O'Reilly Auto Parts 2013 Annual Report Download - page 65

FORM 10-K
59
$51.7 million and $57.3 million, respectively, reducing the aggregate availability under the Revolving Credit Facility by those amounts.
As of December 31, 2013 and 2012, the Company had no outstanding borrowings under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility (other than swing line loans) bear interest, at the Company’s option, at the Base Rate or
Eurodollar Rate (both as defined in the Credit Agreement) plus an applicable margin. Swing line loans made under the Revolving Credit
Facility bear interest at the Base Rate plus the applicable margin for Base Rate loans. In addition, the Company pays a facility fee on
the aggregate amount of the commitments in an amount equal to a percentage of such commitments. The interest rate margins and facility
fee are based upon the better of the ratings assigned to the Company’s debt by Moody’s Investor Service, Inc. and Standard & Poor’s
Rating Services, subject to limited exceptions. Based upon the Company’s credit ratings at December 31, 2013, its margin for Base Rate
loans was 0.000%, its margin for Eurodollar Rate loans was 0.975% and its facility fee was 0.150%.
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. Adjusted debt includes outstanding debt, outstanding
stand-by letters of credit and similar instruments, six-times rent expense and excludes any premium or discount recorded in conjunction
with the issuance of long-term debt. In the event that the Company should default on any covenant contained within the Credit Agreement,
certain actions may be taken, including, but not limited to, possible termination of credit extensions, immediate payment of outstanding
principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from lenders. As of December
31, 2013, the Company remained in compliance with all covenants under the Credit Agreement.
Senior notes:
4.875% Senior Notes due 2021:
On January 14, 2011, the Company 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 United Missouri Bank, N.A. (“UMB”) as trustee.
Interest on the 4.875% Senior Notes due 2021 is payable on January 14 and July 14 of each year and is computed on the basis of a 360-
day year.
4.625% Senior Notes due 2021:
On September 19, 2011, the Company 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 and is computed on the basis of a 360-day year.
3.800% Senior Notes due 2022:
On August 21, 2012, the Company 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 and is computed on the basis of a 360-day year.
3.850% Senior Notes due 2023:
On June 20, 2013, the Company 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, with the remainder intended to be used for general corporate purposes, including share repurchases.
The senior notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries (“Subsidiary Guarantors”) that incurs
or guarantees the Company’s obligations under the Company’s Revolving Credit Facility or certain other debt of the Company or any of
the 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 the Company’s 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 of the property of, the subsidiary guarantor. Each of the Subsidiary Guarantors is 100% owned, directly or indirectly, by the Company
and the Company has no independent assets or operations other than those of its subsidiaries. The only direct or indirect subsidiaries of
the Company that would not be Subsidiary Guarantors would be minor subsidiaries. Neither the Company, nor any of its Subsidiary
Guarantors, are subject to any material or significant restrictions on the Company’s ability to obtain funds from its subsidiaries by dividend
or loan or to transfer assets from such subsidiaries, except as provided by applicable law. Each of the senior notes is subject to certain
customary covenants, with which the Company complied as of December 31, 2013.