AutoNation 2006 Annual Report Download - page 12

Table of Contents
relations functions in addition to his role as General Counsel. Mr. Ferrando joined our Company in July 1996 and served in various
capacities within our company, including as Senior Vice President and General Counsel of our Automotive Retail Group from March
1998 until January 2000. Prior to joining our company, Mr. Ferrando was a corporate attorney with Skadden, Arps, Slate, Meagher &
Flom from 1991 until 1996.
has served as our Senior Vice President — Sales since October 2005 and as our Senior Vice President —
Finance and Insurance and Fixed Operations from May 2003 until September 2005. From 2001 until May 2003, Mr. Westfall served as
our Senior Vice President — Finance and Insurance. Previously, he served as President of our former wholly-owned captive finance
company, AutoNation Financial Services, from 1997 through 2001. He is also the former President of BMW Financial Services for
North America.
 RISK FACTORS
Our business, financial condition, results of operations, cash flows and prospects, and the prevailing market price and
performance of our common stock, may be adversely affected by a number of factors, including the matters discussed below. Certain
statements and information set forth in this Annual Report on Form 10-K, as well as other written or oral statements made from time to
time by us or by our authorized officers on our behalf, constitute “forward-looking statements” within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. We intend for our forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should note that our forward-looking
statements speak only as of the date of this Annual Report on Form 10-K or when made and we undertake no duty or obligation to update
or revise our forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the
expectations, plans, intentions and projections reflected in our forward-looking statements are reasonable, such statements are subject to
known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The
risks, uncertainties and other factors that our stockholders and prospective investors should consider include, but are not limited to, the
following:
We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which
we hold franchises.
The success of our stores is dependent on vehicle manufacturers in several key respects. First, we rely exclusively on the various
vehicle manufacturers for our new vehicle inventory. Our ability to sell new vehicles is dependent on a vehicle manufacturer’s ability to
produce and allocate to our stores an attractive, high quality and desirable product mix at the right time in order to satisfy customer
demand. Second, manufacturers generally support their franchisees by providing direct financial assistance in various areas, including,
among others, inventory financing assistance and advertising assistance. Third, manufacturers provide product warranties and, in some
cases, service contracts, to customers. Our stores perform warranty and service contract work for vehicles under manufacturer product
warranties and service contracts, and direct bill the manufacturer as opposed to invoicing the store customer. At any particular time, we
have significant receivables from manufacturers for warranty and service work performed for customers. In addition, we rely on
manufacturers to varying extents for original equipment manufactured replacement parts, training, product brochures and point of sale
materials, and other items for our stores.
The core brands of vehicles that we sell, representing more than 90% of the number of new vehicles that we sold in 2006, are
manufactured by Ford, General Motors, DaimlerChrysler, Toyota, Nissan, Honda and BMW. In particular, our General Motors
Corporation and Ford Motor Company stores represented over 33% of our new vehicle revenue in 2006. We are subject to a concentration
of risk in the event of financial distress, including potential bankruptcy, of a major vehicle manufacturer such as General Motors or
Ford. In the event of such a bankruptcy, among other things, (i) the manufacturer could attempt to terminate all or certain of our
franchises, and we may not receive adequate compensation for them, (ii) we may not be able to collect some or all of our significant
receivables that are due from such manufacturers and we may be subject to preference claims relating to payments made by
manufacturers prior to bankruptcy, (iii) we may not be able to obtain financing for our new vehicle inventory, or arrange financing for
our customers for their vehicle purchases and leases, with the manufacturer’s
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