O'Reilly Auto Parts 2003 Annual Report Download - page 46

notes to consolidated financial statements (continued)
page 44
note 3 – related parties
The Company leases certain land and buildings related to nine of its O’Reilly Auto Parts stores under six-year operating lease agreements
with O’Reilly Investment Company and O’Reilly Real Estate Company, partnerships in which certain shareholders and directors 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 nine of 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 6). Rent expense under these operating leases totaled $3,238,000, $3,222,000 and $2,894,000 in 2003, 2002 and 2001, respectively.
note 4 – 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. The lines of credit were fully repaid in 2002.
note 5 – long-term debt
On July 29, 2002, the Company completed an unsecured, three-year syndicated credit facility (Credit Facility) in the amount of
$150 million led by Wells Fargo Bank as the Administrative Agent, replacing a five-year syndicated credit facility. The Credit Facility
is guaranteed by all of our subsidiaries and may be increased to a total of $200 million, subject to availability of such additional credit
from either existing banks within the Credit Facility or other banks. The Credit Facility bears interest at LIBOR plus a spread ranging
from 0.875% to 1.375% (2.06% at December 31, 2003 and 2.26% at December 31, 2002) and expires in July 2005. At December
31, 2003 and 2002, $20.0 million and $90.0 million, respectively, of the Credit Facility was outstanding. Additionally, letters of
credit totaling $11.0 million and $6.0 million were outstanding at December 31, 2003 and 2002, respectively. Accordingly, our
aggregate availability for additional borrowings under the Credit Facility was $119.0 million and $54.0 million at December 31,
2003 and 2002, respectively. Prior to July 29, 2002, the Company had available an unsecured credit facility providing for maximum
borrowings of $140 million. The former credit facility was comprised of a revolving credit facility of $125 million, and a term loan
of $15 million. The credit facility, which bore interest at LIBOR plus 0.50%, expired in January 2003. All borrowings outstanding
under the former credit facility were fully repaid in July 2002.
The Company issues stand-by letters of credit provided by a $20 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 $11.0 million and $6.0 million were
outstanding at December 31, 2003 and 2002, 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 out-
standing borrowings under the Company’s former revolving credit facility.
The Company leases certain computer equipment under capitalized leases. The lease agreements have terms ranging from 30 months
to 36 months, expiring from 2004 to 2006. At December 31, 2003, the monthly installments under these agreements were approxi-
mately $85,000. The present value of the future minimum lease payments under these agreements totaled $882,000 and $549,000 at
December 31, 2003, and 2002, respectively, which has been classified as long-term debt in the accompanying consolidated financial
statements. During 2003, 2002 and 2001, the Company purchased $1,426,000, $812,000 and $467,000, respectively, of assets
under capitalized leases.