AutoNation 2003 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2003 AutoNation annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

Table of Contents
tax, totaling $14.6 million to reflect the deferral of certain allowances, primarily floorplan assistance, into inventory cost. The impact of this
accounting change for the year ended December 31, 2003 was an increase of $3.3 million in Cost of Sales. On a comparable basis, the
impact of this accounting change for the years ended December 31, 2002 and 2001 would have been an increase of $4.7 million and a
decrease of $11.6 million, respectively, in Cost of Sales. Additionally, the adoption of EITF 02-16 impacted the accounting for certain
manufacturers’ advertising allowances resulting in a reclassification that increased Selling, General and Administrative expenses and,
correspondingly, reduced Cost of Sales by $18.6 million for the year ended December 31, 2003 to now reflect these allowances as a
reduction of Cost of Sales. On a comparable basis, the reclassification to increase Selling, General and Administrative Expenses and to
reduce Cost of Sales for the years ended December 31, 2002 and 2001 would have been $19.5 million and $21.4 million, respectively.
In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS 143, “Accounting for Asset Retirement Obligations,”
effective for fiscal years beginning after June 15, 2002. SFAS 143 requires that entities record the fair value of an asset retirement obligation
in the period in which it was incurred. The adoption of SFAS 143 did not have an impact on our consolidated financial position, results of
operations or cash flows.
In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires the recognition of a liability for certain
guarantee obligations issued or modified after December 31, 2002. FIN 45 also clarifies disclosure requirements to be made by a guarantor
for certain guarantees. The disclosure provisions of FIN 45 were effective for fiscal years ending after December 15, 2002. We adopted the
disclosure provisions of FIN 45 as of December 31, 2002 and have adopted the accounting requirements effective January 1, 2003, which
did not have a material impact on our consolidated financial position, results of operations or cash flows. See Note 16, Discontinued
Operations, for discussion of the accounting treatment of potential future guarantees.
In November 2002, the EITF reached a consensus on EITF Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple
Deliverables.” EITF 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple
products, services and/or rights to use assets. The provisions of EITF 00-21 apply to revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. The adoption of EITF 00-21 did not have an impact on our consolidated financial position, results of operations
or cash flows.
In January 2003, the FASB issued FASB Interpretation No. 46 “Consolidation of Variable Interest Entities, an Interpretation of APB
No. 50,” (“FIN 46”). FIN 46 requires certain variable interest entities, as defined, to be consolidated by the primary beneficiary of the entity if
the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial support from other parties. FIN 46, as amended, is effective for all new
variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003,
the provisions of FIN 46 must be applied for the first interim or annual period beginning after December 15, 2003. In December 2003, the
FASB issued a revision to FIN 46 (“FIN 46R”) to clarify some of the provisions of the interpretation and defer the implementation date for
certain entities to periods ending after March 14, 2004. The adoption of FIN 46 and FIN 46R, as revised, are not expected to have an impact
on our consolidated financial position, results of operations or cash flows.
In April 2003, the FASB issued SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS 149
clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative and clarifies when a
derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS 149 amends certain other
existing pronouncements. SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003 and should be applied
prospectively. The adoption of SFAS 149 did not have an impact on our consolidated financial position, results of operations or cash flows.
36