O'Reilly Auto Parts 2001 Annual Report Download - page 28

O’REILLY AUTOMOTIVE 2001 ANNUAL REPORT
A MODEL YEAR
Page 26
NOTE 3—SHORT-TERM INVESTMENTS
The Company’s short-term investments are classified as available-
for-sale in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and are carried at cost,
which approximates fair market value. At December 31, 2001 and
2000, short-term investments consisted of preferred equity securities.
NOTE 4—RELATED PARTIES
The Company leases certain land and buildings related to its O’Reilly
Auto Parts stores under six-year operating lease agreements with
O’Reilly Investment Company and O’Reilly Real Estate Company, part-
nerships in which certain shareholders of the Company are partners.
Generally, these lease agreements provide for renewal options for an
additional six years at the option of the Company. Additionally, the
Company leases certain land and buildings related to its O’Reilly
Auto Parts stores under 15-year operating lease agreements with
O’Reilly-Wooten 2000 LLC, which is owned by certain shareholders of
the Company. Generally, these lease agreements provide for renewal
options for two additional five-year terms at the option of the
Company (see Note 7). Rent expense under these operating leases
totaled $2,894,000, $2,671,000 and $2,647,000 in 2001, 2000 and
1999, respectively.
NOTE 5—NOTE PAYABLE TO BANK
At December 31, 2001, the Company had available short-term
unsecured bank lines of credit providing for maximum borrowings
of $5 million, all of which was outstanding at December 31, 2001. At
December 31, 2000, the Company had available unsecured short-term
bank lines of credit providing for borrowings up to $10 million, all of
which was outstanding at December 31, 2000. The lines of credit bear
interest at LIBOR plus 0.50% (2.43% at December 31, 2001).
Additionally, at December 31, 2000, the Company had available a
short-term line of credit in the amount of $25 million, all of which was
outstanding at December 31, 2000. The weighted-average interest
rate for all lines of credit for the years ended December 31, 2001 and
2000, was 5.48% and 7.20%, respectively.
NOTE 6—LONG-TERM DEBT
At December 31, 2001, the Company had available an unsecured
credit facility providing for maximum borrowings of $140 million.
The facility is comprised of a revolving credit facility of $125 million
and a term loan of $15 million. At December 31, 2000, the Company
had available an unsecured credit facility providing for maximum
borrowings of $152.5 million. The facility was comprised of a revolving
credit facility of $125 million and a term loan of $27.5 million. At
December 31, 2001 and 2000, $61,350,000 and $74,755,000, respectively,
of the revolving credit facility and $15 million and $27.5 million,
respectively, of the term loan were outstanding. The credit facility,
which bears interest at LIBOR plus 0.50% (2.43% at December 31,
2001), expires in January 2003.
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 revolving credit facility.
During 2001 and 2000, the Company leased certain computer
equipment under capitalized leases. The lease agreements are
three-year terms expiring from 2001 to 2003. At December 31, 2001,
the monthly installments under these agreements were approximately
$42,000. The present value of the future minimum lease payments under
these agreements totaled $860,000 and $2,232,000 at December 31,
2001 and 2000, respectively, which has been classified as long-term
debt in the accompanying consolidated financial statements. During
2001, 2000 and 1999 the Company purchased $467,000, $800,000 and
$2,676,000, respectively, of assets under capitalized leases.
Additionally, the Company has various unsecured notes payable
to individuals and banks, amounting to $251,000 and $97,000, at
December 31, 2001 and 2000, respectively.
Indirect borrowings under letters of credit provided by a
$5,000,000 sublimit of the revolving credit facility totaled $210,650
and $648,510 at December 31, 2001 and 2000, respectively. These
letters of credit reduced availability of borrowings at December 31,
2001 and 2000.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)