Table of Contents


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2020
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: 001-31262
 
ASBURY AUTOMOTIVE GROUP, INC.
(Exact name of Registrant as specified in its charter)
 
 Delaware 01-0609375 
 
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
     
 
2905 Premiere Parkway NW,
Suite 300

Duluth,Georgia 30097 
 (Address of principal executive offices) (Zip Code) 
(770) (770) 418-8200
(Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Trading
Title of each classSymbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareABGNew York Stock Exchange
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  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large Accelerated Filerx☒  Accelerated Filero☐
     
Non-Accelerated Filero☐(Do not check if a smaller reporting company)Smaller Reporting Companyo☐
     
   Emerging Growth Companyo☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o☐    No  x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The number of shares of common stock outstanding as of October 24, 2017May 8, 2020 was 20,817,702.19,289,811.
 

ASBURY AUTOMOTIVE GROUP, INC.


TABLE OF CONTENTS


  Page
PART I—Financial Information
Item 1.
Condensed Consolidated Financial Statements (unaudited)
 
 
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2020 and December 31, 20162019
4
 
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2017March 31, 2020 and 20162019
5
 
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017March 31, 2020 and 20162019
6
 
Condensed Consolidated Statements of Cash FlowsShareholders' Equity for the NineThree Months Ended September 30, 2017March 31, 2020 and 20162019
7
 
Notes to Condensed Consolidated Financial Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019
8
Item 2.Notes to Condensed Consolidated Financial Statements
9
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
1721
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
39
Item 4.
Controls and Procedures
4039
   
 PART II—Other Information 
   
Item 1.
Legal Proceedings
40
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
41
Item 4.
Mine Safety Disclosures
41
Item 6.
Exhibits
42
 
Signatures
43
Index to Exhibits
44
 
Index to Exhibits
45















PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value and share data)
(Unaudited)
September 30, 2017 December 31, 2016March 31, 2020 December 31, 2019
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents$2.8
 $3.4
$388.6
 $3.5
Contracts-in-transit131.8
 182.6
64.7
 194.7
Accounts receivable, net108.7
 138.4
89.4
 136.2
Inventories843.5
 894.9
1,059.7
 985.0
Assets held for sale16.2
 16.1
28.7
 154.2
Other current assets117.7
 97.0
122.1
 129.0
Total current assets1,220.7
 1,332.4
1,753.2
 1,602.6
PROPERTY AND EQUIPMENT, net823.0
 815.4
924.4
 909.7
OPERATING LEASE RIGHT-OF-USE ASSETS62.1
 65.6
GOODWILL160.8
 128.1
206.5
 201.7
INTANGIBLE FRANCHISE RIGHTS54.7
 48.5
113.2
 121.7
OTHER LONG-TERM ASSETS10.6
 11.7
9.8
 10.0
Total assets$2,269.8
 $2,336.1
$3,069.2
 $2,911.3
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Floor plan notes payable—trade, net$109.7
 $108.3
$118.4
 $130.3
Floor plan notes payable—non-trade, net578.6
 673.5
730.1
 657.7
Current maturities of long-term debt14.3
 14.0
47.4
 32.4
Current maturities of operating leases17.3
 17.0
Accounts payable and accrued liabilities277.8
 309.1
268.7
 308.7
Liabilities associated with assets held for sale—
 100.9
Total current liabilities980.4
 1,104.9
1,181.9
 1,247.0
LONG-TERM DEBT901.4
 912.7
1,117.5
 907.0
OPERATING LEASE LIABILITIES48.7
 52.6
DEFERRED INCOME TAXES9.1
 8.9
24.9
 26.0
OTHER LONG-TERM LIABILITIES31.6
 29.9
35.3
 32.4
COMMITMENTS AND CONTINGENCIES (Note 11)
 
COMMITMENTS AND CONTINGENCIES (Note 12)

 

SHAREHOLDERS' EQUITY:      
Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued or outstanding—
 —
—
 —
Common stock, $.01 par value; 90,000,000 shares authorized; 40,973,460 and 40,750,765 shares issued, including shares held in treasury, respectively0.4
 0.4
Common stock, $.01 par value; 90,000,000 shares authorized; 41,140,657 and 41,072,080 shares issued, including shares held in treasury, respectively0.4
 0.4
Additional paid-in capital559.8
 549.4
586.4
 582.9
Retained earnings707.8
 611.5
1,114.0
 1,094.5
Treasury stock, at cost; 20,153,622 and 19,497,596 shares, respectively(918.9) (879.5)
Treasury stock, at cost; 21,845,622 and 21,791,707 shares, respectively(1,033.6) (1,028.6)
Accumulated other comprehensive loss(1.8) (2.1)(6.3) (2.9)
Total shareholders' equity347.3
 279.7
660.9
 646.3
Total liabilities and shareholders' equity$2,269.8
 $2,336.1
$3,069.2
 $2,911.3









See accompanying Notes to Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended March 31,
2017 2016 2017 20162020 2019
REVENUE:          
New vehicle$881.6
 $940.9
 $2,597.0
 $2,676.3
$822.1
 $871.8
Used vehicle455.6
 476.4
 1,396.6
 1,407.5
493.2
 509.9
Parts and service197.2
 200.4
 589.5
 584.9
221.6
 217.6
Finance and insurance, net67.7
 65.4
 202.5
 192.6
70.4
 71.5
TOTAL REVENUE1,602.1
 1,683.1
 4,785.6
 4,861.3
1,607.3
 1,670.8
COST OF SALES:          
New vehicle840.6
 893.4
 2,474.6
 2,536.6
785.7
 833.9
Used vehicle426.8
 446.6
 1,301.2
 1,307.7
462.5
 475.4
Parts and service74.4
 77.4
 222.3
 222.9
86.7
 82.3
TOTAL COST OF SALES1,341.8
 1,417.4
 3,998.1
 4,067.2
1,334.9
 1,391.6
GROSS PROFIT260.3
 265.7
 787.5
 794.1
272.4
 279.2
OPERATING EXPENSES:          
Selling, general, and administrative182.5
 185.7
 549.2
 549.2
194.7
 191.0
Depreciation and amortization8.1
 7.8
 24.0
 23.0
9.5
 8.6
Other operating expenses, net—
 1.5
 0.7
 4.2
Franchise rights impairment23.0
 —
Other operating expense, net10.2
 1.8
INCOME FROM OPERATIONS69.7
 70.7
 213.6
 217.7
35.0
 77.8
OTHER EXPENSES:       
OTHER EXPENSES (INCOME):   
Floor plan interest expense5.8
 5.0
 17.1
 14.4
7.0
 10.2
Other interest expense, net13.4
 13.2
 40.2
 40.0
17.0
 13.9
Swap interest expense0.4
 0.8
 1.6
 2.4
Loss on extinguishment of long-term debt, net20.6
 —
Gain on dealership divestitures, net(33.7) —
Total other expenses, net19.6
 19.0
 58.9
 56.8
10.9
 24.1
INCOME BEFORE INCOME TAXES50.1
 51.7
 154.7
 160.9
24.1
 53.7
Income tax expense19.4
 19.3
 58.1
 60.8
4.6
 12.8
NET INCOME$30.7
 $32.4
 $96.6
 $100.1
$19.5
 $40.9
EARNINGS PER COMMON SHARE:       
EARNINGS PER SHARE:   
Basic—          
Net income$1.49
 $1.47
 $4.64
 $4.39
$1.02
 $2.13
Diluted—          
Net income$1.48
 $1.47
 $4.60
 $4.37
$1.01
 $2.11
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:       
WEIGHTED AVERAGE SHARES OUTSTANDING:   
Basic20.6
 22.0
 20.8
 22.8
19.1
 19.2
Restricted stock0.1
 0.0
 0.1
 0.0
0.1
 0.1
Performance share units0.1
 0.1
 0.1
 0.1
0.1
 0.1
Diluted20.8
 22.1
 21.0
 22.9
19.3
 19.4
















 See accompanying Notes to Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
For the Three Months Ended September 30, For the Nine Months Ended September 30, For the Three Months Ended March 31,
2017 2016 2017 2016 2020 2019
Net income$30.7
 $32.4
 $96.6
 $100.1
 $19.5
 $40.9
Other comprehensive income (loss):       
Other comprehensive (loss) income:    
Change in fair value of cash flow swaps0.3
 1.0
 0.5
 (4.8) (4.5) (1.8)
Income tax benefit (expense) associated with cash flow swaps(0.1) (0.4) (0.2) 1.9
Income tax benefit associated with cash flow swaps 1.1
 0.5
Comprehensive income$30.9
 $33.0
 $96.9
 $97.2
 $16.1
 $39.6











































See accompanying Notes to Condensed Consolidated Financial Statements


ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in millions)

(Unaudited)

 Common Stock Additional
Paid-in
Capital		 Retained
Earnings		 Treasury Stock Accumulated
Other
Comprehensive
Income (Loss)		 Total
 Shares Amount   Shares Amount  
Balances, December 31, 201941,072,080
 $0.4
 $582.9
 $1,094.5
 21,791,707
 $(1,028.6) $(2.9) $646.3
Comprehensive Income:               
Net income—
 —
 —
 19.5
 —
 —
 —
 19.5
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.1 tax benefit—
 —
 —
 —
 —
 —
 (3.4) (3.4)
Other comprehensive income—
 —
 —
 —
 —
 —
 (3.4) (3.4)
Share-based compensation—
 —
 3.8
 —
 —
 —
 —
 3.8
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements68,577
 —
 (0.3) —
 —
 —
 —
 (0.3)
Repurchase of common stock associated with net share settlements of employee share-based awards—
 —
 —
 —
 53,915
 (5.0) —
 (5.0)
Balances, March 31, 202041,140,657
 $0.4
 $586.4
 $1,114.0
 21,845,622
 $(1,033.6) $(6.3) $660.9




 Common Stock 
Additional
Paid-in
Capital
 
Retained
Earnings
 Treasury Stock 
Accumulated
Other
Comprehensive
Income (Loss)
 Total
 Shares Amount   Shares Amount  
Balances, December 31, 201841,065,069
 $0.4
 $572.9
 $922.7
 21,719,339
 $(1,023.4) $0.6
 $473.2
Comprehensive Income:               
Net income—
 —
 —
 40.9
 —
 —
 —
 40.9
Change in fair value of cash flow swaps, net of reclassification adjustment and $0.5 tax benefit—
 —
 —
 —
 —
 —
 (1.3) (1.3)
Other comprehensive income—
 —
 —
 40.9
 —
 —
 (1.3) 39.6
Cumulative effect adjustment of ASU 2018-02—
 —
 —
 0.2
 —
 —
 (0.2) —
Share-based compensation—
 —
 3.9
 —
 —
 —
 —
 3.9
Issuance of common stock in connection with share-based payment arrangements238,078
 —
 —
 —
 —
 —
 —
 —
Repurchase of common stock associated with net share settlement of employee share-based awards—
 —
 —
 —
 66,912
 (4.7) —
 (4.7)
Share repurchases—
 —
 —
 —
 108,978
 (7.4) —
 (7.4)
Retirement of previously repurchased common stock(108,978) —
 (1.3) (6.1) (108,978) 7.4
 —
 —
Balances, March 31, 201941,194,169
 $0.4
 $575.5
 $957.7
 21,786,251
 $(1,028.1) $(0.9) $504.6









































See accompanying Notes to Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
For the Nine Months Ended September 30,For the Three Months Ended March 31,
2017 20162020 2019
CASH FLOW FROM OPERATING ACTIVITIES:      
Net income$96.6
 $100.1
$19.5
 $40.9
Adjustments to reconcile net income to net cash provided by operating activities—      
Depreciation and amortization24.0
 23.0
9.5
 8.6
Share-based compensation10.0
 9.1
3.5
 3.9
Deferred income taxes0.1
 6.4
0.1
 —
Impairment expenses—
 3.1
Franchise rights impairment23.0
 —
Loss on extinguishment of long-term debt, net20.6
 —
Loaner vehicle amortization16.8
 15.6
5.8
 5.8
Gain on divestitures, net(33.7) —
Change in right-of-use asset5.2
 4.5
Other adjustments, net2.3
 2.5
0.2
 3.2
Changes in operating assets and liabilities, net of acquisitions and divestitures—      
Contracts-in-transit50.8
 46.8
130.0
 39.4
Accounts receivable30.0
 7.5
46.7
 15.1
Inventories189.5
 78.1
7.9
 (19.6)
Other current assets(145.6) (111.0)(36.3) (41.3)
Floor plan notes payable—trade, net1.4
 (20.4)(16.2) 3.8
Accounts payable and accrued liabilities(34.3) (11.0)
Accounts payable and other current liabilities(52.6) 4.6
Operating lease liabilities(5.3) (4.6)
Other long-term assets and liabilities, net1.6
 1.5
(0.2) 0.9
Net cash provided by operating activities243.2
 151.3
127.7
 65.2
CASH FLOW FROM INVESTING ACTIVITIES:      
Capital expenditures—excluding real estate(21.4) (47.3)(9.1) (3.6)
Capital expenditures—real estate(0.3) (10.6)(2.3) —
Purchases of previously leased real estate—
 (19.6)—
 (4.9)
Acquisitions(80.1) —
(63.1) (118.5)
Divestitures115.5
 —
Proceeds from the sale of assets3.8
 —
4.2
 —
Net cash used in investing activities(98.0) (77.5)
Net cash provided by (used in) investing activities45.2
 (127.0)
CASH FLOW FROM FINANCING ACTIVITIES:      
Floor plan borrowings—non-trade2,818.1
 2,920.4
1,124.1
 1,066.3
Floor plan borrowings—acquisitions25.1
 —
27.1
 47.7
Floor plan repayments—non-trade(2,938.1) (2,813.9)(1,086.9) (1,033.6)
Floor plan repayments—non-trade divestiture(50.5) —
Proceeds from borrowings1,355.3
 —
Repayments of borrowings(11.5) (11.2)(1,156.1) (3.9)
Proceeds from sale and leaseback transaction7.3
 —
Payment of debt issuance costs—
 (2.7)(3.1) —
Purchases of treasury stock—
 (7.4)
Repurchases of common stock, including shares associated with net share settlement of employee share-based awards(39.4) (165.5)(5.0) (4.7)
Net cash used in financing activities(145.8) (72.9)
Net (decrease) increase in cash and cash equivalents(0.6) 0.9
Net cash provided by financing activities212.2
 64.4
Net increase in cash and cash equivalents385.1
 2.6
CASH AND CASH EQUIVALENTS, beginning of period3.4
 2.8
3.5
 8.3
CASH AND CASH EQUIVALENTS, end of period$2.8
 $3.7
$388.6
 $10.9







See Note 1011 "Supplemental Cash Flow Information" for further details
See accompanying Notes to Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
We are one of the largest automotive retailers in the United States, operating 94States. As of March 31, 2020, we owned and operated 102 new vehicle franchises (80(83 dealership locations) representing 31 brands of automobiles and 24 collision repair centers in 1716 metropolitan markets within nine states as of September 30, 2017.9 states. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. As of September 30, 2017, we offered 29 brands of new vehicles andFor the three months ended March 31, 2020, our new vehicle revenue brand mix consisted of 46%43% imports, 33%34% luxury, and 21%23% domestic brands. We also operated 24 collision repair centers that serve customers in our local markets.
Our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups:
 
Coggin dealerships operating primarily in Jacksonville, Fort Pierce and Orlando, Florida;
Courtesy dealerships operating in Tampa, Florida;
Crown dealerships operating in North Carolina, South Carolina and Virginia;
Gray-DanielsGreenville Automotive dealerships operating in the Jackson, Mississippi area;Greenville, South Carolina;
Hare and Estes dealerships operating in the Indianapolis, Indiana area;
McDavid dealerships operating in metropolitan Austin Dallas and Houston,Dallas, Texas;
Nalley dealerships operating in metropolitan Atlanta, Georgia; and
Plaza dealerships operating in metropolitan St. Louis, Missouri.Missouri; and

Our operating results are generally subject to changesMike Shaw dealerships in the economic environment as well as seasonal variations. Historically, we have generated more revenue and operating income in the second, third, and fourth quarters than in the first quarter of the calendar year. Generally, the seasonal variations in our operations are caused by factors related to weather conditions, changes in manufacturer incentive programs, model changeovers and consumer buying patterns, among other things.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESDenver, Colorado area.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and reflect the consolidated accounts of Asbury Automotive Group, Inc. (the "Company") and our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. If necessary, reclassifications of amounts previously reported have been made to the accompanying Condensed Consolidated Financial Statements in order to conform to current presentation.
In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair presentationstatement of the Condensed Consolidated Financial Statements as of September 30, 2017,March 31, 2020, and for the three and nine months ended September 30, 2017March 31, 2020 and 2016,2019, have been included.included, unless otherwise indicated. The results of operations for the three and nine months ended September 30, 2017March 31, 2020 are not necessarily indicative of the results that may be expected for any other interim period, or any full year period. Our Condensed Consolidated Financial Statements should be read together with our audited consolidated financial statementsConsolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed quarterly and the effects of any revisions are reflected in the consolidated financial statementsConsolidated Financial Statements in the period they are determined to be necessary. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, those relating to inventory valuation reserves, variable consideration and constraint considerations related to retro-commission arrangements, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for insurance programs, certain assumptions related to intangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.


Contracts-In-Transit
Contracts-in-transit represent receivables from third-party finance companies for the portion of new and used vehicle purchase price financed by customers through sources arranged by us.


Accounts Receivable
The allowance for credit losses is estimated through an annual loss rate approach, by type of receivable, utilizing historical loss rates which have been adjusted for expectations of future economic conditions.
Revenue Recognition
Revenue from the sale ofPlease refer to Note 2 "Revenue Recognition".
Internal Profit
Revenues and expenses associated with internal work performed by our parts and service departments on new and used vehicles (which excludes sales tax)vehicle inventory are eliminated in consolidation. The gross profit earned by our parts and service departments for internal work performed is recognized upon the latest of delivery, signing of the sales contract or approval of financing. Revenue from the sale of parts, service and collision repair work (which excludes sales tax) is recognized upon delivery of parts to the customer or at the time vehicle service or repair work is completed, as applicable. Manufacturer incentives and rebates, including manufacturer holdbacks, floor plan interest assistance and certain advertising assistance, are recognizedincluded as a reduction of new vehicle costParts and Service Cost of sales atSales on the time the related vehicles are sold, in the accompanying Condensed Consolidated Statements of Income.
We receive commissions from third-party lending and insurance institutions for arranging customer financing and fromIncome upon the sale of the vehicle. The costs incurred by our new and used vehicle departments for work performed by our parts and service contracts, guaranteed auto protection (known as "GAP") insurance, and other insurance, to customers (collectively "F&I"). We may be charged back for F&I commissions in the event a contractdepartments is prepaid, defaulted upon, or terminated ("chargebacks"). F&I commissions are recorded at the time a vehicle is sold, and a reserve for future chargebacks is established based on historical chargeback experience and the termination provisions of the applicable contract. F&I commissions, net of estimated future chargebacks, are included in Finance and Insurance, net ineither New Vehicle Cost of Sales or Used Vehicle Cost of Sales on the accompanying Condensed Consolidated Statements of Income. Additionally, we participate in future profits associated withIncome, depending on the performanceclassification of the third-partyvehicle serviced. We eliminate the internal profit on vehicles that remain in inventory.
Income Taxes
We use the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates.
Share Repurchases

Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. Periodically, the Company may retire repurchased shares of common stock previously held underlying portfolioby the Company as treasury stock. In accordance with our accounting policy, we allocate any excess share repurchase price over par value between additional paid-in capital, which is limited to amounts initially recorded for certain products, pursuant to retrospective commission arrangements. Our retrospective portfolio income is recorded as revenue at the time it is received from our third-party providers.same issue, and retained earnings.
Earnings per Common Share
Basic earnings per common share is computed by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per common share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding during the period. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.
Assets Held for Sale and Liabilities Associated with Assets Held for Sale
Certain amounts have been classified as Assets Held for Sale in the accompanying Condensed Consolidated Balance Sheets. Assets and liabilities classified as held for sale may include assets and liabilities associated with pending dealership disposals, real estate not currently used in our operations that we are actively marketing to sell, and any related mortgage notes payable or other liabilities, if applicable. Classification as held for sale begins on the date that we have met all of the criteria for classification as held for sale.
At the time of classifying assets as held for sale, we compare the carrying value of these assets to estimates of fair value to assess for impairment. We compare the carrying value to estimates of fair value utilizing the assistance of third-party broker opinions of value and third-party desktop appraisals to assist in our fair value estimates related to real estate properties.
Statements of Cash Flows
Borrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle ("Non-Trade") and all floor plan notes payable relating to pre-owned vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on the accompanying Condensed Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. The net change in floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor Plan Notes Payable—Trade") is classified as an operating activity on the accompanying Condensed Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as financing activities in the accompanying Condensed Consolidated Statement of Cash Flows. Cash flows related to floor plan notes payable included

in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturer from which we purchased the related inventory.
Loaner vehicles account for a significant portion of Other Current Assets.current assets. We acquire loaner vehicles either with available cash or through borrowing from either our manufacturer affiliated lenders or through our senior secured credit agreement with Bank of America, as administrative agent, and the other agents and lenders party thereto (the "2016(as amended, the "2019 Senior Credit Facility"). Loaner vehicles are initially used by our service department for a short period of time (typically six to twelve months) before

we seek to sell them. Therefore, we classify the acquisition of loaner vehicles in Other Current Assetscurrent assets and the borrowings and repayments of loaner vehicle notes payable in Accounts Payablepayable and Accrued Liabilitiesaccrued liabilities in the accompanying Condensed Consolidated Statements of Cash Flows. Loaner vehicles are depreciated over the service period to their estimated value. At the end of the loaner service period, loaner vehicles are transferred from Other Current Assetscurrent assets to used vehicle inventory. These transfers are reflected as non-cash transfers between Other Current Assetscurrent assets and Inventories in the accompanying Condensed Consolidated Statements of Cash Flows.
Recent Accounting Pronouncements
In March 2016,Effective January 1, 2020, the Company adopted Financial Accounting StandardsStandard Board ("FASB") issued Accounting StandardStandards Update ("ASU") 2016-09, Compensation—Stock Compensation (Topic 718)2016-13, Measurement of Credit Losses on Financial Instruments, to simplify certain aspectswhich changed the way entities assess the impairment of its financial instruments based on its estimate of expected credit losses versus the accounting for share-based payment transactions to employees.current incurred loss model. The newadoption of this standard requires excess tax benefits and tax deficiencies to be recorded in the statements of income asdid not have a component of the provision for income taxes when stock awards vest or are settled. In addition, it eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur, allows us to withhold more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activitymaterial impact on our statementscondensed consolidated financial statements.
2. REVENUE RECOGNITION
The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service to a customer. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.
Disaggregation of cash flows.Revenue
The following table summarizes revenue from contracts with customers for the three months ended March 31, 2020 and 2019:
 For the Three Months Ended March 31,
 2020 2019
 (In millions)
Revenue:   
   New vehicle$822.1
 $871.8
   Used vehicle retail446.0
 458.2
   Used vehicle wholesale47.2
 51.7
New and used vehicle1,315.3
 1,381.7
  Sale of vehicle parts and accessories36.8
 36.9
  Vehicle repair and maintenance services184.8
 180.7
Parts and services221.6
 217.6
Finance and insurance, net70.4
 71.5
Total revenue$1,607.3
 $1,670.8







We adoptedContract Asset
Changes in contract assets during the new standard January 1, 2017, upon which excess tax benefits or deficiencies from share-based award activity wereperiod are reflected in the Condensed Consolidated Statements of Income as a component of the provision for income taxes, whereas they previously were recognized in equity. We also elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The adoption of ASU 2016-09 resulted in a cumulative-effect adjustment of $0.5 million (pre-tax) to reduce retained earnings and increase additional paid-in capital as of January 1, 2017,table below. Contract assets related to our election to account for forfeitures as they occur.

We adopted the aspects of the standard affecting the cash flow presentation retrospectively, and accordingly, to conform to the current year presentation, we reclassified $0.2 million of excess tax benefits under financing activities to operating activities for the nine months ended September 30, 2017 in our Condensed Consolidated Statements of Cash Flows. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods presented on our consolidated statements of cash flows since such cash flows have historically been presented as a financing activity.
In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, changing the subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value. We adopted this standard, beginning January 1, 2017, and its adoption did not have an impact on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), a new standard on revenue recognition. Further, the FASB has issued a number of additional ASUs regarding the new revenue recognition standard. The new standard, as amended, will supersede existing revenue recognition guidance and apply to all entities that enter into contracts to provide goods or services to customers. The guidance also addresses the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as real estate, property, and equipment. The new standard will become effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within that year. The new standard can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. We anticipate using the modified retrospective approach with the cumulative effect of initially adopting the standard recognized on the date of adoption. We established an implementation team to assess the impact of the new standard to our material revenue streams and potential differences from our current policies as well as the changes in controls and processes, if any, to implement the standard. We are currently in the process of reviewing contracts and other related documents for each material revenue stream and based on our preliminary assessment we do not anticipate changes to the timing of our recognition of revenue of new and used vehicle sales and the sale of vehicle parts.

Our current policy is to record revenue for customer pay vehicle repair and maintenance services onceare transferred to receivables when a repair order is completed and invoiced to the repair is completed. Based on our preliminary assessment of the new standard we anticipate that this revenue will likely be recognized as we perform these services. We are currently reviewing whether our preliminary assessment is appropriate based on our review of customer contracts.customer.
 Vehicle Repair and Maintenance Services Finance and Insurance, net Total
 (In millions)
Contract Assets (Current), January 1, 2020$4.8
 $12.3
 $17.1
Transferred to receivables from contract assets recognized at the beginning of the period(4.8) (4.1) (8.9)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period3.7
 4.6
 8.3
Contract Assets (Current), March 31, 2020$3.7
 $12.8
 $16.5

We are currently evaluating the constraint factors for a portion of the transaction price for certain insurance contracts. The new standard requires that an estimate of variable consideration, subject to a constraint, be included in the transaction price and recognized when or as an entity satisfies its performance obligation. In the event variable consideration is considered fully constrained, recognition will occur once the uncertainties associated with the constraint determination are resolved. In the event

our evaluation of these factors results in the variable consideration not being fully constrained, revenue would be subjected to accelerated recognition under the new standard.

We have not yet quantified the impact from adopting this standard to our consolidated financial statements and will continue to assess the impacts, including the enhanced disclosure requirements, and any changes to our processes and controls prior to adoption.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), a new standard on lease accounting. The new standard will supersede the existing lease accounting guidance and apply to all entities. The guidance defines new principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. The new standard will become effective for annual reporting periods beginning on or after December 15, 2018 and for interim periods within that year. A modified retrospective approach is required and early adoption of this standard is permitted. While we are still evaluating the impact of this standard, we expect that the right-of-use assets and the associated lease liabilities will be material to our financial statements. We plan to adopt this standard effective January 1, 2019.
3. ACQUISITIONS AND DIVESTITURES
Results of acquired dealerships are included in our accompanying Condensed Consolidated Statements of Income commencing on the date of acquisition. Our acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The fair value of our manufacturer franchise rights are determined atas of the acquisition date, by discounting the projected cash flows specific to each franchise. Included in this analysis are market participant assumptions at a dealership level, regardingrelated to the cash flows directly attributable to the franchise rights, revenueincluding year-over-year and terminal growth rates, working capital requirements, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses. Using an estimated weighted average cost of capital, estimated residual values at the end of the forecast period and estimated future capital expenditure requirements, the Company calculates the fair value of the franchise rights.
During the ninethree months ended September 30, 2017,March 31, 2020, we acquired the assets of two3 franchises (two(1 dealership locations) and one collision centerlocation) in the Indianapolis, IndianaDenver, Colorado market for a combined purchase price of $80.1$63.6 million. We financedfunded these acquisitions with $55.0an aggregate of $34.5 million of cash and $25.1$27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, this acquisition included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $1.5 million of purchase price holdbacks related to a prior year acquisition during the three months ended March 31, 2020.
During the three months ended March 31, 2019, we acquired the assets of 8 franchises (4 dealership locations) in the Indianapolis, Indiana market for a purchase price of $121.0 million. We funded these acquisitions with $70.8 million of cash, $47.7 million of floor plan borrowings for the purchase of the related new vehicle inventory, and purchase price holdbacks of $2.5 million for potential indemnity claims made by us with respect to the acquired franchises.
Below is the preliminary allocation of purchase price for the acquisitions completed during the ninethree months ended September 30, 2017. We have not finished our final assessments of third party real estate appraisalsMarch 31, 2020 and our internal2019, respectively. Our 2020 valuation
of for manufacturer franchise rights, real estate, property and the assignmentequipment, and our assessment with respect to certain assumed leases is preliminary as of goodwill to reporting units. March 31, 2020.

The $38.9 million of goodwill and manufacturer franchise rights associated with our acquisitions will be deductible for federal and state income tax purposes ratably over a 15 year period.
 For the Three Months Ended March 31,
 2020 2019
 (In millions)
Inventory$29.8
 $58.1
Real estate14.5
 29.8
Property and equipment0.4
 1.8
Goodwill and manufacturer franchise rights19.2
 32.1
Liabilities assumed—
 (0.8)
Other(0.3) —
Total purchase price$63.6
 $121.0

 As of
 September 30, 2017
 (In millions)
Inventory$25.9
Real estate12.2
Property and equipment1.4
Goodwill32.7
Manufacturer franchise rights6.2
Loaner and rental vehicles3.2
Liabilities assumed(1.5)
Total purchase price$80.1
During the three months ended March 31, 2020, we sold 1 franchise (1 dealership location) in the Atlanta, Georgia market and we sold 6 franchises (5 dealership locations) and 1 collision center in the Jackson, Mississippi market. The Company recorded a pre-tax gain totaling $33.7 million, which is presented in our accompanying Condensed Consolidated Statements of Income as Gain on dealership divestitures, net. The divested businesses would not be considered significant subsidiaries as defined in Rule 1-02(w) of Regulation S-X.

We did 0t divest any dealerships during the three months ended March 31, 2019.
On December 11, 2019, we announced the proposed acquisition of substantially all of the assets of the businesses of the Park Place Dealership family of entities (collectively, "Park Place") pursuant to that certain Asset Purchase Agreement, dated as of December 11, 2019, among the Company, Park Place and the other parties thereto (the "Asset Purchase Agreement"), and related agreements and transactions (collectively, the "Acquisition"). On March 24, 2020, we delivered notice to the sellers terminating the Acquisition pursuant to the terms of the related agreements and transactions in exchange for the payment of $10.0 million of liquidated damages which is reflected in our accompanying Condensed Consolidated Statements of Income as Other operating expense, net. See Note 9 "Debt" for details related to the impact on certain financing arrangements as a result of terminating the Acquisition.

4. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following:
 As of
 March 31, 2020 December 31, 2019
 (In millions)
Vehicle receivables$21.2
 $44.8
Manufacturer receivables38.7
 50.4
Other receivables31.0
 42.4
     Total accounts receivable90.9
 137.6
Less—Allowance for credit losses(1.5) (1.4)
     Accounts receivable, net$89.4
 $136.2

 As of
 September 30, 2017 December 31, 2016
 (In millions)
Vehicle receivables$37.4
 $53.2
Manufacturer receivables40.9
 45.5
Other receivables32.0
 41.6
     Total accounts receivable110.3
 140.3
Less—Allowance for doubtful accounts(1.6) (1.9)
     Accounts receivable, net$108.7
 $138.4

5. INVENTORIES
Inventories consisted of the following:
 As of
 March 31, 2020 December 31, 2019
 (In millions)
New vehicles$861.1
 $802.6
Used vehicles158.0
 140.1
Parts and accessories40.6
 42.3
Total inventories$1,059.7
 $985.0

 As of
 September 30, 2017 December 31, 2016
 (In millions)
New vehicles$673.7
 $720.6
Used vehicles128.2
 132.7
Parts and accessories41.6
 41.6
Total inventories$843.5
 $894.9
The lower of cost and net realizable value reserves reduced total inventories by $5.78.1 million and $6.5$6.1 million as of September 30, 2017March 31, 2020 and December 31, 20162019, respectively. In addition to inventories shown above, we had $67.7 million of inventories classified as Assets held for sale on the accompanying Consolidated Balance Sheet as of December 31, 2019, associated with pending dealership disposals. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, certain automobile manufacturer incentives reduced new vehicle inventory cost by $7.8$10.1 million and $8.2$9.6 million,, respectively, and reduced new vehicle cost of sales for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 by $29.4$10.2 million and $29.8$10.5 million, respectively.
6. ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities classified as held for sale include (i) assets and liabilities associated with pending dealership disposals, (ii) real estate not currently used in our operations that we are actively marketing to sell and (iii) the related mortgage notes payable, if applicable.
Real estate assets held for sale not currently used in our operations and other real estate assets, totaled $28.7 million and $38.9 million as of March 31, 2020 and December 31, 2019, respectively. There were 0 liabilities associated with these properties as of March 31, 2020. As of December 31, 2019, there was $8.3 million of mortgage payable.
As of December 31, 2019, there were 7 franchises (6 dealership locations) and 1 collision center pending disposition, with assets and liabilities totaling $115.3 million and $92.6 million, respectively. During the ninethree months ended September 30, 2017, we reclassified two vacant properties with net book valuesMarch 31, 2020, the Company recorded a pre-tax gain totaling $33.7 million, on the sale of $3.8 million to Assets Held for Sale. these dealerships.
Additionally, during the ninethree months ended September 30, 2017,March 31, 2020, we sold one1 vacant property with a net book value of $3.9$3.7 million.
Assets held for sale, comprising real estate
7. GOODWILL AND INTANGIBLE FRANCHISE RIGHTS
Our acquisitions have resulted in the recording of goodwill and intangible franchise rights. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not currently used inindividually identified and separately recognized. Franchise rights are indefinite-lived intangible assets representing our operations, totaled $16.2 millionrights under franchise agreements with vehicle manufacturers. Goodwill and $16.1 millionintangible franchise rights are tested annually as of September 30, 2017October 1st or more frequently in the event that facts and December 31, 2016, respectively,circumstances indicate a triggering event has occurred.
As a result of the adverse impact on our dealership operations caused by the COVID-19 pandemic, the Company considered the extent to which the COVID-19 impacts combined with other relevant circumstances (e.g., the results of the Company’s most recent impairment test) could affect the significant inputs used to determine the fair value of the Company’s franchise rights and there were no liabilitiesgoodwill associated with these real estate assets held for salethe Company’s reporting units.
To the extent that we determined that the totality of events and circumstances and their effect on the significant inputs into the fair value determination of our franchise rights and reporting units, would more likely than not lead to an impairment of the carrying value of the franchise rights or goodwill reporting units, we performed quantitative impairment tests as of September 30, 2017 or DecemberMarch 31, 2016.2020. We performed qualitative assessments on the remaining franchise rights and goodwill reporting units as of March 31, 2020.
The results of our quantitative and qualitative assessments indicated that the carrying value of goodwill related to all reporting units did not exceed their fair value.
The quantitative impairment tests for franchise rights included a comparison of the estimated fair value to the carrying value of each franchise right asset. The Company estimates fair value by using a discounted cash flow model (income approach) based on market participant assumptions related to the cash flows directly attributable to the franchise. These assumptions

During the nine months ended September 30, 2016, we recorded $1.5 millioninclude year-over-year and terminal growth rates, working capital requirements, weighted average cost of impairment expense based on a third-party broker opinion of value associated with a property transferred to Assets Held for Sale. Additionally, during the nine months ended September 30, 2016, we recorded $0.7 million of impairment expense based on offers from prospective buyers on onecapital, future gross margins, and future selling, general, and administrative expenses.
The results of the real estate properties classified in Assets Heldquantitative impairment testing for Sale.

In addition tocertain franchise rights as of March 31, 2020, identified that the above impairments, during the nine months ended September 30, 2016,carrying values of certain of our franchise rights assets exceeded their fair value. As a result, we recognized a $0.9$23.0 million pre-tax non-cash impairment charge associated with a lease buyout and lease termination on real estate not classified as held for sale. This was recorded in Other Operating Expenses, net in our accompanying Condensed Consolidated Statements of Income.during the three months ended March 31, 2020.

7.8. FLOOR PLAN NOTES PAYABLE
Floor plan notes payable consisted of the following:
As ofAs of
September 30, 2017 December 31, 2016March 31, 2020 December 31, 2019
(In millions)(In millions)
Floor plan notes payable—trade(a)$121.5
 $120.0
$133.7
 $146.5
Floor plan notes payable offset account(11.8) (11.7)(15.3) (16.2)
Total floor plan notes payable—trade, net$109.7
 $108.3
Floor plan notes payable—trade, net$118.4
 $130.3
      
Floor plan notes payable—non-trade$641.8
 $732.7
Floor plan notes payable—new non-trade (b)$784.8
 $773.6
Floor plan notes payable—used non-trade110.0
 —
Floor plan notes payable offset account(63.2) (59.2)(164.7) (115.9)
Total floor plan notes payable—non-trade, net$578.6
 $673.5
Floor plan notes payable—non-trade, net$730.1
 $657.7

____________________________
(a) Amounts reflected for floor plan notes payable—trade as of December 31, 2019, excluded $21.9 million classified as
Liabilities associated with assets held for sale.
(b) Amounts reflected for floor plan notes payable—new non-trade as of December 31, 2019, excluded $40.9 million classified as Liabilities associated with assets held for sale.
We have a floor plan facility with Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory. Our floor plan facility with Ford Credit was amended in December 2019 to extend the maturity date from December 5, 2019 to May 31, 2020.
We have established a floor plan notes payable offset account with Ford Motor Credit Company whichthat allows us to transfer cash to the account as an offset ofto our outstanding Floor Plan Notes Payable—Trade, net. Additionally,Trade. In addition, we have a similar floor plan offset account with Bank of America whichthat allows us to offset our outstanding Floor Plan Notes Payable—Non-Trade, net.Non-Trade. These accounts allow us to transfer cash to reduce the amount of outstanding floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the floor plan offset accountsaccount into our operating cash accounts within one to two days. As of September 30, 2017March 31, 2020 and December 31, 20162019, we had $75.0$180.0 million and $70.9$132.1 million, respectively, in these floor plan offset accounts.
At our option, we have the ability to re-designate a portion of our availability under the Revolving Credit Facility to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility. The maximum amount we are allowed to re-designate is determined based on our aggregate revolving commitment under the Revolving Credit Facility, less $50.0 million. In addition, we are able to re-designate any amounts moved to the New Vehicle Floor Plan Facility or Used Vehicle Floor Plan Facility back to the Revolving Credit Facility. As of December 31, 2019, $190.0 million of availability under our Revolving Credit Facility was re-designated to the New Vehicle Floor Plan Facility to take advantage of the lower commitment fee rates on the New Vehicle Floor Plan Facility when compared to the Revolving Credit Facility. On March 17, 2020, the entire $190.0 million was re-designated from the New Vehicle Floor Plan Facility to the Revolving Credit Facility. In addition, on March 18, 2020 we borrowed $110.0 million under the Used Vehicle Floor Plan Facility.
8. LONG-TERM
9. DEBT
Long-term debt consisted of the following:
 As of
March 31, 2020 December 31, 2019
(In millions)
6.00% Senior Subordinated Notes due 2024$—
 $600.0
4.50% Senior Notes due 2028280.0
 —
4.75% Senior Notes due 2030320.0
 —
Mortgage notes payable bearing interest at fixed rates99.2
 100.5
2018 Bank of America Facility (a)105.3
 88.3
2018 Wells Fargo Master Loan Facility25.0
 25.0
2013 BofA Real Estate Facility16.5
 35.5
2015 Wells Fargo Master Loan Facility (b)75.5
 76.8
2019 Bank of America Revolving Credit Facility237.0
 —
Finance lease liability17.0
 17.2
Total debt outstanding1,175.5
 943.3
Add—unamortized premium on 6.0% Senior Subordinated Notes due 2024—
 5.1
Less—debt issuance costs(10.6) (9.0)
Long-term debt, including current portion1,164.9
 939.4
Less—current portion, net of current portion of debt issuance costs(47.4) (32.4)
Long-term debt$1,117.5
 $907.0

 As of
September 30, 2017 December 31, 2016
(In millions)
6.0% Senior Subordinated Notes due 2024$600.0
 $600.0
Mortgage notes payable bearing interest at fixed rates177.6
 182.8
Real estate credit agreement48.3
 51.5
Restated master loan agreement90.6
 93.6
Capital lease obligations3.3
 3.4
Total debt outstanding919.8
 931.3
Add—unamortized premium on 6.0% Senior Subordinated Notes due 20247.1
 7.6
Less—debt issuance costs(11.2) (12.2)
Long-term debt, including current portion915.7
 926.7
Less—current portion, net of current portion of debt issuance costs(14.3) (14.0)
Long-term debt$901.4
 $912.7
____________________________
(a) Amounts reflected for the 2018 BofA Real Estate Facility as of December 31, 2019, exclude $26.6 million classified as Liabilities associated with assets held for sale.
(b) Amounts reflected for the 2015 Wells Fargo Master Loan Facility as of December 31, 2019, exclude $1.5 million classified as Liabilities associated with assets held for sale.
6.00% Senior Subordinated Notes due 2024
On February 3, 2020, we issued a conditional notice of redemption to the holders of our 6% Notes, notifying such holders that we intend to redeem all of the 6% Notes. On March 4, 2020, the 6% Notes were redeemed at 103% of par, plus accrued and unpaid interest to, but excluding, the date of redemption. We recorded a loss on extinguishment of the 6% Notes of $19.1 million which comprised a redemption premium of $18.0 million and the write-off of the unamortized premium and debt issuance costs totaling $1.1 million related to the 6% Notes on the redemption date.
New Senior Notes
On February 19, 2020, the Company completed its offering of senior unsecured notes, consisting of $525.0 million  aggregate principal amount of 4.50% Senior Notes due 2028 (the “2028 Notes”) and $600.0 million aggregate principal amount of 4.75% Senior Notes due 2030 (the “2030 Notes” and, together with the 2028 Notes, the “Notes”).The Company paid lender fees of $6.8 million in conjunction with the Notes offering and incurred additional debt issuance costs of $3.1 million. The lender fees and other debt issuance costs incurred are being amortized over the term of the Notes using the effective interest method.
The 2028 Notes and 2030 Notes mature on March 1, 2028 and March 1, 2030, respectively. Interest is payable semiannually, on March 1 and September 1 of each year. The New Senior Notes were offered, together with additional borrowings and cash on hand, to (i) fund, if consummated, the acquisition of substantially all of the assets of Park Place, (ii) redeem all of our outstanding $600.0 million aggregate principal amount of the 6.0% Notes and (iii) pay fees and expenses in connection with the foregoing.
As a result of the termination of the Acquisition, the Company delivered a notice of special mandatory redemption to holders of its 2028 Notes and 2030 Notes pursuant to which it would redeem on a pro rata basis (1) $245.0 million of the 2028 Notes and (2) $280.0 million of the 2030 Notes, in each case, at 100% of the respective principal amount plus accrued and unpaid interest to but excluding, the special mandatory redemption date. On March 30, 2020, the Company completed the redemption and recorded a write-off of unamortized debt issuance costs of $1.5 million.

The remaining outstanding 2028 Notes and 2030 Notes are subject to customary covenants, events of default and optional redemption provisions. In addition, the remaining outstanding 2028 Notes and 2030 Notes are required to be registered under the Securities Act of 1933 within 270 days of the closing date for the offering.
We are a holding company with no independent assets or operations. For all relevant periods presented, our 6.0% Senior Subordinated Notes, due 2024 (our "6.0% Notes")2028 Notes and 2030 Notes have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries. Any subsidiaries whichthat have not guaranteed such notes are "minor" (as defined in Rule 3-10(h) of Regulation S-X). As of September 30, 2017,March 31, 2020, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or our guarantor subsidiaries.
Amendments to 2019 Senior Credit Facility
In connection with the Acquisition, we obtained amendments, among other things, to (1) increase the aggregate commitments under the Revolving Credit Facility to $350.0 million, (2) increase the aggregate commitments under the New Vehicle Floorplan Facility to $1.35 billion and (3) increase the aggregate commitments under the Used Vehicle Floorplan Facility to $200.0 million. These amendments to increase the aggregate commitments were to be effective concurrently with the consummation of the Acquisition. As a result of the termination of the Acquisition, the aforementioned amendments did not become effective.
On March 18, 2020, the Company borrowed an additional $237.0 million under the Revolving Credit Facility and, as a result has no additional availability thereunder.
New BofA Real Estate Facility
In connection with the Acquisition, on February 7, 2020 we entered into the New BofA Real Estate Facility, which provided for term loans in an aggregate amount not to exceed $280.6 million, upon the consummation of the Acquisition. As a result of the termination of the Acquisition, the anticipated borrowings under the New BofA Real Estate Facility have not occured.
9.10. FINANCIAL INSTRUMENTS AND FAIR VALUE
In determining fair value, we use various valuation approaches, including market and income approaches. Accounting standards establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the assumptionspresumptions market

participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1-Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.
Level 2-Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Assets and liabilities utilizing Level 2 inputs include interest rate swap instruments, exchange-traded debt securities that are not actively traded or do not have a high trading volume, mortgage notes payable, and certain real estate properties on a non-recurring basis.
Level 3-Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating the fair value of certain non-financial assets and non-financial liabilities in purchase acquisitions and those used in the assessment of impairment for goodwill and manufacturer franchise rights.
The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required to determine fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.
Fair value is a market-based exit price measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use inputs that are current as of the measurement date, including during periods of significant market fluctuations.

Financial instruments consist primarily of cash and cash equivalents, contracts-in-transit, accounts receivable, cash surrender value of corporate-owned life insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable, and interest rate swap instruments. The carrying values of our financial instruments, with the exception of subordinated long-term debt and mortgage notes payable, approximate fair value due to (i) their short-term nature, (ii) recently completed market transactions, or (iii) existence of variable interest rates, which approximate market rates. The fair value of our subordinated long-term debt is based on reported market prices in an inactive market whichthat reflects Level 2 inputs. We estimate the fair value of our mortgage notes payable using a present value technique based on current market interest rates for similar types of financial instruments whichthat reflect Level 2 inputs.
A summary of the carrying values and fair values of our 6.0% Notes and our mortgageMortgage notes payable is as follows:
 As of
 March 31, 2020 December 31, 2019
 (In millions)
Carrying Value:   
6.00% Senior Subordinated Notes due 2024$—
 $598.8
4.50% Senior Notes due 2028276.5
 —
4.75% Senior Notes due 2030315.2
 —
Mortgage notes payable (a)319.2
 323.4
Total carrying value$910.9
 $922.2
    
Fair Value:   
6.00% Senior Subordinated Notes due 2024$—
 $619.5
4.50% Senior Notes due 2028238.0
 —
4.75% Senior Notes due 2030272.0
 —
Mortgage notes payable (a)344.2
 364.2
Total fair value$854.2
 $983.7

 As of
 September 30, 2017 December 31, 2016
 (In millions)
Carrying Value:   
6.0% Senior Subordinated Notes due 2024$607.1
 $607.6
Mortgage notes payable316.5
 327.9
Total carrying value$923.6
 $935.5
    
Fair Value:   
6.0% Senior Subordinated Notes due 2024$627.0
 $613.5
Mortgage notes payable320.0
 339.5
Total fair value$947.0
 $953.0
____________________________

(a) Excludes amounts classified as Liabilities associated with assets held for sale as of December 31, 2019.

Interest Rate Swap Agreements


In June 2015, we entered into an interest rate swap agreement with a notional principal amount of $100.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR, rate, through maturity in February 2025. The notional value of this swap was $91.7$78.5 million as of September 30, 2017March 31, 2020 and is reducing over its remaining term to $53.1 million at maturity.

In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR, rate, through maturity in September 2023. The notional value of this swap was $51.8 million as of September 30, 2017 was $61.2 millionMarch 31, 2020 and the notional value will reduceis reducing over its remaining term to $38.7 million at maturity.
The fair value of cash flow swaps is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates and present value factors. Fair value estimates reflect a credit adjustment to the discount rate applied to all expected cash flows under the swaps. Other than this input, all other inputs used in the valuation of these swaps are designated to be Level 2 fair values. The fair value liabilities related to theof our swaps was a $8.3 million and a $3.8 million liability as of September 30, 2017March 31, 2020 and December 31, 2016, were $3.1 million and $3.6 million,2019, respectively.

The following table provides information regarding the fair value of our interest rate swap agreements and the impact on the Condensed Consolidated Balance Sheets:
 As of
 March 31, 2020 December 31, 2019
 (In millions)
Other current liabilities$2.2
 $0.9
Other long-term liabilities6.1
 2.9
Total fair value$8.3
 $3.8

 As of
 September 30, 2017 December 31, 2016
 (In millions)
Accounts payable and accrued liabilities$1.4
 $2.2
Other long-term liabilities1.7
 1.4
Total fair value$3.1
 $3.6
Both of our interest rate swaps qualify for cash flow hedge accounting treatment. DuringThese interest rate swaps are marked to market at each reporting date andany unrealized gains or losses are included in accumulated other comprehensive income and reclassified to interest expense in the three months and nine months ended September 30, 2017 and 2016, neither of our cash flow swaps contained any ineffectiveness, nor was any ineffectiveness recognized insame period or periods during which the hedged transactions affect earnings. Information about the effect of our interest rate swap agreements on the accompanying Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income, areis as follows (in millions):
For the Three Months Ended September 30, Results Recognized in Accumulated Other Comprehensive Loss
(Effective Portion)		 Location of Results Reclassified from Accumulated Other Comprehensive Loss
to Earnings		 Results Reclassified from Accumulated Other Comprehensive Loss
to Earnings
2017 $(0.1) Swap interest expense $(0.4)
2016 $0.2
 Swap interest expense $(0.8)
For the Three Months Ended March 31, Results Recognized in Accumulated Other Comprehensive Income/(Loss) Location of Amount Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings 
Amount Reclassified from Accumulated Other Comprehensive Income/(Loss)
to Earnings
2020 $(4.5) Other interest expense, net $(0.3)
2019 $(1.8) Floor plan interest expense and Other interest expense, net $—
For the Nine Months Ended September 30, 
Results Recognized in Accumulated Other Comprehensive Loss
(Effective Portion)
 
Location of Results Reclassified from Accumulated Other Comprehensive Loss
to Earnings
 
Amount Reclassified from Accumulated Other Comprehensive Loss
to Earnings–Active Swaps
2017 $(1.1) Swap interest expense $(1.6)
2016 $(7.2) Swap interest expense $(2.4)

On the basis of yield curve conditions as of September 30, 2017March 31, 2020 and including assumptions about future changes in fair value, we expect the amount to be reclassified out of Accumulated Other Comprehensive Loss into earnings within the next 12 months will be losses of $1.4 million.$2.2 million.
10.11. SUPPLEMENTAL CASH FLOW INFORMATION
During the ninethree months ended September 30, 2017March 31, 2020 and 20162019, we made interest payments, including amounts capitalized, totaling $48.122.3 million and $46.514.1 million, respectively. Included in these interest payments are $16.97.4 million and $14.39.8 million, of floor plan interest payments during the ninethree months ended September 30, 2017March 31, 2020 and 20162019, respectively.
During the ninethree months ended September 30, 2017March 31, 2020 and 2016, we made2019, no material income tax payments net ofwere made, nor refunds received, totaling $94.2 million and $65.1 million, respectively.received.
During the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, we transferred $111.8$39.4 million and $86.6$37.0 million, respectively, of loaner vehicles from Other Current Assetscurrent assets to Inventories on our Condensed Consolidated Balance Sheets.

11.12. COMMITMENTS AND CONTINGENCIES
Our dealerships are party to dealer and framework agreements with applicable vehicle manufacturers. In accordance with these agreements, each dealership has certain rights and is subject to restrictions typical in the industry. The ability of these manufacturers to influence the operations of the dealerships or the loss of any of these agreements could have a materially negative impact on our operating results.
In some instances, manufacturers may have the right, and may direct us, to implement costly capital improvements to dealerships as a condition to entering into, renewing, or extending franchise agreements with them. Manufacturers also typically require that their franchises meet specific standards of appearance. These factors, either alone or in combination, could cause us to use our financial resources on capital projects that we might not have planned for or otherwise determined to undertake.
From time to time, we and our dealerships are or may become involved in various claims relating to, and arising out of, our business and our operations. These claims may involve, but not be limited to, financial and other audits by vehicle manufacturers or lenders and certain federal, state, and local government authorities, which have historically related primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations of violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants, and (iii) payments made to government authorities relating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise

through litigation, government proceedings, and other dispute resolution processes. Such claims, including class actions, could relate to, but may not be limited to, the practice of charging administrative fees and other fees and commissions, employment-related matters, truth-in-lending and other dealer assisted financing obligations, contractual disputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.
We believe we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. Based on our review of the various types of claims currently known to us, there is no indication of material reasonably possible losses in excess of amounts accrued in the aggregate. We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity, or results of operations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on our financial condition, liquidity, or results of operations.
A significant portion of our business involves the sale of vehicles, parts, or vehicles composed of parts that are manufactured outside the United States. As a result, our operations are subject to customary risks of importing merchandise, including fluctuations in the relative values of currencies, import duties, exchange controls, trade restrictions, work stoppages, and general political and socio-economic conditions in foreign countries. The United States or the countries from which our products are imported may, from time to time, impose new quotas, duties, tariffs, or other restrictions;restrictions, or adjust presently prevailing quotas, duties, or tariffs, which may affect our operations, and our ability to purchase imported vehicles and/or parts at reasonable prices.
Substantially all of our facilities are subject to federal, state and local provisions regarding the discharge of materials into the environment. Compliance with these provisions has not had, nor do we expect such compliance to have, any material effect upon our capital expenditures, net earnings, financial condition, liquidity or competitive position. We believe that our current practices and procedures for the control and disposition of such materials comply with applicable federal, state, and local requirements. No assurances can be provided, however, that future laws or regulations, or changes in existing laws or regulations, would not require us to expend significant resources in order to comply therewith.
We had $13.3$12.7 million of letters of credit outstanding as of September 30, 2017,March 31, 2020, which are required by certain of our insurance providers. In addition, as of September 30, 2017,March 31, 2020, we maintained a $5.0$5.3 million surety bond line in the ordinary course of our business. Our letters of credit and surety bond line are considered to be off balance sheet arrangements.
Our other material commitments include (i) floor plan notes payable, (ii) operating leases, (iii) long-term debt and (iv) interest on long-term debt, as described elsewhere herein.
13. SUBSEQUENT EVENTS
On April 27, 2020, we entered into an amendment to our floor plan facility with Ford Credit to extend the maturity date from May 31, 2020 to July 31, 2020.



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
Certain of the discussions and information included or incorporated by reference in this report may constitute "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical in nature and may include statements relating to our goals, plans and projections regarding industry and general economic trends, our expected financial position, results of operations or market position and our business strategy. Such statements can generally be identified by words such as "may," "target," "could," "would," "will," "should," "believe," "expect," "anticipate," "plan," "intend," "foresee," and other similar words or phrases. Forward-looking statements may also relate to our expectations and assumptions with respect to, among other things:


The declines in sales and service revenue and ongoing disruptions in our abilityoperations, the operations of our vehicle and parts manufacturers and other suppliers, vendors and business partners, and the global economy in general due to execute our business strategy;the COVID-19 pandemic;
the seasonally adjusted annual rate of new vehicle sales in the U.S.;
our ability to further improve our operating cash flows, and the availability of capital and liquidity;
our estimated future capital expenditures;United States;
general economic conditions and its expected impact on our revenuesrevenue and expenses;
our expected parts and service revenue due to, among other things, improvements in manufacturing quality;
the variable nature of significant components of our cost structure;vehicle technology;
our ability to limit our exposure to regional economic downturns due to our geographic diversity and brand mix;
manufacturers' willingness to continue tocontinued use of incentive programs to drive demand for their product offerings;
our ability to leverage our common systems, infrastructure and processes in a cost-efficient manner;
our capital allocation strategy, including as it relates to acquisitions and divestitures, stock repurchases, dividends and capital expenditures;
the continued availability of financing, including floor plan financing for inventory;
the ability of consumers to secure vehicle financing at favorable rates; and
the growth of import and luxurythe brands that comprise our portfolio over the long-term;
our ability to mitigate any future negative trends in new vehicle sales; and
our ability to increase our cash flow and net income as a result of the foregoinglong-term and other factors.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual future results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to:


The degree to which declines in sales and service revenue and ongoing disruptions in our operations, the operations of our vehicle and parts manufacturers and other suppliers, vendors and business partners, and the global economy in general due to the COVID-19 pandemic may adversely impact our business, results of operations, financial condition and cash flows;
changes in general economic and business conditions, including changes in employment levels, consumer demand, preferences and confidence levels, consumer demand and preferences, the availability and cost of credit, fuel prices, levels of discretionary personal income and interest rates;
our ability to generate sufficient cash flows, maintain our liquidity and obtain any necessary additional funds for working capital, capital expenditures, acquisitions, stock repurchases, debt maturity payments and other corporate purposes, if necessary or desirable;
significant disruptions in the production and delivery of vehicles and parts for any reason, including the COVID-19 pandemic, natural disasters, product recalls, work stoppages or other occurrences that are outside of our control;
our ability to execute our balanced automotive retailing and service business strategy;strategy while operating under restrictions and best practices imposed or encouraged by governmental and other regulatory authorities;
our ability to attract and retain skilled employees;
adverse conditions affecting the vehicle manufacturers whose brands we sell, and their ability to design, manufacture, deliver and market their vehicles successfully;
changes in the mix and total number of vehicles we are able to sell;
our outstanding indebtedness and our continued ability to comply with applicable covenants in our various financing and lease agreements, or to obtain waivers of these covenants as necessary;

high levels of competition in our industry, which may create pricing and margin pressures on our products and services;

our relationships with manufacturers of the vehicles we sell and our ability to renew, and enter into new framework and dealer agreements with vehicle manufacturers whose brands we sell, on terms acceptable to us;
the availability of manufacturer incentive programs and our ability to earn these incentives;
failure of our management information systems or any security breaches;
changes in laws and regulations governing the operation of automobile franchises, including trade restrictions, consumer protections, accounting standards, taxation requirements and environmental laws;
changes in, or the imposition of, new tariffs or trade restrictions on imported vehicles or parts;
adverse results from litigation or other similar proceedings involving us;
our ability to generate sufficient cash flows, maintain our liquidityconsummate planned mergers, acquisitions and obtain any necessary additional funds for working capital, capital expenditures, acquisitions, stock repurchases and/or dividends, debt maturity payments, and other corporate purposes;dispositions;
any disruptions in the financial markets, which may impact our ability to access capital;
our relationships with, and the financial stability of, our lenders and lessors;
significant disruptions in the production, delivery or availability of vehicles and parts for any reason, including natural disasters, product recalls, work stoppages, import restrictions or limitations, significant property loss or other occurrences that are outside of our control;
our ability to execute our initiatives and other strategies; and
our ability to leverage gains from our dealership portfolio.portfolio; and
our ability to successfully integrate businesses we may acquire, or that any business we acquire may not perform as we expected at the time we acquired it.
Many of these factors are beyond our ability to control or predict, and their ultimate impact could be material. Moreover, the factors set forth under "Item 1A. Risk Factors" in this report and in our Annual Report on Form 10-K for the year ended December 31, 20162019 and other cautionary statements made in this report should be read and considered as forward-looking statements subject to such uncertainties. Forward-looking statements speak only as of the date they are made, and weof this report. We expressly disclaim any obligation to update any forward-looking statement contained herein.

OVERVIEW
We are one of the largest automotive retailers in the United States. As of September 30, 2017March 31, 2020, we owned and operated 94102 new vehicle franchises (80(83 dealership locations), representing 2931 brands of automobiles and 24 collision centers in 1716 metropolitan markets within nine states. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes repair and maintenance services, replacement parts, and collision repair services; and finance and insurance products. As of September 30, 2017,For the three months ended March 31, 2020, our new vehicle revenue brand mix consisted of 46%43% imports, 33%34% luxury, and 21%23% domestic brands.
Our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups:
 
Coggin dealerships operating primarily in Jacksonville, Fort Pierce and Orlando, Florida;
Courtesy dealerships operating in Tampa, Florida;
Crown dealerships operating in North Carolina, South Carolina and Virginia;
Gray-DanielsGreenville Automotive dealerships operating in the Jackson, Mississippi area;Greenville, South Carolina;
Hare and Estes dealerships operating in the Indianapolis, Indiana area;
McDavid dealerships operating in metropolitan Austin Dallas and Houston,Dallas, Texas;
Nalley dealerships operating in metropolitan Atlanta, Georgia; and
Plaza dealerships operating in metropolitan St. Louis, Missouri.Missouri; and
Mike Shaw dealerships operating in the Denver, Colorado area.
Our revenues are derived primarily from: (i) the sale of new vehicles; (ii) the sale of used vehicles to individual retail customers ("used retail") and to other dealers at auction ("wholesale") (the terms "used retail" and "wholesale" collectively referred to as "used"); (iii) repair and maintenance services, including collision repair, the sale of automotive replacement parts,

and the reconditioning of used vehicles (collectively referred to as "parts and service"); and (iv) the arrangement of third-party vehicle financing and the sale of a number of vehicle protection products (defined below and collectively referred to as "F&I").

We evaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle sold, our parts and service operations based on aggregate gross profit, and our F&I business based on F&I gross profit per vehicle sold.
Our continued organic growth is dependent upon the execution of our balanced automotive retailing and service business strategy, the continued strength of our brand mix, and the production and allocation of desirable vehicles from the automobile manufacturers whose brands we sell. Our vehicle sales have historically fluctuated with product availability as well as local and national economic conditions, including consumer confidence, availability of consumer credit, fuel prices, and employment levels. Additionally,In addition, manufacturer imposed stop-sales or open safety recalls, primarily due to, but not limited to, vehicle safety concerns or a vehicle's failure to meet environmental related requirements.
In addition, our ability to sell certain new and used vehicles can be negatively impacted by a number of factors, some of which are outside of our controlcontrol. As a result of market conditions caused by COVID-19, certain vehicle manufacturers and other suppliers have ceased or slowed production of new vehicles, parts and other supplies. We cannot predict with any certainty how long the automotive retail industry will be subject to these production slowdowns implemented by such vehicle manufacturers and other suppliers and when normalized production will resume at these manufacturers. Further, governmental actions, such as travel restrictions imposed in response to national emergencies or the imposition of, tariffs or trade restrictions on imported goods, may include manufacturer imposed stop-sales or open safety recalls, primarily due to, but not limited to,adversely affect vehicle safety concerns or a vehicle's failure to meet environmental related requirements. Wesales and depress demand. However, we believe that the impact on our business of any future negative trends in new vehicle sales would be partially mitigated by (i) the expected relative stability of our parts and service operations over the long-term, (ii) the variable nature of significant components of our cost structure, and (iii) our diversified brand and geographic mix.
Impact of COVID-19 on Our resultsBusiness
The COVID-19 pandemic, and the response thereto, including “shelter in place” or “stay at home” orders issued by federal, state and local governments and other regulatory authorities, has adversely impacted, and is expected to continue to adversely impact, our business operations, store traffic, financial condition, liquidity and cash flow, as well as the operations, financial condition and liquidity of our suppliers, vendors and business partners and the global economic condition in general.
Despite auto retailers having been deemed essential services in most of the markets in which we operate, we experienced significant declines in new and used vehicle unit sales towards the latter half of March which carried over into April. The pandemic has deteriorated consumer confidence and led to furloughs and increased unemployment across the country, reducing the number of consumers who will qualify for the threeextension of credit for a vehicle purchase or qualify for a lease. Additionally, the closures of, and/or reduced availability of services from the department of motor vehicles in various states have and nine months ended September 30, 2017 were impactedwill continue to have an adverse effect on our ability to obtain license plates for our fleet and our customers, to perfect liens on sold vehicles, and on our customers’ ability to obtain valid driver licenses. Our parts and service business is also operating below capacity, as consumer fears about becoming ill with the disease adversely affects traffic to our dealerships.
In response to the downturn in our business, in early April management took various actions in an attempt to mitigate the financial impact of COVID-19. These actions included the furloughing of approximately 2,300 employees, reduced store hours, and suspension of the Company's 401(k) match. In addition, the Company has implemented temporary reductions in pay for all employees and the Company’s directors have also agreed to waive portions of their annual cash retainers. These actions will be evaluated and adjusted as necessary in response to the Company’s operational needs during the ongoing outbreak of COVID-19 and the resulting economic uncertainty.
We are monitoring and managing our cash flows and have enacted cost saving measures to respond to the volatile environment. The Company has significantly reduced its marketing expenses, deferred most capital expenditures, and negotiated significant discounts with certain vendors through the end of the second quarter of 2020. Because the Company cannot predict the duration of the pandemic or the lifting of "shelter in place orders", the Company will continue to evaluate its options and manage its business as appropriate on a location by Hurricanes Harveylocation basis in order to preserve its financial flexibility during this challenging time.
The COVID-19 global pandemic has resulted in a significant decrease in our market capitalization and Irma which hadprofitability that increases the risk of impairment. During the first quarter of 2020, we recorded a net$23.0 million non-cash impairment charge related to our intangible manufacturer franchise rights. We may be required to record additional impairment charges if the COVID-19 global pandemic continues, and we cannot accurately predict the amount and timing of any additional impairment charge at this time, however, any such impairment charge could have an adverse impacteffect on our results dueof operations and stockholders’ equity.

As a precautionary measure, on March 18, 2020, the Company borrowed an additional $237 million under the Revolving Credit Facility and an additional $110 million under the Used Vehicle Floor Plan Facility. As of March 31, 2020, we had $12.5 million of remaining availability under the Used Vehicle Floor Plan Facility and no remaining availability under the Revolving Credit Facility. As of March 31, 2020, we had cash and cash equivalents of $388.6 million and an additional $180.0 million of funds in our floor plan offset accounts. We believe we will have sufficient liquidity to meet our debt service and working capital requirements; commitments and contingencies; debt repayment, maturity and repurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months.
Our top priority continues to be the safety and protection of our customers, team members and their families. We have modified certain business practices to conform to government restrictions and are taking precautionary measures as directed by government and regulatory authorities. Following the CDC’s recommendation, we are providing face masks to employees. We have also increased the frequency of dealership cleanings, implemented the use of plastic seat and steering wheel covers when performing service on guest's vehicles, are thoroughly cleaning and sanitizing loaner vehicles after each use and have secured extra supplies of hand sanitizer, alcohol wipes, gloves and disinfectants for both employee and guest use at our dealerships. Many of our stores are also offering complimentary pick up and delivery services to our customers, and we continue to offer online purchasing of new and used vehicles with delivery to the temporary closurecustomer.
Park Place Acquisition
As previously announced, on December 11, 2019, the Company entered into (1) an Asset Purchase Agreement (the “Asset Purchase Agreement”) with certain members of the Park Place Dealership family of entities, Park Place Mid-Cities, Ltd., a Texas limited partnership, and the identified principal (collectively, “Park Place”) and (2) a Real Estate Purchase Agreement (the “Real Estate Purchase Agreement” and, together with the Asset Purchase Agreement, the “Transaction Agreements”) with certain dealershipsmembers of the Park Place Dealership family of entities to acquire substantially all of the assets of, and certain real property related to, the Park Place business. On March 24, 2020, the Purchaser delivered notice to the sellers terminating the Transaction Agreements pursuant to the terms thereof in our Texas, Floridaexchange for the payment of $10.0 million of liquidated damages. Please refer to Liquidity and Georgia markets. The loss of business caused by these storms should be considered when comparing current results to prior periods.Capital Resources for additional details.
First Quarter Results
The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during the ninethree months ended September 30, 2017March 31, 2020 was 15.2 million compared to 16.9 million during the three months ended March 31, 2019. SAAR for the months of January and February was 17.1 million comparedand 17.0 million, respectively. Despite a strong start to 17.4the month, March ended with a SAAR of 11.4 million duringas the nine months ended September 30, 2016. The automotive retailimpact of the COVID-19 pandemic began to severely impact our business continuesand industry as a whole. In addition to benefit froma decline in vehicle sales in March, there was also a precipitous decline in used vehicle sales, as well as the availabilityparts and service business. As the result of creditgovernment ordered closures of non-essential businesses, the country has seen an unprecedented increase in unemployment claims which has eroded consumer confidence and the willingness to consumers and relatively low overall unemployment levels, fuel prices, and interest rates. Demandmake significant purchases such as automobiles. We expect to continue to be adversely impacted by this pandemic for new vehicles is generally highest during the second, third, and fourth quarters of each year and, accordingly, we expect our revenues and operating results to generally be higher during these periods. Revenues and operating results may be impacted significantly from quarter-to-quarter by changing economic conditions, vehicle manufacturer incentive programs, adverse weather events or other developments outside of our control.foreseeable future.
Our gross profit margin varies with our revenue mix. Sales of new vehicles generally result in a lower gross profit margin than used vehicle sales, sales of parts and service, and sales of F&I products. As a result, when used vehicle, parts and service, and F&I revenue increase as a percentage of total revenue, we expect our overall gross profit margin to increase.
Selling, general, and administrative ("SG&A") expenses consist primarily of fixed and incentive-based compensation, advertising, rent, insurance, utilities, and other customary operating expenses. A significant portion of our cost structure is variable (such as sales commissions), or controllable (such as advertising), which we believe allows us to adapt to changes in the retail environment over the long-term. We evaluate commissions paid to salespeople as a percentage of retail vehicle gross profit, advertising expense on a per vehicle retailed ("PVR") basis, and all other SG&A expenses in the aggregate as a percentage of total gross profit.
We had total available liquidity of $406.4$581.1 million as of September 30, 2017,March 31, 2020, which consisted of cash and cash equivalents of $2.8$388.6 million, $75.0$180.0 million of funds in our floor plan offset accounts $190.0 million of availability under our new vehicle floorplan facility that is able to be re-designated to our revolving credit facility, $46.7 million of availability under our revolving credit facility, and $91.9$12.5 million of availability under our used vehicle revolving floor plan facility. For further discussion of our liquidity, please refer to "Liquidity and Capital Resources" below.





RESULTS OF OPERATIONS
Three Months Ended September 30, 2017March 31, 2020 Compared to the Three Months Ended September 30, 2016
March 31, 2019
For the Three Months Ended September 30, 
Increase
(Decrease)
 
%
Change
For the Three Months Ended March 31, 
Increase
(Decrease)
 
%
Change
2017 2016 2020 2019 
(Dollars in millions, except per share data)(Dollars in millions, except per share data)
REVENUE:              
New vehicle$881.6
 $940.9
 $(59.3) (6)%$822.1
 $871.8
 $(49.7) (6)%
Used vehicle455.6
 476.4
 (20.8) (4)%493.2
 509.9
 (16.7) (3)%
Parts and service197.2
 200.4
 (3.2) (2)%221.6
 217.6
 4.0
 2 %
Finance and insurance, net67.7
 65.4
 2.3
 4 %70.4
 71.5
 (1.1) (2)%
TOTAL REVENUE1,602.1
 1,683.1
 (81.0) (5)%1,607.3
 1,670.8
 (63.5) (4)%
GROSS PROFIT:              
New vehicle41.0
 47.5
 (6.5) (14)%36.4
 37.9
 (1.5) (4)%
Used vehicle28.8
 29.8
 (1.0) (3)%30.7
 34.5
 (3.8) (11)%
Parts and service122.8
 123.0
 (0.2) — %134.9
 135.3
 (0.4) — %
Finance and insurance, net67.7
 65.4
 2.3
 4 %70.4
 71.5
 (1.1) (2)%
TOTAL GROSS PROFIT260.3
 265.7
 (5.4) (2)%272.4
 279.2
 (6.8) (2)%
OPERATING EXPENSES:              
Selling, general, and administrative182.5
 185.7
 (3.2) (2)%194.7
 191.0
 3.7
 2 %
Depreciation and amortization8.1
 7.8
 0.3
 4 %9.5
 8.6
 0.9
 10 %
Other operating expenses, net—
 1.5
 (1.5) (100)%
Franchise rights impairment23.0
 —
 23.0
 — %
Other operating expense, net10.2
 1.8
 8.4
 NM
INCOME FROM OPERATIONS69.7
 70.7
 (1.0) (1)%35.0
 77.8
 (42.8) (55)%
OTHER EXPENSES:       
OTHER EXPENSES (INCOME):       
Floor plan interest expense5.8
 5.0
 0.8
 16 %7.0
 10.2
 (3.2) (31)%
Other interest expense, net13.4
 13.2
 0.2
 2 %17.0
 13.9
 3.1
 22 %
Swap interest expense0.4
 0.8
 (0.4) (50)%
Loss on extinguishment of long-term debt, net20.6
 —
 20.6
 — %
Gain on dealership divestitures, net(33.7) —
 (33.7) — %
Total other expenses, net19.6
 19.0
 0.6
 3 %10.9
 24.1
 (13.2) (55)%
INCOME BEFORE INCOME TAXES50.1
 51.7
 (1.6) (3)%24.1
 53.7
 (29.6) (55)%
Income tax expense19.4
 19.3
 0.1
 1 %4.6
 12.8
 (8.2) (64)%
NET INCOME$30.7
 $32.4
 $(1.7) (5)%$19.5
 $40.9
 $(21.4) (52)%
Net income per common share—Diluted$1.48
 $1.47
 $0.01
 1 %
Net income per share—Diluted$1.01
 $2.11
 $(1.10) (52)%

NM—Not Meaningful




For the Three Months Ended September 30,For the Three Months Ended March 31,
2017 20162020 2019
REVENUE MIX PERCENTAGES:      
New vehicle55.0% 55.9 %51.1 % 52.2%
Used vehicle retail25.0% 25.1 %27.8 % 27.4%
Used vehicle wholesale3.5% 3.2 %2.9 % 3.1%
Parts and service12.3% 11.9 %13.8 % 13.0%
Finance and insurance, net4.2% 3.9 %4.4 % 4.3%
Total revenue100.0% 100.0 %100.0 % 100.0%
GROSS PROFIT MIX PERCENTAGES:      
New vehicle15.8% 17.9 %13.4 % 13.6%
Used vehicle retail11.0% 12.0 %11.5 % 12.0%
Used vehicle wholesale—% (0.8)%(0.2)% 0.3%
Parts and service47.2% 46.3 %49.5 % 48.5%
Finance and insurance, net26.0% 24.6 %25.8 % 25.6%
Total gross profit100.0% 100.0 %100.0 % 100.0%
GROSS PROFIT MARGIN16.2% 15.8 %16.9 % 16.7%
SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT70.1% 69.9 %71.5 % 68.4%
Total revenue duringfor the third quarter of 2017three months ended March 31, 2020 decreased by $81.0$63.5 million (5%(4%) compared to the third quarter of 2016,three months ended March 31, 2019, due to a $59.3$49.7 million (6%) decrease in new vehicle revenue, a $20.8$16.7 million (4%(3%) decrease in used vehicle revenue, and a $3.2$1.1 million (2%) decrease in parts and serviceF&I, net revenue, partially offset by a $2.3$4.0 million (4%(2%) increase in F&I, netparts and service revenue. DuringThe $6.8 million (2%) decrease in gross profit during the three months ended September 30, 2017, gross profit decreased by $5.4 million (2%)March 31, 2020 was driven by a $6.5$3.8 million (14%(11%) decrease in used vehicle gross profit, a $1.5 million (4%) decrease in new vehicle gross profit, a $1.0$1.1 million (3%(2%) decrease in used vehicle gross profitF&I, net and a $0.2$0.4 million decrease in parts and service gross profit, partially offset by a $2.3 million (4%) increase in F&I gross profit.
Income from operations during the third quarter of 2017three months ended March 31, 2020 decreased by $1.0$42.8 million (1%(55%) compared to the third quarter of 2016, primarilythree months ended March 31, 2019, due to the $5.4$6.8 million (2%) decrease in gross profit, partially offset by a $3.2$3.7 million (2%) decreaseincrease in SG&A expenses, a $0.9 million (10%) increase in depreciation and amortization expense, a $23.0 million franchise right impairment charge and a $1.5$8.4 million decreaseincrease in other operating expenses,expense, net. Total other expenses, net increaseddecreased by $0.6$13.2 million (3%(55%), primarily due toas a $0.8result of a $33.7 million (16%net gain on dealership divestitures during the first quarter of 2020 and a $3.2 million (31%) increasedecrease in floor plan interest expense, partially offset by a $20.6 million loss on extinguishment of debt and a $0.2$3.1 million (22%) increase in other interest expense, net, partially offset by a $0.4 million (50%) decrease in swap interest expense during the third quarter of 2017.net. As a result, income before income taxes decreased $1.6$29.6 million (3%). The $0.1 million (1%(55%) increase in income tax expense was due to an increase in our effective tax rate by 140 basis points, from 37.3%$24.1 million for the third quarter of 2016 to 38.7% for the third quarter of 2017.three months ended March 31, 2020. Overall, net income decreased by $1.7$21.4 million (5%(52%) during the third quarter of 2017three months ended March 31, 2020 as compared to the third quarter of 2016.three months ended March 31, 2019.
During the third quarter of 2017, our dealerships in Florida, Georgia, and Houston, Texas had various levels of business interruption due to Hurricanes Irma and Harvey. As a consequence of these storms, both our sales and service operations were closed for a number of days, resulting in a net adverse affect on the company’s third quarter 2017 financial performance. Operations in each of these locations have now returned to full capacity. Property damage sustained at the Company's dealerships and to inventory are estimated to be less than $0.5 million.
We assess the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance. As such, for the following discussion, same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first full month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.















New Vehicle—
 For the Three Months Ended September 30, Increase (Decrease) 
%
Change
 2017 2016 
 (Dollars in millions, except for per vehicle data)
As Reported:       
Revenue:       
Luxury$288.3
 $318.2
 $(29.9) (9)%
Import414.2
 427.2
 (13.0) (3)%
Domestic179.1
 195.5
 (16.4) (8)%
Total new vehicle revenue$881.6
 $940.9
 $(59.3) (6)%
Gross profit:       
Luxury$18.5
 $20.8
 $(2.3) (11)%
Import14.4
 18.3
 (3.9) (21)%
Domestic8.1
 8.4
 (0.3) (4)%
Total new vehicle gross profit$41.0
 $47.5
 $(6.5) (14)%
New vehicle units:       
Luxury5,499
 6,061
 (562) (9)%
Import14,997
 15,522
 (525) (3)%
Domestic4,691
 5,232
 (541) (10)%
Total new vehicle units25,187
 26,815
 (1,628) (6)%
        
Same Store:       
Revenue:       
Luxury$288.3
 $310.3
 $(22.0) (7)%
Import406.7
 410.8
 (4.1) (1)%
Domestic159.1
 183.6
 (24.5) (13)%
Total new vehicle revenue$854.1
 $904.7
 $(50.6) (6)%
Gross profit:       
Luxury$18.5
 $20.2
 $(1.7) (8)%
Import14.5
 17.8
 (3.3) (19)%
Domestic6.9
 8.0
 (1.1) (14)%
Total new vehicle gross profit$39.9
 $46.0
 $(6.1) (13)%
New vehicle units       
Luxury5,499
 5,913
 (414) (7)%
Import14,753
 14,969
 (216) (1)%
Domestic4,103
 4,899
 (796) (16)%
Total new vehicle units24,355
 25,781
 (1,426) (6)%



 For the Three Months Ended March 31, 
Increase
(Decrease)
 
%
Change
 2020 2019 
 (Dollars in millions, except for per vehicle data)
As Reported:       
Revenue:       
Luxury$276.5
 $289.0
 $(12.5) (4)%
Import358.2
 405.0
 (46.8) (12)%
Domestic187.4
 177.8
 9.6
 5 %
Total new vehicle revenue$822.1
 $871.8
 $(49.7) (6)%
Gross profit:       
Luxury$16.9
 $19.1
 $(2.2) (12)%
Import10.6
 11.7
 (1.1) (9)%
Domestic8.9
 7.1
 1.8
 25 %
Total new vehicle gross profit$36.4
 $37.9
 $(1.5) (4)%
New vehicle units:       
Luxury4,992
 5,162
 (170) (3)%
Import12,458
 14,443
 (1,985) (14)%
Domestic4,527
 4,504
 23
 1 %
Total new vehicle units21,977
 24,109
 (2,132) (9)%
        
Same Store:       
Revenue:       
Luxury$275.7
 $287.5
 $(11.8) (4)%
Import323.3
 359.6
 (36.3) (10)%
Domestic146.4
 155.7
 (9.3) (6)%
Total new vehicle revenue$745.4
 $802.8
 $(57.4) (7)%
Gross profit:       
Luxury$17.0
 $19.1
 $(2.1) (11)%
Import9.3
 10.4
 (1.1) (11)%
Domestic6.9
 6.4
 0.5
 8 %
Total new vehicle gross profit$33.2
 $35.9
 $(2.7) (8)%
New vehicle units:       
Luxury4,977
 5,132
 (155) (3)%
Import11,340
 12,842
 (1,502) (12)%
Domestic3,596
 3,952
 (356) (9)%
Total new vehicle units19,913
 21,926
 (2,013) (9)%

New Vehicle Metrics—
For the Three Months Ended September 30, Increase (Decrease) 
%
Change
For the Three Months Ended March 31, Increase (Decrease) 
%
Change
2017 2016 2020 2019 
As Reported:              
Revenue per new vehicle sold$35,002
 $35,089
 $(87) — %$37,407
 $36,161
 $1,246
 3 %
Gross profit per new vehicle sold$1,628
 $1,771
 $(143) (8)%$1,656
 $1,572
 $84
 5 %
New vehicle gross margin4.7% 5.0% (0.3)% 

4.4% 4.3% 0.1 % 

              
Luxury:              
Gross profit per new vehicle sold$3,364
 $3,432
 $(68) (2)%$3,385
 $3,700
 $(315) (9)%
New vehicle gross margin6.4% 6.5% (0.1)%  6.1% 6.6% (0.5)%  
Import:              
Gross profit per new vehicle sold$960
 $1,179
 $(219) (19)%$851
 $810
 $41
 5 %
New vehicle gross margin3.5% 4.3% (0.8)%  3.0% 2.9% 0.1 %  
Domestic:              
Gross profit per new vehicle sold$1,727
 $1,606
 $121
 8 %$1,966
 $1,576
 $390
 25 %
New vehicle gross margin4.5% 4.3% 0.2 %  4.7% 4.0% 0.7 %  
              
Same Store:              
Revenue per new vehicle sold$35,069
 $35,092
 $(23) — %$37,433
 $36,614
 $819
 2 %
Gross profit per new vehicle sold$1,638
 $1,784
 $(146) (8)%$1,667
 $1,637
 $30
 2 %
New vehicle gross margin4.7% 5.1% (0.4)% 

4.5% 4.5% — % 

              
Luxury:              
Gross profit per new vehicle sold$3,364
 $3,416
 $(52) (2)%$3,416
 $3,722
 $(306) (8)%
New vehicle gross margin6.4% 6.5% (0.1)%  6.2% 6.6% (0.4)%  
Import:              
Gross profit per new vehicle sold$983
 $1,189
 $(206) (17)%$820
 $810
 $10
 1 %
New vehicle gross margin3.6% 4.3% (0.7)%  2.9% 2.9% — %  
Domestic:              
Gross profit per new vehicle sold$1,682
 $1,633
 $49
 3 %$1,919
 $1,619
 $300
 19 %
New vehicle gross margin4.3% 4.4% (0.1)%  4.7% 4.1% 0.6 %  
NewFor the three months ended March 31, 2020, new vehicle revenue decreased by $59.3$49.7 million (6%) as a result of a $29.9 million (9%)9% decrease in luxury brandsnew vehicle units sold, partially offset by a 3% increase in revenue a $16.4 million (8%) decrease in domestic brands revenue and a $13.0 million (3%) decrease in import brands revenue. Sameper new vehicle sold. For the three months ended March 31, 2020, same store new vehicle revenue decreased by $50.6 million (6%) due to7% as the result of a $24.5 million (13%)9% decrease in domestic brands revenue, a $22.0 million (7%) decrease in luxury brands revenue and a $4.1 million (1%) decrease in import brands revenue.
U.S. new vehicle SAAR decreasedunits sold, partially offset by 2%, from 17.6 million foran increase in revenue per unit sold.
For the three months ended September 30, 2016 to 17.2 million for the three months ended September 30, 2017. Same store unit volumes at our luxury, import,March 31, 2020, new vehicle gross profit and domestic brand dealerships were down 7%, 1% and 16%, respectively.
Samesame store new vehicle gross profit decreased by $6.1$1.5 million (13%(4%) and $2.7 million (8%), due to a 6% decrease in new vehicle unit volumes and an 8% decrease in gross profit per new vehicle sold.respectively. Same store new vehicle gross profit margin for the three months ended September 30, 2017 decreased by 40 basis pointsMarch 31, 2020 remained at 4.5%.
The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during the three months ended March 31, 2020 was 15.2 million compared to 4.7%.16.9 million during the three months ended March 31, 2019, a 10% decrease. The decreaseCompany experienced a significant decline in our same store gross profit margin was primarily attributable to a change in our revenue mix towards our generally lower margin import brands and margin pressuresnew vehicle sales during the latter half of March as a result of generally higher new vehicle inventory levels across the industry“shelter in place” orders imposed by governmental and other regulatory authorities, in an attempt to curb the failure to achievespread of the aggressive sales and marketing incentive targets set by certain manufacturers.
We believe that our new vehicle inventory continues to be well-aligned with current consumer demand, with approximately 72 days of supply in our inventory as of September 30, 2017.COVID-19 virus.


Used Vehicle—
For the Three Months Ended September 30, Increase (Decrease) 
%
Change
For the Three Months Ended March 31, Increase (Decrease) 
%
Change
2017 2016 2020 2019 
(Dollars in millions, except for per vehicle data)(Dollars in millions, except for per vehicle data)
As Reported:              
Revenue:              
Used vehicle retail revenue$400.1
 $423.3
 $(23.2) (5)%$446.0
 $458.2
 $(12.2) (3)%
Used vehicle wholesale revenue55.5
 53.1
 2.4
 5 %47.2
 51.7
 (4.5) (9)%
Used vehicle revenue$455.6
 $476.4
 $(20.8) (4)%$493.2
 $509.9
 $(16.7) (3)%
Gross profit:              
Used vehicle retail gross profit$28.9
 $31.9
 $(3.0) (9)%$31.2
 $33.6
 $(2.4) (7)%
Used vehicle wholesale gross profit(0.1) (2.1) 2.0
 95 %(0.5) 0.9
 (1.4) (156)%
Used vehicle gross profit$28.8
 $29.8
 $(1.0) (3)%$30.7
 $34.5
 $(3.8) (11)%
Used vehicle retail units:              
Used vehicle retail units18,777
 20,030
 (1,253) (6)%20,287
 21,083
 (796) (4)%
              
Same Store:              
Revenue:              
Used vehicle retail revenue$386.0
 $396.9
 $(10.9) (3)%$404.5
 $426.6
 $(22.1) (5)%
Used vehicle wholesale revenue52.8
 50.2
 2.6
 5 %43.4
 47.2
 (3.8) (8)%
Used vehicle revenue$438.8
 $447.1
 $(8.3) (2)%$447.9
 $473.8
 $(25.9) (5)%
Gross profit:              
Used vehicle retail gross profit$27.5
 $30.4
 $(2.9) (10)%$28.3
 $31.8
 $(3.5) (11)%
Used vehicle wholesale gross profit—
 (2.1) 2.1
 100 %(0.5) 0.8
 (1.3) (163)%
Used vehicle gross profit$27.5
 $28.3
 $(0.8) (3)%$27.8
 $32.6
 $(4.8) (15)%
Used vehicle retail units:              
Used vehicle retail units17,993
 18,558
 (565) (3)%18,230
 19,510
 (1,280) (7)%


Used Vehicle Metrics—
For the Three Months Ended September 30, Increase (Decrease) 
%
Change
For the Three Months Ended March 31, Increase (Decrease) 
%
Change
2017 2016 2020 2019 
As Reported:              
Revenue per used vehicle retailed$21,308
 $21,133
 $175
 1 %$21,985
 $21,733
 $252
 1 %
Gross profit per used vehicle retailed$1,539
 $1,593
 $(54) (3)%$1,538
 $1,594
 $(56) (4)%
Used vehicle retail gross margin7.2% 7.5% (0.3)% 

7.0% 7.3% (0.3)% 

              
Same Store:              
Revenue per used vehicle retailed$21,453
 $21,387
 $66
 — %$22,189
 $21,866
 $323
 1 %
Gross profit per used vehicle retailed$1,528
 $1,638
 $(110) (7)%$1,552
 $1,630
 $(78) (5)%
Used vehicle retail gross margin7.1% 7.7% (0.6)% 

7.0% 7.5% (0.5)% 


Used vehicle revenue decreased by $20.8$16.7 million (4%(3%) due to a 6%$12.2 million (3%) decrease in used vehicle retail units sold partially offset by increasesrevenue, and a $4.5 million (9%) decrease in revenue per used vehicle retailed and wholesale revenue. Same store used vehicle revenue decreased by $8.3$25.9 million (2%(5%) due to a 3%$22.1 million (5%) decrease in used vehicle retail units sold partially offset byrevenue, and a slight increase$3.8 million (8%) decrease in revenue per used vehicle retailed.

wholesale revenues.
For the three months ended September 30, 2017March 31, 2020, total Company and same store used vehicle retail gross marginprofit margins decreased 6030 and 50 basis points, respectively, to 7.1% as7.0%. Similar to new vehicles, used vehicle retail sales experienced a resultsignificant decline during the second half of March, increasing the 7% decreaseday supply to 42 days which is above our targeted range of 30 to 35 days. In addition to the decline in used vehicle gross profit per vehicle retailed. We attributesales, we also observed a weakening in the 60 basis point decrease inwholesale market.

our same store used vehicle retail gross margins to a combination of increased supply of off lease vehicles and margin pressure created by higher new vehicle incentives.

We believe that our used vehicle inventory continues to be well-aligned with current customer demand, with approximately 35 days of supply in our inventory as of September 30, 2017.
Parts and Service—
For the Three Months Ended September 30, 
Increase
(Decrease)
 
%
Change
For the Three Months Ended March 31, 
Increase
(Decrease)
 
%
Change
2017 2016 2020 2019 
(Dollars in millions)(Dollars in millions)
As Reported:              
Parts and service revenue$197.2
 $200.4
 $(3.2) (2)%$221.6
 $217.6
 $4.0
 2 %
Parts and service gross profit:              
Customer pay68.1
 67.0
 1.1
 2 %78.1
 77.2
 0.9
 1 %
Warranty20.6
 19.9
 0.7
 4 %22.2
 21.6
 0.6
 3 %
Wholesale parts5.3
 5.1
 0.2
 4 %5.0
 6.1
 (1.1) (18)%
Parts and service gross profit, excluding reconditioning and preparation$94.0
 $92.0
 $2.0
 2 %$105.3
 $104.9
 $0.4
 — %
Parts and service gross margin, excluding reconditioning and preparation47.7% 45.9% 1.8%  47.5% 48.2% (0.7)% 

Reconditioning and preparation$28.8
 $31.0
 $(2.2) (7)%
Reconditioning and preparation *$29.6
 $30.4
 $(0.8) (3)%
Total parts and service gross profit$122.8
 $123.0
 $(0.2) — %$134.9
 $135.3
 $(0.4) — %
Total parts and service gross margin62.3% 61.4% 0.9% 

              
Same Store:              
Parts and service revenue$193.6
 $191.4
 $2.2
 1 %$203.5
 $204.6
 $(1.1) (1)%
Parts and service gross profit:              
Customer pay66.8
 64.2
 2.6
 4 %72.5
 73.3
 (0.8) (1)%
Warranty20.3
 19.3
 1.0
 5 %19.7
 20.6
 (0.9) (4)%
Wholesale parts5.2
 4.8
 0.4
 8 %4.6
 5.5
 (0.9) (16)%
Parts and service gross profit, excluding reconditioning and preparation$92.3
 $88.3
 $4.0
 5 %$96.8
 $99.4
 $(2.6) (3)%
Parts and service gross margin, excluding reconditioning and preparation47.7% 46.1% 1.6%  47.6% 48.6% (1.0)% 

Reconditioning and preparation$28.1
 $29.3
 $(1.2) (4)%
Reconditioning and preparation *$27.3
 $28.0
 $(0.7) (3)%
Total parts and service gross profit$120.4
 $117.6
 $2.8
 2 %$124.1
 $127.4
 $(3.3) (3)%
Total parts and service gross margin62.2% 61.4% 0.8% 

* Reconditioning and preparation represents the gross profit earned by our parts and service departments for internal work performed is included as a reduction of Parts and Service Cost of Sales on the accompanying Condensed Consolidated Statements of Income upon the sale of the vehicle.
The $3.2$4.0 million (2%) decreaseincrease in parts and service revenue was primarily due to a $3.5$3.1 million (3%(2%) decreaseincrease in customer pay revenue, and a $0.6$1.1 million (2%(3%) decreaseincrease in wholesale partswarranty revenue, partially offset by a $0.9$0.2 million (2%(1%) increasedecrease in warrantywholesale parts revenue. Same store parts and service revenue increaseddecreased by $2.2$1.1 million (1%) to $193.6from $204.6 million duringfor the three months ended September 30, 2017 from $191.4March 31, 2019 to $203.5 million duringfor the three months ended September 30, 2016.March 31, 2020. The increasedecrease in same store parts and service revenue was primarily due to a $1.4$1.0 million (4%(3%) increasedecrease in warranty revenue and a $1.1 million (4%) increase in wholesale parts revenue, partially offset by a $0.3$0.1 million decrease in customer pay revenue.
Parts and service gross profit, excluding reconditioning and preparation, increased by $2.0$0.4 million (2%) to $94.0$105.3 million and same store parts and service gross profit, excluding reconditioning and preparation, increaseddecreased by $4.0$2.6 million (5%(3%) to $92.3$96.8 million. The increasedecrease in same store gross profit is attributable to decreases in customer pay gross profit, warranty gross profit, and wholesale parts gross profit. The parts and service gross profit, excluding reconditioning and preparation, is primarily duebusiness was negatively impacted in March as a result of customers observing "shelter in place" orders issued in response to the higher margins on warranty and sublet services.COVID-19 pandemic.












Finance and Insurance, net—
For the Three Months Ended September 30, 
Increase
(Decrease)
 
%
Change
For the Three Months Ended March 31, 
Increase
(Decrease)
 
%
Change
2017 2016 2020 2019 
(Dollars in millions, except for per vehicle data)(Dollars in millions, except for per vehicle data)
As Reported:              
Finance and insurance, net$67.7
 $65.4
 $2.3
 4%$70.4
 $71.5
 $(1.1) (2)%
Finance and insurance, net per vehicle sold$1,540
 $1,396
 $144
 10%$1,666
 $1,582
 $84
 5 %
              
Same Store:              
Finance and insurance, net$65.5
 $62.3
 $3.2
 5%$64.4
 $66.2
 $(1.8) (3)%
Finance and insurance, net per vehicle sold$1,547
 $1,405
 $142
 10%$1,688
 $1,598
 $90
 6 %
F&I revenue, net revenue increased by $2.3decreased $1.1 million (4%(2%) during the third quarter of 2017 asthree months ended March 31, 2020 when compared to the third quarter of 2016three months ended March 31, 2019, and same store F&I, net revenue increaseddecreased by $3.2$1.8 million (5%(3%) over the same period of time. Duringperiod. F&I revenue, net was negatively impacted by decreases in new and used retail unit sales which were negatively impacted by the COVID-19 pandemic. For the three months ended September 30, 2017, we benefited fromMarch 31, 2020 same store F&I PVR increased $90/unit (6%) over the acceleration of commissions as a result of our amended agreement with our primary insurance products underwriter which became effective during the fourth quarter of 2016.prior year quarter.
Selling, General, and Administrative Expense—
For the Three Months Ended September 30, 
Increase
(Decrease)
 
% of Gross
Profit Increase (Decrease)
For the Three Months Ended March 31, 
Increase
(Decrease)
 
% of Gross
Profit Increase (Decrease)
2017 
% of Gross
Profit
 2016 
% of Gross
Profit
 2020 
% of Gross
Profit
 2019 
% of Gross
Profit
 
(Dollars in millions)(Dollars in millions)
As Reported:                      
Personnel costs$87.4
 33.6% $86.4
 32.5% $1.0
 1.1 %$94.9
 34.8% $92.4
 33.1% $2.5
 1.7 %
Sales compensation27.4
 10.5% 28.6
 10.8% (1.2) (0.3)%27.4
 10.1% 28.3
 10.1% (0.9) — %
Share-based compensation3.6
 1.4% 3.0
 1.1% 0.6
 0.3 %3.5
 1.3% 3.9
 1.4% (0.4) (0.1)%
Outside services19.9
 7.6% 19.6
 7.4% 0.3
 0.2 %21.4
 7.9% 19.5
 7.0% 1.9
 0.9 %
Advertising6.6
 2.5% 8.5
 3.2% (1.9) (0.7)%7.4
 2.7% 8.0
 2.9% (0.6) (0.2)%
Rent6.5
 2.5% 7.6
 2.9% (1.1) (0.4)%6.8
 2.5% 6.8
 2.4% —
 0.1 %
Utilities4.1
 1.6% 4.3
 1.6% (0.2) — %4.1
 1.5% 4.2
 1.5% (0.1) — %
Insurance4.5
 1.7% 4.0
 1.5% 0.5
 0.2 %4.1
 1.5% 3.2
 1.1% 0.9
 0.4 %
Other22.5
 8.7% 23.7
 8.9% (1.2) (0.2)%25.1
 9.2% 24.7
 8.9% 0.4
 0.3 %
Selling, general, and administrative expense$182.5
 70.1% $185.7
 69.9% $(3.2) 0.2 %$194.7
 71.5% $191.0
 68.4% $3.7
 3.1 %
Gross profit$260.3
   $265.7
      $272.4
   $279.2
      
                      
Same Store:                      
Personnel costs$84.5
 33.4% $82.3
 32.4% $2.2
 1.0 %$86.9
 34.8% $86.9
 33.2% $—
 1.6 %
Sales compensation26.4
 10.4% 27.2
 10.7% (0.8) (0.3)%24.8
 9.9% 26.2
 10.0% (1.4) (0.1)%
Share-based compensation3.6
 1.4% 3.0
 1.2% 0.6
 0.2 %3.5
 1.4% 3.9
 1.5% (0.4) (0.1)%
Outside services19.3
 7.6% 18.3
 7.2% 1.0
 0.4 %19.5
 7.8% 18.1
 6.9% 1.4
 0.9 %
Advertising6.4
 2.5% 7.6
 3.0% (1.2) (0.5)%5.9
 2.4% 7.3
 2.8% (1.4) (0.4)%
Rent6.5
 2.6% 7.6
 3.0% (1.1) (0.4)%6.7
 2.7% 6.7
 2.6% —
 0.1 %
Utilities4.0
 1.6% 4.0
 1.6% —
 — %3.7
 1.5% 3.9
 1.5% (0.2) — %
Insurance4.4
 1.7% 3.7
 1.5% 0.7
 0.2 %3.4
 1.4% 2.8
 1.1% 0.6
 0.3 %
Other22.0
 8.7% 22.9
 8.9% (0.9) (0.2)%$24.1
 9.6% $23.3
 8.7% 0.8
 0.9 %
Selling, general, and administrative expense$177.1
 69.9% $176.6
 69.5% $0.5
 0.4 %$178.5
 71.5% $179.1
 68.3% $(0.6) 3.2 %
Gross profit$253.3
   $254.2
      $249.5
   $262.1
      
SG&A expense as a percentage of gross profit was 70.1%increased 310 basis points from 68.4% for the third quarter of 2017 as comparedthree months ended March 31, 2019 to 69.9%71.5% for the third quarter of 2016.three months ended March 31, 2020 . Same store SG&A expense as a percentage of gross profit

increased by 40320 basis points from 69.5%68.3% for the third quarter of 2016three months ended March 31, 2019 to 69.9%71.5% for the third quarter of 2017.

three months ended March 31, 2020. The 20 basis point increase in SG&A as a percentage of gross profit is partially attributable to approximately $1.5 million of expense in connection with our previously disclosed CEO transition. The $1.5 million of expense reflects the remeasurement of and changes to the amortization period of share-based awards previously granted to the CEO and other compensation to be paid during the transition period.
In addition, SG&A as a percentage of gross profit was adversely impacted by higher outside service costs predominately related to our investments in technologies to improve productivity and our customer experience, partially offset by decreases in Advertising and Rent expenses.
Floor Plan Interest Expense —
Floor plan interest expense increased by $0.8 million (16%) to $5.8 million during the three months ended September 30, 2017 compared to $5.0 million for the three months ended September 30, 2016, primarily as a result of higher interest rates.
Income Tax Expense —
During the third quarter of 2017 our effective tax rate was 38.7% compared to 37.3% for the third quarter of 2016. Our effective tax rate is highly dependent on our level of income before income taxes and permanent differences between book and tax income.


RESULTS OF OPERATIONS
Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016
 For the Nine Months Ended September 30, 
Increase
(Decrease)
 
%
Change
 2017 2016 
 (Dollars in millions, except per share data)
REVENUE:       
New vehicle$2,597.0
 $2,676.3
 $(79.3) (3)%
Used vehicle1,396.6
 1,407.5
 (10.9) (1)%
Parts and service589.5
 584.9
 4.6
 1 %
Finance and insurance, net202.5
 192.6
 9.9
 5 %
TOTAL REVENUE4,785.6
 4,861.3
 (75.7) (2)%
GROSS PROFIT:       
New vehicle122.4
 139.7
 (17.3) (12)%
Used vehicle95.4
 99.8
 (4.4) (4)%
Parts and service367.2
 362.0
 5.2
 1 %
Finance and insurance, net202.5
 192.6
 9.9
 5 %
TOTAL GROSS PROFIT787.5
 794.1
 (6.6) (1)%
OPERATING EXPENSES:       
Selling, general, and administrative549.2
 549.2
 —
 — %
Depreciation and amortization24.0
 23.0
 1.0
 4 %
Other operating expenses, net0.7
 4.2
 (3.5) (83)%
INCOME FROM OPERATIONS213.6
 217.7
 (4.1) (2)%
OTHER EXPENSES:       
Floor plan interest expense17.1
 14.4
 2.7
 19 %
Other interest expense, net40.2
 40.0
 0.2
 1 %
Swap interest expense1.6
 2.4
 (0.8) (33)%
Total other expenses, net58.9
 56.8
 2.1
 4 %
INCOME BEFORE INCOME TAXES154.7
 160.9
 (6.2) (4)%
Income tax expense58.1
 60.8
 (2.7) (4)%
NET INCOME$96.6
 $100.1
 $(3.5) (3)%
Net income per common share—Diluted$4.60
 $4.37
 $0.23
 5 %


 For the Nine Months Ended September 30,
 2017 2016
REVENUE MIX PERCENTAGES:   
New vehicle54.3% 55.1 %
Used vehicle retail26.0% 25.8 %
Used vehicle wholesale3.2% 3.1 %
Parts and service12.3% 12.0 %
Finance and insurance, net4.2% 4.0 %
Total revenue100.0% 100.0 %
GROSS PROFIT MIX PERCENTAGES:   
New vehicle15.5% 17.6 %
Used vehicle retail12.1% 12.7 %
Used vehicle wholesale0.1% (0.2)%
Parts and service46.6% 45.6 %
Finance and insurance, net25.7% 24.3 %
Total gross profit100.0% 100.0 %
GROSS PROFIT MARGIN16.5% 16.3 %
SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT69.7% 69.2 %
Total revenue during the nine months ended September 30, 2017 decreased by $75.7 million (2%) compared to the nine months ended September 30, 2016, due to a $79.3 million (3%) decrease in new vehicle revenue and a $10.9 million (1%) decrease in used vehicle, partially offset by a $9.9 million (5%) increase in F&I, net revenue and a $4.6 million (1%) increase in parts and service revenue. The $6.6 million decrease in gross profit during the nine months ended September 30, 2017 was driven by a decrease of $17.3 million (12%) in new vehicle gross profit and a $4.4 million (4%) decrease in used vehicle gross profit, offset by a $9.9 million (5%) increase in F&I gross profit and a $5.2 million (1%) increase in parts and service gross profit. For the nine months ended September 30, 2017, our total gross profit margin increased 20 basis points to 16.5%.
Income from operations during the nine months ended September 30, 2017 decreased by $4.1 million (2%) compared to the nine months ended September 30, 2016, due to a $6.6 million decrease in gross profit and a $1.0 million (4%) increase in depreciation and amortization expense, partially offset by a $3.5 million (83%) decrease in other operating expenses, net. The $2.1 million increase in other expenses, net during the nine months ended September 30, 2017 was due to a $2.7 million (19%) increase in floor plan interest expense, partially offset by a $0.8 million (33%) decrease in swap interest expense. As a result, income before income taxes decreased by $6.2 million (4%) to $154.7 million for the nine months ended September 30, 2017. The decrease in income before income taxes resulted in a decrease in income tax expense of $2.7 million (4%). Overall, net income decreased by $3.5 million (3%) during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.
We assess the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance. As such, for the following discussion, same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first full month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.




New Vehicle—
 For the Nine Months Ended September 30, 
Increase
(Decrease)
 
%
Change
 2017 2016 
 (Dollars in millions, except for per vehicle data)
As Reported:       
Revenue:       
Luxury$852.3
 $909.7
 $(57.4) (6)%
Import1,205.7
 1,206.0
 (0.3) — %
Domestic539.0
 560.6
 (21.6) (4)%
Total new vehicle revenue$2,597.0
 $2,676.3
 $(79.3) (3)%
Gross profit:       
Luxury$54.7
 $61.4
 $(6.7) (11)%
Import42.8
 52.9
 (10.1) (19)%
Domestic24.9
 25.4
 (0.5) (2)%
Total new vehicle gross profit$122.4
 $139.7
 $(17.3) (12)%
New vehicle units:       
Luxury16,117
 17,469
 (1,352) (8)%
Import43,504
 43,814
 (310) (1)%
Domestic14,163
 15,326
 (1,163) (8)%
Total new vehicle units73,784
 76,609
 (2,825) (4)%
        
Same Store:       
Revenue:       
Luxury$852.3
 $889.9
 $(37.6) (4)%
Import1,186.8
 1,154.7
 32.1
 3 %
Domestic487.2
 524.1
 (36.9) (7)%
Total new vehicle revenue$2,526.3
 $2,568.7
 $(42.4) (2)%
Gross profit:       
Luxury$54.8
 $59.9
 $(5.1) (9)%
Import42.5
 51.3
 (8.8) (17)%
Domestic21.6
 23.8
 (2.2) (9)%
Total new vehicle gross profit$118.9
 $135.0
 $(16.1) (12)%
New vehicle units:       
Luxury16,117
 17,102
 (985) (6)%
Import42,891
 42,049
 842
 2 %
Domestic12,677
 14,256
 (1,579) (11)%
Total new vehicle units71,685
 73,407
 (1,722) (2)%

New Vehicle Metrics—
 For the Nine Months Ended September 30, Increase (Decrease) 
%
Change
 2017 2016 
As Reported:       
Revenue per new vehicle sold$35,197
 $34,935
 $262
 1 %
Gross profit per new vehicle sold$1,659
 $1,824
 $(165) (9)%
New vehicle gross margin4.7% 5.2% (0.5)% 

        
Luxury:       
Gross profit per new vehicle sold$3,394
 $3,515
 $(121) (3)%
New vehicle gross margin6.4% 6.7% (0.3)%  
Import:       
Gross profit per new vehicle sold$984
 $1,207
 $(223) (18)%
New vehicle gross margin3.5% 4.4% (0.9)%  
Domestic:       
Gross profit per new vehicle sold$1,758
 $1,657
 $101
 6 %
New vehicle gross margin4.6% 4.5% 0.1 %  
        
Same Store:       
Revenue per new vehicle sold$35,242
 $34,993
 $249
 1 %
Gross profit per new vehicle sold$1,659
 $1,839
 $(180) (10)%
New vehicle gross margin4.7% 5.3% (0.6)% 

        
Luxury:       
Gross profit per new vehicle sold$3,400
 $3,503
 $(103) (3)%
New vehicle gross margin6.4% 6.7% (0.3)%  
Import:       
Gross profit per new vehicle sold$991
 $1,220
 $(229) (19)%
New vehicle gross margin3.6% 4.4% (0.8)%  
Domestic:       
Gross profit per new vehicle sold$1,704
 $1,669
 $35
 2 %
New vehicle gross margin4.4% 4.5% (0.1)%  
New vehicle revenue decreased by $79.3 million (3%) as a result of a 4% decrease in new vehicle units sold, partially offset by a 1% increase in revenue per new vehicle sold. Same store new vehicle revenue decreased by $42.4 million (2%) as a result of a 2% decrease in new vehicle units sold, partially offset by a slight increase in revenue per new vehicle sold.
Same store new vehicle gross profit for the nine months ended September 30, 2017 decreased by $16.1 million (12%), due to a 10% decrease in gross profit per new vehicle sold. Same store new vehicle gross margin for the nine months ended September 30, 2017 decreased by 60 basis points to 4.7%. The decrease in our same store gross profit margin was primarily attributable to a change in our revenue mix towards our generally lower margin import brands and margin pressures as a result of generally higher new vehicle inventory levels across the industry and the failure to achieve the aggressive sales and marketing incentive targets set by certain manufacturers.


Used Vehicle—
 For the Nine Months Ended September 30, Increase (Decrease) 
%
Change
 2017 2016 
 (Dollars in millions, except for per vehicle data)
As Reported:       
Revenue:       
Used vehicle retail revenue$1,245.7
 $1,254.7
 $(9.0) (1)%
Used vehicle wholesale revenue150.9
 152.8
 (1.9) (1)%
Used vehicle revenue$1,396.6
 $1,407.5
 $(10.9) (1)%
Gross profit:       
Used vehicle retail gross profit$94.4
 $101.4
 $(7.0) (7)%
Used vehicle wholesale gross profit1.0
 (1.6) 2.6
 163 %
Used vehicle gross profit$95.4
 $99.8
 $(4.4) (4)%
Used vehicle retail units:       
Used vehicle retail units59,107
 59,378
 (271) — %
        
Same Store:       
Revenue:       
Used vehicle retail revenue$1,200.9
 $1,170.5
 $30.4
 3 %
Used vehicle wholesale revenue144.8
 145.2
 (0.4) — %
Used vehicle revenue$1,345.7
 $1,315.7
 $30.0
 2 %
Gross profit:       
Used vehicle retail gross profit$90.0
 $94.7
 $(4.7) (5)%
Used vehicle wholesale gross profit1.2
 (1.4) 2.6
 NM
Used vehicle gross profit$91.2
 $93.3
 $(2.1) (2)%
Used vehicle retail units:       
Used vehicle retail units56,623
 54,674
 1,949
 4 %

Used Vehicle Metrics—
 For the Nine Months Ended September 30, Increase (Decrease) 
%
Change
 2017 2016 
As Reported:       
Revenue per used vehicle retailed$21,075
 $21,131
 $(56) — %
Gross profit per used vehicle retailed$1,597
 $1,708
 $(111) (6)%
Used vehicle retail gross margin7.6% 8.1% (0.5)% 

        
Same Store:       
Revenue per used vehicle retailed$21,209
 $21,409
 $(200) (1)%
Gross profit per used vehicle retailed$1,589
 $1,732
 $(143) (8)%
Used vehicle retail gross margin7.5% 8.1% (0.6)% 

NM—Not Meaningful
Used vehicle revenue decreased by $10.9 million (1%) due to a decrease of $9.0 million (1%) in used vehicle retail revenue and a $1.9 million (1%) decrease in used vehicle wholesale revenue. Same store used vehicle revenue increased by $30.0 million (2%) due to an increase of $30.4 million (3%) in same store used vehicle retail revenue, partially offset by a $0.4 million decrease in same store used vehicle wholesale revenues. For the nine months ended September 30, 2017 same store used vehicle retail unit sales grew by 1,949 units (4%).

For the nine months ended September 30, 2017 same store used vehicle retail gross margins decreased 60 basis points to 7.5% as a result of the 8% decrease in used vehicle gross profit per vehicle retailed and a 1% decrease in revenue per used vehicle retailed.

Parts and Service—
 For the Nine Months Ended September 30, 
Increase
(Decrease)
 
%
Change
 2017 2016 
 (Dollars in millions)
As Reported:       
Parts and service revenue$589.5
 $584.9
 $4.6
 1 %
Parts and service gross profit:       
Customer pay203.8
 201.4
 2.4
 1 %
Warranty61.7
 54.4
 7.3
 13 %
Wholesale parts15.7
 15.6
 0.1
 1 %
Parts and service gross profit, excluding reconditioning and preparation$281.2
 $271.4
 $9.8
 4 %
Parts and service gross margin, excluding reconditioning and preparation47.7% 46.4% 1.3% 

Reconditioning and preparation$86.0
 $90.6
 $(4.6) (5)%
Total parts and service gross profit$367.2
 $362.0
 $5.2
 1 %
Total parts and service gross margin62.3% 61.9% 0.4% 

        
Same Store:       
Parts and service revenue$579.6
 $556.1
 $23.5
 4 %
Parts and service gross profit:       
Customer pay199.9
 192.4
 7.5
 4 %
Warranty60.8
 52.5
 8.3
 16 %
Wholesale parts15.6
 14.5
 1.1
 8 %
Parts and service gross profit, excluding reconditioning and preparation$276.3
 $259.4
 $16.9
 7 %
Parts and service gross margin, excluding reconditioning and preparation47.7% 46.6% 1.1% 

Reconditioning and preparation$84.1
 $85.6
 $(1.5) (2)%
Total parts and service gross profit$360.4
 $345.0
 $15.4
 4 %
Total parts and service gross margin62.2% 62.0% 0.2% 

The $4.6 million (1%) increase in parts and service revenue was primarily the result of an increase of $12.4 million (12%) in warranty revenue, partially offset by a $6.7 million (2%) decrease in customer pay revenue and a $1.1 million (1%) decrease in wholesale parts revenue. Same store parts and service revenue increased by $23.5 million (4%) from $556.1 million for the nine months ended September 30, 2016 to $579.6 million for the nine months ended September 30, 2017. The increase in same store parts and service revenue was primarily due to a $14.4 million (14%) increase in warranty revenue, a $4.7 million (6%) increase in wholesale parts revenue, and a $4.4 million (1%) increase in customer pay revenue.
Parts and service gross profit, excluding reconditioning and preparation, increased by $9.8 million (4%) to $281.2 million and same store gross profit, excluding reconditioning and preparation, increased by $16.9 million (7%) to $276.3 million. The increase in same store parts and service gross profit is primarily due to a shift in mix towards our higher margin warranty revenue.



Finance and Insurance, net—
 For the Nine Months Ended September 30, 
Increase
(Decrease)
 
%
Change
 2017 2016 
 (Dollars in millions, except for per vehicle data)
As Reported:       
Finance and insurance, net$202.5
 $192.6
 $9.9
 5%
Finance and insurance, net per vehicle sold$1,524
 $1,416
 $108
 8%
        
Same Store:       
Finance and insurance, net$196.2
 $182.5
 $13.7
 8%
Finance and insurance, net per vehicle sold$1,529
 $1,425
 $104
 7%
F&I, net revenue increased by $9.9 million (5%) during the nine months ended September 30, 2017 when compared to the nine months ended September 30, 2016, with same store F&I, net revenue increasing by $13.7 million (8%) over the same time period. During the nine months ended September 30, 2017, we benefited from the acceleration of commissions as a result of our amended agreement with our primary insurance products underwriter which became effective during the fourth quarter of 2016.
Selling, General, and Administrative Expense—
 For the Nine Months Ended September 30, 
Increase
(Decrease)
 
% of Gross
Profit Increase (Decrease)
 2017 
% of Gross
Profit
 2016 
% of Gross
Profit
 
 (Dollars in millions)
As Reported:           
Personnel costs$261.1
 33.2% $257.1
 32.4% $4.0
 0.8 %
Sales compensation83.5
 10.6% 83.8
 10.6% (0.3) — %
Share-based compensation10.0
 1.3% 9.1
 1.1% 0.9
 0.2 %
Outside services60.7
 7.7% 57.7
 7.3% 3.0
 0.4 %
Advertising22.7
 2.9% 25.4
 3.2% (2.7) (0.3)%
Rent20.2
 2.6% 23.0
 2.9% (2.8) (0.3)%
Utilities11.8
 1.5% 11.7
 1.5% 0.1
 — %
Insurance11.4
 1.4% 13.6
 1.7% (2.2) (0.3)%
Other67.8
 8.5% 67.8
 8.5% —
 — %
Selling, general, and administrative expense$549.2
 69.7% $549.2
 69.2% $—
 0.5 %
Gross profit$787.5
   $794.1
      
            
Same Store:           
Personnel costs$252.8
 33.0% $244.2
 32.3% $8.6
 0.7 %
Sales compensation80.5
 10.5% 79.4
 10.5% 1.1
 — %
Share-based compensation10.0
 1.3% 9.1
 1.2% 0.9
 0.1 %
Outside services59.0
 7.7% 54.0
 7.1% 5.0
 0.6 %
Advertising21.6
 2.8% 22.4
 3.0% (0.8) (0.2)%
Rent20.2
 2.6% 22.9
 3.0% (2.7) (0.4)%
Utilities11.4
 1.5% 10.9
 1.4% 0.5
 0.1 %
Insurance11.0
 1.4% 12.8
 1.7% (1.8) (0.3)%
Other$66.7
 8.7% $65.3
 8.7% 1.4
 — %
Selling, general, and administrative expense$533.2
 69.5% $521.0
 68.9% $12.2
 0.6 %
Gross profit$766.7
   $755.8
      



SG&A expense as a percentage of gross profit was 69.7% for the nine months ended September 30, 2017 compared to 69.2% for the nine months ended September 30, 2016. Same store SG&A expense as a percentage of gross profit increased by 60 basis points from 68.9% for the nine months ended September 30, 2016 to 69.5% for the nine months ended September 30, 2017. The increase in SG&A expense is primarily attributable to higher personnel costs and higher outside services predominately related to our investments in technologies to improve our customer experience and productivity, partially offset by decreases in Insurance, Advertising, and Rent Expense. The decrease in insurance expense for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016March 31, 2020, is primarily the result of a reductiondecline in insurance retention related to hail storm damage at certain dealerships in 2016, coupled with lower premiums for property and casualty insurance. Included in SG&A expense forgross profit as a result of the ninenegative impact the COVID-19 pandemic had on the business, particularly during the latter half of the month of March.
Franchise Rights Impairment —
During the three months ended September 30, 2017 is approximately $1.5 millionMarch 31, 2020, we recorded a franchise rights impairment charge of expense in connection with our previously disclosed CEO transition.$23.0 million. As a result of the COVID-19 pandemic, we performed a quantitative impairment analysis of certain franchise rights assets and determined that their carrying values exceeded their fair value by $23.0 million.
Other Operating Expenses,Expense, net —
Other operating expenses,expense, net which includes gains and losses from the sale of property and equipment, income derived from lease arrangements, and other non-core operating items was $0.7 million fornot considered core to our business. During the ninethree months ended September 30, 2017 compared with otherMarch 31, 2020, the Company recorded Other operating expenses,expense, net of $4.2$10.2 million, inwhich included an $11.6 million charge related to certain financing transactions related to, as well as the comparable 2016 period.
During the nine months ended September 30, 2017, we recognized expenses associated with a lease termination of, $2.9 million, partially offset by $0.8 million of other income andthe Park Place acquisition, a $0.9 million gain recognized for legal settlements.
During the nine months ended September 30, 2016, we recognized $3.1 million in non-cash real estate related impairment charges consisting of $0.9 million related to a lease buyoutlegal settlements and a lease termination, $0.7$0.3 million gain related to the write downsale of vacant real estate. Included in the $1.8 million of other operating expense, net for the three months ended March 31, 2019, was a property classified as Assets Held for Sale, and $1.5$2.4 million pre-tax loss related to a property transferred to Assets Held for Sale.the write-off of fixed assets, partially offset by $0.6 million, net of other non-core operating income.
Floor Plan Interest Expense —
Floor plan interest expense increaseddecreased by $2.7$3.2 million (19%(31%) to $17.1$7.0 million during the ninethree months ended September 30, 2017March 31, 2020 compared to $14.4$10.2 million forduring the ninethree months ended September 30, 2016,March 31, 2019 primarily as a result of highera decrease in LIBOR from which our floor plan interest rates.rate is calculated.

Loss on Extinguishment of Debt, net —

On March 4, 2020, the Company redeemed its $600 million 6% Notes scheduled to mature in 2024 at 103% of par, plus accrued and unpaid interest. We recorded a loss on extinguishment of the 6% Notes of $19.1 million which comprised a redemption premium of $18.0 million and the write-off of the unamortized premium and debt issuance costs totaling $1.1 million.

As a result of the termination of the Acquisition, the Company delivered a notice of special mandatory redemption to holders of its 2028 Notes and 2030 Notes pursuant to which it would redeem on a pro rata basis (1) $245.0 million of the 2028 Notes and (2) $280.0 million of the 2030 Notes, in each case, at 100% of the respective principal amount plus accrued and unpaid interest to, but excluding the special mandatory redemption date. On March 30, 2020, the Company completed the redemption and recorded a write-off of unamortized debt issuance costs of $1.5 million.
Gain on Dealership Divestitures, net —
During the three months ended March 31, 2020, we sold one franchise (one dealership location) in the Atlanta, Georgia market and we sold six franchises (five dealership locations) and one collision center in the Jackson, Mississippi market. The Company recorded a net pre-tax gain totaling $33.7 million.
Income Tax Expense —
The $8.2 million (64%) decrease in income tax expense was primarily the result of a $29.6 million (55%) decrease in income before income taxes and was further reduced by an excess tax benefit related to the vesting of share-based awards. Our effective tax rate for the three months ended March 31, 2020 was 19.1% compared to 23.8% in the prior comparative period.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2017March 31, 2020, we had total available liquidity of $406.4581.1 million, which consisted of $388.6 million of cash and cash equivalents, of $2.8180.0 million, $75.0 million of available funds in our floor plan offset accounts $190.0 million of availability under our new vehicle floor plan facility that is able to be re-designated to our revolving credit facility, $46.7 million of availability under our revolving credit facility, and $91.9$12.5 million of availability under our used vehicle revolving floor plan facility. The borrowing capacities under our revolving credit facility and our used vehicle revolving floor plan facility are limited by borrowing base calculations and, from time to time, may be further limited by our required compliance with certain financialcustomary operating and other restrictive covenants. As of September 30, 2017March 31, 2020, these financial covenants did not further limit our availability under our credit facilities. For more information on our financial covenants, see "Covenants" and "Share Repurchases and Dividend Restrictions" below.

We continually evaluate our liquidity and capital resources based upon (i) our cash and cash equivalents on hand, (ii) the funds that we expect to generate through future operations, (iii) current and expected borrowing availability under our 20162019 Senior Credit Facility, our other floor plan facilities, our Real Estate Credit Agreement, our Restated Master Loan Agreement, and our mortgage financings (each, as defined below), (iv) amounts in our new vehicle floor plan notes payable offset accounts, and (v) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, financings, acquisitions, dispositions, equity and/or debt repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements; commitments and contingencies; debt repayment, maturity and repurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months.

On March 24, 2020, the Company delivered notice to the sellers terminating the previously announced (1) Asset Purchase Agreement (the “Asset Purchase Agreement”) with certain members of the Park Place Dealership family of entities, Park Place Mid-Cities, Ltd., a Texas limited partnership, and the identified principal (collectively, “Park Place”) and (2) Real Estate Purchase Agreement (the “Real Estate Purchase Agreement” and, together with the Asset Purchase Agreement, the “Transaction Agreements”) with certain members of the Park Place Dealership family of entities to acquire substantially all of the assets of, and certain real property related to, the Park Place business pursuant to the terms thereof in exchange for the payment of $10.0 million of liquidated damages.
In connection with the termination of the Transaction Agreements:

The Company delivered a notice of special mandatory redemption to holders of its $525.0 million aggregate principal amount of 4.50% senior notes due 2028 (the “2028 Notes”) and $600.0 million aggregate principal amount of 4.75% senior notes due 2030 (the “2030 Notes” and, together with the 2028 Notes, the “Notes”) pursuant to which it redeemed on a pro rata basis (1) $245.0 million of the 2028 Notes and (2) $280.0 million of the 2030 Notes, in each case, at 100% of the respective principal amount plus accrued and unpaid interest to, but excluding the special mandatory redemption date.

The Company did not consummate the transactions contemplated by, or incur indebtedness in connection with, the new real estate term loan credit agreement, dated as of February 7, 2020, by and among various financial institutions party thereto, certain of the Company’s subsidiaries and Bank of America, N.A. (“Bank of America”).

The amendments to the Third Amended and Restated Credit Agreement, dated as of September 25, 2019, among the Company, certain of its subsidiaries, Bank of America and the other lenders thereto (the “2019 Senior Credit Agreement”) to (1) increase the aggregate commitments under the revolving credit facility to $350.0 million, (2) increase the aggregate commitments under the new vehicle floorplan facility to $1.35 billion and (3) increase the aggregate commitments under the used vehicle floorplan facility to $200.0 million did not become effective.

The amended and restated commitment letter, by and among the Company, Bank of America, BofA Securities, Inc., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Bank, National Association, Santander Bank, N.A., SunTrust Robinson Humphrey, Inc., Trust Bank and U.S. Bank National Association terminated in accordance with its terms on April 15, 2020.

We currently are party to the following material credit facilities and agreements, and have the following material indebtedness outstanding. For a more detailed description of the material terms of these agreements and facilities, and this indebtedness, please refer to theNote 13 "Long-Term Debt" footnote included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2019.
•
2019 Senior Credit Facility —On September 25, 2019, the Company and certain of its subsidiaries entered into the third amended and restated credit agreement with Bank of America, as administrative agent, and the other lenders party thereto (the "2019 Senior Credit Facility"). The 2019 Senior Credit Agreement provides for the following:
2016 Senior Credit Facility —On July 25, 2016, the Company and certain of its subsidiaries entered into an amended and restated senior secured credit agreement with Bank of America, as administrative agent, and the other lenders party thereto.
The 2016 Senior Credit Facility provides for the following:


Revolving Credit Facility—A $250.0 million revolving credit facility (the "RevolvingRevolving Credit Facility")Facility for, among other things, acquisitions, working capital and capital expenditures, including a $50.0 million sub-limit for letters of credit. As described below,During the three months ended March 31, 2020, we had borrowings of $237.0 million, resulting in outstanding borrowings of $237.0 million as of September 30, 2017, we re-designated $190.0 million of availability from the Revolving Credit Facility to the New Vehicle Floor Plan Facility (as defined below), resulting in $60.0 million of borrowing capacity.March 31, 2020. In addition, we had $13.3$12.7 million in outstanding letters of credit as of March 31, 2020, resulting in $46.7 million ofno additional borrowing availability as of September 30, 2017.March 31, 2020.


New Vehicle Floor Plan Facility— A $900.0 million new vehicle revolving floor plan facility (the "New$1.04 billion New Vehicle Floor Plan Facility").Facility. In connection with the New Vehicle Floor Plan Facility, we established an account with Bank of America that allows us to transfer cash as an offset to floor plan notes payable. These transfers reduce the amount of outstanding new vehicle floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the offset account into our operating cash accounts within one to two days. As a result of the use of our floor plan offset account, we experienceexperienced a reduction in Floor Plan Interest Expense on our Condensed Consolidated Statements of Income. As of September 30, 2017,March 31, 2020, we had $578.6$730.1 million, which is net of $63.2$164.7 million in our floor plan offset account, outstanding under the New Vehicle Floor Plan Facility.

Used Vehicle Floor Plan Facility—A $150.0$160.0 million used vehicle revolving floor plan facility (the "UsedUsed Vehicle Floor Plan Facility")Facility to finance the acquisition of used vehicle inventory and for, among other things, working capital and capital expenditures, as well as to refinance used vehicles. Our borrowing capacity under the Used Vehicle Floor Plan Facility was limited to $91.9$12.5 million based on our borrowing base calculation as of September 30, 2017.March 31, 2020. We havebegan the year with nothing drawn on our used vehicle floor plan facilityfacility. During the three months ended March 31, 2020, we had borrowings of $110.0 million, resulting in outstanding borrowings of $110.0 million on our Used Vehicle Floor Plan Facility as of September 30, 2017.

March 31, 2020.
Subject to compliance with certain conditions, the agreement governing the 20162019 Senior Credit FacilityAgreement provides that we have the ability, at our option and subject to the receipt of additional commitments from existing or new lenders, to increase the size of the facilities by up to $325.0$350.0 million in the aggregate without lender consent.

At our option, we have the ability to re-designate a portion of our availability under the Revolving Credit Facility to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility. The maximum amount we are allowed to re-designate is determined based on our current borrowing availabilityaggregate commitments under the Revolving Credit Facility, less $50.0 million. In addition, we are able to re-designate any amounts moved to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility back to the Revolving Credit Facility. As of September 30, 2017, we re-designatedDecember 31, 2019, $190.0 million of availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan Facility. We re-designated this amountFacility to take advantage of the lower commitment fee rates on the New Vehicle Floor Plan Facility when compared to the Revolving Credit Facility.

On March 17, 2020, we re-allocated the entire $190 million from the New Vehicle Floor Plan Facility to the Revolving Credit Facility.
Borrowings under the 20162019 Senior Credit Facility bear interest, at our option, based on the London Interbank Offered Rate ("LIBOR")LIBOR or the Base Rate, in each case plus an Applicable Margin.Rate. The Base Rate is the highest of (i) the (i)Federal Funds Rate plus 0.50%, (ii) the Bank of America prime rate, (ii) Federal Funds rate plus 0.50%, and (iii) one month LIBOR plus 1.00%. The Applicable Margin, for borrowings underRate means with respect to the Revolving Credit Facility, rangesa range from 1.25%1.00% to 2.50%2.00% for LIBOR loans and 0.25%0.15% to 1.50%1.00% for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio. Borrowings under the New Vehicle Floor PlanFloorplan Facility bear interest, at theour option, of the Company, based on LIBOR plus 1.25%1.10% or the Base Rate plus 0.25%0.10%. Borrowings under the Used Vehicle Floor PlanFloorplan Facility bear interest, at theour option, of the Company, based on LIBOR plus 1.50%1.40% or the Base Rate plus 0.50%0.40%.

In addition to the payment of interest on borrowings outstanding under the 20162019 Senior Credit Facility, we are required to pay a quarterly commitment fee on the total unused commitments thereunder. The fee for unused commitments under the Revolving Credit Facility is between 0.20%0.15% and 0.45%0.40% per year, based on the Company's total lease adjusted leverage ratio, and the fee for unused commitments under the New Vehicle Facility Floor Plan and the Used Vehicle Facility Floor Plan Facility is 0.15% per year.
Manufacturer affiliated new vehicle floor plan and other financing facilities — We have a floor plan facility with the Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory, which matures on December 5, 2019. During August 2016, we established a floor plan offset account with Ford Credit, which operates in a similar manner to our floor plan offset account with Bank of America. As of September 30, 2017, we had $109.7 million, net of $11.8 million in our floor plan offset account, outstanding under our floor plan facility. Additionally, we had $80.8 million outstanding under facilities with certain manufacturers for the financing of loaner vehicles, which were presented within Accounts Payable and Accrued Liabilities in our Condensed Consolidated
•
Manufacturer affiliated new vehicle floor plan and other financing facilities —We have a floor plan facility with the Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory. This floor plan facility was amended in December 2019 to extend the maturity date from December 5, 2019 to May 31, 2020. We have also established a floor plan offset account with Ford Credit, which operates in a similar manner to our floor plan offset account with Bank of America. As of March 31, 2020, we had $118.4 million, net of $15.3 million in our floor plan offset account, outstanding under our floor plan facility. Additionally, we had $83.6 million outstanding under facilities with certain manufacturers for the financing of loaner vehicles, which were presented within Accounts payable and accrued liabilities in our Condensed Consolidated Balance Sheets. Neither our floor plan facility with Ford Credit nor our facilities for loaner vehicles have stated borrowing limitations.
•
The New Senior Notes—On February 19, 2020, the Company completed its offering of senior unsecured notes, consisting of $525.0 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “2028 Notes”) and $600.0 million aggregate principal amount of 4.75% Senior Notes due 2030 (the “2030 Notes” and, together with the 2028 Notes, the “Notes”). The 2028 Notes and 2030 Notes mature on March 1, 2028 and March 1, 2030, respectively. Interest is payable semiannually, on March 1 and September 1 of each year. The New Senior Notes were offered,

Balance Sheets. Neithertogether with additional borrowings and cash on hand, to (i) fund, if consummated, the acquisition of substantially all of the assets of Park Place, (ii) redeem all of our floor plan facility with Ford Credit nor our facilities for loaner vehicles have stated borrowing limitations.
outstanding $600.0 million aggregate principal amount of 6.0% Senior Subordinated Notes due 2024 — as(the “6.0% Notes”) and (iii) pay fees and expenses in connection with the foregoing.
On March 24, 2020, the Company delivered notice to the sellers terminating the previously announced Transaction. As a result, the Company redeemed $245.0 million aggregate principal million of September 30, 2017 we had $600.0the 2028 Notes and $280.0 million in aggregate principal amount outstanding relatedof the 2030 Notes (the “Mandatory Redemption Amount”) on a pro rata basis in proportion to the aggregate principal amount of each series of Notes at a redemption price equal to 100% of the Mandatory Redemption Amount, plus accrued and unpaid interest on March 30, 2020. The New Senior Notes of each series are guaranteed, jointly and severally, on a senior unsecured basis, by each of our 6.0% Notes. Weexisting and future restricted subsidiaries, with certain exceptions. In addition, the New Senior Notes are subject to customary covenants, events of default and optional redemption revisions. The New Senior Notes are required to pay interest on the 6.0% Notes on June 15 and December 15 of each year until maturity on December 15, 2024. 
Mortgage notes — as of September 30, 2017, we had $177.6 million of mortgage note obligations. These obligations are collateralized by the associated real estate at our dealership locations.
Restated Master Loan Agreement — provides for term loans to certain of our subsidiaries (the "Restated Master Loan Agreement"). Borrowingsbe registered under the Restated Master Loan Agreement are guaranteed by us and are collateralized by the real property financed under the Restated Master Loan Agreement. AsSecurities Act of September 30, 2017, the outstanding balance under the Restated Master Loan Agreement was $90.6 million. There is no further borrowing availability under this facility.
Real Estate Credit Agreement — a real estate term loan credit agreement with borrowings collateralized by first priority liens, subject to certain permitted exceptions, on all1933 within 270 days of the real property financed thereunder (the "Real Estate Credit Agreement"). Asclosing date for the offering of September 30, 2017, we had $48.3 million of mortgage note obligations outstanding under the Real Estate Credit Agreement. There is no further borrowing availability under this agreement.New Senior Notes.
•
6.0% Senior Subordinated Notes due 2024 — In connection with the issuance of the 2028 Notes and 2030 Notes, on March 4, 2020, we redeemed all of our 6.0% Notes at 103% of par, plus accrued and unpaid interest up to, but excluding, the date of redemption. 
•
Mortgage notes — as of March 31, 2020, we had $99.2 million of mortgage note obligations. These obligations are collateralized by the associated real estate at our dealership locations.
•
2013 BofA Real Estate Facility— As of March 31, 2020, we had $16.5 million of outstanding borrowings under the 2013 BofA Real Estate Facility. There is no further borrowing availability under this agreement.
•
2015 Wells Fargo Master Loan Facility—Borrowings under the 2015 Wells Fargo Master Loan Facility (as defined herein) are guaranteed by us and are collateralized by the real property financed under the 2015 Wells Fargo Master Loan Facility. As of March 31, 2020, the outstanding balance under this agreement was $75.5 million. There is no further borrowing availability under this agreement.
•
2018 Bank of America Facility —On November 13, 2018, the Company and certain of its subsidiaries entered into the 2018 BofA Real Estate Facility (as defined herein) with Bank of America, which provides for term loans in an aggregate amount not to exceed $128.1 million. Our right to make draws under the 2018 BofA Real Estate Facility terminated on November 13, 2019. All of the real property financed by an operating dealership subsidiary of the Company under the 2018 BofA Real Estate Facility is collateralized by first priority liens, subject to certain permitted exceptions. As of March 31, 2020, we had $105.3 million of outstanding borrowings under the 2018 Bank of America Facility.
•
2018 Wells Fargo Master Loan Facility—On November 16, 2018, certain subsidiaries of the Company entered into a 2018 Wells Fargo Master Loan Agreement (as defined herein) which provides for term loans to certain of the Company's subsidiaries that are borrowers under the 2018 Wells Fargo Master Loan Facility in an aggregate amount not to exceed $100.0 million. Our right to make draws under the 2018 Wells Fargo Master Loan Facility will terminate on June 30, 2020. On November 16, 2018, we borrowed an aggregate amount of $25.0 million under the 2018 Wells Fargo Master Loan Facility, the proceeds of which were used for general corporate purposes. As of March 31, 2020, we had $25.0 million outstanding borrowings under the 2018 Wells Fargo Master Loan Facility.
Covenants
We are subject to a number of customary operating and other restrictive covenants in our various debt and lease agreements. We were in compliance with all of our covenants as of September 30, 2017.March 31, 2020.
Share Repurchases and Dividend Restrictions
Our ability to repurchase shares or pay dividends on our common stock is subject to our compliance with the covenants and restrictions in our various debt and lease agreements. Our 20162019 Senior Credit Facility and our indenture governing our 6.0% Notes permit us to make an unlimited amount of restricted payments, such as share repurchases or dividends, so long as our Consolidated Total Leverage Ratio, as defined in those agreements, does not exceed 3.0 to 1.0 on a pro forma basis after giving effect to any proposed payments. As of September 30, 2017,March 31, 2020, our Consolidated Total Leverage Ratio did not exceed 3.0 to 1.0.
On January 30, 2014, our Board of Directors authorized our current share repurchase program (the "Repurchase Program").
On January 27, 2016,October 19, 2018, our Board of Directors reset the authorization under our Repurchase Program to $300.0$100.0 million in the

aggregate, for the repurchase of our common stock in open market transactions or privately negotiated transactions from time to
time.
During the three and nine months ended September 30, 2017,March 31, 2020, we repurchased 90,700 and 584,696did not repurchase any shares, respectively, of our common stock under the Repurchase Program for a total of $5.1 million and $34.8 million, respectively.Program. As of September 30, 2017,March 31, 2020, we had remaining authorization to repurchase $53.3$66.3 million in shares of our common stock under the Repurchase Program.
During the three and nine months ended September 30, 2017,March 31, 2020, we repurchased 541 and 71,33053,915 shares, respectively, of our common stock for $30.0 thousand and $4.6$5.0 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.
Cash Flows
Classification of Cash Flows Associated with Floor Plan Notes Payable
Borrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle ("Non-Trade"), and all floor plan notes payable relating to used vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on the accompanying Condensed Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. The net change in floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor Plan Notes Payable—Trade") is classified as an operating activity on the accompanying Condensed Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying Condensed Consolidated StatementStatements of Cash Flows. Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the

extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturer from which we purchased the related inventory. The majority of our floor plan notes are payable to parties unaffiliated with the entities from which we purchase our new vehicle inventory, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.
Floor plan borrowings are required by all vehicle manufacturers for the purchase of new vehicles, and all floor plan lenders require amounts borrowed for the purchase of a vehicle to be repaid within a short time period after the related vehicle is sold. As a result, we believe that it is important to understand the relationship between the cash flows of all of our floor plan notes payable and new vehicle inventory in order to understand our working capital and operating cash flow and to be able to compare our operating cash flow to that of our competitors (i.e., if our competitors have a different mix of trade and non-trade floor plan financing as compared to us). In addition, we include all floor plan borrowings and repayments in our internal operating cash flow forecasts. As a result, we use the non-GAAP measure "cash provided by operating activities, as adjusted" (defined below) to compare our results to forecasts. We believe that splitting the cash flows of floor plan notes payable between operating activities and financing activities, while all new vehicle inventory activity is included in operating activities, results in significantly different operating cash flow than if all the cash flows of floor plan notes payable were classified together in operating activities.
Cash provided by operating activities, as adjusted, includes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer from which we purchase the related new vehicles. Cash provided by operating activities, as adjusted, has material limitations, and therefore, may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for analysis of our operating results in accordance with GAAP. In order to compensate for these potential limitations we also review the related GAAP measures.
We have provided below a reconciliation of cash flow from operating activities, as if all changes in floor plan notes payable, except for (i) borrowings associated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicle inventory, were classified as an operating activity.
For the Nine Months Ended September 30,For the Three Months Ended March 31,
2017 20162020 2019
(In millions)(In millions)
Reconciliation of Cash provided by operating activities to Cash provided by operating activities, as adjusted      
Cash provided by operating activities, as reported$243.2
 $151.3
$127.7
 $65.2
New vehicle floor plan (repayments) borrowings—non-trade, net
(120.0) 76.5
New vehicle floor plan borrowings —non-trade, net
37.2
 32.7
Cash provided by operating activities, as adjusted$123.2
 $227.8
$164.9
 $97.9

Operating Activities—
Net cash provided by operating activities totaled $243.2$127.7 million and $151.3$65.2 million, for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. Net cash provided by operating activities, as adjusted, totaled $123.2$164.9 million and $227.8$97.9 million for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively.
The $104.6$67.0 million decreaseincrease in our net cash provided by operating activities, as adjusted, for the ninethree months ended September 30, 2017 asMarch 31, 2020 compared to the ninethree months ended September 30, 2016March 31, 2019 was primarily the result of the following:

$63.3a $122.2 million increase related to the lower balances of accounts receivable and contracts-in-transit around the period end and a $12.0 million increase related to the change in inventory, net of floor plan notes payable
$34.5 million related to the changeborrowings. The increase in other current and non-current assets and liabilities;
$23.3 million related to a decrease in accounts payable and accrued liabilities; and
$10.0 million related to the non-cash adjustments toour net income.
The decrease in our cash provided by operating activities, as adjusted, was partially offset by $26.5a decrease in non-cash adjustments to net income of $13.3 million related to sales volume and the timinga decrease in accounts payable and other current liabilities of collection of accounts receivable and contracts-in-transit during 2017 as compared to 2016.$58.9 million.
Investing Activities—
Net cash used in investing activities totaled $98.0$45.2 million and $77.5$127.0 million, for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. Capital expenditures, excluding the purchase of real estate, were $21.4$9.1 million and $47.3$3.6 million for the

nine three months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. We expect that capital expenditures for 20172020 will total approximately $50.0$29.5 million to upgrade or replace our existing facilities, construct new facilities, expand our service capacity, and invest in technology and equipment.
During the ninethree months ended September 30, 2017,March 31, 2020, we acquired twothe assets of three franchises (two(one dealership location) in the Denver, Colorado market for a purchase price of $63.6 million. We funded these acquisitions with an aggregate of $34.5 million of cash and $27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, these acquisitions included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $1.5 million of purchase price holdbacks related to a prior year acquisition.
During the three months ended March 31, 2019, we acquired the assets of eight franchises (four dealership locations) Indianapolis, Indiana market for a purchase price of $121.0 million. Consideration paid (or payable) to fund this acquisition included $70.8 million of cash, $47.7 million of floor plan borrowings for the purchase of the related new vehicle inventory, and purchase price holdbacks of $2.5 million for potential indemnity claims made by us with respect to the acquired franchises.
During the three months ended March 31, 2020, we sold one franchise (one dealership location) in the Atlanta, Georgia market and we sold six franchises (five dealership locations) and one collision center in the Indianapolis, IndianaJackson, Mississippi market for an aggregate purchase price of $80.1$115.5 million.
During In addition, during the ninethree months ended September 30, 2017,March 31, 2020 , we received cash proceeds of $3.8$4.2 million, from the sale of a property that wasvacant properties. The assets and liabilities related to the aforementioned divestitures were included in Assets Heldheld for Salesale and Liabilities associated with assets held for sale as of December 31, 2016.2019.
During the ninethree months ended September 30, 2016,March 31, 2020 and 2019, purchases of real estate, including previously leased real estate, totaled $30.2 million.$2.3 million and $4.9 million, respectively.
As part of our capital allocation strategy, we continually evaluate opportunities to purchase properties currently under lease and acquire properties in connection with future dealership relocations. No assurances can be provided that we will have or be able to access capital at times or on terms in amounts deemed necessary to execute this strategy.
Financing Activities—
Net cash used in financing activities totaled $145.8 million and $72.9$212.2 million for the ninethree months ended September 30, 2017 and 2016, respectively.March 31, 2020. Net cash provided by financing activities totaled $64.4 million for the three months ended March 31, 2019.
During the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, we had non-trade floor plan borrowings, excluding floor plan borrowings associated with acquisitions, of $2.82$1.12 billion and $2.92$1.07 billion, respectively, and non-trade floor plan repayments, excluding floor plan repayments associated with a divestiture, of $2.94$1.09 billion and $2.81$1.03 billion, respectively.

In addition, duringDuring the ninethree months ended September 30, 2017March 31, 2020 and 2019, we had floor plan borrowings of $27.1 million and $47.7 million, respectively, related to acquisitions.
During the three months ended March 31, 2020, we had non-trade floor plan borrowingsrepayments associated with a divestiture of $25.1 million related to acquisitions.$50.5 million.
Repayments of borrowings totaled $11.5$1,156.1 million and $11.2$3.9 million, for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. In addition, payments of debt issuance costs totaled $3.1 million for the three months ended March 31, 2020.

During the ninethree months ended September 30, 2017,March 31, 2020, we repurchasedhad proceeds of $7.3 million related to a totalsale and leaseback of 584,696real estate in Plano, Texas.
During the three months ended March 31, 2020, we did not repurchase any shares of our common stock under our Repurchase Program for a total of $34.8 million and 71,330but repurchased 53,915 shares of our common stock for $4.6$5.0 million from employees in connection with a net share settlement feature of employee equity-based awards.

Off Balance Sheet Arrangements
We had no off balance sheet arrangements during any of the periods presented other than those disclosed in Note 1112 "Commitments and Contingencies" ofwithin the Notes hereto.accompanying Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to risk from changes in interest rates on a significant portion of our outstanding indebtedness. Based on $674.3$1,177.4 million of total variable interest rate debt, which includes our floor plan notes payable and certain mortgage liabilities, outstanding as of September 30, 2017,March 31, 2020, a 100 basis point change in interest rates could result in a change of as much as $6.7$11.8 million to our total annual interest expense in our Consolidated Statements of Income.
We periodically receive floor plan assistance from certain automobile manufacturers, which is accounted for as a reduction in our new vehicle inventory cost. Floor plan assistance reduced our cost of sales for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 by $26.6$9.4 million and $25.7$9.7 million, respectively. We cannot provide assurance as to the future amount of floor plan assistance and these amounts may be negatively impacted due to future changes in interest rates.
As part of our strategy to mitigate our exposure to fluctuations in interest rates, we have various interest rate swap agreements. All of our interest rate swaps qualify for cash flow hedge accounting treatment and do not contain any ineffectiveness.
In June 2015, we entered into an interest rate swap agreement with a notional principal amount of $100.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR, rate, through maturity in February 2025. The notional value of this swap was $91.7$78.5 million as of September 30, 2017March 31, 2020 and is reducing over its remaining term to $53.1 million at maturity.

In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR, rate, through maturity in September 2023. The notional values of this swap as of September 30, 2017March 31, 2020 was $61.2$51.8 million and will reduce over its remaining term to $38.7 million at maturity.
For additional information about the effect of our derivative instruments, onplease refer to Note 10 "Financial Instruments and Fair Value" within the accompanying Condensed Consolidated Financial Statements, see Note 9 "Financial Instruments and Fair Value" of the Notes thereto.Statements.

Item 4. Controls and Procedures


Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of such period such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time period specified in the rules and forms of the U.S. Securities and Exchange Commission, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. Management, including the principal executive officer and the principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2017March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we and our dealerships may become involved in various claims relating to, and arising out of our business and our operations. These claims may involve, but are not limited to, financial and other audits by vehicle manufacturers or lenders, and certain federal, state, and local government authorities, which relate primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations of violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants and (iii) payments made to government authorities relating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise through litigation, government proceedings, and other dispute resolution processes. Such claims, including class actions, can relate to, but are not limited to, the practice of charging administrative fees, employment-related matters, truth-in-lending practices, contractual disputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity or results of operations.  However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on our financial condition, liquidity or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that affect our business and financial results that are discussed in Part I, Item 1A, of our Annual Report on Form 10- K for the fiscal year ended December 31, 2019. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. Other than as set forth below, there have been no material changes to such risk factors.
The novel coronavirus disease (COVID-19) global pandemic has had and is expected to continue to have a material adverse impact on our business, financial condition and results of operations.
The COVID-19 global pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets. We expect the COVID-19 global pandemic to have a material adverse impact on our business including our results of operations, financial condition and liquidity. The extent of the impact of the COVID-19 global pandemic on our business, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and scope of the pandemic, which are uncertain and cannot be predicted.
As a result of the COVID-19 global pandemic, and in response to government mandates or recommendations, such as “shelter in place” and self-quarantines, as well as decisions we have made to protect the health and safety of our employees, consumers and communities, we have modified our business practices, including the implementation of reduced hours at certain of our dealerships, developing social distancing plans, restricting employee travel and limiting physical participation in meetings, and cancelling events and industry and other conferences. As a result of the government mandates or recommendations, our dealerships, including our parts and services businesses, are not operating at capacity, which has resulted in a loss of sales and profits. Additionally, the closures of, and/or reduced availability of services from, the department of motor vehicles in various states have and will continue to have an adverse effect on our ability to obtain license plates for our fleet and our customers, to perfect liens on sold vehicles, and on our customers’ ability to obtain valid driver licenses. All of these factors present challenges to our operations, which could adversely affect our business, results of operations and financial condition. We are presently considered an essential business, but we may face future operational restrictions or challenges that may limit operations or require us to further restrict access or close dealerships due to, among other factors, evolving and increasingly stringent governmental restrictions including public health directives, quarantine policies, social distancing measures or positive diagnoses for COVID-19 among our employees at certain dealership locations.
Any significant reduction in consumer visits to, or spending at, our dealerships caused by COVID-19, would result in a loss of sales and profits and other material adverse effects. Self-quarantine or "shelter in place" mandates may reduce customer visits to our dealerships. We also expect consumer fears about becoming ill with the disease to continue, which will further adversely affect traffic to our dealerships. Consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the impacts of any recession, resulting from the COVID-19 global pandemic. For example, COVID-19 has resulted in employee furloughs and increased unemployment

across the United States, thereby reducing consumer demand for our products and services and also reducing the number of consumers who will quality for the extension of credit for a vehicle purchase or a lease either on favorable terms or at all. All of these factors are expected to negatively impact sales and profitability.
Our profitability is dependent to a great extent on various aspects of vehicle manufacturers’ operations. As a result of market conditions caused by COVID-19, certain vehicle manufacturers and other suppliers have ceased or slowed production of new vehicles, parts and other supplies. We cannot predict with any certainty how long the automotive retail industry will be subject to these production slowdowns implemented by such vehicle manufacturers and other suppliers and when normalized production will resume at these manufacturers. This disruption in our supply network has negatively impacted, and will continue to impact, our ability to maintain a desirable mix of popular new vehicles and parts that consumers demand at the time and in the volumes desired, all of which would adversely impact our revenues.
The effects of the COVID-19 global pandemic on the operating results of our business has resulted in a franchise rights impairment charge in the first quarter of 2020 and it may result in additional impairment charges in the future, which could adversely affect our future operating results. Our principal intangible assets are goodwill and our rights under our franchise agreements with vehicle manufacturers. Goodwill and franchise rights are subject to impairment assessments at least annually or more frequently when events or changes in circumstances indicate that an impairment may have occurred. The COVID-19 global pandemic has resulted in a significant decrease in our market capitalization and profitability that increases the risk of impairment. During the first quarter of 2020, we recorded a $23.0 million non-cash impairment charge related to our intangible manufacturer franchise rights assets. We may be required to record additional impairment charges if the COVID-19 global pandemic continues, and we cannot accurately predict the amount and timing of any additional impairment charge at this time, however, any such impairment charge could have an adverse effect on our results of operations and stockholders’ equity.
In addition, the impact of the COVID-19 global pandemic on macroeconomic conditions may impact the proper functioning of financial and capital markets, foreign currency exchange rates, commodity prices and interest rates. Even after the COVID-19 global pandemic has subsided, we may continue to experience adverse impacts to our business as a result of an economic recession or depression that has occurred or may occur in the future. The continued disruption of global financial markets as a result of the COVID-19 global pandemic could have a negative impact on our ability to access capital in the future.
The extent of the impact of the COVID-19 global pandemic on our business is highly uncertain and difficult to predict, as information is rapidly evolving with respect to the duration and severity of the pandemic. At this point, we cannot reasonably estimate the duration and severity of the COVID-19 global pandemic, or its overall impact on our business. Even after the COVID-19 global pandemic has subsided, we may continue to experience adverse impacts to our business as a result of increased unemployment and any economic recession or depression that has occurred or may occur in the future. Any of these events could amplify the other risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and could materially adversely affect our business, financial condition, results of operations and/or stock price.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On January 30, 2014, our Board of Directors authorized our Repurchase Program. On January 27, 2016,October 19, 2018, our Board of Directors reset the authorization under our Repurchase Program to $300.0$100.0 million in the aggregate, for the repurchase of shares of our common stock in open market transactions or privately negotiated transactions. Any repurchases will be subject to applicable limitations in our debt or other financing agreements that may be in existence from time to time.
  During the three months ended September 30, 2017,March 31, 2020, we repurchased 90,700did not repurchase any shares of our common stock under the Repurchase Program.Program but repurchased 53,915 shares of our common stock for $5.0 million from employees in connection with a net share settlement feature of employee equity-based awards. As of September 30, 2017,March 31, 2020, we had remaining authorization to repurchase $53.3$66.3 million in shares of our common stock under the Repurchase Program.
The following table sets forth information regarding stock repurchases by the Company on a monthly basis during the three month period ended September 30, 2017:
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in millions)
07/01/2017 - 07/31/2017 90,700
 $56.15
 90,700
 $53.3
08/01/2017 - 08/31/2017 —
 $—
 —
 $—
09/01/2017 - 09/30/2017 —
 $—
 —
 $—
Item 4. Mine Safety Disclosures


Not applicable.

Item 6. Exhibits
Exhibit

Number		  Description of Documents
10.1
4.1
 
First AmendmentIndenture relating to Employment Agreement betweenthe 2028 Notes, dated as of February 19, 2020, by and among Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and David W. Hult, datedU.S. Bank National Association, as Trustee, including the form of August 21, 2017 (incorporated by referencenote attached as Exhibit A thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.2
Form of 4.50% Senior Note due 2028 (included as Exhibit 10.1A in Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)February 20, 2020)*


10.2
4.3
 
TransitionIndenture relating to the 2030 Notes, dated as of February 19, 2020, by and Separation Agreement betweenamong Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and Craig T. Monaghan, datedU.S. Bank National Association, as Trustee, including the form of August 21, 2017 (incorporated by reference tonote attached as Exhibit 10.2A thereto (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 22, 2017)February 20, 2020)*
4.4
Form of 4.75% Senior Note due 2030 (included as Exhibit A in Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.5
Registration Rights Agreement relating to the 2028 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.6
Registration Rights Agreement relating to the 2030 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.6 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
10.1
Credit Agreement, dated February 7, 2020, by and among Asbury Automotive Group, Inc., certain subsidiaries party thereto and Bank of America, N.A (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2020)*
10.2
First Amendment to the Third Amended and Restated Credit Agreement, dated January 31, 2020, among Asbury Automotive Group, Inc., as a borrower, certain of its subsidiaries, as vehicle borrowers, Bank of America, N.A., as administrative agent, revolving swing line lender, new vehicle floorplan swing line lender, used vehicle floorplan swingline lender and an l/c issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as co-syndication agents, Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation, as co-documentation agents, and BofA Securities, Inc. as sole lead arranger and sole bookrunner (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2020)*
31.1
Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document

101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted in iXBRL Exhibit 101)
*Incorporated by reference

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Asbury Automotive Group, Inc.
Date:May 11, 2020By:/s/    David W. Hult
Name:David W. Hult
Title:Chief Executive Officer and President
Asbury Automotive Group, Inc.
Date:May 11, 2020By:/s/ William F. Stax
Name:William F. Stax
Title:Interim Principal Financial Officer, Vice President, Controller and Chief Accounting Officer


INDEX TO EXHIBITS
Exhibit
Number		Description of Documents
4.1Indenture relating to the 2028 Notes, dated as of February 19, 2020, by and among Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as Trustee, including the form of note attached as Exhibit A thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.2Form of 4.50% Senior Note due 2028 (included as Exhibit A in Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.3Indenture relating to the 2030 Notes, dated as of February 19, 2020, by and among Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as Trustee, including the form of note attached as Exhibit A thereto (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.4Form of 4.75% Senior Note due 2030 (included as Exhibit A in Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.5Registration Rights Agreement relating to the 2028 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.6Registration Rights Agreement relating to the 2030 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.6 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
10.1Credit Agreement, dated February 7, 2020, by and among Asbury Automotive Group, Inc., certain subsidiaries party thereto and Bank of America, N.A (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2020)*
10.2First Amendment to the Third Amended and Restated Credit Agreement, dated January 31, 2020, among Asbury Automotive Group, Inc., as a borrower, certain of its subsidiaries, as vehicle borrowers, Bank of America, N.A., as administrative agent, revolving swing line lender, new vehicle floorplan swing line lender, used vehicle floorplan swingline lender and an l/c issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as co-syndication agents, Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation, as co-documentation agents, and BofA Securities, Inc. as sole lead arranger and sole bookrunner (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2020)*
31.1  Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2  Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1  Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2  Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS XBRL Instance Document
- The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
*Incorporated by reference.




SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Asbury Automotive Group, Inc.
Date: October 25, 2017By:/s/    Craig T. Monaghan
Name:Craig T. Monaghan
Title:Chief Executive Officer and President
Asbury Automotive Group, Inc.
Date: October 25, 2017By:/s/    Sean D. Goodman
Name:Sean D. Goodman
Title:Senior Vice President and Chief Financial Officer


INDEX TO EXHIBITS
Exhibit
Number104		  Description of Documents
10.1
First Amendment to Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of August 21, 2017 (incorporated by reference toCover Page Interactive Data File (formatted in iXBRL Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*


10.2
Transition and Separation Agreement between Asbury Automotive Group, Inc. and Craig T. Monaghan, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 22, 2017)*

31.1
Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101)
* Incorporated by reference.
reference



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