UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~June 30, 2020~~March 31, 2021


☐			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)

__________________________________________


GA						58-0254510
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2999 WILDWOOD PARKWAY,

30339

ATLANTA,

(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 Class

Trading Symbol

Name of each exchange on which registered

Common Stock, $1.00 par value per share

GPC

New York Stock Exchange

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

There were ~~144,264,189~~144,472,216 shares of common stock outstanding as of ~~June 30, 2020.~~April 19, 2021.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in thousands, except share and per share data)	(in thousands, except share and per share data)	June 30, 2020		December 31, 2019		(in thousands, except share and per share data)	March 31, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	983,759	$	276,992	Cash and cash equivalents	$	1,117,988	$	990,166
Trade accounts receivable, less allowance for doubtful accounts (2020 – $42,139; 2019 – $35,047)		1,823,357		2,440,252
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, net	Merchandise inventories, net	3,351,751		3,443,876		Merchandise inventories, net	3,600,658		3,506,271
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,132,461		1,063,245		Prepaid expenses and other current assets	1,149,877		1,060,360
Current assets of discontinued operations		—		714,251
Total current assets	Total current assets	7,291,328		7,938,616		Total current assets	7,678,160		7,113,763
Goodwill	Goodwill	1,771,835		2,293,519		Goodwill	1,885,447		1,917,477
Other intangible assets, less accumulated amortization	Other intangible assets, less accumulated amortization	1,422,680		1,492,097		Other intangible assets, less accumulated amortization	1,455,333		1,498,257
Deferred tax assets	Deferred tax assets	76,154		45,921		Deferred tax assets	51,907		65,658
Property, plant and equipment, less accumulated depreciation (2020 – $1,275,388; 2019 – $1,199,285)		1,133,990		1,173,688
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 assets	Operating lease assets	997,146		995,667		Operating lease assets	1,044,127		1,038,877
Other assets	Other assets	570,829		457,350		Other assets	663,333		644,140
Noncurrent assets of discontinued operations		—		248,771
Total assets	Total assets	$	13,263,962	$	14,645,629	Total assets	$	13,943,543	$	13,440,215

Liabilities and equity	Liabilities and equity					Liabilities and equity
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	3,745,031	$	3,948,000	Trade accounts payable	$	4,479,398	$	4,128,084
Current portion of debt	Current portion of debt	489,028		624,060		Current portion of debt	160,373		160,531
Dividends payable	Dividends payable	113,968		110,851		Dividends payable	117,714		114,043
Other current liabilities	Other current liabilities	1,620,703		1,493,092		Other current liabilities	1,578,866		1,491,426
Current liabilities of discontinued operations		—		218,117
Total current liabilities	Total current liabilities	5,968,730		6,394,120		Total current liabilities	6,336,351		5,894,084
Long-term debt	Long-term debt	2,727,929		2,802,056		Long-term debt	2,458,020		2,516,614
Operating lease liabilities	Operating lease liabilities	756,346		756,519		Operating lease liabilities	788,907		789,294
Pension and other post–retirement benefit liabilities	Pension and other post–retirement benefit liabilities	249,649		249,832		Pension and other post–retirement benefit liabilities	254,558		265,687
Deferred tax liabilities	Deferred tax liabilities	210,003		233,044		Deferred tax liabilities	206,630		212,910
Other long-term liabilities	Other long-term liabilities	480,417		445,652		Other long-term liabilities	562,968		543,623
Noncurrent liabilities of discontinued operations		—		68,906
Equity:	Equity:					Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; NaN issued	Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; NaN issued	—		—		Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; NaN issued	0		0
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2020 – 144,264,189 shares; 2019 – 145,378,158 shares		144,264		145,378
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2021 – 144,458,057 shares; 2020 – 144,354,335 shares						Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2021 – 144,458,057 shares; 2020 – 144,354,335 shares	144,458		144,354
Additional paid-in capital	Additional paid-in capital	107,819		98,777		Additional paid-in capital	117,867		117,165
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(1,023,760)		(1,036,502)
Retained earnings	Retained earnings	3,809,564		4,571,860		Retained earnings	4,085,998		3,979,779
Accumulated other comprehensive loss		(1,212,372)		(1,141,308)
Total parent equity	Total parent equity	2,849,275		3,674,707		Total parent equity	3,324,563		3,204,796
Noncontrolling interests in subsidiaries	Noncontrolling interests in subsidiaries	21,613		20,793		Noncontrolling interests in subsidiaries	11,546		13,207
Total equity	Total equity	2,870,888		3,695,500		Total equity	3,336,109		3,218,003
Total liabilities and equity	Total liabilities and equity	$	13,263,962	$	14,645,629	Total liabilities and equity	$	13,943,543	$	13,440,215

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020
Net sales	Net sales	$	3,823,227	$	4,457,931	$	7,915,753	$	8,717,060	Net sales	$	4,464,714	$	4,092,526
Cost of goods sold	Cost of goods sold	2,532,740		2,975,227		5,237,088		5,841,558		Cost of goods sold	2,923,899		2,704,348
Gross profit	Gross profit	1,290,487		1,482,704		2,678,665		2,875,502		Gross profit	1,540,815		1,388,178
Operating expenses:	Operating expenses:									Operating expenses:
Selling, administrative and other expenses	Selling, administrative and other expenses	971,589		1,127,296		2,114,286		2,238,715		Selling, administrative and other expenses	1,195,164		1,142,697
Depreciation and amortization	Depreciation and amortization	66,733		62,684		133,987		121,301		Depreciation and amortization	72,296		67,254
Provision for doubtful accounts	Provision for doubtful accounts	11,300		5,513		17,819		9,238		Provision for doubtful accounts	4,909		6,519
Restructuring costs	Restructuring costs	25,059		—		28,041		—		Restructuring costs	0		2,982
Goodwill impairment charge		506,721		—		506,721		—
Total operating expenses	Total operating expenses	1,581,402		1,195,493		2,800,854		2,369,254		Total operating expenses	1,272,369		1,219,452
Non-operating (income) expenses:
Non-operating (income) expense:										Non-operating (income) expense:
Interest expense	Interest expense	25,465		23,262		46,430		47,116		Interest expense	19,062		20,965
Other	Other	(11,944)		(18,250)		(24,776)		(15,082)		Other	(36,475)		(12,832)
Total non-operating (income) expenses		13,521		5,012		21,654		32,034
(Loss) income before income taxes		(304,436)		282,199		(143,843)		474,214
Total non-operating (income) expense										Total non-operating (income) expense	(17,413)		8,133
Income before income taxes										Income before income taxes	285,859		160,593
Income taxes	Income taxes	59,065		72,680		97,312		119,011		Income taxes	68,149		38,247
Net (loss) income from continuing operations		(363,501)		209,519		(241,155)		355,203
Net (loss) income from discontinued operations		(200,871)		14,911		(186,682)		29,477
Net (loss) income		$	(564,372)	$	224,430	$	(427,837)	$	384,680
Net income from continuing operations										Net income from continuing operations	217,710		122,346
Net income from discontinued operations										Net income from discontinued operations	0		14,189
Net income										Net income	$	217,710	$	136,535
Dividends declared per common share	Dividends declared per common share	$	0.7900	$	0.7625	$	1.5800	$	1.5250	Dividends declared per common share	$	0.8150	$	0.7900
Basic (loss) earnings per share from continuing operations		$	(2.52)	$	1.43	$	(1.67)	$	2.43
Diluted (loss) earnings per share from continuing operations		$	(2.52)	$	1.43	$	(1.67)	$	2.42
Basic earnings per share:										Basic earnings per share:
Continuing operations										Continuing operations	$	1.51	$	0.84
Discontinued operations										Discontinued operations	0		0.10
Basic earnings per share										Basic earnings per share	$	1.51	$	0.94
Diluted earnings per share:										Diluted earnings per share:
Continuing operations										Continuing operations	$	1.50	$	0.84
Discontinued operations										Discontinued operations	0		0.10
Diluted earnings per share										Diluted earnings per share	$	1.50	$	0.94

Weighted average common shares outstanding	Weighted average common shares outstanding	144,262		146,075		144,657		146,029		Weighted average common shares outstanding	144,413		145,052
Dilutive effect of stock options and non-vested restricted stock awards	Dilutive effect of stock options and non-vested restricted stock awards	—		661		—		684		Dilutive effect of stock options and non-vested restricted stock awards	887		571
Weighted average common shares outstanding – assuming dilution	Weighted average common shares outstanding – assuming dilution	144,262		146,736		144,657		146,713		Weighted average common shares outstanding – assuming dilution	145,300		145,623

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data) 2020 2019 2020 2019
Net (loss) income $ (564,372) $ 224,430 $ (427,837) $ 384,680
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2020 — $12,114 and $3,445; 2019 — $4,015 and $3,695, respectively 111,599 9 (71,014) 47,973
Cash flow hedge adjustments, net of income taxes in 2020 — $560 and $6,044; 2019 — $3,711 and $5,626, respectively 1,514 (10,034) (16,342) (15,213)
Pension and postretirement benefit adjustments, net of income taxes in 2020 — $3,008 and $6,025; 2019 — $1,786 and $3,574, respectively 7,844 4,833 16,292 9,665
Other comprehensive income (loss), net of income taxes 120,957 (5,192) (71,064) 42,425
Comprehensive (loss) income $ (443,415) $ 219,238 $ (498,901) $ 427,105


	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
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 — $6,604	3,741		(17,856)
Pension and postretirement benefit adjustments, net of income taxes in 2021 — $3,421; 2020 — $3,017	9,296		8,448
Other comprehensive income (loss), net of income taxes	12,742		(192,021)
Comprehensive income (loss)	$	230,452	$	(55,486)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

Three Months Ended June 30, 2020
(in thousands, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non-controlling Interests in Subsidiaries Total Equity
April 1, 2020 144,249,343 $ 144,249 $ 103,878 $ (1,333,329) $ 4,487,904 $ 3,402,702 $ 20,329 $ 3,423,031
Net loss — — — — (564,372) (564,372) — (564,372)
Other comprehensive income, net of tax — — — 120,957 — 120,957 — 120,957
Cash dividend declared, $0.7900 per share — — — — (113,968) (113,968) — (113,968)
Share-based awards exercised, including tax benefit of $383 14,846 15 (464) — — (449) — (449)
Share-based compensation — — 4,405 — — 4,405 — 4,405
Noncontrolling interest activities — — — — — — 1,284 1,284
June 30, 2020 144,264,189 $ 144,264 $ 107,819 $ (1,212,372) $ 3,809,564 $ 2,849,275 $ 21,613 $ 2,870,888

Six Months Ended June 30, 2020
(in thousands, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non-controlling Interests in Subsidiaries Total Equity
January 1, 2020 145,378,158 $ 145,378 $ 98,777 $ (1,141,308) $ 4,571,860 $ 3,674,707 $ 20,793 $ 3,695,500
Net loss — — — — (427,837) (427,837) — (427,837)
Other comprehensive loss, net of tax — — — (71,064) — (71,064) — (71,064)
Cash dividend declared, $1.5800 per share — — — — (228,444) (228,444) — (228,444)
Share-based awards exercised, including tax benefit of $162 22,475 22 (812) — — (790) — (790)
Share-based compensation — — 9,854 — — 9,854 — 9,854
Purchase of stock (1,136,444) (1,136) — — (94,583) (95,719) — (95,719)
Cumulative effect from adoption of ASU 2016-13 (1)
— — — — (11,432) (11,432) — (11,432)
Noncontrolling interest activities — — — — — — 820 820
June 30, 2020 144,264,189 $ 144,264 $ 107,819 $ (1,212,372) $ 3,809,564 $ 2,849,275 $ 21,613 $ 2,870,888


	Three Months Ended March 31, 2021
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2021	144,354,335	$	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 $1,764	103,722	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, 2021	144,458,057	$	144,458	$	117,867	$	(1,023,760)	$	4,085,998	$	3,324,563	$	11,546	$	3,336,109

~~Table of Contents~~

~~GENUINE PARTS COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)~~

~~(UNAUDITED)~~

Three Months Ended June 30, 2019
(in thousands, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non-controlling Interests in Subsidiaries Total Equity
April 1, 2019 146,063,911 $ 146,064 $ 77,424 $ (1,189,987) $ 4,517,430 $ 3,550,931 $ 21,901 $ 3,572,832
Net income — — — — 224,430 224,430 — 224,430
Other comprehensive loss, net of tax — — — (5,192) — (5,192) — (5,192)
Cash dividend declared, $0.7625 per share — — — — (111,380) (111,380) — (111,380)
Share-based awards exercised, including tax benefit of $174 14,458 14 (546) — — (532) — (532)
Share-based compensation — — 7,071 — — 7,071 — 7,071
Noncontrolling interest activities — — — — — — 746 746
June 30, 2019 146,078,369 $ 146,078 $ 83,949 $ (1,195,179) $ 4,630,480 $ 3,665,328 $ 22,647 $ 3,687,975

Six Months Ended June 30, 2019
(in thousands, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non-controlling Interests in Subsidiaries Total Equity
January 1, 2019 145,936,613 $ 145,937 $ 78,380 $ (1,115,078) $ 4,341,212 $ 3,450,451 $ 21,540 $ 3,471,991
Net income — — — — 384,680 384,680 — 384,680
Other comprehensive income, net of tax — — — 42,425 — 42,425 — 42,425
Cash dividend declared, $1.5250 per share — — — — (222,735) (222,735) — (222,735)
Share-based awards exercised, including tax benefit of $3,986 141,756 141 (7,512) — — (7,371) — (7,371)
Share-based compensation — — 13,081 — — 13,081 — 13,081
Cumulative effect from adoption of ASU 2018-02 (2) — — — (122,526) 122,526 — — —
Cumulative effect from adoption of ASU 2016-02, net of tax (2) — — — — 4,797 4,797 — 4,797
Noncontrolling interest activities — — — — — — 1,107 1,107
June 30, 2019 146,078,369 $ 146,078 $ 83,949 $ (1,195,179) $ 4,630,480 $ 3,665,328 $ 22,647 $ 3,687,975


	Three Months Ended March 31, 2020
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2020	145,378,158	$	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 $221	7,629	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, 2020	144,249,343	$	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. ~~Refer to the recent accounting pronouncements footnote.~~

~~(2)The Company adopted ASU 2016-02,~~ ~~Leases,~~ ~~and ASU 2018-02,~~ ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,~~ ~~during the first quarter of 2019.~~

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Six Months Ended June 30,							Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020
Operating activities:	Operating activities:					Operating activities:
Net (loss) income		$	(427,837)	$	384,680
Net (loss) income from discontinued operations		(186,682)		29,477
Net (loss) income from continuing operations		(241,155)		355,203
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities:
Net income						Net income	$	217,710	$	136,535
Net income from discontinued operations						Net income from discontinued operations	0		14,189
Net income from continuing operations						Net income from continuing operations	217,710		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 amortization	Depreciation and amortization	133,987		121,301		Depreciation and amortization	72,296		67,254
Share-based compensation	Share-based compensation	9,854		11,407		Share-based compensation	6,235		4,495
Excess tax benefits from share-based compensation	Excess tax benefits from share-based compensation	162		(3,986)		Excess tax benefits from share-based compensation	(1,764)		(221)
Realized currency losses		11,356		27,037
Goodwill impairment charge		506,721		—
Changes in operating assets and liabilities	Changes in operating assets and liabilities	499,795		(262,997)		Changes in operating assets and liabilities	6,465		(166,014)
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations	920,720		247,965		Net cash provided by operating activities from continuing operations	300,942		27,860
Investing activities:	Investing activities:					Investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(74,358)		(102,180)		Purchases of property, plant and equipment	(48,391)		(38,914)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	6,838		8,888		Proceeds from sale of property, plant and equipment	16,863		3,327
Proceeds from divestitures of businesses	Proceeds from divestitures of businesses	382,737		12,028		Proceeds from divestitures of businesses	10,345		10,442
Acquisitions of businesses and other investing activities	Acquisitions of businesses and other investing activities	(15,393)		(378,237)		Acquisitions of businesses and other investing activities	(19,489)		(3,833)
Net cash provided by (used in) investing activities from continuing operations		299,824		(459,501)
Net cash used in investing activities from continuing operations						Net cash used in investing activities from continuing operations	(40,672)		(28,978)
Financing activities:	Financing activities:					Financing activities:
Proceeds from debt	Proceeds from debt	1,885,109		2,973,236		Proceeds from debt	31,599		1,318,905
Payments on debt	Payments on debt	(2,082,271)		(2,359,975)		Payments on debt	(26,767)		(1,057,667)
Share-based awards exercised	Share-based awards exercised	(790)		(7,371)		Share-based awards exercised	(5,429)		(341)
Dividends paid	Dividends paid	(225,327)		(216,724)		Dividends paid	(114,043)		(110,851)
Purchases of stock	Purchases of stock	(95,719)		—		Purchases of stock	0		(95,719)
Other financing activities	Other financing activities	(8,357)		—		Other financing activities	(1,354)		(871)
Net cash (used in) provided by financing activities from continuing operations	Net cash (used in) provided by financing activities from continuing operations	(527,355)		389,166		Net cash (used in) provided by financing activities from continuing operations	(115,994)		53,456
Cash flows from discontinued operations:	Cash flows from discontinued operations:					Cash flows from discontinued operations:
Net cash provided by operating activities from discontinued operations	Net cash provided by operating activities from discontinued operations	31,668		53,410		Net cash provided by operating activities from discontinued operations	0		46,200
Net cash used in investing activities from discontinued operations	Net cash used in investing activities from discontinued operations	(11,131)		(4,497)		Net cash used in investing activities from discontinued operations	0		(6,495)
Net cash provided by financing activities from discontinued operations	Net cash provided by financing activities from discontinued operations	—		—		Net cash provided by financing activities from discontinued operations	0		0
Net cash provided by discontinued operations	Net cash provided by discontinued operations	20,537		48,913		Net cash provided by discontinued operations	0		39,705
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(6,959)		2,461		Effect of exchange rate changes on cash and cash equivalents	(16,454)		(14,566)
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	706,767		229,004		Net increase in cash and cash equivalents	127,822		77,477
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	276,992		333,547		Cash and cash equivalents at beginning of period	990,166		276,992
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	983,759	$	562,551	Cash and cash equivalents at end of period	$	1,117,988	$	354,469

See accompanying notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

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 U.S. (“U.S. GAAP”) for complete financial statements. ~~During the six months ended~~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 ~~(loss)~~ 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, ~~certain intercompany sales~~revenue from freight services provided by the Automotive Parts Group are grossed up and recast in continuing operations in each period because those sales ~~will continue~~are continuing with the discontinued operations after the divestiture. Except as disclosed herein, there have been no material changes 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,” “we,” “our,” “us,” or “its”) for the year ended December 31, ~~2019.~~2020. Accordingly, the unaudited ~~interim~~ condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s ~~2019~~2020 Annual Report on Form 10-K.

The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the ~~interim~~unaudited condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its ~~interim~~unaudited 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. Reserves for bad debts, credit losses on guaranteed loans and customer sales returns are estimated and accrued on an interim basis based on a consideration of historical experience, current conditions, and reasonable and supportable forecasts. Volume incentives are estimated based upon cumulative and projected purchasing levels. 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 ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of results for the ~~entire year.~~year ended December 31, 2021. The Company's results of operations ~~are concentrated~~improved in ~~North America, Europe and Australasia and are vulnerable~~the first quarter of 2021 relative to the ~~reduced economic activity~~first quarter of 2020 as a result of several positive trends caused by the ~~COVID-19~~global response to the coronavirus (“COVID-19”) outbreak, which was declared a pandemic in March ~~2020~~2020. In particular, as widespread vaccine distribution continued, we have seen economic recovery in many of the markets where we operate and ~~led many governments~~a significant uptick in consumer mobility. However, the Company's operations remain vulnerable to ~~put in place temporary social distancing and shelter-in-place mandates. In May and early June, many governments began phased reopenings~~reversal of ~~their economies. These phased approaches promote economic activity while adhering to new guidelines and enhanced safety measures.~~these trends or other continuing negative effects caused by COVID-19. The extent to which the ~~COVID-19~~ 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 ~~a “second wave”~~additional waves or ~~additional spikes;~~spikes in infection rates; the duration of the outbreak; governmental, business or other actions taken in response to the ~~pandemic;~~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's foreign subsidiaries are benefiting from various forms of government economic assistance including certain temporary subsidies that were received in the second quarter of 2020, which have been classified as a reduction of selling, administrative and other expenses. If the pandemic persists or worsens, the estimates and assumptions management made as of June 30, 2020 could change in subsequent interim reports and upon final determination at year-end, and it is reasonably possible such changes could be significant. The Company has evaluated subsequent events through the date the unaudited condensed consolidated financial statements covered by this quarterly report were issued. ~~The Company will continue to evaluate the nature and extent of these potential impacts to its business and consolidated financial statements.~~

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2. Segment Information

The following table presents a summary of the Company's reportable segment financial information from continuing operations:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Net sales:	Net sales:									Net sales:
Automotive	Automotive	$	2,495,799	$	2,776,210	$	5,078,484	$	5,399,916	Automotive	$	2,953,165	$	2,582,685
Industrial	Industrial	1,327,428		1,681,721		2,837,269		3,317,144		Industrial	1,511,549		1,509,841
Total net sales	Total net sales	$	3,823,227	$	4,457,931	$	7,915,753	$	8,717,060	Total net sales	$	4,464,714	$	4,092,526
Segment profit:	Segment profit:									Segment profit:
Automotive	Automotive	$	218,906	$	228,736	$	361,484	$	408,304	Automotive	$	235,678	$	142,578
Industrial	Industrial	108,928		136,334		222,861		257,362		Industrial	125,292		113,933
Total segment profit	Total segment profit	$	327,834	$	365,070	$	584,345	$	665,666	Total segment profit	360,970		256,511
Interest expense, net	Interest expense, net	(24,876)		(22,586)		(44,744)		(45,603)		Interest expense, net	(18,324)		(19,868)
Intangible asset amortization	Intangible asset amortization	(23,256)		(22,604)		(45,996)		(43,875)		Intangible asset amortization	(25,544)		(22,740)
Corporate expense	Corporate expense	(28,613)		(33,573)		(83,674)		(64,752)		Corporate expense	(31,243)		(55,061)
Other unallocated costs (1)	Other unallocated costs (1)	(555,525)		(4,108)		(553,774)		(37,222)		Other unallocated costs (1)	0		1,751
(Loss) income before income taxes from continuing operations		$	(304,436)	$	282,199	$	(143,843)	$	474,214
Income before income taxes from continuing operations										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 June 30, Six Months Ended June 30,
2020 2019 2020 2019
Other unallocated costs:
Goodwill impairment charge (2) $ (506,721) $ — $ (506,721) $ —
Restructuring costs (3) (25,059) — (28,041) —
Realized currency loss (4) (11,356) — (11,356) (27,037)
Gain on insurance proceeds related to SPR Fire (5) 1,166 — 13,448 —
Transaction and other costs (6) (13,555) (4,108) (21,104) (10,185)
Total other unallocated costs $ (555,525) $ (4,108) $ (553,774) $ (37,222)


	Three Months Ended March 31,
	2021		2020
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 the second quarter goodwill impairment charge related to the Company's European reporting unit. Refer to the goodwill and other intangible assets footnote.~~

~~(3)~~ Adjustment reflects restructuring costs related to the ~~ongoing~~ execution of the 2019 Cost Savings ~~Plan announced in the fourth quarter of 2019.~~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. ~~Refer to the restructuring footnote.~~

~~(4) Adjustment reflects realized currency losses related to divestitures. Refer to the acquisitions, divestitures and discontinued operations footnote.~~

~~(5)~~(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. ~~Refer to the commitments and contingencies footnote.~~

~~(6)~~(4) Adjustment reflects ~~(i) $2,481 and $8,490~~$6,000 of incremental costs associated with COVID-19 for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 ~~respectively,~~ and ~~(ii)~~ 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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Net sales are disaggregated by geographical region for each of the Company’s reportable segments, as the Company deems this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
North America:	North America:									North America:
Automotive	Automotive	$	1,715,567	$	1,964,985	$	3,447,063	$	3,780,131	Automotive	$	1,862,805	$	1,731,496
Industrial	Industrial	1,231,208		1,681,721		2,641,923		3,317,144		Industrial	1,399,399		1,410,715
Total North America	Total North America	$	2,946,775	$	3,646,706	$	6,088,986	$	7,097,275	Total North America	$	3,262,204	$	3,142,211
Australasia:	Australasia:									Australasia:
Automotive	Automotive	$	282,797	$	286,717	$	555,721	$	571,270	Automotive	$	367,869	$	272,924
Industrial	Industrial	96,220		—		195,346		—		Industrial	112,150		99,126
Total Australasia	Total Australasia	$	379,017	$	286,717	$	751,067	$	571,270	Total Australasia	$	480,019	$	372,050
Europe – Automotive	Europe – Automotive	$	497,435	$	524,508	$	1,075,700	$	1,048,515	Europe – Automotive	$	722,491	$	578,265
Total net sales	Total net sales	$	3,823,227	$	4,457,931	$	7,915,753	$	8,717,060	Total net sales	$	4,464,714	$	4,092,526

3. Accumulated Other Comprehensive Loss

The following tables present the changes in accumulated other comprehensive loss (“AOCL”) by component for the ~~six~~three months ended ~~June 30:~~March 31:


		Changes in Accumulated Other Comprehensive Loss by Component															Changes in Accumulated Other Comprehensive Loss by Component
		Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation		Total			Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation		Total
Beginning balance, January 1, 2020		$	(704,415)	$	(20,671)	$	(416,222)	$	(1,141,308)
Beginning balance, January 1, 2021										Beginning balance, January 1, 2021	$	(692,868)	$	(30,007)	$	(313,627)	$	(1,036,502)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	—		(21,046)		(82,370)		(103,416)		Other comprehensive loss before reclassifications	0		0		(295)		(295)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	16,292		4,704		11,356		32,352		Amounts reclassified from accumulated other comprehensive loss	9,296		3,741		0		13,037
Other comprehensive income (loss), net of income taxes	Other comprehensive income (loss), net of income taxes	16,292		(16,342)		(71,014)		(71,064)		Other comprehensive income (loss), net of income taxes	9,296		3,741		(295)		12,742
Ending balance, June 30, 2020		$	(688,123)	$	(37,013)	$	(487,236)	$	(1,212,372)
Ending balance, March 31, 2021										Ending balance, March 31, 2021	$	(683,572)	$	(26,266)	$	(313,922)	$	(1,023,760)

Changes in Accumulated Other
Comprehensive Loss by Component
Pension and Other Post-Retirement Benefits Cash Flow Hedges Foreign Currency Translation Total
Beginning balance, January 1, 2019 $ (626,322) $ (4,631) $ (484,125) $ (1,115,078)
Other comprehensive income (loss) before reclassifications — (10,827) 20,936 10,109
Amounts reclassified from accumulated other comprehensive loss (1) 9,665 (4,386) 27,037 32,316
Other comprehensive income (loss), net of income taxes 9,665 (15,213) 47,973 42,425
Cumulative effect from adoption of ASU 2018-02 (122,526) — — (122,526)
Ending balance, June 30, 2019 $ (739,183) $ (19,844) $ (436,152) $ (1,195,179)


	Changes in Accumulated Other Comprehensive Loss by Component
	Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation		Total
Beginning balance, January 1, 2020	$	(704,415)	$	(20,671)	$	(416,222)	$	(1,141,308)
Other comprehensive loss before reclassifications	0		(19,300)		(182,613)		(201,913)
Amounts reclassified from accumulated other comprehensive loss	8,448		1,444		0		9,892
Other comprehensive income (loss), net of income taxes	8,448		(17,856)		(182,613)		(192,021)
Ending balance, March 31, 2020	$	(695,967)	$	(38,527)	$	(598,835)	$	(1,333,329)

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(1) Amount includes realized currency losses of $27,037 that were reclassified out of foreign currency translation into earnings in connection with the March 7, 2019 sale of Grupo Auto Todo. Refer to the acquisitions, divestitures and discontinued operations footnote for further details.

The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the employee benefit plans footnote. ~~The nature of the cash flow hedges are discussed in the derivatives and hedging footnote.~~ Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net ~~(loss)~~ income in the same period that the related pre-tax AOCL reclassifications are recognized.

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4. Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of ~~ASUs~~Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs and has determined that any recently adopted accounting pronouncements did not ~~listed below were assessed~~have a material impact on the Company's condensed consolidated financial statements and ~~determined to be~~all recent accounting pronouncements not yet adopted are not applicable or are expected to have ~~a minimal~~an immaterial impact on the Company's condensed consolidated financial statements.

~~Financial Instruments - Credit Losses (Topic 326)~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~. Among other things, the ASU and its amendments replace the incurred loss impairment model for receivables and loan guarantees with a current expected credit loss model. The new model measures impairment based on expected credit losses over the remaining contractual life of an asset, considering available information about the collectability of cash flows, past events, current conditions, and reasonable and supportable forecasts. Additional quantitative and qualitative disclosures are required. The Company adopted ASU 2016-13 and its amendments as of January 1, 2020, which included recognizing a cumulative-effect adjustment to reduce opening retained earnings by $11,432, net of taxes.

~~Compensation - Retirement Benefits (Topic 715)~~

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Changes to the Disclosure Requirements for Defined Benefit Plans~~. The updated accounting guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing, adding and clarifying certain disclosures. These provisions must be applied retrospectively. ASU 2018-14 is effective for periods beginning after December 15, 2020, with an option to adopt early. The adoption of ASU 2018-14 is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures. The Company does not plan to early adopt the standard.

5. Employee Benefit Plans

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

Pension Benefits
2020 2019
Service cost $ 2,925 $ 2,379
Interest cost 20,865 24,335
Expected return on plan assets (38,410) (38,507)
Amortization of prior service credit 173 (17)
Amortization of actuarial loss 11,088 7,746
Net periodic benefit income $ (3,359) $ (4,064)

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~~Net periodic benefit income from the Company's pension plans included the following components for the six months ended June 30:~~


		Pension Benefits							Pension Benefits
		2020		2019			2021		2020
Service cost	Service cost	$	5,907	$	4,769	Service cost	$	3,041	$	2,982
Interest cost	Interest cost	41,790		48,683		Interest cost	17,906		20,925
Expected return on plan assets	Expected return on plan assets	(76,933)		(77,034)		Expected return on plan assets	(38,732)		(38,523)
Amortization of prior service credit		346		(34)
Amortization of prior service cost						Amortization of prior service cost	172		173
Amortization of actuarial loss	Amortization of actuarial loss	22,210		15,495		Amortization of actuarial loss	12,456		11,122
Net periodic benefit income	Net periodic benefit income	$	(6,680)	$	(8,121)	Net periodic benefit income	$	(5,157)	$	(3,321)

Service cost is recorded in selling, administrative and other expenses in the condensed consolidated statements of income while all other components are recorded within other non-operating (income) ~~expenses.~~expense. Pension benefits also include amounts related to supplemental retirement plans.

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 debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio and certain limitations on additional borrowings. At ~~June 30, 2020,~~March 31, 2021, the Company was in compliance with all such covenants.

As of ~~June 30, 2020,~~March 31, 2021, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately ~~$925,109.~~$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 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. The Company recognizes a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of ~~June 30, 2020,~~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 ~~June 30, 2020,~~March 31, 2021, the Company has recognized certain assets and liabilities amounting to ~~$90,000~~$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.

7. ~~Credit Facilities~~Accounts Receivable Sales Agreement

~~On May 1,~~In 2020, the Company entered into amendments to: (i) the Amended and Restated Syndicated Credit Facility Agreement, dated as of October 30, 2017 ("Credit Facility") and (ii) the Notes Purchase Agreement with certain investors governing the Series I, J, K, L and M senior notes, dated as of October 30, 2017 ("Notes Agreement"). The financial covenants in these agreements were amended to provide for the debt to EBITDA ratio to increase from 3.50 to 1.0 to 4.00 to 1.0 through

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December 31, 2020 (and then to revert to 3.50 to 1.0 after such date). With respect to the Credit Facility, the interest rates were amended to increase the applicable rate by 75 basis points (resulting in a rate of LIBOR + 225 basis points) and the LIBOR floor from 0.0% to 1.0%. With respect to the Notes Agreement, the interest rates were amended to increase the coupon applicable to each series of the Senior Notes by 50 basis points, effective immediately and applicable through December 31, 2020, and to increase the coupon applicable to each series of the Senior Notes by an ~~additional 50 basis points, if and only if the debt to EBITDA ratio exceeds 3.50 to 1.0.~~

~~8. Accounts Receivable Sales Agreement~~

~~On May 29, 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.~~institution on a revolving basis. The A/R Sales Agreement has a 364 day term, which the Company intends to renew each year. ~~The terms of the A/R Sales Agreement limit the total principal amount outstanding of receivables sold to approximately $500,000 at any point in time.~~

As part of the A/R Sales Agreement, the Company continuously sells designated pools of ~~trade accounts receivable~~receivables as they are originated by it and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity ~~whose~~(“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 ~~special purpose entity~~SPE in its condensed consolidated financial statements.

The ~~special purpose entity~~SPE transferred ownership and control of certain receivables that met certain qualifying conditions to the unaffiliated financial institution in ~~turn sells certain~~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 ~~on a monthly basis. These sales to~~so that the ~~unaffiliated financial institution are accounted for as sales because control over~~total principal amount outstanding of receivables sold is approximately $800,000 at any point in time (which is the ~~receivables is transferred to the unaffiliated financial institution~~maximum amount allowed under the ~~terms~~agreement). The future amount of receivables outstanding as sold could decrease, based on the ~~agreement.~~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 ~~represents a summary of~~summarizes the activity and amounts outstanding under the A/R Sales Agreement ~~since its inception:~~as of:


	~~June 30, 2020~~
~~Receivables sold to the financial institution and derecognized~~	$	~~902,326~~
~~Cash collected on sold receivables~~	$	~~402,302~~
~~Receivables pledged as collateral on sold receivables as of period-end~~	$	~~342,636~~


	Three Months Ended March 31,
	2021		2020
Receivables sold to the financial institution and derecognized	$	1,927,931	$	0
Cash collected on sold receivables	$	1,927,928	$	0

~~Cash proceeds~~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 ~~receivables sold are included~~A/R Sales Agreement is reflected in cash from operating activities in the condensed consolidated statement of cash flows. The SPE incurs fees ~~recorded in connection with~~due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which are immaterial, ~~and~~ are recorded within other non-operating (income) ~~expenses~~expense in the condensed consolidated statements of income. The ~~future amount may fluctuate based on~~SPE has a recourse obligation to repurchase from the ~~level of activity and other factors. The Company maintains continuing involvement with the~~unaffiliated financial institution any previously sold receivables ~~by providing~~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. The associated servicing liability~~services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period. ~~The Company may incur a recourse obligation in limited circumstances. Separate accruals for recourse obligations are immaterial.~~

9.8. 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 ~~and term loan~~ approximate their respective fair values based on the short-term nature of these instruments. As of June 30, 2020, the carrying amount, net of debt issuance costs, and the fair value of fixed rate debt were approximately $1,939,978 and $1,845,693, respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity. The carrying amount, net of debt issuance costs, of fixed rate debt of $1,939,978 is included in long-term debt in the condensed consolidated balance sheets. Refer to the derivatives and hedging footnote for information on the fair value of derivative instruments.

~~10.~~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 Company 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.

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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 ~~flow~~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.

The following table summarizes the location and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships:

June 30, 2020 December 31, 2019
Instrument Balance Sheet Location Notional Balance Notional Balance
Cash flow hedges:
Interest rate swaps Other current liabilities $ 800,000 $ 358 $ 800,000 $ 24,792
Net investment hedges:
Forward contracts Prepaid expenses and other current assets $ 1,160,990 $ 76,169 $ 925,810 $ 39,965
Foreign currency debt Long-term debt € 700,000 $ 786,940 € 700,000 $ 784,000

The derivative instruments are recognized in the condensed 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.

Cash Flow Hedges

The Company uses interest rate swaps to mitigate variability in forecasted interest payments on a portion of the Company’s U.S. dollar-denominated unsecured variable rate debt. The interest rate swaps effectively convert a portion of the floating rate interest payment into a fixed rate interest payment. The Company designates the interest rate swaps as qualifying hedging instruments and accounts for them as cash flow hedges. On May 1,In 2020, the Company ~~dedesignated~~terminated its interest rate swaps and ~~modified them to match~~settled the ~~terms of its modified debt agreement and as a result the $48,492 payable as of that date was deemed a financing transaction. Subsequent~~outstanding balances through cash ~~flows to pay this amount over the~~payments totaling $41,000. The remaining term of the agreement are reflected within financing activities in the condensed consolidated statement of cash flows. This payable is classified within other current liabilities on the condensed consolidated balance sheets. The corresponding amount in AOCL is being amortized to interest expense on a straight-line basis over the remaining life of the previously hedged instrument. The Company redesignated the portion of the modified interest rate swap that is not related to the financing agreement as a qualifying hedging instrument. Gains and losses from fair value adjustments on the cash flow hedges are initially classified in AOCL and are reclassified to interest expense on the dates interest payments are accrued.

~~Hedges of~~ Net ~~Investments in Foreign Operations~~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 forward rate (i.e., the forward points). The initial value of this excluded component is recognized as a reduction to interest expense in a systematic and rational manner over the term of the derivative instrument. All other changes in value for the net investment hedges are included in AOCL within foreign currency translation and would only be reclassified to earnings if the European subsidiary were liquidated, or otherwise disposed.


		March 31, 2021				December 31, 2020
Instrument	Balance Sheet Location	Notional		Balance		Notional		Balance
Net investment hedges:
Forward contracts	Prepaid expenses and other current assets	$	925,810	$	43,870	$	800,000	$	7,668
Forward contracts	Other current liabilities	$	235,180	$	11,556	$	360,990	$	19,442
Foreign currency debt	Long-term debt	€	700,000	$	820,120	€	700,000	$	861,070

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The tables below presents gains and losses related to designated cash flow hedges and net investment hedges:

Gain (Loss) Recognized in AOCL Before Reclassifications Gain Recognized in Interest Expense For Excluded Components
2020 2019 2020 2019
Three Months Ended June 30,
Cash flow hedges:
Interest rate contracts $ (4,370) $ (14,121) $ — $ —
Net investment hedges:
Forward contracts (31,147) (4,300) 7,476 5,008
Foreign currency debt (13,720) (10,570) — —
Total $ (49,237) $ (28,991) $ 7,476 $ 5,008


		Gain (Loss) Recognized in AOCL Before Reclassifications						Gain Recognized in Interest Expense For Excluded Components							Gain (Loss) Recognized in AOCL before Reclassifications				Gain Recognized in Interest Expense for Excluded Components
		2020		2019		2020		2019			2021		2020		2021		2020
Six Months Ended June 30,
Three Months Ended March 31,										Three Months Ended March 31,
Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Interest rate contracts	Interest rate contracts	$	(28,830)	$	(21,567)	$	—	$	—	Interest rate contracts	$	0	$	(24,461)	$	—	$	—
Net investment hedges:	Net investment hedges:									Net investment hedges:
Cross-currency swap		—		2,936		—		2,294
Forward contracts	Forward contracts	15,701		5,641		13,998		6,624		Forward contracts	37,515		46,848		6,574		6,522
Foreign currency debt	Foreign currency debt	(2,940)		5,110		—		—		Foreign currency debt	40,950		10,780		—		—
Total	Total	$	(16,069)	$	(7,880)	$	13,998	$	8,918	Total	$	78,465	$	33,167	$	6,574	$	6,522

~~11.~~10. Commitments and Contingencies

Legal Matters

As more fully discussed in the ~~commitments and contingencies footnote of the~~ Company's notes to the consolidated financial statements in its ~~2019~~2020 Annual Report on Form 10-K, a jury awarded damages against the Company in a litigated automotive product liability dispute. On February 19, 2020, the Washington Court of Appeals issued an order entirely reversing the jury’s finding on damages and ordering a new trial on damages. The plaintiffs subsequently appealed this order to the Washington Supreme ~~Court; on~~Court. On July 7, 2020, the Washington Supreme Court indicated that it ~~will~~would consider a further appeal on this ~~matter.~~matter, and oral arguments occurred on November 10, 2020. A ruling from Washington Supreme Court is expected in 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.

~~Fire at S.P. Richards Headquarters and Distribution Center~~

On July 19, 2019, a fire occurred at the S.P. Richards headquarters in Atlanta, Georgia. The building primarily held the S.P. Richards headquarters office and was connected to its Atlanta distribution center. The Company maintains property and casualty loss insurance coverage. The Company recognized a gain of $1,165 and $13,448 during the three and six months ended June 30, 2020, respectively, for insurance recoveries in excess of losses it has incurred on inventory, property, plant and equipment and other fire-related costs. The gain is included within other non-operating (income) expenses on the condensed consolidated statements of income. The Company expects to receive additional insurance recoveries in the future which will result in additional gains.

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~~12.~~11. Acquisitions, Divestitures and Discontinued Operations

Acquisitions

The Company acquired several businesses for approximately ~~$33,047~~$20,340 and ~~$378,744,~~$20,874, net of cash acquired, during the ~~six~~three months ended ~~June 30,~~March 31, 2021 and March 31, 2020, ~~and June 30, 2019,~~ respectively. The ~~Company finalized the acquisition accounting~~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 ~~and six~~ months ended ~~June 30, 2020.~~March 31, 2021.

Divestitures

The Company received cash proceeds from divestitures of businesses totaling ~~$382,737~~$10,345 and ~~$12,028~~$10,442 for ~~the six months ended June 30, 2020 and June 30, 2019, respectively.~~

~~Grupo Auto Todo~~

On March 7, 2019, the Company sold all of its equity in Grupo Auto Todo, a Mexican subsidiary within the Automotive Parts Group. Grupo Auto Todo contributed annual revenues of approximately $15,900 for the year ended December 31, 2019. ~~The Company incurred realized currency losses of $27,037 from this transaction during~~ the three months ended ~~June 30, 2019. These losses are included within other non-operating (income) expenses on the condensed consolidated statements of income.~~March 31, 2021 and March 31, 2020, respectively.

Discontinued Operations

Business Products Group

~~Effective June 30,~~During 2020, the Company completed the divestiture of its Business Products Group ~~by selling Supply Source Enterprises, Inc. ("SSE") and S.P. Richards Company ("SPR") in separate transactions. There may be additional cash payments or receipts in subsequent quarters~~ as ~~the Company finalizes customary post-transaction working capital adjustments. These divestitures are~~ part of ~~the Company's~~its long-term strategic initiative to streamline its operations and optimize its portfolio so that it can drive shareholder value by focusing on its global Automotive and Industrial Parts Groups. The Business Products Group was previously a reportable segment of the Company. These divestitures, together with prior period divestitures of Garland C. Norris (effective December 13, 2019), SPR Canada (effective January 1, 2020) and Safety Zone Canada (effective March 2, 2020), representThis divestiture represented a single plan to exit the Business Products Group segment and ~~are~~was considered a strategic shift that ~~will have~~had a major effect on the Company’s operations and financial results. Therefore, the results of operations, financial position and cash flows for the Business Products Group are reported as discontinued operations for all periods presented.

The Company retains 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 on the condensed consolidated balance sheets, as of March 31, 2021. The Company maintains an ~~immaterial~~allowance equal to the current expected credit loss based on a consideration of

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historical experience, current market conditions and reasonable and supportable forecasts related to this investment inand 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. The~~entity, but the Company is not the primary beneficiary and therefore ~~does~~the entity is not ~~consolidate SPR.~~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 a transition services agreement.

The Company’s results of operations for discontinued operations were:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net sales $ 379,938 $ 476,329 $ 846,944 $ 954,033
Cost of goods sold 277,614 360,452 632,007 722,786
Gross profit 102,324 115,877 214,937 231,247
Operating expenses 89,385 95,947 179,461 190,820
Loss (gain) on disposal 216,133 — 220,318 1,000
Income before income taxes (203,194) 19,930 (184,842) 39,427
Income taxes (1) (2,323) 5,019 1,840 9,950
Net (loss) income from discontinued operations $ (200,871) $ 14,911 $ (186,682) $ 29,477
Basic (loss) earnings per share from discontinued operations $ (1.39) $ 0.10 $ (1.29) $ 0.20
Diluted (loss) earnings per share from discontinued operations $ (1.39) $ 0.10 $ (1.29) $ 0.20
Weighted average common shares outstanding 144,262 146,075 144,657 146,029
Weighted average common shares outstanding – assuming dilution 144,262 146,736 144,657 146,713

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~~(1)Income taxes include a $7,125 tax benefit associated with the (loss) gain on the disposal for the three and six months ended June 30, 2020.~~

~~The Company’s assets and liabilities for discontinued operations, by major class, were:~~


			~~December~~Three Months Ended March 31, ~~2019~~2020
~~Assets~~
~~Trade accounts receivable, net~~	Net sales		$	~~194,903~~467,006
~~Merchandise inventories, net~~Cost of goods sold	354,393	~~387,307~~
~~Prepaid expenses and other current assets~~Gross profit	112,613	~~132,041~~
~~Other intangible assets, less accumulated amortization~~			~~76,829~~
Operating ~~lease assets~~			~~80,302~~ and non-operating expenses		90,076
~~Other assets~~Loss on divestiture	4,185	~~91,640~~
~~Total assets of~~Income before income taxes	18,352
Income taxes	4,163
Net income from discontinued operations			$	~~963,022~~14,189

~~Liabilities~~
~~Trade accounts payable~~			$	~~158,163~~
~~Other current liabilities~~			~~59,954~~
~~Operating lease liabilities~~			~~68,906~~
~~Total liabilities of discontinued operations~~			$	~~287,023~~

~~13. Goodwill and Other Intangible Assets~~

Total consolidated goodwill as of June 30, 2020 is $1,771,835, net of $506,721 of accumulated impairment loss. The changes in the carrying amount of goodwill during the periods ended June 30, 2020 and December 31, 2019 by reportable segment, as well as other identifiable intangible assets, are summarized as follows:

Goodwill
Automotive Industrial Total Other Intangible Assets, Net
Balance as of December 31, 2019 $ 1,897,495 $ 396,024 $ 2,293,519 $ 1,492,097
Additions (1) 10,672 (3,346) 7,326 7,224
Amortization — — — (45,996)
Impairments (506,721) — (506,721) —
Foreign currency translation (17,682) (4,607) (22,289) (30,645)
Balance as of June 30, 2020 $ 1,383,764 $ 388,071 $ 1,771,835 $ 1,422,680

~~(1) Additions include measurement period adjustments related to prior year acquisitions.~~

The Company reviews its goodwill annually for impairment in the fourth quarter, or sooner if circumstances indicate that the carrying amount may exceed fair value. The Company tests goodwill for impairment at the reporting unit level, which is an operating segment or a level below an operating segment (a component).

Due to several factors that coalesced in the second quarter of 2020 the Company performed an interim impairment test as of May 31, 2020 for its European reporting unit and recorded a goodwill impairment charge of $506,721. The factors primarily resulted from the ongoing market volatility and uncertainty caused by the COVID-19 pandemic, which have extended into the second quarter and have impacted several critical impairment testing assumptions including weighted average cost of capital and market multiples, and near-term revenue and operating margin projections for the reporting unit. The Company also assessed the finite-lived, identifiable tangible and intangible assets at the European reporting unit for impairment under the undiscounted cash flows approach and concluded there was no impairment.

The European reporting unit’s fair value was calculated using a combination of both income and market approaches and involved significant unobservable inputs (Level 3 inputs). The assumptions used in the income approach include projected

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revenue growth rates, operating margins, the estimated weighted average costs of capital and terminal value. The weighted-average cost of capital used in the income approach was adjusted to reflect the specific risks and uncertainties associated with the COVID-19 pandemic in developing the cash flow projections. The assumptions used in the market approach include benchmark company market multiples. The Company used inputs and assumptions it believed are consistent with those a hypothetical marketplace participant would use. The interim impairment tests were prepared in accordance with the Company's accounting policies as described in the summary of significant accounting policies footnote in its consolidated financial statements included in its Annual Report on Form 10-K for 2019.

Should actual results differ from certain key assumptions used in the interim impairment test, including revenue and operating margin growth rates, which are both impacted by economic conditions, or should other key assumptions change, including benchmark company market multiples, weighted average costs of capital and terminal value, in subsequent periods the Company could record additional impairment charges for this reporting unit.

If there are sustained declines in macroeconomic or business conditions in future periods, including as a result of the COVID-19 pandemic, affecting the projected earnings and cash flows at the Company's reporting units, among other things, there can be no assurance that goodwill at one or more reporting units may not be impaired. Based on the Company's interim impairment assessment as of June 30, 2020, which included reviewing the previous revenue and operating margin growth forecasts based on the current projections, the Company has determined that it is not more likely than not that the goodwill is impaired for all other reporting units.

~~14. Income Taxes~~

The Company's effective income tax rate was negative 19.4% for the three months ended June 30, 2020, compared to 25.8% for the same three month period in 2019. The effective income tax rate was negative 67.7% for the six months ended June 30, 2020, compared to 25.1% for the same period in 2019. The rate decrease is primarily due to the non-deductible goodwill impairment charge and certain transaction and other costs.

~~15.~~12. Earnings Per Share

As more fully discussed in the share-based compensation footnote of the Company’s notes to the consolidated financial statements in its ~~2019~~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. ~~Options~~Certain outstanding options to purchase ~~approximately 2,537 and 2,418 shares of common stock were outstanding but excluded from~~are not included in the ~~computations of~~ diluted earnings per share for the three and six month period ended June 30, 2020, respectively, as compared to approximately 247 and 135 for the three and six month period ended June 30, 2019, respectively. These options were excludedcalculation because their inclusion would have been anti-dilutive.

~~16. Restructuring~~

~~2019 Cost Savings Plan~~

~~As more fully discussed in~~ There were 0 anti-dilutive shares outstanding for the ~~restructuring footnote of~~three months ended March 31, 2021, as compared to approximately 1,410 for the Company's notes to the consolidated financial statements in its 2019 Annual Report on Form 10-K, the Company approved and began to implement certain restructuring actions (the “2019 Cost Savings Plan”) across its subsidiaries primarily targeted at simplifying organizational structures and distribution networks. The Company believes these actions will reduce costs in the future and allow it to more effectively and efficiently manage its businesses.

~~The table below summarizes costs incurred in 2020 associated with the 2019 Cost Savings Plan:~~


	~~Total~~
~~Restructuring costs~~	$	~~28,041~~
~~Remaining costs expected but not yet incurred~~	~~6,863~~
~~Total costs~~	$	~~34,904~~

The 2019 Cost Savings Plan was approved and funded by the Company's corporate office and therefore these costs are not allocated to the Company's segments. The cumulative amount of costs incurred as of June 30, 2020 since inception is $182,982.

The table below summarizes the activity related to the restructuring costs discussed above. As of June 30, 2020, the current portion of the restructuring liability of $32,586 is included in other current liabilities on the condensed consolidated balance sheet.three months ended March 31, 2020.

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Severance and other employee costs Facility and closure costs Accelerated operating lease costs Asset impairments Total
Liability as of January 1, 2020 $ 72,192 $ 6,639 $ — $ — $ 78,831
Restructuring costs 9,236 7,316 5,496 5,993 28,041
Cash payments (56,303) (5,098) — — (61,401)
Non-cash charges — — (5,496) (5,993) (11,489)
Translation (522) (84) — — (606)
Liability as of June 30, 2020 $ 24,603 $ 8,773 $ — $ — $ 33,376

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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, ~~2019.~~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 we~~or 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,” ~~and variations of such words and~~or similar expressions are intended to identify such forward-looking statements. ~~Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.~~ These forward-looking statements include ~~without limitation,~~ our expected ability to operate and protect our workforce during the COVID-19 pandemic, our ~~strategy to grow~~strategies for growing our ~~higher-margin~~ 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.

~~The Company cautions~~We caution you that ~~its~~all 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 extent and duration of the disruption to our business operations caused by the global health crisis associated with the COVID-19 ~~outbreak,~~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 capital and liquidity provided by the financial and capital markets; ~~the Company’s~~our ability to maintain compliance with ~~its~~our debt covenants; ~~the Company's~~our ability to successfully integrate acquired businesses into ~~the Company~~our operations and to realize the anticipated synergies and benefits; ~~the Company's ability to successfully divest businesses; the Company's~~our ability to successfully implement ~~its~~our business initiatives in ~~its~~our two business segments; slowing demand for ~~the Company's~~our products; the 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 ~~as well as~~and our supply chain; changes in national and international legislation or government regulations or policies, including changes to import tariffs, ~~short-term government subsidies,~~environmental and ~~the unpredictability of such changes~~social policy, infrastructure programs and privacy legislation, and their impact to ~~the Company~~us and ~~its~~our suppliers and ~~customers, data security policies and requirements as well as privacy legislation;~~customers; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation and the United Kingdom's (“U.K.”) exit from the European Union ~~commonly known as Brexit,~~ and the unpredictability of the impact following such ~~exit from the European Union;~~exit; changes in tax policies; volatile exchange rates; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; ~~the Company's~~our ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting, including as a result of the work from home environment; the uncertainties and costs of litigation; disruptions caused by a failure or breach of ~~the Company's~~our information systems, as well as other risks and uncertainties discussed in ~~the Company's~~our 2020 Annual Report on Form 10-K ~~for 2019, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020~~ and Item 1A, ~~risk factors,~~Risk Factors, in this report on Form 10-Q (all of which risks may be amplified by the COVID-19 ~~outbreak)~~pandemic) and from time to time in ~~the Company's~~our subsequent filings with the SEC.

Forward-looking statements ~~are~~speak only as of the date they are made, and ~~the Company undertakes~~we undertake no duty to update ~~its~~any forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K and other reports filed with the SEC.

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Overview

Genuine Parts Company is a service organization engaged in the global distribution of automotive ~~replacement parts~~ and industrial replacement parts. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. ~~The Company conducts~~We conduct business in North America, Europe and Australasia from ~~approximately 3,600~~a network of more than 10,000 locations.

Our Automotive Parts Group operated in the U.S., Canada, Mexico, France, the U.K., Germany, Poland, the Netherlands, Belgium, Australia and New Zealand as of March 31, 2021, and accounted for 66% of total revenues for the three months ended March 31, 2021. Our Industrial Parts Group operated in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and

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Singapore. The Industrial Parts Group accounted for 34% of the Company's total revenues for the three months ended March 31, 2021.

At Genuine Parts Company, our mission is to be a world-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.

~~The Company's Automotive Parts Group operated~~COVID-19 Pandemic

Our business and results of operations improved in the ~~U.S., Canada, Mexico, France,~~first quarter of 2021 relative to the ~~U.K., Germany, Poland,~~first quarter of 2020 as a result of several positive trends caused by the ~~Netherlands, Belgium, Australia and New Zealand as of June 30, 2020, and accounted for 64% of total revenues for~~global response to the six months ended June 30, 2020. Our Industrial Parts Group operated in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore. The Industrial Parts Group accounted for 36% of the Company's total revenues for the six months ended June 30, 2020. During the six months ended June 30, 2020, the Company completed the divestiture of its Business Products Group and has accounted for this segment as discontinued operations for the periods presented.

~~COVID-19 Pandemic~~

~~The~~ COVID-19 outbreak, which was declared a pandemic byin March 2020. In particular, as widespread vaccine distribution continued, we have seen economic recovery in many of the ~~World Health Organization (“WHO”) on March 11, 2020, continues~~markets where we operate and a significant uptick in consumer mobility. However, some areas continue to ~~evolve rapidly. Our deepest~~experience renewed outbreaks and ~~sincere thoughts go out to all affected by COVID-19, as well as the dedicated healthcare workers and first responders who are on the front lines for all our citizens.~~

~~Overall,~~surges in infection rates. As a result, our business segments continue to face many ~~uncertainties. The results of~~uncertainties and our operations ~~for the six months ended June 30, 2020 are not necessarily indicative of results for the entire year. The Company's operations are~~remain vulnerable to ~~the reduced economic activity~~reversal of these trends or other continuing negative effects caused by the COVID-19 outbreak, which led many governments to put in place temporary social distancing and shelter-in-place mandates in late March and early April. As a result, our business segments experienced slowing sales trends as we entered the second quarter. Sales results sequentially improved throughout the second quarter of 2020 as markets reopened and governments eased restrictions.

pandemic.

The extent to which the COVID-19 pandemic impacts ~~the Company~~us will depend on numerous factors and future developments that we cannot predict, including the severity of the virus; the occurrence of ~~a “second wave”~~additional waves or ~~additional spikes;~~spikes in infection rates; the duration of the outbreak; governmental, business or other actions taken in response to the ~~pandemic;~~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 on customer demand. While the negative impact on our business operations cannot be reasonably estimated at this time, our teams are preparing for multiple scenarios to ensure we continue to protect our employees while also keeping our operations up and running to serve our customers.

During the first quarter we created a dedicated COVID-19 Taskforce and added enhanced protocols in response to COVID-19, including implementing many of the recommendations and requirements issued by the Centers for Disease Control and Prevention, WHO, and local, state and national health authorities, to protect our employees, customers, suppliers and communities.

As of ~~June 30, 2020,~~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 ~~they~~certain inventory shortages, delays in order fulfillment and increased backlogs our partners continue to do their part to ~~ensure~~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 ~~the Company,~~our business, please see “Results of Operations,” “Financial Condition,” “Liquidity and Capital Resources,” “Changes in Internal Control over Financial Reporting,” ~~item~~Item 1A, “Risk Factors,” and ~~item~~Item 2, “Issuer Repurchase of Equity Securities” in this report, which isare incorporated herein by reference.

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Key Business Metrics

We consider comparable sales ~~daily sales and number of miles driven~~ to be a key business ~~metrics~~metric because management has evaluated its results of operations using ~~these metrics~~this metric and ~~believes~~we believe that ~~these~~this key ~~indicators provide~~indicator provides additional perspective and insights when analyzing the operating performance of ~~the Company~~our business from period to period and trends in its historical operating results. ~~These metrics~~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 ~~(also called organic sales or core sales)~~ refer to period-over-period comparisons of our net sales excluding the impact of acquisitions, ~~divestitures~~foreign currency and ~~foreign currency. The Company considers~~other. We consider this metric useful to investors because it provides greater transparency into management’s view and assessment of ~~the Company’s~~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 manner.

~~Daily Sales~~

Daily sales is a key metric that represents the amounts invoiced to the Company's customers each day. Daily sales do not represent GAAP-based sales because, among other things, invoices are not always generated at the same time goods and services are delivered to customers and the amounts do not include adjustments for estimates of returns, rebates or other forms of variable consideration. Management uses this metric to monitor demand trends at each of its subsidiaries throughout each month for the purposes of monitoring performance against forecasts and to make operational decisions. The Company considers this metric useful to investors because it provides greater transparency into management’s view and assessment of the Company’s core ongoing operations. The calculation of this metric may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate this metric in the same manner.

~~Number of Miles Driven~~

The Company considers the number of miles driven, which is an industry-generated metric, to be a key metric because it influences the demand for repair and maintenance products sold within the automotive aftermarket. We believe including this metric is useful to investors because it provides greater transparency into management’s view and assessment of trends in the Automotive Parts Group.

Results of Operations

Overview

~~The Company has remained substantially open~~As a result of COVID-19 vaccine distribution and its positive impact on consumer mobility and demand, we are encouraged by the increased economic activity globally during the ~~COVID-19 pandemic, which slowed mobility and overall economic activity. Despite the challenges~~first quarter of ~~these unprecedented business conditions, our North American and Australasian automotive operations operated well and~~2021. Our Automotive Parts Group reported improved sales and segment profit ~~margins. In addition, our~~margin across all regions during the three months ended March 31, 2021 when compared to the same prior year period and also when compared to the same period in 2019. Our Industrial Parts Group ~~maintained a flat operating~~experienced continued recovery in their operations with improved sales trends and segment profit margin ~~with~~this quarter when compared to the ~~prior year quarter. The Company~~same period in both 2020 and 2019. We improved ~~its~~our total ~~gross~~segment profit margin in the quarter and ~~executed on a number~~are generating gross margin gains and realizing the continued benefits of ~~accelerated~~our cost savings initiatives to more effectively leverage our cost structure. ~~As a result~~We believe our Automotive

Table of ~~COVID-19~~Contents

Parts Group also benefited from improving product availability and ~~its negative impact on demand,~~colder weather in North America and Europe as compared to the ~~Company has experienced and may continue to experience a decrease~~same period in ~~volume-based buying incentives and increased freight, insurance, IT and cybersecurity costs.~~the prior year. In addition, ~~primarily due to~~we believe the ~~significant impact of COVID-19 on the financial performance~~pandemic-related government stimulus benefited many of our ~~European reporting unit,~~U.S. customers to further drive demand. Our Industrial Parts Group benefited from the ~~Company recognized a goodwill impairment charge of $506.7 million. These trends~~strengthening industrial economy, which is evident in indicators such as the Purchasing Managers Index and ~~uncertainties may persist and impact future results.~~Industrial Production Index.

Sales

Sales for the three months ended ~~June 30, 2020~~March 31, 2021 were ~~$3.8~~$4.5 billion, a ~~14.2% decrease as~~9.1% increase compared to ~~$4.5~~$4.1 billion in the same period of the prior year period. The decrease in sales is attributable to a 13.7% decline in comparable sales driven primarily by COVID-19 and related government actions, a 4.1% impact from divestitures and the net impact of foreign currency and other of 0.6%. These items were partially offset by a 4.2% benefit from acquisitions. Sales for ~~the six months ended June 30, 2020 were $7.9 billion, a 9.2% decrease as compared to $8.7 billion in~~ the same period of the prior year. The ~~decline~~increase in sales is ~~due~~attributable to a ~~9.0%~~4.6% increase in comparable sales, ~~decrease due primarily to decreased demand caused by COVID-19,~~ a ~~4.5%~~net favorable impact ~~from divestitures and a 0.7% impact from~~of foreign currency and ~~other. These items were partially offset~~other of 3.7%, and a 0.8% benefit from acquisitions. Foreign currency was positively impacted by ~~a 5.0% positive impact from acquisitions.~~the strengthening of the Australian dollar, Euro and Canadian dollar as compared to the U.S. dollar.

Sales for the Automotive Parts Group ~~decreased 10.1%~~increased 14.3% for the three months ended ~~June 30, 2020, as~~March 31, 2021 compared to the same period in the prior year. This group's revenue ~~decrease~~increase for the three months ended ~~June 30, 2020~~March 31, 2021 consisted of an approximate ~~12.6% decrease~~8.3% increase in comparable sales driven ~~primarily~~ by ~~COVID-19 and related government actions and~~strong demand in all geographical regions, the net impact of ~~unfavorable~~favorable foreign currency and other of ~~0.7%. These items were partially offset by a 3.2% benefit from acquisitions. This~~

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~~group's 6.0% revenue decrease for the six months ended June 30, 2020 consisted of an approximate 8.9% decrease in comparable sales, a 1.0% net unfavorable impact from foreign currency and other~~5.1%, and a ~~0.3% impact from the sale of Grupo Auto Todo in March of 2019. These items were partially offset by a 4.2%~~0.9% benefit from acquisitions.

Sales for the Industrial Parts Group ~~decreased 21.1%~~increased 0.1% for the three months ended ~~June 30, 2020,~~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, mostly offset by an approximate 1.8% decrease in comparable sales as compared to the same period in 2019. The decrease in this group's revenues reflects an approximate 16.7% decrease in comparable sales driven primarily by COVID-19 and related government actions, a 10.9% impact from the sale of EIS, which was sold in the third quarter of 2019, and a slightly unfavorable foreign currency impact. These declines were slightly offset by a 6.7% benefit from acquisitions. This group's 14.5% sales decrease for the six months ended June 30, 2020 reflects a 9.9% decrease in comparable sales, an 11.7% impact from the sale of EIS and a slight impact from foreign currency. This decrease was partially offset by a 7.2% benefit from acquisitions.2020.

Cost of Goods Sold and Operating Expenses

Cost of goods sold for the three months ended ~~June 30, 2020~~March 31, 2021 was ~~$2.5~~$2.9 billion, ~~a 14.9% decrease~~an 8.1% increase from ~~$3.0~~$2.7 billion for the same period in ~~2019.~~2020. As a percentage of net sales, cost of goods sold was ~~66.2%~~65.5% for the three months ended ~~June 30, 2020, as~~March 31, 2021, compared to ~~66.7% in~~66.1% for the same three month period of ~~2019.~~2020. Cost of goods sold for the six months ended June 30, 2020 was $5.2 billion, a 10.3% decrease from $5.8 billion for the same period in 2019. As a percentage of net sales, cost of goods sold was 66.2% for the six months ended June 30, 2020, as compared to 67.0% in the same six month period of 2019. The decrease in cost of goods sold for the three and six months ended June 30, 2020 primarily relates to the impact of divestitures and the overall decrease in sales volume due to COVID-19 for these periods as compared to the same three and six month period of the prior year. The resulting improvement in gross margin, which we have reported for 11 consecutive quarters, is attributable to the favorable impact of divestitures as well as the acquisitions of higher gross margin businesses. These items, as well as strategic category management initiatives including pricing and global sourcing actions and favorable product mix shifts were partially offset by a decrease in supplier incentives due to lower purchasing volumes. The Company’s cost of goods sold includes the total cost of merchandise sold, including freight expenses associated with moving merchandise from our ~~supplier~~suppliers to our distribution centers, retail stores and branches, as well as supplier volume incentives and inventory adjustments. Gross profit as a percentage of net sales may fluctuate based on (i) changes in merchandise costs and related supplier 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, (v) changes in foreign currency exchange rates, and (vi) the impact of tariffs. ~~Tariffs did not~~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 ~~a material impact in the periods presented.~~reported improved year over year gross margin for 14 consecutive quarters.

Total operating expenses increased 4.3% to ~~$1.6~~$1.3 billion for the three months ended ~~June 30, 2020 as~~March 31, 2021 compared to $1.2 billion for the same three month period in ~~2019.~~2020. As a percentage of net sales, operating expenses ~~increased~~decreased to ~~41.4% as~~28.5% compared to ~~26.8%~~29.8% in the ~~same~~ three month ~~period of the previous year. For the six months~~periods ended ~~June 30,~~March 31, 2021 and 2020, ~~these expenses totaled $2.8 billion as compared to $2.4 billion for the same six month period~~respectively. The decrease in ~~2019. As a percentage of net sales, operating expenses increased to 35.4% as compared to 27.2% in the same six month period of the previous year.~~

~~The increase in total~~ operating expenses as a percentage of net sales for the ~~three and six months ended June 30, 2020~~period is primarily related to ~~the goodwill impairment charge related to our European reporting unit~~improved leverage on stronger sales and the restructuring, transaction and other costs and income recorded thus far in 2020. Additionally, the Company continues to experience the effects of rising costs in areas such as insurance, IT and cyber-security and its ability to leverage its expenses was negatively impacted by lower comparable sales relative to the prior year. To offset these trends, the Company is focused on the execution of ongoing cost control initiatives, including its $100 million cost savings plan announced in 2019. In association with this plan we achieved $40 million in savings in the second quarter of 2020 for a total of $70 million in expense reductions through June 30, 2020. In addition, the Company benefited from accelerated cost reduction initiatives implemented in association with the onset of COVID-19. Combined, these initiatives produced cost savings in payroll, freight, facility, legal and professional costs, among others, of approximately $200 million in the second quarter of 2020. Included in the savings are approximately $40 million of temporary government subsidies received by certain of our foreign operations.initiatives.

~~The Company’s~~Our operating expenses are substantially comprised of compensation and benefit-related costs for personnel. Other major expense categories include facility occupancy costs for headquarters, distribution centers and retail store/branch operations, ~~insurance~~transportation and delivery costs, technology and digital costs, accounting, legal and professional services, ~~technology and digital costs, transportation and delivery~~insurance costs, and 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 generally remain consistent.

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Segment Profit

Segment profit decreased to $327.8 million for the three months ended June 30, 2020, compared to $365.1 million for the same three month period of the prior year, a decrease of 10.2%. Segment profit margin was 8.6% as compared to 8.2% in the same three month period of 2019. The increase in segment profit margin for the three months ended June 30, 2020 reflects the improvement in gross margin and significant cost savings relative to the prior year. For the six months ended June 30, 2020, segment profit decreased to $584.3 million compared to $665.7 million for the same six month period of the prior year, a decrease of 12.2%. Segment profit margin was 7.4% as compared to 7.6% in the same six month period of 2019, driven by reduced sales volume as a result of COVID-19 and its impact on leverage prior to the Company's implementation of its accelerated cost initiatives in the second quarter of 2020.

As more fully discussed in our 2019 Form 10-K, in the fourth quarter of 2019 the Company began to implement certain restructuring actions across its subsidiaries under the 2019 Cost Savings Plan, primarily targeted at simplifying organizational structures and distribution networks. We believe that these actions, coupled with our ongoing focus on driving top line sales growth and accelerated cost initiatives in response to COVID-19, will continue to create value for our stakeholders.

The Automotive Parts ~~Group’s~~Group's segment profit ~~decreased 4.3%~~increased 65.3% in the three months ended ~~June 30, 2020 as~~March 31, 2021 compared to the same period of ~~2019,~~2020, and its segment profit margin ~~was 8.8% as~~increased to 8.0% compared to ~~8.2% in~~5.5% for the same period of the previous year. This improvement in segment profit margin reflects the strong operating results in ~~our North American and Australasian businesses,~~all geographical regions, driven by ~~significant cost reductions~~primarily strong sales trends and the ~~benefit~~execution of ~~government subsidies in~~ our ~~international businesses. For the six months ended June 30, 2020, the Automotive Parts Group's segment profit decreased approximately 11.5%~~growth and the segment profit margin was 7.1% as compared to 7.6% in the same six month period of 2019. The decrease in segment profit margin for the six months is primarily due to the deleveraging of expenses due to lower automotive sales volumes, although the Canadian and Australasian operations have operated well and show improved segment profit margins for the six months in 2020 relative to 2019.operating initiatives.

The Industrial Parts Group's segment profit ~~decreased 20.1%~~increased 10.0% in the three months ended ~~June 30, 2020 as~~March 31, 2021 compared to the same three month period of ~~2019,~~2020, and ~~the~~its segment profit margin ~~for this group was 8.2%~~increased to 8.3% compared to 8.1% for the same period of the previous year. Segment profit for the Industrial Parts Group decreased 13.4% in the six months ended June 30, 2020 as compared to the same six month period of 2019, and the segment profit margin for this group improved to 7.9% compared to 7.8%7.5% for the same period of the previous year. The improved segment profit ~~margins for both periods reflect the growing efficiencies in Industrial Parts Group's operating structure as well as the positive impact of acquisitions~~margin reflects gross margin expansion and ~~the sale of EIS.~~

~~Goodwill Impairment~~

~~Due~~reduced expenses related to ~~several factors that coalesced in the second quarter of 2020 we performed an interim impairment test as of May 31, 2020 for~~ our European reporting unit and recorded a goodwill impairment charge of $506.7 million. These factors primarily resulted from the ongoing market volatility and uncertainty caused by the COVID-19 pandemic, which have extended into the second quarter and have impacted several critical impairment testing assumptions including weighted average cost of capital and market multiples, and near-term revenue and operating margin projections for the reporting unit. Refer to the goodwill and other intangible assets footnote within the notes to the condensed consolidated financial statements for additional information. If there are sustained declines in macroeconomic or business conditions in future periods, including as a result of the continued COVID-19 pandemic, affecting the projected earnings and cash flows at our reporting units, among other things, there can be no assurance that goodwill at one or more reporting units may not be impaired. However, as of June 30, 2020, we determined that there were no other indicators that goodwill was impaired at any of our other reporting units.control initiatives.

Income Taxes

~~The Company's~~Our effective income tax rate was ~~negative 19.4%~~23.8% for both the three months ended June 30, 2020, compared to 25.8% for the same three month period in 2019. The effective income tax rate was negative 67.7% for the six months ended June 30, 2020, compared to 25.1% for the same period in 2019. The rate decrease is primarily due to the non-deductible goodwill impairment chargeMarch 31, 2021 and ~~certain transaction and other costs.~~March 31, 2020.

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Net ~~(Loss)~~ Income from Continuing Operations

For the three months ended ~~June 30, 2020, the Company recorded consolidated~~March 31, 2021, net ~~loss~~income from continuing operations was $217.7 million, an increase of ~~$363.5 million, a decrease of 273.5% as~~77.9% compared to ~~consolidated~~ net income from continuing operations of ~~$209.5~~$122.3 million infor the same three month period of the prior year. On a per share diluted basis, net ~~loss~~income from continuing operations was ~~$2.52, a decrease~~$1.50, an increase of ~~276.2% as~~78.6% compared to ~~net income per diluted share of $1.43~~$0.84 for the same three month period of 2019. For the six months ended June 30, 2020, the Company recorded consolidated net loss from continuing operations of $241.2 million, a decrease of 167.9% as compared to consolidated net income from continuing operations of $355.2 million in the same six month period of the prior year. On a per share diluted basis, net loss from continuing operations was $1.67, a decrease of 169.0% as compared to net income per diluted

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~~share of $2.42 in the same six month period of 2019. The decrease in income for these periods was primarily driven by reduced sales volume as a result of COVID-19.~~2020.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, ~~the Company~~we incurred ~~$555.5~~$1.8 million ~~and $553.8 million, respectively,~~ of adjustments. These adjustments ~~include a goodwill impairment charge of $506.7 million~~represent restructuring costs, insurance proceeds related to ~~our European reporting unit and also represents restructuring costs, realized currency losses~~the SPR Fire, and transaction and other ~~costs and income.~~costs. Transaction and other costs primarily include incremental costs associated with certain divestitures and COVID-19, slightly offset by income from the SPR Fire insurance proceeds. Refer to the acquisitions, divestitures and discontinued operations footnote and commitments and contingencies footnote for more information.COVID-19.

For the three months ended ~~June 30, 2020, before the impact of goodwill impairment, realized currency losses, restructuring, transaction and other costs and insurance proceeds related to the SPR fire, the Company's adjusted~~March 31, 2021, net income from continuing operations on an adjusted basis was ~~$190.5~~also $217.7 million, ~~a decrease~~an increase of ~~11.5% as~~86.4% compared to adjusted net income from continuing operations of ~~$215.4~~$116.8 million infor the same three month period of the prior year. On a per share basis, ~~adjusted~~ net income from continuing operations on an adjusted basis was ~~$1.32~~$1.50 for the three months ended ~~June 30, 2020, a decrease~~March 31, 2021, an increase of ~~10.2% as~~87.5% compared to ~~$1.47~~$0.80 for the same three month period of ~~2019.~~2020. For ~~the six months ended June 30,~~ 2020, ~~before giving effect to the adjustments discussed above,~~ adjusted net income from continuing operations was $307.3 million, a decrease of 20.7% for the same six month period of 2019. On a per share diluted basis, adjusted net income from continuing operations was $2.12 for the six months ended June 30, 2020, a decrease of 19.4% as compared to $2.63 for the same six month period of the prior year. Each of adjusted net (loss) income from continuing operations and adjusted diluted net ~~(loss)~~ income from continuing operations per common share ~~is a~~are both non-GAAP ~~measure~~measures (see table below for reconciliations to the most directly comparable GAAP measures).

The following table sets forth a reconciliation of net ~~(loss)~~ income from continuing operations and diluted net ~~(loss)~~ income from continuing operations per common share to adjusted net ~~(loss)~~ income from continuing operations and adjusted diluted net ~~(loss)~~ income from continuing operations per common share to account for the impact of these adjustments. ~~The Company believes~~We believe that the presentation of adjusted net ~~(loss)~~ income from continuing operations and adjusted diluted net ~~(loss)~~ income from continuing operations per common share, ~~which are not calculated in accordance with GAAP,~~ when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of the Company's core operations. ~~The Company considers~~We consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of ~~the Company’s~~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 not associated with ~~the Company’s~~our core operations. ~~The Company does~~We do not, nor ~~does it~~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 June 30, Six Months Ended June 30,
(in thousands) 2020 2019 2020 2019
GAAP net (loss) income from continuing operations $ (363,501) $ 209,519 $ (241,155) $ 355,203
Adjustments:
Goodwill impairment charge (1) 506,721 — 506,721 —
Restructuring costs (2) 25,059 — 28,041 —
Realized currency loss (3) 11,356 — 11,356 27,037
Gain on insurance proceeds related to SPR Fire (4) (1,166) — (13,448) —
Transaction and other costs (5) 13,555 4,108 21,104 10,185
Total adjustments 555,525 4,108 553,774 37,222
Tax impact of adjustments (1,500) 1,769 (5,310) (5,140)
Adjusted net income from continuing operations $ 190,524 $ 215,396 $ 307,309 $ 387,285


	Three Months Ended March 31,
(in thousands)	2021		2020
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 assuming dilution:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020
GAAP net (loss) income from continuing operations		(2.52)		1.43		(1.67)		2.42
GAAP net income from continuing operations										GAAP net income from continuing operations	$	1.50	$	0.84

Adjustments:	Adjustments:									Adjustments:
Goodwill impairment charge (1)		3.51		—		3.50		—
Restructuring costs (2)		0.17		—		0.19		—
Realized currency loss (3)		0.08		—		0.08		0.18
Gain on insurance proceeds related to SPR Fire (4)		(0.01)		—		(0.09)		—
Transaction and other costs (5)		0.10		0.03		0.15		0.07
Restructuring costs (1)										Restructuring costs (1)	—		0.02
Gain on insurance proceeds related to SPR Fire (2)										Gain on insurance proceeds related to SPR Fire (2)	—		(0.08)
Transaction and other costs (3)										Transaction and other costs (3)	—		0.05
Total adjustments	Total adjustments	3.85		0.03		3.83		0.25		Total adjustments	—		(0.01)
Tax impact of adjustments	Tax impact of adjustments	(0.01)		0.01		(0.04)		(0.04)		Tax impact of adjustments	—		(0.03)
Adjusted diluted net income from continuing operations per common share	Adjusted diluted net income from continuing operations per common share	$	1.32	$	1.47	$	2.12	$	2.63	Adjusted diluted net income from continuing operations per common share	$	1.50	$	0.80
Weighted average common shares outstanding – assuming dilution	Weighted average common shares outstanding – assuming dilution	144,262		146,736		144,657		146,713		Weighted average common shares outstanding – assuming dilution	145,300		145,623

The table below clarifies where the ~~items that have been~~ adjusted ~~above to improve comparability of the financial information from period to period~~items are presented in the condensed consolidated statements of income.


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020
Line item:	Line item:									Line item:
Cost of goods sold		$	12,891	$	2,960	$	12,891	$	2,960
Selling, administrative and other expenses	Selling, administrative and other expenses	663		1,148		8,213		7,225		Selling, administrative and other expenses	$	—	$	7,549
Goodwill impairment charge		506,721		—		506,721		—
Restructuring costs	Restructuring costs	25,059		—		28,041		—		Restructuring costs	—		2,982
Non-operating (income): Other		10,191		—		(2,092)		27,037
Non-operating (income) expense: Other										Non-operating (income) expense: Other	—		(12,282)
Total adjustments	Total adjustments	$	555,525	$	4,108	$	553,774	$	37,222	Total adjustments	$	—	$	(1,751)

~~(1) Adjustment reflects the second quarter goodwill impairment charge related to our European reporting unit.~~

~~(2)~~(1) Adjustment reflects restructuring costs related to the ~~ongoing~~ execution of the 2019 Cost Savings ~~Plan announced in the fourth quarter of 2019.~~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 realized currency losses related to divestitures.~~

~~(4)~~(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.

~~(5)~~(3) Adjustment ~~reflects (i) $2.5 million and $8.5~~includes $6.0 million of incremental costs associated with COVID-19 for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 ~~respectively,~~ and ~~(ii)~~ 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’s~~Our cash balance of ~~$983.8 million~~$1.1 billion at ~~June 30, 2020~~March 31, 2021 increased ~~$706.8~~$127.8 million, or ~~255.2%~~12.9%, from December 31, ~~2019.~~2020. For the ~~six~~three months ended ~~June 30, 2020, the Company~~March 31, 2021, we had net cash provided by operating activities of ~~$920.7~~$300.9 million, net cash ~~provided by~~used in investing activities of ~~$299.8~~$40.7 million and net cash used in financing activities of ~~$527.4~~$116.0 million. The cash provided by operating activities was up significantly from the prior year, primarily driven by ~~entry into~~higher net income for the ~~A/R Sales Agreement to sell receivables, which generated $500 million in operating cash flows,~~three months ended March 31, 2021 and the effective management of our working capital. The investing activities consisted primarily ~~$389.6~~of $48.4 million for capital expenditures and $19.5 million for acquisitions and other investing activities, partially offset by $27.2 million in proceeds from ~~divestitures and~~ the sale of property, plant and equipment ~~slightly offset by $74.4 million for capital expenditures~~ and ~~$15.4 million for acquisitions and other investing activities.~~divestitures. The financing activities

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consisted primarily of ~~$197.2 million net payments on debt, $225.3~~$114.0 million for dividends paid to the Company’s ~~shareholders and $95.7 million paid for share repurchases.~~shareholders.

Accounts receivable ~~decreased $616.9~~increased $252.7 million, or ~~25.3%~~16.2%, from December 31, ~~2019~~2020 primarily due to entering into the A/R Sales Agreement. As we continue to operate through 2020 and this uncertain environment, we will be closely monitoring our collection trends. However, collection trends are currently meeting our expectations and we have observed that manyhigher sales volume in March of ~~our small and medium-sized customers in the U.S. and international markets are receiving various forms of government assistance.~~2021. Inventory ~~decreased $92.1~~increased $94.4 million, or 2.7%, due to increased economic activity globally and ~~accounts~~related product demand. Accounts payable ~~decreased $203.0~~increased $351.3 million, or ~~5.1%~~8.5% from December 31, ~~2019.~~2020 partly due to extended payment terms with certain suppliers. Total debt of ~~$3.2~~$2.6 billion at ~~June 30, 2020~~March 31, 2021 decreased ~~$209.2 million,~~$0.1 billion, or ~~6.1%~~2.2%, from December 31, ~~2019.~~2020.

We continue to negotiate extended payment dates with our suppliers. Our current payment terms with the majority of our suppliers range from 30 to 360 days. Several global financial institutions offer voluntary supply chain finance ~~("SCF"~~(“SCF”) programs which enable our suppliers, ~~(generally those that grant extended terms),~~ 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.~~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 SCF 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 ~~statement~~statements of cash flows. ~~We have been informed by the financial institutions that as~~As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019, suppliers elected to sell $1.8 billion and $1.8 billion, respectively, of our~~2020, the outstanding payment obligations to the financial ~~institutions.~~institutions are $1.9 billion and $1.8 billion, respectively. The amount settled through the SCF program was ~~$1.3 billion~~$577 million and $629 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021 and March 31, 2020, respectively.

Liquidity and Capital Resources

We have taken actions and will continue to take actions intended to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from COVID-19. These actions include the previously negotiated covenant amendments to our credit arrangements due to macro uncertainty and evaluating alternative forms of liquidity to enhance credit capacity, reducing our planned capital expenditures for 2020 (specifically deferring our growth related capital spending), temporarily suspending our share repurchase program, and limiting merger and acquisition activity to select “bolt-on” acquisitions. Additionally, we are taking precautionary measures to conserve liquidity including, but not limited to, reducing our inventory levels and managing replenishment volumes to adjust to the new level of market demand and to the extent available, we are delaying tax payments as allowed by governmental authorities. We have a low level of capital expenditures related to maintenance items, which provides the flexibility to decrease spending as needed to further preserve funds.

~~We believe that we have sufficient liquidity to manage through the current market disruption caused by COVID-19.~~ We ended the quarter with $2.6 billion of total liquidity (comprising ~~$1.6~~$1.5 billion availability on the revolving credit facility and ~~$1.0~~$1.1 billion of cash and cash equivalents). From time to time, ~~the Company~~we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk. ~~The Company~~We currently ~~believes~~believe that the existing lines of credit and cash generated from operations will be sufficient to fund anticipated operations 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 ~~April 6, 2020,~~February 16, 2021, we announced a 3% increase in the ~~Board of Directors declared a~~ regular quarterly cash dividend for 2021. The Board of ~~seventy-nine cents ($0.79)~~Directors increased the cash dividend payable to an annual rate of $3.26 per share oncompared with the ~~Company’s common stock. At this time, we expect~~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 ~~continue to pay dividends in the ordinary course.~~

On May 1, 2020, the Company entered into an amendment to each of the Amended and Restated Syndicated Credit Facility Agreement and the Notes Purchase Agreement, each dated as of October 30, 2017, to provide additional covenant flexibility on account of the COVID-19 pandemic. In consideration of the increased covenant flexibility, the Company agreed to certain interest rate increases under these facilities.

On May 29, 2020, we entered into an agreement (the "A/R Sales Agreement") to sell short-term receivables from certain customer trade accounts to an unaffiliated financial institution. The A/R Sales Agreement has a one year term, which the

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~~Company intends to renew each year. The terms of the A/R Sales Agreement limit the balance of receivables sold to approximately $500 million at any point in time.~~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.

~~Although we expect our borrowing costs to increase in the near term as a result of credit market disruptions caused by the COVID-19 pandemic, we~~We expect to be able to continue to borrow funds at reasonable rates over the long term. At ~~June 30, 2020,~~March 31, 2021, the Company's total average cost of debt was ~~2.85%~~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

For quantitative and qualitative disclosures about market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of our 2020 Annual Report on Form ~~10-K for the year ended December 31, 2019.~~10-K. Our exposure to market risk has not changed materially since December 31, ~~2019.~~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”) and Chief Financial Officer (“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~~Internal Control over ~~financial reporting~~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 quarter ended ~~June 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result of COVID-19, certain members of our workforce shifted to a primarily work from home environment beginning in March 2020. We took precautionary actions to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely, and we will continue to evaluate the impact of any related changes to our 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 ~~2019~~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 ~~2019~~2020 Annual Report on Form 10-K, ~~as updated and supplemented in Part II, "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and as further updated and supplemented below,~~ which could materially affect our business, financial condition or future results. 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. ~~Except as presented below, there have been no material changes from the risk factors described in our Form 10-K.~~

The impact of the COVID-19 pandemic has significantly impacted worldwide economic conditions, and our operations and our financial results have been and will in the future be materially adversely impacted, and the duration and extent to which it will impact our business remains uncertain.

COVID-19, a novel strain of coronavirus, was reported in December 2019, with the World Health Organization declaring it a global pandemic on March 11, 2020. The COVID-19 pandemic has created significant volatility, uncertainty and disruption, with severe impacts on the United States and global economies. The COVID-19 pandemic has impacted a large portion of the world, including our domestic and international operations. If the pandemic continues to create disruptions or turmoil in the credit or financial markets, or impacts our credit ratings, it could adversely affect our ability to access capital on favorable terms or at all, meet our liquidity needs or amend and/or refinance our existing credit arrangements.

The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments that we cannot predict, including the severity of the virus; the occurrence of a “second wave” or additional spikes; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic; and impacts on our supply chain, our ability to keep operating locations open, and on customer demand.

As the pandemic continues to spread throughout the United States, consumer fears about COVID-19 continue and recommendations and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine have persisted and/or increased, which has and will continue to adversely affect our operations. For example, we witnessed significant disruptions in sales in the last two weeks of the quarter ended March 31, 2020 on account of the lower customer demand, which trend also impacted the quarter ended June 30, 2020 and may continue into the future. We have incurred and continue to incur additional costs related to efforts to protect the health and well-being of our team members, customers and the communities we serve. We expect to continue to incur additional costs, which may be significant, as we continue to implement operational changes in response to this pandemic.

We may further restrict the operations of our various distribution center, branch or store facilities in both of our segments if we deem such action necessary or appropriate or if recommended or mandated by local government authorities. Additionally, we may incur significant additional costs to ensure we meet the needs of our customers and our employees, including additional cleanings of our stores and other facilities. Also, if we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate or appropriate for a particular region or the Company as a whole, we could suffer damage to our reputation and our brand, which could adversely affect our business in the future. These items could have a further material impact on our sales and profits and could lead to significantly higher losses on outstanding customer receivables, guaranteed loans and asset impairment charges, among other things.

The COVID-19 pandemic has resulted in work and travel restrictions and delays, which have been expanded throughout the continued progression of the pandemic. These restrictions and delays have impacted and may continue to impact suppliers and manufacturers of certain of our products. This may make it difficult for our suppliers to source and manufacture products in, and to export our products from, affected areas. As a result, we may continue to face delays or difficulty sourcing certain products, which could negatively affect our business and financial results. Even if we are able to find alternate sources for such products, they may cost more, which could adversely impact our profitability and financial condition.

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Additional adverse changes in economic conditions as a result of the pandemic may also lead to increased credit concerns and challenges to recover accounts receivable, reduced liquidity, adverse impacts on our suppliers and customers, including on their abilities to continue to operate as a going concern.

Further, the Company and management are focused on mitigating the impact of the COVID-19 pandemic, which has required and will continue to require, a large investment of time and resources and may delay other strategic initiatives. Additionally, many of our employees are working remotely and may continue to do so for an extended period. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to our abilityto manage our business, cyber-security and data security risks, the potential vulnerabilities to our financial reporting systems and our internal control environment and the effectiveness of our internal controls over financial reporting.

Due to the unprecedented nature of COVID-19 and the myriad of responses thereto, we cannot identify all of the risks we face from the pandemic and its resulting impacts. Even after the pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur. The pandemic could also amplify other risks and uncertainties described in our 2019 Annual Report on Form 10-K. The ultimate adverse impacts relating to the potential effect of the COVID-19 pandemic on our business and the costs that we may incur as a result cannot be reasonably estimated but could be material.

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

The following table provides information about the Company’s purchases of shares of the Company’s common stock during the three months ended ~~June 30, 2020:~~March 31, 2021:

ISSUER PURCHASES OF EQUITY SECURITIES

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
April 1, 2020 through April 30, 2020 8,533 $70.56 — 14,484,676
May 1, 2020 through May 31, 2020 1,704 $73.72 — 14,484,676
June 1, 2020 through June 30, 2020 14,782 $91.85 — 14,484,676
Totals 25,019 $83.35 — 14,484,676


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
January 1, 2021 through January 31, 2021	361,685	$105.20	—	14,479,536
February 1, 2021 through February 28, 2021	59,900	$104.91	—	14,479,536
March 1, 2021 through March 31, 2021	230,353	$113.32	—	14,479,536
Totals	651,938	$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 ~~June 30, 2020 and the Company has temporarily suspended all future share repurchases under the repurchase plan until there is greater visibility into the macro environment in light of COVID-19.~~March 31, 2021.

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Item 6. Exhibits

(a) The following exhibits are filed or furnished as part of this report:


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						By-Laws of the Company, as amended and restated November 19, 2018 (incorporated herein by reference from Exhibit 3.2 to the Company’s Current Report on Form 8-K dated November 19, 2018)

Exhibit 31.1						Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Executive Officer – filed herewith

Exhibit 31.2						Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Financial Officer – filed herewith

Exhibit 32						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer and Chief Financial Officer – furnished ~~herewith~~

~~Exhibit 10.1~~						~~Second Amendment to Amended and Restated Syndicated Facility Agreement dated May 1, 2020~~ ~~amending that certain Amended and Restated Syndicated Facility Agreement~~ ~~dated October 30, 2017~~ ~~by and among Genuine Parts Company, Bank of America, N.A., as administrative agent, and the other~~ l ~~ender~~ p ~~arties~~ ~~thereto~~ ~~- filed herewith~~

~~Exhibit 10.2~~						Amendment to Notes Purchase Agreement dated May 1, 2020 amending that certain Note Purchase Agreement dated October 30, 2017, by and among Genuine Parts Company, J.P, Morgan Securities, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as agents, and the other parties thereto – filed herewith

Exhibit 101.INS						XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Exhibit 101.SCH						XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

Exhibit 101.LAB						XBRL Taxonomy Extension Labels Linkbase Document

Exhibit 101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104						The cover page from this Annual Report on Form 10-Q for the period ended ~~June 30, 2020~~March 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: ~~July 30, 2020~~April 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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	Three Months Ended June 30, 2020
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
April 1, 2020	144,249,343	$	144,249	$	103,878	$	(1,333,329)	$	4,487,904	$	3,402,702	$	20,329	$	3,423,031
Net loss	—	—		—		—		(564,372)		(564,372)		—		(564,372)
Other comprehensive income, net of tax	—	—		—		120,957		—		120,957		—		120,957
Cash dividend declared, $0.7900 per share	—	—		—		—		(113,968)		(113,968)		—		(113,968)
Share-based awards exercised, including tax benefit of $383	14,846	15		(464)		—		—		(449)		—		(449)
Share-based compensation	—	—		4,405		—		—		4,405		—		4,405
Noncontrolling interest activities	—	—		—		—		—		—		1,284		1,284
June 30, 2020	144,264,189	$	144,264	$	107,819	$	(1,212,372)	$	3,809,564	$	2,849,275	$	21,613	$	2,870,888


	Six Months Ended June 30, 2020
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2020	145,378,158	$	145,378	$	98,777	$	(1,141,308)	$	4,571,860	$	3,674,707	$	20,793	$	3,695,500
Net loss	—	—		—		—		(427,837)		(427,837)		—		(427,837)
Other comprehensive loss, net of tax	—	—		—		(71,064)		—		(71,064)		—		(71,064)
Cash dividend declared, $1.5800 per share	—	—		—		—		(228,444)		(228,444)		—		(228,444)
Share-based awards exercised, including tax benefit of $162	22,475	22		(812)		—		—		(790)		—		(790)
Share-based compensation	—	—		9,854		—		—		9,854		—		9,854
Purchase of stock	(1,136,444)	(1,136)		—		—		(94,583)		(95,719)		—		(95,719)
Cumulative effect from adoption of ASU 2016-13 (1)	—	—		—		—		(11,432)		(11,432)		—		(11,432)
Noncontrolling interest activities	—	—		—		—		—		—		820		820
June 30, 2020	144,264,189	$	144,264	$	107,819	$	(1,212,372)	$	3,809,564	$	2,849,275	$	21,613	$	2,870,888


	Three Months Ended June 30, 2019
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
April 1, 2019	146,063,911	$	146,064	$	77,424	$	(1,189,987)	$	4,517,430	$	3,550,931	$	21,901	$	3,572,832
Net income	—	—		—		—		224,430		224,430		—		224,430
Other comprehensive loss, net of tax	—	—		—		(5,192)		—		(5,192)		—		(5,192)
Cash dividend declared, $0.7625 per share	—	—		—		—		(111,380)		(111,380)		—		(111,380)
Share-based awards exercised, including tax benefit of $174	14,458	14		(546)		—		—		(532)		—		(532)
Share-based compensation	—	—		7,071		—		—		7,071		—		7,071
Noncontrolling interest activities	—	—		—		—		—		—		746		746
June 30, 2019	146,078,369	$	146,078	$	83,949	$	(1,195,179)	$	4,630,480	$	3,665,328	$	22,647	$	3,687,975


	Six Months Ended June 30, 2019
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2019	145,936,613	$	145,937	$	78,380	$	(1,115,078)	$	4,341,212	$	3,450,451	$	21,540	$	3,471,991
Net income	—	—		—		—		384,680		384,680		—		384,680
Other comprehensive income, net of tax	—	—		—		42,425		—		42,425		—		42,425
Cash dividend declared, $1.5250 per share	—	—		—		—		(222,735)		(222,735)		—		(222,735)
Share-based awards exercised, including tax benefit of $3,986	141,756	141		(7,512)		—		—		(7,371)		—		(7,371)
Share-based compensation	—	—		13,081		—		—		13,081		—		13,081
Cumulative effect from adoption of ASU 2018-02 (2)	—	—		—		(122,526)		122,526		—		—		—
Cumulative effect from adoption of ASU 2016-02, net of tax (2)	—	—		—		—		4,797		4,797		—		4,797
Noncontrolling interest activities	—	—		—		—		—		—		1,107		1,107
June 30, 2019	146,078,369	$	146,078	$	83,949	$	(1,195,179)	$	4,630,480	$	3,665,328	$	22,647	$	3,687,975


	Severance and other employee costs		Facility and closure costs		Accelerated operating lease costs		Asset impairments		Total
Liability as of January 1, 2020	$	72,192	$	6,639	$	—	$	—	$	78,831
Restructuring costs	9,236		7,316		5,496		5,993		28,041
Cash payments	(56,303)		(5,098)		—		—		(61,401)
Non-cash charges	—		—		(5,496)		(5,993)		(11,489)
Translation	(522)		(84)		—		—		(606)
Liability as of June 30, 2020	$	24,603	$	8,773	$	—	$	—	$	33,376