Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2018

Condensed Financial Information Disclosure [Abstract]

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables include condensed consolidating financial information as of September 30, 2018 and December 31, 2017, and for the nine months ended September 30, 2018 and 2017, for Group 1 Automotive, Inc.’s (as issuer of the 5.00% Notes) guarantor subsidiaries and non-guarantor subsidiaries (representing foreign entities). The condensed consolidating financial information includes certain allocations of balance sheet, statement of operations, and cash flows items that are not necessarily indicative of the financial position, results of operations, or cash flows of these entities had they operated on a stand-alone basis. In accordance with Rule 3-10 of Regulation S-X, condensed consolidated financial statements of non-guarantors are not required. The Company has no assets or operations independent of its subsidiaries. Obligations under the 5.00% Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by the Company’s current wholly owned domestic subsidiaries and certain of the Company’s future domestic subsidiaries, with the exception of the Company’s “minor” subsidiaries (as defined by Rule 3-10 of Regulation S-X). There are no significant restrictions on the ability of the Company or subsidiary guarantors for the Company to obtain funds from its subsidiary guarantors by dividend or loan. None of the subsidiary guarantors’ assets represent restricted assets pursuant to SEC Rule 4-08(e)(3) of Regulation S-X.

CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2018

	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
	(Unaudited, in thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	9,062		$	22,965	$	—		$	32,027
Contracts-in-transit and vehicle receivables, net	—		169,199			66,410		—			235,609
Accounts and notes receivable, net	—		133,506			35,812		—			169,318
Intercompany accounts receivable	32,585		51,159			—		(83,744		)	—
Inventories, net	—		1,392,370			341,386		—			1,733,756
Prepaid expenses and other current assets	214		23,953			53,829		—			77,996
Total current assets	32,799		1,779,249			520,402		(83,744		)	2,248,706
PROPERTY AND EQUIPMENT, net	—		1,125,421			225,508		—			1,350,929
GOODWILL	—		865,062			103,709		—			968,771
INTANGIBLE FRANCHISE RIGHTS	—		239,738			36,547		—			276,285
INVESTMENT IN SUBSIDIARIES	3,194,823		—			—		(3,194,823		)	—
OTHER ASSETS	—		25,028			11,147		—			36,175
Total assets	$	3,227,622	$	4,034,498		$	897,313	$	(3,278,567	)	$	4,880,866
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—	$	1,126,477		$	28,557	$	—		$	1,155,034
Offset account related to floorplan notes payable - credit facility	—		(71,397		)	—		—			(71,397		)
Floorplan notes payable — manufacturer affiliates	—		259,697			155,918		—			415,615
Offset account related to floorplan notes payable - manufacturer affiliates	—		(20,500		)	—		—			(20,500		)
Current maturities of long-term debt and short-term financing	—		63,940			12,140		—			76,080
Current liabilities from interest rate risk management activities	—		311			—		—			311
Accounts payable	—		202,823			225,618		—			428,441
Intercompany accounts payable	1,088,282		—			51,159		(1,139,441		)	—
Accrued expenses	—		170,607			36,475		—			207,082
Total current liabilities	1,088,282		1,731,958			509,867		(1,139,441		)	2,190,666
LONG-TERM DEBT, net of current maturities	872,477		311,592			120,058		—			1,304,127
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—		444			—		—			444
DEFERRED INCOME TAXES AND OTHER LIABILITIES	1,148		224,405			11,730		—			237,283
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,265,715		2,821,796			255,658		(3,194,823		)	1,148,346
Intercompany note receivable	—		(1,055,697		)	—		1,055,697			—
Total stockholders’ equity	1,265,715		1,766,099			255,658		(2,139,126		)	1,148,346
Total liabilities and stockholders’ equity	$	3,227,622	$	4,034,498		$	897,313	$	(3,278,567	)	$	4,880,866

CONDENSED CONSOLIDATED BALANCE SHEET

December 31, 2017

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	10,096		$	18,691	$	—		$	28,787
Contracts-in-transit and vehicle receivables, net	—			266,788			39,645		—			306,433
Accounts and notes receivable, net	—			144,872			43,739		—			188,611
Intercompany accounts receivable	26,988			12,948			—		(39,936		)	—
Inventories, net	—			1,434,852			328,441		—			1,763,293
Prepaid expenses and other current assets	1,934			8,378			31,750		—			42,062
Total current assets	28,922			1,877,934			462,266		(39,936		)	2,329,186
PROPERTY AND EQUIPMENT, net	—			1,121,108			197,851		—			1,318,959
GOODWILL	—			835,268			77,766		—			913,034
INTANGIBLE FRANCHISE RIGHTS	—			255,980			29,652		—			285,632
INVESTMENT IN SUBSIDIARIES	2,999,407			—			—		(2,999,407		)	—
OTHER ASSETS	—			13,682			10,572		—			24,254
Total assets	$	3,028,329		$	4,103,972		$	778,107	$	(3,039,343	)	$	4,871,065
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—		$	1,219,844		$	20,851	$	—		$	1,240,695
Offset account related to floorplan notes payable - credit facility	—			(86,547		)	—		—			(86,547		)
Floorplan notes payable — manufacturer affiliates	—			272,563			124,620		—			397,183
Offset account related to floorplan notes payable - manufacturer affiliates	—			(22,500		)	—		—			(22,500		)
Current maturities of long-term debt and short-term financing	24,741			31,229			21,639		—			77,609
Current liabilities from interest rate risk management activities	—			1,996			—		—			1,996
Accounts payable	—			229,470			183,511		—			412,981
Intercompany accounts payable	890,995			—			39,936		(930,931		)	—
Accrued expenses	—			150,241			26,829		—			177,070
Total current liabilities	915,736			1,796,296			417,386		(930,931		)	2,198,487
LONG-TERM DEBT, net of current maturities	865,202			360,526			92,456		—			1,318,184
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—			8,583			—		—			8,583
DEFERRED INCOME TAXES AND OTHER LIABILITIES	(117		)	210,216			11,430		—			221,529
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,247,508			2,619,346			256,835		(2,999,407		)	1,124,282
Intercompany note receivable	—			(890,995		)	—		890,995			—
Total stockholders’ equity	1,247,508			1,728,351			256,835		(2,108,412		)	1,124,282
Total liabilities and stockholders’ equity	$	3,028,329		$	4,103,972		$	778,107	$	(3,039,343	)	$	4,871,065

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30, 2018

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(Unaudited, in thousands)
REVENUES	$	—		$	2,200,230		$	688,828		$	—		$	2,889,058
COST OF SALES	—			1,847,757			606,200			—			2,453,957
GROSS PROFIT	—			352,473			82,628			—			435,101
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	323			240,167			76,281			—			316,771
DEPRECIATION AND AMORTIZATION EXPENSE	—			13,510			3,471			—			16,981
ASSET IMPAIRMENTS	—			23,159			—			—			23,159
(LOSS) INCOME FROM OPERATIONS	(323		)	75,637			2,876			—			78,190
OTHER EXPENSE:
Floorplan interest expense	—			(12,903		)	(1,782		)	—			(14,685		)
Other interest expense, net	—			(17,272		)	(1,868		)	—			(19,140		)
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(323		)	45,462			(774		)	—			44,365
BENEFIT (PROVISION) FOR INCOME TAXES	58			(9,120		)	(525		)	—			(9,587		)
EQUITY IN EARNINGS OF SUBSIDIARIES	35,042			—			—			(35,042		)	—
NET INCOME (LOSS)	$	34,777		$	36,342		$	(1,299	)	$	(35,042	)	$	34,778
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES	—			3,522			(5,908		)	—			(2,386		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	34,777		$	39,864		$	(7,207	)	$	(35,042	)	$	32,392

Nine Months Ended September 30, 2018

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(Unaudited, in thousands)
REVENUES	$	—		$	6,456,718		$	2,235,828		$	—		$	8,692,546
COST OF SALES	—			5,417,890			1,981,629			—			7,399,519
GROSS PROFIT	—			1,038,828			254,199			—			1,293,027
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,726			721,255			225,229			—			949,210
DEPRECIATION AND AMORTIZATION EXPENSE	—			39,431			10,530			—			49,961
ASSET IMPAIRMENTS	—			27,427			—			—			27,427
(LOSS) INCOME FROM OPERATIONS	(2,726		)	250,715			18,440			—			266,429
OTHER EXPENSE:
Floorplan interest expense	—			(38,050		)	(5,285		)	—			(43,335		)
Other interest expense, net	—			(51,620		)	(5,754		)	—			(57,374		)
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(2,726		)	161,045			7,401			—			165,720
BENEFIT (PROVISION) FOR INCOME TAXES	635			(36,457		)	(2,844		)	—			(38,666		)
EQUITY IN EARNINGS OF SUBSIDIARIES	129,145			—			—			(129,145		)	—
NET INCOME (LOSS)	$	127,054		$	124,588		$	4,557		$	(129,145	)	$	127,054
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES	—			16,705			(22,223		)	—			(5,518		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	127,054		$	141,293		$	(17,666	)	$	(129,145	)	$	121,536

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(Unaudited, in thousands)
REVENUES	$	—		$	2,301,958		$	710,334		$	—		$	3,012,292
COST OF SALES	—			1,948,390			632,482			—			2,580,872
GROSS PROFIT	—			353,568			77,852			—			431,420
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	433			259,119			68,775			—			328,327
DEPRECIATION AND AMORTIZATION EXPENSE	—			12,380			2,679			—			15,059
ASSET IMPAIRMENTS	—			9,526			—			—			9,526
INCOME (LOSS) FROM OPERATIONS	(433		)	72,543			6,398			—			78,508
OTHER EXPENSE:
Floorplan interest expense	—			(12,014		)	(1,477		)	—			(13,491		)
Other interest expense, net	—			(16,726		)	(1,148		)	—			(17,874		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(433		)	43,803			3,773			—			47,143
BENEFIT (PROVISION) FOR INCOME TAXES	163			(16,423		)	(1,002		)	—			(17,262		)
EQUITY IN EARNINGS OF SUBSIDIARIES	30,151			—			—			(30,151		)	—
NET INCOME (LOSS)	$	29,881		$	27,380		$	2,771		$	(30,151	)	$	29,881
OTHER COMPREHENSIVE INCOME, NET OF TAXES	—			1,454			8,399			—			9,853
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	29,881		$	28,834		$	11,170		$	(30,151	)	$	39,734

Nine Months Ended September 30, 2017

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(Unaudited, in thousands)
REVENUES	$	—		$	6,393,367		$	1,809,949		$	—		$	8,203,316
COST OF SALES	—			5,378,731			1,604,751			—			6,983,482
GROSS PROFIT	—			1,014,636			205,198			—			1,219,834
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,932			733,744			179,998			—			916,674
DEPRECIATION AND AMORTIZATION EXPENSE	—			35,873			6,885			—			42,758
ASSET IMPAIRMENTS	—			9,526			—			—			9,526
(LOSS) INCOME FROM OPERATIONS	(2,932		)	235,493			18,315			—			250,876
OTHER EXPENSE:
Floorplan interest expense	—			(34,954		)	(3,705		)	—			(38,659		)
Other interest expense, net	—			(49,568		)	(2,620		)	—			(52,188		)
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(2,932		)	150,971			11,990			—			160,029
BENEFIT (PROVISION) FOR INCOME TAXES	1,100			(55,402		)	(2,774		)	—			(57,076		)
EQUITY IN EARNINGS OF SUBSIDIARIES	104,785			—			—			(104,785		)	—
NET INCOME (LOSS)	$	102,953		$	95,569		$	9,216		$	(104,785	)	$	102,953
OTHER COMPREHENSIVE INCOME, NET OF TAXES	—			3,531			16,998			—			20,529
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	102,953		$	99,100		$	26,214		$	(104,785	)	$	123,482

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2018

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(Unaudited, in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	127,073		$	192,976		$	37,366		$	357,415
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(91,890		)	(43,452		)	(135,342		)
Proceeds from disposition of franchises, property and equipment	—			101,364			6,340			107,704
Purchases of property and equipment, including real estate	—			(79,490		)	(38,725		)	(118,215		)
Deposits for real estate and dealership acquisitions	381			—			—			381
Net cash provided by (used in) investing activities	381			(70,016		)	(75,837		)	(145,472		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			5,036,149			70,661			5,106,810
Repayments on credit facility - floorplan line and other	—			(5,124,860		)	(60,365		)	(5,185,225		)
Borrowings on credit facility - acquisition line	98,596			—			—			98,596
Repayments on credit facility - acquisition line	(91,450		)	—			—			(91,450		)
Borrowings on other debt	—			70,661			52,637			123,298
Principal payments on other debt	(24,741		)	(36,198		)	(44,612		)	(105,551		)
Borrowings on debt related to real estate	—			42,657			12,055			54,712
Principal payments on debt related to real estate	—			(71,762		)	(11,480		)	(83,242		)
Employee stock purchase plan purchases, net of employee tax withholdings	1,529			—			—			1,529
Repurchases of common stock, amounts based on settlement date	(108,623		)	—			—			(108,623		)
Proceeds from termination of mortgage swap	—			918			—			918
Dividends paid	(16,014		)	—			—			(16,014		)
Borrowings (repayments) with subsidiaries	208,665			(219,177		)	10,512			—
Investment in subsidiaries	(195,416		)	177,618			17,798			—
Net cash (used in) provided by financing activities	(127,454		)	(123,994		)	47,206			(204,242		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(2,941		)	(2,941		)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			(1,034		)	5,794			4,760
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			10,096			19,535			29,631
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	9,062		$	25,329		$	34,391

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2017

	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(Unaudited, in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	102,951		$	188,979		$	15,304		$	307,234
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(62,475		)	(46,607		)	(109,082		)
Proceeds from disposition of franchises, property and equipment	—			2,807			2,326			5,133
Purchases of property and equipment, including real estate	—			(131,622		)	(12,688		)	(144,310		)
Other	—			1,526			—			1,526
Net cash used in investing activities	—			(189,764		)	(56,969		)	(246,733		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			5,053,598			—			5,053,598
Repayments on credit facility - floorplan line and other	—			(5,108,475		)	—			(5,108,475		)
Borrowings on credit facility - acquisition line	68,085			—			—			68,085
Repayments on credit facility - acquisition line	(35,576		)	—			—			(35,576		)
Borrowings on other debt	25,054			—			101,262			126,316
Principal payments on other debt	—			(787		)	(87,914		)	(88,701		)
Borrowings on debt related to real estate	—			10,156			28,875			39,031
Principal payments on debt related to real estate	—			(16,819		)	(4,450		)	(21,269		)
Employee stock purchase plan purchases, net of employee tax withholdings	4,196			—			—			4,196
Repurchases of common stock, amounts based on settlement date	(40,094		)	—			—			(40,094		)
Dividends paid	(15,221		)	—			—			(15,221		)
Borrowings (repayments) with subsidiaries	74,826			(110,857		)	36,031			—
Investment in subsidiaries	(184,221		)	174,576			9,645			—
Net cash provided by (used in) financing activities	(102,951		)	1,392			83,449			(18,110		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			867			867
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			607			42,651			43,258
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			8,039			16,207			24,246
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	8,646		$	58,858		$	67,504