AutoNation 2000 Annual Report Download - page 27

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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, par value $.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, 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.
See Note 2, Business Acquisitions and Divestitures, of the Notes to
Consolidated Financial Statements, for further discussion of business
combinations.
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 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 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 intend to complete the sale of our Flemington dealer group during the
second quarter of 2001 as described under the heading, "Business Acquisitions
and Divestitures," 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, the ultimate disposition will
not be substantially completed until late 2001. Revenue for the operations
disposed or to be disposed was $923.5 million, $2.12 billion and $1.70 billion
during 2000, 1999 and 1998, 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.
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The following summarizes activity in the restructuring and impairment
reserves for the year ended December 31, 2000: