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PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(All tables in millions, except per share data)
11. DISCONTINUED OPERATIONS
On June 30, 2000, the Company completed the
tax-free spin-off of ANC Rental. Accordingly, the net assets and
operating results of ANC Rental have been classified as discontinued
operations for all periods presented in the accompanying Consolidated
Financial Statements. Income from discontinued operations during
the year ended December 31, 2000, is net of previously estimated
losses of $22.1 million which were accrued in 1999 and additional
costs associated with the spin-off totaling $11.3 million recorded
in 2000. In 1999, the Company recorded a loss related to ANC Rental
of $34.1 million, net of income taxes, representing the estimated
loss from operations through the expected distribution date and
costs associated with the spin-off.
In connection with the spin-off, the Company
made certain capital contributions to ANC Rental prior to the
spin-off. These contributions include cash of approximately $200.0
million and the net assets of an insurance subsidiary. The Company
also entered into various agreements with ANC Rental which set
forth the terms of the distribution and other agreements governing
the Company's relationship with ANC Rental after the spin-off.
As a result of the spin-off, the Company's equity was reduced
by the net assets of ANC Rental totaling $894.4 million.
In connection with the spin-off, the Company
agreed to continue to provide ANC Rental with guarantees and other
credit enhancements, currently with respect to certain indebtedness
and certain property and vehicle lease obligations. The Company
receives fees for providing these guarantees commensurate with
market rates. To the extent that ANC Rental is not able to meet
its obligations, the Company would be likely to be called on to
perform under guarantees and credit enhancements provided by the
Company, which could have a material adverse effect on the Company's
business, consolidated results of operations, financial condition
and/or cash flows.
In July 1998, the Company's former solid waste
services subsidiary, Republic Services, completed an initial public
offering of 36.1% of its outstanding common stock resulting in
net proceeds of approximately $1.43 billion. In May 1999, the
Company sold substantially all of its remaining interest in Republic
Services in a public offering resulting in net proceeds of approximately
$1.78 billion and an after tax gain of approximately $377.0 million.
Accordingly, operating results of Republic Services for the period
prior to disposition have been classified as discontinued operations
in the accompanying Consolidated Financial Statements.
In October 1997, the Company sold its electronic
security division resulting in an after tax gain of approximately
$230.0 million. In 1999 and 1998, the Company recognized additional
after tax gains of approximately $2.1 million and $11.6 million,
respectively, related to finalizing the gain on disposition.
A summary of the net assets of discontinued
operations as of December 31, 1999 for the automotive rental businesses
is as follows:
Current assets ................................ $ 5,349.3
Non-current assets ............................ 1,000.2
----------
Total assets ................................. 6,349.5
Current liabilities ........................... 2,235.8
Non-current liabilities ....................... 3,387.1
----------
Total liabilities ............................ 5,622.9
----------
Net assets of discontinued operations ......... $ 726.6
==========
Selected income statement data for the Company's
discontinued operations for the years ended December 31 is as follows:
2000 1999
------------ ----------------------------------------------
Automotive Automotive Solid
Rental Rental Waste Total
------------ ------------------- ------------ -------------
Revenue .................... $ 1,721.2 $ 3,542.3 $ 552.5 $ 4,094.8
========== ============ ========= =========
Pre-tax income ............. (14.8) (88.2)(1) 100.8 12.6
Provision (benefit)
for income taxes ......... (5.8) (18.8) 38.8 20.0
Extraordinary
charge, net of
income taxes ............. -- 1.6 -- 1.6
Minority interest in
RSG ...................... -- -- 21.6 21.6
---------- ------------ --------- ---------
Net income (loss) .......... (9.0) (71.0) 40.4 (30.6)
Previously estimated
and accrued losses 22.1 -- -- --
---------- ------------ --------- ---------
Income (loss) from
discontinued
operations ............... $ 13.1 $ (71.0) $ 40.4 $ (30.6)
========== ============ ========= ==========
1998
--------------------------------------------
Automotive Solid
Rental Waste Total
-------------- -------------- --------------
Revenue .................... $ 3,453.6 $ 1,369.1 $ 4,822.7
=========== =========== ===========
Pre-tax income ............. 170.1 292.5 462.6
Provision (benefit)
for income taxes ......... 61.3 105.3 166.6
Extraordinary
charge, net of
income taxes ............. -- -- --
Minority interest in
RSG ...................... -- 33.9 33.9
----------- ----------- -----------
Net income (loss) .......... 108.8 153.3 262.1
Previously estimated
and accrued losses -- -- --
----------- ----------- -----------
Income (loss) from
discontinued
operations ............... $ 108.8 $ 153.3 $ 262.1
=========== =========== ===========
(1) Includes pre-tax restructuring and other
charges of $40.5 million in 1999 primarily related to ANC Rental's
consolidation of its North American operations and other restructuring
activities.
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Form
10-K 
