Moody's: AutoNation positive

Moody's Investors Service said it affirmed the debt ratings of AutoNation Inc. and changed the outlook to positive from stable.

The change in outlook reflects continuing improvement in AutoNation's financial performance, and settlement of various tax and other business contingencies. The company's operating cash flow is strong and liquidity has remained good despite tax settlement payments and share repurchases of more than $900 million in 2003.

Ratings affirmed include the company's senior implied rating of Ba1, senior guaranteed unsecured notes and senior guaranteed credit facilities of Ba2, senior unsecured issuer rating of Ba3, and speculative grade liquidity rating of SGL-2.

Moody's said the ratings are supported by expectations that AutoNation will sustain the level of operational improvements seen over the past few years and that it will have a moderate program of acquisitions and share repurchases that will be financed primarily from operating cash flow.

Moody's said the ratings are constrained by concerns that AutoNation might resume a higher growth acquisition strategy and that share repurchases might return to previous high levels, thereby increasing non-vehicle debt.

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