Note 16 - Discontinued Operations

12 Months Ended

Dec. 31, 2012

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

(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 to be completed 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team believes it is unlikely that changes will be made to the plan or the plan to dispose of the store will be withdrawn.

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.

At December 31, 2009, two operating stores and three properties were classified as held for sale.  The two operating stores were under contract to sell at that time.

Based on subsequent negotiations with the buyer in the first quarter of 2010, management concluded that it was no longer probable that the sale of the remaining two stores would be effected, resulting in the determination that these two operating stores no longer met all of the criteria for classification as held for sale at March 31, 2010. Therefore, in the first quarter of 2010, assets and related liabilities associated with two stores were reclassified from assets held for sale to assets held and used. Their associated results of operations were retrospectively reclassified from discontinued operations to continuing operations for all periods presented.

In the second quarter of 2010, we classified the operating results of Fresno Dodge, which was sold during the quarter, as discontinued operations. Additionally, one of the properties classified as held for sale as of December 31, 2009 was sold. Management evaluated the remaining two properties to determine if classification remained appropriate. Based on new facts and circumstances previously considered unlikely, management no longer believed the sales were probable. As a result the properties were reclassified to assets held and used in June 2010. As of December 31, 2010, we had no stores or properties classified as held for sale.

In 2011, we sold three stores:  a Chrysler Jeep Dodge store in Concord, California; a Volkswagen store in Thornton, Colorado and a GMC Buick and a Kia store in Cedar Rapids, Iowa. The associated results of operations for these locations are classified as discontinued operations. As of December 31, 2011, we had no stores and no properties classified as held for sale.

In October 2012, we sold two stores: a Chrysler Jeep Dodge store and a Hyundai store, both located in Renton, Washington. The associated results of operations for these locations are classified as discontinued operations. Additionally, in October 2012, we determined that one of our stores met the criteria for classification of the assets and related liabilities as held for sale.

As of December 31, 2012, we have one store and no properties classified as held for sale. Assets held for sale included the following (in thousands):

December 31,	2012
Inventories	$	9,412
Property, plant and equipment		1,102
Intangible assets		2,065
	$	12,579

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

December 31,	2012
Floor plan notes payable	$	8,347

Interest expense is allocated to stores classified as discontinued operations for actual floor plan 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. Interest expense included as a component of discontinued operations was as follows (in thousands):

Year Ended December 31,	2012		2011		2010
Floor plan interest	$	217	$	520	$	493
Other interest		69		108		117
Total interest	$	286	$	628	$	610

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

Year Ended December 31,	2012			2011			2010
Revenue	$	82,150		$	131,380		$	100,979
Gain from discontinued operations	$	2,186		$	1,516		$	648
Net gain (loss) on disposal activities		(621	)		4,396			(301	)
		1,565			5,912			347
Income tax expense		(598	)		(2,262	)		(215	)
Income from discontinued operations, net of income taxes	$	967		$	3,650		$	132
Goodwill and other intangible assets disposed of	$	169		$	712		$	-
Cash generated from disposal activities	$	6,618		$	23,838		$	941
Floor plan debt paid in connection with disposal activities	$	6,712		$	1,784		$	2,134

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

Year Ended December 31,	2012			2011			2010
Goodwill and other intangible assets	$	(169	)	$	3,168		$	-
Property, plant and equipment		(299	)		1,357			(217	)
Inventory		(82	)		(88	)		-
Other		(71	)		(41	)		(84	)
	$	(621	)	$	4,396		$	(301	)