CAN I BE HAPPY IN BUSINESS Dave Cosper CFO, Sonic Automotive

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CAN I BE HAPPY IN BUSINESS?Dave CosperCFO,
Sonic Automotive
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The Answer Of Course IsYES, NO, or MAYBE
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A Rough Beginning--You will know if you have
made a mistake.
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• Choose something you like
• Passion
• How is the Culture?
• Do You like the People?
• People, People, People

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• Attitude is So Important
• Beware of Self Delusion

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Dont be Afraid toMake a Big Change
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WHERE DO YOU FALL?
Self Confidence
Arrogance
Self Doubt
Dont let POWER corrupt you
Dont let FEAR stop you

• Ineffective
• Paralyzed
• Afraid
• Not Inspiring
• No Leadership

• Effective
• Takes Action
• Empowering
• Inspiring
• Leadership

• Selfish
• Condescending
• May appear effective for a while
• Demoralizing
• Destructive

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SHADOW OF A LEADER

• Leaders shape culture through action, attitude,
  and message they cast shadows
• Shadows influence everyone around the leader
• Awareness and caring are key
• What shadow do you cast?
• You can change your shadow -- or at least manage
  it
• Remember, people are watching

Actions are more important than words
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ORGANIZATIONS BECOME SHADOWS OF THEIR LEADERS
Caring
Caring
Caring
Caring
Caring
Caring
Caring
Caring
Hectic
Fear
Hectic
Hectic
Hectic
Fear
Fear
Fear
Hectic
Hectic
Hectic
Hectic
Fear
Fear
Fear
Fear

• In every organization, there are
• Shadows cast by current leaders, and
• Ghosts of former leaders

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ADVICE

• Reputation is Key Build your Brand
• Every Interaction is Important
• Be a Leader. Get things done. Take
  responsibility.
• Be yourself -- Dont change
• Watch for Chips on Your Shoulder

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ADVICE

• Keep Things Simple
• Learn from Everyone
• Have Fun

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Sonic Automotive, Inc.

• 276 among the Fortune 500
• Brand and Geographic diversity1
• 173 franchises
• 37 collision repair centers
• 37 vehicle brands
• 15 states
• 26 metro markets

1As of November 1, 2006
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Business Model
2005 Revenues
2005 Gross Profit
7.3 billion
1.1 billion
2
14
16
23
44
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61
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FI
New Vehicles
Used Vehicles
Fixed Operations
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Compelling Opportunity
Attractive Industry Dynamics

• Opportunity for organic growth
• Opportunity for acquisition growth
• Weighted toward brands that are taking market
  share
• Consistent performance over several years
• Consistent delivery on promises

Favorable Brand Mix
Effective Operating Strategy
Positioned for Future Growth
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Portfolio Enrichment Strategy

• Actively manage brand portfolio to stay ahead of
  market trends

Sonic Sales Mix of Select Brands ( of Total
Revenue)
Focus on brands with higher margins and higher
growth potential
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Parts, Service and Collision Repair
REVENUE ( in millions) 9 Months Ended Each Year
GROSS MARGIN RATE 9 Months Ended Each Year
Q3 - 50.0
Operating Initiatives

• Consistent and improving performance
• Grow service capacity in high margin brands
• Standardized service drive sales practices

• Fixed absorption was 89.6 in the third quarter
• Standardized variable pricing strategy
• Database marketing

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Capitalization
100
100
100
100
100
100
Debt
Equity
Achieved 40 Target For Debt-To-Capital
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Sonic Strategy

• Focus on portfolio enrichment growth through
  high return acquisitions
• Continue to execute against objectives
• Process improvement
• Cost control
• Fixed operations and used vehicle opportunities
• Disciplined capital allocation
• Platform for future growth

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