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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
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: 001-31262  
ASBURY AUTOMOTIVE GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware01-0609375
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
2905 Premiere Parkway NW,Suite 300 
Duluth, Georgia
30097
(Address of principal executive offices) (Zip Code)
(770) 418-8200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading
Title of each classSymbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareABGNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically 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  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer  Accelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company


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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The number of shares of common stock outstanding as of November 2, 2020 was 19,285,548.


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ASBURY AUTOMOTIVE GROUP, INC.

TABLE OF CONTENTS

  Page
PART I—Financial Information
PART II—Other Information








Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value and share data)
(Unaudited)
 September 30, 2020December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$4.1 $3.5 
Contracts-in-transit119.1 194.7 
Accounts receivable, net126.4 136.2 
Inventories828.7 985.0 
Assets held for sale49.6 154.2 
Other current assets170.1 129.0 
Total current assets1,298.0 1,602.6 
PROPERTY AND EQUIPMENT, net945.4 909.7 
OPERATING LEASE RIGHT-OF-USE ASSETS286.9 65.6 
GOODWILL888.6 201.7 
INTANGIBLE FRANCHISE RIGHTS101.9 121.7 
OTHER LONG-TERM ASSETS9.8 10.0 
Total assets$3,530.6 $2,911.3 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net$60.4 $130.3 
Floor plan notes payable—non-trade, net635.2 657.7 
Current maturities of long-term debt49.7 32.4 
Current maturities of operating leases26.9 17.0 
Accounts payable and accrued liabilities418.0 308.7 
Liabilities associated with assets held for sale22.5 100.9 
Total current liabilities1,212.7 1,247.0 
LONG-TERM DEBT1,174.1 907.0 
OPERATING LEASE LIABILITIES263.6 52.6 
DEFERRED INCOME TAXES24.7 26.0 
OTHER LONG-TERM LIABILITIES43.6 32.4 
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued or outstanding
  
Common stock, $.01 par value; 90,000,000 shares authorized; 41,133,862 and 41,072,080 shares issued, including shares held in treasury, respectively
0.4 0.4 
Additional paid-in capital592.1 582.9 
Retained earnings1,259.8 1,094.5 
Treasury stock, at cost; 21,848,314 and 21,791,707 shares, respectively
(1,033.7)(1,028.6)
Accumulated other comprehensive loss(6.7)(2.9)
Total shareholders' equity811.9 646.3 
Total liabilities and shareholders' equity$3,530.6 $2,911.3 


See accompanying Notes to Condensed Consolidated Financial Statements
4

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ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2020201920202019
REVENUE:
New vehicle$957.9 $986.9 $2,541.8 $2,823.9 
Used vehicle569.5 546.9 1,510.2 1,590.4 
Parts and service237.2 227.6 628.0 669.7 
Finance and insurance, net80.8 80.6 217.8 232.3 
TOTAL REVENUE1,845.4 1,842.0 4,897.8 5,316.3 
COST OF SALES:
New vehicle897.3 948.3 2,406.2 2,709.1 
Used vehicle520.3 514.5 1,393.2 1,487.6 
Parts and service91.9 86.1 247.3 252.3 
TOTAL COST OF SALES1,509.5 1,548.9 4,046.7 4,449.0 
GROSS PROFIT335.9 293.1 851.1 867.3 
OPERATING EXPENSES:
Selling, general, and administrative206.5 202.0 553.4 593.7 
Depreciation and amortization9.8 9.1 29.0 26.7 
Franchise rights impairment  23.0  
Other operating expense (income), net0.5 (0.2)9.4 1.0 
INCOME FROM OPERATIONS119.1 82.2 236.3 245.9 
OTHER EXPENSES (INCOME):
Floor plan interest expense3.0 9.0 14.1 29.7 
Other interest expense, net12.9 13.7 41.7 41.2 
Loss on extinguishment of long-term debt, net  20.6  
Gain on dealership divestitures, net(24.7) (58.4)(11.7)
Total other (income) expense, net(8.8)22.7 18.0 59.2 
INCOME BEFORE INCOME TAXES127.9 59.5 218.3 186.7 
Income tax expense31.7 14.5 53.0 45.9 
NET INCOME$96.2 $45.0 $165.3 $140.8 
EARNINGS PER SHARE:
Basic—
Net income$5.01 $2.36 $8.61 $7.37 
Diluted—
Net income$4.96 $2.33 $8.56 $7.30 
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic19.219.119.219.1
Restricted stock0.10.10.1
Performance share units0.10.10.10.1
Diluted19.419.319.319.3






 See accompanying Notes to Condensed Consolidated Financial Statements
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ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 202020192020 2019
Net income$96.2 $45.0 $165.3 $140.8 
Other comprehensive (loss) income:
Change in fair value of cash flow swaps (1.0)(5.1)(5.3)
Income tax benefit associated with cash flow swaps 0.3 1.3 1.4 
Comprehensive income$96.2  $44.3 $161.5  $136.9 











































See accompanying Notes to Condensed Consolidated Financial Statements
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ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in millions)
(Unaudited)
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balances, December 31, 201941,072,080 $0.4 $582.9 $1,094.5 21,791,707 $(1,028.6)$(2.9)$646.3 
Comprehensive Income:
Net income— — — 19.5 — — — 19.5 
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.1 tax benefit
— — — — — — (3.4)(3.4)
Comprehensive income— — — 19.5 — — (3.4)16.1 
Share-based compensation— — 3.8 — — — — 3.8 
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements68,577 — (0.3)— — — — (0.3)
Repurchase of common stock associated with net share settlements of employee share-based awards— — — — 53,915 (5.0)— (5.0)
Balances, March 31, 202041,140,657 $0.4 $586.4 $1,114.0 21,845,622 $(1,033.6)$(6.3)$660.9 
Comprehensive Income:
Net income— — 49.6 — — — 49.6 
Change in fair value of cash flow swaps, net of reclassification adjustment and $0.2 tax benefit
— — — — — — (0.4)(0.4)
Comprehensive income— — — 49.6 — — (0.4)49.2 
Share-based compensation— — 3.1 — — 3.1 
Forfeitures in connection with share-based payment arrangements(2,916)— — — — — —  
Repurchase of common stock associated with net share settlements of employee share-based awards— — — — 2,552 (0.1)— (0.1)
Balances, June 30, 202041,137,741 $0.4 $589.5 $1,163.6 21,848,174 $(1,033.7)$(6.7)$713.1 
Comprehensive Income:
Net income— — 96.2 — — — 96.2 
Comprehensive income— — — 96.2 — —  96.2 
Share-based compensation— — 2.8 — — — — 2.8 
Forfeitures in connection with share-based payment arrangements(3,879)— (0.2)— — — — (0.2)
Repurchase of common stock associated with net share settlements of employee share-based awards— — — — 140 — —  
Balances, September 30, 202041,133,862 $0.4 $592.1 $1,259.8 21,848,314 $(1,033.7)$(6.7)$811.9 

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 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balances, December 31, 201841,065,069 $0.4 $572.9 $922.7 21,719,339 $(1,023.4)$0.6 $473.2 
Comprehensive Income:
Net income— — — 40.9 — — — 40.9 
Change in fair value of cash flow swaps, net of reclassification adjustment and $0.5 tax benefit
— — — — — — (1.3)(1.3)
Comprehensive income— — — 40.9 — — (1.3)39.6 
Cumulative effect adjustment of ASU 2018-02
— — — 0.2 — — (0.2) 
Share-based compensation— — 3.9 — — — — 3.9 
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements238,078 — — — — — —  
Repurchase of common stock associated with net share settlement of employee share-based awards— — — — 66,912 (4.7)— (4.7)
Share repurchases— — — — 108,978 (7.4)— (7.4)
Retirement of previously repurchased common stock(108,978)— (1.3)(6.1)(108,978)7.4 —  
Balances, March 31, 201941,194,169 $0.4 $575.5 $957.7 21,786,251 $(1,028.1)$(0.9)$504.6 
Comprehensive Income:
Net income— — — 54.9 — — — 54.9 
Change in fair value of cash flow swaps, net of reclassification adjustment and $0.6 tax benefit
— — — — — — (1.9)(1.9)
Comprehensive income— — — 54.9 — — (1.9)53.0 
Share-based compensation— — 2.9 — — — — 2.9 
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements(3,656)— — — — — —  
Repurchase of common stock associated with net share settlement of employee share-based awards— — — — 3,328 (0.3)— (0.3)
Share repurchases— — — — 50,436 (3.9)— (3.9)
Retirement of previously repurchased common stock(50,436)— (0.6)(3.3)(50,436)3.9 —  
Balances, June 30, 201941,140,077 $0.4 $577.8 $1,009.3 21,789,579 $(1,028.4)$(2.8)$556.3 
Comprehensive Income:
Net income— — — 45.0 — — — 45.0 
Other comprehensive loss— — — — — — (0.7)(0.7)
Share-based compensation— — 3.6 — — — — 3.6 
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements(704)— — — —  
Repurchase of common stock associated with net share settlement of employee share-based awards— — — — 2,128 (0.2)— (0.2)
Share repurchases— — — — 42,965 (4.0)— (4.0)
Retirement of previously repurchased common stock(42,965)— (0.6)(3.4)(42,965)4.0 —  
Balances, September 30, 201941,096,408 $0.4 $580.8 $1,050.9 21,791,707 $(1,028.6)$(3.5)$600.0 

See accompanying Notes to Condensed Consolidated Financial Statements
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ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 For the Nine Months Ended September 30,
 20202019
CASH FLOW FROM OPERATING ACTIVITIES:
Net income$165.3 $140.8 
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization29.0 26.7 
Share-based compensation9.2 10.4 
Franchise rights impairment23.0  
Loss on extinguishment of long-term debt, net20.6  
Loaner vehicle amortization15.5 17.6 
Gain on divestitures, net(58.4)(11.7)
Change in right-of-use asset13.0 14.3 
Other adjustments, net1.4 4.0 
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit75.6 49.7 
Accounts receivable10.2 17.6 
Inventories420.5 201.0 
Other current assets(110.7)(131.1)
Floor plan notes payable—trade, net(68.3)8.1 
Accounts payable and other current liabilities84.4 11.8 
Operating lease liabilities(13.0)(14.5)
Other long-term assets and liabilities, net7.9 3.0 
Net cash provided by operating activities625.2 347.7 
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate(27.5)(28.7)
Capital expenditures—real estate(2.3)(9.2)
Purchases of previously leased real estate (4.9)
Acquisitions(954.1)(210.0)
Divestitures161.6 39.1 
Proceeds from the sale of assets4.2 7.5 
Net cash used in investing activities(818.1)(206.2)
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade2,838.3 3,118.7 
Floor plan borrowings—acquisitions131.6 55.3 
Floor plan repayments—non-trade(2,995.7)(3,273.1)
Floor plan repayments—non-trade divestitures(55.3)(14.1)
Proceeds from borrowings1,875.3  
Repayments of borrowings(1,599.7)(12.0)
Proceeds from sale and leaseback transaction7.3  
Payment of debt issuance costs(3.1)(2.3)
Repurchases of common stock, including shares associated with net share settlement of
employee share-based awards
(5.2)(20.5)
Net cash provided by (used in) financing activities193.5 (148.0)
Net increase in cash and cash equivalents0.6 (6.5)
CASH AND CASH EQUIVALENTS, beginning of period3.5 8.3 
CASH AND CASH EQUIVALENTS, end of period$4.1 $1.8 




See Note 11 "Supplemental Cash Flow Information" for further details
See accompanying Notes to Condensed Consolidated Financial Statements
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ASBURY AUTOMOTIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
We are one of the largest automotive retailers in the United States. As of September 30, 2020, we owned and operated 113 new vehicle franchises (90 dealership locations) representing 31 automobile brands and 25 collision repair centers 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 service, which includes repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. As of September 30, 2020, our new vehicle revenue brand mix consisted of 44% imports, 34% luxury, and 22% domestic brands.
Our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups:
Coggin dealerships operating primarily in Jacksonville, Fort Pierce and Orlando, Florida;
Courtesy dealerships operating in Tampa, Florida;
Crown dealerships operating in North Carolina, South Carolina and Virginia;
Greenville Automotive dealerships operating in Greenville, South Carolina;
Hare and Estes dealerships operating in the Indianapolis, Indiana area;
McDavid dealerships operating in metropolitan Austin and Dallas, Texas;
Nalley dealerships operating in metropolitan Atlanta, Georgia;
Park Place dealerships operating in the Dallas-Fort Worth area;
Plaza dealerships operating in metropolitan St. Louis, Missouri; and
Mike Shaw dealerships in the Denver, Colorado area.

On July 6, 2020, the Company, through two of its subsidiaries, entered into an Asset Purchase Agreement (the "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 new vehicle dealership franchises, two collision centers and an auto auction comprising the Park Place Dealership group (collectively, the "Revised Transaction"). The Revised Transaction was completed on August 24, 2020 for a purchase price of $889.9 million. The purchase price was financed through a combination of cash, debt and seller financing. See Note 3 "Acquisitions and Divestitures" for details of the Revised Transaction.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and reflect the consolidated accounts of Asbury Automotive Group, Inc. (the "Company") and our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. If necessary, reclassifications of amounts previously reported have been made to the accompanying Condensed Consolidated Financial Statements in order to conform to current presentation.
In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair statement of the Condensed Consolidated Financial Statements as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019, have been included, unless otherwise indicated. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for any other interim period, or any full year period. Our Condensed Consolidated Financial Statements should be read together with our audited Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed quarterly and the effects of any revisions are reflected in the Consolidated Financial Statements in the period they are determined to be necessary. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, those relating to inventory valuation reserves, variable consideration and constraint considerations related to retro-commission arrangements, reserves for
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chargebacks against revenue recognized from the sale of finance and insurance products, reserves for insurance programs, certain assumptions related to intangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.
Contracts-In-Transit
Contracts-in-transit represent receivables from third-party finance companies for the portion of new and used vehicle purchase price financed by customers through sources arranged by us.
Accounts Receivable
The allowance for credit losses is estimated using an annual loss rate approach, by type of receivable, utilizing historical loss rates which have been adjusted for expectations of future economic conditions.
Revenue Recognition
Please refer to Note 2 "Revenue Recognition".
Internal Profit
Revenues and expenses associated with internal work performed by our parts and service departments on new and used vehicle inventory are eliminated in consolidation. The gross profit earned by our parts and service departments for internal work performed is included as a reduction of Parts and Service Cost of Sales in the accompanying Condensed Consolidated Statements of Income upon the sale of the vehicle. The costs incurred by our new and used vehicle departments for work performed by our parts and service departments is included in either New Vehicle Cost of Sales or Used Vehicle Cost of Sales in the accompanying Condensed Consolidated Statements of Income, depending on the classification of the vehicle serviced. We eliminate the internal profit on vehicles that remain in inventory.
Income Taxes
We use the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates.
Share Repurchases
Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. Periodically, the Company may retire repurchased shares of common stock previously held 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.
Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding during the period. The Company excluded 0 and 78,180 restricted share units issued under the Asbury Automotive Group, Inc. 2019 Equity and Incentive Compensation Plan, from its computation of diluted earnings per share for the three and nine months ended September 30, 2020, respectively, because they were anti-dilutive. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.
Assets Held for Sale and Liabilities Associated with Assets Held for Sale
Certain amounts have been classified as Assets Held for Sale in the accompanying Condensed Consolidated Balance Sheets. Assets and liabilities classified as held for sale may include assets and liabilities associated with pending dealership disposals, real estate we are actively marketing to sell, and any related mortgage notes payable or other liabilities, if applicable. Classification as held for sale begins on the date that we have met all of the criteria for classification as held for sale.
At the time of classifying assets as held for sale, we compare the carrying value of these assets to estimates of fair value to assess for impairment. We compare the carrying value to estimates of fair value utilizing the assistance of third-party broker opinions of value and third-party desktop appraisals to assist in our fair value estimates related to real estate properties.
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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 in the accompanying Condensed Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. The net change in floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor Plan Notes Payable—Trade") is classified as an operating activity in the accompanying Condensed Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as financing activities in the accompanying Condensed Consolidated Statements of Cash Flows. Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturer from which we purchased the related inventory.
Loaner vehicles account for a significant portion of Other current assets. We acquire loaner vehicles either with available cash or through borrowing from either our manufacturer affiliated lenders or through our senior secured credit agreement with Bank of America, as administrative agent, and the other agents and lenders party thereto (as amended, the "2019 Senior Credit Facility"). Loaner vehicles are initially used by our service department for a short period of time (typically six to twelve months) before we seek to sell them. Therefore, we classify the acquisition of loaner vehicles in Other current assets and the borrowings and repayments of loaner vehicle notes payable in Accounts payable and accrued liabilities in the accompanying Condensed Consolidated Statements of Cash Flows. Loaner vehicles are depreciated over the service period to their estimated value. At the end of the loaner service period, loaner vehicles are transferred from Other current assets to used vehicle inventory. These transfers are reflected as non-cash transfers between Other current assets and Inventories in the accompanying Condensed Consolidated Statements of Cash Flows.
Recent Accounting Pronouncements
Effective January 1, 2020, the Company adopted Financial Accounting Standard Board Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments, which changed the way entities assess the impairment of its financial instruments based on its estimate of expected credit losses versus the current incurred loss model. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.
2. REVENUE RECOGNITION
The Company satisfies performance obligations either over time or at a point in time. 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
The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2020 and 2019:
For the Three Months Ended September 30,
20202019
(In millions)
Revenue:
   New vehicle$957.9 $986.9 
   Used vehicle retail507.4 505.0 
   Used vehicle wholesale62.1 41.9 
New and used vehicle1,527.4 1,533.8 
  Sale of vehicle parts and accessories36.8 36.7 
  Vehicle repair and maintenance services200.4 190.9 
Parts and services237.2 227.6 
Finance and insurance, net80.8 80.6 
Total revenue$1,845.4 $1,842.0 
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For the Nine Months Ended September 30,
20202019
(In millions)
Revenue:
   New vehicle$2,541.8 $2,823.9 
   Used vehicle retail1,366.0 1,449.8 
   Used vehicle wholesale144.2 140.6 
New and used vehicle4,052.0 4,414.3 
  Sale of vehicle parts and accessories99.5 109.7 
  Vehicle repair and maintenance services528.5 560.0 
Parts and services628.0 669.7 
Finance and insurance, net217.8 232.3 
Total revenue$4,897.8 $5,316.3 
Contract Asset
Changes in contract assets during the period are reflected in the table below. 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 ServicesFinance and Insurance, netTotal
(In millions)
Contract Assets (Current), January 1, 2020$4.8 $12.3 $17.1 
Transferred to receivables from contract assets recognized at the beginning of the period(4.8)(4.1)(8.9)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period3.7 4.6 8.3 
Contract Assets (Current), March 31, 2020$3.7 $12.8 $16.5 
Transferred to receivables from contract assets recognized at the beginning of the period(3.7)(4.0)(7.7)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period3.3 4.0 7.3 
Contract Assets (Current), June 30, 20203.3 12.8 16.1 
Transferred to receivables from contract assets recognized at the beginning of the period(3.3)(3.2)(6.5)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period6.8 3.9 10.7 
Contract Assets (Current), September 30, 2020$6.8 $13.5 $20.3 
3. ACQUISITIONS AND DIVESTITURES
Results of acquired dealerships are included in our accompanying Condensed Consolidated Statements of Income commencing on the date of acquisition. Our acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The fair value of our manufacturer franchise rights are determined 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.

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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 Condensed Consolidated Statements of Income as Other operating expense (income), net. See Note 9 "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 new vehicle dealership franchises (8 dealership locations), two collision centers and an auto auction. The Revised Transaction was completed on August 24, 2020 and financed through a combination of cash, floor plan facilities and seller financing. The seller financing comprised $150.0 million in aggregate principal amount of a 4.00% promissory note due August 2021 and $50.0 million in aggregate principal amount of 4.00% promissory note due February 2022 (collectively, the "Seller Notes"). In September 2020, the Company redeemed the Seller Notes. See Note 9 "Debt" for further details.
The sources of the preliminary purchase consideration are as follows:
(In millions)
Cash$527.4 
Seller Notes200.0 
New Vehicle Floor Plan Facility127.5 
Used Vehicle Floor Plan Facility35.0 
Preliminary purchase price$889.9 
Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on information currently available. We have not finalized our valuation for manufacturer franchise rights which will be reclassified from goodwill once completed. Our valuation for property and equipment and our assessment with respect to certain assumed leases is preliminary as of September 30, 2020. Furthermore, the assignment of goodwill to reporting units has not been completed as of the date of issuance of these Condensed Consolidated Financial Statements. The following table summarizes the allocation of the estimated purchase price based on preliminary estimates of fair value:
(In millions)
Summary of Assets Acquired and Liabilities Assumed
Inventories$120.8 
Loaner vehicles57.0 
Property and equipment35.0 
Goodwill and intangible assets685.9 
Operating lease right-of-use assets202.7 
Total assets acquired1,101.4 
Operating lease liabilities(202.2)
Other liabilities(9.3)
Total liabilities assumed(211.5)
Net assets acquired$889.9 
The Company recorded $1.3 million of acquisition related costs during the three months ended September 30, 2020. These costs are included in Selling, general, and administrative in the Condensed Consolidated Statements of Income.
The Company's Condensed Consolidated Statements of Income included revenue and net income attributable to Park Place from August 24, 2020 through September 30, 2020 of $148.4 million and $7.0 million, respectively.

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The following represents the unaudited pro forma information as if Park Place had been included in the consolidated results of the Company since January 1, 2019:
For the Three Months Ended September 30,
 20202019
(In millions)
(Unaudited)
Pro Forma Revenue$2,045.7 $2,261.4 
Pro Forma Net Income$107.0 $56.6 
For the Nine Months Ended September 30,
20202019
(In millions)
(Unaudited)
Pro Forma Revenue$5,755.6 $6,517.5 
Pro Forma Net Income$187.4 $173.9 
This pro forma information incorporates the Company's accounting policies and adjusts the results of Park Place for depreciation, rent expense, and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the Revised Transaction had occurred on January 1, 2019. They have also been adjusted to reflect the $1.3 million of acquisition related costs incurred during the three months ended September 30, 2020 as having occurred on January 1, 2019. The pro forma information also assumes that the September 2020 divestiture of the Lexus Greenville dealership, which was related to the Park Place acquisition, occurred on January 1, 2019.
Other Acquisitions and Divestitures
In addition to the Revised Transaction, during the nine months ended September 30, 2020, we acquired the assets of three franchises (one dealership location) in the Denver, Colorado market for a combined purchase price of $63.6 million. We funded this acquisition with an aggregate of $34.5 million of cash and $27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, this acquisition included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $2.5 million of purchase price holdbacks related to a prior year acquisition during the nine months ended September 30, 2020.
During the nine months ended September 30, 2019, we acquired the assets of nine franchises (five dealership locations) and one collision center in the Indianapolis, Indiana market and one franchise (one dealership location) in the Denver, Colorado market for a combined purchase price of $210.4 million. We funded these acquisitions with an aggregate of $153.9 million of cash, $55.3 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, these acquisitions included purchase price holdbacks of $1.2 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $0.8 million of purchase price holdbacks related to a prior year acquisition.
The 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.
Below is the allocation of purchase price for the other acquisitions completed during the nine months ended September 30, 2020 and 2019, respectively. Our 2020 valuation for manufacturer franchise rights, real estate, property and equipment, and our assessment with respect to certain assumed leases is preliminary as of September 30, 2020.
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For the Nine Months Ended September 30,
20202019
(In millions)
Inventory$29.8 $70.9 
Real estate14.5 43.1 
Property and equipment0.4 4.7