AutoNation 2015 Annual Report Download - page 68

Table of Contents
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and the long-term portions of debt issuance costs and notes receivable. Debt issuance costs are amortized to Other Interest Expense in the accompanying
Consolidated Statements of Income.
Other Current Liabilities
Other current liabilities consist of various items payable within one year including, among other items, accruals for payroll and benefits, sales taxes, the
current portions of finance and insurance chargeback liabilities and self-insurance reserves, deferred revenue, customer deposits, and accrued expenses.
Other Liabilities
Other liabilities consist of various items payable beyond one year including, among other items, the long-term portions of deferred compensation
obligations, self-insurance reserves, and finance and insurance chargeback liabilities.
Employee Savings Plans
We offer a 401(k) plan to all of our employees and provide a matching contribution to certain employees that participate in the plan. We provided a
matching contribution of $6.8 million in 2015, $5.9 million in 2014, and $5.2 million in 2013. Employer matching contributions are subject to a three-year
graded vesting period for employees hired subsequent to January 1, 2011, and are fully vested immediately upon contribution for employees hired prior to
January 1, 2011.
We offer a deferred compensation plan (the “Plan”) to provide certain employees and non-employee directors with the opportunity to accumulate assets
for retirement on a tax-deferred basis. Participants in the Plan are allowed to defer a portion of their compensation and are fully vested in their respective
deferrals and earnings. Participants may choose from a variety of investment options, which determine their earnings credits. We provided a matching
contribution to employee participants in the Plan of $0.6 million for 2015, $0.6 million for 2014, and $0.5 million in 2013. One-third of the matching
contribution is vested and credited to participants on the first business day of the subsequent calendar year, and an additional one-third vests and is credited
on each of the first and second anniversaries of such date. We may also make discretionary contributions, which vest three years after the effective date of the
discretionary contribution. Participants eligible for a matching contribution under the Plan are not eligible for a matching contribution in our 401(k) plan.
The balances due to participants in the Plan were $64.6 million as of December 31, 2015, and $63.4 million as of December 31, 2014, and are included in
Other Current Liabilities and Other Liabilities in the accompanying Consolidated Balance Sheets.
Stock-Based Compensation
We grant stock-based awards in the form of stock options, restricted stock, and restricted stock units (“RSUs”). Stock options granted under all plans are
non-qualified. Upon exercise, shares of common stock are issued from our treasury stock. We use the Black-Scholes valuation model to determine
compensation expense associated with our stock options. Restricted stock awards, which are considered nonvested share awards as defined under generally
accepted accounting principles, and RSUs are issued from our treasury stock. Compensation cost for restricted stock awards and RSUs is based on the closing
price of our common stock on the date of grant. Certain of our equity-based compensation plans contain provisions that provide for vesting of awards upon
retirement. Accordingly, compensation cost for stock-based awards is recognized on a straight-line basis, net of estimated forfeitures, over the shorter of the
stated vesting period or the period until employees become retirement-eligible. See Note 10 of the Notes to Consolidated Financial Statements for more
information about our stock-based compensation arrangements.
Revenue Recognition
Revenue consists of the sales of new and used vehicles, sales of parts and automotive services, commissions from finance and insurance products, and sales
of other products. We recognize revenue (which excludes sales taxes) in the period in which products are sold or services are provided. The automotive
services we provide include, but are not limited to, customer-paid repairs and maintenance, as well as repairs and maintenance under manufacturer warranties
and extended service contracts. We recognize vehicle and finance and insurance revenue when a sales contract has been executed, the
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