Good morning and welcome to the Sonic Automotive fourth quarter 2007 earnings conference call. All Lines has been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer period. (Operator Instructions) As a reminder, ladies and gentlemen this call is being recorded today Tuesday, February 26, 2008. Presentation materials which management will be reviewing on the conference call can be accessed on the company’s website at www.SonicAutomotive.com by clicking on the for investors tab and choosing webcast and presentations on the left side of the monitor. At this I would like to refer to the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. During this conference call management may discuss financial projections, information, or expectations about the company’s products or market or otherwise make statements about the future. Such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties are detailed in the company’s filings with the Securities and Exchange Commission thank you. I would like to now introduce Mr. Scott Smith, President of Sonic Automotive. Mr. Smith you may begin your conference.

Good morning ladies and gentlemen. This is Scott Smith, President and Chief Strategic Officer as co-founder; it is an honor and privilege to be leading our company and this call today. Welcome to Sonic Automotive’s fourth quarter 2007 conference call. Joining me on the call today are the company’s Vice Chairman and Chief Financial Officer, Mr. Dave Cosper, our Divisional Chief Operating officers, Mr. Jeff Dyke and Jim Evans, Rachel Richard our Vice President of Retail Strategy , and Mr. Greg Young our Vice President of Investor Relations. The presentation material for this call today is posted to our website www.sonicautomotive.com and can be accessed by clicking on the for investors tab and choosing webcast and presentations on the left side of your screen. Our comments today will be linked to the slides on this site. If you will please turn to Slide Number One. Discussion topics for today call will include some color from me on our corporate culture, our people, our vision, our strategy and motion, a look back at 2007 accomplishments, our 2008 strategic focus and a review of our fourth quarter performance. We’ll then open the call for questions and we’ll wrap the call up with some closing comments. If you’ll please turn to Slide Two. This Slide is a little bit busy but I think its import for our fellow shareholders to get a better understanding of who we are, what we believe, and how we do it. It’s our corporate culture, our values, our beliefs. On the left of the Slide is a copy of the Sonic Creed Card, while this may be the recipe for success, the secret sauce is really woven into fabric of our culture. Let me call our promises, it’s ASI+GSI+MSI=ROI, this really isn’t rocket science, simply put associate Satisfaction…

Good morning everyone. As you can see on this Slide, total revenue for the quarter was up 7.6% from prior year to over $2.1 billion. Although gross profit was up 5.7% gross margin slipped 20 basis points from the prior year to 15.3% reflecting primarily increased competition in a soft market. New retail margins were 7.2% down 40 basis points from last year. Used retail margins were 8.2% down 90 basis points. Fixed Operations margins were 50.3%, down 20 basis point from last year. Operating profit for the quarter was $77 million an increase of 4% from 2006. Our margin was 3.7% down only 10 basis point from last year. Our strong focus on cost control and cost reduction helped us offset a large part of the deterioration in gross margin. Total income from continuing ops was $29.4 million an increase of 1.7% from last year and EPS from continuing operations was $0.68 up 6.3% from 2006. Please turn to the next Slide. Let’s take a look at the full year 2007. As Scott mentioned, we delivered on all the commitments we made to you despite many challenges. For the year revenue was $8.3 million up 4.4%. Gross profit for the year was up 5.2% and gross margin improved by 10 basis points to 15.5%. Operating profit for the year was up 13.1% driven by higher gross and 190 basis points reduction in SG&A. Operating margin was a strong 3.6% up 30 basis points from 2006. Continuing EPS for the year was $2.54 right where we projected and total EPS was $2.13 up from $1.85 in 2006 a 15.1% improvement. Please turn to the next Slide. Let me review our same store sales performance. Overall, same store revenue increased 1.3% for the quarter. Excluding our wholesale business same store revenue…

In summary on Slide 14, while I’m thrilled with our 2007 performance, I’m even more excited about our future. As co-founder I’ve seen our company in every stage of our company’s history and I can tell you that I’ve never seen it in such great shape and we’ve never been so poised for success as we are today. We’re expecting that 2008 is going to be a challenging year however, we’re not building a company for the short term we’re building a company for the long haul. I’m pleased to announce that our dividend will remain unchanged at $0.12 per share payable on April 15, 2008 for shareholders of record as of March 15, 2008. And before we open the call and take your questions I’d like to take time to thank our manufacturer partners and the many Sonic Automotive associates without whom these accomplishments would not have been possible. Nothing happens until we sell a car and we’re committed to taking the high road, it’s our compass. At this time we’d like to open the call and take your questions.

(Operator Instructions) Your first question comes from Edward Yruma with JP Morgan. Edward Yruma – JP Morgan: Your discontinued ops line continues to grow, and I’m not just necessarily referring to the $0.09, but the amount you have on right now. How long will it take you to divest those dealerships in that group?

We made great progress in fact, 67% of that loss is now gone. We sold the stores, we really ramped up the activity in the fourth quarter that sold successfully seven or eight franchises so the lion’s share of that is behind us.

On your fixed to floating, how much of your debt to you have swapped right now?

We’re a little over 50% fixed.

The final question I have, I know that you guided that you’d like to get back from to kind of a 35 to 40% debt to cap level. What’s the timeframe around that?

I’m gonna call that longer term. With the mortgages basically all we’re doing is taking off balance sheet financing that exists and putting it on our balance sheet. It is pressuring us, the nice thing about mortgages though is you make payments every month and they go down and over time it’s just like owning your house, it’s gonna be yours. So we’re convinced it’s the right thing to do and we’re going to keep pressure on it, but I am going to call it our as a separate item so you can see what it is that we’re doing with the business. It’s going much faster than I thought it would and I think it’s a long term recipe for success for Sonic.

Your next question comes from Rick Nelson with Stephens. Rick Nelson – Stephens, Inc.: Can you talk about the profitable dealers that you’re contemplating bringing into dis ops and how much revenue, how many dealerships, and possibly what the proceeds might look like for these?

Let me talk in general terms about that Rick, I don’t want to get specific, but I tell you this, it’s a little different way of thinking for us. There’s a lot of expenditures that are often required by manufacturers and we’re reviewing whether or not those make sense for us. Sometimes in the past I think we may have just invested the money and moved on, but as we look at some of these stores where you’ve got to spend $5, $7 million and we don’t see revenue increase, we’re thinking, “Geese it probably doesn’t pencil for us and we might be better letting the store go.” Avoid spending that money, free up some capital; invest somewhere else where we can earn higher returns. We’re close on a Toyota store, I can tell you that but beyond that I don’t wanna give you a lot a detail. It’s not a huge number but there’s several stores that we’re contemplating. Rick Nelson – Stephens, Inc.: Are they import stores or domestics as well?

Both but I think probably for the first time we’re considering import stores. Rick Nelson – Stephens, Inc.: Your SG&A to gross as you point is already the lowest in the peer group. What do you think is the potential there as we move forward?

I think in 08 it’s going to be tough to see a lot of improvement there given the gross environment and the fact that we’re gonna be ramping up our spending, particularly on the training front. I was pleased to see that in absolute dollars our fixed comp and our other fixed overhead were flat in 2007 in dollar terms versus 2006. That always helps and we’ll just keep whacking at it wherever we can but I don’t see huge improvement given the environment we have. Rick Nelson – Stephens, Inc.: Finally, on acquisition multiples are you seeing those are a contracted at all given the overall environment? And the tradeoff I guess between acquisition and buybacks still favoring buybacks?

The stock buyback is not a long term growth strategy for us but when we look out there at the current prices I think there is a lot of unrealistic expectations by the private dealers as to what their dealerships are worth and I don’t see a whole lot of transactions happening this year. The transactions that we talked about earlier were deals that we’ve been working on for many, many months. In case of Beck Imports years, and it was just a matter of timing. But as we look when we can buy our stock at 6, 7, 8 times after tax, it doesn’t make any sense to pay the 6 times, 7 times pretax for acquisitions.

Your next question comes from Rich Kwas with Wachovia Richard Kwas – Wachovia : I have a question on grosses on the luxury side, are you seeing any deterioration on that on the new vehicle front?

We saw grosses soften a little bit in fourth quarter on luxury domestic and imports as well. Interestingly, I would say that from a regional perspective they held up reasonably well in California and Florida and most of the deterioration was in other parts of the country, including Texas.

Some of that compression is coming out of truck and luxury, maybe a little bit of that on BMW 3 Series, but other than that nothing, no more. Richard Kwas – Wachovia : What’s factored into the guidance? Do you see it stabilizing where it is now, or do you see further deterioration at all?

It’s pretty much factored in steady state there may be a little bit of improvement in used going forward, I’m hoping to see that. But we’re not assuming any huge deterioration from today’s levels. Richard Kwas – Wachovia: On the California exposure, Dave can you just walk us through what happened on the new vehicle front and used vehicle front? In that market it seemed like the fourth quarter it’s been a tough market but incrementally things got worse.

I’ll turn it over to Jim in a second, but as I mentioned, overall new car margins were down a tenth of a point from 06 which is good. We grew used handsomely on the West coast, fixed ops improved as did F&I. New cars were soft and Jim can give you couple bits of color on that.

After Dave’s comments, we did see some continued softening in the new vehicle market in California. But one of the encouraging thing is the stabilization of the gross profit on the new car side, we saw that finally hit near the bottom we believe. At the same time almost 14% growth and used cars good growth and customer pay and F&I up 5%. So we outperformed the market with our major brands, despite the continued softness and gross compression in California. Richard Kwas – Wachovia : And on the used vehicle front, you’re gonna start to face some pretty difficult comps in the second half of the year, are you kind of expecting first half to be up nicely given the initiatives you have in place and that second half softens? Or, what’s the current thought there?

Yes, we’re continuing to see some nice growth on into the beginning of the year. But you got to remember we’re also rolling out our second phase of our used vehicle process which is going to help us. We just completed our first region; we’ll roll out Texas here in a few weeks and then the rest of the country sometime between now and the end of the year and maybe the first quarter of 09. We won’t see the full benefit of all that though towards the end of maybe 09.

In that stage with the trade desk, it’s really about getting more margin than volume. It’s putting the right vehicle in the right place to maximize margin. Fourth quarter was huge for us on used cars up 19%, in total continuing ops is up 25% in revenue. BMW CPO sales were up 86%. So there were some really terrific numbers and obviously you can’t repeat that but we’ll maintain it and improve from there. Richard Kwas – Wachovia : And then finally Dave, on the LIBOR assumptions there, it looks like back half you’re assuming an increase? What’s kind of the thought there?

Well, who knows where the market’s going. We’ve seen a number of different economic forecast and we’re hoping with some of the other economists out there that things start to turn around in the second half and at that the time rates would tick up. If they didn’t tick up, if you want to do the math, if they were 3.5% for the whole year it’s somewhere around $0.03 of good news for us given our variable exposure.

Your next questions comes from Colin Langan with UBS Colin Langan – UBS : I noticed you did talk about the mortgage being slightly up, did you have a significant change or a notable change in the number of dealers that you lease versus own?

Well we’re starting to move the ball. We’ve got four stores presently with mortgages, another two that we’re about to close on and another five that I’m hoping within the next two months we can close on. We’re getting close to maybe 10% owning our property, which I think is big. It’s going a little faster than I would have thought, but that’s okay, it’s a financial benefit for us. Colin Langan – UBS : Part of that, I mean when the mortgage interest is higher that’s due to owning more mortgages, some of the recent moves that you’ve made? Is that correct or is it a market factor?

You’re thinking about it exactly right, we had zero mortgage property previously. We now have 46 and we’re headed to $140 to $150 million of unbalance sheet mortgage financing. Colin Langan – UBS : So that year-over-year headwind, that includes properties that you anticipate on maybe buying next year or is that not in there?

It does. We’ve got $46 million on the books, we’re looking for another $90, a total of $130, $140. Colin Langan – UBS : I think you mention in terms of parts and services, customer pay was up 3.7. How is warranty looking? Is that stabilizing at all? Or is that down? I guess it must be down a little bit?

Down 1.7%. Mercedes had been the biggest driver of that as its warranty cost fell, but I see that kind of stabilizing now so I view it probably as flat going forward.

And Colin, we’ve seen that stabilizing over the last couple of quarters. Colin Langan – UBS : Okay. So, excluding maybe Mercedes, do you expect parts and services to be up? Is that anticipated in your guidance? I mean there’s no reason to - is there anything out there that we should be thinking about?

We’ll continue to improve in fixed operations, absolutely. We’re adding some stall capacity and our sales processes are still benefiting us in the units and operations out there for our luxury vehicles continue to grow so we’ll be up. And really if you think about the guidance, new cars are gonna be soft, we gonna grow in used, we’re gonna grow in fixed ops and F&I maybe a little bit of upside but not much from where we ended the year.

To qualify that a little bit, Mercedes Benz warranty was down 23% for the quarter, so that’s what’s dragging that number down. Colin Langan – UBS : Okay. And just, I wanted to clarify something, you mentioned that you’re going to have some assets that you bought closing in Q2. Are those mortgage properties that you bought? Or are they new dealerships? And, if they’re new dealerships what is the revenue on those?

They’re new dealerships and I don’t have the revenue numbers handy on those. Colin Langan – UBS : Okay. Just one last question, in your guidance for the repurchase, earnings share repurchase earnings benefit, is that from what you’ve done already? Or do you anticipating dong more? Is that baked in there or no? Seems like it’s just what you’ve done already looking at the numbers but.

It’s really a combination of both and the timing. We had a pretty hefty repurchase last year of $50 million. We’ve got $12 million done and that $0.12 is really both years impact.

We did a lot of our share repurchases in 07 starting around late third quarter so we’ll get the full year impact of that in 2008. Plus we did bake in some additional share repurchase in 08 for [inaudible].

That’s exactly right. Colin Langan – UBS : Okay so the bulk of it though is what was done already as of last year and as of what you’ve done so far this year?

That’s correct.

Your next question comes from Scott Stember with Sidoti & Company. . Scott Stember – Sidoti & Company: On the fixed ops side it looks like the gross margin was off 20 basis points. Can you talk about that a little?

I was looking at that this morning actually. There’s a couple things we think may be driving that. First, I don’t think it’s a huge significant issue, but tire sales are actually up 10% year-to-year and tires have a lower margin in percentage term but fairly good gross overall. Also we’ve got a pretty big initiative to ramp up our quick lube business at all of our stores to get people in and comfortable with our dealerships and our shops, and that not our highest margin business either. So I guess I’m ok with 20 basis points slip in the margin if the total dollars are more and that’s a strategy that’s working for us. Scott Stember – Sidoti & Company : And you said customer pay was up 3.7%, right?

Yes. Scott Stember – Sidoti & Company : Can you just, the buyback information for the quarter and what you did so for this year, I missed that?

$12 million. Scott Stember – Sidoti & Company : That was in the first quarter?

In the first quarter as of yesterday. Scott Stember – Sidoti & Company: And what did you do in the fourth quarter?

The fourth, $14 million. A total of $50 for the year and $14 million for the quarter. Scott Stember – Sidoti & Company : And how much do you have left currently right now? $21 million of board authorization. Last year I think we got $60 of authorization of authorization throughout the year. Scott Stember – Sidoti & Company : Can you comment on in January early February what we’re seeing as far as trends?

In general terms January was not a very good month, February was a little better. Let me give Jeff a chance to give you more color.

Absolutely, if you look at January it was a difficult month, although in our initiative categories fixed operations used cars, we continue to perform and then in February a little better, but not much.

(Operator Instructions) Your next question comes from Doug Carson with Banc of America Securities. Doug Carson – Banc of America Securities: I had a quick questions about funding, how’s the availability for financing the floor plan, kind of how’s the tightness of credit if there is any based on what’s going on at some of the finance companies? And the separately the perception of the consumer, how’s the availability for credit for the consumer coming in to buy a vehicle? Then, I have a separate question on the used car market.

First on floor plan financing, we have a fantastic relationship with our banking syndicate group and with the captives and that’s just not an issue at all. I mean it’s a four year facility and it’s in place, great rates and super support, so in terms of flooring our vehicles absolutely not an issue. In terms of the market out there clearly some of the subprime lenders are tightening up, we’re seeing that. We haven’t seen it have a material effect on our sales yet which is a good thing and frankly a little surprising. We’ll keep an eye on that but we’ve got a preferred lender group that we do business with and their very strong with us, Jim and Jeff are you see anything that I’m not?

We haven’t seen any direct linkage between the mortgage issues and the subprime retail lending, there’s plenty of capital still there and the lenders are staying aggressive for the most part. And subprime only represents 15% of our overall used car business at any rate so we don’t see any gap there at the moment, it remains steady.

I would tell you as you know we spun off Cornerstone last year, and they’re up and running as American Credit Acceptance and doing a great job in growing their business and being very supportive of Sonic. And while I’ve got people here, I’ve checked the revenue on those two acquisitions, combined it would be about $120 million in new revenue for the Mercedes and the Thoroughbred stores. Doug Carson – Banc of America Securities: Thanks for that answer, it was a good answer. The implementation of this merchandising strategy program for the used vehicles, did it surprise you guys internally with the 19% year-over-year growth? Because, that seems very high to me and great number relative to what others have been dong in the used car market. I’m just trying to understand that better.

We appreciate that, it was a great quarter for used cars. But quite honestly that’s sort of been a building trend over the last two years. We’ve been working on sort of phase one in controlling our merchandising inventory and pricing it right for the last two years so this is not something that we just woke up and started doing. It’s been something that we’ve been working on very, very hard and executing at the store level and we’re starting to finally reap the benefit of all of our hard work.

There are no further questions at this time, I will turn the call back over to Mr. Smith for any closing remarks.

I’d just like to thank everyone again for being on the call today. Thanks so much we’ll let you go.