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Note 6 - Credit Facilities and Long-term Debt | 12 Months Ended
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Dec. 31, 2015
Notes to Financial Statements |
Debt Disclosure [Text Block] |
(6) | Credit Facilities and Long-Term Debt
Below is a summary of our outstanding balances on credit facilities and long-term debt (in thousands):
December 31, |  | 2015 |  |  | 2014 |
New vehicle floor plan commitment |  | $ | 1,265,872 |  |  | $ | 1,137,632 |
Floor plan notes payable (1) |  |  | 48,083 |  |  |  | 41,047 |
Total floor plan debt |  |  | 1,313,955 |  |  |  | 1,178,679 |
Used vehicle inventory financing facility |  |  | 171,000 |  |  |  | 134,000 |
Revolving lines of credit |  |  | 61,246 |  |  |  | 134,769 |
Real estate mortgages |  |  | 387,861 |  |  |  | 334,443 |
Other debt |  |  | 25,247 |  |  |  | 37,766 |
Total debt |  | $ | 1,959,309 |  |  | $ | 1,819,657 |
(1) | At December 31, 2014, we had an additional $4.9 million of floor plan notes payable outstanding on our new vehicle floor plan commitment recorded as liability related to assets held for sale.
Credit Facility We have a $1.85 billion revolving syndicated credit facility that matures in January 2021. This syndicated credit facility is comprised of 18 financial institutions, including eight manufacturer-affiliated finance companies. As of December 31, 2015, our credit facility provides for up to $1.45 billion in new vehicle inventory floor plan financing, up to $200 million in used vehicle inventory floor plan financing and a maximum of $200 million in revolving financing for general corporate purposes, including acquisitions and working capital. This credit facility may be expanded to $2.1 billion total availability, subject to lender approval. We may request a reallocation of any unused portion of our credit facility provided that the used vehicle inventory floor plan commitment does not exceed $250 million, the revolving financing commitment does not exceed $300 million, and the sum of those commitments plus the new vehicle inventory floor plan financing commitment does not exceed the total aggregate financing commitment. All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities. The new vehicle floor plan commitment is collateralized by our new vehicle inventory. Our used vehicle inventory financing facility is collateralized by our used vehicle inventory that has been in stock for less than 180 days. Our revolving line of credit is secured by our outstanding receivables related to vehicle sales, unencumbered vehicle inventory, other eligible receivables, parts and accessories and equipment. We have the ability to deposit up to $50 million in cash in Principal Reduction “PR” accounts associated with our new vehicle inventory floor plan commitment. The PR accounts are recognized as offsetting credits against outstanding amounts on our new vehicle floor plan commitment and would reduce interest expense associated with the outstanding principal balance. As of December 31, 2015, we did not have any amounts deposited in our PR accounts. If the outstanding principal balance on our new vehicle inventory floor plan commitment, plus requests on any day, exceeds 95% of the loan commitment, a portion of the revolving line of credit must be reserved. The reserve amount is equal to the lesser of $15.0 million or the maximum revolving line of credit commitment less the outstanding balance on the line less outstanding letters of credit. The reserve amount will decrease the revolving line of credit availability and may be used to repay the new vehicle floor plan commitment balance. The interest rate on the credit facility varies based on the type of debt, with the rate of one-month LIBOR plus 1.25% for new vehicle floor plan financing, one-month LIBOR plus 1.50% for used vehicle floor plan financing; and a variable interest rate on the revolving financing ranging from the one-month LIBOR plus 1.25% to 2.50%, depending on our leverage ratio. The annual interest rate associated with our new vehicle floor plan commitment, excluding the effects of our interest rate swaps, was 1.68% at December 31, 2015. The annual interest rate associated with our used vehicle inventory financing facility and our revolving line of credit was 1.93% and 2.18%, respectively, at December 31, 2015. Under the terms of our credit facility we are subject to financial covenants and restrictive covenants that limit or restrict our incurring additional indebtedness, making investments, selling or acquiring assets and granting security interests in our assets. As of December 31, 2015, we were in compliance with all financial covenants. The table below details our financial covenants:
Debt Covenant Ratio |  |  | Requirement |  |  | As of December 31, 2015
Current ratio |  |  | Not less than 1.10 | to | 1 |  |  | 1.26 | to | 1
Fixed charge coverage ratio |  |  | Not less than 1.20 | to | 1 |  |  | 3.36 | to | 1
Leverage ratio |  |  | Not more than 5.00 | to | 1 |  |  | 1.79 | to | 1
Funded debt restriction |  |  | Not to exceed $600 million |  |  | $413.4 million
Floor Plan Notes Payable We have floor plan agreements with manufacturer-affiliated finance companies for vehicles that are designated for use as service loaners. The interest rates on these floor plan notes payable commitments vary by manufacturer and are variable rates. At December 31, 2015, $48.1 million was outstanding on these agreements at interest rates ranging up to 3.0%. Borrowings from, and repayments to, manufacturer-affiliated finance companies are classified as operating activities in the Consolidated Statements of Cash Flows. Real Estate Mortgages and Other Debt We have mortgages associated with our owned real estate. Interest rates related to this debt ranged from 1.8% to 5.0% at December 31, 2015. The mortgages are payable in various installments through October 2034. As of December 31, 2015, we had fixed interest rates on 70% of our outstanding mortgage debt. Our other debt includes capital leases, sellers’ notes and our equity contribution obligations associated with the new markets tax credit equity-method investment. The interest rates associated with our other debt ranged from 2.2% to 6.5% at December 31, 2015. This debt, which totaled $25.2 million at December 31, 2015, is due in various installments through January 2024. Future Principal Payments The schedule of future principal payments associated with real estate mortgages and other debt as of December 31, 2015 was as follows (in thousands):
Year Ending December 31, |  |  |  |
2016 |  | $ | 38,823 |
2017 |  |  | 39,164 |
2018 |  |  | 39,547 |
2019 |  |  | 41,775 |
2020 |  |  | 32,923 |
Thereafter |  |  | 220,876 |
Total principal payments |  | $ | 413,108 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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