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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2016
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OR
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o
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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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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
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Smaller reporting company
o
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Page
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2016
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2015
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2016
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2015
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Operating revenues
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ADESA Auction Services
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$
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434.1
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$
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345.0
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$
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835.6
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$
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673.0
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IAA Salvage Services
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264.8
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248.6
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534.4
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486.6
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AFC
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72.9
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64.7
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146.8
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131.1
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Total operating revenues
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771.8
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658.3
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1,516.8
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1,290.7
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Operating expenses
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Cost of services (exclusive of depreciation and amortization)
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430.9
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366.5
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849.6
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718.6
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Selling, general and administrative
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146.9
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123.5
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288.0
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245.0
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Depreciation and amortization
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59.0
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51.8
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115.4
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102.7
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Total operating expenses
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636.8
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541.8
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1,253.0
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1,066.3
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Operating profit
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135.0
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116.5
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263.8
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224.4
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Interest expense
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35.8
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21.8
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64.5
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42.8
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Other (income) expense, net
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(0.3
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)
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0.4
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(1.6
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)
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(1.8
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)
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Loss on extinguishment of debt
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—
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—
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4.0
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—
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Income before income taxes
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99.5
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94.3
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196.9
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183.4
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Income taxes
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37.7
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34.8
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74.4
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69.4
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Net income
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$
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61.8
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$
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59.5
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$
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122.5
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$
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114.0
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Net income per share
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Basic
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$
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0.45
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$
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0.42
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$
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0.89
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$
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0.81
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Diluted
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$
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0.44
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$
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0.41
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$
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0.88
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$
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0.79
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Dividends declared per common share
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$
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0.29
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$
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0.27
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$
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0.58
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$
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0.54
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2016
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2015
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2016
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2015
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Net income
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$
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61.8
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$
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59.5
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$
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122.5
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$
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114.0
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Other comprehensive income (loss)
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Foreign currency translation gain (loss)
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(4.4
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)
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3.1
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4.3
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(15.2
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)
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Comprehensive income
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$
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57.4
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$
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62.6
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$
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126.8
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$
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98.8
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June 30,
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December 31,
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2016
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2015
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Assets
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Current assets
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Cash and cash equivalents
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$
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314.7
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$
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155.0
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Restricted cash
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15.0
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16.2
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Trade receivables, net of allowances of $8.3 and $6.6
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721.4
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511.9
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Finance receivables, net of allowances $9.5 and $9.0
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1,729.1
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1,632.0
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Other current assets
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131.5
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131.0
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Total current assets
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2,911.7
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2,446.1
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Other assets
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Goodwill
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2,006.0
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1,795.9
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Customer relationships, net of accumulated amortization of $666.1 and $619.3
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487.8
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417.7
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Other intangible assets, net of accumulated amortization of $273.4 and $258.1
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319.4
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310.8
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Other assets
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35.2
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34.1
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Total other assets
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2,848.4
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2,558.5
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Property and equipment, net of accumulated depreciation of $613.0 and $569.6
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808.3
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766.9
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Total assets
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$
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6,568.4
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$
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5,771.5
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June 30,
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December 31,
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2016
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2015
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Liabilities and Stockholders' Equity
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Current liabilities
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Accounts payable
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$
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749.2
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$
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608.4
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Accrued employee benefits and compensation expenses
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80.3
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90.9
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Accrued interest
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1.0
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0.8
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Other accrued expenses
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147.0
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128.4
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Income taxes payable
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2.3
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5.3
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Dividends payable
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40.0
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37.2
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Obligations collateralized by finance receivables
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1,231.2
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1,189.0
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Current maturities of long-term debt
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24.7
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153.9
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Total current liabilities
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2,275.7
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2,213.9
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Non-current liabilities
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Long-term debt
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2,378.3
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1,711.2
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Deferred income tax liabilities
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294.2
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300.8
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Other liabilities
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160.9
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159.5
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Total non-current liabilities
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2,833.4
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2,171.5
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Commitments and contingencies (Note 8)
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Stockholders' equity
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Preferred stock, $0.01 par value:
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Authorized shares: 100,000,000
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Issued shares: none
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—
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—
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Common stock, $0.01 par value:
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Authorized shares: 400,000,000
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Issued and outstanding shares:
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June 30, 2016: 137,914,256
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December 31, 2015: 137,795,296
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1.4
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1.4
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Additional paid-in capital
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1,433.9
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1,407.6
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Retained earnings
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59.9
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17.3
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Accumulated other comprehensive loss
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(35.9
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)
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(40.2
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)
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Total stockholders' equity
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1,459.3
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1,386.1
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Total liabilities and stockholders' equity
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$
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6,568.4
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$
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5,771.5
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Common
Stock
Shares
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Common
Stock
Amount
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Additional
Paid-In
Capital
|
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Retained Earnings
|
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Accumulated
Other
Comprehensive
Loss
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Total
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|||||||||||
Balance at December 31, 2015
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137.8
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$
|
1.4
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|
$
|
1,407.6
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$
|
17.3
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$
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(40.2
|
)
|
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$
|
1,386.1
|
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Net income
|
|
|
|
|
|
|
|
122.5
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|
|
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|
122.5
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Other comprehensive income
|
|
|
|
|
|
|
|
|
|
4.3
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|
|
4.3
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||||||||
Issuance of common stock under stock plans
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0.9
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10.6
|
|
|
|
|
|
|
10.6
|
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||||||||
Stock-based compensation expense
|
|
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|
|
9.8
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|
|
|
|
|
9.8
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Excess tax benefit from stock-based compensation
|
|
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|
|
|
5.8
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|
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|
|
5.8
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Repurchase and retirement of common stock
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(0.8
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)
|
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—
|
|
|
|
|
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—
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|
||||||||
Dividends earned under stock plans
|
|
|
|
|
0.1
|
|
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(0.1
|
)
|
|
|
|
—
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|
||||||||
Cash dividends declared to stockholders ($0.58 per share)
|
|
|
|
|
|
|
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(79.8
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)
|
|
|
|
(79.8
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)
|
||||||||
Balance at June 30, 2016
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137.9
|
|
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$
|
1.4
|
|
|
$
|
1,433.9
|
|
|
$
|
59.9
|
|
|
$
|
(35.9
|
)
|
|
$
|
1,459.3
|
|
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Six Months Ended
June 30, |
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2016
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|
2015
|
||||
Operating activities
|
|
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|
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Net income
|
$
|
122.5
|
|
|
$
|
114.0
|
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
115.4
|
|
|
102.7
|
|
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Provision for credit losses
|
13.8
|
|
|
9.1
|
|
||
Deferred income taxes
|
(7.2
|
)
|
|
(9.1
|
)
|
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Amortization of debt issuance costs
|
4.2
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|
|
3.4
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Stock-based compensation
|
9.8
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|
5.8
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Excess tax benefit from stock-based compensation
|
(5.8
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)
|
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(5.0
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)
|
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Loss on extinguishment of debt
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4.0
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—
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Other non-cash, net
|
3.5
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|
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1.6
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|
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Changes in operating assets and liabilities, net of acquisitions:
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||||
Trade receivables and other assets
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(207.3
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)
|
|
(139.3
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)
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Accounts payable and accrued expenses
|
106.0
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|
|
117.3
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|
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Net cash provided by operating activities
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158.9
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|
|
200.5
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|
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Investing activities
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Net increase in finance receivables held for investment
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(103.5
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)
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(118.2
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)
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Acquisition of businesses, net of cash acquired
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(353.3
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)
|
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(115.1
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)
|
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Purchases of property, equipment and computer software
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(75.5
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)
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(64.2
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)
|
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Proceeds from the sale of property and equipment
|
—
|
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|
0.1
|
|
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Decrease in restricted cash
|
1.2
|
|
|
0.6
|
|
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Net cash used by investing activities
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(531.1
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)
|
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(296.8
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)
|
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Financing activities
|
|
|
|
||||
Net increase in book overdrafts
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36.9
|
|
|
30.5
|
|
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Net decrease in borrowings from lines of credit
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(140.0
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)
|
|
—
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|
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Net increase in obligations collateralized by finance receivables
|
34.8
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|
|
234.9
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Proceeds from long-term debt
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1,336.5
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|
|
—
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|
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Payments for debt issuance costs/amendments
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(19.5
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)
|
|
(10.8
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)
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Payments on long-term debt
|
(646.4
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)
|
|
(8.8
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)
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Payments on capital leases
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(11.7
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)
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|
(9.6
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)
|
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Payments of contingent consideration and deferred acquisition costs
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(3.6
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)
|
|
(1.2
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)
|
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Issuance of common stock under stock plans
|
10.6
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|
|
14.0
|
|
||
Excess tax benefit from stock-based compensation
|
5.8
|
|
|
5.0
|
|
||
Repurchase and retirement of common stock
|
—
|
|
|
(22.1
|
)
|
||
Dividends paid to stockholders
|
(77.0
|
)
|
|
(76.5
|
)
|
||
Net cash provided by financing activities
|
526.4
|
|
|
155.4
|
|
||
Effect of exchange rate changes on cash
|
5.5
|
|
|
(7.2
|
)
|
||
Net increase in cash and cash equivalents
|
159.7
|
|
|
51.9
|
|
||
Cash and cash equivalents at beginning of period
|
155.0
|
|
|
152.9
|
|
||
Cash and cash equivalents at end of period
|
$
|
314.7
|
|
|
$
|
204.8
|
|
Cash paid for interest
|
$
|
58.0
|
|
|
$
|
38.0
|
|
Cash paid for taxes, net of refunds
|
$
|
68.4
|
|
|
$
|
72.3
|
|
•
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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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"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") and GRS Remarketing Limited ("GRS");
|
•
|
"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.;
|
•
|
"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, as amended on March 9, 2016;
|
•
|
"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"), the
seven
-year senior secured term loan B-3 facility ("Term Loan B-3"), the
$300 million
,
five
-year senior secured revolving credit facility (the "revolving credit facility") and the
$250 million
,
five
-year senior secured revolving credit facility (the "old revolving credit facility"), the terms of which are set forth in the Credit Agreement. Term Loan B-1 and the old revolving credit facility were extinguished in March 2016 with proceeds received from Term Loan B-3;
|
•
|
"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"); and
|
•
|
"KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries.
|
|
Originally Reported
|
|
Reclassified
|
|
As Adjusted
|
||||||
Unamortized debt issuance costs
|
$
|
20.3
|
|
|
$
|
(20.3
|
)
|
|
$
|
—
|
|
Obligations collateralized by finance receivables
|
1,201.2
|
|
|
(12.2
|
)
|
|
1,189.0
|
|
|||
Long-term debt
|
1,719.3
|
|
|
(8.1
|
)
|
|
1,711.2
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
PRSUs
|
$
|
2.6
|
|
|
$
|
1.7
|
|
|
$
|
5.7
|
|
|
$
|
3.0
|
|
RSUs
|
1.5
|
|
|
0.7
|
|
|
3.0
|
|
|
1.1
|
|
||||
Service options
|
0.5
|
|
|
0.8
|
|
|
1.1
|
|
|
1.7
|
|
||||
Total stock-based compensation expense
|
$
|
4.6
|
|
|
$
|
3.2
|
|
|
$
|
9.8
|
|
|
$
|
5.8
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
61.8
|
|
|
$
|
59.5
|
|
|
$
|
122.5
|
|
|
$
|
114.0
|
|
Weighted average common shares outstanding
|
137.6
|
|
|
141.8
|
|
|
137.4
|
|
|
141.6
|
|
||||
Effect of dilutive stock options and restricted stock awards
|
1.7
|
|
|
2.3
|
|
|
1.7
|
|
|
2.4
|
|
||||
Weighted average common shares outstanding and potential common shares
|
139.3
|
|
|
144.1
|
|
|
139.1
|
|
|
144.0
|
|
||||
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.45
|
|
|
$
|
0.42
|
|
|
$
|
0.89
|
|
|
$
|
0.81
|
|
Diluted
|
$
|
0.44
|
|
|
$
|
0.41
|
|
|
$
|
0.88
|
|
|
$
|
0.79
|
|
|
June 30, 2016
|
|
Net Credit Losses
Three Months Ended
June 30, 2016
|
|
Net Credit Losses
Six Months Ended
June 30, 2016
|
||||||||||
|
Principal Amount of:
|
|
|
||||||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|
||||||||||
Floorplan receivables
|
$
|
1,730.1
|
|
|
$
|
8.8
|
|
|
$
|
5.3
|
|
|
$
|
10.6
|
|
Other loans
|
8.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total receivables managed
|
$
|
1,738.6
|
|
|
$
|
8.8
|
|
|
$
|
5.3
|
|
|
$
|
10.6
|
|
|
December 31, 2015
|
|
Net Credit Losses
Three Months Ended
June 30, 2015
|
|
Net Credit Losses
Six Months Ended
June 30, 2015
|
||||||||||
|
Principal Amount of:
|
|
|
||||||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|
||||||||||
Floorplan receivables
|
$
|
1,635.5
|
|
|
$
|
7.0
|
|
|
$
|
4.1
|
|
|
$
|
7.3
|
|
Other loans
|
5.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total receivables managed
|
$
|
1,641.0
|
|
|
$
|
7.0
|
|
|
$
|
4.1
|
|
|
$
|
7.3
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Obligations collateralized by finance receivables, gross
|
$
|
1,241.7
|
|
|
$
|
1,201.2
|
|
Unamortized securitization issuance costs
|
(10.5
|
)
|
|
(12.2
|
)
|
||
Obligations collateralized by finance receivables
|
$
|
1,231.2
|
|
|
$
|
1,189.0
|
|
|
Interest Rate *
|
|
Maturity
|
|
June 30,
2016 |
|
December 31,
2015 |
||||||
Term Loan B-1
|
LIBOR
|
|
+ 2.50%
|
|
March 11, 2017
|
|
$
|
—
|
|
|
$
|
637.2
|
|
Term Loan B-2
|
Adjusted LIBOR
|
|
+ 3.1875%
|
|
March 11, 2021
|
|
1,092.2
|
|
|
1,098.0
|
|
||
Term Loan B-3
|
Adjusted LIBOR
|
|
+ 3.50%
|
|
March 9, 2023
|
|
1,346.6
|
|
|
—
|
|
||
Revolving credit facility
|
Adjusted LIBOR
|
|
+ 2.50%
|
|
March 9, 2021
|
|
—
|
|
|
—
|
|
||
Old revolving credit facility
|
LIBOR
|
|
+ 2.25%
|
|
March 11, 2019
|
|
—
|
|
|
140.0
|
|
||
Canadian line of credit
|
CAD Prime
|
|
+ 0.50%
|
|
Repayable upon demand
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
|
|
|
|
|
2,438.8
|
|
|
1,875.2
|
|
||
Unamortized debt issuance costs/discounts
|
|
|
|
|
|
(35.8
|
)
|
|
(10.1
|
)
|
|||
Current portion of long-term debt
|
|
|
|
|
|
|
(24.7
|
)
|
|
(153.9
|
)
|
||
Long-term debt
|
|
|
|
|
|
|
$
|
2,378.3
|
|
|
$
|
1,711.2
|
|
•
|
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.
|
|
|
Asset Derivatives
|
||||||||||
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
2015 Interest rate caps
|
|
Other assets
|
|
$
|
—
|
|
|
Other assets
|
|
$
|
0.7
|
|
|
|
Location of Gain / (Loss) Recognized in Income on Derivatives
|
|
Amount of Gain / (Loss)
Recognized in Income on Derivatives
|
|||||||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||||
2015 Interest rate caps
|
|
Interest expense
|
|
$
|
(0.1
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(0.2
|
)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Foreign currency translation loss
|
$
|
(36.0
|
)
|
|
$
|
(40.3
|
)
|
Unrealized gain on postretirement benefit obligation, net of tax
|
0.1
|
|
|
0.1
|
|
||
Accumulated other comprehensive loss
|
$
|
(35.9
|
)
|
|
$
|
(40.2
|
)
|
|
ADESA
Auctions |
|
IAA
|
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
434.1
|
|
|
$
|
264.8
|
|
|
$
|
72.9
|
|
|
$
|
—
|
|
|
$
|
771.8
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
242.5
|
|
|
167.3
|
|
|
21.1
|
|
|
—
|
|
|
430.9
|
|
|||||
Selling, general and administrative
|
80.6
|
|
|
26.5
|
|
|
7.3
|
|
|
32.5
|
|
|
146.9
|
|
|||||
Depreciation and amortization
|
24.8
|
|
|
21.2
|
|
|
7.9
|
|
|
5.1
|
|
|
59.0
|
|
|||||
Total operating expenses
|
347.9
|
|
|
215.0
|
|
|
36.3
|
|
|
37.6
|
|
|
636.8
|
|
|||||
Operating profit (loss)
|
86.2
|
|
|
49.8
|
|
|
36.6
|
|
|
(37.6
|
)
|
|
135.0
|
|
|||||
Interest expense
|
0.1
|
|
|
—
|
|
|
8.2
|
|
|
27.5
|
|
|
35.8
|
|
|||||
Other (income) expense, net
|
(0.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
0.3
|
|
|
(0.3
|
)
|
|||||
Intercompany expense (income)
|
13.3
|
|
|
9.6
|
|
|
(8.6
|
)
|
|
(14.3
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
73.3
|
|
|
40.3
|
|
|
37.0
|
|
|
(51.1
|
)
|
|
99.5
|
|
|||||
Income taxes
|
27.1
|
|
|
15.1
|
|
|
14.0
|
|
|
(18.5
|
)
|
|
37.7
|
|
|||||
Net income (loss)
|
$
|
46.2
|
|
|
$
|
25.2
|
|
|
$
|
23.0
|
|
|
$
|
(32.6
|
)
|
|
$
|
61.8
|
|
Total assets
|
$
|
3,049.7
|
|
|
$
|
1,276.3
|
|
|
$
|
2,155.8
|
|
|
$
|
86.6
|
|
|
$
|
6,568.4
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
345.0
|
|
|
$
|
248.6
|
|
|
$
|
64.7
|
|
|
$
|
—
|
|
|
$
|
658.3
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
191.8
|
|
|
155.1
|
|
|
19.6
|
|
|
—
|
|
|
366.5
|
|
|||||
Selling, general and administrative
|
67.5
|
|
|
24.9
|
|
|
6.9
|
|
|
24.2
|
|
|
123.5
|
|
|||||
Depreciation and amortization
|
21.3
|
|
|
19.4
|
|
|
7.7
|
|
|
3.4
|
|
|
51.8
|
|
|||||
Total operating expenses
|
280.6
|
|
|
199.4
|
|
|
34.2
|
|
|
27.6
|
|
|
541.8
|
|
|||||
Operating profit (loss)
|
64.4
|
|
|
49.2
|
|
|
30.5
|
|
|
(27.6
|
)
|
|
116.5
|
|
|||||
Interest expense
|
0.2
|
|
|
—
|
|
|
5.5
|
|
|
16.1
|
|
|
21.8
|
|
|||||
Other (income) expense, net
|
0.3
|
|
|
0.4
|
|
|
—
|
|
|
(0.3
|
)
|
|
0.4
|
|
|||||
Intercompany expense (income)
|
14.4
|
|
|
9.6
|
|
|
(5.2
|
)
|
|
(18.8
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
49.5
|
|
|
39.2
|
|
|
30.2
|
|
|
(24.6
|
)
|
|
94.3
|
|
|||||
Income taxes
|
17.5
|
|
|
14.6
|
|
|
11.5
|
|
|
(8.8
|
)
|
|
34.8
|
|
|||||
Net income (loss)
|
$
|
32.0
|
|
|
$
|
24.6
|
|
|
$
|
18.7
|
|
|
$
|
(15.8
|
)
|
|
$
|
59.5
|
|
Total assets
|
$
|
2,534.1
|
|
|
$
|
1,256.8
|
|
|
$
|
1,874.4
|
|
|
$
|
65.7
|
|
|
$
|
5,731.0
|
|
|
ADESA
Auctions |
|
IAA
|
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
835.6
|
|
|
$
|
534.4
|
|
|
$
|
146.8
|
|
|
$
|
—
|
|
|
$
|
1,516.8
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
467.6
|
|
|
340.8
|
|
|
41.2
|
|
|
—
|
|
|
849.6
|
|
|||||
Selling, general and administrative
|
157.2
|
|
|
52.2
|
|
|
14.8
|
|
|
63.8
|
|
|
288.0
|
|
|||||
Depreciation and amortization
|
47.3
|
|
|
42.5
|
|
|
15.6
|
|
|
10.0
|
|
|
115.4
|
|
|||||
Total operating expenses
|
672.1
|
|
|
435.5
|
|
|
71.6
|
|
|
73.8
|
|
|
1,253.0
|
|
|||||
Operating profit (loss)
|
163.5
|
|
|
98.9
|
|
|
75.2
|
|
|
(73.8
|
)
|
|
263.8
|
|
|||||
Interest expense
|
0.2
|
|
|
—
|
|
|
16.0
|
|
|
48.3
|
|
|
64.5
|
|
|||||
Other (income) expense, net
|
(1.1
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(1.6
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|
4.0
|
|
|||||
Intercompany expense (income)
|
28.5
|
|
|
19.2
|
|
|
(16.4
|
)
|
|
(31.3
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
135.9
|
|
|
80.1
|
|
|
75.6
|
|
|
(94.7
|
)
|
|
196.9
|
|
|||||
Income taxes
|
50.4
|
|
|
30.0
|
|
|
28.6
|
|
|
(34.6
|
)
|
|
74.4
|
|
|||||
Net income (loss)
|
$
|
85.5
|
|
|
$
|
50.1
|
|
|
$
|
47.0
|
|
|
$
|
(60.1
|
)
|
|
$
|
122.5
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
673.0
|
|
|
$
|
486.6
|
|
|
$
|
131.1
|
|
|
$
|
—
|
|
|
$
|
1,290.7
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
378.9
|
|
|
301.7
|
|
|
38.0
|
|
|
—
|
|
|
718.6
|
|
|||||
Selling, general and administrative
|
136.0
|
|
|
47.0
|
|
|
14.0
|
|
|
48.0
|
|
|
245.0
|
|
|||||
Depreciation and amortization
|
41.5
|
|
|
39.0
|
|
|
15.5
|
|
|
6.7
|
|
|
102.7
|
|
|||||
Total operating expenses
|
556.4
|
|
|
387.7
|
|
|
67.5
|
|
|
54.7
|
|
|
1,066.3
|
|
|||||
Operating profit (loss)
|
116.6
|
|
|
98.9
|
|
|
63.6
|
|
|
(54.7
|
)
|
|
224.4
|
|
|||||
Interest expense
|
0.4
|
|
|
—
|
|
|
10.6
|
|
|
31.8
|
|
|
42.8
|
|
|||||
Other (income) expense, net
|
(0.3
|
)
|
|
0.2
|
|
|
(1.5
|
)
|
|
(0.2
|
)
|
|
(1.8
|
)
|
|||||
Intercompany expense (income)
|
29.6
|
|
|
19.2
|
|
|
(9.5
|
)
|
|
(39.3
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
86.9
|
|
|
79.5
|
|
|
64.0
|
|
|
(47.0
|
)
|
|
183.4
|
|
|||||
Income taxes
|
32.4
|
|
|
29.9
|
|
|
24.3
|
|
|
(17.2
|
)
|
|
69.4
|
|
|||||
Net income (loss)
|
$
|
54.5
|
|
|
$
|
49.6
|
|
|
$
|
39.7
|
|
|
$
|
(29.8
|
)
|
|
$
|
114.0
|
|
•
|
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.
|
•
|
The ADESA Auctions segment serves a domestic and international customer base through live and online auctions and through
76
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. ADESA also includes GRS, an online vehicle remarketing business in the United Kingdom.
|
•
|
The IAA segment serves a domestic and international customer base through live and online auctions and through
173
salvage vehicle auction sites in the United States and Canada at
June 30, 2016
. IAA also includes HBC Vehicle Services ("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
June 30, 2016
, AFC conducted business at
123
locations in the United States and Canada. The Company also sells vehicle service contracts through Preferred Warranties, Inc. ("PWI").
|
|
Three Months Ended
June 30, |
||||||
(Dollars in millions except per share amounts)
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
434.1
|
|
|
$
|
345.0
|
|
IAA
|
264.8
|
|
|
248.6
|
|
||
AFC
|
72.9
|
|
|
64.7
|
|
||
Total revenues
|
771.8
|
|
|
658.3
|
|
||
Cost of services*
|
430.9
|
|
|
366.5
|
|
||
Gross profit*
|
340.9
|
|
|
291.8
|
|
||
Selling, general and administrative
|
146.9
|
|
|
123.5
|
|
||
Depreciation and amortization
|
59.0
|
|
|
51.8
|
|
||
Operating profit
|
135.0
|
|
|
116.5
|
|
||
Interest expense
|
35.8
|
|
|
21.8
|
|
||
Other (income) expense, net
|
(0.3
|
)
|
|
0.4
|
|
||
Income before income taxes
|
99.5
|
|
|
94.3
|
|
||
Income taxes
|
37.7
|
|
|
34.8
|
|
||
Net income
|
$
|
61.8
|
|
|
$
|
59.5
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
0.45
|
|
|
$
|
0.42
|
|
Diluted
|
$
|
0.44
|
|
|
$
|
0.41
|
|
|
Three Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
ADESA revenue
|
$
|
434.1
|
|
|
$
|
345.0
|
|
Cost of services*
|
242.5
|
|
|
191.8
|
|
||
Gross profit*
|
191.6
|
|
|
153.2
|
|
||
Selling, general and administrative
|
80.6
|
|
|
67.5
|
|
||
Depreciation and amortization
|
24.8
|
|
|
21.3
|
|
||
Operating profit
|
$
|
86.2
|
|
|
$
|
64.4
|
|
|
Three Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
IAA revenue
|
$
|
264.8
|
|
|
$
|
248.6
|
|
Cost of services*
|
167.3
|
|
|
155.1
|
|
||
Gross profit*
|
97.5
|
|
|
93.5
|
|
||
Selling, general and administrative
|
26.5
|
|
|
24.9
|
|
||
Depreciation and amortization
|
21.2
|
|
|
19.4
|
|
||
Operating profit
|
$
|
49.8
|
|
|
$
|
49.2
|
|
|
Three Months Ended
June 30, |
||||||
(Dollars in millions except volumes and per loan amounts)
|
2016
|
|
2015
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
67.7
|
|
|
$
|
59.6
|
|
Other revenue
|
2.6
|
|
|
2.4
|
|
||
Provision for credit losses
|
(5.5
|
)
|
|
(4.3
|
)
|
||
Other service revenue
|
8.1
|
|
|
7.0
|
|
||
Total AFC revenue
|
72.9
|
|
|
64.7
|
|
||
Cost of services*
|
21.1
|
|
|
19.6
|
|
||
Gross profit*
|
51.8
|
|
|
45.1
|
|
||
Selling, general and administrative
|
7.3
|
|
|
6.9
|
|
||
Depreciation and amortization
|
7.9
|
|
|
7.7
|
|
||
Operating profit
|
$
|
36.6
|
|
|
$
|
30.5
|
|
Loan transactions
|
421,527
|
|
|
381,675
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
154
|
|
|
$
|
151
|
|
|
Three Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Selling, general and administrative
|
$
|
32.5
|
|
|
$
|
24.2
|
|
Depreciation and amortization
|
5.1
|
|
|
3.4
|
|
||
Operating loss
|
$
|
(37.6
|
)
|
|
$
|
(27.6
|
)
|
|
Six Months Ended
June 30, |
||||||
(Dollars in millions except per share amounts)
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
835.6
|
|
|
$
|
673.0
|
|
IAA
|
534.4
|
|
|
486.6
|
|
||
AFC
|
146.8
|
|
|
131.1
|
|
||
Total revenues
|
1,516.8
|
|
|
1,290.7
|
|
||
Cost of services*
|
849.6
|
|
|
718.6
|
|
||
Gross profit*
|
667.2
|
|
|
572.1
|
|
||
Selling, general and administrative
|
288.0
|
|
|
245.0
|
|
||
Depreciation and amortization
|
115.4
|
|
|
102.7
|
|
||
Operating profit
|
263.8
|
|
|
224.4
|
|
||
Interest expense
|
64.5
|
|
|
42.8
|
|
||
Other income, net
|
(1.6
|
)
|
|
(1.8
|
)
|
||
Loss on extinguishment of debt
|
4.0
|
|
|
—
|
|
||
Income before income taxes
|
196.9
|
|
|
183.4
|
|
||
Income taxes
|
74.4
|
|
|
69.4
|
|
||
Net income
|
$
|
122.5
|
|
|
$
|
114.0
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
0.89
|
|
|
$
|
0.81
|
|
Diluted
|
$
|
0.88
|
|
|
$
|
0.79
|
|
|
Six Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
ADESA revenue
|
$
|
835.6
|
|
|
$
|
673.0
|
|
Cost of services*
|
467.6
|
|
|
378.9
|
|
||
Gross profit*
|
368.0
|
|
|
294.1
|
|
||
Selling, general and administrative
|
157.2
|
|
|
136.0
|
|
||
Depreciation and amortization
|
47.3
|
|
|
41.5
|
|
||
Operating profit
|
$
|
163.5
|
|
|
$
|
116.6
|
|
|
Six Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
IAA revenue
|
$
|
534.4
|
|
|
$
|
486.6
|
|
Cost of services*
|
340.8
|
|
|
301.7
|
|
||
Gross profit*
|
193.6
|
|
|
184.9
|
|
||
Selling, general and administrative
|
52.2
|
|
|
47.0
|
|
||
Depreciation and amortization
|
42.5
|
|
|
39.0
|
|
||
Operating profit
|
$
|
98.9
|
|
|
$
|
98.9
|
|
|
Six Months Ended
June 30, |
||||||
(Dollars in millions except volumes and per loan amounts)
|
2016
|
|
2015
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
137.1
|
|
|
$
|
120.7
|
|
Other revenue
|
5.0
|
|
|
4.5
|
|
||
Provision for credit losses
|
(11.0
|
)
|
|
(7.8
|
)
|
||
Other service revenue
|
15.7
|
|
|
13.7
|
|
||
Total AFC revenue
|
146.8
|
|
|
131.1
|
|
||
Cost of services*
|
41.2
|
|
|
38.0
|
|
||
Gross profit*
|
105.6
|
|
|
93.1
|
|
||
Selling, general and administrative
|
14.8
|
|
|
14.0
|
|
||
Depreciation and amortization
|
15.6
|
|
|
15.5
|
|
||
Operating profit
|
$
|
75.2
|
|
|
$
|
63.6
|
|
Loan transactions
|
875,077
|
|
|
793,357
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
150
|
|
|
$
|
148
|
|
|
Six Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Selling, general and administrative
|
$
|
63.8
|
|
|
$
|
48.0
|
|
Depreciation and amortization
|
10.0
|
|
|
6.7
|
|
||
Operating loss
|
$
|
(73.8
|
)
|
|
$
|
(54.7
|
)
|
(Dollars in millions)
|
June 30,
2016 |
|
December 31,
2015 |
|
June 30,
2015 |
||||||
Cash and cash equivalents
|
$
|
314.7
|
|
|
$
|
155.0
|
|
|
$
|
204.8
|
|
Restricted cash
|
15.0
|
|
|
16.2
|
|
|
16.4
|
|
|||
Working capital
|
636.0
|
|
|
232.2
|
|
|
420.2
|
|
|||
Amounts available under Credit Facility*
|
300.0
|
|
|
110.0
|
|
|
250.0
|
|
|||
Cash flow from operations for the six months ended
|
158.9
|
|
|
|
|
200.5
|
|
*
|
There were related outstanding letters of credit totaling approximately
$29.7 million
, $28.0 million and $28.6 million at
June 30, 2016
,
December 31, 2015
and
June 30, 2015
, respectively, which reduced the amount available for borrowings under the revolving credit facility.
|
|
Three Months Ended June 30, 2016
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
46.2
|
|
|
$
|
25.2
|
|
|
$
|
23.0
|
|
|
$
|
(32.6
|
)
|
|
$
|
61.8
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
27.1
|
|
|
15.1
|
|
|
14.0
|
|
|
(18.5
|
)
|
|
37.7
|
|
|||||
Interest expense, net of interest income
|
—
|
|
|
—
|
|
|
8.2
|
|
|
27.5
|
|
|
35.7
|
|
|||||
Depreciation and amortization
|
24.8
|
|
|
21.2
|
|
|
7.9
|
|
|
5.1
|
|
|
59.0
|
|
|||||
Intercompany interest
|
11.1
|
|
|
9.5
|
|
|
(8.6
|
)
|
|
(12.0
|
)
|
|
—
|
|
|||||
EBITDA
|
109.2
|
|
|
71.0
|
|
|
44.5
|
|
|
(30.5
|
)
|
|
194.2
|
|
|||||
Intercompany charges
|
2.2
|
|
|
0.1
|
|
|
—
|
|
|
(2.3
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
1.1
|
|
|
0.7
|
|
|
0.5
|
|
|
2.6
|
|
|
4.9
|
|
|||||
Acquisition related costs
|
1.3
|
|
|
0.1
|
|
|
0.1
|
|
|
1.8
|
|
|
3.3
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
(6.7
|
)
|
|||||
Minority interest
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||||
Other
|
0.9
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||
Total addbacks
|
6.5
|
|
|
0.4
|
|
|
(6.1
|
)
|
|
2.1
|
|
|
2.9
|
|
|||||
Adjusted EBITDA
|
$
|
115.7
|
|
|
$
|
71.4
|
|
|
$
|
38.4
|
|
|
$
|
(28.4
|
)
|
|
$
|
197.1
|
|
|
Three Months Ended June 30, 2015
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
32.0
|
|
|
$
|
24.6
|
|
|
$
|
18.7
|
|
|
$
|
(15.8
|
)
|
|
$
|
59.5
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
17.5
|
|
|
14.6
|
|
|
11.5
|
|
|
(8.8
|
)
|
|
34.8
|
|
|||||
Interest expense, net of interest income
|
0.2
|
|
|
—
|
|
|
5.5
|
|
|
16.1
|
|
|
21.8
|
|
|||||
Depreciation and amortization
|
21.3
|
|
|
19.4
|
|
|
7.7
|
|
|
3.4
|
|
|
51.8
|
|
|||||
Intercompany interest
|
12.6
|
|
|
9.4
|
|
|
(5.2
|
)
|
|
(16.8
|
)
|
|
—
|
|
|||||
EBITDA
|
83.6
|
|
|
68.0
|
|
|
38.2
|
|
|
(21.9
|
)
|
|
167.9
|
|
|||||
Intercompany charges
|
1.8
|
|
|
0.2
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
1.0
|
|
|
0.3
|
|
|
0.4
|
|
|
1.7
|
|
|
3.4
|
|
|||||
Acquisition related costs
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
1.0
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(4.2
|
)
|
|
—
|
|
|
(4.2
|
)
|
|||||
Minority interest
|
0.5
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||
Other
|
0.8
|
|
|
0.2
|
|
|
0.5
|
|
|
—
|
|
|
1.5
|
|
|||||
Total addbacks
|
4.5
|
|
|
0.6
|
|
|
(3.3
|
)
|
|
0.3
|
|
|
2.1
|
|
|||||
Adjusted EBITDA
|
$
|
88.1
|
|
|
$
|
68.6
|
|
|
$
|
34.9
|
|
|
$
|
(21.6
|
)
|
|
$
|
170.0
|
|
|
Six Months Ended June 30, 2016
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
85.5
|
|
|
$
|
50.1
|
|
|
$
|
47.0
|
|
|
$
|
(60.1
|
)
|
|
$
|
122.5
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
50.4
|
|
|
30.0
|
|
|
28.6
|
|
|
(34.6
|
)
|
|
74.4
|
|
|||||
Interest expense, net of interest income
|
0.1
|
|
|
—
|
|
|
16.0
|
|
|
48.3
|
|
|
64.4
|
|
|||||
Depreciation and amortization
|
47.3
|
|
|
42.5
|
|
|
15.6
|
|
|
10.0
|
|
|
115.4
|
|
|||||
Intercompany interest
|
23.0
|
|
|
18.9
|
|
|
(16.4
|
)
|
|
(25.5
|
)
|
|
—
|
|
|||||
EBITDA
|
206.3
|
|
|
141.5
|
|
|
90.8
|
|
|
(61.9
|
)
|
|
376.7
|
|
|||||
Intercompany charges
|
5.5
|
|
|
0.3
|
|
|
—
|
|
|
(5.8
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
2.3
|
|
|
1.3
|
|
|
0.9
|
|
|
5.9
|
|
|
10.4
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|
4.0
|
|
|||||
Acquisition related costs
|
2.4
|
|
|
0.1
|
|
|
0.1
|
|
|
3.3
|
|
|
5.9
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(13.1
|
)
|
|
—
|
|
|
(13.1
|
)
|
|||||
Minority interest
|
1.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|||||
Other
|
1.8
|
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
Total addbacks
|
13.6
|
|
|
1.0
|
|
|
(12.1
|
)
|
|
7.4
|
|
|
9.9
|
|
|||||
Adjusted EBITDA
|
$
|
219.9
|
|
|
$
|
142.5
|
|
|
$
|
78.7
|
|
|
$
|
(54.5
|
)
|
|
$
|
386.6
|
|
|
Six Months Ended June 30, 2015
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
54.5
|
|
|
$
|
49.6
|
|
|
$
|
39.7
|
|
|
$
|
(29.8
|
)
|
|
$
|
114.0
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
32.4
|
|
|
29.9
|
|
|
24.3
|
|
|
(17.2
|
)
|
|
69.4
|
|
|||||
Interest expense, net of interest income
|
0.3
|
|
|
—
|
|
|
10.6
|
|
|
31.8
|
|
|
42.7
|
|
|||||
Depreciation and amortization
|
41.5
|
|
|
39.0
|
|
|
15.5
|
|
|
6.7
|
|
|
102.7
|
|
|||||
Intercompany interest
|
25.4
|
|
|
18.8
|
|
|
(9.5
|
)
|
|
(34.7
|
)
|
|
—
|
|
|||||
EBITDA
|
154.1
|
|
|
137.3
|
|
|
80.6
|
|
|
(43.2
|
)
|
|
328.8
|
|
|||||
Intercompany charges
|
4.2
|
|
|
0.4
|
|
|
—
|
|
|
(4.6
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
1.9
|
|
|
0.5
|
|
|
0.7
|
|
|
3.2
|
|
|
6.3
|
|
|||||
Acquisition related costs
|
1.7
|
|
|
0.1
|
|
|
—
|
|
|
1.3
|
|
|
3.1
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(8.1
|
)
|
|
—
|
|
|
(8.1
|
)
|
|||||
Minority interest
|
0.7
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Other
|
2.5
|
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
0.1
|
|
|
1.6
|
|
|||||
Total addbacks
|
11.0
|
|
|
0.3
|
|
|
(7.9
|
)
|
|
—
|
|
|
3.4
|
|
|||||
Adjusted EBITDA
|
$
|
165.1
|
|
|
$
|
137.6
|
|
|
$
|
72.7
|
|
|
$
|
(43.2
|
)
|
|
$
|
332.2
|
|
|
Three Months Ended
|
|
Twelve
Months
Ended
|
||||||||||||||||
(Dollars in millions)
|
September 30,
2015
|
|
December 31, 2015
|
|
March 31, 2016
|
|
June 30,
2016 |
|
June 30, 2016
|
||||||||||
Net income (loss)
|
$
|
52.3
|
|
|
$
|
48.3
|
|
|
$
|
60.7
|
|
|
$
|
61.8
|
|
|
$
|
223.1
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
29.6
|
|
|
26.9
|
|
|
36.7
|
|
|
37.7
|
|
|
130.9
|
|
|||||
Interest expense, net of interest income
|
24.3
|
|
|
23.8
|
|
|
28.7
|
|
|
35.7
|
|
|
112.5
|
|
|||||
Depreciation and amortization
|
54.1
|
|
|
56.0
|
|
|
56.4
|
|
|
59.0
|
|
|
225.5
|
|
|||||
EBITDA
|
160.3
|
|
|
155.0
|
|
|
182.5
|
|
|
194.2
|
|
|
692.0
|
|
|||||
Non-cash stock-based compensation
|
3.5
|
|
|
2.9
|
|
|
5.5
|
|
|
4.9
|
|
|
16.8
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
4.0
|
|
|||||
Acquisition related costs
|
0.7
|
|
|
1.0
|
|
|
2.6
|
|
|
3.3
|
|
|
7.6
|
|
|||||
Securitization interest
|
(5.1
|
)
|
|
(5.5
|
)
|
|
(6.4
|
)
|
|
(6.7
|
)
|
|
(23.7
|
)
|
|||||
Minority interest
|
(0.2
|
)
|
|
(0.9
|
)
|
|
0.6
|
|
|
1.0
|
|
|
0.5
|
|
|||||
(Gain)/Loss on asset sales
|
1.8
|
|
|
0.3
|
|
|
0.4
|
|
|
0.4
|
|
|
2.9
|
|
|||||
Severance and retention
|
0.7
|
|
|
0.9
|
|
|
0.3
|
|
|
0.5
|
|
|
2.4
|
|
|||||
Other
|
1.4
|
|
|
0.8
|
|
|
—
|
|
|
(0.5
|
)
|
|
1.7
|
|
|||||
Total addbacks
|
2.8
|
|
|
(0.5
|
)
|
|
7.0
|
|
|
2.9
|
|
|
12.2
|
|
|||||
Adjusted EBITDA
|
$
|
163.1
|
|
|
$
|
154.5
|
|
|
$
|
189.5
|
|
|
$
|
197.1
|
|
|
$
|
704.2
|
|
|
Six Months Ended
June 30, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Net cash provided by (used by):
|
|
|
|
||||
Operating activities
|
$
|
158.9
|
|
|
$
|
200.5
|
|
Investing activities
|
(531.1
|
)
|
|
(296.8
|
)
|
||
Financing activities
|
526.4
|
|
|
155.4
|
|
||
Effect of exchange rate on cash
|
5.5
|
|
|
(7.2
|
)
|
||
Net increase in cash and cash equivalents
|
$
|
159.7
|
|
|
$
|
51.9
|
|
•
|
an increase in cash used for acquisitions of approximately $238.2; and
|
•
|
an increase in capital expenditures of approximately $11.3 million. For a discussion of the Company's capital expenditures, see “Capital Expenditures” below;
|
•
|
a decrease in the additional finance receivables held for investment of approximately $14.7 million.
|
•
|
the debt refinancing and payment activities in the first quarter of 2016, for which the Company received approximately $558.9 million of cash after the repayment and rollover of debt; and
|
•
|
a $22.1 million decrease in cash used for the repurchase and retirement of common stock;
|
•
|
a decrease in the additional obligations collateralized by finance receivables of approximately $200.1 million; and
|
•
|
an increase in payments for debt issuance costs of $8.7 million.
|
•
|
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 was paid on April 5, 2016, to stockholders of record at the close of business on March 23, 2016.
|
•
|
On May 3, 2016, the Company announced a cash dividend of $0.29 per share that was paid on July 5, 2016, to stockholders of record at the close of business on June 22, 2016.
|
•
|
On August 2, 2016, the Company announced a cash dividend of $0.29 per share that is payable on October 4, 2016, to stockholders of record at the close of business on September 21, 2016.
|
•
|
In March 2016, we amended our Credit Agreement, which resulted in an increase in interest rates on our debt. As such, our future interest payments related to long-term debt will be higher than projected at December 31, 2015. In addition, the amendment increased our outstanding debt by approximately $572 million since December 31, 2015 and extended the maturity on approximately $1.35 billion of our debt to 2023.
|
•
|
In the second quarter of 2016,
50%
of the net cash proceeds from the sale-leaseback of certain technology and capital equipment were used to prepay
$2.5 million
and
$3.1 million
of Term Loan B-2 and Term Loan B-3, respectively.
|
•
|
Operating lease obligations change in the ordinary course of business. We lease most of our auction facilities, as well as other property and equipment under operating leases. Future operating lease obligations will continue to change if renewal options are exercised and/or if we enter into additional operating lease agreements.
|
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)
(Dollars in millions)
|
||||
April 1 - April 30
|
|
—
|
|
|
|
|
—
|
|
|
$
|
72.4
|
|
May 1 - May 31
|
|
—
|
|
|
|
|
—
|
|
|
72.4
|
|
|
June 1 - June 30
|
|
—
|
|
|
|
|
—
|
|
|
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.
|
a)
|
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.
|
|
|
(Registrant)
|
|
|
|
Date:
|
August 3, 2016
|
/s/ ERIC M. LOUGHMILLER
|
|
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and
Accounting Officer)
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1a
|
|
|
Asset Purchase Agreement, dated as of February 17, 2016, by and among ADESA, Inc., Brasher’s
Reno Auto Auction, L.L.C., BIAA, L.L.C., Brasher’s Auto Auctions, West Coast Auto Auctions, Inc.
and the other parties thereto
|
|
8-K
|
|
001-34568
|
|
2.1
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1b
|
|
|
First Amendment to Asset Purchase Agreement, dated as of April 1, 2016, to that certain Asset Purchase Agreement dated as of February 17, 2016, by and among ADESA, Inc., Brasher’s Reno Auto Auction, L.L.C., BIAA, L.L.C., Brasher’s Auto Auctions, West Coast Auto Auctions, Inc. and the other parties thereto
|
|
10-Q
|
|
001-34568
|
|
2.1b
|
|
5/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
Asset Purchase Agreement, dated as of February 17, 2016, by and among ADESA, Inc., Brasher’s
Auto Auctions and the other parties thereto
|
|
8-K
|
|
001-34568
|
|
2.2
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.3
|
|
|
Asset Purchase Agreement, dated as of February 17, 2016, by and among ADESA, Inc., West Coast
Auto Auctions, Inc., Brasher’s Cascade Auto Auction, Inc., Brasher’s Northwest Auto Auction, Inc.,
Brasher’s Sacramento Auto Auction, Inc., Brasher’s Fresno Auto Auction, Inc. and the other parties
thereto
|
|
8-K
|
|
001-34568
|
|
2.3
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation of KAR Auction Services, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1a
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1b
|
|
|
Incremental Commitment Agreement and First Amendment, dated as of March 9, 2016, among KAR Auction Services, Inc., JPMorgan Chase Bank, N.A., as administrative agent, certain subsidiaries of the Company party thereto and the several lenders party thereto
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
10-K
|
|
001-34568
|
|
10.10
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
*
|
KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) Annual Incentive Program (2014)
|
|
10-K
|
|
333-148847
|
|
10.29
|
|
3/11/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
*
|
KAR Auction Services, Inc. Annual Incentive Plan Summary of Terms for Plan Year 2015
|
|
10-Q
|
|
001-34568
|
|
10.11
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
*
|
KAR Auction Services, Inc. Annual Incentive Plan Summary of Terms for Plan Year 2016
|
|
10-Q
|
|
001-34568
|
|
10.13
|
|
5/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14a
|
|
^
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14b
|
|
|
Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated June 15, 2004
|
|
S-4
|
|
333-148847
|
|
10.33
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14c
|
|
|
Amendment No. 2 to Amended and Restated Purchase and Sale Agreement, dated January 18, 2007
|
|
S-4
|
|
333-148847
|
|
10.34
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14d
|
|
^
|
Amendment No. 3 to Amended and Restated Purchase and Sale Agreement, dated April 20, 2007
|
|
S-4
|
|
333-148847
|
|
10.35
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14e
|
|
|
Amendment No. 4 to Amended and Restated Purchase and Sale Agreement, dated January 30, 2009
|
|
10-K
|
|
001-34568
|
|
10.19e
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14f
|
|
|
Amendment No. 5 to Amended and Restated Purchase and Sale Agreement, dated April 25, 2011
|
|
10-K
|
|
001-34568
|
|
10.19f
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15a
|
|
^
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15b
|
|
^
|
Amendment No. 1, to Sixth Amended and Restated Receivables Purchase Agreement, dated March 2, 2016
|
|
10-Q
|
|
001-34568
|
|
10.15b
|
|
5/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
^
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23a
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23b
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24a
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24b
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
|
Form of Indemnification Agreement
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26a
|
|
*
|
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as Amended June 10, 2014
|
|
DEF 14A
|
|
001-34568
|
|
Appendix A
|
|
4/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26b
|
|
*
|
First Amendment to the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan
|
|
10-K
|
|
001-34568
|
|
10.24b
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27a
|
|
*
|
KAR Auction Services, Inc. Employee Stock Purchase Plan
|
|
S-8
|
|
333-164032
|
|
10.3
|
|
12/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27b
|
|
*
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27c
|
|
*
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
*
|
KAR Auction Services, Inc. Directors Deferred Compensation Plan, effective December 10, 2009
|
|
10-Q
|
|
001-34568
|
|
10.62
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
*
|
Form of Director Restricted Share Agreement
|
|
10-Q
|
|
001-34568
|
|
10.63
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
*
|
Form of Nonqualified Stock Option Agreement
|
|
S-1/A
|
|
333-161907
|
|
10.65
|
|
12/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31a
|
|
*
|
Form of 2015 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
10-Q
|
|
001-34568
|
|
10.29a
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31b
|
|
*
|
Form of 2015 Restricted Stock Unit Award Agreement for non-Section 16 Officers
|
|
10-Q
|
|
001-34568
|
|
10.29b
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
*
|
Form of 2016 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
10-K
|
|
001-34568
|
|
10.30
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
*
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
*
|
Form of Performance-Based Restricted Stock Unit Agreement (Cumulative Adjusted Net Income Per Share)
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
*
|
Form of 2015 Performance-Based Restricted Stock Unit Agreement (Cumulative Adjusted Net Income Per Share)
|
|
10-Q
|
|
001-34568
|
|
10.32
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
*
|
Form of 2016 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)
|
|
10-K
|
|
001-34568
|
|
10.34
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
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32.2
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Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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X
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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X
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^
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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.
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*
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Denotes management contract or compensation plan, contract or arrangement.
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(a)
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Authorized Capital Stock
. The total number of shares of stock which the Corporation shall have authority to issue is 500,000,000 of which the Corporation shall have authority to issue 400,000,000 shares of common stock, each having a par value of one cent per share ($0.01) (the “Common Stock”), and 100,000,000 shares of preferred stock, each having a par value of one cent per share ($0.01) (the “Preferred Stock”). The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the GCL (or any successor provision thereto), and no vote of the holders of any of the Common Stock or the Preferred Stock voting separately as a class shall be required therefor.
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(b)
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Common Stock
. The powers, preferences and rights, and the qualifications, limitations and restrictions, of the Common Stock are as follows:
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(c)
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Preferred Stock
. The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such
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(d)
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Power to Sell and Purchase Shares
. Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law.
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(a)
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The business and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors. In addition to the powers and authority expressly conferred upon the Board of Directors by applicable law, this Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the GCL and this Amended and Restated Certificate of Incorporation.
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(b)
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The Board of Directors shall consist of not less than two or more than fifteen members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors.
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(c)
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Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. The right of stockholders to fill vacancies on the Board of Directors is hereby specifically denied. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.
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(d)
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Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any director or the entire Board of Directors may be removed from office at any time by the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors.
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(e)
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Notwithstanding the foregoing, the election, term, removal and filling of vacancies with respect to directors, if any, elected separately by the holders of one or more series of Preferred Stock shall not be governed by this Article FIFTH, but rather shall be as
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(f)
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In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL and this Amended and Restated Certificate of Incorporation.
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By:
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/s/ Rebecca C. Polak
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Name:
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Rebecca C. Polak
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Title:
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Executive Vice President,
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General Counsel and Secretary
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1)
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I have reviewed this Quarterly Report on Form 10-Q of KAR Auction Services, Inc.;
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2)
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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;
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3)
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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;
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4)
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5)
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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):
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a)
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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
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b)
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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.
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/s/ JAMES P. HALLETT
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James P. Hallett
Chief Executive Officer
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1)
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I have reviewed this Quarterly Report on Form 10-Q of KAR Auction Services, Inc.;
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2)
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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;
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3)
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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;
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4)
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5)
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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):
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a)
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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
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b)
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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.
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/s/ ERIC M. LOUGHMILLER
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Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
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1)
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The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
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2)
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the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ JAMES P. HALLETT
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James P. Hallett
Chief Executive Officer
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1)
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The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
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2)
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the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ ERIC M. LOUGHMILLER
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Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
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