O'Reilly Auto Parts 2009 Annual Report Download - page 73

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entered into with SunTrust on November 24, 2008, was for $50 million and matured on November 28, 2009, bringing the total notional
amount of swapped debt to $400 million as of December 31, 2009, thus increasing the Company’s exposure to changes in interest
rates. On January 21, 2010 the Company entered into an interest rate swap transaction with Barclays in the amount of $50 million,
increasing the total notional amount of swapped debt to $450 million as of that date, thus reducing the Company’s exposure to changes
in interest rates. The Company is required to make certain monthly fixed rate payments calculated on the notional amounts, while the
applicable counter party is obligated to make certain monthly floating rate payments to the Company referencing the same notional
amount. The interest rate swap transactions effectively fix 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. The
counterparties, transaction dates, effective dates, applicable notional amounts, effective index rates and maturity dates of each of the
interest rate swap transactions which existed as of December 31, 2009, are included in the table below:
Counterparty
Transaction
Date Effective Date
Notional
Amount
(in thousands)
Effective
index rate
Spread at
December
31, 2009
Effective
Interest Rate at
December 31,
2009
Maturity date
BBT 7/24/2008 8/1/2008 $ 100,000 3.425%
3.50%
6.93
%
8/1/2010
BA 7/24/2008
8/1/2008
75,000
3.830
2.67
6.50
8/1/2011
SunTrust 7/24/2008
8/1/2008
25,000
3.830
3.50
7.33
8/1/2011
SunTrust 7/24/2008
8/1/2008
50,000
3.830
2.25
6.08
8/1/2011
BBT 10/14/2008
10/17/2008
25,000
2.990
2.25
5.24
10/17/2010
BBT 10/14/2008
10/17/2008
25,000
3.010
2.25
5.26
10/17/2010
BA 10/14/2008
10/17/2008
25,000
3.050
2.25
5.30
10/17/2010
SunTrust 10/14/2008
10/17/2008
25,000
2.990
2.25
5.24
10/17/2010
BA 10/14/2008
10/17/2008
50,000
3.560
2.25
5.81
10/17/2011
$ 400,000
On July 11, 2008, the Company executed the Third Supplemental Indenture (the ‘Third Supplemental Indenture”) to the 6¾%
Exchangeable Senior Notes due 2025 (the “Notes”), in which it agreed to become a guarantor, on a subordinated basis, of the $100
million principal amount of the Notes originally issued by CSK pursuant to an Indenture dated as of December 19, 2005, as amended
and supplemented by 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 The Bank of
New York Mellon Trust Company, N.A., as trustee. On December 31, 2008, and effective as of July 11, 2008, the Company entered
into the Fourth Supplemental Indenture in order to correct the definition of Exchange Rate in the Third Supplemental Indenture.
The Notes are exchangeable, under certain circumstances, into cash and shares of the Company’s common stock. The Notes bear
interest at 6.75% per year until December 15, 2010, and 6.50% until maturity on December 15, 2025. 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 fiscal quarter (and only during that fiscal quarter) commencing after July 11, 2008, if the last reported sale price
of the Company’s 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 fiscal quarter;
• If the Notes have been called for redemption by the Company; or
• Upon the occurrence of specified corporate transactions, such as a change in control.
If the Notes are exchanged, the Company will deliver cash equal to the lesser of the aggregate principal amount of Notes to be
exchanged and the Company’s total exchange obligation and, in the event the Company’s total exchange obligation exceeds the
aggregate principal amount of Notes to be exchanged, shares of the Company’s common stock in respect of that excess. The total
exchange obligation reflects the exchange rate whereby each $1,000 in principal amount of the Notes is exchangeable into an
equivalent value of 25.97 shares of the Company’s common stock and $60.61 in cash.
The Noteholders may require the Company 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. The Company 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 after