AutoNation 2006 Annual Report Download - page 34

Table of Contents
tender offer, (2) purchase $309.4 million aggregate principal of our 9% senior unsecured notes for an aggregate total consideration of
$339.8 million pursuant to our debt tender offer and consent solicitation, and (3) pay related financing costs. Approximately
$34.5 million of tender premium related to our debt tender offer and other financing costs was expensed during 2006.
During 2006, we repaid $37.7 million of the outstanding balance under a mortgage facility with an automotive manufacturer’s
captive finance subsidiary. At December 31, 2006, we had $116.0 million outstanding under this mortgage facility, which bears interest
at LIBOR-based interest rates and is secured by mortgages on certain of our stores properties.
We had no repurchases of our common stock during the first quarter of 2006. In April 2006, we purchased 50 million shares of our
common stock at $23 per share for an aggregate purchase price of $1.15 billion pursuant to our equity tender offer. After the completion
of the equity tender offer, we repurchased an additional 11.2 million shares of our common stock for a purchase price of $228.9 million
during the remainder of 2006, for a total of 61.2 million shares repurchased for an aggregate purchase price of $1.38 billion in 2006.
There is approximately $92.4 million available for share repurchases authorized by our Board of Directors as of December 31, 2006.
Future share repurchases are subject to limitations contained in the indenture relating to our new senior notes. While we expect to
continue repurchasing shares in the future, the decision to make additional share repurchases will be based on such factors as the market
price of our common stock, the potential impact on our capital structure and the expected return on competing uses of capital such as
strategic store acquisitions and capital investments in our current businesses.
Our new senior notes, amended credit agreement and mortgage facility contain numerous customary financial and operating
covenants that place significant restrictions on us. See Note 7, Notes Payable and Long-Term Debt, of the Notes to the Consolidated
Financial Statements for further information. As of December 31, 2006, we were in compliance with the requirements of all applicable
financial and operating covenants.
In the event of a downgrade in our credit ratings, none of the covenants described in Note 7 of the Notes to the Consolidated
Financial Statements would be impacted. In addition, availability under the revolving credit facility described above would not be
impacted should a downgrade in the senior unsecured credit ratings occur. Certain covenants in the indenture for the new senior notes
would be eliminated with certain upgrades of the new senior notes to investment grade by either Standard and Poor’s or Moody’s Investor
Service.
At December 31, 2006 and 2005, vehicle floorplan payable-trade totaled $2.0 billion and $2.3 billion, respectively. Vehicle floorplan
payable-trade reflects amounts borrowed to finance the purchase of specific vehicle inventories with manufacturers’ captive finance
subsidiaries. Vehicle floorplan payable-non-trade totaled $233.9 million and $102.2 million, at December 31, 2006 and 2005,
respectively, and represents amounts payable borrowed to finance the purchase of specific vehicle inventories with non-trade lenders. All
the floorplan facilities are at LIBOR-based rates of interest. Secured floorplan facilities are used to finance new vehicle inventories and the
amounts outstanding thereunder are due on demand, but are generally paid within several business days after the related vehicles are sold.
Floorplan facilities are primarily collateralized by new vehicle inventories and related receivables. Our manufacturer agreements generally
require that the manufacturer have the ability to draft against the floorplan facilities so that the lender directly funds the manufacturer for
the purchase of inventory. The floorplan facilities contain certain operational covenants. At December 31, 2006, we were in compliance
with such covenants in all material respects. At December 31, 2006, aggregate capacity under the floorplan credit facilities to finance new
vehicles was approximately $3.6 billion, of which $2.3 billion total was outstanding.
Cash Flows
Cash and cash equivalents increased (decreased) by $(193.5) million, $134.9 million and $(68.5) million during the years ended
December 31, 2006, 2005 and 2004, respectively. The major components of these changes are discussed below.
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