AutoNation 2007 Annual Report Download - page 41

Table of Contents
Net cash provided by operating activities during 2007 was primarily affected by a change in the classification of borrowings from a
floorplan lender, a reduction in tax payments, and a reduction in earnings, as further discussed below.
On November 30, 2006, General Motors (“GM”) completed the sale of a majority stake in General Motors Acceptance Corporation
(“GMAC”), which was GM’s wholly-owned captive finance subsidiary prior to this transaction. As a result of this sale, we have classified new
borrowings from GMAC subsequent to this transaction as vehicle floorplan payable-non-trade, with related changes reflected as financing cash
flows. Accordingly, net floorplan borrowings from GMAC since this transaction (totaling $231.5 million for 2007) are reflected as cash
provided by financing activities, while repayments in 2007 of amounts due to GMAC prior to this transaction continue to be reflected as cash
used by operating activities.
Partially offsetting the GMAC reclassification was a $130.4 million reduction in tax payments during 2007, as compared to 2006. A portion
of this reduction pertains to estimated federal tax payments totaling approximately $100 million that we made in 2006, related to estimated taxes
for the third and fourth quarter of 2005, payment for which had been deferred as allowed for filers affected by hurricanes in 2005.
The reduction in cash provided by operating activities also reflects lower earnings in 2007, as compared to 2006. Additionally, cash
provided by operating activities was favorably impacted in 2006 by a $34.5 million adjustment to net income to reflect tender premium and
other financing costs related to our April 2006 debt tender offer as a financing activity.
Cash provided by operating activities decreased in 2006, as compared to 2005, primarily as a result of the federal tax payments totaling
approximately $100 million made in 2006 that were related to estimated taxes for the third and fourth quarter of 2005, as discussed above.
Additionally, cash provided by operating activities also reflects lower earnings in 2006 as compared to 2005.
Cash Flows from Investing Activities
Net cash flows from investing activities consist primarily of cash used in capital additions, activity from business acquisitions, property
dispositions, purchases and sales of investments, and other transactions as further described below.
Capital expenditures, excluding property operating lease buy-outs, were $157.9 million during 2007, as compared to $169.7 million in
2006, and $130.6 million in 2005. We will make facility and infrastructure upgrades and improvements from time to time as we identify
projects that are required to maintain our current business or that we expect to provide us with acceptable rates of return. We expect 2008 capital
expenditures of approximately $110 million, excluding any acquisition-related spending, land purchased for future sites, or 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.
Proceeds from the disposal of property held for sale were $8.8 million in 2007, $6.5 million in 2006, and $33.4 million in 2005. These
amounts are primarily from the sales of stores and other properties held for sale. Cash received from business divestitures, net of cash
relinquished, totaled $55.1 million in 2007, $24.0 million in 2006, and $55.0 million in 2005.
Cash used in business acquisitions, net of cash acquired, was $6.7 million in 2007, $166.7 million in 2006, and $15.9 million in 2005.
During 2007, we acquired ten automotive retail franchises and other related assets as compared to five in 2006 and two in 2005. Cash used in
business acquisitions included deferred purchase price for certain prior year automotive retail acquisitions of $0.2 million in 2006 and
$9.9 million in 2005. See discussion in Note 15, Acquisitions, of the Notes to Consolidated Financial Statements.
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