LKQ CORP, 10-Q filed on 7/27/2012
Quarterly Report
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 
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 
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 
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 
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 
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 
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)
 
 
Stock-based compensation expense
7,978 
 
7,978 
 
 
Exercise of stock options (in shares)
 
938,000 
 
 
 
Exercise of stock options
10,112 
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 
 
 
 
Interim Financial Statements
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.

Financial Statement Information
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.

Equity Incentive Plans
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   
  

 

 

    

 

 

    

 

 

    

 

 

 
Long-Term Obligations
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.

Derivative Instruments and Hedging Activities
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.

Fair Value Measurements
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.

Commitments and Contingencies
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.

Earnings Per Share
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   
Business Combinations
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.

Income Taxes
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.

Segment and Geographic Information
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.

Financial Statement Information (Policies)

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

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.

Financial Statement Information (Tables)

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   
  

 

 

    

 

 

 

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   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

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   
  

 

 

 
Equity Incentive Plans (Tables)

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 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   
  

 

 

   

 

 

   

 

 

   

 

 

 

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   
  

 

 

    

 

 

    

 

 

    

 

 

 
Long-Term Obligations (Tables)
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   
  

 

 

   

 

 

 
Derivative Instruments and Hedging Activities (Tables)

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 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   
  

 

 

   

 

 

   

 

 

   

 

 

 
Fair Value Measurements (Tables)

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 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 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   
  

 

 

   

 

 

   

 

 

   

 

 

 
Commitments and Contingencies (Tables)
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   
  

 

 

 
Earnings Per Share (Tables)

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   
Business Combinations (Tables)

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 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.
Segment and Geographic Information (Tables)

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   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 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   
  

 

 

    

 

 

 

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   
  

 

 

    

 

 

    

 

 

    

 

 

 
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
 
 
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 
 
 
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 
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 
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 
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 
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
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 
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 
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 
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 
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 
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 
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% 
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 
 
 
 
 
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
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% 
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 
 
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 
 
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% 
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 
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 
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 
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
 
 
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 
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 
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. 3, 2011
Euro Car Parts Holdings Limited
Two Thousand Twelve Contingent Payment
GBP (£)
Oct. 3, 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 
 
12 
 
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 
 
 
 
 
 
 
 
 
 
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 
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 
Income Taxes - Additional Information (Detail)
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Income Taxes
 
 
Effective income tax rate
36.80% 
38.90% 
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
 
 
 
 
 
 
 
Number of reportable segments
 
 
 
 
 
 
 
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 
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 
 
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 
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 
 
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 
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 
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 
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