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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 1-5690
  __________________________________________ 
GENUINE PARTS COMPANY
(Exact name of registrant as specified in its charter)
   __________________________________________ 
GA 58-0254510
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

2999 WILDWOOD PARKWAY, 30339
ATLANTA,GA
(Address of principal executive offices) (Zip Code)
678-934-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of each exchange on which registered
Common Stock, $1.00 par value per shareGPCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer 
  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
There were 144,289,653 shares of common stock outstanding as of September 30, 2020.





Table of Contents
Page
   
  
  



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, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$900,123 $276,992 
Trade accounts receivable, less allowance for doubtful accounts (2020 – $46,885; 2019 – $35,047)
1,952,225 2,440,252 
Merchandise inventories, net 3,419,383 3,443,876 
Prepaid expenses and other current assets1,103,554 1,063,245 
Current assets of discontinued operations 714,251 
Total current assets7,375,285 7,938,616 
Goodwill1,829,946 2,293,519 
Other intangible assets, less accumulated amortization1,449,446 1,492,097 
Deferred tax assets67,594 45,921 
Property, plant and equipment, less accumulated depreciation (2020 – $1,357,013; 2019 – $1,200,688)
1,141,419 1,173,688 
Operating lease assets1,024,453 995,667 
Other assets587,318 457,350 
Noncurrent assets of discontinued operations 248,771 
Total assets$13,475,461 $14,645,629 
Liabilities and equity
Current liabilities:
Trade accounts payable
$4,030,319 $3,948,000 
Current portion of debt
206,335 624,043 
Dividends payable
113,983 110,851 
Other current liabilities
1,626,061 1,493,109 
Current liabilities of discontinued operations 218,117 
Total current liabilities
5,976,698 6,394,120 
Long-term debt
2,700,616 2,802,056 
Operating lease liabilities779,468 756,519 
Pension and other post–retirement benefit liabilities
248,488 249,832 
Deferred tax liabilities
214,738 233,044 
Other long-term liabilities
520,680 445,652 
Noncurrent liabilities of discontinued operations 68,906 
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 – 2020 – 144,289,653 shares; 2019 – 145,378,158 shares
144,290 145,378 
Additional paid-in capital
113,249 98,777 
Retained earnings
3,923,113 4,571,860 
Accumulated other comprehensive loss
(1,166,572)(1,141,308)
Total parent equity
3,014,080 3,674,707 
Noncontrolling interests in subsidiaries
20,693 20,793 
Total equity
3,034,773 3,695,500 
Total liabilities and equity
$13,475,461 $14,645,629 
See accompanying notes to condensed consolidated financial statements.
2

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

 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2020201920202019
Net sales
$4,370,086 $4,525,284 $12,285,839 $13,242,344 
Cost of goods sold
2,842,020 3,020,051 8,079,108 8,861,609 
Gross profit
1,528,066 1,505,233 4,206,731 4,380,735 
Operating expenses:
Selling, administrative and other expenses
1,140,156 1,175,699 3,254,442 3,414,414 
Depreciation and amortization
69,097 65,667 203,084 186,968 
Provision for doubtful accounts
5,633 1,192 23,452 10,430 
Restructuring costs10,968  39,009  
Goodwill impairment charge  506,721  
Total operating expenses
1,225,854 1,242,558 4,026,708 3,611,812 
Non-operating expenses (income):
Interest expense
25,788 26,451 72,218 73,567 
Other
(21,241)(47,655)(46,017)(62,737)
Total non-operating expenses (income) 4,547 (21,204)26,201 10,830 
Income before income taxes297,665 283,879 153,822 758,093 
Income taxes
64,747 71,623 162,059 190,634 
Net income (loss) from continuing operations232,918 212,256 (8,237)567,459 
Net (loss) income from discontinued operations(5,387)15,231 (192,069)44,708 
Net income (loss) $227,531 $227,487 $(200,306)$612,167 
Dividends declared per common share
$0.7900 $0.7625 $2.3700 $2.2875 
Basic earnings (loss) per share:
Continuing operations$1.61 $1.46 $(0.06)$3.89 
Discontinued operations(0.03)0.10 (1.33)0.31 
Basic earnings (loss) per share$1.58 $1.56 $(1.39)$4.20 
Diluted earnings (loss) per share:
Continuing operations$1.61 $1.45 $(0.06)$3.87 
Discontinued operations(0.04)0.11 (1.33)0.31 
Diluted earnings (loss) per share$1.57 $1.56 $(1.39)$4.18 
Weighted average common shares outstanding
144,273 145,572 144,528 145,875 
Dilutive effect of stock options and non-vested restricted stock awards
762 617  654 
Weighted average common shares outstanding – assuming dilution
145,035 146,189 144,528 146,529 
See accompanying notes to condensed consolidated financial statements.
3

Table of Contents

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

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2020201920202019
Net income (loss)$227,531 $227,487 $(200,306)$612,167 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2020 — $22,896 and $19,451; 2019 — $17,773 and $21,468, respectively
34,063 (78,298)(36,951)(30,325)
Cash flow hedge adjustments, net of income taxes in 2020 — $1,313 and $4,731; 2019 — $787 and $6,413, respectively
3,550 (2,127)(12,792)(17,340)
Pension and postretirement benefit adjustments, net of income taxes in 2020 — $2,998 and $9,023; 2019 — $2,592 and $6,166, respectively
8,187 7,024 24,479 16,689 
Other comprehensive income (loss), net of income taxes
45,800 (73,401)(25,264)(30,976)
Comprehensive income (loss)$273,331 $154,086 $(225,570)$581,191 
See accompanying notes to condensed consolidated financial statements.
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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

Three Months Ended September 30, 2020
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
July 1, 2020144,264,189 $144,264 $107,819 $(1,212,372)$3,809,564 $2,849,275 $21,613 $2,870,888 
Net income— — — — 227,531 227,531 — 227,531 
Other comprehensive income, net of tax— — — 45,800 — 45,800 — 45,800 
Cash dividend declared, $0.7900 per share
— — — — (113,982)(113,982)— (113,982)
Share-based awards exercised, including tax benefit of $213
25,464 26 (990)— — (964)— (964)
Share-based compensation— — 6,420 — — 6,420 — 6,420 
Noncontrolling interest activities— — — — — — (920)(920)
September 30, 2020144,289,653 $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 SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2020145,378,158 $145,378 $98,777 $(1,141,308)$4,571,860 $3,674,707 $20,793 $3,695,500 
Net loss— — — — (200,306)(200,306)— (200,306)
Other comprehensive loss, net of tax— — — (25,264)— (25,264)— (25,264)
Cash dividend declared, $2.3700 per share
— — — — (342,426)(342,426)— (342,426)
Share-based awards exercised, including tax benefit of $375
47,939 48 (1,802)— — (1,754)— (1,754)
Share-based compensation— — 16,274 — — 16,274 — 16,274 
Purchase of stock(1,136,444)(1,136)— — (94,583)(95,719)— (95,719)
Cumulative effect from adoption of ASU 2016-13 (1)
— — — — (11,432)(11,432)— (11,432)
Noncontrolling interest activities— — — — — — (100)(100)
September 30, 2020144,289,653 $144,290 $113,249 $(1,166,572)$3,923,113 $3,014,080 $20,693 $3,034,773 



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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(UNAUDITED)

Three Months Ended September 30, 2019
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
July 1, 2019146,078,369$146,078 $83,949 $(1,195,179)$4,630,480 $3,665,328 $22,647 $3,687,975 
Net income— — — — 227,487 227,487 — 227,487 
Other comprehensive loss, net of tax— — — (73,401)— (73,401)— (73,401)
Cash dividend declared, $0.7625 per share
— — — — (110,786)(110,786)— (110,786)
Share-based awards exercised, including tax benefit of $68
2,953 4 (128)— — (124)— (124)
Share-based compensation— — 6,739 — — 6,739 — 6,739 
Purchase of stock(788,207)(789)— — (72,263)(73,052)— (73,052)
Noncontrolling interest activities— — — — — — (101)(101)
September 30, 2019145,293,115 $145,293 $90,560 $(1,268,580)$4,674,918 $3,642,191 $22,546 $3,664,737 


Nine Months Ended September 30, 2019
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2019145,936,613 $145,937 $78,380 $(1,115,078)$4,341,212 $3,450,451 $21,540 $3,471,991 
Net income— — — — 612,167 612,167 — 612,167 
Other comprehensive loss, net of tax— — — (30,976)— (30,976)— (30,976)
Cash dividend declared, $2.2875 per share
— — — — (333,521)(333,521)— (333,521)
Share-based awards exercised, including tax benefit of $4,054
144,709 145 (7,640)— — (7,495)— (7,495)
Share-based compensation— — 19,820 — — 19,820 — 19,820 
Purchase of stock(788,207)(789)— — (72,263)(73,052)— (73,052)
Cumulative effect from adoption of ASU 2018-02 (2)
— — — (122,526)122,526 — —  
Cumulative effect from adoption of ASU 2016-02, net of tax (2)
— — — — 4,797 4,797 — 4,797 
Noncontrolling interest activities— — — — — — 1,006 1,006 
September 30, 2019145,293,115 $145,293 $90,560 $(1,268,580)$4,674,918 $3,642,191 $22,546 $3,664,737 

(1)The Company adopted Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, during the first quarter of 2020. Refer to the recent accounting pronouncements footnote.
(2)The Company adopted ASU 2016-02, Leases, and ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, during the first quarter of 2019.
See accompanying notes to condensed consolidated financial statements.
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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 Nine Months Ended September 30,
(in thousands)20202019
Operating activities:
Net (loss) income$(200,306)$612,167 
Net (loss) income from discontinued operations(192,069)44,708 
Net (loss) income from continuing operations(8,237)567,459 
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities:
Depreciation and amortization203,084 186,968 
Share-based compensation16,274 17,310 
Excess tax benefits from share-based compensation375 (4,054)
Realized currency losses on divestitures11,356 30,848 
Goodwill impairment charge506,721  
Changes in operating assets and liabilities697,611 (120,673)
Net cash provided by operating activities from continuing operations
1,427,184 677,858 
Investing activities:
Purchases of property, plant and equipment(105,428)(176,321)
Proceeds from sale of property, plant and equipment11,675 10,281 
Proceeds from divestitures of businesses382,737 416,784 
Acquisitions of businesses and other investing activities(59,062)(636,137)
Net cash provided by (used in) investing activities from continuing operations
229,922 (385,393)
Financing activities:
Proceeds from debt1,888,622 3,928,716 
Payments on debt(2,466,031)(3,749,509)
Share-based awards exercised(1,754)(7,495)
Dividends paid(339,294)(328,106)
Purchases of stock(95,719)(73,052)
Other financing activities(15,032) 
Net cash used in financing activities from continuing operations(1,029,208)(229,446)
Cash flows from discontinued operations:
Net cash provided by operating activities from discontinued operations13,323 67,354 
Net cash used in investing activities from discontinued operations(11,131)(6,000)
Net cash provided by financing activities from discontinued operations  
Net cash provided by discontinued operations2,192 61,354 
Effect of exchange rate changes on cash and cash equivalents(6,959)(6,645)
Net increase in cash and cash equivalents623,131 117,728 
Cash and cash equivalents at beginning of period276,992 333,547 
Cash and cash equivalents at end of period$900,123 $451,275 
See accompanying notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. On June 30, 2020, the Company completed the divestiture of its Business Products Group. Refer to the acquisitions, divestitures and discontinued operations footnote for more information. The Company's results of operations for the Business Products Group are reported as discontinued operations and all information related to the discontinued operations has been excluded from the notes to the condensed consolidated financial statements for all periods presented. Net (loss) income from discontinued operations for each period includes all costs that are directly attributable to these businesses and excludes certain corporate overhead costs that were previously allocated. Additionally, revenue from freight services provided by the Automotive Parts Group are grossed up and recast in continuing operations in each period because those sales are continuing with the discontinued operations after the divestiture. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Genuine Parts Company (the “Company,” “we,” “our,” “us,” or “its”) for the year ended December 31, 2019. Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 2019 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, credit losses on guaranteed loans, customer sales returns, and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation. Reserves for bad debts, credit losses on guaranteed loans and customer sales returns are estimated and accrued on an interim basis based on a consideration of historical experience, current conditions, and reasonable and supportable forecasts. Volume incentives are estimated based upon cumulative and projected purchasing levels. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The Company has reclassified certain prior period amounts to conform to the current period presentation.
The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of results for the entire year. The Company's operations are concentrated in North America, Europe and Australasia and are vulnerable to the reduced economic activity caused by the COVID-19 outbreak, which was declared a pandemic in March 2020. The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments that the Company cannot predict, including the severity of the virus; the occurrence of a “second wave” or additional spikes; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic; and impacts on the Company's supply chain, its ability to keep operating locations open, and on customer demand. The Company benefited from various forms of government economic assistance including certain temporary subsidies that were received primarily in the second quarter of 2020, which have been classified as a reduction of selling, administrative and other expenses. If the pandemic persists or worsens, the estimates and assumptions management made as of September 30, 2020 could change upon final determination at year-end, and it is reasonably possible such changes could be significant. The Company has evaluated subsequent events through the date the condensed consolidated financial statements covered by this quarterly report were issued. The Company will continue to evaluate the nature and extent of these potential impacts to its business and consolidated financial statements.

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2. Segment Information
The following table presents a summary of the Company's reportable segment financial information from continuing operations:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Net sales:
Automotive
$2,960,379 $2,792,453 $8,038,863 $8,192,369 
Industrial
1,409,707 1,732,831 4,246,976 5,049,975 
Total net sales
$4,370,086 $4,525,284 $12,285,839 $13,242,344 
Segment profit:
Automotive
$266,124 $222,561 $627,608 $630,865 
Industrial
125,620 137,525 348,481 394,887 
Total segment profit
$391,744 $360,086 $976,089 $1,025,752 
Interest expense, net
(25,221)(24,880)(69,965)(70,483)
Intangible asset amortization
(24,223)(24,910)(70,219)(68,785)
Corporate expense
(33,379)(38,830)(117,053)(103,582)
Other unallocated costs (1)(11,256)12,413 (565,030)(24,809)
Income before income taxes from continuing operations$297,665 $283,879 $153,822 $758,093 
(1) The following table presents a summary of the other unallocated costs:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019