UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 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, 20192022
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 1-5690
GENUINE PARTS COMPANYCOMPANY
(Exact name of registrant as specified in its charter)

GA58-0254510
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
GA
58-0254510
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2999 WILDWOOD PARKWAY,
ATLANTA,GA30339
(Address of principal executive offices)(Zip Code)

678-934-5000678-934-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par value per shareGPCNew 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 Exchange 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 (§ 232,495 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☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes ☐   No  ☒
As of June 30, 2019,2022, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $14,311,370,798$18.7 billion based on the closing sale price as reported on the New York Stock Exchange.
There were 145,381,623140,807,089 shares of the Company'scompany's common stock outstanding as of February 18, 2020.20, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
Specifically identified portions of the Company’scompany’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2020May 1, 2023 are incorporated by reference into Part III of this Form 10-K.




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Item 1.



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PART I.

ITEM 1.    BUSINESS.
Genuine Parts Company, “GPC”, a Georgia corporation incorporated on May 7, 1928, is a leadingglobal service organization engaged in the distribution of automotive and industrial replacement parts, industrial parts, and business products, eachas described in more detail below. In 2019,2022, our business was conducted from more than 3,60010,600 locations throughout North America, Europe, Australia and New Zealand ("Australasia") viathrough an offering of best in class operating and distribution efficiencies, industry leading coverageassortment of consumable/replacement parts, outstanding just-in-time service and enhanced technology solutions. At December 31, 2019, the Company employed approximately 55,000 people worldwide.solution.
As used in this report, "we," "us," "our," "GPC," and the “Company”“company” refers to Genuine Parts CompanyGPC and its subsidiaries, except as otherwise indicated by the context; and the terms “automotive parts” and “industrial parts” refer to replacement parts in each respective category.
For financial information regarding segments as well asOUR PURPOSE & STRATEGY
We are one global team unified by our geographicpurpose: We Keep the World Moving. This is the foundation for how we do business. Our mission is to be an employer of choice, supplier of choice, valued customer, good corporate citizen and investment of choice for all our shareholders. Additionally, we strive to be a respected community member that gives back to the communities in which we operate. In order to execute this mission, we align our resources with strategic areas of operation, refer to the segment data footnote in the Notes to Consolidated Financial Statements.
The Company’s website can be found at www.genpt.com. The Company makes available, free of charge through its website, access to the Company’s Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other reports, and any amendments to these documents, as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”). Additionally,focus for our corporate governance guidelines, codes of conduct and ethics, and charters of the Audit Committee and the Compensation, Nominating and Governance Committee of our Board of Directors, as well as information regarding our procedure for shareholders and other interested parties to communicate with our Board of Directors, are availableoperations. Specifically, we focus on our website.market-leading automotive and industrial businesses in North America, Europe and Australasia to deliver profitable growth, operational efficiencies and strong cash flow.
In Part IIIWe have strategic initiatives designed to build on our current competitive advantages. We believe our primary competitive advantages are our: (1) global presence and brand strength; (2) best-in-class operating and distribution efficiencies; and (3) enhanced technology solutions.
Our strategic financial objectives are intended to complement our mission and drive value for all our stakeholders. These financial objectives include: (1) revenue growth in excess of this Form 10-K, we incorporate certain information by referencemarket growth; (2) improved operating margins; (3) a strong balance sheet and cash flows; and (4) effective capital allocation. Our strategy is designed to our proxy statementposition us for our 2020 annual meeting of shareholders. We expect to file that proxy statement with the SEC on or about March 3, 2020,long-term growth and we will make it available online at the same time at http://www.proxydocs.com/gpc. Please refer to the proxy statement for the information incorporated by reference into Part III of this Form 10-K when it is available.enhance shareholder value.
OUR SEGMENTS
AUTOMOTIVE PARTS GROUP ("Automotive")
TheOur Automotive Parts Group,segment is the largest segmentglobal automotive network of the Company, distributesparts and care, distributing automotive parts, accessories and accessoryservice items in North America, Europe and Australasia. TheOur Automotive Parts Groupbusiness offers complete inventory, cataloging, marketing, training and other programs to the automotive aftermarket in each of these regions towhich distinguish itselfthis business from the competition.
During 2019,In North America, Automotive sells parts primarily under the Company’s Automotive Parts Group included National Automotive Parts Association ("NAPA") automotive partsbrand name through distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”) owned and operated in the United States ("U.S.") by the Company; NAPA and Traction automotive parts distribution centers and auto parts stores in the U.S. and Canada owned and operated by the Company and NAPA Canada/UAP Inc. (“NAPA Canada/UAP”), a wholly-owned subsidiary of the Company; auto parts stores and distribution centers in the U.S. operated by corporations in which the Company owned either a noncontrolling or controlling interest; auto parts stores in Canada operated by corporations in which NAPA Canada/UAP owns a 50% interest; Repco and other automotive parts distribution centers, branches and auto parts stores in Australasia owned and operated by GPC Asia Pacific, a wholly-owned subsidiary of the Company; automotive parts distribution centers and auto parts stores in. In Europe, owned and operated by Alliance Automotive Group (“AAG”), a wholly-owned subsidiary of the Company; an importcompany, is a leading distributor of vehicle parts, tools and workshop equipment with its primary operations in nine European countries. AAG is rolling out the NAPA brand of products and currently serves its customers under a variety of banners, including Groupauto, Precisium Group, Pièces Auto, UAN, Alliance Automotive Group Germany, PartsPoint and Lausan. In Australasia, Automotive serves the market primarily under the Repco and NAPA brand names.
Our global Automotive network sells to customers in both commercial do-it-for-me (“DIFM”) and retail do-it-yourself (“DIY”) segments of the market and covers substantially all global motor vehicle models. DIFM customers include local, regional and national repair centers, auto dealers, service stations and both private and public sector accounts. DIY customers are primarily served over-the-counter at our global stores or digitally. DIFM and DIY customers account for approximately 80% and 20% of Automotive total sales, respectively.
As part of our ongoing strategy, our Automotive network grew in 2022 with acquisitions of various strategic and bolt-on store groups in North America, Europe and Australasia. In Europe, we expanded our footprint in two new key markets in Spain and Portugal, Europe's fifth largest market, while also expanding into Eastern Germany. In Australasia, we acquired a leading Australian branded direct-to-consumer distributor of lighting products focused on the four-wheel drive market in Australasia and continued our bolt-on strategy in North America.
Store Network.    The following table details the breakdown of our Automotive distribution network including our distribution centers, company-owned and independently-owned automotive partsstores by geographic region as of December 31, 2022.
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North AmericaEuropeAustralasiaTotal
Distribution centers77 78 14 169 
Company-owned stores1,682 742 529 2,953 
Independently-owned stores5,037 1,642 — 6,679 
Total locations6,796 2,462 543 9,801 
The mix of company-owned stores versus independently-owned stores in a given market varies based on several factors including our overall market strategy, the ability to access desirable local retail space, the complexity, profitability and expected ultimate size of the market and our ability to provide operational support within a     geographic region. In our Australasian operations, we go to market with a company-owned store model.
Independently-owned stores purchase inventory from company-operated distribution centercenters. These independently-owned stores are responsible for operating and managing their business, including operating costs and capital expenditures. We do not receive a royalty or franchise fee from independently-owned stores.
Our 169 Automotive distribution centers serve both company-owned and independently-owned stores located throughout the geographic regions in which we operate. Both types of automotive stores, in turn, sell to a wide variety of customers in the U.S. owned byautomotive aftermarket. During 2022, we expanded our network with the Company and operated by its Altrom America division; an importaddition of 138 net new stores during the year.
Products.    Our automotive parts distribution center and branches in Canada owned and operated by Altrom Canada Corporation (“Altrom Canada”), a wholly-owned subsidiarynetwork provides access to hundreds of the Company; distribution centers in the U.S. owned by Balkamp, Inc. (“Balkamp”), a wholly-owned subsidiarythousands of the Company; distribution facilities in the U.S. owned by the Company and operated by its Rayloc division; and an automotive parts distribution center and auto parts stores in Mexico, owned and operated by Autopartes NAPA Mexico ("NAPA Mexico"), a wholly-owned subsidiary of the Company.
The Company’s automotive parts distribution centers distributedifferent replacement parts (other than body parts) for substantially all motor vehicle makes and models, in service in the U.S., including imported vehicles, hybrid and electric vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles and farm vehicles. Each part is cataloged and numbered for identification and accessibility. Availability is a critical success factor in our business and our teams utilize data and analytics to have the right parts, in the right place and at the right time. We do not manufacture any of the products we distribute. The majority of products distributed in North America are under the NAPA name, a mark licensed to us by NAPA, which is important to the sales and marketing of these products. In addition,Australasia and Europe, products are distributed under several brand names, including many of the Company distributesnational brands, as well as the NAPA name. Our Automotive operations have access to more than 725,000 different parts and related supply items. These items are purchased from hundreds of different suppliers, with approximately 46% of 2022 automotive parts inventories purchased from 10 major suppliers.
We also distribute replacement parts for small engines, farm equipment, marine equipment and heavy duty equipment. The Company’sOur inventories also include accessory items for such vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform their own maintenance and parts installation.
The Company's automotiveTraction, our heavy duty parts network was expanded in 2019 via the acquisition of various store groups and automotive operationsbusiness in North America Europe and Australasia.

AAG made a number of acquisitions to further expand their automotive operations in 2019, consisting of several small tuck-in businesses and three larger ones. Hennig Fahrzeugteile ("Hennig"), acquired on January 1, 2019, is headquartered in Essen, North Rhine-Westphalia, and is one of Germany's leading suppliers of vehicle parts. Hennig serves more than 9,000 customers, predominantly independent workshops and retailers. In addition, AAG expanded its footprint into the Netherlands and Belgium via the June 1, 2019 acquisition of PartsPoint Group ("PartsPoint"), headquartered in Ede, Netherlands. PartsPoint is a leading distributor of automotive and aftermarket parts and accessories in the Benelux. Finally, AAG reinforced its market share in the heavy duty market in France via the acquisition of Todd Group ("Todd") on October 1, 2019. Todd, based in Normandy, France, is a leading distributor of truck parts and accessories for the heavy-duty aftermarket. In total, AAG's acquisitions in 2019 are expected to generate annual revenues of approximately $630 million.
The Company has a 15% interest in Mitchell Repair Information Corporation (“MRIC”), a subsidiary of Snap-on Incorporated. MRIC is a leading automotive diagnostic and repair information company that links North American subscribers to its services and information databases. MRIC’s core product, “Mitchell ON-DEMAND,” is a premier electronic repair information source in the automotive aftermarket.
Distribution System.    In 2019, the Company operated 56 domestic NAPA automotive parts distribution centers located in 39 states and approximately 1,130 domestic company-owned NAPA AUTO PARTS stores located in 44 states. At December 31, 2019, the Company had either a noncontrolling, controlling or other interest in 8 corporations, which operated approximately 256 auto parts stores in 15 states. The Company’s domestic automotive operations have access to approximately 530,000 different parts and related supply items. These items are purchased from more than 100 different suppliers, with approximately 49% of 2019 automotive parts inventories purchased from 10 major suppliers. Since 1931, the Company's domestic operations have had return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.
The Company’s domestic distribution centers serve the company-owned NAPA AUTO PARTS stores and approximately 4,800 independently-owned NAPA AUTO PARTS stores located throughout the U.S. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, sales to these independent automotive parts stores account for approximately 61% of the Company’s total U.S. Automotive sales and 20% of the Company’s total sales.
NAPA Canada/UAP, founded in 1926, is a leader in the distribution and marketing of replacement parts and accessories for automobiles and trucks and is also a significant supplier to the mining and forestry industries in Canada. NAPA Canada/UAP operates a network of nine NAPA automotive parts distribution centers, three heavy duty parts distribution centers and one fabrication/remanufacturing facility supplying 592 NAPA stores and 120 Traction wholesalers. The NAPA stores and Traction wholesalers in Canada include 207 company-owned stores, 11 joint ventures and 24 progressive owners in which NAPA Canada/UAP owns a 50% interest and 470 independently owned stores. NAPA and Traction operations supply bannered installers and independent installers in all provinces of Canada, as well as networks of service stations and repair shops operating under the banners of national accounts. NAPA Canada/UAP is a licensee of the NAPA® name in Canada. Additionally, Altrom Canada operates one import automotive parts distribution center and 23 branches, which distribute OE branded products for import vehicles through the NAPA Canada/UAP network.
In Australia and New Zealand, GPC Asia Pacific, originally established in 1922, is a leading distributor of automotive replacement parts and accessories. GPC Asia Pacific operates 12 distribution centers, 406 auto parts stores under the Repco banner, 130 auto parts stores under NAPA, Ashdown Ingram and other banners, and 17 locations associated with AMX/McLeod.
In Mexico, NAPA Mexico owns and operates one distribution center and serves 25 company-owned and 18 independently-owned auto parts stores. NAPA Mexico is a licensee of the NAPA® name in Mexico.
AAG, founded in 1989, is a leading European distributor of vehicle parts, tools, and workshop equipment with its primary operations in six countries in Europe. In France, AAG operates 16 distribution centers and serves 1,057 stores, of which 266 are company-owned, under the banners GROUPAUTO France, Precisium Group, Partner's, and GEF Auto. In the United Kingdom ("U.K."), AAG operates 36 distribution centers and serves 842 stores, of which 226 are company-owned, under the banners GROUPAUTO UK & Ireland and UAN. In Germany, AAG operates nine distribution centers and 29 company-owned stores under the banner Alliance Automotive Group Germany as well as 31 company owned stores under the banner Hennig Fahrzeugteile. In Poland, AAG serves 210 affiliated outlets under the banner GROUPAUTO Polska. In the Netherlands and Belgium, AAG operates through a network of one national distribution center, seven regional warehouses and 195 stores, of which 133 are company owned.
The Company's North American automotive business is supported by several operations that form its Automotive Supply Group. Balkamp, a wholly-owned subsidiary of the Company, distributes a wide variety of replacement parts and accessory items for passenger cars, heavy-duty vehicles, motorcycles and farm equipment. In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions. Balkamp packages many of the 42,000 products, which constitute the “Balkamp” line of products that are distributed through the NAPA system. These products are categorized into over 238 different product categories purchased from approximately 500 domestic suppliers and over 100 foreign manufacturers. Balkamp provides the NAPA system with over 1,300

SKUs of oils and chemicals. BALKAMP®, a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization.
The Company's Rayloc division operates four facilities focused on providing cost effective, quality service in engineering, cataloging, global sourcing, and distribution. Rayloc delivers over 10,000 part numbers, including brake pads, brake drums, chassis, and bearings through a nationwide distribution network. Products are distributed through the NAPA system under the NAPA® brand name. Rayloc® is a mark licensed to the Company by NAPA.
Additionally, Altrom America distributes OE branded products for import vehicles through the NAPA system.
Finally, the Company operates domestically two TW Distribution heavy duty parts distribution centers which serve 22 company-owned Traction Heavy Duty parts stores located in eight states. This group distributes heavy vehicle parts through the NAPA system and direct to small and large fleet owners and operators.
Products.    The Company’s automotive distribution network provides access to hundreds of thousands of different parts and related supply items. Each item is cataloged and numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers. The majority of orders are filled and shipped the same day they are received. The Company does not manufacture any of the products it distributes. The majority of products are distributed in North America under the NAPA® name, a mark licensed to the Company by NAPA, which is important to the sales and marketing of these products. Traction sales also includesells products distributed under the HD Plus name, a proprietary line of automotive parts for the heavy duty truck market. In Australasia and Europe, products are distributed under several brand names, including many of the national brands.
Service to NAPA AUTO PARTS Stores.    The Company believesWe believe that the quality and the range of services provided to itsour North American automotive parts customers constitute a significant advantage for itsour automotive parts distribution system. SuchOur goal is to properly stock our locations with the right parts to ensure we provide quick and quality service to our customers whose orders are often filled and shipped the same day they are received. Our services also include fast and frequent delivery,up to date parts cataloging (including the use of electronic NAPA AUTO PARTS catalogs) and stock adjustmentadjustments through a continuing parts classification system which, as initiated by the Company from time to time,us, allows independent retailers (“jobbers”)independently-owned stores to return certain merchandise on a scheduled basis. The Company offers itsWe offer our NAPA AUTO PARTS store customers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, as well as marketing conferences and seminars, sales and advertising manuals and training programs.
The Company hasWe have developed and refined an inventory classification system to determine optimum distribution center and auto parts store inventory levels for automotive parts stocking based on automotive registrations, usage rates, production statistics, technological advances, including predictive analytics, and other similar factors. This system, which undergoes continuous analytical review, is an integral part of the Company’sour inventory control procedures and comprises an important feature of the inventory management services that the Company makeswe make available to itsour NAPA AUTO PARTS store customers. Over the last 25 years, losses to the CompanyLosses from inventory obsolescence have not been insignificantsignificant historically and the Company attributeswe attribute this to the successful operation of itsour classification system, which involvesincludes product return privileges with most of itsour suppliers.
NAPA.    The Company isWe are the sole member of the National Automotive Parts Association, LLC a voluntary association formed in 1925 to promote the distribution of automotive parts for its members. NAPA, which neither buys nor sells
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automotive parts, functions as a trade association whose sole member in 2019 owned and operated 56 distribution centers located throughout the U.S. NAPAthat develops marketing concepts and programs that may be used byfor its members which, at December 31, 2019, includes only the Company. It is not involved in the chain of distribution.sole member.
Among the automotive products purchased by the Companyus from various manufacturers for distribution are certain lines designated, cataloged, advertised and promoted as “NAPA” lines. Generally, the Company iswe are not required to purchase any specific quantity of parts so designated and itwe may and does, purchase competitive lines from the same as well as other supply sources.
The Company usesWe use the federally registered trademark NAPA® as part of the trade name of itsour distribution centers and parts stores. The Company fundsWe fund NAPA’s national advertising program, which is designed to increase public recognition of the NAPA name and to promote NAPA product lines.
The Company isWe are a party to, together with the former members of NAPA, to a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954. The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among the Companyus and former NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers.
Competition.Competition.    The automotive parts distribution businessaftermarket is highly competitive. The Company competesWe compete with other national, regional and local automotive parts chains, automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those that they build themselves), automobile dealers, and warehouse clubs and large automotive parts retail chains.clubs. In addition, the Company competes

we compete with the distributing outlets of parts manufacturers, oil companies, mass merchandisers (including national retail chains), and with other parts distributors and retailers, including online retailers. The Automotive Parts Group competesWe compete primarily on availability of product offering, service, brand recognition and price. Our automotive competitors include AutoZone, Inc., O-Reilly Auto Parts, Inc., Advance Auto Parts, Inc., LKQ Corporation, Bapcor and Uni-Select, among many others. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We face substantial competition in the industries in which we do business.”
INDUSTRIAL PARTS GROUP ("Industrial")
TheOur Industrial Parts Groupsegment operates in both North America and Australasia.Australasia through our wholly-owned subsidiaries Motion Industries, Inc. (“Motion”), a wholly-owned subsidiary of the Company headquartered in Birmingham, Alabama, operates in North America. Inenco Group ("Inenco"), also a wholly-owned subsidiary of the Companyand Motion Asia Pacific, headquartered in Sydney, Australia, operates across Australasia.Australia.
MotionIndustrial distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission products, industrial automation and robotics, hose,hoses, hydraulic and pneumatic components, industrial and safety supplies and material handling products to MRO (maintenance,maintenance, repair and operation)operation (“MRO”) and OEM (originaloriginal equipment manufacturer)manufacturer (“OEM”) customers throughout the U.S., Canada, Mexico and Mexico.Australasia
In Canada, industrial parts are distributed by Motion Industries (Canada), Inc. (“Motion Canada”). The Mexican market is2022, our Industrial segment served by Motion Mexico S de RL de CV (“Motion Mexico”).
In 2019, Motion served approximatelymore than 200,000 OEM and MRO customers in all types of industries, located throughout North America, including the equipment and machinery, food and beverage, forest products, primary metals, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries; as well as strategically targeted specialty industries such as power generation, alternative energy, government, transportation, ports and others. MotionWe established a new electric vehicle battery category based on increasing opportunities presented by the build-out of new battery manufacturing facilities across North America. Our Industrial segment services all manufacturing and processing industries with access to a database of 8.7over 19 million parts. Additionally, Motion provides U.S. government agencies access to approximately 72,000 products and replacement parts through a Government Services Administration (GSA) schedule.
The Company's Industrial Parts Group network expanded in 2019 via the acquisition of various tuck-in acquisitions and industrial operations in North America and Australasia. In North America, the Company expanded its industrial operations with two tuck-in acquisitions, which in total are expected to generate annual revenues of approximately $78 million.
In Australasia, the Company purchased the remaining 65% stake in Inenco, a leading distributor of industrial replacement parts and accessories in Australasia. In total, Inenco is expected to generate annual revenues of approximately $400 million.
The Industrial Parts Groupbusiness provides customers with supply chain efficiencies achieved through the Company’s On-Site Solutionsour on-site solutions offering. This service provides inventory management, asset repair and tracking, vendor managed inventory ("VMI"), as well as radio frequency identification ("RFID") asset management of the customer’s inventory. MotionIndustrial also provides a wide range of services and repairs such as: gearbox and fluid power assembly and repair, process pump assembly and repair, hydraulic drive shaft repair, electrical panel assembly and repair, and hose and gasket manufacture and assembly, as well as many other value-added services.assembly. A highly developed supply chain with vendor partnerships and connectivity are enhanced by Motion’s leading e-business capabilities, such as MiSupplierConnect, which provides integration between the Company’sour information technology network and suppliers’ systems, creating numerous benefits for both the supplier and customer. These services and supply chain efficiencies assist Motion in providing the cost savings that many of its customers require and expect.
Distribution SystemNetwork.The following table details the breakdown of our Industrial distribution centers, branches and service centers by geographic region as of December 31, 2022.
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North AmericaAustralasiaTotal
Distribution centers19 16 35 
Branches549 148 697 
Service Centers67 2 69 
Total locations635 166 801 
Our 35 Industrial distribution centers serve the branches and services centers located throughout the geographic regions in which we operate. The branches and service centers, in turn, sell to MRO and OEM customers in all types of industries across North America and Australasia.
In North America, theour Industrial Parts Groupbusiness stocks andor distributes more than 195,00019 million different items purchased from more than 88049,000 different suppliers. Its service centers provide hydraulic, hose and mechanical repairs for customers. Approximately 40%46% of total industrial product purchases in 20192022 were made from 10 majorour top 50 strategic suppliers. Sales are generated from facilities in the Industrial Parts Group’s facilities located in 49 states,U.S., Puerto Rico, Mexico and nine provinces in Canada and Mexico.Canada.
In Australasia, theour Industrial Parts Group operatedbusiness operates a network of distribution centers, branches and branchesservice centers across Australia, New Zealand, Indonesia and Singapore as of December 31, 2019.2022.
Our Industrial network was expanded on January 3, 2022 with the acquisition of Kaman Distribution Group ("KDG"). KDG, which is headquartered in Bloomfield, Connecticut, is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to MRO and OEM customers. This strategic and highly synergistic combination significantly enhances our scale and strengthens our market leading position, creating a premier leader of industrial solutions.
Most branches have warehouseare facilities that stock significant amounts of inventory representative of the products used by customers in the respective market areas served.
Products.    The Industrial Parts Group distributes a wide variety of parts and products to its customers, which are primarily industrial concerns.companies. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers, electric motors, industrial supplies, assembly tools, test equipment, adhesives and chemicals. MotionIndustrial also offers systems and automation products that support sophisticated motion control and process automation for full systems integration of plant equipment. The nature of Motion's business demands the maintenance of adequate inventories and the ability to promptly meet demandingcritical delivery requirements. Virtually all of the products distributed are installed by the customer or used in plant and facility maintenance activities. Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order.order receipt. The majority of all sales are on open account. Motion has ongoing purchase agreements with many of its national account customers which, collectively, represent approximately 45%40% of the annual sales volume.

SupplySupplier Agreements.    Non-exclusive distributor agreements are in effect with most of the Industrial Parts Group’s suppliers. The terms of these agreements vary; however, it has been theour experience of the Industrial Parts Group that the custom of the trade is to treat such agreements as continuing until breached by one party or until terminated by mutual consent.
Competition.    The industrial parts distribution business is highly competitive and fragmented. The Industrial Parts Group competesWe compete with othernational, regional and local distributors specializing in the distribution of such items, general line distributors and others who provide similar services. To a lesser extent, the Industrial Parts Group competeswe compete with manufacturers that sell directly to the customer. Thecustomer and with various industrial eCommerce sites. Our Industrial Parts Group competescompetitors include Applied Industrial Technologies, Inc., Fastenal Company, and W.W. Grainger, Inc, among many others. We compete primarily on the breadth of product offerings, quality service and price.competitive pricing. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We face substantial competition in the industries in which we do business.”
BUSINESS PRODUCTS GROUP
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
We are committed to the development of sustainable and efficient operations and business practices that enhance and protect our people, our communities and our planet. Our goal is to generate above-market returns while aligning our business practices to support the interests of our stakeholders.
Our process of defining sustainability priorities focuses on the simultaneous improvement of our environmental, social and financial position, and our strong leadership and governance practices that strive to integrate sustainability into our business strategy and corporate culture. The Business Products Group, operated through S.P. Richards Company (“S.P. Richards” or "SPR"), is a wholly-owned subsidiaryNominating and ESG Committee of the Company headquarteredBoard of Directors oversees our sustainability initiatives which aims to deliver long-term value for our shareholders and all our stakeholders.
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We seek to promote a diverse, equitable and inclusive workplace and to ensure the health, safety and well-being of all employees. We emphasize giving back and uplifting the communities in Atlanta, Georgia. S.P. Richards iswhich we operate through partnerships and volunteer efforts. Refer to the “Human Capital Management” section below for further information on our human capital management initiatives.
We are committed to reducing our environmental footprint and positively impacting the planet through the implementation of sustainable initiatives throughout our value chain. We have engaged a leading sustainability partner to assist us with calculating our global greenhouse gas footprint, which includes all our facilities and operations worldwide. The new global emissions calculation provides the basis for measuring and reporting progress on reducing emissions over time, and it serves as a guidepost as we develop a comprehensive global carbon abatement strategy. We have expanded the use of LED lighting retrofits and smart HVAC systems in our facilities and have continued to implement and monitor fleet management practices and policies to minimize our energy usage and carbon emissions. Additionally, we are helping our teammates, customers and the industry prepare for electric vehicles ("EVs") and the changes taking place in the wholesale distributionmarket. We see this as an opportunity to lead our industry with knowledge and new products for EVs. We are continuously incorporating environmental stewardship in our practices and discovering opportunities to develop more efficient operations.
Additional information regarding our sustainability efforts and future initiatives can be found in our 2022 Sustainability Report and the Sustainability section of our website at www.genpt.com.
HUMAN CAPITAL MANAGEMENT
Our key human capital management objectives are to attract, retain and develop the highest quality talent. To support these objectives, our human resources programs are designed to connect prospective and current talent to opportunities at the company, engage current employees through an inclusive and diverse culture, and develop employees to grow for future opportunities within the organization.
Employee Retention and Professional Development
As of December 31, 2022, we employed approximately 58,000 people worldwide and operated within 17 countries. We take pride in our employees and are committed to helping them improve their physical, emotional, financial and social well-being. Our benefit offerings are designed to meet the varied and evolving needs of a broad linediverse workforce across businesses and geographies while helping our employees care for themselves and their families. We offer benefits aimed at improving quality of office and other business-related products through a diverse customer base of resellers. These products are used in businesses, schools, offices, and other institutions. Business products fall into the general categories of office furniture, technology products, general office, school supplies, cleaning, janitorial and breakroom supplies, safety and security items, healthcare products and disposable food service products.
In 2019, the Business Products Group operated primarily in the U.S. but was also represented in Canada through S.P. Richards Canada, a wholly-owned subsidiary of the Company headquartered near Toronto, Ontario. On December 6, 2019, the Company entered into a definitive agreement to sell all of its equity in SPR Canada, and the transaction closed on January 1, 2020.
Distribution System.    The Business Products Group distributes more than 98,000 items to almost 9,000 resellers and distributors throughout the U.S.care while limiting out-of-pocket costs. In addition, the group hasour well-being programs include an electronic, non-stock ordering systemonline platform that can seamlessly deliver thousandsoffers an interactive way to accomplish personal and financial goals and a rewards platform to reward employees for completing company sponsored competitions and well-being activities.
We periodically conduct a global engagement survey as a means of additional SKUs to customers in a timely fashion. This group’s network of strategically located distribution centers provides overnight delivery of the Company’s comprehensive product offering. Approximately 41% of the Company’s total office products purchases in 2019 were made from 10 major suppliers.
The Business Products Group sells to a wide variety of resellers. These resellers include independently owned office product dealers, national office product superstoresmeasuring employee engagement and mass merchants, large contract stationers, online resellers, military base stores, office furniture dealers, value-add technology resellers, business machine dealers, janitorial and sanitation supply distributors, safety product resellers and food service distributors. Resellers are offered comprehensive marketing programs, which include print and electronic catalogs, flyers, digital content and email campaigns for reseller websites,satisfaction, as well as an arraya tool for improving our human capital management strategies. Our leadership team reviews the survey results and based on the survey responses, action plans are developed to focus on areas of educationopportunity. We are pleased to report that our most recent engagement survey results were favorable overall and have shown that our employees are proud to work for us. The results of the engagement surveys help us continuously improve our human capital strategies and find ways to foster engagement and growth for our employees.
In addition, to empower employees to continually enhance their skills and reach their maximum potential, we provide a range of development programs, resources, and opportunities. Many are facilitated locally by each business with core leadership development at the Corporate level. One of our more significant programs is focused on high potential employees from all global business units. This program is a combination of in-person and virtual coursework and training resources. Inwith the intent that participants become fully immersed in the operations of our business and develop strategies and improvements cross-functionally. We also offer various internship and rotational programs that allow employees to see different operations of our business while also building strong relationships throughout the company. Other development opportunities include on-demand and live training courses to help our employees achieve their professional and personal goals. We believe these programs demonstrate our ongoing commitment to develop our future leaders.
Diversity, Equity and Inclusion ("DEI")
Our culture is strengthened by our core values, which includes a steadfast commitment to standing up for equality for our teammates, suppliers, customers, communities and other stakeholders. As part of our investment in our people, we make diversity, equity and inclusion a top priority. We promote a diverse, inclusive, and innovative culture that encourages and embraces change, diverse ideas, and perspectives. We strive to ensure our teammates reflect our global and diverse customer base. We are committed to creating a welcoming environment where all teammates have opportunities to grow and feel a sense of belonging, regardless of gender, sex, race, color, religion, national origin, age, disability, veteran status, sexual orientation, gender expression or experiences. Our goal is to
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create an inclusive and welcoming culture where we value, respect, and provide equal opportunities for all employees.
Our Diversity, Equity, and Inclusion Council, led by senior leadership and representatives from each business unit have helped to ensure accountabilities exist to advance new and current DEI initiatives. Some initiatives include, providing scholarships with an emphasis for students who attend Historically Black Colleges and Universities and collaboration with organizations that support women such as Women in Technology and Women in Auto Care. Our commitment also includes supporting organizations that advance the interests of disadvantaged individuals and communities in need. We continue to partner with Georgia Minority Supplier Diversity Council, the Georgia Hispanic Chamber of Commerce, United Way's African American Partnership and Young Professional Leaders programs.
Our efforts are also directed internally where we encourage the exchange of ideas, actively listen to employee dialogue, provide appropriate training, and ensure that the interests of all our employees are supported and advanced. This year we launched four business resource groups ("BRGs") - African American, Asian, Veteran and Women, for our corporate teammates in the Unites States. These BRGs provide our teammates with venues for personal and professional development, including networking, coaching, skill building, community engagement, volunteering and advancement opportunities. These groups play a key role in educating and engaging teammates in our DEI goals and efforts. We aim to leverage key learnings from these groups and expand the program globally. Overall, we seek to create an environment where there is a sense of belonging and all voices are heard and valued.
Please refer to our 2022 Sustainability Report and Human Rights Policy, which can be found on our investor relations website, for further information on human capital management.
Additional Information
Our website can be found at www.genpt.com. We make available, free of charge through our website, access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, any amendments to these documents, and other reports. These documents and reports are available under the Investor Relations section of our website as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”). We also use our website as a means of disclosing material information and for complying with our disclosure obligations under the SEC’s Regulation FD (Fair Disclosure). Important information, including news releases, analyst presentations and financial information regarding Genuine Parts is routinely posted on our website. Accordingly, investors should monitor the Investor Relations portion of our website, in addition world-class market analytics programs are made available to qualified resellers.
Products.    The Business Products Group distributes technology productsfollowing our press releases, SEC filings and consumer electronics including storage media, printer supplies, tabletspublic conference calls and computer accessories, calculators, shredders, laminators, copiers,webcasts. Additionally, our corporate governance guidelines, codes of conduct and printers; office furniture including desks, credenzas, chairs, adjustable height desks, chair mats, office suites, panel systems, file, mobile and storage cabinets and computer workstations; office supplies including desk accessories, accounting supplies, binders, filing supplies, report covers, writing instruments, envelopes, note pads, business forms, copy paper, mailroom and shipping supplies, drafting and audiovisual supplies; school and educational products including bulletin boards, teaching aids and art supplies; healthcare products including first aid supplies, gloves, exam room supplies and furnishings, cleaners and waste containers; janitorial and cleaning supplies; safety supplies; disposable food service products; and breakroom supplies including napkins, utensils, snacks and beverages. S.P. Richards has return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.
While the Company’s inventory includes products from over 700ethics, charters of the industry’s leading manufacturers worldwide, S.P. Richards also markets products under a number of proprietary brand names. These brands include: Business Source®, a line of value priced, high volume office products; Compucessory®, a line of computer accessories; Lorell®, a line of office furniture; NatureSaver®, an offering of recycled products; Elite Image®, a line of remanufactured toner cartridges, premium papersCompensation and labels; Integra™, a line of writing instruments; Genuine Joe®, a line of cleaningHuman Capital Committee and breakroom products; Sparco™, a targeted line to add depth to key office supply categories. Through the Company’s FurnitureAdvantage™ program, S.P. Richards provides resellers with an additional 16,000 furniture items made available to consumers in seven to ten business days.
The Company’s Impact ProductsNominating and The Safety Zone businesses also offer an additional series of proprietary brands including Eclipse™, Mopster®, ProGuard®, ProLite®, PolyLite®, ProMax®,ESG Committee, and The Safety Zone® brands of products that are janitorial and sanitation based, as well as solution-specific.
Competition.    The business products distribution business is highly competitive. In the distribution of its product offering to resellers, S.P. Richards competes with many other wholesale distributors, as well as with certain manufacturers of office products. S.P. Richards competes primarily on product offerings, service, marketing programs, brand recognition and price. Further information regarding competition inour procedure for shareholders and other interested parties to communicate with our Board of Directors, are available also on our website.
In Part III of this Form 10-K, we incorporate certain information by reference to our proxy statement for our 2023 annual meeting of shareholders. We expect to file the industryproxy statement with the SEC on or about March 3, 2023, and it will be available online at the same time at http://www.proxydocs.com/gpc. Please refer to the proxy statement for the information incorporated by reference into Part III of this Form 10-K when it is set forth in “Item 1A. Risk Factors — We face substantial competition in the industries in which we do business.”available.

ITEM 1A. RISK FACTORS.
FORWARD-LOOKING STATEMENTS
Some statements in this report, as well as in other materials we file with the SEC or otherwise release to the public and in materials that we make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. Forward-looking statements may relate, for example, to future operations, including the anticipated synergies and benefits of any acquisitions or divestitures, as well as prospects, strategies, including the 2019 Cost Savings Plan, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautionsWe caution that itsour forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated in our forward-looking statements as a result of various important factors. Such factors include, but are not limited to, those discussed below.
Forward-looking statements are only as of the date they are made, and the Company undertakeswe undertake no duty to update itsour forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-Q, 8-K and other reports filed with the SEC.
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You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K. Set forth below are the material risks and uncertainties that, if they were to occur, could materially and adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report and in the other public statements we make. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition, results of operations or the trading price of our securities.
We may not be able to successfully implement our business initiatives in each of our three business segments to grow our sales The considerations and earnings, which could adversely affect our business, financial condition, results of operations and cash flows.
We have implemented numerous initiatives in each of our three business segments to grow sales and earnings, including the introduction of new and expanded product lines, strategic acquisitions, geographic expansion (including through acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. If werisks that follow are unable to implement these initiatives efficiently and effectively, or if these initiatives are unsuccessful, our business, financial condition, results of operations and cash flows could be adversely affected.
Successful implementation of these initiatives also depends on factors specific to the automotive parts industry and the other industries in which we operate and numerous other factors thatorganized within relevant headings but may be beyond our control.relevant to other headings as well. In addition, to the othermaterial risks and uncertainties described below does not indicate that the risk factors contained in this “Item 1A. Risk Factors,” adverse changes in the following factors could undermine our business initiatives and have a material adverse effect on our business, financial condition, results of operations and cash flows:has not already materialized.
the competitive environment in our end markets may force us to reduce prices below our desired pricing level or to increase promotional spending;
our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner;
our ability to successfully enter new markets, including by successfully identifying and acquiring suitable acquisition targets in these new markets;
our ability to effectively manage our costs;
our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations, including in particular the challenges associated with the integration of foreign operations to ensure the adequacy of internal controls;
our ability to identify and successfully implement appropriate technological, digital and e-commerce solutions;
the occurrence of unusually severe weather events, which can disrupt our operations (forcing temporary closure of retail and distribution centers, prohibiting shipment of inventory and products) and negatively impact our results in the affected geographies;
the occurrence of political unrest and strikes, which can disrupt our operations and negatively impact our results in the affected geographies;
volatility in oil prices, which could have a negative impact on the U.S. economy and, in particular, the economies of energy-dominant states in which we operate;

the adequacy of our disclosure controls and procedures and internal controls over financial reporting; and
the economy in general, including the monetary policies of the Federal Reserve, which are influenced by various factors, including inflation, unemployment and short-term and long-term changes in the international trade balance and the fiscal policies of the U.S. government.STRATEGIC AND OPERATIONAL RISKS
Our business will be adversely affected if demand for our products slows.
Our business depends on customer demand for the products that we distribute. Demand for these products depends on many factors.
With respect to our automotive group,Automotive segment, the primary factors are:
•the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for maintenance and repair;
•the number of vehicles in the automotive fleet, a function of new vehicle sales and vehicle scrappage rates, as a steady or growing total vehicle population supports the continued demand for maintenance and repair;
•the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles;
•the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles;
•the addition of electric vehicles, hybrid vehicles, ride sharing services, alternative transportation means and autonomously driven vehicles and future legislation, including tax incentives and restrictions on the sale of new internal combustion vehicles, related thereto;
•gas prices, as increases in gas prices may deter consumers from using their vehicles;
•changes in travel patterns, which may cause consumers to rely more on other transportation;
•the weather, as milder weather conditions may lower the failure rates of automotive parts, while extended periods of rain and winter precipitation may cause our customers to defer maintenance and repair on their vehicles; extremely hot or cold conditions may enhance demand for our products due to increased failure rates of our customers’ automotive parts, and global warming trends and other significant climate changes can create more variability in the short term or lead to other weather conditions that could impact our business;
•restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and
•the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending.
With respect to our industrial parts group,Industrial segment, the primary factors are:
•the level of industrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts;
•changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy;
•the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas, which subsequently reduces demand for our products;
•changes in legislation or government regulations or policies which could impact international trade among our multi-national customer base and cause reduced demand for our products; and
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•the economy in general, which in declining conditions may cause reduced demand for industrial output.
With respect toWe depend on our relationships with our suppliers, and a disruption of these relationships or of our suppliers’ operations could harm our business.
As a distributor of automotive and industrial parts, our business depends on developing and maintaining close and productive relationships with our suppliers. We depend on our suppliers to sell us quality products group,at favorable prices. A variety of factors, many outside our control, affect our suppliers' ability to deliver quality merchandise to us at favorable prices and in a timely manner. These include, raw material shortages, inadequate manufacturing capacity, labor strikes, shortages and disputes anywhere within the primary factors are:
consolidation of customerssupply and consolidationdistribution chain delivering products to us, tariff and customs legislation and enforcement, transportation disruptions, tax and other legislative uncertainties, pandemics and/or weather conditions. In recent years, partly as a result of the industry;
COVID-19 pandemic and other factors beyond our control, such as the increasing digitization of the workplace, as this negatively impacts the need for certain office products;
the level of unemployment, especially as it relatesongoing Russia and Ukraine war, we have experienced supply chain disruptions, particularly with regard to white collarglobal labor shortages and service jobs, as high unemployment reduces the need for office products;
the level of office vacancy rates, as high vacancy rates reduces the need for office products; and
the economy in general, which in declining conditions may cause reduced demand for business products consumption.

Changes in legislation or government regulations or policies could have a significant impact on our results of operations.
Certain political developments, including, among others: (i) the results of elections ininventory sourced from outside the U.S. and globally and the impact of such results on political decision-making, and (ii) unrest in the U.K. and Europe, have resulted in increased economic uncertainty for multi-national companies operating within the U.K. and Europe. These developments may result in economic and trade policy actions that could impact economic conditions in many countries and continue to change the landscape of international trade. Our business is global, so changes to existing international trade agreements, blocking of foreign trade or imposition of tariffs on foreign goods could result in decreased revenues and/or increases in pricing, either of which could have an adverse impact on our business, results of operations, financial condition and cash flows in future periods. For instance, the United States imposed Section 232 tariffs on many imported products of steel and aluminum in March 2018 and expanded the tariffs to additional derivative products of steel and aluminum effective February 8, 2020. The United States imposed Section 301 tariffs on most imported products from China starting in July 2018. Although the United States and China reached a Phase One trade deal in January 2020, most of these tariffs remain in place and uncertainty persists in the trade relationship between the two countries that impacts the global trade landscape. In addition, the Tax Cuts and Jobs Act (the "Act") was signed into law on December 22, 2017. The Act, which reduced the U.S. corporate tax rate to 21 percent from 35 percent for taxable years beginning after December 31, 2017, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings.
The U.K.'s exit from the European Union (“E.U.”) will continue to have uncertain effects and could adversely impact our business, results of operations and financial condition.
On January 31, 2020, the U.K. exited from the E.U. (commonly referred to as “Brexit”). While a transition period of 11-month begins, during which the U.K. will continue to follow the E.U. rules, including remaining a member of the E.U. single market and Customs union, the final U.K./E.U. relationship is still uncertain for companies doing business both in the U.K. and the overall global economy. Brexit has impacted global markets, including various currencies, and resulted in a sharp decline in the value of the British Pound as compared to the U.S. dollar and other major currencies.  The fluctuation of currency exchange rates may expose us to gains and losses on non-U.S. currency transactions. Volatility in the securities markets and in currency exchange rates may continue as the U.K. negotiates its new rules and trade deals with the E.U. during the transition period and after. While wedisruptions have not experienced anyhad a material financial impact from Brexit on our business to date, but we cannot predict its future implications. Anyprovide any assurance that these or new supply chain disruptions will not materially or adversely impact from Brexit on our business and operations over the long term will depend, in part, on the outcome of final tariff, tax treaties, trade, regulatory, and other negotiations the U.K. conducts.
Uncertainty and/or deterioration in general macro-economic conditions domestically and globally, including unemployment, inflation or deflation, changes in tax policies, changes in energy costs, uncertain credit markets, or other economic conditions, could have a negative impact on our business, financial condition and results of operations and cash flows.
Our business and operating results have been and may in the future be adversely affected by uncertain global economic conditions, including domestic outputs, political uncertaintyfuture.
Furthermore, financial or operational difficulties at a particular supplier could cause that supplier to increase the cost, or decrease the quality, of the products we purchase. Supplier consolidation could also limit the number of suppliers from which we may purchase products and unrest, employment rates, inflation or deflation, changes in tax policies, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices, interest rates, volatile exchange rates, and other challenges that could materially affect the global economy. Bothprices we pay for these products. In addition, we would suffer an adverse impact if our commercial and retail customers may experience deterioration of their financial resources, which could result in existingsuppliers limit or potential customers delaying or canceling plans to purchase our products. Our vendors could experience similar negative conditions, which could impact their ability to fulfill their financial obligations to us. Future weakness incancel the global economy could adversely affect our business, results of operations, financial condition and cash flows.return privileges that currently protect us from inventory obsolescence.
We face substantial competition in the industries in which we do business.
The sale of automotive parts,and industrial parts and business products is highly competitive and impacted by many factors, including name recognition, product availability, customer service, changing customer preferences, store location, and pricing pressures. Because we seek to offer competitive prices, if our competitors reduce their prices, we may be forced to reduce our prices if our competitors reduce their prices or increase promotional spending, which could result in a material decline in our revenues and earnings. Increased competition among distributors of automotive and industrial parts, and office products, including increased availability among digital and e-commerce providers across the markets in which we do business, could cause a material adverse effect on our results of operations. The Company anticipatesWe anticipate no decline in competition in any of its threeour business segments in the foreseeable future.
In particular, the market for replacement automotive parts is highly competitive and subjects us to a wide variety of competitors. We compete primarily with national, international and regional auto parts chains, independently owned regional and local automotive parts and accessories stores, automobile dealers that supply manufacturer replacement parts and accessories, mass merchandisers, internet providers and wholesale clubs that sell automotive products, and regional and local full service automotive repair shops, both new and established.
Furthermore, both the automotive aftermarket and the office supply industries continueindustry continues to experience consolidation. Consolidation among our competitors could further enhance their financial position, provide them with the ability to offer more

competitive prices to customers for whom we compete, and allow them to achieve increased efficiencies in their consolidated operations that enable them to more effectively compete for customers. If we are unable to continue to develop successful competitive strategies or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline.
In addition, the loss or significant reduction in purchase volumeThe impact of a major customer in thegeopolitical conflicts may adversely affect our business products group could significantly impact itsand results of operations.
We depend on our relationships with our suppliers,have operations or activities in numerous countries and a disruption of our suppliers relationships or a disruption in our suppliers’ operations could harm our business.
regions outside the United States, including throughout western Europe and Australasia. As a distributor of automotive parts, industrial parts and business products,result, our business depends on developing and maintaining close and productive relationships with our suppliers. We depend on our suppliers to sell us quality products at favorable prices. Many factors outside our control, including, without limitation, raw material shortages, inadequate manufacturing capacity, labor disputes, tariff legislation, transportation disruptions, taxglobal operations are affected by economic, political and other legislative uncertainties, pandemics and/conditions in the foreign countries in which we do business as well as U.S. laws regulating international trade. Specifically, instability in the geopolitical environment in many parts of the world (including as a result of the on-going Russia and Ukraine war, and China-Taiwan relations) and other disruptions may continue to put pressure on global economic conditions. In addition, countries across the globe are instituting sanctions and other penalties against Russia. While we do not have operations in Russia or weather conditions,Ukraine, the retaliatory measures that have been taken, and could be taken in the future, by the U.S., NATO, and other countries have created global security concerns that could result in broader European military and political conflicts and otherwise have a substantial impact on regional and global economies, any or all of which could adversely affect our suppliers’ ability to deliver to us quality merchandisebusiness, particularly our European operations.
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While the broader consequences are uncertain at favorable prices in a timely manner.
Furthermore, financial this time, the continuation and/or operational difficulties with a particular suppliers could cause that suppliers to increase the costescalation of the products or decrease the qualityRussian and Ukraine conflict, along with any expansion of the products we purchase. Supplier consolidation could also limit theconflict to surrounding areas, create a number of suppliers from which we may purchase productsrisks that could adversely impact our business, including:
•increased inflation and could materially affect the prices we pay for these products. In addition, we would suffer an adverse impact if our suppliers limit or cancel the return privileges that currently protect us from inventory obsolescence.significant volatility in commodity prices;
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. The impact•disruptions to our supply chain cannot be reasonably estimated at this time. At the time of this filing, the outbreak has been largely concentratedglobal technology infrastructure, including through cyberattacks, ransom attacks or cyber-intrusion;
•adverse changes in China, although cases have been confirmed in other countries. The Company does not currently sell any products in China, but it does source a portion of its products from China. The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertaininternational trade policies and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.relations;
We recognize the growing demand for business-to-business and business-to-customer digital and e-commerce options and solutions, and we could lose business if we fail to provide the digital and e-commerce options and solutions our customers wish to use.
Our success in digital and e-commerce depends on •our ability to accurately identifymaintain or increase our prices, including freight in response to rising fuel costs;
•disruptions in global supply chains;
•increased exposure to foreign currency fluctuations; and
•constraints, volatility or disruption in the products to make available through digitalcredit and e-commerce platforms across our business segments, and to establish and maintain such platforms to provide an efficient on-line experience with the highest level of data security to our customers on and through the platforms our customers wish to use (including mobile) with rapidly changing technology in a highly competitive environment.capital markets.
If we experience a security breach, if our internal information systems fail to function properly or if we are unsuccessful in implementing, integrating or upgrading our information systems, our business operations could be materially affected.
We depend on information systems to process customer orders, manage inventory and accounts receivable collections, purchase products, manage accounts payable processes, ship products to customers on a timely basis, maintain cost effective operations, provide superior service to customers and accumulate financial results, among many other things.
Despite our implementation of various security measures, our IT systems and operations could be subject to damagesdamage or interruptionsinterruption from computer viruses, natural disasters, unauthorized physical or electronic access, power outages, telecommunications failure, computer system or network failures, wire transfer failure, employee error/malfeasance, cyber-attacks, security breaches, and other similar disruptions. Additionally, the techniques and sophistication used to conduct cyber-attacks and breaches of IT systems change frequently and have the potential to not be recognized until such attacks are launched or have been in place for a period of time. Maintaining, operating, and protecting these systems and related personal and sensitive information about our employees, customers and suppliers requires continuous investments in physical and technological security measures, employee training, and third-party services which the Company haswe have made and will continue to make. A cyber-attack or security breach could result in, among other things, sensitive and confidential data being lost, manipulated or exposed to unauthorized persons or to the public or delay our ability to process customer orders and manage inventory. While we also seek to obtain assurances from third parties with whom we interact to protect confidential information, there are risks that the confidentiality or accessibility of data held or utilized by such third parties may be compromised.
To date, we have not experienced a material breach of cyber-security; however, our computer systems and the computer systems of our third-party service providers have been, and will likely continue to be, subjected to unauthorized access or phishing attempts, computer viruses, malware, ransomware or other malicious codes. In particular, in connection with the COVID-19 pandemic and the related increase in working from home, there has been a spike in cyber-security attacks as work from home measures have led businesses to increase reliance on virtual environments and communications systems, which have been subjected to increasing third-party vulnerabilities and security risks.
A serious prolonged disruption of our information systems for any of the above reasons could materially impair fundamental business processes and increase expenses, decrease sales or otherwise impact earnings and cash flows. Furthermore, such a breachdisruption may harm our reputation and business prospects and subject us to legal claims if there is loss, disclosure or misappropriation of or access to our customers, employees or suppliers' information. As the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, compliance with these requirements could also result in

significant additional costs. As threats related to cybersecurity breaches grow more sophisticated and frequent, it may become more difficult to timely detect and protect our data and infrastructure.
We recognize the growing demand for business-to-business and business-to-customer e-commerce options and solutions, and we could lose business if we fail to provide the e-commerce options and solutions our customers wish to use.
Our retail and business customers increasingly demand convenient, easy-to-use e-commerce tools as an option to conduct their business with us. The success of our e-commerce platform depends on our ability to accurately identify the products to make available through our e-commerce platform, and to provide and maintain an
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efficient online experience with the highest level of data security for our customers. Operating an e-commerce platform is a complex undertaking and exposes us to risks and difficulties frequently experienced by internet-based businesses, included risks related to, among other things, our ability to support, expand, and develop our internet operations, website, mobile applications and software and related operational systems. Continuing to improve our e-commerce platform involves substantial investment of capital and resources, increasing supply chain and distribution capabilities, attracting, developing and retaining qualified personnel with relevant subject matter expertise and effectively managing and improving the customer experience. If we are unable to successfully provide the e-commerce solutions our retail and business customers desire, we may lose existing customers and fail to attract new ones. Our business, financial condition, results of operations and cash flows may be materially and adversely affected as a result.
We are dependent on key personnel and the loss of one or more of those key persons could harm our business.
Our future success significantly depends on the continued services and performance of our key management personnel. We believe our management team’s depth and breadth of experience in our industry is integral to executing our business plan. We also will need to continue to attract, motivate, and retain other key personnel as well as maintain employee safety and well-being. The loss of services of members of our senior management team or other key employees, the inability to attract additional qualified personnel as needed or failure to plan for the succession of senior management and key personnel could have a material adverse effect on our business.
In addition, there has recently been an increase in workers exercising their right to form or join a union, particularly in the U.S. There can be no assurance that our employees will not elect to be represented by labor unions in the future, which could among other things, adversely impact our culture, increase operating costs and otherwise disrupt our business and operations.
Our strategic transactions, initiatives and transformation plan involve risks, which could have an adverse impact on our financial condition and results of operation, and we may not realize the anticipated benefits of these transactions.transactions and initiatives.
We regularly consider and enter into strategic transactions, including mergers, acquisitions, investments, alliances, and other growth and market expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies and various other benefits. Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty.uncertainty, and we face significant competition in pursuing strategically beneficially transactions. Pursuing strategic transactions is also a time-consuming process that can involve significant expenses and management attention. For each of our acquisitions, we need to successfully integrate the target company’s products, services, associates and systems into our business operations.operations, including in particular the challenges associated with the integration of foreign operations to ensure the adequacy of internal controls. Integration can be a complex and time-consuming process, and if the integration is not fully successful or is delayed for a material period of time, we may not achieve the anticipated synergies or benefits of the acquisition. Furthermore, even if the target companies are successfully integrated, the acquisitions may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products or services, and expose us to additional liabilities. Any impairment of goodwill or other intangible assets acquired in a strategic transaction may reduce our earnings. Additionally,In addition, any investments we hold in other companies are subject to a risk of partial or total loss of our investment. We also consider and enter into divestitures from time to time, with the expectation that these transactions will result in increases in cost savings and various other benefits. Strategic divestitures are subject to uncertainty and can be a complex and time-consuming process. If the divestiture is not fully successful or is delayed for a material period of time, or if we are unable to reinvest the proceeds of the divestiture in a manner consistent with our strategic objectives, we may not achieve the anticipated benefits of the divestiture.
BecauseAdditionally, as we undertake the transformation plan for our business, we have integrated our strategic initiatives into a cohesive business model which balances competing priorities. If we are involved in litigation from timeunable to timeimplement these strategic initiatives efficiently and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs as well as reputational harm.
We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various reasons. The damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limitseffectively, or if our insurance policies do not cover a claim, this could have a material adverse effect onthese strategic initiatives are unsuccessful, our business, financial condition, results of operations and cash flows.
Additionally,flows could be adversely affected. To facilitate this transformation plan, we are subject to numerous laws in the various jurisdictions in which we operatemaking substantial investments, recruiting new talent, and optimizing our business model, management system, and organization, as well as governmental regulations relatingdivesting ourselves of assets related to taxes, environmental protection, product quality standards, data privacy, buildingthe business products group segment, which we have exited. Accordingly, a strong balance sheet that provides the flexibility to invest in these new growth opportunities and zoning requirements, and employment law matters.maintaining discipline in our capital allocation is critical to the success of our transformation plans. If we failare unable to comply with existingmaintain a strong balance sheet or future lawsoptimize our capital allocation or regulations,are otherwise not successful in executing our strategic initiatives and transformation plan (or are delayed for reasons outside of our control), we may not be subjectable to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition,realize the full benefits of our capital expenses could increase due to remediation measures that may be requiredplan. Furthermore, if we are foundunable to be noncompliant with any existingsuccessfully drive employee or future laws or regulations.
We are dependent on key personnel andcustomer adoption of certain strategic initiatives, we may not realize the loss of one or more of those key persons could harm our business.
Our future success significantly depends on the continued services and performancefull benefits of our key management personnel. We believeplan. Additionally,
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failure to make progress on our management team’s depth and breadthplans (or failure to accurately measure progress on our plan), may disrupt the conduct of experience in our industry is integral to executing our business plan. We also will need to continue to attract, motivate and retain other key personnel. The lossdivert management’s attention and resources. All of services of members of our senior management team or other key employees, the inability to attract additional qualified personnel as needed or failure to plan for the succession of senior management and key personnelwhich could have a materialan adverse effect on our business.
Our debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
We have an unsecured revolving credit facility and unsecured senior notes, which could have important consequences to our financial health. For example, our level of indebtedness could, among other things:
make it more difficult to satisfy our financial obligations, including those relating to the senior unsecured notes and our credit facility;
increase our vulnerability to adverse economic and industry conditions;
limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a competitive disadvantage;
require us to dedicate a substantial portion of our cash flows to service the principal and interest on the debt, reducing the funds available for other business purposes, such as working capital, capital expenditures or other cash requirements;
limit our ability to incur additional debt with acceptable terms; and
expose us to fluctuations in interest rates.
In addition, the terms of our financing obligations include restrictions, such as affirmative, negative and financial covenants, conditions on borrowing and subsidiary guarantees. A failure to comply with these restrictions could result in a default under our financing obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The

occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could have a material adverse effect on our business, financial condition and results of operations and cash flows.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could affect our financial results or financial condition.
GAAP and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, impairment of goodwill and other intangible assets, inventories, lease obligations, self-insurance, vendor allowances, tax matters and litigation, are complex and involve many subjective assumptions, estimates and judgments. Changes in accounting standards or their interpretation or changes in underlying assumptions, estimates or judgments could significantly change our reported or expected financial performance or financial condition. The implementation of new accounting standards could also require certain systems, internal process and other changes that could increase our operating costs.
Our stock price is subject to fluctuations, and the value of your investment may decline.
The trading price of our common stock is subject to fluctuations, and may be subject to fluctuations in the future based upon external economic and market conditions. The stock market in general has experienced significant price and volume fluctuations that sometimes have been unrelated or disproportionate to the operating performance of listed companies. These broad market, geopolitical and industry factors among others may harm the market price of our common stock, regardless of our operating performance and growth outlook, and the value of your investment may decline.
We may be affected by global climate change or legal, regulatory, or market responses to such change.
The concern over climate change has led to legislative and regulatory initiatives aimed at reducing greenhouse gas emissions (“GHG”). For example, proposals that would impose mandatory requirements related to GHG continue to be considered by policy makers in the U.S. and elsewhere. Laws enacted to reduce GHG could directly or indirectly affect our suppliers and could adversely affect our business, financial condition, results of operations and cash flows. Changes in automotive technology and compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers all of which could adversely impact the demand for our products and our business, financial condition, results of operations or cash flows.
We are subject to risks related to corporate social responsibility and reputation.
Many factors influence our reputation and the value of our brands including the perception held by our customers, business partners, investors, other key stakeholders and the communities in which we do business. Our business faces increasing scrutiny related to environmental, social and governance activities and disclosures and risk of damage to our reputation and the value of our brands if we fail to act responsibly in a number of areas, such as environmental stewardship, supply chain management, climate change, diversity and inclusion, workplace conduct, human rights, philanthropy and support for local communities. Any harm to our reputation could impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.operations.
If we fail to maintain an effective system of internal controls over financial reporting there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis, which could result in a loss of investor confidence and negatively impact our business, results of operations, financial condition and stock price.
Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud. However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. There can be no assurance that all control issues or fraud will be detected. As we continue to grow our business, our internal controls continue to become more complex and require more resources. Further, some of our employees work remotely and could introduce potential vulnerabilities to our financial reporting systems and our internal control environment and the effectiveness of our internal controls over financial reporting. Any failure to maintain effective controls could prevent us from timely and reliably reporting financial results and may harm our operating results. In addition, if we are unable to conclude that we have effective internal control over financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified report as to the effectiveness of our internal control over financial reporting, as of each fiscal year end, we may be exposed to negative publicity, which could cause investors to lose confidence in our reported financial information. Any failure to maintain effective internal controls and any such resulting negative publicity may negatively affect our business and stock price.
Additionally, the existence of any material weaknesses or significant deficiencies would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause

stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect us and the market price of our common stock.
We
MACROECONOMIC, INDUSTRY AND FINANCIAL RISKS
Uncertainty and/or deterioration in general macro-economic conditions domestically and globally, including inflation or deflation, employment rates and wages, changes in tax policies, changes in energy costs, uncertain credit markets, or other economic conditions, could have a negative impact on our business, financial condition, results of operations and cash flows.
Our business and operating results have been and may in the future be adversely affected by uncertain global economic conditions, including inflation or deflation, domestic outputs, political uncertainty and unrest, employment rates and wages, including increases in minimum wage, changes in tax policies, including tax legislation such as the methodInflation Reduction Act of determining2022, changes in energy costs, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices, rising interest rates, monetary policies, volatile exchange rates, and other challenges that could affect the London Interbank Offered Rate (“LIBOR”),global economy. Both our commercial and retail customers may experience deterioration of their financial resources, which could result in existing or potential customers delaying or canceling plans to purchase our products.
Additionally, other economic conditions, including resulting from healthcare pandemics or epidemics, could impact various aspects of our business. The extent to which these could impact us depends on numerous factors and future developments that we cannot predict, including the occurrence of additional waves or spikes in infection rates, including due to the emergence and spread of variants; governmental, business or other actions taken in response to certain healthcare pandemics or epidemics and the efficacy of these actions, including partial or complete shut downs, travel restrictions, and stay-at-home orders among other actions; effectiveness and public acceptance of vaccines; and impacts on our supply chain, our ability to keep operating locations open, and on customer demand.
Our vendors could experience similar negative conditions, which could impact their ability to fulfill their financial obligations to us. Future weakness in the global economy could adversely affect our business, results of operations, financial condition and cash flows.
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Fluctuations in foreign currency exchange rates have adversely affected and could continue to adversely affect our operating results.
Because the functional currency of most of our foreign operations is the applicable local currency, but our financial reporting currency is the U.S. dollar, we are required to translate the assets, liabilities, expenses, and revenues of our foreign operations into U.S. dollars at the applicable exchange rate in preparing our Consolidated Financial Statements. Accordingly, we face foreign currency exchange rate risk arising from transactions in the normal course of business, such as sales and loans to wholly owned subsidiaries, sales to third-party customers, purchases from suppliers, and bank lines of credit with creditors denominated in foreign currencies.
Foreign currency exchange rates have affected our net sales, net earnings, and operating results and could continue to result in declines in our reported net sales and net earnings. Currency exchange rate fluctuations may also affect the comparative prices between products we sell and products our foreign competitors sell in the same market, which may decrease demand for our products. Substantial exchange rate fluctuations as a result of the strengthening of the U.S. dollar or otherwise, may have an adverse effect on our operating results, financial condition, and cash flows, as well as the comparability of our Consolidated Financial Statements between reporting periods. While we actively manage our foreign currency market risk in the normal course of business by entering into various derivative instruments to hedge against such risk, these derivative instruments involve risks and may not effectively limit our underlying exposure to foreign currency exchange rate fluctuations or minimize our net earnings and cash volatility associated with foreign currency exchange rate changes. Further, the failure of one or more counterparties to our foreign currency exchange rate contracts to fulfill their obligations to us could adversely affect our operating results.
Our debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
We have an unsecured revolving credit facility and unsecured senior notes, which could have important consequences to our financial health. For example, our level of indebtedness could, among other things:
•make it more difficult to satisfy our financial obligations, including those relating to our unsecured revolving credit facility and our unsecured senior notes;
•increase our vulnerability to adverse economic and industry conditions;
•limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a competitive disadvantage;
•require us to dedicate a substantial portion of our cash flows to service the principal and interest on the debt, reducing the funds available for other business purposes, such as working capital, capital expenditures or other cash requirements;
•limit our ability to incur additional debt with acceptable terms; and
•expose us to fluctuations in interest rates.
The terms of our financing obligations include restrictions, such as affirmative, negative and financial covenants, conditions on borrowing and subsidiary guarantees. A failure to comply with these restrictions could result in a default under our financing obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a default that remains uncured or the replacementinability to secure a necessary consent or waiver could have a material adverse effect on our business, financial condition, results of LIBORoperations and cash flows. We also guarantee the borrowings of certain independently owned automotive parts stores and certain other affiliates in which we have a non-controlling equity ownership interest. To date, we have not experienced any significant losses in connection with these guarantees. However, if any of the borrowers under these guarantees experienced a default, we may be required to satisfy their payment obligations in an alternative reference rate,amount that could be material.
In addition, our indebtedness is rated by credit rating agencies. Our overall credit rating may be negatively impacted by deteriorating and uncertain credit markets or other factors that may or may not be within our control. The interest rates on our unsecured revolving credit facility, as well as any additional indebtedness we may incur in the future, are impacted by our credit ratings. Accordingly, any negative impact of our credit ratings, or placement of our credit ratings on “review” or “watch” status, could result in higher interest expense and could impact the terms of any additional indebtedness we incur in the future.
LEGAL AND REGULATORY RISKS
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We may be affected by global climate change or legal, tax, regulatory, or market responses to such change.
The concern over climate change has led to legislative and regulatory initiatives aimed at reducing greenhouse gas emissions (“GHG”). For example, proposals that would impose mandatory requirements related to GHG continue to be considered by policy makers in the U.S. and elsewhere. For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs that may be imposed on vehicles and automobile fuels could adversely affect demand for the products we sell. We may not be able to accurately predict, prepare for and respond to new kinds of technological innovations with respect to electric vehicles and other technologies that minimize emissions. Laws enacted to reduce GHG could directly or indirectly affect our suppliers and could adversely affect our business, financial condition, results of operations and cash flows. Changes in automotive technology (including the adoption of electric vehicles) and compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers all of which could adversely impact the demand for our variable rate loans, derivative contractsproducts and our business, financial condition, results of operations or cash flows.
Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs as well as reputational harm.
We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various reasons. For example, we are party to, among other litigation, numerous pending product liability lawsuits relating to our national distribution of automotive parts and supplies, many of which involve claims of personal injury allegedly resulting from the use of automotive parts distributed by us. The damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim our business, financial assetscondition, results of operations and liabilities.cash flows could be materially and adversely affected. In particular, on July 8, 2021, the Washington Supreme Court overturned the order of the Washington Court of Appeals and reinstated the trial court's damage award of $77 million against us.
Additionally, we are subject to numerous laws in the various jurisdictions in which we operate as well as governmental regulations relating to taxes, environmental protection, product quality standards, data privacy, building and zoning requirements, and employment law matters. If we fail to comply with existing or future laws or regulations, we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital expenses could increase due to remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations.
Changes in legislation or government regulations or policies, particularly those relating to taxation and international trade, could have a significant impact on our results of operations.
Our business relies upon a large volumeis global, so changes to existing international trade agreements, blocking of loans, derivative contracts and other financial instrumentsforeign trade or imposition of tariffs on foreign goods could result in decreased revenues and/or increases in pricing, either of which are directly or indirectly dependent on LIBOR to establish their interest rate and/or value. The U.K. Financial Conduct Authority announced in 2017 that it would no longer compel banks to submit rates for the calculation of LIBOR after 2021. It is not possible to predict whether banks will continue to provide LIBOR submissions to the administrator of LIBOR, whether LIBOR rates will cease to be published or supported before or after 2021 or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere. It is expected that a transition away from the widespread use of LIBOR to alternative rates is likely to occur during the next several years.
While wecould have established a working group consisting of key stakeholders from throughout the company to monitor developments relating to LIBOR uncertainty and changes and to guide the Company’s response, thean adverse impact of these developments on our business, results of operations, financial condition and cash flows in future periods. For instance, the United States imposed Section 232 tariffs on many imported products of steel and aluminum in March 2018 and expanded the tariffs to additional derivative products of steel and aluminum effective February 8, 2020. The United States imposed Section 301 tariffs on most imported products from China starting in July 2018. Although the United States and China reached a Phase One trade deal in January 2020, there was no Phase Two trade deal implemented and most of the tariffs imposed remain in place, while uncertainty persists in the trade relationship between the two countries that impacts the global trade landscape.
In addition, as a global business, we are subject to taxation in each of the jurisdictions in which we operate. Changes in the tax laws of these jurisdictions, or in the interpretation or enforcement of existing tax laws, could subject our business to audits, inquiries and legal challenges from taxing authorities and could reduce the benefit of tax structures previously implemented for our operations. As a result, we may incur additional costs, including taxes and penalties for historical periods, that may have a material and adverse effect on our business, financial condition, results is not yet known. The transition from LIBOR may cause usof operations and cash flows.
GENERAL RISKS
We are subject to incur increased costsrisks related to corporate social responsibility and additional risk. Uncertainty as to the nature of alternative reference rates and as to potential changes in or other reforms to LIBOR may adversely affect LIBOR ratesreputation.
Many factors influence our reputation and the value of LIBOR-based loans originated priorour brands including the perception held by our customers, business partners, investors, other key stakeholders and the communities in which we do business. Our business faces increasing scrutiny related to 2021. If LIBOR rates are no longer available, any successor or replacement interest rates may perform differently, which may affect our net interest income, change our marketenvironmental, social and governance activities and disclosures and risk profile and require changesof damage to our risk, pricingreputation and hedging strategies.the value of our brands if we fail to act responsibly in a number of areas, such
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as environmental stewardship and sustainability, supply chain management, climate change, diversity, equity and inclusion, workplace conduct, human rights, philanthropy and support for local communities. Any failureharm to adequately manage this transitionour reputation could adversely impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.
Our stock price is subject to fluctuations, and the value of your investment may decline.
The trading price of our common stock is subject to fluctuations, and may be subject to fluctuations in the future based upon external economic and market conditions. The stock market in general has experienced significant price and volume fluctuations that sometimes have been unrelated or disproportionate to the operating performance of listed companies. These broad market, geopolitical and industry factors among others may harm the market price of our common stock, regardless of our operating performance and growth outlook, and the value of your investment may decline.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2.    PROPERTIES.
The following table summarizes our company-owned and operated distribution centers, retail stores, branches and branchesservice centers as of December 31, 2019:2022:
Distribution CentersOther Locations
Distribution Centers Stores/Branches
Automotive Parts: 
Automotive:Automotive:
North America81 1,424North America771,682
Europe62 692Europe78742
Australasia12 553Australasia14529
Total Automotive Parts155 2,669
Industrial Parts: 
Total AutomotiveTotal Automotive1692,953
Industrial:Industrial:
North America15 551North America19616
Australasia8 184Australasia16150
Total Industrial Parts23 735
Business Products44 0
Total IndustrialTotal Industrial35766
Total222 3,404Total2043,719
In addition to the properties set forth above, the Company haswe have various headquarters, shared service centers and other facilities. The Company'sOur corporate and U.S. Automotive Parts Group headquarters are located in two office buildings owned by the Companyus in Atlanta, Georgia. The CompanyWe generally ownsown distribution centers and leaseslease retail stores and branches. We believe that our facilities on theas a whole are in good condition, are adequately insured, are fully utilized and are suitable and adequate to conduct the business of our current operations.
ITEM 3.    LEGAL PROCEEDINGS.
The CompanyInformation with respect to our legal proceedings may be found in the Commitments and Contingencies Footnote in the Notes to Consolidated Financial Statements in Item 8 of Part II, which is subject to various legal and governmental proceedings, many involving routine litigation incidental to the businesses, including approximately 1,615 product liability lawsuits resulting from its national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributedincorporated herein by the Company. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material effect on the Company’s business, results of operations or financial condition.reference.

ITEM 4.    MINE SAFETY DISCLOSURES.
Not applicable.

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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 Regarding Common Stock
The Company’sOur common stock is traded on the New York Stock Exchange under the ticker symbol “GPC.”
Dividend Information
We have paid a cash dividend to shareholders every year since going public in 1948 and increased the annual dividend for 66 consecutive years through 2022. While we have historically paid dividends to holders of our common stock on a quarterly basis and expect to continue doing so going forward, the declaration and payment of future dividends will depend on many factors, including, but not limited to, our earnings, financial condition, business development needs and regulatory considerations, and are at the discretion of our Board of Directors.
Stock Performance Graph
Set forth below is a line graph comparing the yearly dollar change in the cumulative total shareholder return on the Company’sour common stock against the cumulative total shareholder return of the Standard and Poor’s ("S&P") 500 Stock Index and a peer group composite index (“Peer Index”) structured by the Companyus as set forth below for the five year period that commenced December 31, 20142017 and ended December 31, 2019.2022. This graph assumes that $100 was invested on December 31, 20142017 in Genuine Parts Company common stock, the S&P 500 Stock Index (the Company is(we are a member of the S&P 500 Stock Index, and itsour cumulative total shareholder return went into calculating the S&P 500 Stock Index results set forth in the graph) and the peer group composite index as set forth below and assumes reinvestment of all dividends.
Comparison of five year cumulative total shareholder return
stockperformancegraph2019.jpggpc-20221231_g1.jpg
Genuine Parts Company, S&P 500 Stock Index and peer group composite index
Cumulative Total Shareholder Return $ at Fiscal Year End 2014 2015 2016 2017 2018 2019Cumulative Total Shareholder Return $ at Fiscal Year End201720182019202020212022
Genuine Parts Company $100.00 $82.86 $94.71 $97.03 $101.02 $115.21Genuine Parts Company$100.00$104.11$118.74$116.13$166.52$211.19
S&P 500 Stock Index $100.00 $101.38 $113.51 $138.28 $132.23 $173.86S&P 500 Stock Index$100.00$95.62$125.73$148.87$191.60$156.90
Peer Index $100.00 $87.89 $92.97 $108.80 $89.45 $113.61Peer Index$100.00$83.10$106.58$127.14$156.34$125.91
In constructing the Peer Index for use in the stock performance graph above, the Companywe used the shareholder returns of various publicly held companies (weighted in accordance with each company’s stock market capitalization at
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December 31, 20142017 and including reinvestment of dividends) that compete with the Companyus in threeour two industry segments: automotive parts and industrial parts and business products (each group of companies included in the Peer Index as competing with the Companyus in a separate industry segment is hereinafter referred to as a “Peer Group”). Included in the automotive parts Peer Group are those companies making up the Dow Jones U.S. Auto Parts Index (the Company is(we are a member of such industry group, and its individual shareholder return was included when calculating the Peer Index results set forth in the performance graph). Included in the industrial parts Peer Group are Applied Industrial Technologies, Inc., Fastenal Company, and W.W. Grainger, Inc. and included in the business products Peer Group is Office Depot, Inc.

In determining the Peer Index, each Peer Group was weighted to reflect the Company’sour annual net sales in each industry segment. Each industry segment of the Company comprised the following percentages of the Company’s net sales for the fiscal years shown:
Industry Segment 2014
 2015
 2016
 2017
 2018
 2019
Automotive Parts 53% 52% 53% 53% 56% 57%
Industrial Parts 36% 35% 34% 35% 34% 34%
Business Products 11% 13% 13% 12% 10% 9%
Holders
As of December 31, 2019,2022, there were 4,2006,892 holders of record of the Company’scompany’s common stock. The number of holders of record does not include beneficial owners of the common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.
Issuer Purchases of Equity Securities
The following table provides information about the purchases of shares of the Company’scompany’s common stock during the three month period ended December 31, 2019:2022:
PeriodTotal
Number of
Shares
Purchased(1)		Average
Price  Paid
per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
October 1, 2022 through October 31, 202218,142 $173.00 124,004 10,458,662 
November 1, 2022 through November 30, 202222,892 $178.92 109,115 10,349,547 
December 1, 2022 through December 31, 20222,183 $171.00 56,549 10,292,998 
Total43,217 $176.04 289,668 10,292,998 
Period 
Total
Number of
Shares
Purchased(1)
 
Average
Price  Paid
per Share
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
October 1, 2019 through October 31, 2019 42,966
 $103.06
 —
 15,631,936
November 1, 2019 through November 30, 2019 61,548
 $105.48
 —
 15,631,936
December 1, 2019 through December 31, 2019 101,863
 $105.40
 10,816
 15,621,120
Totals 206,377
 $104.94
 10,816
 15,621,120
(1)Includes shares surrendered by employees to the company to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of share appreciation rights and/or tax withholding obligations.
(1)Includes shares surrendered by employees to the Company to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of stock options and/or tax withholding obligations.
(2)On November 17, 2008, and August 21, 2017, the Board of Directors announced that it had authorized the repurchase of 15.0 million shares and 15.0 million shares, respectively. The authorization for these repurchase plans continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 0.6 million shares authorized in the 2008 plan and 15.0 million shares authorized in the 2017 plan remain available to be repurchased by the Company. There were no other repurchase plans announced as of December 31, 2019.

(2)On August 21, 2017, the Board of Directors announced that it had authorized the repurchase of 15 million shares. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. The authorization for these repurchase plans continues until all such shares have been repurchased or the repurchase program is terminated by action of the Board of Directors. The program may be suspended at any time and does not have an expiration date. Approximately 10.3 million shares authorized remain available to be repurchased by the company. There were no other repurchase plans announced as of December 31, 2022.


ITEM 6.    SELECTED FINANCIAL DATA.(RESERVED)
The following table sets forth certain selected historical financial and operating data
17
Table of the Company as of the dates and for the periods indicated. The following selected financial data are qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes and other financial information, as well as in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.Contents
  Year Ended December 31,
(In thousands, except per share data) 2019 2018 2017 2016 2015
Net sales $19,392,305
 $18,735,073
 $16,308,801
 $15,339,713
 $15,280,044
Cost of goods sold $13,076,036
 $12,751,286
 $11,402,403
 $10,740,106
 $10,724,192
Operating and non-operating expenses, net $5,485,969
 $4,908,175
 $3,897,130
 $3,525,267
 $3,432,171
Income before taxes $830,300
 $1,075,612
 $1,009,268
 $1,074,340
 $1,123,681
Income taxes $209,215
 $265,138
 $392,511
 $387,100
 $418,009
Net income $621,085
 $810,474
 $616,757
 $687,240
 $705,672
Weighted average common shares outstanding during year — assuming dilution 146,417
 147,241
 147,701
 149,804
 152,496
Per common share:          
Diluted net income $4.24
 $5.50
 $4.18
 $4.59
 $4.63
Dividends declared $3.05
 $2.88
 $2.70
 $2.63
 $2.46
December 31 closing stock price $106.23
 $96.02
 $95.01
 $95.54
 $85.89
Total debt, less current maturities $2,802,056
 $2,432,133
 $2,550,020
 $550,000
 $250,000
Total equity $3,695,500
 $3,471,991
 $3,464,156
 $3,207,356
 $3,159,242
Total assets $14,645,629
 $12,683,040
 $12,412,381
 $8,859,400
 $8,144,771
During the fourth quarter of 2019, we approved and began to implement the 2019 Cost Savings Plan, which resulted in recognizing $154.9 million in total restructuring costs and special termination costs primarily related to planned workforce reductions and facility closures and consolidations. Also in the fourth quarter of 2019, we recorded a goodwill impairment charge related to the Business Products reporting unit totaling $82.0 million. Refer to the restructuring footnote and the goodwill and other intangible assets footnote in the Notes to Consolidated Financial Statements for additional information.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and resources. Such forward-looking statements should be read in conjunction with our disclosures under “Item 1A. Risk Factors” of this Form 10-K.
This section of this Form 10-K generally discusses 2019 and 2018 results and year-to-year comparisons between 2019 and 2018 results. Discussions of 2017 results and year-to-year comparisons between 2018 and 2017 results are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
OVERVIEW
Genuine Parts Company is a global service organization engaged in the global distribution of automotive and industrial replacement parts, industrial parts and business products.parts. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia.
In 2019, the Company2022, we conducted business in North America, Europe and Australasia from approximately 3,600more than 10,600 locations.
The Company's Our Automotive Parts Groupbusiness operated in the U.S., Canada, Mexico, France, the UK,U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand in 2019,2022 and accounted for 57%62% of total revenues for the year. Our Industrial Parts Group entered 2019 with operationsbusiness operated in the U.S., Canada, Mexico, and expanded its operations into Australia, New Zealand, Indonesia and Singapore in July 2019 with the addition of the Inenco business. The Industrial Parts Groupand accounted for 34% of the Company's total revenues in 2019. Our Business Products Group operated in the U.S. and Canada in 2019, although its Canadian operations were divested, effective January 1, 2020. The Business Products Group accounted for 9%38% of total revenues in 2019.revenues.

At Genuine Parts Company, ourOur mission is to be a world-class service organization and thean employer of choice, supplier of choice, valued customer, good corporate citizen and investment of choice.choice for all our shareholders. Additionally, we strive to be a respected community member that gives back to the communities in which we operate. Our strategic financial objectives are intended to align with our mission and drive value for all our stakeholders. Our strategic financial objectives include: (1) top line revenue growth in excess of market growth; (2) improved operating margin,margins; (3) strong balance sheet and cash flowflows; and (4) effective capital allocation.
Top Line RevenueKEY PERFORMANCE INDICATORS
The Company's strategy for top line revenue growth includesWe consider a combinationvariety of organicperformance and acquisitive initiatives designed to outpace the industry, improve the market sharefinancial measures in each ofassessing our business, segments and position the Company for sustained long-term growth. In 2019, this strategy ledkey performance indicators used to 1.7% comparablemeasure our results are summarized below.
Comparable Sales
Comparable sales growth and a 4.6% contribution from acquisitions. Comparable store sales (also called organic sales or core sales) refer to period‑over‑periodperiod-over-period comparisons of our net sales excluding the impact of acquisitions, divestitures, foreign currency and other. We consider this metric useful to investors because it provides greater transparency into management’s view and assessment of our core ongoing operations. This metric is widely used by analysts, investors and competitors in our industry, although our calculation of the metric may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate this metric in the same manner.
Gross Profit and Gross Margin
Gross profit represents net sales less cost of goods sold. Gross profit as a percentage of net sales is referred to as gross margin. Cost of goods sold primarily represents the cost of merchandise sold, including the cost of inbound freight from suppliers. It also includes the effects of supplier volume incentives and inventory adjustments. Our gross profit is variable in nature and generally follows changes in net sales. We believe that gross profit and gross margin are useful measures because they allow management, analysts, investors and others to evaluate the profit we generate from our sales, before operating and other expenses and income.
Selling, Administrative and Other Expenses ("SG&A")
SG&A includes all personnel and personnel-related costs at our segment headquarters, distribution centers, stores and branches, which accounts for more than 60% of total SG&A. Additional costs in SG&A include our facilities, freight and delivery, marketing, advertising, technology, digital, legal and professional costs. Freight and delivery costs are the shipping and handling costs incurred related to delivering merchandise to our customers.
Segment Profit and Segment Margin
Segment profit is calculated as net sales less costs of goods sold, operating expenses, and certain non-operating expenses attributable to the segment (e.g., foreign currency.currency), excluding general corporate expenses, net interest expense, intangible asset amortization, and other unallocated amounts that are primarily driven by corporate initiatives. Operating expenses include SG&A at our segments. Segment profit as a percentage of segment net sales is referred to as segment margin.
We believe that segment profit and segment margin are useful measures because they allow management, analysts, investors, and other interested parties to evaluate the profitability of our segments, after the effects of
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operating and other expenses and income associated with those businesses. Refer to the Segment Data Footnote in the Notes to Consolidated Financial Statements for additional information.
Net Income and EBITDA
We believe that net income and EBITDA, along with their adjusted measures, are useful measures of operating performance. EBITDA helps us assess the underlying profitability of our company’s business operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest), and tax strategies (income taxes). Net Income represents our profitability after the effects of all operating and other expenses and income.
The adjusted measures of EBITDA and net income eliminate certain non-recurring charges and other items that we do not believe are reflective of our ongoing business performance. These adjusted measures help us evaluate our operating performance on a comparable basis from period-to-period so that we can better understand the ongoing factors and trends affecting our business operations. We also use adjusted EBITDA, together with net income and segment profit, to forecast our performance, evaluate our actual results against our forecasts and compare our results to others in the industries that we serve. Adjusted EBITDA is also a measure of performance included in our executive incentive compensation plans. See “Non-GAAP Financial Measures” below for a discussion of how we define adjusted net income and adjusted EBITDA and a reconciliation of adjusted net income, EBITDA and adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
CONSOLIDATED RESULTS OF OPERATIONS
Our discussion of our results focuses on 2022 and 2021 and year-to-year comparisons between those periods. Discussions of 2020 results and year-to-year comparisons between 2021 and 2020 results are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
In 2022, we experienced strong and consistent customer demand and a favorable pricing environment for our services. These factors, combined with our Industrial segment's $1.3 billion acquisition of Kaman Distribution Group ("KDG"), contributed to 17.1% revenue growth over 2021. Our strong revenue growth, expense leverage and strategic initiatives also led us to divest of certain non-core businesses determined to be slower-growthdrove a 60 basis point improvement in segment margin and lower-margin operations. These divestitures and the unfavorable impact of foreign currency partially offset our total sales growth for the year.
Operating Margins
The Company targets continuous operating margin improvement each year. In 2019, the competitive dynamics across our businesses, as well as the continued cost pressures and the need to invest in a more productive and efficient cost structure led us to expand and accelerate our initiatives to improve the operating performance of the Company. These efforts produced improved gross margins in 2019 and we believe created a path for significant cost savings in the years ahead.
In October of 2019, the Company approved and began to implement certain restructuring actions across its subsidiaries primarily targeted at simplifying organizational structures and distribution networks (the "2019 Cost Savings Plan"). The Company expects the 2019 Cost Savings Plan to result in $100 million in annualized operating expense reductions by allowing it to more effectively and efficiently manage its businesses. Among other things, the 2019 Cost Savings Plan will result in workforce reductions and facility closures and consolidations. The Company executed a voluntary retirement program ("VRP") for its U.S. and Canadian subsidiaries in the fourth quarter of 2019 in connection with this plan. The Company is well underway in executing the 2019 Cost Savings Plan.
Balance Sheet and Cash Flow
The Company is focused on maintaining a strong balance sheet and generating strong cash flows to support our growth initiatives. In 2019, we deployed less total working capital and improved our working capital efficiency, or working capital as a percent of total revenues, to 8.0%.
The Company generated $892.0 millionprovided $1.5 billion in cash from operations, a 16.6% increase from 2021. These results allowed us to continue investing in our businesses through strategic acquisitions and also benefited from cash proceeds associated with the sale of certain non-core businesses in 2019, as noted before. We utilized our cash for effective capital allocation.
Capital Allocation
The Company's priorities for effective capital allocation have remained consistent for many years. In 2019, we used cash for key investments in the form of capital expenditures and accretive acquisitions, as well as the return of capital to our shareholders via cash dividends and opportunistic share repurchases.
RESULTS OF OPERATIONSexpenditures.
Our results of operations are summarized below for the years ended December 31, 20192022 and 2018.2021.
 Year Ended December 31,
20222021
(in thousands)$% of Sales$% of Sales$ Change% Change
Net sales$22,095,973 100.0 %$18,870,510 100.0 %$3,225,463 17.1 %
Cost of goods sold14,355,869 65.0 %12,236,374 64.8 %2,119,495 17.3 %
Gross profit7,740,104 35.0 %6,634,136 35.2 %1,105,968 16.7 %
Operating expenses:
Selling, administrative and other expenses5,758,295 26.1 %5,162,506 27.4 %595,789 11.5 %
Depreciation and amortization347,819 1.6 %290,971 1.5 %56,848 19.5 %
Provision for doubtful accounts19,791 0.1 %17,739 0.1 %2,052 11.6 %
Total operating expenses6,125,905 27.7 %5,471,216 29.0 %654,689 12.0 %
Non-operating expenses (income):
Interest expense, net73,887 0.3 %62,150 0.3 %11,737 18.9 %
Other(32,290)(0.1)%(99,576)(0.5)%67,286 (67.6)%
Total non-operating expenses (income)41,597 0.2 %(37,426)(0.2)%79,023 (211.1)%
Income before income taxes1,572,602 7.1 %1,200,346 6.4 %372,256 31.0 %
Income taxes389,901 1.8 %301,556 1.6 %88,345 29.3 %
Net income$1,182,701 5.4 %$898,790 4.8 %$283,911 31.6 %
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  Year Ended December 31,
(In thousands, except per share data) 2019 2018
Net sales $19,392,305
 $18,735,073
Gross margin $6,316,269
 $5,983,787
Net income $621,085
 $810,474
Diluted net income per common share $4.24
 $5.50

Year Ended December 31,
(in thousands, except per share data)20222021$ Change% Change
Diluted EPS$8.31$6.23$2.08 33.4 %
Adjusted EBITDA$1,999,329$1,681,515$317,814 18.9 %
Automotive segment profit$1,191,674$1,073,427$118,247 11.0 %
Industrial segment profit$886,636$595,232$291,404 49.0 %
Total segment profit$2,078,310$1,668,659$409,651 24.5 %
Automotive segment margin8.7 %8.6 %
Industrial segment margin10.5 %9.4 %
Total segment margin9.4 %8.8 %
Net Sales
ConsolidatedOur net sales forincrease of 17.1% includes an 11.8% comparable sales increase and an 8.6% positive impact from acquisitions, slightly offset by an unfavorable impact of foreign currency of 3.3%.
Strong customer demand, which was consistent throughout 2022, and a favorable pricing environment were the primary drivers of our comparable sales growth. We deployed strategic pricing increases throughout 2022 to offset the dynamic product cost increases we faced across our businesses from elevated inflationary pressure, particularly in Automotive. Separately, we continued to invest in strategic acquisitions in both segments, with the KDG acquisition in particular providing a significant sales benefit in 2022. Our sales growth was negatively impacted by the U.S. dollar strengthening relative to other foreign currencies during the year, ended December 31, 2019 totaled $19.4most significantly against the Euro.
Automotive
Net sales for Automotive were $13.7 billion up 3.5%in 2022, an 8.9% increase from 2018. 2019 net2021. The increase includes 9.0% growth in comparable sales included an approximate 4.6%and a 4.5% contribution from acquisitions, netpartially offset by a 4.6%unfavorable impact from foreign currency and other.
Our growth in sales was driven by continued solid demand for automotive parts, a strong pricing environment due to elevated inflation in product costs, and footprint expansion through acquisitions, such as our entry into new markets in Spain and Portugal. Several underlying factors driving customer demand for automotive parts in the markets we serve include increases in the average age of store closurescars on the road and an approximate 1.7%miles driven, and the lack of availability of new cars due to supply chain constraints.
Industrial
Net sales for Industrial were $8.4 billion in 2022, a 33.2% increase from 2021. The increase includes 17.3% growth in comparable sales and a 16.8% contribution from acquisitions primarily driven by the addition of KDG. This was slightly offset by a 0.9% unfavorable impact of currency translation.
Our growth in comparable sales reflects the positive impact of our ongoing sales initiatives and strength in numerous industry segments in North America throughout much of 2022. We experienced double-digit sales growth across all 14 customer sectors we served, with the largest percent increases in oil and gas, mining, and aggregate and cement. The increase in core sales.sales volume drove the majority of our growth, in addition to a contribution of low single-digit product cost inflation. Our acquisition of KDG contributed significantly to our sales growth, and it enhanced our position as a market leader in the industrial supply chain for MRO and OEM customer support and advanced engineering and automation solutions.
Gross Profit & Gross Margin
Gross profit increased $1.1 billion, or approximately 16.7% from 2021, primarily driven by the increase in net sales, and gross margin decreased slightly to 35.0% from 35.2% in 2021. The Company's salepositive contributions to gross margin from our pricing and sourcing initiatives, among others, were more than offset by the negative impact of certain non-core businesses determined to be slower-growth and lower-margin operations partially offsetlower supplier incentives as a percentage of sales; the relative sales growth of Industrial as a component of total sales, by 1.4%. Additionally,which generates lower gross margins than Automotive; and the unfavorable impact of foreign currency partially offset total sales by 1.4%.currency.

The Company's core sales growth, which represents the Company's comparable sales, included both the increase in sales volume and product inflation. The impact of product inflation varied by business segment in 2019, with prices up approximately 2.4% in the U.S. Automotive and Industrial segments and up approximately 3.0% in the Business Products segment. Due to the Company's global initiatives to grow revenues, we believe it is well positioned for sustainable long-term growth.
Automotive Group
Net sales for the Automotive Group (“Automotive”) were $11.0 billion in 2019, a 4.4% increase from 2018. The increase in sales consists of an approximate 5.0% contribution from acquisitions, a 2.3% comparable sales increase and a 2.3%negative impact of currency translation associated with our automotive businesses in Canada, Australasia, Europe and Mexico. In addition, the sale of Auto Todo in 2019, the Company's legacy automotive business in Mexico, slightly offset total sales for the Automotive Group.
Automotive sales were positively impacted by product inflation of 2.4% in the U.S. operations. In 2019, total Automotive revenues were up approximately 2.3% in the first quarter, up 1.4% in the second quarter, up 5.3% in the third quarter and up 8.7% in the fourth quarter, with the higher third and fourth quarter increases due to the positive impact of various acquisitions. In particular, we expanded our European footprint in June with the acquisition of PartsPoint Group in the Netherlands and Belgium. Sound industry fundamentals and effective growth strategies drove organic growth of approximately 3% or more in the U.S., Canada and Australasia. This was offset by core sales declines in our European operations, which faced several challenges in 2019 primarily related to regional economic and geopolitical concerns. Our team in Europe worked throughout the year to navigate these challenges, resulting in improved sales trends in Europe in the last half of the year. In our view, the underlying fundamentals in the automotive aftermarket, including trends related to the overall number and age of the vehicle population, as well as the continued increase in miles driven, remain supportive of sustained demand for automotive aftermarket maintenance and supply items across the markets we serve. We expect these fundamentals and our ongoing sales initiatives to drive sales growth for the Automotive Group in 2020.
Industrial Parts Group
Net sales for the Industrial Parts Group (“Industrial”) were $6.5 billion in 2019, up 3.6% from 2018. The increase in sales reflects an approximate 5.2% contribution from acquisitions and a 1.7% increase in comparable sales, offset by an approximate 3.1% decrease in net sales related to the sale of EIS, a non-core component of the industrial business due to its slower-growth and lower-margin profile. Total Industrial sales were positively impacted by product inflation of 2.4%, as a portion of this increase was passed through to customers and is included in the comparable sales increase. Industrial revenues were up approximately 5.7% in the first quarter of 2019, up 4.9% in the second quarter, up 9.9% in the third quarter and down 5.9% in the fourth quarter. These quarterly results reflect the impact of several factors, including the slowing trend in the industrial economy throughout the course of the year, as evidenced by weakening economic indicators such as Manufacturing Industrial Production and the Purchasing Managers Index, among others. In addition, the July acquisition of Inenco, one of Australasia's leading industrial distributors, and the sale of EIS on September 30, 2019, impacted the quarterly sales comparisons for the Industrial Group in 2019. We are confident in our growth plans for 2020, both in North America and Australasia, but also expect to experience a relatively slow industrial economy through at least the first half of the year.
Business Products Group
Net sales for S.P. Richards, our Business Products Group (“Business Products”), were $1.9 billion in 2019, a decrease of 1.8% from 2018. The decrease in sales reflects the decline in core sales and was especially pronounced in the fourth quarter, which was significantly slower relative to the first three quarters of the year due to industry consolidation and increased competition.
Sales were up approximately 1.0% in the first quarter, down 1.1% in the second quarter, down 0.9% in the third quarter and down 6.3% in the fourth quarter of 2019. While the business products industry continues to face significant challenges, our strategy to diversify our traditional product offering into the large and growing Facilities, Breakroom and Safety Supplies ("FBS") category has partially offset these challenges. On January 1, 2020, we divested of our Canadian operations in the Business Products Group to simplify our business model and focus on our U.S. operations. As we look ahead, we remain focused on our core growth initiatives and maximizing the growth prospects for our diversified business, but will also continue to evaluate all opportunities that may help us more effectively navigate the evolving industry dynamics in which this group competes.
Cost of Goods Sold
The Company includes in cost of goods sold the actual cost of merchandise, which represents the vast majority of this line item. Other items in cost of goods sold include warranty costs and in-bound freight from the suppliers, net of any vendor allowances and incentives. Cost of goods sold was $13.1 billion in 2019, a 2.5% increase from $12.8 billion in 2018. The increase in cost of goods sold in 2019 compares to a 3.5% total sales increase and is a positive reflection of our global supply chain initiatives, the lower cost of goods sold models at certain acquired companies such as PartsPoint and Inenco, and the sale of the lower margin EIS business. These items were slightly offset by relatively unchanged levels of supplier incentives in 2019 compared to 2018. Cost of goods sold represented 67.4% of net sales in 2019, decreasing from 68.1% of net sales in 2018.

In 2019 and 2018, each of the Company's business segments experienced vendor price increases. In 2019, tariffs on certain goods sourced directly or indirectly from China were a contributing factor in the price increases for the automotive and business products segments. Historically where we experience price increases, we are able to work with our customers to pass most of these increases along to them.
Operating Expenses
The Company includes in selling, administrative and otherSG&A expenses (“SG&A”) all personnel and personnel-related costs at its headquarters, distribution centers, stores and branches, which accounts for more than 60% of total SG&A. Additional costs in SG&A include our facilities, delivery, marketing, advertising, technology, digital, legal and professional costs.
SG&A of $4.9 billion in 2019 increased by $0.3 billion or approximately 6.9% from 2018. This represents 25.4%represent 26.1% of net sales in 20192022 compared to 24.6%27.4% of net sales in 2018. 2021. The decrease in SG&A expense as a percent of net sales was primarily driven by leveraging strong core sales growth, cost
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reduction and productivity initiatives, as well as a one-time benefit of $103 million on the sale of real estate that had been previously leased to S.P. Richards Company ("SPR"). These benefits were partially offset by higher personnel and freight and delivery costs in 2022, and costs of $67 million associated with the acquisition and integration of KDG, which includes an impairment of $17 million from the retirement of certain legacy trade names. Additionally we had a remeasurement to increase our product liability by $29 million due to a revision of our estimate of the number of claims to be incurred in future periods, among other assumptions.
The increase in SG&Adepreciation and amortization expense of $57 million was due to higher amortization from intangible assets associated with the acquisition of KDG and higher depreciation from increased capital investments to improve our distribution facilities, streamline our supply chain and invest in enhanced technology solutions.
Non-Operating Expenses and Income
We incurred $42 million in net non-operating expenses in 2022, a $79 million change from $37 million in net non-operating income in 2021. This category primarily includes net interest expense, pension and investment income, foreign currency gains and losses, and Accounts Receivable Sales Agreement ("A/R Sales Agreement") fees. The $79 million change includes the effects of a $12 million increase in net interest expense in 2022 due to increased borrowing to fund the acquisition of KDG. It also includes the effects of a $67 million decrease in other non-operating income. The decrease primarily resulted from a $32 million year-over-year net decline in income on certain investments, a $17 million increase in A/R Sales Agreement fees, and the net change of $12 million as foreign currency moved from gains in the prior year to losses in the current year.
Segment Profit
Automotive
Automotive segment profit increased 11.0% and its segment margin improved 10 basis points from 2021. The increased segment profit reflects the benefits of strong sales growth due to solid customer demand, a combination of factors, including the impact of increased sales for the year. In addition, our expenses reflect the impact of higher costfavorable pricing environment and higher gross margin models at certain acquired businesses, including PartsPoint and Inenco, as well as the sale of EIS, which had a lower level of SG&A expenses relative to total sales. We also experienced rising costs in areasfootprint expansion into new markets, such as labor, freightin Europe. We were able to improve segment margin in Automotive, despite elevated inflationary product cost pressures, primarily through our strategic pricing initiatives and delivery, insurance, legalour ability to leverage operating costs through strong core sales growth and professionalthe benefits of our strategic supply chain initiatives.
Industrial
Industrial segment profit increased 49.0% and technology for the year, although our laborits segment margin improved 110 basis points from 2021. The improvement in Industrial segment profit and freight costs trended more favorably in the fourth quarter. Further, we incurred incremental costs associated with our acquisitions during the year. The increase in SG&A expenses as a percentage of net sales in 2019 relative to the prior yearmargin primarily reflects the cost increases described above as well as the lossbenefits of leverage associated with the 1.7% comparableleveraging expenses through double-digit core sales growth, for the Company.acquisition of KDG and our strategic supply chain and other operating initiatives.
To improve on our SG&A expense levels, we continue to execute on our growth initiatives to better leverage our expenses. Additionally, we are working towards a lower cost and highlyIncome Taxes
Our effective infrastructure via steps to accelerate the integrationincome tax rate was 24.8% as of our acquisitions, investments to enhance our productivity and innovative strategies to unlock greater savings and efficiencies across our operations. Through the 2019 Costs Savings Plan discussed above, the Company expects to reduce expenses by an annualized run-rate of $100 million by the end of 2020.
Depreciation and amortization expense was $270.3 million in 2019, an increase of approximately $28.7 million, or 11.9%, from 2018, due primarily to the impact of acquisitions and the increase in capital expenditures relative to the prior year. The provision for doubtful accounts was $14.9 million in 2019, a $2.2 million decrease from 2018. We believe the Company is adequately reserved for bad debts at December 31, 2019.
In addition, the Company approved and began2022, compared to implement the 2019 Cost Savings Plan discussed above, which resulted25.1% in the recognition of $112.2 million in restructuring costs that are accounted for as a component of operating expenses. The restructuring costs are primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations. Refer to the restructuring footnote in the Notes to Consolidated Financial Statements for additional information.
2021. For the year ended December 31, 2019,2022, the Company recorded a goodwill impairment charge related to its Business Products Group totaling $82.0 million. Several factors that developed in the fourth quarter of 2019 led to this charge, including: (i) greater uncertainty associated with long-term industry trends and the competitive environment and (ii) fourth quarter results, including segment profitability, that were below management expectations due primarily to a reduction in volume with certain national account customers. Management concluded that no other assets were impaired. Refer to the goodwill and other intangible assets footnote in the Notes to Consolidated Financial Statements for additional information.
If there are sustained declines in macroeconomic or business conditions in future periods affecting the projected earnings and cash flows at our reporting units, among other things, there can be no assurance that goodwill at one or more reporting units may not be impaired. Nonetheless, as of December 31, 2019, we believe the remaining goodwill on our consolidated balance sheet is recoverable at each respective reporting unit.
Non-Operating Expenses and Income
Non-operating expenses included interest expense of $95.7 million in 2019 and $101.9 million in 2018. The $6.2 millionrate decrease in interest expense in 2019 reflects the combination of the repayment of debt throughout the year and lower interest rates on certain variable interest debt instruments. To offset potential rising interest rates, the Company has entered into interest hedge products to increase our fixed interest rate debt relative to total debt.
The Company recorded $42.8 million in special termination costs related to benefits provided through the Company's defined benefit plans to employees that accepted the VRP package as part of the Company's 2019 Cost Savings Plan. Refer to the restructuring footnote in the Notes to Consolidated Financial Statements for additional information.
In “Other”, the net benefit of interest income, equity method investment income, investment dividends, noncontrolling interests and pension income in 2019 was $66.0 million, an approximate $1.8 million decrease from the prior year primarily driven by lower interest income.

Income Before Income Taxes
Income before income taxes was $830.3 million in 2019, down 22.8% from 2018. As a percentage of net sales, income before income taxes was 4.3% in 2019 compared to 5.7% in 2018. Adjusted for certain costs noted above and presented in Non-GAAP Measures below, income before income taxes was relatively unchanged from the prior year at $1.1 billion and 5.7% of net sales.
Income before income taxes is used as the measure of segment profit for each business segment. Segment profit is calculated as net sales less operating expenses excluding general corporate expenses, interest expense, equity in income from investees, intangible asset amortization, income attributable to noncontrolling interests and other unallocated amounts that are driven by corporate initiatives and adjusted in Non-GAAP Measures (as described further below). Segment profit as a percent of revenues reflects the segment margin for each business segment.
Automotive Group
Automotive's segment profit decreased 2.8% in 2019 from 2018 and segment margin was 7.6% in 2019 as compared to 8.1% in 2018. The decrease in segment margin reflects the loss of expense leverage due to the 2.3% growth in comparable sales for Automotive, as this group requires approximately 3.0% comparable sales growth to leverage its fixed costs. In addition, rising costs in several areas as described above negatively impacted Automotive's segment margin. By geography, the Company's European automotive operations were most challenged in 2019 and primarily account for Automotive's decline in margin for the year. To improve Automotive's segment margin, this group is focused on several initiatives to grow sales and has also enhanced its cost management initiatives to drive savings in 2020 and the years ahead.
Industrial Group
Industrial’s segment profit increased 7.1% in 2019 from 2018 and segment margin was 8.0%, an increase from 7.7% in 2018. The improvement in segment margin for this group primarily reflects the benefit of improved gross margins, despite the slowing sales trend during the year and 1.7% comparable sales growth. 2019 was a transformative year for Industrial, given the the addition of Inenco in Australasia and sale of EIS. The Company believes that the Industrial Group is well-positioned for further growth in 2020.
Business Products Group
Business Product's segment profit was down 12.4% in 2019 from 2018 and segment margin decreased to 4.1% from 4.6%. The decrease in segment margin primarily reflects the pressures associated with rising costs and the deleveraging of expenses due to the decrease in sales for this group caused by industry consolidation and increased competition. Nonetheless, the Business Products Group enters 2020 focused on its core growth initiatives, the further diversification of its business and the ongoing evaluation of options for new and enhanced opportunities to maximize the growth prospects for this business.
Income Taxes
The effective income tax rate of 25.2% in 2019 increased from 24.6% in 2018. The increase in rate is primarily due to geographic income tax rate mix shifts andthe inclusion in the prior year results of the impact of one-time transactiona United Kingdom rate change that required deferred tax asset and liability remeasurement, partially offset by other costs, as well as changes inone time adjustments.
On August 16, 2022, the realizabilityInflation Reduction Act of future2022 ("IRA") was signed into law, and is effective beginning January 1, 2023. The IRA contains tax benefit adjustments recorded in the comparable periods.provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases which we do not expect to have material impacts to our financial statements.
Net Income
Net income was $621.1$1.2 billion in 2022, a significant increase compared to $899 million in 2019, a decrease of 23.4% from $810.5 million in 2018. On a2021. Diluted earnings per share diluted basis, net income("EPS") was $4.24$8.31 in 2019, down 22.9%2022, up 33.4% compared to $5.50$6.23 in 2018. Net income was 3.2% of net sales in 2019 compared to 4.3% of net sales in 2018.2021. Adjusted net income was $833.2$1.2 billion in 2022, an increase of 19.1% from $997 million in 2019, down 0.3%2021. Adjusted diluted EPS was $8.34, a 20.7% increase compared to $6.91 in 2021. EBITDA was $2.0 billion in 2022, an increase of 28.4% from $1.6 billion in 2021. Adjusted EBITDA was $2.0 billion in 2022, an increase of 18.9% from $1.7 billion in 2021.
The growth in net income, adjusted net income, EBITDA and adjusted EBITDA in 2018. On a per share diluted basis, adjusted net income was $5.69, a 0.2% increase compared to adjusted diluted net income per shareall periods presented reflects strong operating results in both of $5.68our segments, driven primarily by strong sales growth, the benefits of key acquisitions (including KDG), and the continued execution of our strategic pricing and other initiatives, as discussed more fully in 2018. the commentary above.
Adjusted net income, adjusted diluted EPS, EBITDA and adjusted diluted net income per share, both Non-GAAPEBITDA are non-GAAP measures in 2019 and 2018 exclude those items noted above. See "Non-GAAP Measures"(see table below for more information and for a reconciliationreconciliations to GAAP.the most directly comparable GAAP measures).
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Non-GAAP Financial Measures
The following tabletables sets forth a reconciliationreconciliations of net income, and diluted net income per common shareEPS to adjusted net income and adjusted diluted net income per common shareEPS to account for the impact of adjustments. The Company believesWe also include adjusted EBITDA with a reconciliation to pretax earnings. We believe that the presentation of adjusted net income, adjusted diluted EPS and adjusted diluted net income per common share,EBITDA, which are not calculated in accordance with GAAP, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of the Company'sour core operations. The Company considersWe consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of the Company’sour ongoing operating performance by removing items management believes are not representative of our continuing operations and may distort our longer-term operating trends. We believe these measures to be useful to enhance the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not associated with the Company’sour core operations. The Company

doesWe do not, nor does itdo we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.
Year Ended December 31,
(in thousands)20222021
GAAP net income$1,182,701 $898,790 
Adjustments:
Gain on sales of real estate (1)(102,803)— 
Gain on insurance proceeds (2)(1,507)(3,862)
Product liability adjustment (3)28,730 — 
Product liability damages award (4)— 77,421 
Loss on software disposal (5)— 61,063 
Gain on equity investment (6)— (10,229)
Transaction and other costs (7)80,601 3,655 
Total adjustments5,021 128,048 
Tax impact of adjustments(137)(29,828)
Adjusted net income$1,187,585 $997,010 

The table below represents amounts per common share assuming dilution:
Year Ended December 31,
(in thousands, except per share data)20222021
GAAP diluted EPS$8.31 $6.23 
Adjustments:
Gain on sales of real estate (1)(0.72)— 
Gain on insurance proceeds (2)(0.01)(0.03)
Product liability adjustment (3)0.20 — 
Product liability damages award (4)— 0.54 
Loss on software disposal (5)— 0.42 
Gain on equity investment (6)— (0.07)
Transaction and other costs (7)0.56 0.03 
Total adjustments0.03 0.89 
Tax impact of adjustments— (0.21)
Adjusted diluted EPS$8.34 $6.91 
Weighted average common shares outstanding - assuming dilution142,322 144,221 
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  Year Ended December 31,
(In thousands, except per share data) 2019 2018
GAAP net income $621,085
 $810,474
Diluted net income per common share $4.24
 $5.50
     
Adjustments:    
Restructuring (1) 154,941
 —
Goodwill impairment charge (2) 81,968
 —
Realized currency and other divestiture losses (3) 41,499
 —
Termination fee (4) —
 (12,000)
Gain on equity investment (5) (38,663) —
Transaction and other costs (6) 33,506
 48,105
Total adjustments 273,251
 36,105
Tax impact of adjustments (61,155) (10,497)
Adjusted net income $833,181
 $836,082
Adjusted diluted net income per common share $5.69
 $5.68
(1) Adjustment reflects restructuring and special termination costs related to the 2019 Cost Savings Plan announced in the fourth quarter of 2019. The costs are primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations.
(2) Adjustment reflects a fourth quarter goodwill impairment charge related to our Business Products reporting unit.
(3) Adjustment reflects realized currency and other divestitures losses primarily related togain on the sale of EISreal estate that had been leased to S.P. Richards.
(2)Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and Grupo AutoTodo.equipment and other fire-related costs.
(3)Adjustment to remeasure product liability for a revised estimate of the number of claims to be incurred in future periods, among other assumptions.
(4)Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.
(5)Adjustment reflects a termination fee receivedloss on an internally developed software project that was disposed of due to a change in the third quarter of 2018management strategy related to the attempted Business Products Group spin-off .advances in alternative technologies.
(5) (6)Adjustment relates to the gaingains recognized upon remeasuring the Company's preexisting 35%remeasurement of certain equity investmentinvestments to fair value upon acquiring the remaining equity of Inenco on July 1, 2019.those entities.
(6) (7)Adjustment reflectsfor 2022 primarily includes costs of $67 million associated with the January 3, 2022 acquisition and integration of KDG which includes a $17 million impairment charge. The impairment charge was driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Separately, this adjustment includes an $11 million loss related to an investment. Adjustment for 2021 includes transaction and other non-recurring costs related to acquisitionsacquisitions.
Year Ended December 31,
(in thousands)20222021
GAAP net income$1,182,701 $898,790 
Depreciation and amortization347,819 290,971 
Interest expense, net73,887 62,150 
Income taxes389,901 301,556 
EBITDA1,994,308 1,553,467 
Total adjustments (8)5,021 128,048 
Adjusted EBITDA$1,999,329 $1,681,515 
(8) Adjustments are the same as adjustments included within the adjusted net income table above.
The table below clarifies where the adjusted items are presented in the consolidated statement of income:
Year Ended December 31,
(in thousands)20222021
Line item:
Cost of goods sold$5,000 $— 
Selling, administrative and other expenses(7,472)142,139 
Non-operating expenses (income): Other7,493 (14,091)
Total adjustments$5,021 $128,048 
OUTLOOK
We expect continued revenue and divestituresearnings growth in 2019.2023 despite uncertain economic conditions. We anticipate revenue growth in 2023, as positive trends related to miles driven, aging vehicles and limited new car inventory remain supportive of sustained demand for our Automotive business. In addition, we believe the strong performance in our Industrial business reflects the diversity of our product and service offerings. We expect our growing capabilities in industrial solutions, including automation, fluid power and conveyance to be differentiators for our business.
We continue to execute our strategic pricing and sourcing initiatives to mitigate product and other inflationary cost pressures which we expect to drive improvement in gross margins and earnings. With our global growth initiatives and strong industry fundamentals, we believe we are well positioned for both near-term and sustainable long-term sales and earnings growth.
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FINANCIAL CONDITION
The Company’sOur cash balance of $277.0 million at December 31, 2019 compares2022 was $653 million compared to cash of $333.5$715 million a year ago. Accounts receivable increased $391 million, or 21.7%, from December 31, 2021 primarily due to higher net sales inclusive of the KDG acquisition. Inventory increased $552 million, or 14.2% from December 31, 2021 in association with higher product demand and increased net sales, and acquisitions (including KDG). Accounts payable increased $652 million, or 13.6% from December 31, 2021 due to increased purchases to support higher net sales and extended payment terms with certain suppliers. Total debt of $3.3 billion at December 31, 2018,2022 increased $919 million from December 31, 2021 primarily due to the Senior Notes offering (as discussed below) to fund the acquisition of KDG.
Supply Chain Finance Programs
We have negotiated extended payment dates with our suppliers through supply chain finance programs. Several global financial institutions offer voluntary supply chain finance ("SCF") programs which enable our suppliers (generally those that grant extended terms), at their sole discretion, to sell their receivables from us to these financial institutions on a non-recourse basis at a rate that takes advantage of our credit rating and may be beneficial to them. The SCF program is primarily available to suppliers of goods and services included in cost of goods sold in our consolidated statements of income. We and our suppliers agree on commercial terms for the goods and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. Our current payment terms with the majority of our suppliers range from 30 to 360 days. The suppliers sell goods or services, as discussed further below. Forapplicable, to us and they issue the associated invoices to us based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. In turn, we direct payment to the financial institutions, rather than the suppliers, for the invoices sold to the financial institutions. No guarantees are provided by us or any of our subsidiaries on third-party performance under the SCF program; however, we guarantee the payment by our subsidiaries to the financial institutions participating in the SCF program for the applicable invoices. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable in our consolidated balance sheets. All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our consolidated statement of cash flows. We have been informed by the financial institutions that as of December 31, 2022 and 2021, suppliers elected to sell $3.1 billion and $2.7 billion, respectively, of our outstanding payment obligations to the financial institutions. The amount settled through the SCF program was $3.7 billion for the year ended December 31, 2019, the Company used $724.7 million for acquisitions and other investing activities, $438.9 million for dividends paid to the Company’s shareholders, and $297.9 million for investments in the Company via capital expenditures. These items were offset by the Company’s earnings and net cash provided by operating activities.2022.
LIQUIDITY AND CAPITAL RESOURCES
The Company’sOur strong financial position and cash flow performance have provided us with the capacity to invest in acquisitions, capital expenditures and technology to support our global growth strategy, as well as return value to our shareholders through dividends and share repurchases. Our sources of capital consist primarily of cash flows from operations, supplemented as necessary by private and public issuances of debt and bank borrowings. Currently, we believe that our cash on hand and available short-term and long-term sources of capital are sufficient to fund our operations in both the Company’s operations,short and long term, including working capital requirements, scheduled debt payments, interest payments, capital expenditures, benefit plan contributions, income tax obligations,strategic acquisitions, dividends, share repurchases, capital expenditures, scheduled debt and contemplated acquisitions.interest payments, and income tax obligations.
The ratio of current assets to current liabilities was 1.24 to 1 at December 31, 2019 and 1.28 to 1 at 2018, and our liquidity position remains solid. We continue to negotiate extended payment dates with our vendors. Certain vendors participate in financing arrangements with financial institutions that allow the vendors to receive payment earlier while we pay the financial institution based on the underlying vendor invoice amounts and due dates. The Company’sOur total debt outstanding at December 31, 20192022 increased by $282.8$919 million or 9.0% from December 31, 2018, due primarily to additional private placement debt to fund various acquisitions.2021, as discussed above.

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Sources and Uses of Cash
A summary of the Company’sour consolidated statements of cash flows is as follows:
 Year Ended December 31,   Year Ended December 31,
(In thousands) 2019 2018 $ Change % Change(In thousands)20222021$ Change% Change
Operating activities $892,010
 $1,145,164
 $(253,154) (22.1)%Operating activities$1,466,971 $1,258,285 $208,686 16.6 %
Investing activities $(563,206) $(496,124) $(67,082) 13.5 %Investing activities$(1,684,240)$(506,164)$(1,178,076)232.7 %
Financing activities $(385,962) $(608,830) $222,868
 (36.6)%Financing activities$205,101 $(989,532)$1,194,633 (120.7)%
Operating Activities
The Company continues to generateWe generated strong positive cash andflow in 2019 net cash provided by operating activities totaled $892.0 million, a $253.2 million, or 22.1%, decrease from 2018. The decrease2022 with the increase in cash provided by operating activities was primarily due todriven by higher earnings and the change ineffective management of our working capital, in 2019 as comparedincluding a $200 million benefit related to 2018, asincreasing the Company's increase in accounts payable was less than in the prior year.amount of receivables sold under our A/R Sales Agreement.
Investing Activities
Net cash usedWe continue to invest in investing activities was $563.2 million in 2019 comparedour business through strategic acquisitions and capital expenditures to $496.1 million in 2018, a $67.1 million, or 13.5%, increase.broaden our product and service offerings, improve our business operations and expand our global footprint. In 2019,2022, net cash used in investing activities included $724.7 million$1.7 billion used for acquisitions of businesses and other investing activities an increaseprimarily in connection with the acquisition of $446.4KDG and a $158 million or 160.3%,benefit from 2018, andthe settlement of a net investment hedge. Additionally, we invested $340 million in capital expenditures of $297.9 million, an increase of $65.4 million, or 28.2%, from the prior year. Capital expendituresto improve our supply chain, facilities, and technology environment. These items were in-line with our original estimate of $300 million for the year, and we estimate that cash used for capital expenditures in 2020 will be in the range of $300 million to $330 million. The Company received $434.6 million in proceeds for the divestiture of businesses during the year and $24.8partially offset by $145 million in proceeds from the sale of property, plant and equipment. These items partially offset the net cash usedequipment (primarily real estate that had been previously leased to SPR) and $34 million in investing activities described above.proceeds from divestitures of store operations in Automotive.
Financing Activities
Net cash used inCash provided by financing activities in 2019 totaled $386.0reflects $919 million a decrease of $222.9 million, or 36.6%, from the $608.8 million in cash used in financing activities in 2018. Primarily, the decrease reflects the net proceeds from debt issued in 2019 as compared toprimarily from the net payments on debt in 2018. For the years presented, the Company's financing activities also included the use of cash forSenior Notes offering, which was mostly offset by dividends paid to shareholders of $496 million and repurchases of the Company’sour common stock. The Company paid dividends to shareholdersstock of $438.9 million$223 million. In 2022, we announced a 10% increase in our regular quarterly cash dividend and $416.0 million during 2019 and 2018, respectively. The Company expectswe expect this trend of increasing dividends to continue in the foreseeable future. During 2019 and 2018, the Company repurchased $74.2 million and $92.0 million, respectively, of the Company’s common stock. We also expect to remain active in our share repurchase program, but the amount and value of shares repurchased will vary and is at the discretionsubject to authorization of the Company's boardour Board of directors.Directors.
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Notes and Other Borrowings
The Company maintains a $2.6 billion multi-currency Syndicated FacilityOn January 3, 2022, we amended our A/R Sales Agreement (the "Syndicated Facility") with a consortium of financial institutions, which matures in October 2022 and bears interest at London Inter-bank Offered Rate ("LIBOR") plus a margin, which is based on the Company’s debt to earnings before interest, tax, depreciation and amortization ("EBITDA") ratio. The Company also has the option to increase the borrowing capacity up tofacility limit by an additional $200 million, bringing the total to $1 billion. The terms of the A/R Sales Agreement limit the balance of receivables sold to approximately $1 billion as well as an option to decrease the borrowing capacity or terminate the facility with appropriate notice. At December 31, 2019, approximately $1.4 billion was outstanding under this line of credit. Dueat any point in time. Refer to the workers’ compensationA/R Sales Agreement Footnote in the Notes to Consolidated Financial Statements for more information.
On January 6, 2022, we issued $500 million of unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and insurance reserve requirements in certain states, the Company also had unused lettersAugust 1 of credit of approximately $65 million and $64 million outstanding at December 31, 2019 and 2018, respectively.each year, beginning on August 1, 2022.
At December 31, 2019, the Company2022, we had $3.4 billion of unsecured Senior Notes outstandingoutstanding. Approximately $1.8 billion of $2.0 billion. Thesethese borrowings contain covenants related to a maximum debt to EBITDA ratio and certain limitations on additional borrowings. At December 31, 2019, the Company was2022, we were in compliance with all such covenants.the covenants under our Unsecured Revolving Credit Facility and our outstanding unsecured Senior Notes. Any failure to comply with our debt covenants or restrictions could result in a default under our financing arrangements or require us to obtain waivers from our lenders for failure to comply with these restrictions. The weighted average interest rateoccurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could create cross defaults under other debt arrangements and have a material adverse effect on our business, financial condition, results of operations and cash flows.
We ended the year with $2.2 billion of total liquidity (comprising $1.5 billion availability on the Company’s totalrevolving credit facility and $653 million of cash and cash equivalents). Due to the workers’ compensation and insurance reserve requirements in certain states, we also had unused letters of credit of approximately $71 million outstanding borrowings was approximately 2.18% at December 31, 20192022. Our unused letters of credit expire within one year, but have automatic renewal clauses. From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and 2.71%to manage against foreign currency risk. We currently believe that the existing lines of credit and cash generated from operations will be sufficient to fund anticipated operations for the foreseeable future.
Our total average cost of debt was 2.33% at December 31, 2018.2022 and 2.35% at December 31, 2021. Total interest expense, net of interest income, for all borrowings was $91.3 million, $92.1$74 million and $38.7$62 million in 2019, 20182022 and 2017,2021, respectively. Refer to the credit facilities footnoteDebt Footnote in the Notes to Consolidated Financial Statements for more information.
Contractual and Other Obligations
The following table shows the Company’s approximate obligations and commitments, including interest due on credit facilities, to make future payments under specified contractual obligations as of December 31, 2019:

Contractual Obligations
  Payment Due by Period
(In thousands) Total 
Less Than
1 Year
 1-3 Years 3-5 Years 
Over
5 Years
Credit facilities $3,426,099
 $624,043
 $903,525
 $609,138
 $1,289,393
Operating leases 1,196,927
 301,325
 444,369
 230,200
 221,033
Total contractual cash obligations $4,623,026
 $925,368
 $1,347,894
 $839,338
 $1,510,426
Due to the uncertainty of the timing of futuresummarizes our material cash flows associated with the Company’s unrecognized tax benefitsrequirements at December 31, 2019, the Company is unable2022 that we expect to make reasonably reliablebe paid in cash. The table does not include amounts that are contingent on events or other factors that are uncertain or unknown at this time, including legal contingencies and uncertain tax positions. The amounts presented are based on various estimates of the period of cash settlement with the respective taxing authorities. Therefore, $18.0 million of unrecognized tax benefits have been excludedand actual results may vary from the contractual obligations table above. Refer to the income taxes footnote in the Notes to Consolidated Financial Statements for a discussion on income taxes.amounts presented.
 Payment Due by Period
(In thousands)TotalLess Than 1 Year1-3 Years3-5 YearsOver 5 Years
Credit facilities$3,351,185 $252,029 $847,452 $743,264 $1,508,440 
Operating leases1,243,248 325,370 467,485 234,308 216,085 
Total material cash requirements$4,594,433 $577,399 $1,314,937 $977,572 $1,724,525 
Purchase orders or contracts for the purchase of inventory and other goods and services are not included in our estimates. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations,cash requirement, as purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current distribution needs and are fulfilled by our vendors within short time horizons. The Company doesWe do not have significant agreements for the purchase of inventory or other goods specifying minimum quantities or set prices that exceed our expected requirements.
The Company guaranteesAdditionally, we guarantee the borrowings of certain independently owned automotive parts stores (independents) and certain other affiliates in which the Company haswe have a noncontrolling equity ownership interest (affiliates). The Company’sOur maximum exposure to loss as a result of itsour involvement with these independents and affiliates is generally equal to the total borrowings subject to our guarantee. At December 31, 2022, the Company’s guarantee.total borrowings of the independents and affiliates subject to guarantee by the company were approximately $916 million. These loans generally mature over periods from one to six years. Our amount of commitment expiring in 2023 is approximately $401 million. To date, the Company haswe have had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings. The following table shows the Company’s approximate commercial commitments as
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Table of December 31, 2019:
Other Commercial Commitments
Contents
   Amount of Commitment Expiration per Period
 (In thousands)
Total  Amounts
Committed
 
Less Than
1 Year
 1-3 Years 3-5 Years 
Over
5 Years
Standby letters of credit$65,322
 $65,322
 $—
 $—
 $—
Guaranteed borrowings of independents and affiliates904,662
 514,353
 379,039
 11,270
 —
Total commercial commitments$969,984
 $579,675
 $379,039
 $11,270
 $—
In addition, the Company sponsors defined benefit pension plans that may obligate us to make contributions to the plans from time to time. Contributions in 2019 were $15.8 million. We expect to make $6.9 million in cash contributions to our qualified defined benefit plans in 2020, however, contributions required for 2020 and future years will depend on a number of unpredictable factors including the market performance of the plans’ assets and future changes in interest rates that affect the actuarial measurement of the plans’ obligations.
Share Repurchases
In 2019, the Company2022, we repurchased approximately 0.81.6 million shares of itsour common stock for an aggregate $223 million, and the Companywe had remaining authority to purchase approximately 15.610.3 million shares of itsour common stock at December 31, 2019.2022. We expect to remain active in our share repurchase program and continue to return capital to our shareholders. There were no other repurchase plans announced as of December 31, 2022.
CRITICAL ACCOUNTING POLICIES
General
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We describe in this section certain critical accounting policies that require us to make significant estimates, assumptions and judgments. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions

about matters that are uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the preparation of the consolidated financial statements. For further information on the critical accounting policies, see the summarySummary of significant accounting policies footnoteSignificant Accounting Policies Footnote in the Notes to Consolidated Financial Statements.
Inventories — Provisions for Slow Moving and Obsolescence
The Company identifies slow moving or obsolete inventories and estimates appropriate provisions related thereto. Historically, these losses have not been significant as the vast majority of the Company’s inventories are not highly susceptible to obsolescence and a majority are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.
Allowance for Doubtful Accounts — Methodology
The Company evaluates the collectability of trade accounts receivable based on a combination of factors. The Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience and periodically adjusts this estimate when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2019, 2018 and 2017, the Company recorded provisions for doubtful accounts of approximately $14.9 million, $17.1 million, and $13.9 million, respectively.
Consideration Received from Vendors
The CompanyWe may enter into agreements at the beginning of each year with many of itsour vendors that provide for inventory purchase incentives. Generally, the Company earnswe earn inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accruesWe accrue for the receipt of these incentives as part of itsour inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While management believes the Companywe will continue to receive consideration from vendors in 20202023 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future or that we will be able to achieve the specified volumes necessary to take advantage of such incentives.
Impairment of Property, Plant and Equipment and Goodwill and Other Intangible Assets
At least annually, the Company evaluateswe evaluate property, plant and equipment, goodwill and other intangible assets for potential impairment indicators. The Company’sOur judgments regarding the existence of impairment indicators are based on market conditions and operational performance, among other factors. Future events could cause the Companyus to conclude that impairment indicators exist and that assets associated with a particular operation are impaired. Evaluating for impairment also requires the Companyus to estimate future operating results and cash flows which requires judgment by management. Any resulting impairment loss could have a material adverse impact on the Company’sour financial condition and results of operations. Refer to the goodwillGoodwill and other intangible assets footnoteOther Intangible Assets Footnote of the Notes to Consolidated Financial Statements for further information on the results of the Company'sour annual goodwill impairment testing.
Employee Benefit Plans
The Company’sOur benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the Company’sour pension plan assets. Our U.S. plan, our largest pension plan, is well-funded, with a fund status of 127% at December 31, 2022. The plans in Europe are unfunded and therefore there are no plan assets. TheOur pension plan investment strategy implemented by the Company’sour management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, as well as fiduciary standards. The long-term primary objectives for the pension plan funds are to provide for a reasonable amount of long-term growth of capital without undue exposure to risk, protect the assets from erosion of purchasing power and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company’sOur investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (47% S&P 500 Index, 5% Russell Mid Cap Index, 7% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index,(38% U.S. Large-cap stocks, 9% U.S. Mid-cap stocks, 10% International stocks, 3% MSCI Emerging Market Net,stocks and 28%40% Barclays U.S. Long Govt/Credit)Gov/Credit Index).
We make several critical assumptions in determining our pension plan assets and liabilities and related pension income. We believe the most critical of these assumptions are the expected rate of return on plan assets and the discount rate. Other assumptions we make relate to employee demographic factors such as rate of
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compensation increases, mortality rates, retirement patterns and turnover rates. Refer to the employee benefit plans footnoteEmployee Benefit Plans Footnote of the Notes to Consolidated Financial Statements for more information regarding these assumptions.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’sour asset allocations and future expectations, the Company’sour expected rate of return on plan assets for measuring 20202023 pension income is 7.11%7.09% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’sour benefit obligations, using capital market data and historical relationships.
The discount rate is chosen as the rate at which pension obligations could be effectively settled and is based on capital market conditions as of the measurement date. We have matched the timing and duration of the expected cash flows of our pension obligations to a yield curve generated from a broad portfolio of high-quality fixed income debt instruments to select our discount rate. Based upon this cash flow matching analysis, we selected a weighted average discount rate for the plans of 3.4%5.61% at December 31, 2019.2022.
Our pension income for 2022 is determined at the December 31, 2021 measurement date. A 25 basis point increase in discount rate would result in an approximate $46 million decrease on our projected benefit obligation. A 25 basis point decrease in discount rate would result in approximate $48 million increase on our projected benefit obligation. A 25 basis point change in discount rate would have an immaterial impact on our pension income. A 25 basis point change in expected return on asset would have an approximate $6 million impact on our pension income. These sensitivities reflect the effect of changing one assumption at a time and assume no changes to the design of the pension plans.
Effective December 31, 2013, our defined benefit pension plans were amended to freeze benefit plan accruals for participants and provide for immediate vesting of accrued benefits. Net periodic benefit income for our defined benefit pension plans was $16.2$27 million, $15.8$19 million, and $12.6$18 million for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. The income associated with the pension plans in 2019, 20182022, 2021 and 20172020 reflects the impact of the hard freeze effective December 31, 2013. No further benefits were provided after this date for additional credited service or earnings and all participants became fully vested as of December 31, 2013.freeze. Refer to the employee benefit plans footnoteEmployee Benefit Plans Footnote of the Notes to Consolidated Financial Statements for more information regarding employee benefit plans.
Business Combinations
When the Company acquireswe acquire businesses, it applieswe apply the acquisition method of accounting and recognizesrecognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree at their fair values on the acquisition date, which requires significant estimates and assumptions. Goodwill is measured as the excess of the fair value of the consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method requires the Companyus to record provisional amounts for any items for which the accounting is not complete at the end of a reporting period. The CompanyWe must complete the accounting during the measurement period, which cannot exceed one year. Adjustments made during the measurement period could have a material impact on the Company'sour financial condition and results of operations.
The CompanyWe typically measuresmeasure customer relationshiprelationships and other intangible assets using an income approach. Significant estimates and assumptions used in this approach include discount rates and certain assumptions that form the basis of the forecasted cash flows expected to be generated from the asset (e.g., future revenue growth rates operating margins and attrition rates)EBITDA margins). If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Companywe could record impairment charges. In addition, the Company haswe have estimated the economic lives of certain acquired tangible and intangible assets and these lives are used to calculate depreciation and amortization expense. If the Company'sour estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.
Legal and Product Liabilities
The Company accruesWe accrue for potential losses related to legal disputes, litigation, product liabilities, and regulatory matters when it is probable (more(the future event or events are likely than not)to occur) that the Companywe will incur a loss and the amount of the loss can be reasonably estimated.
To calculate product liabilities, the Company estimateswe estimate potential losses relating to pending claims and also estimatesestimate the likelihood of additional, similar claims being filed against the Companyus in the future. To estimate potential losses on claims that could be filed in the future, the Company considerswe consider claims pending against the Company,us, claim filing rates, the number of codefendants and the extent to which they share in settlements, and the amount of loss by claim type. The estimated losses for pending and potential future claims are calculated on a discounted basis using risk-free interest rates derived from market data about monetary assets with maturities comparable to those of the projected product liabilities. The Company usesWe use an actuarial specialist to assist with measuring itsour product liabilities. While we believe our legal and product liability estimates are reasonable in light of all available information, if one or more legal claims were to greatly exceed our
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estimates, our results of operations and cash flows could be materially and adversely affected. Refer to the commitmentsCommitments and contingencies footnoteContingencies Footnote of the Notes to Consolidated Financial Statements for additional information regarding product liabilities.
Self Insurance
The Company isWe are self-insured for the majority of itsour group health insurance costs. A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by the Company’sour claims administrators. These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.
Long-term insurance liabilities consist primarily of reserves for the Company'sour workers’ compensation program. In addition, the Company carrieswe carry various large risk deductible workers’ compensation policies for the majority of workers’ compensation liabilities. The Company recordsWe record the workers’ compensation reserves based on an analysis performed by an independent actuary. The analysis calculates development factors, which are applied to total reserves as provided by the various insurance companies who underwrite the program. While the Company believeswe believe that the assumptions used to calculate these liabilities are appropriate,

significant differences in actual experience or significant changes in these assumptions may materially affect workers’ compensation costs.
Income Taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amount and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. In addition, valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In making this determination, the Company considers all available positive and negative evidence including projected future taxable income, future reversals of existing temporary differences, recent financial operations and tax planning strategies.
The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Refer to the summarySummary of significant accounting policies footnoteSignificant Accounting Policies Footnote in the Notes to Consolidated Financial Statements for information on recent accounting pronouncements.
QUARTERLY RESULTS OF OPERATIONS
The following is a summary of the quarterly results of operations for the years ended December 31, 2019 and 2018:
  Three Months Ended
 (In thousands, except per share data)
 March 31, 2019 June 30, 2019 Sept. 30, 2019 Dec. 31, 2019
Net sales $4,736,833
 $4,934,260
 $5,015,023
 $4,706,189
Gross profit $1,508,168
 $1,598,581
 $1,624,426
 $1,585,094
Net income $160,250
 $224,430
 $227,487
 $8,918
Earnings per share:        
Basic $1.10
 $1.54
 $1.56
 $0.06
Diluted $1.09
 $1.53
 $1.56
 $0.06
  Three Months Ended
 (In thousands, except per share data) March 31, 2018 June 30, 2018 Sept. 30, 2018 Dec. 31, 2018
Net sales $4,586,294
 $4,822,065
 $4,722,922
 $4,603,792
Gross profit $1,435,807
 $1,521,586
 $1,484,235
 $1,542,159
Net income $176,576
 $226,972
 $220,227
 $186,699
Earnings per share:        
Basic $1.20
 $1.55
 $1.50
 $1.28
Diluted $1.20
 $1.54
 $1.49
 $1.27
During the fourth quarter of 2019, we approved and began to implement the 2019 Cost Savings Plan, which resulted in recognizing $154.9 million in total restructuring costs and special termination costs primarily due to planned workforce reductions and facility closures and consolidations. Also in the fourth quarter of 2019, we recorded a goodwill impairment charge related to the Business Products reporting unit totaling $82.0 million. Refer to the restructuring footnote and the goodwill and other intangible assets footnote in the Notes to Consolidated Financial Statements for additional information.
We recorded the quarterly earnings per share amounts as if each quarter was a discrete period. As a result, the sum of the basic and diluted earnings per share will not necessarily total the annual basic and diluted earnings per share.
The preparation of interim consolidated financial statements requires management to make estimates and assumptions for the amounts reported in the interim condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, the accrual of insurance reserves, customer sales returns and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out ("LIFO") method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation, which is performed each year-end. Reserves for bad debts, insurance and customer sales returns are estimated and accrued on an interim

basis based upon historical experience. Volume incentives are estimated based upon cumulative and projected purchasing levels. Income taxes are estimated on an interim basis to reflect the impact of tax reform assumptions and other considerations. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant. The effect of these adjustments in 2019 and 2018 was not significant.
ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Although the Company doeswe do not face material risks related to commodity prices, the Company iswe are exposed to changes in interest rates and in foreign currency rates with respect to foreign currency denominated operating revenues and expenses.
Foreign Currency
The Company incursWe incur translation gains or losses resulting from the translation of an operating unit’s foreign functional currency into U.S. dollars for consolidated financial statement purposes. For the periods presented, the Company’sour principal foreign currency exchange exposures are the Euro, the functional currency of our European operations; the Canadian dollar, the functional currency of our Canadian operations; and the Australian dollar, the functional currency of our Australasian operations. We monitor our foreign currency exposures and from time to time, we enter into currency forward contracts to manage our exposure to currency fluctuations. Foreign currency exchange exposure, particularly in regard to the CanadianAustralian and AustralianCanadian dollar, and to a lesser extent the Euro, negatively impacted our results for the year ended December 31, 2019. Foreign currency exchange exposure, particularly in regard to the Canadian and Australian dollar and, to a lesser extent, the Euro and Mexican peso, positively impacted our results for the year ended December 31, 2018.2022. Foreign currency exchange exposure, particularly in regard to the Euro positively impacted our results for the year ended December 31, 2021. This positive impact was mostly offset by the negative impact from the Canadian and Australian dollar for the full year ended December 31, 2021.
During 20192022 and 2018,2021, it was estimated that a 10% shift in exchange rates between those foreign functional currencies and the U.S. dollar would have impacted translated net sales by approximately $513$723 million and $486$683 million, respectively. A 15% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately $770 million$1.1 billion in 20192022 and $729 million$1.0 billion in 2018.2021. A 20% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately $1,026 million$1.4 billion in 20192022 and $972 million$1.4 billion in 2018.2021.
Interest Rates
The Company isWe are subject to interest rate volatility with regard to existing and future issuances of debt.debt and with respect to the A/R Sales Agreement, for which the fees are linked to interest rate changes. We monitor our mix of fixed-rate and variable-rate debt as well as our mix of short-term debt and long-term debt. From time to time, we enter into interest rate swap agreements to manage our exposure to interest rate fluctuations. As of December 31, 2022, we primarily had fixed-rate debt. Based on the Company'sour variable-rate debt and derivative instruments outstanding as of December 31, 20192022 and 2018,2021, we estimate that a 100 basis point increase in interest rates would have increased interest expensean immaterial impact in 2022 and 2021 and would increase the fees on our A/R Sales Agreement by $5.5 million$10 million.
Inflation
In fiscal year 2022, we experienced inflationary pressures across various parts of our business and operations, including, but not limited to, increases to our product costs, overhead costs and rising costs across our supply chain. We continue to monitor the impact of inflation in 2019order to minimize its effects through pricing strategies, productivity improvements and $12 million in 2018. However, thesecost reductions. If our costs were to be subject to more significant inflationary pressures, we may not be able to fully offset such higher costs through price increases in interest expense would have been partially offset by the increases in interest income relatedor other cost
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efficiency measures. Our inability or failure to higher interest rates.do so could harm our business, financial condition and results of operations.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

ANNUAL REPORT ON FORM 10-K
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
3033
Consolidated Balance Sheets as of December 31, 20192022 and 20182021
3436
Consolidated Statements of Income for the Years Ended December 31, 2022, 2021and2020
37
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 20182022, 2021, and 20172020
Consolidated Statements of Equity for the Years Ended December 31, 2019, 20182022, 2021 and 20172020
3639
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 20182022, 2021 and 20172020
3740
Notes to Consolidated Financial Statements
3841



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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Genuine Parts Company and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries (the Company) as of December 31, 20192022 and 2018,2021, the related consolidated statements of income, and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019,2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20192022 and 2018,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019,2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019,2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 202023, 2023 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company changed its method for accounting for leases in 2019. See below for discussion of our related critical audit matter.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the 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 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.












relate.
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Valuation of Goodwill

Description of the Matter
As of December 31, 2019, the Company’s goodwill was $2,293,519,000. As disclosed in Note 1 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level. For a reporting unit in which the Company concludes, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount (or if the Company elects to skip the optional qualitative assessment), the Company is required to perform a quantitative impairment test, which includes measuring the fair value of the reporting unit and comparing it to the reporting unit’s carrying amount. In the year ended December 31, 2019, the Company recorded a goodwill impairment charge of $81,968,000 related to one of its reporting units as disclosed in Note 2 to the consolidated financial statements.

Auditing management’s quantitative impairment test for goodwill was complex and judgmental due to the significant estimation required to determine the fair value of a reporting unit. In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the weighted average costs of capital, revenue growth rates, operating margins, working capital and terminal value, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the reporting units where the quantitative impairment tests were performed, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. For example, we compared the significant assumptions of the reporting unit to current industry, market and economic trends, to the Company's historical results and those of other guideline companies in the same industry, and to other relevant factors. We involved our valuation specialists to assist in our evaluation of the Company's valuation methodology and significant assumptions. In addition, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair values of the reporting units that would result from changes in the assumptions. We also recalculated the resulting impairment charge recorded by the Company.

Fair Value of Customer Relationships Acquired in the Kaman Distribution Group Business Combinations
Combination
Description of the Matter
As disclosed in Note 1210 to the consolidated financial statements, the Company’s cash used in acquisitionsCompany completed the acquisition of businesses totaled $732,142,000,Kaman Distribution Group (KDG) during 2022 for an aggregate net purchase price of cash acquired, during the year ended December 31, 2019. These acquisitions were$1.3 billion. This acquisition was accounted for under the acquisition method of accounting for business combinations. For each business combination, theThe Company allocated the net purchase price to the assets acquired and the liabilities assumed based on their respective fair values as of the date of acquisition, including other intangible assets of $340,799,000.$568 million. Of the other intangible assets acquired, the largest was customer relationships of $304,302,000.
$527 million.

Auditing the Company's accounting for business combinationsvaluation of customer relationships was complex and required significant auditor judgment due to the significant estimation uncertainty in the Company’s determination ofevaluating certain assumptions required to estimate the fair value of customer relationships.value. The significant estimation uncertainty was primarily due to the sensitivity of the respective fair valuesvalue of the customer relationships to assumptions about the future cash flows that the Company expects to generate from the acquired businesses.business. The Company used the multi-period excess earnings method under the income approach to measure the customer relationships. The significant assumptions used to estimate the fair value of the customer relationships includedmeasure was sensitive to underlying assumptions including discount rates and certain assumptions that form the basis of the forecasted results (e.g., future revenue growth rates operating margins and attrition rates)EBITDA margins). The significant assumptions are forward-looking and could be affected by future economic and market conditions.


How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for estimating the fair value of customer relationships, including controls over management's review of the significant assumptions, including the future revenue growth rates and EBITDA margins, used in the multi-period excess earnings method undervaluation of this this intangible asset and review of the income approach.
valuation model.

To test the estimated fair value of the customer relationships, we performed audit procedures that included, among others, evaluating the Company's selection and application of the multi-period excess earnings method under the income approachvaluation methodologies and evaluating the significant assumptions used by the Company. We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. For example, we comparedOur testing also included comparing the significant assumptions used to the historical results of the acquired businessesbusiness and to other guideline companies within the same industries.industry. We also performed sensitivity analyses of the significant assumptions including the future revenue growth rates, operating margins and attrition rates, to evaluate the change in the fair value of the intangible assets resulting from changes in the assumptions.

Adoption of New Lease Accounting Standard

Description of the Matter
As discussed above and in Note 1 to the consolidated financial statements, the Company adopted Accounting Standard Codification Topic 842, Leases (“ASC 842”) as of January 1, 2019. The adoption of ASC 842 resulted in the recognition of a right-of-use asset and lease liability on the consolidated balance sheet for substantially all leases, including operating leases. The cumulative effect of adopting the standard resulted in an adjustment to retained earnings of $4,797,000, net of taxes, at the same date. Management elected to adopt ASC 842 using the modified retrospective approach, in which existing leases were recorded at the adoption date, but prior periods were not recast under this approach. As of December 31, 2019, the Company’s right-of-use asset and lease liability were $1,075,969,000 and $1,096,298,000, respectively, as disclosed in Note 6 to the consolidated financial statements. The right-of-use asset and liability were dependent on management’s determination of incremental borrowing rates (IBRs), which required significant judgment.

Auditing the Company's adoption of ASC 842 was especially challenging due to the effort required to ensure the completeness of the lease population and accuracy of lease terms given the significant volume of lease arrangements and subjectivity due to management’s judgment required to estimate its IBRs. Generally, the Company's lease arrangements do not provide an implicit interest rate. Therefore, the Company was required to estimate its IBRs across various currency environments to use as the discount rates when determining its right-of-use asset and lease liability.

How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for implementing the new lease accounting standard. For example, we tested controls over management's process for review of the application of accounting policy elections and over management’s review of the IBRs.
To test the Company’s adoption of ASC 842, our audit procedures included, among others, an evaluation of the completeness of the population of contracts that meet the definition of a lease under ASC 842, testing the accuracy of lease terms within the lease information technology system, and testing the accuracy of the Company’s system calculations of initial right-of-use assets and lease liabilities. Additionally, we involved our valuation specialists to test management’s model for estimating the IBRs. Our specialists assisted us in evaluating management’s methodology for developing the IBR, testing significant assumptions, such as currency environment adjustments, and comparing the Company’s IBRs to ranges developed by our specialists based on independently observed data.

Loss Contingencies Related to Product Liabilities

Description of the Matter
As disclosed in Notes 1 and 1115 to the consolidated financial statements, the Company is subject to pending product liability lawsuits primarily resulting from its national distribution of automotive parts and supplies. The Company accrues for loss contingencies related to product liabilities if it is probable that the Company will incur a loss and the loss can be reasonably estimated. The amount accrued for product liabilities as of December 31, 20192022 was $146,230,000.
$220 million.

Auditing the Company’s loss contingencies related to product liabilities was complex due to the significant measurement uncertainty associated with the estimate, management’s application of significant judgment and the use of valuation techniques. In addition, the loss contingencies related to product liabilities are sensitive to significant management assumptions, including the number, type, and severity of claims incurred and estimated to be incurred in future periods.


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How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for estimating loss contingencies related to product liabilities. For example, we tested controls over management's review of the significant assumptions described above and the reconciliation of claims data to that used by the Company’s actuarial specialist.


To test the estimated loss contingencies related to product liabilities, our audit procedures included, among others, assessing the methodology used, testing the significant assumptions, including testing the completeness and accuracy of the underlying data, and comparing significant assumptions to historical claims as well as external data. We evaluated the legal letters obtained from internal and external legal counsel, held discussions with legal counsel, and performed a search for new or contrary evidence affecting the estimate. We involved our actuarial specialists to assist in our evaluation of the methodology and assumptions used by management and to independently develop a range of estimated product liabilities using the Company’s historical data as well as other information available for similar cases. We compared the Company's estimated loss contingencies related to product liabilities to the range developed by our actuarial specialists. We also assessed the adequacy of the Company’s disclosures, included in Notes 1 and 1115 to the consolidated financial statements, in relation to these matters.




/s/ Ernst & Young LLP

We have served as the Company’scompany’s auditor since 1948.

Atlanta, Georgia
February 21, 202023, 2023


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Genuine Parts Company and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Data and per Share Amounts)
As of December 31, As of December 31,
2019
2018 20222021
Assets   Assets
Current assets:   Current assets:
Cash and cash equivalents$276,992
 $333,547
Cash and cash equivalents$653,463 $714,701 
Trade accounts receivable, net2,635,155
 2,493,636
Trade accounts receivable, net2,188,868 1,797,955 
Merchandise inventories, net3,831,183
 3,609,389
Merchandise inventories, net4,441,649 3,889,919 
Prepaid expenses and other current assets1,195,286
 1,139,118
Prepaid expenses and other current assets1,532,759 1,353,847 
Total current assets7,938,616
 7,575,690
Total current assets8,816,739 7,756,422 
Goodwill2,293,519
 2,128,776
Goodwill2,588,113 1,915,307 
Other intangible assets, net1,568,926
 1,411,642
Other intangible assets, net1,812,510 1,406,401 
Deferred tax assets54,851
 29,509
Operating lease assets1,075,969
 —
Operating lease assets1,104,678 1,053,689 
Other assets498,965
 510,192
Other assets847,325 985,884 
Property, plant and equipment, net1,214,783
 1,027,231
Property, plant and equipment, net1,326,014 1,234,399 
Total assets$14,645,629
 $12,683,040
Total assets$16,495,379 $14,352,102 
   
Liabilities and equity
 
Liabilities and equity
Current liabilities:  
Current liabilities:
Trade accounts payable$4,106,163
 $3,995,789
Trade accounts payable$5,456,550 $4,804,939 
Current portion of debt624,043
 711,147
Current portion of debt252,029 — 
Other current liabilities1,553,063
 1,088,428
Other current liabilities1,851,340 1,660,768 
Dividends payable110,851
 105,369
Dividends payable126,191 115,876 
Total current liabilities6,394,120
 5,900,733
Total current liabilities7,686,110 6,581,583 
Long-term debt2,802,056
 2,432,133
Long-term debt3,076,794 2,409,363 
Operating lease liabilities825,567
 —
Operating lease liabilities836,019 789,175 
Pension and other post-retirement benefit liabilities249,832
 235,228
Pension and other post-retirement benefit liabilities197,879 265,134 
Deferred tax liabilities232,902
 196,843
Deferred tax liabilities391,163 280,778 
Other long-term liabilities445,652
 446,112
Other long-term liabilities502,967 522,779 
Equity:   Equity:
Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued—
 —
Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued— — 
Common stock, par value $1 per share - authorized 450,000,000 shares; issued and outstanding - 2019 - 145,378,158 shares and 2018 - 145,936,613 shares145,378
 145,937
Common stock, par value $1 per share - authorized 450,000,000 shares; issued and outstanding - 2022 - 140,941,649 shares and 2021 - 142,180,683 sharesCommon stock, par value $1 per share - authorized 450,000,000 shares; issued and outstanding - 2022 - 140,941,649 shares and 2021 - 142,180,683 shares140,941 142,181 
Additional paid-in capital98,777
 78,380
Additional paid-in capital140,324 119,975 
Accumulated other comprehensive loss(1,141,308) (1,115,078)Accumulated other comprehensive loss(1,032,542)(857,739)
Retained earnings4,571,860
 4,341,212
Retained earnings4,541,640 4,086,325 
Total parent equity3,674,707
 3,450,451
Total parent equity3,790,363 3,490,742 
Noncontrolling interests in subsidiaries20,793
 21,540
Noncontrolling interests in subsidiaries14,084 12,548 
Total equity3,695,500
 3,471,991
Total equity3,804,447 3,503,290 
Total liabilities and equity$14,645,629
 $12,683,040
Total liabilities and equity$16,495,379 $14,352,102 
See accompanying notes.

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Genuine Parts Company and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except per Share Amounts)
 Year Ended December 31,
 202220212020
Net sales$22,095,973 $18,870,510 $16,537,433 
Cost of goods sold14,355,869 12,236,374 10,882,592 
Gross profit7,740,104 6,634,136 5,654,841 
Operating expenses:
Selling, administrative and other expenses5,758,295 5,162,506 4,386,739 
Depreciation and amortization347,819 290,971 272,842 
Provision for doubtful accounts19,791 17,739 23,577 
Restructuring costs— — 50,019 
Goodwill impairment charge— — 506,721 
Total operating expenses6,125,905 5,471,216 5,239,898 
Non-operating expenses (income):
Interest expense, net73,887 62,150 91,048 
Other(32,290)(99,576)(55,473)
Total non-operating expenses (income)41,597 (37,426)35,575 
Income before income taxes1,572,602 1,200,346 379,368 
Income taxes389,901 301,556 215,973 
Net income from continuing operations1,182,701 898,790 163,395 
Net loss from discontinued operations— — (192,497)
Net income (loss)$1,182,701 $898,790 $(29,102)
Basic earnings (loss) per share:
Continuing operations$8.36 $6.27 $1.13 
Discontinued operations— — (1.33)
Basic earnings (loss) per share$8.36 $6.27 $(0.20)
Diluted earnings (loss) per share:
Continuing operations$8.31 $6.23 $1.13 
Discontinued operations— — (1.33)
Diluted earnings (loss) per share$8.31 $6.23 $(0.20)
Weighted average common shares outstanding141,468 143,435 144,474 
Dilutive effect of stock options and non-vested restricted stock awards854 786 641 
Weighted average common shares outstanding — assuming dilution142,322 144,221 145,115 
See accompanying notes.
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Table of Contents
Genuine Parts Company and Subsidiaries
Consolidated Statements of Comprehensive Income
(In Thousands, Except per Share Amounts)
 Year Ended December 31,
 2019
2018
2017
Net sales$19,392,305
 $18,735,073
 $16,308,801
Cost of goods sold13,076,036
 12,751,286
 11,402,403
Gross margin6,316,269
 5,983,787
 4,906,398
Operating expenses:     
Selling, administrative, and other expenses4,934,167
 4,615,290
 3,726,233
Depreciation and amortization270,288
 241,635
 167,691
Provision for doubtful accounts14,905
 17,147
 13,932
Restructuring costs112,184
 —
 —
Goodwill impairment charge81,968
 —
 —
Total operating expenses5,413,512
 4,874,072
 3,907,856
Non-operating expenses (income):     
Interest expense95,711
 101,925
 41,486
Other(66,011) (67,822) (52,212)
Special termination costs42,757
 —
 —
Total non-operating expenses (income)72,457
 34,103
 (10,726)
Income before income taxes830,300
 1,075,612
 1,009,268
Income taxes209,215
 265,138
 392,511
Net income$621,085
 $810,474
 $616,757
Basic net income per common share$4.26
 $5.53
 $4.19
Diluted net income per common share$4.24
 $5.50
 $4.18
Weighted average common shares outstanding145,736
 146,657
 147,140
Dilutive effect of stock options and nonvested restricted stock awards681
 584
 561
Weighted average common shares outstanding — assuming dilution146,417
 147,241
 147,701
      
Net income$621,085
 $810,474
 $616,757
Other comprehensive income (loss), net of tax:     
Foreign currency translation adjustment38,246
 (233,235) 137,694
Net gain (loss) on cash flow and net investment hedges, net of income taxes of 2019 — $16,600; 2018 — $10,398; 2017 — $9,71113,617
 28,114
 (17,388)
Pension and postretirement benefit adjustments, net of income taxes of 2019 — $5,036; 2018 — $21,297; 2017 — $20,53944,433
 (57,365) 40,123
Other comprehensive income (loss), net of tax96,296
 (262,486) 160,429
Comprehensive income$717,381
 $547,988
 $777,186
Year Ended December 31,
202220212020
Net income (loss)$1,182,701 $898,790 $(29,102)
Other comprehensive (loss) income, net of income taxes:
Foreign currency translation adjustments(143,890)(65,843)102,595 
Cash flow hedge adjustments, net of income taxes in 2022 — $4,612, 2021 — $5,535, and 2020 — $3,45312,470 14,965 (9,336)
Pension and postretirement benefit adjustments, net of income taxes of 2022 — $15,846, 2021 — $84,650, and 2020 — $4,639(43,383)229,641 11,547 
Other comprehensive (loss) income, net of tax(174,803)178,763 104,806 
Comprehensive income$1,007,898 $1,077,553 $75,704 
See accompanying notes.

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Table of Contents
Genuine Parts Company and Subsidiaries
Consolidated Statements of Equity
(In Thousands, Except Share Data and per Share Amounts)
  Common Stock 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Parent
Equity
 
Non-
controlling
Interests in
Subsidiaries
 
Total
Equity
 
 
 Shares Amount 
 Balance at January 1, 2017148,410,422
 $148,410
 $56,605
 $(1,013,021) $4,001,734
 $3,193,728
 $13,628
 $3,207,356
 Net income—
 —
 —
 —
 616,757
 616,757
 —
 616,757
 Other comprehensive income, net of tax—
 —
 —
 160,429
 —
 160,429
 —
 160,429
 Cash dividends declared, $2.70 per share—
 —
 —
 —
 (396,891) (396,891) —
 (396,891)
 Share-based awards exercised, including tax benefit of $3,134131,232
 132
 (5,371) —
 —
 (5,239) —
 (5,239)
 Share-based compensation—
 —
 16,892
 —
 —
 16,892
 —
 16,892
 Purchase of stock(1,889,039) (1,889) —
 —
 (171,635) (173,524) —
 (173,524)
 Noncontrolling interest activities—
 —
 —
 —
 —
 —
 38,376
 38,376
 Balance at December 31, 2017146,652,615
 146,653
 68,126
 (852,592) 4,049,965
 3,412,152
 52,004
 3,464,156
 Net income—
 —
 —
 —
 810,474
 810,474
 —
 810,474
 Other comprehensive loss, net of tax—
 —
 —
 (262,486) —
 (262,486) —
 (262,486)
 Cash dividends declared, $2.88 per share—
 —
 —
 —
 (422,352) (422,352) —
 (422,352)
 Share-based awards exercised, including tax benefit of $4,232235,058
 235
 (10,462) —
 —
 (10,227) —
 (10,227)
 Share-based compensation—
 —
 20,716
 —
 —
 20,716
 —
 20,716
 Purchase of stock(951,060) (951) —
 —
 (91,032) (91,983) —
 (91,983)
 Cumulative effect from adoption of ASU No. 2014-09, net of tax—
 —
 —
 —
 (5,843) (5,843) —
 (5,843)
 Noncontrolling interest activities—
 —
 —
 —
 —
 —
 (30,464) (30,464)
 Balance at December 31, 2018145,936,613
 145,937
 78,380
 (1,115,078) 4,341,212
 3,450,451
 21,540
 3,471,991
 Net income—
 —
 —
 —
 621,085
 621,085
 —
 621,085
 Other comprehensive income, net of tax—
 —
 —
 96,296
 —
 96,296
 —
 96,296
 Cash dividends declared, $3.05 per share—
 —
 —
 —
 (444,372) (444,372) —
 (444,372)
 Share-based awards exercised, including tax benefit of $4,920240,568
 240
 (11,653) —
 —
 (11,413) —
 (11,413)
 Share-based compensation—
 —
 32,050
 —
 —
 32,050
 —
 32,050
 Purchase of stock(799,023) (799) —
 —
 (73,388) (74,187) —
 (74,187)
 Cumulative effect from adoption of ASU No. 2018-02—
 —
 —
 (122,526) 122,526
 —
 —
 —
 Cumulative effect from adoption of ASU No. 2016-02, net of tax—
 —
 —
 —
 4,797
 4,797
 —
 4,797
 Noncontrolling interest activities—
 —
 —
 —
 —
 —
 (747) (747)
 Balance at December 31, 2019145,378,158
 $145,378
 $98,777
 $(1,141,308) $4,571,860
 $3,674,707
 $20,793
 $3,695,500
 Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive
Loss		Retained
Earnings		Total
Parent
Equity		Non-
controlling
Interests in
Subsidiaries		Total
Equity
SharesAmount
Balance at January 1, 2020145,378,158 $145,378 $98,777 $(1,141,308)$4,571,860 $3,674,707 $20,793 $3,695,500 
Net loss— — — — (29,102)(29,102)— (29,102)
Other comprehensive income, net of tax— — — 104,806 — 104,806 — 104,806 
Cash dividends declared, $3.16 per share— — — — (456,469)(456,469)— (456,469)
Share-based awards exercised, including tax benefit of $677112,621 113 (4,233)— — (4,120)— (4,120)
Share-based compensation— — 22,621 — — 22,621 — 22,621 
Purchase of stock(1,136,444)(1,137)— — (95,078)(96,215)— (96,215)
Cumulative effect from adoption of ASU No. 2016-13— — — — (11,432)(11,432)— (11,432)
Noncontrolling interest activities— — — — — — (7,586)(7,586)
Balance at December 31, 2020144,354,335 144,354 117,165 (1,036,502)3,979,779 3,204,796 13,207 3,218,003 
Net income— — — — 898,790 898,790 — 898,790 
Other comprehensive income, net of tax— — — 178,763 — 178,763 — 178,763 
Cash dividends declared, $3.26 per share— — — — (467,482)(467,482)— (467,482)
Share-based awards exercised, including tax benefit of $7,076440,667 441 (22,787)— — (22,346)— (22,346)
Share-based compensation— — 25,597 — — 25,597 — 25,597 
Purchase of stock(2,614,319)(2,614)— — (330,985)(333,599)— (333,599)
Cumulative effect from adoption of ASU 2019-12— — — — 6,223 6,223 — 6,223 
Noncontrolling interest activities— — — — — — (659)(659)
Balance at December 31, 2021142,180,683 142,181 119,975 (857,739)4,086,325 3,490,742 12,548 3,503,290 
Net income— — — — 1,182,701 1,182,701 — 1,182,701 
Other comprehensive loss, net of tax— — — (174,803)— (174,803)— (174,803)
Cash dividend declared, $3.58 per share— — — — (506,232)(506,232)— (506,232)
Share-based awards exercised, including tax benefit of $5,495333,185 332 (17,709)— — (17,377)— (17,377)
Share-based compensation— — 38,058 — — 38,058 — 38,058 
Purchase of stock(1,572,219)(1,572)— — (221,154)(222,726)— (222,726)
Noncontrolling interest activities— — — — — — 1,536 1,536 
Balance at December 31, 2022140,941,649 $140,941 $140,324 $(1,032,542)$4,541,640 $3,790,363 $14,084 $3,804,447 
See accompanying notes.

39
Table of Contents
Genuine Parts Company and Subsidiaries
Consolidated Statements of Cash Flows 
(In Thousands)
Year Ended December 31
Year Ended December 31 202220212020
2019 2018 2017
Operating activities     
Net income$621,085
 $810,474
 $616,757
Adjustments to reconcile net income to net cash provided by operating activities:     
Operating activities:Operating activities:
Net income (loss)Net income (loss)$1,182,701 $898,790 $(29,102)
Net loss from discontinued operationsNet loss from discontinued operations— — (192,497)
Net income from continuing operationsNet income from continuing operations1,182,701 898,790 163,395 
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Depreciation and amortization270,288
 241,635
 167,691
Depreciation and amortization347,819 290,971 272,842 
Excess tax benefits from share-based compensation(4,920) (4,232) (3,134)
Deferred income taxes(70,932) 3,891
 65,990
Deferred income taxes2,220 31,676 (27,722)
Share-based compensation32,050
 20,716
 16,892
Share-based compensation38,058 25,597 22,621 
Realized currency and other divestiture losses41,499
 —
 —
Gain on equity investment(38,663) —
 —
Gain on sale of real estateGain on sale of real estate(102,803)— — 
Goodwill impairment charge81,968
 —
 —
Goodwill impairment charge— — 506,721 
Other operating activities(13,801) 1,579
 (18,040)Other operating activities18,377 22,575 23,248 
Changes in operating assets and liabilities:     Changes in operating assets and liabilities:
Trade accounts receivable, net(116,145) (72,041) (19,273)Trade accounts receivable, net(244,371)(258,994)957,514 
Merchandise inventories, net(66,202) (73,173) (9,923)Merchandise inventories, net(380,420)(329,237)58,462 
Trade accounts payable70,679
 364,639
 61,474
Trade accounts payable676,406 777,318 89,350 
Other short-term assets and liabilities10,212
 (97,864) (1,544)
Other long-term assets and liabilities74,892
 (50,460) (61,847)
Net cash provided by operating activities892,010
 1,145,164
 815,043
Investing activities     
Other assets and liabilitiesOther assets and liabilities(71,016)(200,411)(51,909)
Net cash provided by operating activities from continuing operationsNet cash provided by operating activities from continuing operations1,466,971 1,258,285 2,014,522 
Investing activities:Investing activities:
Purchases of property, plant and equipment(297,869) (232,422) (156,760)Purchases of property, plant and equipment(339,632)(266,136)(153,502)
Proceeds from sale of property, plant and equipment24,772
 14,665
 21,275
Proceeds from sale of property, plant and equipment145,007 26,549 18,064 
Proceeds from divestitures of businesses434,609
 —
 —
Proceeds from divestitures of businesses33,604 17,738 387,379 
Acquisitions of businesses and other investing activities(724,718) (278,367) (1,494,795)
Net cash used in investing activities(563,206) (496,124) (1,630,280)
Financing activities     
Proceeds from settlement of net investment hedgeProceeds from settlement of net investment hedge158,441 — — 
Acquisitions and other investing activitiesAcquisitions and other investing activities(1,681,660)(284,315)(69,173)
Net cash (used in) provided by investing activities from continuing operationsNet cash (used in) provided by investing activities from continuing operations(1,684,240)(506,164)182,768 
Financing activities:Financing activities:
Proceeds from debt5,037,168
 5,064,291
 6,630,294
Proceeds from debt5,108,641 892,694 2,638,014 
Payments on debt(4,897,769) (5,124,265) (4,350,222)Payments on debt(4,147,773)(1,053,423)(3,533,017)
Payments on acquired debt of AAG—
 —
 (833,775)
Share-based awards exercised(11,413) (10,227) (5,239)Share-based awards exercised(17,377)(22,346)(4,120)
Dividends paid(438,890) (415,983) (395,475)Dividends paid(495,917)(465,649)(453,277)
Purchase of stock(74,187) (91,983) (173,524)Purchase of stock(222,726)(333,599)(96,215)
Other financing activities(871) (30,663) —
Other financing activities(19,747)(7,209)(65,150)
Net cash (used in) provided by financing activities(385,962) (608,830) 872,059
Effect of exchange rate changes on cash603
 (21,562) 15,198
Net cash provided by (used in) financing activities from continuing operationsNet cash provided by (used in) financing activities from continuing operations205,101 (989,532)(1,513,765)
Cash flows from discontinued operations:Cash flows from discontinued operations:
Net cash flows provided by operating activities from discontinued operationsNet cash flows provided by operating activities from discontinued operations— — 5,039 
Net cash used in investing activities from discontinued operationsNet cash used in investing activities from discontinued operations— — (11,131)
Net cash provided by financing activities from discontinued operationsNet cash provided by financing activities from discontinued operations— — — 
Net cash (used in) provided by discontinued operationsNet cash (used in) provided by discontinued operations— — (6,092)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(49,070)(38,054)35,741 
Net (decrease) increase in cash and cash equivalents(56,555) 18,648
 72,020
Net (decrease) increase in cash and cash equivalents(61,238)(275,465)713,174 
Cash and cash equivalents at beginning of year333,547
 314,899
 242,879
Cash and cash equivalents at beginning of year714,701 990,166 276,992 
Cash and cash equivalents at end of year$276,992
 $333,547
 $314,899
Cash and cash equivalents at end of year$653,463 $714,701 $990,166 
     
Supplemental disclosures of cash flow information     Supplemental disclosures of cash flow information
Cash paid during the year for:     Cash paid during the year for:
Income taxes$303,736
 $236,536
 $298,827
Income taxes$362,859 $305,326 $223,019 
Interest$95,281
 $102,131
 $38,401
Interest$73,368 $65,732 $91,344 
See accompanying notes.

40
Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 20192022

(in thousands, except per share data)

1. Summary1.Summary of Significant Accounting Policies
Business
Genuine Parts Company and all of its majority-owned subsidiaries (the "Company""company") is a distributor of automotive replacement parts and industrial parts and materials and business products. The Company servesmaterials. We serve a diverse customer base through approximately 3,600a network of more than 10,600 locations inthroughout North America, Australasia, and Europe and, therefore, hashave limited exposure from credit losses to any particular customer, region, or industry segment. The Company performsWe perform periodic credit evaluations of itsour customers’ financial condition and generally doesdo not require collateral. The Company has
We have reclassified certain prior period amounts to conform to the current period presentation.
We have evaluated subsequent events through the date the financial statements were issued.
On June 30, 2020, we completed the divestiture of our Business Products Group. Refer to the Acquisitions, Divestitures and Discontinued Operations Footnote for more information. Our results of operations for the Business Products Group are reported as discontinued operations and all information related to the discontinued operations has been excluded from the Notes to the Consolidated Financial Statements for all periods presented. Net loss from discontinued operations includes all costs that are directly attributable to these businesses and excludes certain corporate overhead costs that were previously allocated.
Principles of Consolidation
The consolidated financial statements include all of the accounts of the Company.our accounts. The net income attributable to noncontrolling interests is not material to the Company’sour consolidated net income. Intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates and the differences could be material.
Revenue Recognition
The Company applied ASU 2014-09, using the modified retrospective method effective January 1, 2018. The cumulative effect of initially applying ASU 2014-09 and its amendments resulted in a reduction to the opening retained earnings balance of $8,000 prior to the tax adjustment, at January 1, 2018 and a related adjustment to other current liabilities as of that date. Revenue for periods prior to January 1, 2018 has not been adjusted and continues to be reported under Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition (ASC 605).
The CompanyWe primarily recognizesrecognize revenue at the point the customer obtains control of the products or services and at an amount that reflects the consideration expected to be received for those products or services. Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price and recognizes revenue upon delivery or as services are rendered.
Revenue is recognized net of allowances for returns, variable consideration and any taxes collected from customers that will be remitted to governmental authorities. Revenue recognized over time is not significant. Payment terms with customers vary by the type and location of the customer and the products or services offered. The Company doesWe do not adjust the promised amount of consideration for the effects of significant financing components based on the expectation that the period between when the Company transferswe transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Arrangements with customers that include payment terms extending beyond one year are not significant. Liabilities for customer incentives, discounts, or rebates are included in other current liabilities in the consolidated balance sheets.
Product Distribution Revenues
The Company generatesWe generate revenue primarily by distributing products through wholesale and retail channels. For wholesale customers, revenue is recognized when title and control of the goods has passed to the wholesale customer. Retail revenue is recognized at the point of sale when the goods are transferred to customers and consideration is received. Shipping and handling activities are performed prior to the customer obtaining control of the products. Costs associated with shipping and handling to our customers are considered costs to fulfill a contract and are included in selling, administrative and other expenses in the period they are incurred.
41

Other Revenues
The Company offersWe offer software support, product cataloging, marketing, training and other membership program and support services to certain customers. This revenue is recognized as services are performed. Revenue from these services is recognized over a short duration and the impact to our consolidated financial statements is not significant.

38
Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

Variable Consideration
The Company’sOur products are generally sold with a right of return and may include variable consideration in the form of incentives, discounts, credits or rebates. The Company estimatesWe estimate variable consideration based on historical experience to determine the expected amount to which the Companywe will be entitled in exchange for transferring the promised goods or services to a customer. The Company recognizesWe recognize estimated variable consideration as an adjustment to the transaction price when control of the related product or service is transferred. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant.
Foreign Currency Translation
The consolidated balance sheets and statements of income and comprehensive income of the Company’sour foreign subsidiaries have been translated into U.S. dollars at the current and average exchange rates, respectively. The foreign currency translation adjustment is included as a component of accumulated other comprehensive loss.
Cash and Cash Equivalents
The Company considersWe consider all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.
Trade Accounts Receivable and the Allowance for Doubtful Accounts
The Company evaluatesWe evaluate the collectability of trade accounts receivable based on a combination of factors. The Company estimatesWe estimate an allowance for doubtful accounts as a percentage of net sales based on various factors, including historical bad debt experience, current economic conditions and future expected credit losses and collectability trends. We will periodically adjustsadjust this estimate when the Company becomeswe become aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company haswe have a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operateswe operate could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2019, 2018,2022, 2021, and 2017, the Company2020, we recorded provisions for doubtful accounts of approximately $14,905, $17,147,$20 million, $18 million, and $13,932,$24 million, respectively. At December 31, 20192022 and 2018,2021, the allowance for doubtful accounts was approximately $37,905$54 million and $21,888,$44 million, respectively.
Merchandise Inventories, Including Consideration Received From Vendors
Merchandise inventories are valued at the lower of cost or net realizable value. Cost is determined by the last-in, first-out ("LIFO") method for a majority of U.S. automotive and industrial parts, and generally by the first-in, first-out ("FIFO")weighted average method for business productsnon-U.S. and certain non-U.S. and other inventories. If the FIFO method had been used for all inventories,in place of LIFO, cost would have been approximately $531,800$835 million and $479,500$628 million higher than reported at December 31, 20192022 and 2018,2021, respectively. During 2019 and 2017, reductionsReductions in certain industrial parts inventories resulted in liquidations of LIFO inventory layers, which reduced cost of goods sold by approximately $10,400immaterial amounts in 2021 and $2,000, respectively.2020. There were 0no liquidations of LIFO liquidationsinventory layers in 2018.2022.
The Company identifiesWe identify slow moving or obsolete inventories and estimatesestimate appropriate provisions related thereto. Historically, these losses have not been significant as the vast majority of the Company’sour inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company haswe have no reason to believe itsour inventory return privileges will be discontinued in the future, itsour risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.
The Company entersWe enter into agreements at the beginning of each year with many of itsour vendors that provide for inventory purchase incentives. Generally, the Company earnswe earn inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accruesWe accrue for the receipt of these incentives as part of itsour inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While
42

management believes the Companywe will continue to receive consideration from vendors in 20202023 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist primarily of amounts due from vendors, prepaid expenses, debt securities, and income and other taxes receivable.

39
Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

Goodwill
The Company reviews itsWe review our goodwill annually for impairment in the fourth quarter, or sooner if circumstances indicate that the carrying amount may exceed fair value. The Company testsWe test goodwill for impairment at the reporting unit level, which is an operating segment or a level below an operating segment (a component). A component is a reporting unit if the component constitutes a business for which discrete financial information and operating results are available and management regularly reviews that information. However, the Companywe may aggregate two or more components of an operating segment into a single reporting unit if the components have similar economic characteristics.
To review goodwill at a reporting unit for impairment, the Companywe generally electselect to first assessesassess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Qualitative factors include adverse macroeconomic, industry or market conditions, cost factors, or financial performance. If the Company electswe elect not to perform a qualitative assessment or concludesconclude from itsour assessment of qualitative factors that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Companywe must perform a quantitative test to evaluate goodwill impairment.
To perform a quantitative test, the Company calculateswe calculate the fair value of the reporting unit and comparescompare that amount to the reporting unit's carrying value. The CompanyWe typically calculatescalculate the fair value by using a combination of a market approach and an income approach that is based on a discounted cash flow model. The assumptions used in the market approach generally include benchmark company market multiples and the assumptions used in the income approach generally include the projected cash flows of the reporting unit, which are based on projected revenue growth rates and operatingEBITDA margins, and the estimated weighted average costscost of capital, working capital and terminal value. The Company usesWe use inputs and assumptions it believeswe believe are consistent with those a hypothetical marketplace participantsparticipant would use. The Company recognizesWe recognize goodwill impairment (if any) as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
Refer to the goodwillGoodwill and other intangible assets footnoteOther Intangible Assets Footnote for further information on the results of the Company'sour annual goodwill impairment testing.
Long-Lived Assets Other Than Goodwill
The Company assesses itsWe assess our long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, the Company projectswe project undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. Impairment losses, if any, are measured based upon the difference between the carrying amount and the fair value of the assets. For the yearyears ended December 31, 2019, the Company2022, 2021, and 2020 we recognized long-lived asset impairments of $7,792losses related to certain assets expected to be abandoned in connection with the 2019 Cost Savings Plan (referimpairments and disposals of $17 million, $61 million, and $6 million, respectively. (Refer to the restructuring footnoteGoodwill and Other Intangible Assets Footnote and the Property, Plant and Equipment Footnote for more information). The Company also assessedinformation on the finite-lived, identifiable tangiblelosses that occurred in 2022 and intangible assets at the Business Products reporting unit for impairment under the undiscounted cash flows approach and concluded there was no impairment. NaN impairments were recognized in 2018 or 2017.2021, respectively).
Other Assets
Other assets consist primarily of cash surrender value of life insurance policies, equity method and other investments, guarantee fees receivable, and deferred compensation benefits.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and amortization are primarily determined on a straight-line basis over the following estimated useful lives of each asset: buildings, and improvements, 10 to 40 years; machinery and equipment, 5 to 15 years.years; and the shorter of lease term or useful life for leasehold improvements.
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Other Current Liabilities
Other current liabilities consist primarily of reservescurrent lease obligations, allowances for sales returns expected within the next year, accrued compensation, accrued customer incentives, accrued income and other taxes, and other reserves for expenses incurred.
Other Long-term Liabilities
Other long-term liabilities consist primarily of reservesallowances for sales returns expected after the next year, guarantee obligations, accrued taxes and other non-current obligations.

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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

Self-Insurance
The Company isWe are self-insured for the majority itsof our group health insurance costs. A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by the Company’sour claims administrators. These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.
Long-term insurance liabilities consist primarily of reserves for the Company'sour workers’ compensation program. In addition, the Company carries various large riskWe carry high deductible workers’ compensation policies for thea majority of workers’ compensationthese liabilities. The Company records the workers’ compensationWe record our reserves based on an analysis performed by an independent actuary. The analysis calculatesinvolves calculating loss development factors which are appliedand applying them to total reserves as providedsupplied by the variousour insurance companies who underwrite the program.providers. While the Company believes thatwe believe the assumptions used to calculatein these liabilitiescalculations are appropriate, significant differenceschanges in actual experience or significant changes in theseour assumptions maycould materially affect workers’the worker’s compensation costs.
Accumulated Other Comprehensive Loss
The following table presents the amounts that comprise accumulated other comprehensive loss ("AOCL") as well as the changes in those amounts by component for the years ended on December 31, 2019costs and 2018:
  
Changes in Accumulated Other Comprehensive
Loss by Component
  
Pension
Benefits
 Other Post-Retirement Benefits Cash Flow and Net Investment Hedges 
Foreign
Currency
Translation
 Total
Beginning balance, January 1, 2018 $(567,443) $(1,514) $(17,388) $(266,247) $(852,592)
Other comprehensive (loss) income before reclassifications, net of tax (85,677) 20
 26,563
 (233,235) (292,329)
Amounts reclassified from accumulated other comprehensive loss, net of tax 28,581
 (289) 1,551
 —
 29,843
Net current period other comprehensive (loss) income (57,096) (269) 28,114
 (233,235) (262,486)
Ending balance, December 31, 2018 (624,539) (1,783) 10,726
 (499,482) (1,115,078)
Other comprehensive income (loss) before reclassifications, net of tax 22,119
 1
 11,237
 3,545
 36,902
Amounts reclassified from accumulated other comprehensive loss, net of tax 22,646
 (333) 2,380
 34,701
 59,394
Net current period other comprehensive income (loss) 44,765
 (332) 13,617
 38,246
 96,296
Cumulative effect from adoption of ASU 2018-02 (122,526) —
 —
 —
 (122,526)
Ending balance, December 31, 2019 $(702,300) $(2,115) $24,343
 $(461,236) $(1,141,308)

The accumulated other comprehensive loss components related to the pension benefits are included in the computation of net periodic benefit income in the employee benefit plans footnote. The components related to the cash flow and net investment hedges are included in the derivatives and hedging footnote.reserves recorded.
Business Combinations
When the Company acquireswe acquire businesses, it applieswe apply the acquisition method of accounting and recognizesrecognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree at their fair values on the acquisition date, which requires significant estimates and assumptions. Goodwill is measured as the excess of the fair value of the consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method requires the Companyus to record provisional amounts for any items for which the accounting is not complete at the end of a reporting period. The CompanyWe must complete the accounting during the measurement period, which cannot exceed one year. Adjustments made during the measurement period could have a material impact on the Company'sour financial condition and results of operations.
The CompanyWe typically measuresmeasure customer relationshiprelationships and other intangible assets using an income approach. Significant estimates and assumptions used in this approach include discount rates and certain assumptions that form the basis of the forecasted cash

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Notes to Consolidated Financial Statements
December 31, 2019

flows expected to be generated from the asset (e.g., future revenue growth rates operating margins and attrition rates)EBITDA Margin). If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Companywe could record impairment charges. In addition, the Company haswe have estimated the economic lives of certain acquired tangible and intangible assets and these lives are used to calculate depreciation and amortization expense. If the Company'sour estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.
Legal and Product Liabilities
The Company accruesWe accrue for potential losses related to legal disputes, litigation, product liabilities, and regulatory matters when it is probable (more(the future event or events are likely than not)to occur) that the Companywe will incur a loss and the amount of the loss can be reasonably estimated.
The amount of the product liability amount reflects the Company’sour reasonable estimate of losses based upon currently known facts. To calculate the liability, the Company estimateswe estimate potential losses relating to pending claims and also estimates the likelihood of additional, similar claims being filed against the Companyus in the future. To estimate potential losses on claims that could be filed in the future, the Company considerswe consider claims pending against the Company,us, claim filing rates, the number of codefendants and the extent to which they share in settlements, and the amount of loss by claim type. The estimated losses for pending and potential future claims are calculated on a discounted basis using risk-free interest rates derived from market data about monetary assets with maturities comparable to those of the projected product liabilities. The Company usesWe use an actuarial specialist to assist with measuring itsour product liabilities.
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Fair Value Measurements
The carrying amounts reflectedFair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit and term loan approximate their respective fair valuesan orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Additionally, ASC 820, Fair Value Measurements, defines levels within a hierarchy based upon observable and non-observable inputs.
•Level 1- Observable inputs such as quoted prices in active markets;
•Level 2- Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3- Unobservable inputs in which there is little or no market data, which require the short-term nature of these instruments. reporting entity to develop its own assumptions
At December 31, 20192022 and 2018,2021, the fair value of fixed rate debtour senior unsecured notes was approximately $2,013,542$2.9 billion and $1,427,381, respectively. The fair value of fixed rate debt is$2.5 billion, respectively, which are designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) andhierarchy. Our valuation technique is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit riskprices and maturity. At December 31, 2019 and 2018, the carrying value of fixed rate debt, net of debt issuance costs, was $1,945,387 and $1,466,803, respectively, and is included in long-term and short-term debt in the consolidated balance sheets. other relevant information generated by observable transactions involving identical or comparable assets or liabilities.
Derivative instruments are recognized in the consolidated balance sheets at fair value and are designated as Level 2 in the fair value hierarchy. They are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.
Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analyses of goodwill, other intangible assets, and long-lived assets. These involve fair value measurements on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy (i.e.,hierarchy. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit approximate their respective fair values based on the short-term nature of these instruments.
Fair value measurement using unobservable pricing inputs is inherently uncertain, and the use of different methodologies or assumptions to determine the fair value instruments could result in which little ora different fair value measurement at the reporting date. There have been no market activity exists, therefore requiring an entity to develop its own assumptions aboutchanges in the assumptions that market participants would use in pricing an asset or liability).methodologies used since December 31, 2021.
Derivatives and Hedging
The Company isWe are exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, the Company useswe use derivative and non-derivative instruments as risk management tools to mitigate the potential impact of interest rate and foreign exchange rate risks. The objective of using these tools is to reduce fluctuations in the Company’sour earnings, cash flows and net investments in certain foreign subsidiaries associated with changes in these rates. Derivative financial instruments are not used for trading or other speculative purposes. The Company hasWe have not historically incurred, and doesdo not expect to incur in the future, any losses as a result of counterparty default related to derivative instruments.
The CompanyWe formally documentsdocument relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges to specific forecasted transactions or variability of cash flow to be paid. The CompanyWe also formally assesses,assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivative and non-derivative instruments that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. When a designated instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively.

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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

Shipping and Handling Costs
Shipping and handling costs are classified as selling, administrative and other expenses in the accompanying consolidated statements of income and comprehensive income and totaled approximately $420,000, $390,000,$407 million, $350 million, and $290,000,$302 million, for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively.
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Advertising Costs
Advertising costs are expensed as incurred and totaled $203,700, $204,700,$236 million, $211 million, and $166,000$194 million in the years ended December 31, 2022, 2021, and 2020, respectively.
Restructuring Costs
In October 2019, 2018,we approved certain restructuring actions (the "2019 Cost Savings Plan") across our subsidiaries primarily targeted at simplifying organizational structures and 2017, respectively.distribution networks. Among other things, the 2019 Cost Savings Plan resulted in workforce reductions and facility closures and consolidations. We executed a voluntary retirement program for our U.S. and Canadian subsidiaries in the fourth quarter of 2019 in connection with this plan. We incurred $50 million in costs for the plan in the year ended December 31, 2020. No further material costs have been incurred.
Accounting for Legal Costs
The Company’sWe expense legal costs expectedrelated to be incurred in connection with loss contingencies are expensed as such coststhey are incurred.
Share-Based Compensation
The Company maintainsWe maintain various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), performance awards, dividend equivalents and other share-based awards. SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of the Company’sour common stock on the date of exercise over the base value of the grant. The terms of such SARs require net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of the Company’sour common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to fivethree years and are expensed accordingly on a straight-line basis. Forfeitures are accounted for as they occur. The Company issuesWe issue new shares upon exercise or conversion of awards under these plans.
Income Taxes
The Company accountsWe account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amount and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. In addition, valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In making this determination, the Company considerswe consider all available positive and negative evidence including projected future taxable income, future reversals of existing temporary differences, recent financial operations and tax planning strategies.
The Company recognizesWe recognize a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.
Net Income from Continuing Operations per Common Share
Basic net income from continuing operations per common share is computed by dividing net income from continuing operations by the weighted average number of common shares outstanding during the year. The computation of diluted net income from continuing operations per common share includes the dilutive effect of stock options, stock appreciation rights and nonvested restricted stock awards options. Options to purchase approximately 210, 1,490,4 thousand, 186 thousand, and 1,9201.6 million shares of common stock ranging from $85 — $105$72 - $179 per share were outstanding at December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively. These options were excluded from the computation of diluted net income from continuing operations per common share because the options’ exercise prices were greater than the average market prices of common stock in each respective year.
Recent Accounting Pronouncements
Leases (Topic 842)
In February 2016,Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standard Updates (“ASUs”) to the FASB issued ASU 2016-02, Accounting Standards Codification (“ASC”). We consider the
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Leases, which, among other things, requires an entity
applicability and impact of all ASUs and any not listed below were assessed and determined to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, including operating leases. Expanded disclosures with additional qualitative and quantitative informationbe not applicable or are also required. ASU 2016-02 and its amendments were effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption was permitted.  
The Company adopted ASU 2016-02 and its amendments as of January 1, 2019 using the modified retrospective method and utilized the optional transition methodexpected to apply the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect

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Notes to Consolidated Financial Statements
December 31, 2019

an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term.
The Company's adoption of the standard resulted in a cumulative-effect adjustment to increase retained earnings by $4,797, net of taxes, as of January 1, 2019. The standard did not materially impact the Company's consolidated net income or liquidity. The standard did not have anminimal impact on debt-covenant compliance under the Company's current debt agreements.our consolidated financial statements.
Income Statement - Reporting Comprehensive Income (Topic 220)
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU permits a company to make a one-time election to reclassify stranded tax effects caused by the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The ASU also requires companies to disclose their accounting policies for releasing income tax effects from accumulated other comprehensive income. ASU 2018-02 was effective for periods beginning after December 15, 2018, with an election to adopt early. The Company adopted ASU 2018-02 as of January 1, 2019 and recognized an adjustment to increase retained earnings and to adjust accumulated other comprehensive loss by approximately $122,526.
Intangibles - Goodwill and Other (Topic 350)
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The ASU simplifies the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. ASU 2017-04 requires applying a one-step quantitative test and recording the amount of goodwill impairment as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. The Company adopted ASU 2017-04 as of October 1, 2019 and performed its annual evaluation of goodwill in accordance with this standard, which resulted in a goodwill impairment charge in 2019 of $81,968 related to the Company's Business Products reporting unit.
Financial Instruments - Credit Losses (Topic 220)326)
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. Among other things, the ASU and its amendments replace the incurred loss impairment model for receivables and certain other financial instrumentsloan guarantees with a current expected credit loss model. The new model measures impairment based on expected credit losses over the remaining contractual life of an asset, considering available information about the collectability of cash flows, past events, current conditions, and reasonable and supportable forecasts. Additional quantitative and qualitative disclosures are required. ASU 2016-13 is effective for periods beginning after December 15, 2019, with an option to adopt early. The Company plans to adopt the ASU and its amendments on January 1, 2020. On this date the Company currently expects to record an immaterial cumulative effect adjustment to reduce retained earnings as a result of the adoption. The adoption ofWe adopted ASU 2016-13 and its amendments is not expectedas of January 1, 2020, which included recognizing a cumulative-effect adjustment to have a significant impact on the Company's consolidated financial statements.reduce opening retained earnings by $11 million, net of taxes.
Compensation - Retirement BenefitsIncome Taxes (Topic 715)740)
In August 2018,December 2019, the FASB issued ASU 2018-14,2019-12, Changes toSimplifying the Disclosure RequirementsAccounting for Defined Benefit PlansIncome Taxes. . The updated accounting guidance modifiesremoves certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods. The guidance also simplifies the disclosure requirementsaccounting for employersfranchise taxes, transactions that sponsor defined benefit pensionresult in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or other postretirement plansrates in interim periods. The company adopted ASU 2019-12 as of January 1, 2021, and recognized a cumulative-effect adjustment to increase opening retained earnings by removing, adding and clarifying certain disclosures. These provisions must be applied retrospectively. ASU 2018-14 is effective for periods beginning after December 15, 2020, with an option to adopt early. The adoption of ASU 2018-14 is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures. The Company does not plan to early adopt the standard.$6 million.
Intangibles - Goodwill and Other - Internal-Use SoftwareLiabilities—Supplier Finance Programs (Subtopic 350-40)405-50)
In August 2018,September 2022, the FASB issued ASU 2018-15, 2022-04, Liabilities-Supplier Finance Programs. This standard requires disclosure of the key terms of outstanding supply chain finance programs and a rollforward of the related amounts due to vendors participating in these programs. The new standard does not affect the recognition, measurement or financial statement presentation of any amounts due. The ASU becomes effective January 1, 2023, except for the rollforward requirement, which becomes effective January 1, 2024.

2. Segment Data
Our reportable segments consist of the Automotive Parts Group ("Automotive") and Industrial Parts Group ("Industrial"). Within the reportable segments, certain of our operating segments are aggregated since they have similar economic characteristics, products and services, type and class of customers, and distribution methods.
Our Automotive segment distributes replacement parts (other than body parts) for substantially all makes and models of automobiles, trucks, and other vehicles.
Our Industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components and related parts and supplies.
Inter-segment sales are not significant. Segment profit for each industry segment is calculated as net sales less costs of goods sold, operating expenses, and certain non-operating expenses attributable to the segment (e.g., foreign currency), excluding general corporate expenses, net interest expense, intangible asset amortization, and other unallocated amounts that are primarily driven by corporate initiatives.. Approximately $472 million and $438 million of income before income taxes were generated in jurisdictions outside the U.S. for the years ended December 31, 2022, and 2021, respectively. Approximately $327 million of loss before income taxes was generated in jurisdictions outside the U.S. for the year ended December 31, 2020. Net sales and net property, plant and equipment by country relate directly to our operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.
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The following table presents a summary of our reportable segment financial information from continuing operations:
202220212020
Net sales:
Automotive$13,666,634 $12,544,131 $10,860,695 
Industrial8,429,339 6,326,379 5,676,738 
Total net sales$22,095,973 $18,870,510 $16,537,433 
Segment profit:
Automotive$1,191,674 $1,073,427 $867,743 
Industrial886,636 595,232 481,854 
Total segment profit$2,078,310 $1,668,659 $1,349,597 
Interest expense, net(73,886)(62,150)(91,048)
Corporate expense(269,364)(174,842)(149,754)
Intangible asset amortization(157,437)(103,273)(94,962)
Other unallocated costs(5,021)(128,048)(634,465)
Income before income taxes from continuing operations$1,572,602 $1,200,346 $379,368 
 The following table presents a summary of the other unallocated costs:
202220212020
Other unallocated costs:
Gain on sales of real estate (1)$102,803 $— $— 
Gain on insurance proceeds (2)1,507 3,862 13,448 
Product liability adjustment (3)(28,730)— — 
Product liability damages award (4)— (77,421)— 
Loss on software disposal (5)— (61,063)— 
Gain on equity investment (6)— 10,229 — 
Goodwill impairment charge (7)— — (506,721)
Restructuring costs and special termination costs (8)— — (50,019)
Realized currency and other divestiture losses (9)— — (11,356)
Inventory adjustment (10)— — (40,000)
Transaction and other costs (11)(80,601)(3,655)(39,817)
Total other unallocated costs$(5,021)$(128,048)$(634,465)
(1)Customer's AccountingAmount reflects a gain on the sale of real estate that had been leased to S.P. Richards.
(2)Amount reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.
(3)Amount to remeasure product liability for Implementation Costs Incurreda revised estimate of the number of claims to be incurred in future periods, among other assumptions.
(4)Amount reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a Cloud Computing Arrangement That Is2017 automotive product liability claim.
(5)Amount reflects a Service Contractloss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies.
(6). ASU No. 2018-15 alignsAmount relates to gains recognized upon remeasurement of certain equity investments to fair value upon acquiring the requirementsremaining equity of those entities.
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(7)Amount reflects a goodwill impairment charge related to our European reporting unit.
(8)Amount reflects restructuring and special termination costs related to the 2019 Cost Savings Plan. The costs are primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations.
(9)Amount reflects realized currency losses related to divestitures.
(10) Amount reflects a $40 million increase to cost of goods sold due to the correction of an immaterial error related to the accounting in prior years for capitalizing implementationconsideration received from vendors.
(11) Amount for 2022 primarily includes costs of $67 million associated with the January 3, 2022 acquisition and integration of KDG which includes a $17 million impairment charge. The impairment charge was driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Separately, this adjustment includes an $11 million loss related to an investment. Amount for 2021 include transaction and other costs related to acquisitions. For 2020, amount includes a $17 million loss on investment, $10 million of incremental costs associated with COVID-19 and costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred inrelating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things.
The following table presents a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop internal-use software. These provisions should be applied either retrospectively or prospectively to all implementation costs incurred after the datesummary of adoption. ASU 2018-15 is effective for periods beginning after December 15, 2019, with an option to adopt early. The adoption of ASU 2018-15 is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures. The Company does not plan to early adopt the standard.our reportable segment total assets:

20222021
Assets:
Automotive$8,755,363 $8,508,487 
Industrial2,474,392 1,909,053 
Corporate865,001 612,854 
Goodwill and other intangible assets4,400,623 3,321,708 
Total assets$16,495,379 $14,352,102 
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49

The following table presents a summary of select financial information by reportable segment from continuing operations:
202220212020
Depreciation and amortization:
Automotive$146,819 $143,052 $120,932 
Industrial29,670 24,100 16,315 
Corporate13,893 20,546 40,633 
Intangible asset amortization157,437 103,273 94,962 
Total depreciation and amortization$347,819 $290,971 $272,842 
Capital expenditures:
Automotive$235,182 $198,268 $133,523 
Industrial33,165 35,626 19,287 
Corporate71,285 32,242 692 
Total capital expenditures$339,632 $266,136 $153,502 
Net sales:
United States$14,965,462 $12,136,689 $10,863,348 
Europe3,071,964 2,908,156 2,408,913 
Canada1,960,227 1,779,663 1,526,202 
Australasia2,044,432 2,002,188 1,691,190 
Mexico53,888 43,814 47,780 
Total net sales$22,095,973 $18,870,510 $16,537,433 
Net property, plant and equipment:
United States$790,121 $750,267 $728,802 
Europe200,898 179,001 164,268 
Canada113,574 102,484 102,409 
Australasia220,839 201,971 165,596 
Mexico582 676 968 
Total net property, plant and equipment$1,326,014 $1,234,399 $1,162,043 
Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:
202220212020
North America:
Automotive$9,015,501 $8,103,896 $7,177,543 
Industrial7,964,076 5,856,270 5,259,787 
Total North America$16,979,577 $13,960,166 $12,437,330 
Australasia:
Automotive$1,579,169 $1,532,079 $1,274,239 
Industrial465,263 470,109 416,951 
Total Australasia$2,044,432 $2,002,188 $1,691,190 
Europe - Automotive$3,071,964 $2,908,156 $2,408,913 
Total net sales$22,095,973 $18,870,510 $16,537,433 

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50
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

2.3. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill during the years ended December 31, 20192022 and 20182021 by reportable segment, as well as other identifiable intangible assets, are summarized as follows:
 Goodwill
 AutomotiveIndustrialTotalOther Intangible Assets, Net
Balance as of January 1, 2021$1,505,523 $411,954 $1,917,477 $1,498,257 
Additions85,182 2,701 87,883 72,189 
Amortization— — — (103,273)
Foreign currency translation(83,243)(6,810)(90,053)(60,772)
Balance as of December 31, 20211,507,462 407,845 1,915,307 1,406,401 
Additions149,896 609,892 759,788 663,077 
Amortization— — — (157,437)
Impairments— — — (17,461)
Foreign currency translation(77,824)(9,158)(86,982)(82,070)
Balance as of December 31, 2022$1,579,534 $1,008,579 $2,588,113 $1,812,510 
 Goodwill  
 Automotive Industrial Business Products Total Other Intangible Assets, Net
Balance as of January 1, 2018$1,765,508
 $306,491
 $81,989
 $2,153,988
 $1,400,392
Additions55,371
 19,213
 —
 74,584
 164,348
Amortization—
 —
 —
 —
 (88,972)
Foreign currency translation(99,056) (707) (33) (99,796) (64,126)
Balance as of December 31, 20181,721,823
 324,997
 81,956
 2,128,776
 1,411,642
Additions194,561
 185,679
 —
 380,240
 340,799
Divestitures(294) (115,437) —
 (115,731) (90,692)
Amortization—
 —
 —
 —
 (97,459)
Impairments—
 —
 (81,968) (81,968) (2,194)
Foreign currency translation(18,595) 785
 12
 (17,798) 6,830
Balance as of December 31, 2019$1,897,495
 $396,024
 $—
 $2,293,519
 $1,568,926

The CompanyWe completed both qualitative and quantitativeour annual goodwill assessmentsimpairment testing as of October 1, 2019.2022 using a mixture of quantitative and qualitative assessments for our various reporting units. To complete a qualitative assessment, we evaluate historical revenue and operating profit growth trends, market conditions and other factors to determine whether it is more likely than not that the reporting unit's goodwill is impaired. We complete quantitative assessments for reporting units that fail our qualitative assessments, or otherwise on a periodic basis. To complete a quantitative assessment, we calculate a reporting unit's fair value using a combination of income and market approaches, which involve significant unobservable inputs (Level 3). In the income approach, we primarily use these assumptions: projected revenue growth rates, EBITDA margins, the estimated weighted average cost of capital, and terminal value. In the market approach, we primarily use benchmark company market multiples. We believe the inputs and assumptions we use are consistent with those a hypothetical marketplace participant would use. Once calculated, we verify whether the reporting unit's fair value is higher than its carrying amount. If the fair value is lower, we recognize an impairment, generally for the difference.
Based on these assessments, we did not recognize any goodwill impairments during 2022 or 2021. Due to severalseveral factors that developedcoalesced in the fourth second quarter of 2019, the Company2020, we performed an interim impairment test as of DecemberMay 31, 20192020 for itsBusiness Productsour European reporting unit and recorded a goodwill impairment charge of $81,968. As such, total$507 million.
If there are sustained declines in macroeconomic or business conditions in future periods affecting the projected earnings and cash flows at our reporting units, among other things, there can be no assurance that goodwill is net of $81,968 of accumulatedat one or more reporting units may not be impaired.
In June 2022, we recognized a $17 million non-cash impairment loss.
The factors that developed in the fourth quarter of 2019 at the Business Products reporting unit included: (i) greater uncertainty associated with long-term industry trends and the competitive environment and (ii) fourth quarter results, including segment profitability, that were below management expectations due primarilycharge related to a reduction in volume withour decision to retire certain national account customers. The Company performed a quantitative goodwill impairment testlegacy Industrial trade names, classified as of December 31, 2019 and concluded that the full amount of goodwill allocatedother intangible assets, prior to the Business Products reporting unit was impaired. The Company determined that the fair values of its remaining reporting units are in excessend of their carrying amountsestimated useful lives as part of the KDG integration and there were norebranding strategy. We evaluate other intangible assets for potential impairment indicators that goodwill was impaired.annually, or more frequently if circumstances change.
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Other Intangible Assets
The gross carrying amounts and accumulated amortization relating to other intangible assets at December 31, 20192022 and 20182021 are as follows:
 2019 2018
 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net
Customer relationships$1,556,579
 $(310,043) $1,246,536
 $1,356,353
 $(267,818) $1,088,535
Trademarks362,543
 (40,504) 322,039
 355,117
 (32,755) 322,362
Non-competition agreements5,288
 (4,937) 351
 5,009
 (4,264) 745
 $1,924,410
 $(355,484) $1,568,926
 $1,716,479
 $(304,837) $1,411,642


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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

 20222021
 Gross Carrying AmountAccumulated AmortizationNetGross Carrying AmountAccumulated AmortizationNet
Customer relationships$2,121,171 $(566,111)$1,555,060 $1,590,733 $(464,198)$1,126,535 
Trademarks342,136 (85,188)256,948 337,802 (58,073)279,729 
Non-competition agreements5,575 (5,073)502 5,430 (5,293)137 
$2,468,882 $(656,372)$1,812,510 $1,933,965 $(527,564)$1,406,401 
Amortization expense for other intangible assets totaled $97,459, $88,972,$157 million, $103 million, and $51,993$95 million for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively. Estimated other intangible assets amortization expense for the succeeding five years is as follows:
2023$145,357 
2024131,443 
2025130,103 
2026128,508 
2027127,706 
$663,117 
2020$98,193
202197,867
202297,757
202397,023
202496,085
 $486,925

3.4. Property, Plant and Equipment
Property, plant and equipment as of December 31, 20192022 and December 31, 2018,2021, consisted of the following:
20222021
Land$115,845 $126,513 
Buildings and leasehold improvements834,786 873,912 
Machinery, equipment and other1,811,060 1,573,680 
Property, plant and equipment, at cost2,761,691 2,574,105 
Less: accumulated depreciation1,435,677 1,339,706 
Property, plant and equipment, net$1,326,014 $1,234,399 
  2019 2018
Land $128,353
 $105,960
Buildings 789,359
 724,781
Machinery, equipment and other 1,580,023
 1,389,184
Property, plant and equipment, at cost 2,497,735
 2,219,925
Less: accumulated depreciation 1,282,952
 1,192,694
Property, plant and equipment, net $1,214,783
 $1,027,231
During the third quarter of 2021, we reconsidered our approach to an internally developed software project due to a change in management strategy related to advances in alternative technologies. We decided to dispose of the software project as of September 30, 2021. As a result, we recognized $61 million of selling, administrative and other expense related to the disposal of this software.
During the second quarter of 2022, we recognized a $103 million gain on the sale of real estate that had been leased to S.P. Richards Company ("SPR"). Refer to the discontinued operations section of the Acquisitions, Divestitures and Discontinued Operations Footnote for additional information regarding the divestiture of our business products group.
5. Accounts Receivable Sales Agreement
We have an A/R sales agreement to sell short-term receivables from certain customer trade accounts to an unaffiliated financial institution on a revolving basis. The A/R Sales Agreement has a 3 year term, which we intend to renew.
52

4. Credit FacilitiesAs part of the A/R Sales Agreement, we routinely sell designated pools of receivables as they are originated by it and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”). The assets of the SPE would be first available to satisfy the creditor claims of the unaffiliated financial institution. We control and therefore consolidate the SPE in our consolidated financial statements.
The principal amountsSPE transferred ownership and control of certain receivables that met certain qualifying conditions to the unaffiliated financial institution in exchange for cash. We account for transactions with the unaffiliated financial institution as sales of financial assets, with the associated receivables derecognized from our consolidated balance sheet. The remaining receivables held by the SPE were pledged to secure the collectability of the Company’s borrowings subject to variable rates (after considerationsold receivables. The amount of hedging arrangements) totaled approximately $554,902 and $1,176,477 atreceivables pledged as collateral as of December 31, 20192022 and 2018,December 31, 2021 is approximately $1.1 billion and $973 million, respectively.
We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institution by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institution so that the total principal amount outstanding of receivables sold is approximately $1.0 billion at any point in time (which is the maximum amount allowed under the agreement). The future amount of receivables outstanding as sold could decrease, based on the level of activity and other factors. Total principal amount outstanding of receivables sold is approximately $1.0 billion and $800 million as of December 31, 2022 and December 31, 2021, respectively.
The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of period end:
December 31, 2022December 31, 2021
Receivables sold to the financial institution and derecognized$8,946,730 $7,520,474 
Cash collected on sold receivables$8,746,740 $7,520,465 
Continuous cash activity related to the A/R Sales Agreement is reflected in cash from operating activities in the consolidated statement of cash flows. We received a benefit to cash from operations of approximately $200 million from increasing the amount of receivables sold under the A/R Sales Agreement in the year ended December 31, 2022.
The SPE incurs fees due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which totaled $27 million, $11 million, and $6 million in 2022, 2021, and 2020, respectively, are recorded within other non-operating expense (income) in the consolidated statements of income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institution any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of December 31, 2022 and December 31, 2021 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.
6. Debt
The weighted average interest rate on the Company’sour outstanding borrowings was approximately 2.18%2.33% and 2.71%2.35% at December 31, 20192022 and 2018,2021, respectively.
The Company entered into long-term fixed rate debt private placement agreements of €250,000 and Australian dollar ("A$") A$310,000 on May 31, 2019 and June 30, 2019, respectively. The rates of interest and maturity dates related to these agreements are included in the table below.
Certain borrowings require the Companyus to comply with a financial covenant with respect to a maximum debt to EBITDA ratio. At December 31, 2019, the Company was2022, we were in compliance with all such covenants. Due to the workers’ compensation and insurance reserve requirements in certain states, the Companywe also had unused letters of credit of approximately $65,322$71 million and $63,504$73 million outstanding at December 31, 20192022 and 2018,2021, respectively.

On January 6, 2022, we issued $500 million of unsecured 1.75% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.75% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022. We utilized the proceeds from these offerings to repay borrowings under our Revolving Credit Facility, which were incurred to finance a significant portion of the Kaman Distribution Group ("KDG") acquisition.
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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

Amounts outstanding under the Company’sour credit facilities, net of debt issuance costs consist of the following:
  December 31,
  2019 2018
Unsecured Revolving Credit Facility, $1,500,000, LIBOR plus 1.50% variable, due October 30, 2022 $477,873
 $604,383
Unsecured Term Loan A, $1,100,000, LIBOR plus 1.50% variable, due October 30, 2022 962,500
 1,045,000
Unsecured term notes:    
July 29, 2016, Series G Senior Unsecured Notes, $50,000, 2.64% fixed, due July 29, 2021 50,000
 50,000
December 2, 2013, Series F Senior Unsecured Notes, $250,000, 3.24% fixed, due December 2, 2023 250,000
 250,000
June 30, 2019, Series A Senior Unsecured Notes, A$155,000, 3.10% fixed, due June 30, 2024 108,422
 —
October 30, 2017, Series J Senior Unsecured Notes, €225,000, 1.40% fixed, due October 30, 2024 252,000
 257,468
June 30, 2019, Series B Senior Unsecured Notes, A$155,000, 3.43% fixed, due June 30, 2026 108,422
 —
November 30, 2016, Series H Senior Unsecured Notes, $250,000, 3.24% fixed, due November 30, 2026 250,000
 250,000
October 30, 2017, Series K Senior Unsecured Notes, €250,000, 1.81% fixed, due October 30, 2027 280,000
 286,075
October 30, 2017, Series I Senior Unsecured Notes, $120,000, 3.70% fixed, due October 30, 2027 120,000
 120,000
May 31, 2019, Series A Senior Unsecured Notes, €50,000, 1.55% fixed, due May 31, 2029 56,000
 —
October 30, 2017, Series L Senior Unsecured Notes, €125,000, 2.02% fixed, due October 30, 2029 140,000
 143,038
May 31, 2019, Series B Senior Unsecured Notes, €100,000, 1.74% fixed, due May 31, 2031 112,000
 —
October 30, 2017, Series M Senior Unsecured Notes, €100,000, 2.32% fixed, due October 30, 2032 112,000
 114,430
May 31, 2019, Series C Senior Unsecured Notes, €100,000, 1.95% fixed, due May 31, 2034 112,000
 —
Other unsecured debt 40,340
 27,093
Total unsecured debt 3,431,557
 3,147,487
Unamortized debt issuance costs (5,458) (4,207)
Total debt 3,426,099
 3,143,280
Less debt due within one year 624,043
 711,147
Long-term debt, excluding current portion $2,802,056
 $2,432,133


December 31, 2022December 31, 2021
Unsecured Revolving Credit Facility, $1,500,000, LIBOR plus 1.13% variable, due September 30, 2026$— $— 
January 6, 2022, Senior Unsecured Notes, $500,000, 1.75% fixed, due February 1, 2025500,000 — 
January 6, 2022, Senior Unsecured Notes, $500,000, 2.75% fixed, due February 1, 2032500,000 — 
October 27, 2020, Senior Unsecured Notes, $500,000, 1.88% fixed, due November 1, 2030500,000 500,000 
December 2, 2013, Series F Senior Unsecured Notes, $250,000, 3.24% fixed, due December 2, 2023250,000 250,000 
June 30, 2019, Series A Senior Unsecured Notes, A$155,000, 3.10% fixed, due June 30, 2024105,664 112,375 
October 30, 2017, Series J Senior Unsecured Notes, €225,000, 1.40% fixed, due October 30, 2024240,840 254,835 
June 30, 2019, Series B Senior Unsecured Notes, A$155,000, 3.43% fixed, due June 30, 2026105,664 112,375 
November 30, 2016, Series H Senior Unsecured Notes, $250,000, 3.24% fixed, due November 30, 2026250,000 250,000 
October 30, 2017, Series K Senior Unsecured Notes, €250,000, 1.81% fixed, due October 30, 2027267,600 283,150 
October 30, 2017, Series I Senior Unsecured Notes, $120,000, 3.70% fixed, due October 30, 2027120,000 120,000 
May 31, 2019, Series A Senior Unsecured Notes, €50,000, 1.55% fixed, due May 31, 202953,520 56,630 
October 30, 2017, Series L Senior Unsecured Notes, €125,000, 2.02% fixed, due October 30, 2029133,800 141,575 
May 31, 2019, Series B Senior Unsecured Notes, €100,000, 1.74% fixed, due May 31, 2031107,040 113,260 
October 30, 2017, Series M Senior Unsecured Notes, €100,000, 2.32% fixed, due October 30, 2032107,040 113,260 
May 31, 2019, Series C Senior Unsecured Notes, €100,000, 1.95% fixed, due May 31, 2034107,040 113,260 
Other unsecured debt2,977 840 
Total unsecured debt3,351,185 2,421,560 
Unamortized debt issuance costs(12,236)(8,041)
Unamortized discounts(10,126)(4,156)
Total debt3,328,823 2,409,363 
Less debt due within one year252,029 — 
Long-term debt, excluding current portion$3,076,794 $2,409,363 
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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

Approximate maturities under the Company’sour credit facilities net of debt issuance costs, are as follows:
2020$624,043
2021189,573
2022713,952
2023249,240
2024359,898
Thereafter1,289,393
 $3,426,099

2023$252,029 
2024347,452 
2025500,000 
2026355,664 
2027387,600 
Thereafter1,508,440 
$3,351,185 
5.7. Derivatives and Hedging
The following table summarizes the location and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships:
    December 31, 2019 December 31, 2018
Instrument Balance sheet location Notional Balance Notional Balance
Cash flow hedges:          
Interest rate swaps Other current liabilities $800,000
 $24,792
 $500,000
 $6,345
Net investment hedges:          
Cross-currency swap Prepaid expenses and other current assets $—
 $—
 $500,000
 $6,006
Forward contracts Prepaid expenses and other current assets $925,810
 $39,965
 $—
 $—
Foreign currency debt Long-term debt €700,000
 $784,000
 €700,000
 $801,010

Cash FlowNet Investment Hedges
The Company uses interest rate swaps to mitigate variability in forecasted interest payments on a portion of the Company’s U.S. dollar-denominated unsecured variable rate debt. The interest rate swaps effectively convert a portion of the floating rate interest payment into a fixed rate interest payment. The Company designates the interest rate swaps as qualifying hedging instruments and accounts for them as cash flow hedges. Gains and losses from fair value adjustments on the cash flow hedges are initially classified in accumulated other comprehensive loss and are reclassified to interest expense on the dates interest payments are accrued.
Hedges of Net Investments in Foreign Operations
The Company hasWe have designated certain derivative instruments and a portion of itsour foreign currency denominated debt, a non-derivative financial instrument, as hedges of the foreign currency exchange rate exposure of the Company'sour Euro-denominated net investment in a European subsidiary. The Company appliesWe apply the spot method to assess the hedge effectiveness of the derivative instruments and this assessment for each instrument excludes the initial value related to the difference at contract inception between the foreign exchange spot rate and the forward rate (i.e., the forward points). The initial value of this excluded component is recognized as a reduction to interest expense in a systematic and rational manner over the term of the derivative instrument. All other changes in value for the net investment hedges are included in accumulated other comprehensive lossAOCL within foreign currency translation and would only be reclassified to earnings if the European subsidiary were liquidated, or otherwise disposed. Upon settlement, the cash paid or received generally is reflected in investing activities in the statement of cash flows.

The following table summarizes the location and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships:
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Table of Contents
December 31, 2022December 31, 2021
InstrumentBalance sheet locationNotionalBalanceNotionalBalance
Net investment hedges:
Forward contractsPrepaid expenses and other current assets$606,950 $46,670 $925,810 $73,819 
Forward contractsOther current liabilities$106,800 $3,064 $235,180 $2,935 
Foreign currency debtLong-term debt€700,000 $749,280 €700,000 $792,820 
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The table below presents pre-tax gains and losses related to designated cash flow hedges and net investment hedges:
Gain (Loss) Recognized in AOCL Before ReclassificationsGain Recognized in Interest Expense For Excluded Components
202220212020202220212020
Year Ended December 31,
Cash Flow Hedges:
Interest rate contract$— $— $(29,464)$— $— $— 
Net Investment Hedges:
Forward contracts103,240 56,362 (85,390)27,923 26,295 27,146 
Foreign currency debt43,540 68,250 (77,070)— — — 
Total$146,780 $124,612 $(191,924)$27,923 $26,295 $27,146 
  Gain (Loss) Recognized in AOCL Before Reclassifications Gain Recognized in Interest Expense For Excluded Components
  2019 2018 2017 2019 2018 2017
Year Ended December 31,            
Cash Flow Hedges:            
Interest rate contract $(21,972) $(7,896) $—
 $—
 $—
 $—
Net Investment Hedges:            
Cross-currency swap 2,936
 6,006
 —
 2,294
 6,740
 —
Forward contracts 20,679
 —
 —
 17,892
 —
 —
Foreign currency debt 17,010
 38,850
 (27,099) —
 —
 —
Total $18,653
 $36,960
 $(27,099) $20,186
 $6,740
 $—
55

Amounts reclassified from accumulated other comprehensive loss to interest expense for the periods presented were not material.
6.8. Leased Properties
The CompanyWe primarily leaseslease real estate for certain retail stores, branches, distribution centers, office space and land. The CompanyWe also leaseslease equipment (primarily vehicles).
Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company'sour discretion. The Company evaluatesWe evaluate renewal options at lease inception and on an ongoing basis, and includesinclude renewal options that it iswe are reasonably certain to exercise in itsthe expected lease terms when classifying leases and measuring lease liabilities. We elected a policy of not recording leases on the consolidated balance sheets when the leases have a term of 12 months or less and we are not reasonably certain to elect an option to purchase the leased asset. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.
The table below presents the locations of the operating lease assets and liabilities on the consolidated balance sheets as of December 31, 2019:sheets:
  Balance Sheet Line Item December 31, 2019
Operating lease assets Operating lease assets $1,075,969
     
Operating lease liabilities:    
Current operating lease liabilities Other current liabilities $270,731
Noncurrent operating lease liabilities Operating lease liabilities 825,567
Total operating lease liabilities   $1,096,298

Balance Sheet Line ItemDecember 31, 2022December 31, 2021
Operating lease assetsOperating lease assets$1,104,678 $1,053,689 
Operating lease liabilities:
Current operating lease liabilitiesOther current liabilities$286,713 $280,575 
Noncurrent operating lease liabilitiesOperating lease liabilities$836,019 $789,175 
Total operating lease liabilities$1,122,732 $1,069,750 
The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.
The Company'sOur leases generally do not provide an implicit rate, and therefore the Company uses itswe use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Companywe would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The CompanyWe used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.
The Company'sOur weighted average remaining lease term and weighted average discount rate for operating leases as of December 31, 2019 are:
Weighted average remaining lease term (in years)5.68
Weighted average discount rate3.05%


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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

December 31, 2022December 31, 2021
Weighted average remaining lease term (in years)5.325.19
Weighted average discount rate2.51 %2.03 %
The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the consolidated balance sheets as of December 31, 2019:2022:
2023$325,370 
2024269,385 
2025198,100 
2026138,333 
202795,975 
Thereafter216,085 
Total undiscounted future minimum lease payments1,243,248 
Less: Difference between undiscounted lease payments and discounted operating lease liabilities120,516 
Total operating lease liabilities$1,122,732 
2020$301,325
2021251,433
2022192,936
2023138,929
202491,271
Thereafter221,033
Total undiscounted future minimum lease payments1,196,927
Less: Difference between undiscounted lease payments and discounted operating lease liabilities100,629
Total operating lease liabilities$1,096,298
56

OperatingFuture minimum lease payments include $55,055$53 million related to options to extend lease terms that are reasonably certain of being exercised. Future minimum lease payments exclude $165 million related to operating leases that have not yet commenced. These leases are expected to commence in 2023 and 2024 with lease terms of 3 to 25 years.
OperatingThe table below presents operating lease costs (as defined under ASU 2016-02) were $330,275 for the year ended December 31, 2019. and supplemental cash flow information related to leases:
202220212020
Operating lease costs$350,025 $336,228 $313,315 
Cash paid for amounts included in the measurement of operating lease liabilities$358,767 $340,243 $323,336 
Operating lease assets obtained in exchange for new operating lease liabilities$411,052 $358,393 $302,114 
Operating lease costs are included within selling, administrative and other expenses on the consolidated statements of income and comprehensive income. Short-term lease costs, variable lease costs and sublease income were not material for the periods presented.
Rental expense for operating leases (as defined prior to the adoption of ASU 2016-02) was approximately $366,000 and $306,000 for 2018 and 2017, respectively.
Cash paid for amounts included in the measurement of operating lease liabilities was $330,792 for the year ended December 31, 2019, and this amount is included in operating activities in the consolidated statements of cash flows. Operating lease assets obtained in exchange for new operating lease liabilities were $373,779 for the year ended December 31, 2019.
7. Share-Based Compensation
At December 31, 2019, total compensation cost related to nonvested awards not yet recognized was approximately $38,000. The weighted-average period over which this compensation cost is expected to be recognized is approximately two years. The aggregate intrinsic value for SARs and RSUs outstanding at December 31, 2019 and 2018 was approximately $132,700 and $97,800, respectively. The aggregate intrinsic value for SARs and RSUs vested totaled approximately $58,200 and $41,300 at December 31, 2019 and 2018, respectively. At December 31, 2019, the weighted-average contractual life for outstanding and exercisable SARs and RSUs was 4 years. Share-based compensation costs of $32,050, $20,716, and $16,892, were recorded for the years ended December 31, 2019, 2018, and 2017, respectively. The total income tax benefits recognized in the consolidated statements of income and comprehensive income for share-based compensation arrangements were approximately $8,700, $5,600, and $4,600 for 2019, 2018, and 2017, respectively. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2019, 2018, or 2017.
The fair value of RSUs is based on the price of the Company’s stock on the date of grant. The total fair value of RSUs vested during the years ended December 31, 2019, 2018, and 2017 were $26,200, $20,800, and $15,500, respectively. The Company did not grant SARs for the years ended December 31, 2019 and 2018. For the year ended December 31, 2017, the fair value of SARs granted were estimated using a Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 2.3%; dividend yield of 2.8%; annual historical volatility factor of the expected market price of the Company’s common stock of 19% for an average expected life of approximately 6 years.

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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

A summary of the Company’s share-based compensation activity and related information is as follows:
  2019
  Shares (1) Weighted Average Exercise Price (2)
Outstanding at beginning of year 3,650
 $85
Granted 395
 $—
Exercised (922) $76
Forfeited (98) $92
Outstanding at end of year (3) 3,025
 $88
Exercisable at end of year 2,190
 $87
Shares available for future grants 7,834
  
(1)Shares include RSUs.
(2)The weighted average exercise price excludes RSUs.
(3)
The exercise prices for SARs outstanding as of December 31, 2019 ranged from approximately $43 to $100. The weighted average remaining contractual life of all SARs outstanding is approximately five years.
The weighted average grant date fair value of SARs granted during 2017 was $13.89. The aggregate intrinsic value of SARs and RSUs exercised during the years ended December 31, 2019, 2018, and 2017 was $36,200, $32,600, and $16,800, respectively.
In 2019, the Company granted approximately 395 RSUs. In 2018, the Company granted approximately 360 RSUs. In 2017, the Company granted approximately 746 SARs and 171 RSUs.
A summary of the Company’s nonvested share awards activity is as follows:
Nonvested Share Awards (RSUs) Shares Weighted Average Grant Date Fair Value
Nonvested at January 1, 2019 563
 $91
Granted 395
 $100
Vested (216) $94
Forfeited (65) $94
Nonvested at December 31, 2019 677
 $95


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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

8. Income Taxes
Significant components of the Company’s deferred tax assets and liabilities are as follows:


 2019 2018
Deferred tax assets related to:    
Expenses not yet deducted for tax purposes $281,468
 $254,684
Operating lease liabilities 303,400
 —
Pension liability not yet deducted for tax purposes 261,909
 277,929
Capital loss 18,317
 11,944
Net operating loss 38,445
 29,785
  903,539
 574,342
Deferred tax liabilities related to:    
Employee and retiree benefits 215,815
 218,124
Inventory 93,440
 95,280
Operating lease assets 295,109
 —
Other intangible assets 333,935
 296,736
Property, plant and equipment 68,619
 72,463
Other 39,149
 32,978
  1,046,067
 715,581
Net deferred tax liability before valuation allowance (142,528) (141,239)
Valuation allowance (35,524) (26,095)
Total net deferred tax liability $(178,052) $(167,334)

The Company currently holds approximately $173,515 in net operating losses, of which approximately $122,212 will carry forward indefinitely. The remaining net operating losses of approximately $51,303 will begin to expire in 2024.
The components of income before income taxes are as follows:
  2019 2018 2017
United States $587,104
 $790,592
 $813,078
Foreign 243,196
 285,020
 196,190
Income before income taxes $830,300
 $1,075,612
 $1,009,268

The components of income tax expense are as follows:


 2019 2018 2017
Current:      
Federal $171,718
 $144,615
 $252,337
State 48,012
 39,326
 29,288
Foreign 60,417
 77,306
 44,896
Deferred:      
Federal (34,362) 15,167
 71,238
State (13,449) 5,770
 13,663
Foreign (23,121) (17,046) (18,911)
  $209,215
 $265,138
 $392,511


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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:


 2019 2018 2017
Statutory rate applied to income (1) $174,363
 $225,879
 $353,259
Plus state income taxes, net of Federal tax benefit 27,305
 35,626
 27,918
Taxation of foreign operations, net (2) (18,331) (7,639) (33,984)
U.S. tax reform - transition tax (3) 4,492
 4,875
 37,132
U.S. tax reform - deferred tax remeasurement (3) —
 424
 13,854
Foreign rate change - deferred tax remeasurement 6,215
 (1,461) (9,338)
Book tax basis difference in investment —
 (11,944) —
Valuation allowance 4,745
 20,505
 1,273
Other 10,426
 (1,127) 2,397
  $209,215
 $265,138
 $392,511

(1)U.S. statutory rates applied to income are as follows: 2019 and 2018 at 21%, 2017 at 35%.
(2)The Company's effective tax rate reflects the net benefit of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.
(3)Impact of the Tax Cuts and Jobs Act, enacted December 22, 2017.
The Company accounts for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.
The Company, or one of its subsidiaries, files income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2015 or subject to non-United States income tax examinations for years ended prior to 2013. The Company is currently under audit in the U.S. and some of its foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits. The Company does not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
  2019 2018 2017
Balance at beginning of year $18,428
 $14,697
 $15,190
Additions based on tax positions related to the current year 3,701
 2,034
 2,644
Additions for tax positions of prior years 620
 4,787
 1,511
Reductions for tax positions for prior years (965) (725) (430)
Reduction for lapse in statute of limitations —
 (2,338) (3,917)
Settlements (323) (27) (301)
Balance at end of year $21,461
 $18,428
 $14,697

The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2019 and 2018 was approximately $24,347 and $20,669, respectively, of which approximately $18,286 and $14,760, respectively, if recognized, would affect the effective tax rate.
During the years ended December 31, 2019, 2018, and 2017, the Company paid, received refunds, or accrued insignificant amounts of interest and penalties. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

As of December 31, 2019, the Company estimates that it has an outside basis difference in certain foreign subsidiaries of approximately $900,000, which includes the cumulative undistributed earnings from the Company's foreign subsidiaries. The Company continues to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.
9. Employee Benefit Plans
The Company’sOur defined benefit pension plans cover employees in the U.S., Canada, and Europe who meet eligibility requirements. The plan covering U.S. employees is noncontributory, and the Companywe implemented a hard freeze for the U.S. qualified defined benefit plan as of December 31, 2013. No further benefits were provided after this date for additional credited service or earnings, and all participants became fully vested as of December 31, 2013. The Canadian plan is contributory, and benefits are based on career average compensation. The Company’sOur funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. For the plans in the U.S. and Canada, the Companywe may increase itsour contribution above the minimum, if appropriate to itsour tax and cash position and the plans’ funded position. The European plans are funded in accordance with local regulations.
The CompanyWe also sponsorssponsor supplemental retirement plans covering employees in the U.S. and Canada. The Company usesWe use a measurement date of December 31 for itsour pension and supplemental retirement plans.
Several assumptions are used to determine the benefit obligations, plan assets, and net periodic income. The discount rate for the U.S. pension plan is calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments. The bond matching approach reflects the process that would be used to settle the pension obligations. The discount rate for non U.S. plans are set by using Willis Towers Watson's RATE:Link model. For each plan, this approach reflects yields available on high quality corporate bonds that would generate the cash flow necessary to pay the plan's benefits when due. The expected return on plan assets is based on a calculated market-related value of plan assets, where gains and losses on plan assets are amortized over a five year period and accumulate in other comprehensive income. Other non-investment unrecognized gains and losses are amortized in future net income based on a “corridor” approach, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year. The unrecognized gains and losses in excess of the corridor criteria are amortized over the average future lifetime or service of plan participants, depending on the plan. These assumptions are updated at each annual measurement date.
57

Changes in benefit obligations for the years ended December 31, 20192022 and 20182021 were:


 2019 2018
Changes in benefit obligation    
Benefit obligation at beginning of year $2,278,043
 $2,435,765
Service cost 9,558
 10,410
Interest cost 97,441
 88,247
Plan participants’ contributions 2,246
 2,466
Actuarial loss (gain) 246,352
 (122,556)
Foreign currency exchange rate changes 9,073
 (18,416)
Gross benefits paid (119,789) (118,643)
Plan amendments 3,327
 —
Curtailments (6,569) —
Settlements (67,831) —
Special termination costs 42,757
 —
Acquired plans 1,992
 770
Benefit obligation at end of year $2,496,600
 $2,278,043

20222021
Changes in benefit obligation
Benefit obligation at beginning of year$2,532,973 $2,678,966 
Service cost10,204 12,218 
Interest cost75,248 71,693 
Plan participants’ contributions1,892 1,908 
Actuarial gain(546,266)(87,966)
Foreign currency exchange rate changes(15,744)(1,184)
Gross benefits paid(135,907)(142,327)
Curtailments— (80)
Settlements(276)(255)
Acquired plans1,039 — 
Benefit obligation at end of year$1,923,163 $2,532,973 
The benefit obligations for the Company’sour U.S. pension plans included in the above were $2,228,066$1.7 billion and $2,055,701$2.2 billion at December 31, 20192022 and 2018,2021, respectively. The total accumulated benefit obligation for the Company’sour defined benefit pension plans in the U.S., Canada, and Europe was approximately $2,466,322$1.9 billion and $2,247,013$2.5 billion at December 31, 20192022 and 2018,2021, respectively.

For the U.S. pension plan, there was a net actuarial liability gain of $442 million and an asset loss of $581 million. The liability gain was comprised primarily of a $466 million gain due to discount rate changes. For the U.S. supplemental retirement plan, there was a net actuarial liability gain of $61 million comprised primarily of a $63 million gain due to discount rate changes.
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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The Company recorded $42,757 in special termination costs related to benefits provided through the Company's defined benefit plans to employees that accepted the voluntary retirement program ("VRP") as part of the Company's 2019 Cost Savings Plan. Refer to the restructuring footnote for more information.
The assumptions used to measure the pension benefit obligations for the plans at December 31, 20192022 and 2018,2021, were:
 2019 2018
Weighted average discount rate3.43% 4.36%
Rate of increase in future compensation levels3.13% 3.14%

20222021
Weighted average discount rate5.61 %3.04 %
Rate of increase in future compensation levels3.16 %3.13 %
Changes in plan assets for the years ended December 31, 20192022 and 20182021 were:
  2019 2018
Changes in plan assets    
Fair value of plan assets at beginning of year $2,043,379
 $2,206,479
Actual return on plan assets 427,597
 (86,418)
Foreign currency exchange rate changes 9,826
 (18,054)
Employer contributions 15,799
 57,549
Plan participants’ contributions 2,246
 2,466
Benefits paid (119,789) (118,643)
Settlements (67,831) —
Fair value of plan assets at end of year $2,311,227
 $2,043,379

20222021
Changes in plan assets
Fair value of plan assets at beginning of year$2,756,803 $2,545,359 
Actual return on plan assets(493,359)330,402 
Foreign currency exchange rate changes(15,599)80 
Employer contributions15,504 21,635 
Plan participants’ contributions1,892 1,908 
Benefits paid(135,907)(142,327)
Settlements(276)(254)
Fair value of plan assets at end of year$2,129,058 $2,756,803 
The fair values of plan assets for the Company’sour U.S. pension plans included in the above were $2,051,474$1.9 billion and $1,831,513$2.5 billion at December 31, 20192022 and 2018,2021, respectively.

58

For the years ended December 31, 20192022 and 2018,2021, the aggregate projected benefit obligation and aggregate fair value of plan assets for plans with projected benefit obligations in excess of plan assets were as follows:
20222021
Aggregate projected benefit obligation$208,939 $323,593 
Aggregate fair value of plan assets$— $47,445 


 2019 2018
Aggregate benefit obligation $298,565
 $2,106,348
Aggregate fair value of plan assets $39,672
 $1,863,245

For the years ended December 31, 20192022 and 2018,2021, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows:


 2019 2018
Aggregate accumulated benefit obligation $270,230
 $2,070,183
Aggregate fair value of plan assets $39,672
 $1,855,714

20222021
Aggregate accumulated benefit obligation$192,421 $247,277 
Aggregate fair value of plan assets$— $— 
The asset allocations for the Company’sour funded pension plans at December 31, 20192022 and 2018,2021, and the target allocation for 2020,2023, by asset category were:
 Target Allocation Percentage of Plan Assets at December 31
 20202019 2018
Asset Category     
Equity securities68% 70% 67%
Debt securities32% 30% 33%
 100% 100% 100%

 Target AllocationPercentage of Plan Assets at December 31
 202320222021
Asset Category
Equity securities58 %59 %57 %
Debt securities41 %41 %43 %
Other1 %— %— %
100 %100 %100 %

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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The Company’sOur benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. The plans in Europe are unfunded and, therefore, there are no plan assets. The pension plan strategy implemented by the Company’sour management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada as well as fiduciary standards. The long-term primary investment objectives for the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company’sOur investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (47% S&P 500 Index, 5% Russell Midcap Index, 7% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index,(38% US Large-cap stocks, 9% US Mid-cap stocks, 10% International stocks, 3% MSCI Emerging Market Net,stocks and 28%40% Barclays U.S. Long Govt/Credit)Gov/Credit Index).
The fair values of the plan assets as of December 31, 20192022 and 2018,2021, by asset category, are shown in the tables below. Various inputs are considered when determining the value of the Company’sour pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including the Company’sour own assumptions in determining the fair value of investments). Certain investments are measured at fair value using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy. 

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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes itswe believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year.
59
  2019
  Total Assets Measured at NAV 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Equity Securities          
Common stocks — mutual funds — equity $527,151
 $187,500
 $339,651
 $—
 $—
Genuine Parts Company common stock 214,418
 —
 214,418
 —
 ��
Other stocks 865,078
 —
 865,070
 —
 8
           
Debt Securities          
Short-term investments 34,516
 —
 34,516
 —
 —
Cash and equivalents 15,833
 —
 15,833
 —
 —
Government bonds 259,939
 —
 167,394
 92,545
 —
Corporate bonds 255,352
 —
 —
 255,352
 —
Asset-backed and mortgage-backed securities 9,316
 —
 —
 9,316
 —
Other-international 27,903
 —
 27,903
 —
 —
Municipal bonds 10,153
 —
 —
 10,153
 —
Mutual funds—fixed income 89,298
 89,298
 —
 —
 —
           
Other          
Cash surrender value of life insurance policies 2,270
 —
 —
 —
 2,270
Total $2,311,227
 $276,798
 $1,664,785
 $367,366
 $2,278


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Notes to Consolidated Financial Statements
December 31, 2019

 2022
TotalAssets Measured at NAVQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Observable Inputs
 (Level 2)		Significant Unobservable Inputs
(Level 3)
Equity Securities
Common stocks — mutual funds — equity$285,103 $48,521 $236,582 $— $— 
Genuine Parts Company common stock261,869 — 261,869 — — 
Other stocks711,830 — 711,830 — — 
Debt Securities
Short-term investments41,076 — 41,076 — — 
Cash and equivalents8,632 — 8,632 — — 
Government bonds344,787 — 411 344,376 — 
Corporate bonds412,896 — — 412,896 — 
Asset-backed and mortgage-backed securities9,925 — — 9,925 — 
Convertible Securities1,159 — — 1,159 — 
Other-international37,304 — 37,304 — — 
Municipal bonds14,442 — — 14,442 — 
Other
Options and Futures35 — 35 — — 
Total$2,129,058 $48,521 $1,297,739 $782,798 $— 
  2018
  Total Assets Measured at NAV 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Equity Securities          
Common stocks — mutual funds — equity $457,567
 $166,045
 $291,522
 $—
 $—
Genuine Parts Company common stock 193,810
 —
 193,810
 —
 —
Other stocks 713,924
 —
 713,882
 —
 42
           
Debt Securities          
Short-term investments 30,855
 —
 30,855
 —
 —
Cash and equivalents 14,583
 —
 14,583
 —
 —
Government bonds 223,750
 —
 159,483
 64,267
 —
Corporate bonds 227,616
 —
 —
 227,616
 —
Asset-backed and mortgage-backed securities 8,866
 —
 —
 8,866
 —
Other-international 29,471
 —
 29,126
 345
 —
Municipal bonds 8,747
 —
 —
 8,747
 —
Mutual funds—fixed income 131,755
 86,443
 —
 45,312
 —
           
Other          
Cash surrender value of life insurance policies 2,435
 —
 —
 —
 2,435
Total $2,043,379
 $252,488
 $1,433,261
 $355,153
 $2,477
60

 2021
TotalAssets Measured at NAVQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Equity Securities
Common stocks — mutual funds — equity$388,591 $64,669 $323,922 $— $— 
Genuine Parts Company common stock210,510 — 210,510 — — 
Other stocks971,020 — 971,020 — — 
Debt Securities
Short-term investments46,815 — 46,815 — — 
Cash and equivalents22,084 — 22,084 — — 
Government bonds425,877 — 4,513 421,364 — 
Corporate bonds598,216 — — 598,216 — 
Asset-backed and mortgage-backed securities12,894 — — 12,894 — 
Other-international61,008 — 46,133 14,875 — 
Municipal bonds19,621 — — 19,621 — 
Other
Cash surrender value of life insurance policies167 — 167 — — 
Total$2,756,803 $64,669 $1,625,164 $1,066,970 $— 

Equity securities include Genuine Parts Company common stock in the amounts of $214,418 (9%$262 million (12% of total plan assets) and $193,810 (9%$211 million (8% of total plan assets) at December 31, 20192022 and 2018,2021, respectively. Dividend payments received by the plan on Companycompany stock totaled approximately $6,156$5 million and $5,813$5 million in 20192022 and 2018,2021, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.
The changes in the fair value measurement of plan assets using significant unobservable inputs (Level 3) during 2019 and 2018 were not material.
Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’sour asset allocations and future expectations, the Company’sour expected rate of return on plan assets for measuring 20202023 pension income is 7.11%7.09% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’sour benefit obligations, using capital market data and historical relationships.
The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31:
  2019 2018
Other long-term asset $73,520
 $8,440
Other current liability (11,692) (9,213)
Pension and other post-retirement liabilities (247,201) (233,891)
  $(185,373) $(234,664)


20222021
Other long-term asset$414,834 $499,978 
Other current liability(12,537)(12,546)
Pension and other post-retirement liabilities(196,402)(263,602)
$205,895 $223,830 
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Notes to Consolidated Financial Statements
December 31, 2019

Amounts recognized in accumulated other comprehensive loss(loss) income consist of:
  2019 2018
Net actuarial loss $952,133
 $1,014,794
Prior service cost 9,343
 5,939
  $961,476
 $1,020,733

20222021
Net actuarial loss$682,884 $625,339 
Prior service cost7,273 7,958 
$690,157 $633,297 
The following table reflects the total benefits expected to be paid from the pension plans’ or the Company’sour assets. Of the pension benefits expected to be paid in 2020,2023, approximately $11,694$13 million is expected to be paid from employer assets. Expected employer contributions below reflect amounts expected to be contributed to funded plans. Information about the expected cash flows for the pension plans follows:
Employer contribution 
2020 (expected)$6,943
Expected benefit payments: 
2020$123,033
2021$130,333
2022$134,260
2023$138,539
2024$141,350
2025 through 2029$737,591

Employer contribution
2023 (expected)$4,449 
Expected benefit payments:
2023$138,411 
2024$140,826 
2025$143,591 
2026$145,953 
2027$147,677 
2027 through 2030$736,560 
Net periodic benefit income included the following components:


 2019 2018 2017
Service cost $9,558
 $10,410
 $8,459
Interest cost 97,441
 88,247
 96,651
Expected return on plan assets (154,137) (154,006) (155,432)
Amortization of prior service credit (67) (147) (350)
Amortization of actuarial loss 31,000
 39,721
 38,034
Net periodic benefit income $(16,205) $(15,775) $(12,638)

202220212020
Service cost$10,204 $12,218 $12,105 
Interest cost75,248 71,693 83,732 
Expected return on plan assets(150,318)(153,822)(154,111)
Amortization of prior service cost691 690 692 
Amortization of actuarial loss37,065 49,897 39,613 
Net periodic benefit income$(27,110)$(19,324)$(17,969)
Service cost is recorded in selling, administrative and other expenses in the consolidated statements of income and comprehensive income while all other components except for special termination costs are recorded within other non-operating expenses (income). The special termination costs incurred in connection with the 2019 Cost Savings Plan are presented on their own line within non-operating expenses (income).Pension benefits also include amounts related to supplemental retirement plans.
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:
  2019 2018 2017
Current year actuarial (gain) loss $(33,677) $117,867
 $(27,672)
Recognition of actuarial loss (31,000) (39,721) (38,034)
Current year prior service cost 3,327
 —
 4,768
Recognition of prior service credit 67
 147
 350
Recognition of curtailment loss (155) —
 —
Other (50) —
 —
Total recognized in other comprehensive (loss) income $(61,488) $78,293

$(60,588)
Total recognized in net periodic benefit income and other comprehensive (loss) income $(77,693) $62,518
 $(73,226)


202220212020
Current year actuarial loss (gain)$97,412 $(264,547)$24,613 
Recognition of actuarial loss(37,065)(49,897)(39,613)
Recognition of prior service cost(691)(690)(692)
Recognition of curtailment (loss) gain— (5)435 
Other68 (29)— 
Total recognized in other comprehensive (loss) income$59,724 $(315,168)$(15,257)
Total recognized in net periodic benefit income and other comprehensive (loss) income$32,614 $(334,492)$(33,226)
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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit income in 2020 are as follows:
Actuarial loss$44,602
Prior service credit691
Total$45,293

The assumptions used in measuring the net periodic benefit income for the plans follow:
 2019 2018 2017
Weighted average discount rate4.36% 3.70% 4.26%
Rate of increase in future compensation levels3.14% 3.11% 3.15%
Expected long-term rate of return on plan assets7.12% 7.14% 7.80%

202220212020
Weighted average discount rate3.04 %2.72 %3.43 %
Rate of increase in future compensation levels3.13 %3.11 %3.13 %
Expected long-term rate of return on plan assets6.34 %6.88 %7.11 %
The Company has 1We have one defined contribution plan in the U.S. that covers substantially all of itsour domestic employees. Employees receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense was approximately $64,990$69 million in 2019, $62,3352022, $60 million in 2018,2021, and $58,186$55 million in 2017.2020.
10. Acquisitions, Divestitures and Discontinued Operations
Acquisitions
For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for acquired businesses are included in our consolidated statements of income beginning on their respective acquisition dates.
2022
We acquired several businesses for approximately $1.6 billion, net of cash acquired, during the year ended December 31, 2022. Approximately $1.3 billion was related to our Industrial segment, primarily the acquisition of KDG discussed further below, and $300 million was related to Automotive.
We recognized approximately $562 million of revenue, net of store closures, and $239 million of goodwill and other intangible assets related to our Automotive acquisitions during the year ended December 31, 2022. The other intangible assets acquired consisted of customer relationships of $76 million, trademarks of $9 million, and other intangibles of $4 million with weighted average amortization lives of 18, 15, and 3 years, respectively.
On January 3, 2022, the company, through its wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash, net of cash acquired of approximately $30 million. KDG contributed approximately 5% of net sales included in our consolidated statement of income from January 3, 2022 to December 31, 2022. The KDG acquisition was financed using a combination of borrowing under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement, and $109 million of cash.
The Company has a defined contribution plan that covers full-time Canadian employees after six months of employment and part-time employees upon meeting provincial minimum standards. Employees receive a matching contribution of 100%following table summarizes the fair values of the first 5%assets acquired and liabilities assumed at the acquisition date for the KDG acquisition as well as adjustments made when finalizing the acquisition accounting during the year ended December 31, 2022 (referred to as the "measurement period adjustments"). The measurement period adjustments primarily resulted from revisions to the valuation of inventory and intangible assets, deferred taxes, and long-term liabilities.

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As of January 3, 2022
Initial BalanceMeasurement Period AdjustmentsAs Adjusted
Trade accounts receivable$156,000 $— $156,000 
Merchandise inventories166,000 (14,000)152,000 
Prepaid expenses and other current assets39,000 (1,000)38,000 
Property, plant and equipment26,000 (2,000)24,000 
Operating lease assets49,000 (5,000)44,000 
Other assets1,000 — 1,000 
Other intangible assets574,000 (6,000)568,000 
Goodwill592,000 9,000 601,000 
Total assets acquired1,603,000 (19,000)1,584,000 
Trade accounts payable85,000 — 85,000 
Other current liabilities32,000 — 32,000 
Operating lease liabilities17,000 (1,000)16,000 
Deferred tax liabilities121,000 (13,000)108,000 
Other long-term liabilities39,000 (8,000)31,000 
Total liabilities assumed294,000 (22,000)272,000 
Net assets acquired$1,309,000 $3,000 $1,312,000 

The other intangible assets acquired included $527 million of customer relationship intangibles and a $41 million favorable trade name licensing agreement, with amortization lives of 17 and 1.5 years, respectively. The other intangible assets have a total weighted amortization life of 16 years. We used the multi-period excess earnings method under the income approach to measure KDG's customer relationships, which is sensitive to certain assumptions including discount rates and certain assumptions that form the basis for the forecasted results (e.g., future revenue growth rates and EBITDA margins). These assumptions are forward-looking in nature and are dependent on the future performance of the employees’ salary. Totalacquired business and could be affected by future economic and market conditions.
The goodwill was assigned to the Industrial segment and is attributable primarily to expected synergies and the assembled workforce. Approximately $261 million of the goodwill recognized as part of the acquisition was tax deductible.
For the twelve months ended December 31, 2022, approximately $5 million of inventory amortization step-up cost related to this acquisition was included in cost of goods sold. Further, $62 million of transaction and other one-time costs, inclusive of an impairment charge, were included in selling, administrative, and other expenses in the consolidated statements of income. Refer to the Goodwill and Other Intangible Assets Footnote for more information on the impairment charge.
If the KDG acquisition had occurred on January 1, 2021 and if its results of operations had been included in our consolidated results since that date, our unaudited pro forma consolidated statements of income would have reflected net sales of approximately $22.1 billion and $19.9 billion and net income on a per share diluted basis of $8.47 and $6.02 for the years ended December 31, 2022 and 2021, respectively. The pro forma information is not necessarily indicative of the results of operations that we would have reported had the transaction actually occurred at the beginning of this period, nor is it necessarily indicative of future results.
The adjustments to the pro forma amounts include, but are not limited to, applying our accounting policies, amortization related to fair value adjustments to intangible assets, one-time acquisition accounting adjustments, interest expense on acquisition related debt and debt not assumed, and any associated tax effects. The pro forma results do not include any cost savings or other synergies that may result from the acquisition.
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Earnings related to KDG included in our consolidated statement of income from January 3, 2022 to December 31, 2022 are impracticable to provide due to KDG’s ongoing integration into Motion, which commenced shortly after the acquisition date.
2021
We acquired several businesses for approximately $282 million, net of cash acquired, during the year ended December 31, 2021.
During the year ended December 31, 2021, we recognized approximately $220 million and $25 million of revenue, net of store closures, related to our 2021 Automotive and Industrial acquisitions, respectively. We recorded approximately $160 million of goodwill and other intangible assets associated with the 2021 acquisitions. Other intangible assets acquired consisted of customer relationships with a weighted average amortization life of 20 years.
We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting during the year ended December 31, 2021.
2020
We acquired several businesses for approximately $86 million, net of cash acquired, during the year ended December 31, 2020.
Divestitures
We received proceeds from divestitures of businesses totaling $34 million, $18 million and $387 million during the years ended December 31, 2022, 2021 and 2020, respectively.
Discontinued Operations
Business Products Group
Effective June 30, 2020, we completed the divestiture of our Business Products Group by selling Supply Source Enterprises, Inc. ("SSE") and SPR in separate transactions. These divestitures were part of our long-term strategic initiative to streamline our operations and optimize our portfolio so that we can drive shareholder value by focusing on our global Automotive and Industrial businesses. The Business Products Group was previously a reportable segment of the company. These divestitures, together with prior period divestitures of Garland C. Norris (effective December 13, 2019), SPR Canada (effective January 1, 2020) and Safety Zone Canada (effective March 2, 2020), represented a single plan expenseto exit the Business Products Group segment and was considered a strategic shift that had a major effect on our operations and financial results. Therefore, the results of operations, financial position and cash flows for the Business Products Group were reported as discontinued operations for all periods presented.
Our results of operations for discontinued operations were:
Year Ended December 31,
202220212020
Net sales$— $— $846,944 
Cost of goods sold— — 632,007 
Gross profit— — 214,937 
Operating and non-operating expenses— — 179,461 
Loss on disposal— — 223,928 
Loss before income taxes— — (188,452)
Income taxes— — 4,045 
Net loss from discontinued operations$— $— $(192,497)
In December 2022, we came to an agreement to sell our remaining investment in SPR in connection with a pending acquisition of SPR by a third party. The acquisition closed and we sold our investment in SPR on January 31, 2023. Any remaining transition services will cease by June 30, 2023. As of December 31, 2022, we reduced the net carrying value of our SPR investment by $3 million to $55 million, which was reclassed from other assets to current
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assets on the consolidated balance sheet, and recognized a charge within non-operating expenses (income) on the consolidated statement of income for the three months ended December 31, 2022.
11. Share-Based Compensation
Share-based compensation costs of $38 million, $26 million, and $23 million, were recorded for the years ended December 31, 2022, 2021, and 2020, respectively. The total income tax benefits recognized in the consolidated statements of income for share-based compensation arrangements were approximately $10 million, $7 million, and $6 million for 2022, 2021, and 2020, respectively. At December 31, 2022, total compensation cost related to nonvested awards not yet recognized was approximately $4,433 in 2019$64 million. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2022, 2021, or 2020.
As of December 31, 2022, there were 6.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards.
A summary of our restricted stock units activity and $4,108 in 2018.related information is as follows:
Nonvested Share Awards (RSUs)SharesWeighted Average Grant Date Fair ValueWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Nonvested at beginning of year829 $98.25 
Granted506 $129.87 
Vested(276)$104.22 
Forfeited(65)$105.01 
Nonvested at end of year994 $110.45 1.4$172,409 
10. Guarantees
A summary of our stock appreciation rights activity and related information is as follows:
Stock Appreciation Rights (SARs)SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding at beginning of year634 $90.93 
Granted— $— 
Exercised(310)$89.22 
Forfeited(7)$89.27 
Outstanding at end of year317 $92.65 2.4$25,607 
Exercisable at end of year317 $92.65 2.4$25,607 

The Company guaranteesaggregate intrinsic value of SARs exercised and RSUs vested during the years ended December 31, 2022, 2021, and 2020 was $62 million, $73 million, and $14 million, respectively. The fair value of RSUs is based on the price of our stock on the date of grant for the years ended December 31, 2022 and 2021. The fair value of RSUs is based on the 60-day average price of our stock on the date of grant for the year ended December 31, 2020. The fair value of SARs is estimated using a Black-Scholes option pricing model. We ceased issuing SARs in 2017. The total fair value of SARs and RSUs vested during the years ended December 31, 2022, 2021, and 2020 were $29 million, $25 million, and $10 million, respectively.

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12. Accumulated Other Comprehensive Loss
The following tables present the changes in AOCL by component:
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2022$(463,227)$(15,042)$(379,470)$(857,739)
Other comprehensive (loss) before reclassifications(71,258)— (143,890)(215,148)
Amounts reclassified from accumulated other comprehensive loss27,875 12,470 — 40,345 
Net current period other comprehensive (loss)(43,383)12,470 (143,890)(174,803)
Ending balance, December 31, 2022$(506,610)$(2,572)$(523,360)$(1,032,542)
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2021$(692,868)$(30,007)$(313,627)$(1,036,502)
Other comprehensive income before reclassifications192,382 — (65,843)126,539 
Amounts reclassified from accumulated other comprehensive loss37,259 14,965 — 52,224 
Net current period other comprehensive income229,641 14,965 (65,843)178,763 
Ending balance, December 31, 2021$(463,227)$(15,042)$(379,470)$(857,739)
The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote. The nature of the cash flow hedges are discussed in the Derivatives and Hedging Footnote. Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.
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13. Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:
20222021
Deferred tax assets related to:
Expenses not yet deducted for tax purposes$312,445 $301,302 
Operating lease liabilities314,804 300,705 
Pension liability not yet deducted for tax purposes168,925 171,256 
Capital loss— 7,333 
Net operating loss49,787 48,865 
845,961 829,461 
Deferred tax liabilities related to:
Employee and retiree benefits225,947 235,847 
Inventory77,866 87,062 
Operating lease assets305,885 295,801 
Other intangible assets468,733 365,557 
Property, plant and equipment91,706 72,740 
Other38,597 18,176 
1,208,734 1,075,183 
Net deferred tax liability before valuation allowance(362,773)(245,722)
Valuation allowance(27,362)(34,227)
Total net deferred tax liability$(390,135)$(279,949)
We currently hold approximately $183 million in gross net operating losses, of which approximately $108 million will carry forward indefinitely. The remaining net operating losses of approximately $75 million will begin to expire in 2024.
The components of income before income taxes are as follows:
202220212020
United States$1,100,584 $762,472 $706,594 
Foreign472,018 437,874 (327,226)
Income before income taxes$1,572,602 $1,200,346 $379,368 
The components of income tax expense are as follows:
202220212020
Current:
Federal$196,634 $116,425 $130,680 
State70,453 34,311 35,474 
Foreign120,594 119,144 77,541 
Deferred:
Federal12,727 24,233 2,048 
State4,981 9,485 801 
Foreign(15,488)(2,042)(30,571)
$389,901 $301,556 $215,973 
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The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:
202220212020
Statutory rate applied to income (1)$330,246 $252,073 $79,667 
Plus state income taxes, net of Federal tax benefit59,593 34,599 28,658 
Taxation of foreign operations, net (2)3,347 2,299 (9,072)
Non-deductible goodwill impairment tax effect— — 106,411 
Foreign rate change - deferred tax remeasurement— 17,032 9,045 
Valuation allowance(7,153)(2,486)1,995 
Other3,868 (1,961)(731)
$389,901 $301,556 $215,973 
(1)U.S. statutory rates applied to income are as follows: 2022, 2021 and 2020 at 21%.
(2)Our effective tax rate reflects the impact of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.
We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.
We, or one of our subsidiaries, file income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2019 or subject to foreign income tax examinations for years ended prior to 2013. We are currently under audit in some of our state and foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits; however, we do not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
202220212020
Balance at beginning of year$19,501 $23,237 $21,461 
Additions based on tax positions related to the current year1,475 2,196 3,771 
Additions for tax positions of prior years89 156 3,480 
Reductions for tax positions for prior years(523)(733)(1,382)
Reduction for lapse in statute of limitations(921)(2,843)(3,765)
Settlements— (2,512)(328)
Balance at end of year$19,621 $19,501 $23,237 
The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2022 and 2021 was approximately $21 million and $20 million, respectively, of which approximately $19 million and $19 million, respectively, if recognized, would affect the effective tax rate.
During the tax years ended December 31, 2022, 2021 and 2020, we paid, received refunds, or accrued insignificant interest and penalties. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
As of December 31, 2022, we estimate that we have an outside basis difference in certain foreign subsidiaries of approximately $928 million, which includes the cumulative undistributed earnings from our foreign subsidiaries. We continue to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings,
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including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.
14. Guarantees
We guarantee the borrowings of certain independently controlled automotive parts stores (independents)and businesses (“independents”) and certain other affiliates in which the Company haswe have a noncontrolling equity ownership interest (affiliates)(“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have a controlling financial interestinterests through ownership of a majority voting interest in the independent. The Company hasindependents. We have no voting interest or other equity conversion rights in any of the independents. The Company doesWe do not control the independents or the affiliates but receivesreceive a fee for the guarantee. The Company hasguarantees. We have concluded that the independents are variable interest entities, but that the Company iswe are not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entity’sentities’ economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, the Companywe concluded that the affiliates are not variable interest entities. The Company’sOur maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee.our guarantees. While such borrowings of the independents and affiliates are outstanding, the Company iswe are required to maintain compliance with certain covenants, including a maximum debt to EBITDA ratio and certain limitations on additional borrowings.covenants. At December 31, 2019, the Company was2022, we were in compliance with all such covenants.
At December 31, 2019,2022, the total borrowings of the independents and affiliates subject to guarantee by the Companyus were approximately $904,662.$916 million. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents and affiliates that participate in the guarantee programs. In the event that the Company iswe are required to make payments in connection with guaranteed obligations of the independents or the affiliates, the Companythese guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantee. When it is deemed probable that the Company will incur a loss in connection with a guarantee,guarantees. We recognize a liability is recorded equal to this estimated loss.current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, the Company haswe have had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings.borrowings and the current expected credit loss reserve is not material. As of December 31, 2022, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
The Company hasWe have recognized certain assets and liabilities amounting to $90,000$67 million and $78,000$81 million for the guarantees related to the independents’ and affiliates’ borrowings at December 31, 20192022 and 2018,2021, respectively. These assets and liabilities are included in other assets and other long-term liabilities in the consolidated balance sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.
11.15. Commitments and Contingencies
Legal MattersBusiness Products Group
Effective June 30, 2020, we completed the divestiture of our Business Products Group by selling Supply Source Enterprises, Inc. ("SSE") and SPR in separate transactions. These divestitures were part of our long-term strategic initiative to streamline our operations and optimize our portfolio so that we can drive shareholder value by focusing on our global Automotive and Industrial businesses. The Company is subject to various legal proceedings, many involving routine litigation incidental to the businesses, including approximately 1,615 pending product liability lawsuits resulting from its national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributed by the Company.

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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The amounts accrued for product liabilities as of December 31, 2019 and 2018 were $146,230 and $141,203, respectively. While litigation of any type contains an element of uncertainty, the Company believes that its insurance coverage and its defense, and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary courseBusiness Products Group was previously a reportable segment of the Company’s businesscompany. These divestitures, together with prior period divestitures of Garland C. Norris (effective December 13, 2019), SPR Canada (effective January 1, 2020) and Safety Zone Canada (effective March 2, 2020), represented a single plan to exit the Business Products Group segment and was considered a strategic shift that resolution of these claims will not havehad a materialmajor effect on our operations and financial results. Therefore, the Company’s business, results of operations, or financial condition.
On April 17, 2017, a jury awarded damages against the Company of $81,500 in a litigated automotive product liability dispute.Through post-trial motionsposition and offsets from previous settlements, the initial verdict was reduced to $77,100. The Company believed the verdict was not supported by the facts or the law and was contrary to the Company’s role in the automotive parts industry. The Company challenged the verdict through an appeal to a higher court. On February 19, 2020, the higher court issued an order entirely reversing the jury’s finding on damages and ordering a new trial on damages.  Absent any further appeal, the matter will be remanded to the trial court for a new trial on damages only. At the time of the filing of these financial statements, based upon the Company’s legal defenses, insurance coverage, and reserves, the Company does not believe this matter will have a material impact to the consolidated financial statements.
Fire at S.P. Richards Headquarters and Distribution Center
On July 19, 2019, a fire occurred at the S.P. Richards headquarters in Atlanta, Georgia. The building primarily held the S.P. Richards headquarters office and was connected to its Atlanta distribution center. The Company maintains property and casualty loss insurance coverage. The Company expects to recover all losses on inventory, property, plant and equipment and other fire-related costs from insurance proceeds.
12. Acquisitions and Divestitures
Acquisitions
2019
The Company's cash used in acquisitions of businesses totaled $732,142, net of cash acquired, during the year ended December 31, 2019. In the Automotive Parts Group, the acquired businesses included all of its equity interests in Hennig Fahrzeugteile Group ("Hennig") in January 2019 and of PartsPoint Group in June 2019, which together generate estimated annual revenues of approximately $520,000, as well as several bolt-on acquisitions.
In the Industrial Parts Group, the Company acquired all of the equity interests in Axis New England and Axis New York ("Axis") in March 2019, which generate estimated annual revenue of approximately $55,000, and the remaining 65% equity investment in Inenco Group Pty Ltd ("Inenco") in July 2019. Inenco is one of Australasia's leading industrial distributors of key product categories such as bearings, power transmission and seals and it generates estimated annual revenues of approximately $400,000. Prior to the 65% acquisition, the Company accounted for its 35% investment in Inenco under the equity method of accounting. Upon acquisition the Company recognized the 35% investment at its acquisition-date fair value of $123,385. The difference between the acquisition-date fair value and the carrying amount of the equity method investment resulted in the recognition of a gain of $38,663on the acquisition date. The acquisition-date fair value was determined using a market and income approach with the assistance of a third party valuation firm. The gain is included in the line item "other" within non-operating (income) expenses on the consolidated statement of income and comprehensive incomeflows for the year ended December 31, 2019.Business Products Group were reported as discontinued operations for all periods presented.
The total acquisition date fair value of the consideration transferred for the businesses and of any previously held equity interests was $860,712, net of cash acquired of $16,591, and it consisted of the following:
  December 31, 2019
Cash $732,142
Fair value of 35% investment in Inenco held prior to business combination 123,385
Fair value of other investments held prior to business combination 5,185
Total $860,712

The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for the aggregate of these businesses. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations and tax accounting.

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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

  As of Acquisition Dates
Trade accounts receivable $148,543
Merchandise inventories 319,579
Prepaid expenses and other current assets 788
Intangible assets 340,799
Deferred tax assets 1,480
Property, plant and equipment 70,958
Operating lease assets 127,470
Other assets 20,318
Total identifiable assets acquired 1,029,935
Current liabilities 122,307
Long-term debt 164,662
Operating lease liabilities 61,626
Deferred tax liabilities 67,081
Other long-term liabilities 132,187
Total liabilities assumed 547,863
Net identifiable assets acquired 482,072
Noncontrolling interests in a subsidiary (1,600)
Goodwill 380,240
Net assets acquired $860,712

The acquired intangible assets of approximately $340,799 were provisionally assigned to customer relationships of $304,302, trademarks of $32,907, and other intangibles of $3,590 with weighted average amortization lives of 16.6, 21.7, and 5.0 years, respectively, for a total weighted average amortization life of 17.0 years. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets. 
The estimated goodwill recognized as part of the acquisitions is generally not tax deductible. The goodwill is attributable primarily to the expected synergies and assembled workforces of the acquired businesses.
TheOur results of operations for the acquired businesses were included in the Company’s consolidated statements of income and comprehensive income beginning on their respective acquisition dates.
2018discontinued operations were:
Year Ended December 31,
202220212020
Net sales$— $— $846,944 
Cost of goods sold— — 632,007 
Gross profit— — 214,937 
Operating and non-operating expenses— — 179,461 
Loss on disposal— — 223,928 
Loss before income taxes— — (188,452)
Income taxes— — 4,045 
Net loss from discontinued operations$— $— $(192,497)
In 2018, a significant portion of the businesses acquired included 20 businessesDecember 2022, we came to an agreement to sell our remaining investment in the Automotive Parts Group and 3 businessesSPR in the Industrial Parts Group.
The 20 Automotive Parts Group acquisitions generate estimated annual revenues of approximately $180,000. The acquisitions included TMS Motor Spares ("TMS") in August 2018 and Platinum International Group ("Platinum") in October 2018. TMS is a leading automotive parts distributor and operates 17 locations in Scotland and 7 locations in England. Platinum is a leading value-added battery distributor in the automotive, industrial, and leisure markets and operates 9 locations in the U.K. and 1 location in the Netherlands.
The 3 Industrial Parts Group acquisitions generate estimated annual revenues of approximately $100,000. The largest acquisition was Hydraulic Supply Company ("HSC") in October 2018, which operates 30 locations in the U.S. HSC is a full-service fluid power distributor,connection with a product offeringpending acquisition of hydraulic, pneumaticSPR by a third party. The acquisition closed and industrial components and systems.
For each acquisition,we sold our investment in SPR on January 31, 2023. Any remaining transition services will cease by June 30, 2023. As of December 31, 2022, we reduced the Company allocated the purchase pricenet carrying value of our SPR investment by $3 million to the$55 million, which was reclassed from other assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for the acquired businesses were included in the Company’s consolidated statements of income and comprehensive income beginning on their respective acquisition dates. The Company recorded approximately $167,000 of goodwill and other intangible assets associated with the 2018 acquisitions. Other intangible assets acquired consisted of customer relationships of $76,000 with weighted average amortization lives of 15 years.

to current
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Table of Contents
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

2017
In 2017, a significant portion of the businesses acquired included 12 businesses in the Automotive Parts Group and 3 businesses in the Industrial Parts Group. The aggregate purchase price for these 15 acquisitions was approximately $1,334,000, net of cash acquired. In 2017, the Company allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for the acquired companies were included in the Company’s consolidated statements of income and comprehensive income beginning on their respective acquisition dates. The Company recorded $1,926,000 of goodwill and other intangible assets associated with the 2017 acquisitions. Other intangible assets acquired in 2017, excluding AAG, consisted of customer relationships of $69,000 with weighted average amortization lives of 15 years.
Divestitures
2019
The Company received proceeds from divestitures of businesses totaling $434,609 during the year ended December 31, 2019. The divestitures are not considered strategic shifts that will have a major effect on the Company’s operations or financial results; therefore, they are not reported as discontinued operations. The Companyconsolidated balance sheet, and recognized losses totaling $41,499 related to these transactions during the year ended December 31, 2019, which includes realized currency losses of $34,701. These losses are included in the line item "other"a charge within non-operating expenses (income) on the consolidated statement of income for the three months ended December 31, 2022.
11. Share-Based Compensation
Share-based compensation costs of $38 million, $26 million, and comprehensive$23 million, were recorded for the years ended December 31, 2022, 2021, and 2020, respectively. The total income tax benefits recognized in the consolidated statements of income for share-based compensation arrangements were approximately $10 million, $7 million, and $6 million for 2022, 2021, and 2020, respectively. At December 31, 2022, total compensation cost related to nonvested awards not yet recognized was approximately $64 million. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2022, 2021, or 2020.
As of December 31, 2022, there were 6.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards.
A summary of our restricted stock units activity and related information is as follows:
Nonvested Share Awards (RSUs)SharesWeighted Average Grant Date Fair ValueWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Nonvested at beginning of year829 $98.25 
Granted506 $129.87 
Vested(276)$104.22 
Forfeited(65)$105.01 
Nonvested at end of year994 $110.45 1.4$172,409 

A summary of our stock appreciation rights activity and related information is as follows:
Stock Appreciation Rights (SARs)SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding at beginning of year634 $90.93 
Granted— $— 
Exercised(310)$89.22 
Forfeited(7)$89.27 
Outstanding at end of year317 $92.65 2.4$25,607 
Exercisable at end of year317 $92.65 2.4$25,607 

The aggregate intrinsic value of SARs exercised and RSUs vested during the years ended December 31, 2022, 2021, and 2020 was $62 million, $73 million, and $14 million, respectively. The fair value of RSUs is based on the price of our stock on the date of grant for the years ended December 31, 2022 and 2021. The fair value of RSUs is based on the 60-day average price of our stock on the date of grant for the year ended December 31, 2019.
Grupo Auto Todo
On March 7, 2019,2020. The fair value of SARs is estimated using a Black-Scholes option pricing model. We ceased issuing SARs in 2017. The total fair value of SARs and RSUs vested during the Company sold all of its equity in Grupo Auto Todo, a Mexican subsidiary within the Automotive Parts Group. Grupo Auto Todo contributed revenues of $15,900 for the yearyears ended December 31, 20192022, 2021, and 2020 were $29 million, $25 million, and $10 million, respectively.

66
$93,000
12. Accumulated Other Comprehensive Loss
The following tables present the changes in AOCL by component:
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2022$(463,227)$(15,042)$(379,470)$(857,739)
Other comprehensive (loss) before reclassifications(71,258)— (143,890)(215,148)
Amounts reclassified from accumulated other comprehensive loss27,875 12,470 — 40,345 
Net current period other comprehensive (loss)(43,383)12,470 (143,890)(174,803)
Ending balance, December 31, 2022$(506,610)$(2,572)$(523,360)$(1,032,542)
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2021$(692,868)$(30,007)$(313,627)$(1,036,502)
Other comprehensive income before reclassifications192,382 — (65,843)126,539 
Amounts reclassified from accumulated other comprehensive loss37,259 14,965 — 52,224 
Net current period other comprehensive income229,641 14,965 (65,843)178,763 
Ending balance, December 31, 2021$(463,227)$(15,042)$(379,470)$(857,739)
The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote. The nature of the cash flow hedges are discussed in the Derivatives and Hedging Footnote. Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.
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13. Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:
20222021
Deferred tax assets related to:
Expenses not yet deducted for tax purposes$312,445 $301,302 
Operating lease liabilities314,804 300,705 
Pension liability not yet deducted for tax purposes168,925 171,256 
Capital loss— 7,333 
Net operating loss49,787 48,865 
845,961 829,461 
Deferred tax liabilities related to:
Employee and retiree benefits225,947 235,847 
Inventory77,866 87,062 
Operating lease assets305,885 295,801 
Other intangible assets468,733 365,557 
Property, plant and equipment91,706 72,740 
Other38,597 18,176 
1,208,734 1,075,183 
Net deferred tax liability before valuation allowance(362,773)(245,722)
Valuation allowance(27,362)(34,227)
Total net deferred tax liability$(390,135)$(279,949)
We currently hold approximately $183 million in gross net operating losses, of which approximately $108 million will carry forward indefinitely. The remaining net operating losses of approximately $75 million will begin to expire in 2024.
The components of income before income taxes are as follows:
202220212020
United States$1,100,584 $762,472 $706,594 
Foreign472,018 437,874 (327,226)
Income before income taxes$1,572,602 $1,200,346 $379,368 
The components of income tax expense are as follows:
202220212020
Current:
Federal$196,634 $116,425 $130,680 
State70,453 34,311 35,474 
Foreign120,594 119,144 77,541 
Deferred:
Federal12,727 24,233 2,048 
State4,981 9,485 801 
Foreign(15,488)(2,042)(30,571)
$389,901 $301,556 $215,973 
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The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:
202220212020
Statutory rate applied to income (1)$330,246 $252,073 $79,667 
Plus state income taxes, net of Federal tax benefit59,593 34,599 28,658 
Taxation of foreign operations, net (2)3,347 2,299 (9,072)
Non-deductible goodwill impairment tax effect— — 106,411 
Foreign rate change - deferred tax remeasurement— 17,032 9,045 
Valuation allowance(7,153)(2,486)1,995 
Other3,868 (1,961)(731)
$389,901 $301,556 $215,973 
(1)U.S. statutory rates applied to income are as follows: 2022, 2021 and 2020 at 21%.
(2)Our effective tax rate reflects the impact of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.
We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.
We, or one of our subsidiaries, file income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2019 or subject to foreign income tax examinations for years ended prior to 2013. We are currently under audit in some of our state and foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits; however, we do not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
202220212020
Balance at beginning of year$19,501 $23,237 $21,461 
Additions based on tax positions related to the current year1,475 2,196 3,771 
Additions for tax positions of prior years89 156 3,480 
Reductions for tax positions for prior years(523)(733)(1,382)
Reduction for lapse in statute of limitations(921)(2,843)(3,765)
Settlements— (2,512)(328)
Balance at end of year$19,621 $19,501 $23,237 
The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2022 and 2021 was approximately $21 million and $20 million, respectively, of which approximately $19 million and $19 million, respectively, if recognized, would affect the effective tax rate.
During the tax years ended December 31, 2018.2022, 2021 and 2020, we paid, received refunds, or accrued insignificant interest and penalties. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
As of December 31, 2022, we estimate that we have an outside basis difference in certain foreign subsidiaries of approximately $928 million, which includes the cumulative undistributed earnings from our foreign subsidiaries. We continue to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings,
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EIS
Duringincluding the third quarteravailability of 2019,foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the Company approveddistribution of these earnings.
14. Guarantees
We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which we have a transaction to sell EIS,noncontrolling equity ownership interest (“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a wholly owned subsidiary withinmajority voting interest in the Industrial Parts Group. The transaction closed on September 30, 2019. EIS contributed revenuesindependents. We have no voting interest or equity conversion rights in any of $588,031the independents. We do not control the independents or the affiliates but receive a fee for the year endedguarantees. We have concluded that the independents are variable interest entities, but that we are not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entities’ economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, we concluded that the affiliates are not variable interest entities. Our maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to our guarantees. While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants. At December 31, 20192022, we were in compliance with all such covenants.
At December 31, 2022, the total borrowings of the independents and $817,249affiliates subject to guarantee by us were approximately $916 million. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents and affiliates that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, we have had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of December 31, 2022, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
We have recognized certain assets and liabilities amounting to $67 million and $81 million for the year endedguarantees related to the independents’ and affiliates’ borrowings at December 31, 2018.
Garland C. Norris & SPR Canada
During the fourth quarter of 2019, the Company approved a transaction to sell the2022 and 2021, respectively. These assets of Garland C. Norris ("GCN"), a wholly owned subsidiary within the Business Products Group. The transaction closed on December 13, 2019. On December 6, 2019, the Company also entered into a definitive agreement to sell all of the equity of SPR Canada, a subsidiaryand liabilities are included in other assets and other long-term liabilities in the Business Products Groupconsolidated balance sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and the transaction closed on January 1, 2020. These businesses contributed revenues of $66,705 for the year ended December 31, 2019they are distinct from our current expected credit loss reserve.
15. Commitments and $79,665 for the year ended December 31, 2018. Contingencies
2018
Business Products Group
On April 12, 2018,Effective June 30, 2020, we completed the Company entered into a definitive agreement with Essendant, Inc. ("Essendant") for Essendant to combine with the Company'sdivestiture of our Business Products Group by selling Supply Source Enterprises, Inc. ("SSE") and SPR in separate transactions. These divestitures were part of our long-term strategic initiative to streamline our operations and optimize our portfolio so that we can drive shareholder value by focusing on our global Automotive and Industrial businesses. The Business Products Group was previously a business combination transaction. The transaction wasreportable segment of the company. These divestitures, together with prior period divestitures of Garland C. Norris (effective December 13, 2019), SPR Canada (effective January 1, 2020) and Safety Zone Canada (effective March 2, 2020), represented a single plan to be structured as a Reverse Morris Trust, in which the Company would separateexit the Business Products Group intosegment and was considered a standalone companystrategic shift that had a major effect on our operations and spin off that standalone companyfinancial results. Therefore, the results of operations, financial position and cash flows for the Business Products Group were reported as discontinued operations for all periods presented.
Our results of operations for discontinued operations were:
Year Ended December 31,
202220212020
Net sales$— $— $846,944 
Cost of goods sold— — 632,007 
Gross profit— — 214,937 
Operating and non-operating expenses— — 179,461 
Loss on disposal— — 223,928 
Loss before income taxes— — (188,452)
Income taxes— — 4,045 
Net loss from discontinued operations$— $— $(192,497)
In December 2022, we came to an agreement to sell our remaining investment in SPR in connection with a pending acquisition of SPR by a third party. The acquisition closed and we sold our investment in SPR on January 31, 2023. Any remaining transition services will cease by June 30, 2023. As of December 31, 2022, we reduced the Company's shareholders, immediately followednet carrying value of our SPR investment by $3 million to $55 million, which was reclassed from other assets to current
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assets on the mergerconsolidated balance sheet, and recognized a charge within non-operating expenses (income) on the consolidated statement of income for the three months ended December 31, 2022.
11. Share-Based Compensation
Share-based compensation costs of $38 million, $26 million, and $23 million, were recorded for the years ended December 31, 2022, 2021, and 2020, respectively. The total income tax benefits recognized in the consolidated statements of income for share-based compensation arrangements were approximately $10 million, $7 million, and $6 million for 2022, 2021, and 2020, respectively. At December 31, 2022, total compensation cost related to nonvested awards not yet recognized was approximately $64 million. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2022, 2021, or 2020.
As of December 31, 2022, there were 6.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards.
A summary of our restricted stock units activity and related information is as follows:
Nonvested Share Awards (RSUs)SharesWeighted Average Grant Date Fair ValueWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Nonvested at beginning of year829 $98.25 
Granted506 $129.87 
Vested(276)$104.22 
Forfeited(65)$105.01 
Nonvested at end of year994 $110.45 1.4$172,409 

A summary of our stock appreciation rights activity and related information is as follows:
Stock Appreciation Rights (SARs)SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding at beginning of year634 $90.93 
Granted— $— 
Exercised(310)$89.22 
Forfeited(7)$89.27 
Outstanding at end of year317 $92.65 2.4$25,607 
Exercisable at end of year317 $92.65 2.4$25,607 

The aggregate intrinsic value of SARs exercised and RSUs vested during the years ended December 31, 2022, 2021, and 2020 was $62 million, $73 million, and $14 million, respectively. The fair value of RSUs is based on the price of our stock on the date of grant for the years ended December 31, 2022 and 2021. The fair value of RSUs is based on the 60-day average price of our stock on the date of grant for the year ended December 31, 2020. The fair value of SARs is estimated using a subsidiaryBlack-Scholes option pricing model. We ceased issuing SARs in 2017. The total fair value of EssendantSARs and RSUs vested during the spun-off company.years ended December 31, 2022, 2021, and 2020 were $29 million, $25 million, and $10 million, respectively.
On September 14, 2018,
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12. Accumulated Other Comprehensive Loss
The following tables present the definitive agreement with Essendant was terminatedchanges in AOCL by Essendant, so that Essendant could enter into a merger agreement with another party. Concurrently with the termination, the Company received a termination fee of $12,000. component:
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2022$(463,227)$(15,042)$(379,470)$(857,739)
Other comprehensive (loss) before reclassifications(71,258)— (143,890)(215,148)
Amounts reclassified from accumulated other comprehensive loss27,875 12,470 — 40,345 
Net current period other comprehensive (loss)(43,383)12,470 (143,890)(174,803)
Ending balance, December 31, 2022$(506,610)$(2,572)$(523,360)$(1,032,542)
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2021$(692,868)$(30,007)$(313,627)$(1,036,502)
Other comprehensive income before reclassifications192,382 — (65,843)126,539 
Amounts reclassified from accumulated other comprehensive loss37,259 14,965 — 52,224 
Net current period other comprehensive income229,641 14,965 (65,843)178,763 
Ending balance, December 31, 2021$(463,227)$(15,042)$(379,470)$(857,739)
The termination fee is classified as an offset to the transaction and other costs incurredAOCL components related to the merger agreement withinpension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote. The nature of the cash flow hedges are discussed in the Derivatives and Hedging Footnote. Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.
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13. Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:
20222021
Deferred tax assets related to:
Expenses not yet deducted for tax purposes$312,445 $301,302 
Operating lease liabilities314,804 300,705 
Pension liability not yet deducted for tax purposes168,925 171,256 
Capital loss— 7,333 
Net operating loss49,787 48,865 
845,961 829,461 
Deferred tax liabilities related to:
Employee and retiree benefits225,947 235,847 
Inventory77,866 87,062 
Operating lease assets305,885 295,801 
Other intangible assets468,733 365,557 
Property, plant and equipment91,706 72,740 
Other38,597 18,176 
1,208,734 1,075,183 
Net deferred tax liability before valuation allowance(362,773)(245,722)
Valuation allowance(27,362)(34,227)
Total net deferred tax liability$(390,135)$(279,949)
We currently hold approximately $183 million in gross net operating losses, of which approximately $108 million will carry forward indefinitely. The remaining net operating losses of approximately $75 million will begin to expire in 2024.
The components of income before income taxes are as follows:
202220212020
United States$1,100,584 $762,472 $706,594 
Foreign472,018 437,874 (327,226)
Income before income taxes$1,572,602 $1,200,346 $379,368 
The components of income tax expense are as follows:
202220212020
Current:
Federal$196,634 $116,425 $130,680 
State70,453 34,311 35,474 
Foreign120,594 119,144 77,541 
Deferred:
Federal12,727 24,233 2,048 
State4,981 9,485 801 
Foreign(15,488)(2,042)(30,571)
$389,901 $301,556 $215,973 
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The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:
202220212020
Statutory rate applied to income (1)$330,246 $252,073 $79,667 
Plus state income taxes, net of Federal tax benefit59,593 34,599 28,658 
Taxation of foreign operations, net (2)3,347 2,299 (9,072)
Non-deductible goodwill impairment tax effect— — 106,411 
Foreign rate change - deferred tax remeasurement— 17,032 9,045 
Valuation allowance(7,153)(2,486)1,995 
Other3,868 (1,961)(731)
$389,901 $301,556 $215,973 
(1)U.S. statutory rates applied to income are as follows: 2022, 2021 and 2020 at 21%.
(2)Our effective tax rate reflects the impact of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.
We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.
We, or one of our subsidiaries, file income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2019 or subject to foreign income tax examinations for years ended prior to 2013. We are currently under audit in some of our state and foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits; however, we do not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
202220212020
Balance at beginning of year$19,501 $23,237 $21,461 
Additions based on tax positions related to the current year1,475 2,196 3,771 
Additions for tax positions of prior years89 156 3,480 
Reductions for tax positions for prior years(523)(733)(1,382)
Reduction for lapse in statute of limitations(921)(2,843)(3,765)
Settlements— (2,512)(328)
Balance at end of year$19,621 $19,501 $23,237 
The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2022 and 2021 was approximately $21 million and $20 million, respectively, of which approximately $19 million and $19 million, respectively, if recognized, would affect the effective tax rate.
During the tax years ended December 31, 2022, 2021 and 2020, we paid, received refunds, or accrued insignificant interest and penalties. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
As of December 31, 2022, we estimate that we have an outside basis difference in certain foreign subsidiaries of approximately $928 million, which includes the cumulative undistributed earnings from our foreign subsidiaries. We continue to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings,
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including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.
14. Guarantees
We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a majority voting interest in the independents. We have no voting interest or equity conversion rights in any of the independents. We do not control the independents or the affiliates but receive a fee for the guarantees. We have concluded that the independents are variable interest entities, but that we are not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entities’ economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, we concluded that the affiliates are not variable interest entities. Our maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to our guarantees. While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants. At December 31, 2022, we were in compliance with all such covenants.
At December 31, 2022, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $916 million. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents and affiliates that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, we have had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of December 31, 2022, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
We have recognized certain assets and liabilities amounting to $67 million and $81 million for the guarantees related to the independents’ and affiliates’ borrowings at December 31, 2022 and 2021, respectively. These assets and liabilities are included in other assets and other long-term liabilities in the consolidated balance sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.
15. Commitments and Contingencies
Legal Matters
We are subject to various legal proceedings, many involving routine litigation incidental to the businesses, including approximately 2,228 pending product liability lawsuits resulting from our national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts we distributed. During the fourth quarter of 2022, we revised our estimate of the number of claims to be incurred in future periods, among other assumptions, and recognized $29 million of expense included in selling, administrative and other expenses in the consolidated statements of incomeincome. The amount accrued for pending and comprehensive income.
13. Segment Datafuture claims as of December 31, 2022 was $220 million, the central estimate within our range of $190 million to $270 million, discounted using a discount rate of 3.83%. The undiscounted product liability as of December 31, 2022 was $285 million. The amount accrued for pending and future claims as of December 31, 2021 was $181 million.
The Company’s reportable segments consistamounts recorded are based on the best available information and assumptions that we believe are reasonable. While litigation of automotiveany type contains an element of uncertainty, we believe that our insurance coverage and industrial partsour defense, and business products. Within the reportable segments, certainultimate resolution of the Company’s operating segments are aggregated since they have similar economic characteristics, productspending and services, type and class of customers, and distribution methods.
The Company’s automotive segment distributes replacement parts (other than body parts) for substantially all makes and models of automobiles, trucks, and other vehicles.

reasonably anticipated claims will continue to occur within
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the ordinary course of Contentsour business and that resolution of these claims will not have a material adverse effect on our business, results of operations or financial condition.
Genuine Parts CompanyOn April 17, 2017, a jury awarded damages against the company of $82 million in a litigated automotive product liability dispute. Through post-trial motions and Subsidiaries
Notesoffsets from previous settlements, the initial verdict was reduced to Consolidated Financial Statements
December 31, 2019

$77 million. We believed the verdict was not supported by the facts or the law and was contrary to our role in the automotive parts industry. We challenged the verdict through an appeal to a higher court. On February 19, 2020, the Washington Court of Appeals issued an order entirely reversing the jury's finding on damages and ordering a new trial on damages. The Company’s industrial segment distributesplaintiffs subsequently appealed this order to the Washington Supreme Court. On July 7, 2020, the Washington Supreme Court indicated that it would consider a wide varietyfurther appeal on this matter, and oral arguments occurred on November 10, 2020. On July 8, 2021, the Washington Supreme Court overturned the order of industrial bearings, mechanicalthe Washington Court of Appeals and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components and related parts and supplies.
The Company’s business products segment distributes a wide varietyreinstated the trial court's damage award of office products, computer supplies, office furniture, and business electronics.
Inter-segment sales are not significant. Segment profit for each industry segment is calculated as net sales less operating expenses excluding general corporate expenses, interest expense, equity in income from investees, intangible asset amortization, income attributable$77 million against the company. We recorded an adjustment to noncontrolling interestsincrease selling, administrative and other unallocated amounts that are drivenexpenses by corporate initiatives. Approximately $243,196, $285,020approximately $77 million, inclusive of statutory interest and $196,190insurance coverage, in the consolidated statements of income before income taxes was generated in jurisdictions outside the U.S. for the yearsyear ended December 31, 2019, 2018,2021. The damage award and 2017, respectively. Net sales and net property, plant and equipment by country relate directly to the Company’s operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.
  2019 2018 2017
Net sales: (1)      
Automotive $10,987,533
 $10,526,520
 $8,583,317
Industrial 6,528,332
 6,298,584
 5,805,012
Business products 1,876,440
 1,909,969
 1,920,472
Total net sales $19,392,305
 $18,735,073
 $16,308,801
Segment profit:      
Automotive $830,359
 $854,389
 $720,465
Industrial 521,830
 487,360
 440,454
Business products 77,728
 88,756
 98,882
Total segment profit $1,429,917
 $1,430,505
 $1,259,801
Interest expense, net $(91,315) $(92,093) $(38,677)
Corporate expense $(137,592) $(137,723) $(110,722)
Intangible asset amortization $(97,459) $(88,972) $(51,993)
Other unallocated amounts:      
Restructuring costs $(112,184) $—
 $—
Special termination costs (42,757) —
 —
Goodwill impairment charge (81,968) —
 —
Realized currency and other divestiture losses (41,499) —
 —
Termination fee —
 12,000
 —
Gain on equity investment 38,663
 —
 —
Transaction and other costs (33,506) (48,105) (49,141)
Total other unallocated amounts $(273,251) $(36,105) $(49,141)
       
Income before income taxes $830,300
 $1,075,612
 $1,009,268
Assets:      
Automotive $7,376,571
 $6,246,911
 $6,140,829
Industrial 1,994,115
 1,790,410
 1,645,271
Business products 942,038
 860,279
 859,335
Corporate 470,460
 245,022
 212,566
Goodwill and other intangible assets 3,862,445
 3,540,418
 3,554,380
Total assets $14,645,629
 $12,683,040
 $12,412,381

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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019



 2019 2018 2017
Depreciation and amortization:      
Automotive $122,905
 $105,238
 $71,405
Industrial 17,577
 14,518
 13,446
Business products 7,730
 10,472
 11,262
Corporate 24,617
 22,435
 19,585
Intangible asset amortization 97,459
 88,972
 51,993
Total depreciation and amortization $270,288
 $241,635
 $167,691
Capital expenditures:      
Automotive $227,420
 $198,910
 $118,181
Industrial 39,003
 21,783
 28,566
Business products 20,613
 7,320
 6,726
Corporate 10,833
 4,409
 3,287
Total capital expenditures $297,869
 $232,422
 $156,760
Net sales:      
United States $14,041,308
 $13,927,091
 $13,246,619
Europe 2,223,498
 1,860,912
 256,364
Canada 1,669,803
 1,624,890
 1,525,421
Australasia 1,369,361
 1,193,148
 1,162,122
Mexico 88,335
 129,032
 118,275
Total net sales $19,392,305
 $18,735,073
 $16,308,801
Net property, plant and equipment:      
United States $804,841
 $726,068
 $647,386
Europe 153,357
 110,184
 96,857
Canada 103,320
 91,387
 90,857
Australasia 147,457
 95,578
 95,299
Mexico 5,808
 4,014
 6,303
Total net property, plant and equipment $1,214,783
 $1,027,231
 $936,702


(1)The net effect of discounts, incentives, and freight billed to customers has been allocated to their respective segments for the current and prior periods. Previously, the net effect of such items were captured and presented separately in a line item entitled “Other.”


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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

The following table presents disaggregated geographical net sales from contracts with customers by reportable segment. The Company believes this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors:
 2019 2018 2017
North America:     
Automotive$7,606,678
 $7,472,460
 $7,164,831
Industrial6,316,328
 6,298,584
 5,805,012
Business products1,876,440
 1,909,969
 1,920,472
Total North America$15,799,446
 $15,681,013
 $14,890,315
Australasia:     
Automotive$1,157,357
 $1,193,148
 $1,162,122
Industrial212,004
 —
 —
Total Australasia$1,369,361
 $1,193,148
 $1,162,122
Europe - Automotive$2,223,498
 $1,860,912
 $256,364
Total net sales$19,392,305
 $18,735,073
 $16,308,801



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Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2019

14. Restructuring
In October of 2019, the Company approved and began to implement certain restructuring actions (the "2019 Cost Savings Plan") across its subsidiaries primarily targeted at simplifying organizational structures and distribution networks. The Company believes these actions will reduce costs in the future and allow it to more effectively and efficiently manage its businesses. Among other things, the 2019 Cost Savings Plan will result in workforce reductions and facility closures and consolidations. The Company executed a VRP for its U.S. and Canadian subsidiaries in the fourth quarter of 2019 in connection with this plan.
The table below summarizes costs associated with the 2019 Cost Savings Plan:
  Total
Restructuring costs $112,184
Special termination costs 42,757
Total costs incurred in 2019 $154,941
Remaining costs expected but not yet incurred 20,331
Total costs $175,272

The 2019 Cost Savings Planstatutory interest was approved and funded by the Company's corporate office and therefore these costs are not allocated to the Company's segments. See the segment data footnote for more information.
The table below summarizes the activity related to the restructuring costs discussed above. Asfully paid as of December 31, 2019,2021.
Environmental Liabilities
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the current portionproceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed an applied threshold not to exceed $1 million. Applying this threshold, there are no environmental matters to disclose for this period.
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Table of the restructuring liability of $82,638 is included in other current liabilities on the consolidated balance sheet.Contents
   Severance and other employee costs  Facility and closure costs Accelerated operating lease costs Asset impairments  Total
Liability as of January 1, 2019 $—
 $—
 $—
 $—
 $—
Restructuring costs 88,814
 11,973
 3,605
 7,792
 112,184
Cash payments (5,440) (3,498) —
 —
 (8,938)
Non-cash charges (6,133) —
 (3,605) (7,792) (17,530)
Translation 356
 492
 —
 —
 848
Liability as of December 31, 2019 $77,597
 $8,967
 $—
 $—
 $86,564

ITEM 9

ITEM 9.    .
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
ITEM 9A.    CONTROLS AND PROCEDURES.
Management’s conclusion regarding the effectiveness of disclosure controls and procedures
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’sour management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company’sour disclosure controls and procedures, as such term is defined in SEC Rule 13a-15(e). Based on that evaluation, the Company’sour management, including the CEO and CFO, concluded that the Company’sour disclosure controls and procedures were effective, as of December 31, 2019.2022, to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s report on internal control over financial reporting
The management of Genuine Parts Company and its Subsidiaries (the “Company”“company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.
The Company’sOur internal control system was designed to provide reasonable assurance to the Company’sour management and to the board of directors regarding the preparation and fair presentation of the Company’sour published consolidated financial statements. The Company’sOur internal control over financial reporting includes those policies and procedures that:
i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;company;
ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Companycompany are being made only in accordance with authorizations of management and directors of the Company;company; and
iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’sour assets that could have a material effect on the financial statements.
All internal control systems, no matter how well designed, have inherent limitations and 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. 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. During the year ended December 31, 2019, we acquired Hennig Fahrzeugteile Group ("Hennig"), PartsPoint Group, Axis New England, Axis New York and Inenco Group Pty Ltd (“Inenco”) and have included their balances as of December 31, 2019 in our consolidated balance sheet and the results of their operations in our consolidated statement of income and comprehensive income. As permitted by the Securities and Exchange Commission, we elected to exclude these acquisitions, which constituted approximately 7.9% of total assets as of December 31, 2019 and 3.2% and 1.1% of net sales and net income, respectively, for the year ended December 31, 2019, from our assessment of internal control over financial reporting as of December 31, 2019. Our integration of the systems and processes of these businesses could cause changes to our internal controls over financial reporting in future periods.
The Company’sOur management, including our CEO and CFO, assessed the effectiveness of the Company’sour internal control over financial reporting as of December 31, 2019.2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) ("COSO") in “Internal Control-Integrated Framework.” Based on this assessment, management concluded that the Company’sour internal control over financial reporting was effective as of December 31, 2019.2022.
RemediationOn January 3, 2022, the company, through its wholly-owned subsidiary, Motion Industries, Inc., acquired all of previously identified material weakness
the equity interests in KDG for a purchase price of approximately $1.3 billion in cash. Consistent with guidance issued by the SEC that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting for one year following the acquisition, management excluded an assessment of the effectiveness of our internal control over financial reporting related to KDG. As previously disclosed in Item 9A, Controlsof and Procedures, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, during the fourth quarter2022 KDG represents approximately 5% of fiscal 2018 we identified a material weakness in Alliance Automotive Group's ("AAG") internal control over financial reporting. Specifically, AAG did not adequately identify, designour consolidated total net sales and maintain internal controls at the transaction level that mitigated the riskapproximately 8% of material misstatement in financial reporting processes nor did it maintain appropriate information technology controls. During 2019, management implemented a previously disclosed remediation plan that included initiation of compensating controls and enhanced and revised design of existing financial reporting controls, information technology applications and procedures at AAG. During the fourth quarter of 2019, the Company completed testing the operating effectiveness of the implemented controls and found them to be effective. As a result we have concluded the material weakness has been remediated as of December 31, 2019.

our consolidated total assets.
Changes in internal control over financial reporting
Other than with respect to the remediation efforts described above, thereThere have been no changes in the Company’sour internal control over financial reporting during the Company’sour fourth fiscal quarter ended December 31, 20192022 that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.

The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, which also audited our Consolidated Financial Statements for the year ended December 31, 2022. Ernst & Young LLP's report on our internal control over financial reporting is set forth below.
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Report of Independent Registered Public Accounting Firm


To the Shareholders and the Board of Directors of Genuine Parts Company and Subsidiaries

Opinion on Internal Control overOver Financial Reporting

We have audited Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, 2019,2022, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Genuine Parts Company and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Hennig FahrzeugteileKaman Distribution Group ("Hennig"), PartsPoint Group, Axis New England, Axis New York and Inenco Group Pty Ltd (“Inenco”)(KDG), which areis included in the 20192022 consolidated financial statements of the Company and constituted collectively 7.9%8% of total assets as of December 31, 20192022 and 3.2% and 1.1%5% of net sales and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Hennig, PartsPoint Group, Axis New England, Axis New York and Inenco.

KDG.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 20192022, and 2018,2021, the related consolidated statements of income, and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019,2022, and the related notes and our report dated February 21, 202023, 2023, expressed an unqualified opinion thereon.

Basis offor Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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.

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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.



/s/ Ernst & Young LLP

Atlanta, Georgia
February 21, 202023, 2023

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ITEM 9B.    OTHER INFORMATION.
Not applicable.

ITEM 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III.

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS.
Executive officers of the Companycompany are electedappointed by the Board of Directors and each serves at the pleasure of the Board of Directors until his or her successor has been elected and qualified, or until his or her earlier death, resignation, removal, retirement or disqualification. The current executive officers of the Companycompany are:
Paul D. Donahue, age 63,66, was appointed Chairman of the Board and Chief Executive Officer of the Companycompany in April of 2019. He served as President and Chief Executive Officer from May 2016 - April 2019. Mr. Donahue was been President of the Companycompany from January 2012 until April 2019, and he has been a Director of the Companycompany since April 2012. Previously, Mr. Donahue served as President of the Company’scompany’s U.S. Automotive Parts Group from July 2009 to February 1, 2016. Mr. Donahue served as Executive Vice President of the Companycompany from August 2007 until his appointment as President in 2012. Previously, Mr. Donahue was President and Chief Operating Officer of S.P. Richards Company from 2004 to 2007 and was Executive Vice President-Sales and Marketing in 2003, the year he joined the Company.company.
Carol B. YanceyWilliam P. Stengel, age 56, has been45, was appointed President and Chief Operating Officer of the company on January 1, 2023. Mr. Stengel previously served as President of the company from January 2021 and Executive Vice President and Chief Transformation Officer of the company from November 2019. Previously, Mr. Stengel worked for HD Supply, an Atlanta-based industrial distributor, where he served as President and Chief Executive Officer of HD Supply Facilities Maintenance, from June of 2017 to October of 2018. Prior to his role as President/CEO, he served as Chief Operating Officer for HD Supply Facilities Maintenance from September of 2016 to May of 2017 and prior to that role, he served as Chief Commercial Officer of HD Supply Facilities Maintenance from January of 2016 to September of 2016. Mr. Stengel served as Senior Vice President, Strategic Business Development and Investor Relations of HD Supply from June of 2013 to January of 2016. Prior to HD Supply, Mr. Stengel worked in the Strategic Business Development group at The Home Depot as well as at Bank of America and Stonebridge Associates in various investment banking roles.
Bert Nappier, age 48, was appointed Executive Vice President and Chief Financial Officer of the Company since March 2013, and also held the additional title of Corporate Secretary of the Company up to February 2015. Ms. Yancey was Senior Vice President - Finance and Corporate Secretary from 2005 until her appointmenton May 2, 2022. Mr. Nappier served as Executive Vice President, - Finance in November 2012. Previously, Ms. Yancey was named Vice President of the Company in 1999 and Corporate Secretary in 1995.Treasurer at FedEx Corporation (“FedEx”) from June 2020 to January 2022, where he led teams responsible for corporate finance, cash management, global tax planning and strategy, risk management and corporate development. Prior to that shedate, Mr. Nappier served in various other roles at FedEx, including as Assistant Corporate Secretary from 1994 to 1995, Director of Shareholder Relations from 1992 to1994,President, FedEx Express Europe and Director of Investor Relations in 1991, when she joined the Company.
Scott A. Sonnemaker, age 56, joined the Company on February 1, 2019 as Group President, North American Automotive. Prior to this, he wasChief Executive Officer, TNT Express, Senior Vice President, International Americas at Sysco Corporation from 2016 to 2019. Previously,Chief Financial Officer and Staff Vice President, Staff Vice President and Corporate Controller. Before joining FedEx in 2005, Mr. SonnemakerNappier served as Sysco's Chief Customer OfficerDirector of SEC Reporting and Senior Vice President of Sales from 2010 to 2016.Accounting for Wright Medical Technology, Inc. and an Audit Manager at Ernst & Young LLP, with six years in public accounting.
James R. Neill, age 58,61, was appointed Executive Vice President ofand Chief Human ResourcesResource Officer of the Companycompany in February of 2020. Prior to that, he served as Senior Vice President of Human Resources from April 2014 to February of 2020. Mr. Neill was Senior Vice President of Employee Development and HR Services from April 2013 until his appointment as Senior Vice President of Human Resources of the Company.company. Previously, Mr. Neill served as the Senior Vice President of Human Resources at Motion Industries from 2008 to 2013. Mr. Neill joined Motion in 2006 as Vice President of Human Resources and served in that role from 2006 to 2007.
Randall P. Breaux, age 57,60, was appointed President of Motion Industries on January 1, 2019. Mr. Breaux was Executive Vice President of Marketing, Distribution, and Strategic Planning at Motion from January 2018 until his appointment to President. Previously, he served as Senior Vice President of Marketing, Distribution, and Purchasing from 2015 to 2017. Mr. Breaux joined Motion in 2011 as Senior Vice President of Marketing, Product Management, and Strategic Planning.
Kevin E. Herron, age 57,60, was appointed President of the U.S. Automotive Parts groupGroup on January 1, 2019. Mr. Herron previously served as Executive Vice President - U.S. Automotive Parts Group from 2018 to 2019, and previous to that role, he was Group Senior Vice President of the U.S. Automotive Parts Group from 2014 to 2018. From 2010 to 2014 he was Division Vice President for the Midwest of the U.S. Automotive Parts Group, and prior to that he was Regional Vice President for UAP, the Canadian division of the Automotive Parts Group. He held that role from 2006 to 2010. Prior to that, Mr. Herron served as Regional Vice President of Corporate Stores from 2004 to 2006, and previously he was District Manager in Maine from 1995 to 2003 and held the same title in Vermont during 1994. Prior to those roles, he was Area Manager in Syracuse, New York from 1991 to 1993. Mr. Herron began his career at the Companycompany as a management trainee in Syracuse and served in that role from 1989 to 1990.
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Further information required by this item is set forth under the heading “Nominees for Director”, under the heading “Corporate Governance - Code of Conduct and Ethics”Conduct”, under the heading “Corporate Governance - Board Committees - Audit Committee”, and under the heading “Corporate Governance - Director Nominating Process” of the Proxy Statement and is incorporated herein by reference. We have adopted a Code of Conduct, which is available on the “Investor Relations” section of our website. Any amendments to, or waivers of, the Code of Conduct will be disclosed on our website promptly following the date of such amendment or waiver.
ITEM 11.    EXECUTIVE COMPENSATION.
Information required by this item is set forth under the headings “Executive Compensation”, “Additional Information Regarding Executive Compensation”, “2019“2022 Grants of Plan-Based Awards”, “2019“2022 Outstanding Equity Awards at Fiscal Year-End”, “2019“2022 Option Exercises and Stock Vested”, “2019“2022 Pension Benefits”, “2019“2022 Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating and Governance Committee Report”, “Compensation, Nominating and Governance Committee Interlocks and Insider Participation” and “Compensation of Directors” of the Proxy Statement and is incorporated herein by reference.

ITEM 12.    .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Certain information required by this item is set forth below. Additional information required by this item is set forth under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Proxy Statement and is incorporated herein by reference.
Equity Compensation Plan Information
The following table gives information as of December 31, 20192022 about the common stock that may be issued under all of the Company’scompany’s existing equity compensation plans:
Plan Category(a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(c) Number of  Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) 
Equity Compensation Plans Approved by Shareholders:113,596 (2)$88.33 — 
1,297,250 (3)$95.06 (5)6,926,578 (6)
Equity Compensation Plans Not Approved by Shareholders:135,443 (4)n/a864,557 
Total1,546,289 — 7,791,135 
Plan Category(a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of  Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) 
Equity Compensation Plans Approved by Shareholders:1,121,611
(2)$80.85
 —
  
 1,903,683
(3)$94.74
 7,834,341
(5)
Equity Compensation Plans Not Approved by Shareholders:110,441
(4)n/a
 889,559
  
Total3,135,735
  —
 8,723,900
  
(1)Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights.
(1)Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights.
(2)Genuine Parts Company 2006 Long-Term Incentive Plan
(3)Genuine Parts Company 2015 Incentive Plan
(4)Genuine Parts Company Directors' Deferred Compensation Plan, as amended
(5)All of these shares are available for issuance pursuant to grants of full-value stock awards.
(2)Genuine Parts Company 2006 Long-Term Incentive Plan
(3)Genuine Parts Company 2015 Incentive Plan
(4)Genuine Parts Company Directors' Deferred Compensation Plan, as amended
(5)The weighted average exercise price of outstanding options, warrants and rights is calculated based solely on the exercise price of outstanding options and does not take into account outstanding restricted stock units, which have no exercise price.
(6)All of these shares are available for issuance pursuant to grants of full-value stock awards.
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Information required by this item is set forth under the headings “Corporate Governance — Independent Directors” and “Transactions with Related Persons” of the Proxy Statement and is incorporated herein by reference.
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ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Information required by this item is set forth under the heading “Proposal 3. Ratification of Selection of Independent Auditors” of the Proxy Statement and is incorporated herein by reference.

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PART IV.

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Documents filed as part of this report
(1) Financial Statements
The following consolidated financial statements of Genuine Parts Company and Subsidiaries are incorporated in this Item 15 by reference from Part II-Item 8. Financial Statements and Supplemental Data included in this Annual Report on Form 10-K. See Index to Consolidated Financial Statements.
Report of independent registered public accounting firm on the financial statements
Consolidated balance sheets — December 31, 20192022 and 20182021
Consolidated statements of income — Years ended December 31, 2022, 2021 and 2020
Consolidated statements of comprehensive income — Years ended December 31, 2019, 20182022, 2021 and 20172020
Consolidated statements of equity — Years ended December 31, 2019, 20182022, 2021 and 20172020
Consolidated statements of cash flows — Years ended December 31, 2019, 20182022, 2021 and 20172020
Notes to consolidated financial statements — December 31, 20192022
(2) Financial Statement Schedules
Schedules are omitted because the information is not required or because the information required is included in the financial statements or notes thereto.
(3) Exhibits
The following exhibits are filed as part of or incorporated by reference in this report. Exhibits that are incorporated by reference to documents filed previously by the Companycompany under the Securities Exchange Act of 1934, as amended, are filed with the Securities and Exchange Commission under File No. 1-5690. The Companycompany will furnish a copy of any exhibit upon request to the Company’scompany’s Corporate Secretary.
Instruments with respect to long-term debt where the total amount of securities authorized there under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request.
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Exhibit NumberDescription
Exhibit NumberDescription
Exhibit 2.1
Exhibit 3.1
Amended and Restated Articles of Incorporation of the Company, as amended April 23, 2007. (Incorporated herein by reference from the Company’s Current Reportcompany’s current report on Form 8-K, dated April 23, 2007.)
Exhibit 3.2
By-Laws of the Company,company, as amended and restated November 19, 2018. (Incorporated herein by reference from the Company’s Current Reportcompany’s current report on Form 8-K, dated November 19, 2018.)
Exhibit 4.1
Description of Genuine Parts Company Common Stock.common stock.

Exhibit 4.2Specimen Common Stock Certificate. (Incorporated herein by reference from the Company’scompany’s Registration Statement on Form S-1, Registration No. 33-63874.)
Exhibit 4.3
Exhibit 4.4
Exhibit 4.5
Exhibit 4.6
Exhibit 4.7
Exhibit 4.8
Exhibit 10.1*
The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 3, 1995.)

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Exhibit 10.2*
Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 7, 2005.)
Exhibit 10.3*
Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form10-K, dated March 10, 2000.)
Exhibit 10.4*
Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 7, 2002.)
Exhibit 10.5*
Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 8, 2004.)
Exhibit 10.6*
Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 28, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 3, 2006.)
Exhibit 10.7*
Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 29, 2008.)
Exhibit 10.8*
Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.9*
Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.10*
The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 8, 2004.)
Exhibit 10.11*
Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 10, 2000.)
Exhibit 10.12*
Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 27, 2009.)
Exhibit 10.13*
Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.14*
Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.15*
Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated December 7, 2012, effective December 31, 2013. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.16*
Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated March 8, 2004.)

Exhibit 10.17*
Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 29, 2008.)
Exhibit 10.18*
Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 26, 2013.)
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Exhibit 10.19*
Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. (Incorporated herein by reference from the Company’s Current Reportcompany’s current report on Form 8-K, dated April 18, 2006.)
Exhibit 10.20*
Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 28, 2007.)
Exhibit 10.21*
Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 29, 2008.)
Exhibit 10.22*
Genuine Parts Company 2015 Incentive Plan, effective November 17, 2014. (Incorporated herein by reference from the Company’s Current Reportcompany’s current report on Form 8-K, dated April 28, 2015.)
Exhibit 10.23*10.30*
Genuine Parts Company Performance Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Quarterly Reportcompany’s quarterly report on Form 10-Q, dated May 7, 2014.)
Exhibit 10.24*
Genuine Parts Company Stock Appreciation Rights Agreement. (Incorporated herein by reference from the Company’scompany’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.25*
Form of Executive Officer Change in Control Agreement. (Incorporated herein by reference from the Company'scompany's Annual Report on Form 10-K, dated February 26, 2015.)
Exhibit 10.26
Genuine Parts Company 364-Day Bridge Credit Agreement dated September 22, 2017 by and among Genuine Parts Company, J.P. Morgan Chase Bank, N.A., as administrative agent, and the other Lender Parties. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated October 26, 2017.)
Exhibit 10.27
Genuine Parts Company Amended and Restated Syndicated Facility Agreement dated October 30, 2017 by and among Genuine Parts Company, Bank of America, N.A., as administrative agent, and the other Lender Parties. (Incorporated herein by reference from the Company's Annual Report on Form 10-K dated February 27, 2018.)
Exhibit 10.2810.26
Genuine Parts Company Note Purchase Agreement dated October 30, 2017 by and among Genuine Parts Company, J.P. Morgan Securities, LLC and Merill Lynch, Pierce, Fenner & Smith Incorporated, as agents, and the other Lender Parties. (Incorporated herein by reference from the Company'scompany's Annual Report on Form 10-K dated February 27, 2018.)
Exhibit 10.27
Exhibit 10.28
Exhibit 10.29*
Genuine Parts Company Form of Restricted Stock Unit Award Certificate. (Incorporated herein by reference from the Company'scompany's Annual Report on Form 10-K, dated February 25, 2019.)
Exhibit 10.30*
Genuine Parts Company Form of Performance Restricted Stock Unit Award Certificate. (Incorporated herein by reference from the Company'scompany's Annual Report on Form 10-K, dated February 25, 2019.)
Exhibit 10.31*
Description of Director Compensation.

*Exhibit 10.31*
Description of Director Compensation (Incorporated herein by reference from the company's quarterly report on Form 10-Q, dated July 22, 2021).
Exhibit 10.32
Syndicated Facility Agreement dated October 30, 2020 among Genuine Parts Company, UAP, Inc., and Certain Designated Subsidiaries as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, Domestic Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A., acting through its Toronto Branch, as Canadian Swing Line Lender and the other Lenders and L/C Issuers party thereto. (Incorporated herein by reference from the company's current report on Form 8-K dated November 2, 2020.)
Exhibit 10.33
First Amendment, dated as of September 30, 2021, to Genuine Parts Company Syndicated Facility Agreement dated October 30, 2020 among Genuine Parts Company, UAP, Inc., and Certain Designated Subsidiaries as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, Domestic Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A., acting through its Toronto Bank, as Canadian Swing Line Lender and the other Lenders and L/C Issuers party thereto. (Incorporated herein by reference from the company's quarterly report on Form 10-Q dated October 21, 2021.)
Exhibit 10.34*
*Indicates management contracts and compensatory plans and arrangements.

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Exhibit 21
Subsidiaries of the Company.company.
Exhibit 23
Consent of Independent Registered Public Accounting Firm.
Exhibit 31.1
Certification signed by Chief Executive Officer pursuant to SEC Rule 13a-14(a).
Exhibit 31.2
Certification signed by Chief Financial Officer pursuant to SEC Rule 13a-14(a).
Exhibit 32
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer and Chief Financial Officer (furnished herewith)
Exhibit 101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
Exhibit 101.SCHXBRL Taxonomy Extension Schema Document
Exhibit 101.CALXBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEFXBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LABXBRL Taxonomy Extension Labels Linkbase Document
Exhibit 101.PREXBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104The cover page from this Annual Report on Form 10-K for the year ended December 31, 20192022 formatted in Inline XBRL

ITEM 16.    FORM 10-K SUMMARY.
Not applicable.


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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.
GENUINE PARTS COMPANY

Genuine Parts Company
(Registrant)
Date: February 23, 2023/s/ Paul D. Donahue2/21/2020/s/ Carol B. Yancey2/21/2020
Paul D. Donahue(Date)Carol B. Yancey(Date)
Chairman and Chief Executive Officer
Date: February 23, 2023/s/ Bert Nappier
Bert Nappier
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and
Accounting Officer		Officer)
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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.
/s/ Paul D. Donahue2/17/202021/2023/s/ Carol B. YanceyBert Nappier2/17/202021/2023
Paul D. Donahue(Date)Carol B. YanceyBert Nappier(Date)
Director

Chairman and Chief Executive Officer (Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Accounting Officer (PrincipalPrincipal Financial and
Accounting Officer)
/s/ Elizabeth W. Camp2/17/202021/2023/s/ Richard Cox, Jr.2/21/2023
Elizabeth W. Camp(Date)Richard Cox, Jr.(Date)
DirectorDirector
/s/ Gary P. Fayard2/17/202021/2023/s/    Thomas C. Gallagher2/17/2020
Gary P. Fayard(Date)Thomas C. Gallagher(Date)
DirectorDirector
/s/ P. Russell Hardin2/17/202021/2023
Gary P. Fayard(Date)P. Russell Hardin(Date)
DirectorDirector
/s/ John R. Holder2/17/202021/2023
P. Russell HardinJohn R. Holder(Date)
DirectorDirector
/s/ Donna W. Hyland2/17/202021/2023
John R. HolderDonna W. Hyland(Date)
DirectorDirector
/s/ John D. Johns2/17/202021/2023/s/ Jean-Jacques Lafont2/21/2023
Donna W. Hyland(Date)John D. Johns(Date)Jean-Jacques Lafont(Date)
DirectorDirector
/s/ Robert C. Loudermilk, Jr.2/17/20202/21/2023/s/ Wendy B. Needham2/17/202021/2023
Robert C. Loudermilk, Jr.(Date)Wendy B. Needham(Date)
DirectorDirector
/s/ Juliette W. Pryor2/21/2023/s/ E. Jenner Wood, III2/17/202021/2023
Juliette W. Pryor(Date)E. Jenner Wood, III(Date)
DirectorDirector


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