10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from              to

Commission File Number: 000-50404

LKQ CORPORATION

(Exact name of registrant as specified in its charter)

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)

Registrant’s telephone number, including area code: (312) 621-1950

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At July 20, 2012, the registrant had issued and outstanding an aggregate of 148,140,688 shares of Common Stock.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Condensed Balance Sheets

(In thousands, except share and per share data)

	June 30, 2012			December 31, 2011
Assets
Current Assets:
Cash and equivalents	$	59,353		$	48,247
Receivables, net		309,454			281,764
Inventory		798,807			736,846
Deferred income taxes		46,596			45,690
Prepaid income taxes		11,466			17,597
Prepaid expenses and other current assets		27,331			19,591
Total Current Assets		1,253,007			1,149,735
Property and Equipment, net		443,565			424,098
Intangible Assets:
Goodwill		1,578,605			1,476,063
Other intangibles, net		105,577			108,910
Other Assets		44,655			40,898
Total Assets	$	3,425,409		$	3,199,704
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	224,276		$	210,875
Accrued expenses:
Accrued payroll-related liabilities		34,798			53,256
Other accrued expenses		80,801			77,769
Income taxes payable		7,755			7,262
Contingent consideration liabilities		38,842			600
Other current liabilities		12,471			18,407
Current portion of long-term obligations		46,379			29,524
Total Current Liabilities		445,322			397,693
Long-Term Obligations, Excluding Current Portion		954,067			926,552
Deferred Income Taxes		88,777			88,796
Contingent Consideration Liabilities		49,195			81,782
Other Noncurrent Liabilities		74,320			60,796
Commitments and Contingencies
Stockholders’ Equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 147,973,454 and 146,948,608 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		1,480			1,470
Additional paid-in capital		928,081			902,782
Retained earnings		893,783			748,794
Accumulated other comprehensive loss		(9,616	)		(8,961	)
Total Stockholders’ Equity		1,813,728			1,644,085
Total Liabilities and Stockholders’ Equity	$	3,425,409		$	3,199,704

See notes to unaudited consolidated condensed financial statements.

2

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Condensed Statements of Income

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenue	$	1,006,531		$	759,684		$	2,038,308		$	1,546,332
Cost of goods sold		584,600			437,448			1,168,994			880,450
Gross margin		421,931			322,236			869,314			665,882
Facility and warehouse expenses		82,192			69,183			167,300			139,001
Distribution expenses		91,926			69,048			183,739			134,859
Selling, general and administrative expenses		121,698			91,395			243,412			181,156
Restructuring and acquisition related expenses		2,195			2,377			2,442			2,423
Depreciation and amortization		15,353			11,747			30,246			22,586
Operating income		108,567			78,486			242,175			185,857
Other expense (income):
Interest expense, net		7,356			4,671			14,723			11,080
Loss on debt extinguishment		—			—			—			5,345
Change in fair value of contingent consideration liabilities		1,240			(1,615	)		(105	)		(1,615	)
Other income, net		(1,228	)		(382	)		(1,739	)		(488	)
Total other expense, net		7,368			2,674			12,879			14,322
Income before provision for income taxes		101,199			75,812			229,296			171,535
Provision for income taxes		37,201			29,106			84,307			66,647
Net income	$	63,998		$	46,706		$	144,989		$	104,888
Earnings per share:
Basic	$	0.43		$	0.32		$	0.98		$	0.72
Diluted	$	0.43		$	0.32		$	0.97		$	0.71

Unaudited Consolidated Condensed Statements of Comprehensive Income

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net income	$	63,998		$	46,706		$	144,989		$	104,888
Other comprehensive income, net of tax:
Net change in unrecognized gains/losses on interest rate swaps, net of tax		(3,341	)		(4,277	)		(2,991	)		(2,164	)
Foreign currency translation		(6,171	)		551			2,336			3,053
Total other comprehensive (loss) income		(9,512	)		(3,726	)		(655	)		889
Total comprehensive income	$	54,486		$	42,980		$	144,334		$	105,777

See notes to unaudited consolidated condensed financial statements.

3

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Condensed Statements of Cash Flows

(In thousands)

	Six Months Ended June 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	144,989		$	104,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		33,446			24,797
Stock-based compensation expense		7,978			6,602
Excess tax benefit from stock-based payments		(7,219	)		(4,053	)
Loss on debt extinguishment		—			5,345
Other		1,369			(504	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Receivables		(22,662	)		(24,769	)
Inventory		(30,763	)		(19,578	)
Prepaid income taxes/income taxes payable		13,728			14,786
Accounts payable		3,802			(4,525	)
Other operating assets and liabilities		(23,656	)		(1,909	)
Net cash provided by operating activities		121,012			101,080
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(41,615	)		(42,540	)
Proceeds from sales of property and equipment		472			162
Cash used in acquisitions, net of cash acquired		(120,315	)		(95,591	)
Net cash used in investing activities		(161,458	)		(137,969	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		10,112			5,109
Excess tax benefit from stock-based payments		7,219			4,053
Debt issuance costs		—			(8,190	)
Borrowings under revolving credit facility		331,342			401,753
Repayments under revolving credit facility		(484,851	)		(74,328	)
Borrowings under term loans		200,000			250,000
Repayments under term loans		(8,750	)		(594,214	)
Payments of other obligations		(3,611	)		(716	)
Net cash provided by (used in) financing activities		51,461			(16,533	)
Effect of exchange rate changes on cash and equivalents		91			(11	)
Net increase (decrease) in cash and equivalents		11,106			(53,433	)
Cash and equivalents, beginning of period		48,247			95,689
Cash and equivalents, end of period	$	59,353		$	42,256
Supplemental disclosure of cash paid for:
Income taxes, net of refunds	$	70,698		$	51,238
Interest		13,484			11,140
Supplemental disclosure of noncash investing and financing activities:
Purchase price payable, including notes issued in connection with business acquisitions	$	7,936		$	4,375
Contingent consideration liabilities		5,540			600
Property and equipment acquired under capital leases		3,301			—
Property and equipment purchases not yet paid		2,861			1,673

See notes to unaudited consolidated condensed financial statements.

4

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Condensed Statements of Stockholders’ Equity

(In thousands)

	Common Stock				Additional Paid- In Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	Shares Issued		Amount
BALANCE, December 31, 2011		146,949	$	1,470	$	902,782		$	748,794	$	(8,961	)	$	1,644,085
Net income		—		—		—			144,989		—			144,989
Other comprehensive loss		—		—		—			—		(655	)		(655	)
Restricted stock units vested		86		1		(1	)		—		—			—
Stock-based compensation expense		—		—		7,978			—		—			7,978
Exercise of stock options		938		9		10,103			—		—			10,112
Excess tax benefit from stock-based payments		—		—		7,219			—		—			7,219
BALANCE, June 30, 2012		147,973	$	1,480	$	928,081		$	893,783	$	(9,616	)	$	1,813,728

See notes to unaudited consolidated condensed financial statements.

5

LKQ CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1. 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 “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 consolidated condensed 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 have been condensed or omitted. These unaudited consolidated condensed financial statements reflect, in the opinion of management, all material adjustments (which include only normal 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, 2011 filed with the SEC on February 27, 2012.

Note 2. Financial Statement Information

Revenue Recognition

The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped 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 $24.3 million and $22.8 million at June 30, 2012 and December 31, 2011, 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 Consolidated Condensed Statements of Income and are shown as a current liability on our Unaudited Consolidated Condensed Balance Sheets until remitted. Revenue from the sale of separately-priced extended warranty contracts is reported as deferred revenue and recognized ratably over the term of the contracts or three years in the case of lifetime warranties.

Receivables

We recorded a reserve for uncollectible accounts of approximately $7.4 million and $8.3 million at June 30, 2012 and December 31, 2011, respectively.

Inventory

Inventory consists of the following (in thousands):

	June 30, 2012		December 31, 2011
Aftermarket and refurbished products	$	462,472	$	445,787
Salvage and remanufactured products		336,335		291,059
	$	798,807	$	736,846

Intangibles

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 relationships and covenants not to compete.

6

The change in the carrying amount of goodwill during the six months ended June 30, 2012 is as follows (in thousands):

Balance as of January 1, 2012	$	1,476,063
Business acquisitions and adjustments to previously recorded goodwill		98,907
Exchange rate effects		3,635
Balance as of June 30, 2012	$	1,578,605

The components of other intangibles are as follows (in thousands):

	June 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	116,493	$	(18,892	)	$	97,601	$	115,954	$	(16,305	)	$	99,649
Customer relationships		10,052		(4,364	)		5,688		10,050		(3,065	)		6,985
Covenants not to compete		3,426		(1,138	)		2,288		3,194		(918	)		2,276
	$	129,971	$	(24,394	)	$	105,577	$	129,198	$	(20,288	)	$	108,910

Trade names and trademarks are amortized over a useful life ranging from 10 to 30 years on a straight-line basis. Customer relationships are amortized over the expected period to be benefitted (5 to 10 years) on either a straight-line or accelerated basis. Covenants not to compete are amortized over the lives of the respective agreements, which range from one to five years, on a straight-line basis. Amortization expense for intangibles was approximately $4.2 million and $3.4 million during the six month periods ended June 30, 2012 and 2011, respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2016 is $8.6 million, $7.8 million, $7.1 million, $6.4 million and $5.7 million, respectively.

Depreciation Expense

Included in Cost of Goods Sold on the Unaudited Consolidated Condensed Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations and our distribution centers.

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 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 during the six month period ended June 30, 2012 were as follows (in thousands):

Balance as of January 1, 2012	$	7,347
Warranty expense		11,230
Warranty claims		(12,059	)
Business acquisitions		645
Balance as of June 30, 2012	$	7,163

For an additional fee, we also sell extended warranty contracts for certain mechanical products. The expense related to extended warranty claims is recognized when the claim is made.

Recent Accounting Pronouncements

Effective January 1, 2012, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income” and ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” These ASUs eliminate the option to present the components of other comprehensive income in the statement of changes in stockholders’ equity. Instead, entities have the option to present the components of net income, the components of other comprehensive income and total comprehensive income in a single continuous statement or in two separate but consecutive statements. The amendments did not change the items reported in other comprehensive income or when an item of other comprehensive income is reclassified to net income. As a result, the adoption of this guidance did not affect our financial position, results of operations or cash flows. We have presented the components of net income, the components of other comprehensive income and total comprehensive income in two separate but consecutive statements.

7

Effective January 1, 2012, we adopted FASB ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update clarifies existing fair value measurement requirements, amends existing guidance primarily related to fair value measurements for financial instruments, and requires enhanced disclosures on fair value measurements. The additional disclosures are specific to Level 3 fair value measurements, transfers between Level 1 and Level 2 of the fair value hierarchy, financial instruments not measured at fair value and use of an asset measured or disclosed at fair value differing from its highest and best use. We applied the provisions of this ASU to our fair value measurements during the current year, however, the adoption did not have a material effect on our financial statements. Refer to Note 6, “Fair Value Measurements,” for the required disclosures.

Note 3. Equity Incentive Plans

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”). In the first quarter of 2012, our Board of Directors approved an amendment to the Equity Incentive Plan, which was subsequently approved by our stockholders at our 2012 Annual Meeting in May 2012, to explicitly allow participation of our non-employee directors, to allow issuance of shares of our common stock to non-employee directors in lieu of cash compensation, to increase the number of shares available for issuance under the Equity Incentive Plan by 544,417, and to make certain updating amendments.

In connection with the amendment to the Equity Incentive Plan, our Board of Directors approved the termination of the Stock Option and Compensation Plan for Non-Employee Directors (the “Director Plan”), other than with respect to any options currently outstanding under the Director Plan. We had not issued options under the Director Plan since 2007. The increase in the number of shares available for issuance under the Equity Incentive Plan as approved by our Board of Directors in the first quarter of 2012 represented the remaining number of shares available for issuance under the Director Plan as of December 31, 2011.

Most of our RSUs, stock options, and restricted stock vest over a period of five years. Vesting of the awards is subject to a continued service condition. Each RSU converts into one share of LKQ common stock on the applicable vesting date. Shares of restricted stock may not be sold, pledged or otherwise transferred until they vest. Stock options expire ten years from the date they are granted. We expect to issue new shares of common stock to cover past and future equity grants.

A summary of transactions in our stock-based compensation plans for the six months ended June 30, 2012 is as follows:

	Shares Available For Grant			RSUs					Stock Options					Restricted Stock
				Number Outstanding			Weighted Average Grant Date Fair Value		Number Outstanding			Weighted Average Exercise Price		Number Outstanding			Weighted Average Grant Date Fair Value
Balance, January 1, 2012		7,876,185			716,791		$	23.59		6,539,046		$	12.93		106,000		$	18.98
Granted		(752,205	)		752,205			31.72		—			—		—			—
Exercised		—			—			—		(938,064	)		10.78		—			—
Vested		—			(86,782	)		24.14		—			—		(43,000	)		19.07
Cancelled		112,764			(34,419	)		28.20		(78,345	)		16.29		—			—
Balance, June 30, 2012		7,236,744			1,347,795		$	27.97		5,522,637		$	13.25		63,000		$	18.92

The fair value of RSUs is based on the market price of LKQ stock on the date of issuance. When estimating forfeitures, we consider voluntary and involuntary termination behavior as well as analysis of historical forfeitures. For valuing RSUs granted during the six month period ended June 30, 2012, we used a forfeiture rate of 8% for grants to employees and a forfeiture rate of 0% for grants to directors and executive officers. The fair value of RSUs that vested during the six months ended June 30, 2012 was approximately $2.8 million.

8

We recognize compensation expense on a straight-line basis over the requisite service period of the award. The components of pre-tax stock-based compensation expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
RSUs	$	2,019	$	891	$	4,083	$	1,769
Stock options		1,721		2,057		3,442		4,147
Restricted stock		228		228		453		453
Stock issued to non-employee directors		—		84		—		233
Total stock-based compensation expense	$	3,968	$	3,260	$	7,978	$	6,602

The following table sets forth the classification of total stock-based compensation expense included in the accompanying Unaudited Consolidated Condensed Statements of Income (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Cost of goods sold	$	96		$	79		$	199		$	168
Facility and warehouse expenses		609			623			1,303			1,234
Selling, general and administrative expenses		3,263			2,558			6,476			5,200
		3,968			3,260			7,978			6,602
Income tax benefit		(1,548	)		(1,252	)		(3,112	)		(2,555	)
Total stock-based compensation expense, net of tax	$	2,420		$	2,008		$	4,866		$	4,047

We have not capitalized any stock-based compensation costs during either of the six month periods ended June 30, 2012 or 2011.

As of June 30, 2012, unrecognized compensation expense related to unvested RSUs, stock options and restricted stock is expected to be recognized as follows (in thousands):

	RSUs		Stock Options		Restricted Stock		Total
Remainder of 2012	$	4,094	$	3,441	$	460	$	7,995
2013		8,332		4,722		208		13,262
2014		8,268		3,116		139		11,523
2015		8,063		78		—		8,141
2016		4,498		—		—		4,498
2017		143		—		—		143
Total unrecognized compensation expense	$	33,398	$	11,357	$	807	$	45,562

9

Note 4. Long-Term Obligations

Long-Term Obligations consist of the following (in thousands):

	June 30, 2012			December 31, 2011
Senior secured debt financing facility:
Term loans payable	$	431,875		$	240,625
Revolving credit facility		508,288			660,730
Notes payable through October 2018 at weighted average interest rates of 1.9% and 2.0%, respectively		46,378			38,338
Other long-term debt at weighted average interest rates of 2.4% and 3.2%, respectively		13,905			16,383
		1,000,446			956,076
Less current maturities		(46,379	)		(29,524	)
	$	954,067		$	926,552

On March 25, 2011, we entered into a credit agreement with the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America N.A., as syndication agent, RBS Citizens, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBS Citizens, N.A. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners, which was amended on September 30, 2011 (as amended, the “Credit Agreement”). The Credit Agreement provides for borrowings up to $1.4 billion, consisting of (1) a $950 million revolving credit facility (the “Revolving Credit Facility”), (2) a $250 million term loan facility (the “Term Loan Facility”) and (3) an additional term loan facility of up to $200 million (“New Term Loan Facility”). Under the Revolving Credit Facility, we are permitted to draw up to the U.S. dollar equivalent of $500 million in Canadian dollars, pounds sterling, euros, and other agreed-upon currencies. The Credit Agreement also provides for (a) the issuance of up to $125 million of letters of credit under the Revolving Credit Facility in agreed-upon currencies, (b) the issuance of up to $25 million of swing line loans under the Revolving Credit Facility, and (c) the opportunity to increase the amount of the Revolving Credit Facility or obtain incremental term loans up to $400 million. Outstanding letters of credit and swing line loans are taken into account when determining availability under the Revolving Credit Facility. In January 2012, we borrowed the full $200 million available under the New Term Loan Facility, which we used to pay down a portion of our Revolving Credit Facility borrowings.

Amounts under the Revolving Credit Facility are due and payable upon maturity of the Credit Agreement in March 2016. Amounts under the Term Loan Facility are due and payable in quarterly installments, with the annual payments equal to 5% of the original principal amount in the first and second years, 10% of the original principal amount in the third and fourth years, and 15% of the original principal amount in the fifth year. The remaining balance under the Term Loan Facility is due and payable on the maturity date of the Credit Agreement. Amounts under the New Term Loan Facility are due and payable in quarterly installments beginning after March 31, 2012, with the annual payments equal to 5% of the original principal amount in the first and second years and 10% of the original principal amount in the third and fourth years. The remaining balance under the New Term Loan Facility is due and payable on the maturity date of the Credit Agreement. We are required to prepay the Term Loan Facility and the New Term Loan Facility 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.

The Credit Agreement contains customary representations and warranties, and contains customary covenants that provide limitations and conditions on our ability to, among other things (i) incur indebtedness, (ii) incur liens, (iii) enter into any merger, consolidation, amalgamation, or otherwise liquidate or dissolve the Company, (iv) dispose of certain property, (v) make dividend payments, repurchase our stock, or enter into derivative contracts indexed to the value of our common stock, (vi) make certain investments, including the acquisition of assets constituting a business or the stock of a business designated as a non-guarantor, (vii) make optional prepayments of subordinated debt, (viii) enter into sale-leaseback transactions, (ix) issue preferred stock, redeemable stock, convertible stock or other similar equity instruments, and (x) enter into hedge agreements for speculative purposes or otherwise not in the ordinary course of business. The Credit Agreement also contains financial and affirmative covenants under which we (i) may not exceed a maximum net leverage ratio of 3.00 to 1.00, except in connection with permitted acquisitions with aggregate consideration in excess of $200 million during any period of four consecutive fiscal quarters in which case the maximum net leverage ratio may increase to 3.50 to 1.00 for the subsequent four fiscal quarters and (ii) are required to maintain a minimum interest coverage ratio of 3.00 to 1.00. We were in compliance with all restrictive covenants under the Credit Agreement as of June 30, 2012 and December 31, 2011.

10

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 total 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 5, “Derivative Instruments and Hedging Activities,” the weighted average interest rates on borrowings outstanding against the Credit Agreement at June 30, 2012 and December 31, 2011 were 2.57% and 2.59%, respectively. We also pay a commitment fee based on the average daily unused amount of the Revolving Credit Facility. The commitment fee is subject to change in increments of 0.05% depending on our total leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an applicable rate based on our total leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly in arrears. Borrowings under the Credit Agreement totaled $940.2 million and $901.4 million at June 30, 2012 and December 31, 2011, respectively, of which $25.6 million and $12.5 million were classified as current maturities, respectively. As of June 30, 2012, there were $47.1 million of outstanding letters of credit. The amounts available under the Revolving Credit Facility are reduced by the amounts outstanding under letters of credit, and thus availability on the Revolving Credit Facility at June 30, 2012 was $394.6 million.

During the six months ended June 30, 2011, we incurred a loss on debt extinguishment of $5.3 million related to the write off of the unamortized balance of capitalized debt issuance costs under our previous debt agreement. The amount of the write off excludes debt issuance cost amortization, which is recorded as a component of interest expense. We incurred $8.2 million in fees related to the execution of the Credit Agreement during the six month period ended June 30, 2011. These fees were capitalized within Other Assets on our Unaudited Consolidated Condensed Balance Sheets and are amortized over the term of the agreement.

Note 5. 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. For certain of our foreign operations, we also use short-term foreign currency forward contracts to manage our exposure to variability in foreign currency denominated transactions. With our acquisition of a precious metal extraction business during the second quarter of 2012 (see Note 9, “Business Combinations), we began entering into certain commodity forward contracts to manage our exposure to changing metals prices. We do not hold or issue derivatives for trading purposes.

Interest Rate Swaps

At June 30, 2012, 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 minimizing 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 have received and will receive payment at a variable rate of interest based on the London InterBank Offered Rate (“LIBOR”) or the Canadian Dealer Offered Rate (“CDOR”) for the respective currency of each interest rate swap agreement’s notional amount. The interest rate swap agreements qualify as cash flow hedges, and we have elected to apply hedge accounting for these swap agreements. As a result, the effective portion of changes in the fair value of the interest rate swap agreements is recorded in Accumulated Other Comprehensive 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.

The following table summarizes the terms of our interest rate swap agreements as of June 30, 2012:

Notional Amount	Effective Date	Maturity Date	Fixed Interest Rate*
USD $250,000,000	October 14, 2010	October 14, 2015	3.06%
USD $100,000,000	April 14, 2011	October 14, 2013	2.61%
USD $60,000,000	November 30, 2011	October 31, 2016	2.70%
USD $60,000,000	November 30, 2011	October 31, 2016	2.69%
USD $50,000,000	December 30, 2011	December 30, 2016	2.69%
GBP £50,000,000	November 30, 2011	October 30, 2016	2.86%
CAD $25,000,000	December 30, 2011	March 24, 2016	2.92%

* Includes applicable margin of 1.50% per annum on LIBOR or CDOR-based debt in effect as of June 30, 2012 under the Credit Agreement.

As of June 30, 2012 and December 31, 2011, the fair market value of the interest rate swap contracts was a liability of $15.3 million and $10.6 million, respectively, included in Other Noncurrent Liabilities on our Unaudited Consolidated Condensed Balance Sheets.

11

Changes in Accumulated Other Comprehensive Income (Loss) related to our interest rate swap agreements were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Beginning balance	$	(6,540	)	$	4,289		$	(6,890	)	$	2,176
Pretax loss		(6,718	)		(7,908	)		(7,709	)		(6,427	)
Income tax benefit		2,333			2,847			2,722			2,314
Reversal of unrealized loss		1,636			1,224			3,112			3,270
Reversal of deferred income taxes		(592	)		(440	)		(1,116	)		(1,177	)
Hedge ineffectiveness		—			—			—			(225	)
Income tax benefit		—			—			—			81
Ending balance	$	(9,881	)	$	12		$	(9,881	)	$	12

In connection with the execution of our credit agreement on March 25, 2011 as discussed in Note 4, “Long-Term Obligations,” we temporarily experienced differences in critical terms between the interest rate swaps and the underlying debt. As a result, we incurred a loss of $0.2 million related to hedge ineffectiveness for the six months ended June 30, 2011. Beginning on April 14, 2011, we have held, and expect to continue to hold through the maturity of the respective interest rate swap agreements, at least the notional amount of each agreement in the respective variable-rate debt, such that future ineffectiveness will be immaterial and the swaps will continue to be highly effective in hedging our variable rate debt.

As of June 30, 2012, we estimate that $3.9 million of derivative losses (net of tax) included in Accumulated Other Comprehensive Loss will be reclassified into interest expense within the next 12 months.

Foreign Currency Forward Contracts

In order to manage the risk of changes in exchange rates associated with certain foreign currency transactions in our European operations, such as our purchases of inventory denominated in a currency other than the pound sterling, we have entered into short-term foreign currency forward contracts. These contracts are adjusted to fair value each balance sheet date. The notional amount and fair value of these contracts at June 30, 2012 and December 31, 2011, along with the effect on our results of operations for the three and six month periods ended June 30, 2012, were immaterial. We did not hold any foreign currency forward contracts during the six month period ended June 30, 2011.

Commodity Forward Contracts

In order to manage the risk of changes in prices for certain precious metals, including gold, silver, platinum and palladium, we have entered into short-term commodity forward contracts. These contracts are adjusted to fair value each balance sheet date. The notional amount and fair value of our commodity forward contracts at June 30, 2012 and the effect on our results of operations for the three and six month periods ended June 30, 2012 were immaterial.

Note 6. 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 there were no significant changes in valuation techniques or inputs during the six months ended June 30, 2012. 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.

12

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, 2012 and December 31, 2011 (in thousands):

	Balance as of June 30, 2012		Fair Value Measurements as of June 30, 2012
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	17,597	$	—	$	17,597	$	—
Total Assets	$	17,597	$	—	$	17,597	$	—
Liabilities:
Contingent consideration liabilities	$	88,037	$	—	$	—	$	88,037
Deferred compensation liabilities		17,706		—		17,706		—
Interest rate swaps		15,268		—		15,268		—
Foreign currency forwards		105		—		105		—
Commodity forwards		83		—		83		—
Total Liabilities	$	121,199	$	—	$	33,162	$	88,037
	Balance as of December 31, 2011		Fair Value Measurements as of December 31, 2011
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	13,413	$	—	$	13,413	$	—
Total Assets	$	13,413	$	—	$	13,413	$	—
Liabilities:
Contingent consideration liabilities	$	82,382	$	—	$	—	$	82,382
Deferred compensation liabilities		14,071		—		14,071		—
Interest rate swaps		10,576		—		10,576		—
Total Liabilities	$	107,029	$	—	$	24,647	$	82,382

The cash surrender value of life insurance and deferred compensation liabilities are included in Other Assets and Other Noncurrent Liabilities, respectively, on our Unaudited Consolidated Condensed Balance Sheets. The contingent consideration liabilities are classified as separate line items in both current and noncurrent liabilities on our Unaudited Consolidated Condensed Balance Sheets based on the expected timing of the related payments.

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 the interest rate swaps 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. The fair value of our foreign currency forward contracts is estimated based on quoted foreign exchange rates, forward foreign exchange rates and interest rates. The fair value of our commodity forward contracts is estimated based on quoted commodity rates, forward commodity rates and interest rates.

Our contingent consideration liabilities are related to our business acquisitions as further described in Note 9, “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 unobservable inputs include internally-developed assumptions of the probabilities of achieving specified targets, which are used to determine the resulting cash flows and the applicable discount rate. Our Level 3 fair value measurements are established and updated quarterly by our corporate accounting department using current information about these key assumptions, with the input and oversight of our operational and executive management teams. We evaluate the performance of the business during the period compared to our previous expectations, along with any changes to our future projections, and update the estimated cash flows accordingly. In addition, we consider changes to our cost of capital and changes to the probability of achieving the earnout payment targets when updating our discount rate on a quarterly basis.

13

The significant unobservable inputs used in the fair value measurements of our Level 3 contingent consideration liabilities were as follows:

Unobservable Input	June 30, 2012 Weighted Average			December 31, 2011 Weighted Average
Probability of achieving payout targets		79.8	%		78.1	%
Discount rate		6.5	%		3.0	%

A significant decrease in the assessed probabilities of achieving the targets or a significant increase in the discount rate, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the liabilities are recorded in Change in Fair Value of Contingent Consideration Liabilities within Other Expense (Income) on our Unaudited Consolidated Condensed Statements of Income.

Changes in the fair value of our contingent consideration obligations for the three and six month periods ended June 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Beginning balance	$	82,909		$	2,600		$	82,382		$	2,000
Contingent consideration liabilities recorded for business acquisitions		5,433			—			5,540			600
Payments		—			—			(600	)		—
Loss (gain) included in earnings		1,240			(1,615	)		(105	)		(1,615	)
Exchange rate effects		(1,545	)		—			820			—
Ending balance	$	88,037		$	985		$	88,037		$	985

The loss and gain included in earnings for the three and six month periods ended June 30, 2012, respectively, are related to contingent consideration obligations outstanding as of June 30, 2012. The gain included in earnings for the three and six months ended June 30, 2011 is related to a contingent consideration obligation that was settled prior to June 30, 2012. The changes in the fair value of contingent consideration obligations during the respective periods in 2012 and 2011 are a result of the quarterly assessment of the fair value inputs. The gain during the six month period ended June 30, 2012 also includes the impact related to the adoption of FASB ASU No. 2011-04 as described in Note 2, “Financial Statement Information” (which adoption did not have a material impact).

Financial Assets and Liabilities Not Measured at Fair Value

Our debt is reflected on the Unaudited Consolidated Condensed Balance Sheets at cost. Based on current market conditions as of June 30, 2012, the fair value of our credit facility borrowings (see Note 4, “Long-Term Obligations”) reasonably approximated the carrying value of $940 million. This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant inputs observable in the market including interest rates on recent financing transactions to entities with a credit rating similar to ours. We estimated the fair value of our credit facility borrowings by calculating the upfront cash payment a market participant would require to assume our obligations. The upfront cash payment, excluding any issuance costs, is the amount that a market participant would be able to lend at June 30, 2012 to an entity with a credit rating similar to ours and achieve sufficient cash inflows to cover the scheduled cash outflows under our credit facility.

Note 7. Commitments and Contingencies

Operating Leases

We are obligated under noncancelable operating leases for corporate office space, warehouse and distribution facilities, trucks and certain equipment.

14

The future minimum lease commitments under these leases at June 30, 2012 are as follows (in thousands):

Six months ending December 31, 2012	$	45,082
Years ending December 31:
2013		84,992
2014		73,623
2015		64,206
2016		49,962
2017		38,322
Thereafter		98,691
Future Minimum Lease Payments	$	454,878

Litigation and Related Contingencies

We are a plaintiff in a class action lawsuit against several aftermarket product suppliers. In January 2012, we reached a settlement agreement with certain of the defendants, under which we recognized a gain of $8.3 million. Additionally, in April 2012, the class action lawsuit against certain other defendants was settled, under which we recognized a gain of $8.4 million. These gains were recorded as a reduction of Cost of Goods Sold during the six months ended June 30, 2012. The class action is still pending against two defendants, the results of which are not expected to be material to our results of operations or cash flows. If there is a class settlement with (or a favorable judgment entered against) each of the remaining defendants, we will recognize the gains from such settlement or judgment when substantially all uncertainties regarding their timing and amount are resolved and realization is assured.

We also 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.

Note 8. Earnings Per Share

The following chart sets forth the computation of earnings per share (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income	$	63,998	$	46,706	$	144,989	$	104,888
Denominator for basic earnings per share—Weighted-average shares outstanding		147,645		145,917		147,392		145,765
Effect of dilutive securities:
RSUs		220		80		219		103
Stock options		2,186		2,107		2,238		2,113
Restricted stock		25		27		24		26
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding		150,076		148,131		149,873		148,007
Earnings per share, basic	$	0.43	$	0.32	$	0.98	$	0.72
Earnings per share, diluted	$	0.43	$	0.32	$	0.97	$	0.71

15

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 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Antidilutive securities:
Stock options		—		1,554		—		1,567

Note 9. Business Combinations

During the six months ended June 30, 2012, we made 11 acquisitions in North America, which included seven wholesale businesses and four self service retail operations. Our wholesale acquisitions included the purchase of a precious metals refining and reclamation business, which we acquired with the goal of improving the profitability of our scrap recovery process related to the precious metals we extract from our salvage vehicle parts such as catalytic converters. Our other 2012 acquisitions enabled us to expand our geographic presence and enter new markets.

Total acquisition date fair value of the consideration for the acquisitions during the six months ended June 30, 2012 was $129.9 million, composed of $116.5 million of cash (net of cash acquired), $7.9 million of notes payable and $5.5 million of contingent payments to former owners. The contingent consideration arrangements made in connection with our 2012 acquisitions have a maximum potential payout of $6.5 million.

During the six months ended June 30, 2012, we recorded $98.9 million of goodwill related to these acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2011 acquisitions. Approximately $76.1 million of the $98.9 million of goodwill recorded is expected to be deductible for income tax purposes. In the period between the acquisition dates and June 30, 2012, our 2012 acquisitions generated $22.9 million of revenue and $2.2 million of operating income.

On October 3, 2011, LKQ Corporation, LKQ Euro Limited (“LKQ Euro”), a subsidiary of LKQ Corporation, and Draco Limited (“Draco”) entered into an Agreement for the Sale and Purchase of Shares of Euro Car Parts Holdings Limited (the “Sale and Purchase Agreement”). Under the terms of the Sale and Purchase Agreement, effective October 1, 2011, LKQ Euro acquired all of the shares in the capital of Euro Car Parts Holdings Limited (“ECP”), an automotive aftermarket products distributor in the United Kingdom, from Draco and the other shareholders of ECP. With the acquisition of ECP, we expanded our geographic presence beyond North America into the European market. Our acquisition of ECP established our Wholesale – Europe operating segment. Total acquisition date fair value of the consideration for the ECP acquisition was £261.6 million ($403.7 million), composed of £190.3 million ($293.7 million) of cash (net of cash acquired), £18.4 million ($28.3 million) of notes payable, £2.7 million ($4.1 million) of other purchase price obligations (non-interest bearing) and a contingent payment to the former owners of ECP. Pursuant to the contingent payment terms, if certain annual performance targets are met by ECP, we will be obligated to pay between £22 million and £25 million and between £23 million and £30 million for the years ending December 31, 2012 and 2013, respectively. We assessed the acquisition date fair value of these contingent payments to be £50.2 million ($77.5 million at the exchange rate on October 3, 2011). Refer to Note 6, “Fair Value Measurements” for information on changes to the fair value of our contingent consideration liabilities during each of the three and six month periods ended June 30, 2011 and 2012.

We recorded goodwill of $337.0 million for the ECP acquisition, which will not be deductible for income tax purposes.

In addition to our acquisition of ECP, we made 20 acquisitions in North America in 2011 (12 wholesale businesses, five recycled heavy-duty truck products businesses and three self service retail operations). Our acquisitions included the purchase of two engine remanufacturers, which expanded our presence in the remanufacturing industry that we entered in 2010. Additionally, our acquisition of an automotive heating and cooling component distributor supplements our expansion into the automotive heating and cooling aftermarket products market. Our North American wholesale business acquisitions also included the purchase of the U.S. vehicle refinish paint distribution business of Akzo Nobel Automotive and Aerospace Coatings (the “Akzo Nobel paint business”), which allowed us to increase our paint and related product offerings and expand our geographic presence in the automotive paint market. Our other 2011 acquisitions enabled us to expand our geographic presence and enter new markets.

Total acquisition date fair value of the consideration for these 20 acquisitions was $207.3 million, composed of $193.2 million of cash (net of cash acquired), $5.9 million of notes payable, $4.5 million of other purchase price obligations (non-interest bearing) and $3.7 million of contingent payments to former owners. In conjunction with the acquisition of the Akzo Nobel paint business on May 26, 2011, we entered into a wholesaler agreement under which we became an authorized distributor of Akzo Nobel products in the acquired markets. Included in this agreement is a requirement to make an additional payment to Akzo Nobel in the event that our purchases of Akzo Nobel products do not meet specified thresholds from June 1, 2011 to May 31, 2014. This contingent payment will be calculated as the difference between our actual purchases and the targeted purchase levels outlined in the agreement for the specified period with a maximum payment of $21.0 million. The contingent consideration liability recorded in 2011 also includes two additional arrangements that have a maximum potential payout of $4.6 million. The acquisition date fair value of these contingent consideration agreements is immaterial.

16

During the year ended December 31, 2011, we recorded $105.2 million of goodwill related to these 20 acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2010 acquisitions. Of this amount, approximately $88.3 million is expected to be deductible for income tax purposes.

Our acquisitions are accounted for under the purchase method of accounting and are included in our unaudited consolidated condensed 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, 2012 and the last two quarters of 2011 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain of the inventories 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.

The purchase price allocations for the acquisitions completed during the six months ended June 30, 2012 and the year ended December 31, 2011 are as follows (in thousands):

	Six Months Ended June 30, 2012 (Preliminary)			Year Ended December 31, 2011
				ECP (Preliminary)			Other Acquisitions (Preliminary)			Total (Preliminary)
Receivables	$	4,989		$	54,225		$	23,538		$	77,763
Receivable reserves		(505	)		(3,832	)		(1,121	)		(4,953	)
Inventory		30,109			93,835			59,846			153,681
Prepaid expenses and other current assets		258			3,189			2,820			6,009
Property and equipment		7,779			41,830			10,614			52,444
Goodwill		98,907			337,031			105,177			442,208
Other intangibles		479			39,583			7,683			47,266
Other assets		102			13			9,420			9,433
Deferred income taxes		(657	)		(13,218	)		7,235			(5,983	)
Current liabilities assumed		(11,535	)		(135,390	)		(17,257	)		(152,647	)
Debt assumed		—			(13,564	)		—			(13,564	)
Other noncurrent liabilities assumed		—			—			(619	)		(619	)
Contingent consideration liabilities		(5,540	)		(77,539	)		(3,700	)		(81,239	)
Other purchase price obligations		—			(4,136	)		(4,510	)		(8,646	)
Notes issued		(7,936	)		(28,302	)		(5,917	)		(34,219	)
Cash used in acquisitions, net of cash acquired	$	116,450		$	293,725		$	193,209		$	486,934

The primary reason for our acquisitions made during the six months ended June 30, 2012 and the year ended December 31, 2011 was to leverage our strategy of becoming a one-stop provider for alternative vehicle replacement products. These acquisitions enabled us to expand our market presence, widen our product offerings and enter new markets. When we identify potential acquisitions, we attempt to target companies with a leading market share, an experienced management team and workforce that provide a fit with our existing operations and strong cash flows. In many cases, acquiring companies with these characteristics can result in purchase prices that include a significant amount of goodwill.

Most notably, our acquisition of ECP in 2011 marks our entry into the European automotive aftermarket business, which provides an opportunity to us as that market has historically had a low penetration of alternative collision parts. Additionally, ECP is a leading distributor of alternative automotive products reaching most major markets in the U.K., with a developed distribution network, experienced management team, and established workforce. These factors contributed to the $337 million of goodwill recognized related to this acquisition.

17

The following pro forma summary presents the effect of the businesses acquired during the first six months of 2012 as though the businesses had been acquired as of January 1, 2011 and the businesses acquired during the year ended December 31, 2011 as though they had been acquired as of January 1, 2010. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue, as reported	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
Revenue of purchased businesses for the period prior to acquisition:
ECP		—		134,921		—		265,498
Other acquisitions		25,573		93,193		64,337		194,741
Pro forma revenue	$	1,032,104	$	987,798	$	2,102,645	$	2,006,571
Net income, as reported	$	63,998	$	46,706	$	144,989	$	104,888
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments:
ECP		—		6,019		—		10,952
Other acquisitions		1,335		4,658		4,469		9,999
Pro forma net income	$	65,333	$	57,383	$	149,458	$	125,839
Earnings per share-basic, as reported	$	0.43	$	0.32	$	0.98	$	0.72
Effect of purchased businesses for the period prior to acquisition:
ECP		—		0.04		—		0.08
Other acquisitions		0.01		0.03		0.03		0.07
Pro forma earnings per share-basic (a)	$	0.44	$	0.39	$	1.01	$	0.86
Earnings per share-diluted, as reported	$	0.43	$	0.32	$	0.97	$	0.71
Effect of purchased businesses for the period prior to acquisition:
ECP		—		0.04		—		0.07
Other acquisitions		0.01		0.03		0.03		0.07
Pro forma earnings per share-diluted (a)	$	0.44	$	0.39	$	1.00	$	0.85

(a) 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 net realizable value, adjustments to depreciation on acquired property and equipment, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. These pro forma results are not necessarily indicative either of what would have occurred if the acquisitions had been in effect for the period presented or of future results.

Note 10. Restructuring and Acquisition Related Expenses

Refurbished Bumper and Wheel Restructuring

In the second quarter of 2012, we initiated a restructuring plan to improve the operational efficiency of our refurbished product operations and to reduce the cost structure of the related refurbished bumper and wheel product lines. As part of the restructuring plan, we are consolidating certain of our bumper and wheel refurbishing operations, with a focus on increasing output at the remaining operations to improve economies of scale. Restructuring costs include the write off of disposed assets, severance costs for termination of overlapping headcount, costs to move equipment and inventory, and excess facility costs. These costs are expensed as incurred, when the costs meet the criteria to be accrued, or, in the case of non-performing lease reserves, at the cease-use date of the facility. For the three and six months ended June 30, 2012, we incurred $1.1 million related to this restructuring plan. We are in the process of finalizing our restructuring plan, but currently anticipate we will incur up to an additional $0.5 million of expense to complete our plan in the second half of 2012.

18

Akzo Nobel Paint Business Integration

With our acquisition of the Akzo Nobel paint business, we completed certain restructuring activities to integrate the acquired paint distribution locations into our existing business. Our restructuring plan included the closure of duplicate facilities, elimination of overlapping delivery routes and termination of employees in connection with the consolidation of the overlapping facilities and delivery routes. During the three and six month periods ended June 30, 2011, we incurred $2.1 million in charges primarily related to excess facility costs, which were expensed at the cease-use date for the facilities. While we substantially completed the integration activities related to the Akzo Nobel paint business acquisition in 2011, we may record adjustments to the excess facility reserves if we determine revisions are required to the underlying assumptions.

Other Acquisition Integration Plans

During the three and six month periods ended June 30, 2012, we incurred $1.1 million and $1.3 million, respectively, of restructuring and acquisition related expenses related to certain of our 2011 and 2012 acquisitions. Our integration activities included the closure of duplicate facilities, termination of employees in connection with the consolidation of overlapping facilities with our existing business, moving expenses, and other third party services directly related to our acquisitions. These integration activities were substantially completed as of June 30, 2012.

During the three and six month periods ended June 30, 2011, we incurred $0.3 million related the integration plan for our 2010 acquisition of Cross Canada. Our restructuring plan included the integration of Cross Canada into our existing Canadian operations, as well as the transition of certain corporate functions to our corporate headquarters and our field support center in Nashville. The integration plan related to the Cross Canada acquisition was substantially completed in 2011.

Note 11. 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, 2012 was 36.8% compared with 38.9% for the comparable prior year period. The effective income tax rate for the six months ended June 30, 2012 reflects the larger proportion of pretax income generated in lower rate jurisdictions, primarily as a result of the expansion of our international operations in the fourth quarter of 2011 through our acquisition of ECP.

Note 12. Segment and Geographic Information

We have four operating segments: Wholesale – North America; Wholesale – Europe; Self Service; and Heavy-Duty Truck. Our operations in North America, which include our Wholesale – North America, Self Service and Heavy-Duty Truck operating segments, are aggregated into one reportable segment because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our Wholesale – Europe operating segment, formed with our acquisition of ECP effective October 1, 2011, marks our entry into the European automotive aftermarket business, and is presented as a separate reportable segment. Although the Wholesale – Europe operating segment shares many of the characteristics of our North American operations, including types of products offered, distribution methods, and procurement, we have provided separate financial information as we believe this data would be beneficial to users in understanding our results. Therefore, we present our reportable segments on a geographic basis.

19

The following table presents our financial performance, including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and depreciation and amortization by reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
North America	$	841,335	$	759,684	$	1,712,419	$	1,546,332
Europe		165,196		—		325,889		—
Total revenue	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
EBITDA
North America	$	109,687	$	93,354	$	241,875	$	212,757
Europe		16,057		—		35,590		—
Total EBITDA	$	125,744	$	93,354	$	277,465	$	212,757
Depreciation and Amortization
North America	$	14,771	$	12,871	$	28,773	$	24,797
Europe		2,418		—		4,673		—
Total depreciation and amortization	$	17,189	$	12,871	$	33,446	$	24,797

EBITDA during the three and six months ended June 30, 2012 for our North American segment is inclusive of gains of $8.4 million and $16.7 million, respectively, resulting from lawsuit settlements with certain of our aftermarket product suppliers as discussed in Note 7, “Commitments and Contingencies.” Included within EBITDA of our European segment is a loss of $1.1 million and a gain of $0.2 million for the three and six month periods ended June 30, 2012, respectively, for the change in fair value of contingent consideration liabilities related to our ECP acquisition. Refer to Note 6, “Fair Value Measurements,” for further information on these changes in fair value of the contingent consideration obligations recorded in earnings during the periods.

The table below provides a reconciliation from EBITDA to Net Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
EBITDA	$	125,744	$	93,354	$	277,465	$	212,757
Depreciation and amortization		17,189		12,871		33,446		24,797
Interest expense, net		7,356		4,671		14,723		11,080
Loss on debt extinguishment		—		—		—		5,345
Provision for income taxes		37,201		29,106		84,307		66,647
Net income	$	63,998	$	46,706	$	144,989	$	104,888

The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is 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 excludes depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.

20

The following table presents capital expenditures, which includes additions to property and equipment, by reportable segment (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Capital Expenditures
North America	$	16,372	$	24,447	$	34,506	$	42,540
Europe		3,914		—		7,109		—
	$	20,286	$	24,447	$	41,615	$	42,540

The following table presents assets by reportable segment (in thousands):

	June 30, 2012		December 31, 2011
Receivables, net
North America	$	249,407	$	230,871
Europe		60,047		50,893
Total receivables, net		309,454		281,764
Inventory
North America		670,032		636,145
Europe		128,775		100,701
Total inventory		798,807		736,846
Property and Equipment, net
North America		393,038		380,282
Europe		50,527		43,816
Total property and equipment, net		443,565		424,098
Other unallocated assets		1,873,583		1,756,996
Total assets	$	3,425,409	$	3,199,704

We report net trade receivables, inventories, and net property 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 income taxes.

Our operations are primarily conducted in the U.S. Our European operations, which we started with the acquisition of ECP in the fourth quarter of 2011, are located in the U.K. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, and other alternative parts operations in Guatemala and Costa Rica.

21

The following table sets forth our revenue by geographic area (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
United States	$	789,346	$	716,086	$	1,610,311	$	1,455,412
United Kingdom		165,196		—		325,889		—
Other countries		51,989		43,598		102,108		90,920
	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332

The following table sets forth our tangible long-lived assets by geographic area (in thousands):

	June 30, 2012		December 31, 2011
Long-lived Assets
United States	$	372,978	$	360,961
United Kingdom		50,527		43,816
Other countries		20,060		19,321
	$	443,565	$	424,098

The following table sets forth our revenue by product category (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Aftermarket, other new and refurbished products	$	547,912	$	356,202	$	1,113,256	$	737,318
Recycled, remanufactured and related products and services		323,669		269,700		649,373		545,482
Other		134,950		133,782		275,679		263,532
	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332

All of the product categories include revenue from our North American reportable segment, while our European segment, which is composed of ECP, an automotive aftermarket products distributor, generates revenue only from the sale of aftermarket 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. With our acquisition of a precious metals refining and reclamation business in the second quarter of 2012, revenue from other sources also includes the sales of precious metals harvested from various components, including certain of our salvage vehicle parts.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We provide replacement parts, components and systems needed to repair vehicles (cars and trucks). Buyers of vehicle replacement products have the option to purchase from primarily five sources: new products produced by original equipment manufacturers (“OEMs”), which are commonly known as OEM products; new products produced by companies other than the OEMs, which are sometimes referred to as “aftermarket” products; recycled products originally produced by OEMs; used products that have been refurbished; and used products that have been remanufactured.

We distribute a variety of products to collision and mechanical repair shops, including aftermarket collision and mechanical products, recycled collision and mechanical products, refurbished collision replacement products such as wheels, bumper covers and lights, and remanufactured engines. Collectively, we refer to our products as alternative parts. We are the nation’s largest provider of alternative vehicle collision replacement products, and a leading provider of alternative vehicle mechanical replacement products. Our sales, processing, and distribution facilities reach most major markets in the U.S. and Canada. We expanded our operations effective October 1, 2011 with our acquisition of Euro Car Parts Holdings Limited (“ECP”), the largest distributor of automotive aftermarket products in the United Kingdom. In addition to our foregoing wholesale operations, we operate self service retail facilities that sell recycled automotive products. We also sell recycled heavy-duty truck products and used heavy-duty trucks. We have organized our businesses into four operating segments: Wholesale—North America; Wholesale—Europe; Self Service; and Heavy-Duty Truck. We aggregate our North American operating segments (Wholesale—North America, Self Service and Heavy-Duty Truck) into one reportable segment, resulting in two reportable segments: North America and Europe.

Our revenue, cost of goods sold and operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control. Please refer to the factors discussed in Forward-Looking Statements below. Due to these factors and others, which may be unknown to us at this time, our operating results in future periods can be expected to fluctuate. Accordingly, our historical results of operations may not be indicative of future performance.

Acquisitions

Since our inception in 1998 we have pursued a growth strategy through both organic growth and acquisitions. We have pursued acquisitions that we believe will help drive profitability, cash flow and stockholder value. Our principal focus for acquisitions is companies that will expand our geographic presence and our ability to provide a wider choice of alternative vehicle replacement products to our customers.

During the six months ended June 30, 2012, we made 11 acquisitions in North America, which included seven wholesale businesses and four self service retail operations. Our wholesale acquisitions included the purchase of a precious metals refining and reclamation business, which we acquired with the goal of improving the profitability of our scrap recovery process related to the precious metals we extract from our salvage vehicle parts such as catalytic converters. Our other 2012 acquisitions enabled us to expand our geographic presence and enter new markets. We expect to make additional acquisitions in 2012 as we continue to expand our integrated distribution network offering a broad range of alternative parts.

Effective October 1, 2011, we acquired ECP, which marks our entry into the European automotive aftermarket business. As of June 30, 2012, ECP operated out of approximately 110 branches, supported by nine regional hubs and a national distribution center from which multiple deliveries are made each day. ECP’s product offerings are primarily focused on automotive aftermarket mechanical products, many of which are sourced from the same suppliers that provide products to the OEMs. The expansion of our geographic presence beyond North America into the European market offers an opportunity to us as that market has historically had a low penetration of alternative collision parts.

In addition to our acquisition of ECP, we made 20 acquisitions in North America in 2011 (12 wholesale businesses, five recycled heavy-duty truck products businesses and three self service retail operations). Our acquisitions included the purchase of two engine remanufacturers, which expanded our presence in the remanufacturing industry that we entered in 2010. Additionally, our acquisition of an automotive heating and cooling component distributor supplements our expansion into the automotive heating and cooling aftermarket products market. Our North American wholesale business acquisitions also included the purchase of the U.S. vehicle refinish paint distribution business of Akzo Nobel Automotive and Aerospace Coatings, which allowed us to increase our paint and related product offerings and expand our geographic presence in the automotive paint market. Our other 2011 acquisitions enabled us to expand our geographic presence and enter new markets.

Sources of Revenue

We report our revenue in three categories: (i) aftermarket, other new and refurbished products, (ii) recycled, remanufactured and related products and services, and (iii) other.

23

Our revenue from the sale of vehicle replacement products and related services includes sales of (i) aftermarket, other new and refurbished products and (ii) recycled, remanufactured and related products and services. During the six months ended June 30, 2012, sales of vehicle replacement products and services represented approximately 86% of our consolidated sales. Of these sales, approximately 63% was derived from the sales of aftermarket, other new and refurbished products, while 37% was composed of recycled and remanufactured products and services sales.

We sell the majority of our vehicle replacement products to collision and mechanical repair shops. Our vehicle replacement products include engines, transmissions, front-ends, doors, trunk lids, bumper covers, hoods, fenders, grilles, valances, wheels, head lamps and tail lamps. For an additional fee, we sell extended warranty contracts for certain mechanical products. These contracts cover the cost of parts and labor and are sold for periods of six months, one year, two years or a non-transferable lifetime warranty. We defer the revenue from such contracts and recognize it ratably over the term of the contracts or three years in the case of lifetime warranties. The demand for our products and services is influenced by several factors, including the number of vehicles in operation, the number of miles being driven, the frequency and severity of vehicle accidents, the age profile of vehicles in accidents, availability and pricing of new OEM parts, seasonal weather patterns and local weather conditions. Additionally, automobile insurers exert significant influence over collision repair shops as to how an insured vehicle is repaired and the cost level of the products used in the repair process. Accordingly, we consider automobile insurers to be key demand drivers of our products. While they are not our direct customers, we do provide insurance carriers services in an effort to promote the increased usage of alternative replacement products in the repair process. Such services include the review of vehicle repair order estimates, direct quotation services to insurance company adjusters and an aftermarket parts quality and service assurance program. We neither charge a fee to the insurance carriers for these services nor adjust our pricing of products for our customers when we perform these services for insurance carriers.

There is no standard price for many of our products, but rather a pricing structure that varies from day to day based upon such factors as product availability, quality, demand, new OEM product prices, the age of the vehicle from which the part was obtained and competitor pricing.

For the six months ended June 30, 2012, revenue from other sources represented approximately 14% of our consolidated sales. These other sources include scrap sales and sales of aluminum ingots and sows. We derive scrap metal from several sources, including vehicles that have been used in both our wholesale and self service recycling operations and from OEMs and other entities that contract with us to dismantle and scrap certain vehicles (which we refer to as “crush only” vehicles). With our acquisition of a precious metals refining and reclamation business in the second quarter of 2012, we also generate revenue from the sales of precious metals harvested from various components, including certain of our salvage vehicle parts. Other revenue will vary from period to period based on fluctuations in commodity prices and the volume of materials sold.

Cost of Goods Sold

Our cost of goods sold for aftermarket products includes the price we pay for the parts, freight, and overhead costs including labor, fuel expense, and facility and machinery costs related to the purchasing, warehousing and distribution of our inventory. Our aftermarket products are acquired from a number of vendors. Our cost of goods sold for refurbished products includes the price we pay for inventory, freight, and costs to refurbish the parts, including direct and indirect labor, facility costs including rent and utilities, machinery and equipment costs including equipment rental, repairs and maintenance, depreciation and other overhead related to refurbishing operations.

Our cost of goods sold for recycled products includes the price we pay for the salvage vehicle and, where applicable, auction, storage, and towing fees. Prices for salvage vehicles may be impacted by a variety of factors, including the number of buyers competing to purchase the vehicles, the demand and pricing trends for used vehicles, the number of vehicles designated as “total losses” by insurance companies, the production level of new vehicles (which provides the source from which salvage vehicles ultimately come), and the status of laws regulating bidders or exporters of salvage vehicles. Due to trends relating to these factors, we have seen the prices we pay for salvage vehicles increase on average over the past three years. Our cost of goods sold also includes labor and other costs we incur to acquire and dismantle such vehicles. Our labor and labor-related costs related to acquisition and dismantling account for approximately 8% of our cost of goods sold for vehicles we dismantle. The acquisition and dismantling of salvage vehicles is a manual process and, as a result, energy costs are not material. Our cost of goods sold for remanufactured products includes the price we pay for cores, freight, costs to remanufacture the products, including direct and indirect labor, rent, depreciation and other overhead related to remanufacturing operations.

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 record the estimated warranty costs at the time of sale using historical warranty claims information to project future warranty claims activity and related expenses. We also sell separately priced extended warranty contracts for certain mechanical products. The expense related to extended warranty claims is recognized when the claim is made.

24

Expenses

Our facility and warehouse expenses primarily include our costs to operate our aftermarket warehouses, wholesale and heavy-duty truck salvage yards and self service retail facilities. These costs include labor for plant management and facility and warehouse personnel and related incentive compensation and employee benefits, rent, other facility expenses such as utilities, property insurance, and taxes, and repairs and maintenance costs related to our facilities and equipment. The costs included in facility and warehouse expenses do not relate to inventory processing or conversion activities and, as such, are classified below the gross margin line on our Unaudited Consolidated Condensed Statements of Income.

Our distribution expenses primarily include our costs to prepare and deliver our products to our customers. Included in our distribution expense category are labor costs for drivers, fuel, third party freight costs, local delivery and transfer truck leases or rentals, vehicle repairs and maintenance, supplies and insurance.

Our selling and marketing expenses primarily include salary, commission and other incentive compensation expenses for sales personnel, advertising, promotion and marketing costs, telephone and other communication expenses, credit card fees and bad debt expense. Personnel costs account for approximately 80% of our selling and marketing expenses. Most of our product sales personnel are paid on a commission basis. The number and quality of our sales force is critical to our ability to respond to our customers’ needs and increase our sales volume. Our objective is to continually evaluate our sales force, develop and implement training programs, and utilize appropriate measurements to assess our selling effectiveness.

Our general and administrative expenses primarily include the costs of our corporate offices and field support center that provide corporate and field management, treasury, accounting, legal, payroll, business development, human resources and information systems functions. These costs include wages and benefits for corporate, regional and administrative personnel, stock-based compensation and other incentive compensation, accounting, legal and other professional fees, IT system support and maintenance expenses, and telephone and other communication costs.

Seasonality

Our operating results are subject to quarterly variations based on a variety of factors, influenced primarily by seasonal changes in weather patterns. During the winter months, we tend to have higher demand for our products because there are more weather related accidents, which generate repairs. In addition, the cost of salvage vehicles tends to be lower as the weather related accidents also generate a larger supply of total loss vehicles.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which we filed with the Securities and Exchange Commission on February 27, 2012, includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue or expenses during the six months ended June 30, 2012.

Recently Issued Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 2, “Financial Statement Information” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information related to the new accounting standards that are effective for interim and annual periods beginning in 2012.

Financial Information by Geographic Area

See Note 12, “Segment and Geographic Information” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information related to our revenue and long-lived assets by geographic region.

25

Results of Operations—Consolidated

The following table sets forth statement of operations data as a percentage of total revenue for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Statements of Income Data:
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold		58.1	%		57.6	%		57.4	%		56.9	%
Gross margin		41.9	%		42.4	%		42.6	%		43.1	%
Facility and warehouse expenses		8.2	%		9.1	%		8.2	%		9.0	%
Distribution expenses		9.1	%		9.1	%		9.0	%		8.7	%
Selling, general and administrative expenses		12.1	%		12.0	%		11.9	%		11.7	%
Restructuring and acquisition related expenses		0.2	%		0.3	%		0.1	%		0.2	%
Depreciation and amortization		1.5	%		1.5	%		1.5	%		1.5	%
Operating income		10.8	%		10.3	%		11.9	%		12.0	%
Other expense, net		0.7	%		0.4	%		0.6	%		0.9	%
Income before provision for income taxes		10.1	%		10.0	%		11.2	%		11.1	%
Provision for income taxes		3.7	%		3.8	%		4.1	%		4.3	%
Net income		6.4	%		6.1	%		7.1	%		6.8	%

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Revenue. Our revenue increased 32.5% to $1.0 billion for the three month period ended June 30, 2012 from $759.7 million for the comparable period of 2011. The increase in revenue was primarily due to 29% acquisition related revenue growth and 3.7% organic growth, offset by 0.3% unfavorable impact from foreign exchange in our Canadian operations. Acquisition related revenue growth for the quarter totaled $220.4 million, which included $157.8 million from our fourth quarter 2011 acquisition of ECP, a U.K.-based automotive aftermarket product distributor. ECP also generated $7.4 million in revenue growth from new branch openings since the acquisition, which we include in our organic revenue growth. Our organic revenue from the sale of recycled and remanufactured products grew 8.5% primarily as a result of higher volumes, which resulted from higher inventory purchases that contributed to a greater volume of parts available for sale. Organic growth in aftermarket, other new and refurbished revenue of 4.6% was driven by higher sales volumes. However, we believe that the sales volumes in the second quarter of 2012 continued to be affected by the milder winter weather conditions noted in the first quarter of 2012, as fewer and less severe accidents resulted in a reduction in the backlog of insurance claims activity carrying over into April. The organic growth in parts and services revenue was partially offset by an 8.2% reduction in other revenue primarily due to lower revenue from our furnace operations as a result of declining scrap prices.

Cost of Goods Sold. Our cost of goods sold increased to 58.1% of revenue in the three month period ended June 30, 2012 from 57.6% of revenue in the comparable period of 2011. Our acquisition of ECP, which generates lower gross margins than our North American business because of a greater weighting on lower margin mechanical products, increased our cost of goods sold as a percentage of revenue by 0.4%. In addition, we experienced gross margin compression in the second quarter of 2012 as scrap prices decreased compared to the prior year quarter while we continued to pay higher prices for vehicles primarily in our self service business, resulting in cost of goods sold increasing by 0.8% of revenue. These increases in our cost of goods sold were partially offset by a gain on a lawsuit settlement with certain of our aftermarket product suppliers of $8.4 million, which reduced cost of goods sold by 0.8% of revenue. Refer to Note 7, “Commitments and Contingencies” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on the lawsuit settlement.

Facility and Warehouse Expenses. As a percentage of revenue, facility and warehouse expenses for the three month period ended June 30, 2012 decreased to 8.2% of revenue compared to 9.1% for the comparable period of 2011. Lower facility and warehouse expense in our European operations contributed 0.7% of the decrease as a percentage of revenue. The branch locations in the U.K. are typically smaller and less costly than the warehouse locations in North America since the majority of the inventory is stored in the national distribution center in the U.K., which supplies the branch locations daily. In the North American locations, most of the inventory is stored on site rather than in regional or national distribution centers. The cost of the national distribution center in the U.K. is capitalized into inventory and expensed through cost of goods sold. This classification contributes to the relatively lower gross margin in our European operations as discussed in Cost of Goods Sold above. In our North American operations, our facility and warehouse costs decreased by 0.2% of revenue, primarily due to lower compensation costs.

Distribution Expenses. As a percentage of revenue, distribution expenses for the second quarter of 2012 remained flat with the second quarter of 2011 at 9.1% of revenue. Our European operations increased distribution expenses by 0.2% of revenue, which was offset by a reduction in distribution costs in our North American operations. Our European operations, which generate a greater

26

proportion of revenue from sales to mechanical repair shops compared to our North American operations, incur relatively higher delivery expenses as garage customers demand faster delivery times than our North American collision repair customers. In our North American operations, fuel expense decreased to 1.4% of revenue from 1.6% of revenue due to lower prices compared to the prior year quarter.

Selling, General and Administrative Expenses. As a percentage of revenue, our selling, general and administrative expenses increased to 12.1% for the three month period ended June 30, 2012 from 12.0% for the comparable prior year period. The increase was primarily driven by 0.5% higher personnel expenditures in our European operations, which has a relatively larger sales force compared to our North American operations. In our North American operations, improved leveraging of our selling workforce resulted in 0.2% lower expense compared to the prior year period, as we were able to leverage our sales personnel to generate greater revenue growth. Our general and administrative personnel expenditures also declined by 0.2% of revenue as we continued to leverage our corporate workforce expenditures in periods of rising total revenue.

Restructuring and Acquisition Related Expenses. During the three months ended June 30, 2012, we incurred $2.2 million of restructuring and acquisition related expenses, compared to $2.4 million for the prior year quarter. In the second quarter of 2012, we initiated a restructuring plan to improve the operational efficiency of our refurbished product operations and to reduce the cost structure of the related refurbished bumper and wheel product lines. We incurred $1.1 million of expense as a result of the implementation of this plan, which included the write off of disposed assets, severance costs for termination of overlapping headcount, costs to move equipment and inventory, and excess facility costs. During the three months ended June 30, 2012, we also incurred $1.1 million of expense related to the integration of certain of our 2011 and 2012 acquisitions into our existing business. Restructuring and acquisition related expenses during the quarter ended June 30, 2011 included integration activities related to our purchase of the U.S. vehicle refinish paint distribution business of Akzo Nobel and our 2010 acquisition of Cross Canada. See Note 10, “Restructuring and Acquisition Related Expenses” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our restructuring and integration plans.

Depreciation and Amortization. As a percentage of revenue, depreciation and amortization expense was 1.5% for each of the three month periods ended June 30, 2012 and 2011. Higher expense in 2012 resulting from our increased levels of property and equipment and higher levels of intangible assets as a result of business acquisitions was offset by continued leveraging of our existing facilities to support organic and acquisition related revenue growth.

Other Expense, Net. Total other expense, net increased to $7.4 million for the three month period ended June 30, 2012 from $2.7 million for the comparable prior year quarter. During the three months ended June 30, 2012, interest expense increased by $2.3 million compared to the prior year period. Our average outstanding credit facility borrowings increased to $870 million for the second quarter of 2012 from $555 million in the prior year period, primarily due to additional borrowings to finance our acquisition of ECP in the fourth quarter of 2011. The effect of our higher average debt levels was partially offset by a reduction in our average effective interest rate on bank borrowings to 3.2% from 3.4% during the second quarter of 2011, resulting from lower interest rates caused by a reduction of the applicable margin on LIBOR and CDOR-based borrowings combined with the impact of lower fixed interest rates under our outstanding interest rate swaps in the second quarter of 2012 compared to the second quarter of 2011. During the three month period ended June 30, 2011, we recorded adjustments to the fair value of our contingent payment liabilities resulting in expense of $1.2 million, while in the prior year quarter, the adjustments to the fair value of our contingent payment liabilities resulted in a gain of $1.6 million. Adjustments to our contingent consideration liabilities may cause variability in our results of operations, as changes in the assumptions used to measure the fair value of the liabilities may result in net gains or losses from period to period.

Provision for Income Taxes. Our effective income tax rate was 36.8% and 38.4% for the three month periods ended June 30, 2012 and 2011, respectively. Our international operations, which we expanded in the fourth quarter of 2011 with the ECP acquisition, contributed to a lower effective tax rate as a larger proportion of our pretax income was generated in lower rate jurisdictions.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Revenue. Our revenue increased 31.8% to $2.0 billion for the six month period ended June 30, 2012 from $1.5 billion for the comparable period of 2011. The increase in revenue was primarily due to 28.5% acquisition related revenue growth and 3.5% organic growth, offset by 0.2% unfavorable impact from foreign exchange in our Canadian operations. Acquisition related revenue growth for the first half of 2012 totaled $440.8 million, which included $315.9 million from our fourth quarter 2011 acquisition of ECP. ECP also generated $10.0 million in revenue growth from new branch openings since the acquisition, which we include in our organic revenue growth. Our organic revenue from the sale of recycled and remanufactured products grew 8.5% primarily as a result of higher volumes, which resulted from higher inventory purchases that contributed to a greater volume of parts available for sale. Our organic revenue growth in aftermarket, other new and refurbished products of 2.3% for the six months ended June 30, 2012 reflects the impact of milder winter weather conditions. Sales volumes in the first quarter and into the beginning of the second quarter of 2012 remained flat with the prior year period as the milder winter weather contributed to fewer and less severe vehicle accidents, resulting in lower insurance claims activity. The revenue effect from the decrease in insurance claims activity in the first quarter and into April was more than offset by shifts in product mix toward products with a higher average sales price combined with higher sales volumes later in the second quarter. The organic growth in parts and services revenue was partially offset by a 3.4% reduction in other revenue primarily due to lower revenue from our furnace operations as a result of declining scrap prices.

27

Cost of Goods Sold. Our cost of goods sold increased to 57.4% of revenue in the six month period ended June 30, 2012 from 56.9% of revenue in the comparable period of 2011. Our acquisition of ECP increased our cost of goods sold as a percentage of revenue by 0.5% as a result of factors described in the discussion of our three month comparative results above. In addition, we experienced gross margin compression in the first half of 2012 as scrap prices decreased compared to the prior year period while we continued to pay higher prices for vehicles primarily in our self service business, resulting in cost of goods sold increasing by 0.8% of revenue. These increases in our cost of goods sold were partially offset by a gain on lawsuit settlements with certain of our aftermarket product suppliers totaling $16.7 million, which reduced cost of goods sold by 0.8% of revenue. Refer to Note 7, “Commitments and Contingencies” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on the lawsuit settlements.

Facility and Warehouse Expenses. As a percentage of revenue, facility and warehouse expenses for the six month period ended June 30, 2012 decreased to 8.2% from 9.0% for the comparable period of 2011. Lower facility and warehouse expense in our European operations contributed 0.7% of the decrease as a percentage of revenue due to factors described in our discussion of the three month comparative results above.

Distribution Expenses. As a percentage of revenue, distribution expenses for the six months ended June 30, 2012 increased to 9.0% compared to 8.7% during the comparable prior year period. Distribution expenses in the first six months of 2012 reflect an increase of 0.2% over the prior year period due to relatively higher distribution costs as a percentage of revenue in our European operations due to factors described in the discussion of our three month comparative results above. In our North American operations, higher compensation costs increased distribution expense by 0.2% of revenue, which was partially offset by a reduction in fuel expense by 0.1% of revenue due to lower diesel prices.

Selling, General and Administrative Expenses. As a percentage of revenue, our selling, general and administrative expenses increased to 11.9% for the six months ended June 30, 2012 from 11.7% for the comparable prior year period. The increase was primarily driven by 0.5% higher personnel expenditures in our European operations as a result of the factors described in the discussion our three month comparative results above. The impact of higher selling expenses in our European operations was partially offset by a reduction in general and administrative personnel expenditures as a percentage of revenue in our North American operations as we continued to leverage our corporate workforce in periods of rising total revenue.

Restructuring and Acquisition Related Expenses. During each of the six month periods ended June 30, 2012 and 2011, we incurred $2.4 million of restructuring and acquisition related expenses. In the first half of 2012, we incurred $1.1 million to execute our restructuring plan to consolidate our bumper and wheel refurbishing product lines. We also incurred $1.3 million of restructuring and acquisition related expenses related to the integration of certain of our 2011 and 2012 acquisitions into our existing business. Restructuring and acquisition related expenses during the six months ended June 30, 2011 included integration activities related to our purchase of the U.S. vehicle refinish paint distribution business of Akzo Nobel and our 2010 acquisition of Cross Canada. See Note 10, “Restructuring and Acquisition Related Expenses” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our restructuring and integration plans.

Depreciation and Amortization. As a percentage of revenue, depreciation and amortization expense was 1.5% for each of the six month periods ended June 30, 2012 and 2011. Higher expense in 2012 resulting from our increased levels of property and equipment and higher levels of intangible assets as a result of business acquisitions was offset by continued leveraging of our existing facilities to support organic and acquisition related revenue growth.

Other Expense, Net. Total other expense, net decreased to $12.9 million for the six months ended June 30, 2012 from $14.3 million for the comparable prior year period. The relatively higher other expense, net in the prior year period was primarily due to a $5.3 million loss on debt extinguishment related to the write off of debt issuance costs in 2011 in conjunction with the execution of our senior secured credit agreement in March 2011. During the first half of 2012, interest expense increased by $2.9 million compared to the prior year period. Our average outstanding credit facility borrowings increased to $885 million for the first half of 2012 from $573 million in the prior year period, primarily due to additional borrowings to finance our acquisition of ECP in the fourth quarter of 2011. The effect of our higher average debt levels was partially offset by a reduction in our average effective interest rate on bank borrowings to 3.1% during the six months ended June 30, 2012 from 4.0% during the six months ended June 30, 2011, resulting from lower interest rates under the new credit agreement executed in March 2011 combined with the impact of lower fixed interest rates under our outstanding interest rate swaps in the first half of 2012 compared to the prior year period. During the prior year period, we also recognized a $1.6 million gain from the fair value adjustments of our contingent payment liabilities.

Provision for Income Taxes. Our effective income tax rate was 36.8% and 38.9% for the six months ended June 30, 2012 and 2011, respectively. Our international operations, which we expanded in the fourth quarter of 2011 with the ECP acquisition, contributed to a lower effective tax rate as a larger proportion of our pretax income was generated in lower rate jurisdictions.

28

Results of Operations—Segment Reporting

We have four operating segments: Wholesale—North America; Wholesale—Europe; Self Service; and Heavy-Duty Truck. Our operations in North America, which include our Wholesale—North America, Self Service and Heavy-Duty Truck operating segments, are aggregated into one reportable segment because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our Wholesale—Europe operating segment, formed with our acquisition of ECP effective October 1, 2011, marks our entry into the European automotive aftermarket business, and is presented as a separate reportable segment. Although the Wholesale—Europe operating segment shares many of the characteristics of our North American operations, we have provided separate financial information as we believe this data would be beneficial to users in understanding our results.

The following table presents our financial performance, including revenue and earnings before interest, taxes, and depreciation and amortization (“EBITDA”) by reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
North America	$	841,335	$	759,684	$	1,712,419	$	1,546,332
Europe		165,196		—		325,889		—
Total revenue	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
EBITDA
North America(1)	$	109,687	$	93,354	$	241,875	$	212,757
Europe(2)		16,057		—		35,590		—
Total EBITDA	$	125,744	$	93,354	$	277,465	$	212,757

(1) EBITDA for the three and six month periods ended June 30, 2012 includes gains of $8.4 million and $16.7 million, respectively, resulting from settlements of a class action lawsuit against several of our suppliers as discussed in Note 7, “Commitments and Contingencies” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

(2) EBITDA for the three and six month periods ended June 30, 2012 includes a loss of $1.1 million and a gain of $0.2 million, respectively, from the change in fair value of the ECP contingent consideration liabilities as discussed in Note 6, “Fair Value Measurements” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We adjust the fair value of contingent consideration liabilities each quarter, and the change in the fair value may be either an increase or decrease to EBITDA for the segment based on changes to the underlying assumptions used in the fair value calculation.

The key measure of segment profit or loss reviewed by our chief operating decision maker is 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 excludes depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization. See Note 12, “Segment and Geographic Information” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of total EBITDA to Net Income.

Since we presented a single reportable segment (North America) until the acquisition of ECP effective October 1, 2011, the discussion of the consolidated results of operations covers the factors driving the year over year performance of our North American segment and discusses the effect of the European results of operations on our consolidated results. Results for our European segment will not have a comparative period until the fourth quarter of 2012. However, compared to its unaudited results for the three and six months ended June 30, 2011, ECP has achieved revenue growth of over 20% primarily through higher sales volumes at existing locations as well as new branches. ECP continued to expand its branch network by opening 20 new locations in the U.K. during the six months ended June 30, 2012.

2012 Outlook

We estimate that full year 2012 net income and diluted earnings per share, excluding the impact of any restructuring and acquisition related expenses and any gains or losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities), will be in the range of $265 million to $282 million and $1.77 to $1.88, respectively.

29

Liquidity and Capital Resources

Our primary sources of ongoing liquidity are cash flows from our operations and our credit agreement. Our credit agreement, which was executed on March 25, 2011 and subsequently amended and restated on September 30, 2011, provides for total borrowings of up to $1.4 billion, consisting of a $950 million revolving credit facility (including up to $500 million available in foreign currencies) and up to $450 million of term loan borrowings. In the six months ended June 30, 2012, we borrowed $200 million of available term loans under the credit agreement, which were used to pay down a portion of our outstanding revolving credit facility borrowings. As of June 30, 2012, the outstanding obligations under the facilities were $940.2 million, composed of $431.9 million of term loans and $508.3 million of revolver borrowings. After giving effect to outstanding letters of credit, our availability under the revolving credit facility at June 30, 2012 was $394.6 million. We do not expect to utilize the revolver as a primary source of funding for working capital needs as we expect our cash flows from operations to be sufficient for that purpose, but we do maintain availability as we continue to expand our facilities and network. Cash and equivalents at June 30, 2012 totaled $59.4 million.

Borrowings under the credit agreement accrue interest at variable rates, which depend on the currency and the duration of the borrowing, plus an applicable margin rate. The weighted-average interest rate on borrowings outstanding against our credit agreement at June 30, 2012 (after giving effect to the interest rate swap contracts in force, described in Note 5, “Derivative Instruments and Hedging Activities” to the unaudited consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q) was 2.6%. Of our outstanding credit agreement borrowings of $940.2 million and $901.4 million at June 30, 2012 and December 31, 2011, $25.6 million and $12.5 million were classified as current maturities, respectively. The increase in the current portion of outstanding credit agreement borrowings was a result of the draw of the additional $200 million term loan during the six months ended June 30, 2012 combined with higher term loan payments beginning in the first half of 2013.

The procurement of inventory is the largest operating use of our funds. We normally pay for aftermarket product purchases at the time of shipment or on standard payment terms, depending on the manufacturer and the negotiated payment terms. Our purchases of aftermarket products totaled approximately $309.3 million and $612.3 million during the three and six months ended June 30, 2012, respectively, and $173.0 million and $352.3 million in the comparable periods of 2011. The increase in aftermarket inventory purchases was partially driven by our fourth quarter 2011 acquisition of ECP, which contributed $112.8 million and $209.0 million for the three and six months ended June 30, 2012, respectively. We normally pay for salvage vehicles acquired at salvage auctions and under some direct procurement arrangements at the time that we take possession of the vehicles. We acquired approximately 67,000 and 126,000 wholesale salvage vehicles in the three and six months ended June 30, 2012, respectively, and 57,000 and 112,000 in the comparable periods of 2011. In addition, we acquired approximately 107,000 and 196,000 lower cost self service and crush only vehicles in the three and six months ended June 30, 2012, respectively, and 91,000 and 172,000 in the comparable periods of 2011. Our heavy-duty truck purchases included 1,700 and 3,500 heavy and medium-duty trucks in the three and six month periods ended June 30, 2012, respectively, compared to 1,600 and 2,500 for the comparable prior year periods.

Net cash provided by operating activities totaled $121.0 million for the six months ended June 30, 2012, compared to $101.1 million for the same period of 2011. In 2012, our EBITDA increased by $64.7 million compared to the prior year period, due to both acquisition related growth and organic growth. The increase in EBITDA was partially offset by $19.5 million in higher income tax payments compared to income tax payments made in the first half of 2011 as a result of greater pretax earnings. The first six months of 2012 reflected higher bonus payments of $1.8 million compared to the prior year as well as $5.9 million of payments under our long term incentive plan. Insurance policy payments in the first half of 2012 were $3.7 million higher than the prior year period primarily as a result of additional insurance policies for our European operations acquired in the fourth quarter of 2011. Due to higher outstanding debt levels, cash payments for interest exceeded payments in the prior year period by $2.3 million. Other operating cash outflows during the first half of 2012 exceeded the prior year period primarily due to the timing of payments of various accrued liabilities.

Net cash used in investing activities totaled $161.5 million for the six months ended June 30, 2012, compared to $138.0 million for the same period of 2011. We invested $120.3 million of cash, net of cash acquired, in business acquisitions during the first six months of 2012, compared to $95.6 million for business acquisitions in the comparable prior year period. Property and equipment purchases were $41.6 million in the six months ended June 30, 2012 compared to $42.5 million in the prior year period.

Net cash provided by financing activities totaled $51.5 million for the six months ended June 30, 2012, compared to $16.5 million of net cash used in financing activities during the six months ended June 30, 2011. In the first half of 2012, we borrowed $200 million of available term loans under the credit agreement, which were used to pay down a portion of our outstanding revolving credit facility borrowings. Excluding the repayments in connection with our term loan borrowings, we borrowed an additional net $46.5 million under our revolving credit facility, primarily to fund acquisitions, and we made scheduled term loan payments of $8.8 million in the first half of 2012. In the prior year period, our initial draw under the new credit agreement of $591.8 million (including $250.0 million of term loan borrowings and $341.8 million of revolver borrowings) was used to pay off amounts outstanding under the previous credit facility. Subsequent net repayments on the revolving credit facility in the six months ended June 30, 2011 totaled $16.8 million. Related to the execution of the credit agreement in 2011, we paid $8.2 million of debt issuance costs. Cash generated from exercises of stock options provided $10.1 million and $5.1 million in the six month periods ended June 30, 2012 and 2011, respectively. The excess tax benefit from share-based payment arrangements reduced income taxes payable by $7.2 million and $4.1 million in the six months ended June 30, 2012 and 2011, respectively.

30

We intend to continue to evaluate markets for potential growth through the internal development of distribution centers, processing and sales facilities, and warehouses, through further integration of our facilities, and through selected business acquisitions. Our future liquidity and capital requirements will depend upon numerous factors, including the costs and timing of our internal development efforts and the success of those efforts, the costs and timing of expansion of our sales and marketing activities, and the costs and timing of future business acquisitions. Our credit agreement provides additional sources of liquidity to fund acquisitions, which we expect will support our strategy to supplement our organic growth with acquisitions.

We believe that our current cash and equivalents, cash provided by operating activities and funds available under our credit agreement will be sufficient to meet our current operating and capital requirements. However, we may, from time to time, raise additional funds through public or private financing, strategic relationships or other arrangements. There can be no assurance that additional funding, or refinancing of our credit facility, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse impact on our business, operating results, and financial condition.

2012 Outlook

We estimate that our capital expenditures for 2012, excluding business acquisitions, will be between $100 million and $115 million. We expect to use these funds for several major facility expansions, improvement of current facilities, real estate acquisitions and systems development projects. Maintenance or replacement capital expenditures are expected to be approximately 20% of the total for 2012. We anticipate that net cash provided by operating activities for 2012 will be in the range of $250 million to $280 million.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements. Words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “believe,” “if,” “estimate,” “intend,” “project” and similar words or expressions are used to identify these forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. However, these forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different. These factors include, among other things, those described under Risk Factors in Item 1A of our 2011 Annual Report on Form 10-K, filed with the SEC on February 27, 2012, as supplemented in subsequent filings, including our Quarterly Reports on Form 10-Q.

Other matters set forth in this Quarterly Report may also cause our actual future results to differ materially from these forward-looking statements. We cannot assure you that our expectations will prove to be correct. In addition, all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements mentioned above. You should not place undue reliance on these forward-looking statements. All of these forward-looking statements are based on our expectations as of the date of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our results of operations are exposed to changes in interest rates primarily with respect to borrowings under our credit facility, where interest rates are tied to the prime rate, the London InterBank Offered Rate, or the Canadian Dealer Offered Rate. In March 2008, we implemented a policy to manage our exposure to variable interest rates on a portion of our outstanding variable rate debt instruments through the use of interest rate swap contracts. These contracts convert a portion of our variable rate debt to fixed rate debt, matching effective and maturity dates to specific debt instruments. All of our interest rate swap contracts have been executed with banks that we believe are creditworthy (JP Morgan ChaseBank, N.A., Bank of America, N.A., and RBS Citizens, N.A.) and are denominated in currency that matches the underlying debt instrument. Net interest payments or receipts from interest rate swap contracts will be included as adjustments to interest expense. As of June 30, 2012, we held seven interest rate swap contracts representing a total of $520 million of U.S. dollar-denominated notional amount debt, £50 million of pound sterling-denominated notional amount debt, and CAD $25 million of Canadian dollar-denominated notional amount debt. In total, we had 66% and 69% of our variable rate debt under our credit facility at fixed rates at June 30, 2012 and December 31, 2011, respectively. These swaps have maturity dates ranging from October 2013 through December 2016. These contracts are designated as cash flow hedges and modify the variable rate nature of that portion of our variable rate debt. As of June 30, 2012, the fair market value of these swaps was a liability of $15.3 million. The values of such contracts are subject to changes in interest rates.

At June 30, 2012, we had $317 million of variable rate debt that was not hedged. Using sensitivity analysis to measure the impact of a 100 basis point movement in the interest rate, interest expense would change by $3.2 million over the next twelve months. To the extent that we have cash investments earning interest, a portion of the increase in interest expense resulting from a variable rate change would be mitigated by higher interest income.

31

We are also exposed to market risk related to price fluctuations in scrap metal and other metals. Market prices of these metals affect the amount that we pay for our inventory as well as the revenue that we generate from sales of these metals. As both our revenue and costs are affected by the price fluctuations, we have a natural hedge against the changes. However, there is typically a lag between the effect on our revenue from metal price fluctuations and inventory cost changes. Therefore, we can experience positive or negative margin effects in periods of rising or falling metal prices, particularly when such prices move rapidly. If market prices were to fall at a greater rate than our vehicle acquisition costs, we could experience a decline in gross margin rate. As of June 30, 2012, we held short-term metals forward contracts to mitigate a portion of our exposure to fluctuations in metals prices specifically related to our precious metals refining and reclamation business acquired in the second quarter of 2012. The notional amount and fair value of these forward contracts at June 30, 2012 were immaterial.

Additionally, we are exposed to currency fluctuations with respect to the purchase of aftermarket products from foreign countries. The majority of our foreign inventory purchases are from manufacturers based in Taiwan. While our transactions with manufacturers based in Taiwan are conducted in U.S. dollars, changes in the relationship between the U.S. dollar and the Taiwan dollar might impact the purchase price of aftermarket products. Our aftermarket operations in Canada, which also purchase inventory from Taiwan in U.S. dollars, are further subject to changes in the relationship between the U.S. dollar and the Canadian dollar. Our recently acquired aftermarket operations in the U.K. also source a portion of their inventory from Taiwan, as well as from other European countries and China, resulting in exposure to changes in the relationship of the pound sterling against the euro and the U.S. dollar. With our acquisition of ECP in the fourth quarter, we began hedging our exposure to foreign currency fluctuations for certain of our purchases for our U.K. operations. The notional amount and fair value of these foreign currency forward contracts at June 30, 2012 were immaterial. We do not currently attempt to hedge our foreign currency exposure related to our foreign currency denominated inventory purchases in our North American operations, and we may not be able to pass on any price increases to our customers.

Other than a portion of our foreign currency denominated inventory purchases in the U.K., we do not hold derivative contracts to hedge foreign currency risk. Our net investment in foreign operations is partially hedged by the foreign currency denominated borrowings we use to fund foreign acquisitions. Additionally, we have elected not to hedge the foreign currency risk related to the interest payments on these borrowings as we generate pound sterling and Canadian dollar cash flows that can be used to fund debt payments. As of June 30, 2012, we have amounts outstanding under our revolver facility denominated in pounds sterling of £72.5 million and Canadian dollars of CAD $55.3 million.

Item 4. Controls and Procedures

As of June 30, 2012, the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of LKQ Corporation’s management, including our Chief Executive Officer and Chief Financial Officer, of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of June 30, 2012 to ensure that we are able to record, process, summarize and report the information we are required to disclose in the reports we file with the Securities and Exchange Commission within the required time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. There were no significant changes in our internal control over financial reporting during the quarter ended June 30, 2012 that were identified in connection with the evaluation referred to above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

32

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition and results of operations, and the trading price of our common stock. Please refer to our Annual Report on Form 10-K for fiscal year 2011 and our Quarterly Reports on Form 10-Q filed subsequent to the Annual Report on Form 10-K for information concerning risks and uncertainties that could negatively impact us. The following statements represent changes and/or additions to the risks and uncertainties previously disclosed in the Annual Report and our Quarterly Reports.

We rely on information technology and communication systems in critical areas of our operations and a disruption relating to such technology could harm our business.

Some of the information technology systems and communication systems we use for management of our facilities and our financial functions are leased from or operated by other companies, while others are owned by us. In the event that the providers of these systems terminate their relationships with us, we could suffer disruptions to our operations. Interruptions, outages or breaches of our operational systems, security systems or infrastructure as a result of attacks on, or malfunctions of, our systems could materially disrupt critical operations, disclose confidential information, result in a breach of data privacy, and violate laws or regulations relating to data privacy.

In addition, we continually monitor these systems to find areas for improvement. In the event that we decided to switch providers or to implement our own systems, we may also suffer disruptions to our business. We may be unsuccessful in the development of our own systems, and we may underestimate the costs and expenses of developing and implementing our own systems. Also, our revenue may be hampered during the period of implementing an alternative system, which period could extend longer than we anticipated.

33

Item 6. Exhibits

Exhibits

Exhibit Number	Description of Exhibit
10.1	LKQ Corporation 1998 Equity Incentive Plan (incorporated herein by reference to Appendix A to the Company’s Proxy Statement for its Annual Meeting of Stockholders on May 7, 2012 filed on March 23, 2012).
10.2	LKQ Corporation Long Term Incentive Plan (incorporated herein by reference to Appendix B to the Company’s Proxy Statement for its Annual Meeting of Stockholders on May 7, 2012 filed on March 23, 2012).
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

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July 27, 2012.

LKQ CORPORATION

/s/ JOHN S. QUINN

John S. Quinn

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)

35

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert L. Wagman, certify that:

1. I have reviewed this report on Form 10-Q of LKQ Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 27, 2012

/s/ ROBERT L. WAGMAN

Robert L. Wagman

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John S. Quinn, certify that:

1. I have reviewed this report on Form 10-Q of LKQ Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 27, 2012

/S/ JOHN S. QUINN

John S. Quinn

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LKQ Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, as President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(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.

Dated: July 27, 2012

/S/ ROBERT L. WAGMAN

Robert L. Wagman

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LKQ Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, as Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(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.

Dated: July 27, 2012

/S/ JOHN S. QUINN

John S. Quinn

Executive Vice President and Chief Financial Officer

XML

Expected to be Recognized Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award
Remainder of 2012	$ 7,995
2013	13,262
2014	11,523
2015	8,141
2016	4,498
2017	143
Total unrecognized compensation expense	45,562
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Remainder of 2012	4,094
2013	8,332
2014	8,268
2015	8,063
2016	4,498
2017	143
Total unrecognized compensation expense	33,398
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Remainder of 2012	3,441
2013	4,722
2014	3,116
2015	78
Total unrecognized compensation expense	11,357
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Remainder of 2012	460
2013	208
2014	139
Total unrecognized compensation expense	$ 807

XML

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) (Stock Options) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities, Stock options	1,554	1,567

XML

Unobservable Inputs Used in Fair Value Measurements (Detail) (Contingent Consideration Liabilities, Fair Value, Inputs, Level 3)	Jun. 30, 2012	Dec. 31, 2011
Contingent Consideration Liabilities | Fair Value, Inputs, Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
Weighted Average, Probability of achieving payout targets	79.80%	78.10%
Weighted Average, Discount rate	6.50%	3.00%

XML

Business Combinations - Additional Information (Detail)	6 Months Ended	12 Months Ended		12 Months Ended				12 Months Ended		6 Months Ended	12 Months Ended			6 Months Ended	12 Months Ended
	Jun. 30, 2012 USD ($) Segment	Dec. 31, 2011 USD ($)	Jun. 30, 2012 All Twenty Twelve Acquisitions USD ($)	Dec. 31, 2011 Euro Car Parts Holdings Limited USD ($)	Dec. 31, 2011 Euro Car Parts Holdings Limited GBP (£)	Oct. 03, 2011 Euro Car Parts Holdings Limited Two Thousand Twelve Contingent Payment GBP (£)	Oct. 03, 2011 Euro Car Parts Holdings Limited Two Thousand Thirteen Contingent Payment GBP (£)	Dec. 31, 2011 All Acquisitions Excluding ECP USD ($) Segment	Dec. 31, 2011 All Acquisitions Excluding Ecp And Akzo Nobel USD ($)	Jun. 30, 2012 Wholesale North America Segment Segment	Dec. 31, 2011 Wholesale North America Segment	Dec. 31, 2011 Wholesale North America Segment Engine Remanufacturers	Dec. 31, 2011 Wholesale North America Segment Akzo Nobel USD ($)	Jun. 30, 2012 Self Service Segment Segment	Dec. 31, 2011 Self Service Segment	Dec. 31, 2011 Heavy Duty Truck Segment
Business Acquisition
Number of acquisitions	11							20		7	12	2		4	3	5
Total acquisition date fair value of the consideration for acquisitions	$ 129,900,000			$ 403,700,000	£ 261,600,000			$ 207,300,000
Cash used in acquisition, net of cash acquired	116,450,000	486,934,000		293,700,000	190,300,000			193,200,000
Notes issued	7,936,000	34,219,000		28,300,000	18,400,000			5,900,000
Acquisition date fair value of contingent consideration	5,540,000	81,239,000		77,500,000	50,200,000			3,700,000
Maximum payment under contingent consideration agreement			6,500,000			25,000,000	30,000,000		4,600,000				21,000,000
Goodwill recorded for acquisitions	98,907,000	442,208,000		337,000,000				105,200,000
Goodwill expected to be deductible for income tax purposes	76,100,000							88,300,000
Revenue generated by acquisitions	22,900,000
Operating income generated by acquisitions	2,200,000
Other purchase price obligations		8,646,000		4,100,000	2,700,000			4,500,000
Minimum payment under contingent consideration agreement						£ 22,000,000	£ 23,000,000

XML

Changes in Accumulated Other Comprehensive Income (Loss) Related to Interest Rate Swap Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Derivative Instruments, Gain (Loss)
Beginning balance	$ (6,540)	$ 4,289	$ (6,890)	$ 2,176
Pretax loss	(6,718)	(7,908)	(7,709)	(6,427)
Income tax benefit	2,333	2,847	2,722	2,314
Reversal of unrealized loss	1,636	1,224	3,112	3,270
Reversal of deferred income taxes	(592)	(440)	(1,116)	(1,177)
Hedge ineffectiveness				(225)
Income tax benefit				81
Ending balance	$ (9,881)	$ 12	$ (9,881)	$ 12

XML

Components of Other Intangibles (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets
Gross Carrying Amount	$ 129,971	$ 129,198
Accumulated Amortization	(24,394)	(20,288)
Net	105,577	108,910
Trade Names
Finite-Lived Intangible Assets
Gross Carrying Amount	116,493	115,954
Accumulated Amortization	(18,892)	(16,305)
Net	97,601	99,649
Customer Relationships
Finite-Lived Intangible Assets
Gross Carrying Amount	10,052	10,050
Accumulated Amortization	(4,364)	(3,065)
Net	5,688	6,985
Noncompete Agreements
Finite-Lived Intangible Assets
Gross Carrying Amount	3,426	3,194
Accumulated Amortization	(1,138)	(918)
Net	$ 2,288	$ 2,276

XML

Effect of Businesses Acquired (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Business Acquisition
Revenue, as reported	$ 1,006,531		$ 759,684		$ 2,038,308		$ 1,546,332
Pro forma revenue	1,032,104		987,798		2,102,645		2,006,571
Net income, as reported	63,998		46,706		144,989		104,888
Pro forma net income	65,333		57,383		149,458		125,839
Earnings per share-basic, as reported	$ 0.43		$ 0.32		$ 0.98		$ 0.72
Pro forma earnings per share-basic	$ 0.44	[1]	$ 0.39	[1]	$ 1.01	[1]	$ 0.86	[1]
Earnings per share-diluted, as reported	$ 0.43		$ 0.32		$ 0.97		$ 0.71
Pro forma earnings per share-diluted	$ 0.44	[1]	$ 0.39	[1]	$ 1.00	[1]	$ 0.85	[1]
Euro Car Parts Holdings Limited
Business Acquisition
Revenue of purchased businesses for the period prior to acquisition			134,921				265,498
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments			6,019				10,952
Effect of purchased businesses for the period prior to acquisition			$ 0.04				$ 0.08
Effect of purchased businesses for the period prior to acquisition			$ 0.04				$ 0.07
All Acquisitions Excluding ECP
Business Acquisition
Revenue of purchased businesses for the period prior to acquisition	25,573		93,193		64,337		194,741
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments	$ 1,335		$ 4,658		$ 4,469		$ 9,999
Effect of purchased businesses for the period prior to acquisition	$ 0.01		$ 0.03		$ 0.03		$ 0.07
Effect of purchased businesses for the period prior to acquisition	$ 0.01		$ 0.03		$ 0.03		$ 0.07

[1] The sum of the individual earnings per share amounts may not equal the total due to rounding.

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value, Assets And Liabilities Measured 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, 2012 and December 31, 2011 (in thousands):

	Balance as of June 30, 2012		Fair Value Measurements as of June 30, 2012
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	17,597	$	—	$	17,597	$	—
Total Assets	$	17,597	$	—	$	17,597	$	—
Liabilities:
Contingent consideration liabilities	$	88,037	$	—	$	—	$	88,037
Deferred compensation liabilities		17,706		—		17,706		—
Interest rate swaps		15,268		—		15,268		—
Foreign currency forwards		105		—		105		—
Commodity forwards		83		—		83		—
Total Liabilities	$	121,199	$	—	$	33,162	$	88,037
	Balance as of December 31, 2011		Fair Value Measurements as of December 31, 2011
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	13,413	$	—	$	13,413	$	—
Total Assets	$	13,413	$	—	$	13,413	$	—
Liabilities:
Contingent consideration liabilities	$	82,382	$	—	$	—	$	82,382
Deferred compensation liabilities		14,071		—		14,071		—
Interest rate swaps		10,576		—		10,576		—
Total Liabilities	$	107,029	$	—	$	24,647	$	82,382

Unobservable Inputs Used In The Fair Value Measurements

The significant unobservable inputs used in the fair value measurements of our Level 3 contingent consideration liabilities were as follows:

Unobservable Input	June 30, 2012 Weighted Average			December 31, 2011 Weighted Average
Probability of achieving payout targets		79.8	%		78.1	%
Discount rate		6.5	%		3.0	%

Changes In The Fair Value Of Level 3 Contingent Consideration Obligations

Changes in the fair value of our contingent consideration obligations for the three and six month periods ended June 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Beginning balance	$	82,909		$	2,600		$	82,382		$	2,000
Contingent consideration liabilities recorded for business acquisitions		5,433			—			5,540			600
Payments		—			—			(600	)		—
Loss (gain) included in earnings		1,240			(1,615	)		(105	)		(1,615	)
Exchange rate effects		(1,545	)		—			820			—
Ending balance	$	88,037		$	985		$	88,037		$	985

XML

Fair Value Measurements - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Borrowings under credit agreement, carrying value and fair value	$ 940

XML

Long Term Obligation - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2012 Credit Agreement	Dec. 31, 2011 Credit Agreement	Sep. 30, 2011 Credit Agreement	Mar. 25, 2011 Credit Agreement
Debt Instrument
Maximum incremental term loan borrowings				$ 200,000,000
Maximum revolving credit facility borrowings				950,000,000
Maximum credit agreement borrowings				1,400,000,000
Maximum U.S. dollar value of foreign currency borrowings				500,000,000
Term loan					250,000,000
Maximum amount of letters of credit				125,000,000
Bridge loan maximum capacity				25,000,000
Maximum increase of revolving credit facility or term loans				400,000,000
Minimum consideration for acquisitions during 12 month period to change the maximum net leverage ratio				200,000,000
Original principal payment percentage in first and second years				5.00%
Original principal payment percentage in third and fourth years				10.00%
Original principal payment percentage in fifth year				15.00%
Maximum net leverage ratio				3.00
Maximum net leverage ratio subsequent to acquisition				3.50
Minimum interest coverage ratio				3.00
Proceeds from the New Term Loan		200,000,000
Weighted average interest rate		2.57%	2.59%
Increment change in applicable margin				0.25%
Increment change in commitment fees				0.05%
Fronting fee on letters of credit in addition to participation commission				0.125%
Borrowings under credit agreement, carrying value		940,200,000	901,400,000
Current maturities of credit agreement		25,600,000	12,500,000
Outstanding letters of credit		47,100,000
Availability on the Revolving Credit Facility		394,600,000
Write-off of the unamortized balance of capitalized debt issuance costs	5,345,000
Fees incurred related to the execution of the Credit Agreement	$ 8,200,000

XML

Pre Tax Stock Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	$ 3,968	$ 3,260	$ 7,978	$ 6,602
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	2,019	891	4,083	1,769
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	1,721	2,057	3,442	4,147
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	228	228	453	453
Stock Issued To Non-Employee Directors
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense		$ 84		$ 233

XML

Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012 Defendant	Jan. 31, 2012 January Settlement	Apr. 30, 2012 April Settlement
Gain Contingencies
Former Gain Contingency Recognized in Current Period		$ 8.3	$ 8.4
Number of defendants class action is pending against	2

XML

Revenue by Product Category (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenue from External Customer
Revenue	$ 1,006,531	$ 759,684	$ 2,038,308	$ 1,546,332
Aftermarket Other New And Refurbished Products
Revenue from External Customer
Revenue	547,912	356,202	1,113,256	737,318
Recycled Remanufactured And Related Products And Services
Revenue from External Customer
Revenue	323,669	269,700	649,373	545,482
Other
Revenue from External Customer
Revenue	$ 134,950	$ 133,782	$ 275,679	$ 263,532

XML

Financial Performance by Reportable Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information
Revenue	$ 1,006,531	$ 759,684	$ 2,038,308	$ 1,546,332
EBITDA	125,744	93,354	277,465	212,757
Depreciation and amortization	17,189	12,871	33,446	24,797
North America
Segment Reporting Information
Revenue	841,335	759,684	1,712,419	1,546,332
EBITDA	109,687	93,354	241,875	212,757
Depreciation and amortization	14,771	12,871	28,773	24,797
Europe
Segment Reporting Information
Revenue	165,196		325,889
EBITDA	16,057		35,590
Depreciation and amortization	$ 2,418		$ 4,673

XML

Fair Value Assets and Liabilities Measured on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	$ 17,597	$ 13,413
Fair value liabilities measured on recurring basis	121,199	107,029
Cash surrender value of life insurance
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	17,597	13,413
Contingent Consideration Liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	88,037	82,382
Deferred Compensation Liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	17,706	14,071
Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	15,268	10,576
Foreign Exchange Forward
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	105
Commodity Contract
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	83
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	17,597	13,413
Fair value liabilities measured on recurring basis	33,162	24,647
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	88,037	82,382
Fair Value, Measurements, Recurring | Cash surrender value of life insurance | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	17,597	13,413
Fair Value, Measurements, Recurring | Contingent Consideration Liabilities | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	88,037	82,382
Fair Value, Measurements, Recurring | Deferred Compensation Liabilities | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	17,706	14,071
Fair Value, Measurements, Recurring | Interest Rate Swap | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	15,268	10,576
Fair Value, Measurements, Recurring | Foreign Exchange Forward | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	105
Fair Value, Measurements, Recurring | Commodity Contract | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	$ 83

XML

Financial Statement Information

6 Months Ended

Jun. 30, 2012

Financial Statement Information

Note 2. Financial Statement Information

Revenue Recognition

The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped 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 $24.3 million and $22.8 million at June 30, 2012 and December 31, 2011, 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 Consolidated Condensed Statements of Income and are shown as a current liability on our Unaudited Consolidated Condensed Balance Sheets until remitted. Revenue from the sale of separately-priced extended warranty contracts is reported as deferred revenue and recognized ratably over the term of the contracts or three years in the case of lifetime warranties.

Receivables

We recorded a reserve for uncollectible accounts of approximately $7.4 million and $8.3 million at June 30, 2012 and December 31, 2011, respectively.

Inventory

Inventory consists of the following (in thousands):

	June 30, 2012		December 31, 2011
Aftermarket and refurbished products	$	462,472	$	445,787
Salvage and remanufactured products		336,335		291,059
	$	798,807	$	736,846

Intangibles

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 relationships and covenants not to compete.

The change in the carrying amount of goodwill during the six months ended June 30, 2012 is as follows (in thousands):

Balance as of January 1, 2012	$	1,476,063
Business acquisitions and adjustments to previously recorded goodwill		98,907
Exchange rate effects		3,635
Balance as of June 30, 2012	$	1,578,605

The components of other intangibles are as follows (in thousands):

	June 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	116,493	$	(18,892	)	$	97,601	$	115,954	$	(16,305	)	$	99,649
Customer relationships		10,052		(4,364	)		5,688		10,050		(3,065	)		6,985
Covenants not to compete		3,426		(1,138	)		2,288		3,194		(918	)		2,276
	$	129,971	$	(24,394	)	$	105,577	$	129,198	$	(20,288	)	$	108,910

Trade names and trademarks are amortized over a useful life ranging from 10 to 30 years on a straight-line basis. Customer relationships are amortized over the expected period to be benefitted (5 to 10 years) on either a straight-line or accelerated basis. Covenants not to compete are amortized over the lives of the respective agreements, which range from one to five years, on a straight-line basis. Amortization expense for intangibles was approximately $4.2 million and $3.4 million during the six month periods ended June 30, 2012 and 2011, respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2016 is $8.6 million, $7.8 million, $7.1 million, $6.4 million and $5.7 million, respectively.

Depreciation Expense

Included in Cost of Goods Sold on the Unaudited Consolidated Condensed Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations and our distribution centers.

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 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 during the six month period ended June 30, 2012 were as follows (in thousands):

Balance as of January 1, 2012	$	7,347
Warranty expense		11,230
Warranty claims		(12,059	)
Business acquisitions		645
Balance as of June 30, 2012	$	7,163

For an additional fee, we also sell extended warranty contracts for certain mechanical products. The expense related to extended warranty claims is recognized when the claim is made.

Recent Accounting Pronouncements

Effective January 1, 2012, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income” and ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” These ASUs eliminate the option to present the components of other comprehensive income in the statement of changes in stockholders’ equity. Instead, entities have the option to present the components of net income, the components of other comprehensive income and total comprehensive income in a single continuous statement or in two separate but consecutive statements. The amendments did not change the items reported in other comprehensive income or when an item of other comprehensive income is reclassified to net income. As a result, the adoption of this guidance did not affect our financial position, results of operations or cash flows. We have presented the components of net income, the components of other comprehensive income and total comprehensive income in two separate but consecutive statements.

Effective January 1, 2012, we adopted FASB ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update clarifies existing fair value measurement requirements, amends existing guidance primarily related to fair value measurements for financial instruments, and requires enhanced disclosures on fair value measurements. The additional disclosures are specific to Level 3 fair value measurements, transfers between Level 1 and Level 2 of the fair value hierarchy, financial instruments not measured at fair value and use of an asset measured or disclosed at fair value differing from its highest and best use. We applied the provisions of this ASU to our fair value measurements during the current year, however, the adoption did not have a material effect on our financial statements. Refer to Note 6, “Fair Value Measurements,” for the required disclosures.

XML

Reconciliation of EBITDA to Net Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information
EBITDA	$ 125,744	$ 93,354	$ 277,465	$ 212,757
Depreciation and amortization	17,189	12,871	33,446	24,797
Interest expense, net	7,356	4,671	14,723	11,080
Loss on debt extinguishment				5,345
Provision for income taxes	37,201	29,106	84,307	66,647
Net income	$ 63,998	$ 46,706	$ 144,989	$ 104,888

XML

Terms of Interest Rate Swap Agreements (Detail)	Jun. 30, 2012 Three Point Zero Six Percent USD ($)		Jun. 30, 2012 Two Point Six One Percent USD ($)		Jun. 30, 2012 Two Point Seven Zero Percent USD ($)		Jun. 30, 2012 Two Point Six Nine Percent Maturity On October Thirty First Two Thousand Sixteen USD ($)		Jun. 30, 2012 Two Point Six Nine Percent Maturity On December Thirty Two Thousand Sixteen USD ($)		Jun. 30, 2012 Two Point Eight Six Percent GBP (£)		Jun. 30, 2012 Two Point Nine Two Percent CAD
Derivative
Notional Amount	$ 250,000,000		$ 100,000,000		$ 60,000,000		$ 60,000,000		$ 50,000,000		£ 50,000,000		25,000,000
Fixed Interest Rate	3.06%	[1]	2.61%	[1]	2.70%	[1]	2.69%	[1]	2.69%	[1]	2.86%	[1]	2.92%	[1]

[1] Includes applicable margin of 1.50% per annum on LIBOR or CDOR-based debt in effect as of June 30, 2012 under the Credit Agreement.

XML

Segment and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2012

Schedule Of Financial Performance By Reportable Segment

The following table presents our financial performance, including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and depreciation and amortization by reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
North America	$	841,335	$	759,684	$	1,712,419	$	1,546,332
Europe		165,196		—		325,889		—
Total revenue	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
EBITDA
North America	$	109,687	$	93,354	$	241,875	$	212,757
Europe		16,057		—		35,590		—
Total EBITDA	$	125,744	$	93,354	$	277,465	$	212,757
Depreciation and Amortization
North America	$	14,771	$	12,871	$	28,773	$	24,797
Europe		2,418		—		4,673		—
Total depreciation and amortization	$	17,189	$	12,871	$	33,446	$	24,797

Reconciliation Of Earnings Before Interest Taxes Depreciation And Amortization To Net Income

The table below provides a reconciliation from EBITDA to Net Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
EBITDA	$	125,744	$	93,354	$	277,465	$	212,757
Depreciation and amortization		17,189		12,871		33,446		24,797
Interest expense, net		7,356		4,671		14,723		11,080
Loss on debt extinguishment		—		—		—		5,345
Provision for income taxes		37,201		29,106		84,307		66,647
Net income	$	63,998	$	46,706	$	144,989	$	104,888

Segment Reporting Capital Expenditure

The following table presents capital expenditures, which includes additions to property and equipment, by reportable segment (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Capital Expenditures
North America	$	16,372	$	24,447	$	34,506	$	42,540
Europe		3,914		—		7,109		—
	$	20,286	$	24,447	$	41,615	$	42,540

Schedule Of Assets By Reportable Segment

The following table presents assets by reportable segment (in thousands):

	June 30, 2012		December 31, 2011
Receivables, net
North America	$	249,407	$	230,871
Europe		60,047		50,893
Total receivables, net		309,454		281,764
Inventory
North America		670,032		636,145
Europe		128,775		100,701
Total inventory		798,807		736,846
Property and Equipment, net
North America		393,038		380,282
Europe		50,527		43,816
Total property and equipment, net		443,565		424,098
Other unallocated assets		1,873,583		1,756,996
Total assets	$	3,425,409	$	3,199,704

Schedule Of Revenue By Geographic Area

The following table sets forth our revenue by geographic area (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
United States	$	789,346	$	716,086	$	1,610,311	$	1,455,412
United Kingdom		165,196		—		325,889		—
Other countries		51,989		43,598		102,108		90,920
	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332

Schedule Of Tangible Long-lived Assets By Geographic Area

The following table sets forth our tangible long-lived assets by geographic area (in thousands):

	June 30, 2012		December 31, 2011
Long-lived Assets
United States	$	372,978	$	360,961
United Kingdom		50,527		43,816
Other countries		20,060		19,321
	$	443,565	$	424,098

Schedule Of Revenue By Product Category

The following table sets forth our revenue by product category (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Aftermarket, other new and refurbished products	$	547,912	$	356,202	$	1,113,256	$	737,318
Recycled, remanufactured and related products and services		323,669		269,700		649,373		545,482
Other		134,950		133,782		275,679		263,532
	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332

XML

Business Combinations (Tables)

6 Months Ended

Jun. 30, 2012

Purchase Price Allocations For Acquisitions

The purchase price allocations for the acquisitions completed during the six months ended June 30, 2012 and the year ended December 31, 2011 are as follows (in thousands):

	Six Months Ended June 30, 2012 (Preliminary)			Year Ended December 31, 2011
				ECP (Preliminary)			Other Acquisitions (Preliminary)			Total (Preliminary)
Receivables	$	4,989		$	54,225		$	23,538		$	77,763
Receivable reserves		(505	)		(3,832	)		(1,121	)		(4,953	)
Inventory		30,109			93,835			59,846			153,681
Prepaid expenses and other current assets		258			3,189			2,820			6,009
Property and equipment		7,779			41,830			10,614			52,444
Goodwill		98,907			337,031			105,177			442,208
Other intangibles		479			39,583			7,683			47,266
Other assets		102			13			9,420			9,433
Deferred income taxes		(657	)		(13,218	)		7,235			(5,983	)
Current liabilities assumed		(11,535	)		(135,390	)		(17,257	)		(152,647	)
Debt assumed		—			(13,564	)		—			(13,564	)
Other noncurrent liabilities assumed		—			—			(619	)		(619	)
Contingent consideration liabilities		(5,540	)		(77,539	)		(3,700	)		(81,239	)
Other purchase price obligations		—			(4,136	)		(4,510	)		(8,646	)
Notes issued		(7,936	)		(28,302	)		(5,917	)		(34,219	)
Cash used in acquisitions, net of cash acquired	$	116,450		$	293,725		$	193,209		$	486,934

Effect Of The Businesses Acquired

The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue, as reported	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
Revenue of purchased businesses for the period prior to acquisition:
ECP		—		134,921		—		265,498
Other acquisitions		25,573		93,193		64,337		194,741
Pro forma revenue	$	1,032,104	$	987,798	$	2,102,645	$	2,006,571
Net income, as reported	$	63,998	$	46,706	$	144,989	$	104,888
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments:
ECP		—		6,019		—		10,952
Other acquisitions		1,335		4,658		4,469		9,999
Pro forma net income	$	65,333	$	57,383	$	149,458	$	125,839
Earnings per share-basic, as reported	$	0.43	$	0.32	$	0.98	$	0.72
Effect of purchased businesses for the period prior to acquisition:
ECP		—		0.04		—		0.08
Other acquisitions		0.01		0.03		0.03		0.07
Pro forma earnings per share-basic (a)	$	0.44	$	0.39	$	1.01	$	0.86
Earnings per share-diluted, as reported	$	0.43	$	0.32	$	0.97	$	0.71
Effect of purchased businesses for the period prior to acquisition:
ECP		—		0.04		—		0.07
Other acquisitions		0.01		0.03		0.03		0.07
Pro forma earnings per share-diluted (a)	$	0.44	$	0.39	$	1.00	$	0.85

(a) The sum of the individual earnings per share amounts may not equal the total due to rounding.

XML

Purchase Price Allocations for Acquisitions (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Business Acquisition
Receivables	$ 4,989	$ 77,763
Receivable reserves	(505)	(4,953)
Inventory	30,109	153,681
Prepaid expenses and other current assets	258	6,009
Property and equipment	7,779	52,444
Goodwill	98,907	442,208
Other intangibles	479	47,266
Other assets	102	9,433
Deferred income taxes	(657)	(5,983)
Current liabilities assumed	(11,535)	(152,647)
Debt assumed		(13,564)
Other noncurrent liabilities assumed		(619)
Contingent consideration liabilities	(5,540)	(81,239)
Other purchase price obligations		(8,646)
Notes issued	(7,936)	(34,219)
Cash used in acquisitions, net of cash acquired	116,450	486,934
Euro Car Parts Holding Limited
Business Acquisition
Receivables		54,225
Receivable reserves		(3,832)
Inventory		93,835
Prepaid expenses and other current assets		3,189
Property and equipment		41,830
Goodwill		337,031
Other intangibles		39,583
Other assets		13
Deferred income taxes		(13,218)
Current liabilities assumed		(135,390)
Debt assumed		(13,564)
Contingent consideration liabilities		(77,539)
Other purchase price obligations		(4,136)
Notes issued		(28,302)
Cash used in acquisitions, net of cash acquired		293,725
All Acquisitions Excluding ECP
Business Acquisition
Receivables		23,538
Receivable reserves		(1,121)
Inventory		59,846
Prepaid expenses and other current assets		2,820
Property and equipment		10,614
Goodwill		105,177
Other intangibles		7,683
Other assets		9,420
Deferred income taxes		7,235
Current liabilities assumed		(17,257)
Other noncurrent liabilities assumed		(619)
Contingent consideration liabilities		(3,700)
Other purchase price obligations		(4,510)
Notes issued		(5,917)
Cash used in acquisitions, net of cash acquired		$ 193,209

XML

Terms of Interest Rate Swap Agreements (Parenthetical) (Detail)	Jun. 30, 2012
Derivative
Applicable margin per annum as of the balance sheet date, under the Credit Agreement	1.50%

XML

Financial Statement Information - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 Year	Jun. 30, 2011	Dec. 31, 2011
Finite-Lived Intangible Assets
Reserve for estimated returns, discounts and allowances	$ 24.3		$ 22.8
Revenue recognition period for lifetime extended warranties, years	3
Reserve for uncollectible accounts	7.4		8.3
Amortization expense	4.2	3.4
Estimated annual amortization expense, current fiscal year	8.6
Estimated annual amortization expense, 2013	7.8
Estimated annual amortization expense, 2014	7.1
Estimated annual amortization expense, 2015	6.4
Estimated annual amortization expense, 2016	$ 5.7
Salvage Mechanical Products
Finite-Lived Intangible Assets
Standard warranty period	6 months
Remanufactured Engines
Finite-Lived Intangible Assets
Standard warranty period	3 years
Trade Names | Minimum
Finite-Lived Intangible Assets
Useful life, years	10 years
Trade Names | Maximum
Finite-Lived Intangible Assets
Useful life, years	30 years
Noncompete Agreements | Minimum
Finite-Lived Intangible Assets
Useful life, years	1 year
Noncompete Agreements | Maximum
Finite-Lived Intangible Assets
Useful life, years	5 years
Customer Relationships | Minimum
Finite-Lived Intangible Assets
Useful life, years	5 years
Customer Relationships | Maximum
Finite-Lived Intangible Assets
Useful life, years	10 years

XML

Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventory
Aftermarket and refurbished products	$ 462,472	$ 445,787
Salvage and remanufactured products	336,335	291,059
Inventory	$ 798,807	$ 736,846

XML

Interim Financial Statements

6 Months Ended

Jun. 30, 2012

Interim Financial Statements

Note 1. 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 “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 consolidated condensed 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 have been condensed or omitted. These unaudited consolidated condensed financial statements reflect, in the opinion of management, all material adjustments (which include only normal 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, 2011 filed with the SEC on February 27, 2012.

XML

Changes in Carrying Amount of Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Goodwill
Beginning balance	$ 1,476,063
Business acquisitions and adjustments to previously recorded goodwill	98,907	442,208
Exchange rate effects	3,635
Ending balance	$ 1,578,605	$ 1,476,063

XML

Long Term Obligation (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Debt Instrument
Debt and Capital Lease Obligations	$ 1,000,446	$ 956,076
Less current maturities	(46,379)	(29,524)
Long-Term Obligations, Excluding Current Portion	954,067	926,552
Term Loans Payable
Debt Instrument
Term loans payable	431,875	240,625
Revolving Credit Facility
Debt Instrument
Revolving credit facility	508,288	660,730
Notes Payable, Other Payables
Debt Instrument
Notes payable	46,378	38,338
Other Long-Term Debt
Debt Instrument
Other long-term debt	$ 13,905	$ 16,383

XML

Computation of Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share Disclosure
Net income	$ 63,998	$ 46,706	$ 144,989	$ 104,888
Denominator for basic earnings per share-Weighted-average shares outstanding	147,645	145,917	147,392	145,765
RSUs	220	80	219	103
Stock options	2,186	2,107	2,238	2,113
Restricted stock	25	27	24	26
Denominator for diluted earnings per share-Adjusted weighted-average shares outstanding	150,076	148,131	149,873	148,007
Earnings per share, basic	$ 0.43	$ 0.32	$ 0.98	$ 0.72
Earnings per share, diluted	$ 0.43	$ 0.32	$ 0.97	$ 0.71

XML

Consolidated Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current Assets:
Cash and equivalents	$ 59,353	$ 48,247
Receivables, net	309,454	281,764
Inventory	798,807	736,846
Deferred income taxes	46,596	45,690
Prepaid income taxes	11,466	17,597
Prepaid expenses and other current assets	27,331	19,591
Total Current Assets	1,253,007	1,149,735
Property and equipment, net	443,565	424,098
Intangible Assets:
Goodwill	1,578,605	1,476,063
Other intangibles, net	105,577	108,910
Other Assets	44,655	40,898
Total assets	3,425,409	3,199,704
Current Liabilities:
Accounts payable	224,276	210,875
Accrued expenses:
Accrued payroll-related liabilities	34,798	53,256
Other accrued expenses	80,801	77,769
Income taxes payable	7,755	7,262
Contingent consideration liabilities	38,842	600
Other current liabilities	12,471	18,407
Current portion of long-term obligations	46,379	29,524
Total Current Liabilities	445,322	397,693
Long-Term Obligations, Excluding Current Portion	954,067	926,552
Deferred Income Taxes	88,777	88,796
Contingent Consideration Liabilities	49,195	81,782
Other Noncurrent Liabilities	74,320	60,796
Commitments and Contingencies
Stockholders' Equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 147,973,454 and 146,948,608 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	1,480	1,470
Additional paid-in capital	928,081	902,782
Retained earnings	893,783	748,794
Accumulated other comprehensive loss	(9,616)	(8,961)
Total Stockholders' Equity	1,813,728	1,644,085
Total Liabilities and Stockholders' Equity	$ 3,425,409	$ 3,199,704

XML

Derivative Instruments and Hedging Activities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2012	Dec. 31, 2011
Derivative
Fair market value of interest rate swaps, noncurrent liability		$ 15.3	$ 10.6
Loss from hedge ineffectiveness	0.2
Net loss included in accumulated other comprehensive loss to be reclassified into interest expense within the next 12 months		$ 3.9

XML

Consolidated Condensed Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 144,989	$ 104,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,446	24,797
Stock-based compensation expense	7,978	6,602
Excess tax benefit from stock-based payments	(7,219)	(4,053)
Loss on debt extinguishment		5,345
Other	1,369	(504)
Changes in operating assets and liabilities, net of effects from acquisitions:
Receivables	(22,662)	(24,769)
Inventory	(30,763)	(19,578)
Prepaid income taxes/income taxes payable	13,728	14,786
Accounts payable	3,802	(4,525)
Other operating assets and liabilities	(23,656)	(1,909)
Net cash provided by operating activities	121,012	101,080
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(41,615)	(42,540)
Proceeds from sales of property and equipment	472	162
Cash used in acquisitions, net of cash acquired	(120,315)	(95,591)
Net cash used in investing activities	(161,458)	(137,969)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	10,112	5,109
Excess tax benefit from stock-based payments	7,219	4,053
Debt issuance costs		(8,190)
Borrowings under revolving credit facility	331,342	401,753
Repayments under revolving credit facility	(484,851)	(74,328)
Borrowings under term loans	200,000	250,000
Repayments under term loans	(8,750)	(594,214)
Payments of other obligations	(3,611)	(716)
Net cash provided by (used in) financing activities	51,461	(16,533)
Effect of exchange rate changes on cash and equivalents	91	(11)
Net increase (decrease) in cash and equivalents	11,106	(53,433)
Cash and equivalents, beginning of period	48,247	95,689
Cash and equivalents, end of period	59,353	42,256
Supplemental disclosure of cash paid for:
Income taxes, net of refunds	70,698	51,238
Interest	13,484	11,140
Supplemental disclosure of noncash investing and financing activities:
Purchase price payable, including notes issued in connection with business acquisitions	7,936	4,375
Contingent consideration liabilities	5,540	600
Property and equipment acquired under capital leases	3,301
Property and equipment purchases not yet paid	$ 2,861	$ 1,673

XML

Income Taxes - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Income Taxes
Effective income tax rate	36.80%	38.90%

XML

Equity Incentive Plans - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award
Potential Increase in Shares Available for Issuance under the Equity Incentive Plan	544,417
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)	5 years
Number of shares that restricted stock units convert into on the applicable vesting date	1
Forfeiture rates used for grants to employees	8.00%
Forfeiture rates used for grants to executive officers and directors	0.00%
Fair value of RSUs vested during the period	$ 2.8
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Stock options expiration (in years)	10
Vesting period (in years)	5 years
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)	5 years

XML

Revenue by Geographic Area (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues from External Customers and Long-Lived Assets
Revenue	$ 1,006,531	$ 759,684	$ 2,038,308	$ 1,546,332
United States
Revenues from External Customers and Long-Lived Assets
Revenue	789,346	716,086	1,610,311	1,455,412
United Kingdom
Revenues from External Customers and Long-Lived Assets
Revenue	165,196		325,889
Other Countries
Revenues from External Customers and Long-Lived Assets
Revenue	$ 51,989	$ 43,598	$ 102,108	$ 90,920

XML

Equity Incentive Plans (Tables)

6 Months Ended

Jun. 30, 2012

Summary Of Stock-Based Compensation Plans

A summary of transactions in our stock-based compensation plans for the six months ended June 30, 2012 is as follows:

	Shares Available For Grant			RSUs					Stock Options					Restricted Stock
				Number Outstanding			Weighted Average Grant Date Fair Value		Number Outstanding			Weighted Average Exercise Price		Number Outstanding			Weighted Average Grant Date Fair Value
Balance, January 1, 2012		7,876,185			716,791		$	23.59		6,539,046		$	12.93		106,000		$	18.98
Granted		(752,205	)		752,205			31.72		—			—		—			—
Exercised		—			—			—		(938,064	)		10.78		—			—
Vested		—			(86,782	)		24.14		—			—		(43,000	)		19.07
Cancelled		112,764			(34,419	)		28.20		(78,345	)		16.29		—			—
Balance, June 30, 2012		7,236,744			1,347,795		$	27.97		5,522,637		$	13.25		63,000		$	18.92

Pre-Tax Stock-Based Compensation Expense

The components of pre-tax stock-based compensation expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
RSUs	$	2,019	$	891	$	4,083	$	1,769
Stock options		1,721		2,057		3,442		4,147
Restricted stock		228		228		453		453
Stock issued to non-employee directors		—		84		—		233
Total stock-based compensation expense	$	3,968	$	3,260	$	7,978	$	6,602

Stock-Based Compensation Expense Included In Statements Of Income

The following table sets forth the classification of total stock-based compensation expense included in the accompanying Unaudited Consolidated Condensed Statements of Income (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Cost of goods sold	$	96		$	79		$	199		$	168
Facility and warehouse expenses		609			623			1,303			1,234
Selling, general and administrative expenses		3,263			2,558			6,476			5,200
		3,968			3,260			7,978			6,602
Income tax benefit		(1,548	)		(1,252	)		(3,112	)		(2,555	)
Total stock-based compensation expense, net of tax	$	2,420		$	2,008		$	4,866		$	4,047

Stock-Based Compensation Expense Expected To Be Recognized

As of June 30, 2012, unrecognized compensation expense related to unvested RSUs, stock options and restricted stock is expected to be recognized as follows (in thousands):

	RSUs		Stock Options		Restricted Stock		Total
Remainder of 2012	$	4,094	$	3,441	$	460	$	7,995
2013		8,332		4,722		208		13,262
2014		8,268		3,116		139		11,523
2015		8,063		78		—		8,141
2016		4,498		—		—		4,498
2017		143		—		—		143
Total unrecognized compensation expense	$	33,398	$	11,357	$	807	$	45,562

XML

Summary of Stock Based Compensation Plans (Detail) (USD $)	6 Months Ended
	Jun. 30, 2012
Shares Available For Grant
Share-based Compensation Arrangement by Share-based Payment Award
Balance, January 1, 2012	7,876,185
Granted	(752,205)
Cancelled	112,764
Balance, June 30, 2012	7,236,744
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Balance, January 1, 2012	716,791
Granted	752,205
Vested	(86,782)
Cancelled	(34,419)
Balance, June 30, 2012	1,347,795
Balance, Weighted Average Grant Date Fair Value, January 1, 2012	23.59
Granted, Weighted Average Grant Date Fair Value	31.72
Vested, Weighted Average Grant Date Fair Value	24.14
Cancelled, Weighted Average Grant Date Fair Value	28.20
Balance, Weighted Average Grant Date Fair Value, June 30, 2012	27.97
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Balance, January 1, 2012	6,539,046
Exercised	(938,064)
Cancelled	(78,345)
Balance, June 30, 2012	5,522,637
Balance, Weighted Average Exercise Price, January 1, 2012	12.93
Exercised, Weighted Average Exercise Price	10.78
Cancelled, Weighted Average Exercise Price	16.29
Balance, Weighted Average Exercise Price, June 30, 2012	13.25
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Balance, January 1, 2012	106,000
Vested	(43,000)
Balance, June 30, 2012	63,000
Balance, Weighted Average Grant Date Fair Value, January 1, 2012	18.98
Vested, Weighted Average Grant Date Fair Value	19.07
Balance, Weighted Average Grant Date Fair Value, June 30, 2012	18.92

XML

Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2012

Terms Of Interest Rate Swap Agreements

The following table summarizes the terms of our interest rate swap agreements as of June 30, 2012:

Notional Amount	Effective Date	Maturity Date	Fixed Interest Rate*
USD $250,000,000	October 14, 2010	October 14, 2015	3.06%
USD $100,000,000	April 14, 2011	October 14, 2013	2.61%
USD $60,000,000	November 30, 2011	October 31, 2016	2.70%
USD $60,000,000	November 30, 2011	October 31, 2016	2.69%
USD $50,000,000	December 30, 2011	December 30, 2016	2.69%
GBP £50,000,000	November 30, 2011	October 30, 2016	2.86%
CAD $25,000,000	December 30, 2011	March 24, 2016	2.92%

* Includes applicable margin of 1.50% per annum on LIBOR or CDOR-based debt in effect as of June 30, 2012 under the Credit Agreement.

Changes In Accumulated Other Comprehensive Income (Loss) Related To Interest Rate Swap Agreements

Changes in Accumulated Other Comprehensive Income (Loss) related to our interest rate swap agreements were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Beginning balance	$	(6,540	)	$	4,289		$	(6,890	)	$	2,176
Pretax loss		(6,718	)		(7,908	)		(7,709	)		(6,427	)
Income tax benefit		2,333			2,847			2,722			2,314
Reversal of unrealized loss		1,636			1,224			3,112			3,270
Reversal of deferred income taxes		(592	)		(440	)		(1,116	)		(1,177	)
Hedge ineffectiveness		—			—			—			(225	)
Income tax benefit		—			—			—			81
Ending balance	$	(9,881	)	$	12		$	(9,881	)	$	12

XML

Consolidated Condensed Statements of Stockholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning Balance at Dec. 31, 2011	$ 1,644,085	$ 1,470	$ 902,782	$ 748,794	$ (8,961)
Beginning Balance (in shares) at Dec. 31, 2011		146,949,000
Net income	144,989			144,989
Other comprehensive loss	(655)				(655)
Restricted stock units vested, shares		86,000
Restricted stock units vested, value		1	(1)
Stock-based compensation expense	7,978		7,978
Exercise of stock options (in shares)		938,000
Exercise of stock options	10,112	9	10,103
Excess tax benefit from stock-based payments	7,219		7,219
Ending Balance at Jun. 30, 2012	$ 1,813,728	$ 1,480	$ 928,081	$ 893,783	$ (9,616)
Ending Balance (in shares) at Jun. 30, 2012		147,973,000

XML

Consolidated Condensed Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	147,973,454	146,948,608
Common stock, shares outstanding	147,973,454	146,948,608

XML

Restructuring and Acquisition Related Expenses

6 Months Ended

Jun. 30, 2012

Restructuring and Acquisition Related Expenses

Note 10. Restructuring and Acquisition Related Expenses

Refurbished Bumper and Wheel Restructuring

In the second quarter of 2012, we initiated a restructuring plan to improve the operational efficiency of our refurbished product operations and to reduce the cost structure of the related refurbished bumper and wheel product lines. As part of the restructuring plan, we are consolidating certain of our bumper and wheel refurbishing operations, with a focus on increasing output at the remaining operations to improve economies of scale. Restructuring costs include the write off of disposed assets, severance costs for termination of overlapping headcount, costs to move equipment and inventory, and excess facility costs. These costs are expensed as incurred, when the costs meet the criteria to be accrued, or, in the case of non-performing lease reserves, at the cease-use date of the facility. For the three and six months ended June 30, 2012, we incurred $1.1 million related to this restructuring plan. We are in the process of finalizing our restructuring plan, but currently anticipate we will incur up to an additional $0.5 million of expense to complete our plan in the second half of 2012.

Akzo Nobel Paint Business Integration

With our acquisition of the Akzo Nobel paint business, we completed certain restructuring activities to integrate the acquired paint distribution locations into our existing business. Our restructuring plan included the closure of duplicate facilities, elimination of overlapping delivery routes and termination of employees in connection with the consolidation of the overlapping facilities and delivery routes. During the three and six month periods ended June 30, 2011, we incurred $2.1 million in charges primarily related to excess facility costs, which were expensed at the cease-use date for the facilities. While we substantially completed the integration activities related to the Akzo Nobel paint business acquisition in 2011, we may record adjustments to the excess facility reserves if we determine revisions are required to the underlying assumptions.

Other Acquisition Integration Plans

During the three and six month periods ended June 30, 2012, we incurred $1.1 million and $1.3 million, respectively, of restructuring and acquisition related expenses related to certain of our 2011 and 2012 acquisitions. Our integration activities included the closure of duplicate facilities, termination of employees in connection with the consolidation of overlapping facilities with our existing business, moving expenses, and other third party services directly related to our acquisitions. These integration activities were substantially completed as of June 30, 2012.

During the three and six month periods ended June 30, 2011, we incurred $0.3 million related the integration plan for our 2010 acquisition of Cross Canada. Our restructuring plan included the integration of Cross Canada into our existing Canadian operations, as well as the transition of certain corporate functions to our corporate headquarters and our field support center in Nashville. The integration plan related to the Cross Canada acquisition was substantially completed in 2011.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 20, 2012
Document Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
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		148,140,688

XML

Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes

Note 11. 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, 2012 was 36.8% compared with 38.9% for the comparable prior year period. The effective income tax rate for the six months ended June 30, 2012 reflects the larger proportion of pretax income generated in lower rate jurisdictions, primarily as a result of the expansion of our international operations in the fourth quarter of 2011 through our acquisition of ECP.

XML

Consolidated Condensed Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenue	$ 1,006,531	$ 759,684	$ 2,038,308	$ 1,546,332
Cost of goods sold	584,600	437,448	1,168,994	880,450
Gross margin	421,931	322,236	869,314	665,882
Facility and warehouse expenses	82,192	69,183	167,300	139,001
Distribution expenses	91,926	69,048	183,739	134,859
Selling, general and administrative expenses	121,698	91,395	243,412	181,156
Restructuring and acquisition related expenses	2,195	2,377	2,442	2,423
Depreciation and amortization	15,353	11,747	30,246	22,586
Operating income	108,567	78,486	242,175	185,857
Other expense (income):
Interest expense, net	7,356	4,671	14,723	11,080
Loss on debt extinguishment				5,345
Change in fair value of contingent consideration liabilities	1,240	(1,615)	(105)	(1,615)
Other income, net	(1,228)	(382)	(1,739)	(488)
Total other expense, net	7,368	2,674	12,879	14,322
Income before provision for income taxes	101,199	75,812	229,296	171,535
Provision for income taxes	37,201	29,106	84,307	66,647
Net income	$ 63,998	$ 46,706	$ 144,989	$ 104,888
Earnings per share:
Basic	$ 0.43	$ 0.32	$ 0.98	$ 0.72
Diluted	$ 0.43	$ 0.32	$ 0.97	$ 0.71

XML

Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities

Note 5. 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. For certain of our foreign operations, we also use short-term foreign currency forward contracts to manage our exposure to variability in foreign currency denominated transactions. With our acquisition of a precious metal extraction business during the second quarter of 2012 (see Note 9, “Business Combinations), we began entering into certain commodity forward contracts to manage our exposure to changing metals prices. We do not hold or issue derivatives for trading purposes.

Interest Rate Swaps

At June 30, 2012, 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 minimizing 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 have received and will receive payment at a variable rate of interest based on the London InterBank Offered Rate (“LIBOR”) or the Canadian Dealer Offered Rate (“CDOR”) for the respective currency of each interest rate swap agreement’s notional amount. The interest rate swap agreements qualify as cash flow hedges, and we have elected to apply hedge accounting for these swap agreements. As a result, the effective portion of changes in the fair value of the interest rate swap agreements is recorded in Accumulated Other Comprehensive 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.

The following table summarizes the terms of our interest rate swap agreements as of June 30, 2012:

Notional Amount	Effective Date	Maturity Date	Fixed Interest Rate*
USD $250,000,000	October 14, 2010	October 14, 2015	3.06%
USD $100,000,000	April 14, 2011	October 14, 2013	2.61%
USD $60,000,000	November 30, 2011	October 31, 2016	2.70%
USD $60,000,000	November 30, 2011	October 31, 2016	2.69%
USD $50,000,000	December 30, 2011	December 30, 2016	2.69%
GBP £50,000,000	November 30, 2011	October 30, 2016	2.86%
CAD $25,000,000	December 30, 2011	March 24, 2016	2.92%

* Includes applicable margin of 1.50% per annum on LIBOR or CDOR-based debt in effect as of June 30, 2012 under the Credit Agreement.

As of June 30, 2012 and December 31, 2011, the fair market value of the interest rate swap contracts was a liability of $15.3 million and $10.6 million, respectively, included in Other Noncurrent Liabilities on our Unaudited Consolidated Condensed Balance Sheets.

Changes in Accumulated Other Comprehensive Income (Loss) related to our interest rate swap agreements were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Beginning balance	$	(6,540	)	$	4,289		$	(6,890	)	$	2,176
Pretax loss		(6,718	)		(7,908	)		(7,709	)		(6,427	)
Income tax benefit		2,333			2,847			2,722			2,314
Reversal of unrealized loss		1,636			1,224			3,112			3,270
Reversal of deferred income taxes		(592	)		(440	)		(1,116	)		(1,177	)
Hedge ineffectiveness		—			—			—			(225	)
Income tax benefit		—			—			—			81
Ending balance	$	(9,881	)	$	12		$	(9,881	)	$	12

In connection with the execution of our credit agreement on March 25, 2011 as discussed in Note 4, “Long-Term Obligations,” we temporarily experienced differences in critical terms between the interest rate swaps and the underlying debt. As a result, we incurred a loss of $0.2 million related to hedge ineffectiveness for the six months ended June 30, 2011. Beginning on April 14, 2011, we have held, and expect to continue to hold through the maturity of the respective interest rate swap agreements, at least the notional amount of each agreement in the respective variable-rate debt, such that future ineffectiveness will be immaterial and the swaps will continue to be highly effective in hedging our variable rate debt.

As of June 30, 2012, we estimate that $3.9 million of derivative losses (net of tax) included in Accumulated Other Comprehensive Loss will be reclassified into interest expense within the next 12 months.

Foreign Currency Forward Contracts

In order to manage the risk of changes in exchange rates associated with certain foreign currency transactions in our European operations, such as our purchases of inventory denominated in a currency other than the pound sterling, we have entered into short-term foreign currency forward contracts. These contracts are adjusted to fair value each balance sheet date. The notional amount and fair value of these contracts at June 30, 2012 and December 31, 2011, along with the effect on our results of operations for the three and six month periods ended June 30, 2012, were immaterial. We did not hold any foreign currency forward contracts during the six month period ended June 30, 2011.

Commodity Forward Contracts

In order to manage the risk of changes in prices for certain precious metals, including gold, silver, platinum and palladium, we have entered into short-term commodity forward contracts. These contracts are adjusted to fair value each balance sheet date. The notional amount and fair value of our commodity forward contracts at June 30, 2012 and the effect on our results of operations for the three and six month periods ended June 30, 2012 were immaterial.

XML

Long-Term Obligations

6 Months Ended

Jun. 30, 2012

Long-Term Obligations

Note 4. Long-Term Obligations

Long-Term Obligations consist of the following (in thousands):

	June 30, 2012			December 31, 2011
Senior secured debt financing facility:
Term loans payable	$	431,875		$	240,625
Revolving credit facility		508,288			660,730
Notes payable through October 2018 at weighted average interest rates of 1.9% and 2.0%, respectively		46,378			38,338
Other long-term debt at weighted average interest rates of 2.4% and 3.2%, respectively		13,905			16,383
		1,000,446			956,076
Less current maturities		(46,379	)		(29,524	)
	$	954,067		$	926,552

On March 25, 2011, we entered into a credit agreement with the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America N.A., as syndication agent, RBS Citizens, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBS Citizens, N.A. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners, which was amended on September 30, 2011 (as amended, the “Credit Agreement”). The Credit Agreement provides for borrowings up to $1.4 billion, consisting of (1) a $950 million revolving credit facility (the “Revolving Credit Facility”), (2) a $250 million term loan facility (the “Term Loan Facility”) and (3) an additional term loan facility of up to $200 million (“New Term Loan Facility”). Under the Revolving Credit Facility, we are permitted to draw up to the U.S. dollar equivalent of $500 million in Canadian dollars, pounds sterling, euros, and other agreed-upon currencies. The Credit Agreement also provides for (a) the issuance of up to $125 million of letters of credit under the Revolving Credit Facility in agreed-upon currencies, (b) the issuance of up to $25 million of swing line loans under the Revolving Credit Facility, and (c) the opportunity to increase the amount of the Revolving Credit Facility or obtain incremental term loans up to $400 million. Outstanding letters of credit and swing line loans are taken into account when determining availability under the Revolving Credit Facility. In January 2012, we borrowed the full $200 million available under the New Term Loan Facility, which we used to pay down a portion of our Revolving Credit Facility borrowings.

Amounts under the Revolving Credit Facility are due and payable upon maturity of the Credit Agreement in March 2016. Amounts under the Term Loan Facility are due and payable in quarterly installments, with the annual payments equal to 5% of the original principal amount in the first and second years, 10% of the original principal amount in the third and fourth years, and 15% of the original principal amount in the fifth year. The remaining balance under the Term Loan Facility is due and payable on the maturity date of the Credit Agreement. Amounts under the New Term Loan Facility are due and payable in quarterly installments beginning after March 31, 2012, with the annual payments equal to 5% of the original principal amount in the first and second years and 10% of the original principal amount in the third and fourth years. The remaining balance under the New Term Loan Facility is due and payable on the maturity date of the Credit Agreement. We are required to prepay the Term Loan Facility and the New Term Loan Facility 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.

The Credit Agreement contains customary representations and warranties, and contains customary covenants that provide limitations and conditions on our ability to, among other things (i) incur indebtedness, (ii) incur liens, (iii) enter into any merger, consolidation, amalgamation, or otherwise liquidate or dissolve the Company, (iv) dispose of certain property, (v) make dividend payments, repurchase our stock, or enter into derivative contracts indexed to the value of our common stock, (vi) make certain investments, including the acquisition of assets constituting a business or the stock of a business designated as a non-guarantor, (vii) make optional prepayments of subordinated debt, (viii) enter into sale-leaseback transactions, (ix) issue preferred stock, redeemable stock, convertible stock or other similar equity instruments, and (x) enter into hedge agreements for speculative purposes or otherwise not in the ordinary course of business. The Credit Agreement also contains financial and affirmative covenants under which we (i) may not exceed a maximum net leverage ratio of 3.00 to 1.00, except in connection with permitted acquisitions with aggregate consideration in excess of $200 million during any period of four consecutive fiscal quarters in which case the maximum net leverage ratio may increase to 3.50 to 1.00 for the subsequent four fiscal quarters and (ii) are required to maintain a minimum interest coverage ratio of 3.00 to 1.00. We were in compliance with all restrictive covenants under the Credit Agreement as of June 30, 2012 and December 31, 2011.

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 total 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 5, “Derivative Instruments and Hedging Activities,” the weighted average interest rates on borrowings outstanding against the Credit Agreement at June 30, 2012 and December 31, 2011 were 2.57% and 2.59%, respectively. We also pay a commitment fee based on the average daily unused amount of the Revolving Credit Facility. The commitment fee is subject to change in increments of 0.05% depending on our total leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an applicable rate based on our total leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly in arrears. Borrowings under the Credit Agreement totaled $940.2 million and $901.4 million at June 30, 2012 and December 31, 2011, respectively, of which $25.6 million and $12.5 million were classified as current maturities, respectively. As of June 30, 2012, there were $47.1 million of outstanding letters of credit. The amounts available under the Revolving Credit Facility are reduced by the amounts outstanding under letters of credit, and thus availability on the Revolving Credit Facility at June 30, 2012 was $394.6 million.

During the six months ended June 30, 2011, we incurred a loss on debt extinguishment of $5.3 million related to the write off of the unamortized balance of capitalized debt issuance costs under our previous debt agreement. The amount of the write off excludes debt issuance cost amortization, which is recorded as a component of interest expense. We incurred $8.2 million in fees related to the execution of the Credit Agreement during the six month period ended June 30, 2011. These fees were capitalized within Other Assets on our Unaudited Consolidated Condensed Balance Sheets and are amortized over the term of the agreement.

XML

Long-Term Obligations (Tables)

6 Months Ended

Jun. 30, 2012

Schedule Of Long-Term Obligations

Long-Term Obligations consist of the following (in thousands):

	June 30, 2012			December 31, 2011
Senior secured debt financing facility:
Term loans payable	$	431,875		$	240,625
Revolving credit facility		508,288			660,730
Notes payable through October 2018 at weighted average interest rates of 1.9% and 2.0%, respectively		46,378			38,338
Other long-term debt at weighted average interest rates of 2.4% and 3.2%, respectively		13,905			16,383
		1,000,446			956,076
Less current maturities		(46,379	)		(29,524	)
	$	954,067		$	926,552

XML

Segment and Geographic Information

6 Months Ended

Jun. 30, 2012

Segment and Geographic Information

Note 12. Segment and Geographic Information

We have four operating segments: Wholesale – North America; Wholesale – Europe; Self Service; and Heavy-Duty Truck. Our operations in North America, which include our Wholesale – North America, Self Service and Heavy-Duty Truck operating segments, are aggregated into one reportable segment because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our Wholesale – Europe operating segment, formed with our acquisition of ECP effective October 1, 2011, marks our entry into the European automotive aftermarket business, and is presented as a separate reportable segment. Although the Wholesale – Europe operating segment shares many of the characteristics of our North American operations, including types of products offered, distribution methods, and procurement, we have provided separate financial information as we believe this data would be beneficial to users in understanding our results. Therefore, we present our reportable segments on a geographic basis.

The following table presents our financial performance, including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and depreciation and amortization by reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
North America	$	841,335	$	759,684	$	1,712,419	$	1,546,332
Europe		165,196		—		325,889		—
Total revenue	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
EBITDA
North America	$	109,687	$	93,354	$	241,875	$	212,757
Europe		16,057		—		35,590		—
Total EBITDA	$	125,744	$	93,354	$	277,465	$	212,757
Depreciation and Amortization
North America	$	14,771	$	12,871	$	28,773	$	24,797
Europe		2,418		—		4,673		—
Total depreciation and amortization	$	17,189	$	12,871	$	33,446	$	24,797

EBITDA during the three and six months ended June 30, 2012 for our North American segment is inclusive of gains of $8.4 million and $16.7 million, respectively, resulting from lawsuit settlements with certain of our aftermarket product suppliers as discussed in Note 7, “Commitments and Contingencies.” Included within EBITDA of our European segment is a loss of $1.1 million and a gain of $0.2 million for the three and six month periods ended June 30, 2012, respectively, for the change in fair value of contingent consideration liabilities related to our ECP acquisition. Refer to Note 6, “Fair Value Measurements,” for further information on these changes in fair value of the contingent consideration obligations recorded in earnings during the periods.

The table below provides a reconciliation from EBITDA to Net Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
EBITDA	$	125,744	$	93,354	$	277,465	$	212,757
Depreciation and amortization		17,189		12,871		33,446		24,797
Interest expense, net		7,356		4,671		14,723		11,080
Loss on debt extinguishment		—		—		—		5,345
Provision for income taxes		37,201		29,106		84,307		66,647
Net income	$	63,998	$	46,706	$	144,989	$	104,888

The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is 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 excludes depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.

The following table presents capital expenditures, which includes additions to property and equipment, by reportable segment (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Capital Expenditures
North America	$	16,372	$	24,447	$	34,506	$	42,540
Europe		3,914		—		7,109		—
	$	20,286	$	24,447	$	41,615	$	42,540

The following table presents assets by reportable segment (in thousands):

	June 30, 2012		December 31, 2011
Receivables, net
North America	$	249,407	$	230,871
Europe		60,047		50,893
Total receivables, net		309,454		281,764
Inventory
North America		670,032		636,145
Europe		128,775		100,701
Total inventory		798,807		736,846
Property and Equipment, net
North America		393,038		380,282
Europe		50,527		43,816
Total property and equipment, net		443,565		424,098
Other unallocated assets		1,873,583		1,756,996
Total assets	$	3,425,409	$	3,199,704

We report net trade receivables, inventories, and net property 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 income taxes.

Our operations are primarily conducted in the U.S. Our European operations, which we started with the acquisition of ECP in the fourth quarter of 2011, are located in the U.K. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, and other alternative parts operations in Guatemala and Costa Rica.

The following table sets forth our revenue by geographic area (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue
United States	$	789,346	$	716,086	$	1,610,311	$	1,455,412
United Kingdom		165,196		—		325,889		—
Other countries		51,989		43,598		102,108		90,920
	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332

The following table sets forth our tangible long-lived assets by geographic area (in thousands):

	June 30, 2012		December 31, 2011
Long-lived Assets
United States	$	372,978	$	360,961
United Kingdom		50,527		43,816
Other countries		20,060		19,321
	$	443,565	$	424,098

The following table sets forth our revenue by product category (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Aftermarket, other new and refurbished products	$	547,912	$	356,202	$	1,113,256	$	737,318
Recycled, remanufactured and related products and services		323,669		269,700		649,373		545,482
Other		134,950		133,782		275,679		263,532
	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332

All of the product categories include revenue from our North American reportable segment, while our European segment, which is composed of ECP, an automotive aftermarket products distributor, generates revenue only from the sale of aftermarket 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. With our acquisition of a precious metals refining and reclamation business in the second quarter of 2012, revenue from other sources also includes the sales of precious metals harvested from various components, including certain of our salvage vehicle parts.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share

Note 8. Earnings Per Share

The following chart sets forth the computation of earnings per share (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income	$	63,998	$	46,706	$	144,989	$	104,888
Denominator for basic earnings per share—Weighted-average shares outstanding		147,645		145,917		147,392		145,765
Effect of dilutive securities:
RSUs		220		80		219		103
Stock options		2,186		2,107		2,238		2,113
Restricted stock		25		27		24		26
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding		150,076		148,131		149,873		148,007
Earnings per share, basic	$	0.43	$	0.32	$	0.98	$	0.72
Earnings per share, diluted	$	0.43	$	0.32	$	0.97	$	0.71

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 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Antidilutive securities:
Stock options		—		1,554		—		1,567

XML

Segment and Geographic Information - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended				3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Segment	Jun. 30, 2011	Jun. 30, 2012 North America Segment	Apr. 30, 2012 North America	Jun. 30, 2012 Europe	Jun. 30, 2012 Europe
Segment Reporting Information
Number of operating segments			4
Number of reportable segments					1
Litigation settlement gain recognized					$ 16,700,000	$ 8,400,000
Change in fair value of contingent consideration liabilities	$ (1,240,000)	$ 1,615,000	$ 105,000	$ 1,615,000			$ (1,100,000)	$ 200,000

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements

Note 6. 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 there were no significant changes in valuation techniques or inputs during the six months ended June 30, 2012. 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, 2012 and December 31, 2011 (in thousands):

	Balance as of June 30, 2012		Fair Value Measurements as of June 30, 2012
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	17,597	$	—	$	17,597	$	—
Total Assets	$	17,597	$	—	$	17,597	$	—
Liabilities:
Contingent consideration liabilities	$	88,037	$	—	$	—	$	88,037
Deferred compensation liabilities		17,706		—		17,706		—
Interest rate swaps		15,268		—		15,268		—
Foreign currency forwards		105		—		105		—
Commodity forwards		83		—		83		—
Total Liabilities	$	121,199	$	—	$	33,162	$	88,037
	Balance as of December 31, 2011		Fair Value Measurements as of December 31, 2011
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	13,413	$	—	$	13,413	$	—
Total Assets	$	13,413	$	—	$	13,413	$	—
Liabilities:
Contingent consideration liabilities	$	82,382	$	—	$	—	$	82,382
Deferred compensation liabilities		14,071		—		14,071		—
Interest rate swaps		10,576		—		10,576		—
Total Liabilities	$	107,029	$	—	$	24,647	$	82,382

The cash surrender value of life insurance and deferred compensation liabilities are included in Other Assets and Other Noncurrent Liabilities, respectively, on our Unaudited Consolidated Condensed Balance Sheets. The contingent consideration liabilities are classified as separate line items in both current and noncurrent liabilities on our Unaudited Consolidated Condensed Balance Sheets based on the expected timing of the related payments.

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 the interest rate swaps 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. The fair value of our foreign currency forward contracts is estimated based on quoted foreign exchange rates, forward foreign exchange rates and interest rates. The fair value of our commodity forward contracts is estimated based on quoted commodity rates, forward commodity rates and interest rates.

Our contingent consideration liabilities are related to our business acquisitions as further described in Note 9, “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 unobservable inputs include internally-developed assumptions of the probabilities of achieving specified targets, which are used to determine the resulting cash flows and the applicable discount rate. Our Level 3 fair value measurements are established and updated quarterly by our corporate accounting department using current information about these key assumptions, with the input and oversight of our operational and executive management teams. We evaluate the performance of the business during the period compared to our previous expectations, along with any changes to our future projections, and update the estimated cash flows accordingly. In addition, we consider changes to our cost of capital and changes to the probability of achieving the earnout payment targets when updating our discount rate on a quarterly basis.

The significant unobservable inputs used in the fair value measurements of our Level 3 contingent consideration liabilities were as follows:

Unobservable Input	June 30, 2012 Weighted Average			December 31, 2011 Weighted Average
Probability of achieving payout targets		79.8	%		78.1	%
Discount rate		6.5	%		3.0	%

A significant decrease in the assessed probabilities of achieving the targets or a significant increase in the discount rate, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the liabilities are recorded in Change in Fair Value of Contingent Consideration Liabilities within Other Expense (Income) on our Unaudited Consolidated Condensed Statements of Income.

Changes in the fair value of our contingent consideration obligations for the three and six month periods ended June 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Beginning balance	$	82,909		$	2,600		$	82,382		$	2,000
Contingent consideration liabilities recorded for business acquisitions		5,433			—			5,540			600
Payments		—			—			(600	)		—
Loss (gain) included in earnings		1,240			(1,615	)		(105	)		(1,615	)
Exchange rate effects		(1,545	)		—			820			—
Ending balance	$	88,037		$	985		$	88,037		$	985

The loss and gain included in earnings for the three and six month periods ended June 30, 2012, respectively, are related to contingent consideration obligations outstanding as of June 30, 2012. The gain included in earnings for the three and six months ended June 30, 2011 is related to a contingent consideration obligation that was settled prior to June 30, 2012. The changes in the fair value of contingent consideration obligations during the respective periods in 2012 and 2011 are a result of the quarterly assessment of the fair value inputs. The gain during the six month period ended June 30, 2012 also includes the impact related to the adoption of FASB ASU No. 2011-04 as described in Note 2, “Financial Statement Information” (which adoption did not have a material impact).

Financial Assets and Liabilities Not Measured at Fair Value

Our debt is reflected on the Unaudited Consolidated Condensed Balance Sheets at cost. Based on current market conditions as of June 30, 2012, the fair value of our credit facility borrowings (see Note 4, “Long-Term Obligations”) reasonably approximated the carrying value of $940 million. This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant inputs observable in the market including interest rates on recent financing transactions to entities with a credit rating similar to ours. We estimated the fair value of our credit facility borrowings by calculating the upfront cash payment a market participant would require to assume our obligations. The upfront cash payment, excluding any issuance costs, is the amount that a market participant would be able to lend at June 30, 2012 to an entity with a credit rating similar to ours and achieve sufficient cash inflows to cover the scheduled cash outflows under our credit facility.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies

Note 7. 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, 2012 are as follows (in thousands):

Six months ending December 31, 2012	$	45,082
Years ending December 31:
2013		84,992
2014		73,623
2015		64,206
2016		49,962
2017		38,322
Thereafter		98,691
Future Minimum Lease Payments	$	454,878

Litigation and Related Contingencies

We are a plaintiff in a class action lawsuit against several aftermarket product suppliers. In January 2012, we reached a settlement agreement with certain of the defendants, under which we recognized a gain of $8.3 million. Additionally, in April 2012, the class action lawsuit against certain other defendants was settled, under which we recognized a gain of $8.4 million. These gains were recorded as a reduction of Cost of Goods Sold during the six months ended June 30, 2012. The class action is still pending against two defendants, the results of which are not expected to be material to our results of operations or cash flows. If there is a class settlement with (or a favorable judgment entered against) each of the remaining defendants, we will recognize the gains from such settlement or judgment when substantially all uncertainties regarding their timing and amount are resolved and realization is assured.

We also 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.

XML

Business Combinations

6 Months Ended

Jun. 30, 2012

Business Combinations

Note 9. Business Combinations

During the six months ended June 30, 2012, we made 11 acquisitions in North America, which included seven wholesale businesses and four self service retail operations. Our wholesale acquisitions included the purchase of a precious metals refining and reclamation business, which we acquired with the goal of improving the profitability of our scrap recovery process related to the precious metals we extract from our salvage vehicle parts such as catalytic converters. Our other 2012 acquisitions enabled us to expand our geographic presence and enter new markets.

Total acquisition date fair value of the consideration for the acquisitions during the six months ended June 30, 2012 was $129.9 million, composed of $116.5 million of cash (net of cash acquired), $7.9 million of notes payable and $5.5 million of contingent payments to former owners. The contingent consideration arrangements made in connection with our 2012 acquisitions have a maximum potential payout of $6.5 million.

During the six months ended June 30, 2012, we recorded $98.9 million of goodwill related to these acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2011 acquisitions. Approximately $76.1 million of the $98.9 million of goodwill recorded is expected to be deductible for income tax purposes. In the period between the acquisition dates and June 30, 2012, our 2012 acquisitions generated $22.9 million of revenue and $2.2 million of operating income.

On October 3, 2011, LKQ Corporation, LKQ Euro Limited (“LKQ Euro”), a subsidiary of LKQ Corporation, and Draco Limited (“Draco”) entered into an Agreement for the Sale and Purchase of Shares of Euro Car Parts Holdings Limited (the “Sale and Purchase Agreement”). Under the terms of the Sale and Purchase Agreement, effective October 1, 2011, LKQ Euro acquired all of the shares in the capital of Euro Car Parts Holdings Limited (“ECP”), an automotive aftermarket products distributor in the United Kingdom, from Draco and the other shareholders of ECP. With the acquisition of ECP, we expanded our geographic presence beyond North America into the European market. Our acquisition of ECP established our Wholesale – Europe operating segment. Total acquisition date fair value of the consideration for the ECP acquisition was £261.6 million ($403.7 million), composed of £190.3 million ($293.7 million) of cash (net of cash acquired), £18.4 million ($28.3 million) of notes payable, £2.7 million ($4.1 million) of other purchase price obligations (non-interest bearing) and a contingent payment to the former owners of ECP. Pursuant to the contingent payment terms, if certain annual performance targets are met by ECP, we will be obligated to pay between £22 million and £25 million and between £23 million and £30 million for the years ending December 31, 2012 and 2013, respectively. We assessed the acquisition date fair value of these contingent payments to be £50.2 million ($77.5 million at the exchange rate on October 3, 2011). Refer to Note 6, “Fair Value Measurements” for information on changes to the fair value of our contingent consideration liabilities during each of the three and six month periods ended June 30, 2011 and 2012.

We recorded goodwill of $337.0 million for the ECP acquisition, which will not be deductible for income tax purposes.

In addition to our acquisition of ECP, we made 20 acquisitions in North America in 2011 (12 wholesale businesses, five recycled heavy-duty truck products businesses and three self service retail operations). Our acquisitions included the purchase of two engine remanufacturers, which expanded our presence in the remanufacturing industry that we entered in 2010. Additionally, our acquisition of an automotive heating and cooling component distributor supplements our expansion into the automotive heating and cooling aftermarket products market. Our North American wholesale business acquisitions also included the purchase of the U.S. vehicle refinish paint distribution business of Akzo Nobel Automotive and Aerospace Coatings (the “Akzo Nobel paint business”), which allowed us to increase our paint and related product offerings and expand our geographic presence in the automotive paint market. Our other 2011 acquisitions enabled us to expand our geographic presence and enter new markets.

Total acquisition date fair value of the consideration for these 20 acquisitions was $207.3 million, composed of $193.2 million of cash (net of cash acquired), $5.9 million of notes payable, $4.5 million of other purchase price obligations (non-interest bearing) and $3.7 million of contingent payments to former owners. In conjunction with the acquisition of the Akzo Nobel paint business on May 26, 2011, we entered into a wholesaler agreement under which we became an authorized distributor of Akzo Nobel products in the acquired markets. Included in this agreement is a requirement to make an additional payment to Akzo Nobel in the event that our purchases of Akzo Nobel products do not meet specified thresholds from June 1, 2011 to May 31, 2014. This contingent payment will be calculated as the difference between our actual purchases and the targeted purchase levels outlined in the agreement for the specified period with a maximum payment of $21.0 million. The contingent consideration liability recorded in 2011 also includes two additional arrangements that have a maximum potential payout of $4.6 million. The acquisition date fair value of these contingent consideration agreements is immaterial.

During the year ended December 31, 2011, we recorded $105.2 million of goodwill related to these 20 acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2010 acquisitions. Of this amount, approximately $88.3 million is expected to be deductible for income tax purposes.

Our acquisitions are accounted for under the purchase method of accounting and are included in our unaudited consolidated condensed 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, 2012 and the last two quarters of 2011 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain of the inventories 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.

The purchase price allocations for the acquisitions completed during the six months ended June 30, 2012 and the year ended December 31, 2011 are as follows (in thousands):

	Six Months Ended June 30, 2012 (Preliminary)			Year Ended December 31, 2011
				ECP (Preliminary)			Other Acquisitions (Preliminary)			Total (Preliminary)
Receivables	$	4,989		$	54,225		$	23,538		$	77,763
Receivable reserves		(505	)		(3,832	)		(1,121	)		(4,953	)
Inventory		30,109			93,835			59,846			153,681
Prepaid expenses and other current assets		258			3,189			2,820			6,009
Property and equipment		7,779			41,830			10,614			52,444
Goodwill		98,907			337,031			105,177			442,208
Other intangibles		479			39,583			7,683			47,266
Other assets		102			13			9,420			9,433
Deferred income taxes		(657	)		(13,218	)		7,235			(5,983	)
Current liabilities assumed		(11,535	)		(135,390	)		(17,257	)		(152,647	)
Debt assumed		—			(13,564	)		—			(13,564	)
Other noncurrent liabilities assumed		—			—			(619	)		(619	)
Contingent consideration liabilities		(5,540	)		(77,539	)		(3,700	)		(81,239	)
Other purchase price obligations		—			(4,136	)		(4,510	)		(8,646	)
Notes issued		(7,936	)		(28,302	)		(5,917	)		(34,219	)
Cash used in acquisitions, net of cash acquired	$	116,450		$	293,725		$	193,209		$	486,934

The primary reason for our acquisitions made during the six months ended June 30, 2012 and the year ended December 31, 2011 was to leverage our strategy of becoming a one-stop provider for alternative vehicle replacement products. These acquisitions enabled us to expand our market presence, widen our product offerings and enter new markets. When we identify potential acquisitions, we attempt to target companies with a leading market share, an experienced management team and workforce that provide a fit with our existing operations and strong cash flows. In many cases, acquiring companies with these characteristics can result in purchase prices that include a significant amount of goodwill.

Most notably, our acquisition of ECP in 2011 marks our entry into the European automotive aftermarket business, which provides an opportunity to us as that market has historically had a low penetration of alternative collision parts. Additionally, ECP is a leading distributor of alternative automotive products reaching most major markets in the U.K., with a developed distribution network, experienced management team, and established workforce. These factors contributed to the $337 million of goodwill recognized related to this acquisition.

The following pro forma summary presents the effect of the businesses acquired during the first six months of 2012 as though the businesses had been acquired as of January 1, 2011 and the businesses acquired during the year ended December 31, 2011 as though they had been acquired as of January 1, 2010. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Revenue, as reported	$	1,006,531	$	759,684	$	2,038,308	$	1,546,332
Revenue of purchased businesses for the period prior to acquisition:
ECP		—		134,921		—		265,498
Other acquisitions		25,573		93,193		64,337		194,741
Pro forma revenue	$	1,032,104	$	987,798	$	2,102,645	$	2,006,571
Net income, as reported	$	63,998	$	46,706	$	144,989	$	104,888
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments:
ECP		—		6,019		—		10,952
Other acquisitions		1,335		4,658		4,469		9,999
Pro forma net income	$	65,333	$	57,383	$	149,458	$	125,839
Earnings per share-basic, as reported	$	0.43	$	0.32	$	0.98	$	0.72
Effect of purchased businesses for the period prior to acquisition:
ECP		—		0.04		—		0.08
Other acquisitions		0.01		0.03		0.03		0.07
Pro forma earnings per share-basic (a)	$	0.44	$	0.39	$	1.01	$	0.86
Earnings per share-diluted, as reported	$	0.43	$	0.32	$	0.97	$	0.71
Effect of purchased businesses for the period prior to acquisition:
ECP		—		0.04		—		0.07
Other acquisitions		0.01		0.03		0.03		0.07
Pro forma earnings per share-diluted (a)	$	0.44	$	0.39	$	1.00	$	0.85

(a) 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 net realizable value, adjustments to depreciation on acquired property and equipment, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. These pro forma results are not necessarily indicative either of what would have occurred if the acquisitions had been in effect for the period presented or of future results.

XML

Assets by Reportable Segment (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Segment Reporting Information
Receivables, net	$ 309,454	$ 281,764
Inventory	798,807	736,846
Property and equipment, net	443,565	424,098
Other unallocated assets	1,873,583	1,756,996
Total assets	3,425,409	3,199,704
North America
Segment Reporting Information
Receivables, net	249,407	230,871
Inventory	670,032	636,145
Property and equipment, net	393,038	380,282
Europe
Segment Reporting Information
Receivables, net	60,047	50,893
Inventory	128,775	100,701
Property and equipment, net	$ 50,527	$ 43,816

XML

Tangible Long lived Assets by Geographic Area (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	$ 443,565	$ 424,098
United States
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	372,978	360,961
United Kingdom
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	50,527	43,816
Other Countries
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	$ 20,060	$ 19,321

XML

Segment Reporting Capital Expenditure (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information
Capital Expenditures	$ 20,286	$ 24,447	$ 41,615	$ 42,540
North America
Segment Reporting Information
Capital Expenditures	16,372	24,447	34,506	42,540
Europe
Segment Reporting Information
Capital Expenditures	$ 3,914		$ 7,109

XML

Changes in Warranty Reserve (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Standard Product Warranty
Balance as of January 1, 2012	$ 7,347
Warranty expense	11,230
Warranty claims	(12,059)
Business acquisitions	645
Balance as of June 30, 2012	$ 7,163

XML

Future Minimum Lease Commitments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Operating Leased Assets
Six months ending December 31, 2012	$ 45,082
2013	84,992
2014	73,623
2015	64,206
2016	49,962
2017	38,322
Thereafter	98,691
Future Minimum Lease Payments	$ 454,878

XML

Financial Statement Information (Tables)

6 Months Ended

Jun. 30, 2012

Schedule Of Inventory

Inventory consists of the following (in thousands):

	June 30, 2012		December 31, 2011
Aftermarket and refurbished products	$	462,472	$	445,787
Salvage and remanufactured products		336,335		291,059
	$	798,807	$	736,846

Changes In Carrying Amount Of Goodwill

The change in the carrying amount of goodwill during the six months ended June 30, 2012 is as follows (in thousands):

Balance as of January 1, 2012	$	1,476,063
Business acquisitions and adjustments to previously recorded goodwill		98,907
Exchange rate effects		3,635
Balance as of June 30, 2012	$	1,578,605

Schedule Of Other Intangibles

The components of other intangibles are as follows (in thousands):

	June 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	116,493	$	(18,892	)	$	97,601	$	115,954	$	(16,305	)	$	99,649
Customer relationships		10,052		(4,364	)		5,688		10,050		(3,065	)		6,985
Covenants not to compete		3,426		(1,138	)		2,288		3,194		(918	)		2,276
	$	129,971	$	(24,394	)	$	105,577	$	129,198	$	(20,288	)	$	108,910

Changes In Warranty Reserve

The changes in the warranty reserve during the six month period ended June 30, 2012 were as follows (in thousands):

Balance as of January 1, 2012	$	7,347
Warranty expense		11,230
Warranty claims		(12,059	)
Business acquisitions		645
Balance as of June 30, 2012	$	7,163

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2012

Future Minimum Lease Commitments

The future minimum lease commitments under these leases at June 30, 2012 are as follows (in thousands):

Six months ending December 31, 2012	$	45,082
Years ending December 31:
2013		84,992
2014		73,623
2015		64,206
2016		49,962
2017		38,322
Thereafter		98,691
Future Minimum Lease Payments	$	454,878

XML

Changes in Fair Value of Level 3 Contingent Consideration Obligations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	$ 82,909	$ 2,600	$ 82,382	$ 2,000
Contingent consideration liabilities recorded for business acquisitions	5,433		5,540	600
Payments			(600)
Loss (gain) included in earnings	1,240	(1,615)	(105)	(1,615)
Exchange rate effects	(1,545)		820
Ending balance	$ 88,037	$ 985	$ 88,037	$ 985

XML

Long Term Obligation (Parenthetical) (Detail)	Jun. 30, 2012	Dec. 31, 2011
Notes Payable, Other Payables
Debt Instrument
Weighted average interest rates	1.90%	2.00%
Other Long-Term Debt
Debt Instrument
Weighted average interest rates	2.40%	3.20%

XML

Consolidated Condensed Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Net income	$ 63,998	$ 46,706	$ 144,989	$ 104,888
Other comprehensive income, net of tax:
Net change in unrecognized gains/losses on interest rate swaps, net of tax	(3,341)	(4,277)	(2,991)	(2,164)
Foreign currency translation	(6,171)	551	2,336	3,053
Total other comprehensive (loss) income	(9,512)	(3,726)	(655)	889
Total comprehensive income	$ 54,486	$ 42,980	$ 144,334	$ 105,777

XML

Equity Incentive Plans

6 Months Ended

Jun. 30, 2012

Equity Incentive Plans

Note 3. Equity Incentive Plans

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”). In the first quarter of 2012, our Board of Directors approved an amendment to the Equity Incentive Plan, which was subsequently approved by our stockholders at our 2012 Annual Meeting in May 2012, to explicitly allow participation of our non-employee directors, to allow issuance of shares of our common stock to non-employee directors in lieu of cash compensation, to increase the number of shares available for issuance under the Equity Incentive Plan by 544,417, and to make certain updating amendments.

In connection with the amendment to the Equity Incentive Plan, our Board of Directors approved the termination of the Stock Option and Compensation Plan for Non-Employee Directors (the “Director Plan”), other than with respect to any options currently outstanding under the Director Plan. We had not issued options under the Director Plan since 2007. The increase in the number of shares available for issuance under the Equity Incentive Plan as approved by our Board of Directors in the first quarter of 2012 represented the remaining number of shares available for issuance under the Director Plan as of December 31, 2011.

Most of our RSUs, stock options, and restricted stock vest over a period of five years. Vesting of the awards is subject to a continued service condition. Each RSU converts into one share of LKQ common stock on the applicable vesting date. Shares of restricted stock may not be sold, pledged or otherwise transferred until they vest. Stock options expire ten years from the date they are granted. We expect to issue new shares of common stock to cover past and future equity grants.

A summary of transactions in our stock-based compensation plans for the six months ended June 30, 2012 is as follows:

	Shares Available For Grant			RSUs					Stock Options					Restricted Stock
				Number Outstanding			Weighted Average Grant Date Fair Value		Number Outstanding			Weighted Average Exercise Price		Number Outstanding			Weighted Average Grant Date Fair Value
Balance, January 1, 2012		7,876,185			716,791		$	23.59		6,539,046		$	12.93		106,000		$	18.98
Granted		(752,205	)		752,205			31.72		—			—		—			—
Exercised		—			—			—		(938,064	)		10.78		—			—
Vested		—			(86,782	)		24.14		—			—		(43,000	)		19.07
Cancelled		112,764			(34,419	)		28.20		(78,345	)		16.29		—			—
Balance, June 30, 2012		7,236,744			1,347,795		$	27.97		5,522,637		$	13.25		63,000		$	18.92

The fair value of RSUs is based on the market price of LKQ stock on the date of issuance. When estimating forfeitures, we consider voluntary and involuntary termination behavior as well as analysis of historical forfeitures. For valuing RSUs granted during the six month period ended June 30, 2012, we used a forfeiture rate of 8% for grants to employees and a forfeiture rate of 0% for grants to directors and executive officers. The fair value of RSUs that vested during the six months ended June 30, 2012 was approximately $2.8 million.

We recognize compensation expense on a straight-line basis over the requisite service period of the award. The components of pre-tax stock-based compensation expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
RSUs	$	2,019	$	891	$	4,083	$	1,769
Stock options		1,721		2,057		3,442		4,147
Restricted stock		228		228		453		453
Stock issued to non-employee directors		—		84		—		233
Total stock-based compensation expense	$	3,968	$	3,260	$	7,978	$	6,602

The following table sets forth the classification of total stock-based compensation expense included in the accompanying Unaudited Consolidated Condensed Statements of Income (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Cost of goods sold	$	96		$	79		$	199		$	168
Facility and warehouse expenses		609			623			1,303			1,234
Selling, general and administrative expenses		3,263			2,558			6,476			5,200
		3,968			3,260			7,978			6,602
Income tax benefit		(1,548	)		(1,252	)		(3,112	)		(2,555	)
Total stock-based compensation expense, net of tax	$	2,420		$	2,008		$	4,866		$	4,047

We have not capitalized any stock-based compensation costs during either of the six month periods ended June 30, 2012 or 2011.

As of June 30, 2012, unrecognized compensation expense related to unvested RSUs, stock options and restricted stock is expected to be recognized as follows (in thousands):

	RSUs		Stock Options		Restricted Stock		Total
Remainder of 2012	$	4,094	$	3,441	$	460	$	7,995
2013		8,332		4,722		208		13,262
2014		8,268		3,116		139		11,523
2015		8,063		78		—		8,141
2016		4,498		—		—		4,498
2017		143		—		—		143
Total unrecognized compensation expense	$	33,398	$	11,357	$	807	$	45,562

XML

Restructuring and Acquisition Related Expenses - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	$ 2,195,000	$ 2,377,000	$ 2,442,000	$ 2,423,000
Refurbished Bumper and Wheel Restructuring
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	1,100,000		1,100,000
Expected additional charges	500,000		500,000
Akzo Nobel Paint Business Integration
Restructuring Cost and Reserve
Restructuring and acquisition related expenses		2,100,000		2,100,000
Other 2011 and 2012 Acquisitions
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	1,100,000		1,300,000
Cross Canada Integration
Restructuring Cost and Reserve
Restructuring and acquisition related expenses		$ 300,000		$ 300,000

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Computation Of Earnings Per Share

The following chart sets forth the computation of earnings per share (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income	$	63,998	$	46,706	$	144,989	$	104,888
Denominator for basic earnings per share—Weighted-average shares outstanding		147,645		145,917		147,392		145,765
Effect of dilutive securities:
RSUs		220		80		219		103
Stock options		2,186		2,107		2,238		2,113
Restricted stock		25		27		24		26
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding		150,076		148,131		149,873		148,007
Earnings per share, basic	$	0.43	$	0.32	$	0.98	$	0.72
Earnings per share, diluted	$	0.43	$	0.32	$	0.97	$	0.71

Schedule Of Antidilutive Securities Excluded From Computation Of Earnings

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 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Antidilutive securities:
Stock options		—		1,554		—		1,567

XML

Stock Based Compensation Expense Included in Statements of Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense, before tax	$ 3,968	$ 3,260	$ 7,978	$ 6,602
Income tax benefit	(1,548)	(1,252)	(3,112)	(2,555)
Total stock-based compensation expense, net of tax	2,420	2,008	4,866	4,047
Cost of Sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense, before tax	96	79	199	168
Facility And Warehouse Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense, before tax	609	623	1,303	1,234
Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense, before tax	$ 3,263	$ 2,558	$ 6,476	$ 5,200

XML

Financial Statement Information (Policies)

6 Months Ended

Jun. 30, 2012

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 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 $24.3 million and $22.8 million at June 30, 2012 and December 31, 2011, 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 Consolidated Condensed Statements of Income and are shown as a current liability on our Unaudited Consolidated Condensed Balance Sheets until remitted. Revenue from the sale of separately-priced extended warranty contracts is reported as deferred revenue and recognized ratably over the term of the contracts or three years in the case of lifetime warranties.

Intangibles

Intangibles

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 relationships and covenants not to compete.

The change in the carrying amount of goodwill during the six months ended June 30, 2012 is as follows (in thousands):

Balance as of January 1, 2012	$	1,476,063
Business acquisitions and adjustments to previously recorded goodwill		98,907
Exchange rate effects		3,635
Balance as of June 30, 2012	$	1,578,605

The components of other intangibles are as follows (in thousands):

	June 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	116,493	$	(18,892	)	$	97,601	$	115,954	$	(16,305	)	$	99,649
Customer relationships		10,052		(4,364	)		5,688		10,050		(3,065	)		6,985
Covenants not to compete		3,426		(1,138	)		2,288		3,194		(918	)		2,276
	$	129,971	$	(24,394	)	$	105,577	$	129,198	$	(20,288	)	$	108,910

Trade names and trademarks are amortized over a useful life ranging from 10 to 30 years on a straight-line basis. Customer relationships are amortized over the expected period to be benefitted (5 to 10 years) on either a straight-line or accelerated basis. Covenants not to compete are amortized over the lives of the respective agreements, which range from one to five years, on a straight-line basis. Amortization expense for intangibles was approximately $4.2 million and $3.4 million during the six month periods ended June 30, 2012 and 2011, respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2016 is $8.6 million, $7.8 million, $7.1 million, $6.4 million and $5.7 million, respectively.

Depreciation Expense

Depreciation Expense

Included in Cost of Goods Sold on the Unaudited Consolidated Condensed Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations and our distribution centers.

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 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 during the six month period ended June 30, 2012 were as follows (in thousands):

Balance as of January 1, 2012	$	7,347
Warranty expense		11,230
Warranty claims		(12,059	)
Business acquisitions		645
Balance as of June 30, 2012	$	7,163

For an additional fee, we also sell extended warranty contracts for certain mechanical products. The expense related to extended warranty claims is recognized when the claim is made.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Effective January 1, 2012, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income” and ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” These ASUs eliminate the option to present the components of other comprehensive income in the statement of changes in stockholders’ equity. Instead, entities have the option to present the components of net income, the components of other comprehensive income and total comprehensive income in a single continuous statement or in two separate but consecutive statements. The amendments did not change the items reported in other comprehensive income or when an item of other comprehensive income is reclassified to net income. As a result, the adoption of this guidance did not affect our financial position, results of operations or cash flows. We have presented the components of net income, the components of other comprehensive income and total comprehensive income in two separate but consecutive statements.

Effective January 1, 2012, we adopted FASB ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update clarifies existing fair value measurement requirements, amends existing guidance primarily related to fair value measurements for financial instruments, and requires enhanced disclosures on fair value measurements. The additional disclosures are specific to Level 3 fair value measurements, transfers between Level 1 and Level 2 of the fair value hierarchy, financial instruments not measured at fair value and use of an asset measured or disclosed at fair value differing from its highest and best use. We applied the provisions of this ASU to our fair value measurements during the current year, however, the adoption did not have a material effect on our financial statements. Refer to Note 6, “Fair Value Measurements,” for the required disclosures.