O'Reilly Auto Parts 2013 Annual Report Download - page 40

FORM 10-K
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related to workers’ compensation, general liability and other insurance policies, in the amount of $52 million and $57 million as of
December 13, 2013 and 2012, respectively, reducing the aggregate availability under the Revolving Credit Facility by those amounts.
As of December 31, 2013 and 2012, we had no outstanding borrowings under the Revolving Credit Facility.
On July 11, 2008, we entered into a credit agreement for a five-year asset-based revolving credit facility (the "ABL Credit Facility"),
which was scheduled to mature in July of 2013. At December 31, 2010, we had outstanding borrowings of $356 million under the ABL
Credit Facility, of which $106 million were not covered under an interest rate swap contract. All outstanding borrowings under the ABL
Credit Facility were repaid, and all related interest rate swap transaction contracts were terminated on January 14, 2011, and the ABL
Credit Facility was retired concurrent with the issuance of our 4.875% Senior Notes due 2021, as further described below. In conjunction
with the retirement of our ABL Credit Facility, we recognized a one-time non-cash charge to write off the balance of debt issuance costs
related to the ABL Credit Facility in the amount of $22 million and a one-time charge related to the termination of our interest rate swap
contracts in the amount of $4 million, which are included in “Other income (expense)” on the accompanying Consolidated Statements
of Income for the year ended December 31, 2011.
Senior Notes:
4.875% Senior Notes due 2021:
On January 14, 2011, we issued $500 million aggregate principal amount of unsecured 4.875% Senior Notes due 2021 (“4.875% Senior
Notes due 2021”) at a price to the public of 99.297% of their face value with UMB as trustee. Interest on the 4.875% Senior Notes due
2021 is payable on January 14 and July 14 of each year, which began on July 14, 2011, and is computed on the basis of a 360-day year.
4.625% Senior Notes due 2021:
On September 19, 2011, we issued $300 million aggregate principal amount of unsecured 4.625% Senior Notes due 2021 (“4.625%
Senior Notes due 2021”) at a price to the public of 99.826% of their face value with UMB as trustee. Interest on the 4.625% Senior Notes
due 2021 is payable on March 15 and September 15 of each year, which began on March 15, 2012, and is computed on the basis of a
360-day year.
3.800% Senior Notes due 2022:
On August 21, 2012, we issued $300 million aggregate principal amount of unsecured 3.800% Senior Notes due 2022 (“3.800% Senior
Notes due 2022”) at a price to the public of 99.627% of their face value with UMB as trustee. Interest on the 3.800% Senior Notes due
2022 is payable on March 1 and September 1 of each year, which began on March 1, 2013, and is computed on the basis of a 360-day
year.
3.850% Senior Notes due 2023:
On June 20, 2013, we issued $300 million aggregate principal amount of unsecured 3.850% Senior Notes due 2023 (“3.850% Senior
Notes due 2023”) at a price to the public of 99.992% of their face value with UMB as trustee. Interest on the 3.850% Senior Notes due
2023 is payable on June 15 and December 15 of each year, which began on December 15, 2013, and is computed on the basis of a 360-
day year. The net proceeds from the issuance of the 3.850% Senior Notes due 2023 were used to pay fees and expenses related to the
offering and for general corporate purposes, including share repurchases.
The senior notes are guaranteed on a senior unsecured basis by each of our subsidiaries (“Subsidiary Guarantors”) that incurs or guarantees
our obligations under our Revolving Credit Facility or certain of our other debt or any of our Subsidiary Guarantors. The guarantees are
joint and several and full and unconditional, subject to certain customary automatic release provisions, including release of the subsidiary
guarantor’s guarantee under our Credit Agreement and certain other debt, or, in certain circumstances, the sale or other disposition of a
majority of the voting power of the capital interest in, or of all or substantially all the property of, the subsidiary guarantor. Each of the
Subsidiary Guarantors is 100% owned, directly or indirectly, by us and we have no independent assets or operations other than those of
our subsidiaries. Our only direct or indirect subsidiaries that would not be Subsidiary Guarantors would be minor subsidiaries. Neither
we, nor any of our Subsidiary Guarantors, are subject to any material or significant restrictions on our ability to obtain funds from our
subsidiaries by dividend or loan or to transfer assets from such subsidiaries, except as provided by applicable law. Each of our senior
notes is subject to certain customary covenants, with which we complied as of December 31, 2013.
Debt covenants:
The indentures governing our senior notes contain covenants that limit our ability and the ability of certain of our subsidiaries to, among
other things: (i) create certain liens on assets to secure certain debt; (ii) enter into certain sale and leaseback transactions; and (iii) merge
or consolidate with another company or transfer all or substantially all of our or its property, in each case as set forth in the indentures.
These covenants are, however, subject to a number of important limitations and exceptions.
The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage
ratio of 2.25 times through December 31, 2014, and 2.50 times thereafter through maturity, and a maximum consolidated leverage ratio
of 3.00 times through maturity. The consolidated leverage ratio includes a calculation of adjusted debt to adjusted earnings before interest,
taxes, depreciation, amortization, rent and stock-based compensation expense (“EBITDAR”). Adjusted debt includes outstanding debt,