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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2015
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OR
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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
(State or other jurisdiction of incorporation or organization)
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20-8744739
(I.R.S. Employer Identification No.)
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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 $0.01 per share
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New York Stock Exchange
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
o
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"we," "us," "our" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
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"2007 Transactions" refers to the following events: On December 22, 2006, KAR LLC entered into a definitive merger agreement to acquire ADESA. The merger occurred on April 20, 2007. Concurrently with the merger, IAA was contributed by affiliates of Kelso & Company and Parthenon Capital and IAA's management to KAR Auction Services. Both ADESA and IAA became wholly-owned subsidiaries of KAR Auction Services, which was wholly-owned by KAR LLC prior to the initial public offering. KAR Auction Services is the accounting acquirer, and the assets and liabilities of both ADESA and IAA were recorded at fair value as of April 20, 2007;
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"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including OPENLANE, Inc. (together with OPENLANE, Inc.'s subsidiaries, "OPENLANE");
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"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc.;
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"AutoVIN" refers to AutoVIN, Inc., our wholly-owned subsidiary;
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"Axle LLC" refers to Axle Holdings, II, LLC, the former ultimate parent company of IAA and a holder of common equity interests in KAR LLC;
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"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent;
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"Original Credit Agreement" refers to the Credit Agreement, dated May 19, 2011, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent, as amended on November 29, 2012 and March 12, 2013;
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"Credit Facility" refers to the three-year senior secured term loan B-1 facility ("Term Loan B-1"), the seven-year senior secured term loan B-2 facility ("Term Loan B-2") and the $250 million, five-year senior secured revolving credit facility (the "revolving credit facility"), the terms of which are set forth in the Credit Agreement;
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"Original Credit Facility" refers to the six-year senior secured term loan facility ("Term Loan B") and the $250 million, five-year senior secured revolving credit facility, the terms of which are set forth in the Original Credit Agreement;
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"Equity Sponsors" refers, collectively, to Kelso Investment Associates VII, L.P., GS Capital Partners VI, L.P., ValueAct Capital Master Fund, L.P. and Parthenon Investors II, L.P.;
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"floating rate senior notes" refers to KAR Auction Services' Floating Rate Senior Notes due May 1, 2014. In April 2013, we prepaid the $150.0 million aggregate principal amount outstanding on the floating rate senior notes;
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"IAA" refers, collectively, to Insurance Auto Auctions, Inc., a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services ("HBC");
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"KAR Auction Services" refers to KAR Auction Services, Inc., and not to its subsidiaries; and
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"KAR LLC" refers to KAR Holdings II, LLC, which is owned by affiliates of the Equity Sponsors, other equity co-investors and management of the Company.
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Remarketing channels and systems that are increasingly becoming more interconnected; and
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•
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An increase in more data-based buying and selling.
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Develop alternative marketplaces
. The Company is identifying innovative venues for the exchange of used vehicles through internal development, targeted partnerships and acquisitions.
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Establish exceptional analytics capabilities
. The Company has observed increased demand from commercial customers (e.g., OEMs, insurance companies, finance companies, rental companies, large dealer groups, etc.) for more sophisticated, data-driven, end-to-end remarketing solutions. As a result, the Company is investing in data science and securing access to new data sets to build value-added proprietary solutions.
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•
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Leverage the Company’s unique remarketing portfolio and data
. As a leader in both whole car and salvage auctions, as well as alternative marketplaces, the Company has insight into which venues will best match supply and demand and improve economic outcomes for sellers and buyers by reducing risk, improving efficiency and enhancing transparency. The Company intends to provide proprietary analytical solutions to its customers based on data across multiple marketplaces.
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Grow the Company’s buyer base
. The Company has a global buyer base and plans to continue to invest in attracting and maintaining a broad customer base to create liquid and efficient markets.
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Services
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Description
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Auction Related Services
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ADESA provides marketing and advertising for the vehicles to be auctioned, dealer registration, storage of consigned and purchased inventory, clearing of funds, arbitration of disputes, auction vehicle registration, condition report processing, post-sale inspections, security for consigned inventory, title processing, sales results reports, pre-sale lineups and auctioning of vehicles by licensed auctioneers.
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Transportation Services
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We provide both inbound (pickup) and outbound (delivery) transportation services utilizing our own equipment and personnel as well as licensed and insured third party carriers. Through our subsidiary, CarsArrive and its Internet-based system which provides automated vehicle shipping services, customers can instantly review price quotes and delivery times, and vehicle transporters can check available loads and also receive instant notification of available shipments. The same system is utilized at our whole car auction locations.
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Reconditioning Services
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Our auctions provide detailing, body work, paintless dent repair ("PDR"), light mechanical work, glass repair, tire and key replacement and upholstery repair. Key replacement services are primarily provided by our subsidiary, HTL.
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Inspection Services Provided By AutoVIN
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AutoVIN provides vehicle condition reporting, inventory verification auditing, program compliance auditing and facility inspections. Field managers are equipped with handheld computers and digital cameras to record all inspection and audit data on-site. The same technology is utilized at our whole car auction locations and we believe that the expanded utilization of comprehensive vehicle condition reports with pictures facilitates dealers sourcing vehicles via the Internet.
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Title and Repossession Administration and Remarketing Services
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PAR provides end-to-end management of the remarketing process including titling, repossession administration, inventory management, auction selection, pricing and representation of the vehicles at auction for those customers seeking to outsource all or just a portion of their remarketing needs. Recovery Database Network, Inc. ("RDN") is a specialized provider of B2B software and data solutions for automotive lenders and repossession companies.
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Vehicle Research Services Provided by AutoNiq
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AutoNiq provides dealers real-time vehicle information such as pricing, history reports and market guides. Its mobile app allows used car dealers to scan VINs on mobile devices, view auction run lists and access vehicle history reports and market value reports instantly. AutoNiq offers access to valued resources such as CARFAX and AutoCheck, as well as Black Book Daily, NADA guides, Kelley Blue Book and Galves pricing guide information. It also includes a comprehensive wholesale and retail market report for all markets in the United States.
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ADESA Analytical Services
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ADESA Analytical Services provides value-added market analysis to our customers and the media. These services include access to publications and custom analysis of wholesale market trends for ADESA's customers, including peer group and market benchmarking studies, analysis of the benefits of reconditioning, site selection for optimized remarketing of vehicles, portfolio analysis of auction sales and computer-generated mapping and buyer analysis.
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Proprietary ADESA Technology
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Description
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ADESA.com and ADESA DealerBlock®
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This platform provides for either real-time or "bulletin-board" online auctions of consigned inventory at physical auction locations and is powered by the technology we acquired from OPENLANE. We also utilize this platform to provide upstream and midstream selling capabilities for our consignors, which facilitate the sale of vehicles prior to their arrival at a physical auction site. Auctions can be either closed (restricted to certain eligible dealers) or open (available to all eligible dealers) and inventory feeds of vehicles are automated with many customers' systems as well as third party providers that are integrated with various dealer management systems. Oftentimes, the upstream and midstream closed sales are "private-labeled" for the consignors.
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ADESA LiveBlock®
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Our live auction Internet bidding solution, ADESA LiveBlock®, operates in concert with our physical auctions and provides registered buyers with the opportunity to participate in live auctions. Potential buyers bid online in real time along with the live local bidders and other Internet bidders via a simple, web-based interface. ADESA LiveBlock® provides real-time streaming audio and video from the live auction and still images of vehicles and other data. Buyers inspect and evaluate the vehicle and listen to the live call of the auctioneer while viewing the physical auction that is underway.
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ADESA Run List®
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Provides a summary of consigned vehicles offered for auction sale, allowing dealers to preview inventory and vehicle condition reports prior to an auction event.
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ADESA Market Guide®
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Provides wholesale auction prices, auction sales results, market data and vehicle condition information.
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ADESA Virtual Inventory
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Subscription-based service to allow dealers to embed ADESA's search technology into a dealer's Web site to increase the number of vehicles advertised by the dealer.
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Services
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Description
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Live and Live Online Auction Model
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Vehicles are offered simultaneously to live and online buyers in a live auction format utilizing i-Bid LIVE
SM
technology. We believe this exposes the vehicles to the maximum number of potential buyers.
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Total Loss Solutions
TM
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Provides insurance companies with outsource solutions for the portion of the claims process prior to total loss determination and assignment to a salvage auction. The suite of products includes vehicle inspection and title procurement services that help insurance companies reduce cycle time and cost, while improving employee engagement, ultimately increasing policyholder retention.
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IAA Title Management
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After a vehicle is received at one of our facilities, it remains in storage inventory and cannot be auctioned until IAA receives and processes its transferable title. We process title documents in order to comply with the Department of Motor Vehicles ("DMV") requirements for all vehicles. Wherever possible, we maintain working relationships with each state's respective DMV to supplement an established electronic interface.
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IAA Title Management services range from aging inventory reports to complete oversight of the title process. Our titling expertise results in faster cycle time, which decreases expenses for the vehicle suppliers like insurance companies.
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Vehicle Inspection Centers
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We maintain vehicle inspection centers ("VIC") at many of our facilities. A VIC is a temporary storage and inspection facility located at one of our sites that is operated by the insurance company. Some of these sites are formalized through temporary license agreements with the insurance companies that supply the vehicles. Having a VIC minimizes vehicle storage charges incurred by insurance company suppliers at the temporary storage facility or repair shop and also improves service time for the policyholder.
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Transportation and Towing
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Inbound logistics administration with actual services typically provided by third-party carriers.
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Remarketing Division
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Focuses on vehicles, rental sellers, fleet and leasing companies, banks and dealer trade-in inventory.
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Donation Division
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Processes vehicles for a variety of charitable organizations across the United States and Canada, assisting them in turning donated vehicles into cash to support their respective cause.
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Proprietary IAA Technology
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Description
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i-Bid LIVE
SM
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Our live auction Internet bidding solution, i-Bid LIVE, operates in concert with our physical auctions and provides registered buyers with the opportunity to participate in live auctions. Potential buyers bid online in real time along with the live local bidders and other Internet bidders via a simple, web-based interface. In addition, i-Bid LIVE provides real-time streaming audio from the live auction and images of salvage vehicles and other data. Buyers inspect and evaluate the salvage vehicle and listen to the auction while it is underway.
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I-Buy Fast
SM
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I-Buy Fast is an immediate buying option that allows qualified buyers to purchase vehicles between auctions for a fixed price. Each I-Buy Fast vehicle first runs at a previous auction where an established reserve price was not met.
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CSAToday®
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The process of salvage disposition through our system begins when a vehicle seller first consigns the vehicle to be sold through IAA via a variety of factors including a total loss, a recovered theft, a vehicle donation, a fleet vehicle retired, a vehicle repossessed, etc. A seller representative consigns the vehicle to us, either by phone, facsimile or electronically through CSAToday, our online proprietary salvage inventory management system.
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With CSAToday, vehicle sellers enter vehicle data electronically and then track and manage the progress of vehicles in terms of both time and sales price. With this tool, they have 24-hour access to their vehicles. The information provided through this system ranges from the details associated with a specific vehicle, to comprehensive management reports for an entire area or geographic region. Additional features of this system include inventory management tools and a powerful new IAA Market Value
TM
tool that helps customers determine the approximate value of a potential vehicle. This tool is helpful to adjusters when evaluating the "repair vs. total" decision. The management tools provided by CSAToday enable seller personnel to monitor and manage their vehicles more effectively. For example, insurance company sellers can also use CSAToday to view original garage receipts, verify ignition key availability, view settlement documents and images of the vehicles and receive updates of other current meaningful data.
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Automated Salvage Auction Processing (ASAP)
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We have developed a proprietary web-based information system, Automated Salvage Auction Processing system, or ASAP, to streamline all aspects of our operations and centralize operational data collection. The system provides sellers with 24-hour online access to powerful tools to manage the salvage disposition process, including inventory management, sales price analysis and electronic data interchange of titling information.
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Our other information systems, including i-Bid LIVE and CSAToday systems, are integrated with our ASAP product, facilitating seamless auction processes and information flow with internal operational systems. Our technology platform is a significant competitive advantage that allows us to efficiently manage our business, improve customer selling prices, shorten customers' selling cycle and lower our customers' administration costs.
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•
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incurring significantly higher capital expenditures and operating expenses;
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entering new markets with which we are unfamiliar;
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incurring potential undiscovered liabilities at acquired businesses;
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failing to maintain uniform standards, controls and policies;
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•
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impairing relationships with employees and customers as a result of management changes; and
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increasing expenses for accounting and computer systems, as well as integration difficulties.
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exposure to foreign currency exchange rate risk, which may have an adverse impact on our revenues and profitability;
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restrictions on our ability to repatriate funds, as well as repatriation of funds currently held in foreign jurisdictions to the U.S. may result in higher effective tax rates;
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tariffs and trade barriers and other regulatory or contractual limitations on our ability to operate in certain foreign markets;
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compliance with the Foreign Corrupt Practices Act;
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dealing with unfamiliar regulatory agencies and laws favoring local competitors;
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dealing with political and/or economic instability;
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the difficulty of managing and staffing foreign offices, as well as the increased travel, infrastructure, legal and compliance costs associated with international operations;
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•
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localizing our product offerings; and
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adapting to different business cultures and market structures.
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•
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Fluctuations in the supply of used vehicles.
We are dependent on the supply of used vehicles coming to auction, and our financial performance depends, in part, on conditions in the automotive industry. During the past global economic downturn and credit crisis, there was an erosion of retail demand for new and used vehicles that led many lenders to cut back on originations of new loans and leases and led to significant manufacturing capacity reductions by automakers selling vehicles in the United States and Canada. Capacity reductions could depress the number of vehicles received at auction in the future and could lead to reduced vehicles from various suppliers, negatively impacting auction volumes. In addition, weak growth in or declining new vehicle sales negatively impacts used vehicle trade-ins to dealers and auction volumes. These factors could adversely affect our revenues and profitability.
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•
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Decline in the demand for used vehicles.
We may experience a decrease in demand for used vehicles from buyers due to factors including the lack of availability of consumer credit and declines in consumer spending and consumer confidence. Adverse credit conditions also affect the ability of dealers to secure financing to purchase used vehicles at auction, which further negatively affects buyer demand. In addition, a reduction in the number of franchised and independent used car dealers may reduce dealer demand for used vehicles.
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Decrease in the supply and demand of salvage vehicles.
If the number of miles driven decreases, the number of salvage vehicles received at auction may also decrease. In addition, decreases in commodity prices, such as steel and platinum, may negatively affect vehicle values and demand at salvage auctions. In addition, if consumers eliminate their automotive collision coverage, this could result in fewer vehicles being declared a total loss. Additionally, government regulations on the standards for producing vehicles, as well as changes in vehicle technology, could affect the supply of vehicles at salvage auctions.
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•
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Decrease in consumer spending.
Consumer purchases of new and used vehicles may be adversely affected by economic conditions such as employment levels, wage and salary levels, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, the availability of consumer credit and taxation policies. Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower. Changes to U.S. federal tax policy may negatively affect consumer spending. In addition, the increased use of vehicle sharing and alternate methods of transportation, including autonomous vehicles, could lead to a decrease in consumer purchases of new and used vehicles. To the extent retail demand for new and used vehicles decreases, negatively impacting our auction volumes, our results of operations and financial position could be materially and adversely affected.
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•
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Volatility in the asset-backed securities market.
Volatility and disruption in the asset-backed commercial paper market could lead to a narrowing of interest rate spreads at AFC in certain periods. In addition, any volatility and disruption has affected, and could affect, AFC’s cost of financing related to its securitization facility.
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Ability to service and refinance indebtedness.
Uncertainty in the financial markets may negatively affect our ability to service our existing debt, access additional financing or to refinance our existing indebtedness on favorable terms or at all. If economic weakness exists, it may affect our cash flow from operations and results of operations, which may affect our ability to service payment obligations on our debt or to comply with our debt covenants.
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•
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Increased counterparty credit risk.
Any market deterioration could increase the risk of the failure of financial institutions party to our Credit Agreement and other counterparties with which we do business to honor their obligations to us. Our ability to replace any such obligations on the same or similar terms may be limited if challenging credit and general economic conditions exist.
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•
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limiting our ability to borrow additional amounts to fund working capital, capital expenditures, debt service requirements, execution of our business strategy, acquisitions and other purposes;
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requiring us to dedicate a substantial portion of our cash flow from operations to pay principal and interest on debt, which would reduce the funds available for other purposes, including funding future expansion;
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making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult to react quickly to, changing conditions; and
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exposing us to risks inherent in interest rate fluctuations because the majority of our indebtedness is at variable rates of interest, which could result in higher interest expenses in the event of increases in interest rates.
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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the lenders under our senior secured credit facilities could terminate their commitments to lend us money and foreclose against the assets securing their borrowings; and
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we could be forced into bankruptcy or liquidation.
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•
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The acquisition and sale of used, leased, totaled and recovered theft vehicles are regulated by state or other local motor vehicle departments in each of the locations in which we operate.
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Some of the transport vehicles used at our auctions are regulated by the U.S. Department of Transportation or similar regulatory agencies in the other countries in which we operate.
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In many states and provinces, regulations require that a salvage vehicle be forever “branded” with a salvage notice in order to notify prospective purchasers of the vehicle’s previous salvage status.
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Some state, provincial and local regulations limit who can purchase salvage vehicles, as well as determine whether a salvage vehicle can be sold as rebuildable or must be sold for parts or scrap only.
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•
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AFC is subject to laws in certain states and in Canada which regulate commercial lending activities and interest rates and, in certain jurisdictions, require AFC or one of its subsidiaries to be licensed.
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PWI is subject to laws, regulations and insurance licensing requirements in certain states which are applicable to the sale of vehicle service contracts.
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We are subject to various local zoning requirements with regard to the location of our auction and storage facilities, which requirements vary from location to location.
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Certain of the Company's subsidiaries are indirectly subject to the regulations of the Consumer Financial Protection Act of 2010, or the CFPA, due to their vendor relationships with financial institutions.
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•
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PAR is subject to laws in certain states which regulate repossession administration activities and, in certain jurisdictions, require PAR to be licensed.
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our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;
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changes in earnings estimates or recommendations by securities analysts, if any, who cover our common stock;
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results of operations that are below our announced guidance or below securities analysts’ or consensus estimates or expectations;
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fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
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changes in our capital structure, such as future issuances of securities, sales of large blocks of common stock by our stockholders or our incurrence of additional debt;
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repurchases of our common stock pursuant to our share repurchase program;
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investors’ general perception of us and our industry;
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•
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changes in general economic and market conditions;
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•
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changes in industry conditions; and
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changes in regulatory and other dynamics.
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•
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limiting the right of stockholders to call special meetings of stockholders to holders of at least 35% of our outstanding common stock;
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rules regarding how our stockholders may present proposals or nominate directors for election at stockholder meetings;
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permitting our board of directors to issue preferred stock without stockholder approval;
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granting to the board of directors, and not the stockholders, the sole power to set the number of directors;
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authorizing vacancies on our board of directors to be filled only by a vote of the majority of the directors then in office and specifically denying our stockholders the right to fill vacancies in the board;
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authorizing the removal of directors only for cause and only upon the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote for the election of directors; and
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prohibiting stockholder action by written consent.
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2015
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2014
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||||||||||||
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High
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Low
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High
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Low
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||||||||
4th Quarter (October 1 - December 31)
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$
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38.98
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|
|
$
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35.26
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|
|
$
|
35.70
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|
|
$
|
25.91
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|
3rd Quarter (July 1 - September 30)
|
$
|
39.87
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|
|
$
|
34.70
|
|
|
$
|
32.65
|
|
|
$
|
28.09
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|
2nd Quarter (April 1 - June 30)
|
$
|
38.77
|
|
|
$
|
35.87
|
|
|
$
|
32.22
|
|
|
$
|
28.60
|
|
1st Quarter (January 1 - March 31)
|
$
|
39.52
|
|
|
$
|
33.25
|
|
|
$
|
32.24
|
|
|
$
|
27.06
|
|
|
2015
|
|
2014
|
||||
4th Quarter (October 1 - December 31)
|
$
|
0.27
|
|
|
$
|
0.27
|
|
3rd Quarter (July 1 - September 30)
|
$
|
0.27
|
|
|
$
|
0.25
|
|
2nd Quarter (April 1 - June 30)
|
$
|
0.27
|
|
|
$
|
0.25
|
|
1st Quarter (January 1 - March 31)
|
$
|
0.27
|
|
|
$
|
0.25
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)(2)
(Dollars in millions)
|
||||
October 1 - October 31
|
|
—
|
|
|
|
|
—
|
|
|
$
|
72.4
|
|
November 1 - November 30
|
|
—
|
|
|
|
|
—
|
|
|
72.4
|
|
|
December 1 - December 31
|
|
—
|
|
|
|
|
—
|
|
|
72.4
|
|
|
Total
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1)
|
In October 2014, the board of directors authorized a repurchase of up to $300 million of the Company’s outstanding common stock, par value $0.01 per share, through October 28, 2016. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Exchange Act. The timing and amount of any repurchases is subject to market and other conditions.
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(2)
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In August 2015, as part of the authorized program to repurchase common stock noted above, the Company entered into an accelerated share repurchase agreement under which it paid $200 million for an initial delivery of approximately 4.6 million shares of its common stock. The initial delivery of shares represented 90% of the shares anticipated to be repurchased based on current market prices at that time. The Company settled the accelerated share repurchase agreement in January 2016 and received approximately 0.8 million additional shares of its common stock based on an adjusted volume weighted average price of its stock over the period. In total, 5,413,274 shares were repurchased under the accelerated share repurchase agreement at an average repurchase price of $36.95 per share.
|
Company/Index
|
Base Period
12/31/2010
|
|
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
||||||||||||
KAR Auction Services, Inc.
|
$
|
100
|
|
|
$
|
97.83
|
|
|
$
|
148.15
|
|
|
$
|
223.66
|
|
|
$
|
270.86
|
|
|
$
|
297.96
|
|
S&P 400 Midcap Index
|
$
|
100
|
|
|
$
|
98.27
|
|
|
$
|
115.84
|
|
|
$
|
154.65
|
|
|
$
|
169.76
|
|
|
$
|
166.06
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
102.11
|
|
|
$
|
118.45
|
|
|
$
|
156.82
|
|
|
$
|
178.29
|
|
|
$
|
180.75
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(Dollars in millions except per share amounts)
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
ADESA
|
$
|
1,376.8
|
|
|
$
|
1,218.5
|
|
|
$
|
1,118.6
|
|
|
$
|
1,053.5
|
|
|
$
|
1,017.4
|
|
IAA
|
994.4
|
|
|
895.9
|
|
|
830.0
|
|
|
716.1
|
|
|
700.1
|
|
|||||
AFC
|
268.4
|
|
|
250.1
|
|
|
224.7
|
|
|
193.8
|
|
|
168.8
|
|
|||||
Total operating revenues
|
$
|
2,639.6
|
|
|
$
|
2,364.5
|
|
|
$
|
2,173.3
|
|
|
$
|
1,963.4
|
|
|
$
|
1,886.3
|
|
Operating expenses (exclusive of depreciation and amortization)
|
1,999.5
|
|
|
1,790.2
|
|
|
1,722.2
|
|
|
1,506.2
|
|
|
1,424.6
|
|
|||||
Operating profit
|
427.3
|
|
|
377.7
|
|
|
256.7
|
|
|
267.0
|
|
|
281.9
|
|
|||||
Interest expense
|
91.4
|
|
|
86.2
|
|
|
104.7
|
|
|
119.4
|
|
|
143.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
214.6
|
|
|
169.3
|
|
|
67.7
|
|
|
92.0
|
|
|
72.2
|
|
|||||
Net income per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
1.53
|
|
|
1.21
|
|
|
0.49
|
|
|
0.67
|
|
|
0.53
|
|
|||||
Diluted
|
1.51
|
|
|
1.19
|
|
|
0.48
|
|
|
0.66
|
|
|
0.52
|
|
|||||
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
140.1
|
|
|
140.2
|
|
|
137.9
|
|
|
136.5
|
|
|
136.0
|
|
|||||
Diluted
|
142.3
|
|
|
141.8
|
|
|
140.8
|
|
|
139.0
|
|
|
137.8
|
|
|||||
Cash dividends declared per common share
|
1.08
|
|
|
1.02
|
|
|
0.82
|
|
|
0.19
|
|
|
—
|
|
|
As of December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Financial Position:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
(1)
|
$
|
220.0
|
|
|
$
|
484.3
|
|
|
$
|
356.9
|
|
|
$
|
294.5
|
|
|
$
|
177.0
|
|
Total assets
|
5,791.8
|
|
|
5,351.5
|
|
|
5,127.2
|
|
|
4,922.3
|
|
|
4,779.1
|
|
|||||
Total debt, net of unamortized debt discount
|
1,873.2
|
|
|
1,754.3
|
|
|
1,767.2
|
|
|
1,818.3
|
|
|
1,902.8
|
|
|||||
Total stockholders' equity
|
1,386.1
|
|
|
1,547.1
|
|
|
1,481.8
|
|
|
1,443.7
|
|
|
1,343.2
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
475.0
|
|
|
$
|
431.3
|
|
|
$
|
434.0
|
|
|
$
|
290.2
|
|
|
$
|
305.8
|
|
Capital expenditures
|
134.7
|
|
|
101.0
|
|
|
96.6
|
|
|
102.0
|
|
|
85.8
|
|
|||||
Depreciation and amortization
|
212.8
|
|
|
196.6
|
|
|
194.4
|
|
|
190.2
|
|
|
179.8
|
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
•
|
increases in the number of used vehicles purchased on virtual auction platforms;
|
•
|
business development activities, including greenfields, acquisitions and integration of acquired businesses;
|
•
|
significant current competition and the introduction of new competitors;
|
•
|
our ability to effectively maintain or update information and technology systems;
|
•
|
our ability to implement and maintain measures to protect against cyber-attacks;
|
•
|
changes in the market value of vehicles auctioned, including changes in the actual cash value of salvage vehicles;
|
•
|
fluctuations in consumer demand for and in the supply of used, leased and salvage vehicles and the resulting impact on auction sales volumes, conversion rates and loan transaction volumes;
|
•
|
trends in new and used vehicle sales and incentives, including wholesale used vehicle pricing;
|
•
|
the ability of consumers to lease or finance the purchase of new and/or used vehicles;
|
•
|
the ability to recover or collect from delinquent or bankrupt customers;
|
•
|
economic conditions including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations;
|
•
|
trends in the vehicle remarketing industry;
|
•
|
trends in the number of commercial vehicles being brought to auction, in particular off-lease volumes;
|
•
|
changes in the volume of vehicle production, including capacity reductions at the major original equipment manufacturers;
|
•
|
laws, regulations and industry standards, including changes in regulations governing the sale of used vehicles, the processing of salvage vehicles and commercial lending activities;
|
•
|
competitive pricing pressures;
|
•
|
costs associated with the acquisition of businesses or technologies;
|
•
|
our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements;
|
•
|
our ability to maintain our brand and protect our intellectual property;
|
•
|
our ability to develop and implement information systems responsive to customer needs;
|
•
|
the costs of environmental compliance and/or the imposition of liabilities under environmental laws and regulations;
|
•
|
weather, including increased expenses as a result of catastrophic events;
|
•
|
general business conditions;
|
•
|
our substantial amount of debt;
|
•
|
restrictive covenants in our debt agreements;
|
•
|
our assumption of the settlement risk for vehicles sold;
|
•
|
any losses of key personnel;
|
•
|
litigation developments;
|
•
|
our self-insurance for certain risks;
|
•
|
interruptions to service from our workforce;
|
•
|
any impairment to our goodwill or other intangible assets;
|
•
|
changes in effective tax rates;
|
•
|
changes to accounting standards; and
|
•
|
other risks described from time to time in our filings with the SEC, including the Quarterly Reports on Form 10-Q to be filed by us in 2016.
|
•
|
The ADESA Auctions segment serves a domestic and international customer base through live and online auctions and through
66
whole car auction facilities in North America that are developed and strategically located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely or in person. Through ADESA.com, powered by OPENLANE technology, ADESA offers comprehensive private label remarketing solutions to automobile manufacturers, captive finance companies and other institutions to offer vehicles via the Internet prior to arrival at the physical auction. Vehicles at ADESA's auctions are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to franchise and independent used vehicle dealers. ADESA also provides value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services.
|
•
|
The IAA segment serves a domestic and international customer base through live and online auctions and through
171
salvage vehicle auction sites in the United States and Canada at
December 31, 2015
. IAA also includes HBC, which operates from
10
locations in the United Kingdom. The salvage auctions facilitate the remarketing of damaged vehicles designated as total losses by insurance companies, charity donation vehicles, recovered stolen (or theft) vehicles and low value used vehicles. The salvage auction business specializes in providing services such as inbound transportation, titling, salvage recovery and claims settlement administrative services.
|
•
|
The AFC segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers. At
December 31, 2015
, AFC conducted business at
118
locations in the United States and Canada. The Company also sells vehicle service contracts through Preferred Warranties, Inc. ("PWI").
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2015
|
|
2014
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
1,376.8
|
|
|
$
|
1,218.5
|
|
IAA
|
994.4
|
|
|
895.9
|
|
||
AFC
|
268.4
|
|
|
250.1
|
|
||
Total revenues
|
2,639.6
|
|
|
2,364.5
|
|
||
Cost of services*
|
1,497.5
|
|
|
1,318.8
|
|
||
Gross profit*
|
1,142.1
|
|
|
1,045.7
|
|
||
Selling, general and administrative
|
502.0
|
|
|
471.4
|
|
||
Depreciation and amortization
|
212.8
|
|
|
196.6
|
|
||
Operating profit
|
427.3
|
|
|
377.7
|
|
||
Interest expense
|
91.4
|
|
|
86.2
|
|
||
Other income, net
|
(4.6
|
)
|
|
(3.8
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
30.3
|
|
||
Income before income taxes
|
340.5
|
|
|
265.0
|
|
||
Income taxes
|
125.9
|
|
|
95.7
|
|
||
Net income
|
$
|
214.6
|
|
|
$
|
169.3
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
1.53
|
|
|
$
|
1.21
|
|
Diluted
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
ADESA revenue
|
$
|
1,376.8
|
|
|
$
|
1,218.5
|
|
Cost of services*
|
785.9
|
|
|
693.4
|
|
||
Gross profit*
|
590.9
|
|
|
525.1
|
|
||
Selling, general and administrative
|
276.6
|
|
|
259.9
|
|
||
Depreciation and amortization
|
86.2
|
|
|
80.2
|
|
||
Operating profit
|
$
|
228.1
|
|
|
$
|
185.0
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
IAA revenue
|
$
|
994.4
|
|
|
$
|
895.9
|
|
Cost of services*
|
633.6
|
|
|
555.7
|
|
||
Gross profit*
|
360.8
|
|
|
340.2
|
|
||
Selling, general and administrative
|
98.1
|
|
|
98.8
|
|
||
Depreciation and amortization
|
80.8
|
|
|
76.2
|
|
||
Operating profit
|
$
|
181.9
|
|
|
$
|
165.2
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2015
|
|
2014
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
239.9
|
|
|
$
|
225.0
|
|
Other revenue
|
16.6
|
|
|
11.9
|
|
||
Provision for credit losses
|
(16.0
|
)
|
|
(12.3
|
)
|
||
Other service revenue
|
27.9
|
|
|
25.5
|
|
||
Total AFC revenue
|
268.4
|
|
|
250.1
|
|
||
Cost of services*
|
78.0
|
|
|
69.7
|
|
||
Gross profit*
|
190.4
|
|
|
180.4
|
|
||
Selling, general and administrative
|
27.8
|
|
|
28.8
|
|
||
Depreciation and amortization
|
30.8
|
|
|
30.4
|
|
||
Operating profit
|
$
|
131.8
|
|
|
$
|
121.2
|
|
Loan transactions
|
1,606,720
|
|
|
1,445,077
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
150
|
|
|
$
|
155
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
Selling, general and administrative
|
$
|
99.5
|
|
|
$
|
83.9
|
|
Depreciation and amortization
|
15.0
|
|
|
9.8
|
|
||
Operating loss
|
$
|
(114.5
|
)
|
|
$
|
(93.7
|
)
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2014
|
|
2013
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
1,218.5
|
|
|
$
|
1,118.6
|
|
IAA
|
895.9
|
|
|
830.0
|
|
||
AFC
|
250.1
|
|
|
224.7
|
|
||
Total revenues
|
2,364.5
|
|
|
2,173.3
|
|
||
Cost of services*
|
1,318.8
|
|
|
1,232.2
|
|
||
Gross profit*
|
1,045.7
|
|
|
941.1
|
|
||
Selling, general and administrative
|
471.4
|
|
|
490.0
|
|
||
Depreciation and amortization
|
196.6
|
|
|
194.4
|
|
||
Operating profit
|
377.7
|
|
|
256.7
|
|
||
Interest expense
|
86.2
|
|
|
104.7
|
|
||
Other income, net
|
(3.8
|
)
|
|
(2.6
|
)
|
||
Loss on extinguishment/modification of debt
|
30.3
|
|
|
5.4
|
|
||
Income before income taxes
|
265.0
|
|
|
149.2
|
|
||
Income taxes
|
95.7
|
|
|
81.5
|
|
||
Net income
|
$
|
169.3
|
|
|
$
|
67.7
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
1.21
|
|
|
$
|
0.49
|
|
Diluted
|
$
|
1.19
|
|
|
$
|
0.48
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2014
|
|
2013
|
||||
ADESA revenue
|
$
|
1,218.5
|
|
|
$
|
1,118.6
|
|
Cost of services*
|
693.4
|
|
|
629.9
|
|
||
Gross profit*
|
525.1
|
|
|
488.7
|
|
||
Selling, general and administrative
|
259.9
|
|
|
252.3
|
|
||
Depreciation and amortization
|
80.2
|
|
|
87.9
|
|
||
Operating profit
|
$
|
185.0
|
|
|
$
|
148.5
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2014
|
|
2013
|
||||
IAA revenue
|
$
|
895.9
|
|
|
$
|
830.0
|
|
Cost of services*
|
555.7
|
|
|
545.9
|
|
||
Gross profit*
|
340.2
|
|
|
284.1
|
|
||
Selling, general and administrative
|
98.8
|
|
|
82.4
|
|
||
Depreciation and amortization
|
76.2
|
|
|
73.8
|
|
||
Operating profit
|
$
|
165.2
|
|
|
$
|
127.9
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2014
|
|
2013
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
225.0
|
|
|
$
|
211.1
|
|
Other revenue
|
11.9
|
|
|
10.7
|
|
||
Provision for credit losses
|
(12.3
|
)
|
|
(9.6
|
)
|
||
Other service revenue
|
25.5
|
|
|
12.5
|
|
||
Total AFC revenue
|
250.1
|
|
|
224.7
|
|
||
Cost of services*
|
69.7
|
|
|
56.4
|
|
||
Gross profit*
|
180.4
|
|
|
168.3
|
|
||
Selling, general and administrative
|
28.8
|
|
|
26.2
|
|
||
Depreciation and amortization
|
30.4
|
|
|
27.6
|
|
||
Operating profit
|
$
|
121.2
|
|
|
$
|
114.5
|
|
Loan transactions
|
1,445,077
|
|
|
1,354,955
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
155
|
|
|
$
|
157
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2014
|
|
2013
|
||||
Selling, general and administrative
|
$
|
83.9
|
|
|
$
|
129.1
|
|
Depreciation and amortization
|
9.8
|
|
|
5.1
|
|
||
Operating loss
|
$
|
(93.7
|
)
|
|
$
|
(134.2
|
)
|
|
Three Months Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2015
|
|
2014
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
352.4
|
|
|
$
|
310.5
|
|
IAA
|
261.6
|
|
|
229.6
|
|
||
AFC
|
68.2
|
|
|
65.9
|
|
||
Total revenues
|
682.2
|
|
|
606.0
|
|
||
Cost of services*
|
400.8
|
|
|
344.2
|
|
||
Gross profit*
|
281.4
|
|
|
261.8
|
|
||
Selling, general and administrative
|
128.5
|
|
|
113.8
|
|
||
Depreciation and amortization
|
56.0
|
|
|
51.3
|
|
||
Operating profit
|
96.9
|
|
|
96.7
|
|
||
Interest expense
|
24.2
|
|
|
20.9
|
|
||
Other income, net
|
(2.5
|
)
|
|
(1.9
|
)
|
||
Income before income taxes
|
75.2
|
|
|
77.7
|
|
||
Income taxes
|
26.9
|
|
|
27.4
|
|
||
Net income
|
$
|
48.3
|
|
|
$
|
50.3
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
0.35
|
|
|
$
|
0.36
|
|
Diluted
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
ADESA revenue
|
$
|
352.4
|
|
|
$
|
310.5
|
|
Cost of services*
|
207.8
|
|
|
180.9
|
|
||
Gross profit*
|
144.6
|
|
|
129.6
|
|
||
Selling, general and administrative
|
69.3
|
|
|
63.2
|
|
||
Depreciation and amortization
|
22.4
|
|
|
21.2
|
|
||
Operating profit
|
$
|
52.9
|
|
|
$
|
45.2
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
IAA revenue
|
$
|
261.6
|
|
|
$
|
229.6
|
|
Cost of services*
|
173.0
|
|
|
145.4
|
|
||
Gross profit*
|
88.6
|
|
|
84.2
|
|
||
Selling, general and administrative
|
25.5
|
|
|
25.2
|
|
||
Depreciation and amortization
|
21.7
|
|
|
19.6
|
|
||
Operating profit
|
$
|
41.4
|
|
|
$
|
39.4
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions except volumes and per loan amounts)
|
2015
|
|
2014
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
62.1
|
|
|
$
|
58.4
|
|
Other revenue
|
4.5
|
|
|
3.4
|
|
||
Provision for credit losses
|
(5.5
|
)
|
|
(2.7
|
)
|
||
Other service revenue
|
7.1
|
|
|
6.8
|
|
||
Total AFC revenue
|
68.2
|
|
|
65.9
|
|
||
Cost of services*
|
20.0
|
|
|
17.9
|
|
||
Gross profit*
|
48.2
|
|
|
48.0
|
|
||
Selling, general and administrative
|
6.8
|
|
|
6.7
|
|
||
Depreciation and amortization
|
7.6
|
|
|
7.7
|
|
||
Operating profit
|
$
|
33.8
|
|
|
$
|
33.6
|
|
Loan transactions
|
408,247
|
|
|
373,916
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
150
|
|
|
$
|
158
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
Selling, general and administrative
|
$
|
26.9
|
|
|
$
|
18.7
|
|
Depreciation and amortization
|
4.3
|
|
|
2.8
|
|
||
Operating loss
|
$
|
(31.2
|
)
|
|
$
|
(21.5
|
)
|
|
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
Cash and cash equivalents
|
$
|
155.0
|
|
|
$
|
152.9
|
|
Restricted cash
|
16.2
|
|
|
17.0
|
|
||
Working capital
|
220.0
|
|
|
484.3
|
|
||
Amounts available under Credit Facility*
|
110.0
|
|
|
250.0
|
|
||
Cash flow from operations for the year ended
|
475.0
|
|
|
431.3
|
|
*
|
There were related outstanding letters of credit totaling approximately
$28.0 million
and
$25.1 million
at
December 31, 2015
and
2014
, respectively, which reduced the amount available for borrowings under the revolving credit facility.
|
|
Three Months Ended December 31, 2015
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
25.1
|
|
|
$
|
23.3
|
|
|
$
|
21.4
|
|
|
$
|
(21.5
|
)
|
|
$
|
48.3
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income taxes
|
13.9
|
|
|
11.1
|
|
|
13.4
|
|
|
(11.5
|
)
|
|
26.9
|
|
|||||
Interest expense, net of interest income
|
(0.3
|
)
|
|
—
|
|
|
6.9
|
|
|
17.2
|
|
|
23.8
|
|
|||||
Depreciation and amortization
|
22.4
|
|
|
21.7
|
|
|
7.6
|
|
|
4.3
|
|
|
56.0
|
|
|||||
Intercompany interest
|
12.1
|
|
|
9.5
|
|
|
(7.9
|
)
|
|
(13.7
|
)
|
|
—
|
|
|||||
EBITDA
|
73.2
|
|
|
65.6
|
|
|
41.4
|
|
|
(25.2
|
)
|
|
155.0
|
|
|||||
Adjustments per the Credit Agreement
|
4.4
|
|
|
—
|
|
|
(4.7
|
)
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|||||
Adjusted EBITDA
|
$
|
77.6
|
|
|
$
|
65.6
|
|
|
$
|
36.7
|
|
|
$
|
(25.4
|
)
|
|
$
|
154.5
|
|
|
Three Months Ended December 31, 2014
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
23.9
|
|
|
$
|
18.5
|
|
|
$
|
19.9
|
|
|
$
|
(12.0
|
)
|
|
$
|
50.3
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income taxes
|
7.5
|
|
|
12.4
|
|
|
13.9
|
|
|
(6.4
|
)
|
|
27.4
|
|
|||||
Interest expense, net of interest income
|
0.1
|
|
|
—
|
|
|
4.9
|
|
|
15.8
|
|
|
20.8
|
|
|||||
Depreciation and amortization
|
21.2
|
|
|
19.6
|
|
|
7.7
|
|
|
2.8
|
|
|
51.3
|
|
|||||
Intercompany interest
|
13.0
|
|
|
9.4
|
|
|
(5.1
|
)
|
|
(17.3
|
)
|
|
—
|
|
|||||
EBITDA
|
65.7
|
|
|
59.9
|
|
|
41.3
|
|
|
(17.1
|
)
|
|
149.8
|
|
|||||
Adjustments per the Credit Agreement
|
3.2
|
|
|
0.1
|
|
|
(2.7
|
)
|
|
(1.9
|
)
|
|
(1.3
|
)
|
|||||
Adjusted EBITDA
|
$
|
68.9
|
|
|
$
|
60.0
|
|
|
$
|
38.6
|
|
|
$
|
(19.0
|
)
|
|
$
|
148.5
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
109.2
|
|
|
$
|
92.8
|
|
|
$
|
83.2
|
|
|
$
|
(70.6
|
)
|
|
$
|
214.6
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
62.3
|
|
|
52.4
|
|
|
51.3
|
|
|
(40.1
|
)
|
|
125.9
|
|
|||||
Interest expense, net of interest income
|
0.1
|
|
|
—
|
|
|
24.1
|
|
|
66.6
|
|
|
90.8
|
|
|||||
Depreciation and amortization
|
86.2
|
|
|
80.8
|
|
|
30.8
|
|
|
15.0
|
|
|
212.8
|
|
|||||
Intercompany interest
|
49.7
|
|
|
37.7
|
|
|
(25.3
|
)
|
|
(62.1
|
)
|
|
—
|
|
|||||
EBITDA
|
307.5
|
|
|
263.7
|
|
|
164.1
|
|
|
(91.2
|
)
|
|
644.1
|
|
|||||
Adjustments per the Credit Agreement
|
21.1
|
|
|
1.4
|
|
|
(16.8
|
)
|
|
—
|
|
|
5.7
|
|
|||||
Adjusted EBITDA
|
$
|
328.6
|
|
|
$
|
265.1
|
|
|
$
|
147.3
|
|
|
$
|
(91.2
|
)
|
|
$
|
649.8
|
|
|
Year Ended December 31, 2014
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
86.4
|
|
|
$
|
79.7
|
|
|
$
|
76.6
|
|
|
$
|
(73.4
|
)
|
|
$
|
169.3
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
43.2
|
|
|
48.4
|
|
|
48.6
|
|
|
(44.5
|
)
|
|
95.7
|
|
|||||
Interest expense, net of interest income
|
0.6
|
|
|
0.2
|
|
|
18.7
|
|
|
66.4
|
|
|
85.9
|
|
|||||
Depreciation and amortization
|
80.2
|
|
|
76.2
|
|
|
30.4
|
|
|
9.8
|
|
|
196.6
|
|
|||||
Intercompany interest
|
50.6
|
|
|
37.7
|
|
|
(22.7
|
)
|
|
(65.6
|
)
|
|
—
|
|
|||||
EBITDA
|
261.0
|
|
|
242.2
|
|
|
151.6
|
|
|
(107.3
|
)
|
|
547.5
|
|
|||||
Adjustments per the Credit Agreement
|
24.0
|
|
|
5.2
|
|
|
(8.1
|
)
|
|
30.2
|
|
|
51.3
|
|
|||||
Adjusted EBITDA
|
$
|
285.0
|
|
|
$
|
247.4
|
|
|
$
|
143.5
|
|
|
$
|
(77.1
|
)
|
|
$
|
598.8
|
|
|
Three Months Ended
|
|
Twelve
Months
Ended
|
||||||||||||||||
(Dollars in millions)
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015 |
|
December 31, 2015
|
||||||||||
Net income (loss)
|
$
|
54.5
|
|
|
$
|
59.5
|
|
|
$
|
52.3
|
|
|
$
|
48.3
|
|
|
$
|
214.6
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
34.6
|
|
|
34.8
|
|
|
29.6
|
|
|
26.9
|
|
|
125.9
|
|
|||||
Interest expense, net of interest income
|
20.9
|
|
|
21.8
|
|
|
24.3
|
|
|
23.8
|
|
|
90.8
|
|
|||||
Depreciation and amortization
|
50.9
|
|
|
51.8
|
|
|
54.1
|
|
|
56.0
|
|
|
212.8
|
|
|||||
EBITDA
|
160.9
|
|
|
167.9
|
|
|
160.3
|
|
|
155.0
|
|
|
644.1
|
|
|||||
Other adjustments per the Credit Agreement
|
0.9
|
|
|
2.0
|
|
|
2.4
|
|
|
2.7
|
|
|
8.0
|
|
|||||
Non-cash charges
|
4.3
|
|
|
4.3
|
|
|
5.5
|
|
|
2.3
|
|
|
16.4
|
|
|||||
AFC interest expense
|
(3.9
|
)
|
|
(4.2
|
)
|
|
(5.1
|
)
|
|
(5.5
|
)
|
|
(18.7
|
)
|
|||||
Adjusted EBITDA
|
$
|
162.2
|
|
|
$
|
170.0
|
|
|
$
|
163.1
|
|
|
$
|
154.5
|
|
|
$
|
649.8
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
Net cash provided by (used by):
|
|
|
|
||||
Operating activities
|
$
|
475.0
|
|
|
$
|
431.3
|
|
Investing activities
|
(547.6
|
)
|
|
(412.8
|
)
|
||
Financing activities
|
94.5
|
|
|
(48.5
|
)
|
||
Effect of exchange rate on cash
|
(19.8
|
)
|
|
(8.7
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
2.1
|
|
|
$
|
(38.7
|
)
|
•
|
an increase in cash used for acquisitions of approximately $86.2 million;
|
•
|
an increase in capital expenditures of approximately $33.7 million. For a discussion of the Company's capital expenditures, see “Capital Expenditures” below; and
|
•
|
an increase in the additional finance receivables held for investment of approximately $13.1 million.
|
•
|
a larger increase in obligations collateralized by finance receivables of approximately $250.2 million, in part related to the amendment of the securitization agreement, including the reduction of the overcollateralization requirement; and
|
•
|
increased borrowings on the revolving credit facility of $140.0 million;
|
•
|
a $227.6 million increase in cash used for the repurchase and retirement of common stock; and
|
•
|
a $12.0 million increase in dividends paid to stockholders in
2015
, compared with the same period in
2014
.
|
•
|
On February 17, 2015, the Company announced a cash dividend of $0.27 per share that was paid on April 2, 2015, to stockholders of record at the close of business on March 25, 2015.
|
•
|
On May 5, 2015, the Company announced a cash dividend of $0.27 per share that was paid on July 2, 2015, to stockholders of record at the close of business on June 24, 2015.
|
•
|
On August 3, 2015, the Company announced a cash dividend of $0.27 per share that was paid on October 1, 2015, to stockholders of record at the close of business on September 23, 2015.
|
•
|
On November 5, 2015, the Company announced a cash dividend of $0.27 per share that was paid on January 7, 2016, to stockholders of record at the close of business on December 22, 2015.
|
•
|
On February 17, 2016, the Company announced a cash dividend of $0.29 per share that is payable on April 5, 2016, to stockholders of record at the close of business on March 23, 2016.
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
||||||||||
$250 million revolving credit facility
|
$
|
140.0
|
|
|
$
|
140.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan B-1 (a)
|
637.2
|
|
|
5.1
|
|
|
632.1
|
|
|
—
|
|
|
—
|
|
|||||
Term Loan B-2 (a)
|
1,098.0
|
|
|
8.8
|
|
|
22.4
|
|
|
22.4
|
|
|
1,044.4
|
|
|||||
Capital lease obligations (b)
|
49.4
|
|
|
24.3
|
|
|
24.8
|
|
|
0.3
|
|
|
—
|
|
|||||
Interest payments relating to long-term debt (c)
|
256.9
|
|
|
94.3
|
|
|
81.5
|
|
|
74.1
|
|
|
7.0
|
|
|||||
Operating leases (d)
|
996.2
|
|
|
110.9
|
|
|
198.7
|
|
|
162.7
|
|
|
523.9
|
|
|||||
Total contractual cash obligations
|
$
|
3,177.7
|
|
|
$
|
383.4
|
|
|
$
|
959.5
|
|
|
$
|
259.5
|
|
|
$
|
1,575.3
|
|
(a)
|
The table assumes the long-term debt is held to maturity.
|
(b)
|
We have entered into capital leases for furniture, fixtures, equipment and software. The amounts include the interest portion of the capital leases. Future capital lease obligations would change if we entered into additional capital lease agreements.
|
(c)
|
Interest payments on long-term debt are projected based on the contractual rates of the debt securities. Interest rates for the variable rate term debt instruments were held constant at rates as of
December 31, 2015
.
|
(d)
|
Operating leases are entered into in the normal course of business. We lease most of our auction facilities, as well as other property and equipment under operating leases. Some lease agreements contain options to renew the lease or purchase the leased property. Future operating lease obligations would change if the renewal options were exercised and/or if we entered into additional operating lease agreements.
|
|
Page
|
KAR Auction Services, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets;
|
•
|
Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating revenues
|
|
|
|
|
|
||||||
ADESA Auction Services
|
$
|
1,376.8
|
|
|
$
|
1,218.5
|
|
|
$
|
1,118.6
|
|
IAA Salvage Services
|
994.4
|
|
|
895.9
|
|
|
830.0
|
|
|||
AFC
|
268.4
|
|
|
250.1
|
|
|
224.7
|
|
|||
Total operating revenues
|
2,639.6
|
|
|
2,364.5
|
|
|
2,173.3
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Cost of services (exclusive of depreciation and amortization)
|
1,497.5
|
|
|
1,318.8
|
|
|
1,232.2
|
|
|||
Selling, general and administrative
|
502.0
|
|
|
471.4
|
|
|
490.0
|
|
|||
Depreciation and amortization
|
212.8
|
|
|
196.6
|
|
|
194.4
|
|
|||
Total operating expenses
|
2,212.3
|
|
|
1,986.8
|
|
|
1,916.6
|
|
|||
Operating profit
|
427.3
|
|
|
377.7
|
|
|
256.7
|
|
|||
Interest expense
|
91.4
|
|
|
86.2
|
|
|
104.7
|
|
|||
Other income, net
|
(4.6
|
)
|
|
(3.8
|
)
|
|
(2.6
|
)
|
|||
Loss on extinguishment/modification of debt
|
—
|
|
|
30.3
|
|
|
5.4
|
|
|||
Income before income taxes
|
340.5
|
|
|
265.0
|
|
|
149.2
|
|
|||
Income taxes
|
125.9
|
|
|
95.7
|
|
|
81.5
|
|
|||
Net income
|
$
|
214.6
|
|
|
$
|
169.3
|
|
|
$
|
67.7
|
|
Net income per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.53
|
|
|
$
|
1.21
|
|
|
$
|
0.49
|
|
Diluted
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
$
|
0.48
|
|
Dividends declared per common share
|
$
|
1.08
|
|
|
$
|
1.02
|
|
|
$
|
0.82
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
214.6
|
|
|
$
|
169.3
|
|
|
$
|
67.7
|
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
||||||
Foreign currency translation loss
|
(38.5
|
)
|
|
(20.3
|
)
|
|
(16.6
|
)
|
|||
Unrealized loss on postretirement benefit obligation
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized gain on interest rate derivatives, net of tax of $(0.2) for the year ended December 31, 2013
|
—
|
|
|
—
|
|
|
0.2
|
|
|||
Total other comprehensive loss, net of tax
|
(38.6
|
)
|
|
(20.3
|
)
|
|
(16.4
|
)
|
|||
Comprehensive income
|
$
|
176.0
|
|
|
$
|
149.0
|
|
|
$
|
51.3
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
155.0
|
|
|
$
|
152.9
|
|
Restricted cash
|
16.2
|
|
|
17.0
|
|
||
Trade receivables, net of allowances of $6.6 and $6.3
|
511.9
|
|
|
401.2
|
|
||
Finance receivables, net of allowances $9.0 and $8.0
|
1,632.0
|
|
|
1,363.1
|
|
||
Deferred income tax assets
|
—
|
|
|
41.0
|
|
||
Other current assets
|
131.0
|
|
|
99.7
|
|
||
Total current assets
|
2,446.1
|
|
|
2,074.9
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
1,795.9
|
|
|
1,705.2
|
|
||
Customer relationships, net of accumulated amortization of $619.3 and $551.1
|
417.7
|
|
|
484.4
|
|
||
Other intangible assets, net of accumulated amortization of $258.1 and $221.2
|
310.8
|
|
|
306.2
|
|
||
Unamortized debt issuance costs
|
20.3
|
|
|
16.7
|
|
||
Other assets
|
34.1
|
|
|
36.2
|
|
||
Total other assets
|
2,578.8
|
|
|
2,548.7
|
|
||
Property and equipment, net of accumulated depreciation of $569.6 and $507.2
|
766.9
|
|
|
727.9
|
|
||
Total assets
|
$
|
5,791.8
|
|
|
$
|
5,351.5
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
608.4
|
|
|
$
|
471.7
|
|
Accrued employee benefits and compensation expenses
|
90.9
|
|
|
77.6
|
|
||
Accrued interest
|
0.8
|
|
|
0.3
|
|
||
Other accrued expenses
|
128.4
|
|
|
114.4
|
|
||
Income taxes payable
|
5.3
|
|
|
5.5
|
|
||
Dividends payable
|
37.2
|
|
|
38.2
|
|
||
Obligations collateralized by finance receivables
|
1,201.2
|
|
|
865.2
|
|
||
Current maturities of long-term debt
|
153.9
|
|
|
17.7
|
|
||
Total current liabilities
|
2,226.1
|
|
|
1,590.6
|
|
||
Non-current liabilities
|
|
|
|
||||
Long-term debt
|
1,719.3
|
|
|
1,736.6
|
|
||
Deferred income tax liabilities
|
300.8
|
|
|
333.4
|
|
||
Other liabilities
|
159.5
|
|
|
143.8
|
|
||
Total non-current liabilities
|
2,179.6
|
|
|
2,213.8
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 100,000,000
|
|
|
|
|
|
||
Issued shares: none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 400,000,000
|
|
|
|
|
|
||
Issued and outstanding shares:
|
|
|
|
|
|
||
137,795,296 (2015)
|
|
|
|
|
|
||
141,316,444 (2014)
|
1.4
|
|
|
1.4
|
|
||
Additional paid-in capital
|
1,407.6
|
|
|
1,593.7
|
|
||
Retained earnings (accumulated deficit)
|
17.3
|
|
|
(46.4
|
)
|
||
Accumulated other comprehensive loss
|
(40.2
|
)
|
|
(1.6
|
)
|
||
Total stockholders' equity
|
1,386.1
|
|
|
1,547.1
|
|
||
Total liabilities and stockholders' equity
|
$
|
5,791.8
|
|
|
$
|
5,351.5
|
|
|
Common
Stock
Shares
|
|
Common
Stock
Amount
|
|
Additional
Paid-In
Capital
|
|
(Accumulated
Deficit)/Retained Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||
Balance at December 31, 2012
|
136.7
|
|
|
$
|
1.4
|
|
|
$
|
1,433.9
|
|
|
$
|
(26.7
|
)
|
|
$
|
35.1
|
|
|
$
|
1,443.7
|
|
Net income
|
|
|
|
|
|
|
|
67.7
|
|
|
|
|
67.7
|
|
||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
(16.4
|
)
|
|
(16.4
|
)
|
||||||||
Issuance of common stock under stock plans
|
2.3
|
|
|
|
|
25.3
|
|
|
|
|
|
|
25.3
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
67.2
|
|
|
|
|
|
|
67.2
|
|
||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
7.6
|
|
|
|
|
|
|
7.6
|
|
||||||||
Cash dividends declared to stockholders ($0.82 per share)
|
|
|
|
|
|
|
(113.3
|
)
|
|
|
|
(113.3
|
)
|
|||||||||
Balance at December 31, 2013
|
139.0
|
|
|
$
|
1.4
|
|
|
$
|
1,534.0
|
|
|
$
|
(72.3
|
)
|
|
$
|
18.7
|
|
|
$
|
1,481.8
|
|
Net income
|
|
|
|
|
|
|
|
169.3
|
|
|
|
|
169.3
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(20.3
|
)
|
|
(20.3
|
)
|
||||||||
Issuance of common stock under stock plans
|
2.3
|
|
|
|
|
27.6
|
|
|
|
|
|
|
27.6
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
28.0
|
|
|
|
|
|
|
28.0
|
|
||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
4.1
|
|
|
|
|
|
|
4.1
|
|
||||||||
Cash dividends declared to stockholders ($1.02 per share)
|
|
|
|
|
|
|
(143.4
|
)
|
|
|
|
(143.4
|
)
|
|||||||||
Balance at December 31, 2014
|
141.3
|
|
|
$
|
1.4
|
|
|
$
|
1,593.7
|
|
|
$
|
(46.4
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
1,547.1
|
|
Net income
|
|
|
|
|
|
|
|
214.6
|
|
|
|
|
214.6
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(38.6
|
)
|
|
(38.6
|
)
|
||||||||
Issuance of common stock under stock plans
|
1.8
|
|
|
|
|
22.7
|
|
|
|
|
|
|
22.7
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
11.7
|
|
|
|
|
|
|
11.7
|
|
||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
7.1
|
|
|
|
|
|
|
7.1
|
|
||||||||
Repurchase and retirement of common stock
|
(5.3
|
)
|
|
|
|
(227.6
|
)
|
|
|
|
|
|
(227.6
|
)
|
||||||||
Cash dividends declared to stockholders ($1.08 per share)
|
|
|
|
|
|
|
|
(150.9
|
)
|
|
|
|
(150.9
|
)
|
||||||||
Balance at December 31, 2015
|
137.8
|
|
|
$
|
1.4
|
|
|
$
|
1,407.6
|
|
|
$
|
17.3
|
|
|
$
|
(40.2
|
)
|
|
$
|
1,386.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
214.6
|
|
|
$
|
169.3
|
|
|
$
|
67.7
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
212.8
|
|
|
196.6
|
|
|
194.4
|
|
|||
Provision for credit losses
|
18.8
|
|
|
16.6
|
|
|
11.7
|
|
|||
Deferred income taxes
|
5.0
|
|
|
(24.5
|
)
|
|
22.7
|
|
|||
Amortization of debt issuance costs
|
7.2
|
|
|
7.5
|
|
|
11.1
|
|
|||
Stock-based compensation
|
11.7
|
|
|
28.0
|
|
|
67.2
|
|
|||
Excess tax benefit from stock-based compensation
|
(7.1
|
)
|
|
(4.1
|
)
|
|
(7.6
|
)
|
|||
Loss (gain) on disposal of fixed assets
|
0.9
|
|
|
(0.2
|
)
|
|
0.1
|
|
|||
Loss on extinguishment/modification of debt
|
—
|
|
|
30.3
|
|
|
5.4
|
|
|||
Other non-cash, net
|
2.0
|
|
|
3.6
|
|
|
5.5
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Trade receivables and other assets
|
(127.0
|
)
|
|
(52.3
|
)
|
|
11.8
|
|
|||
Accounts payable and accrued expenses
|
136.1
|
|
|
60.5
|
|
|
44.0
|
|
|||
Net cash provided by operating activities
|
475.0
|
|
|
431.3
|
|
|
434.0
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Net increase in finance receivables held for investment
|
(295.9
|
)
|
|
(282.8
|
)
|
|
(118.8
|
)
|
|||
Acquisition of businesses (net of cash acquired) and equity method investments
|
(118.1
|
)
|
|
(31.9
|
)
|
|
(45.8
|
)
|
|||
Purchases of property, equipment and computer software
|
(134.7
|
)
|
|
(101.0
|
)
|
|
(96.6
|
)
|
|||
Proceeds from the sale of property and equipment
|
0.3
|
|
|
1.1
|
|
|
0.2
|
|
|||
Decrease (increase) in restricted cash
|
0.8
|
|
|
1.8
|
|
|
(6.9
|
)
|
|||
Net cash used by investing activities
|
(547.6
|
)
|
|
(412.8
|
)
|
|
(267.9
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net increase in book overdrafts
|
10.7
|
|
|
9.9
|
|
|
3.7
|
|
|||
Net increase in borrowings from lines of credit
|
140.0
|
|
|
—
|
|
|
—
|
|
|||
Net increase in obligations collateralized by finance receivables
|
349.8
|
|
|
99.6
|
|
|
64.0
|
|
|||
Proceeds from long-term debt
|
—
|
|
|
1,767.2
|
|
|
188.0
|
|
|||
Payments for debt issuance costs/amendments
|
(10.9
|
)
|
|
(12.3
|
)
|
|
(26.0
|
)
|
|||
Payments on long-term debt
|
(21.5
|
)
|
|
(1,785.1
|
)
|
|
(52.7
|
)
|
|||
Payment for early extinguishment of debt
|
—
|
|
|
—
|
|
|
(188.4
|
)
|
|||
Payments on capital leases
|
(20.5
|
)
|
|
(19.4
|
)
|
|
(15.7
|
)
|
|||
Payments of contingent consideration and deferred acquisition costs
|
(1.2
|
)
|
|
(0.2
|
)
|
|
(1.6
|
)
|
|||
Initial net investment for interest rate caps
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
|||
Issuance of common stock under stock plans
|
22.7
|
|
|
27.6
|
|
|
25.3
|
|
|||
Excess tax benefit from stock-based compensation
|
7.1
|
|
|
4.1
|
|
|
7.6
|
|
|||
Repurchase and retirement of common stock
|
(227.6
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid to stockholders
|
(151.9
|
)
|
|
(139.9
|
)
|
|
(78.6
|
)
|
|||
Net cash provided by (used by) financing activities
|
94.5
|
|
|
(48.5
|
)
|
|
(76.6
|
)
|
|||
Effect of exchange rate changes on cash
|
(19.8
|
)
|
|
(8.7
|
)
|
|
(6.6
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
2.1
|
|
|
(38.7
|
)
|
|
82.9
|
|
|||
Cash and cash equivalents at beginning of period
|
152.9
|
|
|
191.6
|
|
|
108.7
|
|
|||
Cash and cash equivalents at end of period
|
$
|
155.0
|
|
|
$
|
152.9
|
|
|
$
|
191.6
|
|
Cash paid for interest
|
$
|
79.7
|
|
|
$
|
75.9
|
|
|
$
|
89.8
|
|
Cash paid for taxes, net of refunds
|
$
|
129.9
|
|
|
$
|
102.2
|
|
|
$
|
46.8
|
|
•
|
"we," "us," "our" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
|
•
|
"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including OPENLANE, Inc. (together with OPENLANE, Inc.'s subsidiaries, "OPENLANE");
|
•
|
"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc.;
|
•
|
"Axle LLC" refers to Axle Holdings II, LLC, the former ultimate parent company of IAA and a holder of common equity interests in KAR LLC;
|
•
|
"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent;
|
•
|
"Original Credit Agreement" refers to the Credit Agreement, dated May 19, 2011, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent, as amended on November 29, 2012 and March 12, 2013;
|
•
|
"Credit Facility" refers to the
three
-year senior secured term loan B-1 facility ("Term Loan B-1"), the
seven
-year senior secured term loan B-2 facility ("Term Loan B-2") and the
$250 million
,
five
-year senior secured revolving credit facility (the "revolving credit facility"), the terms of which are set forth in the Credit Agreement;
|
•
|
"Original Credit Facility" refers to the
six
-year senior secured term loan facility ("Term Loan B") and the
$250 million
,
five
-year senior secured revolving credit facility, the terms of which are set forth in the Original Credit Agreement;
|
•
|
"Equity Sponsors" refers, collectively, to Kelso Investment Associates VII, L.P., GS Capital Partners VI, L.P., ValueAct Capital Master Fund, L.P. and Parthenon Investors II, L.P.;
|
•
|
"IAA" refers, collectively, to Insurance Auto Auctions, Inc., a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services ("HBC");
|
•
|
"KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries; and
|
•
|
"KAR LLC" refers to KAR Holdings II, LLC, which is owned by affiliates of the Equity Sponsors, other equity co-investors and management of the Company.
|
|
Year Ended December 31,
|
||||||||||
AFC Revenue (In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Interest and fee income
|
$
|
239.9
|
|
|
$
|
225.0
|
|
|
$
|
211.1
|
|
Other revenue
|
16.6
|
|
|
11.9
|
|
|
10.7
|
|
|||
Provision for credit losses
|
(16.0
|
)
|
|
(12.3
|
)
|
|
(9.6
|
)
|
|||
Other service revenue
|
27.9
|
|
|
25.5
|
|
|
12.5
|
|
|||
|
$
|
268.4
|
|
|
$
|
250.1
|
|
|
$
|
224.7
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
PRSUs
|
$
|
6.1
|
|
|
$
|
3.5
|
|
|
$
|
0.2
|
|
RSUs
|
2.5
|
|
|
—
|
|
|
—
|
|
|||
Service options
|
3.1
|
|
|
3.6
|
|
|
2.7
|
|
|||
Exit options
|
—
|
|
|
20.9
|
|
|
12.2
|
|
|||
KAR LLC operating units - profit interests
|
—
|
|
|
—
|
|
|
6.1
|
|
|||
KAR LLC value units - profit interests
|
—
|
|
|
—
|
|
|
18.4
|
|
|||
Axle LLC operating units - profit interests
|
—
|
|
|
—
|
|
|
5.4
|
|
|||
Axle LLC value units - profit interests
|
—
|
|
|
—
|
|
|
22.2
|
|
|||
Total stock-based compensation expense
|
$
|
11.7
|
|
|
$
|
28.0
|
|
|
$
|
67.2
|
|
Restricted Stock Units
|
|
Number
|
|
Weighted Average Grant Date Fair Value
|
|||
RSUs at January 1, 2015
|
|
—
|
|
|
N/A
|
|
|
Granted
|
|
253,425
|
|
|
$
|
37.04
|
|
Vested
|
|
—
|
|
|
N/A
|
|
|
Forfeited
|
|
(13,038
|
)
|
|
37.02
|
|
|
RSUs at December 31, 2015
|
|
240,387
|
|
|
$
|
37.04
|
|
Amount Vested
|
|
Vesting Conditions
|
|
Vested & Exercisable Date
|
25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $20.00
|
|
March 2013
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $25.00
|
|
August 2013
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $30.00
|
|
March 2014
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeds $35.00
|
|
March 2015
|
Amount Vested
|
|
Vesting Conditions
|
|
Vested & Exercisable Date
|
25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $16.01
|
|
May 2011
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $19.21
|
|
January 2013
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $22.41
|
|
May 2013
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $25.62
|
|
August 2013
|
Service Options
|
Number
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2015
|
2,744,907
|
|
|
$
|
20.58
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Exercised
|
(510,769
|
)
|
|
15.63
|
|
|
|
|
|
|
||
Forfeited
|
(69,973
|
)
|
|
24.33
|
|
|
|
|
|
|
||
Canceled
|
(836
|
)
|
|
26.87
|
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
2,163,329
|
|
|
$
|
21.66
|
|
|
6.6 years
|
|
$
|
33.3
|
|
Exercisable at December 31, 2015
|
1,218,960
|
|
|
$
|
17.17
|
|
|
5.6 years
|
|
$
|
24.2
|
|
Assumptions
|
|
2014
|
|
2013
|
||
Risk-free interest rate
|
|
1.80% - 1.915%
|
|
|
0.535% - 0.985%
|
|
Expected life
|
|
6.25 years
|
|
|
4 years
|
|
Expected volatility
|
|
30.0
|
%
|
|
35.0
|
%
|
Dividend yield
|
|
3.24% - 3.45%
|
|
|
2.95% - 3.62%
|
|
Exit Options
|
Number
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2015
|
3,133,553
|
|
|
$
|
10.83
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Exercised
|
(1,322,129
|
)
|
|
10.17
|
|
|
|
|
|
|
||
Forfeited
|
(2,996
|
)
|
|
12.25
|
|
|
|
|
|
|
||
Canceled
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
1,808,428
|
|
|
$
|
11.27
|
|
|
2.6 years
|
|
$
|
46.6
|
|
Exercisable at December 31, 2015
|
1,808,428
|
|
|
$
|
11.27
|
|
|
2.6 years
|
|
$
|
46.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
214.6
|
|
|
$
|
169.3
|
|
|
$
|
67.7
|
|
Weighted average common shares outstanding
|
140.1
|
|
|
140.2
|
|
|
137.9
|
|
|||
Effect of dilutive stock options and restricted stock awards
|
2.2
|
|
|
1.6
|
|
|
2.9
|
|
|||
Weighted average common shares outstanding and potential common shares
|
142.3
|
|
|
141.8
|
|
|
140.8
|
|
|||
Net income per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.53
|
|
|
$
|
1.21
|
|
|
$
|
0.49
|
|
Diluted
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
$
|
0.48
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Allowance for Credit Losses
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
8.0
|
|
|
$
|
8.0
|
|
|
$
|
8.0
|
|
Provision for credit losses
|
16.0
|
|
|
12.3
|
|
|
9.6
|
|
|||
Recoveries
|
4.1
|
|
|
3.5
|
|
|
3.7
|
|
|||
Less charge-offs
|
(19.1
|
)
|
|
(15.8
|
)
|
|
(13.3
|
)
|
|||
Balance at end of period
|
$
|
9.0
|
|
|
$
|
8.0
|
|
|
$
|
8.0
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
6.3
|
|
|
$
|
4.8
|
|
|
$
|
5.3
|
|
Provision for credit losses
|
2.8
|
|
|
4.3
|
|
|
2.1
|
|
|||
Less net charge-offs
|
(2.5
|
)
|
|
(2.8
|
)
|
|
(2.6
|
)
|
|||
Balance at end of period
|
$
|
6.6
|
|
|
$
|
6.3
|
|
|
$
|
4.8
|
|
|
December 31, 2015
|
|
Net Credit Losses
During 2015
|
||||||||
|
Principal Amount of:
|
|
|||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|||||||
Floorplan receivables
|
$
|
1,635.5
|
|
|
$
|
7.0
|
|
|
$
|
15.0
|
|
Other loans
|
5.5
|
|
|
—
|
|
|
—
|
|
|||
Total receivables managed
|
$
|
1,641.0
|
|
|
$
|
7.0
|
|
|
$
|
15.0
|
|
|
December 31, 2014
|
|
Net Credit Losses
During 2014
|
||||||||
|
Principal Amount of:
|
|
|||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|||||||
Floorplan receivables
|
$
|
1,365.1
|
|
|
$
|
4.2
|
|
|
$
|
12.3
|
|
Other loans
|
6.0
|
|
|
—
|
|
|
—
|
|
|||
Total receivables managed
|
$
|
1,371.1
|
|
|
$
|
4.2
|
|
|
$
|
12.3
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Total
|
||||||||
Balance at December 31, 2013
|
$
|
962.6
|
|
|
$
|
523.5
|
|
|
$
|
219.0
|
|
|
$
|
1,705.1
|
|
Increase for acquisition activity
|
0.5
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
||||
Other
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||
Balance at December 31, 2014
|
$
|
962.7
|
|
|
$
|
523.5
|
|
|
$
|
219.0
|
|
|
$
|
1,705.2
|
|
Increase for acquisition activity
|
77.6
|
|
|
14.7
|
|
|
—
|
|
|
92.3
|
|
||||
Other
|
(0.9
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
(1.6
|
)
|
||||
Balance at December 31, 2015
|
$
|
1,039.4
|
|
|
$
|
537.5
|
|
|
$
|
219.0
|
|
|
$
|
1,795.9
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Useful
Lives
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
||||||||||||
Customer relationships
|
5 - 19
|
|
$
|
1,037.0
|
|
|
$
|
(619.3
|
)
|
|
$
|
417.7
|
|
|
$
|
1,035.5
|
|
|
$
|
(551.1
|
)
|
|
$
|
484.4
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Useful Lives
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
||||||||||||
Tradenames
|
2 - Indefinite
|
|
$
|
199.2
|
|
|
$
|
(5.3
|
)
|
|
$
|
193.9
|
|
|
$
|
198.3
|
|
|
$
|
(3.8
|
)
|
|
$
|
194.5
|
|
Computer software & technology
|
3 - 13
|
|
354.2
|
|
|
(238.3
|
)
|
|
115.9
|
|
|
313.6
|
|
|
(203.7
|
)
|
|
109.9
|
|
||||||
Covenants not to compete
|
1 - 5
|
|
15.5
|
|
|
(14.5
|
)
|
|
1.0
|
|
|
15.5
|
|
|
(13.7
|
)
|
|
1.8
|
|
||||||
Total
|
|
|
$
|
568.9
|
|
|
$
|
(258.1
|
)
|
|
$
|
310.8
|
|
|
$
|
527.4
|
|
|
$
|
(221.2
|
)
|
|
$
|
306.2
|
|
|
Useful Lives
(in years)
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||||
Land
|
|
|
$
|
236.8
|
|
|
$
|
240.4
|
|
Buildings
|
5 - 40
|
|
217.0
|
|
|
223.7
|
|
||
Land improvements
|
5 - 20
|
|
149.1
|
|
|
148.0
|
|
||
Building and leasehold improvements
|
3 - 33
|
|
348.4
|
|
|
313.5
|
|
||
Furniture, fixtures and equipment
|
1 - 10
|
|
325.5
|
|
|
271.9
|
|
||
Vehicles
|
3 - 10
|
|
15.0
|
|
|
11.5
|
|
||
Construction in progress
|
|
|
44.7
|
|
|
26.1
|
|
||
|
|
|
1,336.5
|
|
|
1,235.1
|
|
||
Accumulated depreciation
|
|
|
(569.6
|
)
|
|
(507.2
|
)
|
||
Property and equipment, net
|
|
|
$
|
766.9
|
|
|
$
|
727.9
|
|
|
December 31,
|
||||||
Classes of Property
|
2015
|
|
2014
|
||||
Furniture, fixtures and equipment
|
$
|
120.4
|
|
|
$
|
89.8
|
|
Accumulated depreciation
|
(71.3
|
)
|
|
(53.5
|
)
|
||
Capital lease assets
|
$
|
49.1
|
|
|
$
|
36.3
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at beginning of period
|
$
|
33.3
|
|
|
$
|
27.8
|
|
|
$
|
24.0
|
|
Net payments
|
(66.3
|
)
|
|
(55.8
|
)
|
|
(59.3
|
)
|
|||
Expense
|
69.1
|
|
|
61.3
|
|
|
63.1
|
|
|||
Balance at end of period
|
$
|
36.1
|
|
|
$
|
33.3
|
|
|
$
|
27.8
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
Interest Rate
|
|
|
|
Maturity
|
|
2015
|
|
2014
|
||||
Term Loan B-1
|
LIBOR
|
|
+ 2.50%
|
|
March 11, 2017
|
|
$
|
637.2
|
|
|
$
|
645.1
|
|
Term Loan B-2
|
Adjusted LIBOR
|
|
+ 2.75%
|
|
March 11, 2021
|
|
1,098.0
|
|
|
1,111.6
|
|
||
Revolving credit facility
|
LIBOR
|
|
+ 2.25%
|
|
March 11, 2019
|
|
140.0
|
|
|
—
|
|
||
Canadian line of credit
|
CAD Prime
|
|
+ 0.50%
|
|
Repayable upon demand
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
|
|
|
|
|
1,875.2
|
|
|
1,756.7
|
|
||
Unamortized debt discount
|
|
|
|
|
|
|
(2.0
|
)
|
|
(2.4
|
)
|
||
Current portion of long-term debt
|
|
|
|
|
|
|
(153.9
|
)
|
|
(17.7
|
)
|
||
Long-term debt
|
|
|
|
|
|
|
$
|
1,719.3
|
|
|
$
|
1,736.6
|
|
2016
|
$
|
153.9
|
|
2017
|
643.3
|
|
|
2018
|
11.2
|
|
|
2019
|
11.2
|
|
|
2020
|
11.2
|
|
|
Thereafter
|
1,044.4
|
|
|
|
$
|
1,875.2
|
|
•
|
In August 2015, we purchased
three
interest rate caps for an aggregate amount of approximately
$1.5 million
with an aggregate notional amount of
$800 million
to manage our exposure to interest rate movements on our variable rate Credit Facility when
three-month LIBOR
(i) exceeds
2.0%
between August 19, 2015 (the effective date) and September 29, 2016 and (ii) exceeds
1.75%
between September 30, 2016 and August 19, 2017 (the maturity date).
|
•
|
In April 2015, we purchased
two
interest rate caps for an aggregate amount of approximately
$0.7 million
with an aggregate notional amount of
$400 million
to manage our exposure to interest rate movements on our variable rate Credit Facility when
three-month LIBOR
exceeds
1.5%
. The interest rate cap agreements each had an effective date of April 16, 2015 and each matures on March 31, 2017.
|
•
|
In August 2013, we purchased
four
interest rate caps for an aggregate amount of approximately
$2.2 million
with an aggregate notional amount of
$1.2 billion
to manage our exposure to interest rate movements on our variable rate
|
|
|
Asset Derivatives
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
2015 Interest rate caps
|
|
Other assets
|
|
$
|
0.7
|
|
|
Other assets
|
|
N/A
|
|
|
2013 Interest rate caps
|
|
Other assets
|
|
N/A
|
|
|
Other assets
|
|
$
|
—
|
|
|
|
Location of Gain / (Loss) Recognized in Income on Derivatives
|
|
Amount of Gain / (Loss)
Recognized in Income on Derivatives
|
|||||||||||
|
|
|
Year Ended December 31,
|
||||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
|
2015
|
|
2014
|
|
2013
|
||||||||
2015 Interest rate caps
|
|
Interest expense
|
|
$
|
(1.5
|
)
|
|
N/A
|
|
|
N/A
|
|
|||
2013 Interest rate caps
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
(0.8
|
)
|
|
$
|
(1.4
|
)
|
|
Operating
Leases
|
|
Capital
Leases
|
||||
2016
|
$
|
110.9
|
|
|
$
|
24.3
|
|
2017
|
103.4
|
|
|
17.2
|
|
||
2018
|
95.3
|
|
|
7.6
|
|
||
2019
|
86.1
|
|
|
0.2
|
|
||
2020
|
76.6
|
|
|
0.1
|
|
||
Thereafter
|
523.9
|
|
|
—
|
|
||
|
$
|
996.2
|
|
|
$
|
49.4
|
|
Less: interest portion of capital leases
|
|
|
|
2.2
|
|
||
Total
|
|
|
|
$
|
47.2
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Income before income taxes:
|
|
|
|
|
|
||||||
Domestic
|
$
|
259.5
|
|
|
$
|
199.3
|
|
|
$
|
88.6
|
|
Foreign
|
81.0
|
|
|
65.7
|
|
|
60.6
|
|
|||
Total
|
$
|
340.5
|
|
|
$
|
265.0
|
|
|
$
|
149.2
|
|
Income tax expense (benefit):
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
88.6
|
|
|
$
|
87.0
|
|
|
$
|
27.3
|
|
Foreign
|
22.6
|
|
|
21.1
|
|
|
23.6
|
|
|||
State
|
9.7
|
|
|
12.1
|
|
|
7.9
|
|
|||
Total current provision
|
120.9
|
|
|
120.2
|
|
|
58.8
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
6.5
|
|
|
(18.6
|
)
|
|
22.7
|
|
|||
Foreign
|
(1.8
|
)
|
|
(2.2
|
)
|
|
(2.6
|
)
|
|||
State
|
0.3
|
|
|
(3.7
|
)
|
|
2.6
|
|
|||
Total deferred provision
|
5.0
|
|
|
(24.5
|
)
|
|
22.7
|
|
|||
Income tax expense
|
$
|
125.9
|
|
|
$
|
95.7
|
|
|
$
|
81.5
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net
|
2.1
|
%
|
|
3.0
|
%
|
|
4.9
|
%
|
Reserves for tax exposures
|
0.3
|
%
|
|
(0.1
|
)%
|
|
0.7
|
%
|
Change in valuation allowance
|
0.3
|
%
|
|
(0.2
|
)%
|
|
2.8
|
%
|
International operations
|
(1.2
|
)%
|
|
(0.6
|
)%
|
|
(0.2
|
)%
|
Profit interests
|
—
|
%
|
|
—
|
%
|
|
12.2
|
%
|
Other, net
|
0.5
|
%
|
|
(1.0
|
)%
|
|
(0.8
|
)%
|
Effective rate
|
37.0
|
%
|
|
36.1
|
%
|
|
54.6
|
%
|
|
2015
|
|
2014
|
||||
Gross deferred tax assets:
|
|
|
|
||||
Allowances for trade and finance receivables
|
$
|
5.5
|
|
|
$
|
5.2
|
|
Accruals and liabilities
|
54.1
|
|
|
49.5
|
|
||
Employee benefits and compensation
|
27.2
|
|
|
39.8
|
|
||
Interest rate cap
|
—
|
|
|
0.2
|
|
||
Net operating loss carryforwards
|
26.7
|
|
|
31.6
|
|
||
Investment basis difference
|
2.6
|
|
|
1.4
|
|
||
Other
|
9.9
|
|
|
11.0
|
|
||
Total deferred tax assets
|
126.0
|
|
|
138.7
|
|
||
Deferred tax asset valuation allowance
|
(21.2
|
)
|
|
(18.2
|
)
|
||
Total
|
104.8
|
|
|
120.5
|
|
||
Gross deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(104.4
|
)
|
|
(94.6
|
)
|
||
Goodwill and intangible assets
|
(293.4
|
)
|
|
(311.2
|
)
|
||
Other
|
(7.8
|
)
|
|
(7.1
|
)
|
||
Total
|
(405.6
|
)
|
|
(412.9
|
)
|
||
Net deferred tax liabilities
|
$
|
(300.8
|
)
|
|
$
|
(292.4
|
)
|
2016
|
$
|
0.3
|
|
2017
|
0.2
|
|
|
2018
|
0.3
|
|
|
2019
|
0.2
|
|
|
2020
|
0.7
|
|
|
2021 to 2035
|
25.0
|
|
|
|
$
|
26.7
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Balance at beginning of period
|
$
|
18.6
|
|
|
$
|
21.2
|
|
Increase in prior year tax positions
|
—
|
|
|
0.2
|
|
||
Decrease in prior year tax positions
|
(1.9
|
)
|
|
(0.4
|
)
|
||
Increase in current year tax positions
|
1.2
|
|
|
0.6
|
|
||
Settlements
|
—
|
|
|
(1.7
|
)
|
||
Lapse in statute of limitations
|
(3.0
|
)
|
|
(1.3
|
)
|
||
Balance at end of period
|
$
|
14.9
|
|
|
$
|
18.6
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Foreign currency translation loss
|
$
|
(40.3
|
)
|
|
$
|
(1.8
|
)
|
Unrealized gain on postretirement benefit obligation, net of tax
|
0.1
|
|
|
0.2
|
|
||
Accumulated other comprehensive loss
|
$
|
(40.2
|
)
|
|
$
|
(1.6
|
)
|
|
ADESA
Auctions |
|
IAA
|
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
1,376.8
|
|
|
$
|
994.4
|
|
|
$
|
268.4
|
|
|
$
|
—
|
|
|
$
|
2,639.6
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
785.9
|
|
|
633.6
|
|
|
78.0
|
|
|
—
|
|
|
1,497.5
|
|
|||||
Selling, general and administrative
|
276.6
|
|
|
98.1
|
|
|
27.8
|
|
|
99.5
|
|
|
502.0
|
|
|||||
Depreciation and amortization
|
86.2
|
|
|
80.8
|
|
|
30.8
|
|
|
15.0
|
|
|
212.8
|
|
|||||
Total operating expenses
|
1,148.7
|
|
|
812.5
|
|
|
136.6
|
|
|
114.5
|
|
|
2,212.3
|
|
|||||
Operating profit (loss)
|
228.1
|
|
|
181.9
|
|
|
131.8
|
|
|
(114.5
|
)
|
|
427.3
|
|
|||||
Interest expense
|
0.7
|
|
|
—
|
|
|
24.1
|
|
|
66.6
|
|
|
91.4
|
|
|||||
Other (income) expense, net
|
(1.7
|
)
|
|
(1.7
|
)
|
|
(1.5
|
)
|
|
0.3
|
|
|
(4.6
|
)
|
|||||
Intercompany expense (income)
|
57.6
|
|
|
38.4
|
|
|
(25.3
|
)
|
|
(70.7
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
171.5
|
|
|
145.2
|
|
|
134.5
|
|
|
(110.7
|
)
|
|
340.5
|
|
|||||
Income taxes
|
62.3
|
|
|
52.4
|
|
|
51.3
|
|
|
(40.1
|
)
|
|
125.9
|
|
|||||
Net income (loss)
|
$
|
109.2
|
|
|
$
|
92.8
|
|
|
$
|
83.2
|
|
|
$
|
(70.6
|
)
|
|
$
|
214.6
|
|
Total assets
|
$
|
2,390.9
|
|
|
$
|
1,292.1
|
|
|
$
|
2,037.2
|
|
|
$
|
71.6
|
|
|
$
|
5,791.8
|
|
Capital expenditures
|
$
|
70.0
|
|
|
$
|
40.4
|
|
|
$
|
7.0
|
|
|
$
|
17.3
|
|
|
$
|
134.7
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
1,218.5
|
|
|
$
|
895.9
|
|
|
$
|
250.1
|
|
|
$
|
—
|
|
|
$
|
2,364.5
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
693.4
|
|
|
555.7
|
|
|
69.7
|
|
|
—
|
|
|
1,318.8
|
|
|||||
Selling, general and administrative
|
259.9
|
|
|
98.8
|
|
|
28.8
|
|
|
83.9
|
|
|
471.4
|
|
|||||
Depreciation and amortization
|
80.2
|
|
|
76.2
|
|
|
30.4
|
|
|
9.8
|
|
|
196.6
|
|
|||||
Total operating expenses
|
1,033.5
|
|
|
730.7
|
|
|
128.9
|
|
|
93.7
|
|
|
1,986.8
|
|
|||||
Operating profit (loss)
|
185.0
|
|
|
165.2
|
|
|
121.2
|
|
|
(93.7
|
)
|
|
377.7
|
|
|||||
Interest expense
|
0.9
|
|
|
0.2
|
|
|
18.7
|
|
|
66.4
|
|
|
86.2
|
|
|||||
Other (income) expense, net
|
(2.4
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
0.2
|
|
|
(3.8
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
30.3
|
|
|
30.3
|
|
|||||
Intercompany expense (income)
|
56.9
|
|
|
38.5
|
|
|
(22.7
|
)
|
|
(72.7
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
129.6
|
|
|
128.1
|
|
|
125.2
|
|
|
(117.9
|
)
|
|
265.0
|
|
|||||
Income taxes
|
43.2
|
|
|
48.4
|
|
|
48.6
|
|
|
(44.5
|
)
|
|
95.7
|
|
|||||
Net income (loss)
|
$
|
86.4
|
|
|
$
|
79.7
|
|
|
$
|
76.6
|
|
|
$
|
(73.4
|
)
|
|
$
|
169.3
|
|
Total assets
|
$
|
2,272.0
|
|
|
$
|
1,233.8
|
|
|
$
|
1,777.2
|
|
|
$
|
68.5
|
|
|
$
|
5,351.5
|
|
Capital expenditures
|
$
|
42.3
|
|
|
$
|
39.3
|
|
|
$
|
6.4
|
|
|
$
|
13.0
|
|
|
$
|
101.0
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
1,118.6
|
|
|
$
|
830.0
|
|
|
$
|
224.7
|
|
|
$
|
—
|
|
|
$
|
2,173.3
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
629.9
|
|
|
545.9
|
|
|
56.4
|
|
|
—
|
|
|
1,232.2
|
|
|||||
Selling, general and administrative
|
252.3
|
|
|
82.4
|
|
|
26.2
|
|
|
129.1
|
|
|
490.0
|
|
|||||
Depreciation and amortization
|
87.9
|
|
|
73.8
|
|
|
27.6
|
|
|
5.1
|
|
|
194.4
|
|
|||||
Total operating expenses
|
970.1
|
|
|
702.1
|
|
|
110.2
|
|
|
134.2
|
|
|
1,916.6
|
|
|||||
Operating profit (loss)
|
148.5
|
|
|
127.9
|
|
|
114.5
|
|
|
(134.2
|
)
|
|
256.7
|
|
|||||
Interest expense
|
1.0
|
|
|
0.8
|
|
|
16.7
|
|
|
86.2
|
|
|
104.7
|
|
|||||
Other (income) expense, net
|
(2.7
|
)
|
|
(0.7
|
)
|
|
0.7
|
|
|
0.1
|
|
|
(2.6
|
)
|
|||||
Loss on modification/extinguishment of debt
|
—
|
|
|
—
|
|
|
0.7
|
|
|
4.7
|
|
|
5.4
|
|
|||||
Intercompany expense (income)
|
59.9
|
|
|
38.4
|
|
|
(19.9
|
)
|
|
(78.4
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
90.3
|
|
|
89.4
|
|
|
116.3
|
|
|
(146.8
|
)
|
|
149.2
|
|
|||||
Income taxes
|
40.1
|
|
|
32.8
|
|
|
40.2
|
|
|
(31.6
|
)
|
|
81.5
|
|
|||||
Net income (loss)
|
$
|
50.2
|
|
|
$
|
56.6
|
|
|
$
|
76.1
|
|
|
$
|
(115.2
|
)
|
|
$
|
67.7
|
|
Total assets
|
$
|
2,296.4
|
|
|
$
|
1,198.2
|
|
|
$
|
1,547.5
|
|
|
$
|
85.1
|
|
|
$
|
5,127.2
|
|
Capital expenditures
|
$
|
41.5
|
|
|
$
|
39.4
|
|
|
$
|
6.3
|
|
|
$
|
9.4
|
|
|
$
|
96.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating revenues
|
|
|
|
|
|
||||||
U.S.
|
$
|
2,291.8
|
|
|
$
|
2,046.1
|
|
|
$
|
1,854.0
|
|
Foreign
|
347.8
|
|
|
318.4
|
|
|
319.3
|
|
|||
|
$
|
2,639.6
|
|
|
$
|
2,364.5
|
|
|
$
|
2,173.3
|
|
2015 Quarter Ended
|
March 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
Operating revenues
|
$
|
632.4
|
|
|
$
|
658.3
|
|
|
$
|
666.7
|
|
|
$
|
682.2
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
352.1
|
|
|
366.5
|
|
|
378.1
|
|
|
400.8
|
|
||||
Selling, general, and administrative
|
121.5
|
|
|
123.5
|
|
|
128.5
|
|
|
128.5
|
|
||||
Depreciation and amortization
|
50.9
|
|
|
51.8
|
|
|
54.1
|
|
|
56.0
|
|
||||
Total operating expenses
|
524.5
|
|
|
541.8
|
|
|
560.7
|
|
|
585.3
|
|
||||
Operating profit
|
107.9
|
|
|
116.5
|
|
|
106.0
|
|
|
96.9
|
|
||||
Interest expense
|
21.0
|
|
|
21.8
|
|
|
24.4
|
|
|
24.2
|
|
||||
Other (income) expense, net
|
(2.2
|
)
|
|
0.4
|
|
|
(0.3
|
)
|
|
(2.5
|
)
|
||||
Income before income taxes
|
89.1
|
|
|
94.3
|
|
|
81.9
|
|
|
75.2
|
|
||||
Income taxes
|
34.6
|
|
|
34.8
|
|
|
29.6
|
|
|
26.9
|
|
||||
Net income
|
$
|
54.5
|
|
|
$
|
59.5
|
|
|
$
|
52.3
|
|
|
$
|
48.3
|
|
Basic net income per share of common stock
|
$
|
0.39
|
|
|
$
|
0.42
|
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
Diluted net income per share of common stock
|
$
|
0.38
|
|
|
$
|
0.41
|
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
2014 Quarter Ended
|
March 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
Operating revenues
|
$
|
583.8
|
|
|
$
|
585.6
|
|
|
$
|
589.1
|
|
|
$
|
606.0
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
324.5
|
|
|
322.1
|
|
|
328.0
|
|
|
344.2
|
|
||||
Selling, general, and administrative
|
126.8
|
|
|
114.3
|
|
|
116.5
|
|
|
113.8
|
|
||||
Depreciation and amortization
|
48.1
|
|
|
48.3
|
|
|
48.9
|
|
|
51.3
|
|
||||
Total operating expenses
|
499.4
|
|
|
484.7
|
|
|
493.4
|
|
|
509.3
|
|
||||
Operating profit
|
84.4
|
|
|
100.9
|
|
|
95.7
|
|
|
96.7
|
|
||||
Interest expense
|
24.1
|
|
|
20.9
|
|
|
20.3
|
|
|
20.9
|
|
||||
Other income, net
|
(0.5
|
)
|
|
(0.9
|
)
|
|
(0.5
|
)
|
|
(1.9
|
)
|
||||
Loss on extinguishment of debt
|
30.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Income before income taxes
|
30.5
|
|
|
80.9
|
|
|
75.9
|
|
|
77.7
|
|
||||
Income taxes
|
9.8
|
|
|
30.1
|
|
|
28.4
|
|
|
27.4
|
|
||||
Net income
|
$
|
20.7
|
|
|
$
|
50.8
|
|
|
$
|
47.5
|
|
|
$
|
50.3
|
|
Basic net income per share of common stock
|
$
|
0.15
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
|
$
|
0.36
|
|
Diluted net income per share of common stock
|
$
|
0.15
|
|
|
$
|
0.36
|
|
|
$
|
0.33
|
|
|
$
|
0.35
|
|
Plan Category
|
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights(1)
|
|
Weighted-average
exercise price of
outstanding
options,
warrants and
rights(2)
|
|
Number of securities
remaining available for
future issuance under equity
compensation
plans (excluding securities
reflected in first column)(3)
|
||||
Equity compensation plans approved by security holder(s)
|
4,754,154
|
|
|
$
|
16.94
|
|
|
8,229,192
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
4,754,154
|
|
|
$
|
16.94
|
|
|
8,229,192
|
|
|
(1)
|
Includes (a) service options, exit options, performance-based restricted stock units ("PRSUs") and restricted stock units ("RSUs") issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan; (b) service and exit options issued under the KAR Auction Services, Inc. Stock Incentive Plan; and (c) service and exit options carried over from the Axle Holdings, Inc. Stock Incentive Plan at the time of the merger on April 20, 2007. In December 2013, we granted a target amount of 223,120 PRSUs which vest in three years if and to the extent that the Company's total shareholder return relative to that of companies within the S&P 500 Index exceeds certain levels. In the first quarter of 2014, we granted a target amount of 86,350 PRSUs. Half of the PRSUs vest in three years if and to the extent that the Company's total shareholder return relative to that of companies within the S&P 500 Index exceeds certain levels. The other half of the PRSUs vest if and to the extent that the Company's three-year adjusted earnings per share attains certain specified goals. In 2015, we also granted PRSUs which vest if and to the extent that the Company's three-year adjusted earnings per share attains certain specified goals. At December 31, 2015, there were 232,540 of these awards outstanding at target. As such, the combined target amount outstanding of 542,010 PRSUs have been included in the table above. In addition, the table also includes 240,387 RSUs that were granted in 2015 and were outstanding at December 31, 2015. The RSUs vest in three equal annual installments from the dates of grant.
|
(2)
|
Awards issued post-merger by KAR Auction Services, Inc. have exercise prices ranging from $10.00 to $30.89. Axle Holdings, Inc. options that were carried over at the merger date have exercise prices ranging from $8.08 to $8.52. The weighted-average price in the table above only reflects the weighted-average exercise price of outstanding options. The weighted-average exercise price does not include the PRSUs or RSUs.
|
(3)
|
The number of securities available for future issuance includes (a) 7,584,753 shares of common stock that may be issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan; and (b) 644,439 shares of common stock that may be issued under the KAR Auction Services, Inc. Employee Stock Purchase Plan.
|
a)
|
The following documents have been filed as part of this report or, where noted, incorporated by reference:
|
1)
|
Financial Statements—the consolidated financial statements of KAR Auction Services, Inc. and its consolidated subsidiaries are filed as part of this report under Item 8.
|
2)
|
Financial Statement Schedules—all schedules have been omitted because the matter or conditions are not present or the information required to be set forth therein is included in the consolidated financial statements and related notes thereto.
|
3)
|
Exhibits—the exhibit list in the Exhibit Index is incorporated herein by reference as the list of exhibits required as part of this report.
|
KAR Auction Services, Inc.
|
|
||
|
|
|
|
By:
|
|
/s/ JAMES P. HALLETT
|
|
|
|
James P. Hallett
Chief Executive Officer
|
|
|
|
February 18, 2016
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JAMES P. HALLETT
|
|
Chief Executive Officer and Chairman of the Board
|
|
February 18, 2016
|
James P. Hallett
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ ERIC M. LOUGHMILLER
|
|
Chief Financial Officer
|
|
February 18, 2016
|
Eric M. Loughmiller
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ TODD F. BOURELL
|
|
Director
|
|
February 18, 2016
|
Todd F. Bourell
|
|
|
|
|
|
|
|
|
|
/s/ DONNA R. ECTON
|
|
Director
|
|
February 18, 2016
|
Donna R. Ecton
|
|
|
|
|
|
|
|
|
|
/s/ PETER R. FORMANEK
|
|
Director
|
|
February 18, 2016
|
Peter R. Formanek
|
|
|
|
|
|
|
|
|
|
/s/ MARK E. HILL
|
|
Director
|
|
February 18, 2016
|
Mark E. Hill
|
|
|
|
|
|
|
|
|
|
/s/ J. MARK HOWELL
|
|
Director
|
|
February 18, 2016
|
J. Mark Howell
|
|
|
|
|
|
|
|
|
|
/s/ LYNN JOLLIFFE
|
|
Director
|
|
February 18, 2016
|
Lynn Jolliffe
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL T. KESTNER
|
|
Director
|
|
February 18, 2016
|
Michael T. Kestner
|
|
|
|
|
|
|
|
|
|
/s/ JOHN P. LARSON
|
|
Lead Independent Director
|
|
February 18, 2016
|
John P. Larson
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN E. SMITH
|
|
Director
|
|
February 18, 2016
|
Stephen E. Smith
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation of KAR Auction Services, Inc.
|
|
S-1/A
|
|
333-161907
|
|
3.1
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Second Amended and Restated By-Laws of KAR Auction Services, Inc.
|
|
8-K
|
|
001-34568
|
|
3.1
|
|
11/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Form of common stock certificate
|
|
S-1/A
|
|
333-161907
|
|
4.15
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
Amendment and Restatement Agreement, dated March 11, 2014, among KAR Auction Services, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A., as administrative agent, swingline lender and issuing lender (the Amended and Restated Credit Agreement and the Amended and Restated Guarantee and Collateral Agreement are included as Exhibits A and B thereto, respectively)
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
*
|
Conversion Option Plan of KAR Auction Services, Inc. (formerly KAR Holdings, Inc.)
|
|
S-1/A
|
|
333-158666
|
|
10.9
|
|
6/17/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
*
|
Form of Conversion Agreement, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and certain executive officers and employees of IAA
|
|
S-1/A
|
|
333-158666
|
|
10.13
|
|
6/17/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
*
|
KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) Stock Incentive Plan
|
|
S-8
|
|
333-164032
|
|
10.1
|
|
12/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
*
|
Form of Nonqualified Stock Option Agreement of KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) pursuant to the Stock Incentive Plan
|
|
S-4
|
|
333-148847
|
|
10.15
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
*
|
Employment Agreement, dated February 27, 2012, between KAR Auction Services, Inc. and James P. Hallett
|
|
10-K
|
|
001-34568
|
|
10.15
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
*
|
Employment Agreement, dated April 13, 2015, between KAR Auction Services, Inc. and Stephane St-Hilaire
|
|
10-Q
|
|
001-34568
|
|
10.7
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
*
|
Amended and Restated Employment Agreement, dated March 24, 2014, between KAR Auction Services, Inc. and Don Gottwald
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
*
|
Employment Agreement, dated December 17, 2013, between KAR Auction Services, Inc. and Eric Loughmiller
|
|
8-K
|
|
001-34568
|
|
10.5
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
*
|
Employment Agreement, dated May 1, 2014, between KAR Auction Services, Inc. and John Kett
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
*
|
KAR Auction Services, Inc. Annual Incentive Plan Summary of Terms for Plan Year 2015
|
|
10-Q
|
|
001-34568
|
|
10.11
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12a
|
|
^
|
Amended and Restated Purchase and Sale Agreement, dated May 31, 2002, between AFC Funding Corporation and Automotive Finance Corporation
|
|
S-4
|
|
333-148847
|
|
10.32
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12b
|
|
|
Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated June 15, 2004
|
|
S-4
|
|
333-148847
|
|
10.33
|
|
1/25/2008
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12c
|
|
Amendment No. 2 to Amended and Restated Purchase and Sale Agreement, dated January 18, 2007
|
|
S-4
|
|
333-148847
|
|
10.34
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12d
|
^
|
Amendment No. 3 to Amended and Restated Purchase and Sale Agreement, dated April 20, 2007
|
|
S-4
|
|
333-148847
|
|
10.35
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12e
|
|
Amendment No. 4 to Amended and Restated Purchase and Sale Agreement, dated January 30, 2009
|
|
10-K
|
|
001-34568
|
|
10.19e
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12f
|
|
Amendment No. 5 to Amended and Restated Purchase and Sale Agreement, dated April 25, 2011
|
|
10-K
|
|
001-34568
|
|
10.19f
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
^
|
Sixth Amended and Restated Receivables Purchase Agreement, dated June 16, 2015, among AFC Funding Corporation, Automotive Finance Corporation, the entities from time to time parties hereto as Purchasers or Purchaser Agents and Bank of Montreal
|
|
10-Q
|
|
001-34568
|
|
10.13
|
|
8/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
^
|
Third Amended and Restated Receivables Purchase Agreement, dated June 16, 2015, among Automotive Finance Canada Inc., KAR Auction Services, Inc. and BNY Trust Company of Canada
|
|
10-Q
|
|
001-34568
|
|
10.14
|
|
8/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15a
|
|
Ground Lease, dated September 4, 2008, between ADESA San Diego, LLC and First Industrial L.P. (East 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.3
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial L.P. (East 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.11
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16a
|
|
Ground Lease, dated September 4, 2008, between ADESA San Diego, LLC and First Industrial L.P. (West 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.4
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial L.P. (West 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.12
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17a
|
|
Ground Lease, dated September 4, 2008, between ADESA California, LLC and ADESA San Diego, LLC and First Industrial Pennsylvania, L.P. (Sacramento, California)
|
|
8-K
|
|
333-148847
|
|
10.5
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Pennsylvania, L.P. (Sacramento, California)
|
|
8-K
|
|
333-148847
|
|
10.13
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18a
|
|
Ground Lease, dated September 4, 2008, between ADESA California, LLC and First Industrial Pennsylvania, L.P. (Tracy, California)
|
|
8-K
|
|
333-148847
|
|
10.6
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Pennsylvania, L.P. (Tracy, California)
|
|
8-K
|
|
333-148847
|
|
10.14
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19a
|
|
Ground Lease, dated September 4, 2008, between ADESA Washington, LLC and First Industrial, L.P. (Auburn, Washington)
|
|
8-K
|
|
333-148847
|
|
10.7
|
|
9/9/2008
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Auburn, Washington)
|
|
8-K
|
|
333-148847
|
|
10.15
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20a
|
|
Ground Lease, dated September 4, 2008, between ADESA Texas, Inc. and First Industrial, L.P. (Houston, Texas)
|
|
8-K
|
|
333-148847
|
|
10.8
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Houston, Texas)
|
|
8-K
|
|
333-148847
|
|
10.16
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21a
|
|
Ground Lease, dated September 4, 2008, between ADESA Florida, LLC and First Industrial Financing Partnership, L.P. (Bradenton, Florida)
|
|
8-K
|
|
333-148847
|
|
10.10
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Financing Partnership, L.P. (Bradenton, Florida)
|
|
8-K
|
|
333-148847
|
|
10.18
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22a
|
|
Ground Sublease, dated October 3, 2008, between ADESA Atlanta, LLC and First Industrial, L.P. (Fairburn, Georgia)
|
|
10-Q
|
|
333-148847
|
|
10.21
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22b
|
|
Guaranty of Lease, dated October 3, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Fairburn, Georgia)
|
|
10-Q
|
|
333-148847
|
|
10.22
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
Form of Indemnification Agreement
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24a
|
*
|
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as Amended June 10, 2014
|
|
DEF 14A
|
|
001-34568
|
|
Appendix A
|
|
4/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24b
|
*
|
First Amendment to the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25a
|
*
|
KAR Auction Services, Inc. Employee Stock Purchase Plan
|
|
S-8
|
|
333-164032
|
|
10.3
|
|
12/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25b
|
*
|
Amendment No. 1 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated March 31, 2010
|
|
10-Q
|
|
001-34568
|
|
10.60
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25c
|
*
|
Amendment No. 2 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated April 1, 2010
|
|
10-Q
|
|
001-34568
|
|
10.61
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26
|
*
|
KAR Auction Services, Inc. Directors Deferred Compensation Plan, effective December 10, 2009
|
|
10-Q
|
|
001-34568
|
|
10.62
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
*
|
Form of Director Restricted Share Agreement
|
|
10-Q
|
|
001-34568
|
|
10.63
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
*
|
Form of Nonqualified Stock Option Agreement
|
|
S-1/A
|
|
333-161907
|
|
10.65
|
|
12/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29a
|
*
|
Form of 2015 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
10-Q
|
|
001-34568
|
|
10.29a
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29b
|
*
|
Form of 2015 Restricted Stock Unit Award Agreement for non-Section 16 Officers
|
|
10-Q
|
|
001-34568
|
|
10.29b
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
*
|
Form of 2016 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
*
|
Form of Performance-Based Restricted Stock Unit Agreement (Total Shareholder Return Percentile Rank vs. S&P 500)
|
|
8-K
|
|
001-34568
|
|
10.2
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
*
|
Form of Performance-Based Restricted Stock Unit Agreement (Cumulative Adjusted Net Income Per Share)
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
*
|
Form of 2015 Performance-Based Restricted Stock Unit Agreement (Cumulative Adjusted Net Income Per Share)
|
|
10-Q
|
|
001-34568
|
|
10.32
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
*
|
Form of 2016 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
Subsidiaries of KAR Auction Services, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
^
|
Portions of this exhibit have been redacted pursuant to a request for confidential treatment filed separately with the Secretary of the Securities and Exchange Commission pursuant to Rule 406 under the Securities Act of 1933, as amended.
|
|
|
*
|
Denotes management contract or compensation plan, contract or arrangement.
|
(a)
|
Notices
. For the purposes 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 certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:
|
“Employer”
|
“Employee”
|
|
|
KAR AUCTION SERVICES, INC.
|
|
|
|
|
|
|
|
By:
/s/ Don Gottwald
|
/s/ John Kett
|
|
John Kett
|
Printed:
Don Gottwald
|
|
|
|
Title:
Chief Operating Officer
|
|
|
|
_______________________________
|
KAR AUCTION SERVICES, INC.
By: _______________________________
|
[NAME]
|
Its: _______________________________
|
Cumulative Operating Adjusted Net Income Per Share During the Measurement Period
|
Number of Restricted Stock Units Vesting
|
Below Threshold:
Below $[____]
|
0
|
Threshold:
$[____]
|
[0.5x]
|
Target:
$[____]
|
[x]
|
Maximum:
Greater than or equal to $[____]
|
[2x]
|
_______________________________
|
KAR AUCTION SERVICES, INC.
By: _______________________________
|
[NAME]
|
Its: _______________________________
|
Name
|
|
State or Jurisdiction of Incorporation or Organization
|
|
ADESA, Inc.
|
|
Delaware
|
|
ADESA Corporation, LLC
|
|
Indiana
|
|
A.D.E. of Ark-La-Tex, Inc.
|
|
Louisiana
|
|
A.D.E. of Knoxville, LLC
|
|
Tennessee
|
|
ADESA Ark-La-Tex, LLC
|
|
Louisiana
|
|
ADESA Arkansas, LLC
|
|
Delaware
|
|
ADESA Atlanta, LLC
|
|
New Jersey
|
|
ADESA Birmingham, LLC
|
|
Alabama
|
|
ADESA California, LLC
|
|
California
|
|
ADESA Charlotte, LLC
|
|
North Carolina
|
|
ADESA Colorado, LLC
|
|
Colorado
|
|
ADESA Dealer Services, LLC
|
|
Indiana
|
|
ADESA Des Moines, LLC
|
|
Iowa
|
|
ADESA Florida, LLC
|
|
Florida
|
|
ADESA Illinois, LLC
|
|
Illinois
|
|
ADESA Impact Texas, LLC
|
|
Texas
|
|
ADESA Indianapolis, LLC
|
|
Indiana
|
|
ADESA Lansing, LLC
|
|
Michigan
|
|
ADESA Lexington, LLC
|
|
Kentucky
|
|
ADESA Mexico, LLC
|
|
Indiana
|
|
ADESA Minnesota, LLC
|
|
Minnesota
|
|
ADESA Missouri, LLC
|
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Missouri
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ADESA Nevada, LLC
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Nevada
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ADESA New Jersey, LLC
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New Jersey
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ADESA New York, LLC
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New York
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ADESA Ohio, LLC
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Ohio
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ADESA Oklahoma, LLC
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Oklahoma
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ADESA Pennsylvania, LLC
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Pennsylvania
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ADESA Phoenix, LLC
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New Jersey
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ADESA San Diego, LLC
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California
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ADESA- South Florida, LLC
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Indiana
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ADESA Texas, Inc.
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Texas
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ADESA Virginia, LLC
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Virginia
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ADESA Wisconsin, LLC
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Wisconsin
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AFC CAL, LLC
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California
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Asset Holdings III, L.P.
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Ohio
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Auto Dealers Exchange of Concord, LLC
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Massachusetts
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Auto Dealers Exchange of Memphis, LLC
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Tennessee
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Automotive Finance Consumer Division, LLC
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Indiana
|
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Automotive Finance Corporation
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|
Indiana
|
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Automotive Recovery Services, Inc.
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Indiana
|
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AUTONIQ, LLC
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Virginia
|
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AutoVIN, Inc.
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Indiana
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Name
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State or Jurisdiction of Incorporation or Organization
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MobileTrac LLC
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Delaware
|
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PAR, Inc.
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Indiana
|
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Axle Holdings, Inc.
|
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Delaware
|
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Axle Holdings Acquisition Company, LLC
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Delaware
|
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Insurance Auto Auctions, Inc.
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Illinois
|
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Insurance Auto Auctions Corp.
|
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Delaware
|
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Insurance Auto Auctions Tennessee LLC
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Tennessee
|
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Insurance Auto Auctions of Georgia LLC
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Georgia
|
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IAA Acquisition Corp.
|
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Delaware
|
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IAA Services, Inc.
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Illinois
|
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Auto Disposal Systems, Inc.
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Ohio
|
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ADS Ashland LLC
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Ohio
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ADS Priority Transport Ltd.
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Ohio
|
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High Tech National, LLC
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Indiana
|
|
HT Locksmiths, Inc.
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Indiana
|
|
Sioux Falls Auto Auction, Inc.
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South Dakota
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Tri-State Auction Co., Inc.
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North Dakota
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Zabel & Associates, Inc.
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North Dakota
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LiveBlock Auctions International, Inc.
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Nevada
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LiveBlock Auctions Canada Ltd.
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Saskatchewan
|
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WFEA Holdings, Inc.
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Alberta
|
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CarBuyCo, LLC
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North Carolina
|
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AFC Funding Corporation
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Indiana
|
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AuctionTrac, LLC
|
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Indiana
|
|
OPENLANE, Inc.
|
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Delaware
|
|
CarsArrive Network, Inc.
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Georgia
|
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Recovery Database Network, Inc.
|
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Delaware
|
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OPENLANE Canada Co.
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Nova Scotia
|
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OPENLANE Canada Inc.
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Ontario
|
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NEPO Auto Centre, Inc.
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Ontario
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Auction Vehicles of Mexico, S. de R.L. de C.V.
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Federal District of Mexico
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Adesur S. de R.L. de C.V.
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Federal District of Mexico
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2540-0714 Quebec Inc.
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Quebec
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504811 NB Ltd.
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New Brunswick
|
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51937 Newfoundland & Labrador Limited
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Newfoundland
|
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79378 Manitoba Inc.
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Manitoba
|
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ADESA Auctions Canada Corporation
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Nova Scotia
|
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ADESA Montreal Corporation
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Nova Scotia
|
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ADESA Quebec Corporation
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Quebec
|
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ADESA Remarketing Services Inc.
|
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Ontario
|
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AutoVIN Canada Inc.
|
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Nova Scotia
|
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Automotive Finance Canada Inc.
|
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Ontario
|
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Impact Auto Auctions Ltd.
|
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Ontario
|
|
Impact Auto Auctions Sudbury Ltd.
|
|
Ontario
|
|
Suburban Auto Parts Inc.
|
|
Ontario
|
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ADESA (UK) Limited
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United Kingdom
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1st Interactive Design Limited
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United Kingdom
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Name
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State or Jurisdiction of Incorporation or Organization
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HBCR LIMITED
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United Kingdom
|
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Holding & Barnes PLC
|
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United Kingdom
|
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Holding & Barnes (C.I.) Limited
|
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United Kingdom
|
|
Preferred Warranties, Inc.
|
|
Pennsylvania
|
|
Preferred Nationwide Reinsurance Company, Ltd.
|
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Turks and Caicos
|
|
Preferred Warranties of Florida, Inc.
|
|
Florida
|
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Warranty Financing Corporation
|
|
Pennsylvania
|
|
PWI Holdings, Inc.
|
|
Pennsylvania
|
|
Superior Warranties, Inc.
|
|
Pennsylvania
|
|
Automotive Key Controls, LLC
|
|
Indiana
|
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1)
|
I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
|
1)
|
The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2)
|
the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2)
|
the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
|