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AutoNation repurchases $145 million of senior notes in fourth quarter
By Jennifer Lanning Drey
Portland, Ore., Jan. 29 - AutoNation, Inc. reduced non-vehicle debt by $155 million in the fourth quarter primarily through the repurchase of $145 million of senior notes, Michael J. Short, chief financial officer of AutoNation, said Thursday during the company's fourth-quarter earnings conference call.
The notes were bought at an average discount of 30% to face value, he said.
Of the $145 million total, $95 million was related to fixed-rate notes and $50 million to floating-rate notes.
Additionally, prior to the end of the fourth quarter, AutoNation entered into trades to repurchase an additional $11 million notional amount of fixed notes that settled in January, he said.
"You may recall that last quarter we announced our intention to reduce total debt by an additional $500 million, and as you can see, we are well on our way," Short said.
The company's cash balance increased to $111.0 million at Dec. 31, compared to $33.0 million at the end of 2007.
The debt reduction combined with cost savings initiatives allowed AutoNation to reduce its leverage ratio to 2.45 times by the end of 2008.
Short said AutoNation has exceeded its cost savings target of $100 million and achieved a run rate of $200 million in annualized savings.
Total liquidity at year-end was more than $400 million.
The company plans to reduce capital expenditures to $90 million in 2009 from $117 million in 2008.
AutoNation posted net income from continuing operations of $70 million, compared to net income from continuing operations of $51 million in the prior-year period. The company had a net benefit in the current quarter of $48 million.
Fourth-quarter revenue was $2.7 billion, compared to $4.1 billion in the year-ago period. The decrease was driven by lower vehicle sales.
AutoNation is an automotive retailer based in Fort Lauderdale, Fla.
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