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, ~~2021~~2022


☐			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 ~~142,421,748~~141,161,349 shares of common stock outstanding as of October ~~18, 2021.~~17, 2022.

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, 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


(in thousands, except share and per share data)	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	629,198	$	714,701
Trade accounts receivable, less allowance for doubtful accounts (2022 – $47,262; 2021 – $44,425)	2,215,032		1,797,955
Merchandise inventories, net	4,300,709		3,889,919
Prepaid expenses and other current assets	1,678,259		1,353,847
Total current assets	8,823,198		7,756,422
Goodwill	2,460,911		1,915,307
Other intangible assets, less accumulated amortization	1,748,274		1,406,401
Property, plant and equipment, less accumulated depreciation (2022 – $1,369,770; 2021 – $1,339,706)	1,241,567		1,234,399
Operating lease assets	1,073,858		1,053,689
Other assets	1,029,272		985,884
Total assets	$	16,377,080	$	14,352,102

Liabilities and equity
Current liabilities:
Trade accounts payable	$	5,531,253	$	4,804,939
Current portion of debt	1,629		—
Dividends payable	126,434		115,876
Other current liabilities	1,835,803		1,660,768
Total current liabilities	7,495,119		6,581,583
Long-term debt	3,231,668		2,409,363
Operating lease liabilities	809,495		789,175
Pension and other post–retirement benefit liabilities	262,820		265,134
Deferred tax liabilities	398,797		280,778
Other long-term liabilities	500,989		522,779
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 – 2022 – 140,962,009 shares; 2021 – 142,180,683 shares	140,962		142,181
Additional paid-in capital	132,240		119,975
Accumulated other comprehensive loss	(1,074,316)		(857,739)
Retained earnings	4,465,565		4,086,325
Total parent equity	3,664,451		3,490,742
Noncontrolling interests in subsidiaries	13,741		12,548
Total equity	3,678,192		3,503,290
Total liabilities and equity	$	16,377,080	$	14,352,102

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)	2021		2020		2021		2020		(in thousands, except per share data)	2022		2021		2022		2021
Net sales	Net sales	$	4,818,849	$	4,370,086	$	14,067,301	$	12,285,839	Net sales	$	5,675,274	$	4,818,849	$	16,572,323	$	14,067,301
Cost of goods sold	Cost of goods sold	3,108,082		2,842,020		9,126,614		8,079,108		Cost of goods sold	3,695,607		3,108,082		10,805,910		9,126,614
Gross profit	Gross profit	1,710,767		1,528,066		4,940,687		4,206,731		Gross profit	1,979,667		1,710,767		5,766,413		4,940,687
Operating expenses:	Operating expenses:									Operating expenses:
Selling, administrative and other expenses	Selling, administrative and other expenses	1,338,768		1,140,156		3,883,241		3,254,442		Selling, administrative and other expenses	1,458,418		1,338,768		4,226,412		3,883,241
Depreciation and amortization	Depreciation and amortization	72,121		69,097		218,377		203,084		Depreciation and amortization	86,563		72,121		259,822		218,377
Provision for doubtful accounts	Provision for doubtful accounts	4,284		5,633		14,230		23,452		Provision for doubtful accounts	6,146		4,284		13,539		14,230
Restructuring costs		—		10,968		—		39,009
Goodwill impairment charge		—		—		—		506,721
Total operating expenses	Total operating expenses	1,415,173		1,225,854		4,115,848		4,026,708		Total operating expenses	1,551,127		1,415,173		4,499,773		4,115,848
Non-operating (income) expenses:
Interest expense		14,958		25,788		50,127		72,218
Non-operating expense (income):										Non-operating expense (income):
Interest expense, net										Interest expense, net	18,220		14,167		58,318		47,853
Other	Other	(18,338)		(21,241)		(79,728)		(46,017)		Other	(7,616)		(17,547)		(26,897)		(77,454)
Total non-operating (income) expenses		(3,380)		4,547		(29,601)		26,201
Total non-operating expense (income)										Total non-operating expense (income)	10,604		(3,380)		31,421		(29,601)
Income before income taxes	Income before income taxes	298,974		297,665		854,440		153,822		Income before income taxes	417,936		298,974		1,235,219		854,440
Income taxes	Income taxes	70,389		64,747		211,649		162,059		Income taxes	105,578		70,389		304,494		211,649
Net income (loss) from continuing operations		228,585		232,918		642,791		(8,237)
Net loss from discontinued operations		—		(5,387)		—		(192,069)
Net income (loss)		$	228,585	$	227,531	$	642,791	$	(200,306)
Net income										Net income	$	312,358	$	228,585	$	930,725	$	642,791
Dividends declared per common share	Dividends declared per common share	$	0.8150	$	0.7900	$	2.4450	$	2.3700	Dividends declared per common share	$	0.8950	$	0.8150	$	2.6850	$	2.4450
Basic earnings (loss) per share:
Continuing operations		$	1.60	$	1.61	$	4.47	$	(0.06)
Discontinued operations		—		(0.03)		—		(1.33)
Basic earnings (loss) per share		$	1.60	$	1.58	$	4.47	$	(1.39)
Diluted earnings (loss) per share:
Continuing operations		$	1.59	$	1.61	$	4.44	$	(0.06)
Discontinued operations		—		(0.04)		—		(1.33)
Diluted earnings (loss) per share		$	1.59	$	1.57	$	4.44	$	(1.39)
Basic earnings per share										Basic earnings per share	$	2.21	$	1.60	$	6.57	$	4.47
Diluted earnings per share										Diluted earnings per share	$	2.20	$	1.59	$	6.53	$	4.44

Weighted average common shares outstanding	Weighted average common shares outstanding	142,871		144,273		143,826		144,528		Weighted average common shares outstanding	141,336		142,871		141,609		143,826
Dilutive effect of stock options and non-vested restricted stock awards	Dilutive effect of stock options and non-vested restricted stock awards	718		762		796		—		Dilutive effect of stock options and non-vested restricted stock awards	773		718		819		796
Weighted average common shares outstanding – assuming dilution	Weighted average common shares outstanding – assuming dilution	143,589		145,035		144,622		144,528		Weighted average common shares outstanding – assuming dilution	142,109		143,589		142,428		144,622

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) 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)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net income	$	312,358	$	228,585	$	930,725	$	642,791
Other comprehensive loss, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2022 — $33,843 and $73,892; 2021 — $11,328 and $25,494, respectively	(131,811)		(82,574)		(248,757)		(75,738)
Cash flow hedge adjustments, net of income taxes in 2022 — $1,384 and $4,151 ; 2021 — $1,384 and $4,151, respectively	3,741		3,741		11,223		11,223
Pension and postretirement benefit adjustments, net of income taxes in 2022 — $2,576 and $7,736; 2021 — $3,425 and $10,280, respectively	6,982		9,301		20,957		27,931
Other comprehensive loss, net of income taxes	(121,088)		(69,532)		(216,577)		(36,584)
Comprehensive income	$	191,270	$	159,053	$	714,148	$	606,207

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, 2021																Three Months Ended September 30, 2022
(in thousands, except share and per share data)	(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		(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
July 1, 2022																	July 1, 2022	141,280,841	$	141,281	$	123,388	$	(953,228)	$	4,329,115	$	3,640,556	$	13,007	$	3,653,563
Net income	Net income	—	—		—		—		228,585		228,585		—		228,585		Net income	—	—		—		—		312,358		312,358		—		312,358
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—	—		—		(69,532)		—		(69,532)		—		(69,532)		Other comprehensive loss, net of tax	—	—		—		(121,088)		—		(121,088)		—		(121,088)
Cash dividend declared, $0.8150 per share		—	—		—		—		(116,486)		(116,486)		—		(116,486)
Share-based awards exercised		2,256	1		(69)		—		—		(68)		—		(68)
Cash dividend declared, $0.895 per share																	Cash dividend declared, $0.895 per share	—	—		—		—		(126,434)		(126,434)		—		(126,434)
Share-based awards exercised, including tax benefit of $731																	Share-based awards exercised, including tax benefit of $731	14,619	15		(1,039)		—		—		(1,024)		—		(1,024)
Share-based compensation	Share-based compensation	—	—		6,320		—		—		6,320		—		6,320		Share-based compensation	—	—		9,891		—		—		9,891		—		9,891
Purchase of stock	Purchase of stock	(800,436)	(800)		—		—		(98,721)		(99,521)		—		(99,521)		Purchase of stock	(333,451)	(334)		—		—		(49,474)		(49,808)		—		(49,808)
Noncontrolling interest activities	Noncontrolling interest activities	—	—		—		—		—		—		2,115		2,115		Noncontrolling interest activities	—	—		—		—		—		—		734		734
September 30, 2021		142,503,493	$	142,503	$	118,223	$	(1,073,086)	$	3,995,537	$	3,183,177	$	13,381	$	3,196,558
September 30, 2022																	September 30, 2022	140,962,009	$	140,962	$	132,240	$	(1,074,316)	$	4,465,565	$	3,664,451	$	13,741	$	3,678,192

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


	Nine Months Ended September 30, 2022
(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, 2022	142,180,683	$	142,181	$	119,975	$	(857,739)	$	4,086,325	$	3,490,742	$	12,548	$	3,503,290
Net income	—	—		—		—		930,725		930,725		—		930,725
Other comprehensive loss, net of tax	—	—		—		(216,577)		—		(216,577)		—		(216,577)
Cash dividend declared, $2.685 per share	—	—		—		—		(380,041)		(380,041)		—		(380,041)
Share-based awards exercised, including tax benefit of $3,868	63,877	64		(15,508)		—		—		(15,444)		—		(15,444)
Share-based compensation	—	—		27,773		—		—		27,773		—		27,773
Purchase of stock	(1,282,551)	(1,283)		—		—		(171,444)		(172,727)		—		(172,727)
Noncontrolling interest activities	—	—		—		—		—		—		1,193		1,193
September 30, 2022	140,962,009	$	140,962	$	132,240	$	(1,074,316)	$	4,465,565	$	3,664,451	$	13,741	$	3,678,192

Table of Contents

~~GENUINE PARTS COMPANY AND SUBSIDIARIES~~

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

~~(UNAUDITED)~~


	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, $0.815 per share	—	—		—		—		(116,486)		(116,486)		—		(116,486)
Share-based awards exercised, including tax benefit of $40	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

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, 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


	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, $2.445 per share	—	—		—		—		(351,606)		(351,606)		—		(351,606)
Share-based awards exercised, including tax benefit of $6,667	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

(1)~~The Company~~We adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, during the first quarter of 2021.

~~(2)The Company adopted ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments,~~ ~~during the first quarter of 2020.~~

See accompanying notes to condensed consolidated financial statements.

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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)	2021		2020		(in thousands)	2022		2021
Operating activities:	Operating activities:					Operating activities:
Net income (loss)		$	642,791	$	(200,306)
Net loss from discontinued operations		—		(192,069)
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:
Net income						Net income	$	930,725	$	642,791
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	218,377		203,084		Depreciation and amortization	259,822		218,377
Loss on software disposal	Loss on software disposal	61,063		—		Loss on software disposal	—		61,063
Share-based compensation	Share-based compensation	20,841		16,274		Share-based compensation	27,773		20,841
Excess tax (benefits) deficiencies from share-based compensation		(6,667)		375
Goodwill impairment charge		—		506,721
Realized currency and other divestiture losses		—		11,356
Gain on sale of real estate						Gain on sale of real estate	(102,803)		—
Intangible asset impairment						Intangible asset impairment	17,461		—
Excess tax benefits from share-based compensation						Excess tax benefits from share-based compensation	(3,868)		(6,667)
Changes in operating assets and liabilities	Changes in operating assets and liabilities	71,791		697,611		Changes in operating assets and liabilities	115,481		71,791
Net cash provided by operating activities from continuing operations		1,008,196		1,427,184
Net cash provided by operating activities						Net cash provided by operating activities	1,244,591		1,008,196
Investing activities:	Investing activities:					Investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(138,206)		(105,428)		Purchases of property, plant and equipment	(243,998)		(138,206)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	24,184		11,675		Proceeds from sale of property, plant and equipment	141,228		24,184
Proceeds from divestitures of businesses	Proceeds from divestitures of businesses	16,687		382,737		Proceeds from divestitures of businesses	32,620		16,687
Acquisitions of businesses and other investing activities	Acquisitions of businesses and other investing activities	(142,567)		(59,062)		Acquisitions of businesses and other investing activities	(1,586,812)		(142,567)
Net cash (used in) provided by investing activities from continuing operations		(239,902)		229,922
Net cash used in investing activities						Net cash used in investing activities	(1,656,962)		(239,902)
Financing activities:	Financing activities:					Financing activities:
Proceeds from debt	Proceeds from debt	242,332		1,888,622		Proceeds from debt	4,547,511		242,332
Payments on debt	Payments on debt	(403,126)		(2,466,031)		Payments on debt	(3,586,954)		(403,126)
Share-based awards exercised	Share-based awards exercised	(19,398)		(1,754)		Share-based awards exercised	(15,444)		(19,398)
Dividends paid	Dividends paid	(349,293)		(339,294)		Dividends paid	(369,483)		(349,293)
Purchases of stock	Purchases of stock	(283,886)		(95,719)		Purchases of stock	(172,727)		(283,886)
Other financing activities	Other financing activities	(5,353)		(15,032)		Other financing activities	(16,869)		(5,353)
Net cash used in financing activities from continuing operations		(818,724)		(1,029,208)
Cash flows from discontinued operations:
Net cash provided by operating activities from discontinued operations		—		13,323
Net cash used in investing activities from discontinued operations		—		(11,131)
Net cash provided by financing activities from discontinued operations		—		—
Net cash provided by discontinued operations		—		2,192
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	386,034		(818,724)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(20,639)		(6,959)		Effect of exchange rate changes on cash and cash equivalents	(59,166)		(20,639)
Net (decrease) increase in cash and cash equivalents		(71,069)		623,131
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(85,503)		(71,069)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	990,166		276,992		Cash and cash equivalents at beginning of period	714,701		990,166
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	919,097	$	900,123	Cash and cash equivalents at end of period	$	629,198	$	919,097

See accompanying notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(in thousands, except per share data)~~

1. General

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 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, ~~2020.~~2021. Accordingly, the unaudited condensed consolidated financial statements and related disclosures herein should be read in conjunction with ~~the Company’s 2020~~our 2021 Annual Report on Form 10-K. Significant accounting policies and other items disclosed in our Annual Report have been omitted from this report because they have not changed.

The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements. Specifically, ~~the Company makes~~we make estimates and assumptions in ~~its~~our 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~~our financial results for the interim periods have been made. These adjustments are of a normal recurring nature.

We have 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, ~~2021~~2022 are not necessarily indicative of results for the year ended December 31, 2021. The Company's results of operations continued to improve in 2021 relative to the same period of 2020 as a result of several positive trends caused by the global response to the coronavirus (“COVID-19”) outbreak, which was declared a pandemic in March 2020. In particular, as widespread vaccine distribution continued, we2022. 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 pandemic impacts the Company will depend on numerous factors and future developments that the Company cannot predict, including the severity of the virus; the occurrence of additional waves or spikes in infection rates, including the spread of variant strains; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic and the efficacy of these actions, including partial or complete shut downs, travel restrictions, and shelter-in-place orders among other actions; the effectiveness and distribution of COVID-19 vaccines; 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.

~~The Company has~~ evaluated subsequent events through the date the unaudited condensed consolidated financial statements covered by this quarterly report were issued.

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~~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,
2021 2020 2021 2020
Net sales:
Automotive $ 3,204,534 $ 2,960,379 $ 9,353,998 $ 8,038,863
Industrial 1,614,315 1,409,707 4,713,303 4,246,976
Total net sales $ 4,818,849 $ 4,370,086 $ 14,067,301 $ 12,285,839
Segment profit:
Automotive $ 281,150 $ 266,124 $ 807,586 $ 627,608
Industrial 165,754 125,620 441,459 348,481
Total segment profit 446,904 391,744 1,249,045 976,089
Interest expense, net (14,167) (25,221) (47,853) (69,965)
Intangible asset amortization (25,311) (24,223) (78,239) (70,219)
Corporate expense (47,389) (33,379) (130,029) (117,053)
Other unallocated costs (1) (61,063) (11,256) (138,484) (565,030)
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,
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 2020 goodwill impairment charge related to the Company's European reporting unit.~~

~~(5)~~Adjustment reflects restructuring costs related to the 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”). The costs are

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~~primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations.~~

~~(6)Adjustment reflects realized currency losses related to divestitures.~~

~~(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.

~~(8)~~Adjustment 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.

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,
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, 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)

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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) 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 Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”). ~~The Company considers~~We consider the applicability and impact of all ASUs and ~~has~~have determined that any recently adopted accounting pronouncements did not have a material impact on ~~the Company's condensed consolidated financial statements and all recent accounting pronouncements not yet adopted are not applicable or are expected to have an immaterial impact on the Company's~~our condensed consolidated financial statements.

~~5. Property, Plant~~In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs. This standard requires disclosure of the key terms of outstanding supply chain finance programs and ~~Equipment~~

~~During~~a rollforward of the ~~third~~related amounts due to vendors participating in these programs. The new standard does not affect the recognition, measurement or financial statement presentation of any amounts due. The guidance is effective in the first quarter of ~~2021,~~2023, except for the ~~Company reconsidered its approach~~rollforward, which is effective in the first quarter of 2024. Early adoption is permitted. We are evaluating the adoption of this new guidance.

Debt

1.750% and 2.750% Senior Notes Offering

On January 6, 2022, we issued $500 million of unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022.

We utilized the proceeds from these offerings to ~~an internally developed software project due~~repay borrowings under our Revolving Credit Facility, which were incurred to finance a ~~change in management strategy related to advances in alternative technologies. The Company decided to dispose~~significant portion of the ~~software project as of September 30, 2021. As a result, the Company recognized $61,063 of selling, administrative and other expense related to the disposal of this software.~~

~~6. Employee Benefit Plans~~

~~Net periodic benefit income from the Company's pension plans included the following components:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Service cost $ 3,043 $ 3,012 $ 9,185 $ 8,919
Interest cost 17,915 20,942 53,783 62,732
Expected return on plan assets (38,755) (38,550) (116,345) (115,483)
Amortization of prior service cost 172 173 516 519
Amortization of actuarial loss 12,465 11,130 37,430 33,340
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 (income) expenses. Pension benefits also include amounts related to supplemental retirement plans.Kaman Distribution Group ("KDG") acquisition.

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~~7. Guarantees~~Derivatives and Hedging

We are exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, we use derivative and non-derivative instruments as risk management tools to mitigate the potential impact of interest rate and foreign exchange rate risks. The objective of using these tools is to reduce fluctuations in our earnings and cash flows associated with changes in these rates. 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.

The ~~Company guarantees~~following table summarizes the classification and carrying amounts of derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):


		September 30, 2022				December 31, 2021
Instrument	Balance Sheet Classification	Notional		Balance		Notional		Balance
Net investment hedges:
Forward contracts	Prepaid expenses and other current assets	$	1,513,750	$	261,813	$	925,810	$	73,819
Forward contract	Other current liabilities	$	—	$	—	$	235,180	$	2,935
Foreign currency debt	Long-term debt	€	700,000	$	686,980	€	700,000	$	792,820

The tables below present gains related to designated net investment hedges:


	Gain Recognized in AOCL before Reclassifications				Gain Recognized in Interest Expense for Excluded Components
(in thousands)	2022		2021		2022		2021
Three months ended September 30,
Forward contracts	$	81,454	$	20,958	$	7,965	$	6,574
Foreign currency debt	43,890		21,000		—		—
Total	$	125,344	$	41,958	$	7,965	$	6,574


	Gain Recognized in AOCL before Reclassifications				Gain Recognized in Interest Expense for Excluded Components
(in thousands)	2022		2021		2022		2021
Nine months ended September 30,
Forward contracts	$	167,834	$	45,143	$	23,095	$	19,722
Foreign currency debt	105,840		49,280		—		—
Total	$	273,674	$	94,423	$	23,095	$	19,722

Fair Value of Financial Instruments

As of September 30, 2022 the fair value of our senior unsecured notes was approximately $2.8 billion, 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.

Guarantees

We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which ~~the Company has~~we have a noncontrolling equity ownership interest (“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a majority voting interest in the independents. 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~~we are required to maintain compliance with certain covenants. At September 30, ~~2021, the Company was~~2022, we were in compliance with all such covenants.

As of September 30, ~~2021,~~2022, the total borrowings of the independents and affiliates subject to guarantee by ~~the Company~~us were approximately ~~$895,636.~~$908 million. These loans generally mature over periods from one to six years. ~~The Company~~We regularly ~~monitors~~monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating

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agencies of the independents and affiliates that participate in the guarantee programs. In the event that ~~the Company is~~we are required to make payments in connection with these guarantees, ~~the Company~~we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. ~~The Company recognizes~~We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, ~~the Company has~~we have not had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of September 30, ~~2021,~~2022, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.

As of September 30, ~~2021, the Company has~~2022, we have recognized certain assets and liabilities amounting to ~~$80,000~~$74 million 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~~our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from ~~the Company's~~our current expected credit loss reserve.

~~8. Debt~~Earnings Per Share

~~On September 30,~~We maintain various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards. Certain outstanding options are not included in the diluted earnings per share calculation because their inclusion would have been anti-dilutive.

The following table summarizes anti-dilutive shares outstanding:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Anti-dilutive shares outstanding	360	—	1,142	158

2. Segment Information

The following table presents a summary of our reportable segment financial information:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net sales:
Automotive	$	3,490,462	$	3,204,534	$	10,233,577	$	9,353,998
Industrial	2,184,812		1,614,315		6,338,746		4,713,303
Total net sales	$	5,675,274	$	4,818,849	$	16,572,323	$	14,067,301
Segment profit:
Automotive	$	309,349	$	281,150	$	896,475	$	807,586
Industrial	242,505		165,754		656,330		441,459
Total segment profit	551,854		446,904		1,552,805		1,249,045
Interest expense, net	(18,220)		(14,167)		(58,318)		(47,853)
Intangible asset amortization	(39,416)		(25,311)		(118,740)		(78,239)
Corporate expense	(72,820)		(47,389)		(187,883)		(130,029)
Other unallocated (expenses) income (1)	(3,462)		(61,063)		47,355		(138,484)
Income before income taxes	$	417,936	$	298,974	$	1,235,219	$	854,440

(1) The following table presents a summary of the other unallocated income and expenses:

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	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Other unallocated (expenses) income:
Gain on sale of real estate (2)	$	—	$	—	$	102,803	$	—
Gain on insurance proceeds (3)	—		—		1,507		—
Product liability damages award (4)	—		—		—		(77,421)
Loss on software disposal (5)	—		(61,063)		—		(61,063)
Transaction and other costs (6)	(3,462)		—		(56,955)		—
Total other unallocated (expenses) income	$	(3,462)	$	(61,063)	$	47,355	$	(138,484)

(2) Amount reflects a gain on the sale of real estate that had been leased to S.P. Richards.

(3) Amount reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.

(4) Amount reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.

(5) Amount 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.

(6) Amount primarily reflects costs associated with the ~~Company entered into the first amendment~~January 3, 2022 acquisition and integration of KDG. These costs also include a $17 million impairment charge driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the ~~Syndicated Facility Agreement (the "Unsecured Revolving Credit Facility"), dated~~end of their estimated useful lives as part of ~~October 30, 2020.~~executing our KDG integration and rebranding strategy. Refer to the acquisition footnote for more information regarding the acquisition.

Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The ~~interest rates were amended to reduce the applicable rate~~following table presents disaggregated geographical net sales from contracts with customers 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.~~reportable segment:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
North America:
Automotive	$	2,333,390	$	2,100,250	$	6,766,271	$	6,039,617
Industrial	2,064,569		1,493,618		5,996,299		4,362,792
Total North America	$	4,397,959	$	3,593,868	$	12,762,570	$	10,402,409
Australasia:
Automotive	$	404,708	$	374,167	$	1,182,557	$	1,130,744
Industrial	120,243		120,697		342,447		350,511
Total Australasia	$	524,951	$	494,864	$	1,525,004	$	1,481,255
Europe – Automotive	$	752,364	$	730,117	$	2,284,749	$	2,183,637
Total net sales	$	5,675,274	$	4,818,849	$	16,572,323	$	14,067,301

9.3. Accounts Receivable Sales Agreement

~~The Company has an~~Under our accounts receivable sales agreement (the ~~“A/~~"A/R Sales ~~Agreement”~~Agreement") to sell short-term receivables from certain customer trade accounts to an unaffiliated financial institution on a revolving basis. The A/R Sales Agreement has a 3 year term, which the Company intends to renew.

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

The SPE transferred ownership and control of certain receivables that met certain qualifying conditions to the unaffiliated financial institution in exchange for cash. The Company accounts for transactions with the unaffiliated financial institution as sales of financial assets, with the associated receivables derecognized from the Company's condensed consolidated balance sheet. The remaining receivables held by the SPE were pledged to secure the

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

~~The Company continues~~We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institution by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institution so that the total principal amount outstanding of receivables sold is approximately ~~$800,000~~$1 billion at any point in time (which is the maximum amount allowed under the ~~agreement)~~agreement as amended on January 3, 2022).

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The ~~future amount of receivables outstanding as sold could decrease, based on the level of activity and other factors. Total~~total principal amount outstanding of receivables sold is approximately ~~$800,000~~$1.0 billion and $800 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The amount of receivables pledged as collateral as of September 30, 2022 and December 31, 2021 is approximately $1.1 billion and $973 million, respectively.

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
(in thousands)										(in thousands)	2022		2021		2022		2021
Receivables sold to the financial institution and derecognized	Receivables sold to the financial institution and derecognized	$	1,884,023	$	1,279,420	$	5,700,895	$	2,181,746	Receivables sold to the financial institution and derecognized	$	2,281,934	$	1,884,023	$	6,760,652	$	5,700,895
Cash collected on sold receivables	Cash collected on sold receivables	$	1,884,028	$	1,279,430	$	5,700,896	$	1,681,732	Cash collected on sold receivables	$	2,281,926	$	1,884,028	$	6,560,655	$	5,700,896

~~Upon entry into the A/R Sales Agreement, the Company received an initial benefit from cash from operations of approximately $800,000 in the year ended December 31, 2020.~~ Continuous cash activity related to the A/R Sales Agreement is reflected in net cash ~~from~~provided by operating activities in the condensed consolidated ~~statement~~statements of cash flows. The SPE incurs fees due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which are immaterial, are recorded within other non-operating expense (income) ~~expense~~ in the condensed consolidated statements of ~~income (loss).~~income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institution any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 is not material. The servicing liability related to ~~the Company's~~our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.

~~10. Fair Value~~4. Employee Benefit Plans

Net periodic benefit income from our pension plans included the following components for our pension benefits:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	2,532	$	3,043	$	7,734	$	9,185
Interest cost	18,804		17,915		56,520		53,783
Expected return on plan assets	(37,569)		(38,755)		(112,887)		(116,345)
Amortization of prior service cost	172		172		516		516
Amortization of actuarial loss	9,264		12,465		27,818		37,430
Net periodic benefit income	$	(6,797)	$	(5,160)	$	(20,299)	$	(15,431)

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

5. Acquisitions

We acquired several businesses, including KDG, for approximately $1.6 billion, net of cash acquired, during the nine months ended September 30, 2022. For the nine months ended September 30, 2021, acquisitions totaled $143 million, net of cash acquired.

During the nine months ended September 30, 2022, we recognized approximately $408 million and $818 million of revenue, net of store closures, related to our Automotive and Industrial acquisitions, respectively. The results of operations for acquired businesses are included in our condensed consolidated statements of income beginning on their respective acquisition dates.

For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. Excluding KDG, for the nine months ended September 30, 2022 and September 30, 2021, we recorded approximately $200 million and $97 million of goodwill and other intangible assets associated with acquisitions. Other intangible assets acquired consisted primarily of customer relationships with a weighted average amortization lives of 20 years.

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KDG Acquisition

On January 3, 2022, we, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash. KDG, which is ~~defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability~~headquartered in ~~an orderly transaction between market participants. Fair value~~Bloomfield, Connecticut, 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~~power transmission, automation 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;~~fluid power industrial distributor and

•~~Level 3. Unobservable inputs in which there is little or no market data, which require~~ solutions provider with operations throughout the ~~reporting entity~~United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to ~~develop its own assumptions~~

MRO and OEM customers. KDG has approximately 1,700 employees with approximately 220 locations across the United States and Puerto Rico. As of January 3, 2022, KDG had estimated annual revenues of approximately $1 billion.

The net cash consideration transferred of approximately $1.3 billion is net of the estimated cash acquired of approximately $30 million.

The KDG acquisition was financed using a combination of borrowings under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement and $109 million of cash.

The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition date as well as adjustments made to the acquisition accounting during the nine months ended September 30, ~~2021~~2022 (referred to as the "measurement period adjustments"). The measurement period adjustments primarily resulted from revisions to the valuation of certain tangible and intangible assets. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets. We are in the process of analyzing the estimated values of all assets acquired and liabilities assumed as of the acquisition date, including, among other things, obtaining valuations of certain tangible and intangible assets, as well as the fair value of certain contracts and the ~~Company's senior unsecured notes~~determination of certain tax balances. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations, tax accounting and leases.


	As of January 3, 2022
(in thousands)	Initial Balance		Measurement Period Adjustments		As Adjusted
Trade accounts receivable	$	156,000	$	—	$	156,000
Merchandise inventories	166,000		(1,000)		165,000
Prepaid expenses and other current assets	39,000		(2,000)		37,000
Property, plant and equipment	26,000		(2,000)		24,000
Operating lease assets	49,000		(5,000)		44,000
Other assets	1,000		—		1,000
Other intangible assets	574,000		(6,000)		568,000
Goodwill	592,000		4,000		596,000
Total assets acquired	1,603,000		(12,000)		1,591,000
Trade accounts payable	85,000		—		85,000
Other current liabilities	32,000		—		32,000
Operating lease liabilities	17,000		(1,000)		16,000
Deferred tax liabilities	121,000		(10,000)		111,000
Other long-term liabilities	39,000		(4,000)		35,000
Total liabilities assumed	294,000		(15,000)		279,000
Net assets acquired	$	1,309,000	$	3,000	$	1,312,000

The other intangible assets acquired included $527 million of customer relationship intangibles and a $41 million favorable trade name licensing agreement, with amortization lives of 17 and 1.5 years, respectively. The other intangible assets have a total weighted amortization life of 16 years.

The goodwill was assigned to the Industrial segment and is attributable primarily to expected synergies and the assembled workforce. Approximately $261 million of the estimated goodwill recognized as part of the KDG acquisition is expected to be tax deductible.

For the nine months ended September 30, 2022, approximately ~~$2,524,914, which are designated as Level 2~~$5 million of inventory amortization step-up cost related to this acquisition was included in ~~the fair value hierarchy. Our valuation technique is based primarily on prices~~cost of goods sold. Further, $49 million of transaction and other ~~relevant information generated by observable transactions involving identical or comparable assets or liabilities.~~one-time

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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~~costs, inclusive of ~~non-financial assets and non-financial liabilities are primarily used in~~ the impairment ~~analyses of goodwill,~~charge described below, were included in selling, administrative, and 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~~expenses in the condensed consolidated ~~balance sheets~~statements of income.

In June 2022, we incurred a $17 million non-cash impairment charge related to our decision to retire certain legacy Industrial trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of the KDG integration and rebranding strategy. We evaluate other intangible assets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit approximate their respective fair values based on the short-term nature of these instruments.potential impairment indicators annually or more frequently if circumstances change.

~~11. Derivatives and Hedging~~6. Accumulated Other Comprehensive Loss

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,~~following tables present 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~~AOCL by component 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.~~nine months ended September 30:


	Changes in Accumulated Other Comprehensive Loss by Component
(in thousands)	Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation		Total
Beginning balance, January 1, 2022	$	(463,227)	$	(15,042)	$	(379,470)	$	(857,739)
Other comprehensive loss before reclassifications	—		—		(248,757)		(248,757)
Amounts reclassified from accumulated other comprehensive loss	20,957		11,223		—		32,180
Other comprehensive income (loss), net of income taxes	20,957		11,223		(248,757)		(216,577)
Ending balance, September 30, 2022	$	(442,270)	$	(3,819)	$	(628,227)	$	(1,074,316)


	Changes in Accumulated Other Comprehensive Loss by Component
(in thousands)	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 income before reclassifications	—		—		(75,738)		(75,738)
Amounts reclassified from accumulated other comprehensive loss	27,931		11,223		—		39,154
Other comprehensive income, 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)

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. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the designated derivative and non-derivative instruments that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. When a designated instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively.

~~Cash Flow Hedges~~

~~In 2020, the Company terminated its interest rate swaps and settled the outstanding balances through cash payments totaling $41,000. The remaining amount in~~ AOCL ~~is being amortized to interest expense on a straight-line basis over the remaining life of the previously hedged instrument.~~

~~Net Investment Hedges~~

The Company has designated certain derivative instruments and a portion of its foreign currency denominated debt, a non-derivative financial instrument, as hedges of the foreign currency exchange rate exposure of the Company's Euro-denominated net investment in a European subsidiary. The Company applies the spot method to assess the hedge effectiveness of the derivative instruments and this assessment for each instrument excludes the initial valuecomponents 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 hedgespension benefits are included in the computation of net periodic benefit income in the employee benefit plans footnote. Generally, tax effects in AOCL ~~within foreign currency translation~~are established at the currently enacted tax rate and ~~would only be~~ reclassified to ~~earnings if~~net income in the ~~European subsidiary were liquidated, or otherwise disposed.~~

~~The following table summarizes~~same period that the ~~location and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that~~related pre-tax AOCL reclassifications are ~~designated and qualify as part of hedging relationships:~~

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:~~

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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
recognized.

~~12.~~7. Commitments and Contingencies

Legal Matters

~~As more fully discussed~~From time to time, we are involved in various claims and legal actions that arise in the ~~Company's notes~~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. There have been no significant developments to the ~~consolidated financial statements~~information presented in ~~its 2020~~our 2021 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 damageswith respect to litigation or commitments 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 would consider a further appeal on this matter, and oral arguments occurred on November 10, 2020. On July 8, 2021, the Washington Supreme Court overturned the order of the Washington Court of Appeals and reinstated the trial court's damage award of $77,100 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, in the condensed consolidated statements of income (loss) for the nine months ended September 30, 2021. The damage award and statutory interest was fully paid as of September 30, 2021.contingencies.

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~~we reasonably ~~believes~~believe will exceed an applied threshold not to exceed ~~$1,000.~~$1 million. Applying this threshold, there are no environmental matters to disclose for this period.

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

~~Acquisitions~~

The Company acquired several businesses for approximately $142,669 and $77,393, net of cash acquired, during the nine months ended September 30, 2021 and September 30, 2020, respectively. The measurement period is still open for certain businesses acquired in prior periods, but there have been no significant measurement period adjustments during the three and nine months ended September 30, 2021.

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~~Divestitures~~

~~The Company received cash proceeds from divestitures of businesses totaling $16,687 and $382,737 for the nine months ended September 30, 2021 and September 30, 2020, respectively.~~

~~Discontinued Operations~~

~~Business Products Group~~

During 2020, the Company completed the divestiture of its Business Products Group as part of 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. This divestiture represented a single plan to exit the Business Products Group segment and was considered a strategic shift that had a major effect on the Company’s operations and financial results. Therefore, the results of operations, financial position and cash flows for 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 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 and other related assets of $17,000.

The Company also remains involved with SPR for a limited period of time through various lease, sublease, freight distribution and transition service agreements. The Company has concluded that SPR is a variable interest entity, but the Company is not the primary beneficiary and therefore the entity is not consolidated. Among other things, the Company does not have any voting rights and does not have the power to direct the activities that most significantly affect SPR's economic performance. For a limited period of time as SPR completes its transition away from the Company’s shared services platform, the Company continues to pay certain payables on SPR’s behalf and at SPR’s direction with full reimbursement from SPR under the terms of a transition services agreement.

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

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

For the three months ended September 30, 2021, the rate increase is primarily due to income mix shifts and statute related adjustments. For the nine months ended September 30, 2021, the rate decrease is primarily due to the non-deductible goodwill impairment charge that occurred in 2020. In addition, during the 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 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

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stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards. Certain outstanding options to purchase shares of common stock are not included in the diluted earnings per share calculation. These options are excluded because their inclusion would have been anti-dilutive.

~~The following table summarizes anti-dilutive shares outstanding:~~

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

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes contained herein and with the audited consolidated financial statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The results of operations for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of results for the year ended December 31, ~~2021.~~2022.

Forward-Looking Statements

Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission (“SEC”), release to the public, 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,” or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include our ~~expected~~view of business and economic trends for the remainder of the year and our expectations regarding our ability to ~~operate~~capitalize on these business and ~~protect our workforce during the COVID-19 pandemic, our strategies for growing our automotive~~economic trends 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.strategic

priorities. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.

We caution you that 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, changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation and geopolitical conflicts such as the conflict between Russia and Ukraine; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; the extent and duration of the disruption to our business operations caused by the global health crisis associated with the COVID-19 pandemic, including the effects on the financial health of our business partners and customers, on supply chains and our suppliers, on vehicle miles driven as well as other metrics that affect our business, and on access to capital and liquidity provided by the financial and capital markets; our ability to maintain compliance with our debt covenants; our ability to successfully integrate acquired businesses into our operations and to realize the anticipated synergies and benefits; our ability to successfully implement our business initiatives in our two business segments; slowing demand for 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 and our supply chain;~~ changes in national and international legislation or government regulations or policies, including changes to import tariffs, environmental and social policy, infrastructure programs and privacy legislation, and their impact to us, ~~and~~ our suppliers and customers; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation and the United Kingdom's (“U.K.”) exit from the European Union and the unpredictability of the impact following such exit; changes in tax policies; volatile exchange rates; ~~volatility in oil prices; significant cost increases, such as rising fuel and freight expenses;~~ our ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other 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 our information systems, as well as other risks and uncertainties discussed in our ~~2020~~2021 Annual Report on Form 10-K and Item 1A, Risk Factors, in our report on Form 10-Q for the quarter ended March 31, 2022 (all of which ~~risks~~ may be amplified by the COVID-19 ~~pandemic)~~pandemic and geopolitical conflicts, such as the current conflict between Russia and Ukraine) and from time to time in our subsequent filings with the SEC.

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

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Overview

Genuine Parts Company is a service organization engaged in the global distribution of automotive and industrial replacement parts. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. We conduct business in North America, Europe and Australasia from a network of more than ~~10,000~~10,300 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~~of choice and investment of ~~choice.~~choice - we keep the world moving! This is our purpose and the foundation of how we do business. Additionally, we strive to be a respected business community member and a good corporate citizen. Our strategic financial objectives are intended to align with our mission and drive value for all our stakeholders. Our strategic financial objectives include: (1) top line revenue growth in excess of market growth; (2) improved operating margin; (3) a strong balance sheet and cash flows; and (4) effective capital allocation.

~~COVID-19 Pandemic~~

~~During~~Our Automotive Parts Group operated in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand as of September 30, 2022, and accounted for 62% of total revenues for the three and nine months ended September 30, ~~2021,~~2022. Our Industrial Parts Group operated in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore. The Industrial Parts Group accounted for 38% of our ~~business~~total revenues for the three and results of operations continued to improve relative to the same period of 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, all regions in which we operate continue to experience periodic surges in infection rates. As a result, our business segments continue to face many uncertainties and our operations remain vulnerable to continuing negative effects caused by the pandemic. However, we are encouraged to see the impact of the pandemic subsiding as evidenced by the improving industrial economy, increase in miles driven and overall consumer activity.

~~As of~~nine months ended September 30, 2021, all our operations are open for business. Our supply chain partners have been very supportive and accommodating, despite strains on the supply chain caused by labor shortages, inventory shortages, delays in order fulfillment and increased backlogs. This has allowed us to continue to provide quality customer service. We remain in constant communication with our employees regarding changing conditions and protocol. Based on the length and severity of 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 our business, please see “Results of Operations,” and Item 1A, “Risk Factors,” in this report, which are incorporated herein by reference.2022.

Key Business Metrics - Comparable Sales

We consider comparable sales, which refers to period-over-period comparisons of our net sales excluding the impact of acquisitions, foreign currency and other, to be a key business ~~metric because management has evaluated its~~metric. Management uses comparable sales to evaluate the results of operations ~~using this metric~~ and we believe that this key indicator provides additional perspective and insights when analyzing the operating performance of our business from period to period and trends in its historical operating results. While this metric is widely used by industry stakeholders, 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. This metric should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this report.

~~Comparable Sales~~

Comparable sales refer to period-over-period comparisons of our net sales excluding the impact of acquisitions, foreign currency and other. We consider this metric useful to investors because it provides greater transparency into management’s view and assessment of our core ongoing operations. This is a metric that is widely used by analysts, investors and competitors in our industry, although our calculation of the metric may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate this metric in the same manner.

Results of Operations

Overview

~~As a result of the COVID-19 vaccine distribution~~Our Automotive Parts Group and ~~its positive impact on consumer mobility~~Industrial Parts Group both reported strong sales and ~~demand, we are encouraged by the increase in consumer activity~~segment profit growth during the three and nine months ended September 30, ~~2021 as~~

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our key markets continue to reopen. In addition, we continue to realize the benefits of our cost savings initiatives to more effectively leverage our cost structure in both our Automotive and Industrial Parts Groups. Both our segments reported improved sales during the three and nine months ended September 30, 20212022 when compared to the same prior year ~~periods. The Automotive~~period. Our Industrial Parts Group also benefited from the ~~broad economic recovery, an increase~~January 2022 acquisition of KDG. We expect this strategic and highly synergistic acquisition to significantly enhance our scale and to strengthen our market leading position in ~~customer mobility~~industrial solutions. Additionally both businesses continued to be highly effective in managing the impacts of inflationary pressures, a dynamic geopolitical landscape and ~~miles driven, as well as favorable weather trends. The Industrial Parts Group benefited from~~ongoing supply chain challenges, all of which we expect to continue throughout the ~~strengthening industrial economy, as evidenced by economic indicators such as~~remainder of 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 our services and solutions business.year.

Sales

Sales for the three months ended September 30, ~~2021~~2022 were $5.7 billion, a 17.8% increase compared to $4.8 billion ~~a 10.3% increase as compared to $4.4 billion in~~for the same period of the prior year. The increase in sales is attributable to a ~~7.6%~~12.7% increase in comparable sales and a ~~1.8%~~9.1% benefit from acquisitions, ~~and~~slightly offset by a net ~~favorable~~unfavorable impact of foreign currency and other of ~~0.9%~~4.0%. Sales for the nine months ended September 30, ~~2021~~2022 were $16.6 billion, a 17.8% increase compared to $14.1 billion ~~a 14.5% increase as compared to $12.3 billion in~~for the same period of the prior year. The increase in sales is due to a ~~10.0%~~12.1% increase in comparable sales, ~~increase,~~ a ~~3.2%~~8.7% benefit from acquisitions, slightly offset by a 3.0% net ~~favorable~~unfavorable impact of foreign currency and ~~other and a 1.3% benefit from acquisitions.~~other. The ~~increases~~increase in comparable sales ~~is driven primarily by~~reflects the ~~increased~~benefits of price increases to offset higher product costs and other inflationary pressures and, to a lesser extent, continued increase in consumer activity ~~as our key markets continue to reopen~~ when compared to the three and nine months ended September 30, ~~2020.~~ 2021. We continue to execute our strategic pricing and other sales initiatives to mitigate product and other inflationary cost pressures.

Sales ~~were positively impacted by price inflation of approximately 3%~~for the Automotive Parts Group increased 8.9% and 2%9.4% for the three and nine months ended September 30, ~~2021, respectively.~~

~~Sales for the Automotive Parts Group increased 8.2% for the three months ended September 30, 2021, as~~2022, respectively, compared to the same ~~period~~periods in the prior year. This group's revenue increase for the three months ended September 30, ~~2021~~2022 consisted of an approximate ~~4.8%~~9.2% increase in comparable sales driven by price increases to offset higher product costs and other inflationary pressures and strong demand. The overall sales increase also included a ~~2.4%~~5.3% benefit from acquisitions, ~~and~~partially offset by a ~~1.0%~~5.6% net ~~favorable~~unfavorable impact of foreign currency and other. This group's ~~16.4%~~ revenue increase for the nine months ended September 30, ~~2021~~ 2022

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consisted of an approximate ~~10.7%~~9.3% increase in comparable sales and 4.4% benefit from acquisitions, partially offset by a ~~3.9%~~4.3% net ~~favorable~~unfavorable impact from foreign currency and other ~~and a 1.8% benefit from acquisitions.~~compared to the same period in 2021.

Sales for the Industrial Parts Group increased ~~14.5%~~35.3% and 34.5% for the three months ended September 30, 2021, as compared to the same period in 2020. The increase in this group's revenue reflects an approximate 13.4% increase in comparable sales, a 0.8% favorable foreign currency impact and ~~a 0.3% benefit from acquisitions. This group's 11.0% sales increase for the~~ nine months ended September 30, ~~2021 reflects an 8.9% increase~~2022, respectively, compared to the same periods in 2021. The increases for both periods reflect benefits of approximately 17% and primarily from the acquisition of KDG and increases of 19.6% and 17.9% in comparable sales ~~a 1.5% favorable impact from foreign currency~~for the three and ~~a 0.6%~~nine months ended September 30, 2022, respectively. Our Industrial Parts Group continues to benefit from ~~acquisitions.~~the ongoing execution of our pricing, supply chain and other strategic initiatives and the continued resilience and expansion in the industrial economy, which is evident in indicators such as the Purchasing Managers Index and Industrial Production Index.

Cost of Goods Sold and Operating Expenses

Cost of goods sold includes the total cost 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.

Cost of goods sold for the three months ended September 30, ~~2021~~2022 was ~~$3.1~~$3.7 billion, ~~a 9.4%~~an 18.9% increase from ~~$2.8~~$3.1 billion for the same period in ~~2020.~~2021. As a percentage of net sales, cost of goods sold was ~~64.5%~~65.1% for the three months ended September 30, ~~2021, as~~2022 compared to ~~65.0% in~~64.5% for the same ~~three month~~ period ~~of 2020. Cost of goods sold~~in 2021. As a result, gross margin declined to 34.9% from 35.5% for the same period in 2021. For the nine months ended September 30, ~~2021~~2022, cost of goods sold was ~~$9.1~~$10.8 billion, ~~a 13.0%~~an 18.4% increase from ~~$8.1~~$9.1 billion for the same nine month period in ~~2020.~~2021. As a percentage of net sales, cost of goods sold was ~~64.9%~~65.2% for the nine months ended September 30, ~~2021, as~~2022 compared to ~~65.8%~~64.9% for the same period in 2021. As a result, gross margin declined to 34.8% from 35.1% in the same period ~~of 2020.~~ in 2021.

The ~~increase~~decreases in ~~cost of goods sold~~gross margin for the three and nine months ended September 30, ~~2021~~2022 was driven primarily ~~relates to~~by the ~~overall increase in sales volume due to the increased consumer activity~~impact of supplier incentives as compared to the same ~~three~~period in 2021, unfavorable foreign exchange, and ~~nine month periods of~~a business mix shift due to the ~~prior year.~~

~~Gross profit as a percentage of net~~increased 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 (vii)from our Industrial Parts Group. This decline was partially offset by the ongoing favorable impact of tariffs. Gross margin improved to 35.5% for the three months ended September 30, 2021 compared to 35.0% in the 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 impact of higher levels of supplier incentives on stronger sales and strategic category management ~~initiatives including~~and pricing ~~and global sourcing strategies. We have reported improved year over year gross margin for 16 consecutive quarters.~~

Total operating expenses increased to $1.4 billion for the three months ended September 30, 2021 as compared to $1.2 billion for the same three month period in 2020. As a percentage of net sales, operating expenses increased to 29.4% as compared to 28.1% in the respective periods. This increase as a percentage of net sales 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~~

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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 the non-cash goodwill impairment charge that occurred in 2020.our business.

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

~~Segment Profit~~

~~The Automotive Parts Group’s segment profit~~Total operating expenses increased ~~5.6% in~~9.6% to $1.6 billion for the three months ended September 30, ~~2021 as~~2022 compared to $1.4 billion for the same three month period in 2021. As a percentage of net sales, operating expenses decreased to 27.3% compared to 29.4% for same three month period in the prior year. For the nine months ended September 30, 2022, these expenses totaled $4.5 billion, compared to $4.1 billion for the same period in 2021, and as a percentage of ~~2020, and its segment profit margin was 8.8% as~~net sales, operating expenses decreased to 27.2% compared to ~~9.0% in~~29.3% for the same nine month period of the previous year. Segment profit margin declined primarily due to the benefit of temporary COVID-related savings initiatives in 2020. These items were partially offset by improved leverage from stronger sales, gross margin expansion and incremental cost control initiatives in 2021. For the nine months ended September 30, ~~2021,~~2022 operating expenses included $57 million of transaction and other costs associated with the KDG acquisition, inclusive of a non-cash impairment charge of $17 million from the retirement of certain legacy trade names that will no longer be used as result of the on-going KDG integration. The increase in total operating expenses for the nine month period was partially offset by a one-time benefit of $103 million from a gain on the sale of real estate that had been leased to S.P. Richards. The overall decrease in operating expenses as a percentage of net sales for the period is primarily related to improved leverage on stronger sales and cost control initiatives.

Segment Profit

The Automotive Parts Group's segment profit increased ~~approximately 28.7%~~10.0% in the three months ended September 30, 2022 compared to the same period of 2021, and ~~the~~its segment profit margin improved to ~~8.6% as~~8.9% compared to ~~7.8% in~~8.8% for the same ~~nine month~~ period of ~~2020. This improvement~~the previous year. For the nine months ended September 30, 2022, segment profit increased 11.0% compared to the same period of the prior year, and segment profit margin increased to 8.8% compared to 8.6% for the same period in 2021. These improvements in segment profit and segment profit margin, isdespite inflationary headwinds, reflect strong operating results in all geographical regions, driven primarily ~~due to~~by strong sales ~~gains as a result of the increased consumer activity as our key markets continue to reopen, gross margin improvements,~~demand and the ~~leveraging~~execution of ~~expenses on higher sales~~our strategic growth and ~~ongoing cost control initiatives.~~operating initiatives around supply chain, pricing and technology.

The Industrial Parts Group's segment profit increased ~~31.9%~~46.3% and 48.7% in the three ~~months ended September 30, 2021 as compared to the same three month period of 2020,~~ and ~~the segment profit margin for this group improved to 10.3% compared to 8.9% for the same period of the previous year. Segment profit for the Industrial Parts Group improved 26.7% in the~~ nine months ended September 30, ~~2021 as~~2022, respectively, compared to the same periods in 2021, primarily driven by the acquisition of KDG. For the three months and nine ~~month period of 2020, and the~~months ended September 30, 2022, this group's segment profit margin ~~for this group improved~~increased to ~~9.4%~~11.1% and 10.4%, respectively, compared to ~~8.2%~~10.3% and 9.4%, respectively, for the same ~~period~~periods of the previous year. ~~The~~These improved segment profit margins ~~for both periods reflect~~are primarily due to the ~~positive impact~~benefit of ~~higher~~strong sales ~~volumes, gross margin gains~~growth and ~~efficiencies~~strategic initiatives in ~~the operating structure of the Industrial Parts Group. Additionally, the Industrial Parts Group benefited from the strengthening industrial economy, which is evident in indicators~~areas such as ~~the Purchasing Managers Index~~supply chain, category management and ~~Industrial Production Index.~~pricing.

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Income Taxes

~~The Company's~~Our effective income tax rate ~~was 23.5%~~ for the three months ended September 30, ~~2021,~~2022 was 25.3% compared to ~~21.8%~~23.5% for the same three month period in ~~2020.~~ 2021. The rate increase is primarily due to geographic income mix shifts with a higher percentage in international.

The effective income tax rate ~~was 24.8%~~ for the nine months ended September 30, ~~2021,~~2022 was 24.7% compared to ~~105.4%~~24.8%, for the same period in ~~2020.~~2021. The rate decrease is primarily due to a prior year United Kingdom rate change that required deferred tax asset and liability remeasurement increasing the 2021 comparative rate, which was partially offset by geographic income mix shifts.

Net Income

For the three months ended September 30, 2021, the rate increase is primarily due to income mix shifts and statute related adjustments. For the nine months ended September 30, 2021, the rate decrease is primarily due to the non-deductible goodwill impairment charge that occurred in 2020, as described below. In addition, during the 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) from Continuing Operations~~

~~For the three months ended September 30, 2021, the Company recorded~~2022, net income ~~from continuing operations~~was $312 million, an increase of ~~$228.6 million, a decrease of 1.9% as~~36.6% compared to net income ~~from continuing operations~~ of ~~$232.9~~$229 million infor the same three month period of the prior year. On a per share diluted basis, net income was ~~$1.59, a decrease~~$2.20, an increase of ~~1.2% as~~38.4% compared to ~~net income per diluted share of $1.61~~$1.59 for the same three month period of ~~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, ~~2021, the Company recorded~~2022, net income ~~from continuing operations~~was $931 million, an increase of ~~$642.8 million as~~44.8% compared to net ~~loss from continuing operations~~income of ~~$8.2~~$643 million for the same nine month period in 2021. On a per share diluted basis, net income was $6.53, an increase of 47.1% compared to $4.44 for the same nine month period of the prior year. On a per share diluted basis, net income from continuing operations was $4.44 as compared to net loss per diluted share of $0.06 in the same nine month period of 2020. The increase in income 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, 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

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reinstated by the 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 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 of adjustments, respectively. These adjustments include a 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.

For the three months ended September 30, ~~2021, the Company's adjusted~~2022, net income ~~from continuing operations~~on an adjusted basis was ~~$270.5~~$317 million, an increase of ~~14.2% as~~17.3% compared to adjusted net income ~~from continuing operations~~ of ~~$236.8~~$270 million infor the same three month period of the prior year. On a per share basis, ~~adjusted~~ net income ~~from continuing operations~~on an adjusted diluted basis was ~~$1.88~~$2.23 for the three months ended September 30, ~~2021,~~2022, an increase of ~~15.3% as~~18.6% compared to ~~$1.63~~$1.88 for the same three month period of ~~2020.~~2021. For the nine months ended September 30, ~~2021, adjusted~~2022, net income ~~from continuing operations~~on an adjusted basis was ~~$740.8~~$896 million, an increase of ~~36.2% as~~21.0% compared to ~~$544.1~~adjusted net income of $741 million for the same nine month period of ~~2020.~~the prior year. On a per share basis, net income on an adjusted diluted basis ~~adjusted net income from continuing operations~~ was ~~$5.12~~$6.29 for the nine months ended September 30, ~~2021,~~2022, an increase of ~~36.2% as~~22.9% compared to ~~$3.76~~$5.12 for the same nine month period of ~~the prior year. The increased adjusted~~2021. Adjusted net 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 income from continuing operations~~earnings per ~~common~~ share are both non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).

The growth in net income and adjusted net income in all periods presented reflects strong operating results in both of our segments, driven primarily by strong sales demand, the benefits of key acquisitions (including KDG), and the execution of our strategic growth initiatives, despite inflationary and other macroeconomic headwinds.

The following table sets forth a reconciliation of net income ~~(loss) from continuing operations~~ and diluted net income ~~(loss) from continuing operations~~ per common share to adjusted net income ~~from continuing operations~~ and adjusted diluted net income ~~from continuing operations~~ per common share to account for the impact of these adjustments. ~~The Company believes~~We believe that the presentation of adjusted net income ~~from continuing operations~~ and adjusted diluted net 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~~our core operations. ~~The Company considers~~We consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of ~~the Company’s~~our ongoing operating performance by removing items management believes are not representative of our ~~continuing~~ operations and may distort our longer-term operating trends. We believe these measures are useful and enhance the comparability of our results from period to period and with our competitors, as well as show ongoing results from operations distinct from items that are infrequent or not associated with ~~the Company’s~~our core operations. ~~The Company does~~We do not, nor ~~does it~~do we suggest that investors should, consider such non-GAAP financial measures, as superior to, in isolation from, or as a substitute for, GAAP financial information.

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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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
GAAP net income	$	312,358	$	228,585	$	930,725	$	642,791

Adjustments:
Gain on sale of real estate (1)	—		—		(102,803)		—
Gain on insurance proceeds (2)	—		—		(1,507)		—
Product liability damages award (3)	—		—		—		77,421
Loss on software disposal (4)	—		61,063		—		61,063
Transaction and other costs (5)	3,462		—		56,955		—
Total adjustments	3,462		61,063		(47,355)		138,484
Tax impact of adjustments	1,464		(19,167)		12,651		(40,489)
Adjusted net income	$	317,284	$	270,481	$	896,021	$	740,786

The table below represent amounts per common share assuming dilution:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2022		2021		2022		2021
GAAP net income	$	2.20	$	1.59	$	6.53	$	4.44

Adjustments:
Gain on sale of real estate (1)	—		—		(0.72)		—
Gain on insurance proceeds (2)	—		—		(0.01)		—
Product liability damages award (3)	—		—		—		0.54
Loss on software disposal (4)	—		0.42		—		0.42
Transaction and other costs (5)	0.02		—		0.40		—
Total adjustments	0.02		0.42		(0.33)		0.96
Tax impact of adjustments	0.01		(0.13)		0.09		(0.28)
Adjusted diluted net income per common share	$	2.23	$	1.88	$	6.29	$	5.12
Weighted average common shares outstanding – assuming dilution	142,109		143,589		142,428		144,622

The table below clarifies where the adjusted items are presented in the condensed consolidated statements of income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Line item:
Cost of goods sold	$	—	$	—	$	5,000	$	—
Selling, administrative and other expenses	3,462		61,063		(50,848)		138,484
Non-operating expense (income): Other	—		—		(1,507)		—
Total adjustments	$	3,462	$	61,063	$	(47,355)	$	138,484

(1) Adjustment reflects a gain on the sale of real estate that had been leased to S.P. Richards.

(2) Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.

(3) Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.

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

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2021 2020 2021 2020
GAAP net income (loss) from continuing operations $ 1.59 $ 1.61 $ 4.44 $ (0.06)
Adjustments:
Loss on software disposal (1) 0.42 — 0.42 —
Product liability damages award (2) — — 0.54 —
Goodwill impairment charge (3) — — — 3.51
Restructuring costs (4) — 0.07 — 0.26
Realized currency loss (5) — — — 0.08
Gain on insurance proceeds related to SPR Fire (6) — — — (0.09)
Transaction and other costs (7) — — — 0.15
Total adjustments 0.42 0.07 0.96 3.91
Tax impact of adjustments (0.13) (0.05) (0.28) (0.09)
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 143,589 145,035 144,622 144,528

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

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2021 2020 2021 2020
Line item:
Cost of goods sold $ — $ 604 $ — $ 13,495
Selling, administrative and other expenses 61,063 — 138,484 8,213
Goodwill impairment charge — — — 506,721
Restructuring costs — 10,968 — 39,009
Non-operating (income) expenses: Other — (316) — (2,408)
Total adjustments $ 61,063 $ 11,256 $ 138,484 $ 565,030

~~(1)~~(4) 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.

(5) Adjustment primarily reflects costs associated with the January 3, 2022 acquisition and integration of KDG. These costs also include a $17 million impairment charge driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Refer to the ~~property, plant and equipment~~acquisition footnote ~~to the condensed consolidated financial statements~~ for more ~~information.~~

~~(2)Adjustment reflects damages reinstated by~~information regarding 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 2020 goodwill impairment charge related to the Company's European reporting unit.~~

~~(4)~~Adjustment reflects restructuring costs related to the execution of the 2019 Cost Savings Plan. The costs are primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations.

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

~~(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.

~~Table of Contents~~

~~(7)~~Adjustment 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.acquisition.

Financial Condition

~~The Company’s~~Our cash balance of ~~$919.1~~$629 million at September 30, ~~2021~~2022 decreased ~~$71.1~~$86 million, ~~or 7.2%,~~ from December 31, ~~2020.~~2021. For the nine months ended September 30, ~~2021, the Company~~2022, we had net cash provided by operating activities of ~~$1,008.2 million,~~$1.2 billion, net cash used in investing activities of ~~$239.9 million~~$1.7 billion and net cash ~~used in~~provided by financing activities of ~~$818.7~~$386 million.

The cash provided by operating activities ~~of $1,008.2 million reflects strong earnings and effective working capital management. This amount decreased $419.0 million from $1,427.2 million~~was driven by higher net income for the nine months ended September 30, ~~2020 primarily driven by~~2022 and the ~~$500~~effective management of our working capital, including a $200 million benefit related to ~~operating cash flow in 2020 as a result~~increasing the facility limit of ~~the Company entering into the~~our A/R Sales ~~Agreement to sell receivables. The~~Agreement. We used $1.7 billion cash for investing activities ~~consisted~~ primarily in connection with the acquisition of ~~$142.6~~KDG, in addition to $244 million ~~in acquisitions and other investing activities and $138.2 million in~~for capital ~~expenditures, slightly offset by $40.9 million in proceeds from divestitures and the sale of property, plant and equipment.~~expenditures. The financing activities consisted primarily of ~~$349.3~~$1 billion of net proceeds from debt primarily from the Senior Notes offering (as discussed below). This was partially offset by $369 million for dividends paid to our shareholders and $173 million of share repurchases.

Each of our working capital line items were impacted by the ~~Company’s shareholders, $283.9 million paid~~acquisition of KDG (refer to our acquisitions footnote in the notes to condensed consolidated financial statements for ~~share repurchases and $160.8 million net payments on debt.~~

further information). Accounts receivable increased ~~$331.3~~$417 million, or ~~21.3%~~23.2%, from December 31, ~~2020 primarily due to higher sales volumes.~~2021. Inventory increased ~~$242.1~~$411 million, or ~~6.9%~~10.6%, ~~due~~from December 31, 2021. In addition to ~~increased economic activity~~the KDG acquisition, accounts receivable and inventory were both impacted by increases in revenues and related product demand. Accounts payable increased ~~$691.0~~$726 million, or ~~16.7%,~~15.1% from December 31, ~~2020~~2021. Apart from KDG, this was due largely to increased ~~purchasing related~~purchases to ~~sales volume~~meet demand, inflationary pressures, and extended payment terms with certain suppliers. Total debt of ~~$2.4~~$3.2 billion at September 30, ~~2021 decreased $0.2 billion,~~2022 increased $824 million, or ~~9.1%~~34.2%, from December 31, ~~2020.~~2021 driven primarily by the Senior Notes offering (as discussed below).

We continue to negotiate extended payment ~~terms~~dates with our suppliers. Our current payment terms with the majority of our suppliers range from 30 to 360 days. Several global financial institutions offer voluntary supply chain finance (“SCF”) programs which enable our suppliers, at their sole discretion, to sell their receivables from ~~the Company~~us to these financial institutions on a non-recourse basis at a rate that takes advantage of our credit rating and may be beneficial to them. The SCF program is primarily available to suppliers of goods and services included in cost of goods sold in our condensed consolidated statements of ~~income (loss). The Company~~income. Our suppliers and ~~our suppliers~~us 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~~us and they issue the associated invoices to ~~the Company~~us based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. In turn, we direct payment to the financial institutions, rather than the suppliers, for the invoices sold to the financial institutions. No guarantees are provided by ~~the Company~~us or any of our subsidiaries on third-party performance under the SCF program; however, ~~the Company guarantees~~we guarantee the payment by our subsidiaries to the financial institutions participating in the SCF program for the applicable invoices. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable in our condensed consolidated balance sheets. All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our condensed consolidated statements of cash flows. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the outstanding payment obligations to the financial institutions are ~~$2.6~~$3.1 billion and ~~$1.8~~$2.7 billion, respectively. The amount settled through the SCF program was ~~$2.3~~$2.7 billion and ~~$1.9~~$2.3 billion for the nine months ended September 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.

Liquidity and Capital Resources

We ended the quarter with ~~$2.4~~$2.1 billion of total liquidity (comprising $1.5 billion availability on the ~~Unsecured Revolving Credit Facility, defined below,~~revolving credit facility and $~~0.9 billion~~629 million of cash and cash equivalents). From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk. We currently believe that the 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.

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

On ~~February 16, 2021,~~January 3, 2022, we ~~announced a 3%~~amended our A/R Sales Agreement to increase the facility limit by an additional $200 million bringing the total to $1 billion. The terms of the A/R Sales Agreement limit the balance of receivables sold to approximately $1 billion at any point in time. Refer to the A/R Sales Agreement footnote in the ~~regular quarterly cash dividend~~notes to condensed consolidated financial statements for ~~2021. The Board~~more information.

On January 6, 2022, we issued $500 million of ~~Directors increased~~unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022. We utilized the ~~cash dividend payable~~proceeds from these offerings to ~~an annual rate~~repay the borrowings under the Revolving Credit Facility which were incurred to finance a significant portion of ~~$3.26 per share compared with~~ the ~~previous dividend of $3.16 per share. GPC has paid a cash dividend every year since going public in 1948, and 2021 marks the 65th consecutive year of increased dividends paid to shareholders.~~KDG Acquisition.

~~We expect to be able to continue to borrow funds at reasonable rates over the long term.~~ At September 30, ~~2021, the Company's~~2022, our total average cost of debt was 2.34%, and ~~the Company remained~~we remain in compliance with all covenants connected with ~~its~~our borrowings. ~~Such covenants include, among others, a financial covenant to maintain a certain leverage ratio of consolidated debt to consolidated adjusted EBITDA under our credit facility.~~

Any failure to comply with our debt covenants or restrictions could result in a default under our financing arrangements or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could create cross defaults under other debt arrangements and have a material adverse effect on our business, financial condition, results of operations and cash flows.

On February 14, 2022, we announced a 10% increase in the regular quarterly cash dividend for 2022. Our Board of Directors increased the cash dividend payable to an annual rate of $3.58 per share compared with the previous dividend of $3.26 per share. We have paid a cash dividend every year since going public in 1948, and 2022 marks the 66th consecutive year of increased dividends paid to shareholders.

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~~2021 Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, ~~2020.~~2021.

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~~our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of ~~the Company’s~~our disclosure controls and procedures. Based on that evaluation, ~~the Company’s~~our CEO and CFO concluded that ~~the Company’s~~our 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~~us in the reports that ~~it files~~we file 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~~our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

On January 3, 2022, we completed the KDG acquisition. We are in the process of integrating KDG into our system of internal control over financial ~~reporting~~reporting.

~~There~~Excluding the KDG acquisition, there have been no changes in ~~the Company’s~~our 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~~our last quarter ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity and capital resources. Except as set forth herein, there have been no significant developments to the information presented in our 2020 Annual Report on Form 10-KInformation with respect to ~~litigation or commitments~~our legal proceedings may be found in the Commitments and ~~contingencies. Refer~~Contingencies footnote in the Notes to ~~the commitments and contingencies footnote to the condensed consolidated financial statements for more information,~~Condensed Consolidated Financial Statements in Item 1 of Part I, which ~~information~~ is incorporated herein by ~~reference herein.~~reference.

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 ~~2020~~2021 Annual Report on Form 10-K and our quarterly report on Form 10-Q for the quarter ended March 31, 2022, 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.

~~Table of Contents~~

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~~our common stock during the three months ended September 30, ~~2021:~~2022:

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, 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


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, 2022 through July 31, 2022	145,453	$139.71	145,453	10,770,664
August 1, 2022 through August 31, 2022	158,642	$155.69	129,558	10,641,106
September 1, 2022 through September 30, 2022	65,277	$159.24	58,440	10,582,666
Totals	369,372	$150.02	333,451	10,582,666

(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~~15 million shares. ~~Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.~~ The authorization for the repurchase continues until all such shares have been repurchased or the repurchase ~~program~~plan 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 ~~12.2~~10.6 million shares authorized remain available to be ~~repurchased by the Company.~~repurchased. There were no other repurchase ~~programs~~plans announced as of September 30, ~~2021.~~2022.

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Item 6. Exhibits

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


Exhibit 3.1						Amended and Restated Articles of Incorporation of the Company, dated April 23, 2007 (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 23, 2007)

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

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

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

Exhibit 32						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer and Chief Financial Officer – furnished herewith
~~Exhibit 10.1~~						~~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 Quarterly Report on Form 10-Q for the period ended September 30, ~~2021~~2022 formatted in Inline XBRL

* Indicates management contracts and compensatory plans and arrangements.

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SIGNATURES

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


						Genuine Parts Company (Registrant)

Date: October ~~21, 2021~~20, 2022						/s/ ~~Carol B. Yancey~~Bert Nappier
						~~Carol B. Yancey~~Bert Nappier
						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)

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PART I		Page

Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income ~~(Loss)~~	3
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~	4
	Condensed Consolidated Statements of Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1815
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2621
Item 4.	Controls and Procedures	2621

PART II

Item 1.	Legal Proceedings	2722
Item 1A.	Risk Factors	2722
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2722
Item 6.	Exhibits	2923
	Signatures	3024


(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


	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, 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