Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

KAR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of ~~July 31, 2021, 119,184,223~~April 30, 2022, 121,532,693 shares of the registrant's common stock, par value $0.01 per share, were outstanding.

Item 1. Financial Statements

(In millions, except per share data)

See accompanying condensed notes to consolidated financial statements

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net income (loss) $ 11.5 $ (32.3) $ 62.4 $ (29.5)
Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss) 7.1 16.0 8.7 (19.9)
Unrealized gain (loss) on interest rate derivatives, net of tax 0.3 (3.6) 7.0 (22.6)
Total other comprehensive income (loss), net of tax 7.4 12.4 15.7 (42.5)
Comprehensive income (loss) $ 18.9 $ (19.9) $ 78.1 $ (72.0)


	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	(0.3)	$	50.9
Other comprehensive income, net of tax
Foreign currency translation gain	1.1		1.6
Unrealized gain on interest rate derivatives, net of tax	9.1		6.7
Total other comprehensive income, net of tax	10.2		8.3
Comprehensive income	$	9.9	$	59.2

(In millions, except share and per share data)

June 30,
2021 December 31, 2020
Liabilities, Temporary Equity and Stockholders' Equity
Current liabilities
Accounts payable $ 1,074.5 $ 688.9
Accrued employee benefits and compensation expenses 65.9 81.3
Accrued interest 6.8 6.5
Other accrued expenses 186.4 185.2
Income taxes payable 2.8 3.2
Obligations collateralized by finance receivables 1,324.2 1,261.2
Current maturities of long-term debt 22.7 24.3
Total current liabilities 2,683.3 2,250.6
Non-current liabilities
Long-term debt 1,851.8 1,853.8
Deferred income tax liabilities 137.1 128.6
Operating lease liabilities 332.0 344.2
Other liabilities 42.8 55.4
Total non-current liabilities 2,363.7 2,382.0
Commitments and contingencies (Note 9) 0 0
Temporary equity
Series A convertible preferred stock 570.0 549.8
Stockholders' equity
Common stock, $0.01 par value:
Authorized shares: 400,000,000
Issued and outstanding shares:
June 30, 2021: 119,181,203
December 31, 2020: 129,700,156 1.2 1.3
Additional paid-in capital 874.6 1,046.5
Retained earnings 642.5 600.7
Accumulated other comprehensive loss (17.0) (32.7)
Total stockholders' equity 1,501.3 1,615.8
Total liabilities, temporary equity and stockholders' equity $ 7,118.3 $ 6,798.2


	March 31, 2022		December 31, 2021
Liabilities, Temporary Equity and Stockholders' Equity
Current liabilities
Accounts payable	$	833.5	$	785.3
Accrued employee benefits and compensation expenses	25.2		32.3
Accrued interest	18.6		6.1
Other accrued expenses	79.0		107.4
Income taxes payable	3.4		7.9
Obligations collateralized by finance receivables	1,866.6		1,692.3
Current maturities of long-term debt	1,034.0		16.3
Current liabilities held-for-sale	705.3		361.7
Total current liabilities	4,565.6		3,009.3
Non-current liabilities
Long-term debt	939.8		1,849.7
Deferred income tax liabilities	60.5		55.9
Operating lease liabilities	86.9		88.1
Other liabilities	22.1		30.0
Non-current liabilities held-for-sale	—		313.8
Total non-current liabilities	1,109.3		2,337.5
Commitments and contingencies (Note 9)	0		0
Temporary equity
Series A convertible preferred stock	601.6		590.9
Stockholders' equity
Common stock, $0.01 par value:
Authorized shares: 400,000,000
Issued and outstanding shares:
March 31, 2022: 121,532,564
December 31, 2021: 121,163,050	1.2		1.2
Additional paid-in capital	914.6		910.8
Retained earnings	614.6		625.7
Accumulated other comprehensive loss	(14.5)		(24.7)
Total stockholders' equity	1,515.9		1,513.0
Total liabilities, temporary equity and stockholders' equity	$	7,792.4	$	7,450.7

See accompanying condensed notes to consolidated financial statements

Common
Stock
Shares Common
Stock
Amount Additional
Paid-In
Capital Retained Earnings Accumulated
Other
Comprehensive
Loss Total
Balance at March, 31, 2020 129.2 $ 1.3 $ 1,031.6 $ 624.8 $ (85.9) $ 1,571.8
Net loss (32.3) (32.3)
Other comprehensive income 12.4 12.4
Issuance of common stock under stock plans 0.1 0.3 0.3
Surrender of RSUs for taxes (0.1) (0.3) (0.3)
Stock-based compensation expense 2.6 2.6
Balance at June 30, 2020 129.2 $ 1.3 $ 1,034.2 $ 592.5 $ (73.5) $ 1,554.5
Common
Stock
Shares Common
Stock
Amount Additional
Paid-In
Capital Retained Earnings Accumulated
Other
Comprehensive
Loss Total
Balance at December 31, 2019 128.8 $ 1.3 $ 1,028.9 $ 651.0 $ (31.0) $ 1,650.2
Cumulative effect adjustment for adoption of ASC Topic 326, net of tax (3.8) (3.8)
Net loss (29.5) (29.5)
Other comprehensive loss (42.5) (42.5)
Issuance of common stock under stock plans 0.6 0.7 0.7
Surrender of RSUs for taxes (0.2) (3.7) (3.7)
Stock-based compensation expense 7.6 7.6
Dividends earned under stock plans 0.7 (0.7) 0
Cash dividends declared to stockholders ($0.19 per share) (24.5) (24.5)
Balance at June 30, 2020 129.2 $ 1.3 $ 1,034.2 $ 592.5 $ (73.5) $ 1,554.5

Six Months Ended
June 30,
2021 2020
Operating activities
Net income (loss) $ 62.4 $ (29.5)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 92.4 94.2
Provision for credit losses 7.6 41.6
Deferred income taxes 6.8 (13.1)
Amortization of debt issuance costs 6.0 5.6
Stock-based compensation 9.9 7.6
Contingent consideration adjustment 15.7 0
Unrealized gain on investment securities (31.6) 0
Goodwill and other intangibles impairment 0 29.8
Other non-cash, net 2.1 4.9
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables and other assets (198.5) (137.5)
Accounts payable and accrued expenses 322.9 265.3
Net cash provided by operating activities 295.7 268.9
Investing activities
Net (increase) decrease in finance receivables held for investment (200.0) 532.6
Acquisition of businesses (net of cash acquired) (79.8) 0
Purchases of property, equipment and computer software (50.7) (46.7)
Investments in securities (20.6) 0
Proceeds from sale of investments 21.4 0
Proceeds from the sale of PWI 2.1 0
Proceeds from the sale of property and equipment 1.9 0
Net cash (used by) provided by investing activities (325.7) 485.9
Financing activities
Net increase in book overdrafts 45.4 5.0
Net decrease in borrowings from lines of credit (1.6) (1.9)
Net increase (decrease) in obligations collateralized by finance receivables 57.0 (720.5)
Proceeds from issuance of Series A Preferred Stock 0 550.1
Payments for issuance costs of Series A Preferred Stock 0 (21.9)
Payments for debt issuance costs/amendments 0 (3.9)
Payments on long-term debt (4.7) (4.7)
Payments on finance leases (6.0) (7.8)
Payments of contingent consideration and deferred acquisition costs (21.3) (22.3)
Issuance of common stock under stock plans 1.0 0.7
Tax withholding payments for vested RSUs (2.2) (3.7)
Repurchase and retirement of common stock (180.9) 0
Dividends paid to stockholders 0 (49.0)
Net cash used by financing activities (113.3) (279.9)
Effect of exchange rate changes on cash 6.4 (17.3)
Net (decrease) increase in cash, cash equivalents and restricted cash (136.9) 457.6
Cash, cash equivalents and restricted cash at beginning of period 812.3 560.9
Cash, cash equivalents and restricted cash at end of period $ 675.4 $ 1,018.5
Cash paid for interest, net of proceeds from interest rate derivatives $ 55.4 $ 63.9
Cash paid for taxes, net of refunds $ 16.6 $ 3.6

~~Table of Contents~~

KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements

~~June 30, 2021~~March 31, 2022 (Unaudited)

Note 1—Basis of Presentation and Nature of Operations

Unless otherwise indicated or unless the context otherwise requires, the following terms used herein shall have the following meanings:

•"we," "us," "our," "KAR" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;

•"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including Openlane, Inc. (together with Openlane, Inc.'s subsidiaries, "Openlane"), BacklotCars, Inc. ("BacklotCars"), CARWAVE Holdings LLC ("CARWAVE"), Nth Gen Software Inc. ("TradeRev"~~), BacklotCars, Inc. ("BacklotCars"~~), ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited")) and ADESA Europe (formerly known as CarsOnTheWeb ("COTW"));

•"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc. (which was sold on December 1, 2020);

•"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014 (as amended, amended and restated, modified or supplemented from time to time), among KAR Auction Services, Inc., as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank N.A., as administrative agent;

•"Credit Facility" refers to the $950 million, senior secured term loan B-6 facility due September 19, 2026 ("Term Loan B-6") and the $325 million, senior secured revolving credit facility due September 19, 2024 (the "Revolving Credit Facility"), the terms of which are set forth in the Credit Agreement;

•"IAA" refers, collectively, to Insurance Auto Auctions, Inc., formerly a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC");

•"KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries;

•"Senior notes" refers to the 5.125% senior notes due 2025 ($950 million aggregate principal was outstanding at ~~June 30, 2021)~~March 31, 2022); and

•"Series A Preferred Stock" refers to the Series A Convertible Preferred Stock, par value $0.01 per share ~~(591,785~~(623,397 and ~~571,606~~612,676 shares of Series A Preferred Stock were outstanding at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively).

Business and Nature of Operations

ADESA is a leading provider of wholesale vehicle auctions and related vehicle remarketing services for the automotive industry. In February 2022, the Company announced that it had entered into a definitive agreement with Carvana Group, LLC (“Carvana”) and Carvana Co., pursuant to which Carvana will acquire the ADESA U.S. physical auction business from KAR (the “Transaction”). The Transaction includes all auction sales, operations and staff at ADESA’s U.S. vehicle logistic centers and use of the ADESA.com marketplace in the U.S. (see Note 2). As of ~~June 30, 2021,~~March 31, 2022, the ADESA Auctions segment serves a domestic and international customer base through digital marketplaces ~~supported by more than 70~~and 14 vehicle logistics center locations across ~~North America.~~Canada. ADESA ~~also~~ includes BacklotCars, an app and web-based dealer-to-dealer wholesale vehicle platform utilized in the United States, CARWAVE, an online dealer-to-dealer marketplace in the United States, TradeRev, an online automotive remarketing platform in Canada where dealers can launch and participate in real-time vehicle auctions at any time, ADESA Remarketing Limited, an online whole car vehicle remarketing business in the United Kingdom and ADESA Europe, ~~(formerly known as CarsOnTheWeb),~~ an online wholesale vehicle auction marketplace in Continental Europe. Our auctions facilitate the sale of used vehicles through on-premise and off-premise marketplaces. ADESA's online service offerings include customized private label solutions powered with software developed by its wholly-owned subsidiary, Openlane, that allow our commercial consignors (automobile manufacturers, captive finance companies and other institutions) to offer vehicles via the Internet prior to arrival at on-premise marketplaces.

Table of Contents

KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

March 31, 2022 (Unaudited)

Remarketing services include a variety of activities designed to facilitate the transfer of used vehicles between sellers and buyers throughout the vehicle life cycle. ADESA facilitates the exchange of these vehicles through an auction marketplace, which aligns sellers and buyers. As an agent for customers, the Company

~~Table of Contents~~

~~KAR Auction Services, Inc.~~

~~Condensed Notes to Consolidated Financial Statements (Continued)~~

~~June 30, 2021 (Unaudited)~~

generally does not take title to or ownership of vehicles sold at the auctions. Generally, fees are earned from the seller and buyer on each successful auction transaction in addition to fees earned for ancillary services.

ADESA ~~has the second largest used vehicle auction network in North America, based upon the number of used vehicles sold through auctions annually, and~~ also provides services such as inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services. ADESA is able to serve the diverse and multi-faceted needs of its customers through the wide range of services offered.

AFC is a leading provider of floorplan financing to independent used vehicle dealers and this financing is provided through approximately 100 locations throughout the United States and ~~Canada.~~Canada as of March 31, 2022. Floorplan financing supports independent used vehicle dealers in North America who purchase vehicles at ADESA, BacklotCars, CARWAVE, TradeRev, other used vehicle and salvage ~~auctions~~auctions. In addition, AFC provides financing for dealer inventory purchased directly from wholesalers and ~~non-auction purchases.~~

~~Prior to December 2020, in addition to floorplan financing,~~other dealers as well as providing liquidity for customer trade-ins which encompasses settling lien holder payoffs. AFC also provided independent used vehicle dealers with vehicle service contracts. In October 2020, a subsidiary of ADESA signed a definitive agreement to sell all of the issued and outstanding shares of capital stock of PWI Holdings, Inc., the Company's extended vehicle service contract business ("PWI"), to certain subsidiaries of Kingsway Financial Services Inc.provides title services for ~~a purchase price of approximately $24.3 million in cash and deferred payments of approximately $2.2 million (subject to customary adjustments). The sale was completed on December 1, 2020.~~their customers.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with

generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and

with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information

and notes required by U.S. GAAP for annual financial statements. Operating results for interim periods are not necessarily

indicative of results that may be expected for the year as a whole. In the opinion of management, the consolidated financial

statements reflect all adjustments, generally consisting of normal recurring accruals, necessary for a fair statement of our results

of operations, cash flows and financial position for the periods presented. These consolidated financial statements and

condensed notes to consolidated financial statements are unaudited and should be read in conjunction with the audited

consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended

December 31, ~~2020,~~2021, as filed with the Securities and Exchange Commission on February ~~18, 2021.~~23, 2022. The ~~2020~~2021 year-end

consolidated balance sheet data included in this Form 10-Q was derived from the audited financial statements referenced above

and does not include all disclosures required by U.S. GAAP for annual financial statements.

~~ADESA's "Auction fees and services revenue"~~During the first quarter of 2022, the Company classified the ADESA U.S. physical auctions (vehicle logistics centers) as held-for-sale based on management’s intention to sell the business. Certain amounts reported in the consolidated ~~statement~~financial statements and related notes prior to March 2022 have been reclassified to discontinued operations to reflect the pending sale of ~~income for~~ the ~~three~~Company’s ADESA U.S. physical auction business. The assets and ~~six months ended June 30, 2020 has~~liabilities of the ADESA U.S. physical auctions have been ~~broken out between "Auction fees"~~reclassified to "Current assets held-for-sale," "Non-current assets held-for-sale," "Current liabilities held-for-sale" and ~~"Service revenue"~~"Non-current liabilities held-for-sale" in the consolidated ~~statement of income to conform with the presentation~~balance sheets for ~~the three and six months ended June 30, 2021.~~

Prior to 2020, the costs and expenses of the holding company were reported separately from the reportable segments. Due to the spin-off of IAA in 2019 and the Company's transition from physical marketplaces to digital marketplaces, the Company has simplified its business and operations. Corporate expenses, previously reported as holding company expenses, are now included in the segments. Certain known expenses (e.g., information technology costs) were recorded directly to the ADESA and AFC segments. Interest expense previously reported by the holding company has been recorded in the ADESA segment. The residual shared services expenses were recorded at ADESA and allocated to AFC based on revenue and employee headcount. Holding companyall periods presented. Likewise, certain amounts reported ~~in the~~for segment results in the consolidated financial statements prior to ~~December 31, 2020~~March 2022 have been reclassified to conform to the ~~current~~discontinued operations presentation. See Note 2 for a further discussion.

~~Table~~In addition, KAR provided transportation services of ~~Contents~~

~~KAR Auction Services, Inc.~~

~~Condensed Notes~~$17.7 million and $24.4 million to ~~Consolidated Financial Statements (Continued)~~

~~June 30,~~the ADESA U.S. physical auctions for the three months ended March 31, 2022 and 2021, ~~(Unaudited)~~respectively. The revenue and cost of services for these transportation services provided to the ADESA U.S. physical auctions was previously eliminated in consolidation, but this revenue and the related costs are now included in the Company's consolidated statements of income.

AFC also has accounts payable to customers of the ADESA U.S. physical auctions related to auction proceeds financed. Previously, these accounts payables were eliminated in consolidation, but are now included in "Accounts payable" and "Current assets held-for-sale" on the consolidated balance sheets and were $40.4 million and $33.5 million at March 31, 2022 and December 31, 2021, respectively.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates based in part on assumptions about current, and for some estimates, future economic and market conditions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

March 31, 2022 (Unaudited)

statements, and the reported amounts of revenues and expenses during the period. Although the current estimates contemplate current conditions and expected future changes, as appropriate, it is reasonably possible that future conditions could differ from these estimates, which could materially affect our results of operations and financial position. Among other effects, such changes could result in future impairments of goodwill, intangible assets and long-lived assets, incremental losses on finance receivables, additional allowances on accounts receivable and deferred tax assets and changes in litigation and other loss contingencies.

New Accounting Standards

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The update also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. ~~Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.~~ This update can be adopted on either a fully retrospective or a modified retrospective basis. ~~We do not expect the~~The adoption of ASU 2020-06 ~~will have a material impact on the consolidated financial statements.~~

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,~~ ~~which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740~~and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of ASU 2019-12 did not have a material impact on the consolidated financial statements.

Note 2—~~Acquisitions~~Pending Sale of ADESA U.S. Physical Auction Business and Discontinued Operations

~~2021 Acquisition~~

In ~~May 2021,~~February 2022, the Company announced that it had entered into a definitive agreement with Carvana, pursuant to which Carvana will acquire the ADESA ~~acquired Auction Frontier, LLC (“Auction Frontier”). Auction Frontier~~U.S. physical auction business from KAR. The Transaction is ~~the owner~~valued at $2.2 billion and ~~operator~~includes all auction sales, operations and staff at ADESA’s U.S. vehicle logistic centers and use of the ~~cloud-based auction simulcast solution Velocicast~~®.ADESA.com marketplace in the U.S. The ~~acquisition~~Transaction is ~~aligned~~subject to customary closing conditions and is expected to close in May 2022. In connection with ~~KAR’s strategy, as Velocicast powers~~the Transaction, the Company and Carvana expect to enter into various agreements to provide a framework for their relationship after the Transaction, including a transition services agreement and a commercial agreement. In addition, KAR will continue to own the ADESA ~~Simulcast~~tradename and ~~Simulcast+ technologies, as well as other wholesale and retail~~the ADESA U.S. physical auctions ~~across North America and Australia.~~will continue to utilize the tradename, which has an indefinite life.

The ~~purchased assets included accounts receivable, software, customer relationships and tradenames.~~Company has classified the ADESA U.S. physical auctions as held-for-sale in its consolidated balance sheets, based on management’s intention to sell the business. The ~~purchase agreement also included additional payments contingent~~"Goodwill" shown in the balance sheets below was allocated to the ADESA U.S. physical auctions based on ~~certain terms and conditions. Financial~~relative fair value. The financial results ~~for Auction Frontier~~of the ADESA U.S. physical auction business have been accounted for as discontinued operations for all periods presented. The business was formerly included in ~~our consolidated financial statements from~~ the ~~date of acquisition.~~

The purchase price for Auction Frontier, net of cash acquired, was approximately $92.2 million, which included a net cash payment of $79.8 million and estimated contingent payments with a fair value of $12.4 million based on a probability model. The maximum amount of undiscounted contingent payment related to this acquisition could approximate $15.0 million. The acquired assets and assumed liabilities of Auction Frontier were recorded at fair value, including $17.9 million to intangible assets, representing the fair value of acquired customer relationships of $10.0 million, software of $7.6 million and tradenames of $0.3 million, which are being amortized over their expected useful lives. The acquired software and tradenames are reported in "Other intangible assets" in the accompanying consolidated balance sheet. The excess earnings method was used to value the customer relationships and the relief from royalty method was used to value the software and tradenames. Both of these methods require forward looking estimates to determine fair value, including among other assumptions, forecasted revenue growth and estimated royalty and license rates. The purchase accounting associated with this acquisition is preliminary, subject to obtaining information to determine the fair value of certain assets and liabilities. The acquisition resulted in a preliminary estimate of $73.8 million of goodwill. The factors contributing to the recognition of goodwill were strategic and synergistic benefits that are expected to be realized from the acquisition. The goodwill is recorded in theCompany’s ADESA Auctions reportable segment.

The following table presents the results of operations for the ADESA U.S. physical auction business that have been reclassified to discontinued operations for all periods presented (in millions):


	Three Months Ended March 31,
	2022		2021
Operating revenues	$	220.0	$	236.2
Operating expenses
Cost of services (exclusive of depreciation and amortization)	158.6		149.7
Selling, general and administrative	43.9		44.4
Depreciation and amortization	11.2		20.1
Total operating expenses	213.7		214.2
Operating profit	6.3		22.0
Interest expense	0.1		0.1
Other (income) expense, net	(6.1)		(1.9)
Income from discontinued operations before income taxes	12.3		23.8
Income taxes	4.2		(0.9)
Income from discontinued operations	$	8.1	$	24.7

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

March 31, 2022 (Unaudited)

The following tables summarize the major classes of assets and liabilities of the ADESA U.S. physical auction business that have been classified as held-for-sale for each period presented (in millions):


	March 31, 2022
Assets
Cash and cash equivalents	$	36.7
Trade receivables, net of allowances	237.8
Inventory	16.5
Other current assets	6.0
Goodwill	980.5
Customer relationships, net of accumulated amortization	81.4
Other intangible assets, net of accumulated amortization	33.5
Operating lease right-of-use assets	226.6
Property and equipment, net of accumulated depreciation	437.1
Other assets	2.5
Current assets held-for-sale	$	2,058.6

Liabilities
Accounts payable	$	323.1
Accrued employee benefits and compensation expenses	19.7
Other accrued expenses	27.0
Current portion of operating lease liabilities	27.7
Deferred income tax liabilities	83.8
Operating lease liabilities	222.0
Other liabilities	2.0
Current liabilities held-for-sale	$	705.3

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021~~March 31, 2022 (Unaudited)

segment and all of it is expected to be deductible for tax purposes. The financial impact of this acquisition, including pro forma financial results, was immaterial to the Company's consolidated results for the six months ended June 30, 2021.

~~Deferred and Contingent Payments Related to Prior Year Acquisitions~~

Some of the purchase agreements related to prior year acquisitions included additional payments over a specified period, including deferred and contingent payments based on certain conditions and performance. At June 30, 2021, we had deferred and estimated contingent consideration with a fair value of approximately $1.9 million and $36.2 million, respectively (based on Level 3 inputs), which are reported in "Other accrued expenses" in the accompanying consolidated balance sheet. At June 30, 2021, the aggregate maximum potential payment remaining for undiscounted deferred payments and undiscounted contingent payments related to these acquisitions could approximate $47.7 million. For the six months ended June 30, 2021, we made contingent consideration payments related to the CarsOnTheWeb acquisition of $21.3 million. For the three and six months ended June 30, 2021, adjustments to estimated contingent consideration associated with the CarsOnTheWeb and TradeRev acquisitions increased contingent consideration and impacted "Other (income) expense, net" by approximately $4.5 million and $15.7 million, respectively, in the aggregate.


	December 31, 2021
Assets
Cash and cash equivalents	$	12.4
Trade receivables, net of allowances	179.3
Inventory	15.7
Other current assets	5.8
Current assets held-for-sale	213.2
Goodwill	980.5
Customer relationships, net of accumulated amortization	84.2
Other intangible assets, net of accumulated amortization	32.6
Operating lease right-of-use assets	231.0
Property and equipment, net of accumulated depreciation	435.7
Other assets	2.6
Non-current assets held-for-sale	1,766.6
Total assets held-for-sale	$	1,979.8

Liabilities
Accounts payable	$	271.7
Accrued employee benefits and compensation expenses	27.2
Other accrued expenses	35.3
Current portion of operating lease liabilities	27.5
Current liabilities held-for-sale	361.7
Deferred income tax liabilities	82.5
Operating lease liabilities	229.0
Other liabilities	2.3
Non-current liabilities held-for-sale	313.8
Total liabilities held-for-sale	$	675.5

Note 3—Stock and Stock-Based Compensation Plans

~~We adopted the~~The KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan ~~in December 2009, which was amended and restated in June 2014 and further amended and restated in June 2021~~ ("Omnibus Plan")~~, and now provides that the maximum number of shares of the Company's common stock that may be issued pursuant to awards under the Omnibus Plan is approximately 7.3 million. The Omnibus Plan~~ is intended to provide equity and/or cash-based awards to our executive officers and key employees. Our stock-based compensation expense includes expense associated with KAR Auction Services, Inc. service-based options ("service options"), market-based options ("market options"), performance-based restricted stock units ("PRSUs") and service-based restricted stock units ("RSUs"). We have determined that the KAR Auction Services, Inc. service options, market options, PRSUs and RSUs should be classified as equity awards.

The following table summarizes our stock-based compensation expense by type of award (in millions):

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Service options $ 0.3 $ 0 $ 0.6 $ 0
Market options 1.7 0 2.8 0
PRSUs 0.9 0.8 3.1 2.3
RSUs 1.6 1.8 3.4 5.3
Total stock-based compensation expense $ 4.5 $ 2.6 $ 9.9 $ 7.6

~~Service Options~~

In the first six months of 2021, we granted approximately 1.0 million service options with a weighted average exercise price of $16.26 per share to certain executive officers of the Company. The service options have a life of ten years and vest in equal annual installments on each of the first 4 anniversaries of the grant dates. The weighted average fair value of the service options granted in the first six months of 2021 was $3.96 per share. The fair values of the service options granted were estimated on the dates of grant using the Black-Scholes option pricing model with an expected life of 6.25 years, a weighted average expected volatility of 36.46%, a weighted average expected dividend yield of 3.8% and a weighted average risk free interest rate of 1.05%.

~~Market Options~~

In the first six months of 2021, we granted approximately 4.0 million market options with a weighted average exercise price of $16.26 per share to certain executive officers of the Company. The market options have a life of ten years and have a service component along with an additional market component. The market options become eligible to vest and become exercisable in equal increments, each upon the later to occur of (i) the first 4 anniversaries of the grant dates, respectively, and (ii) for each respective 25% increment, the attainment of KAR's closing stock price at or above $5, $10, $15 and $20 over each respective exercise price, for 20 consecutive trading days.


	Three Months Ended March 31,
	2022		2021
PRSUs	$	1.9	$	2.0
RSUs	1.4		1.4
Service options	0.2		0.3
Market options	1.5		1.0
Total stock-based compensation expense	$	5.0	$	4.7

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021~~March 31, 2022 (Unaudited)

The weighted average fair value of the market options granted in the first six months of 2021 was $3.90 per share. The fair value and requisite service period of the market options was developed with a Monte Carlo simulation using a multivariate Geometric Brownian Motion with a drift equal to the risk free rate.

PRSUs and RSUs

In the first ~~six months~~quarter of ~~2021,~~2022, we granted a target amount of approximately ~~0.6~~0.5 million PRSUs to certain executive officers ~~and other employees~~ of the Company. ~~Approximately 0.4 million of the~~The PRSUs granted in ~~2021~~2022 vest if and to the extent that the Company's three-year cumulative operating adjusted net income per share attains certain specified ~~goals and approximately 0.2 million of the PRSUs vest if and to the extent that certain operational goals are attained by year-end 2023 or 2024.~~goals. In addition, approximately ~~0.5~~0.3 million RSUs were granted to certain management members of the Company. The RSUs are contingent upon continued employment and generally vest in 3 equal annual installments. The weighted average grant date fair value of the PRSUs and the RSUs was ~~$15.40~~$18.46 per share and ~~$13.90~~$18.45 per share, respectively, which was determined using the closing price of the Company's common stock on the dates of grant.

Share Repurchase Program

In October 2019, the board of directors authorized a repurchase of up to $300 million of the Company's outstanding common stock, par value $0.01 per share, through October 30, 2021. In October 2021, the board of directors authorized an extension of the October 2019 share repurchase program through December 31, 2022. At March 31, 2022, approximately $109.0 million of the Company's outstanding common stock remained available for repurchase under the 2019 share repurchase program. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions. This program does not oblige the Company to repurchase any dollar amount or any number of shares under the authorization, and the program may be suspended, discontinued or modified at any time, for any reason and without notice. No shares of common stock were repurchased during the three months ended March 31, 2022. For the ~~six~~three months ended ~~June 30,~~March 31, 2021, we repurchased and retired ~~10,847,800~~5,219,800 shares of common stock in the open market at a weighted average price of ~~$16.66~~$15.47 per share, under the October 2019 authorization. For the three months ended June 30, 2021, we repurchased and retired 5,628,000 shares of common stock in the open market at a weighted average price of $17.77 per share, aggregating $100 million. NaN shares of common stock were repurchased during the six months ended June 30, 2020.

Note 4—Net Income (Loss) from Continuing Operations Per Share

The following table sets forth the computation of net income ~~(loss)~~from continuing operations per share (in millions except per share amounts):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net income (loss)		$	11.5	$	(32.3)	$	62.4	$	(29.5)
Net income (loss) from continuing operations										Net income (loss) from continuing operations	$	(8.4)	$	26.2
Series A Preferred Stock dividends	Series A Preferred Stock dividends	(10.2)		(2.1)		(20.2)		(2.1)		Series A Preferred Stock dividends	(10.7)		(10.0)
Net income attributable to participating securities	Net income attributable to participating securities	(0.3)		0		(8.8)		0		Net income attributable to participating securities	—		(3.3)
Net income attributable to common stockholders		$	1.0	$	(34.4)	$	33.4	$	(31.6)
Net income (loss) attributable to common stockholders										Net income (loss) attributable to common stockholders	$	(19.1)	$	12.9
Weighted average common shares outstanding	Weighted average common shares outstanding	122.7		129.3		125.8		129.2		Weighted average common shares outstanding	121.4		129.0
Effect of dilutive stock options and restricted stock awards	Effect of dilutive stock options and restricted stock awards	0.5		0		0.6		0		Effect of dilutive stock options and restricted stock awards	—		0.7
Weighted average common shares outstanding and potential common shares	Weighted average common shares outstanding and potential common shares	123.2		129.3		126.4		129.2		Weighted average common shares outstanding and potential common shares	121.4		129.7
Net income (loss) per share
Net income (loss) from continuing operations per share										Net income (loss) from continuing operations per share
Basic	Basic	$	0.01	$	(0.27)	$	0.27	$	(0.24)	Basic	$	(0.16)	$	0.10
Diluted	Diluted	$	0.01	$	(0.27)	$	0.26	$	(0.24)	Diluted	$	(0.16)	$	0.10

~~Prior to June 2020, basic~~The Company includes participating securities (Series A Preferred Stock) in the computation of net income ~~(loss)~~from continuing operations per share ~~was calculated by dividing~~pursuant to the two-class method. The two-class method of calculating net income byfrom continuing operations per share is an allocation method that calculates earnings per share for common stock and participating securities. Under the ~~weighted average number~~two-class method, total dividends provided to the holders of ~~outstanding common shares for~~ the ~~period. Diluted~~Series A Preferred Stock and undistributed earnings allocated to participating securities are subtracted from net income ~~(loss) per share was calculated consistent with basic~~from continuing operations in determining net income ~~(loss) per~~attributable to common stockholders. During periods of net loss, no effect is given to the participating securities because they do not share ~~including~~in the ~~effect~~losses of ~~dilutive unissued common shares related to our stock-based employee compensation program.~~ the Company.

The effect of stock options and restricted stock on net income ~~(loss)~~from continuing operations per share-diluted is determined through the application of the treasury stock method, whereby net proceeds received by the Company based on assumed exercises are hypothetically used to repurchase our common stock at the average market price during the period. As a result of the spin-off, there are IAA employees who hold KAR equity awards included in the calculation. Stock options that would have

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021~~March 31, 2022 (Unaudited)

~~there are IAA employees who hold KAR equity awards included in the calculation. Stock options that would have~~ an anti-dilutive effect on net income ~~(loss)~~from continuing operations per diluted share, unexercisable market options and PRSUs subject to performance conditions which have not yet been satisfied are excluded from the calculations. ~~Approximately 0.6 million~~NaN service options were excluded from the calculation of diluted net income ~~(loss)~~from continuing operations per share for the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2021. All of the market options were excluded from the calculation of diluted net income ~~(loss)~~from continuing operations per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021. Approximately ~~1.1~~0.8 million PRSUs were excluded from the calculation of diluted net income ~~(loss)~~from continuing operations per share for the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2021. Total options outstanding at ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~5.5~~5.7 million and ~~0.7~~2.7 million, respectively. In accordance with U.S. GAAP, no potential common shares were included in the computation of diluted net income from continuing operations per share for the three ~~or six~~ months ended ~~June 30, 2020~~March 31, 2022 because to do so would have been anti-dilutive based on the period ~~losses.~~

Beginning in June 2020, the Company also includes participating securities (Series A Preferred Stock) in the computation of net income (loss) per share pursuant to the two-class method. The two-class method of calculating net income per share is an allocation method that calculates earnings per share for common stock and participating securities. Under the two-class method, total dividends provided to the holders of the Series A Preferred Stock and undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. During periods of net loss ~~no effect is given to the participating securities because they do not share in the losses of the Company.~~from continuing operations.

Note 5—Finance Receivables and Obligations Collateralized by Finance Receivables

AFC sells the majority of its U.S. dollar denominated finance receivables on a revolving basis and without recourse to a wholly-owned, bankruptcy remote, consolidated, special purpose subsidiary ("AFC Funding Corporation"), established for the purpose of purchasing AFC's finance receivables. A securitization agreement allows for the revolving sale by AFC Funding Corporation to a group of bank purchasers of undivided interests in certain finance receivables subject to committed liquidity. The agreement expires on January 31, 2024. AFC Funding Corporation had committed liquidity of ~~$1.60~~$1.70 billion for U.S. finance receivables at ~~June 30, 2021.~~March 31, 2022.

We also have an agreement for the securitization of Automotive Finance Canada Inc.'s ("AFCI") receivables, which expires on January 31, 2024. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$~~175~~225 million at ~~June 30, 2021.~~March 31, 2022. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings.

The following tables present quantitative information about delinquencies, credit loss charge-offs less recoveries ("net credit losses") and components of securitized financial assets and other related assets managed. For purposes of this illustration, delinquent receivables are defined as receivables 31 days or more past due.

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021~~March 31, 2022 (Unaudited)

The following is a summary of the changes in the allowance for credit losses related to finance receivables (in millions):

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020, $2,058.3~~2021, $2,710.9 million and ~~$1,865.3~~$2,482.2 million, respectively, of finance receivables and a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables served as security for the obligations collateralized by finance receivables. The amount of the cash reserve depends on circumstances which are set forth in the securitization agreements. Obligations collateralized by finance receivables consisted of the ~~following:~~following (in millions):

Proceeds from the revolving sale of receivables to the bank facilities are used to fund new loans to customers. AFC, AFC Funding Corporation and AFCI must maintain certain financial covenants including, among others, limits on the amount of debt AFC and AFCI can incur, minimum levels of tangible net worth, and other covenants tied to the performance of the finance receivables portfolio. The securitization agreements also incorporate the financial covenants of our Credit Facility. At ~~June 30, 2021,~~March 31, 2022, we were in compliance with the covenants in the securitization agreements.

Note 6—Long-Term Debt

Long-term debt consisted of the following (in millions):

*The interest rates presented in the table above represent the rates in place at ~~June 30, 2021.~~March 31, 2022.

On September 19, 2019, we entered into the seven-year, $950 million Term Loan B-6 and the $325 million, five-year Revolving Credit Facility. The outstanding balance on Term Loan B-6 is classified as current debt at March 31, 2022, net of unamortized debt issuance costs/discounts of approximately $7.8 million, as the Company expects to repay the debt with the net

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021~~March 31, 2022 (Unaudited)

proceeds from the closing of the Transaction. Under the Credit Agreement, net cash proceeds from the Transaction must be used to repay Term Loan B-6 shortly after closing.

The Credit Facility is available for letters of credit, working capital, permitted acquisitions and general corporate purposes. The Revolving Credit Facility also includes a $50 million sub-limit for issuance of letters of credit and a $60 million sub-limit for swingline loans. The Company also pays a commitment fee between 25 to 35 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility based on the Company’s Consolidated Senior Secured Net Leverage Ratio, from time to time. The interest rate applicable to Term Loan B-6 was ~~2.38%~~2.75% at ~~June 30, 2021.~~March 31, 2022.

The obligations of the Company under the Credit Facility are guaranteed by certain of our domestic subsidiaries (the "Subsidiary Guarantors") and are secured by substantially all of the assets of the Company and the Subsidiary Guarantors, including but not limited to: (a) pledges of and first priority ~~perfected~~ security interests in 100% of the equity interests of certain of the Company's and the Subsidiary Guarantors' domestic subsidiaries and 65% of the equity interests of certain of the Company's and the Subsidiary Guarantors' first tier foreign subsidiaries and (b) ~~perfected~~ first priority security interests in substantially all other tangible and intangible assets of the Company and each Subsidiary Guarantor, subject to certain exceptions. The Credit Agreement contains affirmative and negative covenants that we believe are usual and customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with our affiliates. The Credit Agreement also requires us to maintain a Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement), not to exceed 3.5 as of the last day of each fiscal quarter, if there are revolving loans outstanding. We were in compliance with the applicable covenants in the Credit Agreement at ~~June 30, 2021.~~March 31, 2022.

~~There~~As of March 31, 2022, $101.0 million was drawn on the Revolving Credit Facility and there were 0no borrowings outstanding on the Revolving Credit Facility at ~~June 30, 2021 or~~ December 31, ~~2020.~~2021. We had related outstanding letters of credit in the aggregate amount of ~~$29.7~~$27.3 million and ~~$28.5~~$27.6 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which reduce the amount available for borrowings under the Revolving Credit Facility.

The Company expects to use any remaining proceeds from the Transaction after the repayment of Term Loan B-6 to redeem the senior notes within 365 days of the close of the Transaction. The terms of the senior notes specify that excess proceeds must be reinvested or used to pay down a portion of the senior notes. At March 31, 2022, the senior notes are classified as non-current debt as the Company is not obligated to repay within the next year.

European Lines of Credit

~~COTW~~ADESA Europe has lines of credit aggregating ~~$35.6~~$33.2 million (€30 million). The lines of credit had an aggregate ~~$13.2~~$14.6 million and ~~$14.8~~$6.8 million of borrowings outstanding at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The lines of credit are secured by certain inventory and receivables at ~~COTW~~ADESA Europe subsidiaries.

As of ~~June 30, 2021,~~March 31, 2022, the estimated fair value of our long-term debt amounted to ~~$1,907.5~~$1,994.8 million. The estimates of fair value were based on broker-dealer quotes (Level 2 inputs) for our debt as of ~~June 30, 2021.~~March 31, 2022. The estimates presented on long-term financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.

Note 7—Derivatives

We are exposed to interest rate risk on our variable rate borrowings. Accordingly, interest rate fluctuations affect the amount of interest expense we are obligated to pay. We have used interest rate derivatives with the objective of managing exposure to interest rate movements, thereby reducing the effect of interest rate changes and the effect they could have on future cash flows. Currently, interest rate swap agreements are used to accomplish this objective.

In January 2020, we entered into 3 pay-fixed interest rate swaps with an aggregate notional amount of $500 million to swap variable rate interest payments under our term loan for fixed interest payments bearing a weighted average interest rate of 1.44%, for a total interest rate of 3.69%. The interest rate swaps have a five-year term, each maturing on January 23, 2025.

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

March 31, 2022 (Unaudited)

We ~~have~~originally designated the interest rate swaps as cash flow hedges. The changes in the fair value of the interest rate swaps that are included in the assessment of hedge effectiveness are recorded as a component of "Accumulated other comprehensive income." For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, the Company recorded an unrealized gain on the interest rate swaps of $9.1 million, net of tax of $3.0 million, in "Accumulated other comprehensive income." For the three months ended March 31, 2021, the Company recorded an unrealized gain on the interest rate swaps of ~~$0.3~~$6.7 million, net of tax of ~~$0.1~~$2.2 million, and $7.0 million, net of tax of $2.3 million, respectively, in "Accumulated other comprehensive income." For the three and six months ended June 30, 2020, the Company recorded an unrealized loss on the interest rate swaps of $3.6 million, net of tax of $1.1 million, and $22.6 million, net of tax of $7.3 million, respectively, in "Accumulated other comprehensive income." The earnings impact of the interest rate derivatives designated as cash flow hedges is recorded upon the recognition of the interest related to the hedged debt.

~~Table~~ In February 2022, we discontinued hedge accounting as we concluded that the forecasted interest rate payments were no longer probable of ~~Contents~~

~~KAR Auction Services, Inc.~~

~~Condensed Notes~~occurring in consideration of the Transaction and expected repayment of Term Loan B-6. As a result, the increase in the fair value of the swaps from the time of hedge accounting discontinuance to ~~Consolidated Financial Statements (Continued)~~

~~June 30, 2021 (Unaudited)~~

March 31, 2022 was recognized as an $8.7 million unrealized gain in "Interest expense" in the consolidated statement of income.

When derivatives are used, we are exposed to credit loss in the event of non-performance by the counterparties; however, non-performance is not anticipated and was considered immaterial to the fair value estimates. ASC 815, Derivatives and Hedging, requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks (based on significant observable inputs - Level 2 inputs). The following table presents the fair value of our interest rate derivatives included in the consolidated balance sheets for the periods presented (in millions):

Liability Derivatives
June 30, 2021 December 31, 2020
Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value Balance Sheet Location Fair Value
2020 Interest rate swaps Other liabilities $ 16.6 Other liabilities $ 25.9

Asset/Liability Derivatives

March 31, 2022

December 31, 2021

Derivatives Designated as Hedging Instruments

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

2020 Interest rate swaps

Other assets

N/A

Other liabilities

7.5

Derivatives Not Designated as Hedging Instruments

2020 Interest rate swaps

Other assets

13.3

Other liabilities

N/A

Note 8—Other (Income) Expense, Net

Other (income) expense, net consisted of the following (in millions):

Fair Value Measurement of Investments

The Company invests in certain early-stage automotive companies and funds that relate to the automotive industry. We believe these investments have resulted in the expansion of relationships in the vehicle remarketing industry. Realized gains on these investments were ~~$0.2~~$0.0 million and ~~$17.2 million for the three and six months ended June 30, 2021, respectively. The Company had a reduction in unrealized gains of $11.9~~$17.0 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, respectively. The Company had unrealized losses of $3.0 million for the three months ended March 31, 2022 and unrealized gains of ~~$31.6~~$43.5 million for the ~~six~~three months ended ~~June 30,~~March 31, 2021.

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

March 31, 2022 (Unaudited)

ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A small portion of finance receivables for one entity were converted to investment securities during the first quarter of 2021. This entity became publicly traded during the first quarter of 2021 and now has a readily determinable fair value. As of ~~June 30, 2021,~~March 31, 2022, the fair value of investment securities are based on quoted market prices for identical assets (Level 1 of the fair value hierarchy) and approximated ~~$39.1~~$4.5 million. The net unrealized ~~gain~~loss on these investment securities was ~~$31.6~~$3.0 million at ~~June 30, 2021.~~March 31, 2022. The remaining investments held of ~~$21.5~~$26.2 million do not have readily determinable fair values and the Company has elected to apply the measurement alternative to these investments and present them at cost. Investments are reported in "Other assets" in the accompanying consolidated balance sheets. Realized and unrealized gains and losses are reported in "Other (income) expense, net" in the consolidated statements of income.

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~~KAR Auction Services, Inc.~~

~~Condensed Notes to Consolidated Financial Statements (Continued)~~

~~June 30, 2021 (Unaudited)~~

Note 9—Commitments and Contingencies

We are involved in litigation and disputes arising in the ordinary course of business, such as actions related to injuries; property damage; handling, storage or disposal of vehicles; environmental laws and regulations; and other litigation incidental to the business such as employment matters and dealer disputes. Management considers the likelihood of loss or the incurrence of a liability, as well as the ability to reasonably estimate the amount of loss, in determining loss contingencies. We accrue an estimated loss contingency when it is probable that a liability has been incurred and the amount of loss (or range of possible losses) can be reasonably estimated. Management regularly evaluates current information available to determine whether accrual amounts should be adjusted. Accruals for contingencies including litigation and environmental matters are included in "Other accrued expenses" at undiscounted amounts and exclude claims for recoveries from insurance or other third parties. These accruals are adjusted periodically as assessment and remediation efforts progress, or as additional technical or legal information becomes available. If the amount of an actual loss is greater than the amount accrued, this could have an adverse impact on our operating results in that period. Such matters are generally not, in the opinion of management, likely to have a material adverse effect on our financial condition, results of operations or cash flows. Legal fees are expensed as incurred. There has been 0no significant change in the legal and regulatory proceedings which were disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Note 10—Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consisted of the following (in millions):

Note 11—Segment Information

ASC 280, Segment Reporting, requires reporting of segment information that is consistent with the manner in which the chief operating decision maker operates and views the Company. Our operations are grouped into 2 operating segments: ADESA Auctions and AFC, which also serve as our reportable business segments. These reportable business segments offer different services and have fundamental differences in their operations.

~~Prior to 2020,~~ Beginning in the ~~costs and expenses~~first quarter of 2022, results of the ~~holding company were reported separately from the reportable segments. Due to the spin-off of IAA in 2019 and the Company's transition from~~ADESA U.S physical ~~marketplaces to digital marketplaces, the Company has simplified its business and operations. Corporate expenses, previously~~auctions are now reported as holding company expenses, are now included in the segments. Certain known expenses (e.g., information technology costs) were recorded directly to the ADESA and AFC segments. Interest expense previously reported by the holding company has been recorded in the ADESA segment. The residual shared services expenses were recorded at ADESA and allocated to AFC based on revenue and employee headcount. Holding company amounts reported in the segmentdiscontinued operations (see Note 2). Segment results ~~in the consolidated financial statements~~for prior ~~to December 31, 2020~~periods have been reclassified to conform towith the ~~current~~new presentation.

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021~~March 31, 2022 (Unaudited)

Financial information regarding our reportable segments is set forth below as of and for the three months ended ~~June 30, 2021~~March 31, 2022 (in millions):

Financial information regarding our reportable segments is set forth below as of and for the three months ended ~~June 30, 2020~~March 31, 2021 (in millions):

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KAR Auction Services, Inc.

Condensed Notes to Consolidated Financial Statements (Continued)

~~June 30, 2021 (Unaudited)~~

~~Financial information regarding our reportable segments is set forth below for the six months ended June 30, 2021~~ ~~(in millions)~~:

ADESA
Auctions AFC Consolidated
Operating revenues $ 1,032.6 $ 134.4 $ 1,167.0
Operating expenses
Cost of services (exclusive of depreciation and amortization) 636.4 27.2 663.6
Selling, general and administrative 271.6 17.6 289.2
Depreciation and amortization 87.5 4.9 92.4
Total operating expenses 995.5 49.7 1,045.2
Operating profit 37.1 84.7 121.8
Interest expense 43.4 18.7 62.1
Other (income) expense, net (3.0) (32.4) (35.4)
Intercompany expense (income) 0.2 (0.2) 0
Income (loss) before income taxes (3.5) 98.6 95.1
Income taxes 7.5 25.2 32.7
Net income (loss) $ (11.0) $ 73.4 $ 62.4

~~Financial information regarding our reportable segments is set forth below for the six months ended June 30, 2020~~ ~~(in millions)~~:

ADESA
Auctions AFC Consolidated
Operating revenues $ 929.2 $ 135.3 $ 1,064.5
Operating expenses
Cost of services (exclusive of depreciation and amortization) 587.9 41.8 629.7
Selling, general and administrative 256.1 18.6 274.7
Depreciation and amortization 87.7 6.5 94.2
Goodwill and other intangibles impairment 29.8 0 29.8
Total operating expenses 961.5 66.9 1,028.4
Operating profit (loss) (32.3) 68.4 36.1
Interest expense 46.1 22.8 68.9
Other (income) expense, net (0.6) (0.1) (0.7)
Intercompany expense (income) 1.0 (1.0) 0
Income (loss) before income taxes (78.8) 46.7 (32.1)
Income taxes (14.7) 12.1 (2.6)
Net income (loss) $ (64.1) $ 34.6 $ (29.5)

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~~KAR Auction Services, Inc.~~

~~Condensed Notes to Consolidated Financial Statements (Continued)~~

~~June 30, 2021~~March 31, 2022 (Unaudited)

Geographic Information

Our foreign operations include Canada, Mexico, Continental Europe and the U.K. Approximately ~~56%~~64% and ~~54%~~52% of our foreign operating revenues were from Canada for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~respectively, and approximately 63% and 59% of our foreign operating revenues were from Canada for the three and six months ended June 30, 2020,~~ respectively. Most of the remaining foreign operating revenues were generated from Continental Europe. Information regarding the geographic areas of our operations is set forth below (in millions):

Note 12—Subsequent Event

On April 27, 2022, the board of directors authorized an increase in the size of the Company’s $300 million share repurchase program by an additional $200 million and an extension of the share repurchase program through December 31, 2023. The share repurchase program was originally approved by the board of directors in October 2019. With the increase, and giving effect to the Company’s previous repurchases, approximately $309.0 million of the Company’s outstanding common stock, par value $0.01 per share, remains available for repurchases under the share repurchase program. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions. This program does not oblige the Company to repurchase any dollar amount or any number of shares under the authorization, and the program may be suspended, discontinued or modified at any time, for any reason and without notice.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made in this report on Form 10-Q that are not historical facts (including, but not limited to, expectations, estimates, assumptions and projections regarding the industry, business, future operating results, potential acquisitions and anticipated cash requirements) may be forward-looking statements. Words such as "should," "may," "will," "can," "of the opinion," "confident," "anticipates," "expects," "intends," "plans," "believes," "seeks," ~~"estimates"~~"estimates," "continues," "outlook," initiatives," "goals," "opportunities" and similar expressions identify forward-looking statements. Such statements, including statements regarding the potential impacts of the COVID-19 pandemic; our future growth; anticipated cost savings, revenue increases, credit losses and capital expenditures; contractual obligations; dividend declarations and payments; common stock repurchases; tax rates and assumptions; strategic initiatives, greenfields and acquisitions; our competitive position and retention of customers; and our continued investment in information technology, are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Risk Factors" in this Quarterly Report on Form 10-Q and Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed on February ~~18, 2021,~~23, 2022, and those described from time to time in our future reports filed with the Securities and Exchange Commission. Many of these risk factors are outside of our control, and as such, they involve risks which are not currently known that could cause actual results to differ materially from those discussed or implied herein. The forward-looking statements in this document are made as of the date on which they are made and we do not undertake to update our forward-looking statements.

Pending Sale of ADESA U.S. Physical Auction Business and Discontinued Operations

In February 2022, the Company announced that it had entered into a definitive agreement with Carvana Group, LLC (“Carvana”) and Carvana Co., pursuant to which Carvana will acquire the ADESA U.S. physical auction business from KAR (the “Transaction”). The Transaction is valued at $2.2 billion and includes all auction sales, operations and staff at ADESA’s U.S. vehicle logistic centers and use of the ADESA.com marketplace in the U.S. The Transaction is subject to customary closing conditions and is expected to close in May 2022. In connection with the Transaction, the Company and Carvana expect to enter into various agreements to provide a framework for their relationship after the Transaction, including a transition services agreement and a commercial agreement. In addition, KAR will continue to own the ADESA tradename and the ADESA U.S. physical auctions will continue to utilize the tradename, which has an indefinite life.

The Company has classified the ADESA U.S. physical auctions as held-for-sale in its consolidated balance sheets, based on management’s intention to sell the business. Goodwill was allocated to the ADESA U.S. physical auctions based on relative fair value. The financial results of the ADESA U.S. physical auction business have been accounted for as discontinued operations for all periods presented. The business was formerly included in the Company’s ADESA Auctions reportable segment. The results presented in the "Results of Operations" discussion below only include continuing operations and do not include the results of the ADESA U.S. physical auction business.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Although governmental restrictions that were imposed ~~in 2020~~at the outset of the pandemic to reduce the spread of COVID-19 have since been lifted or scaled back in many jurisdictions, increases in new COVID-19 cases, including ~~more contagious~~new variants, have resulted in the reimposition of restrictions in certain jurisdictions, and may lead to other restrictions being imposed. The COVID-19 pandemic and the related preventative measures taken to help slow the spread have caused, and may continue to cause, significant volatility, uncertainty and economic disruption.

In response to these measures and for the protection of our employees and customers, during 2020 we implemented several measures to help secure our business, including but not limited to furloughs, prohibiting non-essential business travel, suspending non-essential services provided by certain third parties at our locations, delaying or canceling capital projects at our on-premise marketplace locations and suspending the Company's quarterly dividend.

In addition, on March 20, 2020, we temporarily suspended on-premise sale operations across North America, including Simulcast-only sales, and resumed operation of Simulcast-only sales in select markets on April 6, 2020. We subsequently continued to expand the locations offering vehicles for sale via ADESA Simulcast, DealerBlock and Simulcast+, with all ADESA auction locations in the U.S. and Canada offering vehicles for sale by the end of the second quarter of 2020.

We also took advantage of legislation introduced to assist companies during the pandemic. In the first six months of 2021, we recorded a total of approximately $5.8 million claimed under the Canada Emergency Wage Subsidy. These credits partially offset salaries recorded in Canada. We will continue to monitor and assess the impact the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and similar legislation in other countries may have on our business and financial results.

The automotive industry has experienced unprecedented market conditions during the pandemic, including a decline in new vehicle ~~inventory~~production resulting from the shortage of semiconductors. This reduction in supply of new vehicles has caused increased new and used vehicle prices, as well as increased demand for used vehicles. More lessees and dealers are therefore purchasing vehicles at residual value, thus decreasing the number of off-lease vehicles coming to auction. Further, government support and loan accommodations have resulted in fewer repossessed vehicles coming to auction. These factors have contributed to our commercial vehicle volumes declining in ~~2021.~~2021 and 2022 and are expected to continue for the foreseeable future.

While we ~~have developed and implemented and~~ continue to develop and implement health and safety and return-to-workplace protocols, business continuity plans and crisis management protocols in an effort to try to mitigate the negative impact of COVID-19 on our employees, customers and our business, the extent of the impact of the pandemic on our business and financial results will continue to depend on future developments that are uncertain and unpredictable.

The broader implications for our business and results of operations remain uncertain and will depend on many factors outside our control, including, without limitation, the duration and severity of the COVID-19 pandemic, the degree to which governmental restrictions are relaxed or reimposed, the length of time it takes for normal economic and operating conditions to resume, the ~~number and effectiveness~~impact of vaccines and numerous other uncertainties. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business.

We provide whole car auction services in North America and Europe. Our business is divided into two reportable business segments, each of which is an integral part of the vehicle remarketing industry: ADESA Auctions and AFC.

•The ADESA Auctions segment serves a domestic and international customer base through digital marketplaces for wholesale vehicles ~~supported by more than 70~~and 14 vehicle logistics center locations across ~~North America~~Canada that are developed and strategically located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely or in person. ~~Through ADESA.com, ADESA offers~~Powered with software developed by Openlane, comprehensive private label remarketing solutions are offered to automobile manufacturers, captive finance companies and other institutions to offer vehicles via the Internet prior to arrival at on-premise marketplaces. Vehicles sold on ADESA's digital platforms are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to franchise and independent used vehicle dealers. ADESA also provides value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services. ADESA also includes BacklotCars, an app and web-based dealer-to-dealer wholesale vehicle platform utilized in the United States, CARWAVE, an online dealer-to-dealer marketplace in the United States, TradeRev, an online automotive remarketing platform in Canada where dealers can launch and participate in real-time vehicle auctions at any time, ADESA Remarketing Limited, an online whole car vehicle remarketing business in the United Kingdom and ADESA Europe, ~~(formerly known as CarsOnTheWeb),~~ an online wholesale vehicle auction marketplace in Continental Europe.

•As noted above, the ADESA segment results no longer include the 56 ADESA U.S. physical auction locations. These locations sold approximately 212,000 and 295,000 vehicles in the three months ended March 31, 2022 and 2021, respectively.

•The AFC segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers throughout the United States and Canada. ~~Prior to December 2020,~~

Beginning in the ~~Company also sold vehicle service contracts through Preferred Warranties, Inc. ("PWI").~~

~~Prior to 2020, the costs and expenses~~first quarter of 2022, results of the ~~holding company were reported separately from the reportable segments. Due to the spin-off of IAA in 2019 and the Company's transition from~~ADESA U.S physical ~~marketplaces to digital marketplaces, the Company has simplified its business and operations. Corporate expenses, previously~~auctions are now reported as holding company expenses, are now included in the segments. Certain known expenses (e.g., information technology costs) were recorded directly to the ADESA and AFC segments. Interest expense previously reported by the holding company has been recorded in the ADESA segment. The residual shared services expenses were recorded at ADESA and allocated to AFC based on revenue and employee headcount. Holding company amounts reported in the segmentdiscontinued operations (see Note 2). Segment results ~~in the consolidated financial statements~~for prior ~~to December 31, 2020~~periods have been reclassified to conform towith the ~~current~~new presentation.

~~Used vehicles sold in~~We believe the North ~~America through whole car auctions, including off-premise volumes~~American wholesale used vehicle marketplace has a total addressable market of approximately 22 million vehicles. This wholesale used vehicle marketplace consists of the dealer-to-dealer market (franchise and ~~mobile application volumes, were approximately 10.3 million~~independent dealers that both buy and ~~12.0 million in 2020~~sell vehicles) and ~~2019, respectively. Data for~~ the whole car auction industry is collected by the NAAA through an annual survey. The NAAA industry volumes collected by the annual survey do not include off-premise volumes or mobile application volumes (e.g., Openlane, TradeRev, BacklotCars and their respective competitors), but we have included these volumes in our totals. In addition to the traditional whole car auctioncommercial market ~~and off-premise venues described above, we~~(commercial sellers). We believe ~~mobile~~digital applications, such as ~~TradeRev~~BacklotCars, CARWAVE and ~~BacklotCars,~~TradeRev, may provide an opportunity to expand our total addressable market for dealer-to-dealer transactions to ~~as much as~~ 15 million units from approximately 5 million units in 2019. ~~TradeRev~~Commercial seller vehicles are estimated at approximately 8 million vehicles per year.

BacklotCars, CARWAVE and ~~BacklotCars~~TradeRev sold approximately ~~316,000~~550,000 vehicles in the North American digital dealer-to-dealer marketplace for the year ended December 31, ~~2020,~~2021, compared with approximately ~~210,000~~398,000 vehicles for the year ended December 31, ~~2019. TradeRev and BacklotCars sold approximately 119,000 vehicles in the digital dealer-to-dealer marketplace for~~2020. For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~compared with~~vehicles sold by these companies in the North American digital dealer-to-dealer marketplace were approximately ~~72,000 vehicles for the three months ended June 30, 2020.~~133,000 and 125,000, respectively. This volume data includes vehicles sold by CARWAVE prior to its acquisition in October 2021 and vehicles sold by BacklotCars prior to its acquisition in November 2020. ~~For~~The supply chain issues and current market conditions facing the ~~six months ended June 30, 2021 and 2020, vehicles sold by these companies in~~automotive industry, including the ~~digital dealer-to-dealer marketplace were approximately 219,000 and 127,000, respectively. The COVID-19 pandemic has~~disruption of new vehicle production, have had a material impact on the whole car auction industry and we are unable to estimate future volumes.

AFC works with independent used vehicle dealers to improve their results by providing a comprehensive set of business and financial solutions that ~~leverages~~leverage its local presence of branches and in-market representatives, industry experience and scale, as well as KAR affiliations. AFC's North American dealer base was comprised of approximately ~~13,600~~14,500 dealers in ~~2020,~~2021, and loan transactions, which includes both loans paid off and loans curtailed, were approximately ~~1.5~~1.4 million in ~~2020.~~2021.

Key challenges for the independent used vehicle dealer include demand for used vehicles, disruptions in pricing of used vehicle inventory, access to consumer financing and increased used car retail activity of franchise and public dealerships (most of which do not utilize AFC or its competitors for floorplan financing)~~, as well as the ability to operate in locations experiencing pandemic shelter-in-place orders.~~. These same challenges, to the extent they occur, could result in a material negative impact on AFC's results of operations. A significant decline in used vehicle sales would result in a decrease in consumer auto loan originations and an increased number of dealers defaulting on their loans. In addition, volatility in wholesale vehicle pricing impacts the value of recovered collateral on defaulted loans and the resulting severity of credit losses at AFC. A decrease in wholesale used car pricing could lead to increased losses if dealers are unable to satisfy their obligations.

The volume of vehicles sold through our auctions generally fluctuates from quarter-to-quarter. This seasonality is caused by several factors including weather, the timing of used vehicles available for sale from selling customers, holidays, and the seasonality of the retail market for used vehicles, which affects the demand side of the auction industry. Used vehicle auction volumes tend to decline during prolonged periods of winter weather conditions. As a result, revenues and operating expenses related to volume will fluctuate accordingly on a quarterly basis. The fourth calendar quarter typically experiences lower used vehicle auction volume as well as additional costs associated with the holidays and winter weather.

Sources of Revenues and Expenses

Our revenue is derived from auction fees and various on-premise and off-premise services, and from dealer financing fees, interest income and other revenue at AFC. Although auction revenues primarily include the auction services and related fees, our related receivables and payables include the gross value of the vehicles sold.

Our operating expenses consist of cost of services, selling, general and administrative and depreciation and amortization. Cost of services is composed of payroll and related costs, subcontract services, the cost of vehicles purchased, supplies, insurance, property taxes, utilities, service contract claims, maintenance and lease expense related to the auction sites and loan offices. Cost of services excludes depreciation and amortization. Selling, general and administrative expenses are composed of payroll and related costs, sales and marketing, information technology services and professional fees.

Results of Operations

Overview of Results of KAR Auction Services, Inc. for the Three Months Ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

* Exclusive of depreciation and amortization

Discontinued Operations

The financial performance of the ADESA U.S. physical auction business is presented as discontinued operations. As a result, revenue, cost of services and all costs of discontinued operations are presented as one line item in the above table as "Net income from discontinued operations."

For the three months ended ~~June 30, 2021,~~March 31, 2022, we had revenue of ~~$585.4~~$369.4 million compared with revenue of ~~$419.0~~$369.8 million for the three months ended ~~June 30, 2020, an increase~~March 31, 2021, a decrease of ~~40%~~less than 1%. Businesses acquired in the last ~~twelve~~12 months accounted for an increase in revenue of ~~$39.7~~$18.0 million or 7%5% of revenue. For a further discussion of revenues, gross profit and selling, general and administrative expenses, see the segment results discussions below.

Depreciation and Amortization

Depreciation and amortization decreased ~~$1.1~~$0.9 million, or 2%3%, to ~~$45.4~~$26.0 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared with ~~$46.5~~$26.9 million for the three months ended ~~June 30, 2020.~~March 31, 2021. The decrease in depreciation and amortization was primarily the result of fixed assets that have become fully depreciated and a reduction in assets placed in service.

~~Goodwill and Other Intangibles Impairment~~

Interest expense ~~increased $0.3~~decreased $5.2 million, or 1%17%, to ~~$31.2~~$25.6 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared with ~~$30.9~~$30.8 million for the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~increase~~decrease was primarily attributable to an unrealized gain of $8.7 million related to the discontinuance of hedge accounting for the interest rate swaps, partially offset by an increase in interest expense at AFC of ~~$0.2~~$3.0 million, which resulted from an increase in the average finance receivables balance for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared with the three months ended ~~June 30, 2020.~~

~~Table of Contents~~

March 31, 2021.

Other (Income) Expense, Net

For the three months ended March 31, 2022, we had other expense of $1.2 million compared with other income of $49.7 million for the three months ended March 31, 2021. The increase in other expense was primarily attributable to unrealized losses on investment securities of approximately $3.0 million for the three months ended March 31, 2022, compared with unrealized gains on investment securities of approximately $43.5 million for the three months ended March 31, 2021, as well as a reduction in realized gains of approximately $17.0 million, partially offset by a decrease in contingent consideration valuation adjustments of $11.2 million, a decrease in foreign currency losses of $1.0 million and other miscellaneous items aggregating $0.4 million.

The Company invests in certain early-stage automotive companies and funds that relate to the automotive industry. We believe these investments have resulted in the expansion of relationships in the vehicle remarketing industry. ~~Realized~~There were no realized gains on these investments ~~were $0.2~~for the three months ended March 31, 2022. The Company had unrealized losses of $3.0 million for the three months ended June 30, 2021. The Company had a reduction in unrealized gains of $11.9 million at June 30, 2021, as a result of the change in fair value for one of these investment securities which had a recent public offering.March 31, 2022. Any future changes in the fair value of these investment securities will be reflected as unrealized gains or losses until these securities are sold.

For the three months ended June 30, 2021, we had other expense of $14.8 million compared with $1.3 million for the three months ended June 30, 2020. The increase in other expense was primarily attributable to a reduction in unrealized gains on investment securities of approximately $11.9 million and an increase in contingent consideration valuation of $4.5 million, partially offset by a decrease in foreign currency losses of $2.3 million and other miscellaneous items aggregating $0.6 million.

We had an effective tax rate of ~~44.2%~~35.9% on a pre-tax loss for the three months ended ~~June 30, 2021,~~March 31, 2022, compared with an effective tax rate of ~~12.5%~~48.3% for the three months ended ~~June 30, 2020.~~March 31, 2021. The effective tax rate for the three months ended ~~June 30,~~March 31, 2022 was favorably impacted by deductions for stock-based compensation. The effective tax rate for the three months ended March 31, 2021 was unfavorably impacted by the expense for the increase in the estimated value of contingent consideration for which no tax ~~benefits~~benefit has been recorded.

Net Income from Discontinued Operations

In February 2022, the Company announced that it had entered into a definitive agreement with Carvana, pursuant to which Carvana will acquire the ADESA U.S. physical auction business from KAR. As such, the financial results of the ADESA U.S. physical auction business have been ~~recorded. The rate~~accounted for as discontinued operations for all periods presented. For the three months ended ~~June 30, 2020 was unfavorably impacted by~~March 31, 2022 and 2021, the ~~goodwill~~Company's financial statements included income from discontinued operations of $8.1 million and ~~other intangibles impairment charge for which no tax benefit was recorded, partially offset by~~$24.7 million, respectively. For further discussion, reference the ~~tax benefit from recording net operating losses and deductions related~~condensed notes to ~~stock-based compensation expenses.~~the consolidated financial statements.

Impact of Foreign Currency

For the three months ended ~~June 30, 2021,~~March 31, 2022, fluctuations in the euro exchange rate decreased revenue by $3.1 million and had no impact on operating profit or net income. For the three months ended March 31, 2022, fluctuations in the Canadian exchange rate ~~increased~~did not have a material impact on revenue, ~~by $9.3 million,~~ operating profit ~~by $3.4 million and~~or net income by $2.0 million. For the three months ended June 30, 2021, fluctuations in the European exchange rate increased revenue by $5.7 million, operating profit by $0.2 million and decreased net income by $0.2 million.income.

~~Impact of COVID-19 on Our Operations~~

The Company has been subject to numerous orders and directives that have impacted our ability to operate our business throughout North America and in Europe. As a result of these COVID-19 related restrictions on our operations, we have adjusted our business processes so that we can continue to meet the needs of our customers while complying with the various laws, regulations, mandates and directives in each of the markets in which we operate. In many cases, we have had to limit the number of employees and customers at our physical locations at any given time and modify the delivery of services to our customers. However, these adjustments have also resulted in improvements in our operations.

During this challenging time, the Company has worked to meet the needs of the wholesale used car marketplace with its technology-based auction platforms throughout North America and in Europe. The Company believes that certain changes to its business processes that were necessitated by the COVID-19 outbreak are sustainable going forward. For example, the Company has reduced the labor required to process wholesale auction transactions and reduced its selling, general and administrative expenses.

* Exclusive of depreciation and amortization

Revenue from ADESA ~~increased $154.6~~decreased $18.8 million, or ~~43%~~6%, to ~~$516.8~~$285.2 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared with ~~$362.2~~$304.0 million for the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~increase~~decrease in revenue was the result of ~~an increase~~a decrease in the number of vehicles sold, ~~and~~partially offset by an increase in average revenue per vehicle sold. Businesses acquired in the last ~~twelve~~12 months accounted for an increase in revenue of ~~$39.7~~$18.0 million. The change in revenue included the impact of ~~an increase~~a decrease in revenue of ~~$8.7~~$3.1 million due to fluctuations in the ~~Canadian exchange rate and an increase of $5.7 million due to fluctuations in the European~~euro exchange rate.

On-premise marketplace sales are initiated online for vehicles at any of our locations across ~~North America~~Canada and include ADESA Simulcast, Simulcast+ and DealerBlock sales. Off-premise marketplace sales are initiated online and include Openlane, BacklotCars, CARWAVE, TradeRev ~~BacklotCars~~ and ADESA Europe sales. The ~~10% increase~~23% decrease in the number of vehicles sold was comprised of a ~~6% increase in on-premise vehicles sold and a 13% increase in off-premise vehicles sold. However, the Company has experienced a~~ decline in both on-premise and off-premise commercial volumes aggregating ~~18% for~~46%, partially offset by an increase in both on-premise and off-premise dealer consignment volumes aggregating 28%. The decrease in the ~~three months ended June 30, 2021 compared with the three months ended June 30, 2020. For the quarters ended June 30, 2021 and 2020, we conducted all sales through digital marketplaces. All~~number of vehicles ~~were offered online, cars were not~~sold was driven ~~through the auction lanes and we limited access to our physical locations to promote social distancing measures and help prevent the spread~~by a lack of ~~COVID-19.~~supply caused by high vehicle values.

Auction fees per vehicle sold for the three months ended ~~June 30, 2021~~March 31, 2022 increased ~~$59,~~$65, or ~~22%~~29%, reflecting higher vehicle values and a ~~changing~~smaller mix of ~~vehicles sold.~~lower-fee commercial off-premise vehicles.

Service revenue for the three months ended ~~June 30, 2021 increased $47.4~~March 31, 2022 decreased $8.8 million, or 35%, primarily as a result of all the Company's services being available in 2021. A substantial amount of the Company's on-premise and off-premise services were not available for a portion of the second quarter of 2020.

For the three months ended June 30, 2021, gross profit for ADESA increased $52.3 million, or 36%, to $197.3 million, compared with $145.0 million for the three months ended June 30, 2020. Gross profit for ADESA was 38.2% of revenue for the

three months ended June 30, 2021, compared with 40.0% of revenue for the three months ended June 30, 2020. Gross profit as a percentage of revenue decreased for the three months ended June 30, 2021 as compared with the three months ended June 30, 2020, primarily due to the impact of purchased vehicles. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 47.1% and 46.4% for the three months ended June 30, 2021 and 2020, respectively. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold. We have also taken measures to reduce expenses to help protect our business while our operations have been impacted by COVID-19. In the second quarter of 2021 we recorded a benefit of $1.5 million taken under the Canada Emergency Wage Subsidy as compared with an aggregate of $10.1 million taken under the CARES Act and the Canada Emergency Wage Subsidy in the second quarter of 2020. Businesses acquired in the last 12 months accounted for an increase in cost of services of $23.3 million for the three months ended June 30, 2021.

~~Selling, General and Administrative~~

Selling, general and administrative expenses for the ADESA segment increased $27.7 million, or 27%, to $131.4 million for the three months ended June 30, 2021, compared with $103.7 million for the three months ended June 30, 2020, primarily due to increases in selling, general and administrative expenses associated with acquisitions of $24.3 million, incentive-based compensation of $5.5 million, fluctuations in the Canadian exchange rate of $2.1 million, stock-based compensation of $1.8 million and professional fees of $1.3 million, partially offset by decreases in bad debt expense of $4.5 million, severance of $2.3 million, medical expenses of $2.2 million and other miscellaneous expenses aggregating $4.3 million. In addition, the Employee Retention Credit provided under the CARES Act and the Canada Emergency Wage Subsidy was $6.0 million less for the three months ended June 30, 2021, compared with the three months ended June 30, 2020.

Go~~odwill and Other Intangibles Impairment~~

In the second quarter of 2020 a $25.5 million non-cash goodwill impairment charge and a $4.3 million non-cash customer relationship impairment charge were recorded in our ADESA Remarketing Limited reporting unit (doing business as ADESA U.K.). The impairments resulted from the changes in economic circumstances which caused the outlook for the business to be significantly reduced.

Three Months Ended June 30,
(Dollars in millions except volumes and per loan amounts) 2021 2020
Finance-related revenue
Interest and fee income $ 68.2 $ 65.1
Other revenue 2.2 2.0
Provision for credit losses (1.8) (19.0)
Warranty contract revenue — 8.7
Total AFC revenue 68.6 56.8
Cost of services* 13.7 17.9
Gross profit* 54.9 38.9
Selling, general and administrative 8.8 8.6
Depreciation and amortization 2.5 3.2
Operating profit $ 43.6 $ 27.1
Loan transactions 356,000 420,000
Revenue per loan transaction, excluding Warranty contract revenue $ 193 $ 115

* Exclusive of depreciation and amortization

For the three months ended June 30, 2021, AFC revenue increased $11.8 million, or 21%, to $68.6 million, compared with $56.8 million for the three months ended June 30, 2020. The increase in revenue was primarily the result of a 68% increase in

revenue per loan transaction, largely as a result of a decrease in the provision for credit losses, partially offset by a 15% decrease in loan transactions and the elimination of Warranty contract revenue as a result of the sale of PWI in December 2020.

~~Revenue per loan transaction, which includes both loans paid off and loans curtailed, increased $78, or 68%~~6%, primarily as a result of a decrease in ~~provision for credit losses for~~inspection service revenue and transportation revenue resulting from the ~~three months ended June 30, 2021, an increase in interest yields and an increase in loan values, partially offset by a~~ decrease in ~~average portfolio duration. Revenue per loan transaction excludes Warranty contract revenue in 2020.~~

~~The provision for credit losses decreased to 0.4% of the average managed receivables for the three months ended June 30, 2021 from 4.3% for the three months ended June 30, 2020.~~

For the three months ended June 30, 2021, gross profit for the AFC segment increased $16.0 million, or 41%, to $54.9 million, or 80.0% of revenue, compared with $38.9 million, or 68.5% of revenue, for the three months ended June 30, 2020. Excluding PWI for the three months ended June 30, 2020, AFC's gross profit as a percent of revenue was 74.3%. The increase in gross profit as a percent of revenue was primarily the result of a 21% increase in revenue and an 23% decrease in cost of services. The decrease in cost of services was primarily the result of a decrease in PWI expenses of $5.5 million, partially offset by increases in incentive-based compensation of $0.6 million, collection expenses of $0.5 million and other miscellaneous expenses aggregating $0.2 million.

~~Selling, General and Administrative~~

Selling, general and administrative expenses at AFC increased $0.2 million, or 2%, to $8.8 million for the three months ended June 30, 2021, compared with $8.6 million for the three months ended June 30, 2020 primarily as a result of increases in incentive-based compensation of $0.6 million and other miscellaneous expenses aggregating $0.7 million, partially offset by decreases in PWI expenses of $0.6 million and compensation expense of $0.5 million.

~~Overview of Results of KAR Auction Services, Inc. for the Six Months Ended June 30, 2021 and 2020:~~

Six Months Ended
June 30,
(Dollars in millions except per share amounts) 2021 2020
Revenues
Auction fees $ 472.2 $ 433.1
Service revenue 369.8 371.0
Purchased vehicle sales 190.6 125.1
Finance-related revenue 134.4 135.3
Total revenues 1,167.0 1,064.5
Cost of services* 663.6 629.7
Gross profit* 503.4 434.8
Selling, general and administrative 289.2 274.7
Depreciation and amortization 92.4 94.2
Goodwill and other intangibles impairment — 29.8
Operating profit 121.8 36.1
Interest expense 62.1 68.9
Other (income) expense, net (35.4) (0.7)
Income (loss) before income taxes 95.1 (32.1)
Income taxes 32.7 (2.6)
Net income (loss) $ 62.4 $ (29.5)
Net income (loss) per share
Basic $ 0.27 $ (0.24)
Diluted $ 0.26 $ (0.24)

* Exclusive of depreciation and amortization

For the six months ended June 30, 2021, we had revenue of $1,167.0 million compared with revenue of $1,064.5 million for the six months ended June 30, 2020, an increase of 10%. Businesses acquired in the last twelve months accounted for an increase in revenue of $64.9 million or 6% of revenue. For a further discussion of revenues, gross profit and selling, general and administrative expenses, see the segment results discussions below.

~~Depreciation and Amortization~~

Depreciation and amortization decreased $1.8 million, or 2%, to $92.4 million for the six months ended June 30, 2021, compared with $94.2 million for the six months ended June 30, 2020. The decrease in depreciation and amortization was primarily the result of fixed assets that have become fully depreciated and a reduction in assets placed in service.

~~Goodwill and Other Intangibles Impairment~~


Delaware			20-8744739
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Income	3

	Consolidated Statements of Comprehensive Income ~~(Loss)~~	4

	Consolidated Balance Sheets	5

	Consolidated Statements of Stockholders' Equity	7

	Consolidated Statements of Cash Flows	98

	Condensed Notes to Consolidated Financial Statements	109

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2322

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4337

Item 4.	Controls and Procedures	4337

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	4438

Item 1A.	Risk Factors	4438

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4439

Item 6.	Exhibits	4540

Signatures		5147


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	621.6	$	752.1	Cash and cash equivalents	$	134.2	$	177.6
Restricted cash	Restricted cash	53.8		60.2		Restricted cash	26.3		25.8
Trade receivables, net of allowances of $11.7 and $12.1		549.2		367.2
Finance receivables, net of allowances of $24.0 and $22.0		2,084.9		1,889.0
Trade receivables, net of allowances of $10.1 and $9.5						Trade receivables, net of allowances of $10.1 and $9.5	433.3		381.3
Finance receivables, net of allowances of $23.0 and $23.0						Finance receivables, net of allowances of $23.0 and $23.0	2,734.8		2,506.0
Other current assets	Other current assets	105.1		106.7		Other current assets	117.8		87.9
Current assets held-for-sale						Current assets held-for-sale	2,058.6		213.2
Total current assets	Total current assets	3,414.6		3,175.2		Total current assets	5,505.0		3,391.8
Other assets	Other assets					Other assets
Goodwill	Goodwill	2,212.5		2,140.2		Goodwill	1,595.4		1,598.0
Customer relationships, net of accumulated amortization of $692.2 and $668.6		199.8		211.3
Other intangible assets, net of accumulated amortization of $405.8 and $362.0		284.3		290.2
Customer relationships, net of accumulated amortization of $407.8 and $401.5						Customer relationships, net of accumulated amortization of $407.8 and $401.5	153.4		159.1
Other intangible assets, net of accumulated amortization of $365.9 and $350.0						Other intangible assets, net of accumulated amortization of $365.9 and $350.0	236.6		243.3
Operating lease right-of-use assets	Operating lease right-of-use assets	339.0		350.6		Operating lease right-of-use assets	93.2		94.7
Property and equipment, net of accumulated depreciation of $620.7 and $596.4		579.6		589.9
Property and equipment, net of accumulated depreciation of $206.1 and $201.6						Property and equipment, net of accumulated depreciation of $206.1 and $201.6	142.2		143.5
Other assets	Other assets	88.5		40.8		Other assets	66.6		53.7
Non-current assets held-for-sale						Non-current assets held-for-sale	—		1,766.6
Total other assets	Total other assets	3,703.7		3,623.0		Total other assets	2,287.4		4,058.9
Total assets	Total assets	$	7,118.3	$	6,798.2	Total assets	$	7,792.4	$	7,450.7


		December 31, 2020				Net Credit Losses Three Months Ended June 30, 2020					Net Credit Losses Six Months Ended June 30, 2020			December 31, 2021									Net Credit Losses Three Months Ended March 31, 2021
		Total Amount of:								Total Amount of:
(in millions)	(in millions)	Receivables		Receivables Delinquent				(in millions)		Receivables					Receivables Delinquent
Floorplan receivables	Floorplan receivables	$	1,892.1	$	22.9			$	22.0						$	33.9		Floorplan receivables		$	2,519.7		$	7.3		$	1.3
Other loans	Other loans	18.9		0				0						0			Other loans		9.3			—			—
Total receivables managed	Total receivables managed	$	1,911.0	$	22.9	$	22.0				$	33.9	Total receivables managed	$	2,529.0					$	7.3		$	1.3


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Obligations collateralized by finance receivables, gross	Obligations collateralized by finance receivables, gross	$	1,342.3	$	1,282.8	Obligations collateralized by finance receivables, gross	$	1,879.9	$	1,707.4
Unamortized securitization issuance costs	Unamortized securitization issuance costs	(18.1)		(21.6)		Unamortized securitization issuance costs	(13.3)		(15.1)
Obligations collateralized by finance receivables	Obligations collateralized by finance receivables	$	1,324.2	$	1,261.2	Obligations collateralized by finance receivables	$	1,866.6	$	1,692.3


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


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


		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at March, 31, 2021		124.8	$	1.3	$	969.4	$	641.2	$	(24.4)	$	1,587.5
Net income							11.5				11.5
Balance at December 31, 2021													Balance at December 31, 2021	121.2	$	1.2	$	910.8	$	625.7	$	(24.7)	$	1,513.0
Net loss													Net loss						(0.3)				(0.3)
Other comprehensive income	Other comprehensive income								7.4		7.4		Other comprehensive income								10.2		10.2
Issuance of common stock under stock plans	Issuance of common stock under stock plans				0.7						0.7		Issuance of common stock under stock plans	0.5			0.6						0.6
Surrender of RSUs for taxes													Surrender of RSUs for taxes	(0.2)			(2.5)						(2.5)
Stock-based compensation expense	Stock-based compensation expense				4.5						4.5		Stock-based compensation expense				5.6						5.6
Repurchase and retirement of common stock		(5.6)	(0.1)		(100.0)						(100.1)
Dividends earned under stock plans													Dividends earned under stock plans				0.1		(0.1)				—
Dividends on preferred stock	Dividends on preferred stock						(10.2)				(10.2)		Dividends on preferred stock						(10.7)				(10.7)
Balance at June 30, 2021		119.2	$	1.2	$	874.6	$	642.5	$	(17.0)	$	1,501.3
Balance at March 31, 2022													Balance at March 31, 2022	121.5	$	1.2	$	914.6	$	614.6	$	(14.5)	$	1,515.9

		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2020	Balance at December 31, 2020	129.7	$	1.3	$	1,046.5	$	600.7	$	(32.7)	$	1,615.8	Balance at December 31, 2020	129.7	$	1.3	$	1,046.5	$	600.7	$	(32.7)	$	1,615.8
Net income	Net income						62.4				62.4		Net income						50.9				50.9
Other comprehensive income	Other comprehensive income								15.7		15.7		Other comprehensive income								8.3		8.3
Issuance of common stock under stock plans	Issuance of common stock under stock plans	0.4			1.0						1.0		Issuance of common stock under stock plans	0.4			0.3						0.3
Surrender of RSUs for taxes	Surrender of RSUs for taxes	(0.1)			(2.2)						(2.2)		Surrender of RSUs for taxes	(0.1)			(2.2)						(2.2)
Stock-based compensation expense	Stock-based compensation expense				9.9						9.9		Stock-based compensation expense				5.4						5.4
Repurchase and retirement of common stock	Repurchase and retirement of common stock	(10.8)	(0.1)		(180.8)						(180.9)		Repurchase and retirement of common stock	(5.2)			(80.8)						(80.8)
Dividends earned under stock plans	Dividends earned under stock plans				0.2		(0.4)				(0.2)		Dividends earned under stock plans				0.2		(0.4)				(0.2)
Dividends on preferred stock	Dividends on preferred stock						(20.2)				(20.2)		Dividends on preferred stock						(10.0)				(10.0)
Balance at June 30, 2021		119.2	$	1.2	$	874.6	$	642.5	$	(17.0)	$	1,501.3
Balance at March 31, 2021													Balance at March 31, 2021	124.8	$	1.3	$	969.4	$	641.2	$	(24.4)	$	1,587.5


	Six Months Ended June 30,
	2021		2020
Operating activities
Net income (loss)	$	62.4	$	(29.5)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	92.4		94.2
Provision for credit losses	7.6		41.6
Deferred income taxes	6.8		(13.1)
Amortization of debt issuance costs	6.0		5.6
Stock-based compensation	9.9		7.6
Contingent consideration adjustment	15.7		0
Unrealized gain on investment securities	(31.6)		0
Goodwill and other intangibles impairment	0		29.8
Other non-cash, net	2.1		4.9
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables and other assets	(198.5)		(137.5)
Accounts payable and accrued expenses	322.9		265.3
Net cash provided by operating activities	295.7		268.9
Investing activities
Net (increase) decrease in finance receivables held for investment	(200.0)		532.6
Acquisition of businesses (net of cash acquired)	(79.8)		0
Purchases of property, equipment and computer software	(50.7)		(46.7)
Investments in securities	(20.6)		0
Proceeds from sale of investments	21.4		0
Proceeds from the sale of PWI	2.1		0
Proceeds from the sale of property and equipment	1.9		0
Net cash (used by) provided by investing activities	(325.7)		485.9
Financing activities
Net increase in book overdrafts	45.4		5.0
Net decrease in borrowings from lines of credit	(1.6)		(1.9)
Net increase (decrease) in obligations collateralized by finance receivables	57.0		(720.5)
Proceeds from issuance of Series A Preferred Stock	0		550.1
Payments for issuance costs of Series A Preferred Stock	0		(21.9)
Payments for debt issuance costs/amendments	0		(3.9)
Payments on long-term debt	(4.7)		(4.7)
Payments on finance leases	(6.0)		(7.8)
Payments of contingent consideration and deferred acquisition costs	(21.3)		(22.3)
Issuance of common stock under stock plans	1.0		0.7
Tax withholding payments for vested RSUs	(2.2)		(3.7)
Repurchase and retirement of common stock	(180.9)		0
Dividends paid to stockholders	0		(49.0)
Net cash used by financing activities	(113.3)		(279.9)
Effect of exchange rate changes on cash	6.4		(17.3)
Net (decrease) increase in cash, cash equivalents and restricted cash	(136.9)		457.6
Cash, cash equivalents and restricted cash at beginning of period	812.3		560.9
Cash, cash equivalents and restricted cash at end of period	$	675.4	$	1,018.5
Cash paid for interest, net of proceeds from interest rate derivatives	$	55.4	$	63.9
Cash paid for taxes, net of refunds	$	16.6	$	3.6


		June 30, 2021				Net Credit Losses Three Months Ended June 30, 2021					Net Credit Losses Six Months Ended June 30, 2021			March 31, 2022									Net Credit Losses Three Months Ended March 31, 2022
		Total Amount of:								Total Amount of:
(in millions)	(in millions)	Receivables		Receivables Delinquent				(in millions)		Receivables					Receivables Delinquent
Floorplan receivables	Floorplan receivables	$	2,099.6	$	5.7			$	3.3						$	4.6		Floorplan receivables		$	2,750.9		$	8.4		$	1.4
Other loans	Other loans	9.3		0				0						0			Other loans		6.9			—			—
Total receivables managed	Total receivables managed	$	2,108.9	$	5.7	$	3.3				$	4.6	Total receivables managed	$	2,757.8					$	8.4		$	1.4


		June 30, 2021		June 30, 2020			March 31, 2022		March 31, 2021
Allowance for Credit Losses	Allowance for Credit Losses					Allowance for Credit Losses
Balance at December 31	Balance at December 31	$	22.0	$	15.0	Balance at December 31	$	23.0	$	22.0
Opening balance adjustment for adoption of ASC Topic 326		0		5.0
Provision for credit losses	Provision for credit losses	6.6		35.9		Provision for credit losses	1.4		4.8
Recoveries	Recoveries	6.6		5.0		Recoveries	1.9		2.5
Less charge-offs	Less charge-offs	(11.2)		(38.9)		Less charge-offs	(3.3)		(3.8)
Balance at end of period	Balance at end of period	$	24.0	$	22.0	Balance at end of period	$	23.0	$	25.5


		Interest Rate*		Maturity	June 30, 2021		December 31, 2020			Interest Rate*		Maturity	March 31, 2022		December 31, 2021
Term Loan B-6	Term Loan B-6	Adjusted LIBOR	+ 2.25%	September 19, 2026	$	933.4	$	938.1	Term Loan B-6	Adjusted LIBOR	+ 2.25%	September 19, 2026	$	926.2	$	928.6
Revolving Credit Facility	Revolving Credit Facility	Adjusted LIBOR	+ 1.75%	September 19, 2024	0		0		Revolving Credit Facility	Adjusted LIBOR	+ 1.75%	September 19, 2024	101.0		—
Senior notes	Senior notes		5.125%	June 1, 2025	950.0		950.0		Senior notes		5.125%	June 1, 2025	950.0		950.0
European lines of credit	European lines of credit	Euribor	+ 1.25%	Repayable upon demand	13.2		14.8		European lines of credit	Euribor	+ 1.25%	Repayable upon demand	14.6		6.8
Total debt	Total debt				1,896.6		1,902.9		Total debt				1,991.8		1,885.4
Unamortized debt issuance costs/discounts	Unamortized debt issuance costs/discounts				(22.1)		(24.8)		Unamortized debt issuance costs/discounts				(18.0)		(19.4)
Current portion of long-term debt	Current portion of long-term debt				(22.7)		(24.3)		Current portion of long-term debt				(1,034.0)		(16.3)
Long-term debt	Long-term debt				$	1,851.8	$	1,853.8	Long-term debt				$	939.8	$	1,849.7


		ADESA Auctions		AFC		Consolidated			ADESA Auctions		AFC		Consolidated
Operating revenues	Operating revenues	$	516.8	$	68.6	$	585.4	Operating revenues	$	285.2	$	84.2	$	369.4
Operating expenses	Operating expenses							Operating expenses
Cost of services (exclusive of depreciation and amortization)	Cost of services (exclusive of depreciation and amortization)	319.5		13.7		333.2		Cost of services (exclusive of depreciation and amortization)	195.8		15.0		210.8
Selling, general and administrative	Selling, general and administrative	131.4		8.8		140.2		Selling, general and administrative	108.4		10.5		118.9
Depreciation and amortization	Depreciation and amortization	42.9		2.5		45.4		Depreciation and amortization	23.9		2.1		26.0
Total operating expenses	Total operating expenses	493.8		25.0		518.8		Total operating expenses	328.1		27.6		355.7
Operating profit		23.0		43.6		66.6
Operating profit (loss)								Operating profit (loss)	(42.9)		56.6		13.7
Interest expense	Interest expense	21.8		9.4		31.2		Interest expense	13.3		12.3		25.6
Other (income) expense, net	Other (income) expense, net	2.9		11.9		14.8		Other (income) expense, net	(1.8)		3.0		1.2
Intercompany expense (income)	Intercompany expense (income)	0.1		(0.1)		0		Intercompany expense (income)	0.1		(0.1)		—
Income (loss) before income taxes		(1.8)		22.4		20.6
Income (loss) from continuing operations before income taxes								Income (loss) from continuing operations before income taxes	(54.5)		41.4		(13.1)
Income taxes	Income taxes	3.4		5.7		9.1		Income taxes	(15.1)		10.4		(4.7)
Net income (loss)		$	(5.2)	$	16.7	$	11.5
Net income (loss) from continuing operations								Net income (loss) from continuing operations	$	(39.4)	$	31.0	$	(8.4)
Total assets	Total assets	$	4,627.3	$	2,491.0	$	7,118.3	Total assets	$	2,630.3	$	3,103.5	$	5,733.8


		Three Months Ended June 30,					Three Months Ended March 31,
(Dollars in millions except per share amounts)	(Dollars in millions except per share amounts)	2021		2020		(Dollars in millions except per share amounts)	2022		2021
Revenues
Revenues from continuing operations						Revenues from continuing operations
Auction fees	Auction fees	$	236.7	$	177.8	Auction fees	$	101.4	$	102.5
Service revenue	Service revenue	182.2		134.8		Service revenue	137.5		146.3
Purchased vehicle sales	Purchased vehicle sales	97.9		49.6		Purchased vehicle sales	46.3		55.2
Finance-related revenue	Finance-related revenue	68.6		56.8		Finance-related revenue	84.2		65.8
Total revenues		585.4		419.0
Total revenues from continuing operations						Total revenues from continuing operations	369.4		369.8
Cost of services*	Cost of services*	333.2		235.1		Cost of services*	210.8		203.8
Gross profit*	Gross profit*	252.2		183.9		Gross profit*	158.6		166.0
Selling, general and administrative	Selling, general and administrative	140.2		112.3		Selling, general and administrative	118.9		107.3
Depreciation and amortization	Depreciation and amortization	45.4		46.5		Depreciation and amortization	26.0		26.9
Goodwill and other intangibles impairment		—		29.8
Operating profit (loss)		66.6		(4.7)
Operating profit						Operating profit	13.7		31.8
Interest expense	Interest expense	31.2		30.9		Interest expense	25.6		30.8
Other (income) expense, net	Other (income) expense, net	14.8		1.3		Other (income) expense, net	1.2		(49.7)
Income (loss) before income taxes		20.6		(36.9)
Income (loss) from continuing operations before income taxes						Income (loss) from continuing operations before income taxes	(13.1)		50.7
Income taxes	Income taxes	9.1		(4.6)		Income taxes	(4.7)		24.5
Net income (loss) from continuing operations						Net income (loss) from continuing operations	(8.4)		26.2
Net income from discontinued operations						Net income from discontinued operations	8.1		24.7
Net income (loss)	Net income (loss)	$	11.5	$	(32.3)	Net income (loss)	$	(0.3)	$	50.9
Net income (loss) per share
Net income (loss) from continuing operations per share						Net income (loss) from continuing operations per share
Basic	Basic	$	0.01	$	(0.27)	Basic	$	(0.16)	$	0.10
Diluted	Diluted	$	0.01	$	(0.27)	Diluted	$	(0.16)	$	0.10


		Three Months Ended June 30,					Three Months Ended March 31,
(Dollars in millions, except per vehicle amounts)	(Dollars in millions, except per vehicle amounts)	2021		2020		(Dollars in millions, except per vehicle amounts)	2022		2021
Auction fees	Auction fees	$	236.7	$	177.8	Auction fees	$	101.4	$	102.5
Service revenue	Service revenue	182.2		134.8		Service revenue	137.5		146.3
Purchased vehicle sales	Purchased vehicle sales	97.9		49.6		Purchased vehicle sales	46.3		55.2
Total ADESA revenue		516.8		362.2
Total ADESA revenue from continuing operations						Total ADESA revenue from continuing operations	285.2		304.0
Cost of services*	Cost of services*	319.5		217.2		Cost of services*	195.8		190.3
Gross profit*	Gross profit*	197.3		145.0		Gross profit*	89.4		113.7
Selling, general and administrative	Selling, general and administrative	131.4		103.7		Selling, general and administrative	108.4		98.5
Depreciation and amortization	Depreciation and amortization	42.9		43.3		Depreciation and amortization	23.9		24.5
Goodwill and other intangibles impairment		—		29.8
Operating profit (loss)	Operating profit (loss)	$	23.0	$	(31.8)	Operating profit (loss)	$	(42.9)	$	(9.3)
On-premise vehicles sold		332,000		312,000
Off-premise vehicles sold		379,000		336,000
Commercial vehicles sold						Commercial vehicles sold	174,000		320,000
Dealer consignment vehicles sold						Dealer consignment vehicles sold	177,000		138,000
Total vehicles sold	Total vehicles sold	711,000		648,000		Total vehicles sold	351,000		458,000
Auction fees per vehicle sold	Auction fees per vehicle sold	$	333	$	274	Auction fees per vehicle sold	$	289	$	224
Gross profit per vehicle sold*	Gross profit per vehicle sold*	$	277	$	224	Gross profit per vehicle sold*	$	255	$	248
Gross profit percentage, excluding purchased vehicles*	Gross profit percentage, excluding purchased vehicles*	47.1%		46.4%		Gross profit percentage, excluding purchased vehicles*	37.4%		45.7%
Dealer consignment mix		41%		21%
Commercial mix		59%		79%
On-premise mix						On-premise mix	14%		12%
Off-premise mix						Off-premise mix	86%		88%


	Three Months Ended June 30,
(Dollars in millions except volumes and per loan amounts)	2021		2020
Finance-related revenue
Interest and fee income	$	68.2	$	65.1
Other revenue	2.2		2.0
Provision for credit losses	(1.8)		(19.0)
Warranty contract revenue	—		8.7
Total AFC revenue	68.6		56.8
Cost of services*	13.7		17.9
Gross profit*	54.9		38.9
Selling, general and administrative	8.8		8.6
Depreciation and amortization	2.5		3.2
Operating profit	$	43.6	$	27.1
Loan transactions	356,000		420,000
Revenue per loan transaction, excluding Warranty contract revenue	$	193	$	115


		June 30,		December 31,		June 30,			March 31,		December 31,		March 31,
(Dollars in millions)	(Dollars in millions)	2021		2020		2020		(Dollars in millions)	2022		2021		2021
Cash and cash equivalents	Cash and cash equivalents	$	621.6	$	752.1	$	968.5	Cash and cash equivalents	$	134.2	$	177.6	$	715.1
Restricted cash	Restricted cash	53.8		60.2		50.0		Restricted cash	26.3		25.8		52.5
Working capital	Working capital	731.3		924.6		1,241.8		Working capital	939.4		382.5		869.5
Amounts available under the Revolving Credit Facility*	Amounts available under the Revolving Credit Facility*	325.0		325.0		325.0		Amounts available under the Revolving Credit Facility*	224.0		325.0		325.0
Cash flow from operations for the six months ended		295.7				268.9
Cash (used by) provided by operating activities for the three months ended								Cash (used by) provided by operating activities for the three months ended	(9.5)				150.2


		Three Months Ended June 30, 2021							Three Months Ended March 31, 2022
(Dollars in millions)	(Dollars in millions)	ADESA		AFC		Consolidated		(Dollars in millions)	ADESA		AFC		Consolidated
Net income (loss)		$	(5.2)	$	16.7	$	11.5
Net income (loss) from continuing operations								Net income (loss) from continuing operations	$	(39.4)	$	31.0	$	(8.4)
Add back:	Add back:							Add back:
Income taxes	Income taxes	3.4		5.7		9.1		Income taxes	(15.1)		10.4		(4.7)
Interest expense, net of interest income	Interest expense, net of interest income	21.6		9.4		31.0		Interest expense, net of interest income	13.2		12.3		25.5
Depreciation and amortization	Depreciation and amortization	42.9		2.5		45.4		Depreciation and amortization	23.9		2.1		26.0
Intercompany interest	Intercompany interest	0.1		(0.1)		—		Intercompany interest	0.1		(0.1)		—
EBITDA	EBITDA	62.8		34.2		97.0		EBITDA	(17.3)		55.7		38.4
Non-cash stock-based compensation	Non-cash stock-based compensation	4.3		0.6		4.9		Non-cash stock-based compensation	4.4		0.8		5.2
Acquisition related costs	Acquisition related costs	1.8		—		1.8		Acquisition related costs	0.3		—		0.3
Securitization interest	Securitization interest	—		(6.8)		(6.8)		Securitization interest	—		(10.4)		(10.4)
(Gain)/Loss on asset sales								(Gain)/Loss on asset sales	(0.1)		—		(0.1)
Severance	Severance	1.2		—		1.2		Severance	3.2		0.2		3.4
Foreign currency (gains)/losses	Foreign currency (gains)/losses	0.4		—		0.4		Foreign currency (gains)/losses	1.2		—		1.2
Contingent consideration adjustment		4.5		—		4.5
Reduction in unrealized gains on investment securities		—		11.9		11.9
Other		1.5		0.1		1.6
Net change in unrealized (gains) losses on investment securities								Net change in unrealized (gains) losses on investment securities	—		3.0		3.0
Professional fees related to business improvement efforts								Professional fees related to business improvement efforts	7.3		0.8		8.1
Total addbacks/(deductions)	Total addbacks/(deductions)	13.7		5.8		19.5		Total addbacks/(deductions)	16.3		(5.6)		10.7
Adjusted EBITDA	Adjusted EBITDA	$	76.5	$	40.0	$	116.5	Adjusted EBITDA	$	(1.0)	$	50.1	$	49.1


	Three Months Ended June 30, 2020
(Dollars in millions)	ADESA		AFC		Consolidated
Net income (loss)	$	(45.5)	$	13.2	$	(32.3)
Add back:
Income taxes	(9.5)		4.9		(4.6)
Interest expense, net of interest income	21.4		9.2		30.6
Depreciation and amortization	43.3		3.2		46.5
Intercompany interest	0.2		(0.2)		—
EBITDA	9.9		30.3		40.2
Non-cash stock-based compensation	2.4		0.5		2.9
Acquisition related costs	0.9		—		0.9
Securitization interest	—		(6.0)		(6.0)
Loss on asset sales	0.5		—		0.5
Severance	6.0		0.5		6.5
Foreign currency (gains)/losses	2.7		—		2.7
Goodwill and other intangibles impairment	29.8		—		29.8
Other	2.5		—		2.5
Total addbacks/(deductions)	44.8		(5.0)		39.8
Adjusted EBITDA	$	54.7	$	25.3	$	80.0


		Six Months Ended June 30, 2021							Three Months Ended March 31, 2021
(Dollars in millions)	(Dollars in millions)	ADESA		AFC		Consolidated		(Dollars in millions)	ADESA		AFC		Consolidated
Net income (loss)		$	(11.0)	$	73.4	$	62.4
Net income (loss) from continuing operations								Net income (loss) from continuing operations	$	(30.5)	$	56.7	$	26.2
Add back:	Add back:							Add back:
Income taxes	Income taxes	7.5		25.2		32.7		Income taxes	5.0		19.5		24.5
Interest expense, net of interest income	Interest expense, net of interest income	43.0		18.7		61.7		Interest expense, net of interest income	21.3		9.3		30.6
Depreciation and amortization	Depreciation and amortization	87.5		4.9		92.4		Depreciation and amortization	24.5		2.4		26.9
Intercompany interest	Intercompany interest	0.2		(0.2)		—		Intercompany interest	0.1		(0.1)		—
EBITDA	EBITDA	127.2		122.0		249.2		EBITDA	20.4		87.8		108.2
Non-cash stock-based compensation	Non-cash stock-based compensation	9.2		1.3		10.5		Non-cash stock-based compensation	4.4		0.7		5.1
Acquisition related costs	Acquisition related costs	3.3		—		3.3		Acquisition related costs	1.3		—		1.3
Securitization interest	Securitization interest	—		(13.6)		(13.6)		Securitization interest	—		(6.8)		(6.8)
(Gain)/Loss on asset sales	(Gain)/Loss on asset sales	1.0		(0.8)		0.2		(Gain)/Loss on asset sales	—		(0.8)		(0.8)
Severance	Severance	1.7		0.2		1.9		Severance	0.2		0.2		0.4
Foreign currency (gains)/losses	Foreign currency (gains)/losses	2.6		—		2.6		Foreign currency (gains)/losses	2.2		—		2.2
Contingent consideration adjustment	Contingent consideration adjustment	15.7		—		15.7		Contingent consideration adjustment	11.2		—		11.2
Unrealized gains on investment securities		—		(31.6)		(31.6)
Net change in unrealized (gains) losses on investment securities								Net change in unrealized (gains) losses on investment securities	—		(43.5)		(43.5)
Other	Other	1.7		(0.2)		1.5		Other	0.2		(0.3)		(0.1)
Total addbacks/(deductions)	Total addbacks/(deductions)	35.2		(44.7)		(9.5)		Total addbacks/(deductions)	19.5		(50.5)		(31.0)
Adjusted EBITDA	Adjusted EBITDA	$	162.4	$	77.3	$	239.7	Adjusted EBITDA	$	39.9	$	37.3	$	77.2


	Six Months Ended June 30, 2020
(Dollars in millions)	ADESA		AFC		Consolidated
Net income (loss)	$	(64.1)	$	34.6	$	(29.5)
Add back:
Income taxes	(14.7)		12.1		(2.6)
Interest expense, net of interest income	45.1		22.7		67.8
Depreciation and amortization	87.7		6.5		94.2
Intercompany interest	1.0		(1.0)		—
EBITDA	55.0		74.9		129.9
Non-cash stock-based compensation	7.0		1.2		8.2
Acquisition related costs	2.3		—		2.3
Securitization interest	—		(17.4)		(17.4)
Loss on asset sales	1.0		—		1.0
Severance	7.8		0.5		8.3
Foreign currency (gains)/losses	3.1		—		3.1
Goodwill and other intangibles impairment	29.8		—		29.8
Other	3.3		0.1		3.4
Total addbacks/(deductions)	54.3		(15.6)		38.7
Adjusted EBITDA	$	109.3	$	59.3	$	168.6


		Three Months Ended								Twelve Months Ended			Three Months Ended								Twelve Months Ended
(Dollars in millions)	(Dollars in millions)	September 30, 2020		December 31, 2020		March 31, 2021		June 30, 2021		June 30, 2021		(Dollars in millions)	June 30, 2021		September 30, 2021		December 31, 2021		March 31, 2022		March 31, 2022
Net income (loss)	Net income (loss)	$	47.1	$	(17.1)	$	50.9	$	11.5	$	92.4	Net income (loss)	$	11.5	$	(1.0)	$	5.1	$	(0.3)	$	15.3
Less: Income from discontinued operations												Less: Income from discontinued operations	26.8		25.9		(10.1)		8.1		50.7
Income (loss) from continuing operations												Income (loss) from continuing operations	(15.3)		(26.9)		15.2		(8.4)		(35.4)
Add back:	Add back:											Add back:
Income taxes	Income taxes	10.9		(3.4)		23.6		9.1		40.2		Income taxes	2.4		10.3		(22.1)		(4.7)		(14.1)
Interest expense, net of interest income	Interest expense, net of interest income	29.2		30.3		30.7		31.0		121.2		Interest expense, net of interest income	30.8		31.7		31.7		25.5		119.7
Depreciation and amortization	Depreciation and amortization	46.5		50.6		47.0		45.4		189.5		Depreciation and amortization	27.4		27.4		28.2		26.0		109.0
EBITDA	EBITDA	133.7		60.4		152.2		97.0		443.3		EBITDA	45.3		42.5		53.0		38.4		179.2
Non-cash stock-based compensation	Non-cash stock-based compensation	3.9		3.0		5.6		4.9		17.4		Non-cash stock-based compensation	4.3		3.6		1.3		5.2		14.4
Acquisition related costs	Acquisition related costs	2.4		4.1		1.5		1.8		9.8		Acquisition related costs	1.6		2.1		2.1		0.3		6.1
Securitization interest	Securitization interest	(3.7)		(6.2)		(6.8)		(6.8)		(23.5)		Securitization interest	(6.8)		(7.9)		(8.3)		(10.4)		(33.4)
Loss on asset sales		0.1		0.2		0.2		—		0.5
(Gain)/Loss on asset sales												(Gain)/Loss on asset sales	—		—		0.1		(0.1)		—
Severance	Severance	2.3		0.9		0.7		1.2		5.1		Severance	0.6		0.8		1.5		3.4		6.3
Foreign currency (gains)/losses	Foreign currency (gains)/losses	0.1		1.7		2.2		0.4		4.4		Foreign currency (gains)/losses	0.4		0.1		1.1		1.2		2.8
Contingent consideration adjustment	Contingent consideration adjustment	—		4.7		11.2		4.5		20.4		Contingent consideration adjustment	4.5		4.4		4.2		—		13.1
Change in unrealized gains on investment securities		—		—		(43.5)		11.9		(31.6)
Net change in unrealized (gains) losses on investment securities												Net change in unrealized (gains) losses on investment securities	11.9		20.9		9.3		3.0		45.1
Professional fees related to business improvement efforts												Professional fees related to business improvement efforts	—		—		—		8.1		8.1
Other	Other	0.4		(1.3)		(0.1)		1.6		0.6		Other	0.3		0.1		—		—		0.4
Total addbacks/(deductions)	Total addbacks/(deductions)	5.5		7.1		(29.0)		19.5		3.1		Total addbacks/(deductions)	16.8		24.1		11.3		10.7		62.9
Adjusted EBITDA from continuing ops												Adjusted EBITDA from continuing ops	$	62.1	$	66.6	$	64.3	$	49.1	$	242.1
Adjusted EBITDA from discontinued ops												Adjusted EBITDA from discontinued ops	54.4		30.0		33.6		22.6		140.6
Adjusted EBITDA	Adjusted EBITDA	$	139.2	$	67.5	$	123.2	$	116.5	$	446.4	Adjusted EBITDA	$	116.5	$	96.6	$	97.9	$	71.7	$	382.7


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (Dollars in millions)
April 1 - April 30	—	$	—	—	$	209.0
May 1 - May 31	4,126,000	17.71		4,126,000	135.9
June 1 - June 30	1,502,000	17.94		1,502,000	109.0
Total	5,628,000	$	17.77	5,628,000


			Incorporated by Reference
Exhibit No.		Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	+	Separation and Distribution Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.	8-K	001-34568	2.1	6/28/2019

2.2		Agreement and Plan of Merger dated as of September 4, 2020 by and among ADESA, Inc., Showroom Merger Sub, Inc., KAR Auction Services, Inc., BacklotCars, Inc. and Shareholder Representative Services LLC, as the securityholders representative	8-K	001-34568	2.1	9/8/2020

3.1		Amended and Restated Certificate of Incorporation of KAR Auction Services, Inc.	10-Q	001-34568	3.1	8/3/2016

3.2		Second Amended and Restated By-Laws of KAR Auction Services, Inc.	8-K	001-34568	3.1	11/4/2014

3.3		Certificate of Designations Designating the Series A Convertible Preferred Stock	8-K	001-34568	3.1	6/10/2020

4.1		Indenture, dated as of May 31, 2017, among KAR Auction Services, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee, including the form of the Notes	8-K	001-34568	4.1	5/31/2017

4.2		Form of common stock certificate	S-1/A	333-161907	4.15	12/10/2009

4.3		Description of the Company's securities	10-K	001-34568	4.3	2/19/2020

10.1a		Amendment and Restatement Agreement, dated March 11, 2014, among KAR Auction Services, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A., as administrative agent, swingline lender and issuing lender (the Amended and Restated Credit Agreement and the Amended and Restated Guarantee and Collateral Agreement are included as Exhibits A and B thereto, respectively)	8-K	001-34568	10.1	3/12/2014


+			Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed.

^			Portions of this exhibit have been redacted pursuant to a request for confidential treatment filed separately with the Secretary of the Securities and Exchange Commission pursuant to Rule 406 under the Securities Act of 1933, as amended.

*			Denotes management contract or compensation plan, contract or arrangement.


		KAR Auction Services, Inc.
		(Registrant)

Date:	~~August~~May 4, ~~2021~~2022	/s/ ERIC M. LOUGHMILLER
		Eric M. Loughmiller Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)