Genuine Parts (GPC) 10-K risk factor changes: FY2020 vs FY2019

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

We have implemented numerous initiatives in each of our [removed: three] business segments to grow sales and earnings, including the introduction of new and expanded product lines, strategic acquisitions, geographic expansion (including through acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives.

Successful implementation of these initiatives also depends on factors specific to the automotive parts [removed: industry] and [removed: the other] [added: industrial parts] industries [removed: in which we operate] and numerous other factors that may be beyond our control.

[removed: | • |] [added: -] the competitive environment in our end markets may force us to reduce prices below our desired pricing level or to increase promotional spending; [removed: |]

[removed: | • |] [added: -] our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner; [removed: |]

[removed: | • |] [added: -] our ability to successfully enter new markets, including by successfully identifying and acquiring suitable acquisition targets in these new markets; [removed: |]

[removed: | • |] [added: -] our ability to effectively manage our costs; [removed: |]

[removed: | • |] [added: -] our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations, including in particular the challenges associated with the integration of foreign operations to ensure the adequacy of internal controls; [removed: |]

[removed: | • |] [added: -] our ability to identify and successfully implement appropriate technological, digital and e-commerce solutions; [removed: |]

[removed: | • |] [added: -] the occurrence of unusually severe weather events, which can disrupt our operations (forcing temporary closure of retail and distribution centers, prohibiting shipment of inventory and products) and negatively impact our results in the affected geographies; [removed: |]

[removed: | • |] [added: -] the occurrence of political unrest and strikes, which can disrupt our operations and negatively impact our results in the affected geographies; [removed: |]

[removed: | • |] [added: -] volatility in oil prices, which could have a negative impact on the [removed: U.S.] [added: global] economy [removed: and, in particular,] [added: and] the [removed: economies] [added: economy] of [removed: energy-dominant states] [added: each of the nations] in which we [removed: operate; |][added: operate, in particular;]

[removed: | • |] [added: -] the adequacy of our disclosure controls and procedures and internal controls over financial reporting; and [removed: |]

[removed: | • |] [added: -] the economy [added: of each of the nations] in [added: which we operate in] general, including the monetary policies of the Federal Reserve, which are influenced by various factors, including inflation, unemployment and short-term and long-term changes in the international trade balance and the fiscal policies of the U.S. government. [removed: |]

[removed: | • |] [added: -] the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for maintenance and repair; [removed: |]

[removed: | • |] [added: -] the number of vehicles in the automotive fleet, a function of new vehicle sales and vehicle scrappage rates, as a steady or growing total vehicle population supports the continued demand for maintenance and repair; [removed: |]

[removed: | • |] [added: -] the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles; [removed: |]

[removed: | • |] [added: -] the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles; [removed: |]

[removed: | • |] [added: -] the addition of electric vehicles, hybrid vehicles, ride sharing services, alternative transportation means and autonomously driven vehicles and future legislation related thereto; [removed: |]

[removed: | • |] [added: -] gas prices, as increases in gas prices may deter consumers from using their vehicles; [removed: |]

[removed: | • |] [added: -] changes in travel patterns, which may cause consumers to rely more on other transportation; [removed: |]

[removed: | • |] [added: -] restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and [removed: |]

[removed: | • |] [added: -] the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending. [removed: |]

[removed: | • |] [added: -] the level of industrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts; [removed: |]

[removed: | • |] [added: -] changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; [removed: |]

[removed: | • |] [added: -] the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas, which subsequently reduces demand for our products; [removed: |]

[removed: | • |] [added: -] changes in legislation or government regulations or policies which could impact international trade among our multi-national customer base and cause reduced demand for our products; and [removed: |]

[removed: | • |] [added: -] the economy in general, which in declining conditions may cause reduced demand for industrial output. [removed: |]

Changes in legislation or government regulations or [removed: policies] [added: policies, particularly those relating to taxation and international trade,] could have a significant impact on our results of operations.

Although the United States and China reached a Phase One trade deal in January 2020, [added: there was no Phase Two trade deal implemented and] most of [removed: these] [added: the] tariffs [added: imposed] remain in [removed: place and] [added: place, while] uncertainty persists in the trade relationship between the two countries that impacts the global trade landscape.

On January 31, 2020, the U.K. exited from the E.U. (commonly referred to as [removed: “Brexit”).][added: “Brexit”) and began a transition period that concluded on December 31, 2020.]

While we have not experienced any material financial impact from Brexit on our business to date, we cannot predict its future [removed: implications.][added: implications and any future impacts on our business and operations.]

The sale of automotive [removed: parts,] [added: and] industrial parts [removed: 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 pressures.

Because we seek to offer competitive prices, [removed: if our competitors reduce their prices,] we may be forced to reduce our [added: prices if our competitors reduce their] prices, which could result in a material decline in our revenues and earnings.

Increased competition among distributors of [removed: automotive, industrial parts] [added: automotive] and [removed: office products,] [added: industrial parts,] including increased availability among digital and e-commerce providers across the markets in which we do business, could cause a material adverse effect on our results of operations.

The Company anticipates no decline in competition in any of its [removed: three] business segments in the foreseeable future.

We compete primarily with national, international and regional auto parts chains, independently owned regional and local automotive parts and accessories stores, automobile dealers that supply manufacturer replacement parts and accessories, mass merchandisers, internet providers and wholesale clubs that sell automotive [removed: products] [added: products,] and regional and local full service automotive repair shops, both new and established.

Furthermore, [removed: both] the automotive aftermarket [removed: and the office supply industries continue] [added: industry continues] to experience consolidation.

Consolidation among our competitors could further enhance their financial position, provide them with the ability to offer more [added: 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.]

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

STRATEGIC AND OPERATIONAL RISKS

The impact of the COVID-19 pandemic has significantly impacted worldwide economic conditions, and our operations and our financial results have been and will in the future be materially adversely impacted, and the duration and extent to which it will impact our business remains uncertain.

COVID-19, a novel strain of coronavirus, was reported in December 2019, with the World Health Organization declaring it a global pandemic on March 11, 2020.

The COVID-19 pandemic has created significant volatility, uncertainty and disruption, with severe impacts on the United States and global economies.

The COVID-19 pandemic has impacted a large portion of the world, including our domestic and international operations.

If the pandemic continues to create disruptions or turmoil in the credit or financial markets, or impacts our credit ratings, it could adversely affect our ability to access capital on favorable terms or at all, meet our liquidity needs or amend and/or refinance our existing credit arrangements.

The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments that we cannot predict, including the severity of the virus; the occurrence of additional waves or spikes in infection rates; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic and the efficacy of these actions, including partial or complete shut downs, travel restrictions, and stay-at-home orders among other actions; the effectiveness and distribution of COVID-19 vaccines; and impacts on our supply chain, our ability to keep operating locations open, and on customer demand.

As the pandemic continues to spread throughout the United States, consumer fears about COVID-19 continue and recommendations and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine have persisted and/or increased, which has and will continue to adversely affect our operations.

We have incurred and continue to incur additional costs related to efforts to protect the health and well-being of our team members, customers and the communities we serve.

We expect to continue to incur additional costs, which may be significant, as we continue to implement operational changes in response to this pandemic.

We may further restrict the operations of our various distribution centers, branches or store facilities in both of our segments if we deem such action necessary or appropriate or if recommended or mandated by local government authorities.

Additionally, we may incur significant incremental costs to ensure we meet the needs of our customers and our employees, including additional cleanings of our stores and other facilities.

Also, if we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate or appropriate for a particular region or the Company as a whole, we could suffer damage to our reputation and our brand, which could adversely affect our business in the future.

These items could have a further material impact on our sales and profits and could lead to significantly higher losses on outstanding customer receivables, guaranteed loans and asset impairment charges, among other things.

The COVID-19 pandemic has resulted in work and travel restrictions and delays, which have been expanded throughout the continued progression of the pandemic.

These restrictions and delays have impacted and may continue to impact suppliers and manufacturers of certain of our products.

This may make it difficult for our suppliers to source and manufacture products in, and to export our products from, affected areas.

As a result, we may continue to face delays or difficulty sourcing certain products.

These supply chain disruptions, as well as associated labor shortages within the supply chain, could cause inventory shortages, delays in order fulfillment and increased backlogs, and we may be unable to meet our customers’ expectations and requirements as result, which could negatively affect our business and financial results.

Even if we are able to find alternate sources for such products, they may cost more, which could adversely impact our profitability and financial condition.

Additional adverse changes in economic conditions as a result of the pandemic may also lead to increased credit concerns and challenges to recover accounts receivable, reduced liquidity, adverse impacts on our suppliers and customers, including on their abilities to continue to operate as a going concern.

Further, the Company and management are focused on mitigating the impact of the COVID-19 pandemic, which has required and will continue to require, a large investment of time and resources and may delay other strategic initiatives.

Additionally, many of our employees are working remotely and may continue to do so for an extended period.

An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to our ability to manage our business, cyber-security and data security risks, the potential vulnerabilities to our financial reporting systems and our internal control environment and the effectiveness of our internal controls over financial reporting.

Due to the unprecedented nature of COVID-19 and the myriad of responses thereto, we cannot identify all of the risks we face from the pandemic and its resulting impacts.

Even after the pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur.

The pandemic could also amplify other risks and uncertainties described in our 2019 Annual Report on Form 10-K.

The ultimate adverse impacts relating to the potential effect of the COVID-19 pandemic on our business and the costs that we may incur as a result cannot be reasonably estimated but could be material.

A variety of factors, many outside our control, affect our suppliers' ability to deliver quality merchandise to us at favorable prices and in a timely manner.

These include, raw material shortages, inadequate manufacturing capacity, labor strikes, shortages and disputes anywhere within the supply and distribution chain delivering products to us, tariff and customs legislation and enforcement, transportation disruptions, tax and other legislative uncertainties, pandemics (including the current COVID-19 pandemic) and/or weather conditions.

Since the beginning of the COVID-19 pandemic, we have experienced supply chain disruptions, particularly with regard to labor shortages in the U.S. and inventory sourced from China.

These disruptions have not had a material impact on our business to date, but we cannot provide any assurance that these or new supply chain disruptions will not materially or adversely impact our business, financial condition and results of operations in the future

- the rate of adoption of electric vehicles, hybrid vehicles, ride sharing services, alternative transportation means and autonomously driven vehicles and future legislation related thereto;

Our retail and business customers increasingly demand convenient, easy-to-use e-commerce tools as an option to conduct their business with us.

Operating an e-commerce platform is a complex undertaking and exposes us to risks and difficulties frequently experienced by internet-based businesses, included risks related to, among other things, our ability to support, expand, and develop our internet operations, website, mobile applications and software and related operational systems.

Continuing to improve our e-commerce platform involves substantial investment of capital and resources, increasing supply chain and distribution capabilities, attracting, developing and retaining qualified personnel with relevant subject matter expertise and effectively managing and improving the customer experience.

If we are unable to successfully provide the e-commerce solutions our retail and business customers desire, we may lose existing customers and fail to attract new ones.

Our business, financial condition, results of operations and cash flows may be materially and adversely affected as a result.

Pursuing strategic transactions is also a time-consuming process that can involve significant expenses and management attention.

operations.

| | |

| --- | --- |

With respect to our business products group, the primary factors are:

| • | consolidation of customers and consolidation of the industry; |

| • | the increasing digitization of the workplace, as this negatively impacts the need for certain office products; |

| • | the level of unemployment, especially as it relates to white collar and service jobs, as high unemployment reduces the need for office products; |

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

| • | the economy in general, which in declining conditions may cause reduced demand for business products consumption. |

Certain political developments, including, among others: (i) the results of elections in the U.S. and globally and the impact of such results on political decision-making, and (ii) unrest in the U.K. and Europe, have resulted in increased economic uncertainty for multi-national companies operating within the U.K. and Europe.

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

In addition, the Tax Cuts and Jobs Act (the "Act") was signed into law on December 22, 2017.

The Act, which 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.

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.

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.

The fluctuation of currency exchange rates may expose us to gains and losses on non-U.S. currency transactions.

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.

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

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 or significant reduction in purchase volume of a major customer in the business products group could significantly impact its results of operations.

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

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.

The

stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect us and the market price of our common stock.

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

In [removed: 2019,] [added: 2020,] the Company conducted business in North America, Europe and Australasia from approximately [removed: 3,600] [added: 10,000] 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 [removed: 2019,] [added: 2020,] and accounted for [removed: 57%] [added: 66%] of total revenues for the year.

The Industrial Parts Group [added: operated in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore, and] accounted for 34% of the Company's total revenues in [removed: 2019.][added: 2020.]

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

[removed: These divestitures and] [added: Additionally,] the unfavorable impact of foreign currency partially offset [removed: our] [added: 2019] total sales [removed: growth for the year.][added: by 1.5%.]

These efforts produced improved [removed: gross] [added: segment] margins in [removed: 2019] [added: 2020] and we believe created a path for [removed: significant] [added: a more efficient and productive] cost [removed: savings] [added: structure] in the years ahead.

The Company generated [removed: $892.0 million] [added: $2.0 billion] in cash from operations and also benefited from cash proceeds associated with the sale of certain non-core businesses in [removed: 2019, as noted before.][added: 2020.]

The Company's priorities for [added: disciplined and] effective capital allocation [removed: have remained] [added: remain] consistent [removed: for many] [added: with prior] years.

In [removed: 2019,] [added: 2020,] we used cash for key investments in the form of [added: essential] capital expenditures and [removed: accretive] [added: small, bolt-on] acquisitions, as well as the return of capital to our shareholders via cash dividends and opportunistic share repurchases.

Our results of operations are summarized below for the years ended December 31, [added: 2020,] 2019 and 2018.

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

| (In thousands, except per share data) | | [added: | | | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | |

| Diluted net income [added: from continuing operations] per common share | | [removed: $] | [removed: 4.24] | | | $ | [removed: 5.50] [added: 1.13] | | [added: | | | $ | 4.42 | | | | | $ | 5.09 | |]

Consolidated net sales for the year ended December 31, 2019 totaled [removed: $19.4] [added: $17.5] billion, up [removed: 3.5%] [added: 4.1%] from 2018.

[removed: 2019 net] [added: Net] sales [added: for 2019] included an approximate [removed: 4.6%] [added: 5.1%] contribution from acquisitions, net of store closures and an approximate [removed: 1.7%] [added: 2.1%] increase in core sales.

The Company's sale of certain non-core businesses determined to be slower-growth and lower-margin operations partially offset total sales by [removed: 1.4%.][added: 1.6%.]

Additionally, the [removed: unfavorable] [added: favorable] impact of foreign currency [added: and other] partially offset [added: the decline in] total sales by [removed: 1.4%.][added: 0.3%.]

The Company's [removed: core sales growth, which represents the Company's] comparable [removed: sales,] [added: sales] included both [removed: the] [added: an] increase in sales volume and product inflation.

The impact of product inflation varied by business segment in [removed: 2019,] [added: 2020,] with prices [removed: up approximately 2.4%] [added: flat] in the [removed: U.S.] Automotive [removed: and Industrial segments] [added: segment] and up [removed: approximately 3.0%] [added: 0.7%] in [removed: the Business Products] [added: our Industrial] segment.

Net sales for the Automotive Group [removed: (“Automotive”)] were $11.0 billion in 2019, a 4.4% increase from 2018.

We expect these fundamentals and our ongoing sales initiatives to drive sales growth for the Automotive Group in [removed: 2020.][added: 2021.]

Net sales for the Industrial Parts Group [removed: (“Industrial”)] were $6.5 billion in 2019, up 3.6% from 2018.

The [removed: increase] [added: decrease] in sales reflects an [removed: approximate 5.2% contribution from acquisitions and a 1.7% increase] [added: 8.4% decrease] in comparable [removed: sales, offset by] [added: sales and] an approximate [removed: 3.1%] [added: 8.5%] decrease in net sales related to the sale of EIS, a non-core component of the industrial business due to its slower-growth and lower-margin profile.

In addition, the July [added: 1, 2019] acquisition of [removed: Inenco,] [added: Inenco (now referred to as Motion Asia Pacific),] one of Australasia's leading industrial distributors, and the sale of EIS on September 30, 2019, impacted the quarterly sales comparisons for the Industrial Group in 2019.

We are confident in our growth plans for [removed: 2020,] [added: 2021,] both in North America and Australasia, [removed: but also] [added: and] expect to experience a [removed: relatively slow] [added: continued, gradual recovery in the] industrial economy [removed: through at least the first half of] [added: amid] the [removed: year.][added: current COVID-19 environment.]

[removed: *Business Products Group*][added: BUSINESS PRODUCTS GROUP]

[removed: Sales] [added: Industrial revenues] were [removed: up] [added: down] approximately [removed: 1.0%] [added: 7.7%] in the first [removed: quarter,] [added: quarter of 2020,] down [removed: 1.1%] [added: 21.1%] in the second quarter, down [removed: 0.9%] [added: 18.6%] in the third quarter and down [removed: 6.3%] [added: 3.3%] in the fourth [removed: quarter of 2019.][added: quarter.]

Cost of goods sold was [removed: $13.1] [added: $11.7] billion in 2019, a [removed: 2.5%] [added: 3.1%] increase from [removed: $12.8] [added: $11.3] billion in 2018.

The increase in cost of goods sold in 2019 compares to a [removed: 3.5%] [added: 4.1%] total sales increase and is a positive reflection of our global supply chain initiatives, the lower cost of goods sold models at certain acquired companies such as PartsPoint and [removed: Inenco,] [added: Motion Asia Pacific,] and the sale of the lower margin EIS business.

Cost of goods sold represented [removed: 67.4% of net sales in 2019, decreasing from 68.1%] [added: 67.2%] of net sales in 2018.

SG&A of [removed: $4.9] [added: $4.6] billion in 2019 increased by $0.3 billion or approximately [removed: 6.9%] [added: 7.9%] from 2018.

This represents [removed: 25.4%] [added: 26.1%] of net sales in 2019 compared to [removed: 24.6%] [added: 25.2%] of net sales in 2018.

In addition, our expenses reflect the impact of higher cost and higher gross margin models at certain acquired businesses, including PartsPoint and [removed: Inenco,] [added: Motion Asia Pacific,] as well as the sale of EIS, which had a lower level of SG&A expenses relative to total sales.

The increase in SG&A expenses as a percentage of net sales in 2019 relative to the prior year reflects the cost increases described above as well as the loss of leverage associated with the [removed: 1.7%] [added: 2.1%] comparable sales growth for the Company.

[removed: Additionally,] [added: In addition,] we are working towards a lower cost and highly effective infrastructure via steps to accelerate the integration of our acquisitions, investments to enhance our productivity and innovative strategies to unlock greater savings and efficiencies across our operations.

Depreciation and amortization expense was [removed: $270.3] [added: $257.3] million in 2019, an increase of approximately [removed: $28.7] [added: $29.7] million, or [removed: 11.9%,] [added: 13.0%,] from 2018, due primarily to the impact of acquisitions and the increase in capital expenditures relative to the prior year.

The provision for doubtful accounts was [removed: $14.9] [added: $13.9] million in 2019, a [removed: $2.2] [added: $2.1] million decrease from 2018.

We believe the Company is adequately reserved for bad debts [added: and credit losses] at December 31, [removed: 2019.][added: 2020.]

Refer to the [removed: restructuring] [added: segment data] footnote in the Notes to Consolidated Financial Statements for additional information.

Effective June 30, 2020, the Company completed the divestiture of its Business Products Group by selling Supply Source Enterprises, Inc. ("SSE") and S.P. Richards Company ("SPR") in separate transactions.

The Business Products Group was previously a reportable segment of the Company.

The results of operations, financial position and cash flows for the Business Products Group are reported as discontinued operations for all periods presented.

Further, as a result of the reclassification of the Business Products Group business to discontinued operations, the Company now has two segments: the Automotive Group and the Industrial Parts Group.

COVID-19 PANDEMIC

The COVID-19 outbreak, which was declared a pandemic by the World Health Organization (“WHO”) on March 11, 2020, continues to evolve rapidly.

Our deepest and sincere thoughts go out to all affected by COVID-19, as well as the dedicated healthcare workers and first responders who are on the front lines for all our citizens.

Overall, our business segments continue to face many uncertainties.

The Company's operations are vulnerable to the reduced economic activity caused by the COVID-19 outbreak.

Many governments put in place temporary social distancing and shelter-in-place mandates in late March and early April of 2020 and, as a result, our business segments experienced slowing sales trends as we entered the second quarter.

Beginning in the second half of 2020, sales generally improved as markets reopened and governments eased restrictions.

The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments that we cannot predict, including the severity of the virus; the occurrence of additional waves or spikes in infection rates; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic and the efficacy of these actions, including partial or complete shutdowns, travel restrictions, and stay-at-home orders among other actions; the effectiveness and distribution of COVID-19 vaccines; and impacts on our supply chain, our ability to keep operating locations open, and on customer demand.

While the negative impact on our business operations cannot be reasonably estimated at this time, our teams are preparing for multiple scenarios to ensure we continue to protect our employees while also keeping our operations up and running to serve our customers.

During the first quarter of 2020 we created a dedicated COVID-19 taskforce and added enhanced protocols in response to COVID-19, including implementing many of the recommendations and requirements issued by the Centers for Disease Control and Prevention, WHO, and local, state and national health authorities, to protect our employees, customers, suppliers and communities.

As of December 31, 2020, substantially all operations are open for business.

Our supply chain partners have been very supportive, despite strain on the supply chain with respect to labor shortages and certain inventory shortages, delays in order fulfillment and increased backlogs, and they continue to do their part to help our service levels to our customers remain strong.

We remain in constant communication with our employees regarding changing conditions and protocol.

Based on the length and severity of COVID-19, we may experience continued volatility in customer demand and supply chain disruption.

We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.

KEY BUSINESS METRICS

We consider comparable sales to be a key business metric because management has evaluated its results of operations using this metric and we believe that this key indicator provides additional perspective and insights when analyzing the operating performance of the Company from period to period and trends in its historical operating results.

This metric should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this report.

Comparable Sales

The Company considers this metric useful to investors because it provides greater transparency into management’s view and assessment of the Company’s core ongoing operations.

This metric is widely used by analysts, investors and competitors in our industry, although our calculation of the metric may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate this metric in the same manner.

In 2020, in response to the COVID-19 pandemic, our business segments faced tremendous challenges and uncertainties.

Governments put in place temporary social distancing and shelter-in-place mandates in late March and early April of 2020 causing reduced economic activity globally.

Additionally, we limited merger and acquisition activity to select “bolt-on” acquisitions to preserve financial flexibility.

As markets reopened and governments eased restrictions sales results began to improve in the third and fourth quarter of 2020.

Although, we still face many uncertainties, we are encouraged by the current economic outlook and believe our Company is well-positioned to drive positive sales growth in 2021.

In accordance with our 2019 Cost Savings Plan, we recognized permanent expense reductions of $150 million driven by transformative reductions in payroll and facility costs for the year ended December 31, 2020.

Additionally, we experienced lower costs in areas such as freight and delivery and legal and professional for the year.

We also executed on a number of additional savings initiatives in response to the impact of COVID-19, which contributed approximately $300 million in incremental, temporary savings in 2020 related to furloughs, reduced travel and other initiatives.

Our working capital was a source of operating cash flow.

We also focused on having ample liquidity and we improved our debt position by entering into a new revolving credit facility and issuing $500 million of the Company's unsecured senior notes.

Additionally, we entered into an accounts receivable sales agreement (the "A/R Sales Agreement").

We believe these measures further strengthen our liquidity position moving into 2021.

We plan to continue to support the dividend, which we have increased for 64 consecutive years through 2020.

| Net sales | | | | | | $ | 16,537,433 | | | | | $ | 17,522,234 | | | | | $ | 16,831,605 | |

| Gross margin | | | | | | $ | 5,654,841 | | | | | $ | 5,859,683 | | | | | $ | 5,519,755 | |

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.

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.

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.

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

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

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.

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.

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%.

We utilized our cash for effective capital allocation.

| | | | | | | | | |

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

| Net sales | | $ | 19,392,305 | | | $ | 18,735,073 | |

| Gross margin | | $ | 6,316,269 | | | $ | 5,983,787 | |

| Net income | | $ | 621,085 | | | $ | 810,474 | |

In 2019, total Automotive revenues were up approximately 2.3% in the first quarter, up 1.4% in the second quarter, up 5.3% in the third quarter and up 8.7% in the fourth quarter, with the higher third and fourth quarter increases due to the positive impact of various acquisitions.

In particular, we expanded our European footprint in June with the acquisition of PartsPoint Group in the Netherlands and Belgium.

Sound industry fundamentals and effective growth strategies drove organic growth of approximately 3% or more in the U.S., Canada and Australasia.

This was offset by core sales declines in our European operations, which faced several challenges in 2019 primarily related to regional economic and geopolitical concerns.

Our team in Europe worked throughout the year to navigate these challenges, resulting in improved sales trends in Europe in the last half of the year.

Net sales for S.P. Richards, our Business Products Group (“Business Products”), were $1.9 billion in 2019, a decrease of 1.8% from 2018.

The decrease in sales reflects the decline in core sales and was especially pronounced in the fourth quarter, which was significantly slower relative to the first three quarters of the year due to industry consolidation and increased competition.

While the business products industry continues to face significant challenges, our strategy to diversify our traditional product offering into the large and growing Facilities, Breakroom and Safety Supplies ("FBS") category has partially offset these challenges.

On January 1, 2020, we divested of our Canadian operations in the Business Products Group to simplify our business model and focus on our U.S. operations.

As we look ahead, we remain focused on our core growth initiatives and maximizing the growth prospects for our diversified business, but will also continue to evaluate all opportunities that may help us more effectively navigate the evolving industry dynamics in which this group competes.

In 2019 and 2018, each of the Company's business segments experienced vendor price increases.

In 2019, tariffs on certain goods sourced directly or indirectly from China were a contributing factor in the price increases for the automotive and business products segments.

Historically where we experience price increases, we are able to work with our customers to pass most of these increases along to them.

To improve on our SG&A expense levels, we continue to execute on our growth initiatives to better leverage our expenses.

Through the 2019 Costs Savings Plan discussed above, the Company expects to reduce expenses by an annualized run-rate of $100 million by the end of 2020.

In addition, the Company approved and began to implement the 2019 Cost Savings Plan discussed above, which resulted in the recognition of $112.2 million in restructuring costs that are accounted for as a component of operating expenses.

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

For the year ended December 31, 2019, the Company recorded a goodwill impairment charge related to its Business Products Group totaling $82.0 million.

Several factors that developed in the fourth quarter of 2019 led to this charge, including: (i) greater uncertainty associated with long-term industry trends and the competitive environment and (ii) fourth quarter results, including segment profitability, that were below management expectations due primarily to a reduction in volume with certain national account customers.

Management concluded that no other assets were impaired.

Nonetheless, as of December 31, 2019, we believe the remaining goodwill on our consolidated balance sheet is recoverable at each respective reporting unit.

[removed: 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.

Foreign currency exchange exposure, particularly in regard to the [removed: Canadian and Australian dollar and, to a lesser extent, the] Euro [removed: and Mexican peso,] positively impacted our results for the year ended December 31, [removed: 2018.][added: 2020.]

During [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] 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: $513] [added: $549] million and [removed: $486] [added: $508] 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: $770] [added: $824] million in [removed: 2019] [added: 2020] and [removed: $729] [added: $763] million in [removed: 2018.][added: 2019.]

A 20% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately [removed: $1,026] [added: $1,099] million in [removed: 2019] [added: 2020] and [removed: $972] [added: $1,017] million in [removed: 2018.][added: 2019.]

Based on the Company's variable-rate debt and derivative instruments outstanding as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] we estimate that a 100 basis point increase in interest rates would have increased interest expense by [removed: $5.5] [added: $1.1] million in [removed: 2019] [added: 2020] and [removed: $12] [added: $5.5] million in [removed: 2018.][added: 2019.]

This positive impact was mostly offset by the negative impact from the Canadian and Australian dollar for the full year ended December 31, 2020.

Foreign currency exchange

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

In [removed: 2019,] [added: 2020,] business was conducted from more than [removed: 3,600] [added: 10,000] 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.

[removed: At] [added: As of] December 31, [removed: 2019,] [added: 2020,] the Company employed approximately [removed: 55,000] [added: 50,000] people [removed: worldwide.][added: worldwide and operated within 14 countries.]

In Part III of this Form 10-K, we incorporate certain information by reference to our proxy statement for our [removed: 2020] [added: 2021] annual meeting of shareholders.

We expect to file that proxy statement with the SEC on or about March [removed: 3, 2020,] [added: 2, 2021,] and we will make it available online at the same time at http://www.proxydocs.com/gpc.

The Automotive Parts [removed: Group, the largest segment of the Company,] [added: Group] distributes automotive parts and accessory items in North America, Europe and Australasia.

During [removed: 2019,] [added: 2020,] the Company’s Automotive Parts Group included 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 United States ("U.S.") by the [removed: Company;] [added: Company and its U.S. Automotive Group;] 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 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 [removed: Company; an import automotive parts distribution center in the U.S. owned by the Company and operated by its Altrom America division; an import automotive parts distribution 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; 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 network was expanded in [removed: 2019] [added: 2020] via the acquisition of various store groups and automotive operations in North America, Europe and Australasia.

*Distribution System.* In [removed: 2019,] [added: 2020,] the [removed: Company] [added: Company's U.S. Automotive Group] operated [removed: 56] [added: 52] domestic NAPA automotive parts distribution centers located in [removed: 39] [added: 37] states and approximately [removed: 1,130] [added: 1,190] domestic company-owned NAPA AUTO PARTS stores located in [removed: 44] [added: 46] states.

At December 31, [removed: 2019,] [added: 2020,] the Company had either a noncontrolling, controlling [added: (less than 100% owned)] or other interest in [removed: 8] [added: seven] corporations, which operated approximately [removed: 256] [added: 268] auto parts stores in [removed: 15] [added: 12] states.

The Company’s domestic automotive operations have access to approximately [removed: 530,000] [added: 565,000] different parts and related supply items.

These items are purchased from [removed: more than 100] [added: hundreds of] different suppliers, with approximately [removed: 49%] [added: 48%] of [removed: 2019] [added: 2020] automotive parts inventories purchased from 10 major suppliers.

The Company’s domestic distribution centers serve the company-owned NAPA AUTO PARTS stores and approximately [removed: 4,800] [added: 4,700] 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: 61%] [added: 60%] of the Company’s total U.S. Automotive sales and [removed: 20%] [added: 22%] of the Company’s total sales.

NAPA Canada/UAP operates a network of [removed: nine] [added: eight] NAPA automotive parts distribution centers, [removed: three] [added: four] heavy duty parts distribution [removed: centers and] [added: centers,] one fabrication/remanufacturing facility [added: and one Altrom distribution center] supplying [removed: 592] [added: 573] NAPA [removed: stores and 120] [added: stores, 122] Traction [removed: wholesalers.][added: wholesalers and 24 Altrom branches.]

The NAPA stores and Traction wholesalers in Canada include [removed: 207] [added: 198] company-owned stores, [removed: 11] [added: 13] joint ventures and [removed: 24] [added: 21] progressive owners in which NAPA Canada/UAP owns a 50% interest and [removed: 470] [added: 463] independently owned stores.

GPC Asia Pacific operates 12 distribution centers, 406 auto parts stores under the Repco banner, [removed: 130] [added: 112] auto parts stores under NAPA, Ashdown Ingram and other banners, and [removed: 17] [added: 18] locations associated with AMX/McLeod.

In France, AAG operates [removed: 16] [added: 17] distribution centers and serves [removed: 1,057] [added: 1,083] stores, of which [removed: 266] [added: 253] are company-owned, under the banners GROUPAUTO France, Precisium Group, Partner's, and GEF Auto.

In the United Kingdom ("U.K."), AAG operates [removed: 36] [added: 34] distribution centers and serves [removed: 842] [added: 818] stores, of which [removed: 226] [added: 220] are company-owned, under the banners GROUPAUTO UK & Ireland and UAN.

In Germany, AAG operates [removed: nine] [added: 11] distribution centers and [removed: 29] [added: 59] company-owned stores under the banner Alliance Automotive Group [removed: Germany as well as 31 company owned stores under the banner Hennig Fahrzeugteile.][added: Germany.]

In the Netherlands and Belgium, AAG operates [added: under the banner Alliance Automotive Group Benelux] through a network of one national distribution center, [removed: seven] [added: 6] regional warehouses and [removed: 195] [added: 215] stores, of which [removed: 133] [added: 153] are company owned.

[removed: Products] [added: In Australasia and Europe, products] are distributed [removed: through the NAPA system] under [added: several brand names, including many of] the [added: national brands, as well as the] NAPA® [removed: brand] name.

[removed: Finally, the Company] [added: In addition, this Group] operates [removed: domestically] two TW Distribution heavy duty parts distribution centers which serve 22 company-owned Traction Heavy Duty parts stores located in eight states.

NAPA, which neither buys nor sells automotive parts, functions as a trade association whose sole member in [removed: 2019] [added: 2020] owned and operated [removed: 56] [added: 52] 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: 2019,] [added: 2020,] includes only the Company.

[added: 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.

[added: Motion Asia Pacific, which was rebranded from the] Inenco Group ("Inenco"), also a wholly-owned subsidiary of the Company headquartered in Sydney, Australia, operates across Australasia.

In [removed: 2019,] [added: 2020,] Motion served approximately [removed: 200,000] [added: 170,000] customers in all types of industries located throughout North America, including the equipment and machinery, food and beverage, forest products, primary metals, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries; as well as strategically targeted specialty industries such [removed: as power generation, alternative energy, government, transportation, ports, and others.]

Motion services all manufacturing and processing industries with access to a database of [removed: 8.7] [added: 10.4] million parts.

Additionally, Motion provides U.S. government agencies access to approximately [removed: 72,000] [added: 20,500] products and replacement parts through a Government Services Administration [removed: (GSA)] [added: (“GSA”)] schedule.

*Distribution System.* In North America, the Industrial Parts Group stocks and distributes more than [removed: 195,000] [added: 155,000] different items purchased from more than [removed: 880] [added: 750] different suppliers.

Approximately [removed: 40%] [added: 50%] of total industrial product purchases in [removed: 2019] [added: 2020] were made from [removed: 10] [added: 11] major suppliers.

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, [removed: 2019.][added: 2020.]

*Products.* The Industrial Parts Group distributes a wide variety of parts and products to its customers, which are primarily industrial [removed: concerns.][added: companies.]

To a lesser extent, the Industrial Parts Group competes with manufacturers that sell directly to the [removed: customer.][added: customer and with various industrial eCommerce sites.]

[removed: S.P. Richards is] [added: The Business Products Group was] engaged in the wholesale distribution of a broad line of office and other business-related products through a diverse customer base of [removed: resellers.][added: resellers for use in businesses, schools, offices, and other institutions.]

Business products fall into the general categories of office furniture, technology products, general office, school supplies, cleaning, janitorial and [removed: breakroom] [added: break room] supplies, safety and security items, healthcare products and disposable food service products.

We previously reported the results of our Business Products Group as a segment.

As further described in the acquisitions, divestitures and discontinued operations footnote in the Notes to Consolidated Financial Statements, effective June 30, 2020, the Company completed the divestiture of its Business Products Group by selling Supply Source Enterprises, Inc. ("SSE") and S.P. Richards Company ("SPR") in separate transactions.

The results of operations, financial position and cash flows for the Business Products Group are reported as discontinued operations for all periods presented.

The Company maintains an immaterial investment in SPR, which is included within other assets on the consolidated balance sheet.

As a result of the reclassification of the Business Products Group business to discontinued operations, we now have two segments: the Automotive Parts Group and the Industrial Parts Group.

Our description and discussion within this "Item 1.

Business" reflect the continuing operations, unless otherwise noted.

Our segments are further detailed in the segment data footnote in the Notes to Consolidated Financial Statements.

To complement its competitiveness in the automotive aftermarket, this Group includes select investments in digital/e-commerce businesses across our operations.

The U.S. Automotive Group is supported by several operations that are integral to the NAPA supply chain.

as power generation, alternative energy, government, transportation, ports, and others.

HUMAN CAPITAL MANAGEMENT

The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent.

To support these objectives, the Company’s human resources programs are designed to CONNECT prospective and current talent to opportunities at the Company, ENGAGE current employees through an inclusive and diverse culture with an emphasis internally and throughout the community, and help employees to GROW for future opportunities within the organization.

*Employee Retention and Professional Development*

We take pride in our employees and are committed to helping our employees improve their physical, emotional and financial well-being.

Our well-being programs include an online platform that offers an interactive way to accomplish personal and financial goals and a rewards platform for completing Company sponsored competitions and well-being activities.

The Company periodically conducts a global Engagement Survey ("the Engagement Survey") as a means of measuring employee engagement and satisfaction, as well as a tool for improving our human capital strategies.

Our management reviews the results and based on the responses we have built action plans to focus on areas of improvement.

We are pleased to report

that the 2020 Engagement Survey results were overall favorable and have shown that our employees are proud to work for the Company.

The results of the 2020 Engagement Survey and future surveys help us to continuously improve our human capital strategies and find ways to foster engagement and growth for our employees.

In addition, to empower employees to continually enhance their skills and reach their maximum potential, we provide a range of development programs, resources, and opportunities to help them be successful.

Many are facilitated locally by each business with core leadership development at the Corporate level.

One of our more significant programs is focused on high potential employees from all businesses globally.

This program is a combination of in-person and virtual coursework and training with the intent to become fully immersed in the operations of our business and developing strategies and improvements cross-functionally.

The Company also offers various internship and rotational programs.

Our internship and rotational programs allow employees to see different operations of our business while also building strong relationships throughout the Company.

Additionally, we offer various on-demand and live training courses to help our employees achieve their professional and personal goals.

We believe these programs demonstrate the Company’s ongoing commitment of developing our future leaders.

*Diversity and Inclusion*

Our culture is strengthened by our core values, which includes a steadfast commitment to diversity and inclusion.

As part of our investment in our people, we make diversity and inclusion a priority.

Our goal is to create a culture where we value, respect, and provide fair treatment and equal opportunities for all employees.

In addition, the Company has created a Diversity and Inclusion Committee, led by senior leadership and representatives from each business unit to ensure accountabilities exist to advance new initiatives and causes directed at leveling the playing field for all concerned.

Our commitment includes supporting organizations that advance the interests of impacted individuals as well as supporting our communities in need.

In the year ended December 31, 2020, our senior leaders also participated in training and discussions around the creation of an inclusive workplace.

Employees at all levels across the organization are also participating in trainings to gain a better understanding of unconscious bias and its impact on the business.

Our efforts are also directed internally where we encourage the exchange of ideas, actively listen to employee dialogue, provide appropriate training, and ensure that the interests of all our employees are supported and advanced.

Overall, the Company seeks to create an environment where there is a sense of belonging and all voices are valued.

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.

In total, AAG's acquisitions in 2019 are expected to generate annual revenues of approximately $630 million.

The Company has a 15% interest in Mitchell Repair Information Corporation (“MRIC”), a subsidiary of Snap-on Incorporated.

MRIC is a leading automotive diagnostic and repair information company that links North American subscribers to its services and information databases.

MRIC’s core product, “Mitchell ON-DEMAND,” is a premier electronic repair information source in the automotive 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 Mexico, NAPA Mexico owns and operates one distribution center and serves 25 company-owned and 18 independently-owned auto parts stores.

NAPA Mexico is a licensee of the NAPA® name in Mexico.

The Company's North American automotive business is supported by several operations that form its Automotive Supply Group.

Balkamp, a wholly-owned subsidiary of the Company, distributes a wide variety of replacement parts and accessory items for passenger cars, heavy-duty vehicles, motorcycles and farm equipment.

In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions.

Balkamp packages many of the 42,000 products, which constitute the “Balkamp” line of products that are distributed through the NAPA system.

These products are categorized into over 238 different product categories purchased from approximately 500 domestic suppliers and over 100 foreign manufacturers.

Balkamp provides the NAPA system with over 1,300

SKUs of oils and chemicals.

BALKAMP®, a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization.

The Company's Rayloc division operates four facilities focused on providing cost effective, quality service in engineering, cataloging, global sourcing, and distribution.

Rayloc delivers over 10,000 part numbers, including brake pads, brake drums, chassis, and bearings through a nationwide distribution network.

Rayloc® is a mark licensed to the Company by NAPA.

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

This group distributes heavy vehicle parts through the NAPA system and direct to small and large fleet owners and operators.

In Australasia and Europe, products are distributed under several brand names, including many of the national brands.

In addition, the Company competes

Further information regarding competition in the industry is set forth in “Item 1A.

Risk Factors — We face substantial competition in the industries in which we do business.”

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.

The Business Products Group, operated through S.P. Richards Company (“S.P. Richards” or "SPR"), is a wholly-owned subsidiary of the Company headquartered in Atlanta, Georgia.

These products are used in businesses, schools, offices, and other institutions.

In 2019, the Business Products Group operated primarily in the U.S. but was also represented in Canada through S.P. Richards Canada, a wholly-owned subsidiary of the Company headquartered near Toronto, Ontario.

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.

*Distribution System.* The Business Products Group distributes more than 98,000 items to almost 9,000 resellers and distributors throughout the U.S. In addition, the group has an electronic, non-stock ordering system that can seamlessly deliver thousands of additional SKUs to customers in a timely fashion.

Information with respect to the Company's legal proceedings may be found in the Commitments and Contingencies, to the Consolidated Financial Statements in Item 8 of Part II, which is incorporated herein by reference.

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

Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributed by the Company.

While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material effect on the Company’s business, results of operations or financial condition.

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

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

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]

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

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

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

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

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

| 2999 WILDWOOD PARKWAY, | | | | | | [added: | | | | | | | | | | | |]

| ATLANTA, | [added: | |] GA | | | | [added: | | | | | | | |] 30339 | [added: | |]

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

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

| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]

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

| Large accelerated filer | | [added: | | | |] ☒ | | [added: | | | |] Accelerated filer | | [added: | | | |] ☐ | [added: | |]

| Non-accelerated filer | | [added: | | | |] ☐ | | [added: | | | |] Smaller reporting company | | [added: | | | |] ☐ | [added: | |]

| Emerging growth company | | [added: | | | |] ☐ | | | | | [added: | | | | | | | | | |]

As of June 30, [removed: 2019,] [added: 2020,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $14,311,370,798] [added: $12.2 billion] based on the closing sale price as reported on the New York Stock Exchange.

There were [removed: 145,381,623] [added: 144,404,012] shares of the Company's common stock outstanding as of February [removed: 18, 2020.][added: 15, 2021.]

Specifically identified portions of the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April [removed: 27, 2020] [added: 29, 2021] are incorporated by reference into Part III of this Form 10-K.

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

| [removed: [PART I](#sAB6BBD7EC2B45786A1052F85F6FFDAF7)] [added: [PART I](#ie0b82e630d9e4871bff7f39bb70f8177_10)] | | [added: | | | |] Page | [added: | |]

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Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [PART II](#ie0b82e630d9e4871bff7f39bb70f8177_31) | | | | | | | | |

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| [PART IV](#ie0b82e630d9e4871bff7f39bb70f8177_187) | | | | | | | | |

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| | | | [Signatures](#ie0b82e630d9e4871bff7f39bb70f8177_196) | | | [81](#ie0b82e630d9e4871bff7f39bb70f8177_196) | | |

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| [PART II](#sD39F9D4282D553F39EA2016C4BA105EA) | | |

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

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

The following table summarizes [added: our company-owned] distribution centers, retail stores and branches as of December 31, [removed: 2019:][added: 2020:]

| | [added: | |] Distribution Centers | | [added: | | | |] Stores/Branches | [added: | |]

| Automotive Parts: | | | | [added: | | | | | | | |]

| North America | [removed: 81] | | [removed: 1,424] [added: 76] | [added: | | | | | 1,440 | | |]

| Total Automotive Parts | [removed: 155] | | [removed: 2,669] [added: 163] | [added: | | | | | 2,661 | | |]

| Industrial Parts: | | | | [added: | | | | | | | |]

| North America | [removed: 15] | | [removed: 551] [added: 16] | [added: | | | | | 523 | | |]

| Total Industrial Parts | [removed: 23] | | [removed: 735] [added: 24] | [added: | | | | | 693 | | |]

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| Europe | | | 75 | | | | | | 685 | | |

| Australasia | | | 12 | | | | | | 536 | | |

| Australasia | | | 8 | | | | | | 170 | | |

| Total | | | 187 | | | | | | 3,354 | | |

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| Europe | 62 | | 692 |

| Australasia | 12 | | 553 |

| Australasia | 8 | | 184 |

| Business Products | 44 | | 0 |

| Total | 222 | | 3,404 |

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

Market Information Regarding Common Stock

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

Stock Performance 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 (“Peer Index”) structured by the Company as set forth below for the five year period that commenced December 31, 2014 and ended December 31, 2019.

This graph assumes that $100 was invested on December 31, 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.

Comparison of five year cumulative total shareholder return


Genuine Parts Company, S&P 500 Stock Index and peer group composite index

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| Cumulative Total Shareholder Return $ at Fiscal Year End | | 2014 | | 2015 | | 2016 | | 2017 | | 2018 | | 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 |

In constructing the 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, 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 automotive parts Peer Group are those companies making up the Dow Jones U.S. Auto Parts Index (the Company is a member of such industry group, and its individual shareholder return was included when calculating the Peer Index results set forth in the performance graph).

Included in the industrial parts Peer Group are Applied Industrial Technologies, Inc., Fastenal Company, and W.W. Grainger, Inc. and included in the business products Peer Group is Office Depot, Inc.

In determining the Peer Index, each Peer Group was weighted to reflect the Company’s annual net sales in each industry segment.

Each industry segment of the Company comprised the following percentages of the Company’s net sales for the fiscal years shown:

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| Industry Segment | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | |

| Automotive Parts | | 53 | % | | 52 | % | | 53 | % | | 53 | % | | 56 | % | | 57 | % |

| Industrial Parts | | 36 | % | | 35 | % | | 34 | % | | 35 | % | | 34 | % | | 34 | % |

| Business Products | | 11 | % | | 13 | % | | 13 | % | | 12 | % | | 10 | % | | 9 | % |

Holders

As of December 31, 2019, there were 4,200 holders of record of the Company’s common stock.

The number of holders of record does not include beneficial owners of the common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

Issuer Purchases of Equity 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, 2019:

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

| 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 | |

Market Information Regarding Common Stock

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

Stock Performance 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 (“Peer Index”) structured by the Company as set forth below for the five year period that commenced December 31, 2015 and ended December 31, 2020.

This graph assumes that $100 was invested on December 31, 2015 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.

Comparison of five year cumulative total shareholder return


Genuine Parts Company, S&P 500 Stock Index and peer group composite index

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| Cumulative Total Shareholder Return $ at Fiscal Year End | | | | | | 2015 | | | | | | 2016 | | | | | | 2017 | | | | | | 2018 | | | | | | 2019 | | | | | | 2020 | | |

| Genuine Parts Company | | | | | | $100.00 | | | | | | $114.30 | | | | | | $117.10 | | | | | | $121.91 | | | | | | $139.04 | | | | | | $135.99 | | |

| S&P 500 Stock Index | | | | | | $100.00 | | | | | | $111.96 | | | | | | $136.40 | | | | | | $130.43 | | | | | | $171.50 | | | | | | $203.05 | | |

| Peer Index | | | | | | $100.00 | | | | | | $110.23 | | | | | | $131.89 | | | | | | $111.44 | | | | | | $143.67 | | | | | | $171.86 | | |

In constructing the 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, 2015 and including reinvestment of dividends) that compete with the Company in its two industry segments: automotive parts and industrial parts (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 automotive parts Peer Group are those companies making up the Dow Jones U.S. Auto Parts Index (the Company is a member of such industry group, and its individual shareholder return was included when calculating the Peer Index results set forth in the performance graph).

Included in the industrial parts Peer Group are Applied Industrial Technologies, Inc., Fastenal Company, and W.W. Grainger, Inc. In determining the Peer Index, each Peer Group was weighted to reflect the Company’s annual net sales in each industry segment.

Holders

As of December 31, 2020, there were 4,107 holders of record of the Company’s common stock.

The number of holders of record does not include beneficial owners of the common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

Issuer Purchases of Equity 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, 2020:

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

| October 1, 2020 through October 31, 2020 | | | | | | 6,536 | | | | | | $ | 102.45 | | | | | — | | | | | | 14,484,676 | | |

| November 1, 2020 through November 30, 2020 | | | | | | 48,073 | | | | | | $ | 100.69 | | | | | — | | | | | | 14,484,676 | | |

| December 1, 2020 through December 31, 2020 | | | | | | 34,806 | | | | | | $ | 100.08 | | | | | 5,140 | | | | | | 14,479,536 | | |

| Totals | | | | | | 89,415 | | | | | | $ | 100.58 | | | | | 5,140 | | | | | | 14,479,536 | | |

(1)Includes shares surrendered by employees to the Company to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of stock options and/or tax withholding obligations.

(2)On August 21, 2017, the Board of Directors announced that it had authorized the repurchase of 15.0 million shares.

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 14.5 million shares authorized remain available to be repurchased by the Company.

There were no other repurchase plans announced as of December 31, 2020.

Not applicable.

The following table sets forth certain selected historical financial and operating data of the Company as of the dates and for the periods indicated.

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 information, as well as in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.

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| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | |

| (In thousands, except per share data) | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| Net sales | | $ | 19,392,305 | | | $ | 18,735,073 | | | $ | 16,308,801 | | | $ | 15,339,713 | | | $ | 15,280,044 | |

| Cost of goods sold | | $ | 13,076,036 | | | $ | 12,751,286 | | | $ | 11,402,403 | | | $ | 10,740,106 | | | $ | 10,724,192 | |

| Operating and non-operating expenses, net | | $ | 5,485,969 | | | $ | 4,908,175 | | | $ | 3,897,130 | | | $ | 3,525,267 | | | $ | 3,432,171 | |

| Income before taxes | | $ | 830,300 | | | $ | 1,075,612 | | | $ | 1,009,268 | | | $ | 1,074,340 | | | $ | 1,123,681 | |

| Income taxes | | $ | 209,215 | | | $ | 265,138 | | | $ | 392,511 | | | $ | 387,100 | | | $ | 418,009 | |

| Net income | | $ | 621,085 | | | $ | 810,474 | | | $ | 616,757 | | | $ | 687,240 | | | $ | 705,672 | |

| Weighted average common shares outstanding during year — assuming dilution | | 146,417 | | | | 147,241 | | | | 147,701 | | | | 149,804 | | | | 152,496 | | |

| Per common share: | | | | | | | | | | | | | | | | | | | | |

| Diluted net income | | $ | 4.24 | | | $ | 5.50 | | | $ | 4.18 | | | $ | 4.59 | | | $ | 4.63 | |

| Dividends declared | | $ | 3.05 | | | $ | 2.88 | | | $ | 2.70 | | | $ | 2.63 | | | $ | 2.46 | |

| December 31 closing stock price | | $ | 106.23 | | | $ | 96.02 | | | $ | 95.01 | | | $ | 95.54 | | | $ | 85.89 | |

| Total debt, less current maturities | | $ | 2,802,056 | | | $ | 2,432,133 | | | $ | 2,550,020 | | | $ | 550,000 | | | $ | 250,000 | |

| Total equity | | $ | 3,695,500 | | | $ | 3,471,991 | | | $ | 3,464,156 | | | $ | 3,207,356 | | | $ | 3,159,242 | |

| Total assets | | $ | 14,645,629 | | | $ | 12,683,040 | | | $ | 12,412,381 | | | $ | 8,859,400 | | | $ | 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.

| | [added: | |] Page | [added: | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s8B3C7F0B0B1250A3A8721AB7266A7820)] [added: Firm](#ie0b82e630d9e4871bff7f39bb70f8177_70)] | [removed: [30](#s8B3C7F0B0B1250A3A8721AB7266A7820)] | [added: | [32](#ie0b82e630d9e4871bff7f39bb70f8177_70) | | |]

| [Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#s96B06D1724C75ADA80E9DA51A07C59BB)] [added: 2019](#ie0b82e630d9e4871bff7f39bb70f8177_73)] | [removed: [34](#s96B06D1724C75ADA80E9DA51A07C59BB)] | [added: | [34](#ie0b82e630d9e4871bff7f39bb70f8177_73) | | |]

| [Consolidated Statements of [removed: Income and] Comprehensive Income for the Years Ended December 31, [added: 2020,] 2019, [removed: 2018] and [removed: 2017](#sAB390582AB7C571399A6030D761CBFBB)] [added: 2018](#ie0b82e630d9e4871bff7f39bb70f8177_1948)] | [removed: [35](#sAB390582AB7C571399A6030D761CBFBB)] | [added: | [36](#ie0b82e630d9e4871bff7f39bb70f8177_1948) | | |]

| [Consolidated Statements of Equity for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s5BF328426555541DB1C0B4FA8E978105)] [added: 2018](#ie0b82e630d9e4871bff7f39bb70f8177_85)] | [removed: [36](#s5BF328426555541DB1C0B4FA8E978105)] | [added: | [37](#ie0b82e630d9e4871bff7f39bb70f8177_85) | | |]

| [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s73847ABCB7985C4B925370D973CABE85)] [added: 2018](#ie0b82e630d9e4871bff7f39bb70f8177_91)] | [removed: [37](#s73847ABCB7985C4B925370D973CABE85)] | [added: | [38](#ie0b82e630d9e4871bff7f39bb70f8177_91) | | |]

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

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries (the Company) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of [removed: income and] [added: income,] comprehensive income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] 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, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] 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, [removed: 2019,] [added: 2020,] 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 [removed: 21, 2020] [added: 19, 2021] expressed an unqualified opinion thereon.

| | [added: | |] Valuation of Goodwill | [added: | |]

| [removed: *Description] [added: Description] of the [removed: Matter*] [added: Matter] | [added: | |] As of December 31, [removed: 2019,] [added: 2020,] the Company’s goodwill was [removed: $2,293,519,000.] [added: $1,917,477,000.] 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, [removed: 2019,] [added: 2020,] the Company recorded a goodwill impairment charge of [removed: $81,968,000] [added: $506,721,000] related to [removed: one of] its [added: European] reporting [removed: units] [added: unit] as disclosed in Note [removed: 2] [added: 3] 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 [removed: a] [added: the] reporting unit. In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the weighted average [removed: costs] [added: cost] of [removed: capital, revenue growth rates, operating margins, working] capital and [removed: terminal value,] [added: market multiples, and near-term revenue and operating margin projections,] which are affected by expectations about future market or economic conditions. | [added: | |]

| [removed: *How] [added: How] We Addressed the Matter in Our [removed: Audit*] [added: Audit] | [added: | |] 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 [added: European] reporting [removed: units where the quantitative impairment tests were performed,] [added: unit,] 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 [removed: values] [added: value] of the reporting [removed: units] [added: unit] that would result from changes in the assumptions. We also recalculated the resulting impairment charge recorded by the Company. | [added: | |]

| | [added: | |] Loss Contingencies Related to Product Liabilities | [added: | |]

| [removed: *Description] [added: Description] of the [removed: Matter*] [added: Matter] | [added: | |] As disclosed in Notes 1 and [removed: 11] [added: 13] to the consolidated financial statements, the Company is subject to pending product liability lawsuits primarily resulting from its national distribution of automotive parts and supplies. The Company accrues for loss contingencies related to product liabilities if it is probable that the Company will incur a loss and the loss can be reasonably estimated. The amount accrued for product liabilities as of December 31, [removed: 2019] [added: 2020] was [removed: $146,230,000.] [added: $169,461,000.] Auditing the Company’s loss contingencies related to product liabilities was complex due to the significant measurement uncertainty associated with the estimate, management’s application of significant judgment and the use of valuation techniques. In addition, the loss contingencies related to product liabilities are sensitive to significant management assumptions, including the number, type, and severity of claims incurred and estimated to be incurred in future periods. | [added: | |]

| [removed: *How] [added: How] We Addressed the Matter in Our [removed: Audit*] [added: Audit] | [added: | |] We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for estimating loss contingencies related to product liabilities. For example, we tested controls over management's review of the significant assumptions described above and the reconciliation of claims data to that used by the Company’s actuarial specialist. To test the estimated loss contingencies related to product liabilities, our audit procedures included, among others, assessing the methodology used, testing the significant assumptions, including testing the completeness and accuracy of the underlying data, and comparing significant assumptions to historical claims as well as external data. We evaluated the legal letters obtained from internal and external legal counsel, held discussions with legal counsel, and performed a search for new or contrary evidence affecting the estimate. We involved our actuarial specialists to assist in our evaluation of the methodology and assumptions used by management and to independently develop a range of estimated product liabilities using the Company’s historical data as well as other information available for similar cases. We compared the Company's estimated loss contingencies related to product liabilities to the range developed by our actuarial specialists. We also assessed the adequacy of the Company’s disclosures, included in Notes 1 and [removed: 11] [added: 13] to the consolidated financial statements, in relation to these matters. | [added: | |]

| | [removed: As] [added: | | As] of December [removed: 31,] [added: 31,] | | | | | | | [added: | |]

| | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | [added: | 2019 | | | | | | 2018 | | |]

| Assets | | | | | | | | [added: | | | |]

| Current assets: | | | | | | | | [added: | | | |]

| Cash and cash equivalents [added: at beginning of year] | [removed: $] | [removed: 276,992] | [added: 276,992] | | [removed: $] | [added: | | |] 333,547 | | [added: | | | | 314,899 | | |]

| Trade accounts receivable, net | [removed: 2,635,155] | | | | [removed: 2,493,636] | [added: $] | [added: 194,903] | [added: |]

| Prepaid expenses and other current assets | [removed: 1,195,286] | | | | [removed: 1,139,118] | [added: 788] | | [added: |]

| Total current assets | [removed: 7,938,616] | | [added: 7,113,763] | | [removed: 7,575,690] | | | [added: | 7,938,616 | | |]

| Goodwill | [removed: 2,293,519] | | [added: 1,917,477] | | [removed: 2,128,776] | | | [added: | 2,293,519 | | |]

| Other intangible assets, net | [removed: 1,568,926] | | | | [removed: 1,411,642] | [added: 76,829] | | [added: |]

| Deferred tax assets [added: related to:] | [removed: 54,851] | | | | [removed: 29,509] | | | [added: | | | | | | |]

| Operating lease assets | [removed: 1,075,969] | | | | [removed: —] | [added: 80,302] | | [added: |]

| [removed: Property,] [added: Net property,] plant and [removed: equipment, net] [added: equipment:] | [removed: 1,214,783] | | | | [removed: 1,027,231] | | | [added: | | | | | | | | | | | | |]

| Total assets | [removed: $] | [removed: 14,645,629] | | | [added: |] $ | [added: 13,440,215 | | | | | $ | 14,645,629 | | | | | $ |] 12,683,040 | |

| Liabilities and equity | | | | | | | | [added: | | | |]

| Current liabilities: | | | | | | | | [added: | | | |]

| Trade accounts payable | [removed: $] | [removed: 4,106,163] | | | [added: |] $ | [removed: 3,995,789] [added: 158,163] | |

| Current portion of debt | [removed: 624,043] | | [added: 160,531] | | [removed: 711,147] | | | [added: | 624,043 | | |]

| Dividends payable | [removed: 110,851] | | [added: 114,043] | | [removed: 105,369] | | | [added: | 110,851 | | |]

| Total current liabilities | [removed: 6,394,120] | | [added: 5,894,084] | | [removed: 5,900,733] | | | [added: | 6,394,120 | | |]

| Long-term debt | [removed: 2,802,056] | | [added: 2,516,614] | | [removed: 2,432,133] | | | [added: | 2,802,056 | | |]

| Operating lease [removed: liabilities] [added: liabilities:] | [removed: 825,567] | | | | [removed: —] | | | [added: | | | | | | | | | | | | |]

| Pension and other post-retirement benefit liabilities | [removed: 249,832] | | [added: 265,687] | | [removed: 235,228] | | | [added: | 249,832 | | |]

| Other long-term liabilities | [removed: 445,652] | | [added: 543,623] | | [removed: 446,112] | | | [added: | 445,652 | | |]

| [Consolidated Statements of Income for the Years Ended December 31, 2020, 2019 and 2018](#ie0b82e630d9e4871bff7f39bb70f8177_79) | | | [35](#ie0b82e630d9e4871bff7f39bb70f8177_79) | | |

| [Notes to Consolidated Financial Statements](#ie0b82e630d9e4871bff7f39bb70f8177_94) | | | [39](#ie0b82e630d9e4871bff7f39bb70f8177_94) | | |

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

| | | | | | |

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

February 19, 2021

| Cash and cash equivalents | | | $ | 990,166 | | | | | $ | 276,992 | |

| Trade accounts receivable, net | | | 1,556,966 | | | | | | 2,440,252 | | |

| Merchandise inventories, net | | | 3,506,271 | | | | | | 3,443,876 | | |

| Current assets of discontinued operations | | | — | | | | | | 714,251 | | |

| Other intangible assets, net | | | 1,498,257 | | | | | | 1,492,097 | | |

| Deferred tax assets | | | 65,658 | | | | | | 45,921 | | |

| Operating lease assets | | | 1,038,877 | | | | | | 995,667 | | |

| Other assets | | | 644,140 | | | | | | 457,350 | | |

| Noncurrent assets of discontinued operations | | | — | | | | | | 248,771 | | |

| Trade accounts payable | | | $ | 4,128,084 | | | | | $ | 3,948,000 | |

| Other current liabilities | | | 1,491,426 | | | | | | 1,493,109 | | |

| Current liabilities of discontinued operations | | | — | | | | | | 218,117 | | |

| Operating lease liabilities | | | 789,294 | | | | | | 756,519 | | |

| Deferred tax liabilities | | | 212,910 | | | | | | 233,044 | | |

| Noncurrent liabilities of discontinued operations | | | — | | | | | | 68,906 | | |

Consolidated Statements of Income

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

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

| Net sales | | | $ | 16,537,433 | | | | | $ | 17,522,234 | | | | | $ | 16,831,605 | |

| Cost of goods sold | | | 10,882,592 | | | | | | 11,662,551 | | | | | | 11,311,850 | | |

| Gross profit | | | 5,654,841 | | | | | | 5,859,683 | | | | | | 5,519,755 | | |

| Selling, administrative and other expenses | | | 4,386,739 | | | | | | 4,577,610 | | | | | | 4,241,203 | | |

| Depreciation and amortization | | | 272,842 | | | | | | 257,263 | | | | | | 227,584 | | |

| Restructuring costs | | | 50,019 | | | | | | 100,023 | | | | | | — | | |

| Total operating expenses | | | 5,239,898 | | | | | | 4,948,772 | | | | | | 4,484,716 | | |

| Interest expense | | | 93,713 | | | | | | 95,583 | | | | | | 101,796 | | |

| Other | | | (58,138) | | | | | | (86,712) | | | | | | (61,395) | | |

| Income before income taxes | | | 379,368 | | | | | | 859,283 | | | | | | 994,638 | | |

| Income taxes | | | 215,973 | | | | | | 212,808 | | | | | | 245,104 | | |

| Net income from continuing operations | | | 163,395 | | | | | | 646,475 | | | | | | 749,534 | | |

| Net (loss) income from discontinued operations | | | (192,497) | | | | | | (25,390) | | | | | | 60,940 | | |

| Basic (loss) earnings per share: | | | | | | | | | | | | | | | | | |

| Continuing operations | | | $ | 1.13 | | | | | $ | 4.44 | | | | | $ | 5.11 | |

| Discontinued operations | | | (1.33) | | | | | | (0.18) | | | | | | 0.42 | | |

| | |

| --- | --- |

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.

| | 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. |

| *How We Addressed the Matter in Our Audit* | We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for estimating the fair value of customer relationships, including controls over management's review of the significant assumptions used in the multi-period excess earnings method under the income approach. To test the estimated fair value of the customer relationships, we performed audit procedures that included, among others, evaluating the Company's selection and application of the multi-period excess earnings method under the income approach and evaluating the significant assumptions used by the Company. We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. For example, we compared the significant assumptions to the historical results of the acquired businesses and to other guideline companies within the same industries. We also performed sensitivity analyses of the significant assumptions, including the future revenue growth rates, operating margins and attrition rates, to evaluate the change in the fair value of the intangible assets resulting from changes in the assumptions. |

| | Adoption of New Lease Accounting Standard |

| *Description of the Matter* | As discussed above and in Note 1 to the consolidated financial statements, the Company adopted Accounting Standard Codification Topic 842, Leases (“ASC 842”) as of January 1, 2019. The adoption of ASC 842 resulted in the recognition of a right-of-use asset and lease liability on the consolidated balance sheet for substantially all leases, including operating leases. The cumulative effect of adopting the standard resulted in an adjustment to retained earnings of $4,797,000, net of taxes, at the same date. Management elected to adopt ASC 842 using the modified retrospective approach, in which existing leases were recorded at the adoption date, but prior periods were not recast under this approach. As of December 31, 2019, the Company’s right-of-use asset and lease liability were $1,075,969,000 and $1,096,298,000, respectively, as disclosed in Note 6 to the consolidated financial statements. The right-of-use asset and liability were dependent on management’s determination of incremental borrowing rates (IBRs), which required significant judgment. Auditing the Company's adoption of ASC 842 was especially challenging due to the effort required to ensure the completeness of the lease population and accuracy of lease terms given the significant volume of lease arrangements and subjectivity due to management’s judgment required to estimate its IBRs. Generally, the Company's lease arrangements do not provide an implicit interest rate. Therefore, the Company was required to estimate its IBRs across various currency environments to use as the discount rates when determining its right-of-use asset and lease liability. |

| *How We Addressed the Matter in Our Audit* | We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for implementing the new lease accounting standard. For example, we tested controls over management's process for review of the application of accounting policy elections and over management’s review of the IBRs. To test the Company’s adoption of ASC 842, our audit procedures included, among others, an evaluation of the completeness of the population of contracts that meet the definition of a lease under ASC 842, testing the accuracy of lease terms within the lease information technology system, and testing the accuracy of the Company’s system calculations of initial right-of-use assets and lease liabilities. Additionally, we involved our valuation specialists to test management’s model for estimating the IBRs. Our specialists assisted us in evaluating management’s methodology for developing the IBR, testing significant assumptions, such as currency environment adjustments, and comparing the Company’s IBRs to ranges developed by our specialists based on independently observed data. |

February 21, 2020

| | | | | | | | |

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

| Merchandise inventories, net | 3,831,183 | | | | 3,609,389 | | |

| Other assets | 498,965 | | | | 510,192 | | |

| Other current liabilities | 1,553,063 | | | | 1,088,428 | | |

| Deferred tax liabilities | 232,902 | | | | 196,843 | | |

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

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

| Net sales | $ | 19,392,305 | | | $ | 18,735,073 | | | $ | 16,308,801 | |

| Cost of goods sold | 13,076,036 | | | | 12,751,286 | | | | 11,402,403 | | |

| Gross margin | 6,316,269 | | | | 5,983,787 | | | | 4,906,398 | | |

| Selling, administrative, and other expenses | 4,934,167 | | | | 4,615,290 | | | | 3,726,233 | | |

| Depreciation and amortization | 270,288 | | | | 241,635 | | | | 167,691 | | |

| Restructuring costs | 112,184 | | | | — | | | | — | | |

| Total operating expenses | 5,413,512 | | | | 4,874,072 | | | | 3,907,856 | | |

| Interest expense | 95,711 | | | | 101,925 | | | | 41,486 | | |

| Other | (66,011 | | ) | | (67,822 | | ) | | (52,212 | | ) |

| Income before income taxes | 830,300 | | | | 1,075,612 | | | | 1,009,268 | | |

| Income taxes | 209,215 | | | | 265,138 | | | | 392,511 | | |

| Foreign currency translation adjustment | 38,246 | | | | (233,235 | | ) | | 137,694 | | |

| Net gain (loss) on cash flow and net investment hedges, net of income taxes of 2019 — $16,600; 2018 — $10,398; 2017 — $9,711 | 13,617 | | | | 28,114 | | | | (17,388 | | ) |

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

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

| | Balance at January 1, 2017 | 148,410,422 | | | $ | 148,410 | | | $ | 56,605 | | | $ | (1,013,021 | ) | | $ | 4,001,734 | | | $ | 3,193,728 | | | $ | 13,628 | | | $ | 3,207,356 | |

| | Net income | — | | | — | | | | — | | | | — | | | | 616,757 | | | | 616,757 | | | | — | | | | 616,757 | | |

| | Purchase of stock | (1,889,039 | ) | | (1,889 | | ) | | — | | | | — | | | | (171,635 | | ) | | (173,524 | | ) | | — | | | | (173,524 | | ) |

| | Cash dividends declared, $3.05 per share | — | | | — | | | | — | | | | — | | | | (444,372 | | ) | | (444,372 | | ) | | — | | | | (444,372 | | ) |

| | Share-based awards exercised, including tax benefit of $4,920 | 240,568 | | | 240 | | | | (11,653 | | ) | | — | | | | — | | | | (11,413 | | ) | | — | | | | (11,413 | | ) |

Not applicable.

Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were [removed: effective] [added: effective,] as of December 31, [removed: 2019.][added: 2020, to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.]

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, [removed: 2019.][added: 2020.]

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 the Company’s internal control over financial reporting was effective as of December 31, [removed: 2019.][added: 2020.]

[removed: Other than with respect to the remediation efforts described above, there] [added: 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: 2019] [added: 2020] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We have audited Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal [removed: Control-Integrated] [added: Control—Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Genuine Parts Company and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of [removed: income and] [added: income,] comprehensive income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the related notes and our report dated February [removed: 21, 2020] [added: 19, 2021] expressed an unqualified opinion thereon.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, which also audited our Consolidated Financial Statements for the year ended December 31, 2020.

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

February 19, 2021

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.

Remediation of previously identified material weakness

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.

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

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.

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

Donahue*, age [removed: 63,] [added: 64,] was appointed Chairman of the Board and Chief Executive Officer of the Company in April of 2019.

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

Yancey*, age [removed: 56,] [added: 57,] 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.

Prior to that, she served as Assistant Corporate Secretary from 1994 to 1995, Director of Shareholder Relations from 1992 [removed: to1994,] [added: to 1994,] and Director of Investor Relations in 1991, when she joined the Company.

Neill*, age [removed: 58,] [added: 59,] was appointed Executive Vice President of Human Resources of the Company in February of 2020.

Breaux*, age [removed: 57,] [added: 58,] was appointed President of Motion Industries on January 1, 2019.

Herron*, age [removed: 57,] [added: 58,] was appointed President of the U.S. Automotive Parts group on January 1, 2019.

*William P.

Stengel*, age 43, was appointed President of the Company on January 15, 2021.

Mr. Stengel previously served as Executive Vice President and Chief Transformation Officer of the Company from November 2019.

Previously, Mr. Stengel worked for HD Supply, an Atlanta-based industrial distributor, where he served as President and Chief Executive Officer of HD Supply Facilities Maintenance, from June of 2017 to October of 2018.

Prior to his role as President/CEO, he served as Chief Operating Officer for HD Supply Facilities Maintenance from September of 2016 to May of 2017 and prior to that role, he served as Chief Commercial Officer of HD Supply Facilities Maintenance from January of 2016 to September of 2016.

Mr. Stengel served as Senior Vice President, Strategic Business Development and Investor Relations of HD Supply from June of 2013 to January of 2016.

Prior to HD Supply, Mr. Stengel worked in the Strategic Business Development group at the Home Depot as well as at Bank of America and Stonebridge Associates in various investment banking roles.

We have adopted a Code of Conduct and Ethics, which is available on the “Investor Relations” section of our website.

Any amendments to, or waivers of, the Code of Code of Ethics will be disclosed on our website promptly following the date of such amendment or waiver.

*Scott A.

Sonnemaker*, age 56, joined the Company on February 1, 2019 as Group President, North American Automotive.

Prior to this, he was Senior Vice President, International Americas at Sysco Corporation from 2016 to 2019.

Previously, Mr. Sonnemaker served as Sysco's Chief Customer Officer and Senior Vice President of Sales from 2010 to 2016.

Information required by this item is set forth under the headings “Executive Compensation”, “Additional Information Regarding Executive Compensation”, [removed: “2019] [added: “2020] Grants of Plan-Based Awards”, [removed: “2019] [added: “2020] Outstanding Equity Awards at Fiscal Year-End”, [removed: “2019] [added: “2020] Option Exercises and Stock Vested”, [removed: “2019] [added: “2020] Pension Benefits”, [removed: “2019] [added: “2020] 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.

| | |

| --- | --- |

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |

Certain information required by this item is set forth below.

Additional information required by this item is set forth under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Proxy Statement and is incorporated herein by reference.

Equity Compensation Plan Information

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

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

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

| Plan Category | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | | | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | |

| Equity Compensation Plans Approved by Shareholders: | 1,121,611 | | (2) | $ | 80.85 | | | — | | |

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

| Equity Compensation Plans Not Approved by Shareholders: | 110,441 | | (4) | n/a | | | | 889,559 | | |

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

| (1) | Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights. |

| (2) | Genuine Parts Company 2006 Long-Term Incentive Plan |

| (3) | Genuine Parts Company 2015 Incentive Plan |

| (4) | Genuine Parts Company Directors' Deferred Compensation Plan, as amended |

| (5) | All of these shares are available for issuance pursuant to grants of full-value stock awards. |

Certain information required by this item is set forth below.

Additional information required by this item is set forth under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Proxy Statement and is incorporated herein by reference.

Equity Compensation Plan Information

The following table gives information as of December 31, 2020 about the common stock that may be issued under all of the Company’s existing equity compensation plans:

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

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

| Plan Category | | | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | | | | | | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | | | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | | | | |

| Equity Compensation Plans Approved by Shareholders: | | | 876,123 | | | (2) | | | $ | 82.66 | | | | | — | | | | | |

| | | | 1,957,126 | | | (3) | | | $ | 95.00 | | | | | 7,601,126 | | | (5) | | |

| Equity Compensation Plans Not Approved by Shareholders: | | | 120,123 | | | (4) | | | n/a | | | | | | 879,877 | | | | | |

| Total | | | 2,953,372 | | | | | | — | | | | | | 8,481,003 | | | | | |

(1)Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents.

The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights.

(2)Genuine Parts Company 2006 Long-Term Incentive Plan

(3)Genuine Parts Company 2015 Incentive Plan

(4)Genuine Parts Company Directors' Deferred Compensation Plan, as amended

(5)All of these shares are available for issuance pursuant to grants of full-value stock awards.

Consolidated balance sheets — December 31, [removed: 2019] [added: 2020] and [removed: 2018][added: 2019]

Consolidated statements of [removed: income and] comprehensive income — Years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017][added: 2018]

Consolidated statements of equity — Years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017][added: 2018]

Consolidated statements of cash flows — Years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017][added: 2018]

Notes to consolidated financial statements — December 31, [removed: 2019][added: 2020]

| Exhibit Number | | [added: | | | |] Description | [added: | |]

| Exhibit 3.1 | | [added: | | | |] [Amended and Restated Articles of Incorporation of the Company, as amended April 23, 2007. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 23, 2007.)](http://www.sec.gov/Archives/edgar/data/40987/000129993307002400/exhibit1.htm) | [added: | |]

| Exhibit 3.2 | | [added: | | | |] [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, 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000037/a1118amendedandrestatedbyl.htm) | [added: | |]

| Exhibit 4.1 | | [added: | | | |] [Description of Genuine Parts Company Common [removed: Stock.](https://www.sec.gov/Archives/edgar/data/40987/000004098720000010/a201910-kexhibit41.htm)] [added: Stock.](https://www.sec.gov/Archives/edgar/data/40987/000004098721000009/a202010-kexhibit41.htm)] | [added: | |]

| Exhibit 4.2 | | [added: | | | |] Specimen Common Stock Certificate. (Incorporated herein by reference from the Company’s Registration Statement on Form S-1, Registration No. 33-63874.) | [added: | |]

| Exhibit 10.1* | | [added: | | | |] [The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 3, 1995.)](http://www.sec.gov/Archives/edgar/data/40987/0000950144-95-000710-index.html) | [added: | |]

| Exhibit 10.2* | | [added: | | | |] [Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 7, 2005.)](http://www.sec.gov/Archives/edgar/data/40987/000095014405002175/g93577exv10w7.htm) | [added: | |]

| Exhibit 10.3* | | [added: | | | |] [Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report on Form10-K, dated March 10, 2000.)](http://www.sec.gov/Archives/edgar/data/40987/0000950144-00-003057-index.html) | [added: | |]

| Exhibit 10.4* | | [added: | | | |] [Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 7, 2002.)](http://www.sec.gov/Archives/edgar/data/40987/000095014402002108/g74408ex10-47.txt) | [added: | |]

| Exhibit 10.5* | | [added: | | | |] [Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 8, 2004.)](http://www.sec.gov/Archives/edgar/data/40987/000095014404002091/g87625exv10w22.txt) | [added: | |]

| Exhibit 10.6* | | [added: | | | |] [Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 28, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 3, 2006.)](http://www.sec.gov/Archives/edgar/data/40987/000095014406001772/g99860exv10w29.htm) | [added: | |]

| Exhibit 10.7* | | [added: | | | |] [Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. (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/g11900exv10w29.htm) | [added: | |]

| Exhibit 10.8* | | [added: | | | |] [Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)](http://www.sec.gov/Archives/edgar/data/40987/000095012311018264/g25551xxexv10w27.htm) | [added: | |]

| Exhibit 10.9* | | [added: | | | |] [Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012. (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/d455931dex1028.htm) | [added: | |]

| Exhibit 10.10* | | [added: | | | |] [The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 8, 2004.)](http://www.sec.gov/Archives/edgar/data/40987/000095014404002091/g87625exv10w13.txt) | [added: | |]

| Exhibit 10.11* | | [added: | | | |] [Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 10, 2000.)](http://www.sec.gov/Archives/edgar/data/40987/0000950144-00-003057-index.html) | [added: | |]

| Exhibit 10.12* | | [added: | | | |] [Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 27, 2009.)](http://www.sec.gov/Archives/edgar/data/40987/000095014409001684/g17012exv10w36.htm) | [added: | |]

| Exhibit 10.13* | | [added: | | | |] [Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)](http://www.sec.gov/Archives/edgar/data/40987/000095012311018264/g25551xxexv10w25.htm) | [added: | |]

| Exhibit 10.14* | | [added: | | | |] [Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)](http://www.sec.gov/Archives/edgar/data/40987/000095012311018264/g25551xxexv10w26.htm) | [added: | |]

| Exhibit 10.15* | | [added: | | | |] [Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated December 7, 2012, effective December 31, 2013. (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/d455931dex1029.htm) | [added: | |]

| Exhibit 10.16* | | [added: | | | |] [Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 8, 2004.)](http://www.sec.gov/Archives/edgar/data/40987/000095014404002091/g87625exv10w23.txt) | [added: | |]

| Exhibit 10.17* | | [added: | | | |] [Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. (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/g11900exv10w28.htm) | [added: | |]

| Exhibit 10.18* | | [added: | | | |] [Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012. (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/d455931dex1027.htm) | [added: | |]

| Exhibit 10.19* | | [added: | | | |] [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) | [added: | |]

| Exhibit 10.20* | | [added: | | | |] [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) | [added: | |]

| Exhibit 10.21* | | [added: | | | |] [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) | [added: | |]

| Exhibit 10.22* | | [added: | | | |] [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) | [added: | |]

| Exhibit [removed: 10.23*] [added: 10.30*] | | [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, 2014.)](http://www.sec.gov/Archives/edgar/data/40987/000119312514186362/d698970dex102.htm) | [added: | |]

| Exhibit 10.24* | | [added: | | | |] [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) | [added: | |]

| Exhibit 10.25* | | [added: | | | |] [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) | [added: | |]

| Exhibit 10.26 | | [added: | | | |] [Genuine Parts Company [removed: 364-Day Bridge Credit] [added: Note Purchase] Agreement dated [removed: September 22,] [added: October 30,] 2017 by and among Genuine Parts Company, J.P. Morgan [removed: Chase Bank, N.A.,] [added: Securities, LLC and Merill Lynch, Pierce, Fenner & Smith Incorporated,] as [removed: administrative agent,] [added: agents,] and the other Lender Parties. (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: October 26, 2017.)](http://www.sec.gov/Archives/edgar/data/40987/000004098717000015/aagbridgecreditagreement_1.htm)] [added: February 27, 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000002/notepurchaseagreement-ex10.htm)] | [added: | |]

| Exhibit [removed: 10.27] [added: 10.32] | | [removed: [Genuine Parts Company Amended and Restated Syndicated] [added: | | | | [Syndicated] Facility Agreement dated October 30, [removed: 2017 by and] [added: 2020] among Genuine Parts Company, [removed: Bank of America,] [added: UAP, Inc., and Certain Designated Subsidiaries as Borrowers, JPMorgan Chase Bank,] N.A., as [removed: administrative agent,] [added: Administrative Agent, Domestic Swing Line Lender] and [added: L/C Issuer, JPMorgan Chase Bank, N.A., acting through its Toronto Branch, as Canadian Swing Line Lender and] the other [removed: Lender Parties.] [added: Lenders and L/C Issuers party thereto.] (Incorporated herein by reference from the Company's [removed: Annual] [added: Current] Report on Form [removed: 10-K] [added: 8-K] dated [removed: February 27, 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000002/syndicatedfacilityagreemen.htm)] [added: November 2, 2020.)](https://www.sec.gov/Archives/edgar/data/40987/000119312520283958/d61462dex101.htm)] | [added: | |]

| Exhibit 10.28 | | [removed: [Genuine] [added: | | | | [Second Amendment, dated as of May 1, 2020, to Genuine] Parts Company Note Purchase Agreement dated [added: as of] October 30, 2017 by and among Genuine Parts [removed: Company, J.P. Morgan Securities, LLC and Merill Lynch, Pierce, Fenner & Smith Incorporated, as agents,] [added: Company] and [removed: the other Lender Parties.] [added: each holder of Original Notes party thereto.] (Incorporated herein by reference [removed: from] [added: to] the [removed: Company's Annual] [added: Company’s Quarterly] Report on Form [removed: 10-K] [added: 10-Q] dated [removed: February 27, 2018.)](http://www.sec.gov/Archives/edgar/data/40987/000004098718000002/notepurchaseagreement-ex10.htm)] [added: July 30, 2020).](https://www.sec.gov/Archives/edgar/data/40987/000004098720000036/gpc06302020102.htm)] | [added: | |]