Note 16 - Discontinued Operations

9 Months Ended

Sep. 30, 2011

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 16. Discontinued Operations

We classify a store as discontinued operations if the location has been sold, we have ceased operations at that location or if management has committed to a plan to dispose of the store.  Additionally, the store must meet the criteria as required by U.S. generally accepted accounting standards:

· our management team, possessing the necessary authority, commits to a plan to sell the store;

· the store is available for immediate sale in its present condition;

· an active program to locate buyers and other actions that are required to sell the store are initiated;

· a market for the store exists and we believe its sale is likely within one year;

· active marketing of the store commences at a price that is reasonable in relation to the estimated fair market value; and

· our management team believes it is unlikely changes will be made to the plan or withdrawal of the plan to dispose of the store will occur.

We reclassify the store’s operations to discontinued operations in our Consolidated Statements of Operations, on a comparable basis for all periods presented, provided we do not expect to have any significant continuing involvement in the store’s operations after its disposal.

In June 2011, we classified the operating results of a Chrysler Jeep Dodge store in Concord, California, which was sold, as discontinued operations.  On October 19, 2011, we sold a Volkswagen store in Thornton, Colorado. We determined the criteria to classify the assets and related liabilities as held for sale had been met as of September 30, 2011, and the historical operating results for the store were classified as discontinued operations.

Interest expense is allocated to stores classified as discontinued operations for actual flooring interest expense directly related to the new vehicles in the store. Interest expense related to our working capital, acquisition and used vehicle credit facility is allocated based on the amount of assets pledged towards the total borrowing base.

Certain financial information related to discontinued operations was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenue	$	6,114		$	9,690		$	26,157		$	31,277
Pre-tax gain from discontinued operations	$	199		$	397		$	964		$	382
Gain (loss) on disposal activities		169			-			116			(294	)
		368			397			1,080			88
Income tax expense		(144	)		(164	)		(418	)		(40	)
Income from discontinued operations, net of income tax expense	$	224		$	233		$	662		$	48
Cash generated from disposal activities	$	6,105		$	-		$	6,517		$	941
Floor plan debt paid in connection with disposal activities	$	-		$	-		$	-		$	2,134

The gain (loss) on disposal activities included the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Property, plant and equipment	$	-	$	-	$	-	$	(210	)
Other		169		-		116		(84	)
	$	169	$	-	$	116	$	(294	)

As of September 30, 2011, we had one store classified as held for sale. There were no stores classified as held for sale as of December 31, 2010. Assets held for sale included the following (in thousands):

	September 30, 2011
Inventories	$	2,528
Property, plant and equipment		1,673
Goodwill and other intangible assets		711
	$	4,912

Liabilities related to assets held for sale included the following (in thousands):

	September 30, 2011
Floor plan notes payable	$	866
	$	866