2019 Annual Report

FIN

AN

CIA

L H

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HTS

* Adjusted EBITDA is a non-GAAP measure and is defined and reconciled to the most comparable GAAP measure, net income from continuing operations, in our Annual Report on Form 10-K for the year ended December 31, 2019 in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—EBITDA and Adjusted EBITDA.”

For the year ended December 31(In millions, except per share data) 2017 2018 2019

Total operating revenue $2,238.8 $2,442.8 $ 2,781.9

Gross profit $1,029.7 $1,121.3 $1,164.8

Net income from continuing operations per share – diluted $1.26 $0.87 $0.70

Cash dividends declared per common share $1.31 $1.40 $1.08

Weighted average shares outstanding — diluted 138.0 135.7 132.9

Total assets-continuing operations $5,545.9 $5,699.4 $ 6,581.2

3-Year Total Return vs. S&P 500

ADESA$2,429.0

AFC$352.9

(in millions)

Revenue by Segment

53.2%

2019

46.9%

(per FactSet)

S&P500 KAR

2017

$499.9

2018

$505.2

2019

$510.0

Adjusted EBITDA*

(in millions)

$92.4

$117.6

2017 2018 2019

$174.0

Net Income from Continuing Operations

(in millions)

2.2MVehicles sold in 2019

online by ADESA - 58% of all vehicles sold

$284MReturned to

stockholders in 2019 (dividends & share

repurchases)

1.8MAFC loan

transaction units in 2019

80+Number of

countries with active customers

3.8MVehicles sold by ADESA in 2019

Jim HallettCHAIRMAN & CEO

When I first sat down to write this letter, our company and the world were in a very different place. We had started 2020 strong. Our priorities were set, our teams were aligned and we were leveraging the investments made in 2019 to advance our strategy. But over the last several weeks, the COVID-19 coronavirus has taken hold worldwide, dramatically changing the landscape of our industry and the economies and societies where we live and work. And that gave me pause to reconsider my message.to reconsider my message.

At the time of this letter, many of our locations At the time of this letter, many of our locations are running abbreviated operations to protect the health and safety of our employees, customers and communities. The COVID-19 pandemic is an unprecedented crisis, but KAR is no stranger to challenges such as 9/11 and the Great Recession. We have always come out a better and stronger company focusing on our core business and supporting our customers in any way possible.

As I reflect on last year—in many ways we were preparing for change. We could never have anticipated the scale and scope of the coronavirus, but 2019 positioned KAR for transformation—to help us navigate uncertainty and continue leading the evolution of our industry. The COVID-19 pandemic may have accelerated some of this change, but we were already well on our way.

A key area of achievement in 2019 was the advancement of our digital capabilities. We deployed VirtuaLane technology at nearly half of our locations and a new Simulcast platform allowing dealers to buy and sell online at any ADESA auction.

We also released an enhanced ADESA.com, supplemented with our personalized, industry- only vehicle recommendations engine.

LETTER TO STOCKHOLDERS

...2019 positioned KAR for transformation—to help us navigate uncertainty and continue leading the evolution of our industry

And while we did not achieve the TradeRev volumes we anticipated, we continue to grow the active dealer base on this important mobile-app marketplace. In 2019, these digital channels facilitated nearly 60% of all KAR Global transactions. But more importantly, they now allow us to engage dealers anytime, anywhere.

Another standout accomplishment of 2019 was the successful spin-off of Insurance Auto Auctions. This transaction generated new value for our stockholders, and paid a valuable yet less tangible dividend to our company: focus. With the two companies separated, we were able to direct the full force of our capital, resources and people on our core business. These investments led to a more integrated, solutions-based portfolio and an enhanced technology infrastructure that helped us win new business and retain several of our largest customers.

We also completed the acquisition of CarsOnTheWeb in 2019. This gave us a strong presence in the major automotive markets across Europe, and the geographic footprint to support our brand change to “KAR Global.” But our new name doesn’t just represent where we operate; it also signals the broad scale and scope of our remarketing capabilities. Our global customers want global solutions, and the KAR Global name is a commitment to delivering just that.

Shortly after the brand change, our commercial accounts teams adopted KAR Global titles and began representing our integrated solutions versus the individual products and services of each particular brand. Similarly, we combined our ADESA and TradeRev dealer sales representatives into a unified KAR Global team and deployed the only combined physical and digital dealer consignment offering in the industry. These changes will help us deliver a more seamless and simplified customer experience across our portfolio.us deliver a more seamless and simplified customer experience across our portfolio.us deliver a more seamless and simplified customer experience across our portfolio.

So as I look to the future, I believe there is opportunity in every crisis, and KAR’s So as I look to the future, I believe there is opportunity in every crisis, and KAR’s entrepreneurial spirit remains strong. Over the past few weeks we have enrolled and entrepreneurial spirit remains strong. Over the past few weeks we have enrolled and trained thousands of physical auction dealers on our digital marketplaces. We’ve achieved trained thousands of physical auction dealers on our digital marketplaces. We’ve achieved never before seen levels of Simulcast buyer participation and bidding activity and we’re never before seen levels of Simulcast buyer participation and bidding activity and we’re accelerating experimentation with new digital sale formats. 2020 will no doubt be a year accelerating experimentation with new digital sale formats. 2020 will no doubt be a year of adaptation, but our company is prepared, courageous and resilient. of adaptation, but our company is prepared, courageous and resilient. of adaptation, but our company is prepared, courageous and resilient.

Thank you to our employees for their passion, commitment and many contributions in Thank you to our employees for their passion, commitment and many contributions in Thank you to our employees for their passion, commitment and many contributions in 2019. And thank you for your continued support, interest and investment in KAR Global. 2019. And thank you for your continued support, interest and investment in KAR Global. 2019. And thank you for your continued support, interest and investment in KAR Global. Stay safe and stay healthy.Stay safe and stay healthy.Stay safe and stay healthy.

LET

TER

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Jim HallettCHAIRMAN & CEO

Stay safe and stay healthy.Stay safe and stay healthy.Stay safe and stay healthy.

MichaelKestner

BOARD OF DIRECTORS

James HallettCHAIRMAN & CEO

EXECUTIVE LEADERSHIP

MarkHowell

CarmelGalvin*

*Joined February 2020, not pictured in the group photo

StephenSmith

James Hallett

Mary EllenSmith

MarkHill

StefanJacoby

DavidDiDomenico

Thomas FisherEVP & CHIEF DIGITAL OFFICER

JohnHammerCHIEF COMMERCIAL OFFICER, KAR GLOBAL, & PRESIDENT, ADESA

Peter Kelly PRESIDENT, KAR GLOBAL

Eric LoughmillerEVP & CHIEF FINANCIAL OFFICER

James MoneyPRESIDENT,AUTOMOTIVE FINANCE CORPORATION

Chuck ColemanSVP, GENERAL COUNSEL & SECRETARY

Lisa PriceEVP, CHIEF PEOPLEOFFICER

Benjamin SkuyEVP, INTERNATIONAL MARKETS & STRATEGIC INITIATIVES

SrisuSubrahmanyamCHIEF OPERATING OFFICER,ADESA

KAR AUCTION SERVICES, INC.

Notice of Annual Meeting and Proxy Statement

Annual Meeting of StockholdersJune 4, 2020

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12APR202019541630

28MAR201223475050

12APR202019535941

April 23, 2020

Dear Fellow Stockholder:

Thank you for your continued investment in and support of KAR Auction Services, Inc. d/b/a KAR Global (‘‘KARGlobal’’ or the ‘‘Company’’). You are cordially invited to attend KAR Global’s 2020 annual meeting of stockholders,which will be hosted virtually. A virtual meeting provides expanded access, improved communication and cost savingsfor our stockholders and the Company. You will be able to attend the 2020 annual meeting online, vote your shareselectronically and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/KAR2020.

As a KAR Global stockholder, your vote is important. The matters to be acted upon are described in the noticeof annual meeting of stockholders and the proxy statement. Even if you are planning to attend the virtualmeeting, you are strongly encouraged to vote your shares in advance through one of the methods described inthe proxy statement.

2019 was a pivotal year for KAR Global. We completed the spin-off of Insurance Auto Auctions and advancedinitiatives key to our core business—including expanding our international footprint with the acquisition ofCarsOnTheWeb and continued enhancement of our data analytic capabilities and digital and technologyplatforms. Operationally, we grew revenue, adjusted EBITDA and gross profit and sold approximately3.8 million vehicles. We are proud that through share buybacks and dividends, in 2019 we returnedapproximately $284 million to stockholders and invested approximately $282 million in our business throughcapital expenditures and strategic acquisitions.

Thank you again for your continued support of KAR Global, our Board of Directors, our employees and ourfuture.

Sincerely,

James P. Hallett

Chairman of the Board andChief Executive Officer

This proxy statement is dated April 23, 2020 and is first being distributed to stockholders on or about April 23,2020.

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11299 North Illinois Street

Carmel, Indiana 46032

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Date and Time: 9:00 a.m., Eastern Daylight Time, on June 4, 2020

Place: Online at

Admission: To attend the 2020 annual meeting, visit . You willneed the 16-digit control number included on your Notice of Internet Availability of Proxy Materials,on your proxy card or on the instructions that accompanied your proxy materials.

Items of Business: To elect each of the nine director nominees to the Board of Directors.

To approve, on an advisory basis, executive compensation.

To approve an amendment to the KAR Auction Services, Inc. Employee StockPurchase Plan to increase the total number of shares reserved for issuance under the plan by1,500,000 shares.

To ratify the appointment of KPMG LLP as our independent registered publicaccounting firm for 2020.

To transact any other business as may properly come before the meeting or any adjournments orpostponements thereof.

You are entitled to vote at the 2020 annual meeting and at any adjournments or postponementsthereof if you were a stockholder of record at the close of business on April 9, 2020. A list of

Record Date: stockholders entitled to vote at the 2020 annual meeting will be available for examination duringordinary business hours for 10 days prior to the meeting at the address listed above, and the listwill also be available online during the meeting.

Whether or not you plan to virtually attend the 2020 annual meeting, please vote at your earliestconvenience by following the instructions in the Notice of Internet Availability of Proxy Materials or

Voting by Proxy: the proxy card you received in the mail so that your shares can be voted at the 2020 annualmeeting in accordance with your instructions. For specific instructions on voting, please refer to theinstructions on your enclosed proxy card.

On Behalf of the Board of Directors,

April 23, 2020 Charles S. ColemanCarmel, Indiana SVP, General Counsel and Secretary

www.virtualshareholdermeeting.com/KAR2020

www.virtualshareholdermeeting.com/KAR2020

Proposal No. 1:

Proposal No. 2:

Proposal No. 3:

Proposal No. 4:

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The proxy statement for the 2020 annual meeting and the annual report to stockholders for the fiscal yearended December 31, 2019, each of which is being provided to stockholders prior to or concurrently with thisnotice, are also available to you electronically via the Internet. We encourage you to review all of the importantinformation contained in the proxy materials before voting. To view the proxy statement and annual report tostockholders on the Internet, visit our website, , and click on ‘‘Investors’’ and then the‘‘Financials’’ tab. The information on our website is not part of this proxy statement and is not deemedincorporated by reference into this proxy statement or any other public filing made with the SEC.

TABLE OF CONTENTS

1 ELEMENTS USED TO ACHIEVE COMPENSATIONANNUAL MEETING OF STOCKHOLDERS . . . . . . . . . 1 PHILOSOPHY AND OBJECTIVES . . . . . . . . . . . . . . 31ITEMS TO BE VOTED ON AT ANNUAL MEETING OF COMPENSATION POLICIES AND OTHERSTOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 1 INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 40BOARD NOMINEES . . . . . . . . . . . . . . . . . . . . . . . 2 RESULTS OF SAY ON PAY VOTES AT 2019 ANNUAL2019 BUSINESS HIGHLIGHTS . . . . . . . . . . . . . . . . 3 MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41CORPORATE GOVERNANCE HIGHLIGHTS . . . . . . . . 4 COMPENSATION COMMITTEE REPORT . . . . . . . . . 42EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . 5

6 43DIRECTORS ELECTED ANNUALLY . . . . . . . . . . . . . 6 44DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . 6 45BOARD NOMINATIONS AND DIRECTOR NOMINATIONPROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 46BOARD QUALIFICATIONS AND DIVERSITY . . . . . . . . 7INFORMATION REGARDING THE NOMINEES FOR 48ELECTION TO THE BOARD . . . . . . . . . . . . . . . . . . 7

13 49ROLE OF THE BOARD . . . . . . . . . . . . . . . . . . . . . 13 EQUITY-BASED AWARDS—OMNIBUS PLAN . . . . . . . 49BOARD LEADERSHIP . . . . . . . . . . . . . . . . . . . . . . 13 ANNUAL CASH INCENTIVE AWARDS—OMNIBUSEXECUTIVE SESSIONS . . . . . . . . . . . . . . . . . . . . 14 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50BOARD MEETINGS AND ATTENDANCE . . . . . . . . . . 14BOARD COMMITTEES . . . . . . . . . . . . . . . . . . . . . 14 51BOARD AND COMMITTEE EVALUATION PROCESS . . 16 EMPLOYMENT AGREEMENTS WITH NAMEDBOARD’S RISK OVERSIGHT . . . . . . . . . . . . . . . . . 16 EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . 54CORPORATE GOVERANCE DOCUMENTS . . . . . . . . 18 59COMPENSATION COMMITTEE INTERLOCKS ANDINSIDER PARTICIPATION . . . . . . . . . . . . . . . . . . . 18STOCKHOLDER COMMUNICATIONS WITH THEBOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

19 60CASH AND STOCK RETAINERS . . . . . . . . . . . . . . . 19 PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60DIRECTOR DEFERRED COMPENSATION PLAN . . . . . 20DIRECTOR STOCK OWNERSHIP AND HOLDING 63GUIDELINES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63DIRECTOR COMPENSATION PAID IN 2019 . . . . . . . . 20 REPORT OF THE AUDIT COMMITTEE . . . . . . . . . . . 64OUTSTANDING DIRECTOR RESTRICTED STOCK FEES PAID TO KPMG LLP . . . . . . . . . . . . . . . . . . . 65AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF

AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF22 INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6524 66

PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 REVIEW AND APPROVAL OF TRANSACTIONS WITH25 RELATED PERSONS . . . . . . . . . . . . . . . . . . . . . . 66

OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . 27 67COMPENSATION PHILOSOPHY AND OBJECTIVES . . 29 NOMINATION OF DIRECTORS AND OTHERTHE ROLE OF THE COMPENSATION COMMITTEE BUSINESS OF STOCKHOLDERS . . . . . . . . . . . . . . 67AND THE EXECUTIVE OFFICERS IN DETERMININGEXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . 29 68

Notice of Internet Availability of Proxy Materials for the Annual Meeting

www.karglobal.com

PROXY STATEMENT SUMMARY . . . . . . . . . . . . . . . . .

ANALYSIS OF RISK IN THE COMPANY’S

PROPOSAL NO. 1: ELECTION OF DIRECTORS . . . . . . . . COMPENSATION STRUCTURE . . . . . . . . . . . . . . . . . .SUMMARY COMPENSATION TABLE FOR 2019 . . . . . . .GRANTS OF PLAN-BASED AWARDS FOR 2019 . . . . . . .OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .OPTION EXERCISES AND STOCK VESTED DURING

FISCAL YEAR 2019 . . . . . . . . . . . . . . . . . . . . . . . . . .POTENTIAL PAYMENTS UPON TERMINATION OR

BOARD STRUCTURE AND CORPORATE GOVERNANCE . CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . .

POTENTIAL PAYMENTS UPON TERMINATION OR

CHANGE IN CONTROL TABLE . . . . . . . . . . . . . . . . . .

CEO PAY RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . .PROPOSAL NO. 3: APPROVAL OF AN AMENDMENT TO

THE KAR AUCTION SERVICES, INC. EMPLOYEE STOCK

PURCHASE PLAN TO INCREASE THE TOTAL NUMBER

OF SHARES RESERVED UNDER THE PLAN BY 1,500,000

DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 4: RATIFICATION OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . .

BENEFICIAL OWNERSHIP OF THE COMPANY’S

COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . .PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE

EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . RELATED PERSON TRANSACTIONS . . . . . . . . . . . . . .

COMPENSATION DISCUSSION AND ANALYSIS . . . . . . .REQUIREMENTS, INCLUDING DEADLINES, FOR

SUBMISSION OF PROXY PROPOSALS . . . . . . . . . . . . .

QUESTIONS AND ANSWERS ABOUT THE PROXY

MATERIALS AND THE ANNUAL MEETING . . . . . . . . . . .

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This summary highlights information contained elsewhere in this proxy statement. This summary does notcontain all of the information that you should consider, and you should read the entire proxy statement beforevoting. For more complete information regarding KAR Auction Services, Inc.’s (the ‘‘Company,’’ ‘‘KAR,’’ ‘‘KARAuction Services’’ or ‘‘KAR Global’’) 2019 performance, please review the Company’s Annual Report onForm 10-K for the year ended December 31, 2019.

ANNUAL MEETING OF STOCKHOLDERS

Date and Time: 9:00 a.m., Eastern Daylight Time, on June 4, 2020

Location: Online at

Record Date: Stockholders of record as of the close of business on April 9, 2020 are entitled to vote.Each share of common stock is entitled to one vote for each director nominee and foreach of the other proposals to be voted on at the 2020 annual meeting of stockholders.On the record date, the Company had 129,167,854 shares of common stock issued andoutstanding.

NYSE Symbol: KAR

Registrar andAmerican Stock Transfer & Trust Company, LLC

Transfer Agent:

ITEMS TO BE VOTED ON ATANNUAL MEETING OF STOCKHOLDERS

Our Board’sProposal Recommendation Page

Election of each of the nine director nominees. 6each director nominee

Approval, on an advisory basis, of executive compensation. 24

Approval of an amendment to the KAR Auction Services, Inc. 60Employee Stock Purchase Plan to increase the total number of sharesreserved for issuance under the plan by 1,500,000 shares.

Ratification of the appointment of KPMG LLP as our independent 63registered public accounting firm for 2020.

PROXY STATEMENT SUMMARY

www.virtualshareholdermeeting.com/KAR2020

1. FOR

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BOARD NOMINEES (PAGES 7–12)

Director CommitteeName Age Since Independent Primary Occupation Membership**

50 2019 Yes Partner of JANA Partners LLC ,

Chief Human ResourcesOfficer and Senior Vice

51 2020 Yes , President, People and Placesof Autodesk, Inc.Chairman of the Board and

67 2007 No Chief Executive Officer of KAR —Auction Services, Inc.Managing Partner of CollinaVentures, LLC and Chairman

64 2014 Yes (Chair), and Chief Executive Officer ofLumavate LLCPresident and Chief Executive

55 2014 Yes (Chair), Officer of Conexus Indiana

62 2019 Yes Automotive Industry Consultant , Building Products and

66 2013 Yes (Chair), Automotive Industry ConsultantCorporate Vice President ofWorldwide Business

60 2019 Yes , Operations of MicrosoftCorporation

71 2013 Yes Automotive Industry Consultant (Chair),

* Lead Independent Director** =Audit Committee

=Compensation Committee=Nominating and Corporate Governance Committee

=Risk Committee

David DiDomenico AC NCGC

Carmel Galvin CC NCGC

James P. Hallett

Mark E. Hill NCGC RC

J. Mark Howell RC AC

Stefan Jacoby CC NCGC

Michael T. Kestner* AC RC

Mary Ellen Smith CC RC

Stephen E. Smith CC AC

AC

CC

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RC

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2019 BUSINESS HIGHLIGHTS

For the year ended December 31, 2019, the Company again achieved solid financial results. Specific highlightsfor fiscal 2019 included:

On June 28, 2019, we successfully completed the previously announced spin-off of ourformer salvage auction business, IAA, Inc. (‘‘IAA’’), to our stockholders, resulting in KAR

and IAA being two independent, publicly-traded companies (the ).

Operating revenue was up to approximately (up 7% excluding purchased vehicle sales).

Total vehicles sold rose approximately to approximately million units.

Gross profit increased approximately to .

Through share buybacks and dividends, in 2019 we returnedapproximately to stockholders and invested

approximately in our business throughcapital expenditures and strategic acquisitions.

We achieved net income from continuing operations of .

Adjusted EBITDA* rose to .

* Adjusted EBITDA is a non-GAAP measure and is definedand reconciled to the most comparable GAAP measure, netincome from continuing operations, in our Annual Report onForm 10-K for the year ended December 31, 2019 in Item 7,‘‘Management’s Discussion and Analysis of FinancialCondition and Results of Operations—EBITDA and AdjustedEBITDA.’’

‘‘IAA Spin-Off’’

14% $2.8 billion

9% 3.8

4% $1.2 billion

$284 million

$282 million

$92.4 million

1%$510.0 million

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CORPORATE GOVERNANCE HIGHLIGHTS (PAGES 13–18)

We are committed to high standards of ethical and business conduct and strong corporate governancepractices. This commitment is highlighted by the practices described below as well as the information containedon our website, , which can be accessed by clicking on ‘‘Investors’’ and then the‘‘Governance’’ tab.

Our directors are elected annually for one-year terms.

We maintain a majority voting standard for uncontested director elections with a policyfor directors to tender their resignation if less than a majority of the votes cast are in their favor.

Eight of our nine director nominees are independent, and allcommittees of our Board of Directors (the ‘‘Board’’) are comprised entirely of independent directors.

Our independent directors meet in executive session at each regularly scheduledBoard meeting.

We have a lead independent director who presides over the executivesessions of the independent directors and serves as the principal liaison between the independentdirectors and the Company’s CEO and Chairman of the Board.

More than twenty percent of our Board is comprised of women.

The Board and its committees each evaluates itsperformance each year.

The stock ownershipguideline for our non-employee directors is five times their annual cash retainer.

All shares of our commonstock granted to non-employee directors must be held for three years after vesting while serving as adirector.

We have stock ownershipguidelines that are applicable to our executive officers. The stock ownership guideline for our CEO isfive times his annual base salary and, for the remaining named executive officers, three times annualbase salary. Executive officers are required to hold 60% of vested shares, net of taxes, until stockownership guidelines are met.

Our directors and executive officers are prohibited from hedgingor pledging Company stock.

Our Board conducts anannual evaluation and review of our CEO and each executive officer’s performance, development andsuccession plan.

The Risk Committee assists the Board in its oversight of: (i) the principalbusiness, financial, technology, operational and regulatory risks and other material risks and exposuresof the Company; and (ii) the actions, activities and initiatives of the Company to mitigate such risks andexposures. The Risk Committee provides oversight with respect to risk practices implemented bymanagement, except for the oversight of risks that have been specifically delegated to anothercommittee of the Board (in which case the Risk Committee may maintain oversight over such risksthrough the receipt of reports from such committees).

www.karglobal.com

Annual Elections:

Majority Voting:

Director and Committee Independence:

Executive Sessions:

Lead Independent Director:

Gender Diversity:

Annual Board and Committee Evaluations:

Robust Equity Ownership Requirements for Non-Employee Directors:

Robust Equity Retention Requirements for Non-Employee Directors:

Robust Equity Ownership Requirements for Executive Officers:

Anti-Hedging and Pledging Policies:

Annual management and CEO evaluation and succession planning review:

Board Risk Oversight:

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EXECUTIVE COMPENSATION (PAGES 25–58)

We maintain a compensation program structured to achieve a close connection between executive pay andCompany performance. We believe that this strong pay-for-performance orientation has served us well inrecent years. For more information regarding our named executive officer compensation, see ‘‘CompensationDiscussion and Analysis’’ and the compensation tables that follow such section.

We have demonstrated a The Compensationtrend of alignment between our total stockholder Committee sets maximum amounts that may bereturn (‘‘TSR’’) performance and the compensation payable for annual cash incentive compensationof our CEO, as shown in the chart on page 28. and PRSUs.

All of the Our clawback policy provides formembers of our Compensation Committee are the recovery and cancellation of incentiveindependent under New York Stock Exchange compensation of an executive officer in the event(‘‘NYSE’’) rules. we are required to prepare an accounting

restatement due to such executive officer’s Theintentional misconduct.Compensation Committee retains its own

independent compensation consultant to evaluate Change inand review our executive compensation program control severance benefits are two times baseand practices. salary and target bonus for our executive officers.

Our annual incentive Theprogram is 100% performance-based and our stock ownership guideline for our CEO is five timesequity incentive program is heavily performance- his annual base salary, and three times annualbased with 75% of our equity awards in the form of base salary for the other named executive officers.performance restricted stock units (‘‘PRSUs’’). Executive officers are required to hold 60% of

vested shares, net of taxes, until stock ownership Acceleratedguidelines are met.vesting of assumed or replaced equity awards upon

a change in control of the Company is only Eachpermitted if an executive experiences a qualifying year we perform an assessment of any risks thattermination of employment in connection with or could result from our compensation programs andfollowing such change in control. practices.

Dividend equivalents and cash are accrued on We prohibit hedging, pledging and shortPRSUs and RSUs, respectively, but are only paid sales of Company stock by our directors andout if and to the extent the underlying PRSUs and executive officers.RSUs vest. Stock option exercise

We provide a prices are set equal to the grant date market pricelimited number of perquisites that are designed to and cannot be repriced or discounted withoutsupport a competitive total compensation package. stockholder approval.

Our annualincentive program and our PRSU equity awards are We do not maintain a definedentirely performance-based and our executive benefit pension or supplemental retirement plansofficers are not guaranteed any minimum levels of for our executive officers.payment.

WHAT WE DO

✔ Stockholder alignment: ✔ Maximum payout caps:

✔ Independent Compensation Committee: ✔ Clawback policy:

✔ Independent compensation consultant:

✔ Moderate change in control benefits:

✔ Pay for performance: ✔ Robust equity ownership requirements:

✔ ‘‘Double-trigger’’ equity vesting:

✔ Annual compensation risk assessment:

WHAT WE DON’T DO

✘ Pay dividends on unvested equity awards: ✘ Allow hedging or pledging of the Company’ssecurities:

✘ Reprice stock options:✘ Provide excessive perquisites:

✘ Guarantee incentive compensation: ✘ Provide pension benefits or supplementalretirement plans:

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PROPOSAL NO. 1:

ELECTION OF DIRECTORSDIRECTORS ELECTED ANNUALLY

Our Board has nominated the nine individuals named below to stand for election to the Board at the 2020annual meeting. The Company’s directors are elected each year by our stockholders at the annual meeting.We do not have a staggered or classified board. Each director’s term will last until the 2021 annual meeting ofstockholders and until such director’s successor is duly elected and qualified, or such director’s earlier death,resignation or removal. Each director nominee must receive the affirmative vote of a majority of the votes castin the election of directors at the 2020 annual meeting to be elected (i.e., the number of shares voted ‘‘FOR’’ adirector nominee must exceed the number of votes cast ‘‘AGAINST’’ such nominee).

DIRECTOR INDEPENDENCE

The Board is responsible for determining the independence of our directors. Under the NYSE listing standards,a director qualifies as independent if the Board affirmatively determines that the director has no materialrelationship with the Company. While the focus of the inquiry is independence from management, the Board isrequired to broadly consider all relevant facts and circumstances in making an independence determination. Inmaking independence determinations, the Board complies with NYSE listing standards and considers allrelevant facts and circumstances. Based upon its evaluation, our Board has affirmatively determined that thefollowing directors meet the standards of ‘‘independence’’ established by the NYSE: David DiDomenico, CarmelGalvin, Mark E. Hill, J. Mark Howell, Stefan Jacoby, Michael T. Kestner, Mary Ellen Smith and Stephen E.Smith. With respect to the portion of fiscal 2019 during which they served on the Board, the Board alsodetermined that Todd F. Bourell, Donna R. Ecton, Lynn Jolliffe and John P. Larson met the standards of‘‘independence’’ established by the NYSE. James P. Hallett, our CEO and Chairman of the Board, is not anindependent director.

BOARD NOMINATIONS AND DIRECTOR NOMINATION PROCESS

The Board is responsible for nominating members for election to the Board and for filling vacancies on theBoard that may occur between the annual meetings of stockholders. The Nominating and CorporateGovernance Committee is responsible for identifying, screening and recommenlding candidates to the Board forBoard membership. When formulating its Board membership recommendations, the Nominating and CorporateGovernance Committee may also consider advice and recommendations from others, including third-partysearch firms, current Board members, management, stockholders and other persons, as it deems appropriate.The Nominating and Corporate Governance Committee retained a third-party search firm to assist withidentifying, screening and evaluating potential candidates.

The Nominating and Corporate Governance Committee uses a variety of methods to identify and evaluatepotential candidates. Consideration of candidates typically involves a series of internal discussions, review ofcandidate information, and interviews with selected candidates. The Nominating and Corporate GovernanceCommittee will consider the candidate against the criteria it has adopted, as further discussed below, in thecontext of the Board’s then-current composition and the needs of the Board and its committees, and willultimately recommend qualified candidates for election to the Board. Though the Nominating and CorporateGovernance Committee does not have a formal policy regarding consideration of director candidatesrecommended by stockholders, the Nominating and Corporate Governance Committee generally evaluatessuch candidates in the same manner by which it evaluates director candidates recommended by other sources.

As detailed in both the Nominating and Corporate Governance Committee Charter and the CorporateGovernance Guidelines, director candidates are selected based upon various criteria, including experience,skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability inlight of other commitments, dedication, conflicts of interest and such other relevant factors that the Nominatingand Corporate Governance Committee considers appropriate in the context of the needs of the Board.

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All candidates are considered in light of the needs of the Board with due consideration given to the foregoingcriteria. Board members are expected to prepare for, attend and participate in all Board and applicablecommittee meetings and the Company’s annual meetings of stockholders.

In addition, a stockholder may nominate candidates for election as a director, provided that the nominatingstockholder follows the procedures set forth in Article II, Section 5 of the Company’s Second Amended andRestated By-Laws for nominations by stockholders of persons to serve as directors, including the requirementsof timely notice and certain information to be included in such notice. Deadlines for stockholder nominations fornext year’s annual meeting are included in the ‘‘Requirements, Including Deadlines, for Submission of ProxyProposals’’ section on page 67.

An employment agreement entered into on February 27, 2012 between the Company and James P. Hallett, theCompany’s CEO and Chairman of the Board, provides that Mr. Hallett shall be entitled to serve as a memberof the Board for so long as the employment agreement is in effect.

BOARD QUALIFICATIONS AND DIVERSITY

The Nominating and Corporate Governance Committee and the Board believe that diversity along multipledimensions, including opinions, skills, perspectives, personal and professional experiences, and otherdifferentiating characteristics, is an important element of its nomination recommendations. The Nominating andCorporate Governance Committee has not identified any specific minimum qualifications which must be met fora person to be considered as a candidate for director. However, Board candidates are selected based uponvarious criteria including experience, skills, expertise, diversity, personal and professional integrity, character,business judgment, time availability in light of other commitments, dedication, conflicts of interest and suchother relevant factors that the Nominating and Corporate Governance Committee considers appropriate in thecontext of the needs of the Board. Although the Board does not have a formal diversity policy, the Nominatingand Corporate Governance Committee and Board review these factors, including diversity of gender, race,ethnicity, age, cultural background and professional experience, in considering candidates for Boardmembership.

INFORMATION REGARDING THE NOMINEES FOR ELECTIONTO THE BOARD

The following information is furnished with respect to each nominee for election as a director. All of thenominees are currently directors and were elected by the stockholders at last year’s annual meeting, except forMr. DiDomenico, Ms. Galvin and Ms. Smith, who were each elected by the Board to fill vacancies.Mr. DiDomenico was initially identified and recommended to the Nominating and Corporate GovernanceCommittee as a potential nominee by a former non-employee director, and Ms. Galvin and Ms. Smith wereeach initially identified and recommended to the Nominating and Corporate Governance Committee as apotential nominee by a third-party search firm. Mr. DiDomenico, Ms. Galvin and Ms. Smith were eachsubsequently recommended by the Nominating and Corporate Governance Committee to the Board for electionas a director. Upon the recommendation of the Nominating and Corporate Governance Committee, the Boardelected Mr. DiDomenico and Ms. Smith to the Board effective October 16, 2019, and Ms. Galvin to the Boardeffective February 1, 2020.

Each of the nominees has consented to being named in this proxy statement and to serve as a director ifelected. If a nominee is unavailable to stand for election as a director, your proxy holders will have theauthority and discretion to vote for another nominee proposed by the Board or the Board may reduce thenumber of directors to be elected at the 2020 annual meeting. The ages of the nominees are as of the date ofthe 2020 annual meeting, June 4, 2020.

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since October 2019 since February 2020 50 51

Audit Committee and Compensation Committee andNominating and Corporate Nominating and CorporateGovernance Committee Governance Committee

• Chief Human Resources Officer (‘‘CHRO’’) and Senior Vice• Partner of JANA Partners LLC (‘‘JANA’’), a registeredPresident, People and Places, at Autodesk, Inc., ainvestment adviser, since September 2010.multinational software corporation, since March 2018.

• Chief Executive Officer and President of Osprey Technology• CHRO and Senior Vice President at Glassdoor, Inc., a jobAcquisition Corp. (‘‘Osprey’’), a special purpose acquisition

listing platform, from April 2016 to February 2018.company co-sponsored by JANA, since June 2019 and adirector of Osprey since July 2019. • CHRO and Senior Vice President at Advent Software, Inc., an

investment management software company, from October• Managing Director of New Mountain Capital, LLC, an2014 to April 2016.alternative investment manager, from 2005 to 2010.

• Vice President of Talent & Culture Development for Deloitte• Associate Portfolio Manager at Neuberger Berman, Inc., aNew-venture Accelerator (DNA), from May 2013 to Octoberdiversified asset manager, from 2002 to 2005.2014.

• Graduate of Harvard College (BA) and Stanford University • Provided human resources consulting services from JanuaryGraduate School of Business (MBA). 2011 to April 2013 at Front Arch, Inc. and from September

Director of 2009 to December 2011 at Corporate Leadership CouncilOsprey since July 2019. (CLC), Corporate Executive Board.

• Managing Director, Global Head of Human Resources atMoody’s Analytics (formerly Moody’s KMV) from November2004 to March 2008 and Vice President, Global Head of

✓ More than 20 years of investment management and Human Resources at Barra, Inc. from September 1995 toacquisition experience, including managing investment June 2002.portfolios at various financial firms.

• Graduate of Trinity College Dublin (BA) and University College✓ Extensive experience in financial analysis, including evaluating Dublin (MBS).

companies’ strategies, operations and financial performance,which provides important perspectives and insights.

✓ Highly skilled in engaging and collaborating with management ✓ More than 25 years of talent and culture leadershipteams to increase shareholder returns. experience with global organizations in the technology and

online sectors.✓ Extensive experience as an investor in public markets, which

✓ Extensive experience in helping transform global companies,adds valuable perspective on institutional investors’ approachincluding leading diversity and inclusion, employeeto company performance, capital allocation and corporateengagement and culture management efforts at companiesgovernance.with varied locations, languages and cultures.

✓ Significant experience with executive compensation programsand practices, including working directly with boards andcompensations committees on compensation, talent andsuccession planning initiatives.

✓ Provides diverse international perspective.

David DiDomenico Carmel Galvin

Independent Director Independent Director

Age: Age:

Current Board Committees: Current Board Committees:

Career Highlights Career Highlights

Other Current Public Company Directorships:

Skills and Qualifications

Skills and Qualifications

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since April 2007 since June 2014 67 64

Nominating and CorporateGovernance Committee (Chair)and Risk Committee

• Managing Partner of Collina Ventures, LLC, a private• Chairman of the Company since December 2014 and Chiefinvestment company that invests in software and technologyExecutive Officer since September 2009.companies, since 2006; and Chairman and Chief Executive

• Chief Executive Officer and President of ADESA from April Officer of Lumavate LLC, a company that provides a platform2007 to September 2009, a wholly owned subsidiary of the for building cloud-based mobile applications, since NovemberCompany. 2017.

• President of Columbus Fair Auto Auction, a large independent • Co-founder and Chairman of Bluelock, LLC, a privately heldautomobile auction located in Columbus, Ohio, from May 2005 infrastructure-as-a-service company, from 2006 to Marchto April 2007. 2018.

• After selling his auctions to ADESA in 1996, Mr. Hallett held • Co-Founder, President and Chief Executive Officer of Bakervarious senior executive leadership positions with ADESA Hill Corporation, a banking industry software and servicesbetween 1996 and 2005, including President and Chief business, from 1985 to 2006. Baker Hill Corporation wasExecutive Officer of ADESA. acquired by Experian PLC, a global information solutions

company, in 2005.• Founded and owned two automobile auctions in Canada from1990 to 1996. • Graduate of the University of Notre Dame (BBA) and Indiana

University (MBA).• Graduate of Algonquin College.

• Managed and then owned a number of new car franchiseDirector of Interactive Intelligence Group, Inc. from 2004 to 2016.dealerships for 15 years.

• Winner of multiple industry awards, including NAAA Pioneer ofthe Year in 2008 and the Ed Bobit Industry Icon award in

✓ Significant executive leadership and management experience2018.leading and owning a software and technology-based

• Recognized as the EY Entrepreneur of the Year 2014 business provides our Board with expertise in technology,National Services Award Winner and one of Northwood innovation, and strategic investments.University’s 2015 Outstanding Business Leaders.

✓ Extensive experience as an investor and mentor to numerousearly stage software and technology companies providesentrepreneurial perspective to the Board.

✓ Committed and deeply engaged leader with over 20 years of✓ Key leadership experience in numerous central Indianaexperience in key leadership roles throughout the Company

business and community service organizations, includingand over 40 years of experience in the industry.TechPoint, the Central Indiana Community Foundation, the

✓ As Chief Executive Officer, Mr. Hallett has a thorough and Orr Fellowship and the local Teach For America board.in-depth understanding of the Company’s business and

✓ Public company board experience, including serving as a leadindustry, including its employees, business units, customersindependent director.and investors, which provides an additional perspective to our

Board.

✓ Utilizes strong communication skills to guide Boarddiscussions and keep our Board apprised of significantdevelopments in our business and industry; including our riskmanagement practices, strategic planning and development.

James P. Hallett Mark E. Hill

Director Independent Director

Age: Age:

Chairman of the Board and Current Board Committees:

Chief Executive Officer

Career Highlights Career Highlights

Other Public Company Directorships in Last Five Years:

Skills and Qualifications

Skills and Qualifications

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since December 2014 Since June 2019 55 62

Risk Committee (Chair) and Compensation Committee andAudit Committee Nominating and Corporate

Governance Committee

• Consultant in the automotive industry since January 2018.• President and Chief Executive Officer of Conexus Indiana,Indiana’s advanced manufacturing and logistics initiative • Executive Vice President of General Motors Company, asponsored by Central Indiana Corporate Partnership, Inc., multinational company that designs, manufactures andsince January 2018. markets vehicles worldwide, and President of GM International

Operations, from August 2013 to January 2018.• Chief Operating Officer of Angie’s List, Inc., a national localservices consumer review service and marketplace, from • Chief Executive Officer and President of Volvo CarMarch 2013 to September 2017. Angie’s List, Inc. was Corporation, a multinational vehicle manufacturer andacquired in 2017 and merged into ANGI Homeservices Inc. marketer, from August 2010 to October 2012.

• President, Ingram Micro North America Mobility of Ingram • Served in several capacities at Volkswagen AG, aMicro Inc., a technology distribution company, from 2012 to multinational automotive manufacturing company, between2013. 2004 and 2010, most recently serving as Chief Executive

Officer and President of Volkswagen Group of America from• President, BrightPoint Americas of BrightPoint, Inc., a2007 to 2010 and as Executive Vice President of Groupdistributor of mobile devices for phone companies, includingMarketing and Sales at Volkswagen AG from 2004 to 2007.Chief Operating Officer, Executive Vice President and Chief

• Chief Executive Officer and President of Mitsubishi MotorsFinancial Officer, from 1994 to 2012. BrightPoint, Inc. wasEurope, the European headquarters of automotivesold to Ingram Micro Inc. in 2012.manufacturer Mitsubishi Motors, from 2001 to 2004.

• Vice President and Corporate Controller of ADESA from• Served in a variety of finance and leadership roles atAugust 1992 to July 1994, now a wholly owned subsidiary of

Volkswagen AG from 1985 to 2001.the Company.• Graduate of the University of Cologne, Germany.• Audit Staff and Senior Staff at Ernst & Young LLP.

• Graduate of the University of Notre Dame (BBA inAccounting).

✓ More than 30 years of broad international experience in theautomotive industry, including senior management positionswith global automakers in Germany, Japan, the Netherlands,

✓ Extensive senior leadership experience at internet-based and Sweden, Singapore and the United States.technology-driven companies provides valuable insight as an

✓ Deep insights and understanding of the macro trends andincreasing amount of the Company’s consigned vehicles aretechnologies rapidly transforming the automotive industry,sold online.including mobility as a service and autonomous vehicles.

✓ Significant executive leadership experience in the public✓ Extensive knowledge of customer experience and retailcompany sector.

structures. Expansive experience in finance, sales andmarketing has given him a deep understanding of the impact✓ Provides unique, in-depth knowledge of ADESA and itsof both areas on profitability and successful market growth.industry as a former employee of ADESA.

✓ Strong leadership skills in managing and motivating people for✓ Substantial financial experience.establishing momentum for growth and change, building high

✓ Certified Public Accountant with experience in public performance teams in transformative periods and recruitingaccounting and public companies. and retaining senior management.

J. Mark Howell Stefan Jacoby

Independent Director Independent Director

Age: Age:

Current Board Committees: Current Board Committees:

Career Highlights Career Highlights

Skills and Qualifications

Skills and Qualifications

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since July 2019 66

Compensation Committee andRisk Committee

Audit Committee (Chair) andRisk Committee

• Corporate Vice President of Worldwide Business Operations• Consultant in the building products and automotive industryof Microsoft Corporation (‘‘Microsoft’’), a technology company,since December 2015.since July 2013.

• Chief Financial Officer of Building Materials Holding• Vice President, Worldwide Operations of Microsoft from 2011Corporation, a building products company, from August 2013

to July 2013, General Manager, Worldwide Commercialto December 2015.Operations of Microsoft from 2010 to 2011, and General

• Partner in FocusCFO, LLC, a consulting firm providing part Manager and President of Microsoft Licensing, GP from 2006time CFO services, from April 2012 to August 2013. to 2010.

• Executive Vice President, Chief Financial Officer and a • Served in several roles at Hewlett-Packard Company fromdirector of Hilite International, Inc., an automotive supplier of 1996 to 2006, including Vice President, Volume Direct andpowertrain parts, from October 1998 to July 2011. Teleweb, Americas Region, from 2004 to 2006, and Vice

President, Worldwide Customer Operations from 2002 to• Chief Financial Officer of Sinter Metals, Inc., a supplier of2004.powder metal precision components, from 1995 to 1998.

• Graduate of Bowling Green State University (BS) and Wright• Served in various capacities at Banc One Capital Partners,State University (MBA). Earned certificate of completion fromWolfensohn Ventures LP and as a senior audit manager atthe Stanford Executive Program at Stanford University.KPMG LLP.

• Graduated from Southeast Missouri State University.

✓ Over 30 years of broad and extensive operational andleadership experience in the technology industry with a deep

✓ Over 20 years as a CFO provides valuable experience and focus on global operations strategy and execution, businessperspective as Chair of the Audit Committee. transformation change management, global manufacturing,

supply chain and logistics.✓ Brings experience as the former CFO of a large, United

✓ Deep expertise in digital business transformation, changeStates based company which includes experience withmanagement in transforming business processes fromcomplex capital structures and mergers and acquisitions.physical to digital supply chain and operations delivering

✓ Extensive experience in financial analysis and financial highly impactful business model and cost improvements.statement preparation.

✓ Extensive knowledge in leading through growth and expansion✓ Management experience in the automotive industry both by building future operating performance models for new

domestically and internationally provides him with additional businesses in emerging markets and more broadly, worldwide.insight into financial and business matters that are important

✓ Extensive knowledge and broad business skills supportingto the Company.customer experience enhancements, complianceenhancements, oversight, risk mitigation and management.✓ Certified Public Accountant with experience in publicHighly skilled in finance, sales and marketing support with aaccounting and public companies.deep understanding of business model operations and driversof profitability.

✓ Significant leadership skills leading highly impactful andperforming teams and managing people. A proven leaderchampioning diversity and inclusion in corporate culture for alldimensions of diversity.

Michael T. Kestner Mary Ellen Smith

Independent Director Independent Director

Lead Independent Director Age:

Current Board Committees:Age:

Current Board Committees:

Career Highlights Career Highlights

Skills and Qualifications

Skills and Qualifications

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since December 2013 71

Compensation Committee (Chair)and Audit Committee

• Consultant in the automotive industry since October 2012.

• Senior Vice President, Financial Services of American HondaFinance Corporation (AHFC), a provider of financial services toautomobile, motorcycle, marine and power equipment productdealers and their customers, from 1985 to October 2012(including various other positions). Financial services includedcommercial lending, consumer lending and financing and vehicleservice contracts. Started the consumer finance organization atAHFC.

• Served two terms as Chair of the Vehicle Finance Division for theAmerican Financial Services Association. Member of theFinancial Services Roundtable.

• Began career at Bullock’s Dept. Stores, a division of FederatedDepartment Stores. Held senior level positions in the credit carddivision and in store management.

• Member of the board of the directors of Carecredit Corporation, aprivately-held consumer credit healthcare company, from 1996 to2002.

• Interim President of the California Council on EconomicEducation, a not-for-profit organization that provides training andeducational materials to California teachers relating to economicsand personal finance, from July 2013 to February 2014.

• Graduated from California State University, Northridge (BA,MBA).

✓ Over 25 years of extensive operational and managementexperience in the automotive industry with particular insight intothe financing and leasing of vehicles.

✓ Significant expertise in creating, building and developingconsumer and commercial finance business. Expertise in strategydevelopment, sales and marketing, operating efficiency andperformance improvement, customer satisfaction and loyalty, andtalent management.

✓ Extensive experience in managing lease residual setting, vehicleremarketing, dealer inventory financing and vehicle servicecontracts.

✓ Considerable financial skill and expertise.

Stephen E. Smith

Independent Director

Age:

Current Board Committees:

Career Highlights

Skills and Qualifications

The Board of Directors recommends a vote ‘‘FOR’’ the election of✓ each of the foregoing nine nominees to the Board of Directors.

Proxies solicited by the Board of Directors will be voted ‘‘FOR’’ the election of each of the nine directornominees named in this proxy statement and on the proxy card unless stockholders specify a contraryvote.

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ROLE OF THE BOARD

The Board oversees the Company’s CEO and other senior management in the competent and ethical operationof the Company and assures that the long-term interests of the stockholders are being served. The Boardserves as the ultimate decision-making body of the Company, except for those matters reserved to or sharedwith the stockholders. The Company’s Corporate Governance Guidelines are available on our website,

, by clicking on ‘‘Investors’’ and then the ‘‘Governance’’ tab. The information on our websiteis not part of this proxy statement and is not deemed incorporated by reference into this proxy statement orany other public filing made with the Securities and Exchange Commission (the ‘‘SEC’’).

BOARD LEADERSHIP

Neither the Company’s Second Amended and Restated By-Laws nor the Company’s Corporate GovernanceGuidelines require that the Company separate the roles of Chairman of the Board and CEO, and the Boarddoes not have a policy on whether the same person should serve as both the CEO and Chairman of theBoard, or if the roles must remain separate. The Board believes that it should have the flexibility to make thesedeterminations from time to time in the way that it believes best to provide appropriate leadership for theCompany under then-existing circumstances.

At present, the Board has chosen to combine the positions of CEO and Chairman of the Board and to appointa Lead Independent Director. Our Board believes that having one person serve the combined role of CEO andChairman of the Board is appropriate for the Company at this time, as it fosters clear accountability, effectivedecision making and alignment on corporate strategy. Given Mr. Hallett’s unparalleled knowledge of theindustry and the Company, the Board believes Mr. Hallett is in the best position to focus the independentdirectors’ attention on critical business matters and to speak for and lead both the Company and the Board. Inaddition, the Board believes that the appointment of a Lead Independent Director helps ensure that theCompany benefits from effective oversight by its independent directors. Our Lead Independent Directorpresides over the executive sessions of the independent directors and serves as the principal liaison betweenthe independent directors and the Company’s CEO and Chairman of the Board. Our Lead IndependentDirector, Mr. Kestner, has served on the Board since 2013 and as Lead Independent Director since July 2019.Mr. Kestner is a highly-engaged Lead Independent Director empowered with robust authority andresponsibilities, as discussed below.

The Board has adopted a Lead Independent Director Charter, which sets forth a clear mandate with significantauthority and responsibilities for the Lead Independent Director, including:

• Has the authority to call meetings of the independent directors, and calls and developsthe agenda for executive sessions of the independent directors.

• Presides at all meetings of the Board at which the Chairman of the Board is notpresent, including executive sessions of the independent directors.

• Reviews, in consultation with the Chairman and CEO:• agendas for Board meetings;• meeting schedules to assure there is sufficient time for discussion of all agenda

items; and• information sent to the Board, including the quality, quantity, appropriateness

and timeliness of such information.

• Serves as principal liaison on Board-wide issues among the independent directors andthe Chairman and CEO and facilitates communication generally among directors.

• If requested by stockholders, ensures that he or she is available, when appropriate, forconsultation and direct communication.

• Together with the Compensation Committee, conducts an annual evaluation of theChairman and CEO, including an annual evaluation of his or her interactions with theindependent directors.

• Recommends to the independent directors the retention of advisors and consultantswho report directly to the Board, and, upon approval by the independent directors,retains such advisors and consultants.

BOARD STRUCTURE AND CORPORATE GOVERNANCE

www.karglobal.com

Board Meetings andExecutive Sessions

Meeting Agendas,Schedules and Materials

Board/DirectorCommunications

StockholderCommunications

Chairman and CEOPerformance Evaluation

Outside Advisors andConsultants

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EXECUTIVE SESSIONS

The independent directors of the Company meet in executive session at every regularly scheduled Boardmeeting. The Company’s Corporate Governance Guidelines state that the Chairman of the Board (if anindependent director) or the Lead Independent Director (if the Chairman of the Board is not an independentdirector) shall preside at such executive sessions, or in such director’s absence, another independent directordesignated by the Chairman of the Board or the Lead Independent Director, as applicable. Currently,Mr. Kestner, our Lead Independent Director, presides at the executive sessions of our independent directors.

BOARD MEETINGS AND ATTENDANCE

The Board held thirteen meetings during 2019. All of the incumbent directors attended at least 75% of themeetings of the Board and Board committees on which they served during 2019. As stated in our CorporateGovernance Guidelines, each director is expected to attend all annual meetings of stockholders. All of ourdirectors attended last year’s annual meeting of stockholders.

BOARD COMMITTEES

In 2019, the Board maintained four standing committees: the Audit Committee, the Compensation Committee,the Nominating and Corporate Governance Committee and the Risk Committee. Each of our committeesoperates pursuant to a written charter. Copies of the committee charters are available on our website,

, by clicking on ‘‘Investors’’ and then the ‘‘Governance’’ tab. The information on our websiteis not part of this proxy statement and is not deemed incorporated by reference into this proxy statement orany other public filing made with the SEC. The following table sets forth the current membership of eachcommittee:

Nominating andCorporate

Compensation GovernanceName Audit Committee Committee Committee Risk Committee

David DiDomenico

Carmel Galvin

James P. Hallett*

Mark E. Hill (Chair)

J. Mark Howell (Chair)

Stefan Jacoby

Michael T. Kestner** (Chair)

Mary Ellen Smith

Stephen E. Smith (Chair)

* Chief Executive Officer and Chairman of the Board** Lead Independent Director

A description of each Board committee is set forth below.

Meetings Held in 2019:

Primary Responsibilities: Our Audit Committee assists the Board in its oversight of the integrity of ourfinancial statements, our independent registered public accounting firm’s qualifications and independence andthe performance of our independent registered public accounting firm. The Audit Committee (i) reviews theaudit plans and findings of our independent registered public accounting firm and our internal audit team andtracks management’s corrective action plans where necessary; (ii) reviews our financial statements, includingany significant financial items and changes in accounting policies or practices, with our senior management andindependent registered public accounting firm; (iii) reviews our financial risk and control procedures, complianceprograms (including our Code of Business Conduct and Ethics) and significant tax, legal and regulatory

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matters; (iv) reviews and approves related person transactions; and (v) has the sole discretion to appointannually our independent registered public accounting firm, evaluate its independence and performance andset clear hiring policies for employees or former employees of the independent registered public accountingfirm.

Independence: Each member of the Audit Committee is ‘‘financially literate’’ under the rules of the NYSE, andeach of Messrs. Howell and Kestner has been designated as an ‘‘audit committee financial expert’’ as that termis defined by the SEC. In addition, the Board has determined that each member of the Audit Committee meetsthe standards of ‘‘independence’’ established by the NYSE and is ‘‘independent’’ under the independencestandards for audit committee members adopted by the SEC.

Meetings Held in 2019:

Primary Responsibilities: The Compensation Committee reviews and recommends policies relating to thecompensation and benefits of our executive officers and employees. The Compensation Committee reviewsand approves corporate goals and objectives relevant to the compensation of our CEO and other executiveofficers, evaluates the performance of these officers in light of those goals and objectives, and approves thecompensation of these officers based on such evaluations. The Compensation Committee also administers theissuance of equity and other awards under our equity plans.

Independence: All of the members of the Compensation Committee are independent under the NYSE rules(including the enhanced independence requirements for compensation committee members).

Meetings Held in 2019:

Primary Responsibilities: The Nominating and Corporate Governance Committee is responsible for makingrecommendations to the Board regarding candidates for directorships and the size and composition of theBoard. The Nominating and Corporate Governance Committee also reviews non-employee directorcompensation on an annual basis and makes recommendations to the Board. In addition, the Nominating andCorporate Governance Committee is responsible for overseeing our Corporate Governance Guidelines andreporting and making recommendations to the Board concerning governance matters. As required by theCompany’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee overseesan annual evaluation process of the Board and each committee of the Board, as discussed in more detailunder ‘‘Board and Committee Evaluation Process’’ below.

Independence: All of the members of the Nominating and Corporate Governance Committee are independentunder the NYSE rules.

Meetings Held in 2019:

Primary Responsibilities: The Risk Committee assists the Board in its oversight of (i) the principal business,financial, technology, operational and regulatory risks, and other material risks and exposures of the Companyand (ii) the actions, activities and initiatives of the Company to mitigate such risks and exposures. The RiskCommittee also provides oversight for matters specifically relating to cyber security and other risks related toinformation technology systems and procedures. The Risk Committee receives regular reports from theCompany’s Chief Information Security Officer on, among other things, the Company’s cyber risks and threats,the status of projects to strengthen the Company’s information security systems, assessments of theCompany’s security program and the emerging threat landscape. The Risk Committee also oversees theCompany’s enterprise risk management (‘‘ERM’’) program and has direct oversight over certain risks within theERM framework.

Independence: All of the members of the Risk Committee are independent under the NYSE rules.

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BOARD AND COMMITTEE EVALUATION PROCESS

The Nominating and Corporate Governance Committee oversees the annual evaluation process of the Boardand each of its committees. The evaluation process includes a self-evaluation by the Board, a self-evaluationby each committee of the Board, and a peer evaluation by each director of each other Board member. Oncethe evaluation process is complete, the Nominating and Corporate Governance Committee reports to the fullBoard the results, including any recommendations, which are discussed by the full Board and each committee,as applicable, and changes in practices or procedures are considered and implemented as appropriate.

The Nominating and Corporate Governance Committee periodically reviews the format of the evaluationprocess to ensure that actionable feedback is solicited on the operation and effectiveness of the Board, theBoard committees and each Board member. The Nominating and Corporate Governance Committee alsoutilizes the results of this self-evaluation process in assessing and determining the characteristics and criticalskills required of prospective candidates for election to the Board and making recommendations to the Boardwith respect to assignments of Board members to various committees.

BOARD’S RISK OVERSIGHT

Management is responsible for assessing and managing risk at the Company, including communicating themost material risks to the Board and its committees. The Board has primary responsibility for risk oversight,with a focus on the most significant risks facing the Company. Oversight of the Company’s risks is carried outby the Board as a whole and by each of its committees.

The Board’s leadership structure, through its committees, supports its role in risk oversight. In general, thecommittees oversee the following risks:

• The Audit Committee maintains initial oversight over risks related to (i) the integrityof the Company’s financial statements; (ii) internal control over financial reporting and disclosurecontrols and procedures (including the performance of the Company’s internal audit function); (iii) theperformance of the independent registered public accounting firm; and (iv) ethics and related issuesarising from the Company’s whistleblower hotline.

• The Compensation Committee maintains oversight over risks related tothe Company’s compensation programs and practices.

• The Nominating and Corporate GovernanceCommittee monitors potential risks relating to the effectiveness of the Board, notably directorsuccession, composition of the Board and the principal policies that guide the Company’s governance.

• The Risk Committee maintains oversight over the Company’s enterprise-level risks,including with respect to cyber security and information technology systems and procedures as notedabove. The Risk Committee provides oversight with respect to risk practices implemented bymanagement, except for the oversight of risks that have been specifically delegated to anothercommittee of the Board. Even when the oversight of a specific area of risk has been delegated toanother committee, the Risk Committee may maintain oversight over such risks through the receipt ofreports from the committee chairs.

The Board maintains oversight over such risks through the receipt of reports from the committee chairs at eachregularly scheduled Board meeting.

As part of the risk management process, an annual risk assessment is conducted by management to identifyand prioritize the most significant enterprise risks to the Company. This risk assessment is reviewed with theRisk Committee and helps guide the focus and selection of risks that are brought to the Risk Committee forreview or covered by the full Board or its other committees. The reviews by the Risk Committee and othercommittees occur principally through the receipt of reports from management and third parties on applicableareas of risk, and discussions with management and third parties regarding risk assessment and riskmanagement.

Audit Committee:

Compensation Committee:

Nominating and Corporate Governance Committee:

Risk Committee:

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At its regularly scheduled meetings, the Board generally receives a number of reports which include informationrelating to risks faced by the Company. The Company’s Chief Financial Officer provides a report on theCompany’s results of operations, its liquidity position, including an analysis of prospective sources and uses offunds, and the implications to the Company’s debt covenants and credit rating, if any. The Company’s GeneralCounsel provides a privileged report which provides information regarding the status of the Company’s materiallitigation and related matters, if any, including environmental updates and the Company’s continuingcompliance with applicable laws and regulations. Further, the president of each primary business unit providesinformation relating to strategic, operational and competitive risks. At each regularly scheduled Board meeting,the Board also receives reports from the Chairman of the Risk Committee as well as other committee chairs,which may include a discussion of risks initially overseen by the committees for discussion and input from theBoard. As noted above, in addition to these regular reports, the Risk Committee receives reports on specificareas of risk, such as regulatory, cyclical or other risks, and reports to the Board on these matters.

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CORPORATE GOVERNANCE DOCUMENTS

The Board has adopted the following corporate governance documents:

Document Purpose/Application

Code of Business Conduct and Ethics Applies to all of the Company’s employees, officers and directors,including those officers responsible for financial reporting.

Code of Ethics for Principal Executive and Applies to the Company’s principal executive officer, principalSenior Financial Officers financial and accounting officer and such other persons who are

designated by the Board.Corporate Governance Guidelines Contains general principles regarding the functions of the Board

and its committees.Committee Charters Apply to the following Board committees, as applicable: Audit

Committee, Compensation Committee, Nominating and CorporateGovernance Committee and Risk Committee.

Lead Independent Director Charter Sets forth a clear mandate and significant authority andresponsibilities for the Lead Independent Director.

We expect that any amendment to or waiver of the codes of ethics that apply to executive officers or directorswill be disclosed on the Company’s website. The foregoing documents are available on our website,

, by clicking on ‘‘Investors’’ and then the ‘‘Governance’’ tab and in print to any stockholderwho requests them. Requests should be made to KAR Auction Services, Inc., Investor Relations, 11299 NorthIllinois Street, Carmel, Indiana 46032.

COMPENSATION COMMITTEE INTERLOCKS ANDINSIDER PARTICIPATION

During fiscal year 2019, each of Messrs. Bourell, Jacoby, Kestner, Larson, Smith and Mmes. Ecton, Jolliffe andSmith served as members of the Compensation Committee. None of our executive officers serve, or in fiscalyear 2019 served, as a member of the board of directors or compensation committee of any entity that has oneor more executive officers serving on our Board or our Compensation Committee. None of the individualsserving as members of the Compensation Committee during fiscal year 2019 are now or were previously anofficer or employee of the Company or its subsidiaries.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD

Any stockholder or other interested parties desiring to communicate with the Board, the Chairman of the Board,a committee of the Board or any of the independent directors individually or as a group regarding the Companymay directly contact such directors by delivering such correspondence to the Company’s General Counsel atKAR Auction Services, Inc., 11299 North Illinois Street, Carmel, Indiana 46032. Our General Counsel reviewsall such correspondence and forwards to the applicable director(s) copies of all such applicablecorrespondence.

The Audit Committee has established procedures for employees, stockholders and others to submit confidentialand anonymous reports regarding accounting, internal accounting controls, auditing or any other relevantmatters.

www.karglobal.com

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We use a combination of cash and stock based incentive compensation to attract and retain independent,qualified candidates to serve on the Board. The Board makes all director compensation determinations afterconsidering the recommendations of the Nominating and Corporate Governance Committee. The Nominatingand Corporate Governance Committee reviews director compensation annually, assisted periodically by anindependent compensation consultant (most recently by ClearBridge Compensation Group LLC (‘‘ClearBridge’’)in October 2018).

In setting director compensation, we consider various factors including market comparison studies and trends(such as ClearBridge’s review in October 2018), the responsibilities of directors generally, including committeechairs, and the significant amount of time that directors expend in fulfilling their duties. In establishing thenon-employee director compensation recommendations, the Nominating and Corporate Governance Committeeutilized a balance of cash and equity, with the majority of the compensation delivered through equity grants.Directors who also serve as employees of the Company do not receive payment for service as directors.

Based in part on ClearBridge’s October 2018 review of our director compensation program and those of theCompany’s then-current proxy comparator group (which is also used in executive compensation benchmarking),in October 2018 the Nominating and Corporate Governance Committee recommended, and the Boardapproved, certain changes to our director compensation program effective in 2019. Based on its most recentreview, the Nominating and Corporate Governance Committee recommended, and the Board agreed, that noadditional changes should be made to director compensation for 2020. There have been no increases incompensation paid to our directors since those approved in October 2018.

On March 26, 2020, the Company announced that in connection with the ongoing COVID-19 pandemic, eachof our non-employee directors voluntarily elected to forgo one-fourth of his or her annual cash retainer andapplicable chair, membership and lead independent director fees, which was each to be paid at the end of thesecond quarter 2020.

CASH AND STOCK RETAINERS

Non-employee directors who served for the entirety of 2019 received:Components of Director Compensation ProgramFor 2019 Service Annual Amount Form of Payment(1)

Annual Cash Retainer(2) $85,000 CashAnnual Stock Retainer(3) $130,000 Restricted StockLead Independent Director Fee $30,000 CashAudit Committee Chair Fee $25,000 CashCompensation Committee Chair Fee $20,000 CashNominating and Corporate Governance and Risk Committee Chair Fee $10,000 CashAudit Committee Membership Fee $7,500 Cash

(1) May elect to receive annual cash retainer in shares of our common stock.

(2) One-fourth of the annual cash retainer is paid at the end of each quarter, provided that the director served as adirector in such fiscal quarter.

(3) Pursuant to our Policy on Granting Equity Awards, unless specifically provided otherwise by the CompensationCommittee or the Board, annual grants for directors are effective on the date of the annual meeting at which thedirector was elected or re-elected. The annual restricted stock grant vests after one year (i.e., on the anniversary of theannual meeting), and is subject to forfeiture until vested. The number of shares of our common stock received is basedon the value of the shares on the date of the restricted stock grant.

Annual cash and stock retainers and any applicable fees described above are prorated for non-employeedirectors who begin such service on a date other than the date of the Company’s annual meeting ofstockholders. Directors do not receive fees for attending Board or committee meetings. All of our directors arereimbursed for reasonable expenses incurred in connection with attending Board meetings, committee meetingsand director education events.

DIRECTOR COMPENSATION

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DIRECTOR DEFERRED COMPENSATION PLAN

Our Board adopted the KAR Auction Services, Inc. Directors Deferred Compensation Plan (the ‘‘DirectorDeferred Compensation Plan’’) in December 2009. Pursuant to the terms of the Director DeferredCompensation Plan, each non-employee director may elect to defer the receipt of his or her cash director feesinto a pre-tax interest-bearing deferred compensation account, which account accrues interest as described inthe Director Deferred Compensation Plan. Amounts under the Director Deferred Compensation Plan may alsobe invested in the same investment choices as are available under our 401(k) plan. Non-employee directorsalso may choose to receive all or a portion of their annual stock retainer in the form of a deferred shareaccount that tracks shares of our common stock. The Director Deferred Compensation Plan provides that theamount of cash in a director’s deferred cash account, plus the number of shares of our common stock equal tothe number of shares in the director’s deferred share account, will be delivered to a director in installmentsover a specified period or within 60 days following the date of the director’s departure from the Board, withcash being paid in lieu of any fractional shares.

DIRECTOR STOCK OWNERSHIP AND HOLDING GUIDELINES

The Company’s non-employee directors are subject to the Company’s director stock ownership and holdingguidelines. The stock holding guideline requires each non-employee director to hold any shares of theCompany’s common stock granted by the Company for at least three years post-vesting while serving as adirector, subject to certain exceptions approved by the Nominating and Corporate Governance Committee.

The Company’s stock ownership guideline requires each non-employee director to own a minimum of five timeshis or her annual cash retainer amount in shares of Company stock. All non-employee directors with more thanone year of service are in compliance with this stock ownership guideline, except for Messrs. Howell and Smithdue to the decrease in our stock price following the IAA Spin-Off.

DIRECTOR COMPENSATION PAID IN 2019

The following table provides information regarding the fiscal 2019 compensation paid to our non-employeedirectors:

Fees Earnedor Paid in Stock

Name Cash(1) Awards(2) Total

Todd F. Bourell(3) $36,429 — $36,429David DiDomenico(4) $19,425 $82,539 $101,964Donna R. Ecton(3) $56,250 $130,031 $186,281Mark E. Hill $95,000 $130,031 $225,031J. Mark Howell $102,500 $130,031 $232,531Stefan Jacoby $48,805 $130,031 $178,836Lynn Jolliffe(3) $42,500 $130,031 $172,531Michael T. Kestner $125,000 $130,031 $255,031John P. Larson(3) $57,500 $130,031 $187,531Mary Ellen Smith(4) $17,850 $82,539 $100,389Stephen E. Smith $101,000 $130,031 $231,031

(1) The amounts represent the $85,000 annual cash retainer paid to each non-employee director, plus an additional$30,000 paid to the Lead Independent Director, an additional $25,000 paid to the Chairman of the AuditCommittee, an additional $20,000 paid to the Chairman of the Compensation Committee, an additional $10,000paid to the Chairman of the Nominating and Corporate Governance Committee and the Chairman of the RiskCommittee, and an additional $7,500 paid to members of the Audit Committee (other than the Chairman).

(2) The amounts represent the aggregate grant date fair value, computed in accordance with the Financial AccountingStandards Board Accounting Standards Codification Topic 718 (‘‘ASC 718’’), of shares of restricted stock awarded

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to each non-employee director as an annual stock retainer. Each non-employee director who was serving as adirector after June 4, 2019, the date of our 2019 annual meeting, received 2,230 shares of restricted stock as anannual stock retainer in June 2019. Mr. DiDomenico and Ms. Smith each received a prorated annual stock retainergrant of 3,839 shares on November 8, 2019. Pursuant to the Director Deferred Compensation Plan,Messrs. Bourell, DiDomenico, Hill, Howell, Jacoby, Kestner, Larson and Smith and Ms. Ecton and Ms. Jolliffe eachelected to receive 100% of his or her annual stock retainer in a deferred share account. Ms. Ecton’s stock awardwas subsequently forfeited upon her resignation from the Board on July 1, 2019. Please see ‘‘Outstanding DirectorRestricted Stock Awards’’ below for the aggregate number of stock awards outstanding at fiscal year-end for eachnon-employee director.

(3) Mr. Bourell served as a director until June 4, 2019, the date of our 2019 annual meeting. Mr. Larson andMs. Jolliffe served as directors until June 27, 2019, and thereafter became directors of IAA in connection with theIAA Spin-Off. Ms. Ecton served as a director until July 1, 2019, and subsequently forfeited her unvested annualstock retainer granted in June 2019.

(4) Mr. DiDomenico and Ms. Smith joined the Board on October 16, 2019 and received a prorated annual cashretainer and a prorated annual stock retainer.

Mr. Hallett was not entitled to receive any fees or other compensation for serving as a member of our Board in2019 because he was employed by the Company. Ms. Galvin was not a member of the Board in 2019.

OUTSTANDING DIRECTOR RESTRICTED STOCK AWARDS

The following table sets forth information regarding the number of unvested or deferred shares of our commonstock held by each non-employee director as of December 31, 2019:

Deferred PhantomUnvested Shares Shares and

and Dividend DividendName Equivalents(1) Equivalents(2)

Todd F. Bourell(3) — —David DiDomenico 3,839 —Donna R. Ecton(3) — 11,009Carmel Galvin — —Mark E. Hill 5,901 39,219J. Mark Howell 2,247 12,680Stefan Jacoby 2,247 —Lynn Jolliffe(3) 2,247 6,612Michael T. Kestner 4,286 26,833John P. Larson(3) 2,247 11,018Mary Ellen Smith 3,839 —Stephen E. Smith 2,247 8,660

(1) This number represents unvested shares of restricted stock and, for those directors who deferred, unvestedphantom stock and dividend equivalents. Directors also received shares of restricted stock or phantom stock in IAAin connection with the IAA Spin-Off. For 90 days following the IAA Spin-Off, continuing KAR directors who had adeferred stock account pursuant to the Director Deferred Compensation Plan were provided a one-time election toconvert their shares of phantom stock in IAA into (i) shares of phantom stock in KAR, (ii) deferred cash, or (iii) acombination of phantom stock in KAR and deferred cash. Messrs. Hill, Howell, Jacoby, Kestner and Smith eachelected to convert out of shares of phantom stock in IAA: Mr. Hill elected to receive shares of phantom stock inKAR, Mr. Kestner elected to receive shares of phantom stock in KAR and deferred cash, and the remainingdirectors elected to receive deferred cash.

(2) This number represents vested phantom stock and dividend equivalents which are deferred in each director’saccount pursuant to the Director Deferred Compensation Plan. These shares will be settled for shares of ourcommon stock on a one-for-one basis.

(3) Mr. Bourell served as a director until June 4, 2019, the date of our 2019 annual meeting. Mr. Larson andMs. Jolliffe served as directors until June 27, 2019, and thereafter became directors of IAA in connection with theIAA Spin-Off. The unvested awards held by Mr. Larson and Ms. Jolliffe vest based on his or her continued servicewith IAA. Ms. Ecton served as a director until July 1, 2019.

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The following table sets forth certain information with respect to the beneficial ownership of our common stockas of April 9, 2020 of: (1) each person or entity who beneficially owns more than 5% of any class of theCompany’s voting securities of which 129,167,854 shares of common stock were outstanding as of April 9,2020; (2) each of our directors, director nominees and named executive officers; and (3) all of our directors,director nominees and executive officers as a group. Beneficial ownership is determined in accordance with therules of the SEC. To our knowledge, each stockholder will have sole voting and investment power with respectto the shares indicated as beneficially ownled, unless otherwise indicated in a footnote to the following table.The percentage calculations below are based on 129,167,854 shares of our common stock outstanding as ofApril 9, 2020, rather than the percentages set forth in any stockholder’s Schedule 13D or Schedule 13G filing.Unless otherwise indicated in a footnote, the business address of each person is our corporate address, c/oKAR Auction Services, Inc., 11299 North Illinois Street, Carmel, Indiana 46032.

Shares Beneficially Owned

Name of Beneficial Number of Percent ofOwner Shares(1) Class(2)

BlackRock, Inc.(3) 15,779,735 12.22%The Vanguard Group(4) 14,861,985 11.51%Wellington Management Group LLP(5) 9,356,074 7.24%First Manhattan Co.(6) 6,796,427 5.26%

David DiDomenico 13,948 *Carmel Galvin 2,030 *Donald S. Gottwald 56,672 *James P. Hallett(7) 627,347 *John C. Hammer 6,943 *Mark E. Hill(8) 95,413 *J. Mark Howell 15,356 *Stefan Jacoby 2,312 *Peter J. Kelly(7) 198,715 *Michael T. Kestner 37,933 *Eric M. Loughmiller(7) 340,784 *Rebecca C. Polak 100,500 *Mary Ellen Smith 3,839 *Stephen E. Smith 18,909 *

1,688,334 1.31%

* Less than one percent

(1) The number of shares includes shares of our common stock subject to vesting requirements and options exercisablewithin 60 days of April 9, 2020.

(2) Shares subject to options exercisable within 60 days of April 9, 2020 are considered outstanding for the purpose ofdetermining the percent of the class held by the holder of such option, but not for the purpose of computing thepercentage held by others.

(3) Based solely on information disclosed in a Schedule 13G/A filed by BlackRock, Inc. on February 4, 2020. Accordingto this Schedule 13G, BlackRock, Inc. has sole voting power with respect to 14,823,322 shares, sole dispositivepower with respect to 15,779,735 shares, and no shared voting or dispositive power. The address of BlackRock, Inc.is 55 East 52nd Street, New York, NY 10055.

BENEFICIAL OWNERSHIP OF THE COMPANY’SCOMMON STOCK

5% BENEFICIAL OWNERS

NAMED EXECUTIVE OFFICERS, DIRECTORS AND DIRECTOR NOMINEES

Executive officers, directors and director nominees as a group (19 persons)(9)

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(4) Based solely on information disclosed in a Schedule 13G/A filed by The Vanguard Group on February 12, 2020.According to this Schedule 13G/A, The Vanguard Group has sole voting power with respect to 75,136 shares, soledispositive power with respect to 14,783,023 shares, shared voting power with respect to 23,915 shares and shareddispositive power with respect to 78,962 shares. The address of The Vanguard Group is 100 Vanguard Blvd.,Malvern, Pennsylvania 19355.

(5) Based solely on information disclosed in a Schedule 13G filed by Wellington Management Group LLP onJanuary 28, 2020. According to this Schedule 13G, Wellington Management Group LLP, Wellington GroupHoldings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP haveshared voting power with respect to 8,224,889 shares, shared dispositive power with respect to 9,356,074 shares,and no sole voting or dispositive power. The address of Wellington Management Group LLP, Wellington GroupHoldings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP is 280Congress Street, Boston, MA 02210.

(6) Based solely on information disclosed in a Schedule 13G filed by First Manhattan Co. on February 4, 2020.According to this Schedule 13G, First Manhattan Co. has sole voting power with respect to 43,175 shares, soledispositive power with respect to 43,175 shares, shared voting power with respect to 6,658,762 shares and shareddispositive power with respect to 6,753,252 shares. The address of First Manhattan Co. is 399 Park Avenue, NewYork, NY 10022.

(7) Includes the following shares of our common stock issuable pursuant to options that are exercisable within 60 daysof April 9, 2020: Mr. Hallett, 194,404; Mr. Loughmiller, 97,204; and Mr. Kelly, 170,000.

(8) Includes 800 shares held in a family member’s brokerage account, over which Mr. Hill holds a power of attorney.Mr. Hill disclaims beneficial ownership of these shares.

(9) Includes an aggregate of 461,608 shares of our common stock issuable pursuant to options that are exercisablewithin 60 days of April 9, 2020.

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PROPOSAL NO. 2:

ADVISORY VOTE TO APPROVEEXECUTIVE COMPENSATION

PROPOSAL

In accordance with Section 14A of the Exchange Act and related SEC rules, the Company seeks a non-bindingadvisory vote from its stockholders to approve the compensation of its named executive officers as described inthe ‘‘Compensation Discussion and Analysis’’ section beginning on page 25 and the compensation tables thatfollow such section. The Company seeks this non-binding advisory vote from its stockholders annually,pursuant to the results of the stockholders’ vote at the Company’s 2017 annual meeting of stockholdersselecting such frequency.

Our executive compensation program includes certain ‘‘best practices’’ in governance and executivecompensation, including the following:

• We have demonstrated a trend of alignment between our TSR performance andthe compensation of our CEO.

• All of the members of our Compensation Committee areindependent under NYSE rules.

• The Compensation Committee retains its own independentcompensation consultant to review our executive compensation program and practices.

• Our annual incentive program is 100% performance-based and our equityincentive program is heavily performance-based with 75% of our equity awards in the form of PRSUs.

• The Compensation Committee sets maximum amounts that may be payable forannual cash incentive compensation and PRSUs.

• Our clawback policy provides for the recovery and cancellationof an executive officer’s incentive compensation in the event we are required to prepare an accountingrestatement due to such executive officer’s intentional misconduct.

• Change in control severance benefits are two times base salaryand target bonus for our executive officers.

• Our equity awards permit acceleratedvesting of assumed or replaced equity awards upon a change in control of the Company only if anexecutive experiences a qualifying termination of employment in connection with or following suchchange in control.

• We have stock ownership guidelines that are applicable to ourexecutive officers. The stock ownership guideline for our CEO is five times his annual base salary.

In deciding how to vote on this proposal, the Board encourages you to read the ‘‘Compensation Discussion andAnalysis’’ section and the compensation tables that follow. Because this vote is advisory, it will not be bindingupon the Board; however, the Board and the Compensation Committee value our stockholders’ opinions, andthe Compensation Committee will take into account the outcome of the advisory vote when considering futureexecutive compensation decisions.

The affirmative vote of the holders of a majority of the shares present and entitled to vote at the 2020 annualmeeting is required to approve this proposal.

Stockholder alignment:

Independent Compensation Committee:

Independent compensation consultant:

Pay for performance:

Maximum payout caps:

Clawback policy for financial misconduct:

Moderate change in control benefits:

Double-trigger vesting provisions in equity award agreements:

Robust equity ownership requirements:

The Board of Directors recommends that you vote ‘‘FOR’’ the✓ advisory vote to approve executive compensation.

Proxies solicited by the Board of Directors will be voted ‘‘FOR’’ the advisory vote to approve executivecompensation unless stockholders specify a contrary vote.

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OVERVIEW

The following discussion and analysis of our compensation program for named executive officers should beread in conjunction with the tables and text elsewhere in this proxy statement that describe the compensationawarded and paid to the named executive officers.

Our named executive officers for the last completed fiscal year were (i) our chief executive officer; (ii) our chieffinancial officer; (iii) each of the three other most highly compensated executive officers who were serving asexecutive officers at the end of the last completed fiscal year; and (iv) an additional individual who served asan executive officer during a portion of the last completed fiscal year but who was not serving as an executiveofficer at the end of the last completed fiscal year. Our named executive officers are:

Name Title

Chief Executive Officer and Chairman of the Board

Executive Vice President and Chief Financial Officer

President

Chief Commercial Officer for KAR and President of ADESA

Former Chief Strategy Officer and President of Digital, Dataand Mobility Solutions

Former Chief Legal Officer and Secretary for KAR andPresident of TradeRev

* Effective March 8, 2020, Mr. Hammer began serving as the Company’s Chief Commercial Officer in addition to serving asPresident of ADESA.

** Mr. Gottwald resigned from the Company, effective April 3, 2020.*** Ms. Polak resigned from the Company, effective October 8, 2019. ‘‘TradeRev’’ is the assumed name for Nth Gen Software Inc.

Executive Summary (pages )

Compensation Philosophy and Objectives (page )

The Role of the Compensation Committee and the Executive Officers in Determining Executive

Compensation (pages )

Elements Used to Achieve Compensation Philosophy and Objectives (pages )

Compensation Policies and Other Information (pages )

Results of Say on Pay Votes at 2019 Annual Meeting (page )

• Payouts based on Adjusted EBITDA performance in 2019 under our Annual Incentive Program (assubsequently defined) were at 50% of the target award amount for the named executive officers whosepayout is based on the performance of KAR and 82%, 66% and 23% of the target award amount forthe remaining three named executive officers whose payout is based on the performance of both KARand Digital, Data & Mobility Solutions (for Mr. Gottwald), ADESA (for Mr. Hammer) and TradeRev (forMs. Polak).

• We continued our heavy focus on performance-based equity awards with 75% of our 2019 equityawards in the form of PRSUs which KAR PRSUs, following adjustments upon the IAA Spin-Off,achieved 71.1% of target based on KAR’s Operating Adjusted Net Income Per Share performance in2019.

These compensation highlights are discussed in more detail below.

COMPENSATION DISCUSSION AND ANALYSIS

Named Executive Officers

James P. (‘‘Jim’’) Hallett

Eric M. (‘‘Eric’’) Loughmiller

Peter J. (‘‘Peter’’) Kelly

John C. (‘‘John’’) Hammer*

Donald S. (‘‘Don’’) Gottwald**

Rebecca C. (‘‘Becca’’) Polak***

This Compensation Discussion and Analysis is organized into six sections:

27-28

29

29–30

31–39

40–41

41

2019 Executive Compensation Highlights

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As noted above, on June 28, 2019, we completed the IAA Spin-Off, resulting in KAR and IAA being twoindependent, publicly-traded companies. In connection with the IAA Spin-Off, KAR stockholders received oneshare of IAA stock for every one share of KAR stock held as of June 18, 2019.

All equity awards outstanding as of June 28, 2019 were adjusted as a result of the IAA Spin-Off to preservethe economic value of the awards in accordance with the Employee Matters Agreement, dated June 27, 2019,between KAR and IAA. The adjusted KAR awards and adjusted IAA awards are generally subject to the sameterms and conditions, and will continue to vest on the same schedule, except as noted below. For purposes ofaward vesting, continued employment with KAR is treated as continued employment for both KAR and IAAawards. The following summarizes the adjustments to each type of award:

• Holders of outstanding KAR RSUs retained such KAR RSUs and also received an RSU relating toIAA common stock in respect of each KAR RSU held.

• KAR 2017 and 2018 PRSUs were converted into time-based RSUsrelating to KAR common stock at the target performance level, and each holder retained such KAR RSUsand received a corresponding RSU relating to IAA common stock for each KAR RSU held.

• Holders of KAR 2019 PRSUs retained such PRSUs and received a PRSU relatingto IAA common stock in respect of each KAR PRSU held. The PRSUs were subject to adjusted performancecriteria for the period from January 1, 2019, through December 31, 2019, which performance criteria wasdetermined by the KAR and IAA compensation committees following the IAA Spin-Off. For both the KARPRSUs and the IAA PRSUs, the performance-based vesting criteria applied to the 2019 performance yearonly, with only time-based vesting being applicable through the third anniversary of the applicable grant datefor KAR PRSUs and through December 31, 2021 for IAA PRSUs.

• Each KAR stock option was converted into two separate options, an adjusted option topurchase KAR common stock and an option to purchase IAA common stock, with the number and exerciseprices of both options adjusted to maintain economic value. A conversion formula based on the pre-spinclosing price of KAR and IAA was used to determine the exercise prices of the adjusted options.

IAA Spin-Off

RSUs:

PRSUs Granted in 2017 and 2018:

PRSUs Granted in 2019:

Stock Options:

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EXECUTIVE SUMMARY

For the year ended December 31, 2019, the Company again achieved solid financial results. Specific highlightsfor fiscal 2019 included:

On June 28, 2019, we successfully completed the .

Operating revenue was up to approximately (up 7% excluding purchased vehicle sales).

Total vehicles sold rose approximately to approximately million units.

Gross profit increased approximately to .

Through share buybacks and dividends, in 2019 we returnedapproximately to stockholders and invested

approximately in our business throughcapital expenditures and strategic acquisitions.

We achieved net income from continuing operations of .

Adjusted EBITDA* rose to .

* Adjusted EBITDA is a non-GAAP measure and is definedand reconciled to the most comparable GAAP measure, netincome from continuing operations, in our Annual Report onForm 10-K for the year ended December 31, 2019 in Item 7,‘‘Management’s Discussion and Analysis of FinancialCondition and Results of Operations—EBITDA and AdjustedEBITDA.’’

IAA Spin-Off

14% $2.8 billion

9% 3.8

4% $1.2 billion

$284 million

$282 million

$92.4 million

1%$510.0 million

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We maintain a compensation program structured to achieve a close connection between executive pay andCompany performance. We believe that this strong pay for performance orientation has served us well inrecent years.

Our annual incentive program The Compensationis 100% performance-based and our equity incentive Committee sets maximum amounts that may beprogram is heavily performance-based with 75% of payable for annual cash incentive compensation andour equity awards in the form of PRSUs. PRSUs.

All of the Our clawback policy provides formembers of our Compensation Committee are the recovery and cancellation of incentiveindependent under NYSE rules. compensation of an executive officer in the event we

are required to prepare an accounting restatement The due to such executive officer’s intentional misconduct.

Compensation Committee retains its own independentcompensation consultant to evaluate and review our Change inexecutive compensation program and practices. control severance benefits are two times base salary

and target bonus for executive officers. We have demonstrated a

trend of alignment between our TSR performance and Accelerated vestingthe compensation of our CEO, as shown in the chart of assumed or replaced equity awards upon a changebelow. in control of the Company is only permitted if an

executive experiences a qualifying termination ofemployment in connection with or following suchchange in control.

The stockownership guideline for our CEO is five times hisannual base salary, and three times annual basesalary for the other named executive officers.Executive officers are required to hold 60% of vestedshares, net of taxes, until stock ownership guidelinesare met.

2014YE

2015

CEO Pay ($000) Indexed TSR

2016 2017 2018 2019

$5,078$5,529

$6,138$5,812$4,824

Each year2014 we perform an assessment of any risks that could

Fiscal Year YE 2015 2016 2017 2018 2019

result from our compensation programs and practices.CEO Pay ($000) $4,824 $5,078 $5,812 $6,138 $5,529

Indexed TSR* 100 110 130 159 154 192

* TSR assumes an investment of $100, dividend reinvestment and takes into accountthe value of IAA common shares distributed in the IAA Spin-Off.

Dividend equivalents and cash are accrued on PRSUs We prohibit hedging, pledging and shortand RSUs, respectively, but are only paid out if and to sales of Company stock by our directors andthe extent the underlying PRSUs and RSUs vest. executive officers.

We provide a limited Stock option exercise pricesnumber of perquisites that are designed to support a are set equal to the grant date market price andcompetitive total compensation package. cannot be repriced or discounted without stockholder

approval. Our annual

incentive program and our PRSU equity awards areentirely performance-based and our executive officers We do not maintain a definedare not guaranteed any minimum levels of payment. benefit pension or supplemental retirement plans for

our executive officers.

Our Executive Compensation Practices are Aligned with Stockholders’ Interests

WHAT WE DO

✓ Pay for performance: ✓ Maximum payout caps:

✓ Independent Compensation Committee: ✓ Clawback policy:

✓ Independent compensation consultant:

✓ Moderate change in control benefits:

✓ Stockholder alignment:

✓ ‘‘Double-trigger’’ equity vesting:

✓ Robust equity ownership requirements:

✓ Annual compensation risk assessment:

WHAT WE DON’T DO

✗ Pay dividends on unvested equity awards: ✗ Allow hedging or pledging of the Company’s

securities:

✗ Provide excessive perquisites: ✗ Reprice stock options:

✗ Guarantee incentive compensation:

✗ Provide pension benefits or supplemental

retirement plans:

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COMPENSATION PHILOSOPHY AND OBJECTIVES

We design and administer our executive pay programs to help ensure the compensation of our namedexecutive officers is (i) closely aligned with our performance on both a short-term and long-term basis;(ii) linked to specific, measurable results intended to create value for stockholders; and (iii) competitive inattracting and retaining key executive talent into the vehicle remarketing and auto finance industry. Each of thecompensation programs that we have developed and implemented is intended to satisfy one or more of thefollowing specific objectives:

• align the interests of our executive officers with the interests of our stockholders so that our executiveofficers manage from the perspective of owners with an equity stake in the Company;

• motivate and focus our executive officers through incentive compensation programs directly tied to ourfinancial results;

• support a one-company culture and encourage synergies among all business units by aligning rewardswith long-term, overall Company performance and stockholder value;

• provide a significant percentage of total compensation through variable pay based on pre-established,measurable goals and objectives;

• provide competitive upside opportunity without encouraging excessive risk-taking;

• enhance our ability to attract and retain skilled and experienced executive officers; and

• provide rewards commensurate with performance and with competitive market practices.

While the Company does not target any specific percentile positioning versus the market, the market median isused as a reference point but is not the sole determinant when making compensation decisions. Compensationdecisions are made considering a number of factors including experience, tenure, sustained performance,specific requirements of roles relative to the market and individual and Company performance.

THE ROLE OF THE COMPENSATION COMMITTEE ANDTHE EXECUTIVE OFFICERS IN DETERMINING

EXECUTIVE COMPENSATION

The Compensation Committee has primary responsibility for allcompensation decisions relating to our named executive officers. The Compensation Committee reviews theaggregate level of our executive compensation, as well as the mix of elements used to compensate our namedexecutive officers on an annual basis.

Role of the Compensation Committee.

Compensation Committee’s Use of Market and Survey Data. Although the Company is comprised of aunique mix of businesses and lacks directly comparable public companies, the Compensation Committeeunderstands that most companies consider pay levels at comparably-sized, peer companies when settingnamed executive officer compensation levels. With assistance from its independent compensation consultant,ClearBridge, the Compensation Committee has developed a meaningful comparator group for the Company.

In order to confirm competitiveness of compensation, the Compensation Committee uses a combination ofproxy compensation data of a ‘‘proxy comparator group’’ and survey data (from the Aon Hewitt and Mercergeneral industry and service industry surveys) in setting and adjusting compensation levels. In light of the lackof directly comparable companies for the Company’s business, as noted above, companies in the proxycomparator group were selected based on (i) a focus on service-oriented industries; (ii) similarly-sized revenueand market capitalization levels; (iii) comparable growth, profitability and/or market valuation profiles; and(iv) companies with which the Company competes for executive talent. Where possible, the CompensationCommittee included companies that are in related or similar industries to the Company.

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The Compensation Committee viewed the proxy comparator group and market data as an important guide, butnot as the sole determinant in making its decisions regarding 2019 compensation levels. The CompensationCommittee also considered experience, tenure, sustained performance, specific requirements of roles relativeto market and individual and Company performance.

In July 2019, the Compensation Committee reviewed the proxy comparator group following the IAA Spin-Offand, based on the recommendation of ClearBridge, approved a revised proxy comparator group consisting ofthe following 16 companies to be used in making 2020 compensation decisions:

Revised 2020 Proxy Comparator Group

Allison Transmission Holdings, Inc. MSC Industrial Direct Co. Inc. Stericycle, Inc.Copart, Inc Old Dominion Freight Line Inc. Total System Services, Inc.CDK Global, Inc. Pitney Bowes Inc. Werner Enterprises, Inc.Equifax Inc. Richie Bros. Auctioneers Incorporated Westinghouse Air Brake Technologies CorporationGATX Corporation Sotheby’s Worldpay, Inc. (acquired by Fidelity NationalLKQ Corporation Information Services, Inc. on July 31, 2019)

Companies in the revised 2020 proxy comparator group were selected based on the same criteria as the 2019proxy comparator group, adjusted to the Company’s revenue and market capitalization levels following the IAASpin-Off. In light of the Company’s profile following the IAA Spin-Off, Richie Bros. Auctionneers Incorporatedwas added as a comparator company and eBay Inc. and Cintas Corporation were removed as comparatorcompanies.

The Compensation Committee used ClearBridge as itsindependent compensation consultant in 2019. ClearBridge provided the Compensation Committee advice andguidance with respect to (i) the assessment of the Company’s executive compensation programs and practices;(ii) the evaluation of long-term incentive compensation practices and annual and long term incentive plandesign; (iii) the selection of a proxy comparator group; and (iv) the competitiveness of the executive officers’elements of compensation. Prior to the IAA Spin-Off, ClearBridge also provided advice and guidance regardingadjustments to outstanding cash and equity incentive awards related to the IAA Spin-Off and recommendationswith respect to the design of IAA’s compensation plans and programs. ClearBridge regularly attendsCompensation Committee meetings and attends executive sessions as requested by the Chairman of theCompensation Committee. The Compensation Committee has reviewed the independence of ClearBridge inlight of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that thework of ClearBridge for the Compensation Committee does not raise any conflict of interest. All work performedby ClearBridge is and was subject to review and approval of the Compensation Committee.

Mr. Hallett regularly participates in meetings of the Compensation Committeeat which compensation actions involving our named executive officers are discussed. Mr. Hallett assists theCompensation Committee by making recommendations regarding compensation actions for the executiveofficers other than himself. Mr. Hallett recuses himself and does not participate in any portion of any meeting ofthe Compensation Committee at which his compensation is discussed.

The proxy comparator group used from 2017 until July 2019 consisted of the following 17 companies:

2019 Proxy Comparator Group

Allison Transmission Holdings, Inc. GATX Corporation Stericycle, Inc.Cintas Corporation LKQ Corporation Total System Services, Inc.Copart, Inc. MSC Industrial Direct Co. Inc. Werner Enterprises, Inc.CDK Global, Inc. Old Dominion Freight Line Inc. Westinghouse Air Brake TechnologieseBay Inc. Pitney Bowes Inc. CorporationEquifax Inc. Sotheby’s Worldpay, Inc. (formerly Vantiv, Inc. and acquired

by Fidelity National Information Services, Inc. onJuly 31, 2019)

Role of the Independent Compensation Consultant.

Role of the Executive Officers.

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ELEMENTS USED TO ACHIEVE COMPENSATION PHILOSOPHYAND OBJECTIVES

The following table lists the elements of compensation for our 2019 executive compensation program. Theprogram uses a mix of fixed and variable compensation elements and provides alignment with both short- andlong-term business goals through annual and long-term incentives. Our incentives are designed to drive overallcorporate performance and business unit strategies that correlate to stockholder value and align with ourstrategic vision. In order to confirm competitiveness of compensation, the Compensation Committee reviewssurvey data and proxy compensation data of our proxy comparator group.

Base salary Fixed compensation Reward the named Company performance, Three named executivecomponent payable in executive officers for their individual performance, officers received a salarycash. past performance and experience, job scope, adjustment in 2019. See

facilitate the attraction and tenure, review of pages 32–33.Reviewed annually and retention of a skilled and competitive pay practicesadjusted when appropriate. experienced executive and base salary as a

management team. percentage of totalcompensation.

Annual cash Variable compensation Motivate and reward the Award opportunities are KAR’s performance resultedincentive awards component payable in cash successful achievement of based on individual in 50% of the target award

based on performance pre-determined financial performance, experience, for three named executiveagainst annually objectives at the Company. job scope and review of officers of KAR; Digital,established targets. competitive pay practices. Data & Mobility Solutions’,

ADESA’s and TradeRev’srespective performanceNo payouts if a threshold Actual award payouts wereresulted in 82%, 66% andlevel of performance is not based on achievement of23% of the target award forachieved; payouts are 2019 Adjusted EBITDAthe remaining three namedcapped at a maximum level (and for Ms. Polak, anexecutives officers,of performance. additional TradeRevrespectively, based onoperational goal asAdjusted EBITDAdescribed on page 35).performance in 2019.

Performance- PRSUs vest at the end of a Motivate and reward Award opportunities are The Compensationbased restricted three-year performance executives for performance based on individual’s ability Committee granted PRSUsstock units period. However, in on key long-term measures. to impact future results, job to all of the named(PRSUs) connection with the IAA scope, individual executive officers in 2019.

Spin-Off, the KAR 2019 performance and review of See page 36.Align the interests ofPRSU awards were competitive pay practices.executives with long-termadjusted to a one-year stockholder value andperformance period serve to retain executive KAR 2019 PRSU awards(January 1, 2019 to talent. earned based on 2019December 31, 2019), and Operating Adjusted Netwill be subject only to Income Per Sharetime-based vesting through performance throughthe third anniversary of December 31, 2019, butgrant. remain subject to

time-based vesting throughNo PRSUs earned if a the third anniversary ofthreshold level of grant.performance is notachieved; PRSUs are PRSU awards made upcapped at a maximum level 75% of the value of theof performance. aggregate long term

incentives granted to thenamed executive officers in2019.

Restricted stock RSUs vest ratably on each Align the interests of Awards based on The Compensationunits (RSUs) of the first three executives with long-term individual’s ability to impact Committee granted RSUs

anniversaries of the grant stockholder value and future results, job scope, to all of the nameddate subject to the named serve to retain executive individual performance and executive officers in 2019.executive officer’s talent. review of competitive pay See page 36.continued employment with practices.the Company.

RSU awards made up 25%of the value of theaggregate long-termincentives granted to thenamed executive officers in2019.

Elements of 2019 Executive Compensation Program Design

Key Why We Pay How We 2019Element Characteristics This Element Determine Amount Decisions

Fixed

Variable

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Our executive compensation program is designed to deliver compensation in accordance with corporate andbusiness unit performance with a large percentage of compensation at risk through long-term equity awardsand annual cash incentive awards. These awards are linked to actual performance, consistent with our beliefthat a significant amount of executive compensation should be in the form of equity and that a greaterpercentage of compensation should be tied to performance for executives who bear higher levels ofresponsibility for our performance. The mix of target direct compensation awarded in 2019 for our CEO and theaverage of our other named executive officers is shown in the charts below. Approximately 84% of our CEO’stotal compensation, and approximately 74% of the average total compensation of our other named executiveofficers, is at-risk, consisting of PRSUs, restricted stock units (‘‘RSUs’’) and other performance-basedincentives.

CEO Compensation Other Named Executive Officer

Average Compensation

Base Salary16%

Time-Based RSUs16%

Performance-BasedRSUs 48%

Target Annual

Cash Bonus20%

At Risk84%

Not At Risk16%

Base Salary26%

Time-Based RSUs12% Performance-Based

RSUs36%

Target Annual

Cash Bonus26%

At Risk74%

Not At Risk26%

Annual salary levels for our named executive officers are based upon various factors, including theamount and relative percentage of total compensation that is derived from base salary when setting thecompensation of our executive officers, Company performance, individual performance, experience, job scopeand tenure. In view of the wide variety of factors considered by the Compensation Committee in connectionwith determining the base salary of each of our named executive officers, the Compensation Committee hasnot attempted to rank or otherwise assign relative weights to the factors that it considers. A description of howthese factors were applied in 2019 is described below.

In late 2018 and the first quarter of 2019, the Compensation Committee reviewed thebase salaries of each of our named executive officers for 2019. After considering multiple factors as notedabove, the Compensation Committee approved a decrease in base salary for Mr. Gottwald and an increase inbase salary for Messrs. Hammer and Kelly. The Compensation Committee did not approve a base salaryadjustment for Messrs. Hallett and Loughmiller and Ms. Polak because the Compensation Committeedetermined that their base salaries were already set at a competitive level.

Compensation Structure and Goal Setting

Base Salary

General.

Base Salaries for 2019.

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The following base salaries were in effect for 2019:

Name Base Salary Increase % Effective Date

Jim Hallett $975,000 0% N/AEric Loughmiller $550,000 0% N/APeter Kelly $600,000 30% January 7, 2019John Hammer $525,000 5% March 1, 2019Don Gottwald $500,000 (14%) January 28, 2019Becca Polak $515,000 0% N/A

The base salary increase effective January 7, 2019 for Mr. Kelly was based on his new role as President of theCompany and the base salary adjustment effective January 28, 2019 for Mr. Gottwald was to reflect his newrole as Chief Strategy Officer and President of Digital, Data and Mobility Solutions. The base salary increaseeffective March 1, 2019 for Mr. Hammer was a market adjustment and to support engagement during atransformative period at ADESA.

In late 2019 and the first quarter of 2020, the Compensation Committee reviewed thebase salaries of each of our named executive officers for 2020. After considering multiple factors as notedabove, the Compensation Committee approved the following base salaries for 2020:

Name Base Salary Increase % Effective Date

Jim Hallett $975,000 0% N/AEric Loughmiller $550,000 0% N/APeter Kelly $600,000 0% N/AJohn Hammer $546,000 4% January 1, 2020Don Gottwald $500,000 0% N/ABecca Polak N/A N/A N/A

The Compensation Committee did not approve a 2020 base salary adjustment for Messrs. Hallett, Loughmiller,Kelly or Gottwald because the Compensation Committee determined that their base salaries were already setat competitive levels. The base salary increase for Mr. Hammer was based on a variety of factors, includingmarket positioning, individual performance and the criticality of his role. Ms. Polak was not employed in 2020.In order to confirm competitiveness of compensation, the Compensation Committee reviews survey data andproxy compensation data of our proxy comparator group.

On March 26, 2020, the Company announced that in connection with the ongoing COVID-19 pandemic, theCompany’s executive officers have voluntarily elected to reduce or forgo their respective base salaries effectiveApril 5, 2020 through at least June 27, 2020, with Messrs. Hallett, Loughmiller and Kelly each voluntarilyelecting to forgo 100% of his base salary and Mr. Hammer voluntarily electing to reduce his base salary 50%during this period.

Named executive officers with greater job responsibilities have a significant proportion of their annualcash compensation tied to Company performance through their annual incentive opportunity.

Under the KAR Auction Services, Inc. AnnualIncentive Program (the ‘‘Annual Incentive Program’’), which is part of the KAR Auction Services, Inc. 2009Omnibus Stock and Incentive Plan, as amended (the ‘‘Omnibus Plan’’), the grant of cash-based awards toeligible participants is contingent upon the achievement of certain pre-established corporate performance goalsas determined by the Compensation Committee. As described below, Adjusted EBITDA performance goalswere utilized for 2019, with Ms. Polak’s award subject to an additional TradeRev operational goal.

In 2019, the Compensation Committee used ‘‘2019 Adjusted EBITDA’’ for KAR, and, with respect to certainnamed executive officers, for Digital, Data & Mobility Solutions, ADESA and TradeRev, as the relevant metricfor determining awards under the Annual Incentive Program.

‘‘Adjusted EBITDA’’ is equal to EBITDA (earnings before interest expense, income taxes, depreciation andamortization) adjusted to exclude, among other things:

• gains and losses from asset sales;

• unrealized foreign currency translation gains and losses in respect of indebtedness;

Base Salaries for 2020.

Annual Cash Incentive Program

General.

The KAR Auction Services, Inc. Annual Incentive Program.

Use of 2019 Adjusted EBITDA

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• certain non-recurring gains and losses;

• stock based compensation expense;

• certain other non-cash amounts included in the determination of net income;

• charges and revenue reductions resulting from purchase accounting;

• minority interest;

• consulting expenses incurred for cost reduction, operating restructuring and business improvementefforts;

• expenses realized upon the termination of employees and the termination or cancellation of leases,software licenses or other contracts in connection with the operational restructuring and businessimprovement efforts;

• expenses incurred in connection with permitted acquisitions;

• any impairment charges or write-offs of intangibles; and

• any extraordinary, unusual or non-recurring charges, expenses or losses.

Using these measures, the Compensation Committee establishes, on an annual basis, specific targets thatdetermine the size of payouts under the Annual Incentive Program. In 2019, the annual incentive opportunitybased on achievement of 2019 Adjusted EBITDA for each named executive officer was as follows:

Bonus Goal Weighting %Bonus Opportunity 2019 Adjusted EBITDA

Threshold Target Superior Digital,% of % of % of KAR Data &

Base Base Base Base Auction MobilityName Salary Salary Salary Salary Services ADESA Solutions TradeRev(1)

Jim Hallett $975,000 62.5 125 187.5 100Eric Loughmiller $550,000 50 100 150 100Peter Kelly $600,000 50 100 150 100John Hammer $525,000 50 100 150 60 40Don Gottwald $500,000 50 100 150 60 40Becca Polak $515,000 50 100 150 60 40

(1) As described below, Ms. Polak’s annual incentive opportunity tied to TradeRev was also subject to an operational goal.

The chart below reflects Adjusted EBITDA performance metrics and achieved results for 2019 (dollars inmillions). The payout percentages are based on the achievement of the performance metrics set forth below,with payment amounts prorated for performance between the established levels.

Achieved Results

KAR Performance Metric & Goal

Threshold

50% Payout

50.0%

129.3%

0.0%

89.4%

100% Payout

Target

150% Payout

Superior Percentage of

Target Award Earned

KAR Adjusted EBITDA

ADESA Adjusted EBITDA

Digital, Data & Mobility Solution Adjusted EBITDA

TradeRev Adjusted EBITDA

$500.0

$313.8

($62.1)

$139.5

$521.0 $560.0

$301.3 $317.2 $380.6

$121.9 $131.7 $144.9

($55.0) ($53.5) ($40.0)

$500.0

Target Incentive Opportunity: Base Pay multiplied by Individual Target OpportunityBusiness Performance Factor: 2019 Adjusted EBITDA of KAR (100% or 60%) and 2019 Adjusted EBITDA of Business Unit (0% or 40%)

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The Compensation Committee reviews the Company’s business plan approved by the Board and determinesthe level of performance required to receive threshold, target and superior annual incentive payouts. TheCompensation Committee established the performance objectives in amounts which it believed would increasestockholder value and be achievable given a sustained performance on the part of the named executiveofficers and which would require increasingly greater results to achieve the target and superior objectives. TheCompensation Committee may decrease the potential payouts at each performance target if, in the discretionof the Compensation Committee, the circumstances warrant such an adjustment. In 2019, the CompensationCommittee did not increase or decrease the potential payouts of any 2019 annual incentive program award. InJuly 2019, following the IAA Spin-Off, the Compensation Committee adjusted the performance targets for KARin order to reflect the exclusion of the operating results of IAA.

The following chart provides the 2019 Adjusted EBITDA performance targetsestablished by the Compensation Committee for 2019, as adjusted for KAR following the IAA Spin-Off, as wellas the actual level of performance achieved (dollars in millions):

Percentage of TargetAchieved Award Earned (Adjusted

Threshold Target Superior Results(1)(2) EBITDA)

KAR $500.0 $521.0 $560.0 $500.0 50.0%ADESA $301.3 $317.2 $380.6 $313.8 89.4%Digital, Data & Mobility Solutions $121.9 $131.7 $144.9 $139.5 129.3%TradeRev ($55.0) ($53.5) ($40.0) ($62.1) 0%

(1) KAR’s reported Adjusted EBITDA for the year ended December 31, 2019 was $510.0 million, but for Annual IncentiveProgram purposes, certain acquisitions consummated in 2019 were excluded, which resulted in Adjusted EBITDA of$500.0 million.

(2) ADESA’s performance targets and achieved results in the above chart are used for Annual Incentive Programpurposes only and include certain technology expenses recorded in ‘‘holding company’’ expenses and revenue forcertain vehicles sold on the TradeRev platform, and exclude the operating results of Digital, Data & Mobility Solutions,TradeRev and certain international business for Annual Incentive Program purposes. ADESA’s reported AdjustedEBITDA for the year ended December 31, 2019 was $448.0 million which does not reflect such inclusions andexclusions described above.

In addition, the Compensation Committee determined that Ms. Polak’s annual incentive opportunity tied toTradeRev performance would also be subject to an operational performance goal whereby TradeRev must sellat least 190,000 vehicles in 2019 for any payout to be earned. That goal was not met, and therefore Ms. Polakwas not eligible to receive a payout with respect to TradeRev.

Under the Annual Incentive Program, threshold performanceobjectives must be met in order for any payout to occur. Payouts can range from 50% of target awards forperformance at threshold up to a maximum of 150% of target awards for superior performance or no payout ifperformance is below threshold. The table below shows the annual incentive opportunities for our namedexecutive officers for 2019. Because KAR achieved at least the threshold level of performance in 2019, each ofour named executive officers was eligible to receive an award under the Annual Incentive Program in 2019,which amounts are set forth in the ‘‘Summary Compensation Table for 2019’’ on page 44. Based on theCompany’s performance during 2019 and the accompanying payout percentages for the different performancegoals set forth above, our named executive officers earned the percentages and corresponding payoutamounts of their target annual incentive awards as set forth below based on the following formula:

Percentage of TargetAward Earned

Target Annual (AdjustedName Incentive Award EBITDA)(1) 2019 Payout(2)

Jim Hallett $1,218,750 50% $609,375Eric Loughmiller $550,000 50% $275,000Peter Kelly $600,000 50% $300,000John Hammer $525,000 66% $345,190Don Gottwald $500,000 82% $408,552Becca Polak $515,000 23% $115,875

Performance Targets for the Annual Incentive Program

2019 Performance Targets.

2019 Annual Incentive Program Payouts.

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(1) The percentages of target annual incentive awards earned for Messrs. Hammer and Gottwald and Ms. Polak arebased on the percentages of target awards earned for both KAR and (i) ADESA, (ii) Digital, Data & Mobility Solutions,and (iii) TradeRev, respectively.

(2) Ms. Polak’s 2019 annual incentive award payout was prorated based on her October 8, 2019 separation date.

For 2019, the Compensation Committee decided to rely on financial performance metrics exclusively andtherefore did not include a Management by Objective (‘‘MBO’’) component in the 2019 Annual IncentiveProgram. For the 2020 Annual Incentive Program, the bonus opportunity for each named executive officer willbe weighted on a combination of the Company’s financial performance (80%) and the executive’s performanceagainst his or her MBOs (20%). Threshold financial performance objectives must be met in order for anypayout to occur. Each named executive officer’s 2020 MBOs are tailored to their role and aligned withCompany initiatives relating to new product and strategy, customers and people and culture.

The Company provides long-term incentive compensation opportunities in the form of PRSUs and RSUs, eachas described below. Although we have granted stock options in the past, stock options are not currently part ofthe Company’s long-term incentive program.

On February 22, 2019 (and for Mr. Hammer, again on March 1, 2019),the Compensation Committee granted PRSUs and RSUs under its long-term incentive program to theCompany’s named executive officers, as described in the table below. Awards were based on the individual’sability to impact future results, job scope, individual performance and a review of competitive pay practices.

The aggregate target award value for each named executive officer was allocated such that 75% of the valuewas in the form of PRSUs and 25% of the value was in the form of RSUs.

Target PRSUs(Cumulative

OperatingAdjusted Net Value of

Income Per Target Shares Value ofName Share Goal) at Grant RSUs RSUs at Grant

Jim Hallett 62,155 $2,925,014 20,719 $975,036Eric Loughmiller 21,914 $1,031,273 7,305 $343,773Peter Kelly 19,125 $900,023 6,375 $300,008John Hammer(1) 20,484 $965,663 6,830 $321,982Don Gottwald 9,961 $468,765 3,321 $156,286Becca Polak 14,364 $675,970 4,788 $225,323

(1) $500,000 of the aggregate value of Mr. Hammer’s equity awards are attributable to a special sign-on award to makeup for compensation from his previous employer that was forfeited when he joined the Company, with a 75%/25%allocation between PRSUs and RSUs. Mr. Hammer also received a one-time make-whole grant of 2,554 PRSUs($121,877 value at grant) and 852 RSUs ($40,657 value at grant) on March 1, 2019 to reflect an increase in hislong-term incentive target opportunity, which are included in this table.

At the time of grant, the PRSUs were to vest if and to the extent that the sum of the Company’s ‘‘CumulativeOperating Adjusted Net Income Per Share’’ exceeded certain levels over the three-year measurement periodbeginning on January 1, 2019 and ending on December 31, 2021. In connection with the IAA Spin-Off, certainadjustments were made as described below.

‘‘Cumulative Operating Adjusted Net Income Per Share’’ for a fiscal year is calculated by dividing OperatingAdjusted Net Income by the weighted average diluted common shares outstanding per year. ‘‘OperatingAdjusted Net Income’’ for a fiscal year is equal to the Company’s net income as reported in the Form 10-K filedby the Company with respect to such fiscal year, adjusted to (i) exclude gains/losses from certain non-recurringand unbudgeted capital transactions, including debt prepayment, debt refinancing, share repurchases andrelated financing costs not contemplated in the long term incentive targets; (ii) exclude amortization expense

2020 Use of Management by Objectives

Long-Term Incentive Opportunities

2019 Long-Term Incentive Awards.

2019 Performance-Based RSU Awards

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associated with acquired intangible assets recorded during purchase accounting of acquisitions; (iii) excludeacquisition contingent consideration; (iv) exclude the impact of significant acts of God or other events outside ofthe Company’s control that may affect the overall economic environment; (v) exclude significant assetimpairments; (vi) exclude the impact of adoption of new accounting standards; and (vii) exclude the impact oftax rate changes caused by changes in tax legislation.

The amount of the target PRSUs actually earned and paid in shares of common stock in a lump sum followingthe performance period was to be: 0% for below threshold performance, 50% for threshold performance, 100%for target performance and up to 200% for achieving the maximum performance level or higher. Linearinterpolation was to be used to calculate the percentage of PRSUs earned and paid if performance fallsbetween the levels described above.

In connection with the IAA Spin-Off, the PRSUs granted in 2019 were subject to adjusted performance criteriaand an adjusted performance period from January 1, 2019 to December 31, 2019. As described below,following the completion of the adjusted performance period, the 2019 PRSUs were converted into time-basedRSUs with the number so converting based on actual performance during the one-year performance period.The RSUs will vest on the third anniversary of the grant of the 2019 PRSUs, subject to continued employmentas required under the original 2019 PRSU award agreement.

The number of PRSUs that converted into RSUs was based on the Company’s Operating Adjusted Net IncomePer Share achieved, which was determined in accordance with the chart below:Operating Adjusted NetIncome Per Share During the Number of PRSUsMeasurement Period Converting into RSUs

Below Threshold:

Below $1.02 0% of TargetThreshold:

$1.02 50% of TargetTarget Range:

$1.21–$1.33 100% of TargetMaximum:

Greater than or equal to $1.52 200% of Target

The Company achieved Operating Adjusted Net Income Per Share of $1.10 versus a target range of $1.21 to$1.33 for the one-year performance period ended December 31, 2019. As such, on February 19, 2020, basedon the Operating Adjusted Net Income Per Share achieved, 71.1% of the target 2019 PRSUs converted intoRSUs, above the threshold level but below the target level, and resulted in the following number of PRSUsconverting to RSUs:

Number of PRSUsConverting into RSUs

(including dividend Value of 2019 PRSUsName equivalents) Converted into RSUs(1)

Jim Hallett 45,490 $1,057,643Eric Loughmiller 16,038 $372,885Peter Kelly 13,997 $325,430John Hammer 14,991 $348,541Don Gottwald 7,290 $169,493Becca Polak 2,628 $61,101

(1) Based on a share price of $23.25, the February 19, 2020 market close price.

One-third of the RSUs will vest and convert into shares of common stock of the Company on each of the firstthree anniversaries of the grant date, subject to the named executive officer’s continued employment with theCompany through each such anniversary.

2019 Time-Based RSU Awards

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As previously disclosed, on March 2, 2018, the Compensation Committee granted PRSUs and RSUs to theCompany’s named executive officers, some of which remained outstanding at fiscal year-end 2019. Theamounts of PRSUs and RSUs are disclosed in the ‘‘Outstanding Equity Awards’’ table below. Other thancertain adjustments made to the PRSUs granted in 2018 due to the IAA Spin-Off (described below), theseawards have terms substantially similar to those granted in 2019. For the year ended December 31, 2019,one-third of the RSUs had vested, as disclosed in the ‘‘Option Exercises and Stock Vested’’ table below.

In connection with the IAA Spin-Off, the PRSUs granted in 2018 were converted into time-based RSUs with thenumber so converting based on target level performance. The RSUs will vest on the third anniversary of thegrant of the 2018 PRSUs, subject to continued employment as required under the original 2018 PRSU awardagreement.

The number of 2018 PRSUs that converted into RSUs was based on the target level of Cumulative OperatingAdjusted Net Income Per Share, or $9.40. As such, on June 28, 2019, the following number of PRSUsconverted into RSUs:

Number of PRSUsConverting into RSUs

(including dividend Value of 2018 PRSUsName equivalents) Converted into RSUs(1)

Jim Hallett 56,175 $1,404,375Eric Loughmiller 13,234 $330,850Peter Kelly 8,323 $208,075John Hammer 16,205 $405,125Don Gottwald 14,708 $367,700Becca Polak 12,981 $324,525

(1) Based on a share price of $25.00, the June 28, 2019 market close price.

As previously disclosed, on February 24, 2017, the Compensation Committee granted PRSUs and RSUs tocertain of the Company’s named executive officers, some of which remained outstanding at fiscal year-end2019. These awards have terms substantially similar to those granted in 2018. For the year endedDecember 31, 2019, an additional one-third of the RSUs had vested, as disclosed in the ‘‘Option Exercises andStock Vested’’ table below.

In connection with the IAA Spin-Off, the PRSUs granted in 2017 were converted into time-based RSUs with thenumber of PRSUs so converting based on target level performance. The RSUs will vest on the thirdanniversary of the grant of the 2017 PRSUs, subject to continued employment as required under the original2017 PRSU award agreement.

The number of PRSUs that converted into RSUs was based on the target level of Cumulative OperatingAdjusted Net Income Per Share, or $7.20. As such, on June 28, 2019, the following number of PRSUsconverted into RSUs:

Number of PRSUsConverting into RSUs

(including dividend Value of 2017 PRSUsName equivalents) Converted into RSUs(1)

Jim Hallett 63,337 $1,583,425Eric Loughmiller 15,394 $384,850Peter Kelly 9,962 $249,050John Hammer — —Don Gottwald 17,950 $448,750Becca Polak 14,624 $365,600

(1) Based on a share price of $25.00, the June 28, 2019 market close price.

Prior Years’ Awards.

2018 Performance-Based and Time-Based RSU Awards

2017 Performance-Based and Time-Based RSU Awards

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As previously disclosed, on February 19, 2019, the 2016 PRSUs vested above the target performance level butbelow the maximum performance level based on the sum of the Company’s Cumulative Adjusted Net IncomePer Share exceeding certain levels over the three-year period beginning on January 1, 2016 and ending onDecember 31, 2018.

The Company currently grants long-termincentive awards under the Omnibus Plan.

Our Board adopted the Omnibus Plan on December 10, 2009, and it has since been amended and restated, asapproved by our stockholders. Under the Omnibus Plan, participants are eligible to receive stock options,restricted stock, RSUs (with or without performance conditions), stock appreciation rights, other stock-basedawards and/or cash-based awards, each as determined by the Compensation Committee.

We offer a variety of health and welfare and retirement programs to all eligible employees, including our namedexecutive officers. As with all Company employees, our named executive officers are eligible to receive 401(k)employer matching contributions equal to 100% of the first 4% of compensation contributed by the namedexecutive officer. The health and welfare programs are intended to protect employees against catastrophic lossand encourage a healthy lifestyle. Our health and welfare programs include medical, dental, vision, pharmacy,life, disability and accidental death and disability insurance. We also provide travel insurance to all employeeswho travel for business purposes.

We also provide certain enhanced retirement vesting of equity-incentive awards as described in ‘‘PotentialPayments Upon Termination or Change in Control—Potential Payments Upon Termination or Change inControl Table’’.

The Company provides the named executive officers a limited number of perquisites that the CompensationCommittee believes are reasonable and consistent with the objective of attracting and retaining highly qualifiedexecutive officers. The perquisites which are currently available to certain of our named executive officersinclude an automobile allowance or use of a Company-owned automobile, an allowance for executivephysicals, Company-paid group term life insurance premiums and relocation benefits under the Company’smobility program. Please see footnote 6 to the ‘‘Summary Compensation Table for 2019’’ on page 44 for moreinformation regarding perquisites.

2016 Performance-Based RSU Awards

Plan under which Long-Term Incentive Awards are Granted.

Retirement, Health and Welfare Benefits

Perquisites

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COMPENSATION POLICIES AND OTHER INFORMATION

The Compensation Committee recognizes that, from time to time, it is appropriate to enter into agreements withour executive officers to ensure that we continue to retain their services and to promote stability and continuitywithin the Company. All of our current named executive officers have an employment agreement with theCompany. Our employment agreements with Mr. Gottwald and Ms. Polak terminated upon their separation fromthe Company. A description of these agreements can be found in the section titled ‘‘Potential Payments UponTermination or Change in Control—Employment Agreements with Named Executive Officers.’’

Section 280G of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’)and related provisions impose substantial excise taxes under Section 4999 of the Code on so-called ‘‘excessparachute payments’’ payable to certain named executive officers upon a change in control and results in theloss of the compensation deduction for such payments by the Company.

Mr. Hallett’s employment agreement, which became effective as of February 27, 2012, provides for a potential‘‘gross-up payment’’ in the event that such excise taxes result from any excess parachute payments.Mr. Hallett’s employment agreement provides that in the event that any payment or benefit under suchagreement in connection with Mr. Hallett’s employment or termination of employment is or becomes subject toan excise tax under Section 4999 of the Code, then the Company will make a cash payment to Mr. Hallett,which, after the imposition of all income, employment, excise and other taxes thereon, as well as any penaltyand interest assessments associated therewith, will be sufficient to place Mr. Hallett in the same after-taxposition as he would have been in had such excise tax not been applied. However, in the event that areduction of the total payments to Mr. Hallett would avoid the application of the excise tax, then the totalpayments will be reduced to the extent necessary to avoid the excise tax, but in no event by more than 10% ofthe original amount of the total payments.

None of the employment agreements entered into with Messrs. Loughmiller, Kelly, Hammer or Gottwald, orMs. Polak contain excise tax gross-up provisions.

Section 162(m) of the Code (‘‘Section 162(m)’’)generally disallows a federal tax deduction by the Company for compensation paid to Covered Employees (asdefined in Section 162(m)) in excess of $1,000,000. Historically, compensation that qualified as ‘‘performance-based compensation’’ under Section 162(m) could be excluded from this limit. This exception has beenrepealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to theCovered Employees in excess of $1,000,000 will not be deductible by the Company unless it qualifies fortransition relief applicable to certain arrangements in place as of November 2, 2017.

The Compensation Committee historically structured certain awards under the Omnibus Plan so that they couldcomply with the ‘‘performance-based compensation’’ exception for purposes of Section 162(m) and bedeductible by the Company for federal income tax purposes. However, because of the continued developmentof the application and interpretation of Section 162(m) and the regulations issued thereunder, we cannotguarantee that compensation intended to satisfy the requirements for deductibility under Section 162(m), as ineffect prior to 2018, would or will in fact be deductible.

Though tax deductibility is one of many factors considered by the Compensation Committee when determiningexecutive compensation, the Compensation Committee believes that the tax deduction limitation should notcompromise our ability to design and maintain executive compensation arrangements that will attract and retainthe executive talent to compete successfully. Therefore, in seeking to tie executive pay to companyperformance in a meaningful way, the Compensation Committee may make decisions in designing andapproving pay programs that are not driven by tax consequences to the Company.

We account for stock-based compensation in accordance withthe requirements of ASC 718.

Employment and Severance Agreements

Tax and Accounting Considerations

Employment Agreements.

Tax Deductibility of Awards Under the Omnibus Plan.

Accounting for Stock-Based Compensation.

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The Company’s clawback policy provides for the recovery ofincentive compensation in the event the Company is required to prepare an accounting restatement due to anycurrent or former executive officer’s intentional misconduct. In such an event, the executive officer would berequired to repay to the Company the excess amount of incentive compensation received under the inaccuratefinancial statement. The Company intends to revise this policy as needed to comply with the requirements ofthe Dodd-Frank Wall Street Reform and Consumer Protection Act when such requirements become effective.

Our insider trading policy expressly prohibits our directors, officers and other employees from, among otherthings:

• trading in options, warrants, puts and calls or similar instruments on Company securities;

• selling Company securities ‘‘short’’;

• holding Company securities in margin accounts; and

• pledging Company securities as collateral for loans.

In addition to the Company’s insider trading policy, the Company has a formal anti-hedging policy. This policyprohibits our officers and directors from entering into hedging or monetization transactions involving Companystock, such as prepaid variable forward contracts, equity swaps, collars and exchange funds.

The Compensation Committee adopted the following stock ownership guidelines which are applicable to ournamed executive officers:

Title Stock Ownership Guideline

CEO 5 times annual base salaryOther Named Executive Officers 3 times annual base salary

The named executive officers must hold 60% of the vested shares, net of taxes, of Company stock receivedunder awards granted on or after January 1, 2015 until the applicable ownership guideline is met. All namedexecutive officers own shares in excess of the stock ownership guidelines, except for Mr. Hammer whobecame an employee of the Company in 2018 and is subject to the aforementioned holding requirement.

RESULTS OF SAY ON PAY VOTES AT 2019 ANNUAL MEETING

At the Company’s 2019 annual meeting of stockholders, the Company held a non-binding stockholder vote onexecutive compensation (commonly referred to as ‘‘Say on Pay’’). At the meeting, excluding broker non-votes,over 94% of the votes on the matter were cast to approve the Company’s executive compensation programs,over 5% of the votes were cast against, and less than 1% abstained from voting.

The Compensation Committee considered the results of the vote, including the appropriateness of thecompensation philosophy and objectives, the role of the Compensation Committee and executive officers insetting compensation, the elements used to achieve the compensation philosophy and objectives and the levelsof compensation provided to the named executive officers. Following its review, the Compensation Committeedecided to retain the Company’s general approach to executive compensation in 2020, in part due to thesignificant majority of stockholders that voted to approve the Company’s executive compensation programs atthe 2019 annual meeting of stockholders.

In addition, at the Company’s 2017 annual meeting of stockholders, the Company held a non-bindingstockholder vote on whether to hold a Say on Pay vote every one, two or three years. At that meeting, amajority of our stockholders voted in favor of holding a Say on Pay vote every year, and accordingly, theCompany adopted an annual Say on Pay vote frequency. As described in more detail in Proposal No. 2 above,the Company is again holding a Say on Pay vote to approve executive compensation at the 2020 annualmeeting of stockholders.

Clawback Policy for Financial Restatements.

Anti-Hedging and Anti-Pledging Policies

Stock Ownership Guidelines and Stock Holding Requirement

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed the Compensation Discussion and Analysis for executivecompensation for 2019 and discussed that analysis with management. Based on its review and discussionswith management, the Compensation Committee recommended to our Board that the CompensationDiscussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s2019 Annual Report on Form 10-K.

Compensation Committee

Stephen E. Smith (Chairman)

Carmel Galvin

Stefan Jacoby

Mary Ellen Smith

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The Compensation Committee considers the potential risks in our business when designing and administeringthe Company’s pay program, and the Compensation Committee believes its balanced approach to performancemeasurement and pay delivery works to avoid misaligned incentives for individuals to undertake excessive orinappropriate risk. Further, program administration is subject to considerable internal controls, and whendetermining the principal outcomes—performance assessments and pay decisions—the CompensationCommittee relies on principles of sound governance and good business judgment. As part of its responsibilitiesto annually review all incentive compensation and equity-based plans, and evaluate whether the compensationarrangements of the Company’s employees incentivize unnecessary and excessive risk-taking, theCompensation Committee evaluated the risk profile of all of the Company’s compensation policies andpractices for 2019.

In its evaluation, the Compensation Committee reviewed the Company’s employee compensation structuresand noted numerous design elements that manage and mitigate risk without diminishing the incentive nature ofthe compensation. There is a balanced mix between cash and equity and between annual and longer-termincentives. In addition, annual incentive awards and long-term incentive awards granted to executives are tiedto corporate performance goals, including Adjusted EBITDA and Cumulative Operating Adjusted Net IncomePer Share (and, for the 2019 PRSUs following the IAA Spin-Off, Operating Adjusted Net Income Per Share).These metrics encourage performance that supports the business as a whole. The executive annual incentiveawards include a maximum payout opportunity equal to 150% of target. Our executives are also expected tomeet share ownership guidelines in order to align the executives’ interests with those of our stockholders. Also,the Company’s clawback policy permits the Company to recover incentive compensation paid to an executiveofficer if the compensation resulted from any financial result or metric impacted by the executive officer’sintentional misconduct. This policy helps to discourage inappropriate risks, as executives will be heldaccountable for misconduct which is harmful to the Company’s financial and reputational health.

The Compensation Committee also reviewed the Company’s compensation programs for certain designfeatures that may have the potential to encourage excessive risk-taking, including over-weighting towardsannual incentives, highly leveraged payout curves, unreasonable thresholds and steep payout cliffs at certainperformance levels that may encourage short-term business decisions to meet payout thresholds. TheCompensation Committee concluded that the Company’s compensation programs (i) do not include suchelements; or (ii) have implemented features, steps and controls that are designed to limit risks of ourcompensation arrangements. In light of these analyses, the Compensation Committee concluded that theCompany has a balanced pay and performance program that does not encourage excessive risk-taking that isreasonably likely to have a material adverse effect on the Company.

ANALYSIS OF RISK IN THE COMPANY’SCOMPENSATION STRUCTURE

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The table below contains information concerning the compensation of our named executive officers.

Name and Non-EquityPrincipal Stock Incentive Plan All OtherPosition(1) Year(2) Salary Bonus(3) Awards(4) Compensation(5) Compensation(6) Total

2019 $975,000 $3,900,050 $609,375 $45,003 $5,529,428Chief Executive Officer 2018 $975,000 $3,900,032 $1,219,046 $44,148 $6,138,226and Chairman of the Board 2017 $900,000 $3,514,776 $1,355,361 $41,739 $5,811,876

2019 $550,000 $1,375,046 $275,000 $20,335 $2,220,381Executive Vice President 2018 $535,577 $918,788 $460,882 $27,045 $1,942,292and Chief Financial Officer 2017 $500,000 $854,324 $456,798 $25,862 $1,836,984

2019 $576,923 $1,200,031 $300,000 $108,732 $2,185,686President

2019 $520,769 $1,287,644 $345,190 $30,585 $2,184,188Chief Commercial Officer for 2018 $432,692 $400,000 $1,125,109 $210,318 $294,981 $2,463,100KAR and President of ADESA

2019 $506,423 $625,051 $408,552 $33,100 $1,573,126Former Chief Strategy Officer 2018 $583,495 $1,021,164 $589,324 $32,680 $2,226,663and President of Digital, Data 2017 $583,495 $996,133 $702,974 $30,870 $2,313,472and Mobility Solutions

2019 $463,500 $901,293 $115,875 $1,562,482 $3,043,150Former Chief Legal Officer 2018 $515,000 $901,256 $376,484 $30,350 $1,823,090and Secretary for KAR and 2017 $475,000 $811,595 $436,338 $30,150 $1,753,083President of TradeRev

(1) Mr. Gottwald and Ms. Polak resigned from the Company effective April 3, 2020 and October 8, 2019, respectively.Mr. Hammer served as the President of ADESA during 2019 and, effective March 8, 2020, assumed the role of ChiefCommercial Officer of the Company in addition to his role as President of ADESA.

(2) Compensation for Mr. Kelly is provided only for 2019 because he was not a named executive officer for 2018 or 2017.Mr. Hammer joined the Company in 2018.

(3) The 2018 bonus amount for Mr. Hammer was attributable to a special sign on award, granted to make up forcompensation that was forfeited from his previous employer upon joining the Company.

(4) The amounts reported in this column for 2019 represent the grant date fair value of PRSUs and RSUs granted onFebruary 22, 2019, computed in accordance with ASC 718. See Note 5 to our financial statements for 2019 forinformation about the assumptions made in determining the grant date fair value. Assuming, instead, that themaximum level of performance would have been achieved with respect to the 2019 PRSU awards, based on grantdate value of our common stock, the award that could have been earned at the end of the performance period(excluding dividends) is as follows: Mr. Hallett – $5,850,029; Mr. Loughmiller – $2,062,546; Mr. Kelly – $1,800,045;Mr. Hammer – $1,931,326; Mr. Gottwald – $937,529; and Ms. Polak – $1,351,940. Ms. Polak forfeited her entire 2019RSU award and a portion of her 2019 PRSU award upon her resignation from the Company on October 8, 2019.

(5) The amount reported is equal to the amount paid to the named executive officer under the Annual Incentive Program,which is governed by the Omnibus Plan.

(6) The amounts reported for 2019 consist of the following:

• Automobile allowance: Mr. Hallett – $25,000; Mr. Kelly – $18,692; Mr. Hammer – $18,000; Mr. Gottwald – $18,000;and Ms. Polak – $13,985.

• 401(k) matching contributions: Mr. Hallett – $11,200; Mr. Loughmiller – $11,200; Mr. Kelly – $0; Mr. Hammer –$11,200; Mr. Gottwald – $11,200; and Ms. Polak – $11,200.

• Company-paid group term life insurance premiums: Mr. Hallett – $7,163; Mr. Loughmiller – $5,940; Mr. Kelly –$1,991; Mr. Hammer – $1,385; Mr. Gottwald – $2,070; and Ms. Polak – $1,090.

• Executive physical: Mr. Hallett – $1,640; Mr. Loughmiller – $3,195; Mr. Gottwald – $1,830; and Ms. Polak $1,740.• Relocation expense reimbursement under the Company’s mobility program: Mr. Kelly – $88,049 (which includes a

tax gross up amount of $38,301).

For Ms. Polak, the amounts reported for 2019 also consist of the following payments that she received in connectionwith her resignation from the Company: (i) cash severance payment of $1,030,000; (ii) COBRA premiums payment of$4,467; and (iii) consulting fee payment of $500,000 for services provided under her consulting agreement with theCompany following her separation.

SUMMARY COMPENSATION TABLE FOR 2019

Jim Hallett

Eric Loughmiller

Peter Kelly

John Hammer

Don Gottwald

Becca Polak

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The following table summarizes the awards granted to, and the payouts that were achievable for, each of ournamed executive officers in 2019 under the Annual Incentive Program and the grants of PRSUs and RSUsmade under the Omnibus Plan. As further described in the section titled ‘‘Compensation Discussion andAnalysis—IAA Spin-Off’’ on page 26, PRSUs and RSUs granted in 2019 were subsequently adjusted inconnection with the IAA Spin-Off.

Estimated Future Payouts Estimated Future PayoutsUnder Non-Equity Incentive Under Equity Incentive

Plan Awards(1) Plan Awards(2)

Number ofSecurities

Underlying Grant DateRestricted Fair Value

Grant Stock of StockName Date Threshold Target Maximum Threshold Target Maximum Units Awards(a) (b) ($)(c)(1) ($)(d)(1) ($)(e)(1) (#)(f)(2) (#)(g)(2) (#)(h)(2) (#)(i)(3) ($)(j)(4)

— 609,375 1,218,750 1,828,125

2/22/2019 31,078 62,155 124,310 2,925,014

2/22/2019 20,719 975,036— 275,000 550,000 825,000

2/22/2019 10,957 21,914 43,828 1,031,273

2/22/2019 7,305 343,773— 300,000 600,000 900,000

2/22/2019 9,563 19,125 38,250 900,023

2/22/2019 6,375 300,008— 262,500 525,000 787,500

2/22/2019 8,965 17,930 35,860 843,786(5)

2/22/2019 5,978 281,325(5)

3/1/2019(6) 1,277 2,554 5,108 121,877

3/1/2019(6) 852 40,657— 250,000 500,000 750,000

2/22/2019 4,981 9,961 19,922 468,765

2/22/2019 3,321 156,286— 257,500 515,000 772,500

2/22/2019 7,182 14,364 28,728 675,970

2/22/2019 4,788 225,323

(1) Columns (c), (d) and (e) include the potential awards for performance at the threshold, target and maximum (‘‘superior’’)levels, respectively, under the Annual Incentive Program (for Ms. Polak, such amounts assume the TradeRev operational goalwas met). See ‘‘Compensation Discussion and Analysis—Elements Used to Achieve Compensation Philosophy andObjectives—Annual Cash Incentive Program’’ for further information on the terms of the Annual Incentive Program.

(2) Columns (f), (g) and (h) include the potential number of PRSUs which may be earned for performance at the threshold, targetand maximum levels, respectively. These awards were scheduled to vest if and to the extent that the sum of the Company’sCumulative Operating Adjusted Net Income Per Share exceeded certain levels over the three-year period beginning onJanuary 1, 2019 and ending on December 31, 2021. In connection with the IAA Spin-Off, the PRSUs granted in 2019 weresubject to adjusted performance criteria as described in the sections titled ‘‘Compensation Discussion and Analysis—IAASpin-Off’’ and ‘‘Long Term Incentive Opportunities,’’ respectively.

(3) Column (i) includes the number of RSUs granted in 2019. These awards vest ratably on each of the first three anniversariesof the grant date subject to the executive’s continued employment with the Company through each such anniversary.

(4) The amounts reported in this column represent the grant date fair value of awards granted to our named executive officers,computed in accordance with ASC 718. For PRSUs, the grant date fair value is based on target performance. See Note 5 toour financial statements for 2019 for information about the assumptions made in determining the grant date fair value.

(5) $500,000 of the aggregate value of Mr. Hammer’s equity awards are attributable to a special sign-on award to make up forcompensation from his previous employer that was forfeited when he joined the Company, with a 75%/25% allocationbetween PRSUs and RSUs.

(6) Mr. Hammer received a one-time make-whole grant of RSUs and PRSUs to reflect an increase in his 2019 long-termincentive target opportunity.

Additional information concerning our cash and equity incentive awards and plans may be found in the sectionstitled ‘‘Compensation Discussion and Analysis—Elements Used to Achieve Compensation Philosophy andObjectives—Annual Cash Incentive Program’’ and ‘‘Long-Term Incentive Opportunities,’’ respectively.

GRANTS OF PLAN-BASED AWARDS FOR 2019

Jim Hallett

Eric Loughmiller

Peter Kelly

John Hammer

Don Gottwald

Becca Polak

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Option Awards Stock Awards

EquityEquity Incentive

Incentive Plan Awards:Plan Awards: Market or

Market Number of Payout ValueNumber of Number of Value Unearned of UnearnedSecurities Shares or of Shares Shares, Shares,

Underlying Units of or Units of Units or Units orUnexercised Option Option Stock That Stock That Other Rights Other Rights

Options Exercise Expiration Have Not Have Not That Have That HaveName Grant Exercisable Price Date Vested Vested Not Vested Not Vested(a) Year Security (#)(b) ($)(e) (f) (#)(g) ($)(h) (#)(i) ($)(j)

2014 KAR 194,404 11.74 02/27/20242014 IAA 194,404 19.16 02/27/20242017 KAR 6,318(1) 165,606(1)

2017 IAA 6,318(1) 297,325(1)

2017 KAR 61,234(2) 1,358,541(2)

2017 IAA 61,234(2) 2,881,672(2)

2018 KAR 11,532(3) 283,228(3)

2018 IAA 11,532(3) 542,696(3)

2018 KAR 54,310(4) 1,204,925(4)

2018 IAA 54,310(4) 2,555,829(4)

2019 KAR 20,031(5) 460,043(5) 45,490(6) 991,227(6)

2019 IAA 20,031(5) 942,659(5) 72,312(6) 3,403,003(6)

2014 KAR 97,204 11.74 02/27/20242014 IAA 97,204 19.16 02/27/20242017 KAR 1,546(1) 40,752(1)

2017 IAA 1,546(1) 72,755(1)

2017 KAR 14,881(2) 330,151(2)

2017 IAA 14,881(2) 700,300(2)

2018 KAR 2,735(3) 67,417(3)

2018 IAA 2,735(3) 128,709(3)

2018 KAR 12,793(4) 283,826(4)

2018 IAA 12,793(4) 602,039(4)

2019 KAR 7,061(5) 162,168(5) 16,038(6) 349,468(6)

2019 IAA 7,061(5) 332,291(5) 25,495(6) 1,199,795(6)

2011 KAR 170,000 4.93 11/04/20212011 IAA 170,000 8.05 11/04/20212017 KAR 1,035(1) 27,129(1)

2017 IAA 1,035(1) 48,707(1)

2017 KAR 9,962(2) 220,950(2)

2017 IAA 9,962(2) 468,812(2)

2018 KAR 1,780(3) 43,717(3)

2018 IAA 1,780(3) 83,767(3)

2018 KAR 8,323(4) 184,599(4)

2018 IAA 8,323(4) 391,680(4)

2019 KAR 6,375(5) 146,203(5) 13,997(6) 304,995(6)

2019 IAA 6,375(5) 300,008(5) 22,250(6) 1,047,085(6)

2018 KAR 3,465(3) 85,101(3)

2018 IAA 3,465(3) 163,063(3)

2018 KAR 16,205(4) 359,415(4)

2018 IAA 16,205(4) 762,607(4)

2019 KAR 6,830(5) 156,638(5) 14,991(6) 326,654(6)

2019 IAA 6,830(5) 321,420(5) 23,831(6) 1,121,487(6)

2017 KAR 1,865(1) 48,885(1)

2017 IAA 1,865(1) 87,767(1)

2017 KAR 17,950(2) 398,119(2)

2017 IAA 17,950(2) 844,727(2)

2018 KAR 3,145(3) 77,242(3)

2018 IAA 3,145(3) 148,004(3)

2018 KAR 14,708(4) 326,213(4)

2018 IAA 14,708(4) 692,158(4)

2019 KAR 3,321(5) 76,163(5) 7,290(6) 158,849(6)

2019 IAA 3,321(5) 156,286(5) 11,588(6) 545,331(6)

2019 KAR 2,628(6) 57,264(6)

OUTSTANDING EQUITY AWARDSAT FISCAL YEAR-END 2019

Jim Hallett

Eric Loughmiller

Peter Kelly

John Hammer

Don Gottwald

Becca Polak

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(1) The total amounts and values in columns (g) and (h) equal the total number of unvested RSUs granted on February 24, 2017, thatvest ratably on each of the first three anniversaries of the grant date during the named executive officer’s continued employment withthe Company through each such anniversary, and the market value of such awards, determined by multiplying the number ofunvested KAR RSUs by the market price of KAR common stock at the close of the last trading day in 2019, which was $21.79 pershare, and multiplying the number of unvested IAA RSUs by the market price of IAA common stock at the close of the last tradingday in 2019, which was $47.06 per share. The total amount in column (h) includes accrued and unpaid cash dividend equivalents onKAR awards in the following amounts: Mr. Hallett – $27,937; Mr. Loughmiller – $7,064; Mr. Kelly – $4,577; and Mr. Gottwald –$8,247.

(2) The total amounts and values in columns (g) and (h) equal the total number of unvested PRSUs granted on February 24, 2017, thatwere converted into RSUs at the target performance level in connection with the IAA Spin-Off, that vest on the third anniversary ofthe grant date during the named executive officer’s continued employment with the Company through such anniversary, and themarket value of such awards, determined by multiplying the number of unvested KAR RSUs by the market price of KAR commonstock at the close of the last trading day in 2019, which was $21.79 per share, and by multiplying the number of unvested IAA RSUsby the market price of IAA common stock at the close of the last trading day in 2019, which was $47.06 per share. The total amountin column (h) includes accrued and unpaid cash dividend equivalents on the KAR awards in the following amounts: Mr. Hallett –$24,252; Mr. Loughmiller – $5,894; Mr. Kelly – $3,879; and Mr. Gottwald – $6,988.

(3) The total amounts and values in columns (g) and (h) equal the total number of unvested RSUs granted on March 2, 2018, that vestratably on each of the first three anniversaries of the grant date during the named executive officer’s continued employment with theCompany through each such anniversary, and the market value of such awards, determined by multiplying the number of unvestedKAR RSUs by the market price of KAR common stock at the close of the last trading day in 2019, which was $21.79 per share, andby multiplying the number of unvested IAA RSUs by the market price of IAA common stock at the close of the last trading day in2019, which was $47.06 per share. The total amount in column (h) includes accrued and unpaid cash dividend equivalents on theKAR equity awards in the following amounts: Mr. Hallett – $31,946; Mr. Loughmiller – $7,821; Mr. Kelly – $4,931; Mr. Hammer –$9,599; and Mr. Gottwald – $8,712.

(4) The total amounts and values in columns (g) and (h) equal the total number of unvested PRSUs granted on March 2, 2018, that wereconverted into RSUs at the target performance level in connection with the IAA Spin-Off, that vest on the third anniversary of thegrant date during the named executive officer’s continued employment with the Company through such anniversary, and the marketvalue of such awards, determined by multiplying the number of unvested KAR RSUs by the market price of KAR common stock atthe close of the last trading day in 2019, which was $21.79 per share, and by multiplying the number of unvested IAA RSUs by themarket price of IAA common stock at the close of the last trading day in 2019, which was $47.06 per share. The total amount incolumn (h) includes accrued and unpaid cash dividend equivalents on the KAR equity awards in the following amounts: Mr. Hallett –$21,510; Mr. Loughmiller – $5,067; Mr. Kelly – $3,240; Mr. Hammer – $6,308; and Mr. Gottwald – $5,726.

(5) The total amounts and values in columns (g) and (h) equal the total number of unvested RSUs granted on February 24, 2019 (andfor Mr. Hammer, March 1, 2019), that vest ratably on each of the first three anniversaries of the grant date during the namedexecutive officer’s continued employment with the Company through each such anniversary, and the market value of such awards,determined by multiplying the number of unvested KAR RSUs by the market price of KAR common stock at the close of the lasttrading day in 2019, which was $21.79 per share, and by multiplying the number of unvested IAA RSUs by the market price of IAAcommon stock at the close of the last trading day in 2019, which was $47.06 per share. The total amount in column (h) includesaccrued and unpaid cash dividend equivalents on the KAR equity awards in the following amounts: Mr. Hallett – $23,567;Mr. Loughmiller – $8,309; Mr. Kelly – $7,292; Mr. Hammer – $7,813; and Mr. Gottwald – $3,799.

(6) The total amounts and values in columns (i) and (j) equal the total number of unvested PRSUs granted on February 24, 2019, thatmay be earned based on the Company’s Operating Adjusted Net Income Per Share performance over a one-year period ending onDecember 31, 2019, and the market value of such awards, determined by multiplying the number of earned KAR PRSUs by themarket price of KAR common stock at the close of the last trading day in 2019, which was $21.79 per share, and by multiplying thenumber of earned IAA PRSUs by the market price of IAA common stock at the close of the last trading day in 2019, which was$47.06 per share, including in each case any reinvested dividends on such PRSUs. Because the performance period for thesePRSUs was completed as of the end of 2019, we have reported these PRSUs at the level actually earned. Following the completionof the performance period, the number of earned PRSUs vest on the third anniversary of the grant date for KAR PRSUs and onDecember 31, 2021, for IAA PRSUs, in each case during the named executive officer’s continued employment with the Companythrough such date.

Because this table shows outstanding equity awards held by our named executive officers as of December 31,2019, all information is presented on an adjusted basis to reflect the IAA Spin-Off. Please refer to thediscussion in ‘‘Compensation Discussion and Analysis—IAA Spin-Off’’ above for details on the adjustments.

Footnotes to Grants of Plan-Based Awards For 2019 Table

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Option Awards Stock Awards

Number of Shares Number of SharesAcquired on Value Realized on Acquired on Vesting Value Realized on

Name Exercise (#) Exercise ($) (#) Vesting ($)(a) (b) (c) (d) (e)

— — 111,987(1) 5,771,663(2)

— — 44,856(1) 2,339,831(2)

— — 15,705(1) 834,640(2)

— — 1,734(1) 85,254(2)

— — 25,615(1) 1,360,085(2)

34,996(3) 327,325(3) 37,667(1)(4) 1,384,339(2)(4)

(1) This amount includes shares vested with respect to the full amount of the 2016 PRSUs at 117.1% of target, one-thirdof the 2016 RSUs, one-third of the 2017 RSUs and one-third of the 2018 RSUs.

(2) This amount includes accumulated dividend equivalents paid in cash with respect to the vested 2016, 2017 and 2018RSUs.

(3) In addition to the amounts shown in the above table, Ms. Polak also acquired 34,996 shares of IAA stock uponexercising IAA stock options, realizing $806,493 in value.

(4) In addition to the amounts shown in the above table, Ms. Polak also acquired 24,617 shares of IAA stock upon thevesting of IAA PRSUs in connection with her separation from the Company, realizing $982,710 in value.

OPTION EXERCISES AND STOCK VESTED DURINGFISCAL YEAR 2019

Jim Hallett

Eric Loughmiller

Peter Kelly

John Hammer

Don Gottwald

Becca Polak

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The following is a discussion of the treatment of equity-based awards held by our named executive officers andannual cash incentive awards due to our named executive officers upon certain types of employmentterminations or the occurrence of a change in control of the Company. For a discussion of our namedexecutive officers’ severance payments and the treatment of their annual cash incentive awards that maybecome due upon certain types of employment terminations pursuant to their employment agreements, see‘‘Employment Agreements with Named Executive Officers’’ below.

EQUITY-BASED AWARDS—OMNIBUS PLAN

To the extent a named executive officer’s employment agreement does not provide otherwise, the OmnibusPlan (and the related award agreements thereunder) provide for the following treatment of stock options andother equity awards issued pursuant to the Omnibus Plan upon the termination of employment scenarios or achange in control, as set forth below. Since December 10, 2009, all grants of stock options and other equityawards have been and will be made pursuant to the terms of the Omnibus Plan.

Unless otherwise specified in an award agreement, all unvested equity-based awards under the Omnibus Plan will be forfeitedupon a termination of employment for any reason (except in the case of disability or death, as described in the Omnibus Plan).

Voluntary Termination: vested All vested options remain Unless otherwise Single triggeroptions remain exercisable for exercisable for one year (or specified in an vesting with90 days (or until earlier until earlier expiration date). award agreement, committeeexpiration date). vested options discretion to cash

In the event of death or remain exercisable out or substituteFor Cause: all vested and disability, all unvested options for 90 days (or with successorunvested options are cancelled. vest in full, with performance until earlier company awards.

awards remaining subject to expiration date).achievement of goals.

Automatic forfeiture. Without Cause or for Good Reason: Prorated Double triggerportion of the PRSUs based on the Company’s actual vesting at targetperformance during the performance period and the performance levelnumber of full months he/she was employed during for any PRSUs thatsuch performance period. are assumed or

replaced in aDeath or Disability: Full vesting of the PRSU awardChange in Control.based on the Company’s actual performance duringSingle triggerthe performance period.vesting at the

Retirement: Prorated potion of the PRSUs based on target performancethe Company’s actual performance during the level for anyperformance period and the number of full months PRSUs that are notworked through the retirement date (including the assumed or‘‘early retirement date’’ which is the date of the replaced in aexecutive’s voluntary termination of employment after Change in Control.attaining a combination of years of age and servicewith the Company and its affiliates of at least 70, witha minimum age of 60) plus a credit of an additional12 months.

Voluntary Termination (with or without Good Reason), or Termination by the Double triggerCompany (for Cause or without Cause): Forfeiture of any unvested RSUs. vesting for any

RSUs that areDeath or Disability: Full vesting of any unvested RSUs. assumed or

replaced in aRetirement: Immediate vesting of any unvested RSUs scheduled to vest in the 12 monthsChange in Control.following the retirement date (including the ‘‘early retirement date’’) and a prorated portionSingle triggerof such RSUs based on the number of full months he/she was employed since the mostvesting for anyrecent anniversary of the grant date (after giving 12 months vesting credit following theRSUs that are notdate of retirement).assumed orreplaced in aChange in Control.Operating adjustednet income goal isdeemed attained.

POTENTIAL PAYMENTS UPON TERMINATION ORCHANGE IN CONTROL

Termination or Change in Control Scenario

Terminationby the Termination Effect of

Award Voluntary Company Death, Disability without Cause or Change in ControlType Termination for Cause or Retirement for Good Reason or Exit Event

Options

2017PRSUs

2018PRSUs

2019PRSUs

2017RSUs

2018RSUs

2019RSUs

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Unless specified otherwise in a named executive officer’s employment agreement, the termination of a namedexecutive officer’s employment with the Company or any subsidiary shall be deemed to be for ‘‘cause’’ underthe Omnibus Plan upon any of the following events: (i) the refusal or neglect of the named executive officer toperform substantially his/her employment-related duties; (ii) the named executive officer’s personal dishonesty,incompetence, willful misconduct, or breach of fiduciary duty; (iii) the named executive officer’s indictment for,conviction of, or entering a plea of guilty or nolo contendere to a crime constituting a felony or his/her willfulviolation of any applicable law (other than certain exceptions set forth in the Omnibus Plan); (iv) the namedexecutive officer’s failure to reasonably cooperate, following a request to do so by the Company, in any internalor governmental investigation of the Company or any subsidiary; or (v) the named executive officer’s materialbreach of any written covenant or agreement not to disclose any information pertaining to the Company or asubsidiary or not to compete or interfere with the Company or a subsidiary.

The Omnibus Plan does not provide a default ‘‘good reason’’ definition in the event such term is not specifiedin a named executive officer’s employment agreement.

ANNUAL CASH INCENTIVE AWARDS—OMNIBUS PLAN

Death, Disability, Voluntary Termination (with or without Good Reason) or Termination by the Unless otherwiseCompany (for Cause or without Cause): Annual cash incentive awards are treated as described in determined by thethe executive’s employment agreement with the Company, to the extent applicable. See ‘‘Employment administrator of theAgreements with Named Executive Officers’’ below for more information. Omnibus Plan or as

evidenced in an awardRetirement: Unless otherwise specified in an employment agreement, an executive receives a prorated agreement, pro rataamount of the incentive award based on actual performance for the performance period. payment based on

actual performance, inthe administrator’sdiscretion.

Termination or Change in Control Scenario

Termination Termination Effect ofVoluntary by the Company Death, Disability without Cause or Change in ControlTermination for Cause or Retirement for Good Reason or Exit Event

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Mr. Gottwald and Ms. Polak resigned on April 3, 2020 and October 8, 2019, respectively, and the table belowdescribes the payments they actually received in connection with their termination of employment. The amountsin the table below for all other named executive officers are based on employment agreements that were ineffect for each such named executive officer on December 31, 2019, and assume that the termination and/orchange in control, as applicable, was effective as of December 31, 2019, the last business day of the priorfiscal year, and that the respective named executive officers exercised all options and/or received cash inexchange for vested PRSUs and RSUs at such time. Following the end of the prior fiscal year we entered intonew employment agreements with Messrs. Loughmiller, Kelly, and Hammer, which are further described in thesection titled ‘‘Employment Agreements with Named Executive Officers’’ below. The table is merely anillustrative example of the impact of a hypothetical termination of employment or change in control (except forMr. Gottwald and Ms. Polak). The amounts that would actually be paid upon a termination of employment canonly be determined at the time of such termination, based on the facts and circumstances then prevailing.

Non- ExciseEquity Stock Tax Life

Named Executive Officer and Cash Incentive Options PRSUs RSUs Gross- InsuranceTriggering Event Severance Pay(1) (2) (3) (4) Up(5) (6) Total

• Death . . . . . . . . . . . . . . . . —(9) $609,375 — $12,395,196 $2,691,557 — $800,000 $16,496,128• Disability(7) . . . . . . . . . . . . . —(9) $609,375 — $12,395,196 $2,691,557 — — $15,696,128• Retirement(8) . . . . . . . . . . . . — $609,375 — $10,930,453 $2,077,235 — — $13,617,063• Voluntary / for Cause . . . . . . . — — — —(11) —(11) — — —• Termination w/o Cause or for

Good Reason . . . . . . . . . . . $4,387,500(10) $609,375 — $10,930,453(12) $2,077,235(12) — — $18,004,563• CIC (single trigger) . . . . . . . . — $609,375 — — — — — $609,375• Termination after CIC (double

trigger) . . . . . . . . . . . . . . . $4,387,500(10) $609,375 — $12,395,196 $2,691,557 — — $20,083,628

• Death . . . . . . . . . . . . . . . . $17,076(9) $275,000 — $3,465,579 $804,092 — $800,000 $5,361,747• Disability(7) . . . . . . . . . . . . . $17,076(9) $275,000 — $3,465,579 $804,092 — — $4,561,747• Retirement(8) . . . . . . . . . . . . — — — $2,949,158 $595,458 — — $3,544,616• Voluntary / for Cause . . . . . . . — — — —(11) —(11) — — —• Termination w/o Cause or for

Good Reason . . . . . . . . . . . $1,117,076(10) $275,000 — $2,949,158(12) $595,458(12) — — $4,936,692• CIC (single trigger) . . . . . . . . — $275,000 — — — — — $275,000• Termination after CIC (double

trigger) . . . . . . . . . . . . . . . $1,117,076(10) $275,000 — $3,465,579 $804,092 — — $5,661,747

• Death . . . . . . . . . . . . . . . . $27,568(9) $300,000 — $2,618,121 $649,531 — $800,000 $4,395,220• Disability(7) . . . . . . . . . . . . . $27,568(9) $300,000 — $2,618,121 $649,531 — — $3,595,220• Retirement(8) . . . . . . . . . . . . — — — — — — — —• Voluntary / for Cause . . . . . . . — $300,000 — — — — — $300,000• Termination w/o Cause or for

Good Reason . . . . . . . . . . . $1,227,568(10) $300,000 — $1,495,260 — — — $3,022,828• CIC (single trigger) . . . . . . . . — $300,000 — — — — — $300,000• Termination after CIC (double

trigger) . . . . . . . . . . . . . . . $1,227,568(10) $300,000 — $2,618,121 $649,531 — — $4,795,220

• Death . . . . . . . . . . . . . . . . $27,568(9) $345,190 — $2,570,048 $726,222 — $800,000 $4,469,028• Disability(7) . . . . . . . . . . . . . $27,568(9) $345,190 — $2,570,048 $726,222 — — $3,669,028• Retirement(8) . . . . . . . . . . . . — — — — — — — —• Voluntary / for Cause . . . . . . . — $345,190 — — — — — $345,190• Termination w/o Cause or for

Good Reason . . . . . . . . . . . $1,077,568(10) $345,190 — $1,846,173 — — — $3,268,931• CIC (single trigger) . . . . . . . . — $345,190 — — — — — $345,190• Termination after CIC (double

trigger) . . . . . . . . . . . . . . . $1,077,568(10) $345,190 — $2,570,048 $726,222 — — $4,719,028

• Termination for Good Reason . . $1,191,367(10) $408,552 — $2,300,924 — — — $3,900,843

• Termination for Good Reason . . $1,057,355(10) $115,875 — $1,537,013 — — — $2,710,243

POTENTIAL PAYMENTS UPON TERMINATION ORCHANGE IN CONTROL TABLE

Jim Hallett

Eric Loughmiller

Peter Kelly

John Hammer

Don Gottwald

Becca Polak

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(1) The amounts reported are equal to the full amount of the named executive officer’s 2019 annual bonus (aDecember 31, 2019 termination results in a 100% payout, whereas a termination on any other date would result in aprorated amount to the extent applicable), payable under the terms of such officer’s employment agreement or theOmnibus Plan, as applicable, except for Ms. Polak’s 2019 annual bonus which was prorated to reflect her October 8,2019 termination.

(2) No named executive officer had any outstanding, unvested options as of December 31, 2019.

(3) Except for Mr. Gottwald and Ms. Polak (for whom amounts reflect what was actually received upon termination), theamounts reported assume, for KAR awards, a KAR common stock price of $21.79, which was the closing price onDecember 31, 2019, and, for IAA awards, an IAA common stock price of $47.06, which was the closing price onDecember 31, 2019. In the event that a named executive officer terminates employment as a result of the namedexecutive officer’s death, Disability, Retirement or Early Retirement (if eligible) (each as defined in the Omnibus Planexcept for Early Retirement which is defined in the applicable award agreement) prior to a Change in Control (asdefined in the Omnibus Plan) and as of December 31, 2019, each of the named executive officers would be entitled toimmediate vesting of (i) all of the 2017 PRSUs that converted into RSUs, (ii) all of the 2018 PRSUs that converted intoRSUs and (iii) all of the 2019 PRSUs in the case of death or Disability or 24/36ths of the 2019 PRSUs in the case ofRetirement or Early Retirement (if eligible), based on actual performance in the case of the 2019 PRSUs. In the eventthat a named executive officer is terminated without Cause or resigns for Good Reason (each as defined in theapplicable employment agreement) prior to a Change in Control and as of December 31, 2019, each of the namedexecutive officers would be entitled to immediate vesting of (i) all of the 2017 PRSUs that converted into RSUs,(ii) 24/36ths of the 2018 PRSUs that converted into RSUs and (iii) 12/36ths of the 2019 PRSUs; based on actualperformance in the case of the 2019 PRSUs. With respect to the events described above, the amounts disclosed inthe table for the 2017 and 2018 PRSUs reflect the target number of PRSUs that converted into RSUs and the 2019PRSUs reflect actual performance.

If a Change in Control occurs prior to the termination of such named executive officer’s employment, assuming aChange in Control date of December 31, 2019, he would be entitled to receive immediate vesting of the 2017 and2018 PRSUs that converted into RSUs and the target number of 2019 PRSUs as of his termination date, withoutproration, with respect to any such awards that are not assumed or replaced in the Change in Control, each as of theChange in Control date. If awards are assumed or replaced in the Change in Control, and such named executiveofficer’s employment is terminated following the Change in Control as a result of a termination without Cause or aresignation for Good Reason, assuming a Change in Control date of December 31, 2019, he would be entitled toreceive immediate vesting of the 2017 and 2018 PRSUs that converted into RSUs and the target number of 2019PRSUs, without proration, as of his termination date. With respect to a Change in Control, the amounts disclosed inthe ‘‘CIC (single trigger)’’ rows in the table assume that the awards are assumed or replaced in the Change in Control.

(4) Except for Mr. Gottwald and Ms. Polak (for whom amounts reflect what was actually received upon termination), theamounts reported assume, for KAR awards, a KAR common stock price of $21.79, which was the closing price onDecember 31, 2019, and, for IAA awards, an IAA common stock price of $47.06, which was the closing price onDecember 31, 2019. In the event a named executive officer’s employment is terminated as a result of a terminationwith or without Cause or a voluntary termination (with or without Good Reason) prior to a Change in Control and as ofDecember 31, 2019, he would forfeit the unvested portion of his RSUs. In the event a named executive officer’semployment is terminated due to his death or Disability prior to a Change in Control and as of December 31, 2019, hewould be entitled to receive immediate vesting of the unvested portion of his RSUs. In the event that a namedexecutive officer terminates employment prior to a Change in Control due to his Retirement or Early Retirement, hewould be entitled to receive immediate vesting of the unvested portion of his RSUs that are scheduled to vest in the12 months following the retirement date plus a prorated portion of such RSUs based on the number of full months hewas employed since the most recent anniversary of the grant date (after giving 12 months vesting credit following theretirement date).

If a Change in Control occurs prior to the termination of such named executive officer’s employment, assuming aChange in Control date of December 31, 2019, he would be entitled to receive immediate vesting of any RSU awardsthat are not assumed or replaced in the Change in Control, each as of the Change in Control date. If such namedexecutive officer’s employment is terminated following a Change in Control as a result of a termination without Causeor a resignation for Good Reason, assuming a Change in Control date of December 31, 2019, he would be entitled toreceive immediate vesting of any RSU awards that are assumed or replaced in the Change in Control, as of histermination date. With respect to a Change in Control, the amounts disclosed in the ‘‘CIC (single trigger)’’ rows in thetable assume that the RSUs are assumed or replaced in the Change in Control.

(5) As described above, pursuant to his employment agreement and in the event of a Change in Control, Mr. Hallett maybe entitled to an excise tax gross-up with respect to certain payments made in connection with a termination of hisemployment; however, the estimated value of the excess parachute payments on December 31, 2019 is within thestatutory safe harbor amount under Section 280G of the Code, making the excise tax and related gross-upinapplicable. Actual excise tax amounts and tax gross-up payments, if any, would be calculated at the time of an

Footnotes to Potential Payments Upon Termination or Change in Control Table

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actual Change in Control based on all factors and assumptions applicable at that time. No other named executiveofficer is entitled to an excise tax gross-up.

(6) Under the Group Term Life Policy, each named executive officer’s designated beneficiary is entitled to a payment in anamount equal to two times his annual salary, not exceeding $800,000.

(7) Long-term disability is a Company-paid benefit for all employees and therefore is not included in this table. Thelong-term disability benefit is only paid after six months on short-term disability and is 66.67% of base pay capped at$15,000 per month.

(8) Pursuant to the terms of his employment agreement, Mr. Hallett would be entitled to a prorated payout of his 2019annual bonus (the full bonus for a termination date of December 31, 2019) upon his ‘‘retirement’’ (i.e., a voluntarytermination of his employment, provided that he announces his retirement at least 12 months prior to suchtermination).

As of December 31, 2019, Messrs. Hallett and Loughmiller would each have been entitled to receive acceleratedvesting of all or a portion of the RSUs and PRSUs because each had met the requirements for a Retirement or EarlyRetirement as of December 31, 2019 under the applicable award agreements under the Omnibus Plan (each waseither 65 years of age or had reached the age of 60 and had a combination of years of age and service with theCompany and its affiliates of at least 70). Messrs. Kelly and Hammer had not satisfied the Retirement or EarlyRetirement requirements under the applicable award agreements under the Omnibus Plan as of December 31, 2019(i.e., none were either 65 years of age or had reached the age of 60 and met the applicable age and servicerequirements), and thus, they would not have been entitled to accelerated vesting of their equity for a ‘‘retirement’’ asof such date.

Messrs. Loughmiller, Kelly and Hammer had not satisfied the Retirement requirements under the Omnibus Plan as ofDecember 31, 2019 (i.e., none had reached the age of 65), and thus, they would not have been entitled to a proratedpayout of their annual bonuses for a Retirement as of such date.

(9) Under the terms of each named executive officer’s employment agreement (other than with respect to Mr. Hallett), he(or his estate) would be entitled to COBRA premium payments for 12 months in the event of his death or Disability.Mr. Hallett (or his estate) would be entitled to COBRA premium payments for 18 months in the event of his death orDisability, but would not have received this benefit with respect to a termination occurring on December 31, 2019because he did not participate in our group health plans as of such date.

(10) These amounts are equal to (i) for Mr. Hallett, two times the sum of Mr. Hallett’s current annual base salary($975,000) and his 2019 target bonus amount; (ii) for Mr. Gottwald, (a) one times the sum of Mr. Gottwald’s annualbase salary as of December 31, 2018 ($583,495) and his 2018 target bonus amount; and (b) COBRA premiumpayments for 12 months; and (iii) for all other named executive officers, (a) one times the sum of the named executiveofficer’s current annual base salary ($550,000 for Mr. Loughmiller, $600,000 for Mr. Kelly, $525,000 for Mr. Hammer,and $515,000 for Ms. Polak) and his or her 2019 target bonus amount; and (b) COBRA premium payments for12 months. The amount in this column does not include $500,000 payable to Ms. Polak pursuant to a consultingagreement with the Company, which was entered into in connection with her resignation and which is further describedin the section titled ‘‘Employment Agreements with Named Executive Officers’’ below.

(11) Messrs. Hallett and Loughmiller are eligible for Retirement and/or Early Retirement under the applicable awardagreements under the Omnibus Plan. Accordingly, we have assumed that a ‘‘voluntary termination’’ would be treatedas a termination of employment as a result of Retirement or Early Retirement.

(12) Messrs. Hallett and Loughmiller are eligible for Retirement and/or Early Retirement under the applicable awardagreements under the Omnibus Plan and the value shown here reflects what each such named executive officer wouldbe eligible to receive upon a termination of employment as a result of Retirement or Early Retirement.

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EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS

Each of our named executive officers has an employment agreement with the Company. A summary of each ofthe agreements is provided below.

Mr. Hallett’s employment agreement, which became effective as of February 27, 2012, provides for thefollowing severance and change of control payments:

If Mr. Hallett’s employment is terminated as a result ofhis death or disability, we will pay Mr. Hallett, or in the case of his death, Mr. Hallett’s estate or beneficiaries,an amount equal to the sum of (i) any accrued but unpaid base salary and accrued but unused vacation days;(ii) any earned and vested benefits and payments pursuant to the terms of any benefit plan (collectively, theamounts described in (i) and (ii) above are, the ‘‘Accrued Obligations’’); and (iii) subject to Mr. Hallett or hisestate executing a general release of any claims that he may have against the Company (the ‘‘Release’’), anyannual bonus for a prior completed calendar year that has not yet been calculated or paid to Mr. Hallett (the‘‘Earned but Unpaid Bonus’’).

In addition, if Mr. Hallett is participating in the health plans of the Company at the time of his termination, wewill pay him, or in the case of his death, his estate or beneficiaries, his or their premiums attributable tomaintaining insurance coverage under COBRA for the shorter of (i) 18 months; or (ii) until Mr. Hallett becomeseligible for comparable coverage under the health plans of another employer (the ‘‘Continued Benefits’’).Subject to receipt and effectiveness of the Release, we also will pay Mr. Hallett, or his estate or beneficiaries, aprorated bonus based upon the portion of the year during which Mr. Hallett was employed by us (the ‘‘ProratedBonus’’).

For purposes of Mr. Hallett’s employment agreement, ‘‘disability’’ means a ‘‘Total Disability’’ (or equivalent) asdefined in the Company’s long term disability plan in effect at the time of the disability.

Following a majority vote of the Board (excluding Mr. Hallett or anyother employee of the Company), we may terminate Mr. Hallett’s employment at any time for ‘‘Cause.’’ In suchevent, our only obligation to Mr. Hallett would be the payment, in a lump sum, of Mr. Hallett’s AccruedObligations.

‘‘Cause’’ is defined in the employment agreement to mean (i) Mr. Hallett’s willful, continued and uncured failureto perform substantially his duties under the employment agreement for a period of 14 days following notice toMr. Hallett of such failure; (ii) Mr. Hallett engaging in illegal conduct or gross misconduct that is demonstrablylikely to lead to material injury to the Company; (iii) Mr. Hallett’s indictment or conviction of, or plea of nolocontendere to, a crime constituting a felony or any other crime involving moral turpitude; or (iv) Mr. Hallett’sfailure to comply with the provisions of the employment agreement relating to confidential information,intellectual property, non-competition and non-solicitation which is not cured within the 14 day period followingwritten notice to Mr. Hallett of such failure.

Mr. Hallett’s employment may be terminated without Cause atany time upon 30 days’ prior written notice. In the event of a termination without Cause, the Company will payMr. Hallett the following ‘‘Severance Benefits’’: (i) two times the sum of Mr. Hallett’s (a) annual base salary and(b) target bonus for the year in which termination occurs which, for this purpose, shall not equal less than100% of Mr. Hallett’s base salary; (ii) a Prorated Bonus in a lump sum; and (iii) the Continued Benefits. Inaddition to the Severance Benefits described above, we will also pay Mr. Hallett the Accrued Obligations andany Earned but Unpaid Bonus.

Mr. Hallett may terminate his employment for ‘‘Good Reason’’within 90 days following the occurrence of an event constituting ‘‘Good Reason,’’ if such event remains uncuredfor a period of 30 days following notice of the event by Mr. Hallett to the Company. Upon such termination, theCompany will pay Mr. Hallett the sum of the Severance Benefits, the Accrued Obligations and any Earned butUnpaid Bonus.

CEO

Termination Due to Mr. Hallett’s Death or Disability.

Termination by the Company for Cause.

Termination by the Company Without Cause.

Termination by Mr. Hallett for Good Reason.

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‘‘Good Reason’’ is defined in the employment agreement to mean the occurrence of any of the following:

• A material reduction of Mr. Hallett’s authority, duties and responsibilities, or the assignment toMr. Hallett of duties materially inconsistent with Mr. Hallett’s position as Chief Executive Officer;

• A requirement by the Company that Mr. Hallett relocate his principal business location to a locationmore than 50 miles from the Company’s executive offices as of the effective date of theemployment agreement;

• Any material failure by the Company to comply with any of the terms and conditions of theemployment agreement;

• Any failure to timely pay or provide Mr. Hallett’s base salary, or any reduction in Mr. Hallett’s basesalary below $816,000, other than in connection with across-the-board salary reductions;

• Any material reduction in Mr. Hallett’s base salary or annual bonus opportunity; or

• A ‘‘Change of Control,’’ defined by reference to the term ‘‘Change in Control’’ used the OmnibusPlan, occurs and, if applicable, the Company fails to cause its successor to assume or reaffirm theCompany’s obligations under the employment agreement without change.

Mr. Hallett may terminate his employment under theemployment agreement at any time without Good Reason upon 30 days’ prior written notice. In such event, wewill pay Mr. Hallett a lump sum amount equal to the Accrued Obligations.

Mr. Hallett may voluntarily terminate his employment under theemployment agreement due to retirement by announcing his retirement at least 12 months prior to suchtermination. In the event of such a termination, we will pay Mr. Hallett a lump sum amount equal to theAccrued Obligations and a Prorated Bonus.

As described above in ‘‘Compensation Policies and Other Information—Tax andAccounting Considerations—Employment Agreements,’’ Mr. Hallett’s employment agreement provides that inthe event that any payment or benefit in connection with his employment is or becomes subject to an excisetax under Section 4999 of the Code, the Company will make a cash payment to Mr. Hallett, which after theimposition of all income, employment, excise and other taxes thereon as well as any penalty and interestassessments associated therewith, will be sufficient to place Mr. Hallett in the same after-tax position as hewould have been in had such excise tax not applied. However, in the event that a reduction of the totalpayments due to Mr. Hallett would avoid the application of the excise tax, then the total payments will bereduced to the extent necessary to avoid the excise tax, but in no event by more than 10% of the originalamount of the total payments due.

Upon a termination of employmentfor any reason, Mr. Hallett is subject to the following two year post-termination restrictive covenants (except inthe case of retirement): (i) non-competition restrictions; and (ii) non-solicitation of Company employees andcustomers.

The Company had previously entered into substantially similar employment agreements with Messrs.Loughmiller, Kelly, Hammer and Gottwald and Ms. Polak, providing for their at-will employment and theseverance and change of control payments described below. Ms. Polak’s employment agreement terminatedeffective October 8, 2019, and Mr. Gottwald’s employment agreement terminated effective April 3, 2020. OnMarch 9, 2020, the Company entered into new, substantially similar employment agreements with Messrs.Loughmiller, Kelly, and Hammer providing for their at-will employment and the severance and change of controlpayments described below, which superseded their prior employment agreements. Additionally, in connectionwith Ms. Polak’s resignation from the Company, on September 12, 2019, the Company entered into aconsulting agreement with Ms. Polak.

Termination by Mr. Hallett without Good Reason.

Termination by Mr. Hallett upon Retirement.

Excise Tax Gross-Up.

Requirements With Respect to Non-Competition and Non-Solicitation.

Other Named Executive Officers

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If Messrs. Loughmiller, Kelly, Hammer or Gottwald or Ms. Polakterminated his/her employment due to death or disability, the Company would be obligated to pay to theexecutive (or his/her legal representatives) an amount equal to the sum of (i) any earned but unpaid basesalary; (ii) accrued but unpaid vacation earned through the date of termination; (iii) unreimbursed businessexpenses; and (iv) any vested employee benefits. The aggregate of the foregoing is referred to as the‘‘Accrued Obligations.’’ In addition, the executive or his/her estate/beneficiaries would be entitled to receive(i) COBRA premium payments for 12 months or until the executive becomes eligible for coverage underanother employer’s health plan, if the executive is participating in the Company’s health plans on the date ofsuch termination of employment (the ‘‘Continued Benefits’’); (ii) the prorated portion of his/her annual bonus forthe calendar year in which such termination of employment occurred, calculated based on the executive’sactual performance and based on the number of days the executive was employed by the Company duringsuch calendar year (the ‘‘Pro Rata Bonus’’); and (iii) a payment equal to the amount of any annual bonus whichhas been earned in a prior year but which has not yet been paid to the executive (the ‘‘Earned but UnpaidBonus’’).

For purposes of their employment agreements, ‘‘disability’’ means a ‘‘Total Disability’’ (or equivalent) as definedin the Company’s long term disability plan in effect at the time of the disability.

If Messrs. Loughmiller, Kelly, Hammer or Gottwald orMs. Polak voluntarily terminated his/her employment or if the Company terminated his/her employment forCause, the Company’s sole obligation will be to pay him/her the Accrued Obligations. For purposes of theiremployment agreements, ‘‘Cause’’ means the (i) executive’s willful, continued and uncured failure to performsubstantially their duties under the agreement (other than any such failure resulting from incapacity due tomedically documented illness or injury) for a period of 14 days following written notice by the Company to theexecutive of such failure; (ii) executive engaging in illegal conduct or gross misconduct that is demonstrablylikely to lead to material injury to the Company, monetarily or otherwise; (iii) executive’s indictment or convictionof, or plea of nolo contendere to, a crime constituting a felony or any other crime involving moral turpitude; or(iv) executive’s violation of the restrictive covenants under the agreement or any other covenants owed to theCompany by executive.

In the event Messrs. Loughmiller, KellyHammer or Gottwald or Ms. Polak was terminated by the Company without Cause or such executive resignedfor Good Reason, the executive would be entitled to receive the following, subject to the execution andnon-revocation of a release of claims, (i) a lump sum cash payment equal to the sum of his/her annual basesalary plus target annual bonus for the year in which such termination of employment occurs (except that in2019, Mr. Gottwald would receive the sum of his annual base salary plus target annual bonus as ofDecember 31, 2018 under certain circumstances); (ii) the Continued Benefits; (iii) the Pro Rata Bonus; and(iv) the Earned but Unpaid Bonus. For purposes of their employment agreements, ‘‘Good Reason’’ means(i) any material reduction of the executive’s authority, duties and responsibilities; (ii) any material failure by theCompany to comply with any of the terms and conditions of the agreement; (iii) any failure to timely pay orprovide the executive’s base salary, or any reduction in the executive’s base salary, excluding any base salaryreduction made in connection with across the board salary reductions; (iv) the requirement by the Companythat the executive relocate his/her principal business location to a location more than 50 miles from theexecutive’s principal base of operation as of the effective date of the agreement; or (v) a Change of Controloccurs and, if applicable, the Company fails to cause its successor (whether by purchase, merger,consolidation or otherwise) to assume or reaffirm the Company’s obligations under the agreement withoutchange. For purposes of the foregoing, ‘‘Change of Control’’ has the same meaning as the term ‘‘Change inControl’’ under the Omnibus Plan.

Upon a termination of employmentfor any reason, Messrs. Loughmiller, Kelly, Hammer and Gottwald and Ms. Polak are subject to the followingone year post-termination restrictive covenants: (i) non-competition restrictions; and (ii) non-solicitation ofCompany employees and customers.

Prior Employment Agreement with Messrs. Loughmiller, Kelly, Hammer and Gottwald and Ms. Polak

Termination Due to Death or Disability.

Voluntary Termination or Termination for Cause.

Termination Without Cause or Resignation for Good Reason.

Requirements With Respect to Non-Competition and Non-Solicitation.

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On March 9, 2020, the Company entered into new, substantially similar employment agreements withMessrs. Loughmiller, Kelly and Hammer, which replaced their prior employment agreements described above.

If Messrs. Loughmiller, Kelly or Hammer terminates his employmentdue to death or disability, the Company will be obligated to pay to the executive (or his legal representatives)an amount equal to the sum of (i) any earned but unpaid base salary; (ii) accrued but unpaid vacation earnedthrough the date of termination; (iii) unreimbursed business expenses; and (iv) any vested employee benefits.The aggregate of the foregoing is referred to as the ‘‘Accrued Obligations.’’ In addition, the executive or hisestate/beneficiaries would be entitled to receive (i) COBRA premium payments for 18 months or until theexecutive becomes eligible for coverage under another employer’s health plan, if the executive is participatingin the Company’s health plans on the date of such termination of employment (the ‘‘Continued Benefits’’);(ii) the prorated portion of his annual bonus for the calendar year in which such termination of employmentoccurred, calculated based on the executive’s actual performance and based on the number of days theexecutive was employed by the Company during such calendar year (the ‘‘Pro Rata Bonus’’); and (iii) apayment equal to the amount of any annual bonus which has been earned in a prior year but which has notyet been paid to the executive (the ‘‘Earned but Unpaid Bonus’’).

For purposes of their employment agreements, ‘‘disability’’ means a ‘‘Total Disability’’ (or equivalent) as definedin the Company’s long term disability plan in effect at the time of the disability.

If Messrs. Loughmiller, Kelly or Hammer voluntarilyterminates his employment or if the Company terminates his employment for Cause, the Company’s soleobligation will be to pay him the Accrued Obligations. For purposes of their employment agreements, ‘‘Cause’’means the (i) executive’s willful, continued and uncured failure to perform substantially their duties under theagreement (other than any such failure resulting from incapacity due to medically documented illness or injury)for a period of 14 days following written notice by the Company to the executive of such failure; (ii) executiveengaging in illegal conduct or gross misconduct that is demonstrably likely to lead to material injury to theCompany, monetarily or otherwise; (iii) executive’s indictment or conviction of, or plea of nolo contendere to, acrime constituting a felony or any other crime involving moral turpitude; (iv) executive’s material breach of theCompany’s code of business conduct and ethics; or (v) executive’s violation of the restrictive covenants underthe agreement or any other covenants owed to the Company by executive.

In the event Messrs. Loughmiller, Kelly orHammer is terminated by the Company without Cause or such executive resigns for Good Reason, theexecutive would be entitled to receive, subject to the execution and non-revocation of a release of claims, (i) alump sum cash payment equal to the sum of one and a half times his annual base salary plus target annualbonus for the year in which such termination of employment occurs; (ii) the Continued Benefits; (iii) the ProRata Bonus; and (iv) the Earned but Unpaid Bonus. For purposes of their employment agreements, ‘‘GoodReason’’ means (i) any material reduction of the executive’s authority, duties and responsibilities; (ii) anymaterial failure by the Company to comply with any of the terms and conditions of the agreement; (iii) anyfailure to timely pay or provide the executive’s base salary, or any reduction in the executive’s base salary,excluding any base salary reduction made in connection with across the board salary reductions; (iv) therequirement by the Company that the executive relocate his principal business location to a location more than50 miles from the executive’s principal base of operation as of the effective date of the agreement; or (v) aChange of Control occurs and, if applicable, the Company fails to cause its successor (whether by purchase,merger, consolidation or otherwise) to assume or reaffirm the Company’s obligations under the agreementwithout change. For purposes of the foregoing, ‘‘Change of Control’’ has the same meaning as the term‘‘Change in Control’’ under the Omnibus Plan.

In the event Messrs. Loughmiller, Kelly or Hammer is terminated by theCompany without Cause or such executive resigns for Good Reason, as described above, and suchtermination occurs within two years of a Change of Control (as defined under the Omnibus Plan), the executivewould be entitled to receive, subject to the execution and non-revocation of a release of claims, (i) a lump sumcash payment equal to the sum of two times his annual base salary plus target annual bonus for the year in

New Employment Agreement with Messrs. Loughmiller, Kelly and Hammer

Termination Due to Death or Disability.

Voluntary Termination or Termination for Cause.

Termination Without Cause or Resignation for Good Reason.

Change In Control Termination.

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which such termination of employment occurs; (ii) the Continued Benefits; (iii) the Pro Rata Bonus; and (iv) theEarned but Unpaid Bonus.

Upon a termination of employmentfor any reason, Messrs. Loughmiller, Kelly and Hammer are subject to the following one year post-terminationrestrictive covenants: (i) non-competition restrictions; and (ii) non-solicitation of Company employees andcustomers.

In connection with Ms. Polak’s resignation from the Company, on September 12, 2019, the Company enteredinto a consulting agreement with Ms. Polak, pursuant to which Ms. Polak provided consulting services to theCompany from October 8, 2019 through December 31, 2019 and received a fee of $500,000 in connection withsuch services.

Requirements With Respect to Non-Competition and Non-Solicitation.

Consulting Agreement with Ms. Polak

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For the 2019 fiscal year, the ratio of the annual total compensation of Mr. Hallett, our ChiefExecutive Officer (‘‘CEO Compensation’’), to the median of the annual total compensation of all of ouremployees and those of our consolidated subsidiaries other than Mr. Hallett (‘‘Median Annual Compensation’’)was 167 to 1.

This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K usingthe data and assumptions described below. The assumptions used in the calculation of our estimated pay ratioare specific to our company and our employee population; therefore, our pay ratio may not be comparable tothe pay ratios of other companies, including the companies in our proxy comparator group.

In this summary, we refer to the employee who received the Median Annual Compensation as the ‘‘MedianEmployee.’’ For purposes of this summary, Median Annual Compensation was $33,017, and was calculated bytotaling for our Median Employee all applicable elements of compensation for the 2019 fiscal year inaccordance with Item 402(c)(2)(x) of Regulation S-K. For purposes of this summary, CEO Compensation was$5,529,428. CEO Compensation for purposes of this disclosure represents the total compensation reported forMr. Hallett in the ‘‘Summary Compensation Table for 2019’’ for the 2019 fiscal year.

In 2019, we completed the IAA Spin-Off, which caused a significant change in our employeepopulation from that employed for our 2017 pay ratio calculation, which we utilized again in 2018. Given thisimpact, we have re-identified the Median Employee for 2019.

To identify the Median Employee, we first determined our employee population as of December 31, 2019 (the‘‘Determination Date’’). We had 15,203 employees (other than Mr. Hallett), representing all full-time, part-time,seasonal and temporary employees of us and our consolidated subsidiaries as of the Determination Date. Thisnumber did not include any independent contractors or ‘‘leased’’ workers, as permitted by the applicable SECrules. Of our 15,203 total employees (other than Mr. Hallett), approximately 266 (less than 2% of our totalemployee population) are located outside of the U.S. and Canada. As permitted under the de minimisexemption to Item 402(u) of Regulation S-K, we chose to exclude those 266 employees in the followingcountries in identifying our Median Employee: Belgium (113); France (6); Germany (41); Italy (15); Mexico (4);the Netherlands (11); and the United Kingdom (76). We used our number of total employees (15,203, otherthan Mr. Hallett) in making our de minimis calculation.

We then measured compensation for the period beginning on January 1, 2019 and ending on December 31,2019 for 14,937 employees (after the permitted exclusions noted above). This compensation measurement wasfirst calculated by totaling base salary (for salaried employees) and wages (for hourly employees) for eachemployee, and converting international currencies into U.S. dollars. We annualized the total compensation forthe portion of our permanent employee workforce (full-time and part-time) which worked for less than the fullfiscal year due to commencing employment after the beginning of the fiscal year.

We identified 26 possible Median Employees (26 employees with the same compensation), who were alllocated in the U.S. We then calculated gross wages reported on Form W-2 for all 26 employees, whichincluded cash compensation, including regular pay (wages and salary), all variants of overtime (if eligible), andall variants of bonus payments actually paid (if any). We then re-ranked that group of 26 employees to identifythe Median Employee.

CEO PAY RATIO

Summary:

Methodology:

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PROPOSAL NO. 3:

APPROVAL OF AN AMENDMENT TO THE KAR AUCTIONSERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN TOINCREASE THE TOTAL NUMBER OF SHARES RESERVEDFOR ISSUANCE UNDER THE PLAN BY 1,500,000 SHARES

PROPOSAL

Our Board believes it is in the Company’s best interests to encourage stock ownership by its employees.Accordingly, our Board adopted the KAR Auction Services, Inc. Employee Stock Purchase Plan (‘‘ESPP’’) inDecember 2009, and, unless terminated earlier, the ESPP will continue in effect until December 31, 2028. Amaximum of 1,000,000 shares of the Company’s common stock have been reserved for issuance under theESPP, of which 143,606 shares remained available for future ESPP purchases as of April 9, 2020.

The ESPP helps us attract, motivate and retain highly qualified employees and promotes employee stockownership at all levels of the organization, which aligns employees’ interests with those of our stockholders. Weare asking stockholders to approve an amendment to the ESPP to increase the number of shares of theCompany’s common stock reserved for issuance under the ESPP by 1,500,000 shares.

If the number of shares of Company common stock available for issuance under the ESPP is not increased,based on the Company’s current forecasts and estimated participation rates, it is anticipated that the ESPP willrun out of available shares during 2020. Accordingly, on February 4, 2020, the Compensation Committeeapproved an amendment to the ESPP, subject to stockholder approval at the annual meeting, to increase thetotal number of shares of the Company’s common stock reserved for issuance under the ESPP by 1,500,000shares (to a total of 2,500,000 shares). The affirmative vote of a majority of the shares present and entitled tovote at the 2020 annual meeting is required to approve the amendment to our ESPP.

Below is a summary of certain material terms and provisions of the ESPP. This summary is not intended to bea complete description of the ESPP and is qualified in its entirety by reference to the complete text of ourESPP, as proposed to be amended, which is included as Annex I to this proxy statement.

The ESPP is intended to encourage employee participation in the ownership and economic progressof the Company. Our ESPP helps us attract, motivate and retain highly qualified employees and promotesemployee stock ownership, which aligns employees’ interests with those of our stockholders. The ESPP isintended to meet the requirements of Section 423 of the Internal Revenue Code. If the requirements ofSection 423 are met, participants will have the opportunity to take advantage of certain federal income taxbenefits.

Our Board has delegated administration of our ESPP to the Compensation Committee.Subject to the provisions of our ESPP, the Compensation Committee has full authority to implement, administerand make all determinations necessary under our ESPP. The Compensation Committee may also delegatecertain administrative functions to employees or a committee of employees of the Company.

Each employee in the U.S. and Canada who is customarily employed as a full time employee of theCompany or a designated subsidiary is eligible to participate in the ESPP after completing six months ofcontinuous service. Each employee in the U.S. and Canada who is customarily employed as a part-timeemployee of the Company or a designated subsidiary is eligible to participate in the ESPP after completing oneyear of continuous service and being credited with at least one thousand hours of service. An employee maynot be granted a right to purchase shares under the ESPP if such employee (i) would immediately after such

Overview

Summary of our ESPP

Purpose.

Administration.

Eligibility.

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grant own shares or options to purchase shares with 5% or more of the total combined voting power of allclasses of our capital stock, or (ii) holds rights to purchase stock under all of our ‘‘employee stock purchaseplans’’ (within the meaning of Section 423 of the Code) that would accrue at a rate in excess of $25,000 in fairmarket value of our stock (determined at the time the rights are granted) for each calendar year in which suchrights are outstanding at any time. As of April 9, 2020, approximately 12,802 employees were eligible toparticipate in the ESPP. Our executive officers are eligible to participate in our ESPP, and therefore have adirect interest in the approval of this proposal by our stockholders.

Subject to stockholder approval, an aggregate of 2,500,000 shares of our common stock willbe reserved for issuance under the ESPP.

Employees may currently participate in the ESPP through payroll deductions(minimum of 1% and up to a maximum of 15% of their eligible compensation) or through cash contributions tothe Company (via personal check in U.S. dollars). The ESPP provides for one month option periods. On thelast business day of each option period, the Company uses each participant’s payroll deductions or cashcontributions to purchase shares of our common stock at a price equal to 85% of the fair market value of theshares on such date.

Unless otherwise determined by the Compensation Committee (or its delegatees), participantsmust hold shares purchased under the ESPP for six months following delivery to the participant.

Generally, participation will end automatically upon cessation of employment orif the Company terminates or amends the ESPP such that the employee no longer is eligible to participate. Anemployee may withdraw his or her participation in the ESPP at any time in accordance with specifiedprocedures and deadlines. Upon withdrawal from the ESPP, the employee will be refunded any remainingamounts not used to purchase shares of our common stock that have been credited to his or her account.

An employee cannot assign, transfer, pledge or otherwise dispose of any rights to purchase orto receive shares under the ESPP in any way, other than by will or the laws of descent and distribution.

In the event of any merger, consolidation, dividend or otherdistribution, stock split, reverse stock split, recapitalization, combination repurchase or share exchange orreclassification of our common stock or other similar transaction or event, the Compensation Committee willdetermine the appropriate adjustments to be made under the ESPP, including adjustments to the number ofshares of our common stock subject to the ESPP and the purchase price.

Our Board or the Compensation Committee may amend the ESPP at any time,except that, without approval of the stockholders, no amendment may increase the aggregate number ofshares reserved under the ESPP (except pursuant to adjustments provided for in the ESPP), materiallyincrease the benefits accruing to participants or materially modify the requirements as to eligibility forparticipation in the ESPP.

The following is a brief summary of the principal federal income tax consequences under current federalincome tax laws relating to the ESPP. This summary is not intended to be exhaustive and, among other things,does not describe state, local or foreign income and other tax consequences.

The ESPP is intended to qualify as an ‘‘employee stock purchase plan’’ under Section 423 of the Code. Certainfederal income tax consequences to participants from such status under present law are described below.Participants will not recognize income when they enroll in the ESPP nor when they purchase shares ofcommon stock under the ESPP. All tax consequences are deferred until the participant disposes of the sharesof common stock purchased under the ESPP.

If the participant holds the shares of common stock purchased under the ESPP for both one year or more afterthe purchase date and two years or more after the offering date (referred to as the ‘‘Section 423 holdingperiod’’), the participant will generally recognize ordinary income upon sale or other disposition of the sharesequal to the lesser of (i) the amount of the excess, if any, of the fair market value of the shares of commonstock on the offering date over the purchase price and (ii) the amount of the excess, if any, of the fair market

Share Reserve.

Contributions and Purchases.

Holding Period.

Termination of Participation.

Transferability.

Adjustments for Certain Transactions.

Amendment and Termination.

Summary of U.S. Federal Income Tax Consequences

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value of the shares of common stock on the date of disposition over the purchase price. Special rules apply ifthe purchase price is not fixed on the offering date. Any additional gain will be taxed as long-term capital gain.If the shares of common stock are sold for less than the purchase price, there is no ordinary income, and theparticipant will have a long-term capital loss for the difference between the purchase price and the sale price.

If a participant sells or otherwise disposes of shares of common stock purchased under the ESPP before theend of the Section 423 holding period, the participant will generally have ordinary income equal to thedifference between the purchase price and the fair market value on the purchase date. The difference betweenthe sale price and the fair market value on the purchase date will be a capital gain or loss, which will belong-term if the shares of common stock have been held for more than one year.

If a participant recognizes ordinary income by selling or otherwise disposing of shares of common stockpurchased under the ESPP before the end of the Section 423 holding period, the Company will generally beentitled to a tax deduction equal to the participant’s ordinary income. Otherwise, the Company will not beentitled to any income tax deduction with respect to shares of common stock purchased under the ESPP.

Participation in the ESPP is voluntary and each eligible employee makes her or her own decision whether andto what extent to participate in the ESPP. Because benefits under the ESPP depend on employees’ electionsto participate in the ESPP and the fair market value of the shares of our common stock on future purchasedates, it is not possible to determine future benefits that will be received by executive officers and otheremployees under the ESPP. Similarly, the actual number of shares of our common stock that may bepurchased by individual employees or groups of employees is not determinable.

The following table sets forth the aggregate information of our equity compensation plans, including the ESPP,in effect as of December 31, 2019.

Number of Weighted Number of securitiessecurities to be average remaining available for

issued upon exercise price future issuance underexercise of of outstanding equity compensation

outstanding options, plans (excludingoptions, warrants warrants and securities reflected in

Plan Category and rights(1) rights(2) first column)(3)

Equity compensation plans approved by security holder(s) 2,035,813 $ 9.07 5,147,288Equity compensation plans not approved by security holders — — —

Total 2,035,813 $ 9.07 5,147,288

(1) Includes service options, exit options, performance-based restricted stock units (‘‘PRSUs’’) and restricted stock units(‘‘RSUs’’) issued under the Omnibus Plan (excluding dividend equivalents). The amount of PRSUs outstanding attarget of 279,130 (excluding dividend equivalents) have been included.

(2) Awards issued by the Company have exercise prices ranging from $4.60 to $11.74. The weighted-average price in thetable above only reflects the weighted-average exercise price of outstanding options. The weighted-average exerciseprice does not include the PRSUs or RSUs.

(3) The number of securities available for future issuance includes (a) 4,922,268 shares of common stock that may beissued under the Omnibus Plan; and (b) 225,020 shares of common stock that may be issued under the ESPP.

New Plan Benefits

The Board of Directors recommends that you vote ‘‘FOR’’ theapproval of an amendment to the ESPP to increase the total number✓of shares reserved for issuance under the ESPP by 1,500,000 shares.

Proxies solicited by the Board of Directors will be voted ‘‘FOR’’ the approval of an amendment to theESPP to increase the total number of shares reserved for issuance under the ESPP by 1,500,000shares.

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PROPOSAL NO. 4:

RATIFICATION OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM

PROPOSAL

The Audit Committee has appointed KPMG LLP (‘‘KPMG’’) to serve as the Company’s independent registeredpublic accounting firm for its fiscal year ending December 31, 2020. The Audit Committee and the Board seekto have the stockholders ratify the Audit Committee’s appointment of KPMG, which has served as theCompany’s independent registered public accounting firm since 2007. Although the Company is not required toseek stockholder approval of this appointment, the Board believes it is sound corporate governance to do so. Ifthe appointment of KPMG is not ratified by the stockholders, the Audit Committee will consider the vote of theCompany’s stockholders and may appoint another independent registered public accounting firm or may decideto maintain its appointment of KPMG. Ratification of the appointment of our independent registered publicaccounting firm requires the affirmative vote of a majority of the shares present and entitled to vote at the 2020annual meeting.

Representatives of KPMG will be present at the 2020 annual meeting and will have the opportunity to make astatement, if they desire to do so, and to respond to appropriate questions.

The Board of Directors recommends that you vote ‘‘FOR’’ theratification of the appointment of KPMG as our independent✓registered public accounting firm for 2020.

Proxies solicited by the Board of Directors will be voted ‘‘FOR’’ the ratification of the appointment ofKPMG as our independent registered public accounting firm for 2020 unless stockholders specify acontrary vote.

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee is comprised of four independent directors, each of whom satisfies the independencerequirements of Section 10A of the Exchange Act and Rule 10A-3 thereunder. The Audit Committee overseesour financial reporting process on behalf of the Board and serves as the primary communication link betweenthe Board as the representative of our stockholders, KPMG as our independent auditor, and our internalauditors. Our management has the primary responsibility for our financial statements and the reporting process,including the systems of internal controls and for assessing the effectiveness of internal controls over financialreporting. The Audit Committee, at least quarterly, meets with the Company’s Chief Financial Officer, theCompany’s head of Internal Audit and representatives of KPMG and conducts separate executive sessions todiscuss the audited consolidated financial statements, the evaluations of the Company’s internal controls andthe overall quality of the Company’s financial reporting and compliance programs.

In fulfilling its responsibilities during the fiscal year, the Audit Committee reviewed and discussed withmanagement the consolidated financial statements and related financial statement disclosures included in ourQuarterly Reports on Form 10-Q and the audited consolidated financial statements and related financialstatement disclosures included in our Annual Report on Form 10-K for the fiscal year ended December 31,2019. Also, the Audit Committee reviewed with the independent auditors their judgments as to both the qualityand the acceptability of our accounting policies. The Audit Committee’s review with the independent auditorsincluded a discussion of the matters required to be discussed by the applicable requirements of the PublicCompany Accounting Oversight Board (‘‘PCAOB’’) and the SEC. KPMG has provided the Audit Committeewritten disclosures and all communications required under PCAOB standards, including those concerningindependence, and the Audit Committee has discussed those disclosures with KPMG. The Audit Committeehas also reviewed non-audit services performed by KPMG and considered whether KPMG’s provision ofnon-audit services was compatible with maintaining its independence from the Company.

The Audit Committee discussed with our internal auditors and independent auditors the overall scope and plansfor their respective audits and reviewed our plans for compliance with management certification requirementspursuant to Section 404 of the Sarbanes-Oxley Act of 2002. The Audit Committee met with the internal auditorsand independent auditors, with and without management present, to discuss the results of the auditors’examinations, their evaluations of our internal controls, including a review of the disclosure control process, andthe overall quality of our financial reporting. Management represented to the Audit Committee that theCompany’s consolidated audited financial statements as of and for the fiscal year ended December 31, 2019were prepared in accordance with accounting principles generally accepted in the United States, and the AuditCommittee has reviewed and discussed the audited consolidated financial statements with management andthe independent auditors. The Audit Committee, or the Chairman of the Audit Committee, also pre-approved allaudit and non-audit services provided by the independent auditors during and relating to fiscal year 2019. Inreliance on the reviews and discussions referred to above, the Audit Committee recommended to the Boardthat the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscalyear ended December 31, 2019.

The Audit Committee evaluates the performance of the independent auditors each year and determineswhether to re-engage the current independent auditors or consider other audit firms. To assist in the evaluationof KPMG’s performance for the 2019 audit, the Audit Committee conducted a comprehensive evaluation, whichincluded obtaining input from certain members of management, assessing KPMG’s independence, technicalexpertise, industry knowledge, adequacy of audit approach and scope, appropriateness of fees, and serviceand communication with management and the Audit Committee. The results of this evaluation were discussedwith the KPMG engagement partner and the managing partner of KPMG’s local office. The Audit Committeereviews with our Chief Financial Officer and the head of Internal Audit, the overall audit scope and plans, theresults of internal and external audit examinations, evaluations by management and the independent auditorsof our internal control over financial reporting, the quality of our financial reporting and the ability of theindependent auditors to remain independent. Based on these evaluations, the Audit Committee approved theengagement of KPMG as our independent auditors for fiscal year 2020.

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Although the Audit Committee has the sole authority to appoint the independent auditors, the Audit Committeehas continued its long-standing practice of recommending that the Board ask our stockholders to ratify theappointment of the independent auditors at our annual meeting of stockholders.

The Audit Committee

Michael T. Kestner (Chairman)

David DiDomenico

J. Mark Howell

Stephen E. Smith

FEES PAID TO KPMG LLP

The following table sets forth the aggregate fees charged to the Company by KPMG for audit servicesrendered in connection with the audit of our consolidated financial statements and reports for 2019 and 2018and for other services rendered during 2019 and 2018 to the Company and its subsidiaries, as well as allout-of-pocket costs incurred in connection with these services:

Fee Category 2019 2018

Audit Fees(1) $3,040,632 $2,496,449Audit-Related Fees(2) 379,930 3,098,162Tax Fees(3) 14,000 98,526All Other Fees(4) 1,780 1,905

Total Fees $3,436,342 $5,695,042

(1) Audit Fees: Consists of fees for professional services rendered for the audit of our consolidatedfinancial statements, review of the interim condensed consolidated financial statements included in theCompany’s quarterly reports, the audit of our internal controls over financial reporting and services thatare normally provided by independent registered public accounting firms in connection with statutoryand regulatory filings or engagements, and attest services, except those not required by statute orregulation.

(2) Audit-Related Fees: For 2018, consists principally of fees for professional services rendered withrespect to the audits performed over the carve-out financial statements related to the IAA Spin-Off andissued on Form 10 for IAA, Inc., and, for 2018 and 2019, Service Organization Control 1 reporting, andthe audit of our 401(k) benefit plan.

(3) Tax Fees: Consists of fees for various tax planning projects.

(4) All Other Fees: Consists principally of a license to use KPMG’s accounting research software.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT ANDPERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

The Company’s independent registered public accounting firm fee pre-approval policy provides for an annualprocess through which the Audit Committee evaluates the nature and scope of the audit prior to thecommencement of the audit. The Audit Committee also evaluates audit-related, tax and other services that areproposed, along with the anticipated cost of such services. The Audit Committee reviews schedules of specificservices to be provided. If other services are provided outside of this annual process, under the policy theymay be (i) pre-approved by the Audit Committee at a regularly scheduled meeting; or (ii) pre-approved by theChairman of the Audit Committee, acting between meetings and reporting back to the Audit Committee at thenext scheduled meeting. All audit fees, audit-related fees, tax fees and all other fees described above wereapproved by the Audit Committee or the Chairman of the Audit Committee before such services were rendered.

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REVIEW AND APPROVAL OF TRANSACTIONSWITH RELATED PERSONS

Pursuant to our written related person transactions policy, the Company reviews relationships and transactionsin which the Company, or one of its business units, and our directors and executive officers or their immediatefamily members are participants to determine whether such persons have a direct or indirect material interest.

In the course of the review and approval of a related person transaction, the Board or the Audit Committeemay consider the following factors:

• the nature of the related person’s interest in the transaction;

• the material terms of the transaction, including, without limitation, the amount and type of transaction;

• the importance of the transaction to the related person;

• the importance of the transaction to the Company;

• whether the transaction would impair the judgment of a director or executive officer to act in our bestinterest; and

• any other matters that we deem appropriate.

Transactions in which the amount involved exceeds $120,000 in which the Company, or one of its businessunits, was a participant and a related person had a direct or indirect material interest are required to bedisclosed in this proxy statement. There were not any such related person transactions identified sinceJanuary 1, 2019.

RELATED PERSON TRANSACTIONS

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NOMINATION OF DIRECTORS AND OTHER BUSINESS OFSTOCKHOLDERS

In order to submit stockholder proposals for inclusion in our proxy statement related to the 2021 annualmeeting of stockholders pursuant to SEC Rule 14a-8, materials must be received by the Secretary at theCompany’s principal executive office at KAR Auction Services, Inc., Secretary, 11299 North Illinois Street,Carmel, Indiana 46032 no later than December 24, 2020.

The proposals must comply with all of the requirements of SEC Rule 14a-8. Proposals should be addressed to:Charles S. Coleman, SVP, General Counsel and Secretary, KAR Auction Services, Inc., 11299 North IllinoisStreet, Carmel, Indiana 46032. As the SEC’s shareholder proposal rules make clear, simply submitting aproposal does not guarantee its inclusion in our proxy statement.

The Company’s By-Laws also establish an advance notice procedure with regard to director nominations andstockholder proposals that are not submitted for inclusion in the proxy statement pursuant to SEC Rule 14a-8,but that a stockholder instead wishes to present directly at an annual meeting. To be properly brought beforethe 2021 annual meeting, a notice of the nomination or the matter the stockholder wishes to present at themeeting must be delivered to the Secretary at the Company’s principal office in Carmel, Indiana (see addressabove), not less than 90 or more than 120 days prior to the first anniversary of the date of this year’s annualmeeting. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of theCompany’s By-Laws (and not pursuant to SEC Rule 14a-8) must be received no earlier than February 4, 2021,and no later than March 6, 2021. All director nominations and stockholder proposals must comply with therequirements of the Company’s By-Laws, a copy of which may be obtained at no cost from the Secretary of theCompany by writing to KAR Auction Services, Inc., Secretary, 11299 North Illinois Street, Carmel, Indiana46032.

Other than the proposals described in this proxy statement, the Company does not expect any matters to bepresented for a vote at the 2020 annual meeting. However, if you grant a proxy, the persons named as proxyholders on the proxy card will have the discretion to vote your shares on any additional matters properlypresented for a vote at the 2020 annual meeting. If for any unforeseen reason, any one or more of the Board’snominees is not available to stand for election as director, the persons named as proxy holders will vote yourproxy for such other candidate or candidates as may be nominated as a substitute by the Board.

The chairman of the meeting may refuse to allow the transaction of any business not presented beforehand, orto acknowledge the nomination of any person not made in compliance with the foregoing procedures.

REQUIREMENTS, INCLUDING DEADLINES, FORSUBMISSION OF PROXY PROPOSALS

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We are providing these proxy materials to you in connection with the solicitation, by our Board, of proxiesto be voted at the Company’s 2020 annual meeting of stockholders and at any adjournments orpostponements thereof. Stockholders are invited to attend the 2020 annual meeting to be held via a liveaudio webcast on June 4, 2020 beginning at 9:00 a.m., Eastern Daylight Time, at

where stockholders will be able to listen to the meetinglive, submit questions and vote online. You will need the 16-digit control number provided on your Notice(as defined below under ‘‘Why did I receive a notice in the mail regarding the Internet availability of theproxy materials instead of a paper copy of the proxy materials?’’), on your proxy card, or on theinstructions that accompanied your proxy materials. Our proxy materials are first being distributed tostockholders on or about April 23, 2020.

1. Election of • Vote ‘‘FOR’’ all nominees More votes No effect No effectDirectors • Vote ‘‘FOR’’ specific nominees ‘‘FOR’’ than

• Vote ‘‘AGAINST’’ all nominees ‘‘AGAINST’’• Vote ‘‘AGAINST’’ specific nominees• Abstain from voting for all nominees• Abstain from voting for specific nominees

2. Advisory Vote • Vote ‘‘FOR’’ the advisory proposal Majority of the Vote against No effectto Approve • Vote ‘‘AGAINST’’ the advisory proposal shares presentExecutive • Abstain from voting on the advisory and entitled toCompensation proposal vote

3. Approval of • Vote ‘‘FOR’’ the amendment Majority of the Vote against No effectESPP • Vote ‘‘AGAINST’’ the amendment shares presentAmendment to • Abstain from voting on the amendment and entitled toIncrease Share voteReserve by

1,500,000 Shares

4. Ratification of • Vote ‘‘FOR’’ the ratification Majority of the Vote against NotIndependent • Vote ‘‘AGAINST’’ the ratification shares present applicableRegistered • Abstain from voting on the ratification and entitled toAccounting Firm vote

QUESTIONS AND ANSWERS ABOUT THE PROXYMATERIALS AND THE ANNUAL MEETING

Q: Why am I receiving these materials?

A:

www.virtualshareholdermeeting.com/KAR2020,

Q: What proposals will be voted on, what is the Board’s voting recommendation, and what are the

standards for determining whether a proposal has been approved?

A: Proposal Voting Choices and Voting Effect of Effect ofBoard Recommendation Standard Abstention Broker

Non-Vote

The Board recommends a vote ‘‘FOR’’

each of the director nominees.

The Board recommends a vote ‘‘FOR’’

the advisory vote to approve executive

compensation.

The Board recommends a vote ‘‘FOR’’

the ESPP amendment.

The Board recommends a vote ‘‘FOR’’

the ratification of the appointment of

KPMG as our independent registered

accounting firm for 2020.

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All shares owned by you as of the record date, which is the close of business on April 9, 2020, may bevoted by you. You may cast one vote per share of our common stock that you held on the record date.

These shares include shares that are:

• held directly in your name as the stockholder of record; and

• held for you as the beneficial owner through a broker, bank or other nominee, including shares purchased underthe KAR Auction Services, Inc. Employee Stock Purchase Plan (the ‘‘ESPP’’).

On the record date, the Company had 129,167,854 shares of common stock issued and outstanding.

Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent,American Stock Transfer & Trust Company, LLC, you are considered a ‘‘stockholder of record’’ with respect to thoseshares. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to votein person online during the 2020 annual meeting.

Beneficial Owner. If your shares are held in a brokerage account or by a bank or other nominee, you hold yourshares in ‘‘street name’’ and are considered a ‘‘beneficial owner’’ with respect to those shares. These proxy materialsare being forwarded to you by your broker or nominee who is considered the stockholder of record with respect tothose shares. As the beneficial owner, you have the right to direct your broker on how to vote your shares and arealso invited to attend the 2020 annual meeting.

Stockholders may participate in the 2020 annual meeting by visiting the following website: To participate in the 2020 annual meeting, you will need the 16-digit

control number provided on your Notice, on your proxy card, or on the instructions that accompanied your proxymaterials.

Stockholder of Record. Shares held directly in your name as the stockholder of record may be voted online duringthe 2020 annual meeting. If you choose to vote your shares online during the 2020 annual meeting, please follow theinstructions provided on the Notice to log in to . You will need thecontrol number included on your Notice, on your proxy card, or on the instructions that accompanied your proxymaterials.

Beneficial Owner. If you are a beneficial owner in street name and want to vote your shares online during the 2020annual meeting, you will need to ask your bank, broker or other nominee to furnish you with a legal proxy and proofof beneficial ownership, such as your most recent account statement as of April 9, 2020, the record date, a copy ofthe voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership.Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank torequest a proxy form.

Even if you plan to attend the 2020 annual meeting, the Company strongly recommends that you vote your shares inadvance as described below so that your vote will be counted if you later decide not to attend the 2020 annualmeeting. See ‘‘How can I vote my shares without attending the 2020 annual meeting?’’ below.

The 2020 annual meeting will begin promptly at 9:00 a.m., Eastern Daylight Time. We encourage you to access themeeting prior to the start time. Please allow ample time for online check-in, which will begin at 8:45 a.m. EasternDaylight Time.

Q: Who is entitled to vote?

A:

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A:

Q: How can I vote my shares and participate at the 2020 annual meeting?

A:

www.virtualshareholdermeeting.com/KAR2020.

www.virtualshareholdermeeting.com/KAR2020

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We are holding the 2020 annual meeting online and providing Internet voting to provide expanded accessand to allow you to vote your shares online during the annual meeting, with procedures designed toensure the authenticity and correctness of your voting instructions. However, please be aware that youmust bear any costs associated with your Internet access, such as usage charges from Internet accessproviders and telephone companies.

Whether you hold your shares directly as the stockholder of record or beneficially in street name, you mayvote without attending the 2020 annual meeting in one of the following manners:

By Internet. Go to and follow the instructions. You will need the control numberincluded on your proxy card or voting instruction form;

By Telephone. Dial 1-800-690-6903. You will need the control number included on your proxy card orvoting instruction form; or

By Mail. Complete, date and sign your proxy card or voting instruction form and mail it using theenclosed, pre-paid envelope.

If you vote on the Internet or by telephone, you do not need to return your proxy card or voting instructionform. Internet and telephone voting for stockholders will be available 24 hours a day, and will close at11:59 p.m., Eastern Daylight Time, on June 3, 2020.

Employees holding stock acquired through the ESPP will receive a voting instruction form covering allshares held in their individual account from Fidelity, the plan record keeper. The record keeper for theESPP will vote your shares (i) in accordance with the specific instructions on your returned votinginstruction form; or (ii) in its discretion, if you return a signed voting instruction form with no specific votinginstructions.

A quorum of stockholders is necessary to hold the 2020 annual meeting. A quorum at the 2020 annualmeeting exists if the holders of a majority of the Company’s capital stock issued and outstanding andentitled to vote at the 2020 annual meeting are present in person or represented by proxy. Abstentionsand broker non-votes are counted as present for establishing a quorum. A broker non-vote occurs on anitem when a broker, bank or other nominee is not permitted to vote on that item absent instruction fromthe beneficial owner of the shares and no instruction is given.

Stockholder of Record. If you are a stockholder of record and you sign and return a proxy card withoutgiving specific voting instructions, then the proxy holders will vote your shares in the mannerrecommended by the Board on all matters presented in this proxy statement and as the proxy holdersmay determine in their discretion with respect to any other matters properly presented for a vote at the2020 annual meeting.

Beneficial Owner. If you are a beneficial owner of shares and do not provide the organization(e.g., broker, bank or other nominee) that holds your shares in ‘‘street name’’ with specific votinginstructions, the organization that holds your shares may generally vote in its discretion on ‘‘routine’’matters. If the organization that holds your shares does not receive instructions from you on how to voteyour shares on ‘‘non-routine’’ matters, such organization cannot vote your shares and will inform theinspector of election that it does not have the authority to vote on these matters with respect to yourshares. This is generally referred to as a ‘‘broker non-vote.’’ Therefore, we urge you to give votinginstructions to your broker, bank or other nominee. Shares represented by such broker non-votes will becounted in determining whether there is a quorum. Because broker non-votes are not considered sharesentitled to vote, they will have no effect on the outcome of any proposal other than reducing the numberof shares present in person or by proxy and entitled to vote from which a majority is calculated.

Q: How can I vote my shares without attending the 2020 annual meeting?

A:

www.proxyvote.com

Q: If I am an employee holding shares pursuant to the ESPP, how will my shares be voted?

A:

Q: What is the quorum requirement for the 2020 annual meeting?

A:

Q: What happens if I do not give specific voting instructions?

A:

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• Routine Matters. The ratification of the appointment of KPMG as our independent registered publicaccounting firm for 2020 (Proposal No. 4) is considered a routine matter under applicable rules. Abroker, bank or other nominee may generally vote on routine matters, and therefore no brokernon-votes will exist in connection with Proposal No. 4.

• Non-Routine Matters. The election of directors (Proposal No. 1), the advisory vote to approveexecutive compensation (Proposal No. 2), and the approval of an amendment to our ESPP to increasethe number of shares reserved for issuance under the ESPP by 1,500,000 shares (Proposal No. 3), areeach considered ‘‘non-routine’’ matters under applicable rules are considered non-routine matters underapplicable rules. A broker, bank or other nominee cannot vote without instructions on non-routinematters, and therefore there may be broker non-votes on Proposal No. 1, Proposal No. 2 and ProposalNo. 3.

It means your shares are registered differently or are in more than one account. Please provide votinginstructions for all proxy and voting instruction forms you receive.

The votes will be counted by the inspector of elections appointed for the 2020 annual meeting.

Yes. You may revoke your proxy or change your voting instructions at any time prior to the vote at the2020 annual meeting by:

• providing written notice of revocation to the Secretary of the Company at 11299 North Illinois Street,Carmel, Indiana 46032;

• delivering a valid, later-dated proxy or a later-dated vote on the Internet or by telephone; or

• attending the 2020 annual meeting online and voting during the meeting, which will automaticallycancel any proxy previously granted.

Please note that your attendance at the 2020 annual meeting alone will not cause your previously grantedproxy to be revoked unless you vote online during the 2020 annual meeting. If you wish to revoke yourproxy, you must do so in sufficient time to permit the necessary examination and tabulation of thesubsequent proxy or revocation before the vote is taken. Shares held in street name may be voted by youonline during the 2020 annual meeting only if you obtain a signed proxy from the record holder giving youthe right to vote such shares.

The Company pays the cost of soliciting your proxy and reimburses brokers and others for forwarding toyou the proxy materials as beneficial owners of our common stock. The Company’s directors, officers andemployees also may solicit proxies by mail, telephone and personal contact. They will not receive anyadditional compensation for these activities.

This year, we are again taking advantage of the SEC rules that allow us to furnish our proxy materialsover the Internet. As a result, most of our stockholders will be mailed a Notice of Internet Availability ofProxy Materials (‘‘Notice’’), rather than a full paper set of the proxy materials. The Notice includesinformation on how to access the proxy materials via the Internet as well as how to vote via the Internet.We believe this method of delivery will decrease printing and shipping costs, expedite distribution of proxymaterials to you, and reduce our impact on the environment. Stockholders who receive the Notice butwould like to receive a printed copy of the proxy materials in the mail should follow the instructions in theNotice for requesting such materials.

Q: What does it mean if I receive more than one proxy card or voting instruction form?

A:

Q: Who will count the vote?

A:

Q: Can I revoke my proxy or change my vote?

A:

Q: Who will bear the cost of soliciting proxies for the 2020 annual meeting?

A:

Q: Why did I receive a notice in the mail regarding the Internet availability of the proxy materials

instead of a paper copy of the proxy materials?

A:

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We have adopted a procedure called ‘‘householding,’’ which the SEC has approved. Under thisprocedure, we may deliver a single copy of the Notice and, if applicable, this proxy statement and theCompany’s Annual Report to multiple stockholders who share the same address unless we receivedcontrary instructions from one or more of the stockholders.

This procedure reduces our printing and mailing costs and also reduces our impact on the environment.Stockholders who participate in householding will continue to be able to access and receive separateproxy cards. Upon written or oral request, a separate copy of the Notice or this proxy statement and theCompany’s Annual Report, as requested, will be promptly delivered to any stockholder at a sharedaddress to which we delivered a single copy of any of these documents. If you prefer to receive separatecopies of the Notice, the proxy statement or Annual Report, contact Broadridge Financial Solutions, Inc.by calling 1-866-540-7095 or in writing at 51 Mercedes Way, Edgewood, New York 11717, Attention:Householding Department.

If you are a stockholder of record and are receiving more than one copy of the proxy materials at a singleaddress and would like to participate in householding, please notify us by contacting Broadridge FinancialSolutions, Inc. using the mailing address and phone number above. Stockholders who hold shares in‘‘street name’’ may contact their broker, bank or other nominee to request information about householding.

Copies of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, asfiled with the SEC, are available to stockholders free of charge on our website at www.karglobal.comunder the ‘‘Investor Relations’’ tab, or by writing to KAR Auction Services, Inc., Investor Relations, 11299North Illinois Street, Carmel, Indiana 46032.

KAR will announce preliminary voting results at the 2020 annual meeting and publish preliminary, or finalresults if available, in a Current Report on Form 8-K within four business days of the 2020 annualmeeting.

The 2020 annual meeting will be a completely virtual meeting of stockholders, which will be conductedthrough a live audio webcast. There will be no physical meeting location. You are entitled to participate inthe annual meeting only if you were a Company stockholder as of the close of business on April 9, 2020or if you hold a valid proxy for the annual meeting.

You will be able to attend the 2020 annual meeting online and submit your questions during the meetingby visiting . You also will be able to vote your shares onlineduring the annual meeting.

To participate in the 2020 annual meeting, you will need the 16-digit control number included on yourNotice, on your proxy card, or on the instructions that accompanied your proxy materials. Instructions onhow to attend and participate in our online meeting, including how to demonstrate proof of stockownership, are posted on the meeting website.

The meeting will begin promptly at 9:00 a.m., Eastern Daylight Time. We encourage you to access themeeting prior to the start time. Online access to the meeting will open at 8:45 a.m., Eastern DaylightTime, and you should allow ample time to log in to the meeting and test your device’s audio capabilitiesprior to the start of the meeting.

The webcast will be available for replay until midnight on June 3, 2021.

As in 2019, we are excited to host a virtual annual meeting to provide ease of access, real-timecommunication and cost savings for our stockholders and the Company. Hosting a virtual meetingfacilitates stockholder attendance and participation by enabling stockholders to participate from around theworld. In addition, hosting a virtual meeting provides improved communication and cost savings for ourstockholders and the Company.

If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, pleasecall the technical support number that will be posted on the virtual meeting log-in page at

.

Q: I share an address with another stockholder, and we received only one paper copy of the proxymaterials. How may I obtain an additional copy of the proxy materials?

A:

Q: How can I obtain a copy of KAR’s Annual Report on Form 10-K?

A:

Q: Where can I find the voting results of the 2020 annual meeting?

A:

Q: How can I attend the 2020 annual meeting?

A:

www.virtualshareholdermeeting.com/KAR2020

Q: Why is the 2020 annual meeting virtual?

A:

Q: What if I have technical difficulties or trouble accessing the meeting?

A:

www.virtualshareholdermeeting.com/KAR2020

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ANNEX I

KAR AUCTION SERVICES, INC.

AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I

PURPOSE AND SCOPE OF THE PLAN

1.1 Purpose

The KAR Auction Services, Inc. Amended and Restated Employee Stock Purchase Plan is intended toencourage employee participation in the ownership and economic progress of the Company.

1.2 Definitions

Unless the context clearly indicates otherwise, the following terms have the meaning set forth below:

‘‘Board of Directors’’ or ‘‘Board’’ shall mean the Board of Directors of the Company.

‘‘Code’’ shall mean the Internal Revenue Code of 1986, as amended from time to time, together withany applicable regulations issued thereunder.

‘‘Committee’’ shall mean the committee of officers established by the Board to administer the Plan,which Committee shall administer the Plan as provided in Section 1.3 hereof.

‘‘Common Stock’’ shall mean shares of the common stock, par value $0.01 per share, of the Company.

‘‘Company’’ shall mean KAR Auction Services, Inc., a corporation organized under the laws of theState of Delaware, or any successor corporation.

‘‘Compensation’’ shall mean the fixed salary or base wage paid by the Company to an Employee asreported by the Company to the United States government (or other applicable government) for income taxpurposes, including an Employee’s portion of salary deferral contributions pursuant to Code Section 401(k) andany amount excludable pursuant to Code Section 125, but excluding any bonus, fee, overtime pay, severancepay, expenses, stock option or other equity incentive income, or other special emolument or any credit orbenefit under any employee plan maintained by the Company.

‘‘Continuous Service’’ shall mean the period of time, uninterrupted by a termination of employment(other than a termination as a result of a transfer of employment among the Parent, the Company or aDesignated Subsidiary), that an Employee has been employed by the Company, a Designated Subsidiary orthe Parent (or any combination of the foregoing) immediately preceding an Offering Date. Such period of timeshall include any approved leave of absence.

‘‘Designated Subsidiary’’ shall mean any subsidiary of the Company that has been designated by theCommittee to participate in the Plan.

‘‘Employee’’ shall mean any person who is employed by the Company or a Designated Subsidiary as acommon law employee. Any individual who performs services for the Company or a Designated Subsidiarysolely through a leasing or employment agency shall not be considered an Employee.

‘‘Exchange Act’’ shall mean the Securities Exchange Act of 1934, as amended from time to time.

‘‘Exercise Date’’ shall mean the last business day of each calendar month of each Plan Year, or suchother date(s) as determined by the Committee, provided, however, that no Exercise Date with respect to a rightto purchase shares of Common Stock under the Plan shall be later than 5 years from the date such right wasgranted. The Exercise Date constitutes the ‘‘date of grant of the option’’ for purposes of Section 423 of theCode.

‘‘Fair Market Value’’ as of a particular date shall mean the fair market value of a share of CommonStock as determined by the Administrator in its sole discretion; provided, however, that (i) if the Common Stockis admitted to trading on a national securities exchange, the fair market value of a share of Common Stock onany date shall be the closing sale price reported for such share on such exchange on such date or, if no salewas reported on such date, on the last day preceding such date on which a sale was reported, or (ii) if the

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shares of Common Stock are not then listed on the New York Stock Exchange, the average of the highestreported bid and lowest reported asked prices for the shares of Common Stock as reported by the NationalAssociation of Securities Dealers, Inc. Automated Quotations System for the last preceding date on which therewas a sale of such stock in such market, or (3) if the shares of Common Stock are not then listed on a nationalsecurities exchange or traded in an over-the-counter market or the value of such shares is not otherwisedeterminable, such value as determined by the Committee in good faith and in accordance with CodeSection 409A.

‘‘Offering Date’’ shall mean the first business day of each calendar month of each Plan Year, or suchother date(s) as determined by the Committee.

‘‘Option Period’’ or ‘‘Period’’ shall mean each calendar month commencing on the Effective Date asspecified by the Committee in accordance with Section 1.4.

‘‘Option Price’’ shall mean the purchase price of a share of Common Stock hereunder as provided inSection 3.1 hereof.

‘‘Parent’’ shall mean any corporation in an unbroken chain of corporations ending with the Company, ifeach of the corporations other than the Company owns stock possessing 50% or more of the total combinedvoting power of all classes of stock of one of the other corporations in such chain.

‘‘Participant’’ shall mean any Employee who (i) is eligible to participate in the Plan under Section 2.1hereof and (ii) elects to participate.

‘‘Plan’’ shall mean the Company’s Employee Stock Purchase Plan, as the same may be amended fromtime to time.

‘‘Plan Account’’ or ‘‘Account’’ shall mean an account established and maintained in the name of eachParticipant.

‘‘Plan Manager’’ shall mean any Employee appointed pursuant to Section 1.3 hereof.

‘‘Plan Year’’ shall mean the twelve (12) month period beginning January 1 and ending on the followingDecember 31.

‘‘Stock Purchase Agreement’’ shall mean the form prescribed by the Committee or the Company whichmust be completed and executed by an Employee who elects to participate in the Plan.

1.3 Administration of Plan

Subject to oversight by the Board of Directors or the Board’s Compensation Committee, the Committeeshall have the authority to administer the Plan and to make and adopt rules and regulations not inconsistentwith the provisions of the Plan or the Code. The Committee shall adopt the form of Stock Purchase Agreementand all notices required hereunder. Its interpretations and decisions in respect to the Plan shall, subject asaforesaid, be final and conclusive. The Committee shall have the authority to appoint an Employee as PlanManager and to delegate to the Plan Manager such authority with respect to the administration of the Plan asthe Committee, in its sole discretion, deems advisable from time to time.

1.4 Effective Date of Plan

The Plan shall become effective on the date established for that purpose by the Committee, if, prior tothat date, the Plan (i) has been adopted by the Board of Directors of the Company and (ii) has been approvedby an affirmative vote of a majority of votes cast by the holders of the Company’s common stock in person orby proxy and entitled to vote on the proposal, at a meeting at which a quorum is present; provided that theCommittee shall select the first day of a calendar month as the Effective Date.

1.5 Extension or Termination of Plan

The Plan shall continue in effect through and including December 31, 2028, unless terminated priorthereto pursuant to Section 4.3 hereof, or by the Board of Directors or the Compensation Committee of theBoard, each of which shall have the right to extend the term of or terminate the Plan at any time. Upon anysuch termination, the balance, if any, in each Participant’s Account shall be refunded to him, or otherwise

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disposed of in accordance with policies and procedures prescribed by the Committee in cases where such arefund may not be possible.

ARTICLE II

PARTICIPATION

2.1 Eligibility

Each Employee who is customarily employed as a full time employee of the Company or a DesignatedSubsidiary shall be eligible to participate in the Plan beginning on the later of the Effective Date or the datethat he or she completed six (6) months of Continuous Service. Each Employee who is customarily employedas a part-time Employee of the Company or a Designated Subsidiary shall be eligible to participate in the Planbeginning on the later of the Effective Date or the date as of which he or she has completed one year ofContinuous Service and been credited with at least one thousand (1,000) hours of service. All employment withthe Company and/or a Designated Subsidiary prior to the Effective Date shall be counted for purposes ofdetermining eligibility to participate in the Plan. For purposes of this Section 2.1, whether an Employee is‘‘customarily employed’’ shall be determined by the Committee based on the Company’s or DesignatedSubsidiary’s policies and procedures in effect from time to time. No Employee may participate in the Plan ifsaid Employee, immediately after an Offering Date, would be deemed for purposes of Code Section 423(b)(3)to possess 5% or more of the total combined voting power or value of all classes of stock of the Company, itsParent or any subsidiary.

2.2 Ineligible Employees

Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted a right topurchase shares of Common Stock under the Plan to the extent that:

(a) immediately after the grant, such Employee would own stock, and/or hold or own options,possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of theCompany, the Parent or any subsidiary corporation (determined under the rules of Sections 423(b)(3) and424(d) of the Code); or

(b) immediately after the grant, such Employee’s right to purchase Company Stock under all employeestock purchase plans (as defined in Section 423 of the Code) of the Company and any related company wouldaccrue at a rate which exceeds $25,000 in Fair Market Value of such Company Stock (determined at the timesuch purchase right is granted) for each calendar year in which such purchase right would be outstanding atany time.

2.3 Payroll Deductions

Payment for shares of Common Stock purchased hereunder shall be made by authorized payrolldeductions from each payment of Compensation in accordance with instructions received from a Participant.Said deductions shall be expressed as a whole number percentage which shall be at least one percent (1%)but not more than fifteen percent (15%). A Participant may not increase or decrease the deduction during anOption Period. However, a Participant may change the percentage deduction for any subsequent Option Periodby filing notice thereof with the Company prior to the Offering Date on which such Period commences. Duringan Option Period, a Participant may discontinue payroll deductions but have the payroll deductions previouslymade during that Option Period remain in the Participant’s Account to purchase Common Stock on the nextExercise Date, provided that he or she is an Employee as of that Exercise Date. Any amount remaining in theParticipant’s Account after the purchase of Common Stock shall be refunded without interest upon the writtenrequest of the Participant. Any Participant who discontinues payroll deductions during an Option Period mayagain become a Participant for a subsequent Option Period by executing and filing another Stock PurchaseAgreement in accordance with Section 2.1. Amounts deducted from a Participant’s Compensation pursuant tothis Section 2.3 shall be credited to said Participant’s Account.

An eligible Employee may also elect to participate in the Plan solely through optional cash payments inwhole dollars (and no payroll deductions) in accordance with such procedures as the Committee shallprescribe. Optional cash payments by a Participant cannot be less than twenty-five dollars ($25 U.S.) perpayment. A Participant who elects to participate in the optional cash payment only feature may at any timeelect to enroll also in the payroll deduction feature by notifying the Company in accordance with such

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procedures as the Committee shall prescribe. In the case of Participants whose Compensation is not paid inthe currency of the United States, the Committee shall periodically determine, not less frequently than once percalendar year, a minimum payroll deduction that is comparable to ten dollars ($10 U.S.), and a minimumoptional cash payment that is comparable to twenty-five dollars ($25 U.S.), based on applicable currencyexchange rates as determined by the Committee.

ARTICLE III

PURCHASE OF SHARES

3.1 Option Price

The Option Price per share of the Common Stock sold to Participants hereunder shall be eighty-fivepercent (85%) of the Fair Market Value of such share on the Exercise Date of an Option Period, but in noevent shall the Option Price per share be less than the par value of the Common Stock.

3.2 Purchase of Shares

On each Exercise Date, the amount in a Participant’s Account shall be charged with the aggregateOption Price of the largest number of shares of Common Stock, including fractional shares, which can bepurchased with said amount. The balance, if any, in such account shall be carried forward to the nextsucceeding Option Period.

3.3 Limitations on Purchase

Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an optionunder the Plan if, immediately after the grant, such Employee’s right to purchase Common Stock under allemployee stock purchase plans (as defined in Section 423 of the Code) of the Company and any relatedcompany would accrue at a rate which exceeds $25,000 in Fair Market Value of such Common Stock(determined at the time such purchase right is granted) for each calendar year in which such purchase rightwould be outstanding at any time.

3.4 Transferability of Rights

Rights to purchase shares hereunder shall be exercisable only by the Participant. Such rights shall notbe transferable.

ARTICLE IV

PROVISIONS RELATING TO COMMON STOCK

4.1 Common Stock Reserved

There shall be a maximum of 2,500,000 shares of Common Stock reserved for the Plan, subject toadjustment in accordance with Section 4.2 hereof. The aggregate number of shares which may be purchasedunder the Plan shall not exceed the number of shares reserved for the Plan.

4.2 Adjustment for Changes in Common Stock

In the event that adjustments are made in the number of outstanding shares of Common Stock or saidshares are exchanged for a different class of stock of the Company or for shares of stock of any othercorporation by reason of merger, consolidation, stock dividend, stock split or otherwise, the Committee shallmake appropriate adjustments in (i) the number and class of shares or other securities that may be reservedfor purchase, or purchased, hereunder, and (ii) the Option Price. All such adjustments shall be made in thesole discretion of the Committee, and its decision shall be binding and conclusive. Notwithstanding anything tothe contrary in this Plan, in any event, (i) the number of shares of Common Stock that may be reserved forpurchase or purchased hereunder shall not exceed 2,500,000 shares, and (ii) the Option Price per share shallnot be less than eighty-five percent (85%) of the Fair Market Value of such share on the Exercise Date of anOption Period.

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4.3 Insufficient Shares

If the aggregate funds available for purchase of Common Stock on any Exercise Date would cause anissuance of shares in excess of the number provided for in Section 4.1 hereof, (i) the Committee shallproportionately reduce the number of shares which would otherwise be purchased by each Participant in orderto eliminate such excess and (ii) the Plan shall automatically terminate immediately after such Exercise Date.

4.4 Confirmation

Confirmation of each purchase of Common Stock hereunder shall be made available to the Participantin either written or electronic format. A record of purchases shall be maintained by appropriate entries on thebooks of the Company. Participants may obtain a certificate or certificates for all or part of the shares ofCommon Stock purchased hereunder upon making a written request. Unless otherwise determined by theCommittee, shares of Common Stock delivered to a Participant hereunder may not be assigned, transferred,pledged or otherwise disposed of in any way by the Participant during the six (6) month period following suchdelivery to the Participant (other than by will, the laws of descent and distribution) and the shares of CommonStock shall bear a legend denoting such restrictions as may be determined by the Committee to beappropriate.

4.5 Rights as Shareholders

The shares of Common Stock purchased by a Participant on an Exercise Date shall, for all purposes,be deemed to have been issued and sold as of the close of business on such Exercise Date. Prior to that time,none of the rights or privileges of a shareholder of the Company shall exist with respect to such shares.

ARTICLE V

TERMINATION OF PARTICIPATION

5.1 Voluntary Withdrawal

A Participant may withdraw from the Plan at any time by filing notice of withdrawal prior to the close ofbusiness on an Exercise Date. Upon withdrawal, the entire amount, if any, in a Participant’s Account shall berefunded to him without interest. Any Participant who withdraws from the Plan may again become a Participantin accordance with Section 2.1 hereof.

5.2 Termination of Eligibility

If a Participant Retires, he may elect to (i) withdraw the entire amount, if any, in his Plan Account, or(ii) have said amount used to purchase whole shares of Common Stock pursuant to Section 3.2 hereof on thenext succeeding Exercise Date and have any remaining balance refunded without interest.

If a Participant ceases to be eligible under Section 2.1 hereof for any reason other than retirement, thedollar amount and the number of unissued shares in such Participant’s Account will be refunded or distributedto the Participant, or, in the case of death, the Participant’s designated beneficiary or estate, or otherwisedisposed of in accordance with policies and procedures prescribed by the Committee in cases where such arefund or distribution may not be possible.

ARTICLE VI

GENERAL PROVISIONS

6.1 Notices

Any notice which a Participant files pursuant to the Plan shall be made on forms prescribed by theCommittee and shall be effective only when received by the Company.

6.2 Condition of Employment

Neither the creation of the Plan nor participation therein shall be deemed to create any right ofcontinued employment or in any way affect the right of the Company or a Designated Subsidiary to terminatean Employee.

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6.3 Withholding of Taxes; Other Charges

Each Participant shall, no later than the date as of which the value of an option under the Plan and/orshares of Common Stock first becomes includible in the income of the Participant for income tax purposes, payto the Company, or make arrangements satisfactory to the Committee regarding payment of, any taxes of anykind required by law to be withheld with respect to such option or shares of Common Stock. The obligations ofthe Company under the Plan shall be conditional on the making of such payments or arrangements, and theCompany shall, to the extent permitted by law, have the right to deduct any such taxes from any payment ofany kind otherwise due to the Participant.

In particular, to the extent a Participant is subject to taxation under U.S. Federal income tax law, if theParticipant makes a disposition, within the meaning of Code Section 424(c) of any share or shares of CommonStock issued to Participant pursuant to Participant’s exercise of an option, and such disposition occurs withinthe two-year period commencing on the day after the Offering or within the one-year period commencing onthe day after the Exercise Date, Participant shall, within ten (10) days of such disposition, notify the Companythereof and thereafter immediately deliver to the Company any amount of federal, state or local income taxesand other amounts which the Company informs the Participant the Company may be required to withhold.

Participants shall be solely responsible for any commissions or other charges imposed with respect tothe purchase or sale of shares of Common Stock pursuant to the terms of this Plan.

6.4 Amendment of the Plan

The Board of Directors or the Board’s Compensation Committee may at any time, or from time to time,amend the Plan in any respect, except that, without approval of the shareholders, no amendment may increasethe aggregate number of shares reserved under the Plan other than as provided in Section 4.2 hereof,materially increase the benefits accruing to Participants or materially modify the requirements as to eligibility forparticipation in the Plan. Any amendment of the Plan must be made in accordance with applicable provisions ofthe Code and/or any regulations issued thereunder, any other applicable law or regulations, and therequirements of the principal exchange upon which the Common Stock is listed.

6.5 Application of Funds

All funds received by the Company by reason of purchases of Common Stock hereunder may be usedfor any corporate purpose.

6.6 Legal Restrictions

The Company shall not be obligated to sell shares of Common Stock hereunder if counsel to theCompany determines that such sale would violate any applicable law or regulation.

6.7 Gender

Whenever used herein, use of any gender shall be applicable to both genders.

6.8 Governing Law

The Plan and all rights and obligations thereunder shall be constructed and enforced in accordancewith the laws of the State of Delaware and any applicable provisions of the Code and the related regulations.

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549Form 10-K

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

For the fiscal year ended December 31, 2019 OR

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

Commission File Number: 001-34568

KAR Auction Services, Inc. (Exact name of Registrant as specified in its charter)

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

11299 N. Illinois Street, Carmel, Indiana 46032 (Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (800) 923-3725

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

Title of each class Trading symbol Name of each exchange on which registeredCommon Stock, par value $0.01 per share KAR New York Stock Exchange

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

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 The aggregate market value of the registrant's common stock held by stockholders who were not affiliates (as defined by regulations of the Securities

and Exchange Commission) of the registrant was $3,316,074,150 at June 30, 2019.As of February 14, 2020, 128,863,820 shares of the registrant's common stock, par value $0.01 per share, were outstanding.

Documents Incorporated by ReferenceCertain information required by Part III of this Annual Report on Form 10-K is incorporated by reference herein from the registrant's Definitive Proxy

Statement for its 2020 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the registrant's fiscal year ended December 31, 2019.

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Index

PageDefined Terms

PART I

Item 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal Proceedings

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6. Selected Financial DataItem 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other Information

PART III

Item 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits, Financial Statement SchedulesSignatures

3

414272727

28

30315455999999

100102102102102

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DEFINED TERMS

Unless otherwise indicated or unless the context otherwise requires, the following terms used in this Annual Report on Form 10-K 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"), Nth Gen Software Inc. ("TradeRev"), 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.;

• "Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, as amended on March 9, 2016, May 31, 2017 and September 19, 2019, among KAR Auction Services, 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"). See Note 4 of the notes to the consolidated financial statements;

• "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 outstanding at December 31, 2019);

• "Term Loan B-2" refers to the senior secured term loan B-2 facility, the terms of which are set forth in the Credit Agreement;

• "Term Loan B-3" refers to the senior secured term loan B-3 facility, the terms of which are set forth in the Credit Agreement;

• "Term Loan B-4" refers to the senior secured term loan B-4 facility, the terms of which are set forth in the Credit Agreement;

• "Term Loan B-5" refers to the senior secured term loan B-5 facility, the terms of which are set forth in the Credit Agreement;

• "2016 Revolving Credit Facility" refers to the $300 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement; and

• "2017 Revolving Credit Facility" refers to the $350 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement.

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PART I

Item 1. Business

Overview

We are a leading provider of used vehicle auctions and related vehicle remarketing services in North America and Europe. We leverage technology to facilitate an efficient marketplace by providing auction services for sellers of used, or "whole car," vehicles through our 74 North American physical auction locations at December 31, 2019, and multiple proprietary Internet venues. In 2019, we facilitated the sale of approximately 3.8 million used vehicles. Our revenues are generated through auction fees from both vehicle buyers and sellers, as well as by providing value-added ancillary services, including transportation, reconditioning, inspections, marshalling, titling, collateral recovery services and floorplan financing. We facilitate the transfer of ownership directly from seller to buyer and generally we do not take title to or ownership of vehicles sold through our auctions.

Our end-to-end platform serves the remarketing needs of OEMs, dealers, fleet operators, rental companies and financial institutions. We are an auction company that provides advanced and integrated mobile, digital and physical auction marketplaces. We are a technology company that delivers next generation tools to accelerate and simplify remarketing. And we are an analytics company that leverages data to inform and empower our customers with clear, actionable insights.

ADESA, our whole car auction services business, is the second largest provider of used vehicle auction services in North America. Vehicles at ADESA's auctions are typically sold by used vehicle dealers, vehicle manufacturers and their captive finance companies, financial institutions, commercial fleet operators and rental car companies to franchised and independent used vehicle dealers. Through ADESA.com, powered by Openlane technology, ADESA provides a comprehensive remarketing solution to automobile manufacturers, captive finance companies, lease and daily rental car companies, financial institutions and wholesale automobile auctions. An important component of ADESA's services to it's buyers is providing short-term inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers through our wholly-owned subsidiary, AFC, which has 121 locations throughout North America.

At December 31, 2019, we had a North American network of 74 whole car auction locations; in addition, we offer online auctions for whole car vehicles. ADESA also includes 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. We believe our extensive geographic network and diverse product offerings enable us to leverage relationships with providers and buyers of used vehicles.

Our Corporate History

KAR Auction Services, Inc., doing business as KAR Global, was incorporated in 2006 and commenced operations in 2007. In 2009, we changed our name from KAR Holdings, Inc. to KAR Auction Services, Inc. ADESA entered the vehicle remarketing industry in 1989 and first became a public company in 1992. In 1994, ADESA acquired AFC. ADESA remained a public company until 1995 when ALLETE, Inc. purchased a majority of its outstanding equity interests. In 2004, ALLETE, Inc. sold 20% of ADESA to the public and then spun off their remaining 80% interest to shareholders. ADESA was acquired by the Company in 2007. IAA entered the vehicle salvage business in 1982, and first became a public company in 1991. After growing through a series of acquisitions, IAA was acquired by private equity in 2005. The private equity investors and certain members of IAA management contributed IAA to KAR Auction Services in 2007. In a series of transactions between 2012 and 2013, our former owners (private equity investors) sold all of their common stock in secondary offerings. In 2019, IAA was separated from KAR Auction Services through a tax-free spin-off and now operates as a separate entity (NYSE: IAA).

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Our Industry

Auctions are the hub of the remarketing system for used vehicles, bringing professional sellers and buyers together and creating a marketplace for the sale of these vehicles. Whole car auction vehicles include vehicles from dealers turning their inventory, off-lease vehicles, vehicles repossessed by financial institutions and rental and other program fleet vehicles that have reached a predetermined age or mileage. The following are key industry highlights:

Whole Car Auction Industry Volumes

Whole car auction volumes in North America, including online only volumes and mobile application volumes, were approximately 11.5 million in 2018. Data for the whole car auction industry is collected by the National Auto Auction Association ("NAAA") through an annual survey. NAAA industry volumes for 2019 have not yet been released. The NAAA industry volumes collected by the annual survey do not include online only volumes or mobile application volumes (e.g. Openlane and TradeRev), but we have included these volumes in our totals. We estimate that used vehicle auction volumes in North America in 2019 were approximately 12 million vehicles, including online only volumes and mobile application volumes.

Consolidated Whole Car Market

The North American used vehicle auction market is largely consolidated. We estimate that Manheim, a subsidiary of Cox Enterprises, Inc. and ADESA together represent approximately 70% of the North American whole car auction market. We estimate that ADESA represents approximately 30% of the North American whole car auction market.

Floorplan Financing

An important component of the whole car auction industry is providing short-term inventory-secured financing, known as floorplan financing. By providing buyers (primarily independent used vehicle dealers) access to capital, the independent used vehicle dealers are able to place inventory on their lots. AFC and its competitors play a significant role in the whole car auction industry by providing liquidity in the auction lanes.

Our Business Strategy

The Company has a comprehensive strategy that leverages KAR’s unique collection of assets, proven track record with commercial sellers, extensive North American physical footprint, global network of customers and unique set of transaction data. The Company’s strategy for the future builds on this base, and we believe it will enable the Company to meet new opportunities emerging in the automotive remarketing industry, which is being impacted by several meaningful trends, including:

• Remarketing channels and systems that are increasingly becoming more interconnected;• An increase in customer demand and dependency on data in buying and selling decisions; and• Rapidly advancing technology with opportunity for application in the remarketing industry.

KAR is focused on expanding our end-to-end remarketing platform across the used vehicle industry through innovation, data science and a strategic physical footprint. We have invested in technology and talent and deployed a suite of complementary online, digital and mobile capabilities that we believe will simplify and streamline the buying and selling experience for our customers. Additionally, we believe our unique, integrated platform of whole car and finance solutions deliver differentiated value to customers across North America, and positions the Company for further growth around the globe. To execute our strategy of providing the best remarketing venue and analytical evidence for every vehicle, while generating value for our shareholders and customers, we intend to focus on the following strategic initiatives:

• Digital• Data and analytics• International• Mobility• Seamless integration of all of our businesses

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Digital

The Company continues to identify innovative venues for the exchange of used vehicles through internal development, targeted partnerships and acquisitions. For example, in 2017 we acquired the remaining interest in TradeRev, a mobile auction app and desktop solution that facilitates real time dealer-to-dealer vehicle auctions. In the fourth quarter of 2019, we combined the dealer consignment sales efforts of TradeRev and ADESA to help accelerate the growth of our dealer consignment volumes in the United States. The goal is to have one dealer consignment sales representative calling on each dealership and introducing all of our dealer consignment capabilities, whether digital or physical. This strategy is focused on growing total dealer consignment volume.

We are also focused on enhancing our Internet solutions in all of the key channels in which we operate, and we will continue to invest in technology platforms in order to capitalize on new opportunities and attract new customers. KAR is continuously investing in initiatives to upgrade our platforms. Online vehicle remarketing solutions provide the opportunity to improve the customer experience, expand our volume of transactions and potentially increase proceeds for sellers through greater buyer participation at auctions. Online buying activity continues to accelerate and represents an increasing portion of wholesale transactions across the industry. Online sales volume for ADESA represented approximately 58% of the total vehicles sold in 2019. Providing consistent, accurate and user-friendly online solutions remains a strategic priority. Advancing our online solutions allows us to connect more effectively with our current customers and engage with a broader range of geographically diverse customers. We will continue to make investments in our online technology to enhance the selling and buying experience for our customers. These investments involve creating a more streamlined user experience and embedding additional Company capabilities and offerings within our online tools.

Data and Analytics

The Company has observed increased demand from commercial customers (e.g., OEMs, insurance companies, finance companies, rental companies, large dealer groups, etc.) for more sophisticated, data-driven, end-to-end remarketing solutions. Specifically, customers are seeking tools, technology and information that simplify the auction process and help them make more efficient and better-informed buying and selling decisions. As a result, the Company continues to invest in both its data analytics capabilities and leadership. The Company aggregates its broad and unique data set captured through millions of auction transactions and ancillary and related services performed each year. As customer expectations and dependence on data continue to increase and evolve, the Company will further develop its data analytic capabilities.

In 2017, the Company acquired DRIVIN. DRIVIN aggregates automotive retail, pricing, registration and other market and economic data from a variety of public and proprietary sources. The insights generated from that data are deployed through predictive pricing, inventory management and vehicle matching tools that help customers buy, sell and source vehicles. The acquisition of DRIVIN and the combination of our analytic capabilities under the Data as a Service function help maximize value through data science. In 2019, an artificial-intelligence-based recommendation engine was introduced on the ADESA.com marketplace to show dealers which used cars are likely to sell fastest and generate the highest profit margins. We will continue to look for ways to link our data to our customers' decision making.

International

We have experience managing a global buyer base with relationships in over 80 countries. In addition, some of our recent acquisitions and ADESA U.K. have provided an initial foothold in Europe. In January 2019, we completed the acquisition of Belgium-based CarsOnTheWeb. The addition of CarsOnTheWeb, now known as ADESA Europe, places the Company in the major automotive marketplaces across Europe. Most of our international operations consist of online only auctions. We believe we are well positioned to grow internationally and we continue to identify opportunities to expand certain of our service offerings globally. We expect that our ability to efficiently layer in our product and technology licensing will allow us to enter other mature auction markets.

Mobility

With the increased use of vehicle sharing and the prospect of autonomous vehicles, we will look to identify opportunities to integrate our portfolio of service offerings with this emerging market segment. In February 2018, we acquired STRATIM Systems Inc., a mobility and fleet management software company that uses data analytics to help fleet owners manage, maintain and service their fleets.

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Seamless Integration of All of Our Businesses

We believe that the Company’s collection of 74 whole car auction sites, along with their online counterparts, makes us uniquely qualified to provide the best set of remarketing marketplaces for our customers. Additionally, these venues provide the opportunity to anchor further expansion and growth of the catalog of integrated ancillary and related services offered by the Company. We also believe that providing a more unified customer experience is essential to growth. We are working to integrate all of our businesses by developing seamless access to all of our platforms that provides a more efficient and consistent experience to our customers.

Our Business Segments

We operate as two reportable business segments: ADESA Auctions and AFC. Our revenues for the year ended December 31, 2019 were distributed as follows: ADESA 87% and AFC 13%.

ADESA

Overview

We are the second largest provider of whole car auctions and related services to the vehicle remarketing industry in North America. We serve our customer base through online auctions and auction facilities that are developed and strategically located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely via ADESA.com or in person. Our online service offerings include ADESA.com, ADESA Simulcast, DealerBlock and TradeRev and allow us to offer vehicles for sale from any location. ADESA also includes 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.

Vehicles available at our auctions include vehicles from institutional customers such as off-lease vehicles, repossessed vehicles, rental vehicles and other program fleet vehicles that have reached a predetermined age or mileage and have been repurchased by the manufacturers, as well as vehicles from used vehicle dealers turning their inventory. The number of vehicles offered for sale at auction is the key driver of our costs incurred in the whole car auction process, and the number of vehicles sold is the key driver of the related fees generated by the remarketing process.

We offer both online and physical auctions as well as value-enhancing ancillary services in an effective and efficient manner to maximize returns for the sellers of used vehicles. We quickly transfer the vehicles and ownership to the buyer and the net funds to the seller. Vehicles are typically offered for sale at the physical auctions on at least a weekly basis at most locations and the auctions are simulcast over the Internet with streaming audio and video (ADESA Simulcast) so that remote bidders can participate via our online products. Our online auctions (DealerBlock) function 24 hours a day, 7 days a week, providing our customers with maximum exposure for their vehicles and the flexibility to offer vehicles at "buy now" prices or in auctions that last for a few hours, days or even weeks. We also provide customized "private label" selling systems (including "buy now" functionality as well as online auctions) for our customers.

We generate revenue from auction fees paid by vehicle buyers and sellers, as well as fees from related services. Generally, we do not take title to or bear the risk of loss for vehicles sold at whole car auctions. Our buyer fees are typically based on a tiered structure with fees increasing with the sale price of the vehicle, while seller fees are typically fixed. We add buyer fees to the gross sales price paid by buyers for each vehicle, and generally customers do not receive title or possession of vehicles after purchase until payment is received, proof of floorplan financing is provided or credit is approved. We generally deduct seller fees and other ancillary service fees to sellers from the gross sales price of each vehicle before remitting the net amount to the seller. ADESA also sells vehicles that have been purchased, which represent less than 5% of total vehicles sold.

Customers

Suppliers of vehicles to our whole car auctions primarily include (i) large institutions, such as vehicle manufacturers and their captive finance subsidiaries, vehicle rental companies, financial institutions, and commercial fleets and fleet management companies (collectively "institutional customers"); and (ii) franchised and independent used vehicle dealers (collectively "dealer customers"). Buyers of vehicles at our whole car auctions primarily include franchised and independent used vehicle dealers.

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Services

Our whole car auctions also provide a full range of innovative and value-added services to sellers and buyers that enable us to serve as a "one-stop shop." Many of these services may be provided or purchased independently from the auction process, including:

Services DescriptionAuction Related Services ADESA provides marketing and advertising for the vehicles to be auctioned,

dealer registration, storage of consigned inventory, clearing of funds,arbitration of disputes, auction vehicle registration, condition report processing,photo services, post-sale inspections, security for consigned inventory, titleprocessing, sales results reports, pre-sale lineups and auctioning of vehicles bylicensed auctioneers.

Transportation Services We provide both inbound (pickup) and outbound (delivery) transportationservices utilizing our own equipment and personnel as well as licensed andinsured third party carriers. Through our subsidiary, CarsArrive and itsInternet-based system which provides automated vehicle shipping services,customers can instantly review price quotes and delivery times, and vehicletransporters can check available loads and also receive instant notification ofavailable shipments. The same system is utilized at our whole car auctionlocations; however, CarsArrive also arranges transportation for non-auctionvehicles.

Reconditioning Services Our auctions provide detailing, body work, paintless dent repair ("PDR"), lightmechanical work, glass repair, tire and key replacement and upholstery repair.Key replacement services are primarily provided by our subsidiary, HTL.

Inspection Services Provided byAutoVIN

AutoVIN provides vehicle condition reporting, inventory verification auditing,program compliance auditing and facility inspections. Field managers areequipped with handheld computers and digital cameras to record all inspectionand audit data on-site. The same technology is utilized at our whole car auctionlocations and we believe that the expanded utilization of comprehensivevehicle condition reports with pictures facilitates dealers sourcing vehicles viathe Internet.

Title and Repossession Administrationand Remarketing Services

PAR provides end-to-end management of the remarketing process includingtitling, repossession administration, inventory management, auction selection,pricing and representation of the vehicles at auction for those customersseeking to outsource all or just a portion of their remarketing needs. RecoveryDatabase Network, Inc. ("RDN") is a specialized provider of B2B software anddata solutions for automotive lenders and repossession companies. Clearplan isclosely integrated with RDN, providing users with convenient data-flows andaccess to its recovery management platform.

Vehicle Research Services Provided byAutoniq

Autoniq provides dealers real-time vehicle information such as pricing, historyreports and market guides. Its mobile app allows used car dealers to scan VINson mobile devices, view auction run lists and access vehicle history reports andmarket value reports instantly. Autoniq offers access to valued resources suchas CARFAX and AutoCheck, as well as Black Book Daily, NADA guides,Kelley Blue Book and Galves pricing guide information. It also includes acomprehensive wholesale and retail market report for all markets in the UnitedStates.

KAR Analytical Services KAR Analytical Services provides value-added market analysis to ourcustomers and the media. These services include access to publications andcustom analysis of wholesale market trends for KAR's customers, includingpeer group and market benchmarking studies, analysis of the benefits ofreconditioning, site selection for optimized remarketing of vehicles, portfolioanalysis of auction sales and computer-generated mapping and buyer analysis.

Data as a Service Our Data as a Service team aggregates automotive retail, pricing, registrationand other market and economic data from a variety of public and proprietarysources. The insights generated from that data are deployed through predictivepricing, inventory management and vehicle matching tools that help customersbuy, sell and source vehicles.

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Sales and Marketing

Our sales and marketing approach at ADESA is to develop strong relationships and interactive dialogue with our customers. We have relationship managers for the various institutional customers, including vehicle manufacturers, fleet companies, rental car companies, finance companies and others. These relationship managers focus on current trends and customer needs for their respective customers in order to better coordinate our sales effort and service offerings.

Managers of individual auction locations are ultimately responsible for providing services to the institutional customers whose vehicles are directed to the auctions by the corporate sales team. Developing and servicing the largest possible population of buying dealers for the vehicles consigned for sale at each auction is integral to maximizing value for our vehicle suppliers.

We have local sales representatives who have experience in the used vehicle business and an intimate knowledge of local markets. These local representatives focus on the dealer segment and are complemented by a centralized team of inventory consultants matching buyers and inventory. Both the local sales representatives and the inventory consultants are managed by a corporate-level team focused on developing and implementing standard best practices and expanding relationships with major dealer groups. We believe this combination of a centralized structure with decentralized resources enhances relationships with the dealer community and may further increase dealer consignment business at our auctions.

Through our ADESA Analytical Services department, we also provide market analysis to our customers, as they use analytical techniques in making their remarketing decisions.

Online Solutions

Our current online solutions include:

ADESA Technology DescriptionADESA.com and ADESADealerBlock®

This platform provides for either real-time or "bulletin-board" online auctionsof consigned inventory at physical auction locations and is powered byOpenlane technology. We also utilize this platform to provide certain sellingcapabilities for our consignors that facilitate the sale of vehicles prior to theirarrival at a physical auction site. Auctions can be either closed (restricted tocertain eligible dealers) or open (available to all eligible dealers) and inventoryfeeds of vehicles are automated with many customers' systems as well as thirdparty providers that are integrated with various dealer management systems.Oftentimes, the vehicles offered for sale prior to their arrival at a physicalauction site are "private-labeled" for the consignors.

ADESA Simulcast® Our live auction Internet bidding solution, ADESA Simulcast®, operates inconcert with our physical auctions and provides registered buyers with theopportunity to participate in live auctions. Potential buyers bid online in realtime along with the live local bidders and other Internet bidders via a simple,web-based interface. ADESA Simulcast® provides real-time streaming audioand video from the live auction and still images of vehicles and other data.Buyers inspect and evaluate the vehicle and listen to the live call of theauctioneer while viewing the physical auction that is underway.

TradeRev This mobile app mimics the physical auction setting, enabling dealers to launchand participate in live, real-time auctions directly from their smartphone, tabletor desktop. TradeRev gives dealers the ability to start an auction any time ofday and users can complete the entire transaction within the app, includingoptional inspection, title and arbitration services, instant live bids at appraisal,floorplan financing and transportation.

ADESA Run List® Provides a summary of consigned vehicles offered for auction sale, allowingdealers to preview inventory and vehicle condition reports prior to an auctionevent.

ADESA Market Guide® Provides wholesale auction prices, auction sales results, market data andvehicle condition information.

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Competition

In the North American whole car auction industry, we compete with Manheim, a subsidiary of Cox Enterprises, Inc., OVE.com (Manheim's "Online Vehicle Exchange"), RMS Automotive (a subsidiary of Cox Enterprises, Inc.), SmartAuction (a subsidiary of Ally Bank), as well as several smaller chains of auctions, independent auctions and a number of digital auction platforms. In the United States, competition is strongest with Manheim for the supply of used vehicles from national institutional customers. In Canada, we are the largest provider of whole car vehicle auction services. The supply of vehicles from dealers is dispersed among all of the auctions in the used vehicle market.

The whole car auction industry is highly fragmented in Europe where we compete primarily with British Car Auctions and Manheim. There are also a number of small independent auction operations throughout Europe.

In the dealer-to-dealer auction market, our mobile application, TradeRev, currently competes with ACV Auctions, BacklotCars, EBlock, Manheim Express, CarWave, TradeHelper and others.

Due to the increased viability of the Internet as a marketing and distribution channel, new competition has arisen from Internet-based companies and our own customers who have historically remarketed vehicles through various channels, including auctions. Direct sales of vehicles by institutional customers and large dealer groups through internally developed or third-party online platforms have largely replaced telephonic and other non-auction methods, becoming a significant portion of overall used vehicle remarketing. The extent of use of direct, online systems varies by customer. In addition, we and some of our competitors offer online auctions in connection with physical auctions, and other online companies now include used vehicles among the products offered at their auctions.

AFC

Overview

We are a leading provider of floorplan financing to independent used vehicle dealers. We provide short-term inventory-secured financing, known as floorplan financing, to independent used vehicle dealers through branches throughout North America. In 2019, AFC serviced approximately 1.8 million loan transactions, which includes both loans paid off and loans extended, or curtailed. We sell the majority of our U.S. dollar-denominated finance receivables without recourse to a wholly-owned bankruptcy remote special purpose entity, which sells an undivided participation interest in such finance receivables to a group of bank purchasers on a revolving basis. We also securitize the majority of our Canadian dollar denominated finance receivables through a separate third-party facility. We generate a significant portion of our revenues from fees. These fees include origination, floorplan, curtailment and other related program fees. When the loan is extended or paid in full, AFC collects all accrued fees and interest.

Preferred Warranties, Inc. is a vehicle service contract business. We receive advance payments for the vehicle service contracts and unearned revenue is deferred and recognized over the terms of the contracts, which range from 3 months to 7 years, on an individual contract basis. The average term of these contracts originated in 2019 was approximately 1.7 years. We currently purchase program insurance which provides for satisfaction of certain of the Company's vehicle service contracts related liabilities in the event the Company is unable to perform under the terms of specific vehicle service contracts covered by program insurance.

Customers and Locations

Floorplan financing supports independent used vehicle dealers in North America who purchase vehicles from our auctions, other auctions and non-auction purchases. In 2019, approximately 84% of the vehicles floorplanned by AFC were vehicles purchased by dealers at any auction. Our ability to provide floorplan financing facilitates the growth of vehicle sales at auction. As of December 31, 2019, we serviced auctions through 121 locations which are conveniently located at or within close proximity of auctions held by ADESA and other auctions, which allows dealers to reduce transaction time by providing immediate payment for vehicles purchased at auction. We provide availability lists on behalf of our customers to auction representatives regarding the financing capacity of our customers, thereby increasing the purchasing potential at auctions. In addition, we have the ability to send finance representatives on-site to most approved independent auctions during auction sale-days, as well as maintaining a presence at the ADESA auctions. Geographic proximity to the customers gives our employees the ability to stay in close contact with outstanding accounts, thereby better enabling them to manage credit risk.

As of December 31, 2019, AFC had approximately 12,900 active dealers with an average line of credit of approximately $270,000 and no one dealer representing greater than 1.6% of our portfolio. An average of approximately 16 vehicles per active dealer were floorplanned with an approximate average value outstanding of $10,000 per vehicle as of December 31, 2019.

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Sales and Marketing

AFC approaches and seeks to expand its share of the independent dealer floorplan market through a number of methods and channels. We target and solicit new dealers through both direct sales efforts at the dealer's place of business as well as auction-based sales and customer service representatives, who service our dealers at auctions where they replenish and rotate vehicle inventory. These largely local efforts are handled by branch managers, branch personnel and dealer sales managers. AFC's corporate-level team and Business Development Center provide sales and marketing support to AFC field personnel by helping to identify target dealers and coordinating promotional activity with auctions and other vehicle supply sources.

Credit

Our procedures and proprietary computer-based system enable us to manage our credit risk by tracking each vehicle from origination to payoff, while expediting services through our branch network. Typically, we assess a floorplan fee at the inception of a loan and we collect all accrued fees and interest when the loan is extended or repaid in full. In addition, AFC generally holds the title or other evidence of ownership to all vehicles which are floorplanned. Typical loan terms are 30 to 90 days, each with a possible loan extension. For an additional fee, this loan extension allows the dealer to extend the duration of the loan beyond the original term for another 30 to 90 days if the dealer makes payment towards principal and pays accrued fees and interest.

The extension of a credit line to a dealer starts with the underwriting process. Credit lines up to $600,000 are extended using a proprietary scoring model developed internally by AFC. Credit lines in excess of $600,000 may be extended using underwriting guidelines which generally require dealership and personal financial statements, monthly bank statement, sales reports and tax returns. The underwriting of each line of credit requires an analysis, write-up and recommendation by the credit department and, in case of credit lines in excess of $600,000, final review by a credit committee.

Collateral Management

Collateral management is an integral part of daily operations at each AFC branch and our corporate headquarters. AFC's proprietary computer-based system facilitates this daily collateral management by providing real-time access to dealer information and enables branch and corporate personnel to assess and manage potential collection issues. Restrictions are automatically placed on customer accounts in the event of a delinquency, payments by dealers from bank accounts with insufficient funds or poor audit results. Branch personnel are proactive in managing collateral by monitoring loans and notifying dealers that payments are coming due. In addition, approximately 70,000 routine audits, or lot checks, are performed annually on the dealers' lots through our AutoVIN subsidiary. Poor results from lot checks typically require branch personnel to take actions to determine the status of missing collateral, including visiting the dealer personally, verifying units held off-site and collecting payments for units sold. Audits also identify troubled accounts, triggering the involvement of AFC's collections department.

AFC operates two divisions which are organized into thirteen regions in North America. Each division and region is monitored by managers who oversee daily operations. At the corporate level, AFC employs full-time collection specialists and collection attorneys who are assigned to specific regions and monitor collection activity for these areas. Collection specialists work closely with the branches to track trends before an account becomes a troubled account and to determine, together with collection attorneys, the best strategy to secure the collateral once a troubled account is identified.

Securitization

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. AFC's securitization facility has been in place since 1996. AFC Funding Corporation had a committed facility of $1.70 billion from a third-party facility for U.S. finance receivables at December 31, 2019. The agreement expires on January 28, 2022.

We also have an agreement in place for the securitization of Automotive Finance Canada Inc.'s ("AFCI") receivables. This securitization facility provides up to C$175 million in financing for eligible finance receivables through a third-party conduit (separate from the U.S. facility). The agreement expires on January 28, 2022. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings.

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Competition

AFC primarily provides short-term dealer floorplan financing of wholesale vehicles to independent vehicle dealers in North America. At the national level, AFC's competition includes NextGear Capital, a subsidiary of Cox Enterprises, Inc., other specialty lenders, banks and financial institutions. At the local level, AFC faces competition from banks, credit unions and independent auctions who may offer floorplan financing to local auction customers. Such entities typically service only one or a small number of auctions.

Some of our industry competitors who operate whole car auctions on a national scale may endeavor to capture a larger portion of the floorplan financing market. AFC competes primarily on the basis of quality of service, convenience of payment, scope of services offered and historical and consistent commitment to the sector. Our long-term relationships with customers have been established over time and act as a competitive strength for us.

Seasonality

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.

Vehicle and Lending Regulation

Our operations are subject to regulation, supervision and licensing under various federal, state, provincial and local authorities, agencies, statutes and ordinances, which, among other things, require us to obtain and maintain certain licenses, permits and qualifications, provide certain disclosures and notices and limit interest rates, fees and other charges. Some examples of the regulations and laws that impact our company are included in Item 1A "Risk Factors" under the risk: "We are subject to extensive governmental regulations, including vehicle brokerage and auction laws and currency reporting obligations. Our business is subject to risks related to litigation and regulatory actions."

Environmental Regulation

Our operations are subject to various foreign, federal, state and local environmental, health and safety laws and regulations, including those governing the emission or discharge of pollutants into the air or water, the generation, treatment, storage and release of hazardous materials and wastes and the investigation and remediation of contamination. Our failure to comply with current or future environmental, health or safety laws or to obtain and comply with permits required under such laws, could subject us to significant liability or require costly investigative, remedial or corrective actions.

In the used vehicle remarketing industry, large numbers of vehicles are stored and/or refurbished at auction facilities and during that time minor releases of fuel, motor oil and other materials may occur. We have investigated or remediated, or are currently investigating or remediating, contamination resulting from various sources, including gasoline, fuel additives (such as methyl tertiary butyl ether, or MTBE), motor oil, petroleum products and other hazardous materials released from aboveground or underground storage tanks or in connection with current or former operations conducted at our facilities. We have incurred, and may in the future incur, expenditures relating to releases of hazardous materials, investigative, remedial or corrective actions, claims by third parties and other environmental issues, and such expenditures, individually or in the aggregate, could be significant.

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 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.

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Employees

At December 31, 2019, we had a total of approximately 15,300 employees, of which approximately 11,200 were located in the U.S. and approximately 4,100 were located in Canada, Mexico, U.K. and Europe. Approximately 74% of our workforce consists of full-time employees. Currently, less than 1% of our total employees participate in collective bargaining agreements.

In addition to the employee workforce, we also utilize temporary labor services to assist in handling the vehicles consigned to us and to provide certain other services. Nearly all of our auctioneers are independent contractors. Some of the services we provide are outsourced to third party providers that perform the services either on-site or off-site. The use of third party providers depends upon the resources available at each auction facility as well as peaks in the volume of vehicles offered at auction.

Available Information

Our web address is www.karglobal.com. Our electronic filings with the Securities and Exchange Commission ("SEC") (including all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports) are available free of charge on the website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. In addition, our Corporate Governance Guidelines, Code of Conduct and Ethics, Code of Ethics for Principal Executive and Senior Financial Officers and charters of the audit committee, the nominating and corporate governance committee, the risk committee and the compensation committee of our board of directors are available on our website and available in print to any shareholder who requests it. The information posted on our website is not incorporated into this Annual Report.

The SEC maintains a website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.

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Item 1A. Risk Factors

Investing in our Company involves a high degree of risk. You should carefully consider the following risk factors, as well as all of the other information contained in this Annual Report on Form 10-K, before deciding to invest in our Company. The occurrence of any of the following risks could materially and adversely affect our business, financial condition, prospects, results of operations and cash flows. In such case, the trading price of our common stock could decline and you could lose all or part of your investment. These risks are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially affect our business, financial condition, results of operations and prospects.

Risks Related to Our Business

If we are not successful in competing with our known competitors, customers and/or disruptive new entrants, then our market position or competitive advantage could be threatened, as well as our business and results of operations.

We face significant competition for the supply of used vehicles, the buyers of those vehicles and the floorplan financing of these vehicles. Our principal sources of competition historically have come from: (1) direct competitors (e.g., Manheim and NextGear Capital), (2) new entrants, including new vehicle remarketing venues and dealer financing services, and (3) existing alternative vehicle remarketing venues. Due to the increasing use of the Internet and other technology as marketing and distribution channels, we also face increasing competition from online wholesale and retail vehicle selling platforms (generally without any meaningful physical presence) and from our own customers when they sell directly to end users through such platforms rather than remarket vehicles through our auctions and other channels. Increased competition could result in price reductions, reduced margins or loss of market share.

Our future success also depends on our ability to respond to evolving industry trends, changes in customer requirements and new technologies. One potentially adverse trend would be a market shift towards the simultaneous listing and selling of vehicles on multiple online sales platforms. Were such a trend to take hold, the vehicle remarketing industry's economics could significantly change. For example, we might need to incur additional costs or otherwise alter our business model to adapt to these changes. In such case, the volume of vehicles supplied to us and our overall revenues and fees per vehicle sold could decrease. Since 2013, many participants in the whole car industry have been discussing the development of a multiple platform bidding system. Any such collaboration may be unsuccessful, unworkable or deemed inadvisable. In such case, we may lose vehicle volume and market share, and our business, revenues and profitability could be negatively impacted.

Some of our competitors may have greater financial and marketing resources than we do, may be able to respond more quickly to evolving industry dynamics and changes in customer requirements, or may be able to devote greater resources to the development, promotion and sale of new or emerging services and technologies. Our ability to successfully grow through investments in the area of emerging opportunities depends on many factors, including advancements in technology, regulatory changes and other factors that are difficult to predict, that may significantly affect the future of electrification, autonomy, andmobility. If we are unable to compete successfully or to successfully adapt to industry changes, our business, revenues and profitability could be materially adversely affected.

ADESA, through its physical and online wholesale vehicle platforms, currently competes with online wholesale and retail vehicle selling platforms, including OVE.com and RMS Automotive (both affiliated with Cox Enterprises, Inc.), SmartAuction, mobile applications (e.g., ACV Auctions and EBlock) and others. With the exception of OVE.com, these online selling platforms generally do not have any meaningful physical presence and may cause the volume of vehicles sold through our online and physical auctions to decrease. If the number of vehicles sold through our auctions decreases due to these competitors or other industry changes, our revenue and profitability may be negatively impacted. In addition, our long-lived assets could also become subject to impairment.

In the dealer-to-dealer auction market, our mobile application, TradeRev, currently competes with ACV Auctions, BacklotCars, EBlock, Manheim Express, CarWave, TradeHelper and others. The dealer-to-dealer space is experiencing a digital disruption as competitors and new market participants introduce new technologies. If TradeRev is unable to compete and gain market share in the dealer-to-dealer space, our business and revenues may be negatively impacted.

At the national level, AFC's competition includes NextGear Capital, a subsidiary of Cox Enterprises, Inc., other specialty lenders, banks and financial institutions. At the local level, AFC faces competition from banks, credit unions and independent auctions who may offer floorplan financing to local auction customers. Such entities typically service only one or a small number of auctions. Some of our industry competitors who operate whole car auctions on a national scale may endeavor to capture a larger portion of the floorplan financing market. AFC offers its customers competitive rates and fees and competes primarily on the basis of quality of service, convenience of payment, scope of services offered and historical and consistent

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commitment to the sector. If the number of loans originated and serviced decreases due to these competitors, our revenue and profitability may be negatively impacted.

We may not properly leverage or make the appropriate investment in technology advancements, which could result in the loss of any sustainable competitive advantage in products, services and processes.

Our business is dependent on information technology. Robust information technology systems, platforms and products are critical to our operating environment, digital online products and competitive position. Understanding technology innovation is necessary to remain at the forefront of our industry. It is strategically significant that we lead the digital transformation/technology disruption occurring in our industry. We may not be successful in structuring our information technology or developing, acquiring or implementing information systems which are competitive and responsive to the needs of our customers. We might lack sufficient resources to continue to make the significant investments in information technology to compete with our competitors. Certain information technology initiatives that management considers important to our long-term success will require capital investment, have significant risks associated with their execution, and could take several years to implement. We may not be able to develop/implement these initiatives in a cost-effective, timely manner or at all. There can be no assurance that others will not acquire similar or superior technologies sooner than we do or that we will acquire technologies on an exclusive basis or at a significant price advantage. If we do not accurately predict, prepare and respond to new kinds of technology innovations, market developments and changing customer needs, our revenues, profitability and long-term competitiveness could be materially adversely affected.

We may not be successful in the implementation of our business strategy or we may improperly align new strategies with the Company’s vision, which could lead to the misapplication of Company resources.

Our strategy is to provide the best remarketing venue and analytical evidence for every vehicle. To execute our strategy, we are pursuing strategic initiatives that management considers critical to our long-term success, including but not limited to developing alternative marketplaces, expanding fleet mobility relationships, expanding our international footprint, establishing exceptional analytics capabilities, the seamless integration of all of our businesses, leveraging the Company's unique remarketing portfolio and data and growing the Company's buyer base. There are significant risks involved with the execution of these initiatives, including significant business, economic and competitive uncertainties, many of which are outside of our control. Accordingly, we cannot predict whether we will succeed in implementing these strategic initiatives. For example, if we are unsuccessful in continuing to generate significant cash provided by operations (we generated $380.8 million and $438.6 million of cash flow from continuing operations for the years ended December 31, 2019 and 2018, respectively), we may be unable to reinvest in our business, return capital to shareholders or reduce our outstanding indebtedness, which could negatively affect our financial position and results of operations and our ability to execute our other strategies. It could take several years to realize any direct financial benefits from these initiatives, if any direct financial benefits from these initiatives are achieved at all. Additionally, our business strategy may change from time to time, which could delay our ability to implement initiatives that we believe are important to our business.

We may be unable to meet or exceed our customers’ expectations, which could result in poor customer retention and adversely affect our operating results and financial condition.

We believe our future success depends in part on our ability to respond to changes in customer requirements and our ability to meet regulatory requirements for our customers. Our customers include vehicle manufacturers and their captive finance arms, vehicle leasing and rental companies, financial institutions, fleet management companies, franchised and independent used vehicle dealers, automotive wholesalers, insurance companies, non-profit organizations, automotive body shops, rebuilders, exporters and brokers. We work to develop strong relationships and interactive dialogue with our customers to better understand current trends and customer needs. If we are not successful in meeting our customers' expectations, our customer relationships could be negatively affected and result in a loss of future business, which would adversely affect our operating results and financial condition.

ADESA's agreements with its largest institutional suppliers of used vehicles are generally subject to cancellation by either party upon 30 to 90 days' notice. In addition, it is common that institutional suppliers regularly review their relationships with whole car auctions through written requests for proposals. Such suppliers may from time to time require us to make changes to the way we do business as part of the request for proposal process. There can be no assurance that our existing agreements will not be canceled or that we will be able to enter into future agreements with these or other suppliers that disrupt our supplier base on similar terms, or at all, and our ability to grow and sustain profitability could be impaired.

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If we acquire businesses that: are not aligned with the Company’s strategy; lack the proper research and preparation; create unnecessary risks; improperly value and price a target; have poor integration execution; and/or do not achieve the desired outcomes, then our operating results, financial condition and growth prospects could be adversely affected.

Acquisitions are a significant part of our growth strategy and have enabled us to further broaden and diversify our service offerings. Our strategy generally involves acquisitions of companies, products, services and technologies to expand our online, digital and mobile capabilities and the acquisition and integration of additional auction sites and personnel. Acquisition of businesses requires substantial time and attention of management personnel and may also require additional equity or debt financings. Further, integration of newly established or acquired businesses is often disruptive. Since we have acquired or in the future may acquire one or more businesses, there can be no assurance that we will identify appropriate targets, will acquire such businesses on favorable terms, or will be able to successfully integrate such organizations into our business. Because these new ventures are inherently risky, no assurance can be given that such strategies and offerings will be successful and they could materially adversely affect our business, financial condition and results of operations. Acquisitions may also have unanticipated tax, legal, regulatory and accounting ramifications, including as a result of recording goodwill and non-amortizable intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges. In addition, we expect to compete against other auction groups or new industry consolidators for suitable acquisitions. If we are able to consummate acquisitions, such acquisitions could be dilutive to earnings, and we could overpay for such acquisitions.

In pursuing a strategy of acquiring other businesses, we face other risks including, but not limited to:

• incurring significantly higher capital expenditures, operating expenses and operating losses of the business acquired;

• entering new markets with which we are unfamiliar;

• incurring potential undiscovered liabilities at acquired businesses;

• failing to maintain uniform standards, controls and policies;

• incorporating acquired technology and rights into our offerings and unanticipated expenses related to such integration;

• impairing relationships with employees and customers as a result of management changes; and

• increasing expenses for accounting and computer systems, as well as integration difficulties.

Acquisitions and other strategies to expand our operations beyond North America subject us to significant risks and uncertainties. As a result, we may not be successful in realizing anticipated synergies or we may experience unanticipated integration expenses. As we continue to explore opportunities to expand our business internationally, we will need to develop policies and procedures to manage our business on a global scale. There can be no assurance that we will identify appropriate international targets, acquire such businesses on favorable terms, or be able to successfully grow and integrate such organizations into our business. Operationally, acquired businesses typically depend on key relationships and our failure to maintain those relationships could have an adverse effect on our operating results and financial condition.

In addition, we anticipate that our non-U.S. based operations will continue to subject us to risks associated with operating on an international basis, including:

• exposure to foreign currency exchange rate risk, which may have an adverse impact on our revenues and profitability;

• restrictions on our ability to repatriate funds, as well as repatriation of funds currently held in foreign jurisdictions, which may result in higher effective tax rates;

• tariffs and trade barriers and other regulatory or contractual limitations on our ability to operate in certain foreign markets;

• compliance with the Foreign Corrupt Practices Act;

• compliance with various privacy regulations, including the General Data Protection Regulation ("GDPR");

• dealing with unfamiliar regulatory agencies and laws favoring local competitors;

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• dealing with political and/or economic instability;

• the difficulty of managing and staffing foreign offices, as well as the increased travel, infrastructure, legal and compliance costs associated with international operations;

• localizing our product offerings; and

• adapting to different business cultures and market structures.

As we continue to explore opportunities to expand globally, our success will depend on our ability to anticipate and effectively manage these and other risks associated with operating on an international basis. Our failure to manage these risks could have an adverse effect on our operating results and financial condition.

Significant disruptions of information technology systems or breaches of information technology systems, infrastructure and business information could interfere with our operations and could compromise the confidentiality of private customer data, employee data or our proprietary information and adversely affect our business and reputation.

We rely on information technology systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of our business processes and activities. The secure operation of these systems, and the processing and maintenance of the information processed by these systems, is critical to our business operations and strategy. Information technology risks (including the confidentiality, integrity and availability of digital assets) for companies have significantly increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties. These threats may derive from fraud or malice on the part of our employees or third parties, or may result from human error or accidental technological failure. Our customers and other parties in the payments value chain rely on our digital online products as well as other information technologies, computers, software and networks to conduct their operations. In addition, to access our online products and services, our customers increasingly use personal smartphones, tablet PCs and other mobile devices that may be beyond our control.

We are subject to cyber-threats and our information technology has been subject to cyber-attacks and we believe we will continue to be a potential target of such threats and attacks. Continuous cyber-attacks or a sustained attack could lead to service interruptions, malfunctions or other failures in the information technology that supports our businesses and customers (such as the lack of availability of our value-added systems), as well as the operations of our customers or other third parties. Continuous cyber-attacks could also lead to damage to our reputation with our customers and other parties and the market, additional costs (such as repairing systems, adding new personnel or protection technologies or compliance costs), regulatory penalties, financial losses to both us and our customers and partners and the loss of customers and business opportunities. If such attacks are not detected in a timely manner, their effect could be compounded.

Despite security measures and business continuity plans, our systems may be vulnerable to damage, disruptions or shutdowns caused by hackers, computer viruses, or breaches due to errors or malfeasance by employees, third parties and others who have access to these systems. If our information technology is compromised, becomes inoperable for extended periods of time or ceases to function properly, we may have to make a significant investment to fix or replace the information technology and our ability to provide many of our electronic and online solutions to our customers may be impaired, which would have a material adverse effect on our consolidated operating results and financial position. In addition, as cyber-threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. Any of the risks described above could compromise or result in the loss of the information processed by these systems and proprietary data, disrupt our business, damage our reputation and materially adversely affect our consolidated financial position and results of operations.

In addition, aspects of our operations and business are subject to privacy regulation in the United States and elsewhere, including the California Consumer Privacy Act ("CCPA"). We collect and store sensitive data, including the intellectual property, proprietary business information, proprietary business information of our customers, as well as personally identifiable information of our customers and employees, in data centers and on information technology networks. Many U.S. states have enacted data breach regulations and laws requiring varying levels of consumer notification in the event of a security breach. Increased regulation and enforcement activity throughout the world in the areas of data privacy and data security/breach may materially increase our costs, which could have a material adverse effect on our operating results. Our failure to comply with the privacy and data security/breach laws to which we are subject could also result in fines, sanctions and damage to our reputation and tradenames or the loss of significant customers.

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Decreases in the supply of used vehicles coming to auction may impact auction sales volumes, which may adversely affect our revenues and profitability. In addition, a decrease in the number of used vehicles sold at physical auctions could adversely affect our revenue growth, operating results and financial condition.

The number of new and used vehicles that are leased by consumers affects the supply of vehicles coming to auction in future periods as the leases mature. If manufacturers and other lenders decrease the number of new vehicle lease originations and extend the terms of some of the existing leases, the number of off-lease vehicles available at auction for the industry would decline. If the supply of off-lease vehicles coming to auction declines, our revenues and profitability may be adversely affected.

Volumes of off-lease vehicles in subsequent periods will be affected by total new vehicle sales and the future leasing behavior of manufacturers and lenders; therefore, we may not be able to accurately predict the volume of vehicles coming to auction. The supply of off-lease vehicles coming to auction is also affected by the market value of used vehicles compared to the residual value of those vehicles per the lease terms. In most cases, the lessee and the dealer have the ability to purchase the vehicle at the residual price at the end of the lease term. Generally, as market values of used vehicles rise, the number of vehicles purchased at residual value by the lessees and dealers increases, thus decreasing the number of off-lease vehicles available at auction.

Furthermore, online only auction platforms were utilized for the sale of approximately 42% of vehicles sold in North America by ADESA in 2019, compared with approximately 38% in 2018. If sellers and buyers increase the number of vehicles transacted on online only auction platforms, our revenue per vehicle will likely decline. In connection with online auctions, ADESA offers physical auctions, which allow buyers to physically inspect and compare vehicles. In addition, our cost structure includes a significant fixed cost component, including occupancy costs, that cannot be readily reduced if revenue per vehicle declines. If a shift in the percentage of used vehicles sold on online only auction platforms as compared with used vehicles sold at physical auctions occurs, and we are unable to generate new sources of revenue, our operating results and financial condition could be adversely affected.

Our business and operating results would be adversely affected if we lose one or more significant customers.

Loss of business from, or changes in the consignment patterns of, our key customers could have a material adverse effect on our business and operating results. Generally, institutional and dealer customers make no binding long-term commitments to us regarding consignment volumes. Any such customer could reduce its overall supply of vehicles for our auctions or otherwise seek to materially change the terms of its business relationship with us at any time. Any such change could harm our business and operating results. While no single customer accounted for 10% or more of our consolidated revenues in 2019, the loss of, or material reduction in business from, our key customers could have a material adverse effect on our business and operating results.

If we fail to attract and retain key personnel, or have inadequate succession planning, we may not be able to execute our business strategies and our financial results could be negatively affected.

Our success depends in large part on the performance of our executive management team and other key employees, including key field and information technology personnel. If we lose the services of one or more of our executive officers or key employees, or if one or more of them decides to join a competitor or otherwise compete with us, we may not be able to effectively implement our business strategies, our business could suffer and the value of our common stock could be materially adversely affected. Our auction business is directly impacted by the business relationships our employees have established with customers and suppliers and, as a result, if we lose key personnel, we may have difficulty in retaining and attracting customers, developing new services, negotiating favorable agreements with customers and providing acceptable levels of customer service. Leadership changes will occur from time to time and we cannot predict whether significant resignations will occur or whether we will be able to recruit additional qualified personnel. We do not have nor do we currently expect to obtain key person insurance on any of our executive officers.

Used vehicle prices impact fee revenue per unit and may impact the supply of used vehicles, as well as loan losses at AFC.

The volume of new vehicle production, accuracy of lease residual estimates, interest rate fluctuations, customer demand and changes in regulations, among other things, all potentially affect the pricing of used vehicles. Used vehicle prices may affect the volume of vehicles entered for sale at our auctions and the demand for those used vehicles, the fee revenue per unit, loan losses for our dealer financing business and our ability to retain customers. When used vehicle prices are high, used vehicle dealers may retail more of their trade-in vehicles on their own rather than selling them at auction. In addition, a sustained reduction in used vehicle pricing could result in a potential loss of consignors, an increase in loan losses at AFC and decreased profitability.

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If our facilities lack the capacity to accept additional vehicles, then our relationships with vehicle suppliers could be adversely affected.

We regularly evaluate our capacity in all our markets and where appropriate, seek to increase capacity through the acquisition of additional land and facilities. We may not be able to reach agreements to purchase or lease storage facilities in markets where we have limited excess capacity, and zoning restrictions or difficulties obtaining use permits may limit our ability to expand our capacity through acquisitions of new land. In addition, we may not be able to renew or enter into new leases at commercially reasonable rates. If we fail to have sufficient capacity at one or more of our facilities, our relationships with vehicle suppliers could be adversely affected, which could adversely affect our operating results and financial condition.

Adverse economic conditions may negatively affect our business and results of operations.

Future adverse economic conditions could increase our exposure to several risks, including:

• Fluctuations in the supply of used vehicles. We are dependent on the supply of used vehicles coming to auction, and our financial performance depends, in part, on conditions in the automotive industry. During the past global economic downturn and credit crisis, there was an erosion of retail demand for new and used vehicles that led many lenders to cut back on originations of new loans and leases and led to significant manufacturing capacity reductions by automakers selling vehicles in the United States and Canada. Capacity reductions could depress the number of vehicles received at auction in the future and could lead to reduced numbers of vehicles from various suppliers, negatively impacting auction volumes. In addition, weak growth in or declining new vehicle sales negatively impacts used vehicle trade-ins to dealers and auction volumes. These factors could adversely affect our revenues and profitability.

• Decline in the demand for used vehicles. We may experience a decrease in demand for used vehicles from buyers due to factors including the lack of availability of consumer credit and declines in consumer spending and consumer confidence. Adverse credit conditions also affect the ability of dealers to secure financing to purchase used vehicles at auction, which further negatively affects buyer demand. In addition, a reduction in the number of franchised and independent used car dealers may reduce dealer demand for used vehicles.

• Decrease in consumer spending. Consumer purchases of new and used vehicles may be adversely affected by economic conditions such as employment levels, wage and salary levels, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, the availability of consumer credit and taxation policies. Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower. Changes to U.S. federal tax policy may negatively affect consumer spending. In addition, the increased use of vehicle sharing and alternate methods of transportation, including autonomous vehicles, could lead to a decrease in consumer purchases of new and used vehicles and a decrease in vehicle rentals. To the extent retail and rental car company demand for new and used vehicles decreases, negatively impacting our auction volumes, our results of operations and financial position could be materially and adversely affected.

• Volatility in the asset-backed securities market. Volatility and disruption in the asset-backed commercial paper market could lead to a narrowing of interest rate spreads at AFC in certain periods. In addition, any volatility and disruption has affected, and could affect, AFC’s cost of financing related to its securitization facility.

• Ability to service and refinance indebtedness. Uncertainty in the financial markets may negatively affect our ability to service our existing debt, access additional financing or to refinance our existing indebtedness on favorable terms or at all. If economic weakness exists, it may affect our cash flow from operations and results of operations, which may affect our ability to service payment obligations on our debt or to comply with our debt covenants.

• Increased counterparty credit risk. Any market deterioration could increase the risk of the failure of financial institutions party to our Credit Agreement and other counterparties with which we do business to honor their obligations to us. Our ability to replace any such obligations on the same or similar terms may be limited if challenging credit and general economic conditions exist.

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Declining values for vehicles purchased could adversely affect our profitability.

ADESA sells consigned vehicles and vehicles that have been purchased (e.g., vehicles purchased through the ADESA Assurance program or by ADESA Europe and others). The number of vehicles purchased by ADESA continues to grow. When a vehicle is purchased and then resold, rather than sold on a consignment basis, we are exposed to inventory risks, including losses from theft, damage and obsolescence. In addition, when vehicles are purchased, we are subject to changes in vehicle values, which could adversely affect our revenue and profitability.

AFC is exposed to credit risk with our dealer borrowers, which could adversely affect our profitability and financial condition.

AFC is subject to credit risk resulting from defaults in payment by our dealer customers on our floorplan loans. Furthermore, a weak economic environment, decreased demand for used vehicles, disruptions in pricing of used vehicle inventory or consumers’ lack of access to financing could exert pressure on our dealer customers resulting in higher delinquencies, bankruptcies, repossessions and credit losses. There can be no assurances that our monitoring of our credit risk as it affects the collectability of these loans and our efforts to mitigate credit risk through appropriate underwriting policies and loss-mitigation strategies are, or will be, sufficient to prevent an adverse impact in our profitability and financial condition.

If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.

We rely and expect to continue to rely on a combination of confidentiality and license agreements with our employees, consultants and third parties with whom we have relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect our proprietary rights. In the United States and internationally, we have filed various applications for protection of certain aspects of our intellectual property, and we currently hold issued patents in the United States and Canada. However, third parties may knowingly or unknowingly infringe our proprietary rights, third parties may challenge proprietary rights held by us, and pending and future trademark and patent applications may not be approved. In addition, effective intellectual property protection may not be available in every country in which we operate or intend to operate our business. In any or all of these cases, we may be required to expend significant time and expense in order to prevent infringement or to enforce our rights. Although we have taken measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business. If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our service and methods of operations. Any of these events could have an adverse effect on our business and financial results.

We may be subject to patent or other intellectual property infringement claims, which could have an impact on our business or operating results due to a disruption in our business operations, the incurrence of significant costs and other factors.

From time to time, we may receive notices from others claiming that we infringed or otherwise violated their patent or intellectual property rights, and the number of these claims could increase in the future. Claims of intellectual property infringement or other intellectual property violations could require us to enter into licensing agreements on unfavorable terms, incur substantial monetary liability or be enjoined preliminarily or permanently from further use of the intellectual property in question, which could require us to change business practices and limit our ability to compete effectively. Even if we believe that the claims are without merit, the claims can be time-consuming and costly to defend and may divert management’s attention and resources away from our businesses. If we are required to take any of these actions, it could have an adverse impact on our business and operating results.

Weather-related and other events beyond our control may adversely impact operations.

Extreme weather or other events, such as hurricanes, tornadoes, earthquakes, forest fires, floods, terrorist attacks or war, may adversely affect the overall economic environment, the markets in which we compete, our operations and profitability. These events may impact our physical auction facilities, causing a material increase in costs, or delays or cancellation of auction sales, which could have a material adverse impact on our revenues and profitability. Our failure to meet our customers’ demands in such situations could negatively affect our relationships with such customers and result in a loss of future business, which would adversely affect our operating results and financial condition.

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A portion of our net income is derived from our international operations, primarily Canada, which exposes us to foreign exchange risks that may impact our financial statements. In addition, increases in the value of the U.S. dollar relative to certain foreign currencies may negatively impact foreign buyer participation at our auctions.

Fluctuations between U.S. and foreign currency values may adversely affect our results of operations and financial position, particularly fluctuations with Canadian currency values. In addition, there may be tax inefficiencies in repatriating cash from Canada. Approximately 12% of our revenues were attributable to our Canadian operations for the year ended December 31, 2019. A decrease in the value of the Canadian currency relative to the U.S. dollar would reduce our profits from Canadian operations and the value of the net assets of our Canadian operations when reported in U.S. dollars in our financial statements. This could have a material adverse effect on our business, financial condition or results of operations as reported in U.S. dollars. A 1% decrease in the average Canadian exchange rate for the year ended December 31, 2019 would have impacted net income by approximately $0.3 million.

In addition, fluctuations in exchange rates may make it more difficult to perform period-to-period comparisons of our reported results of operations. For purposes of accounting, the assets and liabilities of our Canadian operations are translated using period-end exchange rates; such translation gains and losses are reported in “Accumulated other comprehensive income/loss” as a component of stockholders’ equity. The revenues and expenses of our Canadian operations are translated using average exchange rates during each period.

Likewise, we have a significant number of non-U.S. based buyers who participate in our auctions. Increases in the value of the U.S. dollar relative to these buyers’ local currencies may reduce the prices they are willing to pay at auction, which may negatively affect our revenues.

Increases in fuel prices may have an adverse effect on our revenues and operating results, as well as our earnings growth rates.

Increases in fuel prices may disproportionately affect the demand for sports cars, luxury vehicles, sport utility and full-sized vehicles which are generally not as fuel-efficient as smaller vehicles. Retail sales are a factor that affects the number of used vehicles sold at auction, wholesale prices of those vehicles and the conversion rates at used vehicle auctions. Additionally, higher fuel costs increase the cost of transportation and towing of vehicles and we may not be able to pass on such higher costs to our customers.

Environmental, health and safety risks could adversely affect our operating results and financial condition.

Our operations are subject to various foreign, federal, state and local environmental, health and safety laws and regulations, including those governing the emission or discharge of pollutants into the air or water, the generation, treatment, storage and release of hazardous materials and wastes and the investigation and remediation of contamination. Our failure to comply with current or future environmental, health or safety laws or to obtain and comply with permits required under such laws, could subject us to significant liability or require costly investigative, remedial or corrective actions.

In the used vehicle remarketing industry, large numbers of vehicles are stored and/or refurbished at auction facilities and during that time minor releases of fuel, motor oil and other materials may occur. We have investigated or remediated, or are currently investigating or remediating, contamination resulting from various sources, including gasoline, fuel additives (such as methyl tertiary butyl ether, or MTBE), motor oil, petroleum products and other hazardous materials released from aboveground or underground storage tanks or in connection with current or former operations conducted at our facilities. We have incurred and may in the future incur expenditures related to releases of hazardous materials, investigative, remedial or corrective actions, claims by third parties and other environmental issues, and such expenditures, individually or in the aggregate, could be significant.

We have a substantial amount of debt, which could impair our financial condition and adversely affect our ability to react to changes in our business.

As of December 31, 2019, our total corporate debt was approximately $1.9 billion, exclusive of liabilities related to our securitization facilities which are not secured by the general assets of KAR, and we had $325.0 million of borrowing capacity under our senior secured credit facilities. In addition, we had related outstanding letters of credit in the aggregate amount of $27.4 million at December 31, 2019, which would reduce the $325.0 million available for borrowings under the credit facilities.

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Our indebtedness could have important consequences including:

• limiting our ability to borrow additional amounts to fund working capital, capital expenditures, debt service requirements, execution of our business strategy, acquisitions and other purposes;

• requiring us to dedicate a substantial portion of our cash flow from operations to pay principal and interest on debt, which would reduce the funds available for other purposes, including funding future expansion;

• making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult to react quickly to, changing conditions; and

• exposing us to risks inherent in interest rate fluctuations because the majority of our indebtedness is at variable rates of interest, which could result in higher interest expenses in the event of increases in interest rates.

In addition, if we are unable to generate sufficient cash from operations to service our debt and meet other cash needs, we may be forced to reduce or delay capital expenditures, suspend or eliminate dividends, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We may not be able to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all, particularly because of our high levels of debt and the restrictions imposed by the agreement governing our Credit Facility and the indenture governing our senior notes on our ability to incur additional debt and use the proceeds from asset sales. If we must sell certain of our assets, it may negatively affect our ability to generate revenue. The inability to obtain additional financing could have a material adverse effect on our financial condition.

If we cannot make scheduled payments on our debt, we would be in default and, as a result:

• our debt holders could declare all outstanding principal and interest to be due and payable;

• the lenders under our senior secured credit facilities could terminate their commitments to lend us money and foreclose against the assets securing their borrowings; and

• we could be forced into bankruptcy or liquidation.

Furthermore, the agreement governing our Credit Facility and the indenture governing our senior notes include, and future debt instruments may include, certain restrictive covenants which could limit our ability to enter into certain transactions in the future and may adversely affect our ability to operate our business.

Future changes to tax laws, if adopted, could have an adverse effect on our business, financial condition, results of operations and cash flows.

From time to time legislative proposals at the U.S. Federal, state and international level are made that would, if enacted, make significant changes to the tax laws that apply to the Company, including changes to corporate tax rates, allocation of profits amongst jurisdictions and other changes that reduce or eliminate deductions currently available to us. Such proposed changes in tax laws, if adopted, could adversely affect our business, financial condition, results of operations and cash flows.

Changes in interest rates or market conditions could adversely impact our profitability and business.

Rising interest rates may have the effect of depressing the sales of new and used vehicles because many consumers finance their vehicle purchases and rising auto loan rates increase the cost of purchasing a vehicle. Likewise, when interest rates increase, the subprime borrowing market often tightens, making interest rates even higher for those with lower credit scores. If increased interest rates depress the sales of new and/or used vehicles, then used vehicle trade-ins to dealers and auction volumes could be negatively impacted. These factors could adversely affect ADESA’s revenues and profitability.

In addition, AFC securitizes a majority of its finance receivables on a revolving basis. Volatility and/or market disruption in the asset-backed securities market in the United States or Canada can impact AFC’s cost of financing related to, or its ability to arrange financing on acceptable terms through, its securitization facility, which could negatively affect AFC’s business and our financial condition and operations.

As noted elsewhere, a portion of our indebtedness is at variable rates of interest. As such, increases in interest rates could also result in higher interest expenses for KAR.

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We assume the settlement risk for all vehicles sold through our auctions.

We do not have recourse against sellers for any buyer’s failure to satisfy its payment obligations. Since revenue for most vehicles does not include the gross sales proceeds, failure to collect the receivables in full may result in a net loss up to the gross sales proceeds on a per vehicle basis in addition to any expenses incurred to collect the receivables and to provide the services associated with the vehicle. If we are unable to collect payments on a large number of vehicles, the resulting payment obligations to the seller and decreased fee revenues may have a material adverse effect on our results of operations and financial condition.

We are subject to extensive governmental regulations, including vehicle brokerage and auction laws and currency reporting obligations. Our business is subject to risks related to litigation and regulatory actions.

Our operations are subject to regulation, supervision and licensing under various federal, state, provincial and local authorities, agencies, statutes and ordinances, which, among other things, require us to obtain and maintain certain licenses, permits and qualifications, provide certain disclosures and notices and limit interest rates, fees and other charges. The regulations and laws that impact our company include, without limitation, the following:

• The acquisition and sale of used, leased, totaled and recovered theft vehicles are regulated by state or other local motor vehicle departments in each of the locations in which we operate.

• Some of the transport vehicles used at our auctions are regulated by the U.S. Department of Transportation or similar regulatory agencies in the other countries in which we operate.

• AFC is subject to laws in certain states and in Canada which regulate commercial lending activities and interest rates and, in certain jurisdictions, require AFC or one of its subsidiaries to be licensed.

• PWI is subject to laws, regulations and insurance licensing requirements in certain states which are applicable to the sale of vehicle service contracts.

• We are subject to various local zoning requirements with regard to the location of our auction and storage facilities, which requirements vary from location to location.

• We are subject to federal, state and international laws, directives and regulations relating to the collection, use, retention, disclosure, security and transfer of personally identifiable information (e.g., GDPR and CCPA). These laws, directives, regulations and their interpretation and enforcement continue to evolve and may be inconsistent from jurisdiction to jurisdiction.

• Certain of the Company's subsidiaries are indirectly subject to the regulations of the Consumer Financial Protection Act of 2010, or the CFPA, due to their vendor relationships with financial institutions.

• PAR is subject to laws in certain states which regulate repossession administration activities and, in certain jurisdictions, require PAR to be licensed.

• We deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations.

• In many states and provinces, regulations require that a salvage vehicle be forever “branded” with a salvage notice in order to notify prospective purchasers of the vehicle’s previous salvage status.

• Some state, provincial and local regulations limit who can purchase salvage vehicles, as well as determine whether a salvage vehicle can be sold as rebuildable or must be sold for parts or scrap only.

Changes in law or governmental regulations or interpretations of existing law or regulations could result in increased costs, reduced vehicle prices and decreased profitability for us. In addition, failure to comply with present or future laws and regulations or changes in existing laws or regulations or in their interpretation could have a material adverse effect on our operating results and financial condition.

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We are also subject from time to time to a variety of legal actions relating to our current and past business operations, including litigation relating to employment-related issues, the environment and personal injury claims. There is no guarantee that we will be successful in defending ourselves in legal and administrative actions or in asserting our rights under various laws. In addition, we could incur substantial costs in defending ourselves or in asserting our rights in such actions. The costs and other effects of pending litigation and administrative actions against us cannot be determined with certainty. Although we currently believe that no such proceedings will have a material adverse effect, there can be no assurance that the outcome of such proceedings will be as expected.

We are partially self-insured for certain losses.

We self-insure a portion of employee medical benefits under the terms of our employee health insurance program, as well as a portion of our automobile, general liability and workers’ compensation claims. We record an accrual for the claims expense related to our employee medical benefits, automobile, general liability and workers’ compensation claims based upon the expected amount of all such claims. If actual trends, including the severity of claims and medical cost inflation above expectations were to occur, our self-insured costs would increase, which could have an adverse impact on the operating results in that period.

We depend on the continued and uninterrupted service from our workforce.

Prior to 2018, none of our employees were covered by collective bargaining agreements. In 2018, a group of employees, representing less than 1% of our total employees, ratified a collective bargaining agreement. If a significant number of our employees were to become unionized or collective bargaining agreement terms were to deviate significantly from our current compensation and benefits structure, we could be subject to a substantial increase in labor and benefits expenses that we may be unable to pass through to customers for some period of time, if at all.

We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our net income.

Goodwill represents the amount by which the cost of an acquisition accounted for using the purchase method exceeds the fair value of the net assets acquired. Current accounting standards require that goodwill no longer be amortized but instead be periodically evaluated for impairment based on the fair value of the reporting unit. A significant percentage of our total assets represents goodwill. Declines in our profitability or the value of comparable companies may impact the fair value of our reporting units, which could result in a write-down of goodwill and a reduction in net income.

New accounting pronouncements or new interpretations of existing standards could require us to make adjustments to accounting policies that could adversely affect the financial statements.

The Financial Accounting Standards Board, or the FASB, the Public Company Accounting Oversight Board, the SEC, and other accounting organizations or governmental entities from time to time issue new pronouncements or new interpretations of existing accounting and auditing standards that require changes to our accounting policies and procedures and could cause us to incur additional costs. To date, we do not believe any new pronouncements or interpretations have had a material adverse effect on our financial condition or results of operations, but future pronouncements or interpretations could require the change of policies or procedures.

If the IAA spin-off does not qualify as a tax-free transaction for U.S. federal income tax purposes, the Company and its stockholders could be subject to substantial tax liabilities.

In connection with the spin-off of IAA, we received a private letter ruling from the Internal Revenue Service (the "IRS Ruling") and an opinion from our tax counsel on the basis of certain facts, representations, covenants and assumptions, substantially to the effect that, for U.S. federal income tax purposes, the distribution of IAA common shares in the spin-off qualified as a transaction that generally is tax-free to us and our stockholders, for U.S. federal income tax purposes, under Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The IRS Ruling and the opinion of tax counsel relied on, among other things, various assumptions and representations as to factual matters made by the Company and IAA, which, if inaccurate or incomplete in any material respect, could jeopardize the conclusions reached in the IRS Ruling and opinion. The opinion is not binding on the Internal Revenue Service (the “IRS”), or the courts, and notwithstanding the tax opinion, there can be no assurance that the qualification of the spin-off as a transaction under Sections 368(a)(1)(D) or 355 or other provisions of the Code will not be challenged by the IRS or by others in court, or that any such challenge would not prevail. Notwithstanding the IRS Ruling and the opinion, the IRS could determine on audit that the spin-off should be treated as a taxable transaction if it determines that any of the facts, assumptions, representations or covenants set forth in the tax opinion is not correct or has been violated, or that the spin-off should be taxable for other reasons, including as a

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result of a significant change in stock or asset ownership after the distribution, or if the IRS were to disagree with the conclusions of the tax opinion.

If the spin-off fails to qualify for tax-free treatment, we would, for U.S. federal income tax purposes, be treated as if we had sold the IAA common stock in a taxable sale for its fair market value, and our stockholders would be treated as receiving a taxable distribution in an amount equal to the fair market value of the IAA common stock received in the distribution. In addition, we and/or IAA could incur significant U.S. federal income tax liabilities or tax indemnification obligations, whether under applicable law or a tax matters agreement that we entered into with IAA, if it is ultimately determined that certain related transactions undertaken in anticipation of the spin-off are taxable.

We may be exposed to claims and liabilities as a result of the IAA spin-off, and IAA’s indemnification obligations may not fully protect us.

In connection with the spin-off, IAA agreed to indemnify the Company for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to protect us against the full amount of any liabilities that may arise, or that IAA will be able to fully satisfy its indemnification obligations. The failure to receive amounts for which we are entitled to indemnification could adversely affect our operating results and financial condition.

Risks Related to Ownership of Our Common Stock

The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders and could expose us to securities class action litigation.

You should consider an investment in our common stock to be risky, and you should invest in our common stock only if you can withstand a significant loss and wide fluctuations in the market value of your investment. Many factors could cause the market price of our common stock to rise and fall, including the following:

• our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;

• changes in earnings estimates or recommendations by securities analysts, if any, who cover our common stock;

• results of operations that are below our announced guidance or below securities analysts’ or consensus estimates or expectations;

• fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

• changes in our capital structure, such as future issuances of securities, sales of large blocks of common stock by our stockholders or our incurrence of additional debt;

• repurchases of our common stock pursuant to our share repurchase program;

• investors’ general perception of us and our industry;

• changes in general economic and market conditions;

• changes in industry conditions; and

• changes in regulatory and other dynamics.

In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if successfully defended, could be costly to defend and a distraction to management. Likewise, following periods of volatility in the market price of a company's securities, securities class action litigation could be initiated. If such litigation were introduced against us, it could result in substantial costs and a diversion of our attention and resources, which could have a material adverse effect on our business.

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Future offerings of debt or equity securities, which would rank senior to our common stock, may adversely affect the market price of our common stock.

If, in the future, we decide to issue debt or equity securities that rank senior to our common stock, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. We and, indirectly, our stockholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us.

The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public market.

Future sales by us or by our existing stockholders of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline. These sales also could impede our ability to raise future capital. Under our amended and restated certificate of incorporation, we are authorized to issue up to 400,000,000 shares of common stock, of which 128,833,452 shares of common stock were outstanding as of December 31, 2019. In addition, pursuant to a registration statement under the Securities Act, we have registered shares of common stock reserved for issuance in respect of stock options and other incentive awards granted to our officers and certain of our employees. If any of these holders cause a large number of securities to be sold in the public market, the sales could reduce the trading price of our common stock. We cannot predict the size of future sales of shares of our common stock or the effect, if any, that future sales, or the perception that such sales may occur, would have on the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and by-laws, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.

Our amended and restated certificate of incorporation and by-laws contain provisions that may be considered to have an anti-takeover effect and may delay or prevent a tender offer or other corporate transaction that a stockholder might consider to be in its best interest, including those transactions that might result in a premium over the market price for our shares.

These provisions include:

• rules regarding how our stockholders may present proposals or nominate directors for election at stockholder meetings;

• permitting our board of directors to issue preferred stock without stockholder approval;

• granting to the board of directors, and not the stockholders, the sole power to set the number of directors;

• authorizing vacancies on our board of directors to be filled only by a vote of the majority of the directors then in office and specifically denying our stockholders the right to fill vacancies in the board;

• authorizing the removal of directors only upon the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote for the election of directors; and

• prohibiting stockholder action by written consent.

These provisions apply even if an offer may be considered beneficial by some stockholders.

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You may not receive any future dividends on our common stock.

On November 30, 2012, we announced that our board of directors approved the initiation of a quarterly cash dividend on our common stock. Holders of our common stock are only entitled to receive such dividends as our board of directors may declare out of funds legally available for such payments. We are not required to declare cash dividends on our common stock. Future dividend decisions will be based on and affected by a variety of factors, including our financial condition and results of operations, contractual restrictions, including restrictive covenants contained in our Credit Agreement, the indenture governing our senior notes and AFC’s securitization facilities, capital requirements and other factors that our board of directors deems relevant. Therefore, no assurance can be given as to whether any future dividends may be declared by our board of directors or the amount thereof.

Our share repurchase program could affect the price of our common stock and increase volatility. In addition, it may be suspended or discontinued at any time, which could result in a decrease in the trading price of our common stock.

Repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of a share repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. There can be no assurance that any share repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased the shares of common stock. Although our share repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program's effectiveness. Furthermore, the program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time, which could cause the market price of our stock to decline.

In October 2016, our board of directors authorized a repurchase of up to $500 million of the Company’s outstanding common stock through October 26, 2019. Over the three-year period, all $500 million of the Company's common stock was repurchased under the October 2016 authorization. In October 2019, our board of directors authorized a repurchase of up to $300 million of the Company's outstanding common stock through October 30, 2021. As of December 31, 2019, none of the Company's common stock had been repurchased under the October 2019 authorization. No assurance can be given as to whether the board of directors will authorize additional shares for repurchase, which could cause the market value of our stock to decline.

Item 1b. Unresolved Staff Comments

None.

Item 2. Properties

The corporate headquarters of KAR Auction Services, ADESA and AFC are located in Carmel, Indiana. The facilities are leased properties, with office space being leased through 2034. At December 31, 2019, properties utilized by the ADESA business segment include 74 used vehicle auction facilities in North America, which are either owned or leased. Each auction is generally a multi-lane, drive-through facility, and may have additional buildings for reconditioning, registration, maintenance, bodywork, and other ancillary and administrative services. Each auction also has secure parking areas to store vehicles. The ADESA facilities in North America consist on average of approximately 75 acres of land per site.

Of AFC's 121 locations in North America at December 31, 2019, 84 are physically located at auction facilities (including 63 at ADESA). Each of the remaining AFC offices is strategically located in close proximity to at least one of the auctions that it serves. AFC generally leases its branches.

We regularly evaluate our capacity in all our markets and where appropriate, seek to increase capacity through the acquisition of additional land and facilities. Capacity at our facilities varies from period to period and by region as a result of various factors, including natural disasters.

Item 3. Legal Proceedings

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. Such litigation is generally not, in the opinion of management, likely to have a material adverse effect on our financial condition, results of operations or cash flows.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information and Holders of Record

KAR Auction Services' common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "KAR" and has been traded on the NYSE since December 11, 2009. As of February 14, 2020, there were two stockholders of record. Because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by the holders of record.

Issuer Purchases of Equity Securities

The following table provides information about purchases by KAR Auction Services of its shares of common stock during the quarter ended December 31, 2019:

Period

TotalNumber of

SharesPurchased

AveragePrice

Paid perShare

Total Number ofShares Purchased as

Part of PubliclyAnnounced Plans or

Programs

Approximate Dollar Value of Shares that

May Yet Be Purchased Under the Plans or

Programs (1)(Dollars in millions)

October 1 - October 31 — $ — — $ 300.0November 1 - November 30 — — — 300.0December 1 - December 31 — — — 300.0Total — $ — —

(1) 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. 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.

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Stock Price Performance Graph

The graph below shows the cumulative total stockholder return, assuming an investment of $100 and dividend reinvestment (and taking into account the value of the IAA, Inc. common shares distributed in the spin-off), for the period beginning on December 31, 2014 and ending on December 31, 2019, on each of KAR Auction Services' common stock, the Standard & Poor's 400 Midcap Index and the Standard and Poor's 500 Index. Our stock price performance shown in the following graph is not indicative of future stock price performance.

Company/Index

Base Period

12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019KAR Auction Services, Inc. $ 100 $ 110.00 $ 130.39 $ 158.99 $ 154.08 $ 191.50S&P 400 Midcap Index $ 100 $ 97.82 $ 118.11 $ 137.30 $ 122.08 $ 154.07S&P 500 Index $ 100 $ 101.38 $ 113.51 $ 138.29 $ 132.23 $ 173.86

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Item 6. Selected Financial Data

The following selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the audited consolidated financial statements and related notes thereto of KAR Auction Services, Inc. and other financial information included elsewhere in this Annual Report on Form 10-K.

Selected Financial Data of KAR Auction Services, Inc.For the Years Ended December 31, 2019, 2018, 2017, 2016 and 2015

The following consolidated financial data for the years ended December 31, 2019, 2018, 2017, 2016 and 2015 is based on our audited financial statements.

Year Ended December 31,(Dollars in millions except per share amounts) 2019 2018 2017 2016 2015Operations: Operating revenues

ADESA $ 2,429.0 $ 2,101.9 $ 1,937.5 $ 1,765.3 $ 1,427.8AFC 352.9 340.9 301.3 286.8 268.4

Total operating revenues $ 2,781.9 $ 2,442.8 $ 2,238.8 $ 2,052.1 $ 1,696.2Operating expenses (exclusive of depreciation and amortization) 2,279.1 1,930.3 1,740.8 1,595.3 1,318.8Operating profit 314.1 340.1 326.5 304.2 245.3Interest expense 189.5 191.2 163.2 137.9 90.6

Income from continuing operations 92.4 117.6 174.0 101.7 99.4Income from continuing operations per share

Basic 0.70 0.88 1.28 0.74 0.71Diluted 0.70 0.87 1.26 0.73 0.70

Weighted average shares outstanding Basic 131.6 134.3 136.3 137.6 140.1Diluted 132.9 135.7 138.0 139.1 142.3

Cash dividends declared per common share 1.08 1.40 1.31 1.19 1.08

As of December 31, 2019 2018 2017 2016 2015Financial Position: Working capital - continuing operations (1) $ 726.8 $ 450.3 $ 513.2 $ 287.1 $ 96.0Total assets from continuing operations 6,581.2 5,699.4 5,545.9 5,198.7 4,479.4Total debt, net of unamortized debt issuance costs/discounts 1,890.1 2,667.4 2,680.1 2,470.3 1,865.1Total stockholders' equity 1,650.2 1,464.2 1,484.9 1,397.3 1,386.1

Year Ended December 31, 2019 2018 2017 2016 2015Other Financial Data: Net cash provided by operating activities - continuing operations $ 380.8 $ 438.6 $ 359.3 $ 242.9 $ 325.5Capital expenditures 161.6 131.3 97.3 113.1 93.2Depreciation and amortization 188.7 172.4 171.5 152.6 132.1

___________________________________________________________________(1) Working capital is defined as current assets less current liabilities.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the "Selected Financial Data" and the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

Forward-Looking Statements

This Annual Report on Form 10-K 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-K 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," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward-looking statements. Such statements, including statements regarding our future growth; anticipated cost savings, revenue increases, credit losses and capital expenditures; 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 Item 1A "Risk Factors" of this Annual Report on Form 10-K. Some of these factors include:

• our ability to effectively maintain or update information and technology systems;

• our ability to implement and maintain measures to protect against cyber-attacks;

• significant current competition and the introduction of new competitors;

• competitive pricing pressures;

• our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements;

• our ability to meet or exceed customers' expectations, as well as develop and implement information systems responsive to customer needs;

• business development activities, including greenfields, acquisitions and integration of acquired businesses;

• costs associated with the acquisition of businesses or technologies;

• fluctuations in consumer demand for and in the supply of used, leased and salvage vehicles and the resulting impact on auction sales volumes, conversion rates and loan transaction volumes;

• any losses of key personnel;

• our ability to obtain land or renew/enter into new leases at commercially reasonable rates;

• decreases in the number of used vehicles sold at physical auctions;

• changes in the market value of vehicles auctioned;

• trends in new and used vehicle sales and incentives, including wholesale used vehicle pricing;

• the ability of consumers to lease or finance the purchase of new and/or used vehicles;

• the ability to recover or collect from delinquent or bankrupt customers;

• economic conditions including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations;

• trends in the vehicle remarketing industry;

• trends in the number of commercial vehicles being brought to auction, in particular off-lease volumes;

• changes in the volume of vehicle production, including capacity reductions at the major original equipment manufacturers;

• laws, regulations and industry standards, including changes in regulations governing the sale of used vehicles and commercial lending activities;

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• our ability to maintain our brand and protect our intellectual property;

• the costs of environmental compliance and/or the imposition of liabilities under environmental laws and regulations;

• weather, including increased expenses as a result of catastrophic events;

• general business conditions;

• our substantial amount of debt;

• restrictive covenants in our debt agreements;

• our assumption of the settlement risk for vehicles sold;

• litigation developments;

• our self-insurance for certain risks;

• interruptions to service from our workforce;

• any impairment to our goodwill or other intangible assets;

• changes in effective tax rates;

• the taxable nature of the spin-off of our former salvage auction business;

• changes to accounting standards; and

• other risks described from time to time in our filings with the SEC, including the Quarterly Reports on Form 10-Q to be filed by us in 2020.

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.

Our future growth depends on a variety of factors, including our ability to increase vehicle sold volumes and loan transaction volumes, expand our product and service offerings, including information systems development, acquire and integrate additional business entities, manage expansion, control costs in our operations, introduce fee increases, and retain our executive officers and key employees. We cannot predict whether our growth strategy will be successful. In addition, we cannot predict what portion of overall sales will be conducted through online auctions or other remarketing methods in the future and what impact this may have on our auction business.

Overview

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 physical and online auctions and through 74 whole car auction facilities in North America 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, powered by Openlane technology, ADESA offers comprehensive private label remarketing solutions to automobile manufacturers, captive finance companies and other institutions to offer vehicles via the Internet prior to arrival at the physical auction. Vehicles at ADESA's auctions 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 TradeRev, an online automotive remarketing system 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.

• The AFC segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers. At December 31, 2019, AFC conducted business at 121 locations in the United States and Canada. The Company also sells vehicle service contracts through Preferred Warranties, Inc. ("PWI").

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The holding company is maintained separately from the two reportable segments and includes expenses associated with the corporate offices, such as salaries, benefits and travel costs for our management team, certain human resources, information technology and accounting costs, and certain insurance, treasury, legal and risk management costs. Holding company interest expense includes the interest expense incurred on finance leases and the corporate debt structure. Intercompany charges relate primarily to interest on intercompany debt or receivables and certain administrative costs allocated by the holding company.

Industry Trends

Whole Car

Used vehicles sold in North America through whole car auctions, including online only volumes and mobile application volumes, were approximately 11.5 million in 2018. Data for the whole car auction industry is collected by the NAAA through an annual survey. NAAA industry volumes for 2019 have not yet been released. The NAAA industry volumes collected by the annual survey do not include online only volumes or mobile application volumes (e.g. Openlane and TradeRev), but we have included these volumes in our totals. We estimate that used vehicle auction volumes in North America in 2019 were approximately 12 million vehicles, including online only volumes and mobile application volumes. We expect that used vehicle auction volumes in North America, including online only volumes and mobile application volumes, will be over 11.5 million units in 2020, 2021 and 2022. Our estimates are based on information from the Bureau of Economic Analysis, IHS Automotive, Kontos Total Market Estimates, NAAA's annual survey and management estimates.

In addition to the traditional whole car auction market and online only venues described above, which we estimate have sold near 11 million units in each of the last few years, mobile applications, such as TradeRev, may provide an opportunity to expand our total addressable market for whole car by approximately 5 million units. We are incurring costs to grow TradeRev in the U.S. and Canada. TradeRev incurred operating losses of $71.5 million and $53.0 million for the year ended December 31, 2019 and 2018, respectively.

Automotive Finance

AFC works with independent used vehicle dealers to improve their results by providing a comprehensive set of business and financial solutions that leverages its local branches, industry experience and scale, as well as KAR affiliations. AFC's North American dealer base was comprised of approximately 16,100 dealers in 2019, and loan transactions, which includes both loans paid off and loans curtailed, were approximately 1,800,000 in 2019.

Key challenges for the independent used vehicle dealer include demand for used vehicles, disruptions in pricing of used vehicle inventory, lack of access to consumer financing and increased competition resulting from consolidation in the used vehicle dealer industry. 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.

Seasonality

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 related services associated with our whole car auctions, and from dealer financing fees, interest income and other service 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.

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Results of Operations

Overview of Results of KAR Auction Services, Inc. for the Years Ended December 31, 2019 and 2018:

Year Ended

December 31,(Dollars in millions except per share amounts) 2019 2018Revenues

Auction fees and services revenue $ 2,133.5 $ 1,985.1Purchased vehicle sales 295.5 116.8Finance-related revenue 352.9 340.9

Total revenues 2,781.9 2,442.8Cost of services* 1,617.1 1,321.5Gross profit* 1,164.8 1,121.3Selling, general and administrative 662.0 608.8Depreciation and amortization 188.7 172.4Operating profit 314.1 340.1Interest expense 189.5 191.2Other income, net (7.7) (3.0)Loss on extinguishment of debt 2.2 —Income from continuing operations before income taxes 130.1 151.9Income taxes 37.7 34.3Net income from continuing operations 92.4 117.6Net income from discontinued operations 96.1 210.4Net income $ 188.5 $ 328.0Net income from continuing operations per share

Basic $ 0.70 $ 0.88Diluted $ 0.70 $ 0.87

* Exclusive of depreciation and amortization

Overview

For the year ended December 31, 2019, we had revenue of $2,781.9 million compared with revenue of $2,442.8 million for the year ended December 31, 2018, an increase of 14%. Businesses acquired accounted for an increase in revenue of $193.0 million or 7% 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 increased $16.3 million, or 9%, to $188.7 million for the year ended December 31, 2019, compared with $172.4 million for the year ended December 31, 2018. The increase in depreciation and amortization was primarily the result of certain assets placed in service over the last twelve months and depreciation and amortization for the assets of businesses acquired in 2019.

Interest Expense

Interest expense decreased $1.7 million, or 1%, to $189.5 million for the year ended December 31, 2019, compared with $191.2 million for the year ended December 31, 2018. The decrease was primarily attributable to a decrease of approximately $447.5 million in the average outstanding balance of corporate debt for the year ended December 31, 2019 compared with the year ended December 31, 2018, resulting from the pay down of debt of approximately $1.3 billion in connection with the spin-off of IAA on June 28, 2019 and a net increase in term loan debt of approximately $0.5 billion in connection with the debt refinancing on September 19, 2019, partially offset by an increase in the weighted average interest rate for the same period of approximately 0.3%.

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Loss on Extinguishment of Debt

In September 2019, we amended our Credit Agreement and recorded a $2.2 million pretax charge primarily resulting from the write-off of unamortized debt issue costs associated with Term Loan B-4 and Term Loan B-5.

Income Taxes

We had an effective tax rate of 29.0% for the year ended December 31, 2019, compared with an effective tax rate of 22.6% for the year ended December 31, 2018. The lower effective tax rate for the year ended December 31, 2018 was the result of favorable state tax law changes and higher deductions for stock compensation in 2018.

Net Income from Discontinued Operations

On June 28, 2019, the Company completed the separation ("Separation") of its salvage auction business, IAA, through a spin-off, creating a new independent publicly traded salvage auction company. As such, the financial results of IAA have been accounted for as discontinued operations for all periods presented. For the year ended December 31, 2019 and 2018, the Company's financial statements included income from discontinued operations of $96.1 million and $210.4 million, respectively. The operating results included one-time transaction costs of approximately $31.3 million and $8.1 million for the year ended December 31, 2019 and 2018, respectively, in connection with the Separation of the two companies. These costs consisted of consulting and professional fees associated with preparing for and executing the spin-off. For a further discussion, reference Note 4 of the notes to the consolidated financial statements.

Impact of Foreign Currency

The strengthening of the U.S. dollar has impacted the reporting of our Canadian operations in U.S. dollars. For the year ended December 31, 2019, fluctuations in the Canadian exchange rate decreased revenue by $7.5 million, operating profit by $1.6 million, net income by $0.6 million and net income per diluted share by less than $0.01.

ADESA Results

Year Ended

December 31,(Dollars in millions, except per vehicle amounts) 2019 2018Auction fees and services revenue $ 2,133.5 $ 1,985.1Purchased vehicle sales 295.5 116.8Total ADESA revenue 2,429.0 2,101.9Cost of services* 1,520.7 1,230.8Gross profit* 908.3 871.1Selling, general and administrative 494.3 435.8Depreciation and amortization 149.9 127.5Operating profit $ 264.1 $ 307.8

Vehicles sold 3,784,000 3,472,000 Institutional vehicles sold in North America 2,653,000 2,401,000 Dealer consignment vehicles sold in North America 1,018,000 1,027,000 Vehicles sold in Europe 113,000 44,000 Percentage of vehicles sold online 58% 54% Conversion rate at North American physical auctions 62.8% 61.6%Physical auction revenue per vehicle sold, excluding purchased vehicles $ 884 $ 844Online only revenue per vehicle sold, excluding purchased vehicles $ 149 $ 121

* Exclusive of depreciation and amortization

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Revenue

Revenue from ADESA increased $327.1 million, or 16%, to $2,429.0 million for the year ended December 31, 2019, compared with $2,101.9 million for the year ended December 31, 2018. The increase in revenue was the result of an increase in the number of vehicles sold and increased proceeds from purchased vehicle sales, partially offset by a decrease in average revenue per vehicle sold, excluding purchased vehicle sales. Businesses acquired in the last 12 months accounted for an increase in revenue of $193.0 million, of which $131.7 million was included in "Purchased vehicle sales." The increase in revenue included the impact of a decrease in revenue of $6.9 million due to fluctuations in the Canadian exchange rate.

The increase in vehicles sold was primarily attributable to an 11% increase in institutional volume (10% increase excluding acquisitions), including vehicles sold on our online only platform, as well as a 3% increase in dealer consignment units sold for the year ended December 31, 2019 compared with the year ended December 31, 2018. Online sales volume for ADESA represented approximately 58% of the total vehicles sold in 2019, compared with approximately 54% in 2018. "Online sales" includes the following: (i) selling vehicles directly from a dealership or other interim storage location; (ii) online solutions that offer vehicles for sale while in transit to auction locations; (iii) vehicles sold on the TradeRev platform; (iv) vehicle sales in Europe, including units sold by COTW; (v) simultaneously broadcasting video and audio of the physical auctions to online bidders (ADESA Simulcast); and (vi) bulletin-board or real-time online auctions (DealerBlock®). Online only sales, which do not include vehicles sold on ADESA Simulcast or DealerBlock, accounted for approximately 73% of ADESA's North American online sales volume. ADESA sold approximately 1,533,000 (including approximately 157,000 from TradeRev) and 1,304,000 (including approximately 117,000 from TradeRev) vehicles through its North American online only offerings in 2019 and 2018, respectively. For the year ended December 31, 2019, dealer consignment vehicles represented approximately 40% of used vehicles sold at ADESA physical auction locations, compared with approximately 42% for the year ended December 31, 2018. Vehicles sold at physical auction locations increased approximately 1% in 2019, compared with 2018. The used vehicle conversion percentage at North American physical auction locations, calculated as the number of vehicles sold as a percentage of the number of vehicles entered for sale at our ADESA auctions, increased to 62.8% for the year ended December 31, 2019, compared with 61.6% for the year ended December 31, 2018.

Physical auction revenue per vehicle sold increased $40, or 5%, to $884 for the year ended December 31, 2019, compared with $844 for the year ended December 31, 2018. Physical auction revenue per vehicle sold includes revenue from seller and buyer auction fees and ancillary and other related services, which includes non-auction services and excludes purchased vehicle sales. The increase in physical auction revenue per vehicle sold was primarily attributable to an increase in lower margin ancillary and other related services revenue and auction fees related to higher average transaction prices, partially offset by a decrease in physical auction revenue per vehicle sold of $3 due to fluctuation in the Canadian exchange rate.

Online only auction revenue per vehicle sold increased $96 to $235 for the year ended December 31, 2019, compared with $139 for the year ended December 31, 2018. The increase in online only auction revenue per vehicle sold was attributable to an increase in purchased vehicle sales associated with the ADESA Assurance Program, the increase in TradeRev revenue and the inclusion of CarsOnTheWeb sales. The entire selling price of the purchased vehicles sold at auction is recorded as revenue ("Purchased vehicle sales"). Excluding purchased vehicle sales, online only revenue per vehicle would have been $149 and $121 for the year ended December 31, 2019 and 2018, respectively. The $28 increase in online only revenue per vehicle was attributable to increased revenue per vehicle for units sold on the TradeRev platform and the addition of CarsOnTheWeb.

Gross Profit

For the year ended December 31, 2019, gross profit for ADESA increased $37.2 million, or 4%, to $908.3 million, compared with $871.1 million for the year ended December 31, 2018. Gross profit for ADESA was 37.4% of revenue for the year ended December 31, 2019, compared with 41.4% of revenue for the year ended December 31, 2018. Gross profit as a percentage of revenue decreased for the year ended December 31, 2019 as compared with the year ended December 31, 2018 as a result of an increase in purchased vehicle sales primarily related to the acquisition of COTW and increased activity under ADESA Assurance. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 42.6% and 43.9% for the year ended December 31, 2019 and 2018, respectively. The remaining decrease in gross profit as a percentage of revenue relates to growth in lower margin ancillary and related services. Businesses acquired in the last 12 months accounted for an increase in cost of services of $164.8 million for the year ended December 31, 2019.

For the year ended December 31, 2019, High Tech Locksmiths, a subsidiary of ADESA, incurred an inventory loss of approximately $5.4 million. In December 2019, the Company recovered approximately $4 million related to expenses incurred in previous quarters.

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Selling, General and Administrative

Selling, general and administrative expenses for the ADESA segment increased $58.5 million, or 13%, to $494.3 million for the year ended December 31, 2019, compared with $435.8 million for the year ended December 31, 2018, primarily due to increases in costs associated with TradeRev aggregating $25.4 million, acquisitions of $21.2 million, incentive-based compensation of $6.6 million, information technology costs of $6.1 million, severance of $3.7 million, professional fees of $1.7 million, benefit related expense of $1.7 million, telecom costs of $1.0 million and other miscellaneous expenses aggregating $1.3 million, partially offset by a decrease in compensation expense of $3.9 million, fluctuations in the Canadian exchange rate of $2.0 million, and decreases in marketing costs of $1.6 million, stock-based compensation of $1.5 million and travel expenses of $1.2 million.

AFC Results

Year Ended

December 31,(Dollars in millions except volumes and per loan amounts) 2019 2018Finance-related revenue

Interest and fee income $ 342.1 $ 327.3Other revenue 10.9 13.1Provision for credit losses (35.3) (32.9)Warranty contract revenue 35.2 33.4Total AFC revenue 352.9 340.9

Cost of services* 96.4 90.7Gross profit* 256.5 250.2Selling, general and administrative 25.6 30.7Depreciation and amortization 10.3 16.0Operating profit $ 220.6 $ 203.5

Loan transactions 1,783,000 1,760,000Revenue per loan transaction, excluding "Warranty contract revenue" $ 178 $ 175

* Exclusive of depreciation and amortization

Revenue

For the year ended December 31, 2019, AFC revenue increased $12.0 million, or 4%, to $352.9 million, compared with $340.9 million for the year ended December 31, 2018. The increase in revenue was the result of a 2% increase in revenue per loan transaction and a 1% increase in loan transactions. The increase in revenue included the impact of a decrease in revenue of $0.6 million due to fluctuations in the Canadian exchange rate.

Revenue per loan transaction, which includes both loans paid off and loans curtailed, increased $3, or 2%, primarily as a result of an increase in interest yield as a result of prime rate increases and an increase in average loan values, partially offset by a decrease in floorplan fee per unit and an increase in provision for credit losses for the year ended December 31, 2019. Revenue per loan transaction excludes "Warranty contract revenue."

The provision for credit losses remained constant at 1.7% of the average managed receivables for the year ended December 31, 2019 and 2018. The provision for credit losses is expected to be under 2%, annually, of the average managed receivables balance. However, the actual losses in any particular quarter could deviate from this range.

Gross Profit

For the year ended December 31, 2019, gross profit for the AFC segment increased $6.3 million, or 3%, to $256.5 million, or 72.7% of revenue, compared with $250.2 million, or 73.4% of revenue, for the year ended December 31, 2018. The decrease in gross profit as a percent of revenue was primarily the result of a 6% increase in cost of services. The increase in cost of services was the result of increases in PWI expenses of $3.7 million, compensation expense of $2.4 million, travel expenses of $1.6 million and other miscellaneous expenses aggregating $0.5 million, partially offset by decreases in lot checks of $1.7 million and incentive-based compensation of $0.8 million.

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Selling, General and Administrative

Selling, general and administrative expenses at AFC decreased $5.1 million, or 17%, to $25.6 million for the year ended December 31, 2019, compared with $30.7 million for the year ended December 31, 2018 primarily as a result of decreases in travel expenses of $1.7 million, incentive-based compensation of $1.6 million, compensation expense of $1.1 million and stock-based compensation expense of $0.8 million, partially offset by other miscellaneous expenses aggregating $0.1 million.

Holding Company Results

Year Ended

December 31,(Dollars in millions) 2019 2018Selling, general and administrative $ 142.1 $ 142.3Depreciation and amortization 28.5 28.9Operating loss $ (170.6) $ (171.2)

Selling, General and Administrative

For the year ended December 31, 2019, selling, general and administrative expenses at the holding company decreased $0.2 million, or less than 1%, to $142.1 million, compared with $142.3 million for the year ended December 31, 2018. For the year ended December 31, 2019 compared with the year ended December 31, 2018, there were decreases in incentive-based compensation of $5.7 million, compensation expense of $4.3 million, professional fees of $1.3 million and other miscellaneous expenses aggregating $3.9 million, partially offset by increases in severance of $5.7 million, information technology costs of $5.1 million, stock-based compensation of $2.2 million and telecom costs of $2.0 million.

Overview of Results of KAR Auction Services, Inc. for the Year Ended December 31, 2017:

An overview of the results of KAR Auction Services, Inc. for the year ended December 31, 2017 was included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 21, 2019.

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Overview of Results of KAR Auction Services, Inc. for the Three Months Ended December 31, 2019 and 2018:

Three Months Ended

December 31,(Dollars in millions except per share amounts) 2019 2018Revenues

Auction fees and services revenue $ 504.0 $ 475.3Purchased vehicle sales 79.3 33.2Finance-related revenue 88.0 85.3

Total revenues 671.3 593.8Cost of services* 394.9 332.3Gross profit* 276.4 261.5Selling, general and administrative 164.7 148.7Depreciation and amortization 50.1 42.6Operating profit 61.6 70.2Interest expense 39.5 52.5Other (income) expense, net (2.5) 0.8Income from continuing operations before income taxes 24.6 16.9Income taxes 9.3 1.8Net income from continuing operations 15.3 15.1Net income from discontinued operations 4.5 52.2Net income $ 19.8 $ 67.3Net income from continuing operations per share

Basic $ 0.12 $ 0.11Diluted $ 0.12 $ 0.11

* Exclusive of depreciation and amortization

Overview

For the three months ended December 31, 2019, we had revenue of $671.3 million compared with revenue of $593.8 million for the three months ended December 31, 2018, an increase of 13%. Businesses acquired accounted for an increase in revenue of $55.1 million or 8% 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 increased $7.5 million, or 18%, to $50.1 million for the three months ended December 31, 2019, compared with $42.6 million for the three months ended December 31, 2018. The increase in depreciation and amortization was primarily the result of certain assets placed in service over the last twelve months and depreciation and amortization for the asset of businesses acquired in 2019.

Interest Expense

Interest expense decreased $13.0 million, or 25%, to $39.5 million for the three months ended December 31, 2019, compared with $52.5 million for the three months ended December 31, 2018. The decrease was primarily attributable to a decrease of approximately $793.8 million in the average outstanding balance of corporate debt for the three months ended December 31, 2019 compared with the three months ended December 31, 2018, resulting from the pay down of debt of approximately $1.3 billion in connection with the spin-off of IAA on June 28, 2019, as well as a decrease in the weighted average interest rate for the same period of approximately 0.3%. In addition, there was a decrease in interest expense at AFC of $1.2 million, which resulted from a decrease in incremental interest rates for the three months ended December 31, 2019, as compared with the three months ended December 31, 2018.

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Income Taxes

We had an effective tax rate of 37.8% for the three months ended December 31, 2019, compared with an effective tax rate of 10.7% for the three months ended December 31, 2018. Excluding the effect of the discrete items, our effective tax rate for the three months ended December 31, 2019 and 2018 would have been 32.7% and 29.6%, respectively.

Net Income from Discontinued Operations

On June 28, 2019, the Company completed the Separation of its salvage auction business, IAA, through a spin-off, creating a new independent publicly traded salvage auction company. As such, the financial results of IAA have been accounted for as discontinued operations for all periods presented. For the three months ended December 31, 2019 and 2018, the Company's financial statements included income from discontinued operations of $4.5 million and $52.2 million, respectively. The $4.5 million recorded for the three months ended December 31, 2019 related to income taxes. For further discussion, reference Note 4 of the notes to the consolidated financial statements.

Impact of Foreign Currency

For the three months ended December 31, 2019, the average Canadian exchange rate was consistent with the rate for the three months ended December 31, 2018.

ADESA Results

Three Months Ended

December 31,(Dollars in millions, except per vehicle amounts) 2019 2018Auction fees and services revenue $ 504.0 $ 475.3Purchased vehicle sales 79.3 33.2Total ADESA revenue 583.3 508.5Cost of services* 370.9 309.8Gross profit* 212.4 198.7Selling, general and administrative 124.1 106.9Depreciation and amortization 39.7 33.1Operating profit $ 48.6 $ 58.7

Vehicles sold 887,000 811,000 Institutional vehicles sold in North America 623,000 568,000 Dealer consignment vehicles sold in North America 234,000 233,000 Vehicles sold in Europe 30,000 10,000 Percentage of vehicles sold online 59% 54% Conversion rate at North American physical auctions 58.4% 58.5%Physical auction revenue per vehicle sold, excluding purchased vehicles $ 886 $ 868Online only revenue per vehicle sold, excluding purchased vehicles $ 155 $ 122

* Exclusive of depreciation and amortization

Revenue

Revenue from ADESA increased $74.8 million, or 15%, to $583.3 million for the three months ended December 31, 2019, compared with $508.5 million for the three months ended December 31, 2018. The increase in revenue was the result of an increase in the number of vehicles sold and increased proceeds from purchased vehicle sales, partially offset by a decrease in average revenue per vehicle, excluding purchased vehicle sales. Businesses acquired in the last 12 months accounted for an increase in revenue of $55.1 million, of which $37.7 million was included in "Purchased vehicle sales."

The increase in vehicles sold was primarily attributable to an 11% increase in institutional volume (9% increase excluding acquisitions), including vehicles sold on our online only platform, as well as a 6% increase in dealer consignment units sold for the three months ended December 31, 2019 compared with the three months ended December 31, 2018. Online sales volume for ADESA represented approximately 59% of the total vehicles sold in the fourth quarter of 2019, compared with approximately 54% in the fourth quarter of 2018. "Online sales" includes the following: (i) selling vehicles directly from a

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dealership or other interim storage location; (ii) online solutions that offer vehicles for sale while in transit to auction locations; (iii) vehicles sold on the TradeRev platform; (iv) vehicle sales in Europe, including units sold by COTW; (v) simultaneously broadcasting video and audio of the physical auctions to online bidders (ADESA Simulcast); and (vi) bulletin-board or real-time online auctions (DealerBlock®). Online only sales, which do not include vehicles sold on ADESA Simulcast or DealerBlock, accounted for approximately 73% of ADESA's North American online sales volume. ADESA sold approximately 355,000 (including 38,000 from TradeRev) and 306,000 (including 31,000 from TradeRev) vehicles through its North American online only offerings in the fourth quarter of 2019 and 2018, respectively. For the three months ended December 31, 2019, dealer consignment vehicles represented approximately 39% of used vehicles sold at ADESA physical auction locations, compared with approximately 40% for the three months ended December 31, 2018. Vehicles sold at physical auction locations increased approximately 1% in the fourth quarter of 2019, compared with the fourth quarter of 2018. The used vehicle conversion percentage at North American physical auction locations, calculated as the number of vehicles sold as a percentage of the number of vehicles entered for sale at our ADESA auctions, decreased to 58.4% for the three months ended December 31, 2019, compared with 58.5% for the three months ended December 31, 2018.

Physical auction revenue per vehicle sold increased $18, or 2%, to $886 for the three months ended December 31, 2019, compared with $868 for the three months ended December 31, 2018. Physical auction revenue per vehicle sold includes revenue from seller and buyer auction fees and ancillary and other related services, which includes non-auction services and excludes the sale of purchased vehicles. The increase in physical auction revenue per vehicle sold was primarily attributable to an increase in lower margin ancillary and other related services revenue and auction fees related to higher average transaction prices.

Online only auction revenue per vehicle sold increased $123 to $259 for the three months ended December 31, 2019, compared with $136 for the three months ended December 31, 2018. The increase in online only auction revenue per vehicle sold was attributable to an increase in purchased vehicle sales associated with the ADESA Assurance Program, the increase in TradeRev revenue and the inclusion of CarsOnTheWeb sales. The entire selling price of the purchased vehicles sold at auction is recorded as revenue ("Purchased vehicle sales"). Excluding purchased vehicle sales, online only revenue per vehicle would have been $155 and $122 for the three months ended December 31, 2019 and 2018, respectively. The $33 increase in online only revenue per vehicle was attributable to increased revenue per vehicle for units sold on the TradeRev platform and the addition of CarsOnTheWeb.

Gross Profit

For the three months ended December 31, 2019, gross profit for ADESA increased $13.7 million, or 7%, to $212.4 million, compared with $198.7 million for the three months ended December 31, 2018. Gross profit for ADESA was 36.4% of revenue for the three months ended December 31, 2019, compared with 39.1% of revenue for the three months ended December 31, 2018. Gross profit as a percentage of revenue decreased for the three months ended December 31, 2019 as compared with the three months ended December 31, 2018 as a result of an increase in purchased vehicle sales primarily related to the acquisition of COTW and increased activity under ADESA Assurance. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 42.1% and 41.8% for the three months ended December 31, 2019 and 2018, respectively. Businesses acquired in the last 12 months accounted for an increase in cost of services of $47.1 million for the three months ended December 31, 2019. In addition, in December 2019, the Company recovered approximately $4 million related to expenses incurred at High Tech Locksmiths in previous quarters.

Selling, General and Administrative

Selling, general and administrative expenses for the ADESA segment increased $17.2 million, or 16%, to $124.1 million for the three months ended December 31, 2019, compared with $106.9 million for the three months ended December 31, 2018, primarily due to increases in incentive-based compensation of $6.1 million, costs associated with TradeRev aggregating $5.6 million, acquisitions of $4.7 million, severance of $3.4 million and other miscellaneous expenses aggregating $1.3 million, partially offset by decreases in compensation expense of $2.6 million and professional fees of $1.3 million.

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AFC Results

Three Months Ended

December 31,(Dollars in millions except volumes and per loan amounts) 2019 2018Finance-related revenue

Interest and fee income $ 86.0 $ 84.2Other revenue 2.8 3.5Provision for credit losses (9.8) (10.8)Warranty contract revenue 9.0 8.4Total AFC revenue 88.0 85.3

Cost of services* 24.0 22.5Gross profit* 64.0 62.8Selling, general and administrative 6.1 7.1Depreciation and amortization 2.7 2.4Operating profit $ 55.2 $ 53.3

Loan transactions 443,000 428,000Revenue per loan transaction, excluding "Warranty contract revenue" $ 178 $ 180

* Exclusive of depreciation and amortization

Revenue

For the three months ended December 31, 2019, AFC revenue increased $2.7 million, or 3%, to $88.0 million, compared with $85.3 million for the three months ended December 31, 2018. The increase in revenue was the result of a 4% increase in loan transactions, partially offset by a 1% decrease in revenue per loan transaction.

Revenue per loan transaction, which includes both loans paid off and loans curtailed, decreased $2, or 1%, primarily as a result of a decrease in interest yield as a result of prime rate changes, a decrease in floorplan fee per unit and a decrease in average portfolio duration, partially offset by a decrease in provision for credit losses for the three months ended December 31, 2019. Revenue per loan transaction excludes "Warranty contract revenue."

The provision for credit losses decreased to 1.9% of the average managed receivables for the three months ended December 31, 2019 from 2.2% for the three months ended December 31, 2018. The provision for credit losses is expected to be under 2%, annually, of the average managed receivables balance. However, the actual losses in any particular quarter could deviate from this range.

Gross Profit

For the three months ended December 31, 2019, gross profit for the AFC segment increased $1.2 million, or 2%, to $64.0 million, or 72.7% of revenue, compared with $62.8 million, or 73.6% of revenue, for the three months ended December 31, 2018, primarily as a result of a 3% increase in revenue, partially offset by a 7% increase in cost of services. The increase in cost of services was the result of increases in PWI expenses of $1.0 million, compensation expense of $0.6 million and travel expenses of $0.4 million, partially offset by a decrease in collection expenses of $0.5 million.

Selling, General and Administrative

Selling, general and administrative expenses at AFC decreased $1.0 million, or 14%, to $6.1 million for the three months ended December 31, 2019, compared with $7.1 million for the three months ended December 31, 2018. The decrease in selling, general and administrative expenses was primarily attributable to decreases in travel expenses of $0.5 million, incentive-based compensation of $0.4 million and other miscellaneous expenses aggregating $0.1 million.

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Holding Company Results

Three Months Ended

December 31,(Dollars in millions) 2019 2018Selling, general and administrative $ 34.5 $ 34.7Depreciation and amortization 7.7 7.1Operating loss $ (42.2) $ (41.8)

Selling, General and Administrative

For the three months ended December 31, 2019, selling, general and administrative expenses at the holding company decreased $0.2 million, or 1%, to $34.5 million, compared with $34.7 million for the three months ended December 31, 2018. For the three months ended December 31, 2019 compared with the three months ended December 31, 2018, there were decreases in professional fees of $2.7 million, incentive-based compensation of $1.8 million, compensation expense of $1.7 million, medical expenses of $0.8 million and other miscellaneous expenses aggregating $0.4 million, partially offset by increases in severance of $4.4 million, information technology costs of $1.7 million and stock-based compensation of $1.1 million.

LIQUIDITY AND CAPITAL RESOURCES

We believe that the significant indicators of liquidity for our business are cash on hand, cash flow from operations, working capital and amounts available under our Credit Facility. Our principal sources of liquidity consist of cash generated by operations and borrowings under our Revolving Credit Facility.

December 31,(Dollars in millions) 2019 2018Cash and cash equivalents $ 507.6 $ 277.1Restricted cash 53.3 27.6Working capital 726.8 450.3Amounts available under revolving credit facility* 325.0 350.0Cash flow from operations for the year ended 380.8 438.6

* There were related outstanding letters of credit totaling approximately $27.4 million and $32.9 million at December 31, 2019 and 2018, respectively, which reduced the amount available for borrowings under the revolving credit facility.

We regularly evaluate alternatives for our capital structure and liquidity given our expected cash flows, growth and operating capital requirements as well as capital market conditions.

Working Capital

A substantial amount of our working capital is generated from the payments received for services provided. The majority of our working capital needs are short-term in nature, usually less than a week in duration. Due to the decentralized nature of the business, payments for most vehicles purchased are received at each auction and branch. Most of the financial institutions place a temporary hold on the availability of the funds deposited that generally can range up to two business days, resulting in cash in our accounts and on our balance sheet that is unavailable for use until it is made available by the various financial institutions. There are outstanding checks (book overdrafts) to sellers and vendors included in current liabilities. Because a portion of these outstanding checks for operations in the U.S. are drawn upon bank accounts at financial institutions other than the financial institutions that hold the cash, we cannot offset all the cash and the outstanding checks on our balance sheet. Changes in working capital vary from quarter-to-quarter as a result of the timing of collections and disbursements of funds to consignors from auctions held near period end.

Approximately $153.2 million of available cash was held by our foreign subsidiaries at December 31, 2019. If funds held by our foreign subsidiaries were to be repatriated, state and local income tax expense and foreign withholding tax expense would need to be recognized, net of any applicable foreign tax credits. We expect any applicable taxes to be less than $8 million.

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AFC offers short-term inventory-secured financing, also known as floorplan financing, to independent used vehicle dealers. Financing is primarily provided for terms of 30 to 90 days. AFC principally generates its funding through the sale of its receivables. The receivables sold pursuant to the securitization agreements are accounted for as secured borrowings. For further discussion of AFC's securitization arrangements, see "Securitization Facilities."

In February 2018, the Company announced that its board of directors had approved a plan to pursue the separation of its salvage auction business, IAA, through a spin-off. As part of the spin-off, the Company raised $1.3 billion in debt, consisting of $800 million in term loans and $500 million aggregate principal amount of 5.50% Senior Notes. This debt was transferred to IAA, upon which IAA paid a cash dividend to KAR of approximately $1,278.0 million. The dividend amount was used to prepay a portion of KAR's term loans, as further discussed in the Credit Facilities discussion below.

Credit Facilities

In June 2019, the Company prepaid approximately $518.6 million and $759.4 million of Term Loan B-4 and Term Loan B-5, respectively, with cash received from IAA in connection with the Separation.

On September 19, 2019, we entered into the Third Amendment Agreement (the "Third Amendment") to the Credit Agreement. The Third Amendment provided for, among other things, (i) the refinancing of the existing Term Loan B-4 and Term Loan B-5 with the new Term Loan B-6, (ii) repayment of the 2017 Revolving Credit Facility and (iii) the $325 million Revolving Credit Facility.

The Credit Facility is available for letters of credit, working capital, permitted acquisitions and general corporatepurposes. The Revolving Credit Facility also includes a $50 million sub-limit for issuance of letters of credit and a $60 million sub-limit for swing line loans.

Term Loan B-6 was issued at a discount of $2.4 million and the discount is being amortized using the effective interest method to interest expense over the term of the loan. Term Loan B-6 is payable in quarterly installments equal to 0.25% of the original aggregate principal amount. Such payments commenced on December 31, 2019, with the balance payable at the maturity date.

As set forth in the Credit Agreement, the Tranche B-6 Term Loans bear interest at an adjusted LIBOR rate plus 2.25% or at the Company’s election, Base Rate (as defined in the Credit Agreement) plus 1.25%. Loans under the Revolving Credit Facility will bear interest at a rate calculated based on the type of borrowing (either adjusted LIBOR or Base Rate) and the Company’s Consolidated Senior Secured Net Leverage Ratio, with such rate ranging from 2.25% to 1.75% for adjusted LIBOR loans and from 1.25% to 0.75% for Base Rate 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 Facility based on the Company’s Consolidated Senior Secured Net Leverage Ratio, from time to time. The rate on Term Loan B-6 was 4.06% at December 31, 2019.

On December 31, 2019, $947.6 million was outstanding on Term Loan B-6 and there were no borrowings on the Revolving Credit Facility. In addition, we had related outstanding letters of credit in the aggregate amount of $27.4 million and $32.9 million at December 31, 2019 and December 31, 2018, respectively, which reduce the amount available for borrowings under the revolving credit facility. Our Canadian operations also have a C$8 million line of credit which was undrawn at December 31, 2019. However, there were related letters of credit outstanding totaling approximately C$1.0 million at December 31, 2019, which reduce amounts available under the Canadian line of credit. In addition, our European operations have lines of credit aggregating $33.6 million (€30 million) of which $19.3 million was drawn at December 31, 2019.

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 certain restrictive loan covenants, including, among others, a financial covenant requiring that a Consolidated Senior Secured Net Leverage Ratio be satisfied as of the last day of each fiscal quarter if revolving loans are outstanding, and covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, consummate change of control transactions, dispose of assets, pay dividends, make investments and engage in certain transactions with affiliates. The Consolidated Senior Secured Net Leverage Ratio is calculated as total senior secured debt divided by the last four quarters consolidated Adjusted EBITDA. Senior secured net debt includes term loan borrowings, revolving loans and finance lease liabilities less available cash as defined in the Credit Agreement. Consolidated Adjusted EBITDA is EBITDA (earnings before

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interest expense, income taxes, depreciation and amortization) adjusted to exclude among other things (a) gains and losses from asset sales; (b) unrealized foreign currency translation gains and losses in respect of indebtedness; (c) certain non-recurring gains and losses; (d) stock-based compensation expense; (e) certain other non-cash amounts included in the determination of net income; (f) charges and revenue reductions resulting from purchase accounting; (g) minority interest; (h) consulting expenses incurred for cost reduction, operating restructuring and business improvement efforts; (i) expenses realized upon the termination of employees and the termination or cancellation of leases, software licenses or other contracts in connection with the operational restructuring and business improvement efforts; (j) expenses incurred in connection with permitted acquisitions; (k) any impairment charges or write-offs of intangibles; and (l) any extraordinary, unusual or non-recurring charges, expenses or losses.

Certain covenants contained within the Credit Agreement are critical to an investor's understanding of our financial liquidity, as the failure to maintain compliance with these covenants could result in a default and allow our lenders to declare all amounts borrowed immediately due and payable. The Consolidated Senior Secured Net Leverage Ratio is required to be met when there are revolving loans outstanding under our Credit Agreement. For the quarter ended December 31, 2019, the Consolidated Senior Secured Net Leverage Ratio could not exceed 3.5. Our Consolidated Senior Secured Net Leverage Ratio, including finance lease obligations of $27.3 million, was 1.7 at December 31, 2019.

In addition, the Credit Agreement and the indenture governing our senior notes (see Note 12, "Long-Term Debt" for additional information) contain certain financial and operational restrictions that limit our ability to pay dividends and other distributions, make certain acquisitions or investments, incur indebtedness, grant liens and sell assets. The applicable covenants in the Credit Agreement affect our operating flexibility by, among other things, restricting our ability to incur expenses and indebtedness that could be used to grow the business, as well as to fund general corporate purposes. We were in compliance with the covenants in the Credit Agreement and the indenture governing our senior notes at December 31, 2019.

We believe our sources of liquidity from our cash and cash equivalents on hand, working capital, cash provided by operating activities, and availability under our Credit Facility are sufficient to meet our short and long-term operating needs for the foreseeable future. In addition, we believe the previously mentioned sources of liquidity will be sufficient to fund our capital requirements, debt service payments, announced acquisitions and dividends for the next twelve months.

Senior Notes

On May 31, 2017, we issued $950 million of 5.125% senior notes due June 1, 2025. The Company pays interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year, which commenced on December 1, 2017. We may redeem the senior notes, in whole or in part, at any time prior to June 1, 2020 at a redemption price equal to 100% of the principal amount plus a make-whole premium and thereafter at a premium that declines ratably to par in 2023. The senior notes are guaranteed by the Subsidiary Guarantors.

Securitization Facilities

AFC sells the majority of its U.S. dollar denominated finance receivables on a revolving basis and without recourse to AFC Funding Corporation. 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 28, 2022. AFC Funding Corporation had committed liquidity of $1.70 billion for U.S. finance receivables at December 31, 2019.

We also have an agreement for the securitization of AFCI's receivables, which expires on January 28, 2022. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$175 million at December 31, 2019. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings.

AFC managed total finance receivables of $2,115.2 million and $2,014.8 million at December 31, 2019 and December 31, 2018, respectively. AFC's allowance for losses was $15.0 million and $14.0 million at December 31, 2019 and December 31, 2018, respectively.

As of December 31, 2019 and December 31, 2018, $2,061.6 million and $1,973.2 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 $1,461.2 million and $1,445.3 million of obligations collateralized by finance receivables at December 31, 2019 and December 31, 2018, respectively. The amount of the cash reserve depends on circumstances which are set forth in the securitization agreement. There were unamortized securitization issuance costs of approximately $13.2 million and $19.4 million at December 31, 2019 and December 31, 2018, respectively. After the occurrence of a termination event, as defined in the U.S. securitization agreement, the banks may, and could, cause the stock of AFC Funding Corporation to be transferred to

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the bank facility, though as a practical matter the bank facility would look to the liquidation of the receivables under the transaction documents as their primary remedy.

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 December 31, 2019, we were in compliance with the covenants in the securitization agreements.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA, as presented herein, are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States, or GAAP. They are not measurements of our financial performance under GAAP and should not be considered substitutes for net income (loss) or any other performance measures derived in accordance with GAAP.

EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings, as described above in the discussion of certain restrictive loan covenants under "Credit Facilities."

Management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about one of the principal measures of performance used by our creditors. In addition, management uses EBITDA and Adjusted EBITDA to evaluate our performance. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of the results as reported under GAAP. These measures may not be comparable to similarly titled measures reported by other companies.

The following tables reconcile EBITDA and Adjusted EBITDA to net income (loss) from continuing operations for the periods presented:

Three Months Ended December 31, 2019(Dollars in millions) ADESA AFC Corporate ConsolidatedNet income (loss) from continuing operations $ 35.0 $ 31.4 $ (51.1) $ 15.3Add back:

Income taxes 13.3 9.7 (13.7) 9.3Interest expense, net of interest income 0.5 15.1 22.7 38.3Depreciation and amortization 39.7 2.7 7.7 50.1Intercompany interest (1.8) (1.0) 2.8 —

EBITDA 86.7 57.9 (31.6) 113.0Intercompany charges 3.1 — (3.1) —Non-cash stock-based compensation 2.2 0.4 2.6 5.2Acquisition related costs 1.7 — 0.2 1.9Securitization interest — (13.0) — (13.0)Loss on asset sales 0.4 — — 0.4Severance 4.9 0.3 4.4 9.6Foreign currency (gains)/losses (0.4) — 0.7 0.3Other 3.8 — 0.8 4.6 Total addbacks 15.7 (12.3) 5.6 9.0Adjusted EBITDA $ 102.4 $ 45.6 $ (26.0) $ 122.0

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Three Months Ended December 31, 2018(Dollars in millions) ADESA AFC Corporate ConsolidatedNet income (loss) from continuing operations $ 38.1 $ 29.5 $ (52.5) $ 15.1Add back:

Income taxes 11.1 8.7 (18.0) 1.8Interest expense, net of interest income 0.1 16.3 34.8 51.2Depreciation and amortization 33.1 2.4 7.1 42.6Intercompany interest 4.2 (1.1) (3.1) —

EBITDA 86.6 55.8 (31.7) 110.7Intercompany charges 4.3 — (4.3) —Non-cash stock-based compensation 2.4 0.6 1.5 4.5Acquisition related costs 1.1 — 1.0 2.1Securitization interest — (14.5) — (14.5)Loss on asset sales 0.4 — — 0.4Severance 1.7 0.1 0.1 1.9Foreign currency losses 1.9 — 1.8 3.7IAA allocated costs — — 1.3 1.3Other 0.4 — — 0.4 Total addbacks 12.2 (13.8) 1.4 (0.2)Adjusted EBITDA $ 98.8 $ 42.0 $ (30.3) $ 110.5

Year Ended December 31, 2019(Dollars in millions) ADESA AFC Corporate ConsolidatedNet income (loss) from continuing operations $ 174.3 $ 120.0 $ (201.9) $ 92.4Add back:

Income taxes 67.3 41.9 (71.5) 37.7Interest expense, net of interest income 2.3 63.7 120.4 186.4Depreciation and amortization 149.9 10.3 28.5 188.7Intercompany interest 11.7 (5.1) (6.6) —

EBITDA 405.5 230.8 (131.1) 505.2Intercompany charges 13.5 — (13.5) —Non-cash stock-based compensation 7.8 1.6 10.9 20.3Loss on extinguishment of debt — — 2.2 2.2Acquisition related costs 6.5 — 5.7 12.2Securitization interest — (54.9) — (54.9)Loss on asset sales 2.1 — — 2.1Severance 9.1 0.4 5.8 15.3Foreign currency (gains)/losses (1.5) — 0.8 (0.7)IAA allocated costs — — 2.3 2.3Other 5.0 — 1.0 6.0 Total addbacks 42.5 (52.9) 15.2 4.8Adjusted EBITDA $ 448.0 $ 177.9 $ (115.9) $ 510.0

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Year Ended December 31, 2018(Dollars in millions) ADESA AFC Corporate ConsolidatedNet income (loss) from continuing operations $ 203.3 $ 112.0 $ (197.7) $ 117.6Add back:

Income taxes 69.1 35.4 (70.2) 34.3Interest expense, net of interest income 1.0 59.3 127.0 187.3Depreciation and amortization 127.5 16.0 28.9 172.4Intercompany interest 19.8 (3.2) (16.6) —

EBITDA 420.7 219.5 (128.6) 511.6Intercompany charges 15.3 — (15.3) —Non-cash stock-based compensation 9.3 2.3 8.8 20.4Acquisition related costs 4.8 — 2.5 7.3Securitization interest — (51.5) — (51.5)Loss on asset sales 1.7 — — 1.7Severance 5.0 0.6 0.1 5.7Foreign currency losses 1.9 — 1.8 3.7IAA allocated costs — — 5.2 5.2Other 1.1 — — 1.1 Total addbacks 39.1 (48.6) 3.1 (6.4)Adjusted EBITDA $ 459.8 $ 170.9 $ (125.5) $ 505.2

Certain of our loan covenant calculations utilize financial results for the most recent four consecutive fiscal quarters. The following table reconciles EBITDA and Adjusted EBITDA to net income (loss) for the periods presented:

Three Months Ended

TwelveMonthsEnded

(Dollars in millions)March 31,

2019June 30,

2019September 30,

2019December 31,

2019December 31,

2019Net income (loss) $ 77.8 $ 55.6 $ 35.3 $ 19.8 $ 188.5Less: Income from discontinued operations 62.5 28.2 0.9 4.5 96.1Income from continuing operations 15.3 27.4 34.4 15.3 92.4Add back:

Income taxes 6.5 8.7 13.2 9.3 37.7Interest expense, net of interest income 55.9 55.0 37.2 38.3 186.4Depreciation and amortization 44.3 47.9 46.4 50.1 188.7

EBITDA 122.0 139.0 131.2 113.0 505.2Non-cash stock-based compensation 6.6 4.0 4.5 5.2 20.3Loss on extinguishment of debt — — 2.2 — 2.2Acquisition related costs 3.9 3.7 2.7 1.9 12.2Securitization interest (14.8) (13.8) (13.3) (13.0) (54.9)Loss on asset sales 0.5 0.4 0.8 0.4 2.1Severance 3.7 1.1 0.9 9.6 15.3Foreign currency (gains)/losses (0.6) — (0.4) 0.3 (0.7)IAA allocated costs 1.4 0.9 — — 2.3Other 0.2 0.6 0.6 4.6 6.0 Total addbacks 0.9 (3.1) (2.0) 9.0 4.8Adjusted EBITDA $ 122.9 $ 135.9 $ 129.2 $ 122.0 $ 510.0

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Summary of Cash Flows

Year Ended

December 31,(Dollars in millions) 2019 2018Net cash provided by (used by):

Operating activities - continuing operations $ 380.8 $ 438.6Operating activities - discontinued operations 161.2 284.3Investing activities - continuing operations (415.0) (315.1)Investing activities - discontinued operations (37.4) (66.1)Financing activities - continuing operations (1,163.8) (315.8)Financing activities - discontinued operations 1,317.6 (4.3)Effect of exchange rate on cash 12.8 (20.4)

Net increase in cash, cash equivalents and restricted cash $ 256.2 $ 1.2

Cash flow from operating activities (continuing operations) was $380.8 million for the year ended December 31, 2019, compared with $438.6 million for the year ended December 31, 2018. The decrease in operating cash flow was primarily attributable to changes in operating assets and liabilities as a result of the timing of collections and the disbursement of funds to consignors for auctions held near period-ends, as well as decreased profitability, partially offset by a net increase in non-cash item adjustments.

Net cash used by investing activities (continuing operations) was $415.0 million for the year ended December 31, 2019, compared with $315.1 million for the year ended December 31, 2018. The increase in net cash used by investing activities was primarily attributable to:

• an increase in cash used for acquisitions of approximately $75.5 million; and

• an increase in cash used for capital expenditures of approximately $30.3 million;

partially offset by:

• a net decrease in finance receivables held for investment of approximately $5.9 million.

Net cash used by financing activities (continuing operations) was $1,163.8 million for the year ended December 31, 2019, compared with $315.8 million for the year ended December 31, 2018. The increase in net cash used by financing activities was primarily attributable to:

• an increase in net payments on debt of approximately $784.4 million. The Company used net cash provided by financing activities from discontinued operations (cash received from IAA in the Separation) to prepay approximately $1.3 billion of its term loan debt in the second quarter of 2019. In addition, in the third quarter of 2019, the Company refinanced the outstanding Term Loan B-4 and Term Loan B-5 and repaid the remaining amount on the 2017 Revolving Credit Facility with the new Term Loan B-6;

• a net decrease in the obligations collateralized by finance receivables of approximately $97.6 million; and

• an increase in cash transferred to IAA in connection with the Separation of $50.9 million;

partially offset by:

• a decrease in common stock repurchases of approximately $30.3 million;

• a decrease in dividends paid to stockholders of approximately $24.0 million;

• a $19.3 million increase in borrowings from the lines of credit; and

• a smaller decrease in book overdrafts in 2019 compared with 2018 of approximately $16.0 million.

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Capital Expenditures

Capital expenditures for the years ended December 31, 2019 and 2018 approximated $161.6 million and $131.3 million, respectively. Capital expenditures were funded primarily from internally generated funds. We continue to invest in our core information technology capabilities and capacity expansion. Capital expenditures are expected to be approximately $135 million for fiscal year 2020. Approximately half of the 2020 capital expenditures are expected to relate to technology-based investments, including improvements in information technology systems and infrastructure. Other anticipated capital expenditures are primarily attributable to improvements and expansion at the Company's facilities. Future capital expenditures could vary substantially based on capital project timing, the opening of new auction facilities, capital expenditures related to acquired businesses and the initiation of new information systems projects to support our business strategies.

Dividends

Subject to board of director approval, we expect to pay a quarterly dividend of $0.19 per share using cash flow from operations, representing an annualized dividend of $0.76 per share. The following dividend information has been released for 2019 and 2020:

• On February 18, 2020, the Company announced a cash dividend of $0.19 per share that is payable on April 3, 2020, to stockholders of record at the close of business on March 20, 2020.

• On November 5, 2019, the Company announced a cash dividend of $0.19 per share that was paid on January 3, 2020, to stockholders of record at the close of business on December 20, 2019.

• On August 6, 2019, the Company announced a cash dividend of $0.19 per share that was paid on October 3, 2019, to stockholders of record at the close of business on September 20, 2019.

• On May 7, 2019, the Company announced a cash dividend of $0.35 per share that was paid on June 17, 2019, to stockholders of record at the close of business on June 3, 2019.

• On February 19, 2019, the Company announced a cash dividend of $0.35 per share that was paid on April 4, 2019, to stockholders of record at the close of business on March 22, 2019.

Future dividend decisions will be based on and affected by a variety of factors, including our financial condition and results of operations, contractual restrictions, including restrictive covenants contained in our Credit Agreement and AFC's securitization facilities and the indenture governing our senior notes, capital requirements and other factors that our board of directors deems relevant. No assurance can be given as to whether any future dividends may be declared by our board of directors or the amount thereof.

Acquisitions

In January 2019, the Company completed the acquisition of Dent-ology. Dent-ology enhances our mobile reconditioning capabilities and bolsters our offerings to include wheel repair and expanded hail catastrophe response services.

In January 2019, the Company also completed the acquisition of CarsOnTheWeb. COTW is an online auction company serving the wholesale vehicle sector in Continental Europe that seamlessly connects OEMs, fleet owners, wholesalers and dealers. The acquisition advances KAR’s international strategy and extends its strong North American and U.K.-based portfolio of physical, online and digital auction marketplaces.

Certain of the purchase agreements included additional payments over a specified period contingent on certain terms, conditions and performance. The purchased assets included accounts receivable, inventory, property and equipment, customer relationships, tradenames and software. Financial results for each acquisition have been included in our consolidated financial statements from the date of acquisition.

The aggregate purchase price for the businesses acquired in 2019, net of cash acquired, was approximately $169.2

million, which included net cash payments of $120.7 million, deferred payments with a fair value of $19.2 million and estimated contingent payments with a fair value of $29.3 million based on an option pricing valuation model. The maximum amount of undiscounted deferred payments and undiscounted contingent payments related to these acquisitions could approximate $77.0 million. The purchase price for the acquired businesses was allocated to acquired assets and liabilities based upon fair values, including $32.7 million to intangible assets, representing the fair value of acquired customer relationships of $26.4 million, software of $4.3 million and tradenames of $2.0 million, which are being amortized over their expected useful lives. The acquisitions resulted in aggregate goodwill of $142.6 million. The goodwill is recorded in the ADESA Auctions

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reportable segment. The financial impact of these acquisitions, including pro forma financial results, was immaterial to the Company's consolidated results for the year ended December 31, 2019.

Recent Developments

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

Contractual Obligations

The table below sets forth a summary of our contractual debt and lease obligations as of December 31, 2019. Some of the figures included in this table are based on management's estimates and assumptions about these obligations, including their duration, the possibility of renewal and other factors. Because these estimates and assumptions are necessarily subjective, the obligations we may actually pay in future periods could vary from those reflected in the table. The following summarizes our contractual cash obligations as of December 31, 2019 (in millions):

Payments Due by Period

Contractual Obligations TotalLess than

1 year 1 - 3 Years 4 - 5 YearsMore than

5 YearsLong-term debt

$325 million Revolving Credit Facility $ — $ — $ — $ — $ —Term Loan B-6 (a) 947.6 9.5 19.0 19.0 900.1Senior notes (a) 950.0 — — — 950.0

European lines of credit 19.3 19.3 — — —Finance lease obligations (b) 29.2 14.5 14.3 0.4 —Interest payments relating to long-term debt (c) 518.6 88.0 174.4 172.6 83.6Operating leases (d) 543.0 57.2 105.8 96.9 283.1Other long-term liabilities 25.1 9.1 16.0 — —Total contractual cash obligations $ 3,032.8 $ 197.6 $ 329.5 $ 288.9 $ 2,216.8

________________________________________

(a) The table assumes the long-term debt is held to maturity.(b) We have entered into finance leases for furniture, fixtures, equipment and software. The amounts include the interest

portion of the finance leases. Future finance lease obligations would change if we entered into additional finance lease agreements.

(c) Interest payments on long-term debt are projected based on the contractual rates of the debt securities. Interest rates for the variable rate term debt instruments were held constant at rates as of December 31, 2019.

(d) Operating leases are entered into in the normal course of business. We lease most of our auction facilities, as well as other property and equipment under operating leases. Some lease agreements contain options to renew the lease or purchase the leased property. Future operating lease obligations would change if the renewal options were exercised and/or if we entered into additional operating lease agreements.

Critical Accounting Estimates

In preparing the financial statements in accordance with U.S. generally accepted accounting principles, management must often make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Some of those judgments can be subjective and complex. Consequently, actual results could differ from those estimates. Accounting measurements that management believes are most critical to the reported results of our operations and financial condition include: (1) allowance for credit losses; (2) business combinations; (3) goodwill and other intangible assets; and (4) legal proceedings and other loss contingencies.

In addition to the critical accounting estimates, there are other items used in the preparation of the consolidated financial statements that require estimation, but are not deemed critical. Changes in estimates used in these and other items could have a material impact on our financial statements.

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We continually evaluate the accounting policies and estimates used to prepare the consolidated financial statements. In cases where management estimates are used, they are based on historical experience, information from third-party professionals, and various other assumptions believed to be reasonable. In addition, our most significant accounting policies are discussed in Note 2 and elsewhere in the notes to the consolidated financial statements for the year ended December 31, 2019, which are included in this Annual Report on Form 10-K.

Allowance for Credit Losses

We maintain an allowance for credit losses for estimated losses resulting from the inability of customers to make required payments. Delinquencies and losses are monitored on an ongoing basis and this historical experience provides the primary basis for estimating the allowance. The allowance for credit losses is also based on management's evaluation of the receivables portfolio under current economic conditions, the size of the portfolio, overall portfolio credit quality, review of specific collection matters and such other factors which, in management's judgment, deserve recognition in estimating losses. Specific collection matters can be impacted by the outcome of negotiations, litigation and bankruptcy proceedings with individual customers.

AFC controls credit risk through credit approvals, credit limits, underwriting and collateral management monitoring procedures, including approximately 70,000 lot audits and holding vehicle titles where permitted. The estimates are based on management’s evaluation of many factors, including AFC’s historical credit loss experience, the value of the underlying collateral, delinquency trends and economic conditions. The estimates are based on information available as of each reporting date. Actual losses may differ from the original estimates due to actual results varying from those assumed in our estimates.

As a measure of sensitivity, if we had experienced a 10% increase in net charge-offs of finance receivables for the year ended December 31, 2019, our provision for credit losses would have increased by approximately $3.4 million in 2019.

Business Combinations

When we acquire businesses, we estimate and recognize the fair values of tangible assets acquired, liabilities assumed and identifiable intangible assets acquired. The excess of the purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill. The purchase accounting process requires management to make significant estimates and assumptions in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets and contingent consideration.

Critical estimates are often developed using valuation models that are based on historical experience and information obtained from the management of the acquired companies. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, growth rates, the appropriate weighted-average cost of capital and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which could affect the accuracy or validity of such estimates. Depending on the facts and circumstances, we may engage an independent valuation expert to assist in valuing significant assets and liabilities.

Goodwill and Other Intangible Assets

We assess goodwill for impairment annually during the second quarter or more frequently if events or changes in circumstances indicate that impairment may exist. Important factors that could trigger an impairment review include significant under-performance relative to historical or projected future operating results; significant negative industry or economic trends; and our market valuation relative to our book value. When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that a reporting unit’s fair value is not more likely than not greater than its carrying value, then we calculate the estimated fair value of the reporting unit using discounted cash flows and market approaches.

When assessing goodwill for impairment, our decision to perform a qualitative impairment assessment for a reporting unit in a given year is influenced by a number of factors, including the size of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. If we perform a quantitative assessment of a reporting unit’s goodwill, our impairment calculations contain uncertainties because they require management to make assumptions and apply judgment when estimating future cash flows and earnings, including projected revenue growth and operating expenses related to existing businesses, as well as utilizing valuation multiples of similar publicly traded companies and selecting an appropriate discount rate based on the estimated cost of capital that reflects the risk profile of the related business. Estimates of revenue growth and operating expenses are based on internal projections considering the reporting unit’s past performance and forecasted growth, strategic initiatives and changes in economic conditions. These estimates, as well as the selection of comparable companies and valuation multiples used in the market approach are highly subjective, and our

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ability to realize the future cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies. In 2019, we performed a qualitative impairment assessment for our reporting units. Based on our goodwill assessments, the Company has not identified a reporting unit for which the goodwill was impaired in 2019, 2018 or 2017.

As with goodwill, we assess indefinite-lived tradenames for impairment annually during the second quarter or more frequently if events or changes in circumstances indicate that impairment may exist. When assessing indefinite-lived tradenames for impairment using a qualitative assessment, we evaluate if changes in events or circumstances have occurred that indicate that impairment may exist. If we do not perform a qualitative impairment assessment or if changes in events and circumstances indicate that a quantitative assessment should be performed, management is required to calculate the fair value of the tradename asset group. The fair value calculation includes estimates of revenue growth, which are based on past performance and internal projections for the tradename asset group's forecasted growth, and royalty rates, which are adjusted for our particular facts and circumstances. The discount rate is selected based on the estimated cost of capital that reflects the risk profile of the related business. These estimates are highly subjective, and our ability to achieve the forecasted cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies.

We review other intangible assets for possible impairment whenever circumstances indicate that their carrying amount may not be recoverable. If it is determined that the carrying amount of an other intangible asset exceeds the total amount of the estimated undiscounted future cash flows from that asset, we would recognize a loss to the extent that the carrying amount exceeds the fair value of the asset. Management judgment is involved in both deciding if testing for recovery is necessary and in estimating undiscounted cash flows. Our impairment analysis is based on the current business strategy, expected growth rates and estimated future economic conditions.

Legal Proceedings and Other Loss Contingencies

We are subject to the possibility of various legal proceedings and other loss contingencies, many involving litigation incidental to the business and a variety of environmental laws and regulations. Litigation and other loss contingencies are subject to inherent uncertainties and the outcomes of such matters are often very difficult to predict and generally are resolved over long periods of time. We consider 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. Estimating probable losses requires the analysis of multiple possible outcomes that often are dependent on the judgment about potential actions by third parties. Contingencies are recorded in the consolidated financial statements, or otherwise disclosed, in accordance with ASC 450, Contingencies. We accrue for an estimated loss contingency when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Management regularly evaluates current information available to determine whether accrual amounts should be adjusted. 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.

Off-Balance Sheet Arrangements

As of December 31, 2019, we had no off-balance sheet arrangements pursuant to Item 303(a)(4) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

New Accounting Standards

For a description of new accounting standards that could affect the Company, reference the "New Accounting Standards" section of Note 2 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency

Our foreign currency exposure is limited and arises from transactions denominated in foreign currencies, particularly intercompany loans, as well as from translation of the results of operations from our Canadian and, to a much lesser extent, United Kingdom, Continental Europe and Mexican subsidiaries. However, fluctuations between U.S. and non-U.S. currency values may adversely affect our results of operations and financial position. We have not entered into any foreign exchange contracts to hedge changes in the Canadian dollar, British pound, euro or Mexican peso. Canadian currency translation negatively affected net income by approximately $0.6 million for the year ended December 31, 2019 and positively affected net income by approximately $0.4 million for the year ended December 31, 2018. A 1% decrease in the average Canadian exchange rate for the year ended December 31, 2019 would have impacted net income by approximately $0.3 million. Currency exposure of our U.K., Continental Europe and Mexican operations is not material to the results of operations.

Interest Rates

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 cap agreements to manage our exposure to interest rate changes. We have not designated any of the interest rate caps as hedges for accounting purposes. Accordingly, changes in the fair value of the interest rate caps were recognized as "Interest expense" in the consolidated statement of income.

In August 2017, we entered into two interest rate caps with an aggregate notional amount of $800 million to manage our exposure to interest rate movements on our variable rate Credit Facility when three-month LIBOR exceeded 2.0%. The interest rate cap agreements each had an effective date of September 30, 2017 and each matured on September 30, 2019. We paid an aggregate amount of approximately $1.0 million for the caps in August 2017.

In March 2017, we entered into two interest rate caps with an aggregate notional amount of $400 million to manage our exposure to interest rate movements on our variable rate Credit Facility when three-month LIBOR exceeded 2.0%. The interest rate cap agreements each had an effective date of March 31, 2017 and each matured on March 31, 2019. We paid an aggregate amount of approximately $0.7 million for the caps in April 2017.

Taking our interest rate caps into account, a sensitivity analysis of the impact on our variable rate corporate debt instruments to a hypothetical 100 basis point increase in short-term rates (LIBOR) for the year ended December 31, 2019 would have resulted in an increase in interest expense of approximately $6.1 million.

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Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

PageKAR Auction Services, Inc.

Management's Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Income for the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017

Notes to Consolidated Financial Statements

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Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed under the supervision of our principal executive officer and principal financial and accounting officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and include those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets;

• Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2019, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on our assessment, we have concluded that our internal control over financial reporting was effective as of December 31, 2019. During our assessment, we did not identify any material weaknesses in our internal control over financial reporting.

We have excluded the Dent-ology and CarsOnTheWeb acquisitions from our assessment of internal control over financial reporting as of December 31, 2019 because we are continuing to integrate the acquisitions into our corporate processes. The total assets of the 2019 acquisitions represent 3.3% and the total revenues of the 2019 acquisitions represent 6.9% of the related consolidated financial statement amounts as of and for the year ended December 31, 2019. No potential internal control changes due to new acquisitions would be considered material to, or are reasonably likely to materially affect, our internal control over financial reporting.

KPMG LLP, the independent registered public accounting firm that audited our consolidated financial statements for the year ended December 31, 2019, also audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2019 as stated in their report included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

/s/ JAMES P. HALLETTJames P. HallettChief Executive Officer(Principal Executive Officer)

/s/ ERIC M. LOUGHMILLEREric M. LoughmillerChief Financial Officer(Principal Financial and Accounting Officer)

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of DirectorsKAR Auction Services, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of KAR Auction Services, Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company acquired CarsOnTheWeb and Dent-ology (“2019 acquisitions”) during 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, the 2019 acquisitions’ internal control over financial reporting associated with total assets of 3.3% and total revenues of 6.9% of the related amounts included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the 2019 acquisitions.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2019, the Company has changed its method of accounting for leases due to the adoption of Financial Accounting Standards Board Accounting Standard Codification Topic 842: Leases.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2018, the Company has changed its method of accounting for revenue from contracts with customers due to the adoption of Financial Accounting Standards Board Accounting Standard Codification Topic 606: Revenue from Contracts with Customers.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

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on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of qualitative risk factors in the allowance for credit losses

As discussed in Note 7 to the consolidated financial statements, the Company’s allowance for credit losses of $15 million at December 31, 2019 relates to the loans collectively evaluated for impairment (ACL). The Company estimates the allowance for credit losses using a methodology that first considers the historical loss rates calculated using recorded charge-offs and recoveries over a historical period as well as delinquencies as the primary quantitative factors. The Company’s methodology also considers qualitative risk factors that allow management to adjust its estimates of losses based on the most recent information available.

We identified the assessment of qualitative risk factors as a critical audit matter. Due to significant measurement uncertainty, such assessment required complex and subjective auditor judgment, including knowledge and experience in the industry. This judgment includes evaluating the qualitative framework and related risk factors, including lending policies and procedures, economic and business conditions, as well as the effect of other external and internal factors.

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal controls over the (1) development and approval of the overall allowance for credit losses methodology, which includes the qualitative framework and related risk factors and (2) determination of the qualitative risk factor adjustments. We tested the Company’s process to develop the qualitative framework and related risk factors. Specifically, we tested the sources of data, factors, and assumptions that the Company used by considering whether they are relevant and reliable, and whether additional factors and alternative assumptions should be used. Further, we evaluated trends in the total ACL, including the qualitative factor adjustments, for consistency with trends in the Company’s historical loan portfolio growth and credit performance. We involved credit risk professionals with specialized industry knowledge and experience who assisted in evaluating (1) the Company’s overall allowance for credit losses methodology, which included the qualitative framework and related risk factors, for compliance with U.S. generally accepted accounting principles and (2) the qualitative risk factors and their relationship to the quantitative model and how those factors address recent information not captured in the quantitative model.

Fair value measurement of the contingent consideration liability related to the CarsOnTheWeb acquisition

As discussed in Note 3 to the consolidated financial statements, the initial fair value of the contingent consideration liability related to the CarsOnTheWeb acquisition was $29.3 million. The contingent consideration liability was recognized at fair value on the date of acquisition and is re-measured each reporting period. The estimate of the fair value of the contingent consideration was determined using an option pricing valuation model (“the model”) and

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required the Company to make significant estimates and assumptions related to the acquired entity’s future earnings before interest, income taxes, depreciation and amortization (EBITDA) and discount rates (“estimates and assumptions”).

We identified the initial fair value measurement of the contingent consideration liability as a critical audit matter because it involved a high degree of subjectivity and audit effort. Specifically, the testing and evaluation of the Company’s model required the involvement of professionals with specialized skill and knowledge. In addition, complex and challenging auditor judgment was required in evaluating the internally-developed estimates and assumptions used in the model because there was limited observable market information.

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal controls over the acquisition-date valuation process for contingent consideration, including controls over the model and related estimates and assumptions. We evaluated the significant EBITDA assumptions used in the model by comparing them to historical company specific results, evaluating for consistency with external market data, and assessing whether these assumptions were consistent with evidence obtained in other areas of the audit. Finally, we involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating the Company’s selection of a valuation model for the contingent consideration, (2) evaluating the discount rate used by comparing it against ranges that were independently developed using publicly available market data for comparable entities, and (3) developing an independent estimate of the initial fair value of the contingent consideration liability using an option pricing valuation model and an independently developed discount rate. We compared the results of our valuation professional’s estimate of fair value for the contingent consideration liability to the Company’s fair value estimate.

/s/ KPMG LLP

We have served as the Company's auditor since 2007.

Indianapolis, IndianaFebruary 19, 2020

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KAR Auction Services, Inc.Consolidated Statements of Income(In millions, except per share data)

Year Ended December 31, 2019 2018 2017Operating revenues

Auction fees and services revenue $ 2,133.5 $ 1,985.1 $ 1,841.8Purchased vehicle sales 295.5 116.8 95.7Finance-related revenue 352.9 340.9 301.3

Total operating revenues 2,781.9 2,442.8 2,238.8Operating expenses

Cost of services (exclusive of depreciation and amortization) 1,617.1 1,321.5 1,209.1Selling, general and administrative 662.0 608.8 531.7Depreciation and amortization 188.7 172.4 171.5

Total operating expenses 2,467.8 2,102.7 1,912.3

Operating profit 314.1 340.1 326.5Interest expense 189.5 191.2 163.2Other income, net (7.7) (3.0) (1.0)Loss on extinguishment of debt 2.2 — 27.5Gain on previously held equity interest value — — (21.6)Income from continuing operations before income taxes 130.1 151.9 158.4Income taxes 37.7 34.3 (15.6)Income from continuing operations $ 92.4 $ 117.6 $ 174.0Income from discontinued operations, net of income taxes 96.1 210.4 188.0

Net income $ 188.5 $ 328.0 $ 362.0Net income per share - basic

Income from continuing operations $ 0.70 $ 0.88 $ 1.28Income from discontinued operations 0.73 1.56 1.38Net income $ 1.43 $ 2.44 $ 2.66

Net income per share - diluted Income from continuing operations $ 0.70 $ 0.87 $ 1.26Income from discontinued operations 0.72 1.55 1.36Net income $ 1.42 $ 2.42 $ 2.62

Dividends declared per common share $ 1.08 $ 1.40 $ 1.31

See accompanying notes to consolidated financial statements

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KAR Auction Services, Inc.Consolidated Statements of Comprehensive Income

(In millions)

Year Ended December 31, 2019 2018 2017Net income $ 188.5 $ 328.0 $ 362.0Other comprehensive income (loss)

Foreign currency translation gain (loss) 19.9 (36.1) 24.1Comprehensive income $ 208.4 $ 291.9 $ 386.1

See accompanying notes to consolidated financial statements

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KAR Auction Services, Inc.Consolidated Balance Sheets

(In millions)

December 31, 2019 2018Assets Current assets Cash and cash equivalents $ 507.6 $ 277.1Restricted cash 53.3 27.6Trade receivables, net of allowances of $9.5 and $8.7 457.5 454.6Finance receivables, net of allowances of $15.0 and $14.0 2,100.2 2,000.8Other current assets 125.9 100.6Current assets, discontinued operations — 453.5

Total current assets 3,244.5 3,314.2Other assets Goodwill 1,821.7 1,676.9Customer relationships, net of accumulated amortization of $637.4 and $587.0 207.9 227.4Other intangible assets, net of accumulated amortization of $292.4 and $255.3 298.5 272.4Operating lease right-of-use assets 364.1 —Other assets 35.5 31.0Non-current assets, discontinued operations — 1,053.3

Total other assets 2,727.7 3,261.0Property and equipment, net of accumulated depreciation of $534.3 and $467.5 609.0 631.0Total assets $ 6,581.2 $ 7,206.2

See accompanying notes to consolidated financial statements

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KAR Auction Services, Inc.Consolidated Balance Sheets

(In millions, except share and per share data)

December 31, 2019 2018Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 704.6 $ 691.3Accrued employee benefits and compensation expenses 72.7 72.8Accrued interest 7.9 7.9Other accrued expenses 216.9 132.8Income taxes payable 1.1 0.7Dividends payable 24.5 46.5Obligations collateralized by finance receivables 1,461.2 1,445.3Current maturities of long-term debt 28.8 13.1Current liabilities, discontinued operations — 214.4

Total current liabilities 2,517.7 2,624.8Non-current liabilities Long-term debt 1,861.3 2,654.3Deferred income tax liabilities 134.5 125.3Operating lease liabilities 358.3 —Other liabilities 59.2 71.6Non-current liabilities, discontinued operations — 266.0

Total non-current liabilities 2,413.3 3,117.2Commitments and contingencies (Note 17)Stockholders' equity Preferred stock, $0.01 par value:

Authorized shares: 100,000,000 Issued shares: none — —

Common stock, $0.01 par value: Authorized shares: 400,000,000 Issued and outstanding shares:

128,833,452 (2019) 132,887,029 (2018) 1.3 1.3

Additional paid-in capital 1,028.9 1,131.9Retained earnings 651.0 392.3Accumulated other comprehensive loss (31.0) (61.3)

Total stockholders' equity 1,650.2 1,464.2Total liabilities and stockholders' equity $ 6,581.2 $ 7,206.2

See accompanying notes to consolidated financial statements

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KAR Auction Services, Inc.Consolidated Statements of Stockholders' Equity

(In millions)

CommonStockShares

CommonStock

Amount

AdditionalPaid-InCapital

RetainedEarnings

AccumulatedOther

ComprehensiveLoss Total

Balance at December 31, 2016 136.6 $ 1.4 $ 1,371.1 $ 74.1 $ (49.3) $1,397.3Net income 362.0 362.0Other comprehensive income 24.1 24.1Issuance of common stock under stock plans 1.1 11.4 11.4Surrender of RSUs for taxes (0.1) (5.9) (5.9)Stock-based compensation expense 24.2 24.2Repurchase and retirement of common stock (3.3) (0.1) (149.9) (150.0)Dividends earned under stock plans 0.9 (0.9) —Cash dividends declared to stockholders ($1.31per share) (178.2) (178.2)Balance at December 31, 2017 134.3 1.3 1,251.8 257.0 (25.2) 1,484.9Cumulative effect adjustment for adoption ofASC Topic 606, net of tax (3.0) (3.0)Net income 328.0 328.0Other comprehensive loss (36.1) (36.1)Issuance of common stock under stock plans 1.5 15.0 15.0Surrender of RSUs for taxes (0.2) (10.2) (10.2)Stock-based compensation expense 23.4 23.4Repurchase and retirement of common stock (2.7) (150.0) (150.0)Dividends earned under stock plans 1.9 (1.9) —Cash dividends declared to stockholders ($1.40per share) (187.8) (187.8)Balance at December 31, 2018 132.9 1.3 1,131.9 392.3 (61.3) 1,464.2Cumulative effect adjustment for adoption ofASC Topic 842, net of tax 1.1 1.1Net income 188.5 188.5Other comprehensive income 19.9 19.9Issuance of common stock under stock plans 0.9 4.3 4.3Surrender of RSUs for taxes (0.2) (10.8) (10.8)Stock-based compensation expense 21.4 21.4Repurchase and retirement of common stock (4.8) (119.7) (119.7)Distribution of IAA 213.2 10.4 223.6Dividends earned under stock plans 1.8 (1.8) —Cash dividends declared to stockholders ($1.08per share) (142.3) (142.3)Balance at December 31, 2019 128.8 $ 1.3 $ 1,028.9 $ 651.0 $ (31.0) $1,650.2

See accompanying notes to consolidated financial statements

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KAR Auction Services, Inc.Consolidated Statements of Cash Flows

(In millions)

Year Ended December 31, 2019 2018 2017Operating activities Net income $ 188.5 $ 328.0 $ 362.0Net income from discontinued operations (96.1) (210.4) (188.0)

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 188.7 172.4 171.5Provision for credit losses 40.1 36.9 37.9Deferred income taxes (3.3) 3.0 (72.3)Amortization of debt issuance costs 12.2 10.6 10.4Stock-based compensation 19.6 19.6 20.4Loss (gain) on disposal of fixed assets 0.2 — (0.3)Loss on extinguishment of debt 2.2 — 27.5Gain on previously held equity interest value — — (21.6)Other non-cash, net 11.9 (0.4) 7.1Changes in operating assets and liabilities, net of acquisitions: Trade receivables and other assets (3.0) (49.0) 4.1Accounts payable and accrued expenses 19.8 127.9 0.6

Net cash provided by operating activities - continuing operations 380.8 438.6 359.3Net cash provided by operating activities - discontinued operations 161.2 284.3 238.2Investing activities

Net increase in finance receivables held for investment (132.7) (138.6) (148.5)Acquisition of businesses (net of cash acquired) (120.7) (45.2) (72.4)Purchases of property, equipment and computer software (161.6) (131.3) (97.3)Advance to equity method investee — — (5.0)

Net cash used by investing activities - continuing operations (415.0) (315.1) (323.2)Net cash used by investing activities - discontinued operations (37.4) (66.1) (55.1)Financing activities

Net decrease in book overdrafts (4.7) (20.7) (1.5)Net increase (decrease) in borrowings from lines of credit 19.3 — (80.5)Net increase in obligations collateralized by finance receivables 3.8 101.4 65.0Proceeds from long-term debt 947.6 — 2,717.0Payments for debt issuance costs/amendments (14.1) (12.5) (22.6)Payments on long-term debt (1,749.0) (17.0) (2,436.7)Payments on finance leases (15.9) (15.4) (13.3)Payments of contingent consideration and deferred acquisition costs (9.4) (18.1) (7.0)Initial net investment for interest rate caps — — (1.7)Issuance of common stock under stock plans 4.3 15.0 11.4Tax withholding payments for vested RSUs (10.8) (10.2) (5.9)Repurchase and retirement of common stock (119.7) (150.0) (150.0)Dividends paid to stockholders (164.3) (188.3) (174.8)Cash transferred to IAA (50.9) — —

Net cash used by financing activities - continuing operations (1,163.8) (315.8) (100.6)Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (4.3) (7.0)Effect of exchange rate changes on cash 12.8 (20.4) 14.0Net increase in cash, cash equivalents and restricted cash 256.2 1.2 125.6Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5 177.9Cash, cash equivalents and restricted cash at end of period $ 560.9 $ 304.7 $ 303.5Cash paid for interest, net of proceeds from interest rate caps $ 170.0 $ 180.8 $ 147.1Cash paid for taxes, net of refunds - continuing operations $ 37.8 $ 57.9 $ 70.1Cash paid for taxes, net of refunds - discontinued operations $ 41.4 $ 64.0 $ 55.9

See accompanying notes to consolidated financial statements

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KAR Auction Services, Inc.Notes to Consolidated Financial Statements

December 31, 2019, 2018 and 2017

Note 1—Organization and Other Matters

KAR Auction Services, Inc., doing business as KAR Global, was organized in the State of Delaware on November 9, 2006. The KAR group of companies is comprised of ADESA, Inc., Automotive Finance Corporation and additional business units.

Defined Terms

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"), Nth Gen Software Inc. ("TradeRev"), 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.;

• "Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, as amended on March 9, 2016, May 31, 2017 and September 19, 2019, among KAR Auction Services, 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"). See Note 4;

• "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 outstanding at December 31, 2019);

• "Term Loan B-2" refers to the senior secured term loan B-2 facility, the terms of which are set forth in the Credit Agreement;

• "Term Loan B-3" refers to the senior secured term loan B-3 facility, the terms of which are set forth in the Credit Agreement;

• "Term Loan B-4" refers to the senior secured term loan B-4 facility, the terms of which are set forth in the Credit Agreement;

• "Term Loan B-5" refers to the senior secured term loan B-5 facility, the terms of which are set forth in the Credit Agreement;

• "2016 Revolving Credit Facility" refers to the $300 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement; and

• "2017 Revolving Credit Facility" refers to the $350 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement.

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Business and Nature of Operations

ADESA is a leading provider of wholesale vehicle auctions and related vehicle remarketing services for the automotive industry. As of December 31, 2019, we have a North American network of 74 ADESA whole car auction sites and we also offer online auctions. ADESA also includes TradeRev, an online automotive remarketing system 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 physical, online or hybrid auctions, which permit Internet buyers to participate in physical auctions. ADESA's online service offerings include customized private label solutions powered with software developed by its wholly-owned subsidiary, Openlane, that allow our institutional consignors (automobile manufacturers, captive finance companies and other institutions) to offer vehicles via the Internet prior to arrival at the physical auction. Remarketing services include a variety of activities designed to transfer 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 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 121 locations throughout the United States and Canada as of December 31, 2019. Floorplan financing supports independent used vehicle dealers in North America who purchase vehicles at ADESA, TradeRev, other used vehicle and salvage auctions and non-auction purchases. In addition to floorplan financing, AFC also provides independent used vehicle dealers with other related services and products, such as vehicle service contracts.

Note 2—Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of KAR Auction Services and all of its majority owned subsidiaries. Significant intercompany transactions and balances have been eliminated.

Reclassifications

ADESA Auction Services' revenue reported in the consolidated statements of income for the years ended December 31, 2018 and 2017 has been reclassified between "Auction fees and services revenue" and "Purchased vehicle sales" in the consolidated statement of income to conform with the presentation for the year ended December 31, 2019.

In addition, certain amounts reported in the consolidated financial statements and related notes prior to June 2019 have been reclassified to discontinued operations to reflect the spin-off of the Company's former salvage auction business. Likewise, certain amounts reported for segment results in the consolidated financial statements prior to June 2019 have been reclassified to conform to the discontinued operations presentation. See Note 4 for a discussion of discontinued operations.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. 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 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.

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Business Segments

Our operations are grouped into two operating segments: ADESA Auctions and AFC. The two operating segments also serve as our reportable business segments. Operations are measured through detailed budgeting and monitoring of contributions to consolidated income by each business segment.

Derivative Instruments and Hedging Activity

We recognize all derivative financial instruments in the consolidated financial statements at fair value in accordance with Accounting Standards Codification ("ASC") 815, Derivatives and Hedging. We have used interest rate caps to manage the variability of cash flows to be paid due to interest rate movements on our variable rate debt. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks. The fair value of the derivatives is recorded in "Other assets" on the consolidated balance sheet. We have not designated any of the interest rate caps as hedges for accounting purposes. Accordingly, changes in the fair value of the interest rate derivatives are recognized as "Interest expense" in the consolidated statement of income.

Foreign Currency Translation

The local currency is the functional currency for each of our foreign entities. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at average exchange rates in effect during the year. Assets and liabilities of foreign operations are translated using the exchange rates in effect at year end. Foreign currency transaction gains and losses are included in the consolidated statements of income within "Other income, net" and resulted in a gain of $0.7 million for the year ended December 31, 2019, a loss of $3.7 million for the year ended December 31, 2018 and a gain of $0.4 million effect for the year ended December 31, 2017. Adjustments arising from the translation of net assets located outside the U.S. (gains and losses) are shown as a component of "Accumulated other comprehensive income."

Cash Equivalents

All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. These investments are valued at cost, which approximates fair value.

Restricted Cash

AFC Funding Corporation, a wholly-owned, bankruptcy remote, consolidated, special purpose subsidiary of AFC, is required to maintain a minimum cash reserve of 1 or 3 percent of total receivables sold to the group of bank purchasers as security for the receivables sold. Automotive Finance Canada Inc. ("AFCI") is also required to maintain a minimum cash reserve of 1 percent of total receivables sold to its securitization facility. The amount of the cash reserve depends on circumstances which are set forth in the securitization agreements. AFC also maintains other cash reserves from time to time associated with its banking and vehicle service contract program insurance relationships. Such reserves are presented as "Restricted cash" on the consolidated balance sheets.

Receivables

Trade receivables include the unremitted purchase price of vehicles purchased by third parties at the auctions, fees to be collected from those buyers and amounts due for services provided by us related to certain consigned vehicles in our possession. The amounts due with respect to the consigned vehicles are generally deducted from the sales proceeds upon the eventual auction or other disposition of the related vehicles.

Finance receivables include floorplan receivables created by financing dealer purchases of vehicles in exchange for a security interest in those vehicles and special purpose loans. Floorplan receivables become due at the earlier of the dealer subsequently selling the vehicle or a predetermined time period (generally 30 to 90 days). Special purpose loans relate to loans that are either line of credit loans or working capital loans that can be either secured or unsecured based on the facts and circumstances of the specific loans.

Due to the nature of our business, substantially all trade and finance receivables are due from vehicle dealers and institutional sellers. We have possession of vehicles or vehicle titles collateralizing a significant portion of the trade and finance receivables.

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Trade receivables and finance receivables are reported net of an allowance for doubtful accounts and credit losses. The allowances for doubtful accounts and credit losses are based on management's evaluation of the receivables portfolio under current conditions, the volume of the portfolio, overall portfolio credit quality, review of specific collection issues and such other factors which in management's judgment deserve recognition in estimating losses.

Other Current Assets

Other current assets consist of inventories, prepaid expenses, taxes receivable and other miscellaneous assets. The inventories, which consist of vehicles, supplies and parts, are accounted for on the specific identification method and are stated at the lower of cost or net realizable value.

Goodwill

Goodwill represents the excess of cost over fair value of identifiable net assets of businesses acquired. Goodwill is tested for impairment annually in the second quarter, or more frequently as impairment indicators arise. ASC 350, Intangibles—Goodwill and Other, permits an entity to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the two-step goodwill impairment model. If it is determined through the qualitative assessment that a reporting unit's fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. The quantitative assessment for goodwill impairment is a two-step test. Under the first step, the fair value of each reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and we must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with ASC 805, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

Customer Relationships and Other Intangible Assets

Customer relationships are amortized on a straight-line basis over the life determined at the time of acquisition. Other intangible assets generally consist of tradenames, computer software and non-compete agreements, which if amortized, are amortized using the straight-line method over their estimated useful lives. Tradenames with indefinite lives are not amortized. Costs incurred related to software developed or obtained for internal use are capitalized during the application development stage of software development and amortized over their estimated useful lives. The non-compete agreements are amortized over the life of the agreements. The amortization periods of finite-lived intangible assets are re-evaluated periodically when facts and circumstances indicate that revised estimates of useful lives may be warranted. Indefinite-lived tradenames are assessed for impairment, in accordance with ASC 350, annually in the second quarter or more frequently as impairment indicators arise. At the end of each assessment, a determination is made as to whether the tradenames still have an indefinite life.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method at rates intended to depreciate the costs of assets over their estimated useful lives. Upon retirement or sale of property and equipment, the cost of the disposed assets and related accumulated depreciation is removed from the accounts and any resulting gain or loss is credited or charged to selling, general and administrative expenses. Expenditures for normal repairs and maintenance are charged to expense as incurred. Additions and expenditures for improving or rebuilding existing assets that extend the useful life are capitalized. Leasehold improvements made either at the inception of the lease or during the lease term are amortized over the shorter of their economic lives or the lease term including any renewals that are reasonably assured.

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Unamortized Debt Issuance Costs

Debt issuance costs reflect the expenditures incurred in conjunction with term loan debt, the revolving credit facility, the senior notes and the U.S. and Canadian receivables purchase agreements. The debt issuance costs are being amortized to interest expense using the effective interest method or the straight-line method, as applicable, over the lives of the related debt issues. Debt issuance costs are presented as a direct reduction from the carrying amount of the related debt liability.

Other Assets

Other assets consist of equity and cost method investments, deposits, notes receivable, foreign deferred taxes and other long-term assets.

Long-Lived Assets

Management reviews our property and equipment, customer relationships and other intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. The determination includes evaluation of factors such as current market value, future asset utilization, business climate, and future cash flows expected to result from the use of the related assets. If the carrying amount of a long-lived asset exceeds the total amount of the estimated undiscounted future cash flows from that asset, a loss is recognized in the period to the extent that the carrying amount exceeds the fair value of the asset. The impairment analysis is based on our current business strategy, expected growth rates and estimated future economic and regulatory conditions.

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842), which replaces the existing lease guidance in Topic 840. The ASU is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use ("ROU") assets and corresponding lease liabilities on the balance sheet, with an exception for leases that meet the definition of a short-term lease. The new guidance continues to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income.

We adopted Topic 842 in the first quarter of 2019 and as permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements, we applied the new standard at the adoption date and recognized the cumulative-effect of initially applying the new standard as an increase of $1.1 million to the opening balance of retained earnings. The cumulative-effect adjustment related to the derecognition of existing fixed assets for which we were determined to be the accounting owner under Topic 840 and related liabilities associated with certain sale leaseback transactions in build-to-suit arrangements that did not qualify for sale accounting under Topic 840. Depreciation related to these fixed assets was recorded consistently with owned property and equipment in depreciation expense. In accordance with Topic 842, the lease agreements associated with the derecognized fixed assets and related liabilities generated ROU assets and lease liabilities that will be amortized to lease expense over the lease term. In addition, we recognized additional operating liabilities for continuing operations of approximately $342 million with related ROU assets of approximately $314 million based on the present value of the remaining minimum rental payments for existing operating leases.

We determine if an arrangement is a lease at inception. Operating leases are included in "Operating lease right-of-use assets," "Other accrued expenses" and "Operating lease liabilities" in our consolidated balance sheets. Finance leases are included in "Property and equipment, net," "Other accrued expenses" and "Other liabilities" in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. We use the implicit rate when readily determinable. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, we account for the lease and non-lease components as a single lease component.

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Accounts Payable

Accounts payable include amounts due sellers from the proceeds of the sale of their consigned vehicles less any fees, as well as trade payables and outstanding checks to sellers and vendors. Book overdrafts, representing outstanding checks in excess of funds on deposit, are recorded in "Accounts payable" and amounted to $88.7 million and $93.4 million at December 31, 2019 and 2018, respectively.

Self-Insurance Reserves

We self-insure our employee medical benefits, as well as a portion of our automobile, general liability and workers' compensation claims. We have insurance coverage that limits the exposure on individual claims. The cost of the insurance is expensed over the contract periods. We record an accrual for the claims related to our employee medical benefits, automobile, general liability and workers' compensation claims based upon the expected amount of all such claims. Accrued medical benefits and workers' compensation expenses are included in "Accrued employee benefits and compensation expenses" while accrued automobile and general liability expenses are included in "Other accrued expenses."

Environmental Liabilities

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. These accruals are adjusted periodically as assessment and remediation efforts progress, or as additional technical or legal information becomes available. Accruals for environmental liabilities are included in "Other accrued expenses" at undiscounted amounts and exclude claims for recoveries from insurance or other third parties.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded the revenue recognition requirements in ASC 605, Revenue Recognition. The new guidance provides clarification on the recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Topic 606 also requires additional disclosures to help financial statement users better understand the nature, amount, timing and uncertainty of revenue that is recognized. In preparation for the adoption of Topic 606, we assessed our contracts with customers, evaluated our revenue streams and compared current accounting practices to those required under the new standard. As a result of these efforts, we identified certain impacts to the presentation and timing of revenue recognition for a contract liability (deferred revenue) related to a material right associated with certain volume-related rebates. We have implemented the appropriate changes to our processes and controls to support recognition and disclosure under Topic 606.

We adopted Topic 606 in the first quarter of 2018 using the modified retrospective transition method and recognized the cumulative effect of initially applying the new standard as a decrease of $3.0 million to the opening balance of retained earnings. Prior periods have not been retrospectively adjusted.

There were no material contract assets, contract liabilities or deferred contract costs recorded on the consolidated balance sheet as of December 31, 2019. For each of our primary revenue streams, cash flows are consistent with the timing of revenue recognition.

For the year ended December 31, 2019, revenue recognized from performance obligations related to prior periods was not material. Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less and contracts where revenue is recognized as invoiced, is not material, except for warranty contract revenue, which is described under AFC below.

Revenue is recognized when control of the promised goods or services are transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company generates its revenues from contracts with customers. In contracts with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for

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each performance obligation. The Company then determines how the goods or services are transferred to the customer in order to determine the timing of revenue recognition.

ADESA Auction Services

The performance obligation contained within the ADESA auction contracts for sellers is facilitating the remarketing of vehicles, including titling, administration and sale at auction. The remarketing performance obligation is satisfied at the point in time the vehicle is sold through the auction process. The ADESA ancillary services contracts include services such as inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification and collateral recovery services. The performance obligations related to these services are subject to separate contracts and are satisfied at the point in time the services are completed.

Contracts with buyers are generally established via purchase at auction, subject to standard terms and conditions. These contracts contain a single performance obligation, which is satisfied at a point in time when the vehicle is purchased through the auction process.

Most of the vehicles that are sold through auctions are consigned to ADESA by the seller and held at ADESA’s facilities or third-party locations. ADESA does not take title to these consigned vehicles and records only its auction fees as revenue ("Auction fees and services revenue" in the consolidated statement of income) because it has no influence on the vehicle auction selling price agreed to by the seller and the buyer at the auction. ADESA does not record the gross selling price of the consigned vehicles sold at auction as revenue. Our buyer fees are typically based on a tiered structure with fees increasing with the sale price of the vehicle, while seller fees are typically fixed. ADESA generally enforces its rights to payment for seller transactions through net settlement provisions following the sale of a vehicle. ADESA also sells vehicles that have been purchased, which represent less than 5% of total vehicles sold. For these types of sales, ADESA does record the gross selling price of purchased vehicles sold at auction as revenue ("Purchased vehicle sales" in the consolidated statement of income) and the gross purchase price of the vehicles as cost of services.

AFC

AFC's revenue ("Finance-related revenue" in the consolidated statement of income) is comprised of interest and fee income, provision for credit losses and other revenues associated with our finance receivables, as well as warranty contract revenue. The following table summarizes the primary components of AFC's finance-related revenue:

Year Ended December 31,AFC Revenue (in millions) 2019 2018 2017Interest and fee income $ 342.1 $ 327.3 $ 290.3Other revenue 10.9 13.1 11.8Provision for credit losses (35.3) (32.9) (33.9)Warranty contract revenue 35.2 33.4 33.1

$ 352.9 $ 340.9 $ 301.3

Interest and fee income

Revenues associated with interest and fee income are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs, and therefore are not subject to evaluation under Topic 606. Interest on finance receivables is recognized based on the number of days the vehicle remains financed. AFC ceases recognition of interest on finance receivables when the loans become delinquent, which is generally 31 days past due. Dealers are also charged a fee to floorplan a vehicle ("floorplan fee"), to extend the terms of the receivable ("curtailment fee") and a document processing fee. AFC fee income including floorplan and curtailment fees is recognized over the estimated life of the finance receivable.

Other revenue

Other revenue includes lot check fees, filing fees, lien holder payoff services and other related program fees, each of which are charged to and collected from AFC's customers.

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Warranty contract revenue

Warranty contract revenue represents the revenue generated by Preferred Warranties, Inc. ("PWI"). PWI receives advance payments for vehicle service contracts and unearned revenue is deferred and recognized over the terms of the contracts utilizing a historical earnings curve. The average term of the contracts originated in 2019 was approximately 1.7 years and PWI had unearned revenue of $34.2 million at December 31, 2019.

Income Taxes

We file federal, state and foreign income tax returns in accordance with the applicable rules of each jurisdiction. We account for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes. The provision for income taxes includes federal, foreign, state and local income taxes payable, as well as deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable amounts in periods in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Net Income from Continuing Operations per Share

Basic net income from continuing operations per share is computed by dividing net income from continuing operations by the weighted average common shares outstanding during the year. Diluted net income from continuing operations per share represents net income from continuing operations divided by the sum of the weighted average common shares outstanding plus potential dilutive instruments related to our stock-based employee compensation program. The effect of stock options and restricted stock on net income 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. Stock options that would have an anti-dilutive effect on net income from continuing operations per diluted share and performance-based restricted stock units ("PRSUs") subject to performance conditions which have not yet been satisfied are excluded from the calculations.

Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation under ASC 718, Compensation—Stock Compensation. We recognize all stock-based compensation as expense in the financial statements over the vesting period and that cost is measured as the fair value of the award at the grant date for equity-classified awards. We also recognize the impact of forfeitures as they occur and excess tax benefits and tax deficiencies related to employee stock-based compensation within income tax expense.

New Accounting Standards

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. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2018-15 will have on the consolidated financial statements.

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In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by eliminating Step 2 (implied fair value measurement). Instead goodwill impairment would be measured as the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of ASU 2017-04 will have a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The new guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted beginning in annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company expects the change in methodology for measuring credit losses will result in an increase in the allowance for credit losses of approximately $5 million. The cumulative effect of this change will be recognized, net of tax, as an adjustment to retained earnings on January 1, 2020.

Note 3—Acquisitions and Equity Method Investment

2019 Acquisitions

In January 2019, the Company completed the acquisition of Dent-ology. Dent-ology enhances our mobile reconditioning capabilities and bolsters our offerings to include wheel repair and hail catastrophe response services.

In January 2019, the Company completed the acquisition of CarsOnTheWeb. COTW is an online auction company serving the wholesale vehicle sector in Continental Europe that seamlessly connects OEMs, fleet owners, wholesalers and dealers. The acquisition advances KAR's international strategy and extends its strong North American and U.K.-based portfolio of physical, online and digital auction marketplaces.

Certain of the purchase agreements included additional payments over a specified period contingent on certain terms, conditions and performance. The purchased assets included accounts receivable, inventory, property and equipment, customer relationships, tradenames and software. Financial results for each acquisition have been included in our consolidated financial statements from the date of acquisition.

The aggregate purchase price for the businesses acquired in 2019, net of cash acquired, was approximately $169.2 million, which included net cash payments of $120.7 million, deferred payments with a fair value of $19.2 million and estimated contingent payments with a fair value of $29.3 million based on an option pricing valuation model. The maximum amount of undiscounted deferred payments and undiscounted contingent payments related to these acquisitions could approximate $77.0 million. The purchase price for the acquired businesses was allocated to acquired assets and liabilities based upon fair values, including $32.7 million to intangible assets, representing the fair value of acquired customer relationships of $26.4 million, software of $4.3 million and tradenames of $2.0 million, which are being amortized over their expected useful lives. The acquisitions resulted in aggregate goodwill of $142.6 million. The goodwill is recorded in the ADESA Auctions reportable segment. The financial impact of these acquisitions, including pro forma financial results, was immaterial to the Company's consolidated results for the year ended December 31, 2019.

2018 Acquisitions

In February 2018, the Company completed the acquisition of STRATIM Systems Inc. ("STRATIM"). STRATIM is a mobility and fleet management software company based in San Francisco, California that uses data analytics to help fleet owners manage, maintain and service their fleets. The addition of STRATIM supplements KAR’s broad portfolio of wholesale used vehicle physical, online and digital auction marketplaces and ancillary service providers.

In November 2018, the Company completed the acquisition of Clearplan. Clearplan’s digital platform provides recovery agents, drivers, forwarders and automotive lenders a centralized, mobile, cloud-based hub for repossession workflow and logistics management. The acquisition brings innovative new mobile technology and real-time data analytics to KAR’s portfolio of software as a service capabilities including Recovery Database Network (RDN).

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The purchased assets included accounts receivable, computer equipment and software. Financial results for each acquisition have been included in our consolidated financial statements from the date of acquisition.

The aggregate purchase price for the businesses acquired in 2018, net of cash acquired, was approximately $45.2 million. The purchase price for the acquired businesses was allocated to acquired assets and liabilities based upon fair values, including $10.5 million to intangible assets, representing the fair value of acquired customer relationships of $6.3 million, software of $4.0 million and tradenames of $0.2 million, which are being amortized over their expected useful lives. The acquisitions resulted in goodwill of $32.1 million. The goodwill is recorded in the ADESA Auctions reportable segment. The financial impact of these acquisitions, including pro forma financial results, was immaterial to the Company’s consolidated results for the year ended December 31, 2018.

2017 Acquisitions

In April 2017, the Company purchased all of the stock of CarCo Technologies, Inc. (“DRIVIN”). DRIVIN aggregates automotive retail, pricing, registration and other market and economic data from a variety of public and proprietary sources. The insights generated from that data are deployed through predictive pricing, inventory management and vehicle matching tools that help customers buy, sell and source vehicles.

In May 2017, the Company acquired Dependable Auto Shippers ("DAS"). DAS provides vehicle transportation services for corporate and personal vehicle transportation needs.

In October 2017, the Company acquired the remaining 50% interest in Nth Gen Software Inc. ("TradeRev"). TradeRev brings mobile and digital technology to the Company’s portfolio of whole car auctions, floorplan financing solutions, and other ancillary and related services. The Company plans to further integrate those capabilities into TradeRev to expand its digital business and strengthen its share in the dealer-to-dealer market. The Company entered into operating lease obligations related to various facilities through 2028. Initial annual lease payments for the various facilities are approximately $1.8 million per year.

Certain of the purchase agreements included contingent payments related to vehicle volumes subsequent to the purchase date. The purchased assets included accounts receivable, inventory, customer relationships, tradenames, software and other intangible assets. Financial results for each acquisition have been included in our consolidated financial statements from the date of acquisition.

The aggregate purchase price for the businesses acquired in 2017, net of cash acquired, was approximately $103.0 million, which included deferred payments with a fair value of $6.6 million and estimated contingent payments with a fair value of $24.0 million. The maximum amount of undiscounted contingent payments related to these acquisitions could approximate $60.0 million. The purchase price for the acquired businesses was allocated to acquired assets and liabilities based upon fair values, including $28.5 million to intangible assets, representing the fair value of acquired customer relationships of $3.1 million, software of $23.1 million and tradenames of $2.3 million, which are being amortized over their expected useful lives. The acquisitions resulted in aggregate goodwill of $130.7 million. The goodwill is recorded in the ADESA Auctions reportable segment. The financial impact of these acquisitions, including pro forma financial results, was immaterial to the Company’s consolidated results for the year ended December 31, 2017.

Equity Method Investment

For the first nine months of 2017, ADESA held a 50% interest in TradeRev. In addition, ADESA also had a joint marketing agreement with TradeRev to assist in expanding its footprint in the dealer-to-dealer online space in the U.S. and Canadian markets. Prior to acquiring the rest of the business in October 2017, the Company accounted for TradeRev as an equity method investment because we had the ability to exercise significant influence over operating and financial policies but did not have a controlling financial interest. At the date of acquisition, the carrying amount of the investment was $18.4 million. Upon acquisition, our previously held interest in TradeRev was re-measured at fair value, resulting in a non-cash gain of $21.6 million. The fair value of our previously held interest in TradeRev was developed in consultation with independent valuation specialists who used a discounted cash flow methodology. The gain has been recognized as "Gain on previously held equity interest value" in the consolidated statement of income for the year ended December 31, 2017.

The Company’s share in the net losses of TradeRev in 2017, through the date of acquisition, was $4.4 million. This amount was recorded to “Other income, net” in the consolidated statements of income.

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Note 4—IAA Separation and Discontinued Operations

In February 2018, the Company announced that its board of directors had approved a plan to pursue the separation ("Separation") of its salvage auction business, IAA, through a spin-off. On June 28, 2019, the Company completed the spin-off, creating a new independent publicly traded company, IAA, Inc. ("IAA"). The Separation provided KAR shareholders with equity ownership in both KAR and IAA. On June 28, 2019, the Company’s shareholders received one share of IAA common stock for every share of Company common stock they held as of the close of business on June 18, 2019, the record date for the distribution. In addition to the shares of IAA common stock, KAR received a cash distribution of approximately $1,278.0 million from IAA, which was used to prepay a portion of KAR's term loans. In connection with the spin-off, the Company and IAA entered into various agreements to effect the Separation and provide a framework for their relationship after the Separation, including a separation and distribution agreement, a transition services agreement, an employee matters agreement and a tax matters agreement. These agreements provide for the allocation between the Company and IAA of assets, employees, liabilities and obligations (including investments, property, environmental and tax-related assets and liabilities) attributable to periods prior to, at and after IAA's Separation from the Company and will govern certain relationships between IAA and the Company after the Separation.

The financial results of IAA have been accounted for as discontinued operations for all periods presented. IAA was formerly presented as one of the Company’s reportable segments. Discontinued operations included one-time transaction costs in "Selling, general and administrative" of approximately $31.3 million and $8.1 million for the year ended December 31, 2019 and 2018, respectively, in connection with the Separation of the two companies. These costs consisted of consulting and professional fees associated with preparing for and executing the spin-off.

The following table presents the results of operations for IAA that have been reclassified to discontinued operations for all periods presented:

Year Ended December 31,2019 2018 2017

Operating revenues $ 723.6 $ 1,326.8 $ 1,219.2Operating expenses

Cost of services (exclusive of depreciation and amortization) 446.1 821.2 778.1Selling, general and administrative 94.5 124.0 108.5Depreciation and amortization 43.9 97.4 93.1

Total operating expenses 584.5 1,042.6 979.7Operating profit 139.1 284.2 239.5Interest expense 2.7 0.8 0.8Other income, net — (0.5) (0.9)Income from discontinued operations before income taxes 136.4 283.9 239.6Income taxes 40.3 73.5 51.6Income from discontinued operations $ 96.1 $ 210.4 $ 188.0

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The following table summarizes the major classes of assets and liabilities immediately preceding the spin-off on June 28, 2019 and at December 31, 2018:

June 28, 2019

December 31,2018

AssetsCash and cash equivalents $ 50.9 $ 60.0Trade receivables, net 284.7 311.0Other current assets 83.6 82.5Goodwill 536.8 536.8Customer relationships, net 62.2 74.8Other intangible assets, net 87.5 86.2Operating lease right-of-use assets 655.2 —Other assets 13.3 10.3Property and equipment, net 241.4 345.2Total assets, discontinued operations $ 2,015.6 $ 1,506.8LiabilitiesAccounts payable $ 115.8 $ 129.0Accrued employee benefits and compensation expenses 19.0 29.6Other accrued expenses 120.9 53.6Income taxes payable — 2.2Long-term debt 1,274.8 —Deferred income tax liabilities 63.7 63.1Operating lease liabilities 633.0 —Other liabilities 12.0 202.9Total liabilities, discontinued operations $ 2,239.2 $ 480.4

Note 5—Stock and Stock-Based Compensation Plans

Our stock-based compensation expense has included expense associated with KAR Auction Services, Inc. PRSUs, service-based restricted stock units ("RSUs"), service options and exit options. We have determined that the KAR Auction Services, Inc. PRSUs, RSUs, service options and exit options should be classified as equity awards. In addition, as further discussed below, holders of these awards received an equivalent number of PRSUs, RSUs and options in IAA as they had in KAR at June 28, 2019. These awards are scheduled to vest over the period from February 2020 to February/March 2022.

In connection with the spin-off of IAA, the Company modified its stock-based compensation awards under the "equitable adjustments" clause in the Omnibus Plan, which provides anti-dilution protection. Generally, the award adjustments were intended to maintain the economic value of the awards before and after the Separation date. The post-spin KAR awards and post-spin IAA awards are generally subject to the same terms and conditions, and will continue to vest on the same schedule as the pre-spin KAR awards, except as noted in the equity-conversion related provisions of the employee matters agreement. There was no incremental compensation expense recorded as a result of these modifications. The post-spin expense is comprised of the combined KAR and IAA awards held by KAR employees and did not change as a result of the spin-off.

The compensation cost that was charged against income for all stock-based compensation plans was $19.6 million, $19.6 million and $20.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, and the total income tax benefit recognized in the consolidated statement of income for options, PRSUs and RSUs was approximately $2.9 million, $3.9 million and $5.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. We did not capitalize any stock-based compensation cost in the years ended December 31, 2019, 2018 or 2017. As of December 31, 2019, an estimated $8.3 million of unrecognized compensation expense related to non-vested PRSUs is expected to be recognized over a weighted average term of approximately 1.6 years. As of December 31, 2019, there was approximately $9.9 million of unrecognized compensation expense related to non-vested RSUs which is expected to be recognized over a weighted average term of 1.8 years.

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

Year Ended December 31, 2019 2018 2017PRSUs $ 10.0 $ 10.8 $ 11.9RSUs 9.6 8.7 7.1Service options — 0.1 1.4Total stock-based compensation expense $ 19.6 $ 19.6 $ 20.4

KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan - PRSUs, RSUs, Service Options and Exit Options

We adopted the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan ("Omnibus Plan") in December 2009. The Omnibus Plan, which was approved by shareholders and amended and restated in June 2014, is intended to provide equity and/or cash-based awards to our executive officers and key employees. The maximum number of shares that may be issued pursuant to awards under the Omnibus Plan is 12.5 million, of which approximately 4.9 million shares remained available for future grants as of December 31, 2019. The Omnibus Plan provides for the grant of stock options, restricted stock, stock appreciation rights, other stock-based awards and cash-based awards. The PRSU and RSU grants described below were made pursuant to the Company's Policy on Granting Equity Awards.

PRSUs

In the years ended December 31, 2019, 2018 and 2017 we granted a target amount of approximately 0.3 million, 0.2 million and 0.2 million, respectively, PRSUs to certain executive officers and management of the Company. The weighted average grant date fair value of the PRSUs was $47.09 per share, $54.32 per share and $44.64 per share in 2019, 2018 and 2017, respectively, which was determined using the closing price of the Company's common stock on the dates of grant. Dividend equivalents accrue on the PRSUs and are subject to the same vesting and forfeiture terms as the PRSUs.

In 2016, we granted a target amount of approximately 0.3 million PRSUs to certain executive officers and management of the Company. The PRSUs vested in 2019 based on attainment of the Company's three-year cumulative operating adjusted net income per share goals. The weighted average grant date fair value of the PRSUs was $34.94 per share, which was determined using the closing price of the Company's common stock on the dates of grant.

The following table summarizes PRSU activity (held by KAR and IAA employees), including dividend equivalents, under the Omnibus Plan for the year ended December 31, 2019:

Performance Restricted Stock Units Number

WeightedAverage GrantDate Fair Value

PRSUs at January 1, 2019 789,707 $ 44.62Granted 288,545 47.09Vested (342,276) 33.44Forfeited (38,058) 25.26PRSUs at December 31, 2019 697,918 $ 18.52

KAR employees hold 625,515 of the non-vested PRSUs at December 31, 2019 and IAA employees hold 72,403 of the non-vested PRSUs at December 31, 2019. KAR employees also hold 616,753 of non-vested PRSUs in IAA at December 31, 2019. The fair value of shares that vested during the years ended December 31, 2019 and 2018 was $17.4 million and $16.1 million, respectively.

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RSUs

In each of the years ended December 31, 2019, 2018 and 2017, approximately 0.3 million RSUs were granted to certain executive officers and management of the Company. The RSUs are contingent upon continued employment and generally vest in three equal annual installments. The fair value of RSUs is the value of the Company's common stock at the date of grant and the weighted average grant date fair value of the RSUs was $46.95 per share, $54.28 per share and $44.03 per share in 2019, 2018 and 2017, respectively. Dividend equivalents accrue on the RSUs and are subject to the same vesting and forfeiture terms as the RSUs.

The following table summarizes RSU activity (held by KAR and IAA employees), including dividend equivalents, under the Omnibus Plan for the year ended December 31, 2019:

Restricted Stock Units Number

WeightedAverage GrantDate Fair Value

RSUs at January 1, 2019 556,172 $ 47.87Granted 307,772 46.95Vested (251,328) 42.86Forfeited (61,849) 33.24RSUs at December 31, 2019 550,767 $ 22.71

KAR employees hold 410,606 of the non-vested RSUs at December 31, 2019 and IAA employees hold 140,161 of the non-vested RSUs at December 31, 2019. KAR employees also hold 402,540 of non-vested RSUs in IAA at December 31, 2019. The fair value of shares that vested during the years ended December 31, 2019, 2018 and 2017 was $11.8 million, $29.7 million and $14.7 million, respectively.

Service Options

The outstanding service options granted under the Omnibus Plan have a ten year life and are fully vested and exercisable. The following table summarizes service option activity under the Omnibus Plan for the year ended December 31, 2019:

Service Options Number

WeightedAverageExercise

Price

WeightedAverage

RemainingContractual

Term

AggregateIntrinsic

Value(in millions)

Outstanding at January 1, 2019 1,003,654 $ 24.36 Granted — N/A Exercised (295,244) 19.87 Forfeited — N/A Canceled (563) 10.49

Outstanding at December 31, 2019 707,847 $ 9.08 3.3 years $ 9.0Exercisable at December 31, 2019 707,847 $ 9.08 3.3 years $ 9.0

The intrinsic value presented in the table above represents the amount by which the market value of the underlying stock exceeds the exercise price of the option at December 31, 2019. The intrinsic value changes continuously based on the fair value of our stock. The market value is based on KAR Auction Services' closing stock price of $21.79 on December 31, 2019. The total intrinsic value of service options exercised during the years ended December 31, 2019, 2018 and 2017 was $7.1 million, $13.1 million and $8.1 million, respectively. The fair market value of all vested and exercisable service options at December 31, 2019 and 2018 was $15.4 million and $47.9 million, respectively. All compensation expense related to the service options has been recognized.

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Exit Options

The outstanding exit options granted in 2010 under the Omnibus Plan have a ten year life and are fully vested and exercisable. The following table summarizes exit option activity under the Omnibus Plan for the year ended December 31, 2019:

Exit Options Number

WeightedAverageExercise

Price

WeightedAverage

RemainingContractual

Term

AggregateIntrinsic

Value(in millions)

Outstanding at January 1, 2019 14,465 $ 12.85 Granted — N/A Exercised (10,912) 12.02 Forfeited — N/A Canceled — N/A

Outstanding at December 31, 2019 3,553 $ 5.12 0.2 years $ 0.1Exercisable at December 31, 2019 3,553 $ 5.12 0.2 years $ 0.1

The intrinsic value presented in the table above represents the amount by which the market value of the underlying stock exceeds the exercise price of the option at December 31, 2019. The intrinsic value changes continuously based on the fair value of our stock. The market value is based on KAR Auction Services' closing stock price of $21.79 on December 31, 2019. The total intrinsic value of exit options exercised during the years ended December 31, 2019, 2018 and 2017 was $0.4 million, $23.9 million and $14.7 million, respectively. The fair market value of all vested and exercisable exit options at December 31, 2019 and 2018 was $0.1 million and $0.7 million, respectively. All compensation expense related to the exit options has been recognized.

KAR Auction Services, Inc. Employee Stock Purchase Plan

We adopted the KAR Auction Services, Inc. Employee Stock Purchase Plan ("ESPP") in December 2009. The ESPP, which was approved by shareholders, is designed to provide an incentive to attract, retain and reward eligible employees and is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended. A maximum of 1,000,000 shares of our common stock have been reserved for issuance under the ESPP, of which 225,020 shares remained available for future ESPP purchases as of December 31, 2019. The ESPP provides for one month offering periods with a 15% discount from the fair market value of a share on the date of purchase. A participant's annual contribution to the ESPP may not exceed $25,000 per year. Unless terminated earlier, the ESPP will terminate on December 31, 2028. In accordance with ASC 718, Compensation—Stock Compensation, the entire 15% purchase discount is recorded as compensation expense.

Share Repurchase Programs

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. 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.

In October 2016, the board of directors authorized a repurchase of up to $500 million of the Company’s outstanding common stock, par value $0.01 per share, through October 26, 2019. Repurchases were 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. In 2019, 2018 and 2017 we repurchased and retired

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4,753,300, 2,695,978 and 3,279,089 shares of common stock, respectively, in the open market at a weighted average price of $25.18, $55.64 and $45.74 per share, respectively, under the October 2016 authorization.

Note 6—Net Income from Continuing Operations Per Share

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

Year Ended December 31, 2019 2018 2017Net income from continuing operations $ 92.4 $ 117.6 $ 174.0

Weighted average common shares outstanding 131.6 134.3 136.3Effect of dilutive stock options and restricted stock awards 1.3 1.4 1.7Weighted average common shares outstanding and potential common shares 132.9 135.7 138.0Net income from continuing operations per share

Basic $ 0.70 $ 0.88 $ 1.28Diluted $ 0.70 $ 0.87 $ 1.26

Basic net income from continuing operations per share was calculated by dividing net income from continuing operations by the weighted average number of outstanding common shares for the period. Diluted net income from continuing operations per share was calculated consistent with basic net income from continuing operations per share including the effect of dilutive unissued common shares related to our stock-based employee compensation program. The effect of stock options and restricted stock on net income 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 an anti-dilutive effect on net income from continuing operations per diluted share and PRSUs subject to performance conditions which have not yet been satisfied are excluded from the calculations. No options were excluded from the calculation of diluted net income from continuing operations per share for the years ended December 31, 2019, 2018 and 2017. In addition, no PRSUs, approximately 0.5 million PRSUs and approximately 0.5 million PRSUs were excluded from the calculation of diluted net income per share for the years ended December 31, 2019, 2018 and 2017, respectively. Total options outstanding at December 31, 2019, 2018 and 2017 were 0.7 million, 1.0 million and 1.9 million, respectively.

Note 7—Allowance for Credit Losses and Doubtful Accounts

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

Year Ended December 31, 2019 2018 2017Allowance for Credit Losses Balance at beginning of period $ 14.0 $ 13.0 $ 12.0

Provision for credit losses 35.3 32.9 33.9Recoveries 7.7 6.9 5.3Less charge-offs (42.0) (38.8) (38.2)

Balance at end of period $ 15.0 $ 14.0 $ 13.0

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AFC's allowance for credit losses includes estimated losses for finance receivables currently held on the balance sheet of AFC and its subsidiaries.

The following is a summary of changes in the allowance for doubtful accounts related to trade receivables (in millions):

Year Ended December 31, 2019 2018 2017Allowance for Doubtful Accounts Balance at beginning of period $ 8.7 $ 9.1 $ 11.0

Provision for credit losses 4.8 4.0 4.0Less net charge-offs (4.0) (4.4) (5.9)

Balance at end of period $ 9.5 $ 8.7 $ 9.1

Recoveries of trade receivables were netted with charge-offs, as they were not material. Changes in the Canadian exchange rate did not have a material effect on the allowance for doubtful accounts.

Note 8—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 28, 2022. AFC Funding Corporation had committed liquidity of $1.70 billion for U.S. finance receivables at December 31, 2019.

In December 2018, AFC and AFC Funding Corporation entered into the Eighth Amended and Restated Receivables Purchase Agreement (the "Receivables Purchase Agreement"). The Receivables Purchase Agreement increased AFC Funding's U.S. committed liquidity from $1.50 billion to $1.70 billion and extended the facility's maturity date. In addition, the definition of eligible receivables was expanded. We capitalized approximately $11.6 million of costs in connection with the Receivables Purchase Agreement.

We also have an agreement for the securitization of AFCI's receivables, which expires on January 28, 2022. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$175 million at December 31, 2019. In December 2018, AFCI entered into Amending Agreement No. 2 to the Fourth Amended and Restated Receivables Purchase Agreement (the "Canadian Receivable Purchase Agreement"). The Canadian Receivables Purchase Agreement increased AFCI's committed liquidity from C$125 million to C$175 million and extended the facility's maturity date. In addition, the definition of eligible receivables was expanded. We capitalized approximately $0.9 million of costs in connection with the Canadian Receivables Purchase Agreement. 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 losses 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.

December 31, 2019

Net Credit Losses

During 2019

Total Amount of:

(in millions) ReceivablesReceivablesDelinquent

Floorplan receivables $ 2,099.4 $ 28.8 $ 34.3Other loans 15.8 — —Total receivables managed $ 2,115.2 $ 28.8 $ 34.3

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December 31, 2018

Net Credit Losses

During 2018

Total Amount of:

(in millions) ReceivablesReceivablesDelinquent

Floorplan receivables $ 2,001.9 $ 15.9 $ 31.9Other loans 12.9 — —Total receivables managed $ 2,014.8 $ 15.9 $ 31.9

AFC's allowance for losses was $15.0 million and $14.0 million at December 31, 2019 and 2018, respectively.

As of December 31, 2019 and 2018, $2,061.6 million and $1,973.2 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 agreement.

Obligations collateralized by finance receivables consisted of the following:

December 31,2019

December 31,2018

Obligations collateralized by finance receivables, gross $ 1,474.4 $ 1,464.7Unamortized securitization issuance costs (13.2) (19.4)Obligations collateralized by finance receivables $ 1,461.2 $ 1,445.3

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 December 31, 2019, we were in compliance with the covenants in the securitization agreements.

Note 9—Goodwill and Other Intangible Assets

Goodwill consisted of the following (in millions):

ADESAAuctions AFC Total

Balance at December 31, 2017 $ 1,390.4 $ 263.7 $ 1,654.1Increase for acquisition activity 32.1 — 32.1Other (9.3) — (9.3)Balance at December 31, 2018 $ 1,413.2 $ 263.7 $ 1,676.9Increase for acquisition activity 142.6 — 142.6Other 2.2 — 2.2Balance at December 31, 2019 $ 1,558.0 $ 263.7 $ 1,821.7

Goodwill represents the excess cost over fair value of identifiable net assets of businesses acquired. Goodwill increased in 2019 and 2018 primarily as a result of acquisitions. A portion of the goodwill resulting from the businesses acquired in 2019 and 2018 is expected to be deductible for tax purposes. The "other" category includes the impact of fluctuations in exchange rates.

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December 31, 2019, 2018 and 2017

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A summary of customer relationships is as follows (in millions):

December 31, 2019 December 31, 2018

UsefulLives

(in years)

GrossCarryingAmount

AccumulatedAmortization

CarryingValue

GrossCarryingAmount

AccumulatedAmortization

CarryingValue

Customer relationships 5 - 19 $ 845.3 $ (637.4) $ 207.9 $ 814.4 $ (587.0) $ 227.4

The increase in customer relationships in 2019 was primarily related to customer relationships acquired, partially offset by the amortization of existing customer relationships. The decrease in customer relationships in 2018 was primarily a result of continued amortization.

A summary of other intangibles is as follows (in millions):

December 31, 2019 December 31, 2018

Useful Lives

(in years)

GrossCarryingAmount

AccumulatedAmortization

CarryingValue

GrossCarryingAmount

AccumulatedAmortization

CarryingValue

Tradenames 2 - Indefinite $ 147.6 $ (10.7) $ 136.9 $ 145.6 $ (8.6) $ 137.0Computer software & technology 3 - 13 443.0 (281.5) 161.5 381.8 (246.5) 135.3Covenants not to compete 5 0.3 (0.2) 0.1 0.3 (0.2) 0.1Total $ 590.9 $ (292.4) $ 298.5 $ 527.7 $ (255.3) $ 272.4

Other intangibles increased in 2019 and 2018 primarily as a result of computer software additions and acquisitions, partially offset by the amortization of existing intangibles. The carrying amount of tradenames with an indefinite life was approximately $131.5 million at December 31, 2019 and 2018.

Amortization expense for customer relationships and other intangibles was $122.9 million, $111.7 million and $118.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Estimated amortization expense on existing intangible assets for the next five years is $110.7 million for 2020, $77.4 million for 2021, $42.5 million for 2022, $26.8 million for 2023 and $19.3 million for 2024.

Note 10—Property and Equipment

Property and equipment consisted of the following (in millions):

Useful Lives(in years)

December 31, 2019 2018Land $ 205.5 $ 244.6Buildings 5 - 40 247.3 245.0Land improvements 5 - 20 183.7 172.3Building and leasehold improvements 3 - 33 133.6 92.6Furniture, fixtures and equipment 1 - 15 344.0 297.7Vehicles 3 - 10 16.5 14.9Construction in progress 12.7 31.4

1,143.3 1,098.5Accumulated depreciation (534.3) (467.5)Property and equipment, net $ 609.0 $ 631.0

Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $65.8 million, $60.7 million and $52.8 million, respectively.

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Note 11—Self-Insurance and Retained Loss Reserves

We self-insure our employee medical benefits, as well as a portion of our automobile, general liability and workers' compensation claims. We have insurance coverage that limits the exposure on individual claims. The cost of the insurance is expensed over the contract periods. Utilizing historical claims experience, we record an accrual for the claims based upon the expected amount of all such claims, which includes the cost of claims that have been incurred but not reported. Accrued medical benefits and workers' compensation expenses are included in "Accrued employee benefits and compensation expenses" while accrued automobile and general liability expenses are included in "Other accrued expenses."

The following is a summary of the changes in the reserves for self-insurance and the retained losses (in millions):

Year Ended December 31, 2019 2018 2017Balance at beginning of period $ 35.8 $ 37.7 $ 35.8Net payments (66.2) (57.8) (59.3)Expense 67.1 55.9 61.2Balance at end of period $ 36.7 $ 35.8 $ 37.7

Individual stop-loss coverage for medical benefits was $0.5 million in 2019, 2018 and 2017. There was no aggregate policy limit for medical benefits for the Company in either year. The retention for automobile and general liability claims was $1.0 million per occurrence and the retention for workers' compensation claims was $0.5 million per occurrence with a $1.0 million corridor deductible in the 2019, 2018 and 2017 policy years. Once the $1.0 million corridor deductible is met for workers' compensation claims, the deductible reverts back to $0.5 million per occurrence. These retentions are aggregated for workers’ compensation, automobile and general liability claims at approximately $35.9 million in 2019, $31.5 million in 2018 and $30.0 million in 2017. If these aggregates are met, the insurance company would pay the next $7.5 million.

Note 12—Long-Term Debt

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

December 31, Interest Rate* Maturity 2019 2018Term Loan B-4 Adjusted LIBOR + 2.25% March 11, 2021 $ — $ 704.4Term Loan B-5 Adjusted LIBOR + 2.50% March 9, 2023 — 1,031.5Term Loan B-6 Adjusted LIBOR + 2.25% September 19, 2026 947.6 —Revolving Credit Facility Adjusted LIBOR + 1.75% September 19, 2024 — —Senior notes 5.125% June 1, 2025 950.0 950.0European lines of credit Euribor + 1.25% Repayable upon demand 19.3 —Canadian line of credit CAD Prime + 0.50% Repayable upon demand — —Total debt 1,916.9 2,685.9Unamortized debt issuance costs/discounts (26.8) (18.5)Current portion of long-term debt (28.8) (13.1)Long-term debt $ 1,861.3 $ 2,654.3

*The interest rates presented in the table above represent the rates in place at December 31, 2019. The weighted average interest rate on our variable rate debt was 4.01% and 5.21% at December 31, 2019 and 2018, respectively.

Credit Facilities

In June 2019, the Company prepaid approximately $518.6 million and $759.4 million of Term Loan B-4 and Term Loan B-5, respectively, with cash received from IAA in connection with the Separation. As a result of the term loan prepayments in

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the second quarter of 2019, the Company recorded additional interest expense of approximately $1.8 million related to the acceleration of amortization on debt issuance costs.

On September 19, 2019, we entered into the Third Amendment Agreement (the "Third Amendment") to the Credit Agreement. The Third Amendment provided for, among other things, (i) the refinancing of the existing Term Loan B-4 and Term Loan B-5 with the new seven-year, $950 million Term Loan B-6, (ii) repayment of the 2017 Revolving Credit Facility and (iii) the $325 million, five-year Revolving Credit Facility. No early termination penalties were incurred by the Company; however, we incurred a non-cash loss on the extinguishment of debt of $2.2 million in the third quarter of 2019. The loss was primarily a result of the write-off of unamortized debt issue costs associated with Term Loan B-4 and Term Loan B-5. We capitalized approximately $14.1 million of debt issuance costs in connection with the Third Amendment.

On May 31, 2017, we entered into an Incremental Commitment Agreement and Second Amendment (the "Second Amendment") to the Credit Agreement. The Second Amendment provided for, among other things, (i) the refinancing and repricing of the existing Term Loan B-2 remaining after the repayment with Term Loan B-4, (ii) the refinancing and repricing of existing Term Loan B-3 remaining after the repayment with Term Loan B-5 and (iii) the 2017 Revolving Credit Facility. The Company used proceeds from the issuance of $950 million senior notes and proceeds from the issuance of $1,767 million in the aggregate of Term Loan B-4 and Term Loan B-5 to repay Term Loan B-2 and Term Loan B-3 in full and to repay the outstanding balance on the 2016 Revolving Credit Facility. No early termination penalties were incurred by the Company; however, we incurred a non-cash loss on the extinguishment of debt of $27.5 million in the second quarter of 2017. The loss was a result of the write-off of unamortized debt issue costs and debt discounts associated with Term Loan B-2 and Term Loan B-3. We capitalized approximately $7.8 million of debt issuance costs in connection with the Second Amendment.

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.

Term Loan B-6 was issued at a discount of $2.4 million and the discount is being amortized using the effective interest method to interest expense over the term of the loan. Term Loan B-6 is payable in quarterly installments equal to 0.25% of the original aggregate principal amount. Such payments commenced on December 31, 2019, with the balance payable at the maturity date.

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), provided there are revolving loans outstanding. We were in compliance with the covenants in the Credit Agreement at December 31, 2019.

As set forth in the Credit Agreement, the Tranche B-6 Term Loans bear interest at an adjusted LIBOR rate plus 2.25% or at the Company’s election, Base Rate (as defined in the Credit Agreement) plus 1.25%. Loans under the Revolving Credit Facility will bear interest at a rate calculated based on the type of borrowing (either adjusted LIBOR or Base Rate) and the Company’s Consolidated Senior Secured Net Leverage Ratio, with such rate ranging from 2.25% to 1.75% for adjusted LIBOR loans and from 1.25% to 0.75% for Base Rate 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 Facility based on the Company’s Consolidated Senior Secured Net Leverage Ratio, from time to time. The rate on Term Loan B-6 was 4.06% at December 31, 2019.

There were no borrowings on the Revolving Credit Facility at December 31, 2019 or 2018. In addition, we had related outstanding letters of credit in the aggregate amount of $27.4 million and $32.9 million at December 31, 2019 and 2018, respectively, which reduce the amount available for borrowings under the revolving credit facility.

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Senior Notes

On May 31, 2017, we issued $950 million of 5.125% senior notes due June 1, 2025. The Company pays interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year, which commenced on December 1, 2017. We may redeem the senior notes, in whole or in part, at any time prior to June 1, 2020 at a redemption price equal to 100% of the principal amount plus a make-whole premium and thereafter at a premium that declines ratably to par in 2023. We capitalized approximately $14.7 million of debt issuance costs in connection with the senior notes. The senior notes are guaranteed by the Subsidiary Guarantors.

European Lines of Credit

COTW has lines of credit aggregating $33.6 million (€30 million). The lines of credit have an interest rate of Euribor plus 1.25% and had an aggregate $19.3 million of borrowings outstanding at December 31, 2019. The lines of credit are guaranteed by certain COTW subsidiaries. In addition, as part of the acquisition of COTW, we assumed debt of approximately $10.7 million which was paid off in the first quarter of 2019.

Canadian Line of Credit

ADESA Canada has a C$8 million line of credit. The line of credit bears interest at a rate equal to the Canadian prime rate plus 50 basis points. There were no borrowings under the Canadian line of credit at December 31, 2019 or 2018. There were related letters of credit outstanding totaling approximately C$1.0 million at December 31, 2019 and 2018, which reduce credit available under the Canadian line of credit, but do not affect amounts available for borrowings under our Revolving Credit Facility. The line of credit is guaranteed by certain ADESA Canada companies.

Future Principal Payments

At December 31, 2019, aggregate future principal payments on long-term debt are as follows (in millions):

2020 $ 28.82021 9.52022 9.52023 9.52024 9.5Thereafter 1,850.1

$ 1,916.9

Note 13—Financial Instruments

Our derivative activities are initiated within the guidelines of documented corporate risk management policies. We do not enter into any derivative transactions for speculative or trading purposes.

Interest Rate Risk Management

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. We have used interest rate cap agreements to accomplish this objective.

• In August 2017, we entered into two interest rate caps with an aggregate notional amount of $800 million to manage our exposure to interest rate movements on our variable rate Credit Facility when three-month LIBOR exceeded 2.0%. The interest rate cap agreements each had an effective date of September 30, 2017 and each matured on September 30, 2019. We paid an aggregate amount of approximately $1.0 million for the caps in August 2017.

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• In March 2017, we entered into two interest rate caps with an aggregate notional amount of $400 million to manage our exposure to interest rate movements on our variable rate Credit Facility when three-month LIBOR exceeded 2.0%. The interest rate cap agreements each had an effective date of March 31, 2017 and each matured on March 31, 2019. We paid an aggregate amount of approximately $0.7 million for the caps in April 2017.

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. 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. The following table presents the fair value of our interest rate derivatives included in the consolidated balance sheets for the periods presented (in millions):

Asset DerivativesDecember 31, 2019 December 31, 2018

Derivatives Not Designated as HedgingInstruments

Balance SheetLocation

FairValue

Balance SheetLocation

FairValue

2017 Interest rate caps Other assets N/A Other assets $ 5.2

We have not designated any of the interest rate caps as hedges for accounting purposes. Accordingly, changes in the fair value of the interest rate caps are recognized as "Interest expense" in the consolidated statement of income. The following table presents the effect of the interest rate derivatives on our consolidated statements of income for the periods presented (in millions):

Location of Gain /(Loss) Recognized in

Income on Derivatives

Amount of Gain / (Loss) Recognized in Income on Derivatives

Year Ended December 31,

Derivatives Not Designated as Hedging Instruments 2019 2018 20172017 Interest rate caps Interest expense $ (0.9) $ 5.8 $ 0.8

Concentrations of Credit Risk

Financial instruments that potentially subject us to credit risk consist principally of interest-bearing investments, finance receivables, trade receivables and interest rate derivatives. We maintain cash and cash equivalents, short-term investments, and certain other financial instruments with various major financial institutions. We perform periodic evaluations of the relative credit standing of these financial institutions and companies and limit the amount of credit exposure with any one institution. Cash and cash equivalents include interest-bearing investments with maturities of three months or less. Due to the nature of our business, substantially all trade and finance receivables are due from vehicle dealers and institutional sellers. We have possession of vehicles or vehicle titles collateralizing a significant portion of the trade and finance receivables. The risk associated with this concentration is limited due to the large number of accounts and their geographic dispersion. We monitor the creditworthiness of customers to which we grant credit terms in the normal course of business. In the event of non-performance by counterparties to financial instruments we are exposed to credit-related losses, but management believes this credit risk is limited by periodically reviewing the creditworthiness of the counterparties to the transactions.

Financial Instruments

The carrying amounts of trade receivables, finance receivables, other current assets, accounts payable, accrued expenses and borrowings under our short-term revolving line of credit facilities approximate fair value because of the short-term nature of those instruments.

As of December 31, 2019 and 2018, the estimated fair value of our long-term debt amounted to $1,958.5 million and $2,537.9 million, respectively. The estimates of fair value were based on broker-dealer quotes for our debt as of December 31, 2019 and 2018. The estimates presented on long-term financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.

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Note 14—Leases

We lease property, software, automobiles, trucks and trailers pursuant to operating lease agreements. We also lease furniture, fixtures and equipment under finance leases. Our leases have varying remaining lease terms with leases expiring through 2038, some of which include options to extend the leases.

The components of lease expense were as follows (in millions):

Year EndedDecember 31, 2019

Operating lease cost $ 60.2Finance lease cost: Amortization of right-of-use assets $ 14.7 Interest on lease liabilities 1.3Total finance lease cost $ 16.0

Supplemental cash flow information related to leases was as follows (in millions):

Year EndedDecember 31, 2019

Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 58.8 Operating cash flows related to finance leases 1.3 Financing cash flows related to finance leases 15.9Right-of-use assets obtained in exchange for lease obligations: Operating leases 85.9 Finance leases 18.1

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Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):

December 31,2019

Operating LeasesOperating lease right-of-use assets $ 364.1Other accrued expenses $ 34.5Operating lease liabilities 358.3Total operating lease liabilities $ 392.8Finance LeasesProperty and equipment, gross $ 102.2Accumulated depreciation (74.3)Property and equipment, net $ 27.9Other accrued expenses $ 13.3Other liabilities 14.0Total finance lease liabilities $ 27.3Weighted Average Remaining Lease TermOperating leases 10.8 yearsFinance leases 2.3 yearsWeighted Average Discount RateOperating leases 6.1%Finance leases 4.9%

Maturities of lease liabilities as of December 31, 2019 were as follows (in millions):

OperatingLeases

FinanceLeases

2020 $ 57.2 $ 14.52021 54.3 11.22022 51.5 3.12023 49.0 0.22024 47.9 0.2Thereafter 283.1 —Total lease payments 543.0 29.2Less imputed interest (150.2) (1.9)Total $ 392.8 $ 27.3

The following prior year information was accounted for under ASC 840, Leases. Total lease expense for the years ended December 31, 2018 and 2017 was $61.1 million and $54.9 million, respectively. Certain assets included in our furniture, fixtures and equipment at December 31, 2018 were held under finance leases. These assets are summarized below:

Classes of PropertyDecember 31,

2018Furniture, fixtures and equipment $ 86.1Accumulated depreciation (59.5)Capital lease assets $ 26.6

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Note 15—Income Taxes

The components of our income from continuing operations before income taxes and the provision for income taxes are as follows (in millions):

Year Ended December 31, 2019 2018 2017Income from continuing operations before income taxes:

Domestic $ 100.0 $ 85.6 $ 72.6Foreign 30.1 66.3 85.8Total $ 130.1 $ 151.9 $ 158.4

Income tax expense (benefit): Current:

Federal $ 18.4 $ 5.0 $ 30.9Foreign 17.4 23.7 23.8State 5.2 2.6 2.0

Total current provision 41.0 31.3 56.7Deferred:

Federal 3.8 10.4 (73.2)Foreign (7.4) (6.2) (2.8)State 0.3 (1.2) 3.7

Total deferred provision (3.3) 3.0 (72.3)Income tax expense $ 37.7 $ 34.3 $ (15.6)

The provision for income taxes was different from the U.S. federal statutory rate applied to income before taxes, and is reconciled as follows:

Year Ended December 31, 2019 2018 2017Statutory rate 21.0 % 21.0 % 35.0 %State and local income taxes, net 3.6 % 1.9 % 1.8 %Reserves for tax exposures (0.5)% (0.6)% (0.8)%Change in valuation allowance 0.9 % 0.4 % (1.5)%International operations 3.1 % 4.7 % (5.6)%Stock-based compensation (2.5)% (5.0)% (2.8)%Impact of law and rate change (0.2)% (1.7)% (36.2)%Excess officer's compensation 1.5 % 0.9 % — %Transaction costs 0.6 % 0.3 % — %Other, net 1.5 % 0.7 % 0.3 %Effective rate 29.0 % 22.6 % (9.8)%

On December 22, 2017, U.S. tax reform (Tax Cuts and Jobs Act of 2017) was enacted. The law includes significant changes to the U.S. corporate income tax system, including a Federal corporate income tax rate reduction from 35 percent to 21 percent effective for tax years beginning after December 31, 2017. As a result, for the year ended December 31, 2017, the Company recorded a deferred income tax benefit of $65.7 million related to the remeasurement of its deferred tax assets and

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liabilities. In addition, the law imposed a one-time deemed repatriation transition tax on the accumulated unrepatriated and untaxed earnings of our foreign subsidiaries. This resulted in the Company recording a current tax expense of $9.0 million for the year ended December 31, 2017.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets. The valuation allowance as of December 31, 2019 primarily relates to net operating losses, tax credits and capital loss carryforwards that are not more likely than not to be utilized prior to their expiration.

We offset all deferred tax assets and liabilities by jurisdiction, as well as any related valuation allowance, and present them as a non-current deferred income tax asset or liability (as applicable). Deferred tax assets (liabilities) are comprised of the following (in millions):

December 31,2019 2018

Gross deferred tax assets: Allowances for trade and finance receivables $ 6.0 $ 5.5Accruals and liabilities 6.2 12.7Employee benefits and compensation 14.0 14.6Net operating loss carryforwards 48.8 45.5Investment basis difference (2.2) (2.1)Right of use lease liability 97.0 —Other 4.1 4.8

Total deferred tax assets 173.9 81.0Deferred tax asset valuation allowance (31.1) (29.9)

Total 142.8 51.1Gross deferred tax liabilities:

Property and equipment (76.4) (68.7)Goodwill and intangible assets (100.5) (102.7)Right of use lease asset (89.8) —Other (4.7) (5.0)

Total (271.4) (176.4)Net deferred tax liabilities $ (128.6) $ (125.3)

The tax benefit from state and federal net operating loss carryforwards expires as follows (in millions):

2020 $ 0.32021 1.12022 0.32023 0.32024 0.22025 to 2039 46.6

$ 48.8

Permanently reinvested undistributed earnings of our foreign subsidiaries were approximately $352.6 million at December 31, 2019. Because these amounts have been or will be permanently reinvested in properties and working capital, we have not recorded the deferred taxes associated with these earnings. If the undistributed earnings of foreign subsidiaries were to be remitted, state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable

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foreign tax credits. It is not practical for us to determine the additional tax that would be incurred upon remittance of these earnings.

We made federal income tax payments, net of federal income tax refunds, of $9.9 million, $20.5 million and $37.8 million in 2019, 2018 and 2017, respectively. State and foreign income taxes paid by us, net of refunds, totaled $27.9 million, $37.4 million and $32.3 million in 2019, 2018 and 2017, respectively.

We apply the provisions of ASC 740, Income Taxes. ASC 740 clarifies the accounting and reporting for uncertainty in income taxes recognized in an enterprise's financial statements. These provisions prescribe a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken on income tax returns.

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

December 31, 2019 2018Balance at beginning of period $ 7.4 $ 9.7Increase in prior year tax positions — —Decrease in prior year tax positions (0.2) (0.7)Increase in current year tax positions 0.7 0.8Lapse in statute of limitations (1.8) (2.4)Balance at end of period $ 6.1 $ 7.4

The total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was $4.4 million and $5.0 million at December 31, 2019 and 2018, respectively.

We record interest and penalties associated with the uncertain tax positions within our provision for income taxes on the income statement. We had reserves totaling $0.5 million and $1.1 million at December 31, 2019 and December 31, 2018, respectively, associated with interest and penalties, net of tax.

The provision for income taxes involves management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by us. In addition, U.S. and non-U.S. tax authorities periodically review income tax returns filed by us and can raise issues regarding our filing positions, timing and amount of income or deductions and the allocation of income among the jurisdictions in which we operate. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the normal course of business we are subject to examination by taxing authorities in the U.S., Canada, Western Europe, United Kingdom and Mexico. In general, the examination of our material tax returns is completed for the years prior to 2012.

Based on the potential outcome of the Company's tax examinations and the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the currently remaining unrecognized tax benefits will change within the next 12 months. The associated net tax impact on the reserve balance is estimated to be in the range of a $0.5 million to $1.0 million decrease.

Note 16—Employee Benefit Plans

401(k) Plan

We maintain a defined contribution 401(k) plan that covers substantially all U.S. employees. Participants are generally allowed to make non-forfeitable contributions up to the annual IRS limits. The Company matches 100 percent of the amounts contributed by each individual participant up to 4 percent of the participant's compensation. Participants are 100 percent vested in the Company's contributions. For the years ended December 31, 2019, 2018 and 2017 we contributed $16.3 million, $16.9 million and $15.5 million, respectively.

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Note 17—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. Legal fees are expensed as incurred.

We have accrued, as appropriate, for environmental remediation costs anticipated to be incurred at certain of our auction facilities. There were no liabilities for environmental matters included in "Other accrued expenses" at December 31, 2019 or 2018.

We store a significant number of vehicles owned by various customers that are consigned to us to be auctioned. We are contingently liable for each consigned vehicle until the eventual sale or other disposition, subject to certain natural disaster exceptions. Individual stop loss and aggregate insurance coverage is maintained on the consigned vehicles. These consigned vehicles are not included in the consolidated balance sheets.

In the normal course of business, we also enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers and others. These guarantees and indemnifications do not materially impact our financial condition or results of operations, but indemnifications associated with our actions generally have no dollar limitations and historically have been inconsequential.

As noted above, 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. Such litigation is generally not, in the opinion of management, likely to have a material adverse effect on our financial condition, results of operations or cash flows.

Note 18—Accumulated Other Comprehensive Loss

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

December 31, 2019 2018Foreign currency translation loss $ (31.0) $ (61.3)Accumulated other comprehensive loss $ (31.0) $ (61.3)

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Note 19—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. Prior to the spin-off of IAA, our operations were grouped into three operating segments: ADESA Auctions, IAA and AFC, which also served as our reportable business segments. Beginning in the second quarter of 2019, after the completion of the spin-off, the Company began operating under two reportable business segments: ADESA Auctions and AFC. These reportable business segments offer different services and have fundamental differences in their operations. Results of the former IAA segment and spin-related costs are now reported as discontinued operations (see Note 4). Segment results for prior periods have been reclassified to conform with the new presentation of segments.

ADESA Auctions encompasses all physical and online wholesale auctions throughout North America (U.S., Canada and Mexico) and Europe. Beginning in 2019, the ADESA Auctions Segment includes COTW, an online auction company serving the wholesale vehicle sector in Continental Europe. Beginning in October 2017, the ADESA Auctions segment includes TradeRev, an online automotive remarketing system where dealers can launch and participate in real-time vehicle auctions at any time. ADESA Auctions relates to used vehicle remarketing, including auction services, remarketing, or make ready services and all are interrelated, synergistic elements along the auto remarketing chain.

AFC is primarily engaged in the business of providing short-term, inventory-secured financing to independent, used vehicle dealers. AFC also includes other businesses and ventures that AFC may enter into, focusing on providing independent used vehicle dealer customers with other related services and products, including vehicle service contracts. AFC conducts business primarily at or near wholesale used vehicle auctions in the U.S. and Canada.

The holding company is maintained separately from the reportable segments and includes expenses associated with the corporate offices, such as salaries, benefits and travel costs for the corporate management team, certain human resources, information technology and accounting costs, and certain insurance, treasury, legal and risk management costs. Holding company interest expense includes the interest expense incurred on finance leases and the corporate debt structure. Intercompany charges relate primarily to interest on intercompany debt or receivables and certain administrative costs allocated by the holding company.

Financial information regarding our reportable segments is set forth below as of and for the year ended December 31, 2019 (in millions):

ADESAAuctions AFC

HoldingCompany Consolidated

Operating revenues $ 2,429.0 $ 352.9 $ — $ 2,781.9Operating expenses

Cost of services (exclusive of depreciation and amortization) 1,520.7 96.4 — 1,617.1Selling, general and administrative 494.3 25.6 142.1 662.0Depreciation and amortization 149.9 10.3 28.5 188.7

Total operating expenses 2,164.9 132.3 170.6 2,467.8Operating profit (loss) 264.1 220.6 (170.6) 314.1Interest expense 3.7 64.2 121.6 189.5Other (income) expense, net (6.4) (0.4) (0.9) (7.7)Loss on extinguishment of debt — — 2.2 2.2Intercompany expense (income) 25.2 (5.1) (20.1) —Income (loss) from continuing operations before income taxes 241.6 161.9 (273.4) 130.1Income taxes 67.3 41.9 (71.5) 37.7Net income (loss) from continuing operations $ 174.3 $ 120.0 $ (201.9) $ 92.4Total assets $ 3,658.4 $ 2,565.7 $ 357.1 $ 6,581.2Capital expenditures $ 95.2 $ 7.0 $ 59.4 $ 161.6

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Financial information regarding our reportable segments is set forth below as of and for the year ended December 31, 2018 (in millions):

ADESAAuctions AFC

HoldingCompany Consolidated

Operating revenues $ 2,101.9 $ 340.9 $ — $ 2,442.8Operating expenses

Cost of services (exclusive of depreciation and amortization) 1,230.8 90.7 — 1,321.5Selling, general and administrative 435.8 30.7 142.3 608.8Depreciation and amortization 127.5 16.0 28.9 172.4

Total operating expenses 1,794.1 137.4 171.2 2,102.7Operating profit (loss) 307.8 203.5 (171.2) 340.1Interest expense 2.2 59.6 129.4 191.2Other (income) expense, net (1.9) (0.3) (0.8) (3.0)Intercompany expense (income) 35.1 (3.2) (31.9) —Income (loss) from continuing operations before income taxes 272.4 147.4 (267.9) 151.9Income taxes 69.1 35.4 (70.2) 34.3Net income (loss) from continuing operations $ 203.3 $ 112.0 $ (197.7) $ 117.6Total assets $ 3,097.7 $ 2,446.1 $ 155.6 $ 5,699.4Capital expenditures $ 95.1 $ 7.1 $ 29.1 $ 131.3

Financial information regarding our reportable segments is set forth below as of and for the year ended December 31, 2017 (in millions):

ADESAAuctions AFC

HoldingCompany Consolidated

Operating revenues $ 1,937.5 $ 301.3 $ — $ 2,238.8Operating expenses

Cost of services (exclusive of depreciation and amortization) 1,123.9 85.2 — 1,209.1Selling, general and administrative 360.0 30.9 140.8 531.7Depreciation and amortization 113.1 31.3 27.1 171.5

Total operating expenses 1,597.0 147.4 167.9 1,912.3Operating profit (loss) 340.5 153.9 (167.9) 326.5Interest expense 1.2 43.6 118.4 163.2Other (income) expense, net (0.3) — (0.7) (1.0)Loss on extinguishment of debt — — 27.5 27.5Gain on previously held equity interest value (21.6) — — (21.6)Intercompany expense (income) 47.4 (20.2) (27.2) —Income (loss) from continuing operations before income taxes 313.8 130.5 (285.9) 158.4Income taxes 52.9 26.6 (95.1) (15.6)Net income (loss) from continuing operations $ 260.9 $ 103.9 $ (190.8) $ 174.0Total assets $ 3,132.3 $ 2,315.6 $ 98.0 $ 5,545.9Capital expenditures $ 66.9 $ 6.1 $ 24.3 $ 97.3

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KAR Auction Services, Inc.Notes to Consolidated Financial Statements (Continued)

December 31, 2019, 2018 and 2017

97

Geographic Information

Our foreign operations include Canada, Mexico Continental Europe and the U.K. Most of our operations outside the U.S. are in Canada. Approximately 62%, 96% and 96% of our foreign operating revenues were from Canada for the year ended December 31, 2019, 2018 and 2017, respectively. The 2019 acquisition of COTW has increased the percentage of operating revenues from Europe. Information regarding the geographic areas of our operations is set forth below (in millions):

Year Ended December 31, 2019 2018 2017Operating revenues

U.S. $ 2,267.5 $ 2,078.2 $ 1,912.3Foreign 514.4 364.6 326.5

$ 2,781.9 $ 2,442.8 $ 2,238.8

December 31, 2019 2018Long-lived assets

U.S. $ 2,877.8 $ 2,564.3Foreign 458.9 274.4

$ 3,336.7 $ 2,838.7

No single customer accounted for more than ten percent of our total revenues in any fiscal year presented.

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December 31, 2019, 2018 and 2017

98

Note 20—Quarterly Financial Data (Unaudited)Information for any one quarterly period is not necessarily indicative of the results that may be expected for the year.

2019 Quarter Ended March 31 June 30 Sept. 30 Dec. 31Operating revenues $ 689.6 $ 719.1 $ 701.9 $ 671.3Operating expenses

Cost of services (exclusive of depreciation andamortization) 393.9 417.4 410.9 394.9Selling, general, and administrative 175.2 163.2 158.9 164.7Depreciation and amortization 44.3 47.9 46.4 50.1

Total operating expenses 613.4 628.5 616.2 609.7Operating profit 76.2 90.6 85.7 61.6Interest expense 56.5 55.6 37.9 39.5Other (income) expense, net (2.1) (1.1) (2.0) (2.5)Loss on extinguishment of debt — — 2.2 —Income from continuing operations before income taxes 21.8 36.1 47.6 24.6Income taxes 6.5 8.7 13.2 9.3Net income from continuing operations $ 15.3 $ 27.4 $ 34.4 $ 15.3Net income from continuing operations per share

Basic $ 0.11 $ 0.21 $ 0.26 $ 0.12Diluted $ 0.11 $ 0.20 $ 0.26 $ 0.12

2018 Quarter Ended March 31 June 30 Sept. 30 Dec. 31Operating revenues $ 613.2 $ 623.4 $ 612.4 $ 593.8Operating expenses

Cost of services (exclusive of depreciation andamortization) 328.3 330.2 330.7 332.3Selling, general, and administrative 155.5 149.9 154.7 148.7Depreciation and amortization 46.3 42.1 41.4 42.6

Total operating expenses 530.1 522.2 526.8 523.6Operating profit 83.1 101.2 85.6 70.2Interest expense 41.3 48.4 49.0 52.5Other (income) expense, net (0.3) (0.5) (3.0) 0.8Income from continuing operations before income taxes 42.1 53.3 39.6 16.9Income taxes 7.9 15.9 8.7 1.8Net income from continuing operations $ 34.2 $ 37.4 $ 30.9 $ 15.1Net income from continuing operations per shareBasic $ 0.25 $ 0.28 $ 0.23 $ 0.11Diluted $ 0.25 $ 0.28 $ 0.23 $ 0.11

Note 21—Subsequent Event

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

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Internal Control over Financial Reporting

Management's report on our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and the related report of KPMG LLP, our independent registered public accounting firm, are included in Item 8, Financial Statements and Supplementary Data under the headings Management's Report on Internal Control over Financial Reporting and Report of Independent Registered Public Accounting Firm, respectively, and are incorporated herein by reference.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended December 31, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

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PART IIIItem 10. Directors, Executive Officers and Corporate Governance

Information relating to our directors and nominees will be included in our Definitive Proxy Statement for our 2020Annual Meeting of Stockholders and such information will be incorporated by reference herein. Our executive officers are as follows:

Name Age PositionJames P. Hallett 66 Chief Executive Officer and Chairman of the Board of DirectorsCharles S. Coleman 48 Senior Vice President, General Counsel and SecretaryThomas J. Fisher 45 Executive Vice President and Chief Information OfficerDonald S. Gottwald 53 Chief Strategy Officer and President of Digital, Data and Mobility SolutionsJohn C. Hammer 49 President of ADESAPeter J. Kelly 51 PresidentEric M. Loughmiller 60 Executive Vice President and Chief Financial OfficerJames E. Money 57 President of AFCLisa A. Price 45 Executive Vice President, Chief People OfficerBenjamin Skuy 57 Executive Vice President of International Markets and Strategic Initiatives

James P. Hallett, 66, Chief Executive Officer and Chairman of the Board of Directors. Mr. Hallett has served as the Chief Executive Officer since September 2009 and the Chairman of the Board of Directors since December 2014. Mr. Hallett served as President and Chief Executive Officer of ADESA from April 2007 to September 2009. Mr. Hallett served as: Executive Vice President of ADESA, Inc. from May 2004 to May 2005; President of ADESA Corporation, LLC from March 2004 to May 2005; President of ADESA Corporation between August 1996 and October 2001 and again between January 2003 and March 2004; Chief Executive Officer of ADESA Corporation from August 1996 to July 2003; ADESA Corporation's Chairman from October 2001 to July 2003; Chairman, President and Chief Executive Officer of ALLETE Automotive Services, Inc. from January 2001 to January 2003 and Executive Vice President from August 1996 to May 2004. Mr. Hallett left ADESA in May 2005 and thereafter served as President of the Columbus Fair Auto Auction until April 2007.

Charles S. Coleman, 48, Senior Vice President, General Counsel and Secretary. Mr. Coleman has served as the Company's Senior Vice President and General Counsel since October 2017 and as Secretary since October 2019. Mr. Coleman previously served as Senior Vice President, General Counsel and Assistant Secretary from October 2017 to October 2019 and as Vice President, Assistant General Counsel and Assistant Secretary from April 2015 to October 2017. Prior to joining the Company, Mr. Coleman practiced corporate law as an associate attorney and then partner with Krieg DeVault in Indianapolis from 1999 to March 2015 and as an associate attorney with Baker Donelson (formerly Berkowitz, Lefkovits, Isom & Kushner) in Birmingham from 1996 to 1999.

Thomas J. Fisher, 45, Executive Vice President and Chief Information Officer. Mr. Fisher has served as the Company's Executive Vice President and Chief Information Officer since April 2017. Mr. Fisher was the Senior Vice President of Cloud Operations and General Manager, Indianapolis, of Genesys Telecommunications Laboratories, Inc. ("Genesys") from December 2016 to March 2017. Mr. Fisher was the Chief Services Officer at Interactive Intelligence Group, Inc. (which was acquired by Genesys) from January 2014 to December 2016 and also held other roles including Vice President of Global Sales Operations from May 2012 to January 2014.

Donald S. Gottwald, 53, Chief Strategy Officer and President of Digital, Data and Mobility Solutions. Mr. Gottwald has been the Chief Strategy Officer since July 2017 and the President of Digital, Data and Mobility Solutions since February 2019. Mr. Gottwald previously served as the Chief Operating Officer from March 2014 to February 2019. Prior to that, Mr. Gottwald served as the Chief Executive Officer of AFC from January 2009 to March 2014. Mr. Gottwald also served as the President of AFC from January 2009 to May 2013. Previously, Mr. Gottwald served in the role of Executive Vice President of Dealer Business for HSBC Auto Finance from December 2005 to October 2008. Prior to working at HSBC Auto Finance, Mr. Gottwald served in several roles of increased responsibility with GMAC Financial Services from June 1993 to December 2005, including Managing Director of Saab Financial Services Corp. and Managing Director of American Suzuki Financial Services. Mr. Gottwald has been active in the American Financial Services Association and previously served on the association's board of directors. In addition, Mr. Gottwald serves on the Northwood University Automotive Marketing Curriculum Advisory Board. In January 2020, the Company announced that Mr. Gottwald is resigning from the Company effective April 3, 2020.

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John C. Hammer, 49, President of ADESA. Mr. Hammer has been the President of ADESA since February 2018. Prior to ADESA, Mr. Hammer was Chief Executive Officer of U.S. Auto Sales, Inc. and U.S. Auto Finance, Inc. from June 2016 to February 2018, and Chief Executive Officer of Cruz Auto, LLC from June 2017 to February 2018. Mr. Hammer previously served as Chief Executive Officer and President of AFC from March 2014 to June 2016. Mr. Hammer joined AFC in April 2009 as Chief Operating Officer, and assumed the role of President of AFC in May 2013. Prior to AFC, Mr. Hammer held senior management roles for more than a decade at various subsidiaries of GMAC Financial Services. He has also served as a general manager at AutoNation and held management roles at Mercedes Benz Credit Corp. Mr. Hammer has 27 years of experience in the automotive industry.

Peter J. Kelly, 51, President. Mr. Kelly has been President since January 2019. Previously, Mr. Kelly served as the President of Digital Services from December 2014 to January 2019 and the Chief Technology Officer from June 2013 to January 2019. Mr. Kelly was the President and Chief Executive Officer of Openlane from February 2011 to June 2013. Prior to that, Mr. Kelly was President and Chief Financial Officer of Openlane from February 2010 to February 2011. Mr. Kelly was a co-founder of Openlane in 1999 and served in a number of executive roles at Openlane from 1999 to 2010.

Eric M. Loughmiller, 60, Executive Vice President and Chief Financial Officer. Mr. Loughmiller has been Executive Vice President and Chief Financial Officer since April 2007. Previously, from 2001 to 2006, Mr. Loughmiller was the Vice President and Chief Financial Officer of ThoughtWorks, Inc., an information technology consulting firm. Prior to that, Mr. Loughmiller served as Executive Vice President and Chief Financial Officer of May & Speh, Inc. from 1996 to 1998 until May & Speh was acquired by Acxiom Corporation. Mr. Loughmiller was the finance leader of the Outsourcing Division of Acxiom Corporation from 1998 to 2000. Prior to joining May & Speh, Mr. Loughmiller was an audit partner with PricewaterhouseCoopers LLP, an independent registered public accounting firm. Mr. Loughmiller is a certified public accountant.

James E. Money, 57, President of AFC. Mr. Money has been President of AFC since June 2016. Mr. Money joined AFC in 1999 as Controller and was later promoted to Vice President of Finance in 2006 and to Chief Financial Officer in 2009. Prior to joining AFC, Mr. Money served as Chief Financial Officer of Fundex Games, LTD from 1998 to 1999. Mr. Money is a certified public accountant.

Lisa A. Price, 45, Executive Vice President, Chief People Officer. Ms. Price has served as the Company's Executive Vice President, Chief People Officer since January 2020. Ms. Price previously served as the Executive Vice President of Human Resources from June 2013 to January 2020. Prior to that, Ms. Price served as the Vice President of Employment and Litigation Counsel of the Company from January 2008 to June 2013 and Senior Corporate Counsel from November 2005 to January 2008. Prior to joining ADESA, Ms. Price practiced employment law with Stewart & Irwin in Indianapolis from November 2000 to November 2005.

Benjamin Skuy, 57, Executive Vice President of International Markets and Strategic Initiatives. Mr. Skuy has been Executive Vice President of International Markets and Strategic Initiatives since September 2009. Mr. Skuy previously served in the following positions between July 1999 and September 2009: Executive Vice President of International Markets and Managing Director of ADESA Canada from January 2008 to September 2009; Managing Director and Chief Operating Officer of ADESA Canada from July 2006 to January 2008; Chief Operating Officer of ADESA Canada from January 2002 to July 2006; and Chief Financial Officer of ADESA Canada from July 1999 to January 2002. Prior to joining ADESA, Mr. Skuy served as Assistant Vice President at Manulife Financial from June 1998 to July 1999. From August 1990 to May 1998 he served as Senior Manager at The Bank of Nova Scotia.

Delinquent Section 16(a) Reports

The information required by this item is incorporated by reference herein from our Definitive Proxy Statement for our2020 Annual Meeting of Stockholders to be filed with the SEC as set forth under the caption "Documents Incorporated byReference."

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Code of Business Conduct and Ethics

We have adopted the Code of Business Conduct and Ethics that applies to all of our employees, officers and directors,including those officers responsible for financial reporting. In addition, we have adopted the Code of Ethics for PrincipalExecutive and Senior Financial Officers that applies to the Company's principal executive officer, principal financial and accounting officer and such other persons who are designated by our board of directors. Both codes are available on our website at www.karglobal.com and available in print to any stockholder who requests it. Information on, or accessible through, our website is not part of this Form 10-K. We expect that any amendments to these codes, or any waivers of their requirements, will be disclosed on our website.

Item 11. Executive Compensation

The information required by this Item 11 is incorporated by reference herein from our Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders to be filed with the SEC as set forth under the caption "Documents Incorporated by Reference."

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 403 of Regulation S-K will be included in our Definitive Proxy Statement for our 2020 Annual Meeting and such information will be incorporated by reference herein.

Equity Compensation Plan Information

The following table sets forth the aggregate information of our equity compensation plans in effect as of December 31, 2019.

Plan Category

Number ofsecurities to be

issued upon exerciseof outstanding

options, warrantsand rights(1)

Weighted-averageexercise price of

outstandingoptions,

warrants andrights(2)

Number of securitiesremaining available for

future issuance under equitycompensation

plans (excluding securitiesreflected in first column)(3)

Equity compensation plans approved by security holder(s) 2,035,813 $ 9.07 5,147,288Equity compensation plans not approved by securityholders — — —Total 2,035,813 $ 9.07 5,147,288

(1) Includes service options, exit options, performance-based restricted stock units ("PRSUs") and restricted stock units ("RSUs") issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan (excluding dividend equivalents). The amount of PRSUs outstanding at target of 279,130 (excluding dividend equivalents) have been included.

(2) Awards issued by KAR Auction Services, Inc. have exercise prices ranging from $4.60 to $11.74. The weighted-average price in the table above only reflects the weighted-average exercise price of outstanding options. The weighted-average exercise price does not include the PRSUs or RSUs.

(3) The number of securities available for future issuance includes (a) 4,922,268 shares of common stock that may be issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan; and (b) 225,020 shares of common stock that may be issued under the KAR Auction Services, Inc. Employee Stock Purchase Plan.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item 13 is incorporated by reference herein from our Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders to be filed with the SEC as set forth under the caption "Documents Incorporated by Reference."

Item 14. Principal Accounting Fees and Services

The information required by this Item 14 is incorporated by reference herein from our Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders to be filed with the SEC as set forth under the caption "Documents Incorporated by Reference."

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PART IV

Item 15. Exhibits, Financial Statement Schedules

a) The following documents have been filed as part of this report or, where noted, incorporated by reference:

1) Financial Statements—the consolidated financial statements of KAR Auction Services, Inc. and its consolidated subsidiaries are filed as part of this report under Item 8.

2) Financial Statement Schedules—all schedules have been omitted because the matter or conditions are not present or the information required to be set forth therein is included in the consolidated financial statements and related notes thereto.

3) Exhibits—the exhibit index below is incorporated herein by reference as the list of exhibits required as part of this report.

In reviewing the agreements included as exhibits to this Form 10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about KAR Auction Services, ADESA, AFC or other parties to the agreements.

The agreements included or incorporated by reference as exhibits to this Annual Report on Form 10-K contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of "materiality" that are different from "materiality" under the applicable securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.

The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Annual Report not misleading. Additional information about KAR Auction Services may be found elsewhere in this Annual Report on Form 10-K and KAR Auction Services, Inc.'s other public filings, which are available without charge through the SEC's website at http://www.sec.gov. See Item 1, "Business—Available Information."

EXHIBIT INDEX

Incorporated by Reference Exhibit

No. Exhibit Description Form File No. ExhibitFilingDate

FiledHerewith

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

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

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 X

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Incorporated by Reference Exhibit

No. Exhibit Description Form File No. ExhibitFilingDate

FiledHerewith

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

10.1b Incremental Commitment Agreement and First Amendment, dated as of March 9, 2016, among KAR Auction Services, Inc., JPMorgan Chase Bank, N.A., as administrative agent, certain subsidiaries of the Company party thereto and the several lenders party thereto

8-K 001-34568 10.1 3/9/2016

10.1c Incremental Commitment Agreement and Second Amendment, dated as of May 31, 2017, among KAR Auction Services, Inc., JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto and the several lenders party thereto

8-K 001-34568 10.1 5/31/2017

10.1d Third Amendment Agreement, dated as of September 19, 2019, by and among KAR Auction Services, Inc., JPMorgan Chase Bank, N.A., as administrative agent, certain subsidiaries of KAR Auction Services, Inc. party thereto and the several lenders party thereto

8-K 001-34568 10.1 9/20/2019

10.2 * KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) Stock Incentive Plan

S-8 333-164032 10.1 12/24/2009

10.3 * Form of Nonqualified Stock Option Agreement of KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) pursuant to the Stock Incentive Plan

S-4 333-148847 10.15 1/25/2008

10.4 * Employment Agreement, dated February 27, 2012, between KAR Auction Services, Inc. and James P. Hallett

10-K 001-34568 10.15 2/28/2012

10.5a * Amended and Restated Employment Agreement, dated March 24, 2014, between KAR Auction Services, Inc. and Don Gottwald

8-K 001-34568 10.1 3/20/2014

10.5b * Amendment to Employment Agreement, dated February 19, 2018, between KAR Auction Services, Inc. and Don Gottwald

10-K 001-34568 10.5b 2/21/2018

10.5c * Amendment No. 2 to Employment Agreement, dated February 20, 2019, between KAR Auction Services, Inc. and Don Gottwald

10-K 001-34568 10.5c 2/21/2019

10.6 * Employment Agreement, dated December 17, 2013, between KAR Auction Services, Inc. and Eric Loughmiller

8-K 001-34568 10.5 12/17/2013

10.7 * Employment Agreement, dated January 25, 2018, between KAR Auction Services, Inc. and John C. Hammer

10-K 001-34568 10.7 2/21/2019

10.8a * Employment Agreement, dated December 17, 2013, between KAR Auction Services, Inc. and Rebecca Polak

10-K 001-34568 10.13 2/19/2014

10.8b * Amendment to Employment Agreement, dated February 19, 2018, between KAR Auction Services, Inc. and Rebecca Polak

10-K 001-34568 10.8b 2/21/2018

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Incorporated by Reference Exhibit

No. Exhibit Description Form File No. ExhibitFilingDate

FiledHerewith

10.8c * Consulting Agreement, dated September 12, 2019, between KAR Auction Services, Inc. and Rebecca C. Polak

10-Q 001-34568 10.8c 11/6/2019

10.9a * Employment Agreement, dated December 17, 2013, between KAR Auction Services, Inc. and Peter Kelly

10-K 001-34568 10.9a 2/24/2017

10.9b * Amendment to Employment Agreement, dated December 31, 2014, between KAR Auction Services, Inc. and Peter Kelly

10-K 001-34568 10.9b 2/24/2017

10.9c * Amendment No. 2 to Employment Agreement, dated January 8, 2019, between KAR Auction Services, Inc. and Peter Kelly

10-K 001-34568 10.9c 2/21/2019

10.10 * KAR Auction Services, Inc. Annual Incentive Program Summary of Terms 2017

10-K 001-34568 10.13 2/24/2017

10.11 * KAR Auction Services, Inc. Annual Incentive Program Summary of Terms 2018

10-K 001-34568 10.12 2/21/2018

10.12 * KAR Auction Services, Inc. Annual Incentive Program Summary of Terms 2019

10-K 001-34568 10.13 2/21/2019

10.13 * KAR Auction Services, Inc. Annual Incentive Program Summary of Terms 2020

X

10.14a ^ Amended and Restated Purchase and Sale Agreement, dated May 31, 2002, between AFC Funding Corporation and Automotive Finance Corporation

S-4 333-148847 10.32 1/25/2008

10.14b Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated June 15, 2004

S-4 333-148847 10.33 1/25/2008

10.14c Amendment No. 2 to Amended and Restated Purchase and Sale Agreement, dated January 18, 2007

S-4 333-148847 10.34 1/25/2008

10.14d ^ Amendment No. 3 to Amended and Restated Purchase and Sale Agreement, dated April 20, 2007

S-4 333-148847 10.35 1/25/2008

10.14e Amendment No. 4 to Amended and Restated Purchase and Sale Agreement, dated January 30, 2009

10-K 001-34568 10.19e 2/28/2012

10.14f Amendment No. 5 to Amended and Restated Purchase and Sale Agreement, dated April 25, 2011

10-K 001-34568 10.19f 2/28/2012

10.15 ^ Eighth Amended and Restated Receivables Purchase Agreement, dated December 18, 2018, among AFC Funding Corporation, Automotive Finance Corporation, the entities from time to time parties hereto as Purchasers or Purchaser Agents and Bank of Montreal

10-K 001-34568 10.15 2/21/2019

10.16a ^ Fourth Amended and Restated Receivables Purchase Agreement, dated December 20, 2016, between Automotive Finance Canada Inc., KAR Auction Services, Inc. and BNY Trust Company of Canada

10-K 001-34568 10.16 2/24/2017

10.16b Amending Agreement No. 1 to Fourth Amended and Restated Receivables Purchase Agreement, dated January 30, 2017, between Automotive Finance Canada Inc., KAR Auction Services, Inc. and BNY Trust Company of Canada

10-Q 001-34568 10.16b 5/10/2017

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Incorporated by Reference Exhibit

No. Exhibit Description Form File No. ExhibitFilingDate

FiledHerewith

10.16c ^ Amending Agreement No. 2 to Fourth Amended and Restated Receivables Purchase Agreement, dated December 18, 2018, between Automotive Finance Canada Inc., KAR Auction Services, Inc. and BNY Trust Company of Canada

10-K 001-34568 10.16c 2/21/2019

10.17a Ground Lease, dated September 4, 2008, between ADESA San Diego, LLC and First Industrial L.P. (East 39 Acres at Otay Mesa, California)

8-K 333-148847 10.3 9/9/2008

10.17b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial L.P. (East 39 Acres at Otay Mesa, California)

8-K 333-148847 10.11 9/9/2008

10.18a Ground Lease, dated September 4, 2008, between ADESA San Diego, LLC and First Industrial L.P. (West 39 Acres at Otay Mesa, California)

8-K 333-148847 10.4 9/9/2008

10.18b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial L.P. (West 39 Acres at Otay Mesa, California)

8-K 333-148847 10.12 9/9/2008

10.19a Ground Lease, dated September 4, 2008, between ADESA California, LLC and ADESA San Diego, LLC and First Industrial Pennsylvania, L.P. (Sacramento, California)

8-K 333-148847 10.5 9/9/2008

10.19b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Pennsylvania, L.P. (Sacramento, California)

8-K 333-148847 10.13 9/9/2008

10.20a Ground Lease, dated September 4, 2008, between ADESA California, LLC and First Industrial Pennsylvania, L.P. (Tracy, California)

8-K 333-148847 10.6 9/9/2008

10.20b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Pennsylvania, L.P. (Tracy, California)

8-K 333-148847 10.14 9/9/2008

10.21a Ground Lease, dated September 4, 2008, between ADESA Washington, LLC and First Industrial, L.P. (Auburn, Washington)

8-K 333-148847 10.7 9/9/2008

10.21b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Auburn, Washington)

8-K 333-148847 10.15 9/9/2008

10.22a Ground Lease, dated September 4, 2008, between ADESA Texas, Inc. and First Industrial, L.P. (Houston, Texas)

8-K 333-148847 10.8 9/9/2008

10.22b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Houston, Texas)

8-K 333-148847 10.16 9/9/2008

10.23a Ground Lease, dated September 4, 2008, between ADESA Florida, LLC and First Industrial Financing Partnership, L.P. (Bradenton, Florida)

8-K 333-148847 10.10 9/9/2008

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Incorporated by Reference Exhibit

No. Exhibit Description Form File No. ExhibitFilingDate

FiledHerewith

10.23b Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Financing Partnership, L.P. (Bradenton, Florida)

8-K 333-148847 10.18 9/9/2008

10.24a Ground Sublease, dated October 3, 2008, between ADESA Atlanta, LLC and First Industrial, L.P. (Fairburn, Georgia)

10-Q 333-148847 10.21 11/13/2008

10.24b Guaranty of Lease, dated October 3, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Fairburn, Georgia)

10-Q 333-148847 10.22 11/13/2008

10.25 Form of Indemnification Agreement 8-K 001-34568 10.1 12/17/2013

10.26a * KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as Amended June 10, 2014

DEF14A

001-34568 AppendixA

4/29/2014

10.26b * First Amendment to the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan

10-K 001-34568 10.24b 2/18/2016

10.27a * KAR Auction Services, Inc. Employee Stock Purchase Plan

S-8 333-164032 10.3 12/24/2009

10.27b * Amendment No. 1 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated March 31, 2010

10-Q 001-34568 10.60 8/4/2010

10.27c * Amendment No. 2 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated April 1, 2010

10-Q 001-34568 10.61 8/4/2010

10.27d * Amendment No. 3 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated July 31, 2018

10-Q 001-34568 10.26d 11/7/2018

10.28a * KAR Auction Services, Inc. Directors Deferred Compensation Plan, effective December 10, 2009

10-Q 001-34568 10.62 8/4/2010

10.28b * Amendment No. 1 to the KAR Auction Services, Inc. Directors Deferred Compensation Plan, dated as of June 28, 2019

10-Q 001-34568 10.28b 11/6/2019

10.29 * Director Restricted Share Agreement 10-Q 001-34568 10.29 8/7/2019

10.30 * Form of Nonqualified Stock Option Agreement S-1/A 333-161907 10.65 12/4/2009

10.31 * Form of 2016 Restricted Stock Unit Award Agreement for Section 16 Officers

10-K 001-34568 10.30 2/18/2016

10.32 * Form of 2017 Restricted Stock Unit Award Agreement for Section 16 Officers

10-K 001-34568 10.33 2/24/2017

10.33 * Form of 2018 Restricted Stock Unit Award Agreement for Section 16 Officers

10-K 001-34568 10.33 2/21/2018

10.34 * Form of 2019 Restricted Stock Unit Award Agreement for Section 16 Officers

10-K 001-34568 10.35 2/21/2019

10.35 * Form of 2020 Restricted Stock Unit Award Agreement for Section 16 Officers

X

10.36 * Form of 2016 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)

10-K 001-34568 10.34 2/18/2016

10.37 * Form of 2017, 2018 and 2019 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)

10-K 001-34568 10.38 2/24/2017

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Incorporated by Reference Exhibit

No. Exhibit Description Form File No. ExhibitFilingDate

FiledHerewith

10.38 * Form of 2020 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)

X

10.39 Transition Services Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.

8-K 001-34568 10.1 6/28/2019

10.40 Tax Matters Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.

8-K 001-34568 10.2 6/28/2019

10.41 Employee Matters Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.

8-K 001-34568 10.3 6/28/2019

21.1 Subsidiaries of KAR Auction Services, Inc. X

23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm

X

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

101 The following materials from KAR Auction Services,Inc.'s Annual Report on Form 10-K for the year endedDecember 31, 2019 formatted in iXBRL (InlineExtensible Business Reporting Language): (i) theConsolidated Statements of Income for the yearended December 31, 2019, 2018 and 2017; (ii) theConsolidated Balance Sheets as of December 31,2019 and 2018; (iii) the Consolidated Statements ofStockholders' Equity for the year ended December 31,2019, 2018 and 2017; (iv) the ConsolidatedStatements of Cash Flows for the year endedDecember 31, 2019, 2018 and 2017; and (v) theNotes to Consolidated Financial Statements.

X

104 Cover page Interactive Data File, formatted in iXBRL(contained in Exhibit 101).

X

_______________________________________________________________________________

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

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

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

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109

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

KAR Auction Services, Inc.

By: /s/ JAMES P. HALLETTJames P. Hallett

Chief Executive OfficerFebruary 19, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ JAMES P. HALLETTChief Executive Officer and Chairman ofthe Board February 19, 2020

James P. Hallett (Principal Executive Officer)

/s/ ERIC M. LOUGHMILLER Chief Financial Officer February 19, 2020Eric M. Loughmiller (Principal Financial and Accounting Officer)

/s/ DAVID DIDOMENICODirector February 19, 2020

David DiDomenico

/s/ CARMEL GALVINDirector February 19, 2020

Carmel Galvin

/s/ MARK E. HILLDirector February 19, 2020

Mark E. Hill

/s/ J. MARK HOWELLDirector February 19, 2020

J. Mark Howell

/s/ STEFAN JACOBYDirector February 19, 2020

Stefan Jacoby

/s/ MICHAEL T. KESTNERLead Independent Director February 19, 2020

Michael T. Kestner

/s/ MARY ELLEN SMITHDirector February 19, 2020

Mary Ellen Smith

/s/ STEPHEN E. SMITHDirector February 19, 2020

Stephen E. Smith

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EXHIBIT 21.1

Subsidiaries of KAR Auction Services, Inc.

The following is a list of subsidiaries of KAR Auction Services, Inc. (a Delaware corporation) as of December 31, 2019:

NameState or Jurisdiction of

Incorporation or OrganizationADESA, Inc. DelawareADESA Corporation, LLC IndianaA.D.E. of Ark-La-Tex, Inc. LouisianaA.D.E. of Knoxville, LLC TennesseeADESA Ark-La-Tex, LLC LouisianaADESA Arkansas, LLC DelawareADESA Atlanta, LLC New JerseyADESA Birmingham, LLC AlabamaADESA California, LLC CaliforniaADESA Charlotte, LLC North CarolinaADESA Colorado, LLC ColoradoADESA Dealer Services, LLC IndianaADESA Des Moines, LLC IowaADESA Florida, LLC FloridaADESA Illinois, LLC IllinoisADESA Indianapolis, LLC IndianaADESA Lansing, LLC MichiganADESA Lexington, LLC KentuckyADESA Mexico, LLC IndianaADESA Minnesota, LLC MinnesotaADESA Missouri, LLC MissouriADESA Nevada, LLC NevadaADESA New Jersey, LLC New JerseyADESA New York, LLC New YorkADESA Ohio, LLC OhioADESA Oklahoma, LLC OklahomaADESA Pennsylvania, LLC PennsylvaniaADESA Phoenix, LLC New JerseyADESA San Diego, LLC CaliforniaADESA South Florida, LLC IndianaADESA Texas, Inc. TexasADESA Virginia, LLC VirginiaADESA Wisconsin, LLC WisconsinAFC CAL, LLC CaliforniaAsset Holdings III, L.P. OhioAuto Dealers Exchange of Concord, LLC MassachusettsAuto Dealers Exchange of Memphis, LLC TennesseeAutomotive Finance Consumer Division, LLC IndianaAutomotive Finance Corporation IndianaAutoniq, LLC VirginiaAutoVIN, Inc. IndianaMobileTrac LLC Delaware

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NameState or Jurisdiction of

Incorporation or OrganizationPAR, Inc. IndianaHigh Tech National, LLC IndianaHT Locksmiths, Inc. IndianaSioux Falls Auto Auction, Inc. South DakotaTri-State Auction Co., Inc. North DakotaZabel & Associates, Inc. North DakotaLiveBlock Auctions International, Inc. NevadaLiveBlock Auctions Canada Ltd. SaskatchewanWFEA Holdings, Inc. AlbertaAFC Funding Corporation IndianaAuctionTrac, LLC IndianaOPENLANE, Inc. DelawareCarsArrive Network, Inc. GeorgiaRecovery Database Network, Inc. DelawareOPENLANE Canada Co. Nova ScotiaOPENLANE Canada Inc. OntarioNEPO Auto Centre, Inc. OntarioAuction Vehicles of Mexico S. de R.L. de C.V. Federal District of MexicoADESUR S. de R.L. de C.V. Federal District of Mexico2540-0714 Quebec Inc. Quebec504811 NB Ltd. New Brunswick51937 Newfoundland & Labrador Limited Newfoundland79378 Manitoba Inc. ManitobaADESA Auctions Canada Corporation Nova ScotiaADESA Montreal Corporation Nova ScotiaADESA Quebec Corporation QuebecADESA Remarketing Services Inc. OntarioAutoVIN Canada Inc. Nova ScotiaAutomotive Finance Canada Inc. OntarioPreferred Warranties, Inc. PennsylvaniaPreferred Nationwide Reinsurance Company, Ltd. Turks and CaicosPreferred Warranties of Florida, Inc. FloridaPWI Holdings, Inc. PennsylvaniaSuperior Warranties, Inc. PennsylvaniaAutomotive Key Controls, LLC IndianaHigh Tech Locksmiths Canada ULC AlbertaADESA Idaho, LLC IdahoADESA Oregon, LLC OregonADESA Utah, LLC UtahKAR Auction Services International Limited United KingdomADESA Remarketing Limited United KingdomCarCo Technologies, Inc. IllinoisNth Gen Software, Inc. OntarioNth Gen Software LLC FloridaTradeRev USA LLC FloridaTradeRev Motors Inc. OntarioNth Gen Software UK Limited United KingdomTradeRev Technologies Inc. Ontario

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NameState or Jurisdiction of

Incorporation or Organization111 Remarketing, LLC ArizonaSTRATIM Systems Incorporated DelawareSTRATIM Platforms, Inc. DelawareClearplan, LLC DelawareADESA Germany GmbH GermanyADESA Belgium NV BelgiumADESA Deutschland GmbH GermanyADESA Europe Holding NV BelgiumADESA Europe NV BelgiumADESA France SAS FranceADESA Italia S.R.L. ItalyADESA Nederland B.V. The NetherlandsADESA Subastas España, S.L.U. SpainCar Quality Services GmbH GermanyCarsArrive Europe GmbH Germany

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EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors KAR Auction Services, Inc.:

We consent to the incorporation by reference in registration statements (No. 333-164032, No. 333-168523 and No. 333-196668) on Form S-8 of KAR Auction Services, Inc., of our report dated February 19, 2020, with respect to the consolidated balance sheets of KAR Auction Services, Inc. as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2019, which reports appear in the December 31, 2019 annual report on Form 10-K of KAR Auction Services, Inc.

Our audit report on internal control over financial reporting as of December 31, 2019, contains an explanatory paragraph that states that management has excluded from its assessment of the effectiveness of internal control over financial reporting as of December 31, 2019, the internal control over financial reporting associated with CarsOnTheWeb and Dent-ology ("2019 acquisitions") with total assets of 3.3% and total revenues of 6.9% included in the consolidated financial statements of KAR Auction Services, Inc. and subsidiaries as of and for the year ended December 31, 2019. Our audit of internal control over financial reporting of KAR Auction Services, Inc. and subsidiaries also excluded an evaluation of the internal control over financial reporting of the 2019 acquisitions.

/s/ KPMG LLP

Indianapolis, Indiana February 19, 2020

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EXHIBIT 31.1

Certification of Chief Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James P. Hallett, certify that:

1) I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ JAMES P. HALLETTJames P. HallettChief Executive Officer

Date: February 19, 2020

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EXHIBIT 31.2

Certification of Chief Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Eric M. Loughmiller, certify that:

1) I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ ERIC M. LOUGHMILLEREric M. LoughmillerExecutive Vice President and Chief Financial Officer

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EXHIBIT 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of KAR Auction Services, Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James P. Hallett, as Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JAMES P. HALLETTJames P. HallettChief Executive Officer

Date: February 19, 2020

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EXHIBIT 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of KAR Auction Services, Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eric M. Loughmiller, as Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ERIC M. LOUGHMILLEREric M. LoughmillerExecutive Vice President and Chief Financial Officer

Date: February 19, 2020

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Investor relations

INVE

STO

R IN

FOR

MAT

ION

Corporate headquartersKAR Global 11299 N. Illinois St. Carmel, IN 46032800-923-3725karglobal.com

Independent registered public accounting firmKPMG LLP 111 Monument Circle Suite 1500 Indianapolis, IN 46204-5100 317-636-5592

Stock listingNew York Stock Exchange Ticker Symbol: KAR

Transfer agentInquiries and changes to stockholder accounts should be directed to our transfer agent:American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 800-937-5449 718-921-8124https://secure.amstock.com/shareholder/sh_login.asp

The following information is available without charge to stockholders and other interested parties: • Annual Report to Stockholders• Annual Report on Form 10-K and

Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission

To request these documents, or if you have any questions about KAR, please contact:

KAR Global Investor Relations 11299 N. Illinois St. Carmel, IN 46032800-923-3725investor_relations@karglobal.com

The annual report and related documents can be downloaded on the Investor Relations section of the KAR website.

KAR Global

11299 N. Illinois St. Carmel, IN 46032