Fair Value Measurements
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Jun. 30, 2011
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Fair Value Measurement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
The Fair Value Measurements and Disclosures Topic of the FASB
Accounting Standards Codification (the “Fair Value
Measurements Topic”) defines fair value as the price that
would be received in the sale of an asset or paid to transfer a
liability in an orderly transaction between market participants
at the measurement date; requires disclosure of the extent to
which fair value is used to measure financial and non-financial
assets and liabilities, the inputs utilized in calculating
valuation measurements, and the effect of the measurement of
significant unobservable inputs on earnings, or changes in net
assets, as of the measurement date; establishes a three-level
valuation hierarchy based upon the transparency of inputs
utilized in the measurement and valuation of financial assets or
liabilities as of the measurement date:
The Company’s financial instruments consist primarily of
cash and cash equivalents,
contracts-in-transit
and vehicle receivables, accounts and notes receivable,
investments in debt and equity securities, accounts payable,
credit facilities, long-term debt and interest rate swaps. The
fair values of cash and cash equivalents,
contracts-in-transit
and vehicle receivables, accounts and notes receivable, accounts
payable, and credit facilities approximate their carrying values
due to the short-term nature of these instruments or the
existence of variable interest rates.
The Company designates its investments in marketable securities
and debt instruments as
available-for-sale,
measures them at fair value and classifies them as either cash
and cash equivalents or other assets in the accompanying
Consolidated Balance Sheets based upon maturity terms and
certain contractual restrictions. The Company maintains multiple
trust accounts comprised of money market funds with short-term
investments in marketable securities, such as
U.S. government securities, commercial paper and
banker’s acceptances that have maturities of less than
three months. The Company determined that the valuation
measurement inputs of these marketable securities represent
unadjusted quoted prices in active markets and, accordingly, has
classified such investments within Level 1 of the hierarchy
framework.
The Company, within its trust accounts, also holds investments
in debt instruments, such as government obligations and other
fixed income securities. The debt securities are measured based
upon quoted market prices utilizing public information,
independent external valuations from pricing services or
third-party advisors. Accordingly, the Company has concluded the
valuation measurement inputs of these debt securities to
represent, at their lowest level, quoted market prices for
identical or similar assets in markets where there are few
transactions for the assets and has categorized such investments
within Level 2 of the hierarchy framework. In addition, the
Company periodically invests in unsecured, corporate demand
obligations with manufacturer-affiliated finance companies,
which bear interest at a variable rate and are redeemable on
demand by the Company. Therefore, the Company has classified
these demand obligations as cash and cash equivalents on the
Consolidated Balance Sheet. The Company determined that the
valuation measurement inputs of these instruments include inputs
other than
quoted market prices, that are observable or that can be
corroborated by observable data by correlation. Accordingly, the
Company has classified these instruments within Level 2 of
the hierarchy framework.
The Company’s derivative financial instruments are recorded
at fair market value. See Note 4 “Derivative
Instruments and Risk Management Activities” for further
details regarding the Company’s derivative financial
instruments.
The Company determined that its investments in marketable
securities, debt instruments and interest rate derivative
financial instruments met the criteria for disclosure within the
Fair Value Measurements Topic. The respective fair values
measured on a recurring basis as of June 30, 2011 and
December 31, 2010, respectively, were as follows:
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