O'Reilly Auto Parts 2015 Annual Report Download - page 64

FORM 10-K
56
(2) Net of unamortized discount of $1.8 million and $2.1 million as of December 31, 2015 and 2014, respectively, and debt issuance costs of $2.3
million and $2.7 million as of December 31, 2015 and 2014, respectively.
(3) Net of unamortized discount of $0.3 million and $0.4 million as of December 31, 2015 and 2014, respectively, and debt issuance costs of $1.3
million and $1.5 million as of December 31, 2015 and 2014, respectively.
(4) Net of unamortized discount of $0.8 million and $0.9 million as of December 31, 2015 and 2014, respectively, and debt issuance costs of $1.7
million and $1.9 million as of December 31, 2015 and 2014, respectively.
(5) Net of unamortized discount of less than $0.1 million as of December 31, 2015 and 2014, and debt issuance costs of $1.8 million and $2.1 million
as of December 31, 2015 and 2014, respectively.
As of December 31, 2015, the Company had no principal maturities of its financing facilities scheduled within the next five years and
$1.4 billion scheduled thereafter.
Unsecured revolving credit facility:
On January 14, 2011, the Company entered into a credit agreement, as amended by Amendment No. 1 dated as of September 9, 2011,
and as further amended by Amendment No. 2 dated as of July 2, 2013, and as further amended by Amendment No. 3 dated as of June 18,
2015 (the "Credit Agreement"). The Credit Agreement provides for a $600 million unsecured revolving credit facility (the "Revolving
Credit Facility") arranged by Bank of America, N.A., which is scheduled to mature in July 2018. The Credit Agreement includes a $200
million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit
Facility. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject
to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $200 million.
As of December 31, 2015 and 2014, the Company had outstanding letters of credit, primarily to support obligations related to workers'
compensation, general liability and other insurance policies, in the amounts of $37.5 million and $47.9 million, respectively, reducing
the aggregate availability under the Revolving Credit Facility by those amounts. As of December 31, 2015 and 2014, the Company had
no outstanding borrowings under the Revolving Credit Facility.
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 for Base Rate loans. 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
Ratings Services, subject to limited exceptions. As of December 31, 2015, based upon the Company's credit ratings, its margin for Base
Rate loans was 0.000%, its margin for Eurodollar Rate loans was 0.875% and its facility fee was 0.125%.
The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage
ratio of 2.50 times, and a maximum consolidated leverage ratio of 3.00 times. The consolidated leverage ratio includes a calculation of
adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted
debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, 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
commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit
Agreement and litigation from lenders. As of December 31, 2015, the Company remained in compliance with all covenants under the
Credit Agreement.
Senior notes:
The Company has issued $1.4 billion aggregate principal amount of unsecured senior notes due between January 2021 and June 2023
with United Missouri Bank, N.A. as trustee. Interest on the senior notes, ranging from 3.800% to 4.875%, is payable semi-annually and
is computed on the basis of a 360-day year.
The senior notes are guaranteed on a senior unsecured basis by each of the Company's subsidiaries ("Subsidiary Guarantors") that incurs
or guarantees obligations under the Company's Credit Agreement or under other credit facility or capital markets debt of the Company's
or any of the Company's Subsidiary Guarantors. The guarantees are joint and several and full and unconditional, subject to certain
customary automatic release provisions, including release of the Subsidiary Guarantor's guarantee under the Company's Credit Agreement
and certain other debt, or, in certain circumstances, the sale or other disposition of a majority of the voting power of the capital interest
in, or of all or substantially all of the property of, the Subsidiary Guarantor. Each of the Subsidiary Guarantors is 100% 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. Neither the Company,
nor any of its Subsidiary Guarantors, is 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, 2015.