Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2019

Condensed Financial Information Disclosure [Abstract]

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables include condensed consolidating financial information as of March 31, 2019 and December 31, 2018, and for the three months ended March 31, 2019 and 2018, 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 100%-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

As of March 31, 2019

(Unaudited, in thousands)



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	10,245		$	23,378	$	—		$	33,623
Contracts-in-transit and vehicle receivables, net	—		183,894			77,300		—			261,194
Accounts and notes receivable, net	—		137,168			48,143		—			185,311
Intercompany accounts receivable	29,338		14,433			—		(43,771		)	—
Inventories, net	—		1,499,284			361,623		—			1,860,907
Prepaid expenses and other current assets	643		21,541			69,852		—			92,036
TOTAL CURRENT ASSETS	29,981		1,866,565			580,296		(43,771		)	2,433,071
Property and equipment, net	—		1,143,606			227,137		—			1,370,743
Operating lease assets	—		127,140			87,636		—			214,776
Goodwill	—		861,661			104,221		—			965,882
Intangible franchise rights	—		224,393			36,072		—			260,465
Investment in subsidiaries	3,192,888		—			—		(3,192,888		)	—
Other assets	—		10,363			8,191		—			18,554
TOTAL ASSETS	$	3,222,869	$	4,233,728		$	1,043,553	$	(3,236,659	)	$	5,263,491

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—	$	1,224,583		$	31,201	$	—		$	1,255,784
Offset account related to floorplan notes payable - credit facility	—		(72,728		)	—		—			(72,728		)
Floorplan notes payable — manufacturer affiliates	—		297,788			146,215		—			444,003
Offset account related to floorplan notes payable - manufacturer affiliates	—		(26,000		)	—		—			(26,000		)
Current maturities of long-term debt and short-term financing	—		66,542			29,817		—			96,359
Current operating lease liabilities	—		17,751			6,156		—			23,907
Accounts payable	—		218,615			288,733		—			507,348
Intercompany accounts payable	1,223,548		—			53,171		(1,276,719		)	—
Accrued expenses and other current liabilities			172,288			35,781		—			208,069
TOTAL CURRENT LIABILITIES	1,223,548		1,898,839			591,074		(1,276,719		)	2,436,742
Long-term debt, net of current maturities	870,384		283,850			108,348		—			1,262,582
Operating lease liabilities, net of current portion	—		117,067			87,264		—			204,331
Liabilities from interest rate risk management activities	—		2,430			—		—			2,430
Deferred income taxes	1,224		221,726			6,743		—			229,693
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,127,713		2,942,764			250,124		(3,192,888		)	1,127,713
Intercompany note receivable	—		(1,232,948		)	—		1,232,948			—
TOTAL STOCKHOLDERS’ EQUITY	1,127,713		1,709,816			250,124		(1,959,940		)	1,127,713
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,222,869	$	4,233,728		$	1,043,553	$	(3,236,659	)	$	5,263,491

CONDENSED CONSOLIDATED BALANCE SHEET

As of December 31, 2018

(In thousands)



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	4,613		$	11,319	$	—		$	15,932
Contracts-in-transit and vehicle receivables, net	—		232,095			33,565		—			265,660
Accounts and notes receivable, net	—		153,871			40,110		—			193,981
Intercompany accounts receivable	31,842		21,636			—		(53,478		)	—
Inventories, net	—		1,468,422			375,637		—			1,844,059
Prepaid expenses and other current assets	992		32,118			49,624		—			82,734
TOTAL CURRENT ASSETS	32,834		1,912,755			510,255		(53,478		)	2,402,366
Property and equipment, net	—		1,124,559			223,276		—			1,347,835
Goodwill	—		861,628			102,297		—			963,925
Intangible franchise rights	—		224,394			35,236		—			259,630
Investment in subsidiaries	3,100,931		—			—		(3,100,931		)	—
Other assets	—		16,165			11,154		—			27,319
TOTAL ASSETS	$	3,133,765	$	4,139,501		$	882,218	$	(3,154,409	)	$	5,001,075

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—	$	1,251,402		$	41,050	$	—		$	1,292,452
Offset account related to floorplan notes payable - credit facility	—		(33,637		)	—		—			(33,637		)
Floorplan notes payable — manufacturer affiliates	—		276,862			141,062		—			417,924
Offset account related to floorplan notes payable - manufacturer affiliates	—		(100		)	—		—			(100		)
Current maturities of long-term debt and short-term financing	—		73,834			19,133		—			92,967
Accounts payable	—		200,912			218,438		—			419,350
Intercompany accounts payable	1,164,949		—			53,478		(1,218,427		)	—
Accrued expenses	—		164,998			32,611		—			197,609
TOTAL CURRENT LIABILITIES	1,164,949		1,934,271			505,772		(1,218,427		)	2,386,565
Long-term debt, net of current maturities	872,307		294,388			114,794		—			1,281,489
Liabilities from interest rate risk management activities	—		1,696			—		—			1,696
Deferred income taxes and other liabilities	815		223,022			11,794		—			235,631
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,095,694		2,851,073			249,858		(3,100,931		)	1,095,694
Intercompany note receivable	—		(1,164,949		)	—		1,164,949			—
TOTAL STOCKHOLDERS’ EQUITY	1,095,694		1,686,124			249,858		(1,935,982		)	1,095,694
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,133,765	$	4,139,501		$	882,218	$	(3,154,409	)	$	5,001,075

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31, 2019

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
Revenues	$	—		$	2,062,782		$	745,594		$	—		$	2,808,376
Cost of Sales	—			1,715,865			661,008			—			2,376,873
Gross Profit	—			346,917			84,586			—			431,503
Selling, General and Administrative Expenses	1,891			252,044			73,773			—			327,708
Depreciation and Amortization Expense	—			13,234			3,763			—			16,997
Income (loss) from operations	(1,891		)	81,639			7,050			—			86,798
Other expense:
Floorplan interest expense	—			(13,989		)	(1,714		)	—			(15,703		)
Other interest income (expense), net	—			(17,175		)	(1,744		)	—			(18,919		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(1,891		)	50,475			3,592			—			52,176
Benefit (provision) for income taxes	490			(12,902		)	(1,116		)	—			(13,528		)
Equity in earnings of subsidiaries	40,049			—			—			(40,049		)	—
Net income (loss)	$	38,648		$	37,573		$	2,476		$	(40,049	)	$	38,648
Comprehensive income (loss)	(977		)	(4,584		)	3,607			977			(977		)
Comprehensive income (loss) attributable to parent	$	37,671		$	32,989		$	6,083		$	(39,072	)	$	37,671

Three Months Ended March 31, 2019

REVENUES

COST OF SALES

GROSS PROFIT

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

DEPRECIATION AND AMORTIZATION EXPENSE

ASSET IMPAIRMENTS

(LOSS) INCOME FROM OPERATIONS

OTHER EXPENSE:

Floorplan interest expense

Other interest expense, net

(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES

BENEFIT (PROVISION) FOR INCOME TAXES

EQUITY IN EARNINGS OF SUBSIDIARIES

NET INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
Revenues	$	—		$	2,088,487		$	771,539		$	—		$	2,860,026
Cost of Sales	—			1,752,802			687,461			—			2,440,263
Gross Profit	—			335,685			84,078			—			419,763
Selling, General and Administrative Expenses	1,768			249,165			73,414			—			324,347
Depreciation and Amortization Expense	—			12,881			3,461			—			16,342
Income (loss) from operations	(1,768		)	73,639			7,203			—			79,074
Other expense:
Floorplan interest expense	—			(12,337		)	(1,750		)	—			(14,087		)
Other interest income (expense), net	—			(17,017		)	(1,803		)	—			(18,820		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(1,768		)	44,285			3,650			—			46,167
Benefit (provision) for income taxes	424			(9,780		)	(997		)	—			(10,353		)
Equity in earnings of subsidiaries	37,158			—			—			(37,158		)	—
Net income (loss)	$	35,814		$	34,505		$	2,653		$	(37,158	)	$	35,814
Comprehensive income (loss)	—			9,405			7,871			—			17,276
Comprehensive income (loss) attributable to parent	$	35,814		$	43,910		$	10,524		$	(37,158	)	$	53,090

Three Months Ended March 31, 2018

REVENUES

COST OF SALES

GROSS PROFIT

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

DEPRECIATION AND AMORTIZATION EXPENSE

ASSET IMPAIRMENTS

(LOSS) INCOME FROM OPERATIONS

OTHER EXPENSE:

Floorplan interest expense

Other interest expense, net

(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES

BENEFIT (PROVISION) FOR INCOME TAXES

EQUITY IN EARNINGS OF SUBSIDIARIES

NET INCOME (LOSS)

OTHER COMPREHENSIVE INCOME, NET OF TAXES

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2019

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	32,601		$	71,795		$	23,543		$	127,939
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of franchises, property and equipment	—			33,178			1,947			35,125
Purchases of property and equipment, including real estate	—			(36,614		)	(5,097		)	(41,711		)
Other	(200		)	—			—			(200		)
Net cash provided by (used in) investing activities	(200		)	(3,436		)	(3,150		)	(6,786		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			1,624,256			7,288			1,631,544
Repayments on credit facility - floorplan line and other	—			(1,679,425		)	(18,030		)	(1,697,455		)
Borrowings on credit facility - acquisition line	107,777			—			—			107,777
Repayments on credit facility - acquisition line	(111,466		)	—			—			(111,466		)
Borrowings on other debt	—			7,288			13,041			20,329
Principal payments on other debt	—			(18,206		)	(8,487		)	(26,693		)
Principal payments on debt related to real estate	—			(17,702		)	(3,162		)	(20,864		)
Employee stock purchase plan purchases, net of employee tax withholdings	(830		)	—			—			(830		)
Dividends paid	(4,841		)	—			—			(4,841		)
Borrowings (repayments) with subsidiaries	69,908			(68,496		)	(1,412		)	—
Investment in subsidiaries	(92,949		)	92,790			159			—
Net cash provided by (used in) financing activities	(32,401		)	(59,495		)	(10,603		)	(102,499		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(519		)	(519		)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			8,864			9,271			18,135
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			4,613			14,107			18,720
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	13,477		$	23,378		$	36,855

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2018

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	35,814		$	114,862		$	(1,894	)	$	148,782
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(31,414		)	(40,085		)	(71,499		)
Proceeds from disposition of franchises, property and equipment	—			918			2,022			2,940
Purchases of property and equipment, including real estate	—			(34,101		)	(13,847		)	(47,948		)
Other	—			140			—			140
Net cash provided by (used in) investing activities	—			(64,457		)	(51,910		)	(116,367		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			1,612,866			43,326			1,656,192
Repayments on credit facility - floorplan line and other	—			(1,675,917		)	(26,530		)	(1,702,447		)
Borrowings on credit facility - acquisition line	66,945			—			—			66,945
Repayments on credit facility - acquisition line	(66,444		)	—			—			(66,444		)
Borrowings on other debt	—			43,326			22,288			65,614
Principal payments on other debt	(24,742		)	(1,987		)	(13,349		)	(40,078		)
Borrowings on debt related to real estate	—			34,817			12,018			46,835
Principal payments on debt related to real estate	—			(31,000		)	(6,819		)	(37,819		)
Employee stock purchase plan purchases, net of employee tax withholdings	(1,638		)	—			—			(1,638		)
Repurchases of common stock, amounts based on settlement date	(9,199		)	—			—			(9,199		)
Dividends paid	(5,495		)	—			—			(5,495		)
Borrowings (repayments) with subsidiaries	22,730			(50,554		)	27,824			—
Investment in subsidiaries	(17,971		)	16,822			1,149			—
Net cash provided by (used in) financing activities	(35,814		)	(51,627		)	59,907			(27,534		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			47			47
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			(1,222		)	6,150			4,928
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			10,096			19,535			29,631
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	8,874		$	25,685		$	34,559