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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

|                                            |  |                                                                                         
|------------------------------------------- |  | ----------------------------------------------------------------------------------------
|x                                           |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934    
|                                            |  |                                                                                         
|For the fiscal year ended December 31, 2002
|                                            |  |                                                                                         
|or                                         
|                                            |  |                                                                                         
|o                                           |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period
from  to  .

Commission file number

HBL, LLC(Exact name of registrant as specified in its charter)

|                                                                                                                                                             |  |                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------
|Delaware(State or other jurisdiction of
incorporation or organization)2555 Telegraph Road
Bloomfield Hills, Michigan(Address of principal executive offices) |  | 38-3635872(I.R.S. Employer
Identification No.)48302-0954(Zip Code)

Registrants telephone number, including area code (248) 648-2500



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Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None.



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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes o   No x

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b of the Act).   Yes o   No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.   x

The aggregate market value of the voting and non-voting common stock held
by non-affiliates as of March 31, 2003 was $0.0.

The registrant meets the conditions set forth in General Instructions (I)
(1) (a) and (b) of Form 10-K (as modified by grants of no action relief) and is
therefore filing this form with the reduced disclosure format specified
therein.



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TABLE OF CONTENTS



|                                                 |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                          
|                                                 | Item 1. Business                                                                             
|                                                 | Item 2. Properties                                                                           
|                                                 | Item 3. Legal Proceedings                                                                    
|                                                 | Item 4. Submission of Matters to a Vote of Security-Holders                                  
|PART II                                         
|                                                 | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|                                                 | Item 6. Selected Consolidated Financial Data                                                 
|                                                 | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                 | Item 7A. Quantitative and Qualitative Disclosures about Market Risk                          
|                                                 | Item 8. Financial Statements and Supplementary Data                                          
|                                                 | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                                        
|                                                 | Item 10. Directors and Executive Officers of the Registrant                                  
|                                                 | Item 11. Executive Compensation                                                              
|                                                 | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|                                                 | Item 13. Certain Relationships and Related Transactions                                      
|                                                 | Item 14. Disclosure Controls and Procedures                                                  
|PART IV                                         
|                                                 | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|Certificate of Formation Dated November 28, 2001
|Limited Liability Company Agreement             
|Form of Audi Dealer Sales and Service Agreement 
|Form of Mercedes-Benz USA, Inc. Passenger       
|Form of Mercedes-Benz USA, Inc. Light Truck Ret.
|Form of Porsche Sales & Service Agreement       
|Indenture dated March 18, 2002                  
|9 5/8% Senior Subordinated Note Due 2012        
|Certification Pursuant to Section 906           
|Certification Pursuant to Section 906           



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TABLE OF CONTENTS

|      |  |                                                                                       |  |     
|----- |  | ------------------------------------------------------------------------------------- |  | ----
|Items |  |                                                                                       |  | Page
|      |  |                                                                                       |  |     
|      |  | PART I                                                                                |  |     
|1.    |  | Business                                                                              |  | 2   
|2.    |  | Properties                                                                            |  | 6   
|3.    |  | Legal Proceedings                                                                     |  | 6   
|4.    |  | Submission of Matters to a Vote of Security-Holders                                   |  | 6   
|     
|      |  | PART II                                                                               |  |     
|5.    |  | Market for Registrants Common Equity and Related Stockholder
Matters                 |  | 6   
|6.    |  | Selected Consolidated Financial Data                                                  |  | 6   
|7.    |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations |  | 7   
|7.A   |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 13  
|8.    |  | Financial Statements and Supplementary Data                                           |  | 13  
|9.    |  | Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure  |  | 13  
|     
|      |  | PART III                                                                              |  |     
|10.   |  | Directors and Executive Officers of the Registrant                                    |  | 13  
|11.   |  | Executive Compensation                                                                |  | 13  
|12.   |  | Security Ownership of Certain Beneficial Owners and
Management                        |  | 13  
|13.   |  | Certain Relationships and Related Transactions                                        |  | 13  
|14.   |  | Disclosure Controls and Procedures                                                    |  | 13  
|     
|      |  | PART IV                                                                               |  |     
|15.   |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 14  

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PART I




Item 1.Business

Overview

HBL, LLC (HBL or the Company), a Delaware limited liability company,
is a majority owned subsidiary of HBL Holdings, Inc. (Holdings), which is a
wholly owned subsidiary of Lantzsch-Andreas Enterprises, Inc. (LAE). LAE is a
wholly owned subsidiary of United Auto Group, Inc. (UAG). As
of December 31, 2002, HBL, which is engaged in the sale of new and used motor
vehicles and related products and services, owned and operated three retail
automobile franchises located in Vienna, Virginia. The three retail automobile
franchises operate under franchise agreements with Mercedes-Benz, Audi and
Porsche. In addition to selling new and used vehicles, HBL generates revenue at
the dealership through the sale of higher-margin products, such as finance,
insurance and vehicle service contracts, maintenance and repair services,
replacement parts and aftermarket automotive products. In March 2003, we were
awarded an Aston Martin franchise, which is expected to commence operations
during 2003.

On March 1, 2001, UAG acquired 100% of the equity of LAE for $67.4
million in cash (the Acquisition). On December 31, 2001, Holdings sold 10% of
HBL to Roger Penske, Jr. for $7.2 million. On February 22, 2002, HBL sold
substantially all of the assets of its Land Rover operation, including the
franchise rights to the Land Rover product line, to an unaffiliated third party
for $1.4 million in cash.

We are 90% owned by UAG. UAG is the second largest publicly-traded
automotive retailer in the United States as measured by total revenues. As of
December 31, 2002, UAG owned and operated 129 franchises in the United States
and 71 franchises internationally, primarily in the United Kingdom. UAG offers
a full range of 39 vehicle brands, with 73% of its revenues in 2002 generated
from the combined sale of foreign brands and luxury brands such as Honda,
Toyota, BMW, Lexus, Mercedes, Audi and Porsche. For a complete discussion of
UAG, see its 2002 annual report on Form 10-K and its other reports filed with
the Securities and Exchange Commission, which reports are available through its
website UnitedAuto.com.

Dealership Operations

New Vehicle Sales.Our customers finance their purchases of new vehicles
through both traditional purchase transactions as well as through leasing
companies providing consumer automobile leasing. Lease transactions are
typically short-term leases, providing us a market of low mileage, late model
vehicles still covered by manufacturers warranty for our used vehicle sales
business. Short-term leases also give us the opportunity to obtain repeat
business from customers on a more regular basis than purchase transactions.

Used Vehicle Sales.We generally acquire used vehicles from auctions open
only to authorized new vehicle dealers, public auctions, trade-ins in
connection with new purchases and lease expirations or terminations. We clean,
repair and recondition, as necessary, generally at our own service facilities,
all used vehicles we acquire for resale. To improve customer confidence in our
used vehicle inventory, we participate in any available manufacturer
certification processes for used vehicles. If certification is obtained, the
used vehicle owner is typically provided the benefits and warranties similar to
those offered to new vehicle owners by the applicable manufacturer. In
addition, we offer for sale third-party extended service contracts on all of
our used vehicles.

Finance and Insurance Sales and Other Aftermarket Products.We are
capable of arranging financing for our customers vehicle purchases, selling
vehicle extended care service contracts and arranging insurance in connection
with vehicle financing. We provide financing and insurance services to our
customers through third parties, including manufacturers captive finance
companies. We also offer for sale other aftermarket products, such as cellular
phones, alarms and fabric protectors.

Service and Parts Sales.We generate service and parts sales at each of
our dealerships, primarily for the vehicle models sold at that dealership. We
perform both warranty and non-warranty work. As part of our agreements with our
manufacturers, we obtain all equipment required by the manufacturer and needed
to service and maintain each make of vehicle sold at any particular dealership.

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Marketing

We believe that our marketing programs have contributed to our sales
growth. We utilize many different media for our marketing activities, including
newspapers, magazines, television, radio and the Internet. In addition,
automobile manufacturers supplement our local and regional advertising efforts
by producing large advertising campaigns to support their brands, promote
attractive financing packages and draw traffic to local area dealerships.

Agreements with Vehicle Manufacturers

We operate under separate franchise agreements with the manufacturers of
each brand of vehicle sold at the dealership. These agreements contain
provisions and standards governing almost every aspect of the operations of the
dealership, including ownership, management, personnel, training, maintenance
of minimum working capital and in some cases net worth, maintenance of minimum
lines of credit, advertising and marketing, facilities, signs, products and
services, acquisitions of other dealerships (including restrictions on how many
dealerships can be acquired or operated in any given market), inventory,
warranties offered to customers, maintenance of minimum amounts of insurance,
achievement of minimum customer service standards, information systems and
monthly financial reporting. Typically the general manager and/or the owner of
a dealership may not be changed without the manufacturers consent. In exchange
for complying with these provisions and standards, we are granted the
non-exclusive right to sell the manufacturers brand of vehicles and related
parts and services at our dealerships. The agreements also grant us a
non-exclusive license to use each manufacturers trademarks, service marks and
designs in connection with our sales and service of its brands at our
dealerships. Franchise agreements typically expire after a specified period of
time, ranging from one to five years. The agreements also permit the
manufacturer to terminate or not renew the agreement for a variety of causes,
including failure to adequately operate the dealership, insolvency or
bankruptcy, impairment of the dealers reputation or financial standing,
changing the dealerships management or location without consent, sales of the
dealerships assets without consent, failure to maintain adequate working
capital or floor plan financing, changes in the dealerships financial or other
condition, failure to submit information to the manufacturer on a timely basis,
changes in the dealerships owners without consent, pledging the dealerships
stock, failure to have any permit or license necessary to operate the
dealership, and material breaches of other provisions of the agreement, subject
to applicable state franchise laws that limit a manufacturers right to
terminate a franchise. Many agreements grant the manufacturer a security
interest in the vehicles and/or parts sold by the manufacturer to the
dealership.

Our agreements with manufacturers usually give the manufacturers the
right, under some circumstances (including upon a merger, sale, or change of
control of the Company, or in some cases a material change in our business or
capital structure), to acquire from us, at fair market value, the dealerships
that sell the manufacturers brands. In general, our agreements with major
manufacturers limit our ability to sell significant percentages of our voting
stock or significant percentages of the assets relating to our franchises to
any other person or entity (other than for passive investment) or another
manufacturer, engage in other extraordinary corporate transactions (such as a
merger, reorganization or sale of a material amount of assets) or change of
control of our board of directors. In addition, the manufacturers may have a
right of first refusal if we propose to sell our franchises to a third party.
Some of the agreements also prohibit us from pledging, or impose significant
limitations on our ability to pledge, our capital stock to lenders.

Competition

For new vehicle sales, we compete primarily with other franchised dealers
in our marketing area. We do not have any cost advantage in purchasing new
vehicles from the manufacturer, and typically we rely on advertising and
merchandising, sales expertise, service reputation and location of our
dealership to sell new vehicles. Our market includes a number of
well-capitalized competitors that have extensive automobile dealership
managerial experience and strong retail locations and facilities. We compete
with dealers that sell the same brands of new vehicles that we sell and with
dealers that sell other brands of new vehicles that we do not represent. Our
new vehicle dealership competitors have franchise agreements with the various
vehicle manufacturers and, as such, generally have access to new vehicles on
the same terms as us. In recent years, automotive dealers have also faced
increased competition in the sale of new vehicles from independent leasing
companies and on-line purchasing services and warehouse clubs. Due to lower
overhead and sales costs, these companies may be capable of operating on
smaller gross margins and offering lower sales prices than us.

For used vehicle sales, we compete with other franchised dealers,
independent used vehicle dealers, automobile rental agencies, private parties
and used vehicle superstores for supply and resale of used vehicles.

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We believe that the principal competitive factors in vehicle sales are the
marketing campaigns conducted by manufacturers, the ability of dealerships to
offer a wide selection of the most popular vehicles, the location of
dealerships and the quality of customer service. Other competitive factors
include customer preference for particular brands of automobiles, pricing
(including manufacturer rebates and other special offers) and warranties. We
believe that our dealership is competitive in all of these areas.

We compete with other franchised dealers to perform warranty repairs and
with other automotive dealers, franchised service center chains and independent garages for non-warranty repair and routine maintenance
business. We compete with other automotive dealers, service stores and auto
parts retailers in our parts operations. We believe that the principal
competitive factors in parts and service sales are price, the use of
factory-approved replacement parts, the familiarity with a manufacturers
brands and models and the quality of customer service. A number of regional or
national chains offer selected parts and services at prices that may be lower
than our prices.

We believe that a growing number of consumers are utilizing the Internet,
to differing degrees, in connection with the purchase of vehicles. Accordingly,
we may face increased pressures from on-line automotive websites, including
those developed by automobile manufacturers as well as by other dealership
groups. Consumers use the Internet to compare prices for vehicles and related
services, which may cause reduced margins for new vehicles, used vehicles and
related services.

Employees and Labor Relations

As of December 31, 2002, we employed approximately 200 people, none of
whom are covered by collective bargaining agreements with labor unions. We
consider our relations with our employees to be satisfactory. Our policy is to
motivate our key managers through, among other things, variable compensation
programs tied principally to dealership profitability and grants of stock
options of UAG. Due to our reliance on vehicle manufacturers, we may be
adversely affected by labor strikes or work stoppages at the manufacturers
facilities.

Environmental Matters

We are subject to a wide range of foreign, federal, state and local
environmental laws and regulations, including those governing discharges into
the air and water, the operation and removal of aboveground and underground
storage tanks, the use, handling, storage and disposal of hazardous substances
and other materials and the investigation and remediation of contamination. As
with automotive dealerships generally, and service, parts and body shop
operations in particular, our business involves the generation, use, handling
and contracting for recycling or disposal of hazardous or toxic substances or
wastes, including environmentally sensitive materials such as motor oil, waste
motor oil and filters, transmission fluid, antifreeze, refrigerant, waste paint
and lacquer thinner, batteries, solvents, lubricants, degreasing agents,
gasoline and diesel fuels. Similar to many of our competitors, we have incurred
and will continue to incur, capital and operating expenditures and other costs
in complying with such laws and regulations.

Our operations involving the management of hazardous and other
environmentally sensitive materials are subject to requirements of the federal
Resource Conservation and Recovery Act, or RCRA, and comparable state statutes.
Our business also involves the operation of storage tanks containing such
materials. Storage tanks are subject to periodic testing, containment,
upgrading and removal under RCRA and comparable state statutes. Furthermore,
investigation or remediation may be necessary in the event of leaks or other
discharges from current or former underground or aboveground storage tanks. In
addition, water quality protection programs under the federal Water Pollution
Control Act (commonly known as the Clean Water Act), the Safe Drinking Water
Act and comparable state and local programs govern certain discharges from some
of our operations. Similarly, certain air emissions from our operations, such
as auto body painting, may be subject to the federal Clean Air Act and related
state and local laws. Various health and safety standards promulgated by the
Occupational Safety and Health Administration of the United States Department
of Labor and related state agencies also apply to our operations.

We may also have liability in connection with materials that were sent to
third-party recycling, treatment, and/or disposal facilities under the
Comprehensive Environmental Response, Compensation and Liability Act, and
comparable state statutes. These statutes impose liability for investigation
and remediation of contamination without regard to fault or the legality of the
conduct which contributed to the contamination. Responsible parties under these
statutes may include the owner or operator of the site where the contamination
occurred and companies that disposed or arranged for the disposal of the
hazardous substances released at these sites.

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We believe that we do not have any material environmental liabilities and
that compliance with environmental laws and regulations will not, individually
or in the aggregate, have a material adverse effect on our results of
operations, financial condition or cash flows. However, environmental laws and
regulations are complex and subject to change. Compliance with current,
amended, new or more stringent laws or regulations, stricter interpretations of
existing laws or the future discovery of environmental conditions could require
additional expenditures by us, and such expenditures could be material.

Insurance

Due to the nature of the automotive retail industry and the large
inventory maintained by dealerships, automotive retail dealerships generally
require significant levels of insurance covering a broad variety of risks. The
business is subject to substantial risk of property loss due to the significant
concentration of property values at dealership locations. Other potential
liabilities arising out of our operations involve claims of employees,
customers or third parties for personal injury or property damage and potential
fines and penalties in connection with alleged violations of regulatory
requirements.

Accordingly, we participate in liability and property insurance programs subject to
specified deductibles and loss retentions. We also participate in
umbrella liability insurance programs to provide insurance in excess of our primary
insurance policies. The level of risk we retain may change in the future as
insurance market conditions or other factors affecting the economics of our
insurance purchasing change. Although we have, subject to limitations and
exclusions, substantial insurance, we may be exposed to uninsured or
underinsured losses that could have a material adverse effect on our results of
operations, financial condition or cash flows.




Item 2.Properties

We seek to structure our operations so as to minimize the ownership of
real property. As a result, we lease all of our facilities. The leases cover
facilities for new and used vehicle sales facilities, vehicle service/collision
repair operations, storage, and general office use. These leases are for
periods of between fifteen and twenty-five years, and are structured to include
renewal options for an additional five to fifteen years in our favor.




Item 3.Legal Proceedings

From time to time, we are involved in litigation relating to claims
arising out of our operations in the normal course of business. As of March 31,
2003, we are not a party to any legal proceedings that, individually or in the
aggregate, are reasonably expected to have a material adverse effect on our
results of operations, financial condition or cash flows.




Item 4.Submission of Matters to a Vote of Security-Holders

Omitted pursuant to General Instruction I to Form 10-K (the
Instruction).




PART II




Item 5.Market for Registrants Common Equity and Related Stockholder Matters

HBLs equity securities are not publicly traded. HBL files reports under
the Securities and Exchange Act of 1934, as amended, because of its status as a
non-wholly owned subsidiary guarantor of UAGs $300.0 million Senior
Subordinated Notes due 2012.

HBL periodically makes pro rata distributions to its owners in accordance
with the operating agreement. Our ability to make such distributions is
dependent upon the earnings of our dealership operations and their ability to
distribute earnings and other advances and payments. Also, pursuant to the
franchise agreements to which our dealership is subject, we are required to
maintain a certain amount of working capital, which could limit our ability to
make distributions. Any future determination to make distributions will be at
the discretion of our board of directors and will be dependent upon our
financial condition, results of operations, capital requirements and other
factors the board of directors deems relevant.




Item 6.Selected Consolidated Financial Data

Omitted pursuant to the Instruction.

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Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations

General

As an integral part of our dealership operations, we retail new and used
automobiles and light trucks, operate service and parts departments, operate a
collision repair center and sell various aftermarket products, including
finance, warranty, extended service and other insurance contracts. New vehicle
revenues include sales to retail customers and to leasing companies providing
consumer automobile leasing. Used vehicle revenues include amounts received for
used vehicles sold to retail customers, leasing companies providing consumer
leasing and other dealers. We generate finance and insurance revenues from
sales of warranty policies, extended service contracts, other insurance
policies, and accessories, as well as from fees for placing finance and lease
contracts. Service and parts revenues include fees paid for repair and
maintenance service, the sale of replacement parts and body shop repairs.

Our gross profit tends to vary with the mix of revenues we derive from the
sale of new vehicles, used vehicles, finance and insurance products, and
service and parts services. Our gross profit generally varies across product
lines, with new vehicle sales usually resulting in lower gross profit margins
and our other products resulting in higher gross profit margins. Factors such
as seasonality, weather, cyclicality and manufacturers advertising and
incentives may impact the mix of our revenues, and therefore influence our
gross profit margin.

Our selling expenses consist of advertising and compensation for sales
department personnel, including commissions and related bonuses. General and
administrative expenses include compensation for administration, finance, legal
and general management personnel, depreciation, amortization, rent, insurance,
utilities and other outside services. A significant portion of our selling
expenses are variable, and a significant portion of our general and
administrative expenses are subject to our control, allowing us to adjust them
over time to reflect economic trends.

Floor plan interest expense relates to floor plan financing, which
represents indebtedness incurred in connection with the acquisition of new and
used vehicle inventories. Other interest expense consists of interest charges
on all of our interest-bearing debt, other than interest relating to floor plan
financing.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting
standards generally accepted in the United States of America requires the
application of accounting policies that often involve a significant amount of
judgment. Such judgments influence the reported amounts of the assets,
liabilities, revenues and expenses in the Companys financial
statements. Management, on an ongoing basis, reviews estimates and assumptions.
If management determines, as a result of its consideration of facts and
circumstances, that modifications in assumptions and estimates are appropriate,
our results of operations and financial position as reported in the
financial statements may change significantly.

Following is a summary of the accounting policies applied in the
preparation of our financial statements that management believes
are most dependent upon the use of estimates and assumptions.

Finance and Insurance Revenue Recognition

The Company arranges financing for customers through various financial
institutions and receives a commission from the lender equal to the difference
between the interest rates charged to customers over the predetermined interest
rates set by the financing institution. The Company also receives commissions
from the sale of various insurance products to customers, including credit,
life, and health insurance policies and extended service contracts. The Company
receives fee income from the placement of these contracts at the time the
customer enters into the contract. The Company is not the obligor under any of
these contracts. In the case of finance contracts, a customer may prepay, or
fail to pay, thereby terminating the contract. Customers may also terminate
extended warranty contracts with the underlying warranty provider, which are
fully paid at purchase, and become eligible for refunds of unused premiums. If
the customer terminates a retail finance contract or cancels an extended
warranty or other insurance product prior to scheduled maturity, a portion of
these fees may be charged back to us based on the relevant terms of the
contracts. The income we record relating to these fees is net of an estimate of
the ultimate amount of chargebacks we will be required to pay. Such estimate of
ultimate chargeback exposure is based on our historical chargeback expense
arising from similar contracts, including the impact of refinance and default
rates on retail finance contracts and cancellation rates on extended warranty
contracts and other insurance products. The actual amount of historical
chargebacks has not been significantly different than our estimates.

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Goodwill

The Company adopted SFAS No. 141 and SFAS No. 142, which require that all
business combinations initiated after June 30, 2001 be accounted for using the
purchase method, eliminated the pooling of interests method of business
combinations, and eliminated amortization of indefinite lived intangible assets
effective January 1, 2002. The intangible assets on the Companys balance sheet
represent goodwill arising in connection with business combinations. The
Company believes that its goodwill has an indefinite life. SFAS No. 142 also
requires testing for possible impairment of goodwill on an annual basis or when
events or circumstances indicate that impairment may have occurred. The value
ascribed to intangibles acquired in connection with business combinations, the
evaluation of indicated impairment, as well as the estimation of writedowns
resulting from testing in connection with indicated impairment, are subject to
managements judgment and estimates.

Results of Operations

Basis of Presentation: The 2001 financial information included below
represents HBLs full fiscal year operating results, including the two months
prior to the Acquisition. In instances where differences in the accounting
conventions utilized before and after the Acquisition result in significant
income statement fluctuations, such differences have been quantified and
disclosed.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Revenues.Total revenues decreased $9.1 million, or 4.2%, from $219.0
million to $209.8 million. Significant sources of revenues include new vehicle
retail revenues, used vehicle retail revenues, used vehicle wholesale revenues,
fleet revenue, finance and insurance revenues, and parts and service revenues.

New vehicle retail revenues decreased by $11.8 million, or 9.4%, from
$124.4 million to $112.6 million. New vehicle retail sales at the Mercedes-Benz
and Audi franchises decreased $4.9 million, offset in part by a $0.2 million
increase from the Porsche franchise. The decline in new vehicle retail revenues
was due primarily to a decrease in unit sales versus the prior year. The sale
of the Companys Land Rover franchise in February 2002 resulted in a $7.1
million comparative decline in new vehicle retail revenues.

Used vehicle retail revenues decreased by $0.9 million, or 1.8%, from
$49.9 million to $49.0 million. Used vehicle retail sales at the Mercedes-Benz
and Audi franchises increased $2.5 million, offset in part by a $0.2 million
decrease from the Porsche franchise. The sale of the Companys Land Rover
franchise in February 2002 resulted in a $3.2 million comparative decline in
used vehicle retail revenues. Wholesale revenue was consistent with the prior
year.

Finance and insurance revenues decreased by $0.9 million, or 10.5%, from
$8.1 million to $7.3 million. Finance and insurance revenues decreased an
aggregate $0.4 million at the Mercedes-Benz, Audi and Porsche franchises. This
decrease was due principally to the decline in new and used retail vehicle
volume, coupled with aggressive finance and lease programs offered by the
manufacturers. The sale of the Companys Land Rover franchise in February 2002
resulted in a $0.5 million comparative decline in finance and insurance
revenues.

Service and parts revenues increased by $1.1 million, or 4.6%, from $24.5
million to $25.6 million. Service and parts revenues increased
$3.4 million, or 15.7%, at our Mercedes-Benz, Audi and Porsche franchises. The
increase at these stores is due primarily to extended hours of
operation by the Companys service department, including weekend hours which
began in early 2002. The sale of the Companys Land Rover
franchise in February 2002 resulted in a $2.3 million comparative
decline in service and parts revenues.

Fleet revenues increased from nil in 2001 to $3.3 million in 2002.
Current year fleet revenues result from sales to a vehicle rental company.

Gross Profit.Gross profit decreased by $2.1 million, or 6.5%, from
$32.1 million to $30.0 million. The decrease in gross profit is due primarily
to the decrease in new and used retail unit sales and the sale of the Land
Rover franchise in February 2002. Gross profit as a percentage of revenues
decreased from 14.7% to 14.3%. The decrease in gross profit as a percentage of
revenues is due primarily to (1) lower margins on new retail vehicle sales at
all three franchises and (2) the impact of low margin fleet revenues in 2002.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses decreased by $7.0 million, or 24.2%, from $28.7 million
to $21.7 million. Such expenses decreased as a percentage of total revenue from
13.1% to 10.4%, and decreased as a percentage of gross profit from 89.4% to
72.4%. The aggregate decrease in selling, general and administrative expenses
is due principally to (1) a $4.1 million decrease in compensation expense
resulting from one time bonuses in the two months ended February 2001, (2) a
$1.4 million decrease in goodwill amortization, (3) a $0.6 million reduction of
management fees, and (4) decreases in variable expenses attributable to the
reduction in aggregate gross profit compared to the prior year.

8



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##### Table of Contents



Floor Plan Interest Expense.Floor plan interest expense decreased by
$0.3 million, or 36.6%, from $0.8 million to $0.5 million. The decrease in
floor plan interest expense is due primarily to a decrease in the weighted
average borrowing rate on floor plan indebtedness during 2002, partially offset
by an increase in average inventory levels compared to 2001.

Other Interest Expense.Other interest expense decreased by $1.1 million,
or 29.0%, from $3.7 million to $2.6 million. The decrease is due primarily to a
decrease in our weighted average interest rate during 2002.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Revenues.Total revenues increased $5.1 million, or 2.4%, from $213.9
million to $219.0 million. Significant sources of revenues include new vehicle
retail revenues, used vehicle retail revenues, used vehicle wholesale revenues,
finance and insurance revenues, and parts and service revenues.

New vehicle retail revenues increased by $0.6 million, or 0.5%, from
$123.8 million to $124.4 million. New vehicle retail sales at the Mercedes-Benz
and Porsche franchises increased $5.6 million, offset in part by a $5.0 million
decrease at the Audi and Land Rover franchises. The changes year over year at
each franchise is due primarily to changes in retail unit sales.

Used vehicle retail revenues decreased by $1.1 million, or 2.2%, from
$51.0 million to $49.9 million. Used vehicle retail sales at the Land Rover
and Porsche franchises decreased $3.3 million, offset in part by a $2.2 million
increase from the  Mercedes Benz and Audi franchises.
Wholesale revenue increased $2.3 million versus
the prior year.

Finance and insurance revenues increased by $2.2 million, or 36.9%, from
$5.9 million to $8.1 million. The increase is due primarily to an increase in
the percentage of customers purchasing finance and insurance products, coupled
with an increase in the average finance and insurance revenue derived from each
retail vehicle sale.

Service and parts revenues increased by $1.8 million, or 8.0%, from $22.7
million to $24.5 million. The increase is due primarily to the full year effect
of the institution of a second shift in the dealerships service departments in
June 2000, coupled with an increase in customer pay and warranty labor rates
compared to 2000.

Gross Profit.Gross profit decreased by $0.2 million, or 0.6%, from
$32.3 million to $32.1 million. The decrease in gross profit is due primarily
to the decrease in new and used retail unit sales. Gross profit as a percentage
of revenues decreased from 15.1% to 14.7%. The decrease in gross profit as a
percentage of revenues is due primarily to lower margins on new retail vehicle
sales at all four franchises in 2001.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses increased by $1.5 million, or 5.5%, from $27.2 million
to $28.7 million. Such expenses increased as a percentage of total revenue from
12.8% to 13.1%, and increased as a percentage of gross profit from 84.3% to
89.4%. The aggregate increase in selling, general and administrative expenses
is due principally to (1) $1.4 million of goodwill amortization during the ten
months ended December 2002 and (2) $1.4 million of management fees paid to UAG
and its affiliates, offset in part by a $1.0 million reduction of compensation
expense versus 2000.

Floor Plan Interest Expense.Floor plan interest expense decreased by
$0.3 million, or 30.9%, from $1.1 million to $0.8 million. The decrease in
floor plan interest expense is due primarily to a decrease in the weighted
average borrowing rate on floor plan indebtedness during 2001, partially offset
by an increase in average inventory levels compared to 2000.

Other Interest Expense.Other interest expense in 2001 is attributable to
debt incurred in connection with the Acquisition.

Income Taxes.Income taxes decreased by $1.4 million, from $1.6 million
to $0.2 million. The decrease is due to a decrease in pre-tax income compared
with 2000, partially offset by an increase in the Companys effective tax rate.
The Companys effective tax rate increase is primarily attributable to the
impact of non-deductible goodwill amortization in 2001.

9



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##### Table of Contents



Liquidity and Capital Resources

Our cash requirements are primarily for working capital, the improvement
and expansion of existing facilities and the construction of new facilities.
Historically, these cash requirements have been met through the issuance of
debt instruments, including floor plan notes payable, borrowings from
UAG and cash flow from operations. UAG has agreed to support any
required capital needs of the Company in the event cash flow from operations is
not sufficient to fund working capital requirements and the Company is not able
to raise capital through the issuance of additional debt at commercially
reasonable rates.

We finance the majority of our new and a portion of our used vehicle
inventory under revolving floor plan financing agreements with DaimlerChrysler
Services North America LLC. We make monthly interest payments on the amount
financed, but are generally not required to make loan principal repayments
prior to the sale of the new and used vehicles we have financed. The floor plan
agreements grant a security interest in substantially all of our assets.
Interest rates on the floor plan arrangements are variable and increase or
decrease based on movements in LIBOR. Outstanding borrowings under floor plan
arrangements amounted to $21.3 million as of December 31, 2002.

UAG is party to a $700.0 million credit agreement with
DaimlerChrysler Services North America LLC and Toyota Motor Credit Corporation
which provides for revolving loans to be used for acquisitions, working
capital, the repurchase of common stock, letters of credit and general
corporate purposes. UAGs credit agreement is fully and unconditionally
guaranteed on a joint and several basis by the majority of its domestic
automotive dealership subsidiaries, including the Company. Substantially all of
our assets not pledged as security under our floor plan agreements are subject
to security interests granted to lenders under UAGs credit agreement.

In March 2002, UAG issued $300.0 million of senior subordinated
notes due 2012. The notes are fully and unconditionally guaranteed on a joint
and several basis by the majority of its domestic automotive dealership
subsidiaries, including the Company.

During 2002, net cash provided by operations amounted to $14.5 million.
Net cash used in investing activities during 2002 totaled $5.8 million, which
relates to capital expenditures incurred in connection with the
renovation of our sales and service facilities. Net cash
used in financing activities during 2002 totaled $8.7 million, including distributions to UAG and repayments of
long-term debt.

We believe that our cash flow provided by operating activities and our
existing capital resources, including the liquidity provided by our floor plan
financing arrangements and the support indicated by UAG, will be
sufficient to fund our current operations and commitments for the next twelve
months. To the extent we pursue acquisitions or initiate incremental facility
construction or renovation projects, we may need to raise additional capital.
There is no assurance that we would be able to access capital or increase our
borrowing capabilities on terms acceptable to us, if at all.

Cyclicality

Unit sales of motor vehicles, particularly new vehicles, historically have
been cyclical, fluctuating with general economic cycles. During economic
downturns, the automotive retailing industry tends to experience similar
periods of decline and recession as the general economy. We believe that the
industry is influenced by general economic conditions and particularly by
consumer confidence, the level of personal discretionary spending, fuel prices,
interest rates and credit availability.

10



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##### Table of Contents



Seasonality

Our business is modestly seasonal overall. Our operations generally
experience higher volumes of vehicle sales in the second and third quarters of
each year due in part to consumer buying trends and the introduction of new
vehicle models. Also, demand for cars and light trucks is generally lower
during the winter months than in other seasons. Accordingly, we expect our
revenues and profitability to be generally lower in our first and fourth
quarters as compared to our second and third quarters. The service and parts
business at our dealership experiences relatively modest seasonal fluctuations.

New Accounting Pronouncements

Statement of Financial Accounting Standards No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS No. 146) was issued in June
2002 and is effective for exit or disposal activities initiated after December
31, 2002. SFAS No. 146 addresses the timing of the recognition of exit costs
associated with restructuring activities. Under the new standard, certain exit
costs will be recognized over the period in which the restructuring activities
occur, rather than at the point in time the Company commits to the
restructuring plan. SFAS No. 146 is not expected to have a material impact on
the Companys results of operations, financial position or cash flows.

Financial Accounting Standards Board (FASB) Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others (FIN 45) was issued in November
2002. FIN 45 requires the recognition of a liability for certain guarantee
obligations issued or modified after December 31, 2002. FIN 45 also clarifies
disclosure requirements to be made by a guarantor for certain guarantees. FIN
45 is not expected to have a material impact on the Companys results of
operations, financial position or cash flows. The disclosure provisions of FIN
45 are effective for fiscal years ending after December 15, 2002. We have
adopted the disclosure provisions of FIN 45 as of December 31, 2002.

FASB Interpretation No. 46, Consolidation of Variable Interest Entities,
an Interpretation of APB No. 50 (FIN 46) was issued in January 2003. FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 is effective for all
new variable interest entities created or acquired after January 31, 2003. For
variable interest entities created or acquired prior to February 1, 2003, the
provisions of FIN 46 must be applied for the first interim or annual period
beginning after June 15, 2003. The adoption of FIN 46 is not expected to have a
material impact on our results of operations, financial position or cash flows.

Effects of Inflation

We believe that the relatively moderate rates of inflation over the last
few years have not had a significant impact on revenues or profitability. We do
not expect inflation to have any near-term material effects on the sale of our
products and services. However, there can be no assurance that there will be no
such effect in the future.

We finance substantially all of our inventory through various revolving
floor plan arrangements with interest rates that vary based on LIBOR. Such rates have historically increased during periods of increasing
inflation. We do not believe that we would be placed at a competitive
disadvantage should interest rates increase due to increased inflation since
most other automotive dealerships have similar floating rate borrowing
arrangements.

11



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##### Table of Contents



Forward Looking Statements

This Managements Discussion and Analysis of Financial Condition and
Results of Operations and other portions of this report may include
forward-looking statements, within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended. Forward-looking statements generally can be identified
by the use of terms such as may, will, should, expect, anticipate,
believe, intend, plan, estimate, predict, potential, forecast,
continue or variations of such terms, or the use of these terms in the
negative. Forward-looking statements include statements regarding our current
plans, forecasts, estimates, beliefs or expectations, including, without
limitation, statements with respect to:



| |  |  | our future financial performance;                                            
| | - |  | -----------------------------------------------------------------------------
|
| |  |  | future acquisitions;                                                         
|
| |  |  | future capital expenditures;                                                 
|
| |  |  | our ability to respond to economic cycles;                                   
|
| |  |  | trends in the automotive retail industry and in the general economy;         
|
| |  |  | trends affecting our future financial condition or results of
operations; and
|
| |  |  | our business strategy.                                                       

Forward-looking statements involve known and unknown risks and
uncertainties and are not assurances of future performance. Actual results may
differ materially from anticipated results due to a variety of factors
identified from time to time in our periodic reports filed with the SEC.
Important factors that could cause actual results to differ materially from our
expectations include the following:



| |  |  | automobile manufacturers exercise significant control over our
operations and we depend on them in order to operate our business;                                                                                 
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | because we depend on the success and popularity of the brands we
sell, adverse conditions affecting one or more of the automobile
manufacturers we represent may negatively impact our revenues and
profitability;
|
| |  |  | we may not be able to satisfy our capital requirements for financing
the purchase of our inventory;                                                                                                               
|
| |  |  | our failure to meet a manufacturers consumer satisfaction
requirements may adversely affect our ability to obtain incentive
payments from manufacturers and our profitability;                                   
|
| |  |  | our business and the automotive retail industry in general are
susceptible to adverse economic conditions, including changes in
consumer confidence, fuel prices and credit availability;                         
|
| |  |  | substantial competition in automotive sales and services may
adversely affect our profitability;                                                                                                                  
|
| |  |  | automotive retailing is a mature industry with limited potential in
new vehicle sales;                                                                                                                            
|
| |  |  | if we lose key personnel or are unable to attract additional
qualified personnel, our business could be adversely affected;                                                                                       
|
| |  |  | our business may be adversely affected by import product restrictions
and foreign trade risks that may impair our ability to sell foreign
vehicles profitably;                                                    
|
| |  |  | our business is subject to substantial regulation which may adversely
affect our profitability;                                                                                                                   
|
| |  |  | if state dealer laws in the United States are repealed or weakened,
our automotive dealership will be more susceptible to termination,
non-renewal or renegotiation of their franchise agreements;                

12



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##### Table of Contents





| |  |  | our dealership is subject to federal, state and local environmental
regulations that may result in claims and liabilities;                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the substantial amount of indebtedness of UAG may limit our
ability to obtain financing for acquisitions or capital expenditures;                         
|
| |  |  | due to the nature of the automotive retailing business, we may be
involved in legal proceedings that could have a material adverse effect
on our business;




Item 7A.Quantitative and Qualitative Disclosures about Market Risk

Interest Rates.We are exposed to market risk from changes in the
interest rates on our floor plan financing arrangements. Outstanding balances
under floor plan financing arrangements bear interest at a variable rate based
on a margin over LIBOR. Based on the average aggregate
outstanding amounts under floor plan financing arrangements during the year
ended December 31, 2002, a 100 basis point change in interest rates would
result in an approximate $0.2 million change to our annual floor plan interest
expense.




Item 8.Financial Statements and Supplementary Data

See the financial statements listed in the accompanying Index to Financial
Statements for the information required by this item.




Item 9.Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.




PART III




Item 10.Directors and Executive Officers of the Registrant

Omitted pursuant to the Instruction.




Item 11.Executive Compensation

Omitted pursuant to the Instruction.




Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Omitted pursuant to the Instruction.




Item 13.Certain Relationships and Related Transactions

Omitted pursuant to the Instruction.




Item 14.Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure
that material information related to the Company is made known to our principal
executive officer and principal financial officer, in particular during the
period in which the quarterly and annual reports are being prepared. Based on
our most recent evaluation, the principal executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective. There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent
to our most recent evaluation.

13



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##### Table of Contents






PART IV




Item 15.Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  Financial Statements

The financial statements listed in the accompanying Index to
Financial Statements are filed as part of this Annual Report on
Form 10-K.

(b)  Reports on Form 8-K.

(c)  Exhibits

|       |  |                                                                                                                                                
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Certificate of Formation dated November 28, 2001                                                                                               
|3.2    |  | Limited Liability Company Agreement                                                                                                            
|10.1   |  | Form of Audi Dealer Sales and Service Agreement with Audi of
America, a division of Volkswagon of America, Inc., including
Standard Provisions 
|10.2.1 |  | Form of Mercedes-Benz USA, Inc. Passenger and Car Retailer
Agreement, including Standard Provisions.                                           
|10.2.2 |  | Form of Mercedes-Benz USA, Inc. Light Truck Retailer
Agreement, including Standard Provisions.                                                 
|10.3   |  | Form of Porsche Sales and Service Agreement with Porsche North
America, including Standard Provisions                                          
|10.4   |  | Indenture dated as of March 18, 2002 between United Auto Group,
Inc, the Guarantors named therein and Bank One Trust Company, N.A.,
as Trustee,
|10.5   |  | Form of 9 5/8 Senior
Subordinated Note Due 2012 of United Auto Group, Inc. (including form
of Guarantee of HBL, LLC)                           
|99.1   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                        
|99.2   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                        

(d)  Schedules  None.

14



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in New York, New
York on April 11, 2003.

|         |  |     |  |                                          
|-------- |  | --- |  | -----------------------------------------
|HBL, LLC
|         |  |     |  |                                          
|By:      |  | /s/ |  | ROGER S. PENSKE, JR.                     
|         |  |    
|         |  |     |  | Roger S. Penske, Jr.Chairman of the Board

|                                                   |  |                                                                  |  |               
|-------------------------------------------------- |  | ---------------------------------------------------------------- |  | --------------
|Signature                                          |  | Title                                                            |  | Date          
|                                                   |  |                                                                  |  |               
|/s/ ROGER S. PENSKE, JR.

Roger S. Penske, Jr.     |  | Chairman of the Board and Director
(Principal Executive Officer) |  | April 11, 2003
|                                                   |  |                                                                  |  |               
|/s/ THOMAS E. SCHMITT

Thomas E. Schmitt           |  | Secretary and Treasurer
(Principal Accounting Officer)           |  | April 11, 2003
|                                                   |  |                                                                  |  |               
|/s/ JAMES R. DAVIDSON

James R. Davidson           |  | Director                                                         |  | April 11, 2003
|                                                   |  |                                                                  |  |               
|/s/ ROBERT H. KURNICK, JR.

Robert H. Kurnick, Jr. |  | Director                                                         |  | April 11, 2003

15



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##### Table of Contents



CERTIFICATIONS

Certification of Principal Executive Officer

I, Roger S. Penske, Jr., certify that:



|1. |  | I have reviewed this annual report on Form 10-K of HBL, LLC;                                                                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                               



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by others within the registrant, particularly during the period in which this annual report is
being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                        
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                              



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

April 11, 2003

Roger S. Penske, Jr.
Chairman of the Board
(Principal Executive Officer)

16



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##### Table of Contents



Certification of Principal Financial Officer

I, Thomas E. Schmitt, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of HBL, LLC;                                                                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                               



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by others within the registrant, particularly during the period in which this annual report is
being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                        
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                              



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

April 11, 2003

Thomas E. Schmitt
Secretary and Treasurer
(Principal Financial Officer)

17



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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                                                                                                |  |     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|HBL, LLC                                                                                                                                                                                                        |  |     
|Independent Auditors Reports                                                                                                                                                                                   |  | F-2 
|Balance
Sheets as of December 31, 2002 and 2001.                                                                                                                                                                |  | F-5 
|Statements of Operations for the year ended December 31, 2002,
the ten months ended December 31, 2001, the two months ended
February 28, 2001 and the year ended December 31,
2000.                             |  | F-6 
|Statements of Stockholders Equity/ Members Capital for the year
ended December 31, 2002, the ten months ended December 31,
2001, the two months ended February 28, 2001 and the year
ended December 31, 2000. |  | F-8 
|Statements of Cash Flows for the year ended December 31, 2002,
the ten months ended December 31, 2001, the two months ended
February 28, 2001 and the year ended December 31,
2000.                             |  | F-10
|Notes to Financial Statements                                                                                                                                                                                   |  | F-12

F-1



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Members
HBL, LLC

We have audited the accompanying balance sheet of HBL, LLC, formerly known
as HBL, Inc. (the Company), as of December 31, 2002 and the related
statements of operations, stockholders equity/members capital and cash flows
for the year then ended. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit 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
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company at December 31,
2002, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 1 to the financial statements, the Company changed
its method of accounting for goodwill and other intangible assets in 2002 to
conform to statement of financial accounting standards No. 142.

/s/ Deloitte & Touche LLP

New York, New York
January 29, 2003

F-2



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Members
HBL, LLC

We have audited the accompanying balance sheet of HBL, LLC, formerly known
as HBL, Inc. (the Company), as of December 31, 2001 and the related
statements of operations, stockholders equity/members capital and cash flows
for the ten-month period then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit 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
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of HBL, LLC as of December 31,
2001, and the results of its operations and its cash flows for the ten-month
period then ended in conformity with accounting principles generally accepted
in the United States of America.

/s/ Crowe, Chizek and Company LLP

South Bend, Indiana
May 10, 2002

F-3



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Shareholder
HBL, Inc.

We have audited the accompanying statements of operations, stockholders
equity and cash flow of HBL, Inc. (the Company) for the two months ended
February 28, 2001 and the year ended December 31, 2000. These financial
statements are the responsibility of the Company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 audits 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, HBL, Inc.s results of operations and cash flows for
the two months ended February 28, 2001 and the year ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Kaiser Scherer & Schlegel, PLLC

Washington, D.C.
April 9, 2001

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##### Table of Contents



HBL, LLC

BALANCE SHEETS
(In thousands)

|                                       |                                        |   |              |         |   |              |        |         |  
|-------------------------------------- | -------------------------------------- | - | ------------ | ------- | - | ------------ | ------ | ------- | -
|                                       |                                        |   | December 31, |         |   | December 31, |       
|                                       |                                        |   | 2002         |         |   | 2001         |       
|                                       |                                        |   |              |         |   |              |       
|ASSETS                                 |                                        |   |              |         |   |              |        |        
|Cash and cash equivalents              |                                        | $ |             |         |   | $            |       |        
|Accounts receivable, net               |                                        |   | 9,489        |         |   |              | 10,626 |        
|Inventories                            |                                        |   | 23,044       |         |   |              | 20,336 |        
|Other current assets                   |                                        |   | 451          |         |   |              | 347    |        
|                                       |                                        |   |              |         |   |             
|                                       | Total current assets                   |   |              | 32,984  |   |              |        | 31,309  |  
|Property and equipment, net            |                                        |   | 6,416        |         |   |              | 753    |        
|Goodwill                               |                                        |   | 68,281       |         |   |              | 63,030 |        
|Due from Parent                        |                                        |   |             |         |   |              | 866    |        
|Other assets                           |                                        |   | 2            |         |   |              | 2      |        
|                                       |                                        |   |              |         |   |             
|                                       | Total Assets                           |   | $            | 107,683 |   |              | $      | 95,960  |  
|                                       |                                        |   |              |         |   |             
|LIABILITIES AND MEMBERS CAPITAL       |                                        |   |              |         |   |              |        |        
|Floor plan notes payable               |                                        | $ | 21,267       |         |   | $            | 19,022 |        
|Accounts payable                       |                                        |   | 2,854        |         |   |              | 3,293  |        
|Accrued expenses                       |                                        |   | 12,065       |         |   |              | 6,413  |        
|                                       |                                        |   |              |         |   |             
|                                       | Total current liabilities              |   |              | 36,186  |   |              |        | 28,728  |  
|Long-term debt                         |                                        |   | 70,332       |         |   |              | 71,318 |        
|Other long-term liabilities            |                                        |   | 3,624        |         |   |              | 1,095  |        
|                                       |                                        |   |              |         |   |             
|                                       | Total Liabilities                      |   |              | 110,142 |   |              |        | 101,141 |  
|                                       |                                        |   |              |         |   |             
|Commitments and contingent liabilities |                                        |   |              |         |   |              |        |        
|Members Capital                       |                                        |   |              |         |   |              |        |        
|Members Capital                       |                                        |   |             |         |   |              |       |        
|Retained earnings (deficit)            |                                        |   | (2,459       | )       |   |              | (5,181 | )      
|                                       |                                        |   |              |         |   |             
|                                       | Total Members Capital                 |   |              | (2,459  | ) |              |        | (5,181  | )
|                                       |                                        |   |              |         |   |             
|                                       | Total Liabilities and Members Capital |   | $            | 107,683 |   |              | $      | 95,960  |  
|                                       |                                        |   |              |         |   |             

See Notes to Financial Statements.

F-5



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##### Table of Contents



HBL, LLC

STATEMENTS OF OPERATIONS
(In thousands)

|                                             |                |   |              |         |  |              |            |         | 
|-------------------------------------------- | -------------- | - | ------------ | ------- |  | ------------ | ---------- | ------- | 
|                                             |                |   |              |         |  |              | Ten Months |        
|                                             |                |   | Year Ended   |         |  | Ended        |           
|                                             |                |   | December 31, |         |  | December 31, |           
|                                             |                |   | 2002         |         |  | 2001         |           
|                                             |                |   |              |         |  |              |           
|New vehicle sales                            |                | $ | 112,641      |         |  | $            | 106,036    |        
|Used vehicle sales                           |                |   | 48,988       |         |  |              | 42,552     |        
|Finance and insurance                        |                |   | 7,255        |         |  |              | 7,291      |        
|Service and parts                            |                |   | 25,643       |         |  |              | 20,710     |        
|Fleet sales                                  |                |   | 3,270        |         |  |              |           |        
|Wholesale vehicle sales                      |                |   | 12,052       |         |  |              | 10,622     |        
|                                             |                |   |              |         |  |             
|                                             | Total revenues |   |              | 209,849 |  |              |            | 187,211 | 
|Cost of sales                                |                |   | 179,851      |         |  |              | 159,989    |        
|                                             |                |   |              |         |  |             
|                                             | Gross profit   |   |              | 29,998  |  |              |            | 27,222  | 
|Selling, general and administrative expenses |                |   | 21,728       |         |  |              | 20,828     |        
|                                             |                |   |              |         |  |             
|Operating income                             |                |   | 8,270        |         |  |              | 6,394      |        
|Floor plan interest expense                  |                |   | (480         | )       |  |              | (592       | )      
|Other interest expense                       |                |   | (2,637       | )       |  |              | (3,715     | )      
|                                             |                |   |              |         |  |             
|Income before income tax provision           |                |   | 5,153        |         |  |              | 2,087      |        
|Income tax provision                         |                |   |             |         |  |              | (1,353     | )      
|                                             |                |   |              |         |  |             
|Net income                                   |                | $ | 5,153        |         |  | $            | 734        |        
|                                             |                |   |              |         |  |             

See Notes to Financial Statements.

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##### Table of Contents



HBL, INC.

STATEMENTS OF OPERATIONS
(In thousands)

|                                    |                          |   |              |        |  |              |         |         | 
|----------------------------------- | ------------------------ | - | ------------ | ------ |  | ------------ | ------- | ------- | 
|                                    |                          |   | Two Months   |        |  | Year         |        
|                                    |                          |   | Ended        |        |  | Ended        |        
|                                    |                          |   | February 28, |        |  | December 31, |        
|                                    |                          |   | 2001         |        |  | 2000         |        
|                                    |                          |   |              |        |  |              |        
|Sales                               |                          | $ | 31,756       |        |  | $            | 213,271 |        
|Subrental income                    |                          |   |             |        |  |              | 267     |        
|Interest income                     |                          |   | 22           |        |  |              | 107     |        
|Other income                        |                          |   | (5           | )      |  |              | 234     |        
|                                    |                          |   |              |        |  |             
|                                    | Total revenues           |   |              | 31,773 |  |              |         | 213,879 | 
|                                    |                          |   |              |        |  |             
|Cost of sales                       |                          |   | 26,921       |        |  |              | 181,611 |        
|Selling, general and administrative |                          |   | 3,683        |        |  |              | 21,716  |        
|Interest                            |                          |   | 168          |        |  |              | 1,113   |        
|Depreciation                        |                          |   | 72           |        |  |              | 430     |        
|                                    |                          |   |              |        |  |             
|                                    | Total costs and expenses |   |              | 30,844 |  |              |         | 204,870 | 
|                                    |                          |   |              |        |  |             
|Income before bonuses and taxes     |                          |   | 929          |        |  |              | 9,009   |        
|Bonuses                             |                          |   | 4,099        |        |  |              | 5,051   |        
|                                    |                          |   |              |        |  |             
|Income (loss) before income taxes   |                          |   | (3,170       | )      |  |              | 3,958   |        
|Income tax provision (benefit)      |                          |   | (1,173       | )      |  |              | 1,621   |        
|                                    |                          |   |              |        |  |             
|Net income (loss)                   |                          | $ | (1,997       | )      |  | $            | 2,337   |        
|                                    |                          |   |              |        |  |             

See Notes to Financial Statements.

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##### Table of Contents



HBL, LLC

STATEMENT OF STOCKHOLDERS EQUITY/MEMBERS CAPITAL
(In thousands, except share data)

|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |   |         |   |  |       |        |  
|--------------------------------------------------------------- |  | ------------------- | ------- | - | ------ | - | --- | ------- |  | ------- | -------- | - | -------- | ------- | ------ | -------- | ------------- | - | ------- | - |  | ----- | ------ | -
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |   |         |   |  | Total |       
|                                                                |  | Voting Common Stock |         |   |        |   |     |         |  |         |          |   |          |         |        |          | Stockholders' |  
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          | Equity /      |  
|                                                                |  |                     |         |   |        |   |     |         |  | Paid-in |          |   | Retained |         |        | Members' |               |   | Members |  
|                                                                |  | Issued Shares       |         |   | Amount |   |     | Capital |  |         | Earnings |   |          | Capital |        |          | Capital       |  
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |  
|Balances, March 1, 2001                                         |  |                     | 50,000  |   |        | $ | 50  |         |  | $       | 603      |   |          | $       | 2,048  |          |               | $ |        |   |  | $     | 2,701  |  
|Effect of push down and purchase
accounting at acquisition date |  |                     |        |   |        |   | (50 | )       |  |         | (603     | ) |          |         | (2,048 | )        |               |   |        |   |  |       | (2,701 | )
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |  
|Adjusted Balances, March 1, 2001                                |  |                     | 50,000  |   |        |   |    |         |  |         |         |   |          |         |       |          |               |   |        |   |  |       |       |  
|Distributions to Parent                                         |  |                     |        |   |        |   |    |         |  |         |         |   |          |         | (5,915 | )        |               |   |        |   |  |       | (5,915 | )
|Net income                                                      |  |                     |        |   |        |   |    |         |  |         |         |   |          |         | 734    |          |               |   |        |   |  |       | 734    |  
|Formation of HBL, LLC                                           |  |                     | (50,000 | ) |        |   |    |         |  |         |         |   |          |         | 5,181  |          |               |   | (5,181  | ) |  |       |       |  
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |  
|Balances, December 31, 2001                                     |  |                     |        |   |        |   |    |         |  |         |         |   |          |         |       |          |               |   | (5,181  | ) |  |       | (5,181 | )
|Distributions to Parent                                         |  |                     |        |   |        |   |    |         |  |         |         |   |          |         |       |          |               |   | (2,431  | ) |  |       | (2,431 | )
|Net Income                                                      |  |                     |        |   |        |   |    |         |  |         |         |   |          |         |       |          |               |   | 5,153   |   |  |       | 5,153  |  
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |  
|Balances, December 31, 2002                                     |  |                     |        |   |        | $ |    |         |  | $       |         |   |          | $       |       |          |               | $ | (2,459  | ) |  | $     | (2,459 | )
|                                                                |  |                     |         |   |        |   |     |         |  |         |          |   |          |         |        |          |               |  

See Notes to Financial Statements.

F-8



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##### Table of Contents



HBL, INC.

STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands, except share data)

|                            |  |                     |        |  |        |   |    |         |  |         |          |  |          |        |        |               |  |   |        |  
|--------------------------- |  | ------------------- | ------ |  | ------ | - | -- | ------- |  | ------- | -------- |  | -------- | ------ | ------ | ------------- |  | - | ------ | -
|                            |  | Voting Common Stock |        |  |        |   |    |         |  |         |          |  |          |        |       
|                            |  |                     |        |  |        |   |    |         |  |         |          |  | Total    |       
|                            |  |                     |        |  |        |   |    |         |  | Paid-in |          |  | Retained |        |        | Stockholders' | 
|                            |  | Issued Shares       |        |  | Amount |   |    | Capital |  |         | Earnings |  |          | Equity |       
|                            |  |                     |        |  |        |   |    |         |  |         |          |  |          |        |       
|Balances, January 1, 2000   |  |                     | 50,000 |  |        | $ | 50 |         |  | $       | 603      |  |          | $      | 3,704  |               |  | $ | 4,357  |  
|Dividends                   |  |                     |       |  |        |   |   |         |  |         |         |  |          |        | (928   | )             |  |   | (928   | )
|Net income                  |  |                     |       |  |        |   |   |         |  |         |         |  |          |        | 2,337  |               |  |   | 2,337  |  
|                            |  |                     |        |  |        |   |    |         |  |         |          |  |          |        |       
|Balances, December 31, 2000 |  |                     | 50,000 |  |        |   | 50 |         |  |         | 603      |  |          |        | 5,113  |               |  |   | 5,766  |  
|Dividends                   |  |                     |       |  |        |   |   |         |  |         |         |  |          |        | (1,068 | )             |  |   | (1,068 | )
|Net loss                    |  |                     |       |  |        |   |   |         |  |         |         |  |          |        | (1,997 | )             |  |   | (1,997 | )
|                            |  |                     |        |  |        |   |    |         |  |         |          |  |          |        |       
|Balances, February 28, 2001 |  |                     | 50,000 |  |        | $ | 50 |         |  | $       | 603      |  |          | $      | 2,048  |               |  | $ | 2,701  |  
|                            |  |                     |        |  |        |   |    |         |  |         |          |  |          |        |       

F-9



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##### Table of Contents



HBL, LLC

STATEMENTS OF CASH FLOWS
(In thousands)

|                                                                                  |                                                     |   |              |        |   |              |            |        |  
|--------------------------------------------------------------------------------- | --------------------------------------------------- | - | ------------ | ------ | - | ------------ | ---------- | ------ | -
|                                                                                  |                                                     |   |              |        |   |              | Ten Months |       
|                                                                                  |                                                     |   | Year Ended   |        |   | Ended        |           
|                                                                                  |                                                     |   | December 31, |        |   | December 31, |           
|                                                                                  |                                                     |   | 2002         |        |   | 2001         |           
|                                                                                  |                                                     |   |              |        |   |              |           
|Operating Activities:                                                             |                                                     |   |              |        |   |              |            |       
|Net income                                                                        |                                                     | $ | 5,153        |        |   | $            | 734        |       
|Adjustments to reconcile net income to net cash provided
by operating activities: |                                                     |   |              |        |   |              |            |       
|                                                                                  | Depreciation and amortization                       |   |              | 153    |   |              |            | 1,429  |  
|                                                                                  | Deferred income taxes                               |   |              |       |   |              |            | 1,328  |  
|Changes in operating assets and liabilities:                                      |                                                     |   |              |        |   |              |            |       
|Accounts receivable                                                               |                                                     |   | 1,136        |        |   |              | (4,864     | )     
|Inventories                                                                       |                                                     |   | (2,707       | )      |   |              | (2,859     | )     
|Floor plan notes payable                                                          |                                                     |   | 2,245        |        |   |              | 5,493      |       
|Accounts payable and accrued expenses                                             |                                                     |   | 5,212        |        |   |              | 644        |       
|Other                                                                             |                                                     |   | 3,294        |        |   |              | (29        | )     
|                                                                                  |                                                     |   |              |        |   |             
|                                                                                  | Net cash provided by operating activities           |   |              | 14,486 |   |              |            | 1,876  |  
|                                                                                  |                                                     |   |              |        |   |             
|Investing Activities:                                                             |                                                     |   |              |        |   |              |            |       
|Purchase of equipment and improvements                                            |                                                     |   | (5,817       | )      |   |              | (598       | )     
|Cash received as part of the acquisition                                          |                                                     |   |             |        |   |              | 731        |       
|                                                                                  |                                                     |   |              |        |   |             
|                                                                                  | Net cash provided by (used in) investing activities |   |              | (5,817 | ) |              |            | 133    |  
|                                                                                  |                                                     |   |              |        |   |             
|Financing Activities:                                                             |                                                     |   |              |        |   |              |            |       
|Distributions to Parent                                                           |                                                     |   | (2,431       | )      |   |              | (5,915     | )     
|Payments of long-term debt                                                        |                                                     |   | (6,238       | )      |   |              | 3,906      |       
|                                                                                  |                                                     |   |              |        |   |             
|                                                                                  | Net cash used in financing activities               |   |              | (8,669 | ) |              |            | (2,009 | )
|                                                                                  |                                                     |   |              |        |   |             
|                                                                                  | Net change in cash and cash equivalents             |   |              |       |   |              |            |       |  
|                                                                                  |                                                     |   |              |        |   |              |           
|Cash and cash equivalents, beginning of period                                    |                                                     |   |             |        |   |              |           |       
|                                                                                  |                                                     |   |              |        |   |             
|Cash and cash equivalents, end of period                                          |                                                     | $ |             |        |   | $            |           |       
|                                                                                  |                                                     |   |              |        |   |             

See Notes to Financial Statements

F-10



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##### Table of Contents



HBL, INC.

STATEMENTS OF CASH FLOWS
(In thousands)

|                                                                                         |                                                     |   |              |        |   |              |        |      |  
|---------------------------------------------------------------------------------------- | --------------------------------------------------- | - | ------------ | ------ | - | ------------ | ------ | ---- | -
|                                                                                         |                                                     |   | Two Months   |        |   | Year         |       
|                                                                                         |                                                     |   | Ended        |        |   | Ended        |       
|                                                                                         |                                                     |   | February 28, |        |   | December 31, |       
|                                                                                         |                                                     |   | 2001         |        |   | 2000         |       
|                                                                                         |                                                     |   |              |        |   |              |       
|Operating Activities:                                                                    |                                                     |   |              |        |   |              |        |     
|Net income (loss)                                                                        |                                                     | $ | (1,997       | )      |   | $            | 2,337  |     
|Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                     |   |              |        |   |              |        |     
|                                                                                         | Depreciation                                        |   |              | 72     |   |              |        | 430  |  
|                                                                                         | Deferred income taxes                               |   |              | (1,484 | ) |              |        | (112 | )
|                                                                                         | (Gain) loss on disposal of property and equipment   |   |              | 9      |   |              |        | (18  | )
|                                                                                         | Increase in LIFO reserve                            |   |              |       |   |              |        | 145  |  
|Changes in operating assets and liabilities:                                             |                                                     |   |              |        |   |              |        |     
|Accounts receivable, net                                                                 |                                                     |   | 1,381        |        |   |              | 798    |     
|Inventories                                                                              |                                                     |   | (4           | )      |   |              | (3,199 | )   
|Accounts payable and accrued expenses                                                    |                                                     |   | 3,643        |        |   |              | 251    |     
|Deferred service contract earnings                                                       |                                                     |   |             |        |   |              | 172    |     
|Other                                                                                    |                                                     |   | (4           | )      |   |              | 63     |     
|                                                                                         |                                                     |   |              |        |   |             
|                                                                                         | Net cash provided by operating activities           |   |              | 1,616  |   |              |        | 867  |  
|                                                                                         |                                                     |   |              |        |   |             
|Investing Activities:                                                                    |                                                     |   |              |        |   |              |        |     
|Purchases of property and equipment                                                      |                                                     |   | (13          | )      |   |              | (229   | )   
|Proceeds from disposal of property and equipment                                         |                                                     |   |             |        |   |              | 218    |     
|Increase in finance receivables                                                          |                                                     |   | 134          |        |   |              | 83     |     
|Increase in advances to/from affiliates                                                  |                                                     |   | (99          | )      |   |              | (364   | )   
|                                                                                         |                                                     |   |              |        |   |             
|                                                                                         | Net cash provided by (used in) investing activities |   |              | 22     |   |              |        | (292 | )
|                                                                                         |                                                     |   |              |        |   |             
|Financing Activities:                                                                    |                                                     |   |              |        |   |              |        |     
|Net increase (decrease) in floor plan notes                                              |                                                     |   | (1,540       | )      |   |              | 361    |     
|Decrease in officer loan                                                                 |                                                     |   |             |        |   |              | (250   | )   
|Deferred financing costs                                                                 |                                                     |   |             |        |   |              | (53    | )   
|                                                                                         |                                                     |   |              |        |   |             
|                                                                                         | Net cash provided by (used in) financing activities |   |              | (1,540 | ) |              |        | 58   |  
|                                                                                         |                                                     |   |              |        |   |             
|                                                                                         | Net increase in cash and cash equivalents           |   |              | 98     |   |              |        | 633  |  
|Cash and cash equivalents, beginning of period                                           |                                                     |   | 633          |        |   |              |       |     
|                                                                                         |                                                     |   |              |        |   |             
|Cash and cash equivalents, end of period                                                 |                                                     | $ | 731          |        |   | $            | 633    |     
|                                                                                         |                                                     |   |              |        |   |             

See Notes to Financial Statements

F-11



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##### Table of Contents



HBL, LLC

NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except Share Data)

1.     Organization and Summary of Significant Accounting Policies

HBL, LLC, formerly known as HBL, Inc. (HBL or the Company), is engaged
in the sale of new and used motor vehicles and related products and services,
including vehicle service and parts, finance and insurance products and other
aftermarket products. The Company operates the dealership under franchise
agreements with Mercedes-Benz, Audi and Porsche. In accordance with the
individual franchise agreements, the dealership is subject to certain rights
and restrictions typical of the industry. The ability of the manufacturers to
influence the operations of the dealership, or the loss of a franchise
agreement, could have a negative impact on the Companys operating results.

HBL, a Delaware limited liability company, is a majority owned subsidiary
of HBL Holdings, Inc. (Holdings), a Delaware corporation that is a wholly
owned subsidiary of Lantzsch-Andreas Enterprises, Inc. (LAE). LAE is a wholly
owned subsidiary of United Auto Group, Inc. ( UAG or Parent), which UAG
acquired on March 1, 2001 for $67.4 million (the Acquisition). During the
period from March 1, 2001 through December 30, 2001, the operations of the
franchises currently owned and operated by HBL were owned and operated by
Holdings, which had no assets and liabilities other than those relating to the
automobile franchises then owned by HBL. On December 31, 2001, Holdings formed
HBL, LLC and contributed all of its assets and liabilities to HBL, LLC.
Concurrent with the contribution of assets and liabilities to HBL, LLC,
Holdings sold a 10% member interest in HBL, LLC to Roger Penske, Jr. for $7.2
million. HBL is operated pursuant to an operating agreement dated as of
December 31, 2001 (the Operating Agreement) between UAG and Roger Penske, Jr.

Basis of Presentation

As discussed above, UAG acquired HBL on March 1, 2001. Operating results,
financial position and cash flows for the period prior to the formation of HBL
reflect the operating results, financial position and cash flows of Holdings.
In accordance with Securities & Exchange Commission Staff Accounting Bulletin
No. 54 (SAB No. 54), UAG has pushed down HBLs purchase price in revaluing
the assets and liabilities of HBL. According to the provisions of SAB No. 54,
purchase transactions that result in an entity becoming wholly-owned require a
new basis of accounting for the purchased assets and liabilities. As a result
of the purchase, HBL recorded the following purchase price adjustments:

|                            |  |            |        |  
|--------------------------- |  | ---------- | ------ | -
|                            |  | Increase/  |       
|                            |  | (Decrease) |       
|                            |  |           
|Current assets              |  | $          | 2,219  |  
|Property and equipment      |  |            | (1,935 | )
|Intangible assets           |  |            | 69,668 |  
|Accrued liabilities         |  |            | 637    |  
|Other long-term liabilities |  |            | (242   | )
|Long-term debt              |  |            | 72,258 |  
|Stockholders equity        |  |            | (2,701 | )

The financial statements of HBL for the two-month
period ended February 28, 2001 and for the year ended December 31, 2000 reflect
the accounting basis used by Holdings prior to its acquisition by UAG. The financial
statements of HBL subsequent to March 1, 2001 reflect the accounting basis for
the acquired assets and liabilities, including intangibles, utilized
subsequent to the Acquisition. The basis of accounting used after
the Acquisition is not comparable to the basis of accounting used
prior to the Acquisition.

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Cash and Cash Equivalents

Cash and cash equivalents include all highly-liquid investments that have
an original maturity of three months or less at the date of purchase.

Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable and debt, including floor plan notes payable. The
carrying amount of all significant financial instruments approximates fair
value due either to length of maturity or the existence of variable interest
rates that approximate prevailing market rates.

Revenue Recognition

The Company records revenue when vehicles are delivered and title has
passed to the customer, when vehicle service work is performed and when parts
are delivered. The Company also arranges financing for customers through
various financial institutions and receives a commission from the lender equal
to the difference between the interest rates charged to customers over the
predetermined interest rates set by the financing institutions. The Company
also receives commissions from the sale of various insurance products to
customers, including credit, life and health insurance policies and extended
warranty contracts. The Company receives fee income from the placement of
these contracts at the time the customers enter into the agreements. The
Company is not the obligor under any of these contracts. In the case of
finance contracts, a customer may prepay or fail to pay, thereby terminating
the agreement. Customers may also terminate extended warranty contracts,
which are fully paid at purchase, with the underlying warranty provider and
become eligible for refunds of unused premiums. In the event that the consumer
terminates a retail finance contract or cancels an extended warranty or other
insurance product prior to scheduled maturity, a portion of the commissions
received may be charged back to us based on the relevant terms of the
contracts. The income we record relating to these fees is net of an estimate of
the ultimate amount of chargebacks we will be required to pay. Such estimate of
ultimate chargeback exposure is based on our historical chargeback expense,
including the impact of refinance and default rates on retail finance contracts
and cancellation rates on extended warranty contracts and other insurance
products, arising from similar contracts. Prior to the Acquisition, the Company
was the warrantor with respect to certain extended warranty insurance products
it sold to customers. Commission revenue from the sale of such contracts was
amortized over the warranty period using the straight-line method.

Contracts in Transit

Contracts in transit represent customer finance contracts evidencing loan
agreements or lease agreements between the Company, as creditor, and the
customer, as borrower, to acquire or lease a vehicle whereby a third-party
finance source has given the Company initial, non-binding approval to assume
the Companys position as creditor. Funding and final approval from the
finance source is provided upon the finance sources review of the loan or
lease agreement and related documentation executed by the customer at the
dealership. These finance contracts are typically funded within ten days of
the initial approval of the finance transaction give by the third-party finance
source. The finance source is not contractually obligated to make the loan or
lease to the customer until it gives its final approval and funds the
transaction. Until such final approval is given, the contracts in transit
represent amounts due form the customer to the Company. Contracts in transit,
included in accounts receivable, net in the Companys balance sheets, amounted
to $5,121 and $6,917 as of December 31, 2002 and 2001, respectively.

Inventory Valuation

Inventories are stated at the lower of cost or market. Cost for new and
used vehicle inventories is determined using the specific identification
method. Cost for parts, accessories and other inventories is based on factory
list prices. Prior to the Acquisition, cost for new vehicle inventories was
determined using the last-in, first-out (LIFO) method and cost for parts,
accessories and other inventories was based on the first-in, first-out (FIFO)
method.

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Property and Equipment

Property and equipment are recorded at cost and depreciated over estimated
useful lives, primarily using the straight-line method. Useful lives for
purposes of computing depreciation for assets, other than equipment under
capital lease and leasehold improvements, are between 5 and 10 years. Leasehold
improvements and equipment under capital lease are depreciated over the shorter
of the term of the lease or the estimated useful life of the asset.

Expenditures relating to recurring repair and maintenance are expensed as
incurred. Expenditures that increase the useful life or substantially increase
the serviceability of an existing asset are capitalized. When equipment is sold
or otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts, and any resulting gain or loss is reflected in
income.

Income Taxes

HBL is not an income tax paying entity. Accordingly, no income tax
provision is made in the accounts of HBL for the period after which HBL was
formed, since such taxes are liabilities of HBLs members. For the period from
March 1, 2001 through December 31, 2001, Holdings was included in the
consolidated federal and state tax returns of UAG. For the period from January
1, 2000 through February 28, 2001, Holdings was included in the consolidated
federal and state tax returns of LAE. The income taxes reflected in the
accompanying financial statements represent taxes relating to HBL computed on a
stand-alone basis.

Income taxes for periods through December 31, 2001 are provided in
accordance with Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes (SFAS No. 109). Deferred tax assets or liabilities are
computed based upon the difference between financial reporting and tax bases of
assets and liabilities using enacted tax rates. A valuation allowance is
provided when it is more likely than not that taxable income will not be
sufficient to fully realize deferred tax assets.

Goodwill

Goodwill represents the excess of cost over the fair value of net assets acquired
 in connection with the Acquisition. As discussed below, the Company no longer amortizes goodwill.
Prior to January 1, 2002, goodwill was amortized on a straight line basis over
periods not exceeding 40 years. Amortization expense for the ten months ended
December 31, 2001 was $1,387.

Impairment of Long-Lived Assets

The carrying value of long-lived assets is reviewed if the facts and
circumstances, such as significant declines in revenues, earnings or cash flows
or material adverse changes in the business climate, indicate that they may be
impaired. The Company performs its review by comparing the carrying amounts of
long-lived assets to the estimated undiscounted cash flows relating to such
assets. If any impairment in the value of the long-lived assets is indicated,
the carrying value of the long-lived assets is adjusted to reflect such
impairment based on the fair value of the impaired assets or an estimate of
fair value based on discounted cash flows.

Impairment of Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets
(SFAS No. 142), goodwill is not amortized subsequent to December 31, 2001,
however, it must be tested for impairment annually or more frequently when
events or circumstances indicate possible impairment. The impairment test of
goodwill, which is performed in a two-step process, is calculated at the
reporting unit level. The first step identifies potential impairments by
comparing the estimated fair value of each reporting unit with its
corresponding net book value, including goodwill. If the fair value of the
reporting unit exceeds is net book value, goodwill is not impaired and the
second step of the impairment test is not required. If the carrying value of
the reporting unit exceeds its fair value, the second step of the impairment
test determines the possible impairment loss by comparing the implied fair
value of goodwill with its carrying amount. If the implied goodwill is less
than the carrying amount, the carrying value of the goodwill is adjusted to
reflect its implied fair value. The Company performs its annual impairment
test during its fiscal fourth quarter.

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Defined Contribution Plan

The Company sponsors a defined contribution plan covering a significant
majority of the Companys employees. Company contributions to the plan are
based on the level of compensation and contribution by plan participants. The
Company incurred expense of $100, $71, $0 and, $25 relating to such plan during
the year ended December 31, 2002, the ten months ended December 31, 2001, the
two months ended February 28, 2001 and the year ended December 31, 2000,
respectively.

Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The accounts requiring the use of significant estimates
include accounts receivable, inventories, income taxes, intangible assets and
certain reserves.

Advertising

Advertising costs are expensed as incurred. The Company incurred
advertising costs of $1,898, $1,393, $242, and $1,634 during the year ended
December 31, 2002, the ten months ended December 31, 2001, the two months ended
February 28, 2001 and the year ended December 31, 2000, respectively.

Manufacturer Incentives

The Company is the recipient of incentives from the manufacturers at each
of its dealerships. These incentives are variable, the receipt of which are
based, among other things, upon the number of new vehicles purchased by the
dealerships, the attainment of specified new vehicle retail unit sales, the
attainment of certain customer satisfaction levels as measured by the
manufacturer, and reimbursements for qualified advertising expenditures by the
dealerships. All such incentive payments are treated as a reduction of cost of
good sold when earned, other than reimbursements of qualified advertising
expenditures which are treated as a reduction of selling, general and
administrative expense.

Derivative Instruments

Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended and interpreted
(SFAS No. 133) establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. Under SFAS 133, all derivatives, whether
designated in hedging relationships or not, are required to be recorded on the
balance sheet at fair value. SFAS 133 defines requirements for designation and
documentation of hedging relationships, as well as ongoing effectiveness
assessments, which must be met in order to qualify for hedge accounting. For a
derivative that does not qualify as a hedge, changes in fair value would be
recorded in earnings immediately. If the derivative is designated in a
fair-value hedge, the changes in the fair value of the derivative and the
hedged item are recorded in earnings. If the derivative is designated in a
cash-flow hedge, effective changes in the fair value of the derivative are
recorded in other comprehensive income and recorded in the income statement
when the hedged item affects earnings. Changes in the fair value of the
derivative attributable to hedge ineffectiveness are recorded in earnings
immediately. The Company adopted SFAS 133 on January 1, 2001, which had no
impact on its financial position or results of operations.

2.     Inventories

Inventories consisted of the following:

|                             |                   |   |              |        |  |              |        |        | 
|---------------------------- | ----------------- | - | ------------ | ------ |  | ------------ | ------ | ------ | 
|                             |                   |   | December 31, |        |  | December 31, |       
|                             |                   |   | 2002         |        |  | 2001         |       
|                             |                   |   |              |        |  |              |       
|New vehicles                 |                   | $ | 17,393       |        |  | $            | 14,460 |       
|Used vehicles                |                   |   | 4,418        |        |  |              | 4,399  |       
|Parts, accessories and other |                   |   | 1,233        |        |  |              | 1,477  |       
|                             |                   |   |              |        |  |             
|                             | Total inventories |   | $            | 23,044 |  |              | $      | 20,336 | 
|                             |                   |   |              |        |  |             

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As previously stated, the Company used the LIFO method for valuing new
vehicle inventories for all periods presented prior to the Acquisition. Had the
FIFO method been used for valuing new vehicle inventories, the Company would
have reported net income (loss) of ($1,991) and $2,525 for the two months ended
February 28, 2001 and the year ended December 31, 2000, respectively.

3.     Property and Equipment

Property and equipment consisted of the following:

|                                  |       |                                                 |                             |       |              |       |     |              |    |     | 
|--------------------------------- | ----- | ----------------------------------------------- | --------------------------- | ----- | ------------ | ----- | --- | ------------ | -- | --- | 
|                                  |       |                                                 |                             |       | December 31, |       |     | December 31, |   
|                                  |       |                                                 |                             |       | 2002         |       |     | 2001         |   
|                                  |       |                                                 |                             |       |              |       |     |              |   
|Furniture, fixtures and equipment |       | $                                               | 676                         |       |              | $     | 301 |             
|Leasehold improvements            |       |                                                 | 5,913                       |       |              |       | 489 |             
|                                  |       |                                                 |                             |       |              |      
|                                  | Total |                                                 |                             | 6,589 |              |       |     | 790          |   
|                                  |       | Less: Accumulated depreciation and amortization |                             |       | 173          |       |     |              | 37 |    
|                                  |       |                                                 |                             |       |              |      
|                                  |       |                                                 | Property and equipment, net |       | $            | 6,416 |     |              | $  | 753 | 
|                                  |       |                                                 |                             |       |              |      

Depreciation and amortization expense for the year ended December 31,
2002, the ten months ended December 31, 2001, the two months ended February 28,
2001 and the year ended December 31, 2000 was $153, $42, $72 and $430,
respectively.

4.     Floor Plan Notes Payable

The Company currently finances the majority of its new and a portion of
its used vehicle inventory under revolving floor plan financing arrangements
with DaimlerChrysler Services North America LLC. The floor plan financing
agreements with DaimlerChrysler Services North America LLC are guaranteed by
UAG. Prior to the Acquisition, the Company financed the majority of its new
and a portion of its used vehicle inventory under revolving floor plan
financing agreements with a bank. Under the terms of its current floor plan
financing agreements, the Company makes monthly interest payments on the amount
financed, but is not required to make loan principal repayments prior to the
sale of new and used vehicles. Outstanding borrowings under floor plan
financing arrangements as of December 31, 2002 and 2001 were $21,267, and
$19,022, respectively. The floor plan agreements grant a security interest in
substantially all of the assets of the Companys dealerships, and
require repayment after a vehicles sale. Prior to the Acquisition, the
Companys floor plan financing agreement was guaranteed by LAE. Interest rates
on the floor plan agreements are variable and increase or decrease based on
movements in LIBOR. Floor plan interest expense for the year ended December 31,
2002, the ten months ended December 31, 2001, the two months ended February 28,
2001 and the year ended December 31, 2000 was $480, $592, $165 and $1,095,
respectively.

5.     Operating Lease Obligations

The Company leases its dealership facilities under non-cancelable
operating lease agreements with expiration dates through 2028, including all
option periods available to the Company.

Minimum future rental payments required under non-cancelable operating
leases in effect as of December 31, 2002 follow:

|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2003                |  | $ | 3,300  | 
|2004                |  |   | 3,562  | 
|2005                |  |   | 3,582  | 
|2006                |  |   | 3,602  | 
|2007                |  |   | 3,622  | 
|2008 and thereafter |  |   | 48,831 | 
|                    |  |   |       
|                    |  | $ | 66,499 | 
|                    |  |   |       

Rent expense for the year ended December 31, 2002, the ten months ended
December 31, 2001, the two months ended February 28, 2001 and the year ended
December 31, 2000 amounted to $2,384, $2,006, $418 and $2,496, respectively.

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6.     Long-Term Debt

Long-term debt represents the debt incurred by UAG in connection with the
Acquisition. The interest expense included in these financial statements
reflects UAGs weighted average interest rate of 3.75% and 6.25% on this
indebtedness during 2002 and 2001 respectively. UAG borrowed these funds under
a credit agreement with DaimlerChrysler Services North America LLC and Toyota
Motor Credit Corporation that provides UAG with revolving loans to be used for
acquisitions, working capital, the repurchase of common stock and general
corporate purposes. UAGs credit agreement is fully and unconditionally
guaranteed on a joint and several basis by the majority of its domestic
automotive dealership subsidiaries, including the Company. Substantially all of our assets are subject to
security interests granted to lenders under UAGs credit agreement.

In March 2002, UAG issued $300.0 million of senior subordinated notes due
2012 pursuant to Rule 144A and Regulation S and filed a registration
statement with the SEC in January 2003 offering to exchange publicly-traded
notes for the notes issued in March 2002. The notes are fully and
unconditionally guaranteed on a joint and several basis by the majority of
UAGs domestic automotive dealership subsidiaries, including the Company.

7.     Related Party Transactions

From time to time, the Company pays and/or receives fees from UAG and its
affiliates for services rendered in the normal course of business. These
transactions reflect the providers cost or an amount mutually agreed upon by
both parties. It is the Companys belief that the payments relating to these
transactions are on terms at least as favorable as those which could be
obtained from an unrelated third party. In addition, management fees of $900
and $1,498 were charged to HBL by UAG or its affiliates for the year
ended December 31, 2002 and the ten month period ended December 31, 2001,
respectively. Aggregate payments relating to related party transactions amounted to
$1,456 and $1,943 for the year ended December 31, 2002 and the ten month period
ended December 31, 2001, respectively.

Prior to the Acquisition, the property leased by the Company for its
dealership operations was owned by an entity controlled by LAEs principal
shareholders. The Company leased the facility under an operating lease
agreement which was set to expire in 2008. The terms of this lease were
re-negotiated in connection with the Acquisition. In addition, in the two
months ended February 28, 2001 the Company distributed non-interest bearing
related party receivables to LAE of $1,068. During the year ended December 31,
2000, LAE allocated costs of $2,398 to the Company, the Company distributed non-interest
bearing related party receivables to LAE of $928, and the Company received
sub-rental income of $267.

8.     Members Equity/Stockholders Equity

The Company made distributions pursuant to the terms of the Operating
Agreement in the amount of $2,431 and $5,915 during the year ended December 31,
2002 and the ten months ended December 31, 2001, respectively. Prior to the
Acquisition, the Company made distributions to LAE of $1,068 and $928 during
the two months ended February 28, 2001 and the year ended
December 31, 2000, respectively.

9.     Income Taxes

The income tax provision (benefit) consisted of the following:

|                               |                 |                |       |              |       |   |              |       |        |              |        |       |       |  
|------------------------------ | --------------- | -------------- | ----- | ------------ | ----- | - | ------------ | ----- | ------ | ------------ | ------ | ----- | ----- | -
|                               |                 |                |       | Ten          |       |   | Two          |       |        |              |        |      
|                               |                 |                |       | Months       |       |   | Months       |       |        | Year         |       
|                               |                 |                |       | Ended        |       |   | Ended        |       |        | Ended        |       
|                               |                 |                |       | December 31, |       |   | February 28, |       |        | December 31, |       
|                               |                 |                |       | 2001         |       |   | 2001         |       |        | 2000         |       
|                               |                 |                |       |              |       |   |              |       |        |              |       
|Current:                       |                 |                |       |              |       |   |              |       |        |              |        |      
|                               | Federal         |                | $     | 21           |       |   | $            | 252   |        |              | $      | 1,470 |      
|                               | State and local |                |       | 4            |       |   |              | 45    |        |              |        | 263   |      
|                               |                 |                |       |              |       |   |              |       |       
|                               |                 | Total current  |       |              | 25    |   |              |       | 297    |              |        |       | 1,733 |  
|                               |                 |                |       |              |       |   |              |       |       
|Deferred:                      |                 |                |       |              |       |   |              |       |        |              |        |      
|                               | Federal         |                |       | 1,123        |       |   |              | (1247 | )      |              |        | (95   | )    
|                               | State and local |                |       | 205          |       |   |              | (223  | )      |              |        | (17   | )    
|                               |                 |                |       |              |       |   |              |       |       
|                               |                 | Total deferred |       |              | 1,328 |   |              |       | (1,470 | )            |        |       | (112  | )
|                               |                 |                |       |              |       |   |              |       |       
|Income tax (benefit) provision |                 | $              | 1,353 |              |       | $ | (1,173       | )     |        |              | (1,621 | )    
|                               |                 |                |       |              |       |   |              |       |       

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The income tax provision (benefit) varied from the U.S. federal statutory
income tax rate due to the following:

|                                                                    |  |              |       |  |              |   |        |              |  |   |       | 
|------------------------------------------------------------------- |  | ------------ | ----- |  | ------------ | - | ------ | ------------ |  | - | ----- | 
|                                                                    |  | Ten          |       |  | Two          |   |        |              |  |  
|                                                                    |  | Months       |       |  | Months       |   |        | Year         | 
|                                                                    |  | Ended        |       |  | Ended        |   |        | Ended        | 
|                                                                    |  | December 31, |       |  | February 28, |   |        | December 31, | 
|                                                                    |  | 2001         |       |  | 2001         |   |        | 2000         | 
|                                                                    |  |              |       |  |              |   |        |              | 
|Income tax provision (benefit) at the Federal statutory
rate of 35% |  | $            | 730   |  |              | $ | (1,110 | )            |  | $ | 1,385 | 
|State and local income taxes, net of federal benefit                |  |              | 136   |  |              |   | (118   | )            |  |   | 148   | 
|Non-deductible amortization of goodwill                             |  |              | 487   |  |              |   |       |              |  |   |      | 
|Other                                                               |  |              |      |  |              |   | 55     |              |  |   | 88    | 
|                                                                    |  |              |       |  |              |   |        |              | 
|Income tax provision (benefit)                                      |  | $            | 1,353 |  |              | $ | (1,173 | )            |  | $ | 1,621 | 
|                                                                    |  |              |       |  |              |   |        |              | 

10.     Supplemental Cash Flow Information

Cash paid interest for the year ended December 31, 2002, the ten months
ended December 31, 2001, the two months ended February 28, 2001 and the year
ended December 31, 2000 was $480, $592, $194 and $1,121, respectively. Cash
paid income taxes for the ten months ended December 31, 2001, the two months
ended February 28, 2001 and the year ended December 31, 2000 was $621, $0 and
$1,569, respectively. Non cash investing and financing activities include the
distribution of intercompany receivables of $1,068 for the two-months ended
February 28, 2001 and $928 in the year ended December 31, 2000.

11.     Disposition

On February 22, 2002, HBL sold substantially all of the assets of a Land
Rover operation, including the franchise rights to the Land Rover product line,
to an unaffiliated third party for $1.4 million in cash. Total revenues for
the year ended December 31, 2002 and the ten months ended December 31, 2001
were $1,805 and $13,101, respectively.

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EXHIBIT INDEX

|           |  |  |                                                                                                                                                 
|---------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  |  | Description                                                                                                                                     
|           |  |  |                                                                                                                                                 
|3.1        |  |  | Certificate of Formation dated November 28, 2001                                                                                                
|3.2        |  |  | Limited
Liability Company Agreement.                                                                                                            
|10.1       |  |  | Form of Audi Dealer Sales and Service Agreement with Including
Standard Provisions.                                                             
|10.2.1     |  |  | Form of Mercedes-Benz USA, Inc. Passenger and Car Retailer
Agreement, including Standard Provisions.                                            
|10.2.2     |  |  | Form of Mercedes-Benz USA, Inc. Light Truck Retailer Agreement,
including Standard Provisions.                                                  
|10.3       |  |  | Form of Porsche Sales and Service Agreement.                                                                                                    
|10.4       |  |  | Indenture dated as of March 18, 2002 between United Auto Group,
Inc., the guarantors named therein and Bank One Trust Company,
N.A., as Trustee.
|10.5       |  |  | Form of 9 5/8% Senior Subordinated Note Due 2012 of United Auto Group, Inc. (including form of Guarantee of HBL, LLC)                           
|99.1       |  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                         
|99.2       |  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.