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Note 6 - Credit Facilities and Long-term Debt | 12 Months Ended
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Dec. 31, 2016
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, |  | 2016 |  |  | 2015 |
New vehicle floor plan commitment |  | $ | 1,506,895 |  |  | $ | 1,265,872 |
Floor plan notes payable |  |  | 94,602 |  |  |  | 48,083 |
Total floor plan debt |  |  | 1,601,497 |  |  |  | 1,313,955 |
Used vehicle inventory financing facility |  |  | 211,000 |  |  |  | 171,000 |
Revolving lines of credit |  |  | 142,507 |  |  |  | 61,246 |
Real estate mortgages |  |  | 428,367 |  |  |  | 387,861 |
Other debt |  |  | 11,191 |  |  |  | 25,248 |
Debt issuance costs |  |  | (2,184 | ) |  |  | (2,169 | )
Total debt |  | $ | 2,392,378 |  |  | $ | 1,957,141 |
In April 2015, the FASB issued ASU 2015 - 03, "Simplifying the Presentation of Debt Issuance Costs (Subtopic 835 - 30)." ASU 2015 - 03 requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. The new standard is effective for fiscal years beginning after December 15, 2016, and therein. We have adopted the retrospective application of the new guidance, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effect of presenting all debt issuance costs as a reduction from the carrying amount of the related debt liability for both current and prior periods. We reclassified $2.2 million of debt issuance costs as a direct reduction from the carrying amount of debt as of December 31, 2015. Credit Facility We have a credit facility with a total financing commitment of $2.05 billion which matures in July 2021. This syndicated credit facility is comprised of 18 financial institutions, including eight manufacturer-affiliated finance companies. Under our credit facility we are permitted to allocate the total financing commitment among floor plan financing for new vehicle inventory, floor plan financing for used vehicle inventory (up to a maximum of $350 million) and revolving financing for general corporate purposes, including acquisitions and working capital (up to a maximum of $400 million). Our credit facility may be expanded to $2.4 billion total availability, subject to lender approval. All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities. The availability of the revolving line of credit under our syndicated credit facility is determined according to a borrowing base comprised of a portion of certain accounts, receivables, invoices, inventory and equipment. The borrowing base is reduced by the sum of the outstanding aggregate principal balance of new and used vehicle floor plan loans and new and used swing line loans. Our obligations under our revolving syndicated credit facility are secured by a substantial amount of our assets, including our inventory (including new and used vehicles, parts and accessories), equipment, accounts (and other rights to payment) and our equity interests in certain of our subsidiaries. Under our revolving syndicated credit facility, our obligations relating to new vehicle floor plan loans are secured only by collateral owned by borrowers of new vehicle floor plan loans under the credit facility. We have the ability to deposit up to $50 million in cash in Principal Reduction (PR) accounts associated with our new vehicle 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, 2016, we had no balances 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 decreases 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 was 2.02% at December 31, 2016. The annual interest rate associated with our used vehicle inventory financing facility and our revolving line of credit was 2.27% and 2.52%, respectively, at December 31, 2016. 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. Under our credit facility, we are required to maintain the ratios detailed in the following table:
Debt Covenant Ratio |  | Requirement |  | As of December 31, 2016 |
Current ratio |  | Not less than 1.10 to 1 |  | 1.26 | to | 1 |
Fixed charge coverage ratio |  | Not less than 1.20 to 1 |  | 2.63 | to | 1 |
Leverage ratio |  | Not more than 5.00 to 1 |  | 2.18 | to | 1 |
Funded debt restriction |  | Not to exceed $900 million |  |  | $485.2 million |  |
Other Lines of Credit We have other lines of credit with a total financing commitment of $38.5 million for general corporate purposes, including acquisitions and working capital. Substantially all of these other lines of credit mature in 2018 and have interest rates ranging up to 2.77%. As of December 31, 2016, we had outstanding debt of $36.5 million on these other lines of credit. Floor Plan Notes Payable We have floor plan agreements with manufacturer-affiliated finance companies for certain new vehicles and 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, 2016, $94.6 million was outstanding on these agreements at interest rates ranging up to 3.25%. 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 2.1% to 5.0% at December 31, 2016. The mortgages are payable in various installments through October 2034. As of December 31, 2016, we had fixed interest rates on 64.3% of our outstanding mortgage debt. Our other debt includes capital leases and sellers’ notes. The interest rates associated with our other debt ranged from 4.3% to 9.7% at December 31, 2016. This debt, which totaled $11.2 million at December 31, 2016, is due in various installments through December 2050. Future Principal Payments The schedule of future principal payments associated with real estate mortgages and other debt as of December 31, 2016 was as follows (in thousands):
Year Ending December 31, |  |  |  |
2017 |  | $ | 20,608 |
2018 |  |  | 38,150 |
2019 |  |  | 45,189 |
2020 |  |  | 37,504 |
2021 |  |  | 34,897 |
Thereafter |  |  | 263,210 |
Total principal payments |  | $ | 439,558 |

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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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