Note 7 - Long-Term Debt

12 Months Ended

Dec. 31, 2011

(7) Long-Term Debt

Our long-term debt consists of the following (in thousands):

December 31,	2011			2010
Working capital, acquisition and used vehicle credit facility	$	87,000		$	40,000
Real estate mortgages		194,404			234,850
Other debt		5,470			5,924
Total long-term debt		286,874			280,774
Less current maturities		(8,221	)		(12,081	)
Long-term debt	$	278,653		$	268,693

Working Capital, Acquisition and Used Vehicle Credit Facility

On September 30, 2011, we entered into a new three-year $200 million credit facility with U.S. Bank National Association and JPMorgan Chase, N.A. (the “Credit Facility”). This Credit Facility provides us with a $100 million floor plan commitment and up to a $100 million revolving line of credit.

The interest rate on the revolving line of credit is the 1-month LIBOR plus 2.25%. Our financial covenants related to this Credit Facility include maintaining a current ratio not less than 1.20:1.0, a fixed charge coverage ratio not less than 1.20:1.0 and a liabilities to tangible net worth ratio not more than 4.0:1.0. We are also limited in the amount of total funded debt we may carry to $310 million, excluding subordinated debt. As of December 31, 2011, we had $87.0 million outstanding under the Credit Facility and we were in compliance with all financial covenants.

Loans are guaranteed by all of our subsidiaries and are secured by new vehicle inventory, used vehicle and parts inventory, equipment other than fixtures, deposit accounts, accounts receivable, investment property, other intangible personal property and a portion of our real property Lithia Real Estate grants as a security interest to U.S. Bank. Capital stock and other equity interests of our subsidiary stores and certain other subsidiaries are excluded. The lenders’ security interest in new vehicle inventory is subordinated to the interests of floor plan financing lenders, including Ally Bank, Mercedes-Benz Financial Services USA, LLC, Toyota Financial Services, Ford Motor Credit Company, American Honda Finance Corporation and BMW Financial Services NA, LLC. The Credit Facility agreement provides for events of default that include nonpayment, breach of covenants, a change of control and certain cross-defaults with other indebtedness. The Credit Facility provides for events of default that include nonpayment and certain cross-defaults with other indebtedness. In the event of a default, the Credit Facility provides that the lenders may declare the entire principal balance and floor plan balance immediately due, foreclose on collateral and increase the applicable interest rate to the revolving loan rate plus 3% per annum, among other remedies.

Real Estate Mortgages

Associated with our owned real estate and leaseholds, we have mortgages with interest rates ranging from 2.5% to 7.0% per annum. These mortgages are payable in various installments through May 2031 and are secured by the associated real estate.

Other Debt

Other long-term debt includes various notes, capital leases and obligations assumed as a result of acquisitions and other agreements. The interest rates associated with this debt range from 3.5% to 9.0% per annum and are payable in various installments through October 2018.

Future Principal Payments

The schedule of future principal payments on long-term debt as of December 31, 2011 was as follows (in thousands):

Year Ending December 31,
2012	$	8,221
2013		34,318
2014		122,821
2015		46,187
2016		29,498
Thereafter		45,829
Total principal payments	$	286,874