22. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following tables include condensed consolidating financial information as of December 31, 2016 and 2015, and for each of the years in the three-year period ended December 31, 2016, 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

December 31, 2016



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	8,039		$	12,953	$	—		$	20,992
Contracts-in-transit and vehicle receivables, net	—			241,097			28,411		—			269,508
Accounts and notes receivable, net	—			140,985			32,379		—			173,364
Intercompany accounts receivable	—			8,929			—		(8,929		)	—
Inventories, net	—			1,386,871			264,944		—			1,651,815
Prepaid expenses and other current assets	516			7,188			27,204		—			34,908
Total current assets	516			1,793,109			365,891		(8,929		)	2,150,587
PROPERTY AND EQUIPMENT, net	—			990,084			135,799		—			1,125,883
GOODWILL	—			805,935			70,828		—			876,763
INTANGIBLE FRANCHISE RIGHTS	—			260,534			24,342		—			284,876
INVESTMENT IN SUBSIDIARIES	2,787,328			—			—		(2,787,328		)	—
OTHER ASSETS	—			19,313			4,481		—			23,794
Total assets	$	2,787,844		$	3,868,975		$	601,341	$	(2,796,257	)	$	4,461,903

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other	$	—		$	1,131,718		$	4,936	$	—		$	1,136,654
Offset account related to floorplan notes payable - credit facility	—			(59,626		)	—		—			(59,626		)
Floorplan notes payable — manufacturer affiliates	—			281,747			110,914		—			392,661
Offset account related to floorplan notes payable - manufacturer affiliates	—			(25,500		)	—		—			(25,500		)
Current maturities of long-term debt and short-term financing	—			44,659			27,760		—			72,419
Current liabilities from interest rate risk management activities	—			3,941			—		—			3,941
Accounts payable	—			211,050			145,049		—			356,099
Intercompany accounts payable	875,662			—			8,929		(884,591		)	—
Accrued expenses	—			156,648			19,821		—			176,469
Total current liabilities	875,662			1,744,637			317,409		(884,591		)	2,053,117
LONG-TERM DEBT, net of current maturities	836,056			324,540			52,213		—			1,212,809
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES	—			20,470			—		—			20,470
DEFERRED INCOME TAXES AND OTHER LIABILITIES	(1,020		)	240,348			5,979		—			245,307
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,077,146			2,414,642			225,740		(2,787,328		)	930,200
Intercompany note receivable	—			(875,662		)	—		875,662			—
Total stockholders’ equity	1,077,146			1,538,980			225,740		(1,911,666		)	930,200
Total liabilities and stockholders’ equity	$	2,787,844		$	3,868,975		$	601,341	$	(2,796,257	)	$	4,461,903

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

Year Ended December 31, 2016



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	8,734,673		$	2,152,939		$	—		$	10,887,612
COST OF SALES:	—			7,379,323			1,913,220			—			9,292,543
GROSS PROFIT	—			1,355,350			239,719			—			1,595,069
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,722			954,495			213,546			—			1,170,763
DEPRECIATION AND AMORTIZATION EXPENSE	—			43,472			7,762			—			51,234
ASSET IMPAIRMENTS	—			21,794			11,044			—			32,838
INCOME (LOSS) FROM OPERATIONS	(2,722		)	335,589			7,367			—			340,234
OTHER EXPENSE:
Floorplan interest expense	—			(40,444		)	(4,483		)	—			(44,927		)
Other interest expense, net	—			(64,870		)	(3,066		)	—			(67,936		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(2,722		)	230,275			(182		)	—			227,371
BENEFIT (PROVISION) FOR INCOME TAXES	1,020			(83,560		)	2,234			—			(80,306		)
EQUITY IN EARNINGS OF SUBSIDIARIES	148,767			—			—			(148,767		)	—
NET INCOME (LOSS)	$	147,065		$	146,715		$	2,052		$	(148,767	)	$	147,065
COMPREHENSIVE INCOME (LOSS)				10,121			(19,081		)				(8,960		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	147,065		$	156,836		$	(17,029	)	$	(148,767	)	$	138,105

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	8,893,990		$	1,738,515		$	—		$	10,632,505
COST OF SALES:	—			7,555,043			1,543,490			—			9,098,533
GROSS PROFIT	—			1,338,947			195,025			—			1,533,972
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	3,024			950,268			167,541			—			1,120,833
DEPRECIATION AND AMORTIZATION EXPENSE	—			41,220			6,019			—			47,239
ASSET IMPAIRMENTS	—			18,899			68,663			—			87,562
INCOME (LOSS) FROM OPERATIONS	(3,024		)	328,560			(47,198		)	—			278,338
OTHER EXPENSE:
Floorplan interest expense	—			(36,063		)	(3,201		)	—			(39,264		)
Other interest income (expense), net	2,320			(52,276		)	(6,947		)	—			(56,903		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(704		)	240,221			(57,346		)	—			182,171
BENEFIT (PROVISION) FOR INCOME TAXES	264			(89,698		)	1,262			—			(88,172		)
EQUITY IN EARNINGS OF SUBSIDIARIES	94,439			—			—			(94,439		)	—
NET INCOME (LOSS)	$	93,999		$	150,523		$	(56,084	)	$	(94,439	)	93,999
COMPREHENSIVE LOSS	—			(1,543		)	(54,457		)	—			(56,000		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	93,999		$	148,980		$	(110,541	)	$	(94,439	)	37,999

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31, 2014



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elimination			Total Company
	(In thousands)
REVENUES:	$	—		$	8,175,242		$	1,762,647		$	—		$	9,937,889
COST OF SALES:	—			6,929,334			1,560,617			—			8,489,951
GROSS PROFIT	—			1,245,908			202,030			—			1,447,938
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	2,796			883,442			175,726			—			1,061,964
DEPRECIATION AND AMORTIZATION EXPENSE	—			36,701			5,643			—			42,344
ASSET IMPAIRMENTS	—			15,571			25,949			—			41,520
INCOME (LOSS) FROM OPERATIONS	(2,796		)	310,194			(5,288		)	—			302,110
OTHER EXPENSE:
Floorplan interest expense	—			(34,061		)	(7,553		)	—			(41,614		)
Other interest income (expense), net	2,272			(46,517		)	(5,448		)	—			(49,693		)
Loss on extinguishment of long-term debt	—			(46,403		)	—			—			(46,403		)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(524		)	183,213			(18,289		)	—			164,400
BENEFIT (PROVISION) FOR INCOME TAXES	196			(77,911		)	6,319			—			(71,396		)
EQUITY IN EARNINGS OF SUBSIDIARIES	93,332			—			—			(93,332		)	—
NET INCOME (LOSS)	$	93,004		$	105,302		$	(11,970	)	$	(93,332	)	93,004
COMPREHENSIVE LOSS	—			(4,059		)	(26,248		)	—			(30,307		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT	$	93,004		$	101,243		$	(38,218	)	$	(93,332	)	$	62,697

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31, 2016



	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	$	147,065		$	238,552		$	(760	)	$	384,857
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			—			(57,327		)	(57,327		)
Proceeds from disposition of franchises, property and equipment	—			35,317			1,526			36,843
Purchases of property and equipment, including real estate	—			(138,263		)	(18,258		)	(156,521		)
Other	—			2,748			217			2,965
Net cash used in investing activities	—			(100,198		)	(73,842		)	(174,040		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			6,597,406			—			6,597,406
Repayments on credit facility - floorplan line and other	—			(6,676,161		)	—			(6,676,161		)
Borrowings on credit facility - acquisition line	220,020			—			—			220,020
Repayment on credit facility - acquisition line	(220,020		)	—			—			(220,020		)
Debt issue costs	(2,997		)	(516		)	—			(3,513		)
Borrowings on other debt	—			—			49,972			49,972
Principal payments on other debt	—			(923		)	(45,005		)	(45,928		)
Borrowings on debt related to real estate	—			42,654			—			42,654
Principal payments on debt related to real estate loans	—			(20,309		)	(5,154		)	(25,463		)
Issuance of common stock to benefit plans, net	3,868			—			—			3,868
Repurchases of common stock, amounts based on settlement date	(127,606		)	—			—			(127,606		)
Tax effect from stock-based compensation	(249		)	—			—			(249		)
Dividends paid	(19,987		)	—			—			(19,987		)
Borrowings (repayments) with subsidiaries	399,151			(406,888		)	7,737			—
Investment in subsidiaries	(399,245		)	328,084			71,161			—
Net cash (used in) provided by financing activities	(147,065		)	(136,653		)	78,711			(205,007		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			2,145			2,145
NET DECREASE IN CASH AND CASH EQUIVALENTS	—			1,701			6,254			7,955
CASH AND CASH EQUIVALENTS, beginning of period	—			6,338			6,699			13,037
CASH AND CASH EQUIVALENTS, end of period	$	—		$	8,039		$	12,953		$	20,992

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31, 2015



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	93,999		$	49,710		$	(2,662	)	$	141,047
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	—			40,833			748			41,581
Purchases of property and equipment, including real estate	—			(97,009		)	(23,243		)	(120,252		)
Other	—			6,421			—			6,421
Net cash used in investing activities	—			(262,007		)	(22,495		)	(284,502		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			7,557,237			—			7,557,237
Repayments on credit facility - floorplan line and other	—			(7,504,516		)	—			(7,504,516		)
Borrowings on credit facility - acquisition line	489,548			—			—			489,548
Repayment on credit facility - acquisition line	(557,696		)	—			—			(557,696		)
Net borrowings of 5.25% Senior Unsecured Notes	296,250			—			—			296,250
Debt issue costs	—			(788		)	—			(788		)
Borrowings on other debt	—			451			59,404			59,855
Principal payments on other debt	—			(1,386		)	(62,383		)	(63,769		)
Borrowings on debt related to real estate	—			9,596			22,430			32,026
Principal payments on debt related to real estate loans	—			(68,234		)	(3,845		)	(72,079		)
Issuance of common stock to benefit plans, net	214			—			—			214
Repurchases of common stock, amounts based on settlement date	(97,473		)	—			—			(97,473		)
Tax effect from stock-based compensation	—			2,142			—			2,142
Dividends paid	(19,942		)	—			—			(19,942		)
Borrowings (repayments) with subsidiaries	220,281			(211,236		)	(9,045		)	—
Investment in subsidiaries	(425,181		)	409,990			15,191			—
Net cash (used in) provided by financing activities	(93,999		)	193,256			21,752			121,009
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(5,492		)	(5,492		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	—			(19,041		)	(8,897		)	(27,938		)
CASH AND CASH EQUIVALENTS, beginning of period	—			25,379			15,596			40,975
CASH AND CASH EQUIVALENTS, end of period	$	—		$	6,338		$	6,699		$	13,037

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31, 2014



	Group 1 Automotive, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Company
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(327	)	$	235,236		$	(36,621	)	$	198,288
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received	—			(306,364		)	(30,187		)	(336,551		)
Proceeds from disposition of franchises, property and equipment	—			141,147			3,450			144,597
Purchases of property and equipment, including real estate	—			(140,407		)	(9,985		)	(150,392		)
Other	—			(4,705		)	—			(4,705		)
Net cash used in investing activities	—			(310,329		)	(36,722		)	(347,051		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	—			7,832,014			—			7,832,014
Repayments on credit facility - floorplan line and other	—			(7,802,719		)	—			(7,802,719		)
Borrowings on credit facility - acquisition line	389,368			—			—			389,368
Repayment on credit facility - acquisition line	(379,681		)	—			—			(379,681		)
Net borrowings of 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 of other debt	—			—			91,137			91,137
Principal payments of other debt	—			—			(85,905		)	(85,905		)
Principal payments of long-term debt related to real estate loans	—			(43,060		)	(16,890		)	(59,950		)
Borrowings of debt related to real estate	—			86,722			25,457			112,179
Issuance of common stock to benefit plans, net	(321		)	—			—			(321		)
Repurchases of common stock, amounts based on settlement date	(36,802		)	—			—			(36,802		)
Tax effect from stock-based compensation	—			1,841			—			1,841
Dividends paid	(17,097		)	—			—			(17,097		)
Borrowings (repayments) with subsidiaries	78,199			(141,824		)	63,625			—
Investment in subsidiaries	(160,925		)	161,073			(148		)	—
Distributions to parent	—			2,119			(2,119		)	—
Net cash provided by financing activities	327			96,166			75,157			171,650
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(2,127		)	(2,127		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			21,073			(313		)	20,760
CASH AND CASH EQUIVALENTS, beginning of period	—			4,306			15,909			20,215
CASH AND CASH EQUIVALENTS, end of period	$	—		$	25,379		$	15,596		$	40,975