O'Reilly Auto Parts 2007 Annual Report Download - page 40

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leases during the period ended December 31, 2007. The Company acquired $943,000 of assets under the capital lease during the periods ended
December 31, 2006.
Principal maturities of long-term debt are as follows (amounts in thousands):
2008 $ 25,320
2009 149
2010 --
2011 --
2012 --
Thereafter 75,000
$ 100,469
NOTE 7—COMMITMENTS
Lease Commitments
On September 28, 2007, the Company completed a second amended and restated master agreement to its $49 million Synthetic Operating
Lease Facility with a group of financial institutions. The terms of such lease facility provide for an initial lease period of seven years, a residual
value guarantee of approximately $39.7 million at December 31, 2007 and purchase options on the properties. The lease facility also contains a
provision for an event of default whereby the lessor, among other things, may require the Company to purchase any or all of the properties. One
additional renewal period of seven years may be requested from the lessor, although the lessor is not obligated to grant such renewal. The second
amended and restated Facility has been accounted for as an operating lease under SFAS No. 13 and related interpretations, including FASB
Interpretation No. 46R. 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,
2007, 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 (amounts in thousands):
Related Non-related
Parties Parties Total
2008 $ 3,404 $ 48,361 $ 51,765
2009 2,790 45,131 47,921
2010 2,043 40,655 42,698
2011 1,778 37,452 39,230
2012 1,746 33,920 35,666
Thereafter 6,817 278,486 285,303
$ 18,578 $ 484,005 $ 502,583
Rental expense amounted to $55,358,000, $49,245,000 and $43,047,000 for the years ended December 31, 2007, 2006, and 2005, respectively.
Other Commitments
The Company had construction commitments, which totaled approximately $96.3 million, at December 31, 2007.
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 and typically vest 25% a year, over four years. Since the adoption of SFAS No. 123R, the Company records compensation
Notes to Consolidated Financial Statements (continued)