AutoNation 2015 Annual Report Download - page 45

Table of Contents
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During 2015, we recorded non-cash impairment charges of $15.4 million ($9.6 million after-tax) associated with franchise rights recorded at our
Volkswagen stores. See Note 16 of the Notes to Consolidated Financial Statements for more information.
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Floorplan Interest Expense
Floorplan interest expense was $58.3 million in 2015, $53.3 million in 2014, and $53.4 million in 2013. The increase in floorplan interest expense of $5.0
million in 2015, as compared to 2014, is primarily the result of higher average vehicle floorplan balances. Floorplan interest expense in 2014 was relatively
flat compared to 2013.
Other Interest Expense
Other interest expense was $90.9 million in 2015, $86.7 million in 2014, and $88.3 million in 2013. The increase in interest expense of $4.2 million in
2015, as compared to 2014, was primarily due to an increase of $8.3 million resulting from the September 2015 issuance of our 3.35% Senior Notes due 2021
and 4.5% Senior Notes due 2025. This increase was partially offset by decreases in interest expense of $3.3 million due to lower interest rates associated with
our credit facility refinancing in December 2014 and our commercial paper program established in May 2015, and $0.6 million resulting from lower levels of
debt outstanding during the year associated with our mortgage facility. Other interest expense in 2014 was relatively flat compared to 2013.
Loss on Debt Extinguishment
We expensed $1.6 million pre-tax in the fourth quarter of 2014 related to a debt refinancing transaction. This expense included $0.4 million for the write-
off of previously deferred debt issuance costs.
Provision for Income Taxes
Income taxes are provided based upon our anticipated underlying annual blended federal and state income tax rates, adjusted, as necessary, for any other
tax matters occurring during the period. As we operate in various states, our effective tax rate is also dependent upon our geographic revenue mix.
Our effective income tax rate was 38.6% in 2015. See Note 11 of the Notes to Consolidated Financial Statements for discussion of our unrecognized tax
benefits. We do not expect that our unrecognized tax benefits will significantly increase or decrease during the twelve months beginning January 1, 2016.
Our effective income tax rate was 38.5% in 2014 and was 37.8% in 2013, which reflected the benefit of certain favorable tax adjustments. During 2013, we
completed a restructuring of certain of our subsidiaries, a consequence of which was the release of a valuation allowance of $3.4 million, which was reflected
as a benefit in our income tax provision in 2013.
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Discontinued operations are related to stores that were sold or terminated prior to January 1, 2014. Results from discontinued operations, net of income
taxes, were primarily related to expected losses on real estate to be sold, as well as carrying costs for real estate we have not yet sold associated with stores
that were closed prior to January 1, 2014.
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We manage our liquidity to ensure access to sufficient funding at acceptable costs to fund our ongoing operating requirements and future capital
expenditures while continuing to meet our financial obligations. We believe that our cash and cash equivalents, funds generated through future operations,
and amounts available under our revolving credit facility, commercial paper program, and secured used vehicle floorplan facilities will be sufficient to fund
our working capital requirements, service our debt, pay our tax obligations and commitments and contingencies, and meet any seasonal operating
requirements for the foreseeable future.
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