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 an Alternative Base Rate or Adjusted LIBO Rate, as defined in the credit agreement governing the Revolving Credit Facility. As of December 31, 2018, we had outstanding borrowings under our Revolving Credit Facility in the amount of $287 million, at the weighted-average variable interest rate of 4.560%. At this borrowing level, a 0.50% increase in interest rates would have had an unfavorable annual impact on our pre-tax earnings and cash flows in the amount of $1.4 million.

We had outstanding fixed rate debt of $3.15 billion and $2.65 billion as of December 31, 2018 and 2017, respectively. The fair value of our fixed rate debt was estimated at $3.12 billion and $2.73 billion as of December 31, 2018 and 2017, respectively, which was determined by reference to quoted market prices.

We invest certain of our excess cash balances in short-term, highly-liquid instruments with maturities of 90 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, 2018, our cash and cash equivalents totaled $31 million.