AutoNation 2003 Annual Report Download - page 57

Download and view the complete annual report

Please find page 57 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
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As required by SFAS 142, the Company has completed impairment tests as of June 30, 2003 and 2002 and January 1, 2002 for
goodwill and intangibles with indefinite lives. These tests include determining the fair value of the Company’s single reporting unit, as
defined by SFAS 142, and comparing it to the carrying value of the net assets allocated to the reporting unit. No impairment charges resulted
from the required impairment tests. Goodwill and intangibles with indefinite lives will be tested for impairment annually at June 30 or more
frequently when events or circumstances indicate that an impairment may have occurred.
Other Assets
Other assets consist of various items, net of applicable amortization, including, among other items, service loaner and revenue vehicle
inventory which is not available for sale, property held-for-sale, notes receivable and debt issuance costs. Debt issuance costs are amortized
to Other Interest Expense using the effective interest method through maturity.
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, finance and insurance chargeback liabilities, deferred revenue, accrued expenses and customer deposits. Other Current
Liabilities also includes other tax accruals totaling $307.3 million at December 31, 2003. At December 31, 2002, other tax accruals totaled
$361.3 million and were included in Deferred Income Taxes and Other Tax Liabilities. See Note 14, Income Taxes, of Notes to Consolidated
Financial Statements for additional discussion of income taxes, including the impact of the Company’s March 2003 settlement with the
Internal Revenue Service (“IRS”).
Stock Options
The Company applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” in accounting for stock-
based employee compensation arrangements whereby compensation cost related to stock options is generally not recognized in determining
net income. Had compensation cost for the Company’s stock option plans been determined pursuant to Statement of Financial Accounting
Standards No. 123, “Accounting for Stock Based Compensation,” the Company’s net income and earnings per share would have decreased
accordingly. Using the Black-Scholes option pricing model for all options granted, the
50