SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED, AS OF OCTOBER 7, 1996)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 001-13461
------
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
Group 1 Automotive, Inc. 401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Group 1 Automotive, Inc.
950 Echo Lane, Suite 100
Houston, Texas 77024
REQUIRED INFORMATION
The Group 1 Automotive, Inc. 401K Savings Plan (the "Plan") is subject
to the Employee Retirement Income Security Act of 1974.
Item 4. In lieu of the requirements of Items 1, 2 and 3 of this Form
11-K, the following financial statements of the Plan, notes thereto, and Report
of Independent Auditors thereon are being filed in this Report:
(a) Report of Independent Auditors
(b) Statement of Net Assets available for Benefits - December 31,
2002 and 2001
(c) Statement of Changes in Net Assets available for Benefits -
Year ended December 31, 2002; and
(d) Notes to Financial Statements.
The Consent of Independent Auditors to the incorporation by reference
of the foregoing financial statements in the Registration Statement on Form S-8
(No. 333-80399) pertaining to the Plan is being filed as Exhibit 23.1 to this
Report.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
Houston, Texas
FINANCIAL STATEMENTS
December 31, 2002 and 2001
CONTENTS
REPORT OF INDEPENDENT AUDITORS .................................................... 1
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS .............................. 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS ............................................................... 3
NOTES TO FINANCIAL STATEMENTS ................................................ 4
SUPPLEMENTAL SCHEDULE
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) ............... 8
REPORT OF INDEPENDENT AUDITORS
Plan Administrator
Group 1 Automotive, Inc. 401(k) Savings Plan
Houston, Texas
We have audited the accompanying statements of net assets available for benefits
of Group 1 Automotive, Inc. 401(k) Savings Plan (the Plan) as of December 31,
2002 and 2001 and the related statement of changes in net assets available for
benefits for the year ended December 31, 2002. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2002 and 2001 and the changes in net assets available for benefits
for the year ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, Line 4i -
Schedule of Assets (Held at End of Year) is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ CROWE CHIZEK AND COMPANY LLC
--------------------------------
Crowe Chizek and Company LLC
South Bend, Indiana
May 15, 2003
--------------------------------------------------------------------------------
1.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2002 and 2001
--------------------------------------------------------------------------------
2002 2001
------------ ------------
ASSETS
Investments (Note 4) $ 41,184,654 $ 35,962,699
Receivables
Employer contribution 410,869 327,025
Participant contributions 636,977 420,581
Accrued income 29,177 27,587
------------ ------------
1,077,023 775,193
Cash 13,233 42,530
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 42,274,910 $ 36,780,422
============ ============
--------------------------------------------------------------------------------
See accompanying notes to financial statements.
2.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2002
--------------------------------------------------------------------------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Net depreciation in fair value of investments (Note 4) $ (6,584,999)
Interest and dividends 690,179
------------
(5,894,820)
Contributions
Employer 2,892,980
Participant 8,800,460
Rollover 1,382,318
------------
13,075,758
Total additions 7,180,938
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 4,207,715
Administrative expenses 215,624
------------
Total deductions 4,423,339
------------
NET INCREASE PRIOR TO PLAN TRANSFER 2,757,599
Transfers from other plans (Note 3) 2,736,889
------------
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 36,780,422
------------
End of year $ 42,274,910
============
--------------------------------------------------------------------------------
See accompanying notes to financial statements.
3.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
-------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN
The following description of the Group 1 Automotive, Inc. (Company or Sponsor)
401(k) Savings Plan (Plan) provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
General: The Plan is a defined contribution plan, adopted July 1, 1999, covering
all employees of the Company who have six months of service and are age eighteen
and over. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Contributions: Each year, participants may contribute up to 15% of pretax annual
eligible compensation, as defined in the Plan. Participants may also contribute
amounts representing distributions from other qualified defined benefit or
defined contribution plans. Participants direct the investment of their
contributions into various investment options offered by the Plan. The Company
may contribute a discretionary amount based on the amount the participant
contributes to the Plan. The Board of Directors shall determine, by business
unit, whether employer matching contributions will be made for the plan year,
the matching percentage, and the percentage of a participant's compensation upon
which the match shall be based. Effective January 1, 2003, matching
contributions will be calculated for each payroll period. The matching Company
contribution may be in the form of cash or shares of Company Stock or a
combination, but has been historically in cash. Contributions are subject to
certain limitations. Certain Plan administrative costs have been paid by the
Company.
Participant Accounts: Each participant's account is credited with the
participant's contribution and allocation of (a) the Company's contribution, and
(b) Plan earnings, and, at times, charged with an allocation of administrative
expenses. Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account.
Retirement, Death and Disability: A participant is entitled to 100% of his or
her account balance upon retirement, death or disability.
Vesting: Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the remainder of their account plus earnings
thereon is based on years of continuous service. A participant is 100% vested
after five years of credited service.
Forfeitures: The Plan was amended during 2001 to allow the Plan to use
forfeitures to pay for Plan administrative expenses. During the year ended
December 31, 2002, forfeited nonvested accounts of $284,268 were used to reduce
employer contributions by $85,515 and to pay for Plan administrative expenses of
$198,753. As of December 31, 2002 there were $84,154 remaining forfeited
nonvested amounts that will be used to reduce future employer contributions or
pay for Plan administrative expenses.
--------------------------------------------------------------------------------
(Continued)
4.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
--------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Payment of Benefits: On termination of service due to death, disability, or
retirement, a participant will receive a lump-sum amount equal to the value of
the participant's vested interest in his or her account. The participant may
elect to have the distribution received in cash or in shares of Company stock.
In-service Withdrawals: A participant may withdraw from his of her rollover
contribution account any or all amounts held in such account at any time. A
participant who has attained age 59 1/2 may withdraw from his or her account an
amount not exceeding his or her vested account balance. A participant who has
suffered financial hardship may withdraw the lesser of his or her vested account
balance or the amount of financial hardship as defined in the Plan.
Loan Provisions: Participants may borrow from their fund accounts the lesser of
50% of their vested account balance or $50,000. The loans are secured by the
balance in the participant's account and bear interest.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Valuation and Income Recognition: The Plan's investments are stated
at fair value. Quoted market prices are used to value investments. Shares of
mutual funds are valued at the net asset value of shares held by the Plan at
year-end.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Basis of Accounting: The financial statements are prepared on the accrual basis
of accounting.
Estimates: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the plan
administrator to make estimates and assumptions that affect certain reported
amounts and disclosures, and actual results may differ from these estimates. It
is at least reasonably possible that a significant change may occur in the near
term for the estimates of investment valuation.
Risks and Uncertainties: The Plan provides for various investment options. The
underlying investment securities are exposed to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and that such
changes could materially affect participants' account balances and the amounts
reported in the statement of assets available for benefits.
--------------------------------------------------------------------------------
(Continued)
5.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Payment of Benefits: Benefits are recorded when paid.
NOTE 3 - TRANSFERS FROM OTHER PLANS
During 2002, one qualified plan of the Sponsor was merged into the Plan. The
participants of the other plan became participants of this Plan as of the date
of the merger. The assets of the other plan were transferred to the Plan after
the merger date.
NOTE 4 - INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets:
2002 2001
---------- ----------
Massachusetts Investors Growth Stock Fund $8,060,011 $9,456,513
Merrill Lynch Retirement Preservation Trust 7,239,562 5,022,518
Mercury Total Return Bond Fund 4,814,478 2,852,347
Merrill Lynch Equity Index Trust 3,327,816 4,340,649
PIMCO Small Cap Value Fund 2,851,533 --
Group 1 Automotive, Inc. Common Stock 2,730,169 2,075,791
The Oakmark Equity and Income Fund 2,560,409 1,905,388
Van Kampen Growth & Income Fund 2,483,470 1,141,157
Federated International Equity Fund 1,863,315 2,983,671
Van Kampen American Value Fund 214 3,249,192
During 2002, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$6,584,999 as follows:
2002
-----------
Mutual funds $(5,087,290)
Common/Collective Funds (971,388)
Group 1 Automotive, Inc. Common Stock (526,321)
-----------
$(6,584,999)
===========
--------------------------------------------------------------------------------
(Continued)
6.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
--------------------------------------------------------------------------------
NOTE 5 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants would become 100% vested in the employer contributions.
NOTE 6 - PARTIES-IN-INTEREST
Parties-in-interest are defined under Department of Labor regulations as any
fiduciary of the Plan, any party rendering service to the Plan, the employer and
certain others. Merrill Lynch Trust Company is the trustee as defined by the
Plan and, therefore, these transactions qualify as party-in-interest
transactions. Fees paid by the Plan to Merrill Lynch for services rendered
amounted to $215,624 for the year ended December 31, 2002.
The Plan held the following party-in-interest investments:
2002 2001
---------- ----------
Group 1 Automotive, Inc. common stock $2,730,169 $2,075,791
Merrill Lynch Retirement Preservation Trust 7,239,562 5,022,518
Merrill Lynch Equity Index Trust 3,327,816 4,340,649
Merrill Lynch Fundamental Growth Fund 1,771,300 516,870
NOTE 7 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have elected to withdraw from the Plan but have not been paid.
As of December 31, 2002 and 2001, amounts allocated to these individuals totaled
$0 and $8,997, respectively.
NOTE 8 - INCOME TAX STATUS
The Internal Revenue Service has ruled in a letter dated September 24, 2001 that
the Plan is designed under the applicable sections of the Internal Revenue Code
and, therefore, is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the Internal
Revenue Code to maintain its qualification. The Plan has been amended to comply
with IRS guidelines and the plan sponsor believes that the Plan continues to
qualify and to operate as designed.
--------------------------------------------------------------------------------
(Continued)
7.
GROUP 1 AUTOMOTIVE, INC. 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2002
--------------------------------------------------------------------------------
Name of Plan Sponsor: Group 1 Automotive, Inc.
------------------------------------------------
Employer Identification Number: 76-0506313
--------------------------------------
Three-Digit Plan Number: 001
---------------------------------------------
(c)
Description of Investment
(b) Including Maturity Date, (e)
Identity of Issue Rate of Interest, Par or (d) Current
(a) or Borrower Maturity Value Cost Value
----------- -------------- ---- -----
Delaware Group Trend Fund Mutual Fund, # $ 909,561
64,325 units
Federated International Equity Fund Mutual Fund, # 1,863,315
161,887 units
ING Pilgrim International Fund Mutual Fund, # 617,248
59,985 units
Massachusetts Investors Growth Stock Mutual Fund, # 8,060,011
Fund 873,241 units
Mercury Total Return Bond Mutual Fund, # 4,814,478
Fund 361,447 units
* Merrill Lynch Fundamental Mutual Fund, # 1,771,300
Growth Fund 137,204 units
The Oakmark Equity and Income Fund Mutual Fund, # 2,560,409
142,482 units
PIMCO Small Cap Value Fund Mutual Fund, # 2,851,533
145,190 units
Van Kampen American Value Fund Mutual Fund, # 214
14 units
Van Kampen Growth and Income Fund Mutual Fund, # 2,483,470
173,791 units
* Group 1 Automotive, Inc. Common Stock, # 2,730,169
114,329 shares
* Merrill Lynch Equity Index Trust Collective Trust, # 3,327,816
53,118 units
* Merrill Lynch Retirement Preservation Collective Trust, # 7,239,562
Trust 7,239,562 units
Participant Loans Interest rates ranging 1,955,568
from 5.25% to 15% ---------------
$ 41,184,654
===============
--------------------------------------------------------------------------------
* Denotes party-in-interest
# All investments are participant directed therefore cost information is not
required.
8.
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the Company (or other persons who administer the employee benefit plan)
has duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Group 1 Automotive, Inc.
401(k) Savings Plan
-----------------------------------
Date: June 18, 2003 /s/ BROOKS O'HARA
------------------------------------
Brooks O'Hara
Vice President, Human Resources
Plan Administrator
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
23.1 Consent of Independent Auditors