BLOOMFIELD HILLS, Mich. -

Penske Automotive Group revealed Wednesday it has canceled the development of a five-door smart model in response to its discussions about shifting U.S. distribution and other activities for the smart brand to Mercedes-Benz.

Furthermore, boosted by double-digit gains in total retail sales and same-store retail sales revenues at U.S. operations, Penske reported a fourth-quarter income jump of more than $10 million.

The company said Wednesday that its adjusted fourth quarter income from continuing operations attributable to common shareholders came in at $29.5 million or 32 cents per share. During the same quarter a year ago, Penske generated $19.4 million or 21 cents per share.

Executives calculated adjusted fourth quarter income from continuing operations attributable to common shareholders excludes a net after-tax gain of $0.8 million or 1 cent per share.

The company revealed its total fourth-quarter revenue increased 13.5 percent to $2.8 billion.

Other fourth quarter highlights include:

—Total retail unit sales increased 13.9 percent, with 18.9 percent coming in the United States and 3.7 percent deriving from international operations.

—Total same-store retail revenues climbed 9.1 percent, with 13.5 percent coming in the United States and 2.0 percent from international interests.

—The company’s long-term debt was reduced by $167 million since the beginning of 2010, including $74 million during the fourth quarter.

—Penske’s days’ supply of vehicle inventories as of Dec. 31 was 55 days for new and 43 days for used.

“Our results exceeded my expectations,” declared Penske chairman Roger Penske.

“An improving retail environment in the U.S. drove our business in the fourth quarter, including a 13.8-percent increase in same-store total retail unit sales and a 7.0 percent increase in same-store service and parts revenues,” Penske continued.

“In the U.K., our execution and our brand mix helped us to outperform the market and provide a strong contribution of profits despite difficult comparisons due to the government incentive programs in place last year,” he added.

Penske Shares Full-Year Figures

Looking at how the company performed for all of 2010, Penske determined its total revenues for the year ended increased 12.7 percent to $10.7 billion.

Executives noted adjusted income from continuing operations attributable to common shareholders for the year ended amounted to $109.3 million or $1.19 per share. During 2009, those amounts were $80.2 million or 87 cents per share.

Management also indicated adjusted income from continuing operations attributable to common shareholders in both 2010 and 2009 exclude net after-tax gains of $1.8 million (2 cents per share) and $3.1 million (3 cents per share), respectively.

Update on smart USA

With regard to smart USA, Penske shared that the distribution business generated after-tax losses of $5.8 million (6 cents per share) and $15.9 million (17 cents per share) during the three- and 12-month spans that ended Dec 31.

The company emphasized that smart USA’s results for the fourth quarter and full year include after-tax expenses of $2.7 million (3 cents per share) and $3.6 million (4 cents per share), respectively. Officials indicated these expenses were related to the development of the five-door vehicle previously designed for distribution through the smart USA dealer network.

“As previously announced, Mercedes-Benz USA and the company have initiated discussions to transfer distribution of the smart fortwo to Mercedes-Benz USA,” Penske executives stated.

“As a result, smart USA canceled the project relating to the five-door vehicle,” they added.

Penske Acquisition Activity

Turning to another segment of its report, Penske recapped its last year’s acquisition activity.

The company acquired eight franchises and commenced operations at 16 franchises awarded by manufacturers.

Management believes these 24 franchises are expected to generate approximately $400 million of revenue on an annualized basis.

Penske Financing Activity

In wrapping up its financial details, Penske mentioned that it repurchased $155.7 million principal amount of its outstanding 3.5 percent Senior Subordinated Convertible Notes due in 2026 for $156.6 million in cash.

Currently, the company expects to use cash flow from operations, existing working capital and borrowings under its U.S. revolving credit facility to fund the expected April redemption of the remaining $150.6 million principal amount of outstanding Convertible Notes.

As of Dec. 31, officials pointed out Penske had $300 million of revolving credit available under its U.S. credit facility.

Finally, management noted it also has authorization to repurchase up to $150 million of its outstanding common stock, debt or convertible debt.

“Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means,” officials said.