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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 1-13107
AUTONATION, INC.
(Exact name of registrant as specified in its charter)
 
Delaware   73-1105145
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
200 SW 1st Avenue
Fort Lauderdale , Florida   33301
(Address of principal executive offices)   (Zip Code)
(954)769-6000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.01 per share AN New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   þ   No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   þ   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ    Accelerated filer 
Non-accelerated filer    Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  þ
As of July 19, 2021, the registrant had 71,595,447 shares of common stock outstanding.



AUTONATION, INC.
FORM 10-Q
TABLE OF CONTENTS
 
    Page
Item 1.
1
2
3
4
6
Item 2.
Item 3.
Item 4.
Item 1A.
Item 2.
Item 6.



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
 
June 30,
2021
December 31,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 59.5  $ 569.6 
Receivables, net 773.5  845.2 
Inventory 1,756.2  2,598.5 
Other current assets 212.7  139.4 
Total Current Assets 2,801.9  4,152.7 
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $1.7 billion and $1.7 billion, respectively
3,094.7  3,138.1 
OPERATING LEASE ASSETS 303.0  309.5 
GOODWILL 1,187.0  1,185.0 
OTHER INTANGIBLE ASSETS, NET 521.0  521.5 
OTHER ASSETS 473.4  580.4 
Total Assets $ 8,381.0  $ 9,887.2 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Vehicle floorplan payable - trade $ 669.5  $ 1,541.7 
Vehicle floorplan payable - non-trade 901.8  1,218.2 
Accounts payable 396.1  335.2 
Commercial paper 200.0  — 
Current maturities of long-term debt 7.0  309.2 
Accrued payroll and benefits 269.2  225.8 
Other current liabilities 597.1  535.8 
Total Current Liabilities 3,040.7  4,165.9 
LONG-TERM DEBT, NET OF CURRENT MATURITIES 1,790.3  1,792.6 
NONCURRENT OPERATING LEASE LIABILITIES 279.1  286.5 
DEFERRED INCOME TAXES 75.4  95.9 
OTHER LIABILITIES 338.7  310.6 
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS’ EQUITY:
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 86,562,149 shares issued at June 30, 2021, and 102,562,149 shares issued at December 31, 2020, including shares held in treasury
0.8  1.0 
Additional paid-in capital 5.7  53.1 
Retained earnings 3,896.4  4,069.4 
Treasury stock, at cost; 13,429,134 and 19,078,620 shares held, respectively
(1,046.1) (887.8)
Total Shareholders’ Equity 2,856.8  3,235.7 
Total Liabilities and Shareholders’ Equity $ 8,381.0  $ 9,887.2 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
Three Months Ended Six Months Ended
  June 30, June 30,
  2021 2020 2021 2020
Revenue:
New vehicle
$ 3,428.3  $ 2,261.3  $ 6,410.6  $ 4,543.2 
Used vehicle
2,222.9  1,324.5  3,972.0  2,573.2 
Parts and service
950.8  689.9  1,801.8  1,566.2 
Finance and insurance, net
369.0  246.4  682.0  482.2 
Other
7.4  10.9  15.8  35.2 
TOTAL REVENUE 6,978.4  4,533.0  12,882.2  9,200.0 
Cost of sales:
New vehicle
3,107.8  2,141.7  5,900.1  4,327.2 
Used vehicle
2,020.2  1,207.5  3,629.1  2,365.2 
Parts and service
518.3  378.5  980.3  866.0 
Other
5.8  10.3  13.6  33.4 
TOTAL COST OF SALES (excluding depreciation shown below)
5,652.1  3,738.0  10,523.1  7,591.8 
Gross profit:
New vehicle
320.5  119.6  510.5  216.0 
Used vehicle
202.7  117.0  342.9  208.0 
Parts and service
432.5  311.4  821.5  700.2 
Finance and insurance
369.0  246.4  682.0  482.2 
Other
1.6  0.6  2.2  1.8 
TOTAL GROSS PROFIT 1,326.3  795.0  2,359.1  1,608.2 
Selling, general, and administrative expenses 748.9  547.9  1,396.8  1,148.6 
Depreciation and amortization 47.9  49.1  95.8  97.2 
Goodwill impairment —  —  —  318.3 
Franchise rights impairment —  —  —  57.5 
Other (income) expense, net (0.7) (3.4) (0.6) 4.5 
OPERATING INCOME (LOSS) 530.2  201.4  867.1  (17.9)
Non-operating income (expense) items:
Floorplan interest expense
(6.6) (16.3) (16.0) (41.8)
Other interest expense
(20.9) (23.2) (42.1) (46.7)
Other income, net 8.9  214.6  19.9  211.7 
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 511.6  376.5  828.9  105.3 
Income tax provision 126.7  96.6  204.5  57.6 
NET INCOME FROM CONTINUING OPERATIONS 384.9  279.9  624.4  47.7 
Loss from discontinued operations, net of income taxes (0.1) (0.1) (0.2) (0.2)
NET INCOME $ 384.8  $ 279.8  $ 624.2  $ 47.5 
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations $ 4.88  $ 3.18  $ 7.71  $ 0.54 
Discontinued operations $ —  $ —  $ —  $ — 
Net income $ 4.88  $ 3.18  $ 7.71  $ 0.53 
Weighted average common shares outstanding 78.9  87.9  81.0  89.0 
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations $ 4.83  $ 3.18  $ 7.63  $ 0.54 
Discontinued operations $ —  $ —  $ —  $ — 
Net income $ 4.83  $ 3.18  $ 7.63  $ 0.53 
Weighted average common shares outstanding 79.7  88.1  81.8  89.0 
COMMON SHARES OUTSTANDING, net of treasury stock, at period end
73.1  87.2  73.1  87.2 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data)
 
Six Months Ended June 30, 2021
  Common Stock Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total
  Shares Amount
BALANCE AT DECEMBER 31, 2020 102,562,149  $ 1.0  $ 53.1  $ 4,069.4  $ (887.8) $ 3,235.7 
Net income —  —  —  239.4  —  239.4 
Repurchases of common stock —  —  —  —  (306.1) (306.1)
Stock-based compensation expense —  —  20.8  —  —  20.8 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes
—  —  (32.9) —  37.0  4.1 
BALANCE AT MARCH 31, 2021 102,562,149  $ 1.0  $ 41.0  $ 4,308.8  $ (1,156.9) $ 3,193.9 
Net income —  —  —  384.8  —  384.8 
Repurchases of common stock —  —  —  —  (736.1) (736.1)
Treasury stock cancellation (16,000,000) (0.2) (40.6) (797.2) 838.0  — 
Stock-based compensation expense —  —  6.5  —  —  6.5 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes
—  —  (1.2) —  8.9  7.7 
BALANCE AT JUNE 30, 2021 86,562,149  $ 0.8  $ 5.7  $ 3,896.4  $ (1,046.1) $ 2,856.8 

Six Months Ended June 30, 2020
  Common Stock Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total
  Shares Amount
BALANCE AT DECEMBER 31, 2019 102,562,149  $ 1.0  $ 35.9  $ 3,688.3  $ (563.1) $ 3,162.1 
Net loss —  —  —  (232.3) —  (232.3)
Repurchases of common stock —  —  —  —  (80.0) (80.0)
Stock-based compensation expense —  —  4.5  —  —  4.5 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes
—  —  (21.7) —  14.8  (6.9)
Cumulative effect of change in accounting principle - current expected credit losses —  —  —  (0.5) —  (0.5)
BALANCE AT MARCH 31, 2020 102,562,149  $ 1.0  $ 18.7  $ 3,455.5  $ (628.3) $ 2,846.9 
Net income —  —  —  279.8  —  279.8 
Stock-based compensation expense —  —  11.2  —  —  11.2 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes
—  —  (0.4) —  0.2  (0.2)
BALANCE AT JUNE 30, 2020 102,562,149  $ 1.0  $ 29.5  $ 3,735.3  $ (628.1) $ 3,137.7 


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.


3

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 
Six Months Ended
  June 30,
  2021 2020
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 624.2  $ 47.5 
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations 0.2  0.2 
Depreciation and amortization 95.8  97.2 
Amortization of debt issuance costs and accretion of debt discounts 2.2  2.3 
Stock-based compensation expense 27.3  15.7 
Deferred income tax benefit (20.5) (17.1)
Net gain related to business/property dispositions (2.4) (1.5)
Goodwill impairment —  318.3 
Franchise rights impairment —  57.5 
Non-cash impairment charges 1.7  8.6 
Gain on equity investments (10.9) (214.7)
Other (8.7) 3.8 
(Increase) decrease, net of effects from business acquisitions and divestitures:
Receivables 71.7  244.6 
Inventory 849.9  873.3 
Other assets 18.6  75.1 
Increase (decrease), net of effects from business acquisitions and divestitures:
Vehicle floorplan payable - trade (880.6) (621.5)
Accounts payable 60.2  (25.5)
Other liabilities 101.8  30.5 
Net cash provided by continuing operations 930.5  894.3 
Net cash used in discontinued operations (0.2) — 
Net cash provided by operating activities 930.3  894.3 
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment (116.2) (75.3)
Insurance recoveries on property and equipment —  1.5 
Cash received from business divestitures, net of cash relinquished 4.3  — 
Cash used in business acquisitions, net of cash acquired —  (0.4)
Proceeds from the sale of equity securities 109.4  — 
Investment in equity securities (3.3) (50.0)
Other (2.7) (0.5)
Net cash used in continuing operations (8.5) (124.7)
Net cash used in discontinued operations —  — 
Net cash used in investing activities (8.5) (124.7)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

4

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Continued)
 
Six Months Ended
  June 30,
  2021 2020
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repurchases of common stock (1,021.1) (80.0)
Proceeds from 4.75% Senior Notes due 2030 —  497.4 
Payment of 3.35% Senior Notes due 2021 (300.0) — 
Payment of 5.5% Senior Notes due 2020 —  (350.0)
Proceeds from revolving credit facility —  1,110.0 
Payments of revolving credit facility —  (1,110.0)
Net proceeds from (payments of) commercial paper 200.0  (170.0)
Payment of debt issuance costs —  (10.5)
Net payments of vehicle floorplan payable - non-trade (316.9) (431.4)
Payments of other debt obligations (5.6) (3.1)
Proceeds from the exercise of stock options 28.9  1.0 
Payments of tax withholdings for stock-based awards (17.1) (8.1)
Net cash used in continuing operations (1,431.8) (554.7)
Net cash used in discontinued operations —  — 
Net cash used in financing activities (1,431.8) (554.7)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (510.0) 214.9 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period 569.7  42.5 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period $ 59.7  $ 257.4 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.





5

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share data)
1.INTERIM FINANCIAL STATEMENTS
Business and Basis of Presentation
AutoNation, Inc., through its subsidiaries, is the largest automotive retailer in the United States. As of June 30, 2021, we owned and operated 312 new vehicle franchises from 228 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well-known in our key markets, sell 32 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 90% of the new vehicles that we sold during the six months ended June 30, 2021, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, Mercedes-Benz, Stellantis (formerly FCA), BMW, and Volkswagen (including Audi and Porsche). As of June 30, 2021, we also owned and operated 72 AutoNation-branded collision centers, 6 AutoNation USA used vehicle stores, 4 automotive auction operations, and 3 parts distribution centers.
We offer a diversified range of automotive products and services, including new vehicles, used vehicles, “parts and service,” which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive “finance and insurance” products, which include vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. For convenience, the terms “AutoNation,” “Company,” and “we” are used to refer collectively to AutoNation, Inc. and its subsidiaries, unless otherwise required by the context. Our dealership operations are conducted by our subsidiaries.
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of AutoNation, Inc. and its subsidiaries; intercompany accounts and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. The Unaudited Condensed Consolidated Financial Statements herein should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included within our most recent Annual Report on Form 10-K. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to fairly state, in all material respects, our financial position and results of operations for the periods presented.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. We periodically evaluate estimates and assumptions used in the preparation of the financial statements and make changes on a prospective basis when adjustments are necessary. Such estimates and assumptions affect, among other things, our goodwill, indefinite-lived intangible asset, and long-lived asset valuations; inventory valuation; equity investment valuation; assets held for sale; accruals for chargebacks against revenue recognized from the sale of finance and insurance products; accruals related to self-insurance programs; certain legal proceedings; assessment of the annual income tax expense; valuation of deferred income taxes and income tax contingencies; the allowance for expected credit losses; and measurement of performance-based compensation costs.


6

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2.    REVENUE RECOGNITION
Disaggregation of Revenue
The significant majority of our revenue is from contracts with customers. Taxes assessed by governmental authorities that are directly imposed on revenue transactions are excluded from revenue. In the following tables, revenue is disaggregated by major lines of goods and services and timing of transfer of goods and services. We have determined that these categories depict how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. The tables below also include a reconciliation of the disaggregated revenue to reportable segment revenue.
Three Months Ended June 30, 2021
Domestic Import Premium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle $ 991.3  $ 1,184.2  $ 1,252.8  $ —  $ 3,428.3 
Used vehicle 749.1  604.5  788.8  80.5  2,222.9 
Parts and service 257.9  248.5  317.6  126.8  950.8 
Finance and insurance, net 125.8  133.2  108.0  2.0  369.0 
Other 0.7  4.6  1.3  0.8  7.4 
$ 2,124.8  $ 2,175.0  $ 2,468.5  $ 210.1  $ 6,978.4 
Timing of Revenue Recognition
Goods and services transferred at a point in time $ 1,944.2  $ 1,984.7  $ 2,204.5  $ 129.0  $ 6,262.4 
Goods and services transferred over time(2)
180.6  190.3  264.0  81.1  716.0 
$ 2,124.8  $ 2,175.0  $ 2,468.5  $ 210.1  $ 6,978.4 

Three Months Ended June 30, 2020
Domestic Import Premium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle $ 761.7  $ 712.6  $ 787.0  $ —  $ 2,261.3 
Used vehicle 436.8  355.8  490.3  41.6  1,324.5 
Parts and service 193.3  170.4  223.2  103.0  689.9 
Finance and insurance, net 88.0  82.4  64.3  11.7  246.4 
Other 6.2  4.1  —  0.6  10.9 
$ 1,486.0  $ 1,325.3  $ 1,564.8  $ 156.9  $ 4,533.0 
Timing of Revenue Recognition
Goods and services transferred at a point in time $ 1,343.2  $ 1,187.0  $ 1,373.6  $ 97.4  $ 4,001.2 
Goods and services transferred over time(2)
142.8  138.3  191.2  59.5  531.8 
$ 1,486.0  $ 1,325.3  $ 1,564.8  $ 156.9  $ 4,533.0 

7

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Six Months Ended June 30, 2021
Domestic Import Premium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle $ 1,926.7  $ 2,142.2  $ 2,341.7  $ —  $ 6,410.6 
Used vehicle 1,312.8  1,089.2  1,431.1  138.9  3,972.0 
Parts and service 492.0  462.6  602.8  244.4  1,801.8 
Finance and insurance, net 235.1  242.3  194.8  9.8  682.0 
Other 4.9  8.3  1.6  1.0  15.8 
$ 3,971.5  $ 3,944.6  $ 4,572.0  $ 394.1  $ 12,882.2 
Timing of Revenue Recognition
Goods and services transferred at a point in time $ 3,625.7  $ 3,588.8  $ 4,068.1  $ 236.3  $ 11,518.9 
Goods and services transferred over time(2)
345.8  355.8  503.9  157.8  1,363.3 
$ 3,971.5  $ 3,944.6  $ 4,572.0  $ 394.1  $ 12,882.2 

Six Months Ended June 30, 2020
Domestic Import Premium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle $ 1,500.6  $ 1,446.5  $ 1,596.1  $ —  $ 4,543.2 
Used vehicle 841.4  690.3  957.6  83.9  2,573.2 
Parts and service 428.9  377.9  500.6  258.8  1,566.2 
Finance and insurance, net 171.1  166.4  127.3  17.4  482.2 
Other 27.5  6.3  —  1.4  35.2 
$ 2,969.5  $ 2,687.4  $ 3,181.6  $ 361.5  $ 9,200.0 
Timing of Revenue Recognition
Goods and services transferred at a point in time $ 2,654.6  $ 2,387.5  $ 2,753.8  $ 206.7  $ 8,002.6 
Goods and services transferred over time(2)
314.9  299.9  427.8  154.8  1,197.4 
$ 2,969.5  $ 2,687.4  $ 3,181.6  $ 361.5  $ 9,200.0 
(1) “Corporate and other” is comprised of our other businesses, including collision centers, AutoNation USA used vehicle stores, auction operations, and parts distribution centers.
(2) Represents revenue recognized during the period for automotive repair and maintenance services.

Transaction Price Allocated to Remaining Performance Obligations
We sell a vehicle maintenance program (the AutoNation Vehicle Care Program or “VCP”) under which a customer purchases a specific number of maintenance services to be redeemed at an AutoNation location over a five-year term from the date of purchase. We satisfy our performance obligations related to this program and recognize revenue as the maintenance services are rendered, since the customer benefits when we have completed the maintenance service.


8

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following table includes estimated revenue expected to be recognized in the future related to VCP performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:
Revenue Expected to Be Recognized by Period
Total Next 12 Months 13 - 36 Months 37 - 60 Months
Revenue expected to be recognized on VCP contracts sold as of period end
$ 91.0  $ 32.8  $ 43.2  $ 15.0 

As a practical expedient, since automotive repair and maintenance services are performed within one year or less, we do not disclose estimated revenue expected to be recognized in the future for automotive repair and maintenance performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue.

Contract Assets and Liabilities
When the timing of our provision of goods or services is different from the timing of payments made by our customers, we recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated with automotive repair and maintenance services, as well as our estimate of variable consideration that has been included in the transaction price for certain finance and insurance products (retrospective commissions). These contract assets are reclassified to receivables when the right to consideration becomes unconditional. Contract liabilities primarily relate to upfront payments received from customers for the sale of VCP contracts.
Our receivables from contracts with customers are included in Receivables, net, our current contract asset is included in Other Current Assets, our long-term contract asset is included in Other Assets, our current contract liability is included in Other Current Liabilities, and our long-term contract liability is included in Other Liabilities in our Unaudited Condensed Consolidated Balance Sheets.
The following table provides the balances of our receivables from contracts with customers and our current and long-term contract assets and contract liabilities:
June 30, 2021 December 31, 2020
Receivables from contracts with customers, net $ 572.1  $ 595.0 
Contract Asset (Current) $ 29.0  $ 25.7 
Contract Asset (Long-Term) $ 6.8  $ 10.2 
Contract Liability (Current) $ 33.1  $ 32.5 
Contract Liability (Long-Term) $ 58.2  $ 56.0 
The change in the balances of our contract assets and contract liabilities primarily result from the timing differences between our performance and the customer’s payment, as well as changes in the estimated transaction price related to variable consideration that was constrained for performance obligations satisfied in previous periods. The following table presents revenue recognized during the period from amounts included in the contract liability balance at the beginning of the period and performance obligations satisfied in previous periods:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021 2020 2021 2020
Amounts included in contract liability at the beginning of the period $ 8.2  $ 10.3  $ 16.9  $ 18.8 
Performance obligations satisfied in previous periods $ 5.7  $ 3.9  $ 11.1  $ 3.9 

Other significant changes include contract assets reclassified to receivables of $24.6 million for the six months ended June 30, 2021, and $24.4 million for the six months ended June 30, 2020.


9

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3.EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period, including vested restricted stock unit (“RSU”) awards. Diluted EPS is computed by dividing net income by the weighted average number of shares outstanding, noted above, adjusted for the dilutive effect of stock options and unvested RSU awards.
The following table presents the calculation of basic and diluted EPS:
Three Months Ended Six Months Ended
June 30, June 30,
  2021 2020 2021 2020
Net income from continuing operations $ 384.9  $ 279.9  $ 624.4  $ 47.7 
Loss from discontinued operations, net of income taxes (0.1) (0.1) (0.2) (0.2)
Net income $ 384.8  $ 279.8  $ 624.2  $ 47.5 
Basic weighted average common shares outstanding
78.9  87.9  81.0  89.0 
Dilutive effect of stock options and unvested RSUs
0.8  0.2  0.8  — 
Diluted weighted average common shares outstanding
79.7  88.1  81.8  89.0 
Basic EPS amounts(1):
Continuing operations
$ 4.88  $ 3.18  $ 7.71  $ 0.54 
Discontinued operations
$ —  $ —  $ —  $ — 
Net income $ 4.88  $ 3.18  $ 7.71  $ 0.53 
Diluted EPS amounts(1):
Continuing operations
$ 4.83  $ 3.18  $ 7.63  $ 0.54 
Discontinued operations
$ —  $ —  $ —  $ — 
Net income $ 4.83  $ 3.18  $ 7.63  $ 0.53 
(1) EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding.
A summary of anti-dilutive equity instruments excluded from the computation of diluted EPS is as follows:
Three Months Ended Six Months Ended
  June 30, June 30,
  2021 2020 2021 2020
Anti-dilutive equity instruments excluded from the computation of diluted EPS —  2.4  —  2.7 


10

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.RECEIVABLES, NET
The components of receivables, net of allowances for expected credit losses, are as follows:
June 30,
2021
December 31,
2020
Contracts-in-transit and vehicle receivables $ 397.9  $ 445.8 
Trade receivables 160.4  138.0 
Manufacturer receivables 161.9  210.0 
Other 57.1  55.1 
777.3  848.9 
Less: allowances for expected credit losses (3.8) (3.7)
Receivables, net
$ 773.5  $ 845.2 

Contracts-in-transit and vehicle receivables primarily represent receivables from financial institutions for the portion of the vehicle sales price financed by our customers. Trade receivables represent amounts due for parts and services sold, excluding amounts due from manufacturers, as well as receivables from finance organizations for commissions on the sale of finance and insurance products. Manufacturer receivables represent amounts due from manufacturers for holdbacks, rebates, incentives, floorplan assistance, and warranty claims. We evaluate our receivables for collectability based on past collection experience, current information, and reasonable and supportable forecasts.

5.INVENTORY AND VEHICLE FLOORPLAN PAYABLE
The components of inventory are as follows:
June 30,
2021
December 31,
2020
New vehicles $ 637.5  $ 1,761.9 
Used vehicles 923.0  648.4 
Parts, accessories, and other 195.7  188.2 
Inventory
$ 1,756.2  $ 2,598.5 

The components of vehicle floorplan payable are as follows:
June 30,
2021
December 31,
2020
Vehicle floorplan payable - trade $ 669.5  $ 1,541.7 
Vehicle floorplan payable - non-trade 901.8  1,218.2 
Vehicle floorplan payable
$ 1,571.3  $ 2,759.9 
Vehicle floorplan payable-trade reflects amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with the corresponding manufacturers’ captive finance subsidiaries (“trade lenders”). Vehicle floorplan payable-non-trade represents amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with non-trade lenders, as well as amounts borrowed under our secured used vehicle floorplan facilities. Changes in vehicle floorplan payable-trade are reported as operating cash flows and changes in vehicle floorplan payable-non-trade are reported as financing cash flows in the accompanying Unaudited Condensed Consolidated Statements of Cash Flows.
Our inventory costs are generally reduced by manufacturer holdbacks, incentives, floorplan assistance, and non-reimbursement-based manufacturer advertising rebates, while the related vehicle floorplan payables are reflective of the gross cost of the vehicle. The vehicle floorplan payables, as shown in the above table, will generally also be higher than the inventory cost due to the timing of the sale of a vehicle and payment of the related liability.
Vehicle floorplan facilities are due on demand, but in the case of new vehicle inventories, are generally paid within several business days after the related vehicles are sold. Vehicle floorplan facilities are primarily collateralized by vehicle inventories and related receivables.

11

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Our new vehicle floorplan facilities utilize LIBOR-based interest rates, which averaged 1.7% for the six months ended June 30, 2021, and 2.3% for the six months ended June 30, 2020. At June 30, 2021, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately $4.7 billion, of which $1.0 billion had been borrowed.
Our used vehicle floorplan facilities utilize LIBOR-based interest rates, which averaged 1.8% for the six months ended June 30, 2021, and 2.6% for the six months ended June 30, 2020. At June 30, 2021, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was $562.0 million, of which $537.1 million had been borrowed. The remaining borrowing capacity of $24.9 million was limited to $0.2 million based on the eligible used vehicle inventory that could have been pledged as collateral.

6.GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill and intangible assets, net, consist of the following:
June 30,
2021
December 31,
2020
Goodwill $ 1,187.0  $ 1,185.0 
Franchise rights - indefinite-lived $ 509.0  $ 509.0 
Other intangibles 19.4  19.6 
528.4  528.6 
Less: accumulated amortization (7.4) (7.1)
Other intangible assets, net $ 521.0  $ 521.5 
Goodwill and Other Intangible Assets
Goodwill for our reporting units and our franchise rights assets are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may exist.
Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2021, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts. We elected to perform quantitative franchise rights impairment tests as of April 30, 2021, and no impairment charges resulted from these quantitative tests.

7.LONG-TERM DEBT AND COMMERCIAL PAPER
Long-term debt consists of the following:
Debt Description Maturity Date Interest Payable June 30,
2021
December 31,
2020
3.35% Senior Notes
January 15, 2021 January 15 and July 15 $ —  $ 300.0 
3.5% Senior Notes
November 15, 2024 May 15 and November 15 450.0  450.0 
4.5% Senior Notes
October 1, 2025 April 1 and October 1 450.0  450.0 
3.8% Senior Notes
November 15, 2027 May 15 and November 15 300.0  300.0 
4.75% Senior Notes
June 1, 2030 June 1 and December 1 500.0  500.0 
Revolving credit facility March 26, 2025 Monthly —  — 
Finance leases and other debt
Various dates through 2040
Monthly 111.1  116.6 
1,811.1  2,116.6 
Less: unamortized debt discounts and debt issuance costs (13.8) (14.8)
Less: current maturities (7.0) (309.2)
Long-term debt, net of current maturities $ 1,790.3  $ 1,792.6 

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Senior Unsecured Notes and Credit Agreement
In January 2021, we repaid the outstanding $300.0 million of 3.35% Senior Notes due 2021.
The interest rates payable on our outstanding senior unsecured notes are subject to adjustment upon the occurrence of certain credit rating events as provided in the indentures for these senior unsecured notes.
Under our amended and restated credit agreement, we have a $1.8 billion revolving credit facility that matures on March 26, 2025. The credit agreement also contains an accordion feature that allows us, subject to credit availability and certain other conditions, to increase the amount of the revolving credit facility, together with any added term loans, by up to $500.0 million in the aggregate. As of June 30, 2021, we had no borrowings outstanding under our revolving credit facility. We have a $200.0 million letter of credit sublimit as part of our revolving credit facility. The amount available to be borrowed under the revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit, which was $39.7 million at June 30, 2021, leaving a borrowing capacity under the revolving credit facility of $1.8 billion at June 30, 2021.
Our revolving credit facility under the amended credit agreement provides for a commitment fee on undrawn amounts ranging from 0.125% to 0.20% and interest on borrowings at LIBOR or the base rate, in each case plus an applicable margin. The applicable margin ranges from 1.125% to 1.50% for LIBOR borrowings and 0.125% to 0.50% for base rate borrowings. The interest rate charged for our revolving credit facility is affected by our leverage ratio. For instance, an increase in our leverage ratio from greater than or equal to 2.0x but less than 3.25x to greater than or equal to 3.25x would result in a 12.5 basis point increase in the applicable margin.
Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc. (the parent company) has no independent assets or operations. If guarantees of our subsidiaries were to be issued under our existing registration statement, we expect that such guarantees would be full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries would be minor.
Other Long-Term Debt
At June 30, 2021, we had finance leases and other debt obligations of $111.1 million, which are due at various dates through 2040.
Commercial Paper
We have a commercial paper program pursuant to which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $1.0 billion. The interest rate for the commercial paper notes varies based on duration and market conditions. The maturities of the commercial paper notes may vary, but may not exceed 397 days from the date of issuance. Proceeds from the issuance of commercial paper notes are used to repay borrowings under the revolving credit facility, to finance acquisitions and for working capital, capital expenditures, share repurchases, and/or other general corporate purposes. We plan to use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. A downgrade in our credit ratings could negatively impact our ability to issue, or the interest rates for, commercial paper notes.
At June 30, 2021, we had $200.0 million commercial paper notes outstanding with a weighted-average annual interest rate of 0.25% and a weighted-average remaining term of 1 day. We had no commercial paper notes outstanding at December 31, 2020.

8.INCOME TAXES
Income taxes payable included in Other Current Liabilities totaled $47.3 million at June 30, 2021, and $13.3 million at December 31, 2020.
We file income tax returns in the U.S. federal jurisdiction and various states. As a matter of course, various taxing authorities, including the IRS, regularly audit us. Currently, no tax years are under examination by the IRS, and tax years from 2014 to 2019 are under examination by certain U.S. state jurisdictions. These audits may result in proposed assessments where the ultimate resolution may result in our owing additional taxes.

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
It is our policy to account for interest and penalties associated with income tax obligations as a component of Income Tax Provision in the accompanying Unaudited Condensed Consolidated Statements of Operations.

9.SHAREHOLDERS’ EQUITY
A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:
Three Months Ended Six Months Ended
  June 30, June 30,
  2021 2020 2021 2020
Shares repurchased 7.5  —  11.3  2.5 
Aggregate purchase price $ 736.1  $ —  $ 1,042.2  $ 80.0 
Average purchase price per share $ 98.17  $ —  $ 91.94  $ 31.95 

As of June 30, 2021, $155.5 million remained available for share repurchases under the program. In July 2021, our Board of Directors increased the share repurchase authorization by $1.0 billion.
Our Board of Directors authorized the retirement of 16.0 million shares of our treasury stock in April 2021, which assumed the status of authorized but unissued shares. Upon the retirement of treasury stock, it is our policy to charge the excess of the cost of the treasury stock over its par value entirely to additional paid-in capital. Any amounts exceeding additional paid-in capital are charged to retained earnings. This retirement had the effect of reducing treasury stock and issued common stock, which includes treasury stock. Our common stock, additional paid-in capital, retained earnings, and treasury stock accounts were adjusted accordingly. There was no impact to shareholders’ equity or outstanding common stock.
We have 5.0 million authorized shares of preferred stock, par value $0.01 per share, none of which are issued or outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences, and dividends of such preferred stock.
A summary of shares of common stock issued in connection with the exercise of stock options follows:
Three Months Ended Six Months Ended
  June 30, June 30,
  2021 2020 2021 2020
Shares issued 0.2  —  0.6  0.1 
Proceeds from the exercise of stock options $ 7.7  $ —  $ 28.9  $ 1.0 
Average exercise price per share $ 51.10  $ —  $ 50.71  $ 18.12 

The following table presents a summary of shares of common stock issued in connection with the settlement of RSUs, as well as shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the vesting of restricted stock and settlement of RSUs:
Three Months Ended Six Months Ended
  June 30, June 30,
(In actual number of shares) 2021 2020 2021 2020
Shares issued 7,341  7,340  639,192  502,021 
Shares surrendered to AutoNation to satisfy tax withholding obligations
1,616  2,260  224,133  186,600 


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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10.CASH FLOW INFORMATION
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents reported on our Unaudited Condensed Consolidated Balance Sheets to the total amounts, which include cash, cash equivalents, and restricted cash, reported on our Unaudited Condensed Consolidated Statements of Cash Flows:
June 30,
2021
December 31,
2020
Cash and cash equivalents $ 59.5  $ 569.6 
Restricted cash included in Other Current Assets 0.2  0.1 
Total cash, cash equivalents, and restricted cash $ 59.7  $ 569.7 
Non-Cash Investing and Financing Activities
We had accrued purchases of property and equipment of $12.1 million at June 30, 2021, and $8.7 million at June 30, 2020. We had non-cash investing and financing activities related to increases in property and equipment acquired under financing arrangements of $0.8 million during the six months ended June 30, 2020.
Six Months Ended June 30,
2021 2020
Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:
Operating lease liabilities $ 13.0  $ 27.8 
Finance lease liabilities $ 17.3  $ 26.6 
Interest and Income Taxes Paid
We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $63.7 million during the six months ended June 30, 2021, and $83.5 million during the six months ended June 30, 2020. We made income tax payments, net of income tax refunds, of $190.5 million during the six months ended June 30, 2021, and $3.2 million during the six months ended June 30, 2020.

11.FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity can access at the measurement date
Level 2 Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly
Level 3 Unobservable inputs
The following methods and assumptions were used by us in estimating fair value disclosures for financial instruments:
Cash and cash equivalents, receivables, other current assets, vehicle floorplan payable, accounts payable, other current liabilities, commercial paper, and variable rate debt: The amounts reported in the accompanying

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.
Investments in Equity Securities: In the first quarter of 2021, we sold the remaining shares of our Vroom equity investment for total proceeds of $109.4 million. Our remaining investments in equity securities consist of equity securities that do not have readily determinable fair values. We elected to measure these investments using the measurement alternative as permitted by accounting standards and recorded the equity interests at cost, to be subsequently adjusted for observable price changes. During the second quarter of 2021, we identified an observable transaction for the issuance of similar equity securities of the same issuer and we recorded an upward adjustment to our equity investment of $3.4 million based on the observable price change. As of June 30, 2021, the carrying amount of our equity investments was $56.7 million. We have not recorded any impairments or downward adjustments to the carrying amount of our equity investments as of June 30, 2021. Investments in equity securities are reported in Other Assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. Realized and unrealized gains and losses are reported in Other Income, Net (non-operating) in the Unaudited Condensed Consolidated Statements of Operations and in the “Corporate and other” category of our segment information.
The following is information on gains recognized during the six months ended June 30 related to equity investments:
2021 2020
Net gains recognized during the period on equity securities $ 10.9  $ 214.7 
Less: Net gains recognized during the period on equity securities sold during the period 7.5  — 
Unrealized gains recognized during the reporting period on equity securities still held at the reporting date $ 3.4  $ 214.7 

Fixed rate long-term debt: Our fixed rate long-term debt primarily consists of amounts outstanding under our senior unsecured notes. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 1). A summary of the aggregate carrying values and fair values of our fixed rate long-term debt is as follows:
June 30,
2021
December 31,
2020
Carrying value $ 1,797.3  $ 2,101.8 
Fair value $ 2,017.5  $ 2,341.1 

Nonfinancial assets such as goodwill, other intangible assets, long-lived assets held and used, and right-of-use assets are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination. The fair values less costs to sell of long-lived assets held for sale are assessed each reporting period they remain classified as held for sale. Subsequent changes in the held for sale long-lived asset’s fair value less cost to sell (increase or decrease) is reported as an adjustment to its carrying amount, except that the adjusted carrying amount cannot exceed the carrying amount of the long-lived asset at the time it was initially classified as held for sale.

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following table presents assets measured and recorded at fair value on a nonrecurring basis during the six months ended June 30, 2021 and 2020:
2021 2020
Description Fair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)
Gain/(Loss) Fair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)
Gain/(Loss)
Goodwill $ —  $ —  $ 457.5  $ (318.3)
Franchise rights and other $ —  $ —  $ 26.2  $ (59.9)
Equity investment $ 53.4  $ 3.4  $ —  $ — 
Right-of-use assets $ —  $ (0.1) $ 1.4  $ (0.4)
Long-lived assets held and used $ 10.4  $ (1.6) $ 1.8  $ (5.8)
Goodwill and Other Intangible Assets
Goodwill for our reporting units and our franchise rights assets are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may exist.
Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2021, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts. We elected to perform quantitative franchise rights impairment tests as of April 30, 2021, and no impairment charges resulted from these quantitative tests.
During the first quarter of 2020, due to the impact of the COVID-19 pandemic on our results and the decrease in our market capitalization as of March 31, 2020, we recorded goodwill impairment charges of $318.3 million, of which $257.4 million related to our Premium Luxury reporting unit, $41.6 million related to our Collision Centers reporting unit, and $19.3 million related to our Parts Centers reporting unit. We also recorded franchise rights impairment charges of $57.5 million during the first quarter of 2020. The non-cash impairment charges are reflected as Goodwill Impairment and Franchise Rights Impairment, respectively, in the accompanying Unaudited Condensed Consolidated Statements of Operations and in the “Corporate and other” category of our segment information.
The quantitative goodwill impairment test requires a determination of whether the fair value of a reporting unit is less than its carrying value. We estimate the fair value of our reporting units using an “income” valuation approach, which discounts projected free cash flows of the reporting unit at a computed weighted average cost of capital as the discount rate. The income valuation approach requires the use of significant estimates and assumptions, which include revenue growth rates and future operating margins used to calculate projected future cash flows, weighted average costs of capital, and future economic and market conditions. In connection with this process, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization, including consideration of a control premium, based upon our stock price and/or average stock price over a reasonable period as of the measurement date. We base our cash flow forecasts on our knowledge of the automotive industry, our recent performance, our expectations of our future performance, and other assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We also make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.
The quantitative impairment test for franchise rights requires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using Level 3 inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, capital expenditures, and cost of capital, for which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable.
During the six months ended June 30, 2020, we also recorded non-cash impairment charges of $2.4 million to reduce the carrying value of certain finite-lived intangible assets to estimated fair value, which are included in Other (Income) Expense,

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Net in our Unaudited Condensed Consolidated Statements of Operations and in the “Corporate and other” category of our segment information.
Long-Lived Assets and Right-of-Use Assets
Fair value measurements for our long-lived assets and right-of-use assets are based on Level 3 inputs. Changes in fair value measurements are reviewed and assessed each quarter for long-lived assets classified as held for sale, or when an indicator of impairment exists for long-lived assets classified as held and used or for right-of-use assets. The valuation process is generally based on a combination of the market and replacement cost approaches.
In a market approach, we use transaction prices for comparable properties that have recently been sold. These transaction prices are adjusted for factors related to a specific property. We evaluate changes in local real estate markets, and/or recent market interest or negotiations related to a specific property. In a replacement cost approach, the cost to replace a specific long-lived asset is considered, which is adjusted for depreciation from physical deterioration, as well as functional and economic obsolescence, if present and measurable.
To validate the fair values determined under the valuation process noted above, we also obtain independent third-party appraisals for our properties and/or third-party brokers’ opinions of value, which are generally developed using the same valuation approaches described above, and we evaluate any recent negotiations or discussions with third-party real estate brokers related to a specific long-lived asset or market. 
The non-cash impairment charges related to right-of-use assets and long-lived assets held and used are included in Other (Income) Expense, Net in our Unaudited Condensed Consolidated Statements of Operations and in the “Corporate and other” category of our segment information.
We had assets held for sale in continuing operations of $81.3 million as of June 30, 2021, and $25.5 million as of December 31, 2020, primarily related to property held for sale, as well as inventory, goodwill, and property of disposal groups held for sale. We had assets held for sale in discontinued operations of $1.1 million as of June 30, 2021, and $8.0 million as of December 31, 2020, related to property held for sale. Assets held for sale are included in Other Current Assets in our Unaudited Condensed Consolidated Balance Sheets.
Quantitative Information about Level 3 Fair Value Measurements
Description Fair Value at March 31, 2020 Valuation Technique Unobservable Input Range (Average)
Franchise rights $ 24.6  Discounted cash flow Weighted average cost of capital 8.5  %
Discount rate
11.1% - 14.3% (12.1%)
Long-term revenue growth rate 2.0  %
Long-term pretax income margin
0.6% - 2.8% (1.4%)
Contributory asset charges
4.2% - 12.1% (6.2%)

12.COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of our business, including litigation with customers, wage and hour and other employment-related lawsuits, and actions brought by governmental authorities. Some of these lawsuits purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. We disclose the amount accrued if material or if such disclosure is necessary for our financial statements to not be misleading. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material or a statement that such an estimate cannot be made. Our evaluation of whether

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter.
As of June 30, 2021 and 2020, we have accrued for the potential impact of loss contingencies that are probable and reasonably estimable, and there was no indication of a reasonable possibility that a material loss, or additional material loss, may have been incurred. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our results of operations, financial condition, or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition, or cash flows.
Other Matters
AutoNation, acting through its subsidiaries, is the lessee under many real estate leases that provide for the use by our subsidiaries of their respective store premises. Pursuant to these leases, our subsidiaries generally agree to indemnify the lessor and other related parties from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities, or a breach of the lease by the lessee. Additionally, from time to time, we enter into agreements with third parties in connection with the sale of assets or businesses in which we agree to indemnify the purchaser or related parties from certain liabilities or costs arising in connection with the assets or business. Also, in the ordinary course of business in connection with purchases or sales of goods and services, we enter into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, our liability would be limited by the terms of the applicable agreement.
From time to time, primarily in connection with dispositions of automotive stores, our subsidiaries assign or sublet to the store purchaser the subsidiaries’ interests in any real property leases associated with such stores. In general, our subsidiaries retain responsibility for the performance of certain obligations under such leases to the extent that the assignee or sublessee does not perform, whether such performance is required prior to or following the assignment or subletting of the lease. Additionally, AutoNation and its subsidiaries generally remain subject to the terms of any guarantees made by us and our subsidiaries in connection with such leases. Although we generally have indemnification rights against the assignee or sublessee in the event of non-performance under these leases, as well as certain defenses, we estimate that lessee rental payment obligations during the remaining terms of these leases with expirations ranging from 2022 to 2034 are approximately $10 million at June 30, 2021. We do not have any material known commitments that we or our subsidiaries will be called on to perform under any such assigned leases or subleases at June 30, 2021. There can be no assurance that any performance by AutoNation or its subsidiaries required under these leases would not have a material adverse effect on our business, financial condition, and cash flows.
At June 30, 2021, surety bonds, letters of credit, and cash deposits totaled $100.3 million, of which $39.7 million were letters of credit. In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance. We do not currently provide cash collateral for outstanding letters of credit.
In the ordinary course of business, we are subject to numerous laws and regulations, including automotive, environmental, health and safety, and other laws and regulations. We do not anticipate that the costs of compliance with such laws will have a material adverse effect on our business, results of operations, cash flows, or financial condition, although such outcome is possible given the nature of our operations and the extensive legal and regulatory framework applicable to our business. We do not have any material known environmental commitments or contingencies.

13.BUSINESS AND CREDIT CONCENTRATIONS
We own and operate franchised automotive stores in the United States pursuant to franchise agreements with vehicle manufacturers. During the six months ended June 30, 2021, approximately 64% of our total retail new vehicle unit sales was generated by our stores in Florida, Texas, and California. We are subject to a concentration of risk in the event of financial distress of or other adverse event related to a major vehicle manufacturer or related lender or supplier. The core brands of vehicles that we sell, representing approximately 90% of the new vehicles sold during the six months ended June 30, 2021, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, Mercedes-Benz, Stellantis (formerly FCA), BMW, and Volkswagen (including Audi and Porsche). Our business could be materially adversely impacted by a bankruptcy of or other adverse event related to a major vehicle manufacturer or related lender or supplier.
We had receivables from manufacturers or distributors of $161.9 million at June 30, 2021, and $210.0 million at December 31, 2020. Additionally, a large portion of our contracts-in-transit included in Receivables, net, in the accompanying

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited Condensed Consolidated Balance Sheets, are due from automotive manufacturers’ captive finance subsidiaries, which provide financing directly to our new and used vehicle customers. Concentrations of credit risk with respect to non-manufacturer trade receivables are limited due to the wide variety of customers and markets in which our products are sold as well as their dispersion across many different geographic areas in the United States. Consequently, at June 30, 2021, we do not consider AutoNation to have any significant non-manufacturer concentrations of credit risk.

14.SEGMENT INFORMATION
At June 30, 2021 and 2020, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
“Corporate and other” is comprised of our other businesses, including collision centers, AutoNation USA used vehicle stores, auction operations, and parts distribution centers, all of which generate revenues but do not meet the quantitative thresholds for reportable segments, as well as unallocated corporate overhead expenses and other income items.
The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.
The following table provides information on revenues from external customers and segment income of our reportable segments:
Three Months Ended Six Months Ended
  June 30, 2021 June 30, 2021
  Domestic Import Premium Luxury Domestic Import Premium Luxury
Revenues from external customers $ 2,124.8  $ 2,175.0  $ 2,468.5  $ 3,971.5  $ 3,944.6  $ 4,572.0 
Segment income (1)
$ 169.0  $ 203.7  $ 225.7  $ 287.5  $ 329.6  $ 384.2 
Three Months Ended Six Months Ended
  June 30, 2020 June 30, 2020
  Domestic Import Premium Luxury Domestic Import Premium Luxury
Revenues from external customers $ 1,486.0  $ 1,325.3  $ 1,564.8  $ 2,969.5  $ 2,687.4  $ 3,181.6 
Segment income (1)
$ 82.1  $ 88.3  $ 89.2  $ 136.2  $ 154.2  $ 169.4 
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
The following is a reconciliation of total segment income for reportable segments to our consolidated income from continuing operations before income taxes:
Three Months Ended Six Months Ended
  June 30, June 30,
  2021 2020 2021 2020
Total segment income for reportable segments $ 598.4  $ 259.6  $ 1,001.3  $ 459.8 
Corporate and other (74.8) (74.5) (150.2) (519.5)
Other interest expense (20.9) (23.2) (42.1) (46.7)
Other income, net 8.9  214.6  19.9  211.7 
Income from continuing operations before income taxes $ 511.6  $ 376.5  $ 828.9  $ 105.3 

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

15.EXIT OR DISPOSAL COST OBLIGATIONS
On August 17, 2020, we determined to close our aftermarket collision parts (“ACP”) business by the end of 2020. In connection with the closing of the ACP business, we incurred total charges of $36.7 million in 2020. The following is a rollforward of liability balances for exit or disposal cost obligations associated with the closing of the ACP business.
Contract Termination Charges Other Associated Closing Costs Involuntary Termination Benefits Total
Balance at December 31, 2020 $ 0.2  $ 2.4  $ 0.8  $ 3.4 
Costs incurred —  —  —  — 
Costs paid or otherwise settled (0.2) (2.4) (0.7) (3.3)
Balance at June 30, 2021
$ —  $ —  $ 0.1  $ 0.1 

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K.
Overview
AutoNation, Inc., through its subsidiaries, is the largest automotive retailer in the United States. As of June 30, 2021, we owned and operated 312 new vehicle franchises from 228 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well known in our key markets, sell 32 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 90% of the new vehicles that we sold during the six months ended June 30, 2021, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, Mercedes-Benz, Stellantis (formerly FCA), BMW, and Volkswagen (including Audi and Porsche). As of June 30, 2021, we also owned and operated 72 AutoNation-branded collision centers, 6 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers.
We offer a diversified range of automotive products and services, including new vehicles, used vehicles, “parts and service,” which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive “finance and insurance” products, which include vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. We believe that the significant scale of our operations and the quality of our managerial talent allow us to achieve efficiencies in our key markets by, among other things, leveraging the AutoNation retail brand and advertising, implementing standardized processes, and increasing productivity across all of our stores.
At June 30, 2021, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
For the six months ended June 30, 2021, new vehicle sales accounted for 50% of our total revenue and 22% of our total gross profit. Used vehicle sales accounted for 31% of our total revenue and 15% of our total gross profit. Our parts and service operations, while comprising 14% of our total revenue, contributed 35% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 29% of our total gross profit.

Market Conditions
In the second quarter of 2021, U.S. industry retail new vehicle unit sales increased 44% as compared to the second quarter of 2020. Vehicle unit sales during the second quarter of 2020 were significantly adversely impacted, particularly in April 2020, by the COVID-19 pandemic and the extensive “shelter in place” and “stay at home” orders enacted by federal, state, and local governments. In the first half of 2021, the demand for vehicles was strong and exceeded supply. While market demand for new and used vehicles remains high primarily due to low interest rates and a consumer desire for personal transportation, there continues to be a shortage of available new vehicles for sale driven largely by certain component shortages in the manufacturers’ supply chains. This demand and supply imbalance has resulted in higher levels of profitability for available new and used vehicles. The reduced levels of new vehicle availability is currently expected to continue into 2022; however, there is still significant uncertainty as to when new vehicle availability will improve, as well as duration and/or degree of the higher levels of profitability being realized during this time.
Results of Operations
During the three months ended June 30, 2021, we had net income from continuing operations of $384.9 million and diluted earnings per share of $4.83, as compared to net income from continuing operations of $279.9 million and diluted earnings per share of $3.18 during the same period in 2020.
Our total gross profit increased 66.8% during the second quarter of 2021 compared to the second quarter of 2020, driven by increases in new vehicle gross profit of 168.0%, used vehicle gross profit of 73.2%, finance and insurance gross profit of

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49.8%, and parts and service gross profit of 38.9%, each as compared to the second quarter of 2020. New and used vehicle gross profit benefited from an increase in unit volume and an increase in gross profit per vehicle retailed (“PVR”) resulting from strong demand and historically low inventory levels due to manufacturer supply shortages. Finance and insurance gross profit benefited from the increase in unit volume and an increase in finance and insurance gross profit PVR. Parts and service gross profit benefited primarily from increases in gross profit from customer-pay service and the preparation of vehicles for sale due to increased volume, improved margin performance, and higher value repair orders.
SG&A expenses increased largely due to performance-driven increases in compensation expense. With improvements in gross profit and our continued focus on cost control, SG&A expenses as a percentage of gross profit decreased to 56.5% during the three months ended June 30, 2021, from 68.9% in the same period in 2020.
Net income from continuing operations during the three months ended June 30, 2021 and 2020, benefited from unrealized after-tax gains of $2.6 million and $160.5 million, respectively, related to changes in the fair value of the underlying securities of our minority equity investments. Net income from continuing operations during the three months ended June 30, 2020, also benefited from an after-tax gain related to a legal settlement of $2.4 million.
Chief Executive Officer Transition
On July 14, 2020, we announced that we entered into a contract with Michael J. Jackson to serve as Chief Executive Officer of the Company until April 12, 2022, or the date that a new chief executive officer commences employment with the Company, if earlier.
Strategic Initiatives
We plan to expand our AutoNation USA used vehicle stores and are targeting to have over 130 stores by the end of 2026. We opened one AutoNation USA store in the second quarter of 2021 and are on track to open four additional new stores in the second half of 2021 and 12 additional new stores in 2022. We anticipate that the initial capital investment will be approximately $10 million to $11 million for each new store on average. The planned expansion may be impacted by a number of variables, including customer adoption, market conditions, availability of used vehicle inventory, and our ability to identify, acquire, and build out suitable locations in a timely manner.
Inventory Management
Our new and used vehicle inventories are stated at the lower of cost or net realizable value on our consolidated balance sheets. We monitor our vehicle inventory levels based on current economic conditions and seasonal sales trends. Our new vehicle inventory units at June 30, 2021 and 2020, were 14,338 and 39,262, respectively. By historical standards, our inventory unit levels were significantly lower at June 30, 2021, driven by strong demand and the component shortages in the manufacturers’ supply chains. Inadequate levels of new vehicle availability could adversely affect our financial results.
We have typically not experienced significant losses on the sale of new vehicle inventory, in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices. We monitor our new vehicle inventory values as compared to net realizable values, and had no new vehicle inventory write-downs at June 30, 2021, or at December 31, 2020.
We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. We monitor our used vehicle inventory values as compared to net realizable values. Typically, used vehicles that are not sold on a retail basis are sold at wholesale auctions. Our used vehicle inventory balance was net of cumulative write-downs of $2.5 million at June 30, 2021, and $3.4 million at December 31, 2020.
Parts, accessories, and other inventory are carried at the lower of cost or net realizable value. We estimate the amount of potentially damaged and/or excess and obsolete inventory based upon historical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $6.4 million at June 30, 2021, and $6.5 million at December 31, 2020.
Impact of the COVID-19 Pandemic
Although economic conditions have improved subsequent to the first half of 2020, we cannot predict the duration or scope of the COVID-19 pandemic. Negative financial impacts on our financial results and performance could be material in future periods.

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Critical Accounting Estimates
We prepare our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, and we base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Unaudited Condensed Consolidated Financial Statements. For additional discussion of our critical accounting estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K.
Goodwill
Goodwill for our reporting units is tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2021, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts.
As of June 30, 2021, we have $227.2 million of goodwill related to the Domestic reporting unit, $502.6 million related to the Import reporting unit, and $457.2 million related to the Premium Luxury reporting unit.
Other Intangible Assets
Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred.
We elected to perform quantitative tests for our annual franchise rights impairment testing as of April 30, 2021, and no impairment charges resulted from these quantitative tests. The quantitative franchise rights impairment test is dependent on many variables used to determine the fair value of each store’s franchise rights. See Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements for a description of the valuation method and related estimates and assumptions used in our quantitative impairment testing. If the fair value of each of our franchise rights had been determined to be a hypothetical 10% lower as of the valuation date of April 30, 2021, no impairment would have resulted. The effect of a hypothetical 10% decrease in fair value estimates is not intended to provide a sensitivity analysis of every potential outcome.


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Reported Operating Data
Historical operating results include the results of acquired businesses from the date of acquisition.
($ in millions, except per vehicle data) Three Months Ended June 30, Six Months Ended June 30,
2021 2020 Variance
Favorable /
(Unfavorable)
%
Variance
2021 2020 Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
New vehicle $ 3,428.3  $ 2,261.3  $ 1,167.0  51.6  $ 6,410.6  $ 4,543.2  $ 1,867.4  41.1 
Retail used vehicle 2,085.8  1,262.5  823.3  65.2  3,729.9  2,424.5  1,305.4  53.8 
Wholesale 137.1  62.0  75.1  121.1  242.1  148.7  93.4  62.8 
Used vehicle 2,222.9  1,324.5  898.4  67.8  3,972.0  2,573.2  1,398.8  54.4 
Finance and insurance, net 369.0  246.4  122.6  49.8  682.0  482.2  199.8  41.4 
Total variable operations(1)
6,020.2  3,832.2  2,188.0  57.1  11,064.6  7,598.6  3,466.0  45.6 
Parts and service 950.8  689.9  260.9  37.8  1,801.8  1,566.2  235.6  15.0 
Other 7.4  10.9  (3.5) 15.8  35.2  (19.4)
Total revenue $ 6,978.4  $ 4,533.0  $ 2,445.4  53.9  $ 12,882.2  $ 9,200.0  $ 3,682.2  40.0 
Gross profit:
New vehicle $ 320.5  $ 119.6  $ 200.9  168.0  $ 510.5  $ 216.0  $ 294.5  136.3 
Retail used vehicle 180.4  105.8  74.6  70.5  305.6  189.3  116.3  61.4 
Wholesale 22.3  11.2  11.1  37.3  18.7  18.6 
Used vehicle 202.7  117.0  85.7  73.2  342.9  208.0  134.9  64.9 
Finance and insurance 369.0  246.4  122.6  49.8  682.0  482.2  199.8  41.4 
Total variable operations(1)
892.2  483.0  409.2  84.7  1,535.4  906.2  629.2  69.4 
Parts and service 432.5  311.4  121.1  38.9  821.5  700.2  121.3  17.3 
Other 1.6  0.6  1.0  2.2  1.8  0.4 
Total gross profit 1,326.3  795.0  531.3  66.8  2,359.1  1,608.2  750.9  46.7 
Selling, general, and administrative expenses 748.9  547.9  (201.0) (36.7) 1,396.8  1,148.6  (248.2) (21.6)
Depreciation and amortization 47.9  49.1  1.2  95.8  97.2  1.4 
Goodwill impairment —  —  —  —  318.3  318.3 
Franchise rights impairment —  —  —  —  57.5  57.5 
Other (income) expense, net (0.7) (3.4) (2.7) (0.6) 4.5  5.1 
Operating income (loss) 530.2  201.4  328.8  163.3  867.1  (17.9) 885.0  NM
Non-operating income (expense) items:
Floorplan interest expense (6.6) (16.3) 9.7  (16.0) (41.8) 25.8 
Other interest expense (20.9) (23.2) 2.3  (42.1) (46.7) 4.6 
Other income, net 8.9  214.6  (205.7) 19.9  211.7  (191.8)
Income from continuing operations before income taxes $ 511.6  $ 376.5  $ 135.1  35.9  $ 828.9  $ 105.3  $ 723.6  NM
Retail vehicle unit sales:
New vehicle 77,164  54,513  22,651  41.6  146,525  111,252  35,273  31.7 
Used vehicle 80,589  58,920  21,669  36.8  152,369  115,069  37,300  32.4 
157,753  113,433  44,320  39.1  298,894  226,321  72,573  32.1 
Revenue per vehicle retailed:
New vehicle $ 44,429  $ 41,482  $ 2,947  7.1  $ 43,751  $ 40,837  $ 2,914  7.1 
Used vehicle $ 25,882  $ 21,427  $ 4,455  20.8  $ 24,479  $ 21,070  $ 3,409  16.2 
Gross profit per vehicle retailed:
New vehicle $ 4,153  $ 2,194