AutoNation 2000 Annual Report Download - page 67

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value of derivatives.
13. ASSET SECURITIZATIONS
The Company securitizes installment loan receivables through a $1.0
billion commercial paper warehouse facility with unrelated financial
institutions. During 2000, the Company sold unsecured installment loan finance
receivables of $580.1 million under this program, net of retained interests.
The Company continues to service and receive annual servicing fees on the
outstanding balance of securitized receivables. The Company also retains a
subordinated interest in the sold receivables and the rights to future cash
flows arising from the receivables after the investors receive their
contractual return. The Company provides additional credit enhancement in the
form of restricted cash deposits. At December 31, 2000, $576.3 million was
outstanding under this program, net of retained interests. As further discussed
in Note 12, Derivative Financial Instruments, the Company enters into interest
rate protection agreements to manage the interest rate changes on amounts
securitized and on the Company's retained interests.
The Company also securitizes installment loan receivables through the
issuance of asset-backed notes through a non-consolidated special purpose
entity under a $2.0 billion shelf registration statement. Through December 31,
2000, $1.48 billion has been issued and approximately $521.5 million remains to
be issued under this program. The Company uses proceeds from these notes to
refinance installment loans previously securitized under the warehouse facility
and to securitize additional loans held by the Company. The Company provides
credit enhancement related to these notes in the form of overcollateralization,
a reserve fund and a third party surety bond. The Company retains
responsibility for servicing the loans for which it is paid a servicing fee.
During 2000, approximately $691.7 million in additional asset-backed notes were
issued and at December 31, 2000, $1.0 billion was outstanding under this
program, net of retained interests.
These transactions typically result in the recording of a securitization
asset in the form of an interest-only strip which represents the present value
of the future residual cash flows from securitized receivables. The investors
and the securitization trusts have no recourse to the Company's assets for
failure of
65
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
13. ASSET SECURITIZATIONS -- (Continued)
debtors to pay when due except to the extent of the Company's rights to future
cash flow and any subordinated interest the Company retains.
In 2000, recognized pre-tax gains on the securitization of installment
loan receivables were not material to the Company's Consolidated Financial
Statements.
A summary of cash flows received from securitization trusts for the year
ended December 31, 2000, were as follows:
Proceeds from securitizations under warehouse facility ........ $ 580.1
Proceeds from securitizations under shelf registration ........ 691.7