AutoNation 2000 Annual Report Download - page 44

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2000 1999
----------- -----------
Contracts in transit and vehicle receivables ......... $ 407.5 $ 391.9
Finance receivables .................................. 350.2 441.5
Trade receivables .................................... 119.6 121.2
Manufacturer receivables ............................. 131.2 134.1
Other ................................................ 135.4 133.3
--------- ---------
1,143.9 1,222.0
Less: allowance for doubtful accounts ................ (35.1) (42.5)
--------- ---------
$ 1,108.8 $ 1,179.5
========= =========
Finance receivables consist of the following at December 31:
2000 1999
------------ -----------
Finance leases, net ......................................... $ 147.8 $ 196.3
Installment loans ........................................... 50.3 83.8
Retained interests in securitized installment loans ......... 152.1 161.4
--------- --------
$ 350.2 $ 441.5
========= ========
The Company sells installment loan finance receivables in securitization
transactions with unrelated financial institutions. When the Company sells
receivables in securitizations, it retains interest-only strips, one or more
subordinated tranches, servicing rights, and cash reserve accounts, all of
which are retained interests in the securitized receivables. Gains or losses on
the sale of the receivables depend in part on the previous carrying amount of
the financial assets involved in the transfer, allocated between the assets
sold and the retained interests based on their relative fair value at the date
of transfer. Gains or losses from the sale of the receivables are recognized in
the period in which sales occur. Interest-only strips are carried at fair value
and marked to market as a component of other comprehensive income unless an
other than temporary impairment occurs in the valuation of the interest-only
strip in which case the impairment is recorded in the Consolidated Income
Statements. Retained interests in the securitized receivables are carried at
allocated carrying amounts and periodically assessed for impairment. Servicing
assets are initially recorded at allocated carrying amounts and subsequently
amortized over the servicing period and periodically assessed for impairment.
The Company generally estimates fair value utilizing valuation models based on
the present value of future expected cash flows estimated using the Company's
best estimate and historical experience of the key assumptions including credit
losses, voluntary prepayment speeds, forward yield curve, and discount rates
commensurate with the risks involved.
The Company accounts for the sale of receivables in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." In September 2000, SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities -- a
Replacement of FASB No. 125" ("SFAS 140") was
44
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)