Note 9 - Financial Instruments and Fair Value

12 Months Ended

Dec. 31, 2018

9.	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. Certain methods and assumptions were used by the Company in estimating the fair value of financial instruments at

December 31, 2018,

and

2017.

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 that the valuation measurement inputs of its long-term debt represent, at its lowest level, current market interest rates available to the Company for similar debt and the Company’s current credit standing. The Company has categorized such debt within Level

of the hierarchy framework. The carrying amount approximates fair value.

Auction Rate Securities

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

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.

December 31, 2018,

the Company did

not

hold any auction rate securities. The issuer redeemed, at par, all of the remaining auction rate securities in the

third

quarter of

2018.

December 31, 2017,

the Company held auction rate securities with underlying tax-exempt municipal bonds that matured in

2030

and had a fair value and a cost basis of

$6.4

million.

Long-Lived Assets

During the

first

quarter of

2016,

the Company instituted plans to consolidate its dealership network. In

2016,

the Company recorded an impairment charge related to the value of the real estate in the affected locations and a write-down of certain excess real estate in the amount of

$7.5

million.

The fair value measurements for the Company’s long-lived assets are based on Level

inputs. Fair values of the value of the real estate were determined based on evaluations by a

third

-party real estate broker that utilized its knowledge and historical experience in real estate markets and transactions. During

2016

and

2017,

the Company sold

seven

of the properties previously classified as held for sale with a fair value of

$8.3

million. In

2018,

the Company sold

four

of the properties with an aggregate fair value of

$4.7

million. During the

third

quarter of

2017,

the Company made the decision to put

one

of the properties previously classified as “held for sale” with a fair value of

$1.4

million back into service. During the

fourth

quarter of

2018,

the Company made the decision to put

one

of the properties previously classified as “held for sale” with a fair value of

$2.6

million back into service. As of

December 31, 2018,

the remaining real estate associated with the restructuring activities is included in assets held for sale on the Consolidated Balance Sheets.

The following table presents long-lived assets measured and recorded at fair value on a nonrecurring basis (in thousands):

Description		Fair Value Measurements Using Significant Unobservable Inputs December 31 , 201 8
Long-lived assets held for sale		$	2,269

For further discussion of assets held for sale, see Note

– Restructuring Costs of the Notes to Consolidated Financial Statements.

- 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.

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