8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 26, 2008

Group 1 Automotive, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	1-13461	76-0506313
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

950 Echo Lane, Suite 100
Houston, Texas 77024
(Address of principal executive offices) (Zip code)

(713) 647-5700
(Registrant’s telephone number including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act 17 CFR 240.13e-2(c))

Item 2.02. Results of Operations and Financial Condition.

On February 26, 2008, Group 1 Automotive, Inc., a Delaware corporation, issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2007. A copy of the press release is attached hereto as Exhibit 99.1.

As provided in General Instruction B.2. of Form 8-K, the information in this Item 2.02 (including the press release attached as Exhibit 99.1 incorporated by reference in this Item 2.02) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

99.1    Press Release of Group 1 Automotive, Inc., dated as of February 26, 2008.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Group 1 Automotive, Inc.
February 26, 2008	By:	/s/ John C. Rickel
Date		John C. Rickel, Senior Vice President
		and Chief Financial Officer

INDEX TO EXHIBITS

99.1 Press Release of Group 1 Automotive, Inc., dated as of February 26, 2008.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE
TUESDAY, FEB. 26, 2008

GROUP 1 AUTOMOTIVE REPORTS FOURTH-QUARTER 2007 FINANCIAL RESULTS

2008 Full-Year Acquisition Target, Guidance and Outlook Announced

HOUSTON, Feb. 26, 2008 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported adjusted net income for the fourth quarter ended Dec. 31, 2007, of $15.7 million, or $0.70 per diluted share. As shown in the attached tables, this compares to adjusted net income of $16.3 million, or $0.67 per diluted share, for the prior-year quarter. The 2007 fourth-quarter results included a $16.1 million pretax charge for asset impairments. Including this charge, net income was $5.5 million, or $0.24 per diluted share.

For the fourth quarter, same-store revenues fell 1.9 percent, to $1.43 billion, reflecting declines of 2.4 percent and 3.8 percent in new vehicle and total used vehicle revenues, respectively. The used vehicle decline is primarily explained by a 14.9 percent reduction in wholesale revenues, consistent with Group 1’s strategy to reduce this unprofitable business. New vehicle sales continued to be adversely impacted by weak domestic brand performance and difficult macro-economic conditions affecting both the West and Northeast market areas. Partially offsetting these declines were an 8.1 percent increase in finance and insurance (F&I) revenues and a 2.0 percent rise in parts and service revenues. Same-store gross margin was 15.4 percent, down 10 basis points from the fourth quarter 2006. The lower gross margin is more than explained by a 170 basis-point decline in total used vehicle margin, partially offset by a 10 basis-point increase in parts and service margin and a 14.4 percent increase in F&I profit to $1,128 per retail unit.

On a consolidated basis, selling, general and administrative (SG&A) expense as a percent of gross profit improved 130 basis points, to 79.0 percent, reflecting a 1.9 percent, or $3.5 million, reduction in SG&A expense from the fourth quarter 2006.

“Business conditions in most of our market areas remained challenging during the quarter, but overall we are pleased that the initiatives we are implementing in our F&I and parts and service businesses are starting to gain traction,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “We have more work to do, but as a result of our focus on our service and F&I operations, we are better positioned to maneuver through this softer retail vehicle environment.”

In connection with its annual assessment of indefinite-lived intangible assets, Group 1 determined that the fair value of six of its dealerships no longer supported the carrying value associated with them. As a result, the company recorded a non-cash, pretax charge of $9.2 million, or $0.26 per diluted share. The company determined the impairment charge in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” In addition, the company announced that it determined that the fair market value of some of its dealerships no longer supported the carrying value of certain other long-lived

Group 1 Automotive, Inc.
 

assets associated with them. As a result, the company recorded a non-cash, pretax charge of $6.9 million, or $0.20 per diluted share, in the fourth quarter 2007. The company determined the impairment charge in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” and SFAS No. 13, “Accounting for Leases.” The charge recorded by the company reflects its estimate of the fair value of the stores’ fixed assets. These charges were excluded from the 2007 full-year guidance announced Oct. 30, 2007.

Full-Year Results
For the year ended Dec. 31, 2007, on an adjusted basis as shown in the attached tables, net income decreased 8.4 percent to $82.5 million, or $3.52 per diluted share, a 4.3 percent decline from 2006. Adjustments for both years included impairment charges and bond redemption losses. Revenues increased 5.1 percent, to $6.39 billion, primarily due to acquisitions. Gross profit increased 3.3 percent reflecting increases in parts and service and F&I partially offset by lower new and used vehicle profits. SG&A as a percent of gross profit was 78.1 percent in 2007, up 140 basis points from 2006. On a same-store basis, revenues were down 2.5 percent, reflecting declines in new and used vehicles that were partially offset by increases in parts and service and F&I. Same-store gross margin held at 15.8 percent from the prior year, primarily reflecting an increased mix of the higher-margin parts and service business, as well as a 4.7 percent increase in F&I gross profit.

Acquisition and Disposition Recap
During 2007, Group 1 expanded its geographic footprint in the United States and the United Kingdom by acquiring 14 import/luxury franchises, including five BMW, four Mini and three Mercedes-Benz franchises. The 14 franchises are projected to generate approximately $702.4 million in estimated annual revenues, exceeding Group 1’s 2007 acquisition target of $600 million. In addition, Group 1 disposed of 15 underperforming franchises with 12-month revenues of $154.8 million during 2007.

2008 Acquisition Target / smart center Opening Announced
Group 1 has set a target of acquiring franchises with approximately $300 million in estimated annual revenues in 2008.

Toward this target, Group 1 opened smart center Beverly Hills in January 2008. The franchise is operating out of Group 1’s Mercedes-Benz of Beverly Hills facility complex and is expected to generate $9.5 million in estimated annual revenues.

2008 Full-Year Guidance and Outlook Announced
Group 1 announced its 2008 full-year guidance of $2.95 to $3.25 based on its outlook and the following assumptions:

• Industry seasonally adjusted annual sales rate (SAAR) of 15.0 to 15.5 million vehicles

• Same-store revenues three percent to five percent lower

• SG&A expense as a percent of gross profit at 78 percent to 79 percent, excluding any one-time items, as lower sales revenues are expected to offset cost improvements

• Libor interest rates at 3.5 percent throughout 2008

• Tax rate of 38 percent

• Estimated average diluted shares outstanding of 22.5 million

• Guidance excludes the impact of future acquisitions and dispositions, as well as the potential related one-time costs estimated at $10 million to $15 million.

Fourth-Quarter Earnings Conference Call
A conference call to discuss fourth-quarter financial results and Group 1’s 2008 outlook and strategy will be held at 10 a.m. EST on Tuesday, Feb. 26.

Group 1 Automotive, Inc.
 

The conference call will be simulcast live on the Internet at www.group1auto.com through the Investor Relations section. A replay will be available for 30 days.

The conference call will also be available live by dialing in 10 minutes prior to the call at: 800-257-3401 (domestic) or 303-205-0066 (international).

A telephonic replay will be available following the call through March 4, by dialing: 800-405-2236 (domestic) or 303-590-3000 (international), with passcode: 11108789#.

About Group 1 Automotive, Inc.
Group 1 owns and operates 104 automotive dealerships, 143 franchises, and 26 collision service centers in the United States and United Kingdom that offer 32 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks; arranges related financing, vehicle service and insurance contracts; provides maintenance and repair services; and sells replacement parts.

Group 1 Automotive can be reached on the Internet at www.group1auto.com.

This press release contains “forward-looking statements,” which are statements related to future, not past, events. In this context, the forward-looking statements often include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or “will.” Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) general economic and business conditions, (b) the level of manufacturer incentives, (c) the future regulatory environment, (d) our ability to obtain an inventory of desirable new and used vehicles, (e) our relationship with our automobile manufacturers and the willingness of manufacturers to approve future acquisitions, (f) our cost of financing and the availability of credit for consumers, (g) our ability to complete acquisitions and dispositions and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) our ability to retain key personnel. These factors, as well as additional factors that could affect our forward-looking statements, are described in our Form 10-K under the headings “Business—Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook.

Group 1 Automotive, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

	Three Months Ended December 31,									Twelve Months Ended December 31,
	2007			2006			% Change			2007			2006			% Change
REVENUES:
New vehicle retail sales	$	954,577		$	949,751			0.5	%	$	3,985,694		$	3,787,578			5.2	%
Used vehicle retail sales		274,123			263,061			4.2			1,168,868			1,111,672			5.1
Used vehicle wholesale sales		72,989			78,659			(7.2	)		317,878			329,669			(3.6	)
Parts and service		177,060			169,133			4.7			711,650			661,936			7.5
Finance and insurance		50,616			46,456			9.0			208,907			192,629			8.5
Total revenues		1,529,365			1,507,060			1.5	%		6,392,997			6,083,484			5.1	%
COST OF SALES:
New vehicle retail sales		892,681			884,238			1.0	%		3,719,012			3,515,568			5.8	%
Used vehicle retail sales		245,790			230,104			6.8			1,032,864			968,264			6.7
Used vehicle wholesale sales		76,050			80,504			(5.5	)		321,886			332,758			(3.3	)
Parts and service		80,851			77,749			4.0			322,856			302,094			6.9
Total cost of sales		1,295,372			1,272,595			1.8	%		5,396,618			5,118,684			5.4	%
GROSS PROFIT		233,993			234,465			(0.2	)%		996,379			964,800			3.3	%
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		184,757			188,301			(1.9	)%		778,061			739,765			5.2	%
DEPRECIATION AND AMORTIZATION EXPENSE		5,326			4,755			12.0	%		20,897			18,138			15.2	%
ASSET IMPAIRMENTS		16,083			2,241			617.7	%		16,784			2,241			649.0	%
INCOME FROM OPERATIONS		27,827			39,168			(29.0	)%		180,637			204,656			(11.7	)%
OTHER INCOME (EXPENSE):
Floorplan interest expense		(12,235	)		(11,739	)		4.2	%		(48,117	)		(46,682	)		3.1	%
Other interest expense, net		(7,054	)		(5,430	)		29.9			(25,471	)		(18,783	)		35.6
Other income (expense), net		193			525			(63.2	)		(1,026	)		157			(753.5	)
INCOME BEFORE INCOME TAXES		8,731			22,524			(61.2	)%		106,023			139,348			(23.9	)%
PROVISION FOR INCOME TAXES		3,257			7,737			(57.9	)%		38,071			50,958			(25.3	)%
NET INCOME	$	5,474		$	14,787			(63.0	)%	$	67,952		$	88,390			(23.1	)%
DILUTED EARNINGS PER SHARE:	$	0.24		$	0.61			(60.7	)%	$	2.90		$	3.62			(19.9	)%
Weighted average diluted shares outstanding		22,445			24,063			(6.7	)%		23,406			24,446			(4.3	)%

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Dollars in thousands)

	December 31,			December 31,
	2007			2006			% Change
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents	$	33,749		$	39,313			(14.2	)%
Contracts in transit and vehicle receivables, net		193,401			189,004			2.3
Accounts and notes receivable, net		83,687			76,793			9.0
Inventories		899,792			830,628			8.3
Deferred income taxes		18,287			17,176			6.5
Prepaid expenses and other current assets		31,168			25,098			24.2
Total current assets		1,260,084			1,178,012			7.0
PROPERTY AND EQUIPMENT, net		429,238			230,385			86.3
GOODWILL AND OTHER INTANGIBLES		787,245			676,325			16.4
OTHER ASSETS		28,730			29,233			(1.7	)
Total assets	$	2,505,297		$	2,113,955			18.5	%
LIABILITIES AND STOCKHOLDERS’ EQUITY:
CURRENT LIABILITIES:
Floorplan notes payable — credit facility	$	670,820		$	437,288			53.4	%
Floorplan notes payable — manufacturer affiliates		170,911			287,978			(40.7	)
Current maturities of long-term debt		12,260			854			1,335.6
Accounts payable		113,589			117,536			(3.4	)
Accrued expenses		101,951			97,302			4.8
Total current liabilities		1,069,531			940,958			13.7
2.25% CONVERTIBLE SENIOR NOTES		281,915			281,327			0.2
8.25% SENIOR SUBORDINATED NOTES		100,273			135,248			(25.9	)
MORTGAGE FACILITY, net of current maturities		124,633			—			N/A
OTHER LONG-TERM DEBT, net of current maturities		33,017			12,064			173.7
ACQUISITION LINE		135,000			—			N/A
DEFERRED INCOME TAXES		14,711			2,787			427.8
LIABILITIES FROM INTEREST RISK MANAGEMENT ACTIVITIES		16,188			—			N/A
OTHER LIABILITIES		29,017			27,826			4.3
Total liabilities before deferred revenues		1,804,285			1,400,210			28.9
DEFERRED REVENUES		16,531			20,905			(20.9	)
STOCKHOLDERS’ EQUITY:
Common stock		255			252			1.2
Additional paid-in capital		293,675			292,278			0.5
Retained earnings		502,783			448,115			12.2
Accumulated other comprehensive income (loss)		(9,560	)		591			(1,717.6	)
Treasury stock		(102,672	)		(48,396	)		112.1
Total stockholders’ equity		684,481			692,840			(1.2	)
Total liabilities and stockholders’ equity	$	2,505,297		$	2,113,955			18.5	%
BALANCE SHEET DATA:
Working capital	$	190,553		$	237,054			(19.6	)%
Current ratio		1.18			1.25			(5.6	)
Long-term debt to capitalization		50	%		38	%
Excluding Mortgage Facility		45	%		38	%
Inventory days supply: (1)
New vehicle		63			63			—	%
Used vehicle		35			31			12.9

⁽¹⁾ Inventory days supply equals units in inventory as of the end of the period, divided by unit sales for the month then ended, times 30 days.

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)

		Three Months Ended						Year Ended,
		December 31,						December 31,
		2007			2006			2007			2006
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:
Region	Geographic Market
Eastern	Massachusetts		10.4	%		11.3	%		11.7	%		12.5	%
	New Jersey		5.8			5.0			5.5			3.3
	Louisiana		4.0			3.8			3.9			5.0
	New Hampshire		3.5			3.6			3.7			3.8
	Georgia		3.1			3.6			3.5			3.8
	Florida		3.0			3.8			3.4			4.5
	New York		3.0			2.3			2.6			2.3
	Mississippi		1.2			1.6			1.5			0.6
	Alabama		0.7			0.9			0.8			0.3
	South Carolina		0.1			—			—			—
			34.8			35.9			36.6			36.1
Central	Texas		34.5			32.3			32.0			33.4
	Oklahoma		9.2			9.9			9.6			10.6
	New Mexico		1.8			2.0			1.9			2.1
	Kansas		1.2			—			1.0			—
	Colorado		—			—			—			0.2
			46.7			44.2			44.5			46.3
Western	California		16.9			19.9			17.4			17.6
International	United Kingdom		1.6			—			1.5			—
			100.0	%		100.0	%		100.0	%		100.0	%
NEW VEHICLE UNIT SALES BRAND MIX:
Toyota/Scion/Lexus			35.1	%		36.7	%		35.9	%		36.0	%
Ford			11.4			12.2			12.4			15.1
Nissan/Infiniti			12.3			12.7			12.3			11.2
Honda/Acura			12.4			11.5			12.2			10.1
Chrysler			8.3			8.8			8.2			9.6
GM			6.3			7.4			6.5			8.0
BMW/Mini			7.5			4.0			6.6			3.6
Daimler			4.3			3.7			3.2			3.2
Other			2.4			3.0			2.7			3.2
			100.0	%		100.0	%		100.0	%		100.0	%
NEW VEHICLE UNIT OTHER MIX:
Import			52.7	%		54.4	%		54.7	%		52.6	%
Domestic			24.0			26.3			25.0			30.3
Luxury			23.3			19.3			20.3			17.1
			100.0	%		100.0	%		100.0	%		100.0	%
Car			52.6	%		49.0	%		53.3	%		49.3	%
Truck			47.4			51.0			46.7			50.7
			100.0	%		100.0	%		100.0	%		100.0	%

Group 1 Automotive, Inc.
Additional Information — Consolidated
(Unaudited)
(Dollars in thousands, except per unit amounts)

	Three Months Ended December 31,									Twelve Months Ended December 31,
	2007			2006			% Change			2007			2006			% Change
REVENUES:
New vehicle retail sales	$	954,577		$	949,751			0.5	%	$	3,985,694		$	3,787,578			5.2	%
Used vehicle retail sales		274,123			263,061			4.2			1,168,868			1,111,672			5.1
Used vehicle wholesale sales		72,989			78,659			(7.2	)		317,878			329,669			(3.6	)
Total used		347,112			341,720			1.6			1,486,746			1,441,341			3.2
Parts and service		177,060			169,133			4.7			711,650			661,936			7.5
Finance and insurance		50,616			46,456			9.0			208,907			192,629			8.5
Total	$	1,529,365		$	1,507,060			1.5	%	$	6,392,997		$	6,083,484			5.1	%
GROSS MARGIN:
New vehicle retail sales		6.5	%		6.9	%					6.7	%		7.2	%
Used vehicle retail sales		10.3			12.5						11.6			12.9
Used vehicle wholesale sales		(4.2	)		(2.3	)					(1.3	)		(0.9	)
Total used		7.3			9.1						8.9			9.7
Parts and service		54.3			54.0						54.6			54.4
Finance and insurance		100.0			100.0						100.0			100.0
Total		15.3	%		15.6	%					15.6	%		15.9	%
GROSS PROFIT:
New vehicle retail sales	$	61,896		$	65,513			(5.5	)%	$	266,682		$	272,010			(2.0	)%
Used vehicle retail sales		28,333			32,957			(14.0	)		136,004			143,408			(5.2	)
Used vehicle wholesale sales		(3,061	)		(1,845	)		(65.9	)		(4,008	)		(3,089	)		(29.8	)
Total used		25,272			31,112			(18.8	)		131,996			140,319			(5.9	)
Parts and service		96,209			91,384			5.3			388,794			359,842			8.0
Finance and insurance		50,616			46,456			9.0			208,907			192,629			8.5
Total	$	233,993		$	234,465			(0.2	)%	$	996,379		$	964,800			3.3	%
UNITS SOLD:
Retail new vehicles sold		30,307			31,605			(4.1	)%		131,719			129,198			2.0	%
Retail used vehicles sold		15,259			15,992			(4.6	)		67,286			67,868			(0.9	)
Wholesale used vehicles sold		10,231			11,083			(7.7	)		45,524			45,706			(0.4	)
Total used		25,490			27,075			(5.9	)%		112,810			113,574			(0.7	)%
GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	2,042		$	2,073			(1.5	)%	$	2,025		$	2,105			(3.8	)%
Used vehicle retail sales		1,857			2,061			(9.9	)		2,021			2,113			(4.4	)
Used vehicle wholesale sales		(299	)		(166	)		(80.1	)		(88	)		(68	)		(29.4	)
Total used		991			1,149			(13.8	)		1,170			1,235			(5.3	)
Finance and insurance (per retail unit)		1,111			976			13.8			1,050			977			7.5
OTHER:
SG&A expenses	$	184,757		$	188,301			(1.9	)%	$	778,061		$	739,765			5.2	%
SG&A as % revenues		12.1	%		12.5	%					12.2	%		12.2	%
SG&A as % gross profit		79.0	%		80.3	%					78.1	%		76.7	%
Operating margin		1.8	%		2.6	%					2.8	%		3.4	%
Pretax income margin		0.6	%		1.5	%					1.7	%		2.3	%
Floorplan interest	$	(12,235	)	$	(11,739	)		4.2	%	$	(48,117	)	$	(46,682	)		3.1	%
Floorplan assistance		8,886			9,602			(7.5	)		38,183			38,129			0.1
Net floorplan (expense) income	$	(3,349	)	$	(2,137	)		56.7	%	$	(9,934	)	$	(8,553	)		16.1	%

Group 1 Automotive, Inc.
Additional Information — Same Store⁽¹⁾
(Unaudited)
(Dollars in thousands, except per unit amounts)

	Three Months Ended December 31,									Twelve Months Ended December 31,
	2007			2006			% Change			2007			2006			% Change
REVENUES:
New vehicle retail sales	$	901,944		$	924,579			(2.4	)%	$	3,599,205		$	3,698,628			(2.7	)%
Used vehicle retail sales		251,286			252,491			(0.5	)		1,035,880			1,064,560			(2.7	)
Used vehicle wholesale sales		64,932			76,273			(14.9	)		273,348			317,049			(13.8	)
Total used		316,218			328,764			(3.8	)		1,309,228			1,381,609			(5.2	)
Parts and service		166,104			162,827			2.0			649,414			634,997			2.3
Finance and insurance		49,152			45,472			8.1			196,261			187,535			4.7
Total	$	1,433,418		$	1,461,642			(1.9	)%	$	5,754,108		$	5,902,769			(2.5	)%
GROSS MARGIN:
New vehicle retail sales		6.4	%		6.9	%					6.6	%		7.2	%
Used vehicle retail sales		10.5			12.5						11.9			12.9
Used vehicle wholesale sales		(4.5	)		(2.1	)					(1.5	)		(0.7	)
Total used		7.4			9.1						9.1			9.7
Parts and service		54.2			54.1						54.4			54.6
Finance and insurance		100.0			100.0						100.0			100.0
Total		15.4	%		15.5	%					15.8	%		15.8	%
GROSS PROFIT:
New vehicle retail sales	$	57,989		$	63,585			(8.8	)%	$	238,540		$	265,206			(10.1	)%
Used vehicle retail sales		26,326			31,609			(16.7	)		123,343			136,934			(9.9	)
Used vehicle wholesale sales		(2,914	)		(1,619	)		(80.0	)		(4,013	)		(2,267	)		(77.0	)
Total used		23,412			29,990			(21.9	)		119,330			134,667			(11.4	)
Parts and service		90,013			88,051			2.2			353,173			346,466			1.9
Finance and insurance		49,152			45,472			8.1			196,261			187,535			4.7
Total	$	220,566		$	227,098			(2.9	)%	$	907,304		$	933,874			(2.8	)%
UNITS SOLD:
Retail new vehicles sold		29,090			30,792			(5.5	)%		119,565			126,118			(5.2	)%
Retail used vehicles sold		14,473			15,327			(5.6	)		61,073			64,828			(5.8	)
Wholesale used vehicles sold		9,667			10,727			(9.9	)		40,764			43,930			(7.2	)
Total used		24,140			26,054			(7.3	)%		101,837			108,758			(6.4	)%
GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	1,993		$	2,065			(3.5	)%	$	1,995		$	2,103			(5.1	)%
Used vehicle retail sales		1,819			2,062			(11.8	)		2,020			2,112			(4.4	)
Used vehicle wholesale sales		(301	)		(151	)		(99.3	)		(98	)		(52	)		(88.5	)
Total used		970			1,151			(15.7	)		1,172			1,238			(5.3	)
Finance and insurance (per retail unit)		1,128			986			14.4			1,086			982			10.6
OTHER:
SG&A expenses	$	174,065		$	180,059			(3.3	)%	$	708,255		$	710,006			(0.2	)%
SG&A as % revenues		12.1	%		12.3	%					12.3	%		12.0	%
SG&A as % gross profit		78.9	%		79.3	%					78.1	%		76.0	%
Operating margin		1.8	%		2.8	%					3.0	%		3.5	%
Floorplan interest	$	(11,526	)	$	(11,117	)		3.7	%	$	(43,323	)	$	(44,371	)		(2.4	)%
Floorplan assistance		8,728			9,192			(5.0	)		35,765			36,812			(2.8	)
Net floorplan (expense) income	$	(2,798	)	$	(1,925	)		45.4	%	$	(7,558	)	$	(7,559	)		(0.0	)%

⁽¹⁾ Same store amounts include the results for the identical months in each period presented in the comparison, commencing with the first month we owned the dealership and, in the case of dispositions, ending with the last month we owned it. Same store results also include the activities of our corporate office.

Group 1 Automotive, Inc.
Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(Dollars in thousands, except per share amounts)

NET INCOME RECONCILIATION:

	Three Months Ended December 31,							Twelve Months Ended December 31,
	2007		2006		% Change			2007		2006		% Change
As reported	$	5,474	$	14,787		(63.0	)%	$	67,952	$	88,390		(23.1	)%
Adjustments:
Lease Terminations		—		—					2,760		—
Asset impairments		4,414		552					4,884		533
Franchise Rights impairments		5,784		918					5,913		888
Loss on bond redemption		—		—					1,023		310
Adjusted (1)	$	15,672	$	16,257		(3.6	)%	$	82,532	$	90,121		(8.4	)%

DILUTED EARNINGS PER SHARE RECONCILIATION:

	Three Months Ended December 31,							Twelve Months Ended December 31,
	2007		2006		% Change			2007		2006		% Change
As reported	$	0.24	$	0.61		(60.7	)%	$	2.90	$	3.62		(19.9	)%
Adjustments:
Lease Terminations		—		—					0.12		—
Asset impairments		0.20		0.04					0.21		0.04
Franchise Rights impairments		0.26		0.02					0.25		0.02
Loss on bond redemption		—		—					0.04		—
Adjusted (1)	$	0.70	$	0.67		4.5	%	$	3.52	$	3.68		(4.3	)%

(1) Adjusted net income and adjusted diluted earnings per share means net income or diluted earnings per share, as the case may be, plus the adjustments noted above. We use adjusted net income and adjusted diluted earnings per share in our evaluation of the performance of the company, as we believe that they provide additional information regarding the performance of our operations. We believe the presentation of these measures is relevant and useful to investors because they improve period-to-period comparability and are more reflective of our operating performance. Neither of these measures is a measure of financial performance under GAAP. Accordingly, they should not be considered as substitutes for net income or diluted earnings per share prepared in accordance with GAAP. Although we find these non-GAAP results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our net income and diluted earnings per share calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.