v2.4.0.8
Segment and Geographic Information
 9 Months Ended 12 Months Ended
Sep. 30, 2013
Dec. 31, 2012
Segment Reporting [Abstract]    
Segment and Geographic Information
Segment and Geographic Information
We have three operating segments: Wholesale – North America; Wholesale – Europe; and Self Service. Our operations in North America, which include our Wholesale – North America and Self Service operating segments, are aggregated into one reportable segment because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our Wholesale – Europe operating segment, which includes Sator, is presented as a separate reportable segment. Therefore, we present our reportable segments on a geographic basis.
The following table presents our financial performance, including revenue, earnings before interest, taxes, depreciation and amortization ("EBITDA"), and depreciation and amortization by reportable segment for the periods indicated (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Revenue
 
 
 
 
 
 
 
North America
$
928,307

 
$
835,324

 
$
2,865,613

 
$
2,547,743

Europe
369,787

 
181,383

 
880,226

 
507,272

Total revenue
$
1,298,094

 
$
1,016,707

 
$
3,745,839

 
$
3,055,015

EBITDA
 
 
 
 
 
 
 
North America
$
108,314

 
$
89,265

 
$
362,281

 
$
331,140

Europe
38,088

 
20,079

 
95,920

 
55,669

Total EBITDA
$
146,402

 
$
109,344

 
$
458,201

 
$
386,809

Depreciation and Amortization
 
 
 
 
 
 
 
North America
$
16,417

 
$
14,830

 
$
48,555

 
$
43,603

Europe
5,740

 
3,298

 
13,313

 
7,971

Total depreciation and amortization
$
22,157

 
$
18,128

 
$
61,868

 
$
51,574


EBITDA for our North American segment included gains of $0.5 million and $17.2 million during the three and nine months ended September 30, 2012 resulting from lawsuit settlements with certain of our aftermarket product suppliers as discussed in Note 7, "Commitments and Contingencies." Included within EBITDA of our European segment are losses of $0.8 million and $2.1 million during the three months ended September 30, 2013 and 2012, respectively, from the change in fair value of contingent consideration liabilities, primarily related to our 2011 ECP acquisition. During the nine month periods ended September 30, 2013 and 2012, our European segment recognized losses of $2.7 million and $1.9 million, respectively, related to the remeasurement of these contingent consideration liabilities. See Note 6, "Fair Value Measurements" for further information on our contingent consideration liabilities. For the three and nine months ended September 30, 2013, EBITDA for our European segment also included restructuring and acquisition related expenses of $1.6 million and $5.3 million, respectively, primarily related to our acquisitions of Sator and five automotive paint distribution businesses in the U.K.
The table below provides a reconciliation from EBITDA to Net Income (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
EBITDA
$
146,402

 
$
109,344

 
$
458,201

 
$
386,809

Depreciation and amortization
22,157

 
18,128

 
61,868

 
51,574

Interest expense, net
15,200

 
7,964

 
36,287

 
22,687

Loss on debt extinguishment
—

 
—

 
2,795

 
—

Provision for income taxes
35,600

 
29,204

 
123,492

 
113,511

Net income
$
73,445

 
$
54,048

 
$
233,759

 
$
199,037


The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment’s percentage of consolidated revenue. Segment EBITDA excludes depreciation, amortization, interest and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.
The following table presents capital expenditures, which includes additions to property and equipment, by reportable segment (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Capital Expenditures
 
 
 
 
 
 
 
North America
$
14,960

 
$
15,015

 
$
48,662

 
$
49,521

Europe
6,015

 
4,006

 
12,464

 
11,115

 
$
20,975

 
$
19,021

 
$
61,126

 
$
60,636


The following table presents assets by reportable segment (in thousands):
 
September 30,
2013
 
December 31,
2012
Receivables, net
 
 
 
North America
$
260,413

 
$
241,627

Europe
178,387

 
70,181

Total receivables, net
438,800

 
311,808

Inventory
 
 
 
North America
725,213

 
750,565

Europe
292,956

 
150,238

Total inventory
1,018,169

 
900,803

Property and Equipment, net
 
 
 
North America
441,940

 
434,010

Europe
89,957

 
60,369

Total property and equipment, net
531,897

 
494,379

Other unallocated assets
2,372,193

 
2,016,466

Total assets
$
4,361,059

 
$
3,723,456


We report net trade receivables, inventories, and net property and equipment by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash, prepaid and other current and noncurrent assets, goodwill, intangibles and income taxes.
Our operations are primarily conducted in the U.S. Our European operations are located in the U.K., the Netherlands, Belgium and France. 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 other alternative parts operations in Guatemala and Costa Rica. Our revenue is 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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Revenue
 
 
 
 
 
 
 
United States
$
868,052

 
$
784,270

 
$
2,672,545

 
$
2,394,581

United Kingdom
266,384

 
181,383

 
708,089

 
507,272

Other countries
163,658

 
51,054

 
365,205

 
153,162

 
$
1,298,094

 
$
1,016,707

 
$
3,745,839

 
$
3,055,015


The following table sets forth our tangible long-lived assets by geographic area (in thousands):
 
September 30,
2013
 
December 31,
2012
Long-lived Assets
 
 
 
United States
$
411,957

 
$
408,244

United Kingdom
69,309

 
60,369

Other countries
50,631

 
25,766

 
$
531,897

 
$
494,379


The following table sets forth our revenue by product category (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Aftermarket, other new and refurbished products
$
793,925

 
$
562,750

 
$
2,199,009

 
$
1,676,006

Recycled, remanufactured and related products and services
349,411

 
317,877

 
1,060,681

 
967,250

Other
154,758

 
136,080

 
486,149

 
411,759

 
$
1,298,094

 
$
1,016,707

 
$
3,745,839

 
$
3,055,015


Our North American reportable segment generates revenue from all of our product categories, while our European segment generates 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.
Segment and Geographic Information
We have three operating segments: Wholesale – North America; Wholesale – Europe; and Self Service. Our operations in North America, which include our Wholesale – North America and Self Service operating segments, are aggregated into one reportable segment because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our Wholesale – Europe operating segment, formed with our acquisition of ECP effective October 1, 2011, marks our entry into the European automotive aftermarket business, and is presented as a separate reportable segment. Although the Wholesale – Europe operating segment shares many of the characteristics of our North American operations, including types of products offered, distribution methods, and procurement, we have provided separate financial information as we believe this data would be beneficial to users in understanding our results. Therefore, we present our reportable segments on a geographic basis.
The following table presents our financial performance, including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and depreciation and amortization by reportable segment for the periods indicated (in thousands):
 
Year Ended December 31,
 
2012
 
2011
 
2010
Revenue
 
 
 
 
 
North America
$
3,426,858

 
$
3,131,376

 
$
2,469,881

Europe
696,072

 
138,486

 
—

Total revenue
$
4,122,930

 
$
3,269,862

 
$
2,469,881

EBITDA
 
 
 
 
 
North America
$
440,448

 
$
405,924

 
$
339,869

Europe
70,099

 
12,144

 
—

Total EBITDA
$
510,547

 
$
418,068

 
$
339,869

Depreciation and Amortization
 
 
 
 
 
North America
$
59,132

 
$
52,481

 
$
41,428

Europe
11,033

 
2,024

 
—

Total depreciation and amortization
$
70,165

 
$
54,505

 
$
41,428


EBITDA during 2012 for our North American segment is inclusive of gains of $17.9 million resulting from lawsuit settlements with certain of our aftermarket product suppliers as discussed in Note 8, "Commitments and Contingencies." EBITDA for our North America segment also includes net gains of $2.0 million in each of the years ended December 31, 2012 and 2011 from the change in fair value of contingent consideration liabilities related to certain of our acquisitions. Included within EBITDA of our European segment are losses of $3.6 million and $0.6 million for the years ended December 31, 2012 and 2011, respectively, for the change in fair value of contingent consideration liabilities related to our ECP acquisition. See Note 7, "Fair Value Measurements," for further information on these changes in fair value of the contingent consideration obligations recorded in earnings during the periods.
The table below provides a reconciliation from EBITDA to Income from Continuing Operations (in thousands):
 
Year Ended December 31,
 
2012
 
2011
 
2010
EBITDA
$
510,547

 
$
418,068

 
$
339,869

Depreciation and amortization
70,165

 
54,505

 
41,428

Interest expense, net
31,215

 
22,447

 
28,316

Loss on debt extinguishment
—

 
5,345

 
—

Provision for income taxes
147,942

 
125,507

 
103,007

Income from continuing operations
$
261,225

 
$
210,264

 
$
167,118


The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment’s percentage of consolidated revenue. Segment EBITDA excludes depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.
The following table presents capital expenditures, which includes additions to property and equipment, by reportable segment (in thousands):
 
Year Ended December 31,
 
2012
 
2011
 
2010
Capital Expenditures
 
 
 
 
 
North America
$
73,331

 
$
84,856

 
$
61,438

Europe
14,924

 
1,560

 
—

 
$
88,255

 
$
86,416

 
$
61,438


The following table presents assets by reportable segment (in thousands):
 
December 31,
 
2012
 
2011
 
2010
Receivables, net
 
 
 
 
 
North America
$
241,627

 
$
230,871

 
$
191,085

Europe
70,181

 
50,893

 
—

Total receivables, net
311,808

 
281,764

 
191,085

Inventory
 
 
 
 
 
North America
750,565

 
636,145

 
492,688

Europe
150,238

 
100,701

 
—

Total inventory
900,803

 
736,846

 
492,688

Property and Equipment, net
 
 
 
 
 
North America
434,010

 
380,282

 
331,312

Europe
60,369

 
43,816

 
—

Total property and equipment, net
494,379

 
424,098

 
331,312

Other unallocated assets
2,016,466

 
1,756,996

 
1,284,424

Total assets
$
3,723,456

 
$
3,199,704

 
$
2,299,509


We report net trade receivables, inventories, and net property and equipment by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash, prepaid and other current and noncurrent assets, goodwill, intangibles and income taxes.
Our operations are primarily conducted in the U.S. Our European operations, which we started with the acquisition of ECP in the fourth quarter of 2011, are located in the U.K. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, an aftermarket parts distribution facility in Taiwan, and other alternative parts operations in Guatemala and Costa Rica.
The following table sets forth our revenue by geographic area (in thousands):
 
Year Ended December 31,
 
2012
 
2011
 
2010
Revenue
 
 
 
 
 
United States
$
3,209,024

 
$
2,952,620

 
$
2,366,224

United Kingdom
696,072

 
138,486

 
—

Other countries
217,834

 
178,756

 
103,657

 
$
4,122,930

 
$
3,269,862

 
$
2,469,881


The following table sets forth our tangible long-lived assets by geographic area (in thousands):
 
December 31,
 
2012
 
2011
Long-lived Assets
 
 
 
United States
$
408,244

 
$
360,961

United Kingdom
60,369

 
43,816

Other countries
25,766

 
19,321

 
$
494,379

 
$
424,098


The following table sets forth our revenue by product category (in thousands):
 
Year Ended December 31,
 
2012
 
2011
 
2010
Aftermarket, other new and refurbished products
$
2,286,853

 
$
1,634,003

 
$
1,236,806

Recycled, remanufactured and related products and services
1,277,023

 
1,115,088

 
888,320

Other
559,054

 
520,771

 
344,755

 
$
4,122,930

 
$
3,269,862

 
$
2,469,881


All of the product categories include revenue from our North American reportable segment, while our European segment, which is composed of ECP, an automotive aftermarket products distributor, currently generates revenue only from the sale of aftermarket products. Revenue from other sources includes scrap sales, bulk sales to mechanical remanufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations. With our acquisition of a precious metals refining and reclamation business in the second quarter of 2012, revenue from other sources also includes the sales of precious metals harvested from various components, including certain of our salvage vehicle parts.