x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 36-4215970 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
500 WEST MADISON STREET, SUITE 2800, CHICAGO, IL | 60661 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands, except share and per share data) | |||||||
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and equivalents | $ | 273,203 | $ | 87,397 | |||
Receivables, net | 995,153 | 590,160 | |||||
Inventories, net | 1,890,536 | 1,556,552 | |||||
Prepaid expenses and other current assets | 139,536 | 106,603 | |||||
Total Current Assets | 3,298,428 | 2,340,712 | |||||
Property, Plant and Equipment, net | 1,055,046 | 696,567 | |||||
Intangible Assets: | |||||||
Goodwill | 3,059,488 | 2,319,246 | |||||
Other intangibles, net | 630,360 | 215,117 | |||||
Other Assets | 142,622 | 76,195 | |||||
Total Assets | $ | 8,185,944 | $ | 5,647,837 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 735,138 | $ | 415,588 | |||
Accrued expenses: | |||||||
Accrued payroll-related liabilities | 102,962 | 86,527 | |||||
Other accrued expenses | 228,656 | 162,225 | |||||
Other current liabilities | 40,794 | 31,596 | |||||
Current portion of long-term obligations | 60,832 | 56,034 | |||||
Total Current Liabilities | 1,168,382 | 751,970 | |||||
Long-Term Obligations, Excluding Current Portion | 3,274,629 | 1,528,668 | |||||
Deferred Income Taxes | 225,338 | 127,239 | |||||
Other Noncurrent Liabilities | 209,956 | 125,278 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Equity: | |||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 306,785,582 and 305,574,384 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 3,067 | 3,055 | |||||
Additional paid-in capital | 1,111,221 | 1,090,713 | |||||
Retained earnings | 2,374,853 | 2,126,384 | |||||
Accumulated other comprehensive loss | (181,502 | ) | (105,470 | ) | |||
Total Stockholders’ Equity | 3,307,639 | 3,114,682 | |||||
Total Liabilities and Stockholders’ Equity | $ | 8,185,944 | $ | 5,647,837 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Income (In thousands, except per share data) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | 2,450,693 | $ | 1,838,070 | $ | 4,372,169 | $ | 3,611,982 | |||||||
Cost of goods sold | 1,528,746 | 1,114,126 | 2,689,785 | 2,188,559 | |||||||||||
Gross margin | 921,947 | 723,944 | 1,682,384 | 1,423,423 | |||||||||||
Facility and warehouse expenses | 178,670 | 136,379 | 336,275 | 269,036 | |||||||||||
Distribution expenses | 184,331 | 150,039 | 336,674 | 291,753 | |||||||||||
Selling, general and administrative expenses | 254,153 | 205,796 | 472,471 | 409,037 | |||||||||||
Restructuring and acquisition related expenses | 9,080 | 1,663 | 23,891 | 8,151 | |||||||||||
Depreciation and amortization | 52,529 | 29,782 | 84,217 | 59,235 | |||||||||||
Operating income | 243,184 | 200,285 | 428,856 | 386,211 | |||||||||||
Other expense (income): | |||||||||||||||
Interest expense, net | 26,381 | 14,622 | 40,973 | 29,528 | |||||||||||
Loss on debt extinguishment | — | — | 26,650 | — | |||||||||||
Gains on foreign exchange contracts - acquisition related | — | — | (18,342 | ) | — | ||||||||||
Other expense (income), net | 1,339 | 97 | (1,550 | ) | 2,016 | ||||||||||
Total other expense, net | 27,720 | 14,719 | 47,731 | 31,544 | |||||||||||
Income before provision for income taxes | 215,464 | 185,566 | 381,125 | 354,667 | |||||||||||
Provision for income taxes | 74,874 | 64,682 | 132,441 | 124,780 | |||||||||||
Equity in earnings of unconsolidated subsidiaries | 147 | (1,162 | ) | (215 | ) | (3,070 | ) | ||||||||
Net income | $ | 140,737 | $ | 119,722 | $ | 248,469 | $ | 226,817 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.46 | $ | 0.39 | $ | 0.81 | $ | 0.75 | |||||||
Diluted | $ | 0.46 | $ | 0.39 | $ | 0.81 | $ | 0.74 |
Unaudited Condensed Consolidated Statements of Comprehensive Income (In thousands) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 140,737 | $ | 119,722 | $ | 248,469 | $ | 226,817 | |||||||
Other comprehensive (loss) income: | |||||||||||||||
Foreign currency translation | (73,257 | ) | 44,510 | (73,117 | ) | (10,300 | ) | ||||||||
Net change in unrecognized gains/losses on derivative instruments, net of tax | (3,614 | ) | 918 | (3,182 | ) | 1,201 | |||||||||
Net change in unrealized gains/losses on pension plans, net of tax | 120 | (21 | ) | 267 | 107 | ||||||||||
Total other comprehensive (loss) income | (76,751 | ) | 45,407 | (76,032 | ) | (8,992 | ) | ||||||||
Total comprehensive income | $ | 63,986 | $ | 165,129 | $ | 172,437 | $ | 217,825 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (In thousands) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 248,469 | $ | 226,817 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 90,882 | 61,714 | |||||
Stock-based compensation expense | 11,425 | 11,114 | |||||
Excess tax benefit from stock-based payments | (6,685 | ) | (6,737 | ) | |||
Loss on debt extinguishment | 26,650 | — | |||||
Gains on foreign exchange contracts - acquisition related | (18,342 | ) | — | ||||
Other | 7,193 | 5,880 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
Receivables, net | (83,515 | ) | (48,995 | ) | |||
Inventories, net | 42,548 | 38,399 | |||||
Prepaid income taxes/income taxes payable | 23,029 | 21,052 | |||||
Accounts payable | 31,004 | (18,597 | ) | ||||
Other operating assets and liabilities | (17,428 | ) | (7,948 | ) | |||
Net cash provided by operating activities | 355,230 | 282,699 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (102,319 | ) | (66,763 | ) | |||
Acquisitions, net of cash acquired | (1,268,841 | ) | (37,208 | ) | |||
Proceeds from foreign exchange contracts | 18,342 | — | |||||
Other investing activities, net | 11,313 | (5,209 | ) | ||||
Net cash used in investing activities | (1,341,505 | ) | (109,180 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from exercise of stock options | 4,889 | 3,288 | |||||
Excess tax benefit from stock-based payments | 6,685 | 6,737 | |||||
Taxes paid related to net share settlements of stock-based compensation awards | (2,281 | ) | (5,243 | ) | |||
Debt issuance costs | (16,171 | ) | — | ||||
Proceeds from issuance of Euro notes | 563,450 | — | |||||
Borrowings under revolving credit facilities | 1,822,020 | 199,621 | |||||
Repayments under revolving credit facilities | (1,012,362 | ) | (294,276 | ) | |||
Borrowings under term loans | 338,478 | — | |||||
Repayments under term loans | (4,721 | ) | (11,250 | ) | |||
Borrowings under receivables securitization facility | 97,000 | 2,100 | |||||
Repayments under receivables securitization facility | (66,480 | ) | (1,758 | ) | |||
Repayments of other debt, net | (7,824 | ) | (42,090 | ) | |||
Repayment of Rhiag debt and related payments | (543,347 | ) | — | ||||
Payments of other obligations | (1,371 | ) | (2,050 | ) | |||
Net cash provided by (used in) financing activities | 1,177,965 | (144,921 | ) | ||||
Effect of exchange rate changes on cash and equivalents | (5,884 | ) | 220 | ||||
Net increase in cash and equivalents | 185,806 | 28,818 | |||||
Cash and equivalents, beginning of period | 87,397 | 114,605 | |||||
Cash and equivalents, end of period | $ | 273,203 | $ | 143,423 | |||
Supplemental disclosure of cash paid for: | |||||||
Income taxes, net of refunds | $ | 115,346 | $ | 102,747 | |||
Interest | 42,340 | 28,656 | |||||
Supplemental disclosure of noncash investing and financing activities: | |||||||
Notes payable and other financing obligations, including notes issued and debt assumed in connection with business acquisitions | $ | 555,335 | $ | 4,366 | |||
Noncash property, plant and equipment additions | 3,555 | 4,387 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Stockholders’ Equity (In thousands) | ||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Stockholders’ Equity | ||||||||||||||||||
Shares Issued | Amount | |||||||||||||||||||||
BALANCE, January 1, 2016 | 305,574 | $ | 3,055 | $ | 1,090,713 | $ | 2,126,384 | $ | (105,470 | ) | $ | 3,114,682 | ||||||||||
Net income | — | — | — | 248,469 | — | 248,469 | ||||||||||||||||
Other comprehensive income | — | — | — | — | (76,032 | ) | (76,032 | ) | ||||||||||||||
Restricted stock units vested, net of shares withheld for employee tax | 519 | 5 | (2,286 | ) | — | — | (2,281 | ) | ||||||||||||||
Stock-based compensation expense | — | — | 11,425 | — | — | 11,425 | ||||||||||||||||
Exercise of stock options | 693 | 7 | 4,882 | — | — | 4,889 | ||||||||||||||||
Excess tax benefit from stock-based payments | — | — | 6,487 | — | — | 6,487 | ||||||||||||||||
BALANCE, June 30, 2016 | 306,786 | $ | 3,067 | $ | 1,111,221 | $ | 2,374,853 | $ | (181,502 | ) | $ | 3,307,639 |
Note 1. | Interim Financial Statements |
Note 2. | Business Combinations |
Six Months Ended | Year Ended | ||||||||||||||||||
June 30, 2016 | December 31, 2015 | ||||||||||||||||||
Rhiag | PGW | Other Acquisitions | Total | All Acquisitions | |||||||||||||||
Receivables | $ | 235,358 | $ | 136,529 | $ | 996 | $ | 372,883 | $ | 29,628 | |||||||||
Receivable reserves | (28,243 | ) | (6,146 | ) | (53 | ) | (34,442 | ) | (3,926 | ) | |||||||||
Inventories, net (1) | 239,559 | 169,558 | 840 | 409,957 | 79,646 | ||||||||||||||
Prepaid expenses and other current assets | 14,465 | 38,762 | (13 | ) | 53,214 | 3,337 | |||||||||||||
Property, plant and equipment | 58,275 | 271,641 | 431 | 330,347 | 11,989 | ||||||||||||||
Goodwill | 585,112 | 183,970 | 5,107 | 774,189 | 92,175 | ||||||||||||||
Other intangibles | 424,754 | 31,126 | — | 455,880 | 9,926 | ||||||||||||||
Other assets | 2,101 | 57,396 | (407 | ) | 59,090 | 5,166 | |||||||||||||
Deferred income taxes | (109,067 | ) | 2,024 | (216 | ) | (107,259 | ) | 4,102 | |||||||||||
Current liabilities assumed | (246,546 | ) | (168,442 | ) | (615 | ) | (415,603 | ) | (39,191 | ) | |||||||||
Debt assumed | (550,843 | ) | (4,027 | ) | — | (554,870 | ) | (2,365 | ) | ||||||||||
Other noncurrent liabilities assumed | (22,918 | ) | (50,539 | ) | — | (73,457 | ) | (2,651 | ) | ||||||||||
Other purchase price obligations | — | — | — | — | (21,199 | ) | |||||||||||||
Notes issued | — | — | (465 | ) | (465 | ) | (4,296 | ) | |||||||||||
Settlement of pre-existing balances | (591 | ) | — | (32 | ) | (623 | ) | (1,073 | ) | ||||||||||
Cash used in acquisitions, net of cash acquired | $ | 601,416 | $ | 661,852 | $ | 5,573 | $ | 1,268,841 | $ | 161,268 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue, as reported | $ | 2,450,693 | $ | 1,838,070 | $ | 4,372,169 | $ | 3,611,982 | |||||||
Revenue of purchased businesses for the period prior to acquisition: | |||||||||||||||
Rhiag | — | 246,583 | 213,376 | 481,885 | |||||||||||
PGW | 61,667 | 279,729 | 328,000 | 537,385 | |||||||||||
Other acquisitions | 347 | 92,376 | 1,531 | 187,786 | |||||||||||
Pro forma revenue | $ | 2,512,707 | $ | 2,456,758 | $ | 4,915,076 | $ | 4,819,038 | |||||||
Net income, as reported | $ | 140,737 | $ | 119,722 | $ | 248,469 | $ | 226,817 | |||||||
Net income of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments: | |||||||||||||||
Rhiag | — | 5,069 | (178 | ) | 5,201 | ||||||||||
PGW | 6,357 | 8,880 | 13,860 | 2,992 | |||||||||||
Other acquisitions | 16 | 3,374 | 73 | 6,655 | |||||||||||
Acquisition related costs of acquisitions closed in the period, net of tax | 1,604 | — | 10,101 | — | |||||||||||
Pro forma net income | $ | 148,714 | $ | 137,045 | $ | 272,325 | $ | 241,665 | |||||||
Earnings per share, basic—as reported | $ | 0.46 | $ | 0.39 | $ | 0.81 | $ | 0.75 | |||||||
Effect of purchased businesses for the period prior to acquisition: | |||||||||||||||
Rhiag | — | 0.02 | (0.00) | 0.02 | |||||||||||
PGW | 0.02 | 0.03 | 0.05 | 0.01 | |||||||||||
Other acquisitions | 0.00 | 0.01 | 0.00 | 0.02 | |||||||||||
Acquisition related costs of acquisitions closed in the period, net of tax | 0.01 | — | 0.03 | — | |||||||||||
Pro forma earnings per share, basic (1) | $ | 0.48 | $ | 0.45 | $ | 0.89 | $ | 0.79 | |||||||
Earnings per share, diluted—as reported | $ | 0.46 | $ | 0.39 | $ | 0.81 | $ | 0.74 | |||||||
Effect of purchased businesses for the period prior to acquisition: | |||||||||||||||
Rhiag | — | 0.02 | (0.00) | 0.02 | |||||||||||
PGW | 0.02 | 0.03 | 0.04 | 0.01 | |||||||||||
Other acquisitions | 0.00 | 0.01 | 0.00 | 0.02 | |||||||||||
Acquisition related costs of acquisitions closed in the period, net of tax | 0.01 | — | 0.03 | — | |||||||||||
Pro forma earnings per share, diluted (1) | $ | 0.48 | $ | 0.45 | $ | 0.88 | $ | 0.79 |
Note 3. | Financial Statement Information |
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Aftermarket and refurbished products | $ | 1,422,701 | $ | 1,146,162 | |||
Salvage and remanufactured products | 397,522 | 410,390 | |||||
Glass manufacturing products (1) | 70,313 | — | |||||
Total inventories, net | $ | 1,890,536 | $ | 1,556,552 |
Land improvements | 10-20 years |
Buildings and improvements | 20-40 years |
Machinery and equipment | 3-20 years |
Computer equipment and software | 3-10 years |
Vehicles and trailers | 3-10 years |
Furniture and fixtures | 5-7 years |
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Land and improvements | $ | 135,171 | $ | 118,420 | |||
Buildings and improvements | 253,389 | 183,480 | |||||
Machinery and equipment | 574,195 | 355,313 | |||||
Computer equipment and software | 137,197 | 130,363 | |||||
Vehicles and trailers | 117,831 | 101,201 | |||||
Furniture and fixtures | 29,203 | 24,332 | |||||
Leasehold improvements | 150,086 | 140,732 | |||||
1,397,072 | 1,053,841 | ||||||
Less—Accumulated depreciation | (485,592 | ) | (437,946 | ) | |||
Construction in progress | 143,566 | 80,672 | |||||
Total property, plant and equipment, net | $ | 1,055,046 | $ | 696,567 |
North America | Europe | Specialty | Glass | Total | |||||||||||||||
Balance as of January 1, 2016 | $ | 1,445,850 | $ | 594,482 | $ | 278,914 | $ | — | $ | 2,319,246 | |||||||||
Business acquisitions and adjustments to previously recorded goodwill | 715 | 589,952 | (448 | ) | 183,970 | 774,189 | |||||||||||||
Exchange rate effects | 6,729 | (40,292 | ) | (384 | ) | — | (33,947 | ) | |||||||||||
Balance as of June 30, 2016 | $ | 1,453,294 | $ | 1,144,142 | $ | 278,082 | $ | 183,970 | $ | 3,059,488 |
June 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||
Trade names and trademarks | $ | 295,384 | $ | (49,152 | ) | $ | 246,232 | $ | 172,219 | $ | (43,458 | ) | $ | 128,761 | |||||||||
Customer and supplier relationships | 405,547 | (60,752 | ) | 344,795 | 95,508 | (41,007 | ) | 54,501 | |||||||||||||||
Software and other technology related assets | 57,253 | (23,219 | ) | 34,034 | 44,500 | (17,844 | ) | 26,656 | |||||||||||||||
Covenants not to compete | 11,719 | (6,420 | ) | 5,299 | 10,774 | (5,575 | ) | 5,199 | |||||||||||||||
$ | 769,903 | $ | (139,543 | ) | $ | 630,360 | $ | 323,001 | $ | (107,884 | ) | $ | 215,117 |
Gross Amount | |||||||
Rhiag | PGW | ||||||
Trade names and trademarks | $ | 124,074 | $ | 4,200 | |||
Customer and supplier relationships | 290,766 | 24,500 | |||||
Software and other technology related assets | 9,914 | 1,026 | |||||
Covenants not to compete | — | 1,400 | |||||
$ | 424,754 | $ | 31,126 |
Method of Amortization | Useful Life | ||
Trade names and trademarks | Straight-line | 4-30 years | |
Customer and supplier relationships | Accelerated | 4-20 years | |
Software and other technology related assets | Straight-line | 3-6 years | |
Covenants not to compete | Straight-line | 1-5 years |
Balance as of January 1, 2016 | $ | 17,363 | |
Warranty expense | 16,341 | ||
Warranty claims | (14,256 | ) | |
Balance as of June 30, 2016 | $ | 19,448 |
Note 4. | Restructuring and Acquisition Related Expenses |
Note 5. | Stock-Based Compensation |
Number Outstanding | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value (in thousands) (1) | ||||||||
Unvested as of January 1, 2016 | 1,981,292 | $ | 24.19 | $ | 58,706 | |||||
Granted | 976,318 | $ | 29.05 | |||||||
Vested | (605,151 | ) | $ | 21.20 | ||||||
Forfeited / Canceled | (53,449 | ) | $ | 27.34 | ||||||
Unvested as of June 30, 2016 | 2,299,010 | $ | 26.96 | $ | 72,879 | |||||
Expected to vest after June 30, 2016 | 2,198,889 | $ | 26.98 | $ | 69,705 |
Number Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) (1) | |||||||||
Balance as of January 1, 2016 | 3,765,952 | $ | 8.63 | 2.9 | $ | 79,317 | ||||||
Exercised | (692,610 | ) | $ | 7.06 | ||||||||
Forfeited / Canceled | (9,364 | ) | $ | 31.83 | ||||||||
Balance as of June 30, 2016 | 3,063,978 | $ | 8.92 | 2.6 | $ | 69,851 | ||||||
Exercisable as of June 30, 2016 | 2,981,006 | $ | 8.27 | 2.6 | $ | 69,851 | ||||||
Exercisable as of June 30, 2016 and expected to vest thereafter | 3,055,681 | $ | 8.86 | 2.6 | $ | 69,851 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
RSUs | $ | 5,480 | $ | 5,528 | $ | 11,359 | $ | 10,948 | |||||||
Stock options | 29 | 40 | 66 | 166 | |||||||||||
Total stock-based compensation expense | $ | 5,509 | $ | 5,568 | $ | 11,425 | $ | 11,114 |
Note 6. | Earnings Per Share |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Income | $ | 140,737 | $ | 119,722 | $ | 248,469 | $ | 226,817 | |||||||
Denominator for basic earnings per share—Weighted-average shares outstanding | 306,718 | 304,286 | 306,437 | 304,145 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
RSUs | 646 | 732 | 584 | 700 | |||||||||||
Stock options | 1,534 | 2,229 | 1,613 | 2,260 | |||||||||||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding | 308,898 | 307,247 | 308,634 | 307,105 | |||||||||||
Earnings per share, basic | $ | 0.46 | $ | 0.39 | $ | 0.81 | $ | 0.75 | |||||||
Earnings per share, diluted | $ | 0.46 | $ | 0.39 | $ | 0.81 | $ | 0.74 |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Antidilutive securities: | |||||||||||
RSUs | — | 310 | 112 | 323 | |||||||
Stock options | — | 98 | 44 | 99 |
Note 7. | Accumulated Other Comprehensive Income (Loss) |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | |||||||||||||||||||||||||||||||
Foreign Currency Translation | Unrealized (Loss) Gain on Cash Flow Hedges | Unrealized (Loss) Gain on Pension Plans | Accumulated Other Comprehensive (Loss) Income | Foreign Currency Translation | Unrealized (Loss) Gain on Cash Flow Hedges | Unrealized (Loss) Gain on Pension Plan | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||||||||||||
Beginning balance | $ | (96,750 | ) | $ | (500 | ) | $ | (7,501 | ) | $ | (104,751 | ) | $ | (81,883 | ) | $ | (3,118 | ) | $ | (9,623 | ) | $ | (94,624 | ) | ||||||||
Pretax (loss) income | (73,257 | ) | (6,528 | ) | — | (79,785 | ) | 44,510 | (166 | ) | — | 44,344 | ||||||||||||||||||||
Income tax effect | — | 2,250 | — | 2,250 | — | 69 | — | 69 | ||||||||||||||||||||||||
Reclassification of unrealized loss | — | 984 | 160 | 1,144 | — | 1,564 | (27 | ) | 1,537 | |||||||||||||||||||||||
Reclassification of deferred income taxes | — | (320 | ) | (40 | ) | (360 | ) | — | (549 | ) | 6 | (543 | ) | |||||||||||||||||||
Ending Balance | $ | (170,007 | ) | $ | (4,114 | ) | $ | (7,381 | ) | $ | (181,502 | ) | $ | (37,373 | ) | $ | (2,200 | ) | $ | (9,644 | ) | $ | (49,217 | ) |
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | |||||||||||||||||||||||||||||||
Foreign Currency Translation | Unrealized (Loss) Gain on Cash Flow Hedges | Unrealized (Loss) Gain on Pension Plans | Accumulated Other Comprehensive (Loss) Income | Foreign Currency Translation | Unrealized (Loss) Gain on Cash Flow Hedges | Unrealized (Loss) Gain on Pension Plan | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||||||||||||
Beginning balance | $ | (96,890 | ) | $ | (932 | ) | $ | (7,648 | ) | $ | (105,470 | ) | $ | (27,073 | ) | $ | (3,401 | ) | $ | (9,751 | ) | $ | (40,225 | ) | ||||||||
Pretax (loss) income | (73,117 | ) | (6,672 | ) | — | (79,789 | ) | (10,300 | ) | (1,239 | ) | — | (11,539 | ) | ||||||||||||||||||
Income tax effect | — | 2,278 | — | 2,278 | — | 439 | — | 439 | ||||||||||||||||||||||||
Reclassification of unrealized loss | — | 1,790 | 357 | 2,147 | — | 3,085 | 143 | 3,228 | ||||||||||||||||||||||||
Reclassification of deferred income taxes | — | (578 | ) | (90 | ) | (668 | ) | — | (1,084 | ) | (36 | ) | (1,120 | ) | ||||||||||||||||||
Ending Balance | $ | (170,007 | ) | $ | (4,114 | ) | $ | (7,381 | ) | $ | (181,502 | ) | $ | (37,373 | ) | $ | (2,200 | ) | $ | (9,644 | ) | $ | (49,217 | ) |
Note 8. | Long-Term Obligations |
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Senior secured credit agreement: | |||||||
Term loans payable | $ | 750,707 | $ | 410,625 | |||
Revolving credit facilities | 1,292,734 | 480,481 | |||||
Senior notes | 600,000 | 600,000 | |||||
Euro notes | 555,400 | — | |||||
Receivables securitization facility | 93,520 | 63,000 | |||||
Notes payable through October 2025 at weighted average interest rates of 2.3% and 2.2%, respectively | 9,866 | 16,104 | |||||
Other long-term debt at weighted average interest rates of 2.3% and 2.4%, respectively | 59,457 | 29,485 | |||||
Total debt | 3,361,684 | 1,599,695 | |||||
Less: long-term debt issuance costs | (23,925 | ) | (13,533 | ) | |||
Less: current debt issuance cost | (2,298 | ) | (1,460 | ) | |||
Total debt, net of issuance costs | 3,335,461 | 1,584,702 | |||||
Less: current maturities, net of debt issuance costs | (60,832 | ) | (56,034 | ) | |||
Long term debt, net of debt issuance costs | $ | 3,274,629 | $ | 1,528,668 |
Note 9. | Derivative Instruments and Hedging Activities |
Notional Amount | Fair Value at June 30, 2016 (USD) | Fair Value at December 31, 2015 (USD) | ||||||||||||||||||
June 30, 2016 | December 31, 2015 | Other Accrued Expenses | Other Noncurrent Liabilities | Other Accrued Expenses | ||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||
USD denominated | $ | 760,000 | $ | 170,000 | $ | 500 | $ | 5,715 | $ | 858 | ||||||||||
GBP denominated | £ | 50,000 | £ | 50,000 | 209 | — | 465 | |||||||||||||
CAD denominated | C$ | — | C$ | 25,000 | — | — | 24 | |||||||||||||
Total cash flow hedges | $ | 709 | $ | 5,715 | $ | 1,347 |
Note 10. | Fair Value Measurements |
Balance as of June 30, 2016 | Fair Value Measurements as of June 30, 2016 | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | |||||||||||||||
Cash surrender value of life insurance | $ | 33,574 | $ | — | $ | 33,574 | $ | — | |||||||
Total Assets | $ | 33,574 | $ | — | $ | 33,574 | $ | — | |||||||
Liabilities: | |||||||||||||||
Contingent consideration liabilities | $ | 3,134 | $ | — | $ | — | $ | 3,134 | |||||||
Deferred compensation liabilities | 34,742 | — | 34,742 | — | |||||||||||
Interest rate swaps | 6,424 | — | 6,424 | — | |||||||||||
Total Liabilities | $ | 44,300 | $ | — | $ | 41,166 | $ | 3,134 |
Balance as of December 31, 2015 | Fair Value Measurements as of December 31, 2015 | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | |||||||||||||||
Cash surrender value of life insurance | $ | 29,782 | $ | — | $ | 29,782 | $ | — | |||||||
Total Assets | $ | 29,782 | $ | — | $ | 29,782 | $ | — | |||||||
Liabilities: | |||||||||||||||
Contingent consideration liabilities | $ | 4,584 | $ | — | $ | — | $ | 4,584 | |||||||
Deferred compensation liabilities | 30,336 | — | 30,336 | — | |||||||||||
Interest rate swaps | 1,347 | — | 1,347 | — | |||||||||||
Total Liabilities | $ | 36,267 | $ | — | $ | 31,683 | $ | 4,584 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Beginning balance | $ | 3,079 | $ | 5,561 | $ | 4,584 | $ | 7,295 | |||||||
Payments | — | (538 | ) | (1,667 | ) | (2,205 | ) | ||||||||
Increase in fair value included in earnings | 46 | 125 | 119 | 276 | |||||||||||
Exchange rate effects | 9 | 43 | 98 | (175 | ) | ||||||||||
Balance as of June 30 | $ | 3,134 | $ | 5,191 | $ | 3,134 | $ | 5,191 |
Note 11. | Commitments and Contingencies |
Six months ending December 31, 2016 | $ | 97,039 | |
Years ending December 31: | |||
2017 | 172,688 | ||
2018 | 142,782 | ||
2019 | 114,178 | ||
2020 | 92,563 | ||
2021 | 70,136 | ||
Thereafter | 351,954 | ||
Future Minimum Lease Payments | $ | 1,041,340 |
Note 12. | Income Taxes |
Note 13. | Segment and Geographic Information |
North America | Europe | Specialty | Glass | Eliminations | Consolidated | ||||||||||||||||||
Three Months Ended June 30, 2016 | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Third Party | $ | 1,080,401 | $ | 824,216 | $ | 335,972 | $ | 210,104 | $ | — | $ | 2,450,693 | |||||||||||
Intersegment | 119 | (10 | ) | 1,094 | 74 | (1,277 | ) | — | |||||||||||||||
Total segment revenue | $ | 1,080,520 | $ | 824,206 | $ | 337,066 | $ | 210,178 | $ | (1,277 | ) | $ | 2,450,693 | ||||||||||
Segment EBITDA | $ | 163,825 | $ | 89,982 | $ | 41,792 | $ | 23,301 | $ | — | $ | 318,900 | |||||||||||
Depreciation and amortization (1) | 17,622 | 28,280 | 5,283 | 6,531 | — | 57,716 | |||||||||||||||||
Three Months Ended June 30, 2015 | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Third Party | $ | 1,044,779 | $ | 509,833 | $ | 283,458 | $ | — | $ | — | $ | 1,838,070 | |||||||||||
Intersegment | 372 | 70 | 872 | — | (1,314 | ) | — | ||||||||||||||||
Total segment revenue | $ | 1,045,151 | $ | 509,903 | $ | 284,330 | $ | — | $ | (1,314 | ) | $ | 1,838,070 | ||||||||||
Segment EBITDA | $ | 138,880 | $ | 53,943 | $ | 40,198 | $ | — | $ | — | $ | 233,021 | |||||||||||
Depreciation and amortization (1) | 17,249 | 8,704 | 5,092 | — | — | 31,045 |
North America | Europe | Specialty | Glass | Eliminations | Consolidated | ||||||||||||||||||
Six Months Ended June 30, 2016 | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Third Party | $ | 2,167,764 | $ | 1,370,967 | $ | 623,334 | $ | 210,104 | $ | — | $ | 4,372,169 | |||||||||||
Intersegment | 333 | — | 2,045 | 74 | (2,452 | ) | — | ||||||||||||||||
Total segment revenue | $ | 2,168,097 | $ | 1,370,967 | $ | 625,379 | $ | 210,178 | $ | (2,452 | ) | $ | 4,372,169 | ||||||||||
Segment EBITDA | $ | 311,200 | $ | 147,480 | $ | 73,530 | $ | 23,301 | $ | — | $ | 555,511 | |||||||||||
Depreciation and amortization (1) | 35,137 | 38,588 | 10,626 | 6,531 | — | 90,882 | |||||||||||||||||
Six Months Ended June 30, 2015 | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Third Party | $ | 2,090,858 | $ | 997,179 | $ | 523,945 | $ | — | $ | — | $ | 3,611,982 | |||||||||||
Intersegment | 466 | 70 | 1,607 | — | (2,143 | ) | — | ||||||||||||||||
Total segment revenue | $ | 2,091,324 | $ | 997,249 | $ | 525,552 | $ | — | $ | (2,143 | ) | $ | 3,611,982 | ||||||||||
Segment EBITDA | $ | 288,268 | $ | 100,466 | $ | 65,602 | $ | — | $ | — | $ | 454,336 | |||||||||||
Depreciation and amortization (1) | 34,515 | 17,055 | 10,144 | — | — | 61,714 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Segment EBITDA | $ | 318,900 | $ | 233,021 | $ | 555,511 | $ | 454,336 | |||||||
Deduct: | |||||||||||||||
Restructuring and acquisition related expenses (1) | 9,080 | 1,663 | 23,891 | 8,151 | |||||||||||
Inventory step-up adjustment - acquisition related (2) | 10,213 | — | 10,213 | — | |||||||||||
Change in fair value of contingent consideration liabilities (3) | 46 | 125 | 119 | 276 | |||||||||||
Add: | |||||||||||||||
Equity in earnings of unconsolidated subsidiaries | 147 | (1,162 | ) | (215 | ) | (3,070 | ) | ||||||||
Gains on foreign exchange contracts - acquisition related (4) | — | — | 18,342 | — | |||||||||||
EBITDA | 299,708 | 230,071 | 539,415 | 442,839 | |||||||||||
Depreciation and amortization - cost of goods sold | 5,187 | 1,263 | 6,665 | 2,479 | |||||||||||
Depreciation and amortization | 52,529 | 29,782 | 84,217 | 59,235 | |||||||||||
Interest expense, net | 26,381 | 14,622 | 40,973 | 29,528 | |||||||||||
Loss on debt extinguishment | — | — | 26,650 | — | |||||||||||
Provision for income taxes | 74,874 | 64,682 | 132,441 | 124,780 | |||||||||||
Net income | $ | 140,737 | $ | 119,722 | $ | 248,469 | $ | 226,817 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Capital Expenditures | |||||||||||||||
North America | $ | 19,448 | $ | 14,744 | $ | 42,231 | $ | 30,147 | |||||||
Europe | 21,444 | 22,303 | 40,551 | 30,172 | |||||||||||
Specialty | 2,150 | 3,620 | 10,653 | 6,444 | |||||||||||
Glass | 8,884 | — | 8,884 | — | |||||||||||
$ | 51,926 | $ | 40,667 | $ | 102,319 | $ | 66,763 |
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Receivables, net | |||||||
North America | $ | 331,359 | $ | 314,743 | |||
Europe (1) | 444,064 | 215,710 | |||||
Specialty | 99,871 | 59,707 | |||||
Glass (1) | 119,859 | — | |||||
Total receivables, net | 995,153 | 590,160 | |||||
Inventories, net | |||||||
North America | 807,132 | 847,787 | |||||
Europe (1) | 613,928 | 427,323 | |||||
Specialty | 305,396 | 281,442 | |||||
Glass (1) | 164,080 | — | |||||
Total inventories, net | 1,890,536 | 1,556,552 | |||||
Property, Plant and Equipment, net | |||||||
North America | 479,907 | 467,961 | |||||
Europe (1) | 242,741 | 175,455 | |||||
Specialty | 58,443 | 53,151 | |||||
Glass (1) | 273,955 | — | |||||
Total property, plant and equipment, net | 1,055,046 | 696,567 | |||||
Other unallocated assets | 4,245,209 | 2,804,558 | |||||
Total assets | $ | 8,185,944 | $ | 5,647,837 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | |||||||||||||||
United States | $ | 1,483,840 | $ | 1,228,424 | $ | 2,768,807 | $ | 2,423,369 | |||||||
United Kingdom | 358,266 | 347,064 | 707,942 | 690,671 | |||||||||||
Other countries | 608,587 | 262,582 | 895,420 | 497,942 | |||||||||||
$ | 2,450,693 | $ | 1,838,070 | $ | 4,372,169 | $ | 3,611,982 |
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Long-lived Assets | |||||||
United States | $ | 749,504 | $ | 493,300 | |||
United Kingdom | 147,556 | 138,546 | |||||
Other countries | 157,986 | 64,721 | |||||
$ | 1,055,046 | $ | 696,567 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Aftermarket, other new and refurbished products | $ | 1,756,334 | $ | 1,296,168 | $ | 3,144,070 | $ | 2,542,639 | |||||||
Recycled, remanufactured and related products and services | 435,023 | 408,180 | 865,612 | 806,625 | |||||||||||
Manufactured products (1) | 140,632 | — | 140,632 | — | |||||||||||
Other | 118,704 | 133,722 | 221,855 | 262,718 | |||||||||||
$ | 2,450,693 | $ | 1,838,070 | $ | 4,372,169 | $ | 3,611,982 |
Note 14. | Condensed Consolidating Financial Information |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Balance Sheets (In thousands) | |||||||||||||||||||
June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and equivalents | $ | 52,144 | $ | 31,140 | $ | 189,919 | $ | — | $ | 273,203 | |||||||||
Receivables, net | — | 372,413 | 622,740 | — | 995,153 | ||||||||||||||
Intercompany receivables, net | 14,864 | 11,224 | — | (26,088 | ) | — | |||||||||||||
Inventories, net | — | 1,203,556 | 686,980 | — | 1,890,536 | ||||||||||||||
Prepaid expenses and other current assets | 2,083 | 53,520 | 83,933 | — | 139,536 | ||||||||||||||
Total Current Assets | 69,091 | 1,671,853 | 1,583,572 | (26,088 | ) | 3,298,428 | |||||||||||||
Property, Plant and Equipment, net | 271 | 743,265 | 311,510 | — | 1,055,046 | ||||||||||||||
Intangible Assets: | |||||||||||||||||||
Goodwill | — | 1,825,033 | 1,234,455 | — | 3,059,488 | ||||||||||||||
Other intangibles, net | — | 161,257 | 469,103 | — | 630,360 | ||||||||||||||
Investment in Subsidiaries | 5,038,195 | 278,799 | — | (5,316,994 | ) | — | |||||||||||||
Intercompany Notes Receivable | 1,130,732 | 780,340 | — | (1,911,072 | ) | — | |||||||||||||
Other Assets | 41,418 | 80,687 | 28,361 | (7,844 | ) | 142,622 | |||||||||||||
Total Assets | $ | 6,279,707 | $ | 5,541,234 | $ | 3,627,001 | $ | (7,261,998 | ) | $ | 8,185,944 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Accounts payable | $ | 1,669 | $ | 355,545 | $ | 377,924 | $ | — | $ | 735,138 | |||||||||
Intercompany payables, net | — | — | 26,088 | (26,088 | ) | — | |||||||||||||
Accrued expenses: | |||||||||||||||||||
Accrued payroll-related liabilities | 4,726 | 48,724 | 49,512 | — | 102,962 | ||||||||||||||
Other accrued expenses | 5,085 | 90,554 | 133,017 | — | 228,656 | ||||||||||||||
Other current liabilities | 283 | 16,820 | 23,691 | — | 40,794 | ||||||||||||||
Current portion of long-term obligations | 19,262 | 2,826 | 38,744 | — | 60,832 | ||||||||||||||
Total Current Liabilities | 31,025 | 514,469 | 648,976 | (26,088 | ) | 1,168,382 | |||||||||||||
Long-Term Obligations, Excluding Current Portion | 2,146,730 | 8,449 | 1,119,450 | — | 3,274,629 | ||||||||||||||
Intercompany Notes Payable | 750,000 | 1,114,430 | 46,642 | (1,911,072 | ) | — | |||||||||||||
Deferred Income Taxes | — | 111,766 | 121,416 | (7,844 | ) | 225,338 | |||||||||||||
Other Noncurrent Liabilities | 44,313 | 124,822 | 40,821 | — | 209,956 | ||||||||||||||
Stockholders’ Equity | 3,307,639 | 3,667,298 | 1,649,696 | (5,316,994 | ) | 3,307,639 | |||||||||||||
Total Liabilities and Stockholders' Equity | $ | 6,279,707 | $ | 5,541,234 | $ | 3,627,001 | $ | (7,261,998 | ) | $ | 8,185,944 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Balance Sheets (In thousands) | |||||||||||||||||||
December 31, 2015 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and equivalents | $ | 17,616 | $ | 13,432 | $ | 56,349 | $ | — | $ | 87,397 | |||||||||
Receivables, net | — | 214,502 | 375,658 | — | 590,160 | ||||||||||||||
Intercompany receivables, net | 3 | — | 13,544 | (13,547 | ) | — | |||||||||||||
Inventories, net | — | 1,060,834 | 495,718 | — | 1,556,552 | ||||||||||||||
Prepaid expenses and other current assets | 15,254 | 44,810 | 46,539 | — | 106,603 | ||||||||||||||
Total Current Assets | 32,873 | 1,333,578 | 987,808 | (13,547 | ) | 2,340,712 | |||||||||||||
Property, Plant and Equipment, net | 339 | 494,658 | 201,570 | — | 696,567 | ||||||||||||||
Intangible Assets: | |||||||||||||||||||
Goodwill | — | 1,640,745 | 678,501 | — | 2,319,246 | ||||||||||||||
Other intangibles, net | — | 141,537 | 73,580 | — | 215,117 | ||||||||||||||
Investment in Subsidiaries | 3,456,837 | 285,284 | — | (3,742,121 | ) | — | |||||||||||||
Intercompany Notes Receivable | 630,717 | 61,764 | — | (692,481 | ) | — | |||||||||||||
Other Assets | 35,649 | 28,184 | 18,218 | (5,856 | ) | 76,195 | |||||||||||||
Total Assets | $ | 4,156,415 | $ | 3,985,750 | $ | 1,959,677 | $ | (4,454,005 | ) | $ | 5,647,837 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Accounts payable | $ | 681 | $ | 229,519 | $ | 185,388 | $ | — | $ | 415,588 | |||||||||
Intercompany payables, net | — | 13,544 | 3 | (13,547 | ) | — | |||||||||||||
Accrued expenses: | |||||||||||||||||||
Accrued payroll-related liabilities | 4,395 | 48,698 | 33,434 | — | 86,527 | ||||||||||||||
Other accrued expenses | 5,399 | 80,886 | 75,940 | — | 162,225 | ||||||||||||||
Other current liabilities | 284 | 15,953 | 15,359 | — | 31,596 | ||||||||||||||
Current portion of long-term obligations | 21,041 | 1,425 | 33,568 | — | 56,034 | ||||||||||||||
Total Current Liabilities | 31,800 | 390,025 | 343,692 | (13,547 | ) | 751,970 | |||||||||||||
Long-Term Obligations, Excluding Current Portion | 976,353 | 7,487 | 544,828 | — | 1,528,668 | ||||||||||||||
Intercompany Notes Payable | — | 615,488 | 76,993 | (692,481 | ) | — | |||||||||||||
Deferred Income Taxes | — | 113,905 | 19,190 | (5,856 | ) | 127,239 | |||||||||||||
Other Noncurrent Liabilities | 33,580 | 70,109 | 21,589 | — | 125,278 | ||||||||||||||
Stockholders’ Equity | 3,114,682 | 2,788,736 | 953,385 | (3,742,121 | ) | 3,114,682 | |||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 4,156,415 | $ | 3,985,750 | $ | 1,959,677 | $ | (4,454,005 | ) | $ | 5,647,837 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands) | |||||||||||||||||||
For the Three Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Revenue | $ | — | $ | 1,530,947 | $ | 953,917 | $ | (34,171 | ) | $ | 2,450,693 | ||||||||
Cost of goods sold | — | 951,356 | 611,561 | (34,171 | ) | 1,528,746 | |||||||||||||
Gross margin | — | 579,591 | 342,356 | — | 921,947 | ||||||||||||||
Facility and warehouse expenses | — | 118,649 | 60,021 | — | 178,670 | ||||||||||||||
Distribution expenses | — | 118,321 | 66,010 | — | 184,331 | ||||||||||||||
Selling, general and administrative expenses | 8,887 | 132,488 | 112,778 | — | 254,153 | ||||||||||||||
Restructuring and acquisition related expenses | — | 7,082 | 1,998 | — | 9,080 | ||||||||||||||
Depreciation and amortization | 33 | 23,461 | 29,035 | — | 52,529 | ||||||||||||||
Operating (loss) income | (8,920 | ) | 179,590 | 72,514 | — | 243,184 | |||||||||||||
Other expense (income): | |||||||||||||||||||
Interest expense (income), net | 17,804 | (309 | ) | 8,886 | — | 26,381 | |||||||||||||
Intercompany interest (income) expense, net | (2,355 | ) | 2,376 | (21 | ) | — | — | ||||||||||||
Other expense (income), net | 33 | (284 | ) | 1,590 | — | 1,339 | |||||||||||||
Total other expense, net | 15,482 | 1,783 | 10,455 | — | 27,720 | ||||||||||||||
(Loss) income before (benefit) provision for income taxes | (24,402 | ) | 177,807 | 62,059 | — | 215,464 | |||||||||||||
(Benefit) provision for income taxes | (9,384 | ) | 72,019 | 12,239 | — | 74,874 | |||||||||||||
Equity in earnings of unconsolidated subsidiaries | — | 347 | (200 | ) | — | 147 | |||||||||||||
Equity in earnings of subsidiaries | 155,755 | 431 | — | (156,186 | ) | — | |||||||||||||
Net income | $ | 140,737 | $ | 106,566 | $ | 49,620 | $ | (156,186 | ) | $ | 140,737 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands) | |||||||||||||||||||
For the Three Months Ended June 30, 2015 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Revenue | $ | — | $ | 1,269,541 | $ | 599,744 | $ | (31,215 | ) | $ | 1,838,070 | ||||||||
Cost of goods sold | — | 770,026 | 375,315 | (31,215 | ) | 1,114,126 | |||||||||||||
Gross margin | — | 499,515 | 224,429 | — | 723,944 | ||||||||||||||
Facility and warehouse expenses | — | 100,289 | 36,090 | — | 136,379 | ||||||||||||||
Distribution expenses | — | 102,753 | 47,286 | — | 150,039 | ||||||||||||||
Selling, general and administrative expenses | 8,761 | 119,958 | 77,077 | — | 205,796 | ||||||||||||||
Restructuring and acquisition related expenses | — | 1,185 | 478 | — | 1,663 | ||||||||||||||
Depreciation and amortization | 39 | 19,873 | 9,870 | — | 29,782 | ||||||||||||||
Operating (loss) income | (8,800 | ) | 155,457 | 53,628 | — | 200,285 | |||||||||||||
Other expense (income): | |||||||||||||||||||
Interest expense (income), net | 12,241 | (172 | ) | 2,553 | — | 14,622 | |||||||||||||
Intercompany interest (income) expense, net | (10,378 | ) | 7,056 | 3,322 | — | — | |||||||||||||
Other expense (income), net | 2 | (1,106 | ) | 1,201 | — | 97 | |||||||||||||
Total other expense, net | 1,865 | 5,778 | 7,076 | — | 14,719 | ||||||||||||||
(Loss) income before (benefit) provision for income taxes | (10,665 | ) | 149,679 | 46,552 | — | 185,566 | |||||||||||||
(Benefit) provision for income taxes | (4,294 | ) | 59,495 | 9,481 | — | 64,682 | |||||||||||||
Equity in earnings of unconsolidated subsidiaries | — | 19 | (1,181 | ) | — | (1,162 | ) | ||||||||||||
Equity in earnings of subsidiaries | 126,093 | 7,335 | — | (133,428 | ) | — | |||||||||||||
Net income | $ | 119,722 | $ | 97,538 | $ | 35,890 | $ | (133,428 | ) | $ | 119,722 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands) | |||||||||||||||||||
For the Six Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Revenue | $ | — | $ | 2,849,114 | $ | 1,589,554 | $ | (66,499 | ) | $ | 4,372,169 | ||||||||
Cost of goods sold | — | 1,746,596 | 1,009,688 | (66,499 | ) | 2,689,785 | |||||||||||||
Gross margin | — | 1,102,518 | 579,866 | — | 1,682,384 | ||||||||||||||
Facility and warehouse expenses | — | 233,859 | 102,416 | — | 336,275 | ||||||||||||||
Distribution expenses | — | 222,475 | 114,199 | — | 336,674 | ||||||||||||||
Selling, general and administrative expenses | 19,266 | 259,156 | 194,049 | — | 472,471 | ||||||||||||||
Restructuring and acquisition related expenses | — | 11,118 | 12,773 | — | 23,891 | ||||||||||||||
Depreciation and amortization | 69 | 44,005 | 40,143 | — | 84,217 | ||||||||||||||
Operating (loss) income | (19,335 | ) | 331,905 | 116,286 | — | 428,856 | |||||||||||||
Other expense (income): | |||||||||||||||||||
Interest expense (income), net | 29,921 | (166 | ) | 11,218 | — | 40,973 | |||||||||||||
Intercompany interest (income) expense, net | (13,032 | ) | 8,966 | 4,066 | — | — | |||||||||||||
Loss on debt extinguishment | 2,894 | — | 23,756 | — | 26,650 | ||||||||||||||
Gains on foreign exchange contracts - acquisition related | (18,342 | ) | — | — | — | (18,342 | ) | ||||||||||||
Other (income) expense, net | (78 | ) | (3,084 | ) | 1,612 | — | (1,550 | ) | |||||||||||
Total other expense, net | 1,363 | 5,716 | 40,652 | — | 47,731 | ||||||||||||||
(Loss) income before (benefit) provision for income taxes | (20,698 | ) | 326,189 | 75,634 | — | 381,125 | |||||||||||||
(Benefit) provision for income taxes | (7,961 | ) | 125,464 | 14,938 | — | 132,441 | |||||||||||||
Equity in earnings of unconsolidated subsidiaries | (795 | ) | 352 | 228 | — | (215 | ) | ||||||||||||
Equity in earnings of subsidiaries | 262,001 | 12,373 | — | (274,374 | ) | — | |||||||||||||
Net income | $ | 248,469 | $ | 213,450 | $ | 60,924 | $ | (274,374 | ) | $ | 248,469 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands) | |||||||||||||||||||
For the Six Months Ended June 30, 2015 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Revenue | $ | — | $ | 2,495,449 | $ | 1,182,687 | $ | (66,154 | ) | $ | 3,611,982 | ||||||||
Cost of goods sold | — | 1,510,829 | 743,884 | (66,154 | ) | 2,188,559 | |||||||||||||
Gross margin | — | 984,620 | 438,803 | — | 1,423,423 | ||||||||||||||
Facility and warehouse expenses | — | 198,050 | 70,986 | — | 269,036 | ||||||||||||||
Distribution expenses | — | 198,745 | 93,008 | — | 291,753 | ||||||||||||||
Selling, general and administrative expenses | 16,392 | 241,620 | 151,025 | — | 409,037 | ||||||||||||||
Restructuring and acquisition related expenses | — | 7,245 | 906 | — | 8,151 | ||||||||||||||
Depreciation and amortization | 79 | 39,764 | 19,392 | — | 59,235 | ||||||||||||||
Operating (loss) income | (16,471 | ) | 299,196 | 103,486 | — | 386,211 | |||||||||||||
Other expense (income): | |||||||||||||||||||
Interest expense (income), net | 24,555 | (129 | ) | 5,102 | — | 29,528 | |||||||||||||
Intercompany interest (income) expense, net | (21,201 | ) | 14,315 | 6,886 | — | — | |||||||||||||
Other expense (income), net | 27 | (2,841 | ) | 4,830 | — | 2,016 | |||||||||||||
Total other expense, net | 3,381 | 11,345 | 16,818 | — | 31,544 | ||||||||||||||
(Loss) income before (benefit) provision for income taxes | (19,852 | ) | 287,851 | 86,668 | — | 354,667 | |||||||||||||
(Benefit) provision for income taxes | (8,049 | ) | 115,272 | 17,557 | — | 124,780 | |||||||||||||
Equity in earnings of unconsolidated subsidiaries | — | 30 | (3,100 | ) | — | (3,070 | ) | ||||||||||||
Equity in earnings of subsidiaries | 238,620 | 14,595 | — | (253,215 | ) | — | |||||||||||||
Net income | $ | 226,817 | $ | 187,204 | $ | 66,011 | $ | (253,215 | ) | $ | 226,817 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands) | |||||||||||||||||||
For the Three Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 140,737 | $ | 106,566 | $ | 49,620 | $ | (156,186 | ) | $ | 140,737 | ||||||||
Other comprehensive (loss) income: | |||||||||||||||||||
Foreign currency translation | (73,257 | ) | (15,116 | ) | (73,830 | ) | 88,946 | (73,257 | ) | ||||||||||
Net change in unrecognized gains/losses on derivative instruments, net of tax | (3,614 | ) | — | 99 | (99 | ) | (3,614 | ) | |||||||||||
Net change in unrealized gains/losses on pension plans, net of tax | 120 | — | 120 | (120 | ) | 120 | |||||||||||||
Total other comprehensive loss | (76,751 | ) | (15,116 | ) | (73,611 | ) | 88,727 | (76,751 | ) | ||||||||||
Total comprehensive income (loss) | $ | 63,986 | $ | 91,450 | $ | (23,991 | ) | $ | (67,459 | ) | $ | 63,986 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands) | |||||||||||||||||||
For the Three Months Ended June 30, 2015 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 119,722 | $ | 97,538 | $ | 35,890 | $ | (133,428 | ) | $ | 119,722 | ||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation | 44,510 | 13,134 | 44,216 | (57,350 | ) | 44,510 | |||||||||||||
Net change in unrecognized gains/losses on derivative instruments, net of tax | 918 | — | 191 | (191 | ) | 918 | |||||||||||||
Change in unrealized gain on pension plans, net of tax | (21 | ) | — | (21 | ) | 21 | (21 | ) | |||||||||||
Total other comprehensive income | 45,407 | 13,134 | 44,386 | (57,520 | ) | 45,407 | |||||||||||||
Total comprehensive income | $ | 165,129 | $ | 110,672 | $ | 80,276 | $ | (190,948 | ) | $ | 165,129 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands) | |||||||||||||||||||
For the Six Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 248,469 | $ | 213,450 | $ | 60,924 | $ | (274,374 | ) | $ | 248,469 | ||||||||
Other comprehensive (loss) income: | |||||||||||||||||||
Foreign currency translation | (73,117 | ) | (17,971 | ) | (76,869 | ) | 94,840 | (73,117 | ) | ||||||||||
Net change in unrecognized gains/losses on derivative instruments, net of tax | (3,182 | ) | — | 195 | (195 | ) | (3,182 | ) | |||||||||||
Net change in unrealized gains/losses on pension plans, net of tax | 267 | — | 267 | (267 | ) | 267 | |||||||||||||
Total other comprehensive loss | (76,032 | ) | (17,971 | ) | (76,407 | ) | 94,378 | (76,032 | ) | ||||||||||
Total comprehensive income (loss) | $ | 172,437 | $ | 195,479 | $ | (15,483 | ) | $ | (179,996 | ) | $ | 172,437 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands) | |||||||||||||||||||
For the Six Months Ended June 30, 2015 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 226,817 | $ | 187,204 | $ | 66,011 | $ | (253,215 | ) | $ | 226,817 | ||||||||
Other comprehensive (loss) income: | |||||||||||||||||||
Foreign currency translation | (10,300 | ) | (1,238 | ) | (8,583 | ) | 9,821 | (10,300 | ) | ||||||||||
Net change in unrecognized gains/losses on derivative instruments, net of tax | 1,201 | — | 129 | (129 | ) | 1,201 | |||||||||||||
Change in unrealized gains/losses on pension plans, net of tax | 107 | — | 107 | (107 | ) | 107 | |||||||||||||
Total other comprehensive loss | (8,992 | ) | (1,238 | ) | (8,347 | ) | 9,585 | (8,992 | ) | ||||||||||
Total comprehensive income | $ | 217,825 | $ | 185,966 | $ | 57,664 | $ | (243,630 | ) | $ | 217,825 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands) | |||||||||||||||||||
For the Six Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net cash provided by operating activities | $ | 136,098 | $ | 300,978 | $ | 66,346 | $ | (148,192 | ) | $ | 355,230 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Purchases of property, plant and equipment | (2 | ) | (57,742 | ) | (44,575 | ) | — | (102,319 | ) | ||||||||||
Investment and intercompany note activity with subsidiaries | (1,293,298 | ) | (34,448 | ) | — | 1,327,746 | — | ||||||||||||
Acquisitions, net of cash acquired | — | (661,852 | ) | (606,989 | ) | — | (1,268,841 | ) | |||||||||||
Proceeds from foreign exchange contracts | 18,342 | — | — | — | 18,342 | ||||||||||||||
Other investing activities, net | — | 400 | 10,913 | — | 11,313 | ||||||||||||||
Net cash used in investing activities | (1,274,958 | ) | (753,642 | ) | (640,651 | ) | 1,327,746 | (1,341,505 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Proceeds from exercise of stock options | 4,889 | — | — | — | 4,889 | ||||||||||||||
Excess tax benefit from stock-based payments | 6,685 | — | — | — | 6,685 | ||||||||||||||
Taxes paid related to net share settlements of stock-based compensation awards | (2,281 | ) | — | — | — | (2,281 | ) | ||||||||||||
Debt issuance costs | (7,100 | ) | — | (9,071 | ) | — | (16,171 | ) | |||||||||||
Proceeds from issuance of Euro notes | — | — | 563,450 | — | 563,450 | ||||||||||||||
Borrowings under revolving credit facilities | 1,204,000 | — | 618,020 | — | 1,822,020 | ||||||||||||||
Repayments under revolving credit facilities | (119,000 | ) | — | (893,362 | ) | — | (1,012,362 | ) | |||||||||||
Borrowings under term loans | 89,317 | — | 249,161 | — | 338,478 | ||||||||||||||
Repayments under term loans | (3,122 | ) | — | (1,599 | ) | — | (4,721 | ) | |||||||||||
Borrowings under receivables securitization facility | — | — | 97,000 | — | 97,000 | ||||||||||||||
Repayments under receivables securitization facility | — | — | (66,480 | ) | — | (66,480 | ) | ||||||||||||
Repayments of other debt, net | — | (1,657 | ) | (6,167 | ) | — | (7,824 | ) | |||||||||||
Repayment of Rhiag debt and related payments | — | — | (543,347 | ) | — | (543,347 | ) | ||||||||||||
Payments of other obligations | — | (1,371 | ) | — | — | (1,371 | ) | ||||||||||||
Investment and intercompany note activity with parent | — | 621,619 | 706,127 | (1,327,746 | ) | — | |||||||||||||
Dividends | — | (148,192 | ) | — | 148,192 | — | |||||||||||||
Net cash provided by financing activities | 1,173,388 | 470,399 | 713,732 | (1,179,554 | ) | 1,177,965 | |||||||||||||
Effect of exchange rate changes on cash and equivalents | — | (27 | ) | (5,857 | ) | — | (5,884 | ) | |||||||||||
Net increase in cash and equivalents | 34,528 | 17,708 | 133,570 | — | 185,806 | ||||||||||||||
Cash and equivalents, beginning of period | 17,616 | 13,432 | 56,349 | — | 87,397 | ||||||||||||||
Cash and equivalents, end of period | $ | 52,144 | $ | 31,140 | $ | 189,919 | $ | — | $ | 273,203 |
LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands) | |||||||||||||||||||
For the Six Months Ended June 30, 2015 | |||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net cash provided by operating activities | $ | 121,024 | $ | 188,713 | $ | 89,630 | $ | (116,668 | ) | $ | 282,699 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Purchases of property, plant and equipment | (3 | ) | (34,791 | ) | (31,969 | ) | — | (66,763 | ) | ||||||||||
Investment and intercompany note activity with subsidiaries | 30,818 | — | — | (30,818 | ) | — | |||||||||||||
Acquisitions, net of cash acquired | — | (6,583 | ) | (30,625 | ) | — | (37,208 | ) | |||||||||||
Other investing activities, net | — | 585 | (5,794 | ) | — | (5,209 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 30,815 | (40,789 | ) | (68,388 | ) | (30,818 | ) | (109,180 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Proceeds from exercise of stock options | 3,288 | — | — | — | 3,288 | ||||||||||||||
Excess tax benefit from stock-based payments | 6,737 | — | — | — | 6,737 | ||||||||||||||
Taxes paid related to net share settlements of stock-based compensation awards | (5,243 | ) | — | — | — | (5,243 | ) | ||||||||||||
Borrowings under revolving credit facilities | 132,000 | — | 67,621 | — | 199,621 | ||||||||||||||
Repayments under revolving credit facilities | (215,000 | ) | — | (79,276 | ) | — | (294,276 | ) | |||||||||||
Repayments under term loans | (11,250 | ) | — | — | — | (11,250 | ) | ||||||||||||
Borrowings under receivables securitization facility | — | — | 2,100 | — | 2,100 | ||||||||||||||
Repayments under receivables securitization facility | — | — | (1,758 | ) | — | (1,758 | ) | ||||||||||||
Repayments of other debt, net | (31,500 | ) | (596 | ) | (9,994 | ) | — | (42,090 | ) | ||||||||||
Payments of other obligations | — | (2,050 | ) | — | — | (2,050 | ) | ||||||||||||
Investment and intercompany note activity with parent | — | (32,051 | ) | 1,233 | 30,818 | — | |||||||||||||
Dividends | — | (116,668 | ) | — | 116,668 | — | |||||||||||||
Net cash used in financing activities | (120,968 | ) | (151,365 | ) | (20,074 | ) | 147,486 | (144,921 | ) | ||||||||||
Effect of exchange rate changes on cash and equivalents | — | 53 | 167 | — | 220 | ||||||||||||||
Net increase (decrease) in cash and equivalents | 30,871 | (3,388 | ) | 1,335 | — | 28,818 | |||||||||||||
Cash and equivalents, beginning of period | 14,930 | 32,103 | 67,572 | — | 114,605 | ||||||||||||||
Cash and equivalents, end of period | $ | 45,801 | $ | 28,715 | $ | 68,907 | $ | — | $ | 143,423 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of goods sold | 62.4 | % | 60.6 | % | 61.5 | % | 60.6 | % | |||
Gross margin | 37.6 | % | 39.4 | % | 38.5 | % | 39.4 | % | |||
Facility and warehouse expenses | 7.3 | % | 7.4 | % | 7.7 | % | 7.4 | % | |||
Distribution expenses | 7.5 | % | 8.2 | % | 7.7 | % | 8.1 | % | |||
Selling, general and administrative expenses | 10.4 | % | 11.2 | % | 10.8 | % | 11.3 | % | |||
Restructuring and acquisition related expenses | 0.4 | % | 0.1 | % | 0.5 | % | 0.2 | % | |||
Depreciation and amortization | 2.1 | % | 1.6 | % | 1.9 | % | 1.6 | % | |||
Operating income | 9.9 | % | 10.9 | % | 9.8 | % | 10.7 | % | |||
Other expense, net | 1.1 | % | 0.8 | % | 1.1 | % | 0.9 | % | |||
Income before provision for income taxes | 8.8 | % | 10.1 | % | 8.7 | % | 9.8 | % | |||
Provision for income taxes | 3.1 | % | 3.5 | % | 3.0 | % | 3.5 | % | |||
Equity in earnings of unconsolidated subsidiaries | 0.0 | % | (0.1 | )% | (0.0 | )% | (0.1 | )% | |||
Net income | 5.7 | % | 6.5 | % | 5.7 | % | 6.3 | % | |||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
Three Months Ended | |||||||||||||||||||
June 30, | Percentage Change in Revenue | ||||||||||||||||||
2016 | 2015 | Organic | Acquisition | Foreign Exchange | Total Change | ||||||||||||||
Parts & services revenue | $ | 2,331,989 | $ | 1,704,348 | 5.4 | % | 32.8 | % | (1.4 | )% | 36.8 | % | |||||||
Other revenue | 118,704 | 133,722 | (16.2 | )% | 5.2 | % | (0.2 | )% | (11.2 | )% | |||||||||
Total revenue | $ | 2,450,693 | $ | 1,838,070 | 3.8 | % | 30.8 | % | (1.3 | )% | 33.3 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2016 | 2015 | Change | |||||||||
Restructuring expenses | $ | 6,051 | (1) | $ | 937 | (2) | $ | 5,114 | |||
Acquisition related expenses | 3,029 | (3) | 726 | (4) | 2,303 | ||||||
Total restructuring and acquisition related expenses | $ | 9,080 | $ | 1,663 | $ | 7,417 |
(1) | Restructuring expenses of $4.6 million, $1.0 million, and $0.5 million for the quarter ended June 30, 2016 were primarily related to the integration of acquired businesses in our Specialty, Europe, and North America segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees. |
(2) | Restructuring expenses for the quarter ended June 30, 2015 were primarily related to the integration of acquired businesses in our Specialty segment. These integration activities included the closure of duplicate facilities and termination of employees in connection with the integration of the acquisitions into our existing business. |
(3) | Acquisition related expenses for the quarter ended June 30, 2016 included $2.1 million for the acquisition of PGW, $0.4 million for our acquisition of Rhiag, and $0.5 million of external costs related to other potential acquisitions. |
(4) | Acquisition related expenses for the second quarter of 2015 were primarily related to our acquisitions of six aftermarket parts distribution businesses in the Netherlands during the second quarter of 2015. |
Three Months Ended | ||||||||||||
June 30, | ||||||||||||
2016 | 2015 | Change | ||||||||||
Depreciation | $ | 28,279 | $ | 21,557 | $ | 6,722 | (1) | |||||
Amortization | 24,250 | 8,225 | 16,025 | (2) | ||||||||
Total depreciation and amortization | $ | 52,529 | $ | 29,782 | $ | 22,747 |
(1) | The increase in depreciation expense primarily reflects depreciation expense for property, plant and equipment recorded related to our acquisitions of Rhiag and PGW of $3.5 million and $1.0 million, respectively. The remaining change reflects increased levels of property and equipment to support our organic related growth. |
(2) | The increase in amortization expense primarily reflects amortization expense for intangible assets recorded related to our acquisitions of Rhiag and PGW of $14.9 million and $1.8 million, respectively. |
Other expense, net for the three months ended June 30, 2015 | $ | 14,719 | |||
Increase due to: | |||||
Interest expense, net | 11,759 | (1) | |||
Other income, net | 1,242 | ||||
Net increase | 13,001 | ||||
Other expense, net for the three months ended June 30, 2016 | $ | 27,720 |
(1) | Additional interest primarily relates to borrowings used to fund the acquisitions of Rhiag and PGW. |
Six Months Ended | |||||||||||||||||||
June 30, | Percentage Change in Revenue | ||||||||||||||||||
2016 | 2015 | Organic | Acquisition | Foreign Exchange | Total Change | ||||||||||||||
Parts & services revenue | $ | 4,150,314 | $ | 3,349,264 | 5.8 | % | 19.7 | % | (1.6 | )% | 23.9 | % | |||||||
Other revenue | 221,855 | 262,718 | (20.6 | )% | 5.2 | % | (0.2 | )% | (15.6 | )% | |||||||||
Total revenue | $ | 4,372,169 | $ | 3,611,982 | 3.9 | % | 18.6 | % | (1.5 | )% | 21.0 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
Six Months Ended | |||||||||||
June 30, | |||||||||||
2016 | 2015 | Change | |||||||||
Restructuring expenses | $ | 8,187 | (1) | $ | 6,901 | (2) | $ | 1,286 | |||
Acquisition related expenses | 15,704 | (3) | 1,250 | (4) | 14,454 | ||||||
Total restructuring and acquisition related expenses | $ | 23,891 | $ | 8,151 | $ | 15,740 |
(1) | Restructuring expenses of $6.1 million, $1.2 million, and $0.9 million for the six months ended June 30, 2016 related to the integration of acquired businesses in our Specialty, North America, and Europe segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees. |
(2) | Restructuring expenses for the six months ended June 30, 2015 primarily related to the integration of acquired businesses in our Specialty segment. These integration activities included the closure of duplicate facilities and termination of employees in connection with the integration of the acquisitions into our existing business. |
(3) | Acquisition related expenses of $15.7 million for the six months ended June 30, 2016 reflect $11.0 million and $3.9 million related to the acquisitions of Rhiag and PGW, respectively. The remaining expense was related to other completed and potential acquisitions. |
(4) | Acquisition related expenses for the six months ended June 30, 2015 included $0.9 million of external costs related to our acquisitions of seven aftermarket parts distribution businesses in the Netherlands during the first half of 2015. The remaining restructuring expenses were external costs primarily related to potential acquisitions. |
Six Months Ended | ||||||||||||
June 30, | ||||||||||||
2016 | 2015 | Change | ||||||||||
Depreciation | $ | 51,066 | $ | 42,739 | $ | 8,327 | (1) | |||||
Amortization | 33,151 | 16,496 | 16,655 | (2) | ||||||||
Total depreciation and amortization | $ | 84,217 | $ | 59,235 | $ | 24,982 |
(1) | The increase in depreciation expense primarily reflects depreciation expense for property, plant and equipment recorded related to our acquisitions of Rhiag and PGW of $3.8 million and $1.0 million, respectively. The remaining change reflects increased levels of property and equipment to support our organic related growth. |
(2) | The increase in amortization expense primarily reflects amortization expense for intangible assets recorded related to our acquisitions of Rhiag and PGW of $16.1 million and $1.8 million, respectively. These increases are offset by a decline in accelerated amortization for intangibles recognized in previous years. |
Other expense, net for the six months ended June 30, 2015 | $ | 31,544 | |||
Increase (Decrease) due to: | |||||
Interest expense, net | 11,445 | (1) | |||
Loss on debt extinguishment | 26,650 | (2) | |||
Gains on foreign exchange contracts - acquisition related | (18,342 | ) | (3) | ||
Other income, net | (3,566 | ) | (4) | ||
Net increase | 16,187 | ||||
Other expense, net for the six months ended June 30, 2016 | $ | 47,731 |
(1) | Additional interest primarily relates to borrowings used to fund the acquisitions of Rhiag and PGW. |
(2) | During the first quarter of 2016, we incurred a $23.8 million loss on debt extinguishment as a result of our early payment of Rhiag debt assumed as part of the acquisition, and we incurred a $2.9 million loss on debt extinguishment as a result of our January 2016 amendment to our senior secured credit agreement. |
(3) | In March 2016, we entered into foreign currency forward contracts to acquire a total of €588 million used to fund the purchase price of the Rhiag acquisition. The rates under the foreign currency forwards were favorable to the spot rate on March 17, 2016, and as result, these derivatives contracts generated a gain of $18.3 million. |
(4) | The change in Other income, net primarily reflects the impact of foreign currency transaction gains and losses, which was a net $1.9 million favorable impact compared to the prior year period. This includes unrealized gains and losses on foreign currency transactions and unrealized mark-to-market gains and losses on foreign currency forward contracts used to hedge the purchase of inventory in our U.K. operations. The remaining change relates to miscellaneous other income. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2016 | % of Total Segment Revenue | 2015 | % of Total Segment Revenue | 2016 | % of Total Segment Revenue | 2015 | % of Total Segment Revenue | ||||||||||||||||
Third Party Revenue | |||||||||||||||||||||||
North America | $ | 1,080,401 | $ | 1,044,779 | $ | 2,167,764 | $ | 2,090,858 | |||||||||||||||
Europe | 824,216 | 509,833 | 1,370,967 | 997,179 | |||||||||||||||||||
Specialty | 335,972 | 283,458 | 623,334 | 523,945 | |||||||||||||||||||
Glass | 210,104 | — | 210,104 | — | |||||||||||||||||||
Total third party revenue | $ | 2,450,693 | $ | 1,838,070 | $ | 4,372,169 | $ | 3,611,982 | |||||||||||||||
Total Revenue | |||||||||||||||||||||||
North America | $ | 1,080,520 | $ | 1,045,151 | $ | 2,168,097 | $ | 2,091,324 | |||||||||||||||
Europe | 824,206 | 509,903 | 1,370,967 | 997,249 | |||||||||||||||||||
Specialty | 337,066 | 284,330 | 625,379 | 525,552 | |||||||||||||||||||
Glass | 210,178 | — | 210,178 | — | |||||||||||||||||||
Eliminations | (1,277 | ) | (1,314 | ) | (2,452 | ) | (2,143 | ) | |||||||||||||||
Total revenue | $ | 2,450,693 | $ | 1,838,070 | $ | 4,372,169 | $ | 3,611,982 | |||||||||||||||
Segment EBITDA | |||||||||||||||||||||||
North America | $ | 163,825 | 15.2% | $ | 138,880 | 13.3% | $ | 311,200 | 14.4% | $ | 288,268 | 13.8% | |||||||||||
Europe | 89,982 | 10.9% | 53,943 | 10.6% | 147,480 | 10.8% | 100,466 | 10.1% | |||||||||||||||
Specialty | 41,792 | 12.4% | 40,198 | 14.1% | 73,530 | 11.8% | 65,602 | 12.5% | |||||||||||||||
Glass | 23,301 | 11.1% | — | n/m | 23,301 | 11.1% | — | n/m | |||||||||||||||
Total Segment EBITDA | $ | 318,900 | 13.0% | $ | 233,021 | 12.7% | $ | 555,511 | 12.7% | $ | 454,336 | 12.6% |
Three Months Ended June 30, | Percentage Change in Revenue | ||||||||||||||||||
North America | 2016 | 2015 | Organic | Acquisition (3) | Foreign Exchange (4) | Total Change | |||||||||||||
Parts & services revenue | $ | 962,954 | $ | 912,159 | 3.1 | % | (1) | 2.8 | % | (0.3 | )% | 5.6 | % | ||||||
Other revenue | 117,447 | 132,620 | (16.3 | )% | (2) | 5.0 | % | (0.2 | )% | (11.4 | )% | ||||||||
Total third party revenue | $ | 1,080,401 | $ | 1,044,779 | 0.6 | % | 3.1 | % | (0.3 | )% | 3.4 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | Organic growth in parts and services revenue was predominantly attributable to pricing in our wholesale operations. In addition, revenue grew as we generated higher sales volumes in our salvage operations in the second quarter of 2016 compared to the same period in 2015. The volume increase was offset by a negative mix impact as we saw a smaller percentage of sales from high value salvage part types in 2016. Aftermarket sales volumes were flat quarter over quarter as we believe milder winter weather conditions in North America in the first quarter of 2016 negatively impacted collision part sales into the second quarter. Sales volumes in the first half of the second quarter are typically influenced by accident activity in the winter months, and the milder conditions reduced the backlog at repair shops relative to the same period in the prior year. |
(2) | The $15 million decrease in other revenue related primarily to (i) a $7 million reduction due to the sale of our precious metals business late in the second quarter of 2015 and (ii) a $7 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium and rhodium), aluminum wheels and copper wiring, all due to lower prices year over year. |
(3) | The acquired revenue growth reflects the impact of our acquisition of three wholesale businesses and one self service retail operation acquired since the beginning of the second quarter of 2015 up to the one year anniversary of the acquisition date. |
(4) | Compared to the prior year, exchange rates reduced our revenue growth by 0.3%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the second quarter 2016 compared to the prior year second quarter. |
North America | Percentage of Total Segment Revenue | |||
Segment EBITDA for the three months ended June 30, 2015 | 13.3 | % | ||
Increase (decrease) due to: | ||||
Change in gross margin | 1.7 | % | (1) | |
Change in segment operating expenses | 0.3 | % | (2) | |
Change in other expense, net | (0.1 | )% | ||
Segment EBITDA for the three months ended June 30, 2016 | 15.2 | % | ||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | The improvement in gross margin reflects a 1.1% favorable impact from our self service operations, as well as a favorable impact of 0.6% from our wholesale operations. Gross margins at our self service operations improved as car costs have decreased by a greater percentage year over year than revenue. We experienced a 0.4% favorable impact on gross margin as a result of procurement initiatives implemented in our aftermarket operations during 2016, which reduced our product costs. Aftermarket gross margins also improved as a result of a favorable price impact as mentioned in the third party revenue discussion above. |
(2) | The decline in segment operating expenses as a percentage of revenue was primarily due to a 0.2% improvement in facility costs as a percentage of revenue and a 0.2% improvement in fuel costs as a percentage of revenue, partially offset by a 0.3% increase in freight costs as a percentage of revenue. The remaining reduction in segment operating expenses as a percentage of revenue was attributable to a number of individually insignificant decreases across various operating expense categories. |
Three Months Ended June 30, | Percentage Change in Revenue | ||||||||||||||||||
Europe | 2016 | 2015 | Organic (1) | Acquisition (2) | Foreign Exchange (3) | Total Change | |||||||||||||
Parts & services revenue | $ | 822,959 | $ | 508,731 | 8.0 | % | 57.5 | % | (3.7 | )% | 61.8 | % | |||||||
Other revenue | 1,257 | 1,102 | (4.9 | )% | 21.6 | % | (2.6 | )% | 14.1 | % | |||||||||
Total third party revenue | $ | 824,216 | $ | 509,833 | 8.0 | % | 57.4 | % | (3.7 | )% | 61.7 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | In our U.K. operations, parts and services revenue grew organically by 9.6%, while in our Benelux region operations, parts and services revenue grew organically by 4.4%. Our organic revenue growth in the U.K. operations, which primarily resulted from higher sales volumes, was composed of a 7.8% increase in revenue from stores open more than 12 months, a 1.8% increase from revenue generated by 14 branch openings since the second quarter of the prior year through the one year anniversary of their respective opening dates, and two additional selling days in the second quarter of 2016 compared to the prior year quarter. Organic revenue growth in our Benelux operations was primarily due to two additional selling days in the second quarter of 2016 compared to the prior year quarter. |
(2) | Acquisition related growth for the second quarter of 2016 includes $284.3 million from our acquisition of Rhiag. The remainder of our acquired revenue growth reflects our acquisition of 12 distribution companies in the Netherlands and 2 salvage businesses in Sweden acquired since the beginning of the second quarter of 2015 up to the one year anniversary of the acquisition date. |
(3) | Compared to the prior year quarter, exchange rates reduced our revenue growth by $19.0 million, or 3.7%, primarily due to the strengthening of the U.S. dollar against the pound sterling in the second quarter of 2016, partially offset by the weakening of the U.S. dollar against the euro in the second quarter of 2016. |
Europe | Percentage of Total Segment Revenue | |||
Segment EBITDA for the three months ended June 30, 2015 | 10.6 | % | ||
(Decrease) increase due to: | ||||
Change in gross margin | (0.5 | )% | (1) | |
Change in segment operating expenses | 0.7 | % | (2) | |
Change in other expense, net | 0.1 | % | ||
Segment EBITDA for the three months ended June 30, 2016 | 10.9 | % | ||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | The decrease in gross margin is primarily due to a 1.5% decline in gross margins as a result of the acquisition of Rhiag, which has lower gross margins than our other Europe operations. This decrease was partially offset by a 1.0% increase related to our Benelux operations primarily as a result of internalizing incremental gross margin from our 2015 acquisitions of 11 Netherlands distributors and the introduction of new product lines with higher margins than our existing product line sales. |
(2) | The decrease in segment operating expenses as a percentage of revenue reflects (i) a 1.7% decrease related to the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our existing Europe operations and (ii) a decrease of 0.4% in selling, general, and administrative expenses from our U.K. operations due to an increase in operating leverage. These decreases are partially offset by (i) an increase in facility and warehouse expenses of 1.1% primarily from our U.K. operations due to increases from opening 14 new branches and 4 new hubs since the beginning of the prior year second quarter as well as the addition of facility and personnel costs for the newly operating Tamworth distribution facility and (ii) an increase of 0.3% in facility and warehouse personnel expenses from our Benelux operations primarily related to the introduction of new product lines. |
Three Months Ended June 30, | Percentage Change in Revenue | ||||||||||||||||||
Specialty | 2016 | 2015 | Organic (1) | Acquisition (2) | Foreign Exchange (3) | Total Change | |||||||||||||
Parts & services revenue | $ | 335,972 | $ | 283,458 | 8.0 | % | 11.1 | % | (0.5 | )% | 18.5 | % | |||||||
Other revenue | — | — | — | % | — | % | — | % | — | % | |||||||||
Total third party revenue | $ | 335,972 | $ | 283,458 | 8.0 | % | 11.1 | % | (0.5 | )% | 18.5 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | Organic growth in Specialty parts and services revenue reflects an increase in service levels in various regions of North America as we expand the breadth and depth of our inventory offerings and add delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. In addition, we continue to see growth from favorable macro trends and economic conditions, which has increased consumer discretionary spending on automotive and recreational vehicle ("RV") parts and accessories. |
(2) | Acquisition related growth reflects the impact of the acquisition of Coast on August 19, 2015. |
(3) | Compared to the prior year, exchange rates reduced our revenue growth by 0.5%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the second quarter 2016 compared to the prior year second quarter. |
Specialty | Percentage of Total Segment Revenue | |||
Segment EBITDA for the three months ended June 30, 2015 | 14.1 | % | ||
(Decrease) increase due to: | ||||
Change in gross margin | (1.6 | )% | (1) | |
Change in segment operating expenses | (0.3 | )% | (2) | |
Change in other expense, net | 0.2 | % | ||
Segment EBITDA for the three months ended June 30, 2016 | 12.4 | % | ||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | The decline in gross margin reflects (i) a 0.9% increase in inventory costs, which were higher due to the stocking of two distribution centers in the second quarter of 2016 which were not yet operational in the prior year period, (ii) 0.7% of unfavorable gross margin impact due to customer volume rebate adjustments which have increased along with sales volumes, and (iii) a 0.3% net negative impact from the timing of recognizing certain advertising credits in comparison to the prior year quarter, offset by (iv) a 0.2% favorable impact due to product mix with a continued shift to higher gross margin products sold, primarily truck and off road products. |
(2) | The increase in segment operating expenses reflects an increase in facilities and warehouse expense of 0.9% from the addition of two distribution facilities in late 2015 and the higher cost of Coast facilities in comparison to our existing business. These negative effects were partially offset by a 0.4% reduction in selling, general and administrative expenses as a percentage of revenue primarily due to realization of acquisition related synergies and 0.2% improvement in distribution expenses primarily related to the impact of lower fuel rates and lower rental and maintenance costs. |
Six Months Ended June 30, | Percentage Change in Revenue | ||||||||||||||||||
North America | 2016 | 2015 | Organic | Acquisition (3) | Foreign Exchange (4) | Total Change | |||||||||||||
Parts & services revenue | $ | 1,948,210 | $ | 1,830,492 | 4.0 | % | (1) | 3.0 | % | (0.5 | )% | 6.4 | % | ||||||
Other revenue | 219,554 | 260,366 | (20.6 | )% | (2) | 5.1 | % | (0.2 | )% | (15.7 | )% | ||||||||
Total third party revenue | $ | 2,167,764 | $ | 2,090,858 | 0.9 | % | 3.2 | % | (0.5 | )% | 3.7 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | Organic growth in parts and services revenue was attributable to similar changes in volume and price. Sales volumes increased in our wholesale operations resulting from improved fill rates and in-stock rates, as well as increased purchasing levels, which contributed to a greater volume of parts available for sale. Organic revenue growth in parts and services was negatively affected by milder winter weather conditions in North America in the first quarter of 2016. Organic revenue also grew due to increased prices in our wholesale operations, primarily in our salvage operations as a result of shifting our salvage vehicle purchasing to higher quality vehicles, which raised the average revenue per part sold. The organic growth was partially offset by a negative mix impact as we saw a smaller percentage of sales from high value salvage part types in 2016. |
(2) | The $41 million decrease in other revenue related primarily to (i) a $15 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium and rhodium), aluminum wheels and copper wiring, all due to lower prices year over year, (ii) a $13 million reduction due to the sale of our precious metals business late in the second quarter of 2015, and (iii) a $13 million decline in revenue from scrap steel and other metals primarily related to lower scrap steel prices partially offset by higher volumes processed in 2016. |
(3) | The acquired revenue growth reflects the impact of our acquisition of four wholesale businesses and one self service retail operation acquired since the beginning of 2015 up to the one year anniversary of the acquisition date. |
(4) | Compared to the prior year, exchange rates reduced our revenue growth by 0.5%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the first half of 2016 compared to the prior year period. |
North America | Percentage of Total Segment Revenue | |||
Segment EBITDA for the six months ended June 30, 2015 | 13.8 | % | ||
Increase (decrease) due to: | ||||
Change in gross margin | 0.8 | % | (1) | |
Change in segment operating expenses | (0.4 | )% | (2) | |
Change in other income | 0.2 | % | ||
Segment EBITDA for the six months ended June 30, 2016 | 14.4 | % | ||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | The improvement in gross margin primarily reflects a 0.8% favorable impact from our self service operations. Gross margins at our self service operations have improved as car costs have decreased by a greater percentage year over year than revenue. |
(2) | The increase in segment operating expenses as a percentage of revenue was primarily the result of a 0.4% increase in personnel costs as a percentage of revenue. Further contributing to the increase in operating expenses was a 0.2% increase in freight costs as a percentage of revenue, partially offset by a 0.2% improvement in fuel prices. |
Six Months Ended June 30, | Percentage Change in Revenue | ||||||||||||||||||
Europe | 2016 | 2015 | Organic (1) | Acquisition (2) | Foreign Exchange (3) | Total Change | |||||||||||||
Parts & services revenue | $ | 1,368,666 | $ | 994,827 | 7.5 | % | 34.2 | % | (4.1 | )% | 37.6 | % | |||||||
Other revenue | 2,301 | 2,352 | (14.2 | )% | 15.6 | % | (3.6 | )% | (2.1 | )% | |||||||||
Total third party revenue | $ | 1,370,967 | $ | 997,179 | 7.4 | % | 34.2 | % | (4.1 | )% | 37.5 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | In our U.K. operations, parts and services revenue grew organically by 8.5%, while in our Benelux region operations, parts and services revenue grew organically by 5.2%. Our organic revenue growth in the U.K., which primarily resulted from higher sales volumes, was composed of an 6.8% increase in revenue from stores open more than 12 months, a 1.6% increase from revenue generated by 14 branch openings since the second quarter of the prior year through the one year anniversary of their respective opening dates. Organic revenue growth in parts and services in our U.K. operations was negatively affected by milder winter weather conditions in the U.K. in the first quarter of 2016. Organic revenue growth in our Benelux operations was primarily due to higher sales volumes as a result of the introduction of new product lines and two additional selling days in the first half of 2016 compared to the prior year period. |
(2) | Acquisition related growth for the first half of 2016 includes $318.1 million from our acquisition of Rhiag. The remainder of our acquired revenue growth reflects our acquisition of 12 distribution companies in the Netherlands and 2 salvage businesses in Sweden acquired since the beginning of 2015 up to the one year anniversary of the acquisition date. |
(3) | Compared to the prior year, exchange rates reduced our revenue growth by $41.0 million, or 4.1%, primarily due to the strengthening of the U.S. dollar against the pound sterling relative to the first half of 2015. |
Europe | Percentage of Total Segment Revenue | |||
Segment EBITDA for the six months ended June 30, 2015 | 10.1 | % | ||
Increase due to: | ||||
Change in gross margin | 0.1 | % | (1) | |
Change in segment operating expenses | 0.2 | % | (2) | |
Change in other expense, net | 0.4 | % | (3) | |
Segment EBITDA for the six months ended June 30, 2016 | 10.8 | % | ||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | The increase in gross margin reflects improvement of (i) 0.8% related to our Benelux operations primarily as a result of internalizing incremental gross margin from our 2015 acquisitions of 11 Netherlands distributors and the introduction of new product lines with higher margins than our existing product line sales and (ii) 0.3% related to our U.K. operations, primarily as a result of a reduction in product costs. The increase in gross margin from our U.K. and Benelux operations was partially offset by a 0.9% decline in gross margin due to the acquisition of Rhiag, which has lower gross margins than our other Europe operations. |
(2) | The decrease in segment operating expenses as a percentage of revenue reflects (i) a decrease of 1.1% in operating expenses as a result of the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our existing Europe operations and (ii) an increase in facility and warehouse expenses of 0.9% from our U.K. operations due to increases from opening 14 new branches and 4 new hubs since the prior year second quarter as well as the addition of facility and personnel costs for the Tamworth distribution facility. |
(3) | The decrease in other expense, net is a result of gains on foreign currency forward contracts used to manage the foreign currency exposure on inventory purchases in our U.K. operations. |
Six Months Ended June 30, | Percentage Change in Revenue | ||||||||||||||||||
Specialty | 2016 | 2015 | Organic (1) | Acquisition (2) | Foreign Exchange (3) | Total Change | |||||||||||||
Parts & services revenue | $ | 623,334 | $ | 523,945 | 9.3 | % | 10.3 | % | (0.6 | )% | 19.0 | % | |||||||
Other revenue | — | — | — | % | — | % | — | % | — | % | |||||||||
Total third party revenue | $ | 623,334 | $ | 523,945 | 9.3 | % | 10.3 | % | (0.6 | )% | 19.0 | % | |||||||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | Organic growth in Specialty parts and services revenue reflects an increase in service levels in various regions of North America as we expand the breadth and depth of our inventory offerings and add delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. In addition, we continue to see growth from favorable macro trends and economic conditions, which has increased consumer discretionary spending on automotive and RV parts and accessories. |
(2) | Acquisition related growth reflects the impact of the acquisition of Coast on August 19, 2015. |
(3) | Compared to the prior year, exchange rates reduced our revenue growth by 0.6%, primarily due to the strengthening U.S. dollar against the Canadian dollar in the first half of 2016 compared to the first half of 2015. |
Specialty | Percentage of Total Segment Revenue | |||
Segment EBITDA for the six months ended June 30, 2015 | 12.5 | % | ||
(Decrease) increase due to: | ||||
Change in gross margin | (0.8 | )% | (1) | |
Change in segment operating expenses | (0.1 | )% | (2) | |
Change in other expense, net | 0.2 | % | ||
Segment EBITDA for the six months ended June 30, 2016 | 11.8 | % | ||
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. |
(1) | The decline in gross margin reflects (i) a 0.5% increase in inventory costs, which were higher due to the stocking of two distribution centers in the second quarter of 2016 which were not yet operational in the prior year period, and (ii) a 0.6% unfavorable margin impact due to customer volume rebate adjustments which have increased along with sales volume. These negative effects were partially offset by a 0.3% favorable mix effect resulting from a shift toward higher margin products, particularly truck and off road products. |
(2) | The increase in segment operating expenses reflects an increase in facilities and warehouse expense of 0.8% from the addition of two distribution facilities in late 2015 and the higher cost of Coast facilities in comparison to our existing business. These negative effects were offset by 0.7% reduction in selling, general and administrative expenses primarily related to (i) a 0.3% decline in personnel costs for the realization of integration synergies and (ii) individually insignificant decreases across various selling, general and administrative expense categories totaling 0.4%. |
June 30, 2016 | December 31, 2015 | June 30, 2015 | |||||||||
Cash and equivalents | $ | 273,203 | $ | 87,397 | $ | 143,423 | |||||
Total debt (1) | 3,361,684 | 1,599,695 | 1,691,442 | ||||||||
Net debt (total debt less cash and equivalents) | 3,088,481 | 1,512,298 | 1,548,019 | ||||||||
Current maturities (2) | 63,130 | 57,494 | 39,378 | ||||||||
Capacity under credit facilities (3) | 2,547,000 | 1,947,000 | 1,947,000 | ||||||||
Availability under credit facilities (3) | 1,088,846 | 1,337,653 | 1,238,780 | ||||||||
Total liquidity (cash and equivalents plus availability under credit facilities) | 1,362,049 | 1,425,050 | 1,382,203 |
• | Senior secured credit facilities maturing in January 2021, composed of a term loan of $500 million and a €230 million term loan ($751 million of term loans outstanding at June 30, 2016) and $2.45 billion in revolving credit ($1.29 billion outstanding at June 30, 2016), bearing interest at variable rates (although a portion of this debt is hedged through interest rate swap contracts) reduced by $71.9 million of amounts outstanding under letters of credit |
• | Senior Notes totaling $600 million, maturing in May 2023 and bearing interest at a 4.75% fixed rate |
• | Euro Notes totaling $555 million (€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate |
• | Receivables securitization facility with availability up to $97 million ($94 million outstanding as of June 30, 2016), maturing in October 2017 and bearing interest at variable commercial paper rates |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||||||
North America | $ | 258,900 | $ | 257,600 | $ | 1,300 | $ | 519,100 | $ | 489,600 | $ | 29,500 | (1) | |||||||||||
Europe | 568,900 | 253,800 | 315,100 | 868,100 | 524,600 | 343,500 | (2) | |||||||||||||||||
Specialty | 237,100 | 186,800 | 50,300 | 499,400 | 374,400 | 125,000 | (3) | |||||||||||||||||
Glass | 167,000 | — | 167,000 | 167,000 | — | 167,000 | (4) | |||||||||||||||||
Total | $ | 1,231,900 | $ | 698,200 | $ | 533,700 | $ | 2,053,600 | $ | 1,388,600 | $ | 665,000 |
(1) | In North America, aftermarket purchases during the six months ended June 30, 2016 increased primarily as a result of our July 2015 acquisition of Parts Channel coupled with lower purchase levels in Q1 2015, due to accelerated purchases in the fourth quarter of 2014 in anticipation of potential labor issues at West Coast ports in the United States. |
(2) | In our Europe segment, the increase in purchases was primarily due to our acquisition of Rhiag in March of 2016, which added incremental purchases of $241.8 million in the second quarter of 2016 and $262.5 million year to date. Purchases for our U.K. operations increased in the three and six months ended June 30, 2016 compared to the prior year periods primarily as a result of opening four new hubs since the prior year second quarter and incremental inventory purchases to stock the Tamworth, England national distribution center. These increases were partially offset by the devaluation of the pound sterling in the first half of 2016 compared to the prior year period. |
(3) | The increase in Specialty aftermarket purchases during the three and six months ended June 30, 2016 is primarily due to (i) accelerated inventory purchases to stock two new distribution centers during the first quarter of 2016, (ii) additional purchases to support the increased sales volume as a result of the Coast acquisition, and (iii) additional inventory purchases in the second quarter due to stronger than anticipated sales volumes as a result of our annual trade shows. |
(4) | Glass inventory purchases reflect inventory purchases made during the three months ended June 30, 2016 as a result of our April 2016 acquisition of PGW. The amount includes purchases of raw materials used in PGW's manufacturing and fabrication of automotive glass products as well as purchases of aftermarket and refurbished automotive replacement glass and assemblies. |
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||
North America Wholesale salvage cars and trucks | 72 | 75 | (4.0 | )% | 144 | 145 | (0.7 | )% | ||||||||||
Europe Wholesale salvage cars and trucks | 6 | 5 | 20.0 | % | 12 | 11 | 9.1 | % | ||||||||||
Self service and "crush only" cars | 138 | 131 | 5.3 | % | 263 | 231 | 13.9 | % | (1) |
(1) | Compared to the the prior year period, we increased our purchases of lower cost self service and "crush only" cars as prices for vehicles have come down in certain markets due to the decline in the prices of scrap and other metals, allowing us to purchase higher quality vehicles at favorable prices. |
Total | Remainder of 2016-2017 | 2018-2019 | 2020-2021 | Thereafter | |||||||||||||||
Contractual obligations | |||||||||||||||||||
Long-term debt (1) | $ | 3,793.4 | $ | 287.7 | $ | 201.8 | $ | 2,064.0 | $ | 1,239.9 | |||||||||
Capital lease obligations (2) | 28.4 | 10.8 | 4.2 | 1.8 | 11.6 | ||||||||||||||
Operating leases (3) | 1,041.3 | 269.7 | 257.0 | 162.7 | 351.9 | ||||||||||||||
Purchase obligations (4) | 391.2 | 391.2 | — | — | — | ||||||||||||||
Contingent consideration liabilities (5) | 3.2 | 2.8 | 0.4 | — | — | ||||||||||||||
Outstanding letters of credit | 71.9 | 71.9 | — | — | — | ||||||||||||||
Other asset purchase commitments (6) | 93.4 | 79.4 | 11.7 | 2.3 | — | ||||||||||||||
Other long-term obligations | |||||||||||||||||||
Self-insurance reserves (7) | 77.0 | 37.8 | 26.0 | 8.9 | 4.3 | ||||||||||||||
Deferred compensation plans and other retirement obligations (8) | 38.4 | 4.9 | — | — | 33.5 | ||||||||||||||
Long term incentive plan | 8.6 | 4.5 | 4.1 | — | — | ||||||||||||||
Liabilities for unrecognized tax benefits | 2.3 | 0.1 | 1.3 | 0.6 | 0.3 | ||||||||||||||
Total | $ | 5,549.1 | $ | 1,160.8 | $ | 506.5 | $ | 2,240.3 | $ | 1,641.5 |
(1) | Our long-term debt under contractual obligations above includes interest of $476.3 million on the balances outstanding as of June 30, 2016. The long-term debt balance excludes debt issuances costs as these expenses have already been paid. Interest on our senior notes, notes payable, and other long-term debt is calculated based on the respective stated rates. Interest on our variable rate credit facilities is calculated based on the weighted average rates, including the impact of interest rate swaps through their respective expiration dates, in effect for each tranche of borrowings as of June 30, 2016. Future estimated interest expense for the remainder of 2016 through 2017, 2018 through 2019, and 2020 through 2021 is $123.7 million, $132.5 million and $133.6 million, respectively. Estimated interest expense beyond 2021 is $86.4 million. |
(2) | Interest on capital lease obligations of $1.1 million is included based on incremental borrowing or implied rates. Future estimated interest expense for the remainder of 2016 through 2017, 2018 through 2019, and 2020 through 2021 is $1.1 million, $0.7 million and $0.5 million, respectively. Estimated interest expense beyond 2021 is $7.9 million. |
(3) | The operating lease payments above do not include certain tax, insurance and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year. Historically, these expenses have averaged approximately 25% of the corresponding lease payments. |
(4) | Our purchase obligations include open purchase orders for aftermarket inventory. |
(5) | Our contingent consideration liabilities reflect the undiscounted estimated payments of additional consideration related to business combinations. The actual payments will be determined at the end of the applicable performance periods based on the acquired entities' achievement of the targets specified in the purchase agreements. |
(6) | Includes asset purchase commitments related to the construction of a new distribution center for our U.K. operations, commitments to purchase land and buildings, IT related expenditures, and other asset purchase commitments. |
(7) | Self-insurance reserves include undiscounted estimated payments, net of estimated insurance recoveries, for our employee medical benefits, automobile liability, general liability, directors and officers liability, workers' compensation and property insurance. |
(8) | Deferred compensation payments are dependent on elected payment dates. While we expect that these payments will be made more than five years from the latest balance sheet date, payments may be made earlier depending on such elections. Our deferred compensation plans are funded through investments in life insurance policies. Other retirement obligations consist of our expected required contributions to our pension plans. We have not included future funding requirements beyond 2016 in the table above, as these funding projections are not practicable to estimate. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
4.1 | Indenture dated as of April 14, 2016 among LKQ Italia Bondco S.p.A., as Issuer, LKQ Corporation, certain subsidiaries of LKQ Corporation, the trustee, paying agent, transfer agent, and registar (incorporated herein by reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on April 18, 2016). |
4.2 | Supplemental Indenture dated as of June 13, 2016 among Auto Kelly a.s., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee. |
4.3 | Supplemental Indenture dated as of June 13, 2016 among ELIT CZ, spol. s.r.o., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee. |
4.4 | Supplemental Indenture dated as of June 13, 2016 among Rhiag-Inter Auto Parts Italia S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee. |
4.5 | Supplemental Indenture dated as of June 13, 2016 among Bertolotti S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee. |
10.1 | Change of Control Agreement between LKQ Corporation and Ash T. Brooks dated as of May 2, 2016. |
10.2 | ISDA 2002 Master Agreement between Banco Bilbao Vizcaya Argentaria, S.A. and LKQ Corporation, and related Schedule. |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
LKQ CORPORATION | |
/s/ DOMINICK ZARCONE | |
Dominick Zarcone | |
Executive Vice President and Chief Financial Officer | |
(As duly authorized officer and Principal Financial Officer) | |
/s/ MICHAEL S. CLARK | |
Michael S. Clark | |
Vice President — Finance and Controller | |
(As duly authorized officer and Principal Accounting Officer) |
“Czech Limitation Amount”= | A | x G x 0.9 |
O |
“Czech Limitation Amount”= | A | x G x 0.9 |
O |
(i) | the aggregate principal amount of any intercompany loans, or other financial support in any form, advanced or granted from time to time to the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) by the Issuer (whether directly or indirectly) since the Issue Date or outstanding on the Issue Date, as resulting from time to time from the latest financial statements (bilancio di esercizio) of the Guaranteeing Subsidiary duly approved by the shareholders meeting of the Guaranteeing Subsidiary and/or any of its direct or indirect subsidiaries, as the case may be- notwithstanding any subsequent repayment, reduction or cancellation; and |
(ii) | the aggregate principal amount drawn by the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) under any facility agreement (including the Senior Secured Credit Facility) to which the Guaranteeing Subsidiary has acceded as a result of the commitment of the Parent (or any of its direct or indirect subsidiaries) and/or the Issuer notwithstanding any subsequent repayment, reduction or cancellation; and |
(a) | be a general senior unsecured obligation of the Guaranteeing Subsidiary; |
(b) | rank pari passu in right of payment to any existing or future obligations of the Guaranteeing Subsidiary that are not subordinated in right of payment to its Note Guarantee; |
(c) | rank senior in right of payment to any future indebtedness of the Guaranteeing Subsidiary that is subordinated in right of payment to its Note Guarantee; |
(d) | be effectively subordinated to any existing or future obligations of the Guaranteeing Subsidiary that are secured by property or assets that do not secure its Note Guarantee, to the extent of the value of the property and assets securing such obligations; and |
(e) | be subject to the limitations described in this Supplement Indenture. |
(i) | the aggregate principal amount of any intercompany loans, or other financial support in any form, advanced or granted from time to time to the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) by the Issuer (whether directly or indirectly) since the Issue Date or outstanding on the Issue Date, as resulting from time to time from the latest financial statements (bilancio di esercizio) of the Guaranteeing Subsidiary duly approved by the shareholders meeting of the Guaranteeing Subsidiary and/or any of its direct or indirect subsidiaries, as the case may be notwithstanding any subsequent repayment, reduction or cancellation; and |
(ii) | the aggregate principal amount drawn by the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) under any facility agreement (including the Senior Secured Credit Facility) to which the Guaranteeing Subsidiary has acceded as a result of the commitment of the Parent (or any of its direct or indirect subsidiaries) and/or the Issuer- notwithstanding any subsequent repayment, reduction or cancellation; and |
(a) | be a general senior unsecured obligation of the Guaranteeing Subsidiary; |
(b) | rank pari passu in right of payment to any existing or future obligations of the Guaranteeing Subsidiary that are not subordinated in right of payment to its Note Guarantee; |
(c) | rank senior in right of payment to any future indebtedness of the Guaranteeing Subsidiary that is subordinated in right of payment to its Note Guarantee; |
(d) | be effectively subordinated to any existing or future obligations of the Guaranteeing Subsidiary that are secured by property or assets that do not secure its Note Guarantee, to the extent of the value of the property and assets securing such obligations; and |
(e) | be subject to the limitations described in this Supplement Indenture. |
1. | Operation of Agreement. The provisions of this Agreement pertaining to the terms and conditions of your separation from the Company in connection with a Change of Control (collectively, the “Severance Provisions”) shall apply only if a Change of Control occurs during the Effective Period. If a Change of Control occurs during the Effective Period, the Severance Provisions become effective on the date of the Change of Control (the “Change of Control Date”). Notwithstanding the foregoing, if (a) a Change of Control occurs during the Effective Period; and (b) your employment with the Company is terminated (other than your voluntary resignation without Good Reason or due to your death or Disability) during the Effective Period, but within twelve (12) months prior to the date on which the Change of Control occurs; and (c) it is reasonably demonstrated by you that such termination of employment (i) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then the “Change of Control Date” shall instead mean the date immediately prior to the date of such termination of employment. In connection with the foregoing, your unvested equity-based compensation awards |
2. | Termination of Employment by Reason of Death or Disability. Your employment shall terminate automatically if you die during the Change of Control Period. If the Company determines in good faith that you incurred a Disability during the Change of Control Period, it may give you written notice, in accordance with Section 5 hereof, of its intention to terminate your employment. In such event, your employment with the Company shall terminate effective on the thirtieth (30) calendar day after your receipt of such notice if you have not returned to full-time duties within thirty (30) calendar days after such receipt. If your employment is terminated for death or Disability during the Change of Control Period, this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you or your representative, as applicable, the following amounts: |
a. | the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination; |
b. | the Pro Rata Bonus, which shall be paid to you in a single lump sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver and Release; and |
c. | the Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs, policies, arrangements or agreements. |
3. | Termination for Cause; Resignation Other Than for Good Reason. If your employment is terminated for Cause or you resign for other than Good Reason during the Change of Control Period, your employment will terminate on the Date of Termination in accordance with Section 5 hereof and this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you the following: |
a. | the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination; and |
b. | the Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs or policies. |
4. | Termination as a Result of an Involuntary Termination. In the event that your employment with the Company should terminate during the Change of Control Period as a result of an Involuntary Termination, the Company will be obligated, except as provided in Section 8 or Section 9 hereof, to provide you the following benefits: |
a. | Severance Payment. The Company shall pay to you the following amounts: |
i. | the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination; |
ii. | the Pro Rata Bonus, which shall be paid to you in a single lump sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release; |
iii. | an amount equal to the product of (A) 2.0 times (B) the sum of (1) your Adjusted Base Salary plus (2) the greater of (x) your Target Bonus or (y) the average of the annual bonuses paid or to be paid to you with respect to the immediately preceding three (3) fiscal years, which amount shall be paid to you in a single lump sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver and Release; |
iv. | if you had previously consented to the Company’s request to relocate your principal place of employment more than forty (40) miles from its location immediately prior to the Change of Control, all unreimbursed relocation expenses incurred by you in accordance with the Company’s relocation policies, which expenses shall be paid to you in a single lump sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release; and |
v. | the Other Benefits, which shall be paid in accordance with the then-existing terms and conditions of such plans, programs or policies. |
b. | Benefit Continuation. You and your then eligible dependents shall continue to be covered by and participate in the group health and dental care plans (collectively, “Health Plans”) of the Company (at the Company’s cost) in which you participated, or were eligible to participate, immediately prior to the Date of Termination through the end of the Benefit Continuation Period; provided, however, that any medical or dental welfare benefit otherwise receivable by you hereunder shall be reduced to the extent that you become covered under a group health or dental care plan providing comparable medical and health benefits. You shall be eligible to participate in such Health Plans on terms that are at least as favorable as those in effect immediately prior to the Date of Termination. However, in the event that the terms of the Company’s Health Plans do not permit you to participate in those plans (other than pursuant to an election under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)), in lieu of your and your eligible dependent’s coverage and participation under the Company’s Health Plans, the Company shall pay to you within fifteen (15) calendar days after the effective date of the Waiver and Release a lump sum equal to two (2) times your monthly COBRA premium amount for the number of months remaining in the Benefit Continuation Period. In addition, for the purposes of coverage under COBRA, your COBRA event date will be the date of loss of coverage described in this paragraph above. |
c. | Outplacement Services. The Company shall, at its sole expense as incurred, provide you with outplacement services on such terms and conditions as may be reasonably determined by the Company prior to the Change of Control. |
d. | Acceleration of Stock Awards. All your outstanding awards of restricted stock, stock options, and other equity-based compensation shall become fully vested and exercisable in full immediately upon the effective date of the Waiver and Release; provided, however, that any such awards that would be out of the money as of the Date of Termination may be terminated pursuant to Section 9(b) hereof. In addition, all of your outstanding awards of restricted stock, stock options, and other equity-based compensation that are not assumed |
5. | Date and Notice of Termination. Any termination of your employment by the Company or by you during the Change of Control Period shall be communicated by a notice of termination to the other party hereto (the “Notice of Termination”). The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. The date of your termination of employment with the Company (the “Date of Termination”) shall be determined as follows: (i) if your employment is terminated for Disability, thirty (30) calendar days after a Notice of Termination is received by you (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) calendar day period), (ii) if your employment is terminated by the Company in an Involuntary Termination, the later of the date specified in the Notice of Termination or five (5) calendar days after the date the Notice of Termination is received by you, (iii) if you terminate your employment for Good Reason, five (5) calendar days after the date the Notice of Termination is received by the Company, and (iv) if your employment is terminated by the Company for Cause, the later of the date specified in the Notice of Termination or five (5) calendar days following the date such notice is received by you. The Date of Termination for a resignation of employment other than for Good Reason shall be the date set forth in the applicable notice. |
6. | No Mitigation or Offset; D&O Insurance. |
a. | No Mitigation or Offset. You shall not be required to mitigate the amount of any payment provided for herein by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by you as the result of employment by another employer. |
b. | D&O Insurance, and Indemnification. Through at least the sixth anniversary of the Date of Termination, the Company shall maintain coverage for you as a named insured on all directors’ and officers’ insurance maintained by the Company for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide you with at least the same corporate indemnification as it provides to other senior executives. |
7. | Confidentiality. You agree to treat all Confidential Information as confidential information entrusted to you solely for use as an employee of the Company, and shall not divulge, reveal or transmit any Confidential Information in any way to persons not employed by the Company at any time from the date hereof until the end of time, whether or not you continue to be an employee of the Company, unless authorized in writing by the Company. |
8. | Code Section 409A. The Agreement is not intended to constitute a "nonqualified deferred compensation plan" within the meaning of Code Section 409A. Notwithstanding the foregoing, in the event this Agreement or any benefit paid under this Agreement to you is deemed to be subject to Code Section 409A, you consent to the Company's adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion (but without an obligation to do so), to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A. This Agreement will be interpreted and construed to not violate Code Section 409A, although nothing herein will be construed as an entitlement to or guarantee of any particular tax treatment to you. |
9. | Certain Reduction of Payments by the Company. |
a. | Best Net. Anything in this Agreement to the contrary notwithstanding, in the event that the independent auditors of the Company (the “Accounting Firm”) determine that receipt of all payments or distributions in the nature of compensation to or for your benefit, whether paid or payable pursuant to this Agreement or otherwise (“Payments”), would subject you to tax under Section 4999 of the Code, the Payments paid or payable pursuant to this Agreement (the “COC Payments”), including payments made with respect to equity-based compensation accelerated pursuant to Section 4(d) hereof, but excluding payments made with respect to Sections 4(a)(i) and 4(a)(ii) hereof (except as provided below), may be reduced (but not below zero) to the Reduced Amount, but only if the Accounting Firm determines that the Net After-Tax Receipt of unreduced aggregate Payments would be equal to or less than the Net After-Tax Receipt of the aggregate Payments as if the Payments were reduced to the Reduced Amount. If such a determination is not made by the Accounting Firm, you shall receive all COC Payments to which you are entitled under this Agreement. |
b. | Reduced Amount. If the Accounting Firm determines that Payments should be reduced to the Reduced Amount, the Company shall promptly give you notice to that effect and a copy of the detailed calculation thereof. Absent manifest error, all determinations made by the Accounting Firm under this Section 9 shall be binding upon you and the Company and shall be made as soon as reasonably practicable and in no event later than twenty (20) business days following the Change of Control Date, or such later date on which there has been a Payment. The reduction of the Payments, if applicable, shall be made by reducing the payments and benefits hereunder in the following order, and only to the extent necessary to achieve the Reduced Amount: |
c. | Subsequent Adjustment. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to you or for your benefit pursuant to this Agreement which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will have not been paid or distributed by the Company to you or for your benefit pursuant to this Agreement could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or you that the Accounting Firm believes has a high probability of success, determines that an Overpayment has been made, you shall pay any such Overpayment to the Company; provided, however, that no amount shall be payable by you to the Company if and to the extent such payment would not either reduce the amount of taxes to which you are subject under Sections 1 and 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (and in no event later than sixty (60) days following the date on which the Underpayment is determined) by the Company to you or for your benefit. |
10. | Successors; Binding Agreement. |
a. | Assumption by Successor. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform its obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform such obligations if no such succession had taken place; provided, however, that no such assumption shall relieve the Company of its obligations hereunder. As used herein, the “Company” shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid which assumes and agrees to perform its obligations by operation of law or otherwise. |
b. | Enforceability; Beneficiaries. This Agreement shall be binding upon and inure to the benefit of you (and your personal representatives and heirs) and the Company and any organization which succeeds to substantially all of the business or assets of the Company, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Company or otherwise, including, without limitation, as a result of a Change of Control or by operation of law. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate. |
11. | Definitions. For purposes of this Agreement, the following capitalized terms have the meanings set forth below: |
a. | “Accounting Firm” has the meaning assigned thereto in Section 9 hereof. |
b. | “Accrued Obligations” shall mean all compensation earned or accrued through the Date of Termination but not paid as of the Date of Termination, including base salary, bonus for the prior performance year, accrued but unused vacation, and reimbursement of business |
c. | “Adjusted Base Salary” means the greater of your base salary in effect immediately prior to (i) the Change of Control Date or (ii) the Date of Termination. |
d. | “Agreement” has the meaning assigned thereto in the second introductory paragraph hereof. |
e. | “Benefit Continuation Period” means the period beginning on the Date of Termination and ending on the last day of the month in which occurs the earlier of (i) the 24-month anniversary of the Date of Termination and (ii) the date on which you elect coverage for you and your covered dependents under substantially comparable benefit plans of a subsequent employer. |
f. | “Board” has the meaning assigned thereto in the first introductory paragraph hereof. |
g. | “Bonus Opportunity” for any performance year means your maximum cash bonus opportunity for that year, on the assumption that the Company achieves all applicable performance targets and that you achieve all applicable individual performance criteria. |
h. | “Cause” shall mean (i) your engaging in willful and continued failure to substantially perform your material duties with the Company (other than due to becoming Disabled); provided, however, that the Company shall have provided you with written notice of such failure and such failure is not cured by you within twenty (20) calendar days of such notice; (ii) your engaging in misconduct that is materially and demonstrably injurious to the Company; (iii) your conviction of, or plea of no contest to, a felony, other crime of moral turpitude; or (iv) a final non-appealable adjudication in a criminal or civil proceeding that you have committed fraud. For purposes of the previous sentence, no act or failure to act on your part shall be deemed “willful” if it is done, or omitted to be done, by you in good faith and with a reasonable belief that it was in the best interest of the Company. |
i. | “Change of Control” shall mean: |
i. | any “person” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, or (iv) any acquisition pursuant to a transaction that complies with Sections 11(i)(iii)(A), (B), and (C); |
ii. | during any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least three-fourths of the directors then still in office who either were directors at the beginning |
iii. | there is a consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination. |
j. | “Change of Control Date” has the meaning assigned thereto in Section 1 hereof. |
k. | “Change of Control Period” has the meaning assigned thereto in the second introductory paragraph hereof. |
l. | “COC Payments” has the meaning assigned thereto in Section 9 hereof. |
m. | “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. |
n. | “Company” has the meaning assigned thereto in the first introductory paragraph hereof. |
o. | “Confidential Information” shall mean all financial information, trade secrets, personnel records, training and operational manuals, records, contracts, lists, business procedures, business methods, accounts, brochures, and handbooks that was learned or obtained by you in the course of your employment by the Company, and all other documents relating to the Company or persons doing business with the Company that are proprietary to the Company. |
p. | “Date of Termination” has the meaning assigned thereto in Section 5 hereof. |
q. | “Disability” shall mean your incapacity due to physical or mental illness as defined in the long-term disability plan sponsored by the Company or an affiliate of the Company for your benefit and which causes you to be absent from the full-time performance of your duties. |
r. | “Effective Period” shall mean the period commencing on the date hereof (the “Effective Date”) and ending on the third anniversary of the date of this Agreement; provided, however, that beginning on the third anniversary of the date of this Agreement and on each one-year anniversary thereafter (each such date a “Renewal Date”), the Effective Period shall be automatically extended for a period of two years beginning on such Renewal Date, unless at least sixty (60) calendar days prior to such Renewal Date, the Company shall give notice that the Effective Period shall not be so extended. |
s. | “Good Reason” shall mean the occurrence of any of the following events or circumstances: |
i. | a substantial adverse change in your title, position, offices, or the nature of your duties or responsibilities from those in effect immediately prior to the Change of Control, or in the position, level, or status of the person to whom you report. |
ii. | a reduction by the Company in your annual base salary, Target Bonus, or benefits as in effect immediately prior to the Change of Control or as the same may be increased from time to time thereafter, other than a general reduction in benefits applicable across similarly situated executives within the Company; |
iii. | a failure by the Company to pay you material compensation or benefits when due including, without limitation, failure by the Company to pay any accrued relocation expenses or Other Benefits; |
iv. | the relocation of the office of the Company where you are principally employed immediately prior to the Change of Control to a location which is more than forty (40) miles from such office of the Company (except for required travel on the Company’s business to an extent substantially consistent with your customary business travel obligations in the ordinary course of business prior to the Change of Control); or any failure by a successor to the Company to assume and agree to perform this Agreement, as contemplated by Section 10(a) hereof, or any agreement with respect to your outstanding equity awards. |
t. | “Involuntary Termination” shall mean, during the Change of Control Period, (i) your termination of employment by the Company without Cause or (ii) your resignation of employment with the Company for Good Reason. |
u. | “Net After-Tax Receipt” shall mean the present value (as determined in accordance with Section 280G(d)(4) of the Code) of a Payment net of all taxes imposed on you with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to your taxable income for the immediately preceding taxable year, or such other rate(s) as you certify as likely to apply to you in the relevant tax year(s). |
v. | “Notice of Termination” has the meaning assigned thereto in Section 5 hereof. |
w. | “Other Benefits” means, to the extent not theretofore paid or provided, any other amounts or benefits required to be paid or provided to you or that you are eligible to receive under any plan, program, policy, practice, contract or agreement of the Company in accordance with such applicable terms at the time of the Date of Termination. Nothing herein shall prohibit the Company from changing, modifying, amending, or eliminating any benefit plans in accordance with the terms of such plans prior to the Date of Termination, with or without prior notice. |
x. | “Overpayment” has the meaning assigned thereto in Section 9 hereof. |
y. | “Pro Rata Bonus” means a pro rata portion of your Bonus Opportunity for the performance year in which the Date of Termination occurs, calculated based on the number of days that you are employed in the performance year up through and including the Date of Termination. |
z. | “Payment” has the meaning assigned thereto in Section 9 hereof. |
aa. | “Reduced Amount” shall mean $1,000.00 less than the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999 of the Code. |
ab. | “Severance Policy” means the Company’s Severance Policy for Key Executives as adopted on July 21, 2014 and as may be amended from time to time. |
ac. | “Target Bonus” for any year means your total cash target, but not maximum, bonus for that year, on the assumption that the Company has achieved, but not exceeded, all applicable performance targets and that you have achieved, but not exceeded, all applicable individual performance criteria. |
ad. | “Underpayment” has the meaning assigned thereto in Section 9 hereof. |
ae. | “Tax Authority” has the meaning assigned thereto in Section 9 hereof. |
12. | Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Board of Directors, LKQ Corporation, 500 West Madison Street, Suite 2800, Chicago, IL 60661, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. |
13. | Release. As a condition to receiving any payments or benefits pursuant to this Agreement by reason of your death, Disability or Involuntary Termination, you (or in the case of your death, the |
14. | Arbitration. Any dispute or controversy arising under or in connection with this Agreement that cannot be mutually resolved by the parties hereto shall be settled exclusively by arbitration in Chicago, Illinois under the employment arbitration rules of the American Arbitration Association before one arbitrator of exemplary qualifications and stature, who shall be selected jointly by the Company and you, or, if the Company and you cannot agree on the selection of the arbitrator, such arbitrator shall be selected by the American Arbitration Association. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. The Company agrees to pay as incurred, to the fullest extent permitted by law, the costs and fees of the arbitration, including all legal fees and expenses which you may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, you or others of the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by you about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. |
15. | Miscellaneous. |
a. | Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof. Notwithstanding the foregoing and for avoidance of doubt, this Agreement does not supersede or replace the Severance Policy. However, any payments or benefits provided (or to be provided) under this Agreement shall be reduced and offset by payments or benefits of the same type that are received by you from the Company under the Severance Policy or any other severance arrangement. |
b. | Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. |
c. | Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. |
d. | No Contract of Employment. Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of the Company or shall affect the terms and |
e. | Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes. |
f. | Source of Payments. All payments provided under this Agreement shall be paid in cash from the general funds of the Company, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company. |
g. | Headings. The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement. |
h. | Governing Law. This Agreement is governed by ERISA and, to the extent applicable, the laws of the State of Delaware without regard to conflicts of law. |
i. | Effect on Benefit Plans. In the event of any inconsistency between the provisions of this agreement and the provisions of any benefit plan of the Company, the provisions that are more favorable to you shall control. |
Sincerely, | ||
LKQ CORPORATION | ||
By: | /s/ VICTOR CASINI | |
Name: Victor M. Casini | ||
Title: Senior Vice President and General Counsel |
/s/ ASH BROOKS |
Ash T. Brooks |
Senior Vice President and Chief |
Information Officer |
Name of Agreement: | Change of Control Agreement |
Employer Sponsoring Agreement: | LKQ Corporation. 500 West Madison Street, Suite 2800, Chicago, IL 60661 |
Employer Identification Number: | 36-4215970 |
Agreement Number: | 511 |
Agreement Year: | Calendar Year |
Agreement Administrator: | LKQ Corporation c/o Senior Vice President of Human Resources 500 West Madison Street, Suite 2800, Chicago, IL 60661 Telephone No. (312) 621-1950 |
Agent for Service of Legal Process: | Agreement Administrator, at the above address |
Type of Agreement: | Employee Welfare Benefit Plan providing for severance benefits |
Agreement Costs: | The cost of the Agreement is paid by LKQ Corporation |
Type of Administration: | Self-administered by the Agreement Administrator |
16. | Release. |
a. | In exchange for the valuable consideration set forth in the Change of Control Agreement dated as of ____________ ___, 20___ (the “Letter Agreement”), between Employee and the Company, the receipt and adequacy of which are herein acknowledged, Employee hereby agrees to release and forever discharge the Company and its present, former and future partners, shareholders, affiliates, direct and indirect parents, subsidiaries, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “Released Parties”), from any and all claims, actions and causes of action (the “Claims”) arising out of (i) his employment relationship with and service as an employee of the Company and its affiliates, and the termination of such relationship or service, or (ii) any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date hereof, including, but not limited to any Claims under Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans With Disabilities Act of 1990, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974 (ERISA), the Family and Medical Leave Act of 1993, the California Fair Employment and Housing Act; the California Workers’ Compensation Act; the California Unruh and Ralph Civil Rights Laws; the California Alcohol and Drug Rehabilitation Law and any other federal, state or local law, statute, regulation or ordinance, or law of any foreign jurisdiction, whether such Claim arises under statute or common law and whether or not Employee is presently aware of the existence of such Claim. Employee also forever releases, discharges and waives any right he may have to recover in any proceeding brought by any federal, state or local agency against the Released Parties to enforce any laws. To ensure that this Release is fully enforceable in accordance with its terms, Employee agrees to waive any and all rights to any Claims, whether or not he knows or suspects them to exist in his favor, which if known to him would have materially affected his execution of this Release. Notwithstanding the foregoing, this Release does not apply to Employee’s rights, claims, or benefits under the Letter Agreement or to Employee’s rights, if any, to payment of benefits pursuant to any employee benefit plan. This Release also does not apply to Employee’s rights, claims, or benefits claims for unemployment compensation benefits, workers compensation benefits, claims under the Fair Labor Standards Act, health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), or claims with regard to vested benefits under a retirement plan governed by ERISA. |
b. | To ensure that this Release is fully enforceable in accordance with its terms, Employee hereby agrees to waive any and all rights under Section 1542 of the California Civil Code (to the extent applicable) as it exists from time to time, which provides: |
c. | In further consideration of the payments and benefits provided to Employee under the Letter Agreement, Employee hereby releases and forever discharges the Released Parties from any and all Claims that he may have as of the date he signs this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”). By signing this Release, Employee hereby acknowledges and confirms the following: (i) he was advised by the Company in connection with his termination to consult with an attorney of his choice prior to signing this Release and to have such attorney explain to him the terms of this Release, including, without limitation, the terms relating to his release of claims arising under the ADEA; (ii) if Employee is 40 years of age or older as of the date of execution of this Release, he was given a period of not fewer than 21 calendar days to consider the terms of this Release and to consult with an attorney of his choosing with respect thereto; (iii) he is providing the release and discharge set forth in this Paragraph 1(c) only in exchange for consideration in addition to anything of value to which he is already entitled and (iv) he can revoke this Release without it becoming effective as described below. |
17. | No Legal Claim. Employee has not commenced any legal action, which term includes, without limitation, any demand for arbitration proceedings and any charge, complaint, filing or submission with any federal, state or local agency, court or other tribunal, to assert any Claim against a Released Party, and covenants and agrees not to do so in the future with respect to the matters released herein. If Employee commences or joins any legal action against a Released Party, Employee agrees that such an action is prohibited by this Release, and further agrees to promptly indemnify such Released Party for its reasonable costs and attorneys fees incurred in defending such action as well as forfeit or return any monetary judgment obtained by Employee against any Released Party in such action. Nothing in this Paragraph 2 is intended to reflect any party’s belief that Employee’s waiver of claims under the ADEA is invalid or unenforceable under this Release, it being the intent of the parties that such claims are waived. |
18. | Nondisparagement. Employee agrees to refrain, except as required by law or in connection with a judicial proceeding, from making directly or indirectly, now or at any time in the future, any written or oral statements, representations or other communications that disparage or are otherwise damaging to the business or reputation of the Released Parties. |
19. | Continuing Obligations. This Release shall not supersede any continuing obligations Employee may have under the terms of the Letter Agreement or any other agreement between Employee and the Company. |
20. | Disclaimer. Employee hereby certifies that Employee has read the terms of this Release, that Employee has been advised by the Company to consult with an attorney of Employee’s own |
21. | Governing Law. This Release is governed by ERISA and, to the extent applicable, the laws of the State of Delaware without regard to conflicts of law. |
22. | Separability of Clauses. If any provisions of this Release shall be finally determined to be invalid or unenforceable under applicable law by a court of competent jurisdiction, that part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining provisions of this Release. |
23. | Counterparts. This Release may be executed by the parties hereto in counterparts, each of which shall be deemed an original, but both such counterparts shall together constitute one and the same document. |
24. | Effectiveness. This Release shall be effective only when it has been executed by Employee and the executed original has been returned to the Company, and any applicable revocation period has expired. |
LKQ CORPORATION | |
By: | |
Name: | |
Title: |
Name: |
Date: |
dated as of | May 20, 2016 |
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (“Party A”) established as a bank under the laws of the Kingdom of Spain | and | EACH ENTITY LISTED IN EXHIBIT A OF THE SCHEDULE (each a “Party B”) |
1. | Interpretation |
2. | Obligations |
(a) | General Conditions. |
(c) | Netting of Payments. If on any date amounts would otherwise be payable:¯ |
(d) | Deduction or Withholding for Tax. |
3. | Representations |
(a) | Basic Representations. |
4. | Agreements |
(a) | Furnish Specified Information. It will deliver to the other party or, in certain cases under clause (iii) below, to such government or taxing authority as the other party reasonably directs:¯ |
(b) | Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. |
5. | Events of Default and Termination Events |
(a) | Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes (subject to Sections 5(c) and 6(e)(iv)) an event of default (an “Event of Default”) with respect to such party:¯ |
(b) | Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes (subject to Section 5(c)) an Illegality if the event is specified in clause (i) below, a Force Majeure Event if the event is specified in clause (ii) below, a Tax Event if the event is specified in clause (iii) below, a Tax Event Upon Merger if the event is specified in clause (iv) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to clause (v) below or an Additional Termination Event if the event is specified pursuant to clause (vi) below:¯ |
(c) | Hierarchy of Events. |
(d) | Deferral of Payments and Deliveries During Waiting Period. If an Illegality or a Force Majeure Event has occurred and is continuing with respect to a Transaction, each payment or delivery which would otherwise be required to be made under that Transaction will be deferred to, and will not be due until:¯ |
(e) | Inability of Head or Home Office to Perform Obligations of Branch. If (i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or 5(b)(ii)(1) and the relevant Office is not the Affected Party’s head or home office, (ii) Section 10(a) applies, (iii) the other party seeks performance of the relevant obligation orcompliance with the relevant provision by the Affected Party’s head or home office and (iv) the Affected Party’s head or home office fails so to perform or comply due to the occurrence of an event or circumstance which would, if that head or home office were the Office through which the Affected Party makes and receives payments and deliveries with respect to the relevant Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and such failure would otherwise constitute an Event of Default under Section 5(a)(i)or 5(a)(iii)(1) with respect to such party, then, for so long as the relevant event or circumstance continues to exist with respect to both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case may be, and the Affected Party’s head or home office, such failure will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1). |
6. | Early Termination; Close-Out Netting |
(a) | Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). |
(1) | If:¯ |
(c) | Effect of Designation. |
(d) | Calculations; Payment Date. |
(e) | Payments on Early Termination. If an Early Termination Date occurs, the amount, if any, payable in respect of that Early Termination Date (the “Early Termination Amount”) will be determined pursuant to this Section 6(e) and will be subject to Section 6(f). |
(f) | Set-Off. Any Early Termination Amount payable to one party (the “Payee”) by the other party (the “Payer”), in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be (“X”) (and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts (“Other Amounts”) payable by the Payee to the Payer (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation). To the extent that any Other Amounts are so set off, those Other Amounts will be discharged promptly and in all respects. X will give notice to the other party of any set-off effected under this Section 6(f). |
7. | Transfer |
(a) | a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and |
8. | Contractual Currency |
(a) | Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in good faith and using commercially reasonable procedures in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. |
(c) | Separate Indemnities. To the extent permitted by applicable law, the indemnities in this Section 8 constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. |
9. | Miscellaneous |
(a) | Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud. |
(f) | No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. |
10. | Offices; Multibranch Parties |
(a) | If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to and agrees with the other party that, notwithstanding the place of booking or its jurisdiction of incorporation or organisation, its obligations are the same in terms of recourse against it as if it had entered into the Transaction through its head or home office, except that a party will not have recourse to the head or home office of the other party in respect of any payment or delivery deferred pursuant to Section 5(d) for so long as the payment or delivery is so deferred. This representation and agreement will be deemed to be repeated by each party on each date on which the parties enter into a Transaction. |
11. | Expenses |
12. | Notices |
(a) | Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner described below (except that a notice or other communication under Section 5 or 6 may not be given by electronic messaging system or e-mail) to the address or number or in accordance with the electronic messaging system or e-mail details provided (see the Schedule) and will be deemed effective as indicated:¯ |
(b) | Change of Details. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system or e-mail details at which notices or other communications are to be given to it. |
13. | Governing Law and Jurisdiction |
(a) | Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. |
(c) | Service of Process. Each party irrevocably appoints the Process Agent, if any, specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12(a)(i), 12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by applicable law. |
14. | Definitions |
(a) | in respect of the determination of an Unpaid Amount:¯ |
(b) | in respect of an Early Termination Amount:¯ |
(a) | for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer to be a rate offered to the payer by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; |
(i) | quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that may take into account the creditworthiness of the Determining Party at the time the quotation is provided and the terms of any relevant documentation, including credit support documentation, between the Determining Party and the third party providing the quotation; |
(1) | application to relevant market data from third parties pursuant to clause (ii) above or information from internal sources pursuant to clause (iii) above of pricing or other valuation models that are, at the time of the determination of the Close-out Amount, used by the Determining Party in the regular course of its business in pricing or valuing transactions between the Determining Party and unrelated third parties that are similar to the Terminated Transaction or group of Terminated Transactions; and |
(a) | in respect of an event or circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and |
BANCO BILBAO VIZCAYA ARGENTARIA, S.A | EACH ENTITY LISTED IN EXHBIT A: | |||
(“Party A”) | (each a “Party B”) | |||
LKQ CORPORATION | ||||
By: _____________________________________ | /s/ KRISTEN HOLM | |||
Name: | Kristen Holm | By: _____________________________________ | /s/ DOMNICK P. ZARCONE | |
Title: | Managing Director | Name: | Dominick P. Zarcone | |
Date: | May 26, 2016 | Title: | Executive Vice President and Chief Financial Officer | |
Date: | May 26, 2016 | |||
By: _____________________________________ | EURO CAR PARTS LIMITED | |||
Name: | By: _____________________________________ | /s/ JOHN QUINN | ||
Title: | Name: | John Quinn | ||
Date: | Title: | CEO & Managing Director, LKQ Europe | ||
Date: | May 26, 2016 | |||
KEYSTONE AUTOMOTIVE INDUSTRIES ON, | ||||
By: _____________________________________ | /s/ MICHAEL S. CLARK | |||
Name: | Michael S. Clark | |||
Title: | Vice President — Finance and Controller | |||
Date: | May 26, 2016 | |||
(a) | “Specified Entity” means in relation to Party A for the purpose of Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v): none; |
(b) | “Specified Transaction” will have the meaning specified in Section 14 but shall also include any transaction with respect to margin loans, cash loans and short sales of any financial instrument, and as amended by inserting the words, “or any Affiliate of Party A” immediately after “Agreement” in the second line thereof. |
(c) | The “Cross-Default” provisions of Section 5(a)(vi): |
(d) | The “Credit Event Upon Merger” provisions of Section 5(b)(v): |
(e) | The “Automatic Early Termination” provision of Section 6(a): |
(f) | “Termination Currency” means United States Dollars. |
(g) | Additional Termination Event will apply. |
(a) | Payer Tax Representations. For the purpose of Section 3(e) of this Agreement, Party A and Party B will make the following representation:- |
(b) | Payee Tax Representations. For the purpose of Section 3(f) of this Agreement, Party A and Party B will make the following representations specified below, if any:- |
(i) | The following representations will apply to Party A: |
(ii) | (i) a banking corporation organized and existing under the laws of the Kingdom of Spain and has a Taxpayer ID number of A 48265169,(ii) a “foreign person” within the meaning of Section 1.6041-4(a)(4) of the United States Treasury Regulations, (iii) a “non-U.S. branch of a foreign person” within the meaning of Section 1.1441-4(a)(3), of the United States Treasury Regulations. and (iv) “U.S. branch of a foreign person” when Party A is acting through an Office or Agent located in the United States.. The following representations will apply to Party B: |
(iii) | The following representation will apply to both Party A and B: |
Party required to deliver document | Document | Date by which to be delivered |
Party A and Party B Party B | Any document allowing any Party to the other to make or receive payments under this Agreement without withholding or deduction on account of any Tax or with such withholding or deduction at a reduced rate. Internal Revenue Service Form W-9 or W-8BENE (as applicable). | Upon the earlier of (i) reasonable demand by either party and (ii) learning that such form or document is required. Upon execution and delivery of this Agreement |
Party required to deliver document | Form/Document/Certificate | Date by which to be delivered | Covered by Section 3(d) Representation |
Party A and Party B | Certified copies of all corporate, partnership or membership authorizations, as the case may be, and any other documents with respect to the execution, delivery and performance of this Agreement and any Credit Support Document | Upon execution and delivery of this Agreement | Yes |
Party A and Party B | Certificate of authority and specimen signatures of individuals executing this Agreement and any Credit Support Document | Upon execution and delivery of this Agreement and thereafter upon request of the other party | Yes |
Party A | Annual Report of PARTY A containing audited, consolidated financial statements certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party is organized | Upon Request, provided however, that, with respect to Party A, such annual report shall be deemed to be delivered by Party A hereunder if on the date of such request such annual report is posted on Party A’s website at www.bbva.com. | Yes |
Party A | Quarterly Financial Statements of PARTY A containing unaudited, consolidated financial statements of such party’s fiscal quarter prepared in accordance with generally accepted accounting principles in the country in which such party is organized | To be made available on www.bbva.com as soon as available and in any event within 45 days after the end of each fiscal quarter of Party A | |
Party B | Annual Report of Party B and of any Credit Support Provider thereof containing audited, consolidated financial statements certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party and such Credit Support Provider is organized | To be made available on www.lkqcorp.com as soon as available and in any event within 90 days after the end of each fiscal year of Party B and of the Credit Support Provider | Yes |
Party B | Quarterly Financial Statements of Party B and any Credit Support Provider thereof containing unaudited, consolidated financial statements of such party’s fiscal quarter prepared in accordance with generally accepted accounting principles in the country in which such party and such Credit Support Provider is organized | To be made available on www.lkqcorp.com as soon as available and in any event within 45 days after the end of each fiscal quarter of Party B and of the Credit Support Provider | Yes |
(a) | Address for Notices. For the purpose of Section 12(a) of this Agreement:- |
(b) | Process Agent. For the purpose of Section 13(c): |
(c) | Offices. The provisions of Section 10(a) will apply to this Agreement. |
(d) | Multibranch Party. For the purpose of Section 10(b) of this Agreement:- |
(e) | Calculation Agent. The Calculation Agent is Party A. |
(f) | Credit Support Document. Details of any Credit Support Document:- |
(g) | Credit Support Provider. |
(h) | Governing Law. This Agreement and any and all controversies arising out of or in relation to this Agreement shall be governed by and construed in accordance with the laws of the State of New York (without reference to its conflict of laws doctrine). |
(i) | Netting of Payments. Section 2(c)(ii) of this Agreement shall apply; provided that either party may cause payments due on the same day in the same currency (between the same Offices) but under different Transactions to be discharged and replaced with a single, netted payment obligation by providing the other party with a written statement detailing the calculation of such net amount payable not later than three Business Days prior to the relevant due date. |
(j) | “Affiliate” will have the meaning specified in Section 14 of this Agreement. |
(k) | Absence of Litigation. For the purpose of Section 3(c):- |
(l) | No Agency. The provisions of Section 3(g) will apply to this Agreement. |
(m) | Additional Representation will apply. For the purpose of Section 3 of this Agreement, each of the following will constitute an Additional Representation:- |
(i) | Relationship Between Parties. Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):- |
(1) | Non-Reliance. It is acting for its own account, and, it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate |
(2) | Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction. |
(3) | Status of Parties. The other party is not acting as a fiduciary for or an advisor to it in respect of that Transaction. |
(ii) | Each party makes the representations below (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into): |
(1) | Eligible Contract Participant. Each party will be deemed to represent to the other party on each date on which a Transaction is entered into that it is an “eligible contract participant” and that each guarantor of its Swap Obligations (as defined below), if any, is an “eligible contract participant,” as such term is defined in the U.S. Commodity Exchange Act, as amended. For purposes of this provision, “Swap Obligation” means an obligation incurred with respect to a transaction that is a “swap” as defined in the Section 1a(47) of the Commodity Exchange Act and CFTC Regulation 1.3(xxx). |
(2) | Line of Business. It has entered into this Agreement (including each Transaction evidenced hereby) in conjunction with its line of business (including financial intermediation services) or the financing of its business. It represents and warrants that all transactions effected under this Agreement (a) will be appropriate in the conduct and management of its business, (b) will be entered into for non-speculative purposes, and (c) as to Party B, Party B represents that all Transactions effected under this Agreement constitute transactions entered into for purposes of hedging or managing risks related to its assets or liabilities as currently owned or incurred, or likely to be owned or incurred in the conduct of its business. |
(n) | Recording of Conversations. Each party to this Agreement acknowledges and agrees to the recording of conversations and to obtain any necessary consent of, and give any necessary notice of such recording from and between trading and marketing personnel of the parties to this Agreement whether by one or other or both of the parties or their agents. |
(a) | Financial Statements. Section 3(d) is hereby amended by adding in the third line thereof after the word “respect” and before the period: |
(b) | 2002 Master Agreement Protocol. Annexes 1 to 18 and Section 6 of the ISDA 2002 Master Agreement Protocol as published by the International Swaps and Derivatives Association, Inc. on July 15, 2003 are incorporated into and apply to this Agreement. References in those definitions and provisions to any ISDA Master Agreement will be deemed to be references to this Master Agreement. |
(c) |
(d) |
(e) |
(i) | This Agreement, including any Credit Support Document, is a “master netting agreement” as defined in the U.S. Bankruptcy Code (the “Code”), and this Agreement, including any Credit Support Document, and each Transaction hereunder is of a type set forth in Section 561(a)(1)-(5) of the Code; |
(ii) | Party A is a “master netting agreement participant,” a “financial institution,” a “financial participant,”‘ a “forward contract merchant” and a “swap participant” as defined in the Code, All transfers of cash, securities or other property under or in connection with this Agreement, any Credit Support Document or any Transaction hereunder are “margin payments,” “settlement payments” and “transfers” under Sections 546(c), (f), (g) or (j), and under Section 548(d)(2) of the Code; and |
(iii) | Each obligation under this Agreement, any Credit Support Document or any Transaction hereunder is an obligation to make a “margin payment,” “settlement payment” and “payment” within the meaning of Sections 362, 560 and 561 of the Code. |
(f) |
(g) |
(h) | Timely Confirmation Amendment |
(i) | Only ECPs Can Be Guarantors. Notwithstanding anything to the contrary in this Agreement or in any credit agreement or guaranty, no person providing a guaranty of any obligation of Party B under this Agreement (each such person, a “Guarantor”) shall be deemed to be a guarantor of, or to have granted a security interest to secure any guaranty by Guarantor of, any Swap Obligation (as defined below) if such Guarantor is not an “Eligible Contract Participant” as defined in the Commodity Exchange Act and the applicable rules and regulations issued by the Commodity Futures Trading Commission and/or the Securities and Exchange Commission (collectively, and as now or hereafter in effect, “the ECP Rules”) at the time Party B entered into any applicable Transaction (each such Swap Obligation, an “Excluded Swap Obligation”), but solely to the extent that the providing of such guaranty by such Guarantor, or grant of a security interest to secure any guaranty by Guarantor, of any Swap Obligation by such Guarantor would violate the ECP Rules or other applicable law or regulation. Except as expressly set forth in the preceding sentence, nothing in this Agreement shall be deemed to restrict, reduce or waive any obligation of any such Guarantor under any guaranty or other Credit Support Document, and such guaranty or other Credit Support Document shall continue to guarantee, or grant a security interest to secure, as applicable, in accordance with its terms, each Swap Obligation that is not an Excluded Swap Obligation. |
(j) | USA PATRIOT Act Notice. Party A hereby notifies Party B that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Party B, which information includes the name and address of Party B and other information that will allow Party A to identify Party B in accordance with the Act. |
(k) | Dodd-Frank Reporting. The parties hereby agree that, as between Party A and Party B, Party A shall be responsible for all reporting of the terms of each Transactions required pursuant to 17 C.F.R. 43 and 17 C.F.R. 45 (the “CFTC Swap Reporting Requirements”). Party A shall act as, and assume all obligations of, the “Reporting Party” (within the meaning of such term as set forth in 17 C.F.R. 43.2) |
(l) | ISDA Dodd Frank Protocols. If, prior to the date hereof, both parties have adhered to the ISDA August DF Protocol Agreement, as published on August 13, 2012, by ISDA (the “August Protocol Agreement”), the ISDA March 2013 DF Protocol Agreement, as published on March 22, 2013, by ISDA (the “March Protocol Agreement”), or both, and have delivered “Matched Questionnaires” (as defined in the August Protocol Agreement and March Protocol Agreement, as applicable), the parties hereto agree that this Master Agreement shall be supplemented to the same extent as if it were a "Matched PCA" under the August Protocol Agreement and March Protocol Agreement, as applicable. |
(m) |
(n) | Section 2(a)(iii): An amendment to Section 2(a)(iii) is made by adding the following new sections: |
(o) | Fully Paid Transactions. The condition precedent in Section 2 (a) (iii) (1) does not apply to a payment and delivery due to a party if such party shall have satisfied in full all its payment or delivery obligations under Section 2 (a) (i) of this Agreement and shall at the relevant time have no future payment obligations, whether absolute or contingent, under Section 2 (a) (i). |
(p) | Change of Account: Section 2 (b) of this Agreement is hereby amended by the insertion of the following at the end thereof after the word “change”:- |
(q) | Definitions: Section 14 of the Agreement is hereby completed by the insertion of the following terms: |
(r) | [Intentionally Omitted] |
(s) | Confidentiality Waiver |
(t) | Notwithstanding anything to the contrary in this Agreement or in any non-disclosure, confidentiality or other agreement between the parties, each party hereby consents to the disclosure of information: |
(u) | Remedies for Breach |
(v) | Notices |
• | if in writing and delivered in person or by courier, on the date it is delivered; |
• | if sent by telex, on the date the recipient’s answerback is received; |
• | if sent by facsimile transmission, on the date it is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by transmission report generated by the sender’s facsimile machine): |
• | if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date it is delivered or its delivery attempted; |
• | if sent by electronic messaging system, on the date it is received; |
• | if sent by email, on the date it is delivered; or |
• | if made available in a webpage to which the Parties have access through a personalized code and/or electronic signature, on the date it is uploaded |
(a) | Status Representation |
(b) | it will constitute an Additional Termination Event in respect of which (I) such Relevant Transaction(s) will be the sole Affected Transaction(s); and (II) the Change of Status Party will be the sole Affected Party pursuant to Section 6 of the Agreement. |
(c) | Escrow: If (by reason of the time difference between the cities in which payments or deliveries are to be made or otherwise), it is not possible for simultaneous payments or deliveries to be made on any date on which both parties are required to make payments or deliveries hereunder, either party may at its option and in its sole discretion notify the other party that payments or deliveries on such date are to be made in escrow. In such case, the deposit of the payment or delivery due earlier on that date shall be made by 2.00 p.m. (local time at the place for the earlier payment or delivery) on that date with an escrow agent selected by the notifying party, provided this escrow agent is independent of either party and has a long term credit rating of at least A3 (Moody's) or A- (S&P), as the case may be, accompanied by irrevocable payment or delivery instructions: |
(d) | Scope of the Agreement: Notwithstanding anything contained in this Master Agreement to the contrary, if the parties enter into any of the following transactions, including an agreement with respect to any such transaction, (whether before or after this Agreement is entered to): a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) and any combination of these transactions, such transaction shall, unless such confirmation specifically states to the contrary, be subject to, governed by and construed in accordance with, the terms of this Agreement even when not so specified in the confirmation relating thereto. Each such transaction shall be a Transaction and any document or other confirming evidence exchanged between the parties confirming each such transaction shall be a Confirmation for the purposes of this Agreement. |
(e) | The parties agree that the definitions and provisions contained in Annexes (1 to 5) and Section 6 of the EMU Protocol published by the International Swaps and Derivatives Association, Inc. on May 6, 1998 are incorporated into and apply to this Agreement. References in those definitions and provisions to any “ISDA Master Agreement” will be deemed to be references to this Agreement. |
(f) | Contractual Recognition of Bail-in |
“Bail-in Action Termination” means the exercise of any Bail-in Power by the relevant resolution |
“Bail-in Power” means any write-down or conversion power existing from time to time (including for this purpose, without limitation, any power to terminate and value transactions and any power to amend or alter the maturity of eligible liabilities of an institution under resolution or amend the amount of interest payable under such eligible liabilities or the date on which interest becomes payable, including by suspending payment for a temporary period) under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in Spain: |
(a) | Incorporation of Definitions. The 1998 FX and Currency Option Definitions (the “FX Definitions”), published by the International Swaps and Derivatives Association, Inc., the Emerging Markets Traders Association and The Foreign Exchange Committee, are hereby incorporated by reference with respect to FX Transactions (as defined in the FX Definitions) and Currency Option Transactions (as defined in the FX Definitions). Terms defined in the FX Definitions shall have the same meanings in this Part 6. |
(b) | Scope. Unless otherwise agreed in writing by the parties, each FX Transaction and Currency Option Transaction entered into between the parties before, on or after the date of this Agreement shall be a Transaction under this Agreement and shall be part of, subject to and governed by this Agreement. FX Transactions and Currency Option Transactions shall be part of, subject to and governed by this Agreement even if the Confirmation in respect thereof does not state that such FX Transaction or Currency Option Transaction is subject to or governed by this Agreement or does not otherwise reference this Agreement. |
(c) | Premium Netting. If, on any date, and unless otherwise mutually agreed by the parties, Premiums would otherwise be payable hereunder in the same Currency between the same respective offices of the parties, then, on such date, each party’s obligation to make payment of such Premiums will be automatically satisfied and discharged and, if the aggregate Premiums that would otherwise have been payable by such office of one party exceeds the aggregate Premiums that would otherwise have been payable by such office of the other party, replaced by an obligation upon the party by whom the larger aggregate Premiums would have been payable to pay the other party the excess of the larger aggregate Premiums over the smaller aggregate Premiums, and if the aggregate Premiums are equal, no payment shall be made. |
(d) | Payment Netting of FX Transactions and Currency Option Transactions. Multiple Transaction Payment Netting shall not apply to FX Transactions or Currency Option Transactions. Unless otherwise mutually agreed by the parties, if on any date more than one delivery of a particular Currency is to be made between a pair of offices with respect to settlement of FX Transactions or Currency Option Transactions (but excluding payments with respect to option premiums and cash settled options), then each party shall aggregate the amounts of such Currency deliverable by it and only the difference between these aggregate amounts shall be delivered by the party owing the larger aggregate amount to the other party, and, if the aggregate amounts are equal, no delivery of the Currency shall be made. |
(e) | Payment Instructions. All payments to be made hereunder in respect of FX and Currency Option Transactions shall be made in accordance with standing payment instructions provided by the parties from tune to time in writing (or as otherwise specified in a Confirmation). |
(f) | Automatic Exercise. Article 3, Section 3.6(c)(i), line six of the FX Definitions which currently reads “one percent of the Strike Price” shall be amended to read “0.5% of the Strike Price,” |
(g) | Terms Relating to Premium. Article 3, Section 3.4. of the FX Definitions is hereby amended by the addition of the following as a new paragraph (c) of the FX Definitions. |
BANCO BILBAO VIZCAYA | |
ARGENTARIA, S.A. (PARTY A) | |
By: | /s/ KRISTEN HOLM |
Name: | Kristen Holm |
Title: | Managing Director |
Date: | May 26, 2016 |
By: | |
Name: | |
Title: | |
Date: | |
EACH ENTITY LISTED IN EXHIBIT A | |
AS PARTY B | |
LKQ Corporation | |
By: | /s/ DOMNICK P. ZARCONE |
Name: | Dominick P. Zarcone |
Title: | Executive Vice President and Chief Financial Officer |
Date: | May 26, 2016 |
EURO CAR PARTS LImited | |
By: | /s/ JOHN QUINN |
Name: | John Quinn |
Title: | CEO & Managing Director, LKQ Europe |
Date: | May 26, 2016 |
Keystone Automotive Industries ON, Inc. | |
By: | /s/ MICHAEL S. CLARK |
Name: | Michael S. Clark |
Title: | Vice President — Finance and Controller |
Date: | May 26, 2016 |
Name of Party B | Domicile | LKQ Corporation Guarantee Applies |
LKQ Corporation | State of Delaware, USA | No |
Euro Car Parts Limited | England and Wales | Yes |
Keystone Automotive Industries ON, Inc. | Province of Ontario, Canada | Yes |
/s/ ROBERT L. WAGMAN | |
Robert L. Wagman | |
President and Chief Executive Officer |
/S/ DOMINICK ZARCONE | |
Dominick Zarcone | |
Executive Vice President and Chief Financial Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ ROBERT L. WAGMAN | |
Robert L. Wagman | |
President and Chief Executive Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ DOMINICK ZARCONE | |
Dominick Zarcone | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 22, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | LKQ | |
Entity Registrant Name | LKQ CORP | |
Entity Central Index Key | 0001065696 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 307,107,596 |
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 306,785,582 | 305,574,384 |
Common stock, shares outstanding | 306,785,582 | 305,574,384 |
Unaudited Condensed Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Statement [Abstract] | ||||
Revenue | $ 2,450,693 | $ 1,838,070 | $ 4,372,169 | $ 3,611,982 |
Cost of goods sold | 1,528,746 | 1,114,126 | 2,689,785 | 2,188,559 |
Gross margin | 921,947 | 723,944 | 1,682,384 | 1,423,423 |
Facility and warehouse expenses | 178,670 | 136,379 | 336,275 | 269,036 |
Distribution expenses | 184,331 | 150,039 | 336,674 | 291,753 |
Selling, general and administrative expenses | 254,153 | 205,796 | 472,471 | 409,037 |
Restructuring and acquisition related expenses | 9,080 | 1,663 | 23,891 | 8,151 |
Depreciation and amortization | 52,529 | 29,782 | 84,217 | 59,235 |
Operating income | 243,184 | 200,285 | 428,856 | 386,211 |
Other expense (income): | ||||
Interest expense, net | 26,381 | 14,622 | 40,973 | 29,528 |
Loss on debt extinguishment | 0 | 0 | 26,650 | 0 |
Gains on foreign exchange contracts - acquisition related | 0 | (18,342) | 0 | |
Other expense (income), net | 1,339 | 97 | (1,550) | 2,016 |
Total other expense, net | 27,720 | 14,719 | 47,731 | 31,544 |
Income before provision for income taxes | 215,464 | 185,566 | 381,125 | 354,667 |
Provision for income taxes | 74,874 | 64,682 | 132,441 | 124,780 |
Equity in earnings of unconsolidated subsidiaries | 147 | (1,162) | (215) | (3,070) |
Net income | $ 140,737 | $ 119,722 | $ 248,469 | $ 226,817 |
Earnings per share: | ||||
Basic | $ 0.46 | $ 0.39 | $ 0.81 | $ 0.75 |
Diluted | $ 0.46 | $ 0.39 | $ 0.81 | $ 0.74 |
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 140,737 | $ 119,722 | $ 248,469 | $ 226,817 |
Other comprehensive (loss) income: | ||||
Foreign currency translation | (73,257) | 44,510 | (73,117) | (10,300) |
Net change in unrecognized gains/losses on derivative instruments, net of tax | (3,614) | 918 | (3,182) | 1,201 |
Net change in unrealized gains/losses on pension plan, net of tax | 120 | (21) | 267 | 107 |
Total other comprehensive (loss) income | (76,751) | 45,407 | (76,032) | (8,992) |
Total comprehensive income | $ 63,986 | $ 165,129 | $ 172,437 | $ 217,825 |
Unaudited Condensed Consolidated Statements of Stockholders' Equity - 6 months ended Jun. 30, 2016 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|
Beginning balance, shares at Dec. 31, 2015 | 305,574 | ||||
Beginning balance at Dec. 31, 2015 | $ 3,114,682 | $ 3,055 | $ 1,090,713 | $ 2,126,384 | $ (105,470) |
Net income | 248,469 | 0 | 0 | 248,469 | 0 |
Total other comprehensive (loss) income | (76,032) | $ 0 | 0 | 0 | (76,032) |
RSUs vested, shares | 519 | ||||
Restricted stock units vested, value | (2,281) | $ 5 | (2,286) | 0 | 0 |
Stock-based compensation expense | 11,425 | 11,425 | 0 | 0 | |
Stock options exercised, shares | 693 | ||||
Exercise of stock options, value | 4,889 | $ 7 | 4,882 | 0 | 0 |
Excess tax benefit from stock-based payments | 6,487 | 6,487 | 0 | 0 | |
Ending balance, shares at Jun. 30, 2016 | 306,786 | ||||
Ending balance at Jun. 30, 2016 | $ 3,307,639 | $ 3,067 | $ 1,111,221 | $ 2,374,853 | $ (181,502) |
Interim Financial Statements |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Financial Statements | Interim Financial Statements The unaudited financial statements presented in this report represent the consolidation of LKQ Corporation, a Delaware corporation, and its subsidiaries. LKQ Corporation is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries. We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 25, 2016. As described in Note 2, "Business Combinations," on April 21, 2016, we completed our acquisition of Pittsburgh Glass Works LLC ("PGW"), a leading global distributor and manufacturer of automotive glass products. With our acquisition of PGW, we present an additional reportable segment, Glass. Our unaudited condensed consolidated financial statements reflect the impact of PGW from the date of acquisition through the end of the quarter. |
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations On March 18, 2016, LKQ and its wholly-owned subsidiary LKQ Italia S.r.l. acquired Rhiag-Inter Auto Parts Italia S.p.A. ("Rhiag"), a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Slovakia, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Poland and Spain. This acquisition expands LKQ's geographic presence in continental Europe, and we believe the acquisition will generate potential purchasing synergies. Total acquisition date fair value of the consideration for our Rhiag acquisition was €534.2 million ($602.0 million), composed of €533.6 million ($601.4 million) of cash (net of cash acquired) and €0.6 million ($0.6 million) of intercompany balances considered to be effectively settled as part of the transaction. In addition, we assumed €488.8 million ($550.8 million) of existing Rhiag debt as of the acquisition date. To fund the purchase price of the Rhiag acquisition, LKQ entered into foreign currency forward contracts in March 2016 to acquire a total of €588 million. The rates locked in under the foreign currency forwards were favorable to the spot rate on the settlement date, and as a result, these derivative contracts generated a gain of $18.3 million during the three months ended March 31, 2016. The gain on the foreign currency forwards is recorded in Gains on foreign exchange contracts - acquisition related on our unaudited condensed consolidated statement of income for the six months ended June 30, 2016. We recorded $585.1 million of goodwill related to our acquisition of Rhiag, which we do not expect to be deductible for income tax purposes. In the period between the acquisition date and June 30, 2016, Rhiag, which is reported in our Europe reportable segment, generated revenue of $318.1 million and operating income of $10.8 million, which included $6.2 million of acquisition related costs. On April 21, 2016, LKQ and its wholly owned subsidiary LKQ PGW Holdings LLC acquired PGW. PGW’s business comprises wholesale and retail distribution services, automotive glass manufacturing, and retailer alliance partnerships. The acquisition expands our addressable market in North America and globally. Additionally, we believe the acquisition will create potential distribution synergies with our existing network. Total acquisition date fair value of the consideration for our PGW acquisition was $661.9 million, consisting of cash paid (net of cash acquired). We recorded $184.0 million of goodwill related to our acquisition of PGW, of which we expect $84.5 million to be deductible for income tax purposes. In the period between the acquisition date and June 30, 2016, PGW generated revenue of $210.1 million and operating income of $8.9 million. In addition to our acquisitions of Rhiag and PGW, we acquired two wholesale businesses in Europe during the six months ended June 30, 2016. These acquisitions were not material to our results of operations or financial position. During 2015, we completed 18 acquisitions, including 4 wholesale businesses in North America, 12 wholesale businesses in Europe, a self service retail operation, and a specialty vehicle aftermarket business. Our wholesale business acquisitions in North America included PartsChannel, Inc. ("Parts Channel"), an aftermarket collision parts distributor. The specialty aftermarket business acquired was The Coast Distribution System, Inc. ("Coast"), a supplier of replacement parts, supplies and accessories in North America for the recreational vehicle and outdoor recreation markets. Our European acquisitions included 11 aftermarket parts distribution businesses in the Netherlands, 9 of which were former customers of and distributors for our Netherlands subsidiary, Sator Beheer B.V. ("Sator") and were acquired with the objective of expanding our distribution network in the Netherlands. Our other acquisitions completed during 2015 enabled us to expand our geographic presence. Total acquisition date fair value of the consideration for these acquisitions was $187.9 million, composed of $161.3 million of cash (net of cash acquired), $4.3 million of notes payable, $21.2 million of other purchase price obligations, and $1.1 million of pre-existing balances between us and the acquired entities considered to be effectively settled as a result of the acquisitions. During the year ended December 31, 2015, we recorded $92.2 million of goodwill related to these acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2014 acquisitions. We expect $69.9 million of the $92.2 million of goodwill recorded to be deductible for income tax purposes. Our acquisitions are accounted for under the purchase method of accounting and are included in our unaudited condensed consolidated financial statements from the dates of acquisition. The purchase prices were allocated to the net assets acquired based upon estimated fair market values at the dates of acquisition. The purchase price allocations for the acquisitions made during the six months ended June 30, 2016 and the last six months of 2015 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain receivables, inventories and fixed assets acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain liabilities assumed; and 4) the final estimation of the tax basis of the entities acquired. We have recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the valuations. During the three months ended June 30, 2016, we recorded adjustments to our preliminary allocation based on our valuation procedures for our acquisition of Rhiag that resulted in the allocation of $155 million of goodwill to acquired assets, primarily intangible assets and property, plant and equipment. Additionally, as Rhiag was acquired at the end of the first quarter the income statement effect of these adjustments on our earnings was immaterial for the three months ended March 31, 2016. The balance sheet impact and income statement effect of other measurement-period adjustments recorded for acquisitions completed in prior periods was immaterial. The preliminary purchase price allocations for the acquisitions completed during the six months ended June 30, 2016 and the year ended December 31, 2015 are as follows (in thousands):
(1) The PGW inventory balance includes the impact of a step-up adjustment of $10.2 million to report the inventory at its fair value. Included in other noncurrent liabilities recorded for our acquisitions of Rhiag and PGW is a liability for certain pension and other post-retirement obligations we assumed with the acquisitions. Due to the immateriality of these plans, we have not provided the detailed disclosures otherwise prescribed by the accounting guidance on pensions and other post-retirement obligations. The primary objectives of our acquisitions made during the six months ended June 30, 2016 and the year ended December 31, 2015 were to create economic value for our stockholders by enhancing our position as a leading source for alternative collision and mechanical repair products and to expand into other product lines and businesses that may benefit from our operating strengths. Our 2016 acquisition of Rhiag enabled us to expand our market presence in continental Europe. We believe that our Rhiag acquisition will allow for synergies within our European operations, most notably in procurement, and these projected synergies contributed to the goodwill recorded on the Rhiag acquisition. Our April 2016 acquisition of PGW enabled us to enter into new product lines and increase the size of our addressable market. In addition, we believe that our PGW acquisition will allow for distribution synergies with our existing network in North America, which contributed to the goodwill recorded on the acquisition. When we identify potential acquisitions, we attempt to target companies with a leading market presence, an experienced management team and workforce that provide a fit with our existing operations, and strong cash flows. For certain of our acquisitions, we have identified cost savings and synergies as a result of integrating the company with our existing business that provide additional value to the combined entity. In many cases, acquiring companies with these characteristics will result in purchase prices that include a significant amount of goodwill. The following pro forma summary presents the effect of the businesses acquired during the six months ended June 30, 2016 as though the businesses had been acquired as of January 1, 2015 and the businesses acquired during the year ended December 31, 2015 as though they had been acquired as of January 1, 2014. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):
(1) The sum of the individual earnings per share amounts may not equal the total due to rounding. Unaudited pro forma supplemental information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma supplemental information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value; adjustments to depreciation on acquired property, plant and equipment; adjustments to rent expense for above or below market leases; adjustments to amortization on acquired intangible assets; adjustments to interest expense; and the related tax effects. The pro forma impact of our acquisitions reflects the elimination of acquisition related expenses net of tax totaling $1.6 million and $10.1 million for the three and six months ended June 30, 2016, respectively. Refer to Note 4, "Restructuring and Acquisition Related Expenses," for further information regarding our acquisition related expenses. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results. |
Financial Statement Information |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Revenue Recognition The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped to, delivered to or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and allowances of approximately $36.3 million and $32.8 million at June 30, 2016 and December 31, 2015, respectively. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue on our Unaudited Condensed Consolidated Statements of Income and are shown as a current liability on our Unaudited Condensed Consolidated Balance Sheets until remitted. We recognize revenue from the sale of scrap metal, other metals, and cores when title has transferred, which typically occurs upon delivery to the customer. Allowance for Doubtful Accounts We have a reserve for uncollectible accounts which was approximately $50.6 million and $24.6 million at June 30, 2016 and December 31, 2015, respectively. Our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW contributed $23.0 million and $4.8 million, respectively, to our reserve for uncollectible accounts. See Note 2, "Business Combinations" for further information on our acquisitions. Inventories, net Inventories, net consists of the following (in thousands):
(1) Includes all inventory types related to PGW's manufacturing and fabrication of original equipment manufacturer ("OEM") automotive glass parts. Aftermarket automotive glass products distributed by PGW are included within aftermarket and refurbished products above. The balance of glass manufacturing products as of June 30, 2016 is composed of $15.3 million of raw materials, $22.3 million of work in process, and $32.7 million of finished goods. Our U.S. glass manufacturing products inventory is stated at the lower of cost, using the first-in first-out method, or market. Our acquisitions completed during 2016, including our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW, and adjustments to preliminary valuations of inventory for certain of our 2015 acquisitions as of the acquisition date contributed $331.5 million to our aftermarket and refurbished products inventory, $0.7 million to our salvage and remanufactured products inventory, and $77.8 million to our glass manufacturing products inventory. See Note 2, "Business Combinations" for further information on our acquisitions. Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements that extend the useful life of the related asset are capitalized. As property, plant and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized. Construction in progress consists primarily of building and land improvements at our existing facilities. Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease and reasonably assured renewal periods, if shorter. Our estimated useful lives are as follows:
Property, plant and equipment consists of the following (in thousands):
We record depreciation expense within Depreciation and Amortization on the Unaudited Condensed Consolidated Statements of Income. Additionally, included in Cost of Goods Sold on the Unaudited Condensed Consolidated Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations, our distribution centers, and our glass manufacturing operations. Total depreciation expense during the six months ended June 30, 2016 and 2015 was $57.7 million and $45.2 million, respectively. Intangible Assets Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer and supplier relationships, software and other technology related assets, and covenants not to compete. The changes in the carrying amount of goodwill by reportable segment during the six months ended June 30, 2016 are as follows (in thousands):
During the six months ended June 30, 2016, we recorded $585.1 million of goodwill related to our acquisition of Rhiag and $184.0 million related to our acquisition of PGW. See Note 2, "Business Combinations" for further information on our acquisitions. The components of other intangibles are as follows (in thousands):
The components of other intangibles acquired during the six months ended June 30, 2016, are as follows (in thousands):
Our estimated useful lives for our finite lived intangible assets are as follows:
Amortization expense for intangible assets was $33.2 million and $16.5 million during the six months ended June 30, 2016 and 2015, respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2020 is $75.0 million, $85.9 million, $71.5 million, $58.7 million and $46.8 million, respectively. Warranty Reserve Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. The changes in the warranty reserve are as follows (in thousands):
Investments in Unconsolidated Subsidiaries In February 2016, we sold our investment in ACM Parts Pty Ltd. As part of the PGW acquisition, we obtained ownership interests in three joint ventures, including glass manufacturing operations in China and Mexico. Our investment in unconsolidated subsidiaries and our equity in the net earnings of the investees was not material as of and for the three and six months ended June 30, 2016. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"), which was amended in July 2015. This update outlines a new comprehensive revenue recognition model that supersedes most current revenue recognition guidance, and requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities adopting the standard have the option of using either a full retrospective or modified retrospective approach in the application of this guidance. ASU 2014-09 will be effective for the Company during the first quarter of our fiscal year 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We are still evaluating the impact that ASU 2014-09 will have on our consolidated financial statements and related disclosures. In September 2015, the FASB issued Accounting Standards Update 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which requires an acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are identified as opposed to recognition as if the accounting had been completed as of the acquisition date. The ASU also requires disclosure regarding amounts that would have been recorded in previous reporting periods if the adjustment had been recognized as of the acquisition date. ASU 2015-16 became effective for the Company during the first quarter of our fiscal year 2016 and is being applied on a prospective basis. The measurement-period adjustments for our acquisitions and the related impact on earnings of any amounts that would have been recorded in previous periods are disclosed in Note 2, "Business Combinations." In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard requires that entities apply the effects of these changes using a modified retrospective approach, which includes a number of optional practical expedients. We are still evaluating the impact that ASU 2016-02 will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" (“ASU 2016-09”), to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, the treatment of forfeitures, and calculation of earnings per share. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; early adoption is permitted. In prior periods, we have generated excess tax benefits that under the new standard would reduce our effective tax rate. However, the future impact of adopting ASU 2016-09 will depend on a number of factors, including the timing of stock option exercises and the stock prices at the exercise and vesting dates. |
Restructuring and Acquisition Related Expenses |
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Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Acquisition Related Expenses | Acquisition Related Expenses Acquisition related expenses, which include external costs such as legal, accounting, and advisory fees, totaled $3.0 million and $15.7 million for the three and six months ended June 30, 2016. Of our 2016 expenses, $11.0 million was related to our acquisition of Rhiag, $3.9 million related to our acquisition of PGW, and $0.8 million was related to other completed and potential acquisitions. Acquisition related expenses incurred during the three and six months ended June 30, 2015 totaled $0.7 million and $1.3 million. The expenses incurred in the first half of 2015 were primarily related to our acquisitions of seven aftermarket distribution businesses in the Netherlands. Acquisition Integration Plans During the three and six months ended June 30, 2016, we incurred $6.1 million and $8.2 million of restructuring expenses, respectively. Expenses incurred during the three and six months ended June 30, 2016 were primarily a result of the integration of our acquisition of Parts Channel into our existing North America wholesale business, the integration of our Coast acquisition into our existing Specialty business, and the integration of our Keystone Specialty acquisition into our existing North America wholesale business. Expenses incurred were primarily related to facility closure and relocation costs for duplicate facilities, the merger of existing facilities into larger distribution centers, and the termination of employees. During the three and six months ended June 30, 2015, we incurred $0.9 million and $6.9 million of restructuring expenses, respectively. These expenses were primarily a result of the integration of our October 2014 acquisition of Stag Parkway Holding Company, a supplier of parts for recreational vehicles, into our Specialty business. Expenses incurred were primarily related to facility closure and relocation costs for duplicate facilities, and the termination of employees in connection with the consolidation of overlapping facilities with our existing business. We expect to incur expenses related to the integration of certain of our other acquisitions into our existing operations throughout 2016. These integration activities are expected to include the closure of duplicate facilities, rationalization of personnel in connection with the consolidation of overlapping facilities with our existing business and moving expenses. Future expenses to complete these integration plans are expected to be approximately $6.0 million; this amount excludes any potential future restructuring expense related to our acquisitions of Rhiag and PGW. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. We expect to issue new shares of common stock to cover past and future equity grants. RSUs RSUs vest over periods of up to five years, subject to a continued service condition. Currently outstanding RSUs contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case, both conditions must be met before any RSUs vest. For the RSUs containing a performance-based vesting condition, the Company must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within five years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date. During the six months ended June 30, 2016, we granted 976,318 RSUs to employees. The fair value of RSUs that vested during the six months ended June 30, 2016 was $16.1 million. The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the six months ended June 30, 2016:
(1) The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock. Stock Options Stock options vest over periods of up to five years, subject to a continued service condition. Stock options expire either six or ten years from the date they are granted. No options were granted during the six months ended June 30, 2016. The following table summarizes activity related to our stock options under the Equity Incentive Plan for the six months ended June 30, 2016:
(1) The aggregate intrinsic value of outstanding, exercisable and expected to vest options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of January 1, 2016 and June 30, 2016, respectively. This amount changes based on the market price of the Company’s common stock. The following table summarizes the components of pre-tax stock-based compensation expense (in thousands):
As of June 30, 2016, unrecognized compensation expense related to unvested RSUs and stock options is $44.8 million and $0.1 million, respectively, and is expected to be recognized over weighted-average periods of 3.3 years and 0.5 years, respectively. Stock-based compensation expense related to these awards will be different to the extent the actual forfeiture rates are different from our estimated forfeiture rates. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following chart sets forth the computation of earnings per share (in thousands, except per share amounts):
The following table sets forth the number of employee stock-based compensation awards outstanding but not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three and six months ended June 30, 2016 and 2015 (in thousands):
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Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):
Unrealized losses on our interest rate swap contracts totaling $1.0 million and $1.8 million were reclassified to interest expense in our Unaudited Condensed Consolidated Statements of Income during the three and six months ended June 30, 2016, respectively. During the three and six months ended June 30, 2015, unrealized losses of $1.6 million and $3.1 million, respectively, related to our interest rate swaps were reclassified to interest expense. The deferred income taxes related to our cash flow hedges were reclassified from Accumulated Other Comprehensive Income to income tax expense. |
Long-Term Obligations |
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Long-Term Obligations | Long-Term Obligations consist of the following (in thousands):
Senior Secured Credit Agreement On January 29, 2016, LKQ Corporation, LKQ Delaware LLP, and certain other subsidiaries (collectively, the "Borrowers") entered into the Fourth Amended and Restated Credit Agreement ("Credit Agreement"), which amended the Company’s Third Amended and Restated Credit Agreement by modifying certain terms to (1) extend the maturity date by approximately two years to January 29, 2021; (2) increase the total availability under the credit agreement from $2.3 billion to $3.2 billion (composed of $2.45 billion in the revolving credit facility's multicurrency component; and $750 million of term loans, which consist of a term loan of approximately $500 million and a €230 million term loan); (3) increase our ability to incur additional indebtedness; and (4) make other immaterial or clarifying modifications and amendments to the terms of the Third Amended and Restated Credit Agreement. The additional term loan borrowing was used to repay outstanding revolver borrowings and the amount outstanding under our receivables securitization facility, and to pay fees and expenses relating to the amendment and restatement. The remaining additional term loan borrowing was used to fund the Rhiag acquisition. Amounts under the revolving credit facility are due and payable upon maturity of the Credit Agreement on January 29, 2021. Amounts under the initial and additional term loan borrowings will be due and payable in quarterly installments equal to 0.625% of the original principal amount on each of June 30, September 30, and December 31, 2016, and quarterly installments thereafter equal to 1.25% of the original principal amount beginning on March 31, 2017, with the remaining balance due and payable on the maturity date of the Credit Agreement. We are required to prepay the term loan by amounts equal to proceeds from the sale or disposition of certain assets if the proceeds are not reinvested within twelve months. We also have the option to prepay outstanding amounts under the Credit Agreement without penalty. The Credit Agreement contains customary representations and warranties, and contains customary covenants that provide limitations and conditions on our ability to enter into certain transactions. The Credit Agreement also contains financial and affirmative covenants, including limitations on our net leverage ratio and a minimum interest coverage ratio. Borrowings under the Credit Agreement bear interest at variable rates, which depend on the currency and duration of the borrowing elected, plus an applicable margin. The applicable margin is subject to change in increments of 0.25% depending on our net leverage ratio. Interest payments are due on the last day of the selected interest period or quarterly in arrears depending on the type of borrowing. Including the effect of the interest rate swap agreements described in Note 9, "Derivative Instruments and Hedging Activities," the weighted average interest rates on borrowings outstanding under the Credit Agreement at June 30, 2016 and December 31, 2015 were 2.4% and 1.8%, respectively. We also pay a commitment fee based on the average daily unused amount of the revolving credit facilities. The commitment fee is subject to change in increments of 0.05% depending on our net leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an applicable rate based on our net leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly in arrears. Of the total borrowings outstanding under the Credit Agreement, $28.3 million and $22.5 million were classified as current maturities at June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016, there were letters of credit outstanding in the aggregate amount of $71.9 million. The amounts available under the revolving credit facilities are reduced by the amounts outstanding under letters of credit, and thus availability under the revolving credit facilities at June 30, 2016 was $1.1 billion. Related to the execution of the Credit Agreement in January 2016, we incurred $6.1 million of fees, of which $5.0 million were capitalized as an offset to Long-Term Obligations and are amortized over the term of the agreement. The remaining $1.1 million of fees, together with $1.8 million of capitalized debt issuance costs related to our Third Amended and Restated Credit Agreement, were expensed during the six months ended June 30, 2016 as a loss on debt extinguishment. Senior Notes In April 2014, LKQ Corporation completed an offer to exchange $600 million aggregate principal amount of registered 4.75% Senior Notes due 2023 (the "Notes") for notes previously issued through a private placement. The Notes are governed by the Indenture dated as of May 9, 2013 among LKQ Corporation, certain of our subsidiaries (the "Guarantors") and U.S. Bank National Association, as trustee. The Notes are substantially identical to those previously issued through the private placement, except the Notes are registered under the Securities Act of 1933. The Notes bear interest at a rate of 4.75% per year from the most recent payment date on which interest has been paid or provided for. Interest on the Notes is payable in arrears on May 15 and November 15 of each year. The first interest payment was made on November 15, 2013. The Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors. The Notes and the guarantees are, respectively, LKQ Corporation's and each Guarantor's senior unsecured obligations and are subordinated to all of LKQ Corporation's and the Guarantors' existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Notes to the extent of the assets of those subsidiaries. Repayment of Rhiag Acquired Debt and Debt Related Liabilities On March 24, 2016, LKQ Netherlands B.V., a wholly-owned subsidiary of ours, borrowed €508 million under our multi-currency revolving credit facility to repay the Rhiag acquired debt and debt related liabilities. The borrowed funds were passed through an intercompany note to Rhiag and then were used to pay (i) $519.6 million (€465.0 million) for the principal of Rhiag senior note debt assumed with the acquisition, (ii) accrued interest of $8.0 million (€7.1 million) on the notes, (iii) the call premium of $23.8 million (€21.2 million) associated with early redemption of the notes and (iv) $4.9 million (€4.4 million) to terminate Rhiag’s outstanding interest rate swap related to the floating portion of the notes. The call premium is recorded as a loss on debt extinguishment in the Unaudited Condensed Consolidated Statements of Income. Euro Notes On April 14, 2016, LKQ Italia Bondco S.p.A. (the “Issuer”), an indirect, wholly-owned subsidiary of LKQ Corporation, completed an offering of €500 million aggregate principal amount of senior notes due April 1, 2024 (the “Euro Notes”) in a private placement conducted pursuant to Regulation S and Rule 144A under the Securities Act of 1933. The proceeds from the offering were used to repay a portion of the revolver borrowings under the Credit Agreement and to pay related fees and expenses. The Euro Notes are governed by the Indenture dated as of April 14, 2016 (the “Indenture”) among the Issuer, LKQ Corporation and certain of our subsidiaries (the “Euro Notes Subsidiaries”), the trustee, and the paying agent, transfer agent, and registrar. The Euro Notes bear interest at a rate of 3.875% per year from the date of original issuance or from the most recent payment date on which interest has been paid or provided for. Interest on the Euro Notes is payable in arrears on April 1 and October 1 of each year, beginning on October 1, 2016. The Euro Notes are fully and unconditionally guaranteed by LKQ Corporation and the Euro Notes Subsidiaries (the "Euro Notes Guarantors"). The Euro Notes and the guarantees are, respectively, the Issuer’s and each Euro Notes Guarantor’s senior unsecured obligations and are subordinated to all of the Issuer's and the Euro Notes Guarantors’ existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Euro Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Euro Notes to the extent of the assets of those subsidiaries. The Euro Notes have been listed on the ExtraMOT, Professional Segment of the Borsa Italia S.p.A. securities exchange as well as the Global Exchange Market of the Irish Stock Exchange. Related to the execution of the Euro Notes in April 2016, we incurred $10.1 million of fees which were capitalized as an offset to Long-Term Obligations and are amortized over the term of the offering. Receivables Securitization Facility On September 29, 2014, we amended the terms of the receivables securitization facility with The Bank of Tokyo-Mitsubishi UFJ, LTD. ("BTMU") to: (i) extend the term of the facility to October 2, 2017; (ii) increase the maximum amount available to $97 million; and (iii) make other clarifying and updating changes. Under the facility, LKQ sells an ownership interest in certain receivables, related collections and security interests to BTMU for the benefit of conduit investors and/or financial institutions for cash proceeds. Upon payment of the receivables by customers, rather than remitting to BTMU the amounts collected, LKQ retains such collections as proceeds for the sale of new receivables generated by certain of the ongoing operations of the Company. The sale of the ownership interest in the receivables is accounted for as a secured borrowing in our Unaudited Condensed Consolidated Balance Sheets, under which the receivables included in the program collateralize the amounts invested by BTMU, the conduit investors and/or financial institutions (the "Purchasers"). The receivables are held by LKQ Receivables Finance Company, LLC ("LRFC"), a wholly owned bankruptcy-remote special purpose subsidiary of LKQ, and therefore, the receivables are available first to satisfy the creditors of LRFC, including the investors. As of June 30, 2016 and December 31, 2015, $135.2 million and $136.1 million, respectively, of net receivables were collateral for the investment under the receivables facility. Under the receivables facility, we pay variable interest rates plus a margin on the outstanding amounts invested by the Purchasers. The variable rates are based on (i) commercial paper rates, (ii) the London InterBank Offered Rate ("LIBOR"), or (iii) base rates, and are payable monthly in arrears. Commercial paper rates will be the applicable variable rate unless conduit investors are not available to invest in the receivables at commercial paper rates. In such case, financial institutions will invest at the LIBOR rate or at base rates. We also pay a commitment fee on the excess of the investment maximum over the average daily outstanding investment, payable monthly in arrears. As of June 30, 2016, the interest rate under the receivables facility was based on commercial paper rates and was 1.3%. The outstanding balances of $93.5 million and $63.0 million as of June 30, 2016 and December 31, 2015, respectively, were classified as long-term on the Unaudited Condensed Consolidated Balance Sheets because we have the ability and intent to refinance these borrowings on a long-term basis. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and commodity prices. Under our current policies, we use derivatives to manage our exposure to variable interest rates on our senior secured debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes. Cash Flow Hedges At June 30, 2016, we had interest rate swap agreements in place to hedge a portion of the variable interest rate risk on our variable rate borrowings under our Credit Agreement, with the objective of reducing the impact of interest rate fluctuations and stabilizing cash flows. Under the terms of the interest rate swap agreements, we pay the fixed interest rate and receive payment at a variable rate of interest based on LIBOR for the respective currency of each interest rate swap agreement’s notional amount. The effective portion of changes in the fair value of the interest rate swap agreements is recorded in Accumulated Other Comprehensive Income (Loss) and is reclassified to interest expense when the underlying interest payment has an impact on earnings. The ineffective portion of changes in the fair value of the interest rate swap agreements is reported in interest expense. Our interest rate swap contracts have maturity dates ranging from 2016 through 2021. In the first quarter of 2016, we entered into interest rate swap contracts representing a total of $440 million of U.S. dollar-denominated debt. In the second quarter of 2016, we entered into interest rate swap contracts representing a total of $150 million of U.S. dollar-denominated debt. The new swaps entered into in 2016 have maturity dates ranging from January to June 2021, and convert floating to fixed interest rates. From time to time, we may hold foreign currency forward contracts related to certain foreign currency denominated intercompany transactions, with the objective of reducing the impact of changing exchange rates on these future cash flows, as well as reducing the impact of fluctuating exchange rates on our results of operations through the respective dates of settlement. Under the terms of the foreign currency forward contracts, we will sell the foreign currency in exchange for U.S. dollars at a fixed rate on the maturity dates of the contracts. The effective portion of the changes in fair value of the foreign currency forward contracts is recorded in Accumulated Other Comprehensive Income (Loss) and reclassified to other income (expense) when the underlying transaction has an impact on earnings. The following table summarizes the notional amounts and fair values of our interest rate swaps that are designated cash flow hedges as of June 30, 2016 and December 31, 2015 (in thousands):
While our derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge derivative instruments on a gross basis in our Unaudited Condensed Consolidated Balance Sheets. The impact of netting the fair values of these contracts would not have a material effect on our Unaudited Condensed Consolidated Balance Sheets at June 30, 2016 or December 31, 2015. The activity related to our cash flow hedges is included in Note 7, "Accumulated Other Comprehensive Income (Loss)." Ineffectiveness related to our cash flow hedges was immaterial to our results of operations during the three and six months ended June 30, 2016 and June 30, 2015. We do not expect future ineffectiveness related to our cash flow hedges to have a material effect on our results of operations. As of June 30, 2016, we estimate that $2.4 million of derivative losses (net of tax) included in Accumulated Other Comprehensive Loss will be reclassified into our consolidated statements of income within the next 12 months. Other Derivative Instruments We hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability related to inventory purchases and intercompany financing transactions denominated in a non-functional currency. We have elected not to apply hedge accounting for these transactions, and therefore the contracts are adjusted to fair value through our results of operations as of each balance sheet date, which could result in volatility in our earnings. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Financial Assets and Liabilities Measured at Fair Value We use the market and income approaches to value our financial assets and liabilities, and during the three and six months ended June 30, 2016, there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value. The tiers in the fair value hierarchy include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of June 30, 2016 and December 31, 2015 (in thousands):
The cash surrender value of life insurance is included in Other Assets on our Unaudited Condensed Consolidated Balance Sheets. The current portion of deferred compensation and contingent consideration liabilities is included in Other Current Liabilities, and the noncurrent portion is included in Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The balance sheet classification of the interest rate swaps is presented in Note 9, "Derivative Instruments and Hedging Activities." Our Level 2 assets and liabilities are valued using inputs from third parties and market observable data. We obtain valuation data for the cash surrender value of life insurance and deferred compensation liabilities from third party sources, which determine the net asset values for our accounts using quoted market prices, investment allocations and reportable trades. We value our derivative instruments using a third party valuation model that performs a discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates. Our contingent consideration liabilities are related to our business acquisitions as further described in Note 2, "Business Combinations." Under the terms of the contingent consideration agreements, payments may be made at specified future dates depending on the performance of the acquired business subsequent to the acquisition. The liabilities for these payments are classified as Level 3 liabilities because the related fair value measurement, which is determined using an income approach, includes significant inputs not observable in the market. These liabilities are not considered material. Changes in the fair value of our contingent consideration obligations are as follows (in thousands):
All the amounts included in earnings for the three and six months ended June 30, 2016 were related to contingent consideration obligations outstanding as of June 30, 2016. Of the amounts included in earnings for the three and six months ended June 30, 2015, $0.1 million and $0.1 million of losses, respectively, were related to contingent consideration obligations outstanding as of June 30, 2016. Changes in the values of the liabilities are recorded in Other expense (income), net on our Unaudited Condensed Consolidated Statements of Income. The changes in the fair value of contingent consideration obligations included in earnings during the respective periods in 2016 and 2015 reflect the quarterly reassessment of each obligation's fair value, including an analysis of the significant inputs used in the valuation, as well as the accretion of the present value discount. Financial Assets and Liabilities Not Measured at Fair Value Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. Based on market conditions as of June 30, 2016 and December 31, 2015, the fair values of our credit agreement borrowings reasonably approximated the carrying values of $2.0 billion and $891.1 million, respectively. In addition, based on market conditions, the fair value of the outstanding borrowings under the receivables facility reasonably approximated the carrying value of $93.5 million and $63.0 million at June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016 and December 31, 2015, the fair value of the Notes was approximately $587.9 million and $567.3 million, respectively, compared to a carrying value of $600 million. As of June 30, 2016, the fair value of the Euro Notes was approximately $573.1 million compared to a carrying value of $555.4 million. The fair value measurements of the borrowings under our credit agreement and receivables facility are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions with similar terms and maturities. We estimated the fair value by calculating the upfront cash payment a market participant would require at June 30, 2016 to assume these obligations. The fair value of our Notes is classified as Level 1 within the fair value hierarchy since it is determined based upon observable market inputs including quoted market prices in an active market. The fair value of our Euro Notes is determined based upon observable market inputs including quoted market prices in a market that is not active, and therefore is classified as Level 2 within the fair value hierarchy. |
Commitments and Contingencies |
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Commitments and Contingencies | Operating Leases We are obligated under noncancelable operating leases for corporate office space, warehouse and distribution facilities, trucks and certain equipment. The future minimum lease commitments under these leases at June 30, 2016 are as follows (in thousands):
Litigation and Related Contingencies We have certain contingencies resulting from litigation, claims and other commitments and are subject to a variety of environmental and pollution control laws and regulations incident to the ordinary course of business. We currently expect that the resolution of such contingencies will not materially affect our financial position, results of operations or cash flows. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings. We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes. Our effective income tax rate for the six months ended June 30, 2016 was 34.8%, compared with 35.2% for the comparable prior year period. The lower effective income tax rate for the six months ended June 30, 2016 reflects our expected geographic distribution of income, with a slightly larger proportion of our pre-tax income expected to be earned in the typically lower tax rate international jurisdictions. In addition, the tax provision for the first six months of 2015 included unfavorable discrete items of $0.3 million primarily attributable to U.S. state deferred tax adjustments; discrete items for the six months ended June 30, 2016 were immaterial. Our acquisitions completed during the first half of 2016, including our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW, contributed $29.6 million and $136.5 million of deferred tax assets and liabilities, respectively, relating to intangible assets; property, plant and equipment; and reserves, including pension and other post-retirement benefit obligations. |
Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Information | We have five operating segments: Wholesale – North America; Europe; Specialty; Glass; and Self Service. Our Glass operating segment was formed with our April 21, 2016 acquisition of PGW, as discussed in Note 2, "Business Combinations." Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our reportable segments are organized based on a combination of geographic areas served and type of product lines offered. The reportable segments are managed separately as each business serves different customers (i.e. geographic in the case of North America and Europe and product type in the case of Specialty and Glass) and is affected by different economic conditions. Therefore, we present four reportable segments: North America, Europe, Specialty and Glass. The following tables present our financial performance by reportable segment for the periods indicated (in thousands):
(1) Amounts presented include depreciation and amortization expense recorded within cost of goods sold. The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Segment EBITDA is calculated as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses (including inventory step-up adjustments related to acquisitions) and equity in earnings of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA. The table below provides a reconciliation from Segment EBITDA to Net Income (in thousands):
(1) See Note 4, "Restructuring and Acquisition Related Expenses," for further information. (2) Reflects the impact on Cost of Goods Sold of the step-up acquisition adjustment to record PGW inventory at its fair value. (3) See Note 10, "Fair Value Measurements," for further information on our contingent consideration liabilities. (4) Reflects gains on foreign currency forwards used to fix the Euro purchase price of Rhiag. See Note 2, "Business Combinations," for further information. The following table presents capital expenditures by reportable segment (in thousands):
The following table presents assets by reportable segment (in thousands):
(1) The increase in assets for our Europe and Glass segments primarily relates to the Rhiag and PGW acquisitions, respectively (see "Note 2, "Business Combinations" for further detail). We report net receivables, inventories, and net property, plant and equipment by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash, prepaid and other current and noncurrent assets, goodwill, intangibles and deferred income taxes. The majority of our operations are conducted in the U.S. Our European operations are located in the U.K., the Netherlands, Belgium, France, Sweden, and Norway. As part of the Rhiag and PGW acquisitions we expanded our operations into Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland, Spain, and Germany. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. Our net sales are attributed to geographic area based on the location of the selling operation. The following table sets forth our revenue by geographic area (in thousands):
The following table sets forth our tangible long-lived assets by geographic area (in thousands):
The following table sets forth our revenue by product category (in thousands):
(1) Includes sales of PGW's manufactured and fabricated OEM automotive glass products. Sales of PGW's aftermarket automotive glass products are included within Aftermarket, other new and refurbished products above. Our North American reportable segment generates revenue from all of our product categories, except manufactured products, while our European and Specialty segments generate revenue primarily from the sale of aftermarket products. Our Glass segment generates revenue from both the sale of aftermarket products and the sale of manufactured products. Revenue from other sources includes scrap sales, bulk sales to mechanical remanufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations. |
Condensed Consolidating Financial Information |
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Condensed Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information | LKQ Corporation (the "Parent") issued, and the Guarantors have fully and unconditionally guaranteed, jointly and severally, the Notes due on May 15, 2023. A Guarantor's guarantee will be unconditionally and automatically released and discharged upon the occurrence of any of the following events: (i) a transfer (including as a result of consolidation or merger) by the Guarantor to any person that is not a Guarantor of all or substantially all assets and properties of such Guarantor, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the Notes; (ii) a transfer (including as a result of consolidation or merger) to any person that is not a Guarantor of the equity interests of a Guarantor or issuance by a Guarantor of its equity interests such that the Guarantor ceases to be a subsidiary, as defined in the Indenture, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the Notes; (iii) the release of the Guarantor from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the Notes; and (iv) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture, as defined in the Indenture. Presented below are the unaudited condensed consolidating financial statements of the Parent, the Guarantors, the non-guarantor subsidiaries (the "Non-Guarantors"), and the elimination entries necessary to present the Company's financial statements on a consolidated basis as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934 resulting from the guarantees of the Notes. Investments in consolidated subsidiaries have been presented under the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, intercompany balances, and intercompany revenue and expenses. The unaudited condensed consolidating financial statements below have been prepared from the Company's financial information on the same basis of accounting as the unaudited condensed consolidated financial statements, and may not necessarily be indicative of the financial position, results of operations or cash flows had the Parent, Guarantors and Non-Guarantors operated as independent entities.
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Financial Statement Information (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped to, delivered to or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and allowances of approximately $36.3 million and $32.8 million at June 30, 2016 and December 31, 2015, respectively. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue on our Unaudited Condensed Consolidated Statements of Income and are shown as a current liability on our Unaudited Condensed Consolidated Balance Sheets until remitted. We recognize revenue from the sale of scrap metal, other metals, and cores when title has transferred, which typically occurs upon delivery to the customer. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We have a reserve for uncollectible accounts which was approximately $50.6 million and $24.6 million at June 30, 2016 and December 31, 2015, respectively. Our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW contributed $23.0 million and $4.8 million, respectively, to our reserve for uncollectible accounts. See Note 2, "Business Combinations" for further information on our acquisitions. |
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Inventory | Inventories, net Inventories, net consists of the following (in thousands):
(1) Includes all inventory types related to PGW's manufacturing and fabrication of original equipment manufacturer ("OEM") automotive glass parts. Aftermarket automotive glass products distributed by PGW are included within aftermarket and refurbished products above. The balance of glass manufacturing products as of June 30, 2016 is composed of $15.3 million of raw materials, $22.3 million of work in process, and $32.7 million of finished goods. Our U.S. glass manufacturing products inventory is stated at the lower of cost, using the first-in first-out method, or market. Our acquisitions completed during 2016, including our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW, and adjustments to preliminary valuations of inventory for certain of our 2015 acquisitions as of the acquisition date contributed $331.5 million to our aftermarket and refurbished products inventory, $0.7 million to our salvage and remanufactured products inventory, and $77.8 million to our glass manufacturing products inventory. See Note 2, "Business Combinations" for further information on our acquisitions. |
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Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements that extend the useful life of the related asset are capitalized. As property, plant and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized. Construction in progress consists primarily of building and land improvements at our existing facilities. Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease and reasonably assured renewal periods, if shorter. Our estimated useful lives are as follows:
Property, plant and equipment consists of the following (in thousands):
We record depreciation expense within Depreciation and Amortization on the Unaudited Condensed Consolidated Statements of Income. Additionally, included in Cost of Goods Sold on the Unaudited Condensed Consolidated Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations, our distribution centers, and our glass manufacturing operations. Total depreciation expense during the six months ended June 30, 2016 and 2015 was $57.7 million and $45.2 million, respectively. |
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Intangible Assets | Intangible Assets Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer and supplier relationships, software and other technology related assets, and covenants not to compete. The changes in the carrying amount of goodwill by reportable segment during the six months ended June 30, 2016 are as follows (in thousands):
During the six months ended June 30, 2016, we recorded $585.1 million of goodwill related to our acquisition of Rhiag and $184.0 million related to our acquisition of PGW. See Note 2, "Business Combinations" for further information on our acquisitions. The components of other intangibles are as follows (in thousands):
The components of other intangibles acquired during the six months ended June 30, 2016, are as follows (in thousands):
Our estimated useful lives for our finite lived intangible assets are as follows:
Amortization expense for intangible assets was $33.2 million and $16.5 million during the six months ended June 30, 2016 and 2015, respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2020 is $75.0 million, $85.9 million, $71.5 million, $58.7 million and $46.8 million, respectively |
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Warranty Reserve | Warranty Reserve Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. The changes in the warranty reserve are as follows (in thousands):
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Investments in Unconsolidated Subsidiaries | Investments in Unconsolidated Subsidiaries In February 2016, we sold our investment in ACM Parts Pty Ltd. As part of the PGW acquisition, we obtained ownership interests in three joint ventures, including glass manufacturing operations in China and Mexico. Our investment in unconsolidated subsidiaries and our equity in the net earnings of the investees was not material as of and for the three and six months ended June 30, 2016. |
Business Combinations (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Allocations For Acquisitions | The preliminary purchase price allocations for the acquisitions completed during the six months ended June 30, 2016 and the year ended December 31, 2015 are as follows (in thousands):
(1) The PGW inventory balance includes the impact of a step-up adjustment of $10.2 million to report the inventory at its fair value. |
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Pro Forma Effect Of Businesses Acquired | The following pro forma summary presents the effect of the businesses acquired during the six months ended June 30, 2016 as though the businesses had been acquired as of January 1, 2015 and the businesses acquired during the year ended December 31, 2015 as though they had been acquired as of January 1, 2014. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):
(1) The sum of the individual earnings per share amounts may not equal the total due to rounding. |
Financial Statement Information (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We have a reserve for uncollectible accounts which was approximately $50.6 million and $24.6 million at June 30, 2016 and December 31, 2015, respectively. Our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW contributed $23.0 million and $4.8 million, respectively, to our reserve for uncollectible accounts. See Note 2, "Business Combinations" for further information on our acquisitions. |
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Schedule Of Inventory | Inventories, net consists of the following (in thousands):
(1) Includes all inventory types related to PGW's manufacturing and fabrication of original equipment manufacturer ("OEM") automotive glass parts. Aftermarket automotive glass products distributed by PGW are included within aftermarket and refurbished products above. The balance of glass manufacturing products as of June 30, 2016 is composed of $15.3 million of raw materials, $22.3 million of work in process, and $32.7 million of finished goods. Our U.S. glass manufacturing products inventory is stated at the lower of cost, using the first-in first-out method, or market. |
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Schedule Of Estimated Useful Lives | Our estimated useful lives are as follows:
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Schedule Of Property Plant And Equipment | Property, plant and equipment consists of the following (in thousands):
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Changes In Carrying Amount Of Goodwill | The changes in the carrying amount of goodwill by reportable segment during the six months ended June 30, 2016 are as follows (in thousands):
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Components Of Other Intangibles | The components of other intangibles are as follows (in thousands):
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Finite Intangible Assets Acquired as Part of Business Combination | The components of other intangibles acquired during the six months ended June 30, 2016, are as follows (in thousands):
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Schedule of Estimated Useful Lives, Finite Lived Intangible Assets | Our estimated useful lives for our finite lived intangible assets are as follows:
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Changes In Warranty Reserve | The changes in the warranty reserve are as follows (in thousands):
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"), which was amended in July 2015. This update outlines a new comprehensive revenue recognition model that supersedes most current revenue recognition guidance, and requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities adopting the standard have the option of using either a full retrospective or modified retrospective approach in the application of this guidance. ASU 2014-09 will be effective for the Company during the first quarter of our fiscal year 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We are still evaluating the impact that ASU 2014-09 will have on our consolidated financial statements and related disclosures. In September 2015, the FASB issued Accounting Standards Update 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which requires an acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are identified as opposed to recognition as if the accounting had been completed as of the acquisition date. The ASU also requires disclosure regarding amounts that would have been recorded in previous reporting periods if the adjustment had been recognized as of the acquisition date. ASU 2015-16 became effective for the Company during the first quarter of our fiscal year 2016 and is being applied on a prospective basis. The measurement-period adjustments for our acquisitions and the related impact on earnings of any amounts that would have been recorded in previous periods are disclosed in Note 2, "Business Combinations." In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard requires that entities apply the effects of these changes using a modified retrospective approach, which includes a number of optional practical expedients. We are still evaluating the impact that ASU 2016-02 will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" (“ASU 2016-09”), to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, the treatment of forfeitures, and calculation of earnings per share. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; early adoption is permitted. In prior periods, we have generated excess tax benefits that under the new standard would reduce our effective tax rate. However, the future impact of adopting ASU 2016-09 will depend on a number of factors, including the timing of stock option exercises and the stock prices at the exercise and vesting dates. |
Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unvested Restricted Stock Units Activity | The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the six months ended June 30, 2016:
(1) The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock. |
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Schedule of Stock Option Activity | The following table summarizes activity related to our stock options under the Equity Incentive Plan for the six months ended June 30, 2016:
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Schedule Of Pre-Tax Stock-Based Compensation Expense | The following table summarizes the components of pre-tax stock-based compensation expense (in thousands):
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Earnings Per Share (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation Of Earnings Per Share | The following chart sets forth the computation of earnings per share (in thousands, except per share amounts):
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Schedule Of Antidilutive Securities Excluded From Computation Of Diluted Earnings Per Share | The following table sets forth the number of employee stock-based compensation awards outstanding but not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three and six months ended June 30, 2016 and 2015 (in thousands):
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Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Accumulated Other Comprehensive Income (Loss) | The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):
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Long-Term Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Long-Term Obligations | Long-Term Obligations consist of the following (in thousands):
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Derivative Instruments and Hedging Activities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow Hedges | The following table summarizes the notional amounts and fair values of our interest rate swaps that are designated cash flow hedges as of June 30, 2016 and December 31, 2015 (in thousands):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis | The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of June 30, 2016 and December 31, 2015 (in thousands):
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Changes In Fair Value Of Contingent Consideration Obligations | Changes in the fair value of our contingent consideration obligations are as follows (in thousands):
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Commitments | The future minimum lease commitments under these leases at June 30, 2016 are as follows (in thousands):
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Segment and Geographic Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Financial Performance By Reportable Segment | The following tables present our financial performance by reportable segment for the periods indicated (in thousands):
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Reconciliation Of Earnings Before Interest Taxes Depreciation And Amortization To Net Income Table [Text Block] | The table below provides a reconciliation from Segment EBITDA to Net Income (in thousands):
(1) See Note 4, "Restructuring and Acquisition Related Expenses," for further information. (2) Reflects the impact on Cost of Goods Sold of the step-up acquisition adjustment to record PGW inventory at its fair value. (3) See Note 10, "Fair Value Measurements," for further information on our contingent consideration liabilities. |
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Schedule Of Capital Expenditures By Reportable Segment | The following table presents capital expenditures by reportable segment (in thousands):
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Schedule Of Assets By Reportable Segment | The following table presents assets by reportable segment (in thousands):
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Schedule Of Revenue By Geographic Area | The following table sets forth our revenue by geographic area (in thousands):
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Schedule Of Tangible Long-Lived Assets By Geographic Area | The following table sets forth our tangible long-lived assets by geographic area (in thousands):
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Schedule Of Revenue By Product Category | The following table sets forth our revenue by product category (in thousands):
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Condensed Consolidating Financial Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Condensed Balance Sheets |
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Consolidated Condensed Statements of Income |
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Consolidated Condensed Statements of Comprehensive Income (Loss) |
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Consolidated Condensed Statements of Cash Flows |
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Financial Statement Information - Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Goodwill | $ 3,059,488 | $ 2,319,246 | |
Reserve for estimated returns, discounts and allowances | 36,300 | 32,800 | |
Reserve for uncollectible accounts | 50,600 | 24,600 | |
Depreciation | 57,700 | $ 45,200 | |
Finite-lived intangible assets, gross | 769,903 | $ 323,001 | |
Amortization expense | 33,200 | $ 16,500 | |
Estimated annual amortization expense in year one | 75,000 | ||
Estimated annual amortization expense in year two | 85,900 | ||
Estimated annual amortization expense in year three | 71,500 | ||
Estimated annual amortization expense in year four | 58,700 | ||
Estimated annual amortization expense in year five | $ 46,800 | ||
Salvage mechanical products | |||
Standard warranty period | 6 months | ||
Remanufactured engines | |||
Standard warranty period | 3 years | ||
PGW | |||
Goodwill | $ 183,970 | ||
Reserve for uncollectible accounts | 4,800 | ||
Finite-lived intangible assets, gross | 31,126 | ||
Rhiag | |||
Goodwill | 585,112 | ||
Reserve for uncollectible accounts | 23,000 | ||
Finite-lived intangible assets, gross | $ 424,754 |
Financial Statement Information Schedule of Inventory (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Product Information | ||
Inventories, net | $ 1,890,536 | $ 1,556,552 |
Aftermarket and refurbished products | ||
Product Information | ||
Inventories, net | 1,422,701 | 1,146,162 |
Inventories, net (1) | 331,500 | |
Salvage and remanufactured products | ||
Product Information | ||
Inventories, net | 397,522 | 410,390 |
Inventories, net (1) | 700 | |
Glass manufacturing products | ||
Product Information | ||
Inventories, net | 70,313 | 0 |
Inventories, net (1) | 77,800 | |
Glass | ||
Product Information | ||
Inventories, net | 164,080 | $ 0 |
Glass | Glass manufacturing products | ||
Product Information | ||
Inventory, Raw Materials, Net of Reserves | 15,300 | |
Inventory, Work in Process, Net of Reserves | 22,300 | |
Inventory, Finished Goods, Net of Reserves | $ 32,700 |
Financial Statement Information Schedule of Estimated Useful Lives (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Land Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Land Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 20 years |
Building and Building Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 20 years |
Building and Building Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 40 years |
Machinery and Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Machinery and Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 20 years |
Computer equipment and software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Computer equipment and software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Vehicles and trailers | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Vehicles and trailers | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Furniture and Fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Furniture and Fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 7 years |
Financial Statement Information Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 1,397,072 | $ 1,053,841 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (485,592) | (437,946) |
Construction in Progress, Gross | 143,566 | 80,672 |
Property, Plant and Equipment, net | 1,055,046 | 696,567 |
Land and Land Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 135,171 | 118,420 |
Building and Building Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 253,389 | 183,480 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 574,195 | 355,313 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 137,197 | 130,363 |
Vehicles and trailers | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 117,831 | 101,201 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 29,203 | 24,332 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 150,086 | $ 140,732 |
Changes in Carrying Amount of Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 2,319,246 |
Business acquisitions and adjustments to previously recorded goodwill | 774,189 |
Exchange rate effects | (33,947) |
Goodwill, ending balance | 3,059,488 |
North America | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 1,445,850 |
Business acquisitions and adjustments to previously recorded goodwill | 715 |
Exchange rate effects | 6,729 |
Goodwill, ending balance | 1,453,294 |
Europe | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 594,482 |
Business acquisitions and adjustments to previously recorded goodwill | 589,952 |
Exchange rate effects | (40,292) |
Goodwill, ending balance | 1,144,142 |
Specialty | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 278,914 |
Business acquisitions and adjustments to previously recorded goodwill | (448) |
Exchange rate effects | (384) |
Goodwill, ending balance | 278,082 |
Glass | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Business acquisitions and adjustments to previously recorded goodwill | 183,970 |
Exchange rate effects | 0 |
Goodwill, ending balance | 183,970 |
Rhiag | |
Goodwill [Roll Forward] | |
Goodwill, ending balance | $ 585,112 |
Components of Other Intangibles (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | $ 769,903 | $ 323,001 |
Accumulated amortization | (139,543) | (107,884) |
Net | 630,360 | 215,117 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 295,384 | 172,219 |
Accumulated amortization | (49,152) | (43,458) |
Net | 246,232 | 128,761 |
Customer and supplier relationships | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 405,547 | 95,508 |
Accumulated amortization | (60,752) | (41,007) |
Net | 344,795 | 54,501 |
Software and technology related assets | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 57,253 | 44,500 |
Accumulated amortization | (23,219) | (17,844) |
Net | 34,034 | 26,656 |
Covenants not to compete | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 11,719 | 10,774 |
Accumulated amortization | (6,420) | (5,575) |
Net | $ 5,299 | $ 5,199 |
Financial Statement Information Components of Other Intangibles Acquired as part of a Business Combination (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | $ 769,903 | $ 323,001 |
Rhiag | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 424,754 | |
PGW | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 31,126 | |
Trade names and trademarks | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 295,384 | 172,219 |
Trade names and trademarks | Rhiag | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 124,074 | |
Trade names and trademarks | PGW | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 4,200 | |
Customer and supplier relationships | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 405,547 | 95,508 |
Customer and supplier relationships | Rhiag | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 290,766 | |
Customer and supplier relationships | PGW | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 24,500 | |
Software and technology related assets | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 57,253 | 44,500 |
Software and technology related assets | Rhiag | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 9,914 | |
Software and technology related assets | PGW | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 1,026 | |
Covenants not to compete | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 11,719 | $ 10,774 |
Covenants not to compete | Rhiag | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 0 | |
Covenants not to compete | PGW | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | $ 1,400 |
Financial Statement Information Schedule of Estimated Useful Lives, Finite Lived Intangible Assets (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Trade names and trademarks | Minimum | |
Finite-Lived Intangible Assets | |
Useful life, years | 4 years |
Trade names and trademarks | Maximum | |
Finite-Lived Intangible Assets | |
Useful life, years | 30 years |
Customer and supplier relationships | Minimum | |
Finite-Lived Intangible Assets | |
Useful life, years | 4 years |
Customer and supplier relationships | Maximum | |
Finite-Lived Intangible Assets | |
Useful life, years | 20 years |
Software and technology related assets | Minimum | |
Finite-Lived Intangible Assets | |
Useful life, years | 3 years |
Software and technology related assets | Maximum | |
Finite-Lived Intangible Assets | |
Useful life, years | 6 years |
Covenants not to compete | Minimum | |
Finite-Lived Intangible Assets | |
Useful life, years | 1 year |
Covenants not to compete | Maximum | |
Finite-Lived Intangible Assets | |
Useful life, years | 5 years |
Changes in Warranty Reserve (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Warranty Reserve [Roll Forward] | |
Warranty reserve, beginning balance | $ 17,363 |
Warranty expense | 16,341 |
Warranty claims | (14,256) |
Warranty reserve, ending balance | $ 19,448 |
Restructuring and Acquisition Related Expenses - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Restructuring Cost and Reserve | ||||
Restructuring and acquisition related expenses | $ 9,080 | $ 1,663 | $ 23,891 | $ 8,151 |
Acquisition-related expenses | ||||
Restructuring Cost and Reserve | ||||
Restructuring and acquisition related expenses | 3,000 | 700 | 15,700 | 1,300 |
Restructuring expenses | ||||
Restructuring Cost and Reserve | ||||
Restructuring and acquisition related expenses | $ 6,100 | $ 900 | 8,200 | $ 6,900 |
Restructuring expenses | Maximum | ||||
Restructuring Cost and Reserve | ||||
Expected additional charges | 6,000 | |||
Rhiag | Acquisition-related expenses | ||||
Restructuring Cost and Reserve | ||||
Restructuring and acquisition related expenses | 11,000 | |||
PGW | Acquisition-related expenses | ||||
Restructuring Cost and Reserve | ||||
Restructuring and acquisition related expenses | 3,900 | |||
All 2016 Acquisitions and yet to be Completed Acquisitions Excluding Rhiag and PGW | Acquisition-related expenses | ||||
Restructuring Cost and Reserve | ||||
Restructuring and acquisition related expenses | $ 800 |
Stock-Based Compensation - Additional Information (Details) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2016
USD ($)
shares
|
|
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares that RSUs convert into on the applicable vesting date | shares | 1 | |
RSUs granted during the period | shares | 976,318 | |
Fair value of RSUs or restricted stock vested during the period | $ 16.1 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 44.8 | 44.8 |
Expected term for unrecognized stock-based compensation expense expected to be recognized | 3 years 4 months | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 0.1 | $ 0.1 |
Expected term for unrecognized stock-based compensation expense expected to be recognized | 6 months | |
Minimum | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock options expiration period | 6 years | |
Maximum | RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Vesting period | 5 years | |
Maximum | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Vesting period | 5 years | |
Stock options expiration period | 10 years |
Stock-Based Compensation Schedule of Unvested Restricted Stock Units Activity (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Summary of Expected to Vest RSUs [Line Items] | ||
Unvested RSUs, shares | 2,299,010 | 1,981,292 |
RSUs granted during the period | 976,318 | |
RSUs vested, shares | (605,151) | |
RSUs forfeited/canceled, shares | (53,449) | |
RSUs expected to vest, shares | 2,198,889 | |
Unvested RSUs, weighted average grant date fair value | $ 26.96 | $ 24.19 |
RSUs granted, weighted average grant date fair value | 29.05 | |
RSUs vested, weighted average grant date fair value | 21.20 | |
RSUs forfeited/canceled, weighted average grant date fair value | 27.34 | |
RSUs expected to vest, weighted average grant date fair value | $ 26.98 | |
Unvested RSUs, aggregate intrinsic value | $ 72,879 | $ 58,706 |
RSUs expected to vest, aggregate intrinsic value | $ 69,705 |
Stock-Based Compensation Schedule of Stock Option Activity (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Stock options outstanding, shares | 3,063,978 | 3,765,952 |
Stock options exercised, shares | (692,610) | |
Stock options forfeited/canceled, shares | (9,364) | |
Exercisable stock options, shares | 2,981,006 | |
Exercisable and expected to vest stock options, shares | 3,055,681 | |
Stock options outstanding, weighted average exercise price | $ 8.92 | $ 8.63 |
Stock options exercised, weighted average exercise price | 7.06 | |
Stock options forfeited/canceled, weighted average exercise price | 31.83 | |
Exercisable stock options, weighted average exercise price | 8.27 | |
Exercisable and expected to vest stock options, weighted average exercise price | $ 8.86 | |
Stock options outstanding, weighted average remaining contractual term (years) | 2 years 7 months | 2 years 10 months 25 days |
Exercisable stock options, weighted average remaining contractual term (years) | 2 years 7 months | |
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, weighted average remaining contractual term | 2 years 7 months | |
Stock options outstanding, aggregate intrinsic value | $ 69,851 | $ 79,317 |
Exercisable stock options, aggregate intrinsic value | 69,851 | |
Exercisable and expected to vest stock options, aggregate intrinsic value | $ 69,851 |
Schedule of Pre-Tax Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation expense | $ 5,509 | $ 5,568 | $ 11,425 | $ 11,114 |
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation expense | 5,480 | 5,528 | 11,359 | 10,948 |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation expense | $ 29 | $ 40 | $ 66 | $ 166 |
Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 140,737 | $ 119,722 | $ 248,469 | $ 226,817 |
Denominator for basic earnings per share—Weighted-average shares outstanding | 306,718 | 304,286 | 306,437 | 304,145 |
Effect of dilutive securities: | ||||
RSUs | 646 | 732 | 584 | 700 |
Stock options | 1,534 | 2,229 | 1,613 | 2,260 |
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding | 308,898 | 307,247 | 308,634 | 307,105 |
Earnings per share, basic | $ 0.46 | $ 0.39 | $ 0.81 | $ 0.75 |
Earnings per share, diluted | $ 0.46 | $ 0.39 | $ 0.81 | $ 0.74 |
Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive securities | 0 | 310 | 112 | 323 |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive securities | 0 | 98 | 44 | 99 |
Accumulated Other Comprehensive Income (Loss) Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Interest Rate Swap | ||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | $ 1.0 | $ 1.6 | $ 1.8 | $ 3.1 |
Accumulated Other Comprehensive Income (Loss) Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | $ 104,751 | $ 94,624 | $ 105,470 | $ 40,225 |
Foreign currency translation | (73,257) | 44,510 | (73,117) | (10,300) |
Pre-tax income accumulated comprehensive income | (79,785) | 44,344 | (79,789) | (11,539) |
Income tax effect | 2,250 | 69 | 2,278 | 439 |
Reclassification of unrealized gain (loss) | 1,144 | 1,537 | 2,147 | 3,228 |
Reclassification of deferred income taxes | (360) | (543) | (668) | (1,120) |
Ending Balance | 181,502 | 49,217 | 181,502 | 49,217 |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | 96,750 | 81,883 | 96,890 | 27,073 |
Foreign currency translation | (73,257) | 44,510 | (73,117) | (10,300) |
Ending Balance | 170,007 | 37,373 | 170,007 | 37,373 |
Unrealized (Loss) Gain on Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | 500 | 3,118 | 932 | 3,401 |
Pre-tax income accumulated comprehensive income | (6,528) | (166) | (6,672) | (1,239) |
Income tax effect | 2,250 | 69 | 2,278 | 439 |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | (984) | (1,564) | (1,790) | (3,085) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | (320) | (549) | (578) | (1,084) |
Ending Balance | 4,114 | 2,200 | 4,114 | 2,200 |
Unrealized (Loss) Gain on Pension Plan | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax | 7,501 | 9,623 | 7,648 | 9,751 |
Reclassification of unrealized gain (loss) | 160 | (27) | 357 | 143 |
Reclassification of deferred income taxes | (40) | 6 | (90) | (36) |
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax | 7,381 | 9,644 | 7,381 | 9,644 |
Interest Rate Swap | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | $ (1,000) | $ (1,600) | $ (1,800) | $ (3,100) |
Schedule of Long-Term Obligations (Parenthetical) (Details) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Notes Payable | ||
Debt Instrument | ||
Weighted average interest rate | 2.30% | 2.20% |
Other Long-Term Debt | ||
Debt Instrument | ||
Weighted average interest rate | 2.30% | 2.40% |
Schedule of Long-Term Obligations (Details) $ in Thousands, € in Millions |
Jun. 30, 2016
USD ($)
|
Apr. 14, 2016
EUR (€)
|
Jan. 29, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Mar. 27, 2014
USD ($)
|
May 09, 2013
USD ($)
|
---|---|---|---|---|---|---|
Debt Instrument | ||||||
Long-Term Obligations, Total | $ 3,361,684 | $ 1,599,695 | ||||
Deferred Finance Costs, Current, Net | (2,298) | (1,460) | ||||
Deferred Finance Costs, Noncurrent, Net | (23,925) | (13,533) | ||||
Debt and Capital Lease Obligations, Net | 3,335,461 | 1,584,702 | ||||
Long-term Debt and Capital Lease Obligations, Current, Net | 60,832 | 56,034 | ||||
Long-Term Obligations, Excluding Current Portion | 3,274,629 | 1,528,668 | ||||
Term Loan | ||||||
Debt Instrument | ||||||
Term loans payable | 750,707 | 410,625 | ||||
Revolving Credit Facility | ||||||
Debt Instrument | ||||||
Revolving credit facilities | 1,292,734 | 480,481 | ||||
Senior Notes | ||||||
Debt Instrument | ||||||
Senior notes | 600,000 | 600,000 | $ 600,000 | |||
Euro Notes | ||||||
Debt Instrument | ||||||
Senior notes | 555,400 | € 500 | 0 | |||
Receivables Securitization Facility | ||||||
Debt Instrument | ||||||
Receivables securitization facility | 93,520 | 63,000 | ||||
Notes Payable | ||||||
Debt Instrument | ||||||
Notes payable | 9,866 | 16,104 | ||||
Other Long-Term Debt | ||||||
Debt Instrument | ||||||
Other long-term debt | $ 59,457 | $ 29,485 | ||||
Third Amended Credit Agreement | Credit Agreement | ||||||
Debt Instrument | ||||||
Maximum Credit Agreement Borrowings | $ 2,300,000 | |||||
Fourth Amended Credit Agreement | Credit Agreement | ||||||
Debt Instrument | ||||||
Maximum Credit Agreement Borrowings | $ 3,200,000 | |||||
Term loans payable | $ 750,000 |
Long-Term Obligations - Additional Information (Details) $ in Thousands, € in Millions |
3 Months Ended | 6 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 24, 2016
USD ($)
|
Mar. 24, 2016
EUR (€)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
EUR (€)
|
Apr. 14, 2016
EUR (€)
|
Mar. 24, 2016
EUR (€)
|
Jan. 29, 2016
USD ($)
|
Jan. 29, 2016
EUR (€)
|
Dec. 31, 2015
USD ($)
|
Sep. 29, 2014
USD ($)
|
Mar. 27, 2014
USD ($)
|
May 09, 2013
USD ($)
|
|
Debt Instrument | |||||||||||||||
Term Loan Quarterly Repayment, Percentage of Initial Balance | 0.625% | 0.625% | |||||||||||||
Term Loan Quarterly Repayment, Percentage | 1.25% | 1.25% | |||||||||||||
Outstanding letters of credit | $ 71,900 | $ 71,900 | |||||||||||||
Loss on debt extinguishment | $ 0 | $ 0 | $ 26,650 | $ 0 | |||||||||||
Credit Agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Increment change in applicable margin | 0.25% | 0.25% | |||||||||||||
Weighted average interest rate | 2.40% | 2.40% | 2.40% | 1.80% | |||||||||||
Increment change in commitment fees | 0.05% | 0.05% | |||||||||||||
Fronting fee on letters of credit in addition to participation commission | 0.125% | 0.125% | |||||||||||||
Availability on the revolving credit facility | $ 1,100,000 | $ 1,100,000 | |||||||||||||
Term Loan | |||||||||||||||
Debt Instrument | |||||||||||||||
Term loans payable | 750,707 | 750,707 | $ 410,625 | ||||||||||||
Current maturities of credit agreement | 28,300 | 28,300 | 22,500 | ||||||||||||
Senior Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Senior notes | 600,000 | 600,000 | 600,000 | $ 600,000 | |||||||||||
Senior notes interest rate | 4.75% | ||||||||||||||
Euro Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Fees capitalized | 10,100 | 10,100 | |||||||||||||
Senior notes | $ 555,400 | $ 555,400 | € 500.0 | 0 | |||||||||||
Senior notes interest rate | 3.875% | ||||||||||||||
Receivables Securitization Facility | |||||||||||||||
Debt Instrument | |||||||||||||||
Weighted average interest rate | 1.30% | 1.30% | 1.30% | ||||||||||||
Receivables securitization maximum borrowing capacity | $ 97,000 | ||||||||||||||
Receivables used as collateral for receivables securitization facility | $ 135,200 | $ 135,200 | 136,100 | ||||||||||||
Borrowings under receivable securitization facility, carrying value | 93,520 | 93,520 | $ 63,000 | ||||||||||||
Fourth Amended Credit Agreement | Credit Agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Maximum Credit Agreement Borrowings | $ 3,200,000 | ||||||||||||||
Term loans payable | 750,000 | ||||||||||||||
Payments of financing costs | 6,100 | ||||||||||||||
Fees capitalized | 5,000 | 5,000 | |||||||||||||
Loss on debt extinguishment | 1,100 | ||||||||||||||
Fourth Amended Credit Agreement | Credit Agreement | Multicurrency Component | |||||||||||||||
Debt Instrument | |||||||||||||||
Maximum revolving credit facility borrowings | 2,450,000 | ||||||||||||||
Fourth Amended Credit Agreement | USD Term Loan | |||||||||||||||
Debt Instrument | |||||||||||||||
Term loans payable | $ 500,000 | ||||||||||||||
Fourth Amended Credit Agreement | EURO Term Loan | |||||||||||||||
Debt Instrument | |||||||||||||||
Term loans payable | € | € 230.0 | ||||||||||||||
Third Amended Credit Agreement | Credit Agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Maximum Credit Agreement Borrowings | $ 2,300,000 | ||||||||||||||
Loss on debt extinguishment | 1,800 | ||||||||||||||
Rhiag | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt Incurred under Line of Credit Facility, Used to Repay Debt Acquired | $ 508,000 | ||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt | $ 550,843 | $ 550,843 | € 488.8 | ||||||||||||
Rhiag | Senior Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt | 519,600 | € 465.0 | |||||||||||||
Accrued interest | 8,000 | € 7.1 | |||||||||||||
Payments of Debt Extinguishment Costs | 23,800 | 21.2 | |||||||||||||
Interest Rate Swap | Rhiag | Senior Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Payments for Derivative Instrument, Financing Activities | $ 4,900 | € 4.4 |
Derivative Instruments and Hedging Activities - Additional Information (Details) $ in Millions |
Jun. 30, 2016
USD ($)
|
---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Net loss included in accumulated other comprehensive income (loss) to be reclassified into interest expense within the next 12 months | $ 2.4 |
Schedule of Cash Flow Hedges (Details) £ in Thousands, CAD in Thousands, $ in Thousands |
Jun. 30, 2016
USD ($)
|
Jun. 30, 2016
GBP (£)
|
Jun. 30, 2016
CAD
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
GBP (£)
|
Dec. 31, 2015
CAD
|
---|---|---|---|---|---|---|---|
Derivative | |||||||
Derivative Liability, Current | $ 709 | $ 1,347 | |||||
Derivative Liability, Noncurrent | 5,715 | ||||||
Interest Rate Swap | US Dollar Notional Amount | |||||||
Derivative | |||||||
Derivative, Notional Amount | 760,000 | 170,000 | |||||
Derivative Liability, Current | 500 | 858 | |||||
Derivative Liability, Noncurrent | 5,715 | ||||||
Interest Rate Swap | US Dollar Notional Amount | 2016 Interest Rate Swaps | |||||||
Derivative | |||||||
Derivative, Notional Amount | 150,000 | $ 440,000 | |||||
Interest Rate Swap | Pound Sterling Notional Amount | |||||||
Derivative | |||||||
Derivative, Notional Amount | £ | £ 50,000 | £ 50,000 | |||||
Derivative Liability, Current | 209 | 465 | |||||
Derivative Liability, Noncurrent | 0 | ||||||
Interest Rate Swap | Canadian Dollar Notional Amount | |||||||
Derivative | |||||||
Derivative, Notional Amount | CAD | CAD 0 | CAD 25,000 | |||||
Derivative Liability, Current | $ 0 | $ 24 |
Fair Value Measurements - Additional Information (Details) $ in Thousands, € in Millions |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
Apr. 14, 2016
EUR (€)
|
Dec. 31, 2015
USD ($)
|
May 09, 2013
USD ($)
|
|
Fair Value Measurements | |||||||
Portion of change in fair value included in earnings related to contingent consideration obligations outstanding at period end | $ (46) | $ (125) | $ (119) | $ (276) | |||
Contingent Consideration Liabilities | |||||||
Fair Value Measurements | |||||||
Portion of change in fair value included in earnings related to contingent consideration obligations outstanding at period end | $ 100 | $ 100 | |||||
Credit Agreement | |||||||
Fair Value Measurements | |||||||
Borrowings under credit agreement, carrying value | 2,000,000 | 2,000,000 | $ 891,100 | ||||
Receivables Securitization Facility | |||||||
Fair Value Measurements | |||||||
Borrowings under receivable securitization facility, carrying value | 93,520 | 93,520 | 63,000 | ||||
Senior Notes | |||||||
Fair Value Measurements | |||||||
Debt instrument, fair value | 587,900 | 587,900 | 567,300 | ||||
Debt instrument, carrying value | 600,000 | 600,000 | 600,000 | $ 600,000 | |||
Euro Notes | |||||||
Fair Value Measurements | |||||||
Debt instrument, fair value | 573,100 | 573,100 | |||||
Debt instrument, carrying value | $ 555,400 | $ 555,400 | € 500 | $ 0 |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value assets measured on recurring basis | $ 33,574 | $ 29,782 |
Fair value liabilities measured on recurring basis | 44,300 | 36,267 |
Cash surrender value of life insurance | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value assets measured on recurring basis | 33,574 | 29,782 |
Contingent consideration liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | 3,134 | 4,584 |
Deferred compensation liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | 34,742 | 30,336 |
Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | 6,424 | 1,347 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value assets measured on recurring basis | 33,574 | 29,782 |
Fair value liabilities measured on recurring basis | 41,166 | 31,683 |
Fair Value, Inputs, Level 2 | Cash surrender value of life insurance | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value assets measured on recurring basis | 33,574 | 29,782 |
Fair Value, Inputs, Level 2 | Deferred compensation liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | 34,742 | 30,336 |
Fair Value, Inputs, Level 2 | Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | 6,424 | 1,347 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | 3,134 | 4,584 |
Fair Value, Inputs, Level 3 | Contingent consideration liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value liabilities measured on recurring basis | $ 3,134 | $ 4,584 |
Changes in Fair Value of Contingent Consideration Obligations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Contingent Consideration Obligations [Roll Forward] | ||||
Beginning balance | $ 3,079 | $ 5,561 | $ 4,584 | $ 7,295 |
Payments | 0 | (538) | (1,667) | (2,205) |
Increase (decrease) in fair value included in earnings | 46 | 125 | 119 | 276 |
Exchange rate effects | 9 | 43 | 98 | (175) |
Ending balance | $ 3,134 | $ 5,191 | $ 3,134 | $ 5,191 |
Future Minimum Lease Commitments (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 97,039 |
2017 | 172,688 |
2018 | 142,782 |
2019 | 114,178 |
2020 | 92,563 |
2021 | 70,136 |
Thereafter | 351,954 |
Future Minimum Lease Payments | $ 1,041,340 |
Income Taxes Income Taxes - Additional Information (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Business Acquisition | ||
Effective income tax rate | 34.80% | 35.20% |
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability | $ 0.3 | |
Rhiag and PGW | ||
Business Acquisition | ||
Deferred Tax Assets, Other | $ 29.6 | |
Deferred Tax Liabilities, Other | $ 136.5 |
Segment and Geographic Information - Additional Information (Details) |
3 Months Ended |
---|---|
Jun. 30, 2016 | |
Segment Reporting Information | |
Number of operating segments | 5 |
Number of reportable segments | 4 |
North America | |
Segment Reporting Information | |
Number of reportable segments | 1 |
Schedule of Financial Performance by Reportable Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Segment Reporting Information | ||||
Revenue | $ 2,450,693 | $ 1,838,070 | $ 4,372,169 | $ 3,611,982 |
Segment EBITDA | 318,900 | 233,021 | 555,511 | 454,336 |
Depreciation and amortization | 57,716 | 31,045 | 90,882 | 61,714 |
North America | ||||
Segment Reporting Information | ||||
Revenue | 1,080,520 | 1,045,151 | 2,168,097 | 2,091,324 |
Segment EBITDA | 163,825 | 138,880 | 311,200 | 288,268 |
Depreciation and amortization | 17,622 | 17,249 | 35,137 | 34,515 |
Europe | ||||
Segment Reporting Information | ||||
Revenue | 824,206 | 509,903 | 1,370,967 | 997,249 |
Segment EBITDA | 89,982 | 53,943 | 147,480 | 100,466 |
Depreciation and amortization | 28,280 | 8,704 | 38,588 | 17,055 |
Specialty | ||||
Segment Reporting Information | ||||
Revenue | 337,066 | 284,330 | 625,379 | 525,552 |
Segment EBITDA | 41,792 | 40,198 | 73,530 | 65,602 |
Depreciation and amortization | 5,283 | 5,092 | 10,626 | 10,144 |
Glass | ||||
Segment Reporting Information | ||||
Revenue | 210,178 | 210,178 | ||
Segment EBITDA | 23,301 | 23,301 | ||
Depreciation and amortization | 6,531 | 6,531 | ||
Intersegment Eliminations | ||||
Segment Reporting Information | ||||
Revenue | (1,277) | (1,314) | (2,452) | (2,143) |
Third Party | North America | ||||
Segment Reporting Information | ||||
Revenue | 1,080,401 | 1,044,779 | 2,167,764 | 2,090,858 |
Third Party | Europe | ||||
Segment Reporting Information | ||||
Revenue | 824,216 | 509,833 | 1,370,967 | 997,179 |
Third Party | Specialty | ||||
Segment Reporting Information | ||||
Revenue | 335,972 | 283,458 | 623,334 | 523,945 |
Third Party | Glass | ||||
Segment Reporting Information | ||||
Revenue | 210,104 | 210,104 | ||
Intersegment | North America | ||||
Segment Reporting Information | ||||
Revenue | 119 | 372 | 333 | 466 |
Intersegment | Europe | ||||
Segment Reporting Information | ||||
Revenue | 10 | 70 | 0 | 70 |
Intersegment | Specialty | ||||
Segment Reporting Information | ||||
Revenue | 1,094 | 872 | 2,045 | 1,607 |
Intersegment | Glass | ||||
Segment Reporting Information | ||||
Revenue | 74 | 74 | ||
Intersegment | Intersegment Eliminations | ||||
Segment Reporting Information | ||||
Revenue | $ (1,277) | $ (1,314) | $ (2,452) | $ (2,143) |
Reconciliation Of Segment EBITDA To Net Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Segment Reporting [Abstract] | ||||
Segment EBITDA | $ 318,900 | $ 233,021 | $ 555,511 | $ 454,336 |
Restructuring and acquisition related expenses | 9,080 | 1,663 | 23,891 | 8,151 |
Business Combination, Adjustment, Inventory | 10,213 | 10,213 | ||
Change in fair value of contingent consideration liabilities | 46 | 125 | 119 | 276 |
Equity in earnings of unconsolidated subsidiaries | 147 | (1,162) | (215) | (3,070) |
Gains on foreign exchange contracts - acquisition related | 0 | 18,342 | 0 | |
EBITDA | 299,708 | 230,071 | 539,415 | 442,839 |
Depreciation and amortization - cost of goods sold | 5,187 | 1,263 | 6,665 | 2,479 |
Depreciation and amortization | 52,529 | 29,782 | 84,217 | 59,235 |
Interest expense, net | 26,381 | 14,622 | 40,973 | 29,528 |
Loss on debt extinguishment | 0 | 0 | 26,650 | 0 |
Provision for income taxes | 74,874 | 64,682 | 132,441 | 124,780 |
Net income | $ 140,737 | $ 119,722 | $ 248,469 | $ 226,817 |
Schedule of Capital Expenditures by Reportable Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Segment Reporting Information | ||||
Capital Expenditures | $ 51,926 | $ 40,667 | $ 102,319 | $ 66,763 |
North America | ||||
Segment Reporting Information | ||||
Capital Expenditures | 19,448 | 14,744 | 42,231 | 30,147 |
Europe | ||||
Segment Reporting Information | ||||
Capital Expenditures | 21,444 | 22,303 | 40,551 | 30,172 |
Specialty | ||||
Segment Reporting Information | ||||
Capital Expenditures | 2,150 | 3,620 | 10,653 | 6,444 |
Glass | ||||
Segment Reporting Information | ||||
Capital Expenditures | $ 8,884 | $ 0 | $ 8,884 | $ 0 |
Schedule of Assets by Reportable Segment (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Segment Reporting Information | ||
Receivables, net | $ 995,153 | $ 590,160 |
Inventories, net | 1,890,536 | 1,556,552 |
Property, Plant and Equipment, net | 1,055,046 | 696,567 |
Other unallocated assets | 4,245,209 | 2,804,558 |
Total Assets | 8,185,944 | 5,647,837 |
North America | ||
Segment Reporting Information | ||
Receivables, net | 331,359 | 314,743 |
Inventories, net | 807,132 | 847,787 |
Property, Plant and Equipment, net | 479,907 | 467,961 |
Europe | ||
Segment Reporting Information | ||
Receivables, net | 444,064 | 215,710 |
Inventories, net | 613,928 | 427,323 |
Property, Plant and Equipment, net | 242,741 | 175,455 |
Specialty | ||
Segment Reporting Information | ||
Receivables, net | 99,871 | 59,707 |
Inventories, net | 305,396 | 281,442 |
Property, Plant and Equipment, net | 58,443 | 53,151 |
Glass | ||
Segment Reporting Information | ||
Receivables, net | 119,859 | 0 |
Inventories, net | 164,080 | 0 |
Property, Plant and Equipment, net | $ 273,955 | $ 0 |
Schedule of Revenue by Geographic Area (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenues from External Customers and Long-Lived Assets | ||||
Revenue | $ 2,450,693 | $ 1,838,070 | $ 4,372,169 | $ 3,611,982 |
United States | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenue | 1,483,840 | 1,228,424 | 2,768,807 | 2,423,369 |
United Kingdom | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenue | 358,266 | 347,064 | 707,942 | 690,671 |
Other countries | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenue | $ 608,587 | $ 262,582 | $ 895,420 | $ 497,942 |
Schedule of Tangible Long-Lived Assets by Geographic Area (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Revenues from External Customers and Long-Lived Assets | ||
Long-lived Assets | $ 1,055,046 | $ 696,567 |
United States | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived Assets | 749,504 | 493,300 |
United Kingdom | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived Assets | 147,556 | 138,546 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived Assets | $ 157,986 | $ 64,721 |
Schedule of Revenue by Product Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenue from External Customers | ||||
Revenue | $ 2,450,693 | $ 1,838,070 | $ 4,372,169 | $ 3,611,982 |
Aftermarket, other new and refurbished products | ||||
Revenue from External Customers | ||||
Revenue | 1,756,334 | 1,296,168 | 3,144,070 | 2,542,639 |
Recycled, remanufactured and related products and services | ||||
Revenue from External Customers | ||||
Revenue | 435,023 | 408,180 | 865,612 | 806,625 |
Other | ||||
Revenue from External Customers | ||||
Revenue | 118,704 | 133,722 | 221,855 | 262,718 |
Glass manufacturing products | ||||
Revenue from External Customers | ||||
Revenue | $ 140,632 | $ 0 | $ 140,632 | $ 0 |
Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Current Assets: | ||||
Cash and equivalents | $ 273,203 | $ 87,397 | $ 143,423 | $ 114,605 |
Receivables, net | 995,153 | 590,160 | ||
Intercompany receivables, net | 0 | 0 | ||
Inventories, net | 1,890,536 | 1,556,552 | ||
Prepaid expenses and other current assets | 139,536 | 106,603 | ||
Total Current Assets | 3,298,428 | 2,340,712 | ||
Property, Plant and Equipment, net | 1,055,046 | 696,567 | ||
Intangible Assets: | ||||
Goodwill | 3,059,488 | 2,319,246 | ||
Other intangibles, net | 630,360 | 215,117 | ||
Investment in Subsidiaries | 0 | 0 | ||
Intercompany Notes Receivable | 0 | 0 | ||
Other Assets | 142,622 | 76,195 | ||
Total Assets | 8,185,944 | 5,647,837 | ||
Current Liabilities: | ||||
Accounts payable | 735,138 | 415,588 | ||
Intercompany payables, net | 0 | 0 | ||
Accrued expenses: | ||||
Accrued payroll-related liabilities | 102,962 | 86,527 | ||
Other accrued expenses | 228,656 | 162,225 | ||
Other current liabilities | 40,794 | 31,596 | ||
Current portion of long-term obligations | 60,832 | 56,034 | ||
Total Current Liabilities | 1,168,382 | 751,970 | ||
Long-Term Obligations, Excluding Current Portion | 3,274,629 | 1,528,668 | ||
Intercompany Notes Payable | 0 | 0 | ||
Deferred Income Taxes | 225,338 | 127,239 | ||
Other Noncurrent Liabilities | 209,956 | 125,278 | ||
Stockholders’ Equity | 3,307,639 | 3,114,682 | ||
Total Liabilities and Stockholders’ Equity | 8,185,944 | 5,647,837 | ||
Consolidation, Eliminations | ||||
Current Assets: | ||||
Cash and equivalents | 0 | 0 | 0 | 0 |
Receivables, net | 0 | 0 | ||
Intercompany receivables, net | (26,088) | (13,547) | ||
Inventories, net | 0 | 0 | ||
Prepaid expenses and other current assets | 0 | 0 | ||
Total Current Assets | (26,088) | (13,547) | ||
Property, Plant and Equipment, net | 0 | 0 | ||
Intangible Assets: | ||||
Goodwill | 0 | 0 | ||
Other intangibles, net | 0 | 0 | ||
Investment in Subsidiaries | (5,316,994) | (3,742,121) | ||
Intercompany Notes Receivable | (1,911,072) | (692,481) | ||
Other Assets | (7,844) | (5,856) | ||
Total Assets | (7,261,998) | (4,454,005) | ||
Current Liabilities: | ||||
Accounts payable | 0 | 0 | ||
Intercompany payables, net | (26,088) | (13,547) | ||
Accrued expenses: | ||||
Accrued payroll-related liabilities | 0 | 0 | ||
Other accrued expenses | 0 | 0 | ||
Other current liabilities | 0 | 0 | ||
Current portion of long-term obligations | 0 | 0 | ||
Total Current Liabilities | (26,088) | (13,547) | ||
Long-Term Obligations, Excluding Current Portion | 0 | 0 | ||
Intercompany Notes Payable | (1,911,072) | (692,481) | ||
Deferred Income Taxes | (7,844) | (5,856) | ||
Other Noncurrent Liabilities | 0 | 0 | ||
Stockholders’ Equity | (5,316,994) | (3,742,121) | ||
Total Liabilities and Stockholders’ Equity | (7,261,998) | (4,454,005) | ||
Parent Company | ||||
Current Assets: | ||||
Cash and equivalents | 52,144 | 17,616 | 45,801 | 14,930 |
Receivables, net | 0 | 0 | ||
Intercompany receivables, net | 14,864 | 3 | ||
Inventories, net | 0 | 0 | ||
Prepaid expenses and other current assets | 2,083 | 15,254 | ||
Total Current Assets | 69,091 | 32,873 | ||
Property, Plant and Equipment, net | 271 | 339 | ||
Intangible Assets: | ||||
Goodwill | 0 | 0 | ||
Other intangibles, net | 0 | 0 | ||
Investment in Subsidiaries | 5,038,195 | 3,456,837 | ||
Intercompany Notes Receivable | 1,130,732 | 630,717 | ||
Other Assets | 41,418 | 35,649 | ||
Total Assets | 6,279,707 | 4,156,415 | ||
Current Liabilities: | ||||
Accounts payable | 1,669 | 681 | ||
Intercompany payables, net | 0 | 0 | ||
Accrued expenses: | ||||
Accrued payroll-related liabilities | 4,726 | 4,395 | ||
Other accrued expenses | 5,085 | 5,399 | ||
Other current liabilities | 283 | 284 | ||
Current portion of long-term obligations | 19,262 | 21,041 | ||
Total Current Liabilities | 31,025 | 31,800 | ||
Long-Term Obligations, Excluding Current Portion | 2,146,730 | 976,353 | ||
Intercompany Notes Payable | 750,000 | 0 | ||
Deferred Income Taxes | 0 | 0 | ||
Other Noncurrent Liabilities | 44,313 | 33,580 | ||
Stockholders’ Equity | 3,307,639 | 3,114,682 | ||
Total Liabilities and Stockholders’ Equity | 6,279,707 | 4,156,415 | ||
Guarantor Subsidiaries | ||||
Current Assets: | ||||
Cash and equivalents | 31,140 | 13,432 | 28,715 | 32,103 |
Receivables, net | 372,413 | 214,502 | ||
Intercompany receivables, net | 11,224 | 0 | ||
Inventories, net | 1,203,556 | 1,060,834 | ||
Prepaid expenses and other current assets | 53,520 | 44,810 | ||
Total Current Assets | 1,671,853 | 1,333,578 | ||
Property, Plant and Equipment, net | 743,265 | 494,658 | ||
Intangible Assets: | ||||
Goodwill | 1,825,033 | 1,640,745 | ||
Other intangibles, net | 161,257 | 141,537 | ||
Investment in Subsidiaries | 278,799 | 285,284 | ||
Intercompany Notes Receivable | 780,340 | 61,764 | ||
Other Assets | 80,687 | 28,184 | ||
Total Assets | 5,541,234 | 3,985,750 | ||
Current Liabilities: | ||||
Accounts payable | 355,545 | 229,519 | ||
Intercompany payables, net | 0 | 13,544 | ||
Accrued expenses: | ||||
Accrued payroll-related liabilities | 48,724 | 48,698 | ||
Other accrued expenses | 90,554 | 80,886 | ||
Other current liabilities | 16,820 | 15,953 | ||
Current portion of long-term obligations | 2,826 | 1,425 | ||
Total Current Liabilities | 514,469 | 390,025 | ||
Long-Term Obligations, Excluding Current Portion | 8,449 | 7,487 | ||
Intercompany Notes Payable | 1,114,430 | 615,488 | ||
Deferred Income Taxes | 111,766 | 113,905 | ||
Other Noncurrent Liabilities | 124,822 | 70,109 | ||
Stockholders’ Equity | 3,667,298 | 2,788,736 | ||
Total Liabilities and Stockholders’ Equity | 5,541,234 | 3,985,750 | ||
Non-Guarantor Subsidiaries | ||||
Current Assets: | ||||
Cash and equivalents | 189,919 | 56,349 | $ 68,907 | $ 67,572 |
Receivables, net | 622,740 | 375,658 | ||
Intercompany receivables, net | 0 | 13,544 | ||
Inventories, net | 686,980 | 495,718 | ||
Prepaid expenses and other current assets | 83,933 | 46,539 | ||
Total Current Assets | 1,583,572 | 987,808 | ||
Property, Plant and Equipment, net | 311,510 | 201,570 | ||
Intangible Assets: | ||||
Goodwill | 1,234,455 | 678,501 | ||
Other intangibles, net | 469,103 | 73,580 | ||
Investment in Subsidiaries | 0 | 0 | ||
Intercompany Notes Receivable | 0 | 0 | ||
Other Assets | 28,361 | 18,218 | ||
Total Assets | 3,627,001 | 1,959,677 | ||
Current Liabilities: | ||||
Accounts payable | 377,924 | 185,388 | ||
Intercompany payables, net | 26,088 | 3 | ||
Accrued expenses: | ||||
Accrued payroll-related liabilities | 49,512 | 33,434 | ||
Other accrued expenses | 133,017 | 75,940 | ||
Other current liabilities | 23,691 | 15,359 | ||
Current portion of long-term obligations | 38,744 | 33,568 | ||
Total Current Liabilities | 648,976 | 343,692 | ||
Long-Term Obligations, Excluding Current Portion | 1,119,450 | 544,828 | ||
Intercompany Notes Payable | 46,642 | 76,993 | ||
Deferred Income Taxes | 121,416 | 19,190 | ||
Other Noncurrent Liabilities | 40,821 | 21,589 | ||
Stockholders’ Equity | 1,649,696 | 953,385 | ||
Total Liabilities and Stockholders’ Equity | $ 3,627,001 | $ 1,959,677 |
Condensed Consolidating Statements of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Condensed Financial Statements, Captions [Line Items] | ||||
Revenue | $ 2,450,693 | $ 1,838,070 | $ 4,372,169 | $ 3,611,982 |
Cost of goods sold | 1,528,746 | 1,114,126 | 2,689,785 | 2,188,559 |
Gross margin | 921,947 | 723,944 | 1,682,384 | 1,423,423 |
Facility and warehouse expenses | 178,670 | 136,379 | 336,275 | 269,036 |
Distribution expenses | 184,331 | 150,039 | 336,674 | 291,753 |
Selling, general and administrative expenses | 254,153 | 205,796 | 472,471 | 409,037 |
Restructuring and acquisition related expenses | 9,080 | 1,663 | 23,891 | 8,151 |
Depreciation and amortization | 52,529 | 29,782 | 84,217 | 59,235 |
Operating income | 243,184 | 200,285 | 428,856 | 386,211 |
Other expense (income): | ||||
Interest expense, net | 26,381 | 14,622 | 40,973 | 29,528 |
Intercompany interest (income) expense, net | 0 | 0 | 0 | 0 |
Loss on debt extinguishment | 0 | 0 | 26,650 | 0 |
Change in fair value of contingent consideration liabilities | 46 | 125 | 119 | 276 |
Gains on foreign exchange contracts - acquisition related | 0 | (18,342) | 0 | |
Other expense (income), net | 1,339 | 97 | (1,550) | 2,016 |
Total other expense, net | 27,720 | 14,719 | 47,731 | 31,544 |
Income before provision for income taxes | 215,464 | 185,566 | 381,125 | 354,667 |
Provision for income taxes | 74,874 | 64,682 | 132,441 | 124,780 |
Equity in earnings of unconsolidated subsidiaries | 147 | (1,162) | (215) | (3,070) |
Income (Loss) from Subsidiaries, Net of Tax | 0 | 0 | 0 | 0 |
Net income | 140,737 | 119,722 | 248,469 | 226,817 |
Consolidation, Eliminations | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenue | (34,171) | (31,215) | (66,499) | (66,154) |
Cost of goods sold | (34,171) | (31,215) | (66,499) | (66,154) |
Gross margin | 0 | 0 | 0 | 0 |
Facility and warehouse expenses | 0 | 0 | 0 | 0 |
Distribution expenses | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | 0 | 0 | 0 | 0 |
Restructuring and acquisition related expenses | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 | 0 |
Other expense (income): | ||||
Interest expense, net | 0 | 0 | 0 | 0 |
Intercompany interest (income) expense, net | 0 | 0 | 0 | 0 |
Loss on debt extinguishment | 0 | |||
Gains on foreign exchange contracts - acquisition related | 0 | |||
Other expense (income), net | 0 | 0 | 0 | 0 |
Total other expense, net | 0 | 0 | 0 | 0 |
Income before provision for income taxes | 0 | 0 | 0 | 0 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Equity in earnings of unconsolidated subsidiaries | 0 | 0 | 0 | 0 |
Income (Loss) from Subsidiaries, Net of Tax | (156,186) | (133,428) | (274,374) | (253,215) |
Net income | (156,186) | (133,428) | (274,374) | (253,215) |
Parent Company | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Cost of goods sold | 0 | 0 | 0 | 0 |
Gross margin | 0 | 0 | 0 | 0 |
Facility and warehouse expenses | 0 | 0 | 0 | 0 |
Distribution expenses | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | 8,887 | 8,761 | 19,266 | 16,392 |
Restructuring and acquisition related expenses | 0 | 0 | 0 | 0 |
Depreciation and amortization | 33 | 39 | 69 | 79 |
Operating income | (8,920) | (8,800) | (19,335) | (16,471) |
Other expense (income): | ||||
Interest expense, net | 17,804 | 12,241 | 29,921 | 24,555 |
Intercompany interest (income) expense, net | (2,355) | (10,378) | (13,032) | (21,201) |
Loss on debt extinguishment | 2,894 | |||
Gains on foreign exchange contracts - acquisition related | (18,342) | |||
Other expense (income), net | 33 | 2 | (78) | 27 |
Total other expense, net | 15,482 | 1,865 | 1,363 | 3,381 |
Income before provision for income taxes | (24,402) | (10,665) | (20,698) | (19,852) |
Provision for income taxes | (9,384) | (4,294) | (7,961) | (8,049) |
Equity in earnings of unconsolidated subsidiaries | 0 | 0 | (795) | 0 |
Income (Loss) from Subsidiaries, Net of Tax | 155,755 | 126,093 | 262,001 | 238,620 |
Net income | 140,737 | 119,722 | 248,469 | 226,817 |
Guarantor Subsidiaries | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenue | 1,530,947 | 1,269,541 | 2,849,114 | 2,495,449 |
Cost of goods sold | 951,356 | 770,026 | 1,746,596 | 1,510,829 |
Gross margin | 579,591 | 499,515 | 1,102,518 | 984,620 |
Facility and warehouse expenses | 118,649 | 100,289 | 233,859 | 198,050 |
Distribution expenses | 118,321 | 102,753 | 222,475 | 198,745 |
Selling, general and administrative expenses | 132,488 | 119,958 | 259,156 | 241,620 |
Restructuring and acquisition related expenses | 7,082 | 1,185 | 11,118 | 7,245 |
Depreciation and amortization | 23,461 | 19,873 | 44,005 | 39,764 |
Operating income | 179,590 | 155,457 | 331,905 | 299,196 |
Other expense (income): | ||||
Interest expense, net | (309) | (172) | (166) | (129) |
Intercompany interest (income) expense, net | 2,376 | 7,056 | 8,966 | 14,315 |
Loss on debt extinguishment | 0 | |||
Gains on foreign exchange contracts - acquisition related | 0 | |||
Other expense (income), net | (284) | (1,106) | (3,084) | (2,841) |
Total other expense, net | 1,783 | 5,778 | 5,716 | 11,345 |
Income before provision for income taxes | 177,807 | 149,679 | 326,189 | 287,851 |
Provision for income taxes | 72,019 | 59,495 | 125,464 | 115,272 |
Equity in earnings of unconsolidated subsidiaries | 347 | 19 | 352 | 30 |
Income (Loss) from Subsidiaries, Net of Tax | 431 | 7,335 | 12,373 | 14,595 |
Net income | 106,566 | 97,538 | 213,450 | 187,204 |
Non-Guarantor Subsidiaries | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenue | 953,917 | 599,744 | 1,589,554 | 1,182,687 |
Cost of goods sold | 611,561 | 375,315 | 1,009,688 | 743,884 |
Gross margin | 342,356 | 224,429 | 579,866 | 438,803 |
Facility and warehouse expenses | 60,021 | 36,090 | 102,416 | 70,986 |
Distribution expenses | 66,010 | 47,286 | 114,199 | 93,008 |
Selling, general and administrative expenses | 112,778 | 77,077 | 194,049 | 151,025 |
Restructuring and acquisition related expenses | 1,998 | 478 | 12,773 | 906 |
Depreciation and amortization | 29,035 | 9,870 | 40,143 | 19,392 |
Operating income | 72,514 | 53,628 | 116,286 | 103,486 |
Other expense (income): | ||||
Interest expense, net | 8,886 | 2,553 | 11,218 | 5,102 |
Intercompany interest (income) expense, net | (21) | 3,322 | 4,066 | 6,886 |
Loss on debt extinguishment | 23,756 | |||
Gains on foreign exchange contracts - acquisition related | 0 | |||
Other expense (income), net | 1,590 | 1,201 | 1,612 | 4,830 |
Total other expense, net | 10,455 | 7,076 | 40,652 | 16,818 |
Income before provision for income taxes | 62,059 | 46,552 | 75,634 | 86,668 |
Provision for income taxes | 12,239 | 9,481 | 14,938 | 17,557 |
Equity in earnings of unconsolidated subsidiaries | (200) | (1,181) | 228 | (3,100) |
Income (Loss) from Subsidiaries, Net of Tax | 0 | 0 | 0 | 0 |
Net income | $ 49,620 | $ 35,890 | $ 60,924 | $ 66,011 |
Condensed Consolidating Statements of Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | $ 140,737 | $ 119,722 | $ 248,469 | $ 226,817 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation | (73,257) | 44,510 | (73,117) | (10,300) |
Net change in unrecognized gains/losses on derivative instruments, net of tax | (3,614) | 918 | (3,182) | 1,201 |
Net change in unrealized gains/losses on pension plan, net of tax | 120 | (21) | 267 | 107 |
Total other comprehensive (loss) income | (76,751) | 45,407 | (76,032) | (8,992) |
Total comprehensive income | 63,986 | 165,129 | 172,437 | 217,825 |
Consolidation, Eliminations | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | (156,186) | (133,428) | (274,374) | (253,215) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation | 88,946 | (57,350) | 94,840 | 9,821 |
Net change in unrecognized gains/losses on derivative instruments, net of tax | (99) | (191) | (195) | (129) |
Net change in unrealized gains/losses on pension plan, net of tax | (120) | 21 | (267) | (107) |
Total other comprehensive (loss) income | 88,727 | (57,520) | 94,378 | 9,585 |
Total comprehensive income | (67,459) | (190,948) | (179,996) | (243,630) |
Parent Company | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 140,737 | 119,722 | 248,469 | 226,817 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation | (73,257) | 44,510 | (73,117) | (10,300) |
Net change in unrecognized gains/losses on derivative instruments, net of tax | (3,614) | 918 | (3,182) | 1,201 |
Net change in unrealized gains/losses on pension plan, net of tax | 120 | (21) | 267 | 107 |
Total other comprehensive (loss) income | (76,751) | 45,407 | (76,032) | (8,992) |
Total comprehensive income | 63,986 | 165,129 | 172,437 | 217,825 |
Guarantor Subsidiaries | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 106,566 | 97,538 | 213,450 | 187,204 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation | (15,116) | 13,134 | (17,971) | (1,238) |
Net change in unrecognized gains/losses on derivative instruments, net of tax | 0 | 0 | 0 | 0 |
Net change in unrealized gains/losses on pension plan, net of tax | 0 | 0 | 0 | 0 |
Total other comprehensive (loss) income | (15,116) | 13,134 | (17,971) | (1,238) |
Total comprehensive income | 91,450 | 110,672 | 195,479 | 185,966 |
Non-Guarantor Subsidiaries | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 49,620 | 35,890 | 60,924 | 66,011 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation | (73,830) | 44,216 | (76,869) | (8,583) |
Net change in unrecognized gains/losses on derivative instruments, net of tax | 99 | 191 | 195 | 129 |
Net change in unrealized gains/losses on pension plan, net of tax | 120 | (21) | 267 | 107 |
Total other comprehensive (loss) income | (73,611) | 44,386 | (76,407) | (8,347) |
Total comprehensive income | $ (23,991) | $ 80,276 | $ (15,483) | $ 57,664 |
Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net cash provided by operating activities | $ 355,230 | $ 282,699 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | $ (51,926) | $ (40,667) | (102,319) | (66,763) | |
Investment and intercompany note activity with subsidiaries | 0 | 0 | |||
Acquisitions, net of cash acquired | (1,268,841) | (37,208) | |||
Proceeds from foreign exchange contracts | 18,342 | 0 | |||
Other investing activities, net | 11,313 | (5,209) | |||
Net cash used in investing activities | (1,341,505) | (109,180) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from exercise of stock options | 4,889 | 3,288 | |||
Excess tax benefit from stock-based payments | 6,685 | 6,737 | |||
Taxes paid related to net share settlements of stock-based compensation awards | (2,281) | (5,243) | |||
Debt issuance costs | (16,171) | 0 | |||
Proceeds from issuance of euro notes | 563,450 | 0 | |||
Borrowings under revolving credit facilities | 1,822,020 | 199,621 | |||
Repayments under revolving credit facilities | (1,012,362) | (294,276) | |||
Borrowings under term loans | 338,478 | 0 | |||
Repayments under term loans | (4,721) | (11,250) | |||
Borrowings under receivables securitization facility | 97,000 | 2,100 | |||
Repayments under receivables securitization facility | (66,480) | (1,758) | |||
Repayments of other long-term debt, net | 7,824 | 42,090 | |||
Payments of other obligations | 1,371 | 2,050 | |||
Repayment of Rhiag Debt and Related payments | (543,347) | 0 | |||
Investment and intercompany note activity with parent | 0 | 0 | |||
Dividends | 0 | 0 | |||
Net cash provided by (used in) financing activities | 1,177,965 | (144,921) | |||
Effect of exchange rate changes on cash and equivalents | (5,884) | 220 | |||
Net (decrease) increase in cash and equivalents | 185,806 | 28,818 | |||
Cash and equivalents, beginning of period | 87,397 | 114,605 | $ 114,605 | ||
Cash and equivalents, end of period | 273,203 | 143,423 | 273,203 | 143,423 | 87,397 |
Consolidation, Eliminations | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net cash provided by operating activities | (148,192) | (116,668) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | 0 | 0 | |||
Investment and intercompany note activity with subsidiaries | 1,327,746 | (30,818) | |||
Acquisitions, net of cash acquired | 0 | 0 | |||
Proceeds from foreign exchange contracts | 0 | ||||
Other investing activities, net | 0 | 0 | |||
Net cash used in investing activities | 1,327,746 | (30,818) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from exercise of stock options | 0 | 0 | |||
Excess tax benefit from stock-based payments | 0 | 0 | |||
Taxes paid related to net share settlements of stock-based compensation awards | 0 | 0 | |||
Debt issuance costs | 0 | ||||
Proceeds from issuance of euro notes | 0 | ||||
Borrowings under revolving credit facilities | 0 | 0 | |||
Repayments under revolving credit facilities | 0 | 0 | |||
Borrowings under term loans | 0 | ||||
Repayments under term loans | 0 | 0 | |||
Borrowings under receivables securitization facility | 0 | 0 | |||
Repayments under receivables securitization facility | 0 | 0 | |||
Repayments of other long-term debt, net | 0 | 0 | |||
Payments of other obligations | 0 | 0 | |||
Repayment of Rhiag Debt and Related payments | 0 | ||||
Investment and intercompany note activity with parent | 1,327,746 | (30,818) | |||
Dividends | 148,192 | 116,668 | |||
Net cash provided by (used in) financing activities | (1,179,554) | 147,486 | |||
Effect of exchange rate changes on cash and equivalents | 0 | 0 | |||
Net (decrease) increase in cash and equivalents | 0 | 0 | |||
Cash and equivalents, beginning of period | 0 | 0 | 0 | ||
Cash and equivalents, end of period | 0 | 0 | 0 | 0 | 0 |
Parent Company | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net cash provided by operating activities | 136,098 | 121,024 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (2) | (3) | |||
Investment and intercompany note activity with subsidiaries | (1,293,298) | 30,818 | |||
Acquisitions, net of cash acquired | 0 | 0 | |||
Proceeds from foreign exchange contracts | 18,342 | ||||
Other investing activities, net | 0 | 0 | |||
Net cash used in investing activities | (1,274,958) | 30,815 | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from exercise of stock options | 4,889 | 3,288 | |||
Excess tax benefit from stock-based payments | 6,685 | 6,737 | |||
Taxes paid related to net share settlements of stock-based compensation awards | (2,281) | (5,243) | |||
Debt issuance costs | (7,100) | ||||
Proceeds from issuance of euro notes | 0 | ||||
Borrowings under revolving credit facilities | 1,204,000 | 132,000 | |||
Repayments under revolving credit facilities | (119,000) | (215,000) | |||
Borrowings under term loans | 89,317 | ||||
Repayments under term loans | (3,122) | (11,250) | |||
Borrowings under receivables securitization facility | 0 | 0 | |||
Repayments under receivables securitization facility | 0 | 0 | |||
Repayments of other long-term debt, net | 0 | 31,500 | |||
Payments of other obligations | 0 | 0 | |||
Repayment of Rhiag Debt and Related payments | 0 | ||||
Investment and intercompany note activity with parent | 0 | 0 | |||
Dividends | 0 | 0 | |||
Net cash provided by (used in) financing activities | 1,173,388 | (120,968) | |||
Effect of exchange rate changes on cash and equivalents | 0 | 0 | |||
Net (decrease) increase in cash and equivalents | 34,528 | 30,871 | |||
Cash and equivalents, beginning of period | 17,616 | 14,930 | 14,930 | ||
Cash and equivalents, end of period | 52,144 | 45,801 | 52,144 | 45,801 | 17,616 |
Guarantor Subsidiaries | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net cash provided by operating activities | 300,978 | 188,713 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (57,742) | (34,791) | |||
Investment and intercompany note activity with subsidiaries | (34,448) | 0 | |||
Acquisitions, net of cash acquired | (661,852) | (6,583) | |||
Proceeds from foreign exchange contracts | 0 | ||||
Other investing activities, net | 400 | 585 | |||
Net cash used in investing activities | (753,642) | (40,789) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from exercise of stock options | 0 | 0 | |||
Excess tax benefit from stock-based payments | 0 | 0 | |||
Taxes paid related to net share settlements of stock-based compensation awards | 0 | 0 | |||
Debt issuance costs | 0 | ||||
Proceeds from issuance of euro notes | 0 | ||||
Borrowings under revolving credit facilities | 0 | 0 | |||
Repayments under revolving credit facilities | 0 | 0 | |||
Borrowings under term loans | 0 | ||||
Repayments under term loans | 0 | 0 | |||
Borrowings under receivables securitization facility | 0 | 0 | |||
Repayments under receivables securitization facility | 0 | 0 | |||
Repayments of other long-term debt, net | 1,657 | 596 | |||
Payments of other obligations | 1,371 | 2,050 | |||
Repayment of Rhiag Debt and Related payments | 0 | ||||
Investment and intercompany note activity with parent | (621,619) | 32,051 | |||
Dividends | (148,192) | (116,668) | |||
Net cash provided by (used in) financing activities | 470,399 | (151,365) | |||
Effect of exchange rate changes on cash and equivalents | (27) | 53 | |||
Net (decrease) increase in cash and equivalents | 17,708 | (3,388) | |||
Cash and equivalents, beginning of period | 13,432 | 32,103 | 32,103 | ||
Cash and equivalents, end of period | 31,140 | 28,715 | 31,140 | 28,715 | 13,432 |
Non-Guarantor Subsidiaries | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net cash provided by operating activities | 66,346 | 89,630 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (44,575) | (31,969) | |||
Investment and intercompany note activity with subsidiaries | 0 | 0 | |||
Acquisitions, net of cash acquired | (606,989) | (30,625) | |||
Proceeds from foreign exchange contracts | 0 | ||||
Other investing activities, net | 10,913 | (5,794) | |||
Net cash used in investing activities | (640,651) | (68,388) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from exercise of stock options | 0 | 0 | |||
Excess tax benefit from stock-based payments | 0 | 0 | |||
Taxes paid related to net share settlements of stock-based compensation awards | 0 | 0 | |||
Debt issuance costs | (9,071) | ||||
Proceeds from issuance of euro notes | 563,450 | ||||
Borrowings under revolving credit facilities | 618,020 | 67,621 | |||
Repayments under revolving credit facilities | (893,362) | (79,276) | |||
Borrowings under term loans | 249,161 | ||||
Repayments under term loans | (1,599) | 0 | |||
Borrowings under receivables securitization facility | 97,000 | 2,100 | |||
Repayments under receivables securitization facility | (66,480) | (1,758) | |||
Repayments of other long-term debt, net | 6,167 | 9,994 | |||
Payments of other obligations | 0 | 0 | |||
Repayment of Rhiag Debt and Related payments | (543,347) | ||||
Investment and intercompany note activity with parent | (706,127) | (1,233) | |||
Dividends | 0 | 0 | |||
Net cash provided by (used in) financing activities | 713,732 | (20,074) | |||
Effect of exchange rate changes on cash and equivalents | (5,857) | 167 | |||
Net (decrease) increase in cash and equivalents | 133,570 | 1,335 | |||
Cash and equivalents, beginning of period | 56,349 | 67,572 | 67,572 | ||
Cash and equivalents, end of period | $ 189,919 | $ 68,907 | $ 189,919 | $ 68,907 | $ 56,349 |
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