|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
36-4215970
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
500 WEST MADISON STREET,
SUITE 2800, CHICAGO, IL
|
|
60661
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
x
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
|
|||||||
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
273,203
|
|
|
$
|
87,397
|
|
Receivables, net
|
995,153
|
|
|
590,160
|
|
||
Inventories, net
|
1,890,536
|
|
|
1,556,552
|
|
||
Prepaid expenses and other current assets
|
139,536
|
|
|
106,603
|
|
||
Total Current Assets
|
3,298,428
|
|
|
2,340,712
|
|
||
Property, Plant and Equipment, net
|
1,055,046
|
|
|
696,567
|
|
||
Intangible Assets:
|
|
|
|
||||
Goodwill
|
3,059,488
|
|
|
2,319,246
|
|
||
Other intangibles, net
|
630,360
|
|
|
215,117
|
|
||
Other Assets
|
142,622
|
|
|
76,195
|
|
||
Total Assets
|
$
|
8,185,944
|
|
|
$
|
5,647,837
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
735,138
|
|
|
$
|
415,588
|
|
Accrued expenses:
|
|
|
|
||||
Accrued payroll-related liabilities
|
102,962
|
|
|
86,527
|
|
||
Other accrued expenses
|
228,656
|
|
|
162,225
|
|
||
Other current liabilities
|
40,794
|
|
|
31,596
|
|
||
Current portion of long-term obligations
|
60,832
|
|
|
56,034
|
|
||
Total Current Liabilities
|
1,168,382
|
|
|
751,970
|
|
||
Long-Term Obligations, Excluding Current Portion
|
3,274,629
|
|
|
1,528,668
|
|
||
Deferred Income Taxes
|
225,338
|
|
|
127,239
|
|
||
Other Noncurrent Liabilities
|
209,956
|
|
|
125,278
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Stockholders’ Equity:
|
|
|
|
||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 306,785,582 and 305,574,384 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
|
3,067
|
|
|
3,055
|
|
||
Additional paid-in capital
|
1,111,221
|
|
|
1,090,713
|
|
||
Retained earnings
|
2,374,853
|
|
|
2,126,384
|
|
||
Accumulated other comprehensive loss
|
(181,502
|
)
|
|
(105,470
|
)
|
||
Total Stockholders’ Equity
|
3,307,639
|
|
|
3,114,682
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
8,185,944
|
|
|
$
|
5,647,837
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
$
|
2,450,693
|
|
|
$
|
1,838,070
|
|
|
$
|
4,372,169
|
|
|
$
|
3,611,982
|
|
Cost of goods sold
|
1,528,746
|
|
|
1,114,126
|
|
|
2,689,785
|
|
|
2,188,559
|
|
||||
Gross margin
|
921,947
|
|
|
723,944
|
|
|
1,682,384
|
|
|
1,423,423
|
|
||||
Facility and warehouse expenses
|
178,670
|
|
|
136,379
|
|
|
336,275
|
|
|
269,036
|
|
||||
Distribution expenses
|
184,331
|
|
|
150,039
|
|
|
336,674
|
|
|
291,753
|
|
||||
Selling, general and administrative expenses
|
254,153
|
|
|
205,796
|
|
|
472,471
|
|
|
409,037
|
|
||||
Restructuring and acquisition related expenses
|
9,080
|
|
|
1,663
|
|
|
23,891
|
|
|
8,151
|
|
||||
Depreciation and amortization
|
52,529
|
|
|
29,782
|
|
|
84,217
|
|
|
59,235
|
|
||||
Operating income
|
243,184
|
|
|
200,285
|
|
|
428,856
|
|
|
386,211
|
|
||||
Other expense (income):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
26,381
|
|
|
14,622
|
|
|
40,973
|
|
|
29,528
|
|
||||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
26,650
|
|
|
—
|
|
||||
Gains on foreign exchange contracts - acquisition related
|
—
|
|
|
—
|
|
|
(18,342
|
)
|
|
—
|
|
||||
Other expense (income), net
|
1,339
|
|
|
97
|
|
|
(1,550
|
)
|
|
2,016
|
|
||||
Total other expense, net
|
27,720
|
|
|
14,719
|
|
|
47,731
|
|
|
31,544
|
|
||||
Income before provision for income taxes
|
215,464
|
|
|
185,566
|
|
|
381,125
|
|
|
354,667
|
|
||||
Provision for income taxes
|
74,874
|
|
|
64,682
|
|
|
132,441
|
|
|
124,780
|
|
||||
Equity in earnings of unconsolidated subsidiaries
|
147
|
|
|
(1,162
|
)
|
|
(215
|
)
|
|
(3,070
|
)
|
||||
Net income
|
$
|
140,737
|
|
|
$
|
119,722
|
|
|
$
|
248,469
|
|
|
$
|
226,817
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.81
|
|
|
$
|
0.75
|
|
Diluted
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
Unaudited Condensed Consolidated Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
140,737
|
|
|
$
|
119,722
|
|
|
$
|
248,469
|
|
|
$
|
226,817
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(73,257
|
)
|
|
44,510
|
|
|
(73,117
|
)
|
|
(10,300
|
)
|
||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
(3,614
|
)
|
|
918
|
|
|
(3,182
|
)
|
|
1,201
|
|
||||
Net change in unrealized gains/losses on pension plans, net of tax
|
120
|
|
|
(21
|
)
|
|
267
|
|
|
107
|
|
||||
Total other comprehensive (loss) income
|
(76,751
|
)
|
|
45,407
|
|
|
(76,032
|
)
|
|
(8,992
|
)
|
||||
Total comprehensive income
|
$
|
63,986
|
|
|
$
|
165,129
|
|
|
$
|
172,437
|
|
|
$
|
217,825
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
Shares
Issued
|
|
Amount
|
|
||||||||||||||||||
BALANCE, January 1, 2016
|
305,574
|
|
|
$
|
3,055
|
|
|
$
|
1,090,713
|
|
|
$
|
2,126,384
|
|
|
$
|
(105,470
|
)
|
|
$
|
3,114,682
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
248,469
|
|
|
—
|
|
|
248,469
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(76,032
|
)
|
|
(76,032
|
)
|
|||||
Restricted stock units vested, net of shares withheld for employee tax
|
519
|
|
|
5
|
|
|
(2,286
|
)
|
|
—
|
|
|
—
|
|
|
(2,281
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
11,425
|
|
|
—
|
|
|
—
|
|
|
11,425
|
|
|||||
Exercise of stock options
|
693
|
|
|
7
|
|
|
4,882
|
|
|
—
|
|
|
—
|
|
|
4,889
|
|
|||||
Excess tax benefit from stock-based payments
|
—
|
|
|
—
|
|
|
6,487
|
|
|
—
|
|
|
—
|
|
|
6,487
|
|
|||||
BALANCE, June 30, 2016
|
306,786
|
|
|
$
|
3,067
|
|
|
$
|
1,111,221
|
|
|
$
|
2,374,853
|
|
|
$
|
(181,502
|
)
|
|
$
|
3,307,639
|
|
Note 1.
|
Interim Financial Statements
|
Note 2.
|
Business Combinations
|
|
Six Months Ended
|
|
Year Ended
|
||||||||||||||||
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||
|
Rhiag
|
|
PGW
|
|
Other Acquisitions
|
|
Total
|
|
All Acquisitions
|
||||||||||
Receivables
|
$
|
235,358
|
|
|
$
|
136,529
|
|
|
$
|
996
|
|
|
$
|
372,883
|
|
|
$
|
29,628
|
|
Receivable reserves
|
(28,243
|
)
|
|
(6,146
|
)
|
|
(53
|
)
|
|
(34,442
|
)
|
|
(3,926
|
)
|
|||||
Inventories, net
(1)
|
239,559
|
|
|
169,558
|
|
|
840
|
|
|
409,957
|
|
|
79,646
|
|
|||||
Prepaid expenses and other current assets
|
14,465
|
|
|
38,762
|
|
|
(13
|
)
|
|
53,214
|
|
|
3,337
|
|
|||||
Property, plant and equipment
|
58,275
|
|
|
271,641
|
|
|
431
|
|
|
330,347
|
|
|
11,989
|
|
|||||
Goodwill
|
585,112
|
|
|
183,970
|
|
|
5,107
|
|
|
774,189
|
|
|
92,175
|
|
|||||
Other intangibles
|
424,754
|
|
|
31,126
|
|
|
—
|
|
|
455,880
|
|
|
9,926
|
|
|||||
Other assets
|
2,101
|
|
|
57,396
|
|
|
(407
|
)
|
|
59,090
|
|
|
5,166
|
|
|||||
Deferred income taxes
|
(109,067
|
)
|
|
2,024
|
|
|
(216
|
)
|
|
(107,259
|
)
|
|
4,102
|
|
|||||
Current liabilities assumed
|
(246,546
|
)
|
|
(168,442
|
)
|
|
(615
|
)
|
|
(415,603
|
)
|
|
(39,191
|
)
|
|||||
Debt assumed
|
(550,843
|
)
|
|
(4,027
|
)
|
|
—
|
|
|
(554,870
|
)
|
|
(2,365
|
)
|
|||||
Other noncurrent liabilities assumed
|
(22,918
|
)
|
|
(50,539
|
)
|
|
—
|
|
|
(73,457
|
)
|
|
(2,651
|
)
|
|||||
Other purchase price obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,199
|
)
|
|||||
Notes issued
|
—
|
|
|
—
|
|
|
(465
|
)
|
|
(465
|
)
|
|
(4,296
|
)
|
|||||
Settlement of pre-existing balances
|
(591
|
)
|
|
—
|
|
|
(32
|
)
|
|
(623
|
)
|
|
(1,073
|
)
|
|||||
Cash used in acquisitions, net of cash acquired
|
$
|
601,416
|
|
|
$
|
661,852
|
|
|
$
|
5,573
|
|
|
$
|
1,268,841
|
|
|
$
|
161,268
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue, as reported
|
$
|
2,450,693
|
|
|
$
|
1,838,070
|
|
|
$
|
4,372,169
|
|
|
$
|
3,611,982
|
|
Revenue of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
|
|
||||||||
Rhiag
|
—
|
|
|
246,583
|
|
|
213,376
|
|
|
481,885
|
|
||||
PGW
|
61,667
|
|
|
279,729
|
|
|
328,000
|
|
|
537,385
|
|
||||
Other acquisitions
|
347
|
|
|
92,376
|
|
|
1,531
|
|
|
187,786
|
|
||||
Pro forma revenue
|
$
|
2,512,707
|
|
|
$
|
2,456,758
|
|
|
$
|
4,915,076
|
|
|
$
|
4,819,038
|
|
|
|
|
|
|
|
|
|
||||||||
Net income, as reported
|
$
|
140,737
|
|
|
$
|
119,722
|
|
|
$
|
248,469
|
|
|
$
|
226,817
|
|
Net income of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
|
|
|
|
|
|
|
|
||||||||
Rhiag
|
—
|
|
|
5,069
|
|
|
(178
|
)
|
|
5,201
|
|
||||
PGW
|
6,357
|
|
|
8,880
|
|
|
13,860
|
|
|
2,992
|
|
||||
Other acquisitions
|
16
|
|
|
3,374
|
|
|
73
|
|
|
6,655
|
|
||||
Acquisition related costs of acquisitions closed in the period, net of tax
|
1,604
|
|
|
—
|
|
|
10,101
|
|
|
—
|
|
||||
Pro forma net income
|
$
|
148,714
|
|
|
$
|
137,045
|
|
|
$
|
272,325
|
|
|
$
|
241,665
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share, basic—as reported
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.81
|
|
|
$
|
0.75
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
|
|
||||||||
Rhiag
|
—
|
|
|
0.02
|
|
|
(0.00)
|
|
|
0.02
|
|
||||
PGW
|
0.02
|
|
|
0.03
|
|
|
0.05
|
|
|
0.01
|
|
||||
Other acquisitions
|
0.00
|
|
|
0.01
|
|
|
0.00
|
|
|
0.02
|
|
||||
Acquisition related costs of acquisitions closed in the period, net of tax
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
||||
Pro forma earnings per share, basic
(1)
|
$
|
0.48
|
|
|
$
|
0.45
|
|
|
$
|
0.89
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share, diluted—as reported
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
|
|
||||||||
Rhiag
|
—
|
|
|
0.02
|
|
|
(0.00)
|
|
|
0.02
|
|
||||
PGW
|
0.02
|
|
|
0.03
|
|
|
0.04
|
|
|
0.01
|
|
||||
Other acquisitions
|
0.00
|
|
|
0.01
|
|
|
0.00
|
|
|
0.02
|
|
||||
Acquisition related costs of acquisitions closed in the period, net of tax
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
||||
Pro forma earnings per share, diluted
(1)
|
$
|
0.48
|
|
|
$
|
0.45
|
|
|
$
|
0.88
|
|
|
$
|
0.79
|
|
Note 3.
|
Financial Statement Information
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Aftermarket and refurbished products
|
$
|
1,422,701
|
|
|
$
|
1,146,162
|
|
Salvage and remanufactured products
|
397,522
|
|
|
410,390
|
|
||
Glass manufacturing products
(1)
|
70,313
|
|
|
—
|
|
||
Total inventories, net
|
$
|
1,890,536
|
|
|
$
|
1,556,552
|
|
Land improvements
|
10-20 years
|
Buildings and improvements
|
20-40 years
|
Machinery and equipment
|
3-20 years
|
Computer equipment and software
|
3-10 years
|
Vehicles and trailers
|
3-10 years
|
Furniture and fixtures
|
5-7 years
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Land and improvements
|
$
|
135,171
|
|
|
$
|
118,420
|
|
Buildings and improvements
|
253,389
|
|
|
183,480
|
|
||
Machinery and equipment
|
574,195
|
|
|
355,313
|
|
||
Computer equipment and software
|
137,197
|
|
|
130,363
|
|
||
Vehicles and trailers
|
117,831
|
|
|
101,201
|
|
||
Furniture and fixtures
|
29,203
|
|
|
24,332
|
|
||
Leasehold improvements
|
150,086
|
|
|
140,732
|
|
||
|
1,397,072
|
|
|
1,053,841
|
|
||
Less—Accumulated depreciation
|
(485,592
|
)
|
|
(437,946
|
)
|
||
Construction in progress
|
143,566
|
|
|
80,672
|
|
||
Total property, plant and equipment, net
|
$
|
1,055,046
|
|
|
$
|
696,567
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Glass
|
|
Total
|
||||||||||
Balance as of January 1, 2016
|
$
|
1,445,850
|
|
|
$
|
594,482
|
|
|
$
|
278,914
|
|
|
$
|
—
|
|
|
$
|
2,319,246
|
|
Business acquisitions and adjustments to previously recorded goodwill
|
715
|
|
|
589,952
|
|
|
(448
|
)
|
|
183,970
|
|
|
774,189
|
|
|||||
Exchange rate effects
|
6,729
|
|
|
(40,292
|
)
|
|
(384
|
)
|
|
—
|
|
|
(33,947
|
)
|
|||||
Balance as of June 30, 2016
|
$
|
1,453,294
|
|
|
$
|
1,144,142
|
|
|
$
|
278,082
|
|
|
$
|
183,970
|
|
|
$
|
3,059,488
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Trade names and trademarks
|
$
|
295,384
|
|
|
$
|
(49,152
|
)
|
|
$
|
246,232
|
|
|
$
|
172,219
|
|
|
$
|
(43,458
|
)
|
|
$
|
128,761
|
|
Customer and supplier relationships
|
405,547
|
|
|
(60,752
|
)
|
|
344,795
|
|
|
95,508
|
|
|
(41,007
|
)
|
|
54,501
|
|
||||||
Software and other technology related assets
|
57,253
|
|
|
(23,219
|
)
|
|
34,034
|
|
|
44,500
|
|
|
(17,844
|
)
|
|
26,656
|
|
||||||
Covenants not to compete
|
11,719
|
|
|
(6,420
|
)
|
|
5,299
|
|
|
10,774
|
|
|
(5,575
|
)
|
|
5,199
|
|
||||||
|
$
|
769,903
|
|
|
$
|
(139,543
|
)
|
|
$
|
630,360
|
|
|
$
|
323,001
|
|
|
$
|
(107,884
|
)
|
|
$
|
215,117
|
|
|
Gross Amount
|
||||||
|
Rhiag
|
|
PGW
|
||||
Trade names and trademarks
|
$
|
124,074
|
|
|
$
|
4,200
|
|
Customer and supplier relationships
|
290,766
|
|
|
24,500
|
|
||
Software and other technology related assets
|
9,914
|
|
|
1,026
|
|
||
Covenants not to compete
|
—
|
|
|
1,400
|
|
||
|
$
|
424,754
|
|
|
$
|
31,126
|
|
Balance as of January 1, 2016
|
$
|
17,363
|
|
Warranty expense
|
16,341
|
|
|
Warranty claims
|
(14,256
|
)
|
|
Balance as of June 30, 2016
|
$
|
19,448
|
|
Note 4.
|
Restructuring and Acquisition Related Expenses
|
Note 5.
|
Stock-Based Compensation
|
|
Number
Outstanding
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Unvested as of January 1, 2016
|
1,981,292
|
|
|
$
|
24.19
|
|
|
$
|
58,706
|
|
Granted
|
976,318
|
|
|
$
|
29.05
|
|
|
|
||
Vested
|
(605,151
|
)
|
|
$
|
21.20
|
|
|
|
||
Forfeited / Canceled
|
(53,449
|
)
|
|
$
|
27.34
|
|
|
|
||
Unvested as of June 30, 2016
|
2,299,010
|
|
|
$
|
26.96
|
|
|
$
|
72,879
|
|
Expected to vest after June 30, 2016
|
2,198,889
|
|
|
$
|
26.98
|
|
|
$
|
69,705
|
|
|
Number
Outstanding
|
|
Weighted
Average Exercise Price
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Balance as of January 1, 2016
|
3,765,952
|
|
|
$
|
8.63
|
|
|
2.9
|
|
$
|
79,317
|
|
Exercised
|
(692,610
|
)
|
|
$
|
7.06
|
|
|
|
|
|
||
Forfeited / Canceled
|
(9,364
|
)
|
|
$
|
31.83
|
|
|
|
|
|
||
Balance as of June 30, 2016
|
3,063,978
|
|
|
$
|
8.92
|
|
|
2.6
|
|
$
|
69,851
|
|
Exercisable as of June 30, 2016
|
2,981,006
|
|
|
$
|
8.27
|
|
|
2.6
|
|
$
|
69,851
|
|
Exercisable as of June 30, 2016 and expected to vest thereafter
|
3,055,681
|
|
|
$
|
8.86
|
|
|
2.6
|
|
$
|
69,851
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
RSUs
|
$
|
5,480
|
|
|
$
|
5,528
|
|
|
$
|
11,359
|
|
|
$
|
10,948
|
|
Stock options
|
29
|
|
|
40
|
|
|
66
|
|
|
166
|
|
||||
Total stock-based compensation expense
|
$
|
5,509
|
|
|
$
|
5,568
|
|
|
$
|
11,425
|
|
|
$
|
11,114
|
|
Note 6.
|
Earnings Per Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net Income
|
$
|
140,737
|
|
|
$
|
119,722
|
|
|
$
|
248,469
|
|
|
$
|
226,817
|
|
Denominator for basic earnings per share—Weighted-average shares outstanding
|
306,718
|
|
|
304,286
|
|
|
306,437
|
|
|
304,145
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
RSUs
|
646
|
|
|
732
|
|
|
584
|
|
|
700
|
|
||||
Stock options
|
1,534
|
|
|
2,229
|
|
|
1,613
|
|
|
2,260
|
|
||||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding
|
308,898
|
|
|
307,247
|
|
|
308,634
|
|
|
307,105
|
|
||||
Earnings per share, basic
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.81
|
|
|
$
|
0.75
|
|
Earnings per share, diluted
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Antidilutive securities:
|
|
|
|
|
|
|
|
||||
RSUs
|
—
|
|
|
310
|
|
|
112
|
|
|
323
|
|
Stock options
|
—
|
|
|
98
|
|
|
44
|
|
|
99
|
|
Note 7.
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||||||||||
|
|
June 30, 2016
|
|
June 30, 2015
|
||||||||||||||||||||||||||||
|
|
Foreign
Currency Translation |
|
Unrealized (Loss) Gain
on Cash Flow Hedges |
|
Unrealized (Loss) Gain
on Pension Plans |
|
Accumulated
Other Comprehensive (Loss) Income |
|
Foreign
Currency Translation |
|
Unrealized (Loss) Gain
on Cash Flow Hedges |
|
Unrealized (Loss) Gain on Pension Plan
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||||||||
Beginning balance
|
|
$
|
(96,750
|
)
|
|
$
|
(500
|
)
|
|
$
|
(7,501
|
)
|
|
$
|
(104,751
|
)
|
|
$
|
(81,883
|
)
|
|
$
|
(3,118
|
)
|
|
$
|
(9,623
|
)
|
|
$
|
(94,624
|
)
|
Pretax (loss)
income
|
|
(73,257
|
)
|
|
(6,528
|
)
|
|
—
|
|
|
(79,785
|
)
|
|
44,510
|
|
|
(166
|
)
|
|
—
|
|
|
44,344
|
|
||||||||
Income tax effect
|
|
—
|
|
|
2,250
|
|
|
—
|
|
|
2,250
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
69
|
|
||||||||
Reclassification of unrealized loss
|
|
—
|
|
|
984
|
|
|
160
|
|
|
1,144
|
|
|
—
|
|
|
1,564
|
|
|
(27
|
)
|
|
1,537
|
|
||||||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(320
|
)
|
|
(40
|
)
|
|
(360
|
)
|
|
—
|
|
|
(549
|
)
|
|
6
|
|
|
(543
|
)
|
||||||||
Ending Balance
|
|
$
|
(170,007
|
)
|
|
$
|
(4,114
|
)
|
|
$
|
(7,381
|
)
|
|
$
|
(181,502
|
)
|
|
$
|
(37,373
|
)
|
|
$
|
(2,200
|
)
|
|
$
|
(9,644
|
)
|
|
$
|
(49,217
|
)
|
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||
|
|
June 30, 2016
|
|
June 30, 2015
|
||||||||||||||||||||||||||||
|
|
Foreign
Currency Translation |
|
Unrealized (Loss) Gain
on Cash Flow Hedges |
|
Unrealized (Loss) Gain
on Pension Plans |
|
Accumulated
Other Comprehensive (Loss) Income |
|
Foreign
Currency Translation |
|
Unrealized (Loss) Gain
on Cash Flow Hedges |
|
Unrealized (Loss) Gain on Pension Plan
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||||||||
Beginning balance
|
|
$
|
(96,890
|
)
|
|
$
|
(932
|
)
|
|
$
|
(7,648
|
)
|
|
$
|
(105,470
|
)
|
|
$
|
(27,073
|
)
|
|
$
|
(3,401
|
)
|
|
$
|
(9,751
|
)
|
|
$
|
(40,225
|
)
|
Pretax (loss)
income
|
|
(73,117
|
)
|
|
(6,672
|
)
|
|
—
|
|
|
(79,789
|
)
|
|
(10,300
|
)
|
|
(1,239
|
)
|
|
—
|
|
|
(11,539
|
)
|
||||||||
Income tax effect
|
|
—
|
|
|
2,278
|
|
|
—
|
|
|
2,278
|
|
|
—
|
|
|
439
|
|
|
—
|
|
|
439
|
|
||||||||
Reclassification of unrealized loss
|
|
—
|
|
|
1,790
|
|
|
357
|
|
|
2,147
|
|
|
—
|
|
|
3,085
|
|
|
143
|
|
|
3,228
|
|
||||||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(578
|
)
|
|
(90
|
)
|
|
(668
|
)
|
|
—
|
|
|
(1,084
|
)
|
|
(36
|
)
|
|
(1,120
|
)
|
||||||||
Ending Balance
|
|
$
|
(170,007
|
)
|
|
$
|
(4,114
|
)
|
|
$
|
(7,381
|
)
|
|
$
|
(181,502
|
)
|
|
$
|
(37,373
|
)
|
|
$
|
(2,200
|
)
|
|
$
|
(9,644
|
)
|
|
$
|
(49,217
|
)
|
Note 8.
|
Long-Term Obligations
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Senior secured credit agreement:
|
|
|
|
||||
Term loans payable
|
$
|
750,707
|
|
|
$
|
410,625
|
|
Revolving credit facilities
|
1,292,734
|
|
|
480,481
|
|
||
Senior notes
|
600,000
|
|
|
600,000
|
|
||
Euro notes
|
555,400
|
|
|
—
|
|
||
Receivables securitization facility
|
93,520
|
|
|
63,000
|
|
||
Notes payable through October 2025 at weighted average interest rates of 2.3% and 2.2%, respectively
|
9,866
|
|
|
16,104
|
|
||
Other long-term debt at weighted average interest rates of 2.3% and 2.4%, respectively
|
59,457
|
|
|
29,485
|
|
||
Total debt
|
3,361,684
|
|
|
1,599,695
|
|
||
Less: long-term debt issuance costs
|
(23,925
|
)
|
|
(13,533
|
)
|
||
Less: current debt issuance cost
|
(2,298
|
)
|
|
(1,460
|
)
|
||
Total debt, net of issuance costs
|
3,335,461
|
|
|
1,584,702
|
|
||
Less: current maturities, net of debt issuance costs
|
(60,832
|
)
|
|
(56,034
|
)
|
||
Long term debt, net of debt issuance costs
|
$
|
3,274,629
|
|
|
$
|
1,528,668
|
|
Note 9.
|
Derivative Instruments and Hedging Activities
|
Note 10.
|
Fair Value Measurements
|
|
Balance as of June 30, 2016
|
|
Fair Value Measurements as of June 30, 2016
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
33,574
|
|
|
$
|
—
|
|
|
$
|
33,574
|
|
|
$
|
—
|
|
Total Assets
|
$
|
33,574
|
|
|
$
|
—
|
|
|
$
|
33,574
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
3,134
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,134
|
|
Deferred compensation liabilities
|
34,742
|
|
|
—
|
|
|
34,742
|
|
|
—
|
|
||||
Interest rate swaps
|
6,424
|
|
|
—
|
|
|
6,424
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
44,300
|
|
|
$
|
—
|
|
|
$
|
41,166
|
|
|
$
|
3,134
|
|
|
Balance as of December 31, 2015
|
|
Fair Value Measurements as of December 31, 2015
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
29,782
|
|
|
$
|
—
|
|
|
$
|
29,782
|
|
|
$
|
—
|
|
Total Assets
|
$
|
29,782
|
|
|
$
|
—
|
|
|
$
|
29,782
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
4,584
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,584
|
|
Deferred compensation liabilities
|
30,336
|
|
|
—
|
|
|
30,336
|
|
|
—
|
|
||||
Interest rate swaps
|
1,347
|
|
|
—
|
|
|
1,347
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
36,267
|
|
|
$
|
—
|
|
|
$
|
31,683
|
|
|
$
|
4,584
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Beginning balance
|
$
|
3,079
|
|
|
$
|
5,561
|
|
|
$
|
4,584
|
|
|
$
|
7,295
|
|
Payments
|
—
|
|
|
(538
|
)
|
|
(1,667
|
)
|
|
(2,205
|
)
|
||||
Increase in fair value included in earnings
|
46
|
|
|
125
|
|
|
119
|
|
|
276
|
|
||||
Exchange rate effects
|
9
|
|
|
43
|
|
|
98
|
|
|
(175
|
)
|
||||
Balance as of June 30
|
$
|
3,134
|
|
|
$
|
5,191
|
|
|
$
|
3,134
|
|
|
$
|
5,191
|
|
Note 11.
|
Commitments and Contingencies
|
Six months ending December 31, 2016
|
$
|
97,039
|
|
Years ending December 31:
|
|
||
2017
|
172,688
|
|
|
2018
|
142,782
|
|
|
2019
|
114,178
|
|
|
2020
|
92,563
|
|
|
2021
|
70,136
|
|
|
Thereafter
|
351,954
|
|
|
Future Minimum Lease Payments
|
$
|
1,041,340
|
|
Note 12.
|
Income Taxes
|
Note 13.
|
Segment and Geographic Information
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Glass
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Third Party
|
$
|
1,080,401
|
|
|
$
|
824,216
|
|
|
$
|
335,972
|
|
|
$
|
210,104
|
|
|
$
|
—
|
|
|
$
|
2,450,693
|
|
Intersegment
|
119
|
|
|
(10
|
)
|
|
1,094
|
|
|
74
|
|
|
(1,277
|
)
|
|
—
|
|
||||||
Total segment revenue
|
$
|
1,080,520
|
|
|
$
|
824,206
|
|
|
$
|
337,066
|
|
|
$
|
210,178
|
|
|
$
|
(1,277
|
)
|
|
$
|
2,450,693
|
|
Segment EBITDA
|
$
|
163,825
|
|
|
$
|
89,982
|
|
|
$
|
41,792
|
|
|
$
|
23,301
|
|
|
$
|
—
|
|
|
$
|
318,900
|
|
Depreciation and amortization
(1)
|
17,622
|
|
|
28,280
|
|
|
5,283
|
|
|
6,531
|
|
|
—
|
|
|
57,716
|
|
||||||
Three Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Third Party
|
$
|
1,044,779
|
|
|
$
|
509,833
|
|
|
$
|
283,458
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,838,070
|
|
Intersegment
|
372
|
|
|
70
|
|
|
872
|
|
|
—
|
|
|
(1,314
|
)
|
|
—
|
|
||||||
Total segment revenue
|
$
|
1,045,151
|
|
|
$
|
509,903
|
|
|
$
|
284,330
|
|
|
$
|
—
|
|
|
$
|
(1,314
|
)
|
|
$
|
1,838,070
|
|
Segment EBITDA
|
$
|
138,880
|
|
|
$
|
53,943
|
|
|
$
|
40,198
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
233,021
|
|
Depreciation and amortization
(1)
|
17,249
|
|
|
8,704
|
|
|
5,092
|
|
|
—
|
|
|
—
|
|
|
31,045
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Glass
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Six Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Third Party
|
$
|
2,167,764
|
|
|
$
|
1,370,967
|
|
|
$
|
623,334
|
|
|
$
|
210,104
|
|
|
$
|
—
|
|
|
$
|
4,372,169
|
|
Intersegment
|
333
|
|
|
—
|
|
|
2,045
|
|
|
74
|
|
|
(2,452
|
)
|
|
—
|
|
||||||
Total segment revenue
|
$
|
2,168,097
|
|
|
$
|
1,370,967
|
|
|
$
|
625,379
|
|
|
$
|
210,178
|
|
|
$
|
(2,452
|
)
|
|
$
|
4,372,169
|
|
Segment EBITDA
|
$
|
311,200
|
|
|
$
|
147,480
|
|
|
$
|
73,530
|
|
|
$
|
23,301
|
|
|
$
|
—
|
|
|
$
|
555,511
|
|
Depreciation and amortization
(1)
|
35,137
|
|
|
38,588
|
|
|
10,626
|
|
|
6,531
|
|
|
—
|
|
|
90,882
|
|
||||||
Six Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Third Party
|
$
|
2,090,858
|
|
|
$
|
997,179
|
|
|
$
|
523,945
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,611,982
|
|
Intersegment
|
466
|
|
|
70
|
|
|
1,607
|
|
|
—
|
|
|
(2,143
|
)
|
|
—
|
|
||||||
Total segment revenue
|
$
|
2,091,324
|
|
|
$
|
997,249
|
|
|
$
|
525,552
|
|
|
$
|
—
|
|
|
$
|
(2,143
|
)
|
|
$
|
3,611,982
|
|
Segment EBITDA
|
$
|
288,268
|
|
|
$
|
100,466
|
|
|
$
|
65,602
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
454,336
|
|
Depreciation and amortization
(1)
|
34,515
|
|
|
17,055
|
|
|
10,144
|
|
|
—
|
|
|
—
|
|
|
61,714
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Segment EBITDA
|
$
|
318,900
|
|
|
$
|
233,021
|
|
|
$
|
555,511
|
|
|
$
|
454,336
|
|
Deduct:
|
|
|
|
|
|
|
|
||||||||
Restructuring and acquisition related expenses
(1)
|
9,080
|
|
|
1,663
|
|
|
23,891
|
|
|
8,151
|
|
||||
Inventory step-up adjustment - acquisition related
(2)
|
10,213
|
|
|
—
|
|
|
10,213
|
|
|
—
|
|
||||
Change in fair value of contingent consideration liabilities
(3)
|
46
|
|
|
125
|
|
|
119
|
|
|
276
|
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated subsidiaries
|
147
|
|
|
(1,162
|
)
|
|
(215
|
)
|
|
(3,070
|
)
|
||||
Gains on foreign exchange contracts - acquisition related
(4)
|
—
|
|
|
—
|
|
|
18,342
|
|
|
—
|
|
||||
EBITDA
|
299,708
|
|
|
230,071
|
|
|
539,415
|
|
|
442,839
|
|
||||
Depreciation and amortization - cost of goods sold
|
5,187
|
|
|
1,263
|
|
|
6,665
|
|
|
2,479
|
|
||||
Depreciation and amortization
|
52,529
|
|
|
29,782
|
|
|
84,217
|
|
|
59,235
|
|
||||
Interest expense, net
|
26,381
|
|
|
14,622
|
|
|
40,973
|
|
|
29,528
|
|
||||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
26,650
|
|
|
—
|
|
||||
Provision for income taxes
|
74,874
|
|
|
64,682
|
|
|
132,441
|
|
|
124,780
|
|
||||
Net income
|
$
|
140,737
|
|
|
$
|
119,722
|
|
|
$
|
248,469
|
|
|
$
|
226,817
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Capital Expenditures
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
19,448
|
|
|
$
|
14,744
|
|
|
$
|
42,231
|
|
|
$
|
30,147
|
|
Europe
|
21,444
|
|
|
22,303
|
|
|
40,551
|
|
|
30,172
|
|
||||
Specialty
|
2,150
|
|
|
3,620
|
|
|
10,653
|
|
|
6,444
|
|
||||
Glass
|
8,884
|
|
|
—
|
|
|
8,884
|
|
|
—
|
|
||||
|
$
|
51,926
|
|
|
$
|
40,667
|
|
|
$
|
102,319
|
|
|
$
|
66,763
|
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Receivables, net
|
|
|
|
||||
North America
|
$
|
331,359
|
|
|
$
|
314,743
|
|
Europe
(1)
|
444,064
|
|
|
215,710
|
|
||
Specialty
|
99,871
|
|
|
59,707
|
|
||
Glass
(1)
|
119,859
|
|
|
—
|
|
||
Total receivables, net
|
995,153
|
|
|
590,160
|
|
||
Inventories, net
|
|
|
|
||||
North America
|
807,132
|
|
|
847,787
|
|
||
Europe
(1)
|
613,928
|
|
|
427,323
|
|
||
Specialty
|
305,396
|
|
|
281,442
|
|
||
Glass
(1)
|
164,080
|
|
|
—
|
|
||
Total inventories, net
|
1,890,536
|
|
|
1,556,552
|
|
||
Property, Plant and Equipment, net
|
|
|
|
||||
North America
|
479,907
|
|
|
467,961
|
|
||
Europe
(1)
|
242,741
|
|
|
175,455
|
|
||
Specialty
|
58,443
|
|
|
53,151
|
|
||
Glass
(1)
|
273,955
|
|
|
—
|
|
||
Total property, plant and equipment, net
|
1,055,046
|
|
|
696,567
|
|
||
Other unallocated assets
|
4,245,209
|
|
|
2,804,558
|
|
||
Total assets
|
$
|
8,185,944
|
|
|
$
|
5,647,837
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
1,483,840
|
|
|
$
|
1,228,424
|
|
|
$
|
2,768,807
|
|
|
$
|
2,423,369
|
|
United Kingdom
|
358,266
|
|
|
347,064
|
|
|
707,942
|
|
|
690,671
|
|
||||
Other countries
|
608,587
|
|
|
262,582
|
|
|
895,420
|
|
|
497,942
|
|
||||
|
$
|
2,450,693
|
|
|
$
|
1,838,070
|
|
|
$
|
4,372,169
|
|
|
$
|
3,611,982
|
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Long-lived Assets
|
|
|
|
||||
United States
|
$
|
749,504
|
|
|
$
|
493,300
|
|
United Kingdom
|
147,556
|
|
|
138,546
|
|
||
Other countries
|
157,986
|
|
|
64,721
|
|
||
|
$
|
1,055,046
|
|
|
$
|
696,567
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Aftermarket, other new and refurbished products
|
$
|
1,756,334
|
|
|
$
|
1,296,168
|
|
|
$
|
3,144,070
|
|
|
$
|
2,542,639
|
|
Recycled, remanufactured and related products and services
|
435,023
|
|
|
408,180
|
|
|
865,612
|
|
|
806,625
|
|
||||
Manufactured products
(1)
|
140,632
|
|
|
—
|
|
|
140,632
|
|
|
—
|
|
||||
Other
|
118,704
|
|
|
133,722
|
|
|
221,855
|
|
|
262,718
|
|
||||
|
$
|
2,450,693
|
|
|
$
|
1,838,070
|
|
|
$
|
4,372,169
|
|
|
$
|
3,611,982
|
|
Note 14.
|
Condensed Consolidating Financial Information
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
June 30, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
52,144
|
|
|
$
|
31,140
|
|
|
$
|
189,919
|
|
|
$
|
—
|
|
|
$
|
273,203
|
|
Receivables, net
|
—
|
|
|
372,413
|
|
|
622,740
|
|
|
—
|
|
|
995,153
|
|
|||||
Intercompany receivables, net
|
14,864
|
|
|
11,224
|
|
|
—
|
|
|
(26,088
|
)
|
|
—
|
|
|||||
Inventories, net
|
—
|
|
|
1,203,556
|
|
|
686,980
|
|
|
—
|
|
|
1,890,536
|
|
|||||
Prepaid expenses and other current assets
|
2,083
|
|
|
53,520
|
|
|
83,933
|
|
|
—
|
|
|
139,536
|
|
|||||
Total Current Assets
|
69,091
|
|
|
1,671,853
|
|
|
1,583,572
|
|
|
(26,088
|
)
|
|
3,298,428
|
|
|||||
Property, Plant and Equipment, net
|
271
|
|
|
743,265
|
|
|
311,510
|
|
|
—
|
|
|
1,055,046
|
|
|||||
Intangible Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
1,825,033
|
|
|
1,234,455
|
|
|
—
|
|
|
3,059,488
|
|
|||||
Other intangibles, net
|
—
|
|
|
161,257
|
|
|
469,103
|
|
|
—
|
|
|
630,360
|
|
|||||
Investment in Subsidiaries
|
5,038,195
|
|
|
278,799
|
|
|
—
|
|
|
(5,316,994
|
)
|
|
—
|
|
|||||
Intercompany Notes Receivable
|
1,130,732
|
|
|
780,340
|
|
|
—
|
|
|
(1,911,072
|
)
|
|
—
|
|
|||||
Other Assets
|
41,418
|
|
|
80,687
|
|
|
28,361
|
|
|
(7,844
|
)
|
|
142,622
|
|
|||||
Total Assets
|
$
|
6,279,707
|
|
|
$
|
5,541,234
|
|
|
$
|
3,627,001
|
|
|
$
|
(7,261,998
|
)
|
|
$
|
8,185,944
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
1,669
|
|
|
$
|
355,545
|
|
|
$
|
377,924
|
|
|
$
|
—
|
|
|
$
|
735,138
|
|
Intercompany payables, net
|
—
|
|
|
—
|
|
|
26,088
|
|
|
(26,088
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
4,726
|
|
|
48,724
|
|
|
49,512
|
|
|
—
|
|
|
102,962
|
|
|||||
Other accrued expenses
|
5,085
|
|
|
90,554
|
|
|
133,017
|
|
|
—
|
|
|
228,656
|
|
|||||
Other current liabilities
|
283
|
|
|
16,820
|
|
|
23,691
|
|
|
—
|
|
|
40,794
|
|
|||||
Current portion of long-term obligations
|
19,262
|
|
|
2,826
|
|
|
38,744
|
|
|
—
|
|
|
60,832
|
|
|||||
Total Current Liabilities
|
31,025
|
|
|
514,469
|
|
|
648,976
|
|
|
(26,088
|
)
|
|
1,168,382
|
|
|||||
Long-Term Obligations, Excluding Current Portion
|
2,146,730
|
|
|
8,449
|
|
|
1,119,450
|
|
|
—
|
|
|
3,274,629
|
|
|||||
Intercompany Notes Payable
|
750,000
|
|
|
1,114,430
|
|
|
46,642
|
|
|
(1,911,072
|
)
|
|
—
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
111,766
|
|
|
121,416
|
|
|
(7,844
|
)
|
|
225,338
|
|
|||||
Other Noncurrent Liabilities
|
44,313
|
|
|
124,822
|
|
|
40,821
|
|
|
—
|
|
|
209,956
|
|
|||||
Stockholders’ Equity
|
3,307,639
|
|
|
3,667,298
|
|
|
1,649,696
|
|
|
(5,316,994
|
)
|
|
3,307,639
|
|
|||||
Total Liabilities and Stockholders' Equity
|
$
|
6,279,707
|
|
|
$
|
5,541,234
|
|
|
$
|
3,627,001
|
|
|
$
|
(7,261,998
|
)
|
|
$
|
8,185,944
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
December 31, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
17,616
|
|
|
$
|
13,432
|
|
|
$
|
56,349
|
|
|
$
|
—
|
|
|
$
|
87,397
|
|
Receivables, net
|
—
|
|
|
214,502
|
|
|
375,658
|
|
|
—
|
|
|
590,160
|
|
|||||
Intercompany receivables, net
|
3
|
|
|
—
|
|
|
13,544
|
|
|
(13,547
|
)
|
|
—
|
|
|||||
Inventories, net
|
—
|
|
|
1,060,834
|
|
|
495,718
|
|
|
—
|
|
|
1,556,552
|
|
|||||
Prepaid expenses and other current assets
|
15,254
|
|
|
44,810
|
|
|
46,539
|
|
|
—
|
|
|
106,603
|
|
|||||
Total Current Assets
|
32,873
|
|
|
1,333,578
|
|
|
987,808
|
|
|
(13,547
|
)
|
|
2,340,712
|
|
|||||
Property, Plant and Equipment, net
|
339
|
|
|
494,658
|
|
|
201,570
|
|
|
—
|
|
|
696,567
|
|
|||||
Intangible Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
1,640,745
|
|
|
678,501
|
|
|
—
|
|
|
2,319,246
|
|
|||||
Other intangibles, net
|
—
|
|
|
141,537
|
|
|
73,580
|
|
|
—
|
|
|
215,117
|
|
|||||
Investment in Subsidiaries
|
3,456,837
|
|
|
285,284
|
|
|
—
|
|
|
(3,742,121
|
)
|
|
—
|
|
|||||
Intercompany Notes Receivable
|
630,717
|
|
|
61,764
|
|
|
—
|
|
|
(692,481
|
)
|
|
—
|
|
|||||
Other Assets
|
35,649
|
|
|
28,184
|
|
|
18,218
|
|
|
(5,856
|
)
|
|
76,195
|
|
|||||
Total Assets
|
$
|
4,156,415
|
|
|
$
|
3,985,750
|
|
|
$
|
1,959,677
|
|
|
$
|
(4,454,005
|
)
|
|
$
|
5,647,837
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
681
|
|
|
$
|
229,519
|
|
|
$
|
185,388
|
|
|
$
|
—
|
|
|
$
|
415,588
|
|
Intercompany payables, net
|
—
|
|
|
13,544
|
|
|
3
|
|
|
(13,547
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
4,395
|
|
|
48,698
|
|
|
33,434
|
|
|
—
|
|
|
86,527
|
|
|||||
Other accrued expenses
|
5,399
|
|
|
80,886
|
|
|
75,940
|
|
|
—
|
|
|
162,225
|
|
|||||
Other current liabilities
|
284
|
|
|
15,953
|
|
|
15,359
|
|
|
—
|
|
|
31,596
|
|
|||||
Current portion of long-term obligations
|
21,041
|
|
|
1,425
|
|
|
33,568
|
|
|
—
|
|
|
56,034
|
|
|||||
Total Current Liabilities
|
31,800
|
|
|
390,025
|
|
|
343,692
|
|
|
(13,547
|
)
|
|
751,970
|
|
|||||
Long-Term Obligations, Excluding Current Portion
|
976,353
|
|
|
7,487
|
|
|
544,828
|
|
|
—
|
|
|
1,528,668
|
|
|||||
Intercompany Notes Payable
|
—
|
|
|
615,488
|
|
|
76,993
|
|
|
(692,481
|
)
|
|
—
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
113,905
|
|
|
19,190
|
|
|
(5,856
|
)
|
|
127,239
|
|
|||||
Other Noncurrent Liabilities
|
33,580
|
|
|
70,109
|
|
|
21,589
|
|
|
—
|
|
|
125,278
|
|
|||||
Stockholders’ Equity
|
3,114,682
|
|
|
2,788,736
|
|
|
953,385
|
|
|
(3,742,121
|
)
|
|
3,114,682
|
|
|||||
Total Liabilities and Stockholders’ Equity
|
$
|
4,156,415
|
|
|
$
|
3,985,750
|
|
|
$
|
1,959,677
|
|
|
$
|
(4,454,005
|
)
|
|
$
|
5,647,837
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,530,947
|
|
|
$
|
953,917
|
|
|
$
|
(34,171
|
)
|
|
$
|
2,450,693
|
|
Cost of goods sold
|
—
|
|
|
951,356
|
|
|
611,561
|
|
|
(34,171
|
)
|
|
1,528,746
|
|
|||||
Gross margin
|
—
|
|
|
579,591
|
|
|
342,356
|
|
|
—
|
|
|
921,947
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
118,649
|
|
|
60,021
|
|
|
—
|
|
|
178,670
|
|
|||||
Distribution expenses
|
—
|
|
|
118,321
|
|
|
66,010
|
|
|
—
|
|
|
184,331
|
|
|||||
Selling, general and administrative expenses
|
8,887
|
|
|
132,488
|
|
|
112,778
|
|
|
—
|
|
|
254,153
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
7,082
|
|
|
1,998
|
|
|
—
|
|
|
9,080
|
|
|||||
Depreciation and amortization
|
33
|
|
|
23,461
|
|
|
29,035
|
|
|
—
|
|
|
52,529
|
|
|||||
Operating (loss) income
|
(8,920
|
)
|
|
179,590
|
|
|
72,514
|
|
|
—
|
|
|
243,184
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net
|
17,804
|
|
|
(309
|
)
|
|
8,886
|
|
|
—
|
|
|
26,381
|
|
|||||
Intercompany interest (income) expense, net
|
(2,355
|
)
|
|
2,376
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|||||
Other expense (income), net
|
33
|
|
|
(284
|
)
|
|
1,590
|
|
|
—
|
|
|
1,339
|
|
|||||
Total other expense, net
|
15,482
|
|
|
1,783
|
|
|
10,455
|
|
|
—
|
|
|
27,720
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(24,402
|
)
|
|
177,807
|
|
|
62,059
|
|
|
—
|
|
|
215,464
|
|
|||||
(Benefit) provision for income taxes
|
(9,384
|
)
|
|
72,019
|
|
|
12,239
|
|
|
—
|
|
|
74,874
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
347
|
|
|
(200
|
)
|
|
—
|
|
|
147
|
|
|||||
Equity in earnings of subsidiaries
|
155,755
|
|
|
431
|
|
|
—
|
|
|
(156,186
|
)
|
|
—
|
|
|||||
Net income
|
$
|
140,737
|
|
|
$
|
106,566
|
|
|
$
|
49,620
|
|
|
$
|
(156,186
|
)
|
|
$
|
140,737
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,269,541
|
|
|
$
|
599,744
|
|
|
$
|
(31,215
|
)
|
|
$
|
1,838,070
|
|
Cost of goods sold
|
—
|
|
|
770,026
|
|
|
375,315
|
|
|
(31,215
|
)
|
|
1,114,126
|
|
|||||
Gross margin
|
—
|
|
|
499,515
|
|
|
224,429
|
|
|
—
|
|
|
723,944
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
100,289
|
|
|
36,090
|
|
|
—
|
|
|
136,379
|
|
|||||
Distribution expenses
|
—
|
|
|
102,753
|
|
|
47,286
|
|
|
—
|
|
|
150,039
|
|
|||||
Selling, general and administrative expenses
|
8,761
|
|
|
119,958
|
|
|
77,077
|
|
|
—
|
|
|
205,796
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
1,185
|
|
|
478
|
|
|
—
|
|
|
1,663
|
|
|||||
Depreciation and amortization
|
39
|
|
|
19,873
|
|
|
9,870
|
|
|
—
|
|
|
29,782
|
|
|||||
Operating (loss) income
|
(8,800
|
)
|
|
155,457
|
|
|
53,628
|
|
|
—
|
|
|
200,285
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net
|
12,241
|
|
|
(172
|
)
|
|
2,553
|
|
|
—
|
|
|
14,622
|
|
|||||
Intercompany interest (income) expense, net
|
(10,378
|
)
|
|
7,056
|
|
|
3,322
|
|
|
—
|
|
|
—
|
|
|||||
Other expense (income), net
|
2
|
|
|
(1,106
|
)
|
|
1,201
|
|
|
—
|
|
|
97
|
|
|||||
Total other expense, net
|
1,865
|
|
|
5,778
|
|
|
7,076
|
|
|
—
|
|
|
14,719
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(10,665
|
)
|
|
149,679
|
|
|
46,552
|
|
|
—
|
|
|
185,566
|
|
|||||
(Benefit) provision for income taxes
|
(4,294
|
)
|
|
59,495
|
|
|
9,481
|
|
|
—
|
|
|
64,682
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
19
|
|
|
(1,181
|
)
|
|
—
|
|
|
(1,162
|
)
|
|||||
Equity in earnings of subsidiaries
|
126,093
|
|
|
7,335
|
|
|
—
|
|
|
(133,428
|
)
|
|
—
|
|
|||||
Net income
|
$
|
119,722
|
|
|
$
|
97,538
|
|
|
$
|
35,890
|
|
|
$
|
(133,428
|
)
|
|
$
|
119,722
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
2,849,114
|
|
|
$
|
1,589,554
|
|
|
$
|
(66,499
|
)
|
|
$
|
4,372,169
|
|
Cost of goods sold
|
—
|
|
|
1,746,596
|
|
|
1,009,688
|
|
|
(66,499
|
)
|
|
2,689,785
|
|
|||||
Gross margin
|
—
|
|
|
1,102,518
|
|
|
579,866
|
|
|
—
|
|
|
1,682,384
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
233,859
|
|
|
102,416
|
|
|
—
|
|
|
336,275
|
|
|||||
Distribution expenses
|
—
|
|
|
222,475
|
|
|
114,199
|
|
|
—
|
|
|
336,674
|
|
|||||
Selling, general and administrative expenses
|
19,266
|
|
|
259,156
|
|
|
194,049
|
|
|
—
|
|
|
472,471
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
11,118
|
|
|
12,773
|
|
|
—
|
|
|
23,891
|
|
|||||
Depreciation and amortization
|
69
|
|
|
44,005
|
|
|
40,143
|
|
|
—
|
|
|
84,217
|
|
|||||
Operating (loss) income
|
(19,335
|
)
|
|
331,905
|
|
|
116,286
|
|
|
—
|
|
|
428,856
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net
|
29,921
|
|
|
(166
|
)
|
|
11,218
|
|
|
—
|
|
|
40,973
|
|
|||||
Intercompany interest (income) expense, net
|
(13,032
|
)
|
|
8,966
|
|
|
4,066
|
|
|
—
|
|
|
—
|
|
|||||
Loss on debt extinguishment
|
2,894
|
|
|
—
|
|
|
23,756
|
|
|
—
|
|
|
26,650
|
|
|||||
Gains on foreign exchange contracts - acquisition related
|
(18,342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,342
|
)
|
|||||
Other (income) expense, net
|
(78
|
)
|
|
(3,084
|
)
|
|
1,612
|
|
|
—
|
|
|
(1,550
|
)
|
|||||
Total other expense, net
|
1,363
|
|
|
5,716
|
|
|
40,652
|
|
|
—
|
|
|
47,731
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(20,698
|
)
|
|
326,189
|
|
|
75,634
|
|
|
—
|
|
|
381,125
|
|
|||||
(Benefit) provision for income taxes
|
(7,961
|
)
|
|
125,464
|
|
|
14,938
|
|
|
—
|
|
|
132,441
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
(795
|
)
|
|
352
|
|
|
228
|
|
|
—
|
|
|
(215
|
)
|
|||||
Equity in earnings of subsidiaries
|
262,001
|
|
|
12,373
|
|
|
—
|
|
|
(274,374
|
)
|
|
—
|
|
|||||
Net income
|
$
|
248,469
|
|
|
$
|
213,450
|
|
|
$
|
60,924
|
|
|
$
|
(274,374
|
)
|
|
$
|
248,469
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
2,495,449
|
|
|
$
|
1,182,687
|
|
|
$
|
(66,154
|
)
|
|
$
|
3,611,982
|
|
Cost of goods sold
|
—
|
|
|
1,510,829
|
|
|
743,884
|
|
|
(66,154
|
)
|
|
2,188,559
|
|
|||||
Gross margin
|
—
|
|
|
984,620
|
|
|
438,803
|
|
|
—
|
|
|
1,423,423
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
198,050
|
|
|
70,986
|
|
|
—
|
|
|
269,036
|
|
|||||
Distribution expenses
|
—
|
|
|
198,745
|
|
|
93,008
|
|
|
—
|
|
|
291,753
|
|
|||||
Selling, general and administrative expenses
|
16,392
|
|
|
241,620
|
|
|
151,025
|
|
|
—
|
|
|
409,037
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
7,245
|
|
|
906
|
|
|
—
|
|
|
8,151
|
|
|||||
Depreciation and amortization
|
79
|
|
|
39,764
|
|
|
19,392
|
|
|
—
|
|
|
59,235
|
|
|||||
Operating (loss) income
|
(16,471
|
)
|
|
299,196
|
|
|
103,486
|
|
|
—
|
|
|
386,211
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net
|
24,555
|
|
|
(129
|
)
|
|
5,102
|
|
|
—
|
|
|
29,528
|
|
|||||
Intercompany interest (income) expense, net
|
(21,201
|
)
|
|
14,315
|
|
|
6,886
|
|
|
—
|
|
|
—
|
|
|||||
Other expense (income), net
|
27
|
|
|
(2,841
|
)
|
|
4,830
|
|
|
—
|
|
|
2,016
|
|
|||||
Total other expense, net
|
3,381
|
|
|
11,345
|
|
|
16,818
|
|
|
—
|
|
|
31,544
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(19,852
|
)
|
|
287,851
|
|
|
86,668
|
|
|
—
|
|
|
354,667
|
|
|||||
(Benefit) provision for income taxes
|
(8,049
|
)
|
|
115,272
|
|
|
17,557
|
|
|
—
|
|
|
124,780
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
30
|
|
|
(3,100
|
)
|
|
—
|
|
|
(3,070
|
)
|
|||||
Equity in earnings of subsidiaries
|
238,620
|
|
|
14,595
|
|
|
—
|
|
|
(253,215
|
)
|
|
—
|
|
|||||
Net income
|
$
|
226,817
|
|
|
$
|
187,204
|
|
|
$
|
66,011
|
|
|
$
|
(253,215
|
)
|
|
$
|
226,817
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
140,737
|
|
|
$
|
106,566
|
|
|
$
|
49,620
|
|
|
$
|
(156,186
|
)
|
|
$
|
140,737
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
(73,257
|
)
|
|
(15,116
|
)
|
|
(73,830
|
)
|
|
88,946
|
|
|
(73,257
|
)
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
(3,614
|
)
|
|
—
|
|
|
99
|
|
|
(99
|
)
|
|
(3,614
|
)
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
120
|
|
|
—
|
|
|
120
|
|
|
(120
|
)
|
|
120
|
|
|||||
Total other comprehensive loss
|
(76,751
|
)
|
|
(15,116
|
)
|
|
(73,611
|
)
|
|
88,727
|
|
|
(76,751
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
63,986
|
|
|
$
|
91,450
|
|
|
$
|
(23,991
|
)
|
|
$
|
(67,459
|
)
|
|
$
|
63,986
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
119,722
|
|
|
$
|
97,538
|
|
|
$
|
35,890
|
|
|
$
|
(133,428
|
)
|
|
$
|
119,722
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
44,510
|
|
|
13,134
|
|
|
44,216
|
|
|
(57,350
|
)
|
|
44,510
|
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
918
|
|
|
—
|
|
|
191
|
|
|
(191
|
)
|
|
918
|
|
|||||
Change in unrealized gain on pension plans, net of tax
|
(21
|
)
|
|
—
|
|
|
(21
|
)
|
|
21
|
|
|
(21
|
)
|
|||||
Total other comprehensive income
|
45,407
|
|
|
13,134
|
|
|
44,386
|
|
|
(57,520
|
)
|
|
45,407
|
|
|||||
Total comprehensive income
|
$
|
165,129
|
|
|
$
|
110,672
|
|
|
$
|
80,276
|
|
|
$
|
(190,948
|
)
|
|
$
|
165,129
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
248,469
|
|
|
$
|
213,450
|
|
|
$
|
60,924
|
|
|
$
|
(274,374
|
)
|
|
$
|
248,469
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
(73,117
|
)
|
|
(17,971
|
)
|
|
(76,869
|
)
|
|
94,840
|
|
|
(73,117
|
)
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
(3,182
|
)
|
|
—
|
|
|
195
|
|
|
(195
|
)
|
|
(3,182
|
)
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
267
|
|
|
—
|
|
|
267
|
|
|
(267
|
)
|
|
267
|
|
|||||
Total other comprehensive loss
|
(76,032
|
)
|
|
(17,971
|
)
|
|
(76,407
|
)
|
|
94,378
|
|
|
(76,032
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
172,437
|
|
|
$
|
195,479
|
|
|
$
|
(15,483
|
)
|
|
$
|
(179,996
|
)
|
|
$
|
172,437
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
226,817
|
|
|
$
|
187,204
|
|
|
$
|
66,011
|
|
|
$
|
(253,215
|
)
|
|
$
|
226,817
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
(10,300
|
)
|
|
(1,238
|
)
|
|
(8,583
|
)
|
|
9,821
|
|
|
(10,300
|
)
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
1,201
|
|
|
—
|
|
|
129
|
|
|
(129
|
)
|
|
1,201
|
|
|||||
Change in unrealized gains/losses on pension plans, net of tax
|
107
|
|
|
—
|
|
|
107
|
|
|
(107
|
)
|
|
107
|
|
|||||
Total other comprehensive loss
|
(8,992
|
)
|
|
(1,238
|
)
|
|
(8,347
|
)
|
|
9,585
|
|
|
(8,992
|
)
|
|||||
Total comprehensive income
|
$
|
217,825
|
|
|
$
|
185,966
|
|
|
$
|
57,664
|
|
|
$
|
(243,630
|
)
|
|
$
|
217,825
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
136,098
|
|
|
$
|
300,978
|
|
|
$
|
66,346
|
|
|
$
|
(148,192
|
)
|
|
$
|
355,230
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(2
|
)
|
|
(57,742
|
)
|
|
(44,575
|
)
|
|
—
|
|
|
(102,319
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
(1,293,298
|
)
|
|
(34,448
|
)
|
|
—
|
|
|
1,327,746
|
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(661,852
|
)
|
|
(606,989
|
)
|
|
—
|
|
|
(1,268,841
|
)
|
|||||
Proceeds from foreign exchange contracts
|
18,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,342
|
|
|||||
Other investing activities, net
|
—
|
|
|
400
|
|
|
10,913
|
|
|
—
|
|
|
11,313
|
|
|||||
Net cash used in investing activities
|
(1,274,958
|
)
|
|
(753,642
|
)
|
|
(640,651
|
)
|
|
1,327,746
|
|
|
(1,341,505
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
4,889
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,889
|
|
|||||
Excess tax benefit from stock-based payments
|
6,685
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,685
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(2,281
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,281
|
)
|
|||||
Debt issuance costs
|
(7,100
|
)
|
|
—
|
|
|
(9,071
|
)
|
|
—
|
|
|
(16,171
|
)
|
|||||
Proceeds from issuance of Euro notes
|
—
|
|
|
—
|
|
|
563,450
|
|
|
—
|
|
|
563,450
|
|
|||||
Borrowings under revolving credit facilities
|
1,204,000
|
|
|
—
|
|
|
618,020
|
|
|
—
|
|
|
1,822,020
|
|
|||||
Repayments under revolving credit facilities
|
(119,000
|
)
|
|
—
|
|
|
(893,362
|
)
|
|
—
|
|
|
(1,012,362
|
)
|
|||||
Borrowings under term loans
|
89,317
|
|
|
—
|
|
|
249,161
|
|
|
—
|
|
|
338,478
|
|
|||||
Repayments under term loans
|
(3,122
|
)
|
|
—
|
|
|
(1,599
|
)
|
|
—
|
|
|
(4,721
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
97,000
|
|
|
—
|
|
|
97,000
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(66,480
|
)
|
|
—
|
|
|
(66,480
|
)
|
|||||
Repayments of other debt, net
|
—
|
|
|
(1,657
|
)
|
|
(6,167
|
)
|
|
—
|
|
|
(7,824
|
)
|
|||||
Repayment of Rhiag debt and related payments
|
—
|
|
|
—
|
|
|
(543,347
|
)
|
|
—
|
|
|
(543,347
|
)
|
|||||
Payments of other obligations
|
—
|
|
|
(1,371
|
)
|
|
—
|
|
|
—
|
|
|
(1,371
|
)
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
621,619
|
|
|
706,127
|
|
|
(1,327,746
|
)
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(148,192
|
)
|
|
—
|
|
|
148,192
|
|
|
—
|
|
|||||
Net cash provided by financing activities
|
1,173,388
|
|
|
470,399
|
|
|
713,732
|
|
|
(1,179,554
|
)
|
|
1,177,965
|
|
|||||
Effect of exchange rate changes on cash and equivalents
|
—
|
|
|
(27
|
)
|
|
(5,857
|
)
|
|
—
|
|
|
(5,884
|
)
|
|||||
Net increase in cash and equivalents
|
34,528
|
|
|
17,708
|
|
|
133,570
|
|
|
—
|
|
|
185,806
|
|
|||||
Cash and equivalents, beginning of period
|
17,616
|
|
|
13,432
|
|
|
56,349
|
|
|
—
|
|
|
87,397
|
|
|||||
Cash and equivalents, end of period
|
$
|
52,144
|
|
|
$
|
31,140
|
|
|
$
|
189,919
|
|
|
$
|
—
|
|
|
$
|
273,203
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
121,024
|
|
|
$
|
188,713
|
|
|
$
|
89,630
|
|
|
$
|
(116,668
|
)
|
|
$
|
282,699
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(3
|
)
|
|
(34,791
|
)
|
|
(31,969
|
)
|
|
—
|
|
|
(66,763
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
30,818
|
|
|
—
|
|
|
—
|
|
|
(30,818
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(6,583
|
)
|
|
(30,625
|
)
|
|
—
|
|
|
(37,208
|
)
|
|||||
Other investing activities, net
|
—
|
|
|
585
|
|
|
(5,794
|
)
|
|
—
|
|
|
(5,209
|
)
|
|||||
Net cash provided by (used in) investing activities
|
30,815
|
|
|
(40,789
|
)
|
|
(68,388
|
)
|
|
(30,818
|
)
|
|
(109,180
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
3,288
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,288
|
|
|||||
Excess tax benefit from stock-based payments
|
6,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,737
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(5,243
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,243
|
)
|
|||||
Borrowings under revolving credit facilities
|
132,000
|
|
|
—
|
|
|
67,621
|
|
|
—
|
|
|
199,621
|
|
|||||
Repayments under revolving credit facilities
|
(215,000
|
)
|
|
—
|
|
|
(79,276
|
)
|
|
—
|
|
|
(294,276
|
)
|
|||||
Repayments under term loans
|
(11,250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,250
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
2,100
|
|
|
—
|
|
|
2,100
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(1,758
|
)
|
|
—
|
|
|
(1,758
|
)
|
|||||
Repayments of other debt, net
|
(31,500
|
)
|
|
(596
|
)
|
|
(9,994
|
)
|
|
—
|
|
|
(42,090
|
)
|
|||||
Payments of other obligations
|
—
|
|
|
(2,050
|
)
|
|
—
|
|
|
—
|
|
|
(2,050
|
)
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(32,051
|
)
|
|
1,233
|
|
|
30,818
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(116,668
|
)
|
|
—
|
|
|
116,668
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(120,968
|
)
|
|
(151,365
|
)
|
|
(20,074
|
)
|
|
147,486
|
|
|
(144,921
|
)
|
|||||
Effect of exchange rate changes on cash and equivalents
|
—
|
|
|
53
|
|
|
167
|
|
|
—
|
|
|
220
|
|
|||||
Net increase (decrease) in cash and equivalents
|
30,871
|
|
|
(3,388
|
)
|
|
1,335
|
|
|
—
|
|
|
28,818
|
|
|||||
Cash and equivalents, beginning of period
|
14,930
|
|
|
32,103
|
|
|
67,572
|
|
|
—
|
|
|
114,605
|
|
|||||
Cash and equivalents, end of period
|
$
|
45,801
|
|
|
$
|
28,715
|
|
|
$
|
68,907
|
|
|
$
|
—
|
|
|
$
|
143,423
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
62.4
|
%
|
|
60.6
|
%
|
|
61.5
|
%
|
|
60.6
|
%
|
Gross margin
|
37.6
|
%
|
|
39.4
|
%
|
|
38.5
|
%
|
|
39.4
|
%
|
Facility and warehouse expenses
|
7.3
|
%
|
|
7.4
|
%
|
|
7.7
|
%
|
|
7.4
|
%
|
Distribution expenses
|
7.5
|
%
|
|
8.2
|
%
|
|
7.7
|
%
|
|
8.1
|
%
|
Selling, general and administrative expenses
|
10.4
|
%
|
|
11.2
|
%
|
|
10.8
|
%
|
|
11.3
|
%
|
Restructuring and acquisition related expenses
|
0.4
|
%
|
|
0.1
|
%
|
|
0.5
|
%
|
|
0.2
|
%
|
Depreciation and amortization
|
2.1
|
%
|
|
1.6
|
%
|
|
1.9
|
%
|
|
1.6
|
%
|
Operating income
|
9.9
|
%
|
|
10.9
|
%
|
|
9.8
|
%
|
|
10.7
|
%
|
Other expense, net
|
1.1
|
%
|
|
0.8
|
%
|
|
1.1
|
%
|
|
0.9
|
%
|
Income before provision for income taxes
|
8.8
|
%
|
|
10.1
|
%
|
|
8.7
|
%
|
|
9.8
|
%
|
Provision for income taxes
|
3.1
|
%
|
|
3.5
|
%
|
|
3.0
|
%
|
|
3.5
|
%
|
Equity in earnings of unconsolidated subsidiaries
|
0.0
|
%
|
|
(0.1
|
)%
|
|
(0.0
|
)%
|
|
(0.1
|
)%
|
Net income
|
5.7
|
%
|
|
6.5
|
%
|
|
5.7
|
%
|
|
6.3
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
|
Three Months Ended
|
|
|
||||||||
|
June 30,
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
Restructuring expenses
|
$
|
6,051
|
|
(1)
|
$
|
937
|
|
(2)
|
$
|
5,114
|
|
Acquisition related expenses
|
3,029
|
|
(3)
|
726
|
|
(4)
|
2,303
|
|
|||
Total restructuring and acquisition related expenses
|
$
|
9,080
|
|
|
$
|
1,663
|
|
|
$
|
7,417
|
|
(1)
|
Restructuring expenses of $4.6 million, $1.0 million, and $0.5 million for the quarter ended June 30, 2016 were primarily related to the integration of acquired businesses in our Specialty, Europe, and North America segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees.
|
(2)
|
Restructuring expenses for the quarter ended June 30, 2015 were primarily related to the integration of acquired businesses in our Specialty segment. These integration activities included the closure of duplicate facilities and termination of employees in connection with the integration of the acquisitions into our existing business.
|
(3)
|
Acquisition related expenses for the quarter ended June 30, 2016 included $2.1 million for the acquisition of PGW, $0.4 million for our acquisition of Rhiag, and $0.5 million of external costs related to other potential acquisitions.
|
(4)
|
Acquisition related expenses for the second quarter of 2015 were primarily related to our acquisitions of six aftermarket parts distribution businesses in the Netherlands during the second quarter of 2015.
|
|
Three Months Ended
|
|
|
|
||||||||
|
June 30,
|
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
|
||||||
Depreciation
|
$
|
28,279
|
|
|
$
|
21,557
|
|
|
$
|
6,722
|
|
(1)
|
Amortization
|
24,250
|
|
|
8,225
|
|
|
16,025
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
52,529
|
|
|
$
|
29,782
|
|
|
$
|
22,747
|
|
|
(1)
|
The increase in depreciation expense primarily reflects depreciation expense for property, plant and equipment recorded related to our acquisitions of Rhiag and PGW of $3.5 million and $1.0 million, respectively. The remaining change reflects increased levels of property and equipment to support our organic related growth.
|
(2)
|
The increase in amortization expense primarily reflects amortization expense for intangible assets recorded related to our acquisitions of Rhiag and PGW of $14.9 million and $1.8 million, respectively.
|
(1)
|
Additional interest primarily relates to borrowings used to fund the acquisitions of Rhiag and PGW.
|
|
Six Months Ended
|
|
|
||||||||
|
June 30,
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
Restructuring expenses
|
$
|
8,187
|
|
(1)
|
$
|
6,901
|
|
(2)
|
$
|
1,286
|
|
Acquisition related expenses
|
15,704
|
|
(3)
|
1,250
|
|
(4)
|
14,454
|
|
|||
Total restructuring and acquisition related expenses
|
$
|
23,891
|
|
|
$
|
8,151
|
|
|
$
|
15,740
|
|
(1)
|
Restructuring expenses of $6.1 million, $1.2 million, and $0.9 million for the six months ended June 30, 2016 related to the integration of acquired businesses in our Specialty, North America, and Europe segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees.
|
(2)
|
Restructuring expenses for the six months ended June 30, 2015 primarily related to the integration of acquired businesses in our Specialty segment. These integration activities included the closure of duplicate facilities and termination of employees in connection with the integration of the acquisitions into our existing business.
|
(3)
|
Acquisition related expenses of $15.7 million for the six months ended June 30, 2016 reflect $11.0 million and $3.9 million related to the acquisitions of Rhiag and PGW, respectively. The remaining expense was related to other completed and potential acquisitions.
|
(4)
|
Acquisition related expenses for the six months ended June 30, 2015 included $0.9 million of external costs related to our acquisitions of seven aftermarket parts distribution businesses in the Netherlands during the first half of 2015. The remaining restructuring expenses were external costs primarily related to potential acquisitions.
|
|
Six Months Ended
|
|
|
|
||||||||
|
June 30,
|
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
|
||||||
Depreciation
|
$
|
51,066
|
|
|
$
|
42,739
|
|
|
$
|
8,327
|
|
(1)
|
Amortization
|
33,151
|
|
|
16,496
|
|
|
16,655
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
84,217
|
|
|
$
|
59,235
|
|
|
$
|
24,982
|
|
|
(1)
|
The increase in depreciation expense primarily reflects depreciation expense for property, plant and equipment recorded related to our acquisitions of Rhiag and PGW of $3.8 million and $1.0 million, respectively. The remaining change reflects increased levels of property and equipment to support our organic related growth.
|
(2)
|
The increase in amortization expense primarily reflects amortization expense for intangible assets recorded related to our acquisitions of Rhiag and PGW of $16.1 million and $1.8 million, respectively. These increases are offset by a decline in accelerated amortization for intangibles recognized in previous years.
|
(1)
|
Additional interest primarily relates to borrowings used to fund the acquisitions of Rhiag and PGW.
|
(2)
|
During the first quarter of 2016, we incurred a $23.8 million loss on debt extinguishment as a result of our early payment of Rhiag debt assumed as part of the acquisition, and we incurred a $2.9 million loss on debt extinguishment as a result of our January 2016 amendment to our senior secured credit agreement.
|
(3)
|
In March 2016, we entered into foreign currency forward contracts to acquire a total of €588 million used to fund the purchase price of the Rhiag acquisition. The rates under the foreign currency forwards were favorable to the spot rate on March 17, 2016, and as result, these derivatives contracts generated a gain of $18.3 million.
|
(4)
|
The change in Other income, net primarily reflects the impact of foreign currency transaction gains and losses, which was a net $1.9 million favorable impact compared to the prior year period. This includes unrealized gains and losses on foreign currency transactions and unrealized mark-to-market gains and losses on foreign currency forward contracts used to hedge the purchase of inventory in our U.K. operations. The remaining change relates to miscellaneous other income.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2016
|
|
% of Total Segment Revenue
|
|
2015
|
|
% of Total Segment Revenue
|
|
2016
|
|
% of Total Segment Revenue
|
|
2015
|
|
% of Total Segment Revenue
|
||||||||
Third Party Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
1,080,401
|
|
|
|
|
$
|
1,044,779
|
|
|
|
|
$
|
2,167,764
|
|
|
|
|
$
|
2,090,858
|
|
|
|
Europe
|
824,216
|
|
|
|
|
509,833
|
|
|
|
|
1,370,967
|
|
|
|
|
997,179
|
|
|
|
||||
Specialty
|
335,972
|
|
|
|
|
283,458
|
|
|
|
|
623,334
|
|
|
|
|
523,945
|
|
|
|
||||
Glass
|
210,104
|
|
|
|
|
—
|
|
|
|
|
210,104
|
|
|
|
|
—
|
|
|
|
||||
Total third party revenue
|
$
|
2,450,693
|
|
|
|
|
$
|
1,838,070
|
|
|
|
|
$
|
4,372,169
|
|
|
|
|
$
|
3,611,982
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
1,080,520
|
|
|
|
|
$
|
1,045,151
|
|
|
|
|
$
|
2,168,097
|
|
|
|
|
$
|
2,091,324
|
|
|
|
Europe
|
824,206
|
|
|
|
|
509,903
|
|
|
|
|
1,370,967
|
|
|
|
|
997,249
|
|
|
|
||||
Specialty
|
337,066
|
|
|
|
|
284,330
|
|
|
|
|
625,379
|
|
|
|
|
525,552
|
|
|
|
||||
Glass
|
210,178
|
|
|
|
|
—
|
|
|
|
|
210,178
|
|
|
|
|
—
|
|
|
|
||||
Eliminations
|
(1,277
|
)
|
|
|
|
(1,314
|
)
|
|
|
|
(2,452
|
)
|
|
|
|
(2,143
|
)
|
|
|
||||
Total revenue
|
$
|
2,450,693
|
|
|
|
|
$
|
1,838,070
|
|
|
|
|
$
|
4,372,169
|
|
|
|
|
$
|
3,611,982
|
|
|
|
Segment EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
163,825
|
|
|
15.2%
|
|
$
|
138,880
|
|
|
13.3%
|
|
$
|
311,200
|
|
|
14.4%
|
|
$
|
288,268
|
|
|
13.8%
|
Europe
|
89,982
|
|
|
10.9%
|
|
53,943
|
|
|
10.6%
|
|
147,480
|
|
|
10.8%
|
|
100,466
|
|
|
10.1%
|
||||
Specialty
|
41,792
|
|
|
12.4%
|
|
40,198
|
|
|
14.1%
|
|
73,530
|
|
|
11.8%
|
|
65,602
|
|
|
12.5%
|
||||
Glass
|
23,301
|
|
|
11.1%
|
|
—
|
|
|
n/m
|
|
23,301
|
|
|
11.1%
|
|
—
|
|
|
n/m
|
||||
Total Segment EBITDA
|
$
|
318,900
|
|
|
13.0%
|
|
$
|
233,021
|
|
|
12.7%
|
|
$
|
555,511
|
|
|
12.7%
|
|
$
|
454,336
|
|
|
12.6%
|
|
Three Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
North America
|
2016
|
|
2015
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
(4)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
962,954
|
|
|
$
|
912,159
|
|
|
3.1
|
%
|
(1)
|
2.8
|
%
|
|
(0.3
|
)%
|
|
5.6
|
%
|
Other revenue
|
117,447
|
|
|
132,620
|
|
|
(16.3
|
)%
|
(2)
|
5.0
|
%
|
|
(0.2
|
)%
|
|
(11.4
|
)%
|
||
Total third party revenue
|
$
|
1,080,401
|
|
|
$
|
1,044,779
|
|
|
0.6
|
%
|
|
3.1
|
%
|
|
(0.3
|
)%
|
|
3.4
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in parts and services revenue was predominantly attributable to pricing in our wholesale operations. In addition, revenue grew as we generated higher sales volumes in our salvage operations in the second quarter of 2016 compared to the same period in 2015. The volume increase was offset by a negative mix impact as we saw a smaller percentage of sales from high value salvage part types in 2016. Aftermarket sales volumes were flat quarter over quarter as we believe milder winter weather conditions in North America in the first quarter of 2016 negatively impacted collision part sales into the second quarter. Sales volumes in the first half of the second quarter are typically influenced by accident activity in the winter months, and the milder conditions reduced the backlog at repair shops relative to the same period in the prior year.
|
(2)
|
The $15 million decrease in other revenue related primarily to (i) a $7 million reduction due to the sale of our precious metals business late in the second quarter of 2015 and (ii) a $7 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium and rhodium), aluminum wheels and copper wiring, all due to lower prices year over year.
|
(3)
|
The acquired revenue growth reflects the impact of our acquisition of three wholesale businesses and one self service retail operation acquired since the beginning of the second quarter of 2015 up to the one year anniversary of the acquisition date.
|
(4)
|
Compared to the prior year, exchange rates reduced our revenue growth by 0.3%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the second quarter 2016 compared to the prior year second quarter.
|
(1)
|
The improvement in gross margin reflects a 1.1% favorable impact from our self service operations, as well as a favorable impact of 0.6% from our wholesale operations. Gross margins at our self service operations improved as car costs have decreased by a greater percentage year over year than revenue. We experienced a 0.4% favorable impact on gross margin as a result of procurement initiatives implemented in our aftermarket operations during 2016, which reduced our product costs. Aftermarket gross margins also improved as a result of a favorable price impact as mentioned in the third party revenue discussion above.
|
(2)
|
The decline in segment operating expenses as a percentage of revenue was primarily due to a 0.2% improvement in facility costs as a percentage of revenue and a 0.2% improvement in fuel costs as a percentage of revenue, partially offset by a 0.3% increase in freight costs as a percentage of revenue. The remaining reduction in segment operating expenses as a percentage of revenue was attributable to a number of
individually insignificant decreases across various operating expense categories.
|
|
Three Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2016
|
|
2015
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
822,959
|
|
|
$
|
508,731
|
|
|
8.0
|
%
|
|
57.5
|
%
|
|
(3.7
|
)%
|
|
61.8
|
%
|
Other revenue
|
1,257
|
|
|
1,102
|
|
|
(4.9
|
)%
|
|
21.6
|
%
|
|
(2.6
|
)%
|
|
14.1
|
%
|
||
Total third party revenue
|
$
|
824,216
|
|
|
$
|
509,833
|
|
|
8.0
|
%
|
|
57.4
|
%
|
|
(3.7
|
)%
|
|
61.7
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
In our U.K. operations, parts and services revenue grew organically by 9.6%, while in our Benelux region operations, parts and services revenue grew organically by 4.4%. Our organic revenue growth in the U.K. operations, which primarily resulted from higher sales volumes, was composed of a 7.8% increase in revenue from stores open more than 12 months, a 1.8% increase from revenue generated by 14 branch openings since the second quarter of the prior year through the one year anniversary of their respective opening dates, and two additional selling days in the second quarter of 2016 compared to the prior year quarter. Organic revenue growth in our Benelux operations was primarily due to two additional selling days in the second quarter of 2016 compared to the prior year quarter.
|
(2)
|
Acquisition related growth for the second quarter of 2016 includes
$284.3 million from our acquisition of Rhiag. The remainder of our acquired revenue growth reflects our acquisition of 12 distribution companies in the Netherlands and 2 salvage businesses in Sweden acquired since the beginning of the second quarter of 2015 up to the one year anniversary of the acquisition date.
|
(3)
|
Compared to the prior year quarter, exchange rates reduced our revenue growth by $19.0 million, or 3.7%, primarily due to the strengthening of the U.S. dollar against the pound sterling in the second quarter of 2016, partially offset by the weakening of the U.S. dollar against the euro in the second quarter of 2016.
|
(1)
|
The decrease in gross margin is primarily due to a 1.5% decline in gross margins as a result of the acquisition of Rhiag, which has lower gross margins than our other Europe operations. This decrease was partially offset by a 1.0% increase related to our Benelux operations primarily as a result of internalizing incremental gross margin from our 2015 acquisitions of 11 Netherlands distributors and the introduction of new product lines with higher margins than our existing product line sales.
|
(2)
|
The decrease in segment operating expenses as a percentage of revenue reflects (i) a 1.7% decrease related to the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our existing Europe operations and (ii) a decrease of 0.4% in selling, general, and administrative expenses from our U.K. operations due to an increase in operating leverage. These decreases are partially offset by (i) an increase in facility and warehouse expenses of 1.1% primarily from our U.K. operations due to increases from opening 14 new branches and 4 new hubs since the beginning of the prior year second quarter as well as the addition of facility and personnel costs for the newly operating Tamworth distribution facility and (ii) an increase of 0.3% in facility and warehouse personnel expenses from our Benelux operations primarily related to the introduction of new product lines.
|
|
Three Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2016
|
|
2015
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
335,972
|
|
|
$
|
283,458
|
|
|
8.0
|
%
|
|
11.1
|
%
|
|
(0.5
|
)%
|
|
18.5
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
335,972
|
|
|
$
|
283,458
|
|
|
8.0
|
%
|
|
11.1
|
%
|
|
(0.5
|
)%
|
|
18.5
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in Specialty parts and services revenue reflects an increase in service levels in various regions of North America as we expand the breadth and depth of our inventory offerings and add delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. In addition, we continue to see growth from favorable macro trends and economic conditions, which has increased consumer discretionary spending on automotive and recreational vehicle ("RV") parts and accessories.
|
(2)
|
Acquisition related growth reflects the impact of the acquisition of Coast on August 19, 2015.
|
(3)
|
Compared to the prior year, exchange rates reduced our revenue growth by 0.5%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the second quarter 2016 compared to the prior year second quarter.
|
(1)
|
The decline in gross margin reflects (i) a 0.9% increase in inventory costs, which were higher due to the stocking of two distribution centers in the second quarter of 2016 which were not yet operational in the prior year period, (ii) 0.7% of unfavorable gross margin impact due to customer volume rebate adjustments which have increased along with sales volumes, and (iii) a 0.3% net negative impact from the timing of recognizing certain advertising credits in comparison to the prior year quarter, offset by (iv) a 0.2% favorable impact due to product mix with a continued shift to higher gross margin products sold, primarily truck and off road products.
|
(2)
|
The increase in segment operating expenses reflects an increase in facilities and warehouse expense of 0.9% from the addition of two distribution facilities in late 2015 and the higher cost of Coast facilities in comparison to our existing business. These negative effects were partially offset by a 0.4% reduction in selling, general and administrative expenses as a percentage of revenue primarily due to realization of acquisition related synergies
and 0
.2% improvement in distribution expenses primarily related to the impact of lower fuel rates and lower rental and maintenance costs.
|
|
Six Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
North America
|
2016
|
|
2015
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
(4)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,948,210
|
|
|
$
|
1,830,492
|
|
|
4.0
|
%
|
(1)
|
3.0
|
%
|
|
(0.5
|
)%
|
|
6.4
|
%
|
Other revenue
|
219,554
|
|
|
260,366
|
|
|
(20.6
|
)%
|
(2)
|
5.1
|
%
|
|
(0.2
|
)%
|
|
(15.7
|
)%
|
||
Total third party revenue
|
$
|
2,167,764
|
|
|
$
|
2,090,858
|
|
|
0.9
|
%
|
|
3.2
|
%
|
|
(0.5
|
)%
|
|
3.7
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in parts and services revenue was attributable to similar changes in volume and price. Sales volumes increased in our wholesale operations resulting from improved fill rates and in-stock rates, as well as increased purchasing levels, which contributed to a greater volume of parts available for sale. Organic revenue growth in parts and services was negatively affected by milder winter weather conditions in North America in the first quarter of 2016. Organic revenue also grew due to increased prices in our wholesale operations, primarily in our salvage operations as a result of shifting our salvage vehicle purchasing to higher quality vehicles, which raised the average revenue per part sold. The organic growth was partially offset by a negative mix impact as we saw a smaller percentage of sales from high value salvage part types in 2016.
|
(2)
|
The $41 million decrease in other revenue related primarily to (i) a $15 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium and rhodium), aluminum wheels and copper wiring, all due to lower prices year over year, (ii) a $13 million reduction due to the sale of our precious metals business late in the second quarter of 2015, and (iii) a $13 million decline in revenue from scrap steel and other metals primarily related to lower scrap steel prices partially offset by higher volumes processed in 2016.
|
(3)
|
The acquired revenue growth reflects the impact of our acquisition of four wholesale businesses and one self service retail operation acquired since the beginning of 2015 up to the one year anniversary of the acquisition date.
|
(4)
|
Compared to the prior year, exchange rates reduced our revenue growth by 0.5%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the first half of 2016 compared to the prior year period.
|
(1)
|
The improvement in gross margin primarily reflects a 0.8% favorable impact from our self service operations. Gross margins at our self service operations have improved as car costs have decreased by a greater percentage year over year than revenue.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue was primarily the result of a 0.4% increase in personnel costs as a percentage of revenue. Further contributing to the increase in operating expenses was a 0.2% increase in freight costs as a percentage of revenue, partially offset by a 0.2% improvement in fuel prices.
|
|
Six Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2016
|
|
2015
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,368,666
|
|
|
$
|
994,827
|
|
|
7.5
|
%
|
|
34.2
|
%
|
|
(4.1
|
)%
|
|
37.6
|
%
|
Other revenue
|
2,301
|
|
|
2,352
|
|
|
(14.2
|
)%
|
|
15.6
|
%
|
|
(3.6
|
)%
|
|
(2.1
|
)%
|
||
Total third party revenue
|
$
|
1,370,967
|
|
|
$
|
997,179
|
|
|
7.4
|
%
|
|
34.2
|
%
|
|
(4.1
|
)%
|
|
37.5
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
In our U.K. operations, parts and services revenue grew organically by 8.5%, while in our Benelux region operations, parts and services revenue grew organically by 5.2%. Our organic revenue growth in the U.K., which primarily resulted from higher sales volumes, was composed of an 6.8% increase in revenue from stores open more than 12 months, a 1.6% increase from revenue generated by 14 branch openings since the second quarter of the prior year through the one year anniversary of their respective opening dates. Organic revenue growth in parts and services in our U.K. operations was negatively affected by milder winter weather conditions in the U.K. in the first quarter of 2016. Organic revenue growth in our Benelux operations was primarily due to higher sales volumes as a result of the introduction of new product lines and two additional selling days in the first half of 2016 compared to the prior year period.
|
(2)
|
Acquisition related growth for the first half of 2016 includes
$318.1 million from our acquisition of Rhiag. The remainder of our acquired revenue growth reflects our acquisition of 12 distribution companies in the Netherlands and 2 salvage businesses in Sweden acquired since the beginning of 2015 up to the one year anniversary of the acquisition date.
|
(3)
|
Compared to the prior year, exchange rates reduced our revenue growth by $41.0 million, or 4.1%, primarily due to the strengthening of the U.S. dollar against the pound sterling relative to the first half of 2015.
|
(1)
|
The increase in gross margin reflects improvement of (i) 0.8% related to our Benelux operations primarily as a result of internalizing incremental gross margin from our 2015 acquisitions of 11 Netherlands distributors and the introduction of new product lines with higher margins than our existing product line sales and (ii) 0.3% related to our U.K. operations, primarily as a result of a reduction in product costs. The increase in gross margin from our U.K. and Benelux operations was partially offset by a 0.9% decline in gross margin due to the acquisition of Rhiag, which has lower gross margins than our other Europe operations.
|
(2)
|
The decrease in segment operating expenses as a percentage of revenue reflects (i) a decrease of 1.1% in operating expenses as a result of the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our existing Europe operations and (ii) an increase in facility and warehouse expenses of 0.9% from our U.K. operations due to increases from opening 14 new branches and 4 new hubs since the prior year second quarter as well as the addition of facility and personnel costs for the Tamworth distribution facility.
|
(3)
|
The decrease in other expense, net is a result of gains on foreign currency forward contracts used to manage the foreign currency exposure on inventory purchases in our U.K. operations.
|
|
Six Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2016
|
|
2015
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
623,334
|
|
|
$
|
523,945
|
|
|
9.3
|
%
|
|
10.3
|
%
|
|
(0.6
|
)%
|
|
19.0
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
623,334
|
|
|
$
|
523,945
|
|
|
9.3
|
%
|
|
10.3
|
%
|
|
(0.6
|
)%
|
|
19.0
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in Specialty parts and services revenue reflects an increase in service levels in various regions of North America as we expand the breadth and depth of our inventory offerings and add delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. In addition, we continue to see growth from favorable macro trends and economic conditions, which has increased consumer discretionary spending on automotive and RV parts and accessories.
|
(2)
|
Acquisition related growth reflects the impact of the acquisition of Coast on August 19, 2015.
|
(3)
|
Compared to the prior year, exchange rates reduced our revenue growth by 0.6%, primarily due to the strengthening U.S. dollar against the Canadian dollar in the first half of 2016 compared to the first half of 2015.
|
(1)
|
The decline in gross margin reflects (i) a 0.5% increase in inventory costs, which were higher due to the stocking of two distribution centers in the second quarter of 2016 which were not yet operational in the prior year period, and (ii) a 0.6% unfavorable margin impact due to customer volume rebate adjustments which have increased along with sales volume
. These negative effects were partially offset by
a 0.3% favorable mix effect resulting from a shift toward higher margin products, particularly truck and off road products.
|
(2)
|
The increase in segment operating expenses reflects an increase in facilities and warehouse expense of 0.8% from the addition of two distribution facilities in late 2015 and the higher cost of Coast facilities in comparison to our existing business. These negative effects were offset by 0.7% reduction in selling, general and administrative expenses primarily related to
(i) a 0.3% decline in personnel costs for the realization of integration synergies and (ii) individually insignificant decreases across various selling, general and administrative expense categories totaling 0.4%.
|
|
June 30, 2016
|
|
December 31, 2015
|
|
June 30, 2015
|
||||||
Cash and equivalents
|
$
|
273,203
|
|
|
$
|
87,397
|
|
|
$
|
143,423
|
|
Total debt
(1)
|
3,361,684
|
|
|
1,599,695
|
|
|
1,691,442
|
|
|||
Net debt (total debt less cash and equivalents)
|
3,088,481
|
|
|
1,512,298
|
|
|
1,548,019
|
|
|||
Current maturities
(2)
|
63,130
|
|
|
57,494
|
|
|
39,378
|
|
|||
Capacity under credit facilities
(3)
|
2,547,000
|
|
|
1,947,000
|
|
|
1,947,000
|
|
|||
Availability under credit facilities
(3)
|
1,088,846
|
|
|
1,337,653
|
|
|
1,238,780
|
|
|||
Total liquidity (cash and equivalents plus availability under credit facilities)
|
1,362,049
|
|
|
1,425,050
|
|
|
1,382,203
|
|
•
|
Senior secured credit facilities maturing in January 2021, composed of a term loan of $500 million and a €230 million term loan (
$751 million
of term loans outstanding at
June 30, 2016
) and $2.45 billion in revolving credit (
$1.29 billion
outstanding at
June 30, 2016
), bearing interest at variable rates (although a portion of this debt is hedged through interest rate swap contracts) reduced by
$71.9 million
of amounts outstanding under letters of credit
|
•
|
Senior Notes totaling
$600 million
, maturing in May 2023 and bearing interest at a 4.75% fixed rate
|
•
|
Euro Notes totaling
$555 million
(€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate
|
•
|
Receivables securitization facility with availability up to $97 million (
$94 million
outstanding as of
June 30, 2016
), maturing in October 2017 and bearing interest at variable commercial paper rates
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
||||||||||||
North America
|
$
|
258,900
|
|
|
$
|
257,600
|
|
|
$
|
1,300
|
|
|
$
|
519,100
|
|
|
$
|
489,600
|
|
|
$
|
29,500
|
|
(1)
|
Europe
|
568,900
|
|
|
253,800
|
|
|
315,100
|
|
|
868,100
|
|
|
524,600
|
|
|
343,500
|
|
(2)
|
||||||
Specialty
|
237,100
|
|
|
186,800
|
|
|
50,300
|
|
|
499,400
|
|
|
374,400
|
|
|
125,000
|
|
(3)
|
||||||
Glass
|
167,000
|
|
|
—
|
|
|
167,000
|
|
|
167,000
|
|
|
—
|
|
|
167,000
|
|
(4)
|
||||||
Total
|
$
|
1,231,900
|
|
|
$
|
698,200
|
|
|
$
|
533,700
|
|
|
$
|
2,053,600
|
|
|
$
|
1,388,600
|
|
|
$
|
665,000
|
|
|
(1)
|
In North America, aftermarket purchases during the six months ended June 30, 2016 increased primarily as a result of our July 2015 acquisition of Parts Channel coupled with lower purchase levels in Q1 2015, due to accelerated purchases in the fourth quarter of 2014 in anticipation of potential labor issues at West Coast ports in the United States.
|
(2)
|
In our Europe segment, the increase in purchases was primarily due to our acquisition of Rhiag in March of 2016, which added incremental purchases of $241.8 million in the second quarter of 2016 and $262.5 million year to date. Purchases for our U.K. operations increased in the three and six months ended June 30, 2016 compared to the prior year periods primarily as a result of opening four new hubs since the prior year second quarter and incremental inventory purchases to stock the Tamworth, England national distribution center. These increase
s were partially offset by the devaluation of the pound sterling in the first half of 2016 compared to the prior year period.
|
(3)
|
The increase in Specialty aftermarket purchases during the three and six months ended June 30, 2016 is primarily due to (i) accelerated inventory purchases to stock two new distribution centers during the first quarter of 2016, (ii) additional purchases to support the increased sales volume as a result of the Coast acquisition, and (iii) additional inventory purchases in the second quarter due to stronger than anticipated sales volumes as a result of our annual trade shows.
|
(4)
|
Glass inventory purchases reflect inventory purchases made during the three months ended June 30, 2016 as a result of our April 2016 acquisition of PGW. The amount includes purchases of raw materials used in PGW's manufacturing and fabrication of automotive glass products as well as purchases of aftermarket and refurbished automotive replacement glass and assemblies.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||||
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
||||||
North America Wholesale salvage cars and trucks
|
72
|
|
|
75
|
|
|
(4.0
|
)%
|
|
144
|
|
|
145
|
|
|
(0.7
|
)%
|
|
Europe Wholesale salvage cars and trucks
|
6
|
|
|
5
|
|
|
20.0
|
%
|
|
12
|
|
|
11
|
|
|
9.1
|
%
|
|
Self service and "crush only" cars
|
138
|
|
|
131
|
|
|
5.3
|
%
|
|
263
|
|
|
231
|
|
|
13.9
|
%
|
(1)
|
(1)
|
Compared to the the prior year period, we increased our purchases of lower cost self service and "crush only" cars as prices for vehicles have come down in certain markets due to the decline in the prices of scrap and other metals, allowing us to purchase higher quality vehicles at favorable prices.
|
|
Total
|
|
Remainder of 2016-2017
|
|
2018-2019
|
|
2020-2021
|
|
Thereafter
|
||||||||||
Contractual obligations
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(1)
|
$
|
3,793.4
|
|
|
$
|
287.7
|
|
|
$
|
201.8
|
|
|
$
|
2,064.0
|
|
|
$
|
1,239.9
|
|
Capital lease obligations
(2)
|
28.4
|
|
|
10.8
|
|
|
4.2
|
|
|
1.8
|
|
|
11.6
|
|
|||||
Operating leases
(3)
|
1,041.3
|
|
|
269.7
|
|
|
257.0
|
|
|
162.7
|
|
|
351.9
|
|
|||||
Purchase obligations
(4)
|
391.2
|
|
|
391.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Contingent consideration liabilities
(5)
|
3.2
|
|
|
2.8
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||||
Outstanding letters of credit
|
71.9
|
|
|
71.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other asset purchase commitments
(6)
|
93.4
|
|
|
79.4
|
|
|
11.7
|
|
|
2.3
|
|
|
—
|
|
|||||
Other long-term obligations
|
|
|
|
|
|
|
|
|
|
||||||||||
Self-insurance reserves
(7)
|
77.0
|
|
|
37.8
|
|
|
26.0
|
|
|
8.9
|
|
|
4.3
|
|
|||||
Deferred compensation plans and other retirement obligations
(8)
|
38.4
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
33.5
|
|
|||||
Long term incentive plan
|
8.6
|
|
|
4.5
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|||||
Liabilities for unrecognized tax benefits
|
2.3
|
|
|
0.1
|
|
|
1.3
|
|
|
0.6
|
|
|
0.3
|
|
|||||
Total
|
$
|
5,549.1
|
|
|
$
|
1,160.8
|
|
|
$
|
506.5
|
|
|
$
|
2,240.3
|
|
|
$
|
1,641.5
|
|
(1)
|
Our long-term debt under contractual obligations above includes interest of $476.3 million on the balances outstanding as of
June 30, 2016
. The long-term debt balance excludes debt issuances costs as these expenses have already been paid. Interest on our senior notes, notes payable, and other long-term debt is calculated based on the respective stated rates. Interest on our variable rate credit facilities is calculated based on the weighted average rates, including the impact of interest rate swaps through their respective expiration dates, in effect for each tranche of borrowings as of
June 30, 2016
. Future estimated interest expense for the remainder of 2016 through 2017, 2018 through 2019, and 2020 through 2021 is $123.7 million, $132.5 million and $133.6 million, respectively. Estimated interest expense beyond 2021 is $86.4 million.
|
(2)
|
Interest on capital lease obligations of $1.1 million is included based on incremental borrowing or implied rates. Future estimated interest expense for the remainder of 2016 through 2017, 2018 through 2019, and 2020 through 2021 is $1.1 million, $0.7 million and $0.5 million, respectively. Estimated interest expense beyond 2021 is $7.9 million.
|
(3)
|
The operating lease payments above do not include certain tax, insurance and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year. Historically, these expenses have averaged approximately 25% of the corresponding lease payments.
|
(4)
|
Our purchase obligations include open purchase orders for aftermarket inventory.
|
(5)
|
Our contingent consideration liabilities reflect the undiscounted estimated payments of additional consideration related to business combinations. The actual payments will be determined at the end of the applicable performance periods based on the acquired entities' achievement of the targets specified in the purchase agreements.
|
(6)
|
Includes asset purchase commitments related to the construction of a new distribution center for our U.K. operations, commitments to purchase land and buildings, IT related expenditures, and other asset purchase commitments.
|
(7)
|
Self-insurance reserves include undiscounted estimated payments, net of estimated insurance recoveries, for our employee medical benefits, automobile liability, general liability, directors and officers liability, workers' compensation and property insurance.
|
(8)
|
Deferred compensation payments are dependent on elected payment dates. While we expect that these payments will be made more than five years from the latest balance sheet date, payments may be made earlier depending on such elections. Our deferred compensation plans are funded through investments in life insurance policies. Other retirement obligations consist of our expected required contributions to our pension plans. We have not included future funding requirements beyond 2016 in the table above, as these funding projections are not practicable to estimate.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
4.1
|
Indenture dated as of April 14, 2016 among LKQ Italia Bondco S.p.A., as Issuer, LKQ Corporation, certain subsidiaries of LKQ Corporation, the trustee, paying agent, transfer agent, and registar (incorporated herein by reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on April 18, 2016).
|
4.2
|
Supplemental Indenture dated as of June 13, 2016 among Auto Kelly a.s., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.
|
4.3
|
Supplemental Indenture dated as of June 13, 2016 among ELIT CZ, spol. s.r.o., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.
|
4.4
|
Supplemental Indenture dated as of June 13, 2016 among Rhiag-Inter Auto Parts Italia S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.
|
4.5
|
Supplemental Indenture dated as of June 13, 2016 among Bertolotti S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.
|
10.1
|
Change of Control Agreement between LKQ Corporation and Ash T. Brooks dated as of May 2, 2016.
|
10.2
|
ISDA 2002 Master Agreement between Banco Bilbao Vizcaya Argentaria, S.A. and LKQ Corporation, and related Schedule.
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
LKQ CORPORATION
|
|
|
|
/s/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
Executive Vice President and Chief Financial Officer
|
|
(As duly authorized officer and Principal Financial Officer)
|
|
|
|
/s/ MICHAEL S. CLARK
|
|
Michael S. Clark
|
|
Vice President — Finance and Controller
|
|
(As duly authorized officer and Principal Accounting Officer)
|
“
Czech Limitation Amount
”=
|
A
|
x G x 0.9
|
O
|
“
Czech Limitation Amount
”=
|
A
|
x G x 0.9
|
O
|
(i)
|
the aggregate principal amount of any intercompany loans, or other financial support in any form, advanced or granted from time to time to the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) by the Issuer (whether directly or indirectly) since the Issue Date or outstanding on the Issue Date, as resulting from time to time from the latest financial statements (
bilancio di esercizio
) of the Guaranteeing Subsidiary duly approved by the shareholders meeting of the Guaranteeing Subsidiary and/or any of its direct or indirect subsidiaries, as the case may be- notwithstanding any subsequent repayment, reduction or cancellation; and
|
(ii)
|
the aggregate principal amount drawn by the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) under any facility agreement (including the Senior Secured Credit Facility) to which the Guaranteeing Subsidiary has acceded as a result of the commitment of the Parent (or any of its direct or indirect subsidiaries) and/or the Issuer notwithstanding any subsequent repayment, reduction or cancellation; and
|
(a)
|
be a general senior unsecured obligation of the Guaranteeing Subsidiary;
|
(b)
|
rank
pari passu
in right of payment to any existing or future obligations of the Guaranteeing Subsidiary that are not subordinated in right of payment to its Note Guarantee;
|
(c)
|
rank senior in right of payment to any future indebtedness of the Guaranteeing Subsidiary that is subordinated in right of payment to its Note Guarantee;
|
(d)
|
be effectively subordinated to any existing or future obligations of the Guaranteeing Subsidiary that are secured by property or assets that do not secure its Note Guarantee, to the extent of the value of the property and assets securing such obligations; and
|
(e)
|
be subject to the limitations described in this Supplement Indenture.
|
(i)
|
the aggregate principal amount of any intercompany loans, or other financial support in any form, advanced or granted from time to time to the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) by the Issuer (whether directly or indirectly) since the Issue Date or outstanding on the Issue Date, as resulting from time to time from the latest financial statements (
bilancio di esercizio
) of the Guaranteeing Subsidiary duly approved by the shareholders meeting of the Guaranteeing Subsidiary and/or any of its direct or indirect subsidiaries, as the case may be notwithstanding any subsequent repayment, reduction or cancellation; and
|
(ii)
|
the aggregate principal amount drawn by the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) under any facility agreement (including the Senior Secured Credit Facility) to which the Guaranteeing Subsidiary has acceded as a result of the commitment of the Parent (or any of its direct or indirect subsidiaries) and/or the Issuer- notwithstanding any subsequent repayment, reduction or cancellation; and
|
(a)
|
be a general senior unsecured obligation of the Guaranteeing Subsidiary;
|
(b)
|
rank
pari passu
in right of payment to any existing or future obligations of the Guaranteeing Subsidiary that are not subordinated in right of payment to its Note Guarantee;
|
(c)
|
rank senior in right of payment to any future indebtedness of the Guaranteeing Subsidiary that is subordinated in right of payment to its Note Guarantee;
|
(d)
|
be effectively subordinated to any existing or future obligations of the Guaranteeing Subsidiary that are secured by property or assets that do not secure its Note Guarantee, to the extent of the value of the property and assets securing such obligations; and
|
(e)
|
be subject to the limitations described in this Supplement Indenture.
|
1.
|
Operation of Agreement
. The provisions of this Agreement pertaining to the terms and conditions of your separation from the Company in connection with a Change of Control (collectively, the “
Severance Provisions
”) shall apply only if a Change of Control occurs during the Effective Period. If a Change of Control occurs during the Effective Period, the Severance Provisions become effective on the date of the Change of Control (the “
Change of Control Date
”). Notwithstanding the foregoing, if (a) a Change of Control occurs during the Effective Period; and (b) your employment with the Company is terminated (other than your voluntary resignation without Good Reason or due to your death or Disability) during the Effective Period, but within twelve (12) months prior to the date on which the Change of Control occurs; and (c) it is reasonably demonstrated by you that such termination of employment (i) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then the “
Change of Control Date
” shall instead mean the date immediately prior to the date of such termination of employment. In connection with the foregoing, your unvested equity-based compensation awards
|
2.
|
Termination of Employment by Reason of Death or Disability
. Your employment shall terminate automatically if you die during the Change of Control Period. If the Company determines in good faith that you incurred a Disability during the Change of Control Period, it may give you written notice, in accordance with Section 5 hereof, of its intention to terminate your employment. In such event, your employment with the Company shall terminate effective on the thirtieth (30) calendar day after your receipt of such notice if you have not returned to full-time duties within thirty (30) calendar days after such receipt. If your employment is terminated for death or Disability during the Change of Control Period, this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you or your representative, as applicable, the following amounts:
|
a.
|
the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination;
|
b.
|
the Pro Rata Bonus, which shall be paid to you in a single lump sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver and Release; and
|
c.
|
the Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs, policies, arrangements or agreements.
|
3.
|
Termination for Cause; Resignation Other Than for Good Reason
. If your employment is terminated for Cause or you resign for other than Good Reason during the Change of Control Period, your employment will terminate on the Date of Termination in accordance with Section 5 hereof and this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you the following:
|
a.
|
the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination; and
|
b.
|
the Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs or policies.
|
4.
|
Termination as a Result of an Involuntary Termination
. In the event that your employment with the Company should terminate during the Change of Control Period as a result of an Involuntary Termination, the Company will be obligated, except as provided in Section 8 or Section 9 hereof, to provide you the following benefits:
|
a.
|
Severance Payment
. The Company shall pay to you the following amounts:
|
i.
|
the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination;
|
ii.
|
the Pro Rata Bonus, which shall be paid to you in a single lump sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release;
|
iii.
|
an amount equal to the product of (A) 2.0 times (B) the sum of (1) your Adjusted Base Salary plus (2) the greater of (x) your Target Bonus or (y) the average of the annual bonuses paid or to be paid to you with respect to the immediately preceding three (3) fiscal years, which amount shall be paid to you in a single lump sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver and Release;
|
iv.
|
if you had previously consented to the Company’s request to relocate your principal place of employment more than forty (40) miles from its location immediately prior to the Change of Control, all unreimbursed relocation expenses incurred by you in accordance with the Company’s relocation policies, which expenses shall be paid to you in a single lump sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release; and
|
v.
|
the Other Benefits, which shall be paid in accordance with the then-existing terms and conditions of such plans, programs or policies.
|
b.
|
Benefit Continuation
. You and your then eligible dependents shall continue to be covered by and participate in the group health and dental care plans (collectively, “
Health Plans
”) of the Company (at the Company’s cost) in which you participated, or were eligible to participate, immediately prior to the Date of Termination through the end of the Benefit Continuation Period;
provided
,
however
, that any medical or dental welfare benefit otherwise receivable by you hereunder shall be reduced to the extent that you become covered under a group health or dental care plan providing comparable medical and health benefits. You shall be eligible to participate in such Health Plans on terms that are at least as favorable as those in effect immediately prior to the Date of Termination. However, in the event that the terms of the Company’s Health Plans do not permit you to participate in those plans (other than pursuant to an election under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA
”)), in lieu of your and your eligible dependent’s coverage and participation under the Company’s Health Plans, the Company shall pay to you within fifteen (15) calendar days after the effective date of the Waiver and Release a lump sum equal to two (2) times your monthly COBRA premium amount for the number of months remaining in the Benefit Continuation Period. In addition, for the purposes of coverage under COBRA, your COBRA event date will be the date of loss of coverage described in this paragraph above.
|
c.
|
Outplacement Services
. The Company shall, at its sole expense as incurred, provide you with outplacement services on such terms and conditions as may be reasonably determined by the Company prior to the Change of Control.
|
d.
|
Acceleration of Stock Awards
. All your outstanding awards of restricted stock, stock options, and other equity-based compensation shall become fully vested and exercisable in full immediately upon the effective date of the Waiver and Release; provided, however, that any such awards that would be out of the money as of the Date of Termination may be terminated pursuant to Section 9(b) hereof. In addition, all of your outstanding awards of restricted stock, stock options, and other equity-based compensation that are not assumed
|
5.
|
Date and Notice of Termination
. Any termination of your employment by the Company or by you during the Change of Control Period shall be communicated by a notice of termination to the other party hereto (the “
Notice of Termination
”). The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. The date of your termination of employment with the Company (the “
Date of Termination
”) shall be determined as follows: (i) if your employment is terminated for Disability, thirty (30) calendar days after a Notice of Termination is received by you (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) calendar day period), (ii) if your employment is terminated by the Company in an Involuntary Termination, the later of the date specified in the Notice of Termination or five (5) calendar days after the date the Notice of Termination is received by you, (iii) if you terminate your employment for Good Reason, five (5) calendar days after the date the Notice of Termination is received by the Company, and (iv) if your employment is terminated by the Company for Cause, the later of the date specified in the Notice of Termination or five (5) calendar days following the date such notice is received by you. The Date of Termination for a resignation of employment other than for Good Reason shall be the date set forth in the applicable notice.
|
6.
|
No Mitigation or Offset; D&O Insurance
.
|
a.
|
No Mitigation or Offset
. You shall not be required to mitigate the amount of any payment provided for herein by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by you as the result of employment by another employer.
|
b.
|
D&O Insurance, and Indemnification
. Through at least the sixth anniversary of the Date of Termination, the Company shall maintain coverage for you as a named insured on all directors’ and officers’ insurance maintained by the Company for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide you with at least the same corporate indemnification as it provides to other senior executives.
|
7.
|
Confidentiality
. You agree to treat all Confidential Information as confidential information entrusted to you solely for use as an employee of the Company, and shall not divulge, reveal or transmit any Confidential Information in any way to persons not employed by the Company at any time from the date hereof until the end of time, whether or not you continue to be an employee of the Company, unless authorized in writing by the Company.
|
8.
|
Code Section 409A
. The Agreement is not intended to constitute a "nonqualified deferred compensation plan" within the meaning of Code Section 409A. Notwithstanding the foregoing, in the event this Agreement or any benefit paid under this Agreement to you is deemed to be subject to Code Section 409A, you consent to the Company's adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion (but without an obligation to do so), to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A. This Agreement will be interpreted and construed to not violate Code Section 409A, although nothing herein will be construed as an entitlement to or guarantee of any particular tax treatment to you.
|
9.
|
Certain Reduction of Payments by the Company
.
|
a.
|
Best Net
. Anything in this Agreement to the contrary notwithstanding, in the event that the independent auditors of the Company (the “
Accounting Firm
”) determine that receipt of all payments or distributions in the nature of compensation to or for your benefit, whether paid or payable pursuant to this Agreement or otherwise (“
Payments
”), would subject you to tax under Section 4999 of the Code, the Payments paid or payable pursuant to this Agreement (the “
COC Payments
”), including payments made with respect to equity-based compensation accelerated pursuant to Section 4(d) hereof, but excluding payments made with respect to Sections 4(a)(i) and 4(a)(ii) hereof (except as provided below), may be reduced (but not below zero) to the Reduced Amount, but only if the Accounting Firm determines that the Net After-Tax Receipt of unreduced aggregate Payments would be equal to or less than the Net After-Tax Receipt of the aggregate Payments as if the Payments were reduced to the Reduced Amount. If such a determination is not made by the Accounting Firm, you shall receive all COC Payments to which you are entitled under this Agreement.
|
b.
|
Reduced Amount
. If the Accounting Firm determines that Payments should be reduced to the Reduced Amount, the Company shall promptly give you notice to that effect and a copy of the detailed calculation thereof. Absent manifest error, all determinations made by the Accounting Firm under this Section 9 shall be binding upon you and the Company and shall be made as soon as reasonably practicable and in no event later than twenty (20) business days following the Change of Control Date, or such later date on which there has been a Payment. The reduction of the Payments, if applicable, shall be made by reducing the payments and benefits hereunder in the following order, and only to the extent necessary to achieve the Reduced Amount:
|
c.
|
Subsequent Adjustment
. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to you or for your benefit pursuant to this Agreement which should not have been so paid or distributed (“
Overpayment
”) or that additional amounts which will have not been paid or distributed by the Company to you or for your benefit pursuant to this Agreement could have been so paid or distributed (“
Underpayment
”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or you that the Accounting Firm believes has a high probability of success, determines that an Overpayment has been made, you shall pay any such Overpayment to the Company;
provided
,
however
, that no amount shall be payable by you to the Company if and to the extent such payment would not either reduce the amount of taxes to which you are subject under Sections 1 and 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (and in no event later than sixty (60) days following the date on which the Underpayment is determined) by the Company to you or for your benefit.
|
10.
|
Successors; Binding Agreement
.
|
a.
|
Assumption by Successor
. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform its obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform such obligations if no such succession had taken place;
provided
,
however
, that no such assumption shall relieve the Company of its obligations hereunder. As used herein, the “
Company
” shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid which assumes and agrees to perform its obligations by operation of law or otherwise.
|
b.
|
Enforceability; Beneficiaries
. This Agreement shall be binding upon and inure to the benefit of you (and your personal representatives and heirs) and the Company and any organization which succeeds to substantially all of the business or assets of the Company, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Company or otherwise, including, without limitation, as a result of a Change of Control or by operation of law. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.
|
11.
|
Definitions
. For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
|
a.
|
“
Accounting Firm
” has the meaning assigned thereto in Section 9 hereof.
|
b.
|
“
Accrued Obligations
” shall mean all compensation earned or accrued through the Date of Termination but not paid as of the Date of Termination, including base salary, bonus for the prior performance year, accrued but unused vacation, and reimbursement of business
|
c.
|
“
Adjusted Base Salary
” means the greater of your base salary in effect immediately prior to (i) the Change of Control Date or (ii) the Date of Termination.
|
d.
|
“
Agreement
” has the meaning assigned thereto in the second introductory paragraph hereof.
|
e.
|
“Benefit Continuation Period
” means the period beginning on the Date of Termination and ending on the last day of the month in which occurs the earlier of (i) the 24-month anniversary of the Date of Termination and (ii) the date on which you elect coverage for you and your covered dependents under substantially comparable benefit plans of a subsequent employer.
|
f.
|
“
Board
” has the meaning assigned thereto in the first introductory paragraph hereof.
|
g.
|
“
Bonus Opportunity
” for any performance year means your maximum cash bonus opportunity for that year, on the assumption that the Company achieves all applicable performance targets and that you achieve all applicable individual performance criteria.
|
h.
|
“
Cause
” shall mean (i) your engaging in willful and continued failure to substantially perform your material duties with the Company (other than due to becoming Disabled);
provided, however
, that the Company shall have provided you with written notice of such failure and such failure is not cured by you within twenty (20) calendar days of such notice; (ii) your engaging in misconduct that is materially and demonstrably injurious to the Company; (iii) your conviction of, or plea of no contest to, a felony, other crime of moral turpitude; or (iv) a final non-appealable adjudication in a criminal or civil proceeding that you have committed fraud. For purposes of the previous sentence, no act or failure to act on your part shall be deemed “willful” if it is done, or omitted to be done, by you in good faith and with a reasonable belief that it was in the best interest of the Company.
|
i.
|
“
Change of Control
” shall mean:
|
i.
|
any “person” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, or (iv) any acquisition pursuant to a transaction that complies with Sections 11(i)(iii)(A), (B), and (C);
|
ii.
|
during any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least three-fourths of the directors then still in office who either were directors at the beginning
|
iii.
|
there is a consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination.
|
j.
|
“
Change of Control Date
” has the meaning assigned thereto in Section 1 hereof.
|
k.
|
“
Change of Control Period
” has the meaning assigned thereto in the second introductory paragraph hereof.
|
l.
|
“
COC Payments
” has the meaning assigned thereto in Section 9 hereof.
|
m.
|
“
Code
” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
|
n.
|
“
Company
” has the meaning assigned thereto in the first introductory paragraph hereof.
|
o.
|
“
Confidential Information
” shall mean all financial information, trade secrets, personnel records, training and operational manuals, records, contracts, lists, business procedures, business methods, accounts, brochures, and handbooks that was learned or obtained by you in the course of your employment by the Company, and all other documents relating to the Company or persons doing business with the Company that are proprietary to the Company.
|
p.
|
“
Date of Termination
” has the meaning assigned thereto in Section 5 hereof.
|
q.
|
“
Disability
” shall mean your incapacity due to physical or mental illness as defined in the long-term disability plan sponsored by the Company or an affiliate of the Company for your benefit and which causes you to be absent from the full-time performance of your duties.
|
r.
|
“
Effective Period
” shall mean the period commencing on the date hereof (the “
Effective Date
”) and ending on the third anniversary of the date of this Agreement;
provided, however
, that beginning on the third anniversary of the date of this Agreement and on each one-year anniversary thereafter (each such date a “
Renewal Date
”), the Effective Period shall be automatically extended for a period of two years beginning on such Renewal Date, unless at least sixty (60) calendar days prior to such Renewal Date, the Company shall give notice that the Effective Period shall not be so extended.
|
s.
|
“
Good Reason
” shall mean the occurrence of any of the following events or circumstances:
|
i.
|
a substantial adverse change in your title, position, offices, or the nature of your duties or responsibilities from those in effect immediately prior to the Change of Control, or in the position, level, or status of the person to whom you report.
|
ii.
|
a reduction by the Company in your annual base salary, Target Bonus, or benefits as in effect immediately prior to the Change of Control or as the same may be increased from time to time thereafter, other than a general reduction in benefits applicable across similarly situated executives within the Company;
|
iii.
|
a failure by the Company to pay you material compensation or benefits when due including, without limitation, failure by the Company to pay any accrued relocation expenses or Other Benefits;
|
iv.
|
the relocation of the office of the Company where you are principally employed immediately prior to the Change of Control to a location which is more than forty (40) miles from such office of the Company (except for required travel on the Company’s business to an extent substantially consistent with your customary business travel obligations in the ordinary course of business prior to the Change of Control); or any failure by a successor to the Company to assume and agree to perform this Agreement, as contemplated by
Section 10(a)
hereof, or any agreement with respect to your outstanding equity awards.
|
t.
|
“
Involuntary Termination
” shall mean, during the Change of Control Period, (i) your termination of employment by the Company without Cause or (ii) your resignation of employment with the Company for Good Reason.
|
u.
|
“
Net After-Tax Receipt
” shall mean the present value (as determined in accordance with Section 280G(d)(4) of the Code) of a Payment net of all taxes imposed on you with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to your taxable income for the immediately preceding taxable year, or such other rate(s) as you certify as likely to apply to you in the relevant tax year(s).
|
v.
|
“
Notice of Termination
” has the meaning assigned thereto in Section 5 hereof.
|
w.
|
“
Other Benefits
” means, to the extent not theretofore paid or provided, any other amounts or benefits required to be paid or provided to you or that you are eligible to receive under any plan, program, policy, practice, contract or agreement of the Company in accordance with such applicable terms at the time of the Date of Termination. Nothing herein shall prohibit the Company from changing, modifying, amending, or eliminating any benefit plans in accordance with the terms of such plans prior to the Date of Termination, with or without prior notice.
|
x.
|
“
Overpayment
” has the meaning assigned thereto in Section 9 hereof.
|
y.
|
“
Pro Rata Bonus
” means a pro rata portion of your Bonus Opportunity for the performance year in which the Date of Termination occurs, calculated based on the number of days that you are employed in the performance year up through and including the Date of Termination.
|
z.
|
“
Payment
” has the meaning assigned thereto in Section 9 hereof.
|
aa.
|
“
Reduced Amount
” shall mean $1,000.00 less than the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999 of the Code.
|
ab.
|
“
Severance Policy
” means the Company’s Severance Policy for Key Executives as adopted on July 21, 2014 and as may be amended from time to time.
|
ac.
|
“
Target Bonus
” for any year means your total cash target, but not maximum, bonus for that year, on the assumption that the Company has achieved, but not exceeded, all applicable performance targets and that you have achieved, but not exceeded, all applicable individual performance criteria.
|
ad.
|
“
Underpayment
” has the meaning assigned thereto in Section 9 hereof.
|
ae.
|
“
Tax Authority
” has the meaning assigned thereto in Section 9 hereof.
|
12.
|
Notice
. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Board of Directors, LKQ Corporation, 500 West Madison Street, Suite 2800, Chicago, IL 60661, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
|
13.
|
Release.
As a condition to receiving any payments or benefits pursuant to this Agreement by reason of your death, Disability or Involuntary Termination, you (or in the case of your death, the
|
14.
|
Arbitration
. Any dispute or controversy arising under or in connection with this Agreement that cannot be mutually resolved by the parties hereto shall be settled exclusively by arbitration in Chicago, Illinois under the employment arbitration rules of the American Arbitration Association before one arbitrator of exemplary qualifications and stature, who shall be selected jointly by the Company and you, or, if the Company and you cannot agree on the selection of the arbitrator, such arbitrator shall be selected by the American Arbitration Association. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. The Company agrees to pay as incurred, to the fullest extent permitted by law, the costs and fees of the arbitration, including all legal fees and expenses which you may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, you or others of the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by you about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
|
15.
|
Miscellaneous
.
|
a.
|
Amendments, Waivers, Etc
. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof. Notwithstanding the foregoing and for avoidance of doubt, this Agreement does not supersede or replace the Severance Policy. However, any payments or benefits provided (or to be provided) under this Agreement shall be reduced and offset by payments or benefits of the same type that are received by you from the Company under the Severance Policy or any other severance arrangement.
|
b.
|
Validity
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
|
c.
|
Counterparts
. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
|
d.
|
No Contract of Employment
. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of the Company or shall affect the terms and
|
e.
|
Withholding
. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.
|
f.
|
Source of Payments
. All payments provided under this Agreement shall be paid in cash from the general funds of the Company, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company.
|
g.
|
Headings
. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.
|
h.
|
Governing Law
. This Agreement is governed by ERISA and, to the extent applicable, the laws of the State of Delaware without regard to conflicts of law.
|
i.
|
Effect on Benefit Plans
. In the event of any inconsistency between the provisions of this agreement and the provisions of any benefit plan of the Company, the provisions that are more favorable to you shall control.
|
Sincerely,
|
||
|
||
LKQ CORPORATION
|
||
|
|
|
By:
|
/s/ VICTOR CASINI
|
|
Name: Victor M. Casini
|
||
Title: Senior Vice President and General Counsel
|
/s/ ASH BROOKS
|
Ash T. Brooks
|
Senior Vice President and Chief
|
Information Officer
|
Name of Agreement:
|
Change of Control Agreement
|
Employer Sponsoring Agreement:
|
LKQ Corporation.
500 West Madison Street, Suite 2800, Chicago, IL 60661
|
Employer Identification Number:
|
36-4215970
|
Agreement Number:
|
511
|
Agreement Year:
|
Calendar Year
|
Agreement Administrator:
|
LKQ Corporation
c/o Senior Vice President of Human Resources
500 West Madison Street, Suite 2800, Chicago, IL 60661
Telephone No. (312) 621-1950
|
Agent for Service of Legal Process:
|
Agreement Administrator, at the above address
|
Type of Agreement:
|
Employee Welfare Benefit Plan providing for severance benefits
|
Agreement Costs:
|
The cost of the Agreement is paid by LKQ Corporation
|
Type of Administration:
|
Self-administered by the Agreement Administrator
|
16.
|
Release
.
|
a.
|
In exchange for the valuable consideration set forth in the Change of Control Agreement dated as of ____________ ___, 20___ (the “
Letter Agreement
”), between Employee and the Company, the receipt and adequacy of which are herein acknowledged, Employee hereby agrees to release and forever discharge the Company and its present, former and future partners, shareholders, affiliates, direct and indirect parents, subsidiaries, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “
Released Parties
”), from any and all claims, actions and causes of action (the “
Claims
”) arising out of (i) his employment relationship with and service as an employee of the Company and its affiliates, and the termination of such relationship or service, or (ii) any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date hereof, including, but not limited to any Claims under Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans With Disabilities Act of 1990, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974 (ERISA), the Family and Medical Leave Act of 1993, the California Fair Employment and Housing Act; the California Workers’ Compensation Act; the California Unruh and Ralph Civil Rights Laws; the California Alcohol and Drug Rehabilitation Law and any other federal, state or local law, statute, regulation or ordinance, or law of any foreign jurisdiction, whether such Claim arises under statute or common law and whether or not Employee is presently aware of the existence of such Claim. Employee also forever releases, discharges and waives any right he may have to recover in any proceeding brought by any federal, state or local agency against the Released Parties to enforce any laws. To ensure that this Release is fully enforceable in accordance with its terms, Employee agrees to waive any and all rights to any Claims, whether or not he knows or suspects them to exist in his favor, which if known to him would have materially affected his execution of this Release. Notwithstanding the foregoing, this Release does not apply to Employee’s rights, claims, or benefits under the Letter Agreement or to Employee’s rights, if any, to payment of benefits pursuant to any employee benefit plan. This Release also does not apply to Employee’s rights, claims, or benefits claims for unemployment compensation benefits, workers compensation benefits, claims under the Fair Labor Standards Act, health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), or claims with regard to vested benefits under a retirement plan governed by ERISA.
|
b.
|
To ensure that this Release is fully enforceable in accordance with its terms, Employee hereby agrees to waive any and all rights under Section 1542 of the California Civil Code (to the extent applicable) as it exists from time to time, which provides:
|
c.
|
In further consideration of the payments and benefits provided to Employee under the Letter Agreement, Employee hereby releases and forever discharges the Released Parties from any and all Claims that he may have as of the date he signs this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“
ADEA
”). By signing this Release, Employee hereby acknowledges and confirms the following: (i) he was advised by the Company in connection with his termination to consult with an attorney of his choice prior to signing this Release and to have such attorney explain to him the terms of this Release, including, without limitation, the terms relating to his release of claims arising under the ADEA; (ii) if Employee is 40 years of age or older as of the date of execution of this Release, he was given a period of not fewer than 21 calendar days to consider the terms of this Release and to consult with an attorney of his choosing with respect thereto; (iii) he is providing the release and discharge set forth in this Paragraph 1(c) only in exchange for consideration in addition to anything of value to which he is already entitled and (iv) he can revoke this Release without it becoming effective as described below.
|
17.
|
No Legal Claim
. Employee has not commenced any legal action, which term includes, without limitation, any demand for arbitration proceedings and any charge, complaint, filing or submission with any federal, state or local agency, court or other tribunal, to assert any Claim against a Released Party, and covenants and agrees not to do so in the future with respect to the matters released herein. If Employee commences or joins any legal action against a Released Party, Employee agrees that such an action is prohibited by this Release, and further agrees to promptly indemnify such Released Party for its reasonable costs and attorneys fees incurred in defending such action as well as forfeit or return any monetary judgment obtained by Employee against any Released Party in such action. Nothing in this Paragraph 2 is intended to reflect any party’s belief that Employee’s waiver of claims under the ADEA is invalid or unenforceable under this Release, it being the intent of the parties that such claims are waived.
|
18.
|
Nondisparagement
. Employee agrees to refrain, except as required by law or in connection with a judicial proceeding, from making directly or indirectly, now or at any time in the future, any written or oral statements, representations or other communications that disparage or are otherwise damaging to the business or reputation of the Released Parties.
|
19.
|
Continuing Obligations
. This Release shall not supersede any continuing obligations Employee may have under the terms of the Letter Agreement or any other agreement between Employee and the Company.
|
20.
|
Disclaimer
. Employee hereby certifies that Employee has read the terms of this Release, that Employee has been advised by the Company to consult with an attorney of Employee’s own
|
21.
|
Governing Law
. This Release is governed by ERISA and, to the extent applicable, the laws of the State of Delaware without regard to conflicts of law.
|
22.
|
Separability of Clauses
. If any provisions of this Release shall be finally determined to be invalid or unenforceable under applicable law by a court of competent jurisdiction, that part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining provisions of this Release.
|
23.
|
Counterparts
. This Release may be executed by the parties hereto in counterparts, each of which shall be deemed an original, but both such counterparts shall together constitute one and the same document.
|
24.
|
Effectiveness
. This Release shall be effective only when it has been executed by Employee and the executed original has been returned to the Company, and any applicable revocation period has expired.
|
LKQ CORPORATION
|
|
By:
|
|
|
Name:
|
|
Title:
|
Name:
|
|
Date:
|
dated as of
|
May 20, 2016
|
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
(“Party A”)
established as a
bank
under the laws of the Kingdom of Spain
|
and
|
EACH ENTITY LISTED IN EXHIBIT A OF THE SCHEDULE
(each a “Party B”)
|
1.
|
Interpretation
|
2.
|
Obligations
|
(a)
|
General Conditions.
|
(c)
|
Netting of Payments.
If on any date amounts would otherwise be payable:¯
|
(d)
|
Deduction or
Withholding for
Tax.
|
3.
|
Representations
|
(a)
|
Basic Representations.
|
4.
|
Agreements
|
(a)
|
Furnish Specified Information.
It will deliver to the other party or, in certain cases under clause (iii) below, to such government or taxing authority as the other party reasonably directs:¯
|
(b)
|
Maintain Authorisations.
It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.
|
5.
|
Events of Default and Termination Events
|
(a)
|
Events of Default.
The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes (subject to Sections 5(c) and 6(e)(iv)) an event of default (an “Event of Default”) with respect to such party:¯
|
(b)
|
Termination Events.
The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes (subject to Section 5(c)) an Illegality if the event is specified in clause (i) below, a Force Majeure Event if the event is specified in clause (ii) below, a Tax Event if the event is specified in clause (iii) below, a Tax Event Upon Merger if the event is specified in clause (iv) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to clause (v) below or an Additional Termination Event if the event is specified pursuant to clause (vi) below:¯
|
(c)
|
Hierarchy of Events.
|
(d)
|
Deferral of Payments and Deliveries During Waiting Period.
If an Illegality or a Force Majeure Event has occurred and is continuing with respect to a Transaction, each payment or delivery which would otherwise be required to be made under that Transaction will be deferred to, and will not be due until:¯
|
(e)
|
Inability of Head or Home Office to Perform Obligations of Branch.
If (i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or 5(b)(ii)(1) and the relevant Office is not the Affected Party’s head or home office, (ii) Section 10(a) applies, (iii) the other party seeks performance of the relevant obligation orcompliance with the relevant provision by the Affected Party’s head or home office and (iv) the Affected Party’s head or home office fails so to perform or comply due to the occurrence of an event or circumstance which would, if that head or home office were the Office through which the Affected Party makes and receives payments and deliveries with respect to the relevant Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and such failure would otherwise constitute an Event of Default under Section 5(a)(i)or 5(a)(iii)(1) with respect to such party, then, for so long as the relevant event or circumstance continues to exist with respect to both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case may be, and the Affected Party’s head or home office, such failure will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).
|
6.
|
Early Termination; Close-Out Netting
|
(a)
|
Right to Terminate Following Event of Default.
If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
|
(1)
|
If:¯
|
(c)
|
Effect of Designation.
|
(d)
|
Calculations; Payment Date
.
|
(e)
|
Payments on Early Termination.
If an Early Termination Date occurs, the amount, if any, payable in respect of that Early Termination Date (the “Early Termination Amount”) will be determined pursuant to this Section 6(e) and will be subject to Section 6(f).
|
(f)
|
Set-Off.
Any Early Termination Amount payable to one party (the “Payee”) by the other party (the “Payer”), in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be (“X”) (and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts (“Other Amounts”) payable by the Payee to the Payer (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation). To the extent that any Other Amounts are so set off, those Other Amounts will be discharged promptly and in all respects. X will give notice to the other party of any set-off effected under this Section 6(f).
|
7.
|
Transfer
|
(a)
|
a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and
|
8.
|
Contractual Currency
|
(a)
|
Payment in the Contractual Currency.
Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in good faith and using commercially reasonable procedures in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.
|
(c)
|
Separate Indemnities.
To the extent permitted by applicable law, the indemnities in this Section 8 constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.
|
9.
|
Miscellaneous
|
(a)
|
Entire Agreement.
This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud.
|
(f)
|
No Waiver of Rights.
A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.
|
10.
|
Offices; Multibranch Parties
|
(a)
|
If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to and agrees with the other party that, notwithstanding the place of booking or its jurisdiction of incorporation or organisation, its obligations are the same in terms of recourse against it as if it had entered into the Transaction through its head or home office, except that a party will not have recourse to the head or home office of the other party in respect of any payment or delivery deferred pursuant to Section 5(d) for so long as the payment or delivery is so deferred. This representation and agreement will be deemed to be repeated by each party on each date on which the parties enter into a Transaction.
|
11.
|
Expenses
|
12.
|
Notices
|
(a)
|
Effectiveness.
Any notice or other communication in respect of this Agreement may be given in any manner described below (except that a notice or other communication under Section 5 or 6 may not be given by electronic messaging system or e-mail) to the address or number or in accordance with the electronic messaging system or e-mail details provided (see the Schedule) and will be deemed effective as indicated:¯
|
(b)
|
Change of Details.
Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system or e-mail details at which notices or other communications are to be given to it.
|
13.
|
Governing Law and Jurisdiction
|
(a)
|
Governing Law.
This Agreement will be governed by and construed in accordance with the law specified in the Schedule.
|
(c)
|
Service of Process.
Each party irrevocably appoints the Process Agent, if any, specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12(a)(i), 12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by applicable law.
|
14.
|
Definitions
|
(a)
|
in respect of the determination of an Unpaid Amount:¯
|
(b)
|
in respect of an Early Termination Amount:¯
|
(a)
|
for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer to be a rate offered to the payer by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market;
|
(i)
|
quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that may take into account the creditworthiness of the Determining Party at the time the quotation is provided and the terms of any relevant documentation, including credit support documentation, between the Determining Party and the third party providing the quotation;
|
(1)
|
application to relevant market data from third parties pursuant to clause (ii) above or information from internal sources pursuant to clause (iii) above of pricing or other valuation models that are, at the time of the determination of the Close-out Amount, used by the Determining Party in the regular course of its business in pricing or valuing transactions between the Determining Party and unrelated third parties that are similar to the Terminated Transaction or group of Terminated Transactions; and
|
(a)
|
in respect of an event or circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and
|
BANCO BILBAO VIZCAYA ARGENTARIA, S.A
|
|
EACH ENTITY LISTED IN EXHBIT A:
|
||
(“Party A”)
|
|
(each a “Party B”)
|
||
|
|
|
|
|
|
|
|
LKQ CORPORATION
|
|
|
|
|
|
|
By: _____________________________________
|
/s/ KRISTEN HOLM
|
|
|
|
Name:
|
Kristen Holm
|
|
By: _____________________________________
|
/s/ DOMNICK P. ZARCONE
|
Title:
|
Managing Director
|
|
Name:
|
Dominick P. Zarcone
|
Date:
|
May 26, 2016
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
|
|
Date:
|
May 26, 2016
|
|
|
|
|
|
By: _____________________________________
|
|
|
EURO CAR PARTS LIMITED
|
|
Name:
|
|
|
By: _____________________________________
|
/s/ JOHN QUINN
|
Title:
|
|
|
Name:
|
John Quinn
|
Date:
|
|
|
Title:
|
CEO & Managing Director, LKQ Europe
|
|
|
|
Date:
|
May 26, 2016
|
|
|
|
|
|
|
|
|
KEYSTONE AUTOMOTIVE INDUSTRIES ON,
|
|
|
|
|
By: _____________________________________
|
/s/ MICHAEL S. CLARK
|
|
|
|
Name:
|
Michael S. Clark
|
|
|
|
Title:
|
Vice President — Finance and Controller
|
|
|
|
Date:
|
May 26, 2016
|
|
|
|
|
|
(a)
|
“Specified Entity”
means in relation to Party A for the purpose of Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v): none;
|
(b)
|
“Specified Transaction”
will have the meaning specified in Section 14 but shall also include any transaction with respect to margin loans, cash loans and short sales of any financial instrument, and as amended by inserting the words, “or any Affiliate of Party A” immediately after “Agreement” in the second line thereof.
|
(c)
|
The
“Cross-Default”
provisions of Section 5(a)(vi):
|
(d)
|
The
“Credit Event Upon Merger”
provisions of Section 5(b)(v):
|
(e)
|
The
“Automatic Early Termination”
provision of Section 6(a):
|
(f)
|
“Termination Currency”
means United States Dollars.
|
(g)
|
Additional Termination Event
will apply.
|
(a)
|
Payer Tax Representations.
For the purpose of Section 3(e) of this Agreement, Party A and Party B will make the following representation:-
|
(b)
|
Payee Tax Representations.
For the purpose of Section 3(f) of this Agreement, Party A and Party B will make the following representations specified below, if any:-
|
(i)
|
The following representations will apply to Party A:
|
(ii)
|
(i
) a banking corporation organized and existing under the laws of the Kingdom of Spain and has a Taxpayer ID number of A 48265169,(ii)
a “foreign person” within the meaning of Section 1.6041-4(a)(4) of the United States Treasury Regulations
, (iii) a “non-U.S. branch of a foreign person” within the meaning of Section 1.1441-4(a)(3), of the United States Treasury Regulations. and (iv) “U.S. branch of a foreign person” when Party A is acting through an Office or Agent located in the United States.
.
The following representations will apply to Party B:
|
(iii)
|
The following representation will apply to both Party A and B:
|
Party required to
deliver document
|
Document
|
Date by which to be delivered
|
Party A and Party B
Party B
|
Any document allowing any Party to the other to make or receive payments under this Agreement without withholding or deduction on account of any Tax or with such withholding or deduction at a reduced rate.
Internal Revenue Service Form W-9 or W-8BENE (as applicable).
|
Upon the earlier of (i) reasonable demand by either party and (ii) learning that such form or document is required.
Upon execution and delivery of this Agreement
|
(a)
|
Address for Notices.
For the purpose of Section 12(a) of this Agreement:-
|
(b)
|
Process Agent.
For the purpose of Section 13(c):
|
(c)
|
Offices.
The provisions of Section 10(a) will apply to this Agreement.
|
(d)
|
Multibranch Party.
For the purpose of Section 10(b) of this Agreement:-
|
(e)
|
Calculation Agent.
The Calculation Agent is Party A.
|
(f)
|
Credit Support Document.
Details of any Credit Support Document:-
|
(g)
|
Credit Support Provider.
|
(h)
|
Governing Law.
This Agreement and any and all controversies arising out of or in relation to this Agreement shall be governed by and construed in accordance with the laws of the State of New York (without reference to its conflict of laws doctrine).
|
(i)
|
Netting of Payments.
Section 2(c)(ii) of this Agreement shall apply; provided that either party may cause payments due on the same day in the same currency (between the same Offices) but under different Transactions to be discharged and replaced with a single, netted payment obligation by providing the other party with a written statement detailing the calculation of such net amount payable not later than three Business Days prior to the relevant due date.
|
(j)
|
“Affiliate”
will have the meaning specified in Section 14 of this Agreement.
|
(k)
|
Absence of Litigation.
For the purpose of Section 3(c):-
|
(l)
|
No Agency.
The provisions of Section 3(g) will apply to this Agreement.
|
(m)
|
Additional Representation
will apply. For the purpose of Section 3 of this Agreement, each of the following will constitute an Additional Representation:-
|
(i)
|
Relationship Between Parties.
Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):-
|
(1)
|
Non-Reliance.
It is acting for its own account, and, it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate
|
(2)
|
Assessment and Understanding.
It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.
|
(3)
|
Status of Parties.
The other party is not acting as a fiduciary for or an advisor to it in respect of that Transaction.
|
(ii)
|
Each party makes the representations below (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into):
|
(1)
|
Eligible Contract Participant.
Each party will be deemed to represent to the other party on each date on which a Transaction is entered into that it is an “eligible contract participant” and that each guarantor of its Swap Obligations (as defined below), if any, is an “eligible contract participant,” as such term is defined in the U.S. Commodity Exchange Act, as amended. For purposes of this provision, “Swap Obligation” means an obligation incurred with respect to a transaction that is a “swap” as defined in the Section 1a(47) of the Commodity Exchange Act and CFTC Regulation 1.3(xxx)
.
|
(2)
|
Line of Business
. It has entered into this Agreement (including each Transaction evidenced hereby) in conjunction with its line of business (including financial intermediation services) or the financing of its business. It represents and warrants that all transactions effected under this Agreement (a) will be appropriate in the conduct and management of its business, (b) will be entered into for non-speculative purposes, and (c) as to Party B, Party B represents that all Transactions effected under this Agreement constitute transactions entered into for purposes of hedging or managing risks related to its assets or liabilities as currently owned or incurred, or likely to be owned or incurred in the conduct of its business.
|
(n)
|
Recording of Conversations.
Each party to this Agreement acknowledges and agrees to the recording of conversations and to obtain any necessary consent of, and give any necessary notice of such recording from and between trading and marketing personnel of the parties to this Agreement whether by one or other or both of the parties or their agents.
|
(a)
|
Financial Statements.
Section 3(d) is hereby amended by adding in the third line thereof after the word “respect” and before the period:
|
(b)
|
2002 Master Agreement Protocol
. Annexes 1 to 18 and Section 6 of the ISDA 2002 Master Agreement Protocol as published by the International Swaps and Derivatives Association, Inc. on July 15, 2003 are incorporated into and apply to this Agreement. References in those definitions and provisions to any ISDA Master Agreement will be deemed to be references to this Master Agreement.
|
(c)
|
|
(d)
|
|
(e)
|
|
(i)
|
This Agreement, including any Credit Support Document, is a “master netting agreement” as defined in the U.S. Bankruptcy Code (the
“Code”
), and this Agreement, including any Credit Support Document, and each Transaction hereunder is of a type set forth in Section 561(a)(1)-(5) of the Code;
|
(ii)
|
Party A is a “master netting agreement participant,” a “financial institution,” a “financial participant,”‘ a “forward contract merchant” and a “swap participant” as defined in the Code, All transfers of cash, securities or other property under or in connection with this Agreement, any Credit Support Document or any Transaction hereunder are “margin payments,” “settlement payments” and “transfers” under Sections 546(c), (f), (g) or (j), and under Section 548(d)(2) of the Code; and
|
(iii)
|
Each obligation under this Agreement, any Credit Support Document or any Transaction hereunder is an obligation to make a “margin payment,” “settlement payment” and “payment” within the meaning of Sections 362, 560 and 561 of the Code.
|
(f)
|
|
(g)
|
|
(h)
|
Timely Confirmation Amendment
|
(i)
|
Only ECPs Can Be Guarantors.
Notwithstanding anything to the contrary in this Agreement or in any credit agreement or guaranty, no person providing a guaranty of any obligation of Party B under this Agreement (each such person, a “Guarantor”) shall be deemed to be a guarantor of, or to have granted a security interest to secure any guaranty by Guarantor of, any Swap Obligation (as defined below) if such Guarantor is not an “Eligible Contract Participant” as defined in the Commodity Exchange Act and the applicable rules and regulations issued by the Commodity Futures Trading Commission and/or the Securities and Exchange Commission (collectively, and as now or hereafter in effect, “the ECP Rules”) at the time Party B entered into any applicable Transaction (each such Swap Obligation, an “Excluded Swap Obligation”), but solely to the extent that the providing of such guaranty by such Guarantor, or grant of a security interest to secure any guaranty by Guarantor, of any Swap Obligation by such Guarantor would violate the ECP Rules or other applicable law or regulation. Except as expressly set forth in the preceding sentence, nothing in this Agreement shall be deemed to restrict, reduce or waive any obligation of any such Guarantor under any guaranty or other Credit Support Document, and such guaranty or other Credit Support Document shall continue to guarantee, or grant a security interest to secure, as applicable, in accordance with its terms, each Swap Obligation that is not an Excluded Swap Obligation.
|
(j)
|
USA PATRIOT Act Notice.
Party A hereby notifies Party B that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Party B, which information includes the name and address of Party B and other information that will allow Party A to identify Party B in accordance with the Act.
|
(k)
|
Dodd-Frank Reporting.
The parties hereby agree that, as between Party A and Party B, Party A shall be responsible for all reporting of the terms of each Transactions required pursuant to 17 C.F.R. 43 and 17 C.F.R. 45 (the “CFTC Swap Reporting Requirements”). Party A shall act as, and assume all obligations of, the “Reporting Party” (within the meaning of such term as set forth in 17 C.F.R. 43.2)
|
(l)
|
ISDA Dodd Frank Protocols.
If, prior to the date hereof, both parties have adhered to the ISDA August DF Protocol Agreement, as published on August 13, 2012, by ISDA (the “August Protocol Agreement”), the ISDA March 2013 DF Protocol Agreement, as published on March 22, 2013, by ISDA (the “March Protocol Agreement”), or both, and have delivered “Matched Questionnaires” (as defined in the August Protocol Agreement and March Protocol Agreement, as applicable), the parties hereto agree that this Master Agreement shall be supplemented to the same extent as if it were a "Matched PCA" under the August Protocol Agreement and March Protocol Agreement, as applicable.
|
(m)
|
|
(n)
|
Section 2(a)(iii):
An amendment to Section 2(a)(iii) is made by adding the following new sections:
|
(o)
|
Fully Paid Transactions. The condition precedent in Section 2 (a) (iii) (1) does not apply to a payment and delivery due to a party if such party shall have satisfied in full all its payment or delivery obligations under Section 2 (a) (i) of this Agreement and shall at the relevant time have no future payment obligations, whether absolute or contingent, under Section 2 (a) (i).
|
(p)
|
Change of Account: Section 2 (b) of this Agreement is hereby amended by the insertion of the following at the end thereof after the word “change”:-
|
(q)
|
Definitions: Section 14 of the Agreement is hereby completed by the insertion of the following terms:
|
(r)
|
[Intentionally Omitted]
|
(s)
|
Confidentiality Waiver
|
(t)
|
Notwithstanding anything to the contrary in this Agreement or in any non-disclosure, confidentiality or other agreement between the parties, each party hereby consents to the disclosure of information:
|
(u)
|
Remedies for Breach
|
(v)
|
Notices
|
•
|
if in writing and delivered in person or by courier, on the date it is delivered;
|
•
|
if sent by telex, on the date the recipient’s answerback is received;
|
•
|
if sent by facsimile transmission, on the date it is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by transmission report generated by the sender’s facsimile machine):
|
•
|
if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date it is delivered or its delivery attempted;
|
•
|
if sent by electronic messaging system, on the date it is received;
|
•
|
if sent by email, on the date it is delivered; or
|
•
|
if made available in a webpage to which the Parties have access through a personalized code and/or electronic signature, on the date it is uploaded
|
(a)
|
Status Representation
|
(b)
|
it will constitute an Additional Termination Event in respect of which (I) such Relevant Transaction(s) will be the sole Affected Transaction(s); and (II) the Change of Status Party will be the sole Affected Party pursuant to Section 6 of the Agreement.
|
(c)
|
Escrow:
If (by reason of the time difference between the cities in which payments or deliveries are to be made or otherwise), it is not possible for simultaneous payments or deliveries to be made on any date on which both parties are required to make payments or deliveries hereunder, either party may at its option and in its sole discretion notify the other party that payments or deliveries on such date are to be made in escrow. In such case, the deposit of the payment or delivery due earlier on that date shall be made by 2.00 p.m. (local time at the place for the earlier payment or delivery) on that date with an escrow agent selected by the notifying party, provided this escrow agent is independent of either party and has a long term credit rating of at least A3 (Moody's) or A- (S&P), as the case may be, accompanied by irrevocable payment or delivery instructions:
|
(d)
|
Scope of the Agreement:
Notwithstanding anything contained in this Master Agreement to the contrary, if the parties enter into any of the following transactions, including an agreement with respect to any such transaction, (whether before or after this Agreement is entered to): a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) and any combination of these transactions, such transaction shall, unless such confirmation specifically states to the contrary, be subject to, governed by and construed in accordance with, the terms of this Agreement even when not so specified in the confirmation relating thereto. Each such transaction shall be a Transaction and any document or other confirming evidence exchanged between the parties confirming each such transaction shall be a Confirmation for the purposes of this Agreement.
|
(e)
|
The parties agree that the definitions and provisions contained in Annexes (1 to 5) and Section 6 of the EMU Protocol published by the International Swaps and Derivatives Association, Inc. on May 6, 1998 are incorporated into and apply to this Agreement. References in those definitions and provisions to any “ISDA Master Agreement” will be deemed to be references to this Agreement.
|
(f)
|
Contractual Recognition of Bail-in
|
|
“
Bail-in Action Termination
” means the exercise of any Bail-in Power by the relevant resolution
|
|
“
Bail-in Power
” means any write-down or conversion power existing from time to time (including for this purpose, without limitation, any power to terminate and value transactions and any power to amend or alter the maturity of eligible liabilities of an institution under resolution or amend the amount of interest payable under such eligible liabilities or the date on which interest becomes payable, including by suspending payment for a temporary period) under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in Spain:
|
(a)
|
Incorporation of Definitions.
The 1998 FX and Currency Option Definitions (the
“FX Definitions”
), published by the International Swaps and Derivatives Association, Inc., the Emerging Markets Traders Association and The Foreign Exchange Committee, are hereby incorporated by reference with respect to FX Transactions (as defined in the FX Definitions) and Currency Option Transactions (as defined in the FX Definitions). Terms defined in the FX Definitions shall have the same meanings in this Part 6.
|
(b)
|
Scope.
Unless otherwise agreed in writing by the parties, each FX Transaction and Currency Option Transaction entered into between the parties before, on or after the date of this Agreement shall be a Transaction under this Agreement and shall be part of, subject to and governed by this Agreement. FX Transactions and Currency Option Transactions shall be part of, subject to and governed by this Agreement even if the Confirmation in respect thereof does not state that such FX Transaction or Currency Option Transaction is subject to or governed by this Agreement or does not otherwise reference this Agreement.
|
(c)
|
Premium Netting.
If, on any date, and unless otherwise mutually agreed by the parties, Premiums would otherwise be payable hereunder in the same Currency between the same respective offices of the parties, then, on such date, each party’s obligation to make payment of such Premiums will be automatically satisfied and discharged and, if the aggregate Premiums that would otherwise have been payable by such office of one party exceeds the aggregate Premiums that would otherwise have been payable by such office of the other party, replaced by an obligation upon the party by whom the larger aggregate Premiums would have been payable to pay the other party the excess of the larger aggregate Premiums over the smaller aggregate Premiums, and if the aggregate Premiums are equal, no payment shall be made.
|
(d)
|
Payment Netting of FX Transactions and Currency Option Transactions.
Multiple Transaction Payment Netting shall not apply to FX Transactions or Currency Option Transactions. Unless otherwise mutually agreed by the parties, if on any date more than one delivery of a particular Currency is to be made between a pair of offices with respect to settlement of FX Transactions or Currency Option Transactions (but excluding payments with respect to option premiums and cash settled options), then each party shall aggregate the amounts of such Currency deliverable by it and only the difference between these aggregate amounts shall be delivered by the party owing the larger aggregate amount to the other party, and, if the aggregate amounts are equal, no delivery of the Currency shall be made.
|
(e)
|
Payment Instructions.
All payments to be made hereunder in respect of FX and Currency Option Transactions shall be made in accordance with standing payment instructions provided by the parties from tune to time in writing (or as otherwise specified in a Confirmation).
|
(f)
|
Automatic Exercise.
Article 3, Section 3.6(c)(i), line six of the FX Definitions which currently reads “one percent of the Strike Price” shall be amended to read “0.5% of the Strike Price,”
|
(g)
|
Terms Relating to Premium.
Article 3, Section 3.4. of the FX Definitions is hereby amended by the addition of the following as a new paragraph (c) of the FX Definitions.
|
|
|
BANCO BILBAO VIZCAYA
|
|
ARGENTARIA, S.A. (PARTY A)
|
|
|
|
By:
|
/s/ KRISTEN HOLM
|
Name:
|
Kristen Holm
|
Title:
|
Managing Director
|
Date:
|
May 26, 2016
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
Date:
|
|
|
|
EACH ENTITY LISTED IN EXHIBIT A
|
|
|
|
AS PARTY B
|
|
|
|
LKQ Corporation
|
|
By:
|
/s/ DOMNICK P. ZARCONE
|
Name:
|
Dominick P. Zarcone
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Date:
|
May 26, 2016
|
|
|
EURO CAR PARTS LImited
|
|
By:
|
/s/ JOHN QUINN
|
Name:
|
John Quinn
|
Title:
|
CEO & Managing Director, LKQ Europe
|
Date:
|
May 26, 2016
|
|
|
Keystone Automotive Industries ON, Inc.
|
|
By:
|
/s/ MICHAEL S. CLARK
|
Name:
|
Michael S. Clark
|
Title:
|
Vice President — Finance and Controller
|
Date:
|
May 26, 2016
|
|
|
Name of Party B
|
Domicile
|
LKQ Corporation Guarantee Applies
|
LKQ Corporation
|
State of Delaware, USA
|
No
|
Euro Car Parts Limited
|
England and Wales
|
Yes
|
Keystone Automotive Industries ON, Inc.
|
Province of Ontario, Canada
|
Yes
|
/s/ ROBERT L. WAGMAN
|
|
Robert L. Wagman
|
|
President and Chief Executive Officer
|
|
/
S
/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
Executive Vice President and Chief Financial Officer
|
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/
S
/ ROBERT L. WAGMAN
|
|
Robert L. Wagman
|
|
President and Chief Executive Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/
S
/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
Executive Vice President and Chief Financial Officer
|