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Financial Statement Information | 3 Months Ended
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Mar. 31, 2014
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, 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 $29.9 million and $26.6 million at March 31, 2014 and December 31, 2013, 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, cores and other metals when title has transferred, which typically occurs upon delivery to the customer. Allowance for Doubtful Accounts We recorded a reserve for uncollectible accounts of approximately $17.7 million and $14.4 million at March 31, 2014 and December 31, 2013, respectively. Inventory Inventory consists of the following (in thousands):
| March 31, |  | December 31,
| 2014 |  | 2013
Aftermarket and refurbished products | $ | 880,371 |  |  | $ | 706,600 |
Salvage and remanufactured products | 375,433 |  |  | 370,352 |
| $ | 1,255,804 |  |  | $ | 1,076,952 |
Our acquisitions completed during the first quarter of 2014 and adjustments to preliminary valuations of inventory for certain of our 2013 acquisitions contributed $151.7 million of the increase in our aftermarket and refurbished products inventory and $9.4 million of the increase in our salvage and remanufactured products inventory during the three months ended March 31, 2014. See Note 8, "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 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 ended March 31, 2014 are as follows (in thousands):
| North America |  | Europe |  | Specialty |  | Total
Balance as of January 1, 2014 | $ | 1,358,937 |  |  | $ | 578,507 |  |  | $ | — |  |  | $ | 1,937,444 |
Business acquisitions and adjustments to previously recorded goodwill | 25,272 |  |  | (601 | ) |  | 236,645 |  |  | 261,316 |
Exchange rate effects | (4,494 | ) |  | 2,987 |  |  | 2 |  |  | (1,505 | )
Balance as of March 31, 2014 | $ | 1,379,715 |  |  | $ | 580,893 |  |  | $ | 236,647 |  |  | $ | 2,197,255 |
The components of other intangibles are as follows (in thousands):
| March 31, 2014 |  | December 31, 2013
| Gross Carrying Amount |  | Accumulated Amortization |  | Net |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net
Trade names and trademarks | $ | 165,716 |  |  | $ | (29,885 | ) |  | $ | 135,831 |  |  | $ | 143,577 |  |  | $ | (27,950 | ) |  | $ | 115,627 |
Customer relationships | 63,824 |  |  | (14,137 | ) |  | 49,687 |  |  | 29,583 |  |  | (10,770 | ) |  | 18,813 |
Software and other technology related assets | 47,200 |  |  | (4,860 | ) |  | 42,340 |  |  | 20,384 |  |  | (2,718 | ) |  | 17,666 |
Covenants not to compete | 4,042 |  |  | (2,548 | ) |  | 1,494 |  |  | 3,979 |  |  | (2,346 | ) |  | 1,633 |
| $ | 280,782 |  |  | $ | (51,430 | ) |  | $ | 229,352 |  |  | $ | 197,523 |  |  | $ | (43,784 | ) |  | $ | 153,739 |
During the three months ended March 31, 2014, we recorded preliminary intangible asset valuations resulting from our 2014 acquisitions and adjustments to certain preliminary intangible asset valuations from our 2013 acquisitions, which included $21.8 million of trade names, $34.2 million of customer relationships, $26.8 million of software and other technology related assets and $0.1 million of covenants not to compete. The trade names, customer relationships, and software and technology related assets recorded in the three months ended March 31, 2014 included $20.9 million, $23.1 million and $26.8 million, respectively related to our acquisition of Keystone Specialty, as discussed in Note 8, "Business Combinations." Trade names and trademarks are amortized over a useful life ranging from 10 to 30 years on a straight-line basis. Customer relationships are amortized over the expected period to be benefited (5 to 15 years) on either a straight-line or accelerated basis. Software and other technology related assets are amortized on a straight-line basis over the expected period to be benefited (five to six years). Covenants not to compete are amortized over the lives of the respective agreements, which range from one to five years, on a straight-line basis. Amortization expense for intangibles was $7.4 million and $2.3 million during the three month periods ended March 31, 2014 and 2013, respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2018 is $30.2 million, $27.3 million, $24.4 million, $22.4 million and $17.9 million, respectively. Warranty Reserve Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products 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 claim information to project future warranty claims activity. The changes in the warranty reserve during the three month period ended March 31, 2014 were as follows (in thousands):
Balance as of January 1, 2014 | $ | 12,447 |
Warranty expense | 7,691 |
Warranty claims | (6,601 | )
Balance as of March 31, 2014 | $ | 13,537 |
Investments in Unconsolidated Subsidiaries As of March 31, 2014, the carrying value of our investments in unconsolidated subsidiaries was $10.7 million; of this amount, $9.0 million relates to our investment in ACM Parts Pty Ltd ("ACM Parts"). In August 2013, we entered into an agreement with Suncorp Group, a leading general insurance group in Australia and New Zealand, to develop ACM Parts, an alternative vehicle replacement parts business in those countries. We hold a 49% equity interest in the entity and will contribute our experience to help establish automotive parts recycling operations and to facilitate the procurement of aftermarket parts; Suncorp Group holds a 51% equity interest and will supply salvage vehicles to the venture as well as assist in establishing relationships with repair shops as customers. We are accounting for our interest in this subsidiary using the equity method of accounting, as our investment gives us the ability to exercise significant influence, but not control, over the investee. The total of our investment in ACM Parts is included within Other Assets on our Unaudited Condensed Consolidated Balance Sheets. Our equity in the net earnings of the investee for the three months ended March 31, 2014 was not material. Depreciation Expense 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 and our distribution centers.

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