Genuine Parts (GPC) 10-K risk factor changes: FY2019 vs FY2018

[removed: FORWARD-LOOKING STATEMENTS][added: FORWARD-LOOKING STATEMENTS]

Forward-looking statements may relate, for example, to future operations, including the anticipated synergies and benefits of any [removed: acquisitions,] [added: acquisitions or divestitures,] as well as prospects, strategies, [added: including the 2019 Cost Savings Plan,] financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services.

[removed: We] [added: We] may not be able to successfully implement our business initiatives in each of our three business segments to grow our sales and earnings, which could adversely affect our business, financial condition, results of operations and cash [removed: flows.][added: flows.]

Risk [removed: Factors”,] [added: Factors,”] adverse changes in the following factors could undermine our business initiatives and have a material adverse effect on our business, financial condition, results of operations and cash flows:

[removed: Our] [added: Our] business will be adversely affected if demand for our products [removed: slows.][added: slows.]

| • | the level of office vacancy rates, as high vacancy rates reduces the need for office products; [added: and] |

| • | consolidation of customers and consolidation of the industry; [removed: and] |

[removed: Changes] [added: Changes] in legislation or government regulations or policies could have a significant impact on our results of [removed: operations.][added: operations.]

These developments may result in economic and trade policy actions that could impact economic conditions in many countries and [added: continue to] change the landscape of international trade.

The Act, which [removed: reduces] [added: reduced] the U.S. corporate tax rate to 21 percent from 35 percent for taxable years beginning after December 31, 2017, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings.

[removed: The] [added: The] U.K.'s [removed: referendum to] exit from the European Union (“E.U.”) will continue to have uncertain effects and could adversely impact our business, results of operations and financial [removed: condition.][added: condition.]

On [removed: June 23, 2016,] [added: January 31, 2020,] the U.K. [removed: voted to exit] [added: exited] from the E.U. (commonly referred to as “Brexit”).

[removed: The U.K. vote] [added: Brexit] has impacted global markets, including various currencies, and resulted in a sharp decline in the value of the British Pound as compared to the U.S. dollar and other major currencies.

[removed: Volatility in the securities markets and in currency exchange rates may continue as the U.K. negotiates its exit from the E.U.] While we have not experienced any material financial impact from Brexit on our business to date, we cannot predict its future implications.

Any impact from Brexit on our business and operations over the long term will depend, in part, on the outcome of [added: final] tariff, tax treaties, trade, regulatory, and other negotiations the U.K. conducts.

[removed: Uncertainty] [added: Uncertainty] and/or deterioration in general macro-economic conditions domestically and globally, including unemployment, inflation or deflation, changes in tax policies, changes in energy costs, uncertain credit markets, or other economic conditions, could have a negative impact on our business, financial condition, results of operations and cash [removed: flows.][added: flows.]

[removed: We] [added: We] face substantial competition in the industries in which we do [removed: business.][added: business.]

The sale of automotive parts, industrial parts and business products is highly competitive and impacted by many factors, including name recognition, product availability, customer service, changing customer preferences, store location, and pricing [added: pressures.]

[removed: Consolidation among our competitors could further enhance their financial position, provide them with the ability to offer more] competitive prices to customers for whom we compete, and allow them to achieve increased efficiencies in their consolidated operations that enable them to more effectively compete for customers.

In addition, the loss [added: or significant reduction in purchase volume] of a major customer in the business products group could significantly impact its results of operations.

[removed: We] [added: We] depend on our relationships with our [removed: vendors,] [added: suppliers,] and a disruption of our [removed: vendor] [added: suppliers] relationships or a disruption in our [removed: vendors’] [added: suppliers’] operations could harm our [removed: business.][added: business.]

As a distributor of automotive parts, industrial parts and business products, our business depends on developing and maintaining close and productive relationships with our [removed: vendors.][added: suppliers.]

We depend on our [removed: vendors] [added: suppliers] to sell us quality products at favorable prices.

Many factors outside our control, including, without limitation, raw material shortages, inadequate manufacturing capacity, labor disputes, tariff legislation, transportation disruptions, tax and other legislative [removed: uncertainties] [added: uncertainties, pandemics] and/or weather conditions, could adversely affect our [removed: vendors’] [added: suppliers’] ability to deliver to us quality merchandise at favorable prices in a timely manner.

Furthermore, financial or operational difficulties with a particular [removed: vendor] [added: suppliers] could cause that [removed: vendor] [added: suppliers] to increase the cost of the products or decrease the quality of the products we [removed: purchase from it.][added: purchase.]

[removed: Vendor] [added: Supplier] consolidation could also limit the number of suppliers from which we may purchase products and could materially affect the prices we pay for these products.

In addition, we would suffer an adverse impact if our [removed: vendors] [added: suppliers] limit or cancel the return privileges that currently protect us from inventory obsolescence.

[removed: We] [added: We] recognize the growing demand for business-to-business and business-to-customer digital and e-commerce options and solutions, and we could lose business if we fail to provide the digital and e-commerce options and solutions our customers wish to [removed: use.][added: use.]

[removed: If] [added: If] we experience a security breach, if our internal information systems fail to function properly or if we are unsuccessful in implementing, integrating or upgrading our information systems, our business operations could be materially [removed: affected.][added: affected.]

Despite our implementation of [added: various] security measures, our IT systems and operations could be subject to damages or interruptions from computer viruses, natural disasters, unauthorized physical or electronic access, power outages, telecommunications failure, computer system or network failures, wire transfer failure, employee error/malfeasance, cyber-attacks, security breaches, and other similar disruptions.

Furthermore, such a breach may harm our reputation and business prospects and subject us to legal claims if there is loss, disclosure or misappropriation of or access to our [removed: customers’] [added: customers, employees or suppliers'] information.

As the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, compliance with these requirements could also result in [removed: significant additional costs.]

[removed: Because] [added: Because] we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other [removed: costs.][added: costs as well as reputational harm.]

Additionally, we are subject to numerous laws in the various jurisdictions in which we operate as well as governmental regulations relating to taxes, environmental protection, product quality standards, [added: data privacy,] building and zoning requirements, and employment law matters.

[removed: We] [added: We] are dependent on key personnel and the loss of one or more of those key persons could harm our [removed: business.][added: business.]

[removed: Our] [added: Our] debt levels could adversely affect our cash flow and prevent us from fulfilling our [removed: obligations.][added: obligations.]

[removed: -] [added: | • |] make it more difficult to satisfy our financial obligations, including those relating to the senior unsecured notes and our credit facility; [added: |]

[removed: -] [added: | • |] increase our vulnerability to adverse economic and industry conditions; [added: |]

[removed: -] [added: | • |] limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a competitive disadvantage; [added: |]

[removed: -] [added: | • |] require us to dedicate a substantial portion of our cash flows to service the principal and interest on the debt, reducing the funds available for other business purposes, such as working capital, capital expenditures or other cash requirements; [added: |]

| • | the occurrence of political unrest and strikes, which can disrupt our operations and negatively impact our results in the affected geographies; |

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For instance, the United States imposed Section 232 tariffs on many imported products of steel and aluminum in March 2018 and expanded the tariffs to additional derivative products of steel and aluminum effective February 8, 2020.

The United States imposed Section 301 tariffs on most imported products from China starting in July 2018.

Although the United States and China reached a Phase One trade deal in January 2020, most of these tariffs remain in place and uncertainty persists in the trade relationship between the two countries that impacts the global trade landscape.

While a transition period of 11-month begins, during which the U.K. will continue to follow the E.U. rules, including remaining a member of the E.U. single market and Customs union, the final U.K./E.U. relationship is still uncertain for companies doing business both in the U.K. and the overall global economy.

Volatility in the securities markets and in currency exchange rates may continue as the U.K. negotiates its new rules and trade deals with the E.U. during the transition period and after.

Consolidation among our competitors could further enhance their financial position, provide them with the ability to offer more

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China.

The impact to our supply chain cannot be reasonably estimated at this time.

At the time of this filing, the outbreak has been largely concentrated in China, although cases have been confirmed in other countries.

The Company does not currently sell any products in China, but it does source a portion of its products from China.

The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

significant additional costs.

Our strategic transactions involve risks, which could have an adverse impact on our financial condition and results of operation, and we may not realize the anticipated benefits of these transactions.

We regularly consider and enter into strategic transactions, including mergers, acquisitions, investments, alliances, and other growth and market expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies and various other benefits.

Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty.

For each of our acquisitions, we need to successfully integrate the target company’s products, services, associates and systems into our business operations.

Integration can be a complex and time-consuming process, and if the integration is not fully successful or is delayed for a material period of time, we may not achieve the anticipated synergies or benefits of the acquisition.

Furthermore, even if the target companies are successfully integrated, the acquisitions may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products or services, and expose us to additional liabilities.

Any impairment of goodwill or other intangible assets acquired in a strategic transaction may reduce our earnings.

Additionally, we consider and enter into divestitures from time to time, with the expectation that these transactions will result in increases in cost savings and various other benefits.

Strategic divestitures are subject to uncertainty and can be a complex and time-consuming process.

If the divestiture is not fully successful or is delayed for a material period of time, we may not achieve the anticipated benefits of the divestiture.

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The

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could affect our financial results or financial condition.

GAAP and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, impairment of goodwill and other intangible assets, inventories, lease obligations, self-insurance, vendor allowances, tax matters and litigation, are complex and involve many subjective assumptions, estimates and judgments.

The terms of Brexit and the resulting U.K./E.U. relationship are uncertain for companies doing business both in the U.K. and the overall global economy.

pressures.

As further described in Part II Item 9A “Controls and Procedures” of this Annual Report, management has concluded that, because of a material weakness in internal controls within AAG, which we acquired on November 2, 2017 and which operates as a business unit of our Automotive segment our disclosure controls and procedures were not effective as of December 31, 2018.

Specifically, AAG failed to adequately identify, design and implement appropriate process controls and information technology controls.

We will continue to enhance our controls at AAG.

The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

We cannot be certain that these measures will be successful or that we will be able to prevent future significant deficiencies or material weaknesses.

Any remediation efforts additionally may require us to incur unanticipated costs for various professional fees and services.

Material inaccuracies in our financial statements would impair their value to management and our Board of Directors in making decisions as to the operation of our business, could impair our reputation and cause investors to lose confidence in our reported financial information.

The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and resources.

Such forward-looking statements should be read in conjunction with our disclosures under “Item 1A.

Risk Factors” of this Form 10-K.

This section of this Form 10-K generally discusses 2019 and 2018 results and year-to-year comparisons between 2019 and 2018 results.

Discussions of 2017 results and year-to-year comparisons between 2018 and 2017 results are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

OVERVIEW

Genuine Parts Company is a service organization engaged in the global distribution of automotive replacement parts, industrial parts and business products.

We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia.

In 2019, the Company conducted business in North America, Europe and Australasia from approximately 3,600 locations.

The Company's Automotive Parts Group operated in the U.S., Canada, France, the UK, Germany, Poland, the Netherlands, Belgium, Australia and New Zealand in 2019, and accounted for 57% of total revenues for the year.

Our Industrial Parts Group entered 2019 with operations in the U.S., Canada, Mexico, and expanded its operations into Australia, New Zealand, Indonesia and Singapore in July 2019 with the addition of the Inenco business.

The Industrial Parts Group accounted for 34% of the Company's total revenues in 2019.

Our Business Products Group operated in the U.S. and Canada in 2019, although its Canadian operations were divested, effective January 1, 2020.

The Business Products Group accounted for 9% of total revenues in 2019.

At Genuine Parts Company, our mission is to be a world-class service organization and the employer of choice, supplier of choice, valued customer, good corporate citizen and investment of choice.

Our strategic financial objectives are intended to align with our mission and drive value for all our stakeholders.

Our strategic financial objectives include: (1) top line revenue growth (2) improved operating margin, (3) strong balance sheet and cash flow and (4) effective capital allocation.

Top Line Revenue

The Company's strategy for top line revenue growth includes a combination of organic and acquisitive initiatives designed to outpace the industry, improve the market share in each of our business segments and position the Company for sustained long-term growth.

In 2019, this strategy led to 1.7% comparable sales growth and a 4.6% contribution from acquisitions.

Comparable store sales (also called organic sales or core sales) refer to period‑over‑period comparisons of our net sales excluding the impact of acquisitions, divestitures and foreign currency.

Our strategic initiatives also led us to divest of certain non-core businesses determined to be slower-growth and lower-margin operations.

These divestitures and the unfavorable impact of foreign currency partially offset our total sales growth for the year.

Operating Margins

The Company targets continuous operating margin improvement each year.

In 2019, the competitive dynamics across our businesses, as well as the continued cost pressures and the need to invest in a more productive and efficient cost structure led us to expand and accelerate our initiatives to improve the operating performance of the Company.

These efforts produced improved gross margins in 2019 and we believe created a path for significant cost savings in the years ahead.

In October of 2019, the Company approved and began to implement certain restructuring actions across its subsidiaries primarily targeted at simplifying organizational structures and distribution networks (the "2019 Cost Savings Plan").

The Company expects the 2019 Cost Savings Plan to result in $100 million in annualized operating expense reductions by allowing it to more effectively and efficiently manage its businesses.

Among other things, the 2019 Cost Savings Plan will result in workforce reductions and facility closures and consolidations.

The Company executed a voluntary retirement program ("VRP") for its U.S. and Canadian subsidiaries in the fourth quarter of 2019 in connection with this plan.

The Company is well underway in executing the 2019 Cost Savings Plan.

Balance Sheet and Cash Flow

The Company is focused on maintaining a strong balance sheet and generating strong cash flows to support our growth initiatives.

In 2019, we deployed less total working capital and improved our working capital efficiency, or working capital as a percent of total revenues, to 8.0%.

The Company generated $892.0 million in cash from operations and also benefited from cash proceeds associated with the sale of certain non-core businesses in 2019, as noted before.

We utilized our cash for effective capital allocation.

Capital Allocation

The Company's priorities for effective capital allocation have remained consistent for many years.

In 2019, we used cash for key investments in the form of capital expenditures and accretive acquisitions, as well as the return of capital to our shareholders via cash dividends and opportunistic share repurchases.

[removed: Foreign Currency][added: Foreign Currency]

The Company [removed: has] [added: incurs] translation gains or losses [removed: that result] [added: resulting] from [removed: translation of] the [removed: results of operations] [added: translation] of an operating unit’s foreign functional currency into U.S. dollars for consolidated financial statement purposes.

For the periods presented, the Company’s principal foreign currency exchange [removed: exposure is] [added: exposures are] the [removed: Canadian dollar,] [added: Euro,] the functional currency of our [removed: Canadian operations,] [added: European operations;] the [removed: Australian] [added: Canadian] dollar, the functional currency of our [removed: Australasian operations and, to a lesser extent,] [added: Canadian operations;] and the [removed: Mexican peso,] [added: Australian dollar,] the functional currency of our [removed: Mexican] [added: Australasian] operations.

During [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] it was estimated that a 10% shift in exchange rates between those foreign functional currencies and the U.S. dollar would have impacted translated net sales by approximately [removed: $486] [added: $513] million and [removed: $287] [added: $486] million, respectively.

A 15% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately [removed: $729] [added: $770] million in [removed: 2018] [added: 2019] and [removed: $430] [added: $729] million in [removed: 2017.][added: 2018.]

A 20% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately [removed: $972] [added: $1,026] million in [removed: 2018] [added: 2019] and [removed: $574] [added: $972] million in [removed: 2017.][added: 2018.]

[removed: Interest Rates][added: Interest Rates]

[removed: Primarily as a result of the new debt issued in 2017 associated with the purchase of AAG, the] [added: The] Company is subject to interest rate volatility with regard to existing and future issuances of debt.

Based on the Company's variable-rate debt and derivative instruments outstanding as of December 31, [added: 2019 and] 2018, we estimate that a 100 basis point increase in interest rates would have increased interest expense by [added: $5.5 million in 2019 and] $12 million in 2018.

However, [removed: this increase] [added: these increases] in interest expense would have been partially offset by the [removed: increase] [added: increases] in interest income related to higher interest rates.

We monitor our foreign currency exposures and from time to time, we enter into currency forward contracts to manage our exposure to currency fluctuations.

Foreign currency exchange exposure, particularly in regard to the Canadian and Australian dollar and, to a lesser extent, the Euro, negatively impacted our results for the year ended December 31, 2019.

Effective in November 2017, the Company increased its foreign currency exchange exposure to include the Euro, the functional currency of our European operations.

Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a leading service organization engaged in the distribution of automotive replacement parts, industrial [removed: parts and materials,] [added: parts,] and business products, each described in more detail below.

In [removed: 2018,] [added: 2019,] business was conducted from more than [removed: 3,100] [added: 3,600] locations throughout North America, Europe, Australia and New Zealand ("Australasia") via an offering of best in class operating and distribution efficiencies, industry leading coverage of consumable/replacement parts, outstanding just-in-time service and enhanced technology solutions.

At December 31, [removed: 2018,] [added: 2019,] the Company employed approximately [removed: 50,000] [added: 55,000] people worldwide.

For financial information regarding segments as well as our geographic areas of operation, refer to [removed: Note 14, Segment Data, of] [added: the segment data footnote in the] Notes to Consolidated Financial [removed: Statements beginning on page F-1.][added: Statements.]

In Part III of this Form 10-K, we incorporate certain information by reference to our proxy statement for our [removed: 2019] [added: 2020] annual meeting of shareholders.

We expect to file that proxy statement with the SEC on or about March [removed: 5, 2019,] [added: 3, 2020,] and we will make it available online at the same time at http://www.proxydocs.com/gpc.

[removed: AUTOMOTIVE] [added: AUTOMOTIVE] PARTS [removed: GROUP][added: GROUP]

The Automotive Parts Group, the largest segment of the Company, distributes automotive parts and accessory items in [removed: the United States ("U.S."), Canada, Mexico,] [added: North America,] Europe and Australasia.

During [removed: 2018,] [added: 2019,] the Company’s Automotive Parts Group included [removed: NAPA] [added: National Automotive Parts Association ("NAPA")] automotive parts distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”) owned and operated in the [removed: U.S.] [added: United States ("U.S.")] by the Company; NAPA and Traction automotive parts distribution centers and auto parts stores in the U.S. and Canada owned and operated by the Company and NAPA Canada/UAP Inc. (“NAPA Canada/UAP”), a wholly-owned subsidiary of the Company; auto parts stores and distribution centers in the U.S. operated by corporations in which the Company owned either a noncontrolling or controlling interest; auto parts stores in Canada operated by corporations in which NAPA Canada/UAP owns a 50% interest; Repco and other automotive parts distribution centers, branches and auto parts stores in [removed: Australia and New Zealand] [added: Australasia] owned and operated by GPC Asia Pacific, a wholly-owned subsidiary of the Company; automotive parts distribution centers and auto parts stores in Europe, owned and operated by Alliance Automotive Group (“AAG”), a wholly-owned subsidiary of the Company; an import automotive parts distribution center in the U.S. owned by the Company and operated by its Altrom America division; [added: an] import automotive parts distribution [removed: centers] [added: center and branches] in Canada owned and operated by Altrom Canada Corporation (“Altrom Canada”), a wholly-owned subsidiary of the Company; distribution centers in the U.S. owned by Balkamp, Inc. (“Balkamp”), a wholly-owned subsidiary of the Company; distribution facilities in the U.S. owned by the Company and operated by its Rayloc division; [removed: automotive parts distribution centers] and [removed: auto parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. (“Auto Todo”), a wholly-owned subsidiary of the Company; and] an automotive parts distribution center and auto parts stores in Mexico, owned and operated by Autopartes NAPA Mexico ("NAPA Mexico"), a wholly-owned subsidiary of the Company.

The Company’s automotive parts distribution centers distribute replacement parts (other than body parts) for substantially all motor vehicle makes and models in service in the U.S., including imported vehicles, [added: hybrid and electric vehicles,] trucks, SUVs, buses, motorcycles, recreational vehicles and farm vehicles.

In addition, the Company distributes replacement parts for small engines, farm [added: equipment, marine] equipment and heavy duty equipment.

The Company's automotive parts network was expanded in [removed: 2018] [added: 2019] via the acquisition of various store groups and automotive operations in North America, Europe and Australasia.

In total, AAG's acquisitions in [removed: 2018] [added: 2019] are expected to generate annual revenues of approximately [removed: $150] [added: $630] million.

[added: *Distribution System.*] In [removed: 2018,] [added: 2019,] the Company operated [removed: 57] [added: 56] domestic NAPA automotive parts distribution centers located in [removed: 40] [added: 39] states and approximately [removed: 1,100] [added: 1,130] domestic company-owned NAPA AUTO PARTS stores located in [removed: 46] [added: 44] states.

[removed: The] [added: Finally, the] Company [removed: also operated] [added: operates] domestically two TW Distribution heavy duty parts distribution centers which serve [removed: 23] [added: 22] company-owned [removed: and four independently owned] Traction Heavy Duty parts stores located in eight states.

At December 31, [removed: 2018,] [added: 2019,] the Company had either a noncontrolling, controlling or other interest in 8 corporations, which operated approximately [removed: 226] [added: 256] auto parts stores in [removed: 14] [added: 15] states.

The Company’s domestic automotive operations have access to approximately [removed: 534,000] [added: 530,000] different parts and related supply items.

These items are purchased from more than 100 different suppliers, with approximately 49% of [removed: 2018] [added: 2019] automotive parts inventories purchased from 10 major suppliers.

The Company’s domestic distribution centers serve [added: the company-owned NAPA AUTO PARTS stores and] approximately 4,800 [removed: independently owned] [added: independently-owned] NAPA AUTO PARTS stores located throughout the U.S. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket.

Collectively, sales to these independent automotive parts stores account for approximately [removed: 59%] [added: 61%] of the Company’s total U.S. Automotive sales and 20% of the Company’s total sales.

NAPA Canada/UAP operates a network of nine NAPA automotive parts distribution centers, three heavy duty parts distribution centers and one fabrication/remanufacturing facility supplying [removed: 588] [added: 592] NAPA stores and [removed: 116] [added: 120] Traction wholesalers.

The NAPA stores and Traction wholesalers in Canada include [removed: 199] [added: 207] company-owned stores, 11 joint ventures and [removed: 21] [added: 24] progressive owners in which NAPA Canada/UAP owns a 50% interest and [removed: 473] [added: 470] independently owned stores.

GPC Asia Pacific operates 12 distribution centers, [removed: 475] [added: 406] auto parts [removed: stores, primarily] [added: stores] under the Repco banner, [added: 130 auto parts stores under NAPA, Ashdown Ingram] and [removed: 87] [added: other banners, and 17] locations associated with [removed: the Ashdown Ingram, Motospecs, AMX/McLeod and RDA Brakes operations.][added: AMX/McLeod.]

In Mexico, [removed: Auto Todo] [added: NAPA Mexico] owns and operates [removed: 11 distribution centers,] one [added: distribution center and serves 25 company-owned and 18 independently-owned] auto parts [removed: store and one tire center.][added: stores.]

[removed: Auto Todo and] NAPA Mexico [removed: are licensees] [added: is a licensee] of the NAPA® name in Mexico.

AAG, founded in 1989, is a leading European distributor of vehicle parts, tools, and workshop equipment with its primary operations in [removed: four] [added: six] countries in Europe.

In France, AAG operates [removed: 15] [added: 16] distribution centers and serves [removed: 1,060] [added: 1,057] stores, of which [removed: 225] [added: 266] are company-owned, under the banners GROUPAUTO France, Precisium Group, Partner's, and GEF Auto.

In the [removed: U.K.,] [added: United Kingdom ("U.K."),] AAG operates [removed: 35] [added: 36] distribution centers [removed: (with one of these in the Netherlands)] and serves [removed: 810] [added: 842] stores, of which [removed: 196] [added: 226] are company-owned, under the banners GROUPAUTO UK & Ireland and UAN.

In Germany, AAG operates nine distribution centers and 29 company-owned stores under the banner Alliance Automotive Group [removed: Germany.][added: Germany as well as 31 company owned stores under the banner Hennig Fahrzeugteile.]

[added: *Products.*] The Company’s automotive distribution network provides access to hundreds of thousands of different parts and related supply items.

[removed: With] [added: Rayloc delivers] over 10,000 part numbers, including brake pads, brake drums, chassis, and [removed: bearings, Rayloc delivers products] [added: bearings] through a nationwide distribution [removed: network of four transfer and shipping facilities.][added: network.]

[removed: Finally, the Company’s Heavy Vehicle Parts Group operates as TW Distribution, with two heavy vehicle automotive parts distribution centers and 27 Traction Heavy Duty parts stores in the U.S.] This group distributes heavy vehicle parts through the NAPA system and direct to small and large fleet owners and operators.

[added: *Service to NAPA AUTO PARTS Stores.*] The Company believes that the quality and the range of services provided to its North American automotive parts customers constitute a significant advantage for its automotive parts distribution system.

[added: *NAPA.*] The Company is the sole member of the National Automotive Parts Association, LLC a voluntary association formed in 1925 to promote the distribution of automotive parts for its members.

NAPA, which neither buys nor sells automotive parts, functions as a trade association whose sole member in [removed: 2018] [added: 2019] owned and operated [removed: 57] [added: 56] distribution centers located throughout the U.S. NAPA develops marketing concepts and programs that may be used by its members which, at December 31, [removed: 2018,] [added: 2019,] includes only the Company.

The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among the Company and former NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to [added: any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers.]

[added: *Competition.*] The automotive parts distribution business is highly competitive.

[removed: In addition, the Company competes] with the distributing outlets of parts manufacturers, oil companies, mass merchandisers (including national retail chains), and with other parts distributors and retailers, including online retailers.

[removed: INDUSTRIAL] [added: INDUSTRIAL] PARTS [removed: GROUP][added: GROUP]

[removed: The Industrial Parts Group is operated as] Motion Industries, Inc. (“Motion”), a wholly-owned subsidiary of the Company headquartered in Birmingham, [removed: Alabama.][added: Alabama, operates in North America.]

AAG made a number of acquisitions to further expand their automotive operations in 2019, consisting of several small tuck-in businesses and three larger ones.

Hennig Fahrzeugteile ("Hennig"), acquired on January 1, 2019, is headquartered in Essen, North Rhine-Westphalia, and is one of Germany's leading suppliers of vehicle parts.

Hennig serves more than 9,000 customers, predominantly independent workshops and retailers.

In addition, AAG expanded its footprint into the Netherlands and Belgium via the June 1, 2019 acquisition of PartsPoint Group ("PartsPoint"), headquartered in Ede, Netherlands.

PartsPoint is a leading distributor of automotive and aftermarket parts and accessories in the Benelux.

Finally, AAG reinforced its market share in the heavy duty market in France via the acquisition of Todd Group ("Todd") on October 1, 2019.

Todd, based in Normandy, France, is a leading distributor of truck parts and accessories for the heavy-duty aftermarket.

Additionally, Altrom Canada operates one import automotive parts distribution center and 23 branches, which distribute OE branded products for import vehicles through the NAPA Canada/UAP network.

In the Netherlands and Belgium, AAG operates through a network of one national distribution center, seven regional warehouses and 195 stores, of which 133 are company owned.

Balkamp provides the NAPA system with over 1,300

SKUs of oils and chemicals.

Additionally, Altrom America distributes OE branded products for import vehicles through the NAPA system.

In addition, the Company competes

The Industrial Parts Group operates in both North America and Australasia.

Inenco Group ("Inenco"), also a wholly-owned subsidiary of the Company headquartered in Sydney, Australia, operates across Australasia.

The Company's Industrial Parts Group network expanded in 2019 via the acquisition of various tuck-in acquisitions and industrial operations in North America and Australasia.

In North America, the Company expanded its industrial operations with two tuck-in acquisitions, which in total are expected to generate annual revenues of approximately $78 million.

In Australasia, the Company purchased the remaining 65% stake in Inenco, a leading distributor of industrial replacement parts and accessories in Australasia.

In total, Inenco is expected to generate annual revenues of approximately $400 million.

In Australasia, the Industrial Parts Group operated a network of distribution centers and branches across Australia, New Zealand, Indonesia and Singapore as of December 31, 2019.

On December 6, 2019, the Company entered into a definitive agreement to sell all of its equity in SPR Canada, and the transaction closed on January 1, 2020.

In the U.S., the Company added two store groups, the Asia Pacific business made one acquisition and the NAPA Canada/UAP business added three store groups.

Collectively, the new store groups and acquired automotive operations in the U.S., Australasia and Canada are expected to generate annual revenues of approximately $35 million.

AAG added 14 acquisitions to their automotive operations in 2018, including three in France and 11 in the United Kingdom ("U.K.").

These acquisitions include the addition of several small tuck-in businesses and two larger ones.

Platinum International Group ("Platinum"), headquartered in Manchester, England, is a leading value-added battery distributor in the automotive, industrial, and leisure markets, and operates nine U.K. locations and one Netherlands location.

In addition, AAG expanded its footprint into Scotland with the acquisition of TMS Motor Spares ("TMS").

TMS, which is headquartered in Carlisle, England, is a leading automotive parts distributor and operates 17 locations in Scotland and seven in England.

Distribution System.

The Traction operations are discussed further below in Related Operations.

In Canada, Altrom Canada operates two import automotive parts distribution centers and 26 branches.

In the U.S., Altrom America operates one import automotive parts distribution center and eight branches.

NAPA Mexico owns and operates one distribution center and serves 16 company-owned and 26 independently-owned auto parts stores.

Products.

Related Operations.

Balkamp operates from four locations that provide the NAPA system with over 1,300 SKUs of oils and chemicals.

Service to NAPA AUTO PARTS Stores.

NAPA.

any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers.

Competition.

Effective January 1, 2018, EIS, Inc. (“EIS”), a wholly-owned subsidiary of the Company, became the Electrical Specialties Group of Motion and is therefore included in the Industrial Parts Group.

The Industrial Parts Group, through its Electrical Specialties Group, also distributes materials to more than 20,000 electrical and electronic manufacturers, as well as to industrial assembly and specialty wire and cable markets in North America.

This division distributes over 110,000 items including wire, cable and connectivity solutions, insulating and conductive materials, assembly tools and test equipment.

In 2018, the Company expanded its industrial operations with two tuck-in acquisitions as well as the purchase of Hydraulic Supply Company ("HSC").

HSC, based in Sunrise, Florida, is a leading full-service fluid power distributor with a broad product offering of hydraulic, pneumatic and industrial components and systems.

HSC operates one distribution center and 30 branches primarily in the southeastern U.S. In total, the Company's three industrial acquisitions in 2018 are expected to generate annual revenues of approximately $100 million.

The Company also continues to maintain its 35% investment in Inenco Group ("Inenco").

Inenco, headquartered in Sydney, Australia, is a leading distributor of industrial replacement parts and accessories in Australasia, with current annual revenues of approximately $400 million and a network of 174 locations across Australia, New Zealand and Asia.

In accordance with the purchase agreement signed in 2017, the Company has an option to acquire the remaining 65% interest in Inenco at a later date, contingent upon Inenco meeting certain financial conditions.

In 2018, the Company accounted for this investment under the equity method of accounting.

Motion’s Energy Services Team routinely performs in-plant surveys and assessments, helping customers reduce their energy consumption and finding opportunities for improved sustainability, ultimately helping customers operate more profitably.

In North America, the Industrial Parts Group operated 559 branches, 15 distribution centers, 42 service centers and four fabrication facilities as of December 31, 2018.

The fabrication facilities operated as part of the Electrical Specialities Group and provide custom fabricated

part and specialty coated materials to customers.

Partnering with its strategic suppliers, Motion has expanded into energy-efficient product markets, focusing on product offerings such as energy-efficient motors and drives and recyclable and environmentally friendly parts and supplies.

Supply Agreements.

The Electrical Specialties Group maintains integrated supply programs as part of the marketing strategy to provide its customers, and in particular its national account customers, the opportunity to participate in this low-cost, high-service capability.

This group has developed Advanced Inventory Management Solutions ("AIMS"), a totally integrated, highly automated suite of solutions for inventory management.

Finally, its integrated supply offering also includes AIMS Dispense, an electronic vending dispenser used to eliminate costly tool cribs and in-house stores at customer warehouse facilities.

S.P. Richards Canada services office product resellers throughout Canada from locations in Vancouver, Toronto, Calgary and Edmonton.

The Business Products Group distributes more than 98,000 items to over 9,700 resellers and distributors throughout the U.S. and Canada from a network of 52 distribution centers.

The Company is subject to various legal and governmental proceedings, many involving routine litigation incidental to the businesses, including approximately [removed: 2,071] [added: 1,615] product liability lawsuits resulting from its national distribution of automotive parts and supplies.

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

| | [removed: þ] [added: ☑] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

| | [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] file [removed: number: 1-5690][added: number: 1-5690]

[removed: GENUINE] [added: GENUINE] PARTS [removed: COMPANY][added: COMPANY]

[removed: (Exact] [added: *(Exact] name of registrant as specified in its [removed: charter)][added: charter)*]

| [removed: Georgia] [added: GA] | | [removed: 58-0254510] | [added: | | 58-0254510 |]

| [removed: (State] [added: (State] or other jurisdiction of incorporation or [removed: organization)] [added: organization)] | | [removed: (I.R.S.] [added: | | | (I.R.S.] Employer Identification [removed: No.)] [added: No.)] |

| [removed: 2999 Wildwood Parkway, Atlanta, Georgia] [added: 2999 WILDWOOD PARKWAY,] | | [removed: 30339] | [added: | | |]

| [removed: (Address] [added: (Address] of principal executive [removed: offices)] [added: offices)] | | [removed: (Zip Code)] | [added: | | (Zip Code) |]

[removed: 678-934-5000][added: 678\-934-5000]

[removed: (Registrant’s] [added: (Registrant’s] telephone number, including area [removed: code)][added: code)]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| Title of [removed: Each Class] [added: each class] | [added: Trading Symbol(s)] | Name of [removed: Each Exchange] [added: each exchange] on [removed: Which Registered] [added: which registered] |

| Common Stock, [removed: $1] [added: $1.00] par value per share | [added: GPC] | New York Stock Exchange |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the [removed: Act:][added: Act:]

[removed: None][added: None]

Yes [removed: þ] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: þ][added: ☒]

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 [added: (§ 232,495 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company or an emerging growth] company.

| Large accelerated filer [removed: þ] | | [added: ☒ | |] Accelerated filer [removed: o] | | [removed: Non-accelerated filer o] [added: ☐] |

| [removed: Smaller reporting company o | |] Emerging growth company [removed: o] | | [added: ☐] | [added: | | | |]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [removed: Exchange] Act).

As of June 30, [removed: 2018,] [added: 2019,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $12,685,700,000] [added: $14,311,370,798] based on the closing sale price as reported on the New York Stock Exchange.

Specifically identified portions of the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April [removed: 22, 2019] [added: 27, 2020] are incorporated by reference into Part III of this Form 10-K.

| [removed: Table] [added: Table] of [removed: Contents] [added: Contents] | | |

| [removed: [PART I](#s616C46BB3D7C50C9BF3EFB69F7CA3B39)] [added: [PART I](#sAB6BBD7EC2B45786A1052F85F6FFDAF7)] | | [removed: Page] [added: Page] |

| [Item [removed: 1.](#s29185124A0FC577E851529BB6EEAC11A)] [added: 1.](#s6DDADD87E41A5C8B98BF37CE603EFDCF)] | [removed: [Business](#s29185124A0FC577E851529BB6EEAC11A)] [added: [Business](#s6DDADD87E41A5C8B98BF37CE603EFDCF)] | [removed: [2](#s29185124A0FC577E851529BB6EEAC11A)] [added: [2](#s6DDADD87E41A5C8B98BF37CE603EFDCF)] |

| [Item [removed: 1A.](#s48A36A118E6F50CEB3C423C72102F78A)] [added: 1A.](#s111926F2B54C5AC1993B675B0D60F740)] | [Risk [removed: Factors](#s48A36A118E6F50CEB3C423C72102F78A)] [added: Factors](#s111926F2B54C5AC1993B675B0D60F740)] | [removed: [7](#s48A36A118E6F50CEB3C423C72102F78A)] [added: [7](#s111926F2B54C5AC1993B675B0D60F740)] |

| [Item [removed: 1B.](#s86CE923C1EB15FD0B293F1ACE1CEE179)] [added: 1B.](#s83EF2FAB53A15E53AEBB8E3862BAB785)] | [Unresolved Staff [removed: Comments](#s86CE923C1EB15FD0B293F1ACE1CEE179)] [added: Comments](#s83EF2FAB53A15E53AEBB8E3862BAB785)] | [removed: [12](#s86CE923C1EB15FD0B293F1ACE1CEE179)] [added: [13](#s83EF2FAB53A15E53AEBB8E3862BAB785)] |

| [Item [removed: 2.](#s7B9BEB9B453A56768E76C93BB2A210E9)] [added: 2.](#s7B66DAD25B3851C3B6EED0D286E54F5B)] | [removed: [Properties](#s7B9BEB9B453A56768E76C93BB2A210E9)] [added: [Properties](#s7B66DAD25B3851C3B6EED0D286E54F5B)] | [removed: [12](#s7B9BEB9B453A56768E76C93BB2A210E9)] [added: [13](#s7B66DAD25B3851C3B6EED0D286E54F5B)] |

| [Item [removed: 3.](#s00D6AF161A2557A5A241C4935CC4D38D)] [added: 3.](#s25DDE308AD3A5367A006DFBB1E2B4473)] | [Legal [removed: Proceedings](#s00D6AF161A2557A5A241C4935CC4D38D)] [added: Proceedings](#s25DDE308AD3A5367A006DFBB1E2B4473)] | [removed: [13](#s00D6AF161A2557A5A241C4935CC4D38D)] [added: [13](#s25DDE308AD3A5367A006DFBB1E2B4473)] |

| [Item [removed: 4.](#sF46949E86CB8545BBFD50A670BC53D4B)] [added: 4.](#s27ECCDEBBFB257ADA3A47836E04275AD)] | [Mine Safety [removed: Disclosures](#sF46949E86CB8545BBFD50A670BC53D4B)] [added: Disclosures](#s27ECCDEBBFB257ADA3A47836E04275AD)] | [removed: [13](#sF46949E86CB8545BBFD50A670BC53D4B)] [added: [14](#s27ECCDEBBFB257ADA3A47836E04275AD)] |

[removed: | [PART II](#s1BC4CE322A3F5EBCBC13805BC1C9E2E4) | | |][added: PART I.]

| [Item [removed: 5.](#s68BD772CDA775C0D905AAFB74C820F52)] [added: 5.](#sFAC86833685B505BAC5606318F4D770C)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s68BD772CDA775C0D905AAFB74C820F52)] [added: Securities](#sFAC86833685B505BAC5606318F4D770C)] | [removed: [14](#s68BD772CDA775C0D905AAFB74C820F52)] [added: [15](#sFAC86833685B505BAC5606318F4D770C)] |

Or

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| | | | | | |

| ATLANTA, | GA | | | | 30339 |

Yes ☒ No ☐

Yes ☒ No ☐

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | | | |

| Non-accelerated filer | | ☐ | | Smaller reporting company | | ☐ |

| | | | | | | |

Yes ☐ No ☒

There were 145,381,623 shares of the Company's common stock outstanding as of February 18, 2020.

DOCUMENTS INCORPORATED BY REFERENCE

| [PART IV](#sE453E39F26775BD0AEE5B6182ACD6ED5) | | |

| | [Signatures](#s13BC279071F85645B051FDE3C54F8862) | [79](#s13BC279071F85645B051FDE3C54F8862) |

10-K 1 gpc-12312018x10k.htm 10-K

| | | |

| --- | --- | --- |

Or

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| | | | | |

| --- | --- | --- | --- | --- |

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

| Class | | Outstanding at February 13, 2019 |

| Common Stock, $1 par value per share | | 145,943,765 shares |

| [PART IV](#s30629C18EDD05632BD6B5B41E89A2884) | | |

| | [Signatures](#sE49EDFF61D6D5B85AAFE6A770754FD78) | [39](#sE49EDFF61D6D5B85AAFE6A770754FD78) |

| | [Index to Financial Statements](#sF38BD482109F5B418F8CD111C08B67E8) | [F-1](#sF38BD482109F5B418F8CD111C08B67E8) |

The following table summarizes distribution centers, retail stores and branches as of December 31, 2019:

| | | | |

| --- | --- | --- | --- |

| | | | |

| | Distribution Centers | | Stores/Branches |

| Automotive Parts: | | | |

| North America | 81 | | 1,424 |

| Europe | 62 | | 692 |

| Australasia | 12 | | 553 |

| Total Automotive Parts | 155 | | 2,669 |

| Industrial Parts: | | | |

| North America | 15 | | 551 |

| Australasia | 8 | | 184 |

| Total Industrial Parts | 23 | | 735 |

| Business Products | 44 | | 0 |

| Total | 222 | | 3,404 |

In addition to the properties set forth above the Company has various headquarters, shared service centers and other facilities.

The Company generally owns distribution centers and leases retail stores and branches.

The Company’s Automotive Parts Group currently operates 57 NAPA Distribution Centers in the U.S. distributed among eight geographic divisions.

Approximately 96% of the distribution center properties are owned by the Company.

At December 31, 2018, the Company operated approximately 1,100 NAPA AUTO PARTS stores located in 46 states, and the Company had either a noncontrolling, controlling or other interest in 226 additional auto parts stores in 14 states.

Other than NAPA AUTO PARTS stores located within company-owned distribution centers, the majority of the auto parts stores in which the Company has an ownership interest are operated in leased facilities.

In addition, NAPA Canada/UAP operates 12 distribution centers, one fabrication/remanufacturing facility and approximately 210 auto parts and Traction stores in Canada.

In Mexico, Auto Todo operates 11 distribution centers, one automotive parts store, and one tire center, and NAPA Mexico operates one distribution center and 16 auto parts stores.

These operations in Canada and Mexico are conducted in leased facilities.

GPC Asia Pacific operates throughout Australia and New Zealand with 12 distribution centers, 475 auto parts stores, primarily under the Repco banner, and 87 facilities associated with the Ashdown Ingram, Motospecs, AMX/McLeod and RDA Brakes operations.

These distribution centers, stores and facilities are conducted in leased facilities.

In Europe, AAG operates 15 distribution centers and 225 company-owned stores in France.

In the U.K., the Company operates 35 distribution centers and 196 company-owned stores.

In Germany, the Company operates nine distribution centers and 29 company-owned stores.

AAG also serves affiliated outlets in Poland, but has no company-owned operations in that country.

AAG's locations are operated in leased facilities, other than three distribution centers and the U.K. country office, which are company-owned.

The Company’s Automotive Parts Group also operates four Balkamp distribution and redistribution centers, four Rayloc distribution facilities and four transfer and shipping facilities.

Two of the Balkamp distribution centers and the four Rayloc distribution facilities are operated in facilities owned by the Company.

Altrom Canada operates two import automotive parts distribution centers and 26 branches, and Altrom America operates one import automotive parts distribution center and eight branches.

The Heavy Vehicle Parts Group operates two TW distribution centers, which serve 27 Traction stores, of which 23 are company-owned and located in the U.S. These operations are all conducted in leased facilities.

The Company’s Industrial Parts Group, operating through Motion and Motion Canada, and including its Electrical Specialties Division, operates 15 distribution centers, 559 branches, 42 service centers, four fabrication facilities and six sales offices.

Approximately 90% of these locations are operated in leased facilities and the remainder are company-owned.

The Company’s Business Products Group operates 48 facilities in the U.S. and four facilities in Canada.

Approximately 75% of these facilities are operated in leased buildings and the remainder are company-owned.

For additional information regarding rental expense on leased properties, see Note 7, Leased Properties, of Notes to Consolidated Financial Statements beginning on page F-1.

[removed: PART II.][added: PART II.]

| [removed: ITEM 5.] [added: ITEM 5.] | [removed: MARKET] [added: MARKET] FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES.] [added: SECURITIES.] |

[removed: Market] [added: Market] Information Regarding Common [removed: Stock][added: Stock]

The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol [removed: “GPC”.][added: “GPC.”]

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

Set forth below is a line graph comparing the yearly dollar change in the cumulative total shareholder return on the Company’s common stock against the cumulative total shareholder return of the Standard and Poor’s ("S&P") 500 Stock Index and a peer group composite index [added: (“Peer Index”)] structured by the Company as set forth below for the five year period that commenced December 31, [removed: 2013] [added: 2014] and ended December 31, [removed: 2018.][added: 2019.]

This graph assumes that $100 was invested on December 31, [removed: 2013] [added: 2014] in Genuine Parts Company common stock, the S&P 500 Stock Index (the Company is a member of the S&P 500 Stock Index, and its cumulative total shareholder return went into calculating the S&P 500 Stock Index results set forth in the graph) and the peer group composite index as set forth below and assumes reinvestment of all dividends.

[removed: Comparison] [added: Comparison] of five year cumulative total shareholder [removed: return][added: return]

[removed: ][added: ]

| [removed: Cumulative] [added: Cumulative] Total Shareholder Return $ at Fiscal Year [removed: End] [added: End] | | [removed: 2013] [added: 2014] | | [removed: 2014] [added: 2015] | | [removed: 2015] [added: 2016] | | [removed: 2016] [added: 2017] | | [removed: 2017] [added: 2018] | | [removed: 2018] [added: 2019] |

In constructing the [removed: peer group composite index (“Peer Index”)] [added: Peer Index] for use in the stock performance graph above, the Company used the shareholder returns of various publicly held companies (weighted in accordance with each company’s stock market capitalization at December 31, [removed: 2013] [added: 2014] and including reinvestment of dividends) that compete with the Company in three industry segments: automotive parts, industrial parts and business products (each group of companies included in the Peer Index as competing with the Company in a separate industry segment is hereinafter referred to as a “Peer Group”).

Included in the industrial parts Peer Group are Applied Industrial Technologies, [removed: Inc.] [added: Inc., Fastenal Company,] and [removed: Kaman Corporation] [added: W.W. Grainger, Inc.] and included in the business products Peer Group is [removed: Essendant,] [added: Office Depot,] Inc.

| [removed: Industry Segment] [added: Industry Segment] | | [removed: 2013] [added: 2014] | | | [removed: 2014] [added: 2015] | | | [removed: 2015] [added: 2016] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | |

| Automotive Parts | | 53 | % | | [removed: 53] [added: 52] | % | | [removed: 52] [added: 53] | % | | 53 | % | | [removed: 53] [added: 56] | % | | [removed: 56] [added: 57] | % |

| Industrial Parts | | [removed: 35 | % | |] 36 | % | | 35 | % | | 34 | % | | 35 | % | | 34 | % | [added: | 34 | % |]

| Business Products | | [removed: 12 | % | |] 11 | % | | 13 | % | | 13 | % | | 12 | % | | 10 | % | [added: | 9 | % |]

[removed: Holders][added: Holders]

As of December 31, [removed: 2018,] [added: 2019,] there were [removed: 4,335] [added: 4,200] holders of record of the Company’s common stock.

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

The following table provides information about the purchases of shares of the Company’s common stock during the three month period ended December 31, [removed: 2018:][added: 2019:]

| [removed: Period] [added: Period] | | [removed: Total Number of Shares Purchased(1)] [added: Total Number of Shares Purchased(1)] | | | [removed: Average Price Paid per Share] [added: Average Price Paid per Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs(2)] [added: Programs(2)] | | | [removed: Maximum] [added: Maximum] Number of Shares That May Yet be Purchased Under the Plans or [removed: Programs] [added: Programs] | |

| (2) | On November 17, 2008, and August 21, 2017, the Board of Directors announced that it had authorized the repurchase of [removed: 15] [added: 15.0] million shares and [removed: 15] [added: 15.0] million shares, respectively. The authorization for these repurchase plans continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately [removed: 1.4] [added: 0.6] million shares authorized in the 2008 plan and 15.0 million shares authorized in the 2017 plan remain available to be repurchased by the Company. There were no other repurchase plans announced as of December 31, [removed: 2018.] [added: 2019.] |

| Genuine Parts Company | | $100.00 | | $82.86 | | $94.71 | | $97.03 | | $101.02 | | $115.21 |

| S&P 500 Stock Index | | $100.00 | | $101.38 | | $113.51 | | $138.28 | | $132.23 | | $173.86 |

| Peer Index | | $100.00 | | $87.89 | | $92.97 | | $108.80 | | $89.45 | | $113.61 |

| October 1, 2019 through October 31, 2019 | | 42,966 | | | $ | 103.06 | | | — | | | 15,631,936 | |

| November 1, 2019 through November 30, 2019 | | 61,548 | | | $ | 105.48 | | | — | | | 15,631,936 | |

| December 1, 2019 through December 31, 2019 | | 101,863 | | | $ | 105.40 | | | 10,816 | | | 15,621,120 | |

| Totals | | 206,377 | | | $ | 104.94 | | | 10,816 | | | 15,621,120 | |

| Genuine Parts Company | | $100.00 | | $131.43 | | $108.89 | | $124.46 | | $127.51 | | $132.75 |

| S&P 500 Stock Index | | $100.00 | | $113.69 | | $115.26 | | $129.04 | | $157.21 | | $150.33 |

| Peer Index | | $100.00 | | $103.92 | | $96.75 | | $105.43 | | $119.90 | | $101.64 |

| October 1, 2018 through October 31, 2018 | | 318,277 | | | $ | 98.48 | | | 300,000 | | | 17,051,915 | |

| November 1, 2018 through November 30, 2018 | | 274,670 | | | $ | 97.94 | | | 222,000 | | | 16,829,915 | |

| December 1, 2018 through December 31, 2018 | | 468,564 | | | $ | 96.31 | | | 409,772 | | | 16,420,143 | |

| Totals | | 1,061,511 | | | $ | 97.38 | | | 931,772 | | | 16,420,143 | |

The following selected financial data are qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes and other financial [removed: information beginning on page F-1,] [added: information,] as well as in “Item 7.

| | | [removed: Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| [removed: (In] [added: (In] thousands, except per share [removed: data)] [added: data)] | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net sales | | [removed: $] [added: $] | [removed: 18,735,073] [added: 19,392,305] | | | $ | [removed: 16,308,801] [added: 18,735,073] | | | $ | [removed: 15,339,713] [added: 16,308,801] | | | $ | [removed: 15,280,044] [added: 15,339,713] | | | $ | [removed: 15,341,647] [added: 15,280,044] | |

| Cost of goods sold | | [removed: $] [added: $] | [removed: 12,751,286] [added: 13,076,036] | | | $ | [removed: 11,402,403] [added: 12,751,286] | | | $ | [removed: 10,740,106] [added: 11,402,403] | | | $ | [removed: 10,724,192] [added: 10,740,106] | | | $ | [removed: 10,747,886] [added: 10,724,192] | |

| Operating and non-operating expenses, net | | [removed: $] [added: $] | [removed: 4,908,175] [added: 5,485,969] | | | $ | [removed: 3,897,130] [added: 4,908,175] | | | $ | [removed: 3,525,267] [added: 3,897,130] | | | $ | [removed: 3,432,171] [added: 3,525,267] | | | $ | [removed: 3,476,022] [added: 3,432,171] | |

| Income before taxes | | [removed: $] [added: $] | [removed: 1,075,612] [added: 830,300] | | | $ | [removed: 1,009,268] [added: 1,075,612] | | | $ | [removed: 1,074,340] [added: 1,009,268] | | | $ | [removed: 1,123,681] [added: 1,074,340] | | | $ | [removed: 1,117,739] [added: 1,123,681] | |

| Income taxes | | [removed: $] [added: $] | [removed: 265,138] [added: 209,215] | | | $ | [removed: 392,511] [added: 265,138] | | | $ | [removed: 387,100] [added: 392,511] | | | $ | [removed: 418,009] [added: 387,100] | | | $ | [removed: 406,453] [added: 418,009] | |

| Net income | | [removed: $] [added: $] | [removed: 810,474] [added: 621,085] | | | $ | [removed: 616,757] [added: 810,474] | | | $ | [removed: 687,240] [added: 616,757] | | | $ | [removed: 705,672] [added: 687,240] | | | $ | [removed: 711,286] [added: 705,672] | |

| Weighted average common shares outstanding during year — assuming dilution | | [removed: 147,241] [added: 146,417] | | | | [removed: 147,701] [added: 147,241] | | | | [removed: 149,804] [added: 147,701] | | | | [removed: 152,496] [added: 149,804] | | | | [removed: 154,375] [added: 152,496] | | |

| Diluted net income | | [removed: $] [added: $] | [removed: 5.50] [added: 4.24] | | | $ | [removed: 4.18] [added: 5.50] | | | $ | [removed: 4.59] [added: 4.18] | | | $ | [removed: 4.63] [added: 4.59] | | | $ | [removed: 4.61] [added: 4.63] | |

| Dividends declared | | [removed: $] [added: $] | [removed: 2.88] [added: 3.05] | | | $ | [removed: 2.70] [added: 2.88] | | | $ | [removed: 2.63] [added: 2.70] | | | $ | [removed: 2.46] [added: 2.63] | | | $ | [removed: 2.30] [added: 2.46] | |

| December 31 closing stock price | | [removed: $] [added: $] | [removed: 96.02] [added: 106.23] | | | $ | [removed: 95.01] [added: 96.02] | | | $ | [removed: 95.54] [added: 95.01] | | | $ | [removed: 85.89] [added: 95.54] | | | $ | [removed: 106.57] [added: 85.89] | |

| Total debt, less current maturities | | [removed: $] [added: $] | [removed: 2,432,133] [added: 2,802,056] | | | $ | [removed: 2,550,020] [added: 2,432,133] | | | $ | [removed: 550,000] [added: 2,550,020] | | | $ | [removed: 250,000] [added: 550,000] | | | $ | [removed: 500,000] [added: 250,000] | |

| Total equity | | [removed: $] [added: $] | [removed: 3,471,991] [added: 3,695,500] | | | $ | [removed: 3,464,156] [added: 3,471,991] | | | $ | [removed: 3,207,356] [added: 3,464,156] | | | $ | [removed: 3,159,242] [added: 3,207,356] | | | $ | [removed: 3,312,364] [added: 3,159,242] | |

| Total assets | | [removed: $] [added: $] | [removed: 12,683,040] [added: 14,645,629] | | | $ | [removed: 12,412,381] [added: 12,683,040] | | | $ | [removed: 8,859,400] [added: 12,412,381] | | | $ | [removed: 8,144,771] [added: 8,859,400] | | | $ | [removed: 8,246,238] [added: 8,144,771] | |

During the fourth quarter of 2019, we approved and began to implement the 2019 Cost Savings Plan, which resulted in recognizing $154.9 million in total restructuring costs and special termination costs primarily related to planned workforce reductions and facility closures and consolidations.

Also in the fourth quarter of 2019, we recorded a goodwill impairment charge related to the Business Products reporting unit totaling $82.0 million.

Refer to the restructuring footnote and the goodwill and other intangible assets footnote in the Notes to Consolidated Financial Statements for additional information.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |

OVERVIEW

Genuine Parts Company is a service organization engaged in the distribution of automotive replacement parts, industrial parts and electrical specialty materials and business products.

We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia.

The Company conducted business in 2018 throughout the North America, Australia, New Zealand, the U.K., France, Germany, Poland, and Puerto Rico from approximately 3,100 locations.

For the periods presented, the Company operates in three business segments: Automotive, Industrial, and Business Products.

Effective in 2018, EIS, Inc., formerly our Electrical and Electronic business segment, was combined with Motion Industries and is now identified as the Electrical Specialties Group of Motion Industries.

As a result, the Industrial segment is comprised of Motion Industries and EIS, Inc. and the results from prior periods have been combined, accordingly.

The combination of these two segments provides strong economies of scale and greater operating efficiencies, which we intend to leverage.

The opportunity to build synergies by sharing talent, physical resources, greater size and scale, and value-added expertise in each respective market channel is highly compelling.

We recorded consolidated net sales of $18.7 billion for the year ended December 31, 2018, an increase of 14.9% compared to sales in 2017.

Consolidated net income for the year ended December 31, 2018 was $810.5 million and diluted net income per share was $5.50.

Adjusted net income was $836.1 million for the year ended December 31, 2018, and adjusted diluted net income per share was $5.68.

Adjusted net income and adjusted diluted net income per share, both non-GAAP measures, exclude the impact of transaction and other costs primarily related to the Company's acquisition of AAG and the attempted transaction to spin-off the Business Products Group, net of a termination fee received.

See "Non-GAAP Measures."

In 2018, our growth strategy centered around plans and initiatives to position the Company for sustained long term sales and earnings growth.

Specifically, we executed on our initiatives to maximize revenues and improve our operating performance across each of our businesses.

Additionally, we were focused on our plans for creating a lower cost, but highly effective infrastructure.

These efforts included ongoing steps to accelerate the integration of our acquisitions, investments to enhance our productivity and innovative strategies to offset rising costs.

Total sales of $16.3 billion in 2017 increased 6.3% compared to sales in 2016.

Net income in 2017 was $617 million and diluted net income per share was $4.18.

Adjusted net income was $696 million and adjusted diluted net income per share was $4.71.

Adjusted net income and adjusted diluted net income per share exclude the impact of transaction and other costs primarily

related to the Company's acquisition of AAG and the transition tax associated with foreign earnings and the revaluation of deferred tax assets and liabilities as required by the Tax Cuts and Jobs Act of 2017.

In 2016, sales were essentially flat with the prior year and net income was down by 3%.

These results primarily reflect the impact of a challenging sales environment that persisted in the U.S. throughout the year.

Over the three year period of 2016 through 2018, our financial performance reflects a variety of initiatives the Company implemented to grow sales and earnings across our businesses.

Examples of such initiatives include strategic acquisitions, the introduction of new and expanded product lines, including those carried by acquired companies, geographic expansion, sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives.

We discuss these initiatives further below.

With regard to the December 31, 2018 consolidated balance sheet, the Company’s cash balance of $334 million compares to cash of $315 million at December 31, 2017.

The Company continues to maintain a strong cash position, supported by the increase in net income and effective working capital management.

Accounts receivable increased 3%, which related directly to our sales increase in the fourth quarter of 2018, and inventory is down by approximately 4% due primarily to a change in classification of certain estimated merchandise returns in connection with adopting Accounting Standards Update ("ASU") ASU 2014-09, Revenue from Contracts with Customers.

Accounts payable increased 10% from the prior year, due primarily to improved payment terms with certain suppliers.

Total debt outstanding at December 31, 2018 was $3.1 billion, a decrease from total debt of $3.2 billion at December 31, 2017.

RESULTS OF OPERATIONS

Our results of operations are summarized below for the three years ended December 31, 2018, 2017 and 2016.

[removed: See “Index to Consolidated Financial Statements” beginning on page F-1.][added: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS]

| [removed: ITEM 9.] [added: ITEM 9.] | [removed: CHANGES] [added: CHANGES] IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE.] [added: DISCLOSURE.] |

ANNUAL REPORT ON FORM 10-K

| | |

| | Page |

| [Report of Independent Registered Public Accounting Firm](#s8B3C7F0B0B1250A3A8721AB7266A7820) | [30](#s8B3C7F0B0B1250A3A8721AB7266A7820) |

| [Consolidated Balance Sheets as of December 31, 2019 and 2018](#s96B06D1724C75ADA80E9DA51A07C59BB) | [34](#s96B06D1724C75ADA80E9DA51A07C59BB) |

| [Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017](#sAB390582AB7C571399A6030D761CBFBB) | [35](#sAB390582AB7C571399A6030D761CBFBB) |

| [Consolidated Statements of Equity for the Years Ended December 31, 2019, 2018 and 2017](#s5BF328426555541DB1C0B4FA8E978105) | [36](#s5BF328426555541DB1C0B4FA8E978105) |

| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017](#s73847ABCB7985C4B925370D973CABE85) | [37](#s73847ABCB7985C4B925370D973CABE85) |

| [Notes to Consolidated Financial Statements](#sF7C7B68DF91D5A6F80BFE84EF201833B) | [38](#sF7C7B68DF91D5A6F80BFE84EF201833B) |

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Genuine Parts Company and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of income and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2020 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company changed its method for accounting for leases in 2019.

See below for discussion of our related critical audit matter.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

| | |

| --- | --- |

| | |

| | Valuation of Goodwill |

| *Description of the Matter* | As of December 31, 2019, the Company’s goodwill was $2,293,519,000. As disclosed in Note 1 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level. For a reporting unit in which the Company concludes, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount (or if the Company elects to skip the optional qualitative assessment), the Company is required to perform a quantitative impairment test, which includes measuring the fair value of the reporting unit and comparing it to the reporting unit’s carrying amount. In the year ended December 31, 2019, the Company recorded a goodwill impairment charge of $81,968,000 related to one of its reporting units as disclosed in Note 2 to the consolidated financial statements. Auditing management’s quantitative impairment test for goodwill was complex and judgmental due to the significant estimation required to determine the fair value of a reporting unit. In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the weighted average costs of capital, revenue growth rates, operating margins, working capital and terminal value, which are affected by expectations about future market or economic conditions. |

| *How We Addressed the Matter in Our Audit* | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above. To test the estimated fair value of the reporting units where the quantitative impairment tests were performed, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. For example, we compared the significant assumptions of the reporting unit to current industry, market and economic trends, to the Company's historical results and those of other guideline companies in the same industry, and to other relevant factors. We involved our valuation specialists to assist in our evaluation of the Company's valuation methodology and significant assumptions. In addition, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair values of the reporting units that would result from changes in the assumptions. We also recalculated the resulting impairment charge recorded by the Company. |

| | Fair Value of Customer Relationships Acquired in Business Combinations |

| *Description of the Matter* | As disclosed in Note 12 to the consolidated financial statements, the Company’s cash used in acquisitions of businesses totaled $732,142,000, net of cash acquired, during the year ended December 31, 2019. These acquisitions were accounted for under the acquisition method of accounting for business combinations. For each business combination, the Company allocated the net purchase price to the assets acquired and the liabilities assumed based on their respective fair values as of the date of acquisition, including other intangible assets of $340,799,000. Of the other intangible assets acquired, the largest was customer relationships of $304,302,000. Auditing the Company's accounting for business combinations was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of customer relationships. The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values of customer relationships to assumptions about the future cash flows that the Company expects to generate from the acquired businesses. The Company used the multi-period excess earnings method under the income approach to measure the customer relationships. The significant assumptions used to estimate the fair value of the customer relationships included discount rates and certain assumptions that form the basis of the forecasted results (e.g., future revenue growth rates, operating margins and attrition rates). The significant assumptions are forward-looking and could be affected by future economic and market conditions. |

| | |

The information required by this Item 8 is set forth in a separate section of this report.

[removed: Management’s] [added: Management’s] conclusion regarding the effectiveness of disclosure controls and [removed: procedures][added: procedures]

[removed: Based on that evaluation, the] [added: The] Company’s management, including [removed: the] [added: our] CEO and CFO, [removed: concluded that due to a material weakness in internal control over financial reporting,] [added: assessed] the [added: effectiveness of the] Company’s internal control over financial reporting [removed: was not effective] as of December 31, [removed: 2018.][added: 2019.]

[removed: Management’s] [added: Management’s] report on internal control over financial [removed: reporting][added: reporting]

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) ("COSO") in “Internal Control-Integrated Framework.” Based on this assessment, management concluded that [removed: due to a material weakness in internal control over financial reporting,] the Company’s internal control over financial reporting was [removed: not] effective as of December 31, [removed: 2018.][added: 2019.]

Specifically, AAG did not adequately identify, design and maintain internal controls at the transaction level that [removed: mitigate] [added: mitigated] the risk of material misstatement in financial reporting processes nor did it maintain appropriate information technology controls.

[removed: Remediation efforts to address] [added: Remediation of previously identified] material [removed: weakness][added: weakness]

[removed: This includes] [added: During 2019, management implemented a previously disclosed remediation plan that included] initiation of compensating controls and enhanced and revised design of existing financial reporting controls, information technology applications and procedures at AAG.

[removed: Changes] [added: Changes] in internal control over financial [removed: reporting][added: reporting]

Other than with respect to the remediation efforts described above, there have been no changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter ended December 31, [removed: 2018] [added: 2019] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

[removed: Report] [added: Report] of Independent Registered Public Accounting [removed: Firm][added: Firm]

[removed: Opinion] [added: Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, [removed: because of the effect of the material weakness described below on the achievement of the objectives of the control criteria,] Genuine Parts Company and Subsidiaries (the Company) [removed: has not maintained] [added: maintained, in all material respects,] effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of income and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related [removed: notes.][added: notes and our report dated February 21, 2020 expressed an unqualified opinion thereon.]

[removed: Basis] [added: Basis] of [removed: Opinion][added: Opinion]

[removed: Definition] [added: Definition] and Limitations of Internal Control Over Financial [removed: Reporting][added: Reporting]

Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2019.

During the year ended December 31, 2019, we acquired Hennig Fahrzeugteile Group ("Hennig"), PartsPoint Group, Axis New England, Axis New York and Inenco Group Pty Ltd (“Inenco”) and have included their balances as of December 31, 2019 in our consolidated balance sheet and the results of their operations in our consolidated statement of income and comprehensive income.

As permitted by the Securities and Exchange Commission, we elected to exclude these acquisitions, which constituted approximately 7.9% of total assets as of December 31, 2019 and 3.2% and 1.1% of net sales and net income, respectively, for the year ended December 31, 2019, from our assessment of internal control over financial reporting as of December 31, 2019.

Our integration of the systems and processes of these businesses could cause changes to our internal controls over financial reporting in future periods.

As previously disclosed in Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2018, during the fourth quarter of fiscal 2018 we identified a material weakness in Alliance Automotive Group's ("AAG") internal control over financial reporting.

During the fourth quarter of 2019, the Company completed testing the operating effectiveness of the implemented controls and found them to be effective.

As a result we have concluded the material weakness has been remediated as of December 31, 2019.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Hennig Fahrzeugteile Group ("Hennig"), PartsPoint Group, Axis New England, Axis New York and Inenco Group Pty Ltd (“Inenco”), which are included in the 2019 consolidated financial statements of the Company and constituted collectively 7.9% of total assets as of December 31, 2019 and 3.2% and 1.1% of net sales and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Hennig, PartsPoint Group, Axis New England, Axis New York and Inenco.

February 21, 2020

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

There were no material errors in the financial results or balances identified as a result of the control deficiencies, and there were no restatements of prior period financial statements and no change in previously released financial results were required as the result of these control deficiencies.

Notwithstanding the identified material weakness, management, including our CEO (principal executive officer) and CFO (principal financial officer), believes the consolidated financial statements included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with the United States Generally Accepted Accounting Principles ("U.S. GAAP").

The Company’s management, including our CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018.

Alliance Automotive Group ("AAG") was acquired on November 2, 2017 and generated approximately 10% of the Company’s total net sales for the year ended December 31, 2018.

AAG is headquartered in London, U.K. and is organized in approximately 220 legal entities across France, Germany, the U.K. and Poland.

AAG’s financial reporting processes rely upon numerous information technology applications.

The internal control environment is structured in decentralized accounting and reporting locations across Europe.

Prior to the Company’s November 2017 acquisition, AAG was not required to file reports with the Securities and Exchange Commission ("SEC").

AAG also was not previously required to prepare consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) in any prior reporting period.

Prior to 2018, AAG was not included in the Company's assessment of the effectiveness of our internal control over financial reporting, as the SEC rules provide companies one year to assess controls at an acquired entity.

Accordingly, within this period, we performed our first comprehensive assessment of the design and effectiveness of internal controls at AAG and determined that AAG’s internal control over financial reporting was ineffective as of December 31, 2018.

Financial reporting processes include i) the financial statement closing process, ii) the processing and accounting for revenue, purchasing, merchandise inventory, treasury and payroll transactions and iii) the related information technology applications.

In certain instances, proper controls were identified, but they did not operate for a sufficient period of time for management to conclude, through testing, that controls were designed and operating effectively.

Ernst & Young LLP has issued a report expressing an adverse opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2018.

Ernst & Young LLP's report on our internal control over financial reporting is set forth below.

Management has and will continue to enhance the risk assessment process and design and implementation of internal control over financial reporting at AAG.

The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

The following material weakness has been identified and included in management’s assessment.

The Company’s European subsidiary, Alliance Automotive Group, did not adequately identify, design and maintain internal controls at the transaction level that mitigate the risk of material misstatement in financial reporting processes nor did it maintain appropriate information technology controls for its information technology systems.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and this report does not affect our report dated February 25, 2019, which expressed an unqualified opinion thereon.

February 25, 2019

[removed: PART III.][added: PART III.]

[removed: Paul] [added: *Paul] D.

[removed: Donahue,] [added: Donahue*,] age [removed: 62,] [added: 63,] was appointed [added: Chairman of the Board and] Chief Executive Officer of the Company in [removed: May 2016.][added: April of 2019.]

Mr. Donahue [removed: has] [added: was] been President of the Company [removed: since] [added: from] January 2012 [added: until April 2019,] and [added: he has been] a [removed: director] [added: Director] of the Company since April 2012.

[removed: Carol] [added: *Carol] B.

[removed: Yancey,] [added: Yancey*,] age [removed: 55,] [added: 56,] has been Executive Vice President and Chief Financial Officer of the Company since March 2013, and also held the additional title of Corporate Secretary of the Company up to February 2015.

Ms. Yancey was Senior Vice President [removed: —] [added: -] Finance and Corporate Secretary from 2005 until her appointment as Executive Vice President [removed: —] [added: -] Finance in November 2012.

[removed: Scott] [added: *Scott] A.

[removed: Sonnemaker,] [added: Sonnemaker*,] age [removed: 55,] [added: 56,] joined the Company on February 1, 2019 as Group President, North American Automotive.

[removed: James] [added: *James] R.

[removed: Neill,] [added: Neill*,] age [removed: 57,] [added: 58,] was appointed [removed: Senior] [added: Executive] Vice President of Human Resources of the Company in [removed: April 2014.][added: February of 2020.]

[removed: Randall] [added: *Randall] P.

[removed: Breaux,] [added: Breaux*,] age [removed: 56,] [added: 57,] was appointed President of Motion Industries on January 1, 2019.

[removed: Kevin] [added: *Kevin] E.

[removed: Herron,] [added: Herron*,] age [removed: 56,] [added: 57,] was appointed President of the U.S. Automotive Parts group on January 1, 2019.

Further information required by this item is set forth under the heading “Nominees for Director”, under the heading “Corporate Governance [removed: —] [added: -] Code of Conduct and Ethics”, under the heading “Corporate Governance [removed: —] [added: -] Board Committees [removed: —] [added: -] Audit Committee”, [added: and] under the heading “Corporate Governance [removed: —] [added: -] Director Nominating Process” [removed: and under the heading “Section 16(a) Beneficial Ownership Reporting Compliance”] of the Proxy Statement and is incorporated herein by reference.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS.

He served as President and Chief Executive Officer from May 2016 - April 2019.

Prior to that, he served as Senior Vice President of Human Resources from April 2014 to February of 2020.

EXECUTIVE OFFICERS OF THE COMPANY.

Information required by this item is set forth under the headings “Executive Compensation”, “Additional Information Regarding Executive Compensation”, [removed: “2018] [added: “2019] Grants of Plan-Based Awards”, [removed: “2018] [added: “2019] Outstanding Equity Awards at Fiscal Year-End”, [removed: “2018] [added: “2019] Option Exercises and Stock Vested”, [removed: “2018] [added: “2019] Pension Benefits”, [removed: “2018] [added: “2019] Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating and Governance Committee Report”, “Compensation, Nominating and Governance Committee Interlocks and Insider Participation” and “Compensation of Directors” of the Proxy Statement and is incorporated herein by reference.

| [removed: ITEM 12.] [added: ITEM 12.] | [removed: SECURITY] [added: SECURITY] OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS.] [added: MATTERS.] |

[removed: Equity] [added: Equity] Compensation Plan [removed: Information][added: Information]

The following table gives information as of December 31, [removed: 2018] [added: 2019] about the common stock that may be issued under all of the Company’s existing equity compensation plans:

| Equity Compensation Plans Approved by Shareholders: | [removed: 1,857,768] [added: 1,121,611] | | (2) | $ | [removed: 77.32] [added: 80.85] | | | — | | |

| Equity Compensation Plans Not Approved by Shareholders: | [removed: 103,779] [added: 110,441] | | (4) | n/a | | | | [removed: 896,221] [added: 889,559] | | |

| | 1,903,683 | | (3) | $ | 94.74 | | | 7,834,341 | | (5) |

| Total | 3,135,735 | | | — | | | | 8,723,900 | | |

| | 1,791,931 | | (3) | $ | 94.80 | | | 8,134,991 | | (5) |

| Total | 3,753,478 | | | — | | | | 9,031,212 | | |

[removed: PART IV.][added: PART IV.]

The following consolidated financial statements of Genuine Parts Company and Subsidiaries are [removed: included] [added: incorporated] in this [removed: Annual Report on Form 10-K.][added: Item 15 by reference from Part II-Item 8.]

See Index to Consolidated Financial [removed: Statements on Page F-1.][added: Statements.]

Consolidated balance sheets — December 31, [removed: 2018] [added: 2019] and [removed: 2017][added: 2018]

Consolidated statements of income and comprehensive income — Years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016][added: 2017]

Consolidated statements of equity — Years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016][added: 2017]

Consolidated statements of cash flows — Years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016][added: 2017]

Notes to consolidated financial statements — December 31, [removed: 2018][added: 2019]

| Exhibit 3.2 | | [By-Laws of the Company, as amended and restated November 19, 2018. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated November 19, [removed: 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000129993313002035/exhibit1.htm)] [added: 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000037/a1118amendedandrestatedbyl.htm)] |

| Exhibit [removed: 10.19*] [added: 10.23*] | | [removed: [Description of Director Compensation.] [added: [Genuine Parts Company Performance Restricted Stock Unit Award Agreement.] (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated May 7, [removed: 2014.)](http://www.sec.gov/Archives/edgar/data/40987/000119312514186362/d698970dex101.htm)] [added: 2014.)](http://www.sec.gov/Archives/edgar/data/40987/000119312514186362/d698970dex102.htm)] |

| Exhibit [removed: 10.20*] [added: 10.19*] | | [Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 18, 2006.)](http://www.sec.gov/Archives/edgar/data/40987/000095014406003614/g00905exv10w1.txt) |

| Exhibit [removed: 10.21*] [added: 10.20*] | | [Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 28, 2007.)](http://www.sec.gov/Archives/edgar/data/40987/000095014407001699/g05682exv10w29.htm) |

| Exhibit [removed: 10.22*] [added: 10.21*] | | [Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.)](http://www.sec.gov/Archives/edgar/data/40987/000095014408001503/g11900exv10w32.htm) |

| Exhibit [removed: 10.23*] [added: 10.22*] | | [Genuine Parts Company 2015 Incentive Plan, effective November 17, 2014. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 28, 2015.)](http://www.sec.gov/Archives/edgar/data/40987/000129993315000644/exhibit1.htm) |

| Exhibit [removed: 10.24*] [added: 10.30*] | | [Genuine Parts Company [added: Form of] Performance Restricted Stock Unit Award [removed: Agreement.] [added: Certificate.] (Incorporated herein by reference from the [removed: Company’s Quarterly] [added: Company's Annual] Report on Form [removed: 10-Q,] [added: 10-K,] dated [removed: May 7, 2014.)](http://www.sec.gov/Archives/edgar/data/40987/000119312514186362/d698970dex102.htm)] [added: February 25, 2019.)](http://www.sec.gov/Archives/edgar/data/40987/000004098719000015/a2018awardcertificateprsu.htm)] |

| Exhibit [removed: 10.25*] [added: 10.24*] | | [Genuine Parts Company Stock Appreciation Rights Agreement. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 26, 2013.)](http://www.sec.gov/Archives/edgar/data/40987/000119312513076665/d455931dex1031.htm) |

| Exhibit [removed: 10.26*] [added: 10.25*] | | [Form of Executive Officer Change in Control Agreement. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated February 26, 2015.)](http://www.sec.gov/Archives/edgar/data/40987/000119312515064165/d829495dex1027.htm) |

| Exhibit [removed: 10.27] [added: 10.26] | | [Genuine Parts Company 364-Day Bridge Credit Agreement dated September 22, 2017 by and among Genuine Parts Company, J.P. Morgan Chase Bank, N.A., as administrative agent, and the other Lender Parties. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated October 26, 2017.)](http://www.sec.gov/Archives/edgar/data/40987/000004098717000015/aagbridgecreditagreement_1.htm) |

| Exhibit [removed: 10.28] [added: 10.27] | | [Genuine Parts Company Amended and Restated Syndicated Facility Agreement dated October 30, 2017 by and among Genuine Parts Company, Bank of America, N.A., as administrative agent, and the other Lender Parties. (Incorporated herein by reference from the Company's Annual Report on Form 10-K dated February 27, 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000002/syndicatedfacilityagreemen.htm) |

| Exhibit [removed: 10.29] [added: 10.28] | | [Genuine Parts Company Note Purchase Agreement dated October 30, 2017 by and among Genuine Parts Company, J.P. Morgan Securities, LLC and Merill Lynch, Pierce, Fenner & Smith Incorporated, as agents, and the other Lender Parties. (Incorporated herein by reference from the Company's Annual Report on Form 10-K dated February 27, 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000002/notepurchaseagreement-ex10.htm) |

| Exhibit [removed: 10.30*] [added: 10.29*] | | [Genuine Parts Company Form of Restricted Stock Unit Award [removed: Certificate](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/a2018awardcertificatersu.htm)] [added: Certificate. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated February 25, 2019.)](http://www.sec.gov/Archives/edgar/data/40987/000004098719000015/a2018awardcertificatersu.htm)] |

| Exhibit 21 | | [Subsidiaries of the [removed: Company.](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/subsidiariesofthecompany20.htm)] [added: Company.](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/subsidiariesofthecompa.htm)] |

| Exhibit 23 | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/gpcconsent2018-exx23.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/gpcconsent2019-exx23.htm)] |

| Exhibit 31.1 | | [Certification signed by Chief Executive Officer pursuant to SEC Rule [removed: 13a-14(a).](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/gpc-12312018xex311.htm)] [added: 13a-14(a).](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/gpc-12312019xex311.htm)] |

| Exhibit 31.2 | | [Certification signed by Chief Financial Officer pursuant to SEC Rule [removed: 13a-14(a).](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/gpc-12312018xex312.htm)] [added: 13a-14(a).](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/gpc-12312019xex312.htm)] |

| Exhibit [removed: 32.1] [added: 32] | | [removed: [Statement of Chief Executive Officer of Genuine Parts Company pursuant] [added: [Certification Pursuant] to 18 U.S.C. Section 1350, as [removed: adopted pursuant] [added: Adopted Pursuant] to [removed: §] [added: Section] 906 of the Sarbanes-Oxley Act of [removed: 2002] [added: 2002, signed by the Chief Executive Officer and Chief Financial Officer] (furnished [removed: herewith).](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/gpc-12312018xex321.htm)] [added: herewith)](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/gpc-12312019xex32.htm)] |

Financial Statements and Supplemental Data included in this Annual Report on Form 10-K.

| Exhibit 4.1 | | [Description of Genuine Parts Company Common Stock.](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/a201910-kexhibit41.htm) |

| Exhibit 10.31* | | [Description of Director Compensation.](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/a4q201910kexhibit1031.htm) |

| | | |

| Exhibit 101.INS | | XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |

| Exhibit 101.SCH | | XBRL Taxonomy Extension Schema Document |

| Exhibit 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |

| Exhibit 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |

| Exhibit 101.LAB | | XBRL Taxonomy Extension Labels Linkbase Document |

| Exhibit 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |

| Exhibit 104 | | The cover page from this Annual Report on Form 10-K for the year ended December 31, 2019 formatted in Inline XBRL |

| Exhibit 10.31* | | [Genuine Parts Company Form of Performance Restricted Stock Unit Award Certificate](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/a2018awardcertificateprsu.htm) |

| Exhibit 32.2 | | [Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).](https://www.sec.gov/Archives/edgar/data/40987/000004098719000015/gpc-12312018xex322.htm) |

| Exhibit 101 | | Interactive data files pursuant to Rule 405 of Regulation S-T: |

| | | (i) the Consolidated Balance Sheets as of December 31, 2018 and 2017; (ii) the Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2018, 2017 and 2016; (iii) the Consolidated Statements of Equity for the Years ended December 31, 2018, 2017 and 2016; (iv) the Consolidated Statements of Cash Flows for Years ended December 31, 2018, 2017 and 2016; (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text. |

[removed: GENUINE] [added: GENUINE] PARTS [removed: COMPANY][added: COMPANY]

| [removed: /s/] [added: /s/] Paul D. [removed: Donahue] [added: Donahue] | | [removed: 2/25/2019] [added: 2/21/2020] | | | | [removed: /s/] [added: /s/] Carol B. [removed: Yancey] [added: Yancey] | | [removed: 2/25/2019] [added: 2/21/2020] | |

| [removed: Paul] [added: Paul] D. [removed: Donahue] [added: Donahue] | | (Date) | | | | [removed: Carol] [added: Carol] B. [removed: Yancey] [added: Yancey] | | (Date) | |

| [removed: President] [added: Chairman] and Chief Executive Officer | | | | | | Executive Vice President and Chief Financial and Accounting Officer | | | |

| [removed: /s/] [added: /s/] Paul D. [removed: Donahue] [added: Donahue] | | [removed: 2/18/2019] [added: 2/17/2020] | | | | [removed: /s/] [added: /s/] Carol B. [removed: Yancey] [added: Yancey] | | [removed: 2/18/2019] [added: 2/17/2020] | |

| Director [removed: President] [added: Chairman] and Chief Executive Officer (Principal Executive Officer) | | | | | | Executive Vice President and Chief Financial and Accounting Officer (Principal Financial and Accounting Officer) | | | |

| [removed: Thomas C. Gallagher] [added: Gary P. Fayard] | | (Date) | | | | [removed: Elizabeth W. Camp] [added: Thomas C. Gallagher] | | (Date) | |

| [removed: Gary P. Fayard] [added: P. Russell Hardin] | | [removed: (Date)] | | | | [removed: P. Russell Hardin] [added: John R. Holder] | | [added: (Date)] | |

| [removed: /s/ John R. Holder] [added: /s/ Donna W. Hyland] | | [removed: 2/18/2019] [added: 2/17/2020] | | | | [removed: /s/ Donna W. Hyland] [added: /s/ John D. Johns] | | [removed: 2/18/2019] [added: 2/17/2020] | |

| [removed: John R. Holder] [added: Donna W. Hyland] | | (Date) | | | | [removed: Donna W. Hyland] [added: John D. Johns] | | (Date) | |

| [removed: John D. Johns] [added: Robert C. Loudermilk, Jr.] | | (Date) | | | | [removed: Robert C. Loudermilk, Jr.] [added: Wendy B. Needham] | | (Date) | |

| [removed: /s/ Wendy B. Needham] [added: /s/ E. Jenner Wood, III] | | [removed: 2/18/2019] [added: 2/17/2020] | | | | [removed: /s/ E. Jenner Wood, III] | | [removed: 2/18/2019] | |

| [removed: Wendy B. Needham] [added: E. Jenner Wood, III] | | (Date) | | | | [removed: E. Jenner Wood, III] | | [removed: (Date)] | |

[removed: ][added: ]

SIGNATURES.

| Paul D. Donahue | | (Date) | | | | Carol B. Yancey | | (Date) | |

| /s/ Elizabeth W. Camp | | 2/17/2020 | | | | | | | |

| Elizabeth W. Camp | | (Date) | | | | Richard Cox, Jr. | | (Date) | |

| /s/ Gary P. Fayard | | 2/17/2020 | | | | /s/ Thomas C. Gallagher | | 2/17/2020 | |

| /s/ P. Russell Hardin | | 2/17/2020 | | | | /s/ John R. Holder | | 2/17/2020 | |

| /s/ Robert C. Loudermilk, Jr. | | 2/17/2020 | | | | /s/ Wendy B. Needham | | 2/17/2020 | |

| Director | | | | | | Director | | | |

| Director | | | | | | | | | |

SIGNATURES.

| | | | | | | | | | |

| /s/ Thomas C. Gallagher | | 2/18/2019 | | | | /s/ Elizabeth W. Camp | | 2/18/2019 | |

| Director and Chairman | | | | | | Director | | | |

| /s/ Gary P. Fayard | | 2/18/2019 | | | | /s/ P. Russell Hardin | | 2/18/2019 | |

| /s/ John D. Johns | | 2/18/2019 | | | | /s/ Robert C. Loudermilk, Jr. | | 2/18/2019 | |

ANNUAL REPORT ON FORM 10-K

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

| | |

| --- | --- |

| | Page |

| [Report of Independent Registered Public Accounting Firm](#s500d184aaf0748f1bd7ffc7d30bd77b3) | [F-2](#s500d184aaf0748f1bd7ffc7d30bd77b3) |

| [Consolidated Balance Sheets as of December 31, 2018 and 2017](#s7DD6FCEC3BF75C4EB3D6B569341B428B) | [F-3](#s7DD6FCEC3BF75C4EB3D6B569341B428B) |

| [Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016](#sC86A1A6505E9508E85451D8B25DB4A24) | [F-4](#sC86A1A6505E9508E85451D8B25DB4A24) |

| [Consolidated Statements of Equity for the Years Ended December 31, 2018, 2017 and 2016](#sF99DCA03152057AA9A6FEDE241A32D7A) | [F-5](#sF99DCA03152057AA9A6FEDE241A32D7A) |

| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016](#s9ED8F7013B3B5AA8B7B9787C0E52D6C4) | [F-6](#s9ED8F7013B3B5AA8B7B9787C0E52D6C4) |

| [Notes to Consolidated Financial Statements](#s5F194338FAFB5CB7AF0BFA4417A334F6) | [F-7](#s5F194338FAFB5CB7AF0BFA4417A334F6) |

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Genuine Parts Company and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of income and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2019 expressed an adverse opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1948.

Atlanta, Georgia

February 25, 2019

F-2

Genuine Parts Company and Subsidiaries