AutoNation 2007 Annual Report Download - page 40

Table of Contents
the floorplan facilities 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 primarily collateralized by new vehicle inventories and related receivables. Our manufacturer agreements generally require
that the manufacturer have the ability to draft against the floorplan facilities so that the lender directly funds the manufacturer for the purchase
of inventory.
Share Repurchases and Dividends
During 2007, 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). There was $196.7 million available for share repurchases authorized by our Board of Directors as of December 31,
2007.
Future share repurchases are subject to limitations contained in the indenture relating to our senior unsecured notes issued in April 2006. As
of January 1, 2008, we had approximately $30 million available for share repurchases and other restricted payments that are subject to these
limitations. This amount will increase in future periods by 50% of our cumulative consolidated net income (as defined in the indenture), the net
proceeds of stock option exercises, and certain other items, and decrease by the amount of future share repurchases and other restricted
payments subject to these limitations. While we expect to continue repurchasing shares in the future, the decision to make additional share
repurchases will be based on such factors as the market price of our common stock versus our view of its intrinsic value, the potential impact
on our capital structure, and the expected return on competing uses of capital such as dealership acquisitions, capital investments in our current
businesses, or repurchases of our debt.
We have not declared or paid any cash dividends on our common stock during our three most recent fiscal years. We do not anticipate
paying cash dividends in the foreseeable future. The indenture for our senior unsecured notes issued in April 2006 restricts our ability to declare
cash dividends.
Restrictions and Covenants
Our senior unsecured notes issued in April 2006, amended credit agreement, and mortgage facility contain numerous customary financial
and operating covenants that place significant restrictions on us. These covenants may limit our ability to obtain additional financing for
working capital, capital expenditures, acquisitions, and other general corporate activity. See Note 7 for further information. 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 in Note 7 would be impacted. In addition, availability
under the revolving credit facility described above would not be impacted should a downgrade in the senior unsecured credit ratings occur.
Certain covenants in the indenture for the senior unsecured notes issued in April 2006 would be eliminated with certain upgrades of the senior
unsecured notes to investment grade by either Standard and Poor’s or Moody’s Investor Service.
The floorplan facilities described above 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
$3.6 billion, of which $2.2 billion total was outstanding.
Cash Flows
Cash and cash equivalents decreased by $20.0 million during 2007, decreased by $194.0 million during 2006, and increased by
$134.6 million during 2005. The major components of these changes are discussed below.
Cash Flows from Operating Activities
Net cash provided by operating activities during 2007 was $206.9 million, as compared to $302.7 million in 2006, and $579.6 million in
2005.
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