|
x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
|
36-4215970
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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500 West Madison Street,
Suite 2800, Chicago, IL
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60661
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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|
Name of each exchange on which registered
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Common Stock, par value $.01 per share
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NASDAQ Global Select Market
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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•
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changes in economic and political activity in the U.S. and other countries in which we are located or do business, including the U.K. withdrawal from the European Union, and the impact of these changes on our businesses, the demand for our products and our ability to obtain financing for operations;
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•
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increasing competition in the automotive parts industry (including the potential competitive advantage to OEMs with "connected car" technology);
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•
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fluctuations in the pricing of new original equipment manufacturer (“OEM”) replacement products;
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•
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changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and auto repairers;
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•
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changes to our business relationships with insurance companies or changes by insurance companies to their business practices relating to the use of our products;
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•
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our ability to identify sufficient acquisition candidates at reasonable prices to maintain our growth objectives;
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•
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our ability to integrate, realize expected synergies, and successfully operate acquired companies and any companies acquired in the future, and the risks associated with these companies;
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•
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the implementation of a border tax or tariff on imports and the negative impact on our business due to the amount of inventory we import;
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•
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restrictions or prohibitions on selling certain aftermarket products to the extent OEMs seek and obtain more design patents than they have in the past and are successful in asserting infringement of these patents and defending their validity;
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•
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variations in the number of vehicles manufactured and sold, vehicle accident rates, miles driven, and the age profile of vehicles in accidents;
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•
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the increase of accident avoidance systems being installed in vehicles;
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•
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the potential loss of sales of certain mechanical parts due to the rise of electric vehicle sales;
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•
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fluctuations in the prices of fuel, scrap metal and other commodities;
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•
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changes in laws or regulations affecting our business;
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•
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higher costs and the resulting potential inability to service our customers to the extent that our suppliers decide to discontinue business relationships with us;
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•
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price increases, interruptions or disruptions to the supply of vehicle parts from aftermarket suppliers and vehicles from salvage auctions;
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•
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changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
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•
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the risks associated with operating in foreign jurisdictions, including foreign laws and economic and political instabilities;
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•
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declines in the values of our assets;
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•
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additional unionization efforts, new collective bargaining agreements, and work stoppages;
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•
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our ability to develop and implement the operational and financial systems needed to manage our operations;
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•
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interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems;
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•
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costs of complying with laws relating to the security of personal information;
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•
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product liability claims by the end users of our products or claims by other parties who we have promised to indemnify for product liability matters;
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•
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costs associated with recalls of the products we sell;
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•
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potential losses of our right to operate at key locations if we are not able to negotiate lease renewals;
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•
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inaccuracies in the data relating to our industry published by independent sources upon which we rely;
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•
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currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies;
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•
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our ability to obtain financing on acceptable terms to finance our growth;
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•
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our ability to satisfy our debt obligations and to operate within the limitations imposed by financing arrangements; and
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•
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changes to applicable U.S. and foreign tax laws, changes to interpretations of tax laws, and changes of our mix of earnings among the jurisdictions in which we operate.
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•
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2007 acquisition of Keystone Automotive Industries, Inc., which, at the time of acquisition, was the leading domestic distributor of aftermarket products, including collision replacement products, paint products, refurbished steel bumpers, bumper covers and alloy wheels.
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•
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2011 acquisition of Euro Car Parts Holdings Limited ("ECP"), a vehicle mechanical aftermarket parts distribution company operating in the United Kingdom. This acquisition served as our entrance into the European automotive aftermarket business, from which we have expanded our European footprint through organic growth and subsequent acquisitions.
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•
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2013 acquisition of Sator Beheer B.V. ("Sator"), a vehicle mechanical aftermarket parts distribution company based in the Netherlands, with operations in the Netherlands, Belgium and Northern France. This acquisition allowed us to further expand our geographic presence into continental Europe.
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•
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2014 acquisition of Keystone Automotive Holdings, Inc. (“Keystone Specialty”), which expanded our product offering and increased our addressable market to include specialty vehicle aftermarket equipment and accessories.
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•
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2016 acquisition of Rhiag-Inter Auto Parts Italia S.p.A. (“Rhiag”), a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Slovakia, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Poland and Spain. This acquisition expanded our geographic presence in continental Europe.
|
•
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On December 11, 2017, we announced that we have signed a definitive agreement to acquire Stahlgruber GmbH (“Stahlgruber”) from Stahlgruber Otto Gruber AG. Stahlgruber is a leading European wholesale distributor of aftermarket spare parts for passenger cars, tools, capital equipment and accessories with operations in Germany, Austria, Czech Republic, Italy, Slovenia, and Croatia with further sales to Switzerland. This acquisition will expand our geographic presence in continental Europe as we continue to expand our Pan-European distribution network. The transaction is expected to be completed in the first half of 2018 and is subject to regulatory approvals.
|
•
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Extensive in-place network.
We have invested significant capital to develop a network of alternative and specialty vehicle parts facilities across our operating segments. Additionally, our ability to move inventory throughout our distribution networks increases the availability of our products and helps us to fill a relatively high percentage of our customers’ requests. In order to expand our distribution network, we will continue to seek to enter new markets and to improve penetration through both organic development and acquisitions. We will continue to seek opportunities to leverage the distribution network by delivering more parts through our existing network in our North America and Specialty operations. We believe our North America segment has the largest distribution network of alternative vehicle parts and accessories in the U.S. and Canada. In our Europe segment, we are implementing a strategy similar to our North America operations by establishing a Pan-European distribution network. We currently have operations in 18 different European countries, which we believe represents the broadest and largest footprint in the aftermarket industry in Europe. On a global basis, we have approximately 1,500 locations as part of our distribution network.
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•
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Acquisitions.
We have focused on growth through acquisitions both domestically and abroad. The primary objective of our acquisitions is to expand our presence to new or adjacent geographic markets and to expand into other product lines and businesses that may benefit from our operating strengths, in each case with the aim of increasing the size of our addressable market. When we identify potential acquisitions, we attempt to target companies with a leading market presence, an experienced management team and workforce that provide a fit with our existing operations, and strong cash flows. After completing an acquisition, we focus on integrating the company with our existing business to provide additional value to the combined entity through cost savings and synergies, such as logistics cost synergies resulting from integration with our existing distribution network, administrative cost savings, shared procurement, and cross-selling opportunities.
|
•
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Strong business relationships.
We have developed business relationships with key constituents, including automobile insurance companies, suppliers and other industry participants in North America and Europe.
|
•
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Broad product offering.
The breadth and depth of our inventory across all of our operating segments reinforces our ability to provide a “one-stop” solution for our customers’ alternative vehicle replacement, maintenance, and specialty vehicle product needs.
|
•
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High fulfillment rates.
We manage local inventory levels to improve delivery and maximize customer service. Improving local order fulfillment rates reduces transfer costs and delivery times, and improves customer satisfaction.
|
•
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Technology driven business processes.
We focus on technology development as a way to support our competitive advantage. We believe that we can more cost effectively leverage our data to make better business decisions than our smaller competitors.
|
•
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Adaptation to evolving technology in the automotive industry.
We are committed to monitoring and adapting our business to the technological changes in the automotive industry. We have recently established a strategy and innovation team that will help us to be more forward-looking and to assess the potential opportunities and risks associated with several areas including, but not limited to, e-commerce, accident avoidance systems, autonomous vehicles, electric vehicles and ride-sharing trends.
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•
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the key personnel of the acquired company may decide not to work for us;
|
•
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customers of the acquired company may decide not to purchase products from us;
|
•
|
suppliers of the acquired company may decide not to sell products to us;
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•
|
we may experience business disruptions as a result of information technology systems conversions;
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•
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we may experience additional financial and accounting challenges and complexities in areas such as tax planning, treasury management, and financial reporting;
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•
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we may be held liable for environmental, tax or other risks and liabilities as a result of our acquisitions, some of which we may not have discovered during our due diligence;
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•
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we may intentionally assume the liabilities of the companies we acquire, which could result in material adverse effects on our business;
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•
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our existing business may be disrupted or receive insufficient management attention;
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•
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we may not be able to realize the cost savings or other financial benefits we anticipated, either in the amount or in the time frame that we expect; and
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•
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we may incur debt or issue equity securities to pay for any future acquisition, the issuance of which could involve the imposition of restrictive covenants or be dilutive to our existing stockholders.
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•
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increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes;
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•
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limit our flexibility in planning for, or reacting to, changes in our business and industry;
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•
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place us at a disadvantage compared to competitors that may have proportionately less debt;
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•
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limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and
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•
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increase our cost of borrowing.
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•
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incur, assume or permit to exist additional indebtedness (including guarantees thereof);
|
•
|
pay dividends or certain other distributions on our capital stock or repurchase our capital stock or prepay subordinated indebtedness;
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•
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incur liens on assets;
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•
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make certain investments or other restricted payments;
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•
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engage in transactions with affiliates;
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•
|
sell certain assets or merge or consolidate with or into other companies;
|
•
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guarantee indebtedness; and
|
•
|
alter the business we conduct.
|
•
|
was insolvent or rendered insolvent by reason of such incurrence;
|
•
|
was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or
|
•
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intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.
|
•
|
the sum of its debts, including contingent liabilities, was greater than the fair value of its assets;
|
•
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the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or
|
•
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it could not pay its debts as they become due.
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ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
|
|
Low
|
||||
2017
|
|
|
|
||||
Fourth Quarter
|
$
|
41.42
|
|
|
$
|
35.78
|
|
Third Quarter
|
$
|
36.05
|
|
|
$
|
31.17
|
|
Second Quarter
|
$
|
33.09
|
|
|
$
|
27.85
|
|
First Quarter
|
$
|
33.17
|
|
|
$
|
29.03
|
|
2016
|
|
|
|
||||
Fourth Quarter
|
$
|
35.58
|
|
|
$
|
29.57
|
|
Third Quarter
|
$
|
36.35
|
|
|
$
|
31.18
|
|
Second Quarter
|
$
|
34.26
|
|
|
$
|
29.37
|
|
First Quarter
|
$
|
32.12
|
|
|
$
|
23.95
|
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
||||||||||||
LKQ Corporation
|
$
|
100
|
|
|
$
|
156
|
|
|
$
|
133
|
|
|
$
|
140
|
|
|
$
|
145
|
|
|
$
|
193
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
132
|
|
|
$
|
150
|
|
|
$
|
152
|
|
|
$
|
170
|
|
|
$
|
207
|
|
Peer Group
|
$
|
100
|
|
|
$
|
122
|
|
|
$
|
149
|
|
|
$
|
150
|
|
|
$
|
169
|
|
|
$
|
171
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(in thousands, except per share data)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
||||||||||
Statements of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
9,736,909
|
|
|
$
|
8,584,031
|
|
|
$
|
7,192,633
|
|
|
$
|
6,740,064
|
|
|
$
|
5,062,528
|
|
Cost of goods sold
|
5,937,286
|
|
|
5,232,328
|
|
|
4,359,104
|
|
|
4,088,151
|
|
|
2,987,126
|
|
|||||
Gross margin
|
3,799,623
|
|
|
3,351,703
|
|
|
2,833,529
|
|
|
2,651,913
|
|
|
2,075,402
|
|
|||||
Operating income
|
847,318
|
|
|
763,398
|
|
|
704,627
|
|
|
649,868
|
|
|
530,180
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
101,640
|
|
|
88,263
|
|
|
57,860
|
|
|
64,542
|
|
|
51,184
|
|
|||||
Other (income) expense, net
|
(20,949
|
)
|
|
(2,146
|
)
|
|
(2,263
|
)
|
|
(2,562
|
)
|
|
3,169
|
|
|||||
Income from continuing operations before provision for income taxes
|
766,627
|
|
|
677,281
|
|
|
649,030
|
|
|
587,888
|
|
|
475,827
|
|
|||||
Provision for income taxes
|
235,560
|
|
|
220,566
|
|
|
219,703
|
|
|
204,264
|
|
|
164,204
|
|
|||||
Equity in earnings (loss) of unconsolidated subsidiaries
|
5,907
|
|
|
(592
|
)
|
|
(6,104
|
)
|
|
(2,105
|
)
|
|
—
|
|
|||||
Income from continuing operations
|
536,974
|
|
|
456,123
|
|
|
423,223
|
|
|
381,519
|
|
|
311,623
|
|
|||||
Net (loss) income from discontinued operations
|
(6,746
|
)
|
|
7,852
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
530,228
|
|
|
463,975
|
|
|
423,223
|
|
|
381,519
|
|
|
311,623
|
|
|||||
Less: net loss attributable to noncontrolling interest
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to LKQ stockholders
|
$
|
533,744
|
|
|
$
|
463,975
|
|
|
$
|
423,223
|
|
|
$
|
381,519
|
|
|
$
|
311,623
|
|
Basic earnings per share:
(6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
1.74
|
|
|
$
|
1.49
|
|
|
$
|
1.39
|
|
|
$
|
1.26
|
|
|
$
|
1.04
|
|
Net (loss) income from discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
1.72
|
|
|
1.51
|
|
|
1.39
|
|
|
1.26
|
|
|
1.04
|
|
|||||
Less: net loss attributable to noncontrolling interest
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to LKQ stockholders
|
$
|
1.73
|
|
|
$
|
1.51
|
|
|
$
|
1.39
|
|
|
$
|
1.26
|
|
|
$
|
1.04
|
|
Diluted earnings per share:
(6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
1.73
|
|
|
$
|
1.47
|
|
|
$
|
1.38
|
|
|
$
|
1.25
|
|
|
$
|
1.02
|
|
Net (loss) income from discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
1.71
|
|
|
1.50
|
|
|
1.38
|
|
|
1.25
|
|
|
1.02
|
|
|||||
Less: net loss attributable to noncontrolling interest
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to LKQ stockholders
|
$
|
1.72
|
|
|
$
|
1.50
|
|
|
$
|
1.38
|
|
|
$
|
1.25
|
|
|
$
|
1.02
|
|
Weighted average shares outstanding-basic
|
308,607
|
|
|
306,897
|
|
|
304,722
|
|
|
302,343
|
|
|
299,574
|
|
|||||
Weighted average shares outstanding-diluted
|
310,649
|
|
|
309,784
|
|
|
307,496
|
|
|
306,045
|
|
|
304,131
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
518,900
|
|
|
$
|
635,014
|
|
|
$
|
544,282
|
|
|
$
|
388,711
|
|
|
$
|
446,404
|
|
Net cash used in investing activities
|
(384,595
|
)
|
|
(1,709,928
|
)
|
|
(329,993
|
)
|
|
(920,994
|
)
|
|
(505,606
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(112,567
|
)
|
|
1,225,737
|
|
|
(238,537
|
)
|
|
501,189
|
|
|
147,593
|
|
|||||
Capital expenditures
|
179,090
|
|
|
207,074
|
|
|
170,490
|
|
|
140,950
|
|
|
90,186
|
|
|||||
Cash paid for acquisitions, net of cash acquired
|
513,088
|
|
|
1,349,339
|
|
|
160,517
|
|
|
775,921
|
|
|
408,384
|
|
|||||
Depreciation and amortization
|
230,203
|
|
|
206,086
|
|
|
128,192
|
|
|
125,437
|
|
|
86,463
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
9,366,872
|
|
|
$
|
8,303,199
|
|
|
$
|
5,647,837
|
|
|
$
|
5,475,739
|
|
|
$
|
4,438,058
|
|
Working capital
(7)
|
2,499,410
|
|
|
2,045,273
|
|
|
1,588,742
|
|
|
1,491,169
|
|
|
1,062,926
|
|
|||||
Long-term obligations, including current portion
|
3,403,980
|
|
|
3,341,771
|
|
|
1,584,702
|
|
|
1,846,148
|
|
|
1,287,242
|
|
|||||
Total Company stockholders' equity
|
4,198,169
|
|
|
3,442,949
|
|
|
3,114,682
|
|
|
2,720,657
|
|
|
2,350,745
|
|
(1)
|
I
ncludes the results of operations of
26
businesses from their respective acquisition dates in 2017.
|
(2)
|
Includes the results o
f operations of: (i) Rhiag, from its acquisition effective March 18, 2016; (ii) the aftermarket automotive glass distribution business of Pittsburgh Glass Works LLC ("PGW autoglass"), from its acquisition effective April 21, 2016; and (iii) 13 other businesses from their respective acquisition dates in 2016.
|
(3)
|
Includes the results of operations of 18 businesses from their respective acquisition dates in 2015.
|
(4)
|
Includes the results of operations of Keystone Specialty from its acquisition effective January 3, 2014 and
22
other businesses from their respective acquisition dates in 2014.
|
(5)
|
Includes the results of operations of Sator from its acquisition effective May 1, 2013 and
19
other businesses from their respective acquisition dates in 2013.
|
(6)
|
The sum of the individual earnings per share amounts may not equal the total due to rounding.
|
(7)
|
Working capital amounts exclude assets and liabilities of discontinued operations.
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Restructuring expenses
|
$
|
5,012
|
|
(1)
|
$
|
15,782
|
|
(2)
|
$
|
(10,770
|
)
|
Acquisition related expenses
|
14,660
|
|
(3)
|
21,980
|
|
(4)
|
(7,320
|
)
|
|||
Total restructuring and acquisition related expenses
|
$
|
19,672
|
|
|
$
|
37,762
|
|
|
$
|
(18,090
|
)
|
(1)
|
Restructuring expenses for the year ended December 31, 2017 included $2 million, $2 million, and $1 million related to the integration of acquired businesses in our North America, Specialty, and Europe segments. These integration activities included the closure of duplicate facilities and termination of employees.
|
(2)
|
Restructuring expenses for the year ended December 31, 2016 included $10 million, $3 million, $2 million 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.
|
(3)
|
Acquisition related expenses for the year ended December 31, 2017 included $5 million of costs for our acquisition of Andrew Page, primarily related to legal and other professional fees associated with the CMA review. The remaining acquisition related costs for the year ended December 31, 2017 consisted of external costs for completed acquisitions; pending acquisitions as of December 31, 2017, including $4 million related to Stahlgruber; and potential acquisitions that were terminated.
|
(4)
|
Acquisition related expenses for the year ended December 31, 2016 reflect $11 million and $4 million related to the acquisitions of Rhiag and PGW autoglass, respectively. The remaining $7 million of expense was related to other completed acquisitions and acquisitions that were pending as of December 31, 2016.
|
|
Year Ended December 31,
|
|
|
|
||||||||
|
2017
|
|
2016
|
|
Change
|
|
||||||
Depreciation
|
$
|
117,859
|
|
|
$
|
107,945
|
|
|
$
|
9,914
|
|
(1)
|
Amortization
|
101,687
|
|
|
83,488
|
|
|
18,199
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
219,546
|
|
|
$
|
191,433
|
|
|
$
|
28,113
|
|
|
(1)
|
The increase in depreciation expense primarily reflected increases of $4 million and $2 million for property, plant and equipment recorded for our acquisitions of Andrew Page and Rhiag, respectively. Depreciation expense increased in 2017 for Andrew Page and Rhiag primarily due to both acquisitions having a full year of results in 2017 compared to a partial year in 2016 (from acquisition dates of October 4, 2016 and March 18, 2016, respectively, through December 31, 2016). The remaining change primarily reflected increased levels of property, plant and equipment to support our organic related growth.
|
(2)
|
The increase primarily reflected incremental amortization expense of (i) $14 million related to intangibles recorded for our acquisition of Rhiag and (ii) $3 million related to intangibles recorded for acquisitions within our Benelux operations during 2017.
|
Other expense, net for the year ended December 31, 2016
|
$
|
86,117
|
|
|
|
Increase (decrease) due to:
|
|
|
|||
Interest expense
|
13,377
|
|
(1)
|
||
Loss on debt extinguishment
|
(26,194
|
)
|
(2)
|
||
Gain on foreign exchange contracts - acquisition related
|
18,342
|
|
(3)
|
||
Gains on bargain purchases
|
4,337
|
|
(4)
|
||
Interest and other income, net
|
(15,288
|
)
|
(5)
|
||
Net decrease
|
(5,426
|
)
|
|
||
Other expense, net for the year ended December 31, 2017
|
$
|
80,691
|
|
|
(1)
|
Additional interest primarily related to borrowings used to fund our acquisitions of Rhiag and PGW.
|
(2)
|
During the first quarter of 2016, we incurred a $24 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 $3 million loss on debt extinguishment as a result of our January 2016 amendment to our senior secured credit agreement. We incurred an immaterial loss on debt extinguishment as a result of our December 2017 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 the date the funds were drawn to complete the acquisition, and as a result, these derivatives contracts generated a gain of $18 million.
|
(4)
|
In October 2016, we acquired Andrew Page out of receivership. We recorded a gain on bargain purchase of $8 million in the fourth quarter of 2016, as the fair value of the net assets acquired exceeded the purchase price. During the year ended December 31, 2017, we increased the gain on bargain purchase for this acquisition by $2 million as a result of changes to our estimate of the fair value of net assets acquired. We also recorded a gain on bargain purchase for another acquisition in Europe completed in the second quarter of 2017.
|
(5)
|
Interest and other income, net was higher in 2017 primarily due to the impact of foreign currency transaction gains and losses, which had a net $6 million favorable impact compared to the prior year period. This primarily included 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 purchases of inventory in our U.K. operations. Additionally, there was a $4 million gain due to a decrease in the fair value of contingent consideration liabilities. The remaining change related to miscellaneous other income.
|
|
Year Ended December 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Base provision for income taxes
|
$
|
266,403
|
|
|
$
|
235,355
|
|
(1)
|
Excess tax benefits from stock-based payments
|
(8,000
|
)
|
|
(11,441
|
)
|
(2)
|
||
U.S. tax reform deferred tax rate adjustment
|
(72,988
|
)
|
|
—
|
|
(3)
|
||
U.S. tax reform transition tax on foreign earnings
|
50,800
|
|
|
—
|
|
(4)
|
||
Other discrete items
|
(655
|
)
|
|
(3,348
|
)
|
|
||
Provision for income taxes
|
$
|
235,560
|
|
|
$
|
220,566
|
|
|
(1)
|
Excluding the impact of discrete items, our annual effective tax rate has been close to 35% over the prior two years. We are still evaluating the impact of the Tax Act on our future U.S. tax liability, but at this time, we expect that the overall impact of the Tax Act on our effective tax rate will be a decrease in the rate from previous years.
|
(2)
|
Represents a discrete item for excess tax benefits received upon the exercise of stock options or vesting of RSUs.
|
(3)
|
Represents the provisional estimate of the revaluation of deferred tax assets and liabilities as a result of the Tax Act which reduced the U.S. federal corporate tax rate.
|
(4)
|
Represents the provisional estimate of the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017 as a result of the Tax Act.
|
|
Year Ended December 31,
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
Restructuring expenses
|
$
|
15,782
|
|
(1)
|
$
|
13,083
|
|
(1)
|
$
|
2,699
|
|
Acquisition related expenses
|
21,980
|
|
(2)
|
6,428
|
|
(3)
|
15,552
|
|
|||
Total restructuring and acquisition related expenses
|
$
|
37,762
|
|
|
$
|
19,511
|
|
|
$
|
18,251
|
|
(1)
|
Restructuring expenses of $10 million, $3 million, $2 million for the year ended December 31, 2016 related to the integration of acquired businesses in our Specialty, North America and Europe segments, respectively. Restructuring expenses of $10 million, $2 million, and $1 million for the year ended December 31, 2015 were primarily related to
|
(2)
|
Acquisition related expenses for the year ended December 31, 2016 reflected $11 million and $4 million related to the acquisitions of Rhiag and PGW, respectively. The remaining $7 million of expense was related to other completed acquisitions and acquisitions that were pending as of December 31, 2016.
|
(3)
|
Acquisition related expenses for the year ended December 31, 2015 included $2 million for our acquisitions of 11 aftermarket parts distribution businesses in the Netherlands and $1 million related to our North America and Specialty acquisitions during the year. Acquisition related expenses also included $3 million for acquisitions that were pending as of December 31, 2015.
|
|
Year Ended December 31,
|
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
|
||||||
Depreciation
|
$
|
107,945
|
|
|
$
|
88,335
|
|
|
$
|
19,610
|
|
(1)
|
Amortization
|
83,488
|
|
|
33,785
|
|
|
49,703
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
191,433
|
|
|
$
|
122,120
|
|
|
$
|
69,313
|
|
|
(1)
|
The increase in depreciation expense primarily reflected the depreciation expense for property and equipment related to our acquisitions of Rhiag and PGW of $14 million and $2 million, respectively. The remaining change primarily reflected increased levels of property and equipment to support our organic related growth.
|
(2)
|
The increase in amortization expense primarily reflected amortization expense for intangible assets related to our acquisitions of Rhiag and PGW of $43 million and $8 million, respectively. These increases were partially 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 $24 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 $3 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 the date the funds were drawn to complete the acquisition, and as result, these derivatives contracts generated a gain of $18 million.
|
(4)
|
In October 2016, we acquired Andrew Page out of receivership. The fair value of the net assets acquired exceeded the purchase price, resulting in a gain on bargain purchase of $8 million.
|
|
Year Ended December 31,
|
||||||||||||||||
|
2017
|
|
% of Total Segment Revenue
|
|
2016
(1)
|
|
% of Total Segment Revenue
|
|
2015
(1)
|
|
% of Total Segment Revenue
|
||||||
Third Party Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
4,798,901
|
|
|
|
|
$
|
4,443,886
|
|
|
|
|
$
|
4,118,286
|
|
|
|
Europe
|
3,636,811
|
|
|
|
|
2,920,470
|
|
|
|
|
1,995,385
|
|
|
|
|||
Specialty
|
1,301,197
|
|
|
|
|
1,219,675
|
|
|
|
|
1,078,962
|
|
|
|
|||
Total third party revenue
|
$
|
9,736,909
|
|
|
|
|
$
|
8,584,031
|
|
|
|
|
$
|
7,192,633
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
4,799,651
|
|
|
|
|
$
|
4,444,625
|
|
|
|
|
$
|
4,119,121
|
|
|
|
Europe
|
3,636,811
|
|
|
|
|
2,920,470
|
|
|
|
|
1,995,455
|
|
|
|
|||
Specialty
|
1,305,516
|
|
|
|
|
1,223,723
|
|
|
|
|
1,082,296
|
|
|
|
|||
Eliminations
|
(5,069
|
)
|
|
|
|
(4,787
|
)
|
|
|
|
(4,239
|
)
|
|
|
|||
Total revenue
|
$
|
9,736,909
|
|
|
|
|
$
|
8,584,031
|
|
|
|
|
$
|
7,192,633
|
|
|
|
Segment EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
655,275
|
|
|
13.7%
|
|
$
|
589,945
|
|
|
13.3%
|
|
$
|
540,650
|
|
|
13.1%
|
Europe
|
319,156
|
|
|
8.8%
|
|
283,608
|
|
|
9.7%
|
|
200,563
|
|
|
10.1%
|
|||
Specialty
|
142,159
|
|
|
10.9%
|
|
131,427
|
|
|
10.7%
|
|
113,316
|
|
|
10.5%
|
(1)
|
In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year results have been recast to reflect the shift in reporting structure in order to present segment results on a comparable basis.
|
|
Year Ended December 31,
|
|
Percentage Change in Revenue
|
|||||||||||||||||
North America
|
2017
|
|
2016
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
|
|
Total Change
|
|||||||||
Parts & services revenue
|
$
|
4,278,531
|
|
|
$
|
4,009,129
|
|
|
3.0
|
%
|
(1
|
)
|
3.6
|
%
|
|
0.1
|
%
|
|
6.7
|
%
|
Other revenue
|
520,370
|
|
|
434,757
|
|
|
19.3
|
%
|
(2
|
)
|
0.4
|
%
|
|
0.0
|
%
|
|
19.7
|
%
|
||
Total third party revenue
|
$
|
4,798,901
|
|
|
$
|
4,443,886
|
|
|
4.6
|
%
|
|
3.2
|
%
|
|
0.1
|
%
|
|
8.0
|
%
|
|
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 largely attributable to increased sales volumes in our wholesale operations, primarily in our salvage operations and, to a lesser extent, our aftermarket operations. Within our salvage
|
(2)
|
The $86 million increase in other revenue primarily related to (i) a $57 million increase in revenue from scrap steel and other metals primarily related to higher prices and, to a lesser extent, increased volumes, year over year and (ii) a $25 million increase in revenue from metals found in catalytic converters (platinum, palladium, and rhodium) primarily due to higher prices, year over year.
|
(3)
|
Acquisition related growth in 2017 included $92 million, or 2.1%, from our PGW autoglass acquisition. The remainder of our acquired revenue growth reflected revenue from our acquisition of 11 wholesale businesses from the beginning of 2016 up to the one-year anniversary of the acquisition dates.
|
(1)
|
The improvement in gross margin reflected a 1.1% favorable impact in our salvage operations, primarily attributable to raising revenue per car by a greater rate than car costs. Revenue per car improved due to higher volumes of parts sold per car, which was a result of refinements to our buying algorithms, an emphasis on inventorying more parts off of each car purchased, and an increase in the number of days we hold each car before it is scrapped. This improvement was partially offset by an unfavorable impact of 0.4% attributable to our aftermarket operations. Within our aftermarket operations, we experienced a 0.4% decline in gross margin primarily as a result of higher input costs from suppliers as well as decreases in net prices caused by higher customer discounts. The remaining change in gross margin was attributable to individually insignificant fluctuations in gross margin across our other North America operations.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflected (i) a 0.3% increase in personnel costs, primarily related to facility and warehouse and SG&A and (ii) a 0.2% increase in freight costs driven by higher use of third party freight to handle increased volumes, partially offset by (iii) a 0.2% decrease in segment operating costs attributable to shared PGW corporate expenses incurred during 2016; these costs, which were primarily SG&A costs, ceased being incurred upon the closing of the sale of the glass manufacturing business on March 1, 2017.
|
|
Year Ended December 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2017
|
|
2016
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
3,628,906
|
|
|
$
|
2,915,841
|
|
|
5.3
|
%
|
|
19.8
|
%
|
|
(0.6
|
)%
|
|
24.5
|
%
|
Other revenue
|
7,905
|
|
|
4,629
|
|
|
47.6
|
%
|
|
24.8
|
%
|
|
(1.6
|
)%
|
|
70.8
|
%
|
||
Total third party revenue
|
$
|
3,636,811
|
|
|
$
|
2,920,470
|
|
|
5.3
|
%
|
|
19.8
|
%
|
|
(0.6
|
)%
|
|
24.5
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Parts and services revenue grew organically across all of our aftermarket business units in Europe from both existing locations and new branches. In Eastern Europe and Western Europe, we added 65 and 23 branches, respectively, since the beginning of the prior year, and organic revenue growth includes revenue from those locations. Revenue at our existing locations grew primarily as a result of increased volumes and, to a lesser extent, increased prices. Organic revenue growth for our Europe segment on a per day basis was 5.7% as there was one fewer selling day in 2017 compared to 2016.
|
(2)
|
Acquisition related growth for the year ended December 31, 2017 included $216 million, or 7.4%, from our acquisition of Rhiag and $141 million, or 4.8%, from our acquisition of Andrew Page. The remainder of our acquired revenue growth included revenue from our acquisitions of 23 wholesale businesses in our Europe segment since the beginning of 2016 through the one-year anniversary of the acquisitions.
|
(3)
|
Compared to the prior year, exchange rates reduced our revenue growth by $18 million, or 0.6%, primarily due to the stronger U.S. dollar against the pound sterling during 2017 relative to 2016, partially offset by the weaker U.S. dollar against the euro during 2017 relative to 2016.
|
(1)
|
The decline in gross margin was due to (i) a 0.6% decrease due to our U.K. operations primarily as a result of an increase in inventory reserves and incremental costs related to the Tamworth distribution facility, which shifted from operating expenses to cost of goods sold when the facility went live, (ii) a 0.3% decrease due to an unfavorable mix impact as a result of generating a higher proportion of our revenue from our Rhiag operations, which have lower gross margins than our other Europe operations, (iii) a 0.3% decrease due to an acquisition in Eastern Europe during the year which has lower gross margins than our other Europe operations, partially offset by (iv) a 0.6% increase in gross margin in our Benelux operations primarily due to increased private label sales, which have higher gross margins, and (v) a 0.2% increase due to a favorable impact related to an increase in supplier rebates as a result of centralized procurement for our Europe segment. The remaining change in gross margin was attributable to individually
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflected (i) an increase of 0.8% in operating expenses as a result of the acquisition of Andrew Page, which has higher operating expenses as a percentage of revenue than our other Europe operations and (ii) an increase of 0.4% in operating expenses in our Benelux operations, primarily due to increased personnel costs related to distribution, partially offset by (iii) a 0.2% favorable mix impact due to our acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our other Europe operations. The remaining decrease in segment operating expenses reflected a number of individually insignificant fluctuations in operating expenses as a percentage of revenue.
|
(3)
|
Approximately half of the decrease in other expense, net was due to the impact of foreign currency transaction gains and losses, primarily due to unrealized mark-to-market gains and losses on foreign currency forward contracts used to hedge the purchases of inventory in our U.K. operations, which were favorable in 2017 relative to the prior year. The remaining decrease in other expense, net reflected a number of individually insignificant fluctuations in other expense, net as a percentage of revenue.
|
|
Year Ended December 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2017
|
|
2016
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,301,197
|
|
|
$
|
1,219,675
|
|
|
4.7
|
%
|
|
1.9
|
%
|
|
0.1
|
%
|
|
6.7
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
1,301,197
|
|
|
$
|
1,219,675
|
|
|
4.7
|
%
|
|
1.9
|
%
|
|
0.1
|
%
|
|
6.7
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in parts & services revenue was driven by increased sales volumes of Truck, Towing and RV parts sales. This organic growth was fueled by favorable economic conditions in most of our primary selling regions, as well as increased sales volumes of light trucks and RVs. Organic revenue growth for our Specialty segment on a per day basis was 5.1%, as there was one fewer selling day in 2017 compared to 2016.
|
(2)
|
Acquisition related growth in 2017 included $20 million, or 1.7%, from our acquisition of Warn. The remainder of our acquired revenue growth reflected revenue from our acquisition of 3 wholesale businesses from the beginning of 2016 up to the one-year anniversary of the acquisition dates.
|
(1)
|
The decline in gross margin primarily reflected a 0.5% decrease due to higher overhead costs in inventory, which is driven by warehouse costs for two new distribution centers that became fully functional in 2016.
|
(2)
|
The decrease in segment operating expenses reflected (i) favorable facility and warehouse expenses of 0.7% primarily related to the integration of Coast facilities and (ii) favorable personnel costs of 0.2% in SG&A as a result of synergies realized on the integration of Coast facilities.
|
|
Year Ended December 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
North America
|
2016
|
|
2015
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
(4)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
4,009,129
|
|
|
$
|
3,643,883
|
|
|
2.9
|
%
|
(1)
|
7.4
|
%
|
|
(0.3
|
)%
|
|
10.0
|
%
|
Other revenue
|
434,757
|
|
|
474,403
|
|
|
(11.2
|
)%
|
(2)
|
3.0
|
%
|
|
(0.1
|
)%
|
|
(8.4
|
)%
|
||
Total third party revenue
|
$
|
4,443,886
|
|
|
$
|
4,118,286
|
|
|
1.3
|
%
|
|
6.9
|
%
|
|
(0.2
|
)%
|
|
7.9
|
%
|
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 primarily attributable to favorable pricing. Increased pricing in our wholesale operations, primarily in our salvage operations, was a result of shifting our salvage vehicle purchasing to higher quality vehicles, which raised the average revenue per part sold. Organic revenue also grew due to increased sales volumes 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. 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. Organic revenue growth in parts and services was also negatively affected by milder winter weather conditions in North America in the first quarter of 2016, which we believe impacted volume for the rest of the year.
|
(2)
|
The $40 million decrease in other revenue primarily relates to (i) a $21 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium, and rhodium), aluminum wheels, and copper wiring, 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) an $8 million decline in revenue from scrap steel and other metals primarily related to lower prices.
|
(3)
|
Acquisition related growth in 2016 includes $209 million from our acquisition of PGW autoglass. The remainder of our acquired revenue growth reflects revenue from our acquisition of nine wholesale businesses and a self service retail operation from the beginning of 2015 up to the one year anniversary of the acquisition dates.
|
(4)
|
Compared to the prior year, exchange rates reduced our revenue growth by 0.2%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar compared to the prior year.
|
(1)
|
The improvement in gross margin reflects a 0.8% favorable impact from our self service operations, as car costs decreased by a greater percentage year over year than revenue. Within our wholesale operations, we experienced a 0.5% favorable impact on gross margin as a result of procurement initiatives implemented in our aftermarket operations during 2016, which reduced our product costs. Partially offsetting these increases was an unfavorable impact of 0.4% related to our acquisition of PGW autoglass, which had lower gross margins than our existing North America operations as a result of a non-recurring inventory step-up adjustment recorded upon acquisition and higher cost products sourced from the glass manufacturing side of the business.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflects (i) an increase in operating expenses of 0.4% related to our PGW autoglass acquisition, which had higher operating expenses as a percentage of revenue than our existing North America operations as a result of incremental costs related to shared PGW corporate expenses that did not reoccur after the sale of the PGW glass manufacturing business, and (ii) a 0.3% increase in personnel costs as a percentage of revenue. These increases were partially offset by a 0.2% improvement in fuel prices as a percentage of revenue.
|
|
Year Ended December 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2016
|
|
2015
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
2,915,841
|
|
|
$
|
1,991,106
|
|
|
7.2
|
%
|
|
47.1
|
%
|
|
(7.9
|
)%
|
|
46.4
|
%
|
Other revenue
|
4,629
|
|
|
4,279
|
|
|
(0.6
|
)%
|
|
15.7
|
%
|
|
(7.0
|
)%
|
|
8.2
|
%
|
||
Total third party revenue
|
$
|
2,920,470
|
|
|
$
|
1,995,385
|
|
|
7.2
|
%
|
|
47.1
|
%
|
|
(7.9
|
)%
|
|
46.4
|
%
|
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 8.1%, while in Benelux region operations, parts and services revenue grew organically by 4.5%. Our organic revenue growth in the U.K., which resulted from higher sales volumes, was composed of a 6.6% increase in revenue from stores open more than 12 months and a 1.5% increase in revenue generated by 21 branch openings since the beginning of the prior year through the one-year anniversary of their respective opening dates. Organic revenue growth in our Benelux region was primarily due to a favorable mix impact resulting from a shift in sales to higher price products as well as increased prices; organic revenue also grew as a result of an additional selling day in 2016 compared to the prior year.
|
(2)
|
Acquisition related growth for the year-ended December 31, 2016 includes $848 million from our acquisition of Rhiag. The remainder of our acquired revenue growth includes revenue from our acquisitions of 14 distribution companies in the Netherlands, 3 wholesale businesses in our U.K. operations, and 3 salvage businesses in Sweden since the beginning of 2015 through the one-year anniversary of the acquisitions.
|
(3)
|
Compared to the prior year, exchange rates reduced our revenue growth by $158 million, or 7.9%, primarily due to the strengthening of the U.S. dollar against the pound sterling relative to 2015.
|
(1)
|
The decrease in gross margin reflects a 1.3% 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 1.8% in operating expenses as a result of the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our other Europe operations and (ii) a 0.3% decrease in distribution expenses in our U.K. operations due to reduced personnel costs. Partially offsetting these decreases were (i) an increase in facility and warehouse expenses of 0.8% from a 0.5% increase primarily related to the opening of 21 new branches and 6 new hubs since the prior year and 0.3% related to the addition of facility and personnel costs for the Tamworth distribution facility, and (ii) an increase of 0.3% in operating expenses as a result of the acquisition of Andrew Page, which has higher operating expenses as a percentage of revenue than our other Europe operations. While we had closed the Andrew Page acquisition and were consolidating its results, we were not permitted to integrate this acquisition with our existing U.K. operations until we received approval from the U.K. Competition and Markets Authority, which concluded its approval process in October 2017.
|
|
Year Ended December 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2016
|
|
2015
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,219,675
|
|
|
$
|
1,078,962
|
|
|
6.7
|
%
|
|
6.6
|
%
|
|
(0.3
|
)%
|
|
13.0
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
1,219,675
|
|
|
$
|
1,078,962
|
|
|
6.7
|
%
|
|
6.6
|
%
|
|
(0.3
|
)%
|
|
13.0
|
%
|
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 throughout North America as we continued to expand the breadth and depth of our inventory offerings and added delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. Through most of 2016, we also saw growth from favorable macro trends and economic conditions, which increased consumer discretionary spending on automotive and recreational vehicle parts and accessories.
|
(2)
|
Acquisition related growth reflects the impact of the Coast acquisition on August 19, 2015 through the one year anniversary of the acquisition.
|
(3)
|
Compared to the prior year, exchange rates reduced our revenue growth by $3 million, or 0.3%, primarily due to the strengthening of the U.S dollar against the Canadian dollar relative to 2015.
|
(1)
|
The decline in gross margin reflects (i) a 0.4% unfavorable impact due to customer volume rebates which have increased along with sales volume, (ii) a 0.3% increase in inventory costs, which were higher due to the stocking of two distribution centers, one of which was not yet operational in the prior year period and one which became operational in the fourth quarter of 2015, and (iii) a decrease in advertising credits of 0.3% due to higher purchase volume in 2015 from the initial stocking of those two new distribution centers. These negative effects were partially offset by a 0.4% improvement due to Coast related freight synergies as more volume went through the existing Specialty network.
|
(2)
|
The decrease in segment operating expenses reflects a favorable 0.9% reduction in selling, general and administrative expenses primarily related to (i) a 0.3% decline in personnel costs from the realization of integration synergies, (ii) lower bad debt expense of 0.2% due to increased collection efforts and (iii) individually insignificant decreases across various selling, general and administrative expense categories totaling 0.4%. Favorable distribution expenses of 0.2% due to lower fuel and freight costs were offset by an increase in facilities and warehouse expense primarily related to the higher cost of Coast facilities as well as the addition of two new distribution centers.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Cash and cash equivalents
|
$
|
279,766
|
|
|
$
|
227,400
|
|
Total debt
(1)
|
3,428,280
|
|
|
3,365,687
|
|
||
Current maturities
(2)
|
129,184
|
|
|
68,414
|
|
||
Capacity under credit facilities
(3)
|
2,850,000
|
|
|
2,550,000
|
|
||
Availability under credit facilities
(3)
|
1,395,081
|
|
|
1,019,112
|
|
||
Total liquidity (cash and cash equivalents plus availability under credit facilities)
|
1,674,847
|
|
|
1,246,512
|
|
(1)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$24 million
as of December 31, 2017 and 2016).
|
(2)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$3 million
and
$2 million
as of December 31, 2017 and 2016, respectively).
|
(3)
|
Capacity under credit facilities includes our revolving credit facilities and our receivables securitization facility. Availability under credit facilities is reduced by our letters of credit.
|
•
|
Senior secured credit facilities maturing in January 2023, composed of term loans totaling $750 million (
$705 million
outstanding at December 31, 2017) and $2.75 billion in revolving credit (
$1.3 billion
outstanding at December 31, 2017), bearing interest at variable rates (although a portion of this debt is hedged through interest rate swap contracts), reduced by $71 million of amounts outstanding under letters of credit
|
•
|
U.S. Notes (2023) totaling
$600 million
, maturing in May 2023 and bearing interest at a 4.75% fixed rate
|
•
|
Euro Notes (2024) totaling $
600 million
(€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate
|
•
|
Receivables securitization facility with availability up to $100 million (
$100 million
outstanding as of
December 31, 2017
), maturing in November 2019 and bearing interest at variable commercial paper rates
|
(1)
|
The total debt amounts presented above reflect the gross values to be repaid (excluding debt issuance costs of
$24 million
as of December 31, 2017).
|
(1)
|
In North America, aftermarket purchases during the year ended December 31, 2017 increased compared to the prior year as we decided to expand our inventory as a result of procurement initiatives to support growth across our operations. The remaining increase is primarily as a result of our acquisition of PGW autoglass in April 2016, which added incremental purchases of $72 million in 2017.
|
(2)
|
In our Europe segment, the increase in purchases during the year ended December 31, 2017 is primarily related to our acquisition of Rhiag in March 2016, which added incremental purchases of $181 million in 2017. Purchases for our U.K. operations increased in 2017 compared to the prior year primarily as a result of our acquisition of Andrew Page in October 2016, which added incremental purchases of $107 million in 2017, partially offset by the devaluation of the pound sterling in 2017 compared to the prior year. Purchases for our Benelux operations increased by $71 million in 2017 compared to the prior year primarily as a result of our acquisition of the aftermarket parts distribution businesses in Belgium in July 2017, which had purchases of $46 million in 2017. The remaining increase in our Benelux operations was primarily due to incremental inventory purchases to achieve supplier purchase rebates.
|
(3)
|
The increase in Specialty inventory purchases during 2017 compared to the prior year is primarily due to increased sales volumes for Truck, Towing and RV parts. Additionally, the acquisition of Warn in November 2017 added incremental purchases of $11 million, which includes purchases of aftermarket inventory and raw materials used in the manufacturing of specialty products.
|
|
Year Ended December 31,
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|
|||
North America wholesale salvage cars and trucks
|
310
|
|
|
291
|
|
|
6.5
|
%
|
(1)
|
Europe wholesale salvage cars and trucks
|
25
|
|
|
23
|
|
|
8.7
|
%
|
|
Self service and "crush only" cars
|
542
|
|
|
524
|
|
|
3.4
|
%
|
(2)
|
(1)
|
The number of salvage cars and trucks purchased during the year ended December 31, 2017 increased primarily due to a decision to increase the number of salvage cars and trucks dismantled compared to the prior year.
|
Net cash provided by operating activities for the year ended December 31, 2016
|
$
|
635
|
|
|
Increase (decrease) due to:
(1)
|
|
|
||
Discontinued operations
|
(68
|
)
|
(2)
|
|
Operating income
|
84
|
|
(3)
|
|
Non-cash depreciation and amortization expense
|
32
|
|
(4)
|
|
Cash paid for taxes
|
(43
|
)
|
(5)
|
|
Cash paid for interest
|
(10
|
)
|
(6)
|
|
Working capital accounts:
(7)
|
|
|
||
Inventory
|
(133
|
)
|
(8)
|
|
Accounts payable
|
8
|
|
|
|
Accounts receivable
|
27
|
|
|
|
Other operating activities
|
(13
|
)
|
(9)
|
|
Net cash provided by operating activities for the year ended December 31, 2017
|
$
|
519
|
|
|
(1)
|
Other than discontinued operations, the amounts presented represent increases (decreases) in operating cash flows attributable to our continuing operations only.
|
(2)
|
Represents the change in cash flows for our glass manufacturing business, which was acquired in April 2016 and disposed of on March 1, 2017.
|
(3)
|
During 2017, our operating income increased compared to the prior year due to both acquisition related growth and organic growth.
|
(4)
|
Non-cash depreciation and amortization expense increased compared to the prior year as discussed in the Results of Operations - Consolidated section.
|
(5)
|
Cash paid for taxes increased during 2017 compared to the prior year as a result of growth in the business from both organic growth and acquisitions, and the timing of tax payments.
|
(6)
|
Cash paid for interest increased compared to the prior year primarily as a result of interest payments related to our Euro Notes (2024), which were issued in April 2016. In the prior year, we made one semi-annual interest payment related to these notes, whereas in 2017 we made two semi-annual interest payments.
|
(7)
|
Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period and can be influenced by factors outside of our control. However, we expect that the net change in these working capital items will generally be a cash outflow as we expect to grow our business each year.
|
(8)
|
The period over period increase in cash outflows for inventory was primarily related to our North America segment as described in the procurement section above.
|
(9)
|
Reflects a number of individually insignificant fluctuations in cash paid for other operating activities.
|
(1)
|
In North America, aftermarket purchases for the year increased primarily as a result of incremental purchases of $141 million related to our April 2016 acquisition of PGW autoglass. Additionally, North America aftermarket inventory purchases increased as a result of our July 2015 acquisition of Parts Channel coupled with lower purchase levels in the first quarter of 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 2016, which added incremental purchases of $710 million during 2016. Purchases for our U.K. operations increased in 2016 compared to the prior year primarily as a result of 21 branch openings since the beginning of the prior year and incremental inventory purchases to stock the Tamworth, England national distribution center. Purchases in our Netherlands operations increased as a result of organic and acquisition related growth. These increases were partially offset by the devaluation of the pound sterling in 2016 compared to the prior year.
|
(3)
|
The increase in Specialty aftermarket purchases was 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 2016 due to stronger than anticipated sales volumes as a result of our annual trade shows.
|
|
Year Ended December 31,
|
|
|||||||
|
2016
|
|
2015
|
|
% Change
|
|
|||
North America wholesale salvage cars and trucks
|
291
|
|
|
290
|
|
|
0.3
|
%
|
|
Europe wholesale salvage cars and trucks
|
23
|
|
|
20
|
|
|
15.0
|
%
|
|
Self service and "crush only" cars
|
524
|
|
|
471
|
|
|
11.3
|
%
|
(1)
|
(1)
|
Compared to the prior year, we increased our purchase of lower cost self service and "crush only" cars in 2016 as prices for vehicles came 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.
|
Net cash provided by operating activities for the year ended December 31, 2015
|
$
|
544
|
|
|
Increase (decrease) due to:
(1)
|
|
|
||
Discontinued operations
|
64
|
|
(2)
|
|
Income from continuing operations before provision for income taxes
|
28
|
|
(3)
|
|
Non-cash depreciation and amortization expense
|
70
|
|
(4)
|
|
Cash paid for taxes
|
(37
|
)
|
(5)
|
|
Working capital accounts:
(6)
|
|
|
||
Accounts receivable
|
(80
|
)
|
(7)
|
|
Inventory
|
17
|
|
(8)
|
|
Accounts payable
|
21
|
|
(9)
|
|
Other operating activities
|
8
|
|
|
|
Net cash provided by operating activities for the year ended December 31, 2016
|
$
|
635
|
|
|
(1)
|
Other than discontinued operations, the amounts presented represent increases (decreases) in operating cash flows attributable to our continuing operations only.
|
(2)
|
Represents cash flows for our glass manufacturing business, which was acquired in April 2016.
|
(3)
|
During 2016, our operating income increased compared to the prior year due to both acquisition related growth and organic growth.
|
(4)
|
Non-cash depreciation and amortization expense increased compared to the prior year primarily as a result of our Rhiag and PGW acquisitions.
|
(5)
|
Cash paid for taxes increased during 2016 compared to the prior year as a result of growth in the business, primarily related to our Rhiag acquisition.
|
(6)
|
Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period and can be influenced by factors outside of our control. However, we expect that the net change in these working capital items will generally be a cash outflow as we expect to grow our business each year.
|
(7)
|
The increase in cash outflows for accounts receivable is primarily related to our U.K. operations as a result of increased sales; the remaining increase primarily related to our Specialty operations, which experienced larger growth in receivables balances during 2016 than the prior year period from organic and acquisition revenue growth.
|
(8)
|
Compared to the prior year, cash outflows related to inventory declined primarily as a result of our North America and Specialty operations. This was partially offset by inventory growth in our U.K. operations as a result of incremental inventory purchases to stock new branches and the Tamworth, England national distribution center.
|
(9)
|
Accounts payable represented a $17 million cash inflow in 2016 compared to a $4 million cash outflow in the prior year. The increase is primarily related to a rise in the payables balance in our U.K. operations, partially offset by a decline in the payables balance in our North America and Rhiag operations due to the timing of payments.
|
|
Total
(6)
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
Contractual obligations
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(1)
|
$
|
3,982.0
|
|
|
$
|
232.6
|
|
|
$
|
389.2
|
|
|
$
|
276.1
|
|
|
$
|
3,084.1
|
|
Capital lease obligations
(2)
|
20.3
|
|
|
5.2
|
|
|
7.3
|
|
|
2.3
|
|
|
5.5
|
|
|||||
Operating leases
(3)
|
1,357.1
|
|
|
235.8
|
|
|
347.5
|
|
|
210.9
|
|
|
562.9
|
|
|||||
Purchase obligations
(4)
|
678.2
|
|
|
478.2
|
|
|
200.0
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term obligations
(5)
|
324.8
|
|
|
156.2
|
|
|
68.1
|
|
|
19.3
|
|
|
81.2
|
|
|||||
Total
|
$
|
6,362.4
|
|
|
$
|
1,108.0
|
|
|
$
|
1,012.1
|
|
|
$
|
508.6
|
|
|
$
|
3,733.7
|
|
(1)
|
Our long-term debt under contractual obligations above includes interest of
$572 million
on the balances outstanding as of
December 31, 2017
. The long-term debt balance excludes debt issuance 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
December 31, 2017
. Future estimated interest expense for the next year, one to three years, and three to five years is
$108 million
,
$210 million
and
$203 million
, respectively. Estimated interest expense beyond five years is
$51 million
.
|
(2)
|
Interest on capital lease obligations of
$10 million
is included based on incremental borrowing or implied rates. Future estimated interest expense for the next year is less than $1 million, while future estimated interest expense for both the next one to three years and three to five years is
$1 million
. Estimated interest expense beyond five years is
$8 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.
|
(4)
|
Our purchase obligations include open purchase orders for aftermarket inventory.
|
(5)
|
Our other long-term obligations consist of estimated payments for our self insurance reserves of $87 million, outstanding letters of credit of $71 million, and outstanding estimated payments of $51 million on the repatriation of earnings as a result of the Tax Act, with the remaining $116 million representing primarily other asset purchase commitments and payments for deferred compensation and pension plans.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
•
|
foreign exchange rates;
|
•
|
interest rates; and
|
•
|
commodity prices.
|
|
Page
|
LKQ CORPORATION AND SUBSIDIARIES
|
|
/s/ DELOITTE & TOUCHE LLP
|
LKQ CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share data)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
9,736,909
|
|
|
$
|
8,584,031
|
|
|
$
|
7,192,633
|
|
Cost of goods sold
|
5,937,286
|
|
|
5,232,328
|
|
|
4,359,104
|
|
|||
Gross margin
|
3,799,623
|
|
|
3,351,703
|
|
|
2,833,529
|
|
|||
Facility and warehouse expenses
|
797,388
|
|
|
688,918
|
|
|
556,041
|
|
|||
Distribution expenses
|
784,485
|
|
|
683,812
|
|
|
602,897
|
|
|||
Selling, general and administrative expenses
|
1,131,214
|
|
|
986,380
|
|
|
828,333
|
|
|||
Restructuring and acquisition related expenses
|
19,672
|
|
|
37,762
|
|
|
19,511
|
|
|||
Depreciation and amortization
|
219,546
|
|
|
191,433
|
|
|
122,120
|
|
|||
Operating income
|
847,318
|
|
|
763,398
|
|
|
704,627
|
|
|||
Other expense (income):
|
|
|
|
|
|
||||||
Interest expense
|
101,640
|
|
|
88,263
|
|
|
57,860
|
|
|||
Loss on debt extinguishment
|
456
|
|
|
26,650
|
|
|
—
|
|
|||
Gains on foreign exchange contracts - acquisition related
|
—
|
|
|
(18,342
|
)
|
|
—
|
|
|||
Gains on bargain purchases
|
(3,870
|
)
|
|
(8,207
|
)
|
|
—
|
|
|||
Interest and other income, net
|
(17,535
|
)
|
|
(2,247
|
)
|
|
(2,263
|
)
|
|||
Total other expense, net
|
80,691
|
|
|
86,117
|
|
|
55,597
|
|
|||
Income from continuing operations before provision for income taxes
|
766,627
|
|
|
677,281
|
|
|
649,030
|
|
|||
Provision for income taxes
|
235,560
|
|
|
220,566
|
|
|
219,703
|
|
|||
Equity in earnings (loss) of unconsolidated subsidiaries
|
5,907
|
|
|
(592
|
)
|
|
(6,104
|
)
|
|||
Income from continuing operations
|
536,974
|
|
|
456,123
|
|
|
423,223
|
|
|||
Net (loss) income from discontinued operations
|
(6,746
|
)
|
|
7,852
|
|
|
—
|
|
|||
Net income
|
530,228
|
|
|
463,975
|
|
|
423,223
|
|
|||
Less: net loss attributable to noncontrolling interest
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to LKQ stockholders
|
$
|
533,744
|
|
|
$
|
463,975
|
|
|
$
|
423,223
|
|
|
|
|
|
|
|
||||||
Basic earnings per share:
(1)
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.74
|
|
|
$
|
1.49
|
|
|
$
|
1.39
|
|
Net (loss) income from discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
—
|
|
|||
Net income
|
1.72
|
|
|
1.51
|
|
|
1.39
|
|
|||
Less: net loss attributable to noncontrolling interest
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to LKQ stockholders
|
$
|
1.73
|
|
|
$
|
1.51
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share:
(1)
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.73
|
|
|
$
|
1.47
|
|
|
$
|
1.38
|
|
Net (loss) income from discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
—
|
|
|||
Net income
|
1.71
|
|
|
1.50
|
|
|
1.38
|
|
|||
Less: net loss attributable to noncontrolling interest
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to LKQ stockholders
|
$
|
1.72
|
|
|
$
|
1.50
|
|
|
$
|
1.38
|
|
LKQ CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
$
|
530,228
|
|
|
$
|
463,975
|
|
|
$
|
423,223
|
|
Less: net loss attributable to noncontrolling interest
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to LKQ stockholders
|
533,744
|
|
|
463,975
|
|
|
423,223
|
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation, net of tax
|
200,596
|
|
|
(175,639
|
)
|
|
(69,817
|
)
|
|||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
3,447
|
|
|
9,023
|
|
|
2,469
|
|
|||
Net change in unrealized gains/losses on pension plans, net of tax
|
(6,035
|
)
|
|
4,911
|
|
|
2,103
|
|
|||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(1,309
|
)
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss)
|
196,699
|
|
|
(161,705
|
)
|
|
(65,245
|
)
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
726,927
|
|
|
302,270
|
|
|
357,978
|
|
|||
Less: comprehensive loss attributable to noncontrolling interest
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|||
Comprehensive income attributable to LKQ stockholders
|
$
|
730,443
|
|
|
$
|
302,270
|
|
|
$
|
357,978
|
|
LKQ CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
|
|||||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
279,766
|
|
|
$
|
227,400
|
|
Receivables, net
|
1,027,106
|
|
|
860,549
|
|
||
Inventories
|
2,380,783
|
|
|
1,935,237
|
|
||
Prepaid expenses and other current assets
|
134,479
|
|
|
87,768
|
|
||
Assets of discontinued operations
|
—
|
|
|
456,640
|
|
||
Total current assets
|
3,822,134
|
|
|
3,567,594
|
|
||
Property, plant and equipment, net
|
913,089
|
|
|
811,576
|
|
||
Intangible assets:
|
|
|
|
||||
Goodwill
|
3,536,511
|
|
|
3,054,769
|
|
||
Other intangibles, net
|
743,769
|
|
|
584,231
|
|
||
Equity method investments
|
208,404
|
|
|
183,467
|
|
||
Other assets
|
142,965
|
|
|
101,562
|
|
||
Total assets
|
$
|
9,366,872
|
|
|
$
|
8,303,199
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
788,613
|
|
|
$
|
633,773
|
|
Accrued expenses:
|
|
|
|
||||
Accrued payroll-related liabilities
|
143,424
|
|
|
118,755
|
|
||
Other accrued expenses
|
218,600
|
|
|
209,101
|
|
||
Other current liabilities
|
45,727
|
|
|
37,943
|
|
||
Current portion of long-term obligations
|
126,360
|
|
|
66,109
|
|
||
Liabilities of discontinued operations
|
—
|
|
|
145,104
|
|
||
Total current liabilities
|
1,322,724
|
|
|
1,210,785
|
|
||
Long-term obligations, excluding current portion
|
3,277,620
|
|
|
3,275,662
|
|
||
Deferred income taxes
|
252,359
|
|
|
199,657
|
|
||
Other noncurrent liabilities
|
307,516
|
|
|
174,146
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 309,126,386 and 307,544,759 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively
|
3,091
|
|
|
3,075
|
|
||
Additional paid-in capital
|
1,141,451
|
|
|
1,116,690
|
|
||
Retained earnings
|
3,124,103
|
|
|
2,590,359
|
|
||
Accumulated other comprehensive loss
|
(70,476
|
)
|
|
(267,175
|
)
|
||
Total Company stockholders' equity
|
4,198,169
|
|
|
3,442,949
|
|
||
Noncontrolling interest
|
8,484
|
|
|
—
|
|
||
Total stockholders' equity
|
4,206,653
|
|
|
3,442,949
|
|
||
Total liabilities and stockholders’ equity
|
$
|
9,366,872
|
|
|
$
|
8,303,199
|
|
LKQ CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
530,228
|
|
|
$
|
463,975
|
|
|
$
|
423,223
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
230,203
|
|
|
206,086
|
|
|
128,192
|
|
|||
Stock-based compensation expense
|
22,832
|
|
|
22,472
|
|
|
21,336
|
|
|||
Loss on debt extinguishment
|
456
|
|
|
26,650
|
|
|
—
|
|
|||
Loss on sale of business
|
10,796
|
|
|
—
|
|
|
—
|
|
|||
Impairment on net assets of discontinued operations
|
—
|
|
|
26,677
|
|
|
—
|
|
|||
Gains on foreign exchange contracts - acquisition related
|
—
|
|
|
(18,342
|
)
|
|
—
|
|
|||
Gains on bargain purchases
|
(3,870
|
)
|
|
(8,207
|
)
|
|
—
|
|
|||
Deferred income taxes
|
(46,537
|
)
|
|
(16,162
|
)
|
|
22,388
|
|
|||
Other
|
1,301
|
|
|
19,550
|
|
|
7,348
|
|
|||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
|
|
|
|
|
|
||||||
Receivables, net
|
(55,979
|
)
|
|
(50,801
|
)
|
|
14,704
|
|
|||
Inventories
|
(203,857
|
)
|
|
(64,114
|
)
|
|
(83,188
|
)
|
|||
Prepaid income taxes/income taxes payable
|
8,376
|
|
|
14,944
|
|
|
17,474
|
|
|||
Accounts payable
|
45,136
|
|
|
18,577
|
|
|
(4,222
|
)
|
|||
Other operating assets and liabilities
|
(20,185
|
)
|
|
(6,291
|
)
|
|
(2,973
|
)
|
|||
Net cash provided by operating activities
|
518,900
|
|
|
635,014
|
|
|
544,282
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(179,090
|
)
|
|
(207,074
|
)
|
|
(170,490
|
)
|
|||
Acquisitions, net of cash acquired
|
(513,088
|
)
|
|
(1,349,339
|
)
|
|
(160,517
|
)
|
|||
Proceeds from disposals of business/investment
|
301,297
|
|
|
10,304
|
|
|
—
|
|
|||
Investments in unconsolidated subsidiaries
|
(7,664
|
)
|
|
(185,671
|
)
|
|
(9,682
|
)
|
|||
Proceeds from foreign exchange contracts
|
—
|
|
|
18,342
|
|
|
—
|
|
|||
Other investing activities, net
|
13,950
|
|
|
3,510
|
|
|
10,696
|
|
|||
Net cash used in investing activities
|
(384,595
|
)
|
|
(1,709,928
|
)
|
|
(329,993
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options
|
7,470
|
|
|
7,963
|
|
|
8,168
|
|
|||
Taxes paid related to net share settlements of stock-based compensation awards
|
(5,525
|
)
|
|
(4,438
|
)
|
|
(7,581
|
)
|
|||
Debt issuance costs
|
(4,267
|
)
|
|
(16,554
|
)
|
|
(97
|
)
|
|||
Proceeds from issuance of Euro Notes (2024)
|
—
|
|
|
563,450
|
|
|
—
|
|
|||
Borrowings under revolving credit facilities
|
839,171
|
|
|
2,636,596
|
|
|
313,142
|
|
|||
Repayments under revolving credit facilities
|
(946,477
|
)
|
|
(1,748,664
|
)
|
|
(445,282
|
)
|
|||
Borrowings under term loans
|
—
|
|
|
582,115
|
|
|
—
|
|
|||
Repayments under term loans
|
(27,884
|
)
|
|
(255,792
|
)
|
|
(22,500
|
)
|
|||
Borrowings under receivables securitization facility
|
11,245
|
|
|
106,400
|
|
|
3,858
|
|
|||
Repayments under receivables securitization facility
|
(11,245
|
)
|
|
(69,400
|
)
|
|
(35,758
|
)
|
|||
Borrowings (repayments) of other debt, net
|
19,706
|
|
|
(31,156
|
)
|
|
(29,696
|
)
|
|||
Payments of Rhiag debt and related payments
|
—
|
|
|
(543,347
|
)
|
|
—
|
|
|||
Payments of other obligations
|
(2,077
|
)
|
|
(1,436
|
)
|
|
(22,791
|
)
|
|||
Other financing activities, net
|
7,316
|
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(112,567
|
)
|
|
1,225,737
|
|
|
(238,537
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
23,512
|
|
|
(3,704
|
)
|
|
(2,960
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
45,250
|
|
|
147,119
|
|
|
(27,208
|
)
|
|||
Cash and cash equivalents of continuing operations, beginning of period
|
227,400
|
|
|
87,397
|
|
|
114,605
|
|
|||
Add: Cash and cash equivalents of discontinued operations, beginning of period
|
7,116
|
|
|
—
|
|
|
—
|
|
|||
Cash and cash equivalents of continuing and discontinued operations, beginning of period
|
234,516
|
|
|
87,397
|
|
|
114,605
|
|
|||
Cash and cash equivalents of continuing and discontinued operations, end of period
|
279,766
|
|
|
234,516
|
|
|
87,397
|
|
|||
Less: Cash and cash equivalents of discontinued operations, end of period
|
—
|
|
|
(7,116
|
)
|
|
—
|
|
|||
Cash and cash equivalents, end of period
|
$
|
279,766
|
|
|
$
|
227,400
|
|
|
$
|
87,397
|
|
Supplemental disclosure of cash paid for:
|
|
|
|
|
|
||||||
Income taxes, net of refunds
|
$
|
273,019
|
|
|
$
|
230,036
|
|
|
$
|
180,126
|
|
Interest
|
95,707
|
|
|
86,021
|
|
|
54,917
|
|
|||
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
|
||||||
Contingent consideration liabilities
|
$
|
6,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
LKQ CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity
(In thousands)
|
||||||||||||||||||||||||||
|
|
|
|
|
LKQ Stockholders
|
|
|
|
|
|||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive (Loss) Income
|
|
Noncontrolling Interest
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares
Issued
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE, January 1, 2015
|
303,453
|
|
|
$
|
3,035
|
|
|
$
|
1,054,686
|
|
|
$
|
1,703,161
|
|
|
$
|
(40,225
|
)
|
|
$
|
—
|
|
|
$
|
2,720,657
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
423,223
|
|
|
—
|
|
|
—
|
|
|
423,223
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,245
|
)
|
|
—
|
|
|
(65,245
|
)
|
||||||
Restricted stock units vested, net of shares withheld for employee tax
|
840
|
|
|
8
|
|
|
(4,349
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,341
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
21,336
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,336
|
|
||||||
Exercise of stock options
|
1,425
|
|
|
14
|
|
|
8,849
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,863
|
|
||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(144
|
)
|
|
(2
|
)
|
|
(3,934
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,936
|
)
|
||||||
Excess tax benefit from stock-based payments
|
—
|
|
|
—
|
|
|
14,125
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,125
|
|
||||||
BALANCE, December 31, 2015
|
305,574
|
|
|
$
|
3,055
|
|
|
$
|
1,090,713
|
|
|
$
|
2,126,384
|
|
|
$
|
(105,470
|
)
|
|
$
|
—
|
|
|
$
|
3,114,682
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
463,975
|
|
|
—
|
|
|
—
|
|
|
463,975
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161,705
|
)
|
|
—
|
|
|
(161,705
|
)
|
||||||
Restricted stock units vested, net of shares withheld for employee tax
|
847
|
|
|
9
|
|
|
(4,447
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,438
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
22,472
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,472
|
|
||||||
Exercise of stock options
|
1,124
|
|
|
11
|
|
|
7,952
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,963
|
|
||||||
BALANCE, December 31, 2016
|
307,545
|
|
|
$
|
3,075
|
|
|
$
|
1,116,690
|
|
|
$
|
2,590,359
|
|
|
$
|
(267,175
|
)
|
|
$
|
—
|
|
|
$
|
3,442,949
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
533,744
|
|
|
—
|
|
|
(3,516
|
)
|
|
530,228
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
196,699
|
|
|
—
|
|
|
196,699
|
|
||||||
Restricted stock units vested, net of shares withheld for employee tax
|
749
|
|
|
7
|
|
|
(4,332
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,325
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
22,832
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,832
|
|
||||||
Exercise of stock options
|
867
|
|
|
9
|
|
|
7,461
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,470
|
|
||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(34
|
)
|
|
—
|
|
|
(1,200
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,200
|
)
|
||||||
Sales of subsidiary shares to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,000
|
|
|
12,000
|
|
||||||
BALANCE, December 31, 2017
|
309,127
|
|
|
$
|
3,091
|
|
|
$
|
1,141,451
|
|
|
$
|
3,124,103
|
|
|
$
|
(70,476
|
)
|
|
$
|
8,484
|
|
|
$
|
4,206,653
|
|
Note 1.
|
Business
|
|
Year Ended
|
|
Year Ended
|
||||||||||||||||
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||
|
All
Acquisitions
(1)
|
|
Rhiag
|
|
PGW
(2)
|
|
Other
Acquisitions
|
|
Total
|
||||||||||
Receivables
|
$
|
73,782
|
|
|
$
|
230,670
|
|
|
$
|
136,523
|
|
|
$
|
13,216
|
|
|
$
|
380,409
|
|
Receivable reserves
|
(7,032
|
)
|
|
(28,242
|
)
|
|
(7,135
|
)
|
|
(794
|
)
|
|
(36,171
|
)
|
|||||
Inventories
(3)
|
150,342
|
|
|
239,529
|
|
|
169,159
|
|
|
62,223
|
|
|
470,911
|
|
|||||
Prepaid expenses and other current assets
|
(295
|
)
|
|
10,793
|
|
|
42,573
|
|
|
4,445
|
|
|
57,811
|
|
|||||
Property
,
plant and equipment
|
41,039
|
|
|
56,774
|
|
|
225,645
|
|
|
17,140
|
|
|
299,559
|
|
|||||
Goodwill
|
314,817
|
|
|
585,415
|
|
|
205,058
|
|
|
52,336
|
|
|
842,809
|
|
|||||
Other intangibles
|
181,216
|
|
|
429,360
|
|
|
37,954
|
|
|
2,537
|
|
|
469,851
|
|
|||||
Other assets
(4)
|
3,257
|
|
|
2,092
|
|
|
57,671
|
|
|
(133
|
)
|
|
59,630
|
|
|||||
Deferred income taxes
|
(65,087
|
)
|
|
(110,791
|
)
|
|
17,506
|
|
|
(1,000
|
)
|
|
(94,285
|
)
|
|||||
Current liabilities assumed
|
(111,484
|
)
|
|
(239,665
|
)
|
|
(168,332
|
)
|
|
(42,290
|
)
|
|
(450,287
|
)
|
|||||
Debt assumed
|
(33,586
|
)
|
|
(550,843
|
)
|
|
(4,027
|
)
|
|
(2,378
|
)
|
|
(557,248
|
)
|
|||||
Other noncurrent liabilities assumed
|
(1,917
|
)
|
|
(23,085
|
)
|
|
(50,847
|
)
|
|
(103
|
)
|
|
(74,035
|
)
|
|||||
Contingent consideration liabilities
|
(6,234
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other purchase price obligations
|
(5,074
|
)
|
|
—
|
|
|
—
|
|
|
(6,698
|
)
|
|
(6,698
|
)
|
|||||
Notes issued
|
(20,187
|
)
|
|
—
|
|
|
—
|
|
|
(4,087
|
)
|
|
(4,087
|
)
|
|||||
Settlement of pre-existing balances
|
242
|
|
|
(591
|
)
|
|
—
|
|
|
(32
|
)
|
|
(623
|
)
|
|||||
Gains on bargain purchases
(5)
|
(3,870
|
)
|
|
—
|
|
|
—
|
|
|
(8,207
|
)
|
|
(8,207
|
)
|
|||||
Settlement of other purchase price obligations (non-interest bearing)
|
3,159
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash used in acquisitions, net of cash acquired
|
$
|
513,088
|
|
|
$
|
601,416
|
|
|
$
|
661,748
|
|
|
$
|
86,175
|
|
|
$
|
1,349,339
|
|
(1)
|
Includes
$6 million
and
$3 million
of adjustments to reduce property
, plant
and equipment and other assets for Rhiag and PGW, respectively.
|
(2)
|
Includes both continuing and discontinued operations of PGW. See Note 3, "Discontinued Operations" for further information on our discontinued operations.
|
(3)
|
The PGW inventory balance includes the impact of a
$10 million
step-up adjustment to report the inventory at its fair value. The amount for our 2017 acquisitions includes a
$4 million
step-up adjustment related to our Warn acquisition.
|
(4)
|
The balance for PGW includes
$24 million
of investments in unconsolidated subsidiaries which relate to the discontinued portion of our PGW operations.
|
(5)
|
The amount recorded during the year ended December 31, 2017 includes a
$2 million
increase to the gain on bargain purchase recorded for our Andrew Page acquisition as a result of changes to our estimate of the fair value of the net assets acquired. The remainder of the gain on bargain purchase recorded during the year ended December 31, 2017 is an immaterial amount related to another acquisition in Europe completed in the second quarter of 2017.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue, as reported
|
$
|
9,736,909
|
|
|
$
|
8,584,031
|
|
|
$
|
7,192,633
|
|
Revenue of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
||||||
Rhiag
|
—
|
|
|
213,376
|
|
|
994,903
|
|
|||
PGW
(1)
|
—
|
|
|
102,540
|
|
|
339,012
|
|
|||
Other acquisitions
|
333,995
|
|
|
854,601
|
|
|
615,140
|
|
|||
Pro forma revenue
|
$
|
10,070,904
|
|
|
$
|
9,754,548
|
|
|
$
|
9,141,688
|
|
|
|
|
|
|
|
||||||
Income from continuing operations, as reported
|
$
|
536,974
|
|
|
$
|
456,123
|
|
|
$
|
423,223
|
|
Income (loss) from continuing operations of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
|
|
|
|
|
|
||||||
Rhiag
|
—
|
|
|
(84
|
)
|
|
10,310
|
|
|||
PGW
(1),(2)
|
—
|
|
|
7,574
|
|
|
3,334
|
|
|||
Other acquisitions
|
15,431
|
|
|
19,323
|
|
|
15,266
|
|
|||
Acquisition related expenses, net of tax
(3)
|
5,870
|
|
|
11,602
|
|
|
1,830
|
|
|||
Pro forma income from continuing operations
|
$
|
558,275
|
|
|
$
|
494,538
|
|
|
$
|
453,963
|
|
|
|
|
|
|
|
||||||
Earnings per share from continuing operations, basic - as reported
|
$
|
1.74
|
|
|
$
|
1.49
|
|
|
$
|
1.39
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
||||||
Rhiag
|
—
|
|
|
(0.00)
|
|
|
0.03
|
|
|||
PGW
(1),(2)
|
—
|
|
|
0.02
|
|
|
0.01
|
|
|||
Other acquisitions
|
0.05
|
|
|
0.06
|
|
|
0.05
|
|
|||
Acquisition related expenses, net of tax
(3)
|
0.02
|
|
|
0.04
|
|
|
0.01
|
|
|||
Pro forma earnings per share from continuing operations, basic
(4)
|
$
|
1.81
|
|
|
$
|
1.61
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
||||||
Earnings per share from continuing operations, diluted - as reported
|
$
|
1.73
|
|
|
$
|
1.47
|
|
|
$
|
1.38
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
||||||
Rhiag
|
—
|
|
|
(0.00)
|
|
|
0.03
|
|
|||
PGW
(1),(2)
|
—
|
|
|
0.02
|
|
|
0.01
|
|
|||
Other acquisitions
|
0.05
|
|
|
0.06
|
|
|
0.05
|
|
|||
Acquisition related expenses, net of tax
(3)
|
0.02
|
|
|
0.04
|
|
|
0.01
|
|
|||
Pro forma earnings per share from continuing operations, diluted
(4)
|
$
|
1.80
|
|
|
$
|
1.60
|
|
|
$
|
1.48
|
|
(1)
|
PGW reflects the results for the continuing aftermarket automotive glass distribution business only.
|
(2)
|
Excludes
$18 million
and
$5 million
of corporate costs for 2015 and 2016, respectively, that we do not expect to incur going forward as a result of the sale of our glass manufacturing business.
|
(3)
|
Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.
|
(4)
|
The sum of the individual earnings per share amounts may not equal the total due to rounding.
|
|
Year Ended
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue
|
$
|
111,130
|
|
|
$
|
498,233
|
|
Cost of goods sold
|
100,084
|
|
|
424,161
|
|
||
Operating expenses
|
8,369
|
|
|
22,330
|
|
||
Impairment on net assets of discontinued operations
(1)
|
—
|
|
|
26,677
|
|
||
Operating income
|
2,677
|
|
|
25,065
|
|
||
Interest and other income (expense), net
(2)
|
1,204
|
|
|
(9,136
|
)
|
||
Income from discontinued operations before taxes
|
3,881
|
|
|
15,929
|
|
||
Provision for income taxes
|
3,598
|
|
|
8,252
|
|
||
Equity in (loss) earnings of unconsolidated subsidiaries
|
(534
|
)
|
|
175
|
|
||
(Loss) income from discontinued operations, net of tax
|
(251
|
)
|
|
7,852
|
|
||
Loss on sale of discontinued operations, net of tax
(3)
|
(6,495
|
)
|
|
—
|
|
||
Net (loss) income from discontinued operations
|
$
|
(6,746
|
)
|
|
$
|
7,852
|
|
|
Period from January 1
|
|
Period from April 21
|
||||
|
to March 1,
|
|
to December 31,
|
||||
|
2017
|
|
2016
|
||||
Non-cash operating activities:
|
|
|
|
||||
Depreciation and amortization
|
$
|
—
|
|
|
$
|
7,752
|
|
Impairment of net assets of discontinued operations
|
—
|
|
|
26,677
|
|
||
Deferred income taxes
|
—
|
|
|
(4,516
|
)
|
||
Capital Expenditures
|
(3,598
|
)
|
|
(24,156
|
)
|
||
Investments in unconsolidated subsidiaries
|
—
|
|
|
(4,400
|
)
|
|
|
December 31, 2016
|
||
Cash and cash equivalents
|
|
$
|
7,116
|
|
Receivables, net
|
|
77,442
|
|
|
Inventories
|
|
71,952
|
|
|
Prepaid expenses and other current assets
|
|
42,426
|
|
|
Property, plant and equipment, net
|
|
199,136
|
|
|
Other assets
|
|
64,166
|
|
|
Valuation allowance
|
|
(5,598
|
)
|
|
Total assets from discontinued operations
|
|
$
|
456,640
|
|
|
|
|
||
Accounts payable
|
|
$
|
72,696
|
|
Other current liabilities
|
|
37,104
|
|
|
Long-term obligations
|
|
1,648
|
|
|
Other noncurrent liabilities (includes pension and post-retirement obligations)
|
|
33,656
|
|
|
Total liabilities from discontinued operations
|
|
145,104
|
|
|
Net assets from discontinued operations
|
|
$
|
311,536
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Aftermarket and refurbished products
|
$
|
1,877,653
|
|
|
$
|
1,540,257
|
|
Salvage and remanufactured products
|
487,108
|
|
|
394,980
|
|
||
Manufactured products
|
16,022
|
|
|
—
|
|
||
Total inventories
|
$
|
2,380,783
|
|
|
$
|
1,935,237
|
|
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
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Land and improvements
|
$
|
137,790
|
|
|
$
|
127,211
|
|
Buildings and improvements
|
233,078
|
|
|
209,773
|
|
||
Machinery and equipment
|
521,526
|
|
|
429,446
|
|
||
Computer equipment and software
|
133,753
|
|
|
120,316
|
|
||
Vehicles and trailers
|
161,269
|
|
|
138,263
|
|
||
Furniture and fixtures
|
31,794
|
|
|
28,405
|
|
||
Leasehold improvements
|
257,506
|
|
|
152,356
|
|
||
|
1,476,716
|
|
|
1,205,770
|
|
||
Less—Accumulated depreciation
|
(606,112
|
)
|
|
(495,644
|
)
|
||
Construction in progress
|
42,485
|
|
|
101,450
|
|
||
Total property, plant and equipment, net
|
$
|
913,089
|
|
|
$
|
811,576
|
|
|
North America
(1)
|
|
Europe
|
|
Specialty
(1)
|
|
Total
|
||||||||
Balance as of January 1, 2015
|
$
|
1,379,681
|
|
|
$
|
616,819
|
|
|
$
|
292,395
|
|
|
$
|
2,288,895
|
|
Business acquisitions and adjustments to previously recorded goodwill
|
72,355
|
|
|
21,217
|
|
|
(1,397
|
)
|
|
92,175
|
|
||||
Exchange rate effects
|
(18,537
|
)
|
|
(43,554
|
)
|
|
267
|
|
|
(61,824
|
)
|
||||
Balance as of December 31, 2015
|
$
|
1,433,499
|
|
|
$
|
594,482
|
|
|
$
|
291,265
|
|
|
$
|
2,319,246
|
|
Business acquisitions and adjustments to previously recorded goodwill
|
226,483
|
|
|
614,437
|
|
|
1,889
|
|
|
842,809
|
|
||||
Exchange rate effects
|
1,818
|
|
|
(108,943
|
)
|
|
(161
|
)
|
|
(107,286
|
)
|
||||
Balance as of December 31, 2016
|
$
|
1,661,800
|
|
|
$
|
1,099,976
|
|
|
$
|
292,993
|
|
|
$
|
3,054,769
|
|
Business acquisitions and adjustments to previously recorded goodwill
|
39,836
|
|
|
155,366
|
|
|
119,615
|
|
|
314,817
|
|
||||
Exchange rate effects
|
7,718
|
|
|
159,556
|
|
|
(349
|
)
|
|
166,925
|
|
||||
Balance as of December 31, 2017
|
$
|
1,709,354
|
|
|
$
|
1,414,898
|
|
|
$
|
412,259
|
|
|
$
|
3,536,511
|
|
(1)
|
In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year amounts have been recast to reflect the shift in reporting structure.
|
|
December 31, 2017
|
December 31, 2016
|
|||||
Intangible assets subject to amortization
|
$
|
664,969
|
|
|
$
|
584,231
|
|
Indefinite-lived intangible assets
(1)
|
78,800
|
|
|
—
|
|
||
Total
|
$
|
743,769
|
|
|
$
|
584,231
|
|
(1)
|
Indefinite-lived intangible assets are composed of trademarks.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Trade names and trademarks
|
$
|
327,332
|
|
|
$
|
(75,095
|
)
|
|
$
|
252,237
|
|
|
$
|
286,008
|
|
|
$
|
(51,104
|
)
|
|
$
|
234,904
|
|
Customer and supplier relationships
|
510,113
|
|
|
(167,532
|
)
|
|
342,581
|
|
|
395,284
|
|
|
(92,079
|
)
|
|
303,205
|
|
||||||
Software and other technology related assets
|
124,049
|
|
|
(59,081
|
)
|
|
64,968
|
|
|
77,329
|
|
|
(35,648
|
)
|
|
41,681
|
|
||||||
Covenants not to compete
|
14,981
|
|
|
(9,798
|
)
|
|
5,183
|
|
|
11,726
|
|
|
(7,285
|
)
|
|
4,441
|
|
||||||
Total
|
$
|
976,475
|
|
|
$
|
(311,506
|
)
|
|
$
|
664,969
|
|
|
$
|
770,347
|
|
|
$
|
(186,116
|
)
|
|
$
|
584,231
|
|
|
Year Ended
|
|
Year Ended
|
||||||||||||||||
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||
|
All Acquisitions
|
|
Rhiag
|
|
PGW
|
|
Other Acquisitions
|
|
Total
|
||||||||||
Trade names and trademarks
(1)
|
$
|
87,306
|
|
|
$
|
127,351
|
|
|
$
|
5,500
|
|
|
$
|
1,015
|
|
|
$
|
133,866
|
|
Customer and supplier relationships
|
75,450
|
|
|
291,893
|
|
|
29,700
|
|
|
—
|
|
|
321,593
|
|
|||||
Software and other technology related assets
|
15,757
|
|
|
10,116
|
|
|
1,154
|
|
|
1,420
|
|
|
12,690
|
|
|||||
Covenants not to compete
|
2,703
|
|
|
—
|
|
|
1,600
|
|
|
102
|
|
|
1,702
|
|
|||||
Total
|
$
|
181,216
|
|
|
$
|
429,360
|
|
|
$
|
37,954
|
|
|
$
|
2,537
|
|
|
$
|
469,851
|
|
(1)
|
Includes a trademark intangible asset of
$79 million
recorded as part of our acquisition of Warn in 2017. We assigned this trademark an indefinite life.
|
|
Year Ended
|
|
Year Ended
|
||||||||
|
December 31, 2017
|
|
December 31, 2016
|
||||||||
|
All Acquisitions
|
|
Rhiag
|
|
PGW
|
|
Other Acquisitions
|
|
Total
|
||
Trade names and trademarks
|
11.2
|
|
20.0
|
|
|
20.0
|
|
20.0
|
|
|
20.0
|
Customer and supplier relationships
|
18.6
|
|
15.0
|
|
|
10.0
|
|
—
|
|
|
14.5
|
Software and other technology related assets
|
11.1
|
|
5.0
|
|
|
14.6
|
|
5.4
|
|
|
5.7
|
Covenants not to compete
|
4.4
|
|
—
|
|
|
5.0
|
|
2.0
|
|
|
4.8
|
Total intangible assets
|
16.5
|
|
16.2
|
|
|
11.4
|
|
11.1
|
|
|
15.8
|
Balance as of January 1, 2016
|
$
|
17,363
|
|
Warranty expense
|
32,096
|
|
|
Warranty claims
|
(29,825
|
)
|
|
Balance as of December 31, 2016
|
$
|
19,634
|
|
Warranty expense
|
38,608
|
|
|
Warranty claims
|
(35,091
|
)
|
|
Balance as of December 31, 2017
|
$
|
23,151
|
|
|
Number
Outstanding
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Unvested as of January 1, 2017
|
1,873,737
|
|
|
$
|
27.58
|
|
|
|
|
|
||
Granted
|
809,708
|
|
|
$
|
32.15
|
|
|
|
|
|
||
Vested
|
(883,844
|
)
|
|
$
|
26.80
|
|
|
|
|
|
||
Forfeited / Canceled
|
(175,211
|
)
|
|
$
|
30.81
|
|
|
|
|
|
||
Unvested as of December 31, 2017
|
1,624,390
|
|
|
$
|
29.94
|
|
|
|
|
|
||
Expected to vest after December 31, 2017
|
1,523,973
|
|
|
$
|
29.89
|
|
|
2.6
|
|
$
|
61,980
|
|
|
Number
Outstanding
|
|
Weighted
Average Exercise Price
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Balance as of January 1, 2017
|
2,623,217
|
|
|
$
|
9.19
|
|
|
|
|
|
||
Exercised
|
(866,799
|
)
|
|
$
|
8.83
|
|
|
|
|
$
|
20,967
|
|
Forfeited / Canceled
|
(18,345
|
)
|
|
$
|
25.26
|
|
|
|
|
|
||
Balance as of December 31, 2017
|
1,738,073
|
|
|
$
|
9.20
|
|
|
1.5
|
|
$
|
54,693
|
|
Exercisable as of December 31, 2017
|
1,738,073
|
|
|
$
|
9.20
|
|
|
1.5
|
|
$
|
54,693
|
|
Exercisable as of December 31, 2017 and expected to vest thereafter
|
1,738,073
|
|
|
$
|
9.20
|
|
|
1.5
|
|
$
|
54,693
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
RSUs
|
$
|
22,826
|
|
|
$
|
22,183
|
|
|
$
|
21,058
|
|
Stock options and other
|
6
|
|
|
162
|
|
|
278
|
|
|||
Total stock-based compensation expense
|
$
|
22,832
|
|
|
$
|
22,345
|
|
|
$
|
21,336
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of goods sold
|
$
|
434
|
|
|
$
|
407
|
|
|
$
|
358
|
|
Facility and warehouse expenses
|
3,338
|
|
|
3,980
|
|
|
2,271
|
|
|||
Selling, general and administrative expenses
|
19,060
|
|
|
17,958
|
|
|
18,707
|
|
|||
Total stock-based compensation expense
|
22,832
|
|
|
22,345
|
|
|
21,336
|
|
|||
Income tax benefit
|
(5,459
|
)
|
|
(8,268
|
)
|
|
(8,221
|
)
|
|||
Total stock-based compensation expense, net of tax
|
$
|
17,373
|
|
|
$
|
14,077
|
|
|
$
|
13,115
|
|
|
RSUs
|
||
2018
|
$
|
14,641
|
|
2019
|
9,232
|
|
|
2020
|
6,020
|
|
|
2021
|
3,249
|
|
|
2022
|
345
|
|
|
Total unrecognized compensation expense
|
$
|
33,487
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Income from continuing operations
|
$
|
536,974
|
|
|
$
|
456,123
|
|
|
$
|
423,223
|
|
Denominator for basic earnings per share—Weighted-average shares outstanding
|
308,607
|
|
|
306,897
|
|
|
304,722
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
RSUs
|
544
|
|
|
689
|
|
|
667
|
|
|||
Stock options
|
1,498
|
|
|
2,198
|
|
|
2,107
|
|
|||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding
|
310,649
|
|
|
309,784
|
|
|
307,496
|
|
|||
Basic earnings per share from continuing operations
|
$
|
1.74
|
|
|
$
|
1.49
|
|
|
$
|
1.39
|
|
Diluted earnings per share from continuing operations
|
$
|
1.73
|
|
|
$
|
1.47
|
|
|
$
|
1.38
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Antidilutive securities:
|
|
|
|
|
|
|||
RSUs
|
37
|
|
|
57
|
|
|
230
|
|
Stock options
|
39
|
|
|
63
|
|
|
96
|
|
|
|
Foreign
Currency Translation |
|
Unrealized (Loss) Gain
on Cash Flow Hedges |
|
Unrealized (Loss) Gain on Pension Plans
|
|
Other Comprehensive Loss from Unconsolidated Subsidiaries
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||
Balance at January 1, 2015
|
|
$
|
(27,073
|
)
|
|
$
|
(3,401
|
)
|
|
$
|
(9,751
|
)
|
|
$
|
—
|
|
|
$
|
(40,225
|
)
|
Pretax (loss) income
|
|
(69,817
|
)
|
|
(1,664
|
)
|
|
2,245
|
|
|
—
|
|
|
(69,236
|
)
|
|||||
Income tax effect
|
|
—
|
|
|
538
|
|
|
(561
|
)
|
|
—
|
|
|
(23
|
)
|
|||||
Reclassification of unrealized loss
|
|
—
|
|
|
5,366
|
|
|
559
|
|
|
—
|
|
|
5,925
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(1,771
|
)
|
|
(140
|
)
|
|
—
|
|
|
(1,911
|
)
|
|||||
Balance at December 31, 2015
|
|
$
|
(96,890
|
)
|
|
$
|
(932
|
)
|
|
$
|
(7,648
|
)
|
|
$
|
—
|
|
|
$
|
(105,470
|
)
|
Pretax (loss) income
|
|
(175,639
|
)
|
|
12,382
|
|
|
7,175
|
|
|
—
|
|
|
(156,082
|
)
|
|||||
Income tax effect
|
|
—
|
|
|
(4,581
|
)
|
|
(2,636
|
)
|
|
—
|
|
|
(7,217
|
)
|
|||||
Reclassification of unrealized loss
|
|
—
|
|
|
1,789
|
|
|
496
|
|
|
—
|
|
|
2,285
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(567
|
)
|
|
(124
|
)
|
|
—
|
|
|
(691
|
)
|
|||||
Balance at December 31, 2016
|
|
$
|
(272,529
|
)
|
|
$
|
8,091
|
|
|
$
|
(2,737
|
)
|
|
$
|
—
|
|
|
$
|
(267,175
|
)
|
Pretax income (loss)
|
|
206,451
|
|
|
(44,550
|
)
|
|
361
|
|
|
—
|
|
|
162,262
|
|
|||||
Income tax effect
|
|
(7,366
|
)
|
|
16,390
|
|
|
(100
|
)
|
|
—
|
|
|
8,924
|
|
|||||
Reclassification of unrealized loss (gain)
|
|
—
|
|
|
50,090
|
|
|
(3,519
|
)
|
|
—
|
|
|
46,571
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(18,483
|
)
|
|
659
|
|
|
—
|
|
|
(17,824
|
)
|
|||||
Disposal of business, net
|
|
1,511
|
|
|
—
|
|
|
(3,436
|
)
|
|
—
|
|
|
(1,925
|
)
|
|||||
Other comprehensive loss of unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,309
|
)
|
|
(1,309
|
)
|
|||||
Balance at December 31, 2017
|
|
$
|
(71,933
|
)
|
|
$
|
11,538
|
|
|
$
|
(8,772
|
)
|
|
$
|
(1,309
|
)
|
|
$
|
(70,476
|
)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Senior secured credit agreement:
|
|
|
|
||||
Term loans payable
|
$
|
704,800
|
|
|
$
|
732,684
|
|
Revolving credit facilities
|
1,283,551
|
|
|
1,358,220
|
|
||
U.S. Notes (2023)
|
600,000
|
|
|
600,000
|
|
||
Euro Notes (2024)
|
600,150
|
|
|
525,850
|
|
||
Receivables securitization facility
|
100,000
|
|
|
100,000
|
|
||
Notes payable through October 2025 at weighted average interest rates of 1.4% and 2.1%, respectively
|
29,146
|
|
|
11,808
|
|
||
Other long-term debt at weighted average interest rates of 1.7% and 2.4%, respectively
|
110,633
|
|
|
37,125
|
|
||
Total debt
|
3,428,280
|
|
|
3,365,687
|
|
||
Less: long-term debt issuance costs
|
(21,476
|
)
|
|
(21,611
|
)
|
||
Less: current debt issuance costs
|
(2,824
|
)
|
|
(2,305
|
)
|
||
Total debt, net of debt issuance costs
|
3,403,980
|
|
|
3,341,771
|
|
||
Less: current maturities, net of debt issuance costs
|
(126,360
|
)
|
|
(66,109
|
)
|
||
Long term debt, net of debt issuance costs
|
$
|
3,277,620
|
|
|
$
|
3,275,662
|
|
|
Balance as of December 31, 2017
|
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
45,984
|
|
|
$
|
—
|
|
|
$
|
45,984
|
|
|
$
|
—
|
|
Interest rate swaps
|
19,102
|
|
|
—
|
|
|
19,102
|
|
|
—
|
|
||||
Cross currency swap agreements
|
5,504
|
|
|
—
|
|
|
5,504
|
|
|
—
|
|
||||
Total Assets
|
$
|
70,590
|
|
|
$
|
—
|
|
|
$
|
70,590
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
2,636
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,636
|
|
Deferred compensation liabilities
|
47,199
|
|
|
—
|
|
|
47,199
|
|
|
—
|
|
||||
Cross currency swap agreements
|
61,492
|
|
|
—
|
|
|
61,492
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
111,327
|
|
|
$
|
—
|
|
|
$
|
108,691
|
|
|
$
|
2,636
|
|
|
Balance as of December 31, 2016
|
|
Fair Value Measurements as of December 31, 2016
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
36,131
|
|
|
$
|
—
|
|
|
$
|
36,131
|
|
|
$
|
—
|
|
Interest rate swaps
|
16,421
|
|
|
—
|
|
|
16,421
|
|
|
—
|
|
||||
Cross currency swap agreements
|
1,486
|
|
|
—
|
|
|
1,486
|
|
|
—
|
|
||||
Total Assets
|
$
|
54,038
|
|
|
$
|
—
|
|
|
$
|
54,038
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
3,162
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,162
|
|
Deferred compensation liabilities
|
36,865
|
|
|
—
|
|
|
36,865
|
|
|
—
|
|
||||
Cross currency swap agreements
|
3,128
|
|
|
—
|
|
|
3,128
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
43,155
|
|
|
$
|
—
|
|
|
$
|
39,993
|
|
|
$
|
3,162
|
|
Years ending December 31:
|
|
||
2018
|
$
|
235,821
|
|
2019
|
192,208
|
|
|
2020
|
155,314
|
|
|
2021
|
117,564
|
|
|
2022
|
93,289
|
|
|
Thereafter
|
562,869
|
|
|
Future Minimum Lease Payments
|
$
|
1,357,065
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
196,825
|
|
|
$
|
159,547
|
|
|
$
|
138,432
|
|
State
|
27,149
|
|
|
27,120
|
|
|
25,952
|
|
|||
Foreign
|
58,123
|
|
|
45,545
|
|
|
32,931
|
|
|||
|
$
|
282,097
|
|
|
$
|
232,212
|
|
|
$
|
197,315
|
|
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
(37,486
|
)
|
|
$
|
1,169
|
|
|
$
|
22,233
|
|
State
|
4,044
|
|
|
2,131
|
|
|
1,212
|
|
|||
Foreign
|
(13,095
|
)
|
|
(14,946
|
)
|
|
(1,057
|
)
|
|||
|
$
|
(46,537
|
)
|
|
$
|
(11,646
|
)
|
|
$
|
22,388
|
|
Provision for income taxes
|
$
|
235,560
|
|
|
$
|
220,566
|
|
|
$
|
219,703
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
U.S. federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
U.S. federal tax reform - federal deferred tax rate change
|
(9.5
|
)%
|
|
—
|
%
|
|
—
|
%
|
U.S. federal tax reform - transition tax on foreign earnings
|
6.6
|
%
|
|
—
|
%
|
|
—
|
%
|
State income taxes, net of state credits and federal tax impact
|
2.8
|
%
|
|
2.7
|
%
|
|
2.9
|
%
|
Impact of rates on international operations
|
(3.2
|
)%
|
|
(3.2
|
)%
|
|
(4.1
|
)%
|
Notional interest deductions
|
(0.9
|
)%
|
|
(2.5
|
)%
|
|
—
|
%
|
Excess tax benefits from stock-based compensation
(1)
|
(1.0
|
)%
|
|
(1.6
|
)%
|
|
—
|
%
|
Non-deductible expenses
|
1.1
|
%
|
|
1.3
|
%
|
|
0.8
|
%
|
Other, net
|
(0.2
|
)%
|
|
0.9
|
%
|
|
(0.7
|
)%
|
Effective tax rate
|
30.7
|
%
|
|
32.6
|
%
|
|
33.9
|
%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred Tax Assets:
|
|
|
|
||||
Accrued expenses and reserves
|
$
|
40,317
|
|
|
$
|
62,059
|
|
Qualified and nonqualified retirement plans
|
19,074
|
|
|
36,626
|
|
||
Inventory
|
17,886
|
|
|
35,565
|
|
||
Accounts receivable
|
16,036
|
|
|
19,046
|
|
||
Interest deduction carryforwards
|
13,845
|
|
|
9,806
|
|
||
Stock-based compensation
|
4,963
|
|
|
9,687
|
|
||
Net operating loss carryforwards
|
11,734
|
|
|
7,858
|
|
||
Other
|
8,971
|
|
|
7,699
|
|
||
|
132,826
|
|
|
188,346
|
|
||
Less: valuation allowance
|
(21,527
|
)
|
|
(11,252
|
)
|
||
Total deferred tax assets
|
$
|
111,299
|
|
|
$
|
177,094
|
|
Deferred Tax Liabilities:
|
|
|
|
||||
Goodwill and other intangible assets
|
$
|
192,688
|
|
|
$
|
222,476
|
|
Property, plant and equipment
|
67,467
|
|
|
72,231
|
|
||
Trade name
|
72,233
|
|
|
59,002
|
|
||
Other
|
16,165
|
|
|
19,439
|
|
||
Total deferred tax liabilities
|
$
|
348,553
|
|
|
$
|
373,148
|
|
Net deferred tax liability
|
$
|
(237,254
|
)
|
|
$
|
(196,054
|
)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Noncurrent deferred tax assets
|
$
|
15,105
|
|
|
$
|
3,603
|
|
Noncurrent deferred tax liabilities
|
252,359
|
|
|
199,657
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at January 1
|
$
|
2,146
|
|
|
$
|
2,273
|
|
|
$
|
2,630
|
|
Additions for acquired tax positions
|
73
|
|
|
—
|
|
|
80
|
|
|||
Additions based on tax positions related to the current year
|
5
|
|
|
5
|
|
|
302
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
—
|
|
|
(743
|
)
|
|||
Lapse of statutes of limitations
|
(534
|
)
|
|
(132
|
)
|
|
(119
|
)
|
|||
Currency exchange rate fluctuations
|
—
|
|
|
—
|
|
|
123
|
|
|||
Balance at December 31
|
$
|
1,690
|
|
|
$
|
2,146
|
|
|
$
|
2,273
|
|
|
North America
(1)
|
|
Europe
|
|
Specialty
(1)
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
4,798,901
|
|
|
$
|
3,636,811
|
|
|
$
|
1,301,197
|
|
|
$
|
—
|
|
|
$
|
9,736,909
|
|
Intersegment
|
750
|
|
|
—
|
|
|
4,319
|
|
|
(5,069
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
4,799,651
|
|
|
$
|
3,636,811
|
|
|
$
|
1,305,516
|
|
|
$
|
(5,069
|
)
|
|
$
|
9,736,909
|
|
Segment EBITDA
|
$
|
655,275
|
|
|
$
|
319,156
|
|
|
$
|
142,159
|
|
|
$
|
—
|
|
|
$
|
1,116,590
|
|
Depreciation and amortization
(2)
|
86,303
|
|
|
120,805
|
|
|
23,095
|
|
|
—
|
|
|
230,203
|
|
|||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
4,443,886
|
|
|
$
|
2,920,470
|
|
|
$
|
1,219,675
|
|
|
$
|
—
|
|
|
$
|
8,584,031
|
|
Intersegment
|
739
|
|
|
—
|
|
|
4,048
|
|
|
(4,787
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
4,444,625
|
|
|
$
|
2,920,470
|
|
|
$
|
1,223,723
|
|
|
$
|
(4,787
|
)
|
|
$
|
8,584,031
|
|
Segment EBITDA
|
$
|
589,945
|
|
|
$
|
283,608
|
|
|
$
|
131,427
|
|
|
$
|
—
|
|
|
$
|
1,004,980
|
|
Depreciation and amortization
(2)
|
80,923
|
|
|
94,979
|
|
|
22,432
|
|
|
—
|
|
|
198,334
|
|
|||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
4,118,286
|
|
|
$
|
1,995,385
|
|
|
$
|
1,078,962
|
|
|
$
|
—
|
|
|
$
|
7,192,633
|
|
Intersegment
|
835
|
|
|
70
|
|
|
3,334
|
|
|
(4,239
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
4,119,121
|
|
|
$
|
1,995,455
|
|
|
$
|
1,082,296
|
|
|
$
|
(4,239
|
)
|
|
$
|
7,192,633
|
|
Segment EBITDA
|
$
|
540,650
|
|
|
$
|
200,563
|
|
|
$
|
113,316
|
|
|
$
|
—
|
|
|
$
|
854,529
|
|
Depreciation and amortization
(2)
|
69,879
|
|
|
36,446
|
|
|
21,867
|
|
|
—
|
|
|
128,192
|
|
(1)
|
In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year results have been recast to reflect the shift in reporting structure in order to present segment results on a comparable basis.
|
(2)
|
Amounts presented include depreciation and amortization expense recorded within cost of goods sold.
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Net income
|
$
|
530,228
|
|
|
$
|
463,975
|
|
|
$
|
423,223
|
|
Less: net loss attributable to noncontrolling interest
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to LKQ stockholders
|
533,744
|
|
|
463,975
|
|
|
423,223
|
|
|||
Subtract:
|
|
|
|
|
|
||||||
Net (loss) income from discontinued operations
|
(6,746
|
)
|
|
7,852
|
|
|
—
|
|
|||
Net income from continuing operations attributable to LKQ stockholders
|
540,490
|
|
|
456,123
|
|
|
423,223
|
|
|||
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
219,546
|
|
|
191,433
|
|
|
122,120
|
|
|||
Depreciation and amortization - cost of goods sold
|
10,657
|
|
|
6,901
|
|
|
6,072
|
|
|||
Interest expense, net
|
100,620
|
|
|
87,682
|
|
|
57,342
|
|
|||
Loss on debt extinguishment
|
456
|
|
|
26,650
|
|
|
—
|
|
|||
Provision for income taxes
|
235,560
|
|
|
220,566
|
|
|
219,703
|
|
|||
EBITDA
|
1,107,329
|
|
|
989,355
|
|
|
828,460
|
|
|||
Subtract:
|
|
|
|
|
|
||||||
Equity in earnings (loss) of unconsolidated subsidiaries
|
5,907
|
|
|
(592
|
)
|
|
(6,104
|
)
|
|||
Gains on foreign exchange contracts - acquisition related
(1)
|
—
|
|
|
18,342
|
|
|
—
|
|
|||
Gains on bargain purchases
(2)
|
3,870
|
|
|
8,207
|
|
|
—
|
|
|||
Add:
|
|
|
|
|
|
||||||
Restructuring and acquisition related expenses
(3)
|
19,672
|
|
|
37,762
|
|
|
19,511
|
|
|||
Inventory step-up adjustment - acquisition related
(4)
|
3,584
|
|
|
3,614
|
|
|
—
|
|
|||
Change in fair value of contingent consideration liabilities
|
(4,218
|
)
|
|
206
|
|
|
454
|
|
|||
Segment EBITDA
|
$
|
1,116,590
|
|
|
$
|
1,004,980
|
|
|
$
|
854,529
|
|
(1)
|
Reflects gains on foreign currency forwards used to fix the euro purchase price of Rhiag. See
Note 2, "Business Combinations
," for further information.
|
(2)
|
Reflects the gains on bargain purchases related to our acquisitions of Andrew Page and a wholesale business in Europe. See
Note 2, "Business Combinations
," for further information.
|
(3)
|
See
Note 5, "Restructuring and Acquisition Related Expenses
," for further information.
|
(4)
|
Reflects the impact on Cost of Goods Sold of the step-up adjustments to record acquired inventory at its fair value for Warn and PGW autoglass in 2017 and 2016, respectively.
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Capital Expenditures
|
|
|
|
|
|
||||||
North America
|
$
|
95,823
|
|
|
$
|
91,618
|
|
|
$
|
72,048
|
|
Europe
|
71,494
|
|
|
77,689
|
|
|
79,072
|
|
|||
Specialty
|
8,175
|
|
|
13,611
|
|
|
19,370
|
|
|||
Discontinued operations
|
3,598
|
|
|
24,156
|
|
|
—
|
|
|||
Total capital expenditures
|
$
|
179,090
|
|
|
$
|
207,074
|
|
|
$
|
170,490
|
|
|
December 31,
|
||||||||||
2017
|
|
2016
(1)
|
|
2015
(1)
|
|||||||
Receivables, net
|
|
|
|
|
|
||||||
North America
(2)
|
$
|
379,666
|
|
|
$
|
351,681
|
|
|
$
|
313,670
|
|
Europe
(2)
|
555,372
|
|
|
443,281
|
|
|
215,710
|
|
|||
Specialty
|
92,068
|
|
|
65,587
|
|
|
60,780
|
|
|||
Total receivables, net
|
1,027,106
|
|
|
860,549
|
|
|
590,160
|
|
|||
Inventories
|
|
|
|
|
|
||||||
North America
(2)
|
1,076,393
|
|
|
915,244
|
|
|
845,805
|
|
|||
Europe
(2)
|
964,068
|
|
|
718,729
|
|
|
427,323
|
|
|||
Specialty
|
340,322
|
|
|
301,264
|
|
|
283,424
|
|
|||
Total inventories
|
2,380,783
|
|
|
1,935,237
|
|
|
1,556,552
|
|
|||
Property, Plant and Equipment, net
|
|
|
|
|
|
||||||
North America
(2)
|
537,286
|
|
|
505,925
|
|
|
467,685
|
|
|||
Europe
(2)
|
293,539
|
|
|
247,910
|
|
|
175,455
|
|
|||
Specialty
|
82,264
|
|
|
57,741
|
|
|
53,427
|
|
|||
Total property, plant and equipment, net
|
913,089
|
|
|
811,576
|
|
|
696,567
|
|
|||
Equity Method Investments
|
|
|
|
|
|
||||||
North America
|
336
|
|
|
336
|
|
|
628
|
|
|||
Europe
(3)
|
208,068
|
|
|
183,131
|
|
|
2,127
|
|
|||
Total equity method investments
|
208,404
|
|
|
183,467
|
|
|
2,755
|
|
|||
Other unallocated assets
|
4,837,490
|
|
|
4,512,370
|
|
|
2,801,803
|
|
|||
Total assets
|
$
|
9,366,872
|
|
|
$
|
8,303,199
|
|
|
$
|
5,647,837
|
|
(1)
|
In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year amounts have been recast to reflect the shift in reporting structure.
|
(2)
|
The increase in assets for our North America and Europe segments from
December 31, 2015
to
December 31, 2016
primarily relates to the PGW autoglass and Rhiag acquisitions, respectively. See
Note 2, "Business Combinations
" for further details.
|
(3)
|
The increase in Europe from
December 31, 2015
to
December 31, 2016
primarily relates to our investment in Mekonomen as described in
Note 4, "Summary of Significant Accounting Policies
."
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
|
|
|
|
||||||
United States
|
$
|
5,662,016
|
|
|
$
|
5,226,918
|
|
|
$
|
4,831,875
|
|
United Kingdom
|
1,548,212
|
|
|
1,390,775
|
|
|
1,382,432
|
|
|||
Other countries
|
2,526,681
|
|
|
1,966,338
|
|
|
978,326
|
|
|||
Total revenue
|
$
|
9,736,909
|
|
|
$
|
8,584,031
|
|
|
$
|
7,192,633
|
|
|
December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Long-lived Assets
|
|
|
|
|
|
||||||
United States
|
$
|
583,236
|
|
|
$
|
531,425
|
|
|
$
|
493,300
|
|
United Kingdom
|
178,021
|
|
|
159,689
|
|
|
138,546
|
|
|||
Other countries
|
151,832
|
|
|
120,462
|
|
|
64,721
|
|
|||
Total long-lived assets
|
$
|
913,089
|
|
|
$
|
811,576
|
|
|
$
|
696,567
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
(1)
|
|
2015
(1)
|
||||||
Aftermarket and other new products
|
$
|
7,326,049
|
|
|
$
|
6,363,706
|
|
|
$
|
5,005,587
|
|
Recycled, remanufactured and refurbished products and services
|
1,882,585
|
|
|
1,780,939
|
|
|
1,708,364
|
|
|||
Other
|
528,275
|
|
|
439,386
|
|
|
478,682
|
|
|||
Total revenue
|
$
|
9,736,909
|
|
|
$
|
8,584,031
|
|
|
$
|
7,192,633
|
|
(1)
|
In the fourth quarter of 2017, we realigned our product categories to differentiate products based on the source of the product. Prior year amounts have been recast to reflect the shift in reporting structure; Aftermarket and other new products decreased by
$77 million
and
$111 million
for the years ended December 31, 2016 and 2015, respectively, with a corresponding increase to recycled, remanufactured and refurbished products and services.
|
Note 15.
|
Selected Quarterly Data (unaudited)
|
|
Quarter Ended
|
||||||||||||||
(In thousands, except per share data)
|
Dec. 31
|
|
Sep. 30
|
|
Jun. 30
|
|
Mar. 31
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
2,469,855
|
|
|
$
|
2,465,800
|
|
|
$
|
2,458,411
|
|
|
$
|
2,342,843
|
|
Gross margin
|
947,645
|
|
|
956,876
|
|
|
965,009
|
|
|
930,093
|
|
||||
Operating income
|
167,954
|
|
|
199,099
|
|
|
244,573
|
|
|
235,692
|
|
||||
Income from continuing operations
|
122,870
|
|
|
122,381
|
|
|
150,914
|
|
|
140,809
|
|
||||
Net loss from discontinued operations
(1)
|
(2,215
|
)
|
|
—
|
|
|
—
|
|
|
(4,531
|
)
|
||||
Net loss attributable to noncontrolling interest
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income attributable to LKQ stockholders
|
124,171
|
|
|
122,381
|
|
|
150,914
|
|
|
136,278
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share from continuing operations
(2)
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.49
|
|
|
$
|
0.46
|
|
Diluted earnings per share from continuing operations
(2)
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
$
|
0.49
|
|
|
$
|
0.45
|
|
|
Quarter Ended
(3)
|
||||||||||||||
(In thousands, except per share data)
|
Dec. 31
|
|
Sep. 30
|
|
Jun. 30
|
|
Mar. 31
|
||||||||
2016
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
2,150,406
|
|
|
$
|
2,207,343
|
|
|
$
|
2,304,806
|
|
|
$
|
1,921,476
|
|
Gross margin
|
830,006
|
|
|
855,444
|
|
|
905,816
|
|
|
760,437
|
|
||||
Operating income
|
161,880
|
|
|
183,401
|
|
|
232,445
|
|
|
185,672
|
|
||||
Income from continuing operations
|
96,298
|
|
|
109,844
|
|
|
137,810
|
|
|
112,171
|
|
||||
Net (loss) income from discontinued operations
(1)
|
(9,967
|
)
|
|
12,844
|
|
|
4,975
|
|
|
—
|
|
||||
Net income
|
86,331
|
|
|
122,688
|
|
|
142,785
|
|
|
112,171
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share from continuing operations
(2)
|
$
|
0.31
|
|
|
$
|
0.36
|
|
|
$
|
0.45
|
|
|
$
|
0.37
|
|
Diluted earnings per share from continuing operations
(2)
|
$
|
0.31
|
|
|
$
|
0.35
|
|
|
$
|
0.45
|
|
|
$
|
0.36
|
|
(1)
|
In the first quarter of 2017, LKQ completed the sale of the glass manufacturing business of its PGW subsidiary and recorded a loss on sale of
$4 million
and an immaterial loss from discontinued operations, net of tax. During the fourth quarter of 2017, we recorded an additional loss on sale of
$2 million
. The remaining amounts presented represent income (loss) from discontinued operations, net of tax for the periods presented. See Note 3, "Discontinued Operations" for further information regarding the disposal of the glass manufacturing business.
|
(2)
|
The sum of the quarters may not equal the total of the respective year's earnings per share on either a basic or diluted basis due to changes in weighted average shares outstanding throughout the year.
|
(3)
|
The 2016 amounts presented above include the results of operations of Rhiag, from its acquisition effective March 18, 2016, and PGW, from its acquisition effective April 21, 2016.
|
Note 16.
|
Condensed Consolidating Financial Information
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
5,780,904
|
|
|
$
|
4,116,161
|
|
|
$
|
(160,156
|
)
|
|
$
|
9,736,909
|
|
Cost of goods sold
|
—
|
|
|
3,458,304
|
|
|
2,639,138
|
|
|
(160,156
|
)
|
|
5,937,286
|
|
|||||
Gross margin
|
—
|
|
|
2,322,600
|
|
|
1,477,023
|
|
|
—
|
|
|
3,799,623
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
521,596
|
|
|
275,792
|
|
|
—
|
|
|
797,388
|
|
|||||
Distribution expenses
|
—
|
|
|
491,082
|
|
|
293,403
|
|
|
—
|
|
|
784,485
|
|
|||||
Selling, general and administrative expenses
|
29,884
|
|
|
545,248
|
|
|
556,082
|
|
|
—
|
|
|
1,131,214
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
7,352
|
|
|
12,320
|
|
|
—
|
|
|
19,672
|
|
|||||
Depreciation and amortization
|
118
|
|
|
96,717
|
|
|
122,711
|
|
|
—
|
|
|
219,546
|
|
|||||
Operating (loss) income
|
(30,002
|
)
|
|
660,605
|
|
|
216,715
|
|
|
—
|
|
|
847,318
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
66,030
|
|
|
546
|
|
|
35,064
|
|
|
—
|
|
|
101,640
|
|
|||||
Intercompany interest (income) expense, net
|
(17,873
|
)
|
|
(2,383
|
)
|
|
20,256
|
|
|
—
|
|
|
—
|
|
|||||
Loss on debt extinguishment
|
456
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
456
|
|
|||||
Gains on bargain purchases
|
—
|
|
|
—
|
|
|
(3,870
|
)
|
|
—
|
|
|
(3,870
|
)
|
|||||
Interest and other expense (income), net
|
242
|
|
|
(14,366
|
)
|
|
(3,411
|
)
|
|
—
|
|
|
(17,535
|
)
|
|||||
Total other expense (income), net
|
48,855
|
|
|
(16,203
|
)
|
|
48,039
|
|
|
—
|
|
|
80,691
|
|
|||||
(Loss) income from continuing operations before provision for income taxes
|
(78,857
|
)
|
|
676,808
|
|
|
168,676
|
|
|
—
|
|
|
766,627
|
|
|||||
Provision for income taxes
|
28,684
|
|
|
168,288
|
|
|
38,588
|
|
|
—
|
|
|
235,560
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
5,907
|
|
|
—
|
|
|
5,907
|
|
|||||
Equity in earnings of subsidiaries
|
648,031
|
|
|
21,836
|
|
|
—
|
|
|
(669,867
|
)
|
|
—
|
|
|||||
Income from continuing operations
|
540,490
|
|
|
530,356
|
|
|
135,995
|
|
|
(669,867
|
)
|
|
536,974
|
|
|||||
Net (loss) income from discontinued operations
|
(6,746
|
)
|
|
(6,746
|
)
|
|
2,050
|
|
|
4,696
|
|
|
(6,746
|
)
|
|||||
Net income
|
533,744
|
|
|
523,610
|
|
|
138,045
|
|
|
(665,171
|
)
|
|
530,228
|
|
|||||
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(3,516
|
)
|
|
—
|
|
|
(3,516
|
)
|
|||||
Net income attributable to LKQ stockholders
|
$
|
533,744
|
|
|
$
|
523,610
|
|
|
$
|
141,561
|
|
|
$
|
(665,171
|
)
|
|
$
|
533,744
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
5,467,430
|
|
|
$
|
3,301,503
|
|
|
$
|
(184,902
|
)
|
|
$
|
8,584,031
|
|
Cost of goods sold
|
—
|
|
|
3,313,503
|
|
|
2,103,727
|
|
|
(184,902
|
)
|
|
5,232,328
|
|
|||||
Gross margin
|
—
|
|
|
2,153,927
|
|
|
1,197,776
|
|
|
—
|
|
|
3,351,703
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
475,487
|
|
|
213,431
|
|
|
—
|
|
|
688,918
|
|
|||||
Distribution expenses
|
—
|
|
|
453,192
|
|
|
230,620
|
|
|
—
|
|
|
683,812
|
|
|||||
Selling, general and administrative expenses
|
34,163
|
|
|
521,909
|
|
|
430,308
|
|
|
—
|
|
|
986,380
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
21,162
|
|
|
16,600
|
|
|
—
|
|
|
37,762
|
|
|||||
Depreciation and amortization
|
132
|
|
|
94,165
|
|
|
97,136
|
|
|
—
|
|
|
191,433
|
|
|||||
Operating (loss) income
|
(34,295
|
)
|
|
588,012
|
|
|
209,681
|
|
|
—
|
|
|
763,398
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
59,415
|
|
|
547
|
|
|
28,301
|
|
|
—
|
|
|
88,263
|
|
|||||
Intercompany interest (income) expense, net
|
(27,470
|
)
|
|
17,124
|
|
|
10,346
|
|
|
—
|
|
|
—
|
|
|||||
Loss on debt extinguishment
|
2,894
|
|
|
—
|
|
|
23,756
|
|
|
—
|
|
|
26,650
|
|
|||||
Gains on foreign exchange contracts - acquisition related
|
(18,342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,342
|
)
|
|||||
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
(8,207
|
)
|
|
—
|
|
|
(8,207
|
)
|
|||||
Interest and other expense (income), net
|
470
|
|
|
(3,773
|
)
|
|
1,056
|
|
|
—
|
|
|
(2,247
|
)
|
|||||
Total other expense, net
|
16,967
|
|
|
13,898
|
|
|
55,252
|
|
|
—
|
|
|
86,117
|
|
|||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
(51,262
|
)
|
|
574,114
|
|
|
154,429
|
|
|
—
|
|
|
677,281
|
|
|||||
(Benefit) provision for income taxes
|
(20,498
|
)
|
|
213,794
|
|
|
27,270
|
|
|
—
|
|
|
220,566
|
|
|||||
Equity in (loss) earnings of unconsolidated subsidiaries
|
(795
|
)
|
|
—
|
|
|
203
|
|
|
—
|
|
|
(592
|
)
|
|||||
Equity in earnings of subsidiaries
|
487,682
|
|
|
22,314
|
|
|
—
|
|
|
(509,996
|
)
|
|
—
|
|
|||||
Income from continuing operations
|
456,123
|
|
|
382,634
|
|
|
127,362
|
|
|
(509,996
|
)
|
|
456,123
|
|
|||||
Net income from discontinued operations
|
7,852
|
|
|
7,852
|
|
|
3,285
|
|
|
(11,137
|
)
|
|
7,852
|
|
|||||
Net income
|
$
|
463,975
|
|
|
$
|
390,486
|
|
|
$
|
130,647
|
|
|
$
|
(521,133
|
)
|
|
$
|
463,975
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
4,965,355
|
|
|
$
|
2,357,655
|
|
|
$
|
(130,377
|
)
|
|
$
|
7,192,633
|
|
Cost of goods sold
|
—
|
|
|
3,010,820
|
|
|
1,478,661
|
|
|
(130,377
|
)
|
|
4,359,104
|
|
|||||
Gross margin
|
—
|
|
|
1,954,535
|
|
|
878,994
|
|
|
—
|
|
|
2,833,529
|
|
|||||
Facility and warehouse expenses
|
—
|
|
|
408,828
|
|
|
147,213
|
|
|
—
|
|
|
556,041
|
|
|||||
Distribution expenses
|
—
|
|
|
408,112
|
|
|
194,785
|
|
|
—
|
|
|
602,897
|
|
|||||
Selling, general and administrative expenses
|
32,946
|
|
|
490,530
|
|
|
304,857
|
|
|
—
|
|
|
828,333
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
13,962
|
|
|
5,549
|
|
|
—
|
|
|
19,511
|
|
|||||
Depreciation and amortization
|
154
|
|
|
82,058
|
|
|
39,908
|
|
|
—
|
|
|
122,120
|
|
|||||
Operating (loss) income
|
(33,100
|
)
|
|
551,045
|
|
|
186,682
|
|
|
—
|
|
|
704,627
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
47,626
|
|
|
669
|
|
|
9,565
|
|
|
—
|
|
|
57,860
|
|
|||||
Intercompany interest (income) expense, net
|
(41,904
|
)
|
|
28,944
|
|
|
12,960
|
|
|
—
|
|
|
—
|
|
|||||
Interest and other expense (income), net
|
99
|
|
|
(7,414
|
)
|
|
5,052
|
|
|
—
|
|
|
(2,263
|
)
|
|||||
Total other expense, net
|
5,821
|
|
|
22,199
|
|
|
27,577
|
|
|
—
|
|
|
55,597
|
|
|||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
(38,921
|
)
|
|
528,846
|
|
|
159,105
|
|
|
—
|
|
|
649,030
|
|
|||||
(Benefit) provision for income taxes
|
(16,054
|
)
|
|
205,176
|
|
|
30,581
|
|
|
—
|
|
|
219,703
|
|
|||||
Equity in (loss) earnings of unconsolidated subsidiaries
|
(1,000
|
)
|
|
59
|
|
|
(5,163
|
)
|
|
—
|
|
|
(6,104
|
)
|
|||||
Equity in earnings of subsidiaries
|
447,090
|
|
|
24,632
|
|
|
—
|
|
|
(471,722
|
)
|
|
—
|
|
|||||
Net income
|
$
|
423,223
|
|
|
$
|
348,361
|
|
|
$
|
123,361
|
|
|
$
|
(471,722
|
)
|
|
$
|
423,223
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
533,744
|
|
|
$
|
523,610
|
|
|
$
|
138,045
|
|
|
$
|
(665,171
|
)
|
|
$
|
530,228
|
|
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(3,516
|
)
|
|
—
|
|
|
(3,516
|
)
|
|||||
Net income attributable to LKQ stockholders
|
533,744
|
|
|
523,610
|
|
|
141,561
|
|
|
(665,171
|
)
|
|
533,744
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
200,596
|
|
|
16,743
|
|
|
206,049
|
|
|
(222,792
|
)
|
|
200,596
|
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
3,447
|
|
|
(133
|
)
|
|
—
|
|
|
133
|
|
|
3,447
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(6,035
|
)
|
|
(3,254
|
)
|
|
(2,781
|
)
|
|
6,035
|
|
|
(6,035
|
)
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(1,309
|
)
|
|
—
|
|
|
(1,309
|
)
|
|
1,309
|
|
|
(1,309
|
)
|
|||||
Other comprehensive income
|
196,699
|
|
|
13,356
|
|
|
201,959
|
|
|
(215,315
|
)
|
|
196,699
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income
|
730,443
|
|
|
536,966
|
|
|
340,004
|
|
|
(880,486
|
)
|
|
726,927
|
|
|||||
Less: comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(3,516
|
)
|
|
—
|
|
|
(3,516
|
)
|
|||||
Comprehensive income attributable to LKQ stockholders
|
$
|
730,443
|
|
|
$
|
536,966
|
|
|
$
|
343,520
|
|
|
$
|
(880,486
|
)
|
|
$
|
730,443
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
463,975
|
|
|
$
|
390,486
|
|
|
$
|
130,647
|
|
|
$
|
(521,133
|
)
|
|
$
|
463,975
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
(175,639
|
)
|
|
(48,914
|
)
|
|
(177,911
|
)
|
|
226,825
|
|
|
(175,639
|
)
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
9,023
|
|
|
133
|
|
|
389
|
|
|
(522
|
)
|
|
9,023
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
4,911
|
|
|
3,962
|
|
|
1,061
|
|
|
(5,023
|
)
|
|
4,911
|
|
|||||
Other comprehensive loss
|
(161,705
|
)
|
|
(44,819
|
)
|
|
(176,461
|
)
|
|
221,280
|
|
|
(161,705
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
302,270
|
|
|
$
|
345,667
|
|
|
$
|
(45,814
|
)
|
|
$
|
(299,853
|
)
|
|
$
|
302,270
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
423,223
|
|
|
$
|
348,361
|
|
|
$
|
123,361
|
|
|
$
|
(471,722
|
)
|
|
$
|
423,223
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
(69,817
|
)
|
|
(20,359
|
)
|
|
(65,878
|
)
|
|
86,237
|
|
|
(69,817
|
)
|
|||||
Net change in unrecognized gains/losses on derivative instruments, net of tax
|
2,469
|
|
|
—
|
|
|
294
|
|
|
(294
|
)
|
|
2,469
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
2,103
|
|
|
—
|
|
|
2,103
|
|
|
(2,103
|
)
|
|
2,103
|
|
|||||
Other comprehensive loss
|
(65,245
|
)
|
|
(20,359
|
)
|
|
(63,481
|
)
|
|
83,840
|
|
|
(65,245
|
)
|
|||||
Total comprehensive income
|
$
|
357,978
|
|
|
$
|
328,002
|
|
|
$
|
59,880
|
|
|
$
|
(387,882
|
)
|
|
$
|
357,978
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
34,360
|
|
|
$
|
35,131
|
|
|
$
|
210,275
|
|
|
$
|
—
|
|
|
$
|
279,766
|
|
Receivables, net
|
—
|
|
|
290,958
|
|
|
736,148
|
|
|
—
|
|
|
1,027,106
|
|
|||||
Intercompany receivables, net
|
2,669
|
|
|
3,010
|
|
|
230
|
|
|
(5,909
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,334,766
|
|
|
1,046,017
|
|
|
—
|
|
|
2,380,783
|
|
|||||
Prepaid expenses and other current assets
|
34,136
|
|
|
44,849
|
|
|
55,494
|
|
|
—
|
|
|
134,479
|
|
|||||
Total current assets
|
71,165
|
|
|
1,708,714
|
|
|
2,048,164
|
|
|
(5,909
|
)
|
|
3,822,134
|
|
|||||
Property, plant and equipment, net
|
910
|
|
|
563,262
|
|
|
348,917
|
|
|
—
|
|
|
913,089
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
2,010,209
|
|
|
1,526,302
|
|
|
—
|
|
|
3,536,511
|
|
|||||
Other intangibles, net
|
—
|
|
|
291,036
|
|
|
452,733
|
|
|
—
|
|
|
743,769
|
|
|||||
Investment in subsidiaries
|
5,952,687
|
|
|
102,931
|
|
|
—
|
|
|
(6,055,618
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,156,550
|
|
|
782,638
|
|
|
—
|
|
|
(1,939,188
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
336
|
|
|
208,068
|
|
|
—
|
|
|
208,404
|
|
|||||
Other assets
|
70,590
|
|
|
33,597
|
|
|
38,778
|
|
|
—
|
|
|
142,965
|
|
|||||
Total assets
|
$
|
7,251,902
|
|
|
$
|
5,492,723
|
|
|
$
|
4,622,962
|
|
|
$
|
(8,000,715
|
)
|
|
$
|
9,366,872
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
5,742
|
|
|
$
|
340,951
|
|
|
$
|
441,920
|
|
|
$
|
—
|
|
|
$
|
788,613
|
|
Intercompany payables, net
|
—
|
|
|
230
|
|
|
5,679
|
|
|
(5,909
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
9,448
|
|
|
65,811
|
|
|
68,165
|
|
|
—
|
|
|
143,424
|
|
|||||
Other accrued expenses
|
5,219
|
|
|
95,900
|
|
|
117,481
|
|
|
—
|
|
|
218,600
|
|
|||||
Other current liabilities
|
282
|
|
|
27,066
|
|
|
18,379
|
|
|
—
|
|
|
45,727
|
|
|||||
Current portion of long-term obligations
|
16,468
|
|
|
1,912
|
|
|
107,980
|
|
|
—
|
|
|
126,360
|
|
|||||
Total current liabilities
|
37,159
|
|
|
531,870
|
|
|
759,604
|
|
|
(5,909
|
)
|
|
1,322,724
|
|
|||||
Long-term obligations, excluding current portion
|
2,095,826
|
|
|
7,372
|
|
|
1,174,422
|
|
|
—
|
|
|
3,277,620
|
|
|||||
Intercompany notes payable
|
750,000
|
|
|
677,708
|
|
|
511,480
|
|
|
(1,939,188
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
12,402
|
|
|
116,021
|
|
|
123,936
|
|
|
—
|
|
|
252,359
|
|
|||||
Other noncurrent liabilities
|
158,346
|
|
|
101,189
|
|
|
47,981
|
|
|
—
|
|
|
307,516
|
|
|||||
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Company stockholders’ equity
|
4,198,169
|
|
|
4,058,563
|
|
|
1,997,055
|
|
|
(6,055,618
|
)
|
|
4,198,169
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
8,484
|
|
|
—
|
|
|
8,484
|
|
|||||
Total stockholders’ equity
|
4,198,169
|
|
|
4,058,563
|
|
|
2,005,539
|
|
|
(6,055,618
|
)
|
|
4,206,653
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
7,251,902
|
|
|
$
|
5,492,723
|
|
|
$
|
4,622,962
|
|
|
$
|
(8,000,715
|
)
|
|
$
|
9,366,872
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
December 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
33,030
|
|
|
$
|
35,360
|
|
|
$
|
159,010
|
|
|
$
|
—
|
|
|
$
|
227,400
|
|
Receivables, net
|
—
|
|
|
248,188
|
|
|
612,361
|
|
|
—
|
|
|
860,549
|
|
|||||
Intercompany receivables, net
|
2,805
|
|
|
11,237
|
|
|
8,837
|
|
|
(22,879
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,149,763
|
|
|
785,474
|
|
|
—
|
|
|
1,935,237
|
|
|||||
Prepaid expenses and other current assets
|
1,640
|
|
|
43,165
|
|
|
42,963
|
|
|
—
|
|
|
87,768
|
|
|||||
Assets of discontinued operations
|
—
|
|
|
357,788
|
|
|
98,852
|
|
|
—
|
|
|
456,640
|
|
|||||
Total current assets
|
37,475
|
|
|
1,845,501
|
|
|
1,707,497
|
|
|
(22,879
|
)
|
|
3,567,594
|
|
|||||
Property, plant
and equipment, net
|
239
|
|
|
527,705
|
|
|
283,632
|
|
|
—
|
|
|
811,576
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
1,851,274
|
|
|
1,203,495
|
|
|
—
|
|
|
3,054,769
|
|
|||||
Other intangibles, net
|
—
|
|
|
153,689
|
|
|
430,542
|
|
|
—
|
|
|
584,231
|
|
|||||
Investment in subsidiaries
|
5,067,297
|
|
|
242,032
|
|
|
—
|
|
|
(5,309,329
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,510,534
|
|
|
800,283
|
|
|
—
|
|
|
(2,310,817
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
336
|
|
|
183,131
|
|
|
—
|
|
|
183,467
|
|
|||||
Other assets
|
59,726
|
|
|
25,177
|
|
|
22,347
|
|
|
(5,688
|
)
|
|
101,562
|
|
|||||
Total assets
|
$
|
6,675,271
|
|
|
$
|
5,445,997
|
|
|
$
|
3,830,644
|
|
|
$
|
(7,648,713
|
)
|
|
$
|
8,303,199
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
1,309
|
|
|
$
|
244,074
|
|
|
$
|
388,390
|
|
|
$
|
—
|
|
|
$
|
633,773
|
|
Intercompany payables, net
|
11,237
|
|
|
8,837
|
|
|
2,805
|
|
|
(22,879
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
6,404
|
|
|
58,187
|
|
|
54,164
|
|
|
—
|
|
|
118,755
|
|
|||||
Other accrued expenses
|
5,502
|
|
|
94,287
|
|
|
109,312
|
|
|
—
|
|
|
209,101
|
|
|||||
Other current liabilities
|
4,283
|
|
|
18,456
|
|
|
15,204
|
|
|
—
|
|
|
37,943
|
|
|||||
Current portion of long-term obligations
|
37,710
|
|
|
1,097
|
|
|
27,302
|
|
|
—
|
|
|
66,109
|
|
|||||
Liabilities of discontinued operations
|
—
|
|
|
110,890
|
|
|
34,214
|
|
|
—
|
|
|
145,104
|
|
|||||
Total current liabilities
|
66,445
|
|
|
535,828
|
|
|
631,391
|
|
|
(22,879
|
)
|
|
1,210,785
|
|
|||||
Long-term obligations, excluding current portion
|
2,371,578
|
|
|
8,356
|
|
|
895,728
|
|
|
—
|
|
|
3,275,662
|
|
|||||
Intercompany notes payable
|
750,000
|
|
|
1,074,218
|
|
|
486,599
|
|
|
(2,310,817
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
—
|
|
|
95,765
|
|
|
109,580
|
|
|
(5,688
|
)
|
|
199,657
|
|
|||||
Other noncurrent liabilities
|
44,299
|
|
|
90,722
|
|
|
39,125
|
|
|
—
|
|
|
174,146
|
|
|||||
Total stockholders’ equity
|
3,442,949
|
|
|
3,641,108
|
|
|
1,668,221
|
|
|
(5,309,329
|
)
|
|
3,442,949
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
6,675,271
|
|
|
$
|
5,445,997
|
|
|
$
|
3,830,644
|
|
|
$
|
(7,648,713
|
)
|
|
$
|
8,303,199
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
243,011
|
|
|
$
|
481,384
|
|
|
$
|
95,617
|
|
|
$
|
(301,112
|
)
|
|
$
|
518,900
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(648
|
)
|
|
(87,102
|
)
|
|
(91,340
|
)
|
|
—
|
|
|
(179,090
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
57,735
|
|
|
—
|
|
|
—
|
|
|
(57,735
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(335,582
|
)
|
|
(177,506
|
)
|
|
—
|
|
|
(513,088
|
)
|
|||||
Proceeds from disposals of business/investment
|
—
|
|
|
305,740
|
|
|
(4,443
|
)
|
|
—
|
|
|
301,297
|
|
|||||
Investments in unconsolidated subsidiaries
|
—
|
|
|
(2,750
|
)
|
|
(4,914
|
)
|
|
—
|
|
|
(7,664
|
)
|
|||||
Other investing activities, net
|
—
|
|
|
6,490
|
|
|
7,460
|
|
|
—
|
|
|
13,950
|
|
|||||
Net cash provided by (used in) investing activities
|
57,087
|
|
|
(113,204
|
)
|
|
(270,743
|
)
|
|
(57,735
|
)
|
|
(384,595
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
7,470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,470
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(5,525
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,525
|
)
|
|||||
Debt issuance costs
|
(4,267
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,267
|
)
|
|||||
Borrowings under revolving credit facilities
|
558,000
|
|
|
—
|
|
|
281,171
|
|
|
—
|
|
|
839,171
|
|
|||||
Repayments under revolving credit facilities
|
(824,862
|
)
|
|
—
|
|
|
(121,615
|
)
|
|
—
|
|
|
(946,477
|
)
|
|||||
Repayments under term loans
|
(27,884
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,884
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
11,245
|
|
|
—
|
|
|
11,245
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(11,245
|
)
|
|
—
|
|
|
(11,245
|
)
|
|||||
(Repayments) borrowings of other debt, net
|
(1,700
|
)
|
|
(1,318
|
)
|
|
22,724
|
|
|
—
|
|
|
19,706
|
|
|||||
Payments of other obligations
|
—
|
|
|
(1,336
|
)
|
|
(741
|
)
|
|
—
|
|
|
(2,077
|
)
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(65,498
|
)
|
|
7,763
|
|
|
57,735
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(301,112
|
)
|
|
—
|
|
|
301,112
|
|
|
—
|
|
|||||
Other financing activities, net
|
—
|
|
|
—
|
|
|
7,316
|
|
|
—
|
|
|
7,316
|
|
|||||
Net cash (used in) provided by financing activities
|
(298,768
|
)
|
|
(369,264
|
)
|
|
196,618
|
|
|
358,847
|
|
|
(112,567
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
706
|
|
|
22,806
|
|
|
—
|
|
|
23,512
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
1,330
|
|
|
(378
|
)
|
|
44,298
|
|
|
—
|
|
|
45,250
|
|
|||||
Cash and cash equivalents of continuing operations, beginning of period
|
33,030
|
|
|
35,360
|
|
|
159,010
|
|
|
—
|
|
|
227,400
|
|
|||||
Add: Cash and cash equivalents of discontinued operations, beginning of period
|
—
|
|
|
149
|
|
|
6,967
|
|
|
—
|
|
|
7,116
|
|
|||||
Cash and cash equivalents of continuing and discontinued operations, beginning of period
|
33,030
|
|
|
35,509
|
|
|
165,977
|
|
|
—
|
|
|
234,516
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
34,360
|
|
|
$
|
35,131
|
|
|
$
|
210,275
|
|
|
$
|
—
|
|
|
$
|
279,766
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
308,299
|
|
|
$
|
539,318
|
|
|
$
|
99,894
|
|
|
$
|
(312,497
|
)
|
|
$
|
635,014
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(36
|
)
|
|
(120,761
|
)
|
|
(86,277
|
)
|
|
—
|
|
|
(207,074
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
(1,720,732
|
)
|
|
—
|
|
|
—
|
|
|
1,720,732
|
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(685,278
|
)
|
|
(664,061
|
)
|
|
—
|
|
|
(1,349,339
|
)
|
|||||
Proceeds from disposal of business/investment
|
—
|
|
|
—
|
|
|
10,304
|
|
|
—
|
|
|
10,304
|
|
|||||
Investments in unconsolidated subsidiaries
|
—
|
|
|
(4,400
|
)
|
|
(181,271
|
)
|
|
—
|
|
|
(185,671
|
)
|
|||||
Proceeds from foreign exchange contracts
|
18,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,342
|
|
|||||
Other investing activities, net
|
3
|
|
|
1,953
|
|
|
1,554
|
|
|
—
|
|
|
3,510
|
|
|||||
Net cash used in investing activities
|
(1,702,423
|
)
|
|
(808,486
|
)
|
|
(919,751
|
)
|
|
1,720,732
|
|
|
(1,709,928
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
7,963
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,963
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(4,438
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,438
|
)
|
|||||
Debt issuance costs
|
(7,104
|
)
|
|
—
|
|
|
(9,450
|
)
|
|
—
|
|
|
(16,554
|
)
|
|||||
Proceeds from issuance of Euro Notes (2024)
|
—
|
|
|
—
|
|
|
563,450
|
|
|
—
|
|
|
563,450
|
|
|||||
Borrowings under revolving credit facilities
|
1,744,408
|
|
|
—
|
|
|
892,188
|
|
|
—
|
|
|
2,636,596
|
|
|||||
Repayments under revolving credit facilities
|
(654,000
|
)
|
|
—
|
|
|
(1,094,664
|
)
|
|
—
|
|
|
(1,748,664
|
)
|
|||||
Borrowings under term loans
|
332,954
|
|
|
—
|
|
|
249,161
|
|
|
—
|
|
|
582,115
|
|
|||||
Repayments under term loans
|
(10,898
|
)
|
|
—
|
|
|
(244,894
|
)
|
|
—
|
|
|
(255,792
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
106,400
|
|
|
—
|
|
|
106,400
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(69,400
|
)
|
|
—
|
|
|
(69,400
|
)
|
|||||
Borrowings (repayments) of other debt, net
|
653
|
|
|
(2,935
|
)
|
|
(28,874
|
)
|
|
—
|
|
|
(31,156
|
)
|
|||||
Payments of Rhiag debt and related payments
|
—
|
|
|
—
|
|
|
(543,347
|
)
|
|
—
|
|
|
(543,347
|
)
|
|||||
Payments of other obligations
|
—
|
|
|
(1,436
|
)
|
|
|
|
|
—
|
|
|
(1,436
|
)
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
608,270
|
|
|
1,112,462
|
|
|
(1,720,732
|
)
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(312,497
|
)
|
|
—
|
|
|
312,497
|
|
|
—
|
|
|||||
Net cash provided by financing activities
|
1,409,538
|
|
|
291,402
|
|
|
933,032
|
|
|
(1,408,235
|
)
|
|
1,225,737
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(157
|
)
|
|
(3,547
|
)
|
|
—
|
|
|
(3,704
|
)
|
|||||
Net increase in cash and cash equivalents
|
15,414
|
|
|
22,077
|
|
|
109,628
|
|
|
—
|
|
|
147,119
|
|
|||||
Cash and cash equivalents of continuing operations, beginning of period
|
17,616
|
|
|
13,432
|
|
|
56,349
|
|
|
—
|
|
|
87,397
|
|
|||||
Cash and cash equivalents of continuing and discontinued operations, end of period
|
33,030
|
|
|
35,509
|
|
|
165,977
|
|
|
—
|
|
|
234,516
|
|
|||||
Less: Cash and cash equivalents of discontinued operations, end of period
|
—
|
|
|
(149
|
)
|
|
(6,967
|
)
|
|
—
|
|
|
(7,116
|
)
|
|||||
Cash and cash equivalents, end of period
|
$
|
33,030
|
|
|
$
|
35,360
|
|
|
$
|
159,010
|
|
|
$
|
—
|
|
|
$
|
227,400
|
|
LKQ CORPORATION AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
262,812
|
|
|
$
|
393,422
|
|
|
$
|
136,361
|
|
|
$
|
(248,313
|
)
|
|
$
|
544,282
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(1
|
)
|
|
(85,868
|
)
|
|
(84,621
|
)
|
|
—
|
|
|
(170,490
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
(66,712
|
)
|
|
—
|
|
|
—
|
|
|
66,712
|
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(118,963
|
)
|
|
(41,554
|
)
|
|
—
|
|
|
(160,517
|
)
|
|||||
Other investing activities, net
|
—
|
|
|
5,446
|
|
|
(4,432
|
)
|
|
—
|
|
|
1,014
|
|
|||||
Net cash used in investing activities
|
(66,713
|
)
|
|
(199,385
|
)
|
|
(130,607
|
)
|
|
66,712
|
|
|
(329,993
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
8,168
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,168
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(7,581
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,581
|
)
|
|||||
Debt issuance costs
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|||||
Borrowings under revolving credit facilities
|
212,000
|
|
|
—
|
|
|
101,142
|
|
|
—
|
|
|
313,142
|
|
|||||
Repayments under revolving credit facilities
|
(352,000
|
)
|
|
—
|
|
|
(93,282
|
)
|
|
—
|
|
|
(445,282
|
)
|
|||||
Repayments under term loans
|
(22,500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,500
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
3,858
|
|
|
—
|
|
|
3,858
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(35,758
|
)
|
|
—
|
|
|
(35,758
|
)
|
|||||
Repayments (borrowings) of other debt, net
|
(31,500
|
)
|
|
(3,457
|
)
|
|
5,261
|
|
|
—
|
|
|
(29,696
|
)
|
|||||
Payments of other obligations
|
—
|
|
|
(21,896
|
)
|
|
(895
|
)
|
|
—
|
|
|
(22,791
|
)
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
60,910
|
|
|
5,802
|
|
|
(66,712
|
)
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(248,313
|
)
|
|
—
|
|
|
248,313
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(193,413
|
)
|
|
(212,756
|
)
|
|
(13,969
|
)
|
|
181,601
|
|
|
(238,537
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
48
|
|
|
(3,008
|
)
|
|
—
|
|
|
(2,960
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
2,686
|
|
|
(18,671
|
)
|
|
(11,223
|
)
|
|
—
|
|
|
(27,208
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
14,930
|
|
|
32,103
|
|
|
67,572
|
|
|
—
|
|
|
114,605
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
17,616
|
|
|
$
|
13,432
|
|
|
$
|
56,349
|
|
|
$
|
—
|
|
|
$
|
87,397
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
/s/ DELOITTE & TOUCHE LLP
|
Name
|
|
Age
|
|
Position
|
Dominick Zarcone
|
|
59
|
|
President, Chief Executive Officer and Director
|
Varun Laroyia
|
|
46
|
|
Executive Vice President and Chief Financial Officer
|
John S. Quinn
|
|
59
|
|
Chief Executive Officer and Managing Director, LKQ Europe
|
Victor M. Casini
|
|
55
|
|
Senior Vice President, General Counsel and Corporate Secretary
|
Walter P. Hanley
|
|
51
|
|
Senior Vice President - Development
|
Justin L. Jude
|
|
41
|
|
Senior Vice President of Operations - Wholesale Parts Division
|
Ashley T. Brooks
|
|
54
|
|
Senior Vice President and Chief Information Officer
|
Matthew J. McKay
|
|
40
|
|
Senior Vice President - Human Resources
|
Michael S. Clark
|
|
43
|
|
Vice President - Finance and Controller
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
|
Number of
securities to be issued
upon exercise of
outstanding options,
warrants, and rights
(a)
|
|
Weighted-average
exercise price of
outstanding options,
warrants, and rights
(b)
|
|
Number of securities remaining
available for future
issuance under equity
compensation plans (excluding securities reflected in column (a)) (c) |
||||
Equity compensation plans approved by stockholders
|
|
|
|
|
|
|
||||
Stock options
|
|
1,738,073
|
|
|
$
|
9.20
|
|
|
|
|
Restricted stock units
|
|
1,624,390
|
|
|
$
|
—
|
|
|
|
|
Total equity compensation plans approved by stockholders
|
|
3,362,463
|
|
|
|
|
11,672,411
|
|
||
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
Total
|
|
3,362,463
|
|
|
|
|
11,672,411
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Restated Certificate of Incorporation of LKQ Corporation (incorporated herein by reference to Exhibit 3.1 to the Company’s report on Form 10-Q filed with the SEC on October 31, 2014).
|
|
Amended and Restated Bylaws of LKQ Corporation, as amended as of March 8, 2017 (incorporated herein by reference to Exhibit 3.1 to the Company's report on Form 8-K filed with the SEC on March 10, 2017).
|
|
LKQ CORPORATION
|
|
|
By:
|
/s/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
President and Chief Executive Officer
|
Signature
|
Title
|
Principal Executive Officer:
|
|
/s/ DOMINICK ZARCONE
|
President and Chief Executive Officer
|
Dominick Zarcone
|
|
Principal Financial Officer:
|
|
/s/ VARUN LAROYIA
|
Executive Vice President and Chief Financial Officer
|
Varun Laroyia
|
|
Principal Accounting Officer:
|
|
/s/ MICHAEL S. CLARK
|
Vice President—Finance and Controller
|
Michael S. Clark
|
|
A Majority of the Directors:
|
|
/s/ SUKHPAL SINGH AHLUWALIA
|
Director
|
Sukhpal Singh Ahluwalia
|
|
/s/ A. CLINTON ALLEN
|
Director
|
A. Clinton Allen
|
|
/s/ ROBERT M. HANSER
|
Director
|
Robert M. Hanser
|
|
/s/ JOSEPH M. HOLSTEN
|
Director
|
Joseph M. Holsten
|
|
/s/ BLYTHE J. MCGARVIE
|
Director
|
Blythe J. McGarvie
|
|
/s/ PAUL M. MEISTER
|
Director
|
Paul M. Meister
|
|
/s/ JOHN F. O'BRIEN
|
Director
|
John F. O'Brien
|
|
/s/ GUHAN SUBRAMANIAN
|
Director
|
Guhan Subramanian
|
|
/s/ WILLIAM M. WEBSTER, IV
|
Director
|
William M. Webster, IV
|
|
/s/ DOMINICK ZARCONE
|
Director
|
Dominick Zarcone
|
|
|
Net Leverage
Ratio: |
Eurocurrency / LIBOR Market Rate /
BA Equivalent Spread |
ABR / Canadian Base Rate Spread
|
Commitment Fee
|
Category 1:
|
<
1.25 to 1.00
|
1%
|
—%
|
0.175%
|
Category 2:
|
> 1.25 to 1.00 but
< 2.00 to 1.00 |
1.25%
|
0.25%
|
0.200%
|
Category 3:
|
> 2.00 to 1.00 but
< 2.75 to 1.00 |
1.5%
|
0.5%
|
0.250%
|
Category 4:
|
> 2.75 to 1.00 but
<
3.50 to 1.00
|
1.75%
|
0.75%
|
0.300%
|
Category 5:
|
> 3.50 to 1.00 but
< 4.00 to 1.00 |
2.00%
|
1.00%
|
0.350%
|
Category 6:
|
> 4.00 to 1:00
|
2.25%
|
1.25%
|
0.400%
|
SMRH:227313540.1
|
1
|
|
|
|
|
SMRH:227313540.1
|
2
|
|
|
|
|
By:
|
/s/ Dominick Zarcone
Name: Dominick Zarcone Title: Executive Vice President |
By:
|
/s/ Dominick Zarcone
Name: Dominick Zarcone Title: Executive Vice President and Chief Financial Officer |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Dominick Zarcone
Name: Dominick Zarcone Title: Vice President and Chief Financial Officer |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Dominick Zarcone
Name: Dominick Zarcone Title: Vice President and Chief Financial Officer |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Dominick Zarcone
Name: Dominick Zarcone Title: Vice President and Chief Financial Officer |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Dominick Zarcone
Name: Dominick Zarcone Title: Executive Vice President |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
_/s/ Todd Hanson
Name: Todd Hanson Title: President |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Linda Garcia
Name: Title: |
SMRH:227313540.1
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
SMRH:227089685.3
|
1
|
|
|
|
|
SMRH:227089685.3
|
2
|
|
|
|
|
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Executive Vice President and Chief Financial Officer |
SMRH:227089685.3
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
SMRH:227089685.3
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
SMRH:227089685.3
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
SMRH:227089685.3
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
By:
|
/s/ Linda Garcia
Name: Linda E. Garcia Title: Vice President |
SMRH:227089685.3
|
[
Signature Page to Supplemental Indenture
]
|
|
|
|
|
SMRH:227313568.1
|
|
|
|
|
|
SMRH:227313568.1
|
2
|
|
|
|
|
SMRH:227313568.1
|
3
|
|
|
|
|
SMRH:227313568.1
|
4
|
|
|
|
|
SMRH:227313568.1
|
|
|
|
|
|
SMRH:227126463.3
|
|
|
|
|
|
SMRH:227126463.3
|
2
|
|
|
|
|
SMRH:227126463.3
|
3
|
|
|
|
|
SMRH:227126463.3
|
4
|
|
|
|
|
SMRH:227126463.3
|
|
|
|
|
|
1.
|
A change in accounting policy or GAAP;
|
2.
|
Dispositions of assets or businesses;
|
3.
|
Asset impairments;
|
4.
|
Amounts incurred in connection with any financing;
|
5.
|
Losses on interest rate swaps resulting from mark-to-market adjustments or discontinuing hedges;
|
6.
|
Board-approved restructuring, acquisition or similar charges, including charges in conjunction with or in anticipation of an acquisition;
|
7.
|
Losses related to environmental, legal, product liability or other contingencies;
|
8.
|
Changes in tax laws;
|
9.
|
Board-approved divestiture of a material business (i.e., the performance goals shall be adjusted to account for the divestiture, including, if appropriate, the pro-rata effect of targeted improvements);
|
10.
|
Changes in contingent consideration liabilities;
|
11.
|
Losses from discontinued operations;
|
12.
|
Amortization expense related to acquired intangible assets; and
|
13.
|
Other extraordinary, unusual or infrequently occurring items as specifically disclosed in the Company’s financial statements or filings under the Exchange Act.
|
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
|
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
,
|
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 or substituted with awards of equivalent value in connection with a Change of Control shall become fully vested and exercisable in full immediately upon the Change of Control.
|
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
|
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 expenses accrued in accordance with the Company’s business expense reimbursement policies.
|
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 of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
|
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
|
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
|
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.
|
bb.
|
“
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.
|
cc.
|
“
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.
|
dd.
|
“
Underpayment
” has the meaning assigned thereto in Section 9 hereof.
|
ee.
|
“
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 executor of your estate) must execute a waiver and release of claims, including confidentiality and non-disparagement covenants, substantially in the form approved by the Company prior to the Change of Control Date (as set forth on
Exhibit B
attached hereto) (a “
Waiver and Release
”), and such executed Waiver and Release must be delivered to the Company (and not revoked by you) and become effective by its own terms no later than 55 days after the later of (i) the Change of Control or (ii) the termination of your employment with the Company.
|
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
|
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 conditions of your employment with the Company prior to the commencement of the Change of Control Period.
|
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
|
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 M. Casini
|
Name: Victor M. Casini
|
||
Title: Senior Vice President and General Counsel
|
||
|
|
/s/ Varun Laroyia
|
|
Varun Laroyia
|
Chief Financial Officer and Executive Vice President
|
|
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:
|
513
|
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
|
1.
|
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.
|
2.
|
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
|
3.
|
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.
|
4.
|
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.
|
5.
|
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 choice prior to executing this Release, that Employee has had an opportunity to do so, and that Employee understands the provisions and consequences of this Release. Employee further certifies that the Company has not made any representation to Employee concerning this Release other than those contained herein.
|
6.
|
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.
|
7.
|
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.
|
8.
|
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.
|
9.
|
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:
|
-
|
he did not advise the parties on tax issues and therefore will not assume any liability
|
Affiliate(s)
|
means any affiliate(s) (
verbundene(s) Unter-
|
(and
|
their
respective
affiliate(s)
|
provisions under
|
the
laws of other
|
investors'
|
respective
affiliate(s)
|
provisions under
|
the
laws of other
|
Ancillary Agreements
|
means the Share Transfer Agreement,
|
Agreement,
|
the Downstream Loans
|
Seller-Related Person
|
means any individual person who is (y) a
|
Subsidiary / Subsidiaries
|
means any subsidiary
/ subsidiaries
|
provisions under
|
the
laws of other
|
Taxes
|
means all taxes and tax-related ancillary
|
4.2.
|
If and to the extent there exists under the Cash Pooling Agreements on the Cash
|
4.3.
|
If and to the extent there exists under the Cash Pooling Agreements on the Cash
|
7.1.2.
|
an amount of EUR 75,000 (in words: Euro seventy-five thousand) per
|
7.1.3.
|
an amount of EUR 90,000 (in words: Euro ninety thousand) per day for
|
7.1.4.
|
an amount of EUR 140,000 (in words: Euro one hundred forty thousand)
|
7.1.7.
|
the Identified Leakage Deduction Amount (as defined in Section 7.5
|
7.3.1.
|
an amount equal to the balance of the Total Purchase Price less the
|
7.3.2.
|
the Closing Downstream Loans Amount shall be allocated to the
|
9.6.
|
In the event of a withdrawal (
Rücktritt
) of Seller, none of the Parties shall have
|
the Material Companies (including
|
joint ownership
|
employment benefits,
|
including old-age part-time
|
Stahlgruber Group
|
inter alia
referred
to as
|
Knowledge of Seller,
|
the contemplated exclusive
|
within
|
the meaning of Section 10.2.1.2
through
|
the balances of
|
intragroup payments set out
in
|
10.2.2.
|
it reflects prices, rates, interest or rent which (i) do not materially deviate
|
10.2.3.
|
in case of payments, it constitutes consideration for any performance
|
12.3.1.
|
the matter to which the Purchaser Claim relates has been taken into
|
(
Verbindlichkeit
),
|
exceptional depreciation
(
außerplanmäßige
|
12.3.2.
|
the amount of the Purchaser Claim is or could have been reasonably
|
12.3.3.
|
the matter to which the Purchaser Claim relates or the payment or
|
12.3.5.
|
in the case of a breach of a Seller's Guarantee, except for a breach of
|
Seller's No Leakage Guarantee and Seller's Guarantee
|
in
|
Mueller, Partnerschaft von Rechtsanwälten mbB
|
to
|
Purchaser's
|
outside
counsel
under
|
12.3.6.
|
the Purchaser Claim results from, or is increased by, the passing of, or
|
12.3.7.
|
the Purchaser Claim results from, or is increased as a result of, the
|
assessed against Seller on
|
the contribution gain I
|
Guarantee
") or (iii) in relation
|
to
the performance claims
|
18.2.1.
|
the relevant Security Charges to Seller or the relevant Seller's Affiliates,
|
18.2.2.
|
in addition to the Security Charges, a monthly fee payable to Seller of
|
18.2.3.
|
to the extent Seller and Seller's Affiliates are not fully released from all
|
19.1.1.
|
the conduct of the Business for which any Seller's Beneficiary is held
|
19.4.1.
|
the Companies from any claims and reasonable costs and expenses
|
19.4.2.
|
the Target Company from any claims and reasonable costs and expenses
|
19.4.3.
|
the Target Company from any claims and reasonable costs and expenses
|
21.3.2.
|
independently developed by the receiving Party at a prior time or in a
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
||||||||||
Income from continuing operations before provision for income taxes
|
|
$
|
475,827
|
|
|
$
|
587,888
|
|
|
$
|
649,030
|
|
|
$
|
677,281
|
|
|
$
|
766,627
|
|
Fixed charges
|
|
100,190
|
|
|
124,670
|
|
|
124,739
|
|
|
176,414
|
|
|
201,246
|
|
|||||
Amortization of capitalized interest, net of interest capitalized
|
|
56
|
|
|
(50
|
)
|
|
64
|
|
|
(423
|
)
|
|
141
|
|
|||||
Distributed income of unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,549
|
|
|||||
Earnings available for fixed charges
|
|
$
|
576,073
|
|
|
$
|
712,508
|
|
|
$
|
773,833
|
|
|
$
|
853,272
|
|
|
$
|
975,563
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, including amortization of debt issuance costs
|
|
$
|
51,184
|
|
|
$
|
64,542
|
|
|
$
|
57,860
|
|
|
$
|
88,263
|
|
|
$
|
101,640
|
|
Capitalized interest
|
|
130
|
|
|
264
|
|
|
166
|
|
|
824
|
|
|
318
|
|
|||||
Portion of rental expense representative of interest
|
|
48,876
|
|
|
59,864
|
|
|
66,713
|
|
|
87,327
|
|
|
99,288
|
|
|||||
Total fixed charges
|
|
$
|
100,190
|
|
|
$
|
124,670
|
|
|
$
|
124,739
|
|
|
$
|
176,414
|
|
|
$
|
201,246
|
|
Ratio of earnings to fixed charges
|
|
5.7
|
|
|
5.7
|
|
|
6.2
|
|
|
4.8
|
|
|
4.8
|
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
|
|
|
|
|
U.S. Enitites
|
|
|
|
|
A&A Auto Parts Stores, Inc.
|
|
Pennsylvania
|
|
|
AeroVision Aircraft Services, LLC
|
|
Michigan
|
|
|
AeroVision Engine Services, LLC
|
|
Michigan
|
|
|
AeroVision International, LLC
|
|
Michigan
|
|
|
AIM Recycling Florida, LLC (50.01% stake)
|
|
Delaware
|
|
AIM Recycling West Palm; AIM Recycling Medley; AIM Recycling Davie
|
Akron Airport Properties, Inc.
|
|
Ohio
|
|
|
American Recycling International, Inc.
|
|
California
|
|
Pick A Part Auto Dismantling
|
A-Reliable Auto Parts & Wreckers, Inc.
|
|
Illinois
|
|
LKQ Self Service Auto Parts-Rockford; LKQ Heavy Duty Truck ARSCO; LKQ Heavy Duty Truck Core; LKQ Pick Your Part Rockford
|
Arrow Speed Acquisition LLC
|
|
Delaware
|
|
|
AutoTech Fund I L.P. ([6-14%] stake)
|
|
Delaware
|
|
|
AVI Sales and Leasing Services, LLC
|
|
Michigan
|
|
|
AVI Inventory Services, LLC
|
|
Michigan
|
|
AeroVision Component Services
|
DriverFx.com, Inc.
|
|
Delaware
|
|
|
Global Powertrain Systems, LLC
|
|
Delaware
|
|
|
Goodmark Motors, LLC (49.9% stake)
|
|
Delaware
|
|
|
Greenleaf Auto Recyclers, LLC
|
|
Delaware
|
|
Saturn Wheel Company; Heartland Aluminum; Profromance Powertrain; LKQ Heavy Duty Truck-Carolina; Potomac German Mid-Atlantic; Greenleaf Quality Recycled Auto Parts; LKQ West Florida; LKQ North Florida
|
KAIR IL, LLC
|
|
Illinois
|
|
|
KAO Logistics, Inc
|
|
Pennsylvania
|
|
|
KAO Warehouse, Inc.
|
|
Delaware
|
|
|
Keystone Automotive Industries, Inc.
|
|
California
|
|
Transwheel, Coast to Coast International; LKQ of Cleveland; Keystone Automotive-San Francisco Bay Area; Chrome Enhancements
|
Keystone Automotive Operations, Inc.
|
|
Pennsylvania
|
|
|
Keystone Automotive Operations of Canada, Inc.
|
|
Delaware
|
|
|
KPGW Canadian Holdco, LLC
|
|
Delaware
|
|
|
Lakefront Capital Holdings, LLC
|
|
California
|
|
|
LKQ 1st Choice Auto Parts, LLC
|
|
Oklahoma
|
|
|
LKQ 250 Auto, Inc.
|
|
Ohio
|
|
|
LKQ All Models Corp.
|
|
Arizona
|
|
Wholesale Auto Recyclers; Cars ‘n More; LKQ of Arizona
|
LKQ Apex Auto Parts, Inc.
|
|
Oklahoma
|
|
LKQ Self Service Auto Parts - Oklahoma City
|
LKQ Auto Parts of Central California, Inc.
|
|
California
|
|
LKQ Valley Truck Parts; LKQ Specialized Auto Parts; LKQ ACME Truck Parts; All Engine Distributing
|
LKQ Auto Parts of Memphis, Inc.
|
|
Arkansas
|
|
LKQ of Tennessee; LKQ Preferred
|
LKQ Auto Parts of North Texas, Inc.
|
|
Delaware
|
|
|
LKQ Auto Parts of North Texas, L.P.
|
|
Delaware
|
|
LKQ Auto Parts of Central Texas; LKQ Self Service Auto Parts-Austin
|
LKQ Auto Parts of Utah, LLC
|
|
Utah
|
|
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
LKQ Best Automotive Corp.
|
|
Delaware
|
|
LKQ Auto Parts of South Texas; A-1 Auto Salvage Pick & Pull; The Engine & Transmission Store; LKQ Automotive Core Services; LKQ International Sales; LKQ of El Paso
|
LKQ Brad’s Auto & Truck Parts, Inc.
|
|
Oregon
|
|
|
LKQ Broadway Auto Parts, Inc.
|
|
New York
|
|
LKQ Buffalo; LKQ Self Service Auto Parts-Buffalo
|
LKQ Corporation
|
|
Delaware
|
|
|
LKQ Delaware LLP
|
|
Delaware
|
|
|
LKQ Foster Auto Parts Salem, Inc.
|
|
Oregon
|
|
Foster Auto Parts Salem
|
LKQ Foster Auto Parts Westside LLC
|
|
Oregon
|
|
|
LKQ Foster Auto Parts, Inc.
|
|
Oregon
|
|
LKQ U-Pull-It Auto Wrecking; U-Pull-It Auto Wrecking; LKQ Barger Auto Parts; LKQ KC Truck Parts-Inland Empire; LKQ KC Truck Parts-Western Washington; LKQ KC Truck Parts-Montana; LKQ Wholesale Truck Parts; LKQ of Eastern Idaho
|
LKQ Gorham Auto Parts Corp.
|
|
Maine
|
|
|
LKQ Great Lakes Corp.
|
|
Indiana
|
|
LKQ Star Auto Parts; LKQ Chicago; LKQ Self Service Auto Parts-Milwaukee
|
LKQ Heavy Truck-Texas Best Diesel, L.P.
|
|
Texas
|
|
LKQ Fleet Solutions
|
LKQ Hunts Point Auto Parts Corp.
|
|
New York
|
|
Partsland USA; LKQ Auto Parts of Eastern Pennsylvania; LKQ Auto Parts
|
LKQ Investments, Inc.
|
|
Delaware
|
|
|
LKQ Lakenor Auto & Truck Salvage, Inc.
|
|
California
|
|
LKQ of Southern California; LKQ of Las Vegas; LKQ Parts Outlet-Los Angeles
|
LKQ Metro, Inc.
|
|
Illinois
|
|
|
LKQ Mid-America Auto Parts, Inc.
|
|
Kansas
|
|
Mabry Auto Salvage; LKQ of Oklahoma City; LKQ of NW Arkansas; LKQ Heavy Duty Truck-Kansas; LKQ Four States
|
LKQ Midwest Auto Parts Corp.
|
|
Nebraska
|
|
Midwest Foreign Auto; LKQ Midwest Auto; LKQ Auto Parts of Lincoln
|
LKQ Minnesota, Inc.
|
|
Minnesota
|
|
LKQ Albert Lea
|
LKQ of Indiana, Inc.
|
|
Indiana
|
|
LKQ Self Service Auto Parts-South Bend; LKQ Kentuckiana
|
LKQ of Michigan, Inc.
|
|
Michigan
|
|
|
LKQ of Nevada, Inc.
|
|
Nevada
|
|
|
LKQ Northeast, Inc.
|
|
Delaware
|
|
LKQ Thruway Auto Parts; LKQ Venice Auto Parts; LKQ Triple Nickel Trucks
|
LKQ Online Corp.
|
|
Delaware
|
|
|
LKQ PGW Holdings, LLC
|
|
Delaware
|
|
|
LKQ Pick Your Part Southeast, LLC
|
|
Delaware
|
|
LKQ Self Service Auto Parts-Orlando; LKQ Pick Your Part
|
LKQ Receivables Finance Company, LLC
|
|
Delaware
|
|
|
LKQ Route 16 Used Auto Parts, Inc.
|
|
Massachusetts
|
|
Diversified Marketing Solutions; LKQ Pick Your Part; LKQ Car World Auto Parts
|
LKQ Self Service Auto Parts-Holland, Inc.
|
|
Michigan
|
|
LKQ Pick Your Part
|
LKQ Self Service Auto Parts-Kalamazoo, Inc.
|
|
Michigan
|
|
LKQ Self Service Auto Parts-Grand Rapids; LKQ Pick Your Part
|
LKQ Self Service Auto Parts-Tulsa, Inc.
|
|
Oklahoma
|
|
LKQ Pick Your Part
|
LKQ Smart Parts, Inc.
|
|
Delaware
|
|
LKQ Viking Auto Salvage
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
LKQ Southeast, Inc.
|
|
Delaware
|
|
LKQ Fort Myers; LKQ Heavy Truck-Tampa; LKQ Pick Your Part; LKQ Gulf Coast; LKQ Plunks Truck Parts & Equipment - West Monroe; LKQ of Carolina; LKQ Richmond; LKQ East Carolina; LKQ Self Service East NC ; LKQ Self Service Auto Parts-Charlotte; LKQ Pick Your Part; LKQ Heavy Duty Truck Charlotte
|
LKQ Southwick LLC
|
|
Massachusetts
|
|
|
LKQ Taiwan Holding Company
|
|
Illinois
|
|
|
LKQ Tire & Recycling, Inc.
|
|
Delaware
|
|
|
LKQ Trading Company
|
|
Delaware
|
|
|
LKQ TriplettASAP, Inc.
|
|
Ohio
|
|
LKQ Heavy Truck-Goody's; LKQ Pittsburgh; LKQ Pick Your Part; Cockrell's Auto Parts
|
LKQ U-Pull-It Auto Damascus, Inc.
|
|
Oregon
|
|
LKQ U-Pull-It Damascus
|
LKQ U-Pull-It Tigard, Inc.
|
|
Oregon
|
|
|
LKQ West Michigan Auto Parts, Inc.
|
|
Michigan
|
|
|
MSN145056, LLC
|
|
Michigan
|
|
|
North American ATK Corporation
|
|
California
|
|
|
PGW Auto Glass, LLC
|
|
Delaware
|
|
|
Pick-Your-Part Auto Wrecking
|
|
California
|
|
LKQ Pick A Part-San Bernardino; LKQ Midnight Auto & Truck Recyclers; LKQ Pick A Part-Hesperia; LKQ Desert High Truck & Auto Recyclers; LKQ Pick A Part-Riverside; LKQ Hillside Truck & Auto Recyclers; LKQ Pick Your Part Chicago Heights
|
Potomac German Auto, Inc.
|
|
Maryland
|
|
LKQ Norfolk; LKQ Heavy Truck-Maryland
|
Pull-N-Save Auto Parts, LLC
|
|
Colorado
|
|
LKQ Pull-N-Save Auto Parts of Aurora LLC; LKQ of Colorado; LKQ Self Service Auto Parts-Denver; LKQ Western Truck Parts
|
Redding Auto Center, Inc.
|
|
California
|
|
LKQ Auto Parts of Northern California; LKQ Reno; LKQ Specialized Parts Planet; LKQ ACME Truck Parts; LKQ Auto Sales of Rancho Cordova
|
Rydell Motor Company, LLC (1% stake)
|
|
Iowa
|
|
|
Scrap Processors, LLC
|
|
Illinois
|
|
|
U-Pull-It, Inc.
|
|
Illinois
|
|
LKQ PickYour Part Blue Island
|
U-Pull-It, North, LLC
|
|
Illinois
|
|
LKQ Pick Your Part
|
Warn Industries, Inc.
|
|
Delaware
|
|
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
|
|
|
|
|
Foreign Entities
|
|
|
|
|
1323352 Alberta ULC
|
|
Alberta
|
|
|
1323410 Alberta ULC
|
|
Alberta
|
|
|
2015 Automaterialen B.V.
|
|
Netherlands
|
|
|
Abiussi BVBA
|
|
Belgium
|
|
|
Ageres B.V.
|
|
Netherlands
|
|
|
Alconed B.V. (subsidary of Intermotor B.V. JV)
|
|
Netherlands
|
|
|
Andrew Page 1917 Limited
|
|
England & Wales
|
|
|
AP Logistics Belgie NV
|
|
Belgium
|
|
|
AP Logistics B.V.
|
|
Netherlands
|
|
|
APS B.V.
|
|
Netherlands
|
|
|
APS Autobanden B.V. (50% stake)
|
|
Netherlands
|
|
|
Arleigh Group Limited
|
|
England & Wales
|
|
|
Arleigh International Limited
|
|
England & Wales
|
|
|
A.S.A.P. Supplies Limited
|
|
England & Wales
|
|
|
ATR GmbH (10% stake)
|
|
Germany
|
|
|
Atracco AB
|
|
Sweden
|
|
|
Atracco AS
|
|
Norway
|
|
|
Atracco Auto AB
|
|
Sweden
|
|
|
Atracco Group AB
|
|
Sweden
|
|
|
Autobedrijf DeJonghe en Co NV
|
|
Belgium
|
|
|
Auto Electra Naaldwijk B.V.
|
|
Netherlands
|
|
|
Autodistibution Polska sp.z.o.o.
|
|
Poland
|
|
|
Auto Kelly a.s.
|
|
Czech Republic
|
|
|
Auto Kelly Bulgaria EOOD
|
|
Bulgaria
|
|
|
Auto Kelly Slovakia s.r.o.
|
|
Slovakia
|
|
|
Automotive Data Services Limited
|
|
England & Wales
|
|
|
Auto-Onderdelen Centrale Middelburg B.V.
|
|
Netherlands
|
|
|
Autosport Willy SA
|
|
Belgium
|
|
|
Autostop Leuven NV
|
|
Belgium
|
|
|
Autoparts Prosec BV
|
|
Netherlands
|
|
|
Autoparts Prosec NV
|
|
Belgium
|
|
|
Auto Wessel B.V.
|
|
Netherlands
|
|
|
Auto Wessel Naarden B.V.
|
|
Netherlands
|
|
|
AVC Tyre Recycling Ltd. (33.33% stake)
|
|
England & Wales
|
|
|
Bertolotti S.p.A.
|
|
Italy
|
|
|
Bildemontering i Helsingborg AV
|
|
Sweden
|
|
|
Blue Moose Holdings Ltd.
|
|
England & Wales
|
|
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
B.S.F. Distribution SPRL
|
|
Belgium
|
|
|
BVG Hold SPRL
|
|
Belgium
|
|
|
Car Parts 4 Less Limited
|
|
England & Wales
|
|
|
Car Systems B.V.
|
|
Netherlands
|
|
|
Cartal Rijsbergen Automotive B.V.
|
|
Netherlands
|
|
|
Centrauto Pieces SPRL
|
|
Belgium
|
|
|
Centro Ricambi Rhiag S.r.l.
|
|
Italy
|
|
|
Commercial Parts UK Holdco Limited (25% stake)
|
|
England & Wales
|
|
|
Cruiser B.V.
|
|
Netherlands
|
|
|
DCM Tools NV
|
|
Belgium
|
|
|
De Bruyn Professional Coatings NV
|
|
Belgium
|
|
|
Digraph Transport Supplies Limited (subsidiary of Commercial Parts UK Holdco Limited JV)
|
|
England & Wales
|
|
|
Distribuidora Hermanos Copher Internacional, SA
|
|
Guatemala
|
|
|
ECP France SAS
|
|
France
|
|
|
ELIT CZ, Spol s.r.o.
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Czech Republic
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Elit Group Ltd.
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Switzerland
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ELIT PL sp.zo.o.
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Poland
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ELIT Slovakia s.r.o.
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Slovakia
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ELIT Ukraine LLC
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Ukraine
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Era S.p.A.
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Italy
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Euro Car Parts Ireland Limited
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Ireland
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Euro Car Parts Limited
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England & Wales
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Euro Car Parts Nordic AB
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Sweden
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Euro Car Parts (Northern Ireland) Limited
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Northern Ireland
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Euro Garage Solutions Ltd
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England & Wales
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Fastighetsaktiebolaget Pistolvagen 4
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Sweden
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|
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GDR NV
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Belgium
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Harrems Tools B.V.
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Netherlands
|
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Harrems Tools N.V.
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Belgium
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Hartsant Crash Repair Bvba
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Belgium
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Havam Automotive B.V.
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Netherlands
|
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Heijl Automotive B.V.
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|
Netherlands
|
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Henrard SA
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Belgium
|
|
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Heuts Beheer B.V.
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|
Netherlands
|
|
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Heuts DHZ B.V.
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|
Netherlands
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Heuts Handel B.V.
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|
Netherlands
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Heuts Tilburg B.V.
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|
Netherlands
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HF Services B.V.
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Netherlands
|
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HF Services Bvba
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Belgium
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International Engines Ltd. (subsidary of Intermotor B.V. JV)
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England & Wales
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Subsidiary
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Jurisdiction
|
|
Assumed Names
|
Intermotor B.V. (50% stake)
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Netherlands
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IPAR Industrial Partners B.V.
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Netherlands
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inSiamo Scarl (24.54% stake)
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Italy
|
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Karkraft (N.I.) Limited
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Northern Ireland
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Keystone Automotive de Mexico, Sociedad de Responsabilidad Limitada de Capital Variable
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|
Mexico
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Keystone Automotive Industries ON, Inc.
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Canada (Federal)
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Keystone Automotive Operations (India) Pvt. Ltd.
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|
India
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Kuhne Nederland B.V.
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|
Netherlands
|
|
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Láng Kft.
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|
Hungary
|
|
|
LKQ Canada Auto Parts Inc.
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|
Canada (Federal)
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|
|
LKQ Euro Limited
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|
Ireland
|
|
|
LKQ Euro Limited
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|
England & Wales
|
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LKQ European Holdings B.V.
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|
Netherlands
|
|
|
LKQ German Holdings GmbH
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|
Germany
|
|
|
LKQ Italia S.r.l.
|
|
Italy
|
|
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LKQ Italia Bondco S.p.A.
|
|
Italy
|
|
|
LKQ Jersey Finance 1 Ltd.
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|
Jersey
|
|
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LKQ Jersey Finance 2 Ltd.
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|
Jersey
|
|
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LKQ Netherlands B.V.
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|
Netherlands
|
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LKQ Ontario LP
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Ontario
|
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Marine Mart Limited
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|
England & Wales
|
|
|
Markesdemo AB (2.85% stake)
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|
Sweden
|
|
|
Mekonomen AB (26.5% stake)
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|
Sweden
|
|
|
Messmer GmbH
|
|
Germany
|
|
|
Midland Chandlers Limited
|
|
England & Wales
|
|
|
Motorparts S.p.A.
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|
Italy
|
|
|
MotorXchange S.A.R.L. (subsidary of Intermotor B.V. JV)
|
|
France
|
|
|
Nipparts B.V.
|
|
Netherlands
|
|
|
Nipparts Deutschland GmbH
|
|
Germany
|
|
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Nova Leisure Limited
|
|
England & Wales
|
|
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NPR Auto Trading Limited
|
|
Ireland
|
|
|
NTP/Stag Canada Inc.
|
|
Canada (Federal)
|
|
|
Nya Christianstads Billackering AB
|
|
Sweden
|
|
|
Obdo Forvaltning AB
|
|
Sweden
|
|
|
Orebro Bidemontering AB
|
|
Sweden
|
|
|
Ottomate BVBA
|
|
Belgium
|
|
|
Pala Holding, B.V.
|
|
Netherlands
|
|
|
PGW Auto Glass, ULC
|
|
Nova Scotia
|
|
|
Pika Autoteile GmbH
|
|
Germany
|
|
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
Primaparts Automaterialen B.V.
|
|
Netherlands
|
|
|
Prosec Carpartes BVBA
|
|
Belgium
|
|
|
PVG Hold BVBA
|
|
Belgium
|
|
|
Recopart AB
|
|
Sweden
|
|
|
Rhiag Engineering S.p.A.
|
|
Italy
|
|
|
Rhiag Group Ltd.
|
|
Switzerland
|
|
|
Rhiag-Inter Auto Parts Italia S.p.A.
|
|
Italy
|
|
|
Rhiag Services Slovakia s.r.o.
|
|
Slovakia
|
|
|
Rhino BidCo S.p.A.
|
|
Italy
|
|
|
Rijsbergen CarTAL Beheer B.V.
|
|
Netherlands
|
|
|
Rox Auto SA
|
|
Belgium
|
|
|
Sator Central Services B.V.
|
|
Netherlands
|
|
|
Sator Holding B.V.
|
|
Netherlands
|
|
|
S.C. ELIT Romania S.r.l.
|
|
Romania
|
|
|
Schaftenaar B.V.
|
|
Netherlands
|
|
|
Sergoyne Car-Parts BVBA
|
|
Belgium
|
|
|
Signalen AB
|
|
Sweden
|
|
|
SiM Impex d.o.o.
|
|
Bosnia and Herzegovina
|
|
|
Slager Automaterialen B.V.
|
|
Netherlands
|
|
|
Stiching Autofirst Nederland B.V. (66.67% stake)
|
|
Netherlands
|
|
|
Styl'Auto Pieces SAS
|
|
France
|
|
|
Thomassons.nu Grupp AB
|
|
Sweden
|
|
|
Tielman Automaterialen B.V.
|
|
Netherlands
|
|
|
Topocar SPRL
|
|
Belgium
|
|
|
Troms Bildelsenter AS
|
|
Norway
|
|
|
Upplands Bildemontering AB
|
|
Sweden
|
|
|
Van Heck & Co. B.V.
|
|
Netherlands
|
|
|
Van Heck Interpieces N.V.
|
|
Belgium
|
|
|
Van Heck Vastgoed B.V.
|
|
Netherlands
|
|
|
Vaxjo Lackcenter AB
|
|
Sweden
|
|
|
VEAM B.V.
|
|
Netherlands
|
|
|
VEGE Benelux B.V. (subsidary of Intermotor B.V. JV)
|
|
Netherlands
|
|
|
VEGECOM S.A.R.L. (subsidary of Intermotor B.V. JV)
|
|
Tunisia
|
|
|
Vége de Mexico S.A. de C.V.
|
|
Mexico
|
|
|
VEGE France S.a.S. (subsidary of Intermotor B.V. JV)
|
|
France
|
|
|
VEGE Italia S.r.l. (subsidary of Intermotor B.V. JV)
|
|
Italy
|
|
|
VEGE Moteurs S.A. (subsidary of Intermotor B.V. JV)
|
|
Tunisia
|
|
|
Vege-Motodis S.A. de C.V.
|
|
Mexico
|
|
|
VEGE-Motoren GmbH (subsidary of Intermotor B.V. JV)
|
|
Germany
|
|
|
Vege-Motoren Iberica S.L. (subsidary of Intermotor B.V. JV)
|
|
Spain
|
|
|
Subsidiary
|
|
Jurisdiction
|
|
Assumed Names
|
VEGE Motorer Norden AB (subsidary of Intermotor B.V. JV)
|
|
Sweden
|
|
|
Vhip Fr SAS
|
|
France
|
|
|
Widells Bilplat Eftr AB
|
|
Sweden
|
|
|
WJCM de Mexico, Sociedad de Responsabilidad Limitada de Capital Variable
|
|
Mexico
|
|
|
|
/s/ DELOITTE & TOUCHE LLP
|
/s/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
President and Chief Executive Officer
|
|
/
S
/ VARUN LAROYIA
|
|
Varun Laroyia
|
|
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
/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
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
/ VARUN LAROYIA
|
|
Varun Laroyia
|
|
Executive Vice President and Chief Financial Officer
|