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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, 2022
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)
   __________________________________________ 
GA58-0254510
(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 141,161,349 shares of common stock outstanding as of October 17, 2022.


Table of Contents
Page
   
  
  

1
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, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$629,198 $714,701 
Trade accounts receivable, less allowance for doubtful accounts (2022 – $47,262; 2021 – $44,425)
2,215,032 1,797,955 
Merchandise inventories, net 4,300,709 3,889,919 
Prepaid expenses and other current assets1,678,259 1,353,847 
Total current assets8,823,198 7,756,422 
Goodwill2,460,911 1,915,307 
Other intangible assets, less accumulated amortization1,748,274 1,406,401 
Property, plant and equipment, less accumulated depreciation (2022 – $1,369,770; 2021 – $1,339,706)
1,241,567 1,234,399 
Operating lease assets1,073,858 1,053,689 
Other assets1,029,272 985,884 
Total assets$16,377,080 $14,352,102 
Liabilities and equity
Current liabilities:
Trade accounts payable$5,531,253 $4,804,939 
Current portion of debt1,629 — 
Dividends payable126,434 115,876 
Other current liabilities1,835,803 1,660,768 
Total current liabilities7,495,119 6,581,583 
Long-term debt3,231,668 2,409,363 
Operating lease liabilities809,495 789,175 
Pension and other post–retirement benefit liabilities262,820 265,134 
Deferred tax liabilities398,797 280,778 
Other long-term liabilities500,989 522,779 
Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; none issued
— — 
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2022 – 140,962,009 shares; 2021 – 142,180,683 shares
140,962 142,181 
Additional paid-in capital132,240 119,975 
Accumulated other comprehensive loss(1,074,316)(857,739)
Retained earnings4,465,565 4,086,325 
Total parent equity3,664,451 3,490,742 
Noncontrolling interests in subsidiaries13,741 12,548 
Total equity3,678,192 3,503,290 
Total liabilities and equity$16,377,080 $14,352,102 
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)2022202120222021
Net sales$5,675,274 $4,818,849 $16,572,323 $14,067,301 
Cost of goods sold3,695,607 3,108,082 10,805,910 9,126,614 
Gross profit1,979,667 1,710,767 5,766,413 4,940,687 
Operating expenses:
Selling, administrative and other expenses1,458,418 1,338,768 4,226,412 3,883,241 
Depreciation and amortization86,563 72,121 259,822 218,377 
Provision for doubtful accounts6,146 4,284 13,539 14,230 
Total operating expenses1,551,127 1,415,173 4,499,773 4,115,848 
Non-operating expense (income):
Interest expense, net18,220 14,167 58,318 47,853 
Other(7,616)(17,547)(26,897)(77,454)
Total non-operating expense (income)10,604 (3,380)31,421 (29,601)
Income before income taxes417,936 298,974 1,235,219 854,440 
Income taxes105,578 70,389 304,494 211,649 
Net income$312,358 $228,585 $930,725 $642,791 
Dividends declared per common share$0.8950 $0.8150 $2.6850 $2.4450 
Basic earnings per share$2.21 $1.60 $6.57 $4.47 
Diluted earnings per share$2.20 $1.59 $6.53 $4.44 
Weighted average common shares outstanding141,336 142,871 141,609 143,826 
Dilutive effect of stock options and non-vested restricted stock awards773 718 819 796 
Weighted average common shares outstanding – assuming dilution142,109 143,589 142,428 144,622 
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)2022202120222021
Net income$312,358 $228,585 $930,725 $642,791 
Other comprehensive loss, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2022 — $33,843 and $73,892; 2021 — $11,328 and $25,494, respectively
(131,811)(82,574)(248,757)(75,738)
Cash flow hedge adjustments, net of income taxes in 2022 — $1,384 and $4,151 ; 2021 — $1,384 and $4,151, respectively
3,741 3,741 11,223 11,223 
Pension and postretirement benefit adjustments, net of income taxes in 2022 — $2,576 and $7,736; 2021 — $3,425 and $10,280, respectively
6,982 9,301 20,957 27,931 
Other comprehensive loss, net of income taxes(121,088)(69,532)(216,577)(36,584)
Comprehensive income$191,270 $159,053 $714,148 $606,207 
See accompanying notes to condensed consolidated financial statements.
4
Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Three Months Ended September 30, 2022
(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, 2022141,280,841 $141,281 $123,388 $(953,228)$4,329,115 $3,640,556 $13,007 $3,653,563 
Net income— — — — 312,358 312,358 — 312,358 
Other comprehensive loss, net of tax— — — (121,088)— (121,088)— (121,088)
Cash dividend declared, $0.895 per share
— — — — (126,434)(126,434)— (126,434)
Share-based awards exercised, including tax benefit of $731
14,619 15 (1,039)— — (1,024)— (1,024)
Share-based compensation— — 9,891 — — 9,891 — 9,891 
Purchase of stock(333,451)(334)— — (49,474)(49,808)— (49,808)
Noncontrolling interest activities— — — — — — 734 734 
September 30, 2022140,962,009 $140,962 $132,240 $(1,074,316)$4,465,565 $3,664,451 $13,741 $3,678,192 

Nine Months Ended September 30, 2022
(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, 2022142,180,683$142,181 $119,975 $(857,739)$4,086,325 $3,490,742 $12,548 $3,503,290 
Net income— — — — 930,725 930,725 — 930,725 
Other comprehensive loss, net of tax— — — (216,577)— (216,577)— (216,577)
Cash dividend declared, $2.685 per share
— — — — (380,041)(380,041)— (380,041)
Share-based awards exercised, including tax benefit of $3,868
63,877 64 (15,508)— — (15,444)— (15,444)
Share-based compensation— — 27,773 — — 27,773 — 27,773 
Purchase of stock(1,282,551)(1,283)— — (171,444)(172,727)— (172,727)
Noncontrolling interest activities— — — — — — 1,193 1,193 
September 30, 2022140,962,009 $140,962 $132,240 $(1,074,316)$4,465,565 $3,664,451 $13,741 $3,678,192 

5
Table of Contents
Three Months Ended September 30, 2021
(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, 2021143,301,673 $143,302 $111,972 $(1,003,554)$3,982,159 $3,233,879 $11,266 $3,245,145 
Net income— — — — 228,585 228,585 — 228,585 
Other comprehensive loss, net of tax— — — (69,532)— (69,532)— (69,532)
Cash dividend declared, $0.815 per share
— — — — (116,486)(116,486)— (116,486)
Share-based awards exercised, including tax benefit of $40
2,256 1 (69)— — (68)— (68)
Share-based compensation— — 6,320 — — 6,320 — 6,320 
Purchase of stock(800,436)(800)— — (98,721)(99,521)— (99,521)
Noncontrolling interest activities— — — — — — 2,115 2,115 
September 30, 2021142,503,493 $142,503 $118,223 $(1,073,086)$3,995,537 $3,183,177 $13,381 $3,196,558 

Nine Months Ended September 30, 2021
(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, 2021144,354,335$144,354 $117,165 $(1,036,502)$3,979,779 $3,204,796 $13,207 $3,218,003 
Net income— — — — 642,791 642,791 — 642,791 
Other comprehensive loss, net of tax— — — (36,584)— (36,584)— (36,584)
Cash dividend declared, $2.445 per share
— — — — (351,606)(351,606)— (351,606)
Share-based awards exercised, including tax benefit of $6,667
385,419 385 (19,783)— — (19,398)— (19,398)
Share-based compensation— — 20,841 — — 20,841 — 20,841 
Purchase of stock(2,236,261)(2,236)— — (281,650)(283,886)— (283,886)
Cumulative effect from adoption of ASU 2019-12 (1)— — — — 6,223 6,223 — 6,223 
Noncontrolling interest activities— — — — — — 174 174 
September 30, 2021142,503,493 $142,503 $118,223 $(1,073,086)$3,995,537 $3,183,177 $13,381 $3,196,558 

(1)We adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, during the first quarter of 2021.
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)20222021
Operating activities:
Net income$930,725 $642,791 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization259,822 218,377 
Loss on software disposal — 61,063 
Share-based compensation27,773 20,841 
Gain on sale of real estate(102,803)— 
Intangible asset impairment17,461 — 
Excess tax benefits from share-based compensation(3,868)(6,667)
Changes in operating assets and liabilities115,481 71,791 
Net cash provided by operating activities1,244,591 1,008,196 
Investing activities:
Purchases of property, plant and equipment(243,998)(138,206)
Proceeds from sale of property, plant and equipment141,228 24,184 
Proceeds from divestitures of businesses32,620 16,687 
Acquisitions of businesses and other investing activities(1,586,812)(142,567)
Net cash used in investing activities(1,656,962)(239,902)
Financing activities:
Proceeds from debt4,547,511 242,332 
Payments on debt(3,586,954)(403,126)
Share-based awards exercised(15,444)(19,398)
Dividends paid(369,483)(349,293)
Purchases of stock(172,727)(283,886)
Other financing activities(16,869)(5,353)
Net cash provided by (used in) financing activities386,034 (818,724)
Effect of exchange rate changes on cash and cash equivalents(59,166)(20,639)
Net decrease in cash and cash equivalents(85,503)(71,069)
Cash and cash equivalents at beginning of period714,701 990,166 
Cash and cash equivalents at end of period$629,198 $919,097 
See accompanying notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General
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 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, 2021. Accordingly, the unaudited condensed consolidated financial statements and related disclosures herein should be read in conjunction with our 2021 Annual Report on Form 10-K. Significant accounting policies and other items disclosed in our Annual Report have been omitted from this report because they have not changed.
The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements. Specifically, we make estimates and assumptions in our unaudited condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, credit losses on guaranteed loans, customer sales returns, and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation. Reserves for bad debts, credit losses on guaranteed loans and customer sales returns are estimated and accrued on an interim basis based on a consideration of historical experience, current conditions, and reasonable and supportable forecasts. Volume incentives are estimated based upon cumulative and projected purchasing levels.
In the opinion of management, all adjustments necessary for a fair presentation of our financial results for the interim periods have been made. These adjustments are of a normal recurring nature. We have reclassified certain prior period amounts to conform to the current period presentation. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of results for the year ended December 31, 2022. We have evaluated subsequent events through the date the unaudited condensed consolidated financial statements covered by this quarterly report were issued.
Recent Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”). We consider the applicability and impact of all ASUs and have determined that any recently adopted accounting pronouncements did not have a material impact on our condensed consolidated financial statements.
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs. This standard requires disclosure of the key terms of outstanding supply chain finance programs and a rollforward of the related amounts due to vendors participating in these programs. The new standard does not affect the recognition, measurement or financial statement presentation of any amounts due. The guidance is effective in the first quarter of 2023, except for the rollforward, which is effective in the first quarter of 2024. Early adoption is permitted. We are evaluating the adoption of this new guidance.
Debt
1.750% and 2.750% Senior Notes Offering
On January 6, 2022, we issued $500 million of unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022.
We utilized the proceeds from these offerings to repay borrowings under our Revolving Credit Facility, which were incurred to finance a significant portion of the Kaman Distribution Group ("KDG") acquisition.
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Derivatives and Hedging
We are exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, we use derivative and non-derivative instruments as risk management tools to mitigate the potential impact of interest rate and foreign exchange rate risks. The objective of using these tools is to reduce fluctuations in our earnings and cash flows associated with changes in these rates. Derivative instruments are recognized in the condensed consolidated balance sheets at fair value and are designated as Level 2 in the fair value hierarchy. They are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.
The following table summarizes the classification and carrying amounts of derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):
September 30, 2022December 31, 2021
InstrumentBalance Sheet ClassificationNotionalBalanceNotionalBalance
Net investment hedges:
Forward contractsPrepaid expenses and other current assets$1,513,750$261,813$925,810$73,819
Forward contractOther current liabilities$—$—$235,180$2,935
Foreign currency debt Long-term debt€700,000$686,980€700,000$792,820
The tables below present gains related to designated net investment hedges:
Gain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)2022202120222021
Three months ended September 30,
Forward contracts$81,454 $20,958 $7,965 $6,574 
Foreign currency debt 43,890 21,000 — — 
Total$125,344 $41,958 $7,965 $6,574 
Gain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)2022202120222021
Nine months ended September 30,
Forward contracts$167,834 $45,143 $23,095 $19,722 
Foreign currency debt 105,840 49,280 — — 
Total$273,674 $94,423 $23,095 $19,722 
Fair Value of Financial Instruments
As of September 30, 2022 the fair value of our senior unsecured notes was approximately $2.8 billion, which are designated as Level 2 in the fair value hierarchy. Our valuation technique is based primarily on prices and other relevant information generated by observable transactions involving identical or comparable assets or liabilities.
Guarantees
We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”). While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants. At September 30, 2022, we were in compliance with all such covenants.
As of September 30, 2022, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $908 million. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating
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agencies of the independents and affiliates that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, we have not had significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of September 30, 2022, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
As of September 30, 2022, we have recognized certain assets and liabilities amounting to $74 million each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the condensed consolidated balance sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.
Earnings Per Share
We maintain various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards. Certain outstanding options are not included in the diluted earnings per share calculation because their inclusion would have been anti-dilutive.
The following table summarizes anti-dilutive shares outstanding:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Anti-dilutive shares outstanding360—1,142158
2. Segment Information
The following table presents a summary of our reportable segment financial information:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Net sales:
Automotive$3,490,462 $3,204,534 $10,233,577 $9,353,998 
Industrial2,184,812 1,614,315 6,338,746 4,713,303 
Total net sales$5,675,274 $4,818,849 $16,572,323 $14,067,301 
Segment profit:
Automotive$309,349 $281,150 $896,475 $807,586 
Industrial242,505 165,754 656,330 441,459 
Total segment profit551,854 446,904 1,552,805 1,249,045 
Interest expense, net(18,220)(14,167)(58,318)(47,853)
Intangible asset amortization(39,416)(25,311)(118,740)(78,239)
Corporate expense(72,820)(47,389)(187,883)(130,029)
Other unallocated (expenses) income (1)(3,462)(61,063)47,355 (138,484)
Income before income taxes$417,936 $298,974 $1,235,219 $854,440 
(1)     The following table presents a summary of the other unallocated income and expenses:
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Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Other unallocated (expenses) income:
Gain on sale of real estate (2)$— $— $102,803 $— 
Gain on insurance proceeds (3)— — 1,507 — 
Product liability damages award (4)— — — (77,421)
Loss on software disposal (5)— (61,063)— (61,063)
Transaction and other costs (6)(3,462)— (56,955)— 
Total other unallocated (expenses) income$(3,462)$(61,063)$47,355 $(138,484)
(2)    Amount reflects a gain on the sale of real estate that had been leased to S.P. Richards.
(3)    Amount reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.
(4)    Amount reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.
(5)    Amount reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies.
(6)    Amount primarily reflects costs associated with the January 3, 2022 acquisition and integration of KDG. These costs also include a $17 million impairment charge driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Refer to the acquisition footnote for more information regarding the acquisition.
Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
North America:
Automotive$2,333,390 $2,100,250 $6,766,271 $6,039,617 
Industrial2,064,569 1,493,618 5,996,299 4,362,792 
Total North America $4,397,959 $3,593,868 $12,762,570 $10,402,409 
Australasia:
Automotive$404,708 $374,167 $1,182,557 $1,130,744 
Industrial120,243 120,697 342,447 350,511 
Total Australasia$524,951 $494,864 $1,525,004 $1,481,255 
Europe – Automotive$752,364 $730,117 $2,284,749 $2,183,637 
Total net sales$5,675,274 $4,818,849 $16,572,323 $14,067,301 
3. Accounts Receivable Sales Agreement
Under our accounts receivable sales agreement (the "A/R Sales Agreement"), we continuously sell designated pools of receivables as they are originated by us and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”). The A/R Sales Agreement has a three year term, which we intend to renew.
We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institution by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institution so that the total principal amount outstanding of receivables sold is approximately $1 billion at any point in time (which is the maximum amount allowed under the agreement as amended on January 3, 2022).
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The total principal amount outstanding of receivables sold is approximately $1.0 billion and $800 million as of September 30, 2022 and December 31, 2021, respectively. The amount of receivables pledged as collateral as of September 30, 2022 and December 31, 2021 is approximately $1.1 billion and $973 million, respectively.
The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Receivables sold to the financial institution and derecognized$2,281,934 $1,884,023 $6,760,652 $5,700,895 
Cash collected on sold receivables$2,281,926 $1,884,028 $6,560,655 $5,700,896 
Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by operating activities in the condensed consolidated statements of cash flows. The SPE incurs fees due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which are immaterial, are recorded within other non-operating expense (income) in the condensed consolidated statements of income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institution any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of September 30, 2022 and December 31, 2021 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.
4. Employee Benefit Plans
Net periodic benefit income from our pension plans included the following components for our pension benefits:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Service cost$2,532 $3,043 $7,734 $9,185 
Interest cost18,804 17,915 56,520 53,783 
Expected return on plan assets(37,569)(38,755)(112,887)(116,345)
Amortization of prior service cost172 172 516 516 
Amortization of actuarial loss9,264 12,465 27,818 37,430 
Net periodic benefit income$(6,797)$(5,160)$(20,299)$(15,431)
Service cost is recorded in selling, administrative and other expenses in the condensed consolidated statements of income while all other components are recorded within other non-operating expense (income). Pension benefits also include amounts related to supplemental retirement plans.
5. Acquisitions
We acquired several businesses, including KDG, for approximately $1.6 billion, net of cash acquired, during the nine months ended September 30, 2022. For the nine months ended September 30, 2021, acquisitions totaled $143 million, net of cash acquired.
During the nine months ended September 30, 2022, we recognized approximately $408 million and $818 million of revenue, net of store closures, related to our Automotive and Industrial acquisitions, respectively. The results of operations for acquired businesses are included in our condensed consolidated statements of income beginning on their respective acquisition dates.
For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. Excluding KDG, for the nine months ended September 30, 2022 and September 30, 2021, we recorded approximately $200 million and $97 million of goodwill and other intangible assets associated with acquisitions. Other intangible assets acquired consisted primarily of customer relationships with a weighted average amortization lives of 20 years.
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KDG Acquisition
On January 3, 2022, we, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash. KDG, which is headquartered in Bloomfield, Connecticut, is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to MRO and OEM customers. KDG has approximately 1,700 employees with approximately 220 locations across the United States and Puerto Rico. As of January 3, 2022, KDG had estimated annual revenues of approximately $1 billion.
The net cash consideration transferred of approximately $1.3 billion is net of the estimated cash acquired of approximately $30 million.
The KDG acquisition was financed using a combination of borrowings under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement and $109 million of cash.
The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition date as well as adjustments made to the acquisition accounting during the nine months ended September 30, 2022 (referred to as the "measurement period adjustments"). The measurement period adjustments primarily resulted from revisions to the valuation of certain tangible and intangible assets. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets. We are in the process of analyzing the estimated values of all assets acquired and liabilities assumed as of the acquisition date, including, among other things, obtaining valuations of certain tangible and intangible assets, as well as the fair value of certain contracts and the determination of certain tax balances. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations, tax accounting and leases.
As of January 3, 2022
(in thousands)Initial BalanceMeasurement Period AdjustmentsAs Adjusted
Trade accounts receivable$156,000 $— $156,000 
Merchandise inventories166,000 (1,000)165,000 
Prepaid expenses and other current assets39,000 (2,000)37,000 
Property, plant and equipment26,000 (2,000)24,000 
Operating lease assets49,000 (5,000)44,000 
Other assets1,000 — 1,000 
Other intangible assets574,000 (6,000)568,000 
Goodwill592,000 4,000 596,000 
Total assets acquired1,603,000 (12,000)1,591,000 
Trade accounts payable85,000 — 85,000 
Other current liabilities32,000 — 32,000 
Operating lease liabilities17,000 (1,000)16,000 
Deferred tax liabilities121,000 (10,000)111,000 
Other long-term liabilities39,000 (4,000)35,000 
Total liabilities assumed294,000 (15,000)