O'Reilly Auto Parts 2004 Annual Report Download - page 45

2004 ANNUAL REPORT 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company issues stand-by letters of credit provided by a $30 million sublimit under the Credit Facility that reduce available borrowings. These
letters of credit are issued primarily to satisfy the requirements of workers compensation, general liability and other insurance policies. Substantially all
of the outstanding letters of credit have a one-year term from the date of issuance and have been issued to replace surety bonds that were previously
issued. Letters of credit totaling $21.3 million and $11.0 million were outstanding at December 31, 2004 and 2003, respectively.
On May 16, 2001, the Company completed a $100 million private placement of two series of unsecured senior notes (Senior Notes). The Series 2001-
A Senior Notes were issued for $75 million, are due May 16, 2006, and bear interest at 7.72% per year. The Series 2001-B Senior Notes were issued for
$25 million, are due May 16, 2008, and bear interest at 7.92% per year. The private placement agreement allows for a total of $200 million of Senior
Notes issuable in series. Proceeds from the transaction were used to reduce outstanding borrowings under the Company’s former revolving credit facility.
The Company leases certain computer equipment under a capitalized lease. The lease agreement has a term of 30 months, expiring in 2006. At
December 31, 2004, the monthly installment under this agreement was approximately $48,500. The present value of the future minimum lease
payments under these agreements totaled $858,000 and $1,426,300 at December 31, 2004, and 2003, respectively, which has been classified as
long-term debt in the accompanying consolidated financial statements. During 2004, the Company did not purchase any assets under a capitalized
lease. During 2003, the Company purchased $1,426,300 of assets under a capitalized lease.
Principal maturities of long-term debt for each of the next five years ending December 31, are as follows (amounts in thousands):
2005 $ 592
2006 75,300
2007 17
2008 25,005
2009 -
Thereafter -
$100,914
Cash paid by the Company for interest during the years ended December 31, 2004, 2003, and 2002, amounted to $4,960,000, $6,864,000, and
$9,248,000, respectively.
NOTE 5—COMMITMENTS
Lease Commitments
On June 26, 2003, we completed an amended and restated master agreement to our $50 million Synthetic Operating Lease Facility (the Facility or
the Synthetic Lease) with a group of financial institutions. The terms of the Facility provide for an initial lease period of five years, a residual value
guarantee of approximately $43.2 million at December 31, 2004, and purchase options on the properties. The Facility also contains a provision for an
event of default whereby the lessor, among other things, may require us to purchase any or all of the properties. One additional renewal period of five
years may be requested from the lessor, although the lessor is not obligated to grant such renewal. The amended and restated Facility has been
accounted for as an operating lease under SFAS No. 13 and related interpretations, including FASB Interpretation No. 46. Future minimum rental
commitments under the Facility have been included in the table of future minimum annual rental commitments below.
The Company also leases certain office space, retail stores, property and equipment under long-term, non-cancelable operating leases. Most of these leases
include renewal options and some include options to purchase and provisions for percentage rent based on sales. At December 31, 2004, future minimum
rental payments under all of the Company’s operating leases for each of the next five years and in the aggregate are as follows (amounts in thousands):
E L AT E D O N R E L AT E D
PART I E S PART I E S TO TAL
2005 $ 3,334 $ 33,041 $ 36,375
2006 3,349 30,910 34,259
2007 3,351 29,386 32,737
2008 3,277 26,587 29,864
2009 2,462 23,882 26,344
Thereafter 7,479 182,629 190,108
$23,252 $326,435 $349,687