þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended September 30, 2008 | ||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware
(State or other jurisdiction of incorporation or organization) |
76-0506313
(I.R.S. Employer Identification No.) |
Large accelerated
filer
þ
|
Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
2
15
43
47
Item 1.
Financial
Statements
3
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Three Months Ended September 30,
Nine Months Ended September 30,
2008
2007
2008
2007
(In thousands, except per share amounts)
$
877,669
$
1,023,117
$
2,737,732
$
2,976,110
262,443
288,420
865,031
865,071
58,689
84,859
193,412
239,605
188,576
176,391
572,165
525,592
46,597
52,618
152,012
153,705
1,433,974
1,625,405
4,520,352
4,760,083
821,964
954,434
2,561,863
2,774,735
234,527
255,092
771,132
761,599
59,623
86,264
195,081
240,361
88,241
78,323
263,667
238,774
1,204,355
1,374,113
3,791,743
4,015,469
229,619
251,292
728,609
744,614
189,209
193,511
579,608
578,511
6,734
5,390
19,049
15,228
48,086
346
48,086
702
(14,410
)
52,045
81,866
150,173
(11,236
)
(11,518
)
(35,636
)
(34,906
)
(7,199
)
(5,695
)
(22,103
)
(16,356
)
495
(1,596
)
904
(1,596
)
(41
)
187
273
377
(32,391
)
33,423
25,304
97,692
(11,820
)
12,592
10,280
34,940
$
(20,571
)
$
20,831
$
15,024
$
62,752
(18
)
(3,481
)
(400
)
3
1,478
127
(15
)
(2,003
)
(273
)
$
(20,571
)
$
20,816
$
13,021
$
62,479
$
(0.91
)
$
0.90
$
0.67
$
2.66
(0.09
)
(0.01
)
$
(0.91
)
$
0.90
$
0.58
$
2.65
22,551
23,110
22,479
23,580
$
(0.91
)
$
0.90
$
0.66
$
2.64
(0.09
)
(0.01
)
$
(0.91
)
$
0.90
$
0.57
$
2.63
22,716
23,229
22,641
23,730
$
0.14
$
0.14
$
0.42
$
0.42
4
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Nine Months Ended
September 30,
2008
2007
(In thousands)
$
13,021
$
62,479
2,003
273
48,086
702
19,049
15,228
11,500
14,188
276
(136
)
5,639
7,482
101,207
31,634
10,693
(3,290
)
28,261
74,314
18,320
12,493
(33,266
)
(124,602
)
(17,043
)
17,157
(4,705
)
(3,681
)
203,041
104,241
(13,373
)
(519
)
(130,283
)
(118,868
)
(48,678
)
(111,394
)
23,778
16,888
1,055
2,633
(154,128
)
(210,741
)
23,051
(153
)
4,074,078
3,957,323
(4,026,396
)
(3,811,850
)
(220,000
)
100,000
54,625
33,515
114,285
(26,663
)
(36,865
)
(9,737
)
(10,176
)
(6,199
)
(2,446
)
(5,590
)
2,746
4,150
1,490
(776
)
(63,038
)
(365
)
(3,630
)
(276
)
136
(2,498
)
(29,548
)
145,391
(21,103
)
2,267
19
(27
)
7,959
40,459
34,248
39,340
$
42,207
$
79,799
$
65,658
$
52,548
$
5,491
$
8,357
5
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Accumulated Other
Comprehensive Income (Loss)
Unrealized
Unrealized
Unrealized
Additional
Gains (Losses)
Gains (Losses)
Gains (Losses)
Common Stock
Paid-in
Retained
on Interest
on Marketable
on Currency
Treasury
Shares
Amount
Capital
Earnings
Rate Swaps
Securities
Translation
Stock
Total
(In thousands)
25,532
$
255
$
293,675
$
502,783
$
(10,118
)
$
(76
)
$
634
$
(102,672
)
$
684,481
13,021
13,021
(899
)
(899
)
(8
)
(8
)
(3,472
)
(3,472
)
8,642
(776
)
(776
)
(216
)
(2
)
(8,960
)
8,837
(125
)
155
2
2,573
296
2,871
118
1
(1
)
(28
)
4,894
4,894
(256
)
(256
)
(9,737
)
(9,737
)
25,561
$
256
$
291,925
$
506,067
$
(11,017
)
$
(84
)
$
(2,838
)
$
(94,315
)
$
689,994
6
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2.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
7
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8
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9
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10
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certain transaction costs, which are presently treated as cost
of the acquisition, will be expensed;
restructuring costs associated with a business combination,
which are presently capitalized, will be expensed subsequent to
the acquisition date;
contingencies, including contingent consideration, which are
presently accounted for as an adjustment of purchase price, will
be recorded at fair value with subsequent adjustments recognized
in operations; and
valuation allowances on acquired deferred tax assets, which are
presently considered to be subsequent changes in consideration
and are recorded as decreases in goodwill, will be recognized up
front and in operations.
11
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3.
STOCK-BASED
COMPENSATION:
12
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Weighted
Average
Shares Under
Exercise Price
Option
per Share
211,774
$
28.33
(7,000
)
12.52
(17,030
)
29.84
187,744
28.76
187,135
28.30
169,264
$
28.78
Weighted
Average
Grant Date
Awards
Fair Value
720,069
$
37.40
117,874
24.51
(64,783
)
30.00
(27,800
)
39.05
745,360
$
35.95
13
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4.
EARNINGS
PER SHARE:
Three Months Ended September 30,
2008
2007
Basic
Diluted
Basic
Diluted
(In thousands, except per share amounts)
$
(20,571
)
$
(20,571
)
$
20,831
$
20,831
(15
)
(15
)
$
(20,571
)
$
(20,571
)
$
20,816
$
20,816
22,551
22,551
23,110
23,110
165
119
22,716
23,229
$
(0.91
)
$
(0.91
)
$
0.90
$
0.90
$
(0.91
)
$
(0.91
)
$
0.90
$
0.90
14
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Nine Months Ended September 30,
2008
2007
Basic
Diluted
Basic
Diluted
(In thousands, except per share amounts)
$
15,024
$
15,024
$
62,752
$
62,752
(2,003
)
(2,003
)
(273
)
(273
)
$
13,021
$
13,021
$
62,479
$
62,479
22,479
22,479
23,580
23,580
162
150
22,641
23,730
$
0.67
$
0.66
$
2.66
$
2.64
(0.09
)
(0.09
)
(0.01
)
(0.01
)
$
0.58
$
0.57
$
2.65
$
2.63
5.
ASSET
IMPAIRMENTS:
The Company determined that the recent economic conditions and
the resulting impact on the automotive retailing industry, as
well as the uncertainty surrounding the going concern of the
domestic automobile manufacturers indicated the potential
impairment of its indefinite-lived intangible assets. In
response to the identification of such triggering events, the
Company performed an interim impairment assessment of its
recorded values, as required by SFAS No. 142,
Goodwill and Other Intangible Assets
(SFAS 142). And, as a result of this
assessment, the Company determined that the fair values of
certain of its indefinite-lived intangible franchise rights were
less than their respective carrying values and recorded a
pre-tax charge of $37.1 million, primarily related to its
domestic brand franchises.
The Company also identified potential impairment indicators
relative to certain of its real estate, primarily associated
with domestic franchise terminations and other equipment
holdings, after giving consideration to the likelihood that
certain facilities would not be sold or used by a prospective
buyer as an automobile
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dealership operation given current market conditions. In
accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets
(SFAS 144), the Company reviewed the carrying
value of such assets in comparison with the respective estimated
fair market values, as determined by third-party appraisal and
brokers opinions of value. Accordingly, the Company
recorded an $11.0 million pre-tax asset impairment charge.
The remaining carrying value of these assets as of
September 30, 2008 was $18.7 million.
6.
INCOME
TAXES:
7.
CREDIT
FACILITIES:
16
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17
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18
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8.
PROPERTY
AND EQUIPMENT:
Estimated
Useful Lives in
September 30,
December 31,
Years
2008
2007
(In thousands)
$
195,907
$
137,344
30 to 40
236,216
168,763
7 to 15
71,993
58,663
7 to 20
63,990
57,079
3 to 10
63,845
60,978
3 to 5
11,452
11,338
10,733
30,558
654,136
524,723
117,194
97,500
$
536,942
$
427,223
19
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9.
FAIR
VALUE MEASUREMENTS:
Level 1
unadjusted, quoted prices for
identical assets or liabilities in active markets;
Level 2
quoted prices for similar
assets and liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are
not active, and inputs other than quoted market prices that are
observable or that can be corroborated by observable market data
by correlation; and
Level 3
unobservable inputs based upon
the reporting entitys internally developed assumptions
that market participants would use in pricing the asset or
liability.
20
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Level 1
Level 2
Level 3
Total
(In thousands)
$
2,649
$
$
$
2,649
8,076
8,076
$
2,649
$
8,076
$
$
10,725
$
$
(17,627
)
$
$
(17,627
)
10.
COMMITMENTS
AND CONTINGENCIES:
21
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22
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11.
LONG-TERM
DEBT:
September 30,
December 31,
2008
2007
(In thousands)
$
282,365
$
281,915
72,889
100,273
15,000
135,000
180,352
131,317
39,186
11,014
41,437
27,579
$
631,229
$
687,098
13,635
12,260
$
617,594
$
674,838
23
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12.
ACQUISITIONS
AND DISPOSITIONS:
13.
DISCONTINUED
OPERATIONS:
Three Months Ended September 30,
Nine Months Ended September 30,
2008
2007
2008
2007
(In thousands)
(In thousands)
$
$
35,899
$
49,192
$
103,549
(18
)
(3,481
)
(400
)
3
1,478
127
$
$
(15
)
$
(2,003
)
$
(273
)
24
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September 30,
December 31,
2008
2007
(In thousands)
$
$
28,515
2,015
1
(27,317
)
(7,863
)
$
$
(4,649
)
14.
CONDENSED
CONSOLIDATING FINANCIAL INFORMATION:
25
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September 30, 2008
26
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December 31, 2007
27
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Three Months Ended September 30, 2008
Total
Group 1
Guarantor
Non-Guarantor
Company
Elimination
Automotive, Inc.
Subsidiaries
Subsidiaries
(Unaudited)
(In thousands)
$
1,433,974
$
$
$
1,392,007
$
41,967
1,204,355
1,167,757
36,598
229,619
224,250
5,369
189,209
1,630
182,837
4,742
6,734
6,376
358
48,086
48,086
(14,410
)
(1,630
)
(13,049
)
269
(11,236
)
(10,940
)
(296
)
(7,199
)
(7,186
)
(13
)
495
495
(41
)
(39
)
(2
)
18,941
(18,941
)
(32,391
)
18,941
(20,571
)
(30,719
)
(42
)
(11,820
)
(11,731
)
(89
)
(20,571
)
18,941
(20,571
)
(18,988
)
47
$
(20,571
)
$
18,941
$
(20,571
)
$
(18,988
)
$
47
28
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Three Months Ended September 30, 2007
Total
Group 1
Guarantor
Non-Guarantor
Company
Elimination
Automotive, Inc.
Subsidiaries
Subsidiaries
(Unaudited)
(In thousands)
$
1,625,405
$
$
$
1,572,134
$
53,271
1,374,113
1,328,004
46,109
251,292
244,130
7,162
193,511
244
188,226
5,041
5,390
5,006
384
346
346
52,045
(244
)
50,552
1,737
(11,518
)
(11,250
)
(268
)
(5,695
)
(5,590
)
(105
)
(1,596
)
(1,596
)
187
187
(21,060
)
21,060
33,423
(21,060
)
20,816
32,303
1,364
12,592
12,308
284
20,831
(21,060
)
20,816
19,995
1,080
(15
)
(15
)
$
20,816
$
(21,060
)
$
20,816
$
19,980
$
1,080
29
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Nine Months Ended September 30, 2008
Total
Group 1
Guarantor
Non-Guarantor
Company
Elimination
Automotive, Inc.
Subsidiaries
Subsidiaries
(Unaudited)
(In thousands)
$
4,520,352
$
$
$
4,383,550
$
136,802
3,791,743
$
3,672,959
118,784
728,609
710,591
18,018
579,608
2,516
562,584
14,508
19,049
17,953
1,096
48,086
48,086
81,866
(2,516
)
81,968
2,414
(35,636
)
(34,763
)
(873
)
(22,103
)
(21,915
)
(188
)
904
904
273
275
(2
)
(15,537
)
15,537
25,304
(15,537
)
13,021
26,469
1,351
10,280
9,872
408
15,024
(15,537
)
13,021
16,597
943
(2,003
)
(2,003
)
$
13,021
$
(15,537
)
$
13,021
$
14,594
$
943
30
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Nine Months Ended September 30, 2007
Total
Group 1
Guarantor
Non-Guarantor
Company
Elimination
Automotive, Inc.
Subsidiaries
Subsidiaries
(Unaudited)
(In thousands)
$
4,760,083
$
$
$
4,634,274
$
125,809
4,015,469
3,906,472
108,997
744,614
727,802
16,812
578,511
1,002
565,106
12,403
15,228
14,331
897
702
702
150,173
(1,002
)
147,663
3,512
(34,906
)
(34,355
)
(551
)
(16,356
)
(16,070
)
(286
)
(1,596
)
(1,596
)
377
377
(63,481
)
63,481
97,692
(63,481
)
62,479
96,019
2,675
34,940
34,229
711
62,752
(63,481
)
62,479
61,790
1,964
(273
)
(273
)
$
62,479
$
(63,481
)
$
62,479
$
61,517
$
1,964
31
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Nine Months Ended September 30, 2008
Total
Group 1
Guarantor
Non-Guarantor
Company
Automotive, Inc.
Subsidiaries
Subsidiaries
(Unaudited)
(In thousands)
continuing operations
$
203,041
$
(2,516
)
$
202,439
$
3,118
(13,373
)
(13,373
)
(130,283
)
(129,186
)
(1,097
)
(48,678
)
(48,678
)
23,778
23,778
1,055
1,055
(154,128
)
(154,086
)
(42
)
23,051
23,051
4,074,078
4,074,078
(4,026,396
)
(4,026,396
)
(220,000
)
(220,000
)
100,000
100,000
54,625
54,625
33,515
33,515
(26,663
)
(26,663
)
(9,737
)
(9,737
)
(6,199
)
(2,093
)
(4,106
)
(5,590
)
(5,590
)
2,746
2,746
1,490
1,490
(776
)
(776
)
(365
)
(365
)
(276
)
(276
)
204,277
(204,277
)
(176,819
)
176,010
809
9,488
(9,463
)
(25
)
(29,548
)
2,516
(28,742
)
(3,322
)
(21,103
)
(21,103
)
19
(178
)
197
7,959
8,008
(49
)
34,248
33,666
582
$
42,207
$
$
41,674
$
533
32
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Total
Group 1
Guarantor
Non-Guarantor
Company
Automotive, Inc.
Subsidiaries
Subsidiaries
(Unaudited)
(In thousands)
$
104,241
$
(1,002
)
$
93,456
$
11,787
$
(519
)
$
$
(519
)
$
(118,868
)
(118,006
)
(862
)
(111,394
)
(62,737
)
(48,657
)
16,888
16,888
2,633
2,633
(210,741
)
(163,855
)
(46,886
)
(153
)
(153
)
3,957,323
3,957,323
(3,811,850
)
(3,811,850
)
114,285
114,285
(63,038
)
(63,038
)
(36,865
)
(36,865
)
(10,176
)
(10,176
)
4,150
4,150
(3,630
)
(3,630
)
(2,498
)
(2,498
)
(2,446
)
(1,747
)
(699
)
136
136
62,795
(62,795
)
(42,085
)
4,485
37,600
49,356
(46,556
)
(2,800
)
145,391
1,002
110,288
34,101
2,267
2,267
(27
)
(1,288
)
1,261
40,459
40,196
263
39,340
38,985
355
$
79,799
$
$
79,181
$
618
33
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our future operating performance;
our ability to improve our margins;
operating cash flows and availability of capital;
the completion of future acquisitions;
the future revenues of acquired dealerships;
future stock repurchases and dividends;
capital expenditures;
changes in sales volumes in the new and used vehicle and parts
and service markets;
business trends in the retail automotive industry, including the
level of manufacturer incentives, new and used vehicle retail
sales volume, customer demand, interest rates and changes in
industry-wide inventory levels; and
availability of financing for inventory and working capital.
the future economic environment, including consumer confidence,
interest rates, the price of gasoline, the level of manufacturer
incentives and the availability of consumer credit may affect
the demand for new and used vehicles, replacement parts,
maintenance and repair services and finance and insurance
products;
adverse international developments such as war, terrorism,
political conflicts or other hostilities may adversely affect
the demand for our products and services;
the future regulatory environment, unexpected litigation or
adverse legislation, including changes in state franchise laws,
may impose additional costs on us or otherwise adversely affect
us;
our principal automobile manufacturers, especially Toyota/Lexus,
Ford, Daimler, Chrysler, Nissan/Infiniti, Honda/Acura, General
Motors and BMW, because of financial distress or other reasons,
may not continue to produce or make available to us vehicles
that are in high demand by our customers or provide financing,
advertising or other assistance to us;
requirements imposed on us by our manufacturers may limit our
acquisitions and require us to increase the level of capital
expenditures related to our dealership facilities;
our dealership operations may not perform at expected levels or
achieve expected improvements;
our failure to achieve expected future cost savings or future
costs being higher than we expect;
available capital resources and various debt agreements may
limit our ability to complete acquisitions, complete
construction of new or expanded facilities, repurchase shares or
pay dividends;
our cost of financing could increase significantly;
foreign exchange controls and currency fluctuations;
34
Table of Contents
new accounting standards could materially impact our reported
earnings per share;
our inability to complete additional acquisitions or changes in
the pace of acquisitions;
the inability to adjust our cost structure to offset any
reduction in the demand for our products and services;
our loss of key personnel;
competition in our industry may impact our operations or our
ability to complete acquisitions;
the failure to achieve expected sales volumes from our new
franchises;
insurance costs could increase significantly and all of our
losses may not be covered by insurance; and
our inability to obtain inventory of new and used vehicles and
parts, including imported inventory, at the cost, or in the
volume, we expect.
35
Table of Contents
Item 2.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
36
Table of Contents
37
Table of Contents
For the Three
For the Nine
Months Ended September 30,
Months Ended September 30,
2008
2007
2008
2007
28,661
34,185
89,548
99,455
15,057
16,440
48,945
50,300
43,718
50,625
138,493
149,755
9,399
12,060
29,651
34,363
53,117
62,685
168,144
184,118
6.3
%
6.7
%
6.4
%
6.8
%
8.4
%
8.6
%
8.7
%
9.3
%
53.2
%
55.6
%
53.9
%
54.6
%
16.0
%
15.5
%
16.1
%
15.6
%
82.4
%
77.0
%
79.5
%
77.7
%
(1.0
)%
3.2
%
1.8
%
3.2
%
(2.3
)%
2.1
%
0.6
%
2.1
%
$
1,066
$
1,039
$
1,098
$
1,026
(1)
Selling, general and administrative
expenses.
38
Table of Contents
39
Table of Contents
certain transaction costs, which are presently treated as costs
of the acquisition, will be expensed;
restructuring costs associated with a business combination,
which are presently capitalized, will be expensed subsequent to
the acquisition date;
contingencies, including contingent consideration, which is
presently accounted for as an adjustment of purchase price, will
be recorded at fair value with subsequent adjustments recognized
in operations; and
valuation allowances on acquired deferred tax assets, which are
presently considered to be subsequent changes in consideration
and are recorded as decreases in goodwill, will be recognized up
front and in operations.
40
Table of Contents
41
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
$
832,839
(17.9
)%
$
1,014,879
$
2,597,363
(11.7
)%
$
2,940,057
246,664
(13.9
)%
286,456
813,002
(4.3
)%
849,833
54,422
(34.4
)%
82,978
179,956
(23.1
)%
233,922
176,017
1.1
%
174,158
533,574
3.5
%
515,311
45,281
(13.4
)%
52,304
148,183
(2.7
)%
152,308
1,355,223
(15.9
)%
1,610,775
4,272,078
(8.9
)%
4,691,431
780,470
(17.6
)%
946,649
2,432,100
(11.3
)%
2,741,412
220,234
(13.1
)%
253,324
723,482
(3.3
)%
748,513
54,995
(34.7
)%
84,204
181,285
(22.6
)%
234,250
82,230
6.4
%
77,272
245,778
5.0
%
234,041
1,137,929
(16.4
)%
1,361,449
3,582,645
(9.5
)%
3,958,216
$
217,294
(12.8
)%
$
249,326
$
689,433
(6.0
)%
$
733,215
$
179,814
(5.8
)%
$
190,882
$
549,361
(2.2
)%
$
561,724
$
6,292
21.6
%
$
5,174
$
17,634
21.3
%
$
14,537
$
10,742
(4.7
)%
$
11,266
$
33,821
(0.2
)%
$
33,896
42
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
6.3
%
6.7
%
6.4
%
6.8
%
8.6
%
8.6
%
8.9
%
9.3
%
53.3
%
55.6
%
53.9
%
54.6
%
16.0
%
15.5
%
16.1
%
15.6
%
82.8
%
76.6
%
79.7
%
76.6
%
2.3
%
3.3
%
2.9
%
3.3
%
$
1,072
3.0
%
$
1,041
$
1,105
7.1
%
$
1,032
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
27,736
(18.2
)%
33,922
86,785
(11.7
)%
98,294
925
263
2,763
1,161
28,661
(16.2
)%
34,185
89,548
(10.0
)%
99,455
$
832,839
(17.9
)%
$
1,014,879
$
2,597,363
(11.7
)%
$
2,940,057
44,830
8,238
140,369
36,053
$
877,669
(14.2
)%
$
1,023,117
$
2,737,732
(8.0
)%
$
2,976,110
$
52,369
(23.2
)%
$
68,230
$
165,262
(16.8
)%
$
198,645
3,336
453
10,607
2,730
$
55,705
(18.9
)%
$
68,683
$
175,869
(12.7
)%
$
201,375
$
1,888
(6.1
)%
$
2,011
$
1,904
(5.8
)%
$
2,021
$
3,606
$
1,722
$
3,839
$
2,351
$
1,944
(3.2
)%
$
2,009
$
1,964
(3.0
)%
$
2,025
6.3
%
6.7
%
6.4
%
6.8
%
7.4
%
5.5
%
7.6
%
7.6
%
6.3
%
6.7
%
6.4
%
6.8
%
83
53.7
%
54
83
53.7
%
54
80
80
83
50.9
%
55
83
50.9
%
55
(1)
Inventory days supply equals
units in inventory at the end of the period, divided by unit
sales for the month then ended, multiplied by 30 days.
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
%
%
2008
Change
2007
2008
Change
2007
7,843
(24.9
)%
10,441
25,202
(15.2
)%
29,711
3,541
(8.9
)
3,886
10,767
(6.9
)
11,559
3,449
(2.1
)
3,522
10,601
6.0
10,002
2,208
(36.1
)
3,456
7,266
(30.3
)
10,423
1,936
2.2
1,894
5,567
2.8
5,414
1,434
(22.7
)
1,856
4,501
(14.2
)
5,245
976
(33.5
)
1,467
3,262
(22.5
)
4,211
1,017
(19.4
)
1,262
2,911
(24.8
)
3,873
935
0.6
929
2,816
(2.1
)
2,877
699
(13.0
)
803
2,075
(10.4
)
2,317
3,698
(16.1
)
4,406
11,816
(6.7
)
12,662
27,736
(18.2
)
33,922
86,784
(11.7
)
98,294
44
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
14,505
(11.1
)%
16,325
47,261
(4.2
)%
49,338
552
115
1,684
962
15,057
(8.4
)%
16,440
48,945
(2.7
)%
50,300
$
246,664
(13.9
)%
$
286,456
$
813,002
(4.3
)%
$
849,833
15,779
1,964
52,029
15,238
$
262,443
(9.0
)%
$
288,420
$
865,031
(0.0
)%
$
865,071
$
26,431
(20.2
)%
$
33,132
$
89,520
(11.6
)%
$
101,320
1,485
196
4,379
2,152
$
27,916
(16.2
)%
$
33,328
$
93,899
(9.3
)%
$
103,472
$
1,822
(10.2
)%
$
2,030
$
1,894
(7.8
)%
$
2,054
$
2,690
$
1,704
$
2,600
$
2,237
$
1,854
(8.5
)%
$
2,027
$
1,918
(6.8
)%
$
2,057
10.7
%
11.6
%
11.0
%
11.9
%
9.4
%
10.0
%
8.4
%
14.1
%
10.6
%
11.6
%
10.9
%
12.0
%
45
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
9,063
(23.5
)%
11,845
28,671
(14.7
)%
33,618
336
215
980
745
9,399
(22.1
)%
12,060
29,651
(13.7
)%
34,363
$
54,422
(34.4
)%
$
82,978
$
179,956
(23.1
)%
$
233,922
4,267
1,881
13,456
5,683
$
58,689
(30.8
)%
$
84,859
$
193,412
(19.3
)%
$
239,605
$
(573
)
53.3
%
$
(1,226
)
$
(1,329
)
306.4
%
$
(327
)
(361
)
(179
)
(340
)
(429
)
$
(934
)
33.5
%
$
(1,405
)
$
(1,669
)
120.8
%
$
(756
)
$
(63
)
39.4
%
$
(104
)
$
(46
)
360.0
%
$
(10
)
$
(1,074
)
$
(833
)
$
(347
)
$
(576
)
$
(99
)
15.4
%
$
(117
)
$
(56
)
154.5
%
$
(22
)
(1.1
)%
(1.5
)%
(0.7
)%
(0.1
)%
(8.5
)%
(9.5
)%
(2.5
)%
(7.6
)%
(1.6
)%
(1.7
)%
(0.9
)%
(0.3
)%
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
23,568
(16.3
)%
28,170
75,932
(8.5
)%
82,956
888
330
2,664
1,707
24,456
(14.2
)%
28,500
78,596
(7.2
)%
84,663
$
301,086
(18.5
)%
$
369,434
$
992,958
(8.4
)%
$
1,083,755
20,046
3,845
65,485
20,921
$
321,132
(14.0
)%
$
373,279
$
1,058,443
(4.2
)%
$
1,104,676
$
25,856
(19.0
)%
$
31,906
$
88,192
(12.7
)%
$
100,992
1,126
17
4,038
1,724
$
26,982
(15.5
)%
$
31,923
$
92,230
(10.2
)%
$
102,716
$
1,097
(3.2
)%
$
1,133
$
1,161
(4.6
)%
$
1,217
$
1,266
$
52
$
1,516
$
1,009
$
1,103
(1.5
)%
$
1,120
$
1,173
(3.3
)%
$
1,213
46
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
8.6
%
8.6
%
8.9
%
9.3
%
5.6
%
0.4
%
6.2
%
8.2
%
8.4
%
8.6
%
8.7
%
9.3
%
31
0.0
%
31
31
0.0
%
31
31
31
31
0.0
%
31
31
0.0
%
31
(1)
Inventory days supply equals
units in inventory at the end of the period, divided by unit
sales for the month then ended, multiplied by 30 days.
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands)
$
176,017
1.1
%
$
174,158
$
533,574
3.5
%
$
515,311
12,559
2,233
38,591
10,281
$
188,576
6.9
%
$
176,391
$
572,165
8.9
%
$
525,592
$
93,788
(3.2
)%
$
96,886
$
287,796
2.3
%
$
281,270
6,547
1,182
20,702
5,548
$
100,335
2.3
%
$
98,068
$
308,498
7.6
%
$
286,818
53.3
%
55.6
%
53.9
%
54.6
%
52.1
%
52.9
%
53.6
%
54.0
%
53.2
%
55.6
%
53.9
%
54.6
%
48
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands, except per unit amounts)
42,241
(15.9
)%
50,247
134,046
(9.2
)%
147,632
1,477
378
4,447
2,123
43,718
(13.6
)%
50,625
138,493
(7.5
)%
149,755
$
14,999
(17.8
)%
$
18,236
$
51,042
(5.2
)%
$
53,828
675
101
2,317
597
$
15,674
(14.5
)%
$
18,337
$
53,359
(2.0
)%
$
54,425
$
18,194
(18.4
)%
$
22,294
$
59,543
(7.2
)%
$
64,172
258
87
612
378
$
18,452
(17.6
)%
$
22,381
$
60,155
(6.8
)%
$
64,550
$
12,088
2.7
%
$
11,774
$
37,598
9.6
%
$
34,307
382
126
900
423
$
12,470
4.8
%
$
11,900
$
38,498
10.8
%
$
34,730
$
45,281
(13.4
)%
$
52,304
$
148,183
(2.7
)%
$
152,308
1,316
314
3,829
1,397
$
46,597
(11.4
)%
$
52,618
$
152,012
(1.1
)%
$
153,705
$
1,072
3.0
%
$
1,041
$
1,105
7.1
%
$
1,032
$
891
$
828
$
861
$
658
$
1,066
2.6
%
$
1,039
$
1,098
7.0
%
$
1,026
49
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands)
$
103,726
(8.2
)%
$
112,995
$
324,227
(4.2
)%
$
338,596
5,622
1,419
18,395
6,349
$
109,348
(4.4
)%
$
114,414
$
342,622
(0.7
)%
$
344,945
$
14,046
1.6
%
$
13,824
$
40,460
(6.5
)%
$
43,271
608
141
1,645
1,016
$
14,654
4.9
%
$
13,965
$
42,105
(4.9
)%
$
44,287
$
21,756
(2.7
)%
$
22,355
$
66,512
(1.1
)%
$
67,277
636
944
2,180
2,799
$
22,392
(3.9
)%
$
23,299
$
68,692
(2.0
)%
$
70,076
$
40,286
(3.4
)%
$
41,708
$
118,162
5.0
%
$
112,580
2,529
125
8,027
6,623
$
42,815
2.3
%
$
41,833
$
126,189
5.9
%
$
119,203
$
179,814
(5.8
)%
$
190,882
$
549,361
(2.2
)%
$
561,724
9,395
2,629
30,247
16,787
$
189,209
(2.2
)%
$
193,511
$
579,608
0.2
%
$
578,511
$
217,294
(12.8
)%
$
249,326
$
689,433
(6.0
)%
$
733,215
12,325
1,966
39,176
11,399
$
229,619
(8.6
)%
$
251,292
$
728,609
(2.1
)%
$
744,614
82.8
%
76.6
%
79.7
%
76.6
%
76.2
%
133.7
%
77.2
%
147.3
%
82.4
%
77.0
%
79.5
%
77.7
%
7,800
9,000
7,800
9,000
50
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands)
$
6,292
21.6
%
$
5,174
$
17,634
21.3
%
$
14,537
442
216
1,415
691
$
6,734
24.9
%
$
5,390
$
19,049
25.1
%
$
15,228
51
Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2008
% Change
2007
2008
% Change
2007
(Dollars in thousands)
$
10,742
(4.7
)%
$
11,266
$
33,821
(0.2
)%
$
33,896
494
252
1,815
1,010
$
11,236
(2.4
)%
$
11,518
$
35,636
2.1
%
$
34,906
$
7,383
(26.3
)%
$
10,022
$
22,948
(19.5
)%
$
28,514
52
Table of Contents
For the Nine Months
Ended September 30,
2008
2007
(In thousands)
$
203,041
$
104,241
(154,128
)
(210,741
)
(29,548
)
145,391
19
(27
)
$
19,384
$
38,864
53
Table of Contents
54
Table of Contents
55
Table of Contents
Total
Commitment
Outstanding
Available
(In thousands)
$
1,000,000
$
697,399
$
302,601
350,000
33,000
317,000
1,350,000
730,399
619,601
300,000
95,384
204,616
235,000
180,352
54,648
$
1,885,000
$
1,006,135
$
878,865
(1)
The available balance at
September 30, 2008 includes $6.5 million of
immediately available funds.
(2)
The outstanding balance at
September 30, 2008 includes $18.0 million of letters
of credit.
(3)
Outstanding balance excludes
$42.9 million of borrowings with manufacturer-affiliates
for foreign and rental vehicle financing not associated with any
of our credit facilities.
56
Table of Contents
57
Table of Contents
Item 3.
Quantitative
and Qualitative Disclosures about Market Risk
Item 4.
Controls
and Procedures
58
Table of Contents
Item 1.
Legal
Proceedings
Item 1A.
Risk
Factors
59
Table of Contents
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds
Total
Approximate
Number of Shares
Dollar Value of
Total
Purchased as
Shares That May be
Number of
Average
Part of Publicly
Purchased Under
Shares
Price Paid
Announced Plans
August 2008
Period
Purchased
per Share
or Programs
Authorization
(In thousands)
$
$
20,000
37,300
20.76
37,300
(774
)
37,300
$
20.76
37,300
(774
)
$
19,226
60
Table of Contents
Item 6.
Exhibits
3
.1
Restated Certificate of Incorporation (Incorporated by reference
to Exhibit 3.1 of Group 1 Automotive, Inc.s
Registration Statement on
Form S-1
Registration
No. 333-29893).
3
.2
Amended and Restated Bylaws of Group 1 Automotive, Inc.
(Incorporated by reference to Exhibit 3.1 of Group 1
Automotive, Inc.s Current Report on
Form 8-K
(File
No. 001-13461)
filed November 13, 2007).
10
.1*
Amendment No. 4 to Credit Agreement dated as of
September 10, 2008 by and among Group 1 Realty, Inc., Group
1 Automotive, Inc., Bank of America, N.A. and the Joining Lenders
10
.2*
Loan Facility dated as of October 3, 2008 by and between
Chandlers Garage Holdings Limited and BMW Financial Services
(GB) Limited.
11
.1
Statement re: computation of earnings per share is included
under Note 4 to the financial statements.
31
.1*
Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31
.2*
Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32
.1*
Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32
.2*
Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
*
Filed or furnished herewith
61
Table of Contents
By:
62
BORROWER:
GROUP 1 REALTY, INC. |
||||
By: | /s/ John Rickel | |||
Name: | John Rickel | |||
Title: | President | |||
COMPANY:
GROUP 1 AUTOMOTIVE, INC. |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
GUARANTORS
:
BARON DEVELOPMENT COMPANY, L.L.C. IVORY AUTO PROPERTIES OF SOUTH CAROLINA, LLC By: GROUP 1 REALTY, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
BOHN HOLDINGS, LLC
By: BOHN HOLDINGS, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
BOHN-FII, LLC
By: BOHN HOLDINGS-F, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
DANVERS-SU, LLC
By: GROUP 1 HOLDINGS-S, LLC, its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
By: GROUP 1 AUTOMOTIVE, INC., its Sole
Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
GPI KS-SV, LLC
By: GPI KS-SB, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
GROUP 1 ASSOCIATES HOLDINGS, LLC
By: GROUP 1 ASSOCIATES, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
HOWARD-DCIII, LLC
GROUP 1 HOLDINGS-DC, L.L.C. GROUP 1 HOLDINGS-F, L.L.C. GROUP 1 HOLDINGS-GM, L.L.C. GROUP 1 HOLDINGS-H, L.L.C. GROUP 1 HOLDINGS-N, L.L.C. GROUP 1 HOLDINGS-S, LLC GROUP 1 HOLDINGS-T, L.L.C. By: GROUP 1 AUTOMOTIVE, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
HARVEY GM, LLC
HARVEY OPERATIONS-T, LLC By: BOHN HOLDINGS, LLC, its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
By: BOHN HOLDINGS, INC., its Sole
Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
IRA AUTOMOTIVE GROUP, LLC
By: DANVERS-T, INC., its Sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
CHAPERRAL DODGE, INC.
KUTZ-N, INC. LUBBOCK MOTORS-GM, INC. LUBBOCK MOTORS-S, INC. LUBBOCK MOTORS-SH, INC. LUBBOCK MOTORS-T, INC. LUBBOCK MOTORS, INC. MAXWELL-N, INC. MAXWELL-NII, INC. MAXWELL CHRYSLER DODGE JEEP, INC. MCCALL-HA, INC. MCCALL-T, INC. MCCALL-TII, INC. MCCALL-TL, INC. MCCALL-H, INC. MCCALL-N, INC. MCCALL-SB, INC. PRESTIGE CHRYSLER NORTHWEST, INC. WEST CENTRAL MANAGEMENT COMPANY, INC. |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
AMARILLO MOTORS-C, LTD.
AMARILLO MOTORS-J, LTD. AMARILLO MOTORS-SM, LTD. GPI, LTD. MAXWELL-G, LTD. MCCALL-SL, LTD. PRESTIGE CHRYSLER SOUTH, LTD. ROCKWALL AUTOMOTIVE-DCD, LTD. By: GROUP 1 ASSOCIATES, INC., its General Partner |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
BOB HOWARD AUTOMOTIVE-EAST, INC.
BOB HOWARD CHEVROLET, INC. BOB HOWARD DODGE, INC. BOB HOWARD MOTORS, INC. BOB HOWARD NISSAN, INC. BOHN HOLDINGS, INC. BOHN HOLDINGS-F, INC. CASA CHEVROLET INC. CASA CHRYSLER PLYMOUTH JEEP INC. DANVERS - DCIII, INC. DANVERS - DCII, INC. DANVERS-N, INC. DANVERS - NII, INC. DANVERS - S, INC. DANVERS-SB, INC. DANVERS-T, INC. DANVERS-TII, INC. DANVERS-TIII, INC. DANVERS - TL, INC. FMM, INC. GPI AL-N, INC. GPI ATLANTA-T, INC. GPI CA-NIII, INC. GPI CA-TII, INC. GPI GA-DM, INC. GPI KS-SB, INC. GPI MS-H, INC. GPI MS-N, INC. GPI MS-SK, INC. GPI NH-T, INC. GPI NH-TL, INC. GPI SAC-SK, INC. GPI SAC-T, INC. GPI SC-SB, INC. GPI SD-DC, INC. GPI SD-IMPORTS, INC. GROUP 1 ASSOCIATES, INC. GROUP 1 FL HOLDINGS, INC. |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
HOWARD-DCII, INC.
HOWARD-GM, INC. HOWARD-GM II, INC. HOWARD-GMIII, INC. HOWARD-H, INC. HOWARD-HA, INC. HOWARD-SB, INC. HOWARD PONTIAC-GMC, INC. LUBY CHEVROLET CO. MIKE SMITH AUTOMOTIVE - H, INC. MIKE SMITH AUTOMOTIVE - N, INC. MIKE SMITH AUTOPLAZA, INC. MIKE SMITH AUTOPLEX BUICK, INC. MIKE SMITH AUTOPLEX DODGE, INC. MIKE SMITH AUTOPLEX, INC. MIKE SMITH AUTOPLEX-GERMAN IMPORTS, INC. MIKE SMITH GM, INC. MIKE SMITH IMPORTS, INC. MIKE SMITH MOTORS, INC. MILLER-DM, INC. MILLER-SH, INC. MILLER AUTOMOTIVE GROUP, INC. MILLBRO, INC. MILLER FAMILY COMPANY, INC. MILLER IMPORTS, INC. MILLER INFINITI INC. MILLER NISSAN, INC. NJ-DM, INC. NJ-H, INC. NJ-HA, INC. NJ-HAII, INC. NJ-HII, INC. NJ-SB, INC. NJ-SV, INC. |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
NY-FV, INC.
NY-FVII, INC. NY-SB, INC. NY-SBII, INC. SUNSHINE BUICK PONTIAC GMC TRUCK, INC. GROUP 1 FUNDING, INC. GPI CA-DMII, INC. NY-DM, INC. ADVANTAGECARS.COM, INC. |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
GROUP 1 LP INTERESTS-DC, INC.
GROUP 1 LP INTERESTS-GM, INC. GROUP 1 LP INTERESTS-S, INC. |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President | |||
GPI SC-SV, LLC
By: GPI SC-SB, INC., its sole Member |
||||
By: | /s/ Darryl M. Burman | |||
Name: | Darryl M. Burman | |||
Title: | Vice President |
ADMINISTRATIVE AGENT
:
BANK OF AMERICA, N.A., as Administrative Agent |
||||
By: | /s/ Anne M. Zeschke | |||
Name: | Anne M. Zeschke | |||
Title: | Assistant Vice President | |||
LENDERS
:
BANK OF AMERICA, N.A. |
||||
By: | /s/ M. Patricia Kay | |||
Name: | M. Patricia Kay | |||
Title: | Senior Vice President | |||
COMERICA BANK
|
||||
By: | /s/ Jonathan S. Heine | |||
Name: | Jonathan S. Heine | |||
Title: | Vice President | |||
JPMORGAN CHASE BANK, N.A.
|
||||
By: | /s/ Robert L. Mendoza | |||
Name: | Robert L. Mendoza | |||
Title: | Vice President | |||
KEYBANK NATIONAL ASSOCIATION
|
||||
By: | /s/ Charles Vetter | |||
Name: | Charles Vetter | |||
Title: | Vice President | |||
NISSAN MOTOR ACCEPTANCE CORPORATION
|
||||
By: | /s/ Chris Hathaway | |||
Name: | Chris Hathaway | |||
Title: | Sr. Manager, Commercial Credit |
WACHOVIA BANK, NATIONAL ASSOCIATION
|
||||
By: | /s/ Michael R. Burkitt | |||
Name: | Michael R. Burkitt | |||
Title: | Senior Vice President | |||
SOVEREIGN BANK
|
||||
By: | /s/ Kyle S. Bourque | |||
Name: | Kyle S. Bourque | |||
Title: | Vice President | |||
TOYOTA MOTOR CREDIT CORPORATION
|
||||
By: | /s/ Reddy Pakanati | |||
Name: | Reddy Pakanati | |||
Title: | Corporate Manager | |||
BMW FINANCIAL SERVICES NA, LLC
|
||||
By: | /s/ Scott Bargar | |||
Name: | Scott Bargar | |||
Title: | Retailer Finance Credit Manager, BMW FS | |||
By: | /s/ Armando Macias | |||
Name: | Armando Macias | |||
Title: | Manager Retailer Finance, Accounting & Audit |
Environmental | Environmental | |||||
Financed Property | Holdback Amount | Completion Date | ||||
Boardwalk Honda and BMW of Atlantic City
6807 Tilton Road Pleasantville, NY 08232 |
$ | 250,000 | September 29, 2009 | |||
Egg Harbor/Mapleshade Acura Elite Acura
6806 Tilton Road Pleasantville, NY 08232 |
$ | 150,000 | September 29, 2009 | |||
Sussman Acura (Boardwalk Acura)
538 Rt. 38 East Mapleshade, NJ 08052 |
$ | 250,000 | September 29, 2009 | |||
Smicklas Chevrolet
5301 North May Avenue Oklahoma City, OK 73157 |
$ | 500,000 | September 29, 2009 | |||
World Ford Kendall
15551 South Dixie Highway Palmetto Bay, FL |
$ | 500,000 | February 22, 2009 | |||
Stafford Service Facility
12202/12206 Murphy Road Stafford, TX |
$ | 150,000 | April 15, 2009 | |||
Mercedes Benz of Augusta
3061 Washington Road Augusta, GA 30907 |
$ | 570,000 | June 28, 2009 | |||
Town North Nissan
9150 Research Boulevard Austin, TX 78758 |
$ | 100,000 | October 18, 2009 | |||
Shamrock Chevrolet
3907 Avenue Q Lubbock, TX 79412 |
$ | 200,000 | August 22, 2009 |
Great Britain
Term Loan
3 October 2008
2
may acting reasonably agree), notice of the intended drawing, such notice to be
irrevocable and in a form acceptable to us
3.2
In this letter, Drawdown Date means the date on which an Advance is made to
you under this facility and Business Day means a day (not being Saturday or
Sunday) on which clearing banks are open in London for normal business.
3.3
If the Loan has not been fully drawn down by
28 February 2010
the remainder
of the facility shall be cancelled unless you have received from us prior approval to
draw down after this date.
3.4
The minimum amount for each Advance shall be £200,000, or such lesser amount
as we may agree from time to time.
4.1
Unless and to the extent the Loan is not fully drawn or is prepaid in
accordance with the terms of this facility letter in which case the scheduled repayment
amounts detailed in this clause shall be adjusted accordingly and shall reduce pro rata by the
amount of the Loan drawn down and/or prepaid, the Loan shall be repaid by you by a first
monthly instalment of principal of
£98,061
followed by
101
consecutive monthly instalments of
principal of
£98,039
each commencing on the
first day of March 2010
and thereafter on the
first day of each succeeding month provided always that the Loan shall be repaid in full by
you no later than
31 August 2018.
If any payment is due on a day that is not a Business Day it
shall be made on the next succeeding Business Day with interest to the actual date of payment.
Payments shall be made by direct debit on your bank account or by such other means as we may
in our discretion require. We shall notify you promptly and in any event within 10 Business
Days of any adjustment to the scheduled repayment amounts in accordance with this clause.
You may, if you give us not less than 2 days prior irrevocable written notice (for amounts
of up to £1,000,000) or 10 days (or such shorter period as we may agree) prior irrevocable
written notice (for amounts over £1,000,000), prepay or cancel the whole or any part of the
Loan (being a minimum amount of £50,000 or such lesser amount as the Lender may agree).
Any prepayment made in accordance with this clause 4 shall, unless otherwise stipulated, be
applied:
(a)
first in payment of any unpaid fees, costs and expenses of the Lender hereunder;
(b)
second, in payment to the Lender of accrued interest, fees and other amounts (excluding
principal) due but unpaid hereunder; and
(c)
third, in payment to the Lender of principal hereunder.
Great Britain
Term Loan
3 October 2008
3
Any prepayment under this facility letter shall be made together with accrued
interest on the amount prepaid but otherwise without premium or penalty.
4.2
If you cease to be an authorised dealer of BMW (UK) Limited
at any time in the future we reserve the right to review this facility and if,
acting reasonably, we believe your ceasing to be an authorised dealer of BMW
(UK) Limited will have a material adverse effect upon your ability to meet your
payment obligations under this facility letter in full we may demand repayment
of the loan and all amounts due under this facility letter on 28 days notice.
5.
Interest on the principal amount of the Loan outstanding from time to time
shall be payable at the rate of
1.0%
per annum above the highest of the following:
5.1
three-month Sterling BBA LIBOR as published on the 1
st
of each and every
month during the term of the Loan or the next Business Day if these dates fall on
a non Business Day (BBA LIBOR is the British Banking Association fixing of the
London Inter-Bank Offered Rate. It is based on offered inter-bank deposit rates
contributed in accordance with the Instructions to BBA LIBOR Contributor Banks);
or
5.2
3.00% per annum
(the Applicable Base Rate) or at such other rate or rates of interest as we may from
time to time agree with you by not less than one months notice in writing to you.
Interest shall accrue from day to day both before and after judgement and shall be
calculated on the basis of a 365 day year and shall be debited to your account on the
last day of each calendar month and shall then be immediately due and payable by you
by direct debit on your bank account or by such other means as we may in our
discretion agree.
6.
If any amount owing by you under this letter (whether principal, interest or
otherwise) is not paid on the due date or if a direct debit is rejected you shall pay
interest on that amount or the amount of the direct debit (as the case may be) from the
due date for payment thereof or from the date of rejection of the direct debit (as the
case may be) to the date that that amount is received by us at the rate of 5% per annum
above the Finance House Base Rate, as published by the Finance & Leasing Association,
from time to time (provided that no reduction in the Finance House Base Rate below 3%
shall be taken into account).
7.
All payments to be made by you under the facility shall be paid without any
deduction, set off or withholding whatsoever (except as required by law). If you are
required by law to deduct any taxes from any amounts paid by you under this letter you
shall pay those taxes when due and deliver to us evidence satisfactory to us (including
all tax receipts) that the payment has been remitted to the appropriate authority.
Great Britain
Term Loan
3 October 2008
4
8.
Any certificate given by us of any amount owing by you to us from time to time
whether by way of principal, interest or otherwise shall be conclusive evidence of the
amount owing (except in the case of manifest error).
9.
You represent, warrant and undertake to us, on the date of your acceptance of
this letter and, save as otherwise specified, on each date that the Loan is available or
outstanding (with reference to the facts and circumstances then existing), as follows:
9.1
all approvals, authorisations, consents, licences, permissions and
registrations which it is necessary to obtain from any governmental, local,
public or other authority or without limitation any third party for the purpose
of or relating to this facility and/or any Security Document (in this letter
called Consents) have been obtained and are in force and all their provisions
and conditions have been complied with;
9.2
the security referred to in the schedule to this letter
constitutes (or will when executed constitute) first security over the
Property known as;
CHANDLERS HAILSHAM, GLENEAGES DRIVE, HAILSHAM, EAST SUSSEX BN27 3UA with
title number ESX309823
and
CHANDLERS BRIGHTON, VICTORIA ROAD, PORTSLADE, BRIGHTON BN41 1YH with title
number Brighton ESX103492
9.3
there are no pending or to your knowledge (after due and careful
enquiry) threatened actions or legal proceedings affecting you which may have a
material adverse effect on your business, assets or financial condition;
9.4
you are not in breach of or in default under any agreement or
obligation relating to (or analogous to) financial indebtedness in each case
which is binding on it which has or is reasonably likely to have a material
adverse effect;
9.5
no event or circumstances referred to in paragraph 11 below has
occurred and is continuing and on the date of this letter no event or
circumstance has occurred and is continuing which with the giving of notice, the
lapse of time, any determination of materiality, the satisfaction of any
applicable condition, or any combination of them could reasonably be expected to
constitute or bring about any event or circumstance referred to in paragraph 11;
9.6
your latest audited financial statements (consolidated in the case
of Group 1 Automotive UK Limited) give a true and fair view of your affairs and
fairly represent your financial position and your results and operations as at
and for the period ended on the date up to which those financial statements were
prepared
Great Britain
Term Loan
3 October 2008
5
and there has been no material adverse change in your business, assets
or financial position since that date;
9.7
all factual information supplied to us in contemplation of
this facility was true as at its date and did not omit anything material to be
known by any proposed lender to you, no change has occurred since the date of
the information already supplied which renders it untrue or misleading in any
material respect and all projections and statements of belief and opinion given
by you to us were made in good faith after due and careful enquiry.
10.
So long as the Loan is available or outstanding:
10.1
you will obtain, maintain in force and comply with all Consents;
10.2
you will permit us and our representatives and advisers during
normal hours and
on reasonable notice full access to the Property and buildings on it;
10.3
you will prepare financial statements in accordance with generally accepted
accounting principles and practices in England consistently applied in respect of
each financial period and cause them to be audited by your auditors and deliver
copies of them promptly and in any event not later than 180 days after the end of
the period to which they relate, and supply us with monthly management
accounting information in the format specified by BMW (UK) Limited as we may
reasonably require;
10.4
you will provide to us such financial and other information of the Purchasers -
including but not limited to information concerning the Property as we may from
time to time reasonably request;
10.5
you will promptly inform us of any event or circumstance referred to in paragraph
11 below or anything of which you become aware which, with the giving of notice
or lapse of time or otherwise, would result in any such event or circumstance.
11.
In the event of:
11.1
Payment default: failure by you to make any repayment of principal,
or payment of
interest or other sum, in respect of the Loan on its due date; or
11.2
Other breaches: any material breach of (or any material default in) the observance
or performance of any term, condition, undertaking or covenant contained in
this
facility letter or in any of the Security Documents and such breach or default,
if
capable or remedy, is not remedied within 15 Business Days after notice from us
to you specifying the breach or default and requiring its remedy; or
|
BMW Financial Services
Great Britain |
|
11.3 | Misrepresentation: any representation or warranty made (or deemed to be repeated), or any information provided by you in connection with the Loan being incorrect in any material respect when made or, repeated or provided; or | ||
11.4 | Winding up or administration: a petition being presented, an order being made or an effective resolution being passed for your winding up or a petition being presented for any administration order in respect of you or your undertaking; or | ||
11.5 | Enforcement or appointment of an Insolvency Practitioner: an encumbrancer taking possession or liquidator, provisional liquidator, administrator, receiver, trustee, sequestrator or similar officer being appointed in respect of all or any of your assets; or | ||
11.6 | Legal process: a distress, execution, attachment, diligence or other legal process being levied, enforced or sued out against any of your assets which is not discharged within 14 days and which would result in a material adverse effect on the Property or the business of the Borrower as a whole; or | ||
11.7 | Suspension of payments: you suspend payment of your debts or become unable to pay your debts as they fall due or are deemed, under Section 123 of the Insolvency Act 1986, to be unable to pay your debts; or | ||
11.8 | Re-scheduling of debts: you propose or enter into a voluntary arrangement (within the meaning of the Insolvency Act 1986) or take or are subject to any proceedings under any law or commence negotiations with one or more of your creditors for the adjustment, re-scheduling or deferment of all or a material part of your debts or you propose to enter into any general assignment or composition with or for the benefit of your creditors; or | ||
11.9 | Cessation of consents: the cessation or revocation for any reason of any Consent which is required to enable you to carry on all or a material part of your business; or | ||
11.9 | Invalidity: it becomes unlawful for you or any guarantor to perform any of your obligations under this letter or if any of this letter or the Security Documents is or becomes unenforceable against any party; or | ||
11.10 | Termination of guarantee etc: any guarantor giving or purporting to give notice to terminate its liabilities under any guarantee in respect of the Loan or any of the events referred to in this paragraph occurring in relation to any such guarantor; or | ||
11.11 | Material adverse change: there is a material adverse change in your financial trading position or prospects or in your ability to comply in full with your obligations under this letter; |
Great Britain
Term Loan
3 October 2008
7
then the whole amount of the outstanding Loan and all accrued interest and other
amounts owing under the Loan shall so long as any such default is continuing
become repayable forthwith on demand in writing being made by us at any time.
12.
(a)
an additional cost incurred by us (or any
holding company of ours) as a
result of us having entered into, or performing or maintaining or
funding
each advance and our other obligations under this letter; or
(b)
a reduction in any amount payable to us or the
effective return to us (or to
any holding company of ours) under this letter or on our capital (or
that of
any holding company of ours); or
(c)
the amount of any payment made by us, or the
amount of any interest
foregone by us, calculated by reference to any amount received or
receivable by us from you. We shall, in consultation with you, take
all
reasonable steps to mitigate any circumstances which arise and which
would result in any amount becoming payable under or pursuant to
this
clause 12.
We confirm we are beneficially entitled to interest payable to us in
respect of an advance under this facility letter and we are a
company resident in the United Kingdom for United Kingdom tax
purposes.
12.2
(i)
any reference to this letter or
any of the Security Documents to, and any obligations arising
under this letter in sterling shall be translated into, or paid
in the currency unit designated by us; and
Great Britain
Term Loan
3 October 2008
8
(ii)
any translation from one currency
or currency unit to another shall be at the official rate of
exchange recognised by the Bank of England (or any other relevant
supervisory body) for the conversion of that currency or currency
unit into the other;
(b)
If a change in Sterling occurs (including, without limitation, in
consequence of European Monetary Union) the terms of this letter and
Security Documents will be amended in the manner specified by us acting
reasonably to reflect the change in currency and to put us in the same
position, as far as possible, as we would have been had no change
occurred and to ensure that we suffer no additional cost, expense,
liability or reduction in our rate of return under this letter as a
result.
12.3
If we seek to exercise our rights under paragraph 12.1, you will
be entitled at any time on five Business days written notice to us to repay the
Loan in whole together with accrued interest thereon without penalty.
13.
13.1
13.2
If we require more than one report or valuation on or of the
Property in any
period of twelve months we shall bear the cost of any additional valuations
unless you are at the time of our requisitioning the report or valuation in
breach
of any of your obligations under this letter or we are entitled under
paragraph 11
to demand early repayment of the Loan.
You will comply or procure compliance with any requirement in respect of the
report or valuation within seven days after receiving notice of the
requirements (and for the avoidance of doubt any failure so to comply or
procure compliance will constitute an irremediable breach of this letter for
the purposes of paragraph 11.2 above).
13.3
If we obtain any valuation of the Property which indicates that the
Loan exceeds
85% of the open market value of your interest in the Property at such time,
then
we may so long as such conditions subsist at our option by notice in writing
to you
do any one or more of the following, namely:
(a)
require you to pay or discharge to us such part of Loan not
exceeding the excess as we may specify; or
Great Britain
Term Loan
3 October 2008
9
(b)
cancel (or suspend, for such period as we may
think fit), your ability to draw down such part of the undrawn
facility as we may specify; or
(c)
require you to provide or procure to be
provided to our satisfaction such additional security as we may
direct.
You will comply or procure compliance with any such notice within seven days
after the date of the notice (and for the avoidance of doubt any failure so
to comply or procure compliance constitutes an irremediable breach of this
letter for the purposes of paragraph 11.2 above).
14.
You will pay to us on demand all expenses (including legal and out-of-pocket
expenses and together with Value Added Tax) on a full indemnity basis incurred by us in
connection with the negotiation and preparation and execution of this letter and the
Security Documents, the fulfilment of all the conditions precedent set out in the
schedule to this letter and any amendment or extension of and the granting of any waiver
or consent under this letter and or any Security Document and you shall also pay to us
on demand all reasonable expenses properly incurred (including legal and out-of-pocket
expenses and together with Value Added Tax) on a full indemnity basis by us in
connection with the enforcement of or the preservation of any rights under this letter
or any of the Security Documents.
15.
If we receive any payment from you which is insufficient to discharge all the
amounts then due and payable by you under this letter, we shall apply that payment
towards your obligations under this letter in such order as we may, in our sole and
absolute discretion, consider appropriate and that application shall override any
application made by you.
16.
Our rights under this letter and the Security Documents:
(a)
may be exercised as often as necessary;
(b)
are cumulative and not exclusive of our rights under the
general law; and
(c)
may be waived only in writing and specifically.
Delay in exercising or non-exercise of any right is not a waiver of that right.
17.
You may not assign, transfer, novate or dispose of any of, or any interest in,
your rights and/or obligations under this letter or any of the Security Documents. We
may assign or transfer all or any part of our rights and/or obligations under this
letter or any of the Security Documents under prior advice to you. We may disclose to
any person with whom we propose to enter into any kind of transfer, participation
agreement in relation to this letter a copy of this letter or any of the Security
Documents and any information
Great Britain
Term Loan
3 October 2008
10
which we have acquired about you. Prior to any disclosure of such information we shall
enter into a confidentiality agreement is respect of the information being disclosed.
18.
If a provision of this letter or any Security Document is or becomes illegal,
invalid or unenforceable, that shall not affect the validity and enforceability of any
other provision of this letter or any of the Security Documents.
19.
All notices or other communications under or in connection with this letter or
any of the Security Documents shall be given in writing or facsimile. Any notice will be
deemed to be given as follows:
(a)
if in writing, when delivered; and
(b)
if by facsimile, when received.
However, a notice given in accordance with the above but received on a day which is
not a Business Day or after business hours in the place of receipt will only be deemed
to be given on the next Business Day in that place. Our addresses for service of
notices under this letter are as set out at the top of page 1 on this letter. Our
facsimile number is 01256 749386 and yours is
Either of us may change our address for
service on giving the other not less than 5 Business Days notice.
20.
This offer letter is available for acceptance by you for a period of 28 days
following its date. If you wish to accept the facility on the terms and conditions of
this letter, please sign and return the enclosed duplicate of this letter.
21.
The Facility Letter shall be governed by the laws of England and Wales and the parties
submit to the exclusive jurisdiction of the English Courts.
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BMW Financial Services
Great Britain |
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1. | A copy of this offer letter signed by you. | |
2. | A certified true copy of a resolution of your Board of Directors: |
2.1 | Accepting the terms and conditions set out in this offer letter. | ||
2.2 | Authorising a specified person or persons to countersign this offer letter. | ||
2.3 | Authorising execution of the Security Documents on your behalf. |
3. | A first Legal Charge over the Property set out in 9.2 of the facility letter in BMW Financial Services standard form. | |
4. | Receipt of satisfactory valuation reports addressed to BMW Financial Services (GB) Limited, by surveyors appointed by BMW Financial Services (GB) Limited. | |
5. | Receipt of a solicitors undertaking from Hammonds LLP to complete our security. | |
6. | An acceptance fee of £5,000 which shall be invoiced on drawdown of this facility. | |
7. | All BMW Financial Services (GB) Limited legal fees and surveyors costs are to be met by you. | |
8. | Evidence of the extent and level of the insurance cover in force in respect of the Property and that our interest is noted as joint insured in respect of the insurance policies held by you. | |
9. | A report on your title of the Property prepared by Hammond LLP Solicitors. | |
10. | At the request of BMW Financial Services (GB) Limited you are to provide a copy of your most recent Bank Overdraft Facility Letter, Loan Agreement or other document setting out borrowing terms and conditions that is in force or has been offered. |
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Paul Shelton
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Darran White | |||
Credit Risk Manager
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Senior Credit Analyst |
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BMW Financial Services
Great Britain |
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/s/
John C. Rickel
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/s/
Darryl M. Burman
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October 3,
2008
Date
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