SEC – ‘UPLOAD’ from 9/16/05 re: Group 1 Automotive Inc – ‘LETTER’

On:  Friday, 9/16/05, at 5:19pm ET   ·   Private-to-Public:  Filing ¶  –  Release Delayed to:  10/12/06   ·   Accession #:  0-5-48034

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Delayed-Release Comment or Other Letter from the SEC
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: LETTER      Comment or Other Letter from the SEC                   7±    27K 


Mail Stop 3561                                                                  

                            September 16, 2005

By Facsimile and U.S. Mail                                                      

Mr. Earl J. Hesterberg                                                          
President and Chief Executive Officer                                           
Group 1 Automotive, Inc.                                                        
950 Echo Lane                                                                   
Suite 100                                                                       
Houston, TX 77024                                                               

Re:       Group 1 Automotive, Inc.                                  
Form 10-K for Fiscal Year Ended December 31, 2004               
Filed March 16, 2005                                            
File No.  1-13461               

Dear Mr. Hesterberg:                                                            

We have reviewed the above referenced filing and have the       
following comments.  Where indicated, we think you should revise                
your                                                                            
document in response to these comments.  If you disagree, we will               
consider your explanation as to why our comment is inapplicable or              
a                                                                               
revision is unnecessary.  Please be as detailed as necessary in                 
your                                                                            
explanation.  In some of our comments, we may ask you to provide                
us                                                                              
with information so we may better understand your disclosure.                   
After                                                                           
reviewing this information, we may raise additional comments.                   

Please understand the purpose of our review is to assist you        
in                                                                              
your compliance with the applicable disclosure requirements and to              
enhance the overall disclosure in your filing.  We look forward to              
working with you in these respects.  We welcome any questions you               
may                                                                             
have about our comments or any other aspect of our review.  Feel                
free                                                                            
to call us at the telephone numbers listed at the end of this                   
letter.                                                                         

Item 7. Management`s Discussion and Analysis of Financial                       
Condition                                                                       
and Results of Operation, page 25                                               
Floorplan Interest Expense, page 37                                             
1. Please expand your disclosure to discuss the relationship                    
between                                                                         
floorplan interest expense and manufacturer interest assistance                 
including why you are eligible to receive assistance in excess of               
your incurred interest expense.  In your discussion, quantify the               
amounts of interest assistance recognized and interest expense                  
incurred and the effects on your cost of sales, gross profit,                   
operating income and net income for each of the three years ending              
December 31, 2004.  Disclose the basis for the amount of interest               
assistance received.  Describe the impact this interest assistance              
has on your liquidity and capital resources in these periods and                
include any risks of concentration, performance or cancellation                 
provisions that are reasonably likely to result in the termination              
or                                                                              
a material reduction in availability of this manufacturer                       
assistance.                                                                     
See Item 303(a)(1) and (2) of Regulation S-K.                                   

Liquidity and Capital Resources, page 38                                        
2. Please tell us how the tabular information that reflects $918                
million in credit facilities outstanding reconciles to $932                     
million                                                                         
presented in your consolidated balance sheet as of December 31,                 
2004.                                                                           
Also, please advise or revise your table of contractual                         
obligations                                                                     
to include interest payments associated with your contractual                   
obligations in future filings.  In your response, please show us                
what                                                                            
your revised disclosure will look like.                                         

Item 8 Financial Statements and Supplementary Data, page 43                     
General                                                                         

3. We note that you have two reinsurance subsidiaries committed to              
the administration of your insurance service offerings.  Please                 
tell                                                                            
us why you have not included the supplemental information                       
concerning                                                                      
property-casualty insurance operations, or Schedule V, for these                
subsidiaries.  Reference is made to Rule 5-04(c) and Rule 12-18 of              
Regulation S-X.                                                                 

4. Tell us if your captive insurance subsidiaries have restricted               
shareholders` equity due to either statutory requirements or terms              
and conditions of reinsurance agreements.  If so, please tell is                
if                                                                              
the restricted shareholders` equity of your insurance subsidiaries              
exceeds 25% of consolidated shareholders` equity as of the most                 
recent balance sheet date and whether you are required to disclose              
the financial information in Schedule I.  See Rule 5-04(c) of                   
Regulation S-X.                                                                 

5. Please advise or revise your future filings to include a                     
schedule                                                                        
for all existing valuation and qualifying accounts.  See Rule 12-               
09                                                                              
of Regulation S-X.                                                              

Consolidated Statements of Operations, page F-4                                 
6. Please tell us how you determined the twenty dealership                      
franchises, disposed in the past five years and possessing                      
approximately $267.2 million of annual revenues, do not qualify                 
for                                                                             
treatment as assets held for sale or discontinued operations in                 
previous filings.  Include the criteria in paragraphs 30 and 42 of              
SFAS No. 144 in your response.                                                  

Consolidated Statements of Cash Flows, page F-6                                 
7. Please clarify how you derived cash flows related to floorplan               
notes payable and net borrowings on the revolving credit facility               
for                                                                             
the year ended December 31, 2004.  The consolidated balance sheets              
reveal a $244,956,000 cash inflow from floorplan notes payable,                 
less                                                                            
the floorplan notes acquired in fiscal 2004 business combinations.              
The cash inflow from floorplan notes currently presented is                     
$73,509,000.  In addition the $84,000,000 cash inflow from the                  
acquisition line appears to be represented by $255,447,000 of cash              
inflows from the credit facility.  Although the currently                       
presented                                                                       
cash flow amounts equal the aggregate changes in the balance                    
sheet,                                                                          
it appears there are significant reclassifications between cash                 
flow                                                                            
categories.   Please provide your calculation for the cash inflows              
for floorplan notes payable and the revolving credit facility as                
well                                                                            
as reclassifying adjustments and the applicable accounting                      
pronouncements that support the present accounting treatment.                   

8. We note you include the changes in your floor plan notes                     
payable                                                                         
as an operating activity on the statements of cash flows.                       
Borrowings                                                                      
and repayments on floor plan notes payable for new and used                     
vehicle                                                                         
inventory should be classified in financing activities when                     
inventory                                                                       
is purchased from a manufacturer unaffiliated with the lender,                  
similar to obtaining external financing through a line of credit                
or                                                                              
other borrowing facility.  When the lender is affiliated with the               
manufacturer, those borrowing and repayments should be included in              
operating activities similar to accounts payable treatment. See                 
paragraph 23a of SFAS no. 95.  Please advise and revise in future               
filings to distinguish your floor plan notes payable.  Also, note               
that Rule 5-02(19)(a) of Regulation S-X requires separate and                   
clear                                                                           
balance sheet display of amounts payable to trade creditors and                 
amounts payable for borrowings.                                                 

Notes to Consolidated Financial Statements, page F-7                            
2. Summary of Significant Accounting Policies, page F-7                         
Revenue Recognition, page F-7                                                   

9.   Please provide us with your accounting policies for recording              
Internet revenues specifically as it relates to reporting revenue               
and                                                                             
related costs either gross as a principal or net as an agent.                   
Please                                                                          
refer to EITF No. 99-19. Tell us the names of the Internet sites                
operating right now and the amounts of revenue recorded in fiscal               
years 2004, 2003 and 2002.  Tell us if you employ lead generators               
to                                                                              
refer prospective car buyers to either your brick and mortar                    
dealerships or Internet sites.  To the extent that lead generator               
fees are material, tell us if you pay fees for each referral, upon              
the consummation of the sale or based on a combination of factors.              
Tell us where you classify lead generator fees in your statement                
of                                                                              
operations and the amount of these fees incurred in fiscal years                
2004, 2003 and 2002.  Please include the names of your Internet                 
sites                                                                           
and the related accounting policies in your future filings and                  
include an example of the disclosures in your response.  We may                 
have                                                                            
further comments after reviewing your response.                                 
10. In future filings please expand your current revenue                        
disclosure                                                                      
to clarify the following:                                                       
* For sales transactions that have multiple units of accounting                 
please state how you determine the separate units and allocate the              
fair values to each separate unit using the residual method.  Also              
describe the nature of any performance, termination, cancellation               
or                                                                              
refund type provisions, as applicable. See Example 4 of EITF No.                
00-                                                                             
21;                                                                             
* Expand the disclosure of your future charge backs to include the              
disclosures required by Rule 12-09 of Regulation S-X for valuation              
and qualifying accounts and disclose the effects that a two                     
percent                                                                         
change in service fee revenues would have on chargeback estimates,              
if                                                                              
such change was material.  See Question 1 of Topic 13B;                         
Please include an example of your expanded and revised disclosure               
in                                                                              
your response.                                                                  

Business Segment Information, page F-12                                         
11. Please tell us how you arrived at the conclusion your                       
reinsurance                                                                     
companies and auto dealerships are representative of a single                   
reportable segment specifically as it relates to the nature of the              
products and services offered by these businesses and the                       
regulatory                                                                      
environments which oversee the property and casualty insurance and              
automotive retail industries.  See paragraph 17 of SFAS No. 131.                
If                                                                              
after further consideration you determine that you have multiple                
reportable segments, please include the segment disclosure                      
required                                                                        
by paragraphs 33 - 39 of SFAS No. 131 in your future interim and                
annual filings.  Disclose whether operating segments have been                  
aggregated.  Please include an example of the revised segment                   
disclosure in your response, as applicable.                                     

12. Operating Leases, page F-21                                                 

12. You disclose that you typically do not guarantee residual                   
values                                                                          
on lease transactions.  Reference is made to page 4 of your 10-K.               
Please tell us if any arrangements presently exist where you do                 
guarantee the residual value in your leases even though this may                
not                                                                             
be a common or pervasive business practice.  If these arrangements              
exist, please tell us the features of these residual guarantees                 
and                                                                             
your accounting treatment.                                                      

13. If other than cash, tell us the form and terms of Mr. Howard`s              
initial investment in the dealership buildings you sold on                      
February                                                                        
18, 2003 for $4.5 million.  If the consideration is in the form of              
a                                                                               
buyer`s note tell us the relevant terms of the note including if                
it                                                                              
is supported by an irrevocable letter of credit.  Tell us if there              
is                                                                              
any third party financing or if you provided direct or indirect                 
funding to the buyer or collaterized or guaranteed loans for the                
buyer.  Please summarize your response with a conclusion as to why              
the sale of these dealership buildings qualifies for sale-                      
leaseback                                                                       
accounting treatment and include references to applicable                       
accounting                                                                      
pronouncements as necessary.                                                    

       As appropriate, please amend your filing and respond to
these comments within 10 business days, or tell us when you will                
provide us with a response.  You may wish to provide us with                    
marked                                                                          
copies of the amendment to expedite our review.  Please furnish a               
cover letter with your amendment that keys your responses to our                
comments and provides any requested information.  Detailed letters              
greatly facilitate our review.  File your response on EDGAR as a                
correspondence file.  Please understand that we may have                        
additional                                                                      
comments after reviewing your responses to our comments.                        

We urge all persons who are responsible for the accuracy and  
adequacy of the disclosure in the filing reviewed by the staff to               
be                                                                              
certain that they have provided all information investors require               
for                                                                             
an informed decision.  Since the company and its management are in              
possession of all facts relating to a company`s disclosure, they                
are                                                                             
responsible for the accuracy and adequacy of the disclosures they               
have made.                                                                      

In connection with responding to our comments, please provide, in               
writing, a statement from the company acknowledging that:                       

* the company is responsible for the adequacy and accuracy of the               
disclosure in the filing;                                                       

* staff comments or changes to disclosure in response to staff                  
comments do not foreclose the Commission from taking any action                 
with                                                                            
respect to the filing; and                                                      

* the company may not assert staff comments as a defense in any                 
proceeding initiated by the Commission or any person under the                  
federal securities laws of the United States.                                   

In addition, please be advised that the Division of             
Enforcement                                                                     
has access to all information you provide to the staff of the                   
Division of Corporation Finance in our review of your filing or in              
response to our comments on your filing.                                        

     You may contact Brian McAllister, Staff Accountant at
(202)                                                                           
551-3341, Donna Di Silvio at (202) 551-3202, or me at (202) 551-                
3841                                                                            
if you have any questions regarding comments on the financial                   
statements and related matters.                                                 

                                                                      Sincerely,

                                                                   Michael Moran
                                                               Accounting Branch
Chief                                                                           
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Mr. Earl J. Hesterberg                                                          
Group 1 Automotive, Inc.                                                        
September 16, 2005                                                              
Page 1                                                                          

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘UPLOAD’ Filing		Date		Other Filings
Release Delayed to:		10/12/06		8-K,  CORRESP,  UPLOAD
Filed on:		9/16/05		UPLOAD
		3/16/05		10-K,  8-K,  UPLOAD
		12/31/04		10-K,  10-K/A,  11-K,  5,  ARS
		2/18/03
				List all Filings

1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/16/05  Group 1 Automotive Inc.           10-K       12/31/04   12:403K                                   Bowne - Houston/FA