What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-01 · 588 added, 269 removed, 1022 unchanged (46% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

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

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 202 1 and 20 20

Consolidated Statements of Income for the Year Ended December 31, 202 1 , 20 20 , and 201 9

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Asbury Automotive Group, Inc.

To the Shareholders and Board of Directors of Asbury Automotive Group, Inc.

Opinion on the Financial Statements

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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 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, 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.

Manufacturer Franchise Rights Impairment Assessment

Description of the Matter At December 31, 2021, the Company's manufacturer franchise rights for car dealerships had an aggregate carrying value for franchises acquired of approximately $1,335.7 million, as disclosed in Note 10 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 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 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 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 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.

We identified the assessment of the Company’s qualitative impairment tests over manufacturer franchise rights acquired prior to the fourth quarter of 2021 as a critical audit matter.

The tests included the evaluation of qualitative factors such as future revenue growth and profitability as well as comparable dealership sales, that required subjective auditor judgment.

For example, this included testing controls over management’s review of significant assumptions, other inputs and the completeness and accuracy of the data used in the qualitative analysis over manufacturer franchise rights acquired prior to the fourth quarter of 2021.

To test the recoverability of the Company's manufacturer franchise rights as part of the impairment assessments, our audit procedures included, among others, understanding cost factors, financial performance, legal and regulatory factors, industry, market and macroeconomic conditions, and other relevant entity-specific events to determine whether a potential impairment indicator was present at one or multiple dealerships.

We also evaluated the Company’s assessment of the change to key assumptions most likely to affect the fair value of the manufacturer franchise rights since the previous quantitative analysis was performed.

Additionally, we evaluated dealership sales and profitability trends to identify potential indicators of impairment.

/s/ Ernst & Young LLP

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, 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 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.

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 94 franchises (65 new dealership locations), seven used vehicle stores, eleven collision centers, a used wholesale business and an F&I product provider business acquired during 2021, which are included in the 2021 consolidated financial statements of the Company and constituted approximately $3.34 billion of consolidated assets as of December 31, 2021 and approximately $346.0 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 94 franchises (65 new dealership locations), seven used vehicle stores, eleven collision centers, a used wholesale business and an F&I product provider business.

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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Cash and cash equivalents $ 178.9 $ 1.4

Short term investments 11.0 —

Contracts-in-transit, net 212.5 161.5

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Total current assets 1,929.4 1,405.7

INVESTMENTS 123.5 —

PROPERTY AND EQUIPMENT, net 1,990.0 956.2

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INTANGIBLE FRANCHISE RIGHTS 1,335.7 425.2

DEFERRED INCOME TAXES, net of current portion 69.1 —

OTHER LONG-TERM ASSETS 22.2 9.6

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Accounts payable and accrued liabilities 742.9 450.9

Deferred revenue—current 181.5 —

Liabilities associated with assets held for sale 20.8 8.9

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LONG-TERM LEASE LIABILITY 242.0 296.7

DEFERRED REVENUE 466.3 —

DEFERRED INCOME TAXES — 34.6

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Parts and service 461.0 346.6 340.1

Finance and insurance 3.6 — —

TOTAL COST OF SALES 7,935.5 5,908.4 6,041.4

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Franchise rights impairment — 23.0 7.1

Other operating expenses (income), net 9.2 0.8 ( 1.1 )

Other operating (income) expense, net ( 5.4 ) 9.2 0.8

INCOME FROM OPERATIONS 791.8 370.8 325.0

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Other interest expense, net 93.9 56.7 54.9

Swap interest expense — — 0.5

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

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Change in fair value of cash flow swaps 6.3 ( 3.6 ) ( 4.4 )

Income tax benefit (expense) associated with cash flow swaps 0.9 1.1 ( 0.8 )

Unrealized gains on available-for-sale debt securities 0.2 — —

Income tax benefit (expense) associated with other comprehensive income items ( 1.6 ) 0.9 1.1

Comprehensive income $ 537.3 $ 251.7 $ 181.1

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Net income — — — 184.4 — — — 184.4

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

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

— — — — — — ( 3.3 ) ( 3.3 )

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Share-based compensation — — 12.5 — — 12.5

Issuance of common stock

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

Issuance of common stock, net of forfeitures, 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 — — — 254.4 — — ( 2.7 ) 251.7

Cumulative effect of change in

accounting principle - ASU 2018-02

— — — 0.2 — — ( 0.2 ) —

Share-based compensation — — 12.6 — — 12.6

Issuance of common stock

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

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 — — — — 202,379 ( 15.3 ) — ( 15.3 )

Retirement of previously repurchased common stock ( 202,379 ) — ( 2.5 ) ( 12.8 ) ( 202,379 ) 15.3 — —

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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Net income — — 532.4 — — — 532.4

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

Unrealized gains on available-for-sale debt securities, net of $ 0 tax charge

— — — — — — 0.2 0.2

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 1.6 tax expense

— — — — — — 4.7 4.7

Comprehensive income — — — 532.4 — — 4.9 537.3

Share-based compensation — — 16.2 — — — — 16.2

Proceeds from secondary offering of common stock, net 3,795,000 — 666.9 — — — — 666.9

Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements 123,625 — — — — —

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Franchise rights impairment — 23.0 7.1

Unrealized gains on investments ( 1.0 ) — —

Loss on extinguishment of debt — 20.6 —

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Floor plan notes payable—trade, net ( 27.6 ) ( 64.5 ) 38.2

Deferred revenue 3.6 — —

Accounts payable and accrued liabilities 39.2 121.0 10.7

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Purchases of previously leased real estate ( 217.1 ) — ( 4.9 )

Acquisitions ( 954.1 ) ( 210.0 ) ( 91.3 )

Acquisitions, net of cash acquired ( 3,660.4 ) ( 954.1 ) ( 210.0 )

Divestitures 21.3 177.9 39.1

Purchases of debt securities—available-for-sale ( 1.1 ) — —

Purchases of equity securities ( 0.4 ) — —

Proceeds from the sale of debt securities—available-for-sale 0.8 — —

Proceeds from the sale of equity securities 0.4 — —

Proceeds from the sale of assets 21.5 4.2 15.0

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Repayments of borrowings ( 41.5 ) ( 1,622.5 ) ( 48.4 )

Proceeds from revolving credit facility 439.0 — —

Repayments of revolving credit facility ( 270.0 ) — —

For the Year Ended December 31,

2021 2020 2019

Sale and leaseback transaction — 7.3 —

Proceeds from issuance of common stock 666.9 — —

Payment of debt issuance costs ( 26.2 ) ( 4.7 ) ( 2.3 )

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Net cash provided by (used in) financing activities 2,930.8 166.2 ( 127.0 )

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

Net increase (decrease) in cash and cash equivalents 177.5 ( 2.1 ) ( 4.8 )

CASH AND CASH EQUIVALENTS, beginning of period 1.4 3.5 8.3

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

For the year ended December 31, 2020, our new vehicle revenue brand mix consisted of 41 % imports, 39 % luxury, and 20 % domestic brands.

Asbury Automotive Group, Inc., a Delaware corporation organized in 2002, is one of the largest automotive retailers in the United States.

Our store operations are conducted by our subsidiaries.

As of December 31, 2021, we owned and operated 205 new vehicle franchises, representing 31 brands of automobiles at 155 dealership locations, 35 collision centers, seven stand-alone used vehicle dealerships, one used vehicle wholesale business and one auto auction within fifteen states.

Our stores offer an extensive range of automotive products and services, including new and used vehicles;

parts and service, which includes repair and maintenance services, replacement parts and collision repair services (collectively referred to as "parts and services" or "P&S");

and finance and insurance products ("F&I"), including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection ("GAP") debt cancellation and prepaid maintenance.

On December 17, 2021, the Company completed the acquisition of the Larry H.

Miller Dealerships ("LHM"), thereby acquiring 54 new vehicle dealerships, seven used car stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto, and the entities comprising the F&I product provider, Total Care Auto, Powered by Landcar ("TCA") for a total purchase price of $ 3.48 billion (the "LHM Acquisition").

The real property was acquired in escrow, to be released, together with the related portion of the purchase price, subject to the satisfaction of certain title related conditions.

The purchase price was financed through a combination of cash, debt, including senior notes, real estate facilities, new and used vehicle floor plan facilities and the proceeds from the issuance of common stock.

TCA offers extended vehicle service contracts, prepaid maintenance contracts, vehicle theft assistance contracts, key replacement contracts, guaranteed asset protection contracts, paintless dent repair contracts, appearance protection contracts, tire and wheel, DrivePur, and lease wear and tear contracts.

In addition, TCA provides the required contractual liability insurance if needed.

The majority of these service contracts are sold through affiliated automobile dealerships.

As a result of acquiring the TCA as part of the LHM Acquisition, the Company now operates in two reportable segments, namely the Dealerships and TCA.

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 "Park Place Acquisition").

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

Certain of the leased real property was subsequently acquired in May 2021 for $ 217.1 million.

See Note 3 "Acquisitions and Divestitures" for details of the LHM Acquisition and the Park Place Acquisition.

Our operating results are generally subject to seasonal variations.

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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.

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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Actual results could differ materially from these estimates.

Estimates and assumptions are reviewed quarterly, and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Significant estimates made in the accompanying Consolidated Financial Statements include, but are not limited to, those relating to inventory valuation reserves, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for insurance programs, certain assumptions related to intangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.

Estimates and assumptions are reviewed quarterly, and the effects of any revisions are

reflected in the consolidated financial statements in the period they are determined to be necessary.

Significant estimates made in the accompanying Consolidated Financial Statements include, but are not limited to, those relating to inventory valuation reserves, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for self-insurance programs, certain assumptions related to intangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.

Cash and Cash Equivalents

Cash and cash equivalents include investments in money market accounts and short-term certificates of deposit, which have maturity dates of less than 90 days when purchased.

Restricted Cash and Securities

TCA places securities on statutory deposit with certain state agencies to retain the right to do business in those states.

Securities held on deposit with various state regulatory authorities had a fair value of $ 2.5 million at December 31, 2021.

Short-Term Investments

Short-term investments consist of debt securities that are callable or have a maturity date within the next 12 months and are classified as current assets.

Debt securities classified as short-term investments are designated as available-for-sale as management intends to hold these securities for indefinite periods of time or may sell the securities in response to changes in interest rates, prepayments, or other similar factors.

Available-for-sale debt securities are reported at fair market value with any unrealized gain or loss, net of applicable income tax, reported in other comprehensive income, as a separate component of shareholders’ equity.

Premiums and discounts on debt securities classified as short-term investments are amortized or accreted using the effective interest method over the period from the purchase date to the expected maturity or call date of the related security and are reported in net income.

Investments consist of available-for-sale debt securities, equity securities, and other investments.

These securities are classified as non-current investments as they are not intended to fund current operations or have stated call dates or maturity dates beyond the next 12 months.

Equity securities may consist of both preferred stock and common stock.

Other investments consist of hedge funds and partnerships.

Debt securities classified as non-current investments are designated as available-for-sale as management intends to hold these securities for indefinite periods of time or may sell the securities in response to changes in interest rates, prepayments, or other similar factors.

Available-for-sale debt securities included in non-current investments are reported at fair market value with any unrealized gain or loss, net of applicable income tax, reported in other comprehensive income, as a separate component of shareholders’ equity.

Premiums and discounts on debt securities included in non-current investments are amortized or accreted, as applicable, using the effective interest method over the period from the purchase date to the expected maturity or call date of the related security and are reported in net income.

Equity securities included in non-current investments are reported at fair market value with the change in value recognized in net income.

Other investments are measured at net asset value as a practical expedient with the net change in net asset value recognized in net income.

We review the debt securities portfolio at the security level on a quarterly basis for potential credit losses, which takes into consideration numerous factors.

Some factors evaluated include changes in credit ratings, financial conditions of the issuer, recent payment activity, and other industry specific economic conditions.

If a security is considered to have a potential credit loss, we compare the present value of expected cash flows to the amortized cost basis of the security to estimate the allowance for credit losses.

The amount of the allowance is limited to the gross unrealized loss on an individual security.

An unrealized loss on a debt security is generally considered to not be related to credit when the fair value of the security is below the carrying value of the security primarily due to changes in risk-free interest rates and when there has not been a significant deterioration in the financial condition of the issuer.

If the Company no longer has the intent or ability to hold a security in an unrealized loss position until recovery of the of the security’s cost basis, a loss is realized immediately in net income.

Contracts-In-Transit

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Inventories are stated at the lower of cost and net realizable value.

We use the specific identification method to value vehicle inventories and the "first-in, first-out" method ("FIFO") to account for our parts inventories.

Our new vehicle sales histories have indicated that the vast majority of the new vehicles we sell are sold for, or in excess of, our cost to purchase those vehicles.

We use the specific identification method to value vehicle inventories and parts and accessories are valued at the lower of cost or net realizable value.

Our new vehicle sales history indicates that the vast majority of the new vehicles we sell are sold for, or in excess of, our cost to purchase those vehicles.

Therefore, we generally do not maintain a reserve for new vehicle inventory.

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):

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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.

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

During the year ended December 31, 2020, 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 2021 and 2019.

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.

The results of operations of acquired dealerships are included in the accompanying Consolidated Statements of Income, commencing on the date of acquisition.

Goodwill and Other Intangible Assets

The results of operations of acquired dealerships and other businesses are included in the accompanying Consolidated Statements of Income, commencing on the date of acquisition.

Goodwill and Franchise Rights

Goodwill represents the excess cost of an acquired business over the estimated fair market value of its identifiable net assets.

We have determined that, based on how we integrate acquisitions into our business, how the components of our business share resources and interact with one another, and how we review the results of our operations, that we have several geographic market-based operating segments.

We have determined that the dealerships in each of our operating segments are components that are aggregated into several geographic market-based reporting units for the purpose of testing goodwill for impairment, as they (i) have similar economic characteristics, (ii) offer similar products and services (all of our dealerships offer new and used vehicles, service, parts and third-party finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our dealerships distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

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.

our dealerships offer new and used vehicles, service, parts and third-party finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our dealerships distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

Our dealership operating segments are aggregated into our single dealerships reportable segment.

Goodwill associated with TCA will be tested annually for impairment at the operating segment level which is the same as the reporting unit for this business.

In December 2021, we completed the LHM Acquisition which included 54 new vehicle dealerships, seven used car stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto (Dealerships segment), and the entities comprising TCA.

We have determined that the operations of TCA comprise a separate operating and reportable segment to that of our dealerships operations and have therefore allocated goodwill of $ 1.64 billion associated with the LHM Acquisition to each of our reportable segments.

Approximately $ 710.3 million of goodwill was allocated to the TCA segment and $ 929.0 million was allocated to the Dealerships segment.

This allocation is preliminary and subject to change once the purchase price allocation is finalized.

The fair value of our manufacturer franchise rights are determined as of 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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We are subject to financial statement risk to the extent that goodwill becomes impaired due to decreases in the fair value of our automotive retail business or manufacturer franchise rights become impaired due to decreases in the fair value of our individual franchises.

Our identifiable intangible assets, other than goodwill, are our rights under franchise agreements with manufacturers, which are recorded at an individual franchise level, and the value of business acquired ("VOBA") which is recorded at the TCA operating unit level.

We recorded VOBA of $ 5.6 million in connection with the acquisition of TCA.

VOBA reflects the estimated fair value of the expected future profits in unearned premium for in-force service contracts acquired in the LHM Acquisition.

VOBA is based on actuarially determined projections, by each type of service contract, of future charges, premiums, claims, operating expenses, investment returns and other factors.

VOBA is reflected in Other long-term assets within the Consolidated Balance Sheets and is amortized over the period of the underlying contracts.

Debt Issuance Costs

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

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.

The changes in fair value 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.

Self-insurance Programs

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".

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606).

Under that guidance, the transaction price is attributed to the underlying performance obligations in the contract and revenue is deferred and recognized as income as the Company satisfies the performance obligations in the contract and as the obligations under the contracts are performed.

Incremental costs of obtaining a contract are capitalized and amortized to the extent that the Company expects to recover those costs.

The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below.

Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service to a customer.

Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

New vehicle and used vehicle retail

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.

Payment is generally received at the time of sale or from a third-party financial institution within a short period of time following the sale of the vehicle.

Amounts due from third-party financial institutions are reflected in Contracts-in-transit or vehicle receivables within Accounts receivable, net on our Consolidated Balance Sheets.

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

Used vehicle wholesale

Proceeds from the sale of these vehicles are recognized in used vehicle revenue upon transfer of control to end-users at auction.

Sale of vehicle parts and accessories

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

Payment is typically received when control of the parts and accessories transfers to the customer or within 30 days of such 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 when the related revenue is recognized.

Vehicle repair and maintenance services

The Company provides vehicle repair and maintenance services to its customers pursuant to the terms and conditions included within the customer contract ("repair order").

Payment for services are typically received upon completion of the services or within 30 days following the completion of the services.

Certain of these services are provided by the Dealerships segment to TCA customers in connection with claims related to TCA's vehicle protection products.

Revenues recorded by the Dealerships segment and the associated claims expenses recorded by the TCA segment are eliminated upon consolidation.

Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment for performance to date exists within our contractual agreements.

As such, the Company recognizes revenue over time as the Company satisfies its performance obligation.

Additionally, the Company has determined that parts and labor are not individually distinct in the context of a repair order and therefore treated as a single performance obligation.

Finance and insurance, net

Within the Dealership segment, 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 debt cancellation, and other products, to end-users.

In addition, we record commissions received from our TCA segment related to the sale of TCA's various vehicle protection F&I products.

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.

The dealerships commission arrangements with TCA, third-party lenders and insurance administrators consists of fixed ("upfront") and variable consideration.

Variable consideration includes commission chargebacks ("chargebacks") in the event a contract is prepaid, defaulted upon, or terminated by the end-user.

The Company reserves for future chargebacks based on historical chargeback experience and the termination provisions of the applicable contract, and these reserves are established in the same period that the related revenue is recognized.

Commissions revenue and related reserves for future chargebacks in connection with the sale of TCA F&I products by our dealerships, are eliminated in consolidation.

We also participate in future profits pursuant to retrospective commission arrangements, which meet the definition of variable consideration, for certain insurance products associated with a third-party portfolio.

The Company estimates the

amount of variable consideration to be included in the transaction price based on historical payment trends and further constrains the variable consideration such that it is probable that a significant reversal of previously recognized revenue will not occur.

In making these assessments the Company considers the likelihood and magnitude of a potential reversal of revenue and updates its assessment when uncertainties associated with the constraint are removed.

Within our TCA segment, all revenue other than investment and interest income is the result of contracts with customers.

Each contract is considered to have a single performance obligation which extends over the life of the contract.

Revenue is recognized over the contract term in proportion to the amount of insurance protection provided.

Expenses are matched with earned premiums resulting in recognition of profits over the life of the contracts.

These expenses include the incremental costs incurred, primarily in the form of commissions, to obtain the contracts with customers.

These commissions are primarily paid to affiliated dealerships and are therefore eliminated upon consolidation.

Unearned premium reserves are established to cover the unexpired portion of premiums written.

Deferred Revenue

We earn and recognize premium revenue related to the TCA segment over the period of the related service contract.

Accordingly, we record deferred revenue as we ratably recognize revenue over the service contract period.

Unpaid Losses and Loss Adjustment Expense Reserve

Losses and loss adjustment expense reserves represent management's best estimate of the ultimate net cost of all reported and unreported losses incurred through December 31, 2021.

The Company does not discount liabilities for unpaid losses or unpaid loss adjustment expense reserves.

The reserves for unpaid losses and loss adjustment expenses are estimated using individual case-basis valuation and statistical analysis.

Those estimates are subject to the effects of trends in loss severity and frequency.

Although considerable variability is inherent in such estimates, management believes the reserves for losses and loss adjustment expenses are adequate.

The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known;

such adjustments are included in income from operations.

Claims are counted when incidents that may result in a liability are reported and are based on policy coverage.

Internal Profit

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We eliminate the internal profit on vehicles that remain in inventory.

Intersegment Elimination

TCA's vehicle protection products are sold primarily through affiliated dealerships and the revenue from the related commissions are included in F&I revenue in the Dealerships segment revenue before consolidation.

The corresponding claims expense incurred and the amortization of deferred acquisition costs is recorded as a cost of sales in the TCA segment.

The Dealerships segment also provides vehicle repair and maintenance services to TCA customers in connection with claims related to TCA's vehicle protection products.

Revenues recorded by the Dealerships segment and the associated claims expenses recorded by the TCA segment are eliminated upon consolidation.

Intersegment revenues and profits from contracts and services are eliminated in consolidation.

See Note 20 "Segment Information" for further details .

Share-Based Compensation

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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.

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 2021 and 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 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.

Advertising expense totaled $ 30.7 million, $ 25.5 million and $ 34.4 million for the years ended December 31, 2021, 2020 and 2019, which was net of earned advertising credits of $ 22.4 million, $ 19.6 million, and $ 21.1 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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Statements of Cash Flows

Borrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle ("Non-Trade") and all floor plan notes payable relating to pre-owned vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on the accompanying Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments.

Borrowings and repayments of floor plan notes payable through our 2019 Senior Credit Facility ("Non-Trade"), and all floor plan notes payable relating to used vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on the accompanying 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.

Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying Consolidated Statement of Cash Flows.

Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturer from which we purchased the related inventory.

Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to our 2019 Senior Credit Facility that includes lenders affiliated with the manufacturers and lenders not affiliated with the manufacturers from which we purchased the related inventory.

The majority of our floor plan notes are payable to our 2019 Senior Credit Facility, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.

Loaner vehicles account for a significant portion of Other current assets.

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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.

At the end of the loaner service period, loaner vehicles are transferred from Other current assets to used vehicle inventory.

At the end of the

loaner service period, loaner vehicles are transferred from Other current assets to used vehicle inventory.

These transfers are reflected as non-cash transfers between Other current Assets and Inventory in the accompanying Consolidated Statements of Cash Flows.

Business and Credit Concentration Risk

Financial instruments, which potentially subject us to a concentration of credit risk, consist principally of cash deposits.

Financial instruments, which potentially subject us to a concentration of credit risk, consist principally of cash deposits and investments.

We maintain cash balances at financial institutions with strong credit ratings.

Generally, amounts maintained with these financial institutions are in excess of FDIC insurance limits.

In addition, we maintain a diverse investment portfolio across various asset categories and limit our exposure through the kind, quality and concentration of these investments.

As of December 31, 2021, the Company had total investments of $ 134.5 million.

We have substantial debt service obligations.

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.

As of December 31, 2021, we had total debt of $ 3.61 billion, which excludes 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 indentures governing our 4.5 % Notes and 4.75 % Notes (the "Indentures"), 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, 4.625 % Notes, 4.75 % Notes and 5.0 % 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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Segment Reporting

Our operations are organized by management into geographic market-based dealership groups.

Our Chief Operating Decision Maker is our Chief Executive Officer who manages the business, regularly reviews financial information and allocates resources at the geographic market level.

The geographic operating segments have been aggregated into one reportable segment as their operations (i) have similar economic characteristics (our markets all have similar long-term average gross margins), (ii) offer similar products and services (all of our markets offer new and used vehicles, parts and service, and third-party finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our markets distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

As of December 31, 2021, the Company had two reportable segments:

(1) Dealerships;

Prior to the acquisition of TCA as part of the LHM Acquisition, we had one reportable segment as the geographic dealership groups are aggregated into one reportable segment.

Segment information is discussed further in Note 20 "Segment Information".

Recent Accounting Pronouncements

Effective October 1, 2021, the Company adopted Financial Accounting Standard Board Accounting Standards Update 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an acquiring entity to apply ASC Topic 606 to recognize and measure contract assets acquired and contract liabilities assumed in a business combination.

The Company applied ASC Topic 606 in recording contract assets acquired and contract liabilities assumed in business combinations that occurred in the quarter ended December 31, 2021.

We assumed contract liabilities or deferred revenue of $ 644.3 million in connection with the LHM Acquisition which closed in December 2021.

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04").

In January 2021, the FASB issued Accounting Standards Update No.

2021-01, Reference Rate Reform (Topic 848):

Scope, which clarified the scope and application of the original guidance.

The guidance in these standards apply to contract accounting, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met, and provides optional expedients and exceptions for a limited time to ease the potential burden in accounting for reference rate reform.

The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

ASU 2020-04 is effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022.

LIBOR benchmarking is utilized in our debt (including mortgages), revolving credit facilities, floorplan facilities, and interest rate swaps.

We are in the process of amending our LIBOR-based debt arrangements and related hedging to revise their interest basis from LIBOR to a Secured Overnight Financing Rate ("SOFR").

The impact of these proposed amendments to our debt arrangements along with the adoption of the provisions from this standard is not anticipated to have a material impact on our Consolidated Financial Statements.

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.

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REVENUE RECOGNITION

The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below.

Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service to a customer.

Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

Disaggregation of Revenue

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Total revenue $ 9,837.7 $ 7,131.8 $ 7,210.3

New vehicle and used vehicle retail

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

Used vehicle wholesale

Proceeds from the sale of these vehicles are recognized in used vehicle revenue upon transfer of control to end-users at auction.

Sale of vehicle parts and accessories

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

Vehicle repair and maintenance services

The Company provides vehicle repair and maintenance services to its customers pursuant to the terms and conditions included within the customer contract ("repair order").

Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment for performance to date exists within our contractual agreements.

As such, the Company recognizes revenue over time as the Company satisfies its performance obligation.

Additionally, the Company has determined that parts and labor are not individually distinct in the context of a repair order and therefore treated as a single performance obligation.

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 ("GAP") debt cancellation, and other insurance, to end-users.

The Company's commission arrangements with third-party lenders and insurance administrators consists of fixed ("upfront") and variable consideration.

Variable consideration includes commission chargebacks ("chargebacks") in the event a contract is prepaid, defaulted upon, or terminated by the end-user.

The Company estimates the amount of variable consideration to be included in the transaction price based on historical payment trends and further constrains the variable consideration such that it is probable that a significant reversal of previously recognized revenue will not occur.

Contract Assets

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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 Total

Certain incremental sales commissions payable to obtain an F&I revenue contract with a customer have been capitalized and are amortized using the same pattern of recognition applicable to the associated F&I revenue contract.

Vehicle Repair and Maintenance Services Finance and Insurance, net Deferred Sales Commissions Total

(In millions)

Contract Assets (Current), January 1, 2018 $ 6.4 $ 10.0 $ 16.4

Transferred to receivables from contract assets recognized at the beginning of the period ( 6.4 ) ( 10.0 ) ( 16.4 )

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

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

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Contract Assets (Current), December 31, 2021 $ 12.3 $ 13.5 $ 1.4 $ 27.2

The Company acquired $ 644.3 million in Deferred revenue as part of the LHM Acquisition in December 2021.

As of December 31, 2021, we had $ 647.8 million of Deferred revenue reflected in the Consolidated Balance Sheet.

ACQUISITIONS AND DIVESTITURES

Results of acquired dealerships are included in our accompanying Consolidated Statements of Income commencing on the date of acquisition.

Results of acquired businesses, which are primarily dealerships, are included in our accompanying Consolidated Statements of Income commencing on the date of acquisition.

Our acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

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

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.

Upon the completion of purchase accounting, the fair value of our manufacturer franchise rights are determined as of the acquisition date, by discounting the projected cash flows specific to each franchise.

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.

LHM Acquisition

On December 17, 2021, we completed the acquisition of the equity interests of, and the real property related to the businesses of the Larry H.

Miller Dealerships and the Total Care Auto, Powered by Landcar business.

The acquisition diversifies Asbury's geographic mix, with entry into six Western states;

Arizona, Utah, New Mexico, Idaho, California and Washington, and adds to the Company’s growing Colorado presence.

As a result of the LHM Acquisition, we acquired 54 new vehicle dealerships, seven used car stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto, and the entities comprising the TCA Business for a total purchase price of approximately $ 3.48 billion.

The real property was acquired in escrow, to be released, together with the related portion of the preliminary purchase consideration, subject to the satisfaction of certain title related conditions.

The preliminary purchase price was paid in cash.

The sources of the preliminary purchase consideration are as follows:

(In millions)

Cash, net of cash acquired $ 195.0

Common stock offering 666.9

Senior notes 1,578.5

Real estate facility 513.0

New vehicle floor plan facility 183.5

Used vehicle floor plan facility 51.0

Payable to sellers 6.0

Preliminary purchase price, net of cash acquired $ 3,193.9

Under the acquisition method of accounting, the tangible and intangible assets acquired and liabilities assumed are recorded at their estimated fair value based on information currently available.

The following table summarizes the amounts recorded based on preliminary estimates of fair value:

(In millions)

Summary of Assets Acquired and Liabilities Assumed

Cash and cash equivalents $ 287.4

Investments 133.5

Contracts-in-transit, net 99.5

Accounts receivable, net 110.0

Inventories, net 285.0

Other current assets 25.4

Total current assets 940.8

Property and equipment, net 792.6

Goodwill 1,639.3

Intangible franchise rights 870.0

Operating lease right-of-use assets 34.1

Deferred income taxes 136.5

Other long-term assets 5.6

Total assets acquired 4,418.9

Accounts payable and accrued liabilities 234.0

Operating lease liabilities 34.1

Deferred revenue 644.3

Other long-term liabilities 25.2

Total liabilities assumed 937.6

Net assets acquired $ 3,481.3

The preliminary acquisition accounting is based upon the Company’s estimates of fair value.

The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management, including the books and records of Larry H.

Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date.

The areas of acquisition accounting that are not yet finalized primarily relate to the following significant items:

(i) finalizing the review and valuation of land, land improvements, buildings and non-real property and equipment (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with the depreciable assets, (ii) finalizing the review and valuation of manufacturer franchise rights (including key assumptions, inputs and estimates), (iii) finalizing the review of the actuarial inputs to the value of business added intangible asset for TCA, (iv) finalizing the valuation of certain in-place contracts or contractual relationships (including but not limited to leases), including determining the appropriate amortization period, (v) finalizing our review of certain assets acquired and liabilities assumed, (vi) finalizing the evaluation and valuation of certain legal matters and/or other loss contingencies, including those that we may not yet be aware of but meet the requirement to qualify as a pre-acquisition contingency, and (vii) finalizing our estimate of the impact of acquisition accounting on deferred income taxes or liabilities.

As the initial acquisition accounting is based on our preliminary assessments, actual values may differ (possibly materially) when final information becomes available that differs from our current estimates.

Additionally, the total consideration transferred is subject to certain post-close adjustments.

We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed.

We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period.

The Company recorded $ 4.9 million of acquisition related costs during the year ended December 31, 2021.

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 LHM from December 17, 2021 through December 31, 2021 of $ 256.4 million and $ 15.7 million, respectively.

The following represents the unaudited pro forma information as if LHM had been included in the consolidated results of the Company since January 1, 2020:

For the Year Ended December 31,

(In millions)

Pro forma revenue $ 15,431.5 $ 12,927.3

Pro forma net income $ 777.3 $ 359.9

This pro forma information incorporates the Company's accounting policies and adjusts the results of the LHM Acquisition for depreciation, rent expense, and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the LHM Acquisition had occurred on January 1, 2020.

They have also been adjusted to reflect the $ 4.9 million of acquisition related costs incurred during 2021 as having occurred on January 1, 2020.

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.

On March 24, 2020, as a result of the uncertainties related to the COVID-19 pandemic 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 (income) expense, net.

See Note 14 "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.

On July 6, 2020, the Company, through two of its subsidiaries, entered into an 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 new vehicle dealership franchises ( 8 dealership locations), two collision centers and an auto auction (collectively, the "Park Place Acquisition").

The Park Place acquisition 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.

In September 2020, the Company redeemed the Seller Notes with proceeds from the offering of 4.50 % Notes due 2028 and 4.75 % Notes due 2030.

See Note 14 "Debt" for further details.

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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:

For the year ended December 31, 2021, we recorded a $ 1.5 million measurement period adjustment to Property and equipment and Goodwill, respectively.

The following table summarizes the allocation of the purchase price:

(In millions)

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Net assets acquired $ 889.9

On May 20, 2021, we exercised the purchase option for certain Park Place real estate leases whose original operating lease right-of-use assets and liabilities totaled $ 99.5 million.

We acquired these properties for $ 217.1 million which was partly financed through the 2021 BofA Real Estate Facility.

The Company's Consolidated Statements of Income included revenue attributable to Park Place for the year ended December 31, 2021 of $ 1.79 billion.

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

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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.

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 Park Place Acquisition 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.

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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 addition to the LHM Acquisition during the year ended December 31, 2021, we acquired the assets of 11 franchises ( 10 dealership locations) in in the Denver, Colorado market and three franchises ( one dealership location) in the Indianapolis, Indiana market for a combined purchase price of $ 485.7 million.

We funded these acquisitions with an aggregate of $ 455.1 million of cash and $ 9.6 million of floor plan borrowings for the purchase of the related new vehicle inventory.

In the aggregate, these acquisitions included purchase price holdbacks of $ 21.0 million for potential indemnity claims made by us with respect to the acquired franchises.

In addition to the acquisition amounts above, we released $ 1.0 million of purchase price holdbacks related to current and prior year acquisitions during the year ended December 31, 2021.

In addition to the Park Place Acquisition 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.

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.

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In addition to the acquisition amounts above, we released $ 0.8 million of purchase price holdbacks related to a prior year acquisition.

During the year ended December 31, 2018, we acquired the assets of one franchise ( one dealership location) in the Indianapolis, Indiana market and two franchises ( two dealership locations) in the Atlanta, Georgia market for a combined aggregate purchase price of $ 93.2 million.

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.

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.

Goodwill and manufacturer franchise rights associated with our Dealership segment acquisitions will be deductible for federal and state income tax purposes ratably over a 15 -year period.

Below is the allocation of the purchase price for the acquisitions (other than the LHM Acquisition and the Park Place Acquisition) for the years ended December 31, 2021 and 2020.

For the 11 franchises ( 10 dealership locations) in the Denver, Colorado market and three franchises ( one dealership location) in the Indianapolis, Indiana market acquired in 2021, the preliminary acquisition accounting is based upon the Company’s estimates of fair value.

Additionally, the total consideration transferred is subject to certain post-close adjustments.

We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed.

We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period.

For the Year Ended December 31,

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Loaner vehicles 8.9 —

Liabilities assumed — ( 0.8 )

Other ( 3.5 ) ( 0.3 )

Total purchase price $ 485.7 $ 63.6

During the year ended December 31, 2021, we sold one franchise ( one dealership location) in the Charlottesville, Virginia market.

The Company recorded a pre-tax gain totaling $ 8.0 million, which is presented in our accompanying Consolidated Statements of Income as Gain on dealership divestitures, net.

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.

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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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Parts and accessories 109.9 46.7

Total inventories $ 875.2 $ 985.0

Total inventories, net (a) $ 718.4 $ 875.2

____________________________

(a) Amounts reflected for inventory as of December 31, 2021, excluded $ 24.1 million, of inventories classified as Assets held for sale.

The lower of cost and net realizable value reserves reduced total inventory cost by $ 7.7 million and $ 6.7 million, respectively as of December 31, 2021 and December 31, 2020.

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, 2021 and December 31, 2020, certain automobile manufacturer incentives reduced new vehicle inventory cost by $ 1.2 million and $ 8.3 million, respectively, and reduced new vehicle cost of sales for the year ended December 31, 2021, 2020, and 2019 by $ 60.4 million, $ 47.0 million, and $ 45.7 million, respectively.

New vehicle inventories as of December 31, 2021 have decreased from December 31, 2020 as a result of manufacturer production challenges caused by the semiconductor chip shortage.

ASSETS HELD FOR SALE

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As of December 31,

(In millions)

Inventory $ 24.1 $ —

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Total Assets held for sale 375.1 28.3

Floor plan notes payable—trade — 21.9

Floor plan notes payable—non-trade 9.1 —

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Net assets held for sale $ 354.3 $ 19.4

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.

As of December 31, 2021, assets held for sale consisted of eight franchises ( eight dealership locations) in addition to one real estate property not currently used in our operations.

Assets and liabilities associated with these dealerships and properties totaled $ 375.1 million and $ 20.8 million, respectively.

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

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

During the year ended December 31, 2021, the Company sold one franchise ( one dealership location) for a pre-tax gain totaling $ 8.0 million and two vacant properties with a net book value of $ 12.5 million.

During the year ended December 31, 2020, the Company sold nine franchises ( eight dealership locations) and one collision center for a pre-tax gain totaling $ 62.3 million and one vacant property with a net book value of $ 3.7 million.

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, 2021.

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

OTHER CURRENT ASSETS

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Other current assets $ 203.7 $ 183.8

The acquisition of TCA included an investment portfolio funded primarily by product premiums.

The amortized cost, gross unrealized gains and losses and estimated fair values of debt securities available-for-sale, equity securities, and other investments measured at net asset value are as follows:

As of December 31, 2021

Amortized Cost Allowance For Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value

(In millions)

Short-term investments $ 11.0 $ — $ — $ — $ 11.0

U.S Treasury 7.5 — — ( 0.1 ) 7.4

Municipal 27.9 — 0.4 ( 0.1 ) 28.2

Corporate 9.5 — 0.1 ( 0.1 ) 9.5

Mortgage and other asset-backed securities 8.8 — 0.1 ( 0.1 ) 8.8

Total debt securities 64.7 — 0.6 ( 0.4 ) 64.9

Common stock 65.2 — — — 65.2

Other investments measured at net asset value 4.4 — — — 4.4

Total investments $ 134.3 $ — $ 0.6 $ ( 0.4 ) $ 134.5

As of December 31, 2021, the Company had $ 0.6 million of accrued interest receivable, which is included in Other current assets on the Consolidated Balance Sheet.

The Company does not consider accrued interest receivable in the carrying amount of financial assets held at amortized cost basis or in the allowance for credit losses calculation.

A summary of amortized costs and fair value of investments by time to maturity, is as follows:

As of December 31, 2021

Amortized Costs Fair Value

(In millions)

Due in 1 year or less $ 11.0 $ 11.0

Due in 1-5 years 44.6 44.8

Due in 5-10 years 0.3 0.3

Due after 10 years — —

Total by maturity 55.9 56.1

Mortgage and other asset-backed securities 8.8 8.8

Common stock 65.2 65.2

Other investments measured at net asset value 4.4 4.4

Total investment securities $ 134.3 $ 134.5

There were no gross gains and losses realized related to sales of available-for-sale debt securities carried at fair value from the acquisition date of December 17, 2021 to December 31, 2021

The following table summarizes the amount of unrealized losses, defined as the amount by which the amortized cost exceeds fair value, and the related fair value of investments with unrealized losses as of December 31, 2021.

The investments were segregated into two categories:

those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position of 12 or more months.

The reference point for determining how long an investment was in an unrealized loss position was December 31, 2021.

All investments were acquired in the LHM acquisition on December 17, 2021, therefore there are no unrealized losses greater than 12 months at December 31, 2021.

As of December 31, 2021

Less than 12 Months Greater than 12 Months Total

Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses

(In millions)

U.S Treasury 7.1 ( 0.1 ) — — 7.1 ( 0.1 )

Municipal 10.0 ( 0.1 ) — — 10.0 ( 0.1 )

Corporate 6.4 ( 0.1 ) — — 6.4 ( 0.1 )

Mortgage and other asset-backed securities 5.8 ( 0.1 ) — — 5.8 ( 0.1 )

Total debt securities $ 29.3 $ ( 0.4 ) $ — $ — $ 29.3 $ ( 0.4 )

On January 1, 2020, the Company adopted the amendments within ASU 2016-13, which replaced the legacy GAAP other-than-temporary impairment (“OTTI”) model with a credit loss model.

The credit loss model under ASC 326-30, applicable to the available-for-sale debt securities, requires the recognition of credit losses through an allowance account, but retains the concept from the OTTI model that credit losses are recognized once securities become impaired.

The Company reviews the investment securities portfolio at the security level on a quarterly basis for potential credit losses, which takes into consideration numerous factors as described in Note 1.

The decline in fair value identified in the tables above are a result of widening market spreads and not a result of credit quality.

Additionally, the Company has determined it has both the intent and ability to hold these investments until the market price recovers or until maturity and does not believe it will be required to sell the securities before maturity.

Accordingly, no credit losses were recognized on these securities during the year ended December 31, 2021 .

PROPERTY AND EQUIPMENT, NET

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(a) Amounts reflected for Property and equipment, net as of December 31, 2021 and 2020, excluded $ 110.8 million and $ 28.3 million, respectively classified as Assets held for sale.

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.

In addition, Property and equipment, net as of December 31, 2021 and 2020 included finance leases of $ 8.4 million and $ 14.6 million, respectively.

During the years ended December 31, 2021, 2020, and 2019, we capitalized $ 0.8 million, $ 0.4 million, and $ 0.6 million, respectively, of interest in connection with various capital projects to upgrade or remodel our facilities.

Depreciation expense was $ 41.9 million, $ 38.5 million, and $ 36.2 million for the years ended December 31, 2021, 2020, and 2019, respectively.

GOODWILL AND INTANGIBLE FRANCHISE RIGHTS

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Goodwill and intangible franchise rights are tested annually as of October 1 st , 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:

On December 17, 2021, the Company completed the LHM Acquisition, thereby acquiring 54 new vehicle dealerships, seven used car stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto, and the entities comprising the TCA operations for a total purchase price of $ 3.48 billion.

We preliminarily recorded goodwill of $ 1.64 billion, franchise rights of $ 870.0 million and value of business acquired ("VOBA") of $ 5.6 million in connection with the LHM Acquisition.

We determined that the TCA operations are a separate operating and reportable segment from our dealership operations and have therefore allocated goodwill of $ 1.64 billion associated with the LHM Acquisition between our reportable segments.

Approximately $ 710.3 million of goodwill was allocated to the TCA segment and $ 929.0 million was allocated to the Dealerships segment.

This allocation is preliminary and subject to change once the purchase price allocation is finalized.

Values may differ, possibly materially, when final information becomes available that differs from current estimates.

As a result of the LHM Acquisition, the Company now operates in two reportable segments namely, the Dealerships and TCA segments.

The changes in goodwill and intangible franchise rights for the years ended December 31, 2021 and 2020 are as follows:

(In millions)

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Divestitures ( 9.1 )

Reclassified to assets held for sale ( 5.3 )

Reclassified from assets held for sale 5.3

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

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Divestitures ( 0.6 )

Reclassified from assets held for sale 5.3

Reclassified to assets held for sale ( 118.5 )

Balance as of December 31, 2021 (a) $ 2,271.7

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Acquisitions 337.8

Divestitures ( 11.3 )

Impairments ( 23.0 )

Reclassified to assets held for sale ( 2.3 )

Balance as of December 31, 2020 $ 425.2

Acquisitions 1,020.5

Divestitures ( 11.3 )

Impairments ( 23.0 )

Reclassified to assets held for sale ( 110.0 )

Balance as of December 31, 2021 $ 1,335.7

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.

We elected to perform a qualitative assessment for our October 1, 2021 goodwill and franchise rights impairment testing and determined that it was more likely than not that the fair value of our reporting units exceeded their carrying value.

We did no t record an impairment charge for goodwill or franchise rights in the year ended December 31, 2021.

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 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.

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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.

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.

The results of the quantitative impairment testing 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.

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.

FLOOR PLAN NOTES PAYABLE—TRADE

We consider floor plan notes payable to a party that is affiliated with the entity from which we purchase our new vehicle inventory as Floor Plan Notes Payable—Trade on our Consolidated Balance Sheets.

Floor plan notes payable—trade, net consisted of the following:

Floor plan notes payable—trade, net

consisted of the following:

As of December 31,

(In millions)

Floor plan notes payable—trade (a) $ 71.7 $ 146.5

Floor plan notes payable—trade $ 39.3 $ 71.7

Floor plan notes payable offset account ( 2.0 ) ( 6.8 )

Total floor plan notes payable—trade, net $ 37.3 $ 64.9

____________________________

(a) Amounts reflected for floor plan notes payable—trade as of December 31, 2019, excluded $ 21.9 million classified as Liabilities associated with assets held for sale.

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 July 2020 to extend the maturity date to July 31, 2021.

This floor plan does not have a stated borrowing limitation.

Our floor plan facility with Ford Credit was amended in July 2020 and can be terminated by either the Company or Ford Credit with a 30-day notice period.

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.

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Floor plan notes payable—new non-trade (a) $ 314.7 $ 715.9

Floor plan notes payable—used non-trade 294.0 —

Floor plan notes payable offset account ( 81.5 ) ( 78.6 )

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(a) Amounts reflected for Floor plan notes payable—new non-trade as of December 31, 2021, excluded $ 9.1 million classified as Liabilities associated with assets held for sale.

On September 25, 2019, the Company and certain of its subsidiaries entered into a third amended and restated credit agreement with Bank of America, N.A.

2019 Senior Credit Facility

In connection with the LHM Acquisition, as of October 29, 2021 we entered into a Third Amendment (the "October 29, 2021 Amendment") to the Third Amended and Restated Credit Agreement dated September 25, 2019 with Bank of America, N.A.

("Bank of America"), as administrative agent, and the other lenders party thereto (the "2019 Senior Credit Facility").

The 2019 Senior Credit Facility amended and restated the Company's pre-existing second amended and restated credit agreement, dated as of July 25, 2016.

The 2019 Senior Credit Facility provides for the following, in each case subject to limitations on availability as set forth therein:

• a $ 250.0 million revolving credit facility (the "Revolving Credit Facility") including a $ 50.0 million sub-limit for letters of credit;

• a $ 1.04 billion new vehicle revolving floor plan facility (the "New Vehicle Floor Plan Facility");

• a $ 160.0 million used vehicle revolving floor plan facility (the "Used Vehicle Floor Plan Facility").

As a result of the October 29, 2021 Amendment, among other things, the 2019 Senior Credit Facility (1) increased the aggregate commitments under the Revolving Credit Facility to $ 450.0 million (2) increased the aggregate commitments under the Used Vehicle Floorplan Facility to $ 350.0 million, (3) increased the aggregate commitments under the New Vehicle Floorplan Facility to $ 1.75 billion, (4) removed our minimum consolidated current ratio covenant, and (5) permitted the use of borrowings under the 2021 Senior Credit Facility to fund a portion of the consideration for the LHM Acquisition.

Proceeds from borrowings under the 2019 Senior Credit Facility will be used, among other things, (i) to finance the purchase of new and used vehicles by the Company and certain of its subsidiaries, (ii) for working capital needs of the Company and certain of its subsidiaries, and (iii) for other general corporate purposes of the Company and certain of its subsidiaries.

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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.

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.

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The 2019 Senior Credit Facility matures, and all amounts outstanding thereunder will be due and payable, on September 25, 2024.

The representations and covenants contained in the 2019 Senior 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 2019 Senior Credit Agreement.

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

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

2 unchanged sentences

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

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

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.

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.

See the "Representations and Covenants" section below under our "Long-Term Debt" footnote for a description of the representations, covenants and events of default contained in the 2019 Senior Credit Facility.

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Accrued interest 24.3 16.4

Accrued licenses and regulatory fees 9.6 3.0

Customer deposits 23.2 8.7

Accrued advertising 3.2 5.1

Unearned premium 13.0 —

Accrued licenses and regulatory fees 9.6 9.6

Customer we owe liabilities 7.0 2.8

Accrued advertising 3.3 3.2

Other 48.7 19.5

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(In millions)

6.0 % Senior Subordinated Notes due 2024

4.50 % Senior Notes due 2028

4.625 % Senior Notes due 2029

4.75 % Senior Notes due 2030

5.00 % Senior Notes due 2032

Mortgage notes payable bearing interest at fixed rates (the weighted average interest rates were 4.6 % and 5.4 % for the year ended December 31, 2021 and 2020, respectively)

2018 Bank of America Facility (a) 84.2 88.3

2018 Wells Fargo Master Loan Facility (b) 86.9 25.0

2021 Real Estate Facility 689.7 —

2021 BofA Real Estate Facility 180.7 —

2015 Wells Fargo Master Loan Facility (c) 61.7 76.8

2018 Bank of America Facility 78.8 84.2

2018 Wells Fargo Master Loan Facility (a) 81.9 86.9

2013 BofA Real Estate Facility 31.1 33.6

2015 Wells Fargo Master Loan Facility (b) 53.2 61.7

2019 Syndicated Revolving Credit Facility 169.0 —

Finance lease liability 8.4 16.6

Total debt outstanding 3,614.5 1,212.2

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

Add—unamortized premium on 4.50 % Senior Notes due 2028

5 unchanged sentences

____________________________

(a) Amounts reflected for the 2018 BofA Real Estate Facility as of December 31, 2019, exclude $ 26.6 million classified as Liabilities associated with assets held for sale.

(a) 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.

(b) Amounts reflected for the 2015 Wells Fargo Master Loan Facility as of December 31, 2020, exclude $ 3.8 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, 2021 are as follows (in millions):

1 unchanged sentence

Total maturities of long-term debt $ 3,614.5

____________________________

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

New Senior Notes

Senior Notes issued in 2021

In connection with the LHM Acquisition, on November 19, 2021, the Company completed its offering of $ 800 million aggregate principal amount of 4.625 % senior notes due 2029 (the “2029 Notes”) and $ 600 million aggregate principal amount of 5.000 % senior notes due 2032 (the “2032 Notes”).

The Company paid lender fees of $ 17.5 million in conjunction with the offering of the 2029 Notes and 2032 Notes and incurred additional debt issuance costs of $ 4.0 million.

The lender fees and other debt issuance costs incurred are being amortized over the terms of the 2029 and 2032 Notes using the effective interest method.

The 2029 Notes will mature on November 15, 2029.

We may redeem some or all of the 2029 Notes at any time on and after November 15, 2024 at redemption prices specified in the 2029 Notes Indenture.

Prior to November 15, 2024, we may also redeem up to 40 % of the aggregate principal amount of the 2029 Notes using the proceeds from certain equity offerings at a redemption price of 104.625 % of their principal amount plus accrued and unpaid interest, if any, to, but not including the redemption date.

In addition, we may redeem some or all of the 2029 Notes at any time prior to November 15, 2024 at a price equal to 100 % of the principal amount thereof plus a make-whole premium set forth in the 2029 Notes Indenture, and accrued and unpaid interest, if any.

If we sell certain of our assets or experience specific kinds of changes of control, we must offer to repurchase the 2029 Notes.

The 2032 Notes mature on February 15, 2032.

We may redeem some or all of the 2032 Notes at any time on and after November 15, 2026 at redemption prices specified in the 2032 Notes Indenture.

Prior to November 15, 2026, we may also redeem up to 40 % of the aggregate principal amount of the 2032 Notes using the proceeds from certain equity offerings at a redemption price of 105.000 % of their principal amount plus accrued and unpaid interest to, if any, but not including the redemption date.

In addition, we may redeem some or all of the 2032 Notes at any time prior to November 15, 2026 at a price equal to 100 % of the principal amount thereof plus a make-whole premium set forth in the 2032 Notes Indenture, and accrued and unpaid interest, if any.

If we sell certain of our assets or experience specific kinds of changes of control, we must offer to repurchase the 2032 Notes.

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

For all relevant periods presented, our 2029 Notes and 2032 Notes have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries other than Landcar Administration Company, Landcar Agency, Inc., and Landcar Casualty Company (collectively, the “TCA Non-Guarantor Subsidiaries”).

Senior Notes issued in 2020

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.

The Company paid lender fees of $ 6.8 million in conjunction with the February 2020 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.

2 unchanged sentences

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 proceeds of the September 2020 Offering were used to redeem the Seller Notes issued in connection with the Park Place Acquisition 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.

1 unchanged sentence

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 February 2020 Offering, together with additional borrowings and cash on hand, was incurred to (i) fund 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 (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.

2 unchanged sentences

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

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.

For all relevant periods presented, our 2028 Notes and 2030 Notes have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries other than the TCA Non-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 February 3, 2020, we issued a conditional notice of redemption to the holders of our 6.0 % Senior Subordinated Notes due 2024, notifying such holders that we intended to redeem all of the 6.0 % Notes.

On March 4, 2020, the 6.0 % 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 6.0 % 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 6.0 % 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

Mortgage Financings

We have multiple mortgage agreements with finance companies affiliated with our vehicle manufacturers ("captive mortgages") and other lenders.

As of December 31, 2021 and 2020, we had total mortgage notes payable outstanding of $ 71.7 million and $ 79.2 million, respectively, which are collateralized by the associated real estate.

2021 Real Estate Facility

On December 17, 2021, we entered into a real estate term loan credit agreement with Bank of America, N.A., as administrative agent and the various financial institutions party thereto, as lenders, which provides for term loans in an aggregate amount equal to $ 689.7 million (the “2021 Real Estate Facility”).

The Company used the proceeds from these borrowings to finance the purchase of the real property in connection with the LHM Acquisition as well as other recent acquisitions and other unencumbered real property.

Term loans under the 2021 Real Estate Facility bear interest, at our option, based on (1) Daily Simple SOFR plus 1.55 % - 1.95 % per annum (as determined by the consolidated total lease adjusted leverage ratio), or (2) the Base Rate (as described below) plus 0.55 % - 0.95 % per annum (as determined by the consolidated total lease adjusted leverage ratio).

The Base Rate is the highest of (i) the Federal Funds rate plus 0.50 %, (ii) the Bank of America prime rate, (iii) the Daily Simple SOFR plus 1.0 % and (iv) 1.00 %.

We will be required to make 20 consecutive quarterly principal payments of 1.25 % of the initial amount of each loan, with a balloon repayment of the outstanding principal amount of loans due on the maturity date.

The 2021 Real Estate Facility matures five years from the initial funding date.

Borrowings under the 2021 Real Estate Facility are guaranteed by us, and are collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder.

As of December 31, 2021, we had $ 689.7 million in term loans outstanding under the 2021 Real Estate Facility.

2021 BofA Real Estate Facility

On May 20, 2021, the Company and certain of its subsidiaries borrowed $ 184.4 million under a real estate term loan credit agreement, dated as of May 10, 2021 (the “2021 BofA Real Estate Credit Agreement”), by and among the Company and certain of its subsidiaries, Bank of America, N.A., as administrative agent and the various financial institutions party thereto, as lenders, which provides for term loans in an aggregate amount equal to $ 184.4 million, subject to customary terms and conditions (the “2021 BofA Real Estate Facility”).

The Company used the proceeds from these borrowings to finance the exercise of its option to purchase certain of the leased real property under the definitive agreements entered into in connection with the acquisition of the Park Place Dealerships.

The Company completed the purchase of the leased real property on May 20, 2021.

Term loans under our 2021 BofA Real Estate Facility bear interest, at our option, based on (1) LIBOR plus 1.65 % per annum or (2) the Base Rate (as described below) plus 0.65 % per annum.

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 1.0 %.

We will be required to make 39 consecutive quarterly principal payments of 1.00 % of the initial amount of each loan, with a balloon repayment of the outstanding principal amount of loans due on the maturity date.

The 2021 BofA Real Estate Facility matures ten years from the initial funding date.

Borrowings under the 2021 BofA Real Estate Facility are guaranteed by us and each of our operating dealership subsidiaries that leased the real estate now financed under the 2021 BofA Real Estate Facility, and are collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder.

The representations and covenants in the 2021 BofA Real Estate Facility are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2021 BofA Real Estate Facility.

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

The 2021 BofA Real Estate Facility 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 2021 BofA Real Estate Facility to immediately repay all amounts outstanding thereunder.

As of December 31, 2021, we had $ 180.7 million in term loans outstanding under the 2021 BofA Real Estate Facility.

2018 BofA Real Estate Facility

On November 13, 2018, we entered into a real estate term loan credit agreement (as amended, restated or supplemented from time to time, the “2018 BofA Real Estate Credit Agreement”) with Bank of America, as lender, providing for term loans in an aggregate amount not to exceed $ 128.1 million, subject to customary terms and conditions (the “2018 BofA Real Estate Facility”).

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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, 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.

As of December 31, 2021 and 2020, we had $ 78.8 million and $ 84.2 million, respectively, in term loans outstanding under the 2018 BofA Real Estate Facility.

2018 Wells Fargo Master Loan Facility

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As of December 31, 2021 and 2020, we had $ 31.1 million and $ 33.6 million, respectively, in term loans outstanding under the 2013 BofA Real Estate Facility.

Summary of Mortgages

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, 2021 and 2020:

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Other mortgage debt 0.8 42.8 2021-2022 1.8 43.2 2020-2022

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

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

2021 Real Estate Facility 689.7 928.9 2026 — — —

2021 BofA Real Estate Facility 180.7 199.4 2031 — — —

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

2018 BofA Real Estate Facility 78.8 105.0 2025 84.2 106.2 2025

2018 Wells Fargo Master Loan Facility (a) 81.9 105.3 2028 86.9 112.9 2028

2013 BofA Real Estate Facility 31.1 71.8 2023 33.6 73.3 2023

2015 Wells Fargo Master Loan Facility (b) 53.2 95.3 2025 61.7 109.6 2025

Total mortgage debt $ 1,187.1 $ 1,700.7 $ 345.6 $ 646.9

____________________________

(a) Amounts reflected for the 2018 BofA Real Estate Facility as of December 31, 2019, exclude $ 26.6 million, classified as Liabilities associated with assets held for sale.

(a) 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.

(b) Amounts reflected for the 2015 Wells Fargo Master Loan Facility as of December 31, 2020 exclude $ 3.8 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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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.

As of December 31, 2021, we had $ 10.8 million in outstanding letters of credit, $ 169.0 million drawn on our Revolving Credit Facility and $ 270.2 million of borrowing availability as of December 31, 2021.

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 December 31,

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.

Applicable Rate means with respect to the Revolving Credit Facility, 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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Stock Repurchase and Dividend Restrictions

The 2019 Senior Credit Facility and the Indenture currently allow for restricted payments without limit so long as our consolidated total leverage ratio (as defined in the 2019 Senior Credit Facility and the Indenture) is not greater than 3.0 to 1.0 after giving effect to such proposed restricted payments.

Restricted payments generally include items such as dividends and share repurchases, and solely with respect to the Indenture, unscheduled repayments of subordinated debt, or the making of certain investments.

In the event that our consolidated total leverage ratio does (or would) exceed 3.0 to 1.0, the 2019 Senior Credit Facility and the Indenture would then also allow for restricted payments under the following mutually exclusive parameters, subject to certain exclusions:

• Share repurchases in an aggregate amount not to exceed $ 20.0 million in any fiscal year;

• General restricted payments allowance of $ 150.0 million;

• Subject to our continued compliance with a minimum consolidated current ratio, a consolidated fixed charge coverage ratio and a maximum consolidated total lease adjusted leverage ratio, in each case as set out in the Indenture, restricted payments capacity additions (or subtractions if negative) equal to (i) 50 % of our net income (as defined in the 2019 Senior Credit Facility and the Indenture beginning on October 1, 2014 and ending on the date of the most recently completed fiscal quarter (the "Measurement Period"), plus (ii) 100 % of any cash proceeds we receive from the sale of equity interests during the Measurement Period, minus (iii) the dollar amount of share repurchases made and dividends paid on or after October 1, 2014, subject to certain exceptions.

The 2019 Senior Credit Facility and the Indentures currently allow for restricted payments without limit so long as our Consolidated Total Leverage Ratio (as defined in the 2019 Senior Credit Facility and the Indentures) is no greater than 3.0 to 1.0 after giving effect to such proposed restricted payments.

Restricted payments generally include items such as dividends, share repurchases, unscheduled repayments of subordinated debt, or purchases of certain investments.

Subject to our continued compliance with a consolidated fixed charge coverage ratio and a maximum consolidated total lease adjusted leverage ratio, in each case as set out in the Indentures, restricted payments capacity additions (or subtractions if negative) equal to a base level plus the cumulative amount of (i) 50 % of our net income (as defined in the 2019 Senior Credit Facility) plus (ii) 100 % of any cash proceeds we receive from the sale of equity interests minus (iii) the dollar amount of share purchases made and dividends paid during the defined measurement periods, subject to certain exceptions.

In the event that our Consolidated Total Leverage Ratio does (or would) exceed 3.0 to 1.0, the 2019 Senior Credit Facility and the Indentures would then also allow for restricted payments under mutually exclusive parameters, subject to certain exclusions.

Under the 2028 Senior Notes and 2030 Senior Notes, our most restrictive indentures, these parameters are:

• The Company may repurchase its own shares in an aggregate amount not to exceed $ 20.0 million in any fiscal year.

• The Company may otherwise make restricted payments only up the cumulative capacity above.

Our restricted payment capacity balance as of December 31, 2021 was $ 958.6 million.

Representations and Covenants

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We cannot give any assurance that we would be able to successfully take any of these actions on terms, or at times, that may be necessary or desirable.

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.

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 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.

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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 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.

The representations and covenants contained in the 2021 BofA Real Estate Facility are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2021 BofA Real Estate Facility.

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

The 2021 BofA Real Estate Facility 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 to immediately repay all amounts outstanding thereunder

The representations and covenants contained in the 2021 Real Estate Facility are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2021 Real Estate Facility.

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

The 2021 Real Estate Facility 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 to immediately repay all amounts outstanding thereunder

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 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.

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.

Upon the occurrence of an event of default, we could be required by the 2018 BofA Real Estate Credit Agreement to immediately repay all amounts outstanding thereunder.

The representations, warranties and covenants contained in the 2018 Wells Fargo Master Loan Agreement and the related documents 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.

The representations, warranties and covenants contained in the 2018 Wells Fargo Master Loan Agreement and the related documents are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio.

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

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Upon the occurrence of an event of default, we could be required by the 2018 Wells Fargo Master Loan Facility to immediately repay all amounts outstanding thereunder.

The representations, warranties and covenants contained in the 2015 Wells Fargo Master Loan Agreement and the related documents 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.

The representations, warranties and covenants contained in the 2015 Wells Fargo Master Loan Agreement and the related documents are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio.

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

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Upon the occurrence of an event of default, we could be required by the 2015 Wells Fargo Master Loan Facility to immediately repay all amounts outstanding thereunder.

The representations and covenants contained in the 2013 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 2013 BofA Real Estate Credit Agreement.

The representations and covenants contained in the 2013 BofA Real Estate Credit Agreement are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2013 BofA Real Estate Credit Agreement.

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

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We use inputs that are current as of the measurement date, including during periods of significant market fluctuations.

Financial instruments consist primarily of cash and cash equivalents, contracts-in-transit, accounts receivable, cash surrender value of corporate-owned life insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable, and interest rate swap instruments.

Financial instruments consist primarily of cash and cash equivalents, investments, contracts-in-transit, accounts receivable, cash surrender value of corporate-owned life insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable, and interest rate swap instruments.

The carrying values of our financial instruments, with the exception of subordinated long-term debt and mortgage notes payable, approximate fair value due to (i) their short-term nature, (ii) recently completed market transactions, or (iii) existence of variable interest rates, which approximate market rates.

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Carrying Value:

6.0 % Senior Subordinated Notes due 2024

4.50 % Senior Notes due 2028

$ 401.6 $ 400.9

4.625 % Senior Notes due 2029

4.75 % Senior Notes due 2030

5.00 % Senior Notes due 2032

Mortgage notes payable (a) 1,183.6 343.7

Total carrying value $ 3,405.2 $ 1,185.2

6.0 % Senior Subordinated Notes due 2024

4.50 % Senior Notes due 2028

$ 413.6 $ 423.2

4.625 % Senior Notes due 2029

4.75 % Senior Notes due 2030

5.00 % Senior Notes due 2032

Mortgage notes payable (a) 1,196.6 354.5

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____________________________

(a) Excludes amounts classified as Liabilities associated with assets held for sale.

(a) The balances as of December 31, 2020 exclude amounts classified as Liabilities associated with assets held for sale.

Interest Rate Swap Agreements

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.

As of December 31, 2021, we had five interest rate swap agreements.

In May 2021, we entered into a new interest rate swap agreement with a notional principal amount of $ 184.4 million which will reduce to $ 110.6 million at maturity.

This swap, along with our existing swaps, was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through each swap's maturity date as noted in the table below.

The following table provides information on the attributes of each swap as of December 31, 2021:

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

Maturity Value Maturity Date

Inception Date Notional Value at Inception Notional Value as of December 31, 2021

Notional Value at Maturity Maturity Date

(In millions)

May 2021 $ 184.4 $ 180.7 $ 110.6 May 2031

July 2020 $ 93.5 $ 86.6 $ 50.6 December 2028

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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 year ended December 31, 2020 and 2019, reflect a liability of $ 7.2 million and $ 3.8 million, respectively.

The fair value of our swaps for the years ended December 31, 2021 and 2020, reflect a net liability of $ 0.9 million and $ 7.2 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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Other current liabilities $ ( 3.8 ) $ ( 2.8 )

Other long-term assets 5.5 —

Other long-term liabilities ( 2.6 ) ( 4.4 )

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

2018 $ 1.8 Swap interest expense $ ( 0.5 )

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

On the basis of yield curve conditions as of December 31, 2021 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 $ 3.8 million.

The table below presents the Company’s investment securities that are measured at fair value on a recurring basis aggregated by the level in the fair value hierarchy within which those measurements fall:

As of December 31, 2021

Level 1 Level 2 Level 3 Total

(In millions)

Cash equivalents $ 6.0 $ — $ — $ 6.0

Short-term investments 2.9 8.1 — 11.0

U.S Treasury 7.4 — — 7.4

Municipal — 28.2 — 28.2

Corporate — 9.5 — 9.5

Mortgage and other asset backed securities — 8.8 — 8.8

Total debt securities 10.3 54.6 — 64.9

Common stock 65.2 — — 65.2

Total $ 75.5 $ 54.6 $ — $ 130.1

Investments measured at net asset value (a) 4.4

Total Investments, at fair value $ 134.5

(a) In accordance with ASC 820-10, certain investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding and is determined by the fund investment manager or custodian.

Other investment securities measured at net asset value as a practical expedient in the amount of $ 4.4 million are excluded from the fair value leveling disclosure above.

We do not have any significant restrictions on our ability to liquidate our

positions on these investments, nor do we believe it is probable a price less than NAV would be received in the event of a liquidation.

We review the fair value hierarchy classifications each reporting period.

Changes in the observability of the valuation attributes may result in a reclassification of certain investments.

Such reclassifications are reported as transfers in and out of Level 3, or between other levels, at the beginning fair value for the reporting period in which the changes occur.

The components of income tax expense are as follows:

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Non-deductible/non-tax items 0.6 0.1 1.3 0.4 0.6 0.2

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

Other, net ( 2.8 ) ( 0.4 ) 1.3 0.4 ( 0.1 ) —

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Deferred income tax assets:

Deferred Revenue $ 139.4 $ —

F&I chargeback liabilities 11.9 $ 11.5

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Operating lease liabilities ( 65.6 ) ( 76.8 )

Investments, net ( 2.0 ) —

Other, net ( 4.2 ) ( 1.2 )

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

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 December 31, 2017 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 completed our accounting for the Tax Act in 2018.

OTHER LONG-TERM LIABILITIES

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(In millions)

Unearned premiums $ 24.0 $ —

Accrued finance and insurance chargebacks 22.4 22.9

Unclaimed property 4.6 3.1

Interest rate swap 2.6 4.4

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 7.1 4.4

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SUPPLEMENTAL CASH FLOW INFORMATION

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.

During the years ended December 31, 2021, 2020, and 2019, we made interest payments, including amounts capitalized, totaling $ 92.2 million, $ 62.6 million, and $ 91.2 million, respectively.

Included in these interest payments are $ 8.7 million,

$ 19.4 million, and $ 38.6 million, of floor plan interest payments for the years ended December 31, 2021, 2020, and 2019, respectively.

During the years ended December 31, 2021, 2020, and 2019 we made income tax payments, net of refunds received, totaling $ 114.2 million, $ 48.6 million, and $ 48.4 million, respectively.

During the years ended December 31, 2021, 2020, and 2019, we transferred $ 216.3 million, $ 163.5 million, and $ 141.0 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:

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2021 2020 2019

(In millions)

Amortization of debt issuance costs $ 2.6 $ 1.8 $ 2.5

Loss on disposal of fixed assets 0.7 2.6 0.9

(Gain) Loss on disposal of fixed assets ( 2.3 ) 0.7 2.6

Other individually immaterial items ( 1.1 ) ( 1.2 ) ( 0.3 )

Other adjustments, net $ ( 0.8 ) $ 1.3 $ 4.8

Effective January 1, 2019, the Company adopted the new lease accounting guidance in ASC 842.

The new standard establishes a right-of-use ("ROU") model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms in excess of 12 months.

Leases are classified as either finance or operating, with classification impacting the pattern of expense recognition in the income statement.

The Company elected the package of practical expedients permitted in ASC 842.

Accordingly, the Company accounted for its existing operating leases as an operating lease under the new guidance, without reassessing (a) whether the contract contains a lease under ASC 842, (b) whether classification of the operating lease would be different in accordance with ASC 842, or (c) whether the unamortized initial direct costs before transition adjustments (as of December 31, 2018) would have met the definition of initial direct costs in ASC 842 at lease commencement.

In addition, the Company opted for the transition relief method specified in Accounting Standards Update No.

2018-11, which allowed for the effective date of the new leases standard as the date of initial application on transition.

As a result of this election the Company (a) did not adjust comparative period financial information for the effects of ASC 842;

(b) made the new required lease disclosures for periods after the effective date;

and (c) carried forward our ASC 840 disclosures - see Note 19 "Leases (Prior to Adoption of ASC 842)" for comparative periods.

As a result of the adoption of ASC 842, the Company recorded a right-of-use asset of $ 86.9 million, which represents the lease liability reduced for deferred rent amounts of $ 4.4 million and a lease liability of $ 91.3 million, which represents the present value of remaining lease payments, discounted using the Company’s incremental borrowing rates based on the remaining lease terms.

We lease real estate and equipment primarily under operating lease agreements.

For leases with terms in excess of 12 months, we record a ROU asset and lease liability based on the present value of lease payments over the lease term.

For leases with terms in excess of 12 months, we record a right-of-use ("ROU") asset and lease liability based on the present value of lease payments over the lease term.

Escalation clauses, lease payments dependent on existing rates/indexes, renewal options, and purchase options are included within the determination of lease payments when appropriate.

We have elected the practical expedient not to separate lease and non-lease components for all leases that qualify, except for information technology assets that are embedded within service agreements (such as software license arrangements).

Leases are classified as either finance or operating, with classification impacting the pattern of expense recognition in the income statement.

When available, the implicit rate is utilized to discount lease payments to present value;

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(In millions)

Operating Operating lease right-of-use assets 317.4 65.6

Operating Assets held for sale 7.1 —

Operating Operating lease right-of-use assets $ 261.0 $ 317.4

Finance Property and equipment, net 8.4 14.6

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Weighted Average Discount Rate - Finance Lease 4.3 % 4.1 %

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.

The following table provides certain information related to the lease costs for finance and operating leases during the years ended December 31, 2021 and 2020.

For the Year Ended December 31,

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Supplemental Cash Flow Information

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

The following table presents supplemental cash flow information for leases during the years ended December 31, 2021 and 2020.

For the Year Ended December 31,

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Changes to finance lease right-of-use asset resulting from lease reassessment event $ ( 14.6 ) $ —

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.

As reflected within the table above, we reduced a portion of the new finance lease right-of-use asset based on the existing finance lease liability at the time of remeasurement.

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 .

During the years ended December 31, 2021 and 2020, we obtained $ 69.2 million and $ 272.3 million, respectively, 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, 2021, we reassessed and remeasured an existing real estate lease, which was previously accounted for as a finance lease due to the presence of a purchase price option which we concluded we are no longer reasonably certain to exercise.

Finance Operating

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2022 $ 0.4 $ 40.0

2023 0.4 36.6

2024 0.4 28.6

2025 0.4 26.1

2026 0.4 24.3

Thereafter 16.5 229.4

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and (iii) the landlord having a claim for various damages.

LEASES (PRIOR TO ADOPTION OF ASC 842)

We lease real estate and equipment primarily under operating lease agreements, most of which have terms ranging from one to twenty years .

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 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.

SEGMENT INFORMATION

As of December 31, 2021, the Company had two reportable segments:

(1) Dealerships and (2) TCA.

Prior to the acquisition of TCA in connection with the LHM Acquisition, we had one reportable segment whereby the geographic dealership groups were aggregated into one reportable segment.

On December 17, 2021, we completed the LHM Acquisition by which we acquired 54 new vehicle dealerships, seven used car stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto, and the entities comprising TCA.

The dealerships acquired in the LHM Acquisition are located in Utah, Arizona, New Mexico, Colorado, Idaho, California and Washington.

Our dealership operations are organized by management into geographic market-based groups within the Dealerships segment.

The operations of our F&I product provider is reflected within our TCA segment.

Our Chief Operating Decision Maker is our Chief Executive Officer who manages the business, regularly reviews financial information and allocates resources at the geographic market level for our dealerships and at the TCA segment level for our F&I product provider's operations.

The geographic dealership group operating segments have been aggregated into one reportable segment as their operations (i) have similar economic characteristics (our markets all have similar long-term average gross margins), (ii) offer similar products and services (all of our markets offer new and used vehicles, parts and service, and finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our markets distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

Goodwill acquired in the LHM Acquisition of $ 929.0 million and $ 710.3 million was allocated to the Dealership and TCA segments, respectively, is consistent with how the Chief Operating Decision Maker reviews financial information and allocates resources.

The allocation was based on the net assets acquired in the Dealership and TCA segments.

This allocation is preliminary and subject to change once the purchase price allocation is finalized.

The majority of TCA’s revenue arises from sales through our affiliated dealerships.

Intercompany profits and losses are eliminated in consolidation.

Reportable segment financial information for the year ended December 31, 2021, are as follows:

As of and for the year ended December 31, 2021

Dealerships TCA Eliminations Total Company

(In millions)

Revenue $ 9,836.7 $ 12.0 $ ( 11.0 ) $ 9,837.7

Gross profit 1,901.7 5.5 ( 5.0 ) 1,902.2

Depreciation and amortization 41.9 — — 41.9

Selling, general and administrative expense 1,076.9 0.3 ( 3.3 ) 1,073.9

Interest expense

Floor plan interest expense 8.2 — — 8.2

Other interest expense, net 93.9 — — 93.9

Total interest expense $ 102.1 $ — $ — $ 102.1

Capital expenditures 74.2 — — $ 74.2

Total Assets $ 7,289.7 $ 762.6 $ ( 49.7 ) $ 8,002.6

COMMITMENTS AND CONTINGENCIES

17 unchanged sentences

The United States or the countries from which our products are imported may, from time to time, impose new quotas, duties, tariffs, or other restrictions;

or adjust presently prevailing quotas, duties, or tariffs, which may affect our operations, and our ability to purchase imported vehicles and/or parts at reasonable prices.

presently prevailing quotas, duties, or tariffs, which may affect our operations, and our ability to purchase imported vehicles and/or parts at reasonable prices.

Substantially all of our facilities are subject to federal, state and local provisions regarding the discharge of materials into the environment.

19 unchanged sentences

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.

We have recognized $ 16.2 million ($ 3.9 million tax benefit), $ 12.6 million ($ 3.2 million tax benefit), and $ 12.5 million ($ 3.1 million tax benefit) in share-based compensation expense for the years ended December 31, 2021, 2020, and 2019, respectively.

As of December 31, 2021, there was $ 14.4 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 1.65 years.

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.

Further, we expect to recognize $ 1.6 million of this expense in 2022, $ 7.7 million in 2023, $ 5.1 million in 2024.

Performance Share Units

21 unchanged sentences

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

The following table summarizes information about restricted share units for 2021:

Shares Weighted Average Grant Date

Non-vested at January 1, 2021 102,593 $ 93.97

3 unchanged sentences

Non-vested at December 31, 2021 116,747 125.33

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:

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

For the Year Ended December 31,

2021 2020 2019

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 $ — $ —

Weighted average grant-date fair value of restricted share units granted $ 150.38 $ 94.07 $ —

Total fair value of restricted share units vested (in millions) $ 3.8 $ 0.3 $ —

Restricted Stock Awards

15 unchanged sentences

Employee Retirement Plan

We sponsor the Asbury Automotive Retirement Savings Plan (the "Retirement Savings Plan"), a 401(k) plan, for eligible employees.

The Company sponsors the Asbury Automotive Retirement Savings Plan (the "Retirement Savings Plan"), a 401(k) plan, for eligible employees.

Employees electing to participate in the Retirement Savings Plan may contribute up to 75 % of their annual eligible compensation.

3 unchanged sentences

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

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.

The Company's expense related to employer matching contributions totaled $ 5.3 million, $ 2.5 million, and $ 3.7 million for the years ended December 31, 2021, 2020, and 2019, 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