XML 85 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 7 - Floor Plan Notes Payable and Lines Of Credit
 12 Months Ended
Dec. 31, 2013
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

7.                     FLOOR PLAN NOTES PAYABLE AND LINES OF CREDIT:


Floor Plan Notes Payable


Floor plan notes are financing agreements to facilitate the Company’s purchase of new and used commercial vehicles. These notes are collateralized by the inventory purchased and accounts receivable arising from the sale thereof. The Company’s credit agreement with GE Capital provides for a loan commitment of up to $750.0 million and has the interest rate benchmarked to LIBOR, as defined in the agreement.


The interest rate under the credit agreement is the three month LIBOR rate plus 2.03%. The interest rate applicable to the GE Capital credit agreement was approximately 2.27% at December 31, 2013. The Company utilizes its excess cash on hand to pay down its outstanding borrowings under its credit agreement with GE Capital, and the resulting interest earned is recognized as an offset to the Company’s gross interest expense under the floor plan credit agreement. The Company is required to pay the lenders a monthly working capital fee equal to 0.35% per annum multiplied by the amount of voluntary prepayments of new and used inventory loans. GE Capital may terminate this credit agreement without cause upon 120 days written notice.


The Company finances substantially all of the purchase price of its new commercial vehicle inventory, and the loan value of its used commercial vehicle inventory under the credit agreement with GE Capital, under which GE Capital pays the manufacturer directly with respect to new commercial vehicles. Amounts borrowed under the agreement are due when the related commercial vehicle inventory (collateral) is sold and the sales proceeds are collected by the Company. Pursuant to the third amendment, the credit agreement expires July 11, 2016, although GE Capital has the right to terminate the credit agreement at any time upon 120 days’ written notice. We may terminate the credit agreement at any time, although, if we do so, we must pay the lenders a prepayment processing fee of (i) $15,000,000 if it terminates on or prior to January 11, 2015; (ii) $7,500,000 if it terminates after January 11, 2015, but on or prior to July 11, 2015; and (iii) $300,000 if it terminates thereafter, subject in each case to specified limited exceptions. On December 31, 2013, the Company had approximately $546.1 million outstanding under its credit agreement with GE Capital.


In June 2012, the Company entered into a wholesale financing agreement with Ford Motor Credit Company that provides for the financing of, and is collateralized by, the Company’s Ford new vehicle inventory. This wholesale financing agreement bears interest at a rate of Prime plus 150 basis points minus certain incentives and rebates; however, the prime rate is defined to be a minimum of 3.75%. As of December 31, 2013, the interest rate on the wholesale financing agreement was 5.25% before considering the applicable incentives. On December 31, 2013, the Company had an outstanding balance of $47.5 million under the Ford Motor Credit Company wholesale financing agreement.


The Company’s weighted average interest rate for floor plan notes payable was 1.26% for the year ended December 31, 2013, and 1.42% for the year ended December 31, 2012, which is net of interest related to prepayments of new and used inventory loans.


Assets pledged as collateral were as follows (in thousands):


   

December 31,

 
   

2013

   

2012

 

Inventories, new and used vehicles at cost based on specific identification, net of allowance

  $ 634,732     $ 541,287  

Vehicle sale related accounts receivable

    42,830       40,840  
                 

Total

  $ 677,562     $ 582,127  
                 

Floor plan notes payable related to vehicles

  $ 593,649     $ 534,520  

Lines of Credit


The Company has a secured line of credit that provides for a maximum borrowing of $15.0 million. There were no advances outstanding under this secured line of credit at December 31, 2013; however, $8.0 million was pledged to secure various letters of credit related to self-insurance products, leaving $7.0 million available for future borrowings as of December 31, 2013.