LKQ filing — read by section

Item 1. Financial Statements

Item 1. Financial Statements 
 
 LKQ CORPORATION AND SUBSIDIARIES 
 Unaudited Condensed Consolidated Statements of Income 
 (In millions, except per share data) 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Revenue $ 3,568 $ 3,104 $ 10,365 $ 9,793 
 Cost of goods sold 2,178 1,828 6,189 5,793 
 
 Gross margin 1,390 1,276 4,176 4,000 
 Selling, general and administrative expenses 979 861 2,848 2,683 
 Restructuring and transaction related expenses 27 3 53 10 
 Gain on disposal of businesses (1) 
 — ( 4 ) — ( 159 ) 
 Depreciation and amortization 76 58 195 178 
 
 Operating income 308 358 1,080 1,288 
 Other expense (income): 
 Interest expense 62 19 150 51 
 Gains on foreign exchange contracts - acquisition related (2) 
 ( 3 ) — ( 49 ) — 
 Interest income and other income, net ( 14 ) ( 8 ) ( 34 ) ( 9 ) 
 Total other expense, net 45 11 67 42 
 Income from continuing operations before provision for income taxes 263 347 1,013 1,246 
 Provision for income taxes 60 88 263 304 
 Equity in earnings of unconsolidated subsidiaries 4 2 9 8 
 Income from continuing operations 207 261 759 950 
 Net income from discontinued operations 1 1 1 5 
 Net income 208 262 760 955 
 Less: net income attributable to continuing noncontrolling interest — — 1 — 
 
 Net income attributable to LKQ stockholders $ 208 $ 262 $ 759 $ 955 
 
 Basic earnings per share: (3) 
 
 Income from continuing operations $ 0.77 $ 0.95 $ 2.84 $ 3.39 
 Net income from discontinued operations 0.01 — — 0.02 
 Net income 0.78 0.96 2.84 3.41 
 Less: net income attributable to continuing noncontrolling interest — — — — 
 
 Net income attributable to LKQ stockholders $ 0.78 $ 0.96 $ 2.84 $ 3.41 
 
 Diluted earnings per share: (3) 
 
 Income from continuing operations $ 0.77 $ 0.95 $ 2.83 $ 3.38 
 Net income from discontinued operations 0.01 — — 0.02 
 Net income 0.78 0.95 2.83 3.40 
 Less: net income attributable to continuing noncontrolling interest — — — — 
 
 Net income attributable to LKQ stockholders $ 0.78 $ 0.95 $ 2.83 $ 3.40 

 (1) Primarily related to the sale of PGW Auto Glass ("PGW"). Refer to Note 3, "Discontinued Operations and Divestitures" for further information. 
 (2) Related to the Uni-Select Inc. ("Uni-Select") acquisition. Refer to Note 2, "Business Combinations" and Note 17, "Derivative Instruments and Hedging Activities" for further information. 
 (3) The sum of the individual earnings per share amounts may not equal the total due to rounding. 
 
 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 
 3 

 LKQ CORPORATION AND SUBSIDIARIES 
 Unaudited Condensed Consolidated Statements of Comprehensive Income 
 (In millions) 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Net income $ 208 $ 262 $ 760 $ 955 
 Less: net income attributable to continuing noncontrolling interest — — 1 — 
 
 Net income attributable to LKQ stockholders 208 262 759 955 
 
 Other comprehensive income (loss): 
 Foreign currency translation, net of tax ( 147 ) ( 187 ) ( 56 ) ( 391 ) 
 Net change in unrealized gains/losses on cash flow hedges, net of tax 2 — ( 5 ) — 
 Net change in unrealized gains/losses on pension plans, net of tax — 1 — 1 
 Other comprehensive income from unconsolidated subsidiaries 8 2 12 4 
 Other comprehensive loss ( 137 ) ( 184 ) ( 49 ) ( 386 ) 
 
 Comprehensive income 71 78 711 569 
 Less: comprehensive income attributable to continuing noncontrolling interest — — 1 — 
 
 Comprehensive income attributable to LKQ stockholders $ 71 $ 78 $ 710 $ 569 

 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 
 4 

 LKQ CORPORATION AND SUBSIDIARIES 
 Unaudited Condensed Consolidated Balance Sheets 
 (In millions, except per share data) 
 
 September 30, 2023 December 31, 2022 
 Assets 
 Current assets: 
 Cash and cash equivalents $ 401 $ 278 
 Receivables, net of allowance for credit losses 1,301 998 
 Inventories 2,998 2,752 
 
 Prepaid expenses and other current assets 275 230 
 Assets of discontinued operations 311 — 
 Total current assets 5,286 4,258 
 Property, plant and equipment, net 1,427 1,236 
 Operating lease assets, net 1,308 1,227 
 Goodwill 5,548 4,319 
 Other intangibles, net 1,176 653 
 Equity method investments 158 141 
 Other noncurrent assets 265 204 
 Total assets $ 15,168 $ 12,038 
 Liabilities and Stockholders' Equity 
 Current liabilities: 
 Accounts payable $ 1,723 $ 1,339 
 Accrued expenses: 
 Accrued payroll-related liabilities 244 218 
 Refund liability 124 109 
 
 Other accrued expenses 363 294 
 
 Current portion of operating lease liabilities 210 188 
 Current portion of long-term obligations 574 34 
 Other current liabilities 148 89 
 Liabilities of discontinued operations 173 — 
 Total current liabilities 3,559 2,271 
 Long-term operating lease liabilities, excluding current portion 1,144 1,091 
 Long-term obligations, excluding current portion 3,763 2,622 
 Deferred income taxes 416 280 
 Other noncurrent liabilities 289 283 
 Commitments and contingencies 
 Redeemable noncontrolling interest 24 24 
 Stockholders' equity: 
 Common stock, $ 0.01 par value, 1,000.0 shares authorized, 323.1 shares issued and 267.9 shares outstanding at September 30, 2023; 322.4 shares issued and 267.3 shares outstanding at December 31, 2022 
 3 3 
 Additional paid-in capital 1,527 1,506 
 Retained earnings 7,194 6,656 
 Accumulated other comprehensive loss ( 372 ) ( 323 ) 
 Treasury stock, at cost; 55.2 shares at September 30, 2023 and 55.1 shares at December 31, 2022 
 ( 2,394 ) ( 2,389 ) 
 Total Company stockholders' equity 5,958 5,453 
 Noncontrolling interest 15 14 
 Total stockholders' equity 5,973 5,467 
 Total liabilities and stockholders' equity $ 15,168 $ 12,038 
 
 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 
 5 

 LKQ CORPORATION AND SUBSIDIARIES 
 Unaudited Condensed Consolidated Statements of Cash Flows 
 (In millions) 
 Nine Months Ended September 30, 
 2023 2022 
 CASH FLOWS FROM OPERATING ACTIVITIES: 
 Net income $ 760 $ 955 
 Adjustments to reconcile net income to net cash provided by operating activities: 
 Depreciation and amortization 219 197 
 
 Gain on disposal of businesses — ( 159 ) 
 Stock-based compensation expense 29 31 
 
 Gains on foreign exchange contracts - acquisition related ( 49 ) — 
 Other 22 ( 22 ) 
 Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: 
 Receivables ( 154 ) ( 118 ) 
 Inventories 128 ( 349 ) 
 Prepaid income taxes/income taxes payable 25 63 
 Accounts payable 122 378 
 Other operating assets and liabilities 42 34 
 Net cash provided by operating activities 1,144 1,010 
 CASH FLOWS FROM INVESTING ACTIVITIES: 
 Purchases of property, plant and equipment ( 233 ) ( 148 ) 
 Proceeds from disposals of property, plant and equipment 8 5 
 Acquisitions, net of cash acquired ( 2,199 ) ( 4 ) 
 Proceeds from disposals of businesses — 399 
 
 Proceeds from settlement of foreign exchange contracts - acquisition related 49 — 
 Other investing activities, net ( 14 ) ( 8 ) 
 Net cash (used in) provided by investing activities ( 2,389 ) 244 
 CASH FLOWS FROM FINANCING ACTIVITIES: 
 
 Debt issuance costs ( 32 ) — 
 Proceeds from issuance of U.S. Notes (2028/33), net of unamortized bond discount 1,394 — 
 Borrowings under revolving credit facilities 1,978 1,323 
 Repayments under revolving credit facilities ( 2,715 ) ( 1,451 ) 
 Borrowings under term loans 1,031 — 
 
 (Repayments) borrowings of other debt, net ( 12 ) 9 
 Settlement of derivative instruments ( 13 ) — 
 Dividends paid to LKQ stockholders ( 222 ) ( 210 ) 
 Purchase of treasury stock ( 8 ) ( 872 ) 
 Other financing activities, net ( 10 ) ( 16 ) 
 Net cash provided by (used in) financing activities 1,391 ( 1,217 ) 
 Effect of exchange rate changes on cash and cash equivalents — ( 42 ) 
 
 Net increase (decrease) in cash and cash equivalents 146 ( 5 ) 
 Cash and cash equivalents of continuing operations, beginning of period 278 274 
 Add: Cash and cash equivalents of discontinued operations, beginning of period — — 
 Cash and cash equivalents of continuing and discontinued operations, beginning of period 278 274 
 Cash and cash equivalents of continuing and discontinued operations, end of period
 424 269 
 Less: Cash and cash equivalents of discontinued operations, end of period
 23 — 
 Cash and cash equivalents, end of period $ 401 $ 269 
 
 Supplemental disclosure of cash paid for: 
 Income taxes, net of refunds $ 227 $ 250 
 Interest 100 38 
 
 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 
 6 

 LKQ CORPORATION AND SUBSIDIARIES 
 Unaudited Condensed Consolidated Statements of Stockholders' Equity 
 (In millions, except per share data) 
 
 LKQ Stockholders 
 Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity 
 Shares Amount Shares Amount 
 Balance as of July 1, 2023 322.9 $ 3 ( 55.2 ) $ ( 2,394 ) $ 1,520 $ 7,059 $ ( 235 ) $ 15 $ 5,968 
 Net income — — — — — 208 — — 208 
 Other comprehensive loss — — — — — — ( 137 ) — ( 137 ) 
 
 Vesting of restricted stock units, net of shares withheld for employee tax 0.2 — — — ( 2 ) — — — ( 2 ) 
 Stock-based compensation expense — — — — 9 — — — 9 
 
 Dividends declared to LKQ stockholders ($0.275 per share) — — — — — ( 73 ) — — ( 73 ) 
 
 Balance as of September 30, 2023 323.1 $ 3 ( 55.2 ) $ ( 2,394 ) $ 1,527 $ 7,194 $ ( 372 ) $ 15 $ 5,973 

 LKQ Stockholders 
 Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity 
 Shares Amount Shares Amount 
 Balance as of July 1, 2022 322.0 $ 3 ( 45.4 ) $ ( 1,894 ) $ 1,492 $ 6,344 $ ( 355 ) $ 15 $ 5,605 
 Net income — — — — — 262 — — 262 
 Other comprehensive loss — — — — — — ( 184 ) — ( 184 ) 
 Purchase of treasury stock — — ( 6.8 ) ( 343 ) — — — — ( 343 ) 
 Vesting of restricted stock units, net of shares withheld for employee tax 0.3 — — — ( 1 ) — — — ( 1 ) 
 Stock-based compensation expense — — — — 8 — — — 8 
 
 Dividends declared to LKQ stockholders ($0.25 per share) — — — — — ( 70 ) — — ( 70 ) 
 
 Balance as of September 30, 2022 322.3 $ 3 ( 52.2 ) $ ( 2,237 ) $ 1,499 $ 6,536 $ ( 539 ) $ 15 $ 5,277 

 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 
 7 

 LKQ CORPORATION AND SUBSIDIARIES 
 Unaudited Condensed Consolidated Statements of Stockholders' Equity 
 (In millions, except per share data) 
 
 LKQ Stockholders 
 Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity 
 Shares Amount Shares Amount 
 Balance as of January 1, 2023 322.4 $ 3 ( 55.1 ) $ ( 2,389 ) $ 1,506 $ 6,656 $ ( 323 ) $ 14 $ 5,467 
 Net income — — — — — 759 — 1 760 
 Other comprehensive loss — — — — — — ( 49 ) — ( 49 ) 
 Purchase of treasury stock — — ( 0.1 ) ( 5 ) — — — — ( 5 ) 
 Vesting of restricted stock units, net of shares withheld for employee tax 0.7 — — — ( 8 ) — — — ( 8 ) 
 Stock-based compensation expense — — — — 29 — — — 29 
 
 Dividends declared to LKQ stockholders ($0.825 per share) — — — — — ( 221 ) — — ( 221 ) 
 
 Balance as of September 30, 2023 323.1 $ 3 ( 55.2 ) $ ( 2,394 ) $ 1,527 $ 7,194 $ ( 372 ) $ 15 $ 5,973 

 LKQ Stockholders 
 Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity 
 Shares Amount Shares Amount 
 Balance as of January 1, 2022 321.6 $ 3 ( 34.6 ) $ ( 1,346 ) $ 1,474 $ 5,794 $ ( 153 ) $ 15 $ 5,787 
 Net income — — — — — 955 — — 955 
 Other comprehensive loss — — — — — — ( 386 ) — ( 386 ) 
 Purchase of treasury stock — — ( 17.6 ) ( 891 ) — — — — ( 891 ) 
 Vesting of restricted stock units, net of shares withheld for employee tax 0.7 — — — ( 6 ) — — — ( 6 ) 
 Stock-based compensation expense — — — — 31 — — — 31 
 Dividends declared to LKQ stockholders ($0.75 per share) — — — — — ( 213 ) — — ( 213 ) 
 
 Balance as of September 30, 2022 322.3 $ 3 ( 52.2 ) $ ( 2,237 ) $ 1,499 $ 6,536 $ ( 539 ) $ 15 $ 5,277 

 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 
 8 

 LKQ CORPORATION AND SUBSIDIARIES 
 Notes to Unaudited Condensed Consolidated Financial Statements 
 
 Note 1. Interim Financial Statements 
 
 LKQ Corporation, a Delaware corporation, is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries. 
 
 We have prepared the accompanying Unaudited Condensed Consolidated Financial Statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented. 
 
 Results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023 ("2022 Form 10-K"). 
 
 Interest income on the Unaudited Condensed Consolidated Statements of Income was updated to conform with the 2022 Form 10-K presentation. 
 
 Recently Adopted Accounting Pronouncements 
 
 During the first quarter of 2023, we adopted Accounting Standards Update No. 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” ("ASU 2022-04"), which requires the buyer in a supplier finance program to disclose certain information about its program, including key terms, balance sheet presentation of amounts, outstanding amounts at the end of each period, and rollforwards of balances. We adopted the provisions of ASU 2022-04 on a retrospective basis (see Note 15, "Supply Chain Financing"), except for the disclosure of rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The adoption of ASU 2022-04 did not have a material impact on our unaudited condensed consolidated financial statements. 
 
 Note 2. Business Combinations 
 
 On August 1, 2023, we acquired all of Uni-Select's issued and outstanding shares for Canadian dollar (“CAD”) 48.00 per share in cash, representing a total enterprise value of approximately CAD 2.8 billion ($ 2.1 billion) (the "Uni-Select Acquisition"), by way of a plan of arrangement (the "Arrangement") entered into on February 26, 2023, under the provisions of the Business Corporations Act (Québec). Uni-Select is a leading distributor of automotive refinish and industrial coatings and related products in North America through its FinishMaster segment, in the automotive aftermarket parts business in Canada through its Canadian Automotive Group segment and in the United Kingdom (“U.K.”) through its GSF Car Parts segment. 
 
 During the second quarter of 2023, we received the required approvals from Uni-Select's shareholders, the Superior Court of Québec and regulators in the United States and Canada with respect to the Arrangement. On July 26, 2023, the U.K.'s Competition and Markets Authority cleared the acquisition, except with respect to the wholesale automotive parts business, GSF Car Parts in the U.K., which was divested in October 2023. See Note 3, "Discontinued Operations and Divestitures" for information related to the divestment of GSF Car Parts. 
 
 In order to reduce the risk related to changes in CAD foreign exchange rates for the CAD purchase price between signing the Arrangement and closing of the Uni-Select Acquisition, we entered into foreign exchange contracts. These foreign exchange contracts did not qualify for hedge accounting, and therefore the changes in fair value are reported in Gains on foreign exchange contracts - acquisition related in the Unaudited Condensed Consolidated Statements of Income. We reported Gains on foreign exchange contracts - acquisition related of $ 3 million and $ 49 million for the three and nine months ended September 30, 2023. These foreign exchange contracts were settled in July 2023 ahead of closing of the Uni-Select Acquisition, resulting in total payments received of $ 49 million. See Note 17, "Derivative Instruments and Hedging Activities" for information related to these foreign exchange contracts. 
 
 9 

 In connection with the Uni-Select Acquisition, we entered into a senior unsecured bridge loan facility to obtain committed financing for a portion of the purchase price. The bridge loan facility was terminated in the second quarter of 2023 after arranging the permanent financing as discussed below. We incurred $ 9 million in upfront fees related to the bridge loan facility and fully amortized these upfront fees (reported in Interest expense in the Unaudited Condensed Consolidated Statements of Income) during the nine months ended September 30, 2023. 
 
 For the permanent financing, on March 27, 2023, we entered into a new term loan credit agreement ("CAD Note") which established an unsecured term loan facility of up to CAD 700 million maturing in July 2026. Proceeds from the CAD Note could only be used (i) to finance a portion of the aggregate cash consideration for the Uni-Select Acquisition, (ii) to refinance certain outstanding debt of Uni-Select and (iii) to pay fees, costs and expenses related to the Uni-Select Acquisition. The CAD Note included a non-usage fee that was incurred through the date the proceeds were drawn on the facility. In connection with the closing of the Uni-Select Acquisition, we borrowed approximately $ 531 million (CAD 700 million) under the CAD Note on July 31, 2023. There were no changes in borrowings against the CAD Note between the draw date and September 30, 2023. 
 
 The CAD Note contains customary covenants for an unsecured term loan for a company that has debt ratings that are investment grade, such as requirements to comply with a total leverage ratio and interest coverage ratio, each calculated in accordance with the terms of the CAD Note, and limits on the Company’s and its subsidiaries’ ability to incur liens and indebtedness. 
 
 The interest rate applicable to the CAD Note may be (i) a forward-looking term rate based on the Canadian Dollar Offer Rate for an interest period chosen by the Company of one or three months or (ii) the Canadian Prime Rate (as defined in the CAD Note), plus in each case a spread based on the Company’s debt rating and total leverage ratio. See Note 16, "Long-Term Obligations" for additional information related to the CAD Note. 
 
 Additionally, on May 24, 2023, we completed an offering of $ 1,400 million aggregate principal amount of senior unsecured notes, consisting of $ 800 million senior notes due 2028 (the "U.S. Notes (2028)") and $ 600 million senior notes due 2033 (the "U.S. Notes (2033)" and together with the U.S. Notes (2028), the "U.S. Notes (2028/33)"). The net proceeds from the offering of the U.S. Notes (2028/33) were used, together with borrowings under our CAD Note, (i) to finance a portion of the consideration payable for the Uni-Select Acquisition, including repaying existing Uni-Select indebtedness, (ii) to pay associated fees and expenses, including fees and expenses incurred in connection with the offering, and (iii) for general corporate purposes. 
 
 The U.S. Notes (2028) and U.S. Notes (2033) bear interest at rates of 5.75 % and 6.25 %, respectively, per year from the date of original issuance or from the most recent payment date on which interest has been paid or provided for. See Note 16, "Long-Term Obligations" for additional information related to the offering of the Notes. 
 
 To hedge the movement of market interest rates for the senior notes prior to the issuance date, we entered into forward-starting interest rate swaps to lock interest rates for the five and ten year senior notes. These forward-starting interest rate swaps were settled in the second quarter following the issuance of the U.S. Notes (2028/33). See Note 17, "Derivative Instruments and Hedging Activities" for information related to these interest rate instruments. 
 
 We funded the remainder of the purchase price with borrowings under our revolving credit facility and cash on hand of approximately $ 150 million and $ 50 million, respectively. 
 
 We recorded $ 1,230 million of goodwill related to our acquisition of Uni-Select, of which we expect $ 116 million to be deductible for income tax purposes. In the period between the acquisition date and September 30, 2023, Uni-Select, which is reported in our Wholesale - North America segment, generated revenue of $ 239 million and an operating loss of $ 13 million, including $ 20 million of restructuring expenses and $ 12 million of amortization of acquired intangibles. 
 
 In addition to our acquisition of Uni-Select, we completed acquisitions of one business within our Wholesale - North America segment, four businesses within our Europe segment and one business in our Specialty segment, during the nine months ended September 30, 2023. Total acquisition date fair value of the consideration for these acquisitions was $ 135 million, composed of $ 118 million of cash paid (net of cash acquired), $ 5 million of notes payable, $ 6 million of other purchase price obligations (non-interest bearing) and $ 6 million of pre-existing equity method investment balances . During the nine months ended September 30, 2023, we recorded $ 61 million of goodwill related to these acquisitions, of which we expect $ 11 million to be deductible for income tax purposes. In the period between the acquisition dates and September 30, 2023, these acquisitions generated revenue of $ 90 million, including $ 42 million within our Europe segment and $ 35 million within our Specialty segment, and operating income of $ 9 million, primarily within our Europe segment. 
 
 10 

 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 values at the dates of acquisition. The purchase price allocations for the acquisitions made during the nine months ended September 30, 2023 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain receivables, inventories and fixed assets acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain liabilities assumed; and 4) the tax basis of the entities acquired. We have recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the valuations. During the first nine months of 2023, the measurement period adjustments recorded for acquisitions completed in prior periods were not material. 
 
 The purchase price allocations for the acquisitions completed during the nine months ended September 30, 2023 are as follows (in millions): 
 
 Nine Months Ended 
September 30, 2023 
 Uni-Select (1) 
 Other Acquisitions Total 
 Receivables $ 123 $ 31 $ 154 
 
 Inventories 332 59 391 
 Prepaid expenses and other current assets 30 5 35 
 Assets of discontinued operations (1) 
 299 — 299 
 Property, plant and equipment 104 10 114 
 Operating lease assets 80 8 88 
 Goodwill 1,230 61 1,291 
 Other intangibles (2) 
 567 25 592 
 Other noncurrent assets 22 — 22 
 
 Current liabilities assumed (3) 
 ( 330 ) ( 44 ) ( 374 ) 
 Liabilities of discontinued operations (1) 
 ( 183 ) — ( 183 ) 
 Long-term operating lease liabilities, excluding current portion ( 54 ) ( 8 ) ( 62 ) 
 Debt assumed ( 1 ) ( 12 ) ( 13 ) 
 Other noncurrent liabilities assumed (4) 
 ( 135 ) — ( 135 ) 
 
 Other purchase price obligations ( 3 ) ( 17 ) ( 20 ) 
 
 Cash used in acquisitions, net of cash acquired $ 2,081 $ 118 $ 2,199 

 (1) In connection with our acquisition of Uni-Select, we acquired one business (GSF Car Parts) which was required to be sold. Therefore, such business was classified as held for sale and was included within the "Assets of discontinued operations" and "Liabilities of discontinued operations" line items in the above preliminary allocation of purchase price. See Note 3, "Discontinued Operations and Divestitures" for information related to the GSF Car Parts business. 
 (2) The amount recorded for our acquisition of Uni-Select primarily includes $ 17 million of trade names (3 to 5 year useful lives) and $ 543 million of customer and supplier relationships (10 to 17 year useful lives). 
 (3) The amount recorded for our acquisition of Uni-Select includes $ 64 million of Accounts Payable outstanding under the supply chain financing arrangement. See Note 15, "Supply Chain Financing" for information related to our supply chain financing programs. 
 (4) The amount recorded for our acquisition of Uni-Select includes $ 126 million of net deferred income tax liability, the significant components of which are as follows: deferred tax liabilities related to customer relationships of $ 140 million net with deferred tax assets related to Canadian net operating loss carryforwards of $ 23 million. 
 
 The fair value of our intangible assets is based on a number of inputs, including projections of future cash flows, assumed royalty rates and customer attrition rates, all of which are Level 3 inputs. The fair value of our property, plant and equipment is determined using inputs such as market comparables and current replacement or reproduction costs of the asset, adjusted for physical, functional and economic factors; these adjustments to arrive at fair value use unobservable inputs in which little or no market data exists, and therefore, these inputs are considered to be Level 3 inputs. See Note 18, "Fair Value Measurements" for further information regarding the tiers in the fair value hierarchy. 
 
 11 

 The acquisition of Uni-Select complements our existing North American paint distribution operations and provides a scaled position in the Canadian mechanical parts space, with opportunity for future consolidation and growth. The primary objectives of our other acquisitions made during the nine months ended September 30, 2023 were to create economic value for our stockholders by enhancing our position as a leading source for alternative collision and mechanical repair products and to expand into other product lines and businesses that may benefit from our operating strengths. 
 
 When we identify potential acquisitions, we attempt to target companies with a leading market presence, experienced management team and workforce, high synergies and/or that add critical capabilities with opportunity for future consolidation and growth. For certain of our acquisitions, we have identified cost savings and synergies as a result of integrating the company with our existing business that provide additional value to the combined entity. In many cases, acquiring companies with these characteristics will result in purchase prices that include a significant amount of goodwill. 
 
 Unaudited Pro Forma Financial Information 
 
 The following unaudited pro forma financial information presents the effect of the businesses acquired during the nine months ended September 30, 2023 as though the businesses had been acquired as of January 1, 2022. The unaudited pro forma financial information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma financial information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value, adjustments to depreciation on acquired property, plant and equipment, adjustments to rent expense for above or below market leases, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results. The unaudited pro forma financial information is as follows (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 
 Revenue $ 3,685 $ 3,521 $ 11,295 $ 11,002 
 
 Income from continuing operations 202 248 692 908 
 
 The pro forma impact of our acquisitions also reflects the elimination of acquisition related expenses (net of tax) of $ 3 million and $ 17 million and gains on foreign exchange contracts - acquisition related of $ 3 million and $ 49 million for the three and nine months ended September 30, 2023, respectively. In addition, the unaudited pro forma financial information excludes the results of GSF Car Parts which was classified as discontinued operations upon the acquisition of Uni-Select. Refer to Note 11, "Restructuring and Transaction Related Expenses" for further information regarding our acquisition related expenses, Note 17, "Derivative Instruments and Hedging Activities" for further information on our foreign exchange contracts and Note 3, "Discontinued Operations and Divestitures" for further information related to the divestment of GSF Car Parts. 
 
 Note 3. Discontinued Operations and Divestitures 
 
 GSF C ar Parts 
 
 We acquired GSF Car Parts as part of the Uni-Select transaction and we were required to divest GSF Car Parts in order to comply with the U.K.'s Competition and Markets Authority regulatory ruling. Since the GSF Car Parts business was held separate and never integrated into our business, we classified the business as discontinued operations upon acquisition. As of September 30, 2023, the assets held for sale and liabilities held for sale are recorded within Assets of discontinued operations and Liabilities of discontinued operations, respectively, on the Unaudited Condensed Consolidated Balance Sheets. 
 
 On October 25, 2023, we completed the divestment of GSF Car Parts. In order to manage our exposure to variability in the cash flows related the sale of GSF Car Parts, we entered into a foreign exchange forward contract to fix the amount of USD we would receive upon completion of the sale. We do not expect to recognize a significant gain or loss upon disposal. 
 
 Glass Manufacturing Business 
 
 For the nine months ended September 30, 2022, we recorded to discontinued operations a $ 5 million benefit primarily related to the reassessment of a previously recorded valuation allowance on a deferred tax asset related to our glass manufacturing business sold in 2017. 
 
 12 

 Other Divestitures (Not Classified in Discontinued Operations) 
 
 In April 2022, we completed the sale of PGW, our aftermarket glass business within our Wholesale - North America segment, to a third party for $ 361 million resulting in recognition of a $ 155 million pretax gain ($ 127 million after tax). Additionally, in September 2022, we completed the sale of a business within our Self Service segment, to a third party, resulting in proceeds of $ 25 million and the recognition of a $ 4 million pretax gain ($ 3 million after tax). 
 
 Note 4. Inventories 
 
 We classify our inventory into the following categories: (i) aftermarket and refurbished products, (ii) salvage and remanufactured products, and (iii) manufactured products. 
 
 Inventories consist of the following (in millions): 
 
 September 30, 2023 December 31, 2022 
 Aftermarket and refurbished products $ 2,460 $ 2,279 
 Salvage and remanufactured products 484 427 
 Manufactured products 54 46 
 Total inventories $ 2,998 $ 2,752 

 Aftermarket and refurbished products and salvage and remanufactured products are primarily composed of finished goods. As of September 30, 2023, manufactured products inventory was composed of $ 29 million of raw materials, $ 7 million of work in process, and $ 18 million of finished goods. As of December 31, 2022, manufactured products inventory was composed of $ 26 million of raw materials, $ 5 million of work in process, and $ 15 million of finished goods. Our 2023 acquisitions contributed approximately $ 380 million to our aftermarket and refurbished products inventory (including $ 332 million from Uni-Select). 
 
 Note 5. Allowance for Credit Losses 
 
 Our allowance for credit losses was $ 57 million and $ 54 million as of September 30, 2023 and December 31, 2022, respectively. The provision for credit losses was $ 1 million for both the three months ended September 30, 2023 and 2022, and $ 7 million and $ 9 million for the nine months ended September 30, 2023 and 2022, respectively. 
 
 Note 6. Noncontrolling Interest 
 
 We present redeemable noncontrolling interest on our balance sheet related to redeemable shares issued to a minority shareholder in conjunction with a previous acquisition. The redeemable shares contain (i) a put option for all noncontrolling interest shares at a fixed price of $ 24 million (€ 21 million) for the minority shareholder exercisable in the fourth quarter of 2023, (ii) a call option for all noncontrolling interest shares at a fixed price of $ 26 million (€ 23 million) for us exercisable beginning in the first quarter of 2026 through the end of the fourth quarter of 2027, and (iii) a guaranteed dividend to be paid quarterly to the minority shareholder through the fourth quarter of 2023. The redeemable shares do not provide the minority shareholder with rights to participate in the profits and losses of the subsidiary prior to the exercise date of the put option. As the put option is outside our control, we recorded a $ 24 million Redeemable noncontrolling interest at the put option's redemption value outside of permanent equity on our Unaudited Condensed Consolidated Balance Sheets. 
 
 Note 7. Intangible Assets 
 
 Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. We performed our annual impairment test during the fourth quarter of 2022, and determined no impairment existed as all of our reporting units had a fair value estimate which exceeded the carrying value by at least 40 %. The fair value estimates of our reporting units were established using weightings of the results of a discounted cash flow methodology and a comparative market multiples approach. Goodwill and indefinite-lived intangible assets impairment testing may also be performed on an interim basis when events or circumstances arise that may lead to impairment. We did not identify any indicators of impairment in the first nine months of 2023 that necessitated an interim test of goodwill impairment or indefinite-lived intangible assets impairment. 
 
 13 

 Note 8. Equity Method Investments 
 
 The carrying value of our Equity method investments were as follows (in millions): 
 
 Segment Ownership as of September 30, 2023 
 September 30, 2023 December 31, 2022 
 MEKO AB (1)(2) 
 Europe 26.6 % $ 148 $ 129 
 Other (3) 
 10 12 
 Total $ 158 $ 141 

 (1) As of September 30, 2023, the Level 1 fair value of our equity investment in MEKO AB ("Mekonomen") was $ 133 million based on the quoted market price for Mekonomen's common stock using the same foreign exchange rate as the carrying value. We evaluated our investment in Mekonomen for other-than-temporary impairment and concluded the decline in fair value was not other-than-temporary; however, a prolonged, material impairment may cause us to account for the decline as an other-than-temporary impairment in a future period, resulting in a charge in our Unaudited Condensed Consolidated Statements of Income. 
 (2) As of September 30, 2023, our share of the book value of Mekonomen's net assets exceeded the book value of our investment by $ 9 million; this difference is primarily related to Mekonomen's Accumulated Other Comprehensive Income balance as of our acquisition date in 2016. We record our equity in the net earnings of Mekonomen on a one quarter lag. 
 (3) In July 2023, we acquired the remaining equity interest in an investment in our Europe segment resulting in a decrease to the carrying value of $ 3 million. 
 
 Note 9. Warranty Reserve 
 
 Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three or four year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. 
 
 The changes in the warranty reserve are as follows (in millions): 
 
 Warranty Reserve 
 Balance as of December 31, 2022 $ 32 
 Warranty expense 65 
 Warranty claims ( 61 ) 
 
 Balance as of September 30, 2023 $ 36 

 Note 10. Revenue Recognition 
 
 Disaggregated Revenue 
 
 We report revenue in two categories: (i) parts and services and (ii) other. 
 
 Parts revenue is generated from the sale of vehicle products including replacement parts, components and systems used in the repair and maintenance of vehicles and specialty products and accessories to improve the performance, functionality and appearance of vehicles. Services revenue includes (i) additional services that are generally billed concurrently with the related product sales, such as the sale of service-type warranties, (ii) fees for admission to our self service yards, and (iii) diagnostic and repair services. 
 
 For Wholesale - North America and Self Service, vehicle replacement products include sheet metal collision parts such as doors, hoods, and fenders; bumper covers; head and tail lamps; mirrors; grilles; wheels; and large mechanical items such as engines and transmissions. For Wholesale - North America and Europe, vehicle replacement products include a wide variety of small mechanical products such as brake pads, discs and sensors; clutches; electrical products such as spark plugs and batteries; steering and suspension products; filters; and oil and automotive fluids. Additionally, in both our Wholesale - North America and Europe segments, we sell paint and paint related consumables for refinishing vehicles. For our Specialty operations, we serve seven product segments: truck and off-road; speed and performance; recreational vehicles; towing; wheels, tires and performance handling; marine; and miscellaneous accessories. 
 
 14 

 Other revenue includes sales of scrap and precious metals (platinum, palladium, and rhodium), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from furnace operations. We derive scrap metal and other precious metals from several sources in both our Wholesale - North America and Self Service segments, including vehicles that have been used in our recycling operations and vehicles from original equipment manufacturers ("OEMs") and other entities that contract with us for secure disposal of "crush only" vehicles. Revenue from the sale of hulks in our Wholesale - North America and Self Service segments is recognized based on a price per ton of delivered material when the customer (processor) collects the scrap. 
 
 The following table sets forth our revenue disaggregated by category and reportable segment (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Wholesale - North America $ 1,312 $ 1,026 $ 3,581 $ 3,182 
 Europe 1,581 1,376 4,762 4,327 
 Specialty 456 452 1,294 1,424 
 Self Service 58 55 181 172 
 Parts and services 3,407 2,909 9,818 9,105 
 Wholesale - North America 75 82 234 271 
 Europe 3 4 15 18 
 
 Self Service 83 109 298 399 
 Other 161 195 547 688 
 Total revenue $ 3,568 $ 3,104 $ 10,365 $ 9,793 

 Variable Consideration 
 
 Amounts related to variable consideration on our Unaudited Condensed Consolidated Balance Sheets are as follows (in millions): 
 
 Classification September 30, 2023 December 31, 2022 
 Return asset Prepaid expenses and other current assets $ 65 $ 58 
 Refund liability Refund liability 124 109 
 Variable consideration reserve Receivables, net of allowance for credit losses 162 136 

 Revenue by Geographic Area 
 
 Our net sales are attributed to geographic area based on the location of the selling operation. The following table sets forth our revenue by geographic area (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Revenue 
 United States $ 1,759 $ 1,612 $ 5,130 $ 5,109 
 Germany 418 369 1,270 1,145 
 United Kingdom 438 375 1,275 1,193 
 Other countries 953 748 2,690 2,346 
 Total revenue $ 3,568 $ 3,104 $ 10,365 $ 9,793 

 15 

 Note 11. Restructuring and Transaction Related Expenses 
 
 From time to time, we initiate restructuring plans to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations. Below is a summary of our current restructuring plans: 
 
 2022 Global Restructuring Plan 
 
 In the fourth quarter of 2022, we began a restructuring initiative covering all of our reportable segments designed to reduce costs, streamline operations, consolidate facilities and implement other strategic changes to the overall organization. We have incurred and expect to incur costs primarily for employee severance, inventory or other asset write-downs, and exiting facilities. This plan is scheduled to be substantially complete by the end of 2024 with an estimated total incurred cost of between $ 25 million and $ 35 million. 
 
 1 LKQ Europe Plan 
 
 In 2019, we announced a multi-year plan called "1 LKQ Europe" which is intended to create structural centralization and standardization of key functions to facilitate the operation of the Europe segment as a single business. Under the 1 LKQ Europe plan, we are reorganizing our non-customer-facing teams and support systems through various projects including the implementation of a common ERP platform, rationalization of our product portfolio, and creation of a Europe headquarters office and central back office. We completed the organizational design and implementation projects in June 2021, with the remaining projects scheduled to be completed by the end of 2027 with a total incurred cost of between $ 30 million and $ 40 million. 
 
 2019/2020 Global Restructuring Plan 
 
 In 2019, we commenced a cost reduction initiative, covering all of our reportable segments, designed to eliminate underperforming assets and cost inefficiencies. This plan was expanded in 2020 as we identified additional opportunities to eliminate inefficiencies, including actions in response to impacts to the business from COVID-19. We have incurred and expect to incur costs for inventory write-downs; employee severance and other expenditures related to employee terminations; lease exit costs, such as lease termination fees, accelerated amortization of operating lease assets and impairment of operating lease assets; other costs related to facility exits, such as moving expenses to relocate inventory and equipment; and accelerated depreciation of fixed assets to be disposed of earlier than the end of the previously estimated useful lives. This plan is expected to be completed in 2023 with a total incurred cost of between $ 106 million to $ 110 million. 
 
 Acquisition Integration Plans 
 
 As we complete the acquisition of a business, we may incur costs related to integrating the acquired business into our current business structure and systems. These costs are typically incurred within a year from the acquisition date and vary in magnitude depending on the size and complexity of the related integration activities. We expect to incur additional expenses of between $ 15 million and $ 25 million to complete the integration plan related to the Uni-Select Acquisition in our Wholesale - North America segment. 
 
 16 

 The following table sets forth the expenses incurred related to our restructuring plans (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 Plan Expense Type 2023 2022 2023 2022 
 2022 Global Plan Employee related costs $ 1 $ — $ 3 $ — 
 Facility exit costs 2 — 5 — 
 Inventory related costs (1) 
 2 — 2 — 
 Other costs 1 — 3 — 
 Total $ 6 $ — $ 13 $ — 
 
 2019/2020 Global Plan Facility exit costs $ — $ 1 $ — $ 2 
 
 Total $ — $ 1 $ — $ 2 
 
 1 LKQ Europe Plan Employee related costs $ — $ 1 $ 1 $ 1 
 
 Total $ — $ 1 $ 1 $ 1 
 
 Acquisition Integration Plans Employee related costs $ 20 $ — $ 20 $ 2 
 Facility exit costs — — 2 — 
 
 Total $ 20 $ — $ 22 $ 2 
 
 Total restructuring expenses $ 26 $ 2 $ 36 $ 5 

 (1) Recorded to Cost of goods sold in the Consolidated Statements of Income 
 
 The following table sets forth the cumulative plan costs by segment related to our restructuring plans (in millions): 
 
 Cumulative Program Costs 
 Wholesale - North America Europe Specialty Self Service Total 
 2022 Global Plan $ 1 $ 16 $ 3 $ 3 $ 23 
 2019/2020 Global Plan 43 59 2 2 106 
 1 LKQ Europe Plan — 8 — — 8 

 The following table sets forth the liabilities recorded related to our restructuring plans (in millions): 
 
 2022 Global Plan 2019/20 Global Plan 1 LKQ Europe Plan 
 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 
 Employee related costs (1) 
 $ — $ 3 $ — $ 1 $ 1 $ 1 
 Facility exit costs (2) 
 3 1 2 6 — — 
 Other costs — — 2 2 — — 
 Total $ 3 $ 4 $ 4 $ 9 $ 1 $ 1 

 (1) Reported in Accrued payroll-related liabilities on our Unaudited Condensed Consolidated Balance Sheets. 
 (2) Reported in Current portion of operating lease liabilities and Long-term operating lease liabilities, excluding current portion on our Unaudited Condensed Consolidated Balance Sheets. 
 
 17 

 Transaction Related Expenses 
 
 The following table sets forth the transaction related expenses incurred (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Professional fees (1) 
 $ 3 $ 1 $ 19 $ 5 
 Transaction related expenses 
 $ 3 $ 1 $ 19 $ 5 

 (1) Includes external costs such as legal, accounting and advisory fees related to completed and potential transactions (including Uni-Select transaction costs in 2023). 
 
 Note 12. Stock-Based Compensation 
 
 RSUs 
 
 The following table summarizes activity related to our restricted stock units ("RSUs") under the LKQ Corporation 1998 Equity Incentive Plan (the "Equity Incentive Plan") for the nine months ended September 30, 2023 (in millions, except years and per share amounts): 
 
 Number Outstanding Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) 
 
 Unvested as of January 1, 2023 1.3 $ 41.02 
 Granted (2) 
 0.6 $ 56.74 
 Vested ( 0.6 ) $ 42.42 
 Forfeited / Canceled ( 0.1 ) $ 44.08 
 Unvested as of September 30, 2023 1.2 $ 48.53 
 Expected to vest after September 30, 2023 1.0 $ 49.26 2.8 $ 50 

 (1) The aggregate intrinsic value of expected to vest RSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of the period multiplied by the number of units) that would have been received by the holders had all the expected to vest RSUs vested. This amount changes based on the market price of LKQ’s common stock. 
 (2) The weighted average grant date fair value of RSUs granted during the nine months ended September 30, 2022 was $ 49.04 . 
 
 The fair value of RSUs that vested during the nine months ended September 30, 2023 was $ 36 million; the fair value of RSUs vested is based on the market price of LKQ stock on the date vested. 
 
 PSUs 
 
 The following table summarizes activity related to our performance-based RSUs ("PSUs") under the Equity Incentive Plan for the nine months ended September 30, 2023 (in millions, except years and per share amounts): 
 
 Number Outstanding Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) 
 
 Unvested as of January 1, 2023 0.5 $ 37.87 
 Granted (2) 
 0.1 $ 56.83 
 Vested ( 0.2 ) $ 32.28 
 
 Unvested as of September 30, 2023 0.4 $ 47.56 
 Expected to vest after September 30, 2023 0.3 $ 46.89 1.2 $ 15 

 18 

 (1) The aggregate intrinsic value of expected to vest PSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all the expected to vest PSUs vested. This amount changes based on the market price of LKQ’s common stock and the achievement of the performance metrics relative to the established targets. 
 (2) Represents the number of PSUs at target payout. The weighted average grant date fair value of PSUs granted during the nine months ended September 30, 2022 was $ 48.95 . 
 
 The fair value of PSUs that vested during the nine months ended September 30, 2023 was $ 12 million; the fair value of PSUs vested is based on the market price of LKQ stock on the date vested. 
 
 Stock-Based Compensation Expense 
 
 Pre-tax stock-based compensation expense for RSUs and PSUs totaled $ 9 million and $ 29 million for the three and nine months ended September 30, 2023, respectively, and $ 8 million and $ 31 million for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, unrecognized compensation expense related to unvested RSUs and PSUs was $ 54 million. Stock-based compensation expense related to these awards will be different to the extent that forfeitures are realized and performance under the PSUs dif fers from current achievement estimates. 
 
 Note 13. Earnings Per Share 
 
 The following chart sets forth the computation of earnings per share (in millions, except per share amounts): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Income from continuing operations $ 207 $ 261 $ 759 $ 950 
 Denominator for basic earnings per share—Weighted-average shares outstanding 267.8 273.8 267.6 280.2 
 Effect of dilutive securities: 
 RSUs 0.4 0.4 0.5 0.6 
 PSUs 0.2 0.4 0.2 0.4 
 
 Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding 268.4 274.6 268.3 281.2 
 Basic earnings per share from continuing operations $ 0.77 $ 0.95 $ 2.84 $ 3.39 
 Diluted earnings per share from continuing operations (1) 
 $ 0.77 $ 0.95 $ 2.83 $ 3.38 

 (1) Diluted earnings per share from continuing operations was computed using the treasury stock method for dilutive securities. 
 
 The number of antidilutive securities was insignificant for all periods presented. 
 
 19 

 Note 14. Accumulated Other Comprehensive Loss 
 
 The components of Accumulated Other Comprehensive Loss are as follows (in millions): 
 
 Three Months Ended September 30, 2023 
 Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Unrealized Gain on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) 
 Balance as of July 1, 2023 
 $ ( 242 ) $ ( 7 ) $ 11 $ 3 $ ( 235 ) 
 Pretax (loss) income ( 147 ) 4 — — ( 143 ) 
 Income tax effect — ( 1 ) — — ( 1 ) 
 Reclassification of unrealized gain — ( 1 ) — — ( 1 ) 
 
 Other comprehensive income from unconsolidated subsidiaries — — — 8 8 
 Balance as of September 30, 2023 
 $ ( 389 ) $ ( 5 ) $ 11 $ 11 $ ( 372 ) 

 Three Months Ended September 30, 2022 
 Foreign Currency Translation Unrealized Gain (Loss) on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) 
 Balance as of July 1, 2022 $ ( 325 ) $ ( 24 ) $ ( 6 ) $ ( 355 ) 
 Pretax loss ( 187 ) — — ( 187 ) 
 
 Reclassification of unrealized loss — 1 — 1 
 
 Other comprehensive income from unconsolidated subsidiaries — — 2 2 
 Balance as of September 30, 2022 $ ( 512 ) $ ( 23 ) $ ( 4 ) $ ( 539 ) 

 Nine Months Ended September 30, 2023 
 
 Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Unrealized Gain on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) 
 Balance as of January 1, 2023 $ ( 333 ) $ — $ 11 $ ( 1 ) $ ( 323 ) 
 Pretax loss ( 56 ) ( 4 ) — — ( 60 ) 
 Income tax effect — 1 — — 1 
 Reclassification of unrealized gain — ( 2 ) — — ( 2 ) 
 
 Other comprehensive income from unconsolidated subsidiaries — — — 12 12 
 Balance as of September 30, 2023 
 $ ( 389 ) $ ( 5 ) $ 11 $ 11 $ ( 372 ) 

 20 

 Nine Months Ended September 30, 2022 
 
 Foreign Currency Translation Unrealized Gain (Loss) on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) 
 Balance as of January 1, 2022 $ ( 121 ) $ ( 24 ) $ ( 8 ) $ ( 153 ) 
 Pretax loss ( 395 ) — — ( 395 ) 
 
 Reclassification of unrealized loss — 1 — 1 
 
 Disposal of business 4 — — 4 
 Other comprehensive income from unconsolidated subsidiaries — — 4 4 
 Balance as of September 30, 2022 $ ( 512 ) $ ( 23 ) $ ( 4 ) $ ( 539 ) 

 Our policy is to reclassify the income tax effect from Accumulated other comprehensive income (loss) to the Provision for income taxes when the related gains and losses are released to the Unaudited Condensed Consolidated Statements of Income. 
 
 Note 15. Supply Chain Financing 
 
 We utilize voluntary supply chain finance programs to support our efforts in negotiating payment term extensions with suppliers as part of our effort to improve our operating cash flows. These programs provide participating suppliers the opportunity to sell their LKQ receivables to financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreement between the suppliers and financial institutions. The financial institutions participate in the supply chain financing initiative on an uncommitted basis and can cease purchasing receivables from our suppliers at any time. Our obligation to our suppliers, including amount due and payment date, are not impacted by the supplier’s decision to sell amounts under these agreements. Our payment terms to the financial institutions, including the timing and amount of payments, are unchanged from the original supplier invoice. All outstanding payments owed under the supply chain finance programs with the participating financial institutions are recorded within Accounts payable in our Unaudited Condensed Consolidated Balance Sheets. As of September 30, 2023 and December 31, 2022, we had $ 348 million, including amounts under the Uni-Select program, and $ 248 million of Accounts payable outstanding under the arrangements, respectively. 
 
 21 

 Note 16. Long-Term Obligations 
 
 Long-term obligations consist of the following (in millions): 
 
 September 30, 2023 
 December 31, 2022 
 
 Maturity Date Interest Rate Amount Interest Rate Amount 
 Senior Unsecured Credit Agreement: 
 Term loans payable January 2026 6.79 % $ 500 — % $ — 
 Revolving credit facilities January 2028 6.07 % (1) 
 1,046 — % — 
 
 Senior Secured Credit Agreement: 
 Revolving credit facilities January 2024 — % — 4.24 % (1) 
 1,786 
 
 Senior Unsecured Term Loan Agreement: 
 Term loans payable July 2026 6.75 % 516 — % — 
 
 Unsecured Senior Notes: 
 U.S. Notes (2028) June 2028 5.75 % 800 — % — 
 U.S. Notes (2033) June 2033 6.25 % 600 — % — 
 Euro Notes (2024) April 2024 3.88 % 529 3.88 % 535 
 Euro Notes (2028) April 2028 4.13 % 264 4.13 % 268 
 
 Notes payable Various through October 2030 3.85 % (1) 
 16 3.25 % (1) 
 16 
 Finance lease obligations 4.76 % (1) 
 73 3.69 % (1) 
 48 
 Other debt 3.64 % (1) 
 25 2.28 % (1) 
 9 
 Total debt 4,369 2,662 
 Less: long-term debt issuance costs and unamortized bond discount ( 32 ) ( 6 ) 
 
 Total debt, net of debt issuance costs and unamortized bond discount 4,337 2,656 
 Less: current maturities, net of debt issuance costs ( 574 ) ( 34 ) 
 Long term debt, net of debt issuance costs and unamortized bond discount $ 3,763 $ 2,622 

 (1) Interest rate derived via a weighted average 
 
 Senior Unsecured Credit Agreement 
 
 On January 5, 2023, we and certain other subsidiaries of ours entered into a new credit agreement (the “Senior Unsecured Credit Agreement”) which establishes: (i) an unsecured revolving credit facility of up to a U.S. Dollar equivalent of $ 2.0 billion, which includes a $ 150 million sublimit for the issuance of letters of credit and a $ 150 million sublimit for swing line loans and (ii) an unsecured term loan facility of up to $ 500 million. Borrowings under the agreement bear interest at the Secured Overnight Financing Rate (i.e. "SOFR") plus the applicable spread or other risk-free interest rates that are applicable for the specified currency plus a spread. The maturity date of the term loan is January 5, 2026 and may be extended by one additional year. The term loan has no required amortization payments prior to its maturity date. The maturity date for the revolving credit facility is January 5, 2028, and may be extended by up to two additional years in one year increments. 
 
 The Senior Unsecured Credit Agreement contains customary covenants for an unsecured credit facility for a company that has debt ratings that are investment grade, such as, requirements to comply with a total leverage ratio and interest coverage ratio, each calculated in accordance with the terms of the Senior Unsecured Credit Agreement, and limits on the Company’s and its subsidiaries’ ability to incur liens and indebtedness. 
 
 Proceeds from the Senior Unsecured Credit Agreement were used to repay the outstanding principal amount under our prior Senior Secured Credit Agreement (the "Prior Credit Agreement"), to pay fees and expenses related to the Senior Unsecured Credit Agreement, and for other general corporate purposes. 
 22 

 Senior Secured Credit Agreement 
 
 In connection with entering into the Senior Unsecured Credit Agreement noted above, Wells Fargo Bank, National Association and the various lending parties terminated the Prior Credit Agreement and each amendment thereto resulting in an immaterial loss on extinguishment of debt. 
 
 Senior Unsecured Term Loan Credit Agreement 
 
 For the permanent financing related to the Uni-Select Acquisition, on March 27, 2023, we entered into the CAD Note which established an unsecured term loan facility of up to CAD 700 million maturing in July 2026. The CAD Note was funded on July 31, 2023, which was one business day prior to the consummation of the Uni-Select Acquisition. 
 
 Unsecured Senior Notes 
 
 On May 24, 2023, as part of the financing for the Uni-Select Acquisition, we completed an offering of $ 1,400 million aggregate principal amount of senior unsecured notes, consisting of $ 800 million senior notes due 2028 and $ 600 million senior notes due 2033 in a private placement conducted pursuant to Rule 144A and Regulation S under the United States Securities Act of 1933. 
 
 The U.S. Notes (2028/33) are governed by the Indenture, dated as of May 24, 2023 (the "Indenture"), among the Company, certain of the Company's subsidiaries (the "Guarantors") and U.S. Bank Trust Company, National Association, as trustee. The U.S. Notes (2028/33) will be initially fully and unconditionally guaranteed on a senior unsecured basis by each of our wholly owned domestic subsidiaries that are guarantors under our Senior Unsecured Credit Agreement, dated as of January 5, 2023, or the CAD Note and each of our domestic subsidiaries that in the future agrees to guarantee obligations under the Senior Unsecured Credit Agreement, the CAD Note, any other Credit Facility Debt or any Capital Markets Debt (as such terms are defined in the Indenture). 
 
 Each subsidiary guarantee will rank equally in right of payment with all existing and future liabilities of the applicable subsidiary guarantor that are not subordinated. Each subsidiary guarantee will effectively rank junior to any secured indebtedness of its respective subsidiary guarantor to the extent of the lesser of the amount of such secured indebtedness and the value of the assets securing such indebtedness. Under the terms of any subsidiary guarantee, holders of the U.S. Notes (2028/33) will not be required to exercise their remedies against us before they proceed directly against the subsidiary guarantors. 
 
 Prior to May 15, 2028 in the case of the U.S. Notes (2028) or March 15, 2033 in the case of the U.S. Notes (2033) (each such date a "Par Call Date"), we may redeem the U.S. Notes (2028) or U.S. Notes (2033), as applicable, at our option, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of (i) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming, in each case, that such U.S. Notes (2028/33) matured on their applicable Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 40 basis points in the case of the U.S. Notes (2028) or 45 basis points in the case of the U.S. Notes (2033), less interest accrued to the date of redemption; and (ii) 100 % of the principal amount of the U.S. Notes (2028/33) to be redeemed; plus in either case, accrued and unpaid interest thereon to, but excluding the redemption date. On or after the applicable Par Call Date we may redeem the U.S. Notes (2028/33) of the applicable series, in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the U.S. Notes (2028/33) being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date. 
 
 In connection with the sale of the U.S. Notes (2028/33), we entered into a Registration Rights Agreement, dated as of May 24, 2023 (the "Registration Rights Agreement"), with the Guarantors and BofA Securities, Inc. and Wells Fargo Securities, LLC, as representatives of the initial purchasers of the U.S. Notes (2028/33) identified therein. Pursuant to the terms of the Registration Rights Agreement, on September 1, 2023, the Company and the Guarantors filed a Registration Statement on Form S-4 ("Form S-4") with respect to a registered offer to exchange (the "Exchange Offer") each series of U.S. Notes (2028/33) and related guarantees for new notes of such series (the "Exchange Notes") and new related guarantees, which will have terms substantially identical in all material respects to the applicable series of U.S. Notes (2028/33) (except that the Exchange Notes will not contain terms with respect to transfer restrictions and Additional Interest (as defined below)). The SEC declared the Form S-4 effective on September 14, 2023. The Company currently expects the Exchange Offer to close in the fourth quarter of 2023. Pursuant to the terms of the Registration Rights Agreement, a "Registration Default" will be deemed to occur if, among other things, we have not exchanged Exchange Notes for all U.S. Notes (2028/33) validly tendered in accordance with the terms of an exchange offer within 365 days after the issue date of the U.S. Notes (2028/33); additional interest ("Additional Interest") will accrue on the principal amount of the applicable U.S. Notes (2028/33) which have not been registered and/or exchanged at a rate of 0.25 % per annum during the 90-day period beginning on the day immediately following the occurrence of any 
 23 

 Registration Default, which rate will, after such 90-day period, increase to a maximum of 0.50 % per annum thereafter commencing on the day immediately following such Registration Default. Assuming the Exchange Offer closes in the fourth quarter of 2023, as the Company currently anticipates, the Company will not be obligated to pay Additional Interest. 
 
 Interest on the U.S. Notes (2028/33) is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. Interest on our 3.88 % senior notes due April 2024 (the "Euro Notes (2024)") and our 4.13 % senior notes due April 2028 (the "Euro Notes (2028)") are payable in arrears on April 1 and October 1 of each year. 
 
 Note 17. 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 current policies, we may use derivatives to manage our exposure to variable interest rates on our debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes. 
 
 Derivative Instruments Designated as Cash Flow Hedges 
 
 In February 2023, we entered into interest rate swap agreements to mitigate the risk of changing interest rates on our variable interest rate payments related to borrowings under our Senior Unsecured Credit Agreement. Under the terms of the interest rate swap agreements, we pay the fixed interest rate and receive a variable interest rate based on term SOFR that matches a contractually specified rate under the Senior Unsecured Credit Agreement. The agreements include a total $ 400 million notional amount maturing in February 2025 with a weighted average fixed interest rate of 4.63 % and a total $ 300 million notional amount maturing in February 2026 with a weighted average fixed interest rate of 4.23 %. Changes in the fair value of the interest rate swaps are recorded in Accumulated other comprehensive loss and reclassified to Interest expense when the hedged interest payments affect earnings. The activity related to the interest rate swaps is classified in operating activities in our Unaudited Condensed Consolidated Statements of Cash Flows as the activity relates to normal recurring settlements to match interest payments. 
 
 In March 2023, we entered into forward starting interest rate swaps to hedge the risk of changes in interest rates related to forecasted debt issuance to finance a portion of the Uni-Select Acquisition. These swaps were settled in May 2023 upon issuance of the U.S. Notes (2028/33), resulting in total payments of $ 13 million. See Note 16, "Long-Term Obligations" for additional information related to the offering of the U.S. Notes (2028/33). Changes in the fair value of the interest rate swaps were recorded in Accumulated other comprehensive loss and the fair value at the termination date will be reclassified to Interest expense over the term of the debt. Payments made to settle the forward starting interest rate swaps were classified in financing activities in our Unaudited Condensed Consolidated Statements of Cash Flows as these payments were related to the forecasted debt issuance. 
 
 All of our interest rate swap contracts have been executed with counterparties that we believe are creditworthy, and we closely monitor the credit ratings of these counterparties. 
 
 As of September 30, 2023, the notional amounts, balance sheet classification and fair values of our derivative instruments designated as cash flow hedges were as follows (in millions) (there were no such hedges as of December 31, 2022): 
 
 Notional Amount Balance Sheet Caption Fair Value - Asset / (Liability) 
 Interest rate swap agreements $ 700 Other noncurrent assets $ 6 
 
 The activity related to our cash flow hedges is included in Note 14, "Accumulated Other Comprehensive Loss." As of September 30, 2023, we estimate that $ 3 million of derivative gains (net of tax) included in Accumulated other comprehensive loss will be reclassified into our Unaudited Condensed Consolidated Statements of Income within the next 12 months. 
 
 Derivative Instruments Not Designated as Hedges 
 
 To manage the foreign currency exposure related to the Uni-Select Acquisition purchase price (denominated in CAD), we entered into foreign exchange contracts in March 2023 to purchase CAD 1.6 billion for approximately $ 1.2 billion. These contracts did not qualify for hedge accounting, and therefore, the contracts were adjusted to fair value through the results of operations as of each balance sheet date. We reported Gains on foreign exchange contracts - acquisition related on the Unaudited Condensed Consolidated Statements of Income of $ 3 million and $ 49 million for the three and nine months ended September 30, 2023, respectively. These contracts were settled in July 2023 resulting in total payments received of $ 49 million. 
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 To manage our foreign currency exposure on other non-functional currency denominated intercompany loans, we entered into short-term foreign currency forward contracts in 2023. We 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. The fair values of these short-term derivative instruments were recorded in either Prepaid expenses and other current assets or Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets and were not material at September 30, 2023. 
 
 Additionally, we hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability in the cash flows related to inventory purchases denominated in a non-functional currency. We have elected not to apply hedge accounting for these transactions. The notional amount and fair value of these contracts at September 30, 2023 and December 31, 2022, along with the effect on our results of operations during the three and nine months ended September 30, 2023 and 2022, were not material. The fair values of these contracts were recorded in either Prepaid expenses and other current assets or Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets. 
 
 Gross vs. Net Presentation for Derivative Instruments 
 
 While certain derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge and other derivative instruments on a gross basis in our Unaudited Condensed Consolidated Balance Sheets. The impact of netting the fair values of these contracts would result in an immaterial decrease to Prepaid expenses and other current assets and Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets at September 30, 2023. 
 
 Note 18. Fair Value Measurements 
 
 Financial Assets and Liabilities Measured at Fair Value 
 
 We use the market and income approaches to estimate the fair value of our financial assets and liabilities, and during the three and nine months ended September 30, 2023, there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value. The tiers in the fair value hierarchy include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs for 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 (in millions): 
 
 September 30, 2023 December 31, 2022 
 Assets: 
 
 Interest rate swaps (Level 2) $ 6 $ — 
 Total Assets $ 6 $ — 
 Liabilities: 
 Contingent consideration liabilities (Level 3) $ 8 $ 7 
 
 Total Liabilities $ 8 $ 7 

 The balance sheet classification of the interest rate swap agreements is presented in Note 17, "Derivative Instruments and Hedging Activities." For contingent consideration liabilities, the current portion is included in Other current liabilities and the noncurrent portion is included in Other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. 
 
 We value derivative instruments using a third party valuation model that performs discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates and current and forward foreign exchange rates. 
 
 Our contingent consideration liabilities are related to our business acquisitions. Under the terms of the contingent consideration agreements, payments may be made at specified future dates depending on the performance of the acquired business subsequent to the acquisition. The liabilities for these payments are classified as Level 3 liabilities because the related fair value measurement, which is determined using an income approach, includes significant inputs not observable in the market. 
 
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 Financial Assets and Liabilities Not Measured at Fair Value 
 
 Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. Based on market conditions as of September 30, 2023, the fair value of the Senior Unsecured Credit Agreement borrowings reasonably approximated the carrying value of $ 1,546 million. As of December 31, 2022, the fair value of the Prior Credit Agreement borrowings reasonably approximated the carrying value of $ 1,786 million. As of September 30, 2023, the fair value of the CAD Note reasonably approximated the carrying value of $ 516 million. As of September 30, 2023, the fair values of the U.S. Notes (2028) and U.S. Notes (2033) were approximately $ 784 million and $ 581 million, respectively, compared to carrying values of $ 800 million and $ 600 million, respectively. As of September 30, 2023 and December 31, 2022, the fair values of the Euro Notes (2024) were approximately $ 527 million and $ 535 million, respectively, compared to carrying values of $ 529 million and $ 535 million, respectively. As of September 30, 2023 and December 31, 2022, the fair values of the Euro Notes (2028) were $ 257 million and $ 254 million, respectively, compared to carrying values of $ 264 million and $ 268 million, respectively. 
 
 The fair value measurements of the borrowings under the credit agreements 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 September 30, 2023 and December 31, 2022 to assume these obligations. The fair values of the U.S. Notes (2028), U.S. Notes (2033), Euro Notes (2024) and Euro Notes (2028) are determined based upon observable market inputs including quoted market prices in markets that are not active, and therefore are classified as Level 2 within the fair value hierarchy. 
 
 We have immaterial equity investments recorded in Other noncurrent assets in which we have elected to use net asset value as a practical expedient to value and thus they are excluded from the fair value hierarchy disclosure. We have deferred compensation liabilities which are recorded in Other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets. These liabilities are determined based on the values of investments in participants' phantom accounts, which is not a fair value measurement, and thus the liabilities are not included in the fair value hierarchy disclosure. 
 
 Note 19. Employee Benefit Plans 
 
 We have funded and unfunded defined benefit plans covering certain employee groups in various European countries and Canada. Local statutory requirements govern many of our European and Canadian plans. The defined benefit plans are mostly closed to new participants and, in some cases, existing participants no longer accrue benefits. 
 
 As of September 30, 2023 and December 31, 2022, the aggregate funded status of the defined benefit plans was a net liability of $ 75 million and $ 72 million, respectively, and is reported in Other noncurrent assets, Other noncurrent liabilities and Accrued payroll-related liabilities on our Unaudited Condensed Consolidated Balance Sheets. 
 
 Net periodic benefit cost for our defined benefit plans were insignificant for each of the three and nine-month periods ended September 30, 2023 and 2022. The service cost component is recorded in Selling, general and administrative ("SG&A") expenses, while the other components are recorded to Interest income and other income, net on the Unaudited Condensed Consolidated Statements of Income. 
 
 Note 20. Income Taxes 
 
 At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings. We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur. 
 
 The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes. 
 
 Our effective income tax rate for the nine months ended September 30, 2023 was 25.9 %, compared to 24.4 % for the nine months ended September 30, 2022. The increase in the effective tax rate for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is primarily attributable to: (i) 0.9 % of unfavorable rate effects, including non-deductible transaction costs and negative impacts on foreign tax credit availability caused by Uni-Select related 
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 transaction activity and (ii) geographic distribution of income favoring higher rate jurisdictions in 2023. Discrete items had similar favorable effects in both years, with a 1 % rate benefit in the prior year, primarily related to the sale of PGW in the second quarter of 2022, and in the current year, primarily related to the Uni-Select Acquisition foreign exchange forward contract gain. 
 
 On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law in the United States. The IRA, among other provisions, enacted a 15 % corporate minimum tax effective for taxable years beginning after December 31, 2022 and a 1 % excise tax on the repurchase of corporate stock after December 31, 2022. We do not currently expect the corporate minimum tax provisions of the IRA to have a material impact on our financial results. The impact of the excise tax provisions will be dependent upon the volume of any future stock repurchases. 
 
 Note 21. Segment and Geographic Information 
 
 We have four operating segments: Wholesale - North America, Europe, Specialty, and Self Service, each of which is presented as a reportable segment. 
 
 The segments are organized based on a combination of geographic areas served and type of product lines offered. The segments are managed separately as the businesses serve different customers and are affected by different economic conditions. Wholesale - North America and Self Service have similar economic characteristics and have common products and services, customers and methods of distribution. We are reporting these operating segments separately to provide greater transparency to investors. 
 
 The following tables present our financial performance by reportable segment for the periods indicated (in millions): 
 
 Wholesale - North America Europe Specialty Self Service Eliminations Consolidated 
 Three Months Ended September 30, 2023 
 Revenue: 
 Third Party $ 1,387 $ 1,584 $ 456 $ 141 $ — $ 3,568 
 Intersegment — — 1 — ( 1 ) — 
 Total segment revenue $ 1,387 $ 1,584 $ 457 $ 141 $ ( 1 ) $ 3,568 
 Segment EBITDA $ 236 $ 147 $ 40 $ ( 1 ) $ — $ 422 
 Total depreciation and amortization (1) 
 34 37 8 5 — 84 
 Three Months Ended September 30, 2022 
 Revenue: 
 Third Party $ 1,108 $ 1,380 $ 452 $ 164 $ — $ 3,104 
 Intersegment 1 — — — ( 1 ) — 
 Total segment revenue $ 1,109 $ 1,380 $ 452 $ 164 $ ( 1 ) $ 3,104 
 Segment EBITDA $ 216 $ 155 $ 49 $ 4 $ — $ 424 
 Total depreciation and amortization (1) 
 19 34 8 3 — 64 

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 Wholesale - North America Europe Specialty Self Service Eliminations Consolidated 
 Nine Months Ended September 30, 2023 
 Revenue: 
 Third Party $ 3,815 $ 4,777 $ 1,294 $ 479 $ — $ 10,365 
 Intersegment — — 3 — ( 3 ) — 
 Total segment revenue $ 3,815 $ 4,777 $ 1,297 $ 479 $ ( 3 ) $ 10,365 
 Segment EBITDA $ 736 $ 486 $ 113 $ 28 $ — $ 1,363 
 Total depreciation and amortization (1) 
 73 110 24 12 — 219 
 Nine Months Ended September 30, 2022 
 Revenue: 
 Third Party $ 3,453 $ 4,345 $ 1,424 $ 571 $ — $ 9,793 
 Intersegment 1 — 2 — ( 3 ) — 
 Total segment revenue $ 3,454 $ 4,345 $ 1,426 $ 571 $ ( 3 ) $ 9,793 
 Segment EBITDA $ 648 $ 446 $ 176 $ 76 $ — $ 1,346 
 Total depreciation and amortization (1) 
 56 107 23 11 — 197 

 (1) Amounts presented include depreciation and amortization expense recorded within Cost of goods sold, SG&A expenses and Restructuring and transaction related expenses. 
 
 The key measure of segment profit or loss reviewed by our chief operating decision maker, our Chief Executive Officer, is Segment EBITDA. We use Segment EBITDA to compare profitability among the segments and evaluate business strategies. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as Net Income attributable to LKQ stockholders excluding discontinued operations; depreciation, amortization; interest; gains and losses on debt extinguishment; income tax expense; restructuring and transaction related expenses (which includes restructuring expenses recorded in Cost of goods sold); change in fair value of contingent consideration liabilities; other gains and losses related to acquisitions, equity method investments, or divestitures; equity in losses and earnings of unconsolidated subsidiaries; equity investment fair value adjustments; impairment charges; and direct impacts of the Ukraine/Russia conflict and related sanctions (including provisions for and subsequent adjustments to reserves for asset recoverability and expenditures to support our employees and their families). 
 
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 The table below provides a reconciliation of Net Income to Segment EBITDA (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Net income $ 208 $ 262 $ 760 $ 955 
 Less: net income attributable to continuing noncontrolling interest — — 1 — 
 Net income attributable to LKQ stockholders 208 262 759 955 
 Less: net income from discontinued operations 1 1 1 5 
 Net income from continuing operations attributable to LKQ stockholders 207 261 758 950 
 Adjustments - continuing operations attributable to LKQ stockholders: 
 
 Depreciation and amortization 84 64 219 197 
 
 Interest expense, net of interest income 53 17 128 46 
 Loss on debt extinguishment — — 1 — 
 Provision for income taxes 60 88 263 304 
 
 Equity in earnings of unconsolidated subsidiaries (1) 
 ( 4 ) ( 2 ) ( 9 ) ( 8 ) 
 Gains on foreign exchange contracts - acquisition related (2) 
 ( 3 ) — ( 49 ) — 
 Equity investment fair value adjustments — — 1 3 
 
 Restructuring and transaction related expenses (3) 
 27 3 53 10 
 Restructuring expenses - cost of goods sold (3) 
 2 — 2 — 
 
 Gain on disposal of businesses (4) 
 — ( 4 ) — ( 159 ) 
 
 Gains on previously held equity interests ( 4 ) ( 2 ) ( 4 ) ( 1 ) 
 Direct impacts of Ukraine/Russia conflict (5) 
 — ( 1 ) — 4 
 Segment EBITDA $ 422 $ 424 $ 1,363 $ 1,346 

 (1) Refer to Note 8, "Equity Method Investments" for further information. 
 (2) Refer to Note 2, "Business Combinations" and Note 17, "Derivative Instruments and Hedging Activities" for further information. 
 (3) Refer to Note 11, "Restructuring and Transaction Related Expenses" for further information. 
 (4) Refer to "Other Divestitures (Not Classified in Discontinued Operations)" in Note 3, "Discontinued Operations and Divestitures" for further information. 
 (5) Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (receivables and inventory) and expenditures to support our employees and their families in Ukraine. 
 
 The following table presents capital expenditures by reportable segment (in millions): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2023 2022 2023 2022 
 Capital Expenditures 
 Wholesale - North America 
 $ 39 $ 19 $ 75 $ 64 
 Europe 47 21 103 63 
 Specialty 5 4 23 12 
 Self Service 6 5 32 9 
 Total capital expenditures $ 97 $ 49 $ 233 $ 148 

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 The following table presents assets by reportable segment (in millions): 
 
 September 30, 2023 December 31, 2022 
 Receivables, net of allowance for credit losses 
 Wholesale - North America (1) 
 $ 515 $ 351 
 Europe 654 547 
 Specialty 124 92 
 Self Service 8 8 
 Total receivables, net of allowance for credit losses 1,301 998 
 Inventories 
 Wholesale - North America (1) 
 1,186 822 
 Europe 1,338 1,418 
 Specialty 431 469 
 Self Service 43 43 
 Total inventories 2,998 2,752 
 Property, plant and equipment, net 
 Wholesale - North America (1) 
 625 505 
 Europe 587 547 
 Specialty 105 94 
 Self Service 110 90 
 Total property, plant and equipment, net 1,427 1,236 
 Operating lease assets, net 
 Wholesale - North America (1) 
 611 541 
 Europe 469 466 
 Specialty 84 85 
 Self Service 144 135 
 Total operating lease assets, net 1,308 1,227 
 
 Other unallocated assets 8,134 5,825 
 Total assets $ 15,168 $ 12,038 

 (1) The increase in assets for the Wholesale - North America segment is primarily attributable to the Uni-Select Acquisition. 
 
 We report net receivables; inventories; net property, plant and equipment; and net operating lease assets 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 and cash equivalents, prepaid expenses and other current and noncurrent assets, goodwill, other intangibles and equity method investments. 
 
 Our largest countries of operation are the U.S., followed by Germany and the U.K. Additional European operations are located in the Netherlands, Italy, Czech Republic, Belgium, Austria, Slovakia, Poland, and other European countries. As a result of the Uni-Select Acquisition, we further expanded our wholesale operations in Canada. Our operations in other countries include remanufacturing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. 
 
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 The following table sets forth our tangible long-lived assets by geographic area (in millions): 
 
 September 30, 2023 December 31, 2022 
 Long-lived assets 
 
 United States $ 1,468 $ 1,371 
 Germany 308 290 
 United Kingdom 276 256 
 Other countries 683 546 
 Total long-lived assets $ 2,735 $ 2,463 

 Note 22. Subsequent Event 
 
 On October 24, 2023, our Board of Directors declared a quarterly cash dividend of $ 0.30 per share of common stock, payable on November 30, 2023, to stockholders of record at the close of business on November 16, 2023. 
 
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
LKQ CORP 10-Q

Item 1. Financial Statements
