AutoNation 2000 Annual Report Download - page 34

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Cash (used in) provided by discontinued operations was as follows during
the years ended December 31:
2000 1999 1998
------------- ------------- -------------
Automotive rental ............ $ (227.0) $ (160.3) $ (129.2)
Solid waste services ......... -- (546.0) 580.6
---------- ---------- ----------
$ (227.0) $ (706.3) $ 451.4
========== ========== ==========
Cash used in our former automotive rental business during 2000 consists
primarily of cash used to replace maturing letters of credit which provide
credit enhancement for ANC Rental's vehicle financing.
32
Quantitative and Qualitative Disclosures About Market Risk
The tables below provide information about our market sensitive financial
instruments and constitute "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 December 31, 2000, we did not have any
outstanding interest rate swaps.
We have entered into a series of interest rate caps and floors
contractually maturing through 2006 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 receive rates under interest rate swaps
are based on implied forward rates in the yield curve at the reporting date.
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