Note 7 - Floor Plan Notes Payable And Lines Of Credit

12 Months Ended

Dec. 31, 2012

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 has the interest rate benchmarked to LIBOR, as defined in the agreement.

The interest rate under the credit agreement is LIBOR plus 2.23% on inventory loans up to $500.0 million and LIBOR plus 2.95% on inventory loans between $500.0 million and $600.0 million. The interest rate applicable to the GE Capital credit agreement was approximately 2.54% at December 31, 2012.  The credit agreement allows the Company to prepay inventory loans, provided that the prepayment does not exceed the sum of 38% of the aggregate inventory loans made up to $500.0 million plus 100% of the inventory loans above $500.0 million.  GE Capital may terminate this credit agreement without cause upon 120 days 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.  This agreement may be modified, suspended or terminated by the lender as described in Note 3 – Supplier and Customer Concentration.  On December 31, 2012, the Company had approximately $500.0 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, 2012, the interest rate on the wholesale financing agreement was 5.25% before considering the applicable incentives. On December 31, 2012, the Company had an outstanding balance of $34.5 million under the Ford Motor Credit Company wholesale financing agreement.

The Company’s weighted average interest rate for floor plan notes payable was 1.42% for the year ended December 31, 2012, and 1.00% for the year ended December 31, 2011, which is net of interest income earned from GE Capital.

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

	December 31,
	2012		2011
Inventories, new and used vehicles at cost based on specific identification, net of allowance	$	541,287	$	536,827
Vehicle sale related accounts receivable		40,840		58,741
Total	$	582,127	$	595,568
Floor plan notes payable related to vehicles	$	534,520	$	520,693

Lines of Credit

The Company has a secured line of credit that provides for a maximum borrowing of $10.0 million.  There were no advances outstanding under this secured line of credit at December 31, 2012; however, $7.4 million was pledged to secure various letters of credit related to self-insurance products, leaving $2.6 million available for future borrowings as of

December 31, 2012.