O REILLY AUTOMOTIVE INC Fair Value Disclosure
NOTE 3 – FAIR VALUE MEASUREMENTS
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis:
The Company invests in various marketable securities with the intention of selling these securities to fulfill its future unsecured obligations under the Company’s nonqualified deferred compensation plan. See Note 14 for further information concerning the Company’s benefit plans.
The Company’s marketable securities were accounted for as trading securities and the carrying amount of its marketable securities were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024. The Company recorded an increase in fair value related to its marketable securities in the amount of $8.0 million and $7.1 million for the year ended December 31, 2025 and 2024, respectively, which were included in “Other income (expense)” on the accompanying Consolidated Statements of Income.
The tables below identify the estimated fair value of the Company’s marketable securities, determined by reference to quoted market prices (Level 1), as of December 31, 2025 and 2024 (in thousands):
December 31, 2025 | ||||||||||||
Quoted Priced in Active Markets | Significant Other | Significant | ||||||||||
for Identical Instruments | Observable Inputs | Unobservable Inputs | ||||||||||
| (Level 1) | | (Level 2) | | (Level 3) | | Total | |||||
Marketable securities | $ | 67,840 | $ | — | $ | — | $ | 67,840 | ||||
December 31, 2024 | ||||||||||||
Quoted Prices in Active Markets | Significant Other | Significant | ||||||||||
for Identical Instruments | Observable Inputs | Unobservable Inputs | ||||||||||
| (Level 1) | | (Level 2) | | (Level 3) | | Total | |||||
Marketable securities | $ | 65,156 | $ | — | $ | — | $ | 65,156 | ||||
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, 2025 and 2024, the Company did not have any material 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, unsecured revolving credit facility borrowings, and commercial paper program borrowings are included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.
The table below identifies the estimated fair value of the Company’s senior notes, using the market approach. The fair values as of December 31, 2025 and 2024, were determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands):
December 31, 2025 | December 31, 2024 | |||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||
Senior Notes | $ | 5,327,587 | $ | 5,308,675 | $ | 5,321,219 | $ | 5,151,768 | ||||
The carrying amount of the Company’s unsecured revolving credit facility approximates fair value (Level 2), as borrowings under the facility bear variable interest at current market rates. The carrying amount of the Company’s commercial paper program approximates fair value (Level 2), as borrowings under the program bear interest at market rates prevailing at the time of issuance. See Note 9 for further information concerning the Company’s senior notes, unsecured revolving credit facility, and commercial paper program.
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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.