10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________

FORM 10-Q

____________________________

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

For the Quarterly Period Ended March 31, 2017

OR

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

For the Transition Period from              to

Commission File Number: 000-50404

____________________________ 

LKQ CORPORATION

(Exact name of registrant as specified in its charter)

____________________________ 

DELAWARE	36-4215970
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
500 WEST MADISON STREET, SUITE 2800, CHICAGO, IL	60661
(Address of principal executive offices)	(Zip Code)

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

____________________________ 

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

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

At April 21, 2017, the registrant had issued and outstanding an aggregate of 308,285,252 shares of Common Stock.

PART I

FINANCIAL INFORMATION

Item 1.     Financial Statements

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Income (In thousands, except per share data)
	Three Months Ended
	March 31,
	2017			2016
Revenue	$	2,342,843		$	1,921,476
Cost of goods sold	1,412,750			1,161,039
Gross margin	930,093			760,437
Facility and warehouse expenses	189,780			157,605
Distribution expenses	185,810			152,343
Selling, general and administrative expenses	267,227			218,318
Restructuring and acquisition related expenses	2,928			14,811
Depreciation and amortization	48,656			31,688
Operating income	235,692			185,672
Other expense (income):
Interest expense, net	23,988			14,592
Loss on debt extinguishment	—			26,650
Gains on foreign exchange contracts - acquisition related	—			(18,342		)
Other income, net	(1,046		)	(2,889		)
Total other expense, net	22,942			20,011
Income from continuing operations before provision for income taxes	212,750			165,661
Provision for income taxes	72,155			53,128
Equity in earnings (loss) of unconsolidated subsidiaries	214			(362		)
Income from continuing operations	140,809			112,171
Loss from discontinued operations, net of tax	(4,531		)	—
Net income	$	136,278		$	112,171
Basic earnings per share:
Income from continuing operations	$	0.46		$	0.37
Loss from discontinued operations	(0.01		)	—
Net income (1)	$	0.44		$	0.37
Diluted earnings per share:
Income from continuing operations	$	0.45		$	0.36
Loss from discontinued operations	(0.01		)	—
Net income (1)	$	0.44		$	0.36
(1) The sum of the individual earnings per share amounts may not equal the total due to rounding.

The accompanying notes are an integral part of the consolidated financial statements.

2

Unaudited Condensed Consolidated Statements of Comprehensive Income (In thousands)
	Three Months Ended
	March 31,
	2017			2016
Net income	$	136,278		$	112,171
Other comprehensive income (loss):
Foreign currency translation	21,579			140
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163			432
Net change in unrealized gains/losses on pension plans, net of tax	(3,041		)	147
Net change in other comprehensive loss from unconsolidated subsidiaries	(162		)	—
Total other comprehensive income	21,539			719
Total comprehensive income	$	157,817		$	112,890

The accompanying notes are an integral part of the consolidated financial statements.

3

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands, except share and per share data)
	March 31,			December 31,
	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	264,614		$	227,400
Receivables, net	973,670			860,549
Inventories	1,978,465			1,935,237
Prepaid expenses and other current assets	101,377			87,768
Assets of discontinued operations	—			456,640
Total current assets	3,318,126			3,567,594
Property and equipment, net	809,208			811,576
Intangible assets:
Goodwill	3,120,844			3,054,769
Other intangibles, net	576,451			584,231
Equity method investments	185,262			183,467
Other assets	112,355			101,562
Total assets	$	8,122,246		$	8,303,199
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	651,117		$	633,773
Accrued expenses:
Accrued payroll-related liabilities	89,977			118,755
Other accrued expenses	243,018			209,101
Other current liabilities	83,601			37,943
Current portion of long-term obligations	91,988			66,109
Liabilities of discontinued operations	—			145,104
Total current liabilities	1,159,701			1,210,785
Long-term obligations, excluding current portion	2,933,277			3,275,662
Deferred income taxes	221,504			199,657
Other noncurrent liabilities	200,893			174,146
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 308,283,752 and 307,544,759 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	3,083			3,075
Additional paid-in capital	1,122,787			1,116,690
Retained earnings	2,726,637			2,590,359
Accumulated other comprehensive loss	(245,636		)	(267,175		)
Total stockholders’ equity	3,606,871			3,442,949
Total liabilities and stockholders’ equity	$	8,122,246		$	8,303,199

The accompanying notes are an integral part of the consolidated financial statements.

4

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (In thousands)
	Three Months Ended
	March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	136,278		$	112,171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,604			33,166
Stock-based compensation expense	7,285			5,916
Loss on debt extinguishment	—			26,650
Loss on sale of business	8,580			—
Gains on foreign exchange contracts - acquisition related	—			(18,342		)
Other	1,343			1,156
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Receivables, net	(108,893		)	(78,373		)
Inventories	(745		)	18,973
Prepaid income taxes/income taxes payable	61,064			41,152
Accounts payable	24,449			20,514
Other operating assets and liabilities	(7,672		)	(28,139		)
Net cash provided by operating activities	172,293			134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(44,398		)	(50,393		)
Acquisitions, net of cash acquired	(77,056		)	(603,735		)
Proceeds from disposals of business/investment	301,297			10,304
Proceeds from foreign exchange contracts	—			18,342
Other investing activities, net	1,314			458
Net cash provided by (used in) investing activities	181,157			(625,024		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464			3,202
Taxes paid related to net share settlements of stock-based compensation awards	(3,644		)	(2,281		)
Debt issuance costs	—			(5,907		)
Borrowings under revolving credit facilities	45,239			1,143,217
Repayments under revolving credit facilities	(389,313		)	(345,609		)
Borrowings under term loans	—			338,478
Repayments under term loans	(9,295		)	—
Borrowings under receivables securitization facility	—			97,000
Repayments under receivables securitization facility	(150		)	(63,000		)
Borrowings of other debt, net	23,313			12,850
Payments of Rhiag debt and related payments	—			(543,347		)
Payments of other obligations	—			(1,437		)
Other financing activities, net	5,000			—
Net cash (used in) provided by financing activities	(326,386		)	633,166
Effect of exchange rate changes on cash and cash equivalents	3,034			(1,163		)
Net increase in cash and cash equivalents	30,098			141,823
Cash and cash equivalents of continuing operations, beginning of period	227,400			87,397
Add: Cash and cash equivalents of discontinued operations, beginning of period	7,116			—
Cash and cash equivalents of continuing and discontinued operations, beginning of period	234,516			87,397
Cash and cash equivalents, end of period	$	264,614		$	229,220
Supplemental disclosure of cash paid for:
Income taxes, net of refunds	$	13,746		$	7,715
Interest	10,965			19,320
Supplemental disclosure of noncash investing and financing activities:
Contingent consideration liabilities	$	10,969		$	—
Notes payable and other financing obligations, including notes issued and debt assumed in connection with business acquisitions	—			551,077
Noncash property, plant and equipment additions	2,936			5,469
Notes and other financing receivables in connection with disposals of business/investment	5,848			—

The accompanying notes are an integral part of the consolidated financial statements.

5

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Stockholders’ Equity (In thousands)
	Common Stock				Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive (Loss) Income			Total Stockholders’ Equity
	Shares Issued		Amount
BALANCE, January 1, 2017	307,545		$	3,075	$	1,116,690		$	2,590,359	$	(267,175	)	$	3,442,949
Net income	—		—		—			136,278		—			136,278
Other comprehensive income	—		—		—			—		21,539			21,539
Restricted stock units vested, net of shares withheld for employee tax	450		4		(2,760		)	—		—			(2,756		)
Stock-based compensation expense	—		—		7,285			—		—			7,285
Exercise of stock options	308		3		2,461			—		—			2,464
Tax withholdings related to net share settlements of stock-based compensation awards	(19	)	1		(889		)	—		—			(888		)
BALANCE, March 31, 2017	308,284		$	3,083	$	1,122,787		$	2,726,637	$	(245,636	)	$	3,606,871

The accompanying notes are an integral part of the consolidated financial statements.

6

LKQ CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated 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 "LKQ," "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries.

We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Operating results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017.

Note 2. Business Combinations

During the three months endedMarch 31, 2017, we completed three acquisitions, including a wholesale business in North America, a wholesale business in Europe and a Specialty vehicle aftermarket business. Total acquisition date fair value of the consideration for these acquisitions was $91.2 million, composed of $77.1 million of cash paid (net of cash acquired) and $14.1 million of other purchase price obligations. We typically fund our acquisitions using borrowings under our credit facilities or other financing arrangements. During the three months endedMarch 31, 2017, we recorded $42.8 million of goodwill related to these acquisitions, of which we expect $39.0 million to be deductible for income tax purposes. These acquisitions were not material to our results of operations or financial position as of and for the three months endedMarch 31, 2017.

On March 18, 2016, LKQ acquired Rhiag-Inter Auto Parts Italia S.p.A. ("Rhiag"), a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Slovakia, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Poland and Spain. This acquisition expanded LKQ's geographic presence in continental Europe, and we believe the acquisition will generate potential purchasing synergies. Total acquisition date fair value of the consideration for our Rhiag acquisition was €534.2 million ($602.0 million), composed of €533.6 million ($601.4 million) of cash paid (net of cash acquired) and €0.6 million ($0.6 million) of intercompany balances considered to be effectively settled as part of the transaction. In addition, we assumed €488.8 million ($550.8 million) of existing Rhiag debt as of the acquisition date. We recorded $590.7 million ($585.4 million of adjustments in 2016 and $5.3 million of adjustments in the three months endedMarch 31, 2017) of goodwill related to our acquisition of Rhiag, which we do not expect to be deductible for income tax purposes.

Related to the funding of the purchase price of the Rhiag acquisition, LKQ entered into foreign currency forward contracts in March 2016 to acquire a total of €588 million. The rates locked in under the foreign currency forwards were favorable to the spot rate on the settlement date, and as a result, these derivative contracts generated a gain of $18.3 million during the year ended December 31, 2016. The gain on the foreign currency forwards was recorded in Gains on foreign exchange contracts - acquisition related on our Unaudited Condensed Consolidated Statement Of Income for the year endedDecember 31, 2016.     

On April 21, 2016, LKQ acquired Pittsburgh Glass Works LLC (“PGW”). At acquisition, PGW’s business comprised aftermarket automotive replacement glass distribution services and automotive glass manufacturing. The acquisition expanded our addressable market in North America. Additionally, we believe the acquisition will create potential distribution synergies with our existing network. Total acquisition date fair value of the consideration for our PGW acquisition was $661.7 million, consisting of cash paid (net of cash acquired). We recorded $207.6 million ($205.1 million in 2016 and $2.5 million in the three months endedMarch 31, 2017) of goodwill related to our acquisition of PGW, of which we expect $104.0 million to be deductible for income tax purposes.

On October 4, 2016, we acquired substantially all of the business assets of Andrew Page Limited ("Andrew Page"), a distributor of aftermarket automotive parts in the U.K., out of receivership. The acquisition is subject to regulatory approval by

7

the Competition and Markets Authority ("CMA") in the U.K. The CMA's review is ongoing as of the date of this report. Total acquisition date fair value of the consideration for this acquisition was £16.4 million ($20.9 million). In connection with the acquisition, we recorded a gain on bargain purchase of $8.2 million, which is recorded on a separate line in our consolidated statement of income for the year endedDecember 31, 2016. We believe that we were able to acquire the net assets of Andrew Page for less than fair value as a result of (i) Andrew Page's financial difficulties that put the company into receivership prior to our acquisition and (ii) a motivated seller that desired to complete the sale in an expedient manner to ensure continuity of the business. We continue to evaluate the purchase price allocation, including the opening value of inventory, fixed assets, intangible assets, accrued liabilities, and deferred taxes, which may require us to adjust the recorded gain.

In addition to our acquisitions of Rhiag, PGW and Andrew Page, we acquired seven wholesale businesses in Europe and five wholesale businesses in North America during the year endedDecember 31, 2016. Total acquisition date fair value of the consideration for these acquisitions was $76.1 million, composed of $67.8 million of cash paid (net of cash acquired), $4.1 million of notes payable and $4.2 million of other purchase price obligations. During the year ended December 31, 2016, we recorded $52.3 million of goodwill related to these acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2015 acquisitions. We expect that substantially all of the goodwill recorded for these acquisitions will not be deductible for income tax purposes.

Our acquisitions are accounted for under the purchase method of accounting and are included in our unaudited condensed consolidated financial statements from the dates of acquisition. The purchase prices were allocated to the net assets acquired based upon estimated fair market values at the dates of acquisition. The purchase price allocations for the acquisitions made during the three months endedMarch 31, 2017 and the last nine months of the year ended December 31, 2016 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain receivables, inventories and fixed assets acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain liabilities assumed; and 4) the final estimation of the tax basis of the entities acquired. We have recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the valuations.

From the date of our preliminary allocation for Rhiag in the first quarter of 2016 through March 31, 2017, we recorded adjustments based on our valuation procedures for our acquisition of Rhiag that resulted in the allocation of $149.0 million of goodwill to acquired assets, primarily intangible assets and property and equipment; this amount includes a $5.3 million increase to goodwill recorded in the first quarter of 2017, primarily attributable to a decline in the value allocated to property and equipment. Additionally, from the date of our preliminary allocation for PGW in the second quarter of 2016 through March 31, 2017, we recorded adjustments based on our valuation procedures that resulted in a $23.6 million increase to goodwill recorded for our PGW acquisition, of which $2.5 million was recorded in the first quarter of 2017. These adjustments were primarily attributable to a decline in the value allocated to property and equipment, partially offset by an increase in the value allocated to deferred taxes. The income statement effect of the Rhiag and PGW measurement period adjustments that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition dates was immaterial. The balance sheet impact and income statement effect of other measurement-period adjustments recorded for acquisitions completed in prior periods was immaterial.

8

The preliminary purchase price allocations for the acquisitions completed during the three months endedMarch 31, 2017 and the year ended December 31, 2016 are as follows (in thousands):

	Three Months Ended			Year Ended
	March 31, 2017			December 31, 2016
	All Acquisitions (1)			Rhiag			PGW (2)			Other Acquisitions			Total
Receivables	$	10,788		$	230,670		$	136,523		$	13,216		$	380,409
Receivable reserves	—			(28,242		)	(7,135		)	(794		)	(36,171		)
Inventories (3)	35,567			239,529			169,159			62,223			470,911
Prepaid expenses and other current assets	(2,718		)	10,793			42,573			4,445			57,811
Property and equipment	(6,299		)	56,774			225,645			17,140			299,559
Goodwill	50,570			585,415			205,058			52,336			842,809
Other intangibles	8,055			429,360			37,954			2,537			469,851
Other assets (4)	1,113			2,092			57,671			(133		)	59,630
Deferred income taxes	948			(110,791		)	17,506			(1,000		)	(94,285		)
Current liabilities assumed	(6,845		)	(239,665		)	(168,332		)	(42,290		)	(450,287		)
Debt assumed	—			(550,843		)	(4,027		)	(2,378		)	(557,248		)
Other noncurrent liabilities assumed	—			(23,085		)	(50,847		)	(103		)	(74,035		)
Contingent consideration liabilities	(10,969		)	—			—			—			—
Other purchase price obligations	(3,154		)	—			—			(6,698		)	(6,698		)
Notes issued	—			—			—			(4,087		)	(4,087		)
Settlement of pre-existing balances	—			(591		)	—			(32		)	(623		)
Gain on bargain purchase	—			—			—			(8,207		)	(8,207		)
Cash used in acquisitions, net of cash acquired	$	77,056		$	601,416		$	661,748		$	86,175		$	1,349,339

(1) Includes $6.4 million and $3.1 million of adjustments to reduce property and equipment and other current assets for Rhiag and PGW, respectively.

(2) Includes both continuing and discontinued operations of PGW. See Note 3, "Discontinued Operations" for further information on our discontinued operations.

(3) The PGW inventory balance includes the impact of a $9.8 million step-up adjustment to report the inventory at its fair value.

(4) The balance for PGW includes $23.6 million of investments in unconsolidated subsidiaries which relate to the discontinued portion of our PGW operations.

The fair value of our intangible assets is based on a number of inputs including projections of future cash flows, assumed royalty rates and customer attrition rates, all of which are Level 3 inputs. The fair value of our property and equipment is determined using inputs such as market comparables and current replacement or reproduction costs of the asset, adjusted for physical, functional and economic factors; these adjustments to arrive at fair value are not observable in the market, and therefore, these inputs are considered to be Level 3 inputs.

Other noncurrent liabilities recorded for our acquisitions of Rhiag and PGW includes a liability for certain pension and other post-retirement obligations we assumed with the acquisitions. A portion of PGW's liability for pension and post-retirement obligations relates to the glass manufacturing operations business, which is classified as discontinued operations, and was recorded within Liabilities of discontinued operations on our consolidated balance sheet as of December 31, 2016; these amounts were included in the net assets disposed as part of the sale of the business, which occurred in the first quarter of 2017. Due to the immateriality of our pension plans for our continuing operations, we have not provided the detailed disclosures otherwise prescribed by the accounting guidance on pensions and other post-retirement obligations.

The primary objectives of our acquisitions made during the three months endedMarch 31, 2017 and the year ended December 31, 2016 were to create economic value for our stockholders by enhancing our position as a leading source for alternative collision and mechanical repair products and to expand into other product lines and businesses that may benefit from our operating strengths. Our 2016 acquisition of Rhiag enabled us to expand our market presence in continental Europe. We believe that our Rhiag acquisition will allow for synergies within our European operations, most notably in procurement,

9

and these projected synergies contributed to the goodwill recorded on the Rhiag acquisition. The aftermarket automotive glass distribution business of PGW, which is included within continuing operations, enabled us to enter into new product lines and increase the size of our addressable market. In addition, we believe that the aftermarket automotive glass distribution business of our PGW acquisition will allow for distribution synergies with our existing network in North America, which contributed to the goodwill recorded on the acquisition.

When we identify potential acquisitions, we attempt to target companies with a leading market presence, an experienced management team and workforce that provide a fit with our existing operations, and strong cash flows. For certain of our acquisitions, we have identified cost savings and synergies as a result of integrating the company with our existing business that provide additional value to the combined entity. In many cases, acquiring companies with these characteristics will result in purchase prices that include a significant amount of goodwill.

The following pro forma summary presents the effect of the businesses acquired during the three months endedMarch 31, 2017 as though the businesses had been acquired as of January 1, 2016, and the businesses acquired during the year ended December 31, 2016 as though they had been acquired as of January 1, 2015. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

	Three Months Ended
	March 31,
	2017		2016
Revenue, as reported	$	2,342,843	$	1,921,476
Revenue of purchased businesses for the period prior to acquisition:
Rhiag	—		213,376
PGW (1)	—		83,034
Other acquisitions	9,554		105,149
Pro forma revenue	$	2,352,397	$	2,323,035
Income from continuing operations, as reported	$	140,809	$	112,171
Income from continuing operations of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
Rhiag	—		(203		)
PGW (1),(2)	—		6,838
Other acquisitions	817		1,229
Acquisition related expenses, net of tax (3)	411		8,494
Pro forma income from continuing operations	$	142,037	$	128,529
Earnings per share from continuing operations, basic—as reported	$	0.46	$	0.37
Effect of purchased businesses for the period prior to acquisition:
Rhiag	—		(0.00)
PGW (1),(2)	—		0.02
Other acquisitions	0.00		0.00
Acquisition related expenses, net of tax (3)	0.00		0.03
Pro forma earnings per share from continuing operations, basic (4)	$	0.46	$	0.42
Earnings per share from continuing operations, diluted—as reported	$	0.45	$	0.36
Effect of purchased businesses for the period prior to acquisition:
Rhiag	—		(0.00)
PGW (1),(2)	—		0.02
Other acquisitions	0.00		0.00
Acquisition related expenses, net of tax (3)	0.00		0.03
Pro forma earnings per share from continuing operations, diluted (4)	$	0.46	$	0.42

(1) PGW reflects the results for the continuing aftermarket automotive glass distribution business only.

10

(2) Excludes $4.4 million of corporate costs for the three months endedMarch 31, 2016 that we do not expect to incur going forward as a result of the sale of our glass manufacturing business.

(3) Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.

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

Unaudited pro forma supplemental information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma supplemental information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value, adjustments to depreciation on acquired property and equipment, adjustments to rent expense for above or below market leases, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. The pro forma impact of our acquisitions also reflects the elimination of acquisition related expenses, net of tax. Refer to Note 5, "Restructuring and Acquisition Related Expenses," for further information regarding our acquisition related expenses. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results.

Note 3. Discontinued Operations

On March 1, 2017, LKQ completed the sale of the glass manufacturing business of its PGW subsidiary to a subsidiary of Vitro S.A.B. de C.V. (Vitro) for a sales price of $301.3 million, including cash received of $316.1 million, net of cash disposed of $14.8 million. In addition, we recorded a purchase price receivable of $3.6 million subject to post sale adjustments. As a result of this transaction, the remaining portion of the Glass operating segment was combined with our Wholesale - North America operating segment, which is part of our North America reportable segment, in the first quarter of 2017. See Note 14, "Segment and Geographic Information" for further information regarding our segments.

Upon execution of the Stock and Asset Purchase Agreement (the "Vitro Agreement") in December 2016, LKQ concluded that the glass manufacturing business met the criteria to be classified as held for sale in LKQ’s consolidated financial statements. As a result, the assets related to the glass manufacturing business were reflected on the Consolidated Balance Sheet at the lower of the net asset carrying value or fair value less cost to sell as of December 31, 2016. The fair value of the assets was determined using the negotiated sale price as an indicator of fair value, which is considered a Level 2 input as it is observable in a non-active market.

As part of the Vitro Agreement, the Company and Vitro entered into a twelve-month Transition Services Agreement commencing on the transaction date with two six-month renewal periods, a three-year Purchase and Supply Agreement, and an Intellectual Property Agreement.

The following table summarizes the operating results of the Company’s discontinued operations related to the sale described above for the three months ended March 31, 2017 as presented in “Loss from discontinued operations, net of tax” on the Unaudited Condensed Consolidated Statements of Income (in thousands):

	Period from January 1 to March 1,
	2017
Revenue	$	111,130
Cost of goods sold	(100,084		)
Operating expenses	(8,369		)
Operating income	2,677
Interest and other expenses, net	1,204			(1)
Income from discontinued operations before provision for income taxes	3,881
Provision for income taxes	(3,598		)	(2)
Equity in earnings (loss) of unconsolidated subsidiaries	(534		)
Loss from discontinued operations, net of tax	(251		)
Loss on sale of discontinued operations, net of tax	(4,280		)	(3)
Net loss from discontinued operations, net of tax	$	(4,531	)

(1) The Company elected to allocate interest expense to discontinued operations based on the expected debt to be repaid. Under this approach, allocated interest through the period ended March 1, 2017 was $1.6 million. Partially offsetting this expense were foreign currency gains.

(2) The provision for taxes includes a return to provision adjustment related to its international operations.

11

(3) In the first quarter of 2017, upon closing of the sale and write-off of the net assets of the glass manufacturing business, we recorded a pre-tax loss on sale of $8.6 million, and a $4.3 million tax benefit. The incremental loss primarily reflects a $5.7 million payable for intercompany sales from the glass manufacturing business to the aftermarket automotive glass distribution business incurred prior to closing which will be paid by LKQ and capital expenditures in 2017 that were not reimbursed by the buyer.

The glass manufacturing business had $3.9 million of operating cash outflows, $3.6 million of investing cash outflows mainly consisting of capital expenditures, and $15.0 million of financing cash inflows made up of parent financing for the period from January 1, 2017 through March 1, 2017.

Pursuant to the Purchase and Supply Agreement, our aftermarket automotive glass distribution business will source various products from Vitro's glass manufacturing business annually for a three year period beginning on March 1, 2017. Between January 1, 2017 and the sale date of March 1, 2017, intercompany sales between the glass manufacturing business and the continuing aftermarket automotive glass distribution business of PGW which were eliminated in consolidation were $7.8 million.

Note 4. 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 to, delivered to or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and allowances of approximately $40.7 million and $38.3 million at March 31, 2017 and December 31, 2016, respectively. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue on our Unaudited Condensed Consolidated Statements of Income and are shown as a current liability on our Unaudited Condensed Consolidated Balance Sheets until remitted. We recognize revenue from the sale of scrap metal, other metals, and cores when title has transferred, which typically occurs upon delivery to the customer.

Allowance for Doubtful Accounts

We have a reserve for uncollectible accounts which was approximately $45.2 million and $45.6 million at March 31, 2017 and December 31, 2016, respectively.

Inventories

Inventories consists of the following (in thousands):

	March 31,		December 31,
	2017		2016
Aftermarket and refurbished products	$	1,557,363	$	1,540,257
Salvage and remanufactured products	421,102		394,980
Total inventories	$	1,978,465	$	1,935,237

Our acquisitions completed during 2017 contributed $35.6 million of the increase in our salvage and remanufactured products inventory during 2017. See Note 2, "Business Combinations" for further information on our acquisitions.

Intangible Assets

Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer and supplier relationships, software and other technology related assets, and covenants not to compete.

12

The changes in the carrying amount of goodwill by reportable segment during the three months endedMarch 31, 2017 are as follows (in thousands):

	North America (1)		Europe		Specialty (1)			Total
Balance as of January 1, 2017	$	1,661,800	$	1,099,976	$	292,993		$	3,054,769
Business acquisitions and adjustments to previously recorded goodwill	41,882		8,022		666			50,570
Exchange rate effects	1,077		14,479		(51		)	15,505
Balance as of March 31, 2017	$	1,704,759	$	1,122,477	$	293,608		$	3,120,844

(1) In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year amounts have been recast to reflect the shift in reporting structure.

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

	March 31, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	296,699	$	(59,734	)	$	236,965	$	286,008	$	(51,104	)	$	234,904
Customer and supplier relationships	403,126		(108,026		)	295,100		395,284		(92,079		)	303,205
Software and other technology related assets	83,028		(42,522		)	40,506		77,329		(35,648		)	41,681
Covenants not to compete	11,862		(7,982		)	3,880		11,726		(7,285		)	4,441
	$	794,715	$	(218,264	)	$	576,451	$	770,347	$	(186,116	)	$	584,231

Our estimated useful lives for our finite lived intangible assets are as follows:

	Method of Amortization	Useful Life
Trade names and trademarks	Straight-line	4-30 years
Customer and supplier relationships	Accelerated	4-20 years
Software and other technology related assets	Straight-line	3-6 years
Covenants not to compete	Straight-line	1-5 years

Amortization expense for intangibles was $23.3 million and $8.9 million during the three months endedMarch 31, 2017 and 2016, respectively. Estimated amortization expense for each of the five years through the period ending December 31, 2021 is $69.4 million (for the remaining nine months of 2017), $77.3 million, $63.8 million, $50.3 million and $42.7 million, respectively.

Property and Equipment

Included in Cost of Goods Sold on the Unaudited Condensed Consolidated Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations as well as our distribution centers. Total depreciation expense was $27.3 million and $24.3 million during the three months ended March 31, 2017 and 2016, respectively.

Investments in Unconsolidated Subsidiaries

Our investment in unconsolidated subsidiaries was $185.3 million as of March 31, 2017. On December 1, 2016, we acquired a 26.5% equity interest in Mekonomen AB ("Mekonomen") from AxMeko AB, an affiliate of Axel Johnson AB, for an aggregate purchase price of $181.3 million. Headquartered in Stockholm, Sweden, Mekonomen is the leading independent car parts and service chain in the Nordic region of Europe, offering a range of products including spare parts and accessories for cars, and workshop services for consumers and businesses. We are accounting for our interest in Mekonomen using the equity method of accounting, as our investment gives us the ability to exercise significant influence, but not control, over the investee. As of March 31, 2017, the book value of our investment in Mekonomen exceeded our share of the book value of Mekonomen's net assets by $115.6 million; this difference is primarily related to goodwill and the fair value of other intangible assets. We are reporting our equity in the net earnings of Mekonomen on a one quarter lag, and therefore we recorded no equity in earnings

13

for this investment in 2016. For the three months ended March 31, 2017, we recorded equity in earnings totaling $0.3 million related to our investment in Mekonomen, which represents our share of the results from the investment date through December 31, 2016, including adjustments to convert the results to US GAAP and to recognize the impact of our purchase accounting adjustments. The level 1 fair value of our equity investment in the publicly traded Mekonomen common stock at March 31, 2017 was $187.3 million compared to a carrying value of $183.2 million.

Warranty Reserve

Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. Our warranty reserve is recorded within Other accrued expenses and Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The changes in the warranty reserve are as follows (in thousands):

Balance as of January 1, 2017	$	19,634
Warranty expense	9,254
Warranty claims	(7,268		)
Balance as of March 31, 2017	$	21,620

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This update outlines a new comprehensive revenue recognition model that supersedes most current revenue recognition guidance and requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB has issued several updates to ASU 2014-09. ASU 2014-09 will be effective for the Company during the first quarter of our fiscal year 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We will continue to evaluate the potential effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures; however, we do not plan to early adopt. Entities adopting the standard have the option of using either a full retrospective or modified retrospective approach in the application of this guidance. We are still determining which method of transition we will follow. We are currently in the process of completing customer contract reviews, determining necessary adjustments to existing accounting policies, evaluating new disclosure requirements and identifying and implementing changes to business processes as deemed necessary to support recognition and disclosure under the new guidance. Based on our preliminary assessment, we do not expect a significant impact for the majority of our revenue transactions as they generally consist of single performance obligations to transfer promised goods or services; however, we do expect the new guidance will change the way we present sales returns in our consolidated financial statements. We are still in the process of determining the magnitude of impact for this change.

In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between current GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard requires that entities apply the effects of these changes using a modified retrospective approach, which includes a number of optional practical expedients. While we are still in the process of quantifying the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures, we anticipate the adoption will materially affect our consolidated balance sheet and disclosures, as the majority of our operating leases will be recorded on the balance sheet under ASU 2016-02. While we do not anticipate the adoption of this accounting standard to have a material impact on our consolidated statements of income at this time, this conclusion may change as we finalize our assessment. In order to assist in our timely implementation of the new standard, we have purchased new software to track our leases. We have engaged a third party to assist with the implementation of the new software with an expectation to complete the implementation by the end of 2017.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"), to add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 includes guidance on classification for the following items: debt prepayment or debt extinguishment costs, settlement of zero coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned or bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and other separately

14

identifiable cash flows where application of the predominance principle is prescribed. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017; early adoption is permitted. The guidance requires retrospective application to all periods presented unless it is impracticable to do so. We are still evaluating the impact that ASU 2016-15 will have on our consolidated financial statements and related disclosures, but we do not expect to early adopt in 2017.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, "Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which simplifies the accounting for goodwill impairment by eliminating step 2 from the goodwill impairment test. Under the new guidance, if the carrying value of a reporting unit exceeds the fair value, an impairment loss will be recognized for the amount of that excess, limited to the goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years and any interim impairment tests for periods beginning after December 15, 2019; early adoption is permitted for entities with annual and interim impairment tests occurring after January 1, 2017, and we plan to early adopt in 2017. The guidance requires adoption on a prospective basis. At this time, we do not expect adoption of this standard to have a significant impact on our financial position, results of operations, or cash flows.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" (“ASU 2016-09”), to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, the treatment of forfeitures, and calculation of earnings per share. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. During the third quarter of 2016, the Company elected to early adopt ASU 2016-09 effective January 1, 2016. With the adoption of ASU 2016-09, excess tax benefits are recognized as a component of the income tax provision, whereas these amounts were previously recognized in equity. The presentation of excess tax benefits on share-based payments was adjusted retrospectively within the Consolidated Statements of Cash Flows, resulting in a $4.6 million increase in operating cash flows for the three months endedMarch 31, 2016 with a corresponding decrease to financing cash flows.

Note 5. Restructuring and Acquisition Related Expenses

Acquisition Related Expenses

Acquisition related expenses, which include external costs such as legal, accounting, and advisory fees, totaled $2.6 million and $12.7 million for the three months endedMarch 31, 2017 and 2016, respectively. Of our 2017 expenses, $0.5 million was related to our acquisition of Andrew Page, and the remaining $2.1 million was related to other completed acquisitions and acquisitions that were pending as of March 31, 2017. Of our 2016 expenses, $10.7 million was related to our acquisition of Rhiag, $1.8 million was related to our acquisition of PGW, and $0.2 million was related to other completed acquisitions and acquisitions that were pending as of March 31, 2016.

Acquisition Integration Plans

During the three months endedMarch 31, 2017 and 2016, we incurred $0.3 million and $2.1 million of restructuring expenses, respectively. Expenses incurred during the three months endedMarch 31, 2017 were primarily a result of the ongoing integration activities in our Specialty segment, which was formed in 2014 and subsequently expanded through acquisitions, including our 2015 Coast acquisition. Expenses incurred were primarily related to facility closure and the merger of existing facilities into larger distribution centers. Expenses incurred during the three months ended March 31, 2016 were primarily a result of the integration of our acquisition of Parts Channel into our existing North American wholesale business and the integration of our Coast acquisition into our existing Specialty business. Expenses incurred were primarily related to facility closure and relocation costs for duplicate facilities and the termination of employees.

We expect to incur additional expenses related to the integration of certain of our acquisitions into our existing operations in 2017. These integration activities are expected to include the closure of duplicate facilities, rationalization of personnel in connection with the consolidation of overlapping facilities with our existing business, and moving expenses. Future expenses to complete these integration plans are expected to be less than $5.0 million.

Note 6. Stock-Based Compensation

In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. We expect to issue new shares of common stock to cover past and future equity grants.

15

RSUs

RSUs vest over periods of up to five years, subject to a continued service condition. Currently outstanding RSUs contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case, both conditions must be met before any RSUs vest. For the RSUs containing a performance-based vesting condition, the Company must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within five years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date.

The fair value of RSUs that vested during the three months endedMarch 31, 2017 was $17.0 million.

The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the three months endedMarch 31, 2017:

	Number Outstanding		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value    (in thousands) (1)
Unvested as of January 1, 2017	1,873,737		$	27.58
Granted	678,450		$	31.73
Vested	(537,512	)	$	25.84
Forfeited / Canceled	(75,302	)	$	31.68
Unvested as of March 31, 2017	1,939,373		$	29.36
Expected to vest after March 31, 2017	1,843,631		$	29.45	3.1	$	53,963

(1) The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock.

Stock Options

Stock options vest over periods of up to five years, subject to a continued service condition. Stock options expire either six or ten years from the date they are granted. No options were granted during the three months endedMarch 31, 2017. The total grant-date fair value of options that vested during the three months endedMarch 31, 2017 was $0.7 million.

The following table summarizes activity related to our stock options under the Equity Incentive Plan for the three months endedMarch 31, 2017:

	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value    (in thousands) (1)
Balance as of January 1, 2017	2,623,217		$	9.19
Exercised	(308,189	)	$	8.00		$	7,250
Forfeited / Canceled	(1,527	)	$	32.31
Balance as of March 31, 2017	2,313,501		$	9.33	2.1	$	46,360
Exercisable as of March 31, 2017	2,313,501		$	9.33	2.1	$	46,360
Exercisable as of March 31, 2017 and expected to vest thereafter	2,313,501		$	9.33	2.1	$	46,360

(1) The aggregate intrinsic value of outstanding, exercisable and expected to vest options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of the last day of the period indicated. This amount changes based on the market price of the Company’s common stock.

16

The following table summarizes the components of pre-tax stock-based compensation expense for our continuing operations (in thousands):

	Three Months Ended
	March 31,
	2017		2016
RSUs	$	7,279	$	5,879
Stock options	6		37
Total stock-based compensation expense	$	7,285	$	5,916

As of March 31, 2017, unrecognized compensation expense related to unvested RSUs is $47.5 million. Stock-based compensation expense related to these awards will be different to the extent that forfeitures are realized.

Note 7. Earnings Per Share

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

	Three Months Ended
	March 31,
	2017		2016
Income from continuing operations	$	140,809	$	112,171
Denominator for basic earnings per share—Weighted-average shares outstanding	308,028		306,157
Effect of dilutive securities:
RSUs	564		580
Stock options	1,708		2,456
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding	310,300		309,193
Basic earnings per share from continuing operations	$	0.46	$	0.37
Diluted earnings per share from continuing operations	$	0.45	$	0.36

The following table sets forth the number of employee stock-based compensation awards outstanding but not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three months endedMarch 31, 2017 and 2016 (in thousands):

	Three Months Ended
	March 31,
	2017	2016
Antidilutive securities:
RSUs	147	228
Stock options	78	88

17

Note 8. Accumulated Other Comprehensive Income (Loss)

The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):

	Three Months Ended
	March 31, 2017
	Foreign Currency Translation			Unrealized Gain (Loss) on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries			Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(272,529	)	$	8,091		$	(2,737	)	$	—		$	(267,175	)
Pretax income	20,068			832			836			—			21,736
Income tax effect	—			(356		)	(318		)	—			(674		)
Reclassification of unrealized loss (gain)	—			4,257			(171		)	—			4,086
Reclassification of deferred income taxes	—			(1,570		)	48			—			(1,522		)
Disposal of business	1,511			—			(3,436		)	—			(1,925		)
Other comprehensive (loss) income from unconsolidated subsidiaries	—			—			—			(162		)	(162		)
Ending balance	$	(250,950	)	$	11,254		$	(5,778	)	$	(162	)	$	(245,636	)

	Three Months Ended
	March 31, 2016
	Foreign Currency Translation			Unrealized (Loss) Gain on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries		Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(96,890	)	$	(932	)	$	(7,648	)	$	—	$	(105,470	)
Pretax (loss) income	140			(165		)	—			—		(25		)
Income tax effect	—			49			—			—		49
Reclassification of unrealized loss	—			807			196			—		1,003
Reclassification of deferred income taxes	—			(259		)	(49		)	—		(308		)
Ending balance	$	(96,750	)	$	(500	)	$	(7,501	)	$	—	$	(104,751	)

Net unrealized gains on our interest rate swap contracts totaling $1.1 million and net unrealized losses of $0.8 million were reclassified to interest expense in our Unaudited Condensed Consolidated Statements of Income during the three months endedMarch 31, 2017 and 2016, respectively. We also reclassified a loss of $5.4 million related to our cross currency swaps to Other income, net in our Unaudited Condensed Consolidated Statements of Income during the three months endedMarch 31, 2017. The deferred income taxes related to our cash flow hedges were reclassified from Accumulated other comprehensive income (loss) to income tax expense.

18

Note 9. Long-Term Obligations

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

	March 31,			December 31,
	2017			2016
Senior secured credit agreement:
Term loans payable	$	723,390		$	732,684
Revolving credit facilities	1,018,181			1,358,220
Senior notes	600,000			600,000
Euro notes	532,600			525,850
Receivables securitization facility	99,850			100,000
Notes payable through October 2025 at weighted average interest rates of 2.3% and 2.1%, respectively	10,014			11,808
Other long-term debt at weighted average interest rates of 2.0% and 2.4%, respectively	64,148			37,125
Total debt	3,048,183			3,365,687
Less: long-term debt issuance costs	(20,604		)	(21,611		)
Less: current debt issuance costs	(2,314		)	(2,305		)
Total debt, net of issuance costs	3,025,265			3,341,771
Less: current maturities, net of debt issuance costs	(91,988		)	(66,109		)
Long term debt, net of debt issuance costs	$	2,933,277		$	3,275,662

Senior Secured Credit Agreement

On January 29, 2016, LKQ Corporation, LKQ Delaware LLP, and certain other subsidiaries (collectively, the "Borrowers") entered into the Fourth Amended and Restated Credit Agreement ("Credit Agreement"), which amended the Company’s Third Amended and Restated Credit Agreement by modifying certain terms to (1) extend the maturity date by approximately two years to January 29, 2021; (2) increase the total availability under the credit agreement from $2.3 billion to $3.2 billion (composed of $2.45 billion in the revolving credit facility's multicurrency component; and $750 million of term loans, which consist of term loans of approximately $500 million and €230 million); (3) increase our ability to incur additional indebtedness; and (4) make other immaterial or clarifying modifications and amendments to the terms of the Third Amended and Restated Credit Agreement. The additional term loan borrowing was used to repay outstanding revolver borrowings and the amount outstanding under our receivables securitization facility, and to pay fees and expenses relating to the amendment and restatement. The remaining additional term loan borrowing was used for general corporate purposes.

On December 14, 2016, LKQ Corporation entered into Amendment No. 1 to the Fourth Amended and Restated Credit Agreement under which the €230 million term loan was prepaid in full using proceeds from borrowings on the multicurrency revolving credit facility. Simultaneously, LKQ Corporation borrowed incremental U.S. dollar ("USD") term loans under the Credit Agreement, which were used to repay outstanding borrowings on the USD revolving credit facility. LKQ Corporation borrowed additional USD amounts on the revolving credit facility and entered into a cross currency swap transaction to exchange the borrowed USD for euro and transferred these amounts to LKQ Netherlands B.V. as an intercompany loan, which LKQ Netherlands B.V. used to repay the multicurrency revolving credit facility borrowings. These transactions had the effect of replacing the euro term loan with a USD term loan. Refer to Note 10, "Derivative Instruments and Hedging Activities" for additional information related to our cross currency swaps.

Amounts under the revolving credit facility are due and payable upon maturity of the Fourth Amended and Restated Credit Agreement on January 29, 2021. Amounts under the initial and additional term loan borrowings were due and payable in quarterly installments equal to 0.625% of the original principal amount on each of June 30, September 30, and December 31, 2016, and are due and payable in quarterly installments thereafter equal to 1.25% of the original principal amount beginning on March 31, 2017, with the remaining balance due and payable on the maturity date of the Fourth Amended and Restated Credit Agreement.

We are required to prepay the term loan by amounts equal to proceeds from the sale or disposition of certain assets if the proceeds are not reinvested within twelve months. We also have the option to prepay outstanding amounts under the Credit Agreement without penalty.

19

The Credit Agreement contains customary representations and warranties, and contains customary covenants that provide limitations and conditions on our ability to enter into certain transactions. The Credit Agreement also contains financial and affirmative covenants, including limitations on our net leverage ratio and a minimum interest coverage ratio.

Borrowings under the Credit Agreement bear interest at variable rates, which depend on the currency and duration of the borrowing elected, plus an applicable margin. The applicable margin is subject to change in increments of 0.25% depending on our net leverage ratio. Interest payments are due on the last day of the selected interest period or quarterly in arrears depending on the type of borrowing. Including the effect of the interest rate swap agreements described in Note 10, "Derivative Instruments and Hedging Activities," the weighted average interest rate on borrowings outstanding under the Credit Agreement at March 31, 2017 and December 31, 2016 was 2.0%. We also pay a commitment fee based on the average daily unused amount of the revolving credit facilities. The commitment fee is subject to change in increments of 0.05% depending on our net leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an applicable rate based on our net leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly in arrears.

Of the total borrowings outstanding under the Credit Agreement, $37.2 million was classified as current maturities at both March 31, 2017 and December 31, 2016. As of March 31, 2017, there were letters of credit outstanding in the aggregate amount of $72.2 million. The amounts available under the revolving credit facilities are reduced by the amounts outstanding under letters of credit, and thus availability under the revolving credit facilities at March 31, 2017 was $1.4 billion.

Related to the execution of the Credit Agreement in January 2016, we incurred $6.1 million of fees, of which $5.0 million were capitalized as an offset to Long-Term Obligations and are amortized over the term of the agreement. The remaining $1.1 million of fees, together with $1.8 million of capitalized debt issuance costs related to our Third Amended and Restated Credit Agreement, were expensed during the three months ended March 31, 2016 as a loss on debt extinguishment.

Senior Notes

In April 2014, LKQ Corporation completed an offer to exchange $600 million aggregate principal amount of 4.75% Senior Notes due 2023 (the "U.S. Notes") for notes previously issued through a private placement. The U.S. Notes are governed by the Indenture dated as of May 9, 2013 among LKQ Corporation, certain of our subsidiaries (the "Guarantors") and U.S. Bank National Association, as trustee. The U.S. Notes are substantially identical to those previously issued through the private placement, except the U.S. Notes are registered under the Securities Act of 1933.

The U.S. Notes bear interest at a rate of 4.75% per year from the most recent payment date on which interest has been paid or provided for. Interest on the U.S. Notes is payable in arrears on May 15 and November 15 of each year. The first interest payment was made on November 15, 2013. The U.S. Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.

The U.S. Notes and the guarantees are, respectively, LKQ Corporation's and each Guarantor's senior unsecured obligations and are subordinated to all of the Guarantors' existing and future secured debt to the extent of the assets securing that secured debt. In addition, the U.S. Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the U.S. Notes to the extent of the assets of those subsidiaries.

Repayment of Rhiag Acquired Debt and Debt Related Liabilities

On March 24, 2016, LKQ Netherlands B.V., a wholly-owned subsidiary of ours, borrowed €508 million under our multi-currency revolving credit facility to repay the Rhiag acquired debt and debt related liabilities. The borrowed funds were passed through an intercompany note to Rhiag and then were used to pay (i) $519.6 million (€465.0 million) for the principal of Rhiag senior note debt assumed with the acquisition, (ii) accrued interest of $8.0 million (€7.1 million) on the notes, (iii) the call premium of $23.8 million (€21.2 million) associated with early redemption of the notes and (iv) $4.9 million (€4.4 million) to terminate Rhiag’s outstanding interest rate swap related to the floating portion of the notes. The call premium is recorded as a loss on debt extinguishment in the Unaudited Condensed Consolidated Statements of Income.

Euro Notes

On April 14, 2016, LKQ Italia Bondco S.p.A. (the “Issuer”), an indirect, wholly-owned subsidiary of LKQ Corporation, completed an offering of €500 million aggregate principal amount of senior notes due April 1, 2024 (the “Euro Notes”) in a private placement conducted pursuant to Regulation S and Rule 144A under the Securities Act of 1933. The proceeds from the offering were used to repay a portion of the revolver borrowings under the Credit Agreement and to pay related fees and expenses. The Euro Notes are governed by the Indenture dated as of April 14, 2016 (the “Indenture”) among the Issuer, LKQ Corporation and certain of our subsidiaries (the “Euro Notes Subsidiaries”), the trustee, and the paying agent, transfer agent, and registrar.

20

The Euro Notes bear interest at a rate of 3.875% per year from the date of original issuance or from the most recent payment date on which interest has been paid or provided for. Interest on the Euro Notes is payable in arrears on April 1 and October 1 of each year, beginning on October 1, 2016. The Euro Notes are fully and unconditionally guaranteed by LKQ Corporation and the Euro Notes Subsidiaries (the "Euro Notes Guarantors").

The Euro Notes and the guarantees are, respectively, the Issuer’s and each Euro Notes Guarantor’s senior unsecured obligations and are subordinated to all of the Issuer's and the Euro Notes Guarantors’ existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Euro Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Euro Notes to the extent of the assets of those subsidiaries. The Euro Notes have been listed on the ExtraMOT, Professional Segment of the Borsa Italia S.p.A. securities exchange as well as the Global Exchange Market of the Irish Stock Exchange.

Related to the execution of the Euro Notes in April 2016, we incurred $10.3 million of fees which were capitalized as an offset to Long-Term Obligations and are amortized over the term of the offering.

Receivables Securitization Facility

On November 29, 2016, we amended the terms of the receivables securitization facility with The Bank of Tokyo-Mitsubishi UFJ, LTD. ("BTMU") to: (i) extend the term of the facility to November 8, 2019; (ii) increase the maximum amount available to $100 million; and (iii) make other clarifying and updating changes. Under the facility, LKQ sells an ownership interest in certain receivables, related collections and security interests to BTMU for the benefit of conduit investors and/or financial institutions for cash proceeds. Upon payment of the receivables by customers, rather than remitting to BTMU the amounts collected, LKQ retains such collections as proceeds for the sale of new receivables generated by certain of the ongoing operations of the Company.

The sale of the ownership interest in the receivables is accounted for as a secured borrowing in our Unaudited Condensed Consolidated Balance Sheets, under which the receivables included in the program collateralize the amounts invested by BTMU, the conduit investors and/or financial institutions (the "Purchasers"). The receivables are held by LKQ Receivables Finance Company, LLC ("LRFC"), a wholly-owned bankruptcy-remote special purpose subsidiary of LKQ, and therefore, the receivables are available first to satisfy the creditors of LRFC, including the investors. As of March 31, 2017 and December 31, 2016, $141.9 million and $140.3 million, respectively, of net receivables were collateral for the investment under the receivables facility.

Under the receivables facility, we pay variable interest rates plus a margin on the outstanding amounts invested by the Purchasers. The variable rates are based on (i) commercial paper rates, (ii) the London InterBank Offered Rate ("LIBOR"), or (iii) base rates, and are payable monthly in arrears. Commercial paper rates will be the applicable variable rate unless conduit investors are not available to invest in the receivables at commercial paper rates. In such case, financial institutions will invest at the LIBOR rate or at base rates. We also pay a commitment fee on the excess of the investment maximum over the average daily outstanding investment, payable monthly in arrears. As of March 31, 2017, the interest rate under the receivables facility was based on commercial paper rates and was 1.8%. The outstanding balances of $99.9 million and $100.0 million as of March 31, 2017 and December 31, 2016, respectively, were classified as long-term on the Unaudited Condensed Consolidated Balance Sheets because we have the ability and intent to refinance these borrowings on a long-term basis.

Note 10. Derivative Instruments and Hedging Activities

We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and commodity prices. Under our current policies, we use derivatives to manage our exposure to variable interest rates on our senior secured debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes.

Cash Flow Hedges

We hold interest rate swap agreements 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 receive payment at a variable rate of interest based on LIBOR for the respective currency of each interest rate swap agreement’s notional amount. The effective portion of changes in the fair value of the interest rate swap agreements is recorded in Accumulated Other Comprehensive Income (Loss) and is reclassified to interest expense when the underlying interest payment has an impact on earnings. The ineffective portion of changes in the fair value of the interest rate swap agreements is reported in interest expense. Our interest rate swap contracts have maturity dates ranging from January to June 2021.

21

From time to time, we may hold foreign currency forward contracts related to certain foreign currency denominated intercompany transactions, with the objective of minimizing the impact of fluctuating exchange rates on these future cash flows. Under the terms of the foreign currency forward contracts, we will sell the foreign currency in exchange for U.S. dollars at a fixed rate on the maturity dates of the contracts. The effective portion of the changes in fair value of the foreign currency forward contracts is recorded in Accumulated other comprehensive income (loss) and reclassified to other income (expense) when the underlying transaction has an impact on earnings.

In 2016, we entered into three cross currency swap agreements for a total notional amount of $422.4 million (€400 million). The notional amount steps down by €15.0 million annually through 2020 with the remainder maturing in January 2021. These cross currency swaps contain an interest rate swap component and a foreign currency forward contract component that, combined with related intercompany financing arrangements, effectively convert variable rate U.S. dollar-denominated borrowings into fixed rate euro-denominated borrowings. The swaps are intended to minimize the impact of fluctuating exchange rates and interest rates on the cash flows resulting from the related intercompany financing arrangements. The effective portion of the changes in the fair value of the derivative instruments is recorded in Accumulated Other Comprehensive Income (Loss) and is reclassified to interest expense and other income (expense) when the underlying transactions have an impact on earnings.

The following table summarizes the notional amounts and fair values of our designated cash flow hedges as of March 31, 2017 and December 31, 2016 (in thousands):

	Notional Amount				Fair Value at March 31, 2017 (USD)				Fair Value at December 31, 2016 (USD)
	March 31, 2017		December 31, 2016		Other Assets		Other Noncurrent Liabilities		Other Assets		Other Noncurrent Liabilities
Interest rate swap agreements
USD denominated	$	590,000	$	590,000	$	17,489	$	—	$	16,421	$	—
Cross currency swap agreements
USD/euro	$	418,442	$	422,408	2,524		5,388		1,486		3,128
Total cash flow hedges					$	20,013	$	5,388	$	17,907	$	3,128

While our derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge derivative instruments on a gross basis in our Unaudited Condensed Consolidated Balance Sheets. The impact of netting the fair values of these contracts would not have a material effect on our Unaudited Condensed Consolidated Balance Sheets at March 31, 2017 or December 31, 2016.

The activity related to our cash flow hedges is included in Note 8, "Accumulated Other Comprehensive Income (Loss)." Ineffectiveness related to our cash flow hedges was immaterial to our results of operations during the three months endedMarch 31, 2017 and 2016. We do not expect future ineffectiveness related to our cash flow hedges to have a material effect on our results of operations.

As of March 31, 2017, we estimate that $0.1 million of derivative gains (net of tax) included in Accumulated other comprehensive income (loss) will be reclassified into our Unaudited Condensed Consolidated Statements of Income within the next 12 months.

Other Derivative Instruments

We hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability related to inventory purchases and intercompany financing transactions denominated in a non-functional currency. We have elected not to apply hedge accounting for these transactions, and therefore the contracts are adjusted to fair value through our results of operations as of each balance sheet date, which could result in volatility in our earnings. The notional amount and fair value of these contracts at March 31, 2017 and December 31, 2016, along with the effect on our results of operations during each of the three month periods ended March 31, 2017 and 2016, were immaterial.

Note 11. Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value

We use the market and income approaches to value our financial assets and liabilities, and during the three months endedMarch 31, 2017, there were no significant changes in valuation techniques or inputs related to the financial assets or

22

liabilities that we have historically recorded at fair value. The tiers in the fair value hierarchy include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of March 31, 2017 and December 31, 2016 (in thousands):

	Balance as of March 31, 2017		Fair Value Measurements as of March 31, 2017
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	38,428	$	—	$	38,428	$	—
Interest rate swaps	20,013		—		20,013		—
Total Assets	$	58,441	$	—	$	58,441	$	—
Liabilities:
Contingent consideration liabilities	$	11,242	$	—	$	—	$	11,242
Deferred compensation liabilities	40,131		—		40,131		—
Foreign currency forward contracts	5,388		—		5,388		—
Total Liabilities	$	56,761	$	—	$	45,519	$	11,242

	Balance as of December 31, 2016		Fair Value Measurements as of December 31, 2016
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	36,131	$	—	$	36,131	$	—
Interest rate swaps	17,907				17,907
Total Assets	$	54,038	$	—	$	54,038	$	—
Liabilities:
Contingent consideration liabilities	$	3,162	$	—	$	—	$	3,162
Deferred compensation liabilities	36,865		—		36,865		—
Foreign currency forward contracts	3,128		—		3,128		—
Total Liabilities	$	43,155	$	—	$	39,993	$	3,162

The cash surrender value of life insurance is included in Other Assets on our Unaudited Condensed Consolidated Balance Sheets. The current portion of deferred compensation is included in Accrued payroll-related liabilities and the current portion of contingent consideration liabilities is included in Other current liabilities on our Unaudited Condensed Consolidated Balance Sheets; the noncurrent portion of these amounts is included in Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The balance sheet classification of the interest rate swaps and foreign currency forward contracts is presented in Note 10, "Derivative Instruments and Hedging Activities."

Our Level 2 assets and liabilities are valued using inputs from third parties and market observable data. We obtain valuation data for the cash surrender value of life insurance and deferred compensation liabilities from third party sources, which determine the net asset values for our accounts using quoted market prices, investment allocations and reportable trades. We value our derivative instruments using a third party valuation model that performs a discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates and current and forward foreign exchange rates.

Our contingent consideration liabilities are related to our business acquisitions. 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.

23

Financial Assets and Liabilities Not Measured at Fair Value

Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. Based on market conditions as of March 31, 2017 and December 31, 2016, the fair value of our credit agreement borrowings reasonably approximated the carrying value of $1.7 billion and $2.1 billion, respectively. In addition, based on market conditions, the fair values of the outstanding borrowings under the receivables facility reasonably approximated the carrying value of $99.9 million and $100.0 million at March 31, 2017 and December 31, 2016, respectively. As of March 31, 2017 and December 31, 2016, the fair values of the U.S. Notes were approximately $595.8 million and $599.5 million, respectively, compared to a carrying value of $600.0 million. As of March 31, 2017 and December 31, 2016, the fair values of the Euro Notes were approximately $562.8 million and $560.6 million compared to carrying values of $532.6 million and $525.9 million, respectively.

The fair value measurements of the borrowings under our credit agreement and receivables facility are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions with similar terms and maturities. We estimated the fair value by calculating the upfront cash payment a market participant would require at March 31, 2017 to assume these obligations. The fair value of our U.S. Notes is classified as Level 1 within the fair value hierarchy since it is determined based upon observable market inputs including quoted market prices in an active market. The fair value of our Euro Notes is determined based upon observable market inputs including quoted market prices in a market that is not active, and therefore is classified as Level 2 within the fair value hierarchy.

Note 12. 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 March 31, 2017 are as follows (in thousands):

Nine months ending December 31, 2017	$	158,837
Years ending December 31:
2018	182,944
2019	151,442
2020	122,188
2021	92,010
2022	75,622
Thereafter	457,967
Future Minimum Lease Payments	$	1,241,010

Litigation and Related Contingencies

We have certain contingencies resulting from litigation, claims and other commitments and are subject to a variety of environmental and pollution control laws and regulations incident to the ordinary course of business. We currently expect that the resolution of such contingencies will not materially affect our financial position, results of operations or cash flows.

Note 13. 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.    

24

Our effective income tax rate for the three months endedMarch 31, 2017 was 33.9%, compared with 32.1% for the comparable prior year period. The effective tax rate for the three months endedMarch 31, 2017 and 2016 reflects the impact of favorable discrete items related to excess tax benefits from stock-based payments in the amount of $3.3 million and $4.4 million, respectively. The increase in our effective tax rate for the three months ended March 31, 2017 compared to the prior year period also reflects our expected geographic distribution of income, with a slightly larger proportion of our pre-tax income expected to be earned in the U.S., which has a higher tax rate than our foreign operations.

Note 14. Segment and Geographic Information

We have four operating segments: Wholesale – North America, Europe, Specialty and Self Service. Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our reportable segments are organized based on a combination of geographic areas served and type of product lines offered. The reportable segments are managed separately as each business serves different customers (i.e. geographic in the case of North America and Europe and product type in the case of Specialty) and is affected by different economic conditions. Therefore, we present three reportable segments: North America, Europe and Specialty.

The following tables present our financial performance by reportable segment for the periods indicated (in thousands):

	North America (1)		Europe		Specialty (1)		Eliminations			Consolidated
Three Months Ended March 31, 2017
Revenue:
Third Party	$	1,208,047	$	820,897	$	313,899	$	—		$	2,342,843
Intersegment	193		—		1,035		(1,228		)	—
Total segment revenue	$	1,208,240	$	820,897	$	314,934	$	(1,228	)	$	2,342,843
Segment EBITDA	$	176,135	$	78,694	$	35,441	$	—		$	290,270
Depreciation and amortization (2)	20,378		24,751		5,475		—			50,604
Three Months Ended March 31, 2016
Revenue:
Third Party	$	1,080,606	$	546,751	$	294,119	$	—		$	1,921,476
Intersegment	214		10		951		(1,175		)	—
Total segment revenue	$	1,080,820	$	546,761	$	295,070	$	(1,175	)	$	1,921,476
Segment EBITDA	$	145,691	$	57,498	$	33,422	$	—		$	236,611
Depreciation and amortization (2)	17,390		10,308		5,468		—			33,166

(1) In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year results have been recast to reflect the shift in reporting structure in order to present segment results on a comparable basis.

(2) Amounts presented include depreciation and amortization expense recorded within cost of goods sold.

The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses and equity in earnings (loss) of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding discontinued operations, depreciation, amortization, interest (which includes loss on debt extinguishment) and income tax expense.

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

25

	Three Months Ended
	March 31,
	2017			2016
Net income	$	136,278		$	112,171
Subtract:
Loss from discontinued operations, net of tax	(4,531		)	—
Income from continuing operations	140,809			112,171
Add:
Depreciation and amortization	48,656			31,688
Depreciation and amortization - cost of goods sold	1,948			1,478
Interest expense, net	23,988			14,592
Loss on debt extinguishment	—			26,650
Provision for income taxes	72,155			53,128
EBITDA	287,556			239,707
Subtract:
Equity in earnings (loss) of unconsolidated subsidiaries	214			(362		)
Gains on foreign exchange contracts - acquisition related (1)	—			18,342
Add:
Restructuring and acquisition related expenses (2)	2,928			14,811
Change in fair value of contingent consideration liabilities	—			73
Segment EBITDA	$	290,270		$	236,611

(1) Reflects gains on foreign currency forwards used to fix the euro purchase price of Rhiag. See Note 2, "Business Combinations," for further information.

(2) See Note 5, "Restructuring and Acquisition Related Expenses," for further information.

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

	Three Months Ended
	March 31,
	2017		2016
Capital Expenditures
North America	$	16,760	$	22,783
Europe	20,458		19,107
Specialty	3,582		8,503
Discontinued operations	3,598		—
Total capital expenditures	$	44,398	$	50,393

26

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

	March 31,		December 31,
	2017		2016
Receivables, net
North America	$	382,922	$	351,681
Europe	473,834		443,281
Specialty	116,914		65,587
Total receivables, net	973,670		860,549
Inventories
North America	945,454		915,244
Europe	740,209		718,729
Specialty	292,802		301,264
Total inventories	1,978,465		1,935,237
Property and Equipment, net
North America	502,582		505,925
Europe	247,720		247,910
Specialty	58,906		57,741
Total property and equipment, net	809,208		811,576
Equity Method Investments
North America	336		336
Europe	184,926		183,131
Total equity method investments	185,262		183,467
Other unallocated assets	4,175,641		4,512,370
Total assets	$	8,122,246	$	8,303,199

We report net 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, assets of discontinued operations and income taxes.

The majority of our operations are conducted in the U.S. Our European operations are located in the U.K., the Netherlands, Belgium, France, Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Spain, Sweden, and Norway. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. Our net sales are attributed to geographic area based on the location of the selling operation.

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

	Three Months Ended
	March 31,
	2017		2016
Revenue
United States	$	1,417,040	$	1,284,967
United Kingdom	382,652		349,676
Other countries	543,151		286,833
Total revenue	$	2,342,843	$	1,921,476

27

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

	March 31,		December 31,
	2017		2016
Long-lived Assets
United States	$	529,589	$	531,425
United Kingdom	163,090		159,689
Other countries	116,529		120,462
Total long-lived assets	$	809,208	$	811,576

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

	Three Months Ended
	March 31,
	2017		2016
Aftermarket, other new and refurbished products	$	1,758,062	$	1,387,736
Recycled, remanufactured and related products and services	454,879		430,589
Other	129,902		103,151
Total revenue	$	2,342,843	$	1,921,476

Our North America reportable segment generates revenue from all of our product categories, while our Europe and Specialty segments generate revenue primarily 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.

Note 15. Condensed Consolidating Financial Information

LKQ Corporation (the "Parent") issued, and the Guarantors have fully and unconditionally guaranteed, jointly and severally, the U.S. Notes due on May 15, 2023. A Guarantor's guarantee will be unconditionally and automatically released and discharged upon the occurrence of any of the following events: (i) a transfer (including as a result of consolidation or merger) by the Guarantor to any person that is not a Guarantor of all or substantially all assets and properties of such Guarantor, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the U.S. Notes; (ii) a transfer (including as a result of consolidation or merger) to any person that is not a Guarantor of the equity interests of a Guarantor or issuance by a Guarantor of its equity interests such that the Guarantor ceases to be a subsidiary, as defined in the Indenture, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the U.S. Notes; (iii) the release of the Guarantor from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the U.S. Notes; and (iv) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture, as defined in the Indenture.

Presented below are the unaudited condensed consolidating financial statements of the Parent, the Guarantors, the non-guarantor subsidiaries (the "Non-Guarantors"), and the elimination entries necessary to present our financial statements on a consolidated basis as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934 resulting from the guarantees of the U.S. Notes. Investments in consolidated subsidiaries have been presented under the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, intercompany balances, and intercompany revenue and expenses. The unaudited condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited condensed consolidated financial statements, and may not necessarily be indicative of the financial position, results of operations or cash flows had the Parent, Guarantors and Non-Guarantors operated as independent entities.

28

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Revenue	$	—		$	1,453,516		$	929,971		$	(40,644	)	$	2,342,843
Cost of goods sold	—			863,375			590,019			(40,644		)	1,412,750
Gross margin	—			590,141			339,952			—			930,093
Facility and warehouse expenses	—			127,803			61,977			—			189,780
Distribution expenses	—			120,430			65,380			—			185,810
Selling, general and administrative expenses	9,183			137,295			120,749			—			267,227
Restructuring and acquisition related expenses	—			1,883			1,045			—			2,928
Depreciation and amortization	30			23,481			25,145			—			48,656
Operating (loss) income	(9,213		)	179,249			65,656			—			235,692
Other expense (income):
Interest expense, net	16,180			198			7,610			—			23,988
Intercompany interest (income) expense, net	(5,672		)	1,019			4,653			—			—
Other expense (income), net	291			(169		)	(1,168		)	—			(1,046		)
Total other expense, net	10,799			1,048			11,095			—			22,942
(Loss) income from continuing operations before (benefit) provision for income taxes	(20,012		)	178,201			54,561			—			212,750
(Benefit) provision for income taxes	(7,437		)	70,038			9,554			—			72,155
Equity in (loss) earnings of unconsolidated subsidiaries	(182		)	—			396			—			214
Equity in earnings of subsidiaries	153,566			4,813			—			(158,379		)	—
Income from continuing operations	140,809			112,976			45,403			(158,379		)	140,809
(Loss) income from discontinued operations, net of tax	(4,531		)	(4,531		)	2,050			2,481			(4,531		)
Net income	$	136,278		$	108,445		$	47,453		$	(155,898	)	$	136,278

29

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands)
	For the Three Months Ended March 31, 2016
	Parent			Guarantors			Non-Guarantors		Eliminations			Consolidated
Revenue	$	—		$	1,318,167		$	635,637	$	(32,328	)	$	1,921,476
Cost of goods sold	—			795,240			398,127		(32,328		)	1,161,039
Gross margin	—			522,927			237,510		—			760,437
Facility and warehouse expenses	—			115,210			42,395		—			157,605
Distribution expenses	—			104,154			48,189		—			152,343
Selling, general and administrative expenses	10,379			126,668			81,271		—			218,318
Restructuring and acquisition related expenses	—			4,036			10,775		—			14,811
Depreciation and amortization	36			20,544			11,108		—			31,688
Operating (loss) income	(10,415		)	152,315			43,772		—			185,672
Other expense (income):
Interest expense, net	12,117			143			2,332		—			14,592
Intercompany interest (income) expense, net	(10,677		)	6,590			4,087		—			—
Loss on debt extinguishment	2,894			—			23,756		—			26,650
Gains on foreign exchange contracts - acquisition related	(18,342		)	—			—		—			(18,342		)
Other income, net	(111		)	(2,800		)	22		—			(2,889		)
Total other (income) expense, net	(14,119		)	3,933			30,197		—			20,011
Income from continuing operations before provision for income taxes	3,704			148,382			13,575		—			165,661
Provision for income taxes	113			50,316			2,699		—			53,128
Equity in (loss) earnings of unconsolidated subsidiaries	(795		)	5			428		—			(362		)
Equity in earnings of subsidiaries	109,375			11,942			—		(121,317		)	—
Net income	$	112,171		$	110,013		$	11,304	$	(121,317	)	$	112,171

30

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net income	$	136,278		$	108,445		$	47,453		$	(155,898	)	$	136,278
Other comprehensive income (loss):
Foreign currency translation	21,579			3,878			21,132			(25,010		)	21,579
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163			(133		)	—			133			3,163
Net change in unrealized gains/losses on pension plans, net of tax	(3,041		)	(2,805		)	(236		)	3,041			(3,041		)
Net change in other comprehensive loss from unconsolidated subsidiaries	(162		)	—			(162		)	162			(162		)
Total other comprehensive income	21,539			940			20,734			(21,674		)	21,539
Total comprehensive income	$	157,817		$	109,385		$	68,187		$	(177,572	)	$	157,817

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands)
	For the Three Months Ended March 31, 2016
	Parent		Guarantors			Non-Guarantors			Eliminations			Consolidated
Net income	$	112,171	$	110,013		$	11,304		$	(121,317	)	$	112,171
Other comprehensive income (loss):
Foreign currency translation	140		(2,855		)	(3,039		)	5,894			140
Net change in unrecognized gains/losses on derivative instruments, net of tax	432		—			96			(96		)	432
Net change in unrealized gains/losses on pension plans, net of tax	147		—			147			(147		)	147
Total other comprehensive income (loss)	719		(2,855		)	(2,796		)	5,651			719
Total comprehensive income	$	112,890	$	107,158		$	8,508		$	(115,666	)	$	112,890

31

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Balance Sheets (In thousands)
	March 31, 2017
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	22,256	$	24,529	$	217,829	$	—		$	264,614
Receivables, net	—		318,249		655,421		—			973,670
Intercompany receivables, net	2,953		—		7,026		(9,979		)	—
Inventories	—		1,170,190		808,275		—			1,978,465
Prepaid expenses and other current assets	1,448		46,405		53,524		—			101,377
Total current assets	26,657		1,559,373		1,742,075		(9,979		)	3,318,126
Property and equipment, net	209		531,214		277,785		—			809,208
Intangible assets:
Goodwill	—		1,895,497		1,225,347		—			3,120,844
Other intangibles, net	—		152,905		423,546		—			576,451
Investment in subsidiaries	5,231,012		73,592		—		(5,304,604		)	—
Intercompany notes receivable	1,175,881		780,686		—		(1,956,567		)	—
Equity method investments	—		336		184,926		—			185,262
Other assets	62,204		30,525		23,388		(3,762		)	112,355
Total assets	$	6,495,963	$	5,024,128	$	3,877,067	$	(7,274,912	)	$	8,122,246
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,030	$	273,002	$	376,085	$	—		$	651,117
Intercompany payables, net	—		7,026		2,953		(9,979		)	—
Accrued expenses:
Accrued payroll-related liabilities	3,321		29,714		56,942		—			89,977
Other accrued expenses	12,360		96,416		134,242		—			243,018
Other current liabilities	38,465		25,174		19,962		—			83,601
Current portion of long-term obligations	36,011		686		55,291		—			91,988
Total current liabilities	92,187		432,018		645,475		(9,979		)	1,159,701
Long-term obligations, excluding current portion	1,996,134		7,871		929,272		—			2,933,277
Intercompany notes payable	750,000		738,026		468,541		(1,956,567		)	—
Deferred income taxes	183		118,208		106,875		(3,762		)	221,504
Other noncurrent liabilities	50,588		111,474		38,831		—			200,893
Stockholders’ equity	3,606,871		3,616,531		1,688,073		(5,304,604		)	3,606,871
Total liabilities and stockholders' equity	$	6,495,963	$	5,024,128	$	3,877,067	$	(7,274,912	)	$	8,122,246

32

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Balance Sheets (In thousands)
	December 31, 2016
	Parent		Guarantors			Non-Guarantors		Eliminations				Consolidated
Assets
Current assets:
Cash and cash equivalents	$	33,030	$	35,360		$	159,010	$	—			$	227,400
Receivables, net	—		248,188			612,361		—				860,549
Intercompany receivables, net	2,805		11,237			8,837		(22,879		)		—
Inventories	—		1,149,763			785,474		—				1,935,237
Prepaid expenses and other current assets	1,640		43,165			42,963		—				87,768
Assets of discontinued operations	—		357,788			98,852		—				456,640
Total current assets	37,475		1,845,501			1,707,497		(22,879		)		3,567,594
Property and equipment, net	239		527,705			283,632		—				811,576
Intangible assets:
Goodwill	—		1,851,274			1,203,495		—				3,054,769
Other intangibles, net	—		153,689			430,542		—				584,231
Investment in subsidiaries	5,067,297		242,032			—		(5,309,329		)		—
Intercompany notes receivable	1,510,534		800,283			—		(2,310,817		)		—
Equity method investments	—		336			183,131		—				183,467
Other assets	59,726		25,177		—	22,347		(5,688		)	—	101,562
Total assets	$	6,675,271	$	5,445,997		$	3,830,644	$	(7,648,713	)		$	8,303,199
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,309	$	244,074		$	388,390	$	—			$	633,773
Intercompany payables, net	11,237		8,837			2,805		(22,879		)		—
Accrued expenses:
Accrued payroll-related liabilities	6,404		58,187			54,164		—				118,755
Other accrued expenses	5,502		94,287			109,312		—				209,101
Other current liabilities	4,283		18,456			15,204		—				37,943
Current portion of long-term obligations	37,710		1,097			27,302		—				66,109
Liabilities of discontinued operations	—		110,890			34,214		—				145,104
Total current liabilities	66,445		535,828			631,391		(22,879		)		1,210,785
Long-term obligations, excluding current portion	2,371,578		8,356			895,728		—				3,275,662
Intercompany notes payable	750,000		1,074,218			486,599		(2,310,817		)		—
Deferred income taxes	—		95,765			109,580		(5,688		)		199,657
Other noncurrent liabilities	44,299		90,722			39,125		—				174,146
Stockholders’ equity	3,442,949		3,641,108			1,668,221		(5,309,329		)		3,442,949
Total liabilities and stockholders' equity	$	6,675,271	$	5,445,997		$	3,830,644	$	(7,648,713	)		$	8,303,199

33

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	118,537		$	112,605		$	35,789		$	(94,638	)	$	172,293
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	—			(18,226		)	(26,172		)	—			(44,398		)
Investment and intercompany note activity with subsidiaries	249,828			—			—			(249,828		)	—
Acquisitions, net of cash acquired	—			(74,937		)	(2,119		)	—			(77,056		)
Proceeds from disposals of business/investment	—			305,740			(4,443		)	—			301,297
Other investing activities, net	—			1,008			306			—			1,314
Net cash provided by (used in) investing activities	249,828			213,585			(32,428		)	(249,828		)	181,157
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464			—			—			—			2,464
Taxes paid related to net share settlements of stock-based compensation awards	(3,644		)	—			—			—			(3,644		)
Borrowings under revolving credit facilities	10,000			—			35,239			—			45,239
Repayments under revolving credit facilities	(376,966		)	—			(12,347		)	—			(389,313		)
Repayments under term loans	(9,295		)	—			—			—			(9,295		)
Repayments under receivables securitization facility	—			—			(150		)	—			(150		)
(Repayments) borrowings of other debt, net	(1,698		)	(1,099		)	26,110			—			23,313
Other financing activities, net	—			5,000			—			—			5,000
Investment and intercompany note activity with parent	—			(246,463		)	(3,365		)	249,828			—
Dividends	—			(94,638		)	—			94,638			—
Net cash (used in) provided by financing activities	(379,139		)	(337,200		)	45,487			344,466			(326,386		)
Effect of exchange rate changes on cash and cash equivalents	—			30			3,004			—			3,034
Net (decrease) increase in cash and cash equivalents	(10,774		)	(10,980		)	51,852			—			30,098
Cash and cash equivalents of continuing operations, beginning of period	33,030			35,360			159,010			—			227,400
Add: Cash and cash equivalents of discontinued operations, beginning of period	—			149			6,967			—			7,116
Cash and cash equivalents of continuing and discontinued operations, beginning of period	33,030			35,509			165,977			—			234,516
Cash and cash equivalents, end of period	$	22,256		$	24,529		$	217,829		$	—		$	264,614

34

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands)
	For the Three Months Ended March 31, 2016
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	69,729		$	77,907		$	13,437		$	(26,229	)	$	134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	—			(29,710		)	(20,683		)	—			(50,393		)
Investment and intercompany note activity with subsidiaries	(646,019		)	—			—			646,019			—
Acquisitions, net of cash acquired	—			—			(603,735		)	—			(603,735		)
Proceeds from disposals of business/investment	—			—			10,304			—			10,304
Proceeds from foreign exchange contracts	18,342			—			—			—			18,342
Other investing activities, net	—			188			270			—			458
Net cash used in investing activities	(627,677		)	(29,522		)	(613,844		)	646,019			(625,024		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	3,202			—			—			—			3,202
Taxes paid related to net share settlements of stock-based compensation awards	(2,281		)	—			—			—			(2,281		)
Debt issuance costs	(5,907		)	—			—			—			(5,907		)
Borrowings under revolving credit facilities	544,000			—			599,217			—			1,143,217
Repayments under revolving credit facilities	(44,000		)	—			(301,609		)	—			(345,609		)
Borrowings under term loans	89,317			—			249,161			—			338,478
Borrowings under receivables securitization facility	—			—			97,000			—			97,000
Repayments under receivables securitization facility	—			—			(63,000		)	—			(63,000		)
(Repayments) borrowings of other debt, net	—			(946		)	13,796			—			12,850
Payments of Rhiag debt and related payments	—			—			(543,347		)	—			(543,347		)
Payments of other obligations	—			(1,437		)	—			—			(1,437		)
Investment and intercompany note activity with parent	—			(20,106		)	666,125			(646,019		)	—
Dividends	—			(25,069		)	(1,160		)	26,229			—
Net cash provided by (used in) financing activities	584,331			(47,558		)	716,183			(619,790		)	633,166
Effect of exchange rate changes on cash and cash equivalents	—			(352		)	(811		)	—			(1,163		)
Net increase in cash and cash equivalents	26,383			475			114,965			—			141,823
Cash and cash equivalents, beginning of period	17,616			13,432			56,349			—			87,397
Cash and cash equivalents, end of period	$	43,999		$	13,907		$	171,314		$	—		$	229,220

35

Forward-Looking Statements

Statements and information in this Quarterly Report on Form 10-Q that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the "safe harbor" provisions of such Act.

Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. Words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “believe,” “if,” “estimate,” “intend,” “project” and similar words or expressions are used to identify these forward-looking statements. These statements are subject to a number of risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different. All forward-looking statements are based on information available to us at the time the statements are made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should not place undue reliance on our forward-looking statements. Actual events or results may differ materially from those expressed or implied in the forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual results to differ from the results predicted or implied by our forward-looking statements include factors discussed in our filings with the SEC, including those disclosed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in our subsequent Quarterly Reports on Form 10-Q (including this Quarterly Report).

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

Overview

We are a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, specialty vehicle products and accessories, and automotive glass products.

Buyers of vehicle replacement products have the option to purchase from primarily five sources: new products produced by original equipment manufacturers ("OEMs"); new products produced by companies other than the OEMs, which are sometimes referred to as aftermarket products; recycled products obtained from salvage vehicles; used products that have been refurbished; and used products that have been remanufactured. We distribute a variety of products to collision and mechanical repair shops, including aftermarket collision and mechanical products, recycled collision and mechanical products, refurbished collision products such as wheels, bumper covers and lights, and remanufactured engines. Collectively, we refer to the four sources that are not new OEM products as alternative parts.

We are the nation’s largest provider of alternative vehicle collision replacement products and a leading provider of alternative vehicle mechanical replacement products, with our sales, processing, and distribution facilities reaching most major markets in the United States and Canada. We are also a leading provider of alternative vehicle replacement and maintenance products in the United Kingdom, the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic, Switzerland and other Eastern European countries. In addition to our wholesale operations, we operate self service retail facilities across the U.S. that sell recycled automotive products from end-of-life-vehicles. We are also a leading distributor of specialty vehicle aftermarket equipment and accessories reaching most major markets in the U.S and Canada. With our 2016 acquisition of the aftermarket automotive replacement glass distribution operations of PGW ("ARG"), we are a leading distributor of automotive glass products reaching most major markets in North America.

We are organized into four operating segments: Wholesale – North America; Europe; Specialty and Self Service. We aggregate our Wholesale –North America and Self Service operating segments into one reportable segment, North America, resulting in three reportable segments: North America, Europe and Specialty.

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

Acquisitions and Investments

Since our inception in 1998, we have pursued a growth strategy through both organic growth and acquisitions. We have pursued acquisitions that we believe will help drive profitability, cash flow and stockholder value. We target companies that are market leaders, will expand our geographic presence and will enhance our ability to provide a wide array of automotive products to our customers through our distribution network.

36

During the three months endedMarch 31, 2017, we completed three acquisitions, including a wholesale business in North America, a wholesale business in Europe and a Specialty vehicle aftermarket business.

On March 18, 2016, LKQ acquired Rhiag, a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland and Spain. This acquisition expanded LKQ's geographic presence in continental Europe, and we believe the acquisition will generate potential purchasing synergies in our Europe segment.

On April 21, 2016, LKQ acquired PGW, a leading global distributor and manufacturer of automotive glass products. PGW’s business comprised aftermarket automotive replacement glass distribution services and automotive glass manufacturing. On March 1, 2017, we sold the automotive glass manufacturing component of PGW. Unless otherwise noted, the discussion related to PGW throughout Part I, Item 2 of this quarterly report on Form 10-Q refers to ARG, which is included within continuing operations. See Note 3, "Discontinued Operations" in Item 1 of this quarterly report on Form 10-Q for further information related to our discontinued operations. The acquisition of ARG expanded our addressable market in North America. Additionally, we believe the acquisition will create potential distribution synergies with our existing network.

In October 2016, we acquired substantially all of the business assets of Andrew Page, a distributor of aftermarket automotive parts in the United Kingdom. The acquisition is subject to regulatory approval by the Competition and Markets Authority ("CMA") in the U.K. The CMA's review is ongoing as of the date of this report.

In addition to our acquisitions of Rhiag, PGW, and Andrew Page, we acquired seven wholesale businesses in Europe and five wholesale business in North America during the year endedDecember 31, 2016.

On December 1, 2016, we acquired a 26.5% equity interest in Mekonomen, the leading independent car parts and service chain in the Nordic region of Europe, offering a wide range of quality products including spare parts and accessories for cars, and workshop services for consumers and businesses. We are accounting for our interest in Mekonomen using the equity method of accounting, as our investment gives us the ability to exercise significant influence, but not control, over the investee; we are reporting our equity in the net earnings of Mekonomen on a one quarter lag.

See Note 2, "Business Combinations" to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information related to our acquisitions.

Sources of Revenue

We report our revenue in two categories: (i) parts and services and (ii) other. Our parts revenue is generated from the sale of vehicle products and related services including (i) aftermarket, other new and refurbished products and (ii) recycled, remanufactured and related products and services. Our service revenue is generated primarily from the sale of extended warranties, fees for admission to our self service yards, and processing fees related to the secure disposal of vehicles. During the three months endedMarch 31, 2017, parts and services revenue represented approximately 94% of our consolidated revenue.

The majority of our parts and services revenue is generated from the sale of vehicle replacement products to collision and mechanical repair shops. In North America, our vehicle replacement products include sheet metal crash parts such as doors, hoods, and fenders; bumper covers; head and tail lamps; automotive glass products such as windshields; mirrors and grills; wheels; and large mechanical items such as engines and transmissions. In Europe, our products include a wide variety of small mechanical products such as filters, belts and hoses, spark plugs, alternators and water pumps, batteries, suspension and brake parts, clutches, and oil and lubricants. The demand for these products is influenced by several factors, including the number of vehicles in operation, the number of miles being driven, the frequency and severity of vehicle accidents, the age profile of vehicles in accidents, seasonal weather patterns and local weather conditions, and the availability and pricing of new OEM parts. With respect to collision related products, automobile insurers exert significant influence over collision repair shops as to how an insured vehicle is repaired and the cost level of the products used in the repair process. Accordingly, we consider automobile insurers to be key demand drivers of our vehicle replacement products. While they are not our direct customers, we do provide insurance carriers services in an effort to promote the increased usage of alternative replacement products in the repair process. Such services include the review of vehicle repair order estimates, direct quotation services to insurance company adjusters and an aftermarket parts quality and service assurance program. We neither charge a fee to the insurance carriers for these services nor adjust our pricing of products for our customers when we perform these services for insurance carriers. There is no standard price for many of our vehicle replacement products, but rather a pricing structure that varies from day to day based upon such factors as new OEM product prices, product availability, quality, demand, the age and mileage of the vehicle from which the part was obtained (in the case of recycled products), competitor pricing and our product cost.

Our revenue from aftermarket, other new and refurbished products also includes revenue generated from the sale of specialty aftermarket vehicle equipment and accessories. These products are primarily sold to a large customer base of specialty vehicle retailers and equipment installers, including mostly independent, single-site operators. Specialty vehicle aftermarket

37

products are typically installed on vehicles within the first three years of ownership to enhance functionality, performance or aesthetics. As a result, the demand for these products is influenced by new and used vehicle sales and the overall economic health of vehicle owners, which may be affected by general business conditions, interest rates, inflation, consumer debt levels and other matters that influence consumer confidence and spending. The prices for our specialty vehicle products are based on manufacturers' suggested retail prices, with discounts applied based on prevailing market conditions, customer volumes and promotions that we may offer from time to time.

For the three months endedMarch 31, 2017, revenue from other sources represented approximately 6% of our consolidated sales. These other sources include scrap sales, bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations. We derive scrap metal from several sources, including vehicles that have been used in both our wholesale and self service recycling operations and from OEMs and other entities that contract with us for secure disposal of "crush only" vehicles. Other revenue will vary from period to period based on fluctuations in commodity prices and the volume of materials sold.

Cost of Goods Sold

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

Our cost of goods sold for recycled products includes the price we pay for the salvage vehicle and, where applicable, auction, towing and storage fees. Prices for salvage vehicles may be impacted by a variety of factors, including the number of buyers competing to purchase the vehicles, the demand and pricing trends for used vehicles, the number of vehicles designated as “total losses” by insurance companies, the production level of new vehicles (which provides the source from which salvage vehicles ultimately come), the age of vehicles at auction and the status of laws regulating bidders or exporters of salvage vehicles. From time to time, we may also adjust our buying strategy to target vehicles with different attributes (for example, age, level of damage, and revenue potential). Due to changes relating to these factors, we have seen the prices we pay for salvage vehicles fluctuate over time. Our cost of goods sold also includes labor and other costs we incur to acquire and dismantle such vehicles. Our labor and labor-related costs related to acquisition and dismantling generally account for between 9% and 13% of our cost of goods sold for vehicles we dismantle. The acquisition and dismantling of salvage vehicles is a manual process and, as a result, energy costs are not material.

Our cost of goods sold for remanufactured products includes the price we pay for cores; freight; and costs to remanufacture the products, including direct and indirect labor, facility and equipment costs, depreciation and other overhead related to our remanufacturing operations.

Some of our salvage mechanical products are sold with a standard six-month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three-year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products that is supported by certain of the suppliers of those products. We record the estimated warranty costs at the time of sale using historical warranty claims information to project future warranty claims activity and related expenses.

Other revenue is primarily generated from the hulks and unusable parts of the vehicles we acquire for our wholesale and self service recycled product operations, and therefore, the costs of these sales include the proportionate share of the price we pay for the salvage vehicles as well as the applicable auction, storage and towing fees and internal costs to purchase and dismantle the vehicles. Our cost of goods sold for other revenue will fluctuate based on the prices paid for salvage vehicles, which may be impacted by a variety of factors as discussed above.

Expenses

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

Our distribution expenses primarily include our costs to prepare and deliver our products to our customers. Included in our distribution expense category are personnel costs such as wages, employee benefits and incentive compensation for drivers;

38

third party freight costs; fuel; and expenses related to our delivery and transfer trucks, including vehicle leases, repairs and maintenance, and insurance.

Our selling and marketing expenses primarily include salary, commission and other incentive compensation expenses for sales personnel; advertising, promotion and marketing costs; credit card fees; telephone and other communication expenses; and bad debt expense. Personnel costs generally account for between 75% and 80% of our selling and marketing expenses. Most of our sales personnel are paid on a commission basis. The number and quality of our sales force is critical to our ability to respond to our customers’ needs and increase our sales volume. Our objective is to continually evaluate our sales force, develop and implement training programs, and utilize appropriate measurements to assess our selling effectiveness.

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

Seasonality

Our operating results are subject to quarterly variations based on a variety of factors, influenced primarily by seasonal changes in weather patterns. During the winter months, we tend to have higher demand for our vehicle replacement products because there are more weather related repairs. Our specialty vehicle operations typically generate greater revenue and earnings in the first half of the year, when vehicle owners tend to install this equipment. We expect our aftermarket glass operations to generate greater revenue and earnings in the second and third quarters, when the demand for automotive replacement glass increases after the winter weather.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which we filed with the SEC on February 27, 2017, includes a summary of the critical accounting policies and estimates we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies or estimates that have had a material impact on our reported amounts of assets, liabilities, revenue or expenses during the three months endedMarch 31, 2017.

Recently Issued Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 4, "Financial Statement Information" to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information related to new accounting standards.

Financial Information by Geographic Area

See Note 14, "Segment and Geographic Information" to the unaudited condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information related to our revenue and long-lived assets by geographic region.

39

Results of Operations—Consolidated

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

	Three Months Ended
	March 31,
	2017		2016
Revenue	100.0	%	100.0	%
Cost of goods sold	60.3	%	60.4	%
Gross margin	39.7	%	39.6	%
Facility and warehouse expenses	8.1	%	8.2	%
Distribution expenses	7.9	%	7.9	%
Selling, general and administrative expenses	11.4	%	11.4	%
Restructuring and acquisition related expenses	0.1	%	0.8	%
Depreciation and amortization	2.1	%	1.6	%
Operating income	10.1	%	9.7	%
Other expense, net	1.0	%	1.0	%
Income from continuing operations before provision for income taxes	9.1	%	8.6	%
Provision for income taxes	3.1	%	2.8	%
Equity in earnings (loss) of unconsolidated subsidiaries	0.0	%	(0.0	)%
Income from continuing operations	6.0	%	5.8	%
Loss from discontinued operations	(0.2	)%	—	%
Net income	5.8	%	5.8	%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

Three Months EndedMarch 31, 2017 Compared to Three Months EndedMarch 31, 2016

Revenue. The following table summarizes the changes in revenue by category (in thousands):

	Three Months Ended
	March 31,				Percentage Change in Revenue
	2017		2016		Organic		Acquisition		Foreign Exchange		Total Change
Parts & services revenue	$	2,212,941	$	1,818,325	4.5	%	20.0	%	(2.8	)%	21.7	%
Other revenue	129,902		103,151		25.9	%	0.2	%	(0.1	)%	25.9	%
Total revenue	$	2,342,843	$	1,921,476	5.7	%	18.9	%	(2.7	)%	21.9	%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

The change in parts and services revenue of 21.7% represents increases in segment revenue of 10.4% in North America, 50.1% in Europe, and 6.7% in Specialty. The increase in other revenue of 25.9% primarily consisted of a $26.8 million organic increase in other revenue. Refer to the discussion of our segment results of operations for factors contributing to the change in revenue during the first quarter of 2017 compared to the prior year period.

Cost of Goods Sold. Cost of goods sold decreased to 60.3% of revenue in the first quarter of 2017 from 60.4% of revenue in the comparable prior year quarter. Cost of goods sold decreased 1.2% as a result of our North America segment, primarily related to our salvage and self service operations. Partially offsetting this decrease was an increase of (i) 0.8% from our Europe segment, the majority of which relates to our Rhiag acquisition, and (ii) 0.4% from our Specialty operations. Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold as a percentage of revenue by segment for the three months endedMarch 31, 2017 compared to the three months endedMarch 31, 2016.

Facility and Warehouse Expenses. As a percentage of revenue, facility and warehouse expenses for the three months endedMarch 31, 2017 decreased to 8.1% from 8.2% in the same period of 2016. The change in facility and warehouse expense primarily reflects a decrease of 0.3% from our acquisition of Rhiag, which has lower facility and warehouse expenses as a percentage of revenue than our prior year consolidated facility and warehouse expenses. Partially offsetting this decrease were

40

a number of individually insignificant increases in facility and warehouse expenses as a percentage of revenue across our other businesses.

Distribution Expenses. As a percentage of revenue, distribution expenses remained flat at 7.9% for the first quarter of 2017 and 2016. Distribution expense as a percentage of revenue reflects (i) a positive impact of 0.5% from our acquisition of Rhiag, which has lower distribution expenses as a percentage of revenue than our prior year consolidated distribution expenses, partially offset by (ii) an unfavorable impact of 0.3% related to our ARG acquisition, which has higher distribution expenses as a percentage of revenue than our prior year consolidated distribution expenses.

Selling, General and Administrative Expenses. Our selling, general and administrative ("SG&A") expenses for the three months endedMarch 31, 2017 remained flat compared to the prior year at 11.4% of revenue. SG&A as a percentage of revenue increased 0.4% as a result of our Rhiag acquisition, which has higher SG&A than our prior year consolidated SG&A. Offsetting this increase were a number of individually insignificant decreases in SG&A expense as a percentage of revenue across our other businesses.

Restructuring and Acquisition Related Expenses. The following table summarizes restructuring and acquisition related expenses for the periods indicated (in thousands):

	Three Months Ended
	March 31,
	2017			2016			Change
Restructuring expenses	$	315		$	2,136	(1)	$	(1,821	)
Acquisition related expenses	2,613		(2)	12,675		(3)	(10,062		)
Total restructuring and acquisition related expenses	$	2,928		$	14,811		$	(11,883	)

(1) Restructuring expenses of $1.4 million and $0.7 million for the quarter ended March 31, 2016 were primarily related to the integration of acquired businesses in our Specialty and North America segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees.

(2) Acquisition related expenses for the quarter ended March 31, 2017 included $1.6 million related to our North America acquisitions, primarily related to potential acquisitions, and $1.0 million related to our Europe acquisitions.

(3) Acquisition related expenses for the quarter ended March 31, 2016 included $10.7 million for our acquisition of Rhiag, $1.8 million for the acquisition of PGW, and $0.2 million of external costs related to acquisitions that were pending as of March 31, 2016.

See Note 5, "Restructuring and Acquisition Related Expenses" to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our restructuring and integration plans.

Depreciation and Amortization. The following table summarizes depreciation and amortization for the periods indicated (in thousands):

	Three Months Ended
	March 31,
	2017		2016		Change
Depreciation	$	25,393	$	22,787	$	2,606	(1)
Amortization	23,263		8,901		14,362		(2)
Total depreciation and amortization	$	48,656	$	31,688	$	16,968

(1) The increase in depreciation expense primarily reflects the depreciation expense for property and equipment recorded related to our acquisitions of Andrew Page and Rhiag of $1.2 million and $1.1 million, respectively. The remaining increase primarily reflects increased levels of property and equipment to support our organic related growth.

(2) The increase in amortization expense primarily reflects amortization expense for intangibles recorded related to the acquisitions of Rhiag and ARG of $11.7 million and $2.3 million, respectively.

Other Expense, Net. The following table summarizes the components of the quarter-over-quarter increase in other expense, net (in thousands):

41

Other expense, net for the three months ended March 31, 2016	$	20,011
Increase (decrease) due to:
Interest expense, net	9,396			(1)
Loss on debt extinguishment	(26,650		)	(2)
Gains on foreign exchange contracts - acquisition related	18,342			(3)
Other income, net	1,843
Net increase	2,931
Other expense, net for the three months ended March 31, 2017	$	22,942

(1) Additional interest primarily relates to borrowings used to fund our acquisitions of Rhiag and PGW.

(2) During the first quarter of 2016, we incurred a $23.8 million loss on debt extinguishment as a result of our early payment of Rhiag debt assumed as part of the acquisition, and we incurred a $2.9 million loss on debt extinguishment as a result of our January 2016 amendment to our senior secured credit agreement.

(3) In March 2016, we entered into foreign currency forward contracts to acquire a total of €588 million used to fund the purchase price of the Rhiag acquisition. The rates under the foreign currency forwards were favorable to the spot rate on the date the funds were drawn to complete the acquisition, and as a result, these derivative contracts generated a gain of $18.3 million.

Provision for Income Taxes. Our effective income tax rate was 33.9% for the three months endedMarch 31, 2017, compared to 32.1% for the three months endedMarch 31, 2016. The effective tax rate reflects the impact of favorable discrete items of $3.3 million and $4.4 million for the three months endedMarch 31, 2017 and 2016, respectively, for excess tax benefits from stock-based payments. The quarter over quarter change in these amounts increased the effective tax rate by 0.5% compared to the prior year. Our effective tax rate was also negatively impacted by an increase in the proportion of earnings expected to be generated in the U.S., which has a higher tax rate than our foreign operations. Excluding the impact of discrete items, our annual effective tax rate has been close to 35% over the last three years. The tax rate will fluctuate from year to year based on the geographic mix of earnings and changes in tax laws, but absent significant movements in either of these factors, we expect our annual effective rate to hold near 35%.

Equity in Earnings (Loss) of Unconsolidated Subsidiaries. Equity in earnings of unconsolidated subsidiaries for the three months endedMarch 31, 2017 primarily related to our investment in Mekonomen.

Foreign Currency Impact. We translate our statements of income at the average exchange rates in effect for the period. Relative to the rates used during the first quarter of 2016, the pound sterling and euro rates used to translate the 2017 statements of income declined by 13.5% and 3.5%, respectively, while the Canadian dollar rate increased by 3.6% during the first quarter of 2017 relative to the prior year quarter. The translation effect of the change of these currencies against the U.S. dollar and realized and unrealized currency losses for the first quarter of 2017 resulted in a $0.01 negative effect on diluted earnings per share from continuing operations relative to the prior year.

Income from Discontinued Operations, net of tax. Income from discontinued operations, net of tax totaled a $4.5 million loss in the first quarter of 2017; we had no discontinued operations in the prior year period. Discontinued operations for 2017 represents the automotive glass manufacturing business of PGW, which was acquired in April 2016.

Results of Operations—Segment Reporting

We have four operating segments: Wholesale – North America; Europe; Specialty and Self Service. Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Therefore, we present three reportable segments: North America, Europe and Specialty.

We have presented the growth of our revenue and profitability in our operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our growth and profitability, consistent with how we evaluate our performance, as this statistic removes the translation impact of exchange rate fluctuations, which are outside of our control and do not reflect our operational performance. Constant currency revenue and Segment EBITDA results are calculated by translating prior year revenue and Segment EBITDA in local currency using the current year's currency conversion rate. This non-GAAP financial measure has important limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-titled measures by other issuers due to potential inconsistencies in the method of calculation and differences due to items subject to interpretation. In addition, not all

42

companies that report revenue or profitability on a constant currency basis calculate such measures in the same manner as we do, and accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

The following table presents our financial performance, including third party revenue, total revenue and Segment EBITDA, by reportable segment for the periods indicated (in thousands):

	Three Months Ended March 31,
	2017			% of Total Segment Revenue	2016 (1)			% of Total Segment Revenue
Third Party Revenue
North America	$	1,208,047			$	1,080,606
Europe	820,897				546,751
Specialty	313,899				294,119
Total third party revenue	$	2,342,843			$	1,921,476
Total Revenue
North America	$	1,208,240			$	1,080,820
Europe	820,897				546,761
Specialty	314,934				295,070
Eliminations	(1,228		)		(1,175		)
Total revenue	$	2,342,843			$	1,921,476
Segment EBITDA
North America	$	176,135		14.6%	$	145,691		13.5%
Europe	78,694			9.6%	57,498			10.5%
Specialty	35,441			11.3%	33,422			11.3%

(1) In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year results have been recast to reflect the shift in reporting structure in order to present segment results on a comparable basis.

The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses and equity in earnings (loss) of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding discontinued operations, depreciation, amortization, interest (which includes loss on debt extinguishment) and income tax expense. See Note 14, "Segment and Geographic Information" to the unaudited condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for a reconciliation of total Segment EBITDA to Net Income.

Three Months EndedMarch 31, 2017 Compared to Three Months EndedMarch 31, 2016

North America

Third Party Revenue. The following table summarizes the changes in third party revenue by category in our North America segment (in thousands):

	Three Months Ended March 31,				Percentage Change in Revenue
North America	2017		2016		Organic			Acquisition (3)		Foreign Exchange (4)		Total Change
Parts & services revenue	$	1,079,875	$	978,499	1.8	%	(1)	8.3	%	0.2	%	10.4%
Other revenue	128,172		102,107		25.5	%	(2)	0.0	%	(0.0	)%	25.5	%
Total third party revenue	$	1,208,047	$	1,080,606	4.0	%		7.5	%	0.2	%	11.8%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

43

(1) Organic growth in parts and services revenue was largely attributable to increased sales volumes in our wholesale operations, primarily in our salvage operations. The favorable volume impact, which was primarily related to mechanical parts, was a result of refinements to our buying algorithms. Also, an emphasis on inventorying more parts off of each car purchased contributed to the increase to the number of parts sold per vehicle. Similar to the prior year, we experienced mild winter weather conditions in sections of North America. While we were able to increase parts and services revenue over the prior year, we believe the weather conditions contributed to a lower growth rate than generated in prior years.

(2) The $26.1 million increase in other revenue primarily relates to (i) a $19.5 million increase in revenue from scrap steel and other metals primarily related to higher prices and, to a lesser extent, increased volumes and (ii) a $7.7 million increase in revenue from metals found in catalytic converters (platinum, palladium, and rhodium) due to roughly equal impacts from higher prices and increased volumes year over year.

(3) Acquisition related growth in 2017 includes $73.1 million, or 6.8%, from our ARG acquisition. The remainder of our acquired revenue growth reflects revenue from our acquisition of six wholesale businesses from the beginning of 2016 up to the one-year anniversary of the acquisition dates.

(4) Compared to the prior year, exchange rates increased our revenue growth by 0.2%, primarily due to the strengthening of the Canadian dollar against the U.S. dollar in the first quarter of 2017 compared to the prior year first quarter.

Segment EBITDA. Segment EBITDA increased $30.4 million, or 20.9%, in the first quarter of 2017 compared to the prior year first quarter. Sequential increases in scrap steel prices in our salvage and self service operations benefited gross margins and had a favorable impact of $5.9 million on North America Segment EBITDA and approximately a $0.01 positive effect on diluted earnings per share. This favorable impact resulted from the increase in scrap steel prices between the date we purchased a car, which influences the price we pay for a car, and the date we scrapped a car, which influences the price we receive for scrapping a car.

The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our North America segment:

North America	Percentage of Total Segment Revenue
Segment EBITDA for the three months ended March 31, 2016	13.5	%
Increase (decrease) due to:
Change in gross margin	1.8	%	(1)
Change in segment operating expenses	(0.5	)%	(2)
Change in other expenses	(0.2	)%
Segment EBITDA for the three months ended March 31, 2017	14.6	%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

(1) The improvement in gross margin reflects a 1.6% favorable impact in our wholesale operations, primarily related to our salvage operations. The increase in salvage gross margin is primarily attributable to raising revenue per car by a greater rate than car costs. Revenue per car improved due to higher volumes of parts sold per car, which was a result of refinements to our buying algorithms and an emphasis on inventorying more parts off of each car purchased. Within our aftermarket operations, we experienced a 0.5% favorable impact on North America gross margin as a result of our procurement initiatives, which reduced our product costs; offsetting this improvement in gross margin was an unfavorable mix impact as a result of a shift in our sales toward lower margin products compared to the prior year first quarter. The improvement in North America gross margin also reflects a 0.7% favorable impact from our self service operations as a result of increases in scrap prices. Partially offsetting these increases was an unfavorable impact of 0.6% related to our ARG acquisition, which has lower gross margins than our other North America operations.

(2) The increase in segment operating expenses as a percentage of revenue reflects a 0.5% increase in operating expenses related to our ARG acquisition, which had higher operating expenses as a percentage of revenue than our existing North America operations. ARG's operating expenses for the first quarter of 2017 included incremental costs related to shared PGW corporate expenses of $5.7 million for the first two months of 2017; these costs ceased being incurred upon the closing of the sale of the glass manufacturing business on March 1, 2017.

44

Europe

Third Party Revenue. The following table summarizes the changes in third party revenue by category in our Europe segment (in thousands):

	Three Months Ended March 31,				Percentage Change in Revenue
Europe	2017		2016		Organic (1)		Acquisition (2)		Foreign Exchange (3)		Total Change
Parts & services revenue	$	819,167	$	545,707	8.5	%	51.5	%	(9.9	)%	50.1%
Other revenue	1,730		1,044		62.5	%	13.2	%	(10.0	)%	65.7%
Total third party revenue	$	820,897	$	546,751	8.6	%	51.4	%	(9.9	)%	50.1%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

(1) In our U.K. operations, parts and services revenue grew organically by 6.8%, while in our Benelux region operations, parts and services revenue grew organically by 3.4%. Our organic revenue growth in the U.K. was primarily a result of higher selling prices as well as two additional selling days in the first quarter of 2017 compared to the first quarter of 2016. Revenue in our U.K. operations grew 5.1% from stores open more than 12 months and 1.7% from 13 branch openings since the beginning of the prior year through the one-year anniversary of their respective opening dates. Organic revenue growth in our Benelux region was primarily due to two additional selling days in the first quarter of 2017 compared to the first quarter of 2016. Rhiag organic revenue growth also benefited from two additional selling days in the period after the one-year anniversary of the acquisition. Organic revenue growth for our Europe segment on a per day basis was 3.4%.

(2) Acquisition related growth for the first quarter of 2017 includes $215.9 million, or 39.5%, from our acquisition of Rhiag. The remainder of our acquired revenue growth includes revenue from our acquisitions of three wholesale businesses in our U.K. operations, three distribution companies in the Netherlands, and three salvage businesses in Sweden since the beginning of 2016 through the one-year anniversary of the acquisitions.

(3) Compared to the prior year, exchange rates reduced our revenue growth by $54.0 million, or 9.9%, primarily due to the strengthening of the U.S. dollar against the pound sterling in the first quarter of 2017 relative to the first quarter of 2016.

Segment EBITDA. Segment EBITDA increased $21.2 million, or 36.9%, in the first quarter of 2017 compared to the prior year period. Our Rhiag acquisition contributed $26.3 million to Segment EBITDA in the first quarter of 2017 compared to $4.2 million in the first quarter of 2016. Our Europe Segment EBITDA includes a negative year over year impact of $6.1 million related to the translation of local currency results into U.S. dollars at lower exchange rates than those experienced during 2016. On a constant currency basis (i.e. excluding the translation impact), Segment EBITDA increased by $27.3 million, or 47.5%, compared to the prior year. Refer to the Foreign Currency Impact discussion within the Results of Operations - Consolidated section above for further detail regarding foreign currency impact on our results for the quarter ended March 31, 2017.

The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our Europe segment:

Europe	Percentage of Total Segment Revenue
Segment EBITDA for the three months ended March 31, 2016	10.5	%
(Decrease) increase due to:
Change in gross margin	(1.1	)%	(1)
Change in segment operating expenses	0.3	%	(2)
Change in other expense, net	(0.1	)%
Segment EBITDA for the three months ended March 31, 2017	9.6	%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

(1) The decrease in gross margin reflects a 1.7% decline in gross margin due to the acquisition of Rhiag, which has lower gross margins than our other Europe operations, partially offset by a 0.3% increase in gross margin due to our Benelux operations. The gross margin improvement in our Benelux operations was primarily a result of increased private label sales, which have higher gross margins. The remaining change in gross margin was attributable to individually insignificant improvements in gross margin across our other Europe operations.

45

(2) The decrease in segment operating expenses as a percentage of revenue reflects (i) a decrease of 1.5% as a result of the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our other Europe operations and (ii) a decrease of 0.4% in selling, general, and administrative expenses from our U.K. operations due to improved operating leverage, partially offset by (iii) an increase of 0.8% in operating expenses as a result of the acquisition of Andrew Page, which has higher operating expenses as a percentage of revenue than our other Europe operations and (iv) an increase in facility and warehouse expenses of 0.7%, primarily related to increased personnel costs in our U.K. operations due to the opening of 13 new branches and 1 new hub since the beginning of the prior year. While we have closed the Andrew Page acquisition and are consolidating its results, we are not permitted to integrate this acquisition with our existing U.K. operations until we receive approval from the CMA.

Specialty

Third Party Revenue. The following table summarizes the changes in third party revenue by category in our Specialty segment (in thousands):

	Three Months Ended March 31,				Percentage Change in Revenue
Specialty	2017		2016		Organic (1)		Acquisition		Foreign Exchange		Total Change
Parts & services revenue	$	313,899	$	294,119	6.3	%	0.1	%	0.3	%	6.7%
Other revenue	—		—		—	%	—	%	—	%	—	%
Total third party revenue	$	313,899	$	294,119	6.3	%	0.1	%	0.3	%	6.7%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

(1) Organic growth in Specialty parts & services revenue was driven by higher Truck, Towing and RV parts sales, partially offset by lower sales of Performance accessories. This organic growth was fueled by favorable economic conditions in most of our primary selling regions, as well as favorable trends in light truck and RV unit sales.

Segment EBITDA. Segment EBITDA increased $2.0 million, or 6.0%, in the first quarter of 2017 compared to the prior year first quarter.

The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our Specialty segment:

Specialty	Percentage of Total Segment Revenue
Segment EBITDA for the three months ended March 31, 2016	11.3	%
(Decrease) increase due to:
Change in gross margin	(2.4	)%	(1)
Change in segment operating expenses	2.3	%	(2)
Change in other expense, net	0.1	%
Segment EBITDA for the three months ended March 31, 2017	11.3	%
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.

(1) The decline in gross margin reflects unfavorable impacts of (i) a 1.0% decrease in overall supplier discounts as 2016 was more favorably impacted by higher volume purchase discounts from the initial stocking of two new distribution centers that became fully functional in 2016, (ii) a 0.9% decrease due to higher overhead costs in inventory which is driven by warehouse costs for these two new distribution centers, and (iii) 0.4% of unfavorable product mix.

(2) The decrease in segment operating expenses reflects favorable facilities and warehouse expenses of 1.1% primarily related to the integration of Coast facilities. Selling, general and administrative expenses were favorable by 0.8% which primarily relates to (i) a 0.4% decline in personnel costs from the realization of integration synergies and the ability to achieve sales growth with a consistent headcount and (ii) individually insignificant decreases across various selling, general, and administrative expense categories totaling 0.4%. Distribution expenses were favorable by 0.4% which also reflects Coast integration synergies through the shift from use of third party carriers to shipments through the Specialty distribution network which created a 0.6% decline in freight costs and truck rentals partially offset by a 0.2% increase in personnel and fuel costs.

46

Liquidity and Capital Resources

The following table summarizes liquidity data as of the dates indicated (in thousands):

	March 31, 2017		December 31, 2016		March 31, 2016
Cash and equivalents	$	264,614	$	227,400	$	229,220
Total debt (1)	3,048,183		3,365,687		2,836,700
Current maturities (2)	94,302		68,414		76,405
Capacity under credit facilities (3)	2,550,000		2,550,000		2,547,000
Availability under credit facilities (3)	1,359,806		1,019,112		1,092,589
Total liquidity (cash and equivalents plus availability under credit facilities)	1,624,420		1,246,512		1,321,809

(1) Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of $22.9 million, $23.9 million, and $18.1 million as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively).

(2) Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of $2.3 million, $2.3 million and $1.0 million as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively).

(3) Includes our revolving credit facilities, our receivables securitization facility, and letters of credit.

We assess our liquidity in terms of our ability to fund our operations and provide for expansion through both internal development and acquisitions. Our primary sources of liquidity are cash flows from operations and our credit facilities. We utilize our cash flows from operations to fund working capital and capital expenditures, with the excess amounts going towards funding acquisitions or paying down outstanding debt. As we have pursued acquisitions as part of our growth strategy, our cash flows from operations have not always been sufficient to cover our investing activities. To fund our acquisitions, we have accessed various forms of debt financing, including revolving credit facilities, senior notes, and a receivables securitization facility.

As of March 31, 2017, we had debt outstanding and additional available sources of financing as follows:

• Senior secured credit facilities maturing in January 2021, composed of term loans totaling $750 million ($723 million outstanding at March 31, 2017) and $2.45 billion in revolving credit ($1.02 billion outstanding at March 31, 2017), bearing interest at variable rates (although a portion of this debt is hedged through interest rate swap contracts), reduced by $72 million of amounts outstanding under letters of credit

• U.S. Notes totaling $600 million, maturing in May 2023 and bearing interest at a 4.75% fixed rate

• Euro Notes totaling $533 million (€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate

• Receivables securitization facility with availability up to $100 million ($100 million outstanding as of March 31, 2017), maturing in November 2019 and bearing interest at variable commercial paper rates

From time to time, we may undertake financing transactions to increase our available liquidity, such as our January 2016 amendment to our senior secured credit facilities, the issuance of €500 million of Euro Notes in April 2016, and the November 2016 amendment to our receivables securitization facility. Our financing structure, which includes our senior secured credit facilities, senior notes, and receivables securitization facility, provides financial flexibility to execute our long-term growth strategy. If we see an attractive acquisition opportunity, we have the ability to use our revolver to move quickly and have certainty of funding up to the amount of our then-available liquidity.

As of March 31, 2017, we had approximately $1.4 billion available under our credit facilities. Combined with approximately $265 million of cash and equivalents at March 31, 2017, we had approximately $1.6 billion in available liquidity, an increase of $378 million over our available liquidity as of December 31, 2016. The increase in available liquidity in the first quarter is primarily attributable to the proceeds from the sale of the glass manufacturing business in March for $301 million.

We believe that our current liquidity and cash expected to be generated by operating activities in future periods will be sufficient to meet our current operating and capital requirements, although such sources may not be sufficient for future acquisitions depending on their size. While we believe that we have adequate capacity, from time to time we may need to raise additional funds through public or private financing, strategic relationships or other arrangements. There can be no assurance that additional funding, or refinancing of our credit facilities, if needed, will be available on terms attractive to us, or at all.

47

Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants or higher interest costs. Our failure to raise capital if and when needed could have a material adverse impact on our business, operating results, and financial condition.

Borrowings under the credit agreement accrue interest at variable rates which are tied to LIBOR or CDOR, depending on the currency and the duration of the borrowing, plus an applicable margin rate which is subject to change quarterly based on our reported leverage ratio. We hold interest rate swaps to hedge the variable rates on a portion of our credit agreement borrowings, with the effect of fixing the interest rates on the respective notional amounts. In addition, in 2016, we entered into cross currency swaps that contain an interest rate swap component and a foreign currency forward contract component that, when combined with related intercompany financing arrangements, effectively convert variable rate U.S. dollar-denominated borrowings into fixed rate euro-denominated borrowings. These derivative transactions are described in Note 10, "Derivative Instruments and Hedging Activities" to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. After giving effect to these contracts, the weighted average interest rate on borrowings outstanding under our credit agreement at March 31, 2017 was 2.0%. Including our senior notes and the borrowings on our receivables securitization program, our overall weighted average interest rate on borrowings was 2.9% at March 31, 2017.

Cash interest payments were $11.0 million for the three months endedMarch 31, 2017, but these payments will increase by approximately $24.6 million in the second quarter of 2017 as a result of our semi-annual interest payments on our U.S. Notes and our Euro Notes. Interest payments on our U.S. Notes are made in May and November, and interest payments on our Euro Notes are scheduled for April and October.

We had outstanding credit agreement borrowings of $1.7 billion and $2.1 billion at March 31, 2017 and December 31, 2016, respectively. Of these amounts, $37.2 million was classified as current maturities at both March 31, 2017 and December 31, 2016.

The scheduled maturities of long-term obligations outstanding at March 31, 2017 are as follows (in thousands):

Nine months ending December 31, 2017	$	83,682
Years ending December 31:
2018	43,453
2019	140,311
2020	38,717
2021	1,602,807
2022	402
Thereafter	1,138,811
Total debt (1)	$	3,048,183

(1) The total debt amounts presented above reflect the gross values to be repaid (excluding debt issuance costs of $22.9 million as of March 31, 2017).

Our credit agreement contains customary covenants that provide limitations and conditions on our ability to enter into certain transactions. The credit agreement also contains financial and affirmative covenants, including limitations on our net leverage ratio and a minimum interest coverage ratio. We were in compliance with all restrictive covenants under our credit agreement as of March 31, 2017.

As of March 31, 2017, the Company had cash of $264.6 million, of which $224.0 million was held by foreign subsidiaries. We consider the undistributed earnings of these foreign subsidiaries to be indefinitely reinvested, and accordingly, no provision for U.S. income taxes has been provided thereon. Should these earnings be repatriated in the future, in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to adjustment for foreign tax credits) and potential withholding taxes payable to the various foreign countries. We believe that we have sufficient cash flow and liquidity to meet our financial obligations in the U.S. without resorting to repatriation of foreign earnings.

The procurement of inventory is the largest operating use of our funds. We normally pay for aftermarket product purchases at the time of shipment or on standard payment terms, depending on the manufacturer and the negotiated payment terms. We normally pay for salvage vehicles acquired at salvage auctions and under direct procurement arrangements at the time that we take possession of the vehicles.

48

The following table sets forth a summary of our aftermarket inventory procurement for the three months endedMarch 31, 2017 and 2016 (in thousands):

	Three Months Ended
	March 31,
	2017		2016		Change
North America	$	265,800	$	260,200	$	5,600
Europe	527,400		299,200		228,200			(1)
Specialty	231,900		262,300		(30,400		)	(2)
Total	$	1,025,100	$	821,700	$	203,400

(1) In our Europe segment, the increase in purchases was primarily due to our acquisition of Rhiag in March 2016, which added incremental purchases of $180.8 million in the first quarter of 2017. Purchases for our U.K. operations increased in the three months ended March 31, 2017 compared to the prior year period primarily as a result of our acquisition of Andrew Page in October 2016, which added incremental purchases of $39.4 million.

(2) The decrease in Specialty aftermarket purchases during the three months ended March 31, 2017 compared to the prior year quarter is primarily due to (i) higher inventory purchases in the first quarter of 2016 to stock a new distribution center that opened in March 2016 and (ii) the closure of several warehouses as part of the integration of our Coast acquisition, which resulted in lower inventory purchases in the first quarter of 2017.

The following table sets forth a summary of our global salvage and self service procurement for the three months endedMarch 31, 2017 and 2016 (in thousands):

	Three Months Ended
	March 31,
	2017	2016	% Change
North America Wholesale salvage cars and trucks	75	72	4.2	%
Europe Wholesale salvage cars and trucks	7	6	16.7	%
Self service and "crush only" cars	133	125	6.4	%	(1)

(1) With the increase in scrap prices compared to the prior year period, we have increased the number of self service and "crush only" vehicles purchased.

Net cash provided by operating activities totaled $172.3 million for the three months endedMarch 31, 2017, compared to $134.8 million during the three months endedMarch 31, 2016. During the first three months of 2017, our glass manufacturing business used $3.9 million of cash for operating activities; these operating cash flows are nonrecurring as we closed the sale of this business on March 1, 2017.

The remaining change in cash provided by operating activities was attributable to our continuing operations. During the three months endedMarch 31, 2017, our operating income increased by $50.0 million compared to the first three months of 2016, due to both acquisition related growth and organic growth. The increase in operating income was negatively impacted by non-cash depreciation and amortization expense, which increased by $17.4 million compared to the prior year period, primarily as a result of our Rhiag and PGW acquisitions. Cash paid for taxes for our continuing operations increased by $6.0 million during the first three months of 2017 compared to the prior year period as a result of growth in the business, primarily related to our Rhiag acquisition. Cash paid for interest decreased by $8.4 million in 2017 primarily as a result of payments in the first quarter of 2016 for interest on the assumed Rhiag debt upon redemption in addition to payments to terminate Rhiag interest rate swaps.

Cash outflows for our primary working capital accounts (receivables, inventory and payables) totaled $85.2 million during the three months endedMarch 31, 2017 compared to $38.9 million during the comparable period in 2016. In the first quarter of 2017, cash outflows for receivables totaled $108.9 million compared to $78.4 million for the prior year period; the increase in cash outflows was primarily attributable to our North America and Europe segments. During the first three months of 2017, cash outflows for inventory were $0.7 million compared to cash inflows of $19.0 million in the prior year period. The quarter over quarter increase in cash outflows for inventory was primarily related to our Europe and North America segments, partially offset by a decrease in cash outflows for inventory in our Specialty segment. Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period and can be influenced by factors outside of our control. However, we expect that the net change in these

49

working capital items will generally be a cash outflow as we expect to grow our business each year. Other operating assets and liabilities represented a $20.5 million smaller cash outflow in 2017 than the first quarter of 2016; the largest component of the change related to growth in other accrued expenses for our Rhiag and ARG operations.

Net cash provided by investing activities totaled $181.2 million for the three months endedMarch 31, 2017, compared to $625.0 million of cash used during the three months endedMarch 31, 2016. We invested $77.1 million of cash, net of cash acquired, in business acquisitions during the three months endedMarch 31, 2017 compared to $603.7 million in the first quarter of 2016, which included $601.4 million for our Rhiag acquisition. In the first quarter of 2017, we received proceeds from the sale of our glass manufacturing business totaling $301.3 million. In the first three months of 2016, we entered into foreign currency contracts to fund the purchase price of the Rhiag acquisition, which generated $18.3 million of gains; we had no such contracts in the current year period.

Net cash used in financing activities totaled $326.4 million for the three months endedMarch 31, 2017, compared to $633.2 million during the three months endedMarch 31, 2016. During the three months endedMarch 31, 2017, net repayments under our credit facilities totaled $353.5 million, as we used the proceeds from the sale of our glass manufacturing business to repay outstanding revolver borrowings; in the first quarter of 2016, we had net borrowings of $1.2 billion primarily to fund our acquisitions. Additionally, we repaid $543.3 million of Rhiag acquired debt and debt related liabilities during the first quarter of 2016. 

We intend to continue to evaluate markets for potential growth through the internal development of distribution centers, processing and sales facilities, and warehouses, through further integration of our facilities, and through selected business acquisitions. Our future liquidity and capital requirements will depend upon numerous factors, including the costs and timing of our internal development efforts and the success of those efforts, the costs and timing of expansion of our sales and marketing activities, and the costs and timing of future business acquisitions.

50

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks arising from adverse changes in:

• foreign exchange rates;

• interest rates; and

• commodity prices.

Foreign Exchange

Foreign currency fluctuations may impact the financial results we report for the portions of our business that operate in functional currencies other than the U.S. dollar. Our operations outside of the U.S. represented 39.5% and 39.1% of our revenue during the three months endedMarch 31, 2017 and the year ended December 31, 2016, respectively. An increase or decrease in the strength of the U.S. dollar against these currencies by 10% would result in a 4.0% change in our consolidated revenue and a 3.0% change in our operating income for the three months endedMarch 31, 2017. See our Results of Operations discussion in Part I, Item 2 of this Quarterly Report on Form 10-Q for additional information regarding the impact of fluctuations in exchange rates on our quarter over quarter results.

Additionally, we are exposed to foreign currency fluctuations with respect to the purchase of aftermarket products from foreign countries, primarily in Europe and Asia. To the extent that our inventory purchases are not denominated in the functional currency of the purchasing location, we are exposed to exchange rate fluctuations. In several of our operations, we purchase inventory from manufacturers in Taiwan in U.S. dollars, which exposes us to fluctuations in the relationship between the local functional currency and the U.S. dollar, as well as fluctuations between the U.S. dollar and the Taiwan dollar. We hedge our exposure to foreign currency fluctuations related to a portion of inventory purchases in our Europe operations, but the notional amount and fair value of these foreign currency forward contracts at March 31, 2017 were immaterial. We do not currently attempt to hedge foreign currency exposure related to our foreign currency denominated inventory purchases in our North America operations, and we may not be able to pass on any price increases to our customers.

Other than with respect to a portion of our foreign currency denominated inventory purchases, we do not hold derivative contracts to hedge foreign currency risk. Our net investment in foreign operations is partially hedged by the foreign currency denominated borrowings we use to fund foreign acquisitions; however, our ability to use foreign currency denominated borrowings to finance our foreign operations may be limited based on local statutory tax laws. We have elected not to hedge the foreign currency risk related to the interest payments on foreign borrowings as we generate cash flows in the local currencies that can be used to fund debt payments. As of March 31, 2017, we had outstanding borrowings of €500 million under our Euro Notes, and £128.7 million, CAD $130.4 million, SEK 116.0 million, and €21.0 million under our revolving credit facilities.

Interest Rates

Our results of operations are exposed to changes in interest rates primarily with respect to borrowings under our credit facilities, where interest rates are tied to the prime rate, LIBOR or CDOR. Therefore, we implemented a policy to manage our exposure to variable interest rates on a portion of our outstanding variable rate debt instruments through the use of interest rate swap contracts. These contracts convert a portion of our variable rate debt to fixed rate debt, matching the currency, effective dates and maturity dates to specific debt instruments. Net interest payments or receipts from interest rate swap contracts are included as adjustments to interest expense. All of our interest rate swap contracts have been executed with banks that we believe are creditworthy (Wells Fargo Bank, N.A.; Bank of America, N.A.; Citizens, N.A.; Fifth Third Bank; HSBC Bank USA, N.A.; and Banco Bilbao Vizcaya Argentaria, S.A.).

As of March 31, 2017, we held ten interest rate swap contracts representing a total of $590 million of U.S. dollar-denominated notional amount debt. Our interest rate swap contracts are designated as cash flow hedges and modify the variable rate nature of that portion of our variable rate debt. These swaps have maturity dates ranging from January 2021 through June 2021. As of March 31, 2017, the fair value of the interest rate swap contracts was an asset of $17.5 million. The values of such contracts are subject to changes in interest rates.

In addition to these interest rate swaps, as of March 31, 2017 we held we three cross currency swap agreements for a total notional amount of $418.4 million (€396.3 million) with maturity dates in January 2021. These cross currency swaps contain an interest rate swap component and a foreign currency forward contract component that, combined with related intercompany financing arrangements, effectively convert variable rate U.S. dollar-denominated borrowings into fixed rate euro-denominated borrowings. The swaps are intended to eliminate uncertainty in cash flows in U.S. dollars and euros in connection with intercompany financing arrangements. The cross currency swaps were also executed with banks we believe are creditworthy (Wells Fargo Bank, N.A.; Bank of America, N.A.; and The Bank of Tokyo-Mitsubishi UFJ, Ltd.). As of March 31,

51

2017, the fair value of the interest rate swap components of the cross currency swaps was an asset of $2.5 million, and the fair value of the currency forward components was a liability of $5.4 million. The values of these contracts are subject to changes in interest rates and foreign currency exchange rates.

In total, we had 57.9% of our variable rate debt under our credit facilities at fixed rates at March 31, 2017 compared to 48% at December 31, 2016. See Note 9, "Long-Term Obligations" and Note 10, "Derivative Instruments and Hedging Activities" to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

At March 31, 2017, we had $833.0 million of variable rate debt that was not hedged. Using sensitivity analysis, a 100 basis point movement in interest rates would change interest expense by $8.3 million over the next twelve months.

Commodity Prices

We are exposed to market risk related to price fluctuations in scrap metal and other metals. Market prices of these metals affect the amount that we pay for our inventory as well as the revenue that we generate from sales of these metals. As both our revenue and costs are affected by the price fluctuations, we have a natural hedge against the changes. However, there is typically a lag between the effect on our revenue from metal price fluctuations and inventory cost changes, and there is no guarantee that the vehicle costs will decrease at the same rate as the metal prices. Therefore, we can experience positive or negative gross margin effects in periods of rising or falling metals prices, particularly when such prices move rapidly. Additionally, if market prices were to change at a greater rate than our vehicle acquisition costs, we could experience a positive or negative effect on our operating margin. The average of scrap metal prices for the first quarter of 2017 has increased 12.1% over the average for the fourth quarter of 2016.

52

Item 4.     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2017, the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of LKQ Corporation's management, including our Chief Executive Officer and our Chief Financial Officer, of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective in providing reasonable assurance that information we are required to disclose in this Quarterly Report on Form 10-Q has been recorded, processed, summarized and reported as of the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

 There were no changes in our internal control over financial reporting during the quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

53

PART II

OTHER INFORMATION

Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition and results of operations, and the trading price of our common stock. Please refer to our 2016 Annual Report on Form 10-K, filed with the SEC on February 27, 2017, for information concerning risks and uncertainties that could negatively impact us. The following represents changes and/or additions to the risks and uncertainties previously disclosed. The following risk factors are not necessarily listed in order of importance.

We face intense competition from local, national, international, and internet-based vehicle products providers, and this competition could negatively affect our business.

The vehicle replacement products industry is highly competitive and is served by numerous suppliers of OEM, recycled, aftermarket, refurbished and remanufactured products. Within each of these categories of suppliers, there are local owner-operated companies, larger regional suppliers, national and international providers, and eCommerce-based suppliers (both local and global). Providers of vehicle replacement products that have traditionally sold only certain categories of such products may decide to expand their product offerings into other categories of vehicle replacement products, which may further increase competition. Some of our current and potential competitors may have more operational expertise; greater financial, technical, manufacturing, distribution, and other resources; longer operating histories; lower cost structures; and better relationships in the insurance and vehicle repair industries or with consumers, than we do. In certain regions of the U.S., local vehicle recycling companies have formed cooperative efforts to compete in the wholesale recycled products industry. Similarly in Europe, some local companies are part of cooperative efforts to compete in the aftermarket parts industry. As a result of these factors, our competitors may be able to provide products that we are unable to supply, provide their products at lower costs, or supply products to customers that we are unable to serve.

We believe that a majority of collision parts by dollar amount are supplied by OEMs, with the balance being supplied by distributors of alternative aftermarket, recycled, refurbished and remanufactured collision parts like us. The OEMs are therefore able to exert pricing pressure in the marketplace. We compete with the OEMs primarily on price and to a lesser extent on service and quality. From time to time, the OEMs have implemented programs seeking to increase their market share in the collision repair parts industry. For example, they have reduced prices on specific products to match the lower prices of alternative products and introduced other rebate programs that may disrupt our sales. The growth of these programs or the introduction of new ones could have a material adverse impact on our business.

In addition, vehicles are being equipped with systems that transmit data to the OEMs wirelessly regarding, among other items, accident incidents, maintenance requirements, location of the vehicle, identification of the closest dealership, and other statistics about the vehicle and its driving history. To the extent that this data is not shared with alternative suppliers, the OEMs will have an advantage with respect to such matters as contacting the vehicle driver, recommending repairs and maintenance, and directing the vehicle owner to an affiliated dealership.

If the number of vehicles involved in accidents declines or the number of cars being repaired declines, our business could suffer.

Our business depends on vehicle accidents and mechanical failures for both the demand for repairs using our products and the supply of recycled, remanufactured and refurbished parts. To the extent that a relatively higher percentage of damaged vehicles are declared total losses, there will be less demand for our products to repair such vehicles. In addition, our business is impacted by factors which influence the number and/or severity of accidents and mechanical failures including, but not limited to, the number of vehicles on the road, the number of miles driven, the ages of drivers, the occurrence and severity of certain weather conditions, the congestion of traffic, drivers distracted by electronic equipment, the use of alcohol or drugs by drivers, the usage rate and effectiveness of accident avoidance systems in new vehicles, the reliability of new OEM parts, and the condition of roadways. For example, an increase in the acceptance of ride-sharing could reduce the number of vehicles on the road. Additionally, an increase in fuel prices may cause the number of vehicles on the road, the number of miles driven, and the need for mechanical repairs and maintenance to decline, as motorists seek alternative transportation options. Mild weather conditions, particularly during winter months, tend to result in a decrease in vehicle accidents. Moreover, a number of states and municipalities have adopted, or are considering adopting, legislation banning the use of handheld cellular telephones or other electronic devices while driving, and such restrictions could lead to a decline in accidents.

Systems designed to minimize accident frequency and severity are becoming more prevalent and more technologically sophisticated. To the extent OEMs install or are mandated by law to install accident avoidance systems in their vehicles, the number and severity of accidents could decrease, which could have a material adverse effect on our business.

54

The average number of new vehicles sold annually has fluctuated from year-to-year.  Periods of decreased sales could result in a reduction in the number of vehicles on the road and consequently fewer vehicles involved in accidents or in need of mechanical repair or maintenance. Substantial further declines in automotive sales in the future could have a material adverse effect on our business, results of operations and/or financial condition. In addition, if vehicle population trends result in a disproportionately high number of older vehicles on the road, insurance companies may find it uneconomical to repair such vehicles or there could be less costly repairs. If vehicle population trends result in a disproportionately high number of newer vehicles on the road, the demand generally for mechanical repairs and maintenance would likely decline due to the newer, longer-lasting parts in the vehicle population and mechanical failures being covered by OEM warranties for the first years of a vehicle's life. Moreover, alternative collision and mechanical parts are less likely to be used on newer vehicles. Electric vehicles do not have traditional engines, transmissions, and certain related other parts. Engines and transmissions represent our largest revenue generating SKUs in North America, and parts for engines and transmissions represent a significant amount of the revenue of our European operations. Thus, an increase in electric vehicles as a percentage of vehicles sold will have a negative impact on our sales of engines, transmissions, and other related parts.

Item 6.     Exhibits

Exhibits

(b) Exhibits

3.1	Amended and Restated Bylaws of LKQ Corporation, as amended as of March 8, 2017 (incorporated herein by reference to Exhibit 3.1 to the Company's report on Form 8-K filed with the SEC on March 10, 2017).
10.1	Form of LKQ Corporation Executive Officer Management Incentive Plan Award Memorandum (incorporated herein by reference to Exhibit 10.1 to the Company's report on Form 8-K filed with the SEC on March 10, 2017).
10.2	Form of LKQ Corporation Executive Officer Long Term Incentive Plan Award Memorandum (incorporated herein by reference to Exhibit 10.2 to the Company's report on Form 8-K filed with the SEC on March 10, 2017).
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

55

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 1, 2017.

LKQ CORPORATION

/s/ DOMINICK ZARCONE

Dominick Zarcone

Executive Vice President and Chief Financial Officer

(As duly authorized officer and Principal Financial Officer)

/s/ MICHAEL S. CLARK

Michael S. Clark

Vice President — Finance and Controller

(As duly authorized officer and Principal Accounting Officer)

56

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert L. Wagman, certify that:

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

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

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

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

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

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

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

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

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

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

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

May 1, 2017

/s/ ROBERT L. WAGMAN

Robert L. Wagman

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dominick Zarcone, certify that:

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

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

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

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

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

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

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

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

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

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

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

May 1, 2017

/S/ DOMINICK ZARCONE

Dominick Zarcone

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LKQ Corporation (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, as President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 1, 2017

/S/ ROBERT L. WAGMAN

Robert L. Wagman

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LKQ Corporation (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, as Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 1, 2017

/S/ DOMINICK ZARCONE

Dominick Zarcone

Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 21, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
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		308,285,252

XML

Unaudited Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenue	$ 2,342,843	$ 1,921,476
Cost of goods sold	1,412,750	1,161,039
Gross margin	930,093	760,437
Facility and warehouse expenses	189,780	157,605
Distribution expenses	185,810	152,343
Selling, general and administrative expenses	267,227	218,318
Restructuring and acquisition related expenses	2,928	14,811
Depreciation and amortization	48,656	31,688
Operating income	235,692	185,672
Other expense (income):
Interest expense, net	23,988	14,592
Loss on debt extinguishment	0	26,650
Gains on foreign exchange contracts - acquisition related	0	(18,342)
Gain (Loss) on Sale of Derivatives		18,342
Other income, net	(1,046)	(2,889)
Total other expense, net	22,942	20,011
Income from continuing operations before provision for income taxes	212,750	165,661
Provision for income taxes	72,155	53,128
Equity in earnings of unconsolidated subsidiaries	214	(362)
Income from continuing operations	140,809	112,171
Loss from discontinued operations, net of tax	(4,531)	0
Net income	$ 136,278	$ 112,171
Basic earnings per share:
Income from continuing operations	$ 0.46	$ 0.37
Loss from discontinued operations	(0.01)	0.00
Net income (1)	0.44	0.37
Diluted earnings per share:
Income from continuing operations	0.45	0.36
Loss from discontinued operations	(0.01)	0.00
Net income (1)	$ 0.44	$ 0.36

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 136,278	$ 112,171
Other comprehensive income (loss):
Foreign currency translation	21,579	140
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163	432
Net change in unrealized gains/losses on pension plan, net of tax	(3,041)	147
Other comprehensive income (loss), unconsolidated subsidiaries	(162)
Total other comprehensive income	21,539	719
Total comprehensive income	$ 157,817	$ 112,890

XML

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 264,614	$ 227,400
Receivables, net	973,670	860,549
Inventories	1,978,465	1,935,237
Prepaid expenses and other current assets	101,377	87,768
Assets of discontinued operations	0	456,640
Total current assets	3,318,126	3,567,594
Property and equipment, net	809,208	811,576
Intangible assets:
Goodwill	3,120,844	3,054,769
Other intangibles, net	576,451	584,231
Equity Method Investments	185,262	183,467
Other assets	112,355	101,562
Total assets	8,122,246	8,303,199
Current liabilities:
Accounts payable	651,117	633,773
Accrued expenses:
Accrued payroll-related liabilities	89,977	118,755
Other accrued expenses	243,018	209,101
Other current liabilities	83,601	37,943
Current portion of long-term obligations	91,988	66,109
Liabilities of discontinued operations	0	145,104
Total current liabilities	1,159,701	1,210,785
Long-term obligations, excluding current portion	2,933,277	3,275,662
Deferred income taxes	221,504	199,657
Other Noncurrent Liabilities	200,893	174,146
Stockholders’ equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 306,785,582 and 305,574,384 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	3,083	3,075
Additional paid-in capital	1,122,787	1,116,690
Retained earnings	2,726,637	2,590,359
Accumulated other comprehensive loss	(245,636)	(267,175)
Total stockholders’ equity	3,606,871	3,442,949
Total liabilities and stockholders’ equity	$ 8,122,246	$ 8,303,199

XML

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	308,283,752	307,544,759
Common stock, shares outstanding	308,283,752	307,544,759

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 136,278	$ 112,171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,604	33,166
Stock-based compensation expense	7,285	5,916
Loss on debt extinguishment	0	26,650
Loss on sale of business	8,600
Gains on foreign exchange contracts - acquisition related	0	(18,342)
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Net cash provided by operating activities	172,293	134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(44,398)	(50,393)
Acquisitions, net of cash acquired	(77,056)	(603,735)
Proceeds from disposal of business/investment	316,100	10,304
Proceeds from foreign exchange contracts		18,342
Other investing activities, net	1,314	458
Net cash provided by (used in) investing activities	181,157	(625,024)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464	3,202
Taxes paid related to net share settlements of stock-based compensation awards	(3,644)	(2,281)
Debt issuance costs		(5,907)
Borrowings under revolving credit facilities	45,239	1,143,217
Repayments under revolving credit facilities	(389,313)	(345,609)
Borrowings under term loans		338,478
Repayments under term loans	(9,295)
Repayments under receivables securitization facility		97,000
Repayments under receivables securitization facility	(150)	(63,000)
Repayment of Rhiag Debt and Related payments		(543,347)
Repayments of Other Debt		(1,437)
Proceeds from (Payments for) Other Financing Activities	5,000
Net cash (used in) provided by financing activities	(326,386)	633,166
Effect of exchange rate changes on cash and cash equivalents	3,034	(1,163)
Net increase in cash and cash equivalents	30,098	141,823
Cash and cash equivalents of continuing and discontinued operations, beginning of period	227,400	87,397
Cash and cash equivalents, end of period	264,614	229,220
Supplemental disclosure of cash paid for:
Income taxes, net of refunds	13,746	7,715
Interest	10,965	19,320
Supplemental disclosure of noncash investing and financing activities:
Notes payable and other financing obligations, including notes issued and debt assumed in connection with business acquisitions	0	551,077
Noncash property, plant and equipment additions	2,936	5,469
Notes and other financing receivables in connection with disposal of business/investment	5,848
Continuing and Discontinued Operations [Member]
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,604	33,166
Stock-based compensation expense	7,285	5,916
Loss on debt extinguishment	0	26,650
Loss on sale of business	(8,580)
Gains on foreign exchange contracts - acquisition related		(18,342)
Other	1,343	1,156
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Receivables, net	(108,893)	(78,373)
Inventories	(745)	18,973
Prepaid income taxes/income taxes payable	61,064	41,152
Accounts payable	24,449	20,514
Other operating assets and liabilities	(7,672)	(28,139)
Net cash provided by operating activities	172,293	134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(44,398)	(50,393)
Acquisitions, net of cash acquired	(77,056)	(603,735)
Proceeds from disposal of business/investment	301,297	10,304
Proceeds from foreign exchange contracts		18,342
Other investing activities, net	1,314	458
Net cash provided by (used in) investing activities	181,157	(625,024)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464	3,202
Taxes paid related to net share settlements of stock-based compensation awards	(3,644)	(2,281)
Debt issuance costs	0	(5,907)
Borrowings under revolving credit facilities	45,239	1,143,217
Repayments under revolving credit facilities	(389,313)	(345,609)
Borrowings under term loans	0	338,478
Repayments under term loans	(9,295)	0
Repayments under receivables securitization facility		97,000
Repayments under receivables securitization facility	(150)	(63,000)
Borrowings of other debt, net	23,313	12,850
Repayment of Rhiag Debt and Related payments	0	(543,347)
Repayments of Other Debt		(1,437)
Proceeds from (Payments for) Other Financing Activities	5,000	0
Net cash (used in) provided by financing activities	(326,386)	633,166
Effect of exchange rate changes on cash and cash equivalents	3,034	(1,163)
Net increase in cash and cash equivalents	30,098	141,823
Cash and cash equivalents of continuing and discontinued operations, beginning of period	234,516	$ 87,397
Supplemental disclosure of noncash investing and financing activities:
Business Acquisition Contingent Consideration And Liabilities At Fair Value	$ 10,969

XML

Unaudited Condensed Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2017 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning balance, shares at Dec. 31, 2016		307,545
Beginning balance at Dec. 31, 2016	$ 3,442,949	$ 3,075	$ 1,116,690	$ 2,590,359	$ (267,175)
Net Income	136,278	0	0	136,278	0
Total other comprehensive income	21,539	$ 0	0	0	21,539
RSUs vested, shares		450
Restricted stock units vested, value	(2,756)	$ 4	(2,760)	0	0
Stock-based compensation expense	7,285		7,285	0	0
Stock options exercised, shares		308
Exercise of stock options, value	2,464	$ 3	2,461	0	0
Ending balance, shares at Mar. 31, 2017		308,284
Ending balance at Mar. 31, 2017	3,606,871	$ 3,083	1,122,787	2,726,637	(245,636)
shares withheld for net share settlements of stock option awards		(19)
Adjustments Related to Tax Withholding for Share-based Compensation	$ (888)	$ 1	$ (889)	$ 0	$ 0

XML

Business Combinations

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

During the three months endedMarch 31, 2017, we completed three acquisitions, including a wholesale business in North America, a wholesale business in Europe and a Specialty vehicle aftermarket business. Total acquisition date fair value of the consideration for these acquisitions was $91.2 million, composed of $77.1 million of cash paid (net of cash acquired) and $14.1 million of other purchase price obligations. We typically fund our acquisitions using borrowings under our credit facilities or other financing arrangements. During the three months endedMarch 31, 2017, we recorded $42.8 million of goodwill related to these acquisitions, of which we expect $39.0 million to be deductible for income tax purposes. These acquisitions were not material to our results of operations or financial position as of and for the three months endedMarch 31, 2017.

On March 18, 2016, LKQ acquired Rhiag-Inter Auto Parts Italia S.p.A. ("Rhiag"), a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Slovakia, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Poland and Spain. This acquisition expanded LKQ's geographic presence in continental Europe, and we believe the acquisition will generate potential purchasing synergies. Total acquisition date fair value of the consideration for our Rhiag acquisition was €534.2 million ($602.0 million), composed of €533.6 million ($601.4 million) of cash paid (net of cash acquired) and €0.6 million ($0.6 million) of intercompany balances considered to be effectively settled as part of the transaction. In addition, we assumed €488.8 million ($550.8 million) of existing Rhiag debt as of the acquisition date. We recorded $590.7 million ($585.4 million of adjustments in 2016 and $5.3 million of adjustments in the three months endedMarch 31, 2017) of goodwill related to our acquisition of Rhiag, which we do not expect to be deductible for income tax purposes.

Related to the funding of the purchase price of the Rhiag acquisition, LKQ entered into foreign currency forward contracts in March 2016 to acquire a total of €588 million. The rates locked in under the foreign currency forwards were favorable to the spot rate on the settlement date, and as a result, these derivative contracts generated a gain of $18.3 million during the year ended December 31, 2016. The gain on the foreign currency forwards was recorded in Gains on foreign exchange contracts - acquisition related on our Unaudited Condensed Consolidated Statement Of Income for the year endedDecember 31, 2016.     

On April 21, 2016, LKQ acquired Pittsburgh Glass Works LLC (“PGW”). At acquisition, PGW’s business comprised aftermarket automotive replacement glass distribution services and automotive glass manufacturing. The acquisition expanded our addressable market in North America. Additionally, we believe the acquisition will create potential distribution synergies with our existing network. Total acquisition date fair value of the consideration for our PGW acquisition was $661.7 million, consisting of cash paid (net of cash acquired). We recorded $207.6 million ($205.1 million in 2016 and $2.5 million in the three months endedMarch 31, 2017) of goodwill related to our acquisition of PGW, of which we expect $104.0 million to be deductible for income tax purposes.

On October 4, 2016, we acquired substantially all of the business assets of Andrew Page Limited ("Andrew Page"), a distributor of aftermarket automotive parts in the U.K., out of receivership. The acquisition is subject to regulatory approval by the Competition and Markets Authority ("CMA") in the U.K. The CMA's review is ongoing as of the date of this report. Total acquisition date fair value of the consideration for this acquisition was £16.4 million ($20.9 million). In connection with the acquisition, we recorded a gain on bargain purchase of $8.2 million, which is recorded on a separate line in our consolidated statement of income for the year endedDecember 31, 2016. We believe that we were able to acquire the net assets of Andrew Page for less than fair value as a result of (i) Andrew Page's financial difficulties that put the company into receivership prior to our acquisition and (ii) a motivated seller that desired to complete the sale in an expedient manner to ensure continuity of the business. We continue to evaluate the purchase price allocation, including the opening value of inventory, fixed assets, intangible assets, accrued liabilities, and deferred taxes, which may require us to adjust the recorded gain.

In addition to our acquisitions of Rhiag, PGW and Andrew Page, we acquired seven wholesale businesses in Europe and five wholesale businesses in North America during the year endedDecember 31, 2016. Total acquisition date fair value of the consideration for these acquisitions was $76.1 million, composed of $67.8 million of cash paid (net of cash acquired), $4.1 million of notes payable and $4.2 million of other purchase price obligations. During the year ended December 31, 2016, we recorded $52.3 million of goodwill related to these acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2015 acquisitions. We expect that substantially all of the goodwill recorded for these acquisitions will not be deductible for income tax purposes.

Our acquisitions are accounted for under the purchase method of accounting and are included in our unaudited condensed consolidated financial statements from the dates of acquisition. The purchase prices were allocated to the net assets acquired based upon estimated fair market values at the dates of acquisition. The purchase price allocations for the acquisitions made during the three months endedMarch 31, 2017 and the last nine months of the year ended December 31, 2016 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain receivables, inventories and fixed assets acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain liabilities assumed; and 4) the final estimation of the tax basis of the entities acquired. We have recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the valuations.

From the date of our preliminary allocation for Rhiag in the first quarter of 2016 through March 31, 2017, we recorded adjustments based on our valuation procedures for our acquisition of Rhiag that resulted in the allocation of $149.0 million of goodwill to acquired assets, primarily intangible assets and property and equipment; this amount includes a $5.3 million increase to goodwill recorded in the first quarter of 2017, primarily attributable to a decline in the value allocated to property and equipment. Additionally, from the date of our preliminary allocation for PGW in the second quarter of 2016 through March 31, 2017, we recorded adjustments based on our valuation procedures that resulted in a $23.6 million increase to goodwill recorded for our PGW acquisition, of which $2.5 million was recorded in the first quarter of 2017. These adjustments were primarily attributable to a decline in the value allocated to property and equipment, partially offset by an increase in the value allocated to deferred taxes. The income statement effect of the Rhiag and PGW measurement period adjustments that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition dates was immaterial. The balance sheet impact and income statement effect of other measurement-period adjustments recorded for acquisitions completed in prior periods was immaterial.

The preliminary purchase price allocations for the acquisitions completed during the three months endedMarch 31, 2017 and the year ended December 31, 2016 are as follows (in thousands):

	Three Months Ended			Year Ended
	March 31, 2017			December 31, 2016
	All Acquisitions (1)			Rhiag			PGW (2)			Other Acquisitions			Total
Receivables	$	10,788		$	230,670		$	136,523		$	13,216		$	380,409
Receivable reserves	—			(28,242		)	(7,135		)	(794		)	(36,171		)
Inventories (3)	35,567			239,529			169,159			62,223			470,911
Prepaid expenses and other current assets	(2,718		)	10,793			42,573			4,445			57,811
Property and equipment	(6,299		)	56,774			225,645			17,140			299,559
Goodwill	50,570			585,415			205,058			52,336			842,809
Other intangibles	8,055			429,360			37,954			2,537			469,851
Other assets (4)	1,113			2,092			57,671			(133		)	59,630
Deferred income taxes	948			(110,791		)	17,506			(1,000		)	(94,285		)
Current liabilities assumed	(6,845		)	(239,665		)	(168,332		)	(42,290		)	(450,287		)
Debt assumed	—			(550,843		)	(4,027		)	(2,378		)	(557,248		)
Other noncurrent liabilities assumed	—			(23,085		)	(50,847		)	(103		)	(74,035		)
Contingent consideration liabilities	(10,969		)	—			—			—			—
Other purchase price obligations	(3,154		)	—			—			(6,698		)	(6,698		)
Notes issued	—			—			—			(4,087		)	(4,087		)
Settlement of pre-existing balances	—			(591		)	—			(32		)	(623		)
Gain on bargain purchase	—			—			—			(8,207		)	(8,207		)
Cash used in acquisitions, net of cash acquired	$	77,056		$	601,416		$	661,748		$	86,175		$	1,349,339

(1) Includes $6.4 million and $3.1 million of adjustments to reduce property and equipment and other current assets for Rhiag and PGW, respectively.

(2) Includes both continuing and discontinued operations of PGW. See Note 3, "Discontinued Operations" for further information on our discontinued operations.

(3) The PGW inventory balance includes the impact of a $9.8 million step-up adjustment to report the inventory at its fair value.

(4) The balance for PGW includes $23.6 million of investments in unconsolidated subsidiaries which relate to the discontinued portion of our PGW operations.

The fair value of our intangible assets is based on a number of inputs including projections of future cash flows, assumed royalty rates and customer attrition rates, all of which are Level 3 inputs. The fair value of our property and equipment is determined using inputs such as market comparables and current replacement or reproduction costs of the asset, adjusted for physical, functional and economic factors; these adjustments to arrive at fair value are not observable in the market, and therefore, these inputs are considered to be Level 3 inputs.

Other noncurrent liabilities recorded for our acquisitions of Rhiag and PGW includes a liability for certain pension and other post-retirement obligations we assumed with the acquisitions. A portion of PGW's liability for pension and post-retirement obligations relates to the glass manufacturing operations business, which is classified as discontinued operations, and was recorded within Liabilities of discontinued operations on our consolidated balance sheet as of December 31, 2016; these amounts were included in the net assets disposed as part of the sale of the business, which occurred in the first quarter of 2017. Due to the immateriality of our pension plans for our continuing operations, we have not provided the detailed disclosures otherwise prescribed by the accounting guidance on pensions and other post-retirement obligations.

The primary objectives of our acquisitions made during the three months endedMarch 31, 2017 and the year ended December 31, 2016 were to create economic value for our stockholders by enhancing our position as a leading source for alternative collision and mechanical repair products and to expand into other product lines and businesses that may benefit from our operating strengths. Our 2016 acquisition of Rhiag enabled us to expand our market presence in continental Europe. We believe that our Rhiag acquisition will allow for synergies within our European operations, most notably in procurement, and these projected synergies contributed to the goodwill recorded on the Rhiag acquisition. The aftermarket automotive glass distribution business of PGW, which is included within continuing operations, enabled us to enter into new product lines and increase the size of our addressable market. In addition, we believe that the aftermarket automotive glass distribution business of our PGW acquisition will allow for distribution synergies with our existing network in North America, which contributed to the goodwill recorded on the acquisition.

When we identify potential acquisitions, we attempt to target companies with a leading market presence, an experienced management team and workforce that provide a fit with our existing operations, and strong cash flows. For certain of our acquisitions, we have identified cost savings and synergies as a result of integrating the company with our existing business that provide additional value to the combined entity. In many cases, acquiring companies with these characteristics will result in purchase prices that include a significant amount of goodwill.

The following pro forma summary presents the effect of the businesses acquired during the three months endedMarch 31, 2017 as though the businesses had been acquired as of January 1, 2016, and the businesses acquired during the year ended December 31, 2016 as though they had been acquired as of January 1, 2015. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

	Three Months Ended
	March 31,
	2017		2016
Revenue, as reported	$	2,342,843	$	1,921,476
Revenue of purchased businesses for the period prior to acquisition:
Rhiag	—		213,376
PGW (1)	—		83,034
Other acquisitions	9,554		105,149
Pro forma revenue	$	2,352,397	$	2,323,035
Income from continuing operations, as reported	$	140,809	$	112,171
Income from continuing operations of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
Rhiag	—		(203		)
PGW (1),(2)	—		6,838
Other acquisitions	817		1,229
Acquisition related expenses, net of tax (3)	411		8,494
Pro forma income from continuing operations	$	142,037	$	128,529
Earnings per share from continuing operations, basic—as reported	$	0.46	$	0.37
Effect of purchased businesses for the period prior to acquisition:
Rhiag	—		(0.00)
PGW (1),(2)	—		0.02
Other acquisitions	0.00		0.00
Acquisition related expenses, net of tax (3)	0.00		0.03
Pro forma earnings per share from continuing operations, basic (4)	$	0.46	$	0.42
Earnings per share from continuing operations, diluted—as reported	$	0.45	$	0.36
Effect of purchased businesses for the period prior to acquisition:
Rhiag	—		(0.00)
PGW (1),(2)	—		0.02
Other acquisitions	0.00		0.00
Acquisition related expenses, net of tax (3)	0.00		0.03
Pro forma earnings per share from continuing operations, diluted (4)	$	0.46	$	0.42

(1) PGW reflects the results for the continuing aftermarket automotive glass distribution business only.

(2) Excludes $4.4 million of corporate costs for the three months endedMarch 31, 2016 that we do not expect to incur going forward as a result of the sale of our glass manufacturing business.

(3) Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.

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

Unaudited pro forma supplemental information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma supplemental information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value, adjustments to depreciation on acquired property and equipment, adjustments to rent expense for above or below market leases, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. The pro forma impact of our acquisitions also reflects the elimination of acquisition related expenses, net of tax. Refer to Note 5, "Restructuring and Acquisition Related Expenses," for further information regarding our acquisition related expenses. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results.

XML

Interim Financial Statements

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Statements

Interim Financial Statements

The unaudited financial statements presented in this report represent the consolidation of LKQ Corporation, a Delaware corporation, and its subsidiaries. LKQ Corporation is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries.

We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Operating results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017.

XML

Discontinued Operations (Notes)

3 Months Ended

Mar. 31, 2017

Discontinued Operations [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 3. Discontinued Operations

On March 1, 2017, LKQ completed the sale of the glass manufacturing business of its PGW subsidiary to a subsidiary of Vitro S.A.B. de C.V. (Vitro) for a sales price of $301.3 million, including cash received of $316.1 million, net of cash disposed of $14.8 million. In addition, we recorded a purchase price receivable of $3.6 million subject to post sale adjustments. As a result of this transaction, the remaining portion of the Glass operating segment was combined with our Wholesale - North America operating segment, which is part of our North America reportable segment, in the first quarter of 2017. See Note 14, "Segment and Geographic Information" for further information regarding our segments.

Upon execution of the Stock and Asset Purchase Agreement (the "Vitro Agreement") in December 2016, LKQ concluded that the glass manufacturing business met the criteria to be classified as held for sale in LKQ’s consolidated financial statements. As a result, the assets related to the glass manufacturing business were reflected on the Consolidated Balance Sheet at the lower of the net asset carrying value or fair value less cost to sell as of December 31, 2016. The fair value of the assets was determined using the negotiated sale price as an indicator of fair value, which is considered a Level 2 input as it is observable in a non-active market.

As part of the Vitro Agreement, the Company and Vitro entered into a twelve-month Transition Services Agreement commencing on the transaction date with two six-month renewal periods, a three-year Purchase and Supply Agreement, and an Intellectual Property Agreement.

The following table summarizes the operating results of the Company’s discontinued operations related to the sale described above for the three months ended March 31, 2017 as presented in “Loss from discontinued operations, net of tax” on the Unaudited Condensed Consolidated Statements of Income (in thousands):

	Period from January 1 to March 1,
	2017
Revenue	$	111,130
Cost of goods sold	(100,084		)
Operating expenses	(8,369		)
Operating income	2,677
Interest and other expenses, net	1,204			(1)
Income from discontinued operations before provision for income taxes	3,881
Provision for income taxes	(3,598		)	(2)
Equity in earnings (loss) of unconsolidated subsidiaries	(534		)
Loss from discontinued operations, net of tax	(251		)
Loss on sale of discontinued operations, net of tax	(4,280		)	(3)
Net loss from discontinued operations, net of tax	$	(4,531	)

(1) The Company elected to allocate interest expense to discontinued operations based on the expected debt to be repaid. Under this approach, allocated interest through the period ended March 1, 2017 was $1.6 million. Partially offsetting this expense were foreign currency gains.

(2) The provision for taxes includes a return to provision adjustment related to its international operations.

(3) In the first quarter of 2017, upon closing of the sale and write-off of the net assets of the glass manufacturing business, we recorded a pre-tax loss on sale of $8.6 million, and a $4.3 million tax benefit. The incremental loss primarily reflects a $5.7 million payable for intercompany sales from the glass manufacturing business to the aftermarket automotive glass distribution business incurred prior to closing which will be paid by LKQ and capital expenditures in 2017 that were not reimbursed by the buyer.

The glass manufacturing business had $3.9 million of operating cash outflows, $3.6 million of investing cash outflows mainly consisting of capital expenditures, and $15.0 million of financing cash inflows made up of parent financing for the period from January 1, 2017 through March 1, 2017.

Pursuant to the Purchase and Supply Agreement, our aftermarket automotive glass distribution business will source various products from Vitro's glass manufacturing business annually for a three year period beginning on March 1, 2017. Between January 1, 2017 and the sale date of March 1, 2017, intercompany sales between the glass manufacturing business and the continuing aftermarket automotive glass distribution business of PGW which were eliminated in consolidation were $7.8 million.

XML

Financial Statement Information

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Revenue Recognition

The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped to, delivered to or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and allowances of approximately $40.7 million and $38.3 million at March 31, 2017 and December 31, 2016, respectively. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue on our Unaudited Condensed Consolidated Statements of Income and are shown as a current liability on our Unaudited Condensed Consolidated Balance Sheets until remitted. We recognize revenue from the sale of scrap metal, other metals, and cores when title has transferred, which typically occurs upon delivery to the customer.

Allowance for Doubtful Accounts

We have a reserve for uncollectible accounts which was approximately $45.2 million and $45.6 million at March 31, 2017 and December 31, 2016, respectively.

Inventories

Inventories consists of the following (in thousands):

	March 31,		December 31,
	2017		2016
Aftermarket and refurbished products	$	1,557,363	$	1,540,257
Salvage and remanufactured products	421,102		394,980
Total inventories	$	1,978,465	$	1,935,237

Our acquisitions completed during 2017 contributed $35.6 million of the increase in our salvage and remanufactured products inventory during 2017. See Note 2, "Business Combinations" for further information on our acquisitions.

Intangible Assets

Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer and supplier relationships, software and other technology related assets, and covenants not to compete.

The changes in the carrying amount of goodwill by reportable segment during the three months endedMarch 31, 2017 are as follows (in thousands):

	North America (1)		Europe		Specialty (1)			Total
Balance as of January 1, 2017	$	1,661,800	$	1,099,976	$	292,993		$	3,054,769
Business acquisitions and adjustments to previously recorded goodwill	41,882		8,022		666			50,570
Exchange rate effects	1,077		14,479		(51		)	15,505
Balance as of March 31, 2017	$	1,704,759	$	1,122,477	$	293,608		$	3,120,844

(1) In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year amounts have been recast to reflect the shift in reporting structure.

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

	March 31, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	296,699	$	(59,734	)	$	236,965	$	286,008	$	(51,104	)	$	234,904
Customer and supplier relationships	403,126		(108,026		)	295,100		395,284		(92,079		)	303,205
Software and other technology related assets	83,028		(42,522		)	40,506		77,329		(35,648		)	41,681
Covenants not to compete	11,862		(7,982		)	3,880		11,726		(7,285		)	4,441
	$	794,715	$	(218,264	)	$	576,451	$	770,347	$	(186,116	)	$	584,231

Our estimated useful lives for our finite lived intangible assets are as follows:

	Method of Amortization	Useful Life
Trade names and trademarks	Straight-line	4-30 years
Customer and supplier relationships	Accelerated	4-20 years
Software and other technology related assets	Straight-line	3-6 years
Covenants not to compete	Straight-line	1-5 years

Amortization expense for intangibles was $23.3 million and $8.9 million during the three months endedMarch 31, 2017 and 2016, respectively. Estimated amortization expense for each of the five years through the period ending December 31, 2021 is $69.4 million (for the remaining nine months of 2017), $77.3 million, $63.8 million, $50.3 million and $42.7 million, respectively.

Property and Equipment

Included in Cost of Goods Sold on the Unaudited Condensed Consolidated Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations as well as our distribution centers. Total depreciation expense was $27.3 million and $24.3 million during the three months ended March 31, 2017 and 2016, respectively.

Investments in Unconsolidated Subsidiaries

Our investment in unconsolidated subsidiaries was $185.3 million as of March 31, 2017. On December 1, 2016, we acquired a 26.5% equity interest in Mekonomen AB ("Mekonomen") from AxMeko AB, an affiliate of Axel Johnson AB, for an aggregate purchase price of $181.3 million. Headquartered in Stockholm, Sweden, Mekonomen is the leading independent car parts and service chain in the Nordic region of Europe, offering a range of products including spare parts and accessories for cars, and workshop services for consumers and businesses. We are accounting for our interest in Mekonomen using the equity method of accounting, as our investment gives us the ability to exercise significant influence, but not control, over the investee. As of March 31, 2017, the book value of our investment in Mekonomen exceeded our share of the book value of Mekonomen's net assets by $115.6 million; this difference is primarily related to goodwill and the fair value of other intangible assets. We are reporting our equity in the net earnings of Mekonomen on a one quarter lag, and therefore we recorded no equity in earnings for this investment in 2016. For the three months ended March 31, 2017, we recorded equity in earnings totaling $0.3 million related to our investment in Mekonomen, which represents our share of the results from the investment date through December 31, 2016, including adjustments to convert the results to US GAAP and to recognize the impact of our purchase accounting adjustments. The level 1 fair value of our equity investment in the publicly traded Mekonomen common stock at March 31, 2017 was $187.3 million compared to a carrying value of $183.2 million.

Warranty Reserve

Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. Our warranty reserve is recorded within Other accrued expenses and Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The changes in the warranty reserve are as follows (in thousands):

Balance as of January 1, 2017	$	19,634
Warranty expense	9,254
Warranty claims	(7,268		)
Balance as of March 31, 2017	$	21,620

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This update outlines a new comprehensive revenue recognition model that supersedes most current revenue recognition guidance and requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB has issued several updates to ASU 2014-09. ASU 2014-09 will be effective for the Company during the first quarter of our fiscal year 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We will continue to evaluate the potential effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures; however, we do not plan to early adopt. Entities adopting the standard have the option of using either a full retrospective or modified retrospective approach in the application of this guidance. We are still determining which method of transition we will follow. We are currently in the process of completing customer contract reviews, determining necessary adjustments to existing accounting policies, evaluating new disclosure requirements and identifying and implementing changes to business processes as deemed necessary to support recognition and disclosure under the new guidance. Based on our preliminary assessment, we do not expect a significant impact for the majority of our revenue transactions as they generally consist of single performance obligations to transfer promised goods or services; however, we do expect the new guidance will change the way we present sales returns in our consolidated financial statements. We are still in the process of determining the magnitude of impact for this change.

In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between current GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard requires that entities apply the effects of these changes using a modified retrospective approach, which includes a number of optional practical expedients. While we are still in the process of quantifying the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures, we anticipate the adoption will materially affect our consolidated balance sheet and disclosures, as the majority of our operating leases will be recorded on the balance sheet under ASU 2016-02. While we do not anticipate the adoption of this accounting standard to have a material impact on our consolidated statements of income at this time, this conclusion may change as we finalize our assessment. In order to assist in our timely implementation of the new standard, we have purchased new software to track our leases. We have engaged a third party to assist with the implementation of the new software with an expectation to complete the implementation by the end of 2017.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"), to add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 includes guidance on classification for the following items: debt prepayment or debt extinguishment costs, settlement of zero coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned or bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and other separately identifiable cash flows where application of the predominance principle is prescribed. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017; early adoption is permitted. The guidance requires retrospective application to all periods presented unless it is impracticable to do so. We are still evaluating the impact that ASU 2016-15 will have on our consolidated financial statements and related disclosures, but we do not expect to early adopt in 2017.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, "Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which simplifies the accounting for goodwill impairment by eliminating step 2 from the goodwill impairment test. Under the new guidance, if the carrying value of a reporting unit exceeds the fair value, an impairment loss will be recognized for the amount of that excess, limited to the goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years and any interim impairment tests for periods beginning after December 15, 2019; early adoption is permitted for entities with annual and interim impairment tests occurring after January 1, 2017, and we plan to early adopt in 2017. The guidance requires adoption on a prospective basis. At this time, we do not expect adoption of this standard to have a significant impact on our financial position, results of operations, or cash flows.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" (“ASU 2016-09”), to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, the treatment of forfeitures, and calculation of earnings per share. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. During the third quarter of 2016, the Company elected to early adopt ASU 2016-09 effective January 1, 2016. With the adoption of ASU 2016-09, excess tax benefits are recognized as a component of the income tax provision, whereas these amounts were previously recognized in equity. The presentation of excess tax benefits on share-based payments was adjusted retrospectively within the Consolidated Statements of Cash Flows, resulting in a $4.6 million increase in operating cash flows for the three months endedMarch 31, 2016 with a corresponding decrease to financing cash flows.

XML

Restructuring and Acquisition Related Expenses

3 Months Ended

Mar. 31, 2017

Restructuring and Related Activities [Abstract]

Restructuring and Acquisition Related Expenses

Acquisition Related Expenses

Acquisition related expenses, which include external costs such as legal, accounting, and advisory fees, totaled $2.6 million and $12.7 million for the three months endedMarch 31, 2017 and 2016, respectively. Of our 2017 expenses, $0.5 million was related to our acquisition of Andrew Page, and the remaining $2.1 million was related to other completed acquisitions and acquisitions that were pending as of March 31, 2017. Of our 2016 expenses, $10.7 million was related to our acquisition of Rhiag, $1.8 million was related to our acquisition of PGW, and $0.2 million was related to other completed acquisitions and acquisitions that were pending as of March 31, 2016.

Acquisition Integration Plans

During the three months endedMarch 31, 2017 and 2016, we incurred $0.3 million and $2.1 million of restructuring expenses, respectively. Expenses incurred during the three months endedMarch 31, 2017 were primarily a result of the ongoing integration activities in our Specialty segment, which was formed in 2014 and subsequently expanded through acquisitions, including our 2015 Coast acquisition. Expenses incurred were primarily related to facility closure and the merger of existing facilities into larger distribution centers. Expenses incurred during the three months ended March 31, 2016 were primarily a result of the integration of our acquisition of Parts Channel into our existing North American wholesale business and the integration of our Coast acquisition into our existing Specialty business. Expenses incurred were primarily related to facility closure and relocation costs for duplicate facilities and the termination of employees.

We expect to incur additional expenses related to the integration of certain of our acquisitions into our existing operations in 2017. These integration activities are expected to include the closure of duplicate facilities, rationalization of personnel in connection with the consolidation of overlapping facilities with our existing business, and moving expenses. Future expenses to complete these integration plans are expected to be less than $5.0 million.

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. We expect to issue new shares of common stock to cover past and future equity grants.

RSUs

RSUs vest over periods of up to five years, subject to a continued service condition. Currently outstanding RSUs contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case, both conditions must be met before any RSUs vest. For the RSUs containing a performance-based vesting condition, the Company must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within five years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date.

The fair value of RSUs that vested during the three months endedMarch 31, 2017 was $17.0 million.

The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the three months endedMarch 31, 2017:

	Number Outstanding		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value    (in thousands) (1)
Unvested as of January 1, 2017	1,873,737		$	27.58
Granted	678,450		$	31.73
Vested	(537,512	)	$	25.84
Forfeited / Canceled	(75,302	)	$	31.68
Unvested as of March 31, 2017	1,939,373		$	29.36
Expected to vest after March 31, 2017	1,843,631		$	29.45	3.1	$	53,963

(1) The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock.

Stock Options

Stock options vest over periods of up to five years, subject to a continued service condition. Stock options expire either six or ten years from the date they are granted. No options were granted during the three months endedMarch 31, 2017. The total grant-date fair value of options that vested during the three months endedMarch 31, 2017 was $0.7 million.

The following table summarizes activity related to our stock options under the Equity Incentive Plan for the three months endedMarch 31, 2017:

	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value    (in thousands) (1)
Balance as of January 1, 2017	2,623,217		$	9.19
Exercised	(308,189	)	$	8.00		$	7,250
Forfeited / Canceled	(1,527	)	$	32.31
Balance as of March 31, 2017	2,313,501		$	9.33	2.1	$	46,360
Exercisable as of March 31, 2017	2,313,501		$	9.33	2.1	$	46,360
Exercisable as of March 31, 2017 and expected to vest thereafter	2,313,501		$	9.33	2.1	$	46,360

(1) The aggregate intrinsic value of outstanding, exercisable and expected to vest options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of the last day of the period indicated. This amount changes based on the market price of the Company’s common stock.

The following table summarizes the components of pre-tax stock-based compensation expense for our continuing operations (in thousands):

	Three Months Ended
	March 31,
	2017		2016
RSUs	$	7,279	$	5,879
Stock options	6		37
Total stock-based compensation expense	$	7,285	$	5,916

As of March 31, 2017, unrecognized compensation expense related to unvested RSUs is $47.5 million. Stock-based compensation expense related to these awards will be different to the extent that forfeitures are realized.

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

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

	Three Months Ended
	March 31,
	2017		2016
Income from continuing operations	$	140,809	$	112,171
Denominator for basic earnings per share—Weighted-average shares outstanding	308,028		306,157
Effect of dilutive securities:
RSUs	564		580
Stock options	1,708		2,456
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding	310,300		309,193
Basic earnings per share from continuing operations	$	0.46	$	0.37
Diluted earnings per share from continuing operations	$	0.45	$	0.36

The following table sets forth the number of employee stock-based compensation awards outstanding but not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three months endedMarch 31, 2017 and 2016 (in thousands):

	Three Months Ended
	March 31,
	2017	2016
Antidilutive securities:
RSUs	147	228
Stock options	78	88

XML

Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):

	Three Months Ended
	March 31, 2017
	Foreign Currency Translation			Unrealized Gain (Loss) on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries			Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(272,529	)	$	8,091		$	(2,737	)	$	—		$	(267,175	)
Pretax income	20,068			832			836			—			21,736
Income tax effect	—			(356		)	(318		)	—			(674		)
Reclassification of unrealized loss (gain)	—			4,257			(171		)	—			4,086
Reclassification of deferred income taxes	—			(1,570		)	48			—			(1,522		)
Disposal of business	1,511			—			(3,436		)	—			(1,925		)
Other comprehensive (loss) income from unconsolidated subsidiaries	—			—			—			(162		)	(162		)
Ending balance	$	(250,950	)	$	11,254		$	(5,778	)	$	(162	)	$	(245,636	)

	Three Months Ended
	March 31, 2016
	Foreign Currency Translation			Unrealized (Loss) Gain on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries		Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(96,890	)	$	(932	)	$	(7,648	)	$	—	$	(105,470	)
Pretax (loss) income	140			(165		)	—			—		(25		)
Income tax effect	—			49			—			—		49
Reclassification of unrealized loss	—			807			196			—		1,003
Reclassification of deferred income taxes	—			(259		)	(49		)	—		(308		)
Ending balance	$	(96,750	)	$	(500	)	$	(7,501	)	$	—	$	(104,751	)

Net unrealized gains on our interest rate swap contracts totaling $1.1 million and net unrealized losses of $0.8 million were reclassified to interest expense in our Unaudited Condensed Consolidated Statements of Income during the three months endedMarch 31, 2017 and 2016, respectively. We also reclassified a loss of $5.4 million related to our cross currency swaps to Other income, net in our Unaudited Condensed Consolidated Statements of Income during the three months endedMarch 31, 2017. The deferred income taxes related to our cash flow hedges were reclassified from Accumulated other comprehensive income (loss) to income tax expense.

XML

Long-Term Obligations

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Long-Term Obligations

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

	March 31,			December 31,
	2017			2016
Senior secured credit agreement:
Term loans payable	$	723,390		$	732,684
Revolving credit facilities	1,018,181			1,358,220
Senior notes	600,000			600,000
Euro notes	532,600			525,850
Receivables securitization facility	99,850			100,000
Notes payable through October 2025 at weighted average interest rates of 2.3% and 2.1%, respectively	10,014			11,808
Other long-term debt at weighted average interest rates of 2.0% and 2.4%, respectively	64,148			37,125
Total debt	3,048,183			3,365,687
Less: long-term debt issuance costs	(20,604		)	(21,611		)
Less: current debt issuance costs	(2,314		)	(2,305		)
Total debt, net of issuance costs	3,025,265			3,341,771
Less: current maturities, net of debt issuance costs	(91,988		)	(66,109		)
Long term debt, net of debt issuance costs	$	2,933,277		$	3,275,662

Senior Secured Credit Agreement

On January 29, 2016, LKQ Corporation, LKQ Delaware LLP, and certain other subsidiaries (collectively, the "Borrowers") entered into the Fourth Amended and Restated Credit Agreement ("Credit Agreement"), which amended the Company’s Third Amended and Restated Credit Agreement by modifying certain terms to (1) extend the maturity date by approximately two years to January 29, 2021; (2) increase the total availability under the credit agreement from $2.3 billion to $3.2 billion (composed of $2.45 billion in the revolving credit facility's multicurrency component; and $750 million of term loans, which consist of term loans of approximately $500 million and €230 million); (3) increase our ability to incur additional indebtedness; and (4) make other immaterial or clarifying modifications and amendments to the terms of the Third Amended and Restated Credit Agreement. The additional term loan borrowing was used to repay outstanding revolver borrowings and the amount outstanding under our receivables securitization facility, and to pay fees and expenses relating to the amendment and restatement. The remaining additional term loan borrowing was used for general corporate purposes.

On December 14, 2016, LKQ Corporation entered into Amendment No. 1 to the Fourth Amended and Restated Credit Agreement under which the €230 million term loan was prepaid in full using proceeds from borrowings on the multicurrency revolving credit facility. Simultaneously, LKQ Corporation borrowed incremental U.S. dollar ("USD") term loans under the Credit Agreement, which were used to repay outstanding borrowings on the USD revolving credit facility. LKQ Corporation borrowed additional USD amounts on the revolving credit facility and entered into a cross currency swap transaction to exchange the borrowed USD for euro and transferred these amounts to LKQ Netherlands B.V. as an intercompany loan, which LKQ Netherlands B.V. used to repay the multicurrency revolving credit facility borrowings. These transactions had the effect of replacing the euro term loan with a USD term loan. Refer to Note 10, "Derivative Instruments and Hedging Activities" for additional information related to our cross currency swaps.

Amounts under the revolving credit facility are due and payable upon maturity of the Fourth Amended and Restated Credit Agreement on January 29, 2021. Amounts under the initial and additional term loan borrowings were due and payable in quarterly installments equal to 0.625% of the original principal amount on each of June 30, September 30, and December 31, 2016, and are due and payable in quarterly installments thereafter equal to 1.25% of the original principal amount beginning on March 31, 2017, with the remaining balance due and payable on the maturity date of the Fourth Amended and Restated Credit Agreement.

We are required to prepay the term loan by amounts equal to proceeds from the sale or disposition of certain assets if the proceeds are not reinvested within twelve months. We also have the option to prepay outstanding amounts under the Credit Agreement without penalty.

The Credit Agreement contains customary representations and warranties, and contains customary covenants that provide limitations and conditions on our ability to enter into certain transactions. The Credit Agreement also contains financial and affirmative covenants, including limitations on our net leverage ratio and a minimum interest coverage ratio.

Borrowings under the Credit Agreement bear interest at variable rates, which depend on the currency and duration of the borrowing elected, plus an applicable margin. The applicable margin is subject to change in increments of 0.25% depending on our net leverage ratio. Interest payments are due on the last day of the selected interest period or quarterly in arrears depending on the type of borrowing. Including the effect of the interest rate swap agreements described in Note 10, "Derivative Instruments and Hedging Activities," the weighted average interest rate on borrowings outstanding under the Credit Agreement at March 31, 2017 and December 31, 2016 was 2.0%. We also pay a commitment fee based on the average daily unused amount of the revolving credit facilities. The commitment fee is subject to change in increments of 0.05% depending on our net leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an applicable rate based on our net leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly in arrears.

Of the total borrowings outstanding under the Credit Agreement, $37.2 million was classified as current maturities at both March 31, 2017 and December 31, 2016. As of March 31, 2017, there were letters of credit outstanding in the aggregate amount of $72.2 million. The amounts available under the revolving credit facilities are reduced by the amounts outstanding under letters of credit, and thus availability under the revolving credit facilities at March 31, 2017 was $1.4 billion.

Related to the execution of the Credit Agreement in January 2016, we incurred $6.1 million of fees, of which $5.0 million were capitalized as an offset to Long-Term Obligations and are amortized over the term of the agreement. The remaining $1.1 million of fees, together with $1.8 million of capitalized debt issuance costs related to our Third Amended and Restated Credit Agreement, were expensed during the three months ended March 31, 2016 as a loss on debt extinguishment.

Senior Notes

In April 2014, LKQ Corporation completed an offer to exchange $600 million aggregate principal amount of 4.75% Senior Notes due 2023 (the "U.S. Notes") for notes previously issued through a private placement. The U.S. Notes are governed by the Indenture dated as of May 9, 2013 among LKQ Corporation, certain of our subsidiaries (the "Guarantors") and U.S. Bank National Association, as trustee. The U.S. Notes are substantially identical to those previously issued through the private placement, except the U.S. Notes are registered under the Securities Act of 1933.

The U.S. Notes bear interest at a rate of 4.75% per year from the most recent payment date on which interest has been paid or provided for. Interest on the U.S. Notes is payable in arrears on May 15 and November 15 of each year. The first interest payment was made on November 15, 2013. The U.S. Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.

The U.S. Notes and the guarantees are, respectively, LKQ Corporation's and each Guarantor's senior unsecured obligations and are subordinated to all of the Guarantors' existing and future secured debt to the extent of the assets securing that secured debt. In addition, the U.S. Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the U.S. Notes to the extent of the assets of those subsidiaries.

Repayment of Rhiag Acquired Debt and Debt Related Liabilities

On March 24, 2016, LKQ Netherlands B.V., a wholly-owned subsidiary of ours, borrowed €508 million under our multi-currency revolving credit facility to repay the Rhiag acquired debt and debt related liabilities. The borrowed funds were passed through an intercompany note to Rhiag and then were used to pay (i) $519.6 million (€465.0 million) for the principal of Rhiag senior note debt assumed with the acquisition, (ii) accrued interest of $8.0 million (€7.1 million) on the notes, (iii) the call premium of $23.8 million (€21.2 million) associated with early redemption of the notes and (iv) $4.9 million (€4.4 million) to terminate Rhiag’s outstanding interest rate swap related to the floating portion of the notes. The call premium is recorded as a loss on debt extinguishment in the Unaudited Condensed Consolidated Statements of Income.

Euro Notes

On April 14, 2016, LKQ Italia Bondco S.p.A. (the “Issuer”), an indirect, wholly-owned subsidiary of LKQ Corporation, completed an offering of €500 million aggregate principal amount of senior notes due April 1, 2024 (the “Euro Notes”) in a private placement conducted pursuant to Regulation S and Rule 144A under the Securities Act of 1933. The proceeds from the offering were used to repay a portion of the revolver borrowings under the Credit Agreement and to pay related fees and expenses. The Euro Notes are governed by the Indenture dated as of April 14, 2016 (the “Indenture”) among the Issuer, LKQ Corporation and certain of our subsidiaries (the “Euro Notes Subsidiaries”), the trustee, and the paying agent, transfer agent, and registrar.

The Euro Notes bear interest at a rate of 3.875% per year from the date of original issuance or from the most recent payment date on which interest has been paid or provided for. Interest on the Euro Notes is payable in arrears on April 1 and October 1 of each year, beginning on October 1, 2016. The Euro Notes are fully and unconditionally guaranteed by LKQ Corporation and the Euro Notes Subsidiaries (the "Euro Notes Guarantors").

The Euro Notes and the guarantees are, respectively, the Issuer’s and each Euro Notes Guarantor’s senior unsecured obligations and are subordinated to all of the Issuer's and the Euro Notes Guarantors’ existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Euro Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Euro Notes to the extent of the assets of those subsidiaries. The Euro Notes have been listed on the ExtraMOT, Professional Segment of the Borsa Italia S.p.A. securities exchange as well as the Global Exchange Market of the Irish Stock Exchange.

Related to the execution of the Euro Notes in April 2016, we incurred $10.3 million of fees which were capitalized as an offset to Long-Term Obligations and are amortized over the term of the offering.

Receivables Securitization Facility

On November 29, 2016, we amended the terms of the receivables securitization facility with The Bank of Tokyo-Mitsubishi UFJ, LTD. ("BTMU") to: (i) extend the term of the facility to November 8, 2019; (ii) increase the maximum amount available to $100 million; and (iii) make other clarifying and updating changes. Under the facility, LKQ sells an ownership interest in certain receivables, related collections and security interests to BTMU for the benefit of conduit investors and/or financial institutions for cash proceeds. Upon payment of the receivables by customers, rather than remitting to BTMU the amounts collected, LKQ retains such collections as proceeds for the sale of new receivables generated by certain of the ongoing operations of the Company.

The sale of the ownership interest in the receivables is accounted for as a secured borrowing in our Unaudited Condensed Consolidated Balance Sheets, under which the receivables included in the program collateralize the amounts invested by BTMU, the conduit investors and/or financial institutions (the "Purchasers"). The receivables are held by LKQ Receivables Finance Company, LLC ("LRFC"), a wholly-owned bankruptcy-remote special purpose subsidiary of LKQ, and therefore, the receivables are available first to satisfy the creditors of LRFC, including the investors. As of March 31, 2017 and December 31, 2016, $141.9 million and $140.3 million, respectively, of net receivables were collateral for the investment under the receivables facility.

Under the receivables facility, we pay variable interest rates plus a margin on the outstanding amounts invested by the Purchasers. The variable rates are based on (i) commercial paper rates, (ii) the London InterBank Offered Rate ("LIBOR"), or (iii) base rates, and are payable monthly in arrears. Commercial paper rates will be the applicable variable rate unless conduit investors are not available to invest in the receivables at commercial paper rates. In such case, financial institutions will invest at the LIBOR rate or at base rates. We also pay a commitment fee on the excess of the investment maximum over the average daily outstanding investment, payable monthly in arrears. As of March 31, 2017, the interest rate under the receivables facility was based on commercial paper rates and was 1.8%. The outstanding balances of $99.9 million and $100.0 million as of March 31, 2017 and December 31, 2016, respectively, were classified as long-term on the Unaudited Condensed Consolidated Balance Sheets because we have the ability and intent to refinance these borrowings on a long-term basis.

XML

Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and commodity prices. Under our current policies, we use derivatives to manage our exposure to variable interest rates on our senior secured debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes.

Cash Flow Hedges

We hold interest rate swap agreements 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 receive payment at a variable rate of interest based on LIBOR for the respective currency of each interest rate swap agreement’s notional amount. The effective portion of changes in the fair value of the interest rate swap agreements is recorded in Accumulated Other Comprehensive Income (Loss) and is reclassified to interest expense when the underlying interest payment has an impact on earnings. The ineffective portion of changes in the fair value of the interest rate swap agreements is reported in interest expense. Our interest rate swap contracts have maturity dates ranging from January to June 2021.

From time to time, we may hold foreign currency forward contracts related to certain foreign currency denominated intercompany transactions, with the objective of minimizing the impact of fluctuating exchange rates on these future cash flows. Under the terms of the foreign currency forward contracts, we will sell the foreign currency in exchange for U.S. dollars at a fixed rate on the maturity dates of the contracts. The effective portion of the changes in fair value of the foreign currency forward contracts is recorded in Accumulated other comprehensive income (loss) and reclassified to other income (expense) when the underlying transaction has an impact on earnings.

In 2016, we entered into three cross currency swap agreements for a total notional amount of $422.4 million (€400 million). The notional amount steps down by €15.0 million annually through 2020 with the remainder maturing in January 2021. These cross currency swaps contain an interest rate swap component and a foreign currency forward contract component that, combined with related intercompany financing arrangements, effectively convert variable rate U.S. dollar-denominated borrowings into fixed rate euro-denominated borrowings. The swaps are intended to minimize the impact of fluctuating exchange rates and interest rates on the cash flows resulting from the related intercompany financing arrangements. The effective portion of the changes in the fair value of the derivative instruments is recorded in Accumulated Other Comprehensive Income (Loss) and is reclassified to interest expense and other income (expense) when the underlying transactions have an impact on earnings.

The following table summarizes the notional amounts and fair values of our designated cash flow hedges as of March 31, 2017 and December 31, 2016 (in thousands):

	Notional Amount				Fair Value at March 31, 2017 (USD)				Fair Value at December 31, 2016 (USD)
	March 31, 2017		December 31, 2016		Other Assets		Other Noncurrent Liabilities		Other Assets		Other Noncurrent Liabilities
Interest rate swap agreements
USD denominated	$	590,000	$	590,000	$	17,489	$	—	$	16,421	$	—
Cross currency swap agreements
USD/euro	$	418,442	$	422,408	2,524		5,388		1,486		3,128
Total cash flow hedges					$	20,013	$	5,388	$	17,907	$	3,128

While our derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge derivative instruments on a gross basis in our Unaudited Condensed Consolidated Balance Sheets. The impact of netting the fair values of these contracts would not have a material effect on our Unaudited Condensed Consolidated Balance Sheets at March 31, 2017 or December 31, 2016.

The activity related to our cash flow hedges is included in Note 8, "Accumulated Other Comprehensive Income (Loss)." Ineffectiveness related to our cash flow hedges was immaterial to our results of operations during the three months endedMarch 31, 2017 and 2016. We do not expect future ineffectiveness related to our cash flow hedges to have a material effect on our results of operations.

As of March 31, 2017, we estimate that $0.1 million of derivative gains (net of tax) included in Accumulated other comprehensive income (loss) will be reclassified into our Unaudited Condensed Consolidated Statements of Income within the next 12 months.

Other Derivative Instruments

We hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability related to inventory purchases and intercompany financing transactions denominated in a non-functional currency. We have elected not to apply hedge accounting for these transactions, and therefore the contracts are adjusted to fair value through our results of operations as of each balance sheet date, which could result in volatility in our earnings. The notional amount and fair value of these contracts at March 31, 2017 and December 31, 2016, along with the effect on our results of operations during each of the three month periods ended March 31, 2017 and 2016, were immaterial.

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value

We use the market and income approaches to value our financial assets and liabilities, and during the three months endedMarch 31, 2017, there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value. The tiers in the fair value hierarchy include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of March 31, 2017 and December 31, 2016 (in thousands):

	Balance as of March 31, 2017		Fair Value Measurements as of March 31, 2017
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	38,428	$	—	$	38,428	$	—
Interest rate swaps	20,013		—		20,013		—
Total Assets	$	58,441	$	—	$	58,441	$	—
Liabilities:
Contingent consideration liabilities	$	11,242	$	—	$	—	$	11,242
Deferred compensation liabilities	40,131		—		40,131		—
Foreign currency forward contracts	5,388		—		5,388		—
Total Liabilities	$	56,761	$	—	$	45,519	$	11,242

	Balance as of December 31, 2016		Fair Value Measurements as of December 31, 2016
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	36,131	$	—	$	36,131	$	—
Interest rate swaps	17,907				17,907
Total Assets	$	54,038	$	—	$	54,038	$	—
Liabilities:
Contingent consideration liabilities	$	3,162	$	—	$	—	$	3,162
Deferred compensation liabilities	36,865		—		36,865		—
Foreign currency forward contracts	3,128		—		3,128		—
Total Liabilities	$	43,155	$	—	$	39,993	$	3,162

The cash surrender value of life insurance is included in Other Assets on our Unaudited Condensed Consolidated Balance Sheets. The current portion of deferred compensation is included in Accrued payroll-related liabilities and the current portion of contingent consideration liabilities is included in Other current liabilities on our Unaudited Condensed Consolidated Balance Sheets; the noncurrent portion of these amounts is included in Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The balance sheet classification of the interest rate swaps and foreign currency forward contracts is presented in Note 10, "Derivative Instruments and Hedging Activities."

Our Level 2 assets and liabilities are valued using inputs from third parties and market observable data. We obtain valuation data for the cash surrender value of life insurance and deferred compensation liabilities from third party sources, which determine the net asset values for our accounts using quoted market prices, investment allocations and reportable trades. We value our derivative instruments using a third party valuation model that performs a discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates and current and forward foreign exchange rates.

Our contingent consideration liabilities are related to our business acquisitions. 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.

Financial Assets and Liabilities Not Measured at Fair Value

Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. Based on market conditions as of March 31, 2017 and December 31, 2016, the fair value of our credit agreement borrowings reasonably approximated the carrying value of $1.7 billion and $2.1 billion, respectively. In addition, based on market conditions, the fair values of the outstanding borrowings under the receivables facility reasonably approximated the carrying value of $99.9 million and $100.0 million at March 31, 2017 and December 31, 2016, respectively. As of March 31, 2017 and December 31, 2016, the fair values of the U.S. Notes were approximately $595.8 million and $599.5 million, respectively, compared to a carrying value of $600.0 million. As of March 31, 2017 and December 31, 2016, the fair values of the Euro Notes were approximately $562.8 million and $560.6 million compared to carrying values of $532.6 million and $525.9 million, respectively.

The fair value measurements of the borrowings under our credit agreement and receivables facility are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions with similar terms and maturities. We estimated the fair value by calculating the upfront cash payment a market participant would require at March 31, 2017 to assume these obligations. The fair value of our U.S. Notes is classified as Level 1 within the fair value hierarchy since it is determined based upon observable market inputs including quoted market prices in an active market. The fair value of our Euro Notes is determined based upon observable market inputs including quoted market prices in a market that is not active, and therefore is classified as Level 2 within the fair value hierarchy.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

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 March 31, 2017 are as follows (in thousands):

Nine months ending December 31, 2017	$	158,837
Years ending December 31:
2018	182,944
2019	151,442
2020	122,188
2021	92,010
2022	75,622
Thereafter	457,967
Future Minimum Lease Payments	$	1,241,010

Litigation and Related Contingencies

We have certain contingencies resulting from litigation, claims and other commitments and are subject to a variety of environmental and pollution control laws and regulations incident to the ordinary course of business. We currently expect that the resolution of such contingencies will not materially affect our financial position, results of operations or cash flows.

XML

Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings. We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes.    

Our effective income tax rate for the three months endedMarch 31, 2017 was 33.9%, compared with 32.1% for the comparable prior year period. The effective tax rate for the three months endedMarch 31, 2017 and 2016 reflects the impact of favorable discrete items related to excess tax benefits from stock-based payments in the amount of $3.3 million and $4.4 million, respectively. The increase in our effective tax rate for the three months ended March 31, 2017 compared to the prior year period also reflects our expected geographic distribution of income, with a slightly larger proportion of our pre-tax income expected to be earned in the U.S., which has a higher tax rate than our foreign operations.

XML

Segment and Geographic Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment and Geographic Information

We have four operating segments: Wholesale – North America, Europe, Specialty and Self Service. Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our reportable segments are organized based on a combination of geographic areas served and type of product lines offered. The reportable segments are managed separately as each business serves different customers (i.e. geographic in the case of North America and Europe and product type in the case of Specialty) and is affected by different economic conditions. Therefore, we present three reportable segments: North America, Europe and Specialty.

The following tables present our financial performance by reportable segment for the periods indicated (in thousands):

	North America (1)		Europe		Specialty (1)		Eliminations			Consolidated
Three Months Ended March 31, 2017
Revenue:
Third Party	$	1,208,047	$	820,897	$	313,899	$	—		$	2,342,843
Intersegment	193		—		1,035		(1,228		)	—
Total segment revenue	$	1,208,240	$	820,897	$	314,934	$	(1,228	)	$	2,342,843
Segment EBITDA	$	176,135	$	78,694	$	35,441	$	—		$	290,270
Depreciation and amortization (2)	20,378		24,751		5,475		—			50,604
Three Months Ended March 31, 2016
Revenue:
Third Party	$	1,080,606	$	546,751	$	294,119	$	—		$	1,921,476
Intersegment	214		10		951		(1,175		)	—
Total segment revenue	$	1,080,820	$	546,761	$	295,070	$	(1,175	)	$	1,921,476
Segment EBITDA	$	145,691	$	57,498	$	33,422	$	—		$	236,611
Depreciation and amortization (2)	17,390		10,308		5,468		—			33,166

(1) In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year results have been recast to reflect the shift in reporting structure in order to present segment results on a comparable basis.

(2) Amounts presented include depreciation and amortization expense recorded within cost of goods sold.

The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses and equity in earnings (loss) of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding discontinued operations, depreciation, amortization, interest (which includes loss on debt extinguishment) and income tax expense.

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

	Three Months Ended
	March 31,
	2017			2016
Net income	$	136,278		$	112,171
Subtract:
Loss from discontinued operations, net of tax	(4,531		)	—
Income from continuing operations	140,809			112,171
Add:
Depreciation and amortization	48,656			31,688
Depreciation and amortization - cost of goods sold	1,948			1,478
Interest expense, net	23,988			14,592
Loss on debt extinguishment	—			26,650
Provision for income taxes	72,155			53,128
EBITDA	287,556			239,707
Subtract:
Equity in earnings (loss) of unconsolidated subsidiaries	214			(362		)
Gains on foreign exchange contracts - acquisition related (1)	—			18,342
Add:
Restructuring and acquisition related expenses (2)	2,928			14,811
Change in fair value of contingent consideration liabilities	—			73
Segment EBITDA	$	290,270		$	236,611

(1) Reflects gains on foreign currency forwards used to fix the euro purchase price of Rhiag. See Note 2, "Business Combinations," for further information.

(2) See Note 5, "Restructuring and Acquisition Related Expenses," for further information.

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

	Three Months Ended
	March 31,
	2017		2016
Capital Expenditures
North America	$	16,760	$	22,783
Europe	20,458		19,107
Specialty	3,582		8,503
Discontinued operations	3,598		—
Total capital expenditures	$	44,398	$	50,393

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

	March 31,		December 31,
	2017		2016
Receivables, net
North America	$	382,922	$	351,681
Europe	473,834		443,281
Specialty	116,914		65,587
Total receivables, net	973,670		860,549
Inventories
North America	945,454		915,244
Europe	740,209		718,729
Specialty	292,802		301,264
Total inventories	1,978,465		1,935,237
Property and Equipment, net
North America	502,582		505,925
Europe	247,720		247,910
Specialty	58,906		57,741
Total property and equipment, net	809,208		811,576
Equity Method Investments
North America	336		336
Europe	184,926		183,131
Total equity method investments	185,262		183,467
Other unallocated assets	4,175,641		4,512,370
Total assets	$	8,122,246	$	8,303,199

We report net 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, assets of discontinued operations and income taxes.

The majority of our operations are conducted in the U.S. Our European operations are located in the U.K., the Netherlands, Belgium, France, Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Spain, Sweden, and Norway. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. Our net sales are attributed to geographic area based on the location of the selling operation.

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

	Three Months Ended
	March 31,
	2017		2016
Revenue
United States	$	1,417,040	$	1,284,967
United Kingdom	382,652		349,676
Other countries	543,151		286,833
Total revenue	$	2,342,843	$	1,921,476

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

	March 31,		December 31,
	2017		2016
Long-lived Assets
United States	$	529,589	$	531,425
United Kingdom	163,090		159,689
Other countries	116,529		120,462
Total long-lived assets	$	809,208	$	811,576

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

	Three Months Ended
	March 31,
	2017		2016
Aftermarket, other new and refurbished products	$	1,758,062	$	1,387,736
Recycled, remanufactured and related products and services	454,879		430,589
Other	129,902		103,151
Total revenue	$	2,342,843	$	1,921,476

Our North America reportable segment generates revenue from all of our product categories, while our Europe and Specialty segments generate revenue primarily 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.

XML

Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2017

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

LKQ Corporation (the "Parent") issued, and the Guarantors have fully and unconditionally guaranteed, jointly and severally, the U.S. Notes due on May 15, 2023. A Guarantor's guarantee will be unconditionally and automatically released and discharged upon the occurrence of any of the following events: (i) a transfer (including as a result of consolidation or merger) by the Guarantor to any person that is not a Guarantor of all or substantially all assets and properties of such Guarantor, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the U.S. Notes; (ii) a transfer (including as a result of consolidation or merger) to any person that is not a Guarantor of the equity interests of a Guarantor or issuance by a Guarantor of its equity interests such that the Guarantor ceases to be a subsidiary, as defined in the Indenture, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the U.S. Notes; (iii) the release of the Guarantor from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the U.S. Notes; and (iv) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture, as defined in the Indenture.

Presented below are the unaudited condensed consolidating financial statements of the Parent, the Guarantors, the non-guarantor subsidiaries (the "Non-Guarantors"), and the elimination entries necessary to present our financial statements on a consolidated basis as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934 resulting from the guarantees of the U.S. Notes. Investments in consolidated subsidiaries have been presented under the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, intercompany balances, and intercompany revenue and expenses. The unaudited condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited condensed consolidated financial statements, and may not necessarily be indicative of the financial position, results of operations or cash flows had the Parent, Guarantors and Non-Guarantors operated as independent entities.

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Revenue	$	—		$	1,453,516		$	929,971		$	(40,644	)	$	2,342,843
Cost of goods sold	—			863,375			590,019			(40,644		)	1,412,750
Gross margin	—			590,141			339,952			—			930,093
Facility and warehouse expenses	—			127,803			61,977			—			189,780
Distribution expenses	—			120,430			65,380			—			185,810
Selling, general and administrative expenses	9,183			137,295			120,749			—			267,227
Restructuring and acquisition related expenses	—			1,883			1,045			—			2,928
Depreciation and amortization	30			23,481			25,145			—			48,656
Operating (loss) income	(9,213		)	179,249			65,656			—			235,692
Other expense (income):
Interest expense, net	16,180			198			7,610			—			23,988
Intercompany interest (income) expense, net	(5,672		)	1,019			4,653			—			—
Other expense (income), net	291			(169		)	(1,168		)	—			(1,046		)
Total other expense, net	10,799			1,048			11,095			—			22,942
(Loss) income from continuing operations before (benefit) provision for income taxes	(20,012		)	178,201			54,561			—			212,750
(Benefit) provision for income taxes	(7,437		)	70,038			9,554			—			72,155
Equity in (loss) earnings of unconsolidated subsidiaries	(182		)	—			396			—			214
Equity in earnings of subsidiaries	153,566			4,813			—			(158,379		)	—
Income from continuing operations	140,809			112,976			45,403			(158,379		)	140,809
(Loss) income from discontinued operations, net of tax	(4,531		)	(4,531		)	2,050			2,481			(4,531		)
Net income	$	136,278		$	108,445		$	47,453		$	(155,898	)	$	136,278

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands)
	For the Three Months Ended March 31, 2016
	Parent			Guarantors			Non-Guarantors		Eliminations			Consolidated
Revenue	$	—		$	1,318,167		$	635,637	$	(32,328	)	$	1,921,476
Cost of goods sold	—			795,240			398,127		(32,328		)	1,161,039
Gross margin	—			522,927			237,510		—			760,437
Facility and warehouse expenses	—			115,210			42,395		—			157,605
Distribution expenses	—			104,154			48,189		—			152,343
Selling, general and administrative expenses	10,379			126,668			81,271		—			218,318
Restructuring and acquisition related expenses	—			4,036			10,775		—			14,811
Depreciation and amortization	36			20,544			11,108		—			31,688
Operating (loss) income	(10,415		)	152,315			43,772		—			185,672
Other expense (income):
Interest expense, net	12,117			143			2,332		—			14,592
Intercompany interest (income) expense, net	(10,677		)	6,590			4,087		—			—
Loss on debt extinguishment	2,894			—			23,756		—			26,650
Gains on foreign exchange contracts - acquisition related	(18,342		)	—			—		—			(18,342		)
Other income, net	(111		)	(2,800		)	22		—			(2,889		)
Total other (income) expense, net	(14,119		)	3,933			30,197		—			20,011
Income from continuing operations before provision for income taxes	3,704			148,382			13,575		—			165,661
Provision for income taxes	113			50,316			2,699		—			53,128
Equity in (loss) earnings of unconsolidated subsidiaries	(795		)	5			428		—			(362		)
Equity in earnings of subsidiaries	109,375			11,942			—		(121,317		)	—
Net income	$	112,171		$	110,013		$	11,304	$	(121,317	)	$	112,171

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net income	$	136,278		$	108,445		$	47,453		$	(155,898	)	$	136,278
Other comprehensive income (loss):
Foreign currency translation	21,579			3,878			21,132			(25,010		)	21,579
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163			(133		)	—			133			3,163
Net change in unrealized gains/losses on pension plans, net of tax	(3,041		)	(2,805		)	(236		)	3,041			(3,041		)
Net change in other comprehensive loss from unconsolidated subsidiaries	(162		)	—			(162		)	162			(162		)
Total other comprehensive income	21,539			940			20,734			(21,674		)	21,539
Total comprehensive income	$	157,817		$	109,385		$	68,187		$	(177,572	)	$	157,817

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands)
	For the Three Months Ended March 31, 2016
	Parent		Guarantors			Non-Guarantors			Eliminations			Consolidated
Net income	$	112,171	$	110,013		$	11,304		$	(121,317	)	$	112,171
Other comprehensive income (loss):
Foreign currency translation	140		(2,855		)	(3,039		)	5,894			140
Net change in unrecognized gains/losses on derivative instruments, net of tax	432		—			96			(96		)	432
Net change in unrealized gains/losses on pension plans, net of tax	147		—			147			(147		)	147
Total other comprehensive income (loss)	719		(2,855		)	(2,796		)	5,651			719
Total comprehensive income	$	112,890	$	107,158		$	8,508		$	(115,666	)	$	112,890

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Balance Sheets (In thousands)
	March 31, 2017
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	22,256	$	24,529	$	217,829	$	—		$	264,614
Receivables, net	—		318,249		655,421		—			973,670
Intercompany receivables, net	2,953		—		7,026		(9,979		)	—
Inventories	—		1,170,190		808,275		—			1,978,465
Prepaid expenses and other current assets	1,448		46,405		53,524		—			101,377
Total current assets	26,657		1,559,373		1,742,075		(9,979		)	3,318,126
Property and equipment, net	209		531,214		277,785		—			809,208
Intangible assets:
Goodwill	—		1,895,497		1,225,347		—			3,120,844
Other intangibles, net	—		152,905		423,546		—			576,451
Investment in subsidiaries	5,231,012		73,592		—		(5,304,604		)	—
Intercompany notes receivable	1,175,881		780,686		—		(1,956,567		)	—
Equity method investments	—		336		184,926		—			185,262
Other assets	62,204		30,525		23,388		(3,762		)	112,355
Total assets	$	6,495,963	$	5,024,128	$	3,877,067	$	(7,274,912	)	$	8,122,246
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,030	$	273,002	$	376,085	$	—		$	651,117
Intercompany payables, net	—		7,026		2,953		(9,979		)	—
Accrued expenses:
Accrued payroll-related liabilities	3,321		29,714		56,942		—			89,977
Other accrued expenses	12,360		96,416		134,242		—			243,018
Other current liabilities	38,465		25,174		19,962		—			83,601
Current portion of long-term obligations	36,011		686		55,291		—			91,988
Total current liabilities	92,187		432,018		645,475		(9,979		)	1,159,701
Long-term obligations, excluding current portion	1,996,134		7,871		929,272		—			2,933,277
Intercompany notes payable	750,000		738,026		468,541		(1,956,567		)	—
Deferred income taxes	183		118,208		106,875		(3,762		)	221,504
Other noncurrent liabilities	50,588		111,474		38,831		—			200,893
Stockholders’ equity	3,606,871		3,616,531		1,688,073		(5,304,604		)	3,606,871
Total liabilities and stockholders' equity	$	6,495,963	$	5,024,128	$	3,877,067	$	(7,274,912	)	$	8,122,246

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Balance Sheets (In thousands)
	December 31, 2016
	Parent		Guarantors			Non-Guarantors		Eliminations				Consolidated
Assets
Current assets:
Cash and cash equivalents	$	33,030	$	35,360		$	159,010	$	—			$	227,400
Receivables, net	—		248,188			612,361		—				860,549
Intercompany receivables, net	2,805		11,237			8,837		(22,879		)		—
Inventories	—		1,149,763			785,474		—				1,935,237
Prepaid expenses and other current assets	1,640		43,165			42,963		—				87,768
Assets of discontinued operations	—		357,788			98,852		—				456,640
Total current assets	37,475		1,845,501			1,707,497		(22,879		)		3,567,594
Property and equipment, net	239		527,705			283,632		—				811,576
Intangible assets:
Goodwill	—		1,851,274			1,203,495		—				3,054,769
Other intangibles, net	—		153,689			430,542		—				584,231
Investment in subsidiaries	5,067,297		242,032			—		(5,309,329		)		—
Intercompany notes receivable	1,510,534		800,283			—		(2,310,817		)		—
Equity method investments	—		336			183,131		—				183,467
Other assets	59,726		25,177		—	22,347		(5,688		)	—	101,562
Total assets	$	6,675,271	$	5,445,997		$	3,830,644	$	(7,648,713	)		$	8,303,199
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,309	$	244,074		$	388,390	$	—			$	633,773
Intercompany payables, net	11,237		8,837			2,805		(22,879		)		—
Accrued expenses:
Accrued payroll-related liabilities	6,404		58,187			54,164		—				118,755
Other accrued expenses	5,502		94,287			109,312		—				209,101
Other current liabilities	4,283		18,456			15,204		—				37,943
Current portion of long-term obligations	37,710		1,097			27,302		—				66,109
Liabilities of discontinued operations	—		110,890			34,214		—				145,104
Total current liabilities	66,445		535,828			631,391		(22,879		)		1,210,785
Long-term obligations, excluding current portion	2,371,578		8,356			895,728		—				3,275,662
Intercompany notes payable	750,000		1,074,218			486,599		(2,310,817		)		—
Deferred income taxes	—		95,765			109,580		(5,688		)		199,657
Other noncurrent liabilities	44,299		90,722			39,125		—				174,146
Stockholders’ equity	3,442,949		3,641,108			1,668,221		(5,309,329		)		3,442,949
Total liabilities and stockholders' equity	$	6,675,271	$	5,445,997		$	3,830,644	$	(7,648,713	)		$	8,303,199

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	118,537		$	112,605		$	35,789		$	(94,638	)	$	172,293
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	—			(18,226		)	(26,172		)	—			(44,398		)
Investment and intercompany note activity with subsidiaries	249,828			—			—			(249,828		)	—
Acquisitions, net of cash acquired	—			(74,937		)	(2,119		)	—			(77,056		)
Proceeds from disposals of business/investment	—			305,740			(4,443		)	—			301,297
Other investing activities, net	—			1,008			306			—			1,314
Net cash provided by (used in) investing activities	249,828			213,585			(32,428		)	(249,828		)	181,157
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464			—			—			—			2,464
Taxes paid related to net share settlements of stock-based compensation awards	(3,644		)	—			—			—			(3,644		)
Borrowings under revolving credit facilities	10,000			—			35,239			—			45,239
Repayments under revolving credit facilities	(376,966		)	—			(12,347		)	—			(389,313		)
Repayments under term loans	(9,295		)	—			—			—			(9,295		)
Repayments under receivables securitization facility	—			—			(150		)	—			(150		)
(Repayments) borrowings of other debt, net	(1,698		)	(1,099		)	26,110			—			23,313
Other financing activities, net	—			5,000			—			—			5,000
Investment and intercompany note activity with parent	—			(246,463		)	(3,365		)	249,828			—
Dividends	—			(94,638		)	—			94,638			—
Net cash (used in) provided by financing activities	(379,139		)	(337,200		)	45,487			344,466			(326,386		)
Effect of exchange rate changes on cash and cash equivalents	—			30			3,004			—			3,034
Net (decrease) increase in cash and cash equivalents	(10,774		)	(10,980		)	51,852			—			30,098
Cash and cash equivalents of continuing operations, beginning of period	33,030			35,360			159,010			—			227,400
Add: Cash and cash equivalents of discontinued operations, beginning of period	—			149			6,967			—			7,116
Cash and cash equivalents of continuing and discontinued operations, beginning of period	33,030			35,509			165,977			—			234,516
Cash and cash equivalents, end of period	$	22,256		$	24,529		$	217,829		$	—		$	264,614

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands)
	For the Three Months Ended March 31, 2016
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	69,729		$	77,907		$	13,437		$	(26,229	)	$	134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	—			(29,710		)	(20,683		)	—			(50,393		)
Investment and intercompany note activity with subsidiaries	(646,019		)	—			—			646,019			—
Acquisitions, net of cash acquired	—			—			(603,735		)	—			(603,735		)
Proceeds from disposals of business/investment	—			—			10,304			—			10,304
Proceeds from foreign exchange contracts	18,342			—			—			—			18,342
Other investing activities, net	—			188			270			—			458
Net cash used in investing activities	(627,677		)	(29,522		)	(613,844		)	646,019			(625,024		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	3,202			—			—			—			3,202
Taxes paid related to net share settlements of stock-based compensation awards	(2,281		)	—			—			—			(2,281		)
Debt issuance costs	(5,907		)	—			—			—			(5,907		)
Borrowings under revolving credit facilities	544,000			—			599,217			—			1,143,217
Repayments under revolving credit facilities	(44,000		)	—			(301,609		)	—			(345,609		)
Borrowings under term loans	89,317			—			249,161			—			338,478
Borrowings under receivables securitization facility	—			—			97,000			—			97,000
Repayments under receivables securitization facility	—			—			(63,000		)	—			(63,000		)
(Repayments) borrowings of other debt, net	—			(946		)	13,796			—			12,850
Payments of Rhiag debt and related payments	—			—			(543,347		)	—			(543,347		)
Payments of other obligations	—			(1,437		)	—			—			(1,437		)
Investment and intercompany note activity with parent	—			(20,106		)	666,125			(646,019		)	—
Dividends	—			(25,069		)	(1,160		)	26,229			—
Net cash provided by (used in) financing activities	584,331			(47,558		)	716,183			(619,790		)	633,166
Effect of exchange rate changes on cash and cash equivalents	—			(352		)	(811		)	—			(1,163		)
Net increase in cash and cash equivalents	26,383			475			114,965			—			141,823
Cash and cash equivalents, beginning of period	17,616			13,432			56,349			—			87,397
Cash and cash equivalents, end of period	$	43,999		$	13,907		$	171,314		$	—		$	229,220

XML

Financial Statement Information (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Included in Cost of Goods Sold on the Unaudited Condensed Consolidated Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations as well as our distribution centers. Total depreciation expense was $27.3 million and $24.3 million during the three months ended March 31, 2017 and 2016, respectively.

Revenue Recognition

Revenue Recognition

The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped to, delivered to or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and allowances of approximately $40.7 million and $38.3 million at March 31, 2017 and December 31, 2016, respectively. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue on our Unaudited Condensed Consolidated Statements of Income and are shown as a current liability on our Unaudited Condensed Consolidated Balance Sheets until remitted. We recognize revenue from the sale of scrap metal, other metals, and cores when title has transferred, which typically occurs upon delivery to the customer.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

We have a reserve for uncollectible accounts which was approximately $45.2 million and $45.6 million at March 31, 2017 and December 31, 2016, respectively.

Inventory

Inventories

Inventories consists of the following (in thousands):

	March 31,		December 31,
	2017		2016
Aftermarket and refurbished products	$	1,557,363	$	1,540,257
Salvage and remanufactured products	421,102		394,980
Total inventories	$	1,978,465	$	1,935,237

Our acquisitions completed during 2017 contributed $35.6 million of the increase in our salvage and remanufactured products inventory during 2017. See Note 2, "Business Combinations" for further information on our acquisitions.

Intangible Assets

Intangible Assets

Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer and supplier relationships, software and other technology related assets, and covenants not to compete.

The changes in the carrying amount of goodwill by reportable segment during the three months endedMarch 31, 2017 are as follows (in thousands):

	North America (1)		Europe		Specialty (1)			Total
Balance as of January 1, 2017	$	1,661,800	$	1,099,976	$	292,993		$	3,054,769
Business acquisitions and adjustments to previously recorded goodwill	41,882		8,022		666			50,570
Exchange rate effects	1,077		14,479		(51		)	15,505
Balance as of March 31, 2017	$	1,704,759	$	1,122,477	$	293,608		$	3,120,844

(1) In the first quarter of 2017, we realigned a portion of our North America operations under our Specialty segment. Prior year amounts have been recast to reflect the shift in reporting structure.

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

	March 31, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	296,699	$	(59,734	)	$	236,965	$	286,008	$	(51,104	)	$	234,904
Customer and supplier relationships	403,126		(108,026		)	295,100		395,284		(92,079		)	303,205
Software and other technology related assets	83,028		(42,522		)	40,506		77,329		(35,648		)	41,681
Covenants not to compete	11,862		(7,982		)	3,880		11,726		(7,285		)	4,441
	$	794,715	$	(218,264	)	$	576,451	$	770,347	$	(186,116	)	$	584,231

Our estimated useful lives for our finite lived intangible assets are as follows:

	Method of Amortization	Useful Life
Trade names and trademarks	Straight-line	4-30 years
Customer and supplier relationships	Accelerated	4-20 years
Software and other technology related assets	Straight-line	3-6 years
Covenants not to compete	Straight-line	1-5 years

Amortization expense for intangibles was $23.3 million and $8.9 million during the three months endedMarch 31, 2017 and 2016, respectively. Estimated amortization expense for each of the five years through the period ending December 31, 2021 is $69.4 million (for the remaining nine months of 2017), $77.3 million, $63.8 million, $50.3 million and $42.7 million, respectively

Warranty Reserve

Warranty Reserve

Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. Our warranty reserve is recorded within Other accrued expenses and Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The changes in the warranty reserve are as follows (in thousands):

Balance as of January 1, 2017	$	19,634
Warranty expense	9,254
Warranty claims	(7,268		)
Balance as of March 31, 2017	$	21,620

Investments in Unconsolidated Subsidiaries

Investments in Unconsolidated Subsidiaries

Our investment in unconsolidated subsidiaries was $185.3 million as of March 31, 2017. On December 1, 2016, we acquired a 26.5% equity interest in Mekonomen AB ("Mekonomen") from AxMeko AB, an affiliate of Axel Johnson AB, for an aggregate purchase price of $181.3 million. Headquartered in Stockholm, Sweden, Mekonomen is the leading independent car parts and service chain in the Nordic region of Europe, offering a range of products including spare parts and accessories for cars, and workshop services for consumers and businesses. We are accounting for our interest in Mekonomen using the equity method of accounting, as our investment gives us the ability to exercise significant influence, but not control, over the investee. As of March 31, 2017, the book value of our investment in Mekonomen exceeded our share of the book value of Mekonomen's net assets by $115.6 million; this difference is primarily related to goodwill and the fair value of other intangible assets. We are reporting our equity in the net earnings of Mekonomen on a one quarter lag, and therefore we recorded no equity in earnings for this investment in 2016. For the three months ended March 31, 2017, we recorded equity in earnings totaling $0.3 million related to our investment in Mekonomen, which represents our share of the results from the investment date through December 31, 2016, including adjustments to convert the results to US GAAP and to recognize the impact of our purchase accounting adjustments. The level 1 fair value of our equity investment in the publicly traded Mekonomen common stock at March 31, 2017 was $187.3 million compared to a carrying value of $183.2 million.

XML

Business Combinations (Tables)

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Purchase Price Allocations For Acquisitions

The preliminary purchase price allocations for the acquisitions completed during the three months endedMarch 31, 2017 and the year ended December 31, 2016 are as follows (in thousands):

	Three Months Ended			Year Ended
	March 31, 2017			December 31, 2016
	All Acquisitions (1)			Rhiag			PGW (2)			Other Acquisitions			Total
Receivables	$	10,788		$	230,670		$	136,523		$	13,216		$	380,409
Receivable reserves	—			(28,242		)	(7,135		)	(794		)	(36,171		)
Inventories (3)	35,567			239,529			169,159			62,223			470,911
Prepaid expenses and other current assets	(2,718		)	10,793			42,573			4,445			57,811
Property and equipment	(6,299		)	56,774			225,645			17,140			299,559
Goodwill	50,570			585,415			205,058			52,336			842,809
Other intangibles	8,055			429,360			37,954			2,537			469,851
Other assets (4)	1,113			2,092			57,671			(133		)	59,630
Deferred income taxes	948			(110,791		)	17,506			(1,000		)	(94,285		)
Current liabilities assumed	(6,845		)	(239,665		)	(168,332		)	(42,290		)	(450,287		)
Debt assumed	—			(550,843		)	(4,027		)	(2,378		)	(557,248		)
Other noncurrent liabilities assumed	—			(23,085		)	(50,847		)	(103		)	(74,035		)
Contingent consideration liabilities	(10,969		)	—			—			—			—
Other purchase price obligations	(3,154		)	—			—			(6,698		)	(6,698		)
Notes issued	—			—			—			(4,087		)	(4,087		)
Settlement of pre-existing balances	—			(591		)	—			(32		)	(623		)
Gain on bargain purchase	—			—			—			(8,207		)	(8,207		)
Cash used in acquisitions, net of cash acquired	$	77,056		$	601,416		$	661,748		$	86,175		$	1,349,339

(1) Includes $6.4 million and $3.1 million of adjustments to reduce property and equipment and other current assets for Rhiag and PGW, respectively.

(2) Includes both continuing and discontinued operations of PGW. See Note 3, "Discontinued Operations" for further information on our discontinued operations.

(3) The PGW inventory balance includes the impact of a $9.8 million step-up adjustment to report the inventory at its fair value.

(4) The balance for PGW includes $23.6 million of investments in unconsolidated subsidiaries which relate to the discontinued portion of our PGW operations.

Pro Forma Effect Of Businesses Acquired

The following pro forma summary presents the effect of the businesses acquired during the three months endedMarch 31, 2017 as though the businesses had been acquired as of January 1, 2016, and the businesses acquired during the year ended December 31, 2016 as though they had been acquired as of January 1, 2015. The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

	Three Months Ended
	March 31,
	2017		2016
Revenue, as reported	$	2,342,843	$	1,921,476
Revenue of purchased businesses for the period prior to acquisition:
Rhiag	—		213,376
PGW (1)	—		83,034
Other acquisitions	9,554		105,149
Pro forma revenue	$	2,352,397	$	2,323,035
Income from continuing operations, as reported	$	140,809	$	112,171
Income from continuing operations of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
Rhiag	—		(203		)
PGW (1),(2)	—		6,838
Other acquisitions	817		1,229
Acquisition related expenses, net of tax (3)	411		8,494
Pro forma income from continuing operations	$	142,037	$	128,529
Earnings per share from continuing operations, basic—as reported	$	0.46	$	0.37
Effect of purchased businesses for the period prior to acquisition:
Rhiag	—		(0.00)
PGW (1),(2)	—		0.02
Other acquisitions	0.00		0.00
Acquisition related expenses, net of tax (3)	0.00		0.03
Pro forma earnings per share from continuing operations, basic (4)	$	0.46	$	0.42
Earnings per share from continuing operations, diluted—as reported	$	0.45	$	0.36
Effect of purchased businesses for the period prior to acquisition:
Rhiag	—		(0.00)
PGW (1),(2)	—		0.02
Other acquisitions	0.00		0.00
Acquisition related expenses, net of tax (3)	0.00		0.03
Pro forma earnings per share from continuing operations, diluted (4)	$	0.46	$	0.42

(1) PGW reflects the results for the continuing aftermarket automotive glass distribution business only.

(2) Excludes $4.4 million of corporate costs for the three months endedMarch 31, 2016 that we do not expect to incur going forward as a result of the sale of our glass manufacturing business.

(3) Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.

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

XML

Discontinued Operations Discontinued Operations Income statement (Tables)

3 Months Ended

Mar. 31, 2017

Disposal Groups, Including Discontinued Operations [Table Text Block]

The following table summarizes the operating results of the Company’s discontinued operations related to the sale described above for the three months ended March 31, 2017 as presented in “Loss from discontinued operations, net of tax” on the Unaudited Condensed Consolidated Statements of Income (in thousands):

	Period from January 1 to March 1,
	2017
Revenue	$	111,130
Cost of goods sold	(100,084		)
Operating expenses	(8,369		)
Operating income	2,677
Interest and other expenses, net	1,204			(1)
Income from discontinued operations before provision for income taxes	3,881
Provision for income taxes	(3,598		)	(2)
Equity in earnings (loss) of unconsolidated subsidiaries	(534		)
Loss from discontinued operations, net of tax	(251		)
Loss on sale of discontinued operations, net of tax	(4,280		)	(3)
Net loss from discontinued operations, net of tax	$	(4,531	)

(1) The Company elected to allocate interest expense to discontinued operations based on the expected debt to be repaid. Under this approach, allocated interest through the period ended March 1, 2017 was $1.6 million. Partially offsetting this expense were foreign currency gains.

(2) The provision for taxes includes a return to provision adjustment related to its international operations.

(3) In the first quarter of 2017, upon closing of the sale and write-off of the net assets of the glass manufacturing business, we recorded a pre-tax loss on sale of $8.6 million, and a $4.3 million tax benefit. The incremental loss primarily reflects a $5.7 million payable for intercompany sales from the glass manufacturing business to the aftermarket automotive glass distribution business incurred prior to closing which will be paid by LKQ and capital expenditures in 2017 that were not reimbursed by the buyer.

XML

Financial Statement Information (Tables)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Line Items]

Standard Product Warranty And Extended Product Warranty Policy Policy [Text Block]

Warranty Reserve

Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. Our warranty reserve is recorded within Other accrued expenses and Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The changes in the warranty reserve are as follows (in thousands):

Balance as of January 1, 2017	$	19,634
Warranty expense	9,254
Warranty claims	(7,268		)
Balance as of March 31, 2017	$	21,620

Schedule of Estimated Useful Lives, Finite Lived Intangible Assets [Table Text Block]

Our estimated useful lives for our finite lived intangible assets are as follows:

	Method of Amortization	Useful Life
Trade names and trademarks	Straight-line	4-30 years
Customer and supplier relationships	Accelerated	4-20 years
Software and other technology related assets	Straight-line	3-6 years
Covenants not to compete	Straight-line	1-5 years

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

We have a reserve for uncollectible accounts which was approximately $45.2 million and $45.6 million at March 31, 2017 and December 31, 2016, respectively.

Schedule Of Inventory

Inventories consists of the following (in thousands):

	March 31,		December 31,
	2017		2016
Aftermarket and refurbished products	$	1,557,363	$	1,540,257
Salvage and remanufactured products	421,102		394,980
Total inventories	$	1,978,465	$	1,935,237

Changes In Carrying Amount Of Goodwill

The changes in the carrying amount of goodwill by reportable segment during the three months endedMarch 31, 2017 are as follows (in thousands):

	North America (1)		Europe		Specialty (1)			Total
Balance as of January 1, 2017	$	1,661,800	$	1,099,976	$	292,993		$	3,054,769
Business acquisitions and adjustments to previously recorded goodwill	41,882		8,022		666			50,570
Exchange rate effects	1,077		14,479		(51		)	15,505
Balance as of March 31, 2017	$	1,704,759	$	1,122,477	$	293,608		$	3,120,844

Schedule of Finite-Lived Intangible Assets [Table Text Block]

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

	March 31, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	296,699	$	(59,734	)	$	236,965	$	286,008	$	(51,104	)	$	234,904
Customer and supplier relationships	403,126		(108,026		)	295,100		395,284		(92,079		)	303,205
Software and other technology related assets	83,028		(42,522		)	40,506		77,329		(35,648		)	41,681
Covenants not to compete	11,862		(7,982		)	3,880		11,726		(7,285		)	4,441
	$	794,715	$	(218,264	)	$	576,451	$	770,347	$	(186,116	)	$	584,231

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This update outlines a new comprehensive revenue recognition model that supersedes most current revenue recognition guidance and requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB has issued several updates to ASU 2014-09. ASU 2014-09 will be effective for the Company during the first quarter of our fiscal year 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We will continue to evaluate the potential effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures; however, we do not plan to early adopt. Entities adopting the standard have the option of using either a full retrospective or modified retrospective approach in the application of this guidance. We are still determining which method of transition we will follow. We are currently in the process of completing customer contract reviews, determining necessary adjustments to existing accounting policies, evaluating new disclosure requirements and identifying and implementing changes to business processes as deemed necessary to support recognition and disclosure under the new guidance. Based on our preliminary assessment, we do not expect a significant impact for the majority of our revenue transactions as they generally consist of single performance obligations to transfer promised goods or services; however, we do expect the new guidance will change the way we present sales returns in our consolidated financial statements. We are still in the process of determining the magnitude of impact for this change.

In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between current GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard requires that entities apply the effects of these changes using a modified retrospective approach, which includes a number of optional practical expedients. While we are still in the process of quantifying the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures, we anticipate the adoption will materially affect our consolidated balance sheet and disclosures, as the majority of our operating leases will be recorded on the balance sheet under ASU 2016-02. While we do not anticipate the adoption of this accounting standard to have a material impact on our consolidated statements of income at this time, this conclusion may change as we finalize our assessment. In order to assist in our timely implementation of the new standard, we have purchased new software to track our leases. We have engaged a third party to assist with the implementation of the new software with an expectation to complete the implementation by the end of 2017.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"), to add and clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 includes guidance on classification for the following items: debt prepayment or debt extinguishment costs, settlement of zero coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned or bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and other separately identifiable cash flows where application of the predominance principle is prescribed. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017; early adoption is permitted. The guidance requires retrospective application to all periods presented unless it is impracticable to do so. We are still evaluating the impact that ASU 2016-15 will have on our consolidated financial statements and related disclosures, but we do not expect to early adopt in 2017.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, "Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which simplifies the accounting for goodwill impairment by eliminating step 2 from the goodwill impairment test. Under the new guidance, if the carrying value of a reporting unit exceeds the fair value, an impairment loss will be recognized for the amount of that excess, limited to the goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years and any interim impairment tests for periods beginning after December 15, 2019; early adoption is permitted for entities with annual and interim impairment tests occurring after January 1, 2017, and we plan to early adopt in 2017. The guidance requires adoption on a prospective basis. At this time, we do not expect adoption of this standard to have a significant impact on our financial position, results of operations, or cash flows.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" (“ASU 2016-09”), to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, the treatment of forfeitures, and calculation of earnings per share. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. During the third quarter of 2016, the Company elected to early adopt ASU 2016-09 effective January 1, 2016. With the adoption of ASU 2016-09, excess tax benefits are recognized as a component of the income tax provision, whereas these amounts were previously recognized in equity. The presentation of excess tax benefits on share-based payments was adjusted retrospectively within the Consolidated Statements of Cash Flows, resulting in a $4.6 million increase in operating cash flows for the three months endedMarch 31, 2016 with a corresponding decrease to financing cash flows.

XML

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Unvested Restricted Stock Units Activity

The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the three months endedMarch 31, 2017:

	Number Outstanding		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value    (in thousands) (1)
Unvested as of January 1, 2017	1,873,737		$	27.58
Granted	678,450		$	31.73
Vested	(537,512	)	$	25.84
Forfeited / Canceled	(75,302	)	$	31.68
Unvested as of March 31, 2017	1,939,373		$	29.36
Expected to vest after March 31, 2017	1,843,631		$	29.45	3.1	$	53,963

(1) The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock.

Schedule of Stock Option Activity

The following table summarizes activity related to our stock options under the Equity Incentive Plan for the three months endedMarch 31, 2017:

	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value    (in thousands) (1)
Balance as of January 1, 2017	2,623,217		$	9.19
Exercised	(308,189	)	$	8.00		$	7,250
Forfeited / Canceled	(1,527	)	$	32.31
Balance as of March 31, 2017	2,313,501		$	9.33	2.1	$	46,360
Exercisable as of March 31, 2017	2,313,501		$	9.33	2.1	$	46,360
Exercisable as of March 31, 2017 and expected to vest thereafter	2,313,501		$	9.33	2.1	$	46,360

(1) The aggregate intrinsic value of outstanding, exercisable and expected to vest options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of the last day of the period indicated. This amount changes based on the market price of the Company’s common stock

Schedule Of Pre-Tax Stock-Based Compensation Expense

The following table summarizes the components of pre-tax stock-based compensation expense for our continuing operations (in thousands):

	Three Months Ended
	March 31,
	2017		2016
RSUs	$	7,279	$	5,879
Stock options	6		37
Total stock-based compensation expense	$	7,285	$	5,916

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Computation Of Earnings Per Share

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

	Three Months Ended
	March 31,
	2017		2016
Income from continuing operations	$	140,809	$	112,171
Denominator for basic earnings per share—Weighted-average shares outstanding	308,028		306,157
Effect of dilutive securities:
RSUs	564		580
Stock options	1,708		2,456
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding	310,300		309,193
Basic earnings per share from continuing operations	$	0.46	$	0.37
Diluted earnings per share from continuing operations	$	0.45	$	0.36

Schedule Of Antidilutive Securities Excluded From Computation Of Diluted Earnings Per Share

The following table sets forth the number of employee stock-based compensation awards outstanding but not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three months endedMarch 31, 2017 and 2016 (in thousands):

	Three Months Ended
	March 31,
	2017	2016
Antidilutive securities:
RSUs	147	228
Stock options	78	88

XML

Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Equity [Abstract]

Schedule Of Accumulated Other Comprehensive Income (Loss)

The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):

	Three Months Ended
	March 31, 2017
	Foreign Currency Translation			Unrealized Gain (Loss) on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries			Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(272,529	)	$	8,091		$	(2,737	)	$	—		$	(267,175	)
Pretax income	20,068			832			836			—			21,736
Income tax effect	—			(356		)	(318		)	—			(674		)
Reclassification of unrealized loss (gain)	—			4,257			(171		)	—			4,086
Reclassification of deferred income taxes	—			(1,570		)	48			—			(1,522		)
Disposal of business	1,511			—			(3,436		)	—			(1,925		)
Other comprehensive (loss) income from unconsolidated subsidiaries	—			—			—			(162		)	(162		)
Ending balance	$	(250,950	)	$	11,254		$	(5,778	)	$	(162	)	$	(245,636	)

	Three Months Ended
	March 31, 2016
	Foreign Currency Translation			Unrealized (Loss) Gain on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries		Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(96,890	)	$	(932	)	$	(7,648	)	$	—	$	(105,470	)
Pretax (loss) income	140			(165		)	—			—		(25		)
Income tax effect	—			49			—			—		49
Reclassification of unrealized loss	—			807			196			—		1,003
Reclassification of deferred income taxes	—			(259		)	(49		)	—		(308		)
Ending balance	$	(96,750	)	$	(500	)	$	(7,501	)	$	—	$	(104,751	)

	Three Months Ended
	March 31, 2016
	Foreign Currency Translation			Unrealized (Loss) Gain on Cash Flow Hedges			Unrealized (Loss) Gain on Pension Plans			Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries		Accumulated Other Comprehensive (Loss) Income
Beginning balance	$	(96,890	)	$	(932	)	$	(7,648	)	$	—	$	(105,470	)
Pretax (loss) income	140			(165		)	—			—		(25		)
Income tax effect	—			49			—			—		49
Reclassification of unrealized loss	—			807			196			—		1,003
Reclassification of deferred income taxes	—			(259		)	(49		)	—		(308		)
Ending balance	$	(96,750	)	$	(500	)	$	(7,501	)	$	—	$	(104,751	)

XML

Long-Term Obligations (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Schedule Of Long-Term Obligations

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

	March 31,			December 31,
	2017			2016
Senior secured credit agreement:
Term loans payable	$	723,390		$	732,684
Revolving credit facilities	1,018,181			1,358,220
Senior notes	600,000			600,000
Euro notes	532,600			525,850
Receivables securitization facility	99,850			100,000
Notes payable through October 2025 at weighted average interest rates of 2.3% and 2.1%, respectively	10,014			11,808
Other long-term debt at weighted average interest rates of 2.0% and 2.4%, respectively	64,148			37,125
Total debt	3,048,183			3,365,687
Less: long-term debt issuance costs	(20,604		)	(21,611		)
Less: current debt issuance costs	(2,314		)	(2,305		)
Total debt, net of issuance costs	3,025,265			3,341,771
Less: current maturities, net of debt issuance costs	(91,988		)	(66,109		)
Long term debt, net of debt issuance costs	$	2,933,277		$	3,275,662

XML

Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Cash Flow Hedges

The following table summarizes the notional amounts and fair values of our designated cash flow hedges as of March 31, 2017 and December 31, 2016 (in thousands):

	Notional Amount				Fair Value at March 31, 2017 (USD)				Fair Value at December 31, 2016 (USD)
	March 31, 2017		December 31, 2016		Other Assets		Other Noncurrent Liabilities		Other Assets		Other Noncurrent Liabilities
Interest rate swap agreements
USD denominated	$	590,000	$	590,000	$	17,489	$	—	$	16,421	$	—
Cross currency swap agreements
USD/euro	$	418,442	$	422,408	2,524		5,388		1,486		3,128
Total cash flow hedges					$	20,013	$	5,388	$	17,907	$	3,128

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of March 31, 2017 and December 31, 2016 (in thousands):

	Balance as of March 31, 2017		Fair Value Measurements as of March 31, 2017
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	38,428	$	—	$	38,428	$	—
Interest rate swaps	20,013		—		20,013		—
Total Assets	$	58,441	$	—	$	58,441	$	—
Liabilities:
Contingent consideration liabilities	$	11,242	$	—	$	—	$	11,242
Deferred compensation liabilities	40,131		—		40,131		—
Foreign currency forward contracts	5,388		—		5,388		—
Total Liabilities	$	56,761	$	—	$	45,519	$	11,242

	Balance as of December 31, 2016		Fair Value Measurements as of December 31, 2016
			Level 1		Level 2		Level 3
Assets:
Cash surrender value of life insurance	$	36,131	$	—	$	36,131	$	—
Interest rate swaps	17,907				17,907
Total Assets	$	54,038	$	—	$	54,038	$	—
Liabilities:
Contingent consideration liabilities	$	3,162	$	—	$	—	$	3,162
Deferred compensation liabilities	36,865		—		36,865		—
Foreign currency forward contracts	3,128		—		3,128		—
Total Liabilities	$	43,155	$	—	$	39,993	$	3,162

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Lease Commitments

The future minimum lease commitments under these leases at March 31, 2017 are as follows (in thousands):

Nine months ending December 31, 2017	$	158,837
Years ending December 31:
2018	182,944
2019	151,442
2020	122,188
2021	92,010
2022	75,622
Thereafter	457,967
Future Minimum Lease Payments	$	1,241,010

XML

Segment and Geographic Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Schedule Of Financial Performance By Reportable Segment

The following tables present our financial performance by reportable segment for the periods indicated (in thousands):

	North America (1)		Europe		Specialty (1)		Eliminations			Consolidated
Three Months Ended March 31, 2017
Revenue:
Third Party	$	1,208,047	$	820,897	$	313,899	$	—		$	2,342,843
Intersegment	193		—		1,035		(1,228		)	—
Total segment revenue	$	1,208,240	$	820,897	$	314,934	$	(1,228	)	$	2,342,843
Segment EBITDA	$	176,135	$	78,694	$	35,441	$	—		$	290,270
Depreciation and amortization (2)	20,378		24,751		5,475		—			50,604
Three Months Ended March 31, 2016
Revenue:
Third Party	$	1,080,606	$	546,751	$	294,119	$	—		$	1,921,476
Intersegment	214		10		951		(1,175		)	—
Total segment revenue	$	1,080,820	$	546,761	$	295,070	$	(1,175	)	$	1,921,476
Segment EBITDA	$	145,691	$	57,498	$	33,422	$	—		$	236,611
Depreciation and amortization (2)	17,390		10,308		5,468		—			33,166

Reconciliation Of Earnings Before Interest Taxes Depreciation And Amortization To Net Income Table [Text Block]

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

	Three Months Ended
	March 31,
	2017			2016
Net income	$	136,278		$	112,171
Subtract:
Loss from discontinued operations, net of tax	(4,531		)	—
Income from continuing operations	140,809			112,171
Add:
Depreciation and amortization	48,656			31,688
Depreciation and amortization - cost of goods sold	1,948			1,478
Interest expense, net	23,988			14,592
Loss on debt extinguishment	—			26,650
Provision for income taxes	72,155			53,128
EBITDA	287,556			239,707
Subtract:
Equity in earnings (loss) of unconsolidated subsidiaries	214			(362		)
Gains on foreign exchange contracts - acquisition related (1)	—			18,342
Add:
Restructuring and acquisition related expenses (2)	2,928			14,811
Change in fair value of contingent consideration liabilities	—			73
Segment EBITDA	$	290,270		$	236,611

(1) Reflects gains on foreign currency forwards used to fix the euro purchase price of Rhiag. See Note 2, "Business Combinations," for further information.

(2) See Note 5, "Restructuring and Acquisition Related Expenses," for further information.

Schedule Of Capital Expenditures By Reportable Segment

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

	Three Months Ended
	March 31,
	2017		2016
Capital Expenditures
North America	$	16,760	$	22,783
Europe	20,458		19,107
Specialty	3,582		8,503
Discontinued operations	3,598		—
Total capital expenditures	$	44,398	$	50,393

Schedule Of Assets By Reportable Segment

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

	March 31,		December 31,
	2017		2016
Receivables, net
North America	$	382,922	$	351,681
Europe	473,834		443,281
Specialty	116,914		65,587
Total receivables, net	973,670		860,549
Inventories
North America	945,454		915,244
Europe	740,209		718,729
Specialty	292,802		301,264
Total inventories	1,978,465		1,935,237
Property and Equipment, net
North America	502,582		505,925
Europe	247,720		247,910
Specialty	58,906		57,741
Total property and equipment, net	809,208		811,576
Equity Method Investments
North America	336		336
Europe	184,926		183,131
Total equity method investments	185,262		183,467
Other unallocated assets	4,175,641		4,512,370
Total assets	$	8,122,246	$	8,303,199

Schedule Of Revenue By Geographic Area

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

	Three Months Ended
	March 31,
	2017		2016
Revenue
United States	$	1,417,040	$	1,284,967
United Kingdom	382,652		349,676
Other countries	543,151		286,833
Total revenue	$	2,342,843	$	1,921,476

Schedule Of Tangible Long-Lived Assets By Geographic Area

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

	March 31,		December 31,
	2017		2016
Long-lived Assets
United States	$	529,589	$	531,425
United Kingdom	163,090		159,689
Other countries	116,529		120,462
Total long-lived assets	$	809,208	$	811,576

Schedule Of Revenue By Product Category

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

	Three Months Ended
	March 31,
	2017		2016
Aftermarket, other new and refurbished products	$	1,758,062	$	1,387,736
Recycled, remanufactured and related products and services	454,879		430,589
Other	129,902		103,151
Total revenue	$	2,342,843	$	1,921,476

XML

Condensed Consolidating Financial Information (Tables)

3 Months Ended

Mar. 31, 2017

Condensed Consolidating Financial Information [Abstract]

Consolidated Condensed Statements of Income

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Revenue	$	—		$	1,453,516		$	929,971		$	(40,644	)	$	2,342,843
Cost of goods sold	—			863,375			590,019			(40,644		)	1,412,750
Gross margin	—			590,141			339,952			—			930,093
Facility and warehouse expenses	—			127,803			61,977			—			189,780
Distribution expenses	—			120,430			65,380			—			185,810
Selling, general and administrative expenses	9,183			137,295			120,749			—			267,227
Restructuring and acquisition related expenses	—			1,883			1,045			—			2,928
Depreciation and amortization	30			23,481			25,145			—			48,656
Operating (loss) income	(9,213		)	179,249			65,656			—			235,692
Other expense (income):
Interest expense, net	16,180			198			7,610			—			23,988
Intercompany interest (income) expense, net	(5,672		)	1,019			4,653			—			—
Other expense (income), net	291			(169		)	(1,168		)	—			(1,046		)
Total other expense, net	10,799			1,048			11,095			—			22,942
(Loss) income from continuing operations before (benefit) provision for income taxes	(20,012		)	178,201			54,561			—			212,750
(Benefit) provision for income taxes	(7,437		)	70,038			9,554			—			72,155
Equity in (loss) earnings of unconsolidated subsidiaries	(182		)	—			396			—			214
Equity in earnings of subsidiaries	153,566			4,813			—			(158,379		)	—
Income from continuing operations	140,809			112,976			45,403			(158,379		)	140,809
(Loss) income from discontinued operations, net of tax	(4,531		)	(4,531		)	2,050			2,481			(4,531		)
Net income	$	136,278		$	108,445		$	47,453		$	(155,898	)	$	136,278

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Income (In thousands)
	For the Three Months Ended March 31, 2016
	Parent			Guarantors			Non-Guarantors		Eliminations			Consolidated
Revenue	$	—		$	1,318,167		$	635,637	$	(32,328	)	$	1,921,476
Cost of goods sold	—			795,240			398,127		(32,328		)	1,161,039
Gross margin	—			522,927			237,510		—			760,437
Facility and warehouse expenses	—			115,210			42,395		—			157,605
Distribution expenses	—			104,154			48,189		—			152,343
Selling, general and administrative expenses	10,379			126,668			81,271		—			218,318
Restructuring and acquisition related expenses	—			4,036			10,775		—			14,811
Depreciation and amortization	36			20,544			11,108		—			31,688
Operating (loss) income	(10,415		)	152,315			43,772		—			185,672
Other expense (income):
Interest expense, net	12,117			143			2,332		—			14,592
Intercompany interest (income) expense, net	(10,677		)	6,590			4,087		—			—
Loss on debt extinguishment	2,894			—			23,756		—			26,650
Gains on foreign exchange contracts - acquisition related	(18,342		)	—			—		—			(18,342		)
Other income, net	(111		)	(2,800		)	22		—			(2,889		)
Total other (income) expense, net	(14,119		)	3,933			30,197		—			20,011
Income from continuing operations before provision for income taxes	3,704			148,382			13,575		—			165,661
Provision for income taxes	113			50,316			2,699		—			53,128
Equity in (loss) earnings of unconsolidated subsidiaries	(795		)	5			428		—			(362		)
Equity in earnings of subsidiaries	109,375			11,942			—		(121,317		)	—
Net income	$	112,171		$	110,013		$	11,304	$	(121,317	)	$	112,171

Consolidated Condensed Statements of Comprehensive Income (Loss)

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net income	$	136,278		$	108,445		$	47,453		$	(155,898	)	$	136,278
Other comprehensive income (loss):
Foreign currency translation	21,579			3,878			21,132			(25,010		)	21,579
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163			(133		)	—			133			3,163
Net change in unrealized gains/losses on pension plans, net of tax	(3,041		)	(2,805		)	(236		)	3,041			(3,041		)
Net change in other comprehensive loss from unconsolidated subsidiaries	(162		)	—			(162		)	162			(162		)
Total other comprehensive income	21,539			940			20,734			(21,674		)	21,539
Total comprehensive income	$	157,817		$	109,385		$	68,187		$	(177,572	)	$	157,817

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Comprehensive Income (In thousands)
	For the Three Months Ended March 31, 2016
	Parent		Guarantors			Non-Guarantors			Eliminations			Consolidated
Net income	$	112,171	$	110,013		$	11,304		$	(121,317	)	$	112,171
Other comprehensive income (loss):
Foreign currency translation	140		(2,855		)	(3,039		)	5,894			140
Net change in unrecognized gains/losses on derivative instruments, net of tax	432		—			96			(96		)	432
Net change in unrealized gains/losses on pension plans, net of tax	147		—			147			(147		)	147
Total other comprehensive income (loss)	719		(2,855		)	(2,796		)	5,651			719
Total comprehensive income	$	112,890	$	107,158		$	8,508		$	(115,666	)	$	112,890

Consolidated Condensed Statements of Cash Flows

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands)
	For the Three Months Ended March 31, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	118,537		$	112,605		$	35,789		$	(94,638	)	$	172,293
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	—			(18,226		)	(26,172		)	—			(44,398		)
Investment and intercompany note activity with subsidiaries	249,828			—			—			(249,828		)	—
Acquisitions, net of cash acquired	—			(74,937		)	(2,119		)	—			(77,056		)
Proceeds from disposals of business/investment	—			305,740			(4,443		)	—			301,297
Other investing activities, net	—			1,008			306			—			1,314
Net cash provided by (used in) investing activities	249,828			213,585			(32,428		)	(249,828		)	181,157
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464			—			—			—			2,464
Taxes paid related to net share settlements of stock-based compensation awards	(3,644		)	—			—			—			(3,644		)
Borrowings under revolving credit facilities	10,000			—			35,239			—			45,239
Repayments under revolving credit facilities	(376,966		)	—			(12,347		)	—			(389,313		)
Repayments under term loans	(9,295		)	—			—			—			(9,295		)
Repayments under receivables securitization facility	—			—			(150		)	—			(150		)
(Repayments) borrowings of other debt, net	(1,698		)	(1,099		)	26,110			—			23,313
Other financing activities, net	—			5,000			—			—			5,000
Investment and intercompany note activity with parent	—			(246,463		)	(3,365		)	249,828			—
Dividends	—			(94,638		)	—			94,638			—
Net cash (used in) provided by financing activities	(379,139		)	(337,200		)	45,487			344,466			(326,386		)
Effect of exchange rate changes on cash and cash equivalents	—			30			3,004			—			3,034
Net (decrease) increase in cash and cash equivalents	(10,774		)	(10,980		)	51,852			—			30,098
Cash and cash equivalents of continuing operations, beginning of period	33,030			35,360			159,010			—			227,400
Add: Cash and cash equivalents of discontinued operations, beginning of period	—			149			6,967			—			7,116
Cash and cash equivalents of continuing and discontinued operations, beginning of period	33,030			35,509			165,977			—			234,516
Cash and cash equivalents, end of period	$	22,256		$	24,529		$	217,829		$	—		$	264,614

LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidating Statements of Cash Flows (In thousands)
	For the Three Months Ended March 31, 2016
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	69,729		$	77,907		$	13,437		$	(26,229	)	$	134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	—			(29,710		)	(20,683		)	—			(50,393		)
Investment and intercompany note activity with subsidiaries	(646,019		)	—			—			646,019			—
Acquisitions, net of cash acquired	—			—			(603,735		)	—			(603,735		)
Proceeds from disposals of business/investment	—			—			10,304			—			10,304
Proceeds from foreign exchange contracts	18,342			—			—			—			18,342
Other investing activities, net	—			188			270			—			458
Net cash used in investing activities	(627,677		)	(29,522		)	(613,844		)	646,019			(625,024		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	3,202			—			—			—			3,202
Taxes paid related to net share settlements of stock-based compensation awards	(2,281		)	—			—			—			(2,281		)
Debt issuance costs	(5,907		)	—			—			—			(5,907		)
Borrowings under revolving credit facilities	544,000			—			599,217			—			1,143,217
Repayments under revolving credit facilities	(44,000		)	—			(301,609		)	—			(345,609		)
Borrowings under term loans	89,317			—			249,161			—			338,478
Borrowings under receivables securitization facility	—			—			97,000			—			97,000
Repayments under receivables securitization facility	—			—			(63,000		)	—			(63,000		)
(Repayments) borrowings of other debt, net	—			(946		)	13,796			—			12,850
Payments of Rhiag debt and related payments	—			—			(543,347		)	—			(543,347		)
Payments of other obligations	—			(1,437		)	—			—			(1,437		)
Investment and intercompany note activity with parent	—			(20,106		)	666,125			(646,019		)	—
Dividends	—			(25,069		)	(1,160		)	26,229			—
Net cash provided by (used in) financing activities	584,331			(47,558		)	716,183			(619,790		)	633,166
Effect of exchange rate changes on cash and cash equivalents	—			(352		)	(811		)	—			(1,163		)
Net increase in cash and cash equivalents	26,383			475			114,965			—			141,823
Cash and cash equivalents, beginning of period	17,616			13,432			56,349			—			87,397
Cash and cash equivalents, end of period	$	43,999		$	13,907		$	171,314		$	—		$	229,220

XML

Business Combinations - Additional Information (Details) $ in Thousands, € in Millions, £ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 GBP (£)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 EUR (€)	Dec. 31, 2016 EUR (€)	Mar. 31, 2016 EUR (€)
Business Acquisition
Number of acquisitions	3
Acquisitions, net of cash acquired	$ (77,056)	$ (603,735)
Business Combination, Bargain Purchase, Gain Recognized, Amount				$ 8,207
Gains on foreign exchange contracts - acquisition related	0	(18,342)
Goodwill	3,120,844			3,054,769
Restructuring and acquisition related expenses	2,928	14,811
Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses	2,600	12,700
North America
Business Acquisition
Goodwill	1,704,759			1,661,800
Europe
Business Acquisition
Goodwill	1,122,477			1,099,976
Specialty
Business Acquisition
Goodwill	293,608			$ 292,993
Wholesale North America Segment [Member]
Business Acquisition
Number of acquisitions			5	5	5
Andrew Page [Member]
Business Acquisition
Business Combination, Consideration Transferred			£ 16.4	$ 20,900
Andrew Page [Member] | Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses	500
All 2017 acquisitions [Member]
Business Acquisition
Business Combination, Consideration Transferred	91,200
Acquisitions, net of cash acquired	(77,100)
Other purchase price obligations	14,100
Goodwill	42,800
Business Acquisition, Goodwill, Expected Tax Deductible Amount	39,000
PGW
Business Acquisition
Acquisitions, net of cash acquired				(661,748)
Notes issued				0
Other purchase price obligations				0
Settlement of pre-existing balances				0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt				4,027
Goodwill	207,600			205,058
Business Acquisition, Goodwill, Expected Tax Deductible Amount				104,000
Goodwill, Purchase Accounting Adjustments	23,600
Business Combination, Adjustment, Inventory				9,800
PGW | Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses		1,800
Rhiag
Business Acquisition
Business Combination, Consideration Transferred				602,000	€ 534.2
Acquisitions, net of cash acquired				(601,416)	€ (533.6)
Notes issued				0
Other purchase price obligations				0
Settlement of pre-existing balances				591		€ 0.6
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt				550,843		€ 488.8
Gains on foreign exchange contracts - acquisition related		(18,300)
Goodwill	590,700			585,415
Goodwill, Purchase Accounting Adjustments	149,000
Rhiag | Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses		$ 10,700
Rhiag | Forward Contracts
Business Acquisition
Derivative, Notional Amount | €							€ 588.0
All 2016 Acquisitions Excluding Rhiag PGW and Andrew Page [Member]
Business Acquisition
Business Combination, Consideration Transferred				76,100
Acquisitions, net of cash acquired				(67,800)
Notes issued				(4,100)
Other purchase price obligations				4,200
Goodwill				$ 52,336
All 2016 Acquisitions Excluding Rhiag PGW and Andrew Page [Member] | Europe
Business Acquisition
Number of acquisitions			7	7	7
Adjustments in 2016 [Member] | PGW
Business Acquisition
Goodwill				$ 205,100
Adjustments in 2016 [Member] | Rhiag
Business Acquisition
Goodwill				$ 585,400
Adjustments in 2017 [Member] | PGW
Business Acquisition
Goodwill	2,500
Goodwill, Purchase Accounting Adjustments	2,500
Adjustments in 2017 [Member] | Rhiag
Business Acquisition
Goodwill	5,300
Goodwill, Purchase Accounting Adjustments	$ 5,300

XML

Purchase Price Allocations for Acquisitions (Details) $ in Thousands, € in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 EUR (€)	Dec. 31, 2016 EUR (€)
Business Acquisition
Payments to Acquire Businesses, Net of Cash Acquired	$ 77,056	$ 603,735
Goodwill	3,120,844		$ 3,054,769
Business Combination, Bargain Purchase, Gain Recognized, Amount			(8,207)
All 2016 Acquisitions
Business Acquisition
Payments to Acquire Businesses, Net of Cash Acquired			1,349,339
Receivables			380,409
Receivable reserves			(36,171)
Inventories (3)			470,911
Prepaid expenses and other current assets			57,811
Property and equipment			299,559
Goodwill			842,809
Other intangibles			469,851
Other assets (4)			59,630
Deferred income taxes			(94,285)
Current liabilities assumed			(450,287)
Debt assumed			(557,248)
Other noncurrent liabilities assumed			(74,035)
Other purchase price obligations			(6,698)
Notes issued			(4,087)
Settlement of pre-existing balances			(623)
Business Combination, Bargain Purchase, Gain Recognized, Amount			(8,207)
Rhiag
Business Acquisition
Business Combination, Consideration Transferred			602,000	€ 534.2
Payments to Acquire Businesses, Net of Cash Acquired			601,416	€ 533.6
Receivables			230,670
Receivable reserves			(28,242)
Inventories (3)			239,529
Prepaid expenses and other current assets			10,793
Property and equipment			56,774
Goodwill	590,700		585,415
Other intangibles			429,360
Other assets (4)			2,092
Deferred income taxes			(110,791)
Current liabilities assumed			(239,665)
Debt assumed			(550,843)		€ (488.8)
Other noncurrent liabilities assumed			(23,085)
Other purchase price obligations			0
Notes issued			0
Settlement of pre-existing balances			(591)		€ (0.6)
PGW
Business Acquisition
Payments to Acquire Businesses, Net of Cash Acquired			661,748
Receivables			136,523
Receivable reserves			(7,135)
Inventories (3)			169,159
Prepaid expenses and other current assets			42,573
Property and equipment			225,645
Goodwill	207,600		205,058
Other intangibles			37,954
Other assets (4)			57,671
Deferred income taxes			17,506
Current liabilities assumed			(168,332)
Debt assumed			(4,027)
Other noncurrent liabilities assumed			(50,847)
Other purchase price obligations			0
Notes issued			0
Settlement of pre-existing balances			0
All 2016 Acquisitions Excluding Rhiag and PGW
Business Acquisition
Payments to Acquire Businesses, Net of Cash Acquired			86,175
Receivables			13,216
Receivable reserves			(794)
Inventories (3)			62,223
Prepaid expenses and other current assets			4,445
Property and equipment			17,140
Other intangibles			2,537
Other assets (4)			(133)
Deferred income taxes			(1,000)
Current liabilities assumed			(42,290)
Debt assumed			(2,378)
Other noncurrent liabilities assumed			(103)
Other purchase price obligations			(6,698)
Notes issued			(4,087)
Settlement of pre-existing balances			(32)
Business Combination, Bargain Purchase, Gain Recognized, Amount			(8,207)
All 2015 Acquisitions
Business Acquisition
Payments to Acquire Businesses, Net of Cash Acquired	77,056
Receivables	10,788
Receivable reserves	0
Inventories (3)	35,567
Prepaid expenses and other current assets	(2,718)
Property and equipment	(6,299)
Goodwill	50,570
Other intangibles	8,055
Other assets (4)	1,113
Deferred income taxes	948
Current liabilities assumed	(6,845)
Debt assumed	0
Other noncurrent liabilities assumed	0
Business Combination, Contingent Consideration, Liability	(10,969)
Other purchase price obligations	(3,154)
Notes issued	0
Settlement of pre-existing balances	0
Adjustments in 2017 [Member] | Rhiag
Business Acquisition
Property and equipment	6,400
Goodwill	5,300
Adjustments in 2017 [Member] | PGW
Business Acquisition
Prepaid expenses and other current assets	3,100
Goodwill	$ 2,500
PGW
Business Acquisition
Business Combinations, Equity Method Investment			$ 23,600

XML

Pro Forma Effect of Businesses Acquired (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Business Acquisition
Revenue, as reported		$ 2,342,843	$ 1,921,476
Pro forma revenue		2,352,397	2,323,035
Income from continuing operation		140,809	112,171
Net Income		136,278	112,171
Pro forma income from continuing operations		$ 142,037	$ 128,529
Pro forma earnings per share from continuing operations, basic (4)	[1]	$ 0.46	$ 0.42
Diluted earnings per share from continuing operations		0.45	0.36
Pro forma earnings per share from continuing operations, diluted (4)	[1]	$ 0.46	$ 0.42
Restructuring and acquisition related expenses		$ 2,928	$ 14,811
Basic earnings per share from continuing operations		$ 0.46	$ 0.37
Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses		$ 2,600	$ 12,700
Rhiag
Business Acquisition
Revenue of purchased businesses for the period prior to acquisition		0	213,376
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments		$ 0	$ (203)
Effect of purchased businesses for the period prior to acquisition		$ 0.00	$ 0.00
Effect of purchased businesses for the period prior to acquisition		$ 0.00	$ 0.00
Rhiag | Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses			$ 10,700
PGW
Business Acquisition
Pro Forma costs excluded		$ 4,400
Revenue of purchased businesses for the period prior to acquisition		0	83,034
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments		$ 0	$ 6,838
Effect of purchased businesses for the period prior to acquisition		$ 0.00	$ 0.02
Effect of purchased businesses for the period prior to acquisition		$ 0.00	$ 0.02
PGW | Acquisition-related expenses
Business Acquisition
Restructuring and acquisition related expenses			$ 1,800
All 2017 acquisitions [Member]
Business Acquisition
Revenue of purchased businesses for the period prior to acquisition		$ 9,554
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments		817
Acquisition related costs, net of tax		$ 411
Effect of purchased businesses for the period prior to acquisition		$ 0.00
Business Acquisition Pro Forma Income Loss From Acquisition Related Costs, Net of Tax, Per Basic Share Effect		0.00
Effect of purchased businesses for the period prior to acquisition		0.00
Business Acquisition Pro Forma Income Loss From Acquisition Related Costs, Net of Tax, Per Diluted Share Effect		$ 0.00
All 2017 and 2016 Acquisitions Excluding Rhiag and PGW [Member]
Business Acquisition
Revenue of purchased businesses for the period prior to acquisition			105,149
Net income of purchased businesses for the period prior to acquisition, including pro forma purchase accounting adjustments			$ 1,229
Effect of purchased businesses for the period prior to acquisition			$ 0.00
Effect of purchased businesses for the period prior to acquisition			$ 0.00
All 2016 Acquisitions
Business Acquisition
Acquisition related costs, net of tax			$ 8,494
Business Acquisition Pro Forma Income Loss From Acquisition Related Costs, Net of Tax, Per Basic Share Effect			$ 0.03
Business Acquisition Pro Forma Income Loss From Acquisition Related Costs, Net of Tax, Per Diluted Share Effect			$ 0.03

[1] PGW reflects the results for the continuing aftermarket automotive glass distribution business only.

XML

Discontinued Operations Net assets of discontinued operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Interest Allocated to Discontinued Operations	$ 1,600
Loss on sale of business	8,600
Disposal Group, Including Discontinued Operation, Revenue	111,130
Proceeds from Divestiture of Businesses	301,297
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents			$ 7,116
Proceeds from disposal of business/investment	316,100	$ 10,304
Cash disposed as part of divestment	14,800
Disposal Group, Including Discontinued Operation, Costs of Goods Sold	(100,084)
Disposal Group, Including Discontinued Operation, Operating Expense	(8,369)
OperatingIncomefromDiscontinuedOperations	2,677
Disposal Group, Including Discontinued Operation, Other Expense	1,204
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax	3,881
Discontinued Operation, Tax Effect of Discontinued Operation	(3,598)
disposal group, including discontinued operation, equity in earnings	(534)
IncomeLossFromDiscontinuedOperationsExcludingLossonSaleNetOfTaxAttributableToReportingEntity	(251)
Loss from discontinued operations, net of tax	(4,531)	$ 0
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax	(4,280)
Purchase price receivable [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration	$ 3,600

XML

Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Intercompany Sales between Continuing and Discontinued Operations	$ 7,800
Disposal Group, Including Discontinued Operation, Revenue	111,130
Disposal Group, Including Discontinued Operation, Costs of Goods Sold	(100,084)
Disposal Group, Including Discontinued Operation, Operating Expense	(8,369)
Discontinued Operation, Tax Effect of Gain (Loss) from Disposal of Discontinued Operation	4,300
Intercompany payable between discontinued operations and continuing operations	5,700
OperatingIncomefromDiscontinuedOperations	2,677
Disposal Group, Including Discontinued Operation, Other Expense	1,204
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax	3,881
Discontinued Operation, Tax Effect of Gain (Loss) from Disposal of Discontinued Operation	(3,598)
disposal group, including discontinued operation, equity in earnings	(534)
Loss from discontinued operations, net of tax	(4,531)	$ 0
Interest Allocated to Discontinued Operations	1,600
Capital Expenditures	44,398	$ 50,393
Cash Provided by (Used in) Operating Activities, Discontinued Operations	3,900
Cash Provided by (Used in) Investing Activities, Discontinued Operations	3,600
Cash Provided by (Used in) Financing Activities, Discontinued Operations	15,000
Continuing and Discontinued Operations [Member]
Capital Expenditures	$ 3,598

XML

Financial Statement Information - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2016

Net Cash Provided by (Used in) Financing Activities

$ (326,386)

$ 633,166

Equity Method Investments

185,262

$ 183,467

Depreciation

$ 27,300

$ 24,300

Net income (1)

$ 0.44

$ 0.36

Net Income

$ 136,278

$ 112,171

Schedule of Finite-Lived Intangible Assets [Table Text Block]

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

	March 31, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Trade names and trademarks	$	296,699	$	(59,734	)	$	236,965	$	286,008	$	(51,104	)	$	234,904
Customer and supplier relationships	403,126		(108,026		)	295,100		395,284		(92,079		)	303,205
Software and other technology related assets	83,028		(42,522		)	40,506		77,329		(35,648		)	41,681
Covenants not to compete	11,862		(7,982		)	3,880		11,726		(7,285		)	4,441
	$	794,715	$	(218,264	)	$	576,451	$	770,347	$	(186,116	)	$	584,231

Goodwill

$ 3,120,844

3,054,769

Reserve for estimated returns, discounts and allowances

(40,700)

(38,300)

Reserve for uncollectible accounts

45,200

45,600

Finite-lived intangible assets, gross

794,715

770,347

Amortization expense

23,300

$ 8,900

Estimated annual amortization expense in year two

77,300

Estimated annual amortization expense in year three

63,800

Estimated annual amortization expense in year five

$ 69,400

Net income (1)

$ 0.44

$ 0.37

Retained earnings

$ 2,726,637

2,590,359

Income (Loss) from Equity Method Investments

214

$ (362)

PGW

Goodwill

207,600

205,058

Rhiag

Goodwill

590,700

585,415

Mekonomen [Member]

Equity Method Investments

$ 183,200

$ 0

Equity Method Investment, Ownership Percentage

2650.00%

Equity Method Investment, Difference Between Carrying Amount and Underlying Equity

$ 115,600

Income (Loss) from Equity Method Investments

300

Equity Method Investments, Fair Value Disclosure

$ 187,300

ASU 2016-09 adjustments [Member] | Restatement Adjustment [Member]

Net Cash Provided by (Used in) Financing Activities

$ 4,600

XML

Financial Statement Information Schedule of Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Product Information
Inventories	$ 1,978,465	$ 1,935,237
Aftermarket and refurbished products
Product Information
Inventories	1,557,363	1,540,257
Salvage and remanufactured products
Product Information
Inventories	421,102	$ 394,980
Inventories (3)	$ 35,600

XML

Financial Statement Information Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 809,208	$ 811,576

XML

Changes in Carrying Amount of Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 3,054,769
Business acquisitions and adjustments to previously recorded goodwill	50,570
Exchange rate effects	15,505
Goodwill, ending balance	3,120,844
North America
Goodwill [Roll Forward]
Goodwill, beginning balance	1,661,800
Business acquisitions and adjustments to previously recorded goodwill	41,882
Exchange rate effects	1,077
Goodwill, ending balance	1,704,759
Europe
Goodwill [Roll Forward]
Goodwill, beginning balance	1,099,976
Business acquisitions and adjustments to previously recorded goodwill	8,022
Exchange rate effects	14,479
Goodwill, ending balance	1,122,477
Specialty
Goodwill [Roll Forward]
Goodwill, beginning balance	292,993
Business acquisitions and adjustments to previously recorded goodwill	666
Exchange rate effects	(51)
Goodwill, ending balance	293,608
Rhiag
Goodwill [Roll Forward]
Goodwill, beginning balance	585,415
Goodwill, ending balance	$ 590,700

XML

Components of Other Intangibles (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets
Finite-Lived Intangible Assets, Amortization Expense, Year Two	$ 77,300
Finite-lived intangible assets, gross	794,715	$ 770,347
Accumulated amortization	(218,264)	(186,116)
Net	576,451	584,231
Finite-Lived Intangible Assets, Amortization Expense, Year Three	63,800
Finite-Lived Intangible Assets, Amortization Expense, Year Four	50,300
Finite-Lived Intangible Assets, Amortization Expense, Year Five	42,700
Trade names and trademarks
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	296,699	286,008
Accumulated amortization	(59,734)	(51,104)
Net	236,965	234,904
Customer and supplier relationships
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	403,126	395,284
Accumulated amortization	(108,026)	(92,079)
Net	295,100	303,205
Software and technology related assets
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	83,028	77,329
Accumulated amortization	(42,522)	(35,648)
Net	40,506	41,681
Covenants not to compete
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	11,862	11,726
Accumulated amortization	(7,982)	(7,285)
Net	$ 3,880	$ 4,441

XML

Financial Statement Information Components of Other Intangibles Acquired as part of a Business Combination (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	$ 794,715	$ 770,347
Trade names and trademarks
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	296,699	286,008
Customer and supplier relationships
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	403,126	395,284
Software and technology related assets
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	83,028	77,329
Covenants not to compete
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	$ 11,862	$ 11,726

XML

Financial Statement Information Schedule of Estimated Useful Lives, Finite Lived Intangible Assets (Details)	3 Months Ended
	Mar. 31, 2017
Trade names and trademarks | Minimum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	4 years
Trade names and trademarks | Maximum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	30 years
Customer and supplier relationships | Minimum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	4 years
Customer and supplier relationships | Maximum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	20 years
Software and technology related assets | Minimum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	3 years
Software and technology related assets | Maximum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	6 years
Covenants not to compete | Minimum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	1 year
Covenants not to compete | Maximum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life	5 years

XML

Changes in Warranty Reserve (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Warranty Reserve [Roll Forward]
Warranty reserve, beginning balance	$ 19,634
Warranty expense	9,254
Warranty claims	(7,268)
Warranty reserve, ending balance	$ 21,620

XML

Financial Statement Information Impact to quarterly financial statements as result of adoption of ASU 2016-09 (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net Income	$ 136,278	$ 112,171
Net income (1)	$ 0.44	$ 0.37
Net income (1)	$ 0.44	$ 0.36
Net Cash Provided by (Used in) Financing Activities	$ 172,293	$ 134,844
ASU 2016-09 adjustments [Member] | Restatement Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net Cash Provided by (Used in) Financing Activities	$ 4,600

XML

Restructuring and Acquisition Related Expenses - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	$ 2,928	$ 14,811
Acquisition-related expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	2,600	12,700
Restructuring expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	300	2,100
Expected additional charges	5,000
Andrew Page [Member] | Acquisition-related expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	500
Rhiag | Acquisition-related expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses		10,700
PGW | Acquisition-related expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses		1,800
All 2016 Acquisitions and yet to be Completed Acquisitions Excluding Rhiag and PGW | Acquisition-related expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses		$ 200
2017 acquisitions yet to be completed [Member] | Acquisition-related expenses
Restructuring Cost and Reserve
Restructuring and acquisition related expenses	$ 2,100

XML

Stock-Based Compensation - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($) shares
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Number of shares that RSUs convert into on the applicable vesting date | shares	1
RSUs granted during the period | shares	678,450
Fair value of RSUs or restricted stock vested during the period | $	$ 17.0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $	$ 47.5
Minimum | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Stock options expiration period	6 years
Maximum | RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period	5 years
Maximum | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period	5 years
Stock options expiration period	10 years

XML

Stock-Based Compensation Schedule of Unvested Restricted Stock Units Activity (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Summary of Expected to Vest RSUs [Line Items]
Unvested RSUs, shares	1,939,373	1,873,737
RSUs granted during the period	678,450
RSUs vested, shares	(537,512)
RSUs forfeited/canceled, shares	(75,302)
RSUs expected to vest, shares	1,843,631
Unvested RSUs, weighted average grant date fair value	$ 29.36	$ 27.58
RSUs granted, weighted average grant date fair value	31.73
RSUs vested, weighted average grant date fair value	25.84
RSUs forfeited/canceled, weighted average grant date fair value	31.68
RSUs expected to vest, weighted average grant date fair value	$ 29.45
ShareBasedCompensationArrangementByShareBasedPaymentAwardRSUsAndRestrictedStockExpectedToVestOutstandingWeightedAverageRemainingContractualTerm	3 years 1 month 6 days
RSUs expected to vest, aggregate intrinsic value	$ 53,963

XML

Stock-Based Compensation Schedule of Stock Option Activity (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	$ 700
Stock options outstanding, shares	2,313,501	2,623,217
Stock options exercised, shares	(308,189)
Stock options forfeited/canceled, shares	(1,527)
Exercisable stock options, shares	2,313,501
Exercisable and expected to vest stock options, shares	2,313,501
Stock options outstanding, weighted average exercise price	$ 9.33	$ 9.19
Stock options exercised, weighted average exercise price	$ 8.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 7,250
Stock options forfeited/canceled, weighted average exercise price	$ 32.31
Exercisable stock options, weighted average exercise price	9.33
Exercisable and expected to vest stock options, weighted average exercise price	$ 9.33
Stock options outstanding, weighted average remaining contractual term (years)	2 years 1 month 6 days
Exercisable stock options, weighted average remaining contractual term (years)	2 years 1 month 6 days
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, weighted average remaining contractual term	2 years 1 month 6 days
Stock options outstanding, aggregate intrinsic value	$ 46,360
Exercisable stock options, aggregate intrinsic value	46,360
Exercisable and expected to vest stock options, aggregate intrinsic value	$ 46,360

XML

Schedule of Pre-Tax Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	$ 7,285	$ 5,916
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	7,279	5,879
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation expense	$ 6	$ 37

XML

Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Income from continuing operation	$ 140,809	$ 112,171
Net Income	$ 136,278	$ 112,171
Denominator for basic earnings per share—Weighted-average shares outstanding	308,028	306,157
Effect of dilutive securities:
RSUs	564	580
Stock options	1,708	2,456
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding	310,300	309,193
Basic earnings per share from continuing operations	$ 0.46	$ 0.37
Diluted earnings per share from continuing operations	$ 0.45	$ 0.36

XML

Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities	147	228
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities	78	88

XML

Accumulated Other Comprehensive Income (Loss) Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest Rate Swap
Schedule of Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax	$ (1.1)	$ 0.8
Cross Currency Interest Rate Contract [Member]
Schedule of Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax	$ 5.4

XML

Accumulated Other Comprehensive Income (Loss) Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 267,175	$ 105,470
Foreign currency translation	21,579	140
Pre-tax income accumulated comprehensive income	21,736	(25)
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax	836
Income tax effect	674	(49)
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Tax	(318)
Reclassification of unrealized gain (loss)	4,086	1,003
Reclassification of deferred income taxes	(1,522)	(308)
Ending Balance	245,636	104,751
Disposal of Business	(1,925)
Other comprehensive income (loss), unconsolidated subsidiaries	(162)
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	272,529	96,890
Foreign currency translation	20,068	140
Ending Balance	250,950	96,750
Unrealized (Loss) Gain on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(8,091)	932
Pre-tax income accumulated comprehensive income	832	(165)
Income tax effect	(356)	(49)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax	(4,257)	(807)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	(1,570)	(259)
Ending Balance	(11,254)	500
Unrealized (Loss) Gain on Pension Plan
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(2,737)	(7,648)
Reclassification of unrealized gain (loss)	(171)	196
Reclassification of deferred income taxes	48	(49)
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(5,778)	(7,501)
Accumulated foreign currency adjustment attributable to disposal of business [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Disposal of cumulative translation adjustment for divested businesses	1,511
Accumulated Defined Benefit Plan Adjustment Attributable to Disposal of Business [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Write off unrealized gain(loss)	(3,436)
Accumulated Gain (Loss) from Unconsoldated Subsidiaries [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Unconsolidated Subsidiaries	(162)
Other comprehensive income (loss), unconsolidated subsidiaries	(162)
Interest Rate Swap
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax	$ 1,100	$ (800)

XML

Schedule of Long-Term Obligations (Parenthetical) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Mar. 31, 2017	Nov. 29, 2016
Euro Notes
Debt Instrument
Debt Issuance Costs, Gross	$ 10.3
Credit Agreement
Debt Instrument
Weighted average interest rate	2.00%	2.00%
Notes Payable
Debt Instrument
Weighted average interest rate	2.10%	2.30%
Other Long-Term Debt
Debt Instrument
Weighted average interest rate	2.40%	2.00%
Receivables Securitization [Member]
Debt Instrument
Weighted average interest rate		1.80%
Receivables Securitization Maximum Borrowing Capacity			$ 100.0
Fourth Amended Credit Agreement | Credit Agreement
Debt Instrument
Payments of Financing Costs	$ 6.1
Debt Issuance Costs, Gross	$ 5.0

XML

Schedule of Long-Term Obligations (Details) $ in Thousands, € in Millions	12 Months Ended
	Dec. 31, 2016 USD ($)	Mar. 31, 2017 USD ($)	Apr. 14, 2016 EUR (€)	Jan. 29, 2016 USD ($)	Mar. 27, 2014 USD ($)	May 09, 2013 USD ($)
Debt Instrument
Long-Term Obligations, Total	$ 3,365,687	$ 3,048,183
Deferred Finance Costs, Current, Net	(2,305)	(2,314)
Deferred Finance Costs, Noncurrent, Net	(21,611)	(20,604)
Debt and Capital Lease Obligations, Net	3,341,771	3,025,265
Long-term Debt and Capital Lease Obligations, Current, Net	(66,109)	(91,988)
Long-term obligations, excluding current portion	3,275,662	2,933,277
Term Loan
Debt Instrument
Term loans payable	732,684	723,390
Revolving Credit Facility
Debt Instrument
Revolving credit facilities	1,358,220	1,018,181
Senior Notes
Debt Instrument
Senior notes	600,000	600,000				$ 600,000
Euro Notes
Debt Instrument
Senior notes	525,850	532,600	€ 500
Debt Issuance Costs, Gross	10,300
Receivables Securitization Facility
Debt Instrument
Receivables securitization facility	100,000	99,850
Notes Payable
Debt Instrument
Notes payable	11,808	10,014
Other Long-Term Debt
Debt Instrument
Other long-term debt	37,125	$ 64,148
Third Amended Credit Agreement | Credit Agreement
Debt Instrument
Maximum Credit Agreement Borrowings					$ 2,300,000
Fourth Amended Credit Agreement | Credit Agreement
Debt Instrument
Payments of Financing Costs	6,100
Maximum Credit Agreement Borrowings				$ 3,200,000
Term loans payable				$ 750,000
Debt Issuance Costs, Gross	$ 5,000

XML

Long-Term Obligations - Additional Information (Details) $ in Thousands, € in Millions			3 Months Ended		12 Months Ended
	Mar. 24, 2016 USD ($)	Mar. 24, 2016 EUR (€)	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 EUR (€)	Nov. 29, 2016 USD ($)	Apr. 14, 2016 EUR (€)	Mar. 24, 2016 EUR (€)	Jan. 29, 2016 USD ($)	Jan. 29, 2016 EUR (€)	Mar. 27, 2014 USD ($)	May 09, 2013 USD ($)
Debt Instrument
Debt and Capital Lease Obligations			$ 3,048,183		$ 3,365,687
Term Loan Quarterly Repayment, Percentage of Initial Balance										0.625%	0.625%
Term Loan Quarterly Repayment, Percentage										1.25%	1.25%
Outstanding letters of credit			72,200
Loss on debt extinguishment			$ 0	$ 26,650
Credit Agreement
Debt Instrument
Increment change in applicable margin										0.25%	0.25%
Weighted average interest rate			2.00%		2.00%	2.00%
Increment change in commitment fees										0.05%	0.05%
Fronting fee on letters of credit in addition to participation commission										0.125%	0.125%
Availability on the revolving credit facility			$ 1,400,000
Term Loan
Debt Instrument
Term loans payable			723,390		$ 732,684
Current maturities of credit agreement					37,200
Senior Notes
Debt Instrument
Senior notes			600,000		600,000								$ 600,000
Senior notes interest rate													4.75%
Euro Notes
Debt Instrument
Fees capitalized					10,300
Senior notes			$ 532,600		525,850			€ 500.0
Senior notes interest rate								3.875%
Receivables Securitization Facility
Debt Instrument
Weighted average interest rate			1.80%
Receivables Securitization Maximum Borrowing Capacity							$ 100,000
Receivables used as collateral for receivables securitization facility			$ 141,900		140,300
Borrowings under receivable securitization facility, carrying value			$ 99,850		100,000
Fourth Amended Credit Agreement | Credit Agreement
Debt Instrument
Maximum Credit Agreement Borrowings										$ 3,200,000
Term loans payable										750,000
Payments of Financing Costs					6,100
Fees capitalized					5,000
Loss on debt extinguishment					1,100
Fourth Amended Credit Agreement | Credit Agreement | Multicurrency Component
Debt Instrument
Maximum revolving credit facility borrowings										2,450,000
Fourth Amended Credit Agreement | USD Term Loan
Debt Instrument
Term loans payable										$ 500,000
Fourth Amended Credit Agreement | EURO Term Loan
Debt Instrument
Term loans payable | €											€ 230.0
Debt and Capital Lease Obligations | €											€ 230.0
Third Amended Credit Agreement | Credit Agreement
Debt Instrument
Maximum Credit Agreement Borrowings												$ 2,300,000
Loss on debt extinguishment					1,800
Rhiag
Debt Instrument
Debt Incurred under Line of Credit Facility, Used to Repay Debt Acquired | €									€ 508.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt					$ 550,843	€ 488.8
Rhiag | Senior Notes
Debt Instrument
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt	$ 519,600								€ 465.0
Accrued interest	8,000	€ 7.1
Payments of Debt Extinguishment Costs	23,800	21.2
Interest Rate Swap | Rhiag | Senior Notes
Debt Instrument
Payments for Derivative Instrument, Financing Activities	$ 4,900	€ 4.4

XML

Derivative Instruments and Hedging Activities - Additional Information (Details) $ in Millions	Mar. 31, 2017 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Net loss included in accumulated other comprehensive income (loss) to be reclassified into interest expense within the next 12 months	$ (0.1)

XML

Schedule of Cash Flow Hedges (Details) $ in Thousands, € in Millions	Mar. 31, 2017 USD ($)	Mar. 31, 2017 EUR (€)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 EUR (€)
Derivative
Derivative Asset, Noncurrent	$ 20,013		$ 17,907
Derivative Liability, Noncurrent	5,388		3,128
Settlement of Notional Amounts | €		€ 15.0
Cross Currency Interest Rate Contract [Member]
Derivative
Derivative, Notional Amount	418,442		422,408
Derivative Asset, Noncurrent	2,524		1,486
Derivative Liability, Noncurrent	5,388		3,128
Cross Currency Interest Rate Contract [Member] | 2016CrossCurrencySwaps [Member]
Derivative
Derivative, Notional Amount			422,400	€ 400.0
Interest Rate Swap
Derivative
Derivative, Notional Amount	590,000		590,000
Derivative Asset, Noncurrent	17,489		$ 16,421
Derivative Liability, Noncurrent	$ 0

XML

Fair Value Measurements - Additional Information (Details) $ in Thousands, € in Millions	3 Months Ended
	Mar. 31, 2016 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Apr. 14, 2016 EUR (€)	May 09, 2013 USD ($)
Fair Value Measurements
Portion of change in fair value included in earnings related to contingent consideration obligations outstanding at period end	$ 73
Credit Agreement
Fair Value Measurements
Borrowings under credit agreement, carrying value		$ 1,700,000	$ 2,100,000
Receivables Securitization Facility
Fair Value Measurements
Borrowings under receivable securitization facility, carrying value		99,850	100,000
Senior Notes
Fair Value Measurements
Debt instrument, fair value		595,800	599,500
Debt instrument, carrying value		600,000	600,000		$ 600,000
Euro Notes
Fair Value Measurements
Debt instrument, fair value		562,800	560,600
Debt instrument, carrying value		$ 532,600	$ 525,850	€ 500

XML

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) $ in Thousands, € in Millions	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Apr. 14, 2016 EUR (€)
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	$ 58,441	$ 54,038
Fair value liabilities measured on recurring basis	56,761	43,155
Fair Value, Measurements, Recurring | Cash surrender value of life insurance
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	38,428	36,131
Fair Value, Measurements, Recurring | Contingent consideration liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	11,242	3,162
Fair Value, Measurements, Recurring | Deferred compensation liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	40,131	36,865
Fair Value, Measurements, Recurring | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	20,013	17,907
Fair Value, Measurements, Recurring | Foreign Exchange Future [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	5,388	3,128
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	58,441	54,038
Fair value liabilities measured on recurring basis	45,519	39,993
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Cash surrender value of life insurance
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	38,428	36,131
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Deferred compensation liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	40,131	36,865
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value assets measured on recurring basis	20,013	17,907
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Foreign Exchange Future [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	5,388	3,128
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	11,242	3,162
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Contingent consideration liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value liabilities measured on recurring basis	11,242	3,162
Euro Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Long-term Debt, Fair Value	562,800	560,600
Debt Instrument, Face Amount	$ 532,600	$ 525,850	€ 500

XML

Future Minimum Lease Commitments (Details) $ in Thousands	Mar. 31, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year	$ 158,837
2017	182,944
2018	151,442
2019	122,188
2020	92,010
2021	75,622
Thereafter	457,967
Future Minimum Lease Payments	$ 1,241,010

XML

Income Taxes Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Business Acquisition
Effective income tax rate	33.90%	32.10%
Net Income	$ 136,278	$ 112,171
Excess Tax Benefit on Stock Based Payments	$ 3,300	$ 4,400

XML

Segment and Geographic Information - Additional Information (Details)	3 Months Ended
	Mar. 31, 2017
Segment Reporting Information
Number of operating segments	4
Number of reportable segments	3

XML

Schedule of Financial Performance by Reportable Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information
Revenue	$ 2,342,843	$ 1,921,476
Segment EBITDA	290,270	236,611
Depreciation and amortization	50,604	33,166
North America
Segment Reporting Information
Revenue	1,208,240	1,080,820
Segment EBITDA	176,135	145,691
Depreciation and amortization	20,378	17,390
Europe
Segment Reporting Information
Revenue	820,897	546,761
Segment EBITDA	78,694	57,498
Depreciation and amortization	24,751	10,308
Specialty
Segment Reporting Information
Revenue	314,934	295,070
Segment EBITDA	35,441	33,422
Depreciation and amortization	5,475	5,468
Intersegment Eliminations
Segment Reporting Information
Revenue	(1,228)	(1,175)
Third Party | North America
Segment Reporting Information
Revenue	1,208,047	1,080,606
Third Party | Europe
Segment Reporting Information
Revenue	820,897	546,751
Third Party | Specialty
Segment Reporting Information
Revenue	313,899	294,119
Intersegment | North America
Segment Reporting Information
Revenue	193	214
Intersegment | Europe
Segment Reporting Information
Revenue	0	10
Intersegment | Specialty
Segment Reporting Information
Revenue	1,035	951
Intersegment | Intersegment Eliminations
Segment Reporting Information
Revenue	$ (1,228)	$ (1,175)

XML

Reconciliation Of Segment EBITDA To Net Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting [Abstract]
Segment EBITDA	$ 290,270	$ 236,611
Loss from discontinued operations, net of tax	(4,531)	0
Restructuring and acquisition related expenses	2,928	14,811
Income from continuing operation	140,809	112,171
Change in fair value of contingent consideration liabilities		(73)
Equity in earnings of unconsolidated subsidiaries	214	(362)
Gain (Loss) on Sale of Derivatives		18,342
EBITDA	287,556	239,707
Depreciation and amortization - cost of goods sold	1,948	1,478
Depreciation and amortization	48,656	31,688
Interest expense, net	23,988	14,592
Loss on debt extinguishment	0	26,650
Provision for income taxes	72,155	53,128
Net Income	$ 136,278	$ 112,171

XML

Schedule of Capital Expenditures by Reportable Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information
Capital Expenditures	$ 44,398	$ 50,393
North America
Segment Reporting Information
Capital Expenditures	16,760	22,783
Europe
Segment Reporting Information
Capital Expenditures	20,458	19,107
Specialty
Segment Reporting Information
Capital Expenditures	3,582	$ 8,503
Discontinued Operations [Member]
Segment Reporting Information
Capital Expenditures	$ 3,598

XML

Schedule of Assets by Reportable Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Segment Reporting Information
Receivables, net	$ 973,670	$ 860,549
Inventories	1,978,465	1,935,237
Property and equipment, net	809,208	811,576
Equity Method Investments	185,262	183,467
Other unallocated assets	4,175,641	4,512,370
Total assets	8,122,246	8,303,199
North America
Segment Reporting Information
Receivables, net	382,922	351,681
Inventories	945,454	915,244
Property and equipment, net	502,582	505,925
Equity Method Investments	336	336
Europe
Segment Reporting Information
Receivables, net	473,834	443,281
Inventories	740,209	718,729
Property and equipment, net	247,720	247,910
Equity Method Investments	184,926	183,131
Specialty
Segment Reporting Information
Receivables, net	116,914	65,587
Inventories	292,802	301,264
Property and equipment, net	$ 58,906	$ 57,741

XML

Schedule of Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues from External Customers and Long-Lived Assets
Revenue	$ 2,342,843	$ 1,921,476
United States
Revenues from External Customers and Long-Lived Assets
Revenue	1,417,040	1,284,967
United Kingdom
Revenues from External Customers and Long-Lived Assets
Revenue	382,652	349,676
Other countries
Revenues from External Customers and Long-Lived Assets
Revenue	$ 543,151	$ 286,833

XML

Schedule of Tangible Long-Lived Assets by Geographic Area (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	$ 809,208	$ 811,576
United States
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	529,589	531,425
United Kingdom
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	163,090	159,689
Other countries
Revenues from External Customers and Long-Lived Assets
Long-lived Assets	$ 116,529	$ 120,462

XML

Schedule of Revenue by Product Category (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue from External Customers
Revenue	$ 2,342,843	$ 1,921,476
Aftermarket, other new and refurbished products
Revenue from External Customers
Revenue	1,758,062	1,387,736
Recycled, remanufactured and related products and services
Revenue from External Customers
Revenue	454,879	430,589
Other
Revenue from External Customers
Revenue	$ 129,902	$ 103,151

XML

Condensed Consolidating Statements of Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Condensed Financial Statements, Captions [Line Items]
Revenue	$ 2,342,843	$ 1,921,476
Cost of goods sold	1,412,750	1,161,039
Gross margin	930,093	760,437
Facility and warehouse expenses	189,780	157,605
Distribution expenses	185,810	152,343
Selling, general and administrative expenses	267,227	218,318
Restructuring and acquisition related expenses	2,928	14,811
Depreciation and amortization	48,656	31,688
Operating (loss) income	235,692	185,672
Other expense (income):
Interest expense, net	23,988	14,592
Intercompany interest (income) expense, net	0	0
Loss on debt extinguishment	0	26,650
Change in fair value of contingent consideration liabilities		(73)
Gains on foreign exchange contracts - acquisition related	0	(18,342)
Other income, net	(1,046)	(2,889)
Income from continuing operations before provision for income taxes	212,750	165,661
Provision for income taxes	72,155	53,128
Equity in earnings of unconsolidated subsidiaries	214	(362)
Nonoperating Income (Expense)	22,942	20,011
Income from continuing operation	140,809	112,171
Loss from discontinued operations, net of tax	(4,531)	0
Income (Loss) from Subsidiaries, Net of Tax	0	0
Net Income (Loss) Attributable to Parent	136,278	112,171
Consolidation, Eliminations
Condensed Financial Statements, Captions [Line Items]
Revenue	(40,644)	(32,328)
Cost of goods sold	(40,644)	(32,328)
Gross margin	0	0
Facility and warehouse expenses	0	0
Distribution expenses	0	0
Selling, general and administrative expenses	0	0
Restructuring and acquisition related expenses	0	0
Depreciation and amortization	0	0
Operating (loss) income	0	0
Other expense (income):
Interest expense, net	0	0
Intercompany interest (income) expense, net	0	0
Loss on debt extinguishment		0
Gains on foreign exchange contracts - acquisition related		0
Other income, net	0	0
Income from continuing operations before provision for income taxes	0	0
Provision for income taxes	0	0
Equity in earnings of unconsolidated subsidiaries	0	0
Nonoperating Income (Expense)	0	0
Income from continuing operation	(158,379)
Loss from discontinued operations, net of tax	2,481
Income (Loss) from Subsidiaries, Net of Tax	(158,379)	(121,317)
Net Income (Loss) Attributable to Parent	(155,898)	(121,317)
Parent Company
Condensed Financial Statements, Captions [Line Items]
Revenue	0	0
Cost of goods sold	0	0
Gross margin	0	0
Facility and warehouse expenses	0	0
Distribution expenses	0	0
Selling, general and administrative expenses	9,183	10,379
Restructuring and acquisition related expenses	0	0
Depreciation and amortization	30	36
Operating (loss) income	(9,213)	(10,415)
Other expense (income):
Interest expense, net	16,180	12,117
Intercompany interest (income) expense, net	(5,672)	(10,677)
Loss on debt extinguishment		2,894
Gains on foreign exchange contracts - acquisition related		(18,342)
Other income, net	291	(111)
Income from continuing operations before provision for income taxes	(20,012)	3,704
Provision for income taxes	(7,437)	113
Equity in earnings of unconsolidated subsidiaries	(182)	(795)
Nonoperating Income (Expense)	10,799	(14,119)
Income from continuing operation	140,809
Loss from discontinued operations, net of tax	(4,531)
Income (Loss) from Subsidiaries, Net of Tax	153,566	109,375
Net Income (Loss) Attributable to Parent	136,278	112,171
Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Revenue	1,453,516	1,318,167
Cost of goods sold	863,375	795,240
Gross margin	590,141	522,927
Facility and warehouse expenses	127,803	115,210
Distribution expenses	120,430	104,154
Selling, general and administrative expenses	137,295	126,668
Restructuring and acquisition related expenses	1,883	4,036
Depreciation and amortization	23,481	20,544
Operating (loss) income	179,249	152,315
Other expense (income):
Interest expense, net	198	143
Intercompany interest (income) expense, net	1,019	6,590
Loss on debt extinguishment		0
Gains on foreign exchange contracts - acquisition related		0
Other income, net	(169)	(2,800)
Income from continuing operations before provision for income taxes	178,201	148,382
Provision for income taxes	70,038	50,316
Equity in earnings of unconsolidated subsidiaries	0	5
Nonoperating Income (Expense)	1,048	3,933
Income from continuing operation	112,976
Loss from discontinued operations, net of tax	(4,531)
Income (Loss) from Subsidiaries, Net of Tax	4,813	11,942
Net Income (Loss) Attributable to Parent	108,445	110,013
Non-Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Revenue	929,971	635,637
Cost of goods sold	590,019	398,127
Gross margin	339,952	237,510
Facility and warehouse expenses	61,977	42,395
Distribution expenses	65,380	48,189
Selling, general and administrative expenses	120,749	81,271
Restructuring and acquisition related expenses	1,045	10,775
Depreciation and amortization	25,145	11,108
Operating (loss) income	65,656	43,772
Other expense (income):
Interest expense, net	7,610	2,332
Intercompany interest (income) expense, net	4,653	4,087
Loss on debt extinguishment		23,756
Gains on foreign exchange contracts - acquisition related		0
Other income, net	(1,168)	22
Income from continuing operations before provision for income taxes	54,561	13,575
Provision for income taxes	9,554	2,699
Equity in earnings of unconsolidated subsidiaries	396	428
Nonoperating Income (Expense)	11,095	30,197
Income from continuing operation	45,403
Loss from discontinued operations, net of tax	2,050
Income (Loss) from Subsidiaries, Net of Tax	0	0
Net Income (Loss) Attributable to Parent	$ 47,453	$ 11,304

XML

Condensed Consolidating Statements of Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Condensed Financial Statements, Captions [Line Items]
Net Income	$ 136,278	$ 112,171
Other comprehensive income (loss), net of tax:
Foreign currency translation	21,579	140
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163	432
Net change in unrealized gains/losses on pension plan, net of tax	(3,041)	147
Other comprehensive income (loss), unconsolidated subsidiaries	(162)
Total other comprehensive income	21,539	719
Total comprehensive income	157,817	112,890
Consolidation, Eliminations
Condensed Financial Statements, Captions [Line Items]
Net Income	(155,898)	(121,317)
Other comprehensive income (loss), net of tax:
Foreign currency translation	(25,010)	5,894
Net change in unrecognized gains/losses on derivative instruments, net of tax	133	(96)
Net change in unrealized gains/losses on pension plan, net of tax	3,041	(147)
Other comprehensive income (loss), unconsolidated subsidiaries	162
Total other comprehensive income	(21,674)	5,651
Total comprehensive income	(177,572)	(115,666)
Parent Company
Condensed Financial Statements, Captions [Line Items]
Net Income	136,278	112,171
Other comprehensive income (loss), net of tax:
Foreign currency translation	21,579	140
Net change in unrecognized gains/losses on derivative instruments, net of tax	3,163	432
Net change in unrealized gains/losses on pension plan, net of tax	(3,041)	147
Other comprehensive income (loss), unconsolidated subsidiaries	(162)
Total other comprehensive income	21,539	719
Total comprehensive income	157,817	112,890
Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Net Income	108,445	110,013
Other comprehensive income (loss), net of tax:
Foreign currency translation	3,878	(2,855)
Net change in unrecognized gains/losses on derivative instruments, net of tax	(133)	0
Net change in unrealized gains/losses on pension plan, net of tax	(2,805)	0
Other comprehensive income (loss), unconsolidated subsidiaries	0
Total other comprehensive income	940	(2,855)
Total comprehensive income	109,385	107,158
Non-Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Net Income	47,453	11,304
Other comprehensive income (loss), net of tax:
Foreign currency translation	21,132	(3,039)
Net change in unrecognized gains/losses on derivative instruments, net of tax	0	96
Net change in unrealized gains/losses on pension plan, net of tax	(236)	147
Other comprehensive income (loss), unconsolidated subsidiaries	(162)
Total other comprehensive income	20,734	(2,796)
Total comprehensive income	$ 68,187	$ 8,508

XML

Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Condensed Financial Statements, Captions [Line Items]
Cost of Goods and Services Sold	$ 1,412,750	$ 1,161,039
Facility And Warehouse Expenses	189,780	157,605
Current assets:
Cash and cash equivalents	264,614	229,220	$ 227,400	$ 87,397
Receivables, net	973,670		860,549
Intercompany receivables, net	0		0
Inventories	1,978,465		1,935,237
Prepaid expenses and other current assets	101,377		87,768
Total current assets	3,318,126		3,567,594
Property and equipment, net	809,208		811,576
Intangible assets:
Goodwill	3,120,844		3,054,769
Other intangibles, net	576,451		584,231
Investment in Subsidiaries	0		0
Intercompany Notes Receivable	0		0
Other assets	112,355		101,562
Total assets	8,122,246		8,303,199
Assets of discontinued operations	0		456,640
Current liabilities:
Accounts payable	651,117		633,773
Intercompany payables, net	0		0
Accrued expenses:
Accrued payroll-related liabilities	89,977		118,755
Other accrued expenses	243,018		209,101
Other current liabilities	83,601		37,943
Current portion of long-term obligations	91,988		66,109
Total current liabilities	1,159,701		1,210,785
Long-term obligations, excluding current portion	2,933,277		3,275,662
Intercompany Notes Payable	0		0
Deferred income taxes	221,504		199,657
Other Noncurrent Liabilities	200,893		174,146
Stockholders’ Equity	3,606,871		3,442,949
Total liabilities and stockholders’ equity	8,122,246		8,303,199
Liabilities of discontinued operations	0		145,104
Equity Method Investments	185,262		183,467
Distribution Expenses	185,810	152,343
Consolidation, Eliminations
Condensed Financial Statements, Captions [Line Items]
Cost of Goods and Services Sold	(40,644)	(32,328)
Facility And Warehouse Expenses	0	0
Current assets:
Cash and cash equivalents	0	0	0	0
Receivables, net	0		0
Intercompany receivables, net	(9,979)		(22,879)
Inventories	0		0
Prepaid expenses and other current assets	0		0
Total current assets	(9,979)		(22,879)
Property and equipment, net	0		0
Intangible assets:
Goodwill	0		0
Other intangibles, net	0		0
Investment in Subsidiaries	(5,304,604)		(5,309,329)
Intercompany Notes Receivable	(1,956,567)		(2,310,817)
Other assets	(3,762)		(5,688)
Total assets	(7,274,912)		(7,648,713)
Assets of discontinued operations			0
Current liabilities:
Accounts payable	0		0
Intercompany payables, net	(9,979)		(22,879)
Accrued expenses:
Accrued payroll-related liabilities	0		0
Other accrued expenses	0		0
Other current liabilities	0		0
Current portion of long-term obligations	0		0
Total current liabilities	(9,979)		(22,879)
Long-term obligations, excluding current portion	0		0
Intercompany Notes Payable	(1,956,567)		(2,310,817)
Deferred income taxes	(3,762)		(5,688)
Other Noncurrent Liabilities	0		0
Stockholders’ Equity	(5,304,604)		(5,309,329)
Total liabilities and stockholders’ equity	(7,274,912)		(7,648,713)
Liabilities of discontinued operations			0
Equity Method Investments	0		0
Distribution Expenses	0	0
Parent Company
Condensed Financial Statements, Captions [Line Items]
Cost of Goods and Services Sold	0	0
Facility And Warehouse Expenses	0	0
Current assets:
Cash and cash equivalents	22,256	43,999	33,030	17,616
Receivables, net	0		0
Intercompany receivables, net	2,953		2,805
Inventories	0		0
Prepaid expenses and other current assets	1,448		1,640
Total current assets	26,657		37,475
Property and equipment, net	209		239
Intangible assets:
Goodwill	0		0
Other intangibles, net	0		0
Investment in Subsidiaries	5,231,012		5,067,297
Intercompany Notes Receivable	1,175,881		1,510,534
Other assets	62,204		59,726
Total assets	6,495,963		6,675,271
Assets of discontinued operations			0
Current liabilities:
Accounts payable	2,030		1,309
Intercompany payables, net	0		11,237
Accrued expenses:
Accrued payroll-related liabilities	3,321		6,404
Other accrued expenses	12,360		5,502
Other current liabilities	38,465		4,283
Current portion of long-term obligations	36,011		37,710
Total current liabilities	92,187		66,445
Long-term obligations, excluding current portion	1,996,134		2,371,578
Intercompany Notes Payable	750,000		750,000
Deferred income taxes	183		0
Other Noncurrent Liabilities	50,588		44,299
Stockholders’ Equity	3,606,871		3,442,949
Total liabilities and stockholders’ equity	6,495,963		6,675,271
Liabilities of discontinued operations			0
Equity Method Investments	0		0
Distribution Expenses	0	0
Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Cost of Goods and Services Sold	863,375	795,240
Facility And Warehouse Expenses	127,803	115,210
Current assets:
Cash and cash equivalents	24,529	13,907	35,360	13,432
Receivables, net	318,249		248,188
Intercompany receivables, net	0		11,237
Inventories	1,170,190		1,149,763
Prepaid expenses and other current assets	46,405		43,165
Total current assets	1,559,373		1,845,501
Property and equipment, net	531,214		527,705
Intangible assets:
Goodwill	1,895,497		1,851,274
Other intangibles, net	152,905		153,689
Investment in Subsidiaries	73,592		242,032
Intercompany Notes Receivable	780,686		800,283
Other assets	30,525		25,177
Total assets	5,024,128		5,445,997
Assets of discontinued operations			357,788
Current liabilities:
Accounts payable	273,002		244,074
Intercompany payables, net	7,026		8,837
Accrued expenses:
Accrued payroll-related liabilities	29,714		58,187
Other accrued expenses	96,416		94,287
Other current liabilities	25,174		18,456
Current portion of long-term obligations	686		1,097
Total current liabilities	432,018		535,828
Long-term obligations, excluding current portion	7,871		8,356
Intercompany Notes Payable	738,026		1,074,218
Deferred income taxes	118,208		95,765
Other Noncurrent Liabilities	111,474		90,722
Stockholders’ Equity	3,616,531		3,641,108
Total liabilities and stockholders’ equity	5,024,128		5,445,997
Liabilities of discontinued operations			110,890
Equity Method Investments	336		336
Distribution Expenses	120,430	104,154
Non-Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Cost of Goods and Services Sold	590,019	398,127
Facility And Warehouse Expenses	61,977	42,395
Current assets:
Cash and cash equivalents	217,829	171,314	159,010	$ 56,349
Receivables, net	655,421		612,361
Intercompany receivables, net	7,026		8,837
Inventories	808,275		785,474
Prepaid expenses and other current assets	53,524		42,963
Total current assets	1,742,075		1,707,497
Property and equipment, net	277,785		283,632
Intangible assets:
Goodwill	1,225,347		1,203,495
Other intangibles, net	423,546		430,542
Investment in Subsidiaries	0		0
Intercompany Notes Receivable	0		0
Other assets	23,388		22,347
Total assets	3,877,067		3,830,644
Assets of discontinued operations			98,852
Current liabilities:
Accounts payable	376,085		388,390
Intercompany payables, net	2,953		2,805
Accrued expenses:
Accrued payroll-related liabilities	56,942		54,164
Other accrued expenses	134,242		109,312
Other current liabilities	19,962		15,204
Current portion of long-term obligations	55,291		27,302
Total current liabilities	645,475		631,391
Long-term obligations, excluding current portion	929,272		895,728
Intercompany Notes Payable	468,541		486,599
Deferred income taxes	106,875		109,580
Other Noncurrent Liabilities	38,831		39,125
Stockholders’ Equity	1,688,073		1,668,221
Total liabilities and stockholders’ equity	3,877,067		3,830,644
Liabilities of discontinued operations			34,214
Equity Method Investments	184,926		$ 183,131
Distribution Expenses	$ 65,380	$ 48,189

XML

Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$ 172,293	$ 134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(44,398)	(50,393)
Investment and intercompany note activity with subsidiaries	0	0
Proceeds from disposal of business/investment	316,100	10,304
Acquisitions, net of cash acquired	(77,056)	(603,735)
Proceeds from Divestiture of Businesses, Net of Cash Divested	301,297
Proceeds from foreign exchange contracts		18,342
Other investing activities, net	1,314	458
Net cash provided by (used in) investing activities	181,157	(625,024)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464	3,202
Taxes paid related to net share settlements of stock-based compensation awards	(3,644)	(2,281)
Debt issuance costs		(5,907)
Borrowings under revolving credit facilities	45,239	1,143,217
Repayments under revolving credit facilities	(389,313)	(345,609)
Borrowings under term loans		338,478
Repayments under term loans	(9,295)
Repayments under receivables securitization facility		97,000
Repayments under receivables securitization facility	(150)	(63,000)
Repayments of other long-term debt, net	(23,313)	(12,850)
Proceeds from (Payments for) Other Financing Activities	5,000
Payments of other obligations		(1,437)
Repayment of Rhiag Debt and Related payments		(543,347)
Investment and intercompany note activity with parent	0	0
Cash and Cash Equivalents, Period Increase (Decrease)	30,098	141,823
Dividends	0	0
Net cash (used in) provided by financing activities	(326,386)	633,166
Effect of Exchange Rate on Cash and Cash Equivalents	3,034	(1,163)
Cash and cash equivalents, end of period	264,614	229,220	$ 227,400
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents			7,116
Consolidation, Eliminations
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	(94,638)	(26,229)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	0	0
Investment and intercompany note activity with subsidiaries	(249,828)	646,019
Acquisitions, net of cash acquired	0	0
Proceeds from Divestiture of Businesses, Net of Cash Divested	0
Other investing activities, net	0	0
Net cash provided by (used in) investing activities	(249,828)	646,019
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	0	0
Taxes paid related to net share settlements of stock-based compensation awards	0	0
Debt issuance costs		0
Borrowings under revolving credit facilities	0	0
Repayments under revolving credit facilities	0	0
Borrowings under term loans		0
Repayments under term loans	0
Repayments under receivables securitization facility		0
Repayments under receivables securitization facility	0	0
Repayments of other long-term debt, net	0	0
Proceeds from (Payments for) Other Financing Activities	0
Payments of other obligations		0
Repayment of Rhiag Debt and Related payments		0
Investment and intercompany note activity with parent	249,828	(646,019)
Cash and Cash Equivalents, Period Increase (Decrease)	0	0
Dividends	94,638	26,229
Net cash (used in) provided by financing activities	344,466	(619,790)
Effect of Exchange Rate on Cash and Cash Equivalents	0	0
Cash and cash equivalents, end of period	0	0	0
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents			0
Parent Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	118,537	69,729
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	0	0
Investment and intercompany note activity with subsidiaries	249,828	(646,019)
Acquisitions, net of cash acquired	0	0
Proceeds from Divestiture of Businesses, Net of Cash Divested	0
Proceeds from foreign exchange contracts		18,342
Other investing activities, net	0	0
Net cash provided by (used in) investing activities	249,828	(627,677)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464	3,202
Taxes paid related to net share settlements of stock-based compensation awards	(3,644)	(2,281)
Debt issuance costs		(5,907)
Borrowings under revolving credit facilities	10,000	544,000
Repayments under revolving credit facilities	(376,966)	(44,000)
Borrowings under term loans		89,317
Repayments under term loans	(9,295)
Repayments under receivables securitization facility		0
Repayments under receivables securitization facility	0	0
Repayments of other long-term debt, net	1,698	0
Proceeds from (Payments for) Other Financing Activities	0
Payments of other obligations		0
Repayment of Rhiag Debt and Related payments		0
Investment and intercompany note activity with parent	0	0
Cash and Cash Equivalents, Period Increase (Decrease)	(10,774)	26,383
Dividends	0	0
Net cash (used in) provided by financing activities	(379,139)	584,331
Effect of Exchange Rate on Cash and Cash Equivalents	0	0
Cash and cash equivalents, end of period	22,256	43,999	33,030
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents			0
Guarantor Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	112,605	77,907
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(18,226)	(29,710)
Investment and intercompany note activity with subsidiaries	0	0
Acquisitions, net of cash acquired	(74,937)	0
Proceeds from Divestiture of Businesses, Net of Cash Divested	305,740
Other investing activities, net	1,008	188
Net cash provided by (used in) investing activities	213,585	(29,522)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	0	0
Taxes paid related to net share settlements of stock-based compensation awards	0	0
Debt issuance costs		0
Borrowings under revolving credit facilities	0	0
Repayments under revolving credit facilities	0	0
Borrowings under term loans		0
Repayments under term loans	0
Repayments under receivables securitization facility		0
Repayments under receivables securitization facility	0	0
Repayments of other long-term debt, net	1,099	946
Proceeds from (Payments for) Other Financing Activities	5,000
Payments of other obligations		(1,437)
Repayment of Rhiag Debt and Related payments		0
Investment and intercompany note activity with parent	(246,463)	(20,106)
Cash and Cash Equivalents, Period Increase (Decrease)	(10,980)	475
Dividends	(94,638)	(25,069)
Net cash (used in) provided by financing activities	(337,200)	(47,558)
Effect of Exchange Rate on Cash and Cash Equivalents	30	(352)
Cash and cash equivalents, end of period	24,529	13,907	35,360
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents			149
Non-Guarantor Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	35,789	13,437
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(26,172)	(20,683)
Investment and intercompany note activity with subsidiaries	0	0
Proceeds from disposal of business/investment		10,304
Acquisitions, net of cash acquired	(2,119)	(603,735)
Proceeds from Divestiture of Businesses, Net of Cash Divested	(4,443)
Other investing activities, net	306	270
Net cash provided by (used in) investing activities	(32,428)	(613,844)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	0	0
Taxes paid related to net share settlements of stock-based compensation awards	0	0
Debt issuance costs		0
Borrowings under revolving credit facilities	35,239	599,217
Repayments under revolving credit facilities	(12,347)	(301,609)
Borrowings under term loans		249,161
Repayments under term loans	0
Repayments under receivables securitization facility		97,000
Repayments under receivables securitization facility	(150)	(63,000)
Repayments of other long-term debt, net	(26,110)	(13,796)
Proceeds from (Payments for) Other Financing Activities	0
Payments of other obligations		0
Repayment of Rhiag Debt and Related payments		(543,347)
Investment and intercompany note activity with parent	(3,365)	666,125
Cash and Cash Equivalents, Period Increase (Decrease)	51,852	114,965
Dividends	0	(1,160)
Net cash (used in) provided by financing activities	45,487	716,183
Effect of Exchange Rate on Cash and Cash Equivalents	3,004	(811)
Cash and cash equivalents, end of period	217,829	171,314	159,010
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents			6,967
Continuing and Discontinued Operations [Member]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	172,293	134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(44,398)	(50,393)
Proceeds from disposal of business/investment	301,297	10,304
Acquisitions, net of cash acquired	(77,056)	(603,735)
Proceeds from foreign exchange contracts		18,342
Other investing activities, net	1,314	458
Net cash provided by (used in) investing activities	181,157	(625,024)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	2,464	3,202
Taxes paid related to net share settlements of stock-based compensation awards	(3,644)	(2,281)
Debt issuance costs	0	(5,907)
Borrowings under revolving credit facilities	45,239	1,143,217
Repayments under revolving credit facilities	(389,313)	(345,609)
Borrowings under term loans	0	338,478
Repayments under term loans	(9,295)	0
Repayments under receivables securitization facility		97,000
Repayments under receivables securitization facility	(150)	(63,000)
Proceeds from (Payments for) Other Financing Activities	5,000	0
Payments of other obligations		(1,437)
Repayment of Rhiag Debt and Related payments	0	(543,347)
Cash and Cash Equivalents, Period Increase (Decrease)	30,098	141,823
Net cash (used in) provided by financing activities	(326,386)	633,166
Effect of Exchange Rate on Cash and Cash Equivalents	$ 3,034	$ (1,163)
Cash and cash equivalents, end of period			234,516
Continuing and Discontinued Operations [Member] | Consolidation, Eliminations
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash and cash equivalents, end of period			0
Continuing and Discontinued Operations [Member] | Parent Company
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash and cash equivalents, end of period			33,030
Continuing and Discontinued Operations [Member] | Guarantor Subsidiaries
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash and cash equivalents, end of period			35,509
Continuing and Discontinued Operations [Member] | Non-Guarantor Subsidiaries
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash and cash equivalents, end of period			$ 165,977