O'Reilly Auto Parts 2008 Annual Report Download - page 53

O’REILLY AUTOMOTIVE 2008 ANNUAL REPORT PG.51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the Company borrowed $588 million. e Company used borrowings under the credit facility to repay certain existing debt of CSK, repay
the Company’s $75 million 2006-A Senior Notes and purchase all of the properties that had been leased under the Company’s synthetic lease
facility. As of December 31, 2008, the amount of the borrowing base available under the credit facility was $1.124 billion of which the Company
had outstanding borrowings of $614.2 million. e available borrowings under the credit facility are also reduced by stand-by letters of credit
issued by the Company primarily to satisfy the requirements of workers compensation, general liability and other insurance policies. As of
December 31, 2008, the Company had stand-by letters of credit outstanding in the amount of $55.6 million and the aggregate availability for
additional borrowings under the credit facility was $454.2 million.
Borrowings under the tranche A revolver currently bear interest, at the Company’s option, at a rate equal to either a base rate plus 1.50% per
annum or LIBOR plus 2.50% per annum, with each rate being subject to adjustment based upon certain excess availability thresholds. Borrowings
under the FILO tranche currently bear interest, at the Company’s option, at a rate equal to either a base rate plus 2.75% per annum or LIBOR
plus 3.75% per annum, with each rate being subject to adjustment based upon certain excess availability thresholds. At December 31, 2008,
the Company had borrowings of $164 million under its revolver and swing line facilities, which were not covered under an interest rate swap
agreement, with interest rates ranging from 3.125% to 4.75% at December 31, 2008. e base rate is equal to the higher of the prime lending rate
established by BA from time to time and the federal funds eective rate as in eect from time to time plus 0.50%, subject to adjustment based
upon remaining available borrowings. Fees related to unused capacity under the credit facility are assessed at a rate of 0.50% or 0.375% of the
remaining available borrowings under the facility, subject to adjustment based upon remaining unused capacity. In addition, the Company paid
customary commitment fees, letter of credit fees, underwriting fees and other administrative fees in respect to the credit facility.
On July 24, 2008, October 14, 2008, and November 24, 2008, the Company entered into interest rate swap transactions with Branch Banking
and Trust Company (“BBT”), Bank of America, N.A. (“BA”) and SunTrust Bank (“SunTrust”). e Company entered into these interest rate
swap transactions to mitigate the risk associated with its oating interest rate based on LIBOR on an aggregate of $450 million of its debt that is
outstanding under its ABL Credit Agreement, dated as of July 11, 2008. e Company is 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 the
Company referencing the same notional amount. e interest rate swap transactions eectively x the annual interest rate payable on these
notional amounts of the Company’s debt, which may exist under the ABL Credit Facility plus an applicable margin under the terms of the same
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 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
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 25,000 3.830 3.75 7.580 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, the Company executed the ird Supplemental Indenture (the ‘ird Supplemental Indenture”) to the Notes, in which it
agreed to become a guarantor, on a subordinated basis, of the $100 million principal amount of 6¾% Exchangeable Senior Notes due 2025
(the “Notes”) originally issued by CSK pursuant to an Indenture (the “Original Indenture”), dated as of December 19, 2005, as amended and
supplemented by the First Supplemental Indenture (the “First Supplemental Indenture”) dated as of December 30, 2005, and the Second
Supplemental Indenture, dated as of July 27, 2006, (the “Second Supplemental Indenture”) by and between CSK Auto Corporation, CSK Auto,
Inc. and e Bank of New York Mellon Trust Company, N.A., as trustee. On December 31, 2008, and eective as of July 11, 2008, the Company
entered into the Fourth Supplemental Indenture (“Fourth Supplemental Indenture”) in order to correct the denition of Exchange Rate in the
ird Supplemental Indenture.