Forward Looking Statements and Risk Factors

Some of the statements in this Form 10-Q constitute forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "intend," "forecast," "anticipate," "believe," "estimate," "predict," "potential," and "continue" or the negative of these terms or other comparable terminology. The forward-looking statements contained in this Form 10-Q involve known and unknown risks, uncertainties and situations that may cause our actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. Some of the important factors that could cause actual results to differ from our expectations are discussed in Item 1A to our 2008 Form 10-K, which was filed with the Securities and Exchange Commission on March 16, 2009. These risk factors have not significantly changed since the filing of the 2008 Form 10-K.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements.

Overview

We are a leading operator of automotive franchises and retailer of new and used vehicles and services. As of August 5, 2009, we offered 27 brands of new vehicles and all brands of used vehicles in 88 stores in the United States and over the Internet. We sell new and used cars and light trucks; sell replacement parts; provide vehicle maintenance, warranty, paint and repair services; and arrange related financing, service contracts, protection products and GAP insurance for our automotive customers.

The first half of 2009 has continued to be a challenging retail environment. The projected Seasonally Adjusted Annualized Rate ("SAAR") of vehicle sales has not materially increased from the historically low levels experienced in the fourth quarter of 2008. General Motors ("GM") and Chrysler have both reorganized in bankruptcy. Unemployment has reached historically high levels and consumer spending continues to face headwinds as the recessionary environment becomes more pronounced and uncertainty regarding the economic outlook increases.

The reorganization of both Chrysler and GM did not materially impact sales levels as consumers were motivated to visit our locations in anticipation of aggressive new vehicle pricing. Overall, while the new vehicle market remained weak, our Chrysler and GM locations did not have materially different results from our other franchise locations.

Despite these negative trends, we have continued to make progress on our restructuring plan. While vehicle sales levels have remained weak, we have focused on improving the gross margin on each retail transaction. We have continued to take costs out of the organization in response to declining top line revenue numbers, through both expense control and personnel reductions. Continued progress has been made on our divestiture plan, as we have sold or closed 20 of the 31 stores we targeted for disposal as of December 31, 2008. As our operational results have stabilized, we have generated positive cash flows from operations. Finally, we have raised cash through mortgage financings, the assumption from a third party of future service contract obligations and the divestiture of assets. The cash generated and raised has been utilized to retire debt obligations and reduce the balance outstanding on our Credit Facilities.

We believe the actions we have taken over the past six months demonstrate the resiliency of our company. However, no assurances can be given that industry sales will not experience a further decline, or that our restructuring plan will be of sufficient magnitude to meet our operating objectives in a declining market.

Outlook

The overall macroeconomic issues that affected us in 2008 continued in the first half of 2009 and have reduced consumers' desire and ability to purchase automobiles. An additional factor negatively impacting auto sales has been a reduction in available options for consumer auto loans. The manufacturers' captive financing companies have suffered additional pressure as the financial crisis has raised their cost of funds and reduced their access to capital. This has prevented them from offering as many incentives designed to drive sales, such as subsidized interest rates and reduced the amount of loan to value they are willing to advance on vehicles.

The magnitude of the seasonal improvement we have typically experienced in March did not occur in the first quarter of 2009. This is similar to our experience in 2008, where the seasonally strong second and third quarters of the year were relatively flat compared with the first quarter of 2008. Our current operational plan assumes vehicle sales remain at the same level of seasonal improvement for the third quarter of 2009, and do not decline as dramatically in the fourth quarter of 2009 given the already historically low sales levels. However, no assurances can be provided that our plan will be achieved, or that a further deterioration in the economic environment will not occur.

Manufacturer Update

As discussed in Note 1, Interim Financial Statements, we are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, of a major vehicle manufacturer. We purchase substantially all of our new vehicles from various manufacturers or distributors at the prevailing prices available to all franchised dealers. We finance our new vehicle inventory primarily with automotive manufacturers' captive finance subsidiaries. Our sales volume could be materially adversely impacted by the manufacturers' or distributors' inability to supply the stores with an adequate supply of vehicles and related financing. Our Chrysler, GM and Ford ("Domestic Manufacturers") stores represented approximately 31%, 18%, and 5% of our new vehicle sales in the first six months of 2009, respectively, and approximately 32%, 19%, and 4% for all of 2008, respectively.

We receive incentives and rebates from our manufacturers, including cash allowances, financing programs, discounts, holdbacks and other incentives. These incentives are held as receivables on our balance sheet until payment is received. Our financial condition could be materially adversely impacted by the manufacturers' or distributors' inability to continue to offer these incentives and rebates at substantially similar terms, or to pay our outstanding receivables. Total receivables from Domestic Manufacturers were $7.2 million and $12.4 million as of June 30, 2009 and December 31, 2008, respectively.

Most manufacturers have experienced significant declines in sales due to the current economic recession. Many have disclosed substantial operating losses over the recent past. Two of these manufacturers, Chrysler and GM, have filed a petition for Chapter 11 bankruptcy protection in the second quarter of 2009. Both succeeded in receiving approval for the transfer and sale of key operating assets

into new companies with reduced debt, improved operating efficiencies, new ownership and resized operations.

In connection with its reorganization, the Chrysler entity emerging from bankruptcy protection ("New Chrysler") assumed most Dealer Sales and Service (franchise) Agreements but elected to reject certain franchise agreements to significantly reduce its dealer count. Two of our Chrysler stores (Omaha Chrysler, Jeep, Dodge and Colorado Springs Chrysler, Jeep) were not assumed and those dealerships have ceased operations. However, five of our existing Dodge dealerships were awarded additional franchises to sell the Chrysler or Jeep brands.

GM undertook a similar process in its reorganization. With respect to the dealerships it elected to terminate, the cancellation was not immediate but, rather, the dealers were offered agreements limiting their current operations, with a final termination of these selected locations to be effective no later than October 2010. The GM closure list is not made public, and no individual dealership may disclose whether it will be retained or terminated. We received franchise agreement modification documents that terminate all operations at three locations, terminate Cadillac franchises at two Chevrolet/Cadillac stores, and terminate heavy truck franchises at two Chevrolet franchises. We have also received notification that our one Saturn franchise may not be continued if a sale to a third party is not completed.

There is legislation pending in Congress which, if passed and signed into law, would require the reinstatement of terminated dealerships and the reopening of certain manufacturing plants. U.S. Administration officials testified in opposition of such legislation. The final outcome is uncertain. While passage of the legislation could result in the reopening of closed Chrysler dealerships and the continuation of the GM dealerships, we would likely lose the recently awarded additional brands at the five Chrysler stores. Further, such reinstatement could add additional costs and burdens on the reorganized manufacturers reducing their competitiveness. We are unable to predict the outcome of such legislation and the ultimate financial impact on our business, if any.

On April 30, 2009, we had $3.9 million in pre-petition receivables from Chrysler. On May 6, 2009, Chrysler started processing payments on our pre-petition receivables. As of the date of this filing, we have approximately $0.4 million in remaining pre-petition receivables outstanding with Chrysler. Of this amount, 67% is attributable to Flooring Assistance Receivables which are not paid until 120 days after invoice date or 14 days after the sale of the vehicle, whichever comes first. Vehicle Incentives make up the next largest category of receivables, representing 15% of the remaining balance. At the time of the GM bankruptcy filing, we have pre-petition receivables of $2.8 million with GM. As of the date of this filing, the pre-petition receivables remaining outstanding are approximately $0.7 million. Of this amount, 41% is related to holdback receivables and 50% is related to advertising assistance receivable, for a combined 91% of the remaining pre-bankruptcy balance. GM holdback is paid on a quarterly basis and advertising assistance is paid either quarterly or every six months, depending on the program. We believe the amounts owed from both Chrysler and GM remain collectible and no valuation allowance has been recorded.

On April 30, 2009, Chrysler Financial stopped providing advances for new floorplan financing. We utilized Chrysler Financial for floorplan financing at all of our Chrysler locations and certain non-Chrysler locations. Existing floorplan financing from Chrysler Financial remains in place, and will be repaid as inventory is sold. General Motors Acceptance Corporation ("GMAC") has provided floorplan financing to all of our Chrysler Financial dealers on an interim basis. We anticipate we will be able to obtain permanent floorplan financing at all of our affected dealerships with substantially equivalent terms as our existing GMAC floorplan facilities. However, no assurances can be provided that we will be able to obtain financing at terms and conditions acceptable to us, or at all.

While New Chrysler and GM have both emerged from bankruptcy protection and completed their reorganizations, and much of the near-term risk to the viability of the suppliers has been mitigated, the future remains uncertain. The success of the reorganization and Chrysler's integration with Fiat S.p.A., is unknown. The future financial condition of GM and New Chrysler, and their ability to provide products that

result in sales and profits consistent with historical results is at risk. Resizing operations could negatively impact the volume of vehicles produced and available to dealers. As such, no assurances can be give that our financial condition, results of operations and cash flows will not be adversely impacted in the future.

As the circumstances surrounding the manufacturers' continued viability and the success of the reorganized companies remain fluid and uncertain, we continue to evaluate the situation and the effect the potential outcomes described above may have on our business. As previously disclosed, we also are continuing to execute on our plan to address the current economic circumstances and weak sales environment by implementing further cost reductions in our business and increasing our liquidity position through refinancing of properties, sale of assets and other cash-generating activities. However, no assurances can be provided that we will be successful in executing these plans.

Results of Continuing Operations

Certain revenue, gross profit margin and gross profit information by product
line was as follows:



                                      Percent of        Gross       Percent of Total
 Three Months Ended June 30, 2009   Total Revenues      Margin        Gross Profit
 New vehicle                                  48.4 %       8.2 %                20.4 %
 Used vehicle retail                          28.4        14.7                  21.5
 Used vehicle wholesale                        4.0         0.2                   0.1
 Finance and insurance(1)                      3.5       100.0                  17.9
 Service, body and parts                      15.6        49.4                  39.7
 Fleet and other                               0.1        55.3                   0.4

                                      Percent of        Gross       Percent of Total
 Three Months Ended June 30, 2008   Total Revenues      Margin        Gross Profit
 New vehicle                                  58.1 %       7.8 %                26.8 %
 Used vehicle retail                          21.1        12.0                  15.0
 Used vehicle wholesale                        4.4        (2.8 )                (0.8 )
 Finance and insurance(1)                      3.8       100.0                  22.7
 Service, body and parts                      12.3        48.8                  35.8
 Fleet and other                               0.3        29.3                   0.5

                                      Percent of        Gross       Percent of Total
 Six Months Ended June 30, 2009     Total Revenues      Margin        Gross Profit
 New vehicle                                  48.2 %       8.4 %                20.8 %
 Used vehicle retail                          27.9        13.8                  19.8
 Used vehicle wholesale                        4.0         1.3                   0.3
 Finance and insurance(1)                      3.5       100.0                  17.8
 Service, body and parts                      16.3        48.7                  40.9
 Fleet and other                               0.1        57.7                   0.4

                                      Percent of        Gross       Percent of Total
 Six Months Ended June 30, 2008     Total Revenues      Margin        Gross Profit
 New vehicle                                  57.0 %       7.8 %                26.3 %
 Used vehicle retail                          21.4        12.1                  15.2
 Used vehicle wholesale                        5.0        (2.0 )                (0.6 )
 Finance and insurance(1)                      3.8       100.0                  22.7
 Service, body and parts                      12.6        48.2                  35.9
 Fleet and other                               0.2        34.6                   0.5

(1) Commissions reported net of anticipated cancellations.

The following table sets forth selected condensed financial data, expressed as a percentage of total revenues for the periods indicated.

                                         Three Months Ended June 30,                Six Months Ended June 30,
                                        2009(1)               2008(1)              2009(1)             2008(1)
Revenues:
New vehicle                                   48.4 %                58.1 %              48.2 %              57.0 %
Used vehicle retail                           28.4                  21.1                27.9                21.4
Used vehicle wholesale                         4.0                   4.4                 4.0                 5.0
Finance and insurance                          3.5                   3.8                 3.5                 3.8
Service, body and parts                       15.6                  12.3                16.3                12.6
Fleet and other                                0.1                   0.3                 0.1                 0.2

Total revenues                               100.0 %               100.0 %             100.0 %             100.0 %
Gross profit                                  19.4                  16.8                19.4                16.9
Asset impairment charges                        -                   55.3                  -                 28.0
Selling, general and
administrative expenses                       15.4                  14.5                16.1                14.5
Depreciation and amortization                  1.0                   0.8                 1.0                 0.8

Operating income (loss)                        3.0                 (53.8 )               2.2               (26.4 )
Floorplan interest expense                    (0.6 )                (0.9 )              (0.7 )              (0.9 )
Other interest expense                        (0.7 )                (0.8 )              (0.9 )              (0.8 )
Other income, net                              0.1                   0.2                 0.2                 0.1

Income (loss) from continuing
operations before taxes                        1.7                 (55.3 )               0.9               (28.0 )
Income tax benefit (expense)                  (0.7 )                17.4                (0.4 )               8.8

Income (loss) from continuing
operations                                     1.0 %               (37.8 )%              0.5 %             (19.2 )%

(1) The percentages may not add due to rounding.

The following tables set forth the changes in our operating results from continuing operations in the three and six-month periods ended June 30, 2009 compared to the three and six-month periods ended June 30, 2008:

                                              Three Months Ended                               %
(Dollars in thousands)                             June 30,                Increase         Increase
                                             2009            2008         (Decrease)       (Decrease)
Revenues:
New vehicle                                $ 194,489      $  308,830      $  (114,341 )         (37.0 )%
Used vehicle retail                          113,930         112,052            1,878             1.7
Used vehicle wholesale                        16,351          23,452           (7,101 )         (30.3 )
Finance and insurance                         13,917          20,263           (6,346 )         (31.3 )
Service, body and parts                       62,544          65,624           (3,080 )          (4.7 )
Fleet and other                                  597           1,432             (835 )         (58.3 )

Total revenues                               401,828         531,653         (129,825 )         (24.4 )
Cost of sales:
New vehicle                                  178,614         284,879         (106,265 )         (37.3 )
Used vehicle retail                           97,190          98,625           (1,435 )          (1.5 )
Used vehicle wholesale                        16,314          24,098           (7,784 )         (32.3 )
Service, body and parts                       31,677          33,631           (1,954 )          (5.8 )
Fleet and other                                  267           1,012             (745 )         (73.6 )

Total cost of sales                          324,062         442,245         (118,183 )         (26.7 )

Gross profit                                  77,766          89,408          (11,642 )         (13.0 )
Asset impairment charges                          -          294,075         (294,075 )        (100.0 )
Selling, general and administrative           61,858          76,892          (15,034 )         (19.6 )
Depreciation and amortization                  3,991           4,261             (270 )          (6.3 )

Operating income (loss)                       11,917        (285,820 )        297,737           104.2
Floorplan interest expense                    (2,416 )        (4,750 )         (2,334 )         (49.1 )
Other interest expense                        (2,991 )        (4,251 )         (1,260 )         (29.6 )
Other income, net                                258           1,068             (810 )         (75.8 )

Income (loss) from continuing operations
before taxes                                   6,768        (293,753 )        300,521           102.3
Income tax (expense) benefit                  (2,718 )        92,545           95,263           102.9

Income (loss) from continuing operations   $   4,050      $ (201,208 )    $   205,258           102.0 %

                                              Three Months Ended                               %
                                                   June 30,                Increase         Increase
                                            2009            2008          (Decrease)       (Decrease)
New units sold                                6,509           10,992           (4,483 )         (40.8 )%
Average selling price per new vehicle     $  29,880      $    28,096      $     1,784             6.3

Used retail units sold                        6,937            6,527              410             6.3
Average selling price per used retail
vehicle                                   $  16,424      $    17,167      $      (743 )          (4.3 )

Used wholesale units sold                     2,855            4,082           (1,227 )         (30.1 )
Average selling price per used
wholesale vehicle                         $   5,727      $     5,745      $       (18 )          (0.3 )

Finance and insurance sales per retail
unit                                      $   1,035      $     1,157      $      (122 )         (10.5 )


                                               Six Months Ended                                %
(Dollars in thousands)                             June 30,                Increase         Increase
                                            2009            2008          (Decrease)       (Decrease)
Revenues:
New vehicle                               $ 370,561      $   598,447      $  (227,886 )         (38.1 )%
Used vehicle retail                         214,404          224,391           (9,987 )          (4.5 )
Used vehicle wholesale                       31,674           51,542          (19,868 )         (38.5 )
Finance and insurance                        26,570           40,335          (13,765 )         (34.1 )
Service, body and parts                     125,091          132,621           (7,530 )          (5.7 )
Fleet and other                               1,133            2,342           (1,209 )         (51.6 )

Total revenues                              769,433        1,049,678         (280,245 )         (26.7 )
Cost of sales:
New vehicle                                 339,548          551,746         (212,198 )         (38.5 )
Used vehicle retail                         184,914          197,321          (12,407 )          (6.3 )
Used vehicle wholesale                       31,278           52,562          (21,284 )         (40.5 )
Finance and insurance                        64,122           68,761           (4,639 )          (6.7 )
Service, body and parts                         479            1,531           (1,052 )         (68.7 )

Total cost of sales                         620,341          871,921         (251,580 )         (28.9 )

Gross profit                                149,092          177,757          (28,665 )         (16.1 )
Asset impairment charges                         -           294,075         (294,075 )        (100.0 )
Selling, general and administrative         123,794          152,302          (28,508 )         (18.7 )
Depreciation and amortization                 8,065            8,559             (494 )          (5.8 )

Operating income (loss)                      17,233         (277,179 )        294,412           106.2
Floorplan interest expense                   (5,122 )         (9,458 )         (4,336 )         (45.8 )
Other interest expense                       (6,602 )         (8,420 )         (1,818 )         (21.6 )
Other income, net                             1,423            1,123              300            26.7

Income (loss) from continuing
operations before taxes                       6,932         (293,934 )        300,866           102.4
Income tax (expense) benefit                 (2,798 )         92,619           95,417           103.0

Income (loss) from continuing
operations                                $   4,134      $  (201,315 )    $   205,449           102.1 %



                                               Six Months Ended                                %
                                                   June 30,                Increase         Increase
                                            2009            2008          (Decrease)       (Decrease)
New units sold                               12,382           20,717           (8,335 )         (40.2 )%
Average selling price per new vehicle     $  29,927      $    28,887      $     1,040             3.6

Used retail units sold                       13,412           12,911              501             3.9
Average selling price per used retail
vehicle                                   $  15,986      $    17,380      $    (1,394 )          (8.0 )

Used wholesale units sold                     5,740            8,269           (2,529 )         (30.6 )
Average selling price per used
wholesale vehicle                         $   5,518      $     6,233      $      (715 )         (11.5 )

Finance and insurance sales per retail
unit                                      $   1,030      $     1,199      $      (169 )         (14.1 )

Revenues

Total revenues decreased 24.4% and 26.7%, respectively, in the three and six-month periods ended June 30, 2009 compared to the same periods of 2008 primarily as a result of a 24.2% and a 26.4% decrease, respectively, in same-store sales, excluding fleet. The decreases in same-store sales reflected the continuing challenging retail environment, led by declining credit availability and deteriorating

consumer confidence as the recessionary environment gained momentum. As 2009 progresses, the revenue declines should slow as the prior year comparisons become less drastic due to the effects of the recessionary environment on the third and fourth quarters of 2008.

Same-store sales percentage increases (decreases) were as follows:

. . .