AutoNation 2001 Annual Report Download - page 63

Company's senior unsecured notes contain numerous customary financial and
operating covenants that place significant restrictions on the
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AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company, including the Company's ability to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments (including
dividends and share repurchases), and investments, and to sell or otherwise
dispose of assets and merge or consolidate with other entities. The new
revolving credit facilities and the indenture for the Company's senior unsecured
notes also require the Company to meet certain financial ratios and tests. At
December 31, 2001, the Company was in compliance with the requirements of the
revolving credit facilities and indenture for the Company's senior unsecured
notes.
The Company was the lessee under a lease facility that was established to
acquire and develop its former megastore properties. As originally structured,
the facility was accounted for as an operating lease and included residual value
guarantees. In 1999, certain properties under the facility were reflected as
capital leases. In connection with the Company's 1999 restructuring activities
as of December 31, 1999, the Company accrued an estimate of the liability under
the residual value guarantee totaling approximately $103.3 million. In September
2000, the Company funded the remaining lease residual value guarantee obligation
to the lessor, reduced the facility size from $500.0 million to $210.0 million
and amended the terms of the facility though the notification of its intention
to exercise the option to purchase the leased properties at the end of the term.
As a result of the amendment, all of the leases had been accounted for as
capital leases at December 31, 2000, with the property and related debt included
in accompanying Consolidated Balance Sheet. In August 2001, the Company repaid
the debt and terminated this facility.
During 2000, the Company entered into a sale-leaseback transaction
involving its corporate headquarters facility that resulted in net proceeds of
approximately $52.1 million with an effective interest rate of 7.75% at December
31, 2001. This transaction was accounted for as a financing lease, wherein the
property remains on the books and continues to be depreciated. The gain on this
transaction will be recognized subsequent to the ten-year lease term. The
Company has the option to renew the lease at the end of the lease term subject
to certain conditions.
At December 31, 2001, aggregate maturities of notes payable and long-term
debt, excluding floorplan notes payable, were as follows:
Year Ending December 31:
2002........................................................ $ 7.9
2003........................................................ 9.5
2004........................................................ 8.7
2005........................................................ 9.2
2006........................................................ 42.0
Thereafter.................................................. 577.9
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$655.2
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9. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
The Company is involved, and will continue to be involved, in numerous
legal proceedings arising out of the conduct of its business, including