8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2007

SONIC AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-13395	56-201079
(Commission File Number)	(IRS Employer Identification No.)

6415 Idlewild Road, Suite 109 Charlotte, North Carolina	28212
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (704) 566-2400

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 31, 2007, we issued a press release announcing results for our fiscal quarter and six month period ended June 30, 2007.

A copy of the press release is attached hereto as Exhibit 99.1. A copy of the earnings call presentation materials is attached hereto as Exhibit 99.2.

Item 7.01. Regulation FD Disclosure.

On July 31, 2007, we issued a press release announcing the approval of a quarterly cash dividend.

A copy of the press release is attached hereto as Exhibit 99.3.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release of Sonic Automotive, Inc. dated July 31, 2007
99.2	Earnings call presentation materials
99.3	Press release of Sonic Automotive, Inc. dated July 31, 2007

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SONIC AUTOMOTIVE, INC.
By:	/s/ Stephen K. Coss
	Stephen K. Coss
	Senior Vice President and General Counsel

Dated: July 31, 2007

3

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press release of Sonic Automotive, Inc. dated July 31, 2007
99.2	Earnings call presentation materials
99.3	Press release of Sonic Automotive, Inc. dated July 31, 2007

4

EX-99.1

Exhibit 99.1

Sonic Automotive, Inc. Continues Strong Operating Trend in Second Quarter and Raises

Full Year Earnings Guidance

CHARLOTTE, N.C. – July 31, 2007 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that second quarter 2007 earnings from continuing operations were $30.0 million, or $0.65 per diluted share, compared to $17.8 million, or $0.41 per diluted share*, in the prior year period.

“Our performance continues to validate the effectiveness of our key operating initiatives,” said President and Chief Strategic Officer B. Scott Smith. “Our gross margin rate increased to 15.6% as a result of continuing growth in our higher-margin used vehicle, fixed operations and F&I departments. In addition to these revenue-oriented initiatives, we continue to see consistent reductions in our SG&A expenses as a percentage of gross profit. As a result of our strong performance over the first half of the year and our outlook for a stable operating environment over the second half, we are increasing our target for 2007 earnings per share from continuing operations to a range of $2.50 to $2.60. This does not include the impact of any unannounced acquisitions.”

Sonic’s Board of Directors has authorized an additional $30 million to be used in the Company’s ongoing share repurchase program. Scott Smith said, “Sonic Automotive has maintained an active share repurchase program for a number of years as a means of offsetting dilution in the Company’s stock, returning capital to shareholders and taking advantage of short-term volatility in the Company’s share price. We will continue to execute this program in conjunction with our stated objectives for managing the Company’s capital structure.”

Presentation materials for the Company’s earnings conference call at 11:00 A.M. (Eastern) on July 31, 2007 can be accessed on the Company’s website at www.sonicautomotive.com by clicking on the “For Investors” tab and choosing “Webcasts & Presentations” on the left side of the screen.

To access the live broadcast of the conference call over the Internet go to: www.sonicautomotive.com.

A live audio of the conference call will be accessible to the public by calling (877) 791-3416. International callers dial (706) 643-0958. Callers should dial in approximately 10 minutes before the call begins.

A conference call replay will be available one hour following the call for seven days and can be accessed by calling: (800) 642-1687 (domestic) or (706) 645-9291 (international), conference call ID #6967100.

* During the second quarter of 2006, the Company recorded pretax charges of $27.6 million between continuing and discontinued operations related primarily to certain decisions made to improve the strategic focus of the Company.

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 173 franchises and 37 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements with respect to anticipated SG&A expense reductions, anticipated earnings per share from continuing operations, anticipated future operating environment for the remainder of 2007 and potential future share repurchases. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management’s view, including without limitation, economic conditions, risks associated with acquisitions and the risk factors described in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2007. The Company does not undertake any obligation to update forward-looking information.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(in thousands, except per share, unit data and percentage amounts)

	Second Quarter Ended						Six Months Ended
	6/30/2007			6/30/2006			6/30/2007			6/30/2006
Revenues
New retail vehicles	$	1,172,400		$	1,173,471		$	2,244,611		$	2,210,772
Fleet vehicles		100,784			97,146			189,755			183,631
Used vehicles		364,062			346,424			694,297			656,632
Wholesale vehicles		107,828			131,250			222,619			263,725
Total vehicles		1,745,074			1,748,291			3,351,282			3,314,760
Parts, service and collision repair		290,916			280,100			584,819			553,828
Finance, insurance and other		54,360			45,502			103,118			91,381
Total revenues		2,090,350			2,073,893			4,039,219			3,959,969
Total gross profit		325,233			311,755			633,026			607,120
SG&A expenses		241,244			248,771			479,236			481,366
Depreciation		8,626			6,806			14,389			11,604
Operating income		75,363			56,178			139,401			114,150
Interest expense, floor plan		17,348			15,832			33,586			28,130
Interest expense, other		8,912			9,909			17,606			20,706
Other (expense) / income		86			(3	)		96			(665	)
Income from continuing operations before taxes		49,189			30,434			88,305			64,649
Income taxes		19,210			12,586			34,439			25,666
Income from continuing operations		29,979			17,848			53,866			38,983
Discontinued operations:
Loss from operations and the sale of discontinued franchises		(5,159	)		(8,780	)		(10,725	)		(15,277	)
Income tax benefit		1,548			3,120			3,218			5,564
Loss from discontinued operations		(3,611	)		(5,660	)		(7,507	)		(9,713	)
Net income	$	26,368		$	12,188		$	46,359		$	29,270
Diluted:
Weighted average common shares outstanding		47,987			46,270			47,963			46,238
Earnings per share from continuing operations	$	0.65		$	0.41		$	1.17		$	0.89
Loss per share from discontinued operations	$	(0.08	)	$	(0.12	)	$	(0.16	)	$	(0.21	)
Earnings per share	$	0.57		$	0.29		$	1.01		$	0.68
Gross Margin Data (Continuing Operations):
Retail new vehicles		7.3	%		7.8	%		7.3	%		7.7	%
Fleet vehicles		2.6	%		2.5	%		2.4	%		2.8	%
Total new vehicles		6.9	%		7.4	%		6.9	%		7.3	%
Used vehicles		9.3	%		9.8	%		9.5	%		9.9	%
Parts, service and collision repair		51.4	%		50.1	%		50.5	%		49.9	%
Finance, insurance and other		100.0	%		100.0	%		100.0	%		100.0	%
Overall gross margin		15.6	%		15.0	%		15.7	%		15.3	%
SG&A Expenses (Continuing Operations):
Personnel	$	139,910		$	140,299		$	274,668		$	276,055
Advertising		16,706			16,599			32,204			31,090
Facility rent		25,694			25,487			51,421			49,157
Other		58,934			66,386			120,943			125,064
Total	$	241,244		$	248,771		$	479,236		$	481,366
Unit Data (Continuing Operations):
New retail units		35,454			37,223			67,465			68,923
Fleet units		4,667			4,470			8,412			8,414
Used units		18,186			17,866			35,147			34,010
Wholesale units		11,807			13,932			24,626			27,309
Average price per unit:
New retail vehicles		33,068			31,525			33,271			32,076
Fleet vehicles		21,595			21,733			22,558			21,824
Used vehicles		20,019			19,390			19,754			19,307
Wholesale vehicles		9,133			9,421			9,040			9,657
Other Data:
Floorplan assistance (continuing operations)	$	9,178		$	9,803		$	17,901		$	18,118
Same store revenue percentage changes:
New retail		(1.6	%)					0.2	%
Fleet		3.2	%					1.9	%
Used		3.4	%					4.2	%
Parts, service and collision repair		1.8	%					3.5	%
Finance, insurance and other		17.4	%					11.9	%
Total		(0.6	%)					0.7	%
Balance Sheet Data:
	6/30/2007			12/31/2006
ASSETS
Current Assets:
Cash and cash equivalents	$	12,157		$	12,696
Receivables, net		318,827			385,849
Inventories		1,109,214			991,984
Assets held for sale		176,536			160,571
Construction in progress expected to be sold in sale-leaseback transactions		4,516			26,198
Other current assets		31,474			35,834
Total current assets		1,652,724			1,613,132
Property and Equipment, Net		270,036			220,551
Goodwill, Net		1,247,721			1,155,428
Other Intangibles, Net		102,299			94,136
Other Assets		36,312			41,517
TOTAL ASSETS	$	3,309,092		$	3,124,764
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable - trade	$	257,765		$	377,943
Floor plan notes payable - non-trade		875,832			686,515
Trade accounts payable		68,048			68,016
Accrued interest		18,281			19,336
Other accrued liabilities		181,098			180,884
Liabilities associated with assets held for sale - trade		48,338			54,229
Liabilities associated with assets held for sale - non-trade		36,325			42,063
Current maturities of long-term debt		3,224			2,707
Total current liabilities		1,488,911			1,431,693
LONG-TERM DEBT		672,196			598,627
OTHER LONG-TERM LIABILITIES		200,562			190,604
STOCKHOLDERS' EQUITY		947,423			903,840
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,309,092		$	3,124,764
Balance Sheet Ratios:
Current Ratio		1.11			1.13
Debt to Total Capital, Net of Cash		41.2	%		39.4	%

EX-99.2

Exhibit 99.2

Cautionary Notice Regarding

Forward-Looking Statements

•

This presentation contains statements that constitute “forward-looking

statements”

within the meaning of Section 27A of the Securities Act of 1933

and

Section 21E of the Securities Exchange Act of 1934.

•

These forward-looking statements are not historical facts, but only predictions

by our company and/or our company’s management.

•

These statements generally can be identified by lead-in words such as “believe,”

“expect”

“anticipate,”

“intend,”

“plan,”

“foresee”

and other similar words. 

Similarly, statements that describe our company’s objectives, plans or goals are

also forward-looking statements.

•

You are cautioned that these forward-looking statements are not guarantees of

future performance and involve risks and uncertainties, and that

actual results

may differ materially from those projected in the forward-looking statements as

a results of various factors. Among others, factors that could materially

adversely affect actual results and performance include those risk factors that are

listed in Sonic Automotive’s Form 10-Q for the quarter ended March 31, 2007.

Sonic Automotive

Second Quarter 2007

Earnings Review

July 31, 2007

The Second Quarter in Review

•

Gross margin at 15.6% and operating

margin at 3.6%

•

Used vehicle process and F&I menu

continue to produce sound results

•

SG&A as a percent of gross was 74.2% for

the quarter --

a 30 bps improvement from

a year ago

•

Two large luxury stores acquired in the

quarter; one more to close today

1

Financial Performance

(amounts in millions, except per share data)

2007

2006

Better/

(Worse)

Revenue

$2,090

$2,074

$16

Gross Profit

$325

$312

$13

Operating Profit

   – Amount

$75

$56

$19

   – Margin

3.6%

2.7%

Net Income

   – Continuing Operations

$30.0

$17.8

$12.2

   – Total Operations

26.4

12.2

14.2

EPS

   – Continuing Operations

$0.65

$0.41

$0.24

   – Total Operations

0.57

0.29

0.28

Q2

2

Same Store Revenue Growth

•

Used and F&I processes driving improved performance in both areas

•

Service Capacity investment contributing to growth

•

As more used vehicles are retailed, wholesale volume is declining

(1.2%)

3.4%

1.8%

3.7%

0.5%

(17.6%)

(0.6%)

New

Used

Fixed

Operations

F&I*

Sub Total

Wholesale

Total

3

* Excludes impact of charges taken in Q2 2006.

Used Vehicles

4

Progress

Continues

Q2 07

Q2 06

Better/    

(Worse)

Champion Stores

Used to new ratio

0.52

0.48

0.04

Used retail volume

15,846

15,430

2.7%

Total Sonic

Used to new ratio

0.51

0.48

0.03

Used retail volume

18,186

17,866

1.8%

Memo:

Used to New Ratio

- California

0.35

0.32

0.03

- Total Luxury

0.56

0.53

0.03

- Total Domestic

0.74

0.72

0.02

F&I Per Unit

$954

$996

$1,013

$800

$850

$900

$950

$1,000

$1,050

FY 2006*

Q1 2007

Q2 2007

F&I

5

$59

$59

* excluding charges taken in Q2 2006

Fixed Operations

6

Strong Customer Pay performance driving growth

9.7%

(3.5%)

3.9%

(5.0%)

(3.0%)

(1.0%)

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

Customer Pay

Warranty

Total Fixed Ops

Revenue

SG&A Expenses as % of Gross Profit

7.4%

5.3%

67.1%

66.3%

7.9%

Q2 2007

Q2 2006

All Other SG&A

Rent

Q2 Charges

79.8%

74.2%

50 bps

80 bps

74.5%

Fixed Absorption

91%

91%

7

Geographic / Brand Review

•

California

–

27% of total revenues

–

New vehicle volume and margins soft; used vehicle volume, Fixed Operations, and F&I up

–

Brand mix 39% Mid Line Imports

•

Florida

–

8% of total revenues

–

Construction at our Toyota dealership hindering business

–

New volume a bit challenged; used vehicle volume, Fixed Operations, and F&I up

•

Brand Commentary

–

BMW

and

Lexus

–

combined

24%

of

total

revenue

•

New volume and Fixed Operations strong

–

Honda -

14% of total revenues

•

Honda industry volume in California was off 5% for Q2 compared with an increase of 2.3% for the

nation

•

Fixed Operations, F&I, and used vehicle growth good

–

Cadillac  -

9% of total revenues

•

Sales soft in general; Michigan is particularly a concern

8

Inventory Management

Days Supply

9

June

Jun-07

Industry

New Vehicles

Domestic

(excluding Cadillac)

54.6

76.0

Luxury (

including Cadillac)

45.4

45.5

Import

49.0

49.5

Overall

49.7

62.2

Used Vehicles

38.3

Debt to Capital Ratio

(1)

(1) –

Net of Cash

39.1%

41.2%

35-40%

Q1 2007

Q2 2007

Target

Two large luxury stores acquired in late Q2

10

•Sale of Cornerstone on

track

•Two mortgages in place; 

more coming

•Reduced interest rate risk

Land Rover/Jaguar North Houston

Closed January 22

Mercedes-Benz of Calabasas 

Closed June 14

Assael BMW and MINI 

Closed June 18

Long Beach BMW and MINI

Closing July 31

Total Annual Revenues: $528 million

Portfolio Enrichment                  

Acquisitions

55%

52%

Before

After

Luxury % Total Revenue -

2007 run rate

11

Second Half Outlook

•

Generally stable operating environment

–

Near term new vehicle softness offset by other opportunities

–

Stable margins and expense levels

–

Some early Q3 softness --

expect Q4 results to be stronger

•

Raising

Continuing

Ops.

EPS

target

to

$2.50

–

$2.60

–

Includes impact of announced acquisitions

–

Continued execution of key initiatives and expense control

•

Increased share repurchase authorization by $30 million

–

Prudent and opportunistic purchases --

picking away at dilution

–

$7 million repurchased so far this year

12

Summary

•

Execution of key initiatives continues

–

Used vehicles, fixed operations, F&I, Portfolio

Enrichment, and eCommerce

•

Executing disciplined and prudent acquisition

strategy --

targeting 10%-15% of revenue

•

Strategy is sound; team focused on delivering

results

•

Top priority: Improved profits and cash flow

13

Full Year Guidance Increased to

$2.50 -

$2.60

EX-99.3

Exhibit 99.3

SONIC AUTOMOTIVE, INC. DECLARES QUARTERLY CASH DIVIDEND

CHARLOTTE, N.C. – July 31, 2007 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that its Board of Directors approved a quarterly dividend of $0.12 per share payable in cash for shareholders of record on September 15, 2007. The dividend will be payable October 15, 2007.

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 173 franchises and 37 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.

Included herein is a forward-looking statement pertaining to an anticipated cash dividend to shareholders. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management’s view, including without limitation, economic conditions, risks associated with acquisitions and the risk factors described in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2007. The Company does not undertake any obligation to update forward-looking information.