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Discontinued Operations (Notes)
 9 Months Ended
Sep. 30, 2017
Discontinued Operations [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]
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 million, including cash received of $316 million, net of cash disposed of $15 million. In addition, we recorded a purchase price receivable of $4 million subject to post sale adjustments. Related to 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 and nine months ended September 30, 2017 and 2016, as presented in “Income (loss) from discontinued operations, net of tax” on the Unaudited Condensed Consolidated Statements of Income (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 30, (1)
 
September 30,
 
2016
 
2017
 
2016
Revenue
$
179,487

 
$
111,130

 
$
325,374

Cost of goods sold
151,519

 
100,084

 
281,275

Operating expenses
8,371

 
8,369

 
13,763

    Operating income
19,597

 
2,677

 
30,336

Interest and other (expense) income, net (2)
(29
)
 
1,204

 
(3,562
)
    Income from discontinued operations before provision for income taxes
19,568

 
3,881

 
26,774

Provision for income taxes (3)
6,962

 
3,598

 
9,526

Equity in earnings (loss) of unconsolidated subsidiaries
238

 
(534
)
 
571

    Income (loss) from discontinued operations, net of tax
12,844

 
(251
)
 
17,819

Loss on sale of discontinued operations, net of tax (4)
—

 
(4,280
)
 
—

     Net income (loss) from discontinued operations, net of tax
$
12,844

 
$
(4,531
)
 
$
17,819

(1)
There were no discontinued operations for the three months ended September 30, 2017 as the glass manufacturing business was sold on March 1, 2017.
(2)
The Company elected to allocate interest expense to discontinued operations based on the expected debt to be repaid. Under this approach, allocated interest from January 1, 2017 through the date of sale was $2 million and from April 21, 2016 to September 30, 2016 was $4 million. The allocated interest from July 1, 2016 to September 30, 2016 was $2 million. The other expenses, net were foreign currency gains and losses.
(3)
The provision for income taxes for 2017 includes a return to provision adjustment related to international operations of the glass manufacturing business.
(4)
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 $9 million, and a $4 million tax benefit. The incremental loss primarily reflects a $6 million payable for intercompany sales from the glass manufacturing business to the aftermarket automotive glass distribution business incurred prior to closing which was paid by LKQ during the second quarter of 2017 and capital expenditures in 2017 that were not reimbursed by the buyer. No adjustments to the loss on sale were recorded in the third quarter of 2017.
The glass manufacturing business had $4 million of operating cash outflows, $4 million of investing cash outflows mainly consisting of capital expenditures, and $15 million of financing cash inflows made up of parent financing for the period from January 1, 2017 through March 1, 2017. The glass manufacturing business had $26 million of operating cash inflows, $18 million of investing cash outflows mainly consisting of capital expenditures, and $1 million of financing cash inflows made up of parent financing for the period from April 21, 2016 through September 30, 2016.
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 $8 million. Purchases under the Purchase and Supply Agreement through September 30, 2017 were $27 million.