The following table illustrates the computation of basic and diluted earnings per share for the three and nine months ended September 30, 20172018 and 20162017 (in thousands, except per share data):

For the three and nine months ended September 30, 20172018 and 2016,2017, the computation of diluted earnings per share did not include certain securities. These securities represent underlying stock options not included in the computation of diluted earnings per share, because the inclusion of such equity awards would have been antidilutive.

Subsequent to the end of the third quarter and through November 7, 2017,2018, the Company repurchased an additional 0.4 million shares of its common stock under its share repurchase program, at an average price of $209.61,$333.80, for a total investment of $85.2$143.7 million.

O’Reilly is currently involved in litigation incidental to the ordinary conduct of the Company’s business. The Company accrues for litigation losses in instances where a material adverse outcome is probable and the Company is able to reasonably estimate the probable loss. The Company accrues for an estimate of material legal costs to be incurred in pending litigation matters. Although the Company cannot ascertain the amount of liability that it may incur from any of these matters, it does not currently believe that, in the aggregate, these matters, taking into account applicable insurance and accruals, will have a material adverse effect on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period.

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),” now codified in the Accounting Standards Codification (“ASU 2014-09”Topic 606”). Under ASU 2014-09,Topic 606, 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 2014-09Topic 606 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

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. In July of 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvement” (“ASU 2018-11”), to provide an additional, optional transition method for adopting ASU 2016-02, which allows for an entity to choose to apply the new lease standard at adoption date and recognize a cumulative-effective adjustment to the opening balance of retained earnings in the period of adoption, while comparative periods presented will continue to be in accordance with current U.S. GAAP Topic 840. For public companies, ASU 2016-02Topic 842 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. The Company will adopt this guidance beginning with its first quarter ending March 31, 2019.period. The Company has established a task force, composed of multiple functional groups inside of the Company, which is currently inhas reviewed the process of evaluating critical components of this new guidancethe standard and is implementing changes to systems and controls necessary to support the potential impact of the guidance on the Company’s financial position, results of operations and cash flows. Based on the preliminary work completed, the Company is considering the potential implicationsadoption of the new standard on determiningbeginning with its first quarter ending March 31, 2019. The Company expects to adopt this guidance using the discount rateadditional, optional transition method, the package of transitional practical expedients relating to be used in valuing newthe identification, classification and existinginitial direct costs of leases commencing before the effective date of Topic 842, and the transitional practical expedient for the treatment of existing favorable and unfavorable lease agreements acquired in connection with previous acquisitions, procedural and operational changes that may be necessaryland easements; however, the Company does not expect to comply withelect the provisionshindsight transitional practical expedient. The Company expects to make an accounting policy election to not apply recognition requirements of the guidance and all applicable financial statement disclosures required byto short-term leases. The Company expects the adoption of the new guidance allto have a material impact on the total assets and liabilities reported on the Company’s consolidated balance sheet, and estimates right-of-use assets and lease liabilities will be within a range of which are areas$1.8 billion to $2.0 billion. This estimated range is based on the Company’s current lease portfolio and changes to the lease portfolio, including the total number of leases, lease commencement and end dates and lease termination expectations, as well as changes in anticipated lease discount rates, could impact this estimated range. The Company does not expect that could potentially be impacted by adoption of the guidance. At this time, the task force has not completed its full evaluation; however, the Company believes the adoption of thethis new guidance will have a material impact on the total assets and total liabilities reported onCompany’s results of operations, cash flows, liquidity or the Company’s consolidated balance sheets.

In June of 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Under ASU 2016-13, businesses and other organizations are required to present financial assets, measured at amortized costs basis, at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis, such as trade receivables. The measurement of expected credit loss will be based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. For public companies, ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2020. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows.

In MayAugust of 2017,2018, the FASB issued ASU No. 2017-09, “Compensation2018-15, “Intangibles - Stock Compensation (Topic 718)Goodwill and Other - Internal-Use Software (Subtopic 350-40): Scope of Modification Accounting”Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2017-09”2018-15”). ASU 2017-09 provides clarity and reduces both2018-15 aligns the diversityrequirements for capitalizing implementation costs incurred in practice and cost and complexity when applying stock compensation guidancea hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to a change to the termsdevelop or conditions of a share-based payment award. For public companies,obtain internal-use software. ASU 2017-092018-15 is effective for annual reporting periods beginning after December 15, 2017, including2019, and interim periods within that reporting period, and requiresallows for either retrospective or prospective adoption, with early adoption permitted. The Company will adoptearly adopted this guidance beginning with its firstthird quarter ending March 31, 2018.ended September 30, 2018, using the prospective adoption method. The Company did not capitalize any implementation costs incurred in cloud computing arrangements that are service contracts during the third quarter ended September 30, 2018, and therefore, the adoption of this new guidance did not impact the Company’s consolidated financial condition, results of operations and cash flows during the period. The Company does not expect that the application of this new guidance is not expected towill have a material impact on the Company’s consolidated financial condition, results of operations orand cash flows.

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.

In Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results of operations, liquidity and certain other factors that may affect our future results, including

The review of Management’s Discussion and Analysis should be made in conjunction with our condensed consolidated financial statements, related notes and other financial information, forward-looking statements and other risk factors included elsewhere in this quarterly report.

We claim the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as “estimate,” “may,” “could,” “will,” “believe,” “expect,” “would,” “consider,” “should,” “anticipate,” “project,” “plan,” “intend” or similar words. In addition, statements contained within this quarterly report that are not historical facts are forward-looking statements, such as statements discussing, among other things, expected growth, store development, integration and expansion strategy, business strategies, the impact of the U.S. Tax Cuts and Jobs Act, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, the economy in general, inflation, product demand, the market for auto parts, competition, weather, risks associated with the performance of acquired businesses, our ability to hire and retain qualified employees, consumer debt levels, our increased debt levels, credit ratings on public debt, governmental regulations, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2016,2017, for additional factors that could materially affect our financial performance. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States. We are one of the largest U.S. automotive aftermarket specialty retailers, selling our products to both do-it-yourself (“DIY”) customers and professional service providers – our “dual market strategy.” Our stores carry an extensive product line consisting of new and remanufactured automotive hard parts, maintenance items, accessories, a complete line of auto body paint and related materials, automotive tools and professional service provider service equipment. Our extensive product line includes an assortment of products that are differentiated by quality and price for most of the product lines we offer. For many of our product offerings, this quality differentiation reflects “good,” “better,” and “best” alternatives. Our sales and total gross margin dollars are highest for the “best” quality category of products. Consumers’ willingness to select products at a higher point on the value spectrum is a driver of sales and profitability in our industry. Our stores also offer enhanced services and programs to our customers, including used oil, oil filter and battery recycling; battery, wiper and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; professional paint shop mixing and related materials; and machine shops.

Our strategy is to open new stores to achieve greater penetration into existing markets and expansion into new, contiguous markets. We typically open new stores either by (i) constructing a new facility or renovating an existing one on property we purchase or lease and stocking the new store with fixtures and inventory; (ii) acquiring an independently owned auto parts store, typically by the purchase of substantially all of the inventory and other assets (other than realty) of such store; or (iii) purchasing multi-store chains. We plan to open 190200 net, new stores in 2017, in addition to the conversion of 48 stores acquired from Bond Auto Parts (“Bond”) in December 2016, as previously announced,2018 and plan to open 200 to 210 net, new stores in 2018.2019. We believe our investment in store growth will be funded with the cash flows expected to be generated by our existing operations and through available borrowings under our existing unsecured revolving

Operating within the retail industry, we are influenced by a number of general macroeconomic factors including, but not limited to, fuel costs, unemployment rates, consumer preferences and spending habits, and competition. We have ongoing initiatives aimed at tailoring our product offering to adjust to customers’ changing preferences, and we also have initiatives focused on marketing and training to educate customers on the advantages of ongoing vehicle maintenance, as well as “purchasing up” on the value spectrum.

We believe the key drivers of current and future demand for the products sold within the automotive aftermarket include the number of U.S. miles driven, number of U.S. registered vehicles, new light vehicle registrations, average vehicle age and unemployment.

We remain confident in our ability to gain market share in our existing markets and grow our business in new markets by focusing on our dual market strategy and the core O’Reilly values of hard work and excellent customer service.

Sales for the three months ended September 30, 2017,2018, increased $119$143 million or 6% to $2.34$2.48 billion from $2.22$2.34 billion for the same period one year ago, representing an increase of 5%.ago. Sales for the nine months ended September 30, 2017,2018, increased $293$435 million or 6% to $6.79$7.22 billion from $6.49$6.79 billion for the same period one year ago, representing an increase of 5%.ago. Comparable store sales for stores open at least one year increased 1.8%3.9% and 4.2%1.8% for the three months ended September 30, 20172018 and 2016,2017, respectively. Comparable store sales for stores open at least one year increased 1.5%4.0% and 4.8%1.5% for the nine months ended September 30, 20172018 and 2016,2017, respectively. Comparable store sales are calculated based on the change in sales offor stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores and sales to Team Members, as well asMembers. Online sales, resulting from Leap Day duringship-to-home orders and pickup in-store orders, for stores open at least one year, are included in the nine months ended September 30, 2016.comparable store sales calculation.

The following table presents the components of the increase in sales for the three and nine months ended September 30, 20172018 (in millions):

We believe the increased sales achieved by our stores are the result of store growth, sales from the 48 acquired Bond stores and the high levels of customer service provided by our well-trained and technically proficient Team Members, superior inventory availability, including same day and over-night access to inventory in our regional distribution centers, enhanced services and programs offered in our stores, a broader selection of product offerings in most stores with a dynamic catalog system to identify and source parts, a targeted promotional and advertising effort through a variety of media and localized promotional events, continued improvement in the merchandising and store layouts of our stores, compensation programs for all store Team Members that provide incentives for performance and our continued focus on serving both DIY and professional service provider customers.

Our comparable store sales increases for the three and nine months ended September 30, 2017,2018, were driven by increasesan increase in average ticket values for both DIY and professional service provider customers and positive transaction counts for professional service provider customers, partially offset by negative customer transaction counts from both ourfor DIY and professional service provider customers. The improvementsimprovement in average ticket values were the result of the increasing complexity and cost of replacement parts necessary to maintain the current population of better engineeredbetter-engineered and more technically advanced vehicles. These better engineered,better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time. WhenThis decrease in repair frequency creates pressure on customer transaction counts; however when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values; however, the decrease in repair frequency creates pressure on customer transaction counts. Customervalues. DIY transaction counts during the current periods were also negatively impactedcontinue to be pressured by softer industry demand,increased gas prices and other inflationary impacts, resulting in part, froman increased deferral of vehicle maintenance and repairs over the second consecutive, unseasonably mild winter weather and a cool, wet summer in many of our markets. The mild winter weather did not stress vehicle components to the degree more typical harsh winter weather would, which resulted in a lower level of automobile parts breakage and associated demand for our products. The cool, wet summer in many of our markets resulted in a lower level of demand, as the absence of typical seasonally high temperatures resulted in fewer temperature related vehicle repairs.short term.

We opened 5043 and 155171 net, new stores during the three and nine months ended September 30, 2017,2018, respectively, compared to 5250 and 141155 net, new stores for the three and nine months ended September 30, 2016,2017, respectively. As of September 30, 2017,2018, we operated 4,9845,190 stores in 47 states compared to 4,7124,984 stores in 4547 states at September 30, 2016.2017. We anticipate total new store growth to be 190 net, new store openings in 2017, slightly below the 2016 net, new store openings due to the resources necessary to convert the 48 Bond stores acquired in December 2016 to our systems, inventory selection and décor packages during 2017, and 200 net, new store openings in 2018.2018, and 200 to 210 net, new store openings in 2019.

Gross profit for the three months ended September 30, 2017,2018, increased 7% to $1.32 billion (or 53.0% of sales) from $1.23 billion (or 52.6% of sales) from $1.17 billion (or 52.7% of sales) for the same period one year ago, representing an increase of 5%.ago. Gross profit for the nine months ended September 30, 2017,2018, increased 7% to $3.81 billion (or 52.7% of sales) from $3.56 billion (or 52.5% of sales) from $3.39 billion (or 52.3% of sales) for the same period one year ago, representing an increase of 5%.ago. The increaseincreases in gross profit dollars for the three and nine months ended September 30, 2017, was2018, were primarily the result of sales from new stores and the increase in comparable store sales at existing stores and sales from the 48 acquired Bond stores. The increase in gross profit dollars for the nine months ended September 30, 2017, was the result of sales from new stores, the increase in comparable store sales at existing stores and sales from the 48 acquired Bond stores, partially offset by prior year gross profit dollars generated from one additional day due to Leap Day. The decreaseincreases in gross profit as a percentage of sales for the three and nine months ended September 30, 2017, was2018, were primarily

Selling, general and administrative expenses (“SG&A”) for the three months ended September 30, 2017,2018, increased 8% to $831 million (or 33.5% of sales) from $768 million (or 32.8% of sales) from $722 million (or 32.5% of sales) for the same period one year ago, representing an increase of 6%.ago. SG&A for the nine months ended September 30, 2017,

2018, increased 8% to $2.42 billion (or 33.5% of sales) from $2.24 billion (or 33.0% of sales) from $2.10 billion (or 32.4% of sales) for the same period one year ago, representing an increase of 6%.ago. The increase in total SG&A dollars for the three months ended September 30, 2017, was primarily the result of additional Team Members, facilities and vehicles to support our increased sales and store count. The increase in total SG&A dollars for the nine months ended September 30, 2017,2018, was primarily the result of additional Team Members, facilities and vehicles to support our increased sales and store count, partially offset byand the planned reinvestment of a portion of the tax savings we are realizing as a result of the U.S. Tax Cuts and Jobs Act, enacted in December 2017 (the “Tax Act”). The increase in total SG&A dollars for the nine months ended September 30, 2018, was primarily the result of additional Team Members, facilities and vehicles to support our increased sales and store count, our tax savings reinvestment initiatives, and a $9.1 million benefit in the prior period from the reduction in our legal accrual following the expiration of the statute of limitations related to a legacy claim and prior year incremental SG&A expenses incurred from one additional day due to Leap Day.claim. The increasesincrease in SG&A as a percentage of sales for the three andmonths ended September 30, 2018, was primarily due to our tax savings reinvestment initiatives. The increase in SG&A as a percentage of sales for the nine months ended September 30, 2017, were2018, was primarily due to deleverageour tax savings reinvestment initiatives and a $9.1 million benefit in the prior period from the reduction in legal accruals. For the full year ended December 31, 2018, we estimate our tax savings reinvestments will result in approximately 70 basis points of store operating costs on soft comparable store sales during the current periods.profit headwind.

As a result of the impacts discussed above, operating income for the three months ended September 30, 2017,2018, increased 5% to $485 million (or 19.5% of sales) from $462 million (or 19.7% of sales) from $448 million (or 20.2% of sales) for the same period one year ago, representing an increase of 3%.ago. As a result of the impacts discussed above, operating income for the nine months ended September 30, 2017,2018, increased 5% to $1.39 billion (or 19.2% of sales) from $1.32 billion (or 19.5% of sales) from $1.29 billion (or 19.9% of sales) for the same period one year ago, representing an increase of 2%.ago.

Total other expense for the three months ended September 30, 2017,2018, increased 31% to $29 million (or 1.2% of sales) from $22 million (or 1.0% of sales) from $16 million (or 0.7% of sales) for the same period one year ago, representing an increase of 41%.ago. Total other expense for the nine months ended September 30, 2017,2018, increased 40% to $86 million (or 1.2% of sales) from $61 million (or 0.9% of sales) from $45 million (or 0.7% of sales) for the same period one year ago, representing an increase of 36%.ago. The increases in total other expense for the three and nine months ended September 30, 2017,2018, were primarily the result of increased interest expense on higher average outstanding borrowings and increased amortization of debt issuance costs.borrowings.

Our provision for income taxes for the three months ended September 30, 2017, increased2018, decreased 43% to $90 million (or 3.6% of sales) from $156 million (or 6.7% of sales) from $153 million (or 6.9% of sales) for the same period one year ago, representing an increase of 2%.ago. Our provision for income taxes for the nine months ended September 30, 2017,2018, decreased 36% to $277 million (or 3.8% of sales) from $430 million (or 6.3% of sales) from $455 million (or 7.0% of sales) for the same period one year ago, representing a decrease of 6%.ago. Our effective tax rate for the three months ended September 30, 2017,2018, was 35.4%19.6% of income before income taxes, compared to 35.5%35.4% for the same period one year ago. Our effective tax rate for the nine months ended September 30, 2017,2018, was 34.1%21.3% of income before income taxes, compared to 36.5%34.1% for the same period one year ago. The increasedecreases in our provision for income taxes and our effective tax rate for the three months ended September 30, 2017, was2018, were primarily the result of higher taxable income in the three months ended September 30, 2017, partially offsetlower federal corporate tax rate set forth by the adoption of Accounting Standard Update No. 2016-09, which provided a benefit of $3 million to the provision for income taxes.Tax Act and higher excess tax benefits from share-based compensation. The decreasedecreases in our provision for income taxes and our effective tax rate for the nine months ended September 30, 2017, was primarily the result of the adoption of Accounting Standard Update No. 2016-09 in 2017, which provided a benefit of $35 million to the provision for income taxes, partially offset by higher taxable income. The decreases in our effective tax rate for the three and nine months ended September 30, 2017,2018, were primarily the result of the adoption of Accounting Standard Update No. 2016-09 in 2017, which provided a benefit of 63 basis points and 279 basis points to the effectivelower federal corporate tax rate forset forth by the Tax Act. During the three months ended September 30, 2018 and 2017, excess tax benefits from share-based compensation were approximately $13 million and $3 million, respectively. During the nine months ended September 30, 2018 and 2017, excess tax benefits from share-based compensation were approximately $33 million and $35 million, respectively.

As a result of the impacts discussed above, net income for the three months ended September 30, 2017,2018, increased 29% to $366 million (or 14.7% of sales) from $284 million (or 12.1% of sales) from $278 million (or 12.5% of sales) for the same period one year ago, representing an increase of 2%.ago. As a result of the impacts discussed above, net income for the nine months ended September 30, 2017,2018, increased 23% to $1.02 billion (or 14.2% of sales) from $831 million (or 12.3% of sales) from $792 million (or 12.2% of sales) for the same period one year ago, representing an increase of 5%.ago.

Our diluted earnings per common share for the three months ended September 30, 2017,2018, increased 11%40% to $4.50 on 81 million shares from $3.22 on 88 million shares from $2.90 on 96 million shares for the same period one year ago. Our diluted earnings per common share for the nine months ended September 30, 2017,2018, increased 12%35% to 12.36 on 83 million shares from $9.15 on 91 million shares from $8.14 on 97 million shares for the same period one year ago. Due to the adoption of Accounting Standard Update No. 2016-09, our diluted earnings per common share for the three and nine months ended September 30, 2017, included a benefit of $0.02 and $0.35, respectively, comprised of a $0.03 and $0.39 earnings per share increase, respectively, from a lower effective tax rate, partially offset by a $0.01 and $0.04, respectively, earnings per share decrease from an increase in the number of weighted-average common shares outstanding - assuming dilution.

Our long-term business strategy requires capital to open new stores, fund strategic acquisitions, expand distribution infrastructure, operate and maintain existing stores and may include the opportunistic repurchase of shares of our common stock through our Board-approved share repurchase program. The primary sources of our liquidity are funds generated from operations and borrowed under our unsecured revolving credit facility. Decreased demand for our products or changes in customer buying patterns could negatively impact our ability to generate funds from operations. Additionally, decreased demand or changes in buying patterns could impact our ability to meet the debt covenants of our credit agreement and, therefore, negatively impact the funds available under our unsecured revolving credit facility.

We believe that cash expected to be provided by operating activities and availability under our unsecured revolving credit facility will be sufficient to fund both our short-term and long-term capital and liquidity needs for the foreseeable future. However, there can be no assurance that we will continue to generate cash flows at or above recent levels.

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the nine months ended September 30, 20172018 and 20162017 (in thousands):

The decreaseincrease in net cash provided by operating activities during the nine months ended September 30, 2017,2018, compared to the same period in 2016,2017, was primarily due to a smaller decrease in our net inventory investment, partially offset by an increase in net income and a larger increasegreater decrease in deferred income taxes.our net inventory investment. The smallergreater decrease in our net inventory investment iswas primarily the result of fewer new suppliers entering our supplier financing programsan increase in 2017,accounts payable as a percentage of inventory driven by a sales growth rate that exceeded the growth in inventory, as compared to 2016. The larger increasea decrease in deferred income taxes is primarily the resultaccounts payable as a percentage of additional depreciation recognizedinventory for income tax purposes, as compared to the same period in the prior year.

The decrease in netNet cash used in investing activities during the nine months ended September 30, 2017,2018, compared to the same period in 2016,2017, was primarily the result of a decrease in capital expenditures. The decrease in capital expenditures was primarily related to the

The increase in net cash used in financing activities during the nine months ended September 30, 2017,2018, compared to the same period in 2016,2017, was primarily attributable to an increase in repurchasesa lower level of our common stocknet borrowings during the current period, as compared to the same period in the prior year, partially offset by a higherlower level of net borrowings duringrepurchases of our common stock in the current period, as compared to the same period in the prior year.

On April 5, 2017, the Company entered into a credit agreement (the “Credit Agreement”). The Credit Agreement provides for a five-year $1.20 billion unsecured revolving credit facility (the “Revolving Credit Facility”) arranged by JPMorgan Chase Bank, N.A., which is scheduled to mature in April 2022. The Credit Agreement includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $600 million, provided that the aggregate amount of the commitments does not exceed $1.80 billion at any time.

On AugustMay 17, 2017, we2018, the Company issued $750$500 million aggregate principal amount of unsecured 3.600%4.350% Senior Notes due 20272028 (“3.600%4.350% Senior Notes due 2027”2028”) at a price to the public of 99.840%99.732% of their face value with UMB Bank, N.A. (“UMB”) as trustee. Interest on the 3.600%4.350% Senior Notes due 20272028 is payable on MarchJune 1 and SeptemberDecember 1 of each year, beginning on MarchDecember 1, 2018, and is computed on the basis of a 360-day year.

We have issued a cumulative $2.65$3.15 billion aggregate principal amount of unsecured senior notes, which are due between 2021 and 2027,2028, with UMB as trustee. Interest on the senior notes, ranging from 3.550% to 4.875%, is payable semi-annually and is computed on the basis of a 360-day year. None of our subsidiaries are guarantorsis a guarantor under the Senior Notes.

The indentures governing our senior notes contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things, create certain liens on assets to secure certain debt and enter into certain sale and leaseback transactions, and limit our ability to merge or consolidate with another company or transfer all or substantially all of our property, in each case as set forth in the indentures. These covenants are, however, subject to a number of important limitations and exceptions. As of September 30, 2017,2018, we were in compliance with the covenants applicable to our senior notes.

The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that we should default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from our lenders.

We had a consolidated fixed charge coverage ratio of 5.905.43 times and 6.145.90 times as of September 30, 20172018 and 2016,2017, respectively, and a consolidated leverage ratio of 1.952.01 times and 1.531.95 times as of September 30, 20172018 and 2016,2017, respectively, remaining in compliance with all covenants related to the borrowing arrangements.

The table below outlines the calculations of the consolidated fixed charge coverage ratio and consolidated leverage ratio covenants, as defined in the Credit Agreement governing the Revolving Credit Facility, for the twelve months ended September 30, 20172018 and 20162017 (dollars in thousands):

The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the nine months ended September 30, 20172018 and 20162017 (in thousands):

Free cash flow, the consolidated fixed charge coverage ratio and the consolidated leverage ratio discussed and presented in the tables above are not derived in accordance with United States generally accepted accounting principles (“GAAP”). We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. We believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio and consolidated leverage ratio provides meaningful supplemental information to both management and investors and reflects the required covenants under the Credit Agreement. We include these items in judging our performance and believe this non-GAAP information is useful to investors as well. Material limitations of these non-GAAP measures are that such measures do not reflect actual GAAP amounts. We compensate for such limitations by presenting, in the tables above, a reconciliation to the most directly comparable GAAP measures.

In January of 2011, our Board of Directors approved a share repurchase program. Under the program, we may, from time to time, repurchase shares of our common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements and overall market conditions. Our Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on May 10, 2017, and September 1, 2017,February 7, 2018, our Board of Directors each time approved a resolution to increase the authorization amount under our share repurchase program by an additional $1.00 billion, resulting in a cumulative authorization amount of $9.75$10.75 billion. EachThe additional authorization is effective for a three-year period, beginning on its respective announcement date.

The following table identifies shares of our common stock that have been repurchased as part of our publicly announced share repurchase program for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share data):

As of September 30, 2017,2018, we had $995$464 million remaining under our share repurchase program. Subsequent to the end of the third quarter and through November 7, 2017,2018, we repurchased 0.4 million additional shares of our common stock under our share repurchase program, at an average price of $209.61,$333.80, for a total investment of $85$144 million. We have repurchased a total of 65.471.4 million shares of our common stock under our share repurchase program since the inception of the program in January of 2011 and through November 7, 2017,2018, at an average price of $135.17,$146.12, for a total aggregate investment of $8.84$10.43 billion.

There have been no material changes to the contractual obligations, to which we are committed, since those discussed in our Annual Report on Form 10-K for the year ended December 31, 2016.2017.

The preparation of our financial statements in accordance with GAAP requires the application of certain estimates and judgments by management. Management bases its assumptions, estimates, and adjustments on historical experience, current trends and other factors believed to be relevant at the time the condensed consolidated financial statements are prepared. There have been no material changes in the critical accounting estimates since those discussed in our Annual Report on Form 10-K for the year ended December 31, 2016.2017.