15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables include condensed consolidating financial information as of June 30, 2016 and December 31, 2015, and for the three and six months ended June 30, 2016 and 2015, 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% Senior 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

June 30, 2016



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	5,495		$	19,470	$	—		$	24,965
Contracts-in-transit and vehicle receivables, net	—			173,024			39,280		—			212,304
Accounts and notes receivable, net	—			116,770			34,885		—			151,655
Intercompany accounts receivable	—			4,386			—		(4,386		)	—
Inventories, net	—			1,532,707			251,407		—			1,784,114
Prepaid expenses and other current assets	684			8,643			19,592		—			28,919
Total current assets	684			1,841,025			364,634		(4,386		)	2,201,957
PROPERTY AND EQUIPMENT, net	—			938,378			142,854		—			1,081,232
GOODWILL	—			807,781			74,200		—			881,981
INTANGIBLE FRANCHISE RIGHTS	—			285,659			37,315		—			322,974
INVESTMENT IN SUBSIDIARIES	2,584,017			—			—		(2,584,017		)	—
OTHER ASSETS	—			8,126			4,530		—			12,656
Total assets	$	2,584,701		$	3,880,969		$	623,533	$	(2,588,403	)	$	4,500,800

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—		$	1,233,518		$	5,702	$	—		$	1,239,220
Offset account related to floorplan notes payable - credit facility	—			(35,461		)	—		—			(35,461		)
Floorplan notes payable — manufacturer affiliates	—			302,504			94,791		—			397,295
Offset account related to floorplan notes payable - manufacturer affiliates	—			(27,500		)	—		—			(27,500		)
Current maturities of long-term debt and short-term financing	—			28,246			14,747		—			42,993
Accounts payable	—			158,500			154,719		—			313,219
Intercompany accounts payable	718,412			—			4,386		(722,798		)	—
Accrued expenses	—			156,948			25,160		—			182,108
Total current liabilities	718,412			1,816,755			299,505		(722,798		)	2,111,874
LONG-TERM DEBT, net of current maturities	845,010			340,094			65,836		—			1,250,940
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—			49,438			—		—			49,438
DEFERRED INCOME TAXES AND OTHER LIABILITIES	(678		)	212,649			9,025		—			220,996
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,021,957			2,180,445			249,167		(2,584,017		)	867,552
Intercompany note receivable	—			(718,412		)	—		718,412			—
Total stockholders’ equity	1,021,957			1,462,033			249,167		(1,865,605		)	867,552
Total liabilities and stockholders’ equity	$	2,584,701		$	3,880,969		$	623,533	$	(2,588,403	)	$	4,500,800

CONDENSED CONSOLIDATED BALANCE SHEET

December 31, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	6,338		$	6,699	$	—		$	13,037
Contracts-in-transit and vehicle receivables, net	—			233,275			19,163		—			252,438
Accounts and notes receivable, net	—			132,078			25,690		—			157,768
Intercompany accounts receivable	—			1,192			—		(1,192		)	—
Inventories, net	—			1,533,166			204,585		—			1,737,751
Prepaid expenses and other current assets	5,312			8,946			13,118		—			27,376
Total current assets	5,312			1,914,995			269,255		(1,192		)	2,188,370
PROPERTY AND EQUIPMENT, net	—			916,338			117,643		—			1,033,981
GOODWILL	—			809,775			45,140		—			854,915
INTANGIBLE FRANCHISE RIGHTS	—			285,659			21,929		—			307,588
INVESTMENT IN SUBSIDIARIES	2,388,081			—			—		(2,388,081		)	—
OTHER ASSETS	—			5,950			5,912		—			11,862
Total assets	$	2,393,393		$	3,932,717		$	459,879	$	(2,389,273	)	$	4,396,716

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—		$	1,261,606		$	4,113	$	—		$	1,265,719
Offset account related to floorplan notes payable - credit facility	—			(110,759		)	—		—			(110,759		)
Floorplan notes payable — manufacturer affiliates	—			303,810			85,261		—			389,071
Offset account related to floorplan notes payable - manufacturer affiliates	—			(25,500		)	—		—			(25,500		)
Current maturities of long-term debt and short-term financing	—			47,015			7,976		—			54,991
Accounts payable	—			178,544			101,879		—			280,423
Intercompany accounts payable	503,333			—			1,192		(504,525		)	—
Accrued expenses	—			167,509			17,814		—			185,323
Total current liabilities	503,333			1,822,225			218,235		(504,525		)	2,039,268
LONG-TERM DEBT, net of current maturities	834,090			300,788			64,656		—			1,199,534
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—			31,153			—		—			31,153
DEFERRED INCOME TAXES AND OTHER LIABILITIES	(265		)	203,824			4,950		—			208,509
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,056,235			2,078,060			172,038		(2,388,081		)	918,252
Intercompany note receivable	—			(503,333		)	—		503,333			—
Total stockholders’ equity	1,056,235			1,574,727			172,038		(1,884,748		)	918,252
Total liabilities and stockholders’ equity	$	2,393,393		$	3,932,717		$	459,879	$	(2,389,273	)	$	4,396,716

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended June 30, 2016



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	2,207,383		$	575,066		$	—		$	2,782,449
COST OF SALES:	—			1,862,787			509,543			—			2,372,330
GROSS PROFIT	—			344,596			65,523			—			410,119
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	605			243,312			55,105			—			299,022
DEPRECIATION AND AMORTIZATION EXPENSE	—			10,642			2,071			—			12,713
ASSET IMPAIRMENTS	—			1,024			—			—			1,024
INCOME (LOSS) FROM OPERATIONS	(605		)	89,618			8,347			—			97,360
OTHER EXPENSE:
Floorplan interest expense	—			(10,402		)	(1,191		)	—			(11,593		)
Other interest expense, net	—			(16,072		)	(633		)	—			(16,705		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(605		)	63,144			6,523			—			69,062
BENEFIT (PROVISION) FOR INCOME TAXES	227			(23,081		)	372			—			(22,482		)
EQUITY IN EARNINGS OF SUBSIDIARIES	46,958			—			—			(46,958		)	—
NET INCOME (LOSS)	$	46,580		$	40,063		$	6,895		$	(46,958	)	$	46,580
OTHER COMPREHENSIVE LOSS, NET OF TAXES	—			(3,480		)	(6,068		)	—			(9,548		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	46,580		$	36,583		$	827		$	(46,958	)	$	37,032

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Six Months Ended June 30, 2016



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	4,289,016		$	1,101,788		$	—		$	5,390,804
COST OF SALES:	—			3,611,709			979,874			—			4,591,583
GROSS PROFIT	—			677,307			121,914			—			799,221
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	1,808			486,327			104,552			—			592,687
DEPRECIATION AND AMORTIZATION EXPENSE	—			21,238			3,939			—			25,177
ASSET IMPAIRMENTS	—			1,533			423			—			1,956
INCOME (LOSS) FROM OPERATIONS	(1,808		)	168,209			13,000			—			179,401
OTHER EXPENSE:
Floorplan interest expense	—			(20,450		)	(2,153		)	—			(22,603		)
Other interest expense, net	—			(32,124		)	(1,510		)	—			(33,634		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(1,808		)	115,635			9,337			—			123,164
BENEFIT (PROVISION) FOR INCOME TAXES	677			(42,362		)	(608		)	—			(42,293		)
EQUITY IN EARNINGS OF SUBSIDIARIES	82,002			—			—			(82,002		)	—
NET INCOME (LOSS)	$	80,871		$	73,273		$	8,729		$	(82,002	)	$	80,871
OTHER COMPREHENSIVE LOSS, NET OF TAXES	—			(12,507		)	(3,913		)	—			(16,420		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	80,871		$	60,766		$	4,816		$	(82,002	)	$	64,451

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended June 30, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	2,287,447		$	439,033		$	—		$	2,726,480
COST OF SALES:	—			1,945,263			389,644			—			2,334,907
GROSS PROFIT	—			342,184			49,389			—			391,573
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	848			237,716			42,004			—			280,568
DEPRECIATION AND AMORTIZATION EXPENSE	—			10,357			1,589			—			11,946
ASSET IMPAIRMENTS	—			498			541			—			1,039
INCOME FROM OPERATIONS	(848		)	93,613			5,255			—			98,020
OTHER EXPENSE:
Floorplan interest expense	—			(8,959		)	(1,056		)	—			(10,015		)
Other interest expense, net	605			(13,073		)	(1,760		)	—			(14,228		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(243		)	71,581			2,439			—			73,777
BENEFIT (PROVISION) FOR INCOME TAXES	92			(26,382		)	(1,177		)	—			(27,467		)
EQUITY IN EARNINGS OF SUBSIDIARIES	46,461			—			—			(46,461		)	—
NET INCOME (LOSS)	$	46,310		$	45,199		$	1,262		$	(46,461	)	$	46,310
OTHER COMPREHENSIVE INCOME, NET OF TAXES	—			3,784			9,999			—			13,783
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	46,310		$	48,983		$	11,261		$	(46,461	)	$	60,093

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Six Months Ended June 30, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	4,285,947		$	873,387		$	—		$	5,159,334
COST OF SALES:	—			3,629,275			774,602			—			4,403,877
GROSS PROFIT	—			656,672			98,785			—			755,457
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,079			465,188			84,770			—			552,037
DEPRECIATION AND AMORTIZATION EXPENSE	—			20,475			3,155			—			23,630
ASSET IMPAIRMENTS	—			498			541			—			1,039
INCOME FROM OPERATIONS	(2,079		)	170,511			10,319			—			178,751
OTHER EXPENSE:
Floorplan interest expense	—			(17,477		)	(1,885		)	—			(19,362		)
Other interest expense, net	1,197			(25,796		)	(3,540		)	—			(28,139		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(882		)	127,238			4,894			—			131,250
BENEFIT (PROVISION) FOR INCOME TAXES	331			(46,985		)	(2,472		)	—			(49,126		)
EQUITY IN EARNINGS OF SUBSIDIARIES	82,675			—			—			(82,675		)	—
NET INCOME (LOSS)	$	82,124		$	80,253		$	2,422		$	(82,675	)	$	82,124
OTHER COMPREHENSIVE LOSS, NET OF TAXES	—			(762		)	(20,595		)	—			(21,357		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	82,124		$	79,491		$	(18,173	)	$	(82,675	)	$	60,767

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2016



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	80,872		$	88,538		$	3,457		$	172,867
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			—			(54,739		)	(54,739		)
Proceeds from disposition of franchises, property and equipment	—			12,728			1,257			13,985
Purchases of property and equipment, including real estate	—			(59,894		)	(10,378		)	(70,272		)
Other	—			3,007			149			3,156
Net cash used in investing activities	—			(44,159		)	(63,711		)	(107,870		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			3,373,126			—			3,373,126
Repayments on credit facility - floorplan line and other	—			(3,325,917		)	—			(3,325,917		)
Borrowings on credit facility - acquisition line	150,020			—			—			150,020
Repayment on credit facility - acquisition line	(140,020		)	—			—			(140,020		)
Borrowings on other debt	—			—			19,653			19,653
Principal payments on other debt	—			(461		)	(21,787		)	(22,248		)
Borrowings on debt related to real estate, net of debt issue costs	—			30,754			—			30,754
Principal payments on debt related to real estate	—			(9,611		)	(2,604		)	(12,215		)
Employee stock purchase plan purchases, net of employee tax withholdings	136			—			—			136
Repurchases of common stock, amounts based on settlement date	(115,246		)	—			—			(115,246		)
Tax effect from stock-based compensation	(85		)	—			—			(85		)
Dividends paid	(10,124		)	—			—			(10,124		)
Other	(2,736		)	(423		)	—			(3,159		)
Borrowings (repayments) with subsidiaries	233,120			(236,314		)	3,194			—
Investment in subsidiaries	(195,937		)	123,624			72,313			—
Distributions to parent	—			—			—			—
Net cash provided by (used in) financing activities	(80,872		)	(45,222		)	70,769			(55,325		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			2,256			2,256
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	—			(843		)	12,771			11,928
CASH AND CASH EQUIVALENTS, beginning of period	—			6,338			6,699			13,037
CASH AND CASH EQUIVALENTS, end of period	$	—		$	5,495		$	19,470		$	24,965

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2015



	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	$	82,124		$	(6,018	)	$	4,469		$	80,575
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(130,783		)	—			(130,783		)
Proceeds from disposition of franchises, property and equipment	—			6,845			494			7,339
Purchases of property and equipment, including real estate	—			(39,305		)	(9,181		)	(48,486		)
Other	—			6,294			—			6,294
Net cash used in investing activities	—			(156,949		)	(8,687		)	(165,636		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			3,550,526			—			3,550,526
Repayments on credit facility - floorplan line and other	—			(3,466,772		)	—			(3,466,772		)
Borrowings on credit facility - acquisition line	346,050			—			—			346,050
Repayment on credit facility - acquisition line	(324,222		)	—			—			(324,222		)
Borrowings on other debt	—			138			25,606			25,744
Principal payments on other debt	—			(989		)	(25,953		)	(26,942		)
Borrowings on debt related to real estate, net of debt issue costs	—			—			22,430			22,430
Principal payments on debt related to real estate	—			(12,846		)	(1,513		)	(14,359		)
Employee stock purchase plan purchases, net of employee tax withholdings	(1,113		)	—			—			(1,113		)
Repurchases of common stock, amounts based on settlement date	(33,121		)	—			—			(33,121		)
Tax effect from stock-based compensation	—			1,439			—			1,439
Dividends paid	(9,737		)	—			—			(9,737		)
Borrowings (repayments) with subsidiaries	80,027			(54,206		)	(25,821		)	—
Investment in subsidiaries	(140,008		)	124,918			15,090			—
Distributions to parent	—			—			—			—
Net cash provided by (used in) financing activities	(82,124		)	142,208			9,839			69,923
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(1,612		)	(1,612		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	—			(20,759		)	4,009			(16,750		)
CASH AND CASH EQUIVALENTS, beginning of period	—			25,379			15,596			40,975
CASH AND CASH EQUIVALENTS, end of period	$	—		$	4,620		$	19,605		$	24,225