Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2019

Condensed Financial Information Disclosure [Abstract]

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables include condensed consolidating financial information as of June 30, 2019 and December 31, 2018, and for the three and six months ended June 30, 2019 and 2018, respectively, 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 June 30, 2019

(Unaudited, in thousands)



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—	$	8,933		$	28,807	$	—		$	37,740
Contracts-in-transit and vehicle receivables, net	—		189,490			63,039		—			252,529
Accounts and notes receivable, net	—		144,432			44,057		—			188,489
Intercompany accounts receivable	38,113		15,165			—		(53,278		)	—
Inventories, net	—		1,458,762			334,909		—			1,793,671
Prepaid expenses and other current assets	207		28,110			61,388		—			89,705
TOTAL CURRENT ASSETS	38,320		1,844,892			532,200		(53,278		)	2,362,134
Property and equipment, net	—		1,195,512			227,474		—			1,422,986
Operating lease assets	—		122,336			80,383		—			202,719
Goodwill	—		861,655			101,847		—			963,502
Intangible franchise rights	—		224,392			35,148		—			259,540
Investment in subsidiaries	3,231,068		—			—		(3,231,068		)	—
Other assets	—		5,948			8,932		—			14,880
TOTAL ASSETS	$	3,269,388	$	4,254,735		$	985,984	$	(3,284,346	)	$	5,225,761

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Floorplan notes payable — credit facility and other, net of offset account	$	—	$	1,098,936		$	30,941	$	—		$	1,129,877
Floorplan notes payable — manufacturer affiliates, net of offset account	—		293,731			132,755		—			426,486
Current maturities of long-term debt	—		48,754			22,794		—			71,548
Current operating lease liabilities	—		17,098			6,406		—			23,504
Accounts payable	—		223,755			262,153		—			485,908
Intercompany accounts payable	1,224,502		—			63,364		(1,287,866		)	—
Accrued expenses and other current liabilities			165,118			32,899		—			198,017
TOTAL CURRENT LIABILITIES	1,224,502		1,847,392			551,312		(1,287,866		)	2,335,340
Long-term debt, net of current maturities	879,739		313,092			102,889		—			1,295,720
Operating lease liabilities, net of current portion	—		113,068			80,353		—			193,421
Deferred income taxes and other liabilities	1,082		229,932			6,201		—			237,215
STOCKHOLDERS’ EQUITY
Group 1 stockholders’ equity	1,164,065		2,985,839			245,229		(3,231,068		)	1,164,065
Intercompany note receivable	—		(1,234,588		)	—		1,234,588			—
TOTAL STOCKHOLDERS’ EQUITY	1,164,065		1,751,251			245,229		(1,996,480		)	1,164,065
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,269,388	$	4,254,735		$	985,984	$	(3,284,346	)	$	5,225,761

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, net of offset account	$	—	$	1,217,765		$	41,050	$	—		$	1,258,815
Floorplan notes payable — manufacturer affiliates, net of offset account	—		276,762			141,062		—			417,824
Current maturities of long-term debt	—		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 and other current liabilities	—		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
Deferred income taxes and other liabilities	815		224,718			11,794		—			237,327
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 OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, 2019

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
Revenues	$	—		$	2,278,681		$	727,008		$	—		$	3,005,689
Cost of sales	—			1,901,972			649,464			—			2,551,436
Gross profit	—			376,709			77,544			—			454,253
Selling, general and administrative expenses	1,158			265,584			71,973			—			338,715
Depreciation and amortization expense	—			14,178			3,686			—			17,864
Asset impairments	—			—			537			—			537
Income (loss) from operations	(1,158		)	96,947			1,348			—			97,137
Other income (expense)
Floorplan interest expense	—			(14,000		)	(1,943		)	—			(15,943		)
Other interest income (expense), net	—			(16,611		)	(1,350		)	—			(17,961		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(1,158		)	66,336			(1,945		)	—			63,233
Benefit (provision) for income taxes	239			(15,314		)	1,067			—			(14,008		)
Equity in earnings of subsidiaries	50,144			—			—			(50,144		)	—
Net income (loss)	$	49,225		$	51,022		$	(878	)	$	(50,144	)	$	49,225
Comprehensive income (loss)	(13,781		)	(9,761		)	(4,020		)	13,781			(13,781		)
Comprehensive income (loss) attributable to parent	$	35,444		$	41,261		$	(4,898	)	$	(36,363	)	$	35,444

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Six Months Ended June 30, 2019

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
Revenues	$	—		$	4,341,463		$	1,472,602		$	—		$	5,814,065
Cost of sales	—			3,617,837			1,310,472			—			4,928,309
Gross profit	—			723,626			162,130			—			885,756
Selling, general and administrative expenses	3,049			517,628			145,746			—			666,423
Depreciation and amortization expense	—			27,412			7,449			—			34,861
Asset impairments	—			—			537			—			537
Income (loss) from operations	(3,049		)	178,586			8,398			—			183,935
Other income (expense)
Floorplan interest expense	—			(27,989		)	(3,657		)	—			(31,646		)
Other interest income (expense), net	—			(33,786		)	(3,094		)	—			(36,880		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(3,049		)	116,811			1,647			—			115,409
Benefit (provision) for income taxes	729			(28,216		)	(49		)	—			(27,536		)
Equity in earnings of subsidiaries	90,193			—			—			(90,193		)	—
Net income (loss)	$	87,873		$	88,595		$	1,598		$	(90,193	)	$	87,873
Comprehensive income (loss)	(14,758		)	(14,345		)	(413		)	14,758			(14,758		)
Comprehensive income (loss) attributable to parent	$	73,115		$	74,250		$	1,185		$	(75,435	)	$	73,115

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, 2018

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
Revenues	$	—		$	2,168,001		$	775,461		$	—		$	2,943,462
Cost of sales	—			1,817,331			687,968			—			2,505,299
Gross profit	—			350,670			87,493			—			438,163
Selling, general and administrative expenses	635			231,923			75,534			—			308,092
Depreciation and amortization expense	—			13,040			3,598			—			16,638
Asset impairments	—			4,268			—			—			4,268
Income (loss) from operations	(635		)	101,439			8,361			—			109,165
Other income (expense)
Floorplan interest expense	—			(12,810		)	(1,753		)	—			(14,563		)
Other interest income (expense), net	—			(17,331		)	(2,083		)	—			(19,414		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(635		)	71,298			4,525			—			75,188
Benefit (provision) for income taxes	153			(17,556		)	(1,322		)	—			(18,725		)
Equity in earnings of subsidiaries	56,945			—			—			(56,945		)	—
Net income (loss)	$	56,463		$	53,742		$	3,203		$	(56,945	)	$	56,463
Comprehensive income (loss)	—			3,778			(24,186		)	—			(20,408		)
Comprehensive income (loss) attributable to parent	$	56,463		$	57,520		$	(20,983	)	$	(56,945	)	$	36,055

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Six Months Ended June 30, 2018

(Unaudited, in thousands)



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
Revenues	$	—		$	4,256,488		$	1,547,000		$	—		$	5,803,488
Cost of sales	—			3,570,133			1,375,429			—			4,945,562
Gross profit	—			686,355			171,571			—			857,926
Selling, general and administrative expenses	2,403			481,088			148,948			—			632,439
Depreciation and amortization expense	—			25,921			7,059			—			32,980
Asset impairments	—			4,268			—			—			4,268
Income (loss) from operations	(2,403		)	175,078			15,564			—			188,239
Other income (expense)
Floorplan interest expense	—			(25,147		)	(3,503		)	—			(28,650		)
Other interest income (expense), net	—			(34,348		)	(3,886		)	—			(38,234		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(2,403		)	115,583			8,175			—			121,355
Benefit (provision) for income taxes	577			(27,336		)	(2,319		)	—			(29,078		)
Equity in earnings of subsidiaries	94,103			—			—			(94,103		)	—
Net income (loss)	$	92,277		$	88,247		$	5,856		$	(94,103	)	$	92,277
Comprehensive income (loss)	—			13,183			(16,315		)	—			(3,132		)
Comprehensive income (loss) attributable to parent	$	92,277		$	101,430		$	(10,459	)	$	(94,103	)	$	89,145

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended June 30, 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	$	87,873		$	126,869		$	38,206		$	252,948
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposition of franchises, property and equipment	—			30,935			7,003			37,938
Purchases of property and equipment, including real estate	—			(91,528		)	(17,710		)	(109,238		)
Other	(305		)	—			—			(305		)
Net cash provided by (used in) investing activities	(305		)	(60,593		)	(10,707		)	(71,605		)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on credit facility - floorplan line and other	—			3,288,391			18,139			3,306,530
Repayments on credit facility - floorplan line and other	—			(3,396,863		)	(28,496		)	(3,425,359		)
Borrowings on credit facility - acquisition line	124,159			—			—			124,159
Repayments on credit facility - acquisition line	(117,934		)	—			—			(117,934		)
Debt issue costs	—			(3,056		)	—			(3,056		)
Borrowings on other debt	—			18,139			58,729			76,868
Principal payments on other debt	—			(28,834		)	(61,353		)	(90,187		)
Borrowings on debt related to real estate	—			33,184			—			33,184
Principal payments on debt related to real estate, net of debt issue costs				(47,938		)	(5,349		)	(53,287		)
Employee stock purchase plan purchases, net of employee tax withholdings	1,005			—			—			1,005
Dividends paid	(9,691		)	—			—			(9,691		)
Borrowings (repayments) with subsidiaries	65,852			(75,773		)	9,921			—
Investment in subsidiaries	(150,959		)	150,794			165			—
Net cash provided by (used in) financing activities	(87,568		)	(61,956		)	(8,244		)	(157,768		)
Effect of exchange rate changes on cash	—			—			(755		)	(755		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	—			4,320			18,500			22,820
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			4,613			14,107			18,720
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	8,933		$	32,607		$	41,540

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended June 30, 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	$	92,277		$	155,215		$	15,614		$	263,106
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid in acquisitions, net of cash received	—			(31,144		)	(43,721		)	(74,865		)
Proceeds from disposition of franchises, property and equipment	—			73,785			2,138			75,923
Purchases of property and equipment, including real estate	—			(56,116		)	(32,114		)	(88,230		)
Other	(400		)	(255		)	—			(655		)
Net cash provided by (used in) investing activities	(400		)	(13,730		)	(73,697		)	(87,827		)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on credit facility - floorplan line and other	—			3,261,353			62,445			3,323,798
Repayments on credit facility - floorplan line and other	—			(3,412,939		)	(48,555		)	(3,461,494		)
Borrowings on credit facility - acquisition line	98,596			—			—			98,596
Repayments on credit facility - acquisition line	(84,884		)	—			—			(84,884		)
Borrowings on other debt	—			60,081			51,061			111,142
Principal payments on other debt	(24,741		)	(24,209		)	(26,834		)	(75,784		)
Borrowings on debt related to real estate	—			42,656			12,055			54,711
Principal payments on debt related to real estate, net of debt issue costs	—			(54,144		)	(9,224		)	(63,368		)
Employee stock purchase plan purchases, net of employee tax withholdings	11			—			—			11
Repurchases of common stock, amounts based on settlement date	(51,276		)	—			—			(51,276		)
Proceeds from termination of mortgage swap	—			918			—			918
Dividends paid	(10,836		)	—			—			(10,836		)
Borrowings (repayments) with subsidiaries	(35,703		)	18,141			17,562			—
Investment in subsidiaries	16,956			(34,762		)	17,806			—
Net cash provided by (used in) financing activities	(91,877		)	(142,905		)	76,316			(158,466		)
Effect of exchange rate changes on cash	—			—			(2,812		)	(2,812		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	—			(1,420		)	15,421			14,001
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			10,096			19,535			29,631
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	8,676		$	34,956		$	43,632