Welcome to this Asbury Automotive Group quarterly earnings release conference call. (Operator Instructions) At this time for opening remarks and introductions, I would like to turn the call over to the Treasurer, Mr. Ryan Marsh.

Thank you, Operator. Good morning to everybody. Welcome to Asbury Automotive Group’s fourth quarter 2008 earnings call. Today’s call is being recorded and will be available for replay later today. A press release detailing Asbury Automotive’s fourth quarter results was released this morning and is posted on our website at www.AsburyAuto.com. Participating on the call with us today are Charles Oglesby, our Chief Executive Officer; Craig Monaghan, our Chief Financial Officer and Michael Kearney, our Chief Operating Officer. As always, at the conclusion of our remarks we will open up the call for questions and I will be available afterwards to accept any questions you might have by dialing my office. Before we begin I'd like to remind you that we may make forward-looking statements relative to Asbury Automotive on this call. We caution you that these statements are only predictions and are subject to risks and uncertainties related to general economic conditions, our restructuring and cost savings initiatives, interest rate fluctuations and changes in consumer credit and spending and other factors over which management has no control. Our actual results may vary materially from these predictions. Any such statements should be evaluated together with the information about Asbury Automotive in our public filings included in our annual report on form 10K. At this time I would like to turn the call over to Charles.

Thank you Ryan. Good morning everyone and thanks for joining us today. First of all, I want to explain to all of our shareholders why we delayed our earnings call and 10K filing until today. Very late in our year in process our auditor, Deloitte & Touche, indicated that they anticipated giving Asbury a “going concern” opinion. This opinion carried significant consequences for us as it resulted in a default under certain of our lending agreements. We see our future differently and in fact believe the actions we have taken to date position us well for long-term success. Our liquidity remains strong with approximately $92 million of cash at year end and borrowing capacity of $116 million. We also have considerable financial flexibility with no material debt maturities until 2012. Furthermore, we have made tremendous progress on the restructuring and productivity plans that we announced during our third quarter conference call. Fortunately, our financial partners see our future as we do. Despite the extremely tight timeline resulting from the late hour of our auditor’s opinion, our lending partners demonstrated their confidence in us and our viability with all eleven voting to provide us with waivers. The fact we were able to garner a 100% approval vote reinforces my conviction that our business remains viable, that our business partners have trust in us and we are focused on the right things. I would like to take a second and publicly say thank you to all of our lending partners for their responsiveness and sterling partnership. Now we would like to move to our industry and operational results. As you are all well aware the auto retailing industry faced unprecedented headwinds in 2008. After a decade of selling over 16 million new cars a year in the U.S. it plummeted 18% to…

Thank you Charles. Good morning everyone. I have a number of topics to review today but would like to start with a recap of our financial performance for the fourth quarter. We reported a loss from continuing operations of $11.15 per diluted share. Included in this loss were $11.07 of non-core items detailed in the table attached to today’s press release. The most significant non-core items are impairment charges totaling $536 million, $492 million of which relates to the write off of all of our goodwill. I want to emphasize these charges are non-cash and do not impact our debt covenants. During the fourth quarter we repurchased $60 million of our public debt for approximately $24 million. The majority of the debt we repurchased was our convertible notes that mature in 2012. We view this as a prudent use of cash as it materially reduces the amount of our nearest maturing debt, delivers significant gains and provides an attractive implied rate of return for our shareholders. Covenants and liquidity continue to be critical focus areas. I’d like to address those topics next. Attached to our press release you will find a summary of our two primary sets of financial covenants, those on our revolver and used vehicle line and our major mortgage facilities. As you will note, we cleared all of our covenants in the fourth quarter as the repurchase of $60 million of sub-notes provided us with significant breathing room under our tightest covenant. As Charles explained earlier our lending partners provided waivers in response to our auditor’s opinion. As part of the waiver process, we volunteered to reduce our revolving credit facility by $25 million, from $200 million to $175 million, and the used vehicle facility $25 million, from $75 million to $50 million. Since both of these…

Thanks Craig. I am extremely proud of what our entire team at Asbury has accomplished in a very short amount of time. We are facing a great amount of internal stress on top of a great amount of external stress. Our employees are demonstrating their courage and strength. We have made great progress in rebuilding our company for the future. I am confident that we will not only survive this turbulent period, but also emerge stronger as we look to learn from the negatives of this recession and turn them into opportunities. As it has been said, every adversity carries within it the seed of greater benefit. Now I would like to turn the call back over to the operator and we will take your questions.

(Operator Instructions) The first question comes from the line of Rick Nelson - Stephens Inc.

What covenants did the auditor’s raise questions about to raise at this going concern opinion and also how much flexibility do you think your banks have to amend covenants if necessary?

The tightest covenant is a leverage test. One of the reasons that we have attached covenant calculations to the release is so that everybody has full disclosure, complete transparency on all of the covenants. So they are there. The bank’s concern was that over the course of the next 12 months we could trip that covenant. I think more specifically one of the things they had some reservation about is that we may have to buy back debt at a discount in order to clear that covenant. In their view there was no certainty we would be able to buy back the debt or what the price we would be able to obtain that debt. The second part of your question?

The flexibility that the banks have to amend covenants if necessary.

We are not in a position to speak to what the banks will do in the future. We can’t predict that. I think the fact that every one of our lenders stepped up at very short notice and gave us the waiver we needed on the heels of this auditor opinion I think speaks mountains about the relationship we have with them and the support that they provide us.

Are you having conversations now with the banks on the amendments of covenants?

We are constantly in dialogue with our banks but no we are not talking about amendments at this point in time.

A question also on the annualized cost savings of $100 million. I’m wondering how much of that is permanent and how much of that reflects the downturn in the business?

It is very difficult for us to say what is permanent and what is a function of the variable cost structure in this industry. To try to do that internally we are of the view that some of the things we are doing at the regional level and the corporate headquarter levels, those are permanent. Those costs will never come back. I think you can lock those in. I would say roughly, as best estimate, that 50% of the costs are just a function of how the business operates. The cost structures are variable whether it is the sales force or in parts and service so I would lock that 50% in as variable. I would say the costs in between are fuzzy. Some are hard and some are structural. It is very difficult to know that much more precisely.

Just one comment on that is that as business improves and this cost comes back it is variable and that is not a bad thing because that means we are beginning to grow again and the market is beginning to improve and have some lift.

How about other potential sources of cash? Can you speak to your inventory levels?

A source of cash is the used vehicle inventory since our new vehicle inventory is floored. Our used vehicle inventories are, we think, at historically low levels for us. We think they are at the right levels. In fact, we think we may want to slightly increase the level of used inventory we carry as we move into the selling season. I don’t think there is a lot on that side. I do think there is more work we can do on the balance sheet across the rest of our current assets and liabilities and it is a scenario we continue to dig into.

On the new car side, how much of the downturn do you think is credit impacted where TALF could positively impact or how much is the consumer unemployment and confidence factors?

We hope that TALF will help. It is too early to see that right now. There is a combination. Certainly the lower consumer confidence right now is in play but the credit is actually probably a bigger part of the business downturn in my estimation. There are buyers out there right now but the credit requirements today remind me of what it was like in the 80’s. The equity that is needed today and the consumer is going through this change where before almost anybody could walk into a dealership and walk out with zero money down and 130% on the value and today that is not happening. Even the best credit can rarely walk out with 125% to 130% loan to value. I think there is an adjustment period going on for the consumer to the new credit standards as well as right now the traffic is less because of the consumer confidence.

The next question comes from Richard Kwas - Wachovia Capital Markets.

A question on the cost reduction, the $10 million comes from the regional management consolidation and $5 million from the corporate relocation that would be on top of the $100 million or so annualized cost savings?

Yes. There may have been a very small amount we saw in the fourth quarter. I would say $1.2 million at most on the regional work.

Then backing up to Rick’s question about how much structural versus variable it sounds like if I take that $100 million I know you have got $27 million in the fourth quarter. If I take the remainder of that and cut that in half that would be somewhat structural cost savings?

I think that is a good estimate. It is a very soft number.

On the waivers, are there any limits in terms of duration time limits and what not where you will be coming up against an expiration for the waivers?

No the waivers were specifically for our year-end financials. The next time this issue would come to the forefront would be at the end of 2009.

So this would be evaluated then?

It would be re-evaluated with a different auditor.

New vehicle inventory I know you were shifting more and more using captives. Is it 100% captives at this point in terms of the new vehicle inventory?

It is not 100% but the vast majority of the new vehicle inventory is with the captives.

In terms of the Detroit Three captives is that 100%?

No. B of A floors our Chrysler stores. We have four Chrysler stores. That’s it. They are all in stores.

Last quarter you talked about asset sales and going through the portfolio in terms of deciding what assets you wanted to keep. In the market obviously it is very difficult to get transaction money here. How do you see that evolving over the course of this year?

Portfolio management is a way we have always looked at our assets. Currently we do have a couple of stores under contract which we expect to close within the next 45 to 60 days and a couple of them before that. So we are like anyone else, it depends on the quality of the asset and the buyers that are available. Currently we don’t have any of our quality assets available for sale. So we are repositioning ourselves and shedding ourselves of stores that take a lot more energy to manage versus the return we are getting on them. If we do need to sell any of these quality assets there are some buyers available.

Are you finding buyers either not being able to get the capital to purchase the assets or is it just unwillingness?

It is a combination of things. Most of the buyers that would want these assets have capitalization themselves and would be willing to put enough equity in that they could get the financing they need. Any other buyer if their own financial position is not strong enough would not be able to find financing for these stores.

On the used inventory, it seems like used has picked up here over the last couple of months. I assume you are going to go to auction more to replenish the inventory given the decline in inventory. Is that a fair assertion?

Yes. I will let our new COO answer that question.

That is true. As you know the new car volume being down which is the largest single source of our trends, we have had to go to the auctions. The auctions business has picked up in the first quarter of this year. There are more buyers there but there is plenty of product available so we are not having to fight for every single one of the units but that is where we are probably having to go get the vast majority of our used cars now.

One of the things with the CPO sector improving and continuing to increase, the dealers are the only ones who have access to that inventory. So that is a benefit to us as an independent dealer. We have access to that inventory that other dealers don’t. Used car dealers.

The next question comes from Rod Lache - Deutsche Bank Securities.

Did I hear you say you are running at around break even in the first two months of this year and if so can you just give us a little color on what you are seeing in the used business now? Would the lower inventory be constraining your volume or going to auctions constraining margins? Any color on the parts and service business?

Yes you did hear us say that we basically broke even for the first two months of the year. Certainly part of that is because of the business model itself. Used has improved and strengthened and where it has strengthened is CPO business. Vehicles $10,000 or less, the margins on those and the turn rate is pretty high. That part of the used business has strengthened. We are going to auction more because with this reduction in new retail sales we don’t have access to all of the trade in’s that we need so that does allow we go to auction and pick up those vehicles. With parts and service, that still is even though it has lessened to a degree and softened, it is still showing the strength of our business model because the fixed part of the business is maintaining stability. It will move up and down 3-4% or move up depending on the days in the month but the cycle that the customer needs to come back in is still there. If they don’t buy new or used they need to have the car serviced. With all of the initiatives that the consolidators and the dealer body has put in place in the past, you are seeing more retention of our customer base. The CPO as well helps there. Even though a customer may buy a pre-owned vehicle instead of new we are able to pick that customer up into our parts/service because of the same thing. It needs to be serviced and it has warranty left on it at the CPO. So that kind of replaces that customer. So we are able to sustain our parts and service business.

So would you expect the parts and service business to be pretty consistent comp wise with what we saw in the fourth quarter?

Parts and service is under pressure and continues to be under pressure. I just want to be clear about that. Parts and service through the first two months were down. In the used business our margins are holding and we think that is in part because of the great job the guys have done with the inventory. We broke even the first two months despite this continued deterioration in parts and service. I think in large part the used vehicle business was stable I would say and the impact of all these cost cuts and productivity initiatives that we are undertaking I think are beginning to flow through. Like I said earlier, we have still not seen the full impact of everything that we are undertaking.

Any additional color on if we think about SG&A to gross and how that would look at this level of demand volume is there a way to look at it that way just given there is some variable and some fixed reduction? So maybe if we look at first quarter do you have any color on what kind of range you are expecting SG&A to gross would come in at?

I think that is a tough one to call. We haven’t been focusing on a number like that specifically. What we are doing instead is on a store by store basis, looking to see what we can do to drive productivity and obviously everything outside of that. Where we end up on a net to gross is a number that falls out at the end of the day. Unfortunately what is happening is we are taking out costs. Now I think we finally caught up and through the fourth quarter our revenues were declining faster than we could take out costs. I think as we got into the beginning of the first quarter our cost reduction initiatives began to catch up. Where the net to gross plays out in the end is going to be a function of what does the reduction in revenue, how is that de-levering balanced out against what we have done in the cost reduction side. I don’t have a number yet.

Lastly, can you comment a little bit on the leverages? Is that $50 million used inventory facility I believe that is excluded from your leverage calculation? Can you confirm that? How much of that are you currently using?

I will confirm the used vehicle facility would not be included in the leverage calculation. That facility is not drawn. Nor is the revolver drawn as of today.

The facility is not drawn today. So you would be able to actually reduce your bank leverage further by moving into that?

That is correct. We could improve our leverage ratio if we…let me be very clear and what I’m trying to do is be very transparent, I think what I hear the question is could we draw the used vehicle facility? Yes. Could we use that to buy back debt? Yes. If we did so would that improve our leverage? Yes. Absolutely. But again, to be clear neither the revolver nor the used vehicle facility are drawn as of today.

Can you tell us which of these non-core items have you excluded from the bank calculation? It looks like there is a slightly different calculation of EBITDA and you are adding slightly different non-cash charges.

That is a fair question and each of the facilities is different in the way they, if you would, adjust EBITDA. I think the best thing to do is maybe get on the phone with Ryan afterwards and we can take you through the details.

It appears that we have no further questions at this time.

We want to thank everyone for joining us today. This is a new day for Asbury because as everyone realizes with the elimination of our regional structure now we have a different alignment of our leadership. We are excited about the future. We appreciate our general managers because again these are the entrepreneurs that touch our customers and our employees every day. We are excited about our new future and look forward to our next earnings call. Thank you.

This concludes today’s Asbury Automotive Group conference call. Thank you for joining us today. Have a wonderful day.