O'Reilly Auto Parts 2015 Annual Report Download - page 45

FORM 10-K
37
evaluating the potential future impact, if any, of ASU 2014-09 on our consolidated financial position, results of operations and cash
flows, and which method of adoption is most appropriate for us.
In January of 2015, the FASB issued ASU No. 2015-01, "Extraordinary and Unusual Items (Subtopic 225-20)" ("ASU 2015-01").
ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items; such that, an entity will no longer need to assess whether
a particular event or transaction event is extraordinary. ASU 2015-01 is effective for annual reporting periods beginning after December
15, 2015, including periods within that reporting period, and early adoption is permitted. We will adopt this guidance beginning with
our first quarter ending March 31, 2016. The application of this guidance is not expected to have a material impact on our consolidated
financial condition, results of operations or cash flows.
In April of 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30)" ("ASU 2015-03"). ASU
2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction
from the carrying amount of that debt liability. In August of 2015, the FASB issued ASU 2015-15, "Interest - Imputation of Interest
(Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
- Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015, EITF Meeting" ("ASU 2015-15"), to update
ASU 2015-03 to reflect an SEC clarification. ASU 2015-15 allows an entity, in the case of a line-of-credit arrangement, to either
follow ASU 2015-03 or defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs
ratable over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-
credit arrangement. ASU 2015-03 and ASU 2015-15 are effective for annual reporting periods beginning after December 15, 2015,
including periods within that reporting period, requires retrospective application, and early adoption is permitted. We early-adopted
ASU 2015-03 and ASU 2015-15 as of December 31, 2015, and applied the requirements of the updates retrospectively. With the
adoption of ASU 2015-15, we opted to defer and present debt issuance costs related to our Revolving Credit Facility as an asset and
subsequently amortize the deferred debt issuance costs ratable over the term of the Revolving Credit Facility. The adoption of ASU
2015-03 resulted in the reclassification of $7.1 million and $8.2 million of unamortized debt issuance costs related to our senior notes
from "Other current assets" or "Other assets, net" to "Long-term debt, less current portion" within our Consolidated Balance Sheets
as of December 31, 2015 and 2014, respectively. The adoption of ASU 2015-15 resulted in the reclassification of $0.5 million of
unamortized debt issuance costs related to our Revolving Credit Facility from "Other current assets" to "Other assets, net" within our
Consolidated Balance Sheets as of December 31, 2015 and 2014. Other than these reclassifications, the adoption of ASU 2015-03
and ASU 2015-15 did not have an impact on our consolidated financial condition, results of operations or cash flows.
In November of 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740) - Balance Sheet Classification of Deferred
Taxes" ("ASU 2015-17"). ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities
and assets be classified as noncurrent in the balance sheet. ASU 2015-17 is effective for annual reporting periods beginning after
December 15, 2016, including periods within that reporting period, allows for prospective or retrospective application, and early
adoption is permitted. We early-adopted ASU 2015-17 as of December 31, 2015, and applied the requirements of the update
retrospectively. The adoption of ASU 2015-17 resulted in the reclassification of $7.4 million and $17.3 million of deferred income
tax liabilities from the current liability "Deferred income taxes" to other long-term liabilities "Deferred income taxes" within our
Consolidated Balance Sheets as of December 31, 2015 and 2014, respectively. Other than this reclassification, the adoption of ASU
2015-17 did not have an impact on our consolidated financial condition, results of operations or cash flows.
In February of 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). Under ASU 2016-02, an entity
will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing
arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees
and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial
statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is
effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and
requires a modified retrospective adoption, with early adoption permitted. We will adopt this guidance beginning with our first quarter
ending March 31, 2019. We are in the process of evaluating the future impact of ASU 2016-02 on our consolidated financial position,
results of operations and cash flows.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Unless otherwise indicated, "we," "us," "our" and similar terms, as well as references to the "Company" or "O'Reilly," refer to O'Reilly
Automotive, Inc. and its subsidiaries.
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. As of December 31, 2015, we had no outstanding borrowings under our Revolving Credit Facility.