UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
FORM 10-Q
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2021
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 COMPANY
(Exact name of registrant as specified in its charter)
   __________________________________________
GEORGIAGA58-0254510
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)

2999 WILDWOOD PARKWAY,
ATLANTA, GA
30339
ATLANTA,GA
(Address of principal executive offices)(Zip Code)
678-934-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of each exchange on which registered
Common Stock, $1.00 par value per shareGPCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Large accelerated filerýAccelerated filer¨
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company
o
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐    No  ý☒
Indicate the number ofThere were 144,472,216 shares outstanding of each of the issuer’s classes of common stock outstanding as of the latest practicable date.
April 19, 2021.
ClassOutstanding at September 30, 2017
Common Stock, $1.00 par value per share146,613,496 Shares






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Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 2017 December 31, 2016
(unaudited)  
(in thousands, except share
and per share data)
ASSETS   
CURRENT ASSETS:   
(in thousands, except share and per share data)(in thousands, except share and per share data)March 31, 2021December 31, 2020
AssetsAssets
Current assets:Current assets:
Cash and cash equivalents$210,082
 $242,879
Cash and cash equivalents$1,117,988 $990,166 
Trade accounts receivable, less allowance for doubtful accounts (2017 – $19,214; 2016 – $15,557)2,155,948
 1,938,562
Trade accounts receivable, less allowance for doubtful accounts (2021 – $39,800; 2020 – $36,622)Trade accounts receivable, less allowance for doubtful accounts (2021 – $39,800; 2020 – $36,622)1,809,637 1,556,966 
Merchandise inventories, net3,354,178
 3,210,320
Merchandise inventories, net3,600,658 3,506,271 
Prepaid expenses and other current assets596,400
 556,670
Prepaid expenses and other current assets1,149,877 1,060,360 
TOTAL CURRENT ASSETS6,316,608
 5,948,431
Total current assetsTotal current assets7,678,160 7,113,763 
Goodwill1,059,637
 956,153
Goodwill1,885,447 1,917,477 
Other intangible assets, less accumulated amortization653,932
 618,510
Other intangible assets, less accumulated amortization1,455,333 1,498,257 
Deferred tax assets122,797
 132,652
Deferred tax assets51,907 65,658 
Property, plant and equipment, less accumulated depreciation (2021 – $1,296,920; 2020 – $1,268,170)Property, plant and equipment, less accumulated depreciation (2021 – $1,296,920; 2020 – $1,268,170)1,165,236 1,162,043 
Operating lease assetsOperating lease assets1,044,127 1,038,877 
Other assets581,047
 475,530
Other assets663,333 644,140 
Property, plant and equipment, less accumulated depreciation (2017 – $1,018,211; 2016 – $960,999)760,213
 728,124
TOTAL ASSETS$9,494,234
 $8,859,400
LIABILITIES AND EQUITY   
CURRENT LIABILITIES:   
Total assetsTotal assets$13,943,543 $13,440,215 
Liabilities and equityLiabilities and equity
Current liabilities:Current liabilities:
Trade accounts payable$3,275,155
 $3,081,111
Trade accounts payable$4,479,398 $4,128,084 
Current portion of debt595,000
 325,000
Current portion of debt160,373 160,531 
Dividends payable98,959
 97,584
Dividends payable117,714 114,043 
Income taxes payable26,666
 6,354
Other current liabilities806,887
 734,101
Other current liabilities1,578,866 1,491,426 
TOTAL CURRENT LIABILITIES4,802,667
 4,244,150
Total current liabilitiesTotal current liabilities6,336,351 5,894,084 
Long-term debt550,000
 550,000
Long-term debt2,458,020 2,516,614 
Operating lease liabilitiesOperating lease liabilities788,907 789,294 
Pension and other post–retirement benefit liabilities260,243
 341,510
Pension and other post–retirement benefit liabilities254,558 265,687 
Deferred tax liabilities50,106
 48,326
Deferred tax liabilities206,630 212,910 
Other long-term liabilities441,090
 468,058
Other long-term liabilities562,968 543,623 
EQUITY:   
Preferred stock, par value – $1 per share   
Authorized – 10,000,000 shares; none issued-0-

-0-
Common stock, par value – $1 per share   
Authorized – 450,000,000 shares; issued and outstanding – 2017 – 146,613,496 shares; 2016 – 148,410,422 shares146,613
 148,410
Equity:Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; NaN issuedPreferred stock, par value – $1 per share; authorized – 10,000,000 shares; NaN issued0 0 
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2021 – 144,458,057 shares; 2020 – 144,354,335 sharesCommon stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2021 – 144,458,057 shares; 2020 – 144,354,335 shares144,458 144,354 
Additional paid-in capital66,152
 56,605
Additional paid-in capital117,867 117,165 
Accumulated other comprehensive lossAccumulated other comprehensive loss(1,023,760)(1,036,502)
Retained earnings4,042,404
 4,001,734
Retained earnings4,085,998 3,979,779 
Accumulated other comprehensive loss(876,934) (1,013,021)
TOTAL PARENT EQUITY3,378,235
 3,193,728
Total parent equityTotal parent equity3,324,563 3,204,796 
Noncontrolling interests in subsidiaries11,893
 13,628
Noncontrolling interests in subsidiaries11,546 13,207 
TOTAL EQUITY3,390,128
 3,207,356
TOTAL LIABILITIES AND EQUITY$9,494,234
 $8,859,400
Total equityTotal equity3,336,109 3,218,003 
Total liabilities and equityTotal liabilities and equity$13,943,543 $13,440,215 
See accompanying notes to condensed consolidated financial statements.

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Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

Three Months Ended March 31,
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(unaudited)
(in thousands, except per share data)
(in thousands, except per share data)(in thousands, except per share data)20212020
Net sales$4,095,906
 $3,941,743
 $12,101,725
 $11,559,648
Net sales$4,464,714 $4,092,526 
Cost of goods sold2,869,016
 2,743,142
 8,479,402
 8,091,124
Cost of goods sold2,923,899 2,704,348 
Gross profit1,226,890
 1,198,601
 3,622,323
 3,468,524
Gross profit1,540,815 1,388,178 
Operating expenses:       Operating expenses:
Selling, administrative and other expenses940,259
 869,562
 2,717,416
 2,522,223
Selling, administrative and other expenses1,195,164 1,142,697 
Depreciation and amortization40,276
 37,682
 117,640
 108,247
Depreciation and amortization72,296 67,254 
980,535
 907,244
 2,835,056
 2,630,470
       
Provision for doubtful accountsProvision for doubtful accounts4,909 6,519 
Restructuring costsRestructuring costs0 2,982 
Total operating expensesTotal operating expenses1,272,369 1,219,452 
Non-operating (income) expense:Non-operating (income) expense:
Interest expenseInterest expense19,062 20,965 
OtherOther(36,475)(12,832)
Total non-operating (income) expenseTotal non-operating (income) expense(17,413)8,133 
Income before income taxes246,355
 291,357
 787,267
 838,054
Income before income taxes285,859 160,593 
Income taxes87,913
 106,031
 278,693
 303,334
Income taxes68,149 38,247 
Net income from continuing operationsNet income from continuing operations217,710 122,346 
Net income from discontinued operationsNet income from discontinued operations0 14,189 
Net income$158,442
 $185,326
 $508,574
 $534,720
Net income$217,710 $136,535 
Basic net income per common share$1.08
 $1.24
 $3.45
 $3.58
Diluted net income per common share$1.08
 $1.24
 $3.44
 $3.56
Dividends declared per common share$.6750
 $.6575
 $2.025
 $1.973
Dividends declared per common share$0.8150 $0.7900 
Basic earnings per share:Basic earnings per share:
Continuing operationsContinuing operations$1.51 $0.84 
Discontinued operationsDiscontinued operations0 0.10 
Basic earnings per shareBasic earnings per share$1.51 $0.94 
Diluted earnings per share:Diluted earnings per share:
Continuing operationsContinuing operations$1.50 $0.84 
Discontinued operationsDiscontinued operations0 0.10 
Diluted earnings per shareDiluted earnings per share$1.50 $0.94 
Weighted average common shares outstanding146,720
 148,899
 147,312
 149,243
Weighted average common shares outstanding144,413 145,052 
Dilutive effect of stock options and non-vested restricted stock awards502
 828
 561
 781
Dilutive effect of stock options and non-vested restricted stock awards887 571 
Weighted average common shares outstanding – assuming dilution147,222
 149,727
 147,873
 150,024
Weighted average common shares outstanding – assuming dilution145,300 145,623 
Comprehensive income$202,897
 $201,981
 $644,661
 $599,828
See accompanying notes to condensed consolidated financial statements.
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Table of Contents



GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

Three Months Ended March 31,
(in thousands, except per share data)20212020
Net income$217,710 $136,535 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2021 — $21,185; 2020 — $15,560(295)(182,613)
Cash flow hedge adjustments, net of income taxes in 2021 — $1,384; 2020 — $6,6043,741 (17,856)
Pension and postretirement benefit adjustments, net of income taxes in 2021 — $3,421; 2020 — $3,0179,296 8,448 
Other comprehensive income (loss), net of income taxes12,742 (192,021)
Comprehensive income (loss)$230,452 $(55,486)
See accompanying notes to condensed consolidated financial statements.
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Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

Three Months Ended March 31, 2021
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2021144,354,335 $144,354 $117,165 $(1,036,502)$3,979,779 $3,204,796 $13,207 $3,218,003 
Net income— — — — 217,710 217,710 — 217,710 
Other comprehensive income, net of tax— — — 12,742 — 12,742 — 12,742 
Cash dividend declared, $0.8150 per share— — — — (117,714)(117,714)— (117,714)
Share-based awards exercised, including tax benefit of $1,764103,722 104 (5,533)— — (5,429)— (5,429)
Share-based compensation— — 6,235 — — 6,235 — 6,235 
Cumulative effect from adoption of ASU 2019-12 (1)— — — — 6,223 6,223 — 6,223 
Noncontrolling interest activities— — — — — — (1,661)(1,661)
March 31, 2021144,458,057 $144,458 $117,867 $(1,023,760)$4,085,998 $3,324,563 $11,546 $3,336,109 


Three Months Ended March 31, 2020
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2020145,378,158$145,378 $98,777 $(1,141,308)$4,571,860 $3,674,707 $20,793 $3,695,500 
Net income— — — — 136,535 136,535 — 136,535 
Other comprehensive loss, net of tax— — — (192,021)— (192,021)— (192,021)
Cash dividend declared, $0.7900 per share— — — — (114,476)(114,476)— (114,476)
Share-based awards exercised, including tax benefit of $2217,629 7 (348)— — (341)— (341)
Share-based compensation— — 5,449 — — 5,449 — 5,449 
Purchase of stock(1,136,444)(1,136)— — (94,583)(95,719)— (95,719)
Cumulative effect from adoption of ASU 2016-13 (2)— — — — (11,432)(11,432)— (11,432)
Noncontrolling interest activities— — — — — — (464)(464)
March 31, 2020144,249,343 $144,249 $103,878 $(1,333,329)$4,487,904 $3,402,702 $20,329 $3,423,031 

(1)The Company adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, during the first quarter of 2021.
(2)The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, during the first quarter of 2020.
See accompanying notes to condensed consolidated financial statements.

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Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Three Months Ended March 31,
Nine Months Ended September 30,
2017 2016
(unaudited)
(in thousands)
OPERATING ACTIVITIES:   
(in thousands)(in thousands)20212020
Operating activities:Operating activities:
Net income$508,574
 $534,720
Net income$217,710 $136,535 
Adjustments to reconcile net income to net cash provided by operating activities:   
Net income from discontinued operationsNet income from discontinued operations0 14,189 
Net income from continuing operationsNet income from continuing operations217,710 122,346 
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 amortization117,640
 108,247
Depreciation and amortization72,296 67,254 
Share-based compensation12,912
 15,362
Share-based compensation6,235 4,495 
Excess tax benefits from share-based compensation(2,504) (10,475)Excess tax benefits from share-based compensation(1,764)(221)
Changes in operating assets and liabilities(94,265) 93,498
Changes in operating assets and liabilities6,465 (166,014)
NET CASH PROVIDED BY OPERATING ACTIVITIES542,357
 741,352
INVESTING ACTIVITIES:   
Net cash provided by operating activities from continuing operationsNet cash provided by operating activities from continuing operations300,942 27,860 
Investing activities:Investing activities:
Purchases of property, plant and equipment(97,181) (86,650)Purchases of property, plant and equipment(48,391)(38,914)
Acquisitions and other investing activities(289,353) (365,545)
NET CASH USED IN INVESTING ACTIVITIES(386,534) (452,195)
FINANCING ACTIVITIES:   
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment16,863 3,327 
Proceeds from divestitures of businessesProceeds from divestitures of businesses10,345 10,442 
Acquisitions of businesses and other investing activitiesAcquisitions of businesses and other investing activities(19,489)(3,833)
Net cash used in investing activities from continuing operationsNet cash used in investing activities from continuing operations(40,672)(28,978)
Financing activities:Financing activities:
Proceeds from debt3,420,000
 3,020,000
Proceeds from debt31,599 1,318,905 
Payments on debt(3,150,000) (2,870,000)Payments on debt(26,767)(1,057,667)
Share-based awards exercised(3,289) (11,942)Share-based awards exercised(5,429)(341)
Excess tax benefits from share-based compensation—
 10,475
Dividends paid(296,517) (288,909)Dividends paid(114,043)(110,851)
Purchases of stock(171,884) (143,810)Purchases of stock0 (95,719)
NET CASH USED IN FINANCING ACTIVITIES(201,690) (284,186)
EFFECT OF EXCHANGE RATE CHANGES ON CASH13,070
 8,575
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(32,797) 13,546
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD242,879
 211,631
CASH AND CASH EQUIVALENTS AT END OF PERIOD$210,082
 $225,177
Other financing activitiesOther financing activities(1,354)(871)
Net cash (used in) provided by financing activities from continuing operationsNet cash (used in) provided by financing activities from continuing operations(115,994)53,456 
Cash flows from discontinued operations:Cash flows from discontinued operations:
Net cash provided by operating activities from discontinued operationsNet cash provided by operating activities from discontinued operations0 46,200 
Net cash used in investing activities from discontinued operationsNet cash used in investing activities from discontinued operations0 (6,495)
Net cash provided by financing activities from discontinued operationsNet cash provided by financing activities from discontinued operations0 0 
Net cash provided by discontinued operationsNet cash provided by discontinued operations0 39,705 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(16,454)(14,566)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents127,822 77,477 
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period990,166 276,992 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$1,117,988 $354,469 
See accompanying notes to condensed consolidated financial statements.

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Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
Note A –
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United StatesU.S. (“U.S. GAAP”) for complete financial statements. On June 30, 2020, the Company completed the divestiture of its Business Products Group. Refer to the acquisitions, divestitures and discontinued operations footnote for more information. The Company's 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 condensed consolidated financial statements for all periods presented. Net income from discontinued operations for each period includes all costs that are directly attributable to these businesses and excludes certain corporate overhead costs that were previously allocated. Additionally, revenue from freight services provided by the Automotive Parts Group are grossed up and recast in continuing operations in each period because those sales are continuing with the discontinued operations after the divestiture. Except as disclosed herein, there hashave been no material changechanges in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Genuine Parts Company (the “Company”“Company,” “we,” “our,” “us,” or “its”) for the year ended December 31, 2016.2020. Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 20162020 Annual Report on Form 10-K.
The preparation of interim financial statements requires management to make estimates and assumptions forthat affect the amounts reported in the unaudited condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interimunaudited condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, credit losses on guaranteed loans, 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.valuation. Reserves for bad debts, credit losses on guaranteed loans and customer sales returns are estimated and accrued on an interim basis based uponon a consideration of historical experience.experience, current conditions, and reasonable and supportable forecasts. Volume incentives are estimated based upon cumulative and projected purchasing levels. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant.
In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The Company has reclassified certain prior period amounts to conform to the current period presentation.
The results of operations for the nine month periodthree months ended September 30, 2017March 31, 2021 are not necessarily indicative of results for the entire year.year ended December 31, 2021. The Company's results of operations improved in the first quarter of 2021 relative to the first quarter of 2020 as a result of several positive trends caused by the global response to the coronavirus (“COVID-19”) outbreak, which was declared a pandemic in March 2020. In particular, as widespread vaccine distribution continued, we have seen economic recovery in many of the markets where we operate and a significant uptick in consumer mobility. However, the Company's operations remain vulnerable to reversal of these trends or other continuing negative effects caused by COVID-19. The extent to which the pandemic impacts the Company will depend on numerous factors and future developments that the Company cannot predict, including the severity of the virus; the occurrence of additional waves or spikes in infection rates; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic and the efficacy of these actions, including partial or complete shut downs, travel restrictions, and shelter-in-place orders among other actions; the effectiveness and distribution of COVID-19 vaccines; and impacts on the Company's supply chain, its ability to keep operating locations open, and on customer demand. The Company has evaluated subsequent events through the date the unaudited condensed consolidated financial statements covered by this quarterly report were issued.
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Note B –
Table of Contents
2. Segment Information
The following table presents a summary of the Company's reportable segment financial information from continuing operations:
 Three Months Ended March 31,
 20212020
Net sales:
Automotive$2,953,165 $2,582,685 
Industrial1,511,549 1,509,841 
Total net sales$4,464,714 $4,092,526 
Segment profit:
Automotive$235,678 $142,578 
Industrial125,292 113,933 
Total segment profit360,970 256,511 
Interest expense, net(18,324)(19,868)
Intangible asset amortization(25,544)(22,740)
Corporate expense(31,243)(55,061)
Other unallocated costs (1)0 1,751 
Income before income taxes from continuing operations$285,859 $160,593 
(1)     The following table presents a summary of the other unallocated costs:
Three Months Ended March 31,
20212020
Other unallocated costs:
Restructuring costs (2)$0 $(2,982)
Gain on insurance proceeds related to SPR Fire (3)0 12,282 
Transaction and other costs (4)0 (7,549)
Total other unallocated costs$0 $1,751 
(2)    Adjustment reflects restructuring costs related to the execution of 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.
(3)    Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs related to the S.P. Richards Headquarters and Distribution Center.
(4)    Adjustment reflects $6,000 of incremental costs associated with COVID-19 for the three months ended March 31, 2020 and costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred relating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things.
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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 (in thousands) (in thousands)
Net sales:       
Automotive$2,171,008
 $2,095,030
 $6,333,495
 $6,115,186
Industrial1,244,234
 1,162,224
 3,729,183
 3,482,246
Office products509,966
 535,175
 1,533,372
 1,493,434
Electrical/electronic materials199,236
 178,448
 588,281
 538,803
Other(28,538) (29,134) (82,606) (70,021)
Total net sales$4,095,906
 $3,941,743
 $12,101,725
 $11,559,648
Operating profit:       
Automotive$178,202
 $197,874
 $537,291
 $555,156
Industrial94,595
 85,608
 281,269
 255,704
Office products23,974
 30,257
 85,184
 97,101
Electrical/electronic materials13,547
 14,277
 42,715
 45,105
Total operating segment profit310,318
 328,016
 946,459
 953,066
Interest expense, net(8,202) (5,244) (21,254) (14,731)
Other intangible assets amortization(11,845) (10,339) (34,085) (28,324)
Other, net(43,916) (21,076) (103,853) (71,957)
Income before income taxes$246,355
 $291,357
 $787,267
 $838,054
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Net sales are disaggregated by segment exclude the effect of certain discounts, incentives and freight billed to customers. The line item “Other” represents the net effectgeographical region for each of the discounts, incentivesCompany’s reportable segments, as the Company deems this presentation best depicts how the nature, amount, timing and freight billed to customers, which is reported as a componentuncertainty of net sales in the Company’s condensed consolidated statements of income and comprehensive income.

cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:

 Three Months Ended March 31,
20212020
North America:
Automotive$1,862,805 $1,731,496 
Industrial1,399,399 1,410,715 
Total North America$3,262,204 $3,142,211 
Australasia:
Automotive$367,869 $272,924 
Industrial112,150 99,126 
Total Australasia$480,019 $372,050 
Europe – Automotive$722,491 $578,265 
Total net sales$4,464,714 $4,092,526 
Note C –
3. Accumulated Other Comprehensive Income (Loss)
The difference between comprehensive income and net income was due to foreign currency translation adjustments and pension and other post-retirement benefit adjustments, as summarized below.
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 (in thousands) (in thousands)
Net income$158,442
 $185,326
 $508,574
 $534,720
Other comprehensive income (loss):       
Foreign currency translation38,675
 11,896
 118,852
 50,840
Pension and other post-retirement benefit adjustments:       
Recognition of prior service credit, net of tax(212) (222) (637) (666)
Recognition of actuarial loss, net of tax5,992
 4,981
 17,872
 14,934
Total other comprehensive income44,455
 16,655
 136,087
 65,108
Comprehensive income$202,897
 $201,981
 $644,661
 $599,828
Loss
The following tables present the changes in accumulated other comprehensive loss (“AOCL”) by component for the ninethree months ended September 30:March 31:
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2021$(692,868)$(30,007)$(313,627)$(1,036,502)
Other comprehensive loss before reclassifications0 0 (295)(295)
Amounts reclassified from accumulated other comprehensive loss9,296 3,741 0 13,037 
Other comprehensive income (loss), net of income taxes9,296 3,741 (295)12,742 
Ending balance, March 31, 2021$(683,572)$(26,266)$(313,922)$(1,023,760)

 2017
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and
Other Post-
Retirement
Benefits		 Foreign
Currency
Translation		 Total
 (in thousands)
Beginning balance, January 1$(609,080) $(403,941) $(1,013,021)
Other comprehensive income before reclassifications, net of tax—
 118,852
 118,852
Amounts reclassified from accumulated other comprehensive loss, net of tax17,235
 —
 17,235
Net current period other comprehensive income17,235
 118,852
 136,087
Ending balance, September 30$(591,845) $(285,089) $(876,934)
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2020$(704,415)$(20,671)$(416,222)$(1,141,308)
Other comprehensive loss before reclassifications0 (19,300)(182,613)(201,913)
Amounts reclassified from accumulated other comprehensive loss8,448 1,444 0 9,892 
Other comprehensive income (loss), net of income taxes8,448 (17,856)(182,613)(192,021)
Ending balance, March 31, 2020$(695,967)$(38,527)$(598,835)$(1,333,329)
 2016
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and
Other Post-
Retirement
Benefits		 Foreign
Currency
Translation		 Total
 (in thousands)
Beginning balance, January 1$(535,634) $(394,984) $(930,618)
Other comprehensive income before reclassifications, net of tax—
 50,840
 50,840
Amounts reclassified from accumulated other comprehensive loss, net of tax14,268
 —
 14,268
Net current period other comprehensive income14,268
 50,840
 65,108
Ending balance, September 30$(521,366) $(344,144) $(865,510)

The accumulated other comprehensive lossAOCL components related to the pension benefits are included in the computation of net periodic benefit income in the employee benefit plans 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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Note D –
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4. Recent Accounting Pronouncements
In May 2014,Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) issuedin the form of Accounting Standards UpdateUpdates (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which will create a single, comprehensive revenue recognition model for recognizing revenue from contracts with customers. The standard is effective for interim and annual reporting periods beginning after December 15, 2017 and may be adopted either retrospectively or on a modified retrospective basis. The core principle ofto the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others.
FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs and has established a cross-functional implementation team to evaluate and implement the new standard related to the recognition of revenue from contracts with customers. The Company primarily sells goods and recognizes revenue at point of sale or delivery and this will not change under the new standard. We are completing an analysis of revenue streams at each of the business units and are evaluating the impact the new standard may have on revenue recognition. We expect to finalize ourdetermined that any recently adopted accounting policy in the short-term and implement any necessary changes to processes and controls in the fourth quarter. In addition, the Company is evaluating recently issued guidance on practical expedients as part of the transition decision.
The Company plans to use the modified retrospective adoption method and does not believe there will be a material impact to the Company’s consolidated revenues upon adoption. However, the Company will present expanded disclosure in accordance with the requirements of the standard. The Company will continue to evaluate the impacts of the pending adoption of ASU 2014-09 and the preliminary assessments are subject to change.
In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"), which modifies existing requirements regarding measuring first-in, first-out and average cost inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (“NRV”), and NRV less an approximately normal profit margin. ASU 2015-11 replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The Company adopted ASU 2015-11 on January 1, 2017 and itpronouncements did not have a material impact to the Company's condensed consolidated financial statements for the nine months ended September 30, 2017 and it will not have a material impact on the annual consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"), which requires an entity to recognize a right-of-use asset and a lease liability on the balance sheet for all leases, including operating leases, with a term greater than twelve months. Expanded disclosures with additional qualitative and quantitative information will also be required. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The new standard must be adopted using a modified retrospective transition. The Company is currently evaluating the impact of ASU 2016-02 on itsCompany's condensed consolidated financial statements and related disclosures. As disclosed in the leased properties footnote in the 2016 Annual Report on Form 10-K, the future minimum payments under noncancelable operating leasesall recent accounting pronouncements not yet adopted are approximately $865.0 million and the Company believes the adoption of this standard willnot applicable or are expected to have a significantan immaterial impact on the consolidated balance sheets.
In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") that changes the accounting for certain aspects of share-based compensation to employees including forfeitures, employer tax withholding, and the financial statement presentation of excess tax benefits or expense. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based compensation, which prospectively reclassifies cash flows from excess tax benefits of share-based compensation currently disclosed in financing activities to operating activities in the period of adoption. The guidance will increase income tax expense volatility, as well as the Company's cash flows from operations. In addition, the Company did not elect to change shares withheld for employment income tax purposes, or the current methodology of estimating forfeitures upon adoption. The Company adopted ASU 2016-09 on January 1, 2017 on a prospective basis. The adoption of ASU 2016-09 did not have a material impact to the Company's condensed consolidated financial statements for the nine months ended September 30, 2017 and it is not expected to have a material impact on the annual consolidated financial statements or related disclosures.statements.
In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715) ("ASU 2017-07"), which requires an entity to report the service cost component of net periodic benefit cost in the same line item as other compensation costs (selling, administrative and other expenses), and the remaining components in non-operating expense in the consolidated statement of income and comprehensive income. This standard is effective for interim and annual reporting periods beginning after December


15, 2017 and early adoption is permitted. The Company will adopt ASU 2017-07 on January 1, 2018 and it is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
Note E – Credit Facilities
In June 2017, the Company exercised its remaining optional one year extension on the $1.2 billion multi-currency Syndicated Facility (the "Syndicated Facility") amended June 19, 2015, to extend the maturity date from June 2021 to June 2022.
At September 30, 2017, approximately $595.0 million was outstanding under the Syndicated Facility and is included in "Current portion of debt" in the accompanying condensed consolidated balance sheet.
On September 22, 2017, the Company executed a $2.0 billion 364-day bridge facility bearing interest at LIBOR plus a variable margin. At September 30, 2017, the Company did not have any amounts outstanding under the facility.
Note F – Share-Based Compensation
As more fully discussed in Note 5 of the Company’s notes to the consolidated financial statements in its 2016 Annual Report on Form 10-K, the Company maintains 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’s 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’s common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion of awards under these plans. Most awards may be exercised or converted to shares not earlier than twelve months nor later than ten years from the date of grant. At September 30, 2017, total compensation cost related to nonvested awards not yet recognized was approximately $38.0 million, as compared to $34.6 million at December 31, 2016. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for SARs and RSUs outstanding at September 30, 2017 was approximately $105.7 million. At September 30, 2017, the aggregate intrinsic value for SARs and RSUs vested totaled approximately $55.5 million, and the weighted-average contractual lives for outstanding and exercisable SARs and RSUs were approximately six and five years, respectively. For the nine months ended September 30, 2017, $12.9 million of share-based compensation cost was recorded, as compared to $15.4 million for the same nine month period in the prior year.

Options to purchase approximately 2.5 million and 1.9 million shares of common stock were outstanding but excluded from the computation of diluted earnings per share for the three and nine month periods ended September 30, 2017, respectively, as compared to approximately 0.7 million and 1.2 million for the three and nine month periods ended September 30, 2016, respectively. These options were excluded from the computation of diluted net income per common share because the options’ exercise prices were greater than the average market price of the common stock. During the nine months ended September 30, 2017, the Company granted approximately 746,000 SARs and 171,000 RSUs.
Note G –5. Employee Benefit Plans

Net periodic benefit income forfrom the Company's pension plans included the following components for the three months ended September 30:March 31:

Pension Benefits
20212020
Service cost$3,041 $2,982 
Interest cost17,906 20,925 
Expected return on plan assets(38,732)(38,523)
Amortization of prior service cost172 173 
Amortization of actuarial loss12,456 11,122 
Net periodic benefit income$(5,157)$(3,321)
 Pension Benefits
 2017 2016
 (in thousands)
Service cost$2,240
 $2,106
Interest cost24,243
 26,195
Expected return on plan assets(38,061) (39,296)
Amortization of prior service credit(88) (108)
Amortization of actuarial loss9,549
 7,860
Net periodic benefit income$(2,117) $(3,243)
Net periodic benefitService cost is recorded in selling, administrative and other expenses in the condensed consolidated statements of income for the pension plans included the followingwhile all other components for the nine months ended September 30:


 Pension Benefits
 2017 2016
 (in thousands)
Service cost$6,530
 $6,257
Interest cost72,474
 78,505
Expected return on plan assets(117,475) (117,767)
Amortization of prior service credit(263) (324)
Amortization of actuarial loss28,500
 23,530
Net periodic benefit income$(10,234) $(9,799)

are recorded within other non-operating (income) expense. Pension benefits also include amounts related to a supplemental retirement plan. During the nine months ended September 30, 2017, the Company made a $38.7 million contribution to the pension plan.plans.
Note H –6. Guarantees
The Company guarantees the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which the Company has 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. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates but receives a fee for the guarantees. The Company has concluded that the independents are variable interest entities, but that the Company is 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, the Company concluded that the affiliates are not variable interest entities. The Company’s 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 guarantees. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalizationearnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio and certain limitations on additional borrowings. At September 30, 2017,March 31, 2021, the Company was in compliance with all such covenants.
At September 30, 2017,As of March 31, 2021, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $554.2 million.$911,865. These loans generally mature over periods from one to six years. The Company regularly monitors 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 is required to make payments in connection with guaranteed obligations of the independents or the affiliates,these guarantees, the Company 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. When it is deemed probable that theThe Company will incur a loss in connection with a guarantee,recognizes 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 has 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 March 31, 2021, 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.
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As of September 30, 2017,March 31, 2021, the Company has recognized certain assets and liabilities amounting to $59.0 million$82,000 each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the condensed consolidated balance sheets. The liabilities relate to the Company's noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from the Company's current expected credit loss reserve.
Note I –7. Accounts Receivable Sales Agreement
In 2020, the Company entered into an accounts receivable sales agreement (the “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 364 day term, which the Company intends to renew each year.
As part of the A/R Sales Agreement, the Company continuously sells 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. The Company controls and therefore consolidates the SPE in its condensed consolidated financial statements.
The SPE transferred ownership and control of certain receivables that met certain qualifying conditions to the unaffiliated financial institution in exchange for cash. The Company accounts for transactions with the unaffiliated financial institution as sales of financial assets, with the associated receivables derecognized from the Company's condensed consolidated balance sheet. The remaining receivables held by the SPE were pledged to secure the collectability of the sold receivables. The amount of receivables pledged as collateral as of March 31, 2021 and December 31, 2020 is approximately $957,000 and $771,000, respectively.
The Company continues 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 $800,000 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 $800,000 as of March 31, 2021 and December 31, 2020, respectively.
The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:
Three Months Ended March 31,
20212020
Receivables sold to the financial institution and derecognized$1,927,931 $0 
Cash collected on sold receivables$1,927,928 $0 
Upon entry into the A/R Sales Agreement, the Company received an initial benefit from cash from operations of approximately $800,000 in the year ended December 31, 2020. Continuous cash activity related to the A/R Sales Agreement is reflected in cash from operating activities in the condensed consolidated statement of cash flows. The SPE incurs fees due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which are immaterial, are recorded within other non-operating (income) expense in the condensed 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 March 31, 2021 and December 31, 2020 is not material. The servicing liability related to the Company's collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.
8. Fair Value of Financial Instruments
Fair 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 an 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
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•Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions
As of March 31, 2021 the fair value of the Company's senior unsecured notes was approximately $2,617,989, which are designated as Level 2 in the fair value hierarchy. Our valuation technique is based primarily on prices and 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. Refer to the Derivatives and Hedging footnote for further information.
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. The carrying amounts reflected in the condensed 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. At September 30, 2017,
9. Derivatives and Hedging
The Company is exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, the carryingCompany uses 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’s earnings and cash flows associated with changes in these rates. Derivative financial instruments are not used for trading or other speculative purposes. The Company has not historically incurred, and does not expect to incur in the future, any losses as a result of counterparty default related to derivative instruments.
The Company formally documents 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 flows to be paid. The Company also formally assesses, 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.
Cash Flow Hedges
In 2020, the Company terminated its interest rate swaps and settled the outstanding balances through cash payments totaling $41,000. The remaining amount in AOCL is being amortized to interest expense on a straight-line basis over the remaining life of the previously hedged instrument.
Net Investment Hedges
The Company has designated certain derivative instruments and a portion of its foreign currency denominated debt, a non-derivative financial instrument, as hedges of the foreign currency exchange rate exposure of the Company's Euro-denominated net investment in a European subsidiary. The Company applies 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 fairforward rate (i.e., the forward points). The initial value of fixed ratethis 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 AOCL within foreign currency translation and would only be reclassified to earnings if the European subsidiary were liquidated, or otherwise disposed.
The following table summarizes the location and carrying amounts of the derivative instruments and the foreign currency denominated debt, were approximately $550.0 milliona non-derivative financial instrument, that are designated and $563.6 million, respectively. qualify as part of hedging relationships:
March 31, 2021December 31, 2020
InstrumentBalance Sheet LocationNotionalBalanceNotionalBalance
Net investment hedges:
Forward contractsPrepaid expenses and other current assets$925,810$43,870$800,000$7,668
Forward contractsOther current liabilities$235,180$11,556$360,990$19,442
Foreign currency debtLong-term debt€700,000$820,120€700,000$861,070
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The fair value of fixed rate debt istables below presents gains and losses related to designated as Level 2cash flow hedges and net investment hedges:
Gain (Loss) Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
2021202020212020
Three Months Ended March 31,
Cash flow hedges:
Interest rate contracts$0 $(24,461)$— $— 
Net investment hedges:
Forward contracts37,515 46,848 6,574 6,522 
Foreign currency debt40,950 10,780 — — 
Total$78,465 $33,167 $6,574 $6,522 

10. Commitments and Contingencies
Legal Matters
As more fully discussed in the fair value hierarchy (i.e., significant observable inputs) and is based primarilyCompany's notes to the consolidated financial statements in its 2020 Annual Report on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity. The carrying value of fixed rate debt of $550.0 million is included in long-term debt in the accompanying condensed consolidated balance sheets.
Note J – Legal Matters
On April 17, 2017,Form 10-K, a jury awarded damages against the Company of $81.5 million in a litigated automotive product liability dispute.Through post-trial motions On February 19, 2020, the Washington Court of Appeals issued an order entirely reversing the jury’s finding on damages and offsets from previous settlements, the initial verdict has been reduced to $77.1 million.ordering a new trial on damages. The Company believes the verdict is not supported by the facts or the law and is contraryplaintiffs subsequently appealed this order to the Company’s roleWashington Supreme Court. On July 7, 2020, the Washington Supreme Court indicated that it would consider a further appeal on this matter, and oral arguments occurred on November 10, 2020. A ruling from Washington Supreme Court is expected in the automotive parts industry.


The Company intends to challenge the verdict through further post-trial motions and on appeal to a higher court.2021. At the time of the filing of these financial statements, based upon the Company’s legal defenses and insurance coverage, and reserves, the Company does not believe this matter will have a material impact to the condensed consolidated financial statements.
Note K –11. Acquisitions, Divestitures and Equity InvestmentsDiscontinued Operations
Acquisitions
The Company acquired several businesses for approximately $20,340 and $20,874, net of cash acquired, during the three months ended March 31, 2021 and March 31, 2020, respectively. The measurement period is still open for certain businesses acquired in prior periods, but there have been no significant measurement period adjustments from finalizing acquisition accounting during the three months ended March 31, 2021.
Divestitures
The Company received cash proceeds from divestitures of businesses totaling $10,345 and $10,442 for the three months ended March 31, 2021 and March 31, 2020, respectively.
Discontinued Operations
Business Products Group
During the nine months ended September 30, 2017,2020, the Company acquired certain companiescompleted the divestiture of its Business Products Group as part of its long-term strategic initiative to streamline its operations and equity investmentsoptimize its portfolio so that it can drive shareholder value by focusing on its global Automotive and Industrial Parts Groups. This divestiture represented a single plan to exit the Business Products Group segment and was considered a strategic shift that had a major effect on the Company’s operations and financial results. Therefore, the results of operations, financial position and cash flows for approximately $266.4 million. the Business Products Group are reported as discontinued operations for all periods presented.
The Company recognized and measuredretains an investment in S.P. Richard's (“SPR”), a business that previously belonged to the Business Products Group, with a carrying value of $70,883, which is included within other assets and liabilities assumedon the condensed consolidated balance sheets, as of March 31, 2021. The Company maintains an allowance equal to the current expected credit loss based on their fair valuesa consideration of
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historical experience, current market conditions and reasonable and supportable forecasts related to this investment and other related assets of $17,000.
The Company also remains involved with SPR for a limited period of time through various lease, sublease, freight distribution and transition service agreements. The Company has concluded that SPR is a variable interest entity, but the Company is not the primary beneficiary and therefore the entity is not consolidated. Among other things, the Company does not have any voting rights and does not have the power to direct the activities that most significantly affect SPR's economic performance. For a limited period of time as SPR completes its transition away from the Company’s shared services platform, the Company continues to pay certain payables on SPR’s behalf and at SPR’s direction with full reimbursement from SPR under the terms of their respective acquisition dates. a transition services agreement.
The Company’s results of operations for discontinued operations were:
Three Months Ended March 31, 2020
Net sales$467,006 
Cost of goods sold354,393 
Gross profit112,613 
Operating and non-operating expenses90,076 
Loss on divestiture4,185 
Income before income taxes18,352 
Income taxes4,163 
Net income from discontinued operations$14,189 
12. Earnings Per Share
As more fully discussed in the acquired companies wereshare-based compensation footnote of the Company’s notes to the consolidated financial statements in its 2020 Annual Report on Form 10-K, the Company maintains 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. Certain outstanding options to purchase are not included in the Company’s condensed consolidated statementsdiluted earnings per share calculation because their inclusion would have been anti-dilutive. There were 0 anti-dilutive shares outstanding for the three months ended March 31, 2021, as compared to approximately 1,410 for the three months ended March 31, 2020.
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Table of income beginning on their respective acquisition dates. The Company recorded approximately $105.4 million of goodwill and other intangible assets associated with the acquisitions. The Company is in the process of analyzing the estimated values of assets and liabilities acquired and is obtaining third-party valuations of certain tangible and intangible assets. The allocations of the respective purchase prices are therefore preliminary and subject to revision. Additional disclosure of the Inenco investment is provided below.Contents
Effective April 3, 2017, the Company acquired a 35% investment in the Inenco Group for approximately $72.1 million from Conbear Holdings Pty Limited ("Conbear"). The equity investment was funded with the Company’s cash on hand. The Inenco Group, which is headquartered in Sydney, Australia, is an industrial distributor of bearings, power transmissions, and seals in Australasia, with annual revenues of approximately $325 million and 161 locations across Australia and New Zealand, as well as an emerging presence in Asia.
The Company and Conbear both have an option to acquire or sell, respectively, the remaining 65% of Inenco at a later date contingent upon certain conditions being satisfied. However, there can be no guarantee that such conditions will be met or, if they are met, whether either company would exercise its option.
On September 22, 2017, the Company entered into a definitive agreement to acquire Alliance Automotive Group (“AAG”). AAG is headquartered in London and is a leading European distributor of vehicle parts, tools and workshop equipment with annual revenues of approximately $1.7 billion. AAG has over 1,800 company-owned stores and affiliated outlets across France, the U.K. and Germany. The acquisition is valued at a total purchase price of approximately $2.0 billion. The Company intends to finance the transaction through a combination of new loan agreements and note issuances. The Company also has available, but does not expect to utilize, a $2.0 billion 364-day unsecured bridge facility. The bridge facility is discussed further in the credit facilities footnote. The Company expects to close on the acquisition in November 2017.
On September 25, 2017, the Company entered into a $1.0 billion foreign currency hedge denominated in Euros to hedge the purchase price for AAG acquisition. The hedge does not qualify for hedge accounting.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes contained herein and with the audited consolidated financial statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016.2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of results for the year ended December 31, 2021.
Forward-Looking Statements

Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission (SEC) or otherwise(“SEC”), release to the public, and in materials that weor 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. All statements in the future tense and all statements accompanied by words such as “expect,” “likely,” “outlook,” “forecast,” “preliminary,” “would,” “could,” “should,” “position,” “will,” “project,” “intend,” “plan,” “on track,” “anticipate,” “to come,” “may,” “possible,” “assume,” or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include our expected ability to operate and protect our workforce during the COVID-19 pandemic, our strategies for growing our automotive and industrial businesses, the execution and effect of our cost savings initiatives, our efforts and initiatives to help us emerge from the pandemic well-positioned to execute our strategy, our ongoing efforts to maintain compliance and flexibility under our debt covenants, our liquidity position and actions to maximize cash flow to continue to operate during these highly uncertain times and plans for future cost savings. 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 the financing, timing and completion of the acquisition of Alliance Automotive Group ("AAG") and the anticipated synergies and benefits of the transaction, as well as future operations, prospects, strategies, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautions
We caution you that itsall 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 as a result of various important factors. Such factors may include, among other things, the inabilityextent and duration of the disruption to completeour business operations caused by the acquisition dueglobal health crisis associated with the COVID-19 pandemic, including the effects on the financial health of our business partners and customers, on supply chains and our suppliers, on vehicle miles driven as well as other metrics that affect our business, and on access to failurecapital and liquidity provided by the financial and capital markets; our ability to satisfy the customary closing conditions and/or the delay of or inability to obtain all regulatory approvals related to the acquisition, the Company’smaintain compliance with our debt covenants; our ability to successfully integrate AAGacquired businesses into the Companyour operations and to realize the anticipated synergies and benefits, changes in the European aftermarket, the Company’sbenefits; our ability to successfully implement itsour business initiatives in each of its fourour two business segments; slowing demand for our products; the Company’s products;ability to maintain favorable supplier arrangements and relationships; disruptions in global supply chains and in our suppliers' operations, including as a result of the impact of COVID-19 on our suppliers and our supply chain; changes in national and international legislation or government regulations or policies;policies, including changes to import tariffs, environmental and social policy, infrastructure programs and privacy legislation, and their impact to us and our suppliers and customers; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation;deflation and the United Kingdom's (“U.K.”) exit from the European Union and the unpredictability of the impact following such exit; changes in tax policies; volatile exchange rates; high energy costs;volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; our ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macro-economicmacroeconomic conditions; competitive product, service and pricing pressures; the


ability to maintain favorable vendor arrangements and relationships; disruptionsfailure or weakness in our vendors’ operations;disclosure controls and procedures and internal controls over financial reporting, including as a result of the Company’s ability to successfully integrate its acquired businesses;work from home environment; the uncertainties and costs of litigation; disruptions caused by a failure or breach of the Company’sour information systems, as well as other risks and uncertainties discussed in the Company’sour 2020 Annual Report on Form 10-K for 2016and Item 1A, Risk Factors, in this report on Form 10-Q (all of which risks may be amplified by the COVID-19 pandemic) and from time to time in the Company’sour subsequent filings with the SEC.

Forward-looking statements arespeak only as of the date they are made, and the Company undertakeswe undertake no duty to update itsany 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 reports on Forms 10-K, 10-Q, 8-K and other reports tofiled with the SEC.
Overview
Genuine Parts Company is a service organization engaged in the global distribution of automotive replacement parts,and industrial replacement parts, office products and electrical/electronic materials. The Company hasparts. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. DuringWe conduct business in North America, Europe and Australasia from a network of more than 10,000 locations.
Our Automotive Parts Group operated in the nine months ended September 30, 2017, business was conducted throughoutU.S., Canada, Mexico, France, the United States, Canada,U.K., Germany, Poland, the Netherlands, Belgium, Australia and New Zealand Mexicoas of March 31, 2021, and Puerto Rico from approximately 2,670 locations.

Salesaccounted for 66% of total revenues for the three months ended September 30, 2017 were $4.10 billion, a 4% increase as compared to $3.94 billionMarch 31, 2021. Our Industrial Parts Group operated in the same periodU.S., Canada, Mexico, Australia, New Zealand, Indonesia and
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Singapore. The Industrial Parts Group accounted for 34% of the prior year. For the three months ended September 30, 2017, the Company recorded consolidated net income of $158.4 million, a decrease of 15% as compared to consolidated net income of $185.3 million in the same three month period of the prior year. For the nine months ended September 30, 2017 sales were $12.10 billion, a 4.7% increase as compared to $11.56 billion in the same period of the prior year. For the nine months ended September 30, 2017, the Company recorded consolidated net income of $508.6 million compared to consolidated net income of $534.7 million in the same nine month period of the prior year.
The Company incurred certain transaction costs primarily related to the pending $2.0 billion European acquisition of Alliance Automotive Group in the third quarter of 2017. Before the impact of these costs, the Company's net income was $170.0 million and $520.2 million in the three and nine month periods ended September 30, 2017.
The Company continues to focus on a variety of initiatives to facilitate continued growth including strategic acquisitions, the introduction of new and expanded product lines, geographic expansion, sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives.

Sales

As noted above, salestotal revenues for the three months ended September 30, 2017 were $4.10 billion,March 31, 2021.
At Genuine Parts Company, our mission is to be a 4% increaseworld-class service organization and the employer of choice, supplier of choice, valued customer, good corporate citizen and investment of choice. 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; (2) improved operating margin; (3) a strong balance sheet and cash flows; and (4) effective capital allocation.
COVID-19 Pandemic
Our business and results of operations improved in the first quarter of 2021 relative to the first quarter of 2020 as compareda result of several positive trends caused by the global response to $3.94 billionthe COVID-19 outbreak, which was declared a pandemic in March 2020. In particular, as widespread vaccine distribution continued, we have seen economic recovery in many of the markets where we operate and a significant uptick in consumer mobility. However, some areas continue to experience renewed outbreaks and surges in infection rates. As a result, our business segments continue to face many uncertainties and our operations remain vulnerable to reversal of these trends or other continuing negative effects caused by the pandemic.
The extent to which the COVID-19 pandemic impacts us will depend on numerous factors and future developments that we cannot predict, including the severity of the virus; the occurrence of additional waves or spikes in infection rates; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic and the impact of these actions, including partial or complete shutdowns, travel restrictions, and shelter-in-place orders among other actions; the effectiveness and distribution of COVID-19 vaccines; and impacts on our supply chain, our ability to keep operating locations open, and customer demand.
As of March 31, 2021, substantially all our operations are open for business. Our supply chain partners have been very supportive, despite strain on the supply chain with respect to labor shortages and certain inventory shortages, delays in order fulfillment and increased backlogs our partners continue to do their part to help our service levels to our customers remain strong. We remain in constant communication with our employees regarding changing conditions and protocol. Based on the length and severity of COVID-19, we may experience continued volatility in customer demand and supply chain disruption. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.
For further information regarding the impact of COVID-19 on our business, please see “Results of Operations,” “Financial Condition,” “Liquidity and Capital Resources,” “Changes in Internal Control over Financial Reporting,” Item 1A, “Risk Factors,” and Item 2, “Issuer Repurchase of Equity Securities” in this report, which are incorporated herein by reference.
Key Business Metrics
We consider comparable sales to be a key business metric because management has evaluated its results of operations using this metric and we believe that this key indicator provides additional perspective and insights when analyzing the operating performance of our business from period to period and trends in its historical operating results. This metric should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this report.
Comparable Sales
Comparable sales refer to period-over-period comparisons of our net sales excluding the impact of acquisitions, 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 is a metric that 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 periodmanner.
Results of Operations
Overview
As a result of COVID-19 vaccine distribution and its positive impact on consumer mobility and demand, we are encouraged by the prior year. The revenue increase forincreased economic activity globally during the first quarter of 2021. Our Automotive Parts Group reported improved sales and segment profit margin across all regions during the three months ended September 30, 2017, consisted of an approximate 2% contribution from acquisitions, a positive 1% increase in organic sales and a 1% favorable currency impact. For the nine months ended September 30, 2017 sales were $12.10 billion, a 4.7% increase as compared to $11.56 billion in the same period of the prior year, which reflects a 1.2% increase in organic sales, a 3.1% contribution from acquisitions and an approximate 0.4% favorable currency impact, asMarch 31, 2021 when compared to the same nine monthprior year period and also when compared to the same period in 2016.

Sales for the Automotive2019. Our Industrial Parts Group increased 3.6%experienced continued recovery in their operations with improved sales trends and segment profit margin this quarter when compared to the same period in both 2020 and 2019. We improved our total segment profit margin in the third quarter and are generating gross margin gains and realizing the continued benefits of 2017,our cost savings initiatives to more effectively leverage our cost structure. We believe our Automotive
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Parts Group also benefited from improving product availability and colder weather in North America and Europe as compared to the same period in the prior year. In addition, we believe the pandemic-related government stimulus benefited many of our U.S. customers to further drive demand. Our Industrial Parts Group benefited from the strengthening industrial economy, which is evident in indicators such as the Purchasing Managers Index and Industrial Production Index.
Sales
Sales for the three months ended March 31, 2021 were $4.5 billion, a 9.1% increase compared to $4.1 billion for the same period of the prior year. The increase in sales is attributable to a 4.6% increase in comparable sales, a net favorable impact of foreign currency and other of 3.7%, and a 0.8% benefit from acquisitions. Foreign currency was positively impacted by the strengthening of the Australian dollar, Euro and Canadian dollar as compared to the U.S. dollar.
Sales for the Automotive Parts Group increased 14.3% for the three months ended March 31, 2021 compared to the same period in the prior year. This group’sgroup's revenue increase for the three months ended September 30, 2017March 31, 2021 consisted of an approximate 1.4%8.3% increase in comparable sales driven by strong demand in all geographical regions, the net impact of favorable foreign currency and other of 5.1%, and a 0.9% benefit from acquisitions.
Sales for the Industrial Parts Group increased 0.1% for the three months ended March 31, 2021 compared to the same period in 2020. The increase in this group's revenues reflects the favorable impact of foreign currency of 1.3% and a 0.6% benefit from acquisitions, a positive 1% net impact of organic sales and a 1.2% favorable currency impact. This group’s 3.6% sales increase for the nine month period ended September 30, 2017 reflects a 1% increase from organic sales growth,mostly offset by an approximate 2% contribution from acquisitions, and a 0.6% favorable currency impact from our businesses throughout Australia, Canada and Mexico. We anticipate the Company’s initiatives to drive both organic and acquisitive growth will positively benefit the Automotive Parts Group through increased1.8% decrease in comparable sales in the quarters ahead.

The Industrial Products Group’s sales increased by approximately 7.1% for the three month period ended September 30, 2017, as compared to the same period in 2016. The increase in this group’s revenues reflects a 4.1% increase in organic sales, an approximate 2.6% accretive impact of acquisitions and a 0.4% favorable foreign currency impact. This group’s 7.1% sales increase for the nine month period ended September 30, 2017 reflects a 4.1% increase in organic sales and a 3% contribution from acquisitions. The Industrial Product Group has multiple initiatives in place to drive continued market share expansion through both organic and acquisitive sales growth in the quarters ahead.2020.

Sales for the Office Products Group decreased 4.7% for the three months ended September 30, 2017, due to its decrease in organic sales compared to the same three month period in 2016. For the nine months ended September 30, 2017, this group’s revenues increased 2.7% due to a 6.3% accretive impact from acquisitions less an approximate 3.6% decrease in organic sales. We expect


our internal sales initiatives, including our plans to further enhance our Facilities, Breakroom and Safety Products offering, to support revenue growth for this group in the quarters ahead.

Sales for the Electrical/Electronic Materials Group increased 11.6% for the three months ended September 30, 2017, as compared to the same period in 2016, and reflect an approximate 0.6% decrease in organic sales, a 1.5% favorable impact of copper pricing, and an approximate 10.7% accretive impact of the Company’s acquisitions. For the nine months ended September 30, 2017, this group’s revenues increased 9.2%, and reflect an approximate 8% accretive impact from acquisitions, a marginal increase in organic sales and a 1% favorable impact of copper pricing. We expect our growth initiatives, including acquisitions, to enable this group to report ongoing revenue growth in the quarters ahead.

For the nine month period ended September 30, 2017, industry pricing increased 0.3% in the Automotive segment, increased 0.6% in the Office Products segment, increased 1.3% in the Electrical/Electronic Materials segment and increased 1.8% in the Industrial segment.
Cost of Goods Sold/Sold and Operating Expenses

Cost of goods sold for the three months ended September 30, 2017March 31, 2021 was $2.87$2.9 billion, a 5%an 8.1% increase from $2.74$2.7 billion for the same period in 2016.2020. As a percentage of net sales, cost of goods sold was 70.0%65.5% for the three month periodmonths ended September 30, 2017, asMarch 31, 2021, compared to 69.6% in66.1% for the same three month period of 2016.2020. Cost of goods sold for the nine months ended September 30, 2017 was $8.48 billion, a 5% increase from $8.09 billion for the same period in the prior year. As a percent of net sales, cost of goods sold was 70.1% as compared to 70.0% in the same nine month period of 2016. The increase in cost of goods sold for the three and nine month periods ended September 30, 2017 primarily relates to the sales increase for this period as compared to the same three and nine month periods of the prior year. The Company’s cost of goods sold includes the total cost of merchandise sold, including freight expenses associated with moving merchandise from our vendorssuppliers to our distribution centers, retail stores and branches, as well as vendorsupplier volume incentives and inventory adjustments. Gross profit as a percentage of net sales may fluctuate based on (i) changes in merchandise costs and related vendorsupplier volume incentives or pricing, (ii) variations in product and customer mix, (iii) price changes in response to competitive pressures, (iv) physical inventory and LIFO adjustments, and (v) changes in foreign currency exchange rates.

rates, and (vi) the impact of tariffs. The increase in costs of goods sold for the three months ended March 31, 2021 are primarily driven by the sales increase as discussed above. Gross margin increased to 34.5% compared to 33.9% for the same three month period of 2020. The gross margin improvements primarily reflect the favorable impact of channel mix shifts, positive product mix, and strategic category management initiatives including pricing and global sourcing actions. In addition, there was minimal impact of price inflation for the three months ended March 31, 2021. We have reported improved year over year gross margin for 14 consecutive quarters.
Total operating expenses increased 4.3% to $980.5 million$1.3 billion for the three month periodmonths ended September 30, 2017 asMarch 31, 2021 compared to $907.2 million$1.2 billion for the same three month period in 2016.2020. As a percentage of net sales, operating expenses increaseddecreased to 23.9% as28.5% compared to 23.0%29.8% in the same three month period of the previous year. For the nine monthsperiods ended September 30, 2017, these expenses totaled $2.84 billion, or 23.4% as a percentage of net sales, compared to $2.63 billion, or 22.8% as a percentage of net sales for the same nine month period in the prior year.March 31, 2021 and 2020, respectively. The increasedecrease in operating expenses as a percentage of net sales for the three and nine month periods ended September 30, 2017 reflects the Company’s deleveraging of expenses on lower comparable sales, as well as higher costs in areas such as IT, digital, legal, professional and insurance, freight and delivery, and acquisition related costs. In addition, the increase includes approximately $18.5 million of transaction costsperiod is primarily related to the Company's pending $2.0 billion European acquisition of Alliance Automotive Group recorded in the threeimproved leverage on stronger sales and nine month periods ended September 30, 2017. The Company continues to focus on effectively managing the costs in our businesses with ongoing investments in technology and supply chain initiatives primarily associated with freight, digital and logistics related functions.cost control initiatives.

The Company’sOur operating expenses are substantially comprised of compensation and benefit relatedbenefit-related costs for personnel. Other major expense categories include facility occupancy costs for headquarters, distribution centers and retail store/branch operations, insurancetransportation and delivery costs, technology and digital costs, accounting, legal and professional services, transportationinsurance costs, and delivery costs, travel and advertising. Management’s ongoing cost control measures in these areas have served to improve the Company’s overall cost structure. The Company's recent acquisitions have lower costs of goods sold and higher levels of operating costs as compared to the Company's other businesses, however, the operating profit margins remain consistent.
OperatingSegment Profit

OperatingThe Automotive Parts Group's segment profit decreased to $310.3 million forincreased 65.3% in the three months ended September 30, 2017, compared to $328.0 million for the same three month period of the prior year. As a percentage of net sales, operating profit was 7.6%, as compared to 8.3% in the same three month period of 2016. For the nine months ended September 30, 2017, operating profit decreased to $946.5 million compared to $953.1 million for the same nine month period of the prior year, and as a percentage of net sales, operating profit was 7.8%, as compared to 8.2% in the same nine month period of 2016. The decrease in operating profit as a percentage of net sales for the three and nine month periods ended September 30, 2017 is primarily due to the deleveraging of fixed costs associated with lower comparable sales growth, higher expenses in areas such as IT, freight and delivery costs, lower volume incentives and a product mix shift to lower margin products, which was partially offset by the positive impact of cost control initiatives.



The Automotive Parts Group’s operating profit decreased 10% in the three month period ended September 30, 2017,March 31, 2021 compared to the same period of 2016,2020, and its operatingsegment profit margin was 8.2%, asincreased to 8.0% compared to 9.4% in5.5% for the same three month period of the priorprevious year. ForThis improvement in segment profit margin reflects the nine months ended September 30, 2017, the Automotive Parts Group’sstrong operating profit decreased approximately 3%results in all geographical regions, driven by primarily strong sales trends and the execution of our growth and operating profit margin was 8.5% as compared to 9.1% in the same nine month period of 2016. The decrease in operating profit margin for the three and nine month periods ended September 30, 2017 is primarily due to the slow organic sales environment in our U.S. Automotive businesses and its impact on expense leverage, higher expenses in areas such as IT, freight and delivery costs lower volume incentives and a product mix shift to lower margin products.

initiatives.
The Industrial Products Group’s operatingParts Group's segment profit increased 10.5%10.0% in the three month periodmonths ended September 30, 2017,March 31, 2021 compared to the same three month period of 2016,2020, and the operatingits segment profit margin for this group was 7.6%increased to 8.3% compared to 7.4%7.5% for the same period of the previous year. Operating profit for the Industrial Products Group increased by 10% for the nine month period ended September 30, 2017, compared to the same period in 2016, and the operatingThe improved segment profit margin was 7.5% comparedreflects gross margin expansion and reduced expenses related to 7.3% for the same nine month period in 2016. The increase in operating profit margin for the three and nine month periods ended September 30, 2017 is primarily due to the increase in organic sales volume and its positive impact on expense leverage, as well as improved core gross margin.

The Office Products Group’s operating profit decreased 21% for the three months ended September 30, 2017, compared to the same three month period in 2016, and the operating profit margin for this group was 4.7% compared to 5.7% for the same three month period of 2016. For the nine months ended September 30, 2017, the Office Products Group’s operating profit decreased 12% compared to the same period of the prior year, and the operating profit margin was 5.6% compared to 6.5% for the same period in 2016. The decrease in operating profit margin for the three and nine month periods ended September 30, 2017 is primarily due to the following factors: the impact of lower organic sales volume and its negative impact on expense leverage; lower volume incentives; and, rising costs associated with serving a growing number of sales channels. The Company has implemented several initiatives to drive significantour cost savings for this group in the quarters ahead.

The Electrical/Electronic Materials Group operating profit decreased 5% for the three months ended September 30, 2017, as compared to the same three month period in 2016, and its operating profit margin was 6.8% compared to 8.0% in the same three month period of the prior year. Operating profit for the Electrical/Electronic Materials Group decreased by approximately 5% for the nine month period ended September 30, 2017, compared to the same period in 2016, and the operating profit margin was 7.3% compared to 8.4% for the same nine month period in 2016. The decrease in operating profit margin for the three and nine month periods ended September 30, 2017 is primarily due to customer and product mix shifts, which were partially offset by the positive impact of cost savingscontrol initiatives.
Income Taxes

TheOur effective income tax rate was 35.7%23.8% for both the three month periodmonths ended September 30, 2017, compared to 36.4% for the same period in 2016. The effective income tax rate was 35.4% for the nine month period ended September 30, 2017, compared to 36.2% for the same period in 2016. The rate decrease in the threeMarch 31, 2021 and nine month periods ended September 30, 2017 reflects the higher mixMarch 31, 2020.
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Table of foreign earnings, taxed at a lower rate relative to our U.S. operations and the positive impact of the recognition of excess tax benefits due to the adoption of ASU 2016-09 pertaining to Stock Compensation as compared to the same periods in 2016.Contents
Net Income

from Continuing Operations
For the three months ended September 30, 2017, the Company recorded consolidatedMarch 31, 2021, net income from continuing operations was $217.7 million, an increase of $158.4 million, a decrease of 15% as77.9% compared to consolidated net income from continuing operations of $185.3$122.3 million infor the same three month period of the prior year. On a per share diluted basis, net income from continuing operations was $1.08, a decrease$1.50, an increase of 13% as78.6% compared to $1.24$0.84 for the same three month period of 2016. 2020.
During the three months ended March 31, 2020, we incurred $1.8 million of adjustments. These adjustments represent restructuring costs, insurance proceeds related to the SPR Fire, and transaction and other costs. Transaction and other costs primarily include incremental costs associated with certain divestitures and COVID-19.
For the ninethree months ended September 30, 2017, the Company recorded consolidatedMarch 31, 2021, net income from continuing operations on an adjusted basis was also $217.7 million, an increase of $508.6 million as86.4% compared to consolidatedadjusted net income from continuing operations of $534.7$116.8 million infor the same ninethree month period of the prior year. On a per share diluted basis, net income from continuing operations on an adjusted basis was $3.44, a decrease$1.50 for the three months ended March 31, 2021, an increase of 3% as87.5% compared to $3.56 in$0.80 for the same ninethree month period ended September 30, 2016.of 2020. For 2020, adjusted net income from continuing operations and adjusted diluted net income from continuing operations per common share are both non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
The Company incurred certain transaction costs primarily relatedfollowing table sets forth a reconciliation of net income from continuing operations and diluted net income from continuing operations per common share to the pending $2.0 billion European acquisition of Alliance Automotive Group in the third quarter of 2017. Beforeadjusted net income from continuing operations and adjusted diluted net income from continuing operations per common share to account for the impact of these costs,adjustments. We believe that the presentation of adjusted net income from continuing operations and adjusted diluted net income from continuing operations per common share, 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's net income was $170.0 million,core operations. We consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of our 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 are useful and enhance the comparability of our results from period to period and with our competitors, as well as show ongoing results from operations distinct from items that are infrequent or $1.16 onnot associated with our core operations. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures, as superior to, in isolation from, or as a substitute for, GAAP financial information.
Three Months Ended March 31,
(in thousands)20212020
GAAP net income from continuing operations$217,710 $122,346 
Adjustments:
Restructuring costs (1)— 2,982 
Gain on insurance proceeds related to SPR Fire (2)— (12,282)
Transaction and other costs (3)— 7,549 
Total adjustments— (1,751)
Tax impact of adjustments— (3,810)
Adjusted net income from continuing operations$217,710 $116,785 
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The table below represent amounts per common share diluted basis, and $520.2 million, or $3.52 on a per share diluted basis,assuming dilution:
Three Months Ended March 31,
(in thousands, except per share data)20212020
GAAP net income from continuing operations$1.50 $0.84 
Adjustments:
Restructuring costs (1)— 0.02 
Gain on insurance proceeds related to SPR Fire (2)— (0.08)
Transaction and other costs (3)— 0.05 
Total adjustments— (0.01)
Tax impact of adjustments— (0.03)
Adjusted diluted net income from continuing operations per common share$1.50 $0.80 
Weighted average common shares outstanding – assuming dilution145,300 145,623 
The table below clarifies where the adjusted items are presented in the condensed consolidated statements of income.
Three Months Ended March 31,
(in thousands)20212020
Line item:
Selling, administrative and other expenses$— $7,549 
Restructuring costs— 2,982 
Non-operating (income) expense: Other— (12,282)
Total adjustments$— $(1,751)
(1)    Adjustment reflects restructuring costs related to the execution of 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.
(2)    Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs related to the S.P. Richards Headquarters and Distribution Center.
(3)     Adjustment includes $6.0 million of incremental costs associated with COVID-19 for the three months ended March 31, 2020 and nine month periods ended September 30, 2017.costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred relating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things.
Financial Condition
The Company’sOur cash balance of $210.1 million$1.1 billion at September 30, 2017 decreased $32.8March 31, 2021 increased $127.8 million, or 14%12.9%, from December 31, 2016.2020. For the ninethree months ended September 30, 2017,March 31, 2021, we had net cash provided by operating activities of $300.9 million, net cash used in investing activities of $40.7 million and net cash used in financing activities of $116.0 million. The cash provided by operating activities was up significantly from the Company used $289.4prior year, primarily driven by higher net income for the three months ended March 31, 2021 and the effective management of our working capital. The investing activities consisted primarily of $48.4 million for capital expenditures and $19.5 million for acquisitions and other investing activities,


$296.5 partially offset by $27.2 million in proceeds from the sale of property, plant and equipment and divestitures. The financing activities consisted primarily of $114.0 million for dividends paid to the Company’s shareholders, $97.2 million for investments in the Company via capital expenditures and $171.9 million for share repurchases. These items were partially offset by the Company’s earnings and net cash provided by operating activities, as well as the Company's debt structure as outlined in liquidity below.

shareholders.
Accounts receivable increased $217.4$252.7 million, or 11%16.2%, from December 31, 2016, which is2020 primarily due to the Company’s acquisitions and higher sales volume in the nine month period ended September 30, 2017 as compared to the fourth quarter or 2016.March of 2021. Inventory increased $143.9$94.4 million, or approximately 4% compared to the inventory balance at December 31, 2016, primarily2.7%, due to acquisitionsincreased economic activity globally and the impact of foreign exchange.related product demand. Accounts payable increased $194.0$351.3 million, or 6%8.5% from December 31, 2016, primarily2020 partly due to more favorableextended payment terms negotiatedwith certain suppliers. Total debt of $2.6 billion at March 31, 2021 decreased $0.1 billion, or 2.2%, from December 31, 2020.
We continue to negotiate extended payment dates with our suppliers. Our current payment terms with the Company's vendorsmajority of our suppliers range from 30 to 360 days. Several global financial institutions offer voluntary supply chain finance (“SCF”) programs which enable our suppliers, at their sole discretion, to sell their receivables from the Company to these financial
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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 condensed consolidated statements of comprehensive income (loss). The Company 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 nine month periodSCF program. The suppliers sell goods or services, as applicable, to the Company and they issue the associated invoices to the Company 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 the Company or any of our subsidiaries on third-party performance under the SCF program; however, the Company guarantees 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 condensed 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 condensed consolidated statements of cash flows. As of March 31, 2021 and December 31, 2020, the outstanding payment obligations to the financial institutions are $1.9 billion and $1.8 billion, respectively. The amount settled through the SCF program was $577 million and $629 million for the three months ended September 30, 2017. The Company’s debt is discussed below.March 31, 2021 and March 31, 2020, respectively.
Liquidity and Capital Resources
Total debt at September 30, 2017 increased $270 million, or 31%, from December 31, 2016, primarily related to fundingWe ended the Company’s working capital needs. The Company maintains a $1.20quarter with $2.6 billion unsecured revolving line of credit with a consortium of financial institutions with an option to increase the borrowing capacity by an additional $350.0 million. The line of credit bears interest at LIBOR plus various margins, which are basedtotal liquidity (comprising $1.5 billion availability on the Company’s leverage ratio. In June 2017,revolving credit facility and $1.1 billion of cash and cash equivalents). From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk. We currently believe that the Company exercised its remaining option to extend the maturity date from June 2021 to June 2022. At September 30, 2017, $595.0 million was outstanding under the line of credit.

As of September 30, 2017, the remaining $550.0 million debt outstanding is at fixed rates of interest and remained unchanged as compared to December 31, 2016. The fixed rate debt is comprised of two notes of $250.0 million each and one note of $50.0 million. One $250.0 million note is due in December 2023 and the other is due in November 2026, and each carry an interest rate of 2.99%. The remaining $50.0 million note, which was executed in July 2016, carries a 2.39% interest rate and is due in July 2021.

On September 22, 2017, the Company entered into a definitive agreement to acquire Alliance Automotive Group (“AAG”) for approximately $2.0 billion including the repayment of AAG’s outstanding debt at closing. The Company intends to finance the transaction through a combination of new loan agreements and note issuances. The Company also has available, but does not expect to utilize, a $2.0 billion 364-day unsecured bridge facility bearing interest at LIBOR plus a variable margin. The Company expects to close on the acquisition in November 2017.

At September 30, 2017, the Company's total average cost of debt was 2.55% and the Company remained in compliance with all covenants connected with the above borrowings.

The ratio of current assets to current liabilities was 1.3 to 1 at September 30, 2017, as compared to 1.4 to 1 at December 31, 2016.The Company currently believes existing lines of credit and cash generated from operations will be sufficient to fund anticipated operations including discretionary share repurchases, if any, for the foreseeable future.
We have a strong cash position and solid financial strength to pursue strategic growth opportunities through disciplined, strategic capital deployment. Our key priorities include the reinvestment in our businesses through capital expenditures, mergers and acquisitions, the dividend and share repurchases. We have plans for additional investments in our businesses to drive growth, improve efficiencies and productivity, and drive shareholder value.
On February 16, 2021, we announced a 3% increase in the regular quarterly cash dividend for 2021. The Board of Directors increased the cash dividend payable to an annual rate of $3.26 per share compared with the previous dividend of $3.16 per share. GPC has paid a cash dividend every year since going public in 1948, and 2021 marks the 65th consecutive year of increased dividends paid to shareholders.
In addition, we qualify and are taking advantage of certain employer payroll tax credits and the deferral of certain tax payments that are allowed under the U.S. Coronavirus Aid, Relief, and Economic Security Act.
We expect to be able to continue to borrow funds at reasonable rates over the long term. At March 31, 2021, the Company's total average cost of debt was 2.65%, and the Company remained in compliance with all covenants connected with its borrowings, such covenants include, among others, a financial covenant to maintain a certain leverage ratio of consolidated debt to consolidated adjusted EBITDA under our credit facility.
Any failure to comply with our debt covenants or restrictions could result in a default under our financing arrangements 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 create cross defaults under other debt arrangements and have a material adverse effect on our business, financial condition, results of operations and cash flows.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Although the Company does not face material risks relatedFor quantitative and qualitative disclosures about market risk, refer to interest rates“Quantitative and commodity prices, the Company is exposed to changesQualitative Disclosures About Market Risk” in foreign currency rates with respect to foreign currency denominated operating revenues and expenses. The Company has translation gains or losses that result from translationItem 7A of the results of operations of an operating unit’s foreign functional currency into U.S. dollars for consolidated financial statement purposes. The Company’s principal foreign currency exchange exposures are the Australian dollar, Canadian dollar and Mexican peso, which are the functional currenciesPart II of our Australia, Canada and Mexico operations, respectively. As previously noted under “Sales,” foreign currency exchange exposure, particularly in regard to the Australian dollar and Canadian dollar, positively impacted our results for the three and nine month periods ended September 30, 2017. There have been no other material changes in market risk from the information provided in the Company’s 20162020 Annual Report on Form10-K.Form 10-K. Our exposure to market risk has not changed materially since December 31, 2020.
Item 4. 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’s management, including the Chief Executive Officer (CEO)(“CEO”) and Chief Financial Officer (CFO)(“CFO”), of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or
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furnishes under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods


specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the SEC that occurred during the Company’s last fiscal quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity and capital resources. Except as set forth herein, there have been no significant developments to the information presented in our 2020 Annual Report on Form 10-K with respect to litigation or commitments and contingencies. See the Commitments and Contingencies footnote to the condensed consolidated financial statements for more information, which information is incorporated by reference herein.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 20162020 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2016 Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about the Company’s purchases of shares of the Company’s common stock during the quarterthree months ended September 30, 2017:

March 31, 2021:
ISSUER PURCHASES OF EQUITY SECURITIES
PeriodTotal Number of Shares Purchased (1)Average Price Paid Per ShareTotal 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
January 1, 2021 through January 31, 2021361,685$105.20—14,479,536
February 1, 2021 through February 28, 202159,900$104.91—14,479,536
March 1, 2021 through March 31, 2021230,353$113.32—14,479,536
Totals651,938$108.04—14,479,536
(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 August 21, 2017, the Board of Directors announced that it had authorized the repurchase of 15.0 million shares. The authorization for the repurchase continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 14.5 million shares authorized remain available to be repurchased by the Company. There were no other repurchase plans announced as of March 31, 2021.
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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
July 1, 2017 through
July 31, 2017		— — — 2,613,516
August 1, 2017 through
August 31, 2017		228,082 $81.68 225,000 17,388,516
September 1, 2017 through
September 30, 2017		19,785 $92.60 — 17,388,516
Totals247,867 $82.55 225,000 17,388,516
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(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 million shares and 15 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 2.4 million shares authorized in the 2008 plan and 15.0 million shares authorized in 2017 remain available to be repurchased by the Company. There were no other plans announced as of September 30, 2017.


Item 6. Exhibits
(a) The following exhibits are filed or furnished as part of this report:
Exhibit 2.1
3.1
Exhibit 3.1
Amended and Restated Articles of Incorporation of the Company, dated April 23, 2007 (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 23, 2007)
Exhibit 3.2
Exhibit 10.1

31.1
Exhibit 31.1
Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Executive Officer – filed herewith
Exhibit 31.2
Exhibit 32.132
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by theand Chief Financial Officer – furnished herewith
Exhibit 101101.INSInteractiveXBRL Instance Document - The instance document does not appear in the interactive data files pursuant to Rule 405 of Regulation S-T:file because its XBRL tags are embedded within the inline XBRL document.
(i) the Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; (ii) the Condensed Consolidated Statements of Income and Comprehensive Income
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-Q for the three and nine month periodsperiod ended September 30, 2017 and 2016; (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016; and (iv) the Notes to the Condensed Consolidated Financial StatementsMarch 31, 2021 formatted in Inline XBRL



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SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date: October 26, 2017April 22, 2021/s/ Carol B. Yancey
Carol B. Yancey
Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)
Date: April 22, 2021/s/ Napoleon B. Rutledge Jr.
Napoleon B. Rutledge Jr.
Senior Vice President and
Chief Accounting Officer
(Duly Authorized Officer and Principal Accounting Officer)



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