O'Reilly Auto Parts 2006 Annual Report Download - page 38

o’reilly automotive 2006 annual report
page 36
notes to consolidated financial statements (continued)
as long-term debt in the accompanying consolidated financial statements. During 2006, the Company acquired $943,000 of assets under the capital
lease agreement discussed above. During 2005, the Company did not acquire any assets under a capital lease.
Principal maturities of long-term debt are as follows:
principal maturities
(amounts in thousands) of long-term debt
2007 $ 309
2008 25,320
2009 150
2010 9,700
2011 -
Thereafter 75,000
$110,479
note 7 – commitments
Lease Commitments
On June 26, 2003, the Company completed an amended and restated master agreement to its $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 $42.2 million at December 31, 2006, 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, 2006, 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:
related non-related
(amounts in thousands) parties parties total
2007 $ 3,489 $ 41,059 $ 44,548
2008 3,414 37,421 40,835
2009 2,618 33,850 36,468
2010 1,815 29,723 31,538
2011 1,550 26,453 28,003
Thereafter 6,892 191,426 198,318
$19,778 $359,932 $379,710
Rental expense amounted to $49,245,000, $43,047,000 and $39,145,000 for the years ended December 31, 2006, 2005, and 2004, respectively. 2004
rental expense includes an adjustment to correct lease accounting in the amount of $4,367,000 ($900,000 related to 2004). See Note 1 – Leases for
further details.
Other Commitments
The Company had construction commitments, which totaled approximately $69.5 million, at December 31, 2006.
note 8 – legal proceedings
The Company is involved in various legal proceedings incidental to the ordinary conduct of its business. Although the Company cannot ascertain the
amount of liability that it may incur from any of these matters, it does not currently believe that, in the aggregate, these matters will have a material
adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
note 9 – share-based employee compensation plans
Stock Options
The Company’s employee stock based incentive plan provides for the granting of stock options to certain key employees of the Company for the purchase
of common stock of the Company. A total of 24,000,000 shares have been authorized for issuance under this plan. Options are granted at an exercise
price that is equal to the market value of the Company’s common stock on the date of the grant. Options granted under the plan expire after ten years