AutoNation 2006 Annual Report Download - page 60

Table of Contents
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these leases are approximately $80 million at December 31, 2006. The Company and its subsidiaries also may be called on to perform
other obligations under these leases, such as environmental remediation of the leased premises or repair of the leased premises upon
termination of the lease, although the Company presently has no reason to believe that it or its subsidiaries will be called on to so perform
and such obligations cannot be quantified at this time. The Company’s exposure under these leases is difficult to estimate and there can
be no assurance that any performance of the Company or its subsidiaries required under these leases would not have a material adverse
effect on the Company’s business, financial condition and cash flows.
At December 31, 2006, surety bonds, letters of credit and cash deposits totaled $124.9 million, including $92.3 million of letters of
credit. In the ordinary course of business, the Company is required to post performance and surety bonds, letters of credit, and/or cash
deposits as financial guarantees of the Company’s performance. The Company does not currently provide cash collateral for outstanding
letters of credit.
In the ordinary course of business, the Company is subject to numerous laws and regulations, including automotive,
environmental, health and safety and other laws and regulations. The Company does not anticipate that the costs of such compliance will
have a material adverse effect on its business, consolidated results of operations, cash flows or financial condition, although such
outcome is possible given the nature of the Company’s operations and the extensive legal and regulatory framework applicable to its
business. The Company does not have any material known environmental commitments or contingencies.
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A summary of yearly repurchase activity follows:
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2006 61.2 $ 1,380.6
2005 11.8 $ 237.1
2004 14.1 $ 236.8
As discussed in Note 7 to the Notes to the Consolidated Financial Statements, the Company purchased 50 million shares of its
common stock at $23 per share for an aggregate purchase price of $1.15 billion pursuant to an equity tender offer in April 2006. After the
completion of the equity tender offer, the Company repurchased an additional 11.2 million shares of its 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 the Company’s Board of
Directors as of December 31, 2006. Future share repurchases are subject to limitations contained in the indenture relating to the
Company’s senior unsecured notes.
In 2006 and 2004, the Company’s Board of Directors authorized the retirement of 50 million and 20 million treasury shares,
respectively, which assumed the status of authorized but unissued shares. This had the effect of reducing treasury stock and issued
common stock, which includes treasury stock. The Company’s outstanding common stock, net of treasury stock, was not impacted by
the treasury share retirements. The Company’s common stock, additional paid-in capital and treasury stock accounts have been adjusted
accordingly. There was no impact to shareholders’ equity.
The Company has 5 million authorized shares of preferred stock, par value $.01 per share, none of which are issued or
outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights,
preferences and dividends.
During 2006, 2005 and 2004, proceeds from the exercise of stock options were $75.7 million, $112.8 million and $94.2 million,
respectively.
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