XML 27 R11.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Note 6 - Financial Instruments and Fair Value | 9 Months Ended
--- | ---
Sep. 30, 2013
Fair Value Disclosures [Abstract] |
Fair Value Disclosures [Text Block] | 6 – Financial Instruments and Fair Value The Company measures certain financial assets and liabilities at fair value on a recurring basis. Financial instruments consist primarily of cash, accounts receivable, accounts payable and floor plan notes payable. The carrying values of the Company’s financial instruments approximate fair value due either to their short-term nature or existence of variable interest rates, which approximate market rates. The carrying value of current assets and current liabilities approximates the fair value due to the short maturity of these items. The fair value of the Company’s long-term debt is based on secondary market indicators. Because the Company’s debt is not quoted, estimates are based on each obligation’s characteristics, including remaining maturities, interest rate, credit rating, collateral and liquidity. Accordingly, the Company concluded the valuation measurement inputs of its long-term debt to represent, at its lowest level, current market interest rates available to the Company for similar debt and the Company’s current credit standing and has categorized such debt within Level 2 of the hierarchy framework. The carrying amount approximates fair value. If investments are deemed to be impaired, the Company determines whether the impairment is temporary or other than temporary. If the impairment is deemed to be temporary, the Company records an unrealized loss in other comprehensive income. If the impairment is deemed other than temporary, the Company records the impairment in the Company’s consolidated statement of income and comprehensive income. In prior years, the Company invested in interest-bearing short-term investments primarily consisting of investment-grade auction rate securities classified as available-for-sale and reported at fair value. These types of investments were designed to provide liquidity through an auction process that reset the applicable interest rates at predetermined periods ranging from 1 to 35 days. This reset mechanism was intended to allow existing investors to continue to own their respective interest in the auction rate security or to gain immediate liquidity by selling their interests at par. Auctions for investment grade securities held by the Company have failed. However, a failed auction does not represent a default by the issuer. The auction rate securities continue to pay interest in accordance with the terms of the underlying security; however, liquidity will be limited until there is a successful auction or until such time as other markets for these investments develop. The Company has the intent and ability to hold these auction rate securities until liquidity returns to the market. The Company does not believe that the lack of liquidity relating to its auction rate securities will have a material impact on its ability to fund operations. As of September 30, 2013, the Company held auction rate securities with underlying tax-exempt municipal bonds that mature in 2030 that have a fair value of $6.6 million and a cost basis of $7.6 million. These bonds have credit wrap insurance and a credit rating of A2 by a major credit rating agency. The Company valued the auction rate securities at September 30, 2013 using a discounted cash flow model based on the characteristics of the individual securities, which the Company believes yields the best estimate of fair value. The first step in the valuation included a credit analysis of the security which considered various factors including the credit quality of the issuer, the instrument’s position within the capital structure of the issuing authority, and the composition of the authority’s assets including the effect of insurance and/or government guarantees. Next, the future cash flows of the instruments were projected based on certain assumptions regarding the auction rate market significant to the valuation including the auction rate market will remain illiquid and auctions will continue to fail causing the interest rate to be the maximum applicable rate. This assumption resulted in discounted cash flow analysis being performed through 2019, the point at which the Company estimates the securities will be redeemed by the municipality. The projected cash flows were then discounted using the applicable yield curve plus a 225 basis point liquidity premium added to the applicable discount rate. The Company recorded a pre-tax impairment charge of $1.0 million on these investments in 2011. The Company believes that the impairment is temporary and has included the impairment in accumulated other comprehensive loss. The table below presents disclosures about the auction rate securities measured at fair value on a recurring basis in the Company’s financial statements as follows (in thousands):
|  | At September 30, 2013 |
|  |  |  |  |  | Fair Value Estimated Using |
|  | Cost Basis Amount |  |  | Level 1 Inputs |  |  | Level 2 Inputs |  |  | Level 3 Inputs |
Investment in auction rate securities |  | $ | 7,575 |  |  | $ | − |  |  | $ | − |  |  | $ | 6,628 |
|  | At December 31, 2012 |
|  |  |  |  |  | Fair Value Estimated Using |
|  | Cost Basis Amount |  |  | Level 1 Inputs |  |  | Level 2 Inputs |  |  | Level 3 Inputs |
Investment in auction rate securities |  | $ | 7,575 |  |  | $ | − |  |  | $ | − |  |  | $ | 6,628 |
Interest Rate Swap Agreements The Company has entered into swap agreements to hedge against the potential impact of increases in interest rates on its floating-rate debt instruments. Swap agreements that hedge exposures to changes in interest rates expose us to credit risk and market risk. Credit risk is the potential failure of the counterparty to perform under the terms of the swap agreement. The Company attempts to minimize this risk by entering into transactions with high-quality counterparties. Market risk is the potential adverse effect on the value of the swap agreement that results from a decline in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. At September 30, 2013, the Company had an aggregate $39.2 million notional amount of interest rate swap contracts, which have been designated as cash flow hedges, to pay fixed rates of interest and receive a floating interest rate based on LIBOR. The fixed interest rates specified in the interest rate swap contracts became effective on or about January 1, 2012. The Company’s interest rate swaps qualify for cash flow hedge accounting treatment. Unrealized gains or losses are recorded in accumulated other comprehensive income. Realized gains and losses will be recognized in interest expense, if they occur. Amounts to be received or paid under the contracts will be recognized as interest expense over the life of the contracts. There was no ineffectiveness for these swaps during the quarters and nine months ended September 30, 2013 and September 30, 2012. The fair value of cash flow swaps is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates and present value factors. As such, the carrying amounts for these swaps are designated to be Level 2 fair values and totaled $1.2 million, excluding accrued interest, as of September 30, 2013. The carrying value of these swaps is included in Other Long-Term Liabilities on the accompanying Consolidated Balance Sheet as of September 30, 2013. As of September 30, 2013 the Company was party to derivative financial instruments, as described in the following table (in thousands):
Agreement |  | Notional Amount |  |  | Fixed Interest Rate |  | Underlying Rate |  | Expiration Date |  | Fair Value |
Interest Rate Swap |  | $ | 1,911 |  |  |  | 5.075 | % | 3 month LIBOR |  | July 1, 2015 |  | $ | (61 | )
Interest Rate Swap |  |  | 3,948 |  |  |  | 5.075 | % | 3 month LIBOR |  | July 1, 2015 |  |  | (126 | )
Interest Rate Swap |  |  | 6,840 |  |  |  | 5.39 | % | 1 month LIBOR |  | December 31, 2014 |  |  | (169 | )
Interest Rate Swap |  |  | 1,322 |  |  |  | 5.39 | % | 1 month LIBOR |  | December 31, 2014 |  |  | (33 | )
Interest Rate Swap |  |  | 2,354 |  |  |  | 5.39 | % | 1 month LIBOR |  | December 31, 2014 |  |  | (58 | )
Interest Rate Swap |  |  | 5,326 |  |  |  | 5.39 | % | 1 month LIBOR |  | December 31, 2014 |  |  | (132 | )
Interest Rate Swap |  |  | 4,888 |  |  |  | 5.38 | % | 1 month LIBOR |  | June 29, 2015 |  |  | (185 | )
Interest Rate Swap |  |  | 752 |  |  |  | 5.29 | % | 1 month LIBOR |  | June 30, 2015 |  |  | (27 | )
Interest Rate Swap |  |  | 1,441 |  |  |  | 5.29 | % | 1 month LIBOR |  | June 30, 2015 |  |  | (53 | )
Interest Rate Swap |  |  | 7,269 |  |  |  | 5.29 | % | 1 month LIBOR |  | June 30, 2015 |  |  | (265 | )
Interest Rate Swap |  |  | 627 |  |  |  | 5.29 | % | 1 month LIBOR |  | June 30, 2015 |  |  | (23 | )
Interest Rate Swap |  |  | 2,519 |  |  |  | 5.29 | % | 1 month LIBOR |  | June 30, 2015 |  |  | (92 | )
Fair values of derivative instruments are on the accompanying Consolidated Balance Sheet (in thousands):
|  |  |  | Fair Value at |
Derivative Liabilities Designated as Hedging Instruments |  | Balance Sheet Location |  | September 30, 2013 |  |  | December 31, 2012 |
Interest Rate Swaps |  | Other Long-Term Liabilities |  | $ | 1,224 |  |  | $ | 1,915 |
(in thousands) |  | Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) during the Three Months Ended |  | Location of Loss |  | Loss Reclassified from Accumulated OCI into Income (Effective Portion) during the Three Months Ended |
|  | September 30, 2013 |  |  | September 30, 2012 |  | Reclassified into Income |  | September 30, 2013 |  |  | September 30, 2012 |
Interest rate swaps |  | $ | 165 |  |  | $ | 97 |  | Interest Expense |  | $ | (60 | ) |  | $ | (87 | )
(in thousands) |  | Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) during the Nine Months Ended |  | Location of Loss |  | Loss Reclassified from Accumulated OCI into Income (Effective Portion) during the Nine Months Ended |
|  | September 30, 2013 |  |  | September 30, 2012 |  | Reclassified into Income |  | September 30, 2013 |  |  | September 30, 2012 |
Interest rate swaps |  | $ | 692 |  |  | $ | 90 |  | Interest Expense |  | $ | (230 | ) |  | $ | (295 | )

X
- Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration