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Note 8 - Derivative Financial Instrument
 6 Months Ended
Jun. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 8. Derivative Financial Instrument


From time to time, we enter into interest rate swaps to fix a portion of our interest expense. We do not enter into derivative instruments for any purpose other than to manage interest rate exposure to fluctuations in the one-month LIBOR benchmark. That is, we do not engage in interest rate speculation using derivative instruments.


As of June 30, 2015, we had a $25 million interest rate swap outstanding with U.S. Bank Dealer Commercial Services. This interest rate swap matures on June 15, 2016 and has a fixed rate of 5.587% per annum. The variable rate on the interest rate swap is the one-month LIBOR rate. At June 30, 2015, the one-month LIBOR rate was 0.19% per annum, as reported in the Wall Street Journal.


Typically, we designate all interest rate swaps as cash flow hedges and, accordingly, we record the change in fair value for the effective portion of these interest rate swaps in comprehensive income rather than net income until the underlying hedged transaction affects net income. If a swap is no longer designated as a cash flow hedge and the forecasted transaction remains probable or reasonably possible of occurring, the gain or loss recorded in accumulated other comprehensive loss is recognized in income as the forecasted transaction occurs. If the forecasted transaction is probable of not occurring, the gain or loss recorded in accumulated other comprehensive loss is recognized in income immediately. See Note 7.


The estimated amount that we expect to reclassify from accumulated other comprehensive loss to net income within the next twelve months is $1.0 million at June 30, 2015.


The fair value of our derivative instruments was included in our Consolidated Balance Sheets as follows (in thousands):


Balance Sheet Information

   Fair Value of Liability Derivatives  

Derivatives Designated as

Hedging Instruments

  

Location in Balance Sheet

  

June 30,

2015

  

Interest Rate Swap Contract

  

Accrued liabilities

   $ 1,187  
   

Other long-term liabilities

     -  
        $ 1,187  

Balance Sheet Information

 

Fair Value of Liability Derivatives

  

Derivatives Designated as

Hedging Instruments

  

Location in Balance Sheet

  

December 31,

2014

  

Interest Rate Swap Contract

  

Accrued liabilities

   $ 1,194  
   

Other long-term liabilities

     556  
        $ 1,750  

The effect of derivative instruments on our Consolidated Statements of Operations was as follows (in thousands):


Derivatives in Cash

Flow Hedging

Relationships

  

Amount of Gain

Recognized in

Accumulated OCI

(Effective Portion)

  

Location of Loss

Reclassified from

Accumulated OCI

into Income

(Effective Portion)

  

Amount of Loss

Reclassified from

Accumulated OCI

into Income

(Effective Portion)

 

Location of Loss

Recognized in Income

on Derivative

(Ineffective Portion

and Amount

Excluded from

Effectiveness Testing)

  

Amount of Loss

Recognized in Income

on Derivative

(Ineffective Portion

and Amount

Excluded from

Effectiveness Testing)

  
                             

Three Months Ended June 30, 2015

        

       

       

Interest Rate Swap Contract

   $ 151  

Floor plan

interest expense

   $ (108 )

Floor plan

interest expense

   $ (191 )
                             

Three Months Ended June 30, 2014

        

       

       

Interest Rate Swap Contract

   $ 93  

Floor plan

interest expense

   $ (118 )

Floor plan

interest expense

   $ (188 )
                             

Six Months Ended June 30, 2015

        

       

       

Interest Rate Swap Contract

   $ 252  

Floor plan

interest expense

   $ (233 )

Floor plan

interest expense

   $ (368 )
                             

Six Months Ended June 30, 2014

        

       

       

Interest Rate Swap Contract

   $ 201  

Floor plan

interest expense

   $ (252 )

Floor plan

interest expense

   $ (359 )

See also Note 8.