AutoNation 2000 Annual Report Download - page 62

where appropriate, the assumed exercise or conversion of options and warrants.
In computing diluted earnings (loss) per share, the Company has utilized the
treasury stock method.
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AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
9. EARNINGS (LOSS) PER SHARE -- (Continued)
The computation of weighted average common and common equivalent shares
used in the calculation of basic and diluted earnings (loss) per share is as
follows for the years ended December 31:
2000 1999 1998
---------- ---------- ----------
Weighted average shares outstanding used in calculating basic
earnings per share ........................................ 361.3 429.8 455.1
Effect of dilutive options and warrants ..................... .1 -- 15.8
----- ----- -----
Weighted average common and common equivalent shares used
in calculating diluted earnings per share ................. 361.4 429.8 470.9
===== ===== =====
At December 31, 2000, the Company had employee stock options outstanding
of approximately 57.2 million of which 56.9 million have been excluded from the
computation of diluted earnings per share since they are anti-dilutive. At
December 31, 1999 and 1998, outstanding employee stock options of approximately
50.9 and 4.8 million, respectively, have been excluded since they are
anti-dilutive.
10. RESTRUCTURING AND IMPAIRMENT CHARGES (RECOVERIES), NET
During the fourth quarter of 1999, the Company approved a plan to
restructure certain of its 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 the Company's 1999 Consolidated Income Statements. 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.
The Company intends to complete the sale of its Flemington dealer group
during the second quarter of 2001 as previously described in Note 2, Business
Acquisitions and Divestitures, resulting in the substantial completion of its
non-core dealership divestiture plan. Closed megastores and other properties