AutoNation 2015 Annual Report Download

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
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

(Mark One)
þ
For the fiscal year ended December 31, 2015
or
¨
For the transition period from ________ to ________
Commission File Number: 

(Exact name of registrant as specified in its charter)

(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)


(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Common Stock, Par Value $0.01 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No þ
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. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the new registrant was required to submit
and post such files). Yes þ No ¨
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 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. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filerandsmaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
As of June 30, 2015, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $4.8 billion based on the closing price of the
common stock on the New York Stock Exchange on such date (for the purpose of this calculation, the registrant assumed that each of its directors, executive officers, and greater than
10% stockholders was an affiliate of the registrant as of June 30, 2015).
As of February 8, 2016, the registrant had 107,224,827 shares of common stock outstanding.

Portions of the registrant’s Proxy Statement relating to its 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended
December 31, 2015 are incorporated herein by reference in Part III.

Table of contents

  • Page 1
    ... 200 SW 1st Tve Fort Lauderdale, Florida (Address of principal executive offices) (954) 769-6000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, Par Value $0.01 Per Share Securities registered pursuant...

  • Page 2
    ... III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services PTRT IV...

  • Page 3
    ... new vehicle brands: Domestic Buick Cadillac Chevrolet Chrysler Dodge Ford GMC Jeep Lincoln Ram Acura Fiat Honda Hyundai Infiniti Mazda Mitsubishi Import Nissan Scion Subaru Toyota Volkswagen Volvo Premium Luxury Alfa Romeo Audi Bentley BMW Jaguar Land Rover Lexus Maserati Mercedes-Benz Mini...

  • Page 4
    ... and expanding our market share. Our Domestic and Import stores are branded nationally under the AutoNation retail brand, which enables us to leverage our advertising efforts and digital channels to market our stores, new and used vehicle inventory, and parts and service business. We continue...

  • Page 5
    ...retail sale in our parts and service departments. In 2015, we implemented a policy not to retail any new or used vehicle that has an open safety recall. Used vehicles that we do not sell at our stores generally are sold at wholesale prices through auctions. See also "Inventory Management" in Part II...

  • Page 6
    ...December 31, 2015: New Vehicle Revenues (in millions) Domestic: Ford, Lincoln Chevrolet, Buick, Cadillac, GMC Chrysler, Dodge, Jeep, Ram Domestic Total Import: Toyota Honda Nissan Other Import Import Total Premium Luxury: Mercedes-Benz BMW Lexus Audi Other Premium Luxury Premium Luxury Total $ 1,643...

  • Page 7
    ... relating to our management, operation, advertising and marketing, and acquisition and ownership structure of automotive stores franchised by such manufacturers. These agreements contain certain requirements pertaining to our operating performance (with respect to matters such as sales volume, sales...

  • Page 8
    ... finance companies, participating in automotive financing. The Dodd-Frank Act also provided the Federal Trade Commission (the "FTC") with new and expanded authority regarding automotive dealers, and the FTC has implemented an enforcement initiative relating to the advertising practices of automotive...

  • Page 9
    ...used vehicle dealers in the United States. We face competition from (i) several public companies that operate numerous automotive retail stores on a regional or national basis, including franchised dealers that sell new and used vehicles as well as non-franchised dealers that sell only used vehicles...

  • Page 10
    ...regions of the United States where stores may be subject to adverse winter conditions. However, we typically experience higher sales of Premium Luxury vehicles, which have higher average selling prices and gross profit per vehicle retailed, in the fourth quarter. Revenue and operating results may be...

  • Page 11
    ...,140 Name Mike Jackson Jonathan P. Ferrando Tge 67 50 Position Chairman of the Board, Chief Executive Officer and President Executive Vice President - General Counsel, Corporate Development and Human Resources Executive Vice President and Chief Operating Officer Executive Vice President and Chief...

  • Page 12
    ... Vice President, Franchise Operations, and in February 2015, she assumed responsibility for our corporate real estate function. Prior to joining AutoNation in 1998, Ms. Parlapiano held finance, marketing, and strategic management positions with Ford Motor Company. Tvailable Information Our website...

  • Page 13
    ... that we sell, representing approximately 95% of the new vehicles that we sold in 2015, are manufactured by Toyota (including Lexus), Ford, Honda, Nissan, General Motors, Mercedes-Benz, FCA US (formerly Chrysler), BMW, and Volkswagen (including Audi and Porsche). We are subject to a concentration...

  • Page 14
    ...operate, and to attract consumers to our own digital channels. Consumers are increasingly shopping for new and used vehicles, automotive repair and maintenance services, and other automotive products and services online and through mobile applications, including through third-party online and mobile...

  • Page 15
    ... respect to sales volume, sales effectiveness, and customer satisfaction, and can influence our ability to acquire additional stores, the naming and marketing of our stores, the operations of our e-commerce sites, our selection of store management, product stocking and advertising spending levels...

  • Page 16
    ... initiative relating to the advertising practices of automotive dealers. In March 2013, the CFPB issued supervisory guidance highlighting its concern that the practice of automotive dealers being compensated for arranging customer financing through discretionary markup of wholesale rates offered...

  • Page 17
    ...finance and insurance business and results of operations. Additionally, the Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010, has increased our annual employee health care costs and cost of compliance, as well as compliance risks related to offering health care...

  • Page 18
    ... of operations, prospects, and ability to satisfy our debt service obligations. We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, and commercial paper program that could have a material adverse effect on our profitability. Our vehicle...

  • Page 19
    ... the following 15 states: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Minnesota, Nevada, Ohio, Tennessee, Texas, Virginia, and Washington. These facilities consist primarily of automobile showrooms, display lots, service facilities, collision repair centers, supply...

  • Page 20
    ... storage lots, parking lots, and offices. We...employment-related lawsuits, and actions brought by governmental authorities. Some of these lawsuits purport or may be determined to be class or collective actions... results of operations, financial condition, cash flow, and prospects. ITEM 4. ...

  • Page 21
    ... Total for twelve months ended December 31, 2015 (1) Total Number of Shares Purchased 432,300 285 - 432,585 3,922,856 $ $ $ Tverage Price Paid Per Share 60.15 63.50 - Total Number of Shares Purchased as Part of Publicly Tnnounced Plans or Programs (1) 432,300 Our Board of Directors from time to...

  • Page 22
    ...The Public Auto Retail Peer Group consists of Asbury Automotive Group, Inc., CarMax, Inc., Group 1 Automotive, Inc., Lithia Motors, Inc., Penske Automotive Group, Inc., and Sonic Automotive, Inc., and these companies are weighted by market capitalization. We have created these comparisons using data...

  • Page 23
    ... Common shares outstanding, net of treasury stock Consolidated Balance Sheets Data: Total assets Long-term debt, net of current maturities Shareholders' equity Retail vehicle unit sales (continuing operations): New vehicle Used vehicle Total (1) 2015 $ $ $ $ 20,862.0 814.8 722.7 442.6 $ $ $ $ 2014...

  • Page 24
    ...in 2015, are manufactured by Toyota (including Lexus), Ford, Honda, Nissan, General Motors, Mercedes-Benz, FCA US (formerly Chrysler), BMW, and Volkswagen (including Audi and Porsche). We offer a diversified range of automotive products and services, including new vehicles, used vehicles, "parts and...

  • Page 25
    ...and Import stores. We expect that finance and insurance revenue and gross profit will benefit from sales of the AutoNation VPP. In 2015, we implemented a policy not to retail any new or used vehicle that has an open safety recall. We generally expect to receive the parts necessary to repair vehicles...

  • Page 26
    ..., 2014. See "New Vehicle Inventories" below for more information. We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. Used vehicles that are not sold on a retail basis are generally...

  • Page 27
    ...values and incremental direct costs to transact a sale. The fair value measurements for our long-lived assets held for sale were based on Level 3 inputs, which considered information obtained from third-party real estate valuation sources, or, in certain cases, pending agreements to sell the related...

  • Page 28
    ... at December 31, 2015, and $84.9 million at December 31, 2014. Chargebacks are influenced by the volume of vehicle sales in recent years and increases or decreases in early termination rates resulting from cancellation of vehicle service contracts and other vehicle protection products, defaults...

  • Page 29
    ... of new and used vehicles, sales of parts and services, commissions from finance and insurance products, and sales of other products. We recognize revenue in the period in which products are sold or services are provided. We recognize vehicle and finance and insurance revenue when a sales contract...

  • Page 30
    ... Wholesale Used vehicle Finance and insurance, net Total variable operations(1) Parts and service Other Total revenue Gross profit: New vehicle Retail used vehicle Wholesale Used vehicle Finance and insurance Total variable operations(1) Parts and service Other Total gross profit Selling, general...

  • Page 31
    ... revenue: Gross profit: New vehicle Used vehicle-retail Parts and service Total Selling, general, and administrative expenses Operating income Other operating items as a percentage of total gross profit: Selling, general, and administrative expenses Operating income 69.4 26.8 December 31, 2015 Days...

  • Page 32
    ...Gross profit: New vehicle Retail used vehicle Wholesale Used vehicle Finance and insurance Total variable operations(1) Parts and service Other Total gross profit Retail vehicle unit sales: New vehicle Used vehicle Total Revenue per vehicle retailed: New vehicle Used vehicle Gross profit per vehicle...

  • Page 33
    ..., 2015 (%) Revenue mix percentages: New vehicle Used vehicle Parts and service Finance and insurance, net Other Total Gross profit mix percentages: New vehicle Used vehicle Parts and service Finance and insurance Other Total Operating items as a percentage of revenue: Gross profit: New vehicle Used...

  • Page 34
    ... prices. Same store gross profit PVR decreased during 2015, as compared to 2014, primarily due to decreases in gross profit PVR for vehicles at our Premium Luxury and Import stores due to increased inventory levels and changes in manufacturer incentive programs, as well as a competitive automotive...

  • Page 35
    ...compared to the prior year. New product offerings from certain automotive manufacturers also favorably impacted same store unit volume. Same store revenue PVR during 2014 benefited from an increase in the average selling prices for Domestic and Premium Luxury vehicles, partially offset by a decrease...

  • Page 36
    ... in trade-in volume associated with new vehicle sales. Same store revenue PVR benefited from an increase in the average selling price of used vehicles at our Domestic, Import, and Premium Luxury stores, and an increase in sales of certified pre-owned vehicles, which have relatively higher average...

  • Page 37
    ... Premium Luxury stores and a shift in mix away from Import vehicles, which have a relatively lower average gross profit PVR. Used Vehicle Inventories Used vehicle inventories were $539.7 million or 43 days supply at December 31, 2015, compared to $437.6 million or 38 days supply at December 31, 2014...

  • Page 38
    ...and used vehicle unit volume. Gross profit associated with our collision business benefited from increased volume referred by automotive insurance providers, as well as an increase in the average repair value and improved customer retention efforts. 2014 compared to 2013 Same store parts and service...

  • Page 39
    ...during 2015, as compared to 2014, due to increases in same store finance and insurance revenue and gross profit PVR and new and used vehicle unit volume. Same store finance and insurance revenue and gross profit PVR benefited from increases in product penetration, profit on vehicle service contracts...

  • Page 40
    ...246.6 280.1 321.4 848.1 (161.2) 53.4 740.3 Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. Retail new vehicle unit sales: Domestic Import Premium Luxury 111,519 157,868 69,693 339,080 102,643 154,066 61,299 318...

  • Page 41
    ... new vehicle sales. Used vehicle revenue PVR benefited from the increase in sales of certified pre-owned vehicles, which have relatively higher average selling prices. Domestic segment income increased during 2015, as compared to 2014, primarily due to an increase in finance and insurance revenue...

  • Page 42
    ...in sales of certified pre-owned vehicles, which have relatively higher average selling prices. Import revenue also benefited from an increase in parts and service revenue. Import segment income increased during 2015, as compared to 2014, primarily due to an increase in parts and service gross profit...

  • Page 43
    ... selling prices. New and used vehicle unit volume also benefited from the acquisitions we completed during 2015. Premium Luxury segment income increased during 2015, as compared to 2014, primarily due to an increase in parts and service gross profit and an increase in finance and insurance revenue...

  • Page 44
    ... incurred in 2013 related to the re-branding of our Domestic and Import stores under the AutoNation retail brand. As a percentage of total gross profit, SG&A expenses decreased to 69.6% in 2014 from 70.1% in 2013 resulting from our continued effective management of our cost structure and improved...

  • Page 45
    ...2013. Discontinued Operations Discontinued operations are related to stores that were sold or terminated prior to January 1, 2014. Results from discontinued operations, net of income taxes, were primarily related to expected losses on real estate to be sold, as well as carrying costs for real estate...

  • Page 46
    .... A summary of shares repurchased under our share repurchase program authorized by our Board of Directors follows: (In millions, except per share data) Shares repurchased Aggregate purchase price Average purchase price per share $ $ 2015 3.9 235.1 60.49 $ $ 2014 9.4 485.1 51.59 $ $ 2013 1.1 53.5 47...

  • Page 47
    ...and related assets during 2015, which include Chrysler, Dodge, Jeep, Ram, Mercedes-Benz, Honda, Ford, Lincoln, Audi, Volkswagen, Hyundai, Subaru, Jaguar, Land Rover, Volvo, and Fiat franchises. We purchased five stores in 2014 and five stores in 2013. During 2015, we divested three Import stores. In...

  • Page 48
    ...our revolving credit facility and for general corporate purposes. In connection with the issuance of the 2021 Notes and 2025 Notes, we incurred $6.4 million in debt issuance costs that will be amortized to interest expense over the terms of the related debt arrangements. At December 31, 2015, we had...

  • Page 49
    ... acquisitions and for working capital, capital expenditures, share repurchases and/or other general corporate purposes. We plan to use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. A downgrade in our credit ratings...

  • Page 50
    ... used vehicle inventory that could have been pledged as collateral. All the vehicle floorplan facilities utilize LIBOR-based interest rates. Vehicle floorplan facilities are due on demand, but in the case of new vehicle inventories, are generally paid within several business days after the related...

  • Page 51
    ... sale of parts and services and finance and insurance products, and proceeds from vehicle floorplan payable-trade. Our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade, purchases of parts inventory, personnel-related expenditures, and payments related...

  • Page 52
    ... of Contents 2015 compared to 2014 Under our share repurchase program authorized by our Board of Directors, during 2015, we repurchased 3.9 million shares of common stock for an aggregate purchase price of $235.1 million (average purchase price per share of $60.49). Additionally, 36,712 shares were...

  • Page 53
    ...7)(1)(2) Commercial paper (Note 7)(1) Interest payments(3) Operating lease and other commitments (Note 8)(1)(4) Unrecognized tax benefits, net (Note 11)(1) Deferred compensation obligations(5) Estimated chargeback liability (Note 18)(1)(6) Estimated self-insurance obligations (Note 6)(1)(7) Purchase...

  • Page 54
    ... The automotive retail 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...

  • Page 55
    ...), our investor relations website (investors.autonation.com), SEC filings, press releases, public conference calls and webcasts. Information about AutoNation, its business, and its results of operations may also be announced by posts on the following social media channels AutoNation's Twitter feed...

  • Page 56
    ... to our annual interest expense of $11.1 million in 2014. Our fixed rate long-term debt, consisting of amounts outstanding under senior unsecured notes, mortgages, and capital lease and other debt obligations, totaled $1.8 billion and had a fair value of $1.9 billion as of December 31, 2015, and...

  • Page 57
    ... FINTNCITL STTTEMENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2015 and 2014 56 58 Consolidated Statements of Income for the Years Ended December 31, 2015, 2014, and 2013 59 Consolidated Statements of Shareholders' Equity for the...

  • Page 58
    ... period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AutoNation, Inc.'s internal control over financial reporting as of December 31...

  • Page 59
    ...2015. Our audit of internal control over financial reporting of AutoNation, Inc. also excluded an evaluation of the internal control over financial reporting of the fourteen stores. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 60
    ...8) SHAREHOLDERS' EQUITY: Preferred stock, par value $0.01 per share; 5,000,000 shares authorized; none issued Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 120,562,149 shares issued at December 31, 2015, and 163,562,149 shares issued at December 31, 2014, including shares...

  • Page 61
    ... per share data) 2015 Revenue: New vehicle Used vehicle Parts and service Finance and insurance, net Other TOTAL REVENUE Cost of Sales: New vehicle Used vehicle Parts and service Other TOTAL COST OF SALES (excluding depreciation shown below) Gross Profit: New vehicle Used vehicle Parts and service...

  • Page 62
    ... Ended December 31, 2015, 2014, and 2013 (In millions, except share data) Common Stock Shares BALANCE AT DECEMBER 31, 2012 Net income Repurchases of common stock Stock-based compensation expense Shares awarded under stock-based compensation plans, including excess income tax benefit of $10.0 BALANCE...

  • Page 63
    ... IN) INVESTING ACTIVITIES: Purchases of property and equipment Property operating lease buy-outs Proceeds from the sale of property and equipment Proceeds from the disposal of assets held for sale Insurance recoveries on property and equipment Cash used in business acquisitions, net of cash acquired...

  • Page 64
    ... Payments of capital lease and other debt obligations Proceeds from the exercise of stock options Excess tax benefit from stock-based awards Net cash provided by (used in) continuing operations Net cash used in discontinued operations Net cash provided by (used in) financing activities INCREASE...

  • Page 65
    ...in 2015, are manufactured by Toyota (including Lexus), Ford, Honda, Nissan, General Motors, Mercedes-Benz, FCA US (formerly Chrysler), BMW, and Volkswagen (including Audi and Porsche). We offer a diversified range of automotive products and services, including new vehicles, used vehicles, "parts and...

  • Page 66
    ... STTTEMENTS (Continued) incentives, floorplan assistance, and non-reimbursement-based manufacturer advertising. Parts, accessories, and other inventory are valued at the lower of acquisition cost (first-in, first-out) or market. See Note 3 of the Notes to Consolidated Financial Statements for more...

  • Page 67
    ...terms of the agreement. However, in general, the states in which we operate have automotive dealership franchise laws that provide that, ...service loaner and rental vehicle inventory, net, the cash surrender value of corporateowned life insurance held in a Rabbi Trust for deferred compensation plan...

  • Page 68
    ... about our stock-based compensation arrangements. Revenue Recognition Revenue consists of the sales of new and used vehicles, sales of parts and automotive services, commissions from finance and insurance products, and sales of other products. We recognize revenue (which excludes sales taxes) in the...

  • Page 69
    ...customer vehicle purchases financed, (ii) vehicle service contracts sold, and (iii) other protection products sold. We sell and receive a commission, which is recognized upon sale, on the following types of products: extended service contracts, maintenance programs, guaranteed auto protection (known...

  • Page 70
    ...advertising expenses are recorded as a reduction of inventory and recognized as a reduction of new vehicle cost of sales in the period the related vehicle is sold. Parts and Service Internal Profit Our parts and service departments provide reconditioning repair work for the majority of used vehicles...

  • Page 71
    ... manufacturers for holdbacks, rebates, incentives, floorplan assistance, and warranty claims. Contracts-in-transit and vehicle receivables primarily represent receivables from financial institutions for the portion of the vehicle sales price financed by our customers. We evaluate our receivables for...

  • Page 72
    ...interest rates, which averaged 1.8% during 2015 and 1.8% during 2014. At December 31, 2015, the aggregate capacity under our floorplan credit agreements with various lenders to finance our new vehicle inventory was approximately $4.3 billion, of which $3.5 billion had been borrowed. Our used vehicle...

  • Page 73
    ...of $0.9 million in 2015, $1.2 million in 2014, and $0.7 million in 2013. 5. GOODWILL TND ...2014 (1) Acquisitions, dispositions, and other adjustments Goodwill at December 31, 2015 (1) $ (1) Import $ 555.8 (4.2) 551.6 19.3 $ 570.9 $ $ Premium Luxury 538.6 49.4 588.0 32.5 620.5 $ $ Corporate...

  • Page 74
    ... was related to Import stores, and $243.6 million was related to Premium Luxury stores. See Note 16 of the Notes to Consolidated Financial Statements for more information about our annual impairment tests of goodwill and franchise rights. 6. SELF-INSURTNCE At December 31, 2015 and 2014, current...

  • Page 75
    ...our revolving credit facility and for general corporate purposes. In connection with the issuance of the 2021 Notes and 2025 Notes, we incurred $6.4 million in debt issuance costs that will be amortized to interest expense over the terms of the related debt arrangements. At December 31, 2015, we had...

  • Page 76
    ... acquisitions and for working capital, capital expenditures, share repurchases and/or other general corporate purposes. We plan to use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. A downgrade in our credit ratings...

  • Page 77
    ... under various operating leases, most of which have terms from one to twenty years. Expenses under real property, equipment, and software leases were $51.4 million in 2015, $49.0 million in 2014, and $47.6 million in 2013. The leases require payment of real estate taxes, insurance, and maintenance...

  • Page 78
    ...terms of the applicable agreement. From time to time, primarily in connection with dispositions of automotive stores, our subsidiaries assign or sublet to the dealership purchaser the subsidiaries' interests in any real property leases associated with such stores. In general, our subsidiaries retain...

  • Page 79
    ...summary of shares repurchased under our share repurchase program authorized by our Board of Directors follows: 2015 Shares repurchased Aggregate purchase price Average purchase price per share $ $ 3.9 235.1 60.49 $ $ 2014 9.4 485.1 51.59 $ $ 2013 1.1 53.5 47.37 From January 1, 2016 through February...

  • Page 80
    ... cost is recognized over the shorter of the stated vesting period or the period until employees become retirement-eligible. The following table summarizes the assumptions used related to the valuation of our stock options during 2015, 2014, and 2013: Grant Year 2015 Risk-free interest rate...

  • Page 81
    ... value of stock options exercised (in millions) Restricted Stock In 2015, the Compensation Committee of our Board of Directors approved the grant of 0.2 million shares of restricted stock. Restricted stock awards are granted to restricted stock-eligible employees generally on the first trading day...

  • Page 82
    ... in Selling, General, and Administrative Expenses in the Consolidated Statements of Income and the total recognized tax benefit related thereto: 2015 Stock options Restricted stock RSUs Total stock-based compensation expense $ 14.8 6.5 2.7 24.0 9.2 $ 2014 18.4 5.8 2.1 26.3 10.0 $ 2013 16.6 4.7 - 21...

  • Page 83
    ...of $23.3 million in 2015, $24.1 million in 2014, and $14.3 million in 2013. 11. INCOME TTXES The components of the income tax provision from continuing operations for the years ended December 31 are as follows: 2015 Current: Federal State Federal and state deferred Change in valuation allowance, net...

  • Page 84
    ... million at December 31, 2014. At December 31, 2015, we had $110.3 million of gross domestic state net operating loss carryforwards and capital loss carryforwards, and $4.2 million of state tax credits, all of which result in a deferred tax asset of $7.3 million and expire from 2016 through 2033. At...

  • Page 85
    ..., 2013, related to these balances. The net of the unrecognized tax benefits, associated interest, penalties, and deferred tax asset was $7.1 million at December 31, 2015, $6.6 million at December 31, 2014, and $6.3 million at December 31, 2013, which if resolved favorably (in whole or in part) would...

  • Page 86
    ... 2015, which include Chrysler, Dodge, Jeep, Ram, Mercedes-Benz, Honda, Ford, Lincoln, Audi, Volkswagen, Hyundai, Subaru, Jaguar, Land Rover, Volvo, and Fiat franchises. We purchased five stores in 2014, and five stores in 2013. The amounts incurred related to acquisitions were $321.5 million in 2015...

  • Page 87
    ...December 31, 2015 and 2014, revenue and net income would not have been materially different from our reported revenue and net income for these periods. In February 2016, we purchased 12 stores located in Texas, which include Chrysler, Dodge, Jeep, Ram, Chevrolet, Hyundai, Mercedes-Benz, and Sprinter...

  • Page 88
    ... or disposal group at the time it was initially classified as held for sale. The following table presents nonfinancial assets measured and recorded at fair value on a nonrecurring basis during the years ended December 31, 2015 and 2014: 2015 Fair Value Measurements Using Significant Unobservable...

  • Page 89
    ... transaction prices are adjusted for factors related to a specific property. The corporate real estate services group also evaluates changes in local real estate markets, and/or recent market interest or negotiations related to a specific property. In a replacement cost approach, the cost to replace...

  • Page 90
    ... provide financing directly to our new and used vehicle customers. We purchase substantially all of our new vehicles from various manufacturers or distributors at the prevailing prices available to all franchised dealers. Additionally, we finance our new vehicle inventory primarily with automotive...

  • Page 91
    ... by Mercedes-Benz, BMW, Lexus, and Audi. The franchises in each segment also sell used vehicles, parts and automotive services, and automotive finance and insurance products. "Corporate and other" is comprised of our other businesses, including collision centers and an auction operation, each...

  • Page 92
    ....1 (161.2) (88.3) - 0.2 5.6 604.4 2014 2013 (1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. Years Ended December 31, 2015 Floorplan interest expense: Domestic Import Premium Luxury Corporate and other Total...

  • Page 93
    ... 61.9 76.1 45.5 23.7 207.2 2014 2013 $ $ $ Years Ended December 31, 2015 Tssets: Domestic Import Premium Luxury Corporate and other: Goodwill Franchise rights Other Corporate and other assets Total assets 20. MULTIEMPLOYER PENSION PLTNS Five of our 254 stores participate in multiemployer pension...

  • Page 94
    ...the table below. The "EIN/Pension Plan Number" column provides the Employer Identification Number (EIN) and the three-digit plan number. The most recent PPA zone status available in 2015 and 2014 is for the plan's year end at December 31, 2014, and December 31, 2013, respectively. The zone status is...

  • Page 95
    ...regions of the United States where stores may be subject to adverse winter conditions. However, we typically experience higher sales of Premium Luxury vehicles, which have higher average selling prices and gross profit per vehicle retailed, in the fourth quarter. Revenue and operating results may be...

  • Page 96
    ... Public Accounting Firm which is included in Part II, Item 8 of this Form 10-K. As permitted by the Securities and Exchange Commission, management elected to exclude the 14 stores that we acquired in the fourth quarter of 2015 from its assessment of internal control over financial reporting...

  • Page 97
    ... our Investor Relations website. The other information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2015. ITEM 11. EXECUTIVE...

  • Page 98
    Table of Contents ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31...

  • Page 99
    ... provisions, which subsequent information may or may not be fully reflected in the public disclosures of the parties. In any event, investors should read the agreements together with the other information concerning AutoNation, Inc. contained in reports and statements that we file with the SEC. 97

  • Page 100
    ... authorized. TUTONTTION, INC. (Registrant) By: /s/ M ICHAEL J. JACKSON Michael J. Jackson, Chairman of the Board, Chief Executive Officer and President February 10, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 101
    ...to 2010 Indenture, dated September 21, 2015, relating to the Company's 4.5% Senior Notes due 2025. Form of 4.5% Senior Notes due 2025 (included in Exhibit 4.12). AutoNation, Inc. 1995 Amended and Restated Employee Stock Option Plan, as amended and restated. AutoNation, Inc. Amended and Restated 1995...

  • Page 102
    ....20 10.21 10.22 10.23 10.24 AutoNation, Inc. Deferred Compensation Plan, as amended and restated. Amended Employment Agreement, dated January 15, 2015, by and between AutoNation, Inc. and Michael J. Jackson. Amended Employment Agreement, dated October 23, 2014, as amended and restated on January 23...

  • Page 103
    ... of Restricted Stock Agreement under the 2008 Plan for grants in 2015 and thereafter. Written Description of Compensatory Arrangement. AutoNation, Inc. Policy Regarding Recoupment of Certain Incentive Compensation, effective as of February 6, 2015. Honda Agreement, dated January 28, 2009, between...

  • Page 104
    ... INDEX In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the Company or its subsidiaries are not filed herewith. We hereby agree to furnish a copy of any such instrument to the Commission upon request. 102

  • Page 105
    ..., as defined $ 2015 722.7 168.2 (0.9) 890.0 $ 2014 682.3 158.5 (1.2) 839.6 $ 2013 604.4 159.4 (0.7) 763.1 $ 2012 516.8 149.7 (0.6) 665.9 $ 2011 461.3 128.8 (1.0) 589.1 $ $ $ $ $ Fixed Charges Floorplan interest expense Other interest expense (a) Capitalized interest costs Interest component of...

  • Page 106
    ...Christi; AutoNation Collision Center North Corpus Christi AutoNation Chevrolet Waco; Mercedes-Benz of Waco; AutoNation Collision Center Waco BMW of Mountain View Delaware Delaware Texas Texas Texas Texas California Delaware Nevada AutoNation Honda 385 AutoNation Cadillac West Palm Beach AutoNation...

  • Page 107
    ... Delaware Texas Florida Delaware Delaware Delaware AutoNation Chevrolet Fort Lauderdale AutoNation GMC Mendenhall AutoNation Chevrolet Pembroke Pines; AutoNation Collision Center Pembroke Pines AutoNation Ford Scottsdale; AutoNation Collision Center North Scottsdale AutoNation Ford Fort Lauderdale...

  • Page 108
    ... Corpus Christi State of Organization Texas AN Pontiac GMC Houston North GP, LLC AN Pontiac GMC Houston North, LP AN San Jose Luxury Imports, Inc. AN Seattle Motors, Inc. AN Subaru Motors, Inc. AN T. Imports of Atlanta, LLC AN Texas Region Management, Ltd. AN Tucson Imports, LLC AN Valencia Auto...

  • Page 109
    ...Park Cities AutoNation Chrysler Dodge Jeep Ram Spring AutoNation Toyota North Arlington; AutoNation Scion North Arlington AutoNation Honda Chandler AutoNation Hyundai Tempe AutoNation Chrysler Dodge Jeep Ram Mobile Audi Bellevue; AutoNation Volvo Bellevue; Mercedes-Benz of Bellevue; Porsche Bellevue...

  • Page 110
    ... Company, Ltd. AutoNation Corporate Management, LLC Current DBA(s) State of Organization Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware AutoNation Honda O'Hare AutoNation Hyundai O'Hare Mercedes-Benz...

  • Page 111
    ... Nissan Lewisville Lexus of Cerritos; Lexus Collision Center Cerritos Texas Texas Delaware Texas California Colorado Arizona California Delaware AutoNation Chevrolet Doral; AutoNation Collision Center Airport Miami AutoNation Chrysler Dodge Jeep Ram North Phoenix AutoNation Chrysler Dodge Jeep...

  • Page 112
    ...-Benz of South Bay; Land Rover South Bay; AutoNation Collision Center South Bay AutoNation Dodge Ram Arapahoe AutoNation Volvo Irvine Arizona Arizona Arizona Arizona Georgia Delaware Colorado Delaware Delaware Delaware Delaware Delaware California Delaware Delaware Texas AutoNation Ford Fort Worth...

  • Page 113
    ... North; BMW of Houston North in the Woodlands; MINI of the Woodlands AutoNation Acura Gulf Freeway AutoNation Honda Clearwater; AutoNation Collision Center Clearwater; AutoNation Collision Center Clearwater South Tennessee Delaware Texas Texas Florida Illinois Texas AutoNation Buick GMC West...

  • Page 114
    ... G.B. Import Sales & Service, LLC GA CDJR Motors, LLC Current DBA(s) AutoNation Auto Auction AutoNation Ford Bradenton; AutoNation Collision Center Bradenton AutoNation Ford Sanford State of Organization Delaware Texas Delaware Florida Florida Florida Florida Delaware AutoNation Toyota Buena Park...

  • Page 115
    ...-Benz of Houston North; smart center Houston North State of Organization Texas Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware California Georgia Ohio Illinois Illinois AutoNation Collision Center Hunt Valley Audi Hunt Valley Mercedes-Benz of Hunt Valley AutoNation Subaru...

  • Page 116
    ... Luxury Imports, Inc. AutoNation Nissan Brandon AutoNation Chevrolet Northpoint BMW of Bellevue Newport Auto Center; Audi Newport Beach; Porsche Newport Beach; Bentley Newport Beach AutoNation Ford South Fort Worth; AutoNation Collision Center Fort Worth Mercedes-Benz of Naperville AutoNation Toyota...

  • Page 117
    ... Delaware California California Delaware Arizona AutoNation Toyota Tempe; AutoNation Scion Tempe Delaware Delaware Delaware AutoNation Chevrolet; AutoNation Collision Center AutoNation Honda South Corpus Christi Prime Auto Auction Texas Texas Texas California Delaware Texas AutoNation Nissan...

  • Page 118
    ...Chevrolet West Austin Delaware Colorado Delaware Texas Delaware Delaware AutoNation Toyota South Austin; Champion Scion South Austin; AutoNation Collision Center Austin Mercedes-Benz of Pompano AutoNation Chrysler Dodge Jeep Ram Roseville AutoNation Honda East Las Vegas AutoNation Nissan Las Vegas...

  • Page 119
    ... Nissan South Bay AutoNation Ford White Bear Lake; AutoNation Pre-Owned Outlet Delaware Delaware Delaware Delaware Minnesota Georgia Delaware AutoNation Toyota Scion Las Vegas AutoNation Chrysler Dodge Jeep Ram North Fort Worth; AutoNation Collision Center Alliance AutoNation Chrysler Dodge Jeep...

  • Page 120
    ... Chevrolet Valencia AutoNation Nissan Dallas AutoNation Ford Delray; AutoNation Collision Center Delray Delaware Delaware Delaware Texas Delaware Delaware Delaware Delaware California AutoNation Chrysler Jeep West; AutoNation Buick GMC Park Meadows; AutoNation Buick GMC West; AutoNation Subaru...

  • Page 121
    ...income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2015, and the effectiveness of internal control over financial reporting as of December 31, 2015, which reports appear in the December 31, 2015 Annual Report on Form 10-K of AutoNation, Inc...

  • Page 122
    ...; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ M ICHAEL J. JACKSON Michael J. Jackson Chairman, Chief Executive Officer and President Date: February 10, 2016

  • Page 123
    ...information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ CHERYL M ILLER Cheryl Miller Executive Vice President and Chief Financial Officer Date: February 10, 2016

  • Page 124
    ... OF 2002 In connection with the Annual Report on Form 1n-K of AutoNation, Inc. (the "Company") for the year ended December 31, 2n15, as filed with the U.S. Securities and Exchange Commission (the "Report"), I, Michael J. Jackson, Chief Executive Officer of the Company, hereby certify, pursuant to 18...

  • Page 125
    ... with the Annual Report on Form 10-K of AutoNation, Inc. (the "Company") for the year ended December 31, 2015, as filed with the U.S. Securities and Exchange Commission (the "Report"), I, Cheryl Miller, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to...

  • Page 126