O'Reilly Auto Parts 2011 Annual Report Download - page 71

-
-
-
,704
,431
,273
31, 31,
61
Borrowings under the Revolving Credit Facility (other than swing line loans) bear interest, at the Company’s option, at the Base Rate
or Eurodollar Rate (both as defined in the Credit Agreement) plus an applicable margin. Swing line loans made under the Revolving
Credit Facility bear interest at the Base Rate plus the applicable margin. In addition, the Company pays a facility fee on the aggregate
amount of the commitments in an amount equal to a percentage of such commitments. The interest rate margins and facility fee are
based upon the better of the ratings assigned to the Company’s debt by Moody’s Investor Service, Inc. and Standard & Poor’s Rating
Services. Based upon the Company’s credit ratings at December 31, 2011, its margin for Base Rate loans was 0.275%, its margin for
Eurodollar Rate loans was 1.275% and its facility fee was 0.225%. Based on the Company’s current credit ratings, its margin for Base
Rate loans is 0.200%, its margin for Eurodollar Rate loans is 1.200% and its facility fee is 0.175%.
The Credit Agreement contains certain debt covenants, which include limitations on total outstanding borrowings, a minimum fixed
charge coverage ratio of 2.0 times through December 31, 2012; 2.25 times through December 31, 2014; 2.5 times through maturity;
and a maximum adjusted consolidated leverage ratio of 3.0 times through maturity. The consolidated leverage ratio includes a
calculation of adjusted earnings before interest, taxes, depreciation, amortization, rent and stock based compensation expense to
adjusted debt. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit, six-times rent expense and excludes any
premium or discount recorded in conjunction with the issuance of long-term debt. In the event that the Company should default on
any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination
of credit extensions, immediate payment of outstanding principal amount plus accrued interest and litigation from lenders. As of
December 31, 2011, the Company remained in compliance with all covenants related to the Credit Agreement.
Senior notes:
4.875% Senior Notes due 2021:
On January 14, 2011, the Company issued $500 million aggregate principal amount of unsecured 4.875% Senior Notes due 2021
(―4.875% Senior Notes due 2021‖) at a price to the public of 99.297% of their face value with United Missouri Bank, N.A. (―UMB‖)
as trustee. Interest on the 4.875% Senior Notes due 2021 is payable on January 14 and July 14 of each year and is computed on the
basis of a 360-day year. The net proceeds from the issuance of the 4.875% Senior Notes due 2021 were used to repay all of the
Company’s outstanding borrowings under its ABL Credit Facility and to pay fees and expenses related to the offering and costs
associated with terminating the Company’s existing interest rate swap contracts, with the remainder used for general corporate
purposes, including share repurchases.
4.625% Senior Notes due 2021:
On September 19, 2011, the Company issued $300 million aggregate principal amount of unsecured 4.625% Senior Notes due 2021
(―4.625% Senior Notes due 2021‖) at a price to the public of 99.826% of their face value with UMB as trustee. Interest on the 4.625%
Senior Notes due 2021 is payable on March 15 and September 15 of each year and is computed on the basis of a 360-day year. The
net proceeds from the issuance of the 4.625% Senior Notes due 2021 were used to pay fees and expenses related to the offering, with
the remainder intended to be used to repay borrowings outstanding from time to time under the Revolving Credit Facility and for
general corporate purposes, including share repurchases.
The senior notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries (―Subsidiary Guarantors‖) that
incurs or guarantees the Company’s obligations under the Company’s Revolving Credit Facility or certain other debt of the Company
or any of the Subsidiary Guarantors. The guarantees are full and unconditional and joint and several. Each of the Subsidiary
Guarantors is wholly-owned, directly or indirectly, by the Company and the Company has no independent assets or operations other
than those of its subsidiaries. The only direct or indirect subsidiaries of the Company that would not be Subsidiary Guarantors would
be minor subsidiaries. No minor subsidiaries exist today. Neither the Company, nor any of its Subsidiary Guarantors, are subject to
any material or significant restrictions on the Company’s ability to obtain funds from its subsidiaries by dividend or loan or to transfer
assets from such subsidiaries, except as provided by applicable law. Each of the senior notes is subject to certain customary
covenants, with which the Company complied as of December 31, 2011.
Capital lease agreements:
The Company assumed certain vehicle capital leases in the CSK acquisition. The remaining vehicle capital lease agreements have
contractual terms of 63 months, which will expire on October 15, 2013. The present value of the future minimum lease payments
under these vehicle capital leases totaled approximately $0.7 million and $1.9 million at December 31, 2011 and 2010, respectively,
which were classified as long-term debt in the accompanying consolidated financial statements. The Company did not acquire any
additional vehicles under capital leases during the periods ended December 31, 2011 or 2010.
The Company assumed certain building capital leases in the CSK acquisition. The remaining building capital lease agreements will
expire on April 30, 2015, and March 31, 2017. The present value of future minimum lease payments under these building capital
leases totaled approximately $0.5 million and $0.8 million at December 31, 2011 and 2010, respectively, which were classified as
long-term debt in the accompanying consolidated financial statements. The Company did not acquire any additional buildings under
capital leases during the periods ended December 31, 2011 or 2010.
FORM 10-K