15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables include condensed consolidating financial information as of September 30, 2015 and December 31, 2014, and for the three and nine months ended September 30, 2015 and 2014, 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.

CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2015



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	4,397		$	17,571		$	—		$	21,968
Contracts-in-transit and vehicle receivables, net	—		173,859			31,777			—			205,636
Accounts and notes receivable, net	—		118,137			28,973			—			147,110
Intercompany accounts receivable	—		263,906			—			(263,906		)	—
Inventories, net	—		1,438,310			196,111			—			1,634,421
Deferred income taxes	288		12,811			—			—			13,099
Prepaid expenses and other current assets	785		8,000			13,771			—			22,556
Total current assets	1,073		2,019,420			288,203			(263,906		)	2,044,790
PROPERTY AND EQUIPMENT, net	—		863,526			115,366			—			978,892
GOODWILL	—		814,759			97,880			—			912,639
INTANGIBLE FRANCHISE RIGHTS	—		306,745			33,018			—			339,763
INVESTMENT IN SUBSIDIARIES	2,162,133		—			—			(2,162,133		)	—
OTHER ASSETS	—		8,683			7,283			—			15,966
Total assets	$	2,163,206	$	4,013,133		$	541,750		$	(2,426,039	)	$	4,292,050

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—	$	1,176,385		$	1,128		$	—		$	1,177,513
Offset account related to floorplan notes payable - credit facility	—		(28,073		)	—			—			(28,073		)
Floorplan notes payable — manufacturer affiliates	—		253,361			94,296			—			347,657
Offset account related to floorplan notes payable - manufacturer affiliates	—		(20,001		)	—			—			(20,001		)
Current maturities of long-term debt	—		50,756			5,203			—			55,959
Accounts payable	—		177,270			113,239			—			290,509
Intercompany accounts payable	368,915		—			263,906			(632,821		)	—
Accrued expenses	—		137,675			20,608			—			158,283
Total current liabilities	368,915		1,747,373			498,380			(632,821		)	1,981,847
LONG-TERM DEBT, net of current maturities	679,158		337,858			67,145			—			1,084,161
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—		39,724			—			—			39,724
DEFERRED INCOME TAXES AND OTHER LIABILITIES	—		206,938			10,052			—			216,990
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,115,133		2,050,155			(33,827		)	(2,162,133		)	969,328
Intercompany note receivable	—		(368,915		)	—			368,915			—
Total stockholders’ equity	1,115,133		1,681,240			(33,827		)	(1,793,218		)	969,328
Total liabilities and stockholders’ equity	$	2,163,206	$	4,013,133		$	541,750		$	(2,426,039	)	$	4,292,050

CONDENSED CONSOLIDATED BALANCE SHEET

December 31, 2014



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	25,379		$	15,596	$	—		$	40,975
Contracts-in-transit and vehicle receivables, net	—		218,361			19,087		—			237,448
Accounts and notes receivable, net	—		117,427			33,903		—			151,330
Intercompany accounts receivable	—		276,217			—		(276,217		)	—
Inventories, net	—		1,342,022			214,683		—			1,556,705
Deferred income taxes	196		10,866			—		—			11,062
Prepaid expenses and other current assets	590		22,039			15,070		—			37,699
Total current assets	786		2,012,311			298,339		(276,217		)	2,035,219
PROPERTY AND EQUIPMENT, net	—		839,063			111,325		—			950,388
GOODWILL	—		700,642			129,735		—			830,377
INTANGIBLE FRANCHISE RIGHTS	—		257,502			46,445		—			303,947
INVESTMENT IN SUBSIDIARIES	1,964,442		—			—		(1,964,442		)	—
OTHER ASSETS	—		10,120			11,441		—			21,561
Total assets	$	1,965,228	$	3,819,638		$	597,285	$	(2,240,659	)	$	4,141,492

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—	$	1,137,743		$	5,503	$	—		$	1,143,246
Offset account related to floorplan notes payable - credit facility	—		(39,616		)	—		—			(39,616		)
Floorplan notes payable — manufacturer affiliates	—		207,329			100,327		—			307,656
Offset account related to floorplan notes payable - manufacturer affiliates	—		(22,500		)	—		—			(22,500		)
Current maturities of long-term debt	—		61,185			11,445		—			72,630
Accounts payable	—		176,143			112,177		—			288,320
Intercompany accounts payable	295,421		—			276,217		(571,638		)	—
Accrued expenses	—		149,700			22,763		—			172,463
Total current liabilities	295,421		1,669,984			528,432		(571,638		)	1,922,199
LONG-TERM DEBT, net of current maturities	609,812		347,202			51,823		—			1,008,837
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—		25,311			—		—			25,311
DEFERRED INCOME TAXES AND OTHER LIABILITIES	—		193,077			14,058		—			207,135
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,059,995		1,879,485			2,972		(1,964,442		)	978,010
Intercompany note receivable	—		(295,421		)	—		295,421			—
Total stockholders’ equity	1,059,995		1,584,064			2,972		(1,669,021		)	978,010
Total liabilities and stockholders’ equity	$	1,965,228	$	3,819,638		$	597,285	$	(2,240,659	)	$	4,141,492

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	2,343,567		$	457,002		$	—		$	2,800,569
COST OF SALES:	—			1,995,252			406,935			—			2,402,187
GROSS PROFIT	—			348,315			50,067			—			398,382
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	555			247,054			41,403			—			289,012
DEPRECIATION AND AMORTIZATION EXPENSE	—			10,372			1,439			—			11,811
ASSET IMPAIRMENTS	—			204			712			—			916
INCOME FROM OPERATIONS	(555		)	90,685			6,513			—			96,643
OTHER EXPENSE:
Floorplan interest expense	—			(8,963		)	(722		)	—			(9,685		)
Other interest expense, net	648			(12,738		)	(1,832		)	—			(13,922		)
INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	93			68,984			3,959			—			73,036
PROVISION FOR INCOME TAXES	(35		)	(26,398		)	(1,342		)	—			(27,775		)
EQUITY IN EARNINGS OF SUBSIDIARIES	45,203			—			—			(45,203		)	—
NET INCOME (LOSS)	$	45,261		$	42,586		$	2,617		$	(45,203	)	$	45,261
COMPREHENSIVE LOSS	—			(6,158		)	(36,307		)	—			(42,465		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	45,261		$	36,428		$	(33,690	)	$	(45,203	)	$	2,796

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Nine Months Ended September 30, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	6,629,514		$	1,330,389		$	—		$	7,959,903
COST OF SALES:	—			5,624,527			1,181,537			—			6,806,064
GROSS PROFIT	—			1,004,987			148,852			—			1,153,839
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,612			712,265			126,173			—			841,050
DEPRECIATION AND AMORTIZATION EXPENSE	—			30,847			4,594			—			35,441
ASSET IMPAIRMENTS	—			702			1,253			—			1,955
INCOME FROM OPERATIONS	(2,612		)	261,173			16,832			—			275,393
OTHER EXPENSE:
Floorplan interest expense	—			(26,439		)	(2,607		)	—			(29,046		)
Other interest expense, net	1,845			(38,534		)	(5,372		)	—			(42,061		)
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(767		)	196,200			8,853			—			204,286
BENEFIT (PROVISION) FOR INCOME TAXES	288			(73,375		)	(3,814		)	—			(76,901		)
EQUITY IN EARNINGS OF SUBSIDIARIES	127,864			—			—			(127,864		)	—
NET INCOME (LOSS)	$	127,385		$	122,825		$	5,039		$	(127,864	)	$	127,385
COMPREHENSIVE LOSS	—			(6,919		)	(56,902		)	—			(63,821		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	127,385		$	115,906		$	(51,863	)	$	(127,864	)	$	63,564

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30, 2014



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	2,175,604		$	450,844		$	—		$	2,626,448
COST OF SALES:	—			1,853,668			398,071			—			2,251,739
GROSS PROFIT	—			321,936			52,773			—			374,709
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	559			220,142			43,532			—			264,233
DEPRECIATION AND AMORTIZATION EXPENSE	—			9,296			1,450			—			10,746
ASSET IMPAIRMENTS	—			4,252			5,121			—			9,373
INCOME FROM OPERATIONS	(559		)	88,246			2,670			—			90,357
OTHER EXPENSE:
Floorplan interest expense	—			(8,544		)	(1,908		)	—			(10,452		)
Other interest expense, net	567			(12,264		)	(1,549		)	—			(13,246		)
Loss on extinguishment of long-term debt	—			(22,790		)	—			—			(22,790		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	8			44,648			(787		)	—			43,869
(PROVISION) BENEFIT FOR INCOME TAXES	(3		)	(20,372		)	2,668			—			(17,707		)
EQUITY IN EARNINGS OF SUBSIDIARIES	26,157			—			—			(26,157		)	—
NET INCOME (LOSS)	$	26,162		$	24,276		$	1,881		$	(26,157	)	$	26,162
COMPREHENSIVE INCOME (LOSS)	—			2,366			(21,938		)	—			(19,572		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	26,162		$	26,642		$	(20,057	)	$	(26,157	)	$	6,590

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Nine Months Ended September 30, 2014



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	6,070,827		$	1,328,122		$	—		$	7,398,949
COST OF SALES:	—			5,142,382			1,174,588			—			6,316,970
GROSS PROFIT	—			928,445			153,534			—			1,081,979
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,315			660,321			131,125			—			793,761
DEPRECIATION AND AMORTIZATION EXPENSE	—			27,232			4,192			—			31,424
ASSET IMPAIRMENTS	—			5,973			5,121			—			11,094
INCOME FROM OPERATIONS	(2,315		)	234,919			13,096			—			245,700
OTHER EXPENSE:
Floorplan interest expense	—			(25,489		)	(6,206		)	—			(31,695		)
Other interest expense, net	1,696			(34,326		)	(3,696		)	—			(36,326		)
Loss on extinguishment of long-term debt	—			(46,403		)	—			—			(46,403		)
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(619		)	128,701			3,194			—			131,276
BENEFIT (PROVISION) FOR INCOME TAXES	232			(57,672		)	491			—			(56,949		)
EQUITY IN EARNINGS OF SUBSIDIARIES	74,714			—			—			(74,714		)	—
NET INCOME (LOSS)	$	74,327		$	71,029		$	3,685		$	(74,714	)	$	74,327
COMPREHENSIVE LOSS	—			(494		)	(7,329		)	—			(7,823		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	74,327		$	70,535		$	(3,644	)	$	(74,714	)	$	66,504

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	127,385		$	93,518		$	9,965		$	230,868
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(212,252		)	—			(212,252		)
Proceeds from disposition of franchises, property and equipment	—			8,986			698			9,684
Purchases of property and equipment, including real estate	—			(61,052		)	(17,287		)	(78,339		)
Other	—			6,047			—			6,047
Net cash used in investing activities	—			(258,271		)	(16,589		)	(274,860		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			5,529,338			—			5,529,338
Repayments on credit facility - floorplan line and other	—			(5,479,152		)	—			(5,479,152		)
Borrowings on credit facility - acquisition line	584,643			—			—			584,643
Repayment on credit facility - acquisition line	(515,944		)	—			—			(515,944		)
Principal payments on real estate credit facility	—			(2,505		)	—			(2,505		)
Borrowings on other debt	—			460			32,915			33,375
Principal payments on other debt	—			(1,157		)	(41,772		)	(42,929		)
Borrowings on debt related to real estate	—			—			22,430			22,430
Principal payments on debt related to real estate	—			(15,843		)	(2,693		)	(18,536		)
Employee stock purchase plan purchases, net of employee tax withholdings	(789		)	—			—			(789		)
Repurchases of common stock, amounts based on settlement date	(66,746		)	—			—			(66,746		)
Tax effect from stock-based compensation	—			1,827			—			1,827
Dividends paid	(14,781		)	—			—			(14,781		)
Borrowings (repayments) with subsidiaries	85,465			(73,365		)	(12,100		)	—
Investment in subsidiaries	(199,233		)	184,168			15,065			—
Net cash (used in) provided by financing activities	(127,385		)	143,771			13,845			30,231
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(5,246		)	(5,246		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			(20,982		)	1,975			(19,007		)
CASH AND CASH EQUIVALENTS, beginning of period	—			25,379			15,596			40,975
CASH AND CASH EQUIVALENTS, end of period	$	—		$	4,397		$	17,571		$	21,968

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2014



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	74,327		$	204,887		$	(7,378	)	$	271,836
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(306,467		)	(2,790		)	(309,257		)
Proceeds from disposition of franchises, property and equipment	—			138,546			254			138,800
Purchases of property and equipment, including real estate	—			(85,239		)	(6,106		)	(91,345		)
Other	—			(5,832		)	—			(5,832		)
Net cash used in investing activities	—			(258,992		)	(8,642		)	(267,634		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			6,047,392			—			6,047,392
Repayments on credit facility - floorplan line and other	—			(6,086,414		)	—			(6,086,414		)
Borrowings on credit facility - acquisition line	314,963			—			—			314,963
Repayment on credit facility - acquisition line	(374,989		)	—			—			(374,989		)
Borrowings on real estate credit facility	—			200			—			200
Principal payments on real estate credit facility	—			(9,081		)	—			(9,081		)
Net borrowings on 5.00% Senior Unsecured Notes	539,600			—			—			539,600
Debt issue costs	(1,881		)	—			—			(1,881		)
Repurchase of 3.00% Convertible Notes	(260,074		)	—			—			(260,074		)
Proceeds from Call/Warrant Unwind related to 3.00% Convertible Notes	32,697			—			—			32,697
Conversion and redemption of 2.25% Convertible Notes	(182,756		)	—			—			(182,756		)
Borrowings on other debt	—			—			78,710			78,710
Principal payments on other debt	—			—			(70,267		)	(70,267		)
Borrowings on debt related to real estate	—			52,279			13,349			65,628
Principal payments on debt related to real estate	—			(29,458		)	(9,566		)	(39,024		)
Employee stock purchase plan purchases, net of employee tax withholdings	187			—			—			187
Repurchases of common stock, amounts based on settlement date	(16,947		)	—			—			(16,947		)
Tax effect from stock-based compensation	—			1,145			—			1,145
Dividends paid	(12,291		)	—			—			(12,291		)
Borrowings (repayments) with subsidiaries	87,136			(94,311		)	7,175			—
Investment in subsidiaries	(199,972		)	200,094			(122		)	—
Distributions to parent	—			2,118			(2,118		)	—
Net cash (used in) provided by financing activities	(74,327		)	83,964			17,161			26,798
EFFECT OF EXCHANGE RATE CHANGES ON CASH	26			—			(589		)	(563		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	26			29,859			552			30,437
CASH AND CASH EQUIVALENTS, beginning of period	—			4,306			15,909			20,215
CASH AND CASH EQUIVALENTS, end of period	$	26		$	34,165		$	16,461		$	50,652