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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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
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20-8744739
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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KAR
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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•
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"we," "us," "our," "KAR" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
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•
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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"), Nth Gen Software Inc. ("TradeRev"), ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited")) and ADESA Europe (formerly known as CarsOnTheWeb ("COTW"));
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•
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"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc.;
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•
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"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, as amended on March 9, 2016, May 31, 2017 and September 19, 2019, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank N.A., as administrative agent;
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•
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"Credit Facility" refers to the $950 million, senior secured term loan B-6 facility due September 19, 2026 ("Term Loan B-6") and the $325 million, senior secured revolving credit facility due September 19, 2024 (the "Revolving Credit Facility"), the terms of which are set forth in the Credit Agreement;
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•
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"IAA" refers, collectively, to Insurance Auto Auctions, Inc., formerly a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC"). See Note 4 of the notes to the consolidated financial statements;
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•
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"KAR Auction Services" refers to KAR Auction Services, Inc., and not to its subsidiaries;
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•
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"Senior notes" refers to the 5.125% senior notes due 2025 ($950 million aggregate principal outstanding at December 31, 2019);
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•
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"Term Loan B-2" refers to the senior secured term loan B-2 facility, the terms of which are set forth in the Credit Agreement;
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"Term Loan B-3" refers to the senior secured term loan B-3 facility, the terms of which are set forth in the Credit Agreement;
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•
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"Term Loan B-4" refers to the senior secured term loan B-4 facility, the terms of which are set forth in the Credit Agreement;
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•
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"Term Loan B-5" refers to the senior secured term loan B-5 facility, the terms of which are set forth in the Credit Agreement;
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•
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"2016 Revolving Credit Facility" refers to the $300 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement; and
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•
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"2017 Revolving Credit Facility" refers to the $350 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement.
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•
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Remarketing channels and systems that are increasingly becoming more interconnected;
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•
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An increase in customer demand and dependency on data in buying and selling decisions; and
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•
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Rapidly advancing technology with opportunity for application in the remarketing industry.
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•
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Digital
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Data and analytics
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•
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International
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•
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Mobility
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•
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Seamless integration of all of our businesses
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Services
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Description
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Auction Related Services
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ADESA provides marketing and advertising for the vehicles to be auctioned, dealer registration, storage of consigned inventory, clearing of funds, arbitration of disputes, auction vehicle registration, condition report processing, photo services, post-sale inspections, security for consigned inventory, title processing, sales results reports, pre-sale lineups and auctioning of vehicles by licensed auctioneers.
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Transportation Services
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We provide both inbound (pickup) and outbound (delivery) transportation services utilizing our own equipment and personnel as well as licensed and insured third party carriers. Through our subsidiary, CarsArrive and its Internet-based system which provides automated vehicle shipping services, customers can instantly review price quotes and delivery times, and vehicle transporters can check available loads and also receive instant notification of available shipments. The same system is utilized at our whole car auction locations; however, CarsArrive also arranges transportation for non-auction vehicles.
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Reconditioning Services
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Our auctions provide detailing, body work, paintless dent repair ("PDR"), light mechanical work, glass repair, tire and key replacement and upholstery repair. Key replacement services are primarily provided by our subsidiary, HTL.
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Inspection Services Provided by AutoVIN
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AutoVIN provides vehicle condition reporting, inventory verification auditing, program compliance auditing and facility inspections. Field managers are equipped with handheld computers and digital cameras to record all inspection and audit data on-site. The same technology is utilized at our whole car auction locations and we believe that the expanded utilization of comprehensive vehicle condition reports with pictures facilitates dealers sourcing vehicles via the Internet.
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Title and Repossession Administration and Remarketing Services
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PAR provides end-to-end management of the remarketing process including titling, repossession administration, inventory management, auction selection, pricing and representation of the vehicles at auction for those customers seeking to outsource all or just a portion of their remarketing needs. Recovery Database Network, Inc. ("RDN") is a specialized provider of B2B software and data solutions for automotive lenders and repossession companies. Clearplan is closely integrated with RDN, providing users with convenient data-flows and access to its recovery management platform.
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Vehicle Research Services Provided by Autoniq
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Autoniq provides dealers real-time vehicle information such as pricing, history reports and market guides. Its mobile app allows used car dealers to scan VINs on mobile devices, view auction run lists and access vehicle history reports and market value reports instantly. Autoniq offers access to valued resources such as CARFAX and AutoCheck, as well as Black Book Daily, NADA guides, Kelley Blue Book and Galves pricing guide information. It also includes a comprehensive wholesale and retail market report for all markets in the United States.
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KAR Analytical Services
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KAR Analytical Services provides value-added market analysis to our customers and the media. These services include access to publications and custom analysis of wholesale market trends for KAR's customers, including peer group and market benchmarking studies, analysis of the benefits of reconditioning, site selection for optimized remarketing of vehicles, portfolio analysis of auction sales and computer-generated mapping and buyer analysis.
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Data as a Service
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Our Data as a Service team aggregates automotive retail, pricing, registration and other market and economic data from a variety of public and proprietary sources. The insights generated from that data are deployed through predictive pricing, inventory management and vehicle matching tools that help customers buy, sell and source vehicles.
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ADESA Technology
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Description
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ADESA.com and ADESA DealerBlock®
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This platform provides for either real-time or "bulletin-board" online auctions of consigned inventory at physical auction locations and is powered by Openlane technology. We also utilize this platform to provide certain selling capabilities for our consignors that facilitate the sale of vehicles prior to their arrival at a physical auction site. Auctions can be either closed (restricted to certain eligible dealers) or open (available to all eligible dealers) and inventory feeds of vehicles are automated with many customers' systems as well as third party providers that are integrated with various dealer management systems. Oftentimes, the vehicles offered for sale prior to their arrival at a physical auction site are "private-labeled" for the consignors.
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ADESA Simulcast®
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Our live auction Internet bidding solution, ADESA Simulcast®, operates in concert with our physical auctions and provides registered buyers with the opportunity to participate in live auctions. Potential buyers bid online in real time along with the live local bidders and other Internet bidders via a simple, web-based interface. ADESA Simulcast® provides real-time streaming audio and video from the live auction and still images of vehicles and other data. Buyers inspect and evaluate the vehicle and listen to the live call of the auctioneer while viewing the physical auction that is underway.
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TradeRev
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This mobile app mimics the physical auction setting, enabling dealers to launch and participate in live, real-time auctions directly from their smartphone, tablet or desktop. TradeRev gives dealers the ability to start an auction any time of day and users can complete the entire transaction within the app, including optional inspection, title and arbitration services, instant live bids at appraisal, floorplan financing and transportation.
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ADESA Run List®
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Provides a summary of consigned vehicles offered for auction sale, allowing dealers to preview inventory and vehicle condition reports prior to an auction event.
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ADESA Market Guide®
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Provides wholesale auction prices, auction sales results, market data and vehicle condition information.
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•
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incurring significantly higher capital expenditures, operating expenses and operating losses of the business acquired;
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•
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entering new markets with which we are unfamiliar;
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•
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incurring potential undiscovered liabilities at acquired businesses;
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failing to maintain uniform standards, controls and policies;
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incorporating acquired technology and rights into our offerings and unanticipated expenses related to such integration;
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impairing relationships with employees and customers as a result of management changes; and
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increasing expenses for accounting and computer systems, as well as integration difficulties.
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exposure to foreign currency exchange rate risk, which may have an adverse impact on our revenues and profitability;
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restrictions on our ability to repatriate funds, as well as repatriation of funds currently held in foreign jurisdictions, which may result in higher effective tax rates;
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tariffs and trade barriers and other regulatory or contractual limitations on our ability to operate in certain foreign markets;
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compliance with the Foreign Corrupt Practices Act;
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compliance with various privacy regulations, including the General Data Protection Regulation ("GDPR");
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dealing with unfamiliar regulatory agencies and laws favoring local competitors;
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dealing with political and/or economic instability;
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the difficulty of managing and staffing foreign offices, as well as the increased travel, infrastructure, legal and compliance costs associated with international operations;
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localizing our product offerings; and
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adapting to different business cultures and market structures.
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•
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Fluctuations in the supply of used vehicles. We are dependent on the supply of used vehicles coming to auction, and our financial performance depends, in part, on conditions in the automotive industry. During the past global economic downturn and credit crisis, there was an erosion of retail demand for new and used vehicles that led many lenders to cut back on originations of new loans and leases and led to significant manufacturing capacity reductions by automakers selling vehicles in the United States and Canada. Capacity reductions could depress the number of vehicles received at auction in the future and could lead to reduced numbers of vehicles from various suppliers, negatively impacting auction volumes. In addition, weak growth in or declining new vehicle sales negatively impacts used vehicle trade-ins to dealers and auction volumes. These factors could adversely affect our revenues and profitability.
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•
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Decline in the demand for used vehicles. We may experience a decrease in demand for used vehicles from buyers due to factors including the lack of availability of consumer credit and declines in consumer spending and consumer confidence. Adverse credit conditions also affect the ability of dealers to secure financing to purchase used vehicles at auction, which further negatively affects buyer demand. In addition, a reduction in the number of franchised and independent used car dealers may reduce dealer demand for used vehicles.
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•
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Decrease in consumer spending. Consumer purchases of new and used vehicles may be adversely affected by economic conditions such as employment levels, wage and salary levels, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, the availability of consumer credit and taxation policies. Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower. Changes to U.S. federal tax policy may negatively affect consumer spending. In addition, the increased use of vehicle sharing and alternate methods of transportation, including autonomous vehicles, could lead to a decrease in consumer purchases of new and used vehicles and a decrease in vehicle rentals. To the extent retail and rental car company demand for new and used vehicles decreases, negatively impacting our auction volumes, our results of operations and financial position could be materially and adversely affected.
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•
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Volatility in the asset-backed securities market. Volatility and disruption in the asset-backed commercial paper market could lead to a narrowing of interest rate spreads at AFC in certain periods. In addition, any volatility and disruption has affected, and could affect, AFC’s cost of financing related to its securitization facility.
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•
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Ability to service and refinance indebtedness. Uncertainty in the financial markets may negatively affect our ability to service our existing debt, access additional financing or to refinance our existing indebtedness on favorable terms or at all. If economic weakness exists, it may affect our cash flow from operations and results of operations, which may affect our ability to service payment obligations on our debt or to comply with our debt covenants.
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•
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Increased counterparty credit risk. Any market deterioration could increase the risk of the failure of financial institutions party to our Credit Agreement and other counterparties with which we do business to honor their obligations to us. Our ability to replace any such obligations on the same or similar terms may be limited if challenging credit and general economic conditions exist.
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•
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limiting our ability to borrow additional amounts to fund working capital, capital expenditures, debt service requirements, execution of our business strategy, acquisitions and other purposes;
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•
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requiring us to dedicate a substantial portion of our cash flow from operations to pay principal and interest on debt, which would reduce the funds available for other purposes, including funding future expansion;
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•
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making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult to react quickly to, changing conditions; and
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•
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exposing us to risks inherent in interest rate fluctuations because the majority of our indebtedness is at variable rates of interest, which could result in higher interest expenses in the event of increases in interest rates.
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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•
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the lenders under our senior secured credit facilities could terminate their commitments to lend us money and foreclose against the assets securing their borrowings; and
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•
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we could be forced into bankruptcy or liquidation.
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•
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The acquisition and sale of used, leased, totaled and recovered theft vehicles are regulated by state or other local motor vehicle departments in each of the locations in which we operate.
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•
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Some of the transport vehicles used at our auctions are regulated by the U.S. Department of Transportation or similar regulatory agencies in the other countries in which we operate.
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•
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AFC is subject to laws in certain states and in Canada which regulate commercial lending activities and interest rates and, in certain jurisdictions, require AFC or one of its subsidiaries to be licensed.
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•
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PWI is subject to laws, regulations and insurance licensing requirements in certain states which are applicable to the sale of vehicle service contracts.
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•
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We are subject to various local zoning requirements with regard to the location of our auction and storage facilities, which requirements vary from location to location.
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•
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We are subject to federal, state and international laws, directives and regulations relating to the collection, use, retention, disclosure, security and transfer of personally identifiable information (e.g., GDPR and CCPA). These laws, directives, regulations and their interpretation and enforcement continue to evolve and may be inconsistent from jurisdiction to jurisdiction.
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•
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Certain of the Company's subsidiaries are indirectly subject to the regulations of the Consumer Financial Protection Act of 2010, or the CFPA, due to their vendor relationships with financial institutions.
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•
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PAR is subject to laws in certain states which regulate repossession administration activities and, in certain jurisdictions, require PAR to be licensed.
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•
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We deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations.
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•
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In many states and provinces, regulations require that a salvage vehicle be forever “branded” with a salvage notice in order to notify prospective purchasers of the vehicle’s previous salvage status.
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•
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Some state, provincial and local regulations limit who can purchase salvage vehicles, as well as determine whether a salvage vehicle can be sold as rebuildable or must be sold for parts or scrap only.
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•
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our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;
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•
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changes in earnings estimates or recommendations by securities analysts, if any, who cover our common stock;
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•
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results of operations that are below our announced guidance or below securities analysts’ or consensus estimates or expectations;
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•
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fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
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•
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changes in our capital structure, such as future issuances of securities, sales of large blocks of common stock by our stockholders or our incurrence of additional debt;
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•
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repurchases of our common stock pursuant to our share repurchase program;
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•
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investors’ general perception of us and our industry;
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•
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changes in general economic and market conditions;
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•
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changes in industry conditions; and
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•
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changes in regulatory and other dynamics.
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•
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rules regarding how our stockholders may present proposals or nominate directors for election at stockholder meetings;
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•
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permitting our board of directors to issue preferred stock without stockholder approval;
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•
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granting to the board of directors, and not the stockholders, the sole power to set the number of directors;
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•
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authorizing vacancies on our board of directors to be filled only by a vote of the majority of the directors then in office and specifically denying our stockholders the right to fill vacancies in the board;
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•
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authorizing the removal of directors only upon the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote for the election of directors; and
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•
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prohibiting stockholder action by written consent.
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
(Dollars in millions)
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||||||
October 1 - October 31
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—
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$
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—
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—
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|
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$
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300.0
|
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November 1 - November 30
|
|
—
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|
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—
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|
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—
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300.0
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||
December 1 - December 31
|
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—
|
|
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—
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|
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—
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|
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300.0
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Total
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—
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$
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—
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—
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(1)
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In October 2019, the board of directors authorized a repurchase of up to $300 million of the Company’s outstanding common stock, par value $0.01 per share, through October 30, 2021. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions.
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Company/Index
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Base Period
12/31/2014
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|
12/31/2015
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12/31/2016
|
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12/31/2017
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12/31/2018
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12/31/2019
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||||||||||||
KAR Auction Services, Inc.
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$
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100
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|
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$
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110.00
|
|
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$
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130.39
|
|
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$
|
158.99
|
|
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$
|
154.08
|
|
|
$
|
191.50
|
|
S&P 400 Midcap Index
|
$
|
100
|
|
|
$
|
97.82
|
|
|
$
|
118.11
|
|
|
$
|
137.30
|
|
|
$
|
122.08
|
|
|
$
|
154.07
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
101.38
|
|
|
$
|
113.51
|
|
|
$
|
138.29
|
|
|
$
|
132.23
|
|
|
$
|
173.86
|
|
|
Year Ended December 31,
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||||||||||||||||||
(Dollars in millions except per share amounts)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Operations:
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|
|
|
|
|
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|
||||||||||
Operating revenues
|
|
|
|
|
|
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|
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||||||||||
ADESA
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$
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2,429.0
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|
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$
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2,101.9
|
|
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$
|
1,937.5
|
|
|
$
|
1,765.3
|
|
|
$
|
1,427.8
|
|
AFC
|
352.9
|
|
|
340.9
|
|
|
301.3
|
|
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286.8
|
|
|
268.4
|
|
|||||
Total operating revenues
|
$
|
2,781.9
|
|
|
$
|
2,442.8
|
|
|
$
|
2,238.8
|
|
|
$
|
2,052.1
|
|
|
$
|
1,696.2
|
|
Operating expenses (exclusive of depreciation and amortization)
|
2,279.1
|
|
|
1,930.3
|
|
|
1,740.8
|
|
|
1,595.3
|
|
|
1,318.8
|
|
|||||
Operating profit
|
314.1
|
|
|
340.1
|
|
|
326.5
|
|
|
304.2
|
|
|
245.3
|
|
|||||
Interest expense
|
189.5
|
|
|
191.2
|
|
|
163.2
|
|
|
137.9
|
|
|
90.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
92.4
|
|
|
117.6
|
|
|
174.0
|
|
|
101.7
|
|
|
99.4
|
|
|||||
Income from continuing operations per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
0.70
|
|
|
0.88
|
|
|
1.28
|
|
|
0.74
|
|
|
0.71
|
|
|||||
Diluted
|
0.70
|
|
|
0.87
|
|
|
1.26
|
|
|
0.73
|
|
|
0.70
|
|
|||||
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
131.6
|
|
|
134.3
|
|
|
136.3
|
|
|
137.6
|
|
|
140.1
|
|
|||||
Diluted
|
132.9
|
|
|
135.7
|
|
|
138.0
|
|
|
139.1
|
|
|
142.3
|
|
|||||
Cash dividends declared per common share
|
1.08
|
|
|
1.40
|
|
|
1.31
|
|
|
1.19
|
|
|
1.08
|
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Financial Position:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital - continuing operations (1)
|
$
|
726.8
|
|
|
$
|
450.3
|
|
|
$
|
513.2
|
|
|
$
|
287.1
|
|
|
$
|
96.0
|
|
Total assets from continuing operations
|
6,581.2
|
|
|
5,699.4
|
|
|
5,545.9
|
|
|
5,198.7
|
|
|
4,479.4
|
|
|||||
Total debt, net of unamortized debt issuance costs/discounts
|
1,890.1
|
|
|
2,667.4
|
|
|
2,680.1
|
|
|
2,470.3
|
|
|
1,865.1
|
|
|||||
Total stockholders' equity
|
1,650.2
|
|
|
1,464.2
|
|
|
1,484.9
|
|
|
1,397.3
|
|
|
1,386.1
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities - continuing operations
|
$
|
380.8
|
|
|
$
|
438.6
|
|
|
$
|
359.3
|
|
|
$
|
242.9
|
|
|
$
|
325.5
|
|
Capital expenditures
|
161.6
|
|
|
131.3
|
|
|
97.3
|
|
|
113.1
|
|
|
93.2
|
|
|||||
Depreciation and amortization
|
188.7
|
|
|
172.4
|
|
|
171.5
|
|
|
152.6
|
|
|
132.1
|
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
•
|
our ability to effectively maintain or update information and technology systems;
|
•
|
our ability to implement and maintain measures to protect against cyber-attacks;
|
•
|
significant current competition and the introduction of new competitors;
|
•
|
competitive pricing pressures;
|
•
|
our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements;
|
•
|
our ability to meet or exceed customers' expectations, as well as develop and implement information systems responsive to customer needs;
|
•
|
business development activities, including greenfields, acquisitions and integration of acquired businesses;
|
•
|
costs associated with the acquisition of businesses or technologies;
|
•
|
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;
|
•
|
any losses of key personnel;
|
•
|
our ability to obtain land or renew/enter into new leases at commercially reasonable rates;
|
•
|
decreases in the number of used vehicles sold at physical auctions;
|
•
|
changes in the market value of vehicles auctioned;
|
•
|
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 and commercial lending activities;
|
•
|
our ability to maintain our brand and protect our intellectual property;
|
•
|
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;
|
•
|
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;
|
•
|
the taxable nature of the spin-off of our former salvage auction business;
|
•
|
changes to accounting standards; and
|
•
|
other risks described from time to time in our filings with the SEC, including the Quarterly Reports on Form 10-Q to be filed by us in 2020.
|
•
|
The ADESA Auctions segment serves a domestic and international customer base through physical and online auctions and through 74 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 TradeRev, an online automotive remarketing system where dealers can launch and participate in real-time vehicle auctions at any time, ADESA Remarketing Limited, an online whole car vehicle remarketing business in the United Kingdom and ADESA Europe (formerly known as CarsOnTheWeb), an online wholesale vehicle auction marketplace in Continental Europe.
|
•
|
The AFC segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers. At December 31, 2019, AFC conducted business at 121 locations in the United States and Canada. The Company also sells vehicle service contracts through Preferred Warranties, Inc. ("PWI").
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
Auction fees and services revenue
|
$
|
2,133.5
|
|
|
$
|
1,985.1
|
|
Purchased vehicle sales
|
295.5
|
|
|
116.8
|
|
||
Finance-related revenue
|
352.9
|
|
|
340.9
|
|
||
Total revenues
|
2,781.9
|
|
|
2,442.8
|
|
||
Cost of services*
|
1,617.1
|
|
|
1,321.5
|
|
||
Gross profit*
|
1,164.8
|
|
|
1,121.3
|
|
||
Selling, general and administrative
|
662.0
|
|
|
608.8
|
|
||
Depreciation and amortization
|
188.7
|
|
|
172.4
|
|
||
Operating profit
|
314.1
|
|
|
340.1
|
|
||
Interest expense
|
189.5
|
|
|
191.2
|
|
||
Other income, net
|
(7.7
|
)
|
|
(3.0
|
)
|
||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
||
Income from continuing operations before income taxes
|
130.1
|
|
|
151.9
|
|
||
Income taxes
|
37.7
|
|
|
34.3
|
|
||
Net income from continuing operations
|
92.4
|
|
|
117.6
|
|
||
Net income from discontinued operations
|
96.1
|
|
|
210.4
|
|
||
Net income
|
$
|
188.5
|
|
|
$
|
328.0
|
|
Net income from continuing operations per share
|
|
|
|
||||
Basic
|
$
|
0.70
|
|
|
$
|
0.88
|
|
Diluted
|
$
|
0.70
|
|
|
$
|
0.87
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions, except per vehicle amounts)
|
2019
|
|
2018
|
||||
Auction fees and services revenue
|
$
|
2,133.5
|
|
|
$
|
1,985.1
|
|
Purchased vehicle sales
|
295.5
|
|
|
116.8
|
|
||
Total ADESA revenue
|
2,429.0
|
|
|
2,101.9
|
|
||
Cost of services*
|
1,520.7
|
|
|
1,230.8
|
|
||
Gross profit*
|
908.3
|
|
|
871.1
|
|
||
Selling, general and administrative
|
494.3
|
|
|
435.8
|
|
||
Depreciation and amortization
|
149.9
|
|
|
127.5
|
|
||
Operating profit
|
$
|
264.1
|
|
|
$
|
307.8
|
|
Vehicles sold
|
3,784,000
|
|
|
3,472,000
|
|
||
Institutional vehicles sold in North America
|
2,653,000
|
|
|
2,401,000
|
|
||
Dealer consignment vehicles sold in North America
|
1,018,000
|
|
|
1,027,000
|
|
||
Vehicles sold in Europe
|
113,000
|
|
|
44,000
|
|
||
Percentage of vehicles sold online
|
58
|
%
|
|
54
|
%
|
||
Conversion rate at North American physical auctions
|
62.8
|
%
|
|
61.6
|
%
|
||
Physical auction revenue per vehicle sold, excluding purchased vehicles
|
$
|
884
|
|
|
$
|
844
|
|
Online only revenue per vehicle sold, excluding purchased vehicles
|
$
|
149
|
|
|
$
|
121
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2019
|
|
2018
|
||||
Finance-related revenue
|
|
|
|
||||
Interest and fee income
|
$
|
342.1
|
|
|
$
|
327.3
|
|
Other revenue
|
10.9
|
|
|
13.1
|
|
||
Provision for credit losses
|
(35.3
|
)
|
|
(32.9
|
)
|
||
Warranty contract revenue
|
35.2
|
|
|
33.4
|
|
||
Total AFC revenue
|
352.9
|
|
|
340.9
|
|
||
Cost of services*
|
96.4
|
|
|
90.7
|
|
||
Gross profit*
|
256.5
|
|
|
250.2
|
|
||
Selling, general and administrative
|
25.6
|
|
|
30.7
|
|
||
Depreciation and amortization
|
10.3
|
|
|
16.0
|
|
||
Operating profit
|
$
|
220.6
|
|
|
$
|
203.5
|
|
Loan transactions
|
1,783,000
|
|
|
1,760,000
|
|
||
Revenue per loan transaction, excluding "Warranty contract revenue"
|
$
|
178
|
|
|
$
|
175
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Selling, general and administrative
|
$
|
142.1
|
|
|
$
|
142.3
|
|
Depreciation and amortization
|
28.5
|
|
|
28.9
|
|
||
Operating loss
|
$
|
(170.6
|
)
|
|
$
|
(171.2
|
)
|
|
Three Months Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
Auction fees and services revenue
|
$
|
504.0
|
|
|
$
|
475.3
|
|
Purchased vehicle sales
|
79.3
|
|
|
33.2
|
|
||
Finance-related revenue
|
88.0
|
|
|
85.3
|
|
||
Total revenues
|
671.3
|
|
|
593.8
|
|
||
Cost of services*
|
394.9
|
|
|
332.3
|
|
||
Gross profit*
|
276.4
|
|
|
261.5
|
|
||
Selling, general and administrative
|
164.7
|
|
|
148.7
|
|
||
Depreciation and amortization
|
50.1
|
|
|
42.6
|
|
||
Operating profit
|
61.6
|
|
|
70.2
|
|
||
Interest expense
|
39.5
|
|
|
52.5
|
|
||
Other (income) expense, net
|
(2.5
|
)
|
|
0.8
|
|
||
Income from continuing operations before income taxes
|
24.6
|
|
|
16.9
|
|
||
Income taxes
|
9.3
|
|
|
1.8
|
|
||
Net income from continuing operations
|
15.3
|
|
|
15.1
|
|
||
Net income from discontinued operations
|
4.5
|
|
|
52.2
|
|
||
Net income
|
$
|
19.8
|
|
|
$
|
67.3
|
|
Net income from continuing operations per share
|
|
|
|
||||
Basic
|
$
|
0.12
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions, except per vehicle amounts)
|
2019
|
|
2018
|
||||
Auction fees and services revenue
|
$
|
504.0
|
|
|
$
|
475.3
|
|
Purchased vehicle sales
|
79.3
|
|
|
33.2
|
|
||
Total ADESA revenue
|
583.3
|
|
|
508.5
|
|
||
Cost of services*
|
370.9
|
|
|
309.8
|
|
||
Gross profit*
|
212.4
|
|
|
198.7
|
|
||
Selling, general and administrative
|
124.1
|
|
|
106.9
|
|
||
Depreciation and amortization
|
39.7
|
|
|
33.1
|
|
||
Operating profit
|
$
|
48.6
|
|
|
$
|
58.7
|
|
Vehicles sold
|
887,000
|
|
|
811,000
|
|
||
Institutional vehicles sold in North America
|
623,000
|
|
|
568,000
|
|
||
Dealer consignment vehicles sold in North America
|
234,000
|
|
|
233,000
|
|
||
Vehicles sold in Europe
|
30,000
|
|
|
10,000
|
|
||
Percentage of vehicles sold online
|
59
|
%
|
|
54
|
%
|
||
Conversion rate at North American physical auctions
|
58.4
|
%
|
|
58.5
|
%
|
||
Physical auction revenue per vehicle sold, excluding purchased vehicles
|
$
|
886
|
|
|
$
|
868
|
|
Online only revenue per vehicle sold, excluding purchased vehicles
|
$
|
155
|
|
|
$
|
122
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions except volumes and per loan amounts)
|
2019
|
|
2018
|
||||
Finance-related revenue
|
|
|
|
||||
Interest and fee income
|
$
|
86.0
|
|
|
$
|
84.2
|
|
Other revenue
|
2.8
|
|
|
3.5
|
|
||
Provision for credit losses
|
(9.8
|
)
|
|
(10.8
|
)
|
||
Warranty contract revenue
|
9.0
|
|
|
8.4
|
|
||
Total AFC revenue
|
88.0
|
|
|
85.3
|
|
||
Cost of services*
|
24.0
|
|
|
22.5
|
|
||
Gross profit*
|
64.0
|
|
|
62.8
|
|
||
Selling, general and administrative
|
6.1
|
|
|
7.1
|
|
||
Depreciation and amortization
|
2.7
|
|
|
2.4
|
|
||
Operating profit
|
$
|
55.2
|
|
|
$
|
53.3
|
|
Loan transactions
|
443,000
|
|
|
428,000
|
|
||
Revenue per loan transaction, excluding "Warranty contract revenue"
|
$
|
178
|
|
|
$
|
180
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Selling, general and administrative
|
$
|
34.5
|
|
|
$
|
34.7
|
|
Depreciation and amortization
|
7.7
|
|
|
7.1
|
|
||
Operating loss
|
$
|
(42.2
|
)
|
|
$
|
(41.8
|
)
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
507.6
|
|
|
$
|
277.1
|
|
Restricted cash
|
53.3
|
|
|
27.6
|
|
||
Working capital
|
726.8
|
|
|
450.3
|
|
||
Amounts available under revolving credit facility*
|
325.0
|
|
|
350.0
|
|
||
Cash flow from operations for the year ended
|
380.8
|
|
|
438.6
|
|
*
|
There were related outstanding letters of credit totaling approximately $27.4 million and $32.9 million at December 31, 2019 and 2018, respectively, which reduced the amount available for borrowings under the revolving credit facility.
|
|
Three Months Ended December 31, 2019
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
35.0
|
|
|
$
|
31.4
|
|
|
$
|
(51.1
|
)
|
|
$
|
15.3
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
13.3
|
|
|
9.7
|
|
|
(13.7
|
)
|
|
9.3
|
|
||||
Interest expense, net of interest income
|
0.5
|
|
|
15.1
|
|
|
22.7
|
|
|
38.3
|
|
||||
Depreciation and amortization
|
39.7
|
|
|
2.7
|
|
|
7.7
|
|
|
50.1
|
|
||||
Intercompany interest
|
(1.8
|
)
|
|
(1.0
|
)
|
|
2.8
|
|
|
—
|
|
||||
EBITDA
|
86.7
|
|
|
57.9
|
|
|
(31.6
|
)
|
|
113.0
|
|
||||
Intercompany charges
|
3.1
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
2.2
|
|
|
0.4
|
|
|
2.6
|
|
|
5.2
|
|
||||
Acquisition related costs
|
1.7
|
|
|
—
|
|
|
0.2
|
|
|
1.9
|
|
||||
Securitization interest
|
—
|
|
|
(13.0
|
)
|
|
—
|
|
|
(13.0
|
)
|
||||
Loss on asset sales
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||
Severance
|
4.9
|
|
|
0.3
|
|
|
4.4
|
|
|
9.6
|
|
||||
Foreign currency (gains)/losses
|
(0.4
|
)
|
|
—
|
|
|
0.7
|
|
|
0.3
|
|
||||
Other
|
3.8
|
|
|
—
|
|
|
0.8
|
|
|
4.6
|
|
||||
Total addbacks
|
15.7
|
|
|
(12.3
|
)
|
|
5.6
|
|
|
9.0
|
|
||||
Adjusted EBITDA
|
$
|
102.4
|
|
|
$
|
45.6
|
|
|
$
|
(26.0
|
)
|
|
$
|
122.0
|
|
|
Three Months Ended December 31, 2018
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
38.1
|
|
|
$
|
29.5
|
|
|
$
|
(52.5
|
)
|
|
$
|
15.1
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
11.1
|
|
|
8.7
|
|
|
(18.0
|
)
|
|
1.8
|
|
||||
Interest expense, net of interest income
|
0.1
|
|
|
16.3
|
|
|
34.8
|
|
|
51.2
|
|
||||
Depreciation and amortization
|
33.1
|
|
|
2.4
|
|
|
7.1
|
|
|
42.6
|
|
||||
Intercompany interest
|
4.2
|
|
|
(1.1
|
)
|
|
(3.1
|
)
|
|
—
|
|
||||
EBITDA
|
86.6
|
|
|
55.8
|
|
|
(31.7
|
)
|
|
110.7
|
|
||||
Intercompany charges
|
4.3
|
|
|
—
|
|
|
(4.3
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
2.4
|
|
|
0.6
|
|
|
1.5
|
|
|
4.5
|
|
||||
Acquisition related costs
|
1.1
|
|
|
—
|
|
|
1.0
|
|
|
2.1
|
|
||||
Securitization interest
|
—
|
|
|
(14.5
|
)
|
|
—
|
|
|
(14.5
|
)
|
||||
Loss on asset sales
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||
Severance
|
1.7
|
|
|
0.1
|
|
|
0.1
|
|
|
1.9
|
|
||||
Foreign currency losses
|
1.9
|
|
|
—
|
|
|
1.8
|
|
|
3.7
|
|
||||
IAA allocated costs
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
||||
Other
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||
Total addbacks
|
12.2
|
|
|
(13.8
|
)
|
|
1.4
|
|
|
(0.2
|
)
|
||||
Adjusted EBITDA
|
$
|
98.8
|
|
|
$
|
42.0
|
|
|
$
|
(30.3
|
)
|
|
$
|
110.5
|
|
|
Year Ended December 31, 2019
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
174.3
|
|
|
$
|
120.0
|
|
|
$
|
(201.9
|
)
|
|
$
|
92.4
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
67.3
|
|
|
41.9
|
|
|
(71.5
|
)
|
|
37.7
|
|
||||
Interest expense, net of interest income
|
2.3
|
|
|
63.7
|
|
|
120.4
|
|
|
186.4
|
|
||||
Depreciation and amortization
|
149.9
|
|
|
10.3
|
|
|
28.5
|
|
|
188.7
|
|
||||
Intercompany interest
|
11.7
|
|
|
(5.1
|
)
|
|
(6.6
|
)
|
|
—
|
|
||||
EBITDA
|
405.5
|
|
|
230.8
|
|
|
(131.1
|
)
|
|
505.2
|
|
||||
Intercompany charges
|
13.5
|
|
|
—
|
|
|
(13.5
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
7.8
|
|
|
1.6
|
|
|
10.9
|
|
|
20.3
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||
Acquisition related costs
|
6.5
|
|
|
—
|
|
|
5.7
|
|
|
12.2
|
|
||||
Securitization interest
|
—
|
|
|
(54.9
|
)
|
|
—
|
|
|
(54.9
|
)
|
||||
Loss on asset sales
|
2.1
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||
Severance
|
9.1
|
|
|
0.4
|
|
|
5.8
|
|
|
15.3
|
|
||||
Foreign currency (gains)/losses
|
(1.5
|
)
|
|
—
|
|
|
0.8
|
|
|
(0.7
|
)
|
||||
IAA allocated costs
|
—
|
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
||||
Other
|
5.0
|
|
|
—
|
|
|
1.0
|
|
|
6.0
|
|
||||
Total addbacks
|
42.5
|
|
|
(52.9
|
)
|
|
15.2
|
|
|
4.8
|
|
||||
Adjusted EBITDA
|
$
|
448.0
|
|
|
$
|
177.9
|
|
|
$
|
(115.9
|
)
|
|
$
|
510.0
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
203.3
|
|
|
$
|
112.0
|
|
|
$
|
(197.7
|
)
|
|
$
|
117.6
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
69.1
|
|
|
35.4
|
|
|
(70.2
|
)
|
|
34.3
|
|
||||
Interest expense, net of interest income
|
1.0
|
|
|
59.3
|
|
|
127.0
|
|
|
187.3
|
|
||||
Depreciation and amortization
|
127.5
|
|
|
16.0
|
|
|
28.9
|
|
|
172.4
|
|
||||
Intercompany interest
|
19.8
|
|
|
(3.2
|
)
|
|
(16.6
|
)
|
|
—
|
|
||||
EBITDA
|
420.7
|
|
|
219.5
|
|
|
(128.6
|
)
|
|
511.6
|
|
||||
Intercompany charges
|
15.3
|
|
|
—
|
|
|
(15.3
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
9.3
|
|
|
2.3
|
|
|
8.8
|
|
|
20.4
|
|
||||
Acquisition related costs
|
4.8
|
|
|
—
|
|
|
2.5
|
|
|
7.3
|
|
||||
Securitization interest
|
—
|
|
|
(51.5
|
)
|
|
—
|
|
|
(51.5
|
)
|
||||
Loss on asset sales
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||
Severance
|
5.0
|
|
|
0.6
|
|
|
0.1
|
|
|
5.7
|
|
||||
Foreign currency losses
|
1.9
|
|
|
—
|
|
|
1.8
|
|
|
3.7
|
|
||||
IAA allocated costs
|
—
|
|
|
—
|
|
|
5.2
|
|
|
5.2
|
|
||||
Other
|
1.1
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
||||
Total addbacks
|
39.1
|
|
|
(48.6
|
)
|
|
3.1
|
|
|
(6.4
|
)
|
||||
Adjusted EBITDA
|
$
|
459.8
|
|
|
$
|
170.9
|
|
|
$
|
(125.5
|
)
|
|
$
|
505.2
|
|
|
Three Months Ended
|
|
Twelve
Months
Ended
|
||||||||||||||||
(Dollars in millions)
|
March 31,
2019
|
|
June 30,
2019
|
|
September 30,
2019
|
|
December 31,
2019 |
|
December 31, 2019
|
||||||||||
Net income (loss)
|
$
|
77.8
|
|
|
$
|
55.6
|
|
|
$
|
35.3
|
|
|
$
|
19.8
|
|
|
$
|
188.5
|
|
Less: Income from discontinued operations
|
62.5
|
|
|
28.2
|
|
|
0.9
|
|
|
4.5
|
|
|
96.1
|
|
|||||
Income from continuing operations
|
15.3
|
|
|
27.4
|
|
|
34.4
|
|
|
15.3
|
|
|
92.4
|
|
|||||
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
6.5
|
|
|
8.7
|
|
|
13.2
|
|
|
9.3
|
|
|
37.7
|
|
|||||
Interest expense, net of interest income
|
55.9
|
|
|
55.0
|
|
|
37.2
|
|
|
38.3
|
|
|
186.4
|
|
|||||
Depreciation and amortization
|
44.3
|
|
|
47.9
|
|
|
46.4
|
|
|
50.1
|
|
|
188.7
|
|
|||||
EBITDA
|
122.0
|
|
|
139.0
|
|
|
131.2
|
|
|
113.0
|
|
|
505.2
|
|
|||||
Non-cash stock-based compensation
|
6.6
|
|
|
4.0
|
|
|
4.5
|
|
|
5.2
|
|
|
20.3
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|||||
Acquisition related costs
|
3.9
|
|
|
3.7
|
|
|
2.7
|
|
|
1.9
|
|
|
12.2
|
|
|||||
Securitization interest
|
(14.8
|
)
|
|
(13.8
|
)
|
|
(13.3
|
)
|
|
(13.0
|
)
|
|
(54.9
|
)
|
|||||
Loss on asset sales
|
0.5
|
|
|
0.4
|
|
|
0.8
|
|
|
0.4
|
|
|
2.1
|
|
|||||
Severance
|
3.7
|
|
|
1.1
|
|
|
0.9
|
|
|
9.6
|
|
|
15.3
|
|
|||||
Foreign currency (gains)/losses
|
(0.6
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
0.3
|
|
|
(0.7
|
)
|
|||||
IAA allocated costs
|
1.4
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|||||
Other
|
0.2
|
|
|
0.6
|
|
|
0.6
|
|
|
4.6
|
|
|
6.0
|
|
|||||
Total addbacks
|
0.9
|
|
|
(3.1
|
)
|
|
(2.0
|
)
|
|
9.0
|
|
|
4.8
|
|
|||||
Adjusted EBITDA
|
$
|
122.9
|
|
|
$
|
135.9
|
|
|
$
|
129.2
|
|
|
$
|
122.0
|
|
|
$
|
510.0
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Net cash provided by (used by):
|
|
|
|
||||
Operating activities - continuing operations
|
$
|
380.8
|
|
|
$
|
438.6
|
|
Operating activities - discontinued operations
|
161.2
|
|
|
284.3
|
|
||
Investing activities - continuing operations
|
(415.0
|
)
|
|
(315.1
|
)
|
||
Investing activities - discontinued operations
|
(37.4
|
)
|
|
(66.1
|
)
|
||
Financing activities - continuing operations
|
(1,163.8
|
)
|
|
(315.8
|
)
|
||
Financing activities - discontinued operations
|
1,317.6
|
|
|
(4.3
|
)
|
||
Effect of exchange rate on cash
|
12.8
|
|
|
(20.4
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
256.2
|
|
|
$
|
1.2
|
|
•
|
an increase in cash used for acquisitions of approximately $75.5 million; and
|
•
|
an increase in cash used for capital expenditures of approximately $30.3 million;
|
•
|
a net decrease in finance receivables held for investment of approximately $5.9 million.
|
•
|
an increase in net payments on debt of approximately $784.4 million. The Company used net cash provided by financing activities from discontinued operations (cash received from IAA in the Separation) to prepay approximately $1.3 billion of its term loan debt in the second quarter of 2019. In addition, in the third quarter of 2019, the Company refinanced the outstanding Term Loan B-4 and Term Loan B-5 and repaid the remaining amount on the 2017 Revolving Credit Facility with the new Term Loan B-6;
|
•
|
a net decrease in the obligations collateralized by finance receivables of approximately $97.6 million; and
|
•
|
an increase in cash transferred to IAA in connection with the Separation of $50.9 million;
|
•
|
a decrease in common stock repurchases of approximately $30.3 million;
|
•
|
a decrease in dividends paid to stockholders of approximately $24.0 million;
|
•
|
a $19.3 million increase in borrowings from the lines of credit; and
|
•
|
a smaller decrease in book overdrafts in 2019 compared with 2018 of approximately $16.0 million.
|
•
|
On February 18, 2020, the Company announced a cash dividend of $0.19 per share that is payable on April 3, 2020, to stockholders of record at the close of business on March 20, 2020.
|
•
|
On November 5, 2019, the Company announced a cash dividend of $0.19 per share that was paid on January 3, 2020, to stockholders of record at the close of business on December 20, 2019.
|
•
|
On August 6, 2019, the Company announced a cash dividend of $0.19 per share that was paid on October 3, 2019, to stockholders of record at the close of business on September 20, 2019.
|
•
|
On May 7, 2019, the Company announced a cash dividend of $0.35 per share that was paid on June 17, 2019, to stockholders of record at the close of business on June 3, 2019.
|
•
|
On February 19, 2019, the Company announced a cash dividend of $0.35 per share that was paid on April 4, 2019, to stockholders of record at the close of business on March 22, 2019.
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
||||||||||
$325 million Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan B-6 (a)
|
947.6
|
|
|
9.5
|
|
|
19.0
|
|
|
19.0
|
|
|
900.1
|
|
|||||
Senior notes (a)
|
950.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
950.0
|
|
|||||
European lines of credit
|
19.3
|
|
|
19.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Finance lease obligations (b)
|
29.2
|
|
|
14.5
|
|
|
14.3
|
|
|
0.4
|
|
|
—
|
|
|||||
Interest payments relating to long-term debt (c)
|
518.6
|
|
|
88.0
|
|
|
174.4
|
|
|
172.6
|
|
|
83.6
|
|
|||||
Operating leases (d)
|
543.0
|
|
|
57.2
|
|
|
105.8
|
|
|
96.9
|
|
|
283.1
|
|
|||||
Other long-term liabilities
|
25.1
|
|
|
9.1
|
|
|
16.0
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
3,032.8
|
|
|
$
|
197.6
|
|
|
$
|
329.5
|
|
|
$
|
288.9
|
|
|
$
|
2,216.8
|
|
(a)
|
The table assumes the long-term debt is held to maturity.
|
(b)
|
We have entered into finance leases for furniture, fixtures, equipment and software. The amounts include the interest portion of the finance leases. Future finance lease obligations would change if we entered into additional finance lease agreements.
|
(c)
|
Interest payments on long-term debt are projected based on the contractual rates of the debt securities. Interest rates for the variable rate term debt instruments were held constant at rates as of December 31, 2019.
|
(d)
|
Operating leases are entered into in the normal course of business. We lease most of our auction facilities, as well as other property and equipment under operating leases. Some lease agreements contain options to renew the lease or purchase the leased property. Future operating lease obligations would change if the renewal options were exercised and/or if we entered into additional operating lease agreements.
|
|
Page
|
KAR Auction Services, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets;
|
•
|
Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating revenues
|
|
|
|
|
|
||||||
Auction fees and services revenue
|
$
|
2,133.5
|
|
|
$
|
1,985.1
|
|
|
$
|
1,841.8
|
|
Purchased vehicle sales
|
295.5
|
|
|
116.8
|
|
|
95.7
|
|
|||
Finance-related revenue
|
352.9
|
|
|
340.9
|
|
|
301.3
|
|
|||
Total operating revenues
|
2,781.9
|
|
|
2,442.8
|
|
|
2,238.8
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Cost of services (exclusive of depreciation and amortization)
|
1,617.1
|
|
|
1,321.5
|
|
|
1,209.1
|
|
|||
Selling, general and administrative
|
662.0
|
|
|
608.8
|
|
|
531.7
|
|
|||
Depreciation and amortization
|
188.7
|
|
|
172.4
|
|
|
171.5
|
|
|||
Total operating expenses
|
2,467.8
|
|
|
2,102.7
|
|
|
1,912.3
|
|
|||
Operating profit
|
314.1
|
|
|
340.1
|
|
|
326.5
|
|
|||
Interest expense
|
189.5
|
|
|
191.2
|
|
|
163.2
|
|
|||
Other income, net
|
(7.7
|
)
|
|
(3.0
|
)
|
|
(1.0
|
)
|
|||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
|
27.5
|
|
|||
Gain on previously held equity interest value
|
—
|
|
|
—
|
|
|
(21.6
|
)
|
|||
Income from continuing operations before income taxes
|
130.1
|
|
|
151.9
|
|
|
158.4
|
|
|||
Income taxes
|
37.7
|
|
|
34.3
|
|
|
(15.6
|
)
|
|||
Income from continuing operations
|
$
|
92.4
|
|
|
$
|
117.6
|
|
|
$
|
174.0
|
|
Income from discontinued operations, net of income taxes
|
96.1
|
|
|
210.4
|
|
|
188.0
|
|
|||
Net income
|
$
|
188.5
|
|
|
$
|
328.0
|
|
|
$
|
362.0
|
|
Net income per share - basic
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
0.70
|
|
|
$
|
0.88
|
|
|
$
|
1.28
|
|
Income from discontinued operations
|
0.73
|
|
|
1.56
|
|
|
1.38
|
|
|||
Net income
|
$
|
1.43
|
|
|
$
|
2.44
|
|
|
$
|
2.66
|
|
Net income per share - diluted
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
0.70
|
|
|
$
|
0.87
|
|
|
$
|
1.26
|
|
Income from discontinued operations
|
0.72
|
|
|
1.55
|
|
|
1.36
|
|
|||
Net income
|
$
|
1.42
|
|
|
$
|
2.42
|
|
|
$
|
2.62
|
|
Dividends declared per common share
|
$
|
1.08
|
|
|
$
|
1.40
|
|
|
$
|
1.31
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
188.5
|
|
|
$
|
328.0
|
|
|
$
|
362.0
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Foreign currency translation gain (loss)
|
19.9
|
|
|
(36.1
|
)
|
|
24.1
|
|
|||
Comprehensive income
|
$
|
208.4
|
|
|
$
|
291.9
|
|
|
$
|
386.1
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
507.6
|
|
|
$
|
277.1
|
|
Restricted cash
|
53.3
|
|
|
27.6
|
|
||
Trade receivables, net of allowances of $9.5 and $8.7
|
457.5
|
|
|
454.6
|
|
||
Finance receivables, net of allowances of $15.0 and $14.0
|
2,100.2
|
|
|
2,000.8
|
|
||
Other current assets
|
125.9
|
|
|
100.6
|
|
||
Current assets, discontinued operations
|
—
|
|
|
453.5
|
|
||
Total current assets
|
3,244.5
|
|
|
3,314.2
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
1,821.7
|
|
|
1,676.9
|
|
||
Customer relationships, net of accumulated amortization of $637.4 and $587.0
|
207.9
|
|
|
227.4
|
|
||
Other intangible assets, net of accumulated amortization of $292.4 and $255.3
|
298.5
|
|
|
272.4
|
|
||
Operating lease right-of-use assets
|
364.1
|
|
|
—
|
|
||
Other assets
|
35.5
|
|
|
31.0
|
|
||
Non-current assets, discontinued operations
|
—
|
|
|
1,053.3
|
|
||
Total other assets
|
2,727.7
|
|
|
3,261.0
|
|
||
Property and equipment, net of accumulated depreciation of $534.3 and $467.5
|
609.0
|
|
|
631.0
|
|
||
Total assets
|
$
|
6,581.2
|
|
|
$
|
7,206.2
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
704.6
|
|
|
$
|
691.3
|
|
Accrued employee benefits and compensation expenses
|
72.7
|
|
|
72.8
|
|
||
Accrued interest
|
7.9
|
|
|
7.9
|
|
||
Other accrued expenses
|
216.9
|
|
|
132.8
|
|
||
Income taxes payable
|
1.1
|
|
|
0.7
|
|
||
Dividends payable
|
24.5
|
|
|
46.5
|
|
||
Obligations collateralized by finance receivables
|
1,461.2
|
|
|
1,445.3
|
|
||
Current maturities of long-term debt
|
28.8
|
|
|
13.1
|
|
||
Current liabilities, discontinued operations
|
—
|
|
|
214.4
|
|
||
Total current liabilities
|
2,517.7
|
|
|
2,624.8
|
|
||
Non-current liabilities
|
|
|
|
||||
Long-term debt
|
1,861.3
|
|
|
2,654.3
|
|
||
Deferred income tax liabilities
|
134.5
|
|
|
125.3
|
|
||
Operating lease liabilities
|
358.3
|
|
|
—
|
|
||
Other liabilities
|
59.2
|
|
|
71.6
|
|
||
Non-current liabilities, discontinued operations
|
—
|
|
|
266.0
|
|
||
Total non-current liabilities
|
2,413.3
|
|
|
3,117.2
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 100,000,000
|
|
|
|
|
|
||
Issued shares: none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 400,000,000
|
|
|
|
|
|
||
Issued and outstanding shares:
|
|
|
|
|
|
||
128,833,452 (2019)
|
|
|
|
|
|
||
132,887,029 (2018)
|
1.3
|
|
|
1.3
|
|
||
Additional paid-in capital
|
1,028.9
|
|
|
1,131.9
|
|
||
Retained earnings
|
651.0
|
|
|
392.3
|
|
||
Accumulated other comprehensive loss
|
(31.0
|
)
|
|
(61.3
|
)
|
||
Total stockholders' equity
|
1,650.2
|
|
|
1,464.2
|
|
||
Total liabilities and stockholders' equity
|
$
|
6,581.2
|
|
|
$
|
7,206.2
|
|
|
Common
Stock
Shares
|
|
Common
Stock
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||
Balance at December 31, 2016
|
136.6
|
|
|
$
|
1.4
|
|
|
$
|
1,371.1
|
|
|
$
|
74.1
|
|
|
$
|
(49.3
|
)
|
|
$
|
1,397.3
|
|
Net income
|
|
|
|
|
|
|
|
362.0
|
|
|
|
|
362.0
|
|
||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
24.1
|
|
|
24.1
|
|
||||||||
Issuance of common stock under stock plans
|
1.1
|
|
|
|
|
11.4
|
|
|
|
|
|
|
11.4
|
|
||||||||
Surrender of RSUs for taxes
|
(0.1
|
)
|
|
|
|
(5.9
|
)
|
|
|
|
|
|
(5.9
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
24.2
|
|
|
|
|
|
|
24.2
|
|
||||||||
Repurchase and retirement of common stock
|
(3.3
|
)
|
|
(0.1
|
)
|
|
(149.9
|
)
|
|
|
|
|
|
(150.0
|
)
|
|||||||
Dividends earned under stock plans
|
|
|
|
|
0.9
|
|
|
(0.9
|
)
|
|
|
|
—
|
|
||||||||
Cash dividends declared to stockholders ($1.31 per share)
|
|
|
|
|
|
|
(178.2
|
)
|
|
|
|
(178.2
|
)
|
|||||||||
Balance at December 31, 2017
|
134.3
|
|
|
1.3
|
|
|
1,251.8
|
|
|
257.0
|
|
|
(25.2
|
)
|
|
1,484.9
|
|
|||||
Cumulative effect adjustment for adoption of
ASC Topic 606, net of tax |
|
|
|
|
|
|
(3.0
|
)
|
|
|
|
(3.0
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
328.0
|
|
|
|
|
328.0
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(36.1
|
)
|
|
(36.1
|
)
|
|||||||||
Issuance of common stock under stock plans
|
1.5
|
|
|
|
|
15.0
|
|
|
|
|
|
|
15.0
|
|
||||||||
Surrender of RSUs for taxes
|
(0.2
|
)
|
|
|
|
(10.2
|
)
|
|
|
|
|
|
(10.2
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
23.4
|
|
|
|
|
|
|
23.4
|
|
|||||||||
Repurchase and retirement of common stock
|
(2.7
|
)
|
|
|
|
|
(150.0
|
)
|
|
|
|
|
|
(150.0
|
)
|
|||||||
Dividends earned under stock plans
|
|
|
|
|
1.9
|
|
|
(1.9
|
)
|
|
|
|
—
|
|
||||||||
Cash dividends declared to stockholders ($1.40 per share)
|
|
|
|
|
|
|
(187.8
|
)
|
|
|
|
(187.8
|
)
|
|||||||||
Balance at December 31, 2018
|
132.9
|
|
|
1.3
|
|
|
1,131.9
|
|
|
392.3
|
|
|
(61.3
|
)
|
|
1,464.2
|
|
|||||
Cumulative effect adjustment for adoption of
ASC Topic 842, net of tax |
|
|
|
|
|
|
1.1
|
|
|
|
|
1.1
|
|
|||||||||
Net income
|
|
|
|
|
|
|
188.5
|
|
|
|
|
188.5
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
19.9
|
|
|
19.9
|
|
|||||||||
Issuance of common stock under stock plans
|
0.9
|
|
|
|
|
4.3
|
|
|
|
|
|
|
4.3
|
|
||||||||
Surrender of RSUs for taxes
|
(0.2
|
)
|
|
|
|
(10.8
|
)
|
|
|
|
|
|
(10.8
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
21.4
|
|
|
|
|
|
|
21.4
|
|
|||||||||
Repurchase and retirement of common stock
|
(4.8
|
)
|
|
|
|
(119.7
|
)
|
|
|
|
|
|
(119.7
|
)
|
||||||||
Distribution of IAA
|
|
|
|
|
|
|
213.2
|
|
|
10.4
|
|
|
223.6
|
|
||||||||
Dividends earned under stock plans
|
|
|
|
|
1.8
|
|
|
(1.8
|
)
|
|
|
|
—
|
|
||||||||
Cash dividends declared to stockholders ($1.08 per share)
|
|
|
|
|
|
|
(142.3
|
)
|
|
|
|
(142.3
|
)
|
|||||||||
Balance at December 31, 2019
|
128.8
|
|
|
$
|
1.3
|
|
|
$
|
1,028.9
|
|
|
$
|
651.0
|
|
|
$
|
(31.0
|
)
|
|
$
|
1,650.2
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
188.5
|
|
|
$
|
328.0
|
|
|
$
|
362.0
|
|
Net income from discontinued operations
|
(96.1
|
)
|
|
(210.4
|
)
|
|
(188.0
|
)
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
188.7
|
|
|
172.4
|
|
|
171.5
|
|
|||
Provision for credit losses
|
40.1
|
|
|
36.9
|
|
|
37.9
|
|
|||
Deferred income taxes
|
(3.3
|
)
|
|
3.0
|
|
|
(72.3
|
)
|
|||
Amortization of debt issuance costs
|
12.2
|
|
|
10.6
|
|
|
10.4
|
|
|||
Stock-based compensation
|
19.6
|
|
|
19.6
|
|
|
20.4
|
|
|||
Loss (gain) on disposal of fixed assets
|
0.2
|
|
|
—
|
|
|
(0.3
|
)
|
|||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
|
27.5
|
|
|||
Gain on previously held equity interest value
|
—
|
|
|
—
|
|
|
(21.6
|
)
|
|||
Other non-cash, net
|
11.9
|
|
|
(0.4
|
)
|
|
7.1
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Trade receivables and other assets
|
(3.0
|
)
|
|
(49.0
|
)
|
|
4.1
|
|
|||
Accounts payable and accrued expenses
|
19.8
|
|
|
127.9
|
|
|
0.6
|
|
|||
Net cash provided by operating activities - continuing operations
|
380.8
|
|
|
438.6
|
|
|
359.3
|
|
|||
Net cash provided by operating activities - discontinued operations
|
161.2
|
|
|
284.3
|
|
|
238.2
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Net increase in finance receivables held for investment
|
(132.7
|
)
|
|
(138.6
|
)
|
|
(148.5
|
)
|
|||
Acquisition of businesses (net of cash acquired)
|
(120.7
|
)
|
|
(45.2
|
)
|
|
(72.4
|
)
|
|||
Purchases of property, equipment and computer software
|
(161.6
|
)
|
|
(131.3
|
)
|
|
(97.3
|
)
|
|||
Advance to equity method investee
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
|||
Net cash used by investing activities - continuing operations
|
(415.0
|
)
|
|
(315.1
|
)
|
|
(323.2
|
)
|
|||
Net cash used by investing activities - discontinued operations
|
(37.4
|
)
|
|
(66.1
|
)
|
|
(55.1
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net decrease in book overdrafts
|
(4.7
|
)
|
|
(20.7
|
)
|
|
(1.5
|
)
|
|||
Net increase (decrease) in borrowings from lines of credit
|
19.3
|
|
|
—
|
|
|
(80.5
|
)
|
|||
Net increase in obligations collateralized by finance receivables
|
3.8
|
|
|
101.4
|
|
|
65.0
|
|
|||
Proceeds from long-term debt
|
947.6
|
|
|
—
|
|
|
2,717.0
|
|
|||
Payments for debt issuance costs/amendments
|
(14.1
|
)
|
|
(12.5
|
)
|
|
(22.6
|
)
|
|||
Payments on long-term debt
|
(1,749.0
|
)
|
|
(17.0
|
)
|
|
(2,436.7
|
)
|
|||
Payments on finance leases
|
(15.9
|
)
|
|
(15.4
|
)
|
|
(13.3
|
)
|
|||
Payments of contingent consideration and deferred acquisition costs
|
(9.4
|
)
|
|
(18.1
|
)
|
|
(7.0
|
)
|
|||
Initial net investment for interest rate caps
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|||
Issuance of common stock under stock plans
|
4.3
|
|
|
15.0
|
|
|
11.4
|
|
|||
Tax withholding payments for vested RSUs
|
(10.8
|
)
|
|
(10.2
|
)
|
|
(5.9
|
)
|
|||
Repurchase and retirement of common stock
|
(119.7
|
)
|
|
(150.0
|
)
|
|
(150.0
|
)
|
|||
Dividends paid to stockholders
|
(164.3
|
)
|
|
(188.3
|
)
|
|
(174.8
|
)
|
|||
Cash transferred to IAA
|
(50.9
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used by financing activities - continuing operations
|
(1,163.8
|
)
|
|
(315.8
|
)
|
|
(100.6
|
)
|
|||
Net cash provided by (used by) financing activities - discontinued operations
|
1,317.6
|
|
|
(4.3
|
)
|
|
(7.0
|
)
|
|||
Effect of exchange rate changes on cash
|
12.8
|
|
|
(20.4
|
)
|
|
14.0
|
|
|||
Net increase in cash, cash equivalents and restricted cash
|
256.2
|
|
|
1.2
|
|
|
125.6
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
304.7
|
|
|
303.5
|
|
|
177.9
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
560.9
|
|
|
$
|
304.7
|
|
|
$
|
303.5
|
|
Cash paid for interest, net of proceeds from interest rate caps
|
$
|
170.0
|
|
|
$
|
180.8
|
|
|
$
|
147.1
|
|
Cash paid for taxes, net of refunds - continuing operations
|
$
|
37.8
|
|
|
$
|
57.9
|
|
|
$
|
70.1
|
|
Cash paid for taxes, net of refunds - discontinued operations
|
$
|
41.4
|
|
|
$
|
64.0
|
|
|
$
|
55.9
|
|
•
|
"we," "us," "our," "KAR" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
|
•
|
"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including Openlane, Inc. (together with Openlane, Inc.'s subsidiaries, "Openlane"), Nth Gen Software Inc. ("TradeRev"), ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited")) and ADESA Europe (formerly known as CarsOnTheWeb ("COTW"));
|
•
|
"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, as amended on March 9, 2016, May 31, 2017 and September 19, 2019, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank N.A., as administrative agent;
|
•
|
"Credit Facility" refers to the $950 million, senior secured term loan B-6 facility due September 19, 2026 ("Term Loan B-6") and the $325 million, senior secured revolving credit facility due September 19, 2024 (the "Revolving Credit Facility"), the terms of which are set forth in the Credit Agreement;
|
•
|
"IAA" refers, collectively, to Insurance Auto Auctions, Inc., formerly a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC"). See Note 4;
|
•
|
"KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries;
|
•
|
"Senior notes" refers to the 5.125% senior notes due 2025 ($950 million aggregate principal outstanding at December 31, 2019);
|
•
|
"Term Loan B-2" refers to the senior secured term loan B-2 facility, the terms of which are set forth in the Credit Agreement;
|
•
|
"Term Loan B-3" refers to the senior secured term loan B-3 facility, the terms of which are set forth in the Credit Agreement;
|
•
|
"Term Loan B-4" refers to the senior secured term loan B-4 facility, the terms of which are set forth in the Credit Agreement;
|
•
|
"Term Loan B-5" refers to the senior secured term loan B-5 facility, the terms of which are set forth in the Credit Agreement;
|
•
|
"2016 Revolving Credit Facility" refers to the $300 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement; and
|
•
|
"2017 Revolving Credit Facility" refers to the $350 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement.
|
|
Year Ended December 31,
|
||||||||||
AFC Revenue (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Interest and fee income
|
$
|
342.1
|
|
|
$
|
327.3
|
|
|
$
|
290.3
|
|
Other revenue
|
10.9
|
|
|
13.1
|
|
|
11.8
|
|
|||
Provision for credit losses
|
(35.3
|
)
|
|
(32.9
|
)
|
|
(33.9
|
)
|
|||
Warranty contract revenue
|
35.2
|
|
|
33.4
|
|
|
33.1
|
|
|||
|
$
|
352.9
|
|
|
$
|
340.9
|
|
|
$
|
301.3
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating revenues
|
$
|
723.6
|
|
|
$
|
1,326.8
|
|
|
$
|
1,219.2
|
|
Operating expenses
|
|
|
|
|
|
||||||
Cost of services (exclusive of depreciation and amortization)
|
446.1
|
|
|
821.2
|
|
|
778.1
|
|
|||
Selling, general and administrative
|
94.5
|
|
|
124.0
|
|
|
108.5
|
|
|||
Depreciation and amortization
|
43.9
|
|
|
97.4
|
|
|
93.1
|
|
|||
Total operating expenses
|
584.5
|
|
|
1,042.6
|
|
|
979.7
|
|
|||
Operating profit
|
139.1
|
|
|
284.2
|
|
|
239.5
|
|
|||
Interest expense
|
2.7
|
|
|
0.8
|
|
|
0.8
|
|
|||
Other income, net
|
—
|
|
|
(0.5
|
)
|
|
(0.9
|
)
|
|||
Income from discontinued operations before income taxes
|
136.4
|
|
|
283.9
|
|
|
239.6
|
|
|||
Income taxes
|
40.3
|
|
|
73.5
|
|
|
51.6
|
|
|||
Income from discontinued operations
|
$
|
96.1
|
|
|
$
|
210.4
|
|
|
$
|
188.0
|
|
|
June 28,
2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
50.9
|
|
|
$
|
60.0
|
|
Trade receivables, net
|
284.7
|
|
|
311.0
|
|
||
Other current assets
|
83.6
|
|
|
82.5
|
|
||
Goodwill
|
536.8
|
|
|
536.8
|
|
||
Customer relationships, net
|
62.2
|
|
|
74.8
|
|
||
Other intangible assets, net
|
87.5
|
|
|
86.2
|
|
||
Operating lease right-of-use assets
|
655.2
|
|
|
—
|
|
||
Other assets
|
13.3
|
|
|
10.3
|
|
||
Property and equipment, net
|
241.4
|
|
|
345.2
|
|
||
Total assets, discontinued operations
|
$
|
2,015.6
|
|
|
$
|
1,506.8
|
|
Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
115.8
|
|
|
$
|
129.0
|
|
Accrued employee benefits and compensation expenses
|
19.0
|
|
|
29.6
|
|
||
Other accrued expenses
|
120.9
|
|
|
53.6
|
|
||
Income taxes payable
|
—
|
|
|
2.2
|
|
||
Long-term debt
|
1,274.8
|
|
|
—
|
|
||
Deferred income tax liabilities
|
63.7
|
|
|
63.1
|
|
||
Operating lease liabilities
|
633.0
|
|
|
—
|
|
||
Other liabilities
|
12.0
|
|
|
202.9
|
|
||
Total liabilities, discontinued operations
|
$
|
2,239.2
|
|
|
$
|
480.4
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
PRSUs
|
$
|
10.0
|
|
|
$
|
10.8
|
|
|
$
|
11.9
|
|
RSUs
|
9.6
|
|
|
8.7
|
|
|
7.1
|
|
|||
Service options
|
—
|
|
|
0.1
|
|
|
1.4
|
|
|||
Total stock-based compensation expense
|
$
|
19.6
|
|
|
$
|
19.6
|
|
|
$
|
20.4
|
|
Performance Restricted Stock Units
|
|
Number
|
|
Weighted Average Grant Date Fair Value
|
|||
PRSUs at January 1, 2019
|
|
789,707
|
|
|
$
|
44.62
|
|
Granted
|
|
288,545
|
|
|
47.09
|
|
|
Vested
|
|
(342,276
|
)
|
|
33.44
|
|
|
Forfeited
|
|
(38,058
|
)
|
|
25.26
|
|
|
PRSUs at December 31, 2019
|
|
697,918
|
|
|
$
|
18.52
|
|
Restricted Stock Units
|
|
Number
|
|
Weighted Average Grant Date Fair Value
|
|||
RSUs at January 1, 2019
|
|
556,172
|
|
|
$
|
47.87
|
|
Granted
|
|
307,772
|
|
|
46.95
|
|
|
Vested
|
|
(251,328
|
)
|
|
42.86
|
|
|
Forfeited
|
|
(61,849
|
)
|
|
33.24
|
|
|
RSUs at December 31, 2019
|
|
550,767
|
|
|
$
|
22.71
|
|
Service Options
|
Number
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2019
|
1,003,654
|
|
|
$
|
24.36
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Exercised
|
(295,244
|
)
|
|
19.87
|
|
|
|
|
|
|
||
Forfeited
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Canceled
|
(563
|
)
|
|
10.49
|
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
707,847
|
|
|
$
|
9.08
|
|
|
3.3 years
|
|
$
|
9.0
|
|
Exercisable at December 31, 2019
|
707,847
|
|
|
$
|
9.08
|
|
|
3.3 years
|
|
$
|
9.0
|
|
Exit Options
|
Number
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2019
|
14,465
|
|
|
$
|
12.85
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Exercised
|
(10,912
|
)
|
|
12.02
|
|
|
|
|
|
|
||
Forfeited
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Canceled
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
3,553
|
|
|
$
|
5.12
|
|
|
0.2 years
|
|
$
|
0.1
|
|
Exercisable at December 31, 2019
|
3,553
|
|
|
$
|
5.12
|
|
|
0.2 years
|
|
$
|
0.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income from continuing operations
|
$
|
92.4
|
|
|
$
|
117.6
|
|
|
$
|
174.0
|
|
Weighted average common shares outstanding
|
131.6
|
|
|
134.3
|
|
|
136.3
|
|
|||
Effect of dilutive stock options and restricted stock awards
|
1.3
|
|
|
1.4
|
|
|
1.7
|
|
|||
Weighted average common shares outstanding and potential common shares
|
132.9
|
|
|
135.7
|
|
|
138.0
|
|
|||
Net income from continuing operations per share
|
|
|
|
|
|
||||||
Basic
|
$
|
0.70
|
|
|
$
|
0.88
|
|
|
$
|
1.28
|
|
Diluted
|
$
|
0.70
|
|
|
$
|
0.87
|
|
|
$
|
1.26
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Allowance for Credit Losses
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
14.0
|
|
|
$
|
13.0
|
|
|
$
|
12.0
|
|
Provision for credit losses
|
35.3
|
|
|
32.9
|
|
|
33.9
|
|
|||
Recoveries
|
7.7
|
|
|
6.9
|
|
|
5.3
|
|
|||
Less charge-offs
|
(42.0
|
)
|
|
(38.8
|
)
|
|
(38.2
|
)
|
|||
Balance at end of period
|
$
|
15.0
|
|
|
$
|
14.0
|
|
|
$
|
13.0
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
8.7
|
|
|
$
|
9.1
|
|
|
$
|
11.0
|
|
Provision for credit losses
|
4.8
|
|
|
4.0
|
|
|
4.0
|
|
|||
Less net charge-offs
|
(4.0
|
)
|
|
(4.4
|
)
|
|
(5.9
|
)
|
|||
Balance at end of period
|
$
|
9.5
|
|
|
$
|
8.7
|
|
|
$
|
9.1
|
|
|
December 31, 2019
|
|
Net Credit Losses
During 2019
|
||||||||
|
Total Amount of:
|
|
|||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|||||||
Floorplan receivables
|
$
|
2,099.4
|
|
|
$
|
28.8
|
|
|
$
|
34.3
|
|
Other loans
|
15.8
|
|
|
—
|
|
|
—
|
|
|||
Total receivables managed
|
$
|
2,115.2
|
|
|
$
|
28.8
|
|
|
$
|
34.3
|
|
|
December 31, 2018
|
|
Net Credit Losses
During 2018
|
||||||||
|
Total Amount of:
|
|
|||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|||||||
Floorplan receivables
|
$
|
2,001.9
|
|
|
$
|
15.9
|
|
|
$
|
31.9
|
|
Other loans
|
12.9
|
|
|
—
|
|
|
—
|
|
|||
Total receivables managed
|
$
|
2,014.8
|
|
|
$
|
15.9
|
|
|
$
|
31.9
|
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Obligations collateralized by finance receivables, gross
|
$
|
1,474.4
|
|
|
$
|
1,464.7
|
|
Unamortized securitization issuance costs
|
(13.2
|
)
|
|
(19.4
|
)
|
||
Obligations collateralized by finance receivables
|
$
|
1,461.2
|
|
|
$
|
1,445.3
|
|
|
ADESA
Auctions
|
|
AFC
|
|
Total
|
||||||
Balance at December 31, 2017
|
$
|
1,390.4
|
|
|
$
|
263.7
|
|
|
$
|
1,654.1
|
|
Increase for acquisition activity
|
32.1
|
|
|
—
|
|
|
32.1
|
|
|||
Other
|
(9.3
|
)
|
|
—
|
|
|
(9.3
|
)
|
|||
Balance at December 31, 2018
|
$
|
1,413.2
|
|
|
$
|
263.7
|
|
|
$
|
1,676.9
|
|
Increase for acquisition activity
|
142.6
|
|
|
—
|
|
|
142.6
|
|
|||
Other
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|||
Balance at December 31, 2019
|
$
|
1,558.0
|
|
|
$
|
263.7
|
|
|
$
|
1,821.7
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Useful
Lives
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
||||||||||||
Customer relationships
|
5 - 19
|
|
$
|
845.3
|
|
|
$
|
(637.4
|
)
|
|
$
|
207.9
|
|
|
$
|
814.4
|
|
|
$
|
(587.0
|
)
|
|
$
|
227.4
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Useful Lives
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
||||||||||||
Tradenames
|
2 - Indefinite
|
|
$
|
147.6
|
|
|
$
|
(10.7
|
)
|
|
$
|
136.9
|
|
|
$
|
145.6
|
|
|
$
|
(8.6
|
)
|
|
$
|
137.0
|
|
Computer software & technology
|
3 - 13
|
|
443.0
|
|
|
(281.5
|
)
|
|
161.5
|
|
|
381.8
|
|
|
(246.5
|
)
|
|
135.3
|
|
||||||
Covenants not to compete
|
5
|
|
0.3
|
|
|
(0.2
|
)
|
|
0.1
|
|
|
0.3
|
|
|
(0.2
|
)
|
|
0.1
|
|
||||||
Total
|
|
|
$
|
590.9
|
|
|
$
|
(292.4
|
)
|
|
$
|
298.5
|
|
|
$
|
527.7
|
|
|
$
|
(255.3
|
)
|
|
$
|
272.4
|
|
|
Useful Lives
(in years)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||||
Land
|
|
|
$
|
205.5
|
|
|
$
|
244.6
|
|
Buildings
|
5 - 40
|
|
247.3
|
|
|
245.0
|
|
||
Land improvements
|
5 - 20
|
|
183.7
|
|
|
172.3
|
|
||
Building and leasehold improvements
|
3 - 33
|
|
133.6
|
|
|
92.6
|
|
||
Furniture, fixtures and equipment
|
1 - 15
|
|
344.0
|
|
|
297.7
|
|
||
Vehicles
|
3 - 10
|
|
16.5
|
|
|
14.9
|
|
||
Construction in progress
|
|
|
12.7
|
|
|
31.4
|
|
||
|
|
|
1,143.3
|
|
|
1,098.5
|
|
||
Accumulated depreciation
|
|
|
(534.3
|
)
|
|
(467.5
|
)
|
||
Property and equipment, net
|
|
|
$
|
609.0
|
|
|
$
|
631.0
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of period
|
$
|
35.8
|
|
|
$
|
37.7
|
|
|
$
|
35.8
|
|
Net payments
|
(66.2
|
)
|
|
(57.8
|
)
|
|
(59.3
|
)
|
|||
Expense
|
67.1
|
|
|
55.9
|
|
|
61.2
|
|
|||
Balance at end of period
|
$
|
36.7
|
|
|
$
|
35.8
|
|
|
$
|
37.7
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
Interest Rate*
|
|
Maturity
|
|
2019
|
|
2018
|
||||||
Term Loan B-4
|
Adjusted LIBOR
|
|
+ 2.25%
|
|
March 11, 2021
|
|
$
|
—
|
|
|
$
|
704.4
|
|
Term Loan B-5
|
Adjusted LIBOR
|
|
+ 2.50%
|
|
March 9, 2023
|
|
—
|
|
|
1,031.5
|
|
||
Term Loan B-6
|
Adjusted LIBOR
|
|
+ 2.25%
|
|
September 19, 2026
|
|
947.6
|
|
|
—
|
|
||
Revolving Credit Facility
|
Adjusted LIBOR
|
|
+ 1.75%
|
|
September 19, 2024
|
|
—
|
|
|
—
|
|
||
Senior notes
|
|
|
5.125%
|
|
June 1, 2025
|
|
950.0
|
|
|
950.0
|
|
||
European lines of credit
|
Euribor
|
|
+ 1.25%
|
|
Repayable upon demand
|
|
19.3
|
|
|
—
|
|
||
Canadian line of credit
|
CAD Prime
|
|
+ 0.50%
|
|
Repayable upon demand
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
|
|
|
|
|
1,916.9
|
|
|
2,685.9
|
|
||
Unamortized debt issuance costs/discounts
|
|
|
|
|
|
(26.8
|
)
|
|
(18.5
|
)
|
|||
Current portion of long-term debt
|
|
|
|
|
|
|
(28.8
|
)
|
|
(13.1
|
)
|
||
Long-term debt
|
|
|
|
|
|
|
$
|
1,861.3
|
|
|
$
|
2,654.3
|
|
2020
|
$
|
28.8
|
|
2021
|
9.5
|
|
|
2022
|
9.5
|
|
|
2023
|
9.5
|
|
|
2024
|
9.5
|
|
|
Thereafter
|
1,850.1
|
|
|
|
$
|
1,916.9
|
|
•
|
In August 2017, we entered into two interest rate caps 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 exceeded 2.0%. The interest rate cap agreements each had an effective date of September 30, 2017 and each matured on September 30, 2019. We paid an aggregate amount of approximately $1.0 million for the caps in August 2017.
|
•
|
In March 2017, we entered into two interest rate caps 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 exceeded 2.0%. The interest rate cap agreements each had an effective date of March 31, 2017 and each matured on March 31, 2019. We paid an aggregate amount of approximately $0.7 million for the caps in April 2017.
|
|
|
Asset Derivatives
|
||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||
2017 Interest rate caps
|
|
Other assets
|
|
N/A
|
|
Other assets
|
|
$
|
5.2
|
|
|
|
Location of Gain / (Loss) Recognized in Income on Derivatives
|
|
Amount of Gain / (Loss)
Recognized in Income on Derivatives
|
|||||||||||
|
|
|
Year Ended December 31,
|
||||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||
2017 Interest rate caps
|
|
Interest expense
|
|
$
|
(0.9
|
)
|
|
$
|
5.8
|
|
|
$
|
0.8
|
|
|
Year Ended December 31, 2019
|
||
Operating lease cost
|
$
|
60.2
|
|
Finance lease cost:
|
|
||
Amortization of right-of-use assets
|
$
|
14.7
|
|
Interest on lease liabilities
|
1.3
|
|
|
Total finance lease cost
|
$
|
16.0
|
|
|
Year Ended December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows related to operating leases
|
$
|
58.8
|
|
Operating cash flows related to finance leases
|
1.3
|
|
|
Financing cash flows related to finance leases
|
15.9
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
85.9
|
|
|
Finance leases
|
18.1
|
|
|
December 31, 2019
|
||
Operating Leases
|
|
||
Operating lease right-of-use assets
|
$
|
364.1
|
|
Other accrued expenses
|
$
|
34.5
|
|
Operating lease liabilities
|
358.3
|
|
|
Total operating lease liabilities
|
$
|
392.8
|
|
Finance Leases
|
|
||
Property and equipment, gross
|
$
|
102.2
|
|
Accumulated depreciation
|
(74.3
|
)
|
|
Property and equipment, net
|
$
|
27.9
|
|
Other accrued expenses
|
$
|
13.3
|
|
Other liabilities
|
14.0
|
|
|
Total finance lease liabilities
|
$
|
27.3
|
|
Weighted Average Remaining Lease Term
|
|
||
Operating leases
|
10.8 years
|
|
|
Finance leases
|
2.3 years
|
|
|
Weighted Average Discount Rate
|
|
||
Operating leases
|
6.1
|
%
|
|
Finance leases
|
4.9
|
%
|
|
Operating
Leases |
|
Finance Leases
|
||||
2020
|
$
|
57.2
|
|
|
$
|
14.5
|
|
2021
|
54.3
|
|
|
11.2
|
|
||
2022
|
51.5
|
|
|
3.1
|
|
||
2023
|
49.0
|
|
|
0.2
|
|
||
2024
|
47.9
|
|
|
0.2
|
|
||
Thereafter
|
283.1
|
|
|
—
|
|
||
Total lease payments
|
543.0
|
|
|
29.2
|
|
||
Less imputed interest
|
(150.2
|
)
|
|
(1.9
|
)
|
||
Total
|
$
|
392.8
|
|
|
$
|
27.3
|
|
Classes of Property
|
December 31,
2018
|
||
Furniture, fixtures and equipment
|
$
|
86.1
|
|
Accumulated depreciation
|
(59.5
|
)
|
|
Capital lease assets
|
$
|
26.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Income from continuing operations before income taxes:
|
|
|
|
|
|
||||||
Domestic
|
$
|
100.0
|
|
|
$
|
85.6
|
|
|
$
|
72.6
|
|
Foreign
|
30.1
|
|
|
66.3
|
|
|
85.8
|
|
|||
Total
|
$
|
130.1
|
|
|
$
|
151.9
|
|
|
$
|
158.4
|
|
Income tax expense (benefit):
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
18.4
|
|
|
$
|
5.0
|
|
|
$
|
30.9
|
|
Foreign
|
17.4
|
|
|
23.7
|
|
|
23.8
|
|
|||
State
|
5.2
|
|
|
2.6
|
|
|
2.0
|
|
|||
Total current provision
|
41.0
|
|
|
31.3
|
|
|
56.7
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
3.8
|
|
|
10.4
|
|
|
(73.2
|
)
|
|||
Foreign
|
(7.4
|
)
|
|
(6.2
|
)
|
|
(2.8
|
)
|
|||
State
|
0.3
|
|
|
(1.2
|
)
|
|
3.7
|
|
|||
Total deferred provision
|
(3.3
|
)
|
|
3.0
|
|
|
(72.3
|
)
|
|||
Income tax expense
|
$
|
37.7
|
|
|
$
|
34.3
|
|
|
$
|
(15.6
|
)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net
|
3.6
|
%
|
|
1.9
|
%
|
|
1.8
|
%
|
Reserves for tax exposures
|
(0.5
|
)%
|
|
(0.6
|
)%
|
|
(0.8
|
)%
|
Change in valuation allowance
|
0.9
|
%
|
|
0.4
|
%
|
|
(1.5
|
)%
|
International operations
|
3.1
|
%
|
|
4.7
|
%
|
|
(5.6
|
)%
|
Stock-based compensation
|
(2.5
|
)%
|
|
(5.0
|
)%
|
|
(2.8
|
)%
|
Impact of law and rate change
|
(0.2
|
)%
|
|
(1.7
|
)%
|
|
(36.2
|
)%
|
Excess officer's compensation
|
1.5
|
%
|
|
0.9
|
%
|
|
—
|
%
|
Transaction costs
|
0.6
|
%
|
|
0.3
|
%
|
|
—
|
%
|
Other, net
|
1.5
|
%
|
|
0.7
|
%
|
|
0.3
|
%
|
Effective rate
|
29.0
|
%
|
|
22.6
|
%
|
|
(9.8
|
)%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Gross deferred tax assets:
|
|
|
|
||||
Allowances for trade and finance receivables
|
$
|
6.0
|
|
|
$
|
5.5
|
|
Accruals and liabilities
|
6.2
|
|
|
12.7
|
|
||
Employee benefits and compensation
|
14.0
|
|
|
14.6
|
|
||
Net operating loss carryforwards
|
48.8
|
|
|
45.5
|
|
||
Investment basis difference
|
(2.2
|
)
|
|
(2.1
|
)
|
||
Right of use lease liability
|
97.0
|
|
|
—
|
|
||
Other
|
4.1
|
|
|
4.8
|
|
||
Total deferred tax assets
|
173.9
|
|
|
81.0
|
|
||
Deferred tax asset valuation allowance
|
(31.1
|
)
|
|
(29.9
|
)
|
||
Total
|
142.8
|
|
|
51.1
|
|
||
Gross deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(76.4
|
)
|
|
(68.7
|
)
|
||
Goodwill and intangible assets
|
(100.5
|
)
|
|
(102.7
|
)
|
||
Right of use lease asset
|
(89.8
|
)
|
|
—
|
|
||
Other
|
(4.7
|
)
|
|
(5.0
|
)
|
||
Total
|
(271.4
|
)
|
|
(176.4
|
)
|
||
Net deferred tax liabilities
|
$
|
(128.6
|
)
|
|
$
|
(125.3
|
)
|
2020
|
$
|
0.3
|
|
2021
|
1.1
|
|
|
2022
|
0.3
|
|
|
2023
|
0.3
|
|
|
2024
|
0.2
|
|
|
2025 to 2039
|
46.6
|
|
|
|
$
|
48.8
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Balance at beginning of period
|
$
|
7.4
|
|
|
$
|
9.7
|
|
Increase in prior year tax positions
|
—
|
|
|
—
|
|
||
Decrease in prior year tax positions
|
(0.2
|
)
|
|
(0.7
|
)
|
||
Increase in current year tax positions
|
0.7
|
|
|
0.8
|
|
||
Lapse in statute of limitations
|
(1.8
|
)
|
|
(2.4
|
)
|
||
Balance at end of period
|
$
|
6.1
|
|
|
$
|
7.4
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Foreign currency translation loss
|
$
|
(31.0
|
)
|
|
$
|
(61.3
|
)
|
Accumulated other comprehensive loss
|
$
|
(31.0
|
)
|
|
$
|
(61.3
|
)
|
|
ADESA
Auctions |
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,429.0
|
|
|
$
|
352.9
|
|
|
$
|
—
|
|
|
$
|
2,781.9
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
1,520.7
|
|
|
96.4
|
|
|
—
|
|
|
1,617.1
|
|
||||
Selling, general and administrative
|
494.3
|
|
|
25.6
|
|
|
142.1
|
|
|
662.0
|
|
||||
Depreciation and amortization
|
149.9
|
|
|
10.3
|
|
|
28.5
|
|
|
188.7
|
|
||||
Total operating expenses
|
2,164.9
|
|
|
132.3
|
|
|
170.6
|
|
|
2,467.8
|
|
||||
Operating profit (loss)
|
264.1
|
|
|
220.6
|
|
|
(170.6
|
)
|
|
314.1
|
|
||||
Interest expense
|
3.7
|
|
|
64.2
|
|
|
121.6
|
|
|
189.5
|
|
||||
Other (income) expense, net
|
(6.4
|
)
|
|
(0.4
|
)
|
|
(0.9
|
)
|
|
(7.7
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||
Intercompany expense (income)
|
25.2
|
|
|
(5.1
|
)
|
|
(20.1
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
241.6
|
|
|
161.9
|
|
|
(273.4
|
)
|
|
130.1
|
|
||||
Income taxes
|
67.3
|
|
|
41.9
|
|
|
(71.5
|
)
|
|
37.7
|
|
||||
Net income (loss) from continuing operations
|
$
|
174.3
|
|
|
$
|
120.0
|
|
|
$
|
(201.9
|
)
|
|
$
|
92.4
|
|
Total assets
|
$
|
3,658.4
|
|
|
$
|
2,565.7
|
|
|
$
|
357.1
|
|
|
$
|
6,581.2
|
|
Capital expenditures
|
$
|
95.2
|
|
|
$
|
7.0
|
|
|
$
|
59.4
|
|
|
$
|
161.6
|
|
|
ADESA
Auctions
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,101.9
|
|
|
$
|
340.9
|
|
|
$
|
—
|
|
|
$
|
2,442.8
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
1,230.8
|
|
|
90.7
|
|
|
—
|
|
|
1,321.5
|
|
||||
Selling, general and administrative
|
435.8
|
|
|
30.7
|
|
|
142.3
|
|
|
608.8
|
|
||||
Depreciation and amortization
|
127.5
|
|
|
16.0
|
|
|
28.9
|
|
|
172.4
|
|
||||
Total operating expenses
|
1,794.1
|
|
|
137.4
|
|
|
171.2
|
|
|
2,102.7
|
|
||||
Operating profit (loss)
|
307.8
|
|
|
203.5
|
|
|
(171.2
|
)
|
|
340.1
|
|
||||
Interest expense
|
2.2
|
|
|
59.6
|
|
|
129.4
|
|
|
191.2
|
|
||||
Other (income) expense, net
|
(1.9
|
)
|
|
(0.3
|
)
|
|
(0.8
|
)
|
|
(3.0
|
)
|
||||
Intercompany expense (income)
|
35.1
|
|
|
(3.2
|
)
|
|
(31.9
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
272.4
|
|
|
147.4
|
|
|
(267.9
|
)
|
|
151.9
|
|
||||
Income taxes
|
69.1
|
|
|
35.4
|
|
|
(70.2
|
)
|
|
34.3
|
|
||||
Net income (loss) from continuing operations
|
$
|
203.3
|
|
|
$
|
112.0
|
|
|
$
|
(197.7
|
)
|
|
$
|
117.6
|
|
Total assets
|
$
|
3,097.7
|
|
|
$
|
2,446.1
|
|
|
$
|
155.6
|
|
|
$
|
5,699.4
|
|
Capital expenditures
|
$
|
95.1
|
|
|
$
|
7.1
|
|
|
$
|
29.1
|
|
|
$
|
131.3
|
|
|
ADESA
Auctions
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
1,937.5
|
|
|
$
|
301.3
|
|
|
$
|
—
|
|
|
$
|
2,238.8
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
1,123.9
|
|
|
85.2
|
|
|
—
|
|
|
1,209.1
|
|
||||
Selling, general and administrative
|
360.0
|
|
|
30.9
|
|
|
140.8
|
|
|
531.7
|
|
||||
Depreciation and amortization
|
113.1
|
|
|
31.3
|
|
|
27.1
|
|
|
171.5
|
|
||||
Total operating expenses
|
1,597.0
|
|
|
147.4
|
|
|
167.9
|
|
|
1,912.3
|
|
||||
Operating profit (loss)
|
340.5
|
|
|
153.9
|
|
|
(167.9
|
)
|
|
326.5
|
|
||||
Interest expense
|
1.2
|
|
|
43.6
|
|
|
118.4
|
|
|
163.2
|
|
||||
Other (income) expense, net
|
(0.3
|
)
|
|
—
|
|
|
(0.7
|
)
|
|
(1.0
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
27.5
|
|
|
27.5
|
|
||||
Gain on previously held equity interest value
|
(21.6
|
)
|
|
—
|
|
|
—
|
|
|
(21.6
|
)
|
||||
Intercompany expense (income)
|
47.4
|
|
|
(20.2
|
)
|
|
(27.2
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
313.8
|
|
|
130.5
|
|
|
(285.9
|
)
|
|
158.4
|
|
||||
Income taxes
|
52.9
|
|
|
26.6
|
|
|
(95.1
|
)
|
|
(15.6
|
)
|
||||
Net income (loss) from continuing operations
|
$
|
260.9
|
|
|
$
|
103.9
|
|
|
$
|
(190.8
|
)
|
|
$
|
174.0
|
|
Total assets
|
$
|
3,132.3
|
|
|
$
|
2,315.6
|
|
|
$
|
98.0
|
|
|
$
|
5,545.9
|
|
Capital expenditures
|
$
|
66.9
|
|
|
$
|
6.1
|
|
|
$
|
24.3
|
|
|
$
|
97.3
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating revenues
|
|
|
|
|
|
||||||
U.S.
|
$
|
2,267.5
|
|
|
$
|
2,078.2
|
|
|
$
|
1,912.3
|
|
Foreign
|
514.4
|
|
|
364.6
|
|
|
326.5
|
|
|||
|
$
|
2,781.9
|
|
|
$
|
2,442.8
|
|
|
$
|
2,238.8
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Long-lived assets
|
|
|
|
||||
U.S.
|
$
|
2,877.8
|
|
|
$
|
2,564.3
|
|
Foreign
|
458.9
|
|
|
274.4
|
|
||
|
$
|
3,336.7
|
|
|
$
|
2,838.7
|
|
2019 Quarter Ended
|
March 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
Operating revenues
|
$
|
689.6
|
|
|
$
|
719.1
|
|
|
$
|
701.9
|
|
|
$
|
671.3
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
393.9
|
|
|
417.4
|
|
|
410.9
|
|
|
394.9
|
|
||||
Selling, general, and administrative
|
175.2
|
|
|
163.2
|
|
|
158.9
|
|
|
164.7
|
|
||||
Depreciation and amortization
|
44.3
|
|
|
47.9
|
|
|
46.4
|
|
|
50.1
|
|
||||
Total operating expenses
|
613.4
|
|
|
628.5
|
|
|
616.2
|
|
|
609.7
|
|
||||
Operating profit
|
76.2
|
|
|
90.6
|
|
|
85.7
|
|
|
61.6
|
|
||||
Interest expense
|
56.5
|
|
|
55.6
|
|
|
37.9
|
|
|
39.5
|
|
||||
Other (income) expense, net
|
(2.1
|
)
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|
(2.5
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
||||
Income from continuing operations before income taxes
|
21.8
|
|
|
36.1
|
|
|
47.6
|
|
|
24.6
|
|
||||
Income taxes
|
6.5
|
|
|
8.7
|
|
|
13.2
|
|
|
9.3
|
|
||||
Net income from continuing operations
|
$
|
15.3
|
|
|
$
|
27.4
|
|
|
$
|
34.4
|
|
|
$
|
15.3
|
|
Net income from continuing operations per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.11
|
|
|
$
|
0.21
|
|
|
$
|
0.26
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
0.11
|
|
|
$
|
0.20
|
|
|
$
|
0.26
|
|
|
$
|
0.12
|
|
2018 Quarter Ended
|
March 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
Operating revenues
|
$
|
613.2
|
|
|
$
|
623.4
|
|
|
$
|
612.4
|
|
|
$
|
593.8
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
328.3
|
|
|
330.2
|
|
|
330.7
|
|
|
332.3
|
|
||||
Selling, general, and administrative
|
155.5
|
|
|
149.9
|
|
|
154.7
|
|
|
148.7
|
|
||||
Depreciation and amortization
|
46.3
|
|
|
42.1
|
|
|
41.4
|
|
|
42.6
|
|
||||
Total operating expenses
|
530.1
|
|
|
522.2
|
|
|
526.8
|
|
|
523.6
|
|
||||
Operating profit
|
83.1
|
|
|
101.2
|
|
|
85.6
|
|
|
70.2
|
|
||||
Interest expense
|
41.3
|
|
|
48.4
|
|
|
49.0
|
|
|
52.5
|
|
||||
Other (income) expense, net
|
(0.3
|
)
|
|
(0.5
|
)
|
|
(3.0
|
)
|
|
0.8
|
|
||||
Income from continuing operations before income taxes
|
42.1
|
|
|
53.3
|
|
|
39.6
|
|
|
16.9
|
|
||||
Income taxes
|
7.9
|
|
|
15.9
|
|
|
8.7
|
|
|
1.8
|
|
||||
Net income from continuing operations
|
$
|
34.2
|
|
|
$
|
37.4
|
|
|
$
|
30.9
|
|
|
$
|
15.1
|
|
Net income from continuing operations per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
$
|
0.23
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
$
|
0.23
|
|
|
$
|
0.11
|
|
Name
|
|
Age
|
|
Position
|
James P. Hallett
|
|
66
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
Charles S. Coleman
|
|
48
|
|
Senior Vice President, General Counsel and Secretary
|
Thomas J. Fisher
|
|
45
|
|
Executive Vice President and Chief Information Officer
|
Donald S. Gottwald
|
|
53
|
|
Chief Strategy Officer and President of Digital, Data and Mobility Solutions
|
John C. Hammer
|
|
49
|
|
President of ADESA
|
Peter J. Kelly
|
|
51
|
|
President
|
Eric M. Loughmiller
|
|
60
|
|
Executive Vice President and Chief Financial Officer
|
James E. Money
|
|
57
|
|
President of AFC
|
Lisa A. Price
|
|
45
|
|
Executive Vice President, Chief People Officer
|
Benjamin Skuy
|
|
57
|
|
Executive Vice President of International Markets and Strategic Initiatives
|
Plan Category
|
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights(1)
|
|
Weighted-average
exercise price of
outstanding
options,
warrants and
rights(2)
|
|
Number of securities
remaining available for
future issuance under equity
compensation
plans (excluding securities
reflected in first column)(3)
|
||||
Equity compensation plans approved by security holder(s)
|
2,035,813
|
|
|
$
|
9.07
|
|
|
5,147,288
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
2,035,813
|
|
|
$
|
9.07
|
|
|
5,147,288
|
|
|
(1)
|
Includes service options, exit options, performance-based restricted stock units ("PRSUs") and restricted stock units ("RSUs") issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan (excluding dividend equivalents). The amount of PRSUs outstanding at target of 279,130 (excluding dividend equivalents) have been included.
|
(2)
|
Awards issued by KAR Auction Services, Inc. have exercise prices ranging from $4.60 to $11.74. The weighted-average price in the table above only reflects the weighted-average exercise price of outstanding options. The weighted-average exercise price does not include the PRSUs or RSUs.
|
(3)
|
The number of securities available for future issuance includes (a) 4,922,268 shares of common stock that may be issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan; and (b) 225,020 shares of common stock that may be issued under the KAR Auction Services, Inc. Employee Stock Purchase Plan.
|
a)
|
The following documents have been filed as part of this report or, where noted, incorporated by reference:
|
1)
|
Financial Statements—the consolidated financial statements of KAR Auction Services, Inc. and its consolidated subsidiaries are filed as part of this report under Item 8.
|
2)
|
Financial Statement Schedules—all schedules have been omitted because the matter or conditions are not present or the information required to be set forth therein is included in the consolidated financial statements and related notes thereto.
|
3)
|
Exhibits—the exhibit index below is incorporated herein by reference as the list of exhibits required as part of this report.
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
2.1
|
|
+
|
|
8-K
|
|
001-34568
|
|
2.1
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
10-Q
|
|
001-34568
|
|
3.1
|
|
8/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
8-K
|
|
001-34568
|
|
3.1
|
|
11/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
|
8-K
|
|
001-34568
|
|
4.1
|
|
5/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
S-1/A
|
|
333-161907
|
|
4.15
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.1a
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1b
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1c
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
5/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1d
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
9/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
*
|
|
S-8
|
|
333-164032
|
|
10.1
|
|
12/24/2009
|
|
|
|
10.3
|
|
*
|
|
S-4
|
|
333-148847
|
|
10.15
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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10.4
|
|
*
|
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10-K
|
|
001-34568
|
|
10.15
|
|
2/28/2012
|
|
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|
10.5a
|
|
*
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/20/2014
|
|
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|
|
10.5b
|
|
*
|
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10-K
|
|
001-34568
|
|
10.5b
|
|
2/21/2018
|
|
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|
10.5c
|
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*
|
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10-K
|
|
001-34568
|
|
10.5c
|
|
2/21/2019
|
|
|
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|
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10.6
|
|
*
|
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8-K
|
|
001-34568
|
|
10.5
|
|
12/17/2013
|
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10.7
|
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*
|
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10-K
|
|
001-34568
|
|
10.7
|
|
2/21/2019
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10.8a
|
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*
|
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10-K
|
|
001-34568
|
|
10.13
|
|
2/19/2014
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10.8b
|
|
*
|
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10-K
|
|
001-34568
|
|
10.8b
|
|
2/21/2018
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|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.8c
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.8c
|
|
11/6/2019
|
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|
10.9a
|
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*
|
|
10-K
|
|
001-34568
|
|
10.9a
|
|
2/24/2017
|
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10.9b
|
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*
|
|
10-K
|
|
001-34568
|
|
10.9b
|
|
2/24/2017
|
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|
|
10.9c
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.9c
|
|
2/21/2019
|
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|
|
10.10
|
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*
|
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10-K
|
|
001-34568
|
|
10.13
|
|
2/24/2017
|
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10.11
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.12
|
|
2/21/2018
|
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|
|
10.12
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.13
|
|
2/21/2019
|
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|
10.13
|
|
*
|
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X
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|
|
10.14a
|
|
^
|
|
S-4
|
|
333-148847
|
|
10.32
|
|
1/25/2008
|
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|
|
10.14b
|
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|
|
S-4
|
|
333-148847
|
|
10.33
|
|
1/25/2008
|
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|
|
|
10.14c
|
|
|
|
S-4
|
|
333-148847
|
|
10.34
|
|
1/25/2008
|
|
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|
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|
|
10.14d
|
|
^
|
|
S-4
|
|
333-148847
|
|
10.35
|
|
1/25/2008
|
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|
|
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|
|
10.14e
|
|
|
|
10-K
|
|
001-34568
|
|
10.19e
|
|
2/28/2012
|
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|
|
10.14f
|
|
|
|
10-K
|
|
001-34568
|
|
10.19f
|
|
2/28/2012
|
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|
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|
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|
|
10.15
|
|
^
|
|
10-K
|
|
001-34568
|
|
10.15
|
|
2/21/2019
|
|
|
|
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|
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|
|
|
|
|
|
|
10.16a
|
|
^
|
|
10-K
|
|
001-34568
|
|
10.16
|
|
2/24/2017
|
|
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|
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|
|
|
10.16b
|
|
|
|
10-Q
|
|
001-34568
|
|
10.16b
|
|
5/10/2017
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.16c
|
|
^
|
|
10-K
|
|
001-34568
|
|
10.16c
|
|
2/21/2019
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
10.17a
|
|
|
|
8-K
|
|
333-148847
|
|
10.3
|
|
9/9/2008
|
|
|
|
|
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|
|
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|
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|
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|
|
|
10.17b
|
|
|
|
8-K
|
|
333-148847
|
|
10.11
|
|
9/9/2008
|
|
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|
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|
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|
|
|
10.18a
|
|
|
|
8-K
|
|
333-148847
|
|
10.4
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
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|
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|
|
|
10.18b
|
|
|
|
8-K
|
|
333-148847
|
|
10.12
|
|
9/9/2008
|
|
|
|
|
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|
|
|
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|
|
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|
|
|
10.19a
|
|
|
|
8-K
|
|
333-148847
|
|
10.5
|
|
9/9/2008
|
|
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|
|
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|
|
|
|
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|
|
|
|
|
10.19b
|
|
|
|
8-K
|
|
333-148847
|
|
10.13
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
10.20a
|
|
|
|
8-K
|
|
333-148847
|
|
10.6
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
10.20b
|
|
|
|
8-K
|
|
333-148847
|
|
10.14
|
|
9/9/2008
|
|
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|
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|
|
10.21a
|
|
|
|
8-K
|
|
333-148847
|
|
10.7
|
|
9/9/2008
|
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|
|
|
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|
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|
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|
|
10.21b
|
|
|
|
8-K
|
|
333-148847
|
|
10.15
|
|
9/9/2008
|
|
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|
|
|
|
|
|
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|
|
|
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|
|
10.22a
|
|
|
|
8-K
|
|
333-148847
|
|
10.8
|
|
9/9/2008
|
|
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|
|
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|
|
|
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|
|
|
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|
|
|
10.22b
|
|
|
|
8-K
|
|
333-148847
|
|
10.16
|
|
9/9/2008
|
|
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|
|
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|
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|
|
10.23a
|
|
|
|
8-K
|
|
333-148847
|
|
10.10
|
|
9/9/2008
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.23b
|
|
|
|
8-K
|
|
333-148847
|
|
10.18
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24a
|
|
|
|
10-Q
|
|
333-148847
|
|
10.21
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24b
|
|
|
|
10-Q
|
|
333-148847
|
|
10.22
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26a
|
|
*
|
|
DEF 14A
|
|
001-34568
|
|
Appendix A
|
|
4/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26b
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.24b
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27a
|
|
*
|
|
S-8
|
|
333-164032
|
|
10.3
|
|
12/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27b
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.60
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27c
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.61
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27d
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.26d
|
|
11/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28a
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.62
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28b
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.28b
|
|
11/6/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.29
|
|
8/7/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
*
|
|
S-1/A
|
|
333-161907
|
|
10.65
|
|
12/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.30
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.33
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.33
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.35
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
*
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.34
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.38
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.38
|
|
*
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.39
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.40
|
|
|
|
8-K
|
|
001-34568
|
|
10.2
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.41
|
|
|
|
8-K
|
|
001-34568
|
|
10.3
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
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32.2
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X
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101
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The following materials from KAR Auction Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2019 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Income for the year ended December 31, 2019, 2018 and 2017; (ii) the Consolidated Balance Sheets as of December 31, 2019 and 2018; (iii) the Consolidated Statements of Stockholders' Equity for the year ended December 31, 2019, 2018 and 2017; (iv) the Consolidated Statements of Cash Flows for the year ended December 31, 2019, 2018 and 2017; and (v) the Notes to Consolidated Financial Statements.
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X
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104
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Cover page Interactive Data File, formatted in iXBRL (contained in Exhibit 101).
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X
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+
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Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed.
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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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KAR Auction Services, Inc.
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||
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By:
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/s/ JAMES P. HALLETT
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James P. Hallett
Chief Executive Officer
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February 19, 2020
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Signature
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Title
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Date
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/s/ JAMES P. HALLETT
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Chief Executive Officer and Chairman of the Board
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February 19, 2020
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James P. Hallett
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(Principal Executive Officer)
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/s/ ERIC M. LOUGHMILLER
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Chief Financial Officer
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February 19, 2020
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Eric M. Loughmiller
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(Principal Financial and Accounting Officer)
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/s/ DAVID DIDOMENICO
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Director
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February 19, 2020
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David DiDomenico
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||
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/s/ CARMEL GALVIN
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Director
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February 19, 2020
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Carmel Galvin
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||
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/s/ MARK E. HILL
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Director
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February 19, 2020
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Mark E. Hill
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||
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/s/ J. MARK HOWELL
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Director
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February 19, 2020
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J. Mark Howell
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||
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/s/ STEFAN JACOBY
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Director
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February 19, 2020
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Stefan Jacoby
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||
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/s/ MICHAEL T. KESTNER
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Lead Independent Director
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February 19, 2020
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Michael T. Kestner
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||
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/s/ MARY ELLEN SMITH
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Director
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February 19, 2020
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Mary Ellen Smith
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||
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/s/ STEPHEN E. SMITH
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Director
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February 19, 2020
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Stephen E. Smith
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•
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rules regarding how our stockholders may present proposals or nominate directors for election at stockholder meetings;
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•
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permitting our board of directors to issue preferred stock without stockholder approval;
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•
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granting to the board of directors, and not to the stockholders, the sole power to set the number of directors;
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•
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authorizing vacancies on our board of directors to be filled only by a vote of the majority of the directors then in office and specifically denying our stockholders the right to fill vacancies in the board;
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•
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authorizing the removal of directors, with or without cause, only upon the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote for the election of directors;
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•
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prohibiting stockholders from calling special meetings of stockholders; and
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•
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prohibiting stockholder action by written consent.
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_______________________________
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KAR AUCTION SERVICES, INC.
By: _______________________________
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[NAME]
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Its: _______________________________
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Cumulative Operating Adjusted Net Income Per Share During the Measurement Period
|
Number of Restricted Stock Units Vesting
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Below Threshold:
Below $[____]
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0
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Threshold:
$[____]
|
[0.5x]
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Target:
$[____]
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[x]
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Maximum:
Greater than or equal to $[____]
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[2x]
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_______________________________
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KAR AUCTION SERVICES, INC.
By: _______________________________
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[NAME]
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Its: _______________________________
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Name
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State or Jurisdiction of Incorporation or Organization
|
|
ADESA, Inc.
|
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Delaware
|
|
ADESA Corporation, LLC
|
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Indiana
|
|
A.D.E. of Ark-La-Tex, Inc.
|
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Louisiana
|
|
A.D.E. of Knoxville, LLC
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|
Tennessee
|
|
ADESA Ark-La-Tex, LLC
|
|
Louisiana
|
|
ADESA Arkansas, LLC
|
|
Delaware
|
|
ADESA Atlanta, LLC
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|
New Jersey
|
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ADESA Birmingham, LLC
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|
Alabama
|
|
ADESA California, LLC
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California
|
|
ADESA Charlotte, LLC
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|
North Carolina
|
|
ADESA Colorado, LLC
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Colorado
|
|
ADESA Dealer Services, LLC
|
|
Indiana
|
|
ADESA Des Moines, LLC
|
|
Iowa
|
|
ADESA Florida, LLC
|
|
Florida
|
|
ADESA Illinois, LLC
|
|
Illinois
|
|
ADESA Indianapolis, LLC
|
|
Indiana
|
|
ADESA Lansing, LLC
|
|
Michigan
|
|
ADESA Lexington, LLC
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|
Kentucky
|
|
ADESA Mexico, LLC
|
|
Indiana
|
|
ADESA Minnesota, LLC
|
|
Minnesota
|
|
ADESA Missouri, LLC
|
|
Missouri
|
|
ADESA Nevada, LLC
|
|
Nevada
|
|
ADESA New Jersey, LLC
|
|
New Jersey
|
|
ADESA New York, LLC
|
|
New York
|
|
ADESA Ohio, LLC
|
|
Ohio
|
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ADESA Oklahoma, LLC
|
|
Oklahoma
|
|
ADESA Pennsylvania, LLC
|
|
Pennsylvania
|
|
ADESA Phoenix, LLC
|
|
New Jersey
|
|
ADESA San Diego, LLC
|
|
California
|
|
ADESA South Florida, LLC
|
|
Indiana
|
|
ADESA Texas, Inc.
|
|
Texas
|
|
ADESA Virginia, LLC
|
|
Virginia
|
|
ADESA Wisconsin, LLC
|
|
Wisconsin
|
|
AFC CAL, LLC
|
|
California
|
|
Asset Holdings III, L.P.
|
|
Ohio
|
|
Auto Dealers Exchange of Concord, LLC
|
|
Massachusetts
|
|
Auto Dealers Exchange of Memphis, LLC
|
|
Tennessee
|
|
Automotive Finance Consumer Division, LLC
|
|
Indiana
|
|
Automotive Finance Corporation
|
|
Indiana
|
|
Autoniq, LLC
|
|
Virginia
|
|
AutoVIN, Inc.
|
|
Indiana
|
|
MobileTrac LLC
|
|
Delaware
|
|
Name
|
|
State or Jurisdiction of Incorporation or Organization
|
|
PAR, Inc.
|
|
Indiana
|
|
High Tech National, LLC
|
|
Indiana
|
|
HT Locksmiths, Inc.
|
|
Indiana
|
|
Sioux Falls Auto Auction, Inc.
|
|
South Dakota
|
|
Tri-State Auction Co., Inc.
|
|
North Dakota
|
|
Zabel & Associates, Inc.
|
|
North Dakota
|
|
LiveBlock Auctions International, Inc.
|
|
Nevada
|
|
LiveBlock Auctions Canada Ltd.
|
|
Saskatchewan
|
|
WFEA Holdings, Inc.
|
|
Alberta
|
|
AFC Funding Corporation
|
|
Indiana
|
|
AuctionTrac, LLC
|
|
Indiana
|
|
OPENLANE, Inc.
|
|
Delaware
|
|
CarsArrive Network, Inc.
|
|
Georgia
|
|
Recovery Database Network, Inc.
|
|
Delaware
|
|
OPENLANE Canada Co.
|
|
Nova Scotia
|
|
OPENLANE Canada Inc.
|
|
Ontario
|
|
NEPO Auto Centre, Inc.
|
|
Ontario
|
|
Auction Vehicles of Mexico S. de R.L. de C.V.
|
|
Federal District of Mexico
|
|
ADESUR S. de R.L. de C.V.
|
|
Federal District of Mexico
|
|
2540-0714 Quebec Inc.
|
|
Quebec
|
|
504811 NB Ltd.
|
|
New Brunswick
|
|
51937 Newfoundland & Labrador Limited
|
|
Newfoundland
|
|
79378 Manitoba Inc.
|
|
Manitoba
|
|
ADESA Auctions Canada Corporation
|
|
Nova Scotia
|
|
ADESA Montreal Corporation
|
|
Nova Scotia
|
|
ADESA Quebec Corporation
|
|
Quebec
|
|
ADESA Remarketing Services Inc.
|
|
Ontario
|
|
AutoVIN Canada Inc.
|
|
Nova Scotia
|
|
Automotive Finance Canada Inc.
|
|
Ontario
|
|
Preferred Warranties, Inc.
|
|
Pennsylvania
|
|
Preferred Nationwide Reinsurance Company, Ltd.
|
|
Turks and Caicos
|
|
Preferred Warranties of Florida, Inc.
|
|
Florida
|
|
PWI Holdings, Inc.
|
|
Pennsylvania
|
|
Superior Warranties, Inc.
|
|
Pennsylvania
|
|
Automotive Key Controls, LLC
|
|
Indiana
|
|
High Tech Locksmiths Canada ULC
|
|
Alberta
|
|
ADESA Idaho, LLC
|
|
Idaho
|
|
ADESA Oregon, LLC
|
|
Oregon
|
|
ADESA Utah, LLC
|
|
Utah
|
|
KAR Auction Services International Limited
|
|
United Kingdom
|
|
ADESA Remarketing Limited
|
|
United Kingdom
|
|
CarCo Technologies, Inc.
|
|
Illinois
|
|
Nth Gen Software, Inc.
|
|
Ontario
|
|
Nth Gen Software LLC
|
|
Florida
|
|
TradeRev USA LLC
|
|
Florida
|
|
TradeRev Motors Inc.
|
|
Ontario
|
|
Nth Gen Software UK Limited
|
|
United Kingdom
|
|
TradeRev Technologies Inc.
|
|
Ontario
|
|
Name
|
|
State or Jurisdiction of Incorporation or Organization
|
|
111 Remarketing, LLC
|
|
Arizona
|
|
STRATIM Systems Incorporated
|
|
Delaware
|
|
STRATIM Platforms, Inc.
|
|
Delaware
|
|
Clearplan, LLC
|
|
Delaware
|
|
ADESA Germany GmbH
|
|
Germany
|
|
ADESA Belgium NV
|
|
Belgium
|
|
ADESA Deutschland GmbH
|
|
Germany
|
|
ADESA Europe Holding NV
|
|
Belgium
|
|
ADESA Europe NV
|
|
Belgium
|
|
ADESA France SAS
|
|
France
|
|
ADESA Italia S.R.L.
|
|
Italy
|
|
ADESA Nederland B.V.
|
|
The Netherlands
|
|
ADESA Subastas España, S.L.U.
|
|
Spain
|
|
Car Quality Services GmbH
|
|
Germany
|
|
CarsArrive Europe GmbH
|
|
Germany
|
|
|
|
|
|
|
|
|
|
1)
|
I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
|
1)
|
The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2)
|
the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2)
|
the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
|