AutoNation 2001 Annual Report Download - page 83

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2001 2000
------------------ -----------------
CARRYING FAIR CARRYING FAIR
ASSETS (LIABILITIES) AMOUNT VALUE AMOUNT VALUE
-------------------- -------- ------- -------- ------
Installment loans receivable, net................... $ 62.3 $ 65.7 $48.1 $ 50.6
Investments in securitizations:
Other retained interests.......................... $ 22.6 $ 22.6 $76.1 $ 76.7
Interest-only strips.............................. $ 51.2 $ 51.2 $76.0 $ 76.4
Servicing liability................................. $ (15.4) $ (15.4) -- --
Fixed rate debt(1).................................. $(501.9) $(510.8) -- --
Interest rate caps.................................. -- -- -- $ 2.6
Interest rate floors................................ -- -- -- $(14.3)
---------------
(1) Primarily consists of amounts outstanding related to senior unsecured notes.
22. BUSINESS AND CREDIT CONCENTRATIONS
The Company owns and operates franchised automotive dealerships in the
United States. Automotive dealerships operate pursuant to franchise agreements
with vehicle manufacturers. Franchise agreements generally provide the
manufacturers or distributors with considerable influence over the operations of
the dealership and generally provide for termination of the franchise agreement
for a variety of causes. The success of any franchised automotive dealership is
dependent, to a large extent, on the financial condition, management, marketing,
production and distribution capabilities of the vehicle manufacturers or
distributors of which the Company holds franchises. At December 31, 2001 and
2000, the Company had receivables from manufacturers or distributors of $130.1
million and $131.2 million, respectively.
The Company purchases substantially all of its new vehicles from various
manufacturers or distributors at the prevailing prices to all franchised
dealers. The Company's sales volume could be adversely impacted by the
manufacturers' or distributors' inability to supply the dealerships with an
adequate supply of vehicles.
Concentrations of credit risk with respect to non-manufacturer trade
receivables are limited due to the wide variety of customers and markets in
which the Company's products are sold as well as their dispersion across many
different geographic areas in the United States. Consequently, at December 31,
2001, the Company does not consider itself to have any significant
non-manufacturer concentrations of credit risk.
23. QUARTERLY INFORMATION (UNAUDITED)
The Company's operations generally experience higher volumes of vehicle
sales in the second and third quarters of each year in part due to consumer
buying trends and the introduction of new vehicle models. Also, demand for cars
and light trucks is generally lower during the winter months than in other
seasons, particularly in regions of the United States where dealerships may be
subject to harsh winters. Accordingly, the Company expects revenue and operating
results to be generally lower in the first and fourth quarters as compared to
the second and third quarters. However, revenue may be impacted significantly
from quarter to quarter by other factors unrelated to season, such as automotive
manufacturer incentive programs. Comparisons of sales and operating results
between different quarters within a single year are, therefore, not necessarily
indicators of future performance.
76
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is an analysis of certain items in the Consolidated Income
Statements by quarter for 2001 and 2000: