AutoNation 2003 Annual Report Download - page 34

Table of Contents
$3.2 million, $8.1 million and $22.3 million during the years ended December 31, 2003, 2002 and 2001, respectively, in deferred purchase
price for certain prior year automotive retail acquisitions.
In April 2001, we completed the sale of our New Jersey-based Flemington dealership group for net proceeds of $59.0 million and a pre-tax
gain of $19.3 million.
We expect that future acquisitions will continue to primarily target single stores and groups of stores focused in key existing markets. As
of December 31, 2003, we had entered into agreements to purchase several automotive stores that represented purchase price
commitments of approximately $86.0 million in cash.
See Note 18, Acquisitions and Divestitures, of Notes to Consolidated Financial Statements for further discussion of business
combinations.
Financial Condition
At December 31, 2003, we had $170.8 million of unrestricted cash and cash equivalents. We have two revolving credit facilities with an
aggregate borrowing capacity of $500.0 million. A 364-day revolving credit facility provides borrowings up to $200.0 million at a LIBOR-based
interest rate and was renewed in August 2003 for another 364-day term to August 2004. A five-year facility, which expires in August 2006,
provides borrowings up to $300.0 million at a LIBOR-based interest rate. These facilities are secured by a pledge of the capital stock of certain
subsidiaries, which directly or indirectly own substantially all of our stores, and are guaranteed by substantially all of our subsidiaries. No
amounts are drawn on these revolving credit facilities.
In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as
financial guarantees of our performance. At December 31, 2003, surety bonds, letters of credit and cash deposits totaled $87.2 million,
including $56.4 million letters of credit, and have various expiration dates. We do not currently provide cash collateral for outstanding letters
of credit. We have negotiated a letter of credit line as part of our multi-year revolving credit facility. Under the terms of the letter of credit line,
the amount available to be borrowed under this revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative face amount of
any outstanding letters of credit. Due to changes in insurance requirements, letters of credit outstanding are expected to be in the range of
$60 million to $80 million in 2004.
We also have $450.0 million of 9.0% senior unsecured notes due August 1, 2008. The senior unsecured notes are guaranteed by
substantially all of our subsidiaries.
Our revolving credit facilities, the indenture for our senior unsecured notes and mortgage facilities contain numerous customary financial
and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness, to create liens or other
encumbrances, to make certain payments (including dividends and share repurchases), and make investments, and to sell or otherwise
dispose of assets and merge or consolidate with other entities. The revolving credit facilities also require us to meet certain financial ratios
and tests, including financial covenants requiring the maintenance of consolidated maximum cash flow leverage, minimum interest
coverage, and maximum balance sheet leverage. Over the life of the revolving credit facilities, certain of the financial covenants become
more restrictive as prescribed by a predetermined schedule. In addition, the senior unsecured notes contain a minimum fixed charge
coverage incurrence covenant, and the mortgage facilities contain both maximum cash flow leverage and minimum interest coverage
covenants. In the event that we were to default in the observance or performance of any of the financial covenants in the revolving credit
facilities or mortgage facilities and such default were to continue beyond any cure period or waiver, the lender under the respective facility
could elect to terminate the facility and declare all outstanding obligations under such facility immediately payable. Under the senior
unsecured notes, should we be in violation of the financial covenants, we could be further limited in incurring certain additional
indebtedness. Our revolving credit facilities, the indenture for our senior unsecured notes and the mortgage facilities have cross-default
provisions that trigger a default in the event of an uncured default under other material indebtedness of ours. At December 31, 2003, we were
in compliance with the requirements of all such financial covenants and do not anticipate any events of default.
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