AutoNation 2006 Annual Report Download - page 39

Table of Contents
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, and we set forth this statement and these risk factors in
order to comply with such safe harbor provisions. 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 automotive retailing industry is sensitive to changing economic conditions and various other factors. Our business and
results of operations are substantially dependent on new vehicle sales levels in the United States and in our particular geographic
markets and the level of gross profit margins that we can achieve on our sales of new vehicles, all of which are very difficult to
predict.
• Our new vehicle sales are impacted by the consumer incentive and marketing programs of vehicle manufacturers.
• Natural disasters and adverse weather events can disrupt our business.
• We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our
business, financial condition, results of operations, cash flows and prospects, including our ability to acquire additional stores.
• We are subject to numerous legal and administrative proceedings, which, if the outcomes are adverse to us, could materially
adversely affect our business, results of operations, financial condition, cash flows and prospects.
• Our operations, including, without limitation, our sales of finance and insurance and vehicle protection products, are subject to
extensive governmental laws, regulation and scrutiny. If we are found to be in violation of, or subject to liabilities under, any of
these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, operating
results and prospects could suffer.
• Our ability to grow our business may be limited by our ability to acquire automotive stores on favorable terms or at all.
• We are subject to interest rate risk in connection with our floorplan notes payable, revolving credit facility, term loan facility,
mortgage facility and floating rate senior unsecured notes that could have a material adverse effect on our profitability.
• Our revolving credit facility, term loan facility, mortgage facility and the indentures relating to our new senior unsecured notes
contain certain restrictions on our ability to conduct our business.
• Our substantial indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our
debt service obligations. We may still be able to incur more debt, intensifying these risks.
• Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our intangible assets for
impairment at least annually, which may result in a material, non-cash write-down of goodwill or franchise rights and could have
a material adverse impact on our results of operations and shareholders’ equity.
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