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Item 8. Financial Statements and Supplementary Data

2026-02-19 compared with 2025-02-20 · 364 added, 267 removed, 1297 unchanged (33% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of LKQ Corporation

To the Stockholders and the Board of Directors of LKQ Corporation

Opinion on the Financial Statements

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment - Refer to Notes 2 and 9 to the financial statements.

Goodwill - Specialty Reporting Unit - Refer to Notes 2 and 9 to the financial statements.

Critical Audit Matter Description

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The Company determines the fair value of its reporting units using a discounted cash flow model and the market approach, which require management to make significant estimates and assumptions.

Auditing the estimates and assumptions that impacted the valuation of certain reporting units involved especially subjective judgment;

Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both.

The goodwill balance was $5,414 million as of December 31, 2025, of which $421 million related to the Specialty reporting unit (“Specialty”).

The carrying value of Specialty exceeded its fair value as of December 31, 2025, and, therefore, the Company recognized $52 million of impairment.

The Company commenced a process in 2025 to explore the potential sale of their Specialty segment which was contemplated by management in the determination of the fair value of this reporting unit.

Auditing the estimates and assumptions that impacted the valuation of the Company's Specialty reporting unit involved especially subjective judgment;

specifically, the forecasts of future revenue and profit margins (“forecasts”), the selection of discount rates and the determination of market multiples.

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Our audit procedures related to the forecasts, the selection of discount rates, and determination of market multiples included the following, among others:

• We tested the effectiveness of controls over the goodwill impairment assessments, including those over the forecasts and the selection of the discount rates and the market multiples.

• We tested the effectiveness of controls over the Company's goodwill impairment assessments, including those over the forecasts and the selection of the discount rates and market multiples for the Specialty reporting unit.

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, (3) analyst and industry reports of the Company and companies in its peer group, and (4) forecasts used in the preceding impairment assessments.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, (3) analyst and industry reports of the Company and companies in its peer group, (4) forecasts used in the preceding impairment assessments, and (5) marketing material related to the potential sales process.

• With the assistance of our fair value specialists, we evaluated the discount rates, including (1) testing the underlying source information and the mathematical accuracy of the calculations, (2) developing a range of independent estimates and comparing those to the discount rates used by management, and (3) comparing the discount rates used by management to those used in the preceding impairment assessments.

• With the assistance of our fair value specialists, we evaluated the market multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline public companies and the multiples used in the preceding impairment assessments.

• With the assistance of our fair value specialists, we evaluated the market multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline public companies, the multiples used in the preceding impairment assessments, and assessment of any contradictory evidence from the potential sales process.

/s/ DELOITTE & TOUCHE LLP

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of LKQ Corporation

To the Stockholders and the Board of Directors of LKQ Corporation

Opinion on Internal Control over Financial Reporting

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Restructuring and transaction related expenses 42 135 65

Gain on disposal of businesses (1)

Impairment of goodwill 52 — —

Depreciation and amortization 365 346 267

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Income from continuing operations 597 669 934

Net (loss) income from discontinued operations — ( 6 ) 6

Net income from discontinued operations 11 24 4

Net income 608 693 938

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Income from continuing operations $ 2.32 $ 2.54 $ 3.49

Net (loss) income from discontinued operations — ( 0.02 ) 0.02

Net income from discontinued operations 0.04 0.09 0.02

Net income 2.36 2.63 3.51

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Income from continuing operations $ 2.31 $ 2.54 $ 3.48

Net (loss) income from discontinued operations — ( 0.02 ) 0.02

Net income from discontinued operations 0.04 0.09 0.02

Net income 2.35 2.63 3.50

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Net income attributable to LKQ stockholders $ 2.35 $ 2.62 $ 3.49

(1) Primarily related to the sale of PGW Auto Glass ("PGW").

Refer to Note 4, "Discontinued Operations and Divestitures" for further information.

(1) Related to the Uni-Select acquisition.

Refer to Note 3, "Business Combinations" and Note 19, "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 Consolidated Financial Statements.

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Net income attributable to LKQ stockholders 607 690 936

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation, net of tax 347 ( 168 ) 90

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Other comprehensive (loss) income from unconsolidated subsidiaries — ( 4 ) 9

Other comprehensive (loss) income ( 177 ) 83 ( 170 )

Other comprehensive income (loss) 360 ( 177 ) 83

Comprehensive income 968 516 1,021

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Prepaid expenses and other current assets 299 328

Current assets of discontinued operations — 48

Total current assets 5,248 4,906

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Other noncurrent assets 449 376

Noncurrent assets of discontinued operations — 515

Total assets $ 15,137 $ 14,955

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Other current liabilities 88 92

Current liabilities of discontinued operations — 35

Total current liabilities 3,137 2,862

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Other noncurrent liabilities 332 341

Noncurrent liabilities of discontinued operations — 117

Commitments and contingencies

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Depreciation and amortization 418 406 319

Gain on disposal of businesses — — ( 159 )

Impairment of goodwill 52 — —

Stock-based compensation expense 34 30 40

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Other investing activities, net 3 ( 35 ) ( 18 )

Net cash (used in) provided by investing activities ( 406 ) ( 2,442 ) 172

Net cash provided by (used in) investing activities 185 ( 406 ) ( 2,442 )

CASH FLOWS FROM FINANCING ACTIVITIES (1) :

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Borrowings under term loans 140 — 1,031

Repayments under term loans ( 140 ) — —

Repayments of other debt, net ( 42 ) ( 45 ) ( 32 )

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Effect of exchange rate changes on cash, cash equivalents and restricted cash 36 ( 29 ) 5

Net (decrease) increase in cash, cash equivalents and restricted cash ( 60 ) 21 4

Cash and cash equivalents, beginning of period 299 278 274

Net increase (decrease) in cash, cash equivalents and restricted cash 93 ( 60 ) 21

Cash, cash equivalents and restricted cash of continuing operations, beginning of period (2)

Cash and cash equivalents of discontinued operations, beginning of period — — —

Cash, cash equivalents and restricted cash of continuing and discontinued operations, beginning of period (2)

Cash, cash equivalents and restricted cash of continuing and discontinued operations, end of period (2)

Cash and cash equivalents of discontinued operations, end of period — — —

Cash, cash equivalents and restricted cash, end of period (2)

$ 332 $ 239 $ 299

Supplemental disclosure of cash paid for:

Income taxes, net of refunds $ 322 $ 305 $ 346

Interest 230 197 71

(1) Amounts presented contain results from both continuing and discontinued operations.

Refer to Note 4, "Discontinued Operations and Divestitures" for further information regarding cash flows associated with the results of discontinued operations.

(2) Refer to Note 2, "Summary of Significant Accounting Policies" and Note 24, "Cash, Cash Equivalents and Restricted Cash" for further information on restricted cash.

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Net income — — — — — 936 — 2 938

Other comprehensive loss — — — — — — ( 170 ) — ( 170 )

Other comprehensive income — — — — — — 83 — 83

Purchase of treasury stock — — ( 0.8 ) ( 35 ) — — — — ( 35 )

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Capital contributions from, net of dividends declared to, noncontrolling interest shareholder — — — — — — — ( 2 ) ( 2 )

Foreign currency translation adjustment on noncontrolling interest — — — — — — — ( 1 ) ( 1 )

Balance as of December 31, 2023 323.1 $ 3 ( 55.9 ) $ ( 2,424 ) $ 1,538 $ 7,290 $ ( 240 ) $ 14 $ 6,181

Net income — — — — — 690 — 3 693

Other comprehensive income — — — — — — 83 — 83

Other comprehensive loss — — — — — — ( 177 ) — ( 177 )

Purchase of treasury stock — — ( 8.6 ) ( 363 ) — — — — ( 363 )

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Capital contributions from, net of dividends declared to, noncontrolling interest shareholder — — — — — — — ( 2 ) ( 2 )

Purchase of noncontrolling interest — — — — ( 1 ) — — — ( 1 )

Balance as of December 31, 2024 323.6 $ 3 ( 64.5 ) $ ( 2,787 ) $ 1,556 $ 7,662 $ ( 417 ) $ 15 $ 6,032

Net income — — — — — 607 — 1 608

Other comprehensive loss — — — — — — ( 177 ) — ( 177 )

Other comprehensive income — — — — — — 360 — 360

Purchase of treasury stock — — ( 4.5 ) ( 161 ) — — — — ( 161 )

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Dividends declared to LKQ stockholders ($1.20 per share) — — — — — ( 311 ) — — ( 311 )

— — — — — ( 318 ) — — ( 318 )

Capital contributions from, net of dividends declared to, noncontrolling interest shareholder — — — — — — — ( 2 ) ( 2 )

Purchase of noncontrolling interest — — — — ( 1 ) — — — ( 1 )

Acquisition of a subsidiary with noncontrolling interest — — — — — — — 9 9

Foreign currency translation adjustment on noncontrolling interest — — — — — — — 1 1

Balance as of December 31, 2025 324.0 $ 3 ( 69.0 ) $ ( 2,948 ) $ 1,581 $ 7,958 $ ( 57 ) $ 24 $ 6,561

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We are a global distributor of vehicle products, including replacement parts, components, and systems used in the repair and maintenance of vehicles, and specialty aftermarket products and accessories designed to improve the performance, functionality and appearance of vehicles.

We operate in the United States, Canada, Germany, the U.K., the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic, Austria, Slovakia, France and various other European countries.

We are organized into four operating segments:

Wholesale - North America;

and Self Service, each of which is presented as a reportable segment.

We operate in the United States ("U.S."), Canada, Germany, the United Kingdom ("U.K."), the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic, Austria, Slovakia, France and various other European countries.

We are organized into three operating segments:

North America;

and Specialty, each of which is presented as a reportable segment.

Summary of Significant Accounting Policies

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Securities and Exchange Commission.

We have reclassified certain prior year amounts to conform to the current year presentation.

We have reclassified certain prior year amounts in the Consolidated Statements of Income and on the Consolidated Balance Sheets for the presentation of discontinued operations as a result of the sale of our Self Service segment.

See Note 4, "Discontinued Operations and Divestitures" for additional information.

Principles of Consolidation

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Inventory cost for aftermarket products includes expenses incurred for freight in and overhead costs;

for items purchased from foreign companies, import fees and duties and transportation insurance are also included.

for items purchased from foreign companies, import fees, tariffs and duties and transportation insurance are also included.

Refurbished products are parts that require cosmetic repairs, such as wheels, bumper covers and lights;

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We performed annual impairment tests during the fourth quarters of 2025, 2024, and 2023.

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.

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, including significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset or significant negative industry or economic trends.

The fair value estimates of our goodwill reporting units were established using weightings of the results of a discounted cash flow methodology and a comparative market multiples approach.

Based on the annual goodwill and indefinite-lived intangible assets impairment test performed in the fourth quarter of 2024, we determined no impairment existed.

The goodwill reporting units had a fair value estimate which exceeded the carrying value by at least 10 %.

Based on our annual goodwill and indefinite-lived intangible assets impairment test performed in the fourth quarter of 2025, we determined the carrying value of our Specialty reporting unit exceeded the fair value estimate;

as a result, we recorded a goodwill impairment charge of $ 52 million for the year ended December 31, 2025.

We determined no other impairments existed when we performed our annual impairment test as both the North America and Europe reporting units had fair value estimates which exceeded the carrying value by at least 48 %.

See Note 9, "Intangible Assets" for further information on the goodwill impairment charge.

We determine if an arrangement is a lease at contract inception with lease right-of-use ("ROU") assets and lease liabilities being recognized based on the present value of the future lease payments over the lease term at the commencement date.

In determining the present value of future lease payments, we use the incremental borrowing rate based on the information available at commencement date when the implicit rate is not readily determinable.

We determine the incremental borrowing rate by analyzing yield curves with consideration of lease term, country and Company specific factors.

We determine the incremental borrowing rate based on information available at the commencement date.

In assessing the ROU asset, we include any lease prepayments and deduct lease incentives.

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We record net assets held for sale at the lower of fair value less cost to sell or carrying value.

Fair values are based on projected discounted cash flows and/or estimated selling prices.

Management's assumptions for the discounted cash flow analyses of the businesses are based on projected revenues and profits, tax rates, capital expenditures, working capital requirements and discount rates.

For businesses for which we utilized estimated selling prices to calculate the fair value, the inputs to the estimates included projected market multiples and any reasonable offers.

Fair values are based on estimated selling prices, which utilize projected market multiples and any reasonable offers.

Due to uncertainties in the estimation process, it is possible that actual results could differ from the estimates used in management's analysis.

The inputs utilized in the fair value estimates are classified as Level 3 within the fair value hierarchy.

The fair values of the net assets were measured on a non-

The fair values of the net assets were measured on a

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

recurring basis as of December 31, 2024.

non-recurring basis as of December 31, 2025.

As of December 31, 2025 and 2024, assets and liabilities held for sale were insignificant.

For the years ended December 31, 2025 and 2023, we recorded an insignificant amount of impairment on our net assets held for sale.

In 2024, we divested certain operations in Slovenia, Poland and Bosnia.

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See Note 13, "Restructuring and Transaction Related Expenses" for further information related to these impairment charges.

For the year ended December 31, 2023, we recorded an insignificant amount of impairment on our net assets held for sale.

Discontinued Operations

We classify operations as discontinued when they meet all the criteria to be classified as held for sale and when the sale represents a strategic shift that will have a major impact on our financial condition and results of operations.

In determining if a disposal constitutes a strategic shift, we evaluate various qualitative and quantitative factors, an example of which is the impact to segment reporting.

We generally consider the disposal of an entire reportable segment to constitute a strategic shift.

When operations are identified for discontinued operations reporting, results of operations for all periods presented are reclassified as discontinued operations in the Consolidated Statements of Income, assets and liabilities of the operations are reported as assets and liabilities of discontinued operations on the Consolidated Balance Sheets, and information is recast throughout the notes to the consolidated financial statements to exclude the results of the discontinued operations.

Furthermore, FASB Accounting Standards Codification 205-20, "Presentation of Financial Statements - Discontinued Operations" defines what activities may be classified as discontinued operations with general corporate overhead generally not being allocable to discontinued operations.

See Note 4, "Discontinued Operations and Divestitures" for further information related to discontinued operations.

Impairment of Long-Lived Assets

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See Note 13, "Restructuring and Transaction Related Expenses" for further information related to these impairment charges.

There were no significant impairments to the carrying value of long-lived assets during the years ended December 31, 2023 or 2022.

For our continuing operations, there were no significant impairments to the carrying value of long-lived assets during the years ended December 31, 2025 or 2023.

Equity Method Investments

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Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for our proportionate share of earnings or losses and dividends, including consideration of basis differences resulting from the difference between the initial carrying amount of the investment and the underlying equity in net assets, as applicable.

Equity method investments are tested for impairment at least annually, and may also be performed on an interim basis when events or circumstances arise that may lead to impairment.

We performed annual impairment testing for the years ended December 31, 2025, 2024, and 2023, and based on our testing, we determined no other-than-temporary impairment existed.

See Note 10, "Equity Method Investments" for further information related to equity method investments.

Financial Assets and Liabilities Measured at Fair Value

We have certain financial assets and liabilities that are measured at fair value within our consolidated financial statements including investments in equity and debt securities as well as our defined benefit plan assets.

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.

See Note 20, "Fair Value Measurements" and Note 22, "Employee Benefit Plans for further information related our fair value measurements and pension plans.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Warranty Reserve

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The excise tax on share repurchases initiated on and after January 1, 2023 is included in the cost basis of treasury stock.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

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, except for the disclosure of rollforward information, which was adopted prospectively for the year ended December 31, 2024 as required.

The adoption of ASU 2022-04 did not have a material impact on our results of operations, financial position or cash flows but did result in additional disclosures.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" (ASU 2023-07).

The ASU expands public entities' segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

We adopted the ASU on a retrospective basis beginning in this Annual Report on Form 10-K for the year ended December 31, 2024.

The adoption of ASU 2023-07 did not have a material impact on our results of operations, financial position or cash flows but did result in additional disclosures.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update No.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." The ASU requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

The ASU is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

Early adoption is permitted.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

We adopted the ASU on a prospective basis beginning in this Annual Report on Form 10-K for the year ended December 31, 2025.

The adoption of ASU 2023-09 did not have a material impact on our results of operations, financial position or cash flows but did result in additional disclosures.

See Note 23, "Income Taxes for further information related to these disclosures.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” The ASU requires disclosure of specific expense categories within relevant income statement captions.

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We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software”.

This ASU removes references to software development project stages to better align with current software development methods.

Under the ASU, an entity will begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose.

This update is effective for annual periods

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

beginning after December 15, 2027, including interim periods within those fiscal years, though early adoption is permitted.

This ASU can be adopted either prospectively, retrospectively, or utilizing a modified transition approach.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements”, which amends certain aspects of hedge accounting to more closely align with the economics of an entity’s risk management activities.

The amendments include changes to the risk assessment for cash flow hedges, hedging forecasted interest payments on choose-your-rate debt instruments, cash flow hedges of nonfinancial forecasted transactions, net written options as hedging instruments and dual hedges of foreign currency denominated debt instruments.

This update is effective for annual periods beginning after December 15, 2026, including interim periods within those fiscal years, though early adoption is permitted.

This ASU is required to be adopted prospectively for all hedging relationships, with the option to adopt the amendments for hedging relationships that exist as of the adoption date.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

Business Combinations

During the year ended December 31, 2024, we completed acquisitions of eight businesses within our Wholesale - North America segment and two businesses within our Europe segment.

These acquisitions were not material to our financial position or results of operations as of and for the year ended December 31, 2024.

During the year ended December 31, 2025, we completed acquisitions of two businesses within our Europe segment and during the year ended December 31, 2024, we completed acquisitions of eight businesses within our North America segment and two businesses within our Europe segment.

These acquisitions were not material to our financial position or results of operations as of and for the years ended December 31, 2025 and 2024.

Additionally, in January 2024, we paid $ 23 million (€ 21 million) to a minority shareholder to settle a put option exercised on redeemable shares issued in conjunction with a previous acquisition.

This payment was presented within Other financing activities, net in financing activities in our Consolidated Statements of Cash Flows.

On February 26, 2023, we entered into a plan of arrangement to acquire all of Uni-Select's issued and outstanding shares.

On August 1, 2023, we completed the acquisition of Uni-Select for an aggregate consideration paid of approximately Canadian dollar (“CAD”) 2.8 billion ($ 2.1 billion) (the "Uni-Select Acquisition").

On August 1, 2023, we completed the acquisition of all of Uni-Select's issued and outstanding shares for an aggregate consideration paid of approximately Canadian dollar (“CAD”) 2.8 billion ($ 2.1 billion) (the "Uni-Select Acquisition").

In order to reduce the risk related to changes in CAD foreign exchange rates for the CAD purchase price, we entered into foreign exchange contracts.

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This acquisition complemented our existing North American paint distribution operations and provided a scaled position in the Canadian replacement and maintenance parts market, with opportunity for future consolidation and growth.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition to our acquisition of Uni-Select, we completed acquisitions of three businesses within our Wholesale - North America segment, four businesses within our Europe segment and one business in our Specialty segment, during the year ended December 31, 2023.

In addition to our acquisition of Uni-Select, we completed acquisitions of three businesses within our North America segment, four businesses within our Europe segment and one business in our Specialty segment, during the year ended December 31, 2023.

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 based upon estimated fair values at the dates of acquisition.

During the year ended December 31, 2024, there have been no significant adjustments to the preliminary purchase price allocations from those disclosed in our December 31, 2023 Consolidated Financial Statements.

During the years ended December 31, 2025 and 2024, there have been no significant adjustments to the preliminary purchase price allocations from those disclosed in our December 31, 2023 Consolidated Financial Statements.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the effect of the businesses acquired during the year ended December 31, 2024 as though the businesses had been acquired as of January 1, 2023.

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):

For businesses acquired during the year ended December 31, 2025, the effect of pro forma revenue and income from continuing operations is not material for the years ended December 31, 2025 and 2024, respectively.

Discontinued Operations and Divestitures

On August 25, 2025, we entered into a definitive agreement to sell our Self Service segment to an affiliate of Pacific Avenue Capital Partners, LLC for an enterprise value of $ 410 million, subject to customary purchase price adjustments.

The sale of the Self Service segment reflects our continued efforts to simplify our portfolio of businesses by exiting an asset-intensive business heavily affected by changes in commodity prices.

The sale was completed on September 30, 2025.

On October 1, 2025, we received the pretax net proceeds from the sale and used these proceeds to repay approximately $ 390 million of revolving credit facility borrowings.

Accordingly, interest expense attributable to the repaid borrowings has been included in discontinued

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

operations for all periods presented.

Additionally, general corporate overhead costs that were historically allocated to the Self Service segment remain within continuing operations for all periods presented.

In connection with the transaction, we also entered into a transition services agreement to provide certain post-close support services.

These support services, most of which last for up to nine months from the closing date of the sale, are in the areas of human resources, tax, finance, information technology, and operations, among others.

The following table summarizes the comparative financial results of discontinued operations which are presented in Net income from discontinued operations in the Consolidated Statements of Income (in millions):

Year Ended December 31,

2025 2024 2023

Revenue $ 395 $ 532 $ 597

Income from continuing operations 693 871

The pro forma impact of our acquisitions also reflects the elimination of acquisition related expenses (net of tax) of $ 18 million and gains on foreign exchange contracts - acquisition related of $ 49 million for the year ended December 31, 2023.

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 13, "Restructuring and Transaction Related Expenses" for further information regarding our acquisition related expenses, Note 19, "Derivative Instruments and Hedging Activities" for further information on our foreign exchange contracts and Note 4, "Discontinued Operations and Divestitures" for further information related to the divestment of GSF Car Parts.

Discontinued Operations and Divestitures

GSF C ar Parts

Cost of goods sold 213 305 375

Gross margin 182 227 222

Impairment on assets held for sale (1)

Selling, general and administrative expenses 124 158 173

Depreciation and amortization 9 15 16

Operating income 34 54 33

Other expense (income):

Interest expense 15 24 23

Interest income and other income, net ( 1 ) ( 2 ) ( 2 )

Total other expense, net 14 22 21

Income from discontinued operations before provision for income taxes 20 32 12

Provision for income taxes 9 8 2

Net income from discontinued operations $ 11 $ 24 $ 10

(1) During the year ended December 31, 2025, we recorded an impairment to write down the carrying value of Self Service to its fair value less costs to sell.

This includes an estimate of working capital adjustments recorded in the fourth quarter of 2025.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The major classes of Assets of discontinued operations and Liabilities of discontinued operations for Self Service as of December 31, 2024 stated on the Consolidated Balance Sheets are as follows (in millions):

December 31, 2024

Current assets:

Receivables, net of allowance for credit losses $ 9

Inventories 37

Prepaid expenses and other current assets 2

Total current assets of discontinued operations 48

Property, plant and equipment, net 108

Operating lease assets, net 132

Other noncurrent assets 1

Total noncurrent assets of discontinued operations 515

Total assets of discontinued operations $ 563

Current liabilities:

Accounts payable $ 4

Accrued expenses:

Accrued payroll-related liabilities 7

Refund liability 1

Other accrued expenses 6

Current portion of operating lease liabilities 15

Other current liabilities 2

Total current liabilities of discontinued operations 35

Long-term operating lease liabilities, excluding current portion 114

Long-term obligations, excluding current portion 3

Total noncurrent liabilities of discontinued operations 117

Total liabilities of discontinued operations $ 152

The following table summarizes the significant non-cash operating activities and capital expenditures of the Company’s discontinued operations related to the Self Service segment (in millions):

Year Ended December 31,

2025 2024 2023

Depreciation and amortization $ 9 $ 15 $ 16

Impairment on assets held for sale 15 — —

Purchases of property, plant and equipment 5 13 36

GSF Car Parts

As part of the Uni-Select transaction, we were required to divest its U.K.

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This foreign exchange contract was settled in October 2023.

Glass Manufacturing Business

For the year ended December 31, 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.

For the year ended December 31, 2023, we recorded a $ 6 million loss to discontinued operations related to GSF Car Parts.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Divestitures (Not Classified in Discontinued Operations)

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See Note 13, "Restructuring and Transaction Related Expenses" for further information related to these divestitures.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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).

We classify our inventory into the following categories:

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Finance lease assets 194 161

Less—Accumulated depreciation ( 1,251 ) ( 1,173 )

Accumulated depreciation ( 1,352 ) ( 1,132 )

Construction in progress 39 60

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

Wholesale - North America Europe Specialty Self Service Total

North America Europe Specialty Total

Balance as of January 1, 2024, gross $ 2,589 $ 2,298 $ 471 $ 5,358

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Balance as of January 1, 2024 2,556 2,298 471 5,325

Business acquisitions 1,171 35 15 — 1,221

Business acquisitions and adjustments to previously recorded goodwill 4 9 2 15

Disposal of businesses — ( 5 ) — ( 5 )

Exchange rate effects ( 32 ) ( 129 ) — ( 161 )

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Business acquisitions and adjustments to previously recorded goodwill ( 1 ) 2 — 1

Disposal of businesses — ( 5 ) — — ( 5 )

Impairment of goodwill — — ( 52 ) ( 52 )

Exchange rate effects 11 280 — 291

Balance as of December 31, 2025 $ 2,538 $ 2,455 $ 421 $ 5,414

Accumulated impairment losses as of December 31, 2025 $ ( 33 ) $ — $ ( 52 ) $ ( 85 )

For the Specialty segment, we recorded a goodwill impairment charge of $ 52 million for the year ended December 31, 2025 as the carrying value was higher than its estimated fair value based on the results of our October 31, 2025 test.

The impairment was driven by a combination of factors, including lower observed market multiples in the guideline public company method, lower long term revenue growth than previous forecasts, and higher margin product groups having a longer anticipated market recovery.

As of December 31, 2025, the remaining Specialty goodwill balance was $ 421 million.

A 1 % decrease in projected cash flows or long term growth rate would result in approximately an additional $ 10 million of impairment, a 25 basis point increase in the discount rate would result in approximately an additional $ 30 million of impairment, or a 1.0 decrease in the market multiples assumption would result in approximately an additional $ 30 million of impairment.

Given the sensitivity of the calculation to these assumptions, events that cause declines to Specialty's future cash flows such as underperformance relative to our forecasts, since actual results may differ from our estimates of future performance, or events that have a negative impact on the market value of the business, such as a deterioration in macroeconomic conditions, could result in additional future impairment to the goodwill in our Specialty segment.

We will continuously monitor each of our reporting units for any risk of future impairments.

We reported the impairment charge in Impairment of goodwill on the Consolidated Statements of Income for the year ended December 31, 2025.

We determined no other impairments existed when we performed our annual impairment test.

See "Intangible Assets" in Note 2, "Summary of Significant Accounting Policies" for further information.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of other intangibles, net are as follows (in millions):

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Software and other technology related assets 482 ( 308 ) 174 425 ( 266 ) 159

Covenants not to compete — — — 2 ( 2 ) —

Total finite-lived intangible assets 2,237 ( 1,246 ) 991 2,088 ( 1,019 ) 1,069

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Total other intangible assets $ 2,318 $ ( 1,246 ) $ 1,072 $ 2,169 $ ( 1,019 ) $ 1,150

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated useful lives for the finite-lived intangible assets are as follows:

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Software and other technology related assets Straight-line 3-15 years

Covenants not to compete Straight-line 2-5 years

Amortization expense for intangibles was $ 183 million, $ 182 million, and $ 126 million during the years ended December 31, 2025, 2024, and 2023, respectively.

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(1) As of December 31, 2025, the Level 1 fair value of our investment in MEKO AB ("Mekonomen") was $ 115 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 Consolidated Statements of Income.

Our share of the book value of Mekonomen's net assets exceeded the book value of our investment by $ 13 million;

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We record our equity in the net earnings of Mekonomen on a one quarter lag.

We received $ 5 million, $ 5 million, and $ 3 million in dividend payments from Mekonomen during the years ended December 31, 2024, 2023, and 2022, respectively.

We received $ 7 million in dividend payments from Mekonomen during the year ended December 31, 2025 and $ 5 million for each of the years ended December 31, 2024 and 2023.

Warranty Reserve

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We also offer limited lifetime warranties on certain collision sheet metal products.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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(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.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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;

and large mechanical items such as engines and transmissions.

For Europe, and to a lesser extent for Wholesale - North America, vehicle replacement products include a wide variety of small mechanical products such as brake pads, discs and sensors;

electrical products such as spark plugs and batteries;

steering and suspension products;

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;

wheels, tires and performance handling;

and miscellaneous accessories.

Parts revenue is generated from the sale of alternative parts and vehicle products including collision parts, which are typically exterior components used in the collision repair process to restore a vehicle's appearance and safety;

hard parts, which are typically internal components that are either mechanical in nature or functional components that are replaced as part of routine maintenance;

major mechanical parts;

and specialty products and accessories, which are vehicle products that improve the performance, functionality and appearance of vehicles.

Services revenue includes additional services that are generally billed concurrently with the related product sales, such as the sale of service-type warranties, and diagnostic and repair services.

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 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.

all of which are typically acquired as byproducts of our salvage operations.

Revenue from the sale of hulks in our North America segment 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):

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2025 2024 2023

Wholesale - North America $ 5,465 $ 4,974 $ 4,207

North America $ 5,329 $ 5,465 $ 4,974

Europe 6,287 6,386 6,303

Specialty 1,690 1,654 1,665

Self Service 213 232 227

Parts and services 13,306 13,505 12,942

Wholesale - North America 297 307 349

North America 321 297 307

Europe 24 21 20

Self Service 319 365 488

Other 345 318 327

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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:

Strategic Restructuring and Transformation Initiative

As part of executing our strategy to deliver profitable growth, drive a lean operating model and maximize returns on invested capital, we will, from time to time, engage in restructuring and business transformation initiatives.

These initiatives can range in scope from broad changes such as centralizing and standardizing non-customer facing teams and divesting non-strategic assets, to targeted changes such as consolidating underutilized facilities and closing underperforming locations.

Executing on these initiatives can take a few months to several years to fully implement depending on the scope and complexity of the initiative.

Additionally, initiatives can change or expand based on the information obtained while executing on the initiative and when additional actions are identified.

In connection with changes to key leadership positions in Europe and North America, as well as changes within the business environments in which we operate, we are executing on new initiatives to transform our operational structures, processes and technologies across all segments to implement target operating models and refine our go to market strategies.

Additionally, as a result of the above changes, the remaining actions related to the initiatives previously included in the 1 LKQ Europe Plan, such as implementing a common Enterprise Resource Planning ("ERP") platform, rationalizing product portfolios and creating a centralized back office function, will be incorporated into this broader enterprise-wide transformation and the related future spend will be incorporated under this plan.

As such, the 1 LKQ Europe Plan was closed at the end of 2025 with the total incurred cost of $ 17 million after successfully establishing a European headquarters office, migrating certain functions to a central back office and integrating four regional businesses onto a common ERP platform.

We anticipate we will incur approximately $ 65 million of cost in the next 12 months executing on the approved actions in connection with this initiative.

2024 Global Restructuring Plan

In the first quarter of 2024, we began a global restructuring initiative focused on enhancing profitability.

This initiative includes exiting businesses and markets that do not align with our strategic objectives and executing on opportunities to reduce costs, streamline operations and consolidate facilities.

As we continue to move forward with our plan, we have incurred and expect to incur impairments and other charges related to the disposal of long-lived assets, inventory, and other assets;

This initiative included exiting businesses and markets that did not align with our strategic objectives and executing on opportunities to reduce costs, streamline operations and consolidate facilities.

As we moved forward with our plan, we incurred impairments and other charges related to the disposal of long-lived assets, inventory, and other assets;

costs for employee severance;

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and other contract termination charges.

We expect that the largest portion of the activity will come from the Europe segment.

The largest portion of the activity came from the Europe segment.

In 2024, we divested our operations in Slovenia and Bosnia to third parties and, certain operations in Poland to Mekonomen, an equity method investment of which we own 26.6 %, and received a combination of cash and notes receivable.

Our decision to exit these markets constituted a triggering event to evaluate certain long-lived assets for impairment, and as a result, we incurred impairment charges with the divestitures of Slovenia, Poland, and Bosnia.

This plan is scheduled to be substantially complete by the end of 2025 with an estimated total incurred cost of between $ 130 million and $ 150 million.

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 costs primarily for employee severance, inventory or other asset write-downs, and exiting facilities.

This plan was completed in 2024 with a total incurred cost of $ 30 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 Enterprise Resource Planning 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.

This plan was substantially completed in 2025 with a total incurred cost of $ 139 million.

Acquisition Integration Plans

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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 substantially completed the integration plan in 2024 related to the Uni-Select Acquisition in our Wholesale - North America segment.

There are no material Acquisition Integration Plans as of December 31, 2025.

LKQ CORPORATION AND SUBSIDIARIES

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Asset impairments (2)

Other costs 7 — —

Other costs, net 2 7 —

Total $ 28 $ 111 $ —

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Cumulative Program Costs

Wholesale - North America Europe Specialty Self Service Total

2024 Global Plan $ 15 $ 96 $ — $ — $ 111

North America Europe Specialty Total

2024 Global Plan $ 30 $ 109 $ — $ 139

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The dividend equivalents are subject to the same vesting requirements, restrictions and forfeiture provisions as the original award.

The Compensation and Human Capital Committee of our Board approved the grant of 228,570 , 169,511 , and 169,605 RSUs to our executives that included both a performance-based vesting condition and a time-based vesting condition in 2024, 2023, and 2022, respectively.

The Compensation and Human Capital Committee of our Board approved the grant of 223,778 ;

and 169,511 RSUs to our executives that included both a performance-based vesting condition and a time-based vesting condition in 2025, 2024, and 2023, respectively.

The performance-based vesting conditions for the 2025, 2024, and 2023 grants to our executive officers have been satisfied.

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( 0.1 ) $ 56.84

Vested ( 0.2 ) $ 38.77

Unvested as of December 31, 2025 0.4 $ 45.20

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Stock-based compensation expense (1)

$ 34 $ 30 $ 40

Income tax benefit ( 7 ) ( 7 ) ( 9 )

Stock-based compensation expense, net of tax $ 27 $ 23 $ 31

(1) For the years ended December 31, 2025, 2024, and 2023, stock-based compensation included approximately $ 3 million, $ 1 million, and $ 1 million, respectively, for Self Service employees.

We did not capitalize any stock-based compensation costs during the years ended December 31, 2025, 2024, and 2023.

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Balance as of January 1, 2023 $ ( 333 ) $ — $ 11 $ ( 1 ) $ ( 323 )

Pretax (loss) income ( 216 ) — 49 — ( 167 )

Income tax effect — — ( 14 ) — ( 14 )

Disposal of business 4 — — — 4

Other comprehensive income from unconsolidated subsidiaries — — — 7 7

Balance as of December 31, 2022

$ ( 333 ) $ — $ 11 $ ( 1 ) $ ( 323 )

Pretax income (loss) 90 ( 12 ) ( 4 ) — 74

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$ ( 411 ) $ ( 9 ) $ ( 1 ) $ 4 $ ( 417 )

Pretax income 347 1 14 — 362

Income tax effect — — ( 2 ) — ( 2 )

Reclassification of unrealized loss (gain) — 1 ( 1 ) — —

Balance as of December 31, 2025

$ ( 64 ) $ ( 7 ) $ 10 $ 4 $ ( 57 )

Net unrealized losses and gains related to our pension plans were reclassified to Interest income and other income, net in the Consolidated Statements of Income during each of the years ended December 31, 2025, 2024, and 2023.

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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.

We utilize voluntary supply chain finance programs to support our efforts in negotiating payment term extensions with suppliers as part of our goal 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.

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As of December 31, 2025 and 2024, we had $ 481 million and $ 416 million of Accounts payable outstanding under the arrangements, respectively.

A rollforward of obligations confirmed and paid during the year is as follows (in millions):

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A rollforward of obligations confirmed and paid during the year is as follows (in millions):

Balance as of January 1, $ 416 $ 411

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Term loan payable January 2027 5.19 % $ 500 5.83 % $ 500

Revolving credit facilities January 2028 5.86 % (1)

664 6.25 % (1)

Revolving credit facilities December 2030 3.13 % (1)

Senior Unsecured Term Loan Agreement:

Term loan payable July 2026 4.98 % 487 6.82 % 529

Term loan payable March 2029 3.81 % 510 4.98 % 487

Unsecured Senior Notes:

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Euro Notes (2028) April 2028 4.13 % 294 4.13 % 259

Euro Notes (2028) April 2028 4.13 % 259 4.13 % 276

Euro Notes (2031) March 2031 4.13 % 881 4.13 % 777

Notes payable Various through October 2030 3.07 % (1)

10 3.85 % (1)

Finance lease obligations 4.81 % (1)

106 4.96 % (1)

Other debt 4.58 % (1)

Other debt Various through December 2030 3.21 % (1)

Total debt 3,695 4,195

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(1) Interest rate derived via a weighted average.

Cash paid for interest was $ 230 million, $ 230 million and $ 197 million for the years ended December 31, 2025, 2024 and 2023, respectively.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The scheduled maturities of long-term obligations outstanding at December 31, 2025 are as follows (in millions):

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Total debt (1)

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Long-term obligations maturing by December 31, 2025 include $ 1 million of short-term debt that may be extended beyond the current year ending December 31, 2025.

(1) The total debt amounts presented above reflect the gross values to be repaid (excluding debt issuance costs and unamortized bond discounts of $ 32 million as of December 31, 2025).

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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 based on the Company's debt rating and total leverage ratio.

Borrowings under the agreement bear interest at the Secured Overnight Financing Rate ("SOFR") plus the applicable spread or other risk-free interest rates that are applicable for the specified currency plus a spread based on the Company's debt rating and total leverage ratio.

On June 5, 2024, we entered into Amendment No.

1 to the Senior Unsecured Credit Agreement which replaced the Canadian Dollar Offer Rate ("CDOR") with the Canadian Overnight Repo Rate Average ("CORRA") for CAD denominated borrowings.

The maturity date of the term loan is January 5, 2026 and may be extended by one additional year subject to agreement by the lenders.

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.

On May 2, 2025 and June 20, 2025, we entered into Amendments No.

3 to the Senior Unsecured Credit Agreement, respectively.

These amendments extended the maturity date of the Senior Unsecured Credit Agreement term loan facility from January 5, 2026 to January 5, 2027 as well as provided certain other immaterial modifications.

On November 26, 2025 and December 17, 2025, we entered into Amendments No.

4 and 5 to the Senior Unsecured Credit Agreement, respectively, which extended the maturity date of the revolving credit facility from January 5, 2028 to December 17, 2030, as well as certain other immaterial modifications and administrative changes.

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 ("Prior Credit Agreement"), to pay fees and expenses related to the Senior Unsecured Credit Agreement, and for other general corporate purposes.

Proceeds from the Senior Unsecured Credit Agreement were used to repay the outstanding principal amount under our prior Senior Secured Credit Agreement, to pay fees and expenses related to the Senior Unsecured Credit Agreement, and for other general corporate purposes.

Senior Unsecured Term Loan Credit Agreement

For the permanent financing related to the Uni-Select Acquisition, on March 27, 2023, we entered into the Senior Unsecured Term Loan Agreement ("CAD Note") which established an unsecured term loan facility of up to CAD 700 million maturing in July 2026.

For the financing related to the Uni-Select Acquisition, on March 27, 2023, we entered into the Senior Unsecured Term Loan Agreement ("CAD Note") which established an unsecured term loan facility of up to CAD 700 million.

The CAD Note was funded on July 31, 2023, which was one business day prior to the consummation of the Uni-Select Acquisition.

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The variable interest rate applicable to the CAD Note may be (i) a forward-looking term rate based on CORRA 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.

On June 20, 2025 we entered into Amendment No.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CAD Note which included certain immaterial modifications.

On November 26, 2025 and December 17, 2025, we entered into Amendments No.

3 and 4, respectively, to the CAD Note which extended the maturity date from July 27, 2026 to March 17, 2029, along with certain other immaterial modifications and administrative changes.

Notes (2028/2033)

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Bank Trust Company, National Association, as trustee.

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

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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Notes (2028/33) (except that the Exchange Notes do not contain terms with respect to transfer restrictions and Additional Interest).

The SEC declared the Form S-4 effective on September 14, 2023.

The Securities and Exchange Commission ("SEC") declared the Form S-4 effective on September 14, 2023.

The Exchange Offer closed in the fourth quarter of 2023.

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Notes (2028/33) is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023.

Euro Notes (2024) and Euro Notes (2031)

On April 14, 2016, LKQ Italia Bondco S.p.A.

("LKQ Italia"), an indirect, wholly-owned subsidiary of LKQ Corporation, completed an offering of € 500 million aggregate principal amount of senior notes due April 1, 2024 (the "Euro Notes (2024)") in a private placement conducted pursuant to Regulation S and Rule 144A under the Securities Act of 1933.

The proceeds from the offering were used to repay a portion of the revolver borrowings under the Prior Credit Agreement and to pay related fees and expenses.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Euro Notes (2031)

On March 13, 2024, LKQ, together with its indirect, wholly-owned subsidiary, LKQ Dutch Bond B.V., a private company with limited liability, completed an offering and sale of € 750 million aggregate principal amount of its 4.125 % Notes due March 13, 2031 (“Euro Notes (2031)”).

We used the net proceeds from this offering to (i) pay outstanding indebtedness, including all of the outstanding € 500 million aggregate principal amount of the Euro Notes (2024) issued by the Company’s indirect wholly-owned subsidiary, LKQ Italia Bondco di LKQ Italia Bondco GP S.r.l e C.S.A.P.A.

(f/k/a LKQ Italia Bondco S.p.A.), and (ii) pay accrued interest and related fees, premiums and expenses.

We used the net proceeds from this offering to (i) pay outstanding indebtedness, including all of the outstanding € 500 million aggregate principal amount of senior notes due April 1, 2024 (the "Euro Notes (2024)") issued by the Company’s indirect wholly-owned subsidiary, LKQ Italia Bondco di LKQ Italia Bondco GP S.r.l e C.S.A.P.A.

(formerly known as LKQ Italia Bondco S.p.A.), and (ii) pay accrued interest and related fees, premiums and expenses.

The Euro Notes (2031) are governed by the Euro Notes (2031) Indenture, dated as of March 13, 2024.

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The Euro Notes (2031) will also be guaranteed by each of the Company’s U.S.

subsidiaries that in the future agrees to guarantee the Company’s obligations under the Senior Unsecured

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Agreement, the CAD Note, any other Credit Facility Debt or any Capital Markets Debt (both as defined in the Company’s preliminary prospectus supplement filed with the SEC on February 28, 2024).

subsidiaries that in the future agrees to guarantee the Company’s obligations under the Senior Unsecured Credit Agreement, the CAD Note, any other Credit Facility Debt or any Capital Markets Debt (both as defined in the Company’s preliminary prospectus supplement filed with the SEC on February 28, 2024).

Prior to December 13, 2030 (the "Par Call Date"), the Euro Notes (2031) are redeemable, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:

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The Euro Notes (2028) and the related guarantees are, respectively, LKQ Euro Holdings' and each Euro Notes (2028) Guarantor's senior unsecured obligations and will be subordinated to all of LKQ Euro Holdings' and the Euro Notes (2028) Guarantors' existing and future secured debt to the extent of the assets securing that secured debt.

In addition, the Euro Notes (2028) are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Euro Notes (2028) to the extent of the assets of those subsidiaries.

In addition, the Euro Notes (2028) are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Euro Notes (2028) to

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the extent of the assets of those subsidiaries.

The Euro Notes (2028) have been listed on the Global Exchange Market of Euronext Dublin.

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In addition, in the event of certain developments affecting taxation or under certain other circumstances which, in any case, require the payment of certain additional amounts, we may redeem the Euro Notes (2028) in whole, but not in part, at any time at a redemption price of 100 % of the principal amount thereof, plus accrued but unpaid interest, if any, and such certain additional amounts, if any, to the redemption date.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative Instruments and Hedging Activities

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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 %.

The agreements include a total $ 400 million notional amount that matured in February 2025 and a total $ 300 million notional amount maturing in February 2026 with a weighted average fixed interest rate of 4.23 %.

In March 2025, we entered into an interest rate swap agreement to replace the agreements that matured in February 2025 that included a total $ 400 million notional amount with a fixed interest rate of 4.11 %.

This agreement matured in November 2025.

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 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 18, "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 is being 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 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.

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Interest rate swap agreements $ 300 Other accrued expenses $ —

Interest rate swap agreements 300 Other noncurrent liabilities ( 1 )

December 31, 2024

Notional Amount Balance Sheet Caption Fair Value - Asset / (Liability)

Interest rate swap agreements $ 400 Other accrued expenses $ —

Interest rate swap agreements 300 Other noncurrent liabilities ( 1 )

The activity related to our cash flow hedges is included in Note 16, "Accumulated Other Comprehensive Income (Loss)." As of December 31, 2025, we estimate that $ 1 million of derivative losses (net of tax) included in Accumulated other comprehensive loss will be reclassified into our Consolidated Statements of Income within the next 12 months.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative Instruments Not Designated as Hedges

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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

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income of $ 49 million for the year ended December 31, 2023.

We reported Gains on foreign exchange contracts - acquisition related on the Consolidated Statements of Income of $ 49 million for the year ended December 31, 2023.

These contracts were settled in July 2023 resulting in total payments received of $ 49 million.

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We use the market and income approaches to estimate the fair value of our financial assets and liabilities, and during the year ended December 31, 2025, 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 table presents 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, 2025 and 2024 (in millions):

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Investments in debt and equity securities relate to our captive insurance subsidiary and are included in Other noncurrent assets on the Consolidated Balance Sheets.

The balance sheet classification of the interest rate swap agreements is presented in Note 19, "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 Consolidated Balance Sheets based on the expected timing of the related payments.

The balance sheet classification of the interest rate swap agreements is presented in Note 19, "Derivative Instruments and Hedging Activities." For contingent consideration liabilities, the entire portion is current at December 31, 2025 and is included in Other current liabilities, while at December 31, 2024, the current portion was included in Other current liabilities and the noncurrent portion was included in Other noncurrent liabilities on the 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.

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Notes (2028), U.S.

Notes (2033), Euro Notes (2024), Euro Notes (2028) and Euro Notes (2031) 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.

Notes (2033), Euro Notes (2028) and Euro Notes (2031) 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.

Based on market conditions as of December 31, 2025 and 2024, the fair value of the borrowings under the Senior Unsecured Credit Agreement reasonably approximated the carrying values of $ 501 million and $ 1,164 million, respectively.

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Euro Notes (2031) 881 902 777 796

Euro Notes (2031) 777 796 — —

LKQ CORPORATION AND SUBSIDIARIES

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2024, operating lease payments for leases that have not yet commence d totaled $ 41 million, which primarily includes the synthetic lease arrangements discussed below .

As of December 31, 2025, operating lease payments for leases that have not yet commence d totaled $ 70 million, which includes the synthetic lease arrangements discussed below .

These operating leases will commence in the n ext 7 months with lease te rms of 2 to 12 years .

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These leases have an aggregate future lease commitment of approximately $ 35 million as of December 31, 2025.

The leases will commence upon completion of construction of the facilities which are expected to be in the later part of 2026.

The leases will commence upon completion of construction of the facilities which are expected to be in 2026.

Each lease term is five years after commencement.

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Supplemental cash flows information (in millions) (1)

2025 2024 2023

Cash paid for amounts included in the measurement of lease liabilities

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Leased assets obtained in exchange for operating lease liabilities 306 384 310

(1) Amounts presented contain results from both continuing and discontinued operations.

Employee Benefit Plans

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Projected benefit obligation - beginning of year $ 200 $ 202

Acquisitions and divestitures (1)

Service cost 6 5

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Fair value - beginning of year $ 116 $ 119

Acquisitions and divestitures (1)

Actual return on plan assets 10 10

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Accumulated benefit obligation $ 212 $ 194

(1) 2023 activity relates to the Uni-Select acquisition.

(1) Includes amounts paid from plan assets as well as amounts paid from Company assets.

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Amortization of actuarial (gain) loss (2)

( 1 ) — ( 2 )

Net periodic benefit cost $ 7 $ 7 $ 5

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As of December 31, 2025, the pretax amounts recognized in Accumulated other comprehensive loss consisted of $ 15 million of net actuarial gains for our defined benefit plans that have not yet been recognized in net periodic benefit cost.

Of this amount, we expect an insignificant amount to be recognized as a component of net periodic benefit cost during the year ending December 31, 2025.

Of this amount, we expect $ 2 million to be recognized as a component of net periodic benefit cost during the year ending December 31, 2026.

Fair Value of Plan Assets

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants.

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 in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Investments that are valued using net asset value (or its equivalent) as a practical expedient are excluded from the fair value hierarchy disclosure.

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Balance at beginning of year $ 62 $ 66

Acquisitions and divestitures — 26

Actual return on plan assets:

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the insurance company then funds the pension payments to the plan participants upon retirement.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employer Contributions and Estimated Future Benefit Payments

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We estimate that contributions to our pension plans during 2026 will be $ 8 million.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes estimated future benefit payments as of December 31, 2025 (in millions):

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Total deferred (benefit) provision for income taxes $ ( 75 ) $ ( 36 ) $ 8

Federal $ 77 $ 99 $ 145

State 25 35 42

Foreign 102 131 117

Provision for income taxes $ 204 $ 265 $ 304

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

federal statutory rate is reconciled to the effective tax rate as follows:

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

Year Ended December 31,

2024 2023 2022

federal statutory rate 21.0 % 21.0 %

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Effective tax rate 28.7 % 24.8 %

The effective income tax rate for the tax year ended December 31, 2025 differs from the statutory federal income tax rate as follows (in millions):

Year Ended December 31, 2025

federal statutory rate $ 168 21.0 %

State income taxes, net of state credits and federal tax impact (1)

Foreign tax effects

Deductible impairment ( 9 ) ( 1.2 ) %

Other 1 0.1 %

Subnational income taxes - trade taxes 19 2.4 %

Enacted changes in tax laws or rates ( 11 ) ( 1.4 ) %

Other ( 11 ) ( 1.4 ) %

Other foreign jurisdictions 21 2.8 %

Effect of cross-border tax laws ( 2 ) ( 0.2 ) %

Tax credits ( 2 ) ( 0.3 ) %

Changes in valuation allowances 2 0.2 %

Non-taxable or non-deductible expenses

Non-deductible impairment 10 1.3 %

Other 2 0.2 %

Changes in unrecognized tax benefits 1 0.1 %

Other adjustments ( 1 ) ( 0.2 ) %

Effective tax rate $ 204 25.5 %

(1) State taxes in California, Illinois, Florida, Texas, Pennsylvania, New York, and Michigan made up the majority (greater than 50 percent) of the tax effect in this category.

Undistributed earnings of our foreign subsidiaries amounted to approximately $ 2,399 million at December 31, 2025.

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federal tax in the hands of the U.S.

corporate shareholders, either as a result of the participation exemption, or due to the previous taxation of such earnings under the transition tax and GILTI regimes, companies must still apply the guidance of ASC 740:

corporate shareholders, either as a result of the participation exemption, or due to the previous taxation of such earnings under the transition tax and Global Intangible Low-Taxed Income regime ("GILTI") regimes, companies must still apply the guidance of ASC 740:

Income Taxes to account for the tax consequences of outside basis differences and other tax impacts of their investments in non-U.S.

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Further, the 2017 transition tax reduced a majority of the previous outside basis differences in our foreign subsidiaries, and most of any new differences arising have extensive interaction with the GILTI regime.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Based on a review of our global financing and capital expenditure requirements as of December 31, 2025, we continue to plan to permanently reinvest the undistributed earnings of our international subsidiaries.

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tax regime, it remains impractical to estimate the amount of deferred taxes potentially payable were such earnings to be repatriated.

The OECD released a framework, referred to as Pillar Two, to implement a global minimum corporate tax rate of 15 % on certain multinational enterprises.

The Organization for Economic Co-operation and Development ("OECD") released a framework, referred to as Pillar Two, to implement a global minimum corporate tax rate of 15 % on certain multinational enterprises.

Certain countries have enacted legislation to adopt the Pillar Two framework while several countries are considering or still announcing changes to their tax laws to implement the minimum tax directive.

On January 5, 2026 the OECD released guidance providing for a Side-by-Side package available for U.S.

parented groups beginning for fiscal years beginning on or after January 1, 2026.

We have evaluated the developments and do not anticipate any material impact on our financial position, results of operations, or cash flows.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We will continue to monitor as additional guidance becomes available.

On July 4, 2025, new U.S.

tax legislation was signed into law, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The OBBBA includes the acceleration of fixed asset depreciation, modifications to the capitalization of domestic research and development expenses, modifications to the limitations to the deductibility of interest expense, and modifications to certain international provisions.

These new provisions take effect starting in 2025 through 2027.

The Company has evaluated the OBBBA enacted during the year and estimated its impact on the consolidated financial statements to be immaterial.

We will continue to evaluate the full impact of these legislative changes as additional guidance becomes available.

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

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Net deferred tax liability $ ( 315 ) $ ( 369 )

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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We have net operating loss carryforwards, primarily for certain international tax jurisdictions, the tax benefits of which totaled approximately $ 29 million and $ 38 million at December 31, 2025 and 2024, respectively.

The $ 15 million decrease in net operating loss carryforwards is primarily related to the sale of certain European entities.

At December 31, 2025 and 2024, we had tax credit carryforwards for U.S.

and certain U.S.

state jurisdictions, the tax benefits of which totaled approximately $ 3 million and less than $ 1 million, respectively.

state jurisdictions, the tax benefits of which totaled approximately $ 4 million and $ 3 million, respectively.

As of December 31, 2025 and 2024, we had interest deduction carryforwards in Italy the tax benefits of which totaled $ 31 million and $ 30 million, respectively.

As of December 31, 2024 and 2023, we had capital loss carryforwards, the tax benefit of which totaled an insignificant amount at both periods.

As of December 31, 2025 and 2024, valuation allowances of $ 52 million and $ 51 million, respectively, were recorded for deferred tax assets related to the foreign interest deduction carryforwards, certain foreign and U.S.

net operating loss carryforwards and capital loss carryforwards.

The $ 13 million net decrease in valuation allowances was primarily attributable to the change in the net operating loss carryforward previously noted.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

net operating loss carryforwards, tax credit, and capital loss carryforwards.

The majority of the net operating losses will generally carry forward until 2035 to 2044.

The interest deduction carryforwards in Italy do not expire.

capital losses can be carried back three years and forward for five years.

Realization of these deferred tax assets is dependent on the generation of sufficient taxable income prior to the expiration dates, where applicable, or in the case of interest deduction carryforward, subject to legislative thin capitalization constraints, typically based on profitability.

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Settlements with taxing authorities ( 1 ) ( 2 ) —

Cumulative translation adjustment 1 — —

Balance at December 31, $ 15 $ 28 $ 8

During the twelve months beginning January 1, 2025, it is reasonably possible that we will reduce unrecognized tax benefits by $ 17 million, none of which would impact our effective tax rate.

Included in the balance of unrecognized tax benefits above as of December 31, 2025, 2024 and 2023, are approximately $ 15 million, $ 10 million and $ 8 million, respectively that, if recognized, would affect the effective tax rate.

The balance of unrecognized tax benefits at December 31, 2024 includes $ 18 million, and at both December 31, 2023 and 2022, an insignificant amount of tax benefits that, if recognized, would result in adjustments to deferred taxes.

The balance of unrecognized tax benefits at December 31, 2025, 2024 and 2023 includes an insignificant amount, $ 18 million, and an insignificant amount of tax benefits that, if recognized, would result in adjustments to deferred taxes.

We recognize interest and penalties accrued related to unrecognized tax benefits as income tax expense.

As of the years ended December 31, 2025, 2024 and 2023, we had accumulated interest and penalties of $ 1 million, attributable to the unrecognized tax benefits noted above.

During the years ended December 31, 2024, 2023 and 2022, we recorded $ 1 million or less of interest and penalties through the income tax provision, prior to any reversals for lapses in the statutes of limitations and settlements.

During each of the years ended December 31, 2025, 2024 and 2023, we recorded $ 1 million or less of interest and penalties through the income tax provision, prior to any reversals for lapses in the statutes of limitations and settlements.

The Company and/or its subsidiaries file income tax returns in the U.S.

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Adjustments from examinations, if any, are not expected to have a material effect on our Consolidated Financial Statements.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amounts of income taxes paid (net of refunds) are as follows (in millions):

Year Ended December 31, 2025

Federal $ 150

United Kingdom 25

Total foreign 118

Total net income taxes paid $ 300

Net income taxes paid were $ 322 million and $ 305 million for years ended December 31, 2024 and 2023, respectively.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of Cash and cash equivalents as reported in the Consolidated Balance Sheets to Cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in millions):

The following table provides a reconciliation of Cash and cash equivalents as reported on the Consolidated Balance Sheets to Cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in millions):

December 31, 2025 December 31, 2024

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(1) Represents cash held with our captive insurance subsidiary for payments on self-insured claims.

Investment in Loan Receivable

In 2025, in connection with extending additional credit, we modified the terms of a loan with a supplier to give us the option to acquire the net assets of the supplier for the amount of the loan in the event of default.

The net outstanding balance of the loans, including accrued interest and credit loss reserve, was $ 69 million and $ 51 million at December 31, 2025 and December 31, 2024, respectively.

The loans are recognized at amortized cost and presented as loan receivables, with $ 49 million and $ 20 million reported in Receivables, net of allowance for credit losses as of December 31, 2025 and 2024, respectively, and the remaining balance presented in Other noncurrent assets on the Consolidated Balance Sheets.

Variable Interest Entity

Due to the significant amount of subordinated financial support that the loans represent to the supplier, we determined that the supplier is a variable interest entity (“VIE”).

We are also a significant customer of the supplier domestically, with purchases under our exclusive distribution agreements historically representing a meaningful portion of the supplier's revenue.

However, we do not represent the primary beneficiary of the VIE, as we do not hold the power to direct the activities that most significantly impact the supplier's economic performance.

Specifically, the kick-out rights provided by our option to acquire the supplier only become effective upon loan default and control will occur upon acquisition completion.

Therefore, the conditions necessary for us to hold such power have not been met and, as such, we do not consolidate the entity.

The maximum exposure to loss that we could experience with respect to the supplier is limited to the net amount of our receivables on our Consolidated Balance Sheet, which was $ 69 million at December 31, 2025.

Segment and Geographic Information

We have four operating segments:

Wholesale - North America;

and Self Service, each of which is presented as a reportable segment.

We have three operating segments:

North America;

and Specialty, each of which is presented as a reportable segment.

The segments are organized based on a combination of geographic regions served and the types of product lines offered.

They are managed separately, as each business serves distinct customer bases and is impacted by different economic conditions.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

North America Europe Specialty Eliminations Consolidated

Year Ended December 31, 2025

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$ 121 $ 150 $ 32 $ — $ 303

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker ("CODM").

Intersegment expenses are included within the amounts shown.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Amounts primarily represent other non operating income and expenses within each segment, as well as reconciling items to remove depreciation - cost of goods sold and restructuring - cost of goods sold, which are excluded from the calculation of Segment EBITDA.

See Note 13, "Restructuring and Transaction Related Expenses" for additional information on the restructuring charges.

(3) Amounts presented include depreciation and amortization expense recorded within Cost of goods sold, SG&A expenses and Restructuring and transaction related expenses.

(3) Amounts presented include depreciation and amortization expense recorded within Cost of goods sold and Restructuring and transaction related expenses.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The key measure of segment profit or loss reviewed by our CODM, our Chief Executive Officer, is Segment EBITDA.

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Net income attributable to LKQ stockholders 607 690 936

net (loss) income from discontinued operations — ( 6 ) 6

net income from discontinued operations 11 24 4

Net income from continuing operations attributable to LKQ stockholders 596 666 932

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Restructuring expenses - cost of goods sold (3)

Gain on disposal of businesses (4)

Gains on previously held equity interests — — ( 3 )

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Impairment of net assets held for sale — — 1

Impairment of goodwill (5)

Segment EBITDA $ 1,509 $ 1,687 $ 1,707

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(3) Refer to Note 13, "Restructuring and Transaction Related Expenses" for further information.

(4) Refer to "Other Divestitures (Not Classified in Discontinued Operations)" in Note 4, "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.

(4) Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (primarily receivables and inventory).

(5) Refer to Note 9, "Intangible Assets" for further information.

LKQ CORPORATION AND SUBSIDIARIES

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Capital Expenditures

Wholesale - North America

North America

$ 76 $ 143 $ 118

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Specialty 13 21 41

Self Service 13 36 14

Total capital expenditures $ 211 $ 298 $ 322

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Receivables, net of allowance for credit losses

Wholesale - North America $ 483 $ 470

North America $ 495 $ 483

Europe 552 528

Specialty 157 102

Self Service 9 8

Total receivables, net of allowance for credit losses 1,204 1,113

Wholesale - North America 1,411 1,217

North America 1,479 1,411

Europe 1,496 1,323

Specialty 451 449

Self Service 37 39

Total inventories 3,426 3,183

Property, plant and equipment, net

Wholesale - North America 675 644

North America 651 675

Europe 695 619

Specialty 106 115

Self Service 108 112

Total property, plant and equipment, net 1,452 1,409

Operating lease assets, net

Wholesale - North America 668 615

North America 641 668

Europe 544 467

Specialty 147 121

Self Service 132 143

Total operating lease assets, net 1,332 1,256

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Unallocated assets include cash and cash equivalents, prepaid expenses and other current and noncurrent assets, goodwill, other intangibles and equity method investments.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, France 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.

Our operations in other countries include wholesale operations in Canada, remanufacturing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth our tangible long-lived assets by geographic area (in millions):

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data