AutoNation 2015 Annual Report Download - page 85
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Table of Contents
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at January 1 $ 4.9
$ 4.8
$ 6.8
Additions based on tax positions related to the current year —
—
—
Additions for tax positions of prior years 0.7
0.9
0.8
Reductions for tax positions of prior years —
(0.1)
(0.2)
Reductions for expirations of statute of limitations —
(0.4)
(2.2)
Settlements —
(0.3)
(0.4)
Balance at December 31 $ 5.6
$ 4.9
$ 4.8
We had accumulated interest and penalties associated with these unrecognized tax benefits of $5.5 million at December 31, 2015, $5.3 million at
December 31, 2014, and $5.1 million at December 31, 2013. We additionally had a deferred tax asset of $4.0 million at December 31, 2015, $3.6 million at
December 31, 2014, and $3.6 million at December 31, 2013, related to these balances. The net of the unrecognized tax benefits, associated interest, penalties,
and deferred tax asset was $7.1 million at December 31, 2015, $6.6 million at December 31, 2014, and $6.3 million at December 31, 2013, which if resolved
favorably (in whole or in part) would reduce our effective tax rate. The unrecognized tax benefits, associated interest, penalties, and deferred tax asset are
included as components of Other Liabilities and Deferred Income Taxes in the Consolidated Balance Sheets.
It is our policy to account for interest and penalties associated with income tax obligations as a component of income tax expense. We recognized $0.4
million during 2015, $0.3 million during 2014, and $0.4 million during 2013 (each net of tax effect), of interest and penalties as part of the provision for
income taxes in the Consolidated Statements of Income.
We do not expect that our unrecognized tax benefits will significantly increase or decrease during the twelve months beginning January 1, 2016.
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating
securities and are to be included in the computation of earnings per share (“EPS”) under the two-class method. Our restricted stock awards are considered
participating securities because they contain non-forfeitable rights to dividends. As the number of shares granted under such awards is immaterial, all
earnings per share amounts reflect such shares as if they were fully vested shares and the disclosures associated with the two-class method are not presented.
Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period, including outstanding
unvested restricted stock awards and vested restricted stock unit awards. Diluted EPS is computed by dividing net income by the weighted average number of
shares outstanding, noted above, adjusted for the dilutive effect of stock options.
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