As filed with the Securities and Exchange Commission on October 5, 2001
REGISTRATION NO. 333-[o]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AUTONATION, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 5511 73-1105145
(State or (Primary Standard (I.R.S.
Other Jurisdiction Industrial Employer
Incorporation or Classification Identification Number)
Organization) Code Number)
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110 S.E. 6th Street
Fort Lauderdale, Florida 33301
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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Jonathan P. Ferrando
Senior Vice President, General Counsel & Secretary
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
(954) 769-6000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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COPIES TO:
Gary P. Cullen
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, IL 60606
(312) 407-0700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered
in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. |_|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
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CALCULATION OF REGISTRATION FEE
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Title Of Each Class Of Amount To Be Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Registered Offering Price Per Unit (Aggregate Offering Price Registration Fee
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9% Senior Notes Due 2008 450,000 $1,000 $450,000,000 $112,500
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Guarantees (2) -- -- -- --
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(1) Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457(f)(1).
(2) Each of the Guarantors (as defined) is registering a Guarantee (as
defined) of the payment of the principal of, premium, if any, and
interest on the notes being registered hereby. Pursuant to Rule
457(n) under the Securities Act of 1933, as amended, no
registration fee is required with respect to the Guarantees.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may determine.
TABLE OF ADDITIONAL REGISTRANTS
State or other
Exact Name of Registrant as Specified in its Charter and Address, Jurisdiction of Primary Standard
Including Zip Code, and Telephone Number, Including Area Code Incorporation Industrial Classification I.R.S. Employer
of Registrant's Principal Executive Offices* or Organization Code Number Identification Number
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7 Rod Real Estate North, A Limited Liability Company WY 6519 84-1167321
7 Rod Real Estate South, A Limited Liability Company WY 6519 84-1167320
Abraham Chevrolet-Miami, Inc. DE 5511 65-0802822
Abraham Chevrolet-Tampa, Inc. DE 5511 65-0802820
ACER Fiduciary, Inc. DE 6411 65-0945065
Airport Dodge, Inc. FL 5511 65-1058721
Al Maroone Ford, LLC DE 5511 65-0944227
Albert Berry Motors, Inc. TX 5511 74-1487498
Allied 2000 Collision Center, Inc. TX 7538 75-2639298
Allison Bavarian CA 5511 94-2707588
All-State Rent A Car, Inc. NV 6719 88-0143152
American Way Motors, Inc. TN 5511 62-1333714
America's Car Stop CA 5511 94-3264409
AN/CF Acquisition Corp. DE 5511 65-0927849
AN/FGJE Acquisition Corp. DE 5511 65-0964276
AN/FMK Acquisition Corp. DE 5511 65-0978211
AN/MF Acquisition Corp. DE 5511 65-0961375
AN/MNI Acquisition Corp. DE 5511 65-1024377
AN/PF Acquisition Corp. DE 5511 65-0927848
AN/STD Acquisition Corp. DE 5511 65-0952134
Anderson Chevrolet CA 5511 94-1503305
Anderson Chevrolet Los Gatos, Inc. CA 5511 77-0262368
Anderson Cupertino, Inc. CA 5511 65-0770033
Anderson Dealership Group CA 6719 77-0417573
Anything on Wheels, Ltd. FL 6719 65-0715206
Appleway Chevrolet, Inc. WA 5511 91-0538143
Atrium Restaurants, Inc. FL 5812 59-2424477
Auto Ad Agency, Inc. MD 7319 52-1295158
Auto Advertising Services, Inc. DE 7319 65-1008609
Auto Car, Inc. CA 5511 68-0129623
Auto Holding Corp. DE 6719 52-2107831
Auto Mission Ltd. CA 5511 94-3141092
Auto West, Inc. CA 5511 94-2946518
AutoNation Benefits Company, Inc. FL 8741 34-1135160
AutoNation Chrysler Plymouth GP, Inc. DE 6719 65-0957163
AutoNation Chrysler Plymouth Jeep of North Houston, L.P. TX 5511 65-0957160
AutoNation Chrysler Plymouth LP, Inc. DE 6719 65-0957162
AutoNation Corporate Management Company FL 8721 65-0629697
AutoNation Denver Management, Inc. CO 6719 84-1216628
AutoNation Dodge of Pembroke Pines, Inc. DE 5511 65-0948962
AutoNation Dodge of San Antonio, L.P. TX 5511 65-0964579
AutoNation Dodge of San Antonio-GP, Inc. DE 6719 65-0964574
AutoNation Dodge of San Antonio-LP, Inc. DE 6719 65-0964580
AutoNation DS Investments, Inc. TX 6719 65-0737774
AutoNation Enterprises Incorporated FL 6719 65-0608578
AutoNation Financial Services Corp. DE 6159 65-0725080
AutoNation Holding Corp. DE 8741 65-0723604
AutoNation Imports Northwest, Inc. DE 5511 65-0934562
AutoNation Imports of Arapahoe DE 5511 65-1137521
AutoNation Imports of Lithia Springs, Inc. DE 5511 65-1003051
AutoNation Imports of Longwood, Inc. DE 5511 65-1032195
AutoNation Imports of Palm Beach, Inc. DE 5511 65-1102140
AutoNation Imports of Winter Park, Inc. DE 5511 65-1032110
AutoNation Insurance Company, Inc. VT 6411 65-0908474
AutoNation LM Holding Corporation DE 8741 65-0723608
AutoNation Motors Holding Corp. DE 8741 65-1132563
AutoNation Motors of Lithia Springs, Inc. DE 5511 65-1002966
AutoNation Realty Corporation DE 6519 65-0711536
AutoNation USA Corporation FL 6519 65-0608572
AutoNation USA of Perrine, Inc. DE 5511 65-0899807
AutoNation USA of Virginia Beach, LLC DE 5511 65-0893906
AutoNationDirect.com, Inc. DE 7319 65-0945066
Bankston Auto, Inc. TX 6719 75-1336358
Bankston Chrysler Jeep of Frisco, L.P. TX 5511 65-1052692
Bankston CJ GP, Inc. DE 6719 65-0932849
Bankston CJ LP, Inc. DE 6719 65-1052692
Bankston Ford of Frisco, Ltd. Co. TX 5511 75-2529822
Bankston Nissan in Irving, Inc. TX 5511 75-1325663
Bankston Nissan Lewisville, Inc. DE 5511 65-0755949
Bargain Rent-A-Car CA 5511 95-3821161
Batfish Auto, LLC CO 6719 84-1268477
Batfish, LLC CO 6719 84-1261352
BBCSS, Inc. AZ 6719 58-2434441
Beach City Chevrolet Company, Inc. CA 5511 95-1879646
Beacon Motors, Inc. FL 5511 65-0582254
Bell Dodge, L.L.C. DE 5511 52-2102862
Bengal Motor Company, Ltd FL 5511 59-2985277
Bengal Motors, Inc. FL 6719 65-0165367
Bill Ayares Chevrolet, Inc. MD 5511 52-0579881
Bill Wallace Enterprises, Inc. FL 5511 65-0613059
Bledsoe Dodge, LLC DE 5511 65-0944613
Bob Townsend Ford, Inc. DE 5511 31-0669965
Body Shop Holding Corp. DE 6719 52-2124065
BOSC Automotive Realty, Inc. DE 6519 38-3262849
Brown & Brown Chevrolet - Superstition Springs, LLC AZ 5511 86-0904747
Brown & Brown Chevrolet, Inc. AZ 5511 86-0128003
Brown & Brown Nissan Mesa, L.L.C AZ 5511 86-0795376
Brown & Brown Nissan Inc. AZ 5511 86-0677220
B-S-P Automotive, Inc. TX 6719 75-1905123
Buick Mart, Inc. CA 5511 95-2260351
Buick Mart Limited Partnership GA 6719 88-0377744
Bull Motors, LLC DE 5511 65-0944614
C. Garrett, Inc. CO 6719 84-1264053
Carlisle Motors, LLC DE 5511 65-0944616
Carwell, LLC DE 5511 65-0944617
C-Car Auto Wholesalers, Inc. OK 6719 75-2691627
Central Motor Company, Ltd FL 5511 65-0165224
Central Motors, Inc. FL 6719 65-0164841
Cerritos Body Works, Inc. CA 7538 33-0374316
Cerritos Imports, Inc. DE 5511 52-2119516
Champion Chevrolet, LLC DE 5511 65-0944618
Champion Ford, Inc. TX 5511 76-0171196
Champion Planning, Inc. TX 6719 76-0209411
Charlie Hillard, Inc. TX 5511 75-0922515
Charlie Thomas Auto Sales, Inc. TX 6719 76-0548926
Charlie Thomas Chevrolet, Inc. TX 5511 76-0006971
Charlie Thomas Chrysler-Plymouth, Inc. TX 5511 76-0010351
Charlie Thomas' Courtesy Ford, Inc. TX 5511 74-1624668
Charlie Thomas Courtesy Leasing, Inc. TX 7515 74-1850452
Charlie Thomas Ford, Inc. TX 5511 74-1189752
Chesrown Auto, LLC DE 5511 65-0944619
Chesrown Chevrolet, LLC DE 5511 65-0944620
Chesrown Collision Center, Inc. CO 7538 84-1358588
Chesrown Ford, Inc. CO 5511 84-1164224
Chevrolet World, Inc. FL 5511 59-2216673
Chuck Clancy Ford of Marietta, Inc. GA 5511 58-1675636
Cleburne Motor Company, Inc. TX 5511 75-1176012
Coastal Cadillac, Inc. FL 5511 59-3023188
Colonial Imports, Inc. FL 6719 59-2441958
Consumer Car Care Corporation TN 6719 62-1151481
Contemporary Cars, Inc. FL 5511 59-1635976
Cook-Whitehead Ford, Inc. FL 5511 59-1165955
Cook-Whitehead Ford, LLC DE 5511 52-2135873
Corporate Properties Holding, Inc. DE 6519 65-0948961
Costa Mesa Cars, Inc. CA 5511 33-0626084
Courtesy Auto Group, Inc. FL 5511 59-2360236
Courtesy Wholesale Corporation FL 6719 65-0630718
Covington Pike Motors, Inc. TN 5511 58-1366612
Credit Management Acceptance Corporation FL 6159 59-3052102
Cross-Continent Auto Retailers, Inc. DE 6719 75-2653095
CT Intercontinental, Inc. TX 5511 76-0222058
CT Motors, Inc. TX 5511 76-0387042
D/L Motor Company FL 5511 59-3237877
D/L Motor-HO, Inc. FL 6719 **
Deal Dodge of Des Plaines, Inc. IL 5511 36-3862968
Dealership Accounting Services, Inc. FL 8721 59-3138671
Dealership Properties, Inc. NV 6519 74-2869002
Dealership Realty Corporation TX 6519 76-0218062
Desert Buick-GMC Management Group, Inc. NV 6719 88-0265699
Desert Buick-GMC Trucks, L.L.C. DE 5511 52-2102859
Desert Chrysler-Plymouth, Inc. DE 5511 88-0121640
Desert Dodge, Inc. NV 5511 88-0227814
Desert GMC, L.L.C. DE 5511 52-2102860
Desert GMC-East, Inc. NV 6719 88-0223845
Desert Lincoln-Mercury, Inc. NV 5511 88-0168433
Dobbs Brothers Buick-Pontiac, Inc. TN 5511 62-1038471
Dobbs Ford of Memphis, Inc. DE 5511 65-1065025
Dobbs Ford, Inc. FL 5511 59-1584177
Dobbs Mobile Bay, Inc. AL 5511 62-1196110
Dobbs Motors of Arizona, Inc. AZ 5511 93-0929951
Dodge of Bellevue, Inc. DE 5511 94-3009590
Don Mealey Chevrolet, Inc. FL 5511 59-1553076
Don Mealey Imports, Inc. FL 5511 59-3099049
Don Mealey Oldsmobile, Inc. FL 5511 59-3172140
Don-A-Vee Jeep-Eagle, Inc. CA 5511 33-0203778
Downers Grove Dodge, Inc. DE 5511 36-2804667
Driver's Mart Worldwide, Inc. VA 6719 38-3275555
Eastgate Ford, Inc. OH 5511 31-0736141
Ed Mullinax Ford, Inc. DE 5511 34-1543105
Ed Mullinax, Inc. DE 6719 34-1543133
Edgren Motor Company, Inc. CA 5511 94-1561041
El Monte Imports, Inc. DE 5511 65-0881906
El Monte Motors, Inc. DE 5511 65-0881905
Elmhurst Auto Mall, Inc. IL 5511 36-4185090
Elmhurst Dodge, Inc. IL 5511 36-2474717
Emich Chrysler Plymouth, LLC DE 5511 65-0944625
Emich Dodge, LLC DE 5511 65-0944626
Emich Lincoln-Mercury, Inc. DE 5511 84-1041105
Emich Lincoln-Mercury, LLC DE 5511 65-0944592
Emich Oldsmobile, LLC DE 5511 65-0944593
Emich Subaru West, LLC DE 5511 65-0944597
Empire Services Agency, Inc. FL 6719 65-0309882
Financial Services, Inc. TX 6159 76-2195488
First Team Automotive Corp. DE 6719 59-3440254
First Team Cadillac-Oldsmobile, LLC DE 5511 52-2135878
First Team Ford of Manatee, Ltd. FL 5511 59-3446538
First Team Ford, Ltd FL 5511 59-3366156
First Team Imports, Ltd. FL 6719 59-3298470
First Team Infiniti, Ltd. FL 6719 59-2927254
First Team Jeep Eagle, Chrysler-Plymouth, Ltd. FL 5511 59-3446556
First Team Management, Inc. FL 6719 59-2714981
First Team Premier, Ltd. FL 6719 59-3392621
Fit Kit, Inc. CA 5511 33-0115670
Flemington Land Rover, LLC DE 5511 65-0944600
Florida Auto Corp. DE 6719 65-0837116
Ford of Garden Grove Limited Partnership GA 6719 88-0377746
Ford of Kirkland, Inc. WA 5511 91-1425985
Fox Buick/Isuzu, Inc. MD 5511 52-1713116
Fox Chevrolet, Inc. MD 5511 52-0845653
Fox Hyundai, Inc. MD 5511 52-1429424
Fox, Inc. MD 5511 52-1264123
Fred Oakley Motors, Inc. DE 5511 75-1524534
Ft. Lauderdale Nissan, Inc. FL 5511 65-0273822
G.B. Import Sales & Service, LLC DE 5511 65-0944605
Gene Evans Ford, LLC DE 5511 65-0944608
George Sutherlin Nissan, Inc GA 5511 58-2062167
Golf Mill Ford, Inc. DE 5511 36-3087611
Government Blvd. Motors, Inc. AL 5511 62-1502108
Gulf Management, Inc. FL 5511 59-3023188
Hayward Dodge, Inc. DE 5511 94-1689551
Hillard Auto Group, Inc. TX 6719 75-1965005
Hollywood Imports Limited, Inc. FL 5511 59-2025810
Hollywood Kia, Inc. FL 5511 65-0619873
Horizon Chevrolet, Inc. OH 5511 34-1245635
House of Imports, Inc. CA 5511 95-2498811
Houston Auto Imports Greenway, Ltd. TX 5511 65-0954426
Houston Auto Imports North, Ltd. TX 5511 65-0954425
Houston Imports Greenway-GP, Inc. DE 6719 65-0952169
Houston Imports Greenway-LP, Inc. DE 6719 65-0959312
Houston Imports North-GP, Inc. DE 6719 65-0952170
Houston Imports North-LP, Inc. DE 6719 65-0959311
H's Auto Body, Inc. DE 7538 65-0935702
Hub Motor Co. GA 5511 58-1091502
Irvine Imports, Inc. CA 5511 33-0374310
Irvine Toyota/Nissan/Volvo Limited Partnership GA 6719 88-0377749
Jemautco, Inc. OH 6719 31-1153168
Jerry Gleason Chevrolet, Inc. IL 5511 36-2840037
Jerry Gleason Dodge, Inc. IL 5511 36-4074146
Jim Quinlan Chevrolet Co. DE 5511 59-1055603
Jim Quinlan Ford Lincoln-Mercury, Inc. FL 5511 59-2690846
Joe MacPherson Ford CA 5511 33-0180618
Joe MacPherson Imports No.1 CA 5511 33-0745137
Joe MacPherson Infiniti CA 5511 33-0127306
Joe MacPherson Oldsmobile CA 5511 33-0293599
John M. Lance Ford, LLC DE 5511 65-0944184
J-R Advertising Company CO 7319 84-1177523
J-R Motors Company Central LLC CO 5511 84-1297225
J-R Motors Company North CO 5511 84-1167355
J-R Motors Company South CO 5511 84-1167319
J-R-M Motors Company Northwest, LLC CO 5511 84-1363627
JRJ Investments, Inc. NV 5511 88-0199942
Kelnat Advertising, Ltd. Co. FL 7319 59-2682744
Kenyon Dodge, Inc. FL 5511 59-0479520
King's Crown Ford, Inc. DE 5511 59-2018826
Kirkland Pontiac-Buick-GMC, Inc. WA 5511 91-1739519
KLJ of Nevada, Inc. NV 6719 88-0384410
L.P. Evans Motors WPB, Inc. FL 5511 59-0684221
L.P. Evans Motors, Inc. FL 5511 59-0601584
Lance Children, Inc. OH 6519 34-1789728
Les Marks Chevrolet, Inc. TX 5511 76-0375065
Lew Webb's Ford, Inc. CA 5511 33-0677560
Lew Webb's Irvine Nissan, Inc. CA 5511 33-0374313
Lexus of Cerritos Limited Partnership GA 6519 88-0378242
LGS Holding Company DE 6719 65-0711531
Lou Grubb Chevrolet, L.L.C. DE 5511 52-2012866
Lou Grubb Chevrolet-Arrowhead, Inc. DE 5511 91-1933520
Lou Grubb Ford, L.L.C. DE 5511 52-2102864
Lovern, Inc. FL 6719 65-0000148
MC/RII, LLC OH 5511 **
M S and S Toyota, Inc. FL 5511 59-1968718
MacHoward Leasing CA 5511 95-2267692
MacPherson Enterprises, Inc. CA 5511 95-2706038
Magic Acquisition Corp. DE 5511 65-0711428
Manhattan Motors, Inc. CA 5511 95-3867937
Marks Family Dealerships, Inc. TX 5511 74-1405873
Marks Transport, Inc. TX 5511 76-0444883
Maroone Car and Truck Rental Company FL 7514 65-0371429
Maroone Chevrolet Ft. Lauderdale, Inc. FL 5511 65-0721018
Maroone Chevrolet, LLC DE 5511 65-0944183
Maroone Dodge, LLC DE 5511 65-0944181
Maroone Dodge Pompano, Inc. FL 5511 65-0721014
Maroone Ford, LLC DE 5511 65-0944179
Maroone Isuzu, LLC DE 5511 65-0944178
Maroone Jeep-Eagle, Inc. DE 5511 65-0797301
Maroone Management Services, Inc FL 6719 65-0721017
Maroone Oldsmobile II, Inc. DE 5511 65-0725800
Maroone Oldsmobile, LLC DE 5511 52-2135875
Marshall Lincoln-Mercury, Inc. CO 5511 84-1382739
Mealey Holdings, Inc. FL 6719 59-3280283
Mechanical Warranty Protection, Inc. FL 6411 65-0062054
Metro Chrysler Jeep, Inc. FL 5511 59-3002195
Midway Chevrolet, Inc. TX 5511 75-1631858
Mike Hall Chevrolet, Inc. DE 5511 74-1940031
Mike Shad Chrysler Plymouth Jeep Eagle, Inc. FL 5511 65-0731779
Mike Shad Ford, Inc. FL 5511 65-0730472
Miller-Sutherlin Automotive, LLC DE 5511 65-0944177
Mission Blvd. Motors, Inc. CA 5511 94-3179980
Mr. Wheels, Inc. CA 5511 95-3050274
Mullinax East, Inc. DE 5511 34-1543140
Mullinax Ford North Canton, Inc. OH 5511 34-1706005
Mullinax Ford South, Inc. FL 5511 59-2745619
Mullinax Lincoln-Mercury, Inc. DE 5511 34-1555317
Mullinax Management, Inc. DE 6719 34-1543139
Mullinax of Mayfield, Inc. OH 5511 34-1032543
Mullinax Used Cars, Inc. OH 5521 34-1663489
Newport Beach Cars, LLC DE 5511 65-0944175
Nichols Ford, Inc. TX 5511 75-2345233
Nissan of Brandon, Inc. FL 5511 59-2872723
Northpoint Chevrolet, Inc. DE 5511 52-2124967
Northpoint Ford, Inc. DE 5511 65-0964278
Northwest Financial Group, Inc. WA 5511 91-1666832
Ontario Dodge, Inc. CA 5511 33-0380793
Orange County Automotive Imports, LLC DE 5511 65-0944636
Orlando Imports, Inc. DE 5511 52-2104777
Payton-Wright Ford Sales, Inc. TX 5511 75-1231297
Peyton Cramer Automotive CA 5511 33-0612289
Peyton Cramer Ford CA 5511 95-3410394
Peyton Cramer Infiniti CA 5511 33-0567152
Peyton Cramer Jaguar CA 5511 33-0567150
Peyton Cramer Lincoln-Mercury CA 5511 33-0679879
Pierce Automotive Corporation AZ 6719 86-0811184
Pierce, LLC DE 5511 65-0944638
Pitre Buick-Pontiac-GMC of Scottsdale, Inc. DE 5511 86-0928953
Pitre Chrysler-Plymouth-Jeep of Bell, Inc. DE 5511 86-0928950
Pitre Chrysler-Plymouth-Jeep of Scottsdale, Inc. DE 5511 86-0928955
Pitre Isuzu-Subaru-Hyundai of Scottsdale, Inc. DE 5511 86-0928952
Pitre Kia of Scottsdale, Inc. DE 5511 86-0928954
Plains Chevrolet, Inc. TX 5511 75-1057395
PMWQ, Inc. NV 6719 75-2748417
PMWQ, Ltd. TX 6719 75-2748419
Port City Imports, Inc. TX 5511 74-2403712
Port City Imports-HO, Inc. TX 6719 58-2490117
Port City Pontiac-GMC Trucks, Inc. TX 5511 74-2481788
Prime Auto Resources, Inc. CA 6719 33-0718037
Quality Nissan, Inc. TX 5511 75-1847218
Quantum Premium Finance Corporation FL 6159 65-0362902
Quinlan Motors, Inc. FL 5511 59-3268936
R. Coop Limited CO 6719 84-1251979
R.L. Buscher II, Inc. CO 6719 84-1171763
R.L. Buscher III, Inc. CO 6719 84-1171764
Real Estate Holdings, Inc. FL 6519 65-0789583
Republic Anderson Investment Group, Inc. CA 6159 65-0829923
Republic DM Property Acquisition Corp. DE 6519 52-2099740
Republic Resources Company DE 8741 51-0370517
Republic Risk Management Services, Inc. FL 8741 65-0782124
Republic of Rochester, Inc. DE 6719 52-2124968
Resources Aviation, Inc. FL 4522 65-0858501
RI Merger Corp. CO 6719 84-1492421
RI Shelf Corp. DE 6719 65-0772300
RI/ASC Acquisition Corp. DE 7538 84-1491657
RI/BB Acquisition Corp. DE 7538 52-2127466
RI/BBNM Acquisition Corp AZ 6719 86-0914399
RI/BRC Real Estate Corp. CA 6519 65-0942312
RI/CC Acquisition Corp. DE 6719 65-0772227
RI/DM Acquisition Corp. DE 6719 52-2099741
RI/HGMC Acquisition Corp. DE 5511 52-2110003
RI/Hollywood Nissan Acquisition Corp. DE 5511 65-0784675
RI/LLC Acquisition Corp. CO 6719 84-1268477
RI/LLC-2 Acquisition Corp. CO 6719 84-1459544
RI/PII Acquisition Corp. DE 5511 52-2124965
RI/RMC Acquisition Corp DE 5511 52-2109998
RI/RMP Acquisition Corp. DE 5511 52-2109996
RI/RMT Acquisition Corp. DE 5511 52-2110000
RI/SBC Acquisition Corp. DE 7538 52-2124051
RI/WFI Acquisition Corporation DE 5511 52-2124969
RII Management Company DE 8741 52-2107830
Rosecrans Investments, LLC DE 6719 65-1093600
Roseville Motor Corporation CA 5511 94-2922942
RRM Corporation, Inc. DE 8721 52-2007719
RSHC, Inc. DE 6411 65-0908475
Sahara Imports, Inc. NV 5511 86-0869592
Sahara Nissan, Inc. NV 5511 88-0133547
Santa Ana Auto Center CA 5511 33-0103746
Saul Chevrolet, Inc. CA 5511 33-0507627
SCM Realty II, Inc. FL 6519 65-0611002
SCM Realty, Inc. FL 6519 59-2640748
Service Station Holding Corp. DE 6719 65-0899829
SGSCP Limited Partnership FL 6719 59-3143533
Shamrock Ford, Inc. CA 5511 94-2220473
Six Jays LLC CO 6719 84-1364768
SMI Motors, Inc. CA 5511 95-4399082
Smythe European, Inc. CA 5511 94-2633163
Southeast Lease Car, Inc. FL 7515 59-2449372
Southtown Ford, Inc. TX 5511 75-6870080
Southwest Dodge, LLC DE 5511 65-0944643
Spit Fire Properties, Inc. FL 6519 59-2484224
Spokane Mitsubishi Dealers Advertising Association, Inc. WA 7319 58-2455403
Star Motors, LLC DE 5511 65-0944646
Steakley Chevrolet, Inc. TX 5511 75-1091508
Steeplechase Motor Company TX 6519 76-0244476
Steve Moore Chevrolet Delray, LLC DE 5511 65-0944647
Steve Moore Chevrolet, LLC DE 5511 65-0944670
Steve Moore, LLC DE 5511 52-2135868
Steve Moore's Buy-Right Auto Center, Inc. FL 5511 65-0192329
Steve Rayman Pontiac-Buick-GMC-Truck, LLC DE 5511 65-0944669
Stevens Creek Motors, Inc. CA 5511 94-3010181
Sunrise Nissan of Jacksonville, Inc. FL 5511 59-3427446
Sunrise Nissan of Orange Park, Inc. FL 5511 59-1357686
Sunset Pontiac-GMC Truck South, Inc. FL 5511 59-3128431
Sunset Pontiac-GMC, Inc. MI 5511 38-1919584
Superior Nissan, Inc. NC 5511 62-1306501
Sutherlin Chrysler-Plymouth Jeep-Eagle, LLC DE 5511 65-0944667
Sutherlin Imports, Inc. GA 5511 58-1673384
Sutherlin Imports, LLC DE 5511 65-0944664
Sutherlin Nissan of Town Center, Inc. GA 5511 58-2241820
Sutherlin Nissan, LLC DE 5511 65-0944665
Tallahassee Automotive Group, Inc. FL 6719 59-3280286
Tallahassee Chrysler Plymouth, Inc. FL 6719 59-3130547
Tartan Advertising, Inc. CA 7319 33-0191704
Tasha Incorporated CA 6719 94-2512050
Taylor Jeep Eagle, LLC DE 5511 65-0944662
Team Dodge, Inc. DE 5511 65-1040982
Terry York Motor Cars, Ltd. CA 5511 95-3549353
Texan Ford Sales, Inc. TX 5511 75-2007516
Texan Ford, Inc. TX 5511 76-0207034
Texan Lincoln-Mercury, Inc. DE 5511 76-0489587
T-Five, Inc. MI 5511 38-2551793
The Consulting Source, Inc. FL 8741 59-2183874
The Pierce Corporation II, Inc. AZ 6719 86-0743383
Torrance Nissan, LLC DE 5511 65-0944661
Tousley Ford, Inc. MN 5511 41-0609970
Town & Country Chrysler Jeep, Inc. DE 5511 91-1197824
Toyota Cerritos Limited Partnership GA 6519 88-0377743
Triangle Corporation DE 8741 52-2025037
T-West Sales & Service, Inc. NV 5511 88-0235466
Valencia Dodge CA 5511 95-3935812
Valencia Lincoln-Mercury, Inc. DE 5511 65-0730303
Valley Chevrolet, Inc. MD 5511 52-0728314
Vanderbeek Motors, Inc. CA 5511 94-2494800
Vanderbeek Olds/GMC Truck, Inc. CA 5511 68-0072435
Village Motors, LLC DE 5511 65-0944660
Vince Wiese Chevrolet, Inc. DE 5511 95-2703429
W.O. Bankston Enterprises, Inc. DE 6719 75-2296087
W.O. Bankston Lincoln-Mercury, Inc. DE 5511 75-1053127
W.O. Bankston Nissan, Inc. TX 5511 75-1279211
W.O. Bankston Paint and Body, Inc. TX 7538 75-1723194
Wallace Dodge, LLC DE 5511 65-0944659
Wallace Ford, LLC DE 5511 65-0944659
Wallace Imports, Inc. FL 6719 59-2326469
Wallace Lincoln-Mercury, LLC DE 5511 65-0944657
Wallace Nissan, LLC DE 5511 65-0944655
Webb Automotive Group, Inc. CA 6719 33-0338459
West Colton Cars, Inc. CA 5511 77-0428114
West Side Motors, Inc. TN 5511 62-1030139
Westgate Chevrolet, Inc. TX 5511 75-1324586
Woody Capital Investment Company II CO 6719 84-1167986
Woody Capital Investment Company III CO 6719 84-1167988
Working Man's Credit Plan, Inc. TX 6719 75-2458731
York Enterprises South, Inc. CA 5511 33-0419789
- --------------
* All Additional Registrants have the following principal executive office:
c/o AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
(954) 769-6000
** Applied For
This preliminary prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Com- mission is effective. This preliminary
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, dated October 5, 2001
AUTONATION[symbol]
Offer to Exchange
All Outstanding 9% Senior Notes Due 2008
($450,000,000 Principal Amount Outstanding)
for
9% Senior Notes Due 2008
The exchange offer and withdrawal rights will expire at 12:00
midnight, New York City time, on , 2002, unless we extend the offer.
-----------------
AutoNation, Inc. will exchange $1,000 in principal amount of its
9% senior notes due 2008 (the "exchange notes") for each $1,000 in
principal amount of its currently outstanding 9% senior notes due 2008 (the
"outstanding notes") (the outstanding notes and the exchange notes are
collectively referred to as the "notes") that is validly tendered and
accepted by AutoNation in the exchange offer.
-----------------
AutoNation will accept for exchange any and all of the outstanding
notes that are validly tendered prior to 12:00 midnight, New York City
time, on , 2002. The exchange offer is not conditioned on any minimum
principal amount of outstanding notes being tendered for exchange. The
exchange offer is, however, subject to other terms and conditions described
in this prospectus, which you should read carefully. Neither AutoNation nor
any of its officers or directors makes any recommendation as to whether or
not you should tender your outstanding notes in the exchange offer. You
must make your own decision after reading this document, including the
discussion entitled "Risk Factors" beginning on page 16, and consulting
with your advisors based on your own financial position and requirements.
All persons holding outstanding notes are eligible to participate in the
exchange offer if they tender their outstanding notes in a jurisdiction
where the exchange offer is permitted under local law.
-----------------
Investing in the notes involves risks. See "Risk Factors"
beginning on page 16.
-----------------
Neither the Securities and Exchange Commission nor any federal or state
securities commission or regulatory authority has approved or disapproved
of these securities or determined if this prospectus is truthful or
adequate. Any representation to the contrary is a criminal offense.
Prospectus dated , 2001
TABLE OF CONTENTS
Page
Summary ...................................................................1
Risk Factors...............................................................16
Information Regarding Forward-looking Statements...........................27
The Exchange Offer.........................................................28
Use of Proceeds............................................................39
Capitalization.............................................................39
Selected Consolidated Financial Data.......................................40
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................42
Business...................................................................64
Management.................................................................78
Security Ownership.........................................................82
Certain Transactions.......................................................85
Description of Certain Other Indebtedness..................................87
Description of the Notes...................................................91
Material United States Federal Income Tax Considerations..................139
Plan of Distribution......................................................140
Legal Matters.............................................................142
Experts...................................................................142
Where You Can Find More Information.......................................143
Index to Consolidated Financial Statements................................F-1
-----------
In this prospectus, unless otherwise stated, "AutoNation," "the
company," "we," "us" and "our" refer to AutoNation, Inc. and its
subsidiaries.
This prospectus also contains product names, trade names and
trademarks of other companies.
-----------
This document incorporates by reference important business,
financial and other information about us that is not included in or
delivered with this document. Documents incorporated by reference are
available to AutoNation noteholders without charge, excluding all exhibits,
unless specifically incorporated by reference as exhibits in this document.
See "Where You Can Find More Information" on page 143 for a list of
documents that have been incorporated by reference into this document.
Requests for these documents should be directed to us at the following
address and telephone number:
AutoNation, Inc.
AutoNation Tower
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
Attn: Investor Relations (954) 769-7339
If you would like to request copies of these documents, please do
so by , 2002 in order to receive them before the expiration of the exchange
offer. In the event we extend the exchange offer, you must submit your
request to receive these documents at least five business days before the
expiration date, as extended.
SUMMARY
The following summary is qualified in its entirety by the more
detailed information included elsewhere or incorporated by reference in
this prospectus. Because this is a summary, it may not contain all the
information that may be important to you. You should read this entire
document and the documents to which we have referred you in the section
entitled "Where You Can Find More Information" on page 143, as well as the
information incorporated by reference, before making an investment
decision.
Our Business
We are the largest automotive retailer in the United States. As of
August 31, 2001, we owned and operated 367 new vehicle franchises from 277
dealerships located in major metropolitan markets in 17 states,
predominantly in the Sunbelt region of the United States. Our dealerships
sell new and used vehicles. In addition, we offer financing for vehicle
purchases, extended service contracts and insurance products, as well as
other aftermarket products such as vehicle accessories. We provide a wide
range of vehicle maintenance and repair services and operate collision
repair centers in most of our key markets. We offer a full range of 35
different vehicle brands. The core brands of vehicles that we sell,
representing almost 90% of the new vehicles that we sold in 2000, are Ford
(Ford, Lincoln and Mercury), General Motors (Chevrolet, Pontiac, GMC and
Buick), Chrysler (Chrysler, Jeep and Dodge), Toyota, Nissan and Honda. We
also sell several luxury vehicle brands including Mercedes-Benz, BMW, Lexus
and Porsche. For the twelve months ended June 30, 2001, we had revenue of
$19.9 billion and earnings before interest expense, income taxes,
depreciation and amortization from continuing operations ("EBITDA") of
$877.3 million. Our common stock is traded on the New York Stock Exchange
under the symbol "AN." As of August 31, 2001, we had an equity market
capitalization of approximately $3.6 billion. We are a Fortune 100 company,
ranking 83rd in terms of revenue on the 2000 list.
Our Strengths
We believe that our principal strengths include the following:
Industry and Market Leadership. We are the largest automotive
retailer in a highly fragmented industry. Our 2000 revenue was larger than
all other public automotive retailers' 2000 revenue combined and our equity
market value at August 31, 2001 was nearly twice that of all other public
automotive retailers combined. In addition to the size of our dealership
operations, we believe that we own some of the most recognizable and
well-known dealerships in our key markets. We are also a leading automotive
retailer in our key markets in terms of market share and brands offered. We
believe that the significant scale of our operations and the quality of our
managerial talent allow us to achieve efficiencies in our key markets by,
among other things, reducing redundant operating expenses, improving asset
management and implementing and sharing best practices across our
dealerships.
Diversified Revenue Streams and Variable Expense Structure. We
offer a diversified range of automotive products and services beyond new
vehicles, such as used vehicles, vehicle maintenance and repair services,
extended service contracts and insurance products, and other aftermarket
products. We believe demand for these additional products and services,
which generally produce higher gross margins as a percentage of revenue
than sales of new vehicles, is less impacted by economic cycles than demand
for new vehicles. We believe this decreases our vulnerability to adverse
economic cycles.
The following chart illustrates the revenue and gross margin
contributions of each component of our business for the twelve months ended
June 30, 2001:
[GRAPHIC OMITTED]
During the twelve months ended June 30, 2001, 66.5% of our total gross
margin originated from sales of used vehicles, parts and service, finance
and insurance products, and other aftermarket products, while these
products and services accounted for only 40.0% of our total revenue.
Further, we believe that the diversification of our portfolio of
dealerships in terms of geography and brand representation will help us
weather adverse local or regional economic cycles or problems associated
with a particular brand of vehicles.
We believe that our cost structure also decreases our
vulnerability to adverse economic cycles. A significant percentage of our
costs are variable, which we expect will permit us to react quickly to
changing economic conditions.
Strong Management with Experience in the Industry. We have a
strong senior management team with extensive experience in automotive
retailing and manufacturing. Our Chief Executive Officer, Mike Jackson, has
30 years of experience in the industry, most recently serving as the
President and Chief Executive Officer of Mercedes-Benz, USA, Inc. prior to
joining us in 1999. Mr. Jackson also served as the managing partner of Euro
Motorcars, an automotive retailer in Bethesda, Maryland, for over ten
years. Our President and Chief Operating Officer, Michael E. Maroone, has
over 25 years of experience in the automotive retailing industry. Prior to
our 1997 acquisition of the Maroone Automotive Group, which was one of the
largest privately-held automotive retail groups in the United States, Mr.
Maroone served as its President and Chief Executive Officer for over 20
years. The senior management of our ten operating districts also reflects
the significant depth of our experience, with our district managers having
on average more than 20 years of experience in automotive retailing,
primarily within the local markets that they manage.
Leading Automotive e-Commerce Platform. We believe that the scale
of our bricks-and- mortar operations and our existing e-commerce
infrastructure, including our operation of the largest independent
automotive retailing website, AutoNation.com, uniquely position us to
capitalize on trends in the automotive retail e-commerce marketplace by
giving us the greatest capacity to both obtain and fulfill customer leads
generated on-line. For the twelve months ended June 30, 2001, our
dealerships sold approximately 67,000 units and generated in excess of $1.6
billion in sales via the internet sales channel. We also have relationships
with prominent consumer portals such as Microsoft's MSN Carpoint and
America Online, as well as other customer lead generators, to purchase high
quality leads, and our proprietary software facilitates our dealerships'
fulfillment of these leads. We have lead referral agreements with
approximately 3,000 franchises operating from more than 1,750 independent
dealerships in 47 states to distribute leads that are outside the scope of
our dealerships' operations. According to a survey by J.D. Power and
Associates dated June 20, 2001, AutoNation.com ranked highest in overall
dealer satisfaction based on evaluations by internet managers of various
dealership on-line buying services.
Our Strategy
Our business strategy consists of the following key elements:
Expand Our Margins
While new vehicle sales will continue to be a significant
component of our operations, we are focused on developing the areas of our
automotive retailing business that produce higher margins than new vehicle
sales, such as parts and service sales, used vehicle sales, and sales of
finance and insurance, and other aftermarket products. We are emphasizing
these higher-margin areas of our business with the following strategic
initiatives:
o Parts and Service Sales and Collision Repair Services:
Increasing our parts and service sales by, among other
things, (1) implementing our team-based service process
in our service facilities and our cycle time solution in
our collision centers, (2) executing comprehensive parts
and service marketing programs, (3) assuring that our
dealerships' parts requirements are fulfilled internally
and (4) developing relationships with national insurance
companies to enhance our collision repair services.
o Used Vehicle Sales: Leveraging our significant scale in
our key markets to improve our used vehicle business by
(1) completing the implementation of our advanced vehicle
inventory management system at each of our dealerships,
(2) implementing comprehensive marketing programs in each
of our districts, (3) dedicating specific management
personnel at the district level to optimize our
operations and (4) adopting standardized operating
policies at our dealerships based on our dealerships'
best practices.
o Finance and Insurance and Other Aftermarket Product
Sales: Improving our finance and insurance and other
aftermarket product business by (1) ensuring a high level
of compliance with our standard operating practices, such
as the use of our customer-friendly "full-disclosure"
finance and insurance menu, (2) increasing sales
at our dealerships of finance and insurance products
offered and focusing on our underperforming dealerships
and (3) promoting further consolidation of the retail
finance sources for our customers' vehicle purchases.
Improve Our Operating Efficiency
We are leveraging our status as the largest automotive retailer in
the United States to further improve our cost structure and the utilization
of our assets. We are focusing on the following key initiatives to achieve
these goals:
o Reduce Days Supply of New and Used Vehicles: Decreasing
the days supply of vehicle inventory that we have at any
given time at our dealerships in order to reduce our
carrying costs. We plan to achieve this by (1) using our
web-based tracking system to enable us to more closely
monitor our inventories, (2) establishing days supply
targets for each of our vehicle models, (3) managing our
new and used vehicle inventories across the dealerships
within each of our markets to optimize inventory turnover
and (4) focusing our inventory purchasing on the more
popular model packages.
o Decrease Time to Convert Receivables into Cash: Focusing
on decreasing the amount of time that our dealerships
take to receive payment on retail receivables (or
"contracts-in-transit") by (1) adopting best practices
concerning sales and contracts- in-transit flow
processing, (2) developing and using a web-based tool to
monitor our dealerships' contracts-in-transit and (3)
developing relationships with preferred lenders who can
expeditiously process our dealerships'
contracts-in-transit.
Effectively Use Free Cash Flow
A key component of our strategy is to maximize the return on
investment generated by the use of the free cash flow that our business
generates. We expect to use our free cash flow to make capital investments
in our current businesses and to complete strategic dealership acquisitions
in our key markets. When dealership acquisitions are unavailable or do not
provide us with an adequate return on our investment, we may use our free
cash flow to prudently repurchase our common stock pursuant to our
Board-authorized share repurchase program, subject to limitations contained
in the indenture with respect to the notes and our credit agreements for
our two senior secured revolving credit facilities.
Grow Our e-Commerce Business
According to industry analysts, the majority of new car buyers
nationwide will consult the Internet for new car information. The Internet
is generating better-informed customers and improving the efficiency of the
sales process. During 2000, we developed relationships with certain
internet service providers and websites, including Microsoft's MSN Carpoint
and America Online, as well as other parties, to purchase leads or
referrals of customers who are shopping for a vehicle. Using our
proprietary software and our website, AutoNation.com, we provide these
customer leads to our dealerships for fulfillment to the greatest extent
possible. Specially-trained internet sales personnel at our dealerships
then use our internet-based system to respond to customer inquiries,
which can be made 24 hours a day, seven days a week. During the first six
months of 2001, our average customer response time during business hours
was approximately 38 minutes, which is well below reported industry average
response times.
Beginning in 2000, we entered into lead referral agreements with
independent dealers to distribute customer leads that we cannot fulfill
within our dealership network. We are continuing to enter into lead
referral agreements with dealers that are able to provide fulfillment
capability for vehicle brands and geographic areas that our dealerships do
not cover. As we enter into additional lead referral agreements, we will
continue to set service and other standards that these independent
dealerships must meet in order to participate in our lead referral program.
Recent Developments
On August 10, 2001, we entered into two new senior secured
revolving credit facilities with an aggregate borrowing capacity of $500.0
million. The 364-day revolving credit facility provides for borrowing
capacity up to $200.0 million and the five-year revolving credit facility
provides for borrowing capacity up to $300.0 million. The principal lenders
under these facilities are Bank of America, N.A., The Chase Manhattan Bank,
Merrill Lynch Capital Corporation, First Union National Bank and an
affiliate of Comerica Securities, Inc. These credit facilities are secured
by a pledge of the capital stock of two of our wholly-owned subsidiaries,
AutoNation Enterprises Incorporated and Auto Holding Corp., which directly
or indirectly own substantially all of our dealerships, and are guaranteed
by substantially all of our dealerships.
-----------
Although we now operate exclusively as an automotive retailer, we
have operated businesses in multiple industries over the past several
years, including solid waste services, electronic security services, car
rental and outdoor media. With the spin-off to our stockholders of our car
rental business, ANC Rental Corporation, and the sale of certain other
non-core assets in 2000, we are now focused exclusively on our operations
in the automotive retailing business. Our principal executive offices are
located at AutoNation Tower, 110 S.E. 6th Street, Fort Lauderdale, Florida
33301 and our telephone number is (954) 769-6000. For more details about
our business, see page 64. For information regarding the risks associated
with our business, see the section of this prospectus entitled "Risk
Factors" beginning on page 16.
The Exchange Offer
On August 10, 2001, we privately placed $450.0 million of 9%
senior notes due 2008. We sold the outstanding notes to the following
initial purchasers:
o Merrill Lynch, Pierce, Fenner & Smith;
o Banc of America Securities LLC;
o J.P. Morgan Securities Inc.;
o First Union Securities, Inc.; and
o Comerica Securities, Inc.
These initial purchasers then sold the outstanding notes to
institutional investors.
Simultaneously with the private placement, we entered into a
registration rights agreement with the initial purchasers of the
outstanding notes. Under the registration rights agreement, we must deliver
this prospectus to you and must complete this exchange offer on or before
February 21, 2002. If this exchange offer does not take place on or before
February 21, 2002, except under limited circumstances, we must pay
liquidated damages to the holders of the outstanding notes until this
exchange offer is completed.
The following is a summary of the principal terms of the exchange
offer.
The exchange offer
(see page 28)........................ We are offering to exchange
$450.0 million principal amount
of 9% senior exchange notes due
2008, which have been registered
under the Securities Act, for
your outstanding 9% senior notes
due 2008.
All outstanding notes properly
tendered and not withdrawn will
be exchanged on the terms and
subject to the conditions of the
exchange offer.
Resales of exchange notes (see We believe that, if you are not
page 33)............................. a broker-dealer, you can offer
for resale, resell and otherwise
transfer the exchange notes
without complying with the
registration and prospectus
delivery requirements of the
Securities Act if:
o you acquire the exchange
notes in the ordinary course
of your business;
o you are not participating,
do not intend to participate
and have no arrangement or
understanding with any
person to participate, in
the distribution of the
exchange notes; and
o you are not an "affiliate"
of ours, as defined in Rule
405 of the Securities Act.
By executing the letter of
transmittal relating to this
offer, or by agreeing to the
terms of the letter of
transmittal, you represent to us
that you satisfy each of these
conditions. If you do not
satisfy any of these conditions
and you transfer any exchange
note without delivering a proper
prospectus or without qualifying
for a registration exemption,
you may incur liability under
the Securities Act. Moreover,
our belief that transfers of
exchange notes would be
permitted without registration
or prospectus delivery under the
conditions described above is
based on SEC interpretations
given to other, unrelated
issuers in similar exchange
offers. We cannot assure you
that the SEC would make a
similar interpretation with
respect to our exchange offer.
We will not be responsible for
or indemnify you against any
liability you may incur under
the Securities Act.
Extension of tender period;
termination; amendment (see
page 36)............................. The exchange offer and
withdrawal rights will expire at
12:00 midnight, New York City
time, on , 2002, unless extended
by us. You must tender your
outstanding notes prior to this
time if you want to participate
in the exchange offer. We may
terminate the exchange offer in
the circumstances described on
page 36. We have the right to
amend the terms of the exchange
offer in any respect.
Withdrawal rights (see page 35).......... You may withdraw outstanding
notes you tendered at any time
before the exchange offer
expires. Withdrawals may not be
rescinded. If you change your
mind again, you may retender
your outstanding notes by again
following the exchange offer
procedures prior to the
expiration of the offer.
Conditions for completion of the
exchange offer (see page37).............. The exchange offer is subject to
various conditions. All
conditions must be satisfied or
waived prior to the expiration
of the exchange offer.
Procedures for tendering
outstanding notes We issued the
outstanding notes as global
securities. (see page 31)................ When we issued the outstanding
notes, we deposited them with
Wells Fargo Bank Minnesota,
National Association, as
custodian. Wells Fargo issued a
certificateless depositary
interest in the outstanding
notes, which represents a 100%
interest in the outstanding
notes, to The Depository Trust
Corporation ("DTC"). Beneficial
interests in the outstanding
notes, which direct or indirect
participants in the DTC hold
through the certificateless
depositary interests, are shown
on records that the DTC
maintains in book-entry form.
If you wish to participate in
the exchange offer, you must
transmit to Wells Fargo Bank
Minnesota, National Association,
which is the exchange agent, on
or before the expiration of the
exchange offer, either:
o a completed and signed
letter of transmittal or a
facsimile thereof, in
accordance with the
instructions contained in
this prospectus and the
letter of transmittal, and
any other required
documents; or
o a computer-generated message
transmitted by means of
DTC's Automated Tender Offer
Program system and forming a
part of a confirmation of
book-entry transfer in which
you acknowledge and agree to
be bound by the terms of the
letter of transmittal. The
exchange agent must also
receive on or prior to the
expiration of the exchange
offer either:
-- a timely confirmation
of book-entry
transfer of your
outstanding notes
into the exchange
agent's account at
DTC, in accordance
with the procedure
for book-entry
transfers; or
-- the documents necessary
for compliance with the
guaranteed delivery
procedures.
Do not send letters of
transmittal and certificates
representing outstanding notes
to us or to DTC. Send these
documents only to the exchange
agent.
Procedures for tendering
certificated outstanding notes
(see page 31)........................ If you are a holder of
book-entry interests in the
outstanding notes, you are
entitled to receive, in limited
circumstances, in exchange for
your book-entry interests,
certificated notes which are in
equal principal amounts to your
book-entry interests. No
certificated notes are issued
and outstanding as of the date
of this prospectus. If you
acquire certificated outstanding
notes prior to the expiration of
the exchange offer, you must
tender your certificated
outstanding notes in accordance
with the procedures described in
this prospectus under the
heading "The Exchange Offer --
Procedures for Tendering--
Certificated Outstanding Notes."
Procedures for tendering
outstanding notes held by a
broker (see page 31)................. If you hold your outstanding
notes through a broker, do not
complete the letter of
transmittal. Please contact your
broker directly for instructions
on how to participate in the
exchange offer.
Guaranteed delivery procedures
(see page 32)........................ If you wish to tender your
outstanding notes and your
outstanding notes are not
immediately available or you
cannot deliver your outstanding
notes, the letter of transmittal
or any other documents required
by the letter of transmittal to
the exchange agent, or you
cannot complete the procedure
for book- entry transfer, then
prior to the expiration of the
exchange offer you must tender
your outstanding notes according
to the guaranteed delivery
procedures set forth in "The
Exchange Offer -- Guaranteed
Delivery Procedures."
Delivery of exchange notes............... We will deliver exchange notes
by book-entry transfer as soon
as reasonably practicable after
acceptance of the outstanding
notes. If we do not accept any
of your outstanding notes for
exchange, we will return them to
you as promptly as practicable
after the expiration or
termination of the exchange
offer without any expense to
you.
No appraisal rights
(see page 29)........................ No appraisal rights are
available to holders of
outstanding notes in connection
with the exchange offer. If you
do not tender your outstanding
notes or we reject your tender,
you will not be entitled to any
further registration rights
under the registration rights
agreement, except under limited
circumstances. Your unexchanged
notes will, however, remain
outstanding and entitled to the
benefits of the indenture.
Prospectus delivery
(see page 34)............................ All broker-dealers must comply
with the registration and
prospectus delivery requirements
of the Securities Act. Each
broker-dealer that receives
registered notes for its own
account pursuant to the exchange
offer must acknowledge that it
will deliver a prospectus in
connection with any resale of
the registered notes. The letter
of transmittal accompanying this
prospectus states that by so
acknowledging and by delivering
a prospectus, a broker-dealer
will not be deemed to admit that
it is an "underwriter" within
the meaning of the Securities
Act. We have agreed that for a
period of 180 days after
consummating the exchange offer
we will make this prospectus
available to any broker-dealer
for use in connection with any
resale.
Material United States federal
income tax considerations (see
page 139)............................ Your exchange of outstanding
notes for exchange notes should
not be a taxable exchange for
United States federal income tax
purposes. You should not
recognize any taxable gain or
loss or any interest income as a
result of the exchange.
Exchange agent........................... Wells Fargo Bank Minnesota,
National Association.
Risk factors (see page 16)............... You should consider carefully
the matters described in the
section entitled "Risk Factors,"
as well as the other information
included in this document and
the documents to which we have
referred you.
Legal limitation......................... We are not making any offer to
sell, nor are we soliciting any
offer to buy, securities in any
jurisdiction in which the offer
or sale is not permitted.
Consequences of Not Exchanging Your Outstanding Notes
If you do not exchange your outstanding notes for exchange notes
in the exchange offer, your outstanding notes will continue to be subject
to the restrictions on transfer contained in the legend on the outstanding
notes. In general, the outstanding notes may not be offered or sold unless
they are registered under the Securities Act of 1933. However, you may
offer or sell your outstanding notes under an exemption from, or in a
transaction not subject to, the Securities Act and applicable state
securities laws. After the exchange offer is completed, you will not be
entitled to any exchange or registration rights with respect to your
outstanding notes, except under limited circumstances.
Summary of the Exchange Notes
The form and terms of the exchange notes are the same as the form
and terms of the outstanding notes, except that the exchange notes will be
registered under the Securities Act. As a result, the exchange notes will
not bear legends restricting their transfer and will not contain the
registration rights and liquidated damage provisions contained in the
outstanding notes. The exchange notes represent the same debt as the
outstanding notes. Both the outstanding notes and the exchange notes are
governed by the same indenture, and the indenture is governed by New York
law.
Issuer................................... AutoNation, Inc.
Notes offered............................ $450,000,000 aggregate principal
amount of 9% senior notes due
2008.
Maturity................................. August 1, 2008.
Interest payment dates................... February 1 and August 1,
beginning February 1, 2002.
Guarantees............................... The exchange notes are guaranteed
by substantially all of our
subsidiaries on a senior basis.
See "Description of Notes--
Guarantees."
Ranking.................................. The exchange notes will be
unsecured and rank equally with
our unsecured senior indebtedness
and senior to our subordinated
indebtedness. Each guarantee will
be unsecured and rank equally
with the unsecured senior
indebtedness of the guarantors
and senior to all subordinated
indebtedness of the guarantors.
The exchange notes will be
effectively subordinated to our
and our guarantors' secured
indebtedness to the extent of the
value of the assets securing such
indebtedness. As of June 30,
2001, after giving effect to (i)
the notes, (ii) our senior credit
facilities, (iii) borrowings
under our mortgage facility and
(iv) the repayment of certain of
our outstanding indebtedness, we
and the guarantors would have had
$708.5 million of senior debt
(excluding our floorplan
financing), all of which would
have been secured, and the
guarantors would also have had
$2.1 billion of floorplan
financing, all of which would
have been secured.
Optional redemption...................... Except as described below, the
exchange notes may not be
redeemed at our option prior to
their maturity.
Public equity offering optional
redemption............................ Before August 1, 2004, we may
redeem up to 35% of the aggregate
principal amount of the exchange
notes with the net cash proceeds
of a public equity offering at
109% of the principal amount of
the exchange notes, plus accrued
interest, if at least 65% of the
aggregate principal amount of the
exchange notes originally issued
remains outstanding after such
redemption.
Change of control........................ If we undergo a change of
control, each noteholder may
require us to repurchase some or
all of his, her or its exchange
notes at a purchase price equal
to 101% of the principal amount
of the exchange notes, plus
accrued interest.
Covenants................................ The indenture governing the
exchange notes contains covenants
that, among other things, limit
our ability and the ability of
our subsidiaries to:
o incur additional indebtedness;
o make restricted payments;
o create certain liens;
o sell assets;
o in the case of our restricted
subsidiaries, restrict dividend
or other payments to us;
o in the case of our restricted
subsidiaries, guarantee
indebtedness;
o engage in transactions with
affiliates;
o create unrestricted subsidiaries
; and
o consolidate, merge or
transfer all or substantially
all of our assets and the
assets of our subsidiaries on
a consolidated basis.
These covenants are subject to
important exceptions and
qualifications, which are
described under the heading
"Description of the Notes" in
this prospectus.
During any period in which we
achieve an investment grade
rating for the exchange notes,
many of these covenants will be
suspended.
Use of proceeds.......................... There will be no proceeds payable
to us or the guarantors from this
exchange offer. We and the
guarantors are conducting the
exchange offer to satisfy certain
of our obligations under the
registration rights agreement
executed in connection with the
issuance of the outstanding
notes.
Absence of a public market for the
exchange notes........................ The exchange notes will be new
securities for which there will
not initially be a market. As a
result, the development or
liquidity of any market for the
exchange notes may not occur. The
initial purchasers have advised
us that they currently intend to
make a market in the exchange
notes. You should be aware,
however, that the initial
purchasers are not obligated to
do so. In the event such a market
may develop, the initial
purchasers may discontinue their
market making activities at any
time without notice. We do not
intend to list the exchange notes
on any securities exchange or
quote them on any automated
dealer quotation system.
Risk factors............................. See "Risk Factors" beginning on
page 16 and the other information
in this prospectus for a
discussion of factors you should
carefully consider before
deciding to participate in the
exchange offer.
Summary Consolidated Financial Data
The following table presents our summary consolidated financial
data. The data presented in this table is either from or derived from the
"Selected Consolidated Financial Data" and our consolidated financial
statements and notes to those statements that are included elsewhere in
this prospectus, except for the consolidated balance sheet data as of
December 31,1998 and June 30, 2000. You should read those sections and the
section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a further explanation of the
financial data summarized here. The results of operations for any interim
period are not necessarily indicative of our results for a full year ($ in
millions).
Year ended Year ended Year ended Six months Six months
December 31, December 31, December 31, ended June 30, ended June 30,
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(unaudited)
CONSOLIDATED
INCOME STATEMENT
DATA:
Revenue:
New vehicles.................. $ 6,775.$ 11,481.$ 12,489.$ 6,399.$ 5,808.9
Used vehicles................. 3,185.2 4,429.7 3,860.2 2,011.7 1,949.5
Parts and service............. 1,383.2 2,222.0 2,334.9 1,176.7 1,201.0
Finance and insurance......... 288.6 423.4 431.8 218.3 233.7
Other......................... 1,031.8 1,555.7 1,493.4 764.0 636.0
------------ -------------- -------------- ---------------- -----------------
Total Revenue.............. 12,664.6 20,111.8 20,609.6 10,569.7 9,829.1
----------- ------------- ------------- -------------- ----------------
Gross Margin:
New vehicles.................. 588.6 962.3 1,056.0 536.4 481.0
Used vehicles................. 379.4 449.6 438.6 231.3 219.2
Parts and service............. 571.6 933.8 999.7 500.9 518.1
Finance and insurance......... 288.6 423.4 431.8 218.3 233.7
Other......................... 103.4 159.5 106.4 49.2 41.1
------------- -------------- --------------- ---------------- -----------------
Total Gross Margin......... 1,931.6 2,928.6 3,032.5 1,536.1 1,493.1
------------ ------------- ------------- -------------- ---------------
Operating Income................. 463.4 109.8 724.8 366.9 336.4
Floorplan interest expense....... 107.0 125.2 199.8 99.0 81.0
Other interest expense........... 14.0 34.9 47.7 22.4 19.4
Depreciation and 4
amortization.................. 79.9 123.0 133.8 66.1 72.
Income (loss) from 2
continuing operations......... 225.8 (31.5) 328.1 161.3 146.
OTHER FINANCIAL
DATA:
EBITDA(1)........................ $ 553.$ 699.$ 902.$ 445.$ 420.3
Rental expense................... 45.0 86.2 82.7
EBITDAR(2)....................... 598.5 785.5 985.2
Capital expenditures............. 256.7 242.3 148.2 52.9 52.8
New vehicles.................. $ 6,775.$ 11,481.$ 12,489.$ 6,399.$ 5,808.9
EBITDA/Total interest
expense....................... 4.6x 4.4x 3.7x
EBITDA less floorplan
interest/Other interest
expense....................... 31.9x 16.5x 14.7x
Debt(3)/EBITDA................... 3.4x 4.4x 3.7x
Debt less floorplan
financing/EBITDA less
floorplan interest............ 1.2x 1.5x 1.2x
OTHER OPERATING
DATA:
New vehicles sold................ 286,000 469,000 489,000 134,000 129,000
Used vehicles sold............... 244,000 315,000 255,000 387,000 350,000
As of As of As of As of As of
December 31, December 31, December 31, June 30, June 30,
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(unaudited)
CONSOLIDATED
BALANCE SHEET
DATA:
Inventory........................ $ 1,849.$ 2,706.$ 2,769.$ 2,799.$ 2,439.3
Working capital.................. 1,063.9 1,136.3 1,034.9 1,079.0 1,006.5
Total assets..................... 8,412.2 9,583.1 8,830.0 8,916.3 8,345.8
Floorplan financing.............. 1,339.2 2,210.6 2,416.7 2,375.3 2,110.1
Revolving credit facilities...... 500.0 669.0 615.0 865.0 396.0
Leases and other debt............ 26.5 174.8 242.2 124.7 302.1
Shareholders' equity............. 5,424.2 4,601.2 3,842.5 3,764.8 3,858.5
OTHER OPERATING
DATA:
Franchises....................... 323 397 397 289 367
- -----------
(1) EBITDA is defined as earnings before interest expense, income
taxes, depreciation, amortization and other non-recurring charges
of $443.7 million in fiscal 1999 and $(3.8) million in fiscal
2000. While EBITDA should not be construed as a substitute for
operating income or as a better measure of liquidity than cash
flows from operating activities, which are determined in
accordance with generally accepted accounting principles, it is
included herein to provide additional information with respect to
our ability to meet future debt service, capital expenditures and
working capital requirements. This measure may not be comparable
to similarly titled measures reported by other companies.
(2) EBITDAR is defined as EBITDA plus rental expense. This measure
may not be comparable to imilarly titled measures reported by other
companies.
(3) Debt is defined as long-term debt, including current maturities and
floorplan financing.
RISK FACTORS
You should carefully consider the following risk factors in
addition to the other information contained in this prospectus before
deciding to participate in the exchange offer. The cautionary statements
set forth below and elsewhere in this prospectus should be read in
conjunction with the accompanying forward-looking statements included in
the sections entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and in reports filed with
the SEC and elsewhere herein.
Risks Related to the Exchange Offer
Your failure to exchange your outstanding notes may limit your
ability to transfer your notes.
We did not register the outstanding notes under the Securities Act
or any state securities laws, and we do not intend to do so after the
exchange offer. As a result, outstanding notes may be transferred only in
limited circumstances under the securities laws. If you do not exchange
your outstanding notes in the exchange offer by following the procedures
described in this prospectus, you will lose your right to have the
outstanding notes registered under the Securities Act, with some
exceptions. If you continue to hold outstanding notes after the exchange
offer, you may be unable to sell them. Outstanding notes that are not
tendered or are tendered but not accepted will, following the exchange
offer, continue to be subject to the existing transfer restrictions.
You may find it difficult to sell your exchange notes.
While the outstanding notes are presently eligible for trading in
the PORTAL market of the NASD by qualified institutional buyers, there is
no existing market for the exchange notes, and we do not intend to list the
exchange notes on any securities exchange or quote them on any automated
dealer quotation system. Although the initial purchasers have informed us
that they intend to make a market in the exchange notes, they are not
obligated to do so and may discontinue any such market at any time without
notice. In addition, such market making activity may be limited during the
exchange offer or during an offering under a shelf registration statement
should we decide to file one. As a result, we can make no assurances to you
as to the development, maintenance or liquidity of any market for the
exchange notes, your ability to sell the exchange notes or the price at
which you may be able to sell the exchange notes. If such markets were to
exist, future trading prices of the exchange notes may be lower than their
principal amount or purchase price and will depend on many factors,
including, among other things, prevailing interest rates, our operating
results and the market for similar securities. Historically, the market for
securities similar to the exchange notes has been subject to disruptions
that have caused substantial volatility in the prices of such securities.
We cannot assure you that, if a market develops, it will not be subject to
similar disruptions. Such a disruption may adversely affect such liquidity
and trading markets independent of our financial performance and prospects.
Some persons who participate in this exchange offer must deliver a
prospectus in connection with resales of the exchange notes.
Based on no-action letters issued by the staff of the SEC to third
parties, we believe that you may offer for resale, resell or otherwise
transfer the registered exchange notes without compliance with the
registration and prospectus delivery requirements of the Securities Act.
However, in some instances described in this prospectus under "The Exchange
Offer -- Resales of Exchange Notes," you will remain obligated to comply
with the prospectus delivery requirements of the Securities Act to transfer
your registered notes. In these instances, if you transfer any registered
note without delivering a prospectus meeting the requirements of the
Securities Act or without an exemption from registration of your registered
notes under the Securities Act, you may incur liability under the
Securities Act. We do not and will not assume, or indemnify you against,
this liability.
Risks Related to the Notes
The notes and the guarantees are unsecured obligations.
The notes are our unsecured obligations, and the guarantees are
the unsecured obligations of the guarantors. The payment of principal,
premium (if any) and interest on the notes is effectively subordinated in
right of payment to all of our secured indebtedness, and the payment of the
guarantees is effectively subordinated in right of payment to all secured
indebtedness of the guarantors, in each case to the extent of the value of
the assets securing such indebtedness. As of June 30, 2001, after giving
effect to (i) the notes, (ii) our senior credit facilities, (iii)
borrowings under our mortgage facility and (iv) the repayment of certain of
our outstanding indebtedness, we and the guarantors would have had $708.5
million of senior debt (excluding our floorplan financing), all of which
would have been secured, and the guarantors would also have had $2.1
billion of floorplan financing, all of which would have been secured. In
addition, the exercise of default rights (other than rights to demand
payment in the event of default or bring suit for payment of amounts due
and payable) under certain of the guarantees are subject to requirements of
advance notice to certain of the automotive manufacturers, as set forth in
the indenture.
We conduct substantially all of our operations through subsidiaries.
We conduct substantially all of our operations through
subsidiaries. Distributions and intercompany transfers from our
subsidiaries to us may be restricted by covenants contained in debt
agreements and other agreements to which such subsidiaries may be subject
and may be restricted by other agreements entered into in the future and by
applicable law. We cannot assure you that the operating results of our
subsidiaries at any given time will be sufficient to make distributions to
us.
There is no assurance that we will be able to purchase the notes
upon a change of control.
If a change of control occurs, we cannot assure you that we will
have sufficient funds to satisfy all of our repurchase obligations under
the indenture. If we undergo certain changes of control, we may need to
refinance large amounts of our debt, including the notes, the debt under
our senior credit facilities and our mortgage facility. If a change of
control occurs, we must offer to buy back the notes for a price equal to
101% of their principal amount, plus accrued interest. We would fund any
repurchase obligation with our available cash, borrowings, sales of equity
or funds provided by a new controlling person. Pursuant to the terms of our
senior credit facilities, we are required to pay off the balance of the
facilities before we buy back the notes. If we buy back the notes without
first repaying the balance on our senior credit facilities, we will be in
default under our senior credit facilities. In addition, any future debt
that we incur may also contain restrictions on our repurchase obligations
upon a change of control. We cannot assure you that there will be
sufficient funds available for the payment of the outstanding balance under
our senior credit facilities, our future debt, if any, and for any required
repurchases of the notes if a change of control occurs. If we fail to
repurchase the notes after a change of control, we will be in default under
the indenture. These buyback requirements may also delay or make it harder
for others to obtain control of us.
Because federal and state statutes may allow courts to void the
guarantees of the notes or subordinate the guarantees to other obligations
of the guarantors, you may not have the right to receive payment under the
guarantees.
Various applicable fraudulent conveyance laws have been enacted
for the protection of creditors. A court may use these laws to subordinate
or void the subsidiary guarantees of the notes issued by any of our
subsidiary guarantors. It is also possible that under certain circumstances
a court could hold that the direct obligations of a subsidiary guaranteeing
the notes could be superior to the obligations under that guarantee.
A court could void or subordinate the guarantee of the notes by
any of our subsidiaries in favor of that subsidiary's other debts or
liabilities to the extent that the court determined that either of the
following was true at the time the subsidiary issued the guarantee:
o that subsidiary incurred the guarantee with the intent to
hinder, delay or defraud any of its present or future
creditors or that such subsidiary contemplated insolvency
with a design to favor one or more creditors to the total
or partial exclusion of others; or
o that subsidiary did not receive fair consideration or
reasonable equivalent value for issuing the guarantee
and, at the time it issued the guarantee, that
subsidiary:
-- was insolvent or rendered insolvent by reason of
the issuance of the guarantee;
-- was engaged or about to engage in a business or
transaction for which the remaining assets of
that subsidiary constitute unreasonably small
capital; or
-- intended to incur, or believed that it would
incur, debts beyond its ability to pay such
debts as they matured.
Among other things, a legal challenge of a subsidiary's guarantee of the
notes on fraudulent conveyance grounds may focus on the benefits, if any,
realized by that subsidiary as a result of our issuance of the notes. To
the extent a subsidiary's guarantee of the notes is voided as a result of
fraudulent conveyance or held unenforceable for any other reason, the
noteholders would cease to have any claim in respect of that guarantee and
would be creditors solely of us.
Our significant shareholders may support strategies that are
opposed to the interests of our noteholders or with which you disagree.
Certain of our shareholders, including certain of our directors,
have the power to significantly influence the results of shareholder votes
and the election of our board of directors, as well as transactions
involving a potential change of control. These shareholders may support
strategies and directions that are in their best interests or in the
interests of our equity holders in general, but that are not in the
interests of our noteholders or with which you disagree. We cannot assure
you that these shareholders will not increase their ownership percentage in
the future.
Risks Related to AutoNation and the Automotive Retailing Industry
The automotive retailing industry is cyclical and is sensitive to
changing economic conditions; we are in the midst of an industry and
general economic slowdown or recession that could materially adversely
impact our business.
Sales of motor vehicles, particularly new vehicles, historically
have been subject to substantial cyclical variation characterized by
periods of oversupply and weak demand. We believe that many factors affect
the industry, including consumer confidence in the economy, the level of
personal discretionary spending, interest rates, fuel prices, credit
availability and unemployment rates. In addition, the industry has been
significantly adversely impacted by the recent terrorist attacks in the
United States and the resulting further general economic slowdown, and
could be further adversely impacted by the outbreak of hostilities arising
out of the terrorist attacks or the prospect of such hostilities. Although
1999 and 2000 were record years for the automotive industry, both in
general and for us specifically, in terms of volume of new vehicles sold,
the automotive industry has experienced a recent decline in demand for new
vehicles. Prior to the recent terrorist attacks against the United States,
industry experts had predicted a decrease in new vehicle sales in the
United States during 2001 of five to ten percent as compared to sales
during 2000. During the first six months of 2001, our new vehicle revenue,
the single largest component of our aggregate revenue and the source of
approximately 32.2% of our gross margin, decreased 10.3% as compared to the
same period in 2000. We expect this lower demand for new vehicles to
continue during the foreseeable future. In addition, since the recent
terrorist attacks against the United States, our dealerships have
experienced additional significant declines in sales of new vehicles,
which, if this trend continues or worsens, would likely have a material
adverse affect on our business, financial condition, results of operations,
cash flows and prospects. Our sales of used vehicles, financial services,
vehicle service, parts and collision repair services also have been
adversely impacted by the current industry and general economic slowdown
and recent events, although not as dramatically as sales of new vehicles.
At this time, we cannot predict the severity or duration of the slowdown in
business due in part to recent events and we cannot assure you that our
business will not be materially adversely affected if it continues or
worsens.
The indenture relating to the notes and our senior credit
facilities restrict our ability to conduct our business.
As of June 30, 2001, after giving effect to (i) the notes, (ii)
our senior credit facilities, (iii) borrowings under our mortgage facility
and (iv) the repayment of certain of our outstanding indebtedness, we and
the guarantors would have had $708.5 million of senior debt (excluding our
floorplan financing), all of which would have been secured, and the
guarantors would also have had $2.1 billion of floorplan financing, all of
which would have been secured. In addition, the indenture and our other
senior credit instruments allow us to incur certain additional
indebtedness, including a limited amount of secured indebtedness. The
indenture permits us to incur inventory financing without satisfaction of
the fixed charge coverage tests.
The indenture and our senior credit agreements contain numerous
financial and operating covenants that limit the discretion of our
management with respect to business matters. These covenants place
significant restrictions on, among other things, our ability to incur
additional indebtedness, to create liens or other encumbrances, to make
certain payments and investments, and to sell or otherwise dispose of
assets and merge or consolidate with other entities. Our senior credit
facilities also require us to meet certain financial ratios and tests that
may require us to take action to reduce debt or act in a manner contrary to
our business objectives. A failure by us or our guarantors to comply with
the obligations contained in our senior credit facilities or the indenture
could result in an event of default under our senior credit facilities or
the indenture, which could permit acceleration of the related debt and
acceleration of debt under other instruments that may contain cross
acceleration or cross-default provisions. If any debt is accelerated, our
assets may not be sufficient to repay in full such indebtedness and our
other indebtedness, including the notes.
There can be no assurance that our future cash flow will be
sufficient to meet our obligations and commitments. If we are unable to
generate sufficient cash flow from operations in the future to service our
indebtedness and to meet our other commitments, we will be required to
adopt one or more alternatives, such as refinancing or restructuring our
debt or equity capital or engaging in asset sales. There can be no
assurance that any of these actions could be effected on a timely basis or
on satisfactory terms or that these actions would enable us to continue to
satisfy our capital requirements. In addition, the terms of our existing or
future franchise agreements, framework agreements or debt agreements,
including the indenture and our senior credit facilities, may prohibit us
from adopting any of these alternatives.
Our dealerships are dependent on the programs and operations of
vehicle manufacturers and, therefore, any changes to such programs and
operations may adversely affect our dealership operations and, in turn,
affect our business, results of operations, financial condition, cash flows
and prospects.
The success of our dealerships is dependent on vehicle
manufacturers in several key respects. First, we rely exclusively on the
various vehicle manufacturers for our new vehicle inventory. Additionally,
manufacturers generally support their dealerships by providing direct
financial assistance in various areas, including, among others, advertising
assistance and favorable inventory financing. Beyond funds paid directly to
their dealerships, the manufacturers also have established various
incentive programs designed to spur consumer demand for their vehicles.
From time to time, manufacturers modify and discontinue these dealer
assistance and consumer incentive programs, which could have a significant
adverse effect on our consolidated results of operations and cash flows.
Any event that may have a material adverse effect on the financial
condition, management, marketing, production and distribution capabilities
of the vehicle manufacturers with whom we hold franchises, such as general
economic downturns or recessions, increases in interest rates, labor
strikes, supply shortages, adverse publicity or product defects, may have a
material adverse effect on our business, results of operations, financial
condition, cash flows and prospects.
We may be required to perform under certain credit enhancements
and guarantees with respect to ANC Rental Corporation, which could have a
material adverse effect on our business, financial condition, cash flows
and prospects.
In connection with the spin-off of ANC Rental Corporation and its
subsidiaries ("ANC Rental") in June 2000, we provide certain guarantees and
credit enhancements with respect to financial and performance obligations
of ANC Rental, including acting as a guarantor under certain motor vehicle
and real property leases between ANC Rental and Mitsubishi Motor Sales of
America, Inc. ("Mitsubishi") and acting as an indemnitor with respect to
certain surety bonds issued on ANC Rental's behalf. We are also a party to
certain agreements with ANC Rental (the "ANC Rental Agreements"), including
a Separation and Distribution Agreement and a Tax Sharing Agreement,
pursuant to which both ANC Rental and we have certain obligations. ANC
Rental reported a net loss for the fourth quarter of 2000 of $44.0 million,
resulting in an aggregate net loss for 2000 of $2.0 million, and a net loss
of $56.6 million for the six months ended June 30, 2001. ANC Rental has
announced that, due in part to the terrorist attacks against the United
States on September 11, 2001, it has suffered a significant decline in
consumer demand for rental cars and that it expects to report a substantial
loss for the full year 2001. ANC Rental also indicated that it is currently
under discussions with its creditors, the United States federal government
and other parties in order to review liquidity options and other financial
issues. Additionally, ANC Rental announced that it has reached agreements
with its lenders to suspend certain financial covenants under certain
credit agreements until November 15, 2001 and to defer until November 30,
2001 a principal payment of $70.0 million due on October 1, 2001. If ANC
Rental is unable to meet its obligations, we will likely be called on to
perform under our credit enhancements and guarantees, which could have a
material adverse effect on our business, financial condition, cash flows
and prospects. ANC Rental has been accounted for as a discontinued
operation and, accordingly, we expect that payments made by us pursuant to
the foregoing credit enhancements and guarantees, if any, would not impact
our reported results from continuing operations.
Under the motor vehicle lease agreement with Mitsubishi referenced
above, ANC Rental currently leases approximately 14,000 vehicles from
Mitsubishi. Under this vehicle lease agreement, which expires at the
conclusion of the leases for model year 2002 vehicles, ANC Rental is
responsible for lease payments that we believe are between $3.0 and $4.0
million per month. We also believe that ANC Rental typically leases
vehicles under this lease agreement for a period of approximately six
months per vehicle. Additionally, ANC Rental is responsible for the return
of all leased vehicles to Mitsubishi upon the termination of the vehicle
lease agreement. Under the real property leases that we guaranty, which
expire in July 2017, ANC Rental leases twelve parcels of property from
Mitsubishi at an aggregate rent of approximately $3.0 million per year. Our
indemnification obligations with respect to the surety bonds issued on
behalf of ANC Rental are capped at $29.5 million in the aggregate. In
addition, in the event of the bankruptcy of ANC Rental, our claims against
ANC Rental under the terms of the ANC Rental Agreements may be extinguished
or unenforceable. These claims could include indemnification rights with
respect to payments made by us to the Internal Revenue Service as a result
of audit adjustments in our consolidated federal income tax returns
relating to ANC Rental's automotive rental businesses prior to the
spin-off. In the event that we are called on to perform under the foregoing
credit enhancements and guarantees and we have claims under the ANC Rental
Agreements that ANC Rental cannot satisfy, we estimate that, based on our
assessment of the risks involved in each matter, our aggregate obligations
under the credit enhancements, guarantees and ANC Rental Agreements could
be in the range of $50 million to $150 million. However, the exposure is
difficult to estimate and we cannot assure you that our aggregate
obligations under these credit enhancements, guarantees and ANC Rental
Agreements will not be materially above the range indicated above.
We operate in a highly competitive environment, and if we are
unable to compete with our competitors, our business, financial condition,
results of operations, cash flows and prospects could be materially
adversely affected.
We operate in a highly competitive environment. Our competition
includes publicly and privately-owned dealerships, some of which operate
large groups, and any of which may sell the same or similar makes of new
and used vehicles in our markets at competitive prices. Other competitors
include franchised automotive dealerships selling other brands of vehicles,
private market buyers and sellers of used vehicles, used vehicle dealers,
service center chains, independent service and repair shops and publicly
and privately-owned finance companies, including those of vehicle
manufacturers, and, as we describe below, on-line automotive retailers and
lead-referral companies. Our franchise agreements generally do not give us
the exclusive right to sell a manufacturer's product within a given
geographic area. Accordingly, a manufacturer may, subject to any protection
of state law, grant another dealer a franchise to start a new dealership
near one of our locations, or an existing dealer may move its dealership to
a location which would compete directly with us. These and other
competitive pressures could materially adversely affect our business,
financial condition, results of operations, cash flows and prospects.
We also face competition in the rapidly evolving automotive
retailing e-commerce business. A number of e-commerce companies and
traditional companies, including the vehicle manufacturers and other
franchised dealership groups, have established automotive-related websites
over the past few years and compete with us in two areas of our e-commerce
business: (i) sales of vehicles to retail customers via the Internet and
(ii) generation and sales to other automobile dealers of customer referrals
or "leads" obtained via the Internet. Additionally, we believe that as
customers use the Internet and gain increased access to information on
prices for vehicles and related finance and insurance products, margins for
new and used vehicle sales and related finance and insurance products may
decrease, whether sales are made via the Internet or through traditional
channels. The success of our e-commerce business will depend on our ability
to develop a strategy that appeals to on-line automobile buyers, to obtain
high visibility on the Internet, whether through our own websites or
through strategic partnerships and alliances with other e- commerce
companies, and to develop and maintain a cost structure that permits us to
operate profitably.
We are subject to restrictions imposed by vehicle manufacturers
which may adversely impact our business, financial condition, results of
operations, cash flows and prospects, including our ability to acquire new
dealerships.
The franchise agreements to which our dealerships are subject and
the framework agreements that we have with many major vehicle manufacturers
impose significant restrictions on our ability to operate our dealerships.
These agreements provide the manufacturers with considerable influence over
the operations of our dealerships, including the level at which we
capitalize our dealerships, the condition of our dealership facilities, our
performance standards with respect to sales volume and customer
satisfaction, our selection of dealership management, the naming and
marketing of our dealerships, the operations of our e-commerce sites and
our ability to acquire additional dealerships. They also grant the
manufacturer the right to terminate our franchise for a variety of reasons
(including any unapproved change of ownership or management or transfer of
franchise rights) and to block our future acquisition of additional
dealerships under certain circumstances (including our failure to meet our
performance targets at our existing dealerships), subject to state laws.
While we believe that we will be able to renew all of our franchise
agreements, we cannot guarantee that all of our franchise agreements will
be renewed or that the terms of the renewal will be favorable to us. In
addition, some of our framework agreements give the manufacturer or
distributor the right to acquire, at fair market value, our automotive
dealerships franchised by that manufacturer or distributor under specified
circumstances in the event of a change in control of our company, the
acquisition of 20% or more of our voting stock by another vehicle
manufacturer or distributor or other extraordinary corporate transactions
such as a merger or sale of all of our assets. The restrictions in our
franchise and framework agreements also may prevent or deter prospective
acquirors from acquiring control of us, which may adversely impact our
equity value. In addition, we have granted certain manufacturers the right
to acquire, at fair market value, the automotive dealerships franchised by
that manufacturer in specified circumstances upon the exercise of remedies
under the guarantees and pledges.
Our long-term strategy requires us to obtain substantial capital,
which, if we do not obtain, will adversely affect our prospects.
We need substantial capital to operate our business and to
effectively execute our long-term strategy. On August 10, 2001, we
terminated our multi-year unsecured revolving credit facility which
provided $1.0 billion of financing and entered into two new senior secured
revolving credit facilities with an aggregate capacity of $500.0 million.
One facility is a 364-day revolving credit facility which provides
borrowing capacity up to $200.0 million and the other facility provides
borrowing capacity up to $300.0 million and has a five-year term. In June
2001, we entered into a mortgage facility with an aggregate capacity of
$150.0 million. As of June 30, 2001, the amount borrowed under this
facility was $116.7 million. We are currently negotiating with a major
vehicle manufacturer's captive finance subsidiary to provide an additional
mortgage facility with respect to certain of our dealership properties.
Additionally, as of June 30, 2001, we had approximately $2.1 billion of
floorplan financing outstanding under our floorplan credit facilities with
various financing sources, primarily the vehicle manufacturers' captive
finance subsidiaries. Our floorplan financing, which we use to finance our
vehicle inventory, is secured by our vehicle inventory. This may limit our
ability to borrow from other sources or for other uses. We intend to obtain
the needed capital to operate our business with cash on hand, through
issuances of equity or debt securities and through borrowings under our
credit arrangements. We cannot, however, assure you that we will be able to
obtain sufficient financing for our business and operations on a timely
basis and on terms acceptable to us.
A substantial portion of our outstanding indebtedness is at
floating interest rates. At times, we have used interest rate swaps, caps
and floors to manage the risk of interest rate fluctuations, but a
substantial increase in interest rates could adversely affect our cost of
borrowed money.
We are subject to numerous legal and administrative proceedings,
which, if the outcomes are adverse to us, could adversely affect our
business, operating results and prospects.
We are involved, and will continue to be involved, in numerous
legal proceedings arising out of the conduct of our business, including
litigation with customers, employment related lawsuits and actions brought
by governmental authorities. We have several class action and other
lawsuits pending against us.
In October 2000, the California Department of Motor Vehicles
("California DMV") brought action against one of our subsidiaries'
dealerships for alleged customer fraud as well as several other claims. In
April 2001, the California DMV action and a related action by the State of
California were settled. As part of the settlement, the dealership closed
its sales operations for six days, agreed to provide restitution to certain
customers in the estimated amount of approximately $1.0 million and paid
$1.1 million in fines, penalties and costs. Three purported civil class
actions and other related lawsuits and claims have been filed or made
against the dealership based on the allegations underlying the California
DMV case. The class of customers to which these actions relate may be
significant.
In an action filed in state court in Palm Beach County, Florida,
plaintiffs accused one of our subsidiaries of violating the Florida Motor
Vehicle Retail Sales Finance Act and the Florida Deceptive and Unfair Trade
Practices Act by allegedly failing to deliver executed copies of retail
installment contracts to customers of our former used vehicle megastores.
The allegations involve nine of our former used vehicle megastores. On
October 31, 2000, the court certified the class of customers on whose
behalf the action would proceed. In July 2001, Florida's Fourth District
Court of Appeals upheld the certification of the class.
Many of our Texas dealership subsidiaries have been named in three
class actions brought against the Texas Automobile Dealer's Association
("TADA") and new vehicle dealerships in Texas that are members of the TADA.
The actions allege that since January 1994 Texas dealers have deceived
customers with respect to a vehicle inventory tax and violated federal
antitrust and other laws as well. Two of the cases are currently pending in
Texas state court and the third is pending in the federal district court
for the Eastern District of Texas.
In addition to the foregoing cases, we are also a party to
numerous other legal proceedings that arose in the conduct of our business.
The results of these matters and any matters brought against us in the
future cannot be predicted with certainty, and an unfavorable resolution of
one or more of these matters could have a material adverse effect on our
business, financial condition, results of operations, cash flows and
prospects.
We are subject to extensive governmental regulation and if we are
found to be in violation of any of these regulations, our business,
operating results and prospects could suffer.
The automotive retailing industry is subject to a wide range of
federal, state and local laws and regulations, such as local licensing
requirements, retail financing and consumer protection laws and regulations
and federal and state environmental, health and safety, wage-hour,
anti-discrimination and other employment practices laws and regulations.
The violation of these laws and regulations can result in administrative,
civil or criminal sanctions against us, which may include a cease and
desist order against the subject operations or even revocation or
suspension of our license to operate the subject business. In addition, as
the on-line automotive business expands, there may be new laws and
regulations adopted, or increased regulatory scrutiny and enforcement of
existing laws and regulations, that could have a material adverse effect on
our e-commerce business. We may need to spend considerable time, effort and
money to keep our existing or acquired facilities in compliance with
applicable federal, state and local regulation of health, safety,
environment, zoning and land use regulations.
We have engaged in certain transactions that may be challenged by
the IRS and may have a material adverse effect on our financial condition,
results of operations, cash flows and assets.
Over the past four years, we have engaged in certain transactions
that are of a type that the Internal Revenue Service has recently indicated
it intends to challenge. At June 30, 2001 and December 31, 2000, we had
$885.0 million and $877.2 million, respectively, of net deferred tax
liabilities. A significant amount of our deferred tax liabilities relates
to the transactions described above. We believe that our tax returns
appropriately reflect such transactions. However, at the present time, we
are unable to predict the outcome of any challenge if the IRS determines to
challenge the tax reporting of such transactions. An unfavorable settlement
or adverse resolution of these matters could have a material adverse effect
on our financial condition, results of operations, cash flows and assets.
If we are not able to implement and execute our strategic
initiatives across all of our dealerships, we may not be able to improve
our operating performance or decrease our cost structure.
The success of our business model depends in large part on our
ability to implement and execute our strategic initiatives across all of
our dealerships and, thereby, obtain business efficiencies, economies of
scale and related cost savings and margin performance improvements. Our
strategic initiatives focus on (i) expanding our margins by focusing on
higher-margin products and services, (ii) continuing to leverage our
significant scale to improve our operating efficiency, including managing
costs of our business and improving the utilization of our assets, (iii)
effectively using our free cash flow to reinvest in our business through
capital investments, strategic dealership acquisitions and share
repurchases and (iv) continuing to grow and leverage our e-commerce
business. These tasks are made more difficult by the fact that the
dealerships within each of our key markets were acquired from independent
organizations and historically have operated independently, with unique
business, sales and marketing practices. Accordingly, the implementation of
our strategic initiatives across each of our markets will require
significant managerial focus and time, and we cannot assure you that it
will result in improved operating performance or increased cost savings in
a timely manner or at all.
We may encounter limitations on our ability to acquire automotive
dealerships in key markets, which may materially adversely affect our
ability to execute our acquisition strategy.
The growth of our automotive retail business since our inception
has been primarily attributable to acquisitions of franchised automotive
dealership groups. The significant consolidation in the industry in our key
markets over the last several years has resulted in fewer desirable
dealerships or dealership groups being available for purchase on reasonable
terms. Although we have negotiated with the major manufacturers limits on
the number of dealerships that we may acquire nationally, regionally or
within any given market, each individual acquisition remains subject to
specific approval from the applicable vehicle manufacturer. We have
approached acquisition limits set forth in a number of our framework
agreements, particularly regarding market limits, and may encounter
additional limitations in the future as we continue to expand. In addition,
under our franchise and framework agreements, manufacturers have the
ability to block our future acquisitions of additional dealerships under
certain circumstances such as our failure to meet certain performance
levels. We cannot assure you that we will be able to execute our growth
strategy in the future by acquiring dealerships selling desirable
automotive brands at desirable locations in our key markets or that any
such acquisitions can be completed on favorable terms.
The loss of our officers and skilled employees that we depend upon
to operate our business could adversely impact our business, financial
condition, results of operations, cash flows and prospects.
Our success depends to a significant degree on the continued
contributions of our key corporate officers. Additionally, our success
depends on the key management personnel at our district offices and the
dealerships in our local markets. The market for qualified employees in the
automotive industry and in the markets in which we operate, particularly
for qualified general managers and sales and service personnel, is highly
competitive and may subject us to increased labor costs during periods of
low unemployment. We also believe that many of our sales and service
personnel are pursued from time to time by our competitors. The loss of a
group of key employees in any of our markets could have a material adverse
effect on our business and results of operations in that market.
We are subject to residual value risk and consumer credit risk in
connection with our lease portfolio; we are also subject to consumer credit
risk in connection with our installment receivables portfolio.
Through AutoNation Financial Services, we provide installment
loans to our customers and, until mid-1999, we provided our customers an
opportunity to finance vehicles through leases with us. We are subject to
residual value risk in connection with our lease portfolio in the event of
a decline in the market value of our leased vehicles. We also are subject
to consumer credit risk in connection with our lease portfolio and our
portfolio of installment receivables. If the economic downturn continues or
worsens, we may face an increase in the rate of payment defaults by our
customers, which may have a material adverse effect on our financial
condition, results of operations and cash flows.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Our business, financial condition, results of operations, cash
flows, plans, objectives and prospects may be adversely affected by a
number of factors, including the matters discussed in the section of this
prospectus entitled "Risk Factors." Certain statements and information set
forth in this prospectus and in the documents that we have filed with the
SEC and incorporated by reference, as well as other written or oral
statements made, or to be made, from time to time by us or by our
authorized executive officers on our behalf, constitute, or will
constitute, "forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, statements preceded by, followed by
or that include the words "believes," "expects," "anticipates,"
"estimates," or other similar expressions. We intend for our
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995, and we set forth this statement and the risk factors in
order to comply with such safe harbor provisions. You should note that our
forward-looking statements speak only as of the date of this prospectus or
when made and we undertake no duty or obligation to update or revise our
forward-looking statements, whether as a result of new information, future
events or otherwise. Although we believe that the expectations, plans,
intentions and projections reflected in our forward-looking statements are
reasonable, such statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. The risks, uncertainties and other factors that
you should consider before investing in the notes include, but are not
limited to, those set forth in the sections of this prospectus entitled
"Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
THE EXCHANGE OFFER
Background and Reasons for the Exchange Offer
On August 10, 2001, we privately placed $450.0 million of 9%
senior notes due 2008. Simultaneously with the sale of the outstanding
notes, we entered into a registration rights agreement relating to the
outstanding notes with the initial purchasers of the outstanding notes --
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America
Securities LLC, J.P. Morgan Securities Inc., First Union Securities, Inc.
and Comerica Securities, Inc. Under this registration rights agreement, we
agreed to file a registration statement regarding the exchange of the
outstanding notes for notes with terms identical in all material respects.
We also agreed to use our reasonable best efforts to cause that
registration statement to become effective with the SEC.
We are conducting the exchange offer to satisfy our contractual
obligations under the registration rights agreement. The form and terms of
the exchange notes are the same as the form and terms of the outstanding
notes, except that the exchange notes will be registered under the
Securities Act. As a result, the exchange notes will not bear legends
restricting their transfer and will not contain the registration rights and
liquidated damage provisions contained in the outstanding notes. The
outstanding notes provide that, if a registration statement relating to the
exchange offer has not been filed by October 24, 2001, and declared
effective by January 22, 2002, except under limited circumstances, we will
pay liquidated damages on the outstanding notes. Upon the completion of the
exchange offer, you will not be entitled to any liquidated damages on your
outstanding notes or any further registration rights under the registration
rights agreement, except under limited circumstances. The exchange offer is
not extended to holders of outstanding notes in any jurisdiction where the
exchange offer does not comply with the securities or blue sky laws of that
jurisdiction.
In this section entitled "The Exchange Offer," the term "holder"
means:
o any person in whose name the outstanding notes are
registered on our books;
o any other person who has obtained a properly completed
bond power from the registered holder; or
o any person whose outstanding notes are held of record by
DTC and who wants to deliver these outstanding notes by
book-entry transfer at DTC.
Terms of the Exchange Offer
We are offering to exchange up to $450.0 million total principal
amount of exchange notes for the same total principal amount of outstanding
notes. The outstanding notes must be tendered properly and not withdrawn on
or before expiration of the exchange offer, as described below. In exchange
for outstanding notes properly tendered and accepted, we will issue a like
total principal amount of up to $450.0 million in exchange notes.
The exchange offer and withdrawal rights expire at 12:00 midnight,
New York City time, on , 2002. We may extend this deadline for any reason.
We refer to the last day on which tenders will be accepted, whether on ,
2002 or any later date to which the exchange offer may be extended, as the
"expiration date." You may tender all, some or none of your outstanding
notes.
The exchange offer is not conditioned upon holders tendering a
minimum principal amount of outstanding notes. As of the date of this
prospectus, $450.0 million aggregate principal amount of notes is
outstanding.
You do not have any appraisal or dissenters' rights in the
exchange offer. If you do not tender outstanding notes or you tender
outstanding notes that we do not accept, your outstanding notes will remain
outstanding. Any outstanding notes will be entitled to the benefits of the
indenture under which they were, and the exchange notes will be, issued.
The outstanding notes will not, however, be entitled to any further
registration rights under the registration rights agreement, except under
limited circumstances. See the section entitled "Risk Factors -- Risks
Factors Related to the Exchange Offer -- Your failure to exchange your
outstanding notes may limit your ability to transfer your notes" for more
information regarding notes outstanding after the exchange offer.
After the expiration date, we will return to you as soon as
reasonably practicable any tendered outstanding notes that we did not
accept for exchange.
You will not have to pay brokerage commissions or fees or transfer
taxes for exchanging your outstanding notes if you follow the instructions
in the letter of transmittal. We will pay the charges and expenses, other
than those taxes described below, in the exchange offer. See "-- Fees and
Expenses" below for further information regarding fees and expenses.
Neither we nor any of our officers or directors makes any
recommendation as to whether or not you should tender your outstanding
notes in the exchange offer. You must make your own decision after reading
this document, including the discussion entitled "Risk Factors" beginning
on page 16, and consulting with your advisors based on your own financial
position and requirements.
We have the right, in accordance with applicable law, at any time:
o to delay the acceptance of the outstanding notes;
o to terminate the exchange offer if we determine that any
of the conditions to the exchange offer have not occurred
or have not been satisfied or waived;
o to extend the expiration date of the exchange offer and
keep all outstanding notes tendered other than those
notes properly withdrawn; and
o to waive any condition or amend the terms of the exchange
offer.
If we materially change the terms of the exchange offer, or if we
waive a material condition of the exchange offer, we will promptly
distribute a prospectus supplement to you disclosing the change or waiver.
We also will extend the exchange offer as required by Rule 14e-1 under the
Securities Exchange Act of 1934.
If we exercise any of the rights listed above, we will promptly
give oral or written notice of the action to the exchange agent, and we
will issue a release to appropriate news agencies. In the case of an
extension, an announcement will be made no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled
expiration date.
Acceptance of Outstanding Notes for Exchange; Issuance of Exchange Notes
If all the conditions to the exchange offer are met or waived, we
will accept for exchange any and all outstanding notes that are validly
tendered and not withdrawn prior to 12:00 midnight, New York City time, on
the expiration date. We will issue $1,000 principal amount at maturity of
registered notes in exchange for each $1,000 principal amount at maturity
of outstanding notes accepted in the exchange offer. Outstanding notes may
be tendered only in minimum denominations of $1,000 principal amount. As of
the date of this prospectus, an aggregate of $450.0 million in principal
amount at maturity of the notes is outstanding. This prospectus, together
with the accompanying letter of transmittal, is first being sent on or
about , 2001, to the nominee of the DTC and to others believed to have
beneficial ownership in the outstanding notes.
We will be deemed to have exchanged outstanding notes validly
tendered and not withdrawn when we give oral or written notice to the
exchange agent of our acceptance. The exchange agent is an agent for us for
receiving tenders of outstanding notes, letters of transmittal and related
documents. The exchange agent is also an agent for tendering holders for
receiving outstanding notes, letters of transmittal and related documents
and transmitting exchange notes to validly tendering holders. If for any
reason, we:
o delay the acceptance or exchange of any outstanding
notes, or
o extend the exchange offer, or
o are unable to accept or exchange notes,
then the exchange agent may, on our behalf and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered notes. Notes that the exchange
agent retains may not be withdrawn, except according to the withdrawal
procedures outlined below in the section entitled "--Withdrawal Rights."
In tendering outstanding notes, you must warrant in the letter of
transmittal or in an agent's message, which is described below, that:
o you have full power and authority to tender, exchange,
sell, assign and transfer outstanding notes;
o we will acquire good, marketable and unencumbered title
to the tendered outstanding notes, free and clear of all
liens, restrictions, charges and other encumbrances; and
o the outstanding notes tendered for exchange are not
subject to any adverse claims or proxies.
You also must warrant and agree that you will, upon request, execute and
deliver any additional documents that we or the exchange agent request to
complete the exchange, sale, assignment and transfer of the outstanding
notes.
Procedures for Tendering
Book-Entry Interests
The outstanding notes were issued as global securities. Beneficial
interests in the global securities, held by direct or indirect participants
in DTC, are shown on, and transfers of these interests are effected only
through, records maintained in book-entry form by DTC with respect to its
participants.
If you hold your outstanding notes in the form of book-entry
interests and you wish to tender your outstanding notes for exchange
pursuant to the exchange offer, you must transmit to the exchange agent on
or prior to the expiration date either:
o a written or facsimile copy of a properly completed and
duly executed letter of transmittal, including all other
documents required by the letter of transmittal, to the
exchange agent at the address set forth on the back of
cover of this prospectus; or
o a computer-generated message transmitted by means of
DTC's Automated Tender Offer Program system and received
by the exchange agent, in which you acknowledge and agree
to be bound by the terms of the letter of transmittal.
In addition, in order to deliver outstanding notes held in the
form of book-entry interests:
o the exchange agent must receive a confirmation of the
book-entry transfer of such notes into the exchange
agent's account at DTC prior to the expiration date; or
o you must comply with the guaranteed delivery procedures
described below.
Certificated Outstanding Notes
Only registered holders of certificated outstanding notes may
tender those notes in the exchange offer. If your outstanding notes are
certificated notes and you wish to tender those notes for exchange pursuant
to the exchange offer, you must transmit to the exchange agent on or prior
to the expiration date, a written or facsimile copy of a properly completed
and duly executed letter of transmittal, including all other required
documents, to the address set forth on the back cover of this prospectus.
In addition, in order to validly tender your certificated outstanding
notes:
o the certificates representing your outstanding notes must
be received by the exchange agent prior to the expiration
date; or
o you must comply with the guaranteed delivery procedures
described below.
Outstanding Notes Held Through a Broker
If you hold your outstanding notes through a broker, do not use
the letter of transmittal to direct the tender of your outstanding notes.
You should contact your broker directly for instructions on how to
participate in the exchange offer. Your broker must notify the DTC and
cause it to transfer the notes into the exchange agent's account in
accordance with DTC procedures. The broker must also ensure that the
exchange agent receives a computer-generated message transmitted by means
of DTC's Automated Tender Offer Program system, in which you acknowledge
and agree to be bound by the terms of the letter of transmittal before the
exchange offer expires.
Procedures Applicable to all Holders
Delivery of required documents by whatever method you choose is at
your sole risk. Delivery is complete when the exchange agent actually
receives the items to be delivered. Delivery of documents to DTC in
accordance with its procedures or to us does not constitute delivery to the
exchange agent. If delivery is by mail, we recommend registered mail,
return receipt requested, properly insured, or an overnight delivery
service. In all cases, you should allow sufficient time to ensure timely
delivery.
If you validly tender outstanding notes and you do not withdraw
the tender prior to the expiration date, you will have made an agreement
with us in accordance with the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal.
Signature Guarantees
You do not need to endorse certificates for the outstanding notes
or provide signature guarantees on the letter of transmittal unless:
(1) someone other than the registered holder tenders the certificate; or
(2) you complete the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the letter of transmittal.
In the case of (1) or (2) above, you must sign your outstanding
note or provide a properly executed bond power. The signature on the bond
power and on the letter of transmittal must be guaranteed by an eligible
institution. An eligible institution is a member of the S.T.A.M.P.
Medallion program, and generally includes a registered national securities
exchange or a member of the National Association of Securities Dealers,
Inc., a commercial bank or a trust company having an office or a
correspondent in the United States. Most banks, brokerage firms and
financial institutions are eligible institutions.
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes but the notes are not
immediately available, or time will not permit the notes or other required
documentation to reach the exchange agent before the expiration date, or
the procedure for book-entry transfer cannot be completed on a timely
basis, you may still tender your outstanding notes if:
o the tender is made through an eligible institution;
o the exchange agent receives from the eligible institution
before the expiration of the exchange offer, a properly
completed and duly executed notice of guaranteed
delivery, substantially in the form provided by us; and
o the exchange agent receives the certificates for all
physically tendered outstanding notes, in proper form for
transfer, or a book-entry confirmation, as the case may
be, and a properly completed letter of transmittal and
all other documents required by the letter of
transmittal, within three NYSE trading days after the
date of execution of the notice of guaranteed delivery.
You may deliver the notice of guaranteed delivery by hand,
telegram or mail to the exchange agent and you must include a guarantee by
an eligible institution in the form set forth in the notice.
Determination of Validity
We will resolve all questions regarding the form of documents,
validity, eligibility, time of receipt and acceptance for exchange of any
tendered outstanding notes. Our resolution of these questions as well as
our interpretation of the terms and conditions of the exchange offer,
including the letter of transmittal, is final and binding on all parties. A
tender of outstanding notes is invalid until all irregularities have been
cured or waived. None of us, the exchange agent, the soliciting dealers or
any other person is under any obligation to give notice of any
irregularities in tenders, and they are not liable for failing to give any
such notice. We reserve the absolute right, in our sole and absolute
discretion, to reject any tenders determined to be in improper form or
unlawful. We also reserve the absolute right to waive any of the conditions
of the exchange offer or any condition or irregularity in the tender of
outstanding notes by any holder. We need not waive similar conditions or
irregularities in the case of other holders.
If any letter of transmittal, endorsement, bond power, power of
attorney, or any other document required by the letter of transmittal is
signed by a trustee, executor, administrator, guardian, attorney-in- fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, that person must indicate that capacity when
signing. In addition, unless waived by us, the person must submit proper
evidence satisfactory to us, in our sole discretion, of his or her
authority to so act.
Resales of Exchange Notes
We are exchanging the outstanding notes for exchange notes in
reliance upon the position of the staff of the SEC, set forth in
interpretive letters to third parties in other similar transactions. We
will not seek our own interpretive letter. As a result, we cannot assure
you that the staff will take the same position on this exchange offer as it
did in interpretive letters to other parties. Based on the staff's letters
to other parties, we believe that holders of exchange notes, other than
broker-dealers, can offer the exchange notes for resale, resell and
otherwise transfer the exchange notes without delivering a prospectus to
prospective purchasers. However, you must acquire the exchange notes in the
ordinary course of business and have no intention of engaging in a
distribution of the exchange notes, as a "distribution" is defined by the
Securities Act.
If you are an "affiliate" of us or you intend to distribute
exchange notes, within the meaning of the Securities Act, or if you are a
broker-dealer who purchased outstanding notes from us to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, you:
o cannot rely on the staff's interpretations in the above
mentioned interpretive letters;
o cannot tender outstanding notes in the exchange offer;
and
o must comply with the registration and prospectus delivery
requirements of the Securities Act to transfer the
outstanding notes, unless the sale is exempt.
In addition, if you are a broker-dealer who acquired outstanding
notes for your own account as a result of market-making or other trading
activities and you exchange the outstanding notes for exchange notes, you
must deliver a prospectus with any resales of the exchange notes.
If you want to exchange your outstanding notes for exchange notes,
you will be required to affirm that you:
o are not an "affiliate" of us;
o are acquiring the exchange notes in the ordinary course
of your business;
o have no arrangement or understanding with any person to
participate in a distribution of the exchange notes,
within the meaning of the Securities Act; and
o are not a broker-dealer, are not engaged in, and do not
intend to engage in, a distribution of the exchange
notes, within the meaning of the Securities Act.
In addition, we may require you to provide information regarding
the number of "beneficial owners" of the outstanding notes within the
meaning of Rule 13d-3 under the Exchange Act. Each broker-dealer that
receives exchange notes for its own account must acknowledge that it
acquired the outstanding notes for its own account as the result of
market-making activities or other trading activities. Each broker-dealer
must further agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of
exchange notes. By making this acknowledgment and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" under the Securities Act. Based on the staff's position in
interpretive letters issued to third parties, we believe that
broker-dealers who acquired outstanding notes for their own accounts as a
result of market-making activities or other trading activities may fulfill
their prospectus delivery requirements with respect to the exchange notes
with a prospectus meeting the requirements of the Securities Act.
Accordingly, a broker- dealer may use this prospectus to satisfy such
requirements. We have agreed that a broker-dealer may use this prospectus
for a period ending 180 days after the expiration date of the exchange
offer. You should read the section entitled "Plan of Distribution" for
further information about the use of this prospectus by broker-dealers. A
broker-dealer intending to use this prospectus in the resale of exchange
notes must notify us, on or prior to the expiration date, that it is a
participating broker-dealer. This notice may be given in the letter of
transmittal or may be delivered to the appropriate exchange agent. Any
participating broker-dealer who is an "affiliate" of us may not rely on the
staff's interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act when reselling
exchange notes.
Each participating broker-dealer exchanging outstanding notes for
exchange notes agrees that, upon receipt of notice from us:
(a) that any statement contained or incorporated by reference
in this prospectus makes the prospectus untrue in any
material respect,
(b) that this prospectus omits to state a material fact
necessary to make the statements contained or
incorporated by reference in this prospectus, in light of
the circumstances under which they were made, not
misleading, or
(c) of the occurrence of other events specified in the
registration rights agreement,
the participating broker-dealer will suspend the sale of exchange notes.
Each participating broker-dealer agrees not to resell the exchange notes
until:
(1) we have amended or supplemented this prospectus to
correct the misstatement or omission and we furnish
copies of the amended or supplemented prospectus to the
participating broker-dealer, or
(2) we give notice that the sale of the exchange notes may be
resumed.
If we give notice suspending the sale of exchange notes, it shall
extend the 180-day period during which this prospectus may be used by a
participating broker-dealer by the number of days between the date we give
notice of suspension and the date participating broker-dealers receive
copies of the amended or supplemented prospectus or the date we give notice
resuming the sale of exchange notes.
Withdrawal Rights
You can withdraw tenders of outstanding notes at any time on or
before the expiration date.
For a withdrawal to be effective, you must deliver a written,
telegraphic, telex or facsimile transmission of a notice of withdrawal or
an agent's message to the appropriate exchange agent on or before the
expiration date. The notice of withdrawal must specify the name of the
person tendering the outstanding notes to be withdrawn, the total principal
amount of outstanding notes withdrawn, and the name of the registered
holder of the outstanding notes if different from the name of the person
tendering the outstanding notes. If you delivered outstanding notes to an
exchange agent, you must submit the serial numbers of the outstanding notes
to be withdrawn, and the signature on the notice of withdrawal must be
guaranteed by an eligible institution, except in the case of outstanding
notes tendered for the account of an eligible institution. If you tendered
outstanding notes as a book-entry transfer, the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawal of outstanding notes. You must deliver the notice of withdrawal
to the exchange agent by written, telegraphic, telex or facsimile
transmission, or by an agent's message. You may not rescind withdrawals of
tender. Outstanding notes properly withdrawn may again be tendered at any
time on or before the expiration date.
We will determine all questions regarding the validity, form and
eligibility of withdrawal notices. Our determination will be final and
binding on all parties. None of us, the exchange agent, the soliciting
dealers or any other person is under any obligation to give notice of any
irregularities in withdrawals, and they are not liable for failing to give
any such notice. Withdrawn outstanding notes will be returned to you after
withdrawal as soon as reasonably practicable.
Interest on Exchange Notes
The exchange notes will bear interest at a rate of 9% per annum.
Interest is payable semi- annually on February 1 and August 1 of each year.
Holders of exchange notes will receive interest from the date of initial
issuance of the exchange notes, plus an amount equal to the accrued
interest on the outstanding notes. Interest on the outstanding notes
accepted for exchange will cease to accrue upon issuance of the exchange
notes.
Extension of Tender Period; Termination; Amendment
We expressly reserve the right, in our sole discretion, for any
reason, including the non-satisfaction of any of the conditions for
completion described below, to extend the period of time during which the
exchange offer is open or to amend the terms of the exchange offer in any
respect. In any of these cases, we will make a public announcement of the
extension or amendment promptly.
If we materially change the terms of or information concerning the
exchange offer, we will extend the exchange offer. The SEC has stated that,
as a general rule, it believes that an offer should remain open for a
minimum of five business days from the date that notice of the material
change is first given. The length of time the exchange offer must remain
open will depend on the particular facts and circumstances.
If any of the conditions indicated in the next section have not
been met, we reserve the right, in our sole discretion, so long as
outstanding notes have not been accepted for exchange, to delay the
acceptance of any outstanding notes or to terminate the exchange offer and
not accept for exchange any outstanding notes.
If we extend the exchange offer, are delayed in accepting any
outstanding notes or are unable to accept for exchange any outstanding
notes under the exchange offer for any reason, then, without affecting our
rights under the exchange offer, the exchange agent may, on our behalf,
retain all outstanding notes tendered. These notes may not be withdrawn
except as provided in the section entitled "Withdrawal Rights" on page 35.
Our reservation of the right to delay acceptance of any outstanding notes
is subject to applicable law, which requires that we pay the consideration
offered or return the outstanding notes deposited promptly after the
termination or withdrawal of the exchange offer.
We will issue a press release or other public announcement no
later than 9:00 a.m., New York City time, on the next business day
following any extension, amendment, non-acceptance or termination of the
previously scheduled expiration date.
Conditions to the Exchange Offer
We may not accept outstanding notes for exchange and may terminate
or not complete the exchange offer at any time prior to the expiration of
the exchange offer if:
o the staff of the SEC no longer allows the exchange notes
to be offered for resale, resold and otherwise
transferred by holders without compliance with the
registration and prospectus delivery provisions of the
Securities Act;
o a governmental body passes any law, statute, rule or
regulation which prohibits or prevents the exchange
offer;
o the SEC or any state securities authority issues a stop
order suspending the effectiveness of the registration
statement or initiates or threatens to initiate a
proceeding to suspend the effectiveness of the
registration statement; or
o we are unable to obtain any governmental approval that is
necessary to complete the exchange offer.
If we reasonably believe that any of the above conditions has occurred, we
may:
o terminate the exchange offer and as promptly as
practicable return all tendered outstanding notes;
o extend the exchange offer;
o waive the unsatisfied condition and, subject to any
requirement to extend the period of time during which the
exchange offer is open, complete the exchange offer; or
o amend the terms of the exchange offer in any respect.
These conditions are solely for our benefit. We may assert these
conditions with respect to all or any portion of the exchange offer
regardless of the circumstances giving rise to them. We may waive any
condition in whole or in part at any time in our discretion. Our failure to
exercise our rights under any of the above conditions does not represent a
waiver of these rights. Each right is an ongoing right that may be asserted
at any time. All conditions must be satisfied or waived prior to the
expiration of the exchange offer. Any determination by us concerning the
conditions described above will be final and binding on all parties.
Exchange Agent
We appointed Wells Fargo Bank Minnesota, National Association as
exchange agent for the exchange offer. You should direct questions and
requests for assistance, requests for additional copies of this prospectus
or of the letter of transmittal and requests for a notice of guaranteed
delivery to the following address for the exchange agent:
Corporate Trust Services
Wells Fargo Bank Minnesota, National Association
213 Court Street-- Suite 902
Middletown, CT 06457
Attention: Robert L. Reynolds - Vice President
(860) 704-6216 (telephone)
(860) 704-6219 (facsimile)
If you deliver letters of transmittal or any other required
documents to an address or facsimile number other than those listed above,
your tender is invalid.
Fees and Expenses
We will pay the exchange agent reasonable and customary fees for
its services and reasonable out-of-pocket expenses. We will also pay
brokerage houses and other custodians, nominees and fiduciaries their
reasonable out-of-pocket expenses for sending copies of this prospectus and
related documents to holders of outstanding notes, and for handling or
tendering for their customers.
We will pay the transfer taxes for the exchange of the outstanding
notes in the exchange offer. If, however, exchange notes are delivered to
or issued in the name of a person other than the registered holder, or if a
transfer tax is imposed for any reason other than for the exchange of
outstanding notes in the exchange offer, then the tendering holder will pay
the transfer taxes. If a tendering holder does not submit satisfactory
evidence of payment of taxes or exemption from taxes with the letter of
transmittal, the taxes will be billed directly to the tendering holder.
We will not make any payment to brokers, dealers or other nominees
soliciting acceptances in the exchange offer.
Accounting Treatment
The exchange notes will be recorded at the same carrying value as
the outstanding notes. Accordingly, we will not recognize any gain or loss
on the exchange for accounting purposes.
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange of the
notes pursuant to the exchange offer. The exchange offer is intended to
satisfy our obligations under the registration rights agreement.
CAPITALIZATION
The following table sets forth our short term-debt and
capitalization as of June 30, 2001 on a historical basis and as adjusted to
give effect to (i) the notes, (ii) borrowings under our senior credit
facilities, (iii) borrowings under our mortgage facility and (iv) the
prepayment of certain of our outstanding indebtedness. This summary should
be read in conjunction with "Use of Proceeds," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Description of Certain Other
Indebtedness" and our consolidated financial statements, including the
accompanying notes, included elsewhere in this prospectus (in millions).
As of June 30, 2001
Actual As Adjusted
Short-term debt:
Floorplan notes payable.......................... $ 2,110.1 $ 2,110.1
Current maturities of long-term debt............. 7.4 7.4
-------------- -----------
Total short-term debt......................... 2,117.5 2,117.5
--------------- ----------
Long-term debt (net of current maturities):
Credit facilities................................ 396.0 86.4
Mortgage facility................................ 114.0 114.0
Notes offered hereby, net of discount............ -- 444.3
Leases and other debt............................ 180.7 56.4
--------------- ----------
Total long-term debt.......................... 690.7 701.1
--------------- ----------
Shareholders' equity................................ 3,858.5 3,858.5
-------------- ----------
Total capitalization.......................... $ 6,666.7 $ 6,677.1
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated income statement data for the years
ended December 31, 1998, 1999 and 2000 and the selected consolidated
balance sheet data as of December 31, 1999 and 2000 are derived from
AutoNation's audited financial statements together with the notes thereto,
included elsewhere in this prospectus. Businesses acquired through December
31, 1997 and accounted for under the pooling of interests method of
accounting have been included retroactively in the financial statements as
if the companies had operated as one entity since inception. Businesses
acquired through June 30, 2001 and accounted for under the purchase method
of accounting are included in the financial statements from the date of
acquisition. The selected consolidated income statement data for the years
ended December 31, 1996 and 1997 and the selected consolidated balance
sheet data as of December 31, 1996, 1997 and 1998 are derived from
AutoNation's audited financial statements not included herein. The selected
consolidated income statement data for the six months ended June 30, 2000
and 2001, and the selected consolidated balance sheet data as of June 30,
2001, are derived from AutoNation's unaudited financial statements included
elsewhere in this prospectus. The selected consolidated balance sheet as of
June 30, 2000 is derived from AutoNation's unaudited financial statements
not included herein. In the opinion of management, these unaudited
financial statements reflect all adjustments necessary for a fair
presentation of our results of operations and financial condition. All such
adjustments are of a normal recurring nature. The selected consolidated
financial data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and related notes included elsewhere in
this prospectus. Operating results for interim periods are not necessarily
indicative of the results that can be expected for a full year ($ in
millions, except per share data and statistical data).
Six months Six months
Year ended Year ended Year ended Year ended Year ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, June 30, June 30,
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
(unaudited)
CONSOLIDATED INCOME
STATEMENT DATA:
Revenue........................... $2,933.7 $6,122.8 $12,664.6 $20,111.8 $20,609.6 $10,569.7 $9,829.1
Gross margin...................... 333.3 757.8 1,931.6 2,928.6 3,032.5 1,536.1 1,493.1
Operating income.................. 5.6 (38.8) 463.4 109.8 724.8 366.9 336.4
Floorplan interest expense........ * (55.2) (107.0) (125.2) (199.8) (99.0) (81.0)
Other interest expense............ (7.2) (4.5) (14.0) (34.9) (47.7) (22.4) (19.4)
Interest income................... 6.6 5.4 8.7 20.6 14.3 8.7 3.6
Other income (expense), net....... 4.2 114.5 1.5 2.2 33.4 3.8 (0.8)
Income (loss) from continuing
operations before income
taxes.......................... 9.2 21.4 352.6 (27.5) 525.0 258.0 238.8
Income (loss) from continuing
operations.................... (1.1) 13.4 225.8 (31.5) 328.1 161.3 146.2
Discontinued operations:
Income (loss) from discontinued
operations, net of income taxes.. 26.0 196.3 262.1 (30.6) 13.1 1.8 --
Gain (loss) on disposal of
segments, net of income taxes.... -- 230.0 11.6 345.0 (11.3) -- --
Net income........................ (6.7) 439.7 499.5 282.9 329.9 163.1 146.2
Basic earnings (loss) per share:
Continuing operations.......... -- 0.03 0.50 (0.07) 0.91 0.44 0.43
Discontinued operations........ 0.08 1.06 0.60 0.73 -- 0.01 --
Extraordinary charge........... (0.10) -- -- -- -- -- --
Net income..................... (0.02) 1.09 1.10 0.66 0.91 0.45 0.43
Weighted average common shares
outstanding...................... 320.9 403.1 455.1 429.8 361.3 364.2 339.3
Diluted earnings (loss) per
share:
Continuing operations............. -- 0.03 0.48 (0.07) 0.91 0.44 0.43
Discontinued operations.............. 0.08 0.99 0.58 0.73 -- 0.01 --
Extraordinary charge.............. (0.10) -- -- -- -- -- --
Net income..................... (0.02) 1.02 1.06 0.66 0.91 0.45 0.43
Weighted average common shares
outstanding.......................... 320.9 430.9 470.9 429.8 361.4 364.4 340.7
OTHER FINANCIAL DATA:
EBITDA(1)..................... 27.3 269.9 553.5 699.3 902.5 445.5 420.3
Depreciation and
amortization............... 10.9 38.8 79.9 123.0 133.8 66.1 72.4
Capital expenditures.......... 68.1 210.0 256.7 242.3 148.2 52.9 52.8
Earnings(3)/Fixed 1.9x 3.7x 3.6x 3.2x 2.9x 2.9x 3.2x
charges(2).................
As of As of As of As of As of As of As of
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, June 30, June 30,
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
(unaudited)
CONSOLIDATED BALANCE
SHEET DATA:
Inventory..................... $ 381.1 $1,081.3 $1,849.5 $2,706.8 $2,769.2 $2,799.1 $2,439.3
Working capital............... 388.8 768.7 1,063.9 1,136.3 1,034.9 1,079.0 1,006.5
Total assets.................. 2,229.1 4,852.1 8,412.2 9,583.1 8,830.0 8,916.3 8,345.8
Floorplan financing........... 225.7 472.5 1,339.2 2,210.6 2,416.7 2,375.3 2,110.1
Revolver...................... 150.0 250.0 500.0 669.0 615.0 865.0 396.0
Leases and other debt......... 230.5 14.6 26.5 174.8 242.2 124.7 302.1
Total current liabilities..... 470.5 752.5 1,997.3 3,134.2 3,141.3 3,239.8 2,768.6
Long-term debt, net of current
maturities................. 269.3 261.1 520.9 836.1 850.4 984.9 690.7
Shareholders' equity.......... 1,419.9 3,484.3 5,424.2 4,601.2 3,842.5 3,764.8 3,858.5
- -----------
(1) EBITDA is defined as earnings before interest expense, income
taxes, depreciation, amortization and other non- recurring charges
of $443.7 million in fiscal 1999 and $(3.8) million in fiscal
2000. While EBITDA should not be construed as a substitute for
operating income or as a better measure of liquidity than cash
flows from operating activities, which are determined in
accordance with generally accepted accounting principles, it is
included herein to provide additional information with respect to
our ability to meet future debt service, capital expenditures and
working capital requirements. This measure may not be comparable
to similarly titled measures reported by other companies.
(2) Fixed charges are defined as interest expense (including amortized
interest and debt discounts), calculated rental expense interest,
and certain subsidiary dividends, if any.
(3) Earnings are defined as pretax income from continuing operations,
net of non-recurring charges, plus fixed charges less interest
capitalized.
* Floorplan interest expense is included in gross margin in 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes thereto included elsewhere in this
prospectus.
Overview
We are the largest automotive retailer in the United States. As of
August 31, 2001, we owned and operated 367 new vehicle franchises from 277
dealerships located in major metropolitan markets in 17 states,
predominantly in the Sunbelt region of the United States. Our dealerships
sell new and used vehicles. In addition, we offer financing for vehicle
purchases, extended service contracts and insurance products, as well as
other aftermarket products such as vehicle accessories. We provide a wide
range of vehicle maintenance and repair services and operate collision
repair centers in most of our key markets. We offer a full range of 35
different vehicle brands. The core brands of vehicles that we sell,
representing almost 90% of the new vehicles that we sold in 2000, are Ford
(Ford, Lincoln and Mercury), General Motors (Chevrolet, Pontiac, GMC and
Buick), Chrysler (Chrysler, Jeep and Dodge), Toyota, Nissan and Honda. We
also sell several luxury vehicle brands, including Mercedes-Benz, BMW,
Lexus and Porsche.
Consolidated Results of Operations
The following is a summary of our consolidated income statements
in gross dollars for the periods indicated (in millions):
Year ended Year ended Year ended Six months Six months
December 31, December 31, December 31, ended June 30, ended June 30,
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(unaudited)
Income (loss) from continuing
operations.................. $ 225.8 $ (31.5) $ 328.1 $ 161.3 $ 146.2
-------------- ------------ ------------ ------------- --------------
Income (loss) from discontinued
operations, net of income
taxes:
Automotive rental........ 108.8 (71.0) 13.1 1.8 --
Solid waste services..... 153.3 40.4 -- -- --
Gain (loss) on disposal of 6 345.
segments............... 11.6 345.0 (11.3) -- --
-------------- ------------ ------------ ------------- --------------
273.7 314.4 1.8 1.8 --
-------------- ------------ ------------ ------------- --------------
Net income..................... $ 499.5 $ 282.9 $ 329.9 $ 163.1 $ 146.2
============== ============ ============ ============= ==============
The following factors have impacted our financial condition and
results of operations and may cause our reported financial data not to be
indicative of our future financial condition and operating results:
o Growth Through Acquisitions: From 1996 through 2001, we
expanded our automotive retail operations through the
acquisition of franchised automotive dealerships as
discussed under the heading "Business Acquisitions and
Divestitures."
o Spin-Off of ANC Rental Corporation: In June 2000, we
completed the tax-free spin-off of our former automotive
rental business. This business has been accounted for as
a discontinued operation as further discussed under the
heading "Discontinued Business Segments."
o Sale of Republic Services, Inc.: In 1998, our former
solid waste services business completed an initial public
offering of 36.1% of its common stock. In 1999, we sold
substantially all of our remaining interests in Republic
Services to the public. See further discussion under the
heading "Discontinued Business Segments."
o Restructuring: In 1999, we restructured certain of our
operations to exit our former used vehicle megastore
business and to reduce our corporate workforce as further
discussed under the heading "Restructuring Activities."
o Share Repurchases: Since the inception of our
Board-authorized share repurchase programs in 1998, we
have repurchased 142.7 million shares of our common stock
for an aggregate price of $1.6 billion through June 30,
2001. See further discussion under the heading "Financial
Condition."
Unless otherwise stated, the following discussions will focus on
the results of continuing operations, which consists of our automotive
retail business.
Same Store Operating Data:
Our historical operating results include the results of acquired
businesses from the date of acquisition for acquisitions accounted for
under the purchase method of accounting. Due to our expansion through
acquisitions as well as the impact of divestitures, year over year
comparisons of our reported operating results do not necessarily provide a
meaningful representation of our internal performance. Accordingly, we have
presented below our operating results for the six months ended June 30,
2001 and 2000 and the years ended December 31, 2000 and 1999 on a same
store basis to better reflect our internal performance. Historical same
store operating results include the results of businesses which were owned
and operated by us during all or part of the fiscal periods included in the
comparison.
The following table sets forth: (1) the components of same store
revenue, with component percentages of total revenue; (2) the components of
same store gross margin, with gross margin percentages of applicable same
store revenue; (3) same store selling, general and administrative expenses;
(4) same store performance; and (5) retail vehicle same store unit sales
for the six months ended June 30 and years ended December 31 ($ in
millions):
Year ended Year ended Six months Six months
December 31, December 31, ended June 30, ended June 30,
1999 % 2000 % 2000 % 2001 %
---- - ---- - ---- - ---- -
(unaudited)
Revenue:
New vehicle............. $ 10,405.8 60.5 $ 10,636.9 61.5 $ 6,087.9 61.2 $ 5,474.9 59.3
Used vehicle............ 3,260.2 19.0 3,167.1 18.3 1,864.2 18.8 1,829.5 19.8
Parts and service....... 1,904.9 11.1 1,947.2 11.3 1,090.8 11.0 1,119.1 12.1
Finance and insurance... 344.1 2.0 362.8 2.1 206.0 2.1 218.9 2.4
Other................... 1,284.8 7.4 1,192.0 6.8 692.4 6.9 592.8 6.4
----------- ----- ----------- ------ ------------- ------ ------------- ------
Total revenue........ 17,199.8 100.0 17,306.0 100.0 9,941.3 100.0 9,235.2 100.0
----------- ----- ----------- ------ ------------- ------ ------------- ------
Gross Margin:
New vehicle............. 875.0 8.4 894.1 8.4 512.0 8.4 454.9 8.3
Used vehicle............ 360.1 11.0 362.2 11.4 214.0 11.5 206.4 11.3
Parts and service....... 799.0 41.9 830.2 42.6 464.2 42.6 483.4 43.2
Finance and insurance... 344.1 100.0 362.8 100.0 206.0 100.0 218.9 100.0
Other................... 113.6 8.8 76.4 6.4 44.8 6.5 33.2 5.6
----------- ----- ----------- ------ ------------- ------ ------------- ------
Total gross margin... 2,491.8 14.5 2,525.7 14.6 1,441.0 14.5 1,396.8 15.1
S,G&A Store................ 1,691.4 9.8 1,663.4 9.6 948.4 9.5 952.3 10.3
----------- ----- ----------- ------ ------------- ------ ------------- ------
Store performance.......... $ 800.4 4.7 $ 862.3 5.0 $ 492.6 5.0$ 444.5 4.8
=========== ===== =========== ====== ============= ====== ============= ======
Retail vehicle unit sales:
New..................... 428,000 420,000 241,000 208,000
Used.................... 231,000 212,000 124,000 120,000
----------- ----------- ------------- ------------- ------
659,000 632,000 365,000 328,000
=========== =========== ============= ============= ======
Overall, our same store revenues and volume decreased during the
six months of 2001 as compared to the same period in the prior year,
primarily due to lower overall demand in the marketplace and other factors
described below.
Total. Same store revenue was $9.2 billion for the six months
ended June 30, 2001 compared to $9.9 billion for the six months ended June
30, 2000, a decrease of 7.1%. Same store revenue was $17.3 billion for the
year ended December 31, 2000 compared to $17.2 billion for the year ended
December 31, 1999, an increase of 0.6%. Same store gross margin was $1.4
billion for the six months ended June 30, 2001 and 2000. Same store gross
margin was $2.5 billion for the years ended December 31, 2000 and1999. Same
store gross margin as a percentage of same store total revenue was 15.1%
for the six months ended June 30, 2001 versus 14.5% for the same period in
the prior year. This 60 basis point increase was primarily driven by a
shift in revenue mix as lower margin new vehicle revenue represented a
smaller component of overall revenue. Same store gross margin as a
percentage of same store total revenue was 14.6% for the year ended
December 31, 2000 versus 14.5% for the year ended December 31, 1999. The
primary components of same store revenue and gross margin changes are
described below.
New vehicle. New vehicle same store revenue decreased 10.1% to
$5.5 billion during the six months ended June 30, 2001, as compared to the
same period in 2000, due to a unit volume decrease of 13.7% partially
offset by a 3.6% increase in prices. New vehicle same store revenue
increased 2.2% to $10.6 billion during the year ended December 31, 2000 due
to price increases of 4.1% offset by a decrease in volume of 1.9%. New
vehicle same store gross margin increased 2.2% to $894.1 million during the
year ended December 31, 2000. Due primarily to the decline in volume, new
vehicle same store gross margin decreased 11.2% to $454.9 million for the
six months ended June 30, 2001. Our new vehicle sales were impacted by the
lower demand experienced in the overall automotive retail industry this
year, predominantly in the domestic product lines. We continue to expect
lower new vehicle demand for the foreseeable future, which will likely
result in lower new vehicle revenue and gross margin.
Used vehicle. Same store used vehicle revenue decreased 1.9% to
$1.8 billion during the six months ended June 30, 2001 as compared to the
same period in 2000. This decrease is attributable to lower volume of 3.2%
partially offset by 1.3% higher average prices. The used vehicle market was
softer in the first six months of 2001 compared to the same period in 2000
and in 2000 compared to 1999 due in part to strong manufacturer incentives
for new vehicles, especially light trucks. Same store used vehicle revenue
decreased 2.9% to $3.2 billion during the year ended December 31, 2000.
This decrease is attributable to lower volume of 8.2% offset by 5.3% higher
average prices. Used vehicle same store gross margin decreased 3.6% to
$206.4 million for the six months ended June 30, 2001 as compared to the
same period in 2000. Used vehicle same store gross margin increased
slightly to $362.2 million during the year ended December 31, 2000, as
compared to the same period in 1999, due to an expansion in gross margin
percentage of 40 basis points to 11.4%.
Parts and service. Parts and service same store revenue increased
2.6% to $1.1 billion during the six months ended June 30, 2001 as compared
to the same period in 2000, driven by volume as well as price increases.
Parts and service same store revenue increased 2.2% from the prior year to
$1.9 billion in 2000. Same store parts and service gross margin increased
4.1% to $483.4 billion for the six months ended June 30, 2001, as compared
to the same period in 2000, as a result of a higher revenue coupled with a
margin expansion of 60 basis points due to our efforts to increase pricing
and manage costs. Gross margin for same store parts and service increased
3.9% to $830.2 million in 2000 as a result of the higher revenue coupled
with a margin expansion of 70 basis points to 42.6%.
Finance and insurance. In the six months ended June 30, 2001, same
store finance and insurance revenue and gross margin (representing pure
commissions) increased 6.3% to $218.9 million, as compared to the six
months ended June 30, 2000. Same store finance and insurance revenue and
gross margin increased 5.4% to $362.8 million during the year ended
December 31, 2000 compared to 1999. These increases are primarily due to a
higher percentage of our customers buying finance and insurance products as
well as increased pricing.
Other revenue. Same store other revenue decreased by 14.4% from
$692.4 million to $592.8 million for the six months ended June 30, 2001
compared to the same period in 2000. This revenue decrease primarily
reflects a reduction in wholesale revenues due to a decrease in the number
of units wholesaled. Same store other revenue was $1.2 billion and $1.3
billion for the years ended December 31, 2000 and 1999, respectively.
Selling, general and administrative expense. Same store selling,
general and administrative expenses were $952.3 million and $948.4 million,
or 10.3% and 9.5% of same store total revenue, for the six months ended
June 30, 2001 and 2000, respectively. This increase as a percentage of
revenue is primarily due to the shift in revenue mix as a function of lower
new vehicle sales. Same store selling, general and administrative expenses
were $1.7 billion during the years ended December 31, 2000 and December 31,
1999. Same store selling, general and administrative expenses as a
percentage of same store total revenue were 9.6% for the year ended
December 31, 2000 versus 9.8% for the year ended December 31, 1999. This
decrease is primarily due to the impact of cost-cutting initiatives and
overall leveraging of the store cost structure.
Store performance margin. Same store performance margins were
$444.5 million and $492.6 million or, as a percentage of same store
revenue, 4.8% and 5.0% for the six months ended June 30, 2001 and 2000,
respectively. This percentage decrease is a result of higher selling,
general and administrative expenses as a percentage of revenue. Same store
performance margin was $862.3 million for the year ended December 31, 2000
versus $800.4 million for the year ended December 31, 1999. Same store
performance margins as a percentage of same store total revenue were 5.0%
for the year ended December 31, 2000 versus 4.7% for the year ended
December 31, 1999. The increases in same store performance margins and same
store performance margin as percentages of same store revenue are primarily
due to decreases in selling, general and administrative expenses, coupled
with gross margin expansion in used vehicles and parts and service.
Reported Operating Data:
The following table sets forth: (1) the components of revenue,
with component percentages of total revenue; (2) the components of gross
margin, with gross margin percentages of applicable revenue; (3) selling,
general and administrative expenses; (4) store performance; and (5) retail
vehicle unit sales for the six months ended June 30 and years ended
December 31 ($ in millions):
Year ended Year ended Year ended Six months Six months
Dec. 31, Dec. 31, Dec. 31, ended June 30, ended June 30,
1998 % 1999 % 2000 % 2000 % 2001 %
---- - ---- - ---- - ---- - ---- -
(unaudited)
Revenue:
New vehicle.......... $ 6,775.8 53.5 $ 11,481.0 57.1 $ 12,489.3 60.6 $ 6,399.0 60.6 $ 5,808.9 59.1
Used vehicle......... 3,185.2 25.2 4,429.7 22.0 3,860.2 18.7 2,011.7 19.0 1,949.5 19.8
Parts and service.... 1,383.2 10.9 2,222.0 11.1 2,334.9 11.3 1,176.7 11.1 1,201.0 12.2
Finance and
insurance......... 288.6 2.3 423.4 2.1 431.8 2.1 218.3 2.1 233.7 2.4
Other................ 1,031.8 8.1 1,555.7 7.7 1,493.4 7.3 764.0 7.2 636.0 6.5
--------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- -----
Total revenue..... 12,664.6 100.0 20,111.8 100.0 20,609.6 100.0 10,569.7 100.0 9,829.1 100.0
--------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- -----
Gross margin:
New vehicle.......... 588.6 8.7 962.3 8.4 1,056.0 8.5 536.4 8.4 481.0 8.3
Used vehicle......... 379.4 11.9 449.6 10.1 438.6 11.4 231.3 11.5 219.2 11.2
Parts and service.... 571.6 41.3 933.8 42.0 999.7 42.8 500.9 42.6 518.1 43.1
Finance and
insurance......... 288.6 100.0 423.4 100.0 431.8 100.0 218.3 100.0 233.7 100.0
Other................ 103.4 10.0 159.5 10.3 106.4 7.1 49.2 6.4 41.1 6.5
--------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- -----
Total gross
margin.......... 1,931.6 15.3 2,928.6 14.6 3,032.5 14.7 1,536.1 14.5 1,493.1 15.2
--------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- -----
S,G&A--Store............ 1,301.8 10.3 2,089.4 10.4 2,021.6 9.8 1,019.4 9.6 1,020.7 10.4
Store performance.... 629.8 5.0 839.2 4.2 1,010.9 4.9 516.7 4.9 472.4 4.8
S,G&A--Corporate......... 86.5 0.7 190.0 1.0 125.2 0.6 83.7 0.7 73.9 0.8
S,G&A--Property
carrying costs....... -- -- -- -- 30.9 0.1 -- -- -- --
Depreciation............ 40.3 0.3 60.1 0.3 54.7 0.3 27.8 0.3 32.0 0.3
Amortization............ 39.6 0.3 62.9 0.3 79.1 0.4 38.3 0.4 40.4 0.4
Asset impairment
charges (recoveries),
net.................. -- -- 416.4 2.1 (3.8) -- -- -- 8.7 0.1
Other gains............. -- -- -- -- -- -- -- -- (19.0) (0.2)
--------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- -----
Operating Income........ $ 463.4 3.7 $ 109.8 0.5 $ 724.8 3.5 $ 366.9 3.5 $ 336.4 3.4
========= ===== ============ ===== ============ ===== =========== ===== =========== =====
Retail vehicle unit
sales:
New.................. 286,000 469,000 489,000 253,000 221,000
Used................. 244,000 315,000 255,000 134,000 129,000
--------- ------------ ------------ ----------- -----------
530,000 784,000 744,000 387,000 350,000
========= ============ ============ =========== ===========
Overall we experienced a decrease in revenue in the first six
months of 2001 compared to the same period in the prior year primarily due
to lower overall demand in the marketplace and other factors described
below.
Total. Total revenue was $9.8 billion for the six months ended
June 30, 2001 compared to $10.6 billion for the six months ended June 30,
2000, a decrease of 7.0%. Total revenue was $20.6 billion, $20.1 billion
and $12.7 billion for the years ended December 31, 2000, 1999 and 1998,
respectively. Total gross margin was $1.5 billion for the six months ended
June 30, 2001 and 2000. Gross margins were $3.0 billion, $2.9 billion and
$1.9 billion for the years ended December 31, 2000, 1999 and 1998,
respectively. The primary components of these changes are described below.
New vehicle. As compared to the six months ended June 30, 2000,
new vehicle revenue decreased 9.2% to $5.8 billion during the six months
ended June 30, 2001 due to lower unit sales primarily in the domestic
product lines for us as well as the industry. New vehicle revenue was $12.5
billion, $11.5 billion and $6.8 billion for the years ended December 31,
2000, 1999 and 1998, respectively. During the first six months of 2001, we
sold 221,000 new vehicles versus 253,000 new vehicles in the comparable
2000 period. Consistent with the volume decrease, new vehicle gross margin
decreased 10.3% to $481.0 million for the six months ended June 30, 2001
versus the same period in 2000. New vehicle gross margins were $1.1
billion, $962.3 million and $588.6 million or, as percentages of new
vehicle revenue, 8.5%, 8.4% and 8.7% for the years ended December 31, 2000,
1999 and 1998, respectively. Increases in revenue and gross margins are
attributable to acquisitions and higher pricing. New vehicle revenue was
also impacted by an increase in same store unit sales in 1999 and a modest
decrease in same store unit sales in 2000.
Used vehicle. Used vehicle sales decreased 3.1% to $1.9 billion
during the six months ended June 30, 2001 as compared to the same period
during 2000. This decrease was a result of lower volume in 2001. Used
vehicle revenue was $3.9 billion, $4.4 billion and $3.2 billion for the
years ended December 31, 2000, 1999 and 1998, respectively. Used vehicle
gross margin decreased 5.2% to $219.2 million during the six months ended
June 30, 2001 from $231.3 million for the same period in 2000. Used vehicle
gross margin percentage was 11.2% of used vehicle revenue for the six
months ended June 30, 2001, a decline of 30 basis points from the
comparable period in 2000. Used vehicle gross margins were $438.6 million,
$449.6 million and $379.4 million or, as percentages of used vehicle
revenue, 11.4%, 10.1% and 11.9% for the years ended December 31, 2000, 1999
and 1998, respectively. The decreases in 2000 used vehicle revenue and
gross margin are the result of a decrease in units retailed from
approximately 315,000 in 1999 to 255,000 in 2000 largely resulting from the
closure of our used vehicle megastores.
Parts and service. Parts and service revenue was $1.2 billion for
the six months ended June 30, 2001and 2000. Parts and service revenue was
$2.3 billion, $2.2 billion and $1.4 billion for the years ended December
31, 2000, 1999 and 1998, respectively. In the six month period ended June
30, 2001, parts and service gross margin was $518.1 million versus $500.9
million for the same period in 2000 or, as a percentage of parts and
service revenue, 43.1% and 42.6%, respectively. Parts and service gross
margins were $999.7 million, $933.8 million and $571.6 million or, as
percentages of parts and service revenue, 42.8%, 42.0% and 41.3% for the
years ended December 31, 2000, 1999 and 1998, respectively. These increases
since 1998 are attributable to acquisitions and higher pricing.
Finance and insurance. Finance and insurance revenue and gross
margin (representing pure commissions) increased 7.1% to $233.7 million
during the six months ended June 30, 2001 as compared to the same period in
2000. Finance and insurance revenue and gross margins were $431.8 million,
$423.4 million and $288.6 million for the years ended December 31, 2000,
1999 and 1998, respectively. These increases are due to acquisitions and a
higher percentage of our customers buying finance and insurance products.
Other revenue. Other revenue decreased 16.8% from $764.0 million
to $636.0 million during the six months ended June 30, 2001 as compared to
the same period in 2000. Other revenue was $1.5 billion, $1.6 billion and
$1.0 billion for the years ended December 31, 2000, 1999 and 1998,
respectively.
Selling, general and administrative expense. Store level selling,
general and administrative expenses were $1.0 billion, or 10.4% of total
revenue, and $1.0 billion, or 9.6% of total revenue, for the six months
ended June 30, 2001 and 2000, respectively. This increase as a percentage
of revenue is primarily due to lower sales. Store selling, general and
administrative expenses were $2.0 billion, $2.1 billion and $1.3 billion
or, as percentages of total revenue, 9.8%, 10.4% and 10.3% for the years
ended December 31, 2000, 1999 and 1998, respectively. The 2000 decreases
are primarily due to successful implementation of our cost-cutting
initiatives. The increase as a percentage of revenue in 1999 over 1998 is
primarily due to higher megastore fixed costs and costs incurred in
connection with the megastore closures and other one-time costs.
Store performance margin. Store performance margins were $472.4
million and $516.7 million, or as a percentage of total revenue, 4.8% and
4.9% for the six months ended June 30, 2001 and 2000, respectively. This
decrease in store performance margin is primarily a result of lower sales.
Store performance margins were $1.0 billion, $839.2 million and $629.8
million or, as percentages of total revenue, 4.9%, 4.2% or 5.0% for the
years ended December 31, 2000, 1999 and 1998, respectively. The increases
in aggregate dollars are primarily due to acquisitions coupled with margin
expansion. The 2000 increase as a percentage of total revenue is primarily
due to lower selling, general and administrative expenses. The 1999
decrease as a percentage of revenue is due to lower gross margin
percentages and higher selling, general and administrative expenses.
Corporate selling, general and administrative expense. Corporate
selling, general and administrative expenses were reduced by $9.8 million,
or 11.7%, to $73.9 million during the six months ended June 30, 2001 as
compared to the same period in 2000. As a percentage of revenue, corporate
selling, general and administrative expenses were 0.8% and 0.7% for the six
months ended June 30, 2001 and 2000, respectively. The decrease is
primarily the result of the continued disposal of excess properties.
Corporate selling, general and administrative expenses were $125.2 million,
$190.0 million and $86.5 million or, as a percentage of total revenue,
0.6%, 1.0% and 0.7%, for the years ended December 31, 2000, 1999 and 1998,
respectively. The 2000 decrease is primarily due to successful
implementation of our 1999 cost-cutting initiatives as described in
"Restructuring Activities" below. The 1999 increase is primarily due to
increased headcount and spending for various corporate initiatives that
have been curtailed or eliminated in conjunction with our 1999
restructuring activities.
S,G&A--Property carrying costs. S,G&A--Property carrying costs
represent costs associated with megastore and other properties held for
sale. We incurred $30.9 million of property carrying costs during the year
ended December 31, 2000. We expect these costs to be less than $10.0
million in 2001. As of June 30, 2001, we had incurred $4.5 million of
property carrying costs.
Depreciation and amortization. Depreciation and amortization were
$72.4 million and $66.1 million, respectively, at June 30, 2001 and 2000,
primarily as a function of acquisitions closed during 2000. Depreciation
and amortization were $133.8 million, $123.0 million and $79.9 million for
the years ended December 31, 2000, 1999 and 1998, respectively. For the six
months ended June 30, 2001 and 2000, depreciation and amortization
percentages of revenue were 0.7% and 0.6%, respectively. Depreciation and
amortization, as percentages of revenue, were 0.7%, 0.6% and 0.6% for the
years ended December 31, 2000, 1999 and 1998, respectively.
Other gains. Other gains of $19.0 million for the six months ended
June 30, 2001 primarily represent the pre-tax gain from the sale of the
Flemington dealer group in April 2001.
Discontinued Business Segments
On June 30, 2000, we completed the spin-off of our former
automotive rental businesses, which had been organized under ANC Rental
Corporation, by distributing 100% of ANC Rental's common stock to
AutoNation's stockholders as a tax-free dividend. As a result of the
spin-off, AutoNation stockholders received one share of ANC Rental common
stock for every eight shares of AutoNation common stock owned as of June
16, 2000. ANC Rental has been accounted for as discontinued operations and,
accordingly, the operating results of ANC Rental have been classified as
discontinued operations in our consolidated financial statements. During
the six months ended June 2000, we recorded income from discontinued
operations totaling $1.8 million net of income taxes. Such amount
represents the excess of previously estimated losses of $22.1 million,
which were accrued in the fourth quarter of 1999, over actual losses.
In July 1998, our former solid waste services subsidiary, Republic
Services, Inc., completed an initial public offering of 36.1% of its common
stock. In May 1999, we sold substantially all of our interest in Republic
Services in a public offering. Our former solid waste services segment has
been accounted for as discontinued operations and, accordingly, the
operating results of Republic Services have been classified as discontinued
operations in the accompanying consolidated financial statements.
Business Acquisitions and Divestitures
From 1996 through 1999, we aggressively expanded our automotive
retail operations through the acquisition of franchised automotive
dealerships. However, we did not complete in 2000 and do not expect to
complete in 2001 acquisitions at the same pace as we have in the past. We
currently expect that future acquisitions will primarily target single
dealerships or small dealership groups focused in our key existing markets.
Since the beginning of 2000, we acquired various automotive retail
businesses. We paid approximately $27.0 million and $190.9 million in cash
for these acquisitions during the six months ended June 30, 2001 and the
year ended December 31, 2000, respectively, all of which were accounted for
under the purchase method of accounting. We also paid approximately $6.2
million and $122.4 million in deferred purchase price for certain prior
year automotive retail acquisitions during the six months ended June 30,
2001 and the year ended December 31, 2000, respectively. At December 31,
2000, we had approximately $24.5 million of deferred purchase price due to
former owners of acquired businesses.
During the year ended December 31, 1999, we acquired various
automotive retail businesses. We paid approximately $879.1 million in cash
for these acquisitions, all of which were accounted for under the purchase
method of accounting. During 1999, we also paid approximately $34.9 million
in deferred purchase price for certain prior year automotive retail
acquisitions. During 1999, we received approximately $131.3 million of cash
from the divestiture of various automotive dealerships.
During the year ended December 31, 1998, we acquired various
businesses in the automotive retail, automotive rental and solid waste
services industries. With respect to continuing operations, we issued
approximately 21.9 million shares of our common stock, valued at $473.2
million, and paid approximately $804.3 million in cash for acquisitions
accounted for under the purchase method of accounting. With respect to
discontinued operations, we issued approximately 3.4 million shares of
common stock, valued at $68.0 million, and paid approximately $494.4
million in cash and certain properties for acquisitions accounted for under
the purchase method of accounting. During 1998, we received approximately
$55.1 million of cash from the divestiture of various automotive
dealerships.
As described below under the heading "Restructuring Activities,"
we have been divesting certain non-core franchised automotive dealerships.
During 2000, we received approximately $89.7 million of cash from the
divestiture of these dealerships. In April 2001, we completed the sale of
our Flemington dealer group for net proceeds of $59.0 million, which
substantially completed our non-core dealership divestiture plan. In the
normal course of business, we will periodically divest dealerships that do
not meet certain operational, financial, or strategic criteria.
In November 2000, we completed the divestiture of our outdoor
media business for a purchase price of approximately $104.0 million. In
connection with the sale, we entered into a prepaid $15.0 million
advertising agreement and, therefore, we received net proceeds of $89.0
million. A pre-tax gain of $53.5 million was recognized on the sale.
Restructuring Activities
During the fourth quarter of 1999, we approved a plan to
restructure certain of our operations. The restructuring plan was comprised
of the following major components: (1) exiting the used vehicle megastore
business and (2) reducing the corporate workforce. The restructuring plan
also included divesting certain non-core franchised dealerships.
Approximately 2,000 positions were eliminated as a result of the
restructuring plan, of which 1,800 were megastore positions and 200 were
corporate positions. These restructuring activities resulted in pre-tax
charges of $443.7 million in 1999 of which $416.4 million appears as asset
impairment charges, net in our 1999 consolidated income statement. These
pre-tax charges include: $286.9 million of asset impairment charges; $103.3
million of reserves for residual value guarantees for closed lease
properties; $26.2 million of severance and other exit costs and $27.3
million of inventory related costs. The $286.9 million asset impairment
charge consists of: $244.9 million of megastore and other property
impairments; $26.6 million of goodwill impairment reserves for the
divestiture of certain non-core franchised automotive dealerships and $15.4
million of information systems impairments. Of the $443.7 million
restructuring reserve recorded, $10.8 million of severance was paid in 1999
and $53.7 million of asset impairments and write-offs were recorded during
the fourth quarter of 1999.
We completed the sale of our New Jersey based-Flemington dealer
group in April 2001, resulting in the substantial completion of our
non-core dealership divestiture plan. We continue to dispose of our closed
megastores and other properties through sales to third parties. Although we
are aggressively marketing these closed properties, their ultimate
disposition will not be substantially completed until late 2001. Revenue
for the operations disposed or to be disposed, including the Flemington
dealer group, was $132.6 million and $570.5 million during the six months
ended June 30, 2001 and 2000, respectively. Revenue for the operations
disposed or to be disposed was $923.5 million, $2.1 billion and $1.7
billion during 2000, 1999 and 1998, respectively. Operating income for the
operations disposed or to be disposed was $0.5 million and $16.5 million
for the six months ended June 30, 2001 and 2000, respectively. Operating
income for the operations disposed or to be disposed was $21.8 million,
$15.5 million and $12.9 million for the years ended December 31, 2000, 1999
and 1998, respectively.
The following summarizes activity in the restructuring and
impairment reserves for the year ended December 31, 2000 (in millions):
Amounts
Charged
Balance (Credited) to Deductions Balance
December 31, 1999 Income Cash Non-cash December 31, 2000
----------------- ------ ---- -------- -----------------
Reserve
Asset reserves:
Asset impairment.......... $263.3 (1) $ (15.0) $ -- $ (86.9) $ 161.4
Inventory................. 15.0 -- -- (15.0) --
Accrued liabilities:
Property lease
residual value
guarantees............. 103.3 (14.8) (88.5) -- --
Severance and other
exit costs............. 17.3 9.4 (22.7) (2.8) 1.2
Finance lease residual
value write-down.......... -- 16.6 -- (16.6) --
------------------ ------------ -------- --------- ----------------
$ 398.9 $ (3.8) $(111.2) (121.3) $ 162.6
================== ============ ======== ========= ================
- -----------
(1) Includes $19.7 million of reserves that had been established on
these properties prior to the 1999 restructuring and impairment
charges recorded.
The following summarizes the components of the $3.8 million
credited to income during the year ended December 31, 2000 (in millions):
Properties
Placed
Back into Additional
Service or Net Gain on Impairment
Retained Sold Properties Charges Other Total
-------- --------------- ----------- ----- -----
Asset reserves
Asset impairment.......................... $ (23.2) $ (3.4) $ 11.6 $ -- $ (15.0)
Accrued liabilities:
Property lease residual value
guarantees............................. (13.0) (1.8) -- -- (14.8)
Severance and other exit costs............ -- -- -- 9.4 9.4
Finance lease residual value
write-down................................ -- -- -- 16.6 16.6
----------------- ------------- --------------- -------- -----------
$ (36.2) $ (5.2) $ 11.6 $26.0 $ (3.8)
================= ============= =============== ======== ===========
During 2000, certain events occurred which caused us to
re-evaluate our plans with respect to various retail properties. As a
result, certain megastore properties were placed back in service as
franchised new vehicle dealerships and we decided to retain certain
dealerships that had been held for sale. Accordingly, based on our
re-evaluation of the fair value of the properties, we determined that the
asset impairment and lease residual value reserves for these properties
were no longer necessary and we were required to reverse the related
estimated reserves totaling $36.2 million back into income. An additional
impairment charge of $11.6 million was recognized primarily related to a
decision in 2000 to close one additional megastore property as part of the
overall restructuring plan. During 2000, we also recognized an impairment
charge totaling $16.6 million associated with the deterioration in residual
values of finance lease receivables. We discontinued writing finance leases
in mid-1999 and the majority of the leases terminate in late 2001.
The following summarizes activity in the restructuring and
impairment reserves for the six months ended June 30, 2001 (in millions):
Amounts
Balance Charged to Deductions Balance
December 31, 2000 Income Cash Non-cash June 30, 2001
----------------- ------ ---- -------- -------------
Reserve
Asset reserves:
Asset impairment................. $ 161.4 $ 4.3 $ -- $ (54.5) $ 111.2
Accrued liabilities:
Severance and other exit
costs......................... 1.2 0.3 (0.8) -- 0.7
Finance lease residual value
write-down....................... -- 4.1 -- (4.1) --
----------------- --------- ------ --------- ----------
$ 162.6 $ 8.7 $(0.8) $ (58.6) $ 111.9
================= ========= ====== ========= ==========
The following summarizes the components of the $8.7 million
charged to income during the six months ended June 30, 2001 (in millions):
Net Gain on Additional
Sold Impairment
Properties Charges Other Total
---------- ------- ----- -----
Asset reserves
Asset impairment.......................... $ (1.0) $ 5.3 $ -- $ 4.3
Accrued liabilities:
Severance and other exit costs............ -- -- 0.3 0.3
Finance lease residual value
write-down................................ -- -- 4.1 4.1
------------- ---------- ------ ------
$ (1.0) $ 5.3 $ 4.4 $ 8.7
============= ========== ====== ======
During the first six months of 2001, we recognized an additional
impairment charge totaling $5.3 million based on the re-evaluation of the
fair value of certain properties. Additionally, we recognized an impairment
charge totaling $4.1 million associated with the deterioration in residual
values of finance lease receivables. We discontinued writing finance leases
in mid-1999 and the majority of the leases terminate in late 2001.
Non-Operating Income and Expense
Floorplan interest expense. Floorplan interest expense was $81.0
million and $99.0 million for the six months ended June 30, 2001 and 2000,
respectively. This decrease was due to lower floorplan financing associated
with lower inventory levels as well as reduced floorplan borrowing rates.
Floorplan interest expense was $199.8 million, $125.2 million and $107.0
million for the years ended December 31, 2000, 1999 and 1998, respectively.
The increases are due to higher floorplan financing associated with higher
inventory levels and higher interest rates.
Other interest expense. During the six months ended June 30, 2001,
other interest expense was incurred primarily on borrowings under our
revolving credit facilities. Other interest expense was $19.4 million and
$22.4 million for the six months ended June 30, 2001 and 2000,
respectively. This decrease was due to lower average borrowings as well as
lower interest rates. Other interest expense was $47.7 million, $34.9
million and $14.0 million for the years ended December 31, 2000, 1999 and
1998, respectively. These increases are due to higher average borrowings
along with higher interest rates.
Interest income. Interest income was $3.6 million and $8.7 million
for the six months ended June 30, 2001 and 2000, respectively. This
decrease is primarily the result of lower average cash and investment
balances. Interest income was $14.3 million, $20.6 million and $8.7 million
for the years ended December 31, 2000, 1999 and 1998, respectively. The
decrease in 2000 is primarily due to lower cash on hand and investment
balances. The increase in 1999 was the result of interest earned on funds
temporarily invested from the proceeds of the sale of substantially all of
our interest in Republic Services.
Other income, net. For the six months ended June 30, 2001, other
expense, net, was $0.8 million. Other income, net, for the year ended
December 31, 2000, was $33.4 million and primarily included gains of
approximately $24.0 million on the sale of approximately 3.1 million shares
of common stock of our former solid waste subsidiary, Republic Services,
and a gain of approximately $53.5 million on the sale of our former outdoor
media business, offset by a $30.0 million valuation write- down related to
an equity-method investment in a privately-held auto salvage and parts
recycling business.
Income taxes. The provision for income taxes from continuing
operations was $92.6 million and $96.7 million for the six months ended
June 30, 2001 and 2000, respectively. The provision for income taxes from
continuing operations was $196.9 million, $4.0 million and $126.8 million
for the years ended December 31, 2000, 1999 and 1998, respectively. The
effective income tax rate was 37.5% and 36.0% for the years ended December
31, 2000 and 1998. Although we reported a pre-tax loss from continuing
operations in 1999, an income tax provision was recorded due to the effect
of certain non-deductible expenses primarily associated with the
restructuring and impairment charges.
Financial Condition
At June 30, 2001, we had $26.1 million of unrestricted cash and
cash equivalents and $396.0 million drawn under a multi-year unsecured
revolving credit facility which provided $1.0 billion of financing and was
scheduled to mature April 2002. This facility was repaid in full and
terminated on August 10, 2001. Another facility provided $250.0 million of
borrowing capacity until its termination on June 29, 2001. On August 10,
2001, we entered into two new senior secured revolving credit facilities
with an aggregate capacity of $500.0 million. One facility is a 364-day
revolving credit facility which provides borrowing capacity up to $200.0
million at a LIBOR-based interest rate. The other facility provides
borrowing capacity up to $300.0 million at a LIBOR-based interest rate and
has a five-year term. These facilities are secured by a pledge of the
capital stock of two of our subsidiaries, and these facilities are
guaranteed by substantially all of our subsidiaries.
On August 10, 2001, we sold $450.0 million of 9.0% senior
unsecured notes due August 1, 2008 at a price of 98.731% of face value. The
notes are guaranteed by substantially all of our subsidiaries.
We used the net proceeds of the offering and borrowings under the
new revolving credit facilities to repay outstanding amounts under the $1.0
billion revolving credit facility and certain other debt and will use any
additional amounts to finance capital expenditures, strategic acquisitions,
working capital and other general corporate purposes.
In June 2001, we entered into a mortgage facility with an
automotive manufacturer's captive finance subsidiary with an aggregate
capacity of $150.0 million. As of June 30, 2001, the amount outstanding
under this mortgage facility was $116.7 million. The facility has a
ten-year term, bears interest at a LIBOR-based rate and is secured by
mortgages on certain of our dealerships' real property. In addition, we are
currently negotiating with a major vehicle manufacturer's captive finance
subsidiary to provide an additional mortgage facility with respect to
certain of our dealership properties.
We finance our vehicle inventory through secured financings,
primarily floorplan facilities, with vehicle manufacturers' captive finance
subsidiaries as well as independent financial institutions and, until
recently, a bank-sponsored commercial paper conduit facility that matured
January 19, 2001, which was not renewed. As of June 30, 2001, capacity of
the facilities was approximately $3.5 billion. We finance our used vehicles
through our cash flow from operations and our credit facilities.
We are the lessee under a lease facility that was established to
acquire and develop our former megastores properties. As originally
structured, the facility had been 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 our 1999
restructuring activities previously described, as of December 31, 1999, we
accrued an estimate of the liability under the residual value guarantee
totaling approximately $103.3 million. In September 2000, we 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 through the notification of our 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 have now been accounted for as
capital leases, with the property and related debt included in our
consolidated balance sheet. On August 10, 2001, we prepaid and terminated
this facility.
We securitize installment loan receivables through a $1.0 billion
commercial paper warehouse facility with unrelated financial institutions.
In September 2000, we decreased the capacity of the commercial paper
warehouse facility from $1.7 billion to $1.0 billion. During the six months
ended June 30, 2001, we sold installment note receivables of $343.6 million
under this program, net of retained interests. During the year ended
December 31, 2000, we securitized approximately $580.1 million of loan
receivables under this program, net of retained interests. At June 30,
2001, we had approximately $776.8 million outstanding under this program,
net of retained interests. We have entered into certain interest rate
derivative transactions with certain financial institutions to manage the
impact of interest rate changes on securitized installment loan
receivables. Proceeds from securitizations are primarily used to repay
borrowings under our revolving credit facilities.
We also securitize installment loan receivables through the
issuance of asset-backed notes through a non-consolidated special purpose
entity under a shelf registration statement. At June 30, 2001, $785.1
million was outstanding under this program, net of retained interests. In
August 2001, we amended the shelf registration statement relating to this
program to provide aggregate capacity of $2.0 billion. Proceeds from the
notes issued under this program are used to refinance installment loans
previously securitized under the warehouse facility and to securitize
additional loans held by us. We provide credit enhancement related to these
notes in the form of over collateralization, a reserve fund and a third
party surety bond. We retain responsibility for servicing the loans for
which we are paid a servicing fee. During 2000, approximately $691.7
million in additional asset-backed notes were issued, net of retained
interests. During the six months ended June 30, 2001, no additional
asset-backed notes were issued. In September 2001, we issued approximately
$850.0 million in asset-backed notes under this program.
During the six months ended June 30, 2001, we repurchased 15.0
million shares of our common stock for an aggregate purchase price of
$129.2 million. Through June 30, 2001, an aggregate of 142.7 million shares
of common stock have been acquired under our share repurchase programs for
an aggregate purchase price of $1.6 billion, leaving approximately $137.9
million available for share repurchases under the program. During the year
ended December 31, 2000, we repurchased 27.6 million shares of our common
stock for an aggregate purchase price of $188.9 million. We repurchased
91.0 million shares of common stock during 1999 for an aggregate purchase
price of $1.2 billion. We repurchased 9.1 million shares of common stock
during 1998 for an aggregate purchase price of $136.0 million. We will
evaluate further share repurchases during the remainder of 2001 based upon
financial and other investment considerations. However, our ability to
repurchase shares will be limited by the terms of the indenture relating to
these notes and our senior credit facilities.
In connection with the ANC Rental spin-off, we made certain
capital contributions to ANC Rental prior to the spin-off. These
contributions included cash of approximately $200.0 million and the net
assets of an insurance subsidiary. We also entered into various agreements
with ANC Rental that set forth the terms of the distribution and other
agreements governing our relationship with ANC Rental after the spin-off.
As a result of the spin-off, our equity as of December 31, 2000, was
reduced by the net assets of ANC Rental totaling $894.4 million. The equity
adjustment resulting from the spin-off is subject to further adjustment
resulting from changes in estimated shared assets and liabilities of
AutoNation and ANC Rental and certain other matters. However, the equity
adjustments arising from changes in the estimated shared assets and
liabilities of AutoNation and ANC Rental, if any, are not expected to be
significant.
In connection with the spin-off of ANC Rental in June 2000, we
provide certain guarantees and credit enhancements with respect to
financial and performance obligations of ANC Rental, including acting as a
guarantor under certain motor vehicle and real property leases and acting
as an indemnitor with respect to certain surety bonds issued on ANC
Rental's behalf. We receive fees for providing these guarantees
commensurate with market rates. We are also a party to certain agreements
with ANC Rental (the "ANC Rental Agreements"), including a Separation and
Distribution Agreement and a Tax Sharing Agreement, pursuant to which both
ANC Rental and we have certain obligations. ANC Rental reported a net loss
for the fourth quarter of 2000 of $44.0 million, resulting in an aggregate
net loss for 2000 of $2.0 million, and a net loss of $56.6 million for the
six months ended June 30, 2001. ANC Rental has announced that, due in part
to the terrorist attacks against the United States on September 11, 2001,
it has suffered a significant decline in consumer demand for rental cars
and that it expects to report a substantial loss for the full year 2001.
ANC Rental also indicated that it is currently under discussions with its
creditors, the United States federal government and other parties in order
to review liquidity options and other financial issues. Additionally, ANC
Rental announced that it has reached agreements with its lenders to suspend
certain financial covenants under certain credit agreements until November
15, 2001 and to defer until November 30, 2001 a principal payment of $70.0
million due on October 1, 2001. If ANC Rental is unable to meet its
obligations, we will likely be called on to perform under our credit
enhancements and guarantees, which could have a material adverse effect on
our business, financial condition and cash flows. ANC Rental has been
accounted for as a discontinued operation and, accordingly, we expect that
payments made by us pursuant to the foregoing credit enhancements and
guarantees, if any, would not impact our reported results from continuing
operations.
Under the motor vehicle lease agreement referenced above, ANC
Rental currently leases approximately 14,000 vehicles. Under this vehicle
lease agreement, which expires at the conclusion of the leases for model
year 2002 vehicles, ANC Rental is responsible for lease payments that we
believe are between $3.0 and $4.0 million per month. We believe that ANC
Rental typically leases vehicles under this lease agreement for a period of
approximately six months per vehicle. Under the real property leases that
we guaranty, which expire in July 2017, ANC Rental leases twelve parcels of
property at an aggregate rent of approximately $3.0 million per year. Our
indemnification obligations with respect to the surety bonds issued on
behalf of ANC Rental are capped at $29.5 million in the aggregate. In
addition, in the event of the bankruptcy of ANC Rental, our claims against
ANC Rental under the terms of the ANC Rental Agreements may be extinguished
or unenforceable. These claims could include indemnification rights with
respect to payments made by us to the Internal Revenue Service as a result
of audit adjustments in our consolidated federal income tax returns
relating to ANC Rental's automotive rental businesses prior to the
spin-off. In the event that we are called on to perform under the foregoing
credit enhancements and guarantees and we have claims under the ANC Rental
Agreements that ANC Rental cannot satisfy, we estimate that our aggregate
obligations under the credit enhancements, guarantees and ANC Rental
Agreements could be in the range of $50 million to $150 million. However,
the exposure is difficult to estimate and we cannot be certain that our
aggregate obligations under these credit enhancements, guarantees and ANC
Rental Agreements relating to ANC Rental will not be materially above the
range indicated above.
We have taken steps since 2000 to further strengthen our balance
sheet, including selling non- core assets and redeploying proceeds into our
core business. In April 2001, we completed the sale of our Flemington
dealer group which substantially completed our non-core dealership
divestiture plan. During 2000, we entered into a sale-leaseback financing
of our corporate headquarters facility resulting in proceeds of
approximately $52.1 million. Additionally, during 2000, we sold an office
building which is occupied by ANC Rental, resulting in proceeds of
approximately $18.7 million. As previously described, in November 2000, we
completed the sale of our outdoor media business for a purchase price of
$104.0 million. In connection with the sale, we entered into a prepaid
$15.0 million advertising agreement and, therefore, we received net
proceeds of $89.0 million.
At June 30, 2001 and December 31, 2000, we had $885.0 million and
$877.2 million, respectively, of net deferred tax liabilities. We provide
for deferred income taxes in our consolidated balance sheets to show the
effect of temporary differences between the recognition of revenue and
expenses for financial and income tax reporting purposes and between the
tax basis of assets and liabilities and their reported amounts in the
financial statements. Over the past four years, we have engaged in certain
transactions that are of a type that the Internal Revenue Service has
recently indicated it intends to challenge. A significant amount of our
deferred tax liabilities relates to the transactions described above. We
believe that our tax returns appropriately reflect such transactions. At
the present time, we are unable to predict the outcome of any challenge if
the IRS determines to challenge the tax reporting of such transactions. An
unfavorable settlement or adverse resolution of these matters could have a
material adverse effect on our financial condition, results of operations,
cash flows and assets.
Cash Flows
Cash and cash equivalents decreased by $56.1 million and $81.2
million during the six months ended June 30, 2001 and 2000, respectively.
Cash and cash equivalents increased (decreased) by $(153.8) million,
$(490.0) million and $598.3 million during the years ended December 31,
2000, 1999 and 1998, respectively. The major components of these changes
are discussed below.
Cash Flows from Operating Activities
Cash provided by operating activities was $492.5 million and $90.1
million during the six months ended June 30, 2001 and 2000, respectively.
Cash provided by operating activities was $281.5 million, $47.2 million and
$217.8 million for the years ended December 31, 2000, 1999 and 1998,
respectively.
Cash flows from operating activities include purchases of vehicle
inventory which are separately financed through secured vehicle financings.
Accordingly, we measure our operating cash flow to include net
proceeds/(payments) under these secured vehicle financings which totaled
$(298.9) million and $141.9 million during the six months ended June 30,
2001 and 2000, respectively; and $159.4 million, $429.7 million and $65.1
million during the years ended December 31, 2000, 1999 and 1998,
respectively. Including net proceeds/(payments) under these secured vehicle
financings, we generated operating cash flow of $193.6 million and $232.0
million during the six months ended June 30, 2001 and 2000, respectively;
and $440.9 million, $476.9 million and $282.9 million during the years
ended 2000, 1999 and 1998, respectively.
Cash Flows from Investing Activities
Cash flows from investing activities consist primarily of cash
used for business acquisitions and divestitures, capital additions,
property dispositions, net activity of installment loan receivables and
other transactions as further described below.
Cash used in business acquisitions was $33.2 million and $192.3
million for the six months ended June 30, 2001 and 2000, respectively. The
decrease in cash used was primarily due to the effect of a planned
reduction in acquisition activity for 2001. Cash used in business
acquisitions was $313.3 million, $914.0 million and $804.3 million for the
years ended December 31, 2000, 1999 and 1998, respectively. The decrease in
cash used in business acquisitions was primarily due to our shift in 2000
to acquire single dealerships or small dealership groups focused in key
existing markets. Cash used in business acquisitions during 2000 includes
$122.4 million in deferred purchase price for certain prior year automotive
retail acquisitions.
Capital expenditures were $52.8 million and $52.9 million during
the six months ended June 30, 2001 and 2000, respectively. Capital
expenditures were $148.2 million, $242.3 million and $256.7 million during
the years ended December 31, 2000, 1999 and 1998, respectively. The
decrease in capital expenditures in 2000 was due to the megastore closures
and fewer acquisitions.
For the six month period ended June 30, 2001, proceeds from the
sale of property and equipment and assets held for sale were $49.9 million
compared to $70.8 million for the same period in 2000. Proceeds from the
sale of property and equipment and assets held for sale were $129.9
million, $88.4 million and $12.3 million during the years ended December
31, 2000, 1999 and 1998, respectively. The increase is primarily due to the
sales of megastore and other properties held for sale and the sale of the
building occupied by ANC Rental. Cash received from business divestitures
was $61.2 million and $27.7 million for the six months ended June 30, 2001
and 2000, respectively. Cash received from business divestitures was $178.7
million, $131.3 million and $55.1 million for the years ended December 31,
2000, 1999 and 1998, respectively.
In July 1998, our former solid waste subsidiary, Republic
Services, completed an initial public offering resulting in proceeds of
approximately $1.4 billion. In May 1999, we sold substantially all of our
interest in Republic Services in a public offering resulting in proceeds of
approximately $1.8 billion. During 2000, we sold substantially all of our
remaining common stock of Republic Services, resulting in proceeds of
approximately $48.2 million. Proceeds from the initial public offering and
the sales of our remaining interest in Republic Services were used to repay
non-vehicle debt, finance acquisitions, acquire shares under our share
repurchase programs and invest in our business.
Funding of installment loan receivables, net of collections,
totaled $345.1 million and $308.1 million for the six months ended June 30,
2001 and 2000, respectively; and $562.3 million, $1.6 billion and $1.0
billion in 2000, 1999 and 1998, respectively. Related proceeds from
securitization of installment loan contracts were $369.0 million and $367.8
million for the six months ended June 30, 2001 and 2000, respectively; and
$720.3 million, $1.6 billion and $706.4 million in 2000, 1999 and 1998,
respectively. We continue to evaluate the appropriate levels of installment
loan fundings.
We believe that our funds generated through future operations and
availability of borrowings under our floorplan facilities (or any
replacements thereof), our revolving credit facilities, our current and
future mortgage facilities and the proceeds from the offering of the
outstanding notes will be sufficient to fund our debt service and working
capital requirements and any seasonal operating requirements for the
foreseeable future. We intend to finance capital expenditures, business
acquisitions and funding of installment loan receivables through cash flow
from operations, our revolving credit facilities, asset-backed securitized
facilities and other financings.
Cash Flows from Financing Activities
Cash flows from financing activities include revolving credit and
vehicle inventory financings, repayments of debt, treasury stock purchases
and other transactions as further described below.
We have repurchased approximately 15.0 million, 27.6 million, 91.0
million, and 9.1 million shares of our common stock during the six months
ended June 30, 2001 and the years ended December 31, 2000, 1999 and 1998,
respectively, for approximately $129.2 million, $188.9 million, $1.2
billion and $136.0 million, respectively, under our Board approved share
repurchase programs.
During the year ended December 31, 2000, we repaid approximately
$197.0 million of debt obligations primarily related to amounts financed
under a $210.0 million lease facility (amended September 2000 from the
original capacity of $500.0 million). On August 10, 2001, we prepaid and
terminated this facility.
During 2000, we entered into a sale-leaseback transaction
involving our corporate headquarters facility which resulted in net
proceeds of approximately $52.1 million.
We will continue to evaluate the best use of our operating cash
flow between capital expenditures, acquisitions and share repurchases.
Cash Flows from Discontinued Operations
Cash provided by (used in) discontinued operations was as follows
during the periods shown (in millions):
Year ended Year ended Year ended Six months ended
December 31, December 31, December 31, June 30,
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(unaudited)
Automotive rental............ $ (129.2) $ (160.3) $ (227.0) $ (227.0) --
Solid waste services......... 580.6 $ (546.0) $ -- -- --
-------------- ------------ ------------ --------- ------
$ 451.4 $ (706.3) $ (227.0) $ (227.0) --
============== ============ ============ ========= ======
Cash used in our former automotive rental business during 2000
consists primarily of cash used to replace maturing letters of credit that
provide credit enhancement for ANC Rental's vehicle financing.
Quantitative and Qualitative Disclosures About Market Risk
The table below provides information about our market sensitive
financial instruments and constitutes "forward-looking statements." All
items described are non-trading.
Our primary market risk exposure is changing interest rates. Our
policy is to manage interest rates through the use of a combination of
fixed and floating rate debt. Interest rate derivatives may be used to
adjust interest rate exposures when appropriate, based upon market
conditions. These derivatives consist of interest rate swaps, caps and
floors which are entered into with a group of financial institutions with
investment grade credit ratings, thereby minimizing the risk of credit
loss. At June 30, 2001, we did not have any derivatives hedging corporate
debt with variable interest rate exposure.
We have entered into a series of interest rate caps and floors
with an aggregate notional amount of $824.4 million contractually maturing
through 2007 to manage the impact of interest rate changes on securitized
installment loan receivables. Expected maturity dates for interest rate
caps and floors in the tables below are based upon the estimated repayment
of the underlying receivables after considering estimated prepayments and
credit losses. Average rates on interest rate caps and floors are based
upon contractual rates. At times, we use variable to fixed interest rate
swaps to manage the impact of interest rate changes on our variable rate
revolving credit and vehicle inventory financing facilities. Expected
maturity dates for variable rate debt and interest rate swaps in the tables
below are based upon contractual maturity dates. Average pay rates under
interest rate swaps are based upon contractual fixed rates. Average
interest rates on variable rate debt and average variable receivable rates
under interest rate swaps are based on implied forward rates in the yield
curve at the reporting date. In addition, in 2001, we entered into a series
of forward starting swaps with a maximum aggregate notional amount of
$124.5 million contractually maturing through 2007 which effectuate a fixed
to variable rate swap at a weighted average rate of 5.49%. Variable rates
on the underlying portfolio are indexed to the Commercial Paper
Nonfinancial rate.
Fair value estimates are made at a specific point in time, based
on relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgement. The fair value of variable rate debt approximates
the carrying value since interest rates are variable and, thus, approximate
current market rates. The fair value of interest rate swaps, caps and
floors is determined from dealer quotations and represents the discounted
future cash flows through maturity or expiration using current rates. The
fair value is effectively the amount we would pay or receive to terminate
the agreements (liability/(asset) in millions).
Expected Maturity Date
Fair Value
December 31,
December 31, 2000 2001 2002 2003 2004 2005 Thereafter Total 2000
----------------- ---- ---- ---- ---- ---- ---------- ----- ----
CONTINUING
OPERATIONS:
Variable rate debt........ $2,416.7 $ 790.8 $ -- $ -- $ -- $ -- $ 3,207.5 $ 3,207.5
Average rate.............. 6.77% 6.67% -- -- -- --
Interest rate cap (1)..... $ 125.5 $ 127.0 $130.9 $ 119.6 $ 63.2 $ 10.1 $ 576.3 $ (2.6)
Average rate.............. 6.62% 6.62% 6.62% 6.62% 6.62% 6.62%
Interest rate floors(1)... $ 125.5 $ 127.0 $130.9 $ 119.6 $ 63.2 $ 10.1 $ 576.3 $ 14.3
Average rate.............. 6.62% 6.62% 6.62% 6.62% 6.62% 6.62%
- -----------
(1) Interest rate caps and floors are used to hedge installment loan
finance receivables securitized under an off- balance sheet
commercial paper warehouse facility. The amount outstanding under
this commercial paper facility was $576.3 million at December 31,
2000.
Seasonality
Our operations generally experience higher volumes of vehicle
sales 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
cars and light trucks is generally lower during the winter months than in
other seasons, particularly in regions of the United States where
dealerships may be subject to harsh winters. Accordingly, we expect our
revenue and operating results to be generally lower in our first and fourth
quarters as compared to our second and third quarters. Comparisons of our
sales and operating results between different quarters within a single year
are, therefore, not necessarily indicators of our future performance.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). In June 1999,
the FASB issued Statement No. 137, "Accounting for Derivative Instruments
and Hedging Activities--Deferral of the Effective Date of FASB Statement
No. 133." In June 2000, the FASB issued Statement 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment
of FASB Statement No. 133." SFAS 133, as amended, establishes accounting
and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at
its fair value. SFAS 133 requires that changes in the derivative
instrument's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative instrument's gains and losses to offset related results
on the hedged item in the income statement, to the extent effective, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. SFAS 133, as
amended, is effective for fiscal years beginning after June 15, 2000. SFAS
133 must be applied to (a) derivative instruments and (b) certain
derivative instruments embedded in hybrid instruments. We adopted SFAS 133
as of January 1, 2001. By requiring the use of fair value accounting,
adoption of SFAS 133 could cause increased volatility in earnings in future
periods. We continue to enter into derivative contracts which we believe
will help minimize this volatility. In addition, we are evaluating other
instruments that would effectively hedge our floating rate debt which we
believe will qualify for hedge accounting.
In September 2000, the FASB issued Statement of Financial
Accounting Standards No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities--a Replacement of FASB
No. 125" ("SFAS 140"). SFAS 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures. SFAS 140 disclosure requirements are
effective for fiscal years ending after December 15, 2000 and have been
included in Note 13, Asset Securitizations, of the Notes to the
Consolidated Financial Statements. Accounting for transfers and servicing
of financial assets and extinguishment of liabilities under SFAS 140 is
effective for transactions occurring after March 31, 2001. Although
additional interpretive guidance is expected from the FASB, the initial
adoption of SFAS 140 did not have a material impact on our consolidated
financial statements.
In December 1999, the SEC issued Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101
provides guidance on the recognition, presentation and disclosure of
revenue in financial statements. Our revenue recognition policy is in
accordance with the provisions of SAB 101. Adoption of the provisions of
SAB 101 did not have a material impact on our consolidated financial
position, results of operations or cash flows as of June 30, 2001.
In 2000, the Emerging Issues Task Force of the Financial
Accounting Standards Board reached a consensus on EITF Issue No. 99-20,
"Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets" ("EITF 99-20"). EITF
99-20 specifies, among other things, how a transferor that retains an
interest in a securitization transaction should account for interest income
and impairment. EITF 99-20 is effective for fiscal quarters beginning after
March 15, 2001. We adopted EITF 99-20 as of April 1, 2001. The adoption of
EITF 99-20 did not have a material impact on our consolidated financial
position, results of operations or cash flows.
As previously described, we have expanded our automotive retailing
operations through the acquisition of franchised automotive dealerships.
These acquisitions have been accounted under both the pooling of interests
and purchase methods of accounting. We understand that the FASB has made
significant changes to the accounting standards for business combinations,
intangible assets and goodwill that will impact us in the future.
On June 30, 2001 the FASB finalized and in July 2001 issued
Statements of Financial Accounting Standards No. 141, "Business
Combinations" ("SFAS 141") and No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142").
SFAS 141 requires all business combinations initiated after June
30, 2001 to be accounted for using the purchase method, eliminating the
pooling of interests method. Additionally, acquired intangible assets
should be 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
of the acquirer's intent to do so.
SFAS 142, upon adoption, eliminates goodwill amortization over its
estimated useful life. However, goodwill will be subject to at least an
annual assessment for impairment by applying a fair-value based test.
Intangible assets with definitive lives will need to be amortized over
their useful lives.
Goodwill and intangible assets with indefinite lives existing at
June 30, 2001 will continue to be amortized until December 31, 2001.
Effective January 1, 2002 such amortization will cease, as companies are
required to adopt the new rules on such date. By the end of the first
quarter of calendar year 2002, companies must begin to perform an
impairment analysis of intangible assets. Furthermore, companies must
complete the first step of the goodwill transition impairment test by June
30, 2002. Any impairment noted must be recorded at the date of adoption
restating first quarter results, if necessary. Impairment charges, if any,
that result from the application of the above tests would be recorded as
the cumulative effect of a change in accounting principle in the first
quarter of the year ending December 31, 2002.
We will not be able to determine the ultimate impact of these
proposed Statements on our consolidated financial statements until such
time as we apply all of their provisions. Amortization of goodwill for the
year ended December 31, 2000 was $73.7 million; however, this is not
intended to be indicative of the expected impact on our future results of
operations.
BUSINESS
Overview
We are the largest automotive retailer in the United States. As of
August 31, 2001, we owned and operated 367 new vehicle franchises from 277
dealerships located in major metropolitan markets in 17 states,
predominantly in the Sunbelt region of the United States. Our dealerships
sell new and used vehicles. In addition, we offer financing for vehicle
purchases, extended service contracts and insurance products, as well as
other aftermarket products such as vehicle accessories. We provide a wide
range of vehicle maintenance and repair services and operate collision
repair centers in most of our key markets. We offer a full range of 35
different vehicle brands. The core brands of vehicles that we sell,
representing almost 90% of the new vehicles that we sold in 2000, are Ford
(Ford, Lincoln and Mercury), General Motors (Chevrolet, Pontiac, GMC and
Buick), Chrysler (Chrysler, Jeep and Dodge), Toyota, Nissan and Honda. We
also sell several luxury vehicle brands including Mercedes-Benz, BMW, Lexus
and Porsche.
Business Strengths
We believe that our principal strengths include the following:
Industry and Market Leadership. We are the largest automotive
retailer in a highly fragmented industry. Our 2000 revenue was larger than
all other public automotive retailers' 2000 revenue combined and our equity
market value at August 31, 2001 was nearly twice that of all other public
automotive retailers combined. In addition to the size of our dealership
operations, we believe that we own some of the most recognizable and
well-known dealerships in our key markets. We are also a leading automotive
retailer in our key markets in terms of market share and brands offered. We
believe that the significant scale of our operations and the quality of our
managerial talent allow us to achieve efficiencies in our key markets by,
among other things, reducing redundant operating expenses, improving asset
management and implementing and sharing best practices across our
dealerships.
Diversified Revenue Streams and Variable Expense Structure. We
offer a diversified range of automotive products and services beyond new
vehicles, such as used vehicles, vehicle maintenance and repair services,
extended service contracts and insurance products, and other aftermarket
products. We believe demand for these additional products and services,
which generally produce higher gross margins as a percentage of revenue
than sales of new vehicles, is less impacted by economic cycles than demand
for new vehicles. We believe this decreases our vulnerability to adverse
economic cycles. The following chart illustrates the revenue and gross
margin contributions of each component of our business for the twelve
months ended June 30, 2001:
[GRAPHIC OMITTED]
During the twelve months ended June 30, 2001, 66.5% of our total
gross margin originated from sales of used vehicles, parts and service,
finance and insurance products, and other aftermarket products, while these
products and services accounted for only 40.0% of our total revenue.
Further, we believe that the diversification of our portfolio of
dealerships in terms of geography and product representation will help us
weather adverse local or regional economic cycles or problems associated
with a particular brand of vehicles. Notwithstanding a decrease of 9.2% in
our new vehicle revenues during the first six months of 2001 as compared to
the same period in 2000, our gross margin percentage increased from 14.5%
to 15.2% during these same periods.
We believe that our cost structure also decreases our
vulnerability to adverse economic cycles. A significant percentage of our
costs are variable, which we expect will permit us to react quickly to
changing economic conditions.
Strong Management with Experience in the Industry. We have a
strong senior management team with extensive experience in automotive
retailing and manufacturing. Our Chief Executive Officer, Mike Jackson, has
30 years of experience in the industry, most recently serving as the
President and Chief Executive Officer of Mercedes-Benz, USA, Inc. prior to
joining us in 1999. Mr. Jackson also served as the managing partner of Euro
Motorcars, an automotive retailer in Bethesda, Maryland, for over ten
years. Our President and Chief Operating Officer, Michael E. Maroone, has
over 25 years of experience in the automotive retailing industry. Prior to
our 1997 acquisition of the Maroone Automotive Group, which was one of the
largest privately-held automotive retail groups in the United States, Mr.
Maroone served as its President and Chief Executive Officer for over 20
years. The senior management of our ten operating districts also reflects
the significant depth of our experience, with our district managers having
on average more than 20 years of experience in automotive retailing,
primarily within the local markets that they manage.
Leading Automotive e-Commerce Platform. We believe that the scale
of our bricks-and-mortar operations and our existing e-commerce
infrastructure, including our operation of the largest independent
automotive retailing website, AutoNation.com, uniquely position us to
capitalize on trends in the automotive retail e-commerce marketplace by
giving us the greatest capacity to both obtain and fulfill customer leads
generated on-line. For the twelve months ended June 30, 2001, our
dealerships sold approximately 67,000 units and generated in excess of $1.6
billion in sales via the internet sales channel. We believe that we are
also a leading purchaser of customer leads generated through third-party
websites. We also have relationships with prominent consumer portals such
as Microsoft's MSN Carpoint and America Online, as well as other customer
lead generators, to purchase high quality leads, and our proprietary
software facilitates our dealerships' fulfillment of these leads. We have
lead referral agreements with approximately 3,000 franchises operating from
more than 1,750 independent dealerships in 47 states to distribute leads
that are outside the scope of our dealerships' operations. According to a
survey by J.D. Power and Associates dated June 20, 2001, AutoNation.com
ranked highest in overall dealer satisfaction based on evaluations by
internet managers of various dealership on-line buying services.
Business Strategy
Based on our established strengths, we are pursuing the following
strategies for future growth in our business:
o Expand our margins by focusing on higher-margin products
and services.
o Continue to leverage our significant scale to improve our
operating efficiency, including managing costs of our
business and improving the utilization of our assets.
o Effectively use our free cash flow to reinvest in our
business through capital investments, strategic
dealership acquisitions and share repurchases.
o Continue to grow and leverage our e-commerce business.
We have implemented the following strategies in certain of our
districts and are in the process of instituting them on a nationwide basis
in all of our dealerships.
Expand Our Margins
While new vehicle sales will continue to be a significant
component of our operations, we are focused on developing the areas of our
automotive retailing business that produce higher margins than new vehicle
sales such as parts and service sales, used vehicle sales, and sales of
finance and insurance, and other aftermarket products. We are emphasizing
these higher-margin areas of our business with the following strategic
initiatives:
o Parts and Service Sales and Collision Repair Services:
Almost all of our dealerships have service facilities
that provide a wide range of vehicle maintenance and
repair services. Additionally, we operate collision
repair centers in most of our key markets. We are
increasing our parts and service sales by, among other
things, (1) continuing to implement our team-based
service process in our service facilities by instituting
our Advanced Production Structure, whereby a repair team
services different parts of a vehicle simultaneously, and
our cycle time solution in our collision centers, (2)
implementing comprehensive parts and service marketing
programs within our local markets, (3) assuring that our
dealerships' parts requirements are fulfilled through
purchases from our dealerships to the extent practicable
and (4) developing relationships with national insurance
companies that establish our dealerships and collision
centers as preferred providers of collision repair
services. Accordingly, we are focusing on hiring,
training and retaining technicians so that we can improve
our service bay utilization and increase our parts and
service sales without the need for additional capital
investment.
o Used Vehicle Sales: Each of our dealerships offers a
variety of brand name used vehicles. We are leveraging
our status as the largest retailer of new vehicles in the
United States to develop competitive advantages over our
principal used vehicle competitors and to expand our used
vehicle business. We believe that, with our significant
scale in our key markets, we have better access than many
of our competitors to desirable used vehicle inventory.
We are leveraging our significant scale in our key
markets to improve our used vehicle business by (1)
completing the implementation of our advanced vehicle
inventory management system at each of our dealerships,
which permits us to source and manage used vehicle
inventories across our dealerships within a local market,
(2) implementing comprehensive used vehicle marketing
programs in each of our districts, (3) dedicating
specific management personnel in each of our geographic
operating districts to optimize our used vehicle
operations and (4) adopting standardized used vehicle
operating policies at our dealerships based on our
dealerships' best practices.
o Finance and Insurance and Other Aftermarket Product
Sales: Each new or used vehicle sale presents our
dealerships with the opportunity to finance the vehicle,
sell an extended service contract or an insurance product
and sell other aftermarket products, such as vehicle
accessories or a theft deterrent system. In order to
improve our finance and insurance business, we are (1)
focusing on improving the performance of our dealerships
that underperform relative to our other dealerships, (2)
ensuring a high level of compliance with our standard
finance and insurance operating practices, such as the
use of our customer-friendly "full-disclosure" finance
and insurance menu, (3) increasing sales at our
dealerships of finance and insurance products and (4)
promote further consolidation of the retail finance
sources for our customers' vehicle purchases to drive
improved pricing and efficiency. For example, through
AutoNation Financial Services, we have achieved a greater
degree of penetration in our finance and insurance
business by identifying preferred lenders across our
network of dealerships which allows us to negotiate more
attractive terms and conditions.
Improve Our Operating Efficiency
We are leveraging our status as the largest automotive retailer in
the United States to further improve our cost structure and the utilization
of our assets. We are focusing on the following key initiatives to achieve
these goals:
o Reduce Days Supply of New and Used Vehicles: We are
dedicated to managing our new and used vehicle
inventories to decrease the days supply of vehicles that
we have at any given time at our dealerships, with the
objective of reducing our inventory financing interest
expense and carrying costs. We plan to achieve this by
(1) using our web-based tracking system to enable us to
more closely monitor our inventories, (2) establishing
days supply targets for each of our vehicle models, (3)
managing our new and used vehicle inventories across the
dealerships within each of our markets to optimize
inventory turnover and (4) focusing our inventory
purchasing on the more popular model packages.
o Decrease Time to Convert Receivables into Cash: We are
focused on decreasing the amount of time that our
dealerships take to receive payment on retail receivables
(or "contracts-in-transit"). We plan to accomplish this
goal, in part, by (1) adopting best practices concerning
sales and contracts-in-transit flow processing, (2)
developing and using a web-based tool to monitor our
dealerships' contracts-in-transit and (3) developing
relationships with preferred lenders who can
expeditiously process our dealerships'
contracts-in-transit. By more quickly converting our
contracts-in-transit into cash, we expect to be able to
more quickly use our capital to pursue our strategic
initiatives, including those described below under the
"Effectively Use Free Cash Flow" heading.
Effectively Use Free Cash Flow
A key component of our strategy is to maximize the return on
investment generated by the use of the free cash flow that our business
generates. We expect to use our free cash flow to make capital investments
in our current businesses and to complete strategic dealership acquisitions
in our key markets. When dealership acquisitions are unavailable or do not
provide us with an adequate return on our investment, we may use our free
cash flow to prudently repurchase our common stock pursuant to our
Board-authorized share repurchase program, subject to limitations contained
in the indenture agreement with respect to these notes and our credit
agreements for our two senior secured revolving credit facilities. The
considerations in determining how we will allocate our free cash flow among
such uses include the following:
o Capital Investments: We invested $148.2 million and $52.8
million in the periods ended December 31, 2000 and June
30, 2001, respectively, on capital investments, including
to upgrade and improve certain of our dealership
facilities. We expect to make additional facility and
infrastructure upgrades and improvements from time to
time, such as the construction of new vehicle dealership
facilities, with a focus on projects that we expect to
provide a reasonable return on our investments.
o Strategic Dealership Acquisitions: We believe that we
will have additional opportunities to acquire dealerships
in our key markets. The factors that will impact whether
we make additional strategic dealership acquisitions
include the brand, location and price of available
dealerships and whether such dealerships complement and
can be integrated into our existing operations.
o Share Repurchases: During the six months ended June 30,
2001, we repurchased 15.0 million shares of our common
stock for an aggregate purchase price of $129.2 million.
During 2000, we repurchased 27.6 million shares of our
common stock for an aggregate price of $188.9 million. As
of June 30, 2001, we are authorized to repurchase up to
an additional $137.9 million of our common stock pursuant
to our latest Board-authorized share repurchase program.
The decision to make additional purchases of our stock
will be based on such factors as the market price of our
common stock, the potential impact on our capital
structure and the expected return on competing uses of
our capital such as strategic dealership acquisitions and
capital investments in our current businesses.
Grow Our e-Commerce Business
According to industry analysts, the majority of new car buyers
nationwide will consult the Internet for new car information. The Internet
is generating better-informed customers and improving the efficiency of the
sales process. Using "Compass," our proprietary web-based lead-management
software tool, and our website, AutoNation.com, we provide these customer
leads to our dealerships for fulfillment to the greatest extent possible.
In addition, during 2000, we developed relationships with certain Internet
service providers and websites, including Microsoft's MSN Carpoint and
America Online, as well as other parties, to purchase leads or referrals of
customers who are shopping for a vehicle. Specially-trained internet sales
personnel at our dealerships then use our internet-based Compass system to
respond to customer inquiries, which can be made 24 hours a day, seven days
a week. During the first six months of 2001, our average customer response
time during business hours was approximately 38 minutes, which is well
below reported industry average response times.
Beginning in 2000, we entered into lead referral agreements with
approximately 3,000 franchises operating from more than 1,750 independent
dealerships in 47 states. Under these agreements, we distribute customer
leads that we cannot fulfill within our dealership network. We are
continuing to enter into lead referral agreements with dealers that are
able to provide fulfillment capability for vehicle brands and geographic
areas that our dealerships do not cover. As we enter into additional lead
referral agreements, we will continue to set service and other standards
that these independent dealerships must meet in order to participate in our
lead referral program.
The Industry
With approximately $1.0 trillion in new and used vehicle sales and
parts and service, automotive retailing is the largest retail trade sector,
accounting for approximately 7.0% of U.S. gross domestic product. The
industry is highly fragmented, with the top ten automotive retailing groups
accounting for only 6.0% of total industry revenue. Additionally, it is
estimated that there are approximately 22,000 franchised new vehicle
dealerships nationwide. The following chart illustrates the revenue
breakdown of the automotive retailing industry:
[GRAPHIC OMITTED]
New and used vehicle sales accounted for approximately $743.0
billion in 2000. New car volume in 2000 was at a high of 17.4 million
units, representing a compounded annual growth rate of 3.4% since 1995.
Total value of new car sales increased from $292.0 billion in 1995 to
$380.0 billion in 2000, or 5.5% per year. The automotive industry is
currently experiencing a significant decline in demand for new vehicles.
The used car market has grown at a slower but steadier rate of 2.3% per
year based on total value of used car sales, with franchised dealers
accounting for 16.1 million units in 2000.
In addition to new and used vehicles, dealerships offer a wide
range of other products and services, including repair and warranty work,
replacement parts, extended warranty coverage and financing and credit
insurance. The parts and service business has grown 4.7% per year since
1995. In 1999 franchised dealers contributed $68.0 billion of the parts and
services industry.
Significant consolidation in the automotive retail industry is
relatively recent, with the majority of the consolidation having taken
place over only the last six years. Approximately 94% of the industry's
market share still remains in the hands of smaller regional and independent
dealerships. With approximately 22,000 individual dealerships in operation,
we expect consolidation in the industry to continue as dealership owners
seek exit strategies or become subject to capital constraints.
Operations
As of August 31, 2001, we owned and operated 367 new vehicle
franchises from dealership located in 17 states. We own and operate
franchises granted by the manufacturers of 35 different makes of vehicles.
The core brands of vehicles that we sell are Ford (Ford, Lincoln and
Mercury), General Motors (Chevrolet, Pontiac, GMC and Buick), Chrysler
(Chrysler, Jeep and Dodge), Toyota, Nissan and Honda. Our management
structure is focused on our local markets, where day-to-day decision-makers
can be more responsive to the needs of local customers. We have established
ten districts to manage our automotive retailing business. The number of
dealerships within each district varies from district to district.
Each of our automotive franchises offers new and used vehicles for
sale. Each of our dealerships also offers financing for vehicle purchases,
extended service contracts and other finance and insurance products, as
well as other aftermarket products such as vehicle accessories. Almost all
of our dealerships have service facilities that provide a wide range of
vehicle maintenance and repair services. Additionally, we operate collision
repair centers in most of our key markets.
Each of our dealerships acquires new vehicles for retail sale
directly from the applicable automotive manufacturer or distributor.
Accordingly, we depend in large part on the automotive manufacturers and
distributors to provide us with high quality vehicles that consumers desire
and to supply us with such vehicles at suitable locations, quantities and
prices. We generally acquire used vehicles from customer trade-ins,
off-lease programs and, to a lesser extent, auctions and other sources. We
recondition used vehicles acquired for retail sale at our dealerships'
service facilities.
We provide certain financial products and services to our
customers through third parties, including the vehicle manufacturers' and
distributors' captive finance companies, as well as our automotive finance
arm, AutoNation Financial Services. AutoNation Financial Services' products
include retail installment loan financing, extended service contracts,
vehicle protection and maintenance programs, and insurance products.
Disposition of Non-Core Assets
ANC Rental Spin-Off. On June 30, 2000, we completed the tax-free
spin-off of ANC Rental Corporation, which operates primarily under the
Alamo Rent-A-Car and National Car Rental brand names in the leisure travel,
business travel and vehicle replacement markets of the automotive rental
industry. As a result of the spin-off, our stockholders of record as of
June 16, 2000 received one share of ANC Rental common stock for every eight
shares of AutoNation common stock they held as of such date. ANC Rental
common stock is traded on The Nasdaq Stock Market under the symbol "ANCX."
We have reclassified and reported ANC Rental's business as a discontinued
operation. Accordingly, except as otherwise noted, the disclosure contained
in this document relates solely to our automotive retailing business.
Other Divestitures of Non-Core Assets. In addition to the spin-off
of ANC Rental, during 2000 we substantially completed our divestitures of
other non-core assets. During 2000, we entered into a sale- leaseback
financing of our corporate headquarters facility resulting in proceeds of
approximately $52.1 million. We also completed the sale of ANC Rental's
corporate headquarters facility for approximately $18.7 million. In
connection with the closure during December 1999 of 23 company-owned
AutoNation USA used vehicle megastores we sold a majority of the excess
real property held for or operated in connection with our former used
vehicle megastore business during 2000. We intend to continue actively
marketing the remaining excess used vehicle megastore properties. In
November 2000, we completed the divestiture of our outdoor media business,
which operated under the name Republic Media, for a sale price of
approximately $104.0 million. In connection with the sale of Republic
Media, we entered into a pre-paid $15.0 million advertising agreement with
respect to the purchaser's radio stations, billboards and other outdoor
advertising media, and, accordingly, we received net proceeds of
approximately $89.0 million in connection with the transaction. During
2000, we also completed the sale of various non-core franchised new vehicle
dealerships for an aggregate sale price of approximately $89.7 million. In
April of 2001, we disposed of our New Jersey-based Flemington Automotive
Group because its geographic location and lack of focus on higher margin
products and services were not in accordance with our business strategy. We
believe that our disposition of significant non-core assets is
substantially complete.
Insurance and Bonding
Our business exposes us to the risk of liabilities arising out of
our operations. Liabilities involve, for example, claims of employees,
customers or third parties for personal injury or property damage occurring
in the course of our operations. We could also be subject to fines and
civil and criminal penalties in connection with alleged violations of
regulatory requirements.
The automotive retailing business is also subject to substantial
risk of property loss due to the significant concentration of property
values at dealership locations. Accordingly, we have purchased liability
and property insurance subject to certain deductibles or loss retentions.
We purchase umbrella liability insurance to provide insurance in excess of
our primary insurance policies. The level of risk we retain may change in
the future as insurance market conditions or other factors affecting the
economics of our insurance purchasing change. Although we have, subject to
certain limitations and exclusions, substantial insurance, we cannot assure
you that we will not be exposed to uninsured or underinsured losses that
could have a material adverse effect on our business, financial condition,
results of operations or cash flows.
Provisions for retained losses and deductibles are made by charges
to expense based upon periodic evaluations of the estimated ultimate
liabilities on reported and unreported claims. The insurance companies that
underwrite our insurance require that we secure our obligation for
deductible reimbursements with collateral. Our collateral requirements are
set by the insurance companies and to date, have been satisfied by posting
surety bonds, letters of credit and cash deposits. Our collateral
requirements may change from time to time based on, among other things, our
claims experience.
Sales and Marketing
We sold approximately 744,000 vehicles through our dealerships in
2000 and approximately 350,000 vehicles during the first six months of
2001. We sell a broad range of well-known vehicle makes within each of our
markets.
Our marketing efforts focus on mass marketing in our local markets
and are designed to build our business with a broad base of repeat and new
customers. We engage in mass marketing and advertising primarily through
newspapers, radio, outdoor billboards, television and the Internet in our
local markets. As we have consolidated our dealership operations in certain
of our key markets under one local brand name in conjunction with our
trademarks, we have been able to focus our efforts on building consumer
awareness of the selected local brand name rather than on the individual
legacy names under which our dealerships operated prior to their
acquisition by us. We also have begun to develop newspaper, television and
radio advertising campaigns that we can modify for use in multiple local
markets, which we expect to result in advertising cost savings and
efficiencies that are not generally available to smaller retailers. We
expect to continue to realize cost savings and efficiencies with respect to
advertising expenses, due to our ability to obtain efficiencies in
developing advertising campaigns and due to our ability to gain volume
discounts and other concessions as we increase our presence within our key
markets and consolidate our dealerships under a single brand name in our
local markets.
We market our vehicle inventory via the Internet through
AutoNation.com, our dealership websites and a site co-branded with America
Online. We also have entered into lead referral agreements pursuant to
which we purchase customer leads generated by various third-party websites,
including Microsoft's MSN Carpoint, and other sources. We provide these
customer leads to our dealerships for fulfillment to the extent possible.
To the extent our dealerships cannot fulfill our customer leads, we have
lead referral agreements with over 3,000 franchises operating from more
than 1,750 independent dealerships in 47 states.
Agreements with Vehicle Manufacturers
We have entered into framework agreements with most major vehicle
manufacturers and distributors. These agreements contain provisions
relating to our management, operation, advertising and marketing,
acquisition and ownership structure of automotive dealerships franchised by
such manufacturers. The agreements also set limits on the number of
dealerships that we may acquire of the particular manufacturer, nationally,
regionally and in local markets, and contain certain restrictions on our
ability to name and brand our dealerships and certain requirements
pertaining to our operating performance, which, if we do not satisfy, may
adversely impact our ability to make further acquisitions of such
manufacturer's dealerships. In addition, some of these framework agreements
give the manufacturer or distributor the right to acquire, at fair market
value, the automotive dealerships franchised by that manufacturer or
distributor under specified circumstances in the event of a change in
control of our company, the acquisition of 20% or more of the voting stock
of our company by another manufacturer or distributor or other
extraordinary corporate transactions such as a merger or sale of all of our
assets.
We operate each of our new vehicle dealerships under a franchise
agreement with a vehicle manufacturer or distributor. The franchise
agreements grant the franchised automotive dealership a non- exclusive
right to sell the manufacturer's or distributor's brand of vehicles and
offer related parts and service within a specified market area. The
franchise agreements also grant the dealerships the right to use the
manufacturer's or distributor's trademarks in connection with dealership
operations. The franchise agreements impose numerous operational
requirements and restrictions on the automotive dealerships relating to
inventory levels, working capital requirements, the sales' process,
marketing and branding, showroom, service facilities and signage,
personnel, changes in management and monthly financial reporting, among
other things. The franchise agreements also provide for termination of the
agreement by the manufacturer or non-renewal for a variety of causes,
subject to applicable state franchise laws that limit a manufacturer's
right to terminate a franchise.
Competition
We operate in a highly competitive industry. We believe that the
principal competitive factors in the automotive retailing business are
location, service, price and selection. Each of our markets includes a
large number of well-capitalized competitors that have extensive automobile
dealership managerial experience and strong retail locations and
facilities. 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 vehicles that we do not represent in a particular market. Our new
vehicle dealership competitors have franchise agreements with the various
vehicle manufacturers and, as such, generally have access to new vehicles
on the same terms as us. We also are subject to competition from
independent automobile parts and service shops and service center chains.
We believe that the principal competitive factors in the service and repair
industry are price, the use of factory-approved replacement parts, the
familiarity with dealers' makes and customer service. In addition to
competition for vehicle sales and service, we face competition in our
finance and insurance business. We believe the principal competitive
factors in the finance and insurance businesses are convenience, interest
rates and contract terms.
In general, the vehicle manufacturers have designated specific
marketing and sales areas within which only one dealer of a given vehicle
line or make may operate. Under most of our framework agreements with the
vehicle manufacturers, our ability to acquire multiple dealers of a given
line-make within a particular market is limited. We are also restricted by
various state franchise laws from relocating our dealerships or
establishing new dealerships of a particular line-make within any area that
is served by another dealer of the same line-make. Accordingly, to the
extent that a market has multiple dealers of a particular line-make as most
of our key markets do with respect to most vehicle lines we sell, we are
subject to significant intra-brand competition.
According to the National Automotive Dealers Association,
Automotive News and reports of various financial analysts, the automotive
retail industry is served by approximately 22,000 franchised automotive
dealerships, approximately 56,000 independent used vehicle dealers and
individual consumers who sell used vehicles in casual private transactions
primarily through classified ads and by word of mouth. Several other public
companies are establishing national or regional automotive retail chains.
Additionally, certain vehicle manufacturers are engaged in the retail sale
and service of vehicles, either independently or in conjunction with their
franchised dealers, and may do so on an expanded basis in the future,
subject to various state laws that restrict or prohibit manufacturer
ownership of dealerships.
We believe that a growing number of consumers are utilizing the
Internet, to differing degrees, in connection with the purchase of
vehicles. Accordingly, we may face increasing competitive pressures from
on-line automotive websites, including those developed by vehicle
manufacturers and other dealership groups. Consumers use the Internet to
compare pricing for cars and related finance and insurance services, which
may cause price convergence and reduced margins for new vehicles, used
vehicles and related finance and insurance services.
Regulations
Automotive and Other Laws and Regulations
We operate in a highly regulated industry. A number of state and
federal laws and regulations affect our business. In every state in which
we operate, we must obtain various licenses in order to operate our
businesses, including dealer, sales, finance and insurance related licenses
issued by state regulatory authorities. Numerous laws and regulations
govern our conduct of business, including those relating to our sales,
operating, financing, advertising and employment practices. These laws and
regulations include state franchise laws and regulations and other
extensive laws and regulations applicable to new and used motor vehicle
dealers, as well as a variety of other laws and regulations. These laws
also include federal and state wage-hour, anti-discrimination and other
employment practices laws.
Our financing activities with customers are subject to federal
truth-in-lending, consumer leasing and equal credit opportunity regulations
as well as state and local motor vehicle finance laws, installment finance
laws, usury laws and other installment sales' laws. Some states regulate
finance fees and charges that may be paid as a result of vehicle sales.
Claims arising out of actual or alleged violations of law may be asserted
against us or our dealerships by individuals or governmental entities and
may expose us to significant damages or other penalties, including
revocation or suspension of our licenses to conduct dealership operations
and fines.
Our operations are subject to the National Traffic and Motor
Vehicle Safety Act, Federal Motor Vehicle Safety Standards promulgated by
the United States Department of Transportation and 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 duties,
penalties, liquidated damages or other charges.
Environmental, Health and Safety Laws and Regulations
Our operations involve the use, handling, storage and contracting
for recycling and/or disposal of materials such as motor oil and filters,
transmission fluids, antifreeze, refrigerants, paints, thinners, batteries,
cleaning products, lubricants, degreasing agents, tires and fuel.
Consequently, our business is subject to a complex variety of federal,
state and local requirements that regulate the environment and public
health and safety.
Most of our dealerships utilize aboveground storage tanks, and to
a lesser extent underground storage tanks, primarily for petroleum-based
products. Storage tanks are subject to periodic testing, containment,
upgrading and removal under the Resource Conservation and Recovery Act and
its state law counterparts. Clean-up or other remedial action may be
necessary in the event of leaks or other discharges from storage tanks or
other sources. In addition, water quality protection programs under the
federal Water Pollution Control Act (commonly known as the Clean Water
Act), the Safe Drinking Water Act and comparable state and local programs
govern certain discharges from some of our operations. Similarly, certain
air emissions from operations such as auto body painting may be subject to
the federal Clean Air Act and related state and local laws. Certain health
and safety standards promulgated by the Occupational Safety and Health
Administration of the United States Department of Labor and related state
agencies also apply.
Some of our dealerships are parties to proceedings under the
Comprehensive Environmental Response, Compensation, and Liability Act, or
CERCLA, typically in connection with materials that were sent to former
recycling, treatment and/or disposal facilities owned and operated by
independent businesses. The remediation or clean-up of facilities where the
release of a regulated hazardous substance occurred is required under
CERCLA and other laws.
We incur significant costs to comply with applicable
environmental, health and safety laws and regulations in the ordinary
course of our business. We do not anticipate, however, that the costs of
such compliance will have a material adverse effect on our business,
results of operations, cash flows or financial condition, although such
outcome is possible given the nature of our operations and the extensive
environmental, public health and safety regulatory framework.
Properties
During 2000, we entered into a sale-leaseback financing of our
corporate headquarters facility resulting in proceeds of approximately
$52.1 million. We also own or lease numerous facilities relating to our
operations in 17 states. These facilities consist primarily of automobile
showrooms, display lots,
service facilities, collision repair centers, supply facilities, automobile
storage lots, parking lots and offices. We believe that our facilities are
sufficient for our needs and are in good repair in all material respects.
In connection with the closure during December 1999 of 23
company-owned AutoNation USA used vehicle megastores, during 2000, we sold
a majority of the excess real property held for or operated in connection
with the used vehicle megastore business. We intend to continue actively
marketing the remaining excess used vehicle megastore properties.
Trademarks
We own a number of registered service marks and trademarks and
also have a number of applications pending to register, among other marks,
AutoNation[symbol](sm) and AutoNation(sm). Pursuant to agreements with
vehicle manufacturers, we have the right to use and display manufacturers'
trademarks, logos and designs at our dealerships and in our advertising and
promotional materials, subject to certain restrictions. We also have
licenses pursuant to various agreements with third parties authorizing the
use and display of the marks and/or logos of such third parties, subject to
certain restrictions. The current registrations of our service marks and
trademarks in the United States and foreign countries are effective for
varying periods of time, which we may renew periodically, provided that we
comply with all applicable laws.
Employees
As of June 30, 2001, we employed approximately 30,000 full time
employees, approximately 800 of whom were covered by collective bargaining
agreements. We believe that we have good relations with our employees. Due
to our dependence on the vehicle manufacturers, however, we may be
adversely affected by labor strikes or work stoppages at the manufacturers'
manufacturing facilities.
Seasonality
Our operations generally experience higher volumes of vehicle
sales 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
cars and light trucks is generally lower during the winter months than in
other seasons, particularly in regions of the United States where
dealerships may be subject to harsh winters. Accordingly, we expect our
revenue and operating income to be generally lower in our first and fourth
quarters as compared to our second and third quarters.
Legal Proceedings
We are involved, and will continue to be involved, in numerous
legal proceedings arising out of the conduct of our business, including
litigation with customers, employment related lawsuits and actions brought
by governmental authorities. We have several class action and other
lawsuits pending against us.
In October 2000, the California Department of Motor Vehicles
("California DMV") brought action against one of our subsidiaries'
dealerships for alleged customer fraud as well as several other claims. In
April 2001, the California DMV action and a related action by the State of
California were settled. As part of the settlement, the dealership closed
its sales operations for six days, agreed to provide restitution to certain
customers in the estimated amount of approximately $1.0 million and paid
$1.1 million in fines, penalties and costs. Three purported civil class
actions and other related lawsuits and claims have been filed or made
against the dealership based on the allegations underlying the California
DMV case.
In an action filed in state court in Palm Beach County, Florida,
plaintiffs accused one of our subsidiaries of violating the Florida Motor
Vehicle Retail Sales Finance Act and the Florida Deceptive and Unfair Trade
Practices Act by allegedly failing to deliver executed copies of retail
installment contracts to customers of our used vehicle megastores. The
allegations involve nine of our former used vehicle megastores. On October
31, 2000, the court certified the class of customers on whose behalf the
action would proceed. In July 2001, Florida's Fourth District Court of
Appeals upheld the certification of the class.
Many of our Texas dealership subsidiaries have been named in three
class actions brought against the Texas Automobile Dealer's Association and
new vehicle dealerships in Texas that are members of the TADA. The actions
allege that since January 1994 Texas dealers have deceived customers with
respect to a vehicle inventory tax and violated federal antitrust and other
laws as well. Two of the cases are currently pending in Texas state court
and the third is pending in the federal district court for the Eastern
District of Texas.
In addition to the foregoing cases, we are also a party to
numerous other legal proceedings that arose in the conduct of our business.
The results of these matters and any matters brought against us in the
future cannot be predicted with certainty and an unfavorable resolution of
one or more of these matters could have a material adverse effect on our
business, financial condition, results of operations, cash flows and
prospects.
MANAGEMENT
Executive Officers and Directors
The following table sets forth certain information with respect to
our directors and our executive officers as of the date of this prospectus.
Name Age Position
- ---- ------------
H. Wayne Huizenga 63 Chairman of the Board*
Mike Jackson 52 Chief Executive Officer and Director*
Harris W. Hudson 58 Vice Chairman of the Board
Robert J. Brown 66 Director
J.P. Bryan 61 Director
Rick L. Burdick 50 Director
Michael G. DeGroote 68 Director
George D. Johnson, Jr. 59 Director
John J. Melk 65 Director
Irene B. Rosenfeld 48 Director
Michael E. Maroone 47 President and Chief Operating Officer*
Craig T. Monaghan 44 Senior Vice President and
Chief Financial Officer*
Patricia A. McKay 43 Senior Vice President-Finance*
Jonathan P. Ferrando 35 Senior Vice President, General Counsel and
Secretary*
Allan D. Stejskal 42 Senior Vice President-Operations*
- -----------
* Executive Officer
We provide below information regarding each of our executive
officers and directors.
H. Wayne Huizenga has served as our Chairman of the Board since
August 1995. He also served as our Chief Executive Officer from August 1995
until October 1996, and as Co-Chief Executive Officer from October 1996
through September 1999. Since May 1998, Mr. Huizenga has been Chairman of
the Board of Republic Services, Inc., a solid waste services company, and
served as its Chief Executive Officer from May 1998 until December 1998.
Since May 2000, Mr. Huizenga has been Vice Chairman of ZixIt Corporation, a
provider of security services and products for Internet use. Since
September 1996, Mr. Huizenga has been Chairman of the Board of Boca
Resorts, Inc., an owner and operator of luxury resort hotels and other
facilities. Since August 1995, Mr. Huizenga also has been Chairman of the
Board of Extended Stay America, Inc., an operator of extended stay lodging
facilities. Mr. Huizenga served as the Vice Chairman of Viacom Inc., a
diversified entertainment and communications company, from September 1994
until October 1995. From April 1987 through September 1994, Mr. Huizenga
served as the Chairman of the Board and Chief Executive Officer of
Blockbuster Entertainment Corporation, a video rental company. In September
1994, Blockbuster merged with Viacom. In 1971, Mr. Huizenga co- founded
Waste Management, Inc., a solid waste services company, and he served in
various capacities, including as President, Chief Operating Officer and
director, from its inception until 1984. Mr. Huizenga owns the Miami
Dolphins, as well as Pro Player Stadium in South Florida, and is a director
of NationsRent, Inc., a national equipment rental company, and ANC Rental
Corporation, a car rental company that we spun off to our stockholders in
June 2000.
Mike Jackson has served as our Chief Executive Officer and as one
of our Directors since September 1999. From October 1998 until September
1999, Mr. Jackson served as President and Chief Executive Officer of
Mercedes-Benz USA, Inc., a North American operating unit of DaimlerChrysler
AG, a multinational automotive manufacturing company. From April 1997 until
October 1999, Mr. Jackson served as President of Mercedes-Benz USA, Inc.
From July 1990 until March 1997, Mr. Jackson served in various capacities
at Mercedes-Benz USA, Inc., including as Executive Vice President
immediately prior to his appointment as President of Mercedes-Benz USA,
Inc. Mr. Jackson was also the managing partner from March 1979 to July 1990
of Euro Motorcars of Bethesda, Maryland, a regional group that owned and
operated eleven automotive dealership franchises, including Mercedes-Benz
and other brands of automobiles. Prior to joining Euro Motorcars, Mr.
Jackson was a District Manager for Mercedes-Benz of North America.
Harris W. Hudson has served as one of our Directors since August
1995, and has served as our Vice Chairman since October 1996. From August
1995 until October 1996, Mr. Hudson served as our President. Since May
1998, Mr. Hudson has served as Vice Chairman and Secretary of Republic
Services. Mr. Hudson founded Hudson Management Corporation, a solid waste
collection company, in 1983 and served as its Chairman of the Board, Chief
Executive Officer and President from its inception until it was acquired by
AutoNation in August 1995. Mr. Hudson also serves as a director of Boca
Resorts and NationsRent.
Robert J. Brown has served as one of our Directors since May 1997.
Mr. Brown has served as Chairman and Chief Executive Officer of B&C
Associates, Inc., a management consulting, marketing research and public
relations firm, since 1973. Mr. Brown also serves as a director of Duke
Energy Corporation, Wachovia Corporation and Sonoco Products Company.
J.P. Bryan has served as one of our Directors since May 1991. From
January 1995 to February 1998, Mr. Bryan served as President and Chief
Executive Officer of Gulf Canada Resources, Ltd., which is engaged in oil
and gas exploration and production. Since 1998, Mr. Bryan has served as
Senior Managing Director of Torch Energy Advisors, Inc., an outsourcing and
service provider to the oil and gas industry, and Mr. Bryan served as its
Chief Executive Officer from 1981 to 1996 and as its Chairman of the Board
from 1981 to 1994. Mr. Bryan also serves on the Board of Directors of
Bellwether Exploration Company, an oil and gas exploration company, and ANC
Rental.
Rick L. Burdick has been one of our Directors since May 1991.
Since 1988, Mr. Burdick has been a partner in Akin, Gump, Strauss, Hauer &
Feld, L.L.P., a global full service law firm. Mr. Burdick serves as a
member of the firm's Executive Committee, Chairman of the firm's Corporate
and Securities Department and Partner-In-Charge of the Washington office.
Mr. Burdick also serves as a director of Century Business Services, Inc., a
provider of outsourced business services to small and medium-sized
companies in the United States.
Michael G. DeGroote has been one of our Directors since 1991 and
served as Vice Chairman of our Board from August 1995 until October 1996.
Mr. DeGroote served as our Chairman of the Board and President from August
1991 until August 1995, and as our Chief Executive Officer from May 1991
until August 1995. Since April 1995, Mr. DeGroote has served as Chairman of
the Board of Century Business Services. Mr. DeGroote also served as
President and Chief Executive Officer of Century Business Services from
April 1995 until October 1996 and from November 1997 until April 1999, and
he served as Chief Executive Officer from April 1999 until October 2000.
George D. Johnson, Jr. has served as one of our Directors since
November 1995. Since January 1995, Mr. Johnson has served as President and
Chief Executive Officer of Extended Stay America. From August 1993 until
January 1995, Mr. Johnson served in various executive positions with
Blockbuster Entertainment Group and, prior to its merger with Viacom, with
Blockbuster, including as President of the Consumer Products Division and
as a director of Blockbuster. Mr. Johnson serves as a director of Extended
Stay America, Duke Energy Corporation and Boca Resorts.
John J. Melk has served as one of our Directors since August 1995.
Mr. Melk has been Chairman and Chief Executive Officer of H2O Plus, Inc., a
bath and skin care product manufacturer and retail distributor, since 1988.
Mr. Melk also serves as a director of Extended Stay America. Additionally,
he is Chairman and Chief Executive Officer of Fisher Island Holdings, LLC,
which owns the development rights of Fisher Island, Florida. Mr. Melk also
previously served as a director and Vice Chairman of Blockbuster prior to
its merger with Viacom in September 1994. Mr. Melk has been a private
investor in various businesses since March 1984 and prior to March 1984 he
held various positions with Waste Management and its subsidiaries,
including President of Waste Management International, plc., a subsidiary
of Waste Management.
Irene B. Rosenfeld has served as one of our Directors since March
1999. Ms. Rosenfeld has been President of Kraft Canada, Inc., a subsidiary
of Kraft Foods, Inc., a diversified food company, since 1996, and in May
2000 was also named Group Vice President of Kraft Foods and President of
Operations, Information Systems, Technology, Canada, Mexico & Puerto Rico.
From 1991 until 1996, Ms. Rosenfeld served in various executive positions
with Kraft Foods, including as Executive Vice President/General Manager of
the Desserts and Snacks Division from 1994 to 1996 and as Executive Vice
President/General Manager of the Beverages Division from 1991 to 1994. Ms.
Rosenfeld also serves as a Trustee of Cornell University.
Michael E. Maroone has served as our President and Chief Operating
Officer since August 1999. Following our acquisition of the Maroone
Automotive Group in January 1997, Mr. Maroone served as President of our
New Vehicle Dealer Division. In January 1998, Mr. Maroone was named
President of our Automotive Retail Group with responsibility for our new
and used vehicle operations. Prior to joining our company, Mr. Maroone was
President and Chief Executive Officer of the Maroone Automotive Group, one
of the country's largest privately-held automotive retail groups.
Craig T. Monaghan has served as our Senior Vice President and
Chief Financial Officer since May 2000. From June 1998 to April 2000, Mr.
Monaghan was Chief Financial Officer of iVillage.com, a leading women's
network on the Internet. From 1991 until 1998, Mr. Monaghan served in
various executive capacities for Reader's Digest Association, Inc., most
recently as Vice President and Treasurer.
Patricia A. McKay has served as our Senior Vice President--Finance
since November 1999. From November 1999 until April 2000, Ms. McKay also
served as our Acting Chief Financial Officer and Controller. Ms. McKay
joined our company in January 1997 as Vice President, Operations
Controller. From February 1998 until November 1999, Ms. McKay served as
Senior Vice President of Finance of our Automotive Retail Group. Prior to
joining our company, Ms. McKay served from October 1988 until December 1996
in various positions with Dole Food Company, Inc., a multinational packaged
food company, most recently as Vice President of Finance and Controller.
From June 1983 through July 1988, Ms. McKay served as an Audit Manager with
Arthur Andersen LLP, most recently as a Senior Audit Manager.
Jonathan P. Ferrando has served as our Senior Vice President,
General Counsel and Secretary since January 2000. Mr. Ferrando joined our
company in July 1996 and served in various capacities within our Legal
Department, including as Senior Vice President and General Counsel of our
Automotive Retail Group from March 1998 until January 2000. Prior to
joining our company, Mr. Ferrando was a corporate attorney in Chicago,
Illinois with Skadden, Arps, Slate, Meagher & Flom, a global full service
law firm, from 1991 until 1996. Mr. Ferrando's practice at Skadden, Arps,
Slate, Meagher & Flom was concentrated in the areas of mergers and
acquisitions and corporate finance.
Allan D. Stejskal has served as our Senior Vice President of
Operations since September 2001. Upon joining us in September 2000, Mr.
Stejskal was appointed Senior Vice President, e-Commerce. Prior to joining
our company, Mr. Stejskal led the automotive industry e-Commerce efforts at
Automatic Data Processing, Inc., a leading national provider of
computerized transaction processing, data communication and information
services, as Vice President, Dealer Services Division, a position he held
since February 1998. From March 1995 to February 1998, Mr. Stejskal was
Vice President and General Manager of the Wholesale Distribution Services
Division of ADP.
Mr. Hudson is married to Mr. Huizenga's sister. Otherwise, there
are no family relationships between any of our Directors.
SECURITY OWNERSHIP
The following table sets forth certain information as of June 30,
2001 with respect to the beneficial ownership of our stock by: (1) each
person who is known to us to be a beneficial owner of more than 5% of our
stock outstanding; (2) each of our Directors; (3) our Chief Executive
Officer and our four highest paid executive officers during 2000; and (4)
all of our current Directors and executive officers as a group. As of June
30, 2001, there were 333,108,488 shares of our common stock outstanding.
References to stock options in the footnotes to the following table reflect
an adjustment made in connection with the spin-off to our stockholders of
ANC Rental Corporation with respect to any stock options granted prior to
August 1, 2000.
Shares of
Common Stock
Beneficially Owned
Names (1) Number Percent
- --------- ------ -------
ESL Investments, Inc. (2).................................................... 45,030,100 13.5%
One Lafayette Place
Greenwich, CT 06830
Subsidiaries of FMR Corp. (3)................................................ 40,995,747 12.3%
82 Devonshire Street
Boston, MA 02109
H. Wayne Huizenga (4)........................................................ 32,266,482 9.5%
Mike Jackson (5)............................................................. 519,461 *
Harris W. Hudson (6)......................................................... 19,151,088 5.7%
Robert J. Brown (7).......................................................... 197,455 *
J.P. Bryan (8)............................................................... 130,785 *
Rick L. Burdick (9).......................................................... 187,285 *
Michael G. DeGroote (10)..................................................... 19,872,769 6.0%
George D. Johnson, Jr. (11).................................................. 1,140,890 *
John J. Melk (12)............................................................ 1,188,570 *
Irene B. Rosenfeld (13)...................................................... 97,549 *
Michael E. Maroone (14)...................................................... 4,709,884 1.4%
Craig T. Monaghan (15)....................................................... 109,436 *
Patricia A. McKay (16)....................................................... 218,921 *
All Directors and executive officers as a group
(15 persons) (17)......................................................... 80,099,900 23.2%
- -------------
* Less than 1%
(1) Unless otherwise indicated, the address of each person or entity
is c/o AutoNation, Inc., 110 S.E. 6th Street, Fort Lauderdale,
Florida, 33301.
(2) The aggregate amount of our stock beneficially owned by ESL
Investments, Inc. consists of: (a) 28,761,582 shares owned by ESL
Partners, L.P., (b) 6,557,895 shares owned by ESL Limited, (c)
1,090,182 shares owned by ESL Institutional Partners, L.P. and (d)
8,620,441 shares owned by ESL Investors, LLC. This information is
based on an amendment to Schedule 13G filed by ESL Partners, L.P.
on February 14, 2001.
(3) Includes: (a) 38,068,437 shares owned by Fidelity Management &
Research Company, (b) 2,418,310 shares owned by Fidelity
Management Trust Company and (c) 509,000 shares owned by Fidelity
International Limited. Fidelity Management and Research and
Fidelity Management Trust are wholly-owned subsidiaries of FMR
Corp. This information is based on an amendment to Schedule 13G
filed by FMR Corp. on March 9, 2001. FMR Corp. and Fidelity
International expressly disclaim that they are acting as a "group"
for purposes of Section 13(d) under the Exchange Act.
(4) The aggregate amount of our stock beneficially owned by Mr.
Huizenga consists of: (a) 2,929 shares owned directly, (b)
24,894,219 shares owned by Huizenga Investments Limited
Partnership, a Nevada limited partnership controlled by Mr.
Huizenga, and (c) vested options to purchase 7,369,334 shares.
(5) The aggregate amount of our stock beneficially owned by Mr.
Jackson consists of: (a) 30,000 shares owned directly and (b)
vested options to purchase 489,461 shares.
(6) The aggregate amount of our stock beneficially owned by Mr. Hudson
consists of: (a) 17,696,779 shares beneficially owned by Harris W.
Hudson Limited Partnership, a Nevada limited partnership
controlled by Mr. Hudson, and (b) vested options to purchase
1,454,309 shares.
(7) The aggregate amount of our stock beneficially owned by Mr. Brown
consists of: (a) 200 shares owned by Mr. Brown and his wife as
joint tenants and (b) vested options to purchase 197,255 shares.
(8) The aggregate amount of our stock beneficially owned by Mr. Bryan
consists of vested options to purchase 130,785 shares.
(9) The aggregate amount of our stock beneficially owned by Mr.
Burdick consists of: (a) 56,500 shares owned directly and (b)
vested options to purchase 130,785 shares.
(10) The aggregate amount of our stock beneficially owned by Mr.
DeGroote consists of: (a) 19,631,200 shares owned by Westbury
(Bermuda) Ltd., a Bermuda corporation controlled by Mr. DeGroote,
and (b) vested options to purchase 241,569 shares.
(11) The aggregate amount of our stock beneficially owned by Mr.
Johnson consists of: (a) 899,321 shares owned by GDJ, Jr.
Investments Limited Partnership, a Nevada limited partnership
controlled by Mr. Johnson, and (b) vested options to purchase
241,569 shares.
(12) The aggregate amount of our stock beneficially owned by Mr. Melk
consists of: (a) 122,001 shares owned directly, (b) 825,000 shares
owned by JJM Republic Limited Partnership, of which Mr. Melk is
the general partner and his three adult children are limited
partners, and (c) vested options to purchase 241,569 shares.
(13) The aggregate amount of our stock beneficially owned by Ms.
Rosenfeld consists of vested options to purchase 97,549 shares.
(14) The aggregate amount of our stock beneficially owned by Mr.
Maroone consists of: (a) 3,353,988 shares beneficially owned by
Michael Maroone Family Partnership, a Nevada limited partnership
controlled by Mr. Maroone, (b) 1,485 shares held through the
AutoNation 401(k) Plan and (c) vested options to purchase
1,354,411 shares.
(15) The aggregate amount of our stock beneficially owned by Mr.
Monaghan consists of vested options to purchase 109,436 shares.
(16) The aggregate amount of our stock beneficially owned by Ms. McKay
consists of: (a) vested options to purchase 217,691 shares and (b)
1,230 shares held through the AutoNation 401(k) Plan.
(17) The aggregate amount of our stock beneficially owned by all
Directors and executive officers as a group includes: (a) 4,822
shares held through the AutoNation 401(k) Plan and (b) vested
options to purchase 12,582,941 shares.
CERTAIN TRANSACTIONS
The following is a summary of agreements and transactions among
certain related parties and us. It is our policy that transactions with
related parties must be on terms that, on the whole, are no less favorable
than terms that would be available from unrelated parties. Based on our
experience, we believe that all of the transactions described below met
that standard at the time the transactions were effected. The amounts
disclosed for the following transactions are estimates based on our records
and other information currently available to us.
Mr. Huizenga owns the Miami Dolphins and Pro Player Stadium, a
professional sports stadium in South Florida. Since the beginning of 2000,
we paid an aggregate of approximately $493,000 to the Miami Dolphins and
Pro Player Stadium in exchange for certain marketing services for our
dealerships and for the use of executive suites and tickets to events at
Pro Player Stadium. We expect to continue to use their marketing services,
executive suites and tickets throughout the remainder of 2001.
We lease an executive suite at the National Car Rental Center, a
sports arena in Broward County, Florida, that is owned by Boca Resorts,
Inc. Mr. Huizenga is the Chairman of the Board of Boca Resorts and
beneficially owns approximately 18% of Boca Resorts' outstanding stock.
Under the lease agreement, we paid Boca Resorts approximately $114,000
during 2000, plus incidental costs, and approximately $128,000, plus
incidental costs, for the use of the executive suite during 2001.
Boca Resorts also owns and operates various resort hotels,
including a hotel in Fort Lauderdale, Florida, at which we have hosted from
time to time meetings of our key managers. Since the beginning of 2000, we
paid Boca Resorts approximately $207,000 for the use of conference
facilities and lodging accommodations at its hotels in connection with our
management meetings.
In 2000, we engaged the law firm of Akin, Gump, Strauss, Hauer &
Feld, L.L.P. for various legal services. Mr. Burdick is a partner in that
law firm. We expect this relationship to continue throughout the remainder
of 2001.
During 2000, we hired the management consulting, marketing
research and public relations firm of B&C Associates, Inc. for certain
management consulting services. Mr. Brown, a member of our board of
directors, is the Chairman, Chief Executive Officer and principal owner of
B&C Associates. Since the beginning of 2000, we paid B&C Associates
approximately $140,000. We expect this relationship to continue throughout
the remainder of 2001.
Since the beginning of 2000, we purchased approximately $1,037,000
of pre-employment drug screening services from Psychemedics Corporation.
Mr. Huizenga owns approximately 11.1% of Psychemedics' outstanding common
stock. We expect to continue to utilize Psychemedics to perform customary
pre-employment drug screenings throughout the remainder of 2001.
National Car Rental Company is a party to an agreement with Boca
Resorts pursuant to which National purchased the naming rights of the
National Car Rental Center. Until the tax-free spin-off of ANC Rental
Corporation to our stockholders was completed in June 2000, National was
one of our subsidiaries. During the time that we owned National in 2000, it
paid approximately $1.1 million to Boca Resorts for such naming rights. In
addition, National used executive suites at the arena during 2000.
In connection with our spin-off of ANC Rental in June 2000, we
entered into a distribution agreement, a tax sharing agreement and various
lease agreements, transitional service agreements, purchase agreements and
other arrangements with ANC Rental. Messrs. Huizenga and Bryan are
directors of ANC Rental and several of our directors own stock of ANC
Rental. At the time of the spin- off, we owned ANC Rental's corporate
headquarters facility and, accordingly, we agreed to lease these facilities
to ANC Rental following the spin-off for approximately $1.6 million per
year. Toward the end of 2000, we sold ANC Rental's headquarters facility,
so we are no longer its landlord. We also agreed to lease certain portions
of our computer data center to ANC Rental for approximately $870,000 per
year. In connection with the spin-off, we also agreed to provide guarantees
and credit enhancements for certain ANC Rental indebtedness and other
obligations, for which ANC Rental paid us a fee of approximately $350,000
during 2000 and approximately $930,000 since the beginning of 2001.
ANC Rental agreed to purchase most of its model year 2000
vehicles, and at least 100,000 model year 2001 vehicles, through certain of
our dealerships. During 2000, ANC Rental purchased approximately 245,000
vehicles through us under these agreements, generating a mark-up fee for us
of approximately $1.5 million. Additionally, ANC Rental provides us certain
transitional services, including computer and administrative services, and
we provide ANC Rental similar services. In 2000, ANC Rental paid us
approximately $650,000 and we paid ANC Rental approximately $180,000 for
such services. ANC Rental also agreed to buy automotive parts from us
following the spin-off, and paid us approximately $7.5 million for parts
purchases made during 2000. ANC Rental also leases space from certain of
our dealerships to operate its local car rental businesses. Since the
beginning of 2000, ANC Rental paid our dealerships an aggregate of
approximately $590,000 under such leases.
In March 2000, we purchased a jet from Republic Services, Inc.
Messrs. Huizenga and Hudson are Chairman of the Board and Vice Chairman of
the Board and Secretary, respectively, of Republic Services. We paid
approximately $4.7 million for the jet, which we believe approximated its
fair market value. In January 2001, we sold the jet back to Republic
Services for approximately the same amount, which was based on its then
current net asset value plus the agreed upon value of certain repairs
performed by us immediately prior to the sale.
DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS
The Senior Secured Credit Facilities
General. On August 10, 2001, we entered into two new senior
secured revolving credit facilities with an aggregate borrowing capacity of
$500.0 million. The principal lenders under these facilities are Bank of
America, N.A., The Chase Manhattan Bank, Merrill Lynch Capital Corporation,
First Union National Bank and an affiliate of Comerica Securities, Inc.
These facilities are secured by a pledge of the capital stock of two of our
wholly-owned subsidiaries, AutoNation Enterprises Incorporated and Auto
Holding Corp., which subsidiaries directly or indirectly own substantially
all of our dealerships, and are guaranteed by substantially all of our
subsidiaries.
Amount and Purpose of Loans. Our senior secured credit facility
provides for two different facilities in an aggregate amount of $500.0
million. The 364-day revolving credit facility provides for borrowing
capacity up to $200.0 million. The multi-year revolving credit facility
provides for borrowing capacity of up to $300.0 million, which includes a
$75.0 million sublimit for the issuance of standby letters of credit and a
$50.0 million sublimit for swing line loans. We intend to use these
facilities for working capital, capital expenditures, acquisitions and
other general corporate purposes. We also used these facilities to prepay
certain existing indebtedness under our previous credit facility.
Interest and Interest Options. Other than swing line loans issued
pursuant to the multi-year revolving credit facility, we have the option of
borrowing at an interest rate equal to one of the following options:
o The higher of (i) the Bank of America prime rate and (ii)
the Federal Funds rate plus 0.50%, plus the applicable
margin or
o LIBOR plus the applicable margin.
Swing line loans bear interest at a rate equal to the higher of
(i) the Bank of America prime rate and (ii) the Federal Funds rate plus
0.50%, plus the applicable margin.
We may select interest periods of one week or one, two, three, six
or twelve months for LIBOR loans, subject to availability with the
participating lenders. We will be required to pay interest at the end of
the selected interest period, but no less frequently than quarterly.
Maturity. The 364-day revolving credit facility terminates August
9, 2002, the 364th day following the closing of the senior credit
facilities. In the event that the 364-day revolving facility is not renewed
and provided that no event of default under the senior credit facilities
has occurred and is then continuing, the outstanding principal amount of
loans under the 364-day revolving facility on such maturity date may, at
our election, be converted to a term loan which will be repayable in a
single payment one year from the then applicable maturity date.
The multi-year revolving facility terminates and all amounts
outstanding thereunder will be due and payable on August 10, 2006.
Availability. Revolving loans under the senior credit facilities
(including swing line loans) may be made, and letters of credit may be
issued, on a revolving basis in each case subject to availability and the
satisfaction of certain conditions precedent to funding, as described
below.
Collateral. Our senior secured credit facilities are secured by a
pledge of the capital stock of two of our wholly-owned subsidiaries,
AutoNation Enterprises Incorporated and Auto Holding Corp., which
subsidiaries are holding companies for substantially all of our
dealerships.
Guarantees. Our senior secured facilities are guaranteed by
substantially all of our current subsidiaries including substantially all
of our current and future dealership subsidiaries.
Optional Prepayments and Commitment Reductions. We will be able to
prepay the senior credit facilities in whole or in part at any time without
premium or penalty, subject to reimbursement of the lenders' breakage and
redeployment costs in the case of prepayment of LIBOR borrowings. We will
also be able to cancel the unutilized portion of any commitment under the
senior credit facilities in excess of the competitive bid loans, the swing
line loans and the stated amount of all letters of credit in whole or in
part without premium or penalty.
Conditions. We will have to meet certain conditions at the dates
we obtain any borrowings including:
o a reaffirmation of representations and warranties made
under the senior credit facilities; and
o that there has been no default that is continuing.
Financial and Operating Covenants. We are subject to financial and
operating covenants including a maximum leverage ratio, a maximum balance
sheet leverage ratio and a minimum interest coverage ratio.
Events of Default. Events of default include:
o nonpayment of principal, interest, fees or other amounts
due under the senior credit facilities;
o failure to comply with covenants of the senior credit
agreements (subject to any applicable cure periods);
o material inaccuracy of representations and warranties set
forth in the senior credit agreements;
o defaults in other material agreements and indebtedness;
o bankruptcy and insolvency events with respect to us or
our subsidiaries;
o a material judgment against us remains undischarged for a
period of time;
o the actual invalidity of any loan documentation or
security interests or any assertion by us or any of our
subsidiaries of such invalidity; or
o a change of control of us.
The Floorplan Facilities
We currently have in place a number of floorplan credit facilities
with various manufacturers, including Ford Motor Credit Company, General
Motors Acceptance Corporation, Chrysler Financial Company, Toyota Motor
Credit Corporation and other financial institutions. Each dealership
subsidiary has its own agreement with the manufacturers for its inventory
financing needs. As of June 30, 2001, there was an aggregate of $2.1
billion outstanding under our floorplan facilities. Typically new vehicle
floorplan financing exceeds the related inventory balances. The inventory
balance is generally reduced by the manufacturers' purchase discounts.
Manufacturer purchase discounts are standard in the industry, typically
occur on all new vehicle purchases, and are not used to offset the related
floorplan financing obligation. These discounts are aggregated and
generally paid to us by the manufacturers on a quarterly basis. The related
floorplan financing becomes due as vehicles are sold.
We make monthly interest payments on the amount financed under our
floorplan facilities but are not required to make loan principal repayments
prior to the sale of the vehicles. We also receive floorplan interest
assistance from various manufacturers which is recognized as a reduction of
cost of operations when earned. The underlying notes are demand notes and
the payments under these notes are due when the related vehicles are sold
and are collateralized by vehicle inventories and, in some cases, other
assets of the applicable dealership subsidiary.
The Mortgage Facility
General. On June 8, 2001, we executed a Master Loan Agreement with
Ford Motor Credit Company for a $150.0 million mortgage facility. This
facility will constitute senior debt secured by mortgages on certain of our
dealerships' real property.
Amount and Purpose of Loans. The mortgage facility provides for
aggregate borrowing capacity of up to $150.0 million. We intend to use the
proceeds of the mortgage facility for working capital purposes, which may
include, but are not limited to, dealership real property acquisitions in
the ordinary course of business and capital expenditures. We also used this
facility to prepay certain existing indebtedness under our previous credit
facility.
Interest. The mortgage facility provides for a LIBOR based
interest rate.
Maturity. The mortgage facility provides for a ten year maturity.
Collateral. Our mortgage facility is secured by mortgages on
certain of our dealerships' real property. Ford Motor Credit Company is
loaning money to us based on a formula of 80% loan to our specified real
property value.
Optional Prepayment. We will be able to prepay the mortgage
facility in whole or in part at any time. If a prepayment occurs on or
before June 8, 2003 and after giving effect to any such prepayment, the
outstanding principal balance of the mortgage facility is less than $30.0
million, we will be required to pay a prepayment premium in an amount equal
to (i) 0.25% multiplied by (ii) the highest principal balance of the
mortgage facility outstanding through the date of prepayment minus the
outstanding principal balance of the mortgage facility after giving effect
to such prepayment.
Conditions to Advances. The mortgage facility contains usual and
customary conditions that must be met at the dates we obtain any
borrowings.
Covenants. The mortgage facility contains usual and customary
covenants, including:
o maintenance of unencumbered assets in an amount equal to
or greater than twice the outstanding principal amount of
borrowings under the mortgage facility;
o maintenance of an interest charge coverage ratio; and
o maintenance of an adjusted leverage ratio.
Events of Default. Events of default include:
o nonpayment of all or any portion of any installment of
indebtedness under the mortgage facility as and when the
same shall become due and payable;
o failure to comply with covenants of the mortgage facility
(subject to any applicable cure periods);
o bankruptcy and insolvency events with respect to us or
any of our subsidiaries that have co-borrowed amounts
under the mortgage facility;
o material inaccuracy of representations and warranties set
forth in the mortgage facility;
o defaults in other material agreements and indebtedness;
and
o a judgment against us of greater than $15.0 million or
against any of our subsidiaries that has co-borrowed
amounts under the mortgage facility in an amount greater
than $1.0 million.
DESCRIPTION OF THE NOTES
The outstanding notes were, and the exchange notes will be, issued
under an Indenture dated as of August 10, 2001 among the Company, the
Guarantors and Wells Fargo Bank Minnesota, National Association, as
Trustee. The terms of the notes include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act
of 1939.
The following description is a summary of the material provisions
of the Indenture. It does not restate the Indenture in its entirety. A copy
of the indenture is an exhibit to the registration statement to which this
prospectus forms a part. For definitions of certain capitalized terms used
in the following summary, see "--Certain Definitions."
Maturity, Principal and Interest
The notes mature on August 1, 2008, and are unsecured senior
obligations of the Company. The Indenture provides, in addition to the
$450.0 million aggregate principal amount of notes being issued on the
Issue Date, for the issuance of additional notes, at any time and from time
to time after the Issue Date, having identical terms to the notes offered
hereby, subject to compliance with the covenant "Limitation on
Indebtedness." Any such additional notes will be issued on the same terms
and will constitute part of the same series of securities as the notes
issued on the Issue Date and will vote together as one series on all
matters with the notes issued on the Issue Date. Each note bears interest
at 9% from August 10, 2001 or from the most recent interest payment date on
which interest has been paid, payable semiannually in arrears on February 1
and August 1 in each year, commencing February 1, 2002.
The Company will pay interest to the Person in whose name the note
(or any predecessor note) is registered at the close of business on the
July 15 or January 15 immediately preceding the relevant interest payment
date. Interest will be computed on the basis of a 360-day year comprised of
twelve 30- day months.
Principal of, premium, if any, and interest on the notes will be
payable, and the notes will be exchangeable and transferable, at the office
or agency of the Company in The City of New York maintained for such
purposes (which initially will be the corporate trust office of the
Trustee). Payment of interest also may be made at the option of the Company
by check mailed to the Person entitled to such interest as shown on the
security register.
Guarantees
Payment of the notes is guaranteed by the Guarantors, jointly and
severally, fully and unconditionally, on a senior basis.
o The Guarantors are comprised of substantially all of the
direct and indirect Restricted Subsidiaries of the
Company.
o In addition, if any Restricted Subsidiary of the Company
becomes a guarantor or obligor in respect of any other
Indebtedness of the Company or any of the Restricted
Subsidiaries, the Company shall cause such Restricted
Subsidiary to enter into a supplemental indenture in
which such Restricted Subsidiary shall agree to guarantee
the Company's obligations under the notes.
If the Company defaults in payment of the principal of, premium, if any, or
interest on the notes, each of the Guarantors will be unconditionally,
jointly and severally, obligated to duly and punctually pay the principal
of, premium, if any, and interest on the notes.
The obligations of each Guarantor under its Guarantee are limited
to the maximum amount which, after giving effect to all other contingent
and fixed liabilities of such Guarantor, and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, will result
in the obligations of such Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under Federal or state law.
Each Guarantor that makes a payment or distribution under its Guarantee
will be entitled to a contribution from any other Guarantor in a pro rata
amount based on the net assets of each Guarantor determined in accordance
with GAAP.
Notwithstanding the foregoing, in certain circumstances a
Guarantee of a Guarantor may be released pursuant to the provisions of
subsection (b) under "--Certain Covenants--Limitation on Issuances of
Guarantees of Indebtedness." The Company also may, at any time, cause a
Restricted Subsidiary to become a Guarantor by executing and delivering a
supplemental indenture providing for the guarantee of payment of the notes
by such Restricted Subsidiary on the basis provided in the Indenture.
Optional Redemption
Except as described below, the notes will not be redeemable by the
Company prior to maturity.
At any time prior to August 1, 2004, the Company, at its option,
may use the net cash proceeds of one or more Public Equity Offerings to
redeem up to an aggregate of 35% of the aggregate principal amount of notes
issued under the Indenture at a redemption price equal to 109% of the
aggregate principal amount of the notes redeemed, plus accrued and unpaid
interest, if any, to the redemption date (subject to the rights of holders
of record on relevant record dates to receive interest due on an interest
payment date). At least 65% of the aggregate principal amount of notes
issued under the Indenture must remain outstanding immediately after the
occurrence of such redemption. In order to effect this redemption, the
Company must mail a notice of redemption no later than 30 days after the
closing of the related Public Equity Offering and must complete such
redemption within 60 days of the closing of the Public Equity Offering.
If less than all of the notes are to be redeemed, the Trustee
shall select the notes to be redeemed in compliance with the requirements
of the principal national security exchange, if any, on which the notes are
listed, or if the notes are not listed, on a pro rata basis, by lot or by
any other method the Trustee shall deem fair and reasonable. notes redeemed
in part must be redeemed only in integral multiples of $1,000. Redemption
pursuant to the provisions relating to a Public Equity Offering must be
made on a pro rata basis or on as nearly a pro rata basis as practicable
(subject to the procedures of DTC or any other depositary).
Sinking Fund
The notes will not be entitled to the benefit of any sinking fund.
Purchase of Notes Upon a Change of Control
If a Change of Control occurs, each holder of notes will have the
right to require that the Company purchase all or any part (in integral
multiples of $1,000) of such holder's notes pursuant to a Change of Control
Offer. In the Change of Control Offer, the Company will offer to purchase
all of the notes, at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount of such
notes, plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Purchase Date") (subject to the rights of holders
of record on relevant record dates to receive interest due on an interest
payment date).
Within 30 days of any Change of Control or, at the Company's
option, prior to such Change of Control but after it is publicly announced,
the Company must notify the Trustee and give written notice of the Change
of Control to each holder of notes, by first-class mail, postage prepaid,
at his address appearing in the security register. The notice must state,
among other things,
o that a Change of Control has occurred and the date of
such event;
o the circumstances and relevant facts regarding such
Change of Control, including information with respect to
pro forma historical income, cash flow and capitalization
after giving effect to such Change of Control;
o the purchase price and the purchase date which shall be
fixed by the Company on a business day no earlier than 30
days nor later than 60 days from the date the notice is
mailed, or such later date as is necessary to comply with
requirements under the Exchange Act;
o that any note not tendered will continue to accrue
interest;
o that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any notes accepted for
payment pursuant to the Change of Control Offer will
cease to accrue interest after the Change of Control
Purchase Date; and
o other procedures that a holder of notes must follow to
accept a Change of Control Offer or to withdraw
acceptance of the Change of Control Offer.
If a Change of Control Offer is made, the Company may not have
available funds sufficient to pay the Change of Control Purchase Price for
all of the notes that might be delivered by holders of the notes seeking to
accept the Change of Control Offer. The failure of the Company to make or
consummate the Change of Control Offer or pay the Change of Control
Purchase Price when due will give the Trustee and the holders of the notes
the rights described under "Events of Default."
In addition to the obligations of the Company under the Indenture
with respect to the notes in the event of a Change of Control,
substantially all of the long-term Indebtedness of the Company also
contains, and any future indebtedness will likely contain, an event of
default upon a Change of Control as defined therein which obligates the
Company to repay amounts outstanding under such indebtedness upon an
acceleration of the Indebtedness issued thereunder.
The definition of "Change of Control" includes a phrase relating
to the sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the assets of the Company. The term "all or
substantially all" as used in the definition of "Change of Control" has not
been interpreted under New York law (which is the governing law of the
Indenture) to represent a specific quantitative test. Therefore, if holders
of the notes elected to exercise their rights under the Indenture and the
Company elected to contest such election, it is not clear how a court
interpreting New York law would interpret the phrase.
The existence of a holder's right to require the Company to
repurchase such holder's notes upon a Change of Control may deter a third
party from acquiring the Company in a transaction which constitutes a
Change of Control.
The provisions of the Indenture will not afford holders of the
notes the right to require the Company to repurchase the notes in the event
of a highly leveraged transaction or transactions with the Company's
management or its Affiliates, including a reorganization, restructuring,
merger or similar transaction (including an acquisition of the Company by
management or its affiliates) involving the Company that may adversely
affect holders of the notes, if such transaction is not a transaction
defined as a Change of Control. A transaction involving the Company's
management or its Affiliates, or a transaction involving a recapitalization
of the Company, will result in a Change of Control if it is the type of
transaction specified by such definition.
The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with a Change of Control
Offer.
The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer
in the manner, at the times and otherwise in compliance with the
requirements described in the Indenture applicable to a Change of Control
Offer made by the Company and purchases all notes validly tendered and not
withdrawn under such Change of Control Offer.
Ranking
The notes are the unsecured senior obligations of the Company, and
the Indebtedness represented by the notes and the payment of principal of,
premium, if any, and interest on the notes will rank equally in right of
payment with all other existing and future unsubordinated indebtedness of
the Company and senior in right of payment to all existing and future
subordinated indebtedness of the Company. The notes are effectively
subordinated to secured Indebtedness of the Company as to the assets
securing such Indebtedness, including the indebtedness under the Credit
Agreements, which is secured by a first priority lien on the Capital Stock
of two of the Company's subsidiaries, which subsidiaries are the holding
companies for substantially all of the Company's dealerships as described
under "Description of Certain Other Indebtedness."
The Indebtedness evidenced by each Guarantee (including the
payment of principal of, premium, if any, and interest on the notes) is
unsecured, ranks equally in right of payment with all other senior
indebtedness of such Guarantor and ranks senior in right of payment to all
subordinated indebtedness of such Guarantor.
As of June 30, 2001, after giving effect to (i) the notes, (ii)
the Company's senior credit facilities, (iii) borrowings under the mortgage
facility and (iv) the repayment of certain of the Company's outstanding
indebtedness, the Company and the Guarantors would have had $708.5 million
of senior indebtedness (excluding the notes and the Company's floorplan
financing), all of which would have been secured, and the Guarantors would
also have had $2.1 billion of floorplan financing, all of which would have
been secured.
Certain Covenants
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness. The Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, create, issue,
incur, assume, guarantee or otherwise in any manner become directly or
indirectly liable for the payment of or otherwise incur, contingently or
otherwise (collectively, "incur"), any Indebtedness (including any Acquired
Indebtedness), unless such Indebtedness is incurred by the Company or any
Guarantor or constitutes Acquired Indebtedness of a Restricted Subsidiary
and, in each case, the Company's Consolidated Fixed Charge Coverage Ratio
for the most recent four full fiscal quarters for which financial
statements are available immediately preceding the incurrence of such
Indebtedness taken as one period is equal to or greater than 2.0:1.0.
Notwithstanding the foregoing, the Company and, to the extent
specifically set forth below, the Restricted Subsidiaries may incur each
and all of the following (collectively, the "Permitted Indebtedness"):
(1) Indebtedness of the Company (and guarantees by Guarantors
of such Indebtedness) under the Credit Facilities in an
aggregate principal amount at any one time outstanding
not to exceed the greater of (a) $750 million and (b) the
Borrowing Base;
(2) Indebtedness of the Company pursuant to the notes issued
on the Issue Date (and any notes issued in exchange
therefor) and Indebtedness of any Guarantor pursuant to a
Guarantee of such notes;
(3) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the Issue Date;
(4) Indebtedness of the Company or a Guarantor owing to a
Restricted Subsidiary; provided that any Indebtedness of
the Company or a Guarantor owing to a Restricted
Subsidiary that is not a Guarantor, except pursuant to
the customary cash management procedures of the Company
and its Restricted Subsidiaries, is made pursuant to an
intercompany note and is unsecured and, other than with
respect to Indebtedness owed to AutoNation Cayman
Insurance Company, Ltd. with respect to capital and
surplus, is subordinated in right of payment from and
after such time as the notes shall become due and payable
(whether at Stated Maturity, acceleration or otherwise)
to the payment and performance of the Company's
obligations under the notes or such Guarantor's
obligations under its guarantee; provided, further, that
any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition,
pledge or transfer to a Restricted Subsidiary) shall be
deemed to be an incurrence of such Indebtedness by the
Company or other obligor not permitted by this clause
(4);
(5) Indebtedness of a Restricted Subsidiary that is not a
Guarantor owing to the Company or another Restricted
Subsidiary; provided that (except pursuant to the
customary cash management procedures of the Company and
its Restricted Subsidiaries) any such Indebtedness is
made pursuant to an intercompany note; provided, further,
that (a) any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition,
pledge or transfer to the Company or a Restricted
Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause
(5), and (b) any transaction pursuant to which any
Restricted Subsidiary, which has Indebtedness owing to
the Company or any other Restricted Subsidiary, ceases to
be a Restricted Subsidiary shall be deemed to be the
incurrence of Indebtedness by such Restricted Subsidiary
that is not permitted by this clause (5);
(6) guarantees of any Restricted Subsidiary made in
accordance with the provisions of "--Limitation on
Issuances of Guarantees of Indebtedness";
(7) obligations of the Company or any Guarantor entered into
in the ordinary course of business
(a) pursuant to Interest Rate Agreements designed to
protect the Company or any Restricted Subsidiary
against fluctuations in interest rates in
respect of Indebtedness of the Company or any
Restricted Subsidiary as long as such
obligations do not exceed the payment
obligations of such Indebtedness then
outstanding,
(b) under any Currency Hedging Agreements, relating
to (1) Indebtedness of the Company or any
Restricted Subsidiary and/or (2) obligations to
purchase or sell assets or properties, in each
case, incurred in the ordinary course of
business of the Company or any Restricted
Subsidiary; provided, however, that such
Currency Hedging Agreements do not increase the
Indebtedness or other obligations of the Company
or any Restricted Subsidiary outstanding other
than as a result of fluctuations in foreign
currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder
or
(c) under any Commodity Price Protection Agreements
which do not increase the amount of Indebtedness
or other obligations of the Company or any
Restricted Subsidiary outstanding other than as
a result of fluctuations in commodity prices or
by reason of fees, indemnities and compensation
payable thereunder;
(8) Indebtedness of the Company or any Restricted Subsidiary
represented by Capital Lease Obligations or Purchase
Money Obligations or other Indebtedness incurred or
assumed in connection with the acquisition (including in
connection with an acquisition of a business by means of
stock purchase, merger or otherwise) or development of
real or personal, movable or immovable property in each
case incurred for the purpose of financing or refinancing
all or any part of the purchase price or cost of
construction or improvement of property used in the
business of the Company, in an aggregate principal amount
pursuant to this clause (8) not to exceed the greater of
(a) $100 million and (b) 10% of the Company's
Consolidated Tangible Net Worth; provided that the
principal amount of any Indebtedness permitted under this
clause (8) did not in each case at the time of incurrence
exceed the Fair Market Value, as determined by the
Company in good faith, of the acquired or constructed
asset or improvement so financed;
(9) Vehicle Inventory Indebtedness;
(10) obligations arising from agreements by the Company or a
Restricted Subsidiary to provide for indemnification,
customary purchase price closing adjustments, earn-outs
or other similar obligations, in each case, incurred in
connection with the acquisition or disposition of any
business or assets of a Restricted Subsidiary;
(11) Indebtedness evidenced by letters of credit or similar
obligations in the ordinary course of business to support
the Company's or any Restricted Subsidiary's insurance or
self- insurance obligations for workers' compensation and
other similar insurance coverages;
(12) Vehicle Receivables Indebtedness;
(13) Indebtedness of the Company or any Guarantor under one or
more Mortgage Facilities in an aggregate principal amount
not to exceed $500 million at any one time outstanding
less any amounts outstanding under the lease facility
that was established primarily to acquire and develop the
Company's former megastore properties;
(14) Indebtedness of the Company and its Restricted
Subsidiaries in addition to that described in clauses (1)
through (13) above, and any renewals, extensions,
substitutions, refinancings or replacements of such
Indebtedness, so long as the aggregate principal amount
of all such Indebtedness shall not exceed $100 million
outstanding at any one time in the aggregate;
(15) obligations in respect of letters of credit, performance
and surety bonds and completion guarantees provided by
the Company or any Restricted Subsidiary of the Company
in the ordinary course of business; and
(16) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a
"refinancing") of any Indebtedness incurred pursuant to
the ratio test in the first paragraph of this covenant or
described in clauses (2) and (3) of this definition of
"Permitted Indebtedness," including any successive
refinancings so long as the borrower under such
refinancing is the Company or, if not the Company, the
same as the borrower of the Indebtedness being refinanced
and the aggregate principal amount of Indebtedness
represented thereby (or if such Indebtedness provides for
an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration of the
maturity thereof, the original issue price of such
Indebtedness plus any accreted value attributable thereto
since the original issuance of such Indebtedness) is not
increased by such refinancing plus the lesser of (a) the
stated amount of any premium or other payment required to
be paid in connection with such a refinancing pursuant to
the terms of the Indebtedness being refinanced or (b) the
amount of premium or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case,
the amount of expenses of the Company incurred in
connection with such refinancing.
For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness permitted by this
covenant, the Company in its sole discretion shall classify or later
reclassify in whole or in part such item of Indebtedness and only be
required to include the amount of such Indebtedness as one of such types.
The accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Redeemable Stock in the form of additional shares of the same class of
Redeemable Stock will not be deemed to be an incurrence of Indebtedness.
Limitation on Restricted Payments. (a) The Company will not, and
will not cause or permit any Restricted Subsidiary to, directly or
indirectly:
(1) declare or pay any dividend on, or make any distribution
to holders of, any shares of the Company's Capital Stock
(other than dividends or distributions payable solely in
shares of its Qualified Capital Stock or in options,
warrants or other rights to acquire shares of such
Qualified Capital Stock);
(2) purchase, redeem, defease or otherwise acquire or retire
for value, directly or indirectly, the Company's Capital
Stock or any Capital Stock of any Affiliate of the
Company (other than Capital Stock of any Restricted
Subsidiary of the Company) or options, warrants or other
rights to acquire such Capital Stock;
(3) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior to
any scheduled principal payment, sinking fund payment or
maturity, any Subordinated Indebtedness;
(4) declare or pay any dividend or distribution on any
Capital Stock of any Restricted Subsidiary to any Person
(other than (a) to the Company or any of its Restricted
Subsidiaries or (b) dividends or distributions made by a
Restricted Subsidiary on a pro rata basis to all
stockholders of such Restricted Subsidiary); or
(5) make any Investment in any Person (other than any
Permitted Investments)
(any of the foregoing actions described in clauses (1) through (5) above,
other than any such action that is a Permitted Payment (as defined below),
collectively, "Restricted Payments") (the amount of any such Restricted
Payment, if other than cash, shall be the Fair Market Value of the assets
proposed to be transferred, as determined either by (a) the board of
directors of the Company and evidenced by a board resolution or (b) the
Board Designee and evidenced by a certificate (or committee resolution, as
the case may be), in each case whose determination shall be conclusive),
unless
(1) immediately before and immediately after giving effect to
such proposed Restricted Payment on a pro forma basis, no
Default or Event of Default shall have occurred and be
continuing;
(2) immediately before and immediately after giving effect to
such Restricted Payment on a pro forma basis, the Company
could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the provisions described
under "--Limitation on Indebtedness"; and
(3) after giving effect to the proposed Restricted Payment,
the aggregate amount of all such Restricted Payments
declared or made after the Issue Date and all Designation
Amounts does not exceed the sum of:
(A) 50% of the aggregate Consolidated Net Income of
the Company accrued on a cumulative basis during
the period beginning on the first day of the
Company's fiscal quarter in which the Issue Date
occurs and ending on the last day of the
Company's last fiscal quarter ending prior to
the date of the Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received after
the Issue Date by the Company either (1) as
capital contributions in the form of common
equity to the Company or (2) from the issuance
or sale (other than to any of its Subsidiaries)
of Qualified Capital Stock of the Company or any
options, warrants or rights to purchase such
Qualified Capital Stock of the Company (except,
in each case, to the extent such proceeds are
used to purchase, redeem or otherwise retire
Capital Stock or Subordinated Indebtedness as
set forth below in clause (2) or (3) of
paragraph (b) below) (and excluding the Net Cash
Proceeds from the issuance of Qualified Capital
Stock financed, directly or indirectly, using
funds borrowed from the Company or any
Subsidiary until and to the extent such
borrowing is repaid);
(C) the aggregate Net Cash Proceeds received after
the Issue Date by the Company (other than from
any of its Subsidiaries) upon the exercise of
any options, warrants or rights to purchase
Qualified Capital Stock of the Company (and
excluding the Net Cash Proceeds from the
exercise of any options, warrants or rights to
purchase Qualified Capital Stock financed,
directly or indirectly, using funds borrowed
from the Company or any Subsidiary until and to
the extent such borrowing is repaid);
(D) the aggregate Net Cash Proceeds received after
the Issue Date by the Company from the
conversion or exchange, if any, of debt
securities or Redeemable Capital Stock of the
Company or its Restricted Subsidiaries into or
for Qualified Capital Stock of the Company plus,
to the extent such debt securities or Redeemable
Capital Stock was issued after the Issue Date,
the aggregate of the Net Cash Proceeds from its
original issuance (and excluding the Net Cash
Proceeds from the conversion or exchange of debt
securities or Redeemable Capital Stock financed,
directly or indirectly, using funds borrowed
from the Company or any Subsidiary until and to
the extent such borrowing is repaid);
(E) (a) in the case of the disposition or repayment
of any Investment constituting a Restricted
Payment made after the Issue Date, an amount (to
the extent not included in Consolidated Net
Income) equal to 100% of the aggregate net
proceeds (including the fair market value of
assets other than cash) received by the Company
and its Restricted Subsidiaries, less the cost
of the disposition of such Investment and net of
taxes; and
(b) in the case of the designation of an
Unrestricted Subsidiary as a Restricted
Subsidiary (as long as the designation of such
Subsidiary as an Unrestricted Subsidiary was
deemed a Restricted Payment), the Fair Market
Value of the Company's interest in such
Subsidiary; provided that such amount shall not
in any case exceed the amount of the Restricted
Payment deemed made at the time the Subsidiary
was designated as an Unrestricted Subsidiary
plus any additional amounts contributed or
loaned to the Unrestricted Subsidiary which were
deemed Restricted Payments; and
(F) $100.0 million.
(b) Notwithstanding the foregoing, and in the case of clauses (2)
through (4) and (9) below, so long as no Default or Event of Default is
continuing or would arise therefrom, the foregoing provisions shall not
prohibit the following actions (each of clauses (1) through (9) being
referred to as a "Permitted Payment"):
(1) the payment of any dividend within 60 days after the date
of declaration thereof, if at such date of declaration
such payment was permitted by the provisions of paragraph
(a) of this covenant and such payment shall have been
deemed to have been paid on such date of declaration and
shall not have been deemed a "Permitted Payment" for
purposes of the calculation required by paragraph (a) of
this covenant;
(2) the repurchase, redemption or other acquisition or
retirement for value of any shares of any class of
Capital Stock of the Company in exchange for (including
any such exchange pursuant to the exercise of a
conversion right or privilege in connection with which
cash is paid in lieu of the issuance of fractional shares
or scrip), or out of the Net Cash Proceeds of (A) a
substantially concurrent issuance and sale for cash
(other than to a Subsidiary) of other shares of Qualified
Capital Stock of the Company or (B) an issuance and sale
for cash (other than to any Subsidiary), which issuance
and sale was done in contemplation of such repurchase,
redemption, acquisition or retirement of, other shares of
Qualified Capital Stock of the Company; provided that the
Net Cash Proceeds from the issuance of such shares of
Qualified Capital Stock are excluded from clause (3)(B)
of paragraph (a) of this covenant;
(3) the repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any
Subordinated Indebtedness in exchange for, or in an
amount not in excess of the Net Cash Proceeds of (A) a
substantially concurrent issuance and sale for cash
(other than to any Subsidiary of the Company) of any
Qualified Capital Stock of the Company or (B) an issuance
and sale for cash (other than to any Subsidiary of the
Company), which issuance and sale was done in
contemplation of such repurchase, redemption, defeasance,
retirement or acquisition, of any Qualified Capital Stock
of the Company, provided that the Net Cash Proceeds from
the issuance of such shares of Qualified Capital Stock
are excluded from clause (3)(B) of paragraph (a) of this
covenant;
(4) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of
principal of any Subordinated Indebtedness (a
"refinancing") through the substantially concurrent
issuance of new Subordinated Indebtedness of the Company
or a Guarantor, provided that any such new Subordinated
Indebtedness
(a) shall be in a principal amount that does not
exceed the principal amount so refinanced (or,
if such Subordinated Indebtedness provides for
an amount less than the principal amount thereof
to be due and payable upon a declaration of
acceleration thereof, then such lesser amount as
of the date of determination), plus the lesser
of (1) the stated amount of any premium or other
payment required to be paid in connection with
such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (2) the amount
of premium or other payment actually paid at
such time to refinance the Indebtedness, plus,
in either case, the amount of expenses of the
Company or such Guarantor incurred in connection
with such refinancing;
(b) has an Average Life to Stated Maturity greater
than the remaining Average Life to Stated
Maturity of the notes;
(c) has a Stated Maturity for its final scheduled
principal payment later than the Stated Maturity
for the final scheduled principal payment of the
notes;
(d) is expressly subordinated in right of payment to
the notes or the Guarantee of such Guarantor, as
the case may be, at least to the same extent as
the Subordinated Indebtedness to be refinanced;
(5) the purchase, redemption or other acquisition or
retirement for value of any class of Capital Stock of the
Company from employees, former employees, directors or
former directors of the Company or any Subsidiary
pursuant to the terms of the agreements pursuant to which
such Capital Stock was acquired in an amount not to
exceed $5.0 million in the aggregate in any calendar
year;
(6) the repurchase, redemption or other acquisition or
retirement for value of Capital Stock of the Company
issued pursuant to acquisitions by the Company to the
extent required by or needed to comply with the
requirements of any of the Manufacturers with which the
Company or a Restricted Subsidiary is a party to a
franchise agreement;
(7) the payment of the contingent purchase price of an
acquisition to the extent such payment would be deemed a
Restricted Payment;
(8) the payment of the deferred purchase price, including
holdbacks (and the receipt of any corresponding
consideration therefor), of an acquisition to the extent
such payment would have been permitted by the Indenture
at the time of such acquisition; and
(9) additional Restricted Payments not to exceed $5.0 million
in the aggregate.
Limitation on Transactions with Affiliates. The Company will not,
and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange
or lease of assets, property or services) with or for the benefit of any
Affiliate of the Company (other than the Company, a Wholly Owned Restricted
Subsidiary or a Restricted Subsidiary that is a Guarantor) unless such
transaction or series of related transactions is entered into in good faith
and in writing and
(1) such transaction or series of related transactions is on
terms or pursuant to arrangements that existed as of the
Issue Date;
(2) such transaction or series of related transactions is on
terms that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those
that would be available in a comparable transaction in
arm's-length dealings with an unrelated third party,
(3) with respect to any transaction or series of related
transactions not covered by clause (1) above involving
aggregate value in excess of $10 million, the Company
delivers an officers' certificate to the Trustee
certifying that such transaction or series of related
transactions complies with clause (2) above, and
(4) with respect to any transaction or series of related
transactions not covered by clause (1) above involving
aggregate value in excess of $20 million, either
(a) such transaction or series of related
transactions has been approved by a majority of
the Disinterested Directors of the board of
directors of the Company, or in the event there
is only one Disinterested Director, by such
Disinterested Director, or
(b) the Company delivers to the Trustee a written
opinion of an investment banking firm of
national standing or other recognized
independent expert with experience appraising
the terms and conditions of the type of
transaction or series of related transactions
for which an opinion is required stating that
the transaction or series of related
transactions is fair to the Company or such
Restricted Subsidiary from a financial point of
view;
provided, however, that this provision shall not apply to (i) employee
benefit arrangements with any officer or director of the Company, including
under any stock option or stock incentive plans, entered into in the
ordinary course of business; (ii) any transaction permitted as a Restricted
Payment or Permitted Payment or Permitted Investment pursuant to the
covenant described in "Limitation on Restricted Payments"; (iii) the
payment of customary fees to directors of the Company and its Restricted
Subsidiaries; (iv) any transaction with any officer or member of the board
of directors of the Company involving indemnification arrangements; and (v)
loans or advances to officers of the Company in the ordinary course of
business not to exceed $2.5 million in any calendar year.
Limitation on Liens. The Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, create, incur
or affirm any Lien of any kind upon any property or assets (including any
intercompany notes) of the Company or any Restricted Subsidiary owned on
the Issue Date or acquired thereafter, or assign or convey any right to
receive any income or profits therefrom, unless the notes (or a Guarantee
in the case of Liens of a Guarantor) are directly secured equally and
ratably with (or, in the case of Subordinated Indebtedness, prior or senior
thereto, with the same relative priority as the notes shall have with
respect to such Subordinated Indebtedness) the obligation or liability
secured by such Lien except for any Permitted Liens.
Notwithstanding the foregoing, any Lien securing the notes granted
pursuant to this covenant shall be automatically and unconditionally
released and discharged upon the release by the holders of the Pari Passu
Indebtedness or Subordinated Indebtedness described above of their Lien on
the property or assets of the Company or any Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under
such Indebtedness, at such time as the holders of all such Pari Passu
Indebtedness or Subordinated Indebtedness also release their Lien on the
property or assets of the Company or such Restricted Subsidiary, or upon
any sale, exchange or transfer to any Person not an Affiliate of the
Company of the property or assets secured by such Lien, or of all of the
Capital Stock held by the Company or any Restricted Subsidiary in, or all
or substantially all the assets of, any Restricted Subsidiary creating such
Lien.
Limitation on Sale of Assets. (a) The Company will not, and will
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, consummate an Asset Sale unless (1) at least 75% of the
consideration from such Asset Sale other than Asset Swaps is received in
cash or Cash Equivalents and (2) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the shares or assets subject to such Asset Sale (as
determined by either (a) the board of directors of the Company and
evidenced by a board resolution or (b) the Board Designee and evidenced by
a certificate (or committee resolution, as the case may be), in each case
whose determination shall be conclusive); provided that the amount of:
(i) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary in
connection with such transfer that are within 10 days
converted, sold or exchanged by the Company or such
Restricted Subsidiary into cash (to the extent of the
cash received);
(ii) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in the
Asset Sale; and
(iii) any payment, or assumption, of Indebtedness which is
related to the assets sold in the Asset Sale
shall be deemed "cash" for purposes of this provision.
With respect to an Asset Swap constituting as Asset Sale, the
Company or any Restricted Subsidiary shall be required to receive in cash
(as such term is deemed to be defined for purposes of this clause (a)) or
Cash Equivalents an amount equal to 75% of the proceeds of the Asset Sale
which do not consist of like-kind assets acquired with the Asset Swap.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale
are not required to be applied to repay permanently any Indebtedness under
the Credit Facilities, the Mortgage Facilities, the Vehicle Receivables
Indebtedness and/or the Vehicle Inventory Indebtedness then outstanding as
required by the terms thereof, or the Company determines not to apply such
Net Cash Proceeds to the permanent prepayment of such Indebtedness under
the Credit Facilities, the Mortgage Facilities, the Vehicle Receivables
Indebtedness and/or the Vehicle Inventory Indebtedness, or if no such
Indebtedness under the Credit Facilities, the Mortgage Facilities, the
Vehicle Receivables Indebtedness and/or the Vehicle Inventory Indebtedness
is then outstanding, then the Company or a Restricted Subsidiary may within
30 days before or 365 days after the Asset Sale invest the Net Cash
Proceeds in properties and other assets that (as determined by either (a)
the board of directors of the Company and evidenced by a board resolution
or (b) the Board Designee and evidenced by a certificate (or committee
resolution, as the case may be), in each case whose determination shall be
conclusive) replace the properties and assets that were the subject of the
Asset Sale or in properties and assets that will be used in a Permitted
Business of the Company or its Restricted Subsidiaries. The amount of such
Net Cash Proceeds not used or invested within 365 days of the Asset Sale as
set forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $25
million, the Company will apply the Excess Proceeds to the repayment of the
notes and any other Pari Passu Indebtedness outstanding with similar
provisions requiring the Company to make an offer to purchase such
Indebtedness with the proceeds from any Asset Sale as follows:
(A) the Company will make an offer to purchase (an "Offer")
from all holders of the notes in accordance with the
procedures set forth in the Indenture in the maximum
principal amount (expressed as a multiple of $1,000) of
notes that may be purchased out of an amount (the "Note
Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the
outstanding principal amount of the notes, and the
denominator of which is the sum of the outstanding
principal amount (or accreted value in the case of
Indebtedness issued with original issue discount) of the
notes and such Pari Passu Indebtedness (subject to
proration in the event such amount is less than the
aggregate Offered Price (as defined herein) of all notes
tendered) and
(B) to the extent required by such Pari Passu Indebtedness to
permanently reduce the principal amount of such Pari
Passu Indebtedness, the Company will make an offer to
purchase or otherwise repurchase or redeem Pari Passu
Indebtedness (a "Pari Passu Offer") in an amount (the
"Pari Passu Debt Amount") equal to the excess of the
Excess Proceeds over the Note Amount; provided that in no
event will the Company be required to make a Pari Passu
Offer in a Pari Passu Debt Amount exceeding the principal
amount of such Pari Passu Indebtedness plus the amount of
any premium required to be paid to repurchase such Pari
Passu Indebtedness. The offer price for the notes will be
payable in cash in an amount equal to 100% of the
principal amount of the notes plus accrued and unpaid
interest, if any, to the date (the "Offer Date") such
Offer is consummated (the "Offered Price"), in accordance
with the procedures set forth in the Indenture. To the
extent that the aggregate Offered Price of the notes
tendered pursuant to the Offer is less than the Note
Amount relating thereto or the aggregate amount of Pari
Passu Indebtedness that is purchased in a Pari Passu
Offer is less than the Pari Passu Debt Amount, the
Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of
notes and Pari Passu Indebtedness surrendered by holders
thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the notes to be purchased on a pro
rata basis. Upon the completion of the purchase of all
the notes tendered pursuant to an Offer and the
completion of a Pari Passu Offer, the amount of Excess
Proceeds, if any, shall be reset at zero.
(d) If the Company becomes obligated to make an Offer pursuant to
clause (c) above, the notes and the Pari Passu Indebtedness shall be
purchased by the Company, at the option of the holders thereof, in whole or
in part in integral multiples of $1,000, on a date that is not earlier than
30 days and not later than 60 days from the date the notice of the Offer is
given to holders, or such later date as may be necessary for the Company to
comply with the requirements under the Exchange Act.
(e) The Indenture will provide that the Company will comply with
the applicable securities laws or regulations in connection with an Offer.
Limitation on Issuances of Guarantees of Indebtedness. (a) The
Company will not cause or permit any Restricted Subsidiary (which is not a
Guarantor), directly or indirectly, to guarantee, assume or in any other
manner become liable with respect to any Indebtedness of the Company or any
Restricted Subsidiary unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to the Indenture providing
for a Guarantee of the notes on the same terms as the guarantee of such
Indebtedness except that (A) such guarantee need not be secured unless
required pursuant to "--Limitation on Liens" and (B) if such Indebtedness
is by its terms expressly subordinated to the notes, any such assumption,
guarantee or other liability of such Restricted Subsidiary with respect to
such Indebtedness shall be subordinated to such Restricted Subsidiary's
Guarantee of the notes at least to the same extent as such Indebtedness is
subordinated to the notes.
(b) Notwithstanding the foregoing, any Guarantee by a Restricted
Subsidiary of the notes shall provide by its terms that it (and all Liens
securing the same) shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all
or substantially all the assets of, such Restricted Subsidiary, which
transaction is in compliance with the terms of the Indenture and such
Restricted Subsidiary is released from all guarantees, if any, by it of
other Indebtedness of the Company or any Restricted Subsidiary, (ii) the
Designation of a Restricted Subsidiary as an Unrestricted Subsidiary in
compliance with the Indenture and (iii) with respect to any Guarantees
created after the Issue Date, the release by the holders of the
Indebtedness of the Company described in clause (a) above of their
guarantee by such Restricted Subsidiary (including any deemed release upon
payment in full of all obligations under such Indebtedness), at such time
as (A) no other Indebtedness of the Company has been guaranteed by such
Restricted Subsidiary or (B) the holders of all such other Indebtedness
which is guaranteed by such Restricted Subsidiary also release their
guarantee by such Restricted Subsidiary (including any deemed release upon
payment in full of all obligations under such Indebtedness).
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to
(1) pay dividends or make any other distribution on its
Capital Stock or any other interest or participation in
or measured by its profits,
(2) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary,
(3) make any Investment in the Company or any Wholly Owned
Restricted Subsidiary, or
(4) transfer any of its properties or assets to the Company
or any Wholly Owned Restricted Subsidiary.
However, this covenant will not prohibit any encumbrance or
restriction (1) pursuant to an agreement in effect on the Issue Date; (2)
with respect to a Restricted Subsidiary that is not a Restricted Subsidiary
of the Company on the Issue Date, in existence at the time such Person
becomes a Restricted Subsidiary of the Company and not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary, provided that such encumbrances and restrictions are not
applicable to the Company or any Restricted Subsidiary or the properties or
assets of the Company or any Restricted Subsidiary other than such
Subsidiary(ies) which is (are) becoming a Restricted Subsidiary(ies); (3)
contained in any Acquired Indebtedness or other agreement of an entity or
related to assets acquired by or merged into or consolidated with the
Company or any Restricted Subsidiary so long as such encumbrance or
restriction was not entered into in contemplation of the acquisition,
merger or consolidation transaction; (4) customary provisions contained in
an agreement that has been entered into for the sale or other disposition
of all or substantially all of the Capital Stock or assets of a Restricted
Subsidiary; provided, however that the restrictions are applicable only to
such Restricted Subsidiary or assets; (5) any encumbrance or restriction
existing under or by reason of applicable law, including any applicable
laws governing Restricted Subsidiaries of the Company which underwrite
and/or reinsure insurance products; (6) customary provisions restricting
subletting or assignment of any lease governing any leasehold interest of
any Restricted Subsidiary; (7) covenants in franchise agreements and/or
framework agreements with Manufacturers customary for franchise agreements
and/or framework agreements in the automobile retailing industry; (8) any
encumbrances or restrictions in security agreements securing Indebtedness
(other than Subordinated Indebtedness) of a Restricted Subsidiary permitted
to be incurred under the Indenture (including any Vehicle Inventory
Indebtedness) (to the extent that such Liens are otherwise incurred in
accordance with "--Limitation on Liens") that restrict the transfer of
property subject to such agreements, provided that any such encumbrance or
restriction is released to the extent the underlying Lien is released or
the related Indebtedness is repaid; and (9) under any agreement that
extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (1) through (8), or
in this clause (9), provided that the terms and conditions of any such
encumbrances or restrictions are no more restrictive in any material
respect than those under or pursuant to the agreement evidencing the
Indebtedness so extended, renewed, refinanced or replaced.
Limitation on Unrestricted Subsidiaries. The Company may designate
after the Issue Date any Subsidiary as an "Unrestricted Subsidiary" under
the Indenture (a "Designation") only if:
(a) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(b) the Company would be permitted to make an Investment
(other than a Permitted Investment) at the time of
Designation (assuming the effectiveness of such
Designation) pursuant to the first paragraph of
"--Limitation on Restricted Payments" above in an amount
(the "Designation Amount") equal to the greater of (1)
the net book value of the Company's interest in such
Subsidiary calculated in accordance with GAAP or (2) the
Fair Market Value of the Company's interest in such
Subsidiary as determined in good faith by either (a) the
board of directors of the Company and evidenced by a
board resolution or (b) the Board Designee and evidenced
by a certificate (or committee resolution, as the case
may be), in each case whose determination shall be
conclusive;
(c) the Company would be permitted under the Indenture to
incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the covenant
described under "--Limitation on Indebtedness" at the
time of such Designation (assuming the effectiveness of
such Designation);
(d) such Unrestricted Subsidiary does not own any Capital
Stock in any Restricted Subsidiary of the Company which
is not simultaneously being designated an Unrestricted
Subsidiary;
(e) such Unrestricted Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than
Unrestricted Subsidiary Indebtedness, provided that an
Unrestricted Subsidiary may provide a Guarantee for the
notes; and
(f) such Unrestricted Subsidiary is not a party to any
agreement, contract, arrangement or understanding at such
time with the Company or any Restricted Subsidiary unless
the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates
of the Company or, in the event such condition is not
satisfied, the value of such agreement, contract,
arrangement or understanding to such Unrestricted
Subsidiary shall be deemed a Restricted Payment.
In the event of any such Designation, the Company shall be deemed
to have made an Investment constituting a Restricted Payment pursuant to
the covenant "Limitation on Restricted Payments" for all purposes of the
Indenture in the Designation Amount.
The Indenture will also provide that the Company shall not and
shall not cause or permit any Restricted Subsidiary to at any time
(a) provide credit support for, guarantee or subject any of
its property or assets (other than the Capital Stock of
any Unrestricted Subsidiary) to the satisfaction of, any
Indebtedness of any Unrestricted Subsidiary (including
any undertaking, agreement or instrument evidencing such
Indebtedness) (other than Permitted Investments in
Unrestricted Subsidiaries) or
(b) be directly or indirectly liable for any Indebtedness of
any Unrestricted Subsidiary. For purposes of the
foregoing, the Designation of a Subsidiary of the Company
as an Unrestricted Subsidiary shall be deemed to be the
Designation of all of the Subsidiaries of such Subsidiary
as Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(a) no Default shall have occurred and be continuing
at the time of and after giving effect to such
Revocation;
(b) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following
such Revocation would, if incurred at such time,
have been permitted to be incurred for all
purposes of the Indenture; and
(c) unless such redesignated Subsidiary shall not
have any Indebtedness outstanding (other than
Indebtedness that would be Permitted
Indebtedness), immediately after giving effect
to such proposed Revocation, and after giving
pro forma effect to the incurrence of any such
Indebtedness of such redesignated Subsidiary as
if such Indebtedness was incurred on the date of
the Revocation, the Company could incur $1.00 of
additional Indebtedness (other than Permitted
Indebtedness) pursuant to the covenant described
under "--Limitation on Indebtedness."
All Designations and Revocations must be evidenced by a resolution
of the board of directors of the Company delivered to the Trustee
certifying compliance with the foregoing provisions.
Provision of Financial Statements. Whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, the Company will, to
the extent permitted under the Exchange Act, file with the Commission the
annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section
13(a) or 15(d) if the Company were so subject, such documents to be filed
with the Commission on or prior to the date (the "Required Filing Date") by
which the Company would have been required so to file such documents if the
Company were so subject.
The Company will also in any event (a) within 15 days of each
Required Filing Date file with the Trustee copies of the annual reports,
quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act if the Company were subject to either of such Sections and
(b) if filing such documents by the Company with the Commission is not
permitted under the Exchange Act, promptly upon written request and payment
of the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective holder at the Company's cost.
If any Guarantor's financial statements would be required to be
included in the financial statements or footnotes filed or delivered
pursuant to the Indenture if the Company were subject to Section 13(a) or
15(d) of the Exchange Act, the Company shall include such Guarantor's
financial statements (or include such financial statements in a footnote)
in any filing or delivery pursuant to the Indenture.
Additional Covenants. The Indenture also contains covenants with
respect to the following matters: (1) payment of principal, premium and
interest; (2) maintenance of an office or agency in The City of New York;
(3) arrangements regarding the handling of money held in trust; (4)
maintenance of corporate existence; (5) payment of taxes and other claims;
(6) maintenance of properties; and (7) maintenance of insurance.
Consolidation, Merger, Sale of Assets
The Company will not, in a single transaction or through a series
of related transactions, consolidate with or merge with or into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of all
or substantially all of its properties and assets to any Person or "group"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) of
Persons, or permit any of its Restricted Subsidiaries to enter into any
such transaction or series of transactions, if such transaction or series
of transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of
the properties and assets of the Company and its Restricted Subsidiaries on
a Consolidated basis to any other Person or "group" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) of Persons, unless at the
time and after giving effect thereto
(1) either (a) the Company will be the continuing corporation
(in the case of a consolidation or merger involving the
Company) or (b) the Person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition all or
substantially all of the properties and assets of the
Company and its Restricted Subsidiaries on a Consolidated
basis (the "Surviving Entity") will be duly organized and
validly existing under the laws of the United States of
America, any state thereof or the District of Columbia
and such Person expressly assumes, by a supplemental
indenture, in a form reasonably satisfactory to the
Trustee, all the obligations of the Company under the
notes and the Indenture and the Registration Rights
Agreement, as the case may be, and the notes and the
Indenture and the Registration Rights Agreement will
remain in full force and effect as so supplemented (and
any Guarantees will be confirmed as applying to such
Surviving Entity's obligations);
(2) immediately after giving effect to such transaction on a
pro forma basis (and treating any Indebtedness not
previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of
the Company or any of its Restricted Subsidiaries as a
result of such transaction as having been incurred at the
time of such transaction), no Default or Event of Default
will have occurred and be continuing;
(3) immediately after giving effect to such transaction on a
pro forma basis, the Company (or the Surviving Entity if
the Company is not the continuing obligor under the
Indenture) could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the provisions
of "--Certain Covenants--Limitation on Indebtedness";
(4) at the time of the transaction each Guarantor, if any,
unless it is the other party to the transactions
described above, will have by supplemental indenture
confirmed that its Guarantee shall apply to such Person's
obligations under the Indenture and the notes; and
(5) at the time of the transaction the Company or the
Surviving Entity will have delivered, or caused to be
delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an officers'
certificate and an opinion of counsel, each to the effect
that such consolidation, merger, transfer, sale,
assignment, conveyance, transfer, lease or other
transaction and the supplemental indenture in respect
thereof comply with the Indenture and that all conditions
precedent therein provided for relating to such
transaction have been complied with.
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in the immediately preceding
paragraph in which the Company is not the continuing corporation, the
successor Person formed or remaining or to which such transfer is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company and the Company will be discharged (other than in a
transaction that results in the transfer of assets constituting or
accounting for less than 95% of the Consolidated assets (as of the last
balance sheet date available to the Company) of the Company or the
Consolidated revenue of the Company (as of the last 12-month period for
which financial statements are available)) from all obligations and
covenants under the Indenture and the notes and the Registration Rights
Agreement.
Events of Default
An Event of Default will occur under the Indenture if:
(1) there shall be a default in the payment of any interest
on any note when it becomes due and payable, and such
default shall continue for a period of 30 days;
(2) there shall be a default in the payment of the principal
of (or premium, if any, on) any note at its Maturity
(upon acceleration, optional or mandatory redemption, if
any, required repurchase or otherwise);
(3) (a) there shall be a default in the performance, or
breach, of any covenant or agreement of the Company or
any Guarantor under the Indenture or any Guarantee (other
than a default in the performance, or breach, of a
covenant or agreement which is specifically dealt with in
clause (1), (2) or in clause (b) or (c) of this clause
(3)) and such default or breach shall continue for a
period of 30 days after written notice has been given, by
certified mail, (1) to the Company by the Trustee or (2)
to the Company and the Trustee by the holders of at least
25% in aggregate principal amount of the outstanding
notes;
(b) there shall be a default in the performance or breach
of the provisions described in " --Consolidation, Merger,
Sale of Assets"; or (c) the Company shall have failed to
make or consummate a Change of Control Offer in
accordance with the provisions of "Purchase of Notes Upon
a Change of Control";
(4) (a) any default in the payment of the principal, premium,
if any, or interest on any Indebtedness shall have
occurred under any of the agreements, indentures or
instruments under which the Company or any Restricted
Subsidiary then has outstanding Indebtedness in excess of
$25 million when the same shall become due and payable in
full and such default shall have continued after any
applicable grace period and shall not have been cured or
waived and, if not already matured at its final maturity
in accordance with its terms, the holder of such
Indebtedness shall have the right to accelerate such
Indebtedness or (b) an event of default as defined in any
of the agreements, indentures or instruments described in
clause (a) of this clause (4) shall have occurred and the
Indebtedness thereunder, if not already matured at its
final maturity in accordance with its terms, shall have
been accelerated;
(5) any Guarantee from any Guarantor that is a Significant
Restricted Subsidiary shall for any reason cease to be,
or shall for any reason be asserted in writing by such
Guarantor or the Company not to be, in full force and
effect and enforceable in accordance with its terms,
except to the extent contemplated by the Indenture and
any such Guarantee;
(6) one or more judgments, orders or decrees of any court or
regulatory or administrative agency for the payment of
money in excess of $25 million, either individually or in
the aggregate (exclusive of any portion of any such
payment covered by insurance), shall be rendered against
the Company or any Restricted Subsidiary or any of their
respective properties and shall not be discharged and
there shall have been a period of 60 consecutive days
during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be
in effect;
(7) any holder or holders of at least $25 million in
aggregate principal amount of Indebtedness of the Company
or any Restricted Subsidiary after a default under such
Indebtedness shall notify the Trustee of the intended
sale or disposition of any assets of the Company or any
Restricted Subsidiary that have been pledged to or for
the benefit of such holder or holders to secure such
Indebtedness or shall commence proceedings, or take any
action (including by way of set-off), to retain in
satisfaction of such Indebtedness or to collect on,
seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company or any Restricted
Subsidiary (including funds on deposit or held pursuant
to lock-box and other similar arrangements);
(8) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in
respect of the Company or any Significant Restricted
Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or (b) a decree or order
adjudging the Company or any Significant Restricted
Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of
or in respect of the Company or any Significant
Restricted Subsidiary under any applicable federal or
state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or any Significant
Restricted Subsidiary or of any substantial part of their
respective properties, or ordering the winding up or
liquidation of their affairs, and any such decree or
order for relief shall continue to be in effect, or any
such other decree or order shall be unstayed and in
effect, for a period of 60 consecutive days; or
(9) (a) the Company or any Significant Restricted
Subsidiary commences a voluntary case or
proceeding under any applicable Bankruptcy Law
or any other case or proceeding to be
adjudicated bankrupt or insolvent,
(b) the Company or any Significant Restricted
Subsidiary consents to the entry of a decree or
order for relief in respect of the Company or
such Significant Restricted Subsidiary in an
involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement
of any bankruptcy or insolvency case or
proceeding against it,
(c) the Company or any Significant Restricted
Subsidiary files a petition or answer or consent
seeking reorganization or relief under any
applicable federal or state law,
(d) the Company or any Significant Restricted
Subsidiary (1) consents to the filing of such
petition or the appointment of, or taking
possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or
similar official of the Company or such
Significant Restricted Subsidiary or of any
substantial part of their respective properties,
(2) makes an assignment for the benefit of
creditors or (3) admits in writing its inability
to pay its debts generally as they become due,
or
(e) the Company or any Significant Restricted
Subsidiary takes any corporate action in
furtherance of any such actions in this
paragraph (9).
If an Event of Default (other than as specified in clauses (8) and
(9) of the prior paragraph) shall occur and be continuing with respect to
the Indenture, the Trustee or the holders of not less than 25% in aggregate
principal amount of the notes then outstanding may, and the Trustee at the
request of such holders shall, declare all unpaid principal of, premium, if
any, and accrued interest on all notes to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by the
holders of the notes) and upon any such declaration, such principal,
premium, if any, and interest shall become due and payable immediately. If
an Event of Default specified in clause (8) or (9) of the prior paragraph
occurs and is continuing, then all the notes shall ipso facto become and be
due and payable immediately in an amount equal to the principal amount of
the notes, together with accrued and unpaid interest, if any, to the date
the notes become due and payable, without any declaration or other act on
the part of the Trustee or any holder. Thereupon, the Trustee may, at its
discretion, proceed to protect and enforce the rights of the holders of
notes by appropriate judicial proceedings.
After a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
holders of a majority in aggregate principal amount of notes outstanding by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (1) all sums paid or advanced by the
Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, (2) all overdue interest
on all notes then outstanding, (3) the principal of, and
premium, if any, on any notes then outstanding which have
become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by
the notes and (4) to the extent that payment of such
interest is lawful, interest upon overdue interest at the
rate borne by the notes;
(b) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction; and
(c) all Events of Default, other than the non-payment of
principal of, premium, if any, and interest on the notes
which have become due solely by such declaration of
acceleration, have been cured or waived as provided in
the Indenture.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
The holders of not less than a majority in aggregate principal
amount of the notes outstanding may on behalf of the holders of all
outstanding notes waive any past default under the Indenture and its
consequences, except a default (1) in the payment of the principal of,
premium, if any, or interest on any note (which may only be waived with the
consent of each holder of notes affected) or (2) in respect of a covenant
or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each note affected by such
modification or amendment.
No holder of any of the notes has any right to institute any
proceedings with respect to the Indenture or any remedy thereunder, unless
the holders of at least 25% in aggregate principal amount of the
outstanding notes have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee under the
notes and the Indenture, the Trustee has failed to institute such
proceeding within 15 days after receipt of such notice and the Trustee,
within such 15-day period, has not received directions inconsistent with
such written request by holders of a majority in aggregate principal amount
of the outstanding notes. Such limitations do not, however, apply to a suit
instituted by a holder of a note for the enforcement of the payment of the
principal of, premium, if any, or interest on such note on or after the
respective due dates expressed in such note.
The Company is required to notify the Trustee within five business
days of the occurrence of any Default. The Company is required to deliver
to the Trustee, on or before a date not more than 60 days after the end of
each fiscal quarter and not more than 120 days after the end of each fiscal
year, a written statement as to compliance with the Indenture, including
whether or not any Default has occurred. The Trustee is under no obligation
to exercise any of the rights or powers vested in it by the Indenture at
the request or direction of any of the holders of the notes unless such
holders offer to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
thereby.
The Trust Indenture Act contains limitations on the rights of the
Trustee, should it become a creditor of the Company or any Guarantor, if
any, to obtain payment of claims in certain cases or to realize on certain
property received by it in respect of any such claims, as security or
otherwise. The Trustee is permitted to engage in other transactions, but if
it acquires any conflicting interest it must eliminate such conflict upon
the occurrence of an Event of Default or else resign.
Defeasance or Covenant Defeasance of Indenture
The Company may, at its option and at any time, elect to have the
obligations of the Company, any Guarantor and any other obligor upon the
notes discharged with respect to the outstanding notes ("defeasance"). Such
defeasance means that the Company, any such Guarantor and any other obligor
under the Indenture shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding notes, except for
(1) the rights of holders of such outstanding notes to
receive payments in respect of the principal of, premium,
if any, and interest on such notes when such payments are
due,
(2) the Company's obligations with respect to the notes
concerning issuing temporary notes, registration of
notes, mutilated, destroyed, lost or stolen notes, and
the maintenance of an office or agency for payment and
money for security payments held in trust,
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and
(4) the defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect
to have the obligations of the Company and any Guarantor released with
respect to certain covenants that are described in the Indenture ("covenant
defeasance") and thereafter any omission to comply with such obligations
shall not constitute a Default or an Event of Default with respect to the
notes. In the event covenant defeasance occurs, certain events (not
including non-payment, bankruptcy and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with
respect to the notes.
In order to exercise either defeasance or covenant defeasance,
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the holders of the notes cash
in United States dollars, U.S. Government Obligations (as
defined in the Indenture), or a combination thereof, in
such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public
accountants or a nationally recognized investment banking
firm, to pay and discharge the principal of, premium, if
any, and interest on the outstanding notes on the Stated
Maturity;
(b) in the case of defeasance, the Company shall have
delivered to the Trustee an opinion of independent
counsel in the United States stating that (A) the Company
has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of
independent counsel in the United States shall confirm
that, the holders of the outstanding notes will not
recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the
case if such defeasance had not occurred;
(c) in the case of covenant defeasance, the Company shall
have delivered to the Trustee an opinion of independent
counsel in the United States to the effect that the
holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same
manner and at the same times as would have been the case
if such covenant defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing either (a) on the date of such deposit (other
than a Default or Event of Default solely resulting from
the borrowing of funds to be applied to such deposit); or
(b) insofar as clauses (8) and (9) under the first
paragraph under "--Events of Default" are concerned, at
any time during the period ending on the 91st day after
the date of deposit;
(e) such defeasance or covenant defeasance shall not cause
the Trustee for the notes to have a conflicting interest
as defined in the Indenture and for purposes of the Trust
Indenture Act with respect to any securities of the
Company or any Guarantor;
(f) such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a Default
under, the Indenture or any other material agreement or
instrument (other than, to the extent set forth in clause
(d) above, the Indenture) to which the Company or any
Restricted Subsidiary is a party or by which it is bound;
(g) such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an
investment company within the meaning of the Investment
Company Act of 1940, as amended, unless such trust shall
be registered under such Act or exempt from registration
thereunder;
(h) the Company will have delivered to the Trustee an opinion
of independent counsel in the United States to the effect
that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(i) the Company shall have delivered to the Trustee an
officers' certificate stating that the deposit was not
made by the Company with the intent of preferring the
holders of the notes or any Guarantee over the other
creditors of the Company or any Guarantor with the intent
of defeating, hindering, delaying or defrauding creditors
of the Company, any Guarantor or others; and
(j) the Company will have delivered to the Trustee an
officers' certificate and an opinion of independent
counsel, each stating that all conditions precedent
provided for relating to either the defeasance or the
covenant defeasance, as the case may be, have been
complied with.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or
exchange of the notes as expressly provided for in the Indenture) as to all
outstanding notes under the Indenture when
(a) either
(1) all such notes theretofore
authenticated and delivered (except
lost, stolen or destroyed notes which
have been replaced or paid or notes
whose payment has been deposited in
trust or segregated and held in trust
by the Company and thereafter repaid to
the Company or discharged from such
trust as provided for in the Indenture)
have been delivered to the Trustee for
cancellation or
(2) all notes not theretofore delivered to
the Trustee for cancellation (a) have
become due and payable, (b) will become
due and payable at their Stated
Maturity within one year, or (c) are to
be called for redemption within one
year under arrangements satisfactory to
the Trustee for the giving of notice of
redemption by the Trustee in the name,
and at the expense, of the Company;
(b) the Company or any Guarantor has irrevocably
deposited or caused to be deposited with the
Trustee as trust funds in trust an amount in
United States dollars sufficient to pay and
discharge the entire indebtedness on the notes
not theretofore delivered to the Trustee for
cancellation, including principal of, premium,
if any, and accrued interest at such Maturity,
Stated Maturity or redemption date;
(c) the Company or any Guarantor has paid or caused
to be paid all other sums payable under the
Indenture by the Company and any Guarantor; and
(d) the Company has delivered to the Trustee an
officers' certificate and an opinion of
independent counsel each stating that (1) all
conditions precedent under the Indenture
relating to the satisfaction and discharge of
such Indenture have been complied with and (2)
such satisfaction and discharge will not result
in a breach or violation of, or constitute a
default under, the Indenture or any other
material agreement or instrument to which the
Company, any Guarantor or any Subsidiary is a
party or by which the Company, any Guarantor or
any Subsidiary is bound.
Modifications and Amendments
Modifications and amendments of the Indenture may be made by the
Company, each Guarantor, if any, and the Trustee with the consent of the
holders of at least a majority in aggregate principal amount of the notes
then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for
notes); provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding note affected
thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, or change to an earlier date
any redemption date of, or waive a default in the payment
of the principal of, premium, if any, or interest on, any
such note or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in
which the principal of any such note or any premium or
the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment
after the Stated Maturity thereof (or, in the case of
redemption, on or after the redemption date);
(2) amend, change or modify the obligation of the Company to
make and consummate an Offer with respect to any Asset
Sale or Asset Sales in accordance with "Certain
Covenants--Limitation on Sale of Assets" or the
obligation of the Company to make and consummate a Change
of Control Offer in the event of a Change of Control in
accordance with "Purchase of Notes Upon a Change of
Control," including, in each case, amending, changing or
modifying any definitions related thereto;
(3) reduce the percentage in principal amount of such
outstanding notes, the consent of whose holders is
required for any such supplemental indenture, or the
consent of whose holders is required for any waiver or
compliance with certain provisions of the Indenture;
(4) modify any of the provisions relating to supplemental
indentures requiring the consent of holders or relating
to the waiver of past defaults or relating to the waiver
of certain covenants, except to increase the percentage
of such outstanding notes required for such actions or to
provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the
holder of each such note affected thereby;
(5) except as otherwise permitted under "Consolidation,
Merger, Sale of Assets," consent to the assignment or
transfer by the Company or any Guarantor of any of its
rights and obligations under the Indenture; or
(6) amend or modify any of the provisions of the Indenture in
any manner which subordinates the notes issued thereunder
in right of payment to any other Indebtedness of the
Company or which subordinates any Guarantee in right of
payment to any other Indebtedness of the Guarantor
issuing any such Guarantee
Notwithstanding the foregoing, without the consent of any holders
of the notes, the Company, any Guarantor, any other obligor under the notes
and the Trustee may modify or amend the Indenture:
(1) to evidence the succession of another Person to the
Company or a Guarantor, and the assumption by any such
successor of the covenants of the Company or such
Guarantor in the Indenture and in the notes and in any
Guarantee in accordance with "--Consolidation, Merger,
Sale of Assets";
(2) to add to the covenants of the Company, any Guarantor or
any other obligor upon the notes for the benefit of the
holders of the notes or to surrender any right or power
conferred upon the Company or any Guarantor or any other
obligor upon the notes, as applicable, in the Indenture,
in the notes or in any Guarantee;
(3) to cure any ambiguity, or to correct or supplement any
provision in the Indenture, the notes or any Guarantee
which may be defective or inconsistent with any other
provision in the Indenture, the notes or any Guarantee or
make any other provisions with respect to matters or
questions arising under the Indenture, the notes or any
Guarantee; provided that, in each case, such provisions
shall not adversely affect the interest of the holders of
the notes;
(4) to comply with the requirements of the Commission in
order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act;
(5) to add a Guarantor under the Indenture;
(6) to evidence and provide the acceptance of the appointment
of a successor Trustee under the Indenture; or
(7) to mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the
holders of the notes as additional security for the
payment and performance of the Company's and any
Guarantor's obligations under the Indenture, in any
property, or assets, including any of which are required
to be mortgaged, pledged or hypothecated, or in which a
security interest is required to be granted to the
Trustee pursuant to the Indenture or otherwise.
The holders of a majority in aggregate principal amount of the
notes outstanding may waive compliance with certain restrictive covenants
and provisions of the Indenture.
Fall Away Event
In the event of the occurrence of a Fall Away Event and no Default
or Event of Default exists, the covenants and provisions described above
under "Purchase of Notes Upon a Change of Control Event," "Certain
Covenants--Limitation on Indebtedness," "--Limitation on Restricted
Payments," "--Limitation on Transactions with Affiliates," " --Limitation
on Sale of Assets," "--Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries," "--Limitation on Unrestricted
Subsidiaries" and the requirement set forth in clause (3) of
"Consolidation, Merger, Sale of Assets" shall each no longer be in effect.
Notwithstanding the foregoing, if the notes cease to have an Investment
Grade rating from either Moody's or Standard & Poor's, then the foregoing
provisions of the Indenture shall be reinstituted as of and from the date
of such rating decline.
Governing Law
The Indenture, the notes and the Guarantees are governed by, and
construed in accordance with, the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in
respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply
to the Commission for permission to continue as Trustee with such conflict
or resign as Trustee.
The holders of a majority in principal amount of the then
outstanding notes will have the right to direct the time, method and place
of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that in case
an Event of Default occurs (which has not been cured), the Trustee will be
required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions,
the Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request of any holder of notes unless
such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Certain Definitions
"Acquired Indebtedness" means Indebtedness of a Person (1)
existing at the time such Person becomes a Restricted Subsidiary or (2)
assumed in connection with the acquisition of assets from such Person, in
each case, other than Indebtedness incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, as the case may be, except for Indebtedness of a Person or any
of its Subsidiaries that is repaid substantially concurrently or in
connection with the time such Person becomes a Restricted Subsidiary of the
Company or substantially concurrently or in connection with the time of the
acquisition of assets from such Person. Acquired Indebtedness shall be
deemed to be incurred on the date of the related acquisition of assets from
any Person or the date the acquired Person becomes a Restricted Subsidiary,
as the case may be.
"Affiliate" means, with respect to any specified Person: (1) any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (2) any other
Person that owns, directly or indirectly, 10% or more of any class or
series of such specified Person's (or any of such Person's direct or
indirect parent's) Capital Stock or any officer or director of any such
other Person or, with respect to any natural Person, any person having a
relationship with such Person by blood, marriage or adoption not more
remote than first cousin; or (3) any other Person 10% or more of the Voting
Stock of which is beneficially owned or held directly or indirectly by such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer (other
than as security), lease (other than operating leases entered into in the
ordinary course of business) or other disposition (including, without
limitation, by way of merger, consolidation or sale and leaseback
transaction) (collectively, a "transfer"), directly or indirectly, in one
or a series of related transactions, of:
(1) any Capital Stock of any Restricted Subsidiary (including
by way of merger or consolidation);
(2) all or substantially all of the properties and assets of
any division or line of business of the Company or any
Restricted Subsidiary; or
(3) any other properties or assets of the Company or any
Restricted Subsidiary other than in the ordinary course
of business.
For the purposes of this definition, the term "Asset Sale" shall
not include any transfer of properties and/or assets
(A) that is governed by the provisions described under
"Consolidation, Merger, Sale of Assets,"
(B) that is by the Company to any Wholly Owned Restricted
Subsidiary, or by any Restricted Subsidiary to the
Company or any Wholly Owned Restricted Subsidiary in
accordance with the terms of the Indenture,
(C) that would be within the definition of a "Restricted
Payment" under the "Limitation on Restricted Payments"
covenant and would be permitted to be made as a
Restricted Payment (and shall be deemed a Restricted
Payment) under such covenant,
(D) that, in the reasonable determination of the Company,
consist of obsolete or worn-out property or property no
longer used in the Company's or any Restricted
Subsidiary's business in the ordinary course of business,
(E) that is a sale of receivables pursuant to documentation
relating to Vehicle Receivables Indebtedness incurred in
the ordinary course of business,
(F) as a result of governmental requirements or franchise
and/or framework agreements, which properties and/or
assets were acquired by the Company after the Issue Date
as part of a larger acquisition of properties and/or
assets that was permitted by the Indenture, or
(G) the Fair Market Value of which in the aggregate does not
exceed $10 million in any transaction or series of
related transactions.
"Asset Swap" means the exchange by the Company or a Restricted
Subsidiary of a portion of its property, business or assets, in the
ordinary course of business, for property, businesses or assets which, or
Capital Stock of a Person all or substantially all of whose assets, are a
type used in a Permitted Business, or a combination of any property,
business or assets or Capital Stock of such a Person and cash or Cash
Equivalents.
"Automobile Retailing Activities" means new and used vehicle
retailing, wholesaling, leasing, financing, servicing and related
activities.
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (1) the sum of the products of (a) the number of years from the
date of determination to the date or dates of each successive scheduled
principal payment of such Indebtedness multiplied by (b) the amount of each
such principal payment by (2) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, or any similar United States federal or state law or foreign law
relating to bankruptcy, insolvency, receivership, winding up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or
change in any such law.
"Board Designee" shall mean a designee of the board of directors
of the Company (including a committee of the board of directors) who shall
be granted authority by the board of directors pursuant to a board
resolution to make certain determinations with respect to the Indenture as
specified herein.
"Borrowing Base" means, as of any date on which Indebtedness is
proposed to be incurred, the sum of (x) 65% of the book value of the
accounts receivable of the Company and its Restricted Subsidiaries as
reflected on their latest available balance sheet and (y) 35% of the book
value of the property, plant and equipment of the Company and its
Restricted Subsidiaries as of such balance sheet date, in each case
calculated on a consolidated basis and in accordance with GAAP, and which
are not, as of such balance sheet date and as of the date of such proposed
incurrence of Indebtedness, subject to any Liens which secure Indebtedness.
"Capital Lease Obligation" of any Person means all monetary
obligations of such Person and its Restricted Subsidiaries on a
Consolidated basis under any capital lease of (or other agreement conveying
the right to use) real or personal property which, in accordance with GAAP,
is required to be recorded as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations, rights in or other equivalents (however designated) of such
Person's capital stock, other equity interests whether now outstanding or
issued after the date of the Indenture, partnership interests (whether
general or limited), limited liability company interests, any other
interest or participation that confers on a Person that right to receive a
share of the profits and losses of, or distributions of assets of, the
issuing Person, including any Preferred Stock, and any rights (other than
debt securities convertible into Capital Stock), warrants or options
exchangeable for or convertible into such Capital Stock.
"Cash Equivalents" means
(1) any evidence of Indebtedness issued or directly and fully
guaranteed or insured by the United States or any agency
or instrumentality thereof,
(2) deposits, certificates of deposit or acceptances of any
financial institution that is a member of the Federal
Reserve System and whose senior unsecured debt is rated
at least "A-1" by Standard & Poor's or at least "P-1" by
Moody's,
(3) commercial paper with a maturity of 365 days or less
issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and existing under
the laws of the United States of America, any state
thereof or the District of Columbia and rated at least
"A-1" by Standard & Poor's and at least "P-1" by Moody's,
(4) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or
unconditionally guaranteed by the United States or issued
by any agency thereof and backed by the full faith and
credit of the United States maturing within 365 days from
the date of acquisition, and
(5) money market funds which invest substantially all of
their assets in securities described in the preceding
clauses (1) through (4).
"Change of Control" means the occurrence of any of the following
events:
(1) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d- 5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all
shares that such Person has the right to acquire, whether
such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 50% or more
of the total outstanding Voting Stock of the Company;
(2) during any period of two consecutive years, individuals
who at the beginning of such period constituted the board
of directors of the Company (together with any new
directors whose election to such board or whose
nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the
directors then still in office who were either directors
at the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of such board of
directors then in office;
(3) the Company consolidates with or merges with or into any
Person, or any Person consolidates with or merges into or
with the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the
Company is converted into or exchanged for cash,
securities or other property, other than any such
transaction where the outstanding Voting Stock of the
Company is converted into or exchanged for Voting Stock
of the surviving Person which is not Redeemable Capital
Stock representing a majority of the voting power of all
Voting Stock of such Surviving Person immediately after
giving effect to such issuance;
(4) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or
consolidation), in one or a series of related
transactions, of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a
whole to any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act); or
(5) the Company is liquidated or dissolved or adopts a plan
of liquidation or dissolution other than in a transaction
which complies with the provisions described under
"--Consolidation, Merger, Sale of Assets."
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of the Indenture such Commission is not existing and
performing the duties now assigned to it under the Securities Act, Exchange
Act and Trust Indenture Act then the body performing such duties at such
time.
"Commodity Price Protection Agreement" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value which is dependent upon, fluctuations
in commodity prices.
"Company" means AutoNation, Inc., a corporation incorporated under
the laws of Delaware, until a successor Person shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter
"Company" shall mean such successor Person.
"Consolidated Fixed Charge Coverage Ratio" of any Person means,
for any period, the ratio of
(a) the sum of Consolidated Net Income (Loss), and in each
case to the extent deducted in computing Consolidated Net
Income (Loss) for such period, Consolidated Interest
Expense, Consolidated Income Tax Expense and Consolidated
Non-cash Charges for such period, of such Person and its
Restricted Subsidiaries on a Consolidated basis, all
determined in accordance with GAAP, less all noncash
items increasing Consolidated Net Income for such period
and less all cash payments during such period relating to
noncash charges that were added back to Consolidated Net
Income in determining the Consolidated Fixed Charge
Coverage Ratio in any prior period to
(b) the sum of Consolidated Interest Expense for such period
and cash and noncash dividends paid on any Redeemable
Capital Stock or cash dividends paid on any Preferred
Stock that is not Redeemable Capital Stock of such Person
and its Restricted Subsidiaries during such period,
in each case after giving pro forma effect (as determined in accordance
with Article 11 of Regulation S- X under the Securities Act or any
successor provision) without duplication to
(1) the incurrence of the Indebtedness giving rise to the
need to make such calculation and (if applicable) the
application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was
incurred, and the application of such proceeds occurred,
on the first day of such period;
(2) the incurrence, repayment or retirement of any other
Indebtedness by the Company and its Restricted
Subsidiaries since the first day of such period as if
such Indebtedness was incurred, repaid or retired at the
beginning of such period (except that, in making such
computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during
such period);
(3) in the case of Acquired Indebtedness or any acquisition
occurring at the time of the incurrence of such
Indebtedness, the related acquisition, assuming such
acquisition had been consummated on the first day of such
period; and
(4) any acquisition or disposition by the Company and its
Restricted Subsidiaries of any company or any business or
any assets out of the ordinary course of business,
whether by merger, stock purchase or sale or asset
purchase or sale, and any related repayment of
Indebtedness, in each case since the first day of such
period, assuming such acquisition or disposition had been
consummated on the first day of such period;
provided that
(1) in making such computation, the Consolidated Interest
Expense attributable to interest on any Indebtedness
computed on a pro forma basis and (A) bearing a floating
interest rate shall be computed as if the rate in effect
on the date of computation had been the applicable rate
for the entire period and (B) which was not outstanding
during the period for which the computation is being made
but which bears, at the option of such Person, a fixed or
floating rate of interest, shall be computed by applying
at the option of such Person either the fixed or floating
rate and
(2) in making such computation, the Consolidated Interest
Expense of such Person attributable to interest on any
Indebtedness under a revolving credit facility computed
on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the
applicable period.
"Consolidated Income Tax Expense" of any Person means, for any
period, the provision for federal, state, local and foreign income taxes of
such Person and its Consolidated Restricted Subsidiaries for such period as
determined in accordance with GAAP.
"Consolidated Interest Expense" of any Person means, without
duplication, for any period, the sum of
(a) the interest expense of such Person and its Restricted
Subsidiaries for such period (determined in accordance
with GAAP), on a Consolidated basis (including interest
under any Vehicle Inventory Indebtedness), including,
without limitation,
(1) amortization of debt discount,
(2) the net costs associated with Interest Rate
Agreements and Currency Hedging Agreements
(including amortization of discounts),
(3) the interest portion of any deferred payment
obligation, and
(4) all commissions, discounts and other fees and
charges owed with respect to letters of credit
and bankers acceptance financing, plus
(b) (1) the interest component of the Capital Lease
Obligations (determined in accordance with GAAP)
of such Person and its Restricted Subsidiaries
during such period and
(2) all capitalized interest of such Person and its
Restricted Subsidiaries plus
(c) for purposes of calculating the Consolidated Fixed Charge
Coverage Ratio, the interest expense determined in
accordance with GAAP under any Guaranteed Debt of such
Person and any Restricted Subsidiary to the extent not
included under clause (a) above, whether or not paid by
such Person or its Restricted Subsidiaries.
"Consolidated Net Income (Loss)" of any Person means, for any
period, the Consolidated net income (or loss) of such Person and its
Restricted Subsidiaries for such period on a Consolidated basis as
determined in accordance with GAAP, adjusted, to the extent included in
calculating such net income (or loss), by excluding, without duplication,
(1) all extraordinary gains or losses net of taxes (less all
fees and expenses relating thereto),
(2) the portion of net income (or loss) of such Person and
its Restricted Subsidiaries on a Consolidated basis
allocable to minority interests in unconsolidated Persons
or Unrestricted Subsidiaries to the extent that cash
dividends or distributions have not actually been
received by such Person or one of its Consolidated
Restricted Subsidiaries,
(3) net income (or loss) of any Person combined with such
Person or any of its Restricted Subsidiaries on a
"pooling of interests" basis attributable to any period
prior to the date of combination,
(4) any gain or loss, net of taxes, realized upon the
termination of any employee pension benefit plan,
(5) gains or losses, net of taxes (less all fees and expenses
relating thereto), in respect of dispositions of assets
other than in the ordinary course of business,
(6) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that
income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders,
(7) any restoration to net income of any contingency reserve,
except to the extent provision for such reserve was made
out of income accrued at any time following the Issue
Date, or
(8) any net gain arising from the acquisition of any
securities or extinguishment, under GAAP, of any
Indebtedness of such Person.
"Consolidated Non-cash Charges" of any Person means, for any
period, the aggregate depreciation, amortization and other non-cash charges
of such Person and its Restricted Subsidiaries on a Consolidated basis for
such period, as determined in accordance with GAAP (excluding any non-cash
charge which requires an accrual or reserve for cash charges for any future
period).
"Consolidated Tangible Net Worth" of any Person means, at any
time, for such Person and its Restricted Subsidiaries on a Consolidated
basis, an amount computed equal to (a) the Consolidated stockholders'
equity of the Person and its Restricted Subsidiaries, minus (b) all
Intangible Assets of the Person and its Restricted Subsidiaries, in each
case as of such time. For the purposes hereof, "Intangible Assets" means
intellectual property, goodwill and other intangible assets, in each case
determined in accordance with GAAP.
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its Restricted
Subsidiaries if and to the extent such accounts would normally be
consolidated with those of such Person, all in accordance with GAAP. The
term "Consolidated" shall have a similar meaning.
"Credit Agreements" means, collectively, the 364-day revolving
credit agreement providing for borrowings of up to $200 million and the
multi-year credit agreement providing for borrowings of up to $300 million,
in each case to be entered into among the Company, as borrower, the
Guarantors, as guarantors, Bank of America, N.A., as administrative agent
and lender, The Chase Manhattan Bank and Merrill Lynch Capital Corporation,
as syndication agents and lenders, First Union National Bank, as
documentation agent and lender, and the other lenders party thereto from
time to time, dated as of the Issue Date, as such agreements, in whole or
in part, in one or more instances, may be amended, renewed, extended,
substituted, refinanced, restructured, replaced, supplemented or otherwise
modified from time to time (including, without limitation, any successive
renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing).
"Credit Facilities" means one or more debt facilities or
commercial paper facilities, in each case with banks or other financial
institutions or institutional lenders, or other Persons which provide,
originate or arrange debt or commercial paper facilities, providing for
revolving credit loans, term loans, receivables financing or letters of
credit, including the Credit Agreements, in each case in existence from
time to time as such facilities, in whole or in part, in one or more
instances, may be amended, renewed, extended, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to
time (including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplements or
other modifications of the foregoing).
"Currency Hedging Agreements" means one or more of the following
agreements which shall be entered into by one or more financial
institutions: foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the
fluctuations in currency values.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Designated Noncash Consideration" means the fair market value of
non-cash consideration received by the Company or any of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated
pursuant to an officer's certificate, setting forth the basis of the
valuation. The aggregate Fair Market Value of the Designated Noncash
Consideration, taken together with the Fair Market Value at the time of
receipt of all other Designated Noncash Consideration received, may not
exceed the greater of (x) $50 million in the aggregate or (y) 5.0% of the
Company's Consolidated Tangible Net Worth over the term of the notes, at
the time of the receipt of the Designated Noncash Consideration (with the
Fair Market Value being measured at the time received and without giving
effect to subsequent changes in value).
"Disinterested Director" means, with respect to any transaction or
series of related transactions, a member of the board of directors of the
Company who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of related
transactions.
"Eligible Special Purpose Entity" means any Person which is or is
not a Subsidiary of the Company which has been formed by or for the benefit
of the Company or any Subsidiary for the purpose of (i) financing or
refinancing, leasing, selling or securitizing Vehicles or related
receivables and which finances, refinances or securitizes Vehicles or
related receivables of, leases Vehicles to or purchases Vehicles or related
receivables from the Company or any Subsidiary; or (ii) financing or
refinancing consumer receivables, leases, loans or retail installment
contracts.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor statute, and the rules and regulations promulgated by the
Commission thereunder.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length free market
transaction between an informed and willing seller under no compulsion to
sell and an informed and willing buyer under no compulsion to buy. Fair
Market Value shall be determined by either (a) the board of directors of
the Company acting in good faith and shall be evidenced by a board
resolution or (b) the Board Designee and evidenced by a certificate (or
committee resolution, as the case may be), in each case whose determination
shall be conclusive.
"Fall Away Event" means the notes shall have achieved Investment
Grade status and the Company delivers to the Trustee an officer's
certificate certifying that the foregoing condition has been satisfied.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles and interpretations thereof in the
United States, consistently applied, which are in effect on the Issue Date.
"Guarantee" means the guarantee by any Guarantor of the Company's
Indenture Obligations.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of
Indebtedness below guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person
through an agreement
(1) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or
purchase of such Indebtedness,
(2) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services,
primarily for the purpose of enabling the debtor
to make payment of such Indebtedness or to
assure the holder of such Indebtedness against
loss,
(3) to supply funds to, or in any other manner
invest in, the debtor (including any agreement
to pay for property or services without
requiring that such property be received or such
services be rendered),
(4) to maintain working capital or equity capital of
the debtor, or otherwise to maintain the net
worth, solvency or other financial condition of
the debtor or to cause such debtor to achieve
certain levels of financial performance or
(5) otherwise to assure a creditor against loss;
provided that the term "guarantee" shall not include endorsements for
collection or deposit, in either case in the ordinary course of business.
"Guarantor" means any Subsidiary which is a guarantor of the
notes, including any Person that is required after the date of the
Indenture to execute a guarantee of the notes pursuant to the "Limitation
on Liens" covenant or the "Limitation on Issuance of Guarantees of
Indebtedness" covenant until a successor replaces such party pursuant to
the applicable provisions of the Indenture and, thereafter, shall mean such
successor.
"Indebtedness" means, with respect to any Person, without duplication,
(1) all indebtedness of such Person for borrowed
money or for the deferred purchase price of
property or services, excluding any trade
payables and other accrued current liabilities
arising in the ordinary course of business, but
including, without limitation, all obligations,
contingent or otherwise, of such Person in
connection with any letters of credit issued
under letter of credit facilities, acceptance
facilities or other similar facilities,
(2) all obligations of such Person evidenced by
bonds, notes, debentures or other similar
instruments,
(3) all indebtedness created or arising under any
conditional sale or other title retention
agreement with respect to property acquired by
such Person (even if the rights and remedies of
the seller or lender under such agreement in the
event of default are limited to repossession or
sale of such property), but excluding trade
payables arising in the ordinary course of
business,
(4) all obligations under Interest Rate Agreements,
Currency Hedging Agreements or Commodity Price
Protection Agreements of such Person,
(5) all Capital Lease Obligations of such Person,
(6) all Indebtedness referred to in clauses (1)
through (5) above of other Persons and all
dividends of other Persons, the payment of which
is secured by (or for which the holder of such
Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon
or with respect to property (including, without
limitation, accounts and contract rights) owned
by such Person, even though such Person has not
assumed or become liable for the payment of such
Indebtedness,
(7) all Guaranteed Debt of such Person,
(8) all Redeemable Capital Stock issued by such
Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus
accrued and unpaid dividends,
(9) Preferred Stock of any Restricted Subsidiary of
the Company, and
(10) any amendment, supplement, modification,
deferral, renewal, extension, refunding or
refinancing of any liability of the types
referred to in clauses (1) through (9) above.
For purposes hereof, the "maximum fixed repurchase price" of any Redeemable
Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as
if such Redeemable Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture,
and if such price is based upon, or measured by, the Fair Market Value of
such Redeemable Capital Stock, such Fair Market Value to be determined in
good faith by the board of directors of the issuer of such Redeemable
Capital Stock.
"Indenture Obligations" means the obligations of the Company and
any other obligor under the Indenture or under the notes, including any
Guarantor, to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in connection
with the Indenture, the notes and the performance of all other obligations
to the Trustee and the holders under the Indenture and the notes, according
to the respective terms thereof.
"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial
institutions: interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements) and/or other types of interest rate hedging agreements from
time to time.
"Investment" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase, acquisition or ownership by
such Person of any Capital Stock, bonds, notes, debentures or other
securities issued or owned by any other Person and all other items that
would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Grade" means, with respect to the notes, a credit
rating of at least Baa3 (or the equivalent) by Moody's, together with a
rating of at least BBB- (or the equivalent) by Standard & Poor's.
"Issue Date" means the original issue date of the notes offered by
this prospectus under the Indenture.
"Lien" means any mortgage or deed of trust, charge, pledge, lien
(statutory or otherwise), privilege, security interest, assignment,
deposit, arrangement, easement, hypothecation, claim, preference, priority
or other encumbrance upon or with respect to any property of any kind
(including any conditional sale, capital lease or other title retention
agreement, any leases in the nature thereof, and any agreement to give any
security interest), real or personal, movable or immovable, now owned or
hereafter acquired. A Person will be deemed to own subject to a Lien any
property which it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, Capital Lease Obligation or
other title retention agreement.
"Manufacturer" means a vehicle manufacturer which is a party to a
dealership franchise agreement with the Company or any Restricted
Subsidiary.
"Maturity" means, when used with respect to the notes, the date on
which the principal of the notes becomes due and payable as therein
provided or as provided in the Indenture, whether at Stated Maturity or the
redemption date and whether by declaration of acceleration, Offer in
respect of Excess Proceeds, Change of Control Offer in respect of a Change
of Control, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Mortgage Facilities" means one or more debt facilities in each
case with banks, manufacturers and/or other entities providing for
borrowings secured primarily by real property in each case as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or
in part from time to time; provided, that the value of the security
securing such debt facilities shall not, at the time such debt facilities
are entered into, exceed 100% of the aggregate principal amount of the
Indebtedness in respect of such debt facilities.
"Net Cash Proceeds" means
(a) with respect to any Asset Sale by any Person, the
aggregate cash proceeds received by the Company or any of
its Restricted Subsidiaries (including, without
limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any
Asset Sale), net of
(1) brokerage commissions and other reasonable fees
and expenses (including fees and expenses of
counsel and investment bankers) related to such
Asset Sale,
(2) provisions for all taxes payable as a result of
such Asset Sale,
(3) payments made to retire Indebtedness where such
Indebtedness is secured by the assets or
properties that are the subject of such Asset
Sale,
(4) amounts required to be paid to any Person (other
than the Company or any Restricted Subsidiary)
owning a beneficial interest in the assets
subject to the Asset Sale and
(5) appropriate amounts to be provided by the
Company or any Restricted Subsidiary, as the
case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without
limitation, pension and other post-employment
benefit liabilities, liabilities related to
environmental matters and liabilities under any
indemnification obligations associated with such
Asset Sale, all as reflected in an officers'
certificate delivered to the Trustee and
(b) with respect to any issuance or sale of Capital Stock or
options, warrants or rights to purchase Capital Stock, or
debt securities or Capital Stock that has been converted
into or exchanged for Capital Stock as referred to under
"--Certain Covenants--Limitation on Restricted Payments,"
the proceeds of such issuance or sale in the form of cash
or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form
of, or stock or other assets when disposed of for, cash
or Cash Equivalents (except to the extent that such
obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of attorney's
fees, accountant's fees and brokerage, consultation,
underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Pari Passu Indebtedness" means (a) any Indebtedness of the
Company that is equal in right of payment to the notes and (b) with respect
to any Guarantee, Indebtedness of a Guarantor which ranks equal in right of
payment to such Guarantor's Guarantee.
"Permitted Business" means the lines of business conducted by the
Company and its Restricted Subsidiaries on the Issue Date and businesses
reasonably related, complementary or ancillary thereto, including
reasonably related extensions or expansions thereof.
"Permitted Investment" means
(1) Investments in any Guarantor or any Wholly Owned
Restricted Subsidiary that is not a Guarantor or
any Person that, as a result of or in connection
with such Investment, (a) becomes a Guarantor or
a Wholly Owned Restricted Subsidiary that is not
a Guarantor or (b) is merged or consolidated
with or into, or transfers or conveys
substantially all of its assets to, or is
liquidated into, the Company or any Guarantor or
any Wholly Owned Restricted Subsidiary that is
not a Guarantor;
(2) Indebtedness of the Company or a Restricted
Subsidiary described under clauses (4), (5), (6)
and (7) of the definition of "Permitted
Indebtedness";
(3) Investments in any of the notes;
(4) Cash Equivalents;
(5) Investments acquired by the Company or any
Restricted Subsidiary in connection with an
Asset Sale permitted under "--Certain
Covenants--Limitation on Sale of Assets" to the
extent such Investments are non-cash proceeds as
permitted under such covenant;
(6) Investments in existence on the Issue Date;
(7) any Investment to the extent the consideration
therefor consists of Qualified Capital Stock of
the Company;
(8) Investments representing Capital Stock or
obligations issued to the Company or any
Restricted Subsidiary in the course of the good
faith settlement of claims against any other
Person by reason of a composition or
readjustment of debt or a reorganization of any
debtor;
(9) prepaid expenses advanced to employees in the
ordinary course of business or other loans or
advances to employees in the ordinary course of
business not to exceed $2.5 million in the
aggregate at any one time outstanding;
(10) accounts receivable arising and trade credit
granted in the ordinary course of business and
any securities received in satisfaction or
partial satisfaction thereof in connection with
accounts of financially troubled Persons to the
extent reasonably necessary in order to prevent
or limit loss;
(11) any security or debt instrument retained by the
Company or any Subsidiary in connection with the
creation of Vehicle Receivables Indebtedness or
Vehicle Inventory Indebtedness which security or
debt instrument represents a residual interest
in assets sold or transferred to an Eligible
Special Purpose Entity;
(12) consumer loans and leases entered into,
purchased or otherwise acquired by the Company
or its Subsidiaries, as lender, lessor or
assignee, as applicable, related to Automobile
Retailing Activities;
(13) Investments constituting the purchase of Capital
Stock of a Restricted Subsidiary by the Company
or another Restricted Subsidiary;
(14) deposits, including interest-bearing deposits,
maintained in the ordinary course of business
with floorplan lenders; and
(15) in addition to the Investments described in
clauses (1) through (14) above, Investments in
an amount not to exceed $25 million in the
aggregate at any one time outstanding.
In connection with any assets or property contributed or transferred to any
Person as an Investment, such property and assets shall be equal to the
Fair Market Value (as determined by either (a) the board of directors of
the Company and evidenced by a board resolution or (b) the Board Designee
and evidenced by a certificate (or committee resolution, as the case may
be), in each case whose determination shall be conclusive) at the time of
Investment.
"Permitted Lien" means:
(a) any Lien existing as of the Issue Date;
(b) any Lien securing the Credit Facilities incurred pursuant
to clause (1) of the definition of "Permitted
Indebtedness"; provided that such Liens are limited to
pledges of Capital Stock of Restricted Subsidiaries of
the Company;
(c) any Lien arising by reason of
(1) any judgment, decree or order of any court, so
long as such Lien is adequately bonded and any
appropriate legal proceedings which may have
been duly initiated for the review of such
judgment, decree or order shall not have been
finally terminated or the period within which
such proceedings may be initiated shall not have
expired;
(2) taxes, governmental assessments or similar
governmental charges or levies not yet
delinquent or which are being contested in good
faith;
(3) security for payment of workers' compensation,
unemployment insurance and other governmental
insurance or benefits and/or other insurance
arrangements;
(4) good faith deposits in connection with bids,
tenders, statutory obligations, leases,
contracts (other than contracts for the payment
of money);
(5) zoning restrictions, easements, licenses,
reservations, title defects, rights of others
for rights of way, utilities, sewers, electric
lines, telephone or telegraph lines, and other
similar purposes, provisions, covenants,
conditions, waivers, restrictions on the use of
property or minor irregularities of title (and
with respect to leasehold interests, mortgages,
obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist
and arising by, through or under a landlord or
owner of the leased property, with or without
consent of the lessee), none of which materially
impairs the use of any parcel of property
material to the operation of the business of the
Company or any Subsidiary or the value of such
property for the purpose of such business;
(6) deposits to secure public or statutory
obligations, or in lieu of surety or appeal
bonds; or
(7) operation of law in favor of mechanics,
carriers, warehousemen, landlords, materialmen,
laborers, employees or suppliers, incurred in
the ordinary course of business for sums which
are not yet delinquent or are being contested in
good faith by negotiations or by appropriate
proceedings which suspend the collection
thereof;
(d) any Lien securing Acquired Indebtedness created prior to
(and not created in connection with, or in contemplation
of) the incurrence of such Indebtedness by the Company or
any Restricted Subsidiary; provided that the Lien shall
attach only to the assets of the related acquired entity
and its Restricted Subsidiaries and not assets of the
Company and its Restricted Subsidiaries generally;
(e) any Lien to secure the performance bids, trade contracts,
leases (including, without limitation, statutory and
common law landlord's liens), statutory obligations,
surety and appeal bonds, letters of credit and other
obligations of a like nature and incurred in the ordinary
course of business of the Company or any Subsidiary;
(f) any Lien securing Indebtedness permitted to be incurred
under Interest Rate Agreements, Currency Hedging
Agreements or Commodity Price Protection Agreements or
otherwise incurred to hedge interest rate risk or
currency or commodity pricing risk;
(g) any Lien securing Capital Lease Obligations or Purchase
Money Obligations in existence as of the Issue Date
and/or incurred in accordance with the Indenture
(including clause (8) of the definition of "Permitted
Indebtedness") and which are incurred or assumed solely
in connection with the acquisition, development or
construction of real or personal, movable or immovable
property within 180 days of such incurrence or
assumption; provided that such Liens only extend to such
acquired, developed or constructed property, such Liens
secure Indebtedness in an amount not in excess of the
original purchase price or the original cost of any such
assets or repair, addition or improvement thereto, and
the incurrence of such Indebtedness is permitted by the
"Limitation on Indebtedness" covenant;
(h) any Lien securing any Vehicle Inventory Indebtedness
and/or Vehicle Receivables Indebtedness;
(i) Liens securing Indebtedness under Mortgage Facilities
permitted to be incurred pursuant to clause (13) of the
definition of "Permitted Indebtedness";
(j) other Liens securing Indebtedness in an aggregate amount
not to exceed the greater of (x) $100 million and (y) 10%
of the Company's Consolidated Tangible Net Worth; and
(k) any extension, renewal, refinancing or replacement, in
whole or in part, of any Lien described in the foregoing
clauses (a) through (j) so long as no additional
collateral is granted as security thereby.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any Capital
Stock of any class or classes (however designated) which is preferred as to
the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over the Capital Stock of any other class in such Person.
"Public Equity Offering" means an underwritten public offering of
common stock (other than Redeemable Capital Stock) of the Company with
gross cash proceeds to the Company of at least $50 million pursuant to a
registration statement that has been declared effective by the Commission
pursuant to the Securities Act (other than a registration statement on Form
S-4 (or any successor form covering substantially the same transactions),
Form S-8 (or any successor form covering substantially the same
transactions) or otherwise relating to equity securities issuable under any
employee benefit plan of the Company).
"Purchase Money Obligation" means any Indebtedness secured by a
Lien on assets (including real property) related to the business of the
Company and the Restricted Subsidiaries and any additions and accessions
thereto, which are purchased (including in connection with the acquisition
of a business by means of stock purchase, merger or otherwise) or developed
by the Company or a Restricted Subsidiary at any time after the notes are
issued; provided that
(1) the security agreement or conditional sales or
other title retention contract pursuant to which
the Lien on such assets is created (collectively
a "Purchase Money Security Agreement") shall be
entered into within 180 days after the purchase
or substantial completion of the construction of
such assets and shall at all times be confined
solely to the assets so purchased or acquired,
any additions or accessions thereto or any
proceeds therefrom,
(2) at no time shall the aggregate principal amount
of the outstanding Indebtedness secured thereby
be increased, except in connection with the
purchase of additions and accessions thereto and
except in respect of fees and other obligations
in respect of such Indebtedness and
(3) the aggregate outstanding principal amount of
Indebtedness secured thereby (determined on a
per asset basis in the case of any additions and
accessions) shall not at the time such Purchase
Money Security Agreement is entered into exceed
100% of the purchase price to the Company or a
Restricted Subsidiary of the assets subject
thereto.
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any Capital Stock that, either by
its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage
of time would be, required to be redeemed prior to the final Stated
Maturity of the principal of the notes or is redeemable at the option of
the holder thereof at any time prior to such final Stated Maturity (other
than upon a change of control of or sale of assets by the Company in
circumstances where the holders of the notes would have similar rights), or
is convertible into or exchangeable for debt securities at any time prior
to such final Stated Maturity at the option of the holder thereof.
"Restricted Subsidiary" means any Subsidiary of the Company that
has not been designated by the board of directors of the Company by a board
resolution delivered to the Trustee as an Unrestricted Subsidiary pursuant
to and in compliance with the covenant described under "Certain
Covenants--Limitation on Unrestricted Subsidiaries."
"Securities Act" means the Securities Act of 1933, or any
successor statute, and the rules and regulations promulgated by the
Commission thereunder.
"Significant Restricted Subsidiary" means, at any date of
determination, any Restricted Subsidiary that represents 10% or more of the
Company's total consolidated assets at the end of the most recent fiscal
quarter for which financial information is available or 10% or more of the
Company's consolidated net revenue or consolidated operating income for the
most recent four quarters for which financial information is available.
"Standard & Poor's" means Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc., and its successors.
"Stated Maturity" means, when used with respect to any
Indebtedness or any installment of interest thereon, the dates specified in
such Indebtedness as the fixed date on which the principal of such
Indebtedness or such installment of interest, as the case may be, is due
and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor subordinated in right of payment to the notes or such Guarantor's
Guarantee, as the case may be.
"Subsidiary" of a Person means
(1) any corporation more than 50% of the outstanding
voting power of the Voting Stock of which is
owned or controlled, directly or indirectly, by
such Person or by one or more other Subsidiaries
of such Person, or by such Person and one or
more other Subsidiaries thereof, or
(2) any limited partnership of which such Person or
any Subsidiary of such Person is a general
partner, or
(3) any other Person in which such Person, or one or
more other Subsidiaries of such Person, or such
Person and one or more other Subsidiaries,
directly or indirectly, have more than 50% of
the outstanding partnership or similar interests
or have the power, by contract or otherwise, to
direct or cause the direction of the policies,
management and affairs thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939, or
any successor statute.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with the covenant
described under "Certain Covenants--Limitation on Unrestricted
Subsidiaries."
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary
means Indebtedness of such Unrestricted Subsidiary
(1) as to which neither the Company nor any
Restricted Subsidiary is directly or indirectly
liable (by virtue of the Company or any such
Restricted Subsidiary being the primary obligor
on, guarantor of, or otherwise liable in any
respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Restricted
Subsidiary to any Affiliate, in which case
(unless the incurrence of such Guaranteed Debt
resulted in a Restricted Payment at the time of
incurrence) the Company shall be deemed to have
made a Restricted Payment equal to the principal
amount of any such Indebtedness to the extent
guaranteed at the time such Affiliate is
designated an Unrestricted Subsidiary and
(2) which, upon the occurrence of a default with
respect thereto, does not result in, or permit
any holder of any Indebtedness of the Company or
any Restricted Subsidiary to declare, a default
on such Indebtedness of the Company or any
Restricted Subsidiary or cause the payment
thereof to be accelerated or payable prior to
its Stated Maturity; provided that
notwithstanding the foregoing any Unrestricted
Subsidiary may guarantee the notes.
"Vehicle Inventory Indebtedness" means Indebtedness (including
pursuant to a commercial paper program) incurred by the Company, any
Restricted Subsidiary or any Eligible Special Purpose Entity to purchase,
lease, finance or refinance or guaranty the purchasing, leasing, financing
or refinancing of Vehicles in the ordinary course of business of the
Company and its Restricted Subsidiaries or related receivables, which
Indebtedness (x) is secured by the Vehicles or related receivables so
financed, to the extent, at any date of determination thereof, the amount
of such Indebtedness does not exceed the depreciated book value of such
Vehicles or the book value of such related receivables as determined in
accordance with GAAP applied on a consistent basis or (y) is unsecured and
provides for a borrowing base which may not exceed 85% of the value of such
Vehicles.
"Vehicle Receivables Indebtedness" means Indebtedness (including
pursuant to a commercial paper program) incurred by any Eligible Special
Purpose Entity to finance, refinance or guaranty the financing or
refinancing of consumer receivables, leases, loans or retail installment
contracts incurred in the sale, transfer or lease of Vehicles; provided (x)
such Indebtedness shall in accordance with GAAP not appear as an asset or
liability on the balance sheet of the Company or any of its Restricted
Subsidiaries; (y) no assets other than the Vehicles, consumer receivables,
leases, loans, retail installment contracts or related proceeds (including,
without limitation, proceeds from insurance, Vehicles and other obligations
under such receivables, leases, loans or retail installment contracts) to
be financed or refinanced secure such Indebtedness; and (z) neither the
Company nor any of its other Restricted Subsidiaries shall incur any
liability with respect to such Indebtedness other than liability arising by
reason of (1) a breach of a representation or warranty or customary
indemnities, in each case contained in any instrument relating to such
Indebtedness or (2) customary interests retained by the Company and/or its
Restricted Subsidiaries in such Indebtedness.
"Vehicles" means all now existing or hereafter acquired new and
used automobiles, sport utility vehicles, trucks and vans of all types and
descriptions, whether held for sale, lease, rental or operational purposes,
which relate to the Company's or any Restricted Subsidiary's Automobile
Retailing Activities.
"Voting Stock" of a Person means Capital Stock of such Person of
the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of
the board of directors, managers or trustees of such Person (irrespective
of whether or not at the time Capital Stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary
all the Capital Stock (other than directors' qualifying shares) of which is
owned by the Company or another Wholly Owned Restricted Subsidiary.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material U.S. federal
income tax consequences associated with the exchange of outstanding notes
for the exchange notes issued in the exchange offer. The discussion is
based upon the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations, judicial authorities, published positions of the
Internal Revenue Service (the "IRS") and other applicable authorities, all
as in effect on the date hereof and all of which are subject to change or
differing interpretations (possibly with retroactive effect). The
discussion does not address all of the tax consequences that may be
relevant to a particular holder or to certain holders subject to special
treatment under U.S. federal income tax laws (including, but not limited
to, certain financial institutions, partnerships or other pass-through
entities, insurance companies, broker-dealers and persons holding their
notes as part of a "straddle," "hedge," or "conversion transaction"). This
discussion is limited to persons that hold their notes as capital assets.
We have not sought, and do not intend to seek, a ruling from the IRS
regarding the matter discussed herein. Our counsel has not rendered any
legal opinion regarding any tax consequences relating to us or to an
investor in the notes.
The exchange of the outstanding notes for the exchange notes
issued in the exchange offer should not be treated as an "exchange" for
U.S. federal income tax purposes because the exchange notes issued in the
exchange offer should not be considered to differ materially in kind or
extent from the outstanding notes. Rather, the notes issued in the exchange
offer received by a holder should be treated as a continuation of the
outstanding notes in the hands of such holder. As a result there should be
no U.S. federal income tax consequences to holders exchanging the
outstanding notes for the exchange notes issued in the exchange offer, and
any exchanging holder of outstanding notes should have the same tax basis
and holding period in, and income in respect of, the exchange notes as such
holder had in the outstanding notes immediately prior to the exchange.
Prospective holders of the exchange notes being issued in the
exchange offer are urged to consult their tax advisors concerning the
particular tax consequences of exchanging such holders' outstanding notes
for the exchange notes being issued in the exchange offer, including the
applicability and effect of any state, local or foreign income and other
tax laws.
PLAN OF DISTRIBUTION
The exchange offer is not being made to, nor will we accept
tenders of or exchange from, holders of outstanding notes in any
jurisdiction in which the exchange offer or the acceptance thereof would
not be in compliance with the securities or blue sky laws of such
jurisdictions.
Based on interpretations by the SEC set forth in no-action letters
issued to third parties, we believe that the exchange notes issued pursuant
to the exchange offer in exchange for the outstanding notes may be offered
for resale, resold and otherwise transferred by the holders thereof, other
than any holder which is (A) an "affiliate" of us within the meaning of
Rule 405 under the Securities Act, (B) a broker-dealer who acquired notes
directly from us or (C) broker-dealer who acquired notes as a result of
market-making or other trading activities, without compliance with the
registration and prospectus delivery provisions of the Securities Act
provided that such exchange notes are acquired in the ordinary course of
such holders' business, and such holders are not engaged in, and do not
intend to engage in, and have no arrangement or understanding with any
person to participate in, a distribution of such exchange notes. However,
broker-dealers receiving the exchange notes in the exchange offer will be
subject to a prospectus delivery requirement with respect to resales of
such exchange notes. To date, the SEC has taken the position that these
broker-dealers may fulfill their prospectus delivery requirements with
respect to transactions involving an exchange of securities such as the
exchange pursuant to the exchange offer, other than a resale of an unsold
allotment from the sale of the outstanding notes to the initial purchasers,
with the prospectus contained in the exchange offer registration statement.
Pursuant to the registration rights agreement, we have agreed to permit
these broker-dealers to use this prospectus in connection with the resale
of such exchange notes.
Each holder of the outstanding notes who wishes to exchange its
outstanding notes for exchange notes in the exchange offer will be required
to make certain representations to us as set forth in "The Exchange Offer
- -- Resales of Exchange Notes."
Each broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it will
deliver a prospectus in connection with any resale of such exchange notes.
This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of exchange notes
received in exchange for outstanding notes where such outstanding notes
were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the
consummation of the exchange offer, we will use our commercially reasonable
efforts to make this prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. In addition,
until , 2001, all dealers effecting transactions in the exchange notes may
be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes
by broker-dealers. Exchange notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the exchange notes or a
combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer or the purchasers of
any such exchange notes. Any broker-dealer that resells exchange notes that
were received by it for its own account pursuant to the exchange offer and
any broker or dealer that participates in a distribution of such exchange
notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of exchange notes and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the consummation of the exchange
offer, we will promptly send additional copies of this prospectus and any
amendment or supplement to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident
to the exchange offer, other than commissions or concessions of any
broker-dealers and will indemnify the holders of the securities, including
any broker-dealers, against certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
The validity of the exchange notes offered by this prospectus will
be passed upon for us by Skadden, Arps, Slate, Meagher & Flom (Illinois),
Chicago, Illinois.
EXPERTS
The consolidated balance sheets as of December 31, 2000 and 1999
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three-year period ended December
31, 2000, included in this prospectus and elsewhere in the Registration
Statement, have been audited by Arthur Andersen LLP, independent certified
public accountants, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts
in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
AutoNation, Inc. files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may inspect and
copy such material at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the SEC's regional offices at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. You may also
obtain copies of such material from the SEC at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. In addition, reports, proxy statements and
other information concerning AutoNation can be inspected at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, where our common
stock is listed.
We have filed a registration statement on Form S-4 under the
Securities Act, as amended, of which this document forms a part, to
register the exchange notes to be issued to noteholders whose outstanding
notes are accepted for exchange pursuant to the exchange offer. This
prospectus, and the related letter of transmittal, constitute our offer to
exchange. This document does not contain all of the information set forth
in the registration statement, selected portions of which are omitted in
accordance with the rules and regulations of the SEC. For further
information pertaining to us and the notes, reference is made to the
registration statement and its exhibits. Statements contained in this
document or in any document incorporated by reference as to the contents of
any contract or other document referred to within this document or other
documents that are incorporated by reference are not necessarily complete
and, in each instance, reference is made to the applicable contract or
other document filed as an exhibit to the registration statement or
otherwise filed with the SEC. Each statement contained in this document is
qualified in its entirety by reference to the underlying documents.
Please call the SEC at 1-800-SEC-0330 for more information on the
public reference rooms. You can also find our SEC filings at the SEC's
website at http://www.sec.gov.
Incorporation By Reference
The following documents that we have filed with the SEC (File No.
0-13107) are incorporated into this document by reference:
o Notice of Annual Meeting and Proxy Statement on Schedule
14A, filed April 9, 2001;
o Current Report on Form 8-K, filed March 7, 2001;
o Current Report on Form 8-K, filed July 20, 2001; and
o Current Report on Form 8-K, filed August 2, 2001.
We also incorporate by reference all future filings we make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities and
Exchange Act of 1934 on or after the date of this prospectus and prior to
the closing of the offering made hereby. Such documents will become a part
of this prospectus from the date that the documents are filed with the SEC.
Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or
superseded for the purposes of this prospectus to the extent that a
statement contained in any subsequently filed document which is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Report of Independent Certified Public Accountants........................ F-2
Consolidated Balance Sheets............................................... F-3
Consolidated Income Statements............................................ F-4
Consolidated Statements of Shareholders' Equity........................... F-5
Consolidated Statements of Cash Flows..................................... F-6
Notes to Consolidated Financial Statements for the
Fiscal Years 1998, 1999 and 2000....................................... F-7
Notes to Unaudited Condensed Consolidated Financial Statements for the
Six Months Ended June 30, 2001......................................... F-43
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of AutoNation, Inc.:
We have audited the accompanying consolidated balance sheets of
AutoNation, Inc. (a Delaware corporation) and subsidiaries as of December
31, 2000 and 1999, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2000. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
AutoNation, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
March 26, 2001 (except with respect to the matters discussed in Notes 17
and 18, as to which the date is October 4, 2001).
AUTONATION, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
Dec. 31, Dec. 31, June 30,
1999 2000 2001
---- ---- ----
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 218.6 $ 82.2 $ 26.1
Receivables, net................................... 1,179.5 1,108.8 1,071.4
Inventory.......................................... 2,706.8 2,769.2 2,439.3
Other current assets............................... 165.6 216.0 238.3
--------------- -------------- --------------
Total Current Assets............................ 4,270.5 4,176.2 3,775.1
Investments........................................... 175.8 38.8 31.6
Property and equipment, net........................... 1,360.4 1,538.1 1,523.7
Intangible assets, net................................ 2,831.0 2,920.2 2,866.9
Other assets.......................................... 218.8 156.7 148.5
Net assets of discontinued operations................. 726.6 -- --
--------------- -------------- --------------
$ 9,583.1 $ 8,830.0 $ 8,345.8
=============== ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................... $ 163.1 $ 143.2 $ 141.7
Accrued liabilities................................ 622.9 453.0 399.5
Notes payable and current maturities of long-term debt 2,218.3 2,423.5 2,117.5
Other current liabilities.......................... 129.9 121.6 109.9
--------------- -------------- --------------
Total Current Liabilities....................... 3,134.2 3,141.3 2,768.6
LONG-TERM DEBT, NET OF CURRENT
MATURITIES......................................... 836.1 850.4 690.7
DEFERRED INCOME TAXES................................. 804.8 877.2 885.0
OTHER LIABILITIES..................................... 206.8 118.6 143.0
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, par value $0.01 per share; 5,000,000
shares authorized; none issued.................. -- -- --
Common stock, par value $0.01 per share;
1,500,000,000 shares authorized; 474,965,676,
475,559,195 and 475,613,197 (unaudited) shares
issued and outstanding including shares held in
treasury, respectively.......................... 4.7 4.8 4.8
Additional paid-in capital......................... 4,661.5 4,664.7 4,664.5
Retained earnings.................................. 1,213.8 649.3 795.5
Accumulated other comprehensive income............. 6.6 1.0 0.2
Treasury stock, at cost; 99,602,444, 127,473,709 and
142,504,709 (unaudited) shares held, respectively (1,285.4) (1,477.3) (1,606.5)
--------------- -------------- --------------
Total Shareholders' Equity...................... 4,601.2 3,842.5 3,858.5
--------------- -------------- --------------
$ 9,583.1 $ 8,830.0 $ 8,345.8
=============== ============== ==============
The accompanying notes are an integral part of these statements.
AUTONATION, INC.
CONSOLIDATED INCOME STATEMENTS
(In millions, except per share data)
Six Months Ended
June 30,
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(unaudited)
REVENUE.......................................... $ 12,664.6 $ 20,111.8 $ 20,609.6 $ 10,569.7 $ 9,829.1
COST OF OPERATIONS............................... 10,733.0 17,183.2 17,577.1 9,033.6 8,336.0
--------------- -------------- -------------- ----------- -------------
GROSS MARGIN..................................... 1,931.6 2,928.6 3,032.5 1,536.1 1,493.1
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES...................................... 1,388.3 2,279.4 2,177.7 1,103.1 1,094.6
DEPRECIATION..................................... 40.3 60.1 54.7 27.8 32.0
AMORTIZATION..................................... 39.6 62.9 79.1 38.3 40.4
RESTRUCTURING AND IMPAIRMENT
CHARGES, NET.................................. -- 416.4 (3.8) -- 8.7
OTHER GAINS...................................... -- -- -- -- (19.0)
--------------- -------------- -------------- ----------- -------------
OPERATING INCOME................................. 463.4 109.8 724.8 366.9 336.4
FLOORPLAN INTEREST EXPENSE....................... (107.0) (125.2) (199.8) (99.0) (81.0)
OTHER INTEREST EXPENSE........................... (14.0) (34.9) (47.7) (22.4) (19.4)
INTEREST INCOME.................................. 8.7 20.6 14.3 8.7 3.6
OTHER INCOME (EXPENSE), NET...................... 1.5 2.2 33.4 3.8 (0.8)
--------------- -------------- -------------- ----------- -------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES................ 352.6 (27.5) 525.0 258.0 238.8
PROVISION FOR INCOME TAXES....................... 126.8 4.0 196.9 96.7 92.6
INCOME (LOSS) FROM CONTINUING
OPERATIONS.................................... 225.8 (31.5) 328.1 161.3 146.2
--------------- -------------- -------------- ----------- -------------
DISCONTINUED OPERATIONS:
Income (loss) from discontinued operations, net of
income taxes.................................. 262.1 (30.6) 13.1 1.8 --
Gain (loss) on disposal of segments, net of income
taxes of $8.4, $516.9, $(1.4), $--(unaudited),
and $--(unaudited), respectively.............. 11.6 345.0 (11.3) -- --
--------------- -------------- -------------- ----------- -------------
273.7 314.4 1.8 1.8 --
--------------- -------------- -------------- ----------- -------------
NET INCOME....................................... $ 499.5 $ 282.9 329.9 $ 163.1 $ 146.2
=============== ============== ============== =========== =============
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations............................ $ 0.50 $ (0.07) $ 0.91 0.44 $ 0.43
Discontinued operations.......................... 0.60 0.73 -- 0.01 --
--------------- -------------- -------------- ----------- -------------
Net income....................................... $ 1.10 0.$6 0.91 0.45 $ 0.43
Weighted average common shares outstanding....... 455.1 429.8 361.3 364.2 339.3
=============== ============== ============== =========== =============
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations............................ $ 0.48 $ (0.07) $ 0.91 0.44 $ 0.43
Discontinued operations.......................... 0.58 0.73 -- 0.01 --
--------------- -------------- -------------- ----------- -------------
Net income....................................... $ 1.06 $ 0.66 $ 0.91 $ 0.45 $ 0.43
=============== ============== ============== =========== =============
Weighted average common shares outstanding....... 470.9 429.8 361.4 364.4 340.7
=============== ============== ============== =========== =============
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions)
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury Comprehensive
Stock Capital Earnings Income (Loss) Stock Income (Loss)
------ ------- -------- ------------- ----- -------------
BALANCE AT DECEMBER 31, 1997................................... $ 4.3 $3,051.5 $ 431.4 $ (2.9) $ --
Comprehensive income (loss):
Net income.................................................. -- -- 499.5 -- -- $ 499.5
------------
Other comprehensive income (loss):
Foreign currency translation adjustments................. -- -- -- -- -- (1.6)
Adjustments to marketable securities and interest-only
strip receivables....................................... -- -- -- -- -- 0.2
------------
Other comprehensive loss................................. -- -- -- (1.4) -- (1.4)
------------
Comprehensive income................................... -- -- -- -- -- $ 498.1
============
Stock issued in acquisitions................................ 0.3 540.9 -- -- --
Sale of common stock of Republic Services................... -- 998.5 -- -- --
Purchases of treasury stock.............................. -- -- -- -- (136.0)
Exercise of stock options and warrants, including income
tax benefit of $4.8 million............................... 0.1 38.0 -- -- --
------ ------- ------ --------- -------
BALANCE AT DECEMBER 31, 1998................................... 4.7 4,628.9 930.9 (4.3) (136.0)
------ ------- ------ --------- -------
Comprehensive income (loss):
Net income.................................................. -- -- 282.9 -- -- $ 282.9
------------
Other comprehensive income (loss):
Foreign currency translation adjustments................. -- -- -- -- -- (1.9)
Adjustments to marketable securities and interest-only
strip receivables....................................... -- -- -- -- -- 12.8
------------
Other comprehensive income............................... -- -- -- 10.9 -- 10.9
------------
Comprehensive income................................... -- -- -- -- -- $ 293.8
============
Purchases of treasury stock................................. -- -- -- -- (1,158.0)
Issuance of treasury stock for employee benefit plan........ -- 0.1 -- -- 10.4
Exercise of stock options and warrants, including
income tax benefit of $1.1 million......................... -- 28.5 -- -- --
Other....................................................... -- 4.0 -- -- (1.8)
------ ------- ------ --------- -------
BALANCE AT DECEMBER 31, 1999................................... 4.7 4,661.5 1,213.8 6.6 (1,285.4)
------ ------- ------ --------- -------
Comprehensive income (loss):
Net income.................................................. -- -- 329.9 -- -- $ 329.9
------------
Other comprehensive income (loss):
Foreign currency translation adjustments................... -- -- -- -- -- 6.4
Adjustments to marketable securities and interest-only
strip receivables -- -- -- -- -- (12.0)
------------
Other comprehensive loss................................... -- -- -- (5.6) -- (5.6)
------------
Comprehensive income..................................... -- -- -- -- -- $ 324.3
============
Purchases of treasury stock................................. -- -- -- -- (188.9
Spin-off of ANC Rental Corporation.......................... -- -- (894.4) -- --
Exercise of stock options and warrants, including income
tax benefit of $1.0 million............................... 0.1 2.2 -- -- --
Other....................................................... -- 1.0 -- -- (3.0)
------ ------- ------ --------- -------
BALANCE AT DECEMBER 31, 2000................................... 4.8 4,664.7 649.3 1.0 (1,477.3)
------ ------- ------ --------- -------
Comprehensive income (loss) (unaudited):
Net income (unaudited)..................................... -- -- 146.2 -- -- $ 146.2
------------
Other comprehensive loss (unaudited):
Adjustments to marketable securities and interest-only
strip receivables -- -- -- -- -- (0.8)
------------
Other comprehensive loss ................................ -- -- -- (0.8) -- (0.8)
------------
Comprehensive income (unaudited)......................... -- -- -- -- -- $ 145.4
============
Purchases of treasurystock (unaudited)...................... -- -- -- -- (129.2)
Exercise of stock options and warrants (unaudited).......... -- 0.4 -- -- --
Other (unaudited)........................................... -- (0.6) -- -- --
------ ------- ------ --------- ---------
BALANCE AT JUNE 30, 2001 (unaudited)........................... $ 4.8 $4,664.5 $795.5 $ 0.2 $(1,606.5)
====== ======== ====== ========= =========
The accompanying notes are an integral part of these statements.
AUTONATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
For the Year Ended Six Months Ended
Dec. 31, June 30,
-------- --------
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(unaudited)
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income............................................... $ 499.5 $ 282.9 $ 329.9 $ 163.1 $ 146.2
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 79.9 123.0 133.8 66.1 72.4
Deferred income tax provision (benefit)............... 12.2 (127.2) 91.3 19.3 9.3
Non-cash restructuring and impairment charges
(recovery), net..................................... -- 432.9 (6.9) -- 8.7
Other gains........................................... -- -- -- -- (19.0)
Gain on sale of marketable securities, net............ -- (4.5) (23.7) (9.6) (0.2)
Valuation write-down on equity-method investment...... -- -- 30.0 -- --
Gain on sale of subsidiary............................ -- -- (53.5) -- --
Income from discontinued operations................... (273.7) (314.4) (1.8) (1.8) --
Other................................................. -- -- -- 0.8 (2.3)
Changes in assets and liabilities, net of effects
from business combinations:
Receivables......................................... (148.4) (140.9) (28.1) (62.9) 39.3
Inventory........................................... 66.5 (380.8) (37.2) (72.2) 268.9
Other assets........................................ (23.0) 42.0 (33.9) (43.8) --
Accounts payable and accrued liabilities............ (85.2) (33.3) (162.3) (64.3) (24.8)
Other liabilities................................... 90.0 167.5 43.9 95.4 (6.0)
------------- ----------- --------- -------- ---------
217.8 47.2 281.5 90.1 492.5
------------- ----------- --------- -------- ---------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment...................... (256.7) (242.3) (148.2) (52.9) (52.8)
Proceeds from sale of property and equipment and
assets held for sale..................................... 12.3 88.4 129.9 70.8 49.9
Purchases of marketable securities....................... (193.6) (88.6) (0.9) -- --
Funding of installment loan receivables, net of collections (965.5) (1,578.6) (562.3) (308.1) (345.1)
Proceeds from sales of installment loan receivables...... 706.4 1,599.4 720.3 367.8 369.0
Sales of marketable securities........................... 94.1 116.7 91.6 53.2 0.5
Cash used in business acquisitions, net of cash acquired. (804.3) (914.0) (313.3) (192.3) (33.2)
Cash received from business divestitures................. 55.1 131.3 178.7 27.7 61.2
Cash received on disposal of solid waste services segment 1,433.6 1,779.6 -- -- --
Restricted cash deposits................................. (39.2) (51.2) (76.6) (46.7) (20.3)
Other.................................................... (64.1) (15.2) (0.4) (0.3) 3.3
------------- ----------- --------- -------- ---------
(21.9) 825.5 18.8 (80.8) 32.5
------------- ----------- --------- -------- ---------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net proceeds (payments) under vehicle inventory financing
facilities.............................................. 65.1 429.7 159.4 141.9 (298.9)
Net proceeds (payments) under revolving credit facilities 250.0 169.0 (54.0) 196.0 (219.0)
Purchases of treasury stock.............................. (136.0) (1,158.0) (188.9) (106.9) (129.2)
Net proceeds (payments) of notes payable and long-term debt (260.3) (126.1) (197.0) (95.2) 65.6
Proceeds from sale-leaseback financing................... -- -- 52.1 -- --
Other.................................................... 32.2 29.0 1.3 0.7 0.4
------------- ----------- --------- -------- ---------
(49.0) (656.4) (227.1) 136.5 (581.1)
------------- ----------- --------- -------- ---------
CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS............ 146.9 216.3 73.2 145.8 (56.1)
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS.......... 451.4 (706.3) (227.0) (227.0) --
------------- ----------- --------- -------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ 598.3 (490.0) (153.8) (81.2) (56.1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD, INCLUDING
CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATIONS OF
$44.9, $590.1, $17.4, $17.4 AND $--, RESPECTIVELY......... 127.7 726.0 236.0 236.0 82.2
------------- ----------- --------- -------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD, INCLUDING CASH
AND CASH EQUIVALENTS OF DISCONTINUED OPERATIONS OF
$590.1, $17.4, $--, $-- (unaudited) AND $--(unaudited),
RESPECTIVELY $ 725.0 $ 236.0 $ 82.2 $ 154.8 $ 26.1
============= =========== ========= ======== ==========
The accompanying notes are an integral part of these statements.
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years 1998, 1999, and 2000
(All tables in millions, except per share data)
Introduction
The audited consolidated balance sheets of AutoNation, Inc. and
its subsidiaries (the "Company") as of December 31, 2000 and 1999, and the
related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31,
2000 included herein were included in the Company's 2000 Annual Report on
Form 10-K.
The unaudited condensed consolidated financial statements as of
June 30, 2001 and for the six months ended June 30, 2001 and 2000 were
included in the Company's Quarterly Report on Form 10-Q and have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. All significant intercompany accounts
and transactions have been eliminated. Certain information related to the
Company's organization, significant accounting policies and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. These unaudited condensed consolidated financial
statements reflect, in the opinion of management, all material adjustments
(which include only normal recurring adjustments) necessary to fairly
state, in all material respects, the financial position and the results of
operations for the periods presented and the disclosures herein are
adequate to make the information presented not misleading in any material
respect. Operating results for interim periods are not necessarily
indicative of the results that can be expected for a full year.
The following notes to consolidated financial statements relate to
the audited three-year period ended December 31, 2000. Notes related to the
unaudited condensed consolidated financial statements for the six months
ended June 30, 2001 and 2000 immediately follow these notes.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Company is the largest automotive retailer in the United
States. As of December 31, 2000, the Company owned and operated
approximately 400 new vehicle franchises from dealerships in 18 states,
predominantly in major metropolitan markets in the Sunbelt states. The
Company's dealerships offer new and used vehicles for sale. Each dealership
also offers financing for vehicle purchases, extended service contracts and
other finance and insurance products, as well as other aftermarket products
such as vehicle accessories, upgraded sound systems and theft-deterrent
systems. The Company's dealerships also offer service facilities that
provide a wide range of vehicle maintenance and repair services, and
operate collision repair centers in most key markets.
On June 30, 2000, the Company completed the spin-off of its former
automotive rental businesses, organized under ANC Rental Corporation ("ANC
Rental"), by distributing 100% of ANC Rental's common stock to AutoNation's
stockholders as a tax-free dividend. As a result of the spin-off,
AutoNation stockholders received one share of ANC Rental common stock for
every eight shares of AutoNation common stock owned as of the June 16, 2000
record date. As discussed in Note 11, Discontinued Operations, the
Company's former automotive rental segment has been accounted for as
discontinued operations in the accompanying Consolidated Financial
Statements and accordingly, the net assets and operating results of ANC
Rental for the periods prior to disposition have been classified as
discontinued operations in the accompanying Consolidated Financial
Statements.
In July 1998, the Company's former solid waste subsidiary,
Republic Services, Inc., completed an initial public offering of 36.1% of
its common stock. In May 1999, the Company sold substantially all of its
interest in Republic Services in a public offering. As discussed in Note
11, Discontinued Operations, the Company's former solid waste services
segment has been accounted for as discontinued operations in the
accompanying Consolidated Financial Statements and accordingly, operating
results of Republic Services for the periods prior to disposition have been
classified as discontinued operations in the accompanying Consolidated
Financial Statements.
Basis of Presentation
The accompanying Consolidated Financial Statements include the
accounts of AutoNation, Inc. and its subsidiaries. The Company operates in
a single industry segment, automotive retailing. All intercompany accounts
and transactions have been eliminated. In order to maintain consistency and
comparability between periods presented, floorplan interest expense,
depreciation and amortization and certain other amounts have been
reclassified from the previously reported financial statements to conform
to the financial statement presentation of the current period.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Receivables
The components of receivables, net of allowance for doubtful
accounts, at December 31 are as follows:
1999 2000
---- ----
Contracts in transit and vehicle receivables.......................................... $ 391.9 $ 407.5
Finance receivables................................................................... 441.5 350.2
Trade receivables..................................................................... 121.2 119.6
Manufacturer receivables.............................................................. 134.1 131.2
Other................................................................................. 133.3 135.4
------------- -------------
1,222.0 1,143.9
Less: allowance for doubtful accounts................................................. (42.5) (35.1)
------------- -------------
$ 1,179.5 $ 1,108.8
============= =============
Finance receivables consist of the following at December 31:
1999 2000
---- ----
Finance leases, net................................................................... $ 196.3 $ 147.8
Installment loans..................................................................... 83.8 50.3
Retained interests in securitized installment loans................................... 161.4 152.1
------------- -------------
$ 441.5 $ 350.2
============= =============
The Company sells installment loan finance receivables in
securitization transactions with unrelated financial institutions. When the
Company sells receivables in securitizations, it retains interest- only
strips, one or more subordinated tranches, servicing rights, and cash
reserve accounts, all of which are retained interests in the securitized
receivables. Gains or losses on the sale of the receivables depend in part
on the previous carrying amount of the financial assets involved in the
transfer, allocated between the assets sold and the retained interests
based on their relative fair value at the date of transfer. Gains or losses
from the sale of the receivables are recognized in the period in which
sales occur. Interest-only strips are carried at fair value and marked to
market as a component of other comprehensive income unless an other than
temporary impairment occurs in the valuation of the interest-only strip in
which case the impairment is recorded in the Consolidated Income
Statements. Retained interests in the securitized receivables are carried
at allocated carrying amounts and periodically assessed for impairment.
Servicing assets are initially recorded at allocated carrying amounts and
subsequently amortized over the servicing period and periodically assessed
for impairment. The Company generally estimates fair value utilizing
valuation models based on the present value of future expected cash flows
estimated using the Company's best estimate and historical experience of
the key assumptions including credit losses, voluntary prepayment speeds,
forward yield curve, and discount rates commensurate with the risks
involved.
The Company accounts for the sale of receivables in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." In September 2000, SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities--a Replacement of FASB No. 125" ("SFAS 140")
was issued. SFAS 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures. SFAS 140 disclosure requirements are
effective for fiscal years ending after December 15, 2000, and have been
included in Note 13, Asset Securitizations. Accounting for transfers and
servicing of financial assets and extinguishment of liabilities under SFAS
140 is effective for transactions occurring after March 31, 2001. Although
additional interpretive guidance is expected from the Financial Accounting
Standards Board ("FASB"), the Company does not expect the adoption of the
accounting requirements of SFAS 140, as currently interpreted, will have a
material impact on its consolidated financial position, results of
operations or cash flows.
As described in Note 10, Restructuring and Impairment Charges
(Recoveries), Net, during 2000, an impairment charge totaling $16.6 million
related to the deterioration of vehicle residual values associated with
finance lease receivables was recognized. Finance lease originations were
discontinued in mid-1999 and the majority of the remaining leases terminate
in late 2001.
In 2000, the Emerging Issues Task Force of the Financial
Accounting Standards Board reached a consensus on EITF Issue No. 99-20,
"Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets" ("EITF 99-20"). EITF
99-20 specifies, among other things, how a transferor that retains an
interest in a securitization transaction should account for interest income
and impairment. EITF 99-20 is effective for fiscal quarters beginning after
March 15, 2001. The Company plans to adopt EITF 99-20 on April 1, 2001. The
Company does not expect adoption of EITF 99-20 to have a material impact on
its consolidated financial position, results of operations or cash flows.
Inventory
Inventory consists primarily of retail vehicles held for sale
valued using the specific identification method, net of reserves. Cost
includes acquisition, reconditioning and transportation expenses. Parts and
accessories are valued at the factory list price which approximates lower
of cost (first-in, first-out) or market.
Inventory acquired in business acquisitions is recorded at fair
value. Adjustments to convert from the acquired entity's accounting method
(generally last-in, first-out) to the Company's accounting method are
recorded as an adjustment to the cost in excess of the fair value of net
assets acquired.
A summary of inventory at December 31 is as follows:
1999 2000
---- ----
New vehicles.......................................................................... $ 2,085.0 $ 2,295.8
Used vehicles......................................................................... 470.1 317.9
Parts, accessories and other.......................................................... 151.7 155.5
--------------- -------------
$ 2,706.8 $ 2,769.2
=============== =============
Other Current Assets
Other current assets consist primarily of restricted cash deposits
related to insurance programs totaling $91.9 million and $160.8 million at
December 31, 1999 and 2000, respectively.
Investments
Investments consist of marketable securities and investments in
businesses accounted for under the equity-method. Marketable securities
include investments in debt and equity securities classified as
available-for-sale and are stated at fair value with unrealized gains and
losses included in other comprehensive income. Other-than-temporary
declines in investment values are recorded as a component of Other Income,
Net in the Company's Consolidated Income Statements. Fair value is
estimated based on quoted market prices. Equity-method investments
represent investments in 50% or less owned automotive-related businesses
over which the Company has the ability to exercise significant influence.
The Company records its initial equity-method investments at cost and
subsequently adjusts the carrying amounts of the investments for the
Company's share of the earnings or losses of the investee after the
acquisition date as a component of Other Income, Net in the Company's
Consolidated Income Statements. The Company continually assesses whether
equity-method investments should be evaluated for possible impairment by
use of an estimate of the related undiscounted cash flows. The Company
measures impairment losses based upon the amount by which the carrying
amount of the asset exceeds the fair value.
A summary of investments at December 31 is as follows:
1999 2000
---- ----
Marketable securities................................................................. $ 106.2 $ 5.2
Equity-method investments............................................................. 69.6 33.6
--------------- ------------
$ 175.8 $ 38.8
=============== ============
Investments in marketable securities at December 31 are as
follows:
1999
----------------------------------------------------------
Gross Gross Fair
Unrealized Unrealized Market
Cost Gains Losses Value
---- ----- ------ -----
U.S. government debt securities............................ $ 37.2 $ -- $ (0.6) $ 36.6
Corporate debt securities.................................. 21.5 -- (0.4) 21.1
Equity securities.......................................... 27.4 21.1 -- 48.5
-------------- ----------- ----------- ----------
$ 86.1 $ 21.1 $ (1.0) $ 106.2
============== =========== =========== ==========
2000
----------------------------------------------------------
Gross Gross Fair
Unrealized Unrealized Market
Cost Gains Losses Value
---- ----- ------ -----
Corporate debt securities.................................. $ 0.6 $ -- $ -- $ 0.6
Equity securities.......................................... 3.1 1.5 -- 4.6
-------------- ----------- ----------- ----------
$ 3.7 $ 1.5 $ -- $ 5.2
============== =========== =========== ==========
Proceeds from sales of available-for-sale securities were $94.1
million, $116.7 million, and $91.6 million for the years ended December 31,
1998, 1999, and 2000, respectively. Gross realized gains and losses were
not material for the year ended December 31, 1998. Gross realized gains and
losses of $5.3 million and $.8 million, respectively were recognized for
the year ended December 31, 1999. Gross realized gains and losses of $24.0
million and $.3 million, respectively were recognized for the year ended
December 31, 2000. In 2000, the Company recognized a pre-tax $30.0 million
valuation write- down to an equity-method investment in a privately-held
salvage and parts recycling business which has been reflected in Other
Income, Net in the accompanying 2000 Consolidated Income Statement.
Property and Equipment
Property and equipment are recorded at cost. Expenditures for
major additions and improvements are capitalized, while minor replacements,
maintenance and repairs are charged to expense as incurred. When property
is retired or otherwise disposed of, the cost and accumulated depreciation
and amortization are removed from the accounts and any resulting gain or
loss is reflected in the Consolidated Income Statements.
The Company revises the estimated useful lives of property and
equipment acquired through its business acquisitions to conform with its
policies regarding property and equipment. Depreciation and amortization
are provided over the estimated useful lives of the assets involved using
the straight-line method. The estimated useful lives are: twenty to forty
years for buildings and improvements, three to fifteen years for equipment
and five to ten years for furniture and fixtures.
A summary of property and equipment at December 31 is as follows:
1999 2000
---- ----
Land.................................................................................. $ 529.7 $ 596.2
Buildings and improvements............................................................ 670.9 827.4
Furniture, fixtures and equipment..................................................... 310.5 282.3
---------------- ---------
1,511.1 1,705.9
Less: accumulated depreciation and amortization....................................... (150.7) (167.8)
---------------- ---------
$ 1,360.4 $ 1,538.1
================ =========
The Company continually evaluates whether events and circumstances
have occurred that may warrant revision of the estimated useful life of
property and equipment or whether the remaining balance of property and
equipment should be evaluated for possible impairment. The Company uses an
estimate of the related undiscounted cash flows over the remaining life of
the property and equipment in assessing whether an asset has been impaired.
The Company measures impairment losses based upon the amount by which the
carrying amount of the asset exceeds the fair value. Fair values generally
are estimated using prices for similar assets and/or discounted cash flows.
As described in Note 10, Restructuring and Impairment Charges (Recoveries),
Net, the Company recognized an impairment charge in 1999 for the write-down
of certain megastore and other properties held for sale to fair value.
Properties held for sale are included in Other Assets as described below.
Additionally, during 2000, the Company sold an office building
which is occupied by ANC Rental, resulting in proceeds of approximately
$18.7 million and a pre-tax gain of $2.3 million reflected in Other Income,
Net in the accompanying 2000 Consolidated Income Statement.
Intangible Assets
Intangible assets consist primarily of the cost of acquired
businesses in excess of the fair value of net assets acquired, including
cost in excess of the fair value of net assets not identified with specific
acquired businesses, or enterprise-level intangible assets. The cost in
excess of the fair value of net assets is amortized over forty years on a
straight-line basis. Accumulated amortization of intangible assets was
$122.5 million and $195.4 million at December 31, 1999 and 2000,
respectively.
The Company continually evaluates whether events and circumstances
have occurred that may warrant revision of the estimated useful life of
intangible assets or whether the remaining balance of intangible assets
should be evaluated for possible impairment. The Company uses an estimate
of the related undiscounted cash flows over the remaining life of the
intangible assets in assessing whether intangible assets have been
impaired. The Company measures impairment losses based upon the amount by
which the carrying amount of the asset exceeds the fair value.
In September 2000, the FASB issued an Exposure Draft entitled
"Business Combinations and Intangible Assets" which was revised in February
2001. The Exposure Draft, if adopted, would prohibit the pooling method of
accounting for business combination transactions and would require that
intangible assets in excess of the fair value of net assets, goodwill, not
be amortized. Goodwill would be reduced only if found to be impaired or if
associated with assets to be sold or otherwise disposed. The FASB is
expected to issue a final statement in 2001. During 2000, the Company
recorded amortization expense of approximately $73.7 million relating to
goodwill. This statement, if issued as proposed, would preclude future
amortization of existing and any future goodwill on a prospective basis
from the date of issuance.
Other Assets
Other assets consist primarily of megastore and other properties
held for sale. As described in Note 10, Restructuring and Impairment
Charges (Recoveries), Net, the Company recognized an impairment charge in
1999 to write-down the carrying value of properties held for sale to fair
value. Assets held for sale totaled approximately $212.0 million and $138.8
million at December 31, 1999 and December 31, 2000, respectively.
Insurance
Under self-insurance programs, the Company retains various levels
of aggregate loss limits, per claim deductibles and claims handling
expenses as part of its various insurance programs, including property and
casualty and employee medical benefits. Costs in excess of this retained
risk per claim are insured under various contracts with third party
insurance carriers. The ultimate costs of these retained insurance risks
are estimated by management and by actuarial evaluation based on historical
claims experience, adjusted for current trends and changes in
claims-handling procedures.
Revenue Recognition
Revenue consists of sales of new and used vehicles and related
finance and insurance ("F&I") products, sales from fixed operations (parts,
service and body shop), sales of other products including wholesale units
and retail financing. The Company recognizes revenue in the period in which
products are sold or services are provided. Revenue on finance products
represents fees earned by the Company for notes placed with financial
institutions in connection with customer vehicle purchases financed and is
recognized upon acceptance of credit by the financial institution. Revenue
on insurance products sold on behalf of third party insurance companies in
connection with vehicle sales is recognized upon sale. An estimated
allowance for chargebacks against revenue recognized from sales of F&I
products is established during the period in which the related revenue is
recognized. Revenue from retail financing and certain loan origination
costs are recognized over the term of the contract using the interest
method until the Company securitizes its installment loans.
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 provides guidance on the recognition,
presentation and disclosure of revenue in financial statements. The
Company's revenue recognition policy is in accordance with the provisions
of SAB 101. Adoption of the provisions of SAB 101 did not have a material
impact on the Company's consolidated financial position, results of
operations or cash flows as of and for the year ended December 31, 2000.
A summary of the Company's revenue by major products and services
for the years ended December 31 is as follows:
1998 1999 2000
---- ---- ----
New vehicles..................................................... $ 6,775.8 $ 11,481.0 $ 12,489.3
Used vehicles.................................................... 3,185.2 4,429.7 3,860.2
Fixed operations................................................. 1,383.2 2,222.0 2,334.9
F&I, net......................................................... 288.6 423.4 431.8
Other............................................................ 1,031.8 1,555.7 1,493.4
------------------- --------------- -------------
$ 12,664.6 $ 20,111.8 $ 20,609.6
Derivative Financial Instruments
The Company utilizes interest rate derivatives to manage the
impact of interest rate changes on securitized installment loan
receivables. To a limited extent, the Company has utilized interest rate
derivatives to manage the impact of interest rate changes on borrowings
under the Company's variable rate vehicle inventory and revolving credit
facilities. The Company does not use derivative financial instruments for
trading purposes.
Derivative financial instruments entered into concurrently with
securitizations are accounted for at fair value as part of the proceeds
received in the determination of the gain or loss on sale. If a derivative
financial instrument entered into concurrently with a securitization is
later terminated, any resulting gain or loss is recognized in earnings upon
termination.
Interest rate swaps are used at times to manage the impact of
interest rate changes on vehicle inventory and revolving credit facility
borrowings. Under interest rate swaps, the Company agrees with other
parties to exchange, at specified intervals, the difference between
fixed-rate and floating-rate interest amounts calculated by reference to an
agreed notional principal amount. Income or expense under these instruments
is recorded on an accrual basis as an adjustment to the yield of the
underlying exposures over the periods covered by the contracts. If an
interest rate swap is terminated early, any resulting gain or loss is
deferred and amortized as an adjustment of the cost of the underlying
exposure position over the remaining periods originally covered by the
terminated swap. If all or part of an underlying position is terminated,
the related pro-rata portion of any unrecognized gain or loss on the swap
is recognized in income at that time as part of the gain or loss on the
termination. Amounts receivable or payable under the agreements are
included in receivables or accrued liabilities in the accompanying
Consolidated Balance Sheets and were not material at December 31, 1999 or
2000.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). In June 1999,
the FASB issued Statement No. 137, "Accounting for Derivative Instruments
and Hedging Activities--Deferral of the Effective Date of FASB Statement
No. 133." In June 2000, the FASB issued Statement 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment
of FASB Statement No. 133." SFAS 133, as amended, establishes accounting
and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at
its fair value. SFAS 133 requires that changes in the derivative
instrument's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative instrument's gains and losses to offset related results
on the hedged item in the income statement, to the extent effective, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting.
If SFAS 133 had to be applied to all derivative contracts in place
on December 31, 2000, including those embedded in other contracts, total
assets and total liabilities would have increased by approximately $14.3
million. The Company does not expect there to be a material cumulative
effect in earnings or other comprehensive income from adoption of SFAS 133
as of January 1, 2001.
By requiring the use of fair value accounting, adoption of SFAS
133 could cause increased volatility in earnings of future periods.
Advertising
The Company expenses the cost of advertising as incurred or when
such advertising initially takes place. At December 31, 2000, the Company
had approximately $15.0 million of prepaid advertising costs associated
with the sale of the Company's former outdoor media business as discussed
in Note 2, Business Acquisitions and Divestitures. No advertising costs
were capitalized at December 31, 1999. Advertising expense was $158.0
million, $212.2 million and $186.5 million for the years ended December 31,
1998, 1999, and 2000, respectively.
Statements of Cash Flows
The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents unless the
investments are legally or contractually restricted for more than three
months. The effect of non-cash transactions related to business
combinations, as discussed in Note 2, Business Acquisitions and
Divestitures, and other non-cash transactions are excluded from the
accompanying Consolidated Statements of Cash Flows.
The Company made interest payments of approximately $190.2
million, $175.2 million and $264.3 million for the years ended December 31,
1998, 1999 and 2000, respectively, including interest on vehicle inventory
financing. The Company made income tax payments of approximately $139.8
million, $84.2 million and $49.9 million for the years ended December 31,
1998, 1999 and 2000, respectively.
As further discussed in Note 3, Notes Payable and Long-Term Debt,
the Company amended the terms of an existing lease facility and as a
result, the underlying leases have been accounted for as capital leases in
2000, with the property and related debt included in the accompanying
Consolidated Balance Sheets.
2. BUSINESS ACQUISITIONS AND DIVESTITURES
Businesses acquired through December 31, 2000 and accounted for
under the purchase method of accounting are included in the Consolidated
Financial Statements from the date of acquisition.
During the year ended December 31, 1999, the Company acquired
various automotive retail businesses. The Company paid approximately $879.1
million in cash for these acquisitions, all of which were accounted for
under the purchase method of accounting. During 1999, the Company also paid
approximately $34.9 million in deferred purchase price for certain prior
year automotive retail acquisitions.
During the year ended December 31, 1998, the Company acquired
various businesses in the automotive retail, solid waste services and
automotive rental industries. With respect to continuing operations, the
Company issued approximately 21.9 million shares of the Company's common
stock, par value $0.01 per share, valued at $473.2 million and paid
approximately $804.3 million in cash for acquisitions accounted for under
the purchase method of accounting. With respect to discontinued operations,
the Company issued approximately 3.4 million shares of common stock valued
at $68.0 million and paid approximately $494.4 million in cash and certain
properties for acquisitions accounted for under the purchase method of
accounting.
During the year ended December 31, 2000, the Company acquired
various automotive retail businesses. The Company paid approximately $190.9
million in cash for these acquisitions, all of which were accounted for
under the purchase method of accounting. During 2000, the Company also paid
approximately $122.4 million in deferred purchase price for certain prior
year automotive retail acquisitions. At December 31, 2000, the Company
accrued approximately $24.5 million of deferred purchase price due to
former owners of acquired businesses.
The preliminary purchase price allocations for business
combinations accounted for under the purchase method of accounting related
to continuing operations for the years ended December 31 were as follows:
1998 1999 2000
---- ---- ----
Property and equipment.................................................. $ 403.5 $ 145.5 $ 21.9
Intangible and other assets............................................. 1,290.8 942.7 169.0
Working capital......................................................... 744.0 450.3 111.5
Debt assumed............................................................ (1,085.1) (623.8) (109.2)
Other liabilities....................................................... (75.7) (35.6) (2.3)
Common stock issued..................................................... (473.2) -- --
----------------- -------------- ------------
Cash used in business acquisitions, net of cash acquired................ $ 804.3 $ 879.1 $ 190.9
================= ============== ============
The Company's unaudited pro forma consolidated results of
continuing operations assuming acquisitions accounted for under the
purchase method of accounting had occurred at the beginning of each period
presented are as follows for the years ended December 31:
1999 2000
---- ----
Revenue............................................................................... $ 22,379.3 $ 21,113.1
Income (loss) from continuing operations.............................................. $ (12.0) 328.8
Diluted earnings (loss) per share from continuing operations.......................... $ (0.03) $ 0.91
The unaudited pro forma results of continuing operations are
presented for informational purposes only and may not necessarily reflect
the future results of operations of the Company or what the results of
operations would have been had the Company owned and operated these
businesses as of the beginning of each period presented.
As described in Note 10, Restructuring and Impairment Charges
(Recoveries), Net, the Company has been divesting of certain non-core
franchised automotive dealerships. During 2000, the Company received
approximately $89.7 million of cash from the divestiture of franchised
automotive dealerships. Gains and losses on divestitures are included in
Asset Impairment Charges (Recoveries) in the accompanying Consolidated
Income Statements and were not material during 2000. The Company signed a
definitive agreement to sell its Flemington dealer group. The Company
expects to complete the sale in the second quarter of 2001.
In November 2000, the Company completed the divestiture of its
outdoor media business for a purchase price of approximately $104.0
million. In connection with the sale, the Company entered into a prepaid
$15.0 million advertising agreement and therefore, received net proceeds of
$89.0 million. The Company recognized a pre-tax gain of $53.5 million on
the sale which has been included in Other Income, Net in the accompanying
2000 Consolidated Income Statement.
Cash received from the divestiture of franchised automotive
dealerships in 1998 and 1999 was $55.1 million and $131.3 million,
respectively. Gains and losses on divestitures, other than those recorded
in the Company's 1999 restructuring and impairment charges, were not
material in 1998 and 1999.
3. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt at December 31 is as follows:
1999 2000
---- ----
Vehicle inventory credit facilities; secured by the Company's vehicle
inventory; interest payable at LIBOR based rates; interest rates of 6.6% and
7.7% at December 31, 1999 and 2000, respectively.................................... $ 2,210.6 $ 2,416.7
$1.5 billion unsecured revolving credit facilities; interest payable using
LIBOR based rates; interest rates of 6.6% and 7.6% at December 31, 1999
and 2000, respectively.............................................................. 669.0 615.0
Other debt; secured by real property, equipment and other assets; interest
ranging from 7.5% to 8.0%; maturing through 2010.................................... 174.8 242.2
----------------- -------------
3,054.4 3,273.9
Less: current maturities............................................................ (2,218.3) (2,423.5)
----------------- -------------
$ 836.1 $ 850.4
================= =============
As of December 31, 2000, the Company had $615.0 million drawn
under two unsecured revolving credit facilities totaling $1.5 billion. One
facility provides $1.0 billion of financing under a multi-year structure
and matures April 2002. The other facility, a $500.0 million 364-day
facility, was amended prior to its scheduled maturity in March 2001 to
provide $250.0 million of borrowing capacity until the earlier of September
30, 2001 or the early renewal of the Company's multi-year $1.0 billion
facility. The Company's revolving credit facilities require, among other
items, that the Company maintain certain financial ratios and comply with
certain financial covenants. The Company was in compliance with these
ratios and covenants at December 31, 2000 and 1999.
The Company finances vehicle inventory through secured financings,
primarily floorplan facilities, with manufacturers' captive finance
subsidiaries, as well as independent financial institutions, and, until
recently, a bank-sponsored commercial paper conduit facility that matured
January 19, 2001, and was not renewed. As of December 31, 2000, committed
capacity of the facilities was approximately $3.5 billion.
The Company is a lessee under a $500.0 million lease facility that
was established primarily to acquire and develop the Company's former
megastore properties. As originally structured, the facility had been
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
described in Note 10, Restructuring and Impairment Charges (Recoveries),
Net, the Company accrued an estimate of the liability under the residual
value guarantees totaling approximately $103.3 million as of December 31,
1999. At December 31, 1999, $469.7 million was funded under this facility
of which $152.5 million was accounted for as capital leases and the
remaining $317.2 million was accounted for as operating leases. In
September 2000, the Company funded its remaining lease residual value
guarantee obligation to the lessor, reduced the facility size to $210.0
million and amended the terms of the facility by exercising its option to
purchase the leased properties at the end of the lease term. As a result of
the lease amendment, the remaining leases were required to be accounted for
as capital leases with the property and related debt reflected on the
balance sheet. As of December 31, 2000, $175.8 million was outstanding
under this facility and is included in Long-Term Debt in the accompanying
2000 Consolidated Balance Sheet. Of the $175.8 million outstanding, $115.2
million is associated with operating properties and $60.6 million is
attributable to properties held for sale. The facility matures April 2002.
Interest payments are LIBOR based.
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. This transaction has been 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, 2000, aggregate maturities of notes payable and
long-term debt were as follows:
2001.......................................................................................... $ 2,423.5
2002.......................................................................................... 797.7
2003.......................................................................................... 4.3
2004.......................................................................................... 3.9
2005.......................................................................................... 4.2
Thereafter.................................................................................... 40.3
-----------------
$ 3,273.9
=================
4. INCOME TAXES
The Company and its subsidiaries file consolidated federal tax
returns. The Company accounts for income taxes in accordance with SFAS No.
109, "Accounting for Income Taxes". Accordingly, deferred income taxes have
been provided to show the effect of temporary differences between the
recognition of revenue and expenses for financial and income tax reporting
purposes and between the tax basis of assets and liabilities and their
reported amounts in the financial statements.
The components of the provision for income taxes from continuing
operations for the years ended December 31 are as follows:
1998 1999 2000
---- ---- ----
Current:
Federal.................................................................... $ 105.5 $ 108.4 $ 101.3
State...................................................................... 9.1 22.8 4.3
Federal and state deferred.................................................... 26.7 (111.2) 91.3
Change in valuation allowance................................................. (14.5) (16.0) --
----------- --------- ---------
Provision for income taxes.................................................... $ 126.8 $ 4.0 $ 196.9
=========== ========= =========
A reconciliation of the provision for income taxes calculated
using the statutory federal income tax rate to the Company's provision for
income taxes from continuing operations for the years ended December 31 is
as follows:
1998 1999 2000
---- ---- ----
Provision (benefit) for income taxes at statutory rate of 35%................. $ 123.4 $ (9.6) $ 183.8
Non-deductible expenses....................................................... 10.3 28.6 5.8
State income taxes, net of federal benefit.................................... 7.6 1.0 10.1
Change in valuation allowance................................................. (14.5) (16.0) --
Other, net.................................................................... -- -- (2.8)
---------- ------- ---------
Provision for income taxes.................................................... $ 126.8 $ 4.0 $ 196.9
========== ======= =========
Components of the net deferred income tax liability at December 31
are as follows:
1999 2000
---- ----
Deferred income tax liabilities:
Book basis in property over tax basis..................................................... $ 336.1 $ 360.8
Expenses deducted for tax, amortized for book............................................. 705.6 689.3
Deferred income tax assets:
Net operating losses...................................................................... (4.2) (3.6)
Accruals not currently deductible......................................................... (342.0) (278.6)
Valuation allowance....................................................................... 109.3 109.3
----------- ------------
Net deferred income tax liability............................................................ $ 804.8 $ 877.2
=========== ============
At December 31, 2000, the Company had available domestic net
operating loss carryforwards primarily related to acquired businesses of
approximately $9.4 million which begin to expire in the year 2011. In
assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The Company provides valuation allowances
to offset portions of deferred tax assets due to uncertainty surrounding
the future realization of such deferred tax assets. The Company adjusts the
valuation allowance in the period management determines it is more likely
than not that deferred tax assets will or will not be realized. Future
decreases to the valuation allowance may be allocated to reduce intangible
assets associated with business acquisitions accounted for under the
purchase method of accounting.
Over the past four years, the Company has engaged in certain
transactions that are of a type that the Internal Revenue Service has
recently indicated it intends to challenge. The Company believes that its
tax returns appropriately reflect such transactions. At the present time,
it is impossible to predict the outcome of any challenge if the IRS
determines to challenge the tax reporting of such transactions.
5. OTHER COMPREHENSIVE INCOME
The changes in the components of other comprehensive income
(loss), net of income taxes, are as follows for the years ended December
31:
1998 1999 2000
----------------------------- --------------------------- ----------------------------
Pre-Tax Tax Net Pre-Tax Tax Net Pre-Tax Tax Net
Amount Effect Amount Amount Effect Amount Amount Effect Amount
------ ------ ------ ------ ------ ------ ------ ------ ------
Foreign currency translation
adjustments(1)................ $ (1.6) $ -- $ (1.6) $(1.9) $ -- $(1.9) $ 6.4 $ -- $ 6.4
Unrealized gain (loss) on
marketable securities and
interest-only strips.......... 0.7 (0.2) 0.5 23.1 (8.3) 14.8 (14.2) 5.3 (8.9)
Reclassification of realized
losses (gains)................ (0.4) 0.1 (0.3) (3.0) 1.0 (2.0) (7.1) 4.0 (3.1)
------ ------ ------ ------ ------ ------ ------ ------ ------
Other comprehensive income
(loss)........................ $ (1.3) $(0.1) $ (1.4) $18.2 $(7.3) $10.9 $(14.9) $ 9.3 $ (5.6)
========= ====== ======= ====== ====== ====== ======= ======= =======
- -----------
(1) Foreign currency translation adjustments relate to the Company's
former automotive rental businesses.
Accumulated other comprehensive income (loss) consists of the
following at December 31:
1999 2000
---- ----
Foreign currency translation adjustments....................................................$ (6.4) $ --
Unrealized gain on marketable securities and interest-only strips........................... 13.0 1.0
----------- -------
$ 6.6 $ 1.0
=========== =======
6. SHAREHOLDERS' EQUITY
The Company repurchased 9.1 million shares of common stock during
1998 for an aggregate purchase price of $136.0 million. The Company
repurchased 91.0 million shares of common stock during 1999 for an
aggregate purchase price of $1.16 billion. During the year ended December
31, 2000, the Company repurchased 27.6 million shares of its common stock,
par value $.01 per share, under its Board authorized share repurchase
program for an aggregate purchase price of $188.9 million. Through December
31, 2000, an aggregate of 127.7 million shares of common stock have been
repurchased under the Company's share repurchase programs, authorized by
the Company's Board of Directors in 1998 and 1999, for an aggregate
purchase price of $1.48 billion. As of March 26, 2001, the Company
repurchased an additional 10.9 million shares of common stock for an
aggregate purchase price of $87.8 million, leaving approximately $179.2
million available for share repurchases under the latest authorized
program. Repurchases are made pursuant to Rule 10b-18 of the Securities
Exchange Act of 1934, as amended.
As discussed in Note 11, Discontinued Operations, the Company
completed the tax-free spin-off of ANC Rental on June 30, 2000. As a result
of the spin-off, the Company's retained earnings were reduced by the net
assets of ANC Rental totaling $894.4 million. The equity adjustment
resulting from the spin-off is subject to further adjustment resulting from
changes in estimated shared assets and liabilities of AutoNation and ANC
Rental and certain other matters. However, such adjustments, if any, are
not expected to be significant.
During the year ended December 31, 1998, the Company's former
solid waste subsidiary, Republic Services, completed an initial public
offering of approximately 36.1% of its outstanding common stock, resulting
in net proceeds of approximately $1.43 billion. In 1999, the Company sold
substantially all of its interest in Republic Services in a public offering
resulting in proceeds of approximately $1.78 billion. During 2000, the
Company sold substantially all of the remaining holdings of common stock of
Republic Services resulting in proceeds of approximately $48.2 million. A
related pre-tax gain of $24.0 million has been reflected in Other Income,
Net, in the accompanying 2000 Consolidated Income Statement.
The Company has five million authorized shares of preferred stock,
par value $0.01 per share, none of which are issued or outstanding. The
Board of Directors has the authority to issue the preferred stock in one or
more series and to establish the rights, preferences and dividends.
7. STOCK OPTIONS AND WARRANTS
The Company has various stock option plans under which options to
purchase shares of common stock may be granted to key employees and
directors of the Company. Options granted under the plans are non-qualified
and are granted at a price equal to the quoted market price of the common
stock on the trading day immediately prior to the date of grant. Generally,
options granted will have a term of 10 years from the date of grant, and
will vest in increments of 25% per year over a four-year period on the
yearly anniversary of the grant date. In October 1998, the Company's Board
of Directors approved the repricing of approximately 32.1 million employee
stock options to $12.75 per share, equal to the closing price of the
Company's common stock on the last business day prior to the date of the
re-pricing. Effective June 30, 2000, in conjunction with the tax-free
spin-off of ANC Rental, options to purchase approximately 2.8 million
shares of common stock held by employees of ANC Rental were canceled. In
addition, the Company's Board of Directors, in accordance with the terms of
the stock option plans, authorized the adjustment of employee stock options
to reflect the market effect on AutoNation's common stock resulting from
the spin-off. All other terms of the existing options, including the
vesting schedules, were unchanged.
A summary of stock option and warrant transactions is as follows
for the years ended December 31:
1998 1999 2000
--------------------- -------------------- ----------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
Options and warrants outstanding at
beginning of period............................ 48.1 $ 15.67 54.6 $ 12.52 50.9 $ 15.84
Granted........................................... 16.9 21.89 17.0 15.80 12.5 6.91
Exercised......................................... (9.3) 3.62 (7.8) 3.73 (0.6) 2.16
Canceled.......................................... (1.1) 25.34 (12.9) 13.90 (10.2) 14.14
Spin-off adjustment............................... -- -- -- -- 4.6 (1.57)
----- ----- ----- ----- ----- -----
Options and warrants outstanding at end of
period......................................... 54.6 $ 12.52 50.9 $ 15.84 57.2 $ 12.74
===== ===== ===== ===== ===== =====
Options and warrants exercisable at end of
period......................................... 18.8 $ 11.27 15.4 $ 18.58 32.7 $ 14.59
Options available for future grants............... 28.2 24.1 25.3
The following table summarizes information about outstanding and
exercisable stock options at December 31, 2000:
Outstanding Exercisable
----------------------------------------- -----------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Exercise Price or Contractual Exercise Exercise
Range of Exercise Prices Shares Life (Yrs.) Price Shares Price
- ------------------------------------ ------ ----------- ----- ------ -----
$ 1.02--$11.17 19.4 7.68 $ 8.35 6.7 $ 10.63
$11.51--$14.39 28.1 6.42 12.60 17.0 12.29
$14.56--$35.88 9.7 5.61 21.89 9.0 21.84
------ ----------- -------- -------- ---------
57.2 6.71 $ 12.74 32.7 $ 14.59
====== =========== ======== ======== =========
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" in accounting for stock-based
employee compensation arrangements whereby compensation cost related to
stock options is generally not recognized in determining net income. Had
compensation cost for the Company's stock option plans been determined
pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation", the
Company's net income and earnings per share would have decreased
accordingly. Using the Black-Scholes option pricing model for all options
granted after December 31, 1994, the Company's pro forma net income, pro
forma earnings per share and pro forma weighted average fair value of
options granted, with related assumptions, are as follows for the years
ended December 31:
1998 1999 2000
---- ---- ----
Pro forma net income................................................... $ 368.5 $ 199.5 $ 285.4
Pro forma diluted earnings per share................................... $ 0.81 $ 0.46 $ 0.79
Pro forma weighted average fair value of options granted............... $ 13.87 $ 6.87 $ 2.96
Risk free interest rates............................................... 4.76-4.82% 6.34-6.38% 5.07-5.15%
Expected dividend yield................................................ -- -- --
Expected lives......................................................... 5-7 years 5-7 years 5-7 years
Expected volatility.................................................... 40% 40% 40%
8. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
In October 2000, the California Department of Motor Vehicles
("California DMV") brought action against one of the Company's California
dealerships for alleged customer fraud as well as several other claims. The
California DMV seeks to have the dealership's license to do business in
California suspended or revoked. The case is scheduled for trial beginning
in April 2001. Three civil class actions and other related lawsuits have
been filed against the dealership based on the allegations underlying the
California DMV case. In addition, the Los Angeles District Attorney's
Office has been conducting an investigation into the allegations underlying
the California DMV case. The Company intends to vigorously defend itself in
these matters.
In an action filed in Florida state court in 1999, a wholly-owned
subsidiary of the Company was accused of violating the Florida Motor
Vehicle Retail Sales Finance Act and the Florida Deceptive and Unfair Trade
Practices Act by allegedly failing to deliver executed copies of retail
installment contracts to customers of the Company's used vehicle
megastores. In October 2000, the court certified the class of customers on
whose behalf the action would proceed. The Company has appealed this
decision and intends to vigorously defend itself in this matter.
Several of the Company's Texas dealerships have been named in
three class actions brought against the Texas Automobile Dealer's
Association ("TADA") and new vehicle dealerships in Texas that are members
of the TADA. The actions allege, among other things, that since January
1994 Texas dealers have deceived customers with respect to a vehicle
inventory tax and violated federal antitrust and other laws as well. These
cases are currently pending in Texas State courts and federal district
court. The Company intends to vigorously defend itself in these matters.
In addition to the above, the Company is a party to numerous other
legal proceedings that arose in the ordinary course of business.
The Company has certain insurance coverage and rights of
indemnification. The Company does not believe that the ultimate resolution
of these matters will have a material adverse effect on the Company's
business, consolidated results of operations, financial condition or cash
flows. However, the results of these matters cannot be predicted with
certainty, and an unfavorable resolution of one or more of these matters
could have a material adverse effect on the Company's business,
consolidated results of operations, financial condition and/or cash flows.
Lease Commitments
The Company leases real property, equipment and software under
various operating leases most of which have terms from 1 to 25 years.
Expenses under real property, equipment and software leases were
$45.0 million, $86.2 million and $82.7 million for the years ended December
31 1998, 1999 and 2000, respectively.
Future minimum lease obligations under noncancellable real
property, equipment and software leases with initial terms in excess of one
year at December 31, 2000 are as follows:
Year Ending December 31:
2001........................................................... $ 71.9
2002........................................................... 63.6
2003........................................................... 53.9
2004........................................................... 40.5
2005........................................................... 32.5
Thereafter..................................................... 158.0
$ 420.4
============
Other Matters
In the normal course of business, the Company is required to post
performance and surety bonds, letters of credit, and/or cash deposits as
financial guarantees of the Company's performance. At December 31, 2000,
surety bonds and letters of credit totaled $27.2 million and have various
expiration dates.
In the ordinary course of business, the Company is subject to
numerous laws and regulations, including automotive, environmental, health
and safety and other laws and regulations. The Company does not anticipate
that the costs of such compliance will have a material adverse effect on
its business, consolidated results of operations, cash flows or financial
condition although such outcome is possible given the nature of the
Company's operations and the extensive legal and regulatory framework
applicable to its business.
9. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during
the year. Diluted earnings (loss) per share is based on the combined
weighted average number of common shares and common share equivalents
outstanding which include, where appropriate, the assumed exercise or
conversion of options and warrants. In computing diluted earnings (loss)
per share, the Company has utilized the treasury stock method.
The computation of weighted average common and common equivalent
shares used in the calculation of basic and diluted earnings (loss) per
share is as follows for the years ended December 31:
1998 1999 2000
---- ---- ----
Weighted average shares outstanding used in calculating basic earnings per share............ 455.1 429.8 361.3
Effect of dilutive options and warrants..................................................... 15.8 -- 0.1
------ ----- -----
Weighted average common and common equivalent shares used in calculating
diluted earnings per share............................................................... 470.9 429.8 361.4
====== ===== =====
At December 31, 1998 and 1999, outstanding employee stock options
of approximately 4.8 and 50.9 million, respectively, have been excluded
since they are anti-dilutive. At December 31, 2000, the Company had
employee stock options outstanding of approximately 57.2 million of which
56.9 million have been excluded from the computation of diluted earnings
per share since they are anti-dilutive.
10. RESTRUCTURING AND IMPAIRMENT CHARGES (RECOVERIES), NET
During the fourth quarter of 1999, the Company approved a plan to
restructure certain of its operations. The restructuring plan was comprised
of the following major components: (1) exiting the used vehicle megastore
business; and (2) reducing the corporate workforce. The restructuring plan
also included divesting of certain non-core franchised dealerships.
Approximately 2,000 positions were eliminated as a result of the
restructuring plan of which 1,800 were megastore positions and 200 were
corporate positions. These restructuring activities resulted in pre-tax
charges of $443.7 million in 1999, of which $416.4 million appears as Asset
Impairment Charges (Recoveries), Net in the Company's 1999 Consolidated
Income Statements. These pre-tax charges include $286.9 million of asset
impairment charges; $103.3 million of reserves for residual value
guarantees for closed lease properties; $26.2 million of severance and
other exit costs; and $27.3 million of inventory related costs. The $286.9
million asset impairment charge consists of: $244.9 million of megastore
and other property impairments; $26.6 million of goodwill impairment
reserves for the divestiture of certain non-core franchised automotive
dealerships; and $15.4 million of information systems impairments. Of the
$443.7 million restructuring reserve recorded, $10.8 million of severance
was paid in 1999 and $53.7 million of asset impairments and write-offs were
recorded during the fourth quarter of 1999.
The Company intends to complete the sale of its Flemington dealer
group during the second quarter of 2001 as previously described in Note 2,
Business Acquisitions and Divestitures, resulting in the substantial
completion of its non-core dealership divestiture plan. Closed megastores
and other properties are being disposed of through sales to third parties.
Although these properties are being aggressively marketed, their ultimate
disposition will not be substantially completed until late 2001. Revenue
for the operations disposed or to be disposed was $1.70 billion, $2.12
billion and $923.5 million during 1998, 1999 and 2000 respectively.
Operating income for the operations disposed or to be disposed was $12.9
million, $15.5 million and $21.8 million for the years ended December 31,
1998, 1999 and 2000 respectively.
The following summarizes activity in the Company's restructuring
and impairment reserves for the year ended December 31, 2000:
Deductions
Amounts
Balance Charged (Credited) Balance
Reserve December 31, 1999 to Income Cash Non-cash December 31, 2000
------- ----------------- --------- ---- -------- -----------------
Asset reserves:
Asset impairment............. $ 263.3 (1) $ (15.0) $ -- $ (86.9) $ 161.4
Inventory.................... 15.0 -- -- (15.0) --
Accrued liabilities:
Property lease residual
value guarantees.......... 103.3 (14.8) (88.5) -- --
Severance and other exit
costs..................... 17.3 9.4 (22.7) (2.8) 1.2
Finance lease residual
value write-down............. -- 16.6 -- (16.6) --
---------------- ------------------ -------- ---------- ---------------
$ 398.9 $ (3.8) $(111.2) $ (121.3) $ 162.6
================ ================== ======== ========== ===============
- -----------
(1) Includes $19.7 million of reserves that had been established on these
properties prior to the 1999 restructuring and impairment charges
recorded.
The following summarizes the components of the $3.8 million amount
credited to income during the year ended December 31, 2000:
Properties Placed Additional
Back into Service Net Gain on Impairment
or Retained Sold Properties Charges Other Total
----------- --------------- ------- ----- -----
Asset reserves:
Asset impairment............................. $ (23.2) $ (3.4) $ 11.6 $ -- $ (15.0)
Accrued liabilities:
Property lease residual value
guarantees................................ (13.0) (1.8) -- -- (14.8)
Severance and other exit costs............... -- -- -- 9.4 9.4
Finance lease residual value write-down......... -- -- -- 16.6 16.6
------------------ ---------------- -------------- -------- -----------
$ (36.2) $ (5.2) $ 11.6 $ 26.0 $ (3.8)
================== ================ ============== ======== ===========
During 2000, certain events occurred which caused the Company to
re-evaluate its plans with respect to various retail properties. As a
result, certain megastore properties were placed back in service and the
Company decided to retain certain dealerships that had been held for sale.
Accordingly, based upon the Company's re-evaluation of the fair values of
the properties, the Company determined that the asset impairment and lease
residual value reserves for these properties were no longer necessary and
the Company was required to reverse the related estimated reserves totaling
$36.2 million back into income. An additional impairment charge of $11.6
million was recognized primarily related to a decision in 2000 to close one
additional megastore property as part of the overall restructuring plan.
During 2000, the Company also recognized an impairment charge totaling
$16.6 million associated with the deterioration in residual values of
finance lease receivables. The Company discontinued writing finance leases
in mid- 1999 and the majority of the leases terminate in late 2001.
11. DISCONTINUED OPERATIONS
On June 30, 2000, the Company completed the tax-free spin-off of
ANC Rental. Accordingly, the net assets and operating results of ANC Rental
have been classified as discontinued operations for all periods presented
in the accompanying Consolidated Financial Statements. Income from
discontinued operations during the year ended December 31, 2000, is net of
previously estimated losses of $22.1 million which were accrued in 1999 and
additional costs associated with the spin-off totaling $11.3 million
recorded in 2000. In 1999, the Company recorded a loss related to ANC
Rental of $34.1 million, net of income taxes, representing the estimated
loss from operations through the expected distribution date and costs
associated with the spin-off.
In connection with the spin-off, the Company made certain capital
contributions to ANC Rental prior to the spin-off. These contributions
include cash of approximately $200.0 million and the net assets of an
insurance subsidiary. The Company also entered into various agreements with
ANC Rental which set forth the terms of the distribution and other
agreements governing the Company's relationship with ANC Rental after the
spin-off. As a result of the spin-off, the Company's equity was reduced by
the net assets of ANC Rental totaling $894.4 million.
In connection with the spin-off, the Company agreed to continue to
provide ANC Rental with guarantees and other credit enhancements, currently
with respect to certain indebtedness and certain property and vehicle lease
obligations. The Company receives fees for providing these guarantees
commensurate with market rates. To the extent that ANC Rental is not able
to meet its obligations, the Company would be likely to be called on to
perform under guarantees and credit enhancements provided by the Company,
which could have a material adverse effect on the Company's business,
consolidated results of operations, financial condition and/or cash flows.
In July 1998, the Company's former solid waste services
subsidiary, Republic Services, completed an initial public offering of
36.1% of its outstanding common stock resulting in net proceeds of
approximately $1.43 billion. In May 1999, the Company sold substantially
all of its remaining interest in Republic Services in a public offering
resulting in net proceeds of approximately $1.78 billion and an after tax
gain of approximately $377.0 million. Accordingly, operating results of
Republic Services for the period prior to disposition have been classified
as discontinued operations in the accompanying Consolidated Financial
Statements.
In October 1997, the Company sold its electronic security division
resulting in an after tax gain of approximately $230.0 million. In 1999 and
1998, the Company recognized additional after tax gains of approximately
$2.1 million and $11.6 million, respectively, related to finalizing the
gain on disposition.
A summary of the net assets of discontinued operations as of
December 31, 1999 for the automotive rental businesses is as follows:
Current assets......................................... $ 5,349.3
Non-current assets..................................... 1,000.2
--------------
Total assets........................................ 6,349.5
Current liabilities.................................... 2,235.8
Non-current liabilities................................ 3,387.1
--------------
Total liabilities................................... 5,622.9
--------------
Net assets of discontinued operations.................. $ 726.6
==============
Selected income statement data for the Company's discontinued
operations for the years ended December 31 is as follows:
1998
-------------------------------------------------
Automotive Solid
Rental Waste Total
------ ----- -----
Revenue.................................................... $ 3,453.6 $ 1,369.1 $ 4,822.7
=============== ================ ==============
Pre-tax income............................................. 170.1 292.5 462.6
Provision for income taxes................................. 61.3 105.3 166.6
Extraordinary charge, net of income taxes.................. -- -- --
Minority interest in RSG................................... -- 33.9 33.9
--------------- ---------------- --------------
Net income................................................. 108.8 153.3 262.1
Previously estimated and accrued losses.................... -- -- --
--------------- ---------------- --------------
Income from discontinued operations........................ $ 108.8 $ 153.3 $ 262.1
=============== ================ ==============
1999 2000
-----------------------------------------------------
Automotive Solid Automotive
Rental Waste Total Rental
------ ----- ----- ------
Revenue............................................... $ 3,542.3 $ 552.5 $ 4,094.8 $ 1,721.2
============= ============== ================ ================
Pre-tax income........................................ (88.2) (1) 100.8 12.6 (14.8)
Provision (benefit) for income taxes.................. (18.8) 38.8 20.0 (5.8)
Extraordinary charge, net of income taxes............. 1.6 -- 1.6 --
Minority interest in RSG.............................. -- 21.6 21.6 --
------------- -------------- ---------------- ----------------
Net income (loss)..................................... (71.0) 40.4 (30.6) (9.0)
Previously estimated and accrued losses............... -- -- -- 22.1
------------- -------------- ---------------- ----------------
Income (loss) from discontinued operations............ $ (71.0) $ 40.4 $ (30.6) $ 13.1
============= ============== ================ ================
- -----------
(1) Includes pre-tax restructuring and other charges of $40.5 million
in 1999 primarily related to ANC Rental's consolidation of its
North American operations and other restructuring activities.
12. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has entered into interest rate derivative transactions
with certain financial institutions to manage the impact of interest rate
changes on securitized installment loan receivables. These derivative
transactions consist of a series of interest rate caps and floors with an
aggregate notional amount of $576.3 million contractually maturing through
2006 which effectuate a variable to fixed rate swap at a weighted average
rate of 6.62% at December 31, 2000. Variable rates on the underlying
portfolio are indexed to the Commercial Paper Nonfinancial Rate.
The amounts exchanged by the counterparties to interest rate
derivatives are based upon the notional amounts and other terms, generally
related to interest rates, of the derivatives. While notional amounts of
interest rate derivatives form part of the basis for the amounts exchanged
by the counterparties, the notional amounts are not themselves exchanged
and, therefore, do not represent a measure of the Company's exposure as an
end user of derivative financial instruments.
The Company is exposed to credit related losses in the event of
non-performance by counterparties to derivative financial instruments. The
Company monitors the credit worthiness of the counterparties and presently
does not expect default by any of the counterparties. The Company does not
obtain collateral in connection with its derivative financial instruments.
The credit exposure that results from interest rate contracts is
represented by the fair value of contracts with a positive fair value as of
the reporting date. See Note 14, Fair Value of Financial Instruments, for
the fair value of derivatives.
13. ASSET SECURITIZATIONS
The Company securitizes installment loan receivables through a
$1.0 billion commercial paper warehouse facility with unrelated financial
institutions. During 2000, the Company sold unsecured installment loan
finance receivables of $580.1 million under this program, net of retained
interests. The Company continues to service and receive annual servicing
fees on the outstanding balance of securitized receivables. The Company
also retains a subordinated interest in the sold receivables and the rights
to future cash flows arising from the receivables after the investors
receive their contractual return. The Company provides additional credit
enhancement in the form of restricted cash deposits. At December 31, 2000,
$576.3 million was outstanding under this program, net of retained
interests. As further discussed in Note 12, Derivative Financial
Instruments, the Company enters into interest rate protection agreements to
manage the interest rate changes on amounts securitized and on the
Company's retained interests.
The Company also securitizes installment loan receivables through
the issuance of asset-backed notes through a non-consolidated special
purpose entity under a $2.0 billion shelf registration statement. Through
December 31, 2000, $1.48 billion has been issued and approximately $521.5
million remains to be issued under this program. The Company uses proceeds
from these notes to refinance installment loans previously securitized
under the warehouse facility and to securitize additional loans held by the
Company. The Company provides credit enhancement related to these notes in
the form of overcollateralization, a reserve fund and a third party surety
bond. The Company retains responsibility for servicing the loans for which
it is paid a servicing fee. During 2000, approximately $691.7 million in
additional asset-backed notes were issued and at December 31, 2000, $1.0
billion was outstanding under this program, net of retained interests.
These transactions typically result in the recording of a
securitization asset in the form of an interest-only strip which represents
the present value of the future residual cash flows from securitized
receivables. The investors and the securitization trusts have no recourse
to the Company's assets for failure of debtors to pay when due except to
the extent of the Company's rights to future cash flow and any subordinated
interest the Company retains.
In 2000, recognized pre-tax gains on the securitization of
installment loan receivables were not material to the Company's
Consolidated Financial Statements.
A summary of cash flows received from securitization trusts for
the year ended December 31, 2000, were as follows:
Proceeds from securitizations under warehouse facility........ $ 580.1
Proceeds from securitizations under shelf registration........ 691.7
Servicing fees received....................................... 17.4
Other cash flows received on retained interests(1)............ 70.7
Purchases of assets from warehouse facility................... (639.6)
$ 720.3
==============
- -----------
(1) Other cash flows primarily include cash flows from interest-only
strips and other retained interests, excluding servicing fees.
The key economic assumptions used in measuring the retained
interests and net initial gains or losses at the date of securitization
resulting from securitizations completed during the year ended December 31,
2000 were as follows:
Description: Assumption(1)
- ------------ -------------
Voluntary prepayment speed (ABS).............................. 1.33%
Weighted-average life (in years).............................. 1.72
Expected credit losses (annual rate).......................... 1.08%
Discount rate on residual cash flows (annual rate)............ 9.50%
Yield (interest rate on receivables).......................... 12.05%
Variable rate to investors.................................... 7.39%
- -----------
(1) The weighted-average rates for securitizations entered into during
the period for securitizations of loans with similar
characteristics.
At December 31, 2000, the carrying value (current fair value) of
the interest-only strips was $68.5 million, with a weighted-average life of
1.58 years. The sensitivity of the current fair value of the residual cash
flows to 10 percent and 20 percent unfavorable changes in assumptions are
presented in the table below. These sensitivities are hypothetical and
should not be considered to be predictive of future performance. The effect
of a variation in a particular assumption on the fair value of the residual
cash flow is calculated independently from any change in another
assumption. In reality, changes in one factor may contribute to changes in
another (for example, increases in market interest rates may result in
lower prepayments and increased credit losses), which might magnify or
counteract the sensitivities. Furthermore, the estimated fair values as
disclosed should not be considered indicative of future earnings on these
assets. The current annual rate assumptions reflect expected performance of
the total loans securitized as of December 31, 2000.
$ Effect on Interest-Only Strip of
----------------------------------
Current 10% Change 20% Change
Description: Rate Assumption in Assumption in Assumption
Voluntary prepayment speed (ABS)........................... 1.16% $2.4 $4.8
Expected credit losses (annual rate)....................... 1.06% $2.2 $4.3
Discount rate on residual cash flows (annual rate)......... 9.50% $1.0 $1.9
Variable rate to investors (annual rate)................... 7.30% $16.6 $32.9
As of December 31, 2000, the Company had expected static pool
credit losses of 2.28%, which would have averaged to an annual rate of
1.13%.
The following summarizes information about managed or securitized
installment loans and delinquencies and net credit losses at December 31,
2000:
Total Principal Principal Amount of Loans
Amount of Loans 60 Days or More Past Due
--------------- ------------------------
Loans securitized.................... $ 1,619.2 $ 7.8
Loans retained on balance sheet...... 50.3 0.4
---------------- ------------
Total loans managed or securitized... $ 1,669.5 $ 8.2
================ ============
Net credit losses are charge-offs less recoveries and are based on
total installment loans managed or securitized. Net credit losses during
the year ended December 31, 2000 totaled $31.5 million.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument represents the amount at
which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation. Fair value
estimates are made at a specific point in time, based on relevant market
information about the financial instrument. These estimates are subjective
in nature and involve uncertainties and matters of significant judgment,
and therefore cannot be determined with precision. The assumptions used
have a significant effect on the estimated amounts reported.
The following methods and assumptions were used by the Company in
estimating fair value disclosures for financial instruments:
o Cash and cash equivalents, trade and manufacturer
receivables, other current assets, accounts payable,
accrued liabilities, other current liabilities and
variable rate debt: the amounts reported in the
accompanying Consolidated Balance Sheets approximate fair
value.
o Installment loans receivable and retained interests in
securitized receivables: The fair value of installment
loans receivable and retained interests in securitized
receivables are estimated based upon the discounted value
of the future cash flows expected to be received.
Significant assumptions used to estimate the fair value
at December 31, 1999 and 2000 are as follows: discount
rate--9.64% and 9.51%; cumulative loss rate--1.93% and
2.39%; and prepayment rate--1.50% and 1.16%.
o Interest rate swaps, caps and floors: the fair value of
interest rate swaps, caps and floors is determined from
dealer quotations and represents the discounted future
cash flows through maturity or expiration using current
rates, and is effectively the amount the Company would
pay or receive to terminate the agreements.
The following table sets forth the carrying amounts and fair
values of the Company's financial instruments, except for those noted above
for which carrying amounts approximate fair value, as of December 31:
1999 2000
--------------------------- -------------------------
Carrying Fair Carrying Fair
Assets (Liabilities) Amount Value Amount Value
------ ----- ------ -----
Installment loans receivable............................................ $ 83.8 $ 84.8 $ 50.3 $ 53.9
Retained interests in securitized receivables:
Principal............................................................ $ 101.4 $ 101.3 $ 76.1 $ 76.7
Interest-only strips................................................. $ 51.8 $ 51.8 $ 68.5 $ 68.5
Servicing assets..................................................... $ 8.2 $ 8.2 $ 7.5 $ 7.9
Interest rate caps...................................................... -- $ 18.5 $ -- $ 2.6
Interest rate floors.................................................... -- $ (7.7) $ -- $ (14.3)
Interest rate swaps..................................................... -- $ 0.1 $ -- $ --
15. BUSINESS AND CREDIT CONCENTRATIONS
The Company owns and operates franchised automotive dealerships in
the United States.
Automotive dealerships operate pursuant to franchise agreements
with vehicle manufacturers. Franchise agreements generally provide the
manufacturers or distributors with considerable influence over the
operations of the dealership and generally provide for termination of the
franchise agreement for a variety of causes. The success of any franchised
automotive dealership is dependent, to a large extent, on the financial
condition, management, marketing, production and distribution capabilities
of the vehicle manufacturers or distributors of which the Company holds
franchises. At December 31, 1999 and 2000, the Company had receivables from
manufacturers or distributors of $134.1 million and $131.2 million,
respectively.
The Company purchases substantially all of its new vehicles from
various manufacturers or distributors at the prevailing prices to all
franchised dealers. The Company's sales volume could be adversely impacted
by the manufacturers' or distributors' inability to supply the dealerships
with an adequate supply of vehicles.
Concentrations of credit risk with respect to non-manufacturer
trade receivables are limited due to the wide variety of customers and
markets in which the Company's products are sold as well as their
dispersion across many different geographic areas in the United States.
Consequently, at December 31, 2000, the Company does not consider itself to
have any significant non-manufacturer concentrations of credit risk.
16. QUARTERLY INFORMATION (UNAUDITED)
The Company's operations generally experience higher volumes of
vehicle sales in the second and third quarters of each year in part due to
consumer buying trends and the introduction of new vehicle models. Also,
demand for cars and light trucks is generally lower during the winter
months than in other seasons, particularly in regions of the United States
where dealerships may be subject to harsh winters. Accordingly, the Company
expects revenue and operating results to be generally lower in the first
and fourth quarters as compared to the second and third quarters.
Operating income (loss) in the fourth quarter of 1999 includes
restructuring and impairment charges of $443.7 million, as described in
Note 10, Restructuring and Impairment Charges (Recoveries), Net.
The following is an analysis of certain items in the Consolidated
Income Statements by quarter for 1999 and 2000:
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Revenue........................................................ 1999 $ 4,562.7 $ 5,069.6 $ 5,459.7 $ 5,019.8
2000 5,230.2 5,339.5 5,338.1 4,701.8
Operating income (loss)........................................ 1999 120.1 183.1 170.3 (363.7)
2000 163.0 203.9 197.3 160.6
Income (loss) from continuing operations....................... 1999 58.4 97.1 92.6 (279.6)
2000 64.7 96.6 93.1 73.7
Basic earnings (loss) per share from continuing
operations(1)............................................... 1999 0.13 0.22 0.22 (0.71)
2000 0.18 0.27 0.26 0.21
Diluted earnings (loss) per share from continuing
operations(1)............................................... 1999 0.13 0.21 0.22 (0.71)
2000 0.18 0.27 0.26 0.21
Net income (loss).............................................. 1999 80.1 501.2 104.7 (403.1)
2000 62.3 100.8 93.1 73.7
- -----------
(1) Quarterly basic and diluted earnings (loss) per share from
continuing operations may not equal earnings per share for the
year as reported in the Consolidated Income Statements due to the
effect of the calculation of weighted-average common stock
equivalents on a quarterly basis.
The following table sets forth, for the periods indicated, the
high and low prices per share of the Company's Common Stock as reported by
the New York Stock Exchange.
High Low
---- ---
1999
First Quarter....................................... $ 16.94 $ 12.13
Second Quarter...................................... $ 18.38 $ 11.63
Third Quarter....................................... $ 17.88 $ 11.50
Fourth Quarter...................................... $ 12.69 $ 7.50
High Low
---- ---
2000
First Quarter....................................... $ 9.31 $ 6.13
Second Quarter...................................... $ 10.75 $ 7.00
Third Quarter....................................... $ 7.31 $ 5.63
Fourth Quarter...................................... $ 7.19 $ 4.63
On June 30, 2000, the Company completed the tax-free spin-off to
its stockholders of all of the capital stock of ANC Rental. The spin-off
was completed by issuing to each of the Company's stockholders of record as
of June 16, 2000 one share of ANC Rental common stock for each eight shares
of AutoNation common stock held by such stockholder. The stock prices
presented above reflect historical stock prices during fiscal 2000 and 1999
and have not been restated to reflect the distribution of ANC Rental common
stock to the Company's stockholders.
17. SUBSEQUENT EVENTS
In connection with the spin-off of ANC Rental in June 2000, the
Company provides certain guarantees and credit enhancements with respect to
financial and performance obligations of ANC Rental, including acting as a
guarantor under certain motor vehicle and real property leases and acting
as an indemnitor with respect to certain surety bonds issued on ANC
Rental's behalf. The Company receives fees for providing these guarantees
commensurate with market rates. The Company is also a party to certain
agreements with ANC Rental (the "ANC Rental Agreements"), including a
Separation and Distribution Agreement and a Tax Sharing Agreement, pursuant
to which both ANC Rental and the Company have certain obligations. ANC
Rental reported a net loss for the fourth quarter of 2000 of $44.0 million,
resulting in an aggregate net loss for 2000 of $2.0 million, and a net loss
of $56.6 million for the six months ended June 30, 2001. ANC Rental has
announced that, due in part to the terrorist attacks against the United
States on September 11, 2001, it has suffered a significant decline in
consumer demand for rental cars and that it expects to report a substantial
loss for the full year 2001. ANC Rental also indicated that it is currently
under discussions with its creditors, the United States federal government
and other parties in order to review liquidity options and other financial
issues. Additionally, ANC Rental announced that it has reached agreements
with its lenders to suspend certain financial covenants under certain
credit agreements until November 15, 2001 and to defer until November 30,
2001 a principal payment of $70.0 million due on October 1, 2001. If ANC
Rental is unable to meet its obligations, the Company will likely be called
on to perform under its credit enhancements and guarantees, which could
have a material adverse effect on the Company's business, financial
condition and cash flows. ANC Rental has been accounted for as a
discontinued operation and, accordingly, the Company expects that payments
made by the Company pursuant to the foregoing credit enhancements and
guarantees, if any, would not impact its reported results from continuing
operations.
Under the motor vehicle lease agreement referenced above, ANC
Rental currently leases approximately 14,000 vehicles. Under this vehicle
lease agreement, which expires at the conclusion of the leases for model
year 2002 vehicles, ANC Rental is responsible for lease payments that the
Company believes are between $3.0 and $4.0 million per month. The Company
believes that ANC Rental typically leases vehicles under this lease
agreement for a period of approximately six months per vehicle. Under the
real property leases that the Company guarantees, which expire in July
2017, ANC Rental leases twelve parcels of property at an aggregate rent of
approximately $3.0 million per year. The Company's indemnification
obligations with respect to the surety bonds issued on behalf of ANC Rental
are capped at $29.5 million in the aggregate. In addition, in the event of
the bankruptcy of ANC Rental, the Company's claims against ANC Rental under
the terms of the ANC Rental Agreements may be extinguished or
unenforceable. These claims could include indemnification rights with
respect to payments made by the Company to the Internal Revenue Service as
a result of audit adjustments in the Company's consolidated federal income
tax returns relating to ANC Rental's automotive rental businesses prior to
the spin-off. In the event that the Company is called on to perform under
the foregoing credit enhancements and guarantees and the Company has claims
under the ANC Rental Agreements that ANC Rental cannot satisfy, the Company
estimates that its aggregate obligations under the credit enhancements,
guarantees and ANC Rental Agreements could be in the range of $50 million
to $150 million. However, the exposure is difficult to estimate and the
Company cannot be certain that its aggregate obligations under these credit
enhancements, guarantees and ANC Rental Agreements relating to ANC Rental
will not be materially above the range indicated above.
As of June 30, 2001, the Company had $396.0 drawn under a
multi-year unsecured revolving credit facility which provided $1.0 billion
of financing and was scheduled to mature April 2002. This facility was
repaid in full and terminated on August 10, 2001. On August 10, 2001, the
Company entered into two new senior secured revolving credit facilities
with aggregate borrowing capacity of $500.0 million. One facility is a
364-day revolving credit facility which provides borrowing capacity up to
$200.0 million at a LIBOR-based interest rate. The other facility provides
borrowing capacity up to $300.0 million at a LIBOR-based rate and has a
five-year term. These facilities are secured by a pledge of the capital
stock of two subsidiaries of the Company and are guaranteed by
substantially all of the Company's subsidiaries.
On August 10, 2001, AutoNation, Inc. sold $450.0 million of 9%
senior unsecured notes due August 1, 2008 at a price of 98.731% of face
value. The notes were issued by AutoNation, Inc. and are guaranteed by
substantially all of its subsidiaries. AutoNation, Inc. has no independent
assets or operations, the guarantees of its subsidiaries are full and
unconditional and joint and several, and any of the subsidiaries other than
the subsidiary guarantors are minor.
The Company used the net proceeds of the offering and borrowings
under the new revolving credit facilities to repay outstanding amounts
under the $1.0 billion revolving credit facility and certain other debt.
The Company will use any additional amounts drawn to finance capital
expenditures, strategic acquisitions, working capital and other general
corporate purposes.
The Company's new credit facilities and the indenture for the
Company's senior notes contain numerous, customary financial and operating
covenants that place certain restrictions on the Company, including with
respect to the Company's ability to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments (including
dividends and share repurchases), acquisitions or investments, to dispose
of certain assets and merge or consolidate with other entities. The new
credit facilities and the indenture also require the Company to meet
certain customary financial ratios and tests.
The Company securitizes installment loan receivables through the
issuance of asset-backed notes through a non-consolidated special purpose
entity under a shelf registration statement. In August 2001, the Company
amended the shelf registration statement relating to this program to
provide an aggregate capacity of $2.0 billion. In September 2001, the
Company issued approximately $850.0 million in asset- backed notes under
this program.
18. 2001 QUARTERLY INFORMATION (UNAUDITED)
The following is an analysis of certain items in the Consolidated
Income Statements by quarter for 2001:
First Second
Quarter Quarter
------- -------
Revenue......................................... $ 4,887.0 $ 4,942.1
Operating income................................ 152.9 183.5
Income from continuing operations............... 59.9 86.3
Net income ..................................... 59.9 86.3
Basic and diluted earnings per share from
continuing operations(1)..................... 0.17 0.26
- -----------
(1) Quarterly basic and diluted earnings per share from continuing
operations may not equal earnings per share for the six months
ended as reported in the Consolidated Income Statements due to the
effect of the calculation of weighted-average common stock
equivalents on a quarterly basis.
Introduction
The following notes relate to the unaudited condensed consolidated
financial statements included in the Quarterly Report on Form 10-Q for
AutoNation, Inc. and its subsidiaries (the "Company") for the six months
ended June 30, 2001.
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial
statements include the accounts of the Company and have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. All significant intercompany accounts and transactions
have been eliminated. Certain information related to the Company's
organization, significant accounting policies and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.
These unaudited condensed consolidated financial statements reflect, in the
opinion of management, all material adjustments (which include only normal
recurring adjustments) necessary to fairly state, in all material respects,
the financial position and the results of operations for the periods
presented and the disclosures herein are adequate to make the information
presented not misleading in any material respect.
Operating results for interim periods are not necessarily
indicative of the results that can be expected for a full year. These
interim financial statements should be read in conjunction with the
Company's audited consolidated financial statements and notes thereto
included in the Company's most recent Annual Report on Form 10-K.
As discussed in Note 13, Discontinued Operations, the Company's
former automotive rental businesses, organized under ANC Rental Corporation
("ANC Rental"), have been accounted for as discontinued operations in the
accompanying unaudited condensed consolidated financial statements and
accordingly, the operating results of ANC Rental for the periods prior to
disposition have been classified as discontinued operations in the
accompanying unaudited condensed consolidated financial statements
presented.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously
reported financial statements to conform with the financial statement
presentation of the current period.
2. INVENTORY
Inventory consists of the following:
December 31, June 30,
2000 2001
---- ----
New vehicles.......................... $ 2,295.8 $ 1,960.5
Used vehicles......................... 317.9 329.0
Parts, accessories and other.......... 155.5 149.8
-------------- ----------------
$ 2,769.2 $ 2,439.3
============== ================
3. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
December 31, June 30,
2000 2001
---- ----
Floorplan facilities............................ $ 2,454.0 $ 2,110.1
Revolving credit facilities..................... 615.0 396.0
Other debt...................................... 242.2 302.1
------------ ----------
3,311.2 2,808.2
Less: current portion........................... (2,460.8) (2,117.5)
------------ ----------
Long-term debt, net of current maturities.... $ 850.4 $ 690.7
============ ==========
The Company finances vehicle inventory through secured floorplan
facilities at a LIBOR-based rate of interest with manufacturers' captive
finance subsidiaries, as well as independent financial institutions. As of
June 30, 2001, capacity was approximately $3.5 billion.
As of June 30, 2001, the Company had $396.0 million drawn under a
multi-year unsecured revolving credit facility which provided $1.0 billion
of financing and was scheduled to mature April 2002. This facility was
repaid in full and terminated on August 10, 2001. Another facility provided
$250.0 million of borrowing capacity until its termination on June 29,
2001. On August 10, 2001, the Company entered into two new senior secured
revolving credit facilities with aggregate capacity of $500.0 million. One
facility is a 364-day revolving credit facility which provides borrowings
up to $200.0 million at a LIBOR-based interest rate. The other facility
provides borrowings up to $300.0 million at a LIBOR-based interest rate and
has a five-year term. These facilities are secured by a pledge of the
capital stock of two subsidiaries of the Company and are guaranteed by
substantially all of the Company's subsidiaries.
On August 10, 2001, the Company sold $450.0 million of 9.0% senior
unsecured notes due August 1, 2008 at a price of 98.731% of face value. The
notes are guaranteed by substantially all of the Company's subsidiaries.
The Company used the net proceeds of the offering and borrowings
under the new revolving credit facilities to repay outstanding amounts
under the $1.0 billion revolving credit facility and certain other debt and
will use any additional amounts drawn to finance capital expenditures,
strategic acquisitions, working capital and other general corporate
purposes.
In June 2001, the Company entered into a mortgage facility with an
automotive manufacturer's captive finance subsidiary with an aggregate
capacity of $150.0 million. As of June 30, 2001, the amount outstanding
under this mortgage facility was $116.7 million and has been included in
Other Debt above. The facility has a ten-year term, bears interest at a
LIBOR-based rate and is secured by mortgages on certain of our dealerships'
real property.
The Company's new credit facilities and the indenture for the
Company's senior notes contain numerous customary financial and operating
covenants that place certain restrictions on the Company, including with
respect to the Company's ability to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments (including
dividends and share repurchases), acquisitions or investments, and to
dispose of certain assets and merge or consolidate with other entities. The
new credit facilities and the indenture also require the Company to meet
certain customary financial ratios and tests.
4. SHAREHOLDERS' EQUITY
During the six months ended June 30, 2001, the Company repurchased
15.0 million shares of its common stock for an aggregate purchase price of
$129.2 million. Through June 30, 2001, an aggregate of 142.7 million shares
of common stock have been acquired under the Company's share repurchase
programs for an aggregate purchase price of $1.61 billion, leaving $137.9
million available for share repurchases under the program.
5. INCOME TAXES
Income taxes have been provided based upon the Company's
anticipated annual effective income tax rate.
Over the past four years, the Company has engaged in certain
transactions that are of a type that the Internal Revenue Service has
recently indicated it intends to challenge. A significant amount of the
Company's deferred tax liabilities relates to these transactions. The
Company believes that its tax returns appropriately reflect such
transactions. However, at the present time, the Company is unable to
predict the outcome of any challenge if the IRS determines to challenge the
tax reporting of such transactions. An unfavorable settlement or adverse
resolution of these matters could have a material adverse effect on the
Company's financial condition, results of operations, cash flows and
assets.
6. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding during the period.
Diluted earnings per share is based on the combined weighted-average number
of common shares and common share equivalents outstanding which include,
where appropriate, the assumed exercise or conversion of options and
warrants.
The computation of weighted-average common and common equivalent
shares used in the calculation of basic and diluted earnings per share is
shown below:
Six Months Ended
June 30,
2000 2001
---- ----
Weighted average common shares outstanding used to
calculate basic earnings per share...................... 364.2 339.3
Effect of dilutive options and warrants.................... 0.2 1.4
------- -----
Weighted average common and common equivalent shares
used to calculate diluted earnings per share............ 364.4 340.7
====== =====
At June 30, 2001 and 2000, the Company had approximately 54.4 million
and 42.5 million of stock options outstanding, respectively, of which 43.4
million and 42.2 million, respectively, have been excluded from the
computation of diluted earnings per share since they are anti-dilutive.
7. COMPREHENSIVE INCOME
Comprehensive income is as follows:
Six Months Ended
June 30,
2000 2001
---- ----
Net income..................................... $ 163.1 $ 146.2
Other comprehensive income (loss).............. 4.0 (0.8)
---------- ----------
Comprehensive income........................... $ 167.1 $ 145.4
========== ==========
8. BUSINESS ACQUISITIONS AND DIVESTITURES
Businesses acquired through June 30, 2001 are accounted for under
the purchase method of accounting and are included in the unaudited
condensed consolidated financial statements from the date of acquisition.
During the six months ended June 30, 2001 and 2000, the Company
acquired various automotive retail businesses and paid approximately $27.0
million and $78.1 million, respectively, in cash for these acquisitions.
During the six months ended June 30, 2001 and 2000, the Company also paid
approximately $6.2 million and $114.2 million, respectively, in deferred
purchase price for certain prior year automotive retail acquisitions.
The preliminary purchase price allocations for business
combinations relating to continuing operations for the six months ended
June 30, were as follows:
2000 2001
---- ----
Property and equipment................................... $ 2.1 $ 20.9
Intangible and other assets.............................. 80.7 7.1
Working capital.......................................... 34.1 0.1
Debt assumed............................................. (36.7) (1.4)
Other.................................................... (2.1) 0.3
---------- -------
Cash used in acquisitions, net of cash acquired.......... $ 78.1 $ 27.0
========== =======
In April 2001, the Company completed the sale of its Flemington
dealer group, resulting in the substantial completion of the Company's
non-core dealership divestiture plan. Net proceeds were $59.0 million,
resulting in a pre-tax gain of $19.1 million which was included in Other
Gains in the accompanying 2001 Unaudited Condensed Consolidated Income
Statements. Revenue for the operations disposed or to be disposed,
including the Flemington dealer group, was $132.6 million and $570.5
million during the six months ended June 30,2001 and 2000, respectively.
Operating income for the operations disposed or to be disposed was $.5
million and $16.5 million for the six months ended June 30, 2001 and 2000,
respectively.
9. ASSET SECURITIZATIONS
The Company securitizes installment loan receivables through a
$1.0 billion commercial paper warehouse facility with unrelated financial
institutions. During the six months ended June 30, 2001, the Company sold
installment loan finance receivables of $343.6 million under this program,
net of retained interests. The Company also securitizes installment loan
receivables through the issuance of asset-backed notes through a
non-consolidated special purpose entity under a $2.0 billion shelf
registration statement. These transactions typically result in the
recording of a securization asset in the form of an interest-only strip,
which represents the present value of the estimated future residual cash
flows from securitized receivables. For the six months ended June 30, 2001
and 2000, the Company recognized pre-tax gains/(losses) of $6.0 million and
$(.9) million, respectively, on the securitization of installment loan
receivables which has been included in Revenue in the 2001 and 2000
Unaudited Condensed Consolidated Income Statements.
The key economic assumptions used in measuring the retained
interests and initial gains or losses at the date of securitization
resulting from securitizations completed during the six months ended June
30, 2001 were as follows:
Description: Assumption(1)
- ------------ -------------
Voluntary prepayment speed (ABS)....................... 1.15%
Weighted-average life (in years)....................... 1.95
Expected credit losses (annual rate)................... 1.17%
Discount rate on residual cash flows (annual rate)..... 9.50%
Yield (annual interest rate on receivables)............ 11.00%
Variable rate to warehouse investors (annual rate)..... 5.28%
- ----------
(1) The weighted-average rates for securitizations entered into during
the period for securitizations of loans with similar
characteristics.
At June 30, 2001, the carrying value (current fair value) of the
interest-only strips was $71.5 million which is included in Receivables,
net, in the Unaudited Condensed Consolidated Balance Sheets, with a
weighted-average life of 1.53 years. At June 30, 2001, the sensitivity of
the current fair value of the residual cash flows to immediate 10 percent
and 20 percent unfavorable changes in assumptions are presented in the
table below. These sensitivities are hypothetical and should not be
considered to be predictive of future performance. As the figures indicate,
the change in fair value based on a ten percent variation in assumptions
cannot necessarily be extrapolated because the relationship of the change
in assumption to the change in fair value may not be linear. Also, in this
table, the effect of a variation in a particular assumption on the fair
value of residual cash flows is calculated independently from any change in
another assumption. In reality, changes in one factor may contribute to
changes in another (for example, increases in market interest rates may
result in lower prepayments and increased credit losses), which might
magnify or counteract the sensitivities. Furthermore, the disclosed
estimated fair values should not be considered indicative of future
earnings on these assets. The current rate assumptions below reflect the
expected performance of the total loans securitized as of June 30, 2001.
$ Effect On Interest-Only Strip of
----------------------------------
Current 10% Change 20% Change
Rate Assumption In Assumption In Assumption
--------------- ------------- --------------
Voluntary prepayment speed (ABS)............................... 1.15%$ 2.5 $ 5.0
Expected credit losses (annual rate)........................... 1.45%$ 2.5 $ 5.0
Discount rate on residual cash flows 1.0
(annual rate).................................................. 9.50%$ $ 2.0
Variable rate to warehouse investors (annual rate)............. 6.81%$ 8.3 $ 16.5
As of June 30, 2001, the Company had expected static pool credit
losses on its total portfolio of 2.87%, which would have averaged to an
annual rate of 1.42%.
10. DERIVATIVE FINANCIAL INSTRUMENTS
Effective January 1, 2001, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("SFAS 133"), as amended.
SFAS 133 establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an
asset or liability measured at its fair value. SFAS 133 requires that
changes in the derivative instrument's fair value be recognized currently
in earnings. The accounting for the portion reported in earnings due to
changes in fair value of the derivative instrument depends on whether the
derivative qualifies as a hedge. If the derivative instrument does not
qualify as a hedge, the gains or losses are reported in earnings when they
occur. Special accounting for qualifying hedges allows a derivative
instrument's gains and losses to offset related results on the hedged item
in earnings, to the extent effective, and requires that a company formally
document, designate, and assess the effectiveness of transactions that
receive hedge accounting.
The Company maintains an overall risk management strategy that
utilizes a variety of interest rate financial instruments to mitigate its
exposure to fluctuations caused by volatility in interest rates. The
Company does not use derivative financial instruments for trading purposes.
The Company has entered into certain interest rate derivative
transactions with certain financial institutions to manage the impact of
interest rate changes on securitized installment loan receivables. These
derivative transactions consist of a series of interest rate caps and
floors at the same strike price with an aggregate notional amount of $824.4
million contractually maturing through 2007 which effectuate a variable to
fixed rate swap at a weighted average rate of 5.95%. In addition in 2001,
the Company has entered into a series of forward starting swaps with a
maximum aggregate notional amount of $124.5 million contractually maturing
through 2007 which effectuate a fixed to variable rate swap at a weighted
average rate of 5.49%. Variable rates on the underlying portfolio are
indexed to the Commercial Paper Nonfinancial rate.
The Company's derivative transactions do not meet the criteria for
hedge accounting under SFAS 133 since the derivative transactions are
designed to economically hedge the exposure of items remeasured with the
changes in fair value recorded in earnings.
The Company's retained interests in securitized installment loan
receivables are considered hybrid instruments under SFAS 133. Included in
the hybrid instrument is an embedded derivative instrument for the interest
and prepayment components of the risk of the securitized installment loan
receivables.
SFAS 133 requires that the Company's embedded derivative
instrument be separated from the host contract and carried at fair value.
Because the Company is not using the embedded derivative instrument as a
hedging instrument, SFAS 133 requires that the Company report the embedded
derivative instrument on its balance sheet and changes in the fair value of
the embedded derivative instrument currently in earnings.
As of January 1, 2001, the Company recorded its embedded
derivative instrument and its caps and floors on its balance sheet which
resulted in an increase to assets and liabilities of approximately $14.3
million and an immaterial effect to earnings.
The Company records the gains and losses from its embedded
derivative contracts and other derivatives as a component of revenue. The
fair value of the derivative contracts is included in other assets and
other liabilities in the accompanying unaudited condensed consolidated
balance sheets, as applicable.
During the six months ended June 30, 2001, the Company recorded a
net loss of $.2 million representing the change in fair value of its
embedded derivative contracts offset by the change in fair value of its
other derivative instruments.
11. RESTRUCTURING AND IMPAIRMENT CHARGES, NET
During the fourth quarter of 1999, the Company approved a plan to
restructure certain of its operations. The restructuring plan was comprised
of the following major components: (1) exiting the used vehicle megastores
business; and (2) reducing the corporate workforce. The restructuring plan
also included divesting of certain non-core franchised dealerships.
Approximately 2,000 positions were eliminated as a result of the
restructuring plan of which 1,800 were megastore positions and 200 were
corporate positions. These restructuring activities resulted in pre-tax
charges of $443.7 million in 1999. These pre-tax charges included $286.9
million of asset impairment charges; $103.3 million of reserves for
residual value guarantees for closed lease properties; $26.2 million of
severance and other exit costs; and $27.3 million of inventory related
costs. The $286.9 million asset impairment charge consisted of: $244.9
million of megastore and other property impairments; $26.6 million of
goodwill impairment reserves for the divestiture of certain non-core
franchised automotive dealerships; and $15.4 million of information systems
impairments.
Closed megastores and other properties are being disposed of
through sales to third parties. Although these properties are being
aggressively marketed, their ultimate disposition will not likely be
substantially completed until late 2001.
The following summarizes the activity and remaining balance in the
Company's restructuring and impairment reserves for the six months ended
June 30, 2001:
Deductions
Balance Amounts Balance
December 31, Charged June 30,
Reserve 2000 to Income Cash Non-Cash 2001
- ------- ---- --------- ---- -------- ----
Asset reserves:
Asset impairment................................ $ 161.4 $ 4.3 $ -- $ (54.5) $ 111.2
Accrued liabilities:
Severance and other exit costs.................. 1.2 0.3 (0.8) -- 0.7
Finance lease residual
value write-down.............................. -- 4.1 -- (4.1) --
----------- ----------- ------- -------- -------
$ 162.6 $ 8.7 $ (0.8) $ (58.6) $ 111.9
=========== =========== ======== ======== =======
The following summarizes the components of the $8.7 million amount
charged to income during the six months ended June 30, 2001:
Net Gain on Additional
Sold Properties Impairment Charges Other Total
Asset reserves:
Asset impairment.................. $ (1.0) $ 5.3 $ -- $ 4.3
Accrued liabilities:
Severance and other exit
costs.......................... -- -- 0.3 0.3
Finance lease residual value
write-down........................ -- -- 4.1 4.1
------------- ------------- ------ --------
$ (1.0) $ 5.3 $ 4.4 $ 8.7
============= ============= ====== ========
During the six months ended June 30, 2001, the Company recognized
an additional impairment charge totaling $5.3 million based on the
re-evaluation of the fair value of certain properties. Additionally, the
Company recognized an impairment charge totaling $4.1 million associated
with the deterioration in residual values of finance lease receivables. The
Company discontinued writing finance leases in mid-1999 and the majority of
the leases terminate in late 2001.
12. COMMITMENTS AND CONTINGENCIES
In October 2000, the California Department of Motor Vehicles
("California DMV") brought action against one of the Company's California
dealerships for alleged customer fraud as well as several other claims. In
April 2001, the California DMV action and a related action by the State of
California were settled. As part of the settlement, the dealership closed
its sales operations for six days, agreed to provide restitution to certain
customers in the estimated amount of approximately $1.0 million and paid
$1.1 million in fines, penalties and costs. Three purported civil class
actions and other related lawsuits and claims have been filed or made
against the dealership based on the allegations underlying the California
DMV case.
In an action filed in Florida state court in 1999, a wholly-owned
subsidiary of the Company was accused of violating among other things the
Florida Motor Vehicle Retail Sales Finance Act and the Florida Deceptive
and Unfair Trade Practices Act by allegedly failing to deliver executed
copies of retail installment contracts to customers of the Company's used
vehicle megastores. In October 2000, the court certified the class of
customers on whose behalf the action would proceed. In July 2001, Florida's
Fourth District Court of Appeals upheld the certification of the class.
Many of the Company's Texas dealerships have been named in three
class action suits brought against the Texas Automobile Dealer's
Association ("TADA") and new vehicle dealerships in Texas that are members
of the TADA. The actions allege, among other things, that since January
1994 Texas dealers deceived customers with respect to a vehicle inventory
tax and violated federal antitrust and other laws as well. These cases are
currently pending in Texas State courts and federal district court.
The Company intends to vigorously defend itself and assert
available defenses with respect to each of the foregoing matters. Further,
the Company has certain insurance coverage and rights of indemnification
with respect to certain aspects of the foregoing matters. However, a
settlement or an adverse resolution of one or more of these matters may
result in the payment of significant costs and damages that could have a
material adverse effect on the Company's business, financial condition,
results of operations and cash flows.
The Company is also a party to numerous other legal proceedings
that arose in the conduct of its business. The Company does not believe
that the ultimate resolution of these matters will have a material adverse
effect on its business, financial condition, results of operations or cash
flows. However, the results of these matters cannot be predicted with
certainty and an unfavorable resolution of one or more of these matters
could have a material adverse effect on its business, financial condition,
results of operations and cash flows.
13. DISCONTINUED OPERATIONS
On June 30, 2000, the Company completed the tax-free spin-off of
ANC Rental. Accordingly, the operating results of ANC Rental have been
classified as discontinued operations for all periods presented in the
accompanying unaudited condensed consolidated financial statements. Income
from discontinued operations during the six months ended June 30, 2000 is
net of previously estimated losses of $22.1 million which were accrued in
the fourth quarter of 1999 and additional costs associated with the
spin-off totaling $11.3 million recorded in the second quarter of 2000.
In connection with the spin-off, the Company provides ANC Rental
with guarantees and credit enhancements with respect to certain financial
and performance obligations of ANC Rental, including acting as a guarantor
under certain motor vehicle and real property leases between ANC Rental and
Mitsubishi Motor Sales of America, Inc. The Company receives fees for
providing these guarantees commensurate with market rates. The Company also
entered into certain agreements with ANC Rental in connection with the
spin-off, including a separation and distribution agreement and a tax
sharing agreement. ANC Rental reported an aggregate net loss for 2000 of
$2.0 million, including a net loss of $44.0 million in the fourth quarter
of 2000, and recently reported a net loss of $56.6 million for the six
months ended June 30, 2001. ANC Rental also announced that it expects to
report a substantial loss for the full year 2001. Accordingly, a failure by
ANC Rental to meet its obligations could have a material adverse effect on
the Company's business, financial condition, consolidated results of
operations and cash flows.
Selected statement of operations data for the Company's automotive
rental discontinued operations is as follows:
Six Months
Ended June
30, 2000
Revenue..................................................................... $ 1,721.2
===============
Pre-tax loss................................................................ (14.8
Benefit for income taxes.................................................... (5.8)
---------------
Net loss.................................................................... (9.0)
Loss on disposal of segment , net of income taxes........................... (11.3)
Previously estimated and accrued losses, net of income taxes................ 22.1
---------------
Income from discontinued operations......................................... $ 1.8
===============
14. NEW ACCOUNTING PRONOUNCEMENTS
On June 30, 2001 the Financial Accounting Standards Board (FASB)
finalized and in July 2001 issued Statements of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS 141") and No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 requires all business combinations initiated after June
30, 2001 to be accounted for using the purchase method, eliminating the
pooling of interests method. Additionally, acquired intangible assets
should be 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
of the acquirer's intent to do so.
SFAS 142, upon adoption, eliminates goodwill amortization over its
estimated useful life. However, goodwill will be subject to at least an
annual assessment for impairment by applying a fair-value based test.
Intangible assets with definitive lives will need to be amortized over
their useful lives.
The provisions of SFAS 142 apply immediately to all acquisitions
completed after June 30, 2001. Goodwill and intangible assets with
indefinite lives existing at June 30, 2001 will continue to be amortized
until December 31, 2001. Effective January 1, 2002 such amortization will
cease, as companies are required to adopt the new rules on such date. By
the end of the first quarter of calendar year 2002, companies must begin to
perform an impairment analysis of intangible assets. Furthermore, companies
must complete the first step of the goodwill transition impairment test by
June 30, 2002. Any impairment noted must be recorded at the date of
adoption restating first quarter results, if necessary. Impairment charges,
if any, that result from the application of the above tests would be
recorded as the cumulative effect of a change in accounting principle in
the first quarter of the year ending December 31, 2002.
The Company will not be able to determine the ultimate impact of
these proposed Statements on its consolidated financial statements until
such time as it applies all of their provisions. Amortization of goodwill
for the year ended December 31, 2000 was $73.7 million. Amortization for
the three and six months ended June 30, 2001 was $17.1 million and $34.1
million respectively. However, this is not intended to be indicative of the
expected impact on the Company's future results of operations.
===============================================================================
OFFER TO EXCHANGE
ALL OUTSTANDING
9% SENIOR NOTES
DUE 2008
FOR
9% SENIOR NOTES
DUE 2008
-----------------------------
AUTONATION[symbol]
-----------------------------
The letter of transmittal, certificates for the outstanding notes
and any other required documents should be sent or delivered by each
noteholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the exchange agent at the following address:
Corporate Trust Services
Wells Fargo Bank Minnesota, National Association
213 Court Street-- Suite 902
Middletown, CT 06457
Attention: Robert L. Reynolds - Vice President
(860) 704-6216 (telephone)
(860) 704-6219 (facsimile)
Prospectus
, 2001
===============================================================================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Third Amended and Restated Certificate of
Incorporation provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach by
a director of the duty of loyalty to the Company or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for unlawful payments of
dividends, or for unlawful stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article VII of the Amended and Restated By-Laws of the Company
(the "Bylaws") provides that to the fullest extent and in the manner
permitted by the laws of the State of Delaware or any other applicable law
and specifically as is permitted under Section 145 of the General
Corporation Law of the State of Delaware, the Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that such person is or was
a director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred in connection with such
action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his conduct was
unlawful. The termination of an action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed
to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
The Bylaws provide that the Company's obligation to indemnify
applies to actions brought by or in the right of the Company as well, but
only to the extent of defense and settlement expenses and not to any
satisfaction of a judgment or settlement of the claim itself, and with the
further limitation that in such actions no indemnification shall be made
(i) unless the indemnified person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
the Company or (ii) in the event such person seeking indemnity was adjudged
to be liable to the Company, unless the court, in its discretion, believes
that in light of all the circumstances indemnification should nonetheless
apply.
The Bylaws provide that any decision as to indemnification shall
be made: (a) by a majority vote of the directors who are not parties to
such action, suit or proceeding ("disinterested directors"), even though
less than a quorum; (b) by a committee of disinterested directors
designated by a majority vote of all disinterested directors, even though
less than a quorum; (c) if there are no such disinterested directors, or if
such directors so direct, by independent legal counsel in a written
opinion; or (d) by the stockholders. However, the Bylaws provide that a
present or former director or officer of the Company who has been
successful on the merits or otherwise in defense of any action, suit or
proceeding for which indemnification would be appropriate as described
above shall be indemnified without the necessity of authorization in the
specific case.
The Bylaws provide that the Company shall pay expenses incurred by
an officer or director in defending a civil, criminal administrative or
investigative action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by such person to repay such amount if it shall ultimately be
determined that such person is not entitled to indemnification.
Indemnification pursuant to these provisions is not exclusive of any other
rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise and shall continue as to a person who has ceased to be a director
or officer.
The Company may purchase and maintain insurance on behalf of any
person who is or was a director or officer of the Company. Under an
insurance policy maintained by the Company, the directors and officers of
the Company are insured, within the limits and subject to the limitations
of the policy, against certain expenses in connection with the defense of
certain claims, actions, suits or proceedings, and certain liabilities
which might be imposed as a result of such claims, actions, suits or
proceedings, which may be brought against them by reason of being or having
been such directors or officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
Exhibit No. Description
2.1 Separation and Distribution Agreement dated June 30, 2000,
between AutoNation, Inc. and ANC Rental Corporation
(incorporated by reference to Exhibit 2.1 to AutoNation's
Current Report on Form 8-K dated June 30, 2000)
2.2 Separation and Distribution Agreement dated June 30, 1998,
between Republic Industries, Inc. (now known as AutoNation,
Inc.) and Republic Services, Inc. (incorporated by reference
to Exhibit 10.1 of AutoNation's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998)
3.1 Third Amended and Restated Certificate of Incorporation of
AutoNation, Inc. (incorporated by reference to Exhibit 10.1 of
AutoNation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999)
3.2 Amended and Restated Bylaws of AutoNation, Inc. (incorporated
by reference to Exhibit 3.2 to AutoNation's Current Report on
Form 8-K dated December 8, 2000)
3.x** Form of Formation Documents for Guarantors
3.x** Form of Operating Documents for Guarantors
4.1* Specimen Certificate of Rule 144A Global Note (Outstanding
Note)
4.2* Specimen Certificate of Regulation S Global Note (Outstanding
Note)
4.3* Specimen Certificate of Global Note (Exchange Note)
4.4* Indenture, dated as of August 10, 2001
5.1** Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois)
10.1 AutoNation, Inc. 1991 Stock Option Plan, as amended to date
(incorporated by reference to Exhibit 10.1 to AutoNation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000)
10.2 AutoNation, Inc. 1995 Amended and Restated Employee Stock
Option Plan, as amended to date (incorporated by reference to
Exhibit 10.2 to AutoNation's Quarterly Report on Form 10- Q
for the quarter ended June 30, 2000)
10.3 AutoNation Enterprises Incorporated Amended and Restated 1995
Employee Stock Option Plan, as amended to date (incorporated
by reference to Exhibit 10.3 to AutoNation's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000)
10.4 AutoNation, Inc. Amended and Restated 1995 Non-Employee
Director Stock Option Plan (incorporated by reference to
Exhibit 10.10 to AutoNation's Annual Report on Form 10-K for
the year ended December 31, 1998)
10.5 AutoNation, Inc. Amended and Restated 1997 Employee Stock
Option Plan, as amended to date (incorporated by reference to
Exhibit 10.4 to AutoNation's Quarterly Report on Form 10- Q
for the quarter ended June 30, 2000)
10.6 AutoNation, Inc. Amended and Restated 1998 Employee Stock
Option Plan, as amended to date (incorporated by reference to
Exhibit 10.5 to AutoNation's Quarterly Report on Form 10- Q
for the quarter ended June 30, 2000)
10.7 AutoNation, Inc, 1999 Senior Executive Bonus Plan
(incorporated by reference to Exhibit 10.7 to AutoNation's
Annual Report on Form 10-Q for the year ended December 31,
2001)
10.8 Letter Agreement dated September 22, 1999, between AutoNation,
Inc. and Michael J. Jackson, Chief Executive Officer
(incorporated by reference to Exhibit 10.4 of AutoNation's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1999)
10.9 Employment Agreement dated August 1, 2000, between AutoNation,
Inc. and Michael E. Maroone, President and Chief Operating
Officer (incorporated by reference to Exhibit 10.1 to
AutoNation's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000)
10.10 Letter Agreement dated March 26, 1999, between AutoNation,
Inc. and Michael E. Maroone, President and Chief Operating
Officer (incorporated by reference to Exhibit 10.1 of
AutoNation's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999)
10.11 Letter Agreement dated April 18, 2000, between AutoNation,
Inc. and Craig T. Monaghan, Chief Financial Officer
(incorporated by reference to Exhibit 10.1 of AutoNation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000)
10.12 Tax Sharing Agreement dated June 30, 2000 between AutoNation,
Inc. and ANC Rental Corporation (incorporated by reference to
Exhibit 10.1 to AutoNation's Current Report on Form 8-K dated
June 30, 2000)
10.13 Benefits Agreement dated June 30, 2000 between AutoNation,
Inc. and ANC Rental Corporation (incorporated by reference to
Exhibit 10.1 to AutoNation's Current Report on Form 8-K dated
June 30, 2000)
10.14 Reimbursement Agreement dated June 30, 2000 between
AutoNation, Inc. and ANC Rental Corporation (incorporated by
reference to Exhibit 10.3 to AutoNation's Current Report on
Form 8-K dated June 30, 2000)
10.15 Tax Indemnification and Allocation Agreement dated June 30,
1998, between Republic Industries, Inc. (now known as
AutoNation, Inc.) and Republic Services, Inc. (incorporated by
reference to Exhibit 10.4 of Republic Services, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998)
21.1* Subsidiaries of AutoNation, Inc.
23.1* Consent of Arthur Andersen LLP
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(included in exhibit 5.1)
24.1 Power of Attorney (included on signature page)
25.1** Statement of Eligibility of Trustee
99.1** Letter of Transmittal
99.2** Letter to Brokers, Securities Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.3** Letter to Clients for use by Brokers, Securities Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.4** Guaranteed Delivery
99.5** Instructions Backup Withholding; Substitute Form W-9
- ---------------
* Filed herewith.
** To be filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES:
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE
We have audited in accordance with auditing standards generally
accepted in the United States, the financial statements of AutoNation, Inc.
included in this registration statement and have issued our report thereon
dated March 26, 2001 (except with respect to matters discussed in Notes 17
and 18, as to which the date is October 4, 2001). Our audits were made for
the purpose of forming an opinion on the basic financial statements taken
as a whole. The schedule set forth below is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in
our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
March 26, 2001 (except with respect to the matters discussed in Notes 17
and 18 in the Company's consolidated financial statements, as to which
the date is October 4, 2001).
AUTONATION, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II
(in millions)
Balance at Additions Balance
Beginning Charged to at End of
Classifications of Year Income Deductions Other Year
- --------------- ------- ------ ---------- ----- ----
Allowance for doubtful accounts:
2000............................. $ 42.5 $ 8.4 $ (14.7) (2) $ (1.1) $ 35.1
1999............................. $ 33.8 $ 13.4 $ (9.4) (2) $ 4.7 (1) $ 42.5
1998............................. $ 8.5 $ 1.8 $ (3.1) (2) $ 26.6 (1) $ 33.8
Restructuring reserves (3):
2000............................. $ 120.6 $ (5.4) $ (111.2) (5) $ (2.8) $ 1.2
1999............................. $ 24.1 $ 416.4 $ (12.4) (5) $ (307.5)(4) $ 120.6
1998............................. $ 46.0 $ -- (6) $ (15.5) (5) $ (6.4)(4) $ 24.1
- ------------------
(1) Allowance of acquired businesses.
(2) Accounts written off.
(3) Included under the caption "Accrued liabilities" in the Consolidated
Balance Sheets.
(4) Primarily asset write-offs.
(5) Primarily cash payments of costs associated with restructuring
activities.
(6) During the year ended December 31, 1998, the Company reduced its
estimated restructuring
reserves for information systems and increased its estimated
reserves for the relocation of certain operations by approximately
$21.0 million.
Schedules not set forth herein have been omitted either because
the required information is set forth in the consolidated financial
statements or the information called for is not required.
ITEM 22: UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrants in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) The undersigned registrants hereby undertake to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(c) The undersigned registrants hereby undertake to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein that was not
the subject of and included in the registration statement when it became
effective.
(d) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act.
(ii) To reflect in the prospectus any facts
or events arising after the effective
date of the registration statement (or
the most recent post-effective
amendment thereof) which, individually
or in the aggregate, represent a
fundamental change in the information
set forth in the registration
statement. Notwithstanding the
foregoing, any increase or decrease in
the volume of securities offered (if
the total dollar value of securities
offered would not exceed that which was
registered) and any deviation from the
low or high end of the estimated
maximum offering range may be reflected
in the form of prospectus filed with
the SEC pursuant to Rule 424(b) if, in
the aggregate, the changes in volume
and price represent no more than 20
percent change in the maximum aggregate
offering price set forth in the
"Calculation of Registration Fee" table
in the effective registration
statement.
(iii) To include any material information
with respect to the plan of
distribution not previously disclosed
in the registration statement or any
material change in such information in
the registration statement; provided,
however, that the registrant need not
file a post-effective amendment to
include the information required to be
included by subsection (i) or (ii) if
such information is contained in
periodic reports filed by the
registrant pursuant to Section 13 or
Section 15(d) of the Securities
Exchange Act that are incorporated by
reference in the registration
statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such
post-effective amendment shall be deemed to be a
new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Fort
Lauderdale, State of Florida, on October 4, 2001.
AutoNation, Inc.
By: /s/ Mike Jackson
-------------------------------
Name: Mike Jackson
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Michael J. Jackson and
Jonathan P. Ferrando his or her true and lawful attorneys-in-fact, each
acting alone, with full powers of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities
to sign any or all amendments, including any post- effective amendments, to
this registration statement, and any related registration statements
pursuant to Rule 462(b) under the Securities Act, and to file the same,
with exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact or their substitutes, each acting alone, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons
in their capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ H. Wayne Huizenga
- ----------------------------------- Chairman of the Board October 4, 2001
H. Wayne Huizenga
/s/ Mike Jackson
- ----------------------------------- Chief Executive Officer and Director October 4, 2001
Mike Jackson (Principal Executive Officer )
/s/ Craig T. Monaghan
- ----------------------------------- Senior Vice President and Chief Financial October 4, 2001
Craig T. Monaghan Officer (Principal Financial Officer)
/s/ Patricia A. McKay
- ----------------------------------- Senior Vice President - Finance (Principal October 4, 2001
Patricia A. McKay Accounting Officer)
/s/ Harris W. Hudson
- ----------------------------------- Vice Chairman of the Board October 4, 2001
Harris W. Hudson
/s/ Robert J. Brown
- ----------------------------------- Director October 4, 2001
Robert J. Brown
/s/ J.P. Bryan
- ----------------------------------- Director October 4, 2001
J.P. Bryan
/s/ Rick L. Burdick
- ----------------------------------- Director October 4, 2001
Rick L. Burdick
/s/ Michael G. DeGroote
- ----------------------------------- Director October 4, 2001
Michael G. DeGroote
/s/ George D. Johnson, Jr.
- ----------------------------------- Director October 4, 2001
George D. Johnson, Jr.
/s/ John J. Melk
- ----------------------------------- Director October 4, 2001
John J. Melk
/s/ Irene B. Rosenfeld
- ----------------------------------- Director October 4, 2001
Irene B. Rosenfeld
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Stafford, state of Texas, on October 4, 2001.
AutoNation Chrysler Plymouth GP, Inc.
AutoNation Chrysler Plymouth LP, Inc.
AutoNation Dodge of San Antonio-GP, Inc.
AutoNation Dodge of San Antonio-LP, Inc.
Champion Ford, Inc.
Champion Planning, Inc.
Charlie Thomas Auto Sales, Inc.
Charlie Thomas Chevrolet, Inc.
Charlie Thomas Courtesy Leasing, Inc.
Dealership Realty Corporation
Houston Imports Greenway-GP, Inc.
Houston Imports Greenway-LP, Inc.
Houston Imports North-GP, Inc.
Houston Imports North-LP, Inc.
Les Marks Chevrolet, Inc.
Marks Transport, Inc.
Mike Hall Chevrolet, Inc.
Port City Imports, Inc.
Port City Imports-HO, Inc.
Port City Pontiac-GMC Trucks, Inc.
RI/HGMC Acquisition Corp.
RI/RMT Acquisition Corp.
Steeplechase Motor Company
Texan Ford, Inc.
Texan Lincoln-Mercury, Inc.
By: /s/ Daniel G. Agnew
---------------------------------------
Daniel G. Agnew
President (Principal Executive
Officer)
AutoNation Chrysler Plymouth Jeep of North
Houston, L.P.
By: AutoNation Chrysler Plymouth GP, Inc.
General Partner
By: /s/ Daniel G. Agnew
------------------------------
Daniel G. Agnew
President (Principal Executive
Officer)
AutoNation Dodge of San Antonio, L.P.
By: AutoNation Dodge of San Antonio-GP,
Inc.
General Partner
By: /s/ Daniel G. Agnew
------------------------------
Daniel G. Agnew
President (Principal Executive
Officer)
Houston Auto Imports Greenway, Ltd.
By: Houston Imports Greenway-GP, Inc.
General Partner
By: /s/ Daniel G. Agnew
------------------------------
Daniel G. Agnew
President (Principal Executive
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Daniel G. Agnew
- ---------------------------------------President (Principal Executive Officer) October 4, 2001
Daniel G. Agnew
/s/ Marc L. Bourhis
- ---------------------------------------Treasurer (Principal Accounting Officer October 44, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------------Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------------Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Clearwater, state of Florida, on October 4, 2001.
Chevrolet World, Inc.
Colonial Imports, Inc.
Cook-Whitehead Ford, Inc.
Cook-Whitehead Ford, LLC
Dealership Accounting Services, Inc.
Don Mealey Chevrolet, Inc.
Don Mealey Imports, Inc.
Don Mealey Oldsmobile, Inc.
Jim Quinlan Chevrolet Co.
Jim Quinlan, Ford Lincoln-Mercury, Inc.
Mealey Holdings, Inc.
Orlando Imports, Inc.
Quinlan Motors, Inc.
By: /s/ Jim Bender
---------------------------------------
Jim Bender
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jim Bender
- ------------------------------------- President (Principal Executive Officer) October 4, 2001
Jim Bender
/s/ Marc L. Bourhis
- ------------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ------------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ------------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Alpharetta, state of Georgia, on October 4, 2001.
AN/MNI Acquisition Corp.
By: /s/ Dennis Botto
---------------------------------------
Dennis Botto
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Dennis Botto
- ------------------------------------- President (Principal Executive Officer) October 4, 2001
Dennis Botto
/s/ Marc L. Bourhis
- ------------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ------------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- -------------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Las Vegas, state of Nevada, on October 4, 2001.
All-State Rent A Car, Inc.
Desert Buick-GMC Management Group, Inc.
Desert Buick-GMC Trucks, LLC
Desert Dodge, Inc.
Desert GMC, LLC
Desert GMC-East, Inc.
Desert Lincoln-Mercury, Inc.
RI/CC Acquisition Corp.
By: /s/ Larry Carter
--------------------------------------
Larry Carter
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Larry Carter
- ------------------------------------- President (Principal Executive Officer) October 4, 2001
Larry Carter
/s/ Marc L. Bourhis
- ------------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ------------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ------------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Denver, state of Colorado, on October 4, 2001.
7 Rod Real Estate North, a Limited Liability
Company
7 Rod Real Estate South, a Limited Liability
Company
AN/CF Acquisition Corp.
AutoNation Denver Management, Inc.
Batfish, LLC
Batfish Auto, LLC
C. Garrett, Inc.
Chesrown Auto, LLC
Chewrown Chevrolet, LLC
Chesrown Collision Center, Inc.
Chesrown Ford, Inc.
Emich Chrysler Plymouth, LLC
Emich Dodge, LLC
Emich Lincoln-Mercury, Inc.
Emich Lincoln-Mercury, LLC
Emich Oldsmobile, LLC
Emich Subaru West, LLC
J-R Advertising Company
J-R Motors Company Central, LLC
J-R-M Motors Company Northwest, LLC
Marshall Lincoln-Mercury, Inc.
R. Coop Limited
R.L. Buscher II, Inc.
R.L. Buscher III, Inc.
RI/LLC Acquisition Corp.
RI/LLC-2 Acquisition Corp.
Southwest Dodge, LLC
Woody Capital Investment Company II
Woody Capital Investment Company III
By: /s/ Fred F. Emich, III
---------------------------------------
Fred F. Emich, III
President (Principal Executive Officer)
J-R Motors Company South
By: Woody Capital Investment Company II
C. Garrett, Inc.
R.L. Buscher II, Inc.
General Partners
By: /s/ Fred F. Emich, III
--------------------------------
Fred F. Emich, III
President (Principal Executive
Officer)
J-R Motors Company North
By: Woody Capital Investment Company III
R. Coop Limited
R.L. Buscher III, Inc.
General Partners
By: /s/ Fred F. Emich, III
--------------------------------
Fred F. Emich, III
President (Principal Executive
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Fred F. Emich, III
- ------------------------------------- President (Principal Executive Officer) October 4, 2001
Fred F. Emich, III
/s/ Marc L. Bourhis
- ------------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ------------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ------------------------------------ Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Union City, state of Georgia, on October 4, 2001.
Gene Evans Ford, LLC
By: /s/ Gene Evans
--------------------------------------
Gene Evans
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Gene Evans
- ------------------------------------- President (Principal Executive Officer) October 4, 2001
Gene Evans
/s/ Marc L. Bourhis
- ------------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ------------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ------------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Ft. Lauderdale, state of Florida, on October 4, 2001.
BOSC Automotive Realty, Inc.
By: /s/ Jonathan P. Ferrando
---------------------------------------
Jonathan P. Ferrando
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jonathan P. Ferrando
- ----------------------------------- President (Principal Executive Officer) October 4, 2001
Jonathan P. Ferrando
/s/ Marc L. Bourhis
- ----------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ----------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ----------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Ft. Lauderdale, state of Florida, on October 4, 2001.
AutoNation Financial Services Corp.
By: /s/ Kevin P. Westfall
---------------------------------------
Kevin P. Westfall
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Kevin P. Westfall
- ----------------------------------- President (Principal Executive Officer) October 4, 2001
Kevin P. Westfall
/s/ Marc L. Bourhis
- ----------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ----------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ----------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Bellflower, state of California, on October 4, 2001.
Don-A-Vee Jeep Eagle, Inc.
By: /s/ Donald A. Fraser
---------------------------------------
Donald A. Fraser
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Donald A. Fraser
- ----------------------------------- President (Principal Executive Officer) October 4, 2001
Donald A. Fraser
/s/ Marc L. Bourhis
- ----------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ----------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ----------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Alpharetta, state of Georgia, on October 4, 2001.
American Way Motors, Inc.
AN/STD Acquisition Corp.
Auto Ad Agency, Inc.
AutoNation Imports of Lithia Springs, Inc.
AutoNation Motors of Lithia Springs, Inc.
Bill Ayares Chevrolet, Inc.
Chuck Clancy Ford of Marietta, Inc.
Consumer Car Care Corporation
Covington Pike Motors, Inc.
Dobbs Brothers Buick-Pontiac, Inc.
Dobbs Ford of Memphis, Inc.
Dobbs Ford, Inc.
Dobbs Mobile Bay, Inc.
Dobbs Motors of Arizona, Inc.
Fox Buick Isuzu, Inc.
Fox Chevrolet, Inc.
Fox Hyundai, Inc.
Fox, Inc.
George Sutherlin Nissan, Inc.
Government Blvd. Motors, Inc.
Hub Motor Co.
Miller-Sutherlin Automotive, LLC
Northpoint Chevrolet, Inc.
Northpoint Ford, Inc.
RI/PII Acquisition Corp.
Steve Rayman Pontiac-Buick-GMC-Truck, LLC
Superior Nissan, Inc.
Sutherlin Chrysler-Plymouth Jeep-Eagle, LLC
Sutherlin Imports, Inc.
Sutherlin Nissan of Town Center, Inc.
Sutherlin Nissan, LLC
Team Dodge, Inc.
Valley Chevrolet, Inc.
West Side Motors, Inc.
By: /s/ Frank Grese
---------------------------------------
Frank Grese
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Frank Grese
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
Frank Grese
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Phoenix, state of Arizona, on October 4, 2001.
BBCSS, Inc.
Bell Dodge, LLC
Brown & Brown Chevrolet - Superstition
Springs, LLC
Brown & Brown Chevrolet, Inc.
Desert Chrysler-Plymouth, Inc.
Lou Grubb Chevrolet, LLC
Lou Grubb Chevrolet-Arrowhead, Inc.
Lou Grubb Ford, LLC
Pitre Buick-Pontiac-GMC of Scottsdale, Inc.
Pitre Chrysler-Plymouth-Jeep of Scottsdale, Inc.
Pitre Chrysler-Plymouth-Jeep on Bell, Inc.
By: /s/ Daniel L. Grubb
-------------------------------------------
President (Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Daniel L. Grubb
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
Daniel L. Grubb
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Dallas, state of Texas, on October 4, 2001.
Allied 2000 Collision Center, Inc.
Bankston Auto, Inc.
Bankston CJ GP, Inc.
Bankston GJ LP, Inc.
Bankston Ford of Frisco, Ltd. Co.
Bledsoe Dodge, LLC
B-S-P Automotive, Inc.
C-Car Auto Wholesalers, Inc.
Charlie Hillard, Inc.
Cleburne Motor Company, Inc.
Dealership Properties, Inc.
Fred Oakley Motors, Inc.
Hillard Auto Group, Inc.
Midway Chevrolet, Inc.
Nichols Ford, Inc.
Payton-Wright Ford Sales, Inc.
PMWQ, Inc.
Plains Chevrolet, Inc.
Quality Nissan, Inc.
Southtown Ford, Inc.
Texan Ford Sales, Inc.
Westgate Chevrolet, Inc.
W.O. Bankston Enterprises, Inc.
W.O. Bankston Lincoln-Mercury, Inc.
W.O. Bankston Paint & Body, Inc.
Working Man's Credit Plan, Inc.
By: /s/ James H. Heckert
---------------------------------------
James H. Heckert
President (Principal Executive Officer)
PMWQ, Ltd.
By: PMWQ, Inc.
General Partner
By: /s/ James H. Heckert
------------------------------
James H. Heckert
President (Principal Executive
Officer)
Bankston Chrysler Jeep of Frisco, L.P.
By: Bankston CJ GP, Inc.
General Partner
By: /s/ James H. Heckert
------------------------------
James H. Heckert
President (Principal Executive
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James H. Heckert
- --------------------------------- President (Principal Executive Officer) October 4, 2001
James H. Heckert
/s/ Marc L. Bourhis
- --------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- --------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- --------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Cerritos, state of California, on October 4, 2001.
Buick Mart, Inc.
Joe MacPherson Imports No. 1
Joe MacPherson Oldsmobile
KLJ of Nevada, Inc.
MacPherson Enterprises, Inc.
Manhattan Motors, Inc.
Orange County Automotive Imports, LLC
Peyton Cramer Ford
Peyton Cramer Lincoln-Mercury
Prime Auto Resources, Inc.
RI/BRC Real Estate Corp.
Santa Ana Auto Center
Tartan Advertising, Inc.
Webb Automotive Group, Inc.
By: /s/ Jerry L. Heuer
Jerry L. Heuer
President (Principal Executive Officer)
Buick Mart Limited Partnership
Ford of Garden Grove Limited Partnership
Irvine Toyota/Nissan/Volvo Limited Partnership
Lexus of Cerritos Limited Partnership
Toyota of Cerritos Limited Partnership
By: Webb Automotive Group, Inc.
General Partner of each of the above
listed entities
By: /s/ Jerry L. Heuer
------------------
Jerry L. Heuer
President (Principal Executive
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jerry L. Heuer
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
Jerry L. Heuer
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Cerritos, state of California, on October 4, 2001.
Bargain Rent-A-Car
Beach City Chevrolet Company, Inc.
Carwell, LLC
Cerritos Body Works, Inc.
Cerritos Imports, Inc.
Champion Chevrolet, LLC
Costa Mesa Cars, Inc.
El Monte Imports, Inc.
El Monte Motors, Inc.
Fit Kit, Inc.
G.B. Import Sales & Service, LLC
House of Imports, Inc.
Irvine Imports, Inc.
Joe MacPherson Ford
Joe MacPherson Infiniti
Lew Webb's Ford, Inc.
Lew Webb's Irvine Nissan, Inc.
MacHoward Leasing
Magic Acquisition Corp.
Mr. Wheels, Inc.
Newport Beach Cars, LLC
Ontario Dodge, Inc.
Peyton Cramer Automotive
Peyton Cramer Ford
Peyton Cramer Infiniti
Peyton Cramer Jaguar
Peyton Cramer Lincoln-Mercury
Saul Chevrolet, Inc.
SMI Motors, Inc.
Terry York Motor Cars, Ltd.
Torrance Nissan, LLC
Valencia Dodge
Valencia Lincoln-Mercury, Inc.
Vince Wiese Chevrolet, Inc.
West Colton Cars, Inc.
York Enterprises South, Inc.
By: /s/ Jerry L. Heuer
--------------------------------------
Jerry L. Heuer
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jerry L. Heuer
- ----------------------------------- President (Principal Executive Officer) October 4, 2001
Jerry L. Heuer
/s/ Randy Jones
- ----------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Randy Jones and Principal Financial Officer)
/s/ Jerry L. Heuer
- ----------------------------------- Director October 4, 2001
Jerry L. Heuer
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Houston, state of Texas, on October 4, 2001.
CT Intercontinental, Inc.
By: /s/ Joe Irpino
---------------------------------------
Joe Irpino
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Joe Irpino
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
Joe Irpino
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Ft. Lauderdale, state of Florida, on October 4, 2001.
Ft. Lauderdale Nissan, Inc.
L.P. Evans Motors WPB, Inc.
L.P. Evans Motors, Inc.
By: /s/ James D. Evans, Jr.
---------------------------------------
James D. Evans, Jr.
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James D. Evans, Jr.
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
James D. Evans, Jr.
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Westlake, state of Ohio, on October 4, 2001.
John M. Lance Ford, LLC
Lance Children, Inc.
By: /s/ John M. Lance
---------------------------------------
John M. Lance
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ John M. Lance
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
John M. Lance
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Ft.
Lauderdale, state of Florida, on October 4, 2001.
Star Motors, LLC
By: /s/ James J. Linus
---------------------------------------
James J. Linus
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James J. Linus
- ---------------------------------- President (Principal Executive Officer) October 4, 2001
James J. Linus
/s/ Marc L. Bourhis
- ---------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- ---------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- ---------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Ft. Lauderdale, state of Florida, on October 4, 2001.
Abraham Chevrolet-Miami, Inc.
Albert Berry Motors, Inc.
Al Maroone Ford, LLC
Atrium Restaurants, Inc.
Auto Advertising Services, Inc.
Auto Holding Corp.
AutoNationDirect.com, Inc.
AutoNation Corporate Management Company
AutoNation DS Investments, Inc.
AutoNation Enterprises Incorporated
AutoNation Motors Holding Corp.
AutoNation Realty Corporation
AutoNation USA Corporation
AutoNation USA of Perrine, Inc.
AutoNation USA of Virginia Beach, LLC
Beacon Motors, Inc.
Bengal Motors, Inc.
Bill Wallace Enterprises, Inc.
Body Shop Holding Corp.
Bull Motors, LLC
Central Motors, Inc.
Corporate Properties Holding, Inc.
Courtesy Wholesale Corporation
Cross-Continent Auto Retailers, Inc.
Driver's Mart Worldwide, Inc.
Empire Services Agency, Inc.
Financial Services, Inc.
First Team Cadillac-Oldsmobile, LLC
First Team Management, Inc.
Flemington Land Rover, LLC
Florida Auto Corp.
Hollywood Imports Limited, Inc.
Hollywood Kia, Inc.
H's Auto Body, Inc.
Kelnat Advertising, Ltd. Co.
LGS Holding Company
Lovern, Inc.
Marks Family Dealerships, Inc.
Maroone Car and Truck Rental Company
Maroone Chevrolet Ft. Lauderdale, Inc.
Maroone Chevrolet, LLC
Maroone Dodge Pompano, Inc.
Maroone Dodge, LLC
Maroone Isuzu, LLC
Maroone Jeep Eagle, Inc.
Maroone Management Services, Inc.
Maroone Oldsmobile II, Inc.
Maroone Oldsmobile, LLC
MC/RII, LLC
Mechanical Warranty Protection, Inc.
Quantum Premium Finance Corporation
Real Estate Holdings, Inc.
Republic DM Property Acquisition Corp.
Republic of Rochester, Inc.
Republic Resources Company
Republic Risk Management Services, Inc.
Resources Aviation, Inc.
RI Merger Corp.
RI Shelf Corp.
RI/ASC Acquisition Corp.
RI/BB Acquisition Corp.
RI/DM Acquisition Corp.
RI/Hollywood Nissan Acquisition Corp.
RI/SBC Acquisition Corp.
RII Management Company
Rosecrans Investments, LLC
RRM Corporation, Inc.
RSHC, Inc.
Six Jays LLC
SCM Realty II, Inc.
SCM Realty, Inc.
Service Station Holding Corp.
Southeast Lease Car, Inc.
Spit Fire Properties, Inc.
Tallahassee Automotive Group
Tallahassee Chrysler Plymouth, Inc.
The Consulting Source, Inc.
Triangle Corporation
Wallace Imports, Inc.
By: /s/ Michael E. Maroone
--------------------------------------
Michael E. Maroone
President (Principal Executive Officer)
First Team Ford of Manatee, Ltd.
First Team Ford, Ltd.
First Team Imports, Ltd.
First Team Infiniti, Ltd.
First Team Jeep Eagle, Chrysler Plymouth, Ltd.
First Team Premier, Ltd.
By: First Team Management, Inc.
General Partner
By: /s/ Michael E. Maroone
------------------------------
Michael E. Maroone
President (Principal Executive
Officer)
Central Motor Company, Ltd.
By: Central Motors, Inc.
General Partner
By: /s/ Michael E. Maroone
------------------------------
Michael E. Maroone
President (Principal Executive
Officer)
Bengal Motor Company, Ltd.
By: Bengal Motors, Inc.
General Partner
By: /s/ Michael E. Marooe
------------------------------
Michael E. Maroone
President (Principal Executive
Officer)
Anything on Wheels, Ltd.
By: AutoNation Enterprises Incorporated
General Partner
By: /s/ Michael E. Maroone
------------------------------
Michael E. Maroone
President (Principal Executive
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Michael E. Maroone
- -------------------------------- President (Principal Executive Officer) October 4, 2001
Michael E. Maroone
/s/ Marc L. Bourhis
- -------------------------------- Treasurer (Principal Accounting Officer October 4, 2001
Marc. L. Bourhis and Principal Financial Officer)
/s/ Michael E. Maroone
- -------------------------------- Director October 4, 2001
Michael E. Maroone
/s/ Jonathan P. Ferrando
- -------------------------------- Director October 4, 2001
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Ft. Lauderdale, state of Florida, on October 4, 2001.
AutoNation Holding Corp.
AutoNation LM Holding Corporation
By: /s/ Michael E. Maroone
---------------------------------------
Michael E. Maroone
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Michael E. Maroone President (Principal Executive Officer) October 4, 2001
- ---------------------------------
Michael E. Maroone
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ---------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- ---------------------------------
Jonathan P. Ferrando
/s/ Jeffrey K. Simpson Director October 4, 2001
- ---------------------------------
Jeffrey K. Simpson
/s/ Gordon W. Stewart Director October 4, 2001
- ----------------------------------
Gordon W. Stewart
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Denver, state of Colorado, on October 4, 2001.
AutoNation Imports of Arapahoe, Inc.
By: /s/ Todd F. Maul
---------------------------------------
Todd F. Maul
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Todd F. Maul President (Principal Executive Officer) October 4, 2001
- ----------------------------------
Todd F. Maul
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- ---------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ----------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- ----------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Austin, state of Texas, on October 4, 2001.
RI/RMC Acquisition Corp.
RI/RMP Acquisition Corp.
By: /s/ Jim Oliver
----------------------------------------
Jim Oliver
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jim Oliver President (Principal Executive Officer) October 4, 2001
- ---------------------------------
Jim Oliver
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ---------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- ---------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Phoenix, state of Arizona, on October 4, 2001.
Brown & Brown Nissan Mesa, LLC
Brown & Brown Nissan, Inc.
JRJ Investments, Inc.
Pierce, LLC
Pierce Automotive Corporation
Pitre Isuzu-Subaru-Hyundai of Scottsdale, Inc.
Pitre Kia of Scottsdale, Inc.
RI/BBNM Acquisition Corp.
Sahara Imports, Inc.
Sahara Nissan, Inc.
T-West Sales and Service, Inc.
The Pierce Corporation II, Inc.
By: /s/ Mitchell D. Pierce
-------------------------------------------
Mitchell D. Pierce
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Mitchell D. Pierce President (Principal Executive Officer) October 4, 2001
- ----------------------------------
Mitchell D. Pierce
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- ---------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ----------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- ----------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Lincolnshire, state of Illinois, on October 4, 2001.
AN/MF Acquisition Corp.
Deal Dodge of Des Plaines, Inc.
Downers Grove Dodge, Inc.
Eastgate Ford, Inc.
Ed Mullinax, Inc.
Elmhurst Auto Mall, Inc.
Elmhurst Dodge, Inc.
Golf Mill Ford, Inc.
Horizon Chevrolet, Inc.
Jemautco, Inc.
Jerry Gleason Chevrolet, Inc.
Jerry Gleason Dodge, Inc.
Mullinax East, Inc.
Mullinax Ford North Canton, Inc.
Mullinax Ford South, Inc.
Mullinax Lincoln-Mercury, Inc.
Mullinax Management, Inc.
Mullinax of Mayfield, Inc.
Mullinax Used Cars, Inc.
T-Five, Inc.
Taylor Jeep Eagle, LLC
Tousley Ford, Inc.
Village Motors, LLC
Bob Townsend Ford, Inc.
Ed Mullinax Ford, Inc.
RI/WFI Acquisition Corporation
By: /s/ Donald Reese
---------------------------------------
Donald Reese
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Donald Reese President (Principal Executive Officer) October 4, 2001
- ----------------------------------
Donald Reese
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- --------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- --------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Jacksonville, state of Florida, on October 4, 2001.
Sunrise Nissan of Jacksonville, Inc.
Sunrise Nissan of Orange Park, Inc.
By: /s/ J. Phillip Risley
---------------------------------------
J. Phillip Risley
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ J. Phillip Risley President (Principal Executive Officer) October 4, 2001
- ----------------------------------
J. Phillip Risley
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- ---------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ J. Phillip Risley Director October 4, 2001
- ---------------------------------------
J. Phillip Risley
/s/ Michael E. Maroone Director October 4, 2001
- -------------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- --------------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of
Dallas, state of Texas, on October 4, 2001.
Steakley Chevrolet, Inc.
By: /s/ Arvel Rodgers
-----------------------------------------
Arvel Rodgers
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Arvel Rodgers President (Principal Executive Officer) October 4, 2001
- ---------------------------------
Arvel Rodgers
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- -------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- -------------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- --------------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Clearwater, state of Florida, on October 4, 2001.
Abraham Chevrolet-Tampa, Inc.
Airport Dodge, Inc.
AN/FGJE Acquisition Corp.
AutoNation Imports of Longwood, Inc.
AutoNation Imports of Winter Park, Inc.
Carlisle Motors, LLC
Coastal Cadillac, Inc.
Contemporary Cars, Inc.
Courtesy Auto Group, Inc.
Credit Management Acceptance Corporation
D/L Motor Company
D/L Moto-HO, Inc.
First Team Automotive Corp.
Gulf Management, Inc.
Kenyon Dodge, Inc.
King's Crown Ford, Inc.
Metro Chrysler Jeep, Inc.
Nissan of Brandon, Inc.
Sunset Pontiac-GMC Truck South, Inc.
Sunset Pontiac-GMC, Inc.
Sutherlin Imports, LLC
By: /s/ Ronald M. Salhany
----------------------------------------
Ronald M. Salhany
President (Principal Executive Officer)
SGSCP Limited Partnership
By: Courtesy Auto Group, Inc.
General Partner
By: /s/ Ronald M. Salhany
----------------------------------------
Ronald M. Salhany
President (Principal Executive
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Ronald M. Salhany President (Principal Executive Officer) October 4, 2001
- --------------------------------
Ronald M. Salhany
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- -------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- -------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- -------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Ft. Lauderdale, state of Florida, on October 4, 2001.
AutoNation Dodge of Pembroke Pines, Inc.
AutoNation Imports of Palm Beach, Inc.
M S & S Toyota, Inc.
Maroone Ford, LLC
Mike Shad Chrysler Plymouth Jeep Eagle, Inc.
Mike Shad Ford, Inc.
Steve Moore Chevrolet, LLC
Steve Moore Chevrolet Delray, LLC
Steve Moore, LLC
Steve Moore's Buy-Right Auto Center, Inc.
Wallace Dodge, LLC
Wallace Ford, LLC
Wallace Lincoln-Mercury, LLC
Wallace Nissan, LLC
By: /s/ Harold W. Shad, III
----------------------------------------
Harold W. Shad, III
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Howard W. Shad, III President (Principal Executive Officer) October 4, 2001
- --------------------------------
Howard W. Shad, III
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- -------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- --------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- --------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Fremont, state of California, on October 4, 2001.
AN/PF Acquisition Corp.
Anderson Dealership Group
Appleway Chevrolet, Inc.
AutoNation Imports Northwest, Inc.
Dodge of Bellevue, Inc.
Ford of Kirkland, Inc.
Kirkland Pontiac-Buick-GMC, Inc.
Northwest Financial Group, Inc.
Republic Anderson Investment Group, Inc.
Spokane Mitsubishi Dealers Advertising
Association, Inc.
Tasha Incorporated
Town & Country Chrysler Jeep, Inc.
By: /s/ David Spisak
---------------------------------------
David Spisak
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David Spisak President (Principal Executive Officer) October 4, 2001
- ---------------------------------
David Spisak
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- --------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- --------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Fremont, state of California, on October 4, 2001.
Allison Bavarian
America's Car Stop
AN/FMK Acquisition Corp.
Anderson Chevrolet
Anderson Chevrolet - Los Gatos, Inc.
Anderson Cupertino, Inc.
Auto Car, Inc.
Auto Mission Ltd.
Auto West, Inc.
Edgren Motor Company, Inc.
Hayward Dodge, Inc.
Mission Blvd. Motors, Inc.
Roseville Motor Corporation
Shamrock Ford, Inc.
Smythe European, Inc.
Stevens Creek Motors, Inc.
By: /s/ David Spisak
--------------------------------------
David Spisak
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David Spisak President (Principal Executive Officer) October 4, 2001
- --------------------------------
David Spisak
/s/ Wesley Pandoff Treasurer (Principal Accounting Officer October 4, 2001
- -------------------------------- and Principal Financial Officer)
Wesley Pandoff
/s/ David Spisak Director October 4, 2001
- --------------------------------
David Spisak
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Irving, state of Texas, on October 4, 2001.
Bankston Nissan in Irving, Inc.
Bankston Nissan Lewisville, Inc.
W.O. Bankston Nissan, Inc.
By: /s/ Robert R. Swanson, Jr.
----------------------------------------
Robert R. Swanson, Jr.
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert R. Swanson, Jr. President (Principal Executive Officer) October 4, 2001
- ---------------------------------
Robert R. Swanson, Jr.
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ---------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October [o ], 2001
- ---------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Roseville, state of California, on October 4, 2001.
Vanderbeek Motors, Inc.
Vanderbeek Olds/GMC Truck, Inc.
By: /s/ Scott Vanderbeek
----------------------------------------
Scott Vanderbeek
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Scott Vanderbeek President (Principal Executive Officer) October 4, 2001
- ---------------------------------
Scott Vanderbeek
/s/ Wesley Pandoff Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Wesley Pandoff
/s/ Scott Vanderbeek Director October 4, 2001
- ---------------------------------------
Scott Vanderbeek
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Corpus
Christi, state of Texas, on October 4, 2001.
Charlie Thomas' Courtesy Ford, Inc.
By: /s/ Robert Westrup
---------------------------------------
Robert Westrup
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert Westrup President (Principal Executive Officer) October 4, 2001
- ---------------------------------
Robert Westrup
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- --------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ---------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- ---------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Houston, state of Texas, on October 4, 2001.
Charlie Thomas Chrysler-Plymouth, Inc.
Charlie Thomas Ford, Inc.
CT Motors, Inc.
By: /s/ Robert Zweig
--------------------------------------
Robert Zweig
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert Zweig President (Principal Executive Officer) October 4, 2001
- ----------------------------------
Robert Zweig
/s/ Marc L. Bourhis Treasurer (Principal Accounting Officer October 4, 2001
- ---------------------------------- and Principal Financial Officer)
Marc. L. Bourhis
/s/ Michael E. Maroone Director October 4, 2001
- ----------------------------------
Michael E. Maroone
/s/ Jonathan P. Ferrando Director October 4, 2001
- ----------------------------------
Jonathan P. Ferrando
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Ft.
Lauderdale, state of Florida, on October 4, 2001.
ACER Fiduciary, Inc.
By: /s/ Jennifer L. Boese
---------------------------------------
Jennifer L. Boese
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jennifer L. Boese President (Principal Executive Officer) October 4, 2001
- ----------------------------------
Jennifer L. Boese
/s/ Jennifer L. Boese Treasurer (Principal Accounting Officer October 4, 2001
- ---------------------------------- and Principal Financial Officer)
Jennifer L. Boese
/s/ Jonathan P. Ferrando Director October 4, 2001
- ----------------------------------
Jonathan P. Ferrando
/s/ Michael E. Maroone Director October 4, 2001
- -------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Ft.
Lauderdale, state of Florida, on October 4, 2001.
AutoNation Insurance Company, Inc.
By: /s/ Jennifer L. Boese
--------------------------------------
Jennifer L. Boese
President (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Jennifer L. Boese President (Principal Executive Officer) October 4, 2001
- -------------------------------
Jennifer L. Boese
/s/ C. Coleman G. Edmunds Treasurer (Principal Accounting Officer October 4, 2001
- ------------------------------- and Principal Financial Officer)
C. Coleman G. Edmunds
/s/ C. Coleman G. Edmunds Director October 4, 2001
- ------------------------------
C. Coleman G. Edmunds
/s/ Guy F. Ragosta Director October 4, 2001
- ------------------------------
Guy F. Ragosta
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Ft.
Lauderdale, state of Florida, on October 4, 2001.
AutoNation Benefits Company, Inc.
By: /s/ Craig T. Monaghan
----------------------------------------
Craig T. Monaghan
Chief Executive Officer (Principal
Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints each of Jonathan P.
Ferrando and Gordon E. Devens, as his true and lawful attorneys-in fact and
agents for the undersigned, with full power of substitution, for in the
name, place and stead of the undersigned to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, (i) any and all pre-effective and post-effective amendments to the
registration statement, (ii) any exhibits to any such registration or
pre-effective or post-effective amendments or (iii) any and all
applications and other documents in connection with any such registration
statement or pre-effective or post effective amendments, and generally to
do all things and perform any and all acts and things whatsoever requisite
and necessary or desirable to enable the Registrants to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Craig T. Monaghan Chief Executive Officer (Principal October 4, 2001
- ---------------------------------- Executive Officer)
Craig T. Monaghan
/s/ Jennifer L. Boese Treasurer (Principal Accounting October 4, 2001
- ---------------------------------- Officer and Principal Financial Officer)
Jennifer L. Boese
/s/ Jonathan P. Ferrando Director October 4, 2001
- ----------------------------------
Jonathan P. Ferrando
/s/ B. Gene Clayton President, Director October 4, 2001
- -----------------------------------
B. Gene Clayton
/s/ Craig T. Monaghan Director October 4, 2001
- -----------------------------------
Craig T. Monaghan
/s/ Peter C. Smith Director October 4, 2001
- ---------------------------------------
Peter C. Smith