What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-01 compared with 2020-03-02 · 394 added, 320 removed, 897 unchanged (44% of the section changed)

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Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Income for the Years Ended December 31, 2019, 2018, and 2017

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018, and 2017

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2019, 2018, and 2017

Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018, and 2017

Consolidated Balance Sheet s as of December 31, 2020 and 2019

Consolidated Statements of Income for the Year Ended December 31, 2020, 2019, and 2018

Consolidated Statements of Comprehensive Income for the Year Ended December 31, 2020, 2019, and 2018

Consolidated Statements of Shareholders' Equity for the Year Ended December 31, 2020, 2019, and 2018

Consolidated Statements of Cash Flows for the Year Ended December 31, 2020, 2019, and 2018

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of

To the Shareholders and Board of Directors of

Asbury Automotive Group, Inc.

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We have audited the accompanying consolidated balance sheets of Asbury Automotive Group, Inc.

(the Company) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 18 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842), and the related amendments.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue in 2018 due to the adoption of Accounting Standards Update (ASU) No.

2014-09, Revenue from Contracts with Customers (Topic 606), and the related amendments.

Basis for Opinion

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The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair Value Estimate of Manufacturer Franchise Rights in Acquisitions and Impairment Assessments

Description of the Matter

During 2019, the Company completed its acquisition of ten franchises (six dealership locations) for a total purchase price of $210.4 million, $65.3 million of which related to manufacturer franchise rights, an indefinite-lived intangible asset, as disclosed in Note 3 of the consolidated financial statements.

Description of the Matter During 2020, the Company completed its acquisition of fifteen franchises (nine dealership locations) for a total purchase price of $953.5 million, $337.8 million of which related to manufacturer franchise rights, an indefinite-lived intangible asset, as disclosed in Note 3 to the consolidated financial statements.

Each transaction was accounted for as a business combination.

At December 31, 2019, the manufacturer franchise rights for these and prior acquisitions had an aggregate carrying value of approximately $121.7 million, as disclosed in Note 9 of the consolidated financial statements.

At December 31, 2020, the Company's manufacturer franchise rights for these and prior acquisitions had an aggregate carrying value of approximately $425.2 million, as disclosed in Note 9 of the consolidated financial statements.

Each manufacturer franchise right asset is assessed for impairment annually as of October 1st, or more often if events or circumstances indicated that impairment may have occurred.

If the fair value of the intangible asset is less than its carrying amount, an impairment loss is recognized in an amount equal to the difference.

In connection with its annual impairment test for the year ended December 31, 2019, the Company recorded an impairment of $7.1 million related to manufacturer franchise rights.

Auditing the Company's estimate of fair value of the manufacturer franchise rights acquired during the year as well as the fair value estimates used in the annual impairment assessment is complex due to the significant management judgments and estimates required.

In connection with its impairment assessments during the year-ended December 31, 2020, the Company recorded impairment charges of $23.0 million related to manufacturer franchise rights.

Auditing the Company's estimate of fair value of the manufacturer franchise rights acquired during the year, as well as the fair value estimates used in the impairment assessments, is complex due to the significant management judgments and estimates required.

The Company's model for estimating the fair value of these assets utilizes market participant assumptions related to the cash flows directly attributable to the franchise rights, including 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, all of which are forward-looking and affected by expectations about economic, industry and company-specific factors.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s process over the manufacturer franchise rights fair value estimates used in conjunction with its acquisitions and its annual impairment assessment.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s process over the manufacturer franchise rights fair value estimates used in conjunction with its acquisitions and its impairment assessments.

For example, this included testing controls over management’s review of the model, significant assumptions, other inputs and the completeness and accuracy of the data used in the measurements.

To test the fair value of the Company's manufacturer franchise rights at acquisition and as part of the annual impairment assessment, our audit procedures included, among others, evaluating the Company's use of the discounted cash flows method, testing of the assumptions and inputs to the valuation model used to develop the projected financial information, involving our valuation specialists to assist in the testing of the weighted average cost of capital utilized and testing the completeness and accuracy of the underlying data.

To test the fair value of the Company's manufacturer franchise rights at acquisition and as part of the impairment assessments, our audit procedures included, among others, evaluating the Company's use of the discounted cash flows method, testing of the assumptions and inputs to the valuation model used to develop the projected financial information, involving our valuation specialists to assist in the testing of the weighted average cost of capital utilized and testing the completeness and accuracy of the underlying data.

We compared the assumptions to current industry, market and economic trends, to the Company's historical results and other market participant considerations.

In addition, we assessed the accuracy of the Company’s historical projections by comparing them to actual operating results.

We also performed a sensitivity analysis of certain assumptions such as year-over-year and terminal growth rates, future selling, general, and administrative expenses and weighted average cost of capital to evaluate the potential change in the fair value of the manufacturer franchise rights resulting from changes in underlying assumptions.

We also performed a sensitivity analysis of certain assumptions such as year-over-year and terminal growth rates, future gross margins, future selling, general, and administrative expenses and weighted average cost of capital to evaluate the potential change in the fair value of the manufacturer franchise rights resulting from changes in underlying assumptions.

/s/ Ernst & Young LLP

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of

To the Shareholders and Board of Directors of

Asbury Automotive Group, Inc.

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of ten franchises (six dealership locations) and one collision center acquired during 2019, which are included in the 2019 consolidated financial statements of the Company and constituted $222.9 million of consolidated assets as of December 31, 2019 and $260.7 million of consolidated revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the ten franchises (six dealership locations) and one collision center.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of fifteen franchises (nine dealership locations), two collision centers and one auto auction acquired during 2020, which are included in the 2020 consolidated financial statements of the Company and constituted $1,015.6 million of consolidated assets as of December 31, 2020 and $687.1 million of consolidated revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the fifteen franchises (nine dealership locations), two collision centers and one auto auction.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Asbury Automotive Group, Inc.

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OPERATING LEASE RIGHT-OF-USE ASSETS 317.4 65.6

GOODWILL 562.2 201.7

INTANGIBLE FRANCHISE RIGHTS 425.2 121.7

OTHER LONG-TERM ASSETS 9.6 10.0

Total assets $ 3,676.3 $ 2,911.3

LIABILITIES AND SHAREHOLDERS' EQUITY

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21,848,314 and 21,791,707 shares, respectively

( 1,033.7 ) ( 1,028.6 )

Accumulated other comprehensive loss ( 5.6 ) ( 2.9 )

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For the Year Ended December 31,

2020 2019 2018

New vehicle $ 3,767.4 $ 3,863.3 $ 3,788.7

Used vehicle 2,169.5 2,131.6 1,972.4

Parts and service 889.8 899.4 821.0

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COST OF SALES:

New vehicle 3,548.9 3,703.8 3,623.5

Used vehicle 2,012.9 1,997.5 1,842.7

Parts and service 346.6 340.1 305.2

TOTAL COST OF SALES 5,908.4 6,041.4 5,771.4

GROSS PROFIT 1,223.4 1,168.9 1,103.0

OPERATING EXPENSES:

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Swap interest expense — — 0.5

Gain on divestitures

Loss on extinguishment of long-term debt, net 20.6 — —

Gain on dealership divestitures, net ( 62.3 ) ( 11.7 ) —

Total other expenses, net 32.7 81.1 86.1

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Income tax expense 83.7 59.5 56.8

NET INCOME $ 254.4 $ 184.4 $ 168.0

EARNINGS PER COMMON SHARE:

Net Income $ 13.25 $ 9.65 $ 8.36

Net Income $ 13.18 $ 9.55 $ 8.28

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic 19.2 19.1 20.1

Restricted stock — 0.1 0.1

Performance share units 0.1 0.1 0.1

Diluted 19.3 19.3 20.3

See accompanying Notes to Consolidated Financial Statements

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For the Year Ended December 31,

2020 2019 2018

Net income $ 254.4 $ 184.4 $ 168.0

Other comprehensive income (loss):

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(Dollars in millions)

Treasury Stock

Common Stock Additional

Capital Retained

Earnings Treasury Stock Accumulated

Comprehensive

Income (Loss)

Income (Loss) Total

Shares Amount Shares Amount

Balances, December 31, 2017 40,969,987 $ 0.4 $ 563.5 $ 750.3 20,156,962 $ ( 919.1 ) $ ( 0.9 ) $ 394.2

Comprehensive Income:

Net income — — — 168.0 — — — 168.0

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 0.8 tax expense

— — — — — — 1.5 1.5

Comprehensive income — — — 168.0 — — 1.5 169.5

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accounting principle - ASU 2014-09

— — — 9.2 — — — 9.2

Share-based compensation — — 10.5 — — — — 10.5

Issuance of common stock in connection with share-based payment arrangements

Issuance of common stock

in connection with share-based payment arrangements 185,049 — — — — — — —

Repurchase of common stock associated with net share settlements of employee share-based awards — — — — 71,434 ( 4.8 ) — ( 4.8 )

Purchase of treasury shares — — — — 1,580,910 ( 105.4 ) — ( 105.4 )

Retirement of previously repurchased common stock ( 89,967 ) $ — $ ( 1.1 ) $ ( 4.8 ) ( 89,967 ) $ 5.9 $ — $ —

Balances, December 31, 2018 41,065,069 $ 0.4 $ 572.9 $ 922.7 21,719,339 $ ( 1,023.4 ) $ 0.6 $ 473.2

Comprehensive Income:

Change in fair value of cash flow swaps, net of reclassification adjustment and $0.8 tax expense

Net income — — — 184.4 — — — 184.4

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 1.1 tax benefit

— — — — — — ( 3.3 ) ( 3.3 )

Comprehensive income — — — 184.4 — — ( 3.3 ) 181.1

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accounting principle - ASU 2018-02

— — — 0.2 — — ( 0.2 ) —

Share-based compensation — — 12.5 — — 12.5

Issuance of common stock in connection with share-based payment arrangements

Issuance of common stock

in connection with share-based payment arrangements 209,390 — — — — —

Repurchase of common stock associated with net share settlements of employee share-based awards — — — — 72,368 ( 5.2 ) — ( 5.2 )

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Comprehensive Income:

Net income — — — 254.4 — — — 254.4

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 0.9 tax benefit

— — — — — — ( 2.7 ) ( 2.7 )

Comprehensive income — — — 254.4 — — ( 2.7 ) 251.7

Cumulative effect of change in

accounting principle - ASU 2018-02

Share-based compensation — — 12.6 — — 12.6

Issuance of common stock in connection with share-based payment arrangements

Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements 61,588 — — — — —

Repurchase of common stock associated with net share settlements of employee share-based awards — — — — 56,607 ( 5.1 ) — ( 5.1 )

Purchase of treasury shares

Retirement of previously repurchased common stock

Balances, December 31, 2020 41,133,668 $ 0.4 $ 595.5 $ 1,348.9 21,848,314 $ ( 1,033.7 ) $ ( 5.6 ) $ 905.5

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For the Year Ended December 31,

2020 2019 2018

CASH FLOW FROM OPERATING ACTIVITIES:

Net income $ 254.4 $ 184.4 $ 168.0

Adjustments to reconcile net income to net cash provided by operating activities—

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Franchise rights impairment 23.0 7.1 3.7

Loss on extinguishment of debt 20.6 — —

Loaner vehicle amortization 21.8 23.6 22.5

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Accounts receivable ( 19.1 ) ( 6.0 ) ( 1.5 )

Inventories 428.0 212.1 ( 24.4 )

Other current assets ( 183.3 ) ( 173.7 ) ( 200.8 )

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Purchases of previously leased real estate — ( 4.9 ) ( 4.4 )

Acquisitions ( 954.1 ) ( 210.0 ) ( 91.3 )

Divestitures 177.9 39.1 —

Proceeds from the sale of assets 4.2 15.0 4.0

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Repayments of borrowings ( 1,622.5 ) ( 48.4 ) ( 19.9 )

Sale and leaseback transaction 7.3 — —

Payment of debt issuance costs ( 4.7 ) ( 2.3 ) ( 1.7 )

Repurchases of common stock, including amounts associated with net share settlements of employee share-based awards ( 5.1 ) ( 20.5 ) ( 110.2 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities 166.2 ( 127.0 ) 143.1

Net (decrease) increase in cash and cash equivalents ( 2.1 ) ( 4.8 ) 3.6

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We are one of the largest automotive retailers in the United States.

As of December 31, 2019 , we owned and operated 107 new vehicle franchises ( 88 dealership locations), representing 31 brands of automobiles, and 25 collision centers, in 17 metropolitan markets, within ten states.

As of December 31, 2020, we owned and operated 112 new vehicle franchises ( 91 dealership locations), representing 31 brands of automobiles, 25 collision centers, and one auto auction in 16 metropolitan markets, within nine states.

Our stores offer an extensive range of automotive products and services, including new and used vehicles, parts and services, which includes repair and maintenance services, replacement parts and collision repair services, and finance and insurance products.

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In addition, we typically experience higher sales of luxury vehicles in the fourth quarter, which have higher average selling prices and gross profit per vehicle retailed.

Revenues and operating results may be impacted significantly from quarter to quarter by changing economic conditions, vehicle manufacturer incentive programs, or adverse weather events.

Revenues and operating results may be impacted significantly from quarter to quarter by changing economic conditions, inventory availability, vehicle manufacturer incentive programs, or adverse weather events.

On August 24, 2020 the Company closed on the purchase of the Park Place Dealership group, acquiring substantially all of the assets of and leasing the real property related to, 12 franchises ( eight dealership locations), two collision centers and an auto auction for a purchase price of $ 889.9 million.

The purchase price was financed through a combination of cash, debt and seller financing.

See Note 3 "Acquisitions and Divestitures" for details of the Revised Transaction.

Basis of Presentation

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We maintain a reserve for used vehicle inventory where cost basis exceeds net realizable value.

In assessing lower of cost and net realizable value for used vehicles, we consider (i) the aging of our used vehicles, (ii) historical sales experience of used vehicles, and (iii) current market conditions and trends in used vehicle sales.

In assessing lower of cost and net realizable value for used vehicles, we

consider (i) the aging of our used vehicles, (ii) historical sales experience of used vehicles, and (iii) current market conditions and trends in used vehicle sales.

We also review and consider the following metrics related to used vehicle sales (both on a recent and longer-term historical basis):

(i) days of supply in our used vehicle inventory, (ii) used vehicle units sold at less than original cost as a percentage of total used vehicles sold, and (iii) average vehicle selling price of used vehicle units sold at less than original cost.

We then determine the appropriate level of reserve required to reduce our used vehicle inventory to the lower of cost and net realizable value, and record the resulting adjustment in the period in which we determine a loss has

The level of reserve determined to be appropriate for each reporting period is considered to be a permanent inventory write-down, and therefore is only released upon the sale of the related inventory.

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If the carrying amount of the underlying assets is less than their net recoverable value, then we calculate an impairment equal to the excess of the carrying amount over the fair market value, and the impairment loss would be charged to operations in the period identified.

We did not record an impairment of our property and equipment in 2019 , 2018 , and 2017 .

During the year-ended we recorded a $ 0.7 million impairment related to a vacant property.

We did no t record an impairment of our property and equipment in 2019 and 2018 .

Acquisitions are accounted for under the acquisition method of accounting and the assets acquired and liabilities assumed are recorded at their fair value at the acquisition date.

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Our only significant identifiable intangible assets, other than goodwill, are our rights under franchise agreements with manufacturers, which are recorded at an individual franchise level.

The fair value of our manufacturer franchise rights are determined at the acquisition date, by discounting the projected cash flows specific to each franchise.

The fair value of our manufacturer franchise rights are

determined at the acquisition date, by discounting the projected cash flows specific to each franchise.

We have determined that manufacturer franchise rights have an indefinite life, as there are no economic, contractual or other factors that limit their useful lives, and they are expected to generate cash flows indefinitely due to the historically long lives of the manufacturers' brand names.

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The types of risks hedged are those relating to the variability of cash flows caused by fluctuations in interest rates.

We document our risk management strategy and assess hedge effectiveness at each interest rate swaps inception and during the term of each hedge.

We document our risk management strategy and assess hedge effectiveness at each interest rate swap's inception and during the term of each hedge.

Derivatives are reported at fair value on the accompanying Consolidated Balance Sheets.

The unrealized gain or losses on our hedges is reported as a component of Accumulated Other Comprehensive Loss on the accompanying Consolidated Balance Sheets, and reclassified to Other interest expense, net in the accompanying Consolidated Statements of Income in the period during which the hedged transaction affects earnings.

The unrealized gains or losses on our hedges is reported as a component of Accumulated Other Comprehensive Loss on the accompanying Consolidated Balance Sheets, and reclassified to Other interest expense, net in the accompanying Consolidated Statements of Income in the period during which the hedged transaction affects earnings.

We are self-insured for employee medical claims and maintain stop-loss insurance for large-dollar individual claims.

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Revenue Recognition

Please refer to Note 2 "Revenue Recognition" within the accompanying Consolidated Financial Statements.

Please refer to Note 2 "Revenue Recognition".

Internal Profit

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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 by 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 the same issue, and retained earnings.

During the year ended December 31, 2019 , the Company retired 202,379 shares of its common stock repurchased pursuant to the Repurchase Program ("Retired Shares") and previously held by the Company as Treasury Shares in the amount of $ 15.3 million .

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 by 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 the same issue, and retained earnings.

The Company did no t repurchase any shares under the Repurchase Program or retire any treasury shares during 2020.

Earnings per Common Share

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We expense costs of advertising as incurred and production costs when the advertising initially takes place, net of certain advertising credits and other discounts received from certain automobile manufacturers.

Advertising expense from continuing operations totaled $ 34.4 million , $ 30.6 million and $ 30.3 million for the years ended December 31, 2019 , 2018 and 2017 , which was net of earned advertising credits of $ 21.1 million , $ 21.0 million , and $ 18.0 million , respectively, and is included in Selling, general, and administrative expense in the accompanying Consolidated Statements of Income.

Advertising expense totaled $ 25.5 million, $ 34.4 million and $ 30.6 million for the year ended December 31, 2020, 2019 and 2018, which was net of earned advertising credits of $ 19.6 million, $ 21.1 million, and $ 21.0 million, respectively, and is included in Selling, general, and administrative expense in the accompanying Consolidated Statements of Income.

We use the liability method to account for income taxes.

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Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Act.

The Tax Act makes broad and complex changes to the U.S.

tax code, including, but not limited to, a reduction in the U.S.

federal corporate income tax rate from 35% to 21%.

In 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%.

The provisional amount recorded related to the remeasurement of our deferred tax balance resulted in a $ 7.9 million reduction to our net deferred tax liability as of December 31, 2017.

The staff of the U.S.

Securities and Exchange Commission issued Staff Accounting Bulletin No.

118 ("SAB 118") on December 22, 2017, which provided guidance on accounting for the income tax effects of the Tax Act.

SAB 118 provides a measurement period that should not extend beyond one year from December 22, 2017, the Tax Act enactment date, for companies to complete the accounting under ASC 740, Income Taxes ("ASC 740").

In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete.

During the third quarter of 2018, the IRS released Notice 2018-68, which clarified a number of changes made to Section 162(m) of the Code by the Tax Act.

As a result of this new guidance, we recorded $ 0.6 million of additional income tax expense related to an adjustment to the deferred tax asset for certain components of share-based compensation.

After considering the additional guidance issued by the U.S.

Treasury Department, state tax authorities and other standard-setting bodies we have completed our accounting for the Tax Act.

Assets Held for Sale and Liabilities Associated with Assets Held for Sale

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Assets and liabilities classified as held for sale include assets and liabilities associated with pending dealership disposals, real estate 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.

Classification as held for sale begins on the date that we have met all of the criteria for classification as held for sale.

Statements of Cash Flows

referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on the accompanying Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments.

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 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 Consolidated Statements of Cash Flows.

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Loaner vehicles are initially used by our service department for only a short period of time (typically 6 to 12 months) before we seek to sell them.

Therefore, we classify the acquisition of loaner vehicles in Other current assets and the borrowings and repayments of loaner vehicle notes payable in Accounts payable and accrued liabilities in the accompanying Consolidated Statements of Cash Flows.

Therefore, we classify the acquisition of loaner vehicles in Other current assets and the borrowings

and repayments of loaner vehicle notes payable in Accounts payable and accrued liabilities in the accompanying Consolidated Statements of Cash Flows.

Loaner vehicles are depreciated over the service period to their estimated value.

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We have substantial debt service obligations.

As of December 31, 2019 , we had total debt of $ 943.3 million , which excluded both $ 28.1 million mortgage notes payable classified as Liabilities associated with assets held for sale and floor plan notes payable, the debt premium on the 6.0 % Senior Subordinated Notes due 2024 (" 6.0 % Notes"), and debt issuance costs.

As of December 31, 2020, we had total debt of $ 1.21 billion, which excluded $ 8.9 million mortgage notes payable classified as Liabilities associated with assets held for sale, floor plan notes payable, debt issuance costs, and the debt premium on the 4.5 % Senior Notes (the " 4.5 % Notes") and 4.75 % Senior Notes (the " 4.75 % Notes") due 2028 and 2030, respectively.

In addition, we and our subsidiaries have the ability to obtain additional debt from time to time to finance acquisitions, real property purchases, capital expenditures, share repurchases or for other purposes, although such borrowings are subject to the restrictions contained in the third amended and restated senior secured credit agreement with Bank of America, N.A.

("Bank of America"), as administrative agent, and the other lenders party thereto (the "2019 Senior Credit Facility"), the indenture governing our 6.0 % Senior Subordinated Notes due 2024 (the "Indenture"), and our other debt instruments.

("Bank of America"), as administrative agent, and the other lenders party thereto (the "2019 Senior Credit Facility"), the indentures governing our 4.5 % Notes and 4.75 % Notes (the "Indentures"), and our other debt instruments.

We will have substantial debt service obligations, consisting of required cash payments of principal and interest, for the foreseeable future.

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Concentrations of credit risk with respect to contracts-in-transit and accounts receivable are limited primarily to automotive manufacturers and financial institutions.

Credit risk arising from receivables from commercial customers is minimal due to the large number of customers comprising our customer base.

Credit risk arising from receivables with commercial customers is minimal due to the large number of customers comprising our customer base.

A significant portion of our new vehicle sales are derived from a limited number of automotive manufacturers.

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Manufacturer (Vehicle Brands):

American Honda Motor Co., Inc.

(Honda and Acura)

Toyota Motor Sales, U.S.A., Inc.

(Toyota and Lexus)

American Honda Motor Co., Inc.

(Honda and Acura)

Mercedes-Benz USA, LLC ( Mercedes-Benz and Sprinter )

Ford Motor Company (Ford and Lincoln)

Nissan North America, Inc.

(Nissan and Infiniti)

Ford Motor Company (Ford and Lincoln)

Mercedes-Benz USA, LLC ( Mercedes-Benz, smart and Sprinter )

BMW of North America, LLC (BMW and Mini)

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Recent Accounting Pronouncements

Effective January 1, 2020, the Company adopted Financial Accounting Standard Board Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments , which changed the way entities assess the impairment of its financial instruments based on its estimate of expected credit losses versus the current incurred loss model.

The adoption of this standard did not have a material impact on our consolidated financial statements.

Effective January 1, 2019, the Company adopted the new lease accounting guidance in Accounting Standards Update (ASU) No.

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Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12").

This update is intended to simplify hedge accounting by better aligning how an entity's risk management activities and hedging relationships are presented in its financial statements and simplifies the application of hedge accounting guidance in certain situations.

This update intended to simplify hedge accounting by better aligning how an entity's risk management activities and hedging relationships are presented in its financial statements and simplifies the application of hedge accounting guidance in certain situations.

This update expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.

For cash flow hedges existing at the adoption date, this update required adoption on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the effective date and the amendments to presentation guidance and disclosure requirements are required to be adopted prospectively.

The adoption of this update did not have a material impact on our Consolidated Financial Statements.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments- Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which requires an entity to assess impairment of its financial instruments based on its estimate of expected credit losses versus the current incurred loss model.

The provisions of ASU 2016-13 are effective for fiscal years beginning after December 15, 2019.

Entities are required to apply these changes through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

We are in the process of finalizing our evaluation of the impact from the adoption of the provisions this ASU will have on our Consolidated Financial Statements;

however, do not expect the impact from the adoption to be material.

REVENUE RECOGNITION

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For the year ended December 31,

2020 2019 2018

New vehicle $ 3,767.4 $ 3,863.3 $ 3,788.7

Used vehicle retail 1,930.0 1,941.3 1,783.3

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New vehicle and used vehicle retail

Revenue from the sale of new and used vehicles (which excludes sales and other taxes) is recognized when the terms of the customer contract are satisfied which generally occurs with the signing of the sales contract and transfer of control of the vehicle to the customer.

Revenue from the sale of new and used vehicles is recognized when the terms of the customer contract are satisfied which generally occurs with the signing of the sales contract and transfer of control of the vehicle to the customer.

Costs associated with incidental items that are immaterial in the context of the contract are accrued at the time of sale.

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The Company recognizes revenue upon transfer of control to the customer which occurs at a point in time.

When the Company performs shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized.

Vehicle repair and maintenance services

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Finance and insurance, net

We receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle service contracts, guaranteed asset protection (known as "GAP") debt cancellation, and other insurance, to end-users.

We receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle service contracts, guaranteed asset protection ("GAP") debt cancellation, and other insurance, to end-users.

Finance and insurance commission revenue is recognized at the point of sale since our performance obligation is to arrange financing or facilitating the sale of a third party's products or services to our customers.

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Contract assets related to vehicle repair and maintenance services are transferred to receivables when a repair order is completed and invoiced to the customer.

Vehicle Repair and Maintenance Services

Finance and Insurance, net

Vehicle Repair and Maintenance Services Finance and Insurance, net Total

(In millions)

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Increases related to revenue recognized, inclusive of adjustments to constraint, during the period 4.1 10.6 14.7

Contract Assets (Current), March 31, 2019

Transferred to receivables from contract assets recognized at the beginning of the period

Increases related to revenue recognized, inclusive of adjustments to constraint, during the period

Contract Assets (Current), June 30, 2019

Contract Assets (Current), December 31, 2018 4.1 10.6 14.7

Transferred to receivables from contract assets recognized at the beginning of the period ( 4.1 ) ( 10.6 ) ( 14.7 )

Increases related to revenue recognized, inclusive of adjustments to constraint, during the period 4.8 12.3 17.1

Contract Assets (Current), September 30, 2019

Contract Assets (Current), December 31, 2019 4.8 12.3 17.1

Transferred to receivables from contract assets recognized at the beginning of the period ( 4.8 ) ( 12.3 ) ( 17.1 )

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Included in this analysis are market participant assumptions related to the cash flows directly attributable to the franchise rights, including 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.

Park Place Acquisition

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 "2019 Asset Purchase Agreement"),

and related agreements and transactions (collectively, the "2019 Acquisition").

On March 24, 2020, we delivered notice to the sellers terminating the 2019 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 Consolidated Statements of Income as Other operating expense (income), net.

See Note 13 "Debt" for details related to the impact on certain financing arrangements as a result of terminating the 2019 Acquisition.

On July 6, 2020, the Company, through two of its subsidiaries, entered into a Revised Asset Purchase Agreement with certain members of the Park Place Dealership group, to acquire substantially all of the assets of, and lease the real property related to, 12 franchises ( 8 dealership locations), two collision centers and an auto auction.

The Revised Transaction was completed on August 24, 2020 and financed through a combination of cash, floor plan facilities and seller financing.

The seller financing comprised $ 150.0 million in aggregate principal amount of a 4.00 % promissory note due August 2021 and $ 50.0 million in aggregate principal amount of a 4.00 % promissory note due February 2022 (collectively, the "Seller Notes").

In September 2020, the Company redeemed the Seller Notes.

See Note 13 "Debt" for further details.

The sources of the purchase consideration are as follows:

(In millions)

Seller Notes 200.0

New Vehicle Floor Plan Facility 127.5

Used Vehicle Floor Plan Facility 35.0

Purchase price $ 889.9

Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on information currently available.

Our valuation for property and equipment is preliminary as of December 31, 2020, as we are finalizing our fair value and related useful lives determinations.

The following table summarizes the allocation of the purchase price based on preliminary estimates of fair value:

(In millions)

Summary of Assets Acquired and Liabilities Assumed

Inventories $ 120.8

Loaner vehicles 57.0

Property and equipment 38.0

Goodwill 358.9

Manufacturer franchise rights 324.0

Operating lease right-of-use assets 202.7

Total assets acquired 1,101.4

Operating lease liabilities ( 202.2 )

Other liabilities ( 9.3 )

Total liabilities assumed ( 211.5 )

Net assets acquired $ 889.9

The Company recorded $ 1.3 million of acquisition related costs during the year ended December 31, 2020.

These costs are included in Selling, general, and administrative in the Consolidated Statements of Income.

The Company's Consolidated Statements of Income included revenue and net income attributable to Park Place from August 24, 2020 through December 31, 2020 of $ 589.6 million and $ 27.6 million, respectively.

The following represents the unaudited pro forma information as if Park Place had been included in the consolidated results of the Company since January 1, 2019:

For the Year Ended December 31,

(In millions)

Pro Forma Revenue $ 7,989.6 $ 8,828.1

Pro Forma Net Income $ 276.2 $ 234.0

This pro forma information incorporates the Company's accounting policies and adjusts the results of Park Place for depreciation, rent expense, and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the Revised Transaction had occurred on January 1, 2019.

They have also been adjusted to reflect the $ 1.3 million of acquisition related costs incurred during 2020 as having occurred on January 1, 2019.

The pro forma information also assumes that the September 2020 divestiture of the Lexus Greenville dealership, which was related to the Park Place acquisition, occurred on January 1, 2019.

Other Acquisitions and Divestitures

In addition to the Revised Transaction, during the year ended December 31, 2020, we acquired the assets of three franchises ( one dealership location) in the Denver, Colorado market for a combined purchase price of $ 63.6 million.

We funded this acquisition 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, 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 $ 2.5 million of purchase price holdbacks related to current and prior year acquisitions during the year ended December 31, 2020.

During the year ended December 31, 2019, we acquired the assets of nine franchises ( five dealership locations) and one collision center in the Indianapolis, Indiana market and one franchise ( one dealership location) in the Denver, Colorado market for a combined purchase price of $ 210.4 million.

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Consideration payable to fund these acquisitions included $ 68.6 million of cash, $ 22.7 million of floor plan borrowings for the purchase of the related new vehicle inventory, and purchase price holdbacks of $ 1.9 million for potential indemnity claims made by us with respect to the acquired franchises.

During the year ended December 31, 2017, we acquired the assets of two franchises ( two dealership locations) and one collision center in the Indianapolis, Indiana market for an aggregate purchase price of $ 80.1 million .

We funded these acquisitions with $ 55.0 million of cash and $ 25.1 million of floor plan borrowings for the purchase of the related new vehicle inventory.

Below is the allocation of purchase price for the acquisitions for the years ended December 31, 2019 and 2018.

Below is the allocation of the purchase price for the acquisitions (other than Park Place) for the year ended December 31, 2020 and 2019.

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.

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(In millions)

Inventory $ 29.8 $ 70.9

Real estate 14.5 43.1

Property and equipment 0.4 4.5

Goodwill 5.4 25.9

Manufacturer franchise rights 13.8 65.3

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Liabilities assumed — ( 0.8 )

Other $ ( 0.3 ) $ —

Total purchase price $ 63.6 $ 210.4

On December 11, 2019, we announced the 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").

See Note 23 "Subsequent Events" of the Notes to Consolidated Financial Statements for more information

During the year ended December 31, 2020, we sold two franchises ( two dealership locations) in the Atlanta, Georgia market, we sold six franchises ( five dealership locations) and one collision center in the Jackson, Mississippi market, and we sold one franchise ( one dealership location) in the Greenville, South Carolina market.

The Company recorded a pre-tax gain totaling $ 62.3 million, which is presented in our accompanying Consolidated Statements of Income as Gain on dealership divestitures, net.

During the year ended December 31, 2019, we sold one franchise ( one dealership location) and one collision center in the Houston, Texas market.

The Company divested $ 30.1 million of assets, which primarily consisted of inventory and property and equipment, resulting in a pre-tax gain of $ 11.7 million, which is presented in our accompanying Consolidated Statements of Income as Gain on divestitures.

The divested business would not be considered a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X.

We did not divest any dealerships during the years ended December 31, 2018 and 2017.

The divested businesses would not be considered a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X.

We did no t divest any dealerships during the year ended December 31, 2018.

ACCOUNTS RECEIVABLE

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Total accounts receivable 156.7 137.6

Less—Allowance for doubtful accounts

Less—Allowance for credit losses ( 1.2 ) ( 1.4 )

Accounts receivable, net $ 155.5 $ 136.2

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(In millions)

New vehicles $ 640.0 $ 802.6

Used vehicles 188.5 140.1

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Total inventories $ 875.2 $ 985.0

The lower of cost and net realizable value reserves reduced total inventory cost by $ 6.1 million as of December 31, 2019 and December 31, 2018 .

The lower of cost and net realizable value reserves reduced total inventory cost by $ 6.7 million and $ 6.1 million, respectively as of December 31, 2020 and December 31, 2019.

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 December 31, 2019 and December 31, 2018 , certain automobile manufacturer incentives reduced new vehicle inventory cost by $ 9.6 million and $ 10.1 million , respectively, and reduced new vehicle cost of sales from continuing operations for the years ended December 31, 2019 , 2018 , and 2017 by $ 45.7 million , $ 42.4 million , and $ 40.1 million , respectively.

As of December 31, 2020 and December 31, 2019, certain automobile manufacturer incentives reduced new vehicle inventory cost by $ 8.3 million and $ 9.6 million, respectively, and reduced new vehicle cost of sales for the year ended December 31, 2020, 2019, and 2018 by $ 47.0 million, $ 45.7 million, and $ 42.4 million, respectively.

ASSETS HELD FOR SALE

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As of December 31,

Inventory $ — $ 67.7

Loaners, net — 3.0

Property and equipment, net 28.3 69.0

Operating lease right-of-use assets — 6.9

Goodwill — 5.3

Franchise rights — 2.3

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Net assets held for sale $ 19.4 $ 53.3

As of December 31, 2019, there were seven franchises ( six dealership locations) and one collision center pending disposition, with assets and liabilities totaling $ 115.3 million and $ 92.6 million , respectively.

As of December 31, 2020 assets held for sale consisted of three real estate properties that are not currently used in our operations.

The assets and liabilities associated with these properties totaled $ 28.3 million and $ 8.9 million, respectively.

As of December 31, 2019, assets held for sale consisted of seven franchises ( six dealership locations) and one collision center, in addition to four real estate properties.

Assets and liabilities totaled $ 154.2 million and $ 100.9 million, respectively.

During the twelve months ended December 31, 2020, the Company recorded a net pre-tax gain totaling $ 33.7 million, on the sale of these dealerships.

Additionally, during the year ended December 31, 2020 and 2019, we sold one vacant property with a net book value of $ 3.7 million and two vacant properties with total net book values of $ 14.6 million, respectively.

During the year ended December 31, 2020, we recorded $ 0.7 million of impairment expense related to a real estate property we were actively marketing to sell, based on offers received from prospective buyers and third-party brokers' opinions of value.

We did no t record impairment expense associated with real estate properties that we were actively marketing to sell during the year ended December 31, 2019.

In January 2021, the Company's Board of Directors authorized Management's request for approval to divest of one dealership location.

The Company is currently in negotiations with a potential buyer for this dealership.

Real estate assets held for sale not currently used in our operations and other real estate assets, totaled $ 38.9 million and $ 26.3 million as of December 31, 2019 and December 31, 2018, respectively.

As of December 31, 2019 there was $ 8.3 million of mortgage payable and as of December 31, 2018, no liabilities associated with these real estate assets held for sale.

Additionally, during the years ended December 31, 2019 and 2018, we sold two vacant properties with a net book value of $ 14.6 million and two vacant properties with total net book values of $ 4.0 million , respectively.

We did no t record any impairment expense associated with real estate properties that we were actively marketing to sell during the years ended December 31, 2019 or 2018.

OTHER CURRENT ASSETS

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Prepaid taxes 7.1 4.7

Deposits 1.1 11.0

Other 5.8 6.6

Other current assets $ 183.8 $ 129.0

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(In millions)

Land $ 350.5 $ 343.8

Buildings and leasehold improvements 691.6 622.9

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(a) Amounts reflected for Property and equipment, net as of December 31, 2020 and 2019, excluded $ 28.3 million and $ 69.0 million, respectively classified as Assets held for sale.

In addition, Property and equipment, net as of December 31, 2019 and 2018 included finance and capital leases of $ 14.6 million and $ 2.3 million , respectively.

During the years ended December 31, 2019 , 2018 , and 2017 , we capitalized $ 0.6 million , $ 0.5 million , and $ 0.2 million , respectively, of interest in connection with various capital projects to upgrade or remodel our facilities.

Depreciation expense was $ 36.2 million , $ 33.7 million , and $ 32.1 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

In addition, Property and equipment, net as of December 31, 2020 and 2019 included finance and capital leases of $ 14.6 million.

During the year ended December 31, 2020, 2019, and 2018, we capitalized $ 0.4 million, $ 0.6 million, and $ 0.5 million, respectively, of interest in connection with various capital projects to upgrade or remodel our facilities.

Depreciation expense was $ 38.5 million, $ 36.2 million, and $ 33.7 million for the year ended December 31, 2020, 2019, and 2018, respectively.

GOODWILL AND INTANGIBLE FRANCHISE RIGHTS

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Intangible franchise rights is an asset representing our rights under franchise agreements with vehicle manufacturers.

The changes in goodwill and intangible franchise rights for the years ended December 31, 2019 and 2018 are as follows:

Goodwill and intangible franchise rights are tested annually as of October 1st, or more frequently in the event that facts and circumstances indicate a triggering event has occurred.

The changes in goodwill and intangible franchise rights for the year ended December 31, 2020 and 2019 are as follows:

(In millions)

Balance as of December 31, 2018 (a) $ 181.2

Balance as of December 31, 2018 (a)

Acquisitions 25.9

Divestitures ( 0.1 )

Reclassified to assets held for sale ( 5.3 )

Balance as of December 31, 2019 (a) 201.7

Acquisitions 364.3

Divestitures ( 9.1 )

Reclassified from assets held for sale 5.3

Balance as of December 31, 2020 (a) $ 562.2

_____________________________

Net of accumulated impairment losses of $ 537.7 million recorded prior to the year ended December 31, 2017 .

(a) Net of accumulated impairment losses of $ 537.7 million recorded prior to the year ended December 31, 2018.

Intangible Franchise Rights

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Balance as of December 31, 2018 $ 65.8

Balance as of December 31, 2018

Acquisitions 65.3

Impairments ( 7.1 )

Reclassified to assets held for sale ( 2.3 )

Balance as of December 31, 2019 $ 121.7

Goodwill and intangible franchise rights are tested annually as of October 1st or more frequently in the event that facts and circumstances indicate a triggering event has occurred.

Goodwill impairment is recognized based on the difference between the carrying value of a reporting unit and its fair value.

We elected to perform a qualitative assessment as of October 1, 2019 for all but one reporting unit for which we performed a quantitative assessment.

We elected a qualitative assessment for our October 1, 2018 goodwill impairment testing and determined for both assessments as of October 1, 2019 and 2018, that it was more likely than not that the fair value exceeded the carrying value of our reporting units.

The quantitative impairment test for franchise rights includes comparison of the estimated fair value to the carrying value for each of our intangible franchise rights.

Acquisitions 337.8

Divestitures ( 11.3 )

Impairments ( 23.0 )

Balance as of December 31, 2020 $ 425.2

As a result of the adverse impact on our dealership operations caused by the COVID-19 pandemic in the first quarter of 2020, 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 goodwill associated with the 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 March 31, 2020.

We also 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 include 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.

We elected to perform a quantitative assessment for our October 1, 2019 and 2018 franchise rights impairment testing.

In connection with our testing, we identified the carrying values of certain of our intangible franchise rights exceeded fair value, and as a result, recognized $ 7.1 million and $ 3.7 million in pre-tax non-cash impairment charges during the years ended December 31, 2019 and 2018 , respectively.

The results of the quantitative impairment testing for certain franchise rights as of March 31, 2020, identified that the carrying values of certain of our franchise rights assets exceeded their fair value.

As a result, we recognized a $ 23.0 million pre-tax non-cash impairment charge during the three months ended March 31, 2020.

We elected to perform a qualitative assessment of our annual goodwill impairment test as of October 1, 2020 for all reporting units and concluded that it was more likely than not that the fair values exceeded the carrying values of our reporting units.

We elected to perform a qualitative assessment for our October 1, 2019 goodwill impairment testing for all but one

reporting unit and determined for both assessments that it was more likely than not that the fair values exceeded the carrying values of our reporting units.

We elected to perform a qualitative assessment for our annual October 1, 2020 franchise rights impairment testing and concluded that it was more likely than not that the fair values of the franchise rights exceeded their carrying values.

We elected to perform an annual quantitative assessment for our October 1, 2019 franchise rights impairment testing.

In connection with our testing, we identified the carrying values of certain of our intangible franchise rights exceeded fair value, and as a result, recognized $ 7.1 million in pre-tax non-cash impairment charges during the year ended December 31, 2019.

FLOOR PLAN NOTES PAYABLE—TRADE

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We have a floor plan facility with the 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.

This floor plan facility does not have a stated borrowing limitation.

We established a floor plan offset account with Ford Credit, that allows us to transfer cash as an offset to floor plan notes payable.

Our floor plan facility with Ford Credit was amended in July 2020 to extend the maturity date to July 31, 2021.

This floor plan does not have a stated borrowing limitation.

We have established a floor plan notes payable offset account with Ford Credit that allows us to transfer cash to the account as an offset to our outstanding Floor Plan Notes Payable—Trade.

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 using our floor plan offset account, we experience a reduction in Floor plan interest expense on our Consolidated Statements of Income.

As a result of using our floor plan offset account, we experienced a reduction in Floor plan interest expense on our Consolidated Statements of Income.

The representations and covenants contained in the agreement governing our floor plan facility with Ford Credit are customary for financing transactions of this nature.

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(In millions)

Floor plan notes payable—new non-trade

Floor plan notes payable—used non-trade

Floor plan notes payable—new non-trade (a) $ 715.9 $ 773.6

Floor plan notes payable offset account ( 78.6 ) ( 115.9 )

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In addition, we are able to convert 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 , we converted $ 190.0 million of availability under our Revolving Credit Facility to our New Vehicle Floor Plan Facility.

We converted this amount to take advantage of the lower commitment fee rates on our new vehicle floor plan facility when compared to our revolving credit facility.

We began the year with $ 190.0 million of availability under the Revolving Credit Facility 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, we re-allocated the entire $ 190.0 million from the New Vehicle Floor Plan Facility to the Revolving Credit Facility.

In connection, with the New Vehicle Floor Plan Facility, we continue to maintain an offset account with Bank of America that allows us to transfer cash as an offset to floor plan notes payable.

As a result of the use of our floor plan offset account, we experience a reduction in Floor plan interest expense on our Consolidated Statements of Income.

As a result of the use of our floor plan offset account, we experienced a reduction in Floor plan interest expense on our Consolidated Statements of Income.

Borrowings under the 2019 Senior Credit Facility bear interest, at our option, based on the London Interbank Offered Rate ("LIBOR") or the Base Rate, in each case plus an Applicable Rate.

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Additionally, we have a similar floor plan offset account with Bank of America that allows us to offset our outstanding Floor Plan Notes Payable—Non-Trade.

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 accounts into our operating cash accounts within one to two days.

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 accounts into our operating cash accounts within one to two days.

As of December 31, 2020 and December 31, 2019 we had $ 85.4 million and $ 132.1 million, respectively, in these floorplan offset accounts.

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Loaner vehicles notes payable (a) 132.7 83.9

Taxes payable 69.1 30.5

Accrued compensation 43.7 30.5

Accrued finance and insurance chargebacks

Accrued insurance 24.3 25.3

Taxes payable

Accrued advertising

Accrued finance and insurance chargebacks 23.3 22.9

Accrued interest 16.4 6.0

Accrued licenses and regulatory fees 9.6 3.0

Customer deposits 8.7 5.1

Accrued advertising 3.2 5.1

Customer we owe liabilities 2.8 3.3

Other 19.5 11.4

Accounts payable and accrued liabilities $ 450.9 $ 308.7

1 unchanged sentence

(a) Amounts reflected for Loaner vehicles notes payable as of December 31, 2019, excluded $ 3.1 million classified as Liabilities associated with assets held for sale.

LONG-TERM DEBT

Long-term debt consisted of the following:

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6.0 % Senior Subordinated Notes due 2024

Mortgage notes payable bearing interest at fixed rates (the weighted average interest rates were 5.3% and 5.2% for the years ended December 31, 2019 and 2018, respectively)

2018 BofA Real Estate Facility (a)

2018 Wells Fargo Master Loan Facility

2013 BofA Real Estate Facility

4.50 % Senior Notes due 2028

4.75 % Senior Notes due 2030

Mortgage notes payable bearing interest at fixed rates (the weighted average interest rates were 5.4 % and 5.3 % for the year ended December 31, 2020 and 2019, respectively)

2018 Bank of America Facility (a) 84.2 88.3

2018 Wells Fargo Master Loan Facility (b) 86.9 25.0

2013 BofA Real Estate Facility 33.6 35.5

2015 Wells Fargo Master Loan Facility (c) 61.7 76.8

Finance lease liability 16.6 17.2

1 unchanged sentence

Add—unamortized premium on 6.0 % Senior Subordinated Notes due 2024

Add—unamortized premium on 4.50 % Senior Notes due 2028

Add—unamortized premium on 4.75 % Senior Notes due 2030

Less—debt issuance costs ( 13.7 ) ( 9.0 )

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(b) Amounts reflected for the 2018 Wells Fargo Master Loan Facility as of December 31, 2020, exclude $ 5.1 million classified as Liabilities associated with assets held for sale.

(c) Amounts reflected for the 2015 Wells Fargo Master Loan Facility as of December 31, 2020 and December 31, 2019, exclude $ 3.8 million and $ 1.5 million classified as Liabilities associated with assets held for sale, respectively.

The aggregate maturities of long-term debt as of December 31, 2020 are as follows (in millions):

Thereafter 931.6

Total maturities of long-term debt $ 1,221.1

1 unchanged sentence

Includes amounts classified as Liabilities associated with assets held for sale.

6.0% Senior Subordinated Notes due 2024

In December 2014, we completed a refinancing of certain of our long-term debt, which included the issuance of $ 400.0 million of 6.0 % Notes, the proceeds of which were used to redeem the $ 300.0 million in outstanding aggregate principal of our 8.375 % Senior Subordinated Notes due 2020 (the " 8.375 % Notes").

In October 2015, we completed an add-on issuance of $ 200.0 million aggregate principal amount of our 6.0 % Notes at a price of 104.25 % of par, plus accrued interest from June 15, 2015 (the "October 2015 Offering").

After deducting the initial purchasers' discounts and expenses we received net proceeds of approximately $ 210.2 million from this offering.

The $ 8.5 million premium paid by the initial purchasers of the 6.0 % Notes was recorded as a component of Long-Term Debt on our Consolidated Balance Sheet and is being amortized as a reduction of interest expense over the remaining term of the 6.0 % Notes.

Based on the amortization of the debt premium, the effective interest rate on the 6.0 % Notes issued in the October 2015 Offering is 5.41 % .

In addition, we capitalized $ 3.8 million of costs associated with the issuance and sale of the 6.0 % Notes, of which $ 2.8 million of underwriters fees were withheld from the proceeds received from the issuance.

These costs are being amortized to interest expense over the remaining term of the 6.0 % Notes using the effective interest method.

New Senior Notes

In connection with the 2019 Acquisition, on February 19, 2020, the Company completed its offering of senior unsecured notes (the "February 2020 Offering"), consisting of $ 525.0 million aggregate principal amount of 4.50 % Senior Notes due 2028 (the "Existing 2028 Notes") and together with the Additional 2028 Notes ((as defined below), the "2028 Notes") and $ 600.0 million aggregate principal amount of 4.75 % Senior Notes due 2030 (the "Existing 2030 Notes" and, together with the Existing 2028 Notes, the "Existing Notes") and together with the Additional 2030 Notes ((as defined below), the "2030 Notes").

The Company paid lender fees of $ 6.8 million in conjunction with the February Notes Offering and incurred additional debt issuance costs of $ 3.1 million.

As a result of the termination of the 2019 Acquisition, the Company delivered a notice of special mandatory redemption to holders of its Existing 2028 Notes and Existing 2030 Notes pursuant to which it would redeem on a pro rata basis (1) $ 245.0 million of the Existing 2028 Notes and (2) $ 280.0 million of the 2030 Existing 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.

In September 2020, the Company completed an issuance of $ 250.0 million aggregate principal amount of additional senior unsecured notes (the "September 2020 Offering") consisting of $ 125.0 million aggregate principal amount of additional 4.50 % Senior Notes due 2028 (the "Additional 2028 Notes") at a price of 101.00 % of par, plus accrued interest from September 1, 2020, and $ 125.0 million aggregate principal amount of additional 4.75 % Senior Notes due 2030 (the "Additional 2030 Notes" and together with the Additional 2028 Notes, the "Additional Notes") at a price of 101.75 % of par, plus accrued interest from September 1, 2020.

After deducting the initial purchasers' discounts of $ 2.8 million, we received net proceeds of approximately $ 250.6 million from the September 2020 Offering.

The $ 3.5 million premium paid by the initial purchasers of the Additional Notes was recorded as a component of long-term debt on our Consolidated Balance Sheet and is being amortized as a reduction of interest expense over the remaining term of the Notes.

The proceeds of the September 2020 Offering were used to redeem the Seller Notes issued in connection with the Revised Transaction and repay approximately $ 50.0 million in aggregate principal amount outstanding under our Revolving Credit Facility.

The lender fees and other debt issuance costs incurred are being amortized over the terms 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 February 2020 Offering, together with additional borrowings and cash on hand, was incurred 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.

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 were required to be registered under the Securities Act of 1933 within 270 days of the closing date for the offering.

The Company completed the registration of the 2028 Notes and 2030 Notes in October 2020.

We are a holding company with no independent assets or operations.

For all relevant periods presented, our 6.0 % Notes have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries.

For all relevant periods presented, 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 that have not guaranteed such notes are "minor" (as defined in Rule 3-10(h) of Regulation S-X).

As of December 31, 2020, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or our guarantor subsidiaries.

6.0 % Senior Subordinated Notes due 2024

On February 3, 2020, we issued a conditional notice of redemption to the holders of our 6 % Senior Subordinated Notes due 2024 (the " 6 % Notes"), notifying such holders that we intended 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 net write-off of the unamortized premium and debt issuance costs of $ 1.1 million related to the 6 % Notes on the redemption date

The Seller Notes comprised $ 150.0 million in aggregate principal amount of 4.00 % promissory note due August 2021 and $ 50.0 million in aggregate principal amount of a 4.00 % promissory note due February 2022 and were issued on August 24, 2020 in conjunction with the Revised Transaction.

In September 2020, the Company redeemed the Seller Notes with the proceeds of the September 2020 Offering.

Mortgage Notes Payable

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Borrowings under the 2018 BofA Real Estate Facility are guaranteed by each of our operating dealership subsidiaries whose real estate is financed under the 2018 BofA Real Estate Facility, and are collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder.

As of December 31, 2019 and 2018 , we had $ 88.3 million and $ 25.7 million , respectively, in term loans outstanding under the 2018 BofA Real Estate Facility.

As of December 31, 2020 and 2019, we had $ 84.2 million and $ 88.3 million, respectively, in term loans outstanding under the 2018 BofA Real Estate Facility, which excludes amounts classified as Liabilities associated with assets held for sale.

2018 Wells Fargo Master Loan Facility

On November 16, 2018, certain of our subsidiaries entered into a master loan agreement (the “2018 Wells Fargo Master Loan Agreement” and, together with the 2013 BofA Real Estate Credit Agreement, the 2015 Wells Fargo Master Loan Agreement and the 2018 BofA Real Estate Agreement, the “Existing Real Estate Credit Agreements”) with Wells Fargo Bank, National Association, as lender, which provides for term loans to certain of our subsidiaries that are borrowers under the Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $ 100.0 million (the "Wells Fargo Master Loan Facility"), subject to customary terms and conditions (the “2018 Wells Fargo Master Loan Facility” and, together with the 2013 BofA Real Estate Facility, the 2015 Wells Fargo Master Loan Facility and the 2018 BofA Real Estate Facility, the “Existing Real Estate Facilities”).

Our right to make draws under the 2018 Wells Fargo Master Loan Facility will terminate on June 30, 2020.

Our right to make draws under the 2018 Wells Fargo Master Loan Facility terminated on June 30, 2020.

Term loans under the 2018 Wells Fargo Master Loan Facility bear interest based on LIBOR plus an applicable margin based on a pricing grid ranging from 1.50 % per annum to 1.85 % per annum based on our consolidated total lease adjusted leverage ratio.

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Borrowings under the 2018 Wells Fargo Master Loan Facility are guaranteed by us pursuant to an unconditional guaranty, and all of the real property financed by any of our operating dealership subsidiaries under the 2018 Wells Fargo Master Loan Facility is collateralized by first priority liens, subject to certain permitted exceptions.

As of December 31, 2019 and 2018 , we had $ 25.0 million outstanding borrowings under the 2018 Wells Fargo Master Loan Facility.

On June 26, 2020, the Company borrowed an additional $ 69.4 million under the 2018 Wells Fargo Master Loan Facility.

As of December 31, 2020 and 2019, we had $ 86.9 million and $ 25.0 million, respectively, outstanding borrowings under the 2018 Wells Fargo Master Loan Facility, which excludes amounts classified as Liabilities associated with assets held for sale.

2015 Wells Fargo Master Loan Facility

On February 3, 2015, certain of our subsidiaries entered into an amended and restated master loan agreement (as amended, restated or supplemented from time to time, the “2015 Wells Fargo Master Loan Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as lender, which provides form term loans to certain of our subsidiaries that are borrowers under the 2015 Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $ 100.0 million (the “2015 Wells Fargo Master Loan Facility”).

Our right to make draws under the 2015 Wells Fargo Master Loan Facility terminated on February 1, 2016.

Term loans under the 2015 Wells Fargo Master Loan Facility bear interest based on LIBOR plus 1.85 %.

We are required to make quarterly principal payments with respect to the initial amount of each loan in 108 equal monthly principal payments based on a hypothetical 19 year amortization schedule, with a balloon repayment of the outstanding principal amount of loans due on February 1, 2025.

Borrowings under the 2015 Wells Fargo Master Loan Facility can be voluntarily prepaid in whole or in part any time without premium or penalty.

Borrowings under the 2015 Wells Fargo Master Loan Facility are guaranteed by us pursuant to an unconditional guaranty, and all of the real property financed by any of our operating dealership subsidiaries under the 2015 Wells Fargo Master Loan Facility is collateralized by first priority liens, subject to certain permitted exceptions.

As of December 31, 2020 and 2019, we had $ 61.7 million and $ 76.8 million, respectively, outstanding under the 2015 Wells Fargo Master Loan Facility, which excludes amounts classified as Liabilities associated with assets held for sale.

2013 BofA Real Estate Facility

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As of December 31, 2020 and 2019, we had $ 33.6 million and $ 35.5 million, respectively, in term loans outstanding under the 2013 BofA Real Estate Facility.

2015 Wells Fargo Master Loan Facility

Our right to make draws under the 2015 Wells Fargo Master Loan Facility terminated on February 1, 2016.

Term loans under the 2015 Wells Fargo Master Loan Facility bear interest based on LIBOR plus 1.85 % .

Borrowings under the 2015 Wells Fargo Master Loan Facility can be voluntarily prepaid in whole or in part any time without premium or penalty.

As of December 31, 2019 and 2018 , we had $ 76.8 million and $ 83.3 million , respectively, outstanding under the 2015 Wells Fargo Master Loan Facility.

Below is a summary of our outstanding mortgage notes payable, the carrying values of the related collateralized real estate, and years of maturity as of December 31, 2019 and 2018 :

As of December 31, 2019

As of December 31, 2018

Mortgage Agreement

Aggregate Principal Outstanding

Carrying Value of Collateralized Related Real Estate

Maturity Dates

Aggregate Principal Outstanding

Carrying Value of Collateralized Related Real Estate

Maturity Dates

Below is a summary of our outstanding mortgage notes payable, the carrying values of the related collateralized real estate, and year of maturity as of December 31, 2020 and 2019:

As of December 31, 2020 As of December 31, 2019

Mortgage Agreement Aggregate Principal Outstanding Carrying Value of Collateralized Related Real Estate Maturity Dates Aggregate Principal Outstanding Carrying Value of Collateralized Related Real Estate Maturity Dates

Captive mortgages $ 77.4 $ 201.7 2020-2024 $ 80.8 $ 182.1 2019-2024

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2018 BofA Real Estate Facility (a) 84.2 106.2 2025 88.3 123.6 2025

2018 Wells Fargo Master Loan Facility

2013 BofA Real Estate Facility

2018 Wells Fargo Master Loan Facility (b) 86.9 112.9 2028 25.0 113.7 2028

2013 BofA Real Estate Facility 33.6 73.3 2023 35.5 74.6 2023

2015 Wells Fargo Master Loan Facility (c) 61.7 109.6 2025 76.8 120.6 2025

Total mortgage debt $ 345.6 $ 646.9 $ 326.1 $ 658.5

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(b) Amounts reflected for the 2018 Wells Fargo Master Loan Facility as of December 31, 2020 exclude $ 5.1 million classified as Liabilities associated with assets held for sale.

(c) Amounts reflected for the 2015 Wells Fargo Master Loan Facility as of December 31, 2020 and 2019, exclude $ 3.8 million and $ 1.5 million, respectively, classified as Liabilities associated with assets held for sale.

Revolving Credit Facility

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We may request Bank of America to issue letters of credit on our behalf thereunder up to $ 50.0 million.

Availability under the Revolving Credit Facility is limited by borrowing base calculations.

Availability is reduced on a dollar-for-dollar basis by the aggregate face amount of any outstanding letters of credit.

As of December 31, 2019 , we converted $ 190.0 million of borrowing capacity from our Revolving Credit Facility to our New Vehicle Revolving Floor Plan Facility, resulting in $ 60.0 million of borrowing capacity.

In addition, we had $ 12.7 million in outstanding letters of credit, resulting in $ 47.3 million of borrowing availability as of December 31, 2019 .

Availability under the Revolving Credit Facility is limited by borrowing base calculations and is reduced on a dollar-for-dollar basis by the aggregate face amount of any outstanding letters of credit.

We had $ 12.7 million in outstanding letters of credit, resulting in $ 237.3 million of borrowing availability as of December 31, 2020.

Proceeds from borrowings from time to time under the revolving credit facility may be used for among other things, acquisitions, working capital and capital expenditures.

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The Base Rate is the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the Bank of America prime rate, and (iii) one month LIBOR plus 1.00 %.

Applicable Rate means with respect to the Revolving Credit Facility, (i) until the Company delivers a certificate with respect to its consolidated total lease adjusted leverage ratio as of September 30, 2019 to Bank of America, as administrative agent, 1.25 % for LIBOR loans and 0.25 % for Base Rate loans and (ii) thereafter a range from 1.00 % to 2.00 % for LIBOR loans and 0.15 % to 1.00 % for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio.

2020 to Bank of America, as administrative agent, 1.25 % for LIBOR loans and 0.25 % for Base Rate loans and (ii) thereafter a range from 1.00 % to 2.00 % for LIBOR loans and 0.15 % to 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 Floorplan Facility bear interest, at our option, based on LIBOR plus 1.10 % or the Base Rate plus 0.10 %.

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Upon the occurrence of an event of default, the Company could be required to immediately repay all amounts outstanding under the applicable facility.

The representations and covenants contained in the agreement governing the 2019 Senior Credit Facility are customary for financing transactions of this nature including, among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the agreement governing the 2019 Senior Credit Facility.

In addition, certain other covenants could restrict the Company's ability to incur additional debt, pay dividends or acquire or dispose of assets.

The agreement governing the 2019 Senior Credit Facility also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness.

In certain instances, an event of default under either the Revolving Credit Facility or the Used Vehicle Floor Plan Facility could be, or result in, an event of default under the New Vehicle Floor Plan Facility, and vice versa.

Upon the occurrence of an event of default, the Company could be required to immediately repay all amounts outstanding under the applicable facility.

The representations and covenants contained in the 2018 BofA Real Estate Credit Agreement are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2018 BofA Real Estate Credit Agreement.

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In addition, certain other covenants could restrict our ability to incur additional debt, pay dividends or acquire or dispose of assets.

The 2018 BofA Real Estate Credit Agreement also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material

indebtedness.

The 2013 BofA Real Estate Credit Agreement also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness.

Upon the occurrence of an event of default, we could be required by the 2013 BofA Real Estate Credit Agreement to immediately repay all amounts outstanding thereunder.

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6.0 % Senior Subordinated Notes due 2024

4.50 % Senior Notes due 2028

4.75 % Senior Notes due 2030

Mortgage notes payable (a) 343.7 323.4

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6.0 % Senior Subordinated Notes due 2024

4.50 % Senior Notes due 2028

4.75 % Senior Notes due 2030

Mortgage notes payable (a) 354.5 364.2

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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, through maturity in February 2025.

The notional values of this swap as of December 31, 2019 and 2018 , were $ 79.8 million and $ 85.1 million , respectively, and the notional value will reduce 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, through maturity in September 2023.

The notional values of this swap as of December 31, 2019 and 2018 , were $ 52.7 million and $ 56.5 million , respectively, and the notional value will reduce over its remaining term to $ 38.7 million at maturity.

We currently have four interest rate swap agreements, two of which were entered into in July 2020.

Each of these swaps were designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR.

The following table provides information on the attributes of each swap as of December 31, 2020:

Inception Date Notional Principal Amount Notional Value as of December 31, 2020

Maturity Value Maturity Date

(In millions)

July 2020 $ 93.5 $ 91.8 $ 50.6 December 2028

July 2020 $ 85.5 $ 84.1 $ 57.3 November 2025

June 2015 $ 100.0 $ 74.6 $ 53.1 February 2025

November 2013 $ 75.0 $ 49.0 $ 38.7 September 2023

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.

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Other than this input, all other inputs used in the valuation for these swaps are designated to be Level 2 fair values.

The fair value of our swaps for the years ended December 31, 2019 and 2018 , reflect a liability of $ 3.8 million and an asset of $ 0.6 million , respectively.

The fair value of our swaps for the year ended December 31, 2020 and 2019, reflect a liability of $ 7.2 million and $ 3.8 million, respectively.

The following table provides information regarding the fair value of our interest rate swap agreements and the impact on the Consolidated Balance Sheets:

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(In millions)

Other current liabilities/(assets)

Other long-term liabilities/(assets)

Other current liabilities $ 2.8 $ 0.9

Other long-term liabilities 4.4 2.9

Total fair value $ 7.2 $ 3.8

Both of our interest rate swaps qualify for cash flow hedge accounting treatment.

These interest rate swaps are marked to market at each reporting date and any unrealized gain or losses are included in accumulated other comprehensive income and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings.

Information about the effects of our interest rate swap agreements on the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, are as follows (in millions):

For the Year Ended December 31,

Results Recognized in Accumulated Other Comprehensive Loss

(Effective Portion)

Location of Results Reclassified from Accumulated Other Comprehensive Loss

Our interest rate swaps qualify for cash flow hedge accounting treatment.

These interest rate swaps are marked to market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings.

Information about the effect of our interest rate swap agreements in the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, is as follows (in millions):

For the Year Ended December 31, Results Recognized in Accumulated Other Comprehensive Loss

(Effective Portion) Location of Results Reclassified from Accumulated Other Comprehensive Loss

Results Reclassified from Accumulated Other Comprehensive Loss

2020 $ ( 6.1 ) Other interest expense, net $ ( 2.5 )

Swap interest expense

2019 $ ( 4.4 ) Other interest expense, net $ —

2018 $ 1.8 Swap interest expense $ ( 0.5 )

On the basis of yield curve conditions as of December 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 $ 2.8 million.

The components of income tax expense from continuing operations are as follows:

For the Years Ended December 31,

The components of income tax expense are as follows:

For the Year Ended December 31,

2020 2019 2018

(In millions)

Federal $ 64.5 $ 46.3 $ 43.8

State 9.8 8.0 7.1

Total current income tax expense 74.3 54.3 50.9

Federal 9.2 5.5 3.9

State 0.2 ( 0.3 ) 2.0

Total deferred income tax expense 9.4 5.2 5.9

Total income tax expense $ 83.7 $ 59.5 $ 56.8

A reconciliation of the statutory federal rate to the effective tax rate from continuing operations is as follows (dollar amounts shown in millions) :

For the Years Ended December 31,

A reconciliation of the statutory federal rate to the effective tax rate is as follows (dollar amounts shown in millions) :

For the Year Ended December 31,

2020 % 2019 % 2018 %

Income tax provision at the statutory rate $ 71.0 21.0 $ 51.2 21.0 $ 47.2 21.0

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Effect of enactment of tax reform — — — — 0.6 0.2

Adjustments and settlements

Other, net 1.3 0.4 ( 0.1 ) — ( 0.1 ) —

Income tax expense $ 83.7 24.8 $ 59.5 24.4 $ 56.8 25.3

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Operating lease right-of-use assets 77.8 18.7

Other, net 10.2 9.0

Total deferred income tax assets 106.5 43.8

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Intangible asset amortization ( 23.9 ) ( 16.4 )

Depreciation ( 39.2 ) ( 33.4 )

Operating lease liabilities ( 76.8 ) ( 17.7 )

Other, net ( 1.2 ) ( 2.3 )

Total deferred income tax liabilities ( 141.1 ) ( 69.8 )

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There were no valuation allowances recorded against the deferred tax assets as of December 31, 2020 or 2019.

As of December 31, 2019, we had income taxes payable of $ 1.3 million , which is included in Accounts payable and accrued liabilities.

As of December 31, 2018, we had pre-paid income taxes of $ 4.6 million which was included in Other current assets.

As of December 31, 2020 and 2019, we had income taxes payable of $ 25.0 million and $ 1.3 million, respectively included in Accounts Payable and Accrued Liabilities.

As of December 31, 2020, there was $ 2.1 million of unrecognized tax benefit.

There was no unrecognized tax benefits as of December 31, 2019 or 2018.

The statutes of limitations related to our consolidated Federal income tax returns are closed for all tax years up to and including 2015.

The expiration of the statutes of limitations related to the various state income tax returns that we and our subsidiaries file varies by state.

The statutes of limitation related to our consolidated Federal income tax returns are closed for all tax years up to and including 2016.

The expiration of the statutes of limitation related to the various state income tax returns that we and our subsidiaries file varies by state.

The 2013 through 2019 tax years generally remain subject to examination by most state tax authorities.

We believe that our tax positions comply with applicable tax law and that we have adequately provided for these matters.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Act.

The Tax Act made broad and complex changes to the U.S.

tax code that affects 2017, including, but not limited to, accelerated depreciation that will allow for full expensing of qualified property.

The Tax Act also established new tax laws including a reduction in the U.S.

federal corporate income tax rate from 35% to 21%.

The SEC staff issued SAB 118 on December 22, 2017, which provided guidance on accounting for the tax effects of the Tax Act.

SAB 118 allowed for a measurement period, not to extend beyond one year from the Tax Act enactment date, for companies to complete the accounting under ASC 740, Income Taxes.

In 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which was generally 21%.

We recorded a $ 7.9 million reduction to our net deferred tax liability for the year ended December 31, 2017 related to the remeasurement of our deferred tax balance.

During the third quarter of 2018, the IRS released Notice 2018-68, which clarified a number of changes made to Section 162(m) of the Code by the Tax Act.

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Accrued finance and insurance chargebacks $ 22.9 $ 22.9

Deferred rent

Deferred payroll tax 9.1 —

Sale and leaseback liability 7.0 —

Interest rate swap 4.4 2.9

Unclaimed property 3.1 2.9

Other 4.4 3.7

Other long-term liabilities $ 50.9 $ 32.4

SUPPLEMENTAL CASH FLOW INFORMATION

During the years ended December 31, 2019 , 2018 , and 2017 , we made interest payments, including amounts capitalized, totaling $ 91.2 million , $ 82.5 million , and $ 76.0 million , respectively.

Included in these interest payments are $ 38.6 million , $ 31.2 million , and $ 22.3 million , of floor plan interest payments for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

During the years ended December 31, 2019 , 2018 , and 2017 we made income tax payments, net of refunds received, totaling $ 48.4 million , $ 40.4 million , and $ 102.7 million , respectively.

During the years ended December 31, 2019 , 2018 , and 2017 , we transferred $ 141.0 million , $ 193.9 million , and $ 156.2 million , respectively, of loaner vehicles from Other current assets to Inventory on our Consolidated Balance Sheets.

During the year ended December 31, 2017, we had non-cash investing and financing activities of $ 4.1 million related to purchases of real estate properties that were previously leased.

During the year ended December 31, 2020, 2019, and 2018, we made interest payments, including amounts capitalized, totaling $ 62.6 million, $ 91.2 million, and $ 82.5 million, respectively.

Included in these interest payments are $ 19.4 million, $ 38.6 million, and $ 31.2 million, of floor plan interest payments for the year ended December 31, 2020, 2019, and 2018, respectively.

During the year ended December 31, 2020, 2019, and 2018 we made income tax payments, net of refunds received, totaling $ 48.6 million, $ 48.4 million, and $ 40.4 million, respectively.

During the year ended December 31, 2020, 2019, and 2018, we transferred $ 163.5 million, $ 141.0 million, and $ 193.9 million, respectively, of loaner vehicles from Other current assets to Inventory on our Consolidated Balance Sheets.

The following items are included in Other adjustments, net to reconcile net income to net cash provided by operating activities:

For the Years Ended December 31,

For the Year Ended December 31,

2020 2019 2018

Amortization of debt issuance costs $ 1.8 $ 2.5 $ 2.5

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Balance Sheet Presentation

Classification

December 31, 2019

As of December 31,

Leases Classification 2020 2019

(In millions)

Operating lease right-of-use assets

Assets held for sale

Property and equipment, net

Operating Operating lease right-of-use assets 317.4 65.6

Operating Assets held for sale — 6.9

Finance Property and equipment, net 14.6 14.6

Total right-of-use assets $ 332.0 $ 87.1

Current maturities of operating leases

Liabilities held for sale

Current maturities of long-term debt

Operating lease liabilities

Liabilities held for sale

Long-term debt

Operating Current maturities of operating leases 24.8 17.0

Operating Liabilities held for sale — 4.2

Finance Current maturities of long-term debt 16.6 0.6

Operating Operating lease liabilities 296.7 52.6

Operating Liabilities held for sale — 2.7

Finance Long-term debt — 16.6

Total lease liabilities $ 338.1 $ 93.7

Lease Term and Discount Rate

December 31, 2019

Weighted Average Lease Term - Operating Leases

Weighted Average Lease Term - Finance Lease

As of December 31,

Weighted Average Lease Term - Operating Leases 14.3 years 5.7 years

Weighted Average Lease Term - Finance Lease 0.2 years 1.2 years

Weighted Average Discount Rate - Operating Leases 4.5 % 4.7 %

Weighted Average Discount Rate - Finance Lease 4.1 % 4.1 %

The following table provides certain information related to the lease costs for finance and operating leases during the year ended December 31, 2019 .

The following table provides certain information related to the lease costs for finance and operating leases during the year ended December 31, 2020 and December 31, 2019.

For the Year Ended December 31,

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Variable lease cost 2.4 1.0

$ 32.8 $ 27.7

Supplemental Cash Flow Information

The following table presents supplemental cash flow information for leases during the year ended December 31, 2019 .

The following table presents supplemental cash flow information for leases during the year ended December 31, 2020 and December 31, 2019.

For the Year Ended December 31,

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Changes to finance lease right-of-use asset resulting from lease reassessment event $ — $ ( 3.1 )

During the year ended December 31, 2020, we obtained $ 272.3 million of right-of-use assets in exchange for new operating lease liabilities, primarily as a result of business combination acquisition transactions.

During the twelve months ended December 31, 2019, we reassessed and remeasured an existing real estate lease, which was previously accounted for as an operating lease and finance lease for the land and building elements, respectively, due to the presence of a purchase price option which we concluded we are now reasonably certain to exercise.

1 unchanged sentence

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities as of December 31, 2020 .

Finance Operating

(In millions)

2021 $ 16.7 $ 38.2

Thereafter — 277.5

Total minimum lease payments $ 16.7 $ 446.4

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Escalation clauses, lease payments dependent on existing rates/indexes, and other lease incentives are included in the minimum lease payments and are recognized on a straight-line basis over the minimum lease term.

Rent expense under such arrangements totaled $ 25.6 million and $ 26.7 million for the years ended December 31, 2018 , and 2017 , respectively.

Rent expense under such arrangements totaled $ 25.6 million for the year ended December 31, 2018.

During the year ended December 31, 2018, we entered into one transaction in which we purchased previously leased real estate for $ 4.4 million.

During the year ended December 31, 2017 , we entered into two transactions in which we purchased previously leased real estate for an aggregate purchase price of $ 9.5 million .

These transactions included the termination of the related lease

obligations, resulting in $ 0.2 million of lease termination charges, which were included in Other operating (income) expenses, net in our Consolidated Statement of Income for the year ended December 31, 2017 .

Future minimum payments under non-cancelable leases with initial terms in excess of one year at December 31, 2018 , were as follows:

(In millions)

Total minimum lease payments

Amounts representing interest

COMMITMENTS AND CONTINGENCIES

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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.

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.

14 unchanged sentences

There were approximately 1.5 million shares available for grant in accordance with the 2019 Plan as of December 31, 2020.

We issue shares of our common stock upon the vesting of performance share units or restricted stock.

We issue shares of our common stock upon the vesting of performance share units or restricted share units.

These shares are issued from our authorized and not outstanding common stock.

In addition, in connection with the vesting of performance share units or restricted stock, we expect to repurchase a portion of the shares issued equal to the amount of employee income tax withholding.

We have recognized $ 12.5 million ( $ 3.1 million tax benefit), $ 10.5 million ( $ 2.6 million tax benefit), and $ 13.6 million ( $ 4.5 million tax benefit) in share-based compensation expense for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

In addition, in connection with the vesting of equity based awards, we repurchase a portion of the shares issued equal to the amount of employee income tax withholding.

We have recognized $ 12.6 million ($ 3.2 million tax benefit), $ 12.5 million ($ 3.1 million tax benefit), and $ 10.5 million ($ 2.6 million tax benefit) in share-based compensation expense for the year ended December 31, 2020, 2019, and 2018, respectively.

As of December 31, 2020, there was $ 13.5 million of total unrecognized share-based compensation expense related to non-vested share-based awards granted under the 2012 Plan, and the weighted average period over which it is expected to be recognized is 1.81 years.

Further, we expect to recognize $ 6.8 million of this expense in 2020, $ 3.3 million in 2021, and $ 1.8 million in 2022.

Further, we expect to recognize $ 1.3 million of this expense in 2021, $ 7.1 million in 2022, $ 4.9 million in 2023, and $ 0.2 million in 2024.

Performance Share Units

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The following table summarizes information about performance share units for 2020:

Weighted Average Grant Date

Shares Weighted Average Grant Date

Non-vested at January 1, 2020 205,290 $ 66.92

Granted 107,798 96.31

Vested ( 75,587 ) 65.20

Forfeited or unearned ( 43,015 ) 69.16

1 unchanged sentence

The weighted average grant-date fair value of performance share units and total fair value of performance share units vested are summarized in the following table:

For the Years Ended December 31,

For the Year Ended December 31,

2020 2019 2018

Weighted average grant-date fair value of performance share units granted $ 96.31 $ 69.67 $ 68.50

Total fair value of performance share units vested (in millions) $ 4.9 $ 6.0 $ 6.4

Restricted Share Units

During the year ended December 31, 2020, the Compensation and Human Resources Committee of the Board of Directors approved the grant of 109,062 shares of restricted share units.

Restricted share units vest in three equal annual installments commencing on the first anniversary of the grant date.

Compensation cost for restricted share units is based on the closing price of our common stock on the date of grant and is recognized on a straight-line basis over the three -year vesting period.

The following table summarizes information about restricted stock units for 2020:

Shares Weighted Average Grant

Date Fair Value

Non-vested at January 1, 2020 — $ —

Granted 109,062 94.07

Vested ( 2,908 ) 95.66

Forfeited ( 3,561 ) 95.66

Non-vested at December 31, 2020 102,593 93.97

The weighted average grant-date fair value of restricted stock units and total fair value of restricted stock units vested are summarized in the following table:

For the Year Ended December 31,

2020 2019 2018

Weighted average grant-date fair value of restricted stock units granted $ 94.07 $ — $ —

Total fair value of restricted stock units vested (in millions) $ 0.3 $ — $ —

Restricted Stock Awards

During the year ended December 31, 2019 , the Compensation and Human Resources Committee of the Board of Directors approved the grant of 122,167 shares of restricted stock.

Restricted stock awards vest in three equal annual installments commencing on the first anniversary of the grant date.

Compensation cost for restricted stock awards is based on the closing price of our common stock on the date of grant and is recognized on a straight-line basis over the three -year vesting period.

The Company's most recent grant of restricted stock awards occurred in 2019 and has since been replaced with restricted share units.

The following table summarizes information about restricted stock awards for 2020:

Weighted Average Grant

Shares Weighted Average Grant

Date Fair Value

Non-vested at January 1, 2020 203,471 $ 68.06

Vested ( 76,646 ) 67.13

Forfeited ( 28,195 ) 68.49

Non-vested at December 31, 2020 98,630 $ 68.66

The weighted average grant-date fair value of restricted stock awards and total fair value of restricted stock awards vested are summarized in the following table:

For the Years Ended December 31,

For the Year Ended December 31,

2020 2019 2018

Weighted average grant-date fair value of restricted stock granted $ — $ 69.18 $ 71.18

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For non-highly compensated employees, after one year of employment we match 50 % of employees' contributions up to 4 % of their eligible compensation.

The Company's match was suspended during part of 2020 as a result of the economic uncertainty associated with the COVID-19 pandemic.

Employer contributions vest on a graded basis over 4 years after the date of hire.

Expenses from continuing operations related to employer matching contributions totaled $ 3.7 million , $ 3.2 million , and $ 3.0 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

CONDENSED QUARTERLY REVENUES AND EARNINGS (UNAUDITED):

For the Three Months Ended

September 30,

(In millions, except per share data)

Net income (2)(3)(4)

Net income per common share:

Basic (1)(2)(3)(4)

Diluted (1)(2)(3)(4)

Net income (5)(6)(7)

Net income per common share:

Basic (1)(5)(6)(7)

Diluted (1)(5)(6)(7)

____________________________

The sum of income per common share for the four quarters does not equal total income per common share due to changes in the average number of shares outstanding during the respective periods.

Results for the three months ended June 30, 2018 were increased by $ 0.5 million as a result of gains from legal settlements, net of tax, or $ 0.03 per basic and diluted share.

Results for the three months ended September 30, 2018 were decreased by $ 0.6 million as a result of an adjustment to the deferred tax asset related to certain components of share-based compensation, net of tax, or $ 0.03 per basic and diluted share.

Results for the three months ended December 31, 2018 were decreased by a $ 2.8 million franchise rights impairment, net of tax, or $ 0.14 per basic and diluted share, respectively, in the aggregate.

Results for the three months ended March 30, 2019 were decreased by $ 1.8 million as a result of fixed assets write-off, net of tax, or $ 0.09 per basic and diluted share.

Results for the three months ended June 30, 2019 were increased by $ 9.0 million as a result of a gain on a divested dealership and real estate, net of tax, or $ 0.46 per basic and diluted share.

Results for the three months ended December 31, 2019 were decreased by $ 5.3 million franchise rights impairment, net of tax, or $ 0.27 per basic and diluted share.

SUBSEQUENT EVENTS

Park Place Acquisition

On December 11, 2019, we entered into an Asset Purchase Agreement and a Real Estate Purchase Agreement 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 businesses described in the Asset Purchase Agreement for a purchase price of approximately $ 1.0 billion (excluding vehicle inventory), reflecting $ 785.0 million of goodwill, approximately $ 215.0 million for real estate and leaseholds and approximately $ 30 million for parts and fixed assets (the "Acquisition").

This Acquisition is expected to close during the first quarter of 2020.

Park Place, based in Dallas, Texas, is one of the country's largest luxury dealer groups, with an attractive portfolio of high volume, award-winning, luxury dealerships and high-quality real estate.

Park Place consists of a collection of:

ten luxury dealerships, including one dealership scheduled to open in the first quarter of 2020;

an auto auction business for wholesaling used cars;

a subscription service platform that offers customers access to a range of luxury vehicles for a monthly fee.

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, 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.

New BofA Real Estate Facility

In connection with the Acquisition, on February 7, 2020 we entered into the New BofA Real Estate Facility, which will provide for term loans in an aggregate amount not to exceed $ 280.6 million , and is expected to mature seven years from the initial funding of the facility.

Borrowings under the New BofA Real Estate Facility are expected to be guaranteed by us and each of our operating dealership subsidiaries that own or lease the real estate being financed under the New BofA Real Estate Facility, and are expected to be collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder.

In connection with the Acquisition, we intend to borrow $ 216.6 million under the New BofA Real Estate Facility, and have the ability to make a single draw of an additional amount up to 80 % of the appraised value of the property expected to be acquired at or after the consummation of the Acquisition.

Amendments to 2019 Senior Credit Facility

In connection with the Acquisition, we have 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 will become effective concurrently with the consummation of the Acquisition.

In connection with the consummation of the Acquisition, we intend to borrow approximately $ 387 million under the 2019 Senior Credit Facility with respect to existing Park Place vehicle inventory, consisting of approximately $ 237 million under the New Vehicle Floor Plan Facility and approximately $ 150 million under the Used Vehicle Floor Plan Facility.

Conditional Redemption Notice for Existing Notes

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 redemption of the 6 % Notes is conditioned upon the consummation of the Acquisition.

If redeemed, the 6 % Notes will be redeemed at 103 % of par, plus accrued and unpaid interest to, but excluding, the date of redemption.

We will pay a redemption premium in connection with the redemption of the 6 % Notes of $ 18.0 million .

In January 2020, we closed on the acquisition of a dealership (comprising three franchises) in the Denver, Colorado market which increases the number of dealerships and franchises in that market to two and four, respectively.

Park Place employees that joined Asbury as a result of the acquisition continued to participate in their existing plan during 2020.

The Company's expense related to employer matching contributions totaled $ 2.5 million, $ 3.7 million, and $ 3.2 million for the year ended December 31, 2020, 2019, and 2018, respectively.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data