AutoNation 2000 Annual Report Download - page 29
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levels and higher interest rates. In 2001, we expect to take numerous steps to
reduce inventory levels and related floorplan interest expense.
Other Interest Expense
Other interest expense was incurred primarily on borrowings under our
revolving credit facilities. 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. The increases are due to higher average borrowings along
with higher interest rates.
Interest Income
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 and investment balances on hand. 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
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 $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 of $4.0
million was recorded due to the effect of certain non-deductible expenses
primarily associated with the restructuring and impairment charges. We
anticipate that our effective income tax rate will increase to between 38% and
39% in 2001.
Financial Condition
At December 31, 2000, we had $82.2 million in cash and cash equivalents.
As of December 31, 2000, we had two unsecured revolving credit facilities in
place in the aggregate of $1.5 billion under which $615.0 million was
outstanding. The unsecured revolving credit facilities may be used for general
corporate purposes. One facility provides $1.0 billion of financing under a
multi-year structure and matures April 2002. The other, a $500.0 million
364-day facility was amended prior to its scheduled maturity in March 2001 to
provide $250.0 million of capacity until the earlier of September 30, 2001 or
the early renewal of the multi-year facility. We also have been negotiating
with several of the vehicle
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