O'Reilly Auto Parts 2014 Annual Report Download - page 58

FORM 10-K
51
NOTE 2 – FAIR VALUE MEASUREMENTS
The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement)
and the lowest priority to unobservable inputs (Level 3 measurement). The Company uses the income and market approaches to determine
the fair value of its assets and liabilities. The three levels of the fair value hierarchy are set forth below:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at
the measurement date.
• Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
• Level 3 – Unobservable inputs for the asset or liability.
Financial assets and liabilities measured at fair value on a recurring basis:
The carrying amount of the Company's marketable securities is included in "Other assets, net" on the accompanying Consolidated Balance
Sheets as of December 31, 2014 (see Note 9). The table below identifies the estimated fair value of the Company's marketable securities,
determined by reference to quoted market prices (Level 1), as of December 31, 2014 (in thousands):
Quoted Prices in Active
Markets for
Identical Instruments
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3) Total
Marketable securities $ 15,378 $ — $ — $ 15,378
Non-financial assets and liabilities measured at fair value on a nonrecurring basis:
Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain
circumstances, including when there is evidence of impairment. These non-financial assets and liabilities may include assets acquired
in a business combination or property and equipment that are determined to be impaired. As of December 31, 2014 and 2013, the Company
did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition.
Fair value of financial instruments:
The carrying amounts of the Company's senior notes are included in "Long-term debt, less current portion" on the accompanying
Consolidated Balance Sheets as of December 31, 2014 and 2013 (see Note 5).
The table below identifies the estimated fair value of the Company's senior notes, using the market approach. The fair values of the
Company's senior notes as of December 31, 2014 and 2013, were determined by reference to quoted market prices of the same or similar
instruments (Level 2):
December 31, 2014 December 31, 2013
(in thousands) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
4.875% Senior Notes due 2021 $ 497,876 $ 566,700 $ 497,525 $ 524,434
4.625% Senior Notes due 2021 299,650 337,222 299,598 310,141
3.800% Senior Notes due 2022 299,109 310,749 299,011 290,453
3.850% Senior Notes due 2023 299,980 311,656 $ 299,976 $ 289,362
The accompanying Consolidated Balance Sheets include other financial instruments, including cash and cash equivalents, accounts
receivable, amounts receivable from suppliers and accounts payable. Due to the short-term nature of these financial instruments, the
Company believes that the carrying values of these instruments approximate their fair values.