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These excerpts taken from the AN 10-K filed Feb 17, 2009. Non-Operating
Income (Expenses)
Floorplan
Interest Expense
Floorplan interest expense was $87.4 million in 2008,
$129.0 million in 2007, and $132.5 million in 2006.
The decrease in 2008, as compared to 2007, is primarily the
result of lower short-term LIBOR interest rates, partially
offset by higher average vehicle floorplan balances and the
additional floorplan interest expense incurred in connection
with the floorplan credit agreements we entered into during the
second quarter of 2008 to finance a portion of our used vehicle
inventory. The decrease in 2007, as compared to 2006, is
primarily the result of lower inventory levels, partially offset
by higher short-term LIBOR interest rates during 2007.
Other
Interest Expense
Other interest expense was incurred primarily on borrowings
under our term loan facility, mortgage facility, revolving
credit facility, and outstanding senior unsecured notes. Other
interest expense was $89.4 million in 2008,
$114.1 million in 2007, and $90.8 million in 2006.
The decrease in other interest expense of $24.7 million in
2008, as compared to 2007, was primarily due to a
$14.4 million decrease in interest expense resulting from
lower interest rates on our term loan facility, a
$7.9 million decrease in interest expense related to the
repurchase of our floating rate and 7% senior unsecured
notes of $232.9 million, and a $6.0 million decrease
in interest expense resulting from lower levels of debt
outstanding during the year associated with our revolving credit
facility and 9% senior unsecured notes. These decreases
were partially offset by a $4.5 million increase in
interest expense related to higher levels of debt outstanding
during the year associated with our mortgage facility.
The increase in other interest expense of $23.3 million in
2007, as compared to 2006, was primarily due to a
$21.8 million increase in interest expense related to the
$1.15 billion of additional debt incurred in connection
with our April 2006 equity tender offer and a $6.2 million
increase in interest expense related to our revolving credit
facility, primarily as a result of increased borrowings in 2007.
Partially offsetting these increases was an $8.7 million
reduction in interest expense resulting from the repurchase of
our 9% senior unsecured notes and repayments of mortgage
facilities. Additionally, during 2007 we incurred
$2.6 million of expenses in connection with the
modifications to our term loan, revolving credit facilities, and
our mortgage facility.
Other
Interest Expense — Senior Note
Repurchases
In April 2006, we repurchased $309.4 million aggregate
principal amount of our 9% senior unsecured notes for an
aggregate total consideration of $339.8 million pursuant to
our debt tender offer and consent solicitation. Approximately
$34.5 million of tender premium and other financing costs
related to our debt tender offer was expensed as Other Interest
Expense — Senior Note Repurchases in the accompanying
Consolidated Income Statements.
Gain
on Senior Note Repurchases
During 2008, we repurchased $105.5 million aggregate
principal amount of our floating rate senior unsecured notes due
April 15, 2013, and $127.4 million aggregate principal
amount of our 7% senior unsecured notes due April 15,
2014. We recorded a gain of $51.3 million in connection
with these repurchases, net of the write-off of related
unamortized debt issuance costs, which is recorded in Gain on
Senior Note Repurchases in the accompanying Consolidated Income
Statements.
We also committed to repurchase an additional $11.1 million
aggregate principal amount of our 7% senior unsecured notes
for which settlement occurred subsequent to December 31,
2008. We have reclassified these amounts from long-term to
current debt as of December 31, 2008. We will record a gain
in the first quarter of 2009 of $3.0 million on the
repurchase of these notes, net of the write-off of related
unamortized debt issuance costs.
Provision
for Income Taxes
Our effective income tax rate was 13.9% in 2008, 37.3% in 2007,
and 38.9% in 2006. The tax rate for 2008 reflects the fact that
a significant portion of the impairment charges taken in 2008
was not deductible for income tax purposes. 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. We expect our underlying tax rate to
be approximately 40% on an ongoing basis, excluding the impact
of any potential tax adjustments in the future.
As of December 31, 2008, we had unrecognized tax benefits
recorded in accordance with FIN 48. See Note 11 of the
Notes to Consolidated Financial Statements for additional
discussion.
Our unrecognized tax benefits were reduced by approximately
$35 million (net of tax effect) as a result of the
expiration of a statute of limitations in October 2008. We do
not expect that our unrecognized tax benefits will significantly
increase or decrease during the twelve months beginning
January 1, 2009.
During 2007, we recorded net income tax benefits in our
provision for income taxes of $12.0 million related to the
resolution of certain tax matters, changes in certain state tax
laws, and other adjustments.
During 2006, we made estimated state tax and federal tax
payments totaling $278.3 million, including approximately
$100 million related to provisions for the third and fourth
quarter of 2005, payment for which had been deferred as allowed
for filers impacted by hurricanes in 2005.
Discontinued
Operations
Discontinued operations are related to stores that were sold or
terminated, that we have entered into an agreement to sell or
terminate, or for which we otherwise deem a proposed sales
transaction or termination to be probable, with no material
changes expected. We had a loss from discontinued operations
totaling $17.7 million in 2008, $10.0 million in 2007,
and $12.1 million in 2006, net of income taxes. Certain
amounts reflected in the accompanying Consolidated Financial
Statements for the years ended December 31, 2008, 2007, and
2006, have been adjusted to classify the results of these stores
as discontinued operations.
Non-Operating Income (Expenses) Floorplan Interest Expense Floorplan interest expense was $87.4 million in 2008, $129.0 million in 2007, and $132.5 million in 2006. The decrease in 2008, as compared to 2007, is primarily the result of lower short-term LIBOR interest rates, partially offset by higher average vehicle floorplan balances and the additional floorplan interest expense incurred in connection with the floorplan credit agreements we entered into during the second quarter of 2008 to finance a portion of our used vehicle inventory. The decrease in 2007, as compared to 2006, is primarily the result of lower inventory levels, partially offset by higher short-term LIBOR interest rates during 2007. Other Interest Expense Other interest expense was incurred primarily on borrowings under our term loan facility, mortgage facility, revolving credit facility, and outstanding senior unsecured notes. Other interest expense was $89.4 million in 2008, $114.1 million in 2007, and $90.8 million in 2006. The decrease in other interest expense of $24.7 million in 2008, as compared to 2007, was primarily due to a $14.4 million decrease in interest expense resulting from lower interest rates on our term loan facility, a $7.9 million decrease in interest expense related to the repurchase of our floating rate and 7% senior unsecured notes of $232.9 million, and a $6.0 million decrease in interest expense resulting from lower levels of debt outstanding during the year associated with our revolving credit facility and 9% senior unsecured notes. These decreases were partially offset by a $4.5 million increase in interest expense related to higher levels of debt outstanding during the year associated with our mortgage facility. The increase in other interest expense of $23.3 million in 2007, as compared to 2006, was primarily due to a $21.8 million increase in interest expense related to the $1.15 billion of additional debt incurred in connection with our April 2006 equity tender offer and a $6.2 million increase in interest expense related to our revolving credit facility, primarily as a result of increased borrowings in 2007. Partially offsetting these increases was an $8.7 million reduction in interest expense resulting from the repurchase of our 9% senior unsecured notes and repayments of mortgage facilities. Additionally, during 2007 we incurred $2.6 million of expenses in connection with the modifications to our term loan, revolving credit facilities, and our mortgage facility.
Other Interest Expense — Senior Note Repurchases In April 2006, we repurchased $309.4 million aggregate principal amount of our 9% senior unsecured notes for an aggregate total consideration of $339.8 million pursuant to our debt tender offer and consent solicitation. Approximately $34.5 million of tender premium and other financing costs related to our debt tender offer was expensed as Other Interest Expense — Senior Note Repurchases in the accompanying Consolidated Income Statements. Gain on Senior Note Repurchases During 2008, we repurchased $105.5 million aggregate principal amount of our floating rate senior unsecured notes due April 15, 2013, and $127.4 million aggregate principal amount of our 7% senior unsecured notes due April 15, 2014. We recorded a gain of $51.3 million in connection with these repurchases, net of the write-off of related unamortized debt issuance costs, which is recorded in Gain on Senior Note Repurchases in the accompanying Consolidated Income Statements. We also committed to repurchase an additional $11.1 million aggregate principal amount of our 7% senior unsecured notes for which settlement occurred subsequent to December 31, 2008. We have reclassified these amounts from long-term to current debt as of December 31, 2008. We will record a gain in the first quarter of 2009 of $3.0 million on the repurchase of these notes, net of the write-off of related unamortized debt issuance costs. Provision for Income Taxes Our effective income tax rate was 13.9% in 2008, 37.3% in 2007, and 38.9% in 2006. The tax rate for 2008 reflects the fact that a significant portion of the impairment charges taken in 2008 was not deductible for income tax purposes. 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. We expect our underlying tax rate to be approximately 40% on an ongoing basis, excluding the impact of any potential tax adjustments in the future. As of December 31, 2008, we had unrecognized tax benefits recorded in accordance with FIN 48. See Note 11 of the Notes to Consolidated Financial Statements for additional discussion. Our unrecognized tax benefits were reduced by approximately $35 million (net of tax effect) as a result of the expiration of a statute of limitations in October 2008. We do not expect that our unrecognized tax benefits will significantly increase or decrease during the twelve months beginning January 1, 2009. During 2007, we recorded net income tax benefits in our provision for income taxes of $12.0 million related to the resolution of certain tax matters, changes in certain state tax laws, and other adjustments. During 2006, we made estimated state tax and federal tax payments totaling $278.3 million, including approximately $100 million related to provisions for the third and fourth quarter of 2005, payment for which had been deferred as allowed for filers impacted by hurricanes in 2005. Discontinued Operations Discontinued operations are related to stores that were sold or terminated, that we have entered into an agreement to sell or terminate, or for which we otherwise deem a proposed sales transaction or termination to be probable, with no material changes expected. We had a loss from discontinued operations totaling $17.7 million in 2008, $10.0 million in 2007, and $12.1 million in 2006, net of income taxes. Certain amounts reflected in the accompanying Consolidated Financial Statements for the years ended December 31, 2008, 2007, and 2006, have been adjusted to classify the results of these stores as discontinued operations.
These excerpts taken from the AN 10-K filed Feb 28, 2008. Non-Operating
Income (Expenses)
Floorplan
Interest Expense
Floorplan interest expense was $133.1 million in 2007,
$138.2 million in 2006, and $102.3 million in 2005.
The decrease in 2007, as compared to 2006, is primarily the
result of lower inventory levels, partially offset by higher
short-term LIBOR interest rates during 2007. The increase in
2006, as compared to 2005, is primarily the result of higher
short-term LIBOR interest rates. In 2008, we anticipate lower
floorplan interest rates resulting from lower short-term LIBOR
interest rates.
Other
Interest Expense
Other interest expense was incurred primarily on borrowings
under our term loan facility, mortgage facility, revolving
credit facility, and outstanding senior unsecured notes. Other
interest expense was $114.3 million in 2007,
$90.9 million in 2006, and $63.3 million in 2005. The
increase in other interest expense in 2007, as compared to 2006,
is primarily due to a $21.8 million increase in interest
expense related to the $1.15 billion of additional debt
incurred in connection with our April 2006 equity tender offer
and a $6.2 million increase in interest expense related to
our revolving credit facility, primarily as a result of
increased borrowings in 2007. Partially offsetting these
increases was an $8.7 million reduction in interest expense
resulting from the repurchase of our 9% senior unsecured
notes and repayments of mortgage facilities. Additionally,
during 2007 we incurred $2.6 million of expenses in
connection with the modifications to our term loan, revolving
credit facilities, and our mortgage facility.
The increase in other interest expense in 2006, as compared to
2005, is primarily due to a $61.6 million increase in
interest expense related to the $1.15 billion of additional
debt incurred in connection with our April 2006 equity tender
offer, partially offset by a $32.4 million reduction in
interest expense resulting from the repurchase of our
9% senior unsecured notes and repayments of mortgage
facilities during 2006 and 2005.
Other
Interest Expense — Senior Note
Repurchases
In April 2006, we purchased $309.4 million aggregate
principal of our 9% senior unsecured notes for an aggregate
total consideration of $339.8 million pursuant to our debt
tender offer and consent solicitation. Approximately
$34.5 million of tender premium and other financing costs
related to our debt tender offer was expensed as Other Interest
Expense — Senior Note Repurchases in the accompanying
Consolidated Income Statements.
Table of Contents
During 2005, we repurchased $123.1 million (face value) of
our 9% senior unsecured notes at an average price of 110.5%
of face value or $136.0 million. The premium paid and
financing costs of $17.4 million were recognized as Other
Interest Expense — Senior Note Repurchases in the
accompanying Consolidated Income Statements.
Provision
for Income Taxes
Our effective income tax rate was 37.3% in 2007, 38.9% in 2006,
and 36.5% in 2005. 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. We expect our underlying tax rate to be
approximately 40% on an ongoing basis, excluding the impact of
any potential tax adjustments in the future.
As of December 31, 2007, we had unrecognized tax benefits
recorded in accordance with FIN 48. See Note 11,
Income Taxes, of the Notes to Consolidated Financial Statements
for additional discussion.
During the twelve months beginning January 1, 2008, it is
reasonably possible that we will reduce unrecognized tax
benefits by approximately $35 million to $39 million
(net of tax effect) primarily as a result of the expiration of
certain statutes of limitations.
During 2007, we recorded net income tax benefits in our
provision for income taxes of $12.0 million related to the
resolution of various income tax matters, changes in certain
state tax laws, and other adjustments.
During 2006, we made estimated state tax and federal tax
payments totaling $278.3 million, including approximately
$100 million related to provisions for the third and fourth
quarter of 2005, payment for which had been deferred as allowed
for filers impacted by hurricanes in 2005.
During 2005, we recorded net income tax benefits in our
provision for income taxes of $14.5 million, primarily
related to the resolution of various income tax matters. We also
recognized income of $110.0 million in 2005, included in
discontinued operations related to the settlement of various
income tax matters.
Non-Operating Income (Expenses) Floorplan Interest Expense Floorplan interest expense was $133.1 million in 2007, $138.2 million in 2006, and $102.3 million in 2005. The decrease in 2007, as compared to 2006, is primarily the result of lower inventory levels, partially offset by higher short-term LIBOR interest rates during 2007. The increase in 2006, as compared to 2005, is primarily the result of higher short-term LIBOR interest rates. In 2008, we anticipate lower floorplan interest rates resulting from lower short-term LIBOR interest rates. Other Interest Expense Other interest expense was incurred primarily on borrowings under our term loan facility, mortgage facility, revolving credit facility, and outstanding senior unsecured notes. Other interest expense was $114.3 million in 2007, $90.9 million in 2006, and $63.3 million in 2005. The increase in other interest expense in 2007, as compared to 2006, is primarily due to a $21.8 million increase in interest expense related to the $1.15 billion of additional debt incurred in connection with our April 2006 equity tender offer and a $6.2 million increase in interest expense related to our revolving credit facility, primarily as a result of increased borrowings in 2007. Partially offsetting these increases was an $8.7 million reduction in interest expense resulting from the repurchase of our 9% senior unsecured notes and repayments of mortgage facilities. Additionally, during 2007 we incurred $2.6 million of expenses in connection with the modifications to our term loan, revolving credit facilities, and our mortgage facility. The increase in other interest expense in 2006, as compared to 2005, is primarily due to a $61.6 million increase in interest expense related to the $1.15 billion of additional debt incurred in connection with our April 2006 equity tender offer, partially offset by a $32.4 million reduction in interest expense resulting from the repurchase of our 9% senior unsecured notes and repayments of mortgage facilities during 2006 and 2005. Other Interest Expense — Senior Note Repurchases In April 2006, we purchased $309.4 million aggregate principal of our 9% senior unsecured notes for an aggregate total consideration of $339.8 million pursuant to our debt tender offer and consent solicitation. Approximately $34.5 million of tender premium and other financing costs related to our debt tender offer was expensed as Other Interest Expense — Senior Note Repurchases in the accompanying Consolidated Income Statements.
Table of ContentsDuring 2005, we repurchased $123.1 million (face value) of our 9% senior unsecured notes at an average price of 110.5% of face value or $136.0 million. The premium paid and financing costs of $17.4 million were recognized as Other Interest Expense — Senior Note Repurchases in the accompanying Consolidated Income Statements. Provision for Income Taxes Our effective income tax rate was 37.3% in 2007, 38.9% in 2006, and 36.5% in 2005. 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. We expect our underlying tax rate to be approximately 40% on an ongoing basis, excluding the impact of any potential tax adjustments in the future. As of December 31, 2007, we had unrecognized tax benefits recorded in accordance with FIN 48. See Note 11, Income Taxes, of the Notes to Consolidated Financial Statements for additional discussion. During the twelve months beginning January 1, 2008, it is reasonably possible that we will reduce unrecognized tax benefits by approximately $35 million to $39 million (net of tax effect) primarily as a result of the expiration of certain statutes of limitations. During 2007, we recorded net income tax benefits in our provision for income taxes of $12.0 million related to the resolution of various income tax matters, changes in certain state tax laws, and other adjustments. During 2006, we made estimated state tax and federal tax payments totaling $278.3 million, including approximately $100 million related to provisions for the third and fourth quarter of 2005, payment for which had been deferred as allowed for filers impacted by hurricanes in 2005. During 2005, we recorded net income tax benefits in our provision for income taxes of $14.5 million, primarily related to the resolution of various income tax matters. We also recognized income of $110.0 million in 2005, included in discontinued operations related to the settlement of various income tax matters. | EXCERPTS ON THIS PAGE:
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