AutoNation 2003 Annual Report Download - page 70

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Table of Contents
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
qualified and are granted at a price equal to the closing market price of the common stock on the trading day immediately prior to the date of
grant. Generally, options granted will have a term of 10 years from the date of grant, and will vest in increments of 25% per year over a four-
year period on the yearly anniversary of the grant date.
A summary of stock option and warrant transactions is as follows for the years ended December 31:
2003 2002 2001
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Options outstanding at beginning of year 53.5 $12.85 57.6 $12.72 57.2 $12.74
Granted 3.2 $16.49 6.0 $12.22 8.0 $10.92
Exercised (10.9) $10.82 (7.0) $11.43 (.9) $9.26
Canceled (2.9) $11.71 (3.1) $12.33 (6.7) $11.15
Options outstanding at end of year 42.9 $13.71 53.5 $12.85 57.6 $12.69
Options exercisable at end of year 32.5 $14.14 36.8 $13.81 37.4 $14.01
Options available for future grants 20.2 20.7 23.8
The following table summarizes information about outstanding and exercisable stock options at December 31, 2003:
Outstanding Exercisable
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Exercise Price or Contractual Exercise Exercise
Range of Exercise Prices Shares Life (Yrs.) Price Shares Price
$ 3.78-$7.56 4.5 6.2 $6.83 3.0 $6.82
$ 7.57-$15.12 28.2 5.1 $12.04 22.0 $12.14
$15.13-$34.02 10.2 4.8 $21.42 7.5 $23.03
42.9 5.1 $13.71 32.5 $14.14
12. FINANCE UNDERWRITING AND ASSET SECURITIZATIONS
In July 2003, the Company sold all of its finance receivables portfolio to a third party and received proceeds equal to the net carrying value
of the finance receivables and servicing liabilities at the closing date of the transaction totaling $52.4 million, resulting in no gain or loss on
the transaction.
In December 2001, the Company decided to exit the business of underwriting retail automobile loans for customers at its stores, which it
determined was not a part of the Company’s core automotive retail business. The Company continues to provide automotive loans and
leases for its customers through unrelated third party finance sources.
The decision to exit the business and the impact of the economic conditions caused the Company to incur asset impairment and related
charges totaling $85.8 million recorded in December 2001 included in Loan and Lease Underwriting Losses (Income), Net in the 2001
Consolidated Income Statement. These charges mainly reflect the impact of estimated increases in loan losses and prepayments, as well as
higher estimated loan-servicing costs. The charges also include $1.5 million of direct exit costs for asset write-offs and other costs. In addition,
during 2001, the Company recognized impairment charges totaling $4.1 million, primarily associated with the deterioration in residual
values of finance lease receivables. The Company discontinued the writing of finance leases in mid-1999.
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