O'Reilly Auto Parts 2015 Annual Report Download - page 60

FORM 10-K
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liabilities contain uncertainties because management must use judgment to estimate the exposures associated with the Company's various
tax positions and actual results could differ from estimates.
Earnings per share:
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the
fiscal period. Diluted earnings per share is calculated by dividing the weighted-average number of common shares outstanding plus the
common stock equivalents associated with the potential impact of dilutive stock options. Certain common stock equivalents that could
potentially dilute basic earnings per share in the future were not included in the fully diluted computation because they would have been
antidilutive. Generally, stock options are antidilutive and excluded from the earnings per share calculation when the exercise price exceeds
the market price of the common shares. See Note 13 for further information concerning the Company's common stock equivalents.
New accounting pronouncements:
In May of 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standard Update ("ASU") No. 2014-09,
"Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"). Under ASU 2014-09, an entity is required to follow a five-
step process to determine the amount of revenue to recognize when promised goods or services are transferred to customers. ASU 2014-09
offers specific accounting guidance for costs to obtain or fulfill a contract with a customer. In addition, an entity is required to disclose
sufficient information to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with
customers. In August of 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of
the Effective Date" ("ASU 2015-14"), to defer the effective date of ASU 2014-09 by one year. Originally, for public companies, ASU
2014-09 was effective for annual reporting periods beginning after December 15, 2016, including periods within that reporting period,
and could be adopted either retrospectively or as a cumulative effect adjustment at the date of adoption, with early adoption not permitted.
For public companies, ASU 2015-14 changes ASU 2014-09 to be effective for annual reporting periods beginning after December 15,
2017, including periods within that reporting period, and can be adopted retrospectively or as a cumulative effective adjustment at the
date of adoption, with early adoption allowed, but not before ASU 2014-09's original effective date of December 15, 2016. The Company
will adopt this guidance beginning with its first quarter ending March 31, 2018. The Company is in the process of evaluating the potential
future impact, if any, of ASU 2014-09 on its consolidated financial position, results of operations and cash flows, and which method of
adoption is most appropriate for the Company.
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. The Company will adopt this guidance beginning
with its first quarter ending March 31, 2016. The application of this guidance is not expected to have a material impact on the Company's
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 is effective for annual reporting periods beginning after December 15, 2015, including periods within that reporting period,
requires retrospective application, and early adoption is permitted. The Company 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, the Company opted
to defer and present debt issuance costs related to its unsecured revolving credit facility as an asset and subsequently amortize the deferred
debt issuance costs ratable over the term of the unsecured 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 the Company's senior notes from "Other
current assets" or "Other assets, net" to "Long-term debt, less current portion" within the accompanying 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 the Company's unsecured revolving credit facility from "Other current assets" to "Other assets, net" within
the accompanying 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 the Company's 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.