O'Reilly Auto Parts 2008 Annual Report Download - page 30

PG.28 O’REILLY AUTOMOTIVE 2008 ANNUAL REPORT
MAN AGEMENT ’S DISCUS SION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
On July 24, 2008, October 14, 2008, and November 24, 2008, we entered into interest rate swap transactions with Branch Banking and Trust
Company (“BBT”), Bank of America, N.A. (“BA”) and SunTrust Bank (“SunTrust”). We entered into these interest rate swap transactions to
mitigate the risk associated with our oating interest rate based on LIBOR on an aggregate of $450 million of our debt that is outstanding under
our ABL Credit Agreement, dated as of July 11, 2008. We are required to make certain monthly xed rate payments calculated on the notional
amounts, while the applicable counter party is obligated to make certain monthly oating rate payments to us referencing the same notional
amount. e interest rate swap transactions eectively x the annual interest rate payable on these notional amounts of our debt, which may
exist under the ABL Credit Facility plus an applicable margin under the terms of the ABL Credit Facility. e counterparties, transaction dates,
eective dates, applicable notional amounts, eective index rates and maturity dates of each of the interest rate swap transactions are included in
the table below:
Notional Eective
Transaction Eective Amount Eective Spread at Interest Rate at Maturity
Counterparty Date Date (in thousands) Index Rate Dec. 31, 2008 Dec. 31, 2008 Date
BBT 7/24/2008 8/1/2008 $ 100,000 3.425% 3.75% 7.175% 8/1/2010
SunTrust 7/24/2008 8/1/2008 25,000 3.830 3.75 7.580 8/1/2011
BA 7/24/2008 8/1/2008 75,000 3.830 2.50 6.330 8/1/2011
SunTrust 7/24/2008 8/1/2008 50,000 3.830 2.50 6.330 8/1/2011
BBT 10/14/2008 10/17/2008 25,000 2.990 2.50 5.490 10/17/2010
BBT 10/14/2008 10/17/2008 25,000 3.010 2.50 5.510 10/17/2010
BA 10/14/2008 10/17/2008 25,000 3.050 2.50 5.550 10/17/2010
SunTrust 10/14/2008 10/17/2008 25,000 2.990 2.50 5.490 10/17/2010
BA 10/14/2008 10/17/2008 50,000 3.560 2.50 6.060 10/17/2011
SunTrust 11/24/2008 11/28/2008 50,000 1.950 2.50 4.450 11/28/2009
$ 450,000
On July 11, 2008, O’Reilly agreed to become a guarantor, on a subordinated basis, of the $100 million principal amount of 6 3/4% Exchangeable
Senior Notes due 2025 (the “Notes”) originally issued by CSK. e Notes are exchangeable, under certain circumstances, into cash and shares of
our common stock. e Notes bear interest at 6.75% per year until December 15, 2010, and 6.5% until maturity on December 15, 2025. Prior to
their stated maturity, the Notes are exchangeable by the holders only under certain circumstances. Prior to their stated maturity, these Notes are
exchangeable by the holder only under the following circumstances (as more fully described in the indenture under which the Notes were issued):
• During any scal quarter (and only during that scal quarter) commencing aer July 11, 2008, if the last reported sale price of our common
stock is greater than or equal to 130% of the applicable exchange price of $36.17 for at least 20 trading days in the period of 30 consecutive
trading days ending on the last trading day of the preceding scal quarter;
• If the Notes have been called for redemption by the Company; or
• Upon the occurrence of specied corporate transactions, such as a change in control.
Upon exchange of the Notes, we will deliver cash equal to the lesser of the aggregate principal amount of notes to be exchanged and our total
exchange obligation and, in the event our total exchange obligation exceeds the aggregate principal amount of notes to be exchanged, shares of
our common stock in respect of that excess. e total exchange obligation reects the exchange rate whereby each $1,000 in principal amount of
the notes is exchangeable into an equivalent value of 25.9697 shares of our common stock and $60.6061 in cash.
e noteholders may require us to repurchase some or all of the notes for cash at a repurchase price equal to 100% of the principal amount of
the notes being repurchased, plus any accrued and unpaid interest on December 15, 2010; December 15, 2015; or December 15, 2020, or on any
date following a fundamental change as described in the indenture. We may redeem some or all of the notes for cash at a redemption price of
100% of the principal amount plus any accrued and unpaid interest on or aer December 15, 2010, upon at least 35-calendar days notice.