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 September 30, ~~2020~~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,

30339

(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 ~~144,289,653~~142,421,748 shares of common stock outstanding as of ~~September 30, 2020.~~

October 18, 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) September 30, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents $ 900,123 $ 276,992
Trade accounts receivable, less allowance for doubtful accounts (2020 – $46,885; 2019 – $35,047) 1,952,225 2,440,252
Merchandise inventories, net 3,419,383 3,443,876
Prepaid expenses and other current assets 1,103,554 1,063,245
Current assets of discontinued operations 0 714,251
Total current assets 7,375,285 7,938,616
Goodwill 1,829,946 2,293,519
Other intangible assets, less accumulated amortization 1,449,446 1,492,097
Deferred tax assets 67,594 45,921
Property, plant and equipment, less accumulated depreciation (2020 – $1,357,013; 2019 – $1,200,688) 1,141,419 1,173,688
Operating lease assets 1,024,453 995,667
Other assets 587,318 457,350
Noncurrent assets of discontinued operations 0 248,771
Total assets $ 13,475,461 $ 14,645,629
Liabilities and equity
Current liabilities:
Trade accounts payable $ 4,030,319 $ 3,948,000
Current portion of debt 206,335 624,043
Dividends payable 113,983 110,851
Other current liabilities 1,626,061 1,493,109
Current liabilities of discontinued operations 0 218,117
Total current liabilities 5,976,698 6,394,120
Long-term debt 2,700,616 2,802,056
Operating lease liabilities 779,468 756,519
Pension and other post–retirement benefit liabilities 248,488 249,832
Deferred tax liabilities 214,738 233,044
Other long-term liabilities 520,680 445,652
Noncurrent liabilities of discontinued operations 0 68,906
Equity:
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 – 144,289,653 shares; 2019 – 145,378,158 shares 144,290 145,378
Additional paid-in capital 113,249 98,777
Retained earnings 3,923,113 4,571,860
Accumulated other comprehensive loss (1,166,572) (1,141,308)
Total parent equity 3,014,080 3,674,707
Noncontrolling interests in subsidiaries 20,693 20,793
Total equity 3,034,773 3,695,500
Total liabilities and equity $ 13,475,461 $ 14,645,629


(in thousands, except share and per share data)	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	919,097	$	990,166
Trade accounts receivable, less allowance for doubtful accounts (2021 – $44,807; 2020 – $36,622)	1,888,253		1,556,966
Merchandise inventories, net	3,748,418		3,506,271
Prepaid expenses and other current assets	1,226,416		1,060,360
Total current assets	7,782,184		7,113,763
Goodwill	1,890,821		1,917,477
Other intangible assets, less accumulated amortization	1,409,886		1,498,257
Deferred tax assets	43,726		65,658
Property, plant and equipment, less accumulated depreciation (2021 – $1,315,825; 2020 – $1,268,170)	1,107,374		1,162,043
Operating lease assets	1,040,724		1,038,877
Other assets	700,223		644,140
Total assets	$	13,974,938	$	13,440,215

Liabilities and equity
Current liabilities:
Trade accounts payable	$	4,819,084	$	4,128,084
Current portion of debt	—		160,531
Dividends payable	116,356		114,043
Other current liabilities	1,601,883		1,491,426
Total current liabilities	6,537,323		5,894,084
Long-term debt	2,432,539		2,516,614
Operating lease liabilities	781,750		789,294
Pension and other post–retirement benefit liabilities	254,727		265,687
Deferred tax liabilities	222,467		212,910
Other long-term liabilities	549,574		543,623
Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; none issued	—		—
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2021 – 142,503,493 shares; 2020 – 144,354,335 shares	142,503		144,354
Additional paid-in capital	118,223		117,165
Retained earnings	3,995,537		3,979,779
Accumulated other comprehensive loss	(1,073,086)		(1,036,502)
Total parent equity	3,183,177		3,204,796
Noncontrolling interests in subsidiaries	13,381		13,207
Total equity	3,196,558		3,218,003
Total liabilities and equity	$	13,974,938	$	13,440,215

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020		2021		2020
Net sales	Net sales	$	4,370,086	$	4,525,284	$	12,285,839	$	13,242,344	Net sales	$	4,818,849	$	4,370,086	$	14,067,301	$	12,285,839
Cost of goods sold	Cost of goods sold	2,842,020		3,020,051		8,079,108		8,861,609		Cost of goods sold	3,108,082		2,842,020		9,126,614		8,079,108
Gross profit	Gross profit	1,528,066		1,505,233		4,206,731		4,380,735		Gross profit	1,710,767		1,528,066		4,940,687		4,206,731
Operating expenses:	Operating expenses:									Operating expenses:
Selling, administrative and other expenses	Selling, administrative and other expenses	1,140,156		1,175,699		3,254,442		3,414,414		Selling, administrative and other expenses	1,338,768		1,140,156		3,883,241		3,254,442
Depreciation and amortization	Depreciation and amortization	69,097		65,667		203,084		186,968		Depreciation and amortization	72,121		69,097		218,377		203,084
Provision for doubtful accounts	Provision for doubtful accounts	5,633		1,192		23,452		10,430		Provision for doubtful accounts	4,284		5,633		14,230		23,452
Restructuring costs	Restructuring costs	10,968		0		39,009		0		Restructuring costs	—		10,968		—		39,009
Goodwill impairment charge	Goodwill impairment charge	0		0		506,721		0		Goodwill impairment charge	—		—		—		506,721
Total operating expenses	Total operating expenses	1,225,854		1,242,558		4,026,708		3,611,812		Total operating expenses	1,415,173		1,225,854		4,115,848		4,026,708
Non-operating expenses (income):
Non-operating (income) expenses:										Non-operating (income) expenses:
Interest expense	Interest expense	25,788		26,451		72,218		73,567		Interest expense	14,958		25,788		50,127		72,218
Other	Other	(21,241)		(47,655)		(46,017)		(62,737)		Other	(18,338)		(21,241)		(79,728)		(46,017)
Total non-operating expenses (income)		4,547		(21,204)		26,201		10,830
Total non-operating (income) expenses										Total non-operating (income) expenses	(3,380)		4,547		(29,601)		26,201
Income before income taxes	Income before income taxes	297,665		283,879		153,822		758,093		Income before income taxes	298,974		297,665		854,440		153,822
Income taxes	Income taxes	64,747		71,623		162,059		190,634		Income taxes	70,389		64,747		211,649		162,059
Net income (loss) from continuing operations	Net income (loss) from continuing operations	232,918		212,256		(8,237)		567,459		Net income (loss) from continuing operations	228,585		232,918		642,791		(8,237)
Net (loss) income from discontinued operations		(5,387)		15,231		(192,069)		44,708
Net loss from discontinued operations										Net loss from discontinued operations	—		(5,387)		—		(192,069)
Net income (loss)	Net income (loss)	$	227,531	$	227,487	$	(200,306)	$	612,167	Net income (loss)	$	228,585	$	227,531	$	642,791	$	(200,306)
Dividends declared per common share	Dividends declared per common share	$	0.7900	$	0.7625	$	2.3700	$	2.2875	Dividends declared per common share	$	0.8150	$	0.7900	$	2.4450	$	2.3700
Basic earnings (loss) per share:	Basic earnings (loss) per share:									Basic earnings (loss) per share:
Continuing operations	Continuing operations	$	1.61	$	1.46	$	(0.06)	$	3.89	Continuing operations	$	1.60	$	1.61	$	4.47	$	(0.06)
Discontinued operations	Discontinued operations	(0.03)		0.10		(1.33)		0.31		Discontinued operations	—		(0.03)		—		(1.33)
Basic earnings (loss) per share	Basic earnings (loss) per share	$	1.58	$	1.56	$	(1.39)	$	4.20	Basic earnings (loss) per share	$	1.60	$	1.58	$	4.47	$	(1.39)
Diluted earnings (loss) per share:	Diluted earnings (loss) per share:									Diluted earnings (loss) per share:
Continuing operations	Continuing operations	$	1.61	$	1.45	$	(0.06)	$	3.87	Continuing operations	$	1.59	$	1.61	$	4.44	$	(0.06)
Discontinued operations	Discontinued operations	(0.04)		0.11		(1.33)		0.31		Discontinued operations	—		(0.04)		—		(1.33)
Diluted earnings (loss) per share	Diluted earnings (loss) per share	$	1.57	$	1.56	$	(1.39)	$	4.18	Diluted earnings (loss) per share	$	1.59	$	1.57	$	4.44	$	(1.39)

Weighted average common shares outstanding	Weighted average common shares outstanding	144,273		145,572		144,528		145,875		Weighted average common shares outstanding	142,871		144,273		143,826		144,528
Dilutive effect of stock options and non-vested restricted stock awards	Dilutive effect of stock options and non-vested restricted stock awards	762		617		0		654		Dilutive effect of stock options and non-vested restricted stock awards	718		762		796		—
Weighted average common shares outstanding – assuming dilution	Weighted average common shares outstanding – assuming dilution	145,035		146,189		144,528		146,529		Weighted average common shares outstanding – assuming dilution	143,589		145,035		144,622		144,528

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 September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2020 2019 2020 2019
Net income (loss) $ 227,531 $ 227,487 $ (200,306) $ 612,167
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2020 — $22,896 and $19,451; 2019 — $17,773 and $21,468, respectively 34,063 (78,298) (36,951) (30,325)
Cash flow hedge adjustments, net of income taxes in 2020 — $1,313 and $4,731; 2019 — $787 and $6,413, respectively 3,550 (2,127) (12,792) (17,340)
Pension and postretirement benefit adjustments, net of income taxes in 2020 — $2,998 and $9,023; 2019 — $2,592 and $6,166, respectively 8,187 7,024 24,479 16,689
Other comprehensive income (loss), net of income taxes 45,800 (73,401) (25,264) (30,976)
Comprehensive income (loss) $ 273,331 $ 154,086 $ (225,570) $ 581,191


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Net income (loss)	$	228,585	$	227,531	$	642,791	$	(200,306)
Other comprehensive (loss) income, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2021 — $11,328 and $25,494; 2020 — $22,896 and $19,451, respectively	(82,574)		34,063		(75,738)		(36,951)
Cash flow hedge adjustments, net of income taxes in 2021 — $1,384 and $4,151; 2020 — $1,313 and $4,731, respectively	3,741		3,550		11,223		(12,792)
Pension and postretirement benefit adjustments, net of income taxes in 2021 — $3,425 and $10,280; 2020 �� $2,998 and $9,023, respectively	9,301		8,187		27,931		24,479
Other comprehensive (loss) income, net of income taxes	(69,532)		45,800		(36,584)		(25,264)
Comprehensive income (loss)	$	159,053	$	273,331	$	606,207	$	(225,570)

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 September 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
July 1, 2020 144,264,189 $ 144,264 $ 107,819 $ (1,212,372) $ 3,809,564 $ 2,849,275 $ 21,613 $ 2,870,888
Net income — — — — 227,531 227,531 — 227,531
Other comprehensive income, net of tax — — — 45,800 — 45,800 — 45,800
Cash dividend declared, $0.7900 per share — — — — (113,982) (113,982) — (113,982)
Share-based awards exercised, including tax benefit of $213 25,464 26 (990) — — (964) — (964)
Share-based compensation — — 6,420 — — 6,420 — 6,420
Noncontrolling interest activities — — — — — — (920) (920)
September 30, 2020 144,289,653 $ 144,290 $ 113,249 $ (1,166,572) $ 3,923,113 $ 3,014,080 $ 20,693 $ 3,034,773


	Three Months Ended September 30, 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
July 1, 2021	143,301,673	$	143,302	$	111,972	$	(1,003,554)	$	3,982,159	$	3,233,879	$	11,266	$	3,245,145
Net income	—	—		—		—		228,585		228,585		—		228,585
Other comprehensive loss, net of tax	—	—		—		(69,532)		—		(69,532)		—		(69,532)
Cash dividend declared, $0.8150 per share	—	—		—		—		(116,486)		(116,486)		—		(116,486)
Share-based awards exercised	2,256	1		(69)		—		—		(68)		—		(68)
Share-based compensation	—	—		6,320		—		—		6,320		—		6,320
Purchase of stock	(800,436)	(800)		—		—		(98,721)		(99,521)		—		(99,521)
Noncontrolling interest activities	—	—		—		—		—		—		2,115		2,115
September 30, 2021	142,503,493	$	142,503	$	118,223	$	(1,073,086)	$	3,995,537	$	3,183,177	$	13,381	$	3,196,558

Nine Months Ended September 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 — — — — (200,306) (200,306) — (200,306)
Other comprehensive loss, net of tax — — — (25,264) — (25,264) — (25,264)
Cash dividend declared, $2.3700 per share — — — — (342,426) (342,426) — (342,426)
Share-based awards exercised, including tax benefit of $375 47,939 48 (1,802) — — (1,754) — (1,754)
Share-based compensation — — 16,274 — — 16,274 — 16,274
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 — — — — — — (100) (100)
September 30, 2020 144,289,653 $ 144,290 $ 113,249 $ (1,166,572) $ 3,923,113 $ 3,014,080 $ 20,693 $ 3,034,773


	Nine Months Ended September 30, 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	—	—		—		—		642,791		642,791		—		642,791
Other comprehensive loss, net of tax	—	—		—		(36,584)		—		(36,584)		—		(36,584)
Cash dividend declared, $2.4450 per share	—	—		—		—		(351,606)		(351,606)		—		(351,606)
Share-based awards exercised	385,419	385		(19,783)		—		—		(19,398)		—		(19,398)
Share-based compensation	—	—		20,841		—		—		20,841		—		20,841
Purchase of stock	(2,236,261)	(2,236)		—		—		(281,650)		(283,886)		—		(283,886)
Cumulative effect from adoption of ASU 2019-12 (1)	—	—		—		—		6,223		6,223		—		6,223
Noncontrolling interest activities	—	—		—		—		—		—		174		174
September 30, 2021	142,503,493	$	142,503	$	118,223	$	(1,073,086)	$	3,995,537	$	3,183,177	$	13,381	$	3,196,558

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

(UNAUDITED)

Three Months Ended September 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
July 1, 2019 146,078,369 $ 146,078 $ 83,949 $ (1,195,179) $ 4,630,480 $ 3,665,328 $ 22,647 $ 3,687,975
Net income — — — — 227,487 227,487 — 227,487
Other comprehensive loss, net of tax — — — (73,401) — (73,401) — (73,401)
Cash dividend declared, $0.7625 per share — — — — (110,786) (110,786) — (110,786)
Share-based awards exercised, including tax benefit of $68 2,953 4 (128) — — (124) — (124)
Share-based compensation — — 6,739 — — 6,739 — 6,739
Purchase of stock (788,207) (789) — — (72,263) (73,052) — (73,052)
Noncontrolling interest activities — — — — — — (101) (101)
September 30, 2019 145,293,115 $ 145,293 $ 90,560 $ (1,268,580) $ 4,674,918 $ 3,642,191 $ 22,546 $ 3,664,737


	Three Months Ended September 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
July 1, 2020	144,264,189	$	144,264	$	107,819	$	(1,212,372)	$	3,809,564	$	2,849,275	$	21,613	$	2,870,888
Net income	—	—		—		—		227,531		227,531		—		227,531
Other comprehensive income, net of tax	—	—		—		45,800		—		45,800		—		45,800
Cash dividend declared, $0.7900 per share	—	—		—		—		(113,982)		(113,982)		—		(113,982)
Share-based awards exercised	25,464	26		(990)		—		—		(964)		—		(964)
Share-based compensation	—	—		6,420		—		—		6,420		—		6,420
Noncontrolling interest activities	—	—		—		—		—		—		(920)		(920)
September 30, 2020	144,289,653	$	144,290	$	113,249	$	(1,166,572)	$	3,923,113	$	3,014,080	$	20,693	$	3,034,773

Nine Months Ended September 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 — — — — 612,167 612,167 — 612,167
Other comprehensive loss, net of tax — — — (30,976) — (30,976) — (30,976)
Cash dividend declared, $2.2875 per share — — — — (333,521) (333,521) — (333,521)
Share-based awards exercised, including tax benefit of $4,054 144,709 145 (7,640) — — (7,495) — (7,495)
Share-based compensation — — 19,820 — — 19,820 — 19,820
Purchase of stock (788,207) (789) — — (72,263) (73,052) — (73,052)
Cumulative effect from adoption of ASU 2018-02 (2) — — — (122,526) 122,526 — — 0
Cumulative effect from adoption of ASU 2016-02, net of tax (2) — — — — 4,797 4,797 — 4,797
Noncontrolling interest activities — — — — — — 1,006 1,006
September 30, 2019 145,293,115 $ 145,293 $ 90,560 $ (1,268,580) $ 4,674,918 $ 3,642,191 $ 22,546 $ 3,664,737


	Nine Months Ended September 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	—	—		—		—		(200,306)		(200,306)		—		(200,306)
Other comprehensive loss, net of tax	—	—		—		(25,264)		—		(25,264)		—		(25,264)
Cash dividend declared, $2.3700 per share	—	—		—		—		(342,426)		(342,426)		—		(342,426)
Share-based awards exercised	47,939	48		(1,802)		—		—		(1,754)		—		(1,754)
Share-based compensation	—	—		16,274		—		—		16,274		—		16,274
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	—	—		—		—		—		—		(100)		(100)
September 30, 2020	144,289,653	$	144,290	$	113,249	$	(1,166,572)	$	3,923,113	$	3,014,080	$	20,693	$	3,034,773

(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)


		Nine Months Ended September 30,							Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020
Operating activities:	Operating activities:					Operating activities:
Net (loss) income		$	(200,306)	$	612,167
Net (loss) income from discontinued operations		(192,069)		44,708
Net (loss) income from continuing operations		(8,237)		567,459
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	642,791	$	(200,306)
Net loss from discontinued operations						Net loss from discontinued operations	—		(192,069)
Net income (loss) from continuing operations						Net income (loss) from continuing operations	642,791		(8,237)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:						Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	203,084		186,968		Depreciation and amortization	218,377		203,084
Loss on software disposal						Loss on software disposal	61,063		—
Share-based compensation	Share-based compensation	16,274		17,310		Share-based compensation	20,841		16,274
Excess tax benefits from share-based compensation		375		(4,054)
Realized currency losses on divestitures		11,356		30,848
Excess tax (benefits) deficiencies from share-based compensation						Excess tax (benefits) deficiencies from share-based compensation	(6,667)		375
Goodwill impairment charge	Goodwill impairment charge	506,721		0		Goodwill impairment charge	—		506,721
Realized currency and other divestiture losses						Realized currency and other divestiture losses	—		11,356
Changes in operating assets and liabilities	Changes in operating assets and liabilities	697,611		(120,673)		Changes in operating assets and liabilities	71,791		697,611
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations	1,427,184		677,858		Net cash provided by operating activities from continuing operations	1,008,196		1,427,184
Investing activities:	Investing activities:					Investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(105,428)		(176,321)		Purchases of property, plant and equipment	(138,206)		(105,428)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	11,675		10,281		Proceeds from sale of property, plant and equipment	24,184		11,675
Proceeds from divestitures of businesses	Proceeds from divestitures of businesses	382,737		416,784		Proceeds from divestitures of businesses	16,687		382,737
Acquisitions of businesses and other investing activities	Acquisitions of businesses and other investing activities	(59,062)		(636,137)		Acquisitions of businesses and other investing activities	(142,567)		(59,062)
Net cash provided by (used in) investing activities from continuing operations		229,922		(385,393)
Net cash (used in) provided by investing activities from continuing operations						Net cash (used in) provided by investing activities from continuing operations	(239,902)		229,922
Financing activities:	Financing activities:					Financing activities:
Proceeds from debt	Proceeds from debt	1,888,622		3,928,716		Proceeds from debt	242,332		1,888,622
Payments on debt	Payments on debt	(2,466,031)		(3,749,509)		Payments on debt	(403,126)		(2,466,031)
Share-based awards exercised	Share-based awards exercised	(1,754)		(7,495)		Share-based awards exercised	(19,398)		(1,754)
Dividends paid	Dividends paid	(339,294)		(328,106)		Dividends paid	(349,293)		(339,294)
Purchases of stock	Purchases of stock	(95,719)		(73,052)		Purchases of stock	(283,886)		(95,719)
Other financing activities	Other financing activities	(15,032)		0		Other financing activities	(5,353)		(15,032)
Net cash used in financing activities from continuing operations	Net cash used in financing activities from continuing operations	(1,029,208)		(229,446)		Net cash used in financing activities from continuing operations	(818,724)		(1,029,208)
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	13,323		67,354		Net cash provided by operating activities from discontinued operations	—		13,323
Net cash used in investing activities from discontinued operations	Net cash used in investing activities from discontinued operations	(11,131)		(6,000)		Net cash used in investing activities from discontinued operations	—		(11,131)
Net cash provided by financing activities from discontinued operations	Net cash provided by financing activities from discontinued operations	0		0		Net cash provided by financing activities from discontinued operations	—		—
Net cash provided by discontinued operations	Net cash provided by discontinued operations	2,192		61,354		Net cash provided by discontinued operations	—		2,192
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(6,959)		(6,645)		Effect of exchange rate changes on cash and cash equivalents	(20,639)		(6,959)
Net increase in cash and cash equivalents		623,131		117,728
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	(71,069)		623,131
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	$	900,123	$	451,275	Cash and cash equivalents at end of period	$	919,097	$	900,123

See accompanying notes to condensed consolidated financial statements.

Table of Contents

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. 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, revenue from freight services provided by the Automotive Parts Group are grossed up and recast in continuing operations in each period because those sales are continuing with the discontinued operations after the divestiture. Except as disclosed herein, there 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 three and nine months ended September 30, ~~2020~~2021 are not necessarily indicative of results for the ~~entire year.~~year ended December 31, 2021. The Company's results of operations ~~are concentrated~~continued to improve in ~~North America, Europe and Australasia and are vulnerable~~2021 relative to the ~~reduced economic activity~~same period 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. In particular, as widespread vaccine distribution continued, we have seen economic recovery in many of the markets where we operate and a significant uptick in consumer mobility. However, the Company's operations remain vulnerable to the continuing negative economic effects caused by the pandemic. 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, including the spread of variant strains; 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; the ability of the global population to access such vaccines; impacts on customer demand, impacts on the Company's supply chain including the impact of higher shipping-related charges as a result of port slowdowns or congestion, and its ability to attract talent and keep operating locations open, and on customer demand. The Company benefited from various forms of government economic assistance including certain temporary subsidies that were received primarily 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 September 30, 2020 could change upon final determination at year-end, and it is reasonably possible such changes could be significant. open.

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.~~

Table of Contents

2. Segment Information

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net sales:	Net sales:									Net sales:
Automotive	Automotive	$	2,960,379	$	2,792,453	$	8,038,863	$	8,192,369	Automotive	$	3,204,534	$	2,960,379	$	9,353,998	$	8,038,863
Industrial	Industrial	1,409,707		1,732,831		4,246,976		5,049,975		Industrial	1,614,315		1,409,707		4,713,303		4,246,976
Total net sales	Total net sales	$	4,370,086	$	4,525,284	$	12,285,839	$	13,242,344	Total net sales	$	4,818,849	$	4,370,086	$	14,067,301	$	12,285,839
Segment profit:	Segment profit:									Segment profit:
Automotive	Automotive	$	266,124	$	222,561	$	627,608	$	630,865	Automotive	$	281,150	$	266,124	$	807,586	$	627,608
Industrial	Industrial	125,620		137,525		348,481		394,887		Industrial	165,754		125,620		441,459		348,481
Total segment profit	Total segment profit	$	391,744	$	360,086	$	976,089	$	1,025,752	Total segment profit	446,904		391,744		1,249,045		976,089
Interest expense, net	Interest expense, net	(25,221)		(24,880)		(69,965)		(70,483)		Interest expense, net	(14,167)		(25,221)		(47,853)		(69,965)
Intangible asset amortization	Intangible asset amortization	(24,223)		(24,910)		(70,219)		(68,785)		Intangible asset amortization	(25,311)		(24,223)		(78,239)		(70,219)
Corporate expense	Corporate expense	(33,379)		(38,830)		(117,053)		(103,582)		Corporate expense	(47,389)		(33,379)		(130,029)		(117,053)
Other unallocated costs (1)	Other unallocated costs (1)	(11,256)		12,413		(565,030)		(24,809)		Other unallocated costs (1)	(61,063)		(11,256)		(138,484)		(565,030)
Income before income taxes from continuing operations	Income before income taxes from continuing operations	$	297,665	$	283,879	$	153,822	$	758,093	Income before income taxes from continuing operations	$	298,974	$	297,665	$	854,440	$	153,822

(1)The following table presents a summary of the other unallocated costs:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Other unallocated costs:
Goodwill impairment charge (2) $ 0 $ 0 $ (506,721) $ 0
Restructuring costs (3) (10,968) 0 (39,009) 0
Realized currency loss on divestitures (4) 0 (7,664) (11,356) (34,701)
Gain on insurance proceeds related to SPR Fire (5) 0 0 13,448 0
Gain on equity investment (6) 0 38,663 0 38,663
Transaction and other costs (7) (288) (18,586) (21,392) (28,771)
Total other unallocated costs $ (11,256) $ 12,413 $ (565,030) $ (24,809)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Other unallocated costs:
Loss on software disposal (2)	$	(61,063)	$	—	$	(61,063)	$	—
Product liability damages award (3)	—		—		(77,421)		—
Goodwill impairment charge (4)	—		—		—		(506,721)
Restructuring costs (5)	—		(10,968)		—		(39,009)
Realized currency loss (6)	—		—		—		(11,356)
Gain on insurance proceeds related to SPR Fire (7)	—		—		—		13,448
Transaction and other costs (8)	—		(288)		—		(21,392)
Total other unallocated costs	$	(61,063)	$	(11,256)	$	(138,484)	$	(565,030)

(2)Adjustment reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies. Refer to the property, plant and equipment footnote to the condensed consolidated financial statements for more information.

(3)Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim. Refer to the commitments and contingencies footnote to the condensed consolidated financial statements for more information.

(4)Adjustment reflects the ~~second quarter~~2020 goodwill impairment charge related to the Company's European reporting unit. ~~Refer to the goodwill and other intangible assets footnote.~~

~~(3)~~ (5)Adjustment reflects restructuring costs related to the ~~ongoing~~ execution of certain restructuring actions across the Company's subsidiaries primarily targeted at simplifying the organizational structures and distribution networks implemented by the Company in October 2019 (the “2019 Cost Savings ~~Plan announced in the fourth quarter of 2019.~~Plan”). The costs are

Table of Contents

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)~~ (6)Adjustment reflects realized currency losses related to divestitures. ~~Refer to the acquisitions, divestitures and discontinued operations footnote.~~

~~(5)~~ (7)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)~~ (8)Adjustment relates to the gain recognized upon remeasuring the Company's preexisting 35% equity investment to fair value upon acquiring the remaining equity of Inenco on July 1, 2019. Refer to the acquisitions, divestitures and discontinued operations footnote.

~~Table of Contents~~

~~(7) Adjustment includes~~reflects $8,490 of incremental costs associated with COVID-19 for the nine months ended September 30, 2020 and costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred relating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things. ~~For the three and nine months ended September 30, 2019, adjustments also include transaction and other costs related to acquisitions and divestitures.~~

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 September 30, Nine Months Ended September 30,
2020 2019 2020 2019
North America:
Automotive $ 1,934,503 $ 1,944,768 $ 5,381,566 $ 5,724,899
Industrial 1,295,717 1,624,303 3,937,640 4,941,447
Total North America $ 3,230,220 $ 3,569,071 $ 9,319,206 $ 10,666,346
Australasia:
Automotive $ 355,874 $ 295,424 $ 911,595 $ 866,694
Industrial 113,990 108,528 309,336 108,528
Total Australasia $ 469,864 $ 403,952 $ 1,220,931 $ 975,222
Europe – Automotive $ 670,002 $ 552,261 $ 1,745,702 $ 1,600,776
Total net sales $ 4,370,086 $ 4,525,284 $ 12,285,839 $ 13,242,344


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
North America:
Automotive	$	2,100,250	$	1,934,503	$	6,039,617	$	5,381,566
Industrial	1,493,618		1,295,717		4,362,792		3,937,640
Total North America	$	3,593,868	$	3,230,220	$	10,402,409	$	9,319,206
Australasia:
Automotive	$	374,167	$	355,874	$	1,130,744	$	911,595
Industrial	120,697		113,990		350,511		309,336
Total Australasia	$	494,864	$	469,864	$	1,481,255	$	1,220,931
Europe – Automotive	$	730,117	$	670,002	$	2,183,637	$	1,745,702
Total net sales	$	4,818,849	$	4,370,086	$	14,067,301	$	12,285,839

3. Accumulated Other Comprehensive Loss

The following tables present the changes in accumulated other comprehensive loss (“AOCL”) by component for the nine months ended September 30:

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 (21,248) (48,307) (69,555)
Amounts reclassified from accumulated other comprehensive loss 24,479 8,456 11,356 44,291
Other comprehensive income (loss), net of income taxes 24,479 (12,792) (36,951) (25,264)
Ending balance, September 30, 2020 $ (679,936) $ (33,463) $ (453,173) $ (1,166,572)


	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, 2021	$	(692,868)	$	(30,007)	$	(313,627)	$	(1,036,502)
Other comprehensive loss before reclassifications	—		—		(75,738)		(75,738)
Amounts reclassified from accumulated other comprehensive loss	27,931		11,223		—		39,154
Other comprehensive income (loss), net of income taxes	27,931		11,223		(75,738)		(36,584)
Ending balance, September 30, 2021	$	(664,937)	$	(18,784)	$	(389,365)	$	(1,073,086)

Table of Contents

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 loss before reclassifications 0 (18,494) (65,026) (83,520)
Amounts reclassified from accumulated other comprehensive loss (1) 16,689 1,154 34,701 52,544
Other comprehensive income (loss), net of income taxes 16,689 (17,340) (30,325) (30,976)
Cumulative effect from adoption of ASU 2018-02 (122,526) 0 0 (122,526)
Ending balance, September 30, 2019 $ (732,159) $ (21,971) $ (514,450) $ (1,268,580)

(1) Amount includes realized currency losses of $34,701 that were reclassified out of foreign currency translation into earnings in connection with the March 7, 2019 sale of Grupo Auto Todo and the September 30, 2019 sale of EIS. Refer to the acquisitions, divestitures and discontinued operations footnote for further details.


	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	—		(21,248)		(48,307)		(69,555)
Amounts reclassified from accumulated other comprehensive loss	24,479		8,456		11,356		44,291
Other comprehensive income (loss), net of income taxes	24,479		(12,792)		(36,951)		(25,264)
Ending balance, September 30, 2020	$	(679,936)	$	(33,463)	$	(453,173)	$	(1,166,572)

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

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,~~5. Property, Plant and Equipment

During the ~~FASB issued~~ ~~ASU 2016-13~~, ~~Measurement~~third quarter of ~~Credit Losses on Financial Instruments. Among other things,~~2021, the ~~ASU and~~Company reconsidered its ~~amendments replace the incurred loss impairment model for receivables and loan guarantees with~~approach to an internally developed software project due to 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.change in management strategy related to advances in alternative technologies. The Company ~~adopted ASU 2016-13 and its amendments~~decided to dispose of the software project as of ~~January 1, 2020, which included recognizing~~September 30, 2021. As a ~~cumulative-effect adjustment to reduce opening retained earnings by $11,432, net~~result, the Company recognized $61,063 of ~~taxes.~~

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

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Changes~~selling, administrative and other expense related 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 adoptiondisposal 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.~~

this software.

~~Table of Contents~~

5.6. Employee Benefit Plans

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

Pension Benefits
2020 2019
Service cost $ 3,012 $ 2,395
Interest cost 20,942 24,362
Expected return on plan assets (38,550) (38,551)
Amortization of prior service cost (credit) 173 (17)
Amortization of actuarial loss 11,130 7,752
Net periodic benefit income $ (3,293) $ (4,059)

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


		Pension Benefits							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019			2021		2020		2021		2020
Service cost	Service cost	$	8,919	$	7,164	Service cost	$	3,043	$	3,012	$	9,185	$	8,919
Interest cost	Interest cost	62,732		73,045		Interest cost	17,915		20,942		53,783		62,732
Expected return on plan assets	Expected return on plan assets	(115,483)		(115,585)		Expected return on plan assets	(38,755)		(38,550)		(116,345)		(115,483)
Amortization of prior service cost (credit)		519		(51)
Amortization of prior service cost						Amortization of prior service cost	172		173		516		519
Amortization of actuarial loss	Amortization of actuarial loss	33,340		23,247		Amortization of actuarial loss	12,465		11,130		37,430		33,340
Net periodic benefit income	Net periodic benefit income	$	(9,973)	$	(12,180)	Net periodic benefit income	$	(5,160)	$	(3,293)	$	(15,431)	$	(9,973)

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

Table of Contents

7. 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.~~covenants. At September 30, ~~2020,~~2021, the Company was in compliance with all such covenants.

As of September 30, ~~2020,~~2021, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately ~~$904,349.~~$895,636. 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

~~Table of Contents~~

connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of September 30, ~~2020,~~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.

As of September 30, ~~2020,~~2021, the Company has recognized certain assets and liabilities amounting to ~~$85,000~~$80,000 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~~8. Debt

On ~~May 1, 2020,~~September 30, 2021, the Company entered into ~~amendments to: (i)~~ the ~~Amended and Restated~~first amendment to the Syndicated ~~Credit~~ Facility Agreement (the "Unsecured Revolving Credit Facility"), 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").~~2020. 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 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~~reduce the applicable rate by 7512.5 basis points (resulting in a rate of LIBOR + ~~225~~112.5 basis points) and the LIBOR floor from ~~0.0%~~0.5% to ~~1.0%~~0.0%. ~~With respect~~The amendment also extended the maturity by one year 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 March 31, 2021, 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.September 30, 2026.

8.9. Accounts Receivable Sales Agreement

~~On May 29, 2020 the~~The Company ~~entered into~~has 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~~3 year term, which the Company intends to ~~renew each year.~~renew.

As part of the A/R Sales Agreement, the Company continuously sells designated pools of receivables as they are originated by it and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose ~~subsidiary.~~entity (“SPE”). The assets of the ~~special purpose subsidiary~~SPE would be first available to satisfy the creditor claims of the unaffiliated financial institution. The Company controls and therefore consolidates the ~~special purpose subsidiary~~SPE in its condensed consolidated financial statements.

~~At the inception of the A/R Sales Agreement, the special purpose subsidiary~~The SPE transferred ownership and control of ~~approximately $500,000 in~~certain receivables that met certain qualifying conditions to the unaffiliated financial institution in exchange for cash. The Company accounts for transactions with the unaffiliated financial institution as sales of financial assets, with the associated receivables derecognized from the Company's condensed consolidated balance sheet. The remaining receivables held by the ~~special purpose subsidiary~~SPE were pledged to secure the

Table of Contents

collectability of the sold receivables. The amount of receivables pledged as collateral as of September 30, 2021 and December 31, 2020 is approximately ~~$1,100,000.~~$983,000 and $771,000, respectively.

The Company continues to be involved with the receivables transferred by the ~~special purpose subsidiary~~SPE to the unaffiliated financial institution by providing collection services. As cash is collected on sold receivables, the ~~special purpose subsidiary~~SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institution so that the total principal amount outstanding of receivables sold is approximately ~~$500,000~~$800,000 at any point in time (which is the maximum amount allowed under the agreement). The future amount of receivables outstanding as sold could decrease, based on the level of activity and other factors. Total principal amount outstanding of receivables sold is approximately $800,000 as of September 30, 2021 and December 31, 2020, respectively.

The following table summarizes the activity ~~and amounts outstanding~~ under the A/R Sales Agreement asfor the following periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Receivables sold to the financial institution and derecognized	$	1,884,023	$	1,279,420	$	5,700,895	$	2,181,746
Cash collected on sold receivables	$	1,884,028	$	1,279,430	$	5,700,896	$	1,681,732

Upon entry into the A/R Sales Agreement, the Company received an initial benefit from cash from operations of ~~period end:~~


	~~September 30, 2020~~
~~Receivables sold to the financial institution and derecognized since inception~~	$	~~2,181,746~~
~~Cash collected on sold receivables since inception~~	$	~~1,681,732~~
~~Total principal amount outstanding of receivables sold at period end~~	$	~~500,014~~

~~Cash~~approximately $800,000 in the year ended December 31, 2020. Continuous cash activity related to the A/R Sales Agreement is ~~presented~~reflected in cash from operating activities in the condensed consolidated statement of cash flows. The ~~special purpose subsidiary~~SPE incurs fees due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which are immaterial, are recorded within other non-operating (income) ~~expenses~~expense in the condensed consolidated statements of ~~income.~~income (loss). The ~~special purpose subsidiary~~SPE has a recourse obligation to repurchase from the unaffiliated financial institution any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse

~~Table of Contents~~

obligation as of September 30, 2021 and December 31, 2020 is not material. The servicing liability related to the Company's collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.

9.10. 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

•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 September 30, 2021 the fair value of the Company's senior unsecured notes was approximately $2,524,914, 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.

Table of Contents

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 September 30, 2020, the carrying amount, net of debt issuance costs, and the fair value of fixed rate debt were approximately $1,996,621 and $2,061,093, 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 $1,996,621 is included in long-term debt in the condensed consolidated balance sheet as of September 30, 2020. Refer to the derivatives and hedging footnote for information on the fair value of derivative instruments.

~~10.~~11. 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.

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 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:

September 30, 2020 December 31, 2019
Instrument Balance Sheet Location Notional Balance Notional Balance
Cash flow hedges:
Interest rate swaps Other current liabilities $ 800,000 $ 512 $ 800,000 $ 24,792
Net investment hedges:
Forward contracts Prepaid expenses and other current assets $ 925,810 $ 42,181 $ 925,810 $ 39,965
Forward contract Other current liabilities $ 235,180 $ 9,098 $ 0 $ 0
Foreign currency debt Long-term debt € 700,000 $ 822,080 € 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. As of September 30, 2020, the amount payable was $41,803. 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

~~Table of Contents~~

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.


		September 30, 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	$	59,397	$	800,000	$	7,668
Forward contracts	Other current liabilities	$	235,180	$	6,306	$	360,990	$	19,442
Foreign currency debt	Long-term debt	€	700,000	$	811,790	€	700,000	$	861,070

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

(Loss) Gain Recognized in AOCL Before Reclassifications Gain Recognized in Interest Expense For Excluded Components
2020 2019 2020 2019
Three Months Ended September 30,
Cash flow hedges:
Interest rate contracts $ (277) $ (3,766) $ — $ —
Net investment hedges:
Forward contracts (49,660) 35,796 6,574 5,596
Foreign currency debt (35,140) 30,030 — —
Total $ (85,077) $ 62,060 $ 6,574 $ 5,596

(Loss) Gain Recognized in AOCL Before Reclassifications Gain Recognized in Interest Expense For Excluded Components
2020 2019 2020 2019
Nine Months Ended September 30,
Cash flow hedges:
Interest rate contracts $ (29,107) $ (25,332) $ — $ —
Net investment hedges:
Cross-currency swap 0 2,936 0 2,294
Forward contracts (33,959) 41,436 20,572 12,220
Foreign currency debt (38,080) 35,140 — —
Total $ (101,146) $ 54,180 $ 20,572 $ 14,514

1514

Table of Contents

~~11.~~


	Gain (Loss) Recognized in AOCL Before Reclassifications				Gain Recognized in Interest Expense For Excluded Components
	2021		2020		2021		2020
Three Months Ended September 30,
Cash flow hedges:
Interest rate contracts	$	—	$	(277)	$	—	$	—
Net investment hedges:
Forward contracts	20,958		(49,660)		6,574		6,574
Foreign currency debt	21,000		(35,140)		—		—
Total	$	41,958	$	(85,077)	$	6,574	$	6,574


	Gain (Loss) Recognized in AOCL Before Reclassifications				Gain Recognized in Interest Expense For Excluded Components
	2021		2020		2021		2020
Nine Months Ended September 30,
Cash flow hedges:
Interest rate contracts	$	—	$	(29,107)	$	—	$	—
Net investment hedges:
Forward contracts	45,143		(33,959)		19,722		20,572
Foreign currency debt	49,280		(38,080)		—		—
Total	$	94,423	$	(101,146)	$	19,722	$	20,572

12. 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 in 2017 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 July 7, 2020, the Washington Supreme Court indicated that it ~~will~~would consider a further appeal on this ~~matter. At~~matter, and oral arguments occurred on November 10, 2020. On July 8, 2021, the ~~time~~Washington Supreme Court overturned the order of the ~~filing~~Washington Court of ~~these financial statements, based upon~~Appeals and reinstated the ~~Company’s legal defenses,~~trial court's damage award of $77,100 against the Company. The Company recorded an adjustment to increase selling, general and other expenses by approximately $77,421, inclusive of statutory interest and insurance coverage, ~~and reserves, the Company does not believe this matter will have a material impact to~~in 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 gainstatements of ~~$13,448 during~~income (loss) for the nine months ended September 30, ~~2020 for insurance recoveries in excess~~2021. The damage award and statutory interest was fully paid as of losses it has incurred on inventory, property, plant and equipment and other fire-related costs. The gain is included within other non-operating expenses (income) on the condensed consolidated statements of income. NaN gains or losses were recognized during the three months ended September 30, ~~2020.~~2021.

Environmental Liabilities

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed an applied threshold not to exceed $1,000. Applying this threshold, there are no environmental matters to disclose for this period.

~~12.~~13. Acquisitions, Divestitures and Discontinued Operations

Acquisitions

The Company acquired several businesses for approximately ~~$77,393~~$142,669 and ~~$642,468,~~$77,393, net of cash acquired, during the nine months ended September 30, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. The ~~Company has not recognized any~~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 nine months ended September 30, ~~2020.~~2021.

~~Inenco~~

~~The Company acquired the remaining 65% equity investment in Inenco in July 2019. Inenco is one~~

Table of Australasia's leading industrial distributors of key product categories such as bearings, power transmission and seals and it generates estimated annual revenues of approximately $400,000. Prior to the 65% acquisition, the Company accounted for its 35% investment under the equity method of accounting. The acquisition-date fair value of the 35% investment was $123,385 and is included in the measurement of the consideration transferred. The difference between the acquisition-date fair value and the carrying amount of the equity method investment resulted in the recognition of a gain of $38,663 on the acquisition date. The acquisition-date fair value was determined using a market and income approach with the assistance of a third party valuation firm. The gain is included within other non-operating expenses (income) on the condensed consolidated statement of income and comprehensive income for the three and nine months ended September 30, 2019.Contents

Divestitures

The Company received cash proceeds from divestitures of businesses totaling ~~$382,737~~$16,687 and ~~$416,784~~$382,737 for the nine months ended September 30, ~~2020~~2021 and September 30, ~~2019,~~2020, 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 nine months ended September 30, 2019. These losses are included within other non-operating expenses (income) on the condensed consolidated statements of income.

~~EIS~~

On September 30, 2019, the Company sold all of its equity in EIS, a wholly owned subsidiary within the Industrial Parts Group. EIS contributed $588,031 for the year ended December 31, 2019. The Company incurred realized currency losses of $7,664 from this transaction, which are included in the line item "other" within non-operating (income) expenses on the condensed consolidated statement of income for the three and nine months ended September 30, 2019.

~~Table of Contents~~

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. The Company has recognized $3,165 during the three months ended September 30, 2020 of additional loss on divestiture, classified as discontinued operations, as part of ~~customary post-transaction working capital adjustments, among other things. 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 prior 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 $69,700, which is included within other assets on the condensed consolidated balance sheets, as of September 30, 2021. The Company maintains an ~~immaterial~~allowance equal to the current expected credit loss based on a consideration of historical experience, current market conditions and reasonable and supportable forecasts related to this investment ~~in SPR~~ and ~~has concluded that SPR is a variable interest entity.~~ other related assets of $17,000.

The Company also remains involved with SPR for a limited period of time through various lease, sublease, freight distribution and transition service agreements. The Company has concluded that SPR is a variable interest entity, but the Company is not the primary beneficiary and therefore ~~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 ~~weekly~~ reimbursement from SPR under the terms of a transition services agreement.

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

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net sales $ 0 $ 489,739 $ 846,944 $ 1,443,772
Cost of goods sold 0 370,546 632,007 1,093,332
Gross profit 0 119,193 214,937 350,440
Operating and non-operating expenses 0 98,539 179,461 289,359
Loss on divestiture 3,165 0 223,483 1,000
(Loss) income before income taxes (3,165) 20,654 (188,007) 60,081
Income taxes (1) 2,222 5,423 4,062 15,373
Net (loss) income from discontinued operations $ (5,387) $ 15,231 $ (192,069) $ 44,708

(1) The effective income tax rate was negative 2.2% for the nine months ended September 30, 2020, compared to 25.6% for the same period in 2019. The rate decrease for the nine months ended September 30, 2020 is primarily due to a non-deductible loss on divestiture.

~~Table of Contents~~

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


	~~December 31, 2019~~
~~Assets~~
~~Trade accounts receivable, net~~	$	~~194,903~~
~~Merchandise inventories, net~~	~~387,307~~
~~Prepaid expenses and other current assets~~	~~132,041~~
~~Other intangible assets, less accumulated amortization~~	~~76,829~~
~~Operating lease assets~~	~~80,302~~
~~Other assets~~	~~91,640~~
~~Total assets of discontinued operations~~	$	~~963,022~~

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

~~13. Goodwill and Other Intangible Assets~~

Total consolidated goodwill as of September 30, 2020 is $1,829,946, net of $506,721 of accumulated impairment loss. The changes in the carrying amount of goodwill during the periods ended September 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) 10,528 5,011 15,539 17,069
Amortization — — — (70,219)
Impairments (506,721) 0 (506,721) 0
Foreign currency translation 27,932 (323) 27,609 10,499
Balance as of September 30, 2020 $ 1,429,234 $ 400,712 $ 1,829,946 $ 1,449,446

~~(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). 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 September 30, 2020, which included reviewing the 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 reporting units.

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 extended into the second quarter and 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. During the second quarter, 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.

~~Table of Contents~~

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 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.


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Net sales	$	—	$	846,944
Cost of goods sold	—		632,007
Gross profit	—		214,937
Operating expenses	—		179,461
Loss on disposal	3,165		223,483
Loss before income taxes	(3,165)		(188,007)
Income tax expense	2,222		4,062
Net loss from discontinued operations	$	(5,387)	$	(192,069)

14. Income Taxes

The Company's effective income tax rate was ~~21.8%~~23.5% for the three months ended September 30, ~~2020,~~2021, compared to ~~25.2%~~21.8% for the same three month period in ~~2019.~~2020. The effective income tax rate was ~~105.4%~~24.8% for the nine months ended September 30, ~~2020,~~2021, compared to ~~25.1%~~105.4% for the same period in ~~2019. The~~2020.

For the three months ended September 30, 2021, the rate ~~decrease during the third quarter~~increase is primarily due ~~primarily~~ to ~~the benefit of statute-related adjustments and~~ income mix ~~shifts. The rate increase for~~shifts and statute related adjustments. For the nine months ended September 30, ~~2020~~2021, the rate decrease is primarily due to athe non-deductible goodwill impairment charge ~~and certain transaction and other costs incurred~~that occurred in 2020. In addition, during the ~~period.~~second quarter of 2021, the United Kingdom enacted legislation raising its corporate tax rate from 19% to 25% effective April 2023. Accordingly, the Company remeasured its deferred tax assets and liabilities as of June 30, 2021.

15. 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

Table of Contents

stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards. ~~Options~~Certain outstanding options to purchase ~~approximately 473 and 2,214~~ shares of common stock ~~were outstanding but excluded from~~are not included in the ~~computations of~~ diluted earnings per share ~~for the three and nine month period ended September 30, 2020, respectively, compared to approximately 544 and 223 for the three and nine month period ended September 30, 2019, respectively.~~calculation. These options ~~were~~are excluded because their inclusion would have been anti-dilutive.

The following table summarizes anti-dilutive shares outstanding:

~~16. Restructuring~~

~~2019 Cost Savings Plan~~

As more fully discussed in the restructuring footnote of 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~~	$	~~39,009~~
~~Remaining costs expected but not yet incurred~~	~~3,825~~
~~Total costs~~	$	~~42,834~~

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 September 30, 2020 since inception is $181,789.

The table below summarizes the activity related to the restructuring costs discussed above. As of September 30, 2020, the current portion of the restructuring liability is included in other current liabilities on the condensed consolidated balance sheet.

~~Table of Contents~~

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 $ 0 $ 0 $ 78,831
Restructuring costs 16,638 9,506 5,890 6,975 39,009
Cash payments (71,389) (8,091) 0 0 (79,480)
Non-cash charges 0 0 (5,890) (6,975) (12,865)
Translation 85 59 0 0 144
Liability as of September 30, 2020 $ 17,526 $ 8,113 $ 0 $ 0 $ 25,639


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Anti-dilutive shares outstanding	—	473	158	2,214

2017

Table of Contents

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 and nine months ended September 30, 2021 are not necessarily indicative of 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 strategies for growing our automotive and industrial businesses, the execution and effect of our cost savings initiatives, our efforts and initiatives to help us emerge from the pandemic well-positioned to execute our strategy, our ongoing efforts to maintain compliance and flexibility under our debt covenants, our liquidity position and actions to maximize cash flow to continue to operate during these highly uncertain times and plans for future cost savings. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.

~~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 Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and Item 1A, 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.

2118

Table of Contents

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 Company~~a network of more than 10,000 locations.

The Company's Automotive Parts Group operated in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Australia and New Zealand as of September 30, 2021, and accounted for 66% of total revenue for the nine months ended September 30, 2021. Our Industrial Parts Group operated in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore. The Industrial Parts Group accounted for 34% of the Company's total revenue for the nine months ended September 30, 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 in the U.S., Canada, Mexico, France, the U.K., Germany, Poland, the Netherlands, Belgium, Australia and New Zealand as of September 30, 2020, and accounted for 65% of total revenues forCOVID-19 Pandemic

During the nine months ended September 30, 2021, our business and results of operations continued to improve relative to the same period of 2020. ~~Our Industrial Parts Group operated~~In particular, as widespread vaccine distribution continued, we have seen economic recovery in ~~the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore. The Industrial Parts Group accounted for 35%~~many of the ~~Company's total revenues for the nine months ended September 30, 2020.~~markets where we operate and a significant uptick in consumer mobility. However, all regions in which we operate continue to experience periodic surges in infection rates. As ~~of 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 by the World Health Organization (“WHO”) on March 11, 2020, continues to evolve rapidly. Our deepest 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,~~result, our business segments continue to face many ~~uncertainties. The results of~~uncertainties and our operations ~~for the nine months ended September 30, 2020 are not necessarily indicative of results for the entire year. The Company's operations are~~remain vulnerable to ~~the reduced economic activity~~continuing negative effects caused by the ~~COVID-19 outbreak, which led many governments~~pandemic. However, we are encouraged 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~~see the ~~second quarter. Sales results sequentially improved throughout the second and third quarter of 2020 as markets reopened and governments eased restrictions.~~

~~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~~impact 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. 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~~pandemic subsiding as evidenced by the ~~Centers for Disease Control~~improving industrial economy, increase in miles driven and ~~Prevention, WHO, and local, state and national health authorities, to protect our employees, customers, suppliers and communities.~~overall consumer activity.

As of September 30, ~~2020, substantially~~2021, all our operations are open for business. Our supply chain partners have been very supportive and accommodating, despite ~~strain~~strains on the supply chain ~~with respect to~~caused by labor shortages, ~~and certain~~ inventory shortages, delays in order fulfillment and increased ~~backlogs, and they~~backlogs. This has allowed us to continue to ~~do their part to help our service levels to our customers remain strong.~~provide quality customer service. We remain in constant communication with our employees regarding changing conditions and protocol. Based on the length and severity of ~~COVID-19,~~the pandemic, 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 2, “Issuer Repurchase of Equity Securities”~~ in this report, which isare incorporated herein by reference.

~~Table of Contents~~

Key Business Metrics

We consider comparable sales to be a key business metric because management has evaluated its results of operations using this metric and we believe that this key indicator provides additional perspective and insights when analyzing the operating performance of ~~the Company~~our business from period to period and trends in its historical operating results. This metric should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this report.

Comparable Sales

Comparable sales ~~(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.

Results of Operations

Overview

~~The Company has remained substantially open~~As a result of the COVID-19 vaccine distribution and its positive impact on consumer mobility and demand, we are encouraged by the increase in consumer activity during the ~~COVID-19 pandemic, which slowed mobility~~three and overall economic activity. Despite the challenges of these unprecedented business conditions, our Automotive Parts Group operated well and reported improved profit margins across all regions during the threenine months ended September 30, ~~2020 when compared~~2021 as

Table of Contents

our key markets continue to reopen. In addition, we continue to realize the same period in the prior year. Our Industrial Parts Group also improved profit margin this quarter when compared to the same prior year period. The Company improved its total gross margin in the quarter and executed on a numberbenefits of our cost savings initiatives to more effectively leverage our cost ~~structure. As a result~~structure in both our Automotive and Industrial Parts Groups. Both our segments reported improved sales during the three and nine months ended September 30, 2021 when compared to the same prior year periods. The Automotive Parts Group benefited from the broad economic recovery, an increase in customer mobility and miles driven, as well as favorable weather trends. The Industrial Parts Group benefited from the strengthening industrial economy, as evidenced by economic indicators such as the Manufacturing Industrial Production and the Purchasing Managers Index, among others. Additionally, the Industrial Parts Group executed on key operational initiatives, including improved omni-channel capabilities and the expansion of ~~COVID-19~~our services and ~~its negative impact on demand, the Company has experienced and may continue to experience a decrease in volume-based buying incentives.These trends and uncertainties may persist and impact future results.~~solutions business.

Sales

Sales for the three months ended September 30, ~~2020~~2021 were ~~$4.4~~$4.8 billion, a ~~3.4% decrease~~10.3% increase as compared to $4.5 billion in the same period of the prior year period. The decrease in sales is attributable to a 1.8% decline in comparable sales driven primarily by COVID-19 and a 4.2% impact from divestitures. These items were partially offset by a 1.3% benefit from acquisitions and the net impact of favorable foreign currency and other of 1.3%. Sales for the quarter improved sequentially from the second quarter of 2020. Sales for the nine months ended September 30, 2020 were $12.3 billion, a 7.2% decrease compared to $13.2$4.4 billion in the same period of the prior year. The ~~decline~~increase in sales is ~~due~~attributable to a ~~6.5%~~7.6% increase in comparable sales, ~~decrease due primarily to decreased demand caused by COVID-19~~a 1.8% benefit from acquisitions and a ~~4.4% impact from divestitures. These items were partially offset by a 3.7% positive impact from acquisitions. The~~net favorable impact of foreign currency and other of 0.9%. Sales for the nine months ended September 30, ~~2020 was flat~~2021 were $14.1 billion, a 14.5% increase as compared to $12.3 billion in the same period of the prior year. The increase in sales is due to a 10.0% comparable sales increase, a 3.2% net favorable impact of foreign currency and other and a 1.3% benefit from acquisitions. The increases in comparable sales is driven primarily by the increased consumer activity as our key markets continue to reopen when compared to the ~~prior year period.~~three and nine months ended September 30, 2020. Sales were positively impacted by price inflation of approximately 3% and 2% for the three and nine months ended September 30, 2021, respectively.

Sales for the Automotive Parts Group increased ~~6.0%~~8.2% for the three months ended September 30, ~~2020,~~2021, as compared to the same period in the prior year. This group's revenue increase for the three months ended September 30, ~~2020~~2021 consisted of an approximate ~~2.2%~~4.8% increase in comparable sales, ~~driven by strong demand in Australasia and Europe,~~ a ~~1.6%~~2.4% benefit from acquisitions and ~~the~~a 1.0% net favorable impact of ~~favorable~~ foreign currency and ~~other of 2.2%. Sales for the quarter improved sequentially from the second quarter of 2020.~~other. This group's ~~1.9%~~16.4% revenue ~~decrease~~increase for the nine months ended September 30, ~~2020~~2021 consisted of an approximate ~~5.1% decrease~~10.7% increase in comparable sales, a 3.9% net favorable impact from foreign currency and other and a ~~0.2% impact from the sale of Grupo Auto Todo in March of 2019. These items were partially offset by a 3.3%~~1.8% benefit from acquisitions.

Sales for the Industrial Parts Group ~~decreased 18.6%~~increased 14.5% for the three months ended September 30, ~~2020,~~2021, as compared to the same period in ~~2019.~~2020. The ~~decrease~~increase in this group's ~~revenues~~revenue reflects an approximate ~~9.2% decrease~~13.4% increase in comparable sales, ~~driven primarily by COVID-19 and related government actions~~a 0.8% favorable foreign currency impact and a ~~9.9% impact from the sale of EIS, which was sold in the third quarter of 2019. Foreign currency was flat compared to the same period in 2019. These declines were slightly offset by a 0.4%~~0.3% benefit from acquisitions. ~~Sales for the quarter improved sequentially from the second quarter of 2020.~~ This group's ~~15.9%~~11.0% sales ~~decrease~~increase for the nine months ended September 30, ~~2020~~2021 reflects ~~a 9.6% decrease~~an 8.9% increase in comparable sales, ~~an 11.0% impact from the sale of EIS and~~ a ~~slight~~1.5% favorable impact from foreign ~~currency. This decrease was partially offset by~~currency and a ~~4.9%~~0.6% benefit from acquisitions.

~~Table of Contents~~

Cost of Goods Sold and Operating Expenses

Cost of goods sold for the three months ended September 30, ~~2020~~2021 was ~~$2.8~~$3.1 billion, a ~~5.9% decrease~~9.4% increase from ~~$3.0~~$2.8 billion for the same period in ~~2019.~~2020. As a percentage of net sales, cost of goods sold was ~~65.0%~~64.5% for the three months ended September 30, ~~2020,~~2021, as compared to ~~66.7%~~65.0% in the same three month period of ~~2019.~~2020. Cost of goods sold for the nine months ended September 30, ~~2020~~2021 was ~~$8.1~~$9.1 billion, ~~an 8.8% decrease~~a 13.0% increase from ~~$8.9~~$8.1 billion for the same period in ~~2019.~~2020. As a percentage of net sales, cost of goods sold was ~~65.8%~~64.9% for the nine months ended September 30, ~~2020,~~2021, as compared to ~~66.9%~~65.8% in the same ~~nine month~~ period of ~~2019.~~2020. The ~~Company’s~~increase in cost of goods sold ~~includes~~for the ~~total cost~~three and nine months ended September 30, 2021 primarily relates to the overall increase in sales volume due to the increased consumer activity as compared to the same three and nine month periods of merchandise sold, including freight expenses associated with moving merchandise from our suppliers to our distribution centers, retail stores and branches, as well as supplier volume incentives and inventory adjustments. the prior year.

Gross profit as a percentage of net sales may fluctuate based on, among other things, (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, (vi) changes in inflation or deflation, and ~~(vi)~~(vii) the impact of tariffs. ~~The decreases in costs of goods sold~~Gross margin improved to 35.5% for the three ~~and nine month periods~~months ended September 30, ~~2020 are primarily driven by~~2021 compared to 35.0% in the ~~sales decreases as discussed above as well as improvements in gross margin.~~same period of 2020. Gross margin for the nine months ended September 30, 2021 improved to 35.1% from 34.2% for the same nine month period of 2020. The gross margin improvements primarily reflect the ~~favorable~~ impact of higher levels of supplier incentives on stronger sales ~~mix shifts to higher gross margin operations, positive product mix (especially in the Industrial Parts Group),~~and strategic category management initiatives including pricing and global sourcing ~~actions and the favorable impact of divestitures. These items were partially offset by a decrease in supplier incentives due to lower purchasing volumes.~~strategies. We have reported improved year over year gross margin for ~~12 quarter over quarter periods.~~16 consecutive quarters.

Total operating expenses ~~decreased~~increased to ~~$1.23~~$1.4 billion for the three months ended September 30, ~~2020~~2021 as compared to ~~$1.24~~$1.2 billion for the same three month period in ~~2019 due to the positive impact of the cost actions implemented during~~ 2020. ~~For the nine months ended September 30, 2020, operating expenses totaled $4.0 billion compared to $3.6 billion for the same nine month period in 2019 due primarily to~~ ~~the $506.7 million goodwill impairment charge recognized in the second quarter related to our European reporting unit.~~ As a percentage of net sales, operating expenses increased to ~~28.1% compared to 27.5% and 32.8% compared to 27.3% in the three and nine month periods ended September 30, 2020,~~29.4% as compared to 28.1% in the ~~same prior year periods, respectively. The increases~~respective periods. This increase as a percentage of net sales ~~in the periods are~~is primarily due to the benefit of temporary COVID-19 related savings initiatives in 2020 and a $61.1 million loss on a software disposal in 2021. For the nine months ended September 30, 2021, operating expenses totaled $4.1 billion as

Table of ~~leverage caused~~Contents

compared to $4.0 billion for the same nine month period in 2020. As a percentage of net sales, operating expenses improved to 29.3% as compared to 32.8% for the respective periods primarily driven by ~~declining sales volume as discussed above.~~the non-cash goodwill impairment charge that occurred in 2020.

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

In accordance with our $100 million cost savings plan announced in late 2019, we recognized more than $40 million in savings in the third quarter of 2020 driven by transformative reductions in payroll and facility costs. Our permanent expense reductions associated with this plan now total over $110 million for the nine months ended September 30, 2020. We have continued to execute on a number of additional savings initiatives in response to the impact of COVID-19, which have contributed approximately $60 million in incremental, temporary savings in the third quarter related to furloughs, reduced travel and other initiatives.

Segment Profit

Segment profit increased to $391.7 million for the three months ended September 30, 2020, compared to $360.1 million for the same three month period of the prior year, an increase of 8.8%. Segment profit margin was 9.0% compared to 8.0% in the same three month period of 2019. The increase in segment profit margin for the three months ended September 30, 2020 reflects the improvement in gross margin and significant cost savings relative to the prior year. For the nine months ended September 30, 2020, ~~segment profit decreased to $976.1 million compared to $1.0 billion for th~~e same nine month period of the prior year, a decrease of 4.8%. However, segment profit margin increased to 7.9% compared to 7.7% in the same nine month period of 2019, driven by the Company's implementation of its gross margin and cost saving initiatives which have allowed the Company to better leverage expenses.

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, gross margin improvement and accelerated cost initiatives in response to COVID-19, will continue to create value for our stakeholders.

The Automotive Parts Group’s segment profit increased ~~19.6%~~5.6% in the three months ended September 30, ~~2020~~2021 as compared to the same period of ~~2019,~~2020, and its segment profit margin was ~~9.0%~~8.8% as compared to ~~8.0%~~9.0% in the same period of the previous year. ~~This improvement in segment~~Segment profit margin ~~reflects~~declined primarily due to the ~~strong operating results~~benefit of temporary COVID-related savings initiatives in ~~all regions, driven~~2020. These items were partially offset by ~~improving~~improved leverage from stronger sales, ~~trends~~gross margin expansion and ~~the positive impact of~~incremental cost ~~actions.~~control initiatives in 2021. For the nine months ended September 30, ~~2020,~~2021, the Automotive Parts Group's segment

~~Table of Contents~~

profit ~~decreased~~increased approximately ~~0.5%. However,~~28.7% and the segment profit margin ~~increased~~improved to ~~7.8%~~8.6% as compared to ~~7.7%~~7.8% in the same nine month period of ~~2019, reflecting~~2020. This improvement in segment profit margin is primarily due to sales gains as a result of the ~~cost actions, better~~increased consumer activity as our key markets continue to reopen, gross margin improvements, and the leveraging of expenses ~~despite lower automotive~~on higher sales ~~volumes~~ and ~~benefit of government subsidies received primarily in the second quarter.~~ongoing cost control initiatives.

The Industrial Parts Group's segment profit ~~decreased 8.7%~~increased 31.9% in the three months ended September 30, ~~2020~~2021 as compared to the same three month period of ~~2019, although~~2020, and the segment profit margin for this group ~~increased~~improved to ~~8.9%~~10.3% compared to ~~7.9%~~8.9% for the same period of the previous year. Segment profit for the Industrial Parts Group ~~decreased 11.8%~~improved 26.7% in the nine months ended September 30, ~~2020~~2021 as compared to the same nine month period of ~~2019, however~~2020, and the segment profit margin for this group improved to ~~8.2%~~9.4% compared to ~~7.8%~~8.2% for the same period of the previous year. The improved segment profit margins for both periods ~~primarily reflects~~reflect the ~~growing efficiencies and~~positive impact of higher sales volumes, gross margin ~~improvements~~gains and efficiencies in the operating structure of the Industrial Parts ~~Group's operating structure and~~Group. Additionally, the ~~accretive benefit of the sale of EIS.~~

~~Goodwill Impairment~~

Due 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 resultedIndustrial Parts Group benefited from the ~~ongoing market volatility~~strengthening industrial economy, which is evident in indicators such as the Purchasing Managers Index and uncertainty caused by the COVID-19 pandemic, which extended into the second quarter and 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. As of September 30, 2020, we determined that there were no indicators that goodwill was impaired at any of our reporting units.Industrial Production Index.

Income Taxes

For the three months ended September 30, 2021, the rate ~~decrease during the third quarter~~increase is primarily due ~~primarily~~ to ~~the benefit of statute-related adjustments and~~ income mix ~~shifts. The rate increase for~~shifts and statute related adjustments. For the nine months ended September 30, ~~2020~~2021, the rate decrease is primarily due to athe non-deductible goodwill impairment charge ~~and certain transaction and other costs incurred~~that occurred in 2020, as described below. In addition, during the ~~period.~~second quarter of 2021, the United Kingdom enacted legislation raising its corporate tax rate from 19% to 25% effective April 2023. Accordingly, the Company remeasured its deferred tax assets and liabilities as of June 30, 2021.

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

For the three months ended September 30, ~~2020,~~2021, the Company recorded ~~consolidated~~ net income from continuing operations of ~~$232.9~~$228.6 million, ~~an increase~~a decrease of ~~9.7%~~1.9% as compared to ~~consolidated~~ net income from continuing operations of ~~$212.3~~$232.9 million in the same three month period of the prior year. On a per share diluted basis, net income ~~from continuing operations~~ was ~~$1.61, an increase~~$1.59, a decrease of ~~11.0%~~1.2% as compared to ~~$1.45~~net income per diluted share of $1.61 for the same three month period of ~~2019.~~ 2020. This decrease is primarily related to a loss on a software disposal of $61.1 million during the three months ended September 30, 2021.

For the nine months ended September 30, ~~2020,~~2021, the Company recorded ~~consolidated~~net income from continuing operations of $642.8 million as compared to net loss from continuing operations of $8.2 ~~million, a decrease of 101.5% compared to consolidated net income from continuing operations of $567.5~~ million in the same nine month period of the prior year. On a per share diluted basis, net ~~loss~~income from continuing operations was ~~$0.06, a decrease of 101.6%~~$4.44 as compared to net ~~income from continuing operations~~loss per diluted share of ~~$3.87~~$0.06 in the same nine month period of ~~2019.~~2020. The ~~decrease~~increase in ~~net~~ income ~~from continuing operations~~ for the nine month period was primarily driven by the goodwill impairment charge of $506.7 million that occurred during the second quarter of 2020. Additionally, we saw higher sales volume as a result of increased consumer activity as our key markets continue to reopen during the nine months ended September 30, ~~2020 was primarily driven~~2021 .

Further impacting net income from continuing operations during the three and nine months ended September 30, 2021, the Company incurred $61.1 million and $138.5 million of adjustments, respectively. These adjustments include the aforementioned loss related to a software disposal of $61.1 million and $77.4 million related to damages

Table of Contents

reinstated by the ~~second quarter goodwill impairment charge~~Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim. Refer to the property, plant and equipment and commitments and contingencies footnotes to the condensed consolidated financial statements for more information regarding these adjustments. The Company believes these represent costs that do not arise in the ordinary course of ~~$506.7 million, as well as reduced sales volumes due to COVID-19.~~the Company's business and therefore impact comparability with prior periods.

During the three and nine months ended September 30, 2020, the Company incurred $11.3 million and $565.0 million ~~respectively,~~ of ~~adjustments.~~adjustments, respectively. These adjustments include a ~~second quarter~~ goodwill impairment charge of $506.7 million related to our European reporting unit and also represents restructuring costs, realized currency losses, insurance proceeds related to the SPR Fire and transaction and other costs and income. 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 in the notes to the condensed consolidated financial statements for more information.COVID-19.

For the three months ended September 30, ~~2020, before the impact of restructuring and transaction and other costs,~~2021, the Company's adjusted net income from continuing operations was ~~$236.8~~$270.5 million, an increase of ~~16.1%~~14.2% as compared to adjusted net income from continuing operations of ~~$203.8~~$236.8 million in the same three month period of the prior year. On a per share basis, adjusted net income from continuing operations was ~~$1.63~~$1.88 for the three months ended September 30, ~~2020,~~2021, an increase of ~~17.3%~~15.3% as compared to ~~$1.39~~$1.63 for the same ~~three month~~ period of ~~2019.~~2020. For the nine months ended September 30, ~~2020, before the impact of adjustments related to goodwill impairment, realized currency losses, restructuring, transaction and other costs and insurance proceeds related to the SPR fire,~~2021, adjusted net income from continuing operations was $740.8 million, an increase of 36.2% as compared to $544.1 million ~~a decrease of 8.0% compared to~~for the same ~~nine month~~ period of ~~2019.~~2020. On a per share diluted basis, adjusted net income from continuing

~~Table of Contents~~

operations was ~~$3.76~~$5.12 for the nine months ended September 30, ~~2020, a decrease~~2021, an increase of ~~6.7%~~36.2% as compared to ~~$4.03~~$3.76 for the same ~~nine month~~ period of the prior year. ~~Each of~~The increased adjusted net ~~(loss)~~income from continuing operations for the three and nine months ended September 30, 2021 reflects the benefits of improved sales volume related to increased consumer activity as our key markets continue to reopen, gross margin improvements, improved expense leverage on sales growth and our ongoing cost control initiatives. Both adjusted net income from continuing operations and adjusted diluted net ~~(loss)~~ income from continuing operations per common share ~~is a~~are 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 income (loss) ~~income~~ from continuing operations and diluted net income (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 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 these metrics useful to investors because they provide greater transparency into management’s view and assessment of the Company’s 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 core operations. The Company does not, nor does it suggest 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 September 30, Nine Months Ended September 30,
(in thousands) 2020 2019 2020 2019
GAAP net income (loss) from continuing operations $ 232,918 $ 212,256 $ (8,237) $ 567,459
Adjustments:
Goodwill impairment charge (1) — — 506,721 —
Restructuring costs (2) 10,968 — 39,009 —
Realized currency loss (3) — 7,664 11,356 34,701
Gain on insurance proceeds related to SPR Fire (4) — — (13,448) —
Gain in equity investment (5) — (38,663) — (38,663)
Transaction and other costs (6) 288 18,586 21,392 28,771
Total adjustments 11,256 (12,413) 565,030 24,809
Tax impact of adjustments (7,423) 4,000 (12,733) (1,140)
Adjusted net income from continuing operations $ 236,751 $ 203,843 $ 544,060 $ 591,128

2622

Table of Contents


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
GAAP net income (loss) from continuing operations	$	228,585	$	232,918	$	642,791	$	(8,237)

Adjustments:
Loss on software disposal (1)	61,063		—		61,063		—
Product liability damages award (2)	—		—		77,421		—
Goodwill impairment charge (3)	—		—		—		506,721
Restructuring costs (4)	—		10,968		—		39,009
Realized currency loss (5)	—		—		—		11,356
Gain on insurance proceeds related to SPR Fire (6)	—		—		—		(13,448)
Transaction and other costs (7)	—		288		—		21,392
Total adjustments	61,063		11,256		138,484		565,030
Tax impact of adjustments	(19,167)		(7,423)		(40,489)		(12,733)
Adjusted net income from continuing operations	$	270,481	$	236,751	$	740,786	$	544,060

Table of Contents

The table below ~~represent~~represents amounts per common share assuming dilution:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020		2021		2020
GAAP net income (loss) from continuing operations	GAAP net income (loss) from continuing operations	$	1.61	$	1.45	$	(0.06)	$	3.87	GAAP net income (loss) from continuing operations	$	1.59	$	1.61	$	4.44	$	(0.06)

Adjustments:	Adjustments:									Adjustments:
Goodwill impairment charge (1)		—		—		3.51		—
Restructuring costs (2)		0.07		—		0.26		—
Realized currency loss (3)		—		0.05		0.08		0.24
Gain on insurance proceeds related to SPR Fire (4)		—		—		(0.09)		—
Gain in equity investment (5)		—		(0.26)		—		(0.26)
Transaction and other costs (6)		—		0.12		0.15		0.19
Loss on software disposal (1)										Loss on software disposal (1)	0.42		—		0.42		—
Product liability damages award (2)										Product liability damages award (2)	—		—		0.54		—
Goodwill impairment charge (3)										Goodwill impairment charge (3)	—		—		—		3.51
Restructuring costs (4)										Restructuring costs (4)	—		0.07		—		0.26
Realized currency loss (5)										Realized currency loss (5)	—		—		—		0.08
Gain on insurance proceeds related to SPR Fire (6)										Gain on insurance proceeds related to SPR Fire (6)	—		—		—		(0.09)
Transaction and other costs (7)										Transaction and other costs (7)	—		—		—		0.15
Total adjustments	Total adjustments	0.07		(0.09)		3.91		0.17		Total adjustments	0.42		0.07		0.96		3.91
Tax impact of adjustments	Tax impact of adjustments	(0.05)		0.03		(0.09)		(0.01)		Tax impact of adjustments	(0.13)		(0.05)		(0.28)		(0.09)
Adjusted diluted net income from continuing operations per common share	Adjusted diluted net income from continuing operations per common share	$	1.63	$	1.39	$	3.76	$	4.03	Adjusted diluted net income from continuing operations per common share	$	1.88	$	1.63	$	5.12	$	3.76
Weighted average common shares outstanding – assuming dilution	Weighted average common shares outstanding – assuming dilution	145,035		146,189		144,528		146,529		Weighted average common shares outstanding – assuming dilution	143,589		145,035		144,622		144,528

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Line item:	Line item:									Line item:
Cost of goods sold	Cost of goods sold	$	604	$	4,521	$	13,495	$	7,481	Cost of goods sold	$	—	$	604	$	—	$	13,495
Selling, administrative and other expenses	Selling, administrative and other expenses	—		15,879		8,213		23,103		Selling, administrative and other expenses	61,063		—		138,484		8,213
Goodwill impairment charge	Goodwill impairment charge	—		—		506,721		—		Goodwill impairment charge	—		—		—		506,721
Restructuring costs	Restructuring costs	10,968		—		39,009		—		Restructuring costs	—		10,968		—		39,009
Non-operating (income): Other		(316)		(32,813)		(2,408)		(5,775)
Non-operating (income) expenses: Other										Non-operating (income) expenses: Other	—		(316)		—		(2,408)
Total adjustments	Total adjustments	$	11,256	$	(12,413)	$	565,030	$	24,809	Total adjustments	$	61,063	$	11,256	$	138,484	$	565,030

(1)Adjustment reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies. Refer to the property, plant and equipment footnote to the condensed consolidated financial statements for more information.

(2)Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim. Refer to the commitments and contingencies footnote to the condensed consolidated financial statements for more information.

(3)Adjustment reflects the ~~second quarter~~2020 goodwill impairment charge related to ~~our~~the Company's European reporting unit.

~~(2)~~ (4)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)~~ (5)Adjustment reflects realized currency losses related to divestitures.

~~(4)~~ (6)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)~~

Table of Contents

(7)Adjustment ~~relates to the gain recognized upon remeasuring the Company's preexisting 35% equity investment to fair value upon acquiring the remaining equity of Inenco on July 1, 2019.~~

~~(6) Adjustment includes~~reflects $8.5 million of incremental costs associated with COVID-19 for the nine months ended September 30, 2020 and costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred relating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things. ~~For the three and nine months ended September 30, 2019, adjustments also include transaction and other costs related to acquisitions and divestitures.~~

Financial Condition

The Company’s cash balance of ~~$900.1~~$919.1 million at September 30, ~~2020 increased $623.1~~2021 decreased $71.1 million, or ~~225.0%~~7.2%, from December 31, ~~2019.~~2020. For the nine months ended September 30, ~~2020,~~2021, the Company had net cash provided by operating activities of ~~$1.4 billion,~~$1,008.2 million, net cash ~~provided by~~used in investing activities of ~~$0.2 billion~~$239.9 million and net cash used in financing activities of ~~$1.0 billion.~~$818.7 million. The

~~Table of Contents~~

cash provided by operating activities ~~was~~of $1,008.2 million reflects strong earnings and effective working capital management. This amount decreased $419.0 million from $1,427.2 million for the nine months ended September 30, 2020 primarily driven by ~~entry~~the $500 million benefit to operating cash flow in 2020 as a result of the Company entering into the A/R Sales Agreement to sell receivables, which provided a $500 million benefit to operating cash flows, and the effective management of our working capital. Refer to the accounts receivable sales agreement footnote in the notes to the condensed consolidated financial statements for more information.receivables. The investing activities consisted primarily of ~~$394.4~~$142.6 million in acquisitions and other investing activities and $138.2 million in capital expenditures, slightly offset by $40.9 million in proceeds from ~~the divestiture of the Business Products Group~~divestitures and the sale of property, plant and ~~equipment, slightly offset by $105.4 million for capital expenditures and $59.1 million for acquisitions and other investing activities.~~equipment. The financing activities consisted primarily of ~~$577.4 million net payments on debt, $339.3~~$349.3 million for dividends paid to the Company’s shareholders, ~~and $95.7~~$283.9 million paid for share ~~repurchases.~~repurchases and $160.8 million net payments on debt.

Accounts receivable ~~decreased $488.0~~increased $331.3 million, or ~~20.0%~~21.3%, from December 31, ~~2019~~2020 primarily due to ~~entering into the A/R Sales Agreement.~~higher sales volumes. Inventory ~~decreased $24.5~~increased $242.1 million, or ~~0.7%~~6.9%, due to ~~ongoing inventory management initiatives~~increased economic activity and ~~accounts~~related product demand. Accounts payable increased ~~$82.3~~$691.0 million, or ~~2.1%~~16.7%, from December 31, ~~2019 partly~~2020 due to increased purchasing related to sales volume and extended payment terms with certain suppliers. Total debt of ~~$2.9~~$2.4 billion at September 30, ~~2020~~2021 decreased ~~$0.5~~$0.2 billion, or ~~15.2%~~9.1%, from December 31, ~~2019 primarily due to a reduction in the amounts outstanding on our revolving credit facility.~~2020.

We continue to negotiate extended payment ~~dates~~terms 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 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 September 30, ~~2020~~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 $2.6 billion and $1.8 billion, respectively. The amount settled through the SCF program was $2.3 billion and $1.9 billion for the nine months ended September 30, ~~2020.~~2021 and September 30, 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 ~~$2.8~~$2.4 billion of total liquidity (comprising ~~$1.9~~$1.5 billion availability on the ~~revolving credit facility~~Unsecured Revolving Credit Facility, defined below, and $0.9 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.

On September 30, 2021, we entered into the first amendment to the Syndicated Facility Agreement (the "Unsecured Revolving Credit Facility"), dated as of October 30, 2020. The interest rates were amended to reduce the applicable rate by 12.5 basis points (resulting in a rate of LIBOR + 112.5 basis points) and the LIBOR floor from 0.5% to 0.0%. The amendment also extended the maturity by one year to September 30, 2026.

Table of Contents

We have a strong cash position and solid financial strength to pursue strategic growth opportunities through disciplined, strategic capital deployment. Our key priorities include the reinvestment in our businesses through capital expenditures, mergers and acquisitions, the dividend and share repurchases. We have plans for additional investments in our businesses to drive growth, improve efficiencies and productivity, and drive shareholder value.

On February ~~18, 2020, the Company~~16, 2021, we announced a 4%3% increase in the regular quarterly cash dividend for ~~2020.~~2021. The Board of Directors increased the cash dividend payable to an annual rate of ~~$3.16~~$3.26 per share compared with the previous dividend of ~~$3.05~~$3.16 per share. GPC has paid a cash dividend every year since going public in 1948, and ~~2020~~2021 marks the ~~64th~~65th consecutive year of increased dividends paid to shareholders. ~~At this time, we expect to continue to pay dividends in the ordinary course.~~

~~Table of Contents~~

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 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.

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 September 30, ~~2020,~~2021, the Company's total average cost of debt was ~~2.95%~~2.34%, and the Company remained in compliance with all covenants connected with its ~~borrowings, such~~borrowings. Such covenants include, among others, a financial covenant to maintain a certain leverage ratio of consolidated debt to consolidated ~~Adjusted~~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 furnishes under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the SEC that occurred during the Company’s last quarter ended September 30, ~~2020~~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.

2926

Table of Contents

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~~Refer to the ~~Commitments~~commitments and ~~Contingencies~~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. 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 centers, branches 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 incremental 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. These supply chain disruptions, as well as associated labor shortages within the supply chain, could cause inventory shortages, delays in order fulfillment and increased backlogs, and we may be unable to meet our customers’ expectations and requirements as result, 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.

3027

Table of Contents

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 ability to 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.

~~There is uncertainty surrounding potential legal, regulatory and policy changes by a new presidential administration in the United States that may directly affect the Company and the global economy.~~

The Company faces regulatory and tax uncertainties on account of the upcoming 2020 U.S. presidential election. The nature, timing and economic and political effects of any potential change to the current legal and regulatory framework affecting the Company remain highly uncertain. Uncertainty surrounding future changes may adversely affect our operating environment and have an adverse impact on our business, financial condition, results of operations and growth prospects.

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 September 30, ~~2020:~~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
July 1, 2020 through July 31, 2020 4,611 $90.15 — 14,484,676
August 1, 2020 through August 31, 2020 55,308 $95.03 — 14,484,676
September 1, 2020 through September 31, 2020 120,441 $100.43 — 14,484,676
Totals 180,360 $98.51 — 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
July 1, 2021 through July 31, 2021	213,064	$128.09	209,275	12,834,436
August 1, 2021 through August 31, 2021	355,503	$124.53	352,904	12,481,532
September 1, 2021 through September 30, 2021	240,124	$120.78	238,257	12,243,275
Totals	808,691	$124.35	800,436	12,243,275

(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. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. The authorization for the repurchase continues until all such shares have been repurchased or the repurchase ~~plan~~program is terminated by action of the Board of Directors. The program may be suspended at any time and does not have an expiration date. Approximately ~~14.5~~12.2 million shares authorized remain available to be repurchased by the Company. There were no other repurchase ~~plans~~programs announced as of September 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.~~2021.

3128

Table of Contents

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						First Amendment, dated as of September 30, 2021, to Genuine Parts Company Syndicated Facility Agreement dated October 30, 2020 among Genuine Parts Company, UAP, Inc., and Certain Designated Subsidiaries as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, Domestic Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A., acting through its Toronto Branch, as Canadian Swing Line Lender and the other Lenders and L/C Issuers party thereto.
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~~Quarterly Report on Form 10-Q for the period ended September 30, ~~2020~~2021 formatted in Inline XBRL

* Indicates management contracts and compensatory plans and arrangements.

3229

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Genuine Parts Company (Registrant)

Date: October ~~22, 2020~~21, 2021						/s/ Carol B. Yancey
						Carol B. Yancey
						Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Date: October 21, 2021						/s/ Napoleon B. Rutledge Jr.
						Napoleon B. Rutledge Jr.
						Senior Vice President and Chief Accounting Officer (Duly Authorized Officer and Principal Accounting Officer)

3330


(in thousands, except share and per share data)	September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	900,123	$	276,992
Trade accounts receivable, less allowance for doubtful accounts (2020 – $46,885; 2019 – $35,047)	1,952,225		2,440,252
Merchandise inventories, net	3,419,383		3,443,876
Prepaid expenses and other current assets	1,103,554		1,063,245
Current assets of discontinued operations	0		714,251
Total current assets	7,375,285		7,938,616
Goodwill	1,829,946		2,293,519
Other intangible assets, less accumulated amortization	1,449,446		1,492,097
Deferred tax assets	67,594		45,921
Property, plant and equipment, less accumulated depreciation (2020 – $1,357,013; 2019 – $1,200,688)	1,141,419		1,173,688
Operating lease assets	1,024,453		995,667
Other assets	587,318		457,350
Noncurrent assets of discontinued operations	0		248,771
Total assets	$	13,475,461	$	14,645,629

Liabilities and equity
Current liabilities:
Trade accounts payable	$	4,030,319	$	3,948,000
Current portion of debt	206,335		624,043
Dividends payable	113,983		110,851
Other current liabilities	1,626,061		1,493,109
Current liabilities of discontinued operations	0		218,117
Total current liabilities	5,976,698		6,394,120
Long-term debt	2,700,616		2,802,056
Operating lease liabilities	779,468		756,519
Pension and other post–retirement benefit liabilities	248,488		249,832
Deferred tax liabilities	214,738		233,044
Other long-term liabilities	520,680		445,652
Noncurrent liabilities of discontinued operations	0		68,906
Equity:
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 – 144,289,653 shares; 2019 – 145,378,158 shares	144,290		145,378
Additional paid-in capital	113,249		98,777
Retained earnings	3,923,113		4,571,860
Accumulated other comprehensive loss	(1,166,572)		(1,141,308)
Total parent equity	3,014,080		3,674,707
Noncontrolling interests in subsidiaries	20,693		20,793
Total equity	3,034,773		3,695,500
Total liabilities and equity	$	13,475,461	$	14,645,629


	Three Months Ended September 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
July 1, 2019	146,078,369	$	146,078	$	83,949	$	(1,195,179)	$	4,630,480	$	3,665,328	$	22,647	$	3,687,975
Net income	—	—		—		—		227,487		227,487		—		227,487
Other comprehensive loss, net of tax	—	—		—		(73,401)		—		(73,401)		—		(73,401)
Cash dividend declared, $0.7625 per share	—	—		—		—		(110,786)		(110,786)		—		(110,786)
Share-based awards exercised, including tax benefit of $68	2,953	4		(128)		—		—		(124)		—		(124)
Share-based compensation	—	—		6,739		—		—		6,739		—		6,739
Purchase of stock	(788,207)	(789)		—		—		(72,263)		(73,052)		—		(73,052)
Noncontrolling interest activities	—	—		—		—		—		—		(101)		(101)
September 30, 2019	145,293,115	$	145,293	$	90,560	$	(1,268,580)	$	4,674,918	$	3,642,191	$	22,546	$	3,664,737


	Nine Months Ended September 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	—	—		—		—		612,167		612,167		—		612,167
Other comprehensive loss, net of tax	—	—		—		(30,976)		—		(30,976)		—		(30,976)
Cash dividend declared, $2.2875 per share	—	—		—		—		(333,521)		(333,521)		—		(333,521)
Share-based awards exercised, including tax benefit of $4,054	144,709	145		(7,640)		—		—		(7,495)		—		(7,495)
Share-based compensation	—	—		19,820		—		—		19,820		—		19,820
Purchase of stock	(788,207)	(789)		—		—		(72,263)		(73,052)		—		(73,052)
Cumulative effect from adoption of ASU 2018-02 (2)	—	—		—		(122,526)		122,526		—		—		0
Cumulative effect from adoption of ASU 2016-02, net of tax (2)	—	—		—		—		4,797		4,797		—		4,797
Noncontrolling interest activities	—	—		—		—		—		—		1,006		1,006
September 30, 2019	145,293,115	$	145,293	$	90,560	$	(1,268,580)	$	4,674,918	$	3,642,191	$	22,546	$	3,664,737


	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	$	0	$	0	$	78,831
Restructuring costs	16,638		9,506		5,890		6,975		39,009
Cash payments	(71,389)		(8,091)		0		0		(79,480)
Non-cash charges	0		0		(5,890)		(6,975)		(12,865)
Translation	85		59		0		0		144
Liability as of September 30, 2020	$	17,526	$	8,113	$	0	$	0	$	25,639