O'Reilly Auto Parts 2011 Annual Report Download - page 52

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changes and transfers within the valuation hierarchy levels, particularly valuations in Level 3 fair value measurements, and was
effective for periods beginning after December 15, 2011. The application of this guidance affects disclosures only and therefore,
should not have an impact on our consolidated financial condition, results of operations or cash flows.
In June of 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income (―2011-05‖). ASU 2011-05 was issued
to improve the comparability of financial reporting between U.S. GAAP and IFRS, and eliminates previous U.S. GAAP guidance that
allowed an entity to present components of other comprehensive income (―OCI‖) as part of its statement of changes in shareholders’
equity. With the issuance of ASU 2011-05, companies are now required to report all components of OCI either in a single continuous
statement of total comprehensive income, which includes components of both OCI and net income, or in a separate statement
appearing consecutively with the statement of income. ASU 2011-05 does not affect current guidance for the accounting of the
components of OCI, or which items are included within total comprehensive income. In December of 2011, the FASB issued ASU
No. 2011-12 Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated
Other Comprehensive Income in Accounting Standards Update No. 2011-05 (―2011-12‖). ASU 2011-12 defers changes in ASU
2011-05 that relate to the presentation of reclassification adjustments shown on the face of the financial statements. No other
requirements of ASU 2011-05 were affected by the issuance of ASU 2011-12, including the requirement to report income either in a
single continuous financial statement or in a separate statement of total comprehensive income, which is effective for periods
beginning after December 15, 2011, with early adoption permitted. We adopted this guidance with our 2011 financial statements; the
application of this guidance affects presentation only and therefore, did not have an impact on our consolidated financial condition,
results of operations or cash flows.
In September of 2011, the FASB issued ASU No. 2011-08 Testing Goodwill for Impairment (―2011-08‖). ASU 2011-08 was issued
to simplify the impairment test of goodwill, by allowing entities to use a qualitative approach to determine whether goodwill
impairment might exist, before completing the entire impairment test. Under ASU 2011-08, an entity has the option to first assess any
qualitative factors that would lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its
carrying amount. The changes under ASU 2011-08 are effective for public companies for annual and interim testing performed for
periods beginning after December 15, 2011, with early adoption permitted. The application of this guidance is not expected to have a
material impact on our consolidated financial condition, results of operations or cash flows.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are subject to interest rate risk to the extent we borrow against our unsecured revolving credit facility (the ―Revolving Credit
Facility‖) with variable interest rates based on either a Base Rate or Eurodollar Rate, as defined in the credit agreement governing the
Revolving Credit Facility. Historically, we had entered into interest rate swap contracts to mitigate our exposure to interest rate risks
associated with borrowings against our previous credit facility with variable interest rates, however, as of December 31, 2011, we did
not have any interest rate swap contracts and had no outstanding borrowings under our Revolving Credit Facility.
We invest certain of our excess cash balances in short-term, highly-liquid instruments with maturities of 30 days or less. We do not
expect any material losses from our invested cash balances and we believe that our interest rate exposure is minimal. As of December
31, 2011, our cash and cash equivalents totaled $362 million.
FORM 10-K