Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2019shares | |
Cover page. | |
Title of 12(b) Security | Common Stock, $1.00 par value per share |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jun. 30, 2019 |
Document Transition Report | false |
Entity File Number | 1-5690 |
Entity Registrant Name | GENUINE PARTS CO |
Entity Incorporation, State or Country Code | GA |
Entity Tax Identification Number | 58-0254510 |
Entity Address, Address Line One | 2999 WILDWOOD PARKWAY, |
Entity Address, Postal Zip Code | 30339 |
Entity Address, City or Town | ATLANTA, |
Entity Address, State or Province | GA |
City Area Code | 678 |
Local Phone Number | 934-5000 |
Trading Symbol | GPC |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 146,078,369 |
Amendment Flag | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Entity Central Index Key | 0000040987 |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 562,551 | $ 333,547 |
Trade accounts receivable, less allowance for doubtful accounts (2019 – $0; 2018 – $21,888) | 2,836,875 | 2,493,636 |
Merchandise inventories, net | 3,750,778 | 3,609,389 |
Prepaid expenses and other current assets | 1,034,466 | 1,139,118 |
Total current assets | 8,184,670 | 7,575,690 |
Goodwill | 2,329,325 | 2,128,776 |
Other intangible assets, less accumulated amortization | 1,517,842 | 1,411,642 |
Deferred tax assets | 27,698 | 29,509 |
Property, plant and equipment, less accumulated depreciation (2019 – $0; 2018 – $1,208,694) | 1,089,763 | 1,027,231 |
Operating lease assets | 961,975 | 0 |
Other assets | 528,199 | 510,192 |
Total assets | 14,639,472 | 12,683,040 |
Current liabilities: | ||
Trade accounts payable | 4,064,547 | 3,995,789 |
Current portion of debt | 1,011,334 | 711,147 |
Dividends payable | 111,380 | 105,369 |
Other current liabilities | 1,310,967 | 1,088,428 |
Total current liabilities | 6,498,228 | 5,900,733 |
Long-term debt | 2,871,106 | 2,432,133 |
Operating lease liabilities | 724,682 | 0 |
Pension and other post–retirement benefit liabilities | 208,008 | 235,228 |
Deferred tax liabilities | 212,308 | 196,843 |
Other long-term liabilities | 437,165 | 446,112 |
Equity: | ||
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; none issued | 0 | 0 |
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2019 – 0 shares; 2018 – 145,936,613 shares | 146,078 | 145,937 |
Additional paid-in capital | 83,949 | 78,380 |
Retained earnings | 4,630,480 | 4,341,212 |
Accumulated other comprehensive loss | (1,195,179) | (1,115,078) |
Total parent equity | 3,665,328 | 3,450,451 |
Noncontrolling interests in subsidiaries | 22,647 | 21,540 |
Total equity | 3,687,975 | 3,471,991 |
Total liabilities and equity | $ 14,639,472 | $ 12,683,040 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 31,280 | $ 21,888 |
Accumulated depreciation | $ 1,341,918 | $ 1,208,694 |
Preferred stock, par value (usd per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 450,000,000 | 450,000,000 |
Common stock, shares issued (in shares) | 146,078,369 | 145,936,613 |
Common stock, shares outstanding (in shares) | 146,078,369 | 145,936,613 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |||
Income Statement [Abstract] | ||||||
Net sales | $ 4,934,260 | $ 4,822,065 | $ 9,671,093 | $ 9,408,359 | ||
Cost of goods sold | 3,335,679 | 3,300,479 | 6,564,344 | 6,450,966 | ||
Gross profit | 1,598,581 | 1,521,586 | 3,106,749 | 2,957,393 | ||
Operating expenses: | ||||||
Selling, administrative and other expenses | 1,216,913 | 1,148,217 | 2,414,133 | 2,281,988 | ||
Depreciation and amortization | 66,154 | 58,451 | 128,131 | 116,814 | ||
Provision for doubtful accounts | 5,962 | 3,666 | 9,931 | 6,367 | ||
Total operating expenses | 1,289,029 | 1,210,334 | 2,552,195 | 2,405,169 | ||
Non-operating expenses (income): | ||||||
Interest expense | 23,296 | 26,476 | 47,179 | 50,585 | ||
Other | (15,873) | (15,495) | (6,266) | (27,951) | ||
Total non-operating expenses | 7,423 | 10,981 | 40,913 | 22,634 | ||
Income before income taxes | 302,129 | 300,271 | 513,641 | 529,590 | ||
Income taxes | 77,699 | 73,299 | 128,961 | 126,042 | ||
Net income | $ 224,430 | $ 226,972 | $ 384,680 | $ 403,548 | ||
Basic net income per common share (usd per share) | $ 1.54 | $ 1.55 | $ 2.63 | $ 2.75 | ||
Diluted net income per common share (usd per share) | 1.53 | 1.54 | 2.62 | 2.74 | ||
Dividends declared per common share (usd per share) | $ 0.7625 | $ 0.7200 | $ 1.5250 | $ 1.4400 | ||
Weighted average common shares outstanding (in shares) | 146,075 | 146,748 | 146,029 | 146,738 | ||
Dilutive effect of stock options and non-vested restricted stock awards (in shares) | 661 | 512 | 684 | 548 | ||
Weighted average common shares outstanding - assuming dilution (in shares) | 146,736 | 147,260 | 146,713 | 147,286 | ||
Other comprehensive (loss) income, net of income taxes: | ||||||
Foreign currency translation adjustments | $ 10,864 | $ (163,993) | $ 37,981 | $ (121,113) | ||
Cash flow and net investment hedge adjustments, net of income taxes in 2019 — $(7,726) and $(1,931); 2018 — $12,115 and $5,935 respectively | (20,889) | 32,755 | (5,221) | 16,045 | ||
Pension and postretirement benefit adjustments, net of income taxes in 2019 — $1,786 and $3,574; 2018 — $2,642 and $5,290 respectively | 4,833 | 7,145 | 9,665 | 14,309 | ||
Other comprehensive (loss) income, net of income taxes | (5,192) | [1] | (124,093) | 42,425 | [1] | (90,759) |
Comprehensive income | $ 219,238 | $ 102,879 | $ 427,105 | $ 312,789 | ||
[1] | Includes the effects of reclassifying realized currency losses of $27,037 out of accumulated other comprehensive loss into earnings in connection with the March 7, 2019 sale of Grupo Auto Todo. Refer to the accumulated other comprehensive loss footnote for further details. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net investment hedge, tax | $ (7,726) | $ 12,115 | $ (1,931) | $ 5,935 |
Pension and postretirement benefit adjustments, tax | $ 1,786 | $ 2,642 | $ 3,574 | $ 5,290 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Parent Equity | Non-controlling Interests in Subsidiaries | |
Beginning balance (in shares) at Dec. 31, 2017 | 146,652,615 | |||||||
Beginning balance at Dec. 31, 2017 | $ 3,464,156 | $ 146,653 | $ 68,126 | $ (852,592) | $ 4,049,965 | $ 3,412,152 | $ 52,004 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 403,548 | 403,548 | 403,548 | |||||
Other comprehensive loss, net of tax | (90,759) | (90,759) | (90,759) | |||||
Cash dividends declared | (211,311) | (211,311) | (211,311) | |||||
Share-based awards exercised, including tax benefit (in shares) | 100,117 | |||||||
Share-based awards exercised, including tax benefit | (4,850) | $ 100 | (4,950) | (4,850) | ||||
Share-based compensation | 9,035 | 9,035 | 9,035 | |||||
Noncontrolling interest activities | (1,649) | (1,649) | ||||||
Ending balance (in shares) at Jun. 30, 2018 | 146,752,732 | |||||||
Ending balance at Jun. 30, 2018 | 3,562,327 | $ 146,753 | 72,211 | (943,351) | 4,236,359 | 3,511,972 | 50,355 | |
Beginning balance (in shares) at Mar. 31, 2018 | 146,737,803 | |||||||
Beginning balance at Mar. 31, 2018 | 3,561,381 | $ 146,738 | 67,550 | (819,258) | 4,115,049 | 3,510,079 | 51,302 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 226,972 | 226,972 | 226,972 | |||||
Other comprehensive loss, net of tax | (124,093) | (124,093) | (124,093) | |||||
Cash dividends declared | (105,662) | (105,662) | (105,662) | |||||
Share-based awards exercised, including tax benefit (in shares) | 14,929 | |||||||
Share-based awards exercised, including tax benefit | (673) | $ 15 | (688) | (673) | ||||
Share-based compensation | 5,349 | 5,349 | 5,349 | |||||
Noncontrolling interest activities | (947) | (947) | ||||||
Ending balance (in shares) at Jun. 30, 2018 | 146,752,732 | |||||||
Ending balance at Jun. 30, 2018 | 3,562,327 | $ 146,753 | 72,211 | (943,351) | 4,236,359 | 3,511,972 | 50,355 | |
Beginning balance (in shares) at Dec. 31, 2018 | 145,936,613 | |||||||
Beginning balance at Dec. 31, 2018 | 3,471,991 | $ 145,937 | 78,380 | (1,115,078) | 4,341,212 | 3,450,451 | 21,540 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 384,680 | 384,680 | 384,680 | |||||
Other comprehensive loss, net of tax | [1] | 42,425 | 42,425 | 42,425 | ||||
Cash dividends declared | (222,735) | (222,735) | (222,735) | |||||
Share-based awards exercised, including tax benefit (in shares) | 141,756 | |||||||
Share-based awards exercised, including tax benefit | (7,371) | $ 141 | (7,512) | (7,371) | ||||
Share-based compensation | 13,081 | 13,081 | 13,081 | |||||
Noncontrolling interest activities | 1,107 | 1,107 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 146,078,369 | |||||||
Ending balance at Jun. 30, 2019 | 3,687,975 | $ 146,078 | 83,949 | (1,195,179) | 4,630,480 | 3,665,328 | 22,647 | |
Beginning balance (in shares) at Mar. 31, 2019 | 146,063,911 | |||||||
Beginning balance at Mar. 31, 2019 | 3,572,832 | $ 146,064 | 77,424 | (1,189,987) | 4,517,430 | 3,550,931 | 21,901 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 224,430 | 224,430 | ||||||
Other comprehensive loss, net of tax | [1] | (5,192) | (5,192) | (5,192) | ||||
Cash dividends declared | (111,380) | (111,380) | (111,380) | |||||
Share-based awards exercised, including tax benefit (in shares) | 14,458 | |||||||
Share-based awards exercised, including tax benefit | (532) | $ 14 | (546) | (532) | ||||
Share-based compensation | 7,071 | 7,071 | 7,071 | |||||
Noncontrolling interest activities | 746 | 746 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 146,078,369 | |||||||
Ending balance at Jun. 30, 2019 | $ 3,687,975 | $ 146,078 | $ 83,949 | $ (1,195,179) | $ 4,630,480 | $ 3,665,328 | $ 22,647 | |
[1] | Includes the effects of reclassifying realized currency losses of $27,037 out of accumulated other comprehensive loss into earnings in connection with the March 7, 2019 sale of Grupo Auto Todo. Refer to the accumulated other comprehensive loss footnote for further details. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends declared per share (usd per share) | $ 0.7625 | $ 0.7200 | $ 1.5250 | $ 1.4400 |
Tax effect on stock options exercised | $ 174 | $ 82 | $ 3,986 | $ 2,599 |
Realized currency losses on divestiture | $ 27,037 | $ 0 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income | $ 384,680 | $ 403,548 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 128,131 | 116,814 |
Share-based compensation | 13,081 | 9,035 |
Excess tax benefits from share-based compensation | (3,986) | (2,599) |
Realized currency losses on divestiture | 27,037 | 0 |
Changes in operating assets and liabilities | (247,568) | (71,723) |
Net cash provided by operating activities | 301,375 | 455,075 |
Investing activities: | ||
Purchases of property, plant and equipment | (106,712) | (65,146) |
Acquisitions of businesses and other investing activities | (357,286) | (82,545) |
Net cash used in investing activities | (463,998) | (147,691) |
Financing activities: | ||
Proceeds from debt | 2,973,236 | 2,320,906 |
Payments on debt | (2,359,975) | (2,367,284) |
Share-based awards exercised | (7,371) | (4,851) |
Dividends paid | (216,724) | (204,649) |
Net cash provided by (used in) financing activities | 389,166 | (255,878) |
Effect of exchange rate changes on cash and cash equivalents | 2,461 | (11,264) |
Net increase in cash and cash equivalents | 229,004 | 40,242 |
Cash and cash equivalents at beginning of period | 333,547 | 314,899 |
Cash and cash equivalents at end of period | $ 562,551 | $ 355,141 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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. Except as disclosed herein, there has been no material change 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, 2018 . Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 2018 Annual Report on Form 10-K. The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the interim condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, 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 and customer sales returns are estimated and accrued on an interim basis based upon historical experience. Volume incentives are estimated based upon cumulative and projected purchasing levels. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2019 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The following table presents a summary of the Company's reportable segment financial information: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net sales: Automotive $ 2,774,808 $ 2,736,201 $ 5,397,153 $ 5,300,460 Industrial 1,681,721 1,602,665 3,317,144 3,150,609 Business products 477,731 483,199 956,796 957,290 Total net sales $ 4,934,260 $ 4,822,065 $ 9,671,093 $ 9,408,359 Operating profit: Automotive $ 228,385 $ 243,611 $ 407,613 $ 428,317 Industrial 136,334 125,191 257,362 237,382 Business products 20,896 21,422 42,116 43,023 Total operating profit 385,615 390,224 707,091 708,722 Interest expense, net (22,514 ) (25,525 ) (45,543 ) (48,832 ) Intangible asset amortization (23,917 ) (21,806 ) (46,501 ) (43,209 ) Corporate expense (1) (37,055 ) (42,622 ) (101,406 ) (87,091 ) Income before income taxes $ 302,129 $ 300,271 $ 513,641 $ 529,590 (1) Includes $4,108 and $38,222 of expenses for the three and six months ended June 30, 2019 , respectively, from realized currency losses and transaction and other costs. The realized currency losses of $27,037 for the six months ended June 30, 2019 resulted from the March 7, 2019 sale of Grupo Auto Todo. Refer to the acquisitions and divestitures footnote for more information. Includes $9,105 and $22,114 for the three and six months ended June 30, 2018 , respectively, in certain transaction and other costs related to the acquisition of Alliance Automotive Group ("AAG") and the attempted Business Products Group spin-off (the attempted spin-off was subsequently terminated in September 2018). Net sales are disaggregated by geographical region for each of the Company’s reportable segments, as the Company deems this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 North America: Automotive $ 1,963,583 $ 1,944,980 $ 3,777,368 $ 3,727,294 Industrial 1,681,721 1,602,665 3,317,144 3,150,609 Business products 477,731 483,199 956,796 957,290 Total North America $ 4,123,035 $ 4,030,844 $ 8,051,308 $ 7,835,193 Australasia – Automotive 286,717 302,799 571,270 604,803 Europe – Automotive 524,508 488,422 1,048,515 968,363 Total net sales $ 4,934,260 $ 4,822,065 $ 9,671,093 $ 9,408,359 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following tables present the changes in accumulated other comprehensive loss by component for the six months ended June 30 : Changes in Accumulated Other Pension and Other Post-Retirement Benefits Cash Flow and Net Investment Hedges Foreign Currency Translation Total Beginning balance, January 1, 2019 $ (626,322 ) $ 10,726 $ (499,482 ) $ (1,115,078 ) Other comprehensive income before reclassifications, net of tax — (835 ) 10,944 10,109 Amounts reclassified from accumulated other comprehensive loss, net of tax (1) 9,665 (4,386 ) 27,037 32,316 Other comprehensive income, net of income taxes 9,665 (5,221 ) 37,981 42,425 Cumulative effect from adoption of ASU 2018-02 (122,526 ) — — (122,526 ) Ending balance, June 30, 2019 $ (739,183 ) $ 5,505 $ (461,501 ) $ (1,195,179 ) (1) Realized currency losses of $27,037 were reclassified out of foreign currency translation into earnings in connection with the March 7, 2019 sale of Grupo Auto Todo. Refer to the acquisitions and divestitures footnote for further details. Changes in Accumulated Other Pension and Other Post-Retirement Benefits Cash Flow and Net Investment Hedges Foreign Currency Translation Total Beginning balance, January 1, 2018 $ (568,957 ) $ (17,388 ) $ (266,247 ) $ (852,592 ) Other comprehensive loss before reclassifications, net of tax — 16,045 (121,113 ) (105,068 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 14,309 — — 14,309 Other comprehensive loss, net of income taxes 14,309 16,045 (121,113 ) (90,759 ) Ending balance, June 30, 2018 $ (554,648 ) $ (1,343 ) $ (387,360 ) $ (943,351 ) The accumulated other comprehensive loss components related to the pension benefits are included in the computation of net periodic benefit income in the employee benefit plans footnote. The nature of the cash flow and net investment hedges are discussed in the derivatives and hedging footnote. Generally, tax effects in accumulated other comprehensive loss are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax accumulated other comprehensive loss reclassifications are recognized. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of ASUs to the FASB Accounting Standards Codification ("ASC"). The Company considers the applicability and impact of all ASUs and any not listed below were assessed and determined to be not applicable or are expected to have a minimal impact on the Company's condensed consolidated financial statements. Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02, Leases , which, among other things, requires an entity to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, including operating leases. Expanded disclosures with additional qualitative and quantitative information are also required. ASU 2016-02 and its amendments were effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption was permitted. The ASU's transition provisions could be applied under a modified retrospective approach to each prior reporting period presented in the financial statements or only at the beginning of the period of adoption (i.e., on the effective date). The Company adopted ASU 2016-02 and its amendments and applied the transition provisions as of January 1, 2019, which included recognizing a cumulative-effect adjustment through opening retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The Company's adoption of the standard resulted in a cumulative-effect adjustment to retained earnings of $4,797 , net of taxes, as of January 1, 2019. The standard did not materially impact the Company's consolidated net income or liquidity. The standard did not have an impact on debt-covenant compliance under the Company's current debt agreements. Income Statement - Reporting Comprehensive Income (Topic 220) In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The ASU permits a company to make a one-time election to reclassify stranded tax effects caused by the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The ASU also requires companies to disclose their accounting policies for releasing income tax effects from accumulated other comprehensive income. ASU 2018-02 was effective for periods beginning after December 15, 2018, with an election to adopt early. The Company adopted ASU 2018-02 as of January 1, 2019 and recognized an adjustment to increase retained earnings and to adjust accumulated other comprehensive loss by approximately $122,526 . Financial Instruments - Credit Losses (Topic 220) In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments . Among other things, the ASU and its amendments replace the incurred loss impairment model for receivables and certain other financial instruments with a current expected credit loss model. The new model measures impairment based on expected credit losses over the remaining contractual life of an asset, considering available information about the collectability of cash flows, past events, current conditions, and reasonable and supportable forecasts. Additional quantitative and qualitative disclosures are required. ASU 2016-13 is effective for periods beginning after December 15, 2019, with an option to adopt early. The Company plans to adopt the ASU and its amendments on January 1, 2020, and any changes to allowances for credit losses caused by the adoption will be made through a cumulative effect adjustment to retained earnings as of that date. The Company is currently evaluating the impact of ASU 2016-13 and its amendments on the Company's consolidated financial statements. Compensation - Retirement Benefits (Topic 715) In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans . The updated accounting guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing, adding and clarifying certain disclosures. These provisions must be applied retrospectively. ASU 2018-14 is effective for periods beginning after December 15, 2020, with an option to adopt early. The adoption of ASU 2018-14 is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures. The Company does not plan to early adopt the standard. |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Net periodic benefit income from the Company's pension plans included the following components for the three months ended June 30 : Pension Benefits 2019 2018 Service cost $ 2,379 $ 2,612 Interest cost 24,335 22,071 Expected return on plan assets (38,507 ) (38,516 ) Amortization of prior service credit (17 ) (37 ) Amortization of actuarial loss 7,746 9,935 Net periodic benefit income $ (4,064 ) $ (3,935 ) Net periodic benefit income from the Company's pension plans included the following components for the six months ended June 30 : Pension Benefits 2019 2018 Service cost $ 4,769 $ 5,266 Interest cost 48,683 44,184 Expected return on plan assets (77,034 ) (77,104 ) Amortization of prior service credit (34 ) (74 ) Amortization of actuarial loss 15,495 19,894 Net periodic benefit income $ (8,121 ) $ (7,834 ) |
Guarantees
Guarantees | 6 Months Ended |
Jun. 30, 2019 | |
Guarantees [Abstract] | |
Guarantees | Guarantees The Company guarantees the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a majority voting interest in the independents. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the guarantees. The Company has concluded that the independents are variable interest entities, but that the Company is not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entities’ economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, the Company concluded that the affiliates are not variable interest entities. The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantees. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At June 30, 2019 , the Company was in compliance with all such covenants. As of June 30, 2019 , the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $841,319 . These loans generally mature over periods from one to six years . In the event that the Company is required to make payments in connection with these guarantees, the Company would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a portion of the amounts paid under the guarantees. When it is deemed probable that the Company will incur a loss in connection with a guarantee, a liability is recorded equal to this estimated loss. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings. As of June 30, 2019 , the Company has recognized certain assets and liabilities amounting to $84,000 each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the condensed consolidated balance sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit and term loan approximate their respective fair values based on the short-term nature of these instruments. As of June 30, 2019 , the carrying amount, net of debt issuance costs, and the fair value of fixed rate debt were approximately $1,961,850 and $2,038,652 , respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity. The carrying amount, net of debt issuance costs, of fixed rate debt of $1,961,850 is included in long-term debt in the condensed consolidated balance sheets. |
Credit Facilities
Credit Facilities | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Credit Facilities | Credit Facilities On May 31, 2019, the Company entered into a private placement agreement of €250,000 long-term fixed rate debt. The €250,000 of long-term fixed rate debt includes €50,000 , 1.55% Series A Guaranteed Senior Note maturing on May 31, 2029, €100,000 , 1.74% Series B Guaranteed Senior Note maturing on May 31, 2031 and €100,000 , 1.95% Series C Guaranteed Senior Note maturing on May 31, 2034. On June 30, 2019, the Company entered into a private placement agreement of Australian dollar ("A$") denominated long-term fixed rate debt of A$310,000 . The A$310,000 of long-term fixed rate debt includes A$155,000 , 3.10% Series A Guaranteed Senior Note maturing on June 30, 2024 and A$155,000 , 3.43% Series B Guaranteed Senior Note maturing on June 30, 2026. All borrowings require the Company to comply with a financial covenant with respect to a maximum debt to EBITDA ratio. At June 30, 2019, the Company was in compliance with all such covenants. For information on the Company's other credit facilities please see the Company's 2018 |
Derivatives and Hedging
Derivatives and Hedging | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging | Derivatives and Hedging The Company is exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, the Company uses derivative and non-derivative instruments as risk management tools to mitigate the potential impact of interest rate and foreign exchange rate risks. The objective of using these tools is to reduce fluctuations in the Company’s earnings and cash flows associated with changes in these rates. Derivative financial instruments are not used for trading or other speculative purposes. The Company has not historically incurred, and does not expect to incur in the future, any losses as a result of counterparty default related to derivative instruments. The Company formally documents relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges to specific forecasted transactions or variability of cash flow to be paid. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the designated derivative and non-derivative instruments that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. When a designated instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively. Cash Flow Hedges In July 2018 and February 2019, the Company entered into interest rate swaps to mitigate variability in forecasted interest payments on $500,000 and $300,000 , respectively, of the Company’s U.S. dollar-denominated unsecured variable rate debt. The interest rate swaps effectively convert a portion of the floating rate interest payment into a fixed rate interest payment. The Company designated the interest rate swaps as qualifying hedging instruments and accounts for these derivatives as cash flow hedges. The fair values of the interest rate cash flow hedges were not material as of June 30, 2019 . Gains or losses related to the interest rate cash flow hedges were not material during the three and six months ended June 30, 2019 . Hedges of Net Investments in Foreign Operations In July 2018, concurrent with the cash flow hedge described above, the Company entered into a cross-currency interest rate swap agreement to effectively convert $500,000 of the U.S. dollar-denominated unsecured variable rate debt to fixed-rate Euro-denominated debt. In February 2019, the Company terminated the cross-currency interest rate swap agreement and entered into a forward contract to effectively convert $800,000 of the U.S. dollar-denominated unsecured debt to Euro-denominated debt. No gains or losses were recognized at termination. The risk management objective of these transactions is to manage foreign currency risk relating to a European subsidiary and reduce the variability in the functional currency equivalent cash flows of the unsecured variable rate debt. The Company designated the instruments as qualifying hedging instruments and accounts for these derivatives as a hedge of the foreign currency exchange rate exposure of an equal amount of the Company's Euro-denominated net investment in a European subsidiary. The fair value of the forward currency hedge was not material as of June 30, 2019 . Gains or losses related to the cross-currency interest rate swap and the forward contract were not material during the three and six months ended June 30, 2019 . As of June 30, 2019 , the Company also had designated €700,000 of the face value of Euro-denominated debt, a non-derivative financial instrument, as a hedge of the foreign currency exchange rate exposure of an equal amount to the Company's Euro-denominated net investment in a European subsidiary. As of June 30, 2019 , the Euro-denominated debt had a total carrying amount of $795,900 , which is included in long-term debt in the Company’s condensed consolidated balance sheets. For the three months ended June 30, 2019 , the Company recorded a loss, net of tax, of approximately $7,716 , and for the six months ended June 30, 2019, the Company recorded a gain, net of tax, of approximately $3,730 . For the three and six months ended June 30, 2018, the Company recorded a gain, net of tax, of approximately $32,755 and $16,045 , respectively. These amounts are recorded in the cash flow and net investment hedges section of accumulated other comprehensive loss in the Company’s condensed consolidated statements of income and comprehensive income. The Company did not reclassify any gains or losses related to net investment hedges from accumulated other comprehensive loss into earnings during the three or six months ended June 30, 2019 . Amounts would only be reclassified into earnings if the European subsidiary were liquidated, or otherwise disposed. |
Leased Properties
Leased Properties | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leased Properties | Leased Properties The Company primarily leases real estate for certain retail stores, distribution centers, office space and land. The Company also leases equipment (primarily vehicles). Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term from one to 20 years . The exercise of lease renewal options is at the Company's discretion. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants. The table below presents the operating lease assets and liabilities recognized on the condensed consolidated balance sheets as of June 30, 2019 : Balance Sheet Line Item June 30, 2019 Operating lease assets Operating lease assets $ 961,975 Operating lease liabilities: Current operating lease liabilities Other current liabilities $ 223,370 Noncurrent operating lease liabilities Operating lease liabilities 724,682 Total operating lease liabilities $ 948,052 The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2019 are: Weighted average remaining lease term (in years) 5.47 Weighted average discount rate 3.49% The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the condensed consolidated balance sheets as of June 30, 2019 : July 1, 2019 through December 31, 2019 $ 144,705 2020 263,440 2021 200,553 2022 147,423 2023 101,241 Thereafter 219,101 Total undiscounted future minimum lease payments 1,076,463 Less: Difference between undiscounted lease payments and discounted operating lease liabilities 128,411 Total operating lease liabilities $ 948,052 Operating lease payments include $22,200 related to options to extend lease terms that are reasonably certain of being exercised. Operating lease costs were $76,899 and $157,386 for the three and six months ended June 30, 2019 , respectively. Operating lease costs are included within selling, administrative and other expenses on the condensed consolidated statements of income and comprehensive income. Short-term lease costs, variable lease costs and sublease income were not material for the periods presented. Cash paid for amounts included in the measurement of operating lease liabilities were $150,882 for the six months ended June 30, 2019 , and this amount is included in operating activities in the condensed consolidated statements of cash flows. Operating lease assets obtained in exchange for new operating lease liabilities were $113,771 for the six months ended June 30, 2019 |
Legal Matters
Legal Matters | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | Legal Matters As more fully discussed in the legal matter footnote of the Company's notes to the consolidated financial statements in its 2018 Annual Report on Form 10-K, a jury awarded damages against the Company in a litigated automotive product liability dispute. At the time of the filing of these financial statements, based upon the Company’s legal defenses, insurance coverage, and reserves, the Company does not believe this matter will have a material impact to the condensed consolidated financial statements. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions The Company acquired several businesses for approximately $378,744 , net of cash acquired, during the six months ended June 30, 2019 . These included Hennig Fahrzeugteile Group, Parts Point Group and several bolt-on acquisitions in the Automotive Parts Group and Axis New England and Axis New York in the Industrial Parts Group. The Company has recognized the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for these businesses. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations, tax accounting and leases. As a subsequent event, in July 2019, the Company acquired several businesses including the remaining 65% equity investment in Inenco Group ("Inenco"). Inenco is one of Australasia's leading industrial distributors of key product categories such as bearings, power transmission and seals and it generates estimated annual revenues of approximately $400 million . Inenco is a part of the Industrial Parts Group. Divestitures Grupo Auto Todo On March 7, 2019, the Company sold all of the equity of Grupo Auto Todo, a Mexican subsidiary within the Automotive Parts Group. Grupo Auto Todo contributed approximately $93,000 of revenues for the year ended December 31, 2018. The Company incurred realized currency losses of $27,037 from this transaction during the six months ended June 30, 2019 . The realized currency losses are included in the line item "other" within non-operating expenses (income) on the condensed consolidated statements of income and comprehensive income. |
Reclassifications
Reclassifications | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | ReclassificationsCertain prior period amounts have been reclassified to conform to the current year presentations. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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 2018 Annual Report on Form 10-K, the Company maintains various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards. Options to purchase approximately 247 and 135 shares of common stock were outstanding but excluded from the computations of diluted earnings per share for the three and six month periods ended June 30, 2019 , respectively, as compared to approximately 2,098 and 1,445 for the three and six month periods ended June 30, 2018 , respectively. These options were excluded from the computations of diluted net income per common share because the options’ exercise prices were greater than the average market price of the common stock. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Accounting | 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. Except as disclosed herein, there has been no material change 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, 2018 . Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 2018 Annual Report on Form 10-K. |
Use of Estimates | The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the interim condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, 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 and customer sales returns are estimated and accrued on an interim basis based upon historical experience. Volume incentives are estimated based upon cumulative and projected purchasing levels. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant. |
Recent Accounting Pronouncements | Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of ASUs to the FASB Accounting Standards Codification ("ASC"). The Company considers the applicability and impact of all ASUs and any not listed below were assessed and determined to be not applicable or are expected to have a minimal impact on the Company's condensed consolidated financial statements. Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02, Leases , which, among other things, requires an entity to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, including operating leases. Expanded disclosures with additional qualitative and quantitative information are also required. ASU 2016-02 and its amendments were effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption was permitted. The ASU's transition provisions could be applied under a modified retrospective approach to each prior reporting period presented in the financial statements or only at the beginning of the period of adoption (i.e., on the effective date). The Company adopted ASU 2016-02 and its amendments and applied the transition provisions as of January 1, 2019, which included recognizing a cumulative-effect adjustment through opening retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The Company's adoption of the standard resulted in a cumulative-effect adjustment to retained earnings of $4,797 , net of taxes, as of January 1, 2019. The standard did not materially impact the Company's consolidated net income or liquidity. The standard did not have an impact on debt-covenant compliance under the Company's current debt agreements. Income Statement - Reporting Comprehensive Income (Topic 220) In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The ASU permits a company to make a one-time election to reclassify stranded tax effects caused by the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The ASU also requires companies to disclose their accounting policies for releasing income tax effects from accumulated other comprehensive income. ASU 2018-02 was effective for periods beginning after December 15, 2018, with an election to adopt early. The Company adopted ASU 2018-02 as of January 1, 2019 and recognized an adjustment to increase retained earnings and to adjust accumulated other comprehensive loss by approximately $122,526 . Financial Instruments - Credit Losses (Topic 220) In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments . Among other things, the ASU and its amendments replace the incurred loss impairment model for receivables and certain other financial instruments with a current expected credit loss model. The new model measures impairment based on expected credit losses over the remaining contractual life of an asset, considering available information about the collectability of cash flows, past events, current conditions, and reasonable and supportable forecasts. Additional quantitative and qualitative disclosures are required. ASU 2016-13 is effective for periods beginning after December 15, 2019, with an option to adopt early. The Company plans to adopt the ASU and its amendments on January 1, 2020, and any changes to allowances for credit losses caused by the adoption will be made through a cumulative effect adjustment to retained earnings as of that date. The Company is currently evaluating the impact of ASU 2016-13 and its amendments on the Company's consolidated financial statements. Compensation - Retirement Benefits (Topic 715) In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans . The updated accounting guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing, adding and clarifying certain disclosures. These provisions must be applied retrospectively. ASU 2018-14 is effective for periods beginning after December 15, 2020, with an option to adopt early. The adoption of ASU 2018-14 is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures. The Company does not plan to early adopt the standard. |
Guarantees | The Company guarantees the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a majority voting interest in the independents. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the guarantees. The Company has concluded that the independents are variable interest entities, but that the Company is not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entities’ economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, the Company concluded that the affiliates are not variable interest entities. The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantees. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At June 30, 2019 , the Company was in compliance with all such covenants. |
Fair Value of Financial Instruments | The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity.The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit and term loan approximate their respective fair values based on the short-term nature of these instruments. |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Segment Information | The following table presents a summary of the Company's reportable segment financial information: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net sales: Automotive $ 2,774,808 $ 2,736,201 $ 5,397,153 $ 5,300,460 Industrial 1,681,721 1,602,665 3,317,144 3,150,609 Business products 477,731 483,199 956,796 957,290 Total net sales $ 4,934,260 $ 4,822,065 $ 9,671,093 $ 9,408,359 Operating profit: Automotive $ 228,385 $ 243,611 $ 407,613 $ 428,317 Industrial 136,334 125,191 257,362 237,382 Business products 20,896 21,422 42,116 43,023 Total operating profit 385,615 390,224 707,091 708,722 Interest expense, net (22,514 ) (25,525 ) (45,543 ) (48,832 ) Intangible asset amortization (23,917 ) (21,806 ) (46,501 ) (43,209 ) Corporate expense (1) (37,055 ) (42,622 ) (101,406 ) (87,091 ) Income before income taxes $ 302,129 $ 300,271 $ 513,641 $ 529,590 (1) Includes $4,108 and $38,222 of expenses for the three and six months ended June 30, 2019 , respectively, from realized currency losses and transaction and other costs. The realized currency losses of $27,037 for the six months ended June 30, 2019 resulted from the March 7, 2019 sale of Grupo Auto Todo. Refer to the acquisitions and divestitures footnote for more information. Includes $9,105 and $22,114 for the three and six months ended June 30, 2018 , respectively, in certain transaction and other costs related to the acquisition of Alliance Automotive Group ("AAG") and the attempted Business Products Group spin-off (the attempted spin-off was subsequently terminated in September 2018). |
Revenue from External Customers by Geographic Areas | The following table presents disaggregated geographical net sales from contracts with customers by reportable segment: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 North America: Automotive $ 1,963,583 $ 1,944,980 $ 3,777,368 $ 3,727,294 Industrial 1,681,721 1,602,665 3,317,144 3,150,609 Business products 477,731 483,199 956,796 957,290 Total North America $ 4,123,035 $ 4,030,844 $ 8,051,308 $ 7,835,193 Australasia – Automotive 286,717 302,799 571,270 604,803 Europe – Automotive 524,508 488,422 1,048,515 968,363 Total net sales $ 4,934,260 $ 4,822,065 $ 9,671,093 $ 9,408,359 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | The following tables present the changes in accumulated other comprehensive loss by component for the six months ended June 30 : Changes in Accumulated Other Pension and Other Post-Retirement Benefits Cash Flow and Net Investment Hedges Foreign Currency Translation Total Beginning balance, January 1, 2019 $ (626,322 ) $ 10,726 $ (499,482 ) $ (1,115,078 ) Other comprehensive income before reclassifications, net of tax — (835 ) 10,944 10,109 Amounts reclassified from accumulated other comprehensive loss, net of tax (1) 9,665 (4,386 ) 27,037 32,316 Other comprehensive income, net of income taxes 9,665 (5,221 ) 37,981 42,425 Cumulative effect from adoption of ASU 2018-02 (122,526 ) — — (122,526 ) Ending balance, June 30, 2019 $ (739,183 ) $ 5,505 $ (461,501 ) $ (1,195,179 ) (1) Realized currency losses of $27,037 were reclassified out of foreign currency translation into earnings in connection with the March 7, 2019 sale of Grupo Auto Todo. Refer to the acquisitions and divestitures footnote for further details. Changes in Accumulated Other Pension and Other Post-Retirement Benefits Cash Flow and Net Investment Hedges Foreign Currency Translation Total Beginning balance, January 1, 2018 $ (568,957 ) $ (17,388 ) $ (266,247 ) $ (852,592 ) Other comprehensive loss before reclassifications, net of tax — 16,045 (121,113 ) (105,068 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 14,309 — — 14,309 Other comprehensive loss, net of income taxes 14,309 16,045 (121,113 ) (90,759 ) Ending balance, June 30, 2018 $ (554,648 ) $ (1,343 ) $ (387,360 ) $ (943,351 ) |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Income for the Pension Plans | Net periodic benefit income from the Company's pension plans included the following components for the three months ended June 30 : Pension Benefits 2019 2018 Service cost $ 2,379 $ 2,612 Interest cost 24,335 22,071 Expected return on plan assets (38,507 ) (38,516 ) Amortization of prior service credit (17 ) (37 ) Amortization of actuarial loss 7,746 9,935 Net periodic benefit income $ (4,064 ) $ (3,935 ) Net periodic benefit income from the Company's pension plans included the following components for the six months ended June 30 : Pension Benefits 2019 2018 Service cost $ 4,769 $ 5,266 Interest cost 48,683 44,184 Expected return on plan assets (77,034 ) (77,104 ) Amortization of prior service credit (34 ) (74 ) Amortization of actuarial loss 15,495 19,894 Net periodic benefit income $ (8,121 ) $ (7,834 ) |
Leased Properties (Tables)
Leased Properties (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lessee, Operating Leases, Assets and Liabilities | The table below presents the operating lease assets and liabilities recognized on the condensed consolidated balance sheets as of June 30, 2019 : Balance Sheet Line Item June 30, 2019 Operating lease assets Operating lease assets $ 961,975 Operating lease liabilities: Current operating lease liabilities Other current liabilities $ 223,370 Noncurrent operating lease liabilities Operating lease liabilities 724,682 Total operating lease liabilities $ 948,052 |
Schedule of Components of Operating Leases | The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2019 are: Weighted average remaining lease term (in years) 5.47 Weighted average discount rate 3.49% |
Lessee, Operating Lease, Liability, Maturity | The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the condensed consolidated balance sheets as of June 30, 2019 : July 1, 2019 through December 31, 2019 $ 144,705 2020 263,440 2021 200,553 2022 147,423 2023 101,241 Thereafter 219,101 Total undiscounted future minimum lease payments 1,076,463 Less: Difference between undiscounted lease payments and discounted operating lease liabilities 128,411 Total operating lease liabilities $ 948,052 |
Segment Information - Operating
Segment Information - Operating Results by Segment (Details) - USD ($) $ in Thousands | Mar. 07, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Segment Reporting Information [Line Items] | |||||
Net sales | $ 4,934,260 | $ 4,822,065 | $ 9,671,093 | $ 9,408,359 | |
Income before income taxes | 302,129 | 300,271 | 513,641 | 529,590 | |
Realized currency losses on divestiture | $ 27,037 | 27,037 | 0 | ||
Transaction costs | 9,105 | 22,114 | |||
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Operating profit | 385,615 | 390,224 | 707,091 | 708,722 | |
Operating Segments | Automotive Parts | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 2,774,808 | 2,736,201 | 5,397,153 | 5,300,460 | |
Operating profit | 228,385 | 243,611 | 407,613 | 428,317 | |
Operating Segments | Industrial Parts | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 1,681,721 | 1,602,665 | 3,317,144 | 3,150,609 | |
Operating profit | 136,334 | 125,191 | 257,362 | 237,382 | |
Operating Segments | Business Products | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 477,731 | 483,199 | 956,796 | 957,290 | |
Operating profit | 20,896 | 21,422 | 42,116 | 43,023 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Interest expense, net | (22,514) | (25,525) | (45,543) | (48,832) | |
Intangible asset amortization | (23,917) | (21,806) | (46,501) | (43,209) | |
Corporate expense | (37,055) | $ (42,622) | (101,406) | $ (87,091) | |
Transaction costs | $ 4,108 | $ 38,222 |
Segment Information - Disaggreg
Segment Information - Disaggregated Geographical Revenue by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 4,934,260 | $ 4,822,065 | $ 9,671,093 | $ 9,408,359 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 4,123,035 | 4,030,844 | 8,051,308 | 7,835,193 |
Automotive Parts | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,963,583 | 1,944,980 | 3,777,368 | 3,727,294 |
Automotive Parts | Australasia | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 286,717 | 302,799 | 571,270 | 604,803 |
Automotive Parts | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 524,508 | 488,422 | 1,048,515 | 968,363 |
Industrial Parts | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,681,721 | 1,602,665 | 3,317,144 | 3,150,609 |
Business Products | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 477,731 | $ 483,199 | $ 956,796 | $ 957,290 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive (Loss) by Component (Details) - USD ($) $ in Thousands | Mar. 07, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 01, 2019 |
AOCI Attributable to Parent [Roll Forward] | ||||
Beginning balance | $ 3,450,451 | |||
Other comprehensive income (loss) before reclassifications, net of tax | 10,109 | $ (105,068) | ||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 32,316 | 14,309 | ||
Other comprehensive income (loss), net of income taxes | 42,425 | (90,759) | ||
Ending balance | 3,665,328 | |||
Realized currency losses on divestiture | $ 27,037 | 27,037 | 0 | |
Pension and Other Post-Retirement Benefits | ||||
AOCI Attributable to Parent [Roll Forward] | ||||
Beginning balance | (626,322) | (568,957) | ||
Other comprehensive income (loss) before reclassifications, net of tax | 0 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 9,665 | 14,309 | ||
Other comprehensive income (loss), net of income taxes | 9,665 | 14,309 | ||
Cumulative effect from adoption of ASU 2018-02 | $ (122,526) | |||
Ending balance | (739,183) | (554,648) | ||
Net Investment Hedge | ||||
AOCI Attributable to Parent [Roll Forward] | ||||
Beginning balance | 10,726 | (17,388) | ||
Other comprehensive income (loss) before reclassifications, net of tax | (835) | 16,045 | ||
Amounts reclassified from accumulated other comprehensive loss, net of tax | (4,386) | 0 | ||
Other comprehensive income (loss), net of income taxes | (5,221) | 16,045 | ||
Cumulative effect from adoption of ASU 2018-02 | 0 | |||
Ending balance | 5,505 | (1,343) | ||
Foreign Currency Translation | ||||
AOCI Attributable to Parent [Roll Forward] | ||||
Beginning balance | (499,482) | (266,247) | ||
Other comprehensive income (loss) before reclassifications, net of tax | 10,944 | (121,113) | ||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 27,037 | 0 | ||
Other comprehensive income (loss), net of income taxes | 37,981 | (121,113) | ||
Cumulative effect from adoption of ASU 2018-02 | 0 | |||
Ending balance | (461,501) | (387,360) | ||
Total | ||||
AOCI Attributable to Parent [Roll Forward] | ||||
Beginning balance | (1,115,078) | (852,592) | ||
Cumulative effect from adoption of ASU 2018-02 | $ (122,526) | |||
Ending balance | $ (1,195,179) | $ (943,351) |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) $ in Thousands | Jan. 01, 2019USD ($) | |
Accumulated Other Comprehensive Loss | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect from adoption of ASU | $ (122,526) | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect from adoption of ASU | 4,797 | [1] |
Accounting Standards Update 2016-02 | Retained Earnings | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect from adoption of ASU | 4,797 | [1] |
Accounting Standards Update 2018-02 | Accumulated Other Comprehensive Loss | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect from adoption of ASU | (122,526) | [1] |
Accounting Standards Update 2018-02 | Retained Earnings | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect from adoption of ASU | $ 122,526 | [1] |
[1] | The Company adopted Accounting Standards Update ("ASU") 2016-02, Leases, and ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, during the first quarter of 2019. Refer to the recent accounting pronouncements footnote for further details. |
Employee Benefit Plans - Compo
Employee Benefit Plans - Components of Net Periodic Benefit Income for the Pension Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 2,379 | $ 2,612 | $ 4,769 | $ 5,266 |
Interest cost | 24,335 | 22,071 | 48,683 | 44,184 |
Expected return on plan assets | (38,507) | (38,516) | (77,034) | (77,104) |
Amortization of prior service credit | (17) | (37) | (34) | (74) |
Amortization of actuarial loss | 7,746 | 9,935 | 15,495 | 19,894 |
Net periodic benefit income | $ (4,064) | $ (3,935) | $ (8,121) | $ (7,834) |
Guarantees (Details)
Guarantees (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Guarantor Obligations [Line Items] | |
Total borrowings of the independents and affiliates subject to guarantee | $ 841,319 |
Guarantees related to borrowings, other assets | 84,000 |
Guarantor obligation, current carrying value | $ 84,000 |
Minimum | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations maturity (in years) | 1 year |
Maximum | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations maturity (in years) | 6 years |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Reported Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of fixed rate debt | $ 1,961,850 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of fixed rate debt | $ 2,038,652 |
Credit Facilities (Details)
Credit Facilities (Details) - Senior Notes | Jun. 30, 2019AUD ($) | May 31, 2019EUR (€) |
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 310,000,000 | € 250,000,000 |
Series A Guaranteed Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 155,000,000 | € 50,000,000 |
Interest rate, stated percentage | 3.10% | 1.55% |
Series B Guaranteed Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 155,000,000 | € 100,000,000 |
Interest rate, stated percentage | 3.43% | 1.74% |
Series C Guaranteed Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | € 100,000 | |
Interest rate, stated percentage | 1.95% |
Derivatives and Hedging (Detail
Derivatives and Hedging (Details) € in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019EUR (€) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Feb. 28, 2019USD ($) | Jul. 31, 2018USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Net investment hedge, net of tax | $ (7,716,000) | $ 32,755,000 | $ 3,730,000 | $ 16,045,000 | |||
Designated as Hedging Instrument | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional amount of nonderivative instruments | € | € 700,000 | ||||||
Unsecured long-term debt, noncurrent | $ 795,900,000 | $ 795,900,000 | |||||
Cash Flow Hedging | Interest Rate Swap | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative, amount of hedged item | $ 300,000,000 | $ 500,000,000 | |||||
Cash Flow Hedging | Cross Currency Interest Rate Contract | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative, amount of hedged item | $ 800,000,000 | $ 500,000,000 |
Leased Properties - Additional
Leased Properties - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Option to extend, amount | $ 22,200 | $ 22,200 |
Operating lease costs | $ 76,899 | 157,386 |
Operating lease, payments | 150,882 | |
Asset obtained in exchange | $ 113,771 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Renewal term | 1 year | 1 year |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Renewal term | 20 years | 20 years |
Leased Properties - Operating L
Leased Properties - Operating Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Operating lease assets | $ 961,975 | $ 0 |
Current operating lease liabilities | 223,370 | |
Operating lease liabilities | 724,682 | $ 0 |
Total operating lease liabilities | $ 948,052 |
Leased Properties - Components
Leased Properties - Components of Operating Leases (Details) | Jun. 30, 2019 |
Leases [Abstract] | |
Weighted average remaining lease term (in years) | 5 years 5 months 19 days |
Weighted average discount rate | 3.49% |
Leased Properties - Future Leas
Leased Properties - Future Lease Payments (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
July 1, 2019 through December 31, 2019 | $ 144,705 |
2020 | 263,440 |
2021 | 200,553 |
2022 | 147,423 |
2023 | 101,241 |
Thereafter | 219,101 |
Total undiscounted future minimum lease payments | 1,076,463 |
Less: Difference between undiscounted lease payments and discounted operating lease liabilities | 128,411 |
Total operating lease liabilities | $ 948,052 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Additional Information (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||
Payments to acquire businesses, net | $ 378,744 | ||
Grupo Auto Todo | |||
Business Acquisition [Line Items] | |||
Divested subsidiary, revenue | $ 93,000 | ||
Business exit costs | $ 27,037 | ||
Inenco Group | Subsequent Event | |||
Business Acquisition [Line Items] | |||
Percentage of voting interests acquired | 65.00% | ||
Estimated annual revenues of acquiree | $ 400,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 247 | 2,098 | 135 | 1,445 |
Uncategorized Items - gpc063020
Label | Element | Value | |
Accounting Standards Update 2014-09 [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (5,843,000) | |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (5,843,000) | |
Accounting Standards Update 2014-09 [Member] | Parent [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (5,843,000) | |
Accounting Standards Update 2016-02 [Member] | Parent [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,797,000 | [1] |
[1] | The Company adopted Accounting Standards Update ("ASU") 2016-02, Leases, and ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, during the first quarter of 2019. Refer to the recent accounting pronouncements footnote for further details. |