LKQ Annual Report 2012 | Quarterlytics

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FY2012 Annual Report · LKQ

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________

FORM 10-K

________________________________________

(Mark One)

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

For the fiscal year ended December 31, 2012

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

Commission File Number: 000-50404
________________________________________

LKQ CORPORATION

(Exact name of registrant as specified in its charter)
________________________________________

Delaware
(State or other jurisdiction of
incorporation or organization)
500 West Madison Street,
Suite 2800, Chicago, IL
(Address of principal executive offices)

36-4215970
(I.R.S. Employer
Identification Number)

60661
(Zip Code)

Registrant’s telephone number, including area code: (312) 621-1950
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, par value $.01 per share

Name of each exchange on which registered
NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None
________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.

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

Large accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

Accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

As of June 30, 2012, the aggregate market value of common stock outstanding held by stockholders who were not affiliates (as

defined by regulations of the Securities and Exchange Commission) of the registrant was approximately $4.9 billion (based on the
closing sale price on the NASDAQ Global Select Market on such date). The number of outstanding shares of the registrant's common
stock as of February 22, 2013 was 298,370,916.

Those sections or portions of the registrant's proxy statement for the Annual Meeting of Stockholders to be held on May 6,

2013, described in Part III hereof, are incorporated by reference in this report.

Documents Incorporated by Reference

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

PART I

This Annual Report on Form 10-K includes forward-looking statements. 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. We have based these forward-looking statements on our current expectations and
projections about future events. However, these forward-looking statements are subject to risks, uncertainties, assumptions and
other factors that may cause our actual results, performance or achievements to be materially different. These factors include,
among other things:

•

•
•

•

uncertainty as to changes in North American and European general economic activity and the impact of these changes
on the demand for our products and our ability to obtain financing for operations;

fluctuations in the pricing of new original equipment manufacturer (“OEM”) replacement products;

the availability and cost of our inventory;

variations in the number of vehicles sold, vehicle accident rates, miles driven, and the age profile of vehicles in
accidents;

changes in state or federal laws or regulations affecting our business;

changes in the types of replacement parts that insurance carriers will accept in the repair process;

inaccuracies in the data relating to industry size published by independent sources upon which we rely;
changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and auto
repairers;

changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of
weather patterns;

increasing competition in the automotive parts industry;

uncertainty as to the impact on our industry of any terrorist attacks or responses to terrorist attacks;

our ability to operate within the limitations imposed by financing arrangements;

our ability to obtain financing on acceptable terms to finance our growth;

declines in the values of our assets;

fluctuations in fuel and other commodity prices;

fluctuations in the prices of scrap metal and other metals;

our ability to develop and implement the operational and financial systems needed to manage our operations;

our ability to identify sufficient acquisition candidates at reasonable prices to maintain our growth objectives;

our ability to integrate and successfully operate acquired companies and any companies acquired in the future and the
risks associated with these companies;

claims by OEMs or others that attempt to restrict or eliminate the sale of alternative automotive products;

termination of business relationships with insurance companies that promote the use of our products;

product liability claims by the end users of our products or claims by other parties who we have promised to
indemnify for product liability matters;

currency fluctuations in the U.S. dollar versus other currencies and currency fluctuations in the pound sterling versus
other currencies;

periodic adjustments to estimated contingent purchase price amounts;

instability in regions in which we operate, such as Mexico, that can affect our supply of certain products; and

interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks
on, or malfunctions of, our systems.

Other matters set forth in this Annual Report may also cause our actual future results to differ materially from these
forward-looking statements. We cannot assure you that our expectations will prove to be correct. In addition, all subsequent
written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements mentioned above. You should not place undue reliance on these forward-looking
statements. All of these forward-looking statements are based on our expectations as of the date of this Annual Report. We
undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and

amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are
available free of charge through our website (www.lkqcorp.com) as soon as reasonably practicable after we electronically file
the material with, or furnish it to, the Securities and Exchange Commission.

NOTE REGARDING STOCK SPLIT

In 2012, our Board of Directors approved a two-for-one split of our common stock. The stock split was completed in

the form of a stock dividend that was issued on September 18, 2012 to stockholders of record at the close of business on August
28, 2012. The stock began trading on a split adjusted basis on September 19, 2012. The Company’s historical share and per
share information within this Annual Report on Form 10-K has been retroactively adjusted to give effect to this stock split.

ITEM 1.

BUSINESS

OVERVIEW

LKQ Corporation ("LKQ" or the "Company") provides replacement parts, components and systems needed to repair

cars and trucks. Buyers of vehicle replacement products have the option to purchase from primarily five sources: new products
produced by original equipment manufacturers ("OEMs"), which are commonly known as OEM products; new products
produced by companies other than the OEMs, which are sometimes referred to as aftermarket products; recycled products
originally produced by OEMs; 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 replacement products such as wheels,
bumper covers and lights, and remanufactured engines. Collectively, we refer to our 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. Our wholesale operations also reach most major markets in Canada, and we are a leading provider of alternative
vehicle mechanical replacement products in the United Kingdom. In addition to our wholesale operations, we operate self
service retail facilities across the U.S. that sell recycled automotive products. We have organized our businesses into three
operating segments: Wholesale—North America; Wholesale—Europe; and Self Service. We aggregate our North American
operating segments (Wholesale—North America and Self Service) into one reportable segment, resulting in two reportable
segments: North America and Europe. See Note 15, "Segment and Geographic Information" to the consolidated financial
statements in Part II, Item 8 of this Annual Report on Form 10-K for financial information by reportable segment and by
geographic region.

We obtain the majority of our aftermarket inventory from automotive parts manufacturers and distributors based in the

U.S., Taiwan, Europe and China. We procure recycled automotive products mainly by purchasing salvage vehicles, typically
severely damaged by collisions and primarily sold at salvage auctions or pools, and then dismantling and inventorying the
parts. The refurbished and remanufactured products that we sell, such as wheels, bumper covers, lights and engines, originate
from the salvage vehicles bought at auctions and from parts received in trade from customers purchasing replacement products
from us.

The majority of our products and services are sold to collision repair shops, also known as body shops, and
mechanical repair shops. We indirectly rely on insurance companies, which ultimately pay for the majority of collision repairs
of insured vehicles, to help drive demand. Insurance companies tend to exert significant influence in the vehicle repair decision.
Because of their importance to the process, we have formed relationships with certain insurance companies in North America
for which we are designated a preferred products supplier. We are attempting to establish similar relationships with insurance
companies in Europe.

We provide customers with a value proposition that includes high quality products at lower cost than new OEM

products, extensive product availability due to our expansive distribution network, responsive service and quick delivery. The
breadth of our alternative parts offerings allows us to serve as a "one-stop" solution for our customers looking for the most cost
effective way to provide quality repairs.

We strive to be environmentally responsible. Our recycled automotive products provide an alternative to the

manufacture of new products, which would require the expenditure of significantly more resources and energy and would
generate a substantial amount of additional pollution. In addition, we save landfill space because the parts that we recycle
would otherwise be discarded. We also collect materials, such as metals, plastics, fuel and motor oil, from the salvage vehicles
that we procure, and use them in our operations or sell them to other users.

HISTORY

Since our formation in 1998, we have grown through internal development and over 150 acquisitions. Today, LKQ is
the only supplier of alternative parts for the automotive collision and mechanical repair industry with a network and presence
serving most major markets in the U.S. and Canada. We are also the largest supplier of automotive aftermarket products,
reaching most major markets, in the U.K.

Initially formed through the combination of a number of wholesale recycled products businesses located in Florida,
Michigan, Ohio and Wisconsin, LKQ grew to be a leading source for recycled automotive collision and mechanical products.
We subsequently expanded through acquisitions of aftermarket, recycled, refurbished and remanufactured product suppliers
and manufacturers, and also expanded into the self service retail business. The most significant increase to our business was
through the acquisition of Keystone Automotive Industries, Inc. in October 2007, which, at the time of acquisition, was the
leading domestic distributor of aftermarket products, including collision replacement products, paint products, refurbished steel
bumpers, bumper covers and alloy wheels.

In October 2011, we expanded our operations into the European automotive aftermarket business through our
acquisition of Euro Car Parts Holdings Limited ("ECP"). As of December 31, 2012, ECP operated out of 130 branches,
supported by a national distribution center and nine regional hubs from which multiple deliveries are made each day. ECP's
product offerings are primarily focused on automotive aftermarket mechanical products, many of which are sourced from the
same suppliers that provide products to the OEMs. The expansion of our geographic presence beyond North America into the
European market offers an opportunity to us as that market has historically had a low penetration of alternative collision parts.

In 2012, we made 30 acquisitions in North America, including 22 wholesale businesses and eight self service retail

operations. These acquisitions enabled us to expand our geographic presence and enter new markets. Additionally, two of our
acquisitions were completed with a goal of improving the recovery from scrap and other metals harvested from the vehicles we
purchase: a precious metals refining and reclamation business, which we acquired with the goal of improving the profitability
of the precious metals we extract from our recycled vehicle parts; and a scrap metal shredder, which we expect will improve the
profitability of the scrap metals recovered from the vehicle hulks in certain of our recycled product operations.

Subsequent to December 31, 2012, we completed the acquisition of an aftermarket product distributor in the U.K. and

a paint distribution business in Canada. We expect to make additional strategic acquisitions in 2013 in domestic and
international markets as we continue to build an integrated distribution network offering a broad range of alternative parts.

STRATEGY

We are focused on creating economic value for our stockholders by enhancing our position as a leading source for

alternative collision and mechanical repair products, and by expanding into other product lines and businesses that may benefit
from our operating strengths. We believe a supply network with a broad inventory of quality alternative collision and
mechanical repair products, high fulfillment rates and superior customer service will provide us with a competitive advantage.
Other than OEMs, the competition in the markets that we serve is extremely fragmented and the supply of products tends to be
localized, often leading to low fulfillment rates, particularly with recycled products. In North America, the distribution channels
for aftermarket and refurbished products have historically been distinct and separate from those for recycled and
remanufactured products despite serving the same customer segment. We provide value to our customers by bringing these two
channels together to provide a broader product offering. To execute our strategy, we are expanding our network of dismantling
plants and warehouses in major metropolitan areas and employing a distribution system that allows for order fulfillment from
regional warehouses located across the U.S. and Canada. By increasing local inventory levels and expanding our network to
provide timely access to a greater range of parts, we have increased fulfillment rates beyond the levels that we believe most of
our competitors realize, particularly for recycled products. We believe opportunities exist beyond our North American
operations to introduce the benefits of an integrated distribution network that supplies alternative parts.

Sources of high quality, reliable alternatives to OEM products are important to insurance companies and to our direct

customers as they seek to control repair costs. Lower parts costs and quicker completion of orders save money and reduce cycle
times. In order to execute this strategy and build on our progress thus far, we will continue to seek to expand into new markets
and to improve penetration both organically and through acquisitions in targeted markets.

National network in place

LKQ has invested significant capital to develop a network of alternative parts facilities across the U.S. and Canada.
The difficulty and time required to obtain proper zoning, as well as dismantling and other environmental permits necessary to
operate newly-sited recycled product facilities, would make establishing a new network of locations a challenge for a
competitor. In addition, there are difficulties associated with recruiting and hiring an experienced management team that has
strong industry knowledge.

We believe there are growth opportunities in new primary and secondary markets in the U.S., Canada and Europe. We

intend to expand our market coverage through a combination of internal development and acquisitions in new regions and
adjacent markets. Our broad network allows us to initially enter new, adjacent markets by establishing local redistribution
facilities, avoiding the need for significant upfront capital outlays to establish local dismantling capabilities and inventories.
We also believe opportunities exist to leverage our national distribution network to expand into complementary product lines as
we have done with our remanufactured engines and paint products.

Strong business relationships

We have developed business relationships with automobile insurance companies, collision and mechanical repair

shops, suppliers and other industry participants. We believe that insurance companies, as payers for many repairs, take active
roles in the selection of alternative replacement products for vehicle repairs in order to minimize the repair portion of the
claims costs and reduce cycle time. On behalf of certain insurance companies, we provide a review of vehicle repair estimates
so they may assess the opportunity to increase usage of alternative products in the repair process, thereby reducing their costs.
Our employees also provide quotes for our products to assist several insurance companies with their estimate and settlement

processes. We also work with insurance companies and vehicle manufacturers to procure salvage vehicles directly from them
on a selected basis, which provides us with an additional source of supply and offers lower transaction costs to sellers of low
value salvage vehicles. We believe we are positioned to take advantage of the increasing importance these industry participants
have in the repair process and will continue to look for ways to enhance our relationships with them.

We provide quality assurance programs that offer additional product support to automobile insurance companies.

These product support programs identify specific subsets of aftermarket products by vendor and product type that can be used
in the repair of vehicles that these companies insure. The programs typically offer aftermarket products that have been
produced by manufacturers certified by a third party testing lab. We may provide additional validation of the quality of the
products beyond our standard warranties, and identification details that make the products traceable back to a manufacturer's
specific production run.

To strengthen our relationship with collision shops, we developed "Keyless," a program that enables collision repair

shops to link their estimating systems with our aftermarket and recycled inventory. It is compatible with all of the major
estimating systems, and in 2012 certain of the estimating systems began using technologies that are fully integrated with our
inventory system. These solutions provide real-time inventory availability and encourage the use of alternative products by
indicating to the collision shop the availability of applicable alternative products at the time of the estimate. It also provides
demand information to our purchasing department and offers sales leads for our sales representatives.

Technology driven business processes

We focus on technology development as a way to support our competitive advantage. We believe that we can more

cost effectively leverage our data to make better business decisions than our smaller competitors. We continue to develop our
technology to better manage and analyze our inventory, assist our salespeople with up-to-date pricing and availability of our
products, and further enhance our inventory procurement process. For example, our bidding specialists responsible for
procuring vehicles are equipped with handheld computing devices that compare the vehicles at the salvage auctions to our
current inventory, historical demand, and recent average prices to arrive at an estimated maximum bid. This bidding system
reduces the likelihood of purchasing unneeded parts that might result in obsolete inventory.

We deploy inventory management systems at our facilities that are similar to those used by leading distribution
companies. We make extensive use of bar code technology and wireless data transmission to track parts from the time a vehicle
or product arrives at a facility to its placement on a truck for delivery to the customer. With this real-time information, the sales
representatives in our North American wholesale operations can quickly and reliably determine the availability of our inventory
to better address our wholesale customers' needs. In the U.K., we use an integrated inventory management system that
provides up-to-the-minute information on available stock by location to ensure availability of high-demand inventory. Based on
daily sales activity, the system directs the needed overnight deliveries to replenish stock levels among the national distribution
center, hubs and branch locations to ensure product availability to meet local customer demand.

Demand driven procurement

We believe efficient procurement of aftermarket products and salvage vehicles is critical to the growth of the operating

results and cash flow of our business. We use information systems and proprietary methodologies to help us identify high
demand aftermarket and recycled products. Our aftermarket inventory systems track products sold and sales lost due to a lack
of inventory, and make purchase recommendations based on this information. The inventory systems also recommend
purchases and transfers based on the extent and location of demand, as well as other replenishment factors. Our buying team
reviews the recommendations and places orders accordingly. When we procure aftermarket products or refurbish collision
replacement products such as wheels, bumper covers and lights, we focus on products that are in the most demand by the
insured repair market. Our most popular aftermarket products are collision replacement products such as hoods and fenders,
bumper covers, head lamps and tail lamps. Because lead times may take 40 days or more on imported products, sales volume
and in-stock inventory are important factors in the procurement process.

Our information systems prioritize and recommend bid prices for the salvage vehicles we evaluate for purchase. Our
processes and systems help to identify with a high degree of accuracy the value of the parts that can be recycled on a salvage
vehicle and recommend a maximum purchase price to achieve our target profitability from the resale of the recycled products.
We also use historical sales records of vehicles by model and year to estimate the demand for our products. Combining this
information with proprietary data that aggregate customer requests for products, we are able to source aftermarket products and
salvage vehicles at prices that we believe will allow us to sell products profitably.

High fulfillment rates

We manage local inventory levels to improve delivery time and maximize customer service. Improving local order

fulfillment rates reduces transfer costs and delivery times, and improves customer satisfaction. Our ability to share inventory on
a regional basis increases the availability of replacement products and also helps us to fill a higher percentage of our customers'

requests. We have developed regional trading zones within which we make our inventory available to our local facilities,
mostly via overnight product transfers. We manage our purchasing and recycled product inventory on a regional basis to
enhance the availability of the products that we believe will be in the highest demand within each region. We believe that our
fulfillment rates are generally higher than the industry average, which distinguishes us from our competition.

Broad product offering

The breadth and depth of our inventory reinforces LKQ's ability to provide a "one-stop" solution for our customers'

alternative vehicle replacement product needs. Customers place a high value on the availability of a broad range of vehicle
replacement products. We are able to provide the collision and mechanical repair industry with premium products at costs
typically 20% to 50% below new OEM replacement products. The availability of alternative products means that automobiles
can be repaired at lower costs and contributes to cars being repaired rather than designated as total losses by insurance
companies. In fact, many insurance companies in North America will not authorize the use of higher cost, new OEM
replacement products if alternative products are available. Our ability to supply these products gives insurance companies the
confidence to designate LKQ as a preferred supplier for their repair shops. With our distribution network that reaches the major
markets in the U.S. and Canada, combined with our extensive range of products, we believe we are the only supplier that is
able to support the insurance industry in this manner. We believe we will be positioned to provide similar services to the
insurance industry in the U.K. as we expand our collision product offerings and continue to build the national distribution
network there.

Our aftermarket and refurbished product lines are particularly broad, with more than 107,000 SKUs sold in North
America in 2012. In order to address the multiple needs of our customers, we offer our Platinum Plus line of high quality
aftermarket products with lifetime warranties and our Value Line of aftermarket products when cost is the main factor for
vehicle repairs. Our U.K. operations also offer a broad range of products, with more than 112,000 individual SKUs sold in
2012.

Certain of our products are certified by independent organizations such as the Certified Automotive Parts Association

("CAPA") and NSF International ("NSF"). CAPA and NSF are associations that evaluate the functional equivalence of
aftermarket collision replacement products to OEM collision replacement products. Members of CAPA and NSF include
insurance companies, product distributors (including LKQ), collision repair shops and consumers. CAPA and NSF develop
engineering specifications for aftermarket collision replacement products based upon examinations of OEM products; certify
the factories, manufacturing processes and quality control procedures used by independent manufacturers; and certify the
materials, fit and finish of specific aftermarket collision replacement products.

In 2011, LKQ became the first automotive parts distributor to become certified under the NSF International

Automotive Parts Distributor Certification Program, which addresses the needs of collision repair shops and insurers by
maintaining quality management systems to address part traceability, service and quality. This certification program
complements the existing parts certification program with NSF under which LKQ has a broad range of certified automotive
collision replacement parts. Many major insurance companies have adopted policies recommending or requiring the use of
products certified by CAPA or NSF. A number of CAPA and NSF certified products are also marketed under the Platinum Plus
brand.

One call away

To execute our strategy of offering a broad inventory with high fulfillment rates, we offer our customers the choice of
aftermarket or recycled products. For many parts, we also offer refurbished or remanufactured product options. If, for example,
a customer has a damaged bumper, we may offer that customer the choice of a recycled bumper, a new aftermarket bumper, or
a refurbished bumper. Because recycled products are in limited supply, our ability to offer additional alternative product options
increases our fulfillment rates and customer satisfaction. Historically, the distribution channels for aftermarket and refurbished
products have been separate from those for recycled and remanufactured products; however, we are combining these channels
through the sharing of warehousing, inventory, sales and distribution systems so that our repair shop customers need only one
source of supply for their alternative repair products.

NORTH AMERICA SEGMENT

Wholesale Automotive Products

Our wholesale automobile product operations in North America are organized by geographic regions serving the U.S.

and Canada that sell all four product types to collision and mechanical automobile repair businesses. Beginning in the fourth
quarter of 2012, we aligned the reporting structure of our heavy-duty truck salvage yards with the geographic reporting
structure of our wholesale operations, under which each of our wholesale regions incorporated the heavy-duty truck locations
into the respective geographic boundaries. As a result, the heavy-duty truck yards that composed a separate operating segment
prior to 2012 are included within the Wholesale - North America operating segment. By aligning the heavy-duty truck yards

with our wholesale facilities that offer alternative parts for automobiles and light and medium-duty trucks, the heavy-duty truck
operations will be able to leverage the distribution network of our wholesale operations and take advantage of cross-selling
opportunities. As of December 31, 2012, our North American wholesale operations conducted business from more than 320
facilities.

As we have combined the distribution channels for our alternative parts offerings, we also leverage our facility and

warehouse costs and improve local product availability by locating multiple product operations together. Our aftermarket
product operations may include a combination of sales, warehousing and distribution, and in many cases will be co-located
with our refurbishing operations. Our recycled product operations, which we may also co-locate with aftermarket warehouses,
typically have processing, sales, distribution and administrative operations on site, indoor and outdoor storage areas, and
include a large warehouse with multiple bays to dismantle vehicles. Our engine remanufacturing operations are conducted
primarily at our facility in Mexico, with sales, warehousing and distribution in the U.S.

Wholesale Aftermarket Products

Our 2012 sales included more than 89,000 SKUs of aftermarket automotive products, excluding refurbished products,
for the most common models of domestic and foreign automobiles and light trucks, primarily for the repair of vehicles three to
seven years old. Our principal aftermarket product types consist of those most frequently damaged in collisions, including
automotive body panels, bumper covers and lights. In recent years, our expansion in complementary product types, such as
paint and cooling products, contributed to the increase in our available products and has allowed us to better meet our
customers' repair needs.

Platinum Plus is our exclusive product line offered in the Keystone brand of aftermarket products. The Platinum Plus

products are held to high quality standards and tested by quality assurance teams. We provide a warranty for as long as a
consumer owns the vehicle on which the product was installed. Many of our Platinum Plus products are used for repairs that
are ultimately paid for by insurance companies and are part of our quality assurance programs.

We have also developed a product line called "Value Line" for more value conscious, often self-pay, consumers. Our

Value Line products offer quality products at reasonable prices, providing additional choices for repairs or rebuilding of
vehicles. The Value Line product line includes most product categories.

We distribute paint and other materials used in repairing damaged vehicles, including sandpaper, abrasives, masking
products and plastic filler. The paint and other materials distributed by us are purchased from numerous suppliers in the U.S.
and Canada. Certain of these products are distributed under the brand "Keystone."

Procurement of Inventory

The aftermarket products we distribute are purchased from independent manufacturers and distributors located

primarily in the U.S. and Taiwan. In 2012, approximately 37% of our aftermarket purchases were made from our top four
vendors, with our largest vendor providing approximately 12% of our inventory. We believe we are one of the largest customers
of each of these suppliers. Outside of this group, no other supplier provided more than 5% of our supply of aftermarket
products. We purchased approximately 42% of our aftermarket products directly from manufacturers in Taiwan and other Asian
countries. Approximately 58% of our aftermarket products were purchased from vendors located in the U.S. and Canada.
However, we believe the majority of these products were manufactured in Taiwan, Mexico or other foreign countries.

We benefit from an automated procurement system for aftermarket goods that makes order and inventory transfer

recommendations using product sales and data for lost sales due to stockouts. Buyers review the system's recommendations and
then place purchase orders or arrange for a redistribution of inventory to areas of higher demand. Typically six months after the
products are introduced, the automated system has sufficient data to make order recommendations. For new products, we use
vehicle volume and registrations by state to influence what new products should be ordered and where the stock should be
located.

We have business arrangements with manufacturers to produce our Platinum Plus products. These agreements

automatically renew for additional 12 month periods unless written notice is given. While we compete with other distributors
for production capacity, we believe that our sources of supply and our relationships with our suppliers are satisfactory.

We usually receive orders within ten days from domestic suppliers. Foreign orders typically are shipped in sea
containers directly to 94 of our aftermarket locations, and are received within 40 to 60 days from the date ordered. Beginning in
2012, we operate an aftermarket parts warehouse in Taiwan that aggregates inventory from certain of our vendors for shipment
to our North American locations. We have 24 regional hubs and three distribution centers, which act as sources for our other
non-container-direct aftermarket warehouse locations and serve as redistribution centers for our operations. This structure is
designed to maximize our fulfillment rates as smaller branches can have a high fill-rate of next day availability.

Wholesale Recycled Products

Our most popular recycled products include engines, transmissions and axle assemblies, door assemblies, sheet metal

products such as trunk lids, fenders and hoods, head and tail lamp assemblies and bumper assemblies. Some insurance
companies mandate that the recycled products must be of the same model year or newer as the vehicle being repaired. As a
result, the majority of the products we sell are from vehicles not more than ten years of age. We have adopted the industry's
grading system based on the condition of the product, and factor product grades into our pricing decisions. Unlike aftermarket
products that are individually boxed, recycled products are most frequently sold as subassemblies or multiple pre-assembled
parts. Installing recycled products often means that collision shops not only save on product cost, but, because several products
may come pre-assembled, the shops are also able to reduce labor costs.

Procurement of Inventory

We procure recycled products for our wholesale operations by acquiring damaged or totaled vehicles. Vehicles that

have been declared "total losses" typically are sold at regional salvage auctions throughout the U.S. and Canada. Salvage
auctions charge fees both to the suppliers of vehicles, primarily insurance companies, and to the purchasers, such as LKQ.
Additionally, we typically pay third parties fees to tow the vehicles from the auction to our facilities.

The availability of the salvage vehicles we procure for our late model recycled product operations may be impacted by

a variety factors, including the production level of new vehicles (which provides the source from which salvage vehicles
ultimately come) and the portion of damaged vehicles declared total losses. Over the past several years, the frequency with
which vehicles are declared total losses has increased as a result¸ we believe, of the rise in repair costs relative to vehicle
replacement cost. In 2000, approximately 9% of accident claims resulted in a total loss; by 2012, this percentage increased to
almost 14%. While the percentage of vehicles declared as total losses has increased, the supply of late model vehicles at
auction has declined due to fewer cars produced in 2008 and 2009. New vehicle sales began to increase again in 2010, and
industry reports project that new car sales will continue to grow over the next several years. These trends should increase the
volume of salvage vehicles at auction.

In 2012, LKQ acquired 254,000 salvage vehicles for our wholesale recycled product operations with 97% purchased at

salvage auctions. Prior to the scheduled auction date, our salvage buyers may preview the auctions online to investigate the
vehicles to be sold and determine our interest in buying them. They obtain key information such as the model and mileage, and
perform visual damage assessments to determine which parts on the targeted vehicles are recyclable. With the data from this
preview, we deploy a bidding system that performs a valuation calculation for each vehicle. In order to recommend a maximum
bid price, the calculation incorporates demand for a vehicle's recyclable parts, current inventory levels, average selling prices,
auction costs, projected margins and instances of out-of-stock. Using this disciplined supply and demand procurement
approach, we place bids on the targeted vehicles. In most cases, we attend auctions in person, although some of our purchasing
is done through an online auction system.

We acquired 3% of the salvage vehicles we purchased for wholesale parts in 2012 directly from insurance companies,
vehicle manufacturers, and other direct sellers. These arrangements eliminate the fees charged to the buyers and sellers by the
salvage auction, often providing inventory with a lower initial expenditure of capital. Direct purchase agreements, while
usually beneficial, have limited applicability to our procurement because vehicle auctions provide us with the flexibility to
focus on sought after vehicles based on our bidding algorithms.

Vehicle Processing

Vehicle processing for our wholesale recycled operations involves dismantling a salvage vehicle into recycled
products that are ready for sale. When a salvage vehicle arrives at one of our facilities, an inventory specialist identifies,
catalogs, and schedules the vehicle for dismantling. Prior to dismantling, we remove from each vehicle its fluids, Freon, and
parts containing hazardous substances or precious metals such as catalytic converters. The extracted fluids are stored in bulk
and subsequently sold to recyclers. In the case of gasoline, the fuel retrieved is primarily used to power our delivery vehicles. A
small portion of the recycled motor oil we collect is used at certain of our plants that have high-efficiency oil burning furnaces;
the balance is sold to motor oil recyclers.

When ready for dismantling, each vehicle will have an inventory report that indicates to the dismantler which parts
should be removed and placed in a warehouse for future sales to customers, which parts should be collected in bulk for our
refurbishing and remanufacturing operations or for sale to parts remanufacturers, and which parts have value but should remain
on the vehicle until sold.

Products that are placed directly on our shelves are typically higher sales volume items such as engines, transmissions,

door assemblies, head and tail lamp assemblies, bumper covers, trunk lids and fenders. Many of the recycled products we sell
are subassemblies of multiple parts including quarter panels and front end assemblies. The subassemblies are cut from the
vehicle bodies, usually using specific parameters provided by the repair shop at the time of sale.

If there is strong demand for products that are currently at high stock levels in our warehouses, we may choose to hold
the vehicle for further dismantling at some future date when we are more likely to have a need for the parts. The holding period
for partially dismantled car bodies will depend on the space available at the site. Once all of the parts of value have been
removed, the remaining vehicle frame is crushed and sold to scrap processors.

Prior to placement on our warehouse shelves, each inventory item is given a unique bar code tag for identification and
entered into our inventory tracking system. We utilize bar coding systems and wireless transmission to keep track of inventory
from the time a product is removed and inventoried, to the time it is sold and put on a truck for delivery.

Refurbished and Remanufactured Products

As of December 31, 2012, we operated 27 plastic bumper and bumper cover refurbishing plants, a chrome bumper

plating plant, 13 wheel refurbishing plants, three light refurbishing plants and four engine remanufacturing facilities.

When identifying the products that we refurbish or remanufacture, we focus on products that have high demand. The
majority of our refurbished and remanufactured products are processed from cores obtained from salvage vehicles purchased
by our recycled operations and damaged cores collected by our route delivery drivers from vehicles under repair by our
customers. These products are accumulated from our wholesale operations at our core sorting facilities, and are then either sent
to our refurbishing or remanufacturing facilities or sold in bulk to other mechanical remanufacturers. Our sales capacity for
these products is limited by the availability of cores to refurbish.

In addition to the products we refurbish or remanufacture in-house, we sell some remanufactured mechanical products,

such as engines and transmissions, acquired from other mechanical remanufacturers. Most of our refurbished and
remanufactured products are sold through our wholesale distribution channels. The balance is sold to retail automotive stores,
wholesale distributors and via internet sales.

Heavy-Duty Truck Products

LKQ started its heavy-duty recycled truck product operations in 2008 with the acquisition of a recycler based in

Houston, Texas. As of December 31, 2012, we had a total of 27 facilities in the U.S. and Canada. We began our recycled truck
operations with a belief that a network offering alternative repair products for heavy-duty trucks would provide similar
opportunities as our wholesale product distribution network for automobiles and light and medium-duty trucks. By including
our heavy-duty truck yards in the geographic regions of our wholesale business beginning in the fourth quarter of 2012, we
expect to leverage the established distribution network of our wholesale operations for the benefit of these heavy-duty truck
operations.

Our inventory is comprised of used heavy- and medium-duty trucks, usually at least five years old, which are
purchased at salvage and truck auctions or directly from insurance companies or large fleet operators. During 2012, we
purchased approximately 8,200 vehicles. Depending on the condition of the vehicles, they may be dismantled for parts or
resold as running vehicles. If certain mechanical parts are damaged, such as transmissions, we may remanufacture them and
offer them to our customers. The vehicles that are acquired for resale are typically special purpose or vocational use trucks such
as those used for garbage pickup or cement delivery. If requested by the sellers of the vehicles, we provide an assurance that the
vehicles will be sold to foreign buyers and exported to countries for use outside of the U.S., or to domestic buyers after the
vehicles have been reconditioned and modified for use other than their original purpose.

Scrap and Other Materials

Our wholesale recycled product operations generate scrap metal and other materials that we sell to recyclers. Vehicles
that have been dismantled for recycled products and "crush only" end of life vehicles acquired from other companies, including
OEMs, are typically crushed using equipment on site. In other cases, we will hire mobile crushing equipment to crush the
vehicles before they are transported to shredders and scrap metal processors. Damaged and unusable wheel cores are melted in
our aluminum furnace and sold to consumers of aluminum ingot and sow for the production of various automotive products,
including wheels. Beginning in 2012 with our acquisition of a precious metals refining and reclamation business, we also
extract and sell the precious metals contained in certain of our salvage parts such as catalytic converters.

Customers

We sell our products to wholesale customers that include collision and mechanical repair shops and new and used car
dealerships, as well as to retail customers. Customers of our heavy-duty truck products may also include owner/operators, local
cartage companies, or exporters. We also generate a portion of our revenue from scrap sales to metal recyclers. No single
customer accounted for 2% or more of our revenue in 2012.

Repair Shops and Others

We sell the majority of our wholesale products to collision and mechanical repair shops. Industry reports estimate
there were approximately 40,000 collision repair shops, including those owned by new car dealerships, in the U.S. in 2011.
The same reports estimate there were approximately 77,000 general (including mechanical) repair garages, excluding new car
dealership service departments, in the U.S. in 2011. The majority of these customers tend to be individually-owned small
businesses, although the number of independent and dealer-operated collision repair facilities has declined 18% since 2006, as
regional or national multiple location operators have increased their geographic presence through acquisitions, primarily in
existing markets. We also sell our products to car rental companies and fleet management groups.

Insurance Companies

Automobile insurance companies wield significant influence on the demand for our products. While insurance

companies do not pay for our products directly, they ultimately pay for the repair costs of insured vehicles in excess of any
deductible amount. As a result, insurance companies often influence the types of products used in a repair.

Our presence in most major markets in the U.S. and Canada gives us a distinctive ability to benefit the major
automobile insurance companies. Insurance companies generally operate at a national or regional level. The use of our products
provides a direct benefit to these companies by lowering the cost of repairs, decreasing the time required to return the repaired
vehicle to the customer, and providing a replacement product that is of high quality and comparable performance to the part
replaced.

We assist insurance companies by providing high quality aftermarket, recycled, refurbished and remanufactured

products to collision repair shops, especially to repair shops that are part of an insurance company's Direct Repair Program
("DRP") network. A repair shop participating in a DRP is referred potential work from the insurance company in exchange for
providing assurances to the insurance company of quality, timeliness and cost. Industry reports indicate that over half of claims
paid for by the top insurance companies in 2012 were paid through a DRP, compared to just over 40% in 2008. To meet the
needs of the DRPs, professional repairers have been required to become fluent in claims handling. Our Keyless system assists
these repairers by indicating the availability of alternative products as replacements for damaged OEM products. This data also
helps insurance companies monitor the body shops' compliance with its DRP product guidelines that might, for instance,
stipulate the use of the lowest cost products that meet quality specifications. In addition, in some markets insurance companies
are able to dispose of low value total loss vehicles directly to us so they can save the transaction fees associated with selling
these vehicles through salvage auctions.

Sales and Marketing

In the case of repairs paid for as a result of insurance claims, which industry publications estimate are approximately

85% of all repairs, insurance companies give collision repair shops directives as to what type of replacement products are
eligible for reimbursement. Typically insurance carriers have established a hierarchy or decision tree prioritizing the types of
products to be used for repairs. As an example, a protocol may require recycled products if available; if recycled products are
not available, then refurbished products; and, if recycled or refurbished products are not available, aftermarket products. If none
of these alternative product types is available, the shop may then use new OEM replacement products. As a body shop looks for
products for a repair, the sourcing of products typically begins with a call to one of our recycled operations or one of our
competitors. Our recycled sales personnel are encouraged to capture the sale as a "one-stop shop" and, if recycled products are
out of stock, to fill orders from our refurbished or aftermarket product inventory. To support these efforts, we have provided our
sales staff with access to both recycled and aftermarket sales systems, and we have developed sales incentive programs that
encourage cross selling throughout our wholesale operations.

As of December 31, 2012, we had approximately 2,000 full-time sales staff in our North American wholesale
operating segment. The full time sales personnel are located at sales desks at our facilities or at one of the regional call centers
we operate. We deploy a call routing system that redirects overflow calls to alternative call centers, typically located within the
same region. We also operate two other call centers, one to support national accounts, and the other to support insurance
adjusters' needs and questions. Our sales personnel are encouraged to initiate outbound calls in addition to the inbound calls
they handle. Our sales staff can use customer estimates from our Keyless estimating system to generate sales leads for both
aftermarket and recycled products.

We are continually reviewing and revising the pricing of wholesale products. Our pricing specialists consider factors
such as recent demand levels, inventory quantity on hand and turnover rates, new OEM product prices and local competitive
pricing, with the goal of optimizing revenue. We set list prices and then sell items at a discount to list, with the discount
typically based on each customer's purchasing volume. We may adjust prices during the year in response to material price
changes of new OEM replacement products.

We believe our commitment to stock inventory in local warehouses, supplemented by the inventory sharing system

within our regional trading zones, improves our ability to meet our customers' requirements more frequently than our
competitors and gives us a competitive advantage.

Distribution

We have a distribution network of over 320 wholesale plants and warehouses across the U.S. and Canada, of which 52
function as large hub or cross dock facilities. Our network of facilities allows us to develop and maintain our relationships with
local repair shops while providing a level of service that is made possible by our nationwide presence. Our local presence
allows us to provide daily deliveries as required by our customers, using drivers who routinely deliver to the same customers.
Our sales force and local delivery drivers develop and maintain critical personal relationships with the local repair shops that
benefit from access to our wide selection of products, which we are able to offer as a result of our regional inventory network.

We have developed an internal distribution network to allow our sales representatives to sell our products within

regional trading zones, thus improving our ability to fulfill customer requests and accelerating inventory turnover. Each
weekday we operate over 290 transfer runs between our cross dock facilities and our plants and warehouses within our regional
trading zones to redistribute our alternative products for delivery on the next day. In addition, we have approximately 2,700
local delivery routes serving our customers each weekday.

Each sale results in the generation of a work order at the location housing the specific product. A dispatcher is then

responsible for ensuring fulfillment accuracy, printing the final invoice, and including the product on the appropriate truck
route for delivery to the customer. In markets where we offer more than one alternative product type, we have begun to
integrate the delivery of multiple product types on the same delivery routes to help minimize distribution costs and improve
customer service. We operate a delivery fleet of medium-sized trucks and smaller trucks and vans. Over time, our delivery
vehicles will become more consistent as we reconfigure the fleet to include vehicles that can carry all four product types.

Competition

We consider all suppliers of vehicle collision and mechanical products to be competitors, including aftermarket
suppliers, recycling businesses, refurbishing operations, parts remanufacturers, OEMs and internet-based suppliers. We believe
the principal areas of differentiation in our industry include availability of inventory, pricing, product quality and service.

The aftermarket product distribution business is highly fragmented and our competitors, other than OEMs, are
generally independently owned distributors with one to three distribution centers. Similarly, we compete with domestic vehicle
product recyclers, most of which are single-unit operators. In some markets, smaller competitors have organized affiliations to
share marketing and distribution resources, including internet sites. We compete with alternative parts distributors on the basis
of our nationwide distribution system, our product lines and inventory availability, customer service, our relationships with
insurance companies, and to a lesser extent, price. We do not consider retail chains that focus on the do-it-yourself market to be
our direct competitors since many of our wholesale product sales are paid for by insurance companies rather than the end user.

Manufacturers of new original equipment products sell the majority of automobile replacement products. We believe,
however, that as the insurance and repair industries continue to recognize the advantages of aftermarket, recycled, refurbished
and remanufactured products, the alternatives to new OEM replacement products will account for a larger percentage of total
vehicle replacement product sales. Since 2008, alternative parts usage has increased from approximately 32% to 37% of the
collision replacement product market. We compete with OEMs on the basis of price, service and product quality.

Self Service Retail Products

Our self service retail operations sell parts from older cars and light-duty trucks directly to consumers. In addition to

revenue from the sale of parts, core and scrap, we charge a nominal admission fee to access the property. Our self service
facilities typically consist of a fenced or enclosed area of several acres with vehicles stored outdoors and a retail building
through which customers are able to access the yard. In 2012, we began rebranding most of our self service locations under the
name "LKQ Pick Your Part." As of December 31, 2012, we conducted our self service operations from 62 facilities in North
America.

Inventory

We acquire inventory for our self service retail product operations from a variety of sources, including but not limited

to towing companies, auctions, the general public, insurance carriers, municipality sales and charitable organizations. We
typically procure salvage vehicles that are more than seven model years old for our self service retail product operations. These
vehicles are generally older and of lower quality than the salvage vehicles we purchase for our wholesale recycled product
operations. Beginning in 2011, a reduction in the supply of these vehicles has contributed to increased car costs, which is
partially a result of the 2009 "cash for clunkers" program that removed many vehicles from supply earlier in their life cycle. In
2012, we purchased approximately 416,000 lower cost self service and "crush only" vehicles.

Vehicles are delivered to our locations by the seller, or we arrange for transportation. Once on our property, minimal

labor is required to process the vehicle other than removing the fluids, Freon, catalytic converters and hazardous materials.
Vehicles are then placed in the yard for customers to remove parts. The vehicle inventory is usually organized according to
domestic and import cars (further organized by make), passenger vans and trucks. In our self service business, availability of a
specific part will depend on which vehicles are currently at the site and to what extent parts may have been previously sold.
We usually keep a vehicle at our facility for 30 to 75 days, generally depending on the capacity of the yard, before it is crushed
and sold to scrap metal processors. By maintaining a relatively short turnover period, we ensure that our inventory is
continually updated with different car options or removed from the yard when the saleable parts are depleted.

Scrap and Other Materials

Our self service auto recycling operations generate scrap metal, alloys and other materials that we sell to recyclers.
Vehicles that we no longer make available to the public and "crush only" vehicles acquired from other companies, including
OEMs, are typically crushed using equipment on site. With our acquisition of a scrap metal shredder in Florida in 2012, we
will begin shredding certain vehicle hulks ourselves in 2013. By shredding our hulks rather than selling them to a recycler, we
expect to improve the recovery of the scrap metals contained in the vehicle hulks generated by local salvage operations.

Customers

The customers of our self service yards are frequently do-it-yourself mechanics, small independent repair shops

servicing older vehicles and auto rebuilders. The scrap from the vehicle hulks, when not processed by us, is sold to recyclers,
with whom we may also compete when procuring salvage vehicles for our operations.

Sales and Marketing

We list part prices for automobiles and light-duty trucks on regularly updated price sheets, with prices varying by part
type, but not by make or model. For instance, four cylinder engines are priced the same regardless of vehicle make, model, age
or condition. While we do not consider retail automotive chains to be our direct competitors, as their product offerings are
focused on maintenance products and mechanical parts, we may reference their prices on certain parts as a benchmark to ensure
our prices remain competitive.

Competition

There are competitors operating self service businesses in all of the markets in which we operate. In some markets,

there are numerous competitors, often operating in close proximity to our operations. We try to differentiate our business by the
quality of the inventory and the size and cleanliness of the property.

EUROPE SEGMENT

Wholesale Auto Products

Our European wholesale operating segment was formed in the fourth quarter of 2011 with our acquisition of ECP. We

continued to expand our branch network in 2012 by opening 41 new locations in the U.K., including an extension to the
national distribution center. This extension houses additional product lines, including certain collision repair products such as
body panels and bumpers, some of which are marketed under the Platinum Plus brand we use in North America. As of
December 31, 2012, we operated 130 branch locations supported by a national distribution center and nine regional hubs,
which allows us to reach most major markets within the U.K. With its national distribution system and IT infrastructure, we
believe ECP will serve as a platform to expand into complementary products to increase market penetration in this region, as
well as to further develop a collision repair parts business similar to our North American wholesale operations.

Inventory

In 2012, we sold more than 112,000 SKUs of aftermarket products, primarily composed of mechanical aftermarket

parts for the repair of vehicles three to 15 years old. Our top selling products include electrical products such as spark plugs and
ignition coils, brake pads and sensors, steering and suspension parts and clutches and related parts. In 2012, our top 10
suppliers represented 32% of our inventory purchases, with our top supplier representing approximately 7% of our purchases.
No suppliers outside of our top ten suppliers provided more than 3% of our annual purchases. The aftermarket products we
distribute are purchased from vendors located primarily in the U.K. and other European countries. In 2012, we purchased 62%
of our aftermarket products from companies in the U.K. and 23% of our products from other European countries. Most of the
products we purchase in the U.K. are sourced from businesses headquartered in other European countries. Approximately 15%
of our products were procured directly from vendors located primarily in China or Taiwan, some of which also supply collision
parts for our Wholesale - North America operations.

We provide value to our customers by offering aftermarket products that, in many cases, are sourced from the same
suppliers used by OEMs. By working directly with the manufacturers, we are able to eliminate intermediate steps in the parts
supply chain to offer the same products for a lower price compared to OEMs. For many of our products, we also offer lower-
cost lines for our customers that are more cost conscious.

Customers

We sell the majority of our products to over 38,000 professional repairers, including independent mechanical repair

shops and collision repair shops. In addition to our sales to repair shops, we generate a portion of our revenue through sales to
retail customers from our branch stores, which have historically represented less than 20% of our revenue. No single customer
accounted for more than 2% of our revenue in 2012.

Sales and Marketing

To place an order, our customers will generally call a sales representative at the nearest branch. Using an electronic
automotive exchange and our integrated IT platform displaying inventory availability, our sales representatives can locate for
our customers the appropriate replacement part. We set list prices for our products, and then apply a discount off of list,
primarily depending on each customer's purchasing volume. In 2012, we launched a business-to-business website with certain
of our customers to enable them to place product orders online through a customized interface that includes detailed parts
specifications, customer-specific pricing, local branch availability and account information. We believe this customer interface
will result in fewer parts returns by improving order accuracy and will also reduce the time required by parts specialists to
advise customers. Whether placed via a phone order or online, customer orders are filled from the local branch or routed to
another location as necessary to fill the order.

Similar to our North American wholesale operations, insurance companies significantly influence the purchasing

decisions for collision products in the U.K. We believe the historically low alternative collision parts usage percentage, which is
currently less than 10%, provides an opportunity for us in this market, particularly as insurance companies look to lower their
costs. As a result, we are attempting to establish business relationships with insurance companies and implement insurer-based
marketing models to bring visibility to the cost savings that can be achieved through the use of alternative parts. As we
continue to grow our collision parts offerings over time in this market, we believe we will be well-positioned to serve as a
lower-cost alternative for insured repairs in the U.K.

Distribution

We employ a central stock replenishment system supported by our integrated IT platform to monitor historical
demand, lost sales, and orders. Using this information, we are better able to appropriately stock our branches to meet customer
requests. In addition to stocking our branches based on local inventory demand, beginning in 2012 all branch locations carry
approximately 3,500 of the top selling SKUs to meet the demand of our national customers. Our typical branch location holds
between 10% and 20% of our available SKUs, with nightly replenishment from our national distribution center and other
distribution hubs. All of our branches can deliver certain in-stock parts within one hour. In the event that a branch does not
have a requested part, the part is supplied by either a hub or the national distribution center within 24 hours. We deliver parts to
our customers on our vans or third party motorcycles with 41,000 daily deliveries, or otherwise by third party carriers.

Competition

We view all suppliers of replacement repair products as our competitors, including other alternative parts suppliers and

OEMs and their dealer networks. While we compete with all alternative parts suppliers, there are few with a distribution
network reaching most major markets in the U.K. We believe we have been able to distinguish ourselves from other alternative
parts suppliers primarily through our distribution network, which allows us to deliver our products quickly, as well as through
our product lines and inventory availability, pricing and service. We compete with OEMs primarily on the basis of price,
service and availability.

EMPLOYEES

As of December 31, 2012, we had approximately 20,300 employees. We are a party to a collective bargaining
agreement with a union that represents 44 employees at our Totowa, New Jersey facility. Approximately 660 of our employees
at our bumper refurbishing and engine remanufacturing operations in Mexico and 160 of our employees at our recycled parts
facility in Quebec City, Canada are also represented by unions. Other than these locations, none of our employees is a member
of a union or participates in other collective bargaining arrangements. We consider our employee relations to be good.

FACILITIES

Our corporate headquarters are located at 500 West Madison Street, Chicago, Illinois 60661. We also operate a field

support center in Nashville, Tennessee that performs certain corporate functions, including accounting, procurement and

information systems support. Our European operations maintain procurement, accounting and finance functions in Wembley,
outside of London, England. In addition to these corporate offices, we have numerous operating facilities that handle wholesale
and self service retail product operations. We operate out of more than 500 locations in total, most of which are leased. Many of
our locations stock multiple product types or serve more than one function.

Included in our total locations are 131 facilities in the U.K., including the 500,000 square foot national distribution

center in Tamworth that houses inventory to supply the hubs and branches of our U.K. operations. We also operate 37 facilities
in Canada, five facilities in Central America, and two facilities in Mexico. In 2012, we opened an aftermarket parts warehouse
in Taiwan to aggregate inventory for shipment to our locations in North America.

INFORMATION TECHNOLOGY

In our North American operations, our aftermarket operations use a third party facility management system. Additional

third party software packages have been implemented to leverage the centralized data and information that a single system
provides, such as a data warehouse to conduct enhanced analytics and reporting, an integrated budgeting system, an electronic
data interchange tool, and eCommerce tools to enhance our online business-to-business initiatives—OrderKeystone.com and
Keyless. The systems used by our aftermarket operations are also used by all of our refurbishing operations.

Our wholesale recycled product locations in North America operate an internally-developed, proprietary facility

management system called LKQX. We believe that the use of a single system across all of our wholesale recycled product
operations helps facilitate the sales process, allows for continued implementation of standard operating procedures, and yields
improved training efficiency, employee transferability, access to our national inventory database, management reporting and
data storage. The system also supports an electronic exchange process for identifying and locating parts at other select recyclers
and facilitates brokered sales to fill customer orders for items not in stock.

Our remanufacturing operations currently operate on three separate IT systems, which we expect to transition to a

single IT platform in the next year. We operate a single enterprise system for all of our heavy-duty truck operations that
supports inter-region sales to reduce the potential for lost sales due to out-of-stock parts. In 2011, we completed the installation
of a standardized point of sale system in our self service retail operations, which allows enhanced management reporting as
well as improved system reliability.

Our aftermarket operations in the U.K. use a single integrated IT platform for our purchasing, branch stock, and

finance activities, which are further supported by a distribution center system to manage inventory movement.

The hardware that supports the systems used in our operations is located in offsite data centers. The centers are in

secure environments with around-the-clock monitoring, redundant power backup, and multiple, diverse data and
telecommunication routing. We use separate third party provided software for our financial systems such as financial and
budget reporting, general ledger accounting, accounts payable, payroll, and fixed assets. We currently protect our local
customer, inventory, and corporate consolidated data, such as financial information, e-mail files, and other user files, with daily
backups. These backups are stored off site with a third party data protection vendor.

We continually evaluate our systems with the goal of ensuring that all critical systems remain scalable and operational

as our business grows.

REGULATION

Environmental Compliance

Our operations and properties, including the maintenance of our delivery vehicles, are subject to extensive federal,

state and local environmental protection and health and safety laws and regulations. These environmental laws govern, among
other things, the emission and discharge of hazardous materials into the ground, air, or water; exposure to hazardous materials;
and the generation, handling, storage, use, treatment, identification, transportation, and disposal of industrial by-products, waste
water, storm water, and mercury and other hazardous materials.

We have made and will continue to make capital and other expenditures relating to environmental matters. We have an

environmental management process designed to facilitate and support our compliance with these requirements. We cannot
assure you, however, that we will at all times be in complete compliance with such requirements.

Although we presently do not expect to incur any capital or other expenditures relating to environmental controls or

other environmental matters in amounts that would be material to us, we may be required to make such expenditures in the
future. Environmental laws are complex, change frequently and have tended to become more stringent over time. Accordingly,
environmental laws may change or become more stringent in the future in a manner that could have a material adverse effect on
our business.

Contamination resulting from vehicle recycling processes can include soil and ground water contamination from the

release, storage, transportation, or disposal of gasoline, motor oil, antifreeze, transmission fluid, chlorofluorocarbons ("CFCs")
from air conditioners, other hazardous materials, or metals such as aluminum, cadmium, chromium, lead, and mercury.
Contamination from the refurbishment of chrome plated bumpers can occur from the release of the plating material.
Contamination can migrate on-site or off-site which can increase the risk, and the amount, of any potential liability.

In addition, many of our facilities are located on or near properties with a history of industrial use that may have

involved hazardous materials. As a result, some of our properties may be contaminated. Some environmental laws hold current
or previous owners or operators of real property liable for the costs of cleaning up contamination, even if these owners or
operators did not know of and were not responsible for such contamination. These environmental laws also impose liability on
any person who disposes of, treats, or arranges for the disposal or treatment of hazardous substances, regardless of whether the
affected site is owned or operated by such person, and at times can impose liability on companies deemed under law to be a
successor to such person. Third parties may also make claims against owners or operators of properties, or successors to such
owners or operators, for personal injuries and property damage associated with releases of hazardous or toxic substances.

When we identify a potential material environmental issue during our acquisition due diligence process, we analyze
the risks, and, when appropriate, perform further environmental assessment to verify and quantify the extent of the potential
contamination. Furthermore, where appropriate, we have established financial reserves for certain environmental matters. In
addition, at times we, or sellers from whom we purchased a business, have undertaken remediation projects. We do not
anticipate, based on currently available information and current laws, that we will incur liabilities in excess of reserves to
address environmental matters. However, in the event we discover new information or if laws change, we may incur significant
liabilities, which may exceed our reserves.

Title Laws

In some states, when a vehicle is deemed a total loss, a salvage title is issued. Whether states issue salvage titles is

important to the supply of inventory for the vehicle recycling industry because an increase in vehicles that qualify as salvage
vehicles provides greater availability and typically lowers the price of such vehicles. Currently, these titling issues are a matter
of state law. In 1992, the U.S. Congress commissioned an advisory committee to study problems relating to vehicle titling,
registration, and salvage. Since then, legislation has been introduced seeking to establish national uniform requirements in this
area, including a uniform definition of a salvage vehicle. The vehicle recycling industry will generally favor a uniform
definition, since it will avoid inconsistencies across state lines, and will generally favor a definition that expands the number of
damaged vehicles that qualify as salvage. However, certain interest groups, including repair shops and some insurance
associations, may oppose this type of legislation. National legislation has not yet been enacted in this area, and there can be no
assurance that such legislation will be enacted in the future.

Anti-Car Theft Act

In 1992, Congress enacted the Anti-Car Theft Act to deter trafficking in stolen vehicles. The purpose of the law is to

implement an electronic system to track and monitor vehicle identification numbers and major automotive parts. In January
2009, the U.S. Department of Justice implemented the portion of the system to track and monitor vehicle identification
numbers. The portion of the system that would track and monitor major automotive parts would require various entities,
including automotive parts recyclers like us, to inspect salvage vehicles for the purpose of collecting the part number for any
"covered major part." The Department of Justice has not promulgated rules on this portion of the system, and therefore there
has been no progress on the implementation of the system to track and monitor major automotive parts. However, if this system
is fully implemented, the requirement to collect the information would place substantial burdens on vehicle recyclers, including
us, that otherwise would not normally exist. It would place similar burdens on repair shops, which may further discourage the
use by such shops of recycled products. There is no pending initiative to implement the parts registration from a law
enforcement point of view. However, there is a risk that a heightened legislative concern over safety of parts might precipitate
an effort to push for the implementation of such rules.

Legislation Affecting Automotive Repair Parts

Most states have laws relating to the use of aftermarket products in motor vehicle collision repair work. The
provisions of these laws include consumer disclosure, vehicle owner's consent regarding the use of aftermarket products in the
repair process, and the requirement to have aftermarket products certified by an independent testing organization. Some
jurisdictions have laws that regulate the sale of certain recycled products that we provide, such as airbags. Additional laws of
this kind may be enacted in the future. An increase in the number of states passing such legislation with prohibitions or
restrictions that are more severe than current laws could have a material adverse impact on our business. Additionally, Congress
could enact federal legislation restricting the use of aftermarket and recycled automotive products used in the course of
collision repair.

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 collision products because there
are more weather related accidents, which generate repairs. In addition, the cost of salvage vehicles may be lower as weather
related accidents generate a larger supply of total loss vehicles.

ITEM 1A.

RISK FACTORS

Risks Relating to Our Business

Our operating results and financial condition have been and could continue to be adversely affected by the economic
conditions in the U.S. and elsewhere.

The decline and slow growth in economic conditions in the U.S., the U.K. and Canada adversely impacted our

business. Such conditions have, in some periods, resulted in fewer miles driven, fewer accident claims and a reduction of
vehicle repairs. In the event that the economic conditions in the U.S. or other countries decline or do not improve, we expect
that our business will be negatively affected.

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 internet-based suppliers.
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. 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 substantially in excess of 50% of collision parts by dollar amount are supplied by OEMs, with the

balance being supplied by distributors like us. The OEMs are therefore in a position 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,
OEMs have experimented with reducing prices on specific products to match the lower prices of alternative products. If such
price reductions were to become widespread, it could have a material adverse impact on our business.

Claims by OEMs relating to aftermarket products could adversely affect our business.

OEMs have attempted to use claims of intellectual property infringement against manufacturers and distributors of

aftermarket products to restrict or eliminate the sale of aftermarket products that are the subject of the claims. The OEMs have
brought such claims in federal court and with the U.S. International Trade Commission.

In December 2005 and May 2008, Ford Global Technologies, LLC filed complaints with the International Trade

Commission against us and others alleging that certain aftermarket products imported into the U.S. infringed on Ford design
patents. The parties settled these matters in April 2009 pursuant to a settlement arrangement that expires in March 2015.

U.S. Patent and Trademark Office records indicate that OEMs are seeking and obtaining more design patents then they

have in the past. To the extent that the OEMs are successful with intellectual property infringement claims, we could be
restricted or prohibited from selling certain aftermarket products, which could have an adverse effect on our business. We will
likely incur significant expenses investigating and defending intellectual property infringement claims. In addition, aftermarket
products certifying organizations may revoke the certification of parts that are the subject of the claims. Lack of certification
may negatively impact us because many major insurance companies recommend or require the use of aftermarket products only
if they have been certified by an independent certifying organization.

An adverse change in our relationships with our suppliers or auction companies could increase our expenses and hurt our
ability to serve our customers.

We are dependent on a relatively small number of suppliers of aftermarket products, most of which are located in
Taiwan. Although alternative suppliers exist for substantially all aftermarket products distributed by us, the loss of any one
supplier could have a material adverse effect on us until alternative suppliers are located and have commenced providing

products. Moreover, our operations are subject to the customary risks of doing business abroad, including, among other things,
transportation costs and delays, political instability, currency fluctuations and the imposition of tariffs, import and export
controls and other non-tariff barriers (including changes in the allocation of quotas), as well as the uncertainty regarding future
relations between China, Japan and Taiwan. Because a substantial volume of our sales involves products manufactured from
sheet metal, we can be adversely impacted if sheet metal becomes unavailable or is only available at higher prices, which we
may not be able to pass on to our customers. In addition, there is a limited supply of salvage vehicles in the U.S. As we grow
and our demand for salvage vehicles increases, the costs of these incremental vehicles could be higher.

Most of our salvage and a portion of our self service inventory is obtained from vehicles offered at salvage auctions

operated by several companies that own auction facilities in numerous locations across the U.S. We do not typically have
contracts with any auction company. According to industry analysts, a small number of companies control a large percentage of
the salvage auction market in the U.S. If an auction company prohibited us from participating in its auctions, began competing
with us, or significantly raised its fees, our business could be adversely affected through higher costs or the resulting potential
inability to service our customers. Moreover, we face competition in the purchase of vehicles from direct competitors,
rebuilders, exporters and others. To the extent that the number of bidders increases, it may have the effect of increasing our cost
of goods sold for wholesale recycled products. Some states regulate bidders to help ensure that salvage vehicles are purchased
for legal purposes by qualified buyers. Auction companies have been actively seeking to reduce, circumvent or eliminate these
regulations, which would further increase the number of bidders.

We also acquire inventory directly from insurance companies, OEMs, and others. To the extent that these suppliers

decide to discontinue these arrangements, our business could be adversely affected through higher costs or the resulting
potential inability to service our customers.

We rely upon insurance companies to promote the usage of alternative parts.

Our success depends, in part, on the acceptance and promotion of alternative parts usage by automotive insurance

companies. Alternative parts usage has generally increased from year to year, but there can be no assurance that such usage will
increase in the future. In addition, in some places we operate, alternative parts usage is relatively low. We also rely on business
relationships with several insurance companies. These insurance companies encourage vehicle repair facilities to use products
we provide. The business relationships include in some cases participation in aftermarket quality and service assurance
programs that may result in a higher usage of our aftermarket products than would be the case without the programs. Our
arrangements with these companies may be terminated by them at any time, including in connection with their own business
concerns relating to the offering, availability, standards or operations of the aftermarket quality and service assurance programs.
We rely on these relationships for sales to some collision repair shops, and a termination of these relationships may result in a
loss of sales, which could adversely affect our results of operations.

In an Illinois lawsuit involving State Farm Mutual Automobile Insurance Company ("Avery v. State Farm"), a jury

decided in October 1999 that State Farm breached certain insurance contracts with its policyholders by using non-OEM
replacement products to repair damaged vehicles when use of such products did not restore the vehicle to its "pre-loss
condition." The jury found that State Farm misled its customers by not disclosing the use of non-OEM replacement products
and the alleged inferiority of those products. The jury assessed damages against State Farm of $456 million, and the judge
assessed an additional $730 million of disgorgement and punitive damages for violations of the Illinois Consumer Fraud Act. In
April 2001, the Illinois Appellate Court upheld the verdict but reduced the damage award by $130 million because of
duplicative damage awards. On August 18, 2005, the Illinois Supreme Court reversed the awards made by the circuit court and
found, among other things, that the plaintiffs had failed to establish any breach of contract by State Farm. The U.S. Supreme
Court declined to hear an appeal of this case. As a result of this case, some insurance companies reduced or eliminated their use
of aftermarket products. Our financial results could be adversely affected if insurance companies modified or terminated the
arrangements pursuant to which repair shops buy aftermarket or recycled products from us due to a fear of similar claims.

We may not be able to sell our products due to existing or new laws and regulations prohibiting or restricting the sale of
wholesale aftermarket, recycled, refurbished or remanufactured products.

Some jurisdictions have enacted laws prohibiting or severely restricting the sale of certain recycled products that we

provide, such as airbags. These and other jurisdictions could enact similar laws or could prohibit or severely restrict the sale of
additional recycled products. Restrictions on the products we are able to sell could decrease our revenue and have an adverse
effect on our business and operations.

Most states have passed laws that prohibit or limit the use of aftermarket products in collision repair work and/or

require enhanced disclosure or vehicle owner consent before using aftermarket products in such repair work. Additional
legislation of this kind may be introduced in the future. If additional laws prohibiting or restricting the use of aftermarket
products are passed, it could have an adverse impact on our aftermarket products business.

Certain organizations test the quality and safety of vehicle replacement products. If these organizations decide not to
test a particular vehicle product or in the event that such organizations decide that a particular vehicle product does not meet
applicable quality or safety standards, we may decide to discontinue sales of such product or insurance companies may decide
to discontinue authorization of repairs using such product. Such events could adversely affect our business.

We may not be able to successfully acquire new businesses or integrate acquisitions, which could cause our business to
suffer.

We may not be able to successfully complete potential strategic acquisitions if we cannot reach agreement on
acceptable terms or for other reasons. Moreover, we may not be able to identify a sufficient number of acquisition candidates at
reasonable prices to maintain our growth objectives. Also, over time, we will likely seek to make acquisitions that are relatively
larger as we grow. Larger acquisition candidates may attract additional competitive buyers, which could increase our cost or
could cause us to lose such acquisitions.

If we buy a company or a division of a company, we may experience difficulty integrating that company's or division's

personnel and operations, which could negatively affect our operating results. In addition:

•

the key personnel of the acquired company may decide not to work for us;

customers of the acquired company may decide not to purchase products from us;

• we may experience business disruptions as a result of information technology systems conversions;

• we may experience additional financial and accounting challenges and complexities in areas such as tax planning,

treasury management, and financial reporting;

• we may be held liable for environmental, tax or other risks and liabilities as a result of our acquisitions, some of which

we may not have discovered during our due diligence;

• we may intentionally assume the liabilities of the companies we acquire, which could materially and adversely affect

our business;

•

our existing business may be disrupted or receive insufficient management attention;

• we may not be able to realize the cost savings or other financial benefits we anticipated, either in the amount or in the

time frame that we expect; and

• we may incur debt or issue equity securities to pay for any future acquisition, the issuance of which could involve the

imposition of restrictive covenants or be dilutive to our existing stockholders.

Our annual and quarterly performance may fluctuate.

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.
Future factors that may affect our operating results include, but are not limited to, those listed in the Special Note on Forward-
Looking Statements in this Annual Report on Form 10-K. Accordingly, our results of operations may not be indicative of future
performance. These fluctuations in our operating results may cause our results to fall below the expectations of public market
analysts and investors, which could cause our stock price or the value of our debt instruments to decline.

Fluctuations in the prices of metals or shipping costs could adversely affect our financial results.

All of our recycling operations generate scrap metal and other metals that we sell. After we dismantle a salvage
vehicle for wholesale parts and after vehicles have been used in our self service retail business, the remaining vehicle hulks are
sold to scrap processors and other remaining metals are sold to processors and brokers of metals. In addition, we receive "crush
only" vehicles from other companies, including OEMs, which we dismantle and which generate scrap metal and other metals.
The prices of scrap and other metals have historically fluctuated, sometimes significantly, due to market factors. In addition,
buyers may stop purchasing metals entirely due to excess supply. To the extent that the prices of metals decrease materially or
buyers stop purchasing metals, our revenue from such sales will suffer and a write-down of our inventory value could be
required. The cost of our wholesale recycled and our self service retail inventory purchases will change as a result of
fluctuating scrap metal and other metals prices. In a period of falling metal prices, there can be no assurance that our inventory
purchasing cost will decrease the same amount or at the same rate as the scrap metal and other metals prices decline, and there
may be a delay between the scrap metal and other metals price reductions and any inventory cost reductions. The price of steel
is a component of the cost to manufacture products for our aftermarket business. We incur substantial freight costs to import
parts from our suppliers, many of whom are located in Asia. If the cost of steel or freight rose we might not be able to pass the
cost increases on to our customers.

If we determine that our goodwill has become impaired, we may incur significant charges to our pre-tax income.

Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. In
the future, goodwill and intangible assets may increase as a result of acquisitions. Goodwill is reviewed at least annually for
impairment. Impairment may result from, among other things, deterioration in the performance of acquired businesses,
increases in our cost of capital, adverse market conditions, and adverse changes in applicable laws or regulations, including
modifications that restrict the activities of the acquired business. As of December 31, 2012, our total goodwill subject to future
impairment testing was $1.7 billion. For further discussion of our annual impairment test, see "Goodwill Impairment" in the
Critical Accounting Policies and Estimates section of Item 7 in this Annual Report on Form 10-K.

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

Because our business depends on vehicle accidents for both the demand for repairs using our products and the supply
of wholesale recycled products, factors which influence the number and/or severity of accidents, 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, the use of cellular telephones and other electronic equipment by drivers, the use of
alcohol and drugs by drivers, the effectiveness of accident avoidance systems in new vehicles, and the condition of roadways,
impact our business. An increase in fuel prices may cause the number of vehicles on the road to decline and the number of
miles driven to decline, as motorists seek alternative transportation options, and this also could lead to a decline in accidents. In
addition, since 2007, the average number of new vehicles sold annually in the U.S. has been less than the average number of
new vehicles sold annually from 1999 through 2006. This could result in a reduction in the number of vehicles on the road and
consequently fewer vehicles involved in accidents. Mild weather conditions, particularly during winter months, tend to result in
a decrease of vehicle accidents. Moreover, a number of states and municipalities have adopted, or are considering adopting,
legislation banning the use of handheld cellular telephones while driving, and such restrictions could lead to a decline in
accidents. To the extent OEMs develop or are mandated by law to install new accident avoidance systems, the number and
severity of accidents could decrease. In addition, the average age of vehicles has been increasing, and insurance companies may
find it uneconomical to repair older vehicles.

Governmental agencies may refuse to grant or renew our operating licenses and permits.

Our operating subsidiaries must obtain licenses and permits from state and local governments to conduct their

operations. When we develop or acquire a new facility, we must seek the approval of state and local units of government.
Governmental agencies may resist the establishment of a vehicle recycling or refurbishing facility in their communities. There
can be no assurance that future approvals or transfers will be granted. In addition, there can be no assurance that we will be able
to maintain and renew the licenses and permits our operating subsidiaries currently hold.

If we lose our key management personnel, we may not be able to successfully manage our business or achieve our
objectives.

Our future success depends in large part upon the leadership and performance of our executive management team and

key employees at the operating level. If we lose the services of one or more of our executive officers or key employees, or if
one or more of them decides to join a competitor or otherwise compete directly or indirectly with us, we may not be able to
successfully manage our business or achieve our business objectives. If we lose the services of any of our key employees at the
operating or regional level, we may not be able to replace them with similarly qualified personnel, which could harm our
business.

We rely on information technology and communication systems in critical areas of our operations and a disruption relating
to such technology could harm our business.

Some of the information technology systems and communication systems we use for management of our facilities and

our financial functions are leased from or operated by other companies, while others are owned by us. In the event that the
providers of these systems terminate their relationships with us or if we suffer prolonged outages of these or our own systems
for whatever reason, we could suffer disruptions to our operations.

In addition, we continually monitor these systems to find areas for improvement. In the event that we decided to

switch providers or to implement our own systems, we may also suffer disruptions to our business. We may be unsuccessful in
the development of our own systems, and we may underestimate the costs and expenses of developing and implementing our
own systems. Also, our revenue may be hampered during the period of implementing an alternative system, which period could
extend longer than we anticipated.

If we experience problems with our fleet of trucks, our business could be harmed.

We use a fleet of trucks to deliver the majority of the products we sell. We are subject to the risks associated with

providing trucking services, including inclement weather, disruptions in the transportation infrastructure, governmental
regulation, availability and price of fuel, liabilities arising from accidents to the extent we are not covered by insurance, and
insurance premium increases. In addition, our failure to deliver products in a timely and accurate manner could harm our
reputation and brand, which could have a material adverse effect on our business.

We are subject to environmental regulations and incur costs relating to environmental matters.

We are subject to various federal, state, and local environmental protection and health and safety laws and regulations

governing, among other things: the emission and discharge of hazardous materials into the ground, air, or water; exposure to
hazardous materials; and the generation, handling, storage, use, treatment, identification, transportation, and disposal of
industrial by-products, waste water, storm water, and mercury and other hazardous materials.

We are also required to obtain environmental permits from governmental authorities for certain of our operations. If
we violate or fail to obtain or comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by
regulators. We could also become liable if employees or other parties are improperly exposed to hazardous materials.

Under certain environmental laws, we could be held responsible for all of the costs relating to any contamination at, or
migration to or from, our or our predecessors' past or present facilities and at independent waste disposal sites. These laws often
impose liability even if the owner or operator did not know of, or was not responsible for, the release of such hazardous
substances.

Environmental laws are complex, change frequently, and have tended to become more stringent over time. Our costs
of complying with current and future environmental and health and safety laws, and our liabilities arising from past or future
releases of, or exposure to, hazardous substances, may adversely affect our business, results of operations, or financial
condition.

We could be subject to product liability claims.

If customers of repair shops that purchase our products are injured or suffer property damage, we could be subject to
product liability claims by such customers. The successful assertion of this type of claim could have an adverse effect on our
business, results of operations or financial condition. In addition, we have agreed to defend and indemnify in certain
circumstances insurance companies that could be named as defendants in such lawsuits. The existence of claims for which we
must defend and indemnify insurance companies could negatively impact our business, results of operations or financial
condition.

Regulations that may be issued under the Anti-Car Theft Act could harm our business.

In 1992, Congress enacted the Anti-Car Theft Act to deter trafficking in stolen vehicles. The purpose of the law is to

implement an electronic system to track and monitor vehicle identification numbers and major automotive parts. In January
2009, the U.S. Department of Justice implemented the portion of the system to track and monitor vehicle identification
numbers. The portion of the system that would track and monitor major automotive parts would require various entities,
including automotive parts recyclers like us, to inspect salvage vehicles for the purpose of collecting the part number for any
"covered major part." The Department of Justice has not promulgated rules on this portion of the system, and therefore there
has been no progress on the implementation of the system to track and monitor major automotive parts. However, if this system
is fully implemented, the requirement to collect the information would place substantial burdens on automotive parts recyclers,
including us, that otherwise would not normally exist. It would place similar burdens on repair shops, which may further
discourage the use of recycled products by such shops.

We operate in foreign jurisdictions, which exposes us to foreign exchange and other risks.

We have operations in the U.K., Canada and Mexico, and we may expand our operations into other countries. We also

incur costs in currencies, other than our functional currencies, in the countries in which we operate. We are thus subject to
foreign exchange exposure to the extent that we operate in different currencies, as well as exposure to foreign tax and other
foreign and domestic laws. In addition, Mexico is currently experiencing a heightened level of criminal activity that could
affect our ability to maintain our supply of certain aftermarket products.

Risks Relating to Our Common Stock and Financial Structure

Future sales of our common stock or other securities may depress our stock price.

We and our stockholders may sell shares of common stock or other equity, debt or instruments which constitute an

element of our debt and equity (collectively, "securities") in the future. We may also issue shares of common stock under our

equity incentive plan or in connection with future acquisitions. We cannot predict the size of future issuances of securities or
the effect, if any, that future issuances and sales of shares of our common stock or other securities will have on the price of our
common stock. Sales of substantial amounts of common stock (including shares issued in connection with an acquisition), the
issuance of additional debt securities, or the perception that such sales or issuances could occur, may cause the price of our
common stock to fall.

Delaware law, our charter documents and our loan documents may impede or discourage a takeover, which could affect the
price of our stock.

The anti-takeover provisions of our certificate of incorporation and bylaws, our loan documents and Delaware law

could, together or separately, impose various impediments to the ability of a third party to acquire control of us, even if a
change in control would be beneficial to our existing stockholders. Our certificate of incorporation and bylaws have provisions
that could discourage potential takeover attempts and make attempts by stockholders to change management more difficult.
Our credit agreement provides that a change of control is an event of default. Our incorporation under Delaware law and these
provisions could also impede an acquisition, takeover, or other business combination involving us or discourage a potential
acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce the price of our
common stock.

Our credit agreement places restrictions on our business.

We have a senior secured debt financing facility with a group of lenders. Our total outstanding indebtedness (including

bank financing, letters of credit, and notes payable in connection with acquisitions) as of December 31, 2012 was $1.2 billion.
The credit agreement contains operating and financial restrictions and requires that we satisfy certain financial and other
covenants. The failure to comply with any of these covenants would cause a default under the credit agreement. A default, if not
waived, could result in acceleration of our debt, in which case the debt would become immediately due and payable. If this
occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if new financing were available, it
may be on terms that are less attractive to us than our existing credit facility or it may be on terms that are not acceptable to us.

We rely on an accounts receivable securitization program for a portion of our liquidity.

We have an arrangement whereby we sell an interest in a portion of our accounts receivable to a special purpose

vehicle and receive funding through the commercial paper market. This arrangement expires in September 2015. In the event
that the market for commercial paper were to close or otherwise become constrained, our cost of credit relative to this program
could rise, or credit could be unavailable altogether.

Our future capital needs may require that we seek to refinance our debt or obtain additional debt or equity financing, events
that could have a negative effect on our business.

We may need to raise additional funds in the future to, among other things, refinance existing debt, fund our existing
operations, improve or expand our operations, respond to competitive pressures, or make acquisitions. From time to time, we
may raise additional funds through public or private financing, strategic alliances, or other arrangements. However, turmoil in
the credit markets could result in tight credit conditions, which could affect our ability to raise additional funds. If adequate
funds are not available on acceptable terms, we may be unable to meet our business or strategic objectives or compete
effectively. If we raise additional funds by issuing equity securities, stockholders may experience dilution of their ownership
interests, and the newly issued securities may have rights superior to those of the common stock. If we raise additional funds by
issuing debt, we may be subject to higher borrowing costs and further limitations on our operations. If we refinance or
restructure our debt, we may incur charges to write off the unamortized portion of deferred debt issuance costs from a previous
financing, or we may incur charges related to hedge ineffectiveness from our interest rate swap obligations. If we fail to raise
capital when needed, our business may be negatively affected.

Future adjustments to contingent purchase price related to acquisitions could materially affect our results.

From time to time we acquire companies with a component of the purchase consideration being delayed and the

payment thereof contingent on certain performance or other factors, including the time value of money (the "contingent
purchase price"). The accounting principles generally accepted in the United States require that we estimate the amount of the
contingent purchase price at the time we complete the acquisition. Each subsequent reporting period (until the contingent
purchase price is either paid or no longer potentially payable), we are required to re-evaluate the estimated amount of
remaining contingent purchase price that is likely to be paid. If the revised estimate of the contingent purchase price is higher
than the amount accrued, then the difference must be recorded and charged to the income statement in that period. If the revised
estimate of the future contingent purchase price is lower than the amount accrued, then the accrual is reduced and the difference
is credited to income for the period. Because some of these payments would not be deductible for tax purposes, it is possible

that the expense (or income) would not be tax-effected on our income statements. These adjustments, if required, could be
material to our future results of operations.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Our properties are described in Item 1 of this Annual Report on Form 10-K, and such description is incorporated by

reference into this Item 2. Our properties are sufficient to meet our present needs, and we do not anticipate any difficulty in
securing additional space to conduct operations or additional office space, as needed, on terms acceptable to us.

ITEM 3.

LEGAL PROCEEDINGS

The Office of the District Attorney of Harris County, Texas has advised us that it is investigating a possible violation of
the Texas Clean Water Act in connection with alleged discharges of petroleum products at two of our facilities in Texas. We are
in negotiations with the Office of the District Attorney to resolve this matter. The resolution will likely involve a monetary payment
to Harris County for the alleged violations at each location. The amount of each payment individually and the amount of the
payments in the aggregate are expected to have a de minimis effect on our financial position, results of operations and cash flows.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ Global Select Market ("NASDAQ"). During 2012, we changed our
ticker symbol on NASDAQ from “LKQX” to “LKQ.” At December 31, 2012 there were 31 record holders of our common
stock. The following table sets forth, for the periods indicated, the range of the high and low sales prices of shares of our
common stock on NASDAQ.

2011

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2012

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

High

Low

$ 13.15

$ 11.00

13.64

13.88

15.63

16.78

18.67

20.02

22.29

11.37

10.19

11.13

15.06

14.63

16.52

18.38

We have not paid any cash dividends on our common stock. We intend to continue to retain our earnings to finance our

growth and for general corporate purposes. We do not anticipate paying any cash dividends on our common stock in the
foreseeable future. In addition, our credit facilities contain, and future financing agreements may contain, financial covenants
and limitations on payment of cash dividends or other distributions of assets.

The following graph compares the percentage change in the cumulative total returns on our common stock, the

NASDAQ Stock Market (U.S.) Index and the following group of peer companies (the "Peer Group"): Copart, Inc.; O'Reilly
Automotive, Inc.; Genuine Parts Company; and Fastenal Co., for the period beginning on December 31, 2007 and ending on
December 31, 2012 (which was the last day of our 2012 fiscal year). The stock price performance in the following graph is not
necessarily indicative of future stock price performance. The graph assumes that the value of an investment in each of the
Company's common stock, the NASDAQ Stock Market (U.S.) Index and the Peer Group was $100 on December 31, 2007 and
that all dividends, where applicable, were reinvested.

Comparison of Cumulative Return
Among LKQ Corporation, the NASDAQ Stock Market (U.S.) Index and the Peer Group

LKQ Corporation

NASDAQ Stock Market (U.S.) Index

Peer Group

12/31/2007

12/31/2008

12/31/2009

12/31/2010

12/31/2011

12/31/2012

100

108

100

139

143

187

201

114

210

This stock performance information is "furnished" and shall not be deemed to be "soliciting material" or subject to

Rule 14A, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject
to the liabilities of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, whether made before or after the date of this report and irrespective of any general
incorporation by reference language in any such filing, except to the extent that it specifically incorporates the information by
reference.

Information about our common stock that may be issued under our equity compensation plans as of December 31,

2012 included in Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by reference.

ITEM 6.

SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Item 7 of this Annual Report on Form 10-K and our consolidated
financial statements and related notes included in Item 8 of this Annual Report on Form 10-K. In 2009, we reclassified into
discontinued operations the results of certain self service retail facilities that we sold, agreed to sell or closed. Statements of
Income data for prior periods have been updated to reflect only the continuing operations.

(in thousands, except per share data)

Statements of Income Data:

Revenue

Cost of goods sold

Gross margin

Operating income

Other (income) expense

Interest expense

Other (income) expense, net

Income from continuing operations before

provision for income taxes

Provision for income taxes

Income from continuing operations

Basic earnings per share from continuing

operations

Diluted earnings per share from continuing

operations

Year Ended December 31,

2008

(a)

2009

(b)

2010

(c)

2011

(d)

2012

(e)

1,908,532

2,047,942

2,469,881

3,269,862

4,122,930

1,064,706

1,120,129

843,826

193,280

37,830

(3,683)

159,133

62,041

97,092

0.36

0.34

927,813

231,448

32,252
(6,121)

205,317

78,180

127,137

0.45

0.44

1,376,401

1,093,480

297,877

1,877,869

1,391,993

361,483

2,398,790

1,724,140

437,953

29,765
(2,013)

270,125

103,007

167,118

0.58

0.57

24,307

1,405

335,771

125,507

210,264

0.72

0.71

31,429
(2,643)

409,167

147,942

261,225

0.88

0.87

Weighted average shares outstanding-basic

272,976

281,082

286,542

292,252

295,810

Weighted average shares outstanding-

diluted

282,046

287,980

291,714

296,750

300,693

2008

2009

2010

2011

2012

Year Ended December 31,

Other Financial Data:

Net cash provided by operating activities

132,961

Net cash used in investing activities

(138,910)

164,002
(102,494)

159,183
(191,583)

211,772
(571,607)

206,190
(352,534)

Net cash provided by (used in) financing

activities

Capital expenditures (f)
Depreciation and amortization
Balance Sheet Data:

Total assets

Working capital

Long-term obligations, including current

portion

Stockholders' equity

11,793

143,435

33,421

(33,165)
125,624

38,062

18,962

218,243

41,428

311,411

700,010

54,505

157,072

390,282

70,165

1,881,804

2,020,121

2,299,509

3,199,704

3,723,456

441,705

526,125

611,555

752,042

896,407

642,874

603,045

600,954

956,076

1,020,506

1,179,434

1,414,161

1,644,085

1,118,478

1,964,094

(a)

(b)

Includes the results of operations of Pick-Your-Part Auto Wrecking from its acquisition on August 25, 2008 and seven
other businesses from their respective acquisition dates in 2008.

Includes the results of operations of Greenleaf Auto Recyclers, LLC ("Greenleaf") from its acquisition on October 1,
2009 and seven other businesses from their respective acquisition dates in 2009. We recorded a gain on bargain
purchase for the Greenleaf acquisition totaling $4.3 million, which is included in Other income, net.

(c)

(d)

(e)

Includes the results of operations of 20 businesses from their respective acquisition dates in 2010.

Includes the results of operations of Euro Car Parts Holdings Limited from its acquisition effective October 1, 2011
and 20 other businesses from their respective acquisition dates in 2011. Our 2011 results include a loss on debt
extinguishment of $5.3 million related to our execution of a new senior secured credit facility on March 25, 2011. Also
in 2011, we recorded a net $1.4 million gain on adjustments to contingent consideration liabilities. The loss on debt
extinguishment and adjustment to contingent consideration liabilities are included in Other expense, net.

Includes the results of operations of 30 businesses from their respective acquisition dates in 2012. Our 2012 results
include gains totaling $17.9 million, which are included in Cost of goods sold, resulting from lawsuit settlements with
certain of our aftermarket product suppliers. Also in 2012, we recorded a net $1.6 million loss on adjustments to
contingent consideration liabilities, which is included in Other income, net.

(f)

Includes consideration paid and payable for acquisitions and amounts paid and payable for property additions.

ITEM 7.

Overview

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

We provide replacement parts, components and systems needed to repair cars and trucks. Buyers of vehicle
replacement products have the option to purchase from primarily five sources: new products produced by original equipment
manufacturers ("OEMs"), which are commonly known as OEM products; new products produced by companies other than the
OEMs, which are sometimes referred to as aftermarket products; recycled products originally produced by OEMs; 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

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.
Factors that may affect our operating results include, but are not limited to, those listed in the Special Note on Forward-
Looking Statements in Part I, Item 1 of this Annual Report on Form 10-K. Accordingly, our historical results of operations may
not be indicative of future performance.

Acquisitions

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. Our principal focus for
acquisitions is companies that will expand our geographic presence and our ability to provide a wider choice of alternative
vehicle replacement products to our customers.

In 2012, we made 30 acquisitions in North America, which included 22 wholesale businesses and eight self service

retail operations. These acquisitions enabled us to expand our geographic presence and enter new markets. Additionally, two of
our acquisitions were completed with a goal of improving the recovery from scrap and other metals harvested from the vehicles
we purchase: a precious metals refining and reclamation business, which we acquired with the goal of improving the
profitability of the precious metals we extract from our recycled vehicle parts; and a scrap metal shredder, which we expect will
improve the profitability of the scrap metals recovered from the vehicle hulks in certain of our recycled product operations.

Subsequent to December 31, 2012, we completed the acquisition of an aftermarket product distributor in the U.K. and

In addition to our acquisition of ECP, we made 20 acquisitions in North America in 2011 (17 wholesale businesses and
three self service retail operations). Our acquisitions included the purchase of two engine remanufacturers, which expanded our
presence in the remanufacturing industry that we entered in 2010. Additionally, our acquisition of an automotive heating and
cooling component distributor supplements our expansion into the automotive heating and cooling aftermarket products
market. Our North American wholesale business acquisitions also included the purchase of the U.S. vehicle refinish paint
distribution business of Akzo Nobel Automotive and Aerospace Coatings (the “Akzo Nobel paint business”), which allowed us
to increase our paint and related product offerings and expand our geographic presence in the automotive paint market. Our
other 2011 acquisitions enabled us to expand our geographic presence and enter new markets.

In 2010, we made 20 acquisitions in North America (18 wholesale businesses and two self service retail operations).

Our acquisitions included the purchase of an engine remanufacturer, which allowed us to further vertically integrate our supply
chain. We expanded our product offerings through the acquisition of an automotive heating and cooling component business, as
well as a tire recycling business. Our 2010 acquisitions also enabled us to expand our geographic presence, most notably in
Canada through our purchase of Cross Canada, an aftermarket product supplier.

Divestitures

In connection with our 2009 agreement with Schnitzer Steel Industries, Inc., we agreed to sell two self service retail

facilities in Dallas, Texas on January 15, 2010. These facilities qualified for treatment as discontinued operations. The financial
results of these facilities are segregated from our continuing operations and presented as discontinued operations in the
Consolidated Statements of Income for all periods presented. The remaining liabilities of discontinued operations are not
material to our financial position for the periods presented. Unless otherwise noted, this Management's Discussion and Analysis
of Financial Condition and Results of Operations relates only to financial results from continuing operations.

Sources of Revenue

We report our revenue in three categories: (i) aftermarket, other new and refurbished products, (ii) recycled,

remanufactured and related products and services, and (iii) other.

Our revenue from the sale of vehicle replacement products and related services includes sales of (i) aftermarket, other

new and refurbished products and (ii) recycled, remanufactured and related products and services. During 2012, sales of
vehicle replacement products and services represented approximately 86% of our consolidated sales. Of these sales,
approximately 64% was derived from the sales of aftermarket, other new and refurbished products, while 36% was composed
of recycled and remanufactured products and services sales. Our services revenue, which includes secure disposal of "crush
only" vehicles, represented less than 1% of our parts and services revenue for the year ended December 31, 2012.

We sell the majority of our vehicle replacement products to collision and mechanical repair shops. Our vehicle
replacement products include sheet metal crash parts such as doors, hoods, and fenders; bumper covers; engines; head and tail
lamps; and wheels. For an additional fee, we sell extended warranty contracts for certain mechanical products. These contracts
cover the cost of parts and labor and are sold for periods of six months, one year, two years or a non-transferable lifetime
warranty. We defer the revenue from such contracts and recognize it ratably over the term of the contracts or three years in the
case of lifetime warranties. The demand for our products and services 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, availability and pricing of new OEM parts, seasonal weather patterns and local weather conditions.
Additionally, 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 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 products, but rather a pricing structure that varies from day to day based
upon such factors as product availability, quality, demand, new OEM product prices, the age and mileage of the vehicle from
which the part was obtained and competitor pricing.

In 2012, revenue from other sources represented approximately 14% of our consolidated sales. These other sources

include scrap sales and sales of aluminum ingots and sows. 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. With our acquisition of a precious metals refining and reclamation business in
the second quarter of 2012, we also generate revenue from the sales of precious metals harvested from various sources,
including certain of our salvage vehicle parts. 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

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

Our cost of goods sold for recycled products includes the price we pay for the salvage vehicle and, where applicable,
auction, storage and towing 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), and the status of laws regulating bidders or exporters of salvage vehicles. 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 account for approximately 9% 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, costs to remanufacture the products, including direct and
indirect labor, rent, depreciation and other overhead related to 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. 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. We also sell separately
priced extended warranty contracts for certain mechanical products. The expense related to extended warranty claims is
recognized when the claim is made.

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 labor for plant management and facility and warehouse personnel and
related incentive compensation and employee benefits, rent, utilities, repairs and maintenance costs related to our facilities and
equipment, and other facility expenses such as property insurance and taxes. 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 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 labor costs for drivers, fuel, third party freight costs, local delivery and transfer truck
leases or rentals and related repairs and maintenance and insurance, and supplies.

Our selling and marketing expenses primarily include salary, commission and other incentive compensation expenses
for sales personnel, advertising, promotion and marketing costs, telephone and other communication expenses, credit card fees
and bad debt expense. Personnel costs account for approximately 80% of our selling and marketing expenses. Most of our
product 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
that provide corporate and field management, treasury, accounting, legal, payroll, business development, human resources and
information systems functions. These costs include wages and benefits for corporate, regional and administrative personnel,
stock-based compensation and other incentive compensation, IT system support and maintenance expenses, accounting, legal
and other professional fees, and supplies.

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 products because there are more
weather related accidents, which generate repairs. In addition, the cost of salvage vehicles may be lower as weather related
accidents generate a larger supply of total loss vehicles.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United
States. 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. On an
ongoing basis, we evaluate our estimates, assumptions, and judgments, including those related to revenue recognition,
inventory valuation, business combinations, and goodwill impairment. We base our estimates on historical experience and on
various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis
for our judgments about the carrying values of assets and liabilities and our recognition of revenue. Actual results may differ
from these estimates.

Revenue Recognition

We recognize and report revenue from the sale of vehicle replacement products when they are shipped or picked up by

the customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that
management estimates based upon historical information. A product would ordinarily be returned within a few days of
shipment. Our customers may earn discounts based upon sales volumes or sales volumes coupled with prompt payment.
Allowances are normally given within a few days following product shipment. We analyze historical returns and allowances
activity by comparing the items to the original invoice amounts and dates. We use this information to project future returns and
allowances on products sold. If actual returns and allowances are higher than our historical experience, there would be an
adverse impact on our operating results in the period of occurrence.

For an additional fee, we also sell extended warranty contracts for certain mechanical products. Revenue from these

contracts is deferred and recognized ratably over the term of the contracts, or three years in the case of lifetime warranties.

We recognize revenue from the sale of scrap, cores, and other metals when title has transferred, which typically occurs

upon delivery to the customer.

Inventory Accounting

Aftermarket and Refurbished Product Inventory. Our aftermarket inventory cost is established based on the average

price we pay for parts, and includes expenses incurred for freight and overhead costs. For items purchased from foreign
companies, import fees and duties and transportation insurance are also included. Refurbished inventory cost is based on the
average price we pay for cores, and also includes expenses incurred for freight, labor and other overhead.

Salvage and Remanufactured Inventory. Our salvage inventory cost is established based upon the price we pay for a

vehicle, including auction, storage and towing fees, as well as expenditures for buying and dismantling. Inventory carrying
value is determined using the average cost to sales percentage at each of our facilities and applying that percentage to the
facility's inventory at expected selling prices. The average cost to sales percentage is derived from each facility's historical
vehicle profitability for salvage vehicles purchased at auction or from contracted rates for salvage vehicles acquired under
certain direct procurement arrangements. Remanufactured inventory cost is based upon the price paid for cores, and also
includes expenses incurred for freight, direct manufacturing costs and overhead.

For all inventory, carrying value is recorded at the lower of cost or market and is reduced to reflect the age of the
inventory and current anticipated demand. If actual demand differs from our estimates, additional reductions to inventory
carrying value would be necessary in the period such determination is made.

Business Combinations

We record our acquisitions under the purchase method of accounting, under which the acquisition purchase price is

allocated to the assets acquired and liabilities assumed based upon their respective fair values. We utilize management
estimates and, in some instances, independent third-party valuation firms to assist in determining the fair values of assets
acquired, liabilities assumed and contingent consideration granted. Such estimates and valuations require us to make significant
assumptions, including projections of future events and operating performance. The purchase price allocation is subject to
change during the measurement period, which is limited to one year subsequent to the acquisition date.

For certain acquisitions, we may issue contingent consideration under which additional payments will be made to the

former owners if specified future events occur or conditions are met, such as meeting profitability or earnings targets. Each
contingent consideration obligation is measured at the acquisition date fair value of the consideration, which is determined
using the discounted probability-weighted expected cash flows. At each subsequent reporting period, we remeasure the liability
at fair value and record any changes to the fair value through Change in Fair Value of Contingent Consideration Liabilities
within Other Expense (Income) on our Consolidated Statements of Income. The fair value measurement of the liability is
performed by our corporate accounting department using current information about key assumptions, with the input and
oversight of our operational and executive management teams. Each reporting period, we evaluate the performance of the
business compared to our previous expectations, along with any changes to our future projections, and update the estimated
cash flows accordingly. In addition, we consider changes to our cost of capital and changes to the probability of achieving the
earnout payment targets when updating our discount rate on a quarterly basis.

Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount

periods and rates, variances between actual results achieved and projected results, changes in the projected results of the
acquired business, or changes in our assessment of the probabilities surrounding the achievement of targets detailed in the
respective agreements. As of December 31, 2012, we recorded $90.0 million of contingent consideration liabilities. Actual
payouts under these contingent consideration arrangements will be determined at the end of the performance periods, and if the
maximum payments were earned, the total payout would be approximately $117 million.

Goodwill Impairment

We are required to test our goodwill for impairment at least annually. When testing goodwill for impairment, we are

required to evaluate events and circumstances that may affect the performance of the reporting unit and the extent to which the
events and circumstances may impact the future cash flows of the reporting unit to determine whether the fair value of the
assets exceed the carrying value. If these assumptions or estimates change in the future, we may be required to record
impairment charges for these assets. In response to changes in industry and market conditions, we may be required to
strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result
in an impairment of goodwill.

We are organized into three operating segments: Wholesale—North America; Wholesale—Europe; and Self Service.
We have also concluded that these three operating segments are reporting units for purposes of goodwill impairment testing in
2012. We perform goodwill impairment tests annually in the fourth quarter and between annual tests whenever events indicate
that an impairment may exist. During 2012, we did not identify any events or changes in circumstances that would more likely
than not reduce the fair value of our reporting units below their carrying amounts. Therefore, we did not perform any
impairment tests other than our annual test in the fourth quarter of 2012.

Our goodwill would be considered impaired if the net book value of a reporting unit exceeded its estimated fair value.

The fair value estimates are established using weightings of the results of a discounted cash flow methodology and a
comparative market multiples approach. We believe that using two methods to determine fair value limits the chances of an
unrepresentative valuation. As of December 31, 2012, we had a total of $1.7 billion in goodwill subject to future impairment
tests. If we were required to recognize goodwill impairments, we would report those impairment losses as part of our operating
results. We determined that no adjustments were necessary when we performed our annual impairment testing in the fourth
quarter of 2012. A 10% decrease in the fair value estimates of the reporting units in the annual impairment test would not have
changed this determination, and each of the reporting units had a substantial excess of fair value over carrying value.

Recently Issued Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 2, "Summary of Significant Accounting Policies" to the

consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to new
accounting standards.

Financial Information by Geographic Area

See Note 15, "Segment and Geographic Information" to the consolidated financial statements in Part II, Item 8 of this

Annual Report on Form 10-K for information related to our revenue and long-lived assets by geographic region.

Results of Operations—Consolidated

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

Statements of Income Data:
Revenue

Cost of goods sold

Gross margin

Facility and warehouse expenses

Distribution expenses

Selling, general and administrative expenses

Restructuring and acquisition related expenses

Depreciation and amortization

Operating income

Other expense, net

Income from continuing operations before provision for income taxes

Provision for income taxes

Income from continuing operations

Income from discontinued operations

Net income

Year Ended December 31,

2012

2011

2010

100.0%

58.2%

41.8%

8.4%

9.1%

12.0%

0.1%

1.6%

10.6%

0.7%

9.9%

3.6%

6.3%

0.0%

6.3%

57.4%

42.6%

9.0%

8.8%

12.0%

0.2%

1.5%

11.1%

0.8%

10.3%

3.8%

6.4%

0.0%

6.4%

55.7%

44.3%

9.5%

8.6%

12.6%

0.0%

1.5%

12.1%

1.1%

10.9%

4.2%

6.8%

0.1%

6.8%

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

Revenue. Our revenue increased 26.1% to $4.1 billion for the year ended December 31, 2012 from $3.3 billion in
2011. The increase in revenue was due to 21.9% acquisition related revenue growth and 4.1% organic growth, which was
composed of 6.0% parts and services revenue partially offset by a 5.8% decline in other revenue due to declining scrap steel
and other metals prices. Acquisition related revenue growth for the year ended December 31, 2012 totaled $716.8 million,
which included $481.6 million from our fourth quarter 2011 acquisition of ECP. Our organic revenue growth in aftermarket,
other new and refurbished products of 6.2% is primarily a result of higher volumes. Incremental sales volume from ECP's new
branches, which we include in organic revenue, contributed 4.4% of the growth. The remaining volume increase is primarily
attributable to greater customer penetration resulting from our expansion into complementary product lines such as paint and
related products. Our organic revenue from the sale of recycled and remanufactured products grew 5.8% primarily as a result
of higher sales volumes, which resulted from higher inventory purchases that contributed to a greater volume of parts available
for sale. Organic revenue growth in parts and services was negatively affected by milder winter weather conditions in North
America in the first quarter and into the beginning of the second quarter of 2012 as the milder winter weather contributed to
fewer and less severe vehicle accidents, resulting in lower insurance claims activity.

Cost of Goods Sold. Our cost of goods sold increased to 58.2% of revenue in 2012 from 57.4% of revenue in 2011. In

2012, the prices we received for scrap metal declined relative to the cost of the scrap component of the cars that we crushed,
while in the prior year scrap metal prices increased relative to the cost component. The resulting margin compression in our
Self Service and Wholesale - North America segments contributed 0.6% of the increase in cost of goods sold. Our acquisition
of ECP, which generates lower gross margins than our North American business because of a greater weighting on lower
margin mechanical products, increased our cost of goods sold by 0.3% of revenue. Our cost of goods sold for the year ended
December 31, 2012 also reflects a 0.2% increase as a result of the lower gross margins generated by our precious metals
refining and reclamation business that we acquired in the second quarter of 2012. Higher warranty claims experience in 2012,
primarily related to our remanufactured engines, increased cost of goods sold by 0.2% of revenue. Our cost of goods sold for
2012 also reflects lower levels of revenue from high margin, "crush only" vehicles compared to the prior year, which increased
cost of goods sold by 0.2%. These increases in our cost of goods sold were partially offset by a 0.2% reduction in cost of goods
sold for lower vehicle acquisition costs, primarily in our Wholesale - North America segment. Additionally, we recognized a
gain on lawsuit settlements totaling $17.9 million, which reduced cost of goods sold by 0.4% of revenue. See Note 8,
"Commitments and Contingencies" to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-
K for further information on the lawsuit settlements.

Facility and Warehouse Expenses. As a percentage of revenue, facility and warehouse expenses for the year ended
December 31, 2012 decreased to 8.4% of revenue compared to 9.0% in 2011, which was primarily due to lower facility and
warehouse expense in our European operations as compared to our North American operations. The branch locations in the
U.K. are typically smaller and less costly than the warehouse locations in North America since the majority of the inventory is
stored in the national distribution center in the U.K., which supplies the branch locations daily. In our North American
operations, most of the inventory sold by our locations is stored on site rather than in regional or national distribution centers.
The cost of the national distribution center in the U.K. is capitalized into inventory and expensed through cost of goods sold.

Distribution Expenses. As a percentage of revenue, distribution expenses increased to 9.1% of revenue in 2012 from

8.8% of revenue in 2011, primarily resulting from an increase of 0.2% related to our European operations. Our European
operations, which generate a greater proportion of revenue from sales to mechanical repair shops compared to our North
American operations, incur relatively higher delivery expenses as garage customers demand faster delivery times than our
North American collision repair customers. In our North American operations, distribution expenses increased by 0.2% of
revenue due to higher compensation costs as a percentage of revenue compared to the prior year.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses for the year ended

December 31, 2012 were consistent with the prior year at 12.0% of revenue. Our European operations increased selling,
general and administrative expenses by 0.2% of revenue, primarily due to greater personnel expenditures for the relatively
larger sales force compared to our North American operations. The impact of higher selling expenses in our European
operations was offset by a reduction in general and administrative personnel expenditures, including incentive compensation, as
a percentage of revenue in our North American operations.

Restructuring and Acquisition Related Expenses. During 2012 and 2011, we incurred $2.8 million and $7.6 million of
restructuring and acquisition related expenses, respectively. In 2012, we incurred $1.1 million to execute our restructuring plan
to consolidate our bumper and wheel refurbishing product lines. We also incurred $1.2 million of restructuring expenses
related to the integration of certain of our 2011 and 2012 acquisitions into our existing business. Our 2011 expenses included
$4.0 million related to integration of our 2011 acquisition of the Akzo Nobel paint business and our 2010 acquisition of Cross
Canada, a Canadian aftermarket business. We also incurred $0.4 million of integration costs related to certain of our other
acquisitions. Acquisition related expenses, which consist of external costs such as closing costs and professional fees, totaled
$0.5 million and $3.2 million for the years ended December 31, 2012 and 2011, respectively. Our acquisition related expenses
in 2011 primarily related to our acquisition of ECP on October 1, 2011. See Note 10, "Restructuring and Acquisition Related
Expenses" to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further
information on our restructuring and integration plans.

Depreciation and Amortization. As a percentage of revenue, depreciation and amortization expense was 1.6% in 2012

compared to 1.5% in 2011. Higher expense in 2012 resulting from our increased levels of property and equipment and higher
levels of intangible assets as a result of business acquisitions was mostly offset by continued leveraging of our existing
facilities to support organic revenue growth.

Other Expense, Net. Total other expense, net increased to $28.8 million for the year ended December 31, 2012 from

$25.7 million for the prior year. This increase was primarily due to an increase in interest expense of $7.1 million compared to
the prior year, partially offset by a $5.3 million loss on debt extinguishment recognized in 2011 related to the write off of debt
issuance costs in conjunction with the execution of our senior secured credit agreement. The increase in interest expense in
2012 was due to higher average outstanding bank borrowings of $922 million compared to $671 million in 2011, primarily as a
result of additional borrowings to finance our acquisition of ECP in the fourth quarter of 2011. The effect of higher average
debt levels was partially offset by a reduction in our average effective interest rate on bank borrowings to 3.1% in 2012 from
3.4% in 2011, resulting from lower interest rates under our credit agreement. In 2012, we recognized $1.6 million of expense
as a result of fair value adjustments to our contingent payment liabilities, while we recognized a $1.4 million gain in 2011.
Adjustments to our contingent consideration liabilities may cause variability in our results of operations, as changes in the
assumptions used to measure the fair value of the liabilities may result in net gains or losses from period to period. We
increased our collections of fees for late payments in 2012, which increased other income by $1.6 million over the prior year.
In 2012, the impact of foreign currency fluctuations in the Canadian dollar, the British pound and other currencies was a gain of
$0.2 million compared to a loss of $0.4 million in 2011.

Provision for Income Taxes. Our effective income tax rate was 36.2% and 37.4% for the years ended December 31,
2012 and 2011, respectively. The lower effective income tax rate in 2012 reflects a benefit of 1.5% relative to the prior year
from our expanding international operations as a larger proportion of our pretax income was generated in lower rate
jurisdictions. Other rate effects from discrete items and permanent differences were 0.3% higher in 2012 than the prior year.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Revenue. Our revenue increased 32.4% to $3.3 billion in 2011 compared to $2.5 billion in 2010. The increase in
revenue was primarily due to business acquisitions, the higher volume of products we sold and higher revenue from scrap metal
and other metals sales. Our acquisition related revenue growth of 21.5% includes $138 million of incremental revenue
generated by ECP since its acquisition effective October 1, 2011. Our total organic revenue growth rate was 10.7%, composed
of 7.9% and 28.0% organic growth in parts and services revenue and other revenue, respectively. Organic growth in parts and
services revenue reflects the increase in salvage revenue over relatively lower levels during the prior year due primarily to
volume increases. The prior year period was impacted by the cash for clunkers program, under which we purchased lower cost,
older vehicles that did not have the same parts revenue potential as our more recent inventory purchases. Additionally, during
the first quarter of 2010, we reduced purchases of salvage vehicles due to higher acquisition prices at the salvage auctions,
resulting in lower volume of salvage parts available for sale during the first two quarters of 2010. During the second half of
2011, our organic revenue growth rate in parts and services revenue of 6.5% reflected the lessening impact of the cash for
clunkers program and lower buying levels on the prior year results. Our aftermarket revenue increased primarily due to growth
in sales volumes, which resulted from higher inventory purchases that contributed to a greater volume of parts available for
sale. The growth in other revenue, which includes sales of scrap metal and other metals, was primarily due to higher metals
prices combined with higher volume of scrap sold. We also had a 0.1% favorable impact on revenue as a result of foreign
exchange in our Canadian operations.

Cost of Goods Sold. Our cost of goods sold increased to 57.4% of revenue in 2011 from 55.7% of revenue in 2010. Of

the increase in cost of goods sold as a percentage of revenue, 0.8% was due to higher input costs combined with competitive
sales pricing pressure in our aftermarket products. Cost of goods sold in 2011 was also impacted by a shift in product mix,
which increased cost of goods sold as a percentage of revenue by 0.6%. Certain of our acquisitions toward the end of 2010 and
during 2011 increased our revenue in product lines that are complementary to our existing vehicle replacement parts offerings
but have lower gross margins, such as remanufactured engines. The product mix effect was also partially generated by sales of
scrap aluminum as we expanded our furnace capacity through an acquisition in August 2010. Our sales of scrap aluminum,
which is a by-product of our wheel refinishing operations, generate lower margins than our sales of vehicle products. Our
acquisition of ECP, which generates lower gross margins than our North American business because of a greater weighting on
lower margin mechanical products, increased our cost of goods sold as a percentage of revenue by 0.2%. Vehicle acquisition
costs in our self service business grew at a greater rate than revenue as purchase costs were driven higher by increased demand
for used cars and higher scrap prices. While scrap metal prices declined late in 2011, average vehicle acquisition costs did not
fall as suppliers continued to demand higher prices. These vehicle acquisition factors caused a 0.5% increase in our cost of
goods sold as a percentage of revenue compared to 2010. These effects were partially offset by reductions in our wholesale
salvage costs as a percentage of revenue as the impact of rising vehicle costs driven by higher demand for salvage vehicles was
offset by our increased recovery on cores and benefits of a net increase in scrap prices over prior year levels.

Facility and Warehouse Expenses. As a percentage of revenue, facility and warehouse expenses declined to 9.0% of
revenue in 2011 from 9.5% in 2010. The decrease was driven by a reduction in personnel-related expenses as a percentage of
revenue, which fell to 4.9% compared to 5.3% in the prior year. As we expanded our product offerings through acquisitions in
complementary business lines during 2011, we were able to leverage the fixed component of facility and warehouse expenses,
such as personnel costs, as we integrated the acquisitions into our existing business. The decrease in facility and warehouse
expenses as a percentage of revenue was also partially a result of higher other revenue, which grew at a greater rate than
personnel expenditures.

Distribution Expenses. Distribution expenses as a percentage of revenue increased by 0.2% compared to 2010 as

higher fuel and freight costs offset benefits from improved utilization of our distribution employees and equipment. Rising fuel
prices increased fuel expense to 1.4% of revenue in 2011 compared to 1.2% in the prior year. Higher fuel prices also impacted
third party freight expense, which increased to 1.4% of revenue in 2011 from 1.2% in 2010. These increases were partially
offset by improved leveraging of our distribution network, including our personnel expenditures and equipment costs, in a
period of growing revenue and higher other revenue that did not require additional distribution expenditures.

Selling, General and Administrative Expenses. As a percentage of revenue, our selling, general and administrative
expenses decreased to 12.0% in 2011 from 12.6% in 2010. The decline in selling, general and administrative expenses was
primarily driven by improved utilization of these costs in a period of rising revenue, including increased revenue from scrap
metal and other metals that did not require additional selling or administrative expenditures. The decrease in these costs as a
percentage of revenue included a reduction in selling expenses to 6.8% of revenue from 7.1% of revenue. Our general and
administrative expenses, which include corporate overhead, professional fees and information technology expenses, decreased
to 5.2% of revenue from 5.5% of revenue.

Restructuring and Acquisition Related Expenses. In 2011, we incurred $7.6 million of restructuring and acquisition

related expenses compared to $0.7 million in 2010. Our 2011 expenses include $4.0 million related to integrating our 2011
acquisition of the Akzo Nobel paint business and our 2010 acquisition of Cross Canada, a Canadian aftermarket business, into
our existing operations. We also incurred $0.4 million of integration costs related to certain of our other acquisitions.
Acquisition related expenses, which consist of external costs primarily related to our acquisition of ECP effective as of
October 1, 2011, totaled $3.2 million in 2011. These acquisition related expenses included professional fees such as accounting,
legal, advisory and valuation services. Restructuring charges incurred in 2010 included charges related to integration efforts
from 2009 acquisitions. See Note 10, "Restructuring and Acquisition Related Expenses," to the consolidated financial
statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on our restructuring and integration
plans.

Depreciation and Amortization. As a percentage of revenue, depreciation and amortization expense was 1.5% in both

2011 and 2010. Our increased levels of property and equipment, primarily driven by capital expenditures and acquisitions as
well as higher intangible amortization expense, were offset by leveraging of our existing facilities to grow revenue and
acquisition related revenue growth, respectively.

Other Expense, Net. Total other expense, net decreased to $25.7 million in 2011 from $27.8 million in 2010. In 2011,

our net interest expense decreased by $5.9 million compared to 2010, which was offset by a loss on debt extinguishment of
$5.3 million. On March 25, 2011, we executed a new senior secured credit agreement, and as a result, the unamortized balance
of debt issuance costs related to the previous credit agreement was written off. Interest expense decreased due to a reduction in
the average effective interest rate on our bank borrowings to 3.4% in 2011 from 4.9% in 2010, resulting from lower interest
rates under our new credit facility combined with the impact of lower fixed interest rates under our outstanding interest rate
swaps compared to the prior year. We also recognized a net gain of $1.4 million related to adjustments to reduce the fair value
estimates of our contingent consideration liabilities. In 2011, we recognized a $0.4 million foreign exchange loss related to
fluctuations in the Canadian dollar, the British pound and other currencies, compared to a $0.2 million gain in the prior year.

Provision for Income Taxes. Our effective income tax rate in 2011 was 37.4% compared with 38.1% in 2010. The
lower effective income tax rate in 2011 reflects a benefit of 0.5% relative to the prior year from our expanding international
operations and a 0.3% reduction in our effective state tax rate. Our international operations, which grew in 2011 with the ECP
acquisition, contributed to a lower effective tax rate as a larger proportion of our pretax income was generated in lower rate
jurisdictions. Additionally, we achieved tax savings from our financing of foreign acquisitions. Our effective state tax rate
declined as a result of a shift in income to lower rate jurisdictions. The effective income tax rate for the comparable prior year
period included a discrete benefit of $1.5 million resulting primarily from the revaluation of deferred taxes in connection with a
legal entity reorganization. While we had no individually significant discrete items in 2011, the total benefit recognized for the
year was similar to the benefit from the legal entity reorganization in 2010.

Income from Discontinued Operations, Net of Taxes. Income from discontinued operations, net of taxes, was $2.0
million in 2010, which was primarily the result of a gain of $2.7 million ($1.7 million, net of tax) from the sale of two self
service retail facilities on January 15, 2010. Our 2011 results do not include any impact from these discontinued operations as
the facilities were closed or sold in the first quarter of 2010.

Results of Operations—Segment Reporting

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. While we believe our Wholesale—Europe operating segment shares many of
the characteristics of our North American operations, we have provided separate financial information as we believe this data
would be beneficial to users in understanding our results.

The following table presents our financial performance, including revenue and earnings before interest, taxes, and

depreciation and amortization (“EBITDA”) by reportable segment for the periods indicated (in thousands):

Revenue

North America

Europe

Total revenue
EBITDA
North America(1)
Europe(2)
Total EBITDA

Year Ended December 31,

2012

2011

2010

3,426,858

696,072

4,122,930

440,448

70,099

510,547

3,131,376

138,486

3,269,862

405,924

12,144

418,068

2,469,881

—

2,469,881

339,869

—

339,869

(1)

(2)

EBITDA for the year ended December 31, 2012 includes gains totaling $17.9 million resulting from settlements of a
class action lawsuit against several of our suppliers as discussed in Note 8, "Commitments and Contingencies" to the
consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. 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 as discussed in
Note 7, "Fair Value Measurements."
EBITDA for the years ended December 31, 2012 and 2011 includes losses of $3.6 million and $0.6 million,
respectively, from the change in fair value of the ECP contingent consideration liabilities as discussed in Note 7, "Fair
Value Measurements" to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
We adjust the fair value of contingent consideration liabilities each quarter, and the change in the fair value may be
either an increase or decrease to EBITDA for the segment based on changes to the underlying assumptions used in the
fair value calculation.

The key measure of segment profit or loss reviewed by our chief operating decision maker 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. See Note 15, "Segment and Geographic Information" to the
consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for a reconciliation of total EBITDA to
Income from Continuing Operations.

Since we presented a single reportable segment (North America) until the acquisition of ECP effective October 1,

2011, our European segment does not have a full comparative prior year period for the year ended December 31, 2012.
Therefore, the discussion of the consolidated results of operations covers the factors driving the year over year performance of
our North American segment and includes the effect of the European results of operations on our consolidated results.
Compared to the year ended December 31, 2011, including the nine-month unaudited pre-acquisition period, ECP achieved
revenue and EBITDA growth of 28% and 30%, respectively, during the year ended December 31, 2012. The growth in our
European segment was primarily a result of higher sales volumes at existing branches, with additional revenue contributed by
new branches as well. ECP continued to expand its branch network by opening 40 new branches in the U.K. in 2012.

2013 Outlook

We estimate that net income and diluted earnings per share for the year ending December 31, 2013, excluding the

impact of any restructuring and acquisition related expenses and any gains or losses related to acquisitions or divestitures
(including changes in the fair value of contingent consideration liabilities), will be in the range of $305 million to $330 million
and $1.00 to $1.09, respectively.

Liquidity and Capital Resources

Our primary sources of ongoing liquidity are cash flows from our operations and our credit agreement. Our credit

agreement, which was executed on March 25, 2011 and subsequently amended and restated on September 30, 2011, provides
for total borrowings of up to $1.4 billion, consisting of a $950 million revolving credit facility (including up to $500 million
available in foreign currencies) and up to $450 million of term loan borrowings. In 2012, we borrowed $200 million of

available term loans under the credit agreement, which were used to pay down a portion of our outstanding revolving credit
facility borrowings. As of December 31, 2012, the outstanding obligations under the credit agreement totaled $974.6 million,
composed of $420.6 million of term loans and $554.0 million of revolver borrowings. After giving effect to outstanding letters
of credit, our availability under the revolving credit facility at December 31, 2012 was $356.1 million. We do not expect to
utilize the revolver as a primary source of funding for working capital needs as we expect our cash flows from operations to be
sufficient for that purpose, but we do maintain availability as we continue to expand our facilities and network. Cash and
equivalents at December 31, 2012 totaled $59.8 million.

Borrowings under the credit agreement accrue interest at variable rates, which depend on the currency and the duration

of the borrowing, plus an applicable margin rate. The weighted-average interest rate on borrowings outstanding against our
credit agreement at December 31, 2012 (after giving effect to the interest rate swap contracts in force, described in Note 6,
"Derivative Instruments and Hedging Activities" to the consolidated financial statements in Part II, Item 8 of this Annual
Report on Form 10-K) was 2.85%. Of our outstanding credit agreement borrowings of $974.6 million and $901.4 million at
December 31, 2012 and 2011, $31.9 million and $12.5 million were classified as current maturities, respectively. The increase
in the current portion of outstanding credit agreement borrowings was a result of the draw of the additional $200 million term
loan in January 2012 combined with higher term loan payments beginning in 2013.

On September 28, 2012, we entered into a three year receivables securitization facility with Bank of Tokyo-Mitsubishi

UFJ, Ltd. ("BTMU"), which we expect will provide borrowing capacity at lower commercial paper rates and assist us in
maintaining availability under the revolving credit facility as we continue to expand our business organically and through
acquisitions. At the end of the initial three year term, the financial institutions party to the agreement may elect to renew their
commitments and thereby extend the agreement. Under the terms of the securitization facility, certain of our subsidiaries (the
"Originators") sell certain of their trade receivables to a bankruptcy-remote special purpose wholly owned subsidiary, LKQ
Receivables Finance Company, LLC ("LRFC"), which in turn sells an ownership interest in the receivables on a revolving basis
to BTMU for the benefit of conduit investors for up to $80 million in cash proceeds. Upon payment of the receivables by
customers, rather than remitting to BTMU the amounts collected, LRFC has reinvested and will reinvest such receivables
payments to purchase additional receivables from the Originators, subject to the Originators generating sufficient eligible
receivables to sell to LRFC in replacement of collected balances. As the receivables are held by LRFC, a separate bankruptcy-
remote corporate entity, they are available first to satisfy the creditors of LRFC. The initial proceeds of $77.3 million were used
for the repayment of outstanding revolver borrowings under the credit agreement. As of December 31, 2012, the outstanding
balance under the receivables securitization facility was $80 million with a borrowing rate of 1.05%.

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. Our purchases of aftermarket products totaled approximately $1.3 billion, $836.3 million, and $576.7 million in 2012,
2011, and 2010, respectively. The increase in aftermarket inventory purchases was primarily driven by our fourth quarter 2011
acquisition of ECP, which contributed $440.3 million and $85.7 million during 2012 and 2011, respectively. We normally pay
for salvage vehicles acquired at salvage auctions and under some direct procurement arrangements at the time that we take
possession of the vehicles. We acquired approximately 254,000, 228,000, and 198,000 wholesale salvage vehicles and 8,200,
6,000, and 4,000 heavy and medium-duty trucks in 2012, 2011, and 2010, respectively. In addition, we acquired approximately
416,000, 352,000, and 297,000 lower cost self service and "crush only" vehicles in 2012, 2011, and 2010, respectively.

Net cash provided by operating activities totaled $206.2 million for the year ended December 31, 2012, compared to
$211.8 million in 2011. In 2012, our EBITDA increased by $92.5 million compared to the prior year, due to both acquisition
related growth and organic growth. The increase in EBITDA was partially offset by a $43.7 million greater cash outflow for
accounts payable as we accelerated payments to take advantage of prompt pay discounts, resulting in a decrease in days
payable outstanding in 2012 compared to 2011. In 2012, we also made $33.0 million of higher income tax payments compared
to the prior year as a result of greater pretax earnings. Due to higher outstanding debt levels, cash payments for interest
exceeded payments in the prior year period by $7.7 million. Prepayments for insurance policies and payroll taxes increased by
$7.3 million over the prior year due to additional insurance policies and the timing of payroll tax payments for our European
operations acquired in the fourth quarter of 2011. The year ended December 31, 2012 reflected higher bonus payments of $1.8
million compared to the prior year as well as $5.9 million of incremental payments under our long term incentive plan.

Net cash used in investing activities totaled $352.5 million for the year ended December 31, 2012, compared to $571.6

million for the same period of 2011. We invested $265.3 million of cash, net of cash acquired, in 30 business acquisitions and
payments for certain of our 2011 acquisitions during 2012, compared to $486.9 million for 21 business acquisitions in the
comparable prior year period, including our acquisition of ECP for $293.7 million of cash, net of cash acquired. Property and
equipment purchases were $88.3 million in the year ended December 31, 2012 compared to $86.4 million in the prior year
period.

Net cash provided by financing activities totaled $157.1 million for the year ended December 31, 2012, compared to

$311.4 million in 2011. In 2012, we borrowed a net $147.0 million under our credit facilities, compared to $307.0 million in the
prior year. Our 2012 bank borrowings included $200 million of available term loans under the credit agreement and $80
million under the receivables securitization facility executed in September, the proceeds of which were used to fund
acquisitions and pay outstanding amounts under our revolving credit facility. Our bank borrowings in 2011 were used
primarily to finance the acquisition of ECP in October 2011. Related to the execution of the 2011 credit agreement, we paid
$11.0 million of debt issuance costs during 2011. Payments of other obligations, which included primarily acquisition related
notes payable, totaled $23.1 million in 2012, compared to $4.5 million during 2011. Cash generated from exercises of stock
options provided $17.7 million and $11.9 million in the years ended December 31, 2012 and 2011, respectively. The excess tax
benefit from share-based payment arrangements reduced income taxes payable by $15.7 million and $8.0 million in the years
ended December 31, 2012 and 2011, respectively.

Net cash provided by operating activities totaled $211.8 million for the year ended December 31, 2011, compared to

$159.2 million in 2010. In 2011, our EBITDA increased by $78.2 million compared to the prior year period, due to both
acquisition related growth and organic growth. Additionally, our cash interest payments were $6.1 million lower than the prior
year period due primarily to lower effective interest rates under our current secured credit agreement. These increases were
partially offset by $25.1 million in higher tax payments primarily driven by the increase in pretax income and a higher net
investment in our primary working capital accounts (receivables, inventory, and payables). The net cash outflow for our
primary working capital accounts increased to $79.6 million for the year ended December 31, 2011 from $69.9 million for the
comparable prior year period, primarily due to increased inventory purchases partially offset by the timing of cash payments
and collections.

Net cash used in investing activities totaled $571.6 million for the year ended December 31, 2011, compared to $191.6

million for the same period of 2010. We invested $486.9 million of cash, net of cash acquired, in 21 acquisitions during 2011,
including $293.7 million of cash paid, net of cash acquired, for our acquisition of ECP. Cash payments, net of cash acquired,
for our 20 acquisitions in 2010 totaled $143.6 million. In January 2010, we completed the sale of two of our self service yards,
resulting in a cash inflow, net of cash sold, of $12.0 million. Property and equipment purchases were $86.4 million in the year
ended December 31, 2011, which is $25.0 million greater than the property and equipment purchases in 2010. The growth in
capital expenditures was driven by an increase in site improvement and capacity expansion projects compared to the prior year,
as well as expenditures related to planned 2010 projects that carried over into 2011.

Net cash provided by financing activities totaled $311.4 million for the year ended December 31, 2011, compared to

$19.0 million in 2010. In March 2011, we entered into our senior secured credit agreement, under which our initial draw of
$591.8 million was used to pay off amounts outstanding under the previous credit facility. The credit agreement was amended
and restated effective September 30, 2011 to provide additional capacity under our revolving credit facility, under which we
drew $325.6 million to fund our acquisition of ECP in the fourth quarter. Additionally, we made three scheduled term loan
payments totaling $9.4 million in 2011. Related to the execution and subsequent amendment of our credit agreement, we paid
$11.0 million of debt issuance costs. During the prior year, we had only one required quarterly term loan payment for $7.5
million due to prepayments made in 2009. Cash generated from exercises of stock options provided $11.9 million and $14.0
million in 2011 and 2010, respectively. The excess tax benefit from share-based payment arrangements reduced income taxes
payable by $8.0 million and $15.0 million in 2011 and 2010, respectively.

As part of the consideration for certain of our business acquisitions, we entered into contingent consideration
agreements with the selling shareholders. Under the terms of the contingent consideration agreements, additional payments will
be made to the former owners if specified future events occur or conditions are met, such as meeting profitability or earnings
targets. For our acquisition of ECP, we are required to pay up to an additional $89 million (£55 million) in the event the
business achieves certain EBITDA targets during the years ending December 31, 2012 and 2013. Based on our evaluation of
the likelihood of meeting these performance targets, we recorded a liability for the acquisition date fair value of the contingent
consideration of $77.5 million (£50.2 million). The acquisition date fair value of our other contingent consideration liabilities
totaled $5.5 million, $3.7 million, and $2.0 million for acquisitions completed in 2012, 2011, and 2010, respectively. As of
December 31, 2012, the fair value of our contingent consideration liabilities was $90.0 million, which included a liability for
the maximum payment of $40.6 million (£25 million) related to the 2012 performance period of the ECP contingent payment
agreement. We expect to fund these payments through either cash generated from operations or through draws on our
revolving credit facility. In addition to these contingent consideration agreements, we issued promissory notes in connection
with our business acquisitions totaling approximately $16.0 million, $34.2 million and $5.5 million, in 2012, 2011, and 2010,
respectively. The notes bear interest at annual rates of 1.0% to 4.0%, and interest is payable at maturity or in monthly
installments.

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. Our credit agreement and recently executed
receivables facility provide additional sources of liquidity to fund acquisitions, which we expect will support our strategy to
supplement our organic growth with acquisitions.

We believe that our current cash and equivalents, cash provided by operating activities and funds available from bank

borrowings 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. 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 facility, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional
equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants. Our failure
to raise capital if and when needed could have a material adverse impact on our business, operating results, and financial
condition.

2013 Outlook

We estimate that our capital expenditures for 2013, excluding business acquisitions, will be between $100 million and

$115 million. We expect to use these funds for several major facility expansions, improvement of current facilities, real estate
acquisitions and systems development projects. Maintenance or replacement capital expenditures are expected to be
approximately 20% of the total for 2013. We anticipate that net cash provided by operating activities for 2013 will be
approximately $300 million.

Off-Balance Sheet Arrangements and Future Commitments

We do not have any off-balance sheet arrangements or undisclosed borrowings or debt that would be required to be

disclosed pursuant to Item 303 of Regulation S-K under the Securities Exchange Act of 1934. Additionally, we do not have any
synthetic leases.

The following table represents our future commitments under contractual obligations as of December 31, 2012 (in

millions):

Contractual obligations
Long-term debt(1)
Capital lease obligations(2)
Operating leases(3)
Purchase obligations(4)
Contingent consideration liabilities(5)
Outstanding letters of credit

Other asset purchase commitments

Purchase price payable

Other long-term obligations

Self-insurance reserves(6)
Deferred compensation plans(7)
Long term incentive plan

Liabilities for unrecognized tax benefits

Total

(1)

Total

Less than
1 Year

1-3 Years

3-5 Years

More than
5 Years

$ 1,189.0

96.3

239.2

853.0

29.1

536.8

159.7

93.3

39.9

4.4

1.9

46.3

19.8

4.8

2.3

5.5

99.3

87.7

42.3

39.9

4.0

1.9

21.7

—

2.3

0.4

7.5

167.0

72.0

51.0

—

0.3

—

15.5

—

2.5

1.0

2.3

114.0

—

0.1

—

5.8

—

0.5

13.8

156.5

—

3.3

19.8

—

0.4

$ 2,127.3

401.3

556.0

975.7

194.3

Our long-term debt under contractual obligations above includes interest on the balances outstanding as of December
31, 2012. Interest on our variable rate credit facilities is calculated based on rates as of December 31, 2012 of 2.85%
and 1.05% for our senior secured credit facility and our receivables securitization facility, respectively. Interest on
notes payable and other long-term debt is included based on stated rates.

(2)

Interest on capital lease obligations is included based on incremental borrowing or implied rates.

(3)

(4)

(5)

(6)

(7)

The operating lease payments above do not include certain tax, insurance and maintenance costs, which are also
required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to
year. These expenses historically average approximately 25% of the corresponding lease payments.

Our purchase obligations include open purchase orders for aftermarket inventory. These amounts include our purchase
obligations under the wholesaler agreement we entered into in connection with our acquisition of the Akzo Nobel
paint business in 2011. See Note 9, "Business Combinations," to the consolidated financial statements in Part II,
Item 8 of this Annual Report on Form 10-K for further information on our acquisition of the Akzo Nobel paint
business.

Our contingent consideration liabilities above reflect the undiscounted estimated payments of additional consideration
related to business combinations. The actual payouts will be determined at the end of the applicable performance
periods based on the acquired entities' achievement of the targets specified in the purchase agreements.

Self-insurance reserves above include undiscounted estimated payments for our employee medical benefits,
automobile liability, general liability, directors and officers liability, workers' compensation and property insurance.

Deferred compensation payments are dependent on elected payment dates. While we expect that these payments will
be made more than five years from the latest balance sheet date, payments may be made earlier depending on such
elections. Our deferred compensation plans are funded through investments in life insurance policies. See Note 11,
"Retirement Plans," to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for
further information related to the deferred compensation plans and related investments.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our results of operations are exposed to changes in interest rates primarily with respect to borrowings under our credit

facility, where interest rates are tied to the prime rate, the London InterBank Offered Rate, or the Canadian Dealer Offered
Rate. In March 2008, 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 effective and maturity dates to specific debt instruments. All of our interest rate swap
contracts have been executed with banks that we believe are creditworthy (JPMorgan Chase Bank, N.A., Bank of America,
N.A., and RBS Citizens, N.A.) and are denominated in currency that matches the underlying debt instrument. Net interest
payments or receipts from interest rate swap contracts will be included as adjustments to interest expense. As of December 31,
2012, we held seven interest rate swap contracts representing a total of $520 million of U.S. dollar-denominated notional
amount debt, £50 million of pound sterling-denominated notional amount debt, and CAD $25 million of Canadian dollar-
denominated notional amount debt. In total, we had 64% and 69% of our variable rate debt under our credit facility at fixed
rates at December 31, 2012 and 2011, respectively. These swaps have maturity dates ranging from October 2013 through
December 2016. These contracts are designated as cash flow hedges and modify the variable rate nature of that portion of our
variable rate debt. As of December 31, 2012, the fair market value of these swaps was a liability of $15.6 million. The values of
such contracts are subject to changes in interest rates.

At December 31, 2012, we had $428 million of variable rate debt that was not hedged, including $80.0 million of
outstanding debt under the receivables securitization facility, which bears interest based on commercial paper rates. Using
sensitivity analysis to measure the impact of a 100 basis point movement in the interest rates, interest expense would change by
$4 million over the next twelve months. To the extent that we have cash investments earning interest, a portion of the increase
in interest expense resulting from a variable rate change would be mitigated by higher interest income.

We are also 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. Therefore, we can
experience positive or negative gross margin effects in periods of rising or falling metal prices, particularly when such prices
move rapidly. If market prices were to fall at a greater rate than our vehicle acquisition costs, we could experience a decline in
gross margin. As of December 31, 2012, we held short-term metals forward contracts to mitigate a portion of our exposure to
fluctuations in metals prices specifically related to our precious metals refining and reclamation business acquired in the second
quarter of 2012. The notional amount and fair value of these forward contracts at December 31, 2012 were immaterial.

Additionally, we are exposed to currency fluctuations with respect to the purchase of aftermarket products from

foreign countries. The majority of our foreign inventory purchases are from manufacturers based in Taiwan. While our
transactions with manufacturers based in Taiwan are conducted in U.S. dollars, changes in the relationship between the U.S.
dollar and the Taiwan dollar might impact the purchase price of aftermarket products. Our aftermarket operations in Canada,
which also purchase inventory from Taiwan in U.S. dollars, are further subject to changes in the relationship between the U.S.

dollar and the Canadian dollar. Our aftermarket operations in the U.K. also source a portion of their inventory from Taiwan, as
well as from other European countries and China, resulting in exposure to changes in the relationship of the pound sterling
against the euro and the U.S. dollar. With our acquisition of Euro Car Parts Holdings Limited in the fourth quarter of 2011, we
began hedging our exposure to foreign currency fluctuations for certain of our purchases for our U.K. operations. The notional
amount and fair value of these foreign currency forward contracts at December 31, 2012 were immaterial. We do not currently
attempt to hedge our foreign currency exposure related to our foreign currency denominated inventory purchases in our North
American operations, and we may not be able to pass on any price increases to our customers.

Foreign currency fluctuations may also 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 in the U.K. and other countries represented 22% of
our revenue in 2012. An increase or decrease in the strength of the U.S. dollar against these currencies by 10% would result in
a 2% change in our consolidated revenue and operating income for the year ended December 31, 2012.

Other than with respect to a portion of our foreign currency denominated inventory purchases in the U.K., 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. Additionally, we have elected not to hedge the
foreign currency risk related to the interest payments on these borrowings as we generate pound sterling and Canadian dollar
cash flows that can be used to fund debt payments. As of December 31, 2012, we have amounts outstanding under our revolver
facility denominated in pounds sterling of £87.5 million ($142.2 million) and Canadian dollars of CAD $110.0 million ($110.8
million).

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

*****

INDEX TO FINANCIAL STATEMENTS

LKQ CORPORATION AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2012 and 2011

Consolidated Statements of Income for the years ended December 31, 2012, 2011, and 2010

Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011, and 2010

Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011, and 2010

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2012, 2011, and 2010

Notes to Consolidated Financial Statements

Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of LKQ Corporation:

We have audited the accompanying consolidated balance sheets of LKQ Corporation and subsidiaries (the
"Company") as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income,
cash flows and stockholders' equity for each of the three years in the period ended December 31, 2012. Our audits also included
the financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board

(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
LKQ Corporation and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2012, in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth
therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company's internal control over financial reporting as of December 31, 2012, based on the criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated March 1, 2013 expressed an unqualified opinion on the Company's internal control over financial
reporting.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
March 1, 2013

LKQ CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets
(In thousands, except share and per share data)

Assets

Current Assets:

Cash and equivalents

Receivables, net

Inventory

Deferred income taxes

Prepaid income taxes

Prepaid expenses and other current assets

Total Current Assets

Property and Equipment, net

Intangible Assets:

Goodwill

Other intangibles, net

Other Assets

Total Assets

Liabilities and Stockholders’ Equity

Current Liabilities:

Accounts payable

Accrued expenses:

Accrued payroll-related liabilities

Other accrued expenses

Income taxes payable

Contingent consideration liabilities

Other current liabilities

Current portion of long-term obligations

Total Current Liabilities

Long-Term Obligations, Excluding Current Portion

Deferred Income Taxes

Contingent Consideration Liabilities

Other Noncurrent Liabilities

Commitments and Contingencies

Stockholders’ Equity:

Common stock, $0.01 par value, 500,000,000 shares authorized, 297,810,896 and
293,897,216 shares issued and outstanding at December 31, 2012 and 2011,
respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

December 31,

2012

2011

59,770

311,808

900,803

53,485

29,537

28,948

1,384,351

494,379

48,247

281,764

736,846

45,690

17,597

19,591

1,149,735

424,098

1,690,284

1,476,063

106,715

47,727

108,910

40,898

3,723,456

3,199,704

219,335

210,875

44,400

90,422

2,748

42,255

17,068

71,716

487,944

1,046,762

102,275

47,754

74,627

53,256

77,769

7,262

600

18,407

29,524

397,693

926,552

88,796

81,782

60,796

2,978

950,338

1,010,019

759

1,964,094

2,939

901,313

748,794
(8,961)
1,644,085

3,723,456

3,199,704

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

LKQ CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income
(In thousands, except per share data)

Revenue
Cost of goods sold
Gross margin

Facility and warehouse expenses
Distribution expenses
Selling, general and administrative expenses
Restructuring and acquisition related expenses
Depreciation and amortization

Operating income

Other expense (income):
Interest expense
Loss on debt extinguishment
Change in fair value of contingent consideration liabilities
Interest and other income, net
Total other expense, net
Income from continuing operations before provision for income taxes

Provision for income taxes

Income from continuing operations

Discontinued operations:

Income from discontinued operations, net of taxes
Gain on sale of discontinued operations, net of taxes
Income from discontinued operations
Net income

Basic earnings per share(a):

Income from continuing operations
Income from discontinued operations
Total

Diluted earnings per share(a):

Income from continuing operations
Income from discontinued operations
Total

Year Ended December 31,

2012
4,122,930
2,398,790
1,724,140
347,917
375,835
495,591
2,751
64,093
437,953

31,429
—
1,643
(4,286)
28,786
409,167
147,942
261,225

—
—
—
261,225

0.88
—
0.88

0.87
—
0.87

2011
3,269,862
1,877,869
1,391,993
293,423
287,626
391,942
7,590
49,929
361,483

24,307
5,345
(1,408)
(2,532)
25,712
335,771
125,507
210,264

—
—
—
210,264

0.72
—
0.72

0.71
—
0.71

2010
2,469,881
1,376,401
1,093,480
233,993
212,718
310,228
668
37,996
297,877

29,765
—
—
(2,013)
27,752
270,125
103,007
167,118

224
1,729
1,953
169,071

0.58
0.01
0.59

0.57
0.01
0.58

(a)

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

Consolidated Statements of Comprehensive Income
(In thousands)

Net income
Other comprehensive income (loss), net of tax:

Foreign currency translation
Net change in unrecognized gains/losses on interest rate swaps, net of tax
Reversal of unrealized gain on pension plan, net of tax
Total other comprehensive income (loss)
Total comprehensive income

Year Ended December 31,

2012
261,225

2011
210,264

2010
169,071

12,921
(3,201)
—
9,720
270,945

(4,273)
(9,066)
—
(13,339)
196,925

3,078
8,712
(15)
11,775
180,846

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

LKQ CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
Stock-based compensation expense
Deferred income taxes
Excess tax benefit from stock-based payments
Other
Changes in operating assets and liabilities, net of effects from acquisitions and
divestitures:

Receivables
Inventory
Prepaid expenses and other assets
Prepaid income taxes/income taxes payable
Accounts payable
Accrued expenses and other current liabilities
Other noncurrent liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment
Proceeds from sales of property and equipment
Proceeds from sale of businesses, net of cash sold
Cash used in acquisitions, net of cash acquired
Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options
Excess tax benefit from stock-based payments
Debt issuance costs
Borrowings under revolving credit facility
Repayments under revolving credit facility
Borrowings under term loans
Repayments under term loans
Borrowings under receivables securitization facility
Repayments under receivables securitization facility
Payments of other obligations

Net cash provided by financing activities

Effect of exchange rate changes on cash and equivalents
Net increase (decrease) in cash and equivalents
Cash and equivalents, beginning of period
Cash and equivalents, end of period
Supplemental disclosure of cash paid for:

Income taxes, net of refunds
Interest

Supplemental disclosure of noncash investing and financing activities:

Purchase price payable, including notes issued in connection with business acquisitions
Contingent consideration liabilities
Stock issued in connection with business acquisitions
Debt assumed with business acquisitions
Property and equipment acquired under capital leases
Property and equipment purchases not yet paid

Year Ended December 31,

2012

2011

2010

261,225

210,264

169,071

70,165
15,634
4,222
(15,737)
4,515

(12,813)
(95,042)
(18,952)
(774)
(15,097)
2,208
6,636
206,190

(88,255)
1,057
—
(265,336)
(352,534)

17,693
15,737
(253)
742,381
(855,402)
200,000
(20,000)
82,700
(2,700)
(23,084)
157,072
795
11,523
48,247
59,770

146,478
29,026

17,637
5,456
—
3,989
14,467
6,564

54,505
13,107
9,302
(7,973)
6,556

(18,074)
(90,091)
(5,094)
2,251
28,589
(3,303)
11,733
211,772

(86,416)
1,743
—
(486,934)
(571,607)

11,919
7,973
(11,048)
1,111,369
(453,867)
250,000
(600,464)
—
—
(4,471)
311,411
982
(47,442)
95,689
48,247

113,433
21,354

42,865
81,239
—
13,564
414
3,567

41,428
9,974
8,963
(15,000)
(47)

(12,309)
(67,795)
(5,240)
7,492
10,156
8,056
4,434
159,183

(61,438)
1,441
11,992
(143,578)
(191,583)

13,962
15,000
(419)
—
—
—
(7,476)
—
—
(2,105)
18,962
221
(13,217)
108,906
95,689

88,294
27,421

11,889
2,000
14,945
—
—
1,425

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

LKQ CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity
(In thousands)

Common Stock

Shares
Issued

Amount

Additional
Paid-
In Capital

Retained
Earnings

BALANCE, January 1, 2010

284,010

2,840

$ 814,532

$ 369,459

Net income

Other comprehensive income
Stock issued in business

acquisitions

Stock issued as director

compensation

Stock-based compensation

expense

Exercise of stock options

Excess tax benefit from stock-

based payments

—

1,379

—

5,516

—

14,931

290

9,684

13,907

15,000

169,071

—

Accumulated
Other
Comprehensive
(Loss) Income
$

Total
Stockholders’
Equity

(7,397) $ 1,179,434
169,071

—

11,775

—

14,945

290

9,684

13,962

15,000

BALANCE, December 31, 2010

290,933

2,909

$ 868,344

$ 538,530

4,378

$ 1,414,161

Net income

Other comprehensive loss

Restricted stock units vested

Stock issued as director

compensation

Stock-based compensation

expense

Exercise of stock options

Excess tax benefit from stock-

based payments

—

164

—

2,768

—

—
(2)

399

12,708

11,891

7,973

210,264

—

BALANCE, December 31, 2011

293,897

2,939

$ 901,313

$ 748,794

Net income

Other comprehensive income

Restricted stock units vested

Stock-based compensation

expense

Exercise of stock options

Excess tax benefit from stock-

based payments

—

467

—

3,447

—

—
(5)

15,634

17,659

15,737

261,225

—

—
(13,339)
—

—

210,264
(13,339)
—

399

12,708

11,919

—

7,973
(8,961) $ 1,644,085
261,225

—

9,720

—

9,720

—

15,634

17,693

15,737

BALANCE, December 31, 2012

297,811

2,978

$ 950,338

$1,010,019

759

$ 1,964,094

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

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Business

The financial statements presented in this report represent the consolidation of LKQ Corporation, a Delaware

corporation, and its subsidiaries. LKQ Corporation is a holding company and all operations are conducted by subsidiaries.
When the terms "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its
consolidated subsidiaries.

We provide replacement parts, components and systems needed to repair cars and trucks. We are the nation's largest

provider of alternative vehicle collision replacement products, and a leading provider of alternative vehicle mechanical
replacement products. We also have operations in the United Kingdom, Canada, Mexico and Central America. In total, we
operate more than 500 facilities.

As described in Note 3, "Discontinued Operations," during 2010, we sold certain of our self service facilities. These

facilities qualified for treatment as discontinued operations. The financial results of these facilities are segregated from our
continuing operations and presented as discontinued operations in the Consolidated Statements of Income for all periods
presented. The remaining liabilities of discontinued operations are not material to our financial position for the periods
presented.

In 2012, our Board of Directors approved a two-for-one split of our common stock. The stock split was completed in

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of LKQ Corporation and its subsidiaries.

All intercompany transactions and accounts have been eliminated.

Use of Estimates

In preparing our financial statements in conformity with accounting principles generally accepted in the United States

we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are

shipped or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and
allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and
allowances of approximately $24.7 million and $22.8 million at December 31, 2012 and 2011, respectively. We present taxes
assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue
on our Consolidated Statements of Income and are shown as a current liability on our Consolidated Balance Sheets until
remitted. Revenue from the sale of separately-priced extended warranty contracts is reported as deferred revenue and
recognized ratably over the term of the contracts or three years in the case of lifetime warranties. We recognize revenue from
the sale of scrap, cores and other metals when title has transferred, which typically occurs upon delivery to the customer.

Shipping & Handling

Revenue also includes amounts billed to customers related to shipping and handling of approximately $25.6 million,

$23.9 million and $17.3 million during the years ended December 31, 2012, 2011 and 2010, respectively. Distribution expenses
in the accompanying Consolidated Statements of Income are the costs incurred to prepare and deliver products to customers.

Receivables and Allowance for Doubtful Accounts

In the normal course of business, we extend credit to customers after a review of each customer's credit history. We

recorded a reserve for uncollectible accounts of approximately $9.5 million and $8.3 million at December 31, 2012 and 2011,
respectively. The reserve is based upon the aging of the accounts receivable, our assessment of the collectability of specific

customer accounts and historical experience. Receivables are written off once collection efforts have been exhausted.
Recoveries of receivables previously written off are recorded when received.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentration of credit risk consist primarily of cash and
equivalents and accounts receivable. We control our exposure to credit risk associated with these instruments by (i) placing our
cash and equivalents with several major financial institutions; (ii) holding high-quality financial instruments; and
(iii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures. In
addition, our overall credit risk with respect to accounts receivable is limited to some extent because our customer base is
composed of a large number of geographically diverse customers.

Inventory

We classify our inventory into the following categories: aftermarket and refurbished vehicle replacement products;

and salvage and remanufactured vehicle replacement products. This classification reflects the historically distinct distribution
channels used in the sale of alternative repair products in North America, although we continue to work toward integrating
these distribution channels.

An aftermarket product is a new vehicle product manufactured by a company other than the original equipment

manufacturer. Cost is established based on the average price we pay for parts, and includes expenses incurred for freight and
overhead costs. For items purchased from foreign companies, import fees and duties and transportation insurance are also
included. Refurbished inventory cost is based on the average price we pay for cores, which are recycled automotive parts that
are not suitable for sale as a replacement part without further processing. The cost of our refurbished inventory also includes
expenses incurred for freight, labor and other overhead.

A salvage product is a recycled vehicle part suitable for sale as a replacement part. Cost is established based upon the

price we pay for a vehicle, including auction, storage and towing fees, as well as expenditures for buying and dismantling.
Inventory carrying value is determined using the average cost to sales percentage at each of our facilities and applying that
percentage to the facility's inventory at expected selling prices. The average cost to sales percentage is derived from each
facility's historical vehicle profitability for salvage vehicles purchased at auction or from contracted rates for salvage vehicles
acquired under certain direct procurement arrangements. Remanufactured inventory cost is based upon the price paid for cores,
and also includes expenses incurred for freight, direct manufacturing costs and overhead.

Inventory consists of the following (in thousands):

Aftermarket and refurbished products

Salvage and remanufactured products

Property and Equipment

December 31,

2012

2011

523,677

377,126
900,803

445,787

291,059
736,846

Property and equipment are recorded at cost. Expenditures for major additions and improvements that extend the

useful life of the related asset are capitalized. As property and equipment are sold or retired, the applicable cost and
accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized. Construction in
progress consists primarily of building and land improvements at our existing facilities. Depreciation is calculated using the
straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease and
reasonably assured renewal periods, if shorter.

The internal and external costs incurred to develop internal use computer software during the application development

stage of the implementation, including the design of the chosen path, are capitalized. Other costs, including expenses incurred
during the preliminary project stage, training expenses, data conversion costs and expenses incurred in the post implementation
stage are expensed in the period incurred. Capitalized costs are amortized ratably over the useful life of the software when the
software becomes operational. Upgrades and enhancements to internal use software are capitalized only if the costs result in
additional functionality. We do not plan to sell or market our internal use computer software to third parties.

Our estimated useful lives are as follows:

Land improvements

Buildings and improvements

Furniture, fixtures and equipment

Computer equipment and software

Vehicles and trailers

Property and equipment consists of the following (in thousands):

Land and improvements

Buildings and improvements

Furniture, fixtures and equipment

Computer equipment and software

Vehicles and trailers

Leasehold improvements

Less—Accumulated depreciation

Construction in progress

Intangibles

10-20 years

20-40 years

3-20 years

3-10 years

December 31,

2012

2011

87,720

133,368

243,565

91,588

51,187

91,280

698,708
(231,130)
26,801

81,170

119,414

192,514

79,195

40,825

69,079

582,197
(179,950)
21,851

494,379

424,098

Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the

identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer
relationships and covenants not to compete.

Goodwill is tested for impairment at least annually, and we performed annual impairment tests during the fourth

quarters of 2012, 2011 and 2010. The results of all of these tests indicated that goodwill was not impaired.

The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):

North America

Europe

Total

Balance as of January 1, 2010

Business acquisitions and adjustments to previously recorded goodwill

Exchange rate effects

Balance as of December 31, 2010

Business acquisitions and adjustments to previously recorded goodwill

Exchange rate effects

Balance as of December 31, 2011

Business acquisitions and adjustments to previously recorded goodwill

Exchange rate effects

Balance as of December 31, 2012

938,783

— $

938,783

91,757

2,433

1,032,973
105,177
(1,520)
1,136,630

201,742

1,459

—

— $

91,757

2,433

1,032,973
442,208

882

1,476,063

197,602

16,619

337,031

2,402

339,433
(4,140)
15,160

1,339,831

350,453

1,690,284

In 2011 and 2012, we finalized the valuation of certain intangible assets acquired related to our 2010 and 2011
acquisitions, respectively. As these adjustments did not have a material impact on our financial position or results of operations,
we recorded these adjustments to goodwill and amortization expense in 2011 and 2012, respectively.

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

December 31, 2012

December 31, 2011

Gross
Carrying
Amount

Accumulated
Amortization

Net

Gross
Carrying
Amount

Accumulated
Amortization

Trade names and trademarks

118,422

(21,599) $

96,823

115,954

Customer relationships

Covenants not to compete

14,426

3,654

(6,642)

(1,546)

7,784

2,108

10,050

3,194

136,502

(29,787) $

106,715

129,198

(16,305) $
(3,065)
(918)
(20,288) $

Net

99,649

6,985

2,276

108,910

In 2012, we recorded $0.6 million of trade names, $4.1 million of customer relationships and $0.6 million of
covenants not to compete resulting from our 2012 acquisitions and adjustments to certain preliminary intangible asset
valuations from our 2011 acquisitions. In 2011, we recorded $40.1 million of trade names, $5.7 million of customer
relationships and $1.5 million of covenants not to compete resulting from our 2011 acquisitions and adjustments to certain
preliminary intangible asset valuations from our 2010 acquisitions. The trade names recorded in 2011 included $39.3 million
for the Euro Car Parts trade name related to our acquisition of Euro Car Parts Holdings Limited (“ECP”) effective October 1,
2011. 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 10 years) on either a straight-line or
accelerated basis. Covenants not to compete are amortized over the lives of the respective agreements, which range from one to
five years, on a straight-line basis. Amortization expense for intangibles was $9.5 million, $7.9 million and $4.2 million during
the years ended December 31, 2012, 2011 and 2010, respectively. Estimated amortization expense for each of the five years in
the period ending December 31, 2017 is $8.8 million, $7.9 million, $7.1 million, $6.3 million and $6.0 million, respectively.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for possible impairment whenever events or circumstances indicate that the carrying

amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not
recoverable, the carrying amount of such assets is reduced to fair value. There were no material adjustments to the carrying
value of long-lived assets of continuing operations during the years ended December 31, 2012, 2011 or 2010.

Product Warranties

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. The changes in the warranty reserve are as
follows (in thousands):

Balance as of January 1, 2011

Warranty expense

Warranty claims

Business acquisitions

Balance as of December 31, 2011

Warranty expense

Warranty claims

Business acquisitions

Balance as of December 31, 2012

2,063

22,364
(20,802)
3,722

7,347

29,628
(27,514)
1,113

10,574

For an additional fee, we also sell extended warranty contracts for certain mechanical products. The expense related to

extended warranty claims is recognized when the claim is made.

Self-Insurance Reserves

We self-insure a portion of employee medical benefits under the terms of our employee health insurance program. We

purchase certain stop-loss insurance to limit our liability exposure. We also self-insure a portion of our property and casualty
risk, which includes automobile liability, general liability, directors and officers liability, workers' compensation and property
coverage, under deductible insurance programs. The insurance premium costs are expensed over the contract periods. A reserve

for liabilities associated with these losses is established for claims filed and claims incurred but not yet reported based upon our
estimate of ultimate cost, which is calculated using analyses of historical data. We monitor new claims and claim development
as well as trends related to the claims incurred but not reported in order to assess the adequacy of our insurance reserves. Total
self-insurance reserves were $44.1 million and $37.4 million, including $21.5 million and $18.2 million classified as Other
Accrued Expenses, as of December 31, 2012 and 2011, respectively. The remaining balances of self-insurance reserves are
classified as Other Noncurrent Liabilities, which reflects management's estimates of when claims will be paid. The reserves
presented on the Consolidated Balance Sheets are net of claims deposits of $0.5 million at both December 31, 2012 and 2011.
In addition to these claims deposits, we had outstanding letters of credit of $37.1 million and $31.8 million at December 31,
2012 and 2011, respectively, to guarantee self-insurance claims payments. While we do not expect the amounts ultimately paid
to differ significantly from our estimates, our insurance reserves and corresponding expenses could be affected if future claims
experience differs significantly from historical trends and assumptions.

Income Taxes

Current income taxes are provided on income reported for financial reporting purposes, adjusted for transactions that

do not enter into the computation of income taxes payable in the same year. Deferred income taxes have been provided to show
the effect of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial
statements. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either
expire before we are able to realize their benefit or that future deductibility is uncertain.

We recognize the benefits of uncertain tax positions taken or expected to be taken in tax returns in the provision for

income taxes only for those positions that are more likely than not to be realized. We follow a two-step approach to recognizing
and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight
of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more
than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax
positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. Our
policy is to include interest and penalties associated with income tax obligations in income tax expense.

U.S. federal income taxes are not provided on our interest in undistributed earnings of foreign subsidiaries when it is

management's intent that such earnings will remain invested in those subsidiaries or other foreign subsidiaries. Taxes will be
provided on these earnings in the period in which a decision is made to repatriate the earnings.

Depreciation Expense

Included in Cost of Goods Sold on the Consolidated Statements of Income is depreciation expense associated with our

refurbishing, remanufacturing, and furnace operations and our distribution centers.

Rental Expense

We recognize rental expense on a straight-line basis over the respective lease terms, including reasonably-assured

renewal periods, for all of our operating leases.

Foreign Currency Translation

For most of our foreign operations, the local currency is the functional currency. Assets and liabilities are translated

into U.S. dollars at the period-ending exchange rate. Statements of Income amounts are translated to U.S. dollars using average
exchange rates during the period. Translation gains and losses are reported as a component of Accumulated Other
Comprehensive Income (Loss) in stockholders' equity.

Recent Accounting Pronouncements

Effective January 1, 2012, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards

Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income” and ASU No. 2011-12, “Deferral of the Effective Date
for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in
Accounting Standards Update No. 2011-05.” These ASUs eliminate the option to present the components of other
comprehensive income in the statement of changes in stockholders’ equity. Instead, entities have the option to present the
components of net income, the components of other comprehensive income and total comprehensive income in a single
continuous statement or in two separate but consecutive statements. The amendments did not change the items reported in other
comprehensive income or when an item of other comprehensive income is reclassified to net income. As a result, the adoption
of this guidance did not affect our financial position, results of operations or cash flows. We have presented the components of

net income, the components of other comprehensive income and total comprehensive income in two separate but consecutive
statements.

Additionally, in February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of
Accumulated Other Comprehensive Income.” This update requires disclosure of amounts reclassified out of accumulated other
comprehensive income by component. In addition, an entity is required to present, either on the face of the financial statements
or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income. For amounts that are
not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that
provide additional details about those amounts. This guidance is effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2012. The update does not change the items reported in other comprehensive income
or when an item of other comprehensive income is reclassified to net income. As this guidance only revises the presentation
and disclosures related to the reclassification of items out of accumulated other comprehensive income, the adoption of this
guidance will not affect our financial position, results of operations or cash flows.

Effective January 1, 2012, we adopted FASB ASU No. 2011-04, “Amendments to Achieve Common Fair Value

Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update clarifies existing fair value measurement
requirements, amends existing guidance primarily related to fair value measurements for financial instruments, and requires
enhanced disclosures on fair value measurements. The additional disclosures are specific to Level 3 fair value measurements,
transfers between Level 1 and Level 2 of the fair value hierarchy, financial instruments not measured at fair value and use of an
asset measured or disclosed at fair value differing from its highest and best use. We applied the provisions of this ASU to our
fair value measurements during the current year, however, the adoption did not have a material effect on our financial
statements. See Note 7, "Fair Value Measurements," for the required disclosures.

Note 3. Discontinued Operations

In connection with our 2009 agreement with Schnitzer Steel Industries, Inc., we agreed to sell two self service retail

facilities in Dallas, Texas on January 15, 2010 for $12.0 million. We recognized a gain on the sale of approximately $1.7
million, net of tax, in our first quarter 2010 results. Goodwill totaling $6.7 million was included in the cost basis of net assets
disposed when determining the gain on sale.

The self service facilities that we sold qualified for treatment as discontinued operations. The financial results of these

facilities are segregated from our continuing operations and presented as discontinued operations in the Consolidated
Statements of Income for all periods presented. The remaining liabilities of discontinued operations are not material to our
financial position for the periods presented.

Results of operations for the discontinued operations are as follows (in thousands):

Revenue

Income before income tax provision

Income tax provision

Income from discontinued operations, net of taxes, before gain on sale of

discontinued operations

Gain on sale of discontinued operations, net of taxes of $1,015

Income from discontinued operations, net of taxes

Note 4. Equity Incentive Plans

Year Ended December 31,

2012

2011

2010

— $

—

— $

—

— $

686

355

131

224

1,729

1,953

In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we

may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”),
performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive
Plan”). In the first quarter of 2012, our Board of Directors approved an amendment to the Equity Incentive Plan, which was
subsequently approved by our stockholders at our 2012 Annual Meeting in May 2012, to explicitly allow participation of our
non-employee directors, to allow issuance of shares of our common stock to non-employee directors in lieu of cash
compensation, to increase the number of shares available for issuance under the Equity Incentive Plan by 1,088,834, and to
make certain updating amendments.

In connection with the amendment to the Equity Incentive Plan, our Board of Directors approved the termination of

the Stock Option and Compensation Plan for Non-Employee Directors (the “Director Plan”), other than with respect to any
options currently outstanding under the Director Plan. We had not issued options under the Director Plan since 2007. The

increase in the number of shares available for issuance under the Equity Incentive Plan as approved by our Board of Directors
in the first quarter of 2012 represented the remaining number of shares available for issuance under the Director Plan as of
December 31, 2011.

The total number of shares approved by our stockholders for issuance under the Equity Incentive Plan is 69.9 million

shares, subject to antidilution and other adjustment provisions, which includes the 1.1 million shares authorized in 2012 and
12.8 million shares authorized in 2011. Of the shares approved by our stockholders for issuance under the Equity Incentive
Plan, 14.6 million shares remained available for issuance as of December 31, 2012.

Most of our RSUs, stock options, and restricted stock vest over a period of five years. Vesting of the awards is subject

to a continued service condition. Each RSU converts into one share of LKQ common stock on the applicable vesting date.
Shares of restricted stock may not be sold, pledged or otherwise transferred until they vest. Stock options expire ten years from
the date they are granted. We expect to issue new shares of common stock to cover past and future equity grants.

As a result of the stock split in September 2012 as discussed in Note 1, "Business," the following adjustments were

made in accordance with the nondiscretionary antidilution provisions of our 1998 Equity Incentive Plan: the number of shares
available for issuance doubled; the number of outstanding RSUs, shares subject to stock options and shares of restricted stock
all also doubled; and the exercise prices of outstanding stock options were reduced to 50% of the exercise prices prior to the
stock split.

A summary of transactions in our stock-based compensation plans is as follows:

RSUs

Stock Options

Restricted Stock

Number
Outstanding

Weighted
Average
Grant Date
Fair Value

Number
Outstanding

Weighted
Average
Exercise
Price

Number
Outstanding

Weighted
Average
Grant Date
Fair Value

Balance, January 1, 2010

Granted

Exercised

Vested

Cancelled

Balance, December 31, 2010

Shares
Available For
Grant

7,285,606

(3,423,066)

—

417,640

4,280,180

— $

— 18,658,814

—

— $

— 3,423,066
— (5,516,310)
—
—
(417,640)
— 16,147,930

—

Granted

Shares Issued for

Director
Compensation

Exercised

Vested

Cancelled

(1,643,348)

1,643,348

11.80

—

(31,166)

—

346,704

—

(164,862)

(44,904)

—
—
— (2,768,038)
—
(301,800)

11.84

11.77

Additional Shares

Authorized

Balance, December 31, 2011

12,800,000
15,752,370

—
1,433,582

—
11.80

—
13,078,092

Granted

Exercised

Vested

Cancelled

(1,504,410)

1,504,410

—

395,972

—

(467,208)

(119,422)

Balance, December 31, 2012

14,643,932

2,351,362

15.86

—
— (3,446,472)
—
(276,550)
9,355,070

13.09

14.03

14.02

4.41

9.98

2.53

—

8.06

6.14

—

4.31

—

8.44

—
6.47

—

5.13

—

8.30

6.90

404,000

9.50

—

—
(96,000)
—

308,000

—

—
(96,000)
—

—
212,000

—

—
(96,000)
—

116,000

—

9.51

—

9.50

—

9.51

—

—
9.49

—

9.51

—

9.47

In January 2013, our Board of Directors granted 594,700 RSUs to employees. The annual award to executive officers

has not been granted as of March 1, 2013.

The following table summarizes information about expected to vest RSUs and restricted stock, and vested and

expected to vest options at December 31, 2012:

RSUs

Stock options

Restricted stock

Weighted
Average
Remaining
Contractual
Life (Yrs)

3.5

5.0

0.6

Intrinsic
Value
(in thousands)

48,949

129,421

2,448

Weighted
Average
Exercise
Price

—

6.85

—

2,319,877

9,079,684

116,000

The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price of $21.10 on

December 31, 2012. This amount changes based upon the fair market value of our common stock. The aggregate intrinsic value
of total outstanding RSUs and restricted stock was $49.6 million and $2.4 million at December 31, 2012, respectively.

The following table summarizes information about outstanding and exercisable stock options at December 31, 2012:

Range of Exercise Prices

$1.50 - $3.50

$3.51 - $5.50

$5.51 - $7.50

$7.51 - $9.50

$9.51 +

Outstanding

Weighted
Average
Remaining
Contractual
Life (Yrs)

Weighted
Average
Exercise
Price

1.6

3.5

6.0

6.1

6.3

5.0

2.11

4.85

5.98

9.21

9.84

6.90

1,357,538

1,676,760

2,193,800

215,666

3,911,306

9,355,070

Exercisable

Weighted
Average
Remaining
Contractual
Life (Yrs)

Weighted
Average
Exercise
Price

1.6

3.5

6.0

5.8

6.0

4.5

2.11

4.85

5.98

9.25

9.78

6.26

1,357,538

1,676,760

1,448,330

160,733

2,253,124

6,896,485

The aggregate intrinsic value of outstanding and exercisable stock options at December 31, 2012 was $132.8 million

and $102.3 million, respectively.

The fair value of RSUs and restricted stock is based on the market price of LKQ stock on the date of issuance. When
estimating forfeitures, we consider voluntary and involuntary termination behavior as well as analysis of historical forfeitures.
For valuing RSUs, we used forfeiture rates of 10% for grants to employees and 0% for grants to non-employee directors and
executive officers.

The fair value of RSUs that vested during the years ended December 31, 2012 and 2011 was $7.8 million and $2.2

million, respectively. There were no RSU vestings during the year ended December 31, 2010 as we did not issue RSUs prior to
2011. The fair value of restricted stock that vested during the years ended December 31, 2012, 2011 and 2010 was
approximately $1.6 million, $1.1 million and $1.0 million, respectively.

We did not grant any stock options during the years ended December 31, 2012 and 2011. For the stock options granted

during 2010, the fair value was estimated using the Black-Scholes option-pricing model. The following table summarizes the
weighted average assumptions used to compute the fair value of stock option grants:

Year Ended
December 31,

2010

Expected life (in years)

Risk-free interest rate

Volatility

Dividend yield

Weighted average fair value of options granted

6.4

3.17%

43.9%

4.77

Expected life—The expected life represents the period that our stock-based awards are expected to be outstanding. At
the last grant date (in 2010), we used the simplified method in developing an estimate of expected life of stock options because
we lacked sufficient data to calculate an expected life based on historical experience. Our first annual option grant with a full
five year vesting period since we became a public company was on January 13, 2006, and these awards became fully vested in

January 2011. Additionally, our options have a ten year life while our existence as a public company was just over six years
when the 2010 grant was made. Therefore, we used the simplified expected term method as permitted by the Securities and
Exchange Commission Staff Accounting Bulletin No. 107, as amended by Staff Accounting Bulletin No. 110.

Risk-free interest rate—We base the risk-free interest rate used in the Black-Scholes option-pricing model on the

implied yield available on U.S. Treasury zero-coupon issues with the same or substantially equivalent remaining term.

Expected volatility—We use the trading history and historical volatility of our common stock in determining an

estimated volatility factor for the Black-Scholes option-pricing model.

Expected dividend yield—We have not declared and have no plans to declare dividends and have therefore used a zero

value for the expected dividend yield in the Black-Scholes option-pricing model.

Estimated forfeitures—When estimating forfeitures, we consider voluntary and involuntary termination behavior as

well as analysis of historical forfeitures. A forfeiture rate of 9% was used for valuing employee option grants, while a forfeiture
rate of 0% was used for valuing non-employee director and executive officer option grants.

The total grant-date fair value of options that vested during the years ended December 31, 2012, 2011 and 2010 was

$7.2 million, $8.6 million and $7.7 million respectively. The total intrinsic value (market value of stock less option exercise
price) of stock options exercised was $45.3 million, $24.8 million and $43.2 million during the years ended December 31,
2012, 2011 and 2010, respectively.

We recognize compensation expense on a straight-line basis over the requisite service period of the award. The

components of pre-tax stock-based compensation expense are as follows (in thousands):

RSUs

Stock options

Restricted stock

Stock issued to non-employee directors

Total stock-based compensation expense

Year Ended December 31,

2012

2011

2010

8,411

3,666

6,310

913

—

8,129

913

399

15,634

13,107

—

8,771

913

290

9,974

The following table sets forth the classification of total stock-based compensation expense included in our

Consolidated Statements of Income (in thousands):

Cost of goods sold

Facility and warehouse expenses

Selling, general and administrative expenses

Income tax benefit

Total stock-based compensation expense, net of tax

Year Ended December 31,

2012

2011

2010

376

327

2,465

12,793

15,634
(6,097)
9,537

2,391

10,389

13,107
(5,059)
8,048

278

2,069

7,627

9,974
(3,920)
6,054

We have not capitalized any stock-based compensation costs during the years ended December 31, 2012, 2011 or

2010.

As of December 31, 2012, unrecognized compensation expense related to unvested RSUs, stock options and restricted

stock is expected to be recognized as follows (in thousands):

RSUs

Stock
Options

Restricted
Stock

Total

2013

2014

2015

2016

8,254

4,580

7,897

7,861

4,394

3,007

—

—
7,662

208

139

—

—
347

13,042

11,043

7,936

4,394

141
36,556

2017
Total unrecognized compensation expense $

141
28,547

Note 5. Long-Term Obligations

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

Senior secured credit agreement:

Term loans payable

Revolving credit facility

Receivables securitization facility

Notes payable through October 2018 at weighted average interest rates of 1.7% and 2.0%,

respectively

Other long-term debt at weighted average interest rates of 3.3% and 3.2%, respectively

Less current maturities

December 31,

2012

2011

420,625

553,964

80,000

42,398

21,491

1,118,478
(71,716)
1,046,762

240,625

660,730

—

38,338

16,383

956,076
(29,524)
926,552

The scheduled maturities of long-term obligations outstanding at December 31, 2012 are as follows (in thousands):

2013

2014

2015

2016

2017

Thereafter

71,716

54,611

138,323

847,759

848

5,221

1,118,478

Senior Secured Credit Agreement

On March 25, 2011, we entered into a credit agreement with the several lenders from time to time party thereto,

JPMorgan Chase Bank, N.A., as administrative agent, Bank of America N.A., as syndication agent, RBS Citizens, N.A. and
Wells Fargo Bank, National Association, as co-documentation agents, and J.P. Morgan Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, RBS Citizens, N.A. and Wells Fargo Securities, LLC, as joint lead arrangers and joint
bookrunners, which was amended on September 30, 2011 (as amended, the “Credit Agreement”). The Credit Agreement
provides for borrowings up to $1.4 billion, consisting of (1) a $950 million revolving credit facility (the “Revolving Credit
Facility”), (2) a $250 million term loan facility (the “Term Loan Facility”) and (3) an additional term loan facility of up to $200
million (“New Term Loan Facility”). Under the Revolving Credit Facility, we are permitted to draw up to the U.S. dollar
equivalent of $500 million in Canadian dollars, pounds sterling, euros, and other agreed-upon currencies. The Credit
Agreement also provides for (a) the issuance of up to $125 million of letters of credit under the Revolving Credit Facility in
agreed-upon currencies, (b) the issuance of up to $25 million of swing line loans under the Revolving Credit Facility, and
(c) the opportunity to increase the amount of the Revolving Credit Facility or obtain incremental term loans up to $400 million.
Outstanding letters of credit and swing line loans are taken into account when determining availability under the Revolving
Credit Facility. In January 2012, we borrowed the full $200 million available under the New Term Loan Facility, which we
used to pay down a portion of our Revolving Credit Facility borrowings.

The obligations under the Credit Agreement are unconditionally guaranteed by our direct and indirect domestic

subsidiaries and certain foreign subsidiaries. Obligations under the Credit Agreement, including the related guarantees, are
collateralized by a security interest and lien on a majority of the existing and future personal property of, and a security interest
in 100% of our equity interest in, each of our existing and future direct and indirect domestic and foreign subsidiaries, provided
that if a pledge of 100% of a foreign subsidiary’s voting equity interests gives rise to an adverse tax consequence, such pledge
shall be limited to 65% of the voting equity interest of the first tier foreign subsidiary. In the event that we obtain and maintain
certain ratings from S&P (BBB- or better, with stable or better outlook) or Moody’s (Baa3 or better, with stable or better
outlook), and upon our request, the security interests in and liens on the collateral described above shall be released. As of
December 31, 2012, our our credit ratings from Moody’s and S&P were Ba2 and BB+, respectively, with a stable outlook.

Amounts under the Revolving Credit Facility are due and payable upon maturity of the Credit Agreement in March

2016. Amounts under the Term Loan Facility are due and payable in quarterly installments, with the annual payments equal to
5% of the original principal amount in the first and second years, 10% of the original principal amount in the third and fourth
years, and 15% of the original principal amount in the fifth year. The remaining balance under the Term Loan Facility is due
and payable on the maturity date of the Credit Agreement. Amounts under the New Term Loan Facility are due and payable in
quarterly installments beginning after March 31, 2012, with the annual payments equal to 5% of the original principal amount
in the first and second years and 10% of the original principal amount in the third and fourth years. The remaining balance
under the New Term Loan Facility is due and payable on the maturity date of the Credit Agreement. We are required to prepay
the Term Loan Facility and the New Term Loan Facility by amounts equal to proceeds from the sale or disposition of certain
assets if the proceeds are not reinvested within twelve months. We also have the option to prepay outstanding amounts under
the Credit Agreement without penalty.

The Credit Agreement contains customary representations and warranties, and contains customary covenants that

provide limitations and conditions on our ability to, among other things (i) incur indebtedness, except for certain exclusions
such as borrowings on a permitted receivables facility up to $100 million, (ii) incur liens, (iii) enter into any merger,
consolidation, amalgamation, or otherwise liquidate or dissolve the Company, (iv) dispose of certain property, (v) make
dividend payments, repurchase our stock, or enter into derivative contracts indexed to the value of our common stock,
(vi) make certain investments, including the acquisition of assets constituting a business or the stock of a business designated as
a non-guarantor, (vii) make optional prepayments of subordinated debt, (viii) enter into sale-leaseback transactions, (ix) issue
preferred stock, redeemable stock, convertible stock or other similar equity instruments, and (x) enter into hedge agreements
for speculative purposes or otherwise not in the ordinary course of business. The Credit Agreement also contains financial and
affirmative covenants under which we (i) may not exceed a maximum net leverage ratio of 3.00 to 1.00, except in connection
with permitted acquisitions with aggregate consideration in excess of $200 million during any period of four consecutive fiscal
quarters in which case the maximum net leverage ratio may increase to 3.50 to 1.00 for the subsequent four fiscal quarters and
(ii) are required to maintain a minimum interest coverage ratio of 3.00 to 1.00. We were in compliance with all restrictive
covenants under the Credit Agreement as of December 31, 2012 and 2011.

The Credit Agreement contains events of default that include (i) our failure to pay principal when due or interest, fees,

or other amounts after grace periods, (ii) our material breach of any representation or warranty, (iii) covenant defaults, (iv)
cross defaults to certain other indebtedness, (v) bankruptcy, (vi) certain ERISA events, (vii) material judgments, (viii) change of
control, and (ix) failure of subordinated indebtedness to be validly and sufficiently subordinated.

Borrowings under the Credit Agreement bear interest at variable rates, which depend on the currency and duration of

the borrowing elected, plus an applicable margin. The applicable margin is subject to change in increments of 0.25% depending
on our total leverage ratio. Interest payments are due on the last day of the selected interest period or quarterly in arrears
depending on the type of borrowing. Including the effect of the interest rate swap agreements described in Note 6, "Derivative
Instruments and Hedging Activities," the weighted average interest rates on borrowings outstanding against the Credit
Agreement at December 31, 2012 and 2011 were 2.85% and 2.59%, respectively. We also pay a commitment fee based on the
average daily unused amount of the Revolving Credit Facility. The commitment fee is subject to change in increments of 0.05%
depending on our total leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an
applicable rate based on our total leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly
in arrears. Borrowings under the Credit Agreement totaled $974.6 million and $901.4 million at December 31, 2012 and 2011,
respectively, of which $31.9 million and $12.5 million were classified as current maturities, respectively. As of December 31,
2012, there were $39.9 million of outstanding letters of credit. The amounts available under the Revolving Credit Facility are
reduced by the amounts outstanding under letters of credit, and thus availability on the Revolving Credit Facility at
December 31, 2012 was $356.1 million.

In 2011, we incurred a loss on debt extinguishment of $5.3 million related to the write off of the unamortized balance
of capitalized debt issuance costs under our previous debt agreement. The amount of the write off excludes debt issuance cost
amortization, which is recorded as a component of interest expense. We incurred $11.0 million in fees related to the execution
of the Credit Agreement during 2011. These fees were capitalized within Other Assets on our Consolidated Balance Sheets and
are amortized over the term of the agreement.

Receivables Securitization Facility

On September 28, 2012, we entered into a three year receivables securitization facility (the "Receivables Facility")

pursuant to (i) a Receivables Sale Agreement (the "RSA"), among certain subsidiaries of LKQ, as "Originators," and LKQ
Receivables Finance Company, LLC ("LRFC"), a wholly owned, bankruptcy-remote special purpose subsidiary of LKQ, as
Buyer and (ii) a Receivables Purchase Agreement (the "RPA") among LRFC, as Seller, LKQ, as Servicer, certain conduit
investors and The Bank of Tokyo-Mitsubishi UFJ, Ltd. ("BTMU"), as Administrative Agent, Managing Agent and Financial
Institution.

Under the terms of the RSA, the Originators sell at a discount or contribute certain of their trade accounts receivable,
related collections and security interests (the "Receivables") to LRFC on a revolving basis. Under the terms of the RPA, LRFC
sells to BTMU for the benefit of the conduit investors and/or financial institutions (together with BTMU, the "Purchasers") an
undivided ownership interest in the Receivables for up to $80 million in cash proceeds, subject to additional Incremental
Purchases, as defined in the RPA, which may increase the maximum amount of aggregate investments made by the Purchasers.
The proceeds from the Purchasers' initial investment of $77.3 million were used to finance LRFC's initial purchase from the
Originators, and the proceeds from LRFC's initial purchase from the Originators were used to repay outstanding borrowings
under the Revolving Credit Facility. Upon payment of the Receivables by customers, rather than remitting to BTMU the
amounts collected, LRFC has reinvested and will reinvest such Receivables payments to purchase additional Receivables from
the Originators, subject to the Originators generating sufficient eligible Receivables to sell to LRFC in replacement of collected
balances. LRFC may also use the proceeds from a subordinated loan made by the Originators to LRFC to finance purchases of
the Receivables from the Originators. Because the Receivables are held by LRFC, a separate bankruptcy-remote corporate
entity, the Receivables will be available first to satisfy the creditors of LRFC, including the Purchasers. At the end of the initial
three year term, the financial institutions may elect to renew their commitments under the RPA.

The sale of the ownership interest in the Receivables is accounted for as a secured borrowing on our Consolidated

Balance Sheets, under which the Receivables collateralize the amounts invested by the Purchasers. As of December 31, 2012,
$116.9 million of net Receivables were collateral for the investment under the Receivables Facility. Under the RPA, 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) LIBOR rates plus 1.25%, or (iii) base rates, and are payable monthly in arrears. 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 December 31, 2012, the interest rate under the Receivables Facility was 1.05%. During 2012, we also incurred
$0.3 million of arrangement fees and other related transaction costs which were capitalized within Other Assets on the
Consolidated Balance Sheets and are amortized over the term of the facility. As of December 31, 2012, the outstanding balance
of $80.0 million was classified as long-term on the Consolidated Balance Sheets because we have the ability and intent to
refinance these borrowings on a long-term basis.

The RPA contains customary representations and warranties and customary covenants, including covenants to preserve

the bankruptcy remote status of LRFC. The RPA also contains customary default and termination provisions that provide for
acceleration of amounts owed under the RPA upon the occurrence of certain specified events with respect to LRFC, the
Originators or LKQ, including, but not limited to, (i) LRFC's failure to pay interest and other amounts due, (ii) failure by
LRFC, the Originators, or LKQ to pay certain indebtedness, (iii) certain insolvency events with respect to LRFC, the
Originators or LKQ, (iv) certain judgments entered against LRFC, the Originators or LKQ, (v) certain liens filed with respect
to the assets of LRFC or the Originators, and (vi) breach of certain financial ratios designed to capture events negatively
affecting the overall credit quality of the Receivables securing amounts invested by the Purchasers.

Other Long-Term Obligations

As part of the consideration for business acquisitions completed during 2012, 2011 and 2010, we issued promissory

notes totaling approximately $16.0 million, $34.2 million and $5.5 million, respectively. The weighted average interest rates on
the notes outstanding at December 31, 2012 and 2011 were 1.7% and 2.0%, respectively.

Note 6. Derivative Instruments and Hedging Activities

We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and

commodity prices. Under our current policies, we use derivatives to manage our exposure to variable interest rates on our
senior secured debt. For certain of our operations, we also use short-term foreign currency and commodity forward contracts to
manage our exposure to variability in foreign currency denominated transactions and changing metals prices, respectively. We
do not hold or issue derivatives for trading purposes.

Interest Rate Swaps

At December 31, 2012, we had interest rate swap agreements in place to hedge a portion of the variable interest rate
risk on our variable rate borrowings under our credit agreement, with the objective of minimizing the impact of interest rate
fluctuations and stabilizing cash flows. Under the terms of the interest rate swap agreements, we pay the fixed interest rate and
have received and will receive payment at a variable rate of interest based on the London InterBank Offered Rate (“LIBOR”) or
the Canadian Dealer Offered Rate (“CDOR”) for the respective currency of each interest rate swap agreement’s notional
amount. The interest rate swap agreements qualify as cash flow hedges, and we have elected to apply hedge accounting for
these swap agreements. As a result, the effective portion of changes in the fair value of the interest rate swap agreements is
recorded in Accumulated Other Comprehensive 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.

The following table summarizes the terms of our interest rate swap agreements as of December 31, 2012:

Notional Amount
USD $250,000,000

USD $100,000,000

USD $60,000,000

USD $50,000,000

GBP £50,000,000

CAD $25,000,000

Effective Date

October 14, 2010

April 14, 2011

November 30, 2011

December 30, 2011

November 30, 2011

December 30, 2011

Maturity Date

October 14, 2015

October 14, 2013

October 31, 2016

December 30, 2016

October 30, 2016

March 24, 2016

Fixed Interest Rate*

3.31%

2.86%

2.95%

2.94%

3.11%

3.17%

* Includes applicable margin of 1.75% per annum on LIBOR or CDOR-based debt in effect as of December 31, 2012 under
the Credit Agreement.

As of December 31, 2012, the fair market value of the $100 million notional amount swap was a liability of $0.7
million included in Other Accrued Expenses on our Consolidated Balance Sheets. The fair market value of the other swap
contracts was a liability of $14.9 million included in Other Noncurrent Liabilities. As of December 31, 2011, the fair market
value of the interest rate swap contracts was a liability of $10.6 million included in Other Noncurrent Liabilities on our
Consolidated Balance Sheets. While our interest rate swaps executed with the same counterparty are subject to master netting
arrangements, we present our interest rate swaps on a gross basis in our Consolidated Balance Sheets.

The activity related to our interest swap agreements is included in Note 14, "Accumulated Other Comprehensive

Income (Loss)." In connection with the execution of our credit agreement on March 25, 2011 as discussed in Note 5, "Long-
Term Obligations," we temporarily experienced differences in critical terms between the interest rate swaps and the underlying
debt. As a result, we incurred a loss of $0.2 million related to hedge ineffectiveness in 2011. Beginning on April 14, 2011, we
have held, and expect to continue to hold through the maturity of the respective interest rate swap agreements, at least the
notional amount of each agreement in the respective variable-rate debt, such that we expect any future ineffectiveness will be
immaterial and the swaps will continue to be highly effective in hedging our variable rate debt.

As of December 31, 2012, we estimate that $4.1 million of derivative losses (net of tax) included in Accumulated

Other Comprehensive Income (Loss) will be reclassified into interest expense within the next 12 months.

Other Derivative Instruments

We hold other short-term derivative instruments, including foreign currency forward contracts and commodity forward

contracts, to manage our exposure to variability in exchange rates and metals prices in certain of our operations. 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 December 31, 2012 and 2011, along with the effect on our results of operations in 2012 and 2011,
were immaterial. We did not hold any foreign currency forward contracts or commodity forward contracts during the year
ended December 31, 2010.

Note 7. Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value

We use the market and income approaches to value our financial assets and liabilities, and there were no significant

changes in valuation techniques or inputs during the year ended December 31, 2012. The tiers in the fair value hierarchy
include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other
than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following tables present information about our financial assets and liabilities measured at fair value on a recurring

basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of December 31,
2012 and 2011 (in thousands):

Assets:
Cash surrender value of life insurance

Total Assets
Liabilities:
Contingent consideration liabilities

Deferred compensation liabilities

Interest rate swaps

Total Liabilities

Assets:
Cash surrender value of life insurance

Total Assets
Liabilities:
Contingent consideration liabilities

Deferred compensation liabilities

Interest rate swaps

Total Liabilities

Balance as of
December 31,
2012

Fair Value Measurements as of December 31, 2012

Level 1

Level 2

Level 3

19,492

90,009

19,843

15,643

— $

19,492

—

— $

90,009

—

19,843

15,643

—

125,495

— $

35,486

90,009

Balance as of
December 31,
2011

Fair Value Measurements as of December 31, 2011

Level 1

Level 2

Level 3

13,413

82,382

14,071

10,576

— $

13,413

—

— $

82,382

—

14,071

10,576

—

107,029

— $

24,647

82,382

The cash surrender value of life insurance and deferred compensation liabilities are included in Other Assets and Other
Noncurrent Liabilities, respectively, on our Consolidated Balance Sheets. The contingent consideration liabilities are classified
as separate line items in both current and noncurrent liabilities on our Consolidated Balance Sheets based on the expected
timing of the related payments.

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

Our contingent consideration liabilities are related to our business acquisitions as further described in Note 9,

"Business Combinations." Under the terms of the contingent consideration agreements, payments may be made at specified
future dates depending on the performance of the acquired business subsequent to the acquisition. The liabilities for these
payments are classified as Level 3 liabilities because the related fair value measurement, which is determined using an income
approach, includes significant inputs not observable in the market. These unobservable inputs include internally-developed
assumptions of the probabilities of achieving specified targets, which are used to determine the resulting cash flows and the
applicable discount rate. Our Level 3 fair value measurements are established and updated quarterly by our corporate
accounting department using current information about these key assumptions, with the input and oversight of our operational
and executive management teams. We evaluate the performance of the business during the period compared to our previous
expectations, along with any changes to our future projections, and update the estimated cash flows accordingly. In addition, we
consider changes to our cost of capital and changes to the probability of achieving the earnout payment targets when updating
our discount rate on a quarterly basis.

The significant unobservable inputs used in the fair value measurements of our Level 3 contingent consideration

liabilities were as follows:

Unobservable Input
Probability of achieving payout targets

Discount rate

December 31,

2012

2011

(Weighted Average)

79.7%

6.6%

78.1%

3.0%

A significant decrease in the assessed probabilities of achieving the targets or a significant increase in the discount

rate, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the liabilities are
recorded in Change in Fair Value of Contingent Consideration Liabilities within Other Expense (Income) on our Consolidated
Statements of Income.

Changes in the fair value of our contingent consideration obligations are as follows (in thousands):

Balance as of January 1, 2011

Contingent consideration liabilities recorded for

business acquisitions

Decrease in fair value included in earnings

Exchange rate effects

Balance as of December 31, 2011

Contingent consideration liabilities recorded for

business acquisitions

Payments

Increase in fair value included in earnings

Exchange rate effects

Balance as of December 31, 2012

2,000

81,239
(1,408)
551

82,382

5,456
(3,100)
1,643

3,628

90,009

The net loss included in earnings for the year ended December 31, 2012 included $1.5 million of losses related to

contingent consideration obligations outstanding as of December 31, 2012. The gain included in earnings for the year ended
December 31, 2011 is related to a contingent consideration obligation that was settled prior to December 31, 2012. The changes
in the fair value of contingent consideration obligations during 2012 and 2011 are a result of the quarterly assessment of the fair
value inputs. The loss during the year ended December 31, 2012 also includes the impact related to the adoption of FASB ASU
No. 2011-04 as described in Note 2, "Summary of Significant Accounting Policies" (which adoption did not have a material
impact).

Financial Assets and Liabilities Not Measured at Fair Value

Our debt is reflected on the Consolidated Balance Sheets at cost. Based on market conditions as of December 31, 2012

and 2011, the fair value of our Credit Agreement borrowings reasonably approximated the carrying value of $975 million and
$901 million, respectively. As discussed in Note 5, "Long-Term Obligations," we entered into a Receivables Facility on
September 28, 2012. Based on market conditions as of December 31, 2012, the fair value of the outstanding borrowings under
the Receivables Facility reasonably approximated the carrying value of $80 million.

The fair value measurements of our debt instruments 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 December 31, 2012 to assume these obligations.

Note 8. 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 December 31, 2012 are as follows (in thousands):

Years ending December 31:

2013

2014

2015

2016

2017

Thereafter

Future Minimum Lease Payments

99,345

88,494

78,536

62,795

51,159

156,506

536,835

Rental expense for operating leases was approximately $101.1 million, $83.7 million and $66.9 million during the

years ended December 31, 2012, 2011 and 2010, respectively.

We guarantee the residual values of the majority of our truck and equipment operating leases. The residual values

decline over the lease terms to a defined percentage of original cost. In the event the lessor does not realize the residual value
when a piece of equipment is sold, we would be responsible for a portion of the shortfall. Similarly, if the lessor realizes more
than the residual value when a piece of equipment is sold, we would be paid the amount realized over the residual value. Had
we terminated all of our operating leases subject to these guarantees at December 31, 2012, the guaranteed residual value
would have totaled approximately $28.7 million. We have not recorded a liability for the guaranteed residual value of
equipment under operating leases as the recovery on disposition of the equipment under the leases is expected to approximate
the guaranteed residual value.

Litigation and Related Contingencies

We are a plaintiff in a class action lawsuit against several aftermarket product suppliers. During 2012, we recognized

gains totaling $17.9 million resulting from settlements with certain of the defendants. These gains were recorded as a reduction
of Cost of Goods Sold on our Consolidated Statements of Income. The class action is still pending against two defendants, the
results of which are not expected to be material to our results of operations or cash flows. If there is a class settlement with (or
a favorable judgment entered against) each of the remaining defendants, we will recognize the gain from such settlement or
judgment when substantially all uncertainties regarding its timing and amount are resolved and realization is assured.

We also have certain contingencies resulting from litigation, claims and other commitments and are subject to a

variety of environmental and pollution control laws and regulations incident to the ordinary course of business. We currently
expect that the resolution of such contingencies will not materially affect our financial position, results of operations or cash
flows.

Note 9. Business Combinations

During the year ended December 31, 2012, we made 30 acquisitions in North America, including 22 wholesale

businesses and eight self service retail operations. These acquisitions enabled us to expand our geographic presence and enter
new markets. Additionally, two of our acquisitions were completed with a goal of improving the recovery from scrap and other
metals harvested from the vehicles we purchase: a precious metals refining and reclamation business, which we acquired with
the goal of improving the profitability of the precious metals we extract from our recycled vehicle parts; and a scrap metal
shredder, which we expect will improve the profitability of the scrap metals recovered from the vehicle hulks in certain of our
recycled product operations.

Total acquisition date fair value of the consideration for the 2012 acquisitions was $284.6 million, composed of $261.5

million of cash (net of cash acquired), $16.0 million of notes payable, $1.6 million of other purchase price obligations (non-
interest bearing) and $5.5 million of contingent payments to former owners. The contingent consideration arrangements made
in connection with our 2012 acquisitions have a maximum potential payout of $6.5 million.

During the year ended December 31, 2012, we recorded $197.6 million of goodwill related to these acquisitions and
immaterial adjustments to preliminary purchase price allocations related to certain of our 2011 acquisitions. We expect $157.8
million of the $197.6 million of goodwill recorded to be deductible for income tax purposes. In the period between the
acquisition dates and December 31, 2012, our 2012 acquisitions generated $116.3 million of revenue and $11.0 million of
operating income. Of our 30 acquisitions completed in 2012, eight were completed in December 2012, and therefore,
contributed less than one month of revenue and operating income for the year ended December 31, 2012.

Subsequent to December 31, 2012, we completed the acquisition of an aftermarket product distributor in the U.K. and
a paint distribution business in Canada. We are in the process of completing the purchase accounting for these acquisitions, and

as a result, we are unable to disclose the amounts recognized for each major class of assets acquired and liabilities assumed, or
the pro forma effect of the acquisition on our results of operations.

On October 3, 2011, LKQ Corporation, LKQ Euro Limited (“LKQ Euro”), a subsidiary of LKQ Corporation, and

Draco Limited (“Draco”) entered into an Agreement for the Sale and Purchase of Shares of Euro Car Parts Holdings Limited
(the “Sale and Purchase Agreement”). Under the terms of the Sale and Purchase Agreement, effective October 1, 2011, LKQ
Euro acquired all of the shares in the capital of ECP, an automotive aftermarket products distributor in the U.K., from Draco
and the other shareholders of ECP. With the acquisition of ECP, we expanded our geographic presence beyond North America
into the European market. Our acquisition of ECP established our Wholesale – Europe operating segment. Total acquisition
date fair value of the consideration for the ECP acquisition was £261.6 million ($403.7 million), composed of £190.3 million
($293.7 million) of cash (net of cash acquired), £18.4 million ($28.3 million) of notes payable, £2.7 million ($4.1 million) of
other purchase price obligations (non-interest bearing) and a contingent payment to the former owners of ECP. Pursuant to the
contingent payment terms, if certain annual performance targets are met by ECP, we will be obligated to pay between £22
million and £25 million and between £23 million and £30 million for the years ending December 31, 2012 and 2013,
respectively. We determined the acquisition date fair value of these contingent payments to be £50.2 million ($77.5 million at
the exchange rate on October 3, 2011). For the 2012 annual performance period, ECP exceeded the stated performance targets,
and therefore, we accrued the maximum payout for the 2012 earnout period as of December 31, 2012. See Note 7, "Fair Value
Measurements" for additional information on changes to the fair value of our contingent consideration liabilities during the
years ended December 31, 2012 and 2011.

We recorded goodwill of $332.9 million for the ECP acquisition, which will not be deductible for income tax

purposes.

Total acquisition date fair value of the consideration for these 20 acquisitions was $207.3 million, composed of $193.2

million of cash (net of cash acquired), $5.9 million of notes payable, $4.5 million of other purchase price obligations (non-
interest bearing) and $3.7 million of contingent payments to former owners. In conjunction with the acquisition of the Akzo
Nobel paint business on May 26, 2011, we entered into a wholesaler agreement under which we became an authorized
distributor of Akzo Nobel products in the acquired markets. Included in this agreement is a requirement to make an additional
payment to Akzo Nobel in the event that our purchases of Akzo Nobel products do not meet specified thresholds from June 1,
2011 to May 31, 2014. This contingent payment will be calculated as the difference between our actual purchases and the
targeted purchase levels outlined in the agreement for the specified period with a maximum payment of $21 million. The
contingent consideration liability recorded in 2011 also includes two additional arrangements that have a maximum potential
payout of $4.6 million. The acquisition date fair value of these contingent consideration agreements is immaterial.

During the year ended December 31, 2011, we recorded $105.2 million of goodwill related to these 20 acquisitions

and immaterial adjustments to preliminary purchase price allocations related to certain of our 2010 acquisitions. Of this
amount, approximately $88.3 million is expected to be deductible for income tax purposes.

In 2010, we made 20 acquisitions in North America (18 wholesale businesses and two self service retail operations).

Our acquisitions included the purchase of an engine remanufacturer, which allowed us to further vertically integrate our supply
chain. We expanded our product offerings through the acquisition of an automotive heating and cooling component business, as
well as a tire recycling business. Our 2010 acquisitions have also enabled us to expand our geographic presence, most notably
in Canada through our purchase of Cross Canada, an aftermarket product supplier.

Total acquisition date fair value of the consideration for the 2010 acquisitions was $170.4 million, composed of $143.6

million of cash (net of cash acquired), $5.5 million of notes payable, $4.4 million of other purchase price obligations (non-
interest bearing), $2.0 million of contingent payments to former owners and $14.9 million in stock issued (1,379,310 shares).
The $14.9 million of common stock was issued in connection with our acquisition of Cross Canada on November 1, 2010. The
fair value of common stock issued was based on the market price of LKQ stock on the date of issuance. We recorded goodwill
of $91.8 million for the 2010 acquisitions, of which $74.9 million is expected to be deductible for income tax purposes.

Our acquisitions are accounted for under the purchase method of accounting and are included in our 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. In connection with the 2012 acquisitions, the purchase price allocations
65

are preliminary as we are in the process of determining the following: 1) valuation amounts for certain of the inventories and
equipment acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain
liabilities assumed; and 4) the final estimation of the tax basis of the entities acquired.

The purchase price allocations for the acquisitions completed during 2012 and 2011 are as follows (in thousands):

Receivables

Receivable reserves

Inventory

Prepaid expenses and other current assets

Property and equipment

Goodwill

Other intangibles

Other assets

Deferred income taxes
Current liabilities assumed

Debt assumed

Other noncurrent liabilities assumed

Contingent consideration liabilities

Other purchase price obligations

Notes issued
Cash used in acquisitions, net of cash acquired $

Year Ended December 31,

2012

2011

(Preliminary)

ECP

Other Acquisitions

Total

15,473
(1,459)
62,305

201

31,930

201,742

655

187

428
(22,910)
(3,989)
—
(5,456)
(1,647)
(15,990)
261,470

54,225
(3,832)
93,835

3,189

41,830

332,891

43,723

13
(13,218)
(135,390)
(13,564)
—
(77,539)
(4,136)
(28,302)
293,725

23,538
(1,121)
59,846

2,820

10,614

105,177

7,683

9,420

7,235
(17,257)
—
(619)
(3,700)
(4,510)
(5,917)
193,209

77,763
(4,953)
153,681

6,009

52,444

438,068

51,406

9,433
(5,983)
(152,647)
(13,564)
(619)
(81,239)
(8,646)
(34,219)
486,934

The primary reason for our acquisitions made in 2012, 2011 and 2010 was to leverage our strategy of becoming a one-
stop provider for alternative vehicle replacement products. These acquisitions enabled us to expand our market presence, widen
our product offerings and enter new markets. When we identify potential acquisitions, we attempt to target companies with a
leading market share, an experienced management team and workforce that provide a fit with our existing operations and
strong cash flows. In many cases, acquiring companies with these characteristics can result in purchase prices that include a
significant amount of goodwill.

Our acquisition of ECP in 2011 marked our entry into the European automotive aftermarket business and provides an
opportunity to us as that market has historically had a low penetration of alternative collision parts. We targeted the U.K. as a
desirable market for international expansion. We believe growth opportunities exist for this business, both through the
geographic expansion into new primary and secondary markets, as well as through increased product offerings including
alternative collision parts. By acquiring ECP, a leading distributor of alternative automotive products, we were able to gain
access to this market in a manner that we viewed as quicker and more cost effective than would have been achievable through a
start-up organization and organic growth. The potential growth opportunities, combined with the developed distribution
network, experienced management team, and established workforce, contributed to the $332.9 million of goodwill recognized
related to this acquisition.

The following pro forma summary presents the effect of the businesses acquired during the year ended December 31,

2012 as though the businesses had been acquired as of January 1, 2011, the businesses acquired during the year ended
December 31, 2011 as though they had been acquired as of January 1, 2010 and the businesses acquired during the year ended
December 31, 2010 as though they had been acquired as of January 1, 2009. The pro forma adjustments are based upon
unaudited financial information of the acquired entities (in thousands, except per share data):

Revenue, as reported

Revenue of purchased businesses for the period prior to acquisition:

ECP

Other acquisitions

Pro forma revenue

Income from continuing operations, as reported

Net income of purchased businesses for the period prior to acquisition,

including pro forma purchase accounting adjustments:

ECP

Other acquisitions

Pro forma income from continuing operations

Basic earnings per share from continuing operations, as reported

Effect of purchased businesses for the period prior to acquisition:

ECP

Other acquisitions

Pro forma basic earnings per share from continuing operations (a)
Diluted earnings per share from continuing operations, as reported

Effect of purchased businesses for the period prior to acquisition:

ECP

Other acquisitions

Pro forma diluted earnings per share from continuing operations (a)

Year Ended December 31,

2012

2011

2010

$ 4,122,930

$ 3,269,862

$ 2,469,881

—

202,144

407,042

466,002

420,769

504,044

$ 4,325,074

$ 4,142,906

$ 3,394,694

261,225

210,264

167,118

—

12,674

273,899

0.88

—

0.04

0.93

0.87

—

0.04

0.91

21,858

27,396

259,518

0.72

0.07

0.09

0.89

0.71

0.07

0.09

0.87

9,669

12,996

189,783

0.58

0.03

0.05

0.66

0.57

0.03

0.04

0.65

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

Unaudited pro forma supplemental information is based upon accounting estimates and judgments that we believe are
reasonable. The unaudited pro forma supplemental information includes the effect of purchase accounting adjustments, such as
the adjustment of inventory acquired to net realizable value, adjustments to depreciation on acquired property and equipment,
adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. These pro
forma results are not necessarily indicative either of what would have occurred if the acquisitions had been in effect for the
period presented or of future results.

Note 10. Restructuring and Acquisition Related Expenses

Refurbished Bumper and Wheel Restructuring

In the second quarter of 2012, we initiated a restructuring plan to improve the operational efficiency of our refurbished

product operations and to reduce the cost structure of the related refurbished bumper and wheel product lines. As part of the
restructuring plan, we consolidated certain of our bumper and wheel refurbishing operations, with a focus on increasing output
at the remaining operations to improve economies of scale. Restructuring costs included the write off of disposed assets,
severance costs for termination of overlapping headcount, costs to move equipment and inventory, and excess facility costs.
These costs are expensed as incurred, when the costs meet the criteria to be accrued, or, in the case of non-performing lease
reserves, at the cease-use date of the facility. During the year ended December 31, 2012, we incurred $1.1 million of expense
related to this restructuring plan. We are in the process of finalizing our restructuring plan, and we do not expect the remaining
expenses to complete our plan will be material.

Akzo Nobel Paint Business Integration

With our acquisition of the Akzo Nobel paint business in the second quarter of 2011, we initiated certain restructuring

activities to integrate the acquired paint distribution locations into our existing business. Our restructuring plan included the
closure of duplicate facilities, elimination of overlapping delivery routes and termination of employees in connection with the
consolidation of the overlapping facilities and delivery routes. During the year ended December 31, 2011, we incurred $2.6
million of charges primarily related to excess facility costs, which were expensed at the cease-use date for the facilities. We
substantially completed the integration activities related to the Akzo Nobel paint business acquisition as of December 31, 2011.

Other Acquisition Integration Plans and Acquisition Related Expenses

During the year ended December 31, 2012, we incurred $1.2 million of restructuring expenses related to the
integration of certain of our 2011 and 2012 acquisitions. These integration activities included the closure of duplicate facilities,
termination of employees in connection with the consolidation of overlapping facilities with our existing business, and moving
expenses. Future expenses to complete these integration plans in the first half of 2013, including expenses for additional
closures of overlapping facilities and termination of duplicate headcount, are not expected to exceed $1 million. Acquisition
related expenses, which consist of external costs directly related to our acquisitions, such as closing costs and advisory, legal,
accounting, valuation and other professional fees, totaled $0.5 million during the year ended December 31, 2012. These costs
are expensed as incurred.

During the year ended December 31, 2011, we incurred $1.8 million of restructuring costs in addition to the expenses

related to the Akzo Nobel integration. These expenses included $1.4 million related to the integration plan for our 2010
acquisition of Cross Canada and $0.4 million related to the integration of certain of our other 2010 and 2011 acquisitions. Our
restructuring plan related to our acquisition of Cross Canada included the integration of the acquired business into our existing
Canadian operations, as well as the transition of certain corporate functions to our corporate headquarters and our field support
center in Nashville. This integration plan was completed in 2011. During the year ended December 31, 2011, we also incurred
$3.2 million of acquisition related expenses, primarily related to our fourth quarter 2011 acquisition of ECP.

During the year ended December 31, 2010, we incurred $0.7 million of restructuring expenses related to our

acquisition of Greenleaf on October 1, 2009. The restructuring plan included the integration of the acquired Greenleaf
operations in our existing wholesale recycled operations, which resulted in the combination or closure of duplicate facilities
and delivery routes. The restructuring activities related to the Greenleaf acquisition were substantially completed in 2010.

Note 11. Retirement Plans

401(k) Plan

We sponsor a 401(k) defined contribution plan that covers substantially all of our eligible, full time U.S. employees.

Contributions to the plan are made by both the employee and us. Our contributions are based on the level of employee
contributions and are subject to certain vesting provisions based upon years of service. Expenses related to this plan totaled
approximately $5.4 million, $5.3 million and $4.8 million during 2012, 2011 and 2010, respectively.

Nonqualified Deferred Compensation Plan

We also offer a nonqualified deferred compensation plan to eligible employees who, due to Internal Revenue Service
("IRS") guidelines, may not take full advantage of our 401(k) defined contribution plan. The plan allows participants to defer
eligible compensation, subject to certain limitations. We will match 50% of the portion of the employee's contributions that
does not exceed 6% of the employee's eligible deferrals. The deferred compensation, together with our matching contributions
and accumulated earnings, is accrued and is payable after retirement or termination of employment, subject to vesting
provisions. Participants may also elect to receive amounts deferred in a given year on any plan anniversary five or more years
subsequent to the year of deferral. Our matching contributions vest over a four year period and totaled $0.9 million, $0.8
million and $0.7 million in 2012, 2011 and 2010, respectively, net of allowable transfers into our 401(k) defined contribution
plan. Total deferred compensation liabilities were approximately $19.8 million and $14.1 million at December 31, 2012 and
2011, respectively.

The nonqualified deferred compensation plan is funded under a trust agreement whereby we pay to the trust amounts

deferred by employees, together with our match, with such amounts invested in life insurance policies carried to meet the
obligations under the deferred compensation plan. We held 184 contracts as of both December 31, 2012 and 2011with a face
value of $81.8 million and $80.6 million, respectively. The cash surrender value of these policies was $19.5 million and $13.4
million at December 31, 2012 and 2011, respectively.

Note 12. Earnings Per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding during the
period. Diluted earnings per share incorporate the incremental shares issuable upon the assumed exercise of stock options and
the assumed vesting of RSUs and restricted stock. Certain of our stock options and restricted stock were excluded from the
calculation of diluted earnings per share because they were antidilutive, but these equity instruments could be dilutive in the
future.

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

Income from continuing operations

Denominator for basic earnings per share—Weighted-average shares

outstanding

Effect of dilutive securities:

RSUs

Stock options

Restricted stock

Year Ended December 31,

2012

2011

2010

261,225

210,264

167,118

295,810

292,252

286,542

479

4,346

182

4,250

—

5,118

Denominator for diluted earnings per share—Adjusted weighted-average

shares outstanding

Basic earnings per share from continuing operations

Diluted earnings per share from continuing operations

300,693

296,750

291,714

0.88

0.87

0.72

0.71

0.58

0.57

The following table sets forth the number of employee stock-based compensation awards outstanding but not included

in the computation of diluted earnings per share because their effect would have been antidilutive (in thousands):

Antidilutive securities:

Stock options

Restricted stock

Note 13. Income Taxes

Year Ended December 31,

2012

2011

2010

—

2,340

—

5,714

The provision for income taxes consists of the following components (in thousands):

Current:

Federal

State

Foreign

Deferred:

Federal

State

Foreign

Provision for income taxes

Year Ended December 31,

2012

2011

2010

110,825

97,887

19,693

13,202

143,720

5,824
(647)
(955)
4,222

147,942

14,435

3,883

116,205

8,376

919

9,302

125,507

75,009

16,552

2,483

94,044

8,928

598
(563)
8,963

103,007

Income taxes have been based on the following components of income from continuing operations before provision

for income taxes (in thousands):

Domestic

Foreign

Year Ended December 31,

2012

2011

2010

348,150

61,017

409,167

319,305

16,466

335,771

264,438

5,687

270,125

The U.S. federal statutory rate is reconciled to the effective tax rate as follows:

U.S. federal statutory rate

State income taxes, net of state credits and federal tax impact

Impact of international operations

Non-deductible expenses

Federal production incentives and credits

Revaluation of deferred taxes

Other, net

Effective tax rate

Year Ended December 31,

2012

2011

2010

35.0 %

3.1 %

(2.3)%

0.8 %

(0.3)%

(0.3)%
0.2 %

36.2 %

35.0 %

3.1 %

(0.8)%

0.7 %

(0.4)%

— %
(0.2)%

37.4 %

35.0 %

3.4 %

(0.3)%

0.3 %

(0.2)%

(0.5)%
0.4 %

38.1 %

Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $74 million at December 31,
2012. Those earnings are considered to be indefinitely reinvested, and accordingly no provision for U.S. income taxes has been
provided thereon. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company 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. Determination of the amount of unrecognized deferred US income tax liability is not practicable due to the
complexities associated with its hypothetical calculation; however, unrecognized foreign tax credits would be available to
reduce materially any U.S. liability.

The greater impact of international operations in 2012 compared to 2011 is primarily a result of our expanding

international operations as a larger proportion of our pretax income was generated in lower rate jurisdictions.

The significant components of our deferred tax assets and liabilities are as follows (in thousands):

December 31,

2012

2011

Deferred Tax Assets:

Inventory

Accrued expenses and reserves

Accounts receivable

Stock-based compensation

Qualified and nonqualified retirement plans

Net operating loss carryforwards

Interest rate swaps

Other

Less valuation allowance

Total deferred tax assets

Deferred Tax Liabilities:

Goodwill and other intangible assets

Property and equipment

Trade name

Other

Total deferred tax liabilities

Net deferred tax liability

29,523

27,361

10,037

9,442

7,476

4,451

5,461

4,711

98,462
(1,631)
96,831

64,704

48,994

30,336

1,428

22,267

18,357

10,860

8,945

5,157

4,722

3,679

8,621

82,608
(1,911)
80,697

46,373

44,535

32,592

1,864

145,462
$
(48,631) $

125,364
(44,667)

Deferred tax assets and liabilities are reflected on our Consolidated Balance Sheets as follows (in thousands):

Current deferred tax assets

Noncurrent deferred tax assets

Current deferred tax liabilities

Noncurrent deferred tax liabilities

December 31,

2012

2011

53,485

45,690

164

102,275

—

1,561

88,796

Our noncurrent deferred tax assets and current deferred tax liabilities are included in Other Assets and Other Current

Liabilities, respectively, on our Consolidated Balance Sheets.

We had net operating loss carryforwards for federal and certain of our state tax jurisdictions, the tax benefits of which

total approximately $4.5 million and $4.7 million at December 31, 2012 and 2011, respectively. At both December 31, 2012
and 2011, we had tax credit carryforwards of $1.0 million related to certain of our state tax jurisdictions. As of December 31,
2012 and 2011, a valuation allowance of $1.6 million and $1.9 million, respectively, was recognized for a portion of the
deferred tax assets related to net operating loss and tax credit carryforwards. The valuation allowance for net operating loss and
tax credit carryforwards decreased by $0.3 million during the year ended December 31, 2012 due to current utilization of some
of the underlying tax benefits as well as a change in judgment regarding the realization of the remaining carryforwards. The net
operating loss carryforwards expire over the period from 2013 through 2030, while nearly all of the tax credit carryforwards
have no expiration. Realization of these deferred tax assets is dependent on the generation of sufficient taxable income prior to
the expiration dates. Based on historical and projected operating results, we believe that it is more likely than not that earnings
will be sufficient to realize the deferred tax assets for which valuation allowances have not been provided. While we expect to
realize the deferred tax assets, net of valuation allowances, changes in estimates of future taxable income or in tax laws may
alter this expectation.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):

2012

2011

2010

Balance at January 1

5,497

5,441

Additions based on tax positions related to the current year

Additions for tax positions of prior years

Reductions for tax positions of prior years

Reductions for tax positions of prior years—timing differences

Lapse of statutes of limitations

Settlements with taxing authorities

Balance at December 31

973

167
(2,379)
—
(998)
(957)
2,303

952

192

—

—
(892)
(196)
5,497

8,526

713

281
(86)
(2,041)
(1,952)
—

5,441

At December 31, 2012 and 2011, we had accumulated interest and penalties included in gross unrecognized tax

benefits of $0.6 million and $1.2 million, respectively. During each of the years ended December 31, 2012, 2011, and 2010,
$0.2 million of interest and penalties were recorded through the income tax provision, prior to any reversals for lapses in the
statutes of limitations. We had deferred tax assets of $0.1 million and $0.2 million related to the accumulated interest balance as
of December 31, 2012 and 2011, respectively. The amount of the unrecognized tax benefits, which if resolved favorably (in
whole or in part) would reduce our effective tax rate, is approximately $1.6 million and $3.8 million at December 31, 2012 and
2011, respectively. The balance of unrecognized tax benefits at December 31, 2012 and 2011 also includes $0.7 million and
$1.7 million, respectively, of tax benefits that, if recognized, would result in adjustments to deferred taxes.

During the twelve months beginning January 1, 2013, it is reasonably possible that we will reduce gross unrecognized

tax benefits by up to approximately $0.4 million, of which approximately $0.3 million would impact our effective tax rate,
primarily as a result of the expiration of certain statutes of limitations.

Tax years after 2009 remain subject to examination by the IRS. In the U.K., tax years through 2009 are no longer open
to inquiry. For certain of our Canadian subsidiaries, certain tax years from 2008 to 2011 are currently under examination. Tax
years from 2009 are subject to income tax examinations by various U.S. state and local jurisdictions. Adjustments from such
examinations, if any, are not expected to have a material effect on our consolidated financial statements.

Note 14. Accumulated Other Comprehensive Income (Loss)

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

Foreign
Currency
Translation

Unrealized (Loss)
Gain
on Interest Rate
Swaps

Unrealized Gain
(Loss)
on Pension Plan

Accumulated
Other
Comprehensive
(Loss) Income

Balance at January 1, 2010

Pretax income

Income tax expense
Reversal of unrealized (gain) loss

Reversal of deferred income taxes

Balance at December 31, 2010

Pretax loss

Income tax benefit

Reversal of unrealized loss

Reversal of deferred income taxes

Hedge ineffectiveness

Income tax benefit

Balance at December 31, 2011

Pretax income (loss)

Income tax benefit

Reversal of unrealized loss

Reversal of deferred income taxes

(876) $
3,078

—

2,202
(4,273)
—

—

—
(2,071) $
12,921

—

Balance at December 31, 2012

10,850

Note 15. Segment and Geographic Information

(6,536) $
3,230
(1,054)
10,377
(3,841)
2,176
(19,391)
6,847

5,641
(2,019)
(225)
81
(6,890) $
(11,313)
3,962

6,439
(2,289)
(10,091) $

—

—
(15)
—

— $

—

— $

—

— $

(7,397)
6,308
(1,054)
10,362
(3,841)
4,378
(23,664)
6,847

5,641
(2,019)
(225)
81
(8,961)
1,608

3,962

6,439
(2,289)
759

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):

Revenue

North America

Europe

Total revenue
EBITDA

North America

Europe

Total EBITDA
Depreciation and Amortization

North America

Europe

Total depreciation and amortization

Year Ended December 31,

2012

2011

2010

3,426,858

696,072

4,122,930

440,448

70,099

510,547

59,132

11,033

70,165

3,131,376

138,486

3,269,862

405,924

12,144

418,068

52,481

2,024

54,505

2,469,881

—

2,469,881

339,869

—

339,869

41,428

—

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):

EBITDA

Depreciation and amortization

Interest expense, net

Loss on debt extinguishment

Provision for income taxes

Year Ended December 31,

2012

2011

2010

510,547

418,068

339,869

70,165

31,215

—

147,942

54,505

22,447

5,345

125,507

41,428

28,316

—

103,007

167,118

Income from continuing operations

261,225

210,264

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):

Capital Expenditures

North America

Europe

Year Ended December 31,

2012

2011

2010

73,331

14,924
88,255

84,856

1,560
86,416

61,438

—
61,438

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

Receivables, net

North America

Europe

Total receivables, net
Inventory

North America

Europe

Total inventory
Property and Equipment, net

North America

Europe

Total property and equipment, net

Other unallocated assets

Total assets

December 31,

2012

2011

2010

241,627

230,871

191,085

70,181

311,808

750,565

150,238

900,803

434,010

60,369

494,379

50,893

281,764

636,145

100,701

736,846

380,282

43,816

424,098

2,016,466

1,756,996

—

191,085

492,688

—

492,688

331,312

—

331,312

1,284,424

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):

Revenue

United States

United Kingdom

Other countries

Year Ended December 31,

2012

2011

2010

3,209,024

2,952,620

2,366,224

696,072

217,834

138,486

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):

Long-lived Assets

United States

United Kingdom

Other countries

December 31,

2012

2011

408,244

360,961

60,369

25,766

43,816

19,321

494,379

424,098

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

Aftermarket, other new and refurbished products

$ 2,286,853

$ 1,634,003

$ 1,236,806

Recycled, remanufactured and related products and services

Other

1,277,023

1,115,088

559,054

520,771

888,320

344,755

$ 4,122,930

$ 3,269,862

$ 2,469,881

Year Ended December 31,

2012

2011

2010

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.

Note 16. Selected Quarterly Data (unaudited)

The following table represents unaudited selected quarterly financial data for the two years ended December 31, 2012.

Beginning with quarter ended December 31, 2011, the selected quarterly financial data includes the results of ECP, which was
acquired effective October 1, 2011. The operating results for any quarter are not necessarily indicative of the results for any
future period.

(In thousands, except per share data)
2011
Revenue
Gross margin(1)
Operating income(1)
Net income(2)
Basic earnings per share(3)
Diluted earnings per share(3)

Mar. 31

Jun. 30

Sep. 30

Dec. 31

Quarter Ended

786,648

759,684

783,898

939,632

343,646

107,371

58,182

322,236

78,486

46,706

334,322

85,488

49,231

0.20

0.16

0.17

391,789

90,138

56,145

0.19

(In thousands, except per share data)
2012
Revenue
Gross margin(1)
Operating income(1)
Net income(2)
Basic earnings per share(3)
Diluted earnings per share(3)

Mar. 31

Jun. 30

Sep. 30

Dec. 31

Quarter Ended

$ 1,031,777

$ 1,006,531

$ 1,016,707

$ 1,067,915

447,383

133,608

80,991

421,931

108,567

63,998

409,705

91,434

54,048

0.28

0.27

0.22

0.21

0.18

445,121

104,344

62,188

0.21

(1)

(2)

Gross margin and operating income during the quarters ended March 31, 2012, June 30, 2012, September 30, 2012
and December 31, 2012 include gains of $8.3 million, $8.4 million, $0.5 million and $0.7 million, respectively,
resulting from lawsuit settlements with certain of our aftermarket product suppliers as discussed in Note 8,
"Commitments and Contingencies."

Net income during the quarters ended June 30, 2011 and December 31, 2011 includes a gain of $1.6 million and a loss
of $0.2 million, respectively, for changes in fair value of our contingent consideration liabilities. The quarters ended
March 31, 2012 and December 31, 2012 include gains for changes in fair value of our contingent consideration
liabilities of $1.3 million and $0.2 million, respectively, while the quarters ended June 30, 2012 and September 30,
2012 include losses of $1.2 million and $1.9 million, respectively. 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.

(3)

The sum of the quarters may not equal the total of the respective year's earnings per share on either a basic or diluted
basis due to changes in weighted average shares outstanding throughout the year.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of December 31, 2012, the end of the period covered by this report, 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 design and
operation of these disclosure controls and procedures were effective to ensure that the Company is able to collect, process and
disclose, within the required time periods, the information we are required to disclose in the reports we file with the Securities
and Exchange Commission.

Report of Management on Internal Control over Financial Reporting dated March 1, 2013

Management of LKQ Corporation and subsidiaries (the "Company") is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
Act of 1934. The Company's internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States. Internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors
of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company's assets that could have a material effect on the Company's financial statements.

Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices,

and actions taken to correct deficiencies as identified. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with
the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31,
2012. Management based this assessment on criteria for effective internal control over financial reporting described in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management's assessment included an evaluation of the design of the Company's internal control over financial reporting and
testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its
assessment with the Audit Committee of the Company's Board of Directors.

Based on this assessment, management determined that, as of December 31, 2012, the Company maintained effective

internal control over financial reporting. Deloitte & Touche LLP, independent registered public accounting firm, who audited
and reported on the consolidated financial statements of the Company included in this report, has issued an attestation report on
the effectiveness of our internal control over financial reporting as of December 31, 2012.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s
most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of LKQ Corporation:

We have audited the internal control over financial reporting of LKQ Corporation and subsidiaries (the "Company") as

of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United

States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the

company's principal executive and principal financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel 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. A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as

of December 31, 2012, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States), the consolidated financial statements and financial statement schedule of the Company as of and for the year ended
December 31, 2012 and our report dated March 1, 2013 expressed an unqualified opinion on those financial statements and
financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
March 1, 2013

ITEM 9B.

OTHER INFORMATION

None.

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

PART III

Directors

The information appearing under the caption "Election of our Board of Directors" in our Proxy Statement for the

Annual Meeting of Stockholders to be held May 6, 2013 (the "Proxy Statement") is incorporated herein by reference.

Executive Officers

Our executive officers, their ages at December 31, 2012, and their positions with us are set forth below. Our executive

officers are elected by and serve at the discretion of our Board of Directors.

Name

Age

Position

Robert L. Wagman

John S. Quinn

Victor M. Casini

Walter P. Hanley

Steven Greenspan

President, Chief Executive Officer and Director

Executive Vice President and Chief Financial Officer

Senior Vice President, General Counsel and Corporate Secretary

Senior Vice President—Development

Senior Vice President of Operations—Wholesale Parts Division

Michael S. Clark

38 Vice President—Finance and Controller

Robert L. Wagman became our President and Chief Executive Officer on January 1, 2012. He was elected to our Board of
Directors on November 7, 2011. Mr. Wagman was our President and Co-Chief Executive Officer from January 1, 2011 to
January 1, 2012. Prior thereto, he had been our Senior Vice President of Operations—Wholesale Parts Division, with oversight
of our wholesale late model operations since August 2009. Prior thereto, from October 1998, Mr. Wagman managed our
insurance company relationships, and from February 2004, added to his responsibilities the oversight of our aftermarket
product operations. He was elected our Vice President of Insurance Services and Aftermarket Operations in August
2005. Before joining us, Mr. Wagman served from April 1995 to October 1998 as the Outside Sales Manager of Triplett Auto
Parts, Inc., a recycled auto parts company that we acquired in July 1998. He started in our industry in 1987 as an Account
Executive for Copart Auto Auctions, a processor and seller of salvage vehicles through auctions.

John S. Quinn has been our Executive Vice President and Chief Financial Officer since November 2009. Prior to joining our
Company, he was the Senior Vice President, Chief Financial Officer and Treasurer of Casella Waste Systems, Inc., a company
in the solid waste management services industry from January 2009. From January 2001 to January 2009 he held various
positions of increasing responsibility with Allied Waste Industries, Inc., a company also in the solid waste management services
industry, including Senior Vice President of Finance from January 2005 to January 2009, Controller and Chief Accounting
Officer from November 2006 to September 2007 and Vice President Financial Analysis and Planning from January 2003 to
January 2005. From August 1987 to January 2001, he held various positions with Waste Management Inc. and Waste
Management International, plc. in Canada and the United Kingdom. Prior to working for Waste Management, he worked for
Ford Glass Ltd., a subsidiary of Ford Motor Company.

Victor M. Casini has been our Vice President, General Counsel and Corporate Secretary from our inception in February 1998.
In March 2008, he was elected Senior Vice President. Mr. Casini was a member of our Board of Directors from May 2010 until
May 2012. From July 1992 to December 2011, Mr. Casini was the Executive Vice President and General Counsel of Flynn
Enterprises, Inc., a venture capital, hedging and consulting firm. Mr. Casini served as Senior Vice President, General Counsel
and Corporate Secretary of Discovery Zone, Inc., an operator and franchisor of family entertainment centers, from July 1992
until May 1995. Prior to July 1992, Mr. Casini practiced corporate and securities law with the law firm of Bell, Boyd & Lloyd
LLP (now known as K&L Gates LLP) in Chicago, Illinois for more than five years.

Walter P. Hanley joined us in December 2002 as our Vice President of Development, Associate General Counsel and Assistant
Secretary. In December 2005, he became our Senior Vice President of Development. Mr. Hanley served as Senior Vice
President, General Counsel and Secretary of Emerald Casino, Inc., an owner of a license to operate a riverboat casino in the
State of Illinois, from June 1999 until August 2002. In January 2001, the Illinois Gaming Board issued an initial decision
seeking to revoke Emerald's license. In July 2002, certain creditors filed a bankruptcy petition against Emerald. The bankruptcy
court confirmed a plan of reorganization in July 2004. The Illinois Gaming Board reversed its initial decision to support the
plan of reorganization and in May 2005 revoked Emerald's license. The bankruptcy case and a related adversary proceeding (in
which Mr. Hanley is a defendant) are pending. Mr. Hanley served as Senior Vice President, General Counsel and Secretary of
Blue Chip Casino, Inc., an owner and operator of a riverboat gaming vessel in Michigan City, Indiana, from July 1996 until
November 1999. Mr. Hanley served as Vice President and Associate General Counsel of Flynn Enterprises, Inc. from May 1995
until February 1998 and as Associate General Counsel of Discovery Zone, Inc. from March 1993 until May 1995. Prior to

March 1993, Mr. Hanley practiced corporate and securities law with the law firm of Bell, Boyd & Lloyd LLP (now known as
K&L Gates LLP) in Chicago, Illinois.

Steven Greenspan became our Senior Vice President of Operations – Wholesale Parts Division on January 1, 2012. Mr.
Greenspan has been in the recycled automotive parts industry for approximately 30 years. He served as our Regional Vice
President—Mid-Atlantic Region from January 2003 to December 2011. He was the Manager of our Atlanta facility from May
1998 until December 2002. Prior thereto, he was the Manager of a company that we acquired in 1998.

Michael S. Clark has been our Vice President—Finance and Controller since February 2011. Prior thereto, he served as our
Assistant Controller since May 2008. Prior to joining our Company, he was the SEC Reporting Manager of FMC Technologies,
Inc., a global provider of technology solutions for the energy industry, from December 2004 to May 2008. Before joining FMC
Technologies, Mr. Clark, a certified public accountant, worked in public accounting for more than eight years, leaving as a
Senior Manager in the audit practice of Deloitte & Touche.

Code of Ethics

A copy of our Code of Ethics for Financial Officers is available free of charge through our website at

www.lkqcorp.com.

Section 16 Compliance

Information appearing under the caption "Other Information—Section 16(a) Beneficial Ownership Reporting

Compliance" in the Proxy Statement is incorporated herein by reference.

Audit Committee

Information appearing under the caption "Corporate Governance—Committees of the Board—Audit Committee" in

the Proxy Statement is incorporated herein by reference.

ITEM 11.

EXECUTIVE COMPENSATION

Information appearing under the captions "Director Compensation—Director Compensation Table," "Executive

Compensation—Compensation Discussion and Analysis," "Corporate Governance—Compensation Committee Interlocks and
Insider Participation" and "Executive Compensation—Compensation Tables" in the Proxy Statement is incorporated herein by
reference.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information appearing under the caption "Other Information—Principal Stockholders" in the Proxy Statement is

incorporated herein by reference.

The following table provides information about our common stock that may be issued under our equity compensation

plans as of December 31, 2012.

Equity Compensation Plan Information

Plan Category

Equity compensation plans approved by stockholders

Stock options

Restricted stock units

Total equity compensation plans approved by

stockholders

Equity compensation plans not approved by

stockholders

Total

Number of
securities to be issued
upon exercise of
outstanding options,
warrants, and rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants, and rights
(b)

Number of securities remaining
available for future
issuance under equity
compensation plans (excluding
securities reflected in column (a))
(c)

9,355,070

2,351,362

11,706,432

6.90

—

— $

—

11,706,432

14,643,932

—

14,643,932

The number of securities to be issued upon exercise of outstanding options, warrants, and rights includes outstanding

stock options and outstanding restricted stock units but excludes restricted stock.

In 2012, our Board of Directors approved an amendment to the LKQ Corporation 1998 Equity Incentive Plan (the

“Equity Incentive Plan”), which was subsequently approved by our stockholders, to explicitly allow participation of our non-
employee directors, to allow issuance of shares of our common stock to non-employee directors in lieu of cash compensation,
to increase the number of shares available for issuance under the Equity Incentive Plan by 1,088,834, and to make certain
updating amendments. In connection with the amendment to the Equity Incentive Plan, our Board of Directors approved the
termination of the Stock Option and Compensation Plan for Non-Employee Directors (the “Director Plan”), other than with
respect to any options currently outstanding under the Director Plan. As a result, all 14,643,932 shares remaining available for
future issuance are under the Equity Incentive Plan.

See Note 4, "Equity Incentive Plans," to the consolidated financial statements in Part II, Item 8 of this Annual Report

on Form 10-K for further information related to the equity incentive plans listed above.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

Information appearing under the caption "Other Information—Certain Transactions," "Election of our Board of

Directors" and "Corporate Governance - Director Independence" in the Proxy Statement is incorporated herein by reference.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information appearing under the caption "Appointment of Our Independent Registered Public Accounting Firm—

Audit Fees and Non-Audit Fees" and "Appointment of Our Independent Registered Public Accounting Firm—Policy on Audit
Committee Approval of Audit and Non-Audit Services" in the Proxy Statement is incorporated herein by reference.

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

PART IV

Reference is made to the information set forth in Part II, Item 8 of this Report, which information is incorporated

herein by reference.

(a)(2) Financial Statement Schedules

Other than as set forth below, all schedules for which provision is made in the applicable accounting regulations of the

SEC have been omitted because they are not required under the related instructions, are not applicable, or the information has
been provided in the consolidated financial statements or the notes thereto.

Schedule II—Valuation and Qualifying Accounts and Reserves

Descriptions

ALLOWANCE FOR DOUBTFUL

ACCOUNTS:

Balance at
Beginning of
Period

Additions
Charged to
Costs and
Expenses

Acquisitions and
Other

(in thousands)

Deductions

Balance at End
of Period

Year ended December 31, 2010

6,507

4,326

1,125

Year ended December 31, 2011

Year ended December 31, 2012
ALLOWANCE FOR ESTIMATED

RETURNS, DISCOUNTS &
ALLOWANCES:

6,895

8,347

5,084

5,928

2,199

308

(5,063) $
(5,831)
(5,113)

6,895

8,347

9,470

Year ended December 31, 2010

15,802

541,314

1,061

Year ended December 31, 2011

Year ended December 31, 2012

18,185

22,804

668,936

714,880

2,754

1,151

(539,992) $
(667,071)
(714,143)

18,185

22,804

24,692

(a)(3) Exhibits

The exhibits to this Annual Report are listed in Item 15(b) of this Annual Report. Included in the exhibits listed therein

are the following exhibits which constitute management contracts or compensatory plans or arrangements:

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.23

10.24

10.25

10.26

10.27

10.28

LKQ Corporation Employees’ Retirement Plan, as amended and restated as of January 1, 2012.

LKQ Corporation 401(k) Plus Plan dated August 1, 1999.

Amendment to LKQ Corporation 401(k) Plus Plan.

Trust for LKQ Corporation 401(k) Plus Plan.

LKQ Corporation 401(k) Plus Plan II, as amended and restated effective as of January 1, 2011.

LKQ Corporation 1998 Equity Incentive Plan, as amended.

Form of LKQ Corporation Award Agreement for options granted under the 1998 Equity Incentive Plan.

Form of LKQ Corporation Restricted Stock Agreement.

Form of LKQ Corporation Restricted Stock Unit Agreement for Non-Employee Directors.

Form of LKQ Corporation Restricted Stock Unit Agreement.

LKQ Corporation Amended and Restated Stock Option and Compensation Plan for Non-Employee Directors, as
amended.

Form of Indemnification Agreement between directors and officers of LKQ Corporation and LKQ Corporation.

LKQ Management Incentive Plan.

Form of LKQ Corporation Executive Officer 2011 Bonus Program Award Memorandum.

Form of LKQ Corporation Executive Officer 2012 Bonus Program Award Memorandum.

Form of LKQ Corporation Executive Officer 2013 Bonus Program Award Memorandum.

LKQ Corporation Long Term Incentive Plan.

Consulting Agreement, as amended and restated, dated as of May 21, 2009 between LKQ Corporation and
Joseph M. Holsten.

Amendment Agreement dated as of January 31, 2011 to the Consulting Agreement between LKQ Corporation
and Joseph M. Holsten dated as of May 21, 2009.

Change of Control Agreement between LKQ Corporation and Robert L. Wagman, as amended and restated as of
March 21, 2012.

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and John S. Quinn.

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and Walter P. Hanley.

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and Victor M. Casini.

Change of Control Agreement dated as of March 14, 2011 between LKQ Corporation and Michael S. Clark.

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and Steven Greenspan.

(b) Exhibits

3.1

3.2

4.1

4.2

10.1

10.2

Certificate of Incorporation of LKQ Corporation, as amended to date (incorporated herein by reference to
Exhibit 3.1 (iii) to the Company’s report on Form 10-K for the fiscal year ended December 31, 2003).

Amended and Restated Bylaws of LKQ Corporation (incorporated herein by reference to Exhibit 3.1 to the
Company’s report on Form 8-K filed with the SEC on March 9, 2012).

Specimen of common stock certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-1/A, Registration No. 333-107417 filed with the SEC on September 12, 2003).

Amendment and Restatement Agreement dated as of September 30, 2011 by and among LKQ Corporation, LKQ
Delaware LLP, and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial
institutions, as lenders, and JP Morgan Chase Bank, N.A., as administrative agent (incorporated herein by
reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on April 30, 2012).

LKQ Corporation Employees’ Retirement Plan, as amended and restated as of January 1, 2012 (incorporated
herein by reference to Exhibit 10.6 to the Company’s report on Form 10-K filed with the SEC on February 27,
2012).

LKQ Corporation 401(k) Plus Plan dated August 1, 1999 (incorporated herein by reference to Exhibit 10.23 to
the Company’s Registration Statement on Form S-1, Registration No. 333-107417 filed with the SEC on July 28,
2003).

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

Amendment to LKQ Corporation 401(k) Plus Plan (incorporated herein by reference to Exhibit 10.24 to the
Company’s Registration Statement on Form S-1, Registration No. 333-107417 filed with the SEC on July 28,
2003).

Trust for LKQ Corporation 401(k) Plus Plan (incorporated herein by reference to Exhibit 10.25 to the Company’s
Registration Statement on Form S-1, Registration No. 333-107417 filed with the SEC on July 28, 2003).

LKQ Corporation 401(k) Plus Plan II, as amended and restated effective as of January 1, 2011 (incorporated
herein by reference to Exhibit 10.8 to the Company’s report on Form 10-K for the year ended December 31,
2010).

LKQ Corporation 1998 Equity Incentive Plan, as amended.

Form of LKQ Corporation Award Agreement for options granted under the 1998 Equity Incentive Plan
(incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 8-K filed with the SEC on
January 11, 2005).

Form of LKQ Corporation Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.1 to the
Company’s report on Form 8-K filed with the SEC on January 17, 2008).

Form of LKQ Corporation Restricted Stock Unit Agreement for Non-Employee Directors (incorporated herein
by reference to Exhibit 10.1 to the Company’s report on Form 10-Q filed with the SEC on July 29, 2011).

Form of LKQ Corporation Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.24 to
the Company’s report on Form 10-K filed with the SEC on February 25, 2011).

LKQ Corporation Amended and Restated Stock Option and Compensation Plan for Non-Employee Directors, as
amended (incorporated herein by reference to Exhibit 10.5 to the Company’s report on Form 10-Q filed with the
SEC on November 7, 2008).

Form of Indemnification Agreement between directors and officers of LKQ Corporation and LKQ Corporation
(incorporated herein by reference to Exhibit 10.30 to the Company’s Registration Statement on Form S-1,
Registration No. 333-107417 filed with the SEC on July 28, 2003).

LKQ Management Incentive Plan (incorporated herein by reference to Appendix A to the Company’s Proxy
Statement for its Annual Meeting of Stockholders on May 2, 2011 filed on March 17, 2011).

Form of LKQ Corporation Executive Officer 2011 Bonus Program Award Memorandum (incorporated herein by
reference to Exhibit 99.1 to the Company’s report on Form 8-K filed with the SEC on May 6, 2011).

Form of LKQ Corporation Executive Officer 2012 Bonus Program Award Memorandum.

Form of LKQ Corporation Executive Officer 2013 Bonus Program Award Memorandum.

LKQ Corporation Long Term Incentive Plan (incorporated herein by reference to Appendix B to the Company’s
Proxy Statement for its Annual Meeting of Stockholders on May 7, 2012 filed on March 23, 2012).

Consulting Agreement, as amended and restated, dated as of May 21, 2009 between LKQ Corporation and
Joseph M. Holsten (incorporated herein by reference to Exhibit 10.2 to the Company’s report on Form 8-K filed
with the SEC on May 21, 2009).

Amendment Agreement dated as of January 31, 2011 to the Consulting Agreement between LKQ Corporation
and Joseph M. Holsten dated as of May 21, 2009 (incorporated herein by reference to Exhibit 10.1 to the
Company’s report on Form 8-K filed with the SEC on February 2, 2011).

ISDA 2002 Master Agreement between Bank of America, N.A. and LKQ Corporation, and related Schedule
(incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 10-Q filed with the SEC on
April 29, 2011).

ISDA 2002 Master Agreement between JP Morgan Chase Bank, National Association and LKQ Corporation, and
related Schedule (incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 10-Q filed
with the SEC on May 9, 2008).

ISDA 2002 Master Agreement between RBS Citizens, N.A. and LKQ Corporation, and related Schedule
(incorporated herein by reference to Exhibit 10.21 to the Company’s report on Form 10-K filed with the SEC on
February 27, 2012).

Change of Control Agreement between LKQ Corporation and Robert L. Wagman, as amended and restated as of
March 21, 2012 (incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed
with the SEC on March 23, 2012).

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and John S. Quinn
(incorporated herein by reference to Exhibit 10.21 to the Company’s report on Form 10-K filed with the SEC on
February 25, 2011).

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and Walter P. Hanley
(incorporated herein by reference to Exhibit 10.22 to the Company’s report on Form 10-K filed with the SEC on
February 25, 2011).

10.26

10.27

10.28

10.29

10.30

10.31

10.32

12.1

21.1

23.1

31.1

31.2

32.1

32.2

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and Victor M. Casini
(incorporated herein by reference to Exhibit 10.23 to the Company’s report on Form 10-K filed with the SEC on
February 25, 2011).

Change of Control Agreement dated as of March 14, 2011 between LKQ Corporation and Michael S. Clark
(incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on
March 15, 2011).

Change of Control Agreement dated as of December 6, 2010 between LKQ Corporation and Steven Greenspan.

Agreement for the Sale and Purchase of Shares in the Capital of Euro Car Parts Holdings Limited dated October
3, 2011 by and among LKQ Corporation, LKQ Euro Limited and Draco Limited (incorporated herein by
reference to Exhibit 10.29 to the Company’s report on Form 10-K filed with the SEC on February 27, 2012).

Receivables Sale Agreement dated as of September 28, 2012 among Keystone Automotive Industries, Inc., as an
Originator, Greenleaf Auto Recyclers, LLC, as an Originator, and LKQ Receivables Finance Company, LLC, as
Buyer (incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC
on October 4, 2012).

Receivables Purchase Agreement dated as of September 28, 2012 among LKQ Receivables Finance Company,
LLC, as Seller, LKQ Corporation, as Servicer, Victory Receivables Corporation, as a Conduit and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., as a Financial Institution, as Administrative Agent and as a Managing Agent
(incorporated herein by reference to Exhibit 10.2 to the Company’s report on Form 8-K filed with the SEC on
October 4, 2012).

Performance Undertaking, dated as of September 28, 2012 by LKQ Corporation in favor of LKQ Receivables
Finance Company, LLC (incorporated herein by reference to Exhibit 10.3 to the Company’s report on Form 8-K
filed with the SEC on October 4, 2012).

Computation of Ratio of Earnings to Fixed Charges.

List of subsidiaries, jurisdictions and assumed names.

Consent of Independent Registered Public Accounting Firm.

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.

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.

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.

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

Pursuant to the requirements of Section 13 or 15(d) of the 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 March 1, 2013.

SIGNATURES

LKQ CORPORATION

By:

/s/ ROBERT L. WAGMAN
Robert L. Wagman

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the registrant and in the capacities indicated on March 1, 2013.

Signature

Title

Principal Executive Officer:

/s/ ROBERT L. WAGMAN
Robert L. Wagman

Principal Financial Officer:

/s/ JOHN S. QUINN
John S. Quinn
Principal Accounting Officer:

/s/ MICHAEL S. CLARK
Michael S. Clark

A Majority of the Directors:

/s/ A. CLINTON ALLEN
A. Clinton Allen
/s/ KEVIN F. FLYNN
Kevin F. Flynn
/s/ RONALD G. FOSTER
Ronald G. Foster
/s/ JOSEPH M. HOLSTEN
Joseph M. Holsten
/s/ BLYTHE J. MCGARVIE
Blythe J. McGarvie
/s/ PAUL M. MEISTER
Paul M. Meister
/s/ JOHN F. O'BRIEN
John F. O'Brien

/s/ GUHAN SUBRAMANIAN
Guhan Subramanian
/s/ ROBERT L. WAGMAN
Robert L. Wagman
/s/ WILLIAM M. WEBSTER, IV
William M. Webster, IV

President and Chief Executive Officer

Executive Vice President and Chief Financial Officer

Vice President—Finance and Controller

Director