items which are not necessarily indicative of the financial position, results of operations or cash flows of these entities on a stand-alone basis. The 2007 consolidating condensed financial statements have been restated for an immaterial error relating to the presentation of long-term debt.

CONSOLIDATING CONDENSED BALANCE SHEET
September 30, 2008

										Penske
		Total								Automotive				Guarantor				Non-Guarantor
		Company				Eliminations				Group, Inc.				Subsidiaries				Subsidiaries
		(In thousands)
Cash and cash equivalents		$	27,772			$	—			$	—			$	18,406			$	9,366
Accounts receivable, net			371,557				(197,270	)			197,270				188,095				183,462
Inventories, net			1,721,833				—				—				964,242				757,591
Other current assets			80,689				—				6,868				33,440				40,381
Assets held for sale			7,496				—				—				278				7,218
Total current assets			2,209,347				(197,270	)			204,138				1,204,461				998,018
Property and equipment, net			701,480				—				6,993				414,120				280,367
Intangible assets			1,691,002				—				—				1,183,334				507,668
Other assets			327,853				(1,918,612	)			2,154,302				19,519				72,644
Total assets		$	4,929,682			$	(2,115,882	)		$	2,365,433			$	2,821,434			$	1,858,697
Floor plan notes payable		$	1,077,639			$	—			$	—			$	542,367			$	535,272
Floor plan notes payable — non-trade			537,095				—				—				317,670				219,425
Accounts payable			233,496				—				2,534				88,656				142,306
Accrued expenses			239,663				(197,270	)			2,243				113,531				321,159
Current portion of long-term debt			13,444				—				—				868				12,576
Liabilities held for sale			11,419				—				—				858				10,561
Total current liabilities			2,112,756				(197,270	)			4,777				1,063,950				1,241,299
Long-term debt			1,073,878				(155,355	)			969,000				34,883				225,350
Other long-term liabilities			351,392				—				—				332,867				18,525
Total liabilities			3,538,026				(352,625	)			973,777				1,431,700				1,485,174
Total stockholders’ equity			1,391,656				(1,763,257	)			1,391,656				1,389,734				373,523
Total liabilities and stockholders’ equity		$	4,929,682			$	(2,115,882	)		$	2,365,433			$	2,821,434			$	1,858,697

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING CONDENSED BALANCE SHEET
December 31, 2007

										Penske
		Total								Automotive				Guarantor				Non-Guarantor
		Company				Eliminations				Group, Inc.				Subsidiaries				Subsidiaries
		(In thousands)
Cash and cash equivalents		$	13,267			$	—			$	—			$	—			$	13,267
Accounts receivable, net			447,717				(210,645	)			210,945				289,939				157,478
Inventories, net			1,680,062				—				—				924,632				755,430
Other current assets			65,756				—				3,849				27,959				33,948
Assets held for sale			90,987				—				—				61,265				29,722
Total current assets			2,297,789				(210,645	)			214,794				1,303,795				989,845
Property and equipment, net			617,707				—				4,617				345,087				268,003
Intangible assets			1,668,163				—				—				1,076,611				591,552
Other assets			84,894				(1,951,050	)			1,956,788				12,395				66,761
Total assets		$	4,668,553			$	(2,161,695	)		$	2,176,199			$	2,737,888			$	1,916,161
Floor plan notes payable		$	1,069,710			$	—			$	—			$	569,259			$	500,451
Floor plan notes payable — non-trade			476,028				—				—				293,270				182,758
Accounts payable			266,251				—				4,550				96,563				165,138
Accrued expenses			211,588				(210,645	)			190				64,036				358,007
Current portion of long-term debt			14,522				—				—				496				14,026
Liabilities held for sale			57,940				—				—				34,113				23,827
Total current liabilities			2,096,039				(210,645	)			4,740				1,057,737				1,244,207
Long-term debt			830,106				(237,616	)			750,000				2,548				315,174
Other long-term liabilities			320,949				—				—				288,647				32,302
Total liabilities			3,247,094				(448,261	)			754,740				1,348,932				1,591,683
Total stockholders’ equity			1,421,459				(1,713,434	)			1,421,459				1,388,956				324,478
Total liabilities and stockholders’ equity		$	4,668,553			$	(2,161,695	)		$	2,176,199			$	2,737,888			$	1,916,161

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING CONDENSED STATEMENT OF INCOME
Three Months Ended September 30, 2008

										Penske
		Total								Automotive				Guarantor				Non-Guarantor
		Company				Eliminations				Group, Inc.				Subsidiaries				Subsidiaries
		(In thousands)
Revenues		$	2,996,443			$	—			$	—			$	1,795,138			$	1,201,305
Cost of sales			2,535,330				—				—				1,504,276				1,031,054
Gross profit			461,113				—				—				290,862				170,251
Selling, general, and administrative expenses			384,533				—				12,503				229,134				142,896
Depreciation and amortization			14,133				—				290				8,418				5,425
Operating income (loss)			62,447				—				(12,793	)			53,310				21,930
Floor plan interest expense			(15,557	)			—				—				(8,875	)			(6,682	)
Other interest expense			(16,358	)			—				(11,959	)			(35	)			(4,364	)
Equity in income of affiliates			8,995				—				7,853				—				1,142
Equity in earnings of subsidiaries			—				(56,237	)			56,237				—				—
Income from continuing operations before income taxes and minority interests			39,527				(56,237	)			39,338				44,400				12,026
Income taxes			(14,190	)			20,286				(14,190	)			(16,666	)			(3,620	)
Minority interests			(189	)			—				—				—				(189	)
Income from continuing operations			25,148				(35,951	)			25,148				27,734				8,217
(Loss) from discontinued operations, net of tax			(932	)			932				(932	)			(694	)			(238	)
Net income		$	24,216			$	(35,019	)		$	24,216			$	27,040			$	7,979

PENSKE AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)

CONSOLIDATING CONDENSED STATEMENT OF INCOME
Three Months Ended September 30, 2007

										Penske
		Total								Automotive				Guarantor				Non-Guarantor
		Company				Eliminations				Group, Inc.				Subsidiaries				Subsidiaries
		(In thousands)
Revenues		$	3,385,855			$	—			$	—			$	1,905,593			$	1,480,262
Cost of sales			2,886,363				—				—				1,615,373				1,270,990
Gross profit			499,492				—				—				290,220				209,272
Selling, general, and administrative expenses			390,523				—				4,269				228,475				157,779
Depreciation and amortization			12,556				—				40				6,896				5,620
Operating income (loss)			96,413				—				(4,309	)			54,849				45,873
Floor plan interest expense			(19,235	)			—				—				(11,590	)			(7,645	)
Other interest expense			(12,409	)			—				(6,293	)			(49	)			(6,067	)
Equity in income of affiliates			1,475				—				—				—				1,475
Equity in earnings of subsidiaries			—				(76,315	)			76,315				—				—
Income from continuing operations before income taxes and minority interests			66,244				(76,315	)			65,713				43,210				33,636
Income taxes			(22,814	)			25,947				(22,814	)			(15,570	)			(10,377	)
Minority interests			(531	)			—				—				—				(531	)
Income from continuing operations			42,899				(50,368	)			42,899				27,640				22,728
Income from discontinued operations, net of tax			501				(501	)			501				244				257
Net income		$	43,400			$	(50,869	)		$	43,400			$	27,884			$	22,985