UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-13395
 
 SONIC AUTOMOTIVE, INC.
 (Exact name of registrant as specified in its charter)
 
 DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    56-2010790
(I.R.S. Employer
Identification No.)
 6415 Idlewild Road, Suite 109, Charlotte, North Carolina
(Address of principal executive offices)
    
    28212
(Zip Code)
 (704) 566-2400
(Registrants telephone number, including area code)
 
 þ o
 o o
  Large Accelerated Filer o
Accelerated Filer þ
Non-Accelerated Filer o
(Do not check if a smaller reporting company)
Smaller Reporting Company o o þ




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##### 



INDEX TO FORM 10-Q
 PagePART I  FINANCIAL INFORMATION
    
    
    3ITEM 1. Condensed Consolidated Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Statements of Income 
Quarter ended March 31, 2009 and March 31, 2010
    
    
    3Condensed Consolidated Balance Sheets 
December 31, 2009 and March 31, 2010
    
    
    4Condensed Consolidated Statement of Stockholders Equity 
Three-month period ended March 31, 2010
    
    
    5Condensed Consolidated Statements of Cash Flows 
Three-month period ended March 31, 2009 and March 31, 2010
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35ITEM 4. Controls and Procedures
    
    
    36PART II  OTHER INFORMATION
    
    
    37ITEM 1. Legal Proceedings
    
    
    37ITEM 1A. Risk Factors
    
    
    38ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40ITEM 6. Exhibits
    
    
    41SIGNATURES
    
    
    44
 2




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##### 



PART I  FINANCIAL INFORMATION
 
 Item 1: Condensed Consolidated Financial Statements.
 
 SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands except per share amounts)
(Unaudited)
 First Quarter EndedMarch 31,2009
    
    
    2010Revenues:New vehicles
    
    $
    704,717
    
    
    $
    784,242Used vehicles
    
    
    329,209
    
    
    
    423,610Wholesale vehicles
    
    
    37,796
    
    
    
    31,384Total vehicles
    
    
    1,071,722
    
    
    
    1,239,236Parts, service and collision repair
    
    
    271,641
    
    
    
    279,370Finance, insurance and other
    
    
    35,135
    
    
    
    40,959Total revenues
    
    
    1,378,498
    
    
    
    1,559,565Cost of Sales:New vehicles
    
    
    (657,899
    )
    
    
    (729,731
    )Used vehicles
    
    
    (298,251
    )
    
    
    (390,121
    )Wholesale vehicles
    
    
    (37,889
    )
    
    
    (32,076
    )Total vehicles
    
    
    (994,039
    )
    
    
    (1,151,928
    )Parts, service and collision repair
    
    
    (136,992
    )
    
    
    (138,946
    )Total cost of sales
    
    
    (1,131,031
    )
    
    
    (1,290,874
    )Gross profit
    
    
    247,467
    
    
    
    268,691Selling, general and administrative expenses
    
    
    (205,920
    )
    
    
    (224,310
    )Impairment charges
    
    
    (57
    )
    
    
    (44
    )Depreciation and amortization
    
    
    (7,625
    )
    
    
    (8,501
    )Operating income
    
    
    33,865
    
    
    
    35,836Other income (expense):Interest expense, floor plan
    
    
    (5,198
    )
    
    
    (4,942
    )Interest expense, other, net
    
    
    (18,252
    )
    
    
    (17,189
    )Interest expense, non-cash, convertible debt
    
    
    (2,619
    )
    
    
    (1,677
    )Interest expense, non-cash, cash flow swaps
    
    
    
    
    
    
    (1,683
    )Other income, net
    
    
    50
    
    
    
    62Total other expense
    
    
    (26,019
    )
    
    
    (25,429
    )Income from continuing operations before taxes
    
    
    7,846
    
    
    
    10,407Income tax provision
    
    
    (3,531
    )
    
    
    (4,475
    )Income from continuing operations
    
    
    4,315
    
    
    
    5,932Discontinued operations:Loss from operations and the sale of discontinued franchises
    
    
    (3,675
    )
    
    
    (2,868
    )Income tax benefit
    
    
    1,038
    
    
    
    1,090Loss from discontinued operations
    
    
    (2,637
    )
    
    
    (1,778
    )Net income
    
    $
    1,678
    
    
    $
    4,154Basic earnings per share:Earnings per share from continuing operations
    
    $
    0.11
    
    
    $
    0.11Loss per share from discontinued operations
    
    
    (0.07
    )
    
    
    (0.03
    )Earnings per share
    
    $
    0.04
    
    
    $
    0.08Weighted average common shares outstanding
    
    
    40,099
    
    
    
    51,889Diluted earnings per share:Earnings per share from continuing operations
    
    $
    0.11
    
    
    $
    0.11Loss per share from discontinued operations
    
    
    (0.07
    )
    
    
    (0.03
    )Earnings per share
    
    $
    0.04
    
    
    $
    0.08Weighted average common shares outstanding
    
    
    40,338
    
    
    
    52,579
  3




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 (Unaudited)December 31,
    
    
    March 31,2009
    
    
    2010ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    30,035
    
    
    $
    214,063Receivables, net
    
    
    232,969
    
    
    
    211,594Inventories
    
    
    795,275
    
    
    
    830,255Assets held for sale
    
    
    12,167
    
    
    
    11,672Other current assets
    
    
    14,937
    
    
    
    18,492Total Current Assets
    
    
    1,085,383
    
    
    
    1,286,076Property and Equipment, net
    
    
    382,085
    
    
    
    382,375Goodwill
    
    
    469,482
    
    
    
    470,151Other Intangible Assets, net
    
    
    80,806
    
    
    
    80,392Other Assets
    
    
    51,099
    
    
    
    59,510Total Assets
    
    $
    2,068,855
    
    
    $
    2,278,504LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Notes payable  floor plan  trade
    
    $
    214,871
    
    
    $
    410,073Notes payable  floor plan  non-trade
    
    
    548,493
    
    
    
    356,840Trade accounts payable
    
    
    55,345
    
    
    
    54,715Accrued interest
    
    
    16,146
    
    
    
    13,010Other accrued liabilities
    
    
    144,709
    
    
    
    141,284Liabilities associated with assets held for sale  non-trade
    
    
    3,346
    
    
    
    4,057Current maturities of long-term debt
    
    
    23,991
    
    
    
    223,189Total Current Liabilities
    
    
    1,006,901
    
    
    
    1,203,168Long-Term Debt
    
    
    552,150
    
    
    
    562,520Other Long-Term Liabilities
    
    
    141,052
    
    
    
    138,560Stockholders Equity:Class A convertible preferred stock, none issued
    
    
    
    
    
    
    Class A common stock, $.01 par value; 100,000,000 shares authorized;
54,986,875 shares issued and 40,099,559 shares outstanding at December
31, 2009; 55,432,031 shares issued and 40,479,172 shares outstanding at
March 31, 2010
    
    
    550
    
    
    
    554Class B common stock; $.01 par value; 30,000,000 shares authorized;
12,029,375 shares outstanding at December 31, 2009 and March 31, 2010
    
    
    121
    
    
    
    121Paid-in capital
    
    
    662,186
    
    
    
    663,446Accumulated deficit
    
    
    (35,180
    )
    
    
    (31,025
    )Accumulated other comprehensive income
    
    
    (22,350
    )
    
    
    (21,482
    )Treasury stock, at cost (14,887,316 Class A shares held at December 31,
2009 and 14,952,859 Class A shares held at March 31, 2010)
    
    
    (236,575
    )
    
    
    (237,358
    )Total Stockholders Equity
    
    
    368,752
    
    
    
    374,256Total Liabilities and Stockholders Equity
    
    $
    2,068,855
    
    
    $
    2,278,504
  4




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(Dollars and shares in thousands)
(Unaudited)
 AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Total
    
    
    Compre-Common Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Treasury
    
    
    Comprehensive
    
    
    Stockholders
    
    
    hensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    Income
    
    
    Equity
    
    
    IncomeBALANCE AT DECEMBER 31,
2009
    
    
    54,987
    
    
    $
    550
    
    
    
    12,029
    
    
    $
    121
    
    
    $
    662,186
    
    
    $
    (35,180
    )
    
    $
    (236,575
    )
    
    $
    (22,350
    )
    
    $
    368,752Shares awarded under stock
compensation plans
    
    
    119
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175
    
    
    
    Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (783
    )
    
    
    
    
    
    
    (783
    )
    
    
    Income tax benefit
associated with stock
compensation plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    Income tax benefit
associated with
convertible note hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    Fair value of interest
rate swap agreements, net
of tax expense of $644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    868
    
    
    
    868
    
    
    
    868Stock-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164
    
    
    
    Restricted stock
amortization, net of
forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    641
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,154
    
    
    
    
    
    
    
    
    
    
    
    4,154
    
    
    
    4,154Other
    
    
    326
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    BALANCE AT MARCH 31, 2010
    
    
    55,432
    
    
    $
    554
    
    
    
    12,029
    
    
    $
    121
    
    
    $
    663,446
    
    
    $
    (31,025
    )
    
    $
    (237,358
    )
    
    $
    (21,482
    )
    
    $
    374,256
    
    
    $
    5,022
  5




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 First Quarter EndedMarch 31,2009
    
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    1,678
    
    
    $
    4,154Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of property, plant and equipment
    
    
    7,733
    
    
    
    8,510Provision for bad debt expense
    
    
    262
    
    
    
    332Other amortization
    
    
    414
    
    
    
    414Debt issuance cost amortization
    
    
    338
    
    
    
    1,012Debt discount amortization, net of premium amortization
    
    
    2,791
    
    
    
    1,266Stock  based compensation expense
    
    
    108
    
    
    
    164Amortization of restricted stock
    
    
    711
    
    
    
    641Deferred income taxes
    
    
    (1,338
    )
    
    
    (244
    )Equity interest in earnings of investees
    
    
    (157
    )
    
    
    (195
    )Asset impairment charges
    
    
    1,586
    
    
    
    44Loss (gain) on disposal of franchises and property and equipment
    
    
    4
    
    
    
    (21
    )Loss on exit of leased dealerships
    
    
    946
    
    
    
    1,461Changes in assets and liabilities that relate to operations:Receivables
    
    
    26,732
    
    
    
    17,574Inventories
    
    
    153,528
    
    
    
    (35,881
    )Other assets
    
    
    (20,801
    )
    
    
    (10,879
    )Notes payable  floor plan  trade
    
    
    (30,229
    )
    
    
    195,202Trade accounts payable and other liabilities
    
    
    22,556
    
    
    
    (9,258
    )Total adjustments
    
    
    165,184
    
    
    
    170,142Net cash provided by operating activities
    
    
    166,862
    
    
    
    174,296CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (20,407
    )
    
    
    (7,766
    )Proceeds from sales of property and equipment
    
    
    435
    
    
    
    (41
    )Proceeds from sale of franchises
    
    
    
    
    
    
    504Net cash used in investing activities
    
    
    (19,972
    )
    
    
    (7,303
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net (repayments) borrowings on notes payable floor plan  non-trade borrowings
on notes payable floor plan  non-trade
    
    
    (160,184
    )
    
    
    (190,942
    )Borrowings on revolving credit facilities
    
    
    226,596
    
    
    
    40,000Repayments on revolving credit facilities
    
    
    (197,552
    )
    
    
    (40,000
    )Proceeds from long-term debt
    
    
    
    
    
    
    209,839Principal payments on long-term debt
    
    
    (1,421
    )
    
    
    (1,538
    )Settlement of cash flow swaps
    
    
    (16,454
    )
    
    
    Purchase of treasury stock
    
    
    (31
    )
    
    
    (783
    )Income tax benefit associated with stock compensation plans
    
    
    
    
    
    
    218Income tax benefit associated with convertible hedge
    
    
    569
    
    
    
    66Issuance of shares under stock compensation plans
    
    
    94
    
    
    
    175Dividends paid
    
    
    (4,864
    )
    
    
    Net cash provided by / (used in) financing activities
    
    
    (153,247
    )
    
    
    17,035NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (6,357
    )
    
    
    184,028CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    6,971
    
    
    
    30,035CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    614
    
    
    $
    214,063SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:Change in fair value of cash flow hedging instruments (net of tax expense
of $9,984 and $644 for the first quarter ended March 31, 2009 and 2010, respectively)
    
    $
    16,290
    
    
    $
    868SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid (received) during the year for:Interest, net of amount capitalized
    
    $
    29,627
    
    
    $
    26,663Income taxes
    
    $
    (10,897
    )
    
    $
    (123
    )
  6




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Basis of Presentation
 Recent Developments
 Reclassifications
 Lease Exit Accruals 
 (dollars in thousands)Balance, December 31, 2009
    
    $
    47,825Lease exit expense
    
    
    1,461Payments
    
    
    (2,612
    )Balance, March 31, 2010
    
    $
    46,674
   Income Tax Expense 
 7




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Dispositions
 (dollars in thousands)December 31,
    
    
    March 31,2009
    
    
    2010Inventories
    
    $
    4,528
    
    
    $
    5,363Property and equipment, net
    
    
    4,838
    
    
    
    4,681Goodwill
    
    
    2,801
    
    
    
    1,628Assets held for sale
    
    $
    12,167
    
    
    $
    11,672
  (dollars in thousands)First Quarter Ended March 31,2009
    
    
    2010Loss from operations
    
    $
    (1,284
    )
    
    $
    (1,518
    )Gain (loss) on disposal of franchises
    
    
    (80
    )
    
    
    318Lease exit charges
    
    
    (782
    )
    
    
    (1,668
    )Property impairment charges
    
    
    (130
    )
    
    
    Goodwill impairment charges
    
    
    (1,399
    )
    
    
    Pre-tax loss
    
    $
    (3,675
    )
    
    $
    (2,868
    )Total Revenues
    
    $
    72,294
    
    
    $
    9,372
   Inventories
  (dollars in thousands)December 31,
    
    
    March 31,2009
    
    
    2010New vehicles
    
    $
    557,319
    
    
    $
    561,127Used vehicles
    
    
    138,401
    
    
    
    170,512Parts and accessories
    
    
    51,470
    
    
    
    50,968Other
    
    
    52,613
    
    
    
    53,011$
    799,803
    
    
    $
    835,618Less inventories classified as assets held for sale
    
    
    (4,528
    )
    
    
    (5,363
    )Inventories
    
    $
    795,275
    
    
    $
    830,255
 8




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Property And Equipment
  (dollars in thousands)December 31,
    
    
    March 31,2009
    
    
    2010Land
    
    $
    61,886
    
    
    $
    58,852Building and improvements
    
    
    322,632
    
    
    
    318,836Office equipment and fixtures
    
    
    75,801
    
    
    
    77,414Parts and service equipment
    
    
    54,981
    
    
    
    56,048Company vehicles
    
    
    8,440
    
    
    
    8,160Construction in progress
    
    
    40,000
    
    
    
    48,290Total, at cost
    
    
    563,740
    
    
    
    567,600Less accumulated depreciation
    
    
    (176,817
    )
    
    
    (180,544
    )Subtotal
    
    
    386,923
    
    
    
    387,056Less assets held for sale
    
    
    (4,838
    )
    
    
    (4,681
    )Property and equipment, net
    
    $
    382,085
    
    
    $
    382,375
  Goodwill And Intangible Assets
 (dollars in thousands)AccumulatedFranchise Agreements
    
    
    Gross Goodwill
    
    
    Impairment
    
    
    Net GoodwillBalance, December 31, 2009
    
    $
    64,835
    
    
    $
    1,266,207
    
    
    $
    (796,725
    )
    
    $
    469,482Reductions from sales of franchises
    
    
    
    
    
    
    (504
    )
    
    
    
    
    
    
    (504
    )Reclassification (to) / from assets held for sale, net
    
    
    
    
    
    
    1,173
    
    
    
    
    
    
    
    1,173Balance, March 31, 2010
    
    $
    64,835
    
    
    $
    1,266,876
    
    
    $
    (796,725
    )
    
    $
    470,151
   Long-Term Debt
  9




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (dollars in thousands)December 31,
    
    
    March 31,2009
    
    
    20102010
Revolving Credit Facility (1)
    
    $
    
    
    
    $
    2006 Revolving Credit Sub-Facility (2)
    
    
    
    
    
    
    Senior Subordinated Notes bearing interest at 8.625%
    
    
    275,000
    
    
    
    275,000Senior Subordinated Notes bearing interest at 9.0%
    
    
    
    
    
    
    210,000Convertible Senior Notes bearing interest at 5.0%
    
    
    172,500
    
    
    
    172,500Convertible Senior Subordinated Notes bearing interest at 4.25%
    
    
    17,045
    
    
    
    17,045Notes payable to a finance company bearing interest from 9.52% to 10.52% (with
a weighted average of 10.19%)
    
    
    17,778
    
    
    
    17,253Mortgage notes to finance companies-fixed rate, bearing interest from 5.80% to 7.03%
    
    
    78,424
    
    
    
    77,840Mortgage notes to finance companies-variable rate, bearing interest at 1.25 to 3.30 percentage
points above one-month LIBOR
    
    
    38,251
    
    
    
    39,172Net debt discount and premium (3)
    
    
    (29,199
    )
    
    
    (29,373
    )Other
    
    
    6,342
    
    
    
    6,272$
    576,141
    
    
    $
    785,709Less current maturities
    
    
    (23,991
    )
    
    
    (223,189
    )Long-term debt
    
    $
    552,150
    
    
    $
    562,520
 
 (1)
    
    Interest rate was 3.5% above LIBOR at March 31, 2010.(2)
    
    See 2006 Credit Facility discussion below.(3)
    
    December 31, 2009 includes $1.5 million discount associated with the 8.625% Notes,
$29.8 million discount associated with the 5.0% Convertible Notes, $0.6 million discount
associated with the 4.25% Convertible Notes, $2.5 million premium associated with notes payable
to a finance company and $0.2 million premium associated with mortgage notes payable. March 31,
2010 includes $1.5 million discount associated with the 8.625% Notes, $28.6 million discount
associated with the 5.0% Convertible Notes , $0.4 million discount associated with the 4.25%
Convertible Notes, $1.5 million discount associated with the 9.0% Notes, $2.3 million premium
associated with notes payable to a finance company and $0.2 million premium associated with mortgage
notes payable. 2006
Credit Facility
  2010 Credit Facilities
   10




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      Covenants
  CovenantConsolidated
    
    ConsolidatedConsolidated
    
    Fixed Charge
    
    Total SeniorLiquidity
    
    Coverage
    
    Secured Debt toRatio
    
    Ratio
    
    EBITDA RatioThrough March 30, 2011
    
    
    ≥ 1.00
    
    
    
    ≥ 1.10
    
    
    
    ≤ 2.25March 31, 2011 through and
including March 30, 2012
    
    
    ≥ 1.05
    
    
    
    ≥ 1.15
    
    
    
    ≤ 2.25March 31, 2012 and thereafter
    
    
    ≥ 1.10
    
    
    
    ≥ 1.20
    
    
    
    ≤ 2.25March 31, 2010 actual
    
    
    1.15
    
    
    
    1.40
    
    
    
    1.37
  11




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  9.0% Notes
  RedemptionPriceBeginning on March 15, 2014
    
    
    104.50
    %Beginning on March 15, 2015
    
    
    102.25
    %Beginning on March 15, 2016 and thereafter
    
    
    100.00
    %
     8.625% Notes
   12




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    5.0% Convertible Senior Notes (5.0% Convertible Notes)
    4.25%
Convertible Senior Subordinated Notes (4.25% Convertible
Notes)
  13




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Notes Payable to a Finance Company
  Mortgage Notes
  Derivative Instruments and Hedging Activities
  Notional Amount
    
    Pay Rate
    
    Receive Rate (1)
    
    Maturing Date(in millions)$
    200.0
    
    
    
    4.935
    %
    
    one-month LIBOR
    
    May 1, 2012$
    100.0
    
    
    
    5.265
    %
    
    one-month LIBOR
    
    June 1, 2012$
    3.8
    
    
    
    7.100
    %
    
    one-month LIBOR
    
    July 10, 2017$
    25.0
    (2)
    
    
    5.160
    %
    
    one-month LIBOR
    
    September 1, 2012$
    15.0
    (2)
    
    
    4.965
    %
    
    one-month LIBOR
    
    September 1, 2012$
    25.0
    (2)
    
    
    4.885
    %
    
    one-month LIBOR
    
    October 1, 2012$
    11.8
    
    
    
    4.655
    %
    
    one-month LIBOR
    
    December 10, 2017$
    8.9
    
    
    
    6.860
    %
    
    one-month LIBOR
    
    August 1, 2017$
    7.2
    
    
    
    4.330
    %
    
    one-month LIBOR
    
    July 1, 2013
 (1)
    
    One-month LIBOR was 0.249% at March 31, 2010.(2)
    
    After December 31, 2009 changes in fair value are recorded through earnings.  14




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   7. Stock-Based Compensation
  Weighted AverageOptions
    
    
    Exercise Price

    
    
    Weighted Average
    
    
    Remaining
    
    
    AggregateOutstanding
    
    
    Per Share
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    
    
    
    (in years)
    
    
    (in thousands)Balance  December 31,
2009
    
    
    4,014
    
    
    $
    1.81 - $37.50
    
    
    $
    15.48
    
    
    
    5.9
    
    
    $
    12,349Exercised
    
    
    (74
    )
    
    $
    1.81 - $8.88
    
    
    
    3.58Forfeited
    
    
    (44
    )
    
    $
    1.81 - $37.50
    
    
    
    18.60Balance  March 31, 2010
    
    
    3,896
    
    
    $
    1.81 - $37.50
    
    
    $
    15.67
    
    
    
    5.6
    
    
    $
    12,671Exercisable
    
    
    2,949
    
    
    $
    1.81 - $37.50
    
    
    $
    19.88
    
    
    
    4.5
    
    
    $
    4,214
 First Quarter Ended(dollars in thousands, except per option amounts)
    
    March 31, 2010Fair Value of Options Vested
    
    $
    453Intrinsic Value of Options Exercised
    
    $
    575
  15




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Unvested Restricted
    
    
    Weighted AverageStock and Restricted
    
    
    Grant Date FairStock Units
    
    
    Value(in thousands)Balance  December 31, 2009
    
    
    313
    
    
    $
    17.45Granted
    
    
    472
    
    
    
    10.30Vested
    
    
    (151
    )
    
    
    21.40Balance  March 31, 2010
    
    
    634
    
    
    $
    11.18
   Per Share Data and Stockholders Equity
  16




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the First Quarter Ended March 31, 2009Income
    
    
    LossFrom Continuing
    
    
    From DiscontinuedOperations
    
    
    Operations
    
    
    Net IncomeClass A & B
    
    
    
    
    
    
    Per Common
    
    
    
    
    
    
    Per Common
    
    
    
    
    
    
    Per CommonShares
    
    
    Amount
    
    
    Share Amount
    
    
    Amount
    
    
    Share Amount
    
    
    Amount
    
    
    Share Amount(dollars in thousands except per share amounts)Earnings (Loss) and Shares
    
    
    40,099
    
    
    $
    4,315
    
    
    
    
    
    
    $
    (2,637
    )
    
    
    
    
    
    $
    1,678Effect of Participating Securities:Unvested Restricted Stock and Stock Units
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )Basic Earnings (Loss) Per Share
    
    
    40,099
    
    
    $
    4,284
    
    
    $
    0.11
    
    
    $
    (2,637
    )
    
    $
    (0.07
    )
    
    $
    1,647
    
    
    $
    0.04Effect of Dilutive Securities:Stock Plans
    
    
    239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted Earnings (Loss) Per Share
    
    
    40,338
    
    
    $
    4,284
    
    
    $
    0.11
    
    
    $
    (2,637
    )
    
    $
    (0.07
    )
    
    $
    1,647
    
    
    $
    0.04For the First Quarter Ended March 31, 2010Income
    
    
    LossFrom Continuing
    
    
    From DiscontinuedOperations
    
    
    Operations
    
    
    Net IncomeClass A & B
    
    
    
    
    
    
    Per Common
    
    
    
    
    
    
    Per Common
    
    
    
    
    
    
    Per CommonShares
    
    
    Amount
    
    
    Share Amount
    
    
    Amount
    
    
    Share Amount
    
    
    Amount
    
    
    Share Amount(dollars in thousands except per share amounts)Earnings (Loss) and Shares
    
    
    51,889
    
    
    $
    5,932
    
    
    
    
    
    
    $
    (1,778
    )
    
    
    
    
    
    $
    4,154Effect of Participating Securities:Unvested Restricted Stock and Stock Units
    
    
    
    
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (71
    )Basic Earnings (Loss) Per Share
    
    
    51,889
    
    
    $
    5,861
    
    
    $
    0.11
    
    
    $
    (1,778
    )
    
    $
    (0.03
    )
    
    $
    4,083
    
    
    $
    0.08Effect of Dilutive Securities:Stock Plans
    
    
    690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted Earnings (Loss) Per Share
    
    
    52,579
    
    
    $
    5,861
    
    
    $
    0.11
    
    
    $
    (1,778
    )
    
    $
    (0.03
    )
    
    $
    4,083
    
    
    $
    0.08
  Contingencies
 Legal and Other Proceedings:
   17




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Guarantees and Indemnification Obligations:
   Fair Value Measurements
    18




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     Fair Value at Reporting Date Using:SignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs(dollars in millions)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash Flow Swaps (1)
    
    $
    (33.3
    )
    
    $
    
    
    
    $
    (33.3
    )
    
    $
    Total
    
    $
    (33.3
    )
    
    $
    
    
    
    $
    (33.3
    )
    
    $
    
 (1)
    
    Included in Other Long-Term Liabilities in the accompanying Condensed Consolidated Balance
Sheet.  19




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (dollars in millions)SignificantFirst
    
    UnobservableQuarter Ended
    
    Inputs
    
    Total3/31/2010
    
    (Level 3)
    
    Gains / (Losses)Long-lived assets
held and used (1)
    
    $
    382.4
    
    
    $
    382.4
    
    
    $
    Goodwill (2)
    
    
    470.2
    
    
    
    470.2
    
    
    
    Franchise assets (2)
    
    
    64.8
    
    
    
    64.8
    
    
    
    Long-lived assets
held for sale (3)
    
    
    6.3
    
    
    
    6.3
    
    
    
    
 (1)
    
    See Note 4 for discussion.(2)
    
    See Note 5 for discussion.(3)
    
    Includes Property and Equipment, Goodwill and Franchise Assets. See Notes 4 and 5 for
discussion.    (dollars in thousands)December 31, 2009
    
    March 31, 2010Fair Value
    
    Carrying Value
    
    Fair Value
    
    Carrying Value9.00% Senior
Subordinated Notes (1)
    
    $
    
    
    
    $
    
    
    
    $
    213,150
    
    
    $
    208,5338.625% Senior
Subordinated Notes (1)
    
    $
    266,750
    
    
    $
    273,455
    
    
    $
    278,795
    
    
    $
    273,5435.0% Convertible Senior
Notes (1)
    
    $
    188,072
    
    
    $
    142,743
    
    
    $
    194,771
    
    
    $
    143,9504.25% Convertible Senior
Subordinated Notes (1)
    
    $
    16,363
    
    
    $
    16,423
    
    
    $
    17,002
    
    
    $
    16,599Mortgage Notes (2)
    
    $
    78,333
    
    
    $
    78,424
    
    
    $
    77,755
    
    
    $
    77,840Notes Payable to a
Finance Company (2)
    
    $
    17,859
    
    
    $
    20,260
    
    
    $
    17,328
    
    
    $
    19,560
 (1)
    
    As determined by market quotations as of March 31, 2010.(2)
    
    As determined by discounted cash flows. 20




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Subsequent Events
  21




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
  Economic Conditions
    22




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Percentage of New Vehicle RevenueFirst Quarter Ended March 31,2009
    
    2010Brand (1)BMW
    
    
    18.2
    %
    
    
    16.0
    %Honda
    
    
    14.0
    %
    
    
    13.6
    %Toyota
    
    
    11.0
    %
    
    
    10.9
    %Mercedes
    
    
    10.6
    %
    
    
    10.6
    %Ford
    
    
    9.8
    %
    
    
    8.9
    %General Motors (2)
    
    
    6.7
    %
    
    
    7.0
    %Lexus
    
    
    5.6
    %
    
    
    6.5
    %Cadillac
    
    
    5.1
    %
    
    
    5.7
    %Other (3)
    
    
    3.7
    %
    
    
    3.2
    %Audi
    
    
    2.4
    %
    
    
    3.1
    %Volkswagen
    
    
    2.0
    %
    
    
    2.1
    %Hyundai
    
    
    2.0
    %
    
    
    2.0
    %Land Rover
    
    
    1.5
    %
    
    
    1.9
    %Porsche
    
    
    1.3
    %
    
    
    1.7
    %Nissan
    
    
    1.1
    %
    
    
    1.7
    %Infiniti
    
    
    1.2
    %
    
    
    1.5
    %Volvo
    
    
    0.9
    %
    
    
    1.3
    %Other Luxury (4)
    
    
    1.1
    %
    
    
    0.9
    %Acura
    
    
    1.0
    %
    
    
    0.9
    %Chrysler (5)
    
    
    0.8
    %
    
    
    0.5
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
 (1)
    
    In accordance with the provisions of Presentation of Financial Statements in the
Accounting Standards Codification (the ASC), prior years income statement data reflect
reclassifications to exclude franchises sold, identified for sale, or terminated subsequent to
March 31, 2009 which had not been previously included in discontinued operations or include
previously held for sale franchises which subsequently were reclassed to held and used. See Notes 1
and 2 to our accompanying unaudited Consolidated Financial Statements which discusses these and
other factors that affect the comparability of the information for the periods presented.(2)
    
    Includes Buick, Chevrolet GMC and Pontiac.(3)
    
    Includes Isuzu, KIA, Mini, Mitsubishi and Subaru.(4)
    
    Includes Hummer, Jaguar, and Saab.(5)
    
    Includes Chrysler, Dodge and Jeep. Results of Operations
  New Vehicles
  First Quarter Ended March 31,2009
    
    2010
    
    % ChangeSAAR (in millions of vehicles)
    
    
    9.5
    
    
    
    11.0
    
    
    
    15.8
    %
 23




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  First Quarter Ended March 31,
    
    Better / (Worse)(in thousands except units and per unit data)
    
    2009
    
    2010
    
    Change
    
    % ChangeReported:Revenue
    
    $
    704,717
    
    
    $
    784,242
    
    
    $
    79,525
    
    
    
    11.3
    %Gross profit
    
    $
    46,818
    
    
    $
    54,511
    
    
    $
    7,693
    
    
    
    16.4
    %Unit sales
    
    
    21,753
    
    
    
    23,234
    
    
    
    1,481
    
    
    
    6.8
    %Revenue per Unit
    
    $
    32,396
    
    
    $
    33,754
    
    
    $
    1,358
    
    
    
    4.2
    %Gross profit per unit
    
    $
    2,152
    
    
    $
    2,346
    
    
    $
    194
    
    
    
    9.0
    %Gross profit as a % of revenue
    
    
    6.6
    %
    
    
    7.0
    %
    
    40
    bps
      Used Vehicles
  24




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 First Quarter Ended March 31,
    
    Better / (Worse)(in thousands except units and per unit data)
    
    2009
    
    2010
    
    Change
    
    % ChangeReported:Revenue
    
    $
    329,209
    
    
    $
    423,610
    
    
    $
    94,401
    
    
    
    28.7
    %Gross profit
    
    $
    30,958
    
    
    $
    33,489
    
    
    $
    2,531
    
    
    
    8.2
    %Unit sales
    
    
    17,411
    
    
    
    21,750
    
    
    
    4,339
    
    
    
    24.9
    %Revenue per Unit
    
    $
    18,908
    
    
    $
    19,476
    
    
    $
    568
    
    
    
    3.0
    %Gross profit per unit
    
    $
    1,778
    
    
    $
    1,540
    
    
    $
    (238
    )
    
    
    (13.4
    %)Gross profit as a % of revenue
    
    
    9.4
    %
    
    
    7.9
    %
    
    (150
    )
    bpsCPO revenue
    
    $
    186,104
    
    
    $
    204,676
    
    
    $
    18,572
    
    
    
    10.0
    %CPO unit sales
    
    
    7,632
    
    
    
    7,627
    
    
    
    (5
    )
    
    
    (0.1
    %)
   Wholesale Vehicles
  First Quarter Ended March 31,
    
    Better / (Worse)(in thousands except units and per unit data)
    
    2009
    
    2010
    
    Change
    
    % ChangeReported:Revenue
    
    $
    37,796
    
    
    $
    31,384
    
    
    $
    (6,412
    )
    
    
    (17.0
    %)Gross profit
    
    $
    (94
    )
    
    $
    (693
    )
    
    $
    (599
    )
    
    
    (637.2
    %)Unit sales
    
    
    6,532
    
    
    
    5,200
    
    
    
    (1,332
    )
    
    
    (20.4
    %)Revenue per Unit
    
    $
    5,786
    
    
    $
    6,035
    
    
    $
    249
    
    
    
    4.3
    %Gross profit per unit
    
    $
    (14
    )
    
    $
    (133
    )
    
    $
    (119
    )
    
    
    (850.0
    %)Gross profit as a % of revenue
    
    
    (0.2
    %)
    
    
    (2.2
    %)
    
    (200
    )
    bps
   Parts, Service and Collision Repair (Fixed Operations)
  25




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 First Quarter Ended March 31,
    
    
    Better / (Worse)(in thousands)
    
    2009
    
    
    2010
    
    
    Change
    
    
    % ChangeReported:RevenueParts
    
    $
    148,759
    
    
    $
    148,285
    
    
    $
    (474
    )
    
    
    (0.3
    %)Service
    
    
    109,741
    
    
    
    118,237
    
    
    
    8,496
    
    
    
    7.7
    %Collision Repair
    
    
    13,141
    
    
    
    12,848
    
    
    
    (293
    )
    
    
    (2.2
    %)Total
    
    $
    271,641
    
    
    $
    279,370
    
    
    $
    7,729
    
    
    
    2.8
    %Gross profitParts
    
    $
    49,739
    
    
    $
    49,612
    
    
    $
    (127
    )
    
    
    (0.3
    %)Service
    
    
    77,501
    
    
    
    83,672
    
    
    
    6,171
    
    
    
    8.0
    %Collision Repair
    
    
    7,409
    
    
    
    7,140
    
    
    
    (269
    )
    
    
    (3.6
    %)Total
    
    $
    134,649
    
    
    $
    140,424
    
    
    $
    5,775
    
    
    
    4.3
    %Gross profit as a % of revenueParts
    
    
    33.4
    %
    
    
    33.5
    %
    
    10
    
    bpsService
    
    
    70.6
    %
    
    
    70.8
    %
    
    20
    
    bpsCollision Repair
    
    
    56.4
    %
    
    
    55.6
    %
    
    (80)
    
    bpsTotal
    
    
    49.6
    %
    
    
    50.3
    %
    
    70
    
    bps
    Finance, Insurance and Other (F&I)
  First Quarter Ended March 31,
    
    Better / (Worse)(in thousands except per unit data)
    
    2009
    
    2010
    
    Change
    
    % ChangeReported:Revenue
    
    $
    35,135
    
    
    $
    40,959
    
    
    $
    5,824
    
    
    
    16.6
    %Gross profit per retail unit
(excluding fleet)
    
    $
    952
    
    
    $
    947
    
    
    $
    (5
    )
    
    
    (0.5
    %)
  26




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Selling, General and Administrative Expenses (SG&A)
   First Quarter Ended March 31,
    
    
    Better / (Worse)(in thousands)
    
    2009
    
    
    2010
    
    
    Change
    
    
    % ChangeReported Expense:Compensation
    
    $
    116,080
    
    
    $
    132,542
    
    
    $
    (16,462
    )
    
    
    (14.2
    %)Advertising
    
    
    11,052
    
    
    
    11,437
    
    
    
    (385
    )
    
    
    (3.5
    %)Rent and Rent Related
    
    
    35,307
    
    
    
    35,833
    
    
    
    (526
    )
    
    
    (1.5
    %)Other
    
    
    43,481
    
    
    
    44,498
    
    
    
    (1,017
    )
    
    
    (2.3
    %)Total
    
    $
    205,920
    
    
    $
    224,310
    
    
    $
    (18,390
    )
    
    
    (8.9
    %)SG&A as a % of grossCompensation
    
    
    46.9
    %
    
    
    49.3
    %
    
    (240
    )
    bpsAdvertising
    
    
    4.5
    %
    
    
    4.3
    %
    
    20
    
    bpsRent and Rent Related
    
    
    14.3
    %
    
    
    13.3
    %
    
    100
    
    bpsOther
    
    
    17.5
    %
    
    
    16.6
    %
    
    90
    
    bpsTotal
    
    
    83.2
    %
    
    
    83.5
    %
    
    (30
    )
    bps
     27




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Impairment Charges
  Depreciation and Amortization
  Interest Expense, Floor Plan
   Interest Expense, Other, Net
  Increase / (Decrease) inInterest Expense, OtherFirst Quarter Ended(dollars in millions)
    
    March 31, 2010Interest Rates  Decrease in interest rates
    
    $
    (0.5
    )Debt balances  Decrease in debt balances
    
    
    (0.2
    )Other factors  Decrease in capitalized interest
    
    
    0.2 Decrease in interest expense related to variable to
fixed rate swaps
    
    
    (1.7
    ) Higher deferred loan cost amortization
    
    
    0.4 Lower interest allocation to discontinued operations
    
    
    0.5 Other
    
    
    0.2$
    (1.1
    )
 28




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Interest Expense, Non-Cash, Convertible Debt
   Interest Expense, Non-Cash, Cash Flow Swaps
   Income Taxes
  29




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Discontinued Operations
  (dollars in thousands)First Quarter Ended March 31,2009
    
    
    2010Loss from operations
    
    $
    (1,284
    )
    
    $
    (1,518
    )Gain (loss) on disposal of franchises
    
    
    (80
    )
    
    
    318Lease exit charges
    
    
    (782
    )
    
    
    (1,668
    )Property impairment charges
    
    
    (130
    )
    
    
    Goodwill impairment charges
    
    
    (1,399
    )
    
    
    Pre-tax loss
    
    $
    (3,675
    )
    
    $
    (2,868
    )Total Revenues
    
    $
    72,294
    
    
    $
    9,372
  Liquidity and Capital Resources
   Floor Plan Facilities
   30




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Long-Term Debt and Credit Facilities
  Capital Expenditures
  Stock Repurchase Program
  Dividends
  Cash Flows
  31




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
   Guarantees and Indemnification Obligations
  Future Liquidity Outlook
    32




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 (Amounts in thousands)2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalFloor Plan Facilities (1)
    
    $
    770,970
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    770,970Long-Term Debt (2)
    
    
    223,934
    
    
    
    7,983
    
    
    
    8,097
    
    
    
    89,336
    
    
    
    183,990
    
    
    
    301,741
    
    
    
    815,081Letters of Credit
    
    
    61,363
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,363Estimated Interest Payments on
Floor Plan Facilities (3)
    
    
    3,239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,239Estimated Interest Payments on
Long-Term Debt (4)
    
    
    67,284
    
    
    
    64,083
    
    
    
    50,770
    
    
    
    38,667
    
    
    
    31,496
    
    
    
    88,318
    
    
    
    340,618Operating Leases (Net of
Sublease Rentals)
    
    
    119,877
    
    
    
    111,936
    
    
    
    104,075
    
    
    
    98,051
    
    
    
    92,693
    
    
    
    464,793
    
    
    
    991,425Construction Contracts
    
    
    35,525
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,525Other Purchase Obligations (5)
    
    
    6,738
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,738Liability related to Accounting for
Uncertainty
in Income Taxes in the ASC (6)
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,729
    
    
    
    31,229Total
    
    $
    1,289,430
    
    
    $
    184,002
    
    
    $
    162,942
    
    
    $
    226,054
    
    
    $
    308,179
    
    
    $
    885,581
    
    
    $
    3,056,188
 
 (1)
    
    Floor plan facilities include amounts classified as liabilities associated with
assets held for sale and are classified as current since they are payable upon demand.(2)
    
    Amounts outstanding under the 8.625% Notes are redeemable at our option but have been
classified in this schedule according to contractual maturity, except for $200.0 million in
aggregate principal amount that was redeemed from cash on hand on April 12, 2010, which was
classified as current. Amounts outstanding under the 9.0% Notes are redeemable at our option in
certain circumstances but have been classified in this schedule according to contractual maturity.
The 4.25% Convertible Notes and the 5.0% Convertible Notes are redeemable in certain circumstances
before the stated maturities at both our option and the option of the respective holders. The
assumed maturities of these securities are based on these earlier redemption dates, which are
November 2010 for the 4.25% Convertible Notes and October 2014 for the 5.0% Convertible Notes.
Amounts include scheduled mortgage principal payments. All amounts represent outstanding principal
only.(3)
    
    Floor plan facilities balances (including amounts classified as liabilities associated with
assets held for sale) are correlated with the amount of vehicle inventory and are generally due at
the time that a vehicle is sold. Estimated interest payments were calculated using the March 31,
2010 floor plan facilities balance, the weighted average interest rate for the first quarter of
2010 of 2.6% and the assumption that floor plan facilities balances at March 31, 2010 would be
relieved within 60 days in connection with the sale of the associated vehicle inventory.(4)
    
    Estimated interest payments calculated based on assumed or stated maturities consistent
discussion in (2) above. Estimated interest payments include payments related to interest rate
swaps.(5)
    
    Other Purchase Obligations include contracts for office supplies, utilities, and various other
items or services.(6)
    
    Amount represents recorded liability, including interest and penalties, related to Accounting
for Uncertainty in Income Taxes in the ASC. 33




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##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Off-Balance Sheet Arrangements
  Seasonality
  34




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 Item 3: Quantitative and Qualitative Disclosures About Market Risk.
 Interest Rate Risk
    Notional Amount
    
    Pay Rate
    
    Receive Rate (1)
    
    Maturing Date(in millions)$
    200.0
    
    
    
    4.935
    %
    
    one-month LIBOR
    
    May 1, 2012$
    100.0
    
    
    
    5.265
    %
    
    one-month LIBOR
    
    June 1, 2012$
    3.8
    
    
    
    7.100
    %
    
    one-month LIBOR
    
    July 10, 2017$
    25.0
    (2)
    
    
    5.160
    %
    
    one-month LIBOR
    
    September 1, 2012$
    15.0
    (2)
    
    
    4.965
    %
    
    one-month LIBOR
    
    September 1, 2012$
    25.0
    (2)
    
    
    4.885
    %
    
    one-month LIBOR
    
    October 1, 2012$
    11.8
    
    
    
    4.655
    %
    
    one-month LIBOR
    
    December 10, 2017$
    8.9
    
    
    
    6.860
    %
    
    one-month LIBOR
    
    August 1, 2017$
    7.2
    
    
    
    4.330
    %
    
    one-month LIBOR
    
    July 1, 2013
 (1)
    
    One-month LIBOR was 0.249% at March 31, 2010.(2)
    
    After December 31, 2009 changes in fair value are recorded through earnings. Foreign Currency Risk
  35




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 Item 4: Controls and Procedures.
  36




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 Item 1: Legal Proceedings.
    37




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
RISK FACTORS
 
 Item 1A: Risk Factors
  Our significant indebtedness could materially adversely affect our financial health, limit our
ability to finance future acquisitions and capital expenditures and prevent us from fulfilling our
financial obligations.
  
    
    $771.0 million under the secured new and used inventory floor plan facilities that is
classified as current, including $4.1 million classified as liabilities associated with
assets held for sale;
    
    $208.5 million in 9.0% Senior Subordinated Notes due 2018 (the 9.0% Notes),
representing $210.0 million in aggregate principal amount outstanding less unamortized
discount of approximately $1.5 million;
    
    $143.9 million in 5.0% Convertible Senior Notes due 2029 which are redeemable by us
and putable by the holders after October 1, 2014 (the 5.0% Convertible Notes),
representing $172.5 million in aggregate principal amount outstanding less unamortized
discount of approximately $28.6 million;
    
    $16.6 million in 4.25% Convertible Senior Subordinated Notes due 2015 (the 4.25%
Convertible Notes), representing $17.0 million in aggregate principal amount outstanding
less unamortized discount of approximately $0.4 million, all of which is classified as
current;
    
    $273.5 million in 8.625% Senior Subordinated Notes due 2013 (the8.625% Notes),
representing $275.0 million in aggregate principal amount outstanding less unamortized net
discount of approximately $1.5 million, of which $200.0 million of principal amount and
$1.1 million of discount has been classified as current ($200.0 million in aggregate
principal was repaid on April 12, 2010);
    
    $117.2 million of mortgage notes, representing $117.0 million in aggregate principal
amount plus unamortized premium of approximately $0.2 million, due from June 2013 to
December 2029, with a weighted average interest rate of 5.1%; and
    
    $25.8 million of other secured debt, representing $23.5 million in aggregate
principal amount plus unamortized premium of approximately $2.3 million.
    38




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
RISK FACTORS
  39




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Repurchases of Equity Securities
  ( in thousands, except price per share amounts)Total Number of
    
    Approximate DollarShares Purchased
    
    Value of Shares ThatAverage
    
    as Part of Publicly
    
    May Yet Be PurchasedTotal Number of
    
    Price Paid
    
    Announced Plans or
    
    Under the Plans orShares Purchased (1)
    
    per Share
    
    Programs (2)
    
    ProgramsJanuary 2010
    
    
    0
    
    
    $
    
    
    
    
    0
    
    
    $
    44,624February 2010
    
    
    0
    
    
    $
    
    
    
    
    0
    
    
    $
    44,624March 2010
    
    
    66
    
    
    $
    11.95
    
    
    
    66
    
    
    $
    43,841Total
    
    
    66
    
    
    $
    
    
    
    
    66
    
    
    $
    43,841
 (1)
    
    Shares repurchased were a result of the delivery of shares by or withholding of shares from employees, including
officers, and directors in satisfaction of withholding tax obligations upon vesting of restricted stock and restricted
stock units and the exercise price of stock options.(2)
    
    Our publicly announced Class A Common Stock repurchase authorizations occurred as follows: ( in thousands)November 1999
    
    $
    25,000February 2000
    
    
    25,000December 2000
    
    
    25,000May 2001
    
    
    25,000August 2002
    
    
    25,000February 2003
    
    
    20,000December 2003
    
    
    20,000July 2004
    
    
    20,000July 2007
    
    
    30,000October 2007
    
    
    40,000April 2008
    
    
    40,000Total
    
    $
    295,000
  40




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 Item 6: Exhibits.
 (a) Exhibits:
 Exhibit No.
    
    Description1.1
    
    Purchase Agreement (the Purchase Agreement) dated as of
March 9, 2010 by and among Sonic Automotive, Inc., the
guarantors named therein and Banc of America Securities LLC on
behalf of itself and as representative of the initial
purchasers named therein (incorporated by reference to Exhibit
1.1 to the Current Report on Form 8-K filed March 15, 2010
(the March 2010 Form 8-K)).4.1
    
    Registration Rights Agreement dated as of March 12, 2010 by
and among Sonic Automotive, Inc. the guarantors set forth on
the signature page thereto and Banc of America Securities LLC,
as representative of the several initial purchasers named on
Schedule A to the Purchase Agreement (incorporated by
reference to Exhibit 4.1 to the March 2010 Form 8-K).4.2
    
    Indenture dated as of March 12, 2010 by and among Sonic
Automotive, Inc, as issuer, the guarantors named therein, and
U.S. Bank National Association, as trustee (the Trustee),
relating to the 9.0% Senior Subordinated Notes due 2018
(incorporated by reference to Exhibit 4.2 to the March 2010
Form 8-K).4.3
    
    Form of 9.0% Senior Subordinated Note due 2018 (included in
Exhibit 4.2 to the
March 2010 Form 8-K).10.1
    
    Amended and Restated Credit Agreement, dated as of January 15,
2010, among Sonic Automotive, Inc.; each lender; Bank of
America, N.A., as Administrative Agent, Swing Line Lender and
an L/C Issuer;, and Wells Faro Bank, National Association, as
an L/C Issuer (incorporated by reference to Exhibit 10.47 to
Sonics Annual Report on Form 10-K for the year ended December
31, 2009).10.2
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Bank of America, N.A., pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.48 to
Sonics Annual Report on Form 10-K for the year ended December
31, 2009).10.3
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of DCFS USA LLC, pursuant to the Credit Agreement
(incorporated by reference to Exhibit 10.49 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.4
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of BMW Financial Services NA, LLC, pursuant to the
Credit Agreement (incorporated by reference to Exhibit 10.50
to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.5
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Toyota Motor Credit Corporation, pursuant to the
Credit Agreement (incorporated by reference to Exhibit 10.51
to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.6
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of JPMorgan Chase Bank, N.A., pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.52 to
Sonics Annual Report on Form 10-K for the year ended December
31, 2009).10.7
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Wachovia Bank, National Association, pursuant to the
Credit Agreement (incorporated by reference to Exhibit 10.53
to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.8
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Comerica Bank, pursuant to the Credit Agreement
(incorporated by reference to Exhibit 10.54 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.9
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of World Omni Financial Corp., pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.55 to
Sonics Annual Report on Form 10-K for the year ended December
31, 2009).10.10
    
    Amended and Restated Subsidiary Guaranty Agreement, dated as
of January 15, 2010, by the Revolving Subsidiary Guarantor, as
Guarantors, to Bank of America, N.A., as administrative agent
for the lenders (incorporated by reference to Exhibit 10.56 to
Sonics Annual Report on Form 10-K for the year ended December
31, 2009).
 41




---



##### 



Exhibit No.
    
    Description10.11
    
    Amended and Restated Securities Pledge Agreement, dated as of
January 15, 2010, by Sonic Automotive, Inc., the subsidiaries
of Sonic named therein and Bank of America, N.A., as
administrative agent for the lenders (incorporated by
reference to Exhibit 10.57 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.12
    
    Amended and Restated Escrow and Security Agreement, dated as
of January 15, 2010, by Sonic Automotive, Inc., the
subsidiaries of Sonic named therein and Bank of America, N.A.,
as administrative agent for the lenders (incorporated by
reference to Exhibit 10.58 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.13
    
    Amended and Restated Securities Pledge Agreement, dated as of
January 15, 2010, by Sonic Financial Corporation and Bank of
America, N.A., as administrative agent for the lenders
(incorporated by reference to Exhibit 10.59 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.14
    
    Amended and Restated Security Agreement, dated as of January
15, 2010, by Sonic Automotive, Inc., the subsidiaries of Sonic
named therein and Bank of America, N.A., as administrative
agent for the lenders (incorporated by reference to Exhibit
10.60 to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.15
    
    Syndicated New and Used Vehicle Floorplan Credit Agreement,
dated January 15, 2010, among Sonic Automotive, Inc.; certain
subsidiaries of the Company; each lender; Bank of America,
N.A., as Administrative Agent, New Vehicle Swing Line Lender
and Used Vehicle Swing Line Lender; and Bank of America, N.A.,
as Revolving Administrative Agent (incorporated by reference
to Exhibit 10.61 to Sonics Annual Report on Form 10-K for the
year ended December 31, 2009).10.16
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Bank of America, N.A., pursuant to the Syndicated New
and Used Vehicle Floorplan Credit Agreement (incorporated by
reference to Exhibit 10.62 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.17
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of JPMorgan Chase Bank, N.A., pursuant to the Syndicated
New and Used Vehicle Floorplan Credit Agreement (incorporated
by reference to Exhibit 10.63 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.18
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Wachovia Bank, National Association, pursuant to the
Syndicated New and Used Vehicle Floorplan Credit Agreement
(incorporated by reference to Exhibit 10.64 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.19
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Comerica Bank, pursuant to the Syndicated New and
Used Vehicle Floorplan Credit Agreement (incorporated by
reference to Exhibit 10.65 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.20
    
    Company Guaranty Agreement, dated January 15, 2010, by Sonic
Automotive, Inc. and Bank of America, N.A., as administrative
agent for the lenders (incorporated by reference to Exhibit
10.66 to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.21
    
    Subsidiary Guaranty Agreement, dated as of January 15, 2010,
by the Floorplan Subsidiary Guarantor, as Guarantors, to Bank
of America, N.A., as administrative agent for the lenders
(incorporated by reference to Exhibit 10.67 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.22
    
    Amendment No. 1 to Amended and
Restated Credit Agreement, dated February 25, 2010, among Sonic
Automotive, Inc.; each lender; Bank of America, N.A., as
Administrative Agent, Swing Line Lender and an L/C Issuer;, and Wells
Fargo Bank, National Association as an L/C Issuer.10.23
    
    Amendment No. 1 to Syndicated New
and Used Vehicle Floorplan Credit Agreement, dated February 25,
2010, among Sonic Automotive, Inc.; certain subsidiaries of the
Company; each lender, Bank of America, N.A., as Administrative Agent,
New Vehicle Swing Line Lender and Used Vehicle Swing Line Lender; and
Bank of America, N.A., as Revolving Administrative Agent.31.1
    
    Certification of Mr. David P. Cosper pursuant to rule 13a-14(a)31.2
    
    Certification of Mr. O. Bruton Smith pursuant to rule 13a-14(a)32.1
    
    Certification of Mr. David P. Cosper pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of Mr. O. Bruton Smith pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 42




---



##### 



SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 Forward Looking Statements
  
    
    future acquisitions or dispositions;
    
    industry trends;
    
    future liquidity trends or needs;
    
    general economic trends, including employment rates and consumer confidence levels;
    
    vehicle sales rates and same store sales growth;
    
    future covenant compliance;
    
    our financing plans and our ability to repay or refinance existing debt when due; and
    
    our business and growth strategies.
  
    
    the number of new and used cars sold in the United States generally, and as compared
to our expectations and the expectations of the market;
    
    our ability to generate sufficient cash flows or obtain additional financing to
refinance existing debt and to fund acquisitions, capital expenditures, our share
repurchase program, dividends on our Common Stock and general operating activities;
    
    the reputation and financial condition of vehicle manufacturers whose brands we
represent, the terms of any bailout of any such manufacturer by the U.S. government or
other government and the success or failure of such a bailout, the financial incentives
vehicle manufacturers offer and their ability to design, manufacture, deliver and market
their vehicles successfully;
    
    our relationships with manufacturers, which may affect our ability to complete
additional acquisitions;
    
    changes in laws and regulations governing the operation of automobile franchises,
accounting standards, taxation requirements, and environmental laws;
    
    adverse resolutions of one or more significant legal
proceedings against us or our dealerships;
    
    general economic conditions in the markets in which we operate, including
fluctuations in interest rates, employment levels, the level of consumer spending and
consumer credit availability;
    
    the terms of any refinancing of our existing indebtedness;
    
    high competition in the automotive retailing industry, which not only creates pricing
pressures on the products and services we offer, but on businesses we seek to acquire;
    
    the timing of and our ability to generate liquidity through asset dispositions, as
well as the timing of our ability to successfully integrate recent and potential future
acquisitions; and
    
    the rate and timing of overall economic recovery or additional decline.
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SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 SIGNATURES
  SONIC AUTOMOTIVE, INC.Date: April 30, 2010
    By:
    /s/ O. BRUTON SMITHO. Bruton SmithChairman and Chief Executive OfficerDate: April 30, 2010
    By:
    /s/ DAVID P. COSPERDavid P. CosperVice Chairman and Chief Financial Officer
(Principal Financial Officer) 44




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SONIC AUTOMOTIVE, INC. AND SUBSIDIARIES
  Exhibit No.
    
    Description1.1
    
    Purchase Agreement (the Purchase Agreement) dated as of March 9,
2010 by and among Sonic Automotive, Inc., the guarantors named
therein and Banc of America Securities LLC on behalf of itself and
as representative of the initial purchasers named therein
(incorporated by reference to Exhibit 1.1 to the Current Report on
Form 8-K filed March 15, 2010 (the March 2010 Form 8-K)).4.1
    
    Registration Rights Agreement dated as of March 12, 2010 by and
among Sonic Automotive, Inc. the guarantors set forth on the
signature page thereto and Banc of America Securities LLC, as
representative of the several initial purchasers named on Schedule
A to the Purchase Agreement (incorporated by reference to Exhibit
4.1 to the March 2010 Form 8-K).4.2
    
    Indenture dated as of March 12, 2010 by and among Sonic
Automotive, Inc, as issuer, the guarantors named therein, and U.S.
Bank National Association, as trustee (the Trustee), relating to
the 9.0% Senior Subordinated Notes due 2018 (incorporated by
reference to Exhibit 4.2 to the March 2010 Form 8-K).4.3
    
    Form of 9.0% Senior Subordinated Note due 2018 (included in
Exhibit 4.2 to the
March 2010 Form 8-K).10.1
    
    Amended and Restated Credit Agreement, dated as of January 15,
2010, among Sonic Automotive, Inc.; each lender; Bank of America,
N.A., as Administrative Agent, Swing Line Lender and an L/C
Issuer;, and Wells Faro Bank, National Association, as an L/C
Issuer (incorporated by reference to Exhibit 10.47 to Sonics
Annual Report on Form 10-K for the year ended December 31, 2009).10.2
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Bank of America, N.A., pursuant to the Credit Agreement
(incorporated by reference to Exhibit 10.48 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.3
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of DCFS USA LLC, pursuant to the Credit Agreement
(incorporated by reference to Exhibit 10.49 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.4
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of BMW Financial Services NA, LLC, pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.50 to Sonics
Annual Report on Form 10-K for the year ended December 31, 2009).10.5
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Toyota Motor Credit Corporation, pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.51 to Sonics
Annual Report on Form 10-K for the year ended December 31, 2009).10.6
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of JPMorgan Chase Bank, N.A., pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.52 to Sonics
Annual Report on Form 10-K for the year ended December 31, 2009).10.7
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Wachovia Bank, National Association, pursuant to the
Credit Agreement (incorporated by reference to Exhibit 10.53 to
Sonics Annual Report on Form 10-K for the year ended December 31,
2009).10.8
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Comerica Bank, pursuant to the Credit Agreement
(incorporated by reference to Exhibit 10.54 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.9
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of World Omni Financial Corp., pursuant to the Credit
Agreement (incorporated by reference to Exhibit 10.55 to Sonics
Annual Report on Form 10-K for the year ended December 31, 2009).10.10
    
    Amended and Restated Subsidiary Guaranty Agreement, dated as of
January 15, 2010, by the Revolving Subsidiary Guarantor, as
Guarantors, to Bank of America, N.A., as administrative agent for
the lenders (incorporated by reference to Exhibit 10.56 to Sonics
Annual Report on Form 10-K for the year ended December 31, 2009).
 45




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Exhibit No.
    
    Description10.11
    
    Amended and Restated Securities Pledge Agreement, dated as of
January 15, 2010, by Sonic Automotive, Inc., the subsidiaries
of Sonic named therein and Bank of America, N.A., as
administrative agent for the lenders (incorporated by
reference to Exhibit 10.57 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.12
    
    Amended and Restated Escrow and Security Agreement, dated as
of January 15, 2010, by Sonic Automotive, Inc., the
subsidiaries of Sonic named therein and Bank of America, N.A.,
as administrative agent for the lenders (incorporated by
reference to Exhibit 10.58 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.13
    
    Amended and Restated Securities Pledge Agreement, dated as of
January 15, 2010, by Sonic Financial Corporation and Bank of
America, N.A., as administrative agent for the lenders
(incorporated by reference to Exhibit 10.59 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.14
    
    Amended and Restated Security Agreement, dated as of January
15, 2010, by Sonic Automotive, Inc., the subsidiaries of Sonic
named therein and Bank of America, N.A., as administrative
agent for the lenders (incorporated by reference to Exhibit
10.60 to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.15
    
    Syndicated New and Used Vehicle Floorplan Credit Agreement,
dated January 15, 2010, among Sonic Automotive, Inc.; certain
subsidiaries of the Company; each lender; Bank of America,
N.A., as Administrative Agent, New Vehicle Swing Line Lender
and Used Vehicle Swing Line Lender; and Bank of America, N.A.,
as Revolving Administrative Agent (incorporated by reference
to Exhibit 10.61 to Sonics Annual Report on Form 10-K for the
year ended December 31, 2009).10.16
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Bank of America, N.A., pursuant to the Syndicated New
and Used Vehicle Floorplan Credit Agreement (incorporated by
reference to Exhibit 10.62 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.17
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of JPMorgan Chase Bank, N.A., pursuant to the Syndicated
New and Used Vehicle Floorplan Credit Agreement (incorporated
by reference to Exhibit 10.63 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.18
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Wachovia Bank, National Association, pursuant to the
Syndicated New and Used Vehicle Floorplan Credit Agreement
(incorporated by reference to Exhibit 10.64 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.19
    
    Promissory Note, dated January 15, 2010, executed by Sonic in
favor of Comerica Bank, pursuant to the Syndicated New and
Used Vehicle Floorplan Credit Agreement (incorporated by
reference to Exhibit 10.65 to Sonics Annual Report on Form
10-K for the year ended December 31, 2009).10.20
    
    Company Guaranty Agreement, dated January 15, 2010, by Sonic
Automotive, Inc. and Bank of America, N.A., as administrative
agent for the lenders (incorporated by reference to Exhibit
10.66 to Sonics Annual Report on Form 10-K for the year ended
December 31, 2009).10.21
    
    Subsidiary Guaranty Agreement, dated as of January 15, 2010,
by the Floorplan Subsidiary Guarantor, as Guarantors, to Bank
of America, N.A., as administrative agent for the lenders
(incorporated by reference to Exhibit 10.67 to Sonics Annual
Report on Form 10-K for the year ended December 31, 2009).10.22
    
    Amendment No. 1 to Amended and
Restated Credit Agreement, dated February 25, 2010, among Sonic
Automotive, Inc.; each lender; Bank of America, N.A., as
Administrative Agent, Swing Line Lender and an L/C Issuer;, and Wells
Fargo Bank, National Association as an L/C Issuer.10.23
    
    Amendment No. 1 to Syndicated New
and Used Vehicle Floorplan Credit Agreement, dated February 25,
2010, among Sonic Automotive, Inc.; certain subsidiaries of the
Company; each lender, Bank of America, N.A., as Administrative Agent,
New Vehicle Swing Line Lender and Used Vehicle Swing Line Lender; and
Bank of America, N.A., as Revolving Administrative Agent.31.1
    
    Certification of Mr. David P. Cosper pursuant to rule 13a-14(a)31.2
    
    Certification of Mr. O. Bruton Smith pursuant to rule 13a-14(a)32.1
    
    Certification of Mr. David P. Cosper pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of Mr. O. Bruton Smith pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 46