<HTML> <HEAD> <TITLE></TITLE> </HEAD> <BODY bgcolor="#FFFFFF"> <!-- PAGEBREAK --> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> ________________________________________________________________________________ <HR size="1" width="100%" align="left"> </DIV> <P align="center"> <B><FONT size="4">UNITED STATES SECURITIES AND EXCHANGE COMMISSION</FONT></B> <DIV align="center"> <B><FONT size="4">Washington, D.C. 20549</FONT></B> </DIV> <DIV align="center"> <HR size="1" width="30%" align="center"> </DIV> <DIV align="center"> <B><FONT size="5">FORM 10-K</FONT></B> </DIV> <P align="center"> <B>[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF</B> <DIV align="center"> <B>THE SECURITIES EXCHANGE ACT OF 1934</B> </DIV> <P align="center"> <B>For fiscal year ended December 31, 1999</B> <P align="center"> <B>OR</B> <P align="center"> <B>[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF</B> <DIV align="center"> <B>THE SECURITIES EXCHANGE ACT OF 1934</B> </DIV> <P align="center"> <B>For the transition period from to . </B> <P align="center"> <B>Commission file number 1-12297</B> <P align="center"> <B><FONT size="5">UNITED AUTO GROUP, INC.</FONT></B> <DIV align="center"> <FONT size="2">(Exact name of registrant as specified in its charter)</FONT> </DIV> <P align="center"> <B>Delaware</B> <DIV align="center"> <FONT size="2">(State or other jurisdiction of</FONT> </DIV> <DIV align="center"> <FONT size="2">incorporation or organization)</FONT> </DIV> <P align="center"> <B>375 Park Avenue</B> <DIV align="center"> <B>New York, New York</B> </DIV> <DIV align="center"> <FONT size="2">(Address of principal executive offices)</FONT> </DIV> <DIV align="center"> <B>22-3086739</B> </DIV> <DIV align="center"> <FONT size="2">(IRS Employer</FONT> </DIV> <DIV align="center"> <FONT size="2">Identification Number)</FONT> </DIV> <P align="center"> <B>10152</B> <DIV align="center"> <FONT size="2">(Zip Code)</FONT> </DIV> <P align="center"> Registrant’s telephone number, including area code: <B>(212) 223-3300</B> <DIV align="center"> <HR size="1" width="30%" align="center"> </DIV> <P align="center"> Securities registered pursuant to Section 12(b) of the Act: <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="56%"> </TD> <TD width="3%"> </TD> <TD width="41%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Name of each Exchange</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Title of each class</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>on which registered</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> Voting Common Stock, par value $0.0001 per share</FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> New York Stock Exchange</FONT></TD> </TR> </TABLE> </CENTER> <P align="center"> Securities registered pursuant to Section 12(g) of the Act: None <DIV align="center"> <HR size="1" width="30%" align="center"> </DIV> <P align="left"> Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No. <P align="left"> Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] <P align="left"> The aggregate market value of the voting common stock held by non-affiliates as of March 22, 2000 was $120,978,314. <P align="left"> As of March 22, 2000, there were 20,685,859 shares of voting common stock outstanding. <P align="left"> Portions of the registrant’s proxy statement to be filed in connection with the annual meeting of shareholders, presently scheduled to be held on May 9, 2000, are incorporated by reference in Part III of this Form 10-K. <DIV align="left"> <HR size="1" width="100%" align="left"> </DIV> <DIV align="left"> <HR size="1" width="100%" align="left"> </DIV> <!-- PAGEBREAK --> <P><HR noshade><P> <!-- TOC --> <A name="toc"><DIV align="CENTER"><U><B>TABLE OF CONTENTS</B></U></DIV></A> <P><CENTER> <TABLE border="0" width="90%" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="76%"></TD> </TR> <TR><TD colspan="9"><A HREF="#000">PART I</A></TD></TR> <TR><TD colspan="9"><A HREF="#001">ITEM 1. BUSINESS</A></TD></TR> <TR><TD colspan="9"><A HREF="#002">ITEM 2. PROPERTIES</A></TD></TR> <TR><TD colspan="9"><A HREF="#003">ITEM 3. LEGAL PROCEEDINGS</A></TD></TR> <TR><TD colspan="9"><A HREF="#004">ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</A></TD></TR> <TR><TD colspan="9"><A HREF="#005">PART II</A></TD></TR> <TR><TD colspan="9"><A HREF="#006">ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</A></TD></TR> <TR><TD colspan="9"><A HREF="#007">ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA</A></TD></TR> <TR><TD colspan="9"><A HREF="#008">ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></TD></TR> <TR><TD colspan="9"><A HREF="#009">ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></TD></TR> <TR><TD colspan="9"><A HREF="#010">ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</A></TD></TR> <TR><TD colspan="9"><A HREF="#011">ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</A></TD></TR> <TR><TD colspan="9"><A HREF="#012">PART III</A></TD></TR> <TR><TD colspan="9"><A HREF="#013">PART IV</A></TD></TR> <TR><TD colspan="9"><A HREF="#014">ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K</A></TD></TR> <TR><TD colspan="9"><A HREF="#015">INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</A></TD></TR> <TR><TD colspan="9"><A HREF="#016">CONSOLIDATED STATEMENTS OF OPERATIONS</A></TD></TR> <TR><TD colspan="9"><A HREF="#017">CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY</A></TD></TR> </TABLE> </CENTER> <!-- /TOC --> <P><HR noshade><P> <P align="center"><B>TABLE OF CONTENTS</B> <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="12%"> </TD> <TD width="3%"> </TD> <TD width="76%"> </TD> <TD width="3%"> </TD> <TD width="2%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Page</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>PART I</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 1.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Business</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 2.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Properties</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 3.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Legal Proceedings</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 4.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Submission of Matters to a Vote of Securityholders</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>PART II</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 5.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Market for Registrant’s Common Equity and Related Stockholder Matters</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 6.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Selected Consolidated Financial Data</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 7.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Management’s Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 7A.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Quantitative and Qualitative Disclosures about Market Risk</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 8.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Financial Statements and Supplementary Data</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 9.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>PART III</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 10.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Directors and Executive Officers of the Registrant</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 11.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Compensation</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 12.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Security Ownership of Certain Beneficial Owners and Management</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 13.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Related Party Transactions and Section 16(a) Beneficial Ownership Reporting Compliance</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>PART IV</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 14.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Exhibits, Financial Statement Schedules and Reports on Form 8-K</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center">i <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <!-- link1 "PART I" --> <DIV align="left"><A NAME="000"></A></DIV> <DIV align="center"> <B>PART I</B> </DIV> <P align="left"> <!-- link1 "ITEM 1. BUSINESS" --> <DIV align="left"><A NAME="001"></A></DIV> <DIV align="left"> <B>ITEM 1. BUSINESS</B> </DIV> <P align="left"><B>Overview</B> <P align="left"> United Auto Group, Inc. (“UAG” or the “Company”) is a leading acquirer, consolidator and operator of franchised automobile and light truck dealerships and related businesses. At the end of 1999, the Company operated franchises located in 16 states and Puerto Rico. In addition, the Company made an investment in two retail automotive dealerships in Brazil in November 1999. As an integral part of its dealership operations, UAG also sells used vehicles. All of UAG’s franchised dealerships include integrated service and parts operations, which are an important source of recurring revenues. In addition, UAG dealerships market a complete line of aftermarket automotive products and services through its wholly owned subsidiaries United Auto Care, Inc. (“UAC”) and United Auto Care Products, Inc. (“UAC Products”). <P align="left"> UAG was incorporated in the State of Delaware in December 1990 and commenced dealership operations in October 1992. Unless the context otherwise requires, references herein to “Common Stock” are to the Company’s Voting Common Stock, par value $0.0001 per share. <P align="left"> The Company was formed to capitalize on consolidation opportunities within the highly fragmented automotive retailing industry by acquiring, consolidating and operating large automobile retailers and related businesses. As capital requirements to operate dealerships continue to increase and many owners who were granted franchises in the 1950s and 1960s approach retirement age, many individual dealers are seeking exit opportunities. These conditions present attractive consolidation opportunities for larger automobile retailers such as UAG. <P align="left"> UAG purchases substantially all of its new car inventories directly from manufacturers. Each of the Company’s dealerships operates pursuant to a franchise agreement between the applicable manufacturer and the subsidiary of the Company that operates such dealership. In accordance with the individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of manufacturers to influence the operations of a dealership, or the loss of a franchise agreement, could have a negative impact on the Company’s operating results. Manufacturers allocate inventory based on the size and location of dealerships, but actual shipments result from negotiations with individual dealers. The Company believes that larger dealers, such as UAG, are better positioned to secure favorable inventory shipments and optimize manufacturers’ allocations. UAG finances its inventory purchases through revolving credit arrangements known in the industry as floor plan facilities. <P align="left"><B>Business Strategy</B> <P align="left"> UAG seeks to be a leader in the consolidation of the automotive retailing industry and to increase stockholder value through a business strategy that includes the following principal elements: <P align="left"><I>Acquire and Integrate Profitable Dealership Operations</I> <P align="left"> UAG seeks to capitalize on the continuing consolidation in the U.S. automotive retailing industry by selectively acquiring dealerships with significant earnings growth potential. The Company principally targets dealerships or dealership groups with established records of profitability as well as with experienced management willing to remain in place. The Company focuses on opportunities in geographic markets with above-average projected population and job growth and attempts to create regional hubs of dealerships that will be able to share administrative and other operations to reduce costs. <P align="left"> The Company’s acquisition program has been specifically tailored to address dealers’ desire to retain a management role in their businesses while achieving personal liquidity. Owners of acquired dealerships typically continue as dealership managers. The Company believes it provides dealership managers additional management tools, and that its economies of scale, marketing expertise and corporate resources act as catalysts for continual dealership growth. In addition, the dealer may retain an equity interest in the business through the ownership of capital stock and/or stock options of UAG. <P align="center">1 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"><I>Grow Higher-Margin Operating Businesses</I> <P align="left"> UAG is focused on increasing higher-margin businesses including the retail sale of used vehicles, aftermarket products, service, parts and collision repair services. <P align="left"> <I>Used Vehicles. </I>Used vehicle sales by franchised dealers, with average prices approximating 60% of new vehicle prices, typically generate higher gross margins as a percentage of sales value than new car sales because of limited comparability among used vehicles and the somewhat subjective nature of their valuation. Consumer acceptance of used vehicle purchasing has grown, due principally to (i) an increase in the availability of late-model, low-mileage used vehicles due in part to the large supply of vehicles coming off short-term leases, (ii) improvements in the quality of motor vehicles and (iii) increases in the prices of new vehicles. <P align="left"> UAG believes that through its new vehicle franchises, it enjoys significant advantages in sourcing used vehicles over both independent and chain used-vehicle companies. Specifically, the Company has access to (i) a steady supply of used vehicles accepted as trade-ins for new vehicle purchases, (ii) off-lease vehicles that were originally leased through the new vehicle franchise and (iii) used vehicle auctions open only to new vehicle dealers. In addition, only new vehicle franchises are able to sell used vehicles certified by the manufacturer under programs through which the manufacturer supports specific high-quality used cars with extended warranties and attractive financing options. <P align="left"> <I>Aftermarket Products. </I>Each sale of a new or used vehicle provides the opportunity for the Company to sell aftermarket products. Aftermarket products include finance, warranty, extended service and maintenance contracts, as well as accessories such as radios, cellular phones, alarms, custom wheels, paint sealants and fabric protectors. In addition, the Company receives fees for placing financing and lease contracts. <P align="left"> <I>Service and Parts. </I>Each of UAG’s new vehicle dealerships offers a fully integrated service and parts department. The service and parts business provides an important recurring revenue stream to the Company’s dealerships, which may help to mitigate the effects of downturns in the automobile sales cycle. Unlike independent service shops or used car dealerships with service operations, UAG is qualified to perform work covered by manufacturer warranties. Since warranty service work is paid for by the manufacturer, consumers are motivated to service their vehicles at a dealership for the warranty period. In recent years, manufacturers have generally lengthened standard warranty coverage on new cars and introduced warranty coverage on used cars, further enhancing customer retention opportunities in the service area. To increase the service and parts businesses, UAG dealerships have implemented programs to track maintenance records of customers and contact them regarding dealership promotions and maintenance schedules. In addition, the Company actively markets warranty-covered services to potential customers such as municipalities and corporations with large fleets of automobiles located near certain of its dealerships. The Company is able to offer repair services to such customers on a more efficient and less costly basis than such customers generally can perform themselves. The Company also believes that its market share will grow at the expense of independent mechanics shops, which may be unable to address the increased mechanical and electronic sophistication of today’s motor vehicles and the increased expenses of compliance with more stringent environmental regulations. <P align="left"> <I>Collision Repair Centers. </I>The Company currently owns 17 collision repair centers, each of which is operated as an integral part of a new vehicle franchise. In light of the recurring stream of referral work from the Company’s new vehicle franchises and the higher margins associated with repair center revenues, the Company has embarked on an effort to increase such revenues. As such, the Company is currently exploring the possibility of constructing several new regional repair centers to act as central collision repair centers in geographic hubs. If constructed, the Company believes that these centers will increase the recurring stream of non-vehicle sales revenues, which may help to mitigate the effects on the Company of downturns in the automobile sales cycle. There can be no assurances that if the Company does construct the collision repair centers and there is a downturn in the automobile sales cycle that such collision repair centers will help mitigate the effects of such downturn on the Company. <P align="center">2 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <I>Implement “Best Practices”. </I>The Company’s senior executives and dealership managers meet periodically to review the operating performance of individual dealerships, as well as to examine important industry trends and, where appropriate, recommend specific operating improvements. This facilitates implementation of successful strategies throughout the organization so that each dealership can benefit from the successes of the others, as well as from the knowledge and experience of UAG’s senior management. Dealership management also attends various industry sponsored leadership and management seminars and receives continuing education in products, marketing strategies and management information systems. The Company shares training techniques across its dealership base and has made increasing revenues from the sale of used cars, aftermarket products, service, parts and collision repair centers a Company-wide focus. <P align="left"> <I>Emphasize Customer Service. </I>Central to UAG’s overall philosophy is customer-oriented service designed to meet the needs of an increasingly sophisticated and demanding automotive consumer through “one-stop” shopping convenience, competitive pricing and a sales staff that is knowledgeable about product offerings and responsive to a customer’s particular needs. The Company’s goal is to establish lasting relationships with its customers, which enhance its reputation in the community and create the opportunity for significant repeat and referral business. <P align="left"> The quality of customer service provided by dealerships sales and service departments is measured by customer satisfaction index (“CSI”) scores, which are derived from data accumulated by manufacturers through individual customer surveys. UAG relies on this data to track the performance of dealership operations and uses it as a factor in determining the compensation of general managers and sales and service personnel in its dealerships. The Company’s most recent CSI scores indicate that a majority of its dealerships’ CSI scores were at or above the average CSI scores for the applicable regions. <P align="left"><B>Competition</B> <P align="left"> The automotive retailing industry is extremely competitive. In large metropolitan areas, consumers have a number of choices in deciding where to purchase a new or used vehicle and where to have such a vehicle serviced. <P align="left"> For new vehicle sales, the Company competes with other franchised dealers in each of its marketing areas. The Company does not have any cost advantage in purchasing new vehicles from the manufacturer, and typically relies on advertising and merchandising, sales expertise, service reputation and location of its dealerships to sell new vehicles. In recent years, automobile dealers have also faced increased competition in the sale of new vehicles from independent leasing companies and on-line purchasing services and warehouse clubs. Due to lower overhead and sales costs, these companies may be capable of operating on smaller gross margins and offering lower sales prices than franchised dealers. In addition, the Company may face competition in the future from partnerships between manufacturers and dealers. <P align="left"> For used vehicle sales, the Company competes with other franchised dealers, independent used vehicle dealers, automobile rental agencies, private parties and used vehicle “superstores” for supply and resale of used vehicles. <P align="left"> The Company believes that the principal competitive factors in vehicle sales are the marketing campaigns conducted by manufacturers, the ability of dealerships to offer a wide selection of the most popular vehicles, the location of dealerships and the quality of customer service. Other competitive factors include customer preference for particular brands of automobiles, pricing (including manufacturer rebates and other special offers) and warranties. The Company believes that its dealerships are competitive in all of these areas. <P align="left"> The Company competes against other franchised dealers to perform warranty repairs and against other automobile dealers, service center chains, and independent garages for non-warranty repair and routine maintenance business. The Company competes with other automobile dealers, service stores and auto parts retailers in its parts operations. The Company believes that the principal competitive factors in parts and service sales are price, the use of factory-approved replacement parts, the familiarity with a manufacturer’s brands and models and the quality of customer service. <P align="center">3 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> A number of regional or national chains offer selected parts and services at prices that may be lower than the Company’s prices. <P align="left"><B>Employees and Labor Relations</B> <P align="left"> As of December 31, 1999, UAG employed approximately 5,800 people, approximately 270 of whom are covered by collective bargaining agreements with labor unions. Relations with employees are considered by the Company to be satisfactory. The Company’s policy is to motivate its key managers through, among other things, variable compensation programs tied principally to dealership profitability and grants of stock options. <P align="left"><B>Environmental Matters</B> <P align="left"> As with automobile dealerships generally, and service, parts and body shop operations in particular, the Company’s business involves the use, handling and contracting for recycling or disposal of hazardous or toxic substances or wastes, including environmentally sensitive materials such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, refrigerant, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline and diesel fuels. The Company’s business also involves the past and current operation and/or removal of aboveground and underground storage tanks containing such substances or wastes. Accordingly, the Company is subject to regulation by federal, state and local authorities that establish health and environmental quality standards and impose penalties for violations of those standards. The Company is also subject to laws, ordinances and regulations governing remediation of contamination at facilities it operates or to which it sends hazardous or toxic substances or wastes for treatment, recycling or disposal. <P align="left"> The Company believes that it does not have any material environmental liabilities and that compliance with environmental laws, ordinances and regulations will not, individually or in the aggregate, have a material adverse effect on the Company’s results of operations or financial condition. However, soil and groundwater contamination has been known to exist at certain properties leased by the Company. Furthermore, environmental laws and regulations are complex and subject to frequent change. There can be no assurance that compliance with amended, new or more stringent laws or regulations, stricter interpretations of existing laws or the future discovery of environmental conditions will not require additional expenditures by the Company, or that such expenditures would not be material. <P align="left"> <!-- link1 "ITEM 2. PROPERTIES" --> <DIV align="left"><A NAME="002"></A></DIV> <DIV align="left"> <B>ITEM 2. PROPERTIES</B> </DIV> <P align="left"> The Company seeks to structure its operations so as to avoid the ownership of real property. As a result, the Company leases substantially all of its facilities, including dealerships and office space used for corporate activities. As of December 31, 1999, the Company has leases at the majority of its dealerships, which can include facilities for (i) new and used vehicle sales, (ii) vehicle service operations, (iii) retail and wholesale parts operations, (iv) collision repair centers, (v) storage and (vi) general office use. Such leases are generally for a period of between five and twenty years and typically include renewal options for an additional five to ten years in favor of the Company. In addition, the Company leases office space in New York, NY, Rochester, NY, Jersey City, NJ and Secaucus, NJ for its administrative headquarters and other corporate related activities. The Company is currently renovating the Secaucus, NJ offices and intends to consolidate the administrative functions currently housed in New York, NY, Rochester, NY and Jersey City, NJ in Secaucus, NJ. The renovation of the Secaucus office space is expected to be complete by May 2000. <P align="left"> <!-- link1 "ITEM 3. LEGAL PROCEEDINGS" --> <DIV align="left"><A NAME="003"></A></DIV> <DIV align="left"> <B>ITEM 3. LEGAL PROCEEDINGS</B> </DIV> <P align="left"> The Company and its subsidiaries are involved in litigation that has arisen in the ordinary course of business. None of these matters, either individually or in the aggregate, are expected to have a material adverse effect on the Company’s results of operations or financial condition. <P align="left"> <!-- link1 "ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS" --> <DIV align="left"><A NAME="004"></A></DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="8%"></TD> <TD width="92%"></TD> </TR> <TR valign="top"> <TD><B>ITEM 4. </B></TD> <TD align="left"> <B>SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</B></TD> </TR> </TABLE> <P align="left"> There were no matters submitted to a vote of security holders during the fourth quarter of 1999. <P align="center">4 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <!-- link1 "PART II" --> <DIV align="left"><A NAME="005"></A></DIV> <DIV align="center"> <B>PART II</B> </DIV> <P align="left"> <!-- link1 "ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS" --> <DIV align="left"><A NAME="006"></A></DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="8%"></TD> <TD width="92%"></TD> </TR> <TR valign="top"> <TD><B>ITEM 5. </B></TD> <TD align="left"> <B>MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</B></TD> </TR> </TABLE> <P align="left"> The Company’s Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “UAG.” There were 112 holders of record of the Common Stock as of March 22, 2000. <P align="left"> The following table sets forth the high and low sales prices of the Common Stock as reported on the NYSE during each fiscal quarter during 1999 and 1998. <CENTER> <TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="60%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="2%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="7"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Quarter Ended</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>High</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Low</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>High</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Low</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> March 31</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 1/2</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 13/16</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 1/8</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 1/4</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> June 30</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 3/4</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 1/2</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 7/8</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 5/8</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> September 30</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 3/16</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 1/8</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 5/16</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 5/16</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> December 31</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 1/16</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2"> 7/8</FONT></TD> </TR> </TABLE> </CENTER> <P align="left"> The Company has never declared or paid dividends on its Common Stock. The Company intends to retain future earnings, if any, to finance the development and expansion of its business and, therefore, does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. The decision whether to pay dividends will be made by the Board of Directors of the Company in light of conditions then existing, including the Company’s results of operations, financial condition and requirements, business conditions and other factors. <P align="left"> The indentures governing the Notes (as hereinafter defined) limit the Company’s ability to pay dividends based on a formula, which takes into account, among other things, the Company’s consolidated net income. <P align="left"> The Company is a holding company whose assets consist primarily of the capital stock of its operating subsidiaries. Consequently, the Company’s ability to pay dividends is dependent upon the earnings of its subsidiaries and their ability to distribute earnings and make other advances and payments to the Company. <P align="left"> Pursuant to the automobile franchise agreements to which the Company’s dealerships are subject, all dealerships are required to maintain a certain minimum working capital, and some dealerships are also required to maintain a certain minimum net worth. These requirements may restrict the ability of the Company’s operating subsidiaries to make dividend payments, which in turn may restrict the Company’s ability to make dividend payments. <P align="center">5 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <!-- link1 "ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA" --> <DIV align="left"><A NAME="007"></A></DIV> <DIV align="left"> <B>ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA</B> </DIV> <P align="left"> The following table sets forth selected historical consolidated financial and other data of the Company as of and for the five years in the period ended December 31, 1999. Such financial information has been derived from the Company’s consolidated financial statements. During the five year period, the Company made a number of acquisitions, each of which has been accounted for using the purchase method of accounting. Accordingly, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition. As a result, the Company’s period to period results of operations vary depending on the dates of such acquisitions. The selected consolidated financial data should be read in conjunction with the Company’s consolidated financial statements and related footnotes included elsewhere herein. <P align="center"><B>SELECTED CONSOLIDATED FINANCIAL DATA(1)(2)</B> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="40%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="19"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="19"><FONT size="2"><B>Years Ended December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="19"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998(3)(4)</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997(5)(6)</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1996(7)</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1995(8)</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="19"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="19"><FONT size="2"><B>(Dollars in thousands, except per share data)</B></FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Statement of Operations Data:</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Total revenues</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,022,517</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,343,147</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,092,593</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,302,031</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">805,621</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Gross profit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">549,437</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">455,617</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">276,359</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">158,150</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">94,348</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,710</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13,378</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(7,936</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,976</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(2,760</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income (loss)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,488</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(797</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,140</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,047</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3,654</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1.01</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.64</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.44</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.82</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.52</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income (loss) per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1.04</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.04</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.56</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.28</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.67</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Other Data:</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Gross profit margin</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13.7%</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13.6%</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13.2%</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12.1%</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11.7%</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> New cars sold at retail</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">93,259</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">77,403</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">50,985</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">36,802</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">25,138</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Used cars sold at retail</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">52,027</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">46,724</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">31,253</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,344</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,953</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Balance Sheet Data:</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Intangible assets, net</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">494,957</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">482,049</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">326,774</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">177,194</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">48,774</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Total assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,279,337</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,184,194</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">971,064</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">525,373</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">235,146</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Long-term debt, including current portion</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">228,924</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">313,021</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">248,531</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,565</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,242</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Total stockholders’ equity</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">430,865</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">341,650</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">300,557</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">284,501</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">51,699</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <DIV align="left"> <HR size="1" width="31%" align="left"> </DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="4%"></TD> <TD width="96%"></TD> </TR> <TR valign="top"> <TD>(1) </TD> <TD align="left"> During 1998, the Company discontinued the auto finance business of its wholly owned subsidiary, United Auto Finance, Inc. (“UAF”). As a result, UAF no longer engages in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation for all periods presented. See footnotes to consolidated financial statements.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(2) </TD> <TD align="left"> During 1997, the Company changed its method of accounting for new vehicle inventories from LIFO to the specific identification method. The effect of the change in accounting for new vehicle inventories was to increase net income and income before extraordinary item by $573 ($0.05 per diluted share) in 1996 and decrease net income and income before extraordinary item by $188 ($0.03 per diluted share) in 1995.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(3) </TD> <TD align="left"> Includes a $12,550 pre-tax charge for estimated future repair costs under the terms of approximately 51,000 warranty and extended service contracts sold from January 1, 1997 to October 31, 1998. See footnotes to consolidated financial statements.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(4) </TD> <TD align="left"> Includes the results of the Skelton Group, the Young Group, the Classic Group, Graceland Dodge, Pioneer Ford, the San Diego dealerships and Citrus Dodge from their respective dates of acquisition.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(5) </TD> <TD align="left"> Includes a $31,660 charge recorded during 1997 to realign certain elements of the Company’s business. See footnotes to consolidated financial statements.</TD> </TR> </TABLE> <P align="center">6 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="4%"></TD> <TD width="96%"></TD> </TR> <TR valign="top"> <TD>(6) </TD> <TD align="left"> Includes the results of Crown Automotive, Hanna Nissan, the Staluppi Automotive Group, the Gene Reed Automotive Group, the Lance Landers dealerships, Stone Mountain Jeep Eagle, Shreveport Dodge, Central Ford, Covington Pike Dodge and the Triangle Group from their respective dates of acquisition</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(7) </TD> <TD align="left"> Includes the results of Atlanta Toyota, United Nissan (GA), Peachtree Nissan, the Sun Automotive Group, the Evans Group and United Nissan (TN) from their respective dates of acquisition.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(8) </TD> <TD align="left"> Includes the results of Landers Auto from its date of acquisition.</TD> </TR> </TABLE> <P align="left"> <!-- link1 "ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" --> <DIV align="left"><A NAME="008"></A></DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="8%"></TD> <TD width="92%"></TD> </TR> <TR valign="top"> <TD><B>ITEM 7. </B></TD> <TD align="left"> <B>MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></TD> </TR> </TABLE> <P align="left"><B>General</B> <P align="left"> As an integral part of its dealership operations, the Company retails new and used automobiles and light trucks, operates service and parts departments, operates collision repair centers and sells various aftermarket products, including finance, warranty, extended service and insurance contracts. <P align="left"> New vehicle revenues include sales to retail and fleet customers and to leasing companies providing consumer automobile leasing. Used vehicle revenues include amounts received for used vehicles sold to retail customers, leasing companies providing consumer leasing, other dealers and wholesalers. Finance and insurance revenues are generated from sales of accessories, finance contracts, warranty policies, extended service contracts and credit insurance policies, as well as fees for placing finance and lease contracts. Service, parts and collision repair revenues include fees paid for repair and maintenance service, the sale of replacement parts and body shop repairs. <P align="left"> The Company’s selling expenses consist of advertising and compensation for sales department personnel, including commissions and related bonuses. General and administrative expenses include compensation for administration, finance, legal and general management personnel, depreciation, amortization, rent, insurance, utilities and other outside services. Other interest expense consists of interest charges on all of the Company’s interest-bearing debt, other than interest relating to floor plan inventory financing. <P align="left"> Between January 1, 1997 and October 31, 1998, the Company sold approximately 51,000 warranty and extended service contracts. The repair obligations for these contracts had been contractually assumed by Trace International Holdings, Inc. (“Trace”) and its subsidiary Alpha Automotive, Inc. (“Alpha”). As a result of uncertainty about Trace and Alpha’s ability to perform their contractual obligations, the Company entered into an insurance agreement under which the repair obligations relating to the 51,000 warranty and extended service contracts were assumed by the insurance company in exchange for a fixed premium payable over time. As a result, the Company has no further financial obligations related to these contracts other than to make specified premium payments. During 1998, the Company recorded a $12.6 million pre-tax charge (the “Alpha Charge”), which represents the estimated present value of those payments. Trace and Alpha remain liable with respect to the warranty and extended service contracts sold prior to November 1, 1998. Future recoveries from Trace and Alpha will reduce the cost of the insurance agreement. On July 21, 1999, Trace and its subsidiaries filed for protection in the bankruptcy court for the Southern District of New York. The case was converted from a Chapter 11 to a Chapter 7 bankruptcy proceeding on January 24, 2000. As a result, further recoveries from Trace are unlikely. <P align="left"> During 1998, the Company discontinued its auto finance business. As a result, UAF will no longer engage in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation for all periods presented in the accompanying consolidated statements of operations. <P align="left"> During 1997, the Company recorded a pre-tax charge of $31.7 million (the “1997 Charge”). The charge included costs associated with (i) the divestiture of automotive franchises, (ii) the closure of three stand-alone used vehicle satellite locations in Arkansas and the disposal of related inventory, (iii) the implementation of a new policy to more efficiently manage the Company’s working capital invested in retail inventory, (iv) excess real estate, (v) the write-off of non-performing assets and (vi) certain corporate consulting agreements. Costs associated with the 1997 Charge amounting to $9.8 million and $20.9 million have been <P align="center">7 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> reflected in cost of goods sold and selling, general and administrative expenses, respectively, in the accompanying financial statements. In addition, $1.0 million was reflected in discontinued operations. </DIV> <P align="left"> Also, the Company made a number of dealership acquisitions in 1999, 1998 and 1997. Each of these acquisitions has been accounted for using the purchase method of accounting and as a result, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition. <P align="left"><B>Results of Operations</B> <P align="left"><B><I>Year Ended December 31, 1999 Compared to Year Ended December 31, 1998</I></B> <P align="left"> <I>Revenues. </I>Revenues increased by $679.4 million, or 20.3%, from $3.3 billion to $4.0 billion. The overall increase in revenues is due primarily to (i) an aggregate 12.9% increase in retail revenues at dealerships owned prior to January 1, 1998 and (ii) dealership acquisitions made subsequent to January 1, 1998, partially offset by a decrease in revenues resulting from the divestiture of certain dealerships. The overall increase in retail revenues at dealerships owned prior to January 1, 1998 reflects 13.2%, 11.7%, 25.0% and 9.6% increases in new retail vehicle sales, used retail vehicle sales, finance and insurance and service and parts revenues, respectively. <P align="left"> Sales of new vehicles increased by $459.0 million, or 23.4%, from $2.0 billion to $2.4 billion. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1998 is due primarily to an 11.0% increase in retail unit sales and an increase in the comparative average selling price per vehicle. Aggregate retail unit sales of new vehicles increased by 20.5%, due principally to the net increase at dealerships owned prior to January 1, 1998 and acquisitions, offset by the decrease due to divested dealerships. The Company retailed 93,259 new vehicles (64.2% of total retail vehicle sales) during the year ended December 31, 1999, compared with 77,403 new vehicles (62.4% of total retail vehicle sales) during the year ended December 31, 1998. <P align="left"> Sales of used vehicles increased by $117.2 million, or 12.7%, from $922.8 million to $1.0 billion. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1998 is due primarily to a 6.0% increase in retail unit sales and an increase in the comparative average selling price per vehicle. Aggregate retail unit sales of used vehicles increased by 11.3%, due principally to the net increase at dealerships owned prior to January 1, 1998 and acquisitions, offset by the decrease due to divested dealerships. The Company retailed 52,027 used vehicles (35.8% of total retail vehicle sales) during the year ended December 31, 1999, compared with 46,724 used vehicles (37.6% of total retail vehicle sales) during the year ended December 31, 1998. <P align="left"> Finance and insurance revenues increased by $38.3 million, or 30.1%, from $127.4 million to $165.8 million. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998, (ii) a 27.4% increase in revenues at UAC and (iii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. <P align="left"> Service and parts revenues increased by $64.8 million, or 19.4%, from $334.1 million to $398.8 million. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. <P align="left"> <I>Gross Profit. </I>Gross profit increased by $93.8 million, or 20.6%, from $455.6 million to $549.4 million. The increase in gross profit is due to (i) an aggregate 11.1% increase in retail gross profit at stores owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. Gross profit as a percentage of revenues increased from 13.6% to 13.7%. The increase in gross profit as a percentage of revenues is primarily attributable to (i) an increase in higher margin finance and insurance and service and parts revenues as a percentage of total revenues during 1999, (ii) the impact of the Alpha Charge on gross profit in 1998 and (iii) improved gross profit margins on <P align="center">8 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> service and parts revenues, partially offset by (i) a decrease in gross profit margins on new and used retail vehicle sales revenues and (ii) a decrease in gross profit margins on finance and insurance revenues. </DIV> <P align="left"> <I>Selling, General and Administrative Expenses. </I>Selling, general and administrative expenses increased by $70.1 million, or 18.7%, from $375.0 million to $445.1 million. Such expenses as a percentage of revenue decreased from 11.2% to 11.1%, and such expenses as a percentage of gross profit decreased from 82.3% to 81.0%. The aggregate increase in selling, general and administrative expenses is due principally to (i) a 12.9% increase at stores owned prior to January 1, 1998 (ii) acquisitions made subsequent to January 1, 1998, and (iii) $2.5 million of compensation expense arising from contractual commitments associated with the issuance by the Company of equity securities in the second and third quarters of 1999, offset by a decrease resulting from the divestiture of certain dealerships. The increase in selling, general and administrative expenses at stores owned prior to January 1, 1998 is due in large part to increased selling expenses, including increased variable compensation, as a result of the increase in gross profit compared with the prior year. <P align="left"> <I>Floor Plan Interest Expense. </I>Floor plan interest expense of $28.7 million was consistent with the prior year. Factors influencing floor plan interest expense include higher average outstanding borrowings during 1999, offset by lower average borrowing rates. <P align="left"> <I>Other Interest Expense. </I>Other interest expense decreased by $2.1 million, from $31.5 million to $29.3 million. The decrease is due primarily to the paydown of indebtedness with proceeds from equity offerings and the effect of refinancing a portion of the Notes with lower interest borrowings under the Credit Agreement (as hereinafter defined), offset in part by an increase in the Company’s average borrowing rate during 1999. <P align="left"> <I>Other Income (Expense), Net. </I>Other income (expense), net decreased by $2.2 million, or 46.4%, from $4.8 million to $2.6 million. Other income relates to management agreements entered into by the Company with certain dealerships where the acquisition of such dealerships by the Company waited final manufacturer approval. Pursuant to the agreements, the Company manages all aspects of such dealership’s operation. The decrease in other income (expense), net is due primarily to the completion of the acquisition in 1999 of certain of the dealerships being operated pursuant to management agreements. <P align="left"> <I>Income Tax Provision. </I>The 1999 income tax provision increased by $9.9 million from $11.6 million to $21.4 million. The increase is due to an increase in pre-tax income in 1999 compared with 1998, partially offset by a decrease in the Company’s annual effective income tax rate. The decrease in the Company’s annual effective income tax rate is due primarily to a decrease in the Company’s effective state tax rate. <P align="left"> <I>Extraordinary Item. </I>The $0.7 million extraordinary item in 1999 represents a net after tax gain on the retirement of $49.0 million of the Notes, offset in part by a net after tax loss resulting from the write-off of the unamortized deferred financing costs related to the Company’s previous credit facility. The $1.2 million extraordinary item in 1998 represents the net after tax loss resulting from the write-off of unamortized deferred financing costs relating to a previous credit facility. <P align="left"><B><I>Year Ended December 31, 1998 Compared to Year Ended December 31, 1997</I></B> <P align="left"> <I>Revenues. </I>Revenues increased by $1.3 billion, or 59.8%, from $2.1 billion to $3.3 billion. The overall increase in revenues is due primarily to (i) dealership acquisitions made subsequent to January 1, 1997 and (ii) an overall 5.2% increase in retail revenues at dealerships owned prior to January 1, 1997, partially offset by (i) a decrease in retail vehicle sales revenues and finance and insurance revenues at dealerships in the Atlanta marketplace and (ii) a decrease in revenues resulting from the divestiture of certain dealerships. The overall increase in retail revenues at dealerships owned prior to January 1, 1997 reflects 4.9%, 2.9%, 19.5% and 7.7% increases in new retail vehicle sales, used retail vehicle sales, finance and insurance and service and parts revenues, respectively. <P align="left"> Sales of new vehicles increased by $720.4 million, or 58.2%, from $1.2 billion to $2.0 billion. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997 and (ii) the net increase at dealerships owned prior to January 1, 1997, offset by (i) the decrease in the Atlanta marketplace and (ii) a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, <P align="center">9 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> 1997 is due to an increase in the comparative average selling price per vehicle, partially offset by a 1.2% decrease in retail unit sales. Aggregate unit retail sales of new vehicles increased by 51.8%, due principally to acquisitions, offset by (i) the net decrease at dealerships owned prior to January 1, 1997 and (ii) the decrease due to divested dealerships. The Company sold 77,403 new vehicles (62.4% of total retail vehicle sales) during the year ended December 31, 1998, compared with 50,985 new vehicles (62.0% of total retail vehicle sales) during the year ended December 31, 1997. </DIV> <P align="left"> Sales of used vehicles increased by $333.7 million, or 56.7%, from $598.1 million to $922.8 million. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997 and (ii) the net increase at dealerships owned prior to January 1, 1997, offset by (i) the decrease in the Atlanta marketplace and (ii) a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1997 is due to an increase in the comparative average selling price per vehicle, partially offset by a 5.2% decrease in retail unit sales. Aggregate unit retail sales of used vehicles increased by 49.5%, due principally to acquisitions, offset by (i) the net decrease at dealerships owned prior to January 1, 1997 and (ii) the decrease due to divested dealerships. The Company sold 46,724 used vehicles (37.6% of total retail vehicle sales) during the year ended December 31, 1998, compared with 31,253 used vehicles (38.0% of total retail vehicle sales) during the year ended December 31, 1997. <P align="left"> Finance and insurance revenues increased by $53.2 million, or 71.7%, from $74.2 million to $127.4 million. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997, (ii) the net increase at dealerships owned prior to January 1, 1997 and (iii) an increase in revenues at UAC, offset by (i) the decrease in the Atlanta marketplace and (ii) a decrease resulting from the divestiture of certain dealerships. <P align="left"> Service and parts revenues increased by $143.3 million, or 75.1%, from $190.8 million to $334.1 million. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997 and (ii) the net increase at dealerships owned prior to January 1, 1997, offset by a decrease resulting from the divestiture of certain dealerships. <P align="left"> <I>Gross Profit. </I>Gross profit increased by $179.3 million, or 64.9%, from $276.4 million to $455.6 million. The increase in gross profit is due to (i) acquisitions made subsequent to January 1, 1997, (ii) an aggregate increase in total gross profit generated at stores owned prior to January 1, 1997 (iii) the increase in revenues at UAC and (iv) the impact of the 1997 Charge on gross profit in 1997, offset by (i) the impact of the Alpha Charge on gross profit in 1998 and (ii) a decrease resulting from the divestiture of certain dealerships. Gross profit as a percentage of revenues increased from 13.2% to 13.6%. The increase in gross profit as a percentage of revenues is primarily attributable to (i) the increase in higher margin finance and insurance and service and parts revenues as a percentage of total revenues, (ii) improved gross profit margins on new and used retail vehicle sales revenues, (iii) improved gross profit margins on finance and insurance revenues and (iv) improved gross profit margins on service and parts revenues. <P align="left"> <I>Selling, General and Administrative Expenses. </I> Selling, general and administrative expenses increased by $120.0 million, or 47.0%, from $255.1 million to $375.0 million. The increase in selling, general and administrative expenses is due principally to (i) acquisitions made subsequent to January 1, 1997, (ii) an increase at stores owned prior to January 1, 1997, offset in part by the impact of the 1997 Charge on selling general and administrative expenses in 1997. Such expenses as a percentage of revenue decreased from 12.2% to 11.2%. <P align="left"> <I>Floor Plan Interest Expense. </I>Floor plan interest expense increased by $9.4 million, or 48.8%, from $19.3 million to $28.7 million. The increase in floor plan interest expense is due principally to acquisitions made subsequent to January 1, 1997. <P align="left"> <I>Other Interest Expense. </I>Other interest expense increased by $17.4 million, from $14.1 million to $31.5 million. The increase is due to (i) the issuance of the Notes and (ii) the incurrence of acquisition related debt. <P align="left"> <I>Other Income (Expense), Net. </I>Other income (expense), net increased by $4.5 million, due primarily to $4.8 million of income earned pursuant to dealership management agreements during 1998. <P align="center">10 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <I>Income Tax Provision. </I>The 1998 income tax provision increased $15.5 million from a benefit of $4.0 million to a provision of $11.6 million. The increase is due to an increase in pre-tax income in 1998 compared with 1997, coupled with an increase in the Company’s annual effective income tax rate during 1998. <P align="left"> <I>Loss from Discontinued Operations. </I>Loss from discontinued operations increased by $10.7 million from $2.2 million to $12.9 million. The increase in loss from discontinued operations is due primarily to (i) an increase in UAF’s 1998 operating loss and (ii) the recording of a $14.4 million loss on disposal, offset by the impact of the 1997 Charge on loss from discontinued operations in 1997. The increase in UAF’s 1998 operating loss was due primarily to (i) losses incurred on the sale of loans in private non-securitized transactions, (ii) losses in connection with exiting interest rate management transactions and (iii) asset impairment relating to finance assets. The loss on disposal consists of (i) $5.9 million relating to contractual commitments, the write-off of certain fixed assets, severance and other administrative expenses, (ii) $3.8 million of asset impairment and losses incurred on the sale of loans in private non-securitized transactions, (iii) $3.9 million of estimated future costs associated with servicing its securitized portfolio of retail automotive loans and (iv) $0.8 million relating to the write-off of deferred financing fees in connection with the closure of UAF’s warehouse lines. <P align="left"> <I>Extraordinary Item. </I>The $1.2 million extraordinary item in 1998, represents the net after tax loss resulting from the write-off of unamortized deferred financing costs relating to a previous credit facility. <P align="left"><B>Liquidity and Capital Resources</B> <P align="left"> The cash requirements of the Company are primarily for the acquisition of new dealerships, working capital and the expansion of existing facilities. Historically, these cash requirements have been met through issuances of equity and debt instruments and cash flow from operations. At December 31, 1999, the Company had working capital of $97.0 million. <P align="left"> On April 12, 1999, the Company and International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. (“IMCG II”), Delaware limited liability companies controlled by Penske Capital Partners, L.L.C. (together, the “Purchaser”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which the Purchaser agreed to purchase (i) an aggregate of 7,903.124 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), (ii) an aggregate of 396.876 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (iii) warrants (the “Warrants”) to purchase (a) 3,898,665 shares of the Company’s Common Stock, and (b) 1,101,335 shares of the Company’s non-voting common stock, par value $0.0001 per share (the “Non-Voting Common Stock”) for $83.0 million. The Series A Preferred Stock is convertible into an aggregate of 7,903,124 shares of Common Stock and the Series B Preferred Stock is convertible into an aggregate of 396,876 shares of Non-Voting Common Stock. The Warrants are exercisable at a price of $12.50 per share for the thirty months following the date of issuance, and $15.50 per share thereafter until May 2, 2004. <P align="left"> The transaction was consummated in two steps: first, the acquisition of approximately $33.5 million of Series A Preferred Stock and, second, the acquisition of approximately $49.5 million of Series A Preferred Stock, Series B Preferred Stock and Warrants. The first step of the transaction closed on May 3, 1999. The Series A Preferred Stock issued on May 3, 1999 was subject to mandatory redemption by the Company at the Purchaser’s option prior to the second closing. On August 3, 1999, the transaction was approved by the Company’s stockholders, after which the second step of the transaction closed. Proceeds from the issuance of the securities pursuant to the Securities Purchase Agreement were used to prepay the remaining $44.4 million of term loans and $18.4 million of revolving loan commitments outstanding under the Company’s credit agreement, to pay approximately $6.8 million of fees incurred in connection with the execution of the Securities Purchase Agreement and fund certain acquisition related costs. The balance of the proceeds were deposited in interest bearing accounts. <P align="left"> The shares of Series A Preferred Stock and Series B Preferred Stock entitle the Purchaser to dividends at a rate of 6.5% per year. Dividends are payable in kind for the first two years. In February 2000, in accordance with the Certificate of Designation governing the preferred stock, the Board of Directors declared and paid to <P align="center">11 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> the Purchasers a pay-in-kind dividend consisting of 220.622 shares of Series A Preferred Stock and 62.324 shares of Series B Preferred Stock representing accrued and unpaid dividends through December 31, 1999 in respect of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock. Such shares are convertible into 220,622 shares of Common Stock and 62,324 shares of Non-Voting Common Stock, respectively. </DIV> <P align="left"> The Company finances all of its new and a portion of its used vehicle inventory under revolving floor plan financing arrangements with various lenders. The Company makes monthly interest payments on the amount financed, but is not required to make loan principal repayments prior to the sale of new and used vehicles. Substantially all of the assets of the Company’s dealerships, including vehicles and related sales proceeds, are subject to security interests granted to their floor plan lending sources. As of December 31, 1999 approximately $478 million of floor plan borrowing was outstanding. Interest rates on the floor plan agreements are variable and increase or decrease based on movements in prime or LIBOR borrowing rates. <P align="left"> On October 8, 1999, the Company entered into a new credit agreement, dated as of August 3, 1999, as amended (the “Credit Agreement”), which provides for up to $360.0 million in revolving loans to be used for acquisitions, working capital, the repurchase of Notes, the repurchase of Common Stock, letters of credit and general corporate purposes. Borrowings under the Credit Agreement bear interest at LIBOR plus 2.00%, other then borrowings to repurchase the Notes which bear interest at LIBOR plus 3.00%. The Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries. The Credit Agreement contains a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness, repurchase capital stock, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the Company is required to comply with specified ratios and tests, including debt to equity, debt service coverage and minimum working capital covenants. The Credit Agreement also contains typical events of default including change of control, material adverse change and non-payment of obligations. In addition, substantially all of the assets of the Company’s dealerships not subject to security interests granted to floor plan lending sources are subject to security interests granted to lenders under the Credit Agreement. The Company was in compliance with all of its debt covenants at December 31, 1999. <P align="left"> During 1997 the Company issued $200.0 million aggregate principal amount of 11% Senior Subordinated Notes due 2007 (the “Notes”). The indentures governing the Notes require the Company to comply with specified debt service coverage ratio levels in order to incur incremental debt. The indentures governing the Notes also limit the Company’s ability to pay dividends based on a formula which take into account, among other things, the Company’s consolidated net income. The indentures also contain other covenants which restrict the Company’s ability to purchase capital stock, incur liens, sell assets and enter into other transactions. The Notes are fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries. During 1999 the Company repurchased and retired $49.0 million of the Notes. As of March 22, 2000, there was $151.0 million principal amount of Notes outstanding. <P align="left"> The indentures governing the Notes contain a provision which requires the Company to offer to purchase all of the then outstanding Notes at a purchase price in cash equal to 101% of their principal amount in the event of a change in control. A change in control will be deemed to have occurred if a purchaser, as defined, beneficially obtains 40% of the voting power, as defined, of the voting stock of the Company. In December 1999, the Company announced its plan to repurchase up to 10% of the total outstanding Common Stock of the Company. The shares of Common Stock may be acquired from time to time over a two-year period either through open market purchases, negotiated transactions, or other means based upon market conditions. The repurchase of shares of Common Stock by the Company has increased the beneficial ownership interest of the Purchaser above 40% of the total ownership of the Company. As a result, the Company plans to make an offer to purchase the outstanding Notes at a change of control redemption price of 101% of par. The Company has sufficient availability under the Credit Agreement to finance the repurchase of the Notes. <P align="left"> During 1999, cash flow from operations amounted to $40.8 million. Net cash used in investing activities during the year ended December 31, 1999 totaled $50.4 million, relating to dealership acquisitions and capital <P align="center">12 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> expenditures. Net cash used in financing activities during the year ended December 31, 1999, relating primarily to the net proceeds from the placement of preferred stock, offset by a net retirement of long-term debt, totaled $18.7 million. In addition, the Company received distributions amounting to $9.7 million from its wholly-owned subsidiary, United Auto Finance, Inc. </DIV> <P align="left"> At December 31, 1999, the Company had approximately $19.8 million of cash available to fund operations and future acquisitions. In addition, $226.9 million, $110.0 million of which is restricted to the repurchase of Notes, is available for borrowing under the Credit Agreement as of March 22, 2000. The Company is a holding company whose assets consist primarily of the capital stock of its operating subsidiaries. Consequently, the Company’s ability to pay dividends is dependent upon the earnings of its subsidiaries and their ability to distribute earnings to the Company and to make other advances and payments by such subsidiaries to the Company. <P align="left"> The Company’s principal source of growth has come from acquisitions of automobile dealerships. The Company believes that its existing capital resources will be sufficient to fund its current operations and commitments. To the extent the Company pursues additional significant acquisitions, it may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional bank borrowings. A public equity offering would require the prior approval of certain automobile manufacturers. <P align="left"><B>Cyclicality</B> <P align="left"> Unit sales of motor vehicles, particularly new vehicles, historically have been cyclical, fluctuating with general economic cycles. During economic downturns, the automotive retailing industry tends to experience similar periods of decline and recession as the general economy. The Company believes that the industry is influenced by general economic conditions and particularly by consumer confidence, the level of personal discretionary spending, interest rates and credit availability. <P align="left"><B>Seasonality</B> <P align="left"> The Company’s combined business is modestly seasonal overall. The greatest seasonalities exist with the dealerships in the northeast United States, for which the second and third quarters are the strongest with respect to vehicle related sales. The service and parts business at all dealerships experience relatively modest seasonal fluctuations. <P align="left"><B>Effects of Inflation</B> <P align="left"> The Company believes that the relatively moderate rates of inflation over the last few years have not had a significant impact on revenue or profitability. The Company does not expect inflation to have any near-term material effects on the sale of its products and services. However, there can be no assurance that there will be no such effect in the future. <P align="left"> The Company finances substantially all of its inventory through various revolving floor plan arrangements with interest rates that vary based on the prime rate or LIBOR. Such rates have historically increased during periods of increasing inflation. The Company does not believe that it would be placed at a competitive disadvantage should interest rates increase due to increased inflation since most other automobile dealers have similar floating rate borrowing arrangements. <P align="left"><B>Forward Looking Statements</B> <P align="left"> Certain portions of this Annual Report on Form 10-K contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Annual Report or incorporated herein by reference regarding the Company’s financial position and business strategy may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations <P align="center">13 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations, some of which are described in greater detail elsewhere in this Annual Report, include the following: (i) the Company is subject to the influence of various manufacturers whose franchises it holds; (ii) the Company is leveraged and subject to restrictions imposed by the terms of its indebtedness; (iii) the Company’s growth depends in large part on the Company’s ability to manage expansion, control costs in its operations and consummate and consolidate dealership acquisitions; (iv) many of the Company’s franchise agreements impose restrictions on the transferability of the Company’s Common Stock; (v) the Company will require substantial additional capital to acquire automobile dealerships and purchase inventory; (vi) unit sales of motor vehicles historically have been cyclical; (vii) the automotive retailing industry is highly competitive; (viii) the automotive retailing industry is a mature industry; (ix) the Company’s success depends to a significant extent on key members of its management; and (x) the Company’s business is seasonal. In light of the foregoing, readers of this Annual Report are cautioned not to place undue reliance on the forward-looking statements contained herein. </DIV> <P align="left"> <!-- link1 "ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK" --> <DIV align="left"><A NAME="009"></A></DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="9%"></TD> <TD width="91%"></TD> </TR> <TR valign="top"> <TD><B>ITEM 7A. </B></TD> <TD align="left"> <B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B></TD> </TR> </TABLE> <P align="left"> <I>Foreign Currency Exchange Rates. </I>Substantially all of the Company’s business is conducted in the United States where its revenues and expenses are transacted in U.S. dollars. As a result, the majority of the Company’s results of operations are not subject to foreign exchange rate fluctuations. The Company does not hedge against foreign exchange rate fluctuations due to the limited financial exposure it faces with respect to such risk. In common with other automobile retailers, the Company purchases certain of its new car inventories from foreign manufacturers. The Company’s business in this regard is subject to certain risks, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions and foreign exchange rate volatility. The Company’s future results could be materially and adversely impacted by changes in these or other factors. <P align="left"> <I>Interest Rates. </I>The Company is exposed to market risk from changes in the interest rates on a significant portion of its outstanding indebtedness. Outstanding balances under the Credit Agreement bear interest at a variable rate based on a margin over LIBOR. Based on the amount outstanding as of March 22, 2000, a 100 basis point change in interest rates would result in an approximate $1.3 million change to the Company’s annual interest expense. Similarly, amounts outstanding under floor plan financing arrangements bear interest at a variable rate based on a margin over LIBOR. Based on the average aggregate outstanding amounts under floor plan financing arrangements during the year ended December 31, 1999, a 100 basis point change in interest rates would result in an approximate $4.3 million change to the Company’s annual floor plan interest expense. During January 2000, the Company entered into swap agreements pursuant to which a notional $200.0 million of the Company’s floating rate debt has been exchanged for fixed rate debt. The fixed rate interest to be paid by the Company is based on LIBOR, as adjusted, and amounts to approximately 7.1%. For fixed rate debt including the Notes, certain seller financed promissory notes and obligations under certain capital leases, interest rate changes affect the fair market value of such debt, but do not impact the Company’s earnings or cash flows. <P align="left"> <!-- link1 "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" --> <DIV align="left"><A NAME="010"></A></DIV> <DIV align="left"> <B>ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA </B> </DIV> <P align="left"> See the consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements for the information required by this item. <P align="left"> <!-- link1 "ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE" --> <DIV align="left"><A NAME="011"></A></DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="8%"></TD> <TD width="92%"></TD> </TR> <TR valign="top"> <TD><B>ITEM 9. </B></TD> <TD align="left"> <B>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</B></TD> </TR> </TABLE> <P align="left"> On May 19, 1999, the Company dismissed PricewaterhouseCoopers LLP, which served as the Company’s independent public accountants since 1992. The reports issued by PricewaterhouseCoopers LLP on the financial statements of the Company for the past two fiscal years did not contain an adverse opinion nor a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. Based on the recommendation of the Audit Committee, the Company’s Board of Directors approved the decision to change independent public accountants. In connection with its audits for the two <P align="center">14 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> most recent fiscal years and through May 19, 1999, there were no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference thereto in their report on the financial statements for such years or such interim periods. </DIV> <P align="left"> The Company engaged Deloitte & Touche LLP as its new independent public accountants as of May 19, 1999. The Company’s Board of Directors approved this on May 19, 1999. During the two most recent fiscal years and through May 19, 1999, the Company has not consulted with Deloitte & Touche LLP regarding either: <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="97%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements; or</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to this Item) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K and related instructions to this Item).</TD> </TR> </TABLE> <P align="left"> <!-- link1 "PART III" --> <DIV align="left"><A NAME="012"></A></DIV> <DIV align="center"> <B>PART III</B> </DIV> <P align="left"> The information required by Items 10 through 13 is included in the Company’s definitive proxy statement under the captions “Compensation of Directors” “Election of Directors,” “Executive Officers,” “Executive Compensation”, “Security Ownership of Certain Beneficial Owners and Management”, “Related Party Transactions,” and “Section 16(a) Beneficial Ownership Reporting Compliance”. Such information is incorporated herein by reference, pursuant to General Instruction G(3). <P align="center">15 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> The following is a list of the officers and directors of the Company, including their principal occupation: <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="32%"> </TD> <TD width="3%"> </TD> <TD width="31%"> </TD> <TD width="3%"> </TD> <TD width="31%"> </TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Name</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Office</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Occupation</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Roger S. Penske</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director, Chairman and Chief Executive Officer of the Company</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Chairman of the Board and Chief Executive Officer of Penske Corporation</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Samuel X. DiFeo</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director, President and Chief Operating Officer of the Company</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> President and Chief Operating Officer of the Company</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> James A. Hislop</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> President and Chief Executive Officer of Penske Capital Partners, LLC</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Richard J. Peters</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> President of Penske Corporation</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Eustace W. Mita</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> President and Chief Executive Officer of HAC Group, LLC</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Donald J. Hofmann, Jr.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> General Partner of Chase Capital Partners</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Marshall S. Cogan</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consultant</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Michael R. Eisenson</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Managing Director and Chief Executive Officer of Charlesbank</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> John J. Hannan</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Principal of Apollo Advisors, L.P. and Apollo Real Estate Advisors, L.P.</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> James R. Davidson</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Vice President – Finance of the Company</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> —</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Robert H. Kurnick, Jr.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Vice President – General Counsel and Secretary of the Company</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Vice President of Penske Corporation</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Paul H. Walters</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Vice President – Administration of the Company</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Vice President — Administration of Penske Corporation</FONT></TD> </TR> </TABLE> </CENTER> <P align="center">16 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <!-- link1 "PART IV" --> <DIV align="left"><A NAME="013"></A></DIV> <DIV align="center"> <B>PART IV</B> </DIV> <P align="left"> <!-- link1 "ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K" --> <DIV align="left"><A NAME="014"></A></DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="8%"></TD> <TD width="92%"></TD> </TR> <TR valign="top"> <TD><B>ITEM 14. </B></TD> <TD align="left"> <B>EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K</B></TD> </TR> </TABLE> <P align="left"> (a) Financial Statements <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="97%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> The consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.</TD> </TR> </TABLE> <P align="left"> (b) Reports on Form 8-K. <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="97%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> The Company did not file any Current Reports on Form 8-K during the three month period ended December 31, 1999.</TD> </TR> </TABLE> <P align="left"> (c) Exhibits <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="24%"> </TD> <TD width="3%"> </TD> <TD width="73%"> </TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 3.1(l)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Certificate of Amendment of Certificate of Incorporation of the Company dated August 3, 1999</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 3.2(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Restated Bylaws</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Specimen Common Stock Certificate</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.2(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Indenture, dated as of July 23, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including form of Note and Guarantee</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.4(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Indenture, dated as of September 16, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including from of Series B Note and Guarantee</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.5(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Certificate of Designation of Series A Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on April 30, 1999</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholders Agreement, dated as of May 3, 1999, by and among AIF II, L.P., Aeneas Venture Corporation, International Motor Cars Group I, L.L.C., International Motor Cars Group II, L.L.C., Trace International Holdings, Inc., and the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Registration Rights Agreement, dated as of October 15, 1993, among the Company and the investors listed therein, as amended July 31, 1996</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.4(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Warrant</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.8(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Option Plan of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.8.1(i)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Amendment to Stock Option Plan of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.11(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Letter, dated July 24, 1996, between the Company and Toyota Motor Sales U.S.A., Inc.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.13(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Non-employee Director Compensation Plan of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.14(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Agreement among the Company, certain of its affiliates and American Honda Motor Co., Inc.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.15(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Option Certificate of the Company in favor of Samuel X. DiFeo and Joseph C. DiFeo</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.18(d)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consulting Agreement, dated March 3, 1997, between the Company and Carl Spielvogel</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.19.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent</FONT></TD> </TR> </TABLE> </CENTER> <P align="center">17 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="24%"> </TD> <TD width="3%"> </TD> <TD width="73%"> </TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.19.2(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> First Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.19.3(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Second Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Non-Competition and Standstill Agreement, dated as of April 12, 1999 by and between Marshall S. Cogan and the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Honda Automobile Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.2(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Lexus Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.3(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Mitsubishi Dealer Sales and Services Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.4(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> BMW of North America, Inc., Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.5(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Suzuki Term Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.6(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Toyota Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.7(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> General Motors Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.9(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Nissan Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.10(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Chrysler Corporation Term Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.15(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Hyundai Motor America Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.21 and 22(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Isuzu Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.26(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Settlement Agreement, dated as of October 3, 1996, among the Company and certain of its affiliates, on the one hand, and Samuel X. DiFeo, Joseph C. DiFeo and certain of their affiliates, on the other hand</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.3(l)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Option Agreement, dated as of August 3, 1999, between the Company and Roger S. Penske</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.3.1(g)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Ford Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.4(l)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Option Agreement, dated as of August 3, 1999 between the Company and Marshall S. Cogan</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.4.5(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Employment Agreement, dated as of August 1, 1995, between Landers Auto Sales, Inc., and Steve Landers</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.5.13(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Employment Agreement, dated as of January 16, 1996, among the Company, UAG Atlanta, Inc. and John Smith</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated as of June 6, 1996, among the Company, UAG West, Inc., Scottsdale Jaguar, LTD., SA Automotive, LTD., SL Automotive, LTD., SPA Automotive, LTD., LRP, LTD., Sun BMW, LTD., Scottsdale Management Group, LTD., 6725 Dealership LTD., and certain parties named therein, as amended on October 21, 1996 by Amendment No. 1, Amendment No. 2 and Amendment No. 3</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.3(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Employment Agreement between the Company, UAG West, Inc., and Steven Knappenberger</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.5(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Audi Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.6(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Acura Automobile Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.8(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Porsche Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.9(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Land Rover North America, Inc. Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.21(e)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Rolls-Royce Dealer Agreement</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.11.1(c)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Agreement and Plan of Merger, dated December 16, 1996, among Crown Jeep Eagle, Inc., Berylson, Inc., Shannon Automotive, Ltd., Kevin J. Coffey, Paul J. Rhodes, the Company, UAG Texas, Inc., and UAG Texas II, Inc.</FONT></TD> </TR> </TABLE> </CENTER> <P align="center">18 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="16%"> </TD> <TD width="3%"> </TD> <TD width="81%"> </TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.13.1(d)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated February 19, 1997, among the Company, UAG East, Inc., Amity Auto Plaza, Ltd., Massapequa Imports Ltd., Westbury Nissan Ltd., Westbury Superstore Ltd., J&S Auto Refinishing Ltd., Florida Chrysler Plymouth Jeep Eagle Inc., Palm Auto Plaza, Inc., West Palm Infiniti Inc., West Palm Nissan Inc., Northlake Auto Finish Inc., John A. Staluppi and John A. Staluppi, Jr., as amended April 7, 1997 and April 30, 1997</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.15.1(e)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated April 12, 1997, among the Company, Gene Reed Chevrolet, Inc., Michael Chevrolet–Oldsmobile, Inc., Reed-Lallier Chevrolet, Inc., Gene Reed, Jr., Michael L. Reed, Michael G. Lallier, Deborah B. Lallier, John P. Jones, Charles J. Bradshaw, Charles J. Bradshaw, Jr., Julia D. Bradshaw and William B. Bradshaw, as amended May 31, 1997</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.18.1(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated July 25, 1997 among the Company, UAG Classic, Inc., Classic Auto Group, Inc., Cherry Hill Classic Cars, Inc., Classic Enterprises, Inc., Classic Buick, Inc., Classic Chevrolet, Inc., Classic Management, Inc., Classic Turnersville, Inc., Classic Imports, Inc., and Thomas J. Hessert, Jr. (as amended)</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.1(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated as of September 25, 1997 among the Company, UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.2(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Agreement and Plan of Merger, dated as of September 25, 1997 among the Company, UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.3(h)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Amendment to Stock Purchase Agreement, dated January 31, 1998, between and among United Auto Group, Inc., UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.4(h)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Amendment to Agreement and Plan of Merger, dated January 31, 1998, between and among United Auto Group, Inc., UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Kissimmee Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.1(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Securities Purchase Agreement, dated as of April 12, 1999, among the Company and International Motorcars Group I, L.L.C., and International Motor Cars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.2(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholder Voting Agreement, dated April 12, 1999, between Trace International Holdings, Inc., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.3(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholder Voting Agreement, dated April 12, 1999, between Aeneas Venture Corporation, International Motorcars Group I, L.L.C. and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.4(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholder Voting Agreement, dated April 12, 1999, between AIF II, L.P., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.7(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Registration Rights Agreement, dated as of May 3, 1999, by and among the Company, International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.21(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Severance Agreement, dated May 3, 1999 between the Company and Robert Nelson.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.22(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Severance Agreement, dated August 2, 1999 between the Company and James Davidson.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.23(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Letter Agreement dated August 3, 1999 between the Company and Samuel X. DiFeo.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 21.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Subsidiaries of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 23.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consent of PricewaterhouseCoopers, LLP</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 23.2(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consent of Deloitte & Touche, LLP</FONT></TD> </TR> </TABLE> </CENTER> <P align="center">19 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="16%"> </TD> <TD width="3%"> </TD> <TD width="81%"> </TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> December 31, 1999 Financial Data Schedule</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.2(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> September 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.3(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> June 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.4(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 31, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.5(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> December 31, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.6(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> September 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.7(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> June 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.8(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 31,1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.9(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> December 31, 1997 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> </TABLE> </CENTER> <DIV align="left"> <HR size="1" width="31%" align="left"> </DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="97%"></TD> </TR> <TR valign="top"> <TD>(a)</TD> <TD align="left"> Filed herewith</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(b)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Registration Statement on Form S-1, Registration No. 333-09429</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(c)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on December 24, 1996, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(d)</TD> <TD align="left"> Incorporated herein by reference to the identically number exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(e)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(f)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(g)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(h)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on February 20, 1998, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(i)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(j)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on April 15, 1999, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(k)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 10, 1999, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(l)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on August 13, 1999, File No. 001-12297</TD> </TR> </TABLE> <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="4%"></TD> <TD width="93%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD>(d) </TD> <TD align="left"> Schedules — No Financial Statement Schedules are required to be filed as part of this Annual Report on Form 10-K.</TD> </TR> </TABLE> <P align="center">20 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>SIGNATURES</B> <P align="left"> Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York on March 27, 2000. <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="38%"></TD> <TD width="62%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> UNITED AUTO GROUP, INC.</TD> </TR> </TABLE> <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="38%"></TD> <TD width="4%"></TD> <TD width="58%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD>By: </TD> <TD align="left"> /s/ ROGER S. PENSKE</TD> </TR> </TABLE> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="38%"></TD> <TD width="62%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> <HR size="1" align="left"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="center"> Roger S. Penske</TD> </TR> <TR valign="top"> <TD> </TD> <TD align="center"> <I>Chairman of the Board and</I></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="center"> <I>Chief Executive Officer</I></TD> </TR> </TABLE> <P align="left"> Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on its behalf by the registrant and in the capacities and on the dates indicated: <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="42%"> </TD> <TD width="3%"> </TD> <TD width="38%"> </TD> <TD width="3%"> </TD> <TD width="14%"> </TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Signature</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Title</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Date</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ ROGER S. PENSKE<BR> <HR size="1">Roger S. Penske</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Chairman of the Board and Chief Executive Officer (Principal Executive Officer)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ SAMUEL X. DIFEO<BR> <HR size="1">Samuel X. DiFeo</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> President, Chief Operating Officer and Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ JAMES R. DAVIDSON<BR> <HR size="1">James R. Davidson</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Executive Vice President — Finance (Principal Financial and Accounting Officer)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ DONALD J. HOFMANN, JR.<BR> <HR size="1">Donald J. Hofmann, Jr.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ EUSTACE W. MITA<BR> <HR size="1">Eustace W. Mita</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ RICHARD J. PETERS<BR> <HR size="1">Richard J. Peters</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ JAMES A. HISLOP<BR> <HR size="1">James A. Hislop</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ MICHAEL R. EISENSON<BR> <HR size="1">Michael R. Eisenson</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ JOHN J. HANNAN<BR> <HR size="1">John J. Hannan</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> /s/ MARSHALL S. COGAN<BR> <HR size="1">Marshall S. Cogan</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Director</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 27, 2000</FONT></TD> </TR> </TABLE> </CENTER> <P align="center">21 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="left"> <!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" --> <DIV align="left"><A NAME="015"></A></DIV> <DIV align="center"> <B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B> </DIV> <CENTER> <TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="87%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> <B>United Auto Group, Inc.</B></FONT></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Reports of Independent Accountants</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2"> F-2</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consolidated Balance Sheets as of December 31, 1999 and 1998</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2"> F-4</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2"> F-5</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consolidated Statements of Stockholders’ Equity for the years ended December 31, 1999, 1998, 1997 and 1996</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2"> F-6</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2"> F-7</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Notes to Consolidated Financial Statements</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2"> F-8</FONT></TD> </TR> </TABLE> </CENTER> <P align="center">F-1 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>REPORT OF INDEPENDENT ACCOUNTANTS</B> <P align="left">To the Board of Directors and Stockholders of United Auto Group, Inc. <DIV align="left"> New York, New York </DIV> <P align="left"> We have audited the accompanying consolidated balance sheet of United Auto Group, Inc. (the “Company”) and subsidiaries as of December 31, 1999, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 1999. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audit. <P align="left"> We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. <P align="left"> In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 1999, and the results of their operations and their cash flows for the year ended December 31, 1999 in conformity with generally accepted accounting principles. <P align="left"> /s/ DELOITTE & TOUCHE LLP <P align="left"> New York, New York <DIV align="left"> February 1, 2000 </DIV> <P align="center">F-2 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>REPORT OF INDEPENDENT ACCOUNTANTS</B> <P align="left">To the Stockholders of United Auto Group, Inc.: <P align="left"> In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of United Auto Group, Inc. (the “Company”) at December 31, 1998, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. We have not audited the consolidated financial statements of the Company for any period subsequent to December 31, 1998. <P align="left"> /s/ PRICEWATERHOUSECOOPERS LLP <P align="left"> Princeton, New Jersey <DIV align="left"> March 29, 1999 </DIV> <P align="center">F-3 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>UNITED AUTO GROUP, INC.</B> <P align="center"> <B>CONSOLIDATED BALANCE SHEETS</B> <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="65%"> </TD> <TD width="3%"> </TD> <TD width="6%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>December 31,</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>(Dollars in thousands)</B></FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> <B>ASSETS</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Cash and cash equivalents</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">19,847</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">38,538</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accounts receivable, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">140,473</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">125,460</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Inventories</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">508,289</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">410,295</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Other current assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,723</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,420</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total current assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">679,332</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">590,713</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Property and equipment, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">68,232</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">51,483</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Intangible assets, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">494,957</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">482,049</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Net assets of discontinued operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13,747</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">23,323</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Other assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">23,069</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">36,626</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> <B>Total Assets</B></FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,279,337</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,184,194</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> <B>LIABILITIES AND STOCKHOLDERS’ EQUITY</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Floor plan notes payable</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">478,460</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">397,234</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accounts payable</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">47,113</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">38,435</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accrued expenses</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">46,328</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">45,104</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Current portion of long-term debt</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,389</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">24,756</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total current liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">582,290</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">505,529</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Long-term debt</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">218,535</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">288,265</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Other long-term liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">47,647</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">48,750</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> <B>Total Liabilities</B></FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">848,472</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">842,544</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Commitments and contingent liabilities</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> <B>Stockholders’ Equity</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Preferred Stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Common Stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Additional paid-in-capital</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">414,318</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">352,591</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Retained earnings (accumulated deficit)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,545</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,943</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> <B>Total Stockholders’ Equity</B></FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">430,865</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">341,650</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> <B>Total Liabilities and Stockholders’ Equity</B></FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,279,337</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,184,194</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center"> See Notes to Consolidated Financial Statements. <P align="center">F-4 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>UNITED AUTO GROUP, INC.</B> <DIV> </DIV> <!-- link1 "CONSOLIDATED STATEMENTS OF OPERATIONS" --> <DIV align="left"><A NAME="016"></A></DIV> <DIV align="center"> <B>CONSOLIDATED STATEMENTS OF OPERATIONS</B> </DIV> <CENTER> <TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="56%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>(In thousands, except per share amounts)</B></FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> New vehicle sales</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,417,906</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,958,885</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,238,530</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Used vehicle sales</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,040,026</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">922,793</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">589,079</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Finance and insurance</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">165,751</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">127,405</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">74,199</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Service and parts</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">398,834</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">334,064</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">190,785</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total revenues</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,022,517</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,343,147</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,092,593</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Cost of sales</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,473,080</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,887,530</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,816,234</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Gross profit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">549,437</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">455,617</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">276,359</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Selling, general and administrative expenses</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">445,142</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">375,043</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">255,066</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Operating income</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">104,295</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">80,574</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">21,293</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Floor plan interest expense</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(28,676</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(28,718</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(19,297</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Other interest expense</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(29,344</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(31,462</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(14,071</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Other income (expense), net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,571</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,800</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">297</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations before minority interests, income tax (provision) benefit and extraordinary item</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">48,846</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">25,194</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,778</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Minority interests</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(722</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(262</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(138</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Income tax (provision) benefit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(21,414</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,554</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,980</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,710</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13,378</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(7,936</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Income (loss) from discontinued operations, net of income taxes</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(12,940</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(2,204</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Income (loss) before extraordinary item</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,756</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">438</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,140</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Extraordinary item (net of income tax provision of $605 in 1999 and income tax benefit of $859 in 1998)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">732</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,235</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Net income (loss)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,488</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(797</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,140</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Basic income (loss) from continuing operations per common share</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1.10</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.66</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.44</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Basic net income (loss) per common share</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1.14</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.04</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.56</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations per diluted common share</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1.01</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.64</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.44</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Net income (loss) per diluted common share</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1.04</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.04</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.56</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Shares used in computing basic per share data</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">21,950</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20,377</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,227</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Shares used in computing diluted per share data</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,526</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20,932</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,607</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center"> See Notes to Consolidated Financial Statements <P align="center">F-5 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>UNITED AUTO GROUP, INC.</B> <DIV> </DIV> <!-- link1 "CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY" --> <DIV align="left"><A NAME="017"></A></DIV> <DIV align="center"> <B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY</B> </DIV> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="27%"> </TD> <TD width="3%"> </TD> <TD width="2%"> </TD> <TD width="1%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="2%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="2%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="7"></TD> <TD></TD> <TD colspan="7"></TD> <TD></TD> <TD colspan="7"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Class A</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Class B</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Voting and</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Convertible</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Convertible</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Non-voting</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Preferred Stock</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Preferred Stock</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Common Stock</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Additional</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Retained</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Issued</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Issued</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Issued</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Paid-in</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Earnings</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Shares</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Amount</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Shares</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Amount</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Shares</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Amount</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Capital</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>(Deficit)</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Total</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="35"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="35"><FONT size="2"><B>(Dollars in thousands)</B></FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Balances, December 31, 1996</B></FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17,294,928</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">284,502</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">284,501</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of stock for<BR> acquisitions</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,497,218</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,986</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,986</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of stock — exercise of stock options</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">503,000</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">6,706</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">6,706</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Repurchase of common stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(397,000</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(8,821</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(8,821</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Unrealized gain on marketable securities — UAF</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">325</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">325</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net loss</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,140</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,140</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Balances, December 31, 1997</B></FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,898,146</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">310,373</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(9,818</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">300,557</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of stock for<BR> acquisitions</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,683,638</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">39,632</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">39,632</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of stock — exercise of stock options</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">156,600</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,586</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,586</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Unrealized loss on marketable securities — UAF</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(328</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(328</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net loss</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(797</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(797</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Balances, December 31, 1998</B></FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20,738,384</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">352,591</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,943</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">341,650</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of stock for<BR> acquisitions</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,261,327</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(16,210</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(16,210</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of options</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,250</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,250</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Repurchase of common stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(118,000</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(992</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(992</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Issuance of preferred stock and warrants</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7,904</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">397</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">76,679</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">76,679</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,488</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,488</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> <B>Balances, December 31, 1999</B></FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7,904</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">397</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">21,881,711</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">414,318</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,545</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">430,865</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center"> See Notes to Consolidated Financial Statements. <P align="center">F-6 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>UNITED AUTO GROUP, INC.</B> <P align="center"> <B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B> <CENTER> <TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="51%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="6%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>(Dollars in thousands)</B></FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> <B>Operating Activities:</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Net income (loss)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,488</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(797</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,140</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Depreciation and amortization</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">19,131</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,464</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">9,100</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Unusual items</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12,550</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">30,660</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Non-cash compensation expense</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,250</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> (Income) loss from discontinued operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12,940</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,204</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Deferred income taxes</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,007</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,561</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(9,193</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Minority interests</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">722</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">262</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">138</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Changes in operating assets and liabilities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accounts receivable</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,090</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(4,709</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(8,317</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Inventories</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(73,687</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">39,648</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(39,280</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Floor plan notes payable</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">59,371</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(29,587</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">37,210</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accounts payable and accrued expenses</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,690</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">9,138</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Other</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,922</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(9,422</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,474</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net cash provided by operating activities of continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">40,758</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">55,048</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,289</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> <B>Investing Activities:</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Purchase of equipment and improvements</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(22,161</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(12,085</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,915</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Dealership acquisitions</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(28,251</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(138,139</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(139,639</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net cash used in investing activities of continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(50,412</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(150,224</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(151,554</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> <B>Financing Activities:</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Proceeds from borrowings of long-term debt</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">65,000</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">68,400</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">252,999</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Payments of long-term debt and capital leases</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(159,147</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(17,956</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(54,850</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Net proceeds from issuance of common stock, preferred stock and warrants</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">76,679</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,772</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Repurchase of common stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(992</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(8,821</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Deferred financing costs</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(227</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,842</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,689</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Other</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,118</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net cash provided by (used in) financing activities of continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(18,687</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">50,622</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">182,293</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net cash distributed by (invested in) discontinued operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">9,650</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,343</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(21,468</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net increase (decrease) in cash and cash equivalents</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(18,691</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(55,897</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,560</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash and cash equivalents, beginning of year</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">38,538</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">94,435</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">66,875</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash and cash equivalents, end of year</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">19,847</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">38,538</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">94,435</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center">See Notes to Consolidated Financial Statements <P align="center">F-7 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>UNITED AUTO GROUP, INC.</B> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B> <DIV align="center"> <B><I>(Dollars in Thousands, Except Per Share Amounts)</I></B> </DIV> <P align="left"><B>1. Organization and Summary of Significant Accounting Policies</B> <P align="left"> United Auto Group, Inc. (“UAG” or the “Company”) is engaged in the sale of new and used motor vehicles and related products and services, including vehicle service, parts and collision repair, finance and insurance products and other aftermarket products. The Company operates dealerships under franchise agreements with a number of automotive manufacturers. In accordance with the individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of the manufacturers to influence the operations of the dealerships, or the loss of a franchise agreement, could have a negative impact on the Company’s operating results. <P align="left"> As discussed in Note 12, the Company entered into a Securities Purchase Agreement during 1999, pursuant to which it received $83,000 in cash in exchange for the issuance of convertible preferred stock and warrants. Also, as discussed in Note 3, the Company discontinued its auto finance business during 1998. As a result, the Company’s wholly owned subsidiary, United Auto Finance, Inc. (“UAF”), is presented as a discontinued operation in the accompanying financial statements. <P align="left"> As discussed in Note 4, the Company completed a number of acquisitions during the three years in the period ended December 31, 1999. Each of these acquisitions has been accounted for using the purchase method of accounting. As a result, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition. <P align="left"><I>Principles of Consolidation</I> <P align="left"> The consolidated financial statements include all significant majority-owned subsidiaries. All material intercompany accounts and transactions among the consolidated subsidiaries have been eliminated. <P align="left"><I>Cash and Cash Equivalents</I> <P align="left"> Cash and cash equivalents include all highly-liquid investments that have an original maturity of three months or less at the date of purchase. <P align="left"><I>Fair Value of Financial Instruments</I> <P align="left"> Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and debt, including floor plan notes payable. Other than the 11% Senior Subordinated Notes due 2007 (the “Notes”), the carrying amount of financial instruments approximates fair value due either to length of maturity or the existence of variable interest rates that approximate prevailing market rates. The fair value of long-term debt is estimated using discounted cash flows based on the Company’s incremental borrowing rates for similar types of borrowings. As of December 31, 1999, the estimated fair value of the outstanding Notes was $143,667. <P align="left"><I>Revenue Recognition</I> <P align="left"> Revenue is generally recognized when vehicles are delivered to consumers, when motor vehicle service work is performed, or when parts are delivered. Finance and insurance revenues are recognized upon the sale of the finance or insurance contract or other aftermarket products. An allowance for chargebacks against revenue relating to the sale of customer finance contracts or other aftermarket products is established when the related revenue is recognized. <P align="center">F-8 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"><I>Inventory Valuation</I> <P align="left"> Inventories are stated at the lower of cost or market. Cost for new and used vehicle inventories is determined using the specific identification method. Cost for parts, accessories and other inventories is based on factory list prices. <P align="left"><I>Property and Equipment</I> <P align="left"> Property and equipment are recorded at cost and depreciated over estimated useful lives, primarily using the straight-line method. Useful lives for purposes of computing depreciation for assets other than leasehold improvements and equipment under capital lease are between 5 and 10 years. Leasehold improvements and equipment under capital lease are depreciated over the term of the lease or the estimated useful life of the asset, whichever is shorter. <P align="left"> Expenditures relating to recurring repair and maintenance are expensed as incurred. Expenditures that increase the useful life or substantially increase the serviceability of an existing asset are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income. <P align="left"><I>Income Taxes</I> <P align="left"> Deferred tax assets or liabilities are computed based upon the difference between financial reporting and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is provided when it is more likely than not that taxable income will not be sufficient to fully realize deferred tax assets. <P align="left"><I>Intangible Assets</I> <P align="left"> Intangible assets of $494,957, consisting primarily of the excess of cost over the fair value of net assets acquired in purchase business combinations, are being amortized on a straight-line basis over periods not exceeding 40 years. Accumulated amortization at December 31, 1999 amounted to $34,412. Amortization expense for the years ended December 31, 1999, 1998 and 1997 was $12,996, $11,560 and $6,300, respectively. <P align="left"><I>Impairment of Long-Lived Assets</I> <P align="left"> The carrying value of long-lived assets, including intangibles, is reviewed if the facts and circumstances, such as significant declines in revenues, earnings or cash flows or material adverse changes in the business climate, indicate that it may be impaired. The Company performs its review by comparing the carrying amounts of long-lived assets to the estimated undiscounted cash flows relating to such assets. If any impairment in the value of the long-lived assets is indicated, the carrying value of the long-lived assets is adjusted to reflect such impairment calculated based on the discounted cash flows or the fair value of the impaired assets. <P align="left"><I>Defined Contribution Plans</I> <P align="left"> The Company sponsors a number of defined contribution plans covering a significant majority of the Company’s employees. Contributions under these plans are discretionary and typically based on the level of compensation and contributions of plan participants. The Company incurred expenses of $1,315, $600 and $402 relating to such plans during the years ended December 31, 1999, 1998 and 1997, respectively. <P align="left"><I>Estimates</I> <P align="left"> The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and <P align="center">F-9 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts which require the use of significant estimates are accounts receivable, inventories, income taxes, intangible assets, and certain accrued expenses. <P align="left"><I>Advertising</I> <P align="left"> Advertising costs are expensed as incurred. The Company incurred advertising costs of $43,165, $37,318 and $25,075 during the years ended December 31, 1999, 1998 and 1997, respectively. <P align="left"><I>Net Income (Loss) Per Common Share</I> <P align="left"> Income available to common shareholders used in the computation of basic earnings per share data was computed based on income from continuing operations and net income, each as adjusted to reflect accrued dividends relating to outstanding preferred stock. Basic earnings per share data was computed based on the weighted average number of common shares outstanding. Diluted earnings per share data was computed based on the weighted average number of shares of the Company’s common stock (“Common Stock”) outstanding, adjusted for the dilutive effect of stock options, convertible preferred stock and warrants. The 1998 computation of diluted earnings per share also included the dilutive effect of the minimum share price guarantee on 1,040,039 shares of common stock issued in connection with the acquisition of the Young Automotive Group in 1998. <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="69%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="2%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Weighted average number of common shares outstanding</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">21,950</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20,377</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,277</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Effect of stock options, preferred stock and warrants</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,576</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">330</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Effect of minimum share price guarantee</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">478</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Weighted average number of common shares outstanding, including effect of dilutive securities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,526</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20,932</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,607</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"><I>Reclassifications</I> <P align="left"> In order to maintain consistency and comparability of financial information between periods presented, certain reclassifications have been made to the Company’s December 31, 1998 financial statements to conform to the current year presentation. <P align="left"><B>2. Unusual Items</B> <P align="left"> Between January 1, 1997 and October 31, 1998, the Company sold approximately 51,000 warranty and extended service contracts. The repair obligations for these contracts had been contractually assumed by Trace International Holdings, Inc. (“Trace”) and its subsidiary Alpha Automotive, Inc. (“Alpha”). As a result of uncertainty about Trace and Alpha’s ability to perform their contractual obligations, the Company entered into an insurance agreement under which the repair obligations relating to the 51,000 warranty and extended service contracts were assumed by the insurance company in exchange for a fixed premium payable over time. As a result, the Company has no further financial obligations related to these contracts other than to make specified premium payments. During 1998, the Company recorded a $12,550 pre-tax charge which represents the estimated present value of those payments. Trace and Alpha remain liable with respect to the warranty and extended service contracts sold prior to November 1, 1998. Future recoveries from Trace and Alpha will reduce the cost of the insurance agreement. On July 21, 1999, Trace and its subsidiaries filed for protection in the bankruptcy court for the Southern District of New York. The case was converted from a Chapter 11 to a Chapter 7 bankruptcy proceeding on January 24, 2000. As a result, further recoveries from Trace are unlikely. <P align="center">F-10 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> During the fourth quarter of 1997, the Company recorded a $31,660 pre-tax charge. The charge included costs associated with (i) the divestiture of automotive franchises, (ii) the closure of three stand-alone used vehicle satellite locations in Arkansas and the disposal of related inventory, (iii) the implementation of a new policy to more efficiently manage the Company’s working capital invested in retail inventory, (iv) excess real estate, (v) the write-off of non-performing assets and (vi) certain corporate consulting agreements. Costs associated with the pre-tax charge amounting to $9,757 and $20,903 have been reflected in cost of goods sold and selling, general and administrative expenses, respectively, in the consolidated statements of operations. In addition, $1,000 has been reflected in discontinued operations. <P align="left"><B>3. Discontinued Operations</B> <P align="left"> During 1998, the Company discontinued its auto finance business. As a result, UAF no longer engages in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation in the accompanying consolidated statements of operations. In addition, the remaining net assets of UAF have been presented as a non-current asset on the consolidated balance sheets. <P align="left"> Summarized financial information of UAF follows: <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="66%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Revenues</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,482</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,108</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,615</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Income (loss) from operations, net of taxes of $26, $2,089 and $1,531 in 1999, 1998 and 1997, respectively</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3,714</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(2,204</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Loss on disposal, net of taxes of $5,189</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(9,226</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income (loss)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(12,940</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(2,204</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net (income) loss per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.12</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> </TABLE> </CENTER> <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="75%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>As of December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Cash and cash equivalents</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,852</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,615</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Restricted cash</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,009</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Finance assets, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12,883</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,947</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Other assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">429</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">967</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Short-term debt, accrued liabilities and other liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,421</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">9,215</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> The loss on disposal in 1998 consisted of (i) $5,888 relating to contractual commitments, the write-off of certain fixed assets, severance and other administrative expenses, (ii) $3,803 of asset impairment and losses incurred on the sale of loans in private non-securitized transactions, (iii) $3,912 of estimated future costs associated with servicing its securitized portfolio of retail automotive loans and (iv) $812 relating to the write-off of deferred financing fees in connection with the closure of UAF’s warehouse lines. <P align="left"><B>4. Business Combinations</B> <P align="left"> During 1999 and 1998, the Company completed a number of acquisitions. Each of these acquisitions has been accounted for using the purchase method of accounting. As a result, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition. Acquisitions during 1999 were not material. <P align="left"> In January 1998, the Company acquired the Skelton Automotive Group, located in Memphis Tennessee. Consideration for the purchase amounted to $16,500, including $14,700 in cash and $1,800 of seller financed promissory notes. <P align="center">F-11 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> In February 1998, the Company acquired the Young Automotive Group, with operations in Indiana, Illinois, North Carolina, South Carolina and Florida. The aggregate consideration for the acquisition amounted to $84,000, consisting of $50,000 in cash, 1,040,039 shares of UAG Common Stock and $7,000 of seller financed promissory notes. The Company agreed to make a contingent payment in cash or Common Stock to the extent the Common Stock issued in connection with this transaction had an aggregate market value of less than $27,000 on the dates it became freely tradable. In February 1999, the Company settled a portion of this obligation with respect to 444,987 shares by issuing 1,156,689 additional shares of Common Stock. The remaining 595,052 shares became freely tradable in June 1999 and the Company settled its obligation with a cash payment of $8,582. <P align="left"> In February 1998, the Company acquired the Classic Automotive Group in New Jersey. The aggregate consideration for the acquisition was $28,700, consisting of $28,000 in cash and $700 of Common Stock. The Company agreed to make a contingent payment in cash or Common Stock to the extent the Common Stock issued in connection with this transaction had an aggregate market value of less than $759 on the date it became freely tradable. In March 1999, the Company settled its obligation with respect to the share price guarantee by paying $306 in cash. <P align="left"> During the year ended December 31, 1998, the Company also acquired (i) Graceland Dodge, located in Memphis Tennessee, (ii) Pioneer Ford, located in Phoenix Arizona, (iii) a group of dealerships which operated Toyota, Lexus, Dodge and Mazda franchises in San Diego California and (iv) a 70% interest in Citrus Dodge, located in Dade City Florida. The aggregate consideration for such acquisitions amounted to $50,859, consisting of $39,059 in cash, $8,400 of Common Stock and $3,400 of seller financed promissory notes. The Company agreed to make contingent payments in cash to the extent the Common Stock issued in connection with these transactions had an aggregate market value of less than $8,400 in July 1999. The Company settled its obligations with respect to these transactions with cash payments amounting to $4,371. <P align="left"> In addition, the Company has agreed to make a contingent payment in cash to the extent that 375,404 shares of Common Stock issued in connection with an acquisition that took place prior to 1998 have an aggregate market value of less than $9,400. <P align="left"><I>Pro Forma Results of Operations</I> <P align="left"> The following unaudited consolidated pro forma results of operations of the Company for the year ended December 31, 1998 give effect to (i) acquisitions consummated during 1998, (ii) the divestiture of certain dealerships during 1998, (iii) the discontinuation of the Company’s auto finance operations and (iv) the offering of the Notes as if they had occurred on January 1, 1998. <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="82%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="7%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Year Ended</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Revenues</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,520,594</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Income from continuing operations before minority interests and income tax provision</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,371</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14,792</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.71</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center">F-12 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"><B>5. Inventories</B> <P align="left"> Inventories consisted of the following: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="71%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>December 31,</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> New vehicles</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">378,311</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">284,343</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Used vehicles</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">102,332</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">99,411</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Parts, accessories and other</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,646</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,541</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total Inventories</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">508,289</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">410,295</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"><B>6. Property and Equipment</B> <P align="left"> Property and equipment consisted of the following: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="67%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>December 31,</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Furniture, fixtures and equipment</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">30,615</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">30,658</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Equipment under capital lease</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11,328</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7,191</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Leasehold improvements</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">42,531</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">28,048</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Total</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">84,474</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">65,897</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Less: Accumulated depreciation and amortization</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,242</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14,414</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Property and equipment, net</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">68,232</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">51,483</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> Depreciation and amortization expense for the years ended December 31, 1999, 1998 and 1997 was $6,135, $4,904 and $2,800, respectively. Accumulated amortization at December 31, 1999 and 1998 on equipment under capital lease, included in accumulated depreciation and amortization above, amounted to $1,806 and $1,614, respectively. <P align="left"><B>7. Floor Plan Notes Payable</B> <P align="left"> The Company finances its purchases of automobile inventory through floor plan financing arrangements with a variety of lenders. Outstanding borrowings under floor plan financing arrangements amounted to $478,460 and $397,234 as of December 31, 1999 and 1998, respectively. The floor plan agreements grant a security interest in the financed vehicles, as well as the related sales proceeds, and require repayment after a vehicle’s sale. Interest rates on the floor plan agreements are variable and increase or decrease based on movements in prime or LIBOR borrowing rates. Floor plan interest expense for the years ended December 31, 1999, 1998 and 1997 was $28,676, $28,718 and $19,297, respectively. The weighted average interest rate on floor plan borrowings was 7.33%, 7.60% and 8.20% for the years ended December 31, 1999, 1998 and 1997, respectively. <P align="center">F-13 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"><B>8. Long-Term Debt</B> <P align="left"> Long-term debt consisted of the following: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="68%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>December 31,</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Series A and B Senior Subordinated Notes due 2007, less net unamortized discount of $1,044 and $1,572 at December 31, 1999 and 1998, respectively</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">149,956</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">198,428</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Credit Agreement, weighted average interest — 8.97% and 9.24% at December 31, 1999 and 1998, respectively</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">54,580</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">68,400</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Seller financed promissory notes payable through 2002, weighted average interest — 7.23% and 7.53% at December 31, 1999 and 1998, respectively</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12,681</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">28,510</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Term loans, weighted average interest — 7.72% and 8.24% at December 31, 1999 and 1998, respectively</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,014</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,776</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Capitalized lease obligations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7,211</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7,908</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Other</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">482</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,999</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Total long-term debt</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">228,924</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">313,021</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Less: Current portion</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,389</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">24,756</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Net long-term debt</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">218,535</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">288,265</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> Scheduled maturities of long-term debt for each of the next five years and thereafter are as follows: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="83%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> 2000</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,389</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> 2001</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">6,848</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> 2002</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,973</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> 2003</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,268</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> 2004</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">802</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> 2005 and thereafter</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">206,644</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total long-term debt</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">228,924</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> On October 8, 1999, the Company entered into a new credit agreement, dated as of August 3, 1999 as amended (the “Credit Agreement”), which provides for up to $360,000 in revolving loans to be used for acquisitions, working capital, the repurchase of Notes, the repurchase of Common Stock, letters of credit and general corporate purposes. Borrowings under the Credit Agreement bear interest at LIBOR plus 2.00%, other than borrowings to repurchase Notes which bear interest at LIBOR plus 3.00%. Outstanding letters of credit under the Credit Agreement as of December 31, 1999 amounted to $1,600. The Credit Agreement replaced the Company’s previous bank borrowing facility, which was terminated upon the effective date of the Credit Agreement. The Company recorded an extraordinary charge during 1999 of $494 ($0.02 per diluted share), net of income taxes of $396, resulting from the write-off of unamortized deferred financing costs relating to the Company’s previous bank borrowing facility. The Company recorded an extraordinary charge during 1998 of $1,235 ($0.06 per diluted share), net of income taxes of $859, relating to the write-off of unamortized deferred financing costs relating to a previous borrowing facility. <P align="left"> The Credit Agreement contains a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness, repurchase capital stock, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the Company is required to comply with specified ratios and tests, including debt to equity, debt service coverage and minimum working capital covenants. The Credit <P align="center">F-14 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> Agreement also contains typical events of default including change of control, material adverse change and non-payment of obligations. Substantially all of the assets of the Company’s dealerships not subject to security interests granted to floor plan lending sources are subject to security interests granted to lenders under the Credit Agreement. <P align="left"> During 1997, the Company issued $200,000 aggregate principal amount of the Notes. The indentures governing the Notes require the Company to comply with specified debt service coverage ratio levels in order to incur incremental debt. The indentures also contain a provision which requires the Company to offer to purchase all of the then outstanding Notes at a purchase price in cash equal to 101% of their principal amount in the event of a change in control. A change in control will be deemed to have occurred if a purchaser, as defined, beneficially obtains 40% of the voting power, as defined, of the voting stock of the Company. The indentures also limit the Company’s ability to pay dividends based on a formula which takes into account, among other things, the Company’s consolidated net income. The indentures also contain other covenants which restrict the Company’s ability to purchase capital stock, incur liens, sell assets and enter into other transactions. <P align="left"> As of March 22, 2000, the Purchaser (as hereinafter defined) has beneficial ownership in excess of 40.0% of the voting stock of the Company. As a result, the Company plans to make an offer to purchase the outstanding Notes at a change of control redemption price of 101% of par. <P align="left"> During 1999, the Company repurchased and retired $49,000 of the Notes. As a result, the Company recorded an extraordinary gain of $1,226 ($0.04 per diluted share), net of $1,001 of tax. <P align="left"> The Credit Agreement and the Notes are fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries (the “Note Guarantors”). Separate financial information of the Note Guarantors has been omitted because the Company is a holding company with no independent operations. <P align="left"><B>9. Operating Lease Obligations</B> <P align="left"> The Company leases its dealership facilities and administrative offices under non-cancelable operating lease agreements with expiration dates through 2018, including all option periods available to the Company. Minimum future rental payments required under non-cancelable operating leases in effect as of December 31, 1999 follows: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="86%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> 2000</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">33,013</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> 2001</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">32,163</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> 2002</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">30,592</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> 2003</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">28,819</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> 2004</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,564</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> 2005 and thereafter</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">276,966</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">429,117</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> Rent expense for the years ended December 31, 1999, 1998, and 1997 amounted to $29,493, $26,917 and $17,674, respectively. A number of the dealership leases are with former owners who continue to operate the dealerships as employees of the Company. Of the total rental payments, $8,466, $11,140 and $10,911, respectively, were made to related parties during 1999, 1998, and 1997, respectively. <P align="left"><B>10. Related Party Transactions</B> <P align="left"> As noted above, the Company is the tenant under a number of non-cancelable lease agreements with employees of the Company, all of whom are former owners of dealerships purchased by the Company. The <P align="center">F-15 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> terms of these leases were negotiated prior to acquisition and the Company believes all such leases are on terms no less favorable to the Company than would be obtained through arm’s-length negotiations with unaffiliated third parties. <P align="left"> The Company entered into management agreements at certain dealerships for which the closing of the acquisition of such dealerships awaited final manufacturer approval. Pursuant to such management agreements, the Company was paid a monthly fee for managing all aspects of the dealerships’ operations. Aggregate income relating to such management fees of $2,571 and $4,800 for the years ending December 31, 1999 and 1998, respectively, has been included in other income (expense), net in the accompanying consolidated statements of operations. <P align="left"> As discussed in Note 2, the Company was party to an agreement whereby the Company’s exposures with respect to the majority of the extended service contracts sold by UAC during the period from January 1, 1997 through October 31, 1998 were assumed by Trace and Alpha in exchange for certain fees. During the period covered by the agreement, the Company remitted approximately $7,729 to Alpha. Such remittances reflect approximately $10,111 in fees for the assumption of obligations with respect to the 51,000 warranty and extended service contracts, offset by approximately $2,383 of claims payments relating to such contracts. <P align="left"> From time to time, the Company pays and/or receives fees from the Purchaser and its affiliates for services rendered in the normal course of business. These transactions reflect the provider’s cost or an amount mutually agreed upon by both parties. It is the Company’s belief that the payments relating to these transactions are on terms at least as favorable as those which could be obtained from an unrelated third party. Aggregate expense relating to such transactions of $311 for the year ended December 31, 1999 has been reflected in selling, general and administrative expenses in the accompanying financial statements. <P align="left"> From time to time, the Company paid and/or received fees from Trace and its affiliates for services rendered in the normal course of business. The Company no longer engages in such transactions. These transactions reflected the provider’s cost or an amount mutually agreed upon by both parties. It is the Company’s belief that the payments relating to these transactions were on terms at least as favorable as those which would have been obtained from an unrelated third party. Aggregate (income) expense relating to such transactions of $131, $260 and $(2,118) for the years ending December 31, 1999, 1998 and 1997, respectively, has been reflected in selling, general and administrative expenses in the accompanying financial statements. As of December 31, 1999 and 1998, the Company owes $256 and $200, respectively, for such services. <P align="left"><B>11. Stock Compensation Plans</B> <P align="left"> During 1996, the Company’s Board of Directors and stockholders adopted a Stock Option Plan. Under the Stock Option Plan, all full-time employees of the Company and its subsidiaries and affiliates are eligible to participate. During 1999, the Company granted options to purchase 332,790 shares at the fair market value of the Common Stock on the date of the grant. Options granted under the Stock Option Plan have a ten year life and typically vest on a pro-rata basis over periods not in excess of five years. As of December 31, 1999, the aggregate number of shares of Common Stock for which stock options may be granted under the Stock Option Plan may not exceed 2,000,838. As of December 31, 1999, 233,618 shares of Common Stock were available <P align="center">F-16 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> for the grant of options under the Stock Option Plan. Presented below is a summary of the status of stock options held by eligible employees during 1999 and 1998 under the Stock Option Plan: <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="35%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="23"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="23"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="23"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="7"></TD> <TD></TD> <TD colspan="7"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Weighted</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Weighted</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Weighted</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Average</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Average</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Average</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercise</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercise</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercise</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Stock Options</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Shares</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Price</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Shares</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Price</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Shares</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Price</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Options outstanding at beginning of year</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,227,390</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18.06</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,078,975</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18.45</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,026,500</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13.90</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Granted</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">332,790</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7.23</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">492,390</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17.67</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">594,800</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18.98</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Exercised</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">186,600</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11.50</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">503,000</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10.34</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Forfeited</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">78,386</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20.25</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">157,375</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">25.82</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">39,325</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11.41</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Options outstanding at end of year</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,431,794</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15.16</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,227,390</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18.06</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,078,975</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18.45</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> The following table summarizes the status of UAG’s employee stock options outstanding and exercisable at January 1, 2000: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="7%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="7%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="7%"> </TD> <TD width="3%"> </TD> <TD width="6%"> </TD> <TD width="1%"> </TD> <TD width="6%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="7%"> </TD> <TD width="3%"> </TD> <TD width="6%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Weighted</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Average</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Weighted</B></FONT></TD> <TD></TD> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Weighted</B></FONT></TD> </TR> <TR> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Range of</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Stock</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Remaining</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Average</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Stock</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Average</B></FONT></TD> </TR> <TR> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercise</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Options</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Contractual</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercise</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Options</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercise</B></FONT></TD> </TR> <TR> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Prices</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Outstanding</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Life</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Price</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Exercisable</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Price</B></FONT></TD> </TR> <TR> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD align="center" valign="top" nowrap><FONT size="2">$7 to $10</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">490,800</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8.07</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8.07</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">135,440</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10.00</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="center" valign="top" nowrap><FONT size="2">$10 to $22</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">840,994</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7.92</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17.54</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">233,449</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17.58</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="right" valign="top" nowrap><FONT size="2">$30</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">6.75</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">30.00</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,431,794</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">428,889</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> The Company has adopted the disclosure only provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123, <I>Accounting for Stock Based Compensation </I>(“SFAS 123”). Had the Company elected to recognize compensation expense for stock options based on the fair value at the grant dates of awards, net income and earnings per share would have been as follows: <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="64%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">24,516</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12,253</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(8,556</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations per diluted share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.92</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.59</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.47</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income (loss)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">25,294</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,922</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,760</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Net income (loss) per diluted share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.95</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.09</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.59</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> </TABLE> </CENTER> <P align="left"> The weighted average fair value of the Company’s stock options was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants: no dividend yield; expected volatility of 49.7% in 1999 and 30.0% in 1998 and 1997; risk-free interest rate of 8.0% in 1999 and 7.0% in 1998 and 1997; and expected lives of five years. The weighted average fair value of options granted during the years ended December 31, 1999, 1998 and 1997 is $3.85, $6.99 and $4.74 per share, respectively. <P align="left"> In connection with the Securities Purchase Agreement, the Company issued 800,000 options during 1999 to purchase Common Stock with an exercise price of $10.00 per share. The Company recorded $2,250 in compensation expense during 1999 relating to the issuance of such options. <P align="center">F-17 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"><B>12. Stockholders’ Equity</B> <P align="left"> At December 31, 1999 and 1998, the following classes of stock are authorized, issued or outstanding (share amounts in thousands): <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="71%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Series A Preferred Stock, $0.0001 par value; 10 shares authorized, 8 issued and outstanding</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Series B Preferred Stock, $0.0001 par value; 10 shares authorized, 1 issued and outstanding</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Common Stock, $0.0001 par value, 40,000 shares authorized; 21,882 shares issued, including 561 treasury shares, at December 31, 1999; 20,133 shares issued, including 443 treasury shares, at December 31, 1998</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Non-voting Common Stock, $0.0001 par value; 7,125 shares authorized, none issued and outstanding, at December 31, 1999; 1,125 shares authorized, 605 issued and outstanding, at December 31, 1998</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Class C Common Stock, $0.0001 par value, 20,000 shares authorized; none issued and outstanding</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Additional paid-in-capital</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">414,318</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">352,591</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Retained earnings (accumulated deficit)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">16,545</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,943</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total stockholders’ equity</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">430,865</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">341,650</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> On April 12, 1999, the Company and International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. (“IMCG II”), Delaware limited liability companies controlled by Penske Capital Partners, L.L.C. (together, the “Purchaser”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which the Purchaser agreed to purchase (i) an aggregate of 7,903.124 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), (ii) an aggregate of 396.876 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (iii) warrants (the “Warrants”) to purchase (a) 3,898,665 shares of the Company’s voting Common Stock, par value $0.0001 per share (the “Common Stock”), and (b) 1,101,335 shares of the Company’s non-voting Common Stock, par value $0.0001 per share (the “Non-Voting Common Stock”) for $83,000. The shares of Series A Preferred Stock and Series B Preferred Stock entitle the Purchaser to dividends at a rate of 6.5% per year, payable in kind for the first two years, except that IMCG II’s dividends will be paid in shares of Series B Preferred Stock. The Series A Preferred Stock is convertible into an aggregate of 7,903,124 shares of Common Stock and the Series B Preferred Stock is convertible into an aggregate of 396,876 shares of Non-Voting Common Stock. The Warrants are exercisable at a price of $12.50 per share for the thirty months following the date of issuance, and $15.50 per share thereafter until May 2, 2004. <P align="left"> The transaction was consummated in two steps: first, the acquisition of approximately $33,550 of Series A Preferred Stock and, second, the acquisition of approximately $49,450 of Series A Preferred Stock, Series B Preferred Stock and Warrants. The first step of the transaction closed on May 3, 1999. The Series A Preferred Stock issued on May 3, 1999 was subject to mandatory redemption by the Company at the Purchaser’s option under certain circumstances prior to the second closing. On August 3, 1999, the transaction was approved by the Company’s stockholders, after which the second step of the transaction closed. Proceeds from the issuance of the securities pursuant to the Securities Purchase Agreement were used to prepay the remaining $44,400 of term loans and $18,400 of revolving loan commitments outstanding under the Company’s credit agreement, to pay approximately $6,800 of fees incurred in connection with the execution of the Securities Purchase Agreement and fund certain acquisition related costs. <P align="center">F-18 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"><B>13. Income Taxes</B> <P align="left"> The income tax (provision) benefit relating to income (loss) from continuing operations consisted of the following: <CENTER> <TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="60%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Current:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Federal</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(7,091</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(278</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> State and local</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3,352</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3,687</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,879</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Foreign</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(964</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(228</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(53</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total current</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,407</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(4,193</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,932</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Deferred:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Federal</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(9,085</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(4,733</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,149</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> State and local</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(517</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,937</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,763</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Foreign</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(405</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(691</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total deferred</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,007</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(7,361</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,912</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Income tax (provision) benefit relating to continuing operations</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(21,414</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,554</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,980</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> The income tax (provision) benefit relating to income (loss) from continuing operations varied from the U.S. federal statutory income tax rate due to the following: <CENTER> <TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="67%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="2%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD colspan="11"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><FONT size="2"><B>Year Ended December 31,</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="11"><HR size="1"></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Income tax (provision) benefit relating to continuing operations at Federal statutory rate of 35%</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(17,096</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(8,818</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,122</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> State and local income taxes, net of federal benefit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(2,516</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,994</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">496</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Impact of change in effective state rate on temporary differences, net of federal benefit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,641</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Valuation allowance</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,700</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Non-deductible amortization of goodwill</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,330</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,412</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(750</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Revision to estimated liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">903</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Other</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(472</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(292</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">112</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Income tax (provision) benefit relating to continuing operations</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(21,414</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(11,554</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,980</FONT></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center">F-19 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <P align="left"> The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, <I> Accounting for Income Taxes </I>(“SFAS 109”). Under SFAS 109, deferred income taxes reflect the estimated tax effect of temporary differences between assets and liabilities reported for financial accounting purposes and those amounts as measured by tax laws and regulations. The components of deferred tax assets and liabilities at December 31, 1999 and 1998 were as follows: <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="70%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> <B>Deferred Tax Assets</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Net operating loss carryforwards</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,105</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,387</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accrued liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,534</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,940</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Partnership investments</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">346</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">866</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Capital loss carryforwards</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,007</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,990</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Sale of finance receivables and other items</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,913</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,527</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Issuance of compensatory stock options</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">810</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Other</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,013</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,423</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Total deferred tax assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11,728</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">22,133</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Valuation allowance</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,490</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,490</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net deferred tax assets</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,238</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">20,643</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> <B>Deferred Tax Liabilities</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Depreciation and amortization</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(15,679</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,236</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total deferred tax liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(15,679</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10,236</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net deferred tax assets (liabilities)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(5,441</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10,407</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"> At December 31, 1999, the Company has $41,776 of state net operating loss carryforwards that expire at various dates through 2019. <P align="left"><B>14. Supplemental Cash Flow Information</B> <P align="left"> The following table presents supplementary cash flow information: <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="65%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1998</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1997</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Cash paid interest</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">28,397</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">26,683</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,016</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Cash paid income taxes</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">9,587</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,234</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,321</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Non-cash financing and investing activities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Dealership acquisition costs financed by issuance of stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">36,100</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">28,150</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Dealership acquisition cost financed by long-term debt</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">12,200</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">27,104</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="left"><B>15. Summary of Quarterly Financial Data (Unaudited)</B> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="50%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="5%"> </TD> <TD width="1%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>First</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Second</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Third</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Fourth</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> </TR> <TR> <TD align="center" nowrap colspan="2"><FONT size="2"><B>Statements of Operations Data(1)(2):</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> <B>1999</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total revenues</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">904,732</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,043,598</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,085,366</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">988,821</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Gross profit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">124,758</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">141,832</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">146,484</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">136,363</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Income from continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,698</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,620</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,969</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,423</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net income</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3,698</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,620</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">9,317</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,853</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Income from continuing operations per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.16</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net income per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.16</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center">F-20 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>UNITED AUTO GROUP, INC.</B> </DIV> <P align="center"> <B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued </B> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="54%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>First</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Second</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Third</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Fourth</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Quarter</B></FONT></TD> </TR> <TR> <TD align="center" nowrap colspan="2"><FONT size="2"><B>Statements of Operations Data(1)(2):</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> <B>1998(4)</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total revenues</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">711,709</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">896,419</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">897,006</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">838,013</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Gross profit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">96,515</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">121,092</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">128,591</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">109,419</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,291</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,027</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,060</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(5,000</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net income (loss)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,064</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,193</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8,227</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(18,281</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Income (loss) from continuing operations per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.39</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.39</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.22</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Net income (loss) per diluted common share</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.05</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.40</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">0.40</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(0.81</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> </TABLE> </CENTER> <DIV align="left"> <HR size="1" width="31%" align="left"> </DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="4%"></TD> <TD width="96%"></TD> </TR> <TR valign="top"> <TD>(1) </TD> <TD align="left"> As discussed in Note 3, the results of UAF have been recorded as discontinued operations.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(2) </TD> <TD align="left"> As discussed in Note 8, the Company recorded an extraordinary gain of $320 in the third quarter of 1999, an extraordinary gain of $412 in the fourth quarter of 1999 and an extraordinary loss of $1,235 in the first quarter of 1998.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(3) </TD> <TD align="left"> As discussed in Note 2, the Company recorded a $12,550 charge during the fourth quarter of 1998.</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(4) </TD> <TD align="left"> Includes the results of the Skelton Group, the Young Group, the Classic Group, Graceland Dodge, Pioneer Ford, the San Diego dealerships and Citrus Dodge from their respective dates of acquisition.</TD> </TR> </TABLE> <P align="left"> The net income (loss) per common share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year net income (loss) per common share amounts. <P align="center">F-21 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>Exhibit Index</B> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="24%"> </TD> <TD width="3%"> </TD> <TD width="73%"> </TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Exhibit</B></FONT></TD> <TD></TD> <TD></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Number</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Description</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 3.1(l)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Certificate of Amendment of Certificate of Incorporation of the Company dated August 3, 1999</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 3.2(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Restated Bylaws</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Specimen Common Stock Certificate</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.2(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Indenture, dated as of July 23, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including form of Note and Guarantee</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.4(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Indenture, dated as of September 16, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including from of Series B Note and Guarantee</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 4.5(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Certificate of Designation of Series A Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on April 30, 1999</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholders Agreement, dated as of May 3, 1999, by and among AIF II, L.P., Aeneas Venture Corporation, International Motor Cars Group I, L.L.C., International Motor Cars Group II, L.L.C., Trace International Holdings, Inc., and the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Registration Rights Agreement, dated as of October 15, 1993, among the Company and the investors listed therein, as amended July 31, 1996</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.4(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Warrant</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.8(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Option Plan of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.8.1(i)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Amendment to Stock Option Plan of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.11(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Letter, dated July 24, 1996, between the Company and Toyota Motor Sales U.S.A., Inc.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.13(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Non-employee Director Compensation Plan of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.14(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Agreement among the Company, certain of its affiliates and American Honda Motor Co., Inc.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.15(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Option Certificate of the Company in favor of Samuel X. DiFeo and Joseph C. DiFeo</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.18(d)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consulting Agreement, dated March 3, 1997, between the Company and Carl Spielvogel</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.19.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.19.2(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> First Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.1.19.3(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Second Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Non-Competition and Standstill Agreement, dated as of April 12, 1999 by and between Marshall S. Cogan and the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Honda Automobile Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.2(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Lexus Dealer Agreement, including Standard Provisions</FONT></TD> </TR> </TABLE> </CENTER> <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="24%"> </TD> <TD width="3%"> </TD> <TD width="73%"> </TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Exhibit</B></FONT></TD> <TD></TD> <TD></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Number</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Description</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.3(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Mitsubishi Dealer Sales and Services Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.4(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> BMW of North America, Inc., Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.5(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Suzuki Term Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.6(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Toyota Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.7(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> General Motors Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.9(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Nissan Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.10(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Chrysler Corporation Term Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.15(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Hyundai Motor America Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.21 and 22(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Isuzu Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.2.26(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Settlement Agreement, dated as of October 3, 1996, among the Company and certain of its affiliates, on the one hand, and Samuel X. DiFeo, Joseph C. DiFeo and certain of their affiliates, on the other hand</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.3(l)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Option Agreement, dated as of August 3, 1999, between the Company and Roger S. Penske</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.3.1(g)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Ford Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.4(l)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Option Agreement, dated as of August 3, 1999 between the Company and Marshall S. Cogan</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.4.5(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Employment Agreement, dated as of August 1, 1995, between Landers Auto Sales, Inc., and Steve Landers</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.5.13(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Employment Agreement, dated as of January 16, 1996, among the Company, UAG Atlanta, Inc. and John Smith</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.1(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated as of June 6, 1996, among the Company, UAG West, Inc., Scottsdale Jaguar, LTD., SA Automotive, LTD., SL Automotive, LTD., SPA Automotive, LTD., LRP, LTD., Sun BMW, LTD., Scottsdale Management Group, LTD., 6725 Dealership LTD., and certain parties named therein, as amended on October 21, 1996 by Amendment No. 1, Amendment No. 2 and Amendment No. 3</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.3(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Form of Employment Agreement between the Company, UAG West, Inc., and Steven Knappenberger</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.5(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Audi Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.6(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Acura Automobile Dealer Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.8(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Porsche Sales and Service Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.9(b)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Land Rover North America, Inc. Dealer Agreement, including Standard Provisions</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.8.21(e)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Rolls-Royce Dealer Agreement</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.11.1(c)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Agreement and Plan of Merger, dated December 16, 1996, among Crown Jeep Eagle, Inc., Berylson, Inc., Shannon Automotive, Ltd., Kevin J. Coffey, Paul J. Rhodes, the Company, UAG Texas, Inc., and UAG Texas II, Inc.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.13.1(d)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated February 19, 1997, among the Company, UAG East, Inc., Amity Auto Plaza, Ltd., Massapequa Imports Ltd., Westbury Nissan Ltd., Westbury Superstore Ltd., J&S Auto Refinishing Ltd., Florida Chrysler Plymouth Jeep Eagle Inc., Palm Auto Plaza, Inc., West Palm Infiniti Inc., West Palm Nissan Inc., Northlake Auto Finish Inc., John A. Staluppi and John A. Staluppi, Jr., as amended April 7, 1997 and April 30, 1997</FONT></TD> </TR> </TABLE> </CENTER> <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="24%"> </TD> <TD width="3%"> </TD> <TD width="73%"> </TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Exhibit</B></FONT></TD> <TD></TD> <TD></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Number</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Description</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.15.1(e)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated April 12, 1997, among the Company, Gene Reed Chevrolet, Inc., Michael Chevrolet–Oldsmobile, Inc., Reed-Lallier Chevrolet, Inc., Gene Reed, Jr., Michael L. Reed, Michael G. Lallier, Deborah B. Lallier, John P. Jones, Charles J. Bradshaw, Charles J. Bradshaw, Jr., Julia D. Bradshaw and William B. Bradshaw, as amended May 31, 1997</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.18.1(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated July 25, 1997 among the Company, UAG Classic, Inc., Classic Auto Group, Inc., Cherry Hill Classic Cars, Inc., Classic Enterprises, Inc., Classic Buick, Inc., Classic Chevrolet, Inc., Classic Management, Inc., Classic Turnersville, Inc., Classic Imports, Inc., and Thomas J. Hessert, Jr. (as amended)</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.1(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stock Purchase Agreement, dated as of September 25, 1997 among the Company, UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.2(f)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Agreement and Plan of Merger, dated as of September 25, 1997 among the Company, UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.3(h)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Amendment to Stock Purchase Agreement, dated January 31, 1998, between and among United Auto Group, Inc., UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.19.1.4(h)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Amendment to Agreement and Plan of Merger, dated January 31, 1998, between and among United Auto Group, Inc., UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Kissimmee Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.1(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Securities Purchase Agreement, dated as of April 12, 1999, among the Company and International Motorcars Group I, L.L.C., and International Motor Cars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.2(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholder Voting Agreement, dated April 12, 1999, between Trace International Holdings, Inc., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.3(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholder Voting Agreement, dated April 12, 1999, between Aeneas Venture Corporation, International Motorcars Group I, L.L.C. and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.4(j)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Stockholder Voting Agreement, dated April 12, 1999, between AIF II, L.P., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.20.7(k)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Registration Rights Agreement, dated as of May 3, 1999, by and among the Company, International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.21(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Severance Agreement, dated May 3, 1999 between the Company and Robert Nelson.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.22(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Severance Agreement, dated August 2, 1999 between the Company and James Davidson.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 10.23(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Letter Agreement dated August 3, 1999 between the Company and Samuel X. DiFeo.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 21.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Subsidiaries of the Company</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 23.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consent of PricewaterhouseCoopers, LLP</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 23.2(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Consent of Deloitte & Touche, LLP</FONT></TD> </TR> </TABLE> </CENTER> <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="24%"> </TD> <TD width="3%"> </TD> <TD width="73%"> </TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Exhibit</B></FONT></TD> <TD></TD> <TD></TD> </TR> <TR> <TD align="center" nowrap><FONT size="2"><B>Number</B></FONT></TD> <TD></TD> <TD align="center" nowrap><FONT size="2"><B>Description</B></FONT></TD> </TR> <TR> <TD align="center" nowrap><HR size="1"></TD> <TD></TD> <TD align="center" nowrap><HR size="1"></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.1(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> December 31, 1999 Financial Data Schedule</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.2(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> September 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.3(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> June 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.4(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 31, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.5(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> December 31, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.6(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> September 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.7(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> June 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.8(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> March 31,1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> <TR> <TD align="right" valign="top"><FONT size="2"> 27.9(a)</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> December 31, 1997 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.</FONT></TD> </TR> </TABLE> </CENTER> <DIV align="left"> <HR size="1" width="31%" align="left"> </DIV> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="97%"></TD> </TR> <TR valign="top"> <TD>(a)</TD> <TD align="left"> Filed herewith</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(b)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Registration Statement on Form S-1, Registration No. 333-09429</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(c)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on December 24, 1996, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(d)</TD> <TD align="left"> Incorporated herein by reference to the identically number exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(e)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(f)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(g)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(h)</TD> <TD align="left"> Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on February 20, 1998, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(i)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(j)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on April 15, 1999, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(k)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 10, 1999, File No. 001-12297</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD>(l)</TD> <TD align="left"> Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on August 13, 1999, File No. 001-12297</TD> </TR> </TABLE> <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="4%"></TD> <TD width="93%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD>(d) </TD> <TD align="left"> Schedules — No Financial Statement Schedules are required to be filed as part of this Annual Report on Form 10-K.</TD> </TR> </TABLE> </BODY> </HTML>