AutoNation 2007 Annual Report Download

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Table of Contents



(Mark One)




oo
 




(Exact Name of Registrant as Specified in its Charter)
 
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)



(Zip Code)
(Address of Principal Executive Offices)

(Registrant’s Telephone Number, Including Area Code)
 
 
Common Stock, Par Value $.01 Per Share The New York Stock Exchange
 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No o
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 o No
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 No o
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. o
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 filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer 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 o No
As of June 29, 2007, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $3.4 billion
based on the closing price of the common stock on The New York Stock Exchange on such date.
As of February 26, 2008, the registrant had 180,018,415 shares of common stock outstanding.

Portions of the registrant’s Proxy Statement relating to its 2008 Annual Meeting of Stockholders are incorporated herein by reference in
Part III.

Table of contents

  • Page 1
    ... Code) (954) 769-6000 (Registrant's Telephone Number, Including Area Code) Segurities Registered Pursuant to Segtion 12(b) of the Tgt: Title of Eagh Class N a m e o f E a g h E x g h a n g e o n W h i g h R e g i s t e r e d Common Stock, Par Value $.01 Per Share None The New York Stock Exchange...

  • Page 2
    ... Item 3. Item 4. Business Risk Factors Unresolved Staff ...Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PTRT III Directors, Executive Officers, and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management...

  • Page 3
    ... brands of vehicles that we sell, representing approximately 96% of the new vehicles that we sold in 2007, are manufactured by Toyota, Ford, General Motors, Honda, Nissan, Chrysler, Daimler, and BMW. We operate in a single operating and reporting segment, automotive retailing. We offer a diversified...

  • Page 4
    ... Sales: Our goal is that our customers will use us for all of their vehicle service needs. Our key initiatives for our parts and service business are focused on optimizing our processes, pricing, and promotion. We have implemented across all of our stores standardized service processes and marketing...

  • Page 5
    ...-brand vehicles within each of our markets. • Increasing Finance, Insurance and Other Aftermarket Product Sales: We continue to improve our finance and insurance business by using our standardized processes across our store network. Our customers are presented with the "AutoNation Pledge," which...

  • Page 6
    ...in our key markets, including "Maroone" in South Florida; "GO" in Denver, Colorado; "AutoWay" in Tampa, Florida; "Bankston" in Dallas, Texas; "Courtesy" in Orlando, Florida; "Desert" in Las Vegas, Nevada; "Team" in Atlanta, Georgia; "Mike Shad" in Jacksonville, Florida; "Dobbs" in Memphis, Tennessee...

  • Page 7
    ... generally is limited to the commissions that we receive. We do not directly finance our customers' vehicle leases or purchases. We also offer our customers various vehicle protection products, including extended service contracts, maintenance programs, guaranteed auto protection (known as "GAP...

  • Page 8
    ...exclusive right to sell the manufacturer or distributor's brand of vehicles and offer related parts and service within a specified market area. These franchise agreements grant our stores the right to use the manufacturer or distributor's trademarks in connection with their operations, and they also...

  • Page 9
    ... States Department of Transportation, and the rules and regulations of various state motor vehicle regulatory agencies. The imported automobiles we purchase are subject to United States customs duties and, in the ordinary course of our business we may, from time to time, be subject to claims for...

  • Page 10
    ... companies that operate numerous automotive retail stores on a national or regional basis and from private market buyers and sellers of used vehicles. We are subject to competition from dealers that sell the same brands of new vehicles that we sell and from dealers that sell other brands of new...

  • Page 11
    ... incentive programs. Trademarks and AutoNation ®. We own a number of registered service marks and trademarks, including, among other marks, AutoNation Pursuant to agreements with vehicle manufacturers, we have the right to use and display manufacturers' trademarks, logos, and designs at our stores...

  • Page 12
    ...captive finance company, AutoNation Financial Services, from 1997 through 2001. He is also the former President of BMW Financial Services for North America. ITEM 1T. RISK FACTORS Our business, financial condition, results of operations, cash flows, and prospects, and the prevailing market price and...

  • Page 13
    ..., training, product brochures and point of sale materials, and other items for our stores. The core brands of vehicles that we sell are manufactured by Toyota, Ford, General Motors, Honda, Nissan, Chrysler, Daimler, and BMW. In particular, our Ford Motor Company and General Motors Corporation 11

  • Page 14
    ... offer extended product warranties or free service programs to consumers. From time to time, manufacturers modify and discontinue these dealer assistance and consumer incentive and marketing programs, which could have a significant adverse effect on our new vehicle and aftermarket product sales...

  • Page 15
    ... our stores. Manufacturers may also have certain rights to restrict our ability to provide guaranties of our operating companies, pledges of the capital stock of our subsidiaries, and liens on our assets, which could adversely impact our ability to obtain financing for our business and operations on...

  • Page 16
    ... emissions and fuel economy, health and safety, wage-hour, anti-discrimination, and other employment practices. Specifically with respect to motor vehicle sales, retail installment sales, leasing, and the sale of finance, insurance, and vehicle protection products at our stores, we are subject to...

  • Page 17
    ...cannot assure you that we will be able to acquire stores selling desirable automotive brands at desirable locations in our key markets or that any such acquisitions can be completed on favorable terms or at all. Acquisitions involve a number of risks, many of which are unpredictable and difficult to...

  • Page 18
    ... limit our ability to obtain financing for working capital, capital expenditures, acquisitions, and other general corporate activities; • Covenants relating to our indebtedness may limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate...

  • Page 19
    ...Fort Lauderdale, Florida, pursuant to a lease expiring in 2010. As of February 2008, we also own or lease numerous facilities relating to our operations in the following 15 states: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Minnesota, Nevada, Ohio, Tennessee, Texas...

  • Page 20
    ... EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information, Holders, and Dividends Our common stock is traded on The New York Stock Exchange under the symbol "AN." The following table sets forth the high and low sales prices of our common stock for the periods...

  • Page 21
    ... the entire amount authorized under the April 2007 Program. On October 23, 2007, our Board of Directors approved a new stock repurchase program (referred to as the "October 2007 Program"), which authorized AutoNation to repurchase up to $250 million in shares of our common stock. 3,303,125 of the...

  • Page 22
    ...Stores Index (currently comprised of Office Depot, Inc., OfficeMax Incorporated, Staples, Inc., and Tiffany & Co.). We have created these comparisons using data supplied by Research Data Group... into any filing of AutoNation, Inc. under the Securities Act of 1933 or the Exchange Act, except as shall...

  • Page 23
    ... to reflect the deferral of certain manufacturer allowances, primarily floorplan assistance, into inventory cost upon the adoption of Emerging Issues Task Force Issue No. 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor," as of January 1, 2003...

  • Page 24
    ... brands of vehicles that we sell, representing approximately 96% of the new vehicles that we sold in 2007, are manufactured by Toyota, Ford, General Motors, Honda, Nissan, Chrysler, Daimler, and BMW. We operate in a single operating and reporting segment, automotive retailing. We offer a diversified...

  • Page 25
    ...assets acquired, using the purchase method of accounting. Acquired intangible assets are separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented, or exchanged, regardless...

  • Page 26
    ...leases placed with financial institutions in connection with customer vehicle purchases financed and (ii) vehicle protection products sold. We primarily sell these products on a straight commission basis; however we also participate in future underwriting profit on certain extended service contracts...

  • Page 27
    ...(63.3) (4.7) $ $ (10.8) 207.1 93.6 34.6 (8.3) 316.2 3.3 (7.4) (0.1) 4.9 3.8 5.9 1.7 0.4 Gross profit: New vehicle Used vehicle Parts and service Finance and insurance Other Total gross profit Selling, general & administrative expenses Depreciation and amortization Other expenses (income), net...

  • Page 28
    ...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 vehicle - retail Parts and service Total Selling, general and...

  • Page 29
    ... 2006 % Variange ($ in millions, exgept per vehigle data) Revenue: New vehicle Used vehicle Parts and service Finance and insurance, net Other Total revenue Gross profit: New vehicle Used vehicle Parts and service Finance and insurance Other Total gross profit $ 10,107.7 4,205.7 2,563.9 596...

  • Page 30
    ...: New vehicle Used vehicle 57.8 24.0 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 vehicle - retail...

  • Page 31
    ...Florida housing markets, higher interest rates, and higher gas prices during portions of 2006. In 2006, we saw a continued revenue shift in our brand mix from domestic brands to volume import and premium luxury brands. In June 2005, General Motors announced an "employee pricing for everyone" program...

  • Page 32
    ...more premium luxury brands. Same store gross profit per vehicle retailed increased 2.4% during 2006, as compared to 2005, primarily as a result of the shift in our sales mix to more imports, including premium luxury brands. Our new vehicle inventories were $1.9 billion or 53 days supply at December...

  • Page 33
    ... environment, particularly in California and Florida. We also saw a decrease in used vehicle sales volumes in our domestic brand stores in our markets, driven in part by a decrease in trade-in volume associated with new vehicle sales. Same store revenue per vehicle retailed during 2007 increased...

  • Page 34
    ... used vehicle sales mix to import luxury vehicles. Same store gross profit per vehicle retailed decreased 4.8% during 2007, as compared to 2006, primarily as a result of an increase in the average cost of our used vehicle inventory combined with the competitive retail market environment. Same store...

  • Page 35
    ... manufacturers' warranty, prepaid service programs and lower vehicles sales volume. The improvements to customer-paid business are attributable to our service drive process, maintenance menu, and service marketing program, as well as our pricing models and training programs. Additionally, during...

  • Page 36
    ... store finance and insurance revenue and gross profit increased $31.8 million or 5.3% during 2006, as compared to 2005, primarily due to the benefit from a $12.3 million increase in retrospective commissions received on extended service contracts, as well as higher new and used vehicle prices and...

  • Page 37
    ...from deleveraging of our cost structure due to the decline in vehicles sales. Selling, general, and administrative expenses in 2007, as compared to 2006, decreased due to a $58.8 million decrease in compensation expense and an $8.3 million decrease in gross advertising expenditures, partially offset...

  • Page 38
    ...price of 110.5% of face value or $136.0 million. The premium paid and financing costs...operations and availability of borrowings under our secured floorplan facilities (for new vehicles) and revolving credit facility will be sufficient to service our debt and fund our working capital requirements, pay...

  • Page 39
    ..., Standard and Poor's Rating Services revised its outlook for AutoNation to negative from stable, indicating concerns that our results in 2008 could be pressured by lower vehicle sales, particularly in our California and Florida markets. Credit ratings could be lowered if new vehicle demand worsens...

  • Page 40
    ... are at one-month LIBOR-based rates of interest. Secured floorplan facilities are used to finance new vehicle inventories and the amounts outstanding thereunder are due on demand, but are generally paid within several business days after the related vehicles are sold. Floorplan facilities are...

  • Page 41
    ... lease buy-outs, net of asset sales. Property operating lease buy-outs were $2.3 million during 2007, as compared to $5.9 million in 2006, and $10.3 million in 2005. We continue to analyze certain higher cost operating leases and evaluate alternatives in order to lower the effective financing costs...

  • Page 42
    ... (3) pay related financing costs. During 2006, we expensed $34.5 million of tender premium ($24.8 million) and other deferred financing costs ($9.7 million) related to our debt tender offer. In 2005, we repurchased $123.1 million (face value) of our 9% senior unsecured notes at an average price of...

  • Page 43
    ... Our operations generally experience higher volumes of vehicle sales and service in the second and third quarters of each year due in part to consumer buying trends and the introduction of new vehicle models. Also, demand for vehicles and light trucks is generally lower during the winter months...

  • Page 44
    ... 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 and...

  • Page 45
    ... risk exposure is increasing LIBOR-based interest rates. Interest rate derivatives may be used to hedge a portion of our variable rate debt when appropriate based on market conditions. At December 31, 2007, our fixed rate debt, primarily consisting of amounts outstanding under senior unsecured notes...

  • Page 46
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2007, and 2006 Consolidated Income Statements for the Years Ended December 31, 2007, 2006 and ...

  • Page 47
    ... Organizations of the Treadway Commission (COSO), and our report dated February 27, 2008, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. /s/ KPMG LLP February 27, 2008 Fort Lauderdale, Florida Certified Public Accountants 45

  • Page 48
    ...generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use...

  • Page 49
    ...EQUITY CURRENT LIABILITIES: Vehicle floorplan payable - trade Vehicle floorplan payable - non-trade Accounts payable Notes payable and current maturities of long-term obligations Other current liabilities Total Current Liabilities LONG-TERM DEBT, NET OF CURRENT MATURITIES DEFERRED INCOME TAXES OTHER...

  • Page 50
    ... Cost of Sales: New vehicle Used vehicle Parts and service Other TOTAL COST OF SALES Gross Profit: New vehicle Used vehicle Parts and service Finance and insurance Other TOTAL GROSS PROFIT Selling, general & administrative expenses Depreciation and amortization Other expenses (income), net OPERATING...

  • Page 51
    ... share data) Tdditional Paid-In Common Stogk Shares ...marketable securities Comprehensive income 278.7 0.2 278.9 $ Purchases of treasury stock Treasury stock cancellation Stock option expense Exercise of stock options, including income tax benefit of $17.7 Cumulative effect of change in accounting...

  • Page 52
    ... costs and discounts Stock option expense Interest expense on senior note repurchase Deferred income tax provision Other Changes in assets and liabilities, net of effects from business combinations and divestitures: Receivables Inventory Other assets Vehicle floorplan payable-trade, net Accounts...

  • Page 53
    ...stores located in major metropolitan markets, predominantly in the Sunbelt region of the United States. We offer a diversified range of automotive products and services, including new vehicles, used vehicles, vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle...

  • Page 54
    ... STTTEMENTS - (Continued) Inventory Inventory consists primarily of new and used vehicles held for sale, valued at the lower of cost or market using the specific identification method. Cost includes acquisition, reconditioning, dealer installed accessories, and transportation expenses. Parts and...

  • Page 55
    ...items, service loaner and rental vehicle inventory, net, investments in marketable securities, the cash surrender value of corporate-owned life insurance held in a Rabbi Trust for deferred compensation participants, property held for sale, notes receivable, restricted assets, and debt issuance costs...

  • Page 56
    ... to key employees and directors of AutoNation. Upon exercise, shares of common stock are issued from our treasury stock. Options granted under the plans are nonqualified and are granted at a price equal to or above the closing market price of the common stock on the trading day immediately prior...

  • Page 57
    ... derivative contracts were determined to be highly effective, and no ineffective portion was recognized in income. Revenue Recognition Revenue consists of the sales of new and used vehicles, commissions from related finance and insurance ("F&I") products, sales of parts and services, and sales of...

  • Page 58
    ... with customer vehicle purchases financed and (ii) vehicle 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 as "GAP," this protection...

  • Page 59
    ... 06-3"), which allows companies to adopt a policy of presenting taxes in the income statement on either a gross or net basis. Taxes within the scope of this EITF include taxes that are imposed on a revenue transaction between a seller and a customer, for example, sales taxes, use taxes, value-added...

  • Page 60
    ... utilize LIBOR-based interest rates, averaged 6.3% for 2007 and 6.2% for 2006. Floorplan facilities are used to finance new vehicle inventories and the amounts outstanding thereunder are due on demand, but are generally paid within several business days after the related vehicles are sold. Floorplan...

  • Page 61
    .... The floorplan facilities contain certain operational covenants. At December 31, 2007, we were in compliance with such covenants in all material respects. At December 31, 2007, aggregate capacity under the floorplan credit facilities to finance new vehicles was approximately $3.6 billion, of which...

  • Page 62
    ... of $80.0 million under the amended revolving credit facility, were used to: (1) purchase 50 million shares of our common stock at $23 per share for an aggregate purchase price of $1.15 billion pursuant to our equity tender offer, (2) purchase $309.4 million aggregate principal of our 9% senior...

  • Page 63
    ...'s Rating Services revised its outlook for AutoNation to negative from stable. Our senior unsecured notes and borrowings under the credit agreement are guaranteed by substantially all of our subsidiaries. Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc., (the parent company) has...

  • Page 64
    ...of an uncured default under other material indebtedness of AutoNation. As of December 31, 2007, we were in compliance with the requirements of all applicable financial and operating covenants. In the event of a downgrade in our credit ratings, none of the covenants described above would be impacted...

  • Page 65
    ... of business in connection with purchases or sales of goods and services, we enter into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, liability would be limited by the terms of the applicable agreement. From time to time, primarily...

  • Page 66
    ... in 2006. In April 2007, our Board of Directors authorized an additional $500.0 million share repurchase program. We repurchased 33.2 million shares of our common stock for an aggregate purchase price of $645.7 million (average purchase price per share of $19.43) during the year ended December...

  • Page 67
    Table of Contents TUTONTTION, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS - (Continued) We use the Black-Scholes valuation model to determine compensation expense and amortize compensation expense over the requisite service period of the grants on a straight-line basis. The following table ...

  • Page 68
    ... of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a period of four years. The total fair value of shares vested during 2007 was $14.2 million. Prior to the adoption of SFAS No. 123R, we reported all tax benefits resulting from the...

  • Page 69
    ... liability components at December 31 are as follows: 2007 2006 Deferred income tax assets: Inventory Receivable reserves Warranty, chargeback and self-insurance liabilities Other accrued liabilities Federal and state tax benefits Other, net Loss carryforwards - Federal and state $ (10.9) (3.7) (55...

  • Page 70
    ... reduce our effective tax rate. The unrecognized tax benefits, associated interest, penalties, and deferred tax asset are included as components of Current and Non-Current Other Assets and Other Liabilities in the Consolidated Balance Sheets. It is our continuing policy to account for interest and...

  • Page 71
    ... operations are related to stores that were sold, that we have entered into an agreement to sell, or for which we otherwise deem a proposed sales transaction to be probable, with no material changes expected. Generally, the sale of a store is completed within 60 to 90 days after the date of a sale...

  • Page 72
    ... gains (losses) on cash flow hedges, restricted investments and marketable securities $ 0.3 $ (0.1) $ 0.2 $ (3.6) $ 1.4...Vehicle floorplan payable-trade Vehicle floorplan payable-non-trade Other liabilities $ - 20.0 $ 1.6 2.5 2.0 Cash paid in deferred purchase price Cash used in business...

  • Page 73
    ...part of the tender offer, we purchased 807,183 shares of our common stock that were beneficially owned by Michael E. Maroone, our President and Chief Operating Officer and one of our directors, and 20,353,844 shares from ESL Investments, Inc., and its investment affiliates. At the time of the tender...

  • Page 74
    ... finance subsidiaries which 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...

  • Page 75
    ...changing economic conditions and automotive manufacturer incentive programs. The following is an analysis of ...(1) Quarterly basic and diluted earnings per share from continuing operations may not equal total earnings per share for the year as reported in the Consolidated Income Statements due to ...

  • Page 76
    ... our internal control over financial reporting. The initial or "core" phase consists of implementing a standard data processing platform in the store and centralizing to a shared services center certain key accounting processes (non-inventory accounts payable, bank account reconciliations and...

  • Page 77
    ... DIRECTOR INDEPENDENCE The information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2008 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2007. ITEM 14. PRINCIPAL ACCOUNTING FEES...

  • Page 78
    ... to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the ...Officer (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President - Corporate Controller (Principal Accounting Officer) Director...

  • Page 79
    ...Number File Number Exhibit Date 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9* 4.10* 4.11* 4.12 4.13 4.14 Third Amended and Restated Certificate of Incorporation of AutoNation...the list of the Company's subsidiaries as guarantors thereunder. Form of floating rate senior unsecured notes due...

  • Page 80
    ...all of their AutoNation shares in AutoNation's cash tender offer to purchase up to 50 million shares of common stock. Amendment, dated October 24, 2006, to the AutoNation, Inc. Amended and Restated 1995 Non-Employee Director Stock Option Plan. AutoNation, Inc. 2007 Non-Employee Director Stock Option...

  • Page 81
    ... g r i p t i o n Number File Number Exhibit Date 10.14 21.1* 23.1* 31.1* 31.2* 32.1** 32.2** AutoNation, Inc. Senior Executive Incentive Bonus Plan. Subsidiaries of AutoNation, Inc. Consent of KPMG LLP Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer Rule 13a-14(a)/15d-14...

  • Page 82
    ... 24, 2007, among AutoNation, Inc., a Delaware corporation (the "Company"), AN Luxury Imports of San Diego, Inc.; AN Luxury Imports Holding, LLC; AN Subaru Motors, Inc.; and AN Corpus Christi Motors, Inc. (each a "Guaranteeing Subsidiary" and collectively, the "Guaranteeing Subsidiaries "), each of...

  • Page 83
    ... become due and payable by the Guarantors for the purpose of this Guarantee, failing payment when due by the Company which failure continues for three days after demand therefor is made to the Company. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so...

  • Page 84
    ... of which recitals are made solely by the Guaranteeing Subsidiaries and the Company. IN WITNESS WHEREOF, the parties hereto have caused... Title: Vice President, Deputy General Counsel AN Luxury Imports of San Diego, Inc. AN Luxury Imports Holding, LLC AN Subaru Motors, Inc. AN Corpus Christi Motors, ...

  • Page 85
    Wells Fargo Bank, National Association, As Trustee By: /s/ Joseph P. O'Donnell Name: Joseph P. O'Donnell Title: Vice President 4

  • Page 86
    ....; AN Subaru Motors, Inc.; Auto Car Holding, LLC; Auto Mission Holding, LLC; Beach City Holding, LLC; Carwell Holding, LLC; Cerritos Body Works Holding, LLC; Cerritos Imports Holding, LLC; Champion Chevrolet Holding, LLC; CJ Valencia Holding, LLC; Costa Mesa Cars Holding, LLC; Edgren Motor Holding...

  • Page 87
    ... become due and payable by the Guarantors for the purpose of this Guarantee, failing payment when due by the Company which failure continues for three days after demand therefor is made to the Company. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so...

  • Page 88
    ...Inc. AN Luxury Imports Holding, LLC AN Subaru Motors, Inc. Auto Car Holding, LLC Auto Mission Holding, LLC Beach City Holding, LLC Carwell Holding, LLC Cerritos Body Works Holding, LLC Cerritos Imports Holding, LLC Champion Chevrolet Holding, LLC CJ Valencia Holding, LLC Costa Mesa Cars Holding, LLC...

  • Page 89
    ... Holding, LLC Roseville Motor Holding, LLC Saul Chevrolet Holding, LLC Shamrock F. Holding, LLC SMI Motors Holding, LLC Smythe European Holding, LLC Stevens Creek Holding, LLC Terry York Motor Cars Holding, LLC Torrance Nissan Holding, LLC Valencia B. Imports Holding, LLC Valencia Dodge Holding, LLC...

  • Page 90
    Wells Fargo Bank, National Association, As Trustee By: /s/ Joseph P. O'Donnell Name: Joseph P. O'Donnell Title: Vice President 5

  • Page 91
    ... "Supplemental Indenture "), dated as of October 18, 2007, among AutoNation, Inc., a Delaware corporation (the "Company"), AN Luxury Imports of Tucson, Inc. (the "Guaranteeing Subsidiary") , which is an indirect subsidiary of the Company (or its permitted successor), and Wells Fargo Bank, National...

  • Page 92
    ... become due and payable by the Guarantors for the purpose of this Guarantee, failing payment when due by the Company which failure continues for three days after demand therefor is made to the Company. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so...

  • Page 93
    ... STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE. 8. Counterparts . The parties may sign any number of copies of... AUTONATION, INC. By: /s/ C. Coleman G. Edmunds Name: C. Coleman G. Edmunds Title: Vice President, Deputy General Counsel AN Luxury Imports of Tucson, ...

  • Page 94
    Wells Fargo Bank, National Association, As Trustee By: /s/ Joseph P. O'Donnell Name: Joseph P. O'Donnell Title: Vice President 4

  • Page 95
    ...Pontiac, Buick, GMC Champion Hyundai Champion Toyota Corpus Christi County Line Ford Maroone thared Resource Center BMW of Fremont Land Rover Fort Lauderdale Maroone Toyota Mercedes-Benz of Pembroke Pines BMW Encinitas Mercedes-Benz of tarasota BMW Tucson BMW of Dallas; MINI of Dallas Bankston...

  • Page 96
    .... AutoNation V. Imports of Delray Beach, LLC AutoNation Vermont, Inc. AutoNationDirect.com, Inc. AutoWest Honda - Roseville Hayward Toyota AutoWest Chrysler Jeep Dodge Cayman Islands Maroone Dodge of Pembroke Pines Delaware Delaware Florida Delaware Delaware Texas Delaware Delaware Delaware Texas...

  • Page 97
    ... Chevrolet; Power Pontiac Buick GMC Charlie Hillard Ford, Mazda Champion Chevrolet Mitsubishi Gulf Freeway Champion Chrysler Jeep Isuzu Hyundai Champion Ford Gulf Freeway Champion Ford Mazda Go Chevrolet AutoNation Collision Repair Center Go Ford West Courtesy Chevrolet at the Airport Team Ford...

  • Page 98
    ... Jeep West; Go Pontiac Buick GMC Park Meadows; Go Pontiac Buick GMC West; Go tubaru Arapahoe; Lamborghini Denver; taleen Denver Go tubaru West Texas Florida Illinois Nevada Texas Delaware Delaware Nevada Delaware Nevada Tennessee Delaware Florida Alabama Arizona Delaware Florida Florida California...

  • Page 99
    ... Mercedes-Benz of Houston North Power Toyota Irvine AutoWay Chevrolet AutoWay Ford, Lincoln-Mercury Power Ford Tustin Infiniti Tustin John Lance Ford GO Honda; Go Hyundai, Mazda Go Toyota tcion Arapahoe Desert Audi; Desert BMW of Henderson; Desert BMW of Las Vegas; Desert MINI of Las Vegas...

  • Page 100
    ... Avenues Mercedes-Benz of Miami Maroone Nissan of Miami Leesburg Honda Leesburg Toyota Delaware Florida Florida Ohio Delaware Delaware Texas California Delaware California Bankston Honda Delaware Texas Georgia Delaware Power Chevrolet Irvine California Delaware California Power Ford Valencia...

  • Page 101
    ... Texas AutoNation Fleet Direct Power tcion Tempe; Power Toyota Tempe Power Pontiac Buick GMC tcottsdale Power Chrysler Jeep tcottsdale Power Hyundai Isuzu; Power tubaru Plains Chevrolet PMWQ, Ltd. Port City Imports, Inc. Prime Auto Resources, Inc. Champion Honda Prime Auto Auction Nevada Texas...

  • Page 102
    ... Delaware Bankston Chevrolet Dallas Maroone Chevrolet of Delray Maroone Chevrolet of Greenacres AutoWest Acura of ttevens Creek Mike thad Nissan of Jacksonville Mike thad Nissan of Orange Park AutoWay Pontiac GMC - North Go Nissan Littleton Team Chrysler Jeep Team Honda AutoWay Toyota Team Nissan...

  • Page 103
    ... Valencia Bankston Nissan Dallas Maroone Dodge Delray Maroone Ford of Delray Maroone Lincoln-Mercury of North Palm Beach Maroone Nissan of Delray West tide Honda Westgate Chevrolet Cadillac Laurel Audi of Westmont Laurel BMW of Westmont Mercedes-Benz of Westmont California California Tennessee...

  • Page 104
    ... of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of AutoNation, Inc. Our report on the consolidated financial statements refers to the adoption of FASB Interpretation No. 48, Accounting for Uncertainty...

  • Page 105
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 106
    ..., process, summarize and report financial 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/ Michael J. Short Michael J. Short Executive Vice President...

  • Page 107
    ... the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Michael J. JacKson Michael J. JacKson Chairman and Chief Executive Officer February 27...

  • Page 108
    ... Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Michael J. Short Michael J. Short Executive Vice President and Chief Financial Officer February...