Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

ANNUAL REPORT ON FORM 10-K

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			36
Consolidated Balance Sheets as of December 31, 2024 and 2023			38
Consolidated Statements of Income for the Years Ended December 31, 2024, 2023 and 2022			39
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023, and 2022			40
Consolidated Statements of Equity for the Years Ended December 31, 2024, 2023 and 2022			41
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022			42
Notes to Consolidated Financial Statements			43

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Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, 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, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

			Asbestos-Related Product Liability
Description of the Matter			As disclosed in Notes 1 and 16 to the consolidated financial statements, the Company is subject to pending asbestos-related product liability lawsuits resulting from its distribution and sale of asbestos-containing brake and friction products. The Company accrues for asbestos-related product liabilities if it is probable that the Company has incurred a loss and the amount of the loss can be reasonably estimated. The amount accrued for the asbestos-related product liability as of December 31, 2024 was $256 million. Auditing the Company’s asbestos-related product liability required complex judgments due to the significant measurement uncertainty associated with the estimate and the use of valuation techniques. In addition, the asbestos-related product liability is sensitive to significant management assumptions, including the number of future claims and costs of resolving claims.

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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 asbestos-related product liability. 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 asbestos-related product liability, 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 and held discussions with legal counsel. 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 the estimated asbestos-related product liability. We compared the Company's estimated asbestos-related product liability to the range developed by our actuarial specialists. We also assessed the adequacy of the Company’s disclosures, included in Notes 1 and 16 to the consolidated financial statements, in relation to this matter.

/s/ Ernst & Young LLP

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

Atlanta, Georgia

February 21, 2025

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Genuine Parts Company and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Data and per Share Amounts)

			As of December 31,
			2024						2023
Assets
Current assets:
Cash and cash equivalents			$	479,991					$	1,102,007
Trade accounts receivable, net			2,182,856						2,223,431
Merchandise inventories, net			5,514,427						4,676,686
Prepaid expenses and other current assets			1,675,310						1,603,728
Total current assets			9,852,584						9,605,852
Goodwill			2,897,270						2,734,681
Other intangible assets, net			1,799,031						1,792,913
Property, plant and equipment, net			1,950,760						1,616,785
Operating lease assets			1,769,720						1,268,742
Other assets			1,013,340						949,481
Total assets			$	19,282,705					$	17,968,454
Liabilities and equity
Current liabilities:
Trade accounts payable			$	5,923,684					$	5,499,536
Current portion of debt			541,705						355,298
Other current liabilities			1,925,636						1,839,640
Dividends payable			134,355						132,635
Total current liabilities			8,525,380						7,827,109
Long-term debt			3,742,640						3,550,930
Operating lease liabilities			1,458,391						979,938
Pension and other post-retirement benefit liabilities			218,629						219,644
Deferred tax liabilities			441,705						437,674
Other long-term liabilities			544,109						536,174
Equity:
Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued			—						—
Common stock, par value $1 per share — authorized 450,000,000 shares; issued and outstanding — 2024 — 138,779,664 shares and 2023 — 139,567,071 shares			138,780						139,567
Additional paid-in capital			196,532						173,025
Accumulated other comprehensive loss			(1,261,743)						(976,872)
Retained earnings			5,263,838						5,065,327
Total parent equity			4,337,407						4,401,047
Noncontrolling interests in subsidiaries			14,444						15,938
Total equity			4,351,851						4,416,985
Total liabilities and equity			$	19,282,705					$	17,968,454

See accompanying notes.

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Genuine Parts Company and Subsidiaries

Consolidated Statements of Income

(In Thousands, Except per Share Amounts)

			Year Ended December 31,
			2024						2023						2022
Net sales			$	23,486,569					$	23,090,610					$	22,095,973
Cost of goods sold			14,962,954						14,799,938						14,355,869
Gross profit			8,523,615						8,290,672						7,740,104
Operating expenses:
Selling, administrative and other expenses			6,642,900						6,167,143						5,758,295
Depreciation and amortization			407,978						350,529						347,819
Provision for doubtful accounts			30,001						25,947						19,791
Restructuring and other costs			213,520						—						—
Total operating expenses			7,294,399						6,543,619						6,125,905
Non-operating (income) expense:
Interest expense, net			96,827						64,469						73,887
Other			(43,579)						(59,764)						(32,290)
Total non-operating expenses			53,248						4,705						41,597
Income before income taxes			1,175,968						1,742,348						1,572,602
Income taxes			271,892						425,824						389,901
Net income			$	904,076					$	1,316,524					$	1,182,701

See accompanying notes.

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Genuine Parts Company and Subsidiaries

Consolidated Statements of Comprehensive Income

(In Thousands, Except per Share Amounts)

			Year Ended December 31,
			2024						2023						2022
Net income			$	904,076					$	1,316,524					$	1,182,701
Other comprehensive (loss) income, net of income taxes:
Foreign currency translation adjustments			(221,812)						64,429						(143,890)
Cash flow hedge adjustments, net of income taxes in 2024 — $0, 2023 — $951, and 2022 — $4,612			—						2,572						12,470
Pension and postretirement benefit adjustments, net of income taxes of 2024 — $23,276, 2023 — $4,174, and 2022 — $15,846			(63,059)						(11,331)						(43,383)
Other comprehensive (loss) income, net of tax			(284,871)						55,670						(174,803)
Comprehensive income			$	619,205					$	1,372,194					$	1,007,898

See accompanying notes.

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Genuine Parts Company and Subsidiaries

Consolidated Statements of Equity

(In Thousands, Except Share Data and per Share Amounts)

			Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Parent Equity						Non- controlling Interests in Subsidiaries						Total Equity
Shares						Amount
Balance at January 1, 2022			142,180,683						$	142,181					$	119,975					$	(857,739)					$	4,086,325					$	3,490,742					$	12,548					$	3,503,290
Net Income			—						—						—						—						1,182,701						1,182,701						—						1,182,701
Other comprehensive income, net of tax			—						—						—						(174,803)						—						(174,803)						—						(174,803)
Cash dividends declared, $3.58 per share			—						—						—						—						(506,232)						(506,232)						—						(506,232)
Share-based awards exercised, including tax benefit of $5,495			333,185						332						(17,709)						—						—						(17,377)						—						(17,377)
Share-based compensation			—						—						38,058						—						—						38,058						—						38,058
Purchase of stock			(1,572,219)						(1,572)						—						—						(221,154)						(222,726)						—						(222,726)
Noncontrolling interest activities			—						—						—						—						—						—						1,536						1,536
Balance at December 31, 2022			140,941,649						140,941						140,324						(1,032,542)						4,541,640						3,790,363						14,084						3,804,447
Net income			—						—						—						—						1,316,524						1,316,524						—						1,316,524
Other comprehensive loss, net of tax			—						—						—						55,670						—						55,670						—						55,670
Cash dividends declared, $3.80 per share			—						—						—						—						(533,118)						(533,118)						—						(533,118)
Share-based awards exercised, including tax benefit of $6,802			380,376						380						(24,525)						—						—						(24,145)						—						(24,145)
Share-based compensation			—						—						57,226						—						—						57,226						—						57,226
Purchase of stock			(1,754,954)						(1,754)						—						—						(259,719)						(261,473)						—						(261,473)
Noncontrolling interest activities			—						—						—						—						—						—						1,854						1,854
Balance at December 31, 2023			139,567,071						139,567						173,025						(976,872)						5,065,327						4,401,047						15,938						4,416,985
Net income			—						—						—						—						904,076						904,076						—						904,076
Other comprehensive income, net of tax			—						—						—						(284,871)						—						(284,871)						—						(284,871)
Cash dividend declared, $4.00 per share			—						—						—						—						(556,651)						(556,651)						—						(556,651)
Share-based awards exercised, including tax benefit of $2,178			297,827						298						(17,186)						—						—						(16,888)						—						(16,888)
Share-based compensation			—						—						40,693						—						—						40,693						—						40,693
Purchase of stock			(1,085,234)						(1,085)						—						—						(148,914)						(149,999)						—						(149,999)
Noncontrolling interest activities			—						—						—						—						—						—						(1,494)						(1,494)
Balance at December 31, 2024			138,779,664						$	138,780					$	196,532					$	(1,261,743)					$	5,263,838					$	4,337,407					$	14,444					$	4,351,851

See accompanying notes.

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Genuine Parts Company and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

			Year Ended December 31,
			2024						2023						2022
Operating activities:
Net income			$	904,076					$	1,316,524					$	1,182,701
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			407,978						350,529						347,819
Deferred income taxes			(18,598)						42,114						2,220
Share-based compensation			40,693						57,226						38,058
Gains on sales of real estate			(43,049)						—						(102,803)
Other operating activities			47,473						(41,626)						18,377
Changes in operating assets and liabilities:
Trade accounts receivable, net			(50,939)						31,989						(244,371)
Merchandise inventories, net			(440,549)						(69,148)						(380,420)
Trade accounts payable			512,347						2,038						676,406
Operating lease right-of-use asset			634,448						344,580						370,476
Other current and noncurrent assets			(122,864)						(168,742)						(19,948)
Operating lease current and noncurrent liabilities			(662,641)						(355,335)						(372,733)
Other current and noncurrent liabilities			42,876						(74,539)						(48,811)
Net cash provided by operating activities			1,251,251						1,435,610						1,466,971
Investing activities:
Purchases of property, plant and equipment			(567,339)						(512,675)						(339,632)
Proceeds from sale of property, plant and equipment			122,432						25,099						145,007
Acquisitions of businesses			(1,080,238)						(306,881)						(1,690,208)
Proceeds from divestitures of businesses			1,631						10,754						33,604
Proceeds from sale of investment			—						80,482						—
Proceeds from settlement of net investment hedge			15,990						—						158,441
Other investing activities			—						(2,571)						8,548
Net cash used in investing activities			(1,507,524)						(705,792)						(1,684,240)
Financing activities:
Proceeds from debt			895,299						3,769,132						5,108,641
Payments on debt			(496,156)						(3,237,959)						(4,147,773)
Shares issued from employee incentive plans			(16,888)						(24,145)						(17,377)
Dividends paid			(554,931)						(526,674)						(495,917)
Purchase of stock			(149,999)						(261,473)						(222,726)
Other financing activities			(11,261)						(11,042)						(19,747)
Net cash (used in) provided by financing activities			(333,936)						(292,161)						205,101
Effect of exchange rate changes on cash and cash equivalents			(31,807)						10,887						(49,070)
Net (decrease) increase in cash and cash equivalents			(622,016)						448,544						(61,238)
Cash and cash equivalents at beginning of year			1,102,007						653,463						714,701
Cash and cash equivalents at end of year			$	479,991					$	1,102,007					$	653,463
Supplemental disclosures of cash flow information
Cash paid during the year for:
Income taxes			$	264,625					$	366,270					$	362,859
Interest			$	124,977					$	90,405					$	73,368

See accompanying notes.

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024

1.Summary of Significant Accounting Policies

Business

Genuine Parts Company is a distributor of automotive replacement parts and industrial parts and materials. We serve a diverse customer base through a network of more than 10,700 locations throughout North America, Europe, and Australasia.

Principles of Consolidation

The consolidated financial statements include all of our accounts. The net income attributable to noncontrolling interests is not material to our consolidated net income. Intercompany accounts and transactions have been eliminated in consolidation.

Certain prior year amounts are reclassified to conform to the current year presentation. These reclassifications had no impact on our previously reported total assets, total liabilities, results of operations, comprehensive income or net cash flows from operating, financing or investing activities.

We have evaluated subsequent events through the date the financial statements were issued.

Use of Estimates

The preparation of the consolidated financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates and the differences could be material.

Revenue Recognition

We recognize revenue at the point the customer obtains control of the products or services and at an amount that reflects the consideration expected to be received for those products or services.

Revenue is recognized net of allowances for returns, variable consideration and any taxes collected from customers that will be remitted to governmental authorities. Revenue recognized over time is not significant. Payment terms with customers vary by the type and location of the customer and the products or services offered. We do not adjust the promised amount of consideration for the effects of significant financing components based on the expectation that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Arrangements with customers that include payment terms extending beyond one year are not significant. Liabilities for customer incentives, discounts, sales returns or rebates are included in other current liabilities in the consolidated balance sheets.

Product Distribution Revenues

We generate revenue primarily by distributing products through wholesale and, to a lesser extent, retail channels. For wholesale customers, revenue is recognized when title and control of the goods has passed to the wholesale customer. Retail revenue is recognized at the point of sale when the goods are transferred to customers and consideration is received. Certain shipping and handling activities may be performed prior to the customer obtaining control of the products. Costs associated with shipping and handling to our customers are considered costs to fulfill a contract and are included in selling, administrative and other expenses in the period they are incurred.

Other Revenues

We offer software support, product cataloging, marketing, training and other membership program and support services to certain customers. This revenue is recognized as services are performed. Revenue from these services is recognized over a short duration and the impact to our consolidated financial statements is not significant.

Variable Consideration

Our products are generally sold with a right of return and may include variable consideration in the form of incentives, discounts, credits or rebates. We estimate variable consideration based on historical experience to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to a customer. We recognize estimated variable consideration as an adjustment to the transaction price

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when control of the related product or service is transferred. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant.

Foreign Currency Translation

The consolidated balance sheets and statements of income of our foreign subsidiaries have been translated into U.S. dollars at the current and average exchange rates, respectively. The foreign currency translation adjustment is included as a component of accumulated other comprehensive loss.

Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Trade Accounts Receivable and the Allowance for Doubtful Accounts

We evaluate the collectability of trade accounts receivable based on a combination of factors. We estimate an allowance for doubtful accounts as a percentage of net sales based on various factors, including historical experience, current economic conditions and future expected credit losses and collectability trends. We will periodically adjust this estimate when we become aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While we have a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which we operate could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. We have limited exposure from credit losses to any particular customer, region, or industry segment. We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral. For the years ended December 31, 2024, 2023, and 2022, we recorded provisions for doubtful accounts of approximately $30 million, $26 million, and $20 million, respectively. At December 31, 2024 and 2023, the allowance for doubtful accounts was approximately $69 million and $57 million, respectively.

Merchandise Inventories, Including Consideration Received From Vendors

Merchandise inventories are valued at the lower of cost or either market value or net realizable value, as applicable. Cost is determined by the last-in, first-out ("LIFO") method for a majority of U.S. automotive and industrial parts, and generally by the weighted average method for non-U.S. and certain other inventories. If the FIFO method had been used in place of LIFO, the carrying cost of inventory in the consolidated balance sheets would have been approximately $896 million and $880 million higher than reported at December 31, 2024 and 2023, respectively. Reductions in certain industrial parts inventories resulted in liquidations of LIFO inventory layers, which reduced cost of goods sold by immaterial amounts in 2024 and 2023. There were no liquidations of LIFO inventory layers in 2022.

We identify slow moving or obsolete inventories and estimate appropriate provisions related thereto. Historically, these losses have not been significant as the vast majority of our inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While we have no reason to believe our inventory return privileges will be discontinued in the future, our risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.

We enter into agreements at the beginning of each year with many of our vendors that provide for inventory purchase incentives. Generally, we earn inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. We accrue for the receipt of these incentives as part of our inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While management believes we will continue to receive consideration from vendors in 2025 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of consideration receivable from vendors, prepaid expenses, income taxes and other miscellaneous receivables.

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The following table provides a reconciliation of prepaid expenses and other current assets reported within the consolidated balance sheets at December 31:

(in thousands)						2024						2023
Prepaid expenses						$	118,401					$	110,863
Consideration receivable from vendors						972,842						928,499
Other current assets						584,067						564,366
Total prepaid expenses and other current assets						$	1,675,310					$	1,603,728

Consideration receivable from vendors include rebates receivable for various vendor funding programs.

Goodwill

We review our goodwill annually for impairment in the fourth quarter, or sooner if circumstances indicate that the carrying amount may exceed fair value. We test goodwill for impairment at the reporting unit level, which is an operating segment or a level below an operating segment (a component). A component is a reporting unit if the component constitutes a business for which discrete financial information and operating results are available and management regularly reviews that information. However, we aggregate two or more components of an operating segment into a single reporting unit if the components have similar economic characteristics and the other aggregation requirements are met.

To review goodwill at a reporting unit for impairment, we generally elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Qualitative factors include adverse macroeconomic, industry or market conditions, cost factors, or financial performance. If we elect not to perform a qualitative assessment or conclude from our assessment of qualitative factors that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we must perform a quantitative test to evaluate goodwill impairment.

To perform a quantitative test, we estimate the fair value of the reporting unit and compare that amount to the reporting unit's carrying value. We typically calculate the fair value by using a combination of a market approach and an income approach that is based on a discounted cash flow model. The assumptions used in the market approach generally include benchmark company market multiples and the assumptions used in the income approach generally include the projected cash flows of the reporting unit, which are based on projected revenue growth rates and EBITDA margins, the estimated weighted average cost of capital, working capital and terminal value. We use inputs and assumptions we believe are consistent with those a hypothetical marketplace participant would use. We recognize goodwill impairment (if any) as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Refer to the Goodwill and Other Intangible Assets Footnote for further information on the results of our annual goodwill impairment testing.

Long-Lived Assets Other Than Goodwill

We assess our long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, we project undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. Impairment losses, if any, are measured based upon the difference between the carrying amount and the fair value of the assets. There were no significant impairment losses in 2024 or 2023. In 2022, we recognized losses related to impairments and disposals of $17 million. Refer to the Goodwill and Other Intangible Assets Footnote for more information on the losses that occurred in 2022.

Other Assets

Other assets consist primarily of cash surrender value of life insurance policies, equity method and other investments, guarantee fees receivable, and deferred compensation benefits.

Property, Plant and Equipment

Property, plant and equipment are carried at cost less accumulated depreciation.

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We capitalize software costs and classify them within property, plant, and equipment, with the associated depreciation reflected as depreciation expense. These software costs include the costs of developing or obtaining internal-use software, such as external direct costs of materials and services, payroll and benefits costs, interest costs, and costs to develop or obtain software that allows for access or conversion of historical data by new systems. We capitalize costs when the preliminary project stage is complete, management has authorized and committed to funding the software project, it is probable that the software project will be completed, and it is probable that the software will be used to perform the intended function. Cost capitalization ceases when the software project is substantially complete and ready for its intended use. Costs that are associated with the preliminary stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.

Depreciation is primarily determined on a straight-line basis over the following estimated useful lives of each asset: buildings, 10 to 40 years; machinery and equipment, 5 to 15 years; furniture and fixtures, 5 to 15 years; capitalized software, generally 3 to 5 years, but up to 20 years for strategic investments in enterprise resource planning and other core systems with low obsolescence risk; and the shorter of lease term or useful life for leasehold improvements.

Other Current Liabilities

Other current liabilities consist primarily of current lease obligations, allowances for sales returns expected within the next year, accrued compensation, accrued income and other taxes, and other reserves for expenses incurred.

Other Long-Term Liabilities

Other long-term liabilities consist primarily of allowances for sales returns expected after the next year, guarantee obligations, accrued taxes and other non-current obligations.

Self-Insurance

We are self-insured for the majority of our group health insurance costs. A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by our claims administrators. These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.

Long-term insurance liabilities consist primarily of reserves for our workers’ compensation program. We carry high deductible policies for a majority of these liabilities. We record our reserves based on an analysis performed by an independent actuary. The analysis involves calculating loss development factors and applying them to reserves supplied by our insurance providers. While we believe the assumptions used in these calculations are appropriate, significant changes in actual experience or our assumptions could materially affect the worker’s compensation costs and reserves recorded.

Business Combinations

When we acquire businesses, we apply the acquisition method of accounting and recognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree at their fair values on the acquisition date, which requires significant estimates and assumptions. Goodwill is measured as the excess of the fair value of the consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method requires us to record provisional amounts for any items for which the accounting is not complete at the end of a reporting period. We must complete the accounting during the measurement period, which cannot exceed one year. Adjustments made during the measurement period could have a material impact on our financial condition and results of operations.

We typically measure customer relationships and other intangible assets using an income approach. Significant estimates and assumptions used in this approach include discount rates and certain assumptions that form the basis of the forecasted cash flows expected to be generated from the asset (e.g., future revenue growth rates and EBITDA Margin). If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired tangible and intangible assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.

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Legal and Asbestos Liabilities

We accrue for potential losses related to legal disputes, litigation, asbestos liability, and regulatory matters when it is probable (the future event or events are likely to occur) that we have incurred a loss and the amount of the loss can be reasonably estimated.

The asbestos-related product liability amount reflects our reasonable estimate of losses based upon currently known facts. To calculate the liability, we estimate potential losses relating to pending claims and also estimate the likelihood of additional, similar claims being filed against us in the future. To estimate potential losses on claims that could be filed in the future, we consider claims pending against us, claim filing rates, the number of codefendants and the extent to which they share in settlements, and the amount of loss by claim type. The estimated losses for pending and potential future claims are calculated on a discounted basis using risk-free interest rates derived from market data about monetary assets with maturities comparable to those of the projected asbestos liability. We use an actuarial specialist to assist with measuring our asbestos liability.

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Additionally, ASC 820, Fair Value Measurements, defines levels within a hierarchy based upon observable and non-observable inputs.

• Level 1- Observable inputs such as quoted prices in active markets;

• Level 2- Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3- Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions

At December 31, 2024 and 2023, the fair value of our senior unsecured notes was approximately $4.1 billion and $3.7 billion, respectively, which are designated as Level 2 in the fair value hierarchy. Our valuation technique is based primarily on prices and other relevant information generated by observable transactions involving identical or comparable assets or liabilities.

Derivative instruments are recognized in the consolidated balance sheets at fair value and are designated as Level 2 in the fair value hierarchy. They are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analyses of goodwill, other intangible assets, and long-lived assets. These involve fair value measurements on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments.

Fair value measurement using unobservable inputs is inherently uncertain, and the use of different methodologies or assumptions to determine the fair value instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used during the periods presented.

Derivatives and Hedging

We are exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, we use derivative and non-derivative instruments as risk management tools to mitigate the potential impact of interest rate and foreign exchange rate risks. The objective of using these tools is to reduce fluctuations in our earnings, cash flows and net investments in certain foreign subsidiaries associated with changes in these rates. Derivative financial instruments are not used for trading or other speculative purposes. We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default related to derivative instruments.

We formally document relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges to specific forecasted transactions or variability of cash flow to be paid. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivative and non-derivative instruments that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. When a designated instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively.

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Shipping and Handling Costs

Shipping and handling costs are classified as selling, administrative and other expenses in the accompanying consolidated statements of income and totaled approximately $381 million, $451 million, and $407 million, for the years ended December 31, 2024, 2023, and 2022, respectively.

Advertising Costs

Advertising costs are expensed as incurred and totaled $237 million, $234 million, and $236 million in the years ended December 31, 2024, 2023, and 2022, respectively.

Accounting for Legal Costs

We expense legal costs related to loss contingencies as they are incurred.

Share-Based Compensation

We maintain various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), performance awards, dividend equivalents and other share-based awards. SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of our common stock on the date of exercise over the base value of the grant. The terms of such SARs require net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of our common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to three years and are expensed accordingly on a straight-line basis. Forfeitures are accounted for as they occur. We issue new shares upon exercise or conversion of awards under these plans.

Income Taxes

We account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amount and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. In addition, valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In making this determination, we consider all available positive and negative evidence including projected future taxable income, future reversals of existing temporary differences, recent financial operations and tax planning strategies.

We recognize a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the year. The computation of diluted net income per common share includes the dilutive effect of stock options, stock appreciation rights and nonvested restricted stock awards options. Options to purchase approximately 11 thousand, 3 thousand, and 4 thousand shares of common stock ranging from $72 - $179 per share were outstanding at December 31, 2024, 2023, and 2022, respectively. These options were excluded from the computation of diluted net income per common share because the options’ exercise prices were greater than the average market prices of common stock in each respective year.

The following table summarizes basic and diluted shares outstanding for the year ended December 31:

(in thousands, except per share data)						2024						2023						2022
Net income						$	904,076					$	1,316,524					$	1,182,701
Weighted average common shares outstanding						139,208						140,367						141,468
Dilutive effect of stock options and non-vested restricted stock awards						462						667						854
Weighted average common shares outstanding – assuming dilution						139,670						141,034						142,322
Basic earnings per share						$	6.49					$	9.38					$	8.36
Diluted earnings per share						$	6.47					$	9.33					$	8.31

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Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”). We consider the applicability and impact of all ASUs and any not listed below were assessed and determined to not be applicable or are expected to have an immaterial impact on our Consolidated Financial Statements.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard requires disclosure in the notes to financial statements, at each interim and annual reporting period, of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. Also required is a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated. This guidance is effective for all public entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and early adoption is permitted. This guidance should be applied either prospectively to financial statements issued after the effective date of this update or retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard requires disclosures of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of other segment items by reportable segment, and all annual disclosures currently required by Topic 280 to be included in interim periods. This standard also requires disclosure of the title and position of the CODM. We adopted this standard effective December 31, 2024.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items, income before tax expense disaggregated between domestic and foreign, income tax expense disaggregated by federal, state and foreign, as well as further information on income taxes paid. The guidance is effective for the year ended December 31, 2025, with early adoption permitted. The guidance should be applied on a prospective basis, with retrospective application permitted. We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

2. Segment Information

Our reportable segments consist of the Automotive Parts Group ("Automotive") and Industrial Parts Group ("Industrial"). Within the reportable segments, certain of our operating segments are aggregated since they have similar economic characteristics, products and services, type and class of customers, and distribution methods. Our Automotive segment distributes replacement parts (other than collision parts) for substantially all makes and models of automobiles, trucks, and other vehicles. Our Industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components and related parts and supplies.

Inter-segment sales are not significant. Approximately $415 million, $577 million and $472 million of income before income taxes were generated in jurisdictions outside the U.S. for the years ended December 31, 2024, 2023, and 2022, respectively. Net sales and net property, plant and equipment by country relate directly to our operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.

During the fourth quarter of 2024, we changed our segment profit measure to segment earnings before interest, taxes, depreciation and amortization ("EBITDA"). We believe that Segment EBITDA and Segment EBITDA margin are useful measures because they allow management, analysts, investors, and other interested parties to evaluate the profitability of our business operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest) and tax strategies (income taxes). In addition, EBITDA is a metric included in certain long term incentive compensation plans.

Our President and Chief Executive Officer is our Chief Operating Decision Maker ("CODM") and uses segment EBITDA to assess segment operating performance and allocate resources among our segments.

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The significant segment expenses regularly provided to the CODM are total cost of sales and total other operating expenses. Total other operating expenses represent all other costs of operating our segments, such as personnel, freight and delivery, facility, technology, marketing costs, as well as items such as foreign currency.

Automotive Segment

The following table presents a summary of our reportable automotive segment financial information:

(in thousands)						2024						2023						2022
Net sales						$	14,769,133					$	14,246,783					$	13,666,634
Cost of goods sold						8,831,702						8,584,065						8,299,239
Gross profit						5,937,431						5,662,718						5,367,395
Operating expenses						4,653,900						4,323,584						3,993,194
EBITDA						$	1,283,531					$	1,339,134					$	1,374,201
Gross margin (1)						40.2		%				39.7		%				39.3		%
Operating expenses as a percentage of net sales						31.5		%				30.3		%				29.2		%
EBITDA margin (2)						8.7		%				9.4		%				10.1		%

Industrial Segment

The following table presents a summary of our reportable industrial segment financial information:

(in thousands)						2024						2023						2022
Net sales						$	8,717,436					$	8,843,827					$	8,429,339
Cost of goods sold						6,062,301						6,210,043						6,041,655
Gross profit						2,655,135						2,633,784						2,387,684
Operating expenses						1,552,947						1,500,863						1,449,030
EBITDA						$	1,102,188					$	1,132,921					$	938,654
Gross margin (1)						30.5		%				29.8		%				28.3		%
Operating expenses as a percentage of net sales						17.8		%				17.0		%				17.2		%
EBITDA margin (2)						12.6		%				12.8		%				11.1		%

*(1)*Gross margin is gross profit as a percentage of net sales.

*(2)*EBITDA margin is EBITDA as a percentage of net sales.

Additional Information

The following table presents a reconciliation from EBITDA to net income:

(in thousands)						2024									2023						2022
Segment EBITDA
Automotive						$	1,283,531								$	1,339,134					$	1,374,201
Industrial						1,102,188									1,132,921						938,654
Corporate EBITDA (1)						(389,217)									(314,709)						(313,526)
Interest expense, net						(96,827)									(64,469)						(73,887)
Depreciation and amortization						(407,978)									(350,529)						(347,819)
Other unallocated costs						(315,729)									—						(5,021)
Income before income taxes						1,175,968									1,742,348						1,572,602
Income taxes						271,892									425,824						389,901
Net Income						$	904,076								$	1,316,524					$	1,182,701

*(1)*Corporate EBITDA consists of costs related to our corporate headquarter’s broad support to our business units and other costs that are managed centrally and not allocated to business segments. These include personnel and other costs for company-wide functions such as executive leadership, human resources, technology,

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cybersecurity, legal, corporate finance, internal audit, and risk management, as well as asbestos-related product liability costs and A/R Sales Agreement fees.

The following table presents a summary of the other unallocated costs:

(in thousands)						2024						2023						2022
Other unallocated costs:
Gain on sales of real estate (2)						$	—					$	—					$	102,803
Gain on insurance proceeds (3)						—						—						1,507
Product liability adjustment (4)						—						—						(28,730)
Restructuring and other costs (5)						(221,007)						—						—
Acquisition and integration related costs and other (6)						(33,126)						—						—
Inventory rebranding strategic initiative (7)						(61,596)						—						—
Transaction and other costs (8)						—						—						(80,601)
Total other unallocated costs						$	(315,729)					$	—					$	(5,021)

*(2)*Amount reflects a gain on the sale of real estate that had been leased to S.P. Richards.

*(3)*Amount reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.

*(4)*Adjustment to remeasure product liability for a revised estimate of the number of claims to be incurred in future periods, among other assumptions.

*(5)*Amount reflects costs related to our global restructuring initiative which includes a voluntary retirement offer in the U.S., inventory liquidation costs, and rationalization and optimization of certain distribution centers, stores and other facilities. The inventory liquidation costs, recognized in cost of goods sold, total $7 million and arise from facility closures. Refer to the Restructuring and Other Costs footnote in our Notes to Consolidated Financial Statements for more information.

*(6)*Amount primarily reflects ongoing acquisition and integration costs related to the acquisitions of MPEC in April 2024 and Walker in July 2024, including professional services costs, personnel costs, and lease and other exit costs. Refer to the Acquisitions footnote in our Notes to Consolidated Financial Statements for more information.

*(7)*Adjustment reflects a charge to write down certain existing inventory associated with a new global rebranding and relaunch of a key tool and equipment offering. The existing inventory that will be liquidated is comprised of otherwise saleable inventory, and the liquidation does not arise from our normal, recurring operational activities.

*(8)*Amount for 2022 primarily includes costs of $67 million associated with the January 3, 2022 acquisition and integration of Kaman Distribution Group ("KDG") which includes a $17 million impairment charge. The impairment charge was driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Separately, this adjustment includes an $11 million loss related to an investment.

The following table presents a summary of our reportable segment total assets:

(in thousands)						2024						2023
Assets:
Automotive						$	10,843,729					$	9,845,644
Industrial						2,765,504						2,535,404
Corporate						977,171						1,059,812
Goodwill and other intangible assets						4,696,301						4,527,594
Total assets						$	19,282,705					$	17,968,454

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The following table presents a summary of select financial information by reportable segment:

(in thousands)						2024						2023						2022
Depreciation and amortization:
Automotive						$	206,536					$	163,517					$	146,819
Industrial						34,818						30,082						29,670
Corporate						23,630						9,752						13,893
Intangible asset amortization						142,994						147,178						157,437
Total depreciation and amortization						$	407,978					$	350,529					$	347,819
Capital expenditures:
Automotive						$	311,704					$	279,943					$	235,182
Industrial						76,730						53,823						33,165
Corporate						178,905						178,909						71,285
Total capital expenditures						$	567,339					$	512,675					$	339,632
Net sales:
United States						$	15,318,989					$	15,247,740					$	14,965,462
Europe						3,839,134						3,611,453						3,071,964
Canada						1,982,719						2,011,343						1,960,227
Australasia						2,258,729						2,149,376						2,044,432
Mexico						86,998						70,698						53,888
Total net sales						$	23,486,569					$	23,090,610					$	22,095,973
Net property, plant and equipment:
United States						$	1,161,136					$	935,583					$	790,121
Europe						384,161						339,330						200,898
Canada						189,978						147,404						113,574
Australasia						214,677						193,638						220,839
Mexico						808						830						582
Total net property, plant and equipment						$	1,950,760					$	1,616,785					$	1,326,014

Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:

(in thousands)						2024						2023						2022
North America:
Automotive						$	9,212,238					$	9,010,337					$	9,015,501
Industrial						8,176,468						8,319,444						7,964,076
Total North America						$	17,388,706					$	17,329,781					$	16,979,577
Australasia:
Automotive						$	1,717,761					$	1,624,993					$	1,579,169
Industrial						540,968						524,383						465,263
Total Australasia						$	2,258,729					$	2,149,376					$	2,044,432
Europe - Automotive						$	3,839,134					$	3,611,453					$	3,071,964
Total net sales						$	23,486,569					$	23,090,610					$	22,095,973

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3. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill during the years ended December 31, 2024 and 2023 by reportable segment, as well as other identifiable intangible assets, are summarized as follows:

						Goodwill
(in thousands)						Automotive						Industrial						Total						Other Intangible Assets, Net
Balance as of January 1, 2023						$	1,579,534					$	1,008,579					$	2,588,113					$	1,812,510
Additions						111,831						8,046						119,877						98,652
Amortization						—						—						—						(147,178)
Foreign currency translation						26,068						623						26,691						28,929
Balance as of December 31, 2023						1,717,433						1,017,248						2,734,681						1,792,913
Additions						251,364						32,775						284,139						218,286
Amortization						—						—						—						(142,994)
Foreign currency translation						(104,927)						(16,624)						(121,550)						(69,174)
Balance as of December 31, 2024						$	1,863,870					$	1,033,399					$	2,897,270					$	1,799,031

We completed our annual goodwill impairment testing as of October 1, 2024. We assess the value of our goodwill under either a quantitative or qualitative assessment for our various reporting units. To complete a qualitative assessment, we evaluate historical revenue and operating profit growth trends, market conditions and other factors to determine whether it is more likely than not that the reporting unit's goodwill is impaired. We complete quantitative assessments for reporting units that fail our qualitative assessments, or otherwise on a periodic basis. To complete a quantitative assessment, we calculate a reporting unit's fair value using a combination of income and market approaches, which involve significant unobservable inputs (Level 3). In the income approach, we primarily use these assumptions: projected revenue growth rates, EBITDA margins, the estimated weighted average cost of capital, and terminal value. In the market approach, we primarily use benchmark company market multiples. We believe the inputs and assumptions we use are consistent with those a hypothetical marketplace participant would use. Once calculated, we verify whether the reporting unit's fair value is higher than its carrying amount. If the fair value is lower, we recognize an impairment, generally for the difference. Based on these assessments, we did not recognize any goodwill impairments during 2024 or 2023.

Accumulated impairment losses for the Automotive segment were $506,721 as of December 31, 2024 and 2023. We have not incurred any accumulated impairment losses for the Industrial segment.

If there are sustained declines in macroeconomic or business conditions in future periods affecting the projected earnings and cash flows at our reporting units, among other things, there can be no assurance that goodwill at one or more reporting units may not be impaired.

In June 2022, we recognized a $17 million non-cash impairment charge related to our decision to retire certain legacy Industrial trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of the KDG integration and rebranding strategy. We evaluate other intangible assets for potential impairment indicators annually, or more frequently if circumstances change.

Other Intangible Assets

The gross carrying amounts and accumulated amortization relating to other intangible assets at December 31, 2024 and 2023 are as follows:

						2024																		2023
(in thousands)						Gross Carrying Amount						Accumulated Amortization						Net						Gross Carrying Amount						Accumulated Amortization						Net
Customer relationships						$	2,350,241					$	(778,707)					$	1,571,534					$	2,252,553					$	(695,934)					$	1,556,619
Other intangibles						369,744						(142,246)						227,497						354,641						(118,347)						236,294
						$	2,719,985					$	(920,953)					$	1,799,031					$	2,607,194					$	(814,281)					$	1,792,913

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The valuation of identifiable intangible assets utilizes significant unobservable inputs and, therefore, represents a Level 3 fair value measurement. The estimated fair value of the identifiable intangible assets is generally determined using an income approach. Amortization expense for other intangible assets totaled $143 million, $147 million, and $157 million for the years ended December 31, 2024, 2023, and 2022, respectively. Estimated other intangible assets amortization expense for the succeeding five years is as follows (in thousands):

2025			$	140,000
2026			140,000
2027			140,000
2028			130,000
2029			130,000
			$	680,000

4. Property, Plant and Equipment

Property, plant and equipment as of December 31, 2024 and December 31, 2023, consisted of the following:

(in thousands)						2024						2023
Land						$	90,989					$	95,865
Buildings and leasehold improvements						1,028,101						901,341
Machinery, equipment and other						1,675,312						1,195,950
Furniture and fixtures						649,352						633,557
Construction in progress						278,791						382,730
Property, plant and equipment, at cost						3,722,545						3,209,443
Less: accumulated depreciation						1,771,785						1,592,658
Property, plant and equipment, net						$	1,950,760					$	1,616,785

We capitalize interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on our borrowings. Total interest costs capitalized for the years ended December 31, 2024 and 2023 were $10.9 million and $7.9 million, respectively.

5. Accounts Receivable Sales Agreement

We have an A/R Sales Agreement to sell short-term receivables from certain customer trade accounts to the unaffiliated financial institutions on a revolving basis. The A/R Sales Agreement has a 1 year term.

As part of the A/R Sales Agreement, we routinely sell designated pools of receivables as they are originated by it and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”). The assets of the SPE would be first available to satisfy the creditor claims of the unaffiliated financial institutions. We control and therefore consolidate the SPE in our consolidated financial statements.

The SPE transferred ownership and control of certain receivables that met certain qualifying conditions to the unaffiliated financial institutions in exchange for cash. We account for transactions with the unaffiliated financial institutions as sales of financial assets, with the associated receivables derecognized from our consolidated balance sheet. The remaining receivables held by the SPE were pledged to secure the collectability of the sold receivables. The amount of receivables pledged as collateral as of December 31, 2024 and December 31, 2023 is approximately $1.3 billion and $1.2 billion, respectively.

We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutions by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institutions so that the total principal amount outstanding of receivables sold is approximately $1.0 billion at any point in time (which is the maximum amount allowed under the agreement). The future amount of receivables outstanding as sold could decrease, based on the level of activity and other factors. Total principal amount outstanding of receivables sold is approximately $1.0 billion and $1.0 billion as of December 31, 2024 and December 31, 2023, respectively.

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The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of period end:

(in thousands)						December 31, 2024						December 31, 2023
Receivables sold to the financial institutions and derecognized						$	8,541,986					$	8,673,477
Cash collected on sold receivables						$	8,542,008					$	8,673,472

Continuous cash activity related to the A/R Sales Agreement is reflected in cash from operating activities in the consolidated statement of cash flows.

The SPE incurs fees due to the unaffiliated financial institutions related to the accounts receivable sales transactions. Those fees, which totaled $61 million, $60 million, and $27 million in 2024, 2023, and 2022, respectively, are recorded within other non-operating expense (income) in the consolidated statements of income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institutions any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of December 31, 2024 and December 31, 2023 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.

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6. Debt

The following table summarizes our debt outstanding as of December 31, 2024 and December 31, 2023:

(in thousands)						December 31, 2024						December 31, 2023
June 30, 2019, Series A Senior Unsecured Notes, A$155,000, 3.10% fixed, due June 30, 2024						$	—					$	105,571
October 30, 2017, Series J Senior Unsecured Notes, €225,000, 1.40% fixed, due October 30, 2024						—						248,355
January 6, 2022, Senior Unsecured Notes, $500,000, 1.75% fixed, due February 1, 2025						500,000						500,000
June 30, 2019, Series B Senior Unsecured Notes, A$155,000, 3.43% fixed, due June 30, 2026						96,426						105,571
November 30, 2016, Series H Senior Unsecured Notes, $250,000, 3.24% fixed, due November 30, 2026						250,000						250,000
October 30, 2017, Series K Senior Unsecured Notes, €250,000, 1.81% fixed, due October 30, 2027						260,150						275,950
October 30, 2017, Series I Senior Unsecured Notes, $120,000, 3.70% fixed, due October 30, 2027						120,000						120,000
November 1, 2023 Senior Unsecured Notes, $425,000, 6.50% fixed, due November 1, 2028						425,000						425,000
May 31, 2019, Series A Senior Unsecured Notes, €50,000, 1.55% fixed, due May 31, 2029						52,030						55,190
August 7, 2024, Senior Unsecured Notes, $750,000, 4.95% fixed, due August 15, 2029						750,000						—
October 30, 2017, Series L Senior Unsecured Notes, €125,000, 2.02% fixed, due October 30, 2029						130,075						137,975
October 27, 2020, Senior Unsecured Notes, $500,000, 1.88% fixed, due November 1, 2030						500,000						500,000
May 31, 2019, Series B Senior Unsecured Notes, €100,000, 1.74% fixed, due May 31, 2031						104,060						110,380
January 6, 2022, Senior Unsecured Notes, $500,000, 2.75% fixed, due February 1, 2032						500,000						500,000
October 30, 2017, Series M Senior Unsecured Notes, €100,000, 2.32% fixed, due October 30, 2032						104,060						110,380
November 1, 2023 Senior Unsecured Notes, $375,000, 6.88% fixed, due November 1, 2033						375,000						375,000
May 31, 2019, Series C Senior Unsecured Notes, €100,000, 1.95% fixed, due May 31, 2034						104,060						110,380
Other unsecured debt						43,619						4,622
Total unsecured debt						4,314,480						3,934,374
Unamortized discount and debt issuance cost						(30,135)						(28,146)
Total debt						4,284,345						3,906,228
Less debt due within one year						541,705						355,298
Long-term debt, excluding current portion						$	3,742,640					$	3,550,930

The following table summarizes scheduled maturities of our debt for the years succeeding December 31, 2024 (in thousands):

2025			$	541,705
2026			348,340
2027			380,150
2028			425,000
2029			932,105
Thereafter			1,687,180
			$	4,314,480

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Unsecured Revolving Credit Facility

On October 30, 2020, we entered into a $1.5 billion Syndicated Facility Agreement (as amended, the "Unsecured Revolving Credit Facility"). The Unsecured Revolving Credit Facility is scheduled to mature on September 30, 2026. We had no outstanding borrowings under the Unsecured Revolving Credit Facility as of December 31, 2024 or December 31, 2023.

Commercial Paper Program

On November 29, 2023, we established a commercial paper program that allows us to issue unsecured commercial paper notes up to $1.5 billion outstanding. The maturities of the commercial paper notes vary but may not exceed 364 days from the date of issuance. The commercial paper notes are sold under customary terms in the commercial paper market and will rank pari passu with unsecured and unsubordinated indebtedness. The notes are issued at par less a discount representing an interest factor or, if interest bearing, at par. The net proceeds of issuances of the commercial paper notes are expected to be used for general corporate purposes. We had no outstanding borrowings under our commercial paper program as of December 31, 2024 or December 31, 2023.

In the Consolidated Statement of Cash Flows, we present commercial paper activity with original maturities of three-months or less on a net basis given their short-term nature.

Notes and Other Borrowings

On August 7, 2024, we issued $750 million of unsecured 4.950% Senior Notes due 2029. Interest is payable on February 15 and August 15 of each year, beginning February 15, 2025.

On November 1, 2023, we issued $425 million of unsecured 6.500% Senior Notes due 2028. Simultaneously, we issued $375 million of unsecured 6.875% Senior Notes due 2033. For both offerings, interest is payable semi-annually on November 1 and May 1 of each year, beginning on May 1, 2024.

Covenants

Certain borrowings require us to comply with a financial covenant with respect to a maximum debt to EBITDA ratio. At December 31, 2024, we were in compliance with all such covenants.

7. Supply Chain Finance Programs

Several global financial institutions offer voluntary supply chain finance (“SCF”) programs which enable our suppliers (generally those that grant extended terms), at their sole discretion, to sell their receivables from us to these financial institutions on a non-recourse basis at a rate that takes advantage of our credit rating and may be beneficial to them. We and our suppliers agree on commercial terms for the goods and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. Our current payment terms with the majority of our suppliers range from 30 to 360 days. The suppliers sell goods or services, as applicable, to us and they issue the associated invoices to us based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. In turn, we direct payment to the financial institutions, rather than the suppliers, for the invoices sold to the financial institutions. No guarantees are provided by us or any of our subsidiaries on third-party performance under the SCF program; however, we guarantee the payment by our subsidiaries to the financial institutions participating in the SCF program for the applicable invoices. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable in our consolidated balance sheets.

All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our consolidated statement of cash flows.

(in thousands)						December 31, 2024						December 31, 2023
Obligations outstanding at the beginning of the year						$	3,020,465					$	3,106,713
Invoices confirmed during the year						4,293,489						3,987,656
Confirmed invoices paid during the year						(3,982,569)						(4,073,904)
Confirmed obligations outstanding at the end of the year						$	3,331,385					$	3,020,465

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8. Derivatives and Hedging

Net Investment Hedges

We have designated certain derivative instruments and a portion of our foreign currency denominated debt, a non-derivative financial instrument, as hedges of the foreign currency exchange rate exposure of our Euro-denominated net investment in a European subsidiary. We also designated certain derivative instruments as hedges of our CAD-denominated net investment in a Canadian subsidiary. We apply the spot method to assess the hedge effectiveness of the derivative instruments and this assessment for each instrument excludes the initial value related to the difference at contract inception between the foreign exchange spot rate and the forward rate (i.e., the forward points). The initial value of this excluded component is recognized as a reduction to interest expense in a systematic and rational manner over the term of the derivative instrument. All other changes in value for the net investment hedges are included in AOCL within foreign currency translation and would only be reclassified to earnings if the European or Canadian subsidiary were liquidated, or otherwise disposed. Upon settlement, the cash paid or received generally is reflected in investing activities in the statement of cash flows.

The following table summarizes the location and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):

												December 31, 2024												December 31, 2023
Instrument						Balance sheet location						Notional						Balance						Notional						Balance
Net investment hedges:
Forward contracts						Prepaid expenses and other current assets						$	1,867,966					$	85,834					$	606,950					$	37,676
Forward contract						Other current liabilities						$	—					$	—					$	106,800					$	4,383
Foreign currency debt						Current portion of debt and long-term debt						€	475,000					$	494,285					€	700,000					$	772,660

The table below presents pre-tax gains and losses related to net investment hedges for the year ended December 31:

						(Loss) Gain Recognized in AOCL Before Reclassifications																		Gain Recognized in Interest Expense For Excluded Components
(in thousands)						2024						2023						2022						2024						2023						2022
Net Investment Hedges:
Forward contracts						$	49,625					$	(22,946)					$	103,240					$	18,905					$	12,634					$	27,923
Foreign currency debt						34,948						(23,380)						43,540						—						—						—
Total						$	84,573					$	(46,326)					$	146,780					$	18,905					$	12,634					$	27,923

9. Leased Properties

We primarily lease real estate for retail stores, branches, distribution centers, office space and land. We also lease equipment (primarily vehicles).

Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our discretion. We evaluate renewal options at lease inception and on an ongoing basis, and we include renewal options that we are reasonably certain to exercise in the expected lease terms when classifying leases and measuring lease liabilities. We elected a policy of not recording leases on the consolidated balance sheets when the leases have a term of 12 months or less and we are not reasonably certain to elect an option to purchase the leased asset. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.

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The table below presents the locations of the operating lease assets and liabilities on the consolidated balance sheets:

(in thousands)						Balance Sheet Line Item						December 31, 2024						December 31, 2023
Operating lease assets						Operating lease assets						$	1,769,720					$	1,268,742
Operating lease liabilities:
Current operating lease liabilities						Other current liabilities						$	343,276					$	298,415
Noncurrent operating lease liabilities						Operating lease liabilities						1,458,391						979,938
Total operating lease liabilities												$	1,801,667					$	1,278,353

The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.

Our leases generally do not provide an implicit rate, and therefore we use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. We used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

Our weighted average remaining lease term and weighted average discount rate for operating leases are:

						December 31, 2024						December 31, 2023
Weighted average remaining lease term (in years)						7.79						6.34
Weighted average discount rate						4.28		%				3.67		%

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the consolidated balance sheets as of December 31, 2024 (in thousands):

2025			$	436,600
2026			394,282
2027			310,407
2028			233,215
2029			155,557
Thereafter			682,913
Total undiscounted future minimum lease payments			2,212,974
Less: Difference between undiscounted lease payments and discounted operating lease liabilities			411,307
Total operating lease liabilities			$	1,801,667

Future minimum lease payments include $53 million related to options to extend lease terms that we are reasonably certain to exercise. Future minimum lease payments exclude $9 million related to an operating lease that has not yet commenced. This lease is expected to commence in 2025 with a lease term of 15 years.

The table below presents operating lease costs and supplemental cash flow information related to leases for the year ended December 31:

(in thousands)						2024						2023						2022
Operating lease costs						$	459,654					$	380,730					$	350,025
Cash paid for amounts included in the measurement of operating lease liabilities						$	449,374					$	389,610					$	358,767
Operating lease assets obtained in exchange for new operating lease liabilities						$	966,796					$	493,039					$	411,052

Operating lease costs are included within selling, administrative and other expenses on the consolidated statements of income. Short-term lease costs, variable lease costs and sublease income were not material for the periods presented. Cash paid for amounts included in the measurement of operating lease liabilities is included in operating activities in the consolidated statements of cash flows.

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10. Employee Benefit Plans

Our defined benefit pension plans cover employees in the U.S., Canada, and Europe who meet eligibility requirements. The plan covering U.S. employees is noncontributory, and our U.S. qualified defined benefit plan was frozen as of December 31, 2013. No further benefits were provided after this date for additional credited service or earnings, and all participants became fully vested as of December 31, 2013.

On April 29, 2024, our Board of Directors approved the termination of the frozen U.S. qualified defined benefit plan (pension plan), effective September 30, 2024. We intend to transfer the management and delivery of continuing benefits associated with the pension plan to a third-party insurance company. The pension plan settlement process involves several regulatory steps and approvals. Subject to completion of these steps and approvals, settlement is expected between late 2025 and early 2026. As part of the plan settlement process, pension plan participants not currently receiving payments will have the opportunity to select a single lump sum payment or an annuity from the insurance company that will pay and administer future benefit payments.

Upon settlement, we expect to recognize a non-cash, pre-tax pension settlement charge in late 2025 or early 2026 equal to the actuarial losses accumulated in AOCI, which totaled approximately $735 million ($540 million, net of tax) as of December 31, 2024. The actual amount of the settlement charges will depend on the valuation of the pension obligation at the settlement date, which is dependent upon interest rates, the lump sum election rate, the cost to purchase annuities, U.S. pension plan asset returns, and other factors. Once settled, we will be fully relieved of all obligations under the U.S. pension plan.

The Canadian plan is contributory, and benefits are based on career average compensation. Our funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. For the plans in the U.S. and Canada, we may increase our contribution above the minimum, if appropriate to our tax and cash position and the plans’ funded position. The European plans are funded in accordance with local regulations.

We also sponsor supplemental retirement plans covering employees in the U.S. and Canada. We use a measurement date of December 31 for our pension and supplemental retirement plans.

Several assumptions are used to determine the benefit obligations, plan assets, and net periodic income. Prior to December 31, 2024, the discount rate for the U.S. pension plan was calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments. As a result of the decision to terminate the U.S. pension plan, as of December 31, 2024, the benefit obligation for the U.S. pension plan was determined based on the amount expected to be required to settle the obligations. Assumptions utilized included the portion of the obligations expected to be settled through elections of lump sum payments or annuities and the cost to purchase annuities, what are subject to change upon actual plan settlement.

The discount rate for non U.S. plans are set by using Willis Towers Watson's RATE:Link model. For non-U.S. plans and the U.S. pension plan prior to December 31, 2024, this approach reflects yields available on high quality corporate bonds that would generate the cash flow necessary to pay the plan's benefits when due. The expected return on plan assets is based on a calculated market-related value of plan assets, where gains and losses on plan assets are amortized over a five year period and accumulate in other comprehensive income. Other non-investment unrecognized gains and losses are amortized in future net income based on a “corridor” approach, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year. The unrecognized gains and losses in excess of the corridor criteria are amortized over the average future lifetime or service of plan participants, depending on the plan. These assumptions are updated at each annual measurement date.

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Changes in benefit obligations for the years ended December 31, 2024 and 2023 were:

(in thousands)						2024						2023
Changes in benefit obligation
Benefit obligation at beginning of year						$	1,981,783					$	1,923,163
Service cost						6,842						5,991
Interest cost						101,289						104,490
Plan participants’ contributions						1,547						1,765
Actuarial loss						51,940						76,072
Foreign currency exchange rate changes						(19,128)						5,580
Gross benefits paid						(142,721)						(137,742)
Plan amendments						—						2,464
Benefit obligation at end of year						$	1,981,552					$	1,981,783

The benefit obligations for our U.S. pension plans included in the above were $1.7 billion at both December 31, 2024 and 2023. The total accumulated benefit obligation for our defined benefit pension plans in the U.S., Canada, and Europe was approximately $2.0 billion and $2.0 billion at December 31, 2024 and 2023, respectively.

For the U.S. pension plan, there was a net actuarial liability loss of $61 million and an asset loss of $61 million. The liability loss was comprised primarily from the cost associated with measuring the plan on a termination basis and the valuation of expected lump sum payments to be made in 2025 prior to the settlement of the plan. For the U.S. supplemental retirement plan, there was a net actuarial liability gain of $6 million. The liability gain is the result of a $8 million gain associated with an increase in the discount rate, a $2 million gain related to updates to the salary growth and bonus payout assumptions, and an offsetting $4 million demographic loss for participant experience.

The assumptions used to measure the pension benefit obligations for the plans at December 31, 2024 and 2023, were:

			2024						2023
Weighted average discount rate			5.15		%				5.30		%
Rate of increase in future compensation levels			2.85		%				3.18		%

Changes in plan assets for the years ended December 31, 2024 and 2023 were:

(in thousands)						2024						2023
Changes in plan assets
Fair value of plan assets at beginning of year						$	2,233,079					$	2,129,058
Actual return on plan assets						137,603						217,767
Foreign currency exchange rate changes						(20,733)						5,407
Employer contributions						15,104						16,824
Plan participants’ contributions						1,547						1,765
Benefits paid						(142,721)						(137,742)
Fair value of plan assets at end of year						$	2,223,879					$	2,233,079

The fair values of plan assets for our U.S. pension plans included in the above were $2.0 billion at both December 31, 2024 and 2023.

For the years ended December 31, 2024 and 2023, the aggregate projected benefit obligation and aggregate fair value of plan assets for plans with projected benefit obligations in excess of plan assets were as follows:

(in thousands)						2024						2023
Aggregate projected benefit obligation						$	229,602					$	231,741
Aggregate fair value of plan assets						$	—					$	—

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For the years ended December 31, 2024 and 2023, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows:

(in thousands)						2024						2023
Aggregate accumulated benefit obligation						$	219,165					$	215,380
Aggregate fair value of plan assets						$	—					$	—

The asset allocations for our funded pension plans at December 31, 2024 and 2023, and the target allocation for 2025, by asset category were:

			Target Allocation						Percentage of Plan Assets at December 31
			2025			2024						2023
Asset Category
Equity securities			10		%				13		%				58		%
Debt securities			30		%				30		%				42		%
Other			60		%				57		%				—		%
			100		%				100		%				100		%

Our benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. Our U.S. plan, our largest pension plan, is well-funded, with a funded status of 128% at December 31, 2024. The plans in Europe are unfunded and, therefore, there are no plan assets. Beginning in 2024, the U.S. pension plan strategy implemented by our management is to minimize funded status volatility through the plan termination process. Our investment strategy with respect to U.S. pension plan assets is to fully hedge plan obligations on a termination basis. In connection with the planned U.S. pension plan termination process, we acquired certain guaranteed annuity contracts from an insurance company using existing plan assets to fund on-going obligations under the U.S. pension plan prior to our planned termination.

The Canadian pension plan strategy implemented by our management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in Canada as well as fiduciary standards. The long-term primary investment objectives for the Canadian pension plan is to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company's Investment Strategy with respect to Canadian pension plan assets is to generate a return in excess of the passive portfolio benchmark (50% Equity, 40% Fixed Income, 10% Other).

The fair values of the plan assets as of December 31, 2024 and 2023, by asset category, are shown in the tables below. Various inputs are considered when determining the value of our pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including our own assumptions in determining the fair value of investments). Certain investments are measured at fair value using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy.

The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year. The guaranteed annuity contract was valued based on the transaction price adjusted for changes in interest rates and actual benefit payments.

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						2024
(in thousands)						Total						Assets Measured at NAV						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Equity Securities
Common stocks — mutual funds — equity						$	54,256					$	—					$	54,256					$	—					$	—
Genuine Parts Company common stock						176,640						—						176,640						—						—
Other stocks						72,749						—						72,749						—						—
Debt Securities
Short-term investments						1,422						—						1,422						—						—
Cash and equivalents						12,365						—						12,365						—						—
Government bonds						52,381						—						329						52,052						—
Corporate bonds						66,321						—						—						66,321						—
Mutual funds-fixed income						201,247						—						201,247						—						—
Short Term Collective Trust						345,064						—						—						345,064						—
Other
Investment Contracts, at Contract Value						1,241,434						—						—						—						1,241,434
Total						$	2,223,879					$	—					$	519,008					$	463,437					$	1,241,434

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						2023
(in thousands)						Total						Assets Measured at NAV						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Equity Securities
Common stocks — mutual funds — equity						$	318,418					$	53,876					$	264,542					$	—					$	—
Genuine Parts Company common stock						209,384						—						209,384						—						—
Other stocks						763,451						—						763,451						—						—
Debt Securities
Short-term investments						38,235						—						38,235						—						—
Cash and equivalents						6,608						—						6,608						—						—
Government bonds						389,199						—						536						388,663						—
Corporate bonds						436,418						—						—						436,418						—
Asset-backed and mortgage-backed securities						10,396						—						—						10,396						—
Convertible Securities						1,720						—						—						1,720						—
Other-international						45,059						—						—						45,059						—
Municipal bonds						14,295						—						—						14,295						—
Other
Options and Futures						(104)						—						—						(105)						1
Total						$	2,233,079					$	53,876					$	1,282,756					$	896,446					$	1

Equity securities include Genuine Parts Company common stock in the amounts of $177 million (8% of total plan assets) and $209 million (9% of total plan assets) at December 31, 2024 and 2023, respectively. Dividend payments received by the plan on company stock totaled approximately $6 million and $6 million in 2024 and 2023, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on our asset allocations and future expectations, our expected rate of return on plan assets for measuring 2025 pension income is 5.33% for the plans. The asset study forecasted expected rates of return for the approximate duration of our benefit obligations, using capital market data and historical relationships.

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31:

(in thousands)						2024						2023
Other long-term asset						$	471,929					$	483,037
Other current liability						(14,402)						(13,039)
Pension and other post-retirement liabilities						(218,629)						(219,644)
						$	238,898					$	250,354

Amounts recognized in accumulated other comprehensive loss consist of:

(in thousands)						2024						2023
Net actuarial loss						$	772,785					$	697,794
Prior service cost						7,919						9,044
						$	780,704					$	706,838

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The following table reflects the total benefits expected to be paid from the pension plans’ or our assets. Of the pension benefits expected to be paid in 2025, approximately $14 million is expected to be paid from employer assets. Expected employer contributions below reflect amounts expected to be contributed to funded plans. Information about the expected cash flows for the pension plans follows (in thousands):

Employer contribution:
2025 (expected)			$	513
Expected benefit payments:
2025			$	438,756
2026			$	27,669
2027			$	28,888
2028			$	30,097
2029			$	31,146
2030 through 2034			$	158,619

Net periodic benefit income included the following components:

(in thousands)						2024						2023						2022
Service cost						$	6,842					$	5,991					$	10,204
Interest cost						101,289						104,490						75,248
Expected return on plan assets						(177,474)						(164,984)						(150,318)
Amortization of prior service cost						1,127						692						691
Amortization of actuarial loss						14,281						9,361						37,065
Net periodic benefit income						$	(53,935)					$	(44,450)					$	(27,110)

Service cost is recorded in selling, administrative and other expenses in the consolidated statements of income while all other components are recorded within other non-operating expenses (income). Pension benefits also include amounts related to supplemental retirement plans.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:

(in thousands)						2024						2023						2022
Current year actuarial loss						$	101,991					$	23,289					$	97,412
Recognition of actuarial loss						(14,281)						(9,361)						(37,065)
Recognition of prior service cost						(1,127)						(692)						(691)
Recognition of curtailment loss						—						—						—
Other						—						2,464						68
Total recognized in other comprehensive income loss						$	86,583					$	15,700					$	59,724
Total recognized in net periodic benefit income and other comprehensive loss (income)						$	32,648					$	(28,750)					$	32,614

The assumptions used in measuring the net periodic benefit income for the plans follow:

			2024						2023						2022
Weighted average discount rate			5.30		%				5.61		%				3.04		%
Rate of increase in future compensation levels			3.18		%				3.16		%				3.13		%
Expected long-term rate of return on plan assets			7.60		%				7.09		%				6.34		%

We have one defined contribution plan in the U.S. that covers substantially all of our domestic employees. Employees receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense was approximately $75 million in 2024, $77 million in 2023, and $69 million in 2022.

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11. Acquisitions

For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for acquired businesses are included in our consolidated statements of income beginning on their respective acquisition dates.

2024

We acquired various businesses for approximately $1.2 billion, which includes certain non-cash consideration and is net of cash acquired, during the year ended December 31, 2024. We recognized approximately $500 million and $30 million of revenue for the year ended December 31, 2024 for our Automotive and Industrial acquisitions, respectively.

The following table summarizes the aggregate estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for these businesses during the year ended December 31, 2024. The fair values of the assets acquired and liabilities assumed are preliminary and may be subject to additional adjustments, particularly to inventory and intangible assets during the measurement period, which may be up to one year from the respective acquisition dates.

(in thousands)						As of Acquisition Dates
Trade accounts receivable						$	100,000
Merchandise inventories						620,000
Prepaid expenses and other current assets						10,000
Other intangible assets						210,000
Property, plant and equipment						100,000
Operating lease assets						250,000
Other assets						10,000
Total identifiable assets acquired						1,300,000
Current liabilities						(120,000)
Operating lease liabilities						(240,000)
Deferred tax liabilities						(40,000)
Other long-term liabilities						(10,000)
Total liabilities assumed						(410,000)
Net identifiable assets acquired						890,000
Goodwill						280,000
Net assets acquired						$	1,170,000

Other intangible assets acquired, totaling approximately $210 million, consisted primarily of customer relationships and trade names with weighted average amortization lives of 18 years.

The estimated goodwill recognized as part of the acquisitions is generally not tax deductible. Goodwill of $250 million and $30 million has been assigned to the Automotive and Industrial segments, respectively. This goodwill is attributable primarily to the expected synergies and assembled work forces of the acquired businesses.

The businesses acquired included two of the largest independent owners of NAPA Auto Parts Stores in the U.S., Motor Parts & Equipment Corporation ("MPEC") in April 2024 and Walker Automotive Group in July 2024. We recognized approximately $100 million of goodwill and other intangible assets associated with the MPEC and

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Walker acquisitions. Approximate values of other assets acquired and liabilities assumed included inventory of $290 million, operating lease assets of $240 million and operating lease liabilities of $250 million.

We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting during the year ended December 31, 2024.

2023

We acquired several businesses for approximately $322 million, net of cash acquired, during the year ended December 31, 2023. Approximately $300 million was related to our Automotive segment and $22 million was related to Industrial. During the year we recognized approximately $389 million and $48 million of sales, net of store closures, related to our 2023 Automotive and Industrial acquisitions, respectively. We recognized approximately $219 million of goodwill and other intangible assets associated with these acquisitions. Other intangible assets acquired of $99 million consisted of customer relationships with a weighted average amortization life of 20 years.

We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting during the year ended December 31, 2023.

2022

We acquired several businesses for approximately $1.6 billion, net of cash acquired, during the year ended December 31, 2022. Approximately $1.3 billion was related to our Industrial segment, primarily the acquisition of KDG and $300 million was related to Automotive.

We recognized approximately $562 million of sales, net of store closures, and $239 million of goodwill and other intangible assets related to our Automotive acquisitions during the year ended December 31, 2022. The other intangible assets acquired consisted of customer relationships of $76 million, trademarks of $9 million, and other intangibles of $4 million with weighted average amortization lives of 18, 15, and 3 years, respectively.

On January 3, 2022, the company, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash, net of cash acquired of approximately $30 million. KDG contributed approximately 5% of net sales included in our consolidated statement of income from January 3, 2022 to December 31, 2022. The KDG acquisition was financed using a combination of borrowing under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement, and $109 million of cash.

For the twelve months ended December 31, 2022, approximately $5 million of inventory amortization step-up cost related to this acquisition was included in cost of goods sold. Further, $62 million of transaction and other one-time costs, inclusive of an impairment charge, were included in selling, administrative, and other expenses in the consolidated statements of income for the year ended December 31, 2022. Refer to the Goodwill and Other Intangible Assets Footnote for more information on the impairment charge.

12. Share-Based Compensation

Share-based compensation costs of $44 million, $57 million, and $38 million, were recorded for the years ended December 31, 2024, 2023, and 2022, respectively. The total income tax benefits recognized in the consolidated statements of income for share-based compensation arrangements were approximately $12 million, $15 million, and $10 million for 2024, 2023, and 2022, respectively. At December 31, 2024, total compensation cost related to nonvested awards not yet recognized was approximately $68 million. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2024, 2023, or 2022.

As of December 31, 2024, there were 6 million shares of common stock available for issuance pursuant to future equity-based compensation awards.

A summary of our restricted stock units activity and related information is as follows:

Nonvested Share Awards (RSUs)						Shares						Weighted Average Grant Date Fair Value						Weighted Average Remaining Contractual Life (Years)						Aggregate Intrinsic Value
Nonvested at beginning of year						888						$	144.46
Granted						460						$	155.62
Vested						(370)						$	135.29
Forfeited						(97)						$	149.31
Nonvested at end of year						881						$	152.71					1.6						$	102,853

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A summary of our stock appreciation rights activity and related information is as follows:

Stock Appreciation Rights (SARs)						Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Life (Years)						Aggregate Intrinsic Value
Outstanding at beginning of year						224						$	93.36
Granted						—						$	—
Exercised						(119)						$	91.71
Forfeited						(2)						$	90.34
Outstanding at end of year						103						$	95.32					1.20						$	2,211
Exercisable at end of year						103						$	95.32					1.20						$	2,211

The aggregate intrinsic value of SARs exercised and RSUs vested during the years ended December 31, 2024, 2023, and 2022 was $68 million, $89 million, and $62 million, respectively. The fair value of RSUs is based on the price of our stock on the date of grant. The fair value of SARs is estimated using a Black-Scholes option pricing model. We ceased issuing SARs in 2017. The total fair value of SARs and RSUs vested during the years ended December 31, 2024, 2023, and 2022 were $51 million, $41 million, and $29 million, respectively.

13. Accumulated Other Comprehensive Loss

The following tables present the changes in AOCL by component:

						Changes in Accumulated Other Comprehensive Loss by Component, Net of Income Taxes
(in thousands)						Pension and Other Post-Retirement Benefits						Cash Flow Hedges						Foreign Currency Translation						Total
Beginning balance, January 1, 2022						$	(463,227)					$	(15,042)					$	(379,470)					$	(857,739)
Other comprehensive income (loss) before reclassifications						(71,258)						—						(143,890)						(215,148)
Amounts reclassified from accumulated other comprehensive loss						27,875						12,470						—						40,345
Ending balance, December 31, 2022						(506,610)						(2,572)						(523,360)						(1,032,542)
Other comprehensive income (loss) before reclassifications						(18,965)						2,765						64,429						48,229
Amounts reclassified from accumulated other comprehensive loss						7,634						(193)						—						7,441
Ending balance, December 31, 2023						(517,941)						—						(458,931)						(976,872)
Other comprehensive income (loss) before reclassifications						(74,604)						—						(221,812)						(296,416)
Amounts reclassified from accumulated other comprehensive loss						11,545						—						—						11,545
Ending balance, December 31, 2024						$	(581,000)					$	—					$	(680,743)					$	(1,261,743)

The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote. The nature of the cash flow hedges are discussed in the Derivatives and Hedging Footnote. Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.

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14. Income Taxes

Significant components of our deferred tax assets and liabilities are as follows:

(in thousands)						2024						2023
Deferred tax assets related to:
Expenses not yet deducted for tax purposes						$	344,858					$	327,946
Operating lease liabilities						622,732						354,594
Pension liability not yet deducted for tax purposes						201,971						175,643
Net operating loss						59,154						49,270
						1,228,715						907,453
Deferred tax liabilities related to:
Employee and retiree benefits						257,640						242,132
Inventory						67,437						92,383
Operating lease assets						635,041						351,821
Other intangible assets						495,227						472,222
Property, plant and equipment						135,073						113,115
Other						52,330						40,264
						1,642,748						1,311,937
Net deferred tax liability before valuation allowance						(414,033)						(404,484)
Valuation allowance						(25,758)						(30,273)
Total net deferred tax liability						$	(439,791)					$	(434,757)

We currently hold approximately $259 million in gross net operating losses, of which approximately $98 million will carry forward indefinitely. The remaining net operating losses of approximately $161 million will begin to expire in 2025.

The components of income before income taxes are as follows:

(in thousands)						2024						2023						2022
United States						$	761,230					$	1,164,914					$	1,100,584
Foreign						414,738						577,434						472,018
Income before income taxes						$	1,175,968					$	1,742,348					$	1,572,602

The components of income tax expense are as follows:

(in thousands)						2024						2023						2022
Current:
Federal						$	129,542					$	201,929					$	196,634
State						41,344						51,244						70,453
Foreign						123,048						130,538						120,594
Deferred:
Federal						(3,774)						26,166						12,727
State						(1,477)						10,241						4,981
Foreign						(16,791)						5,706						(15,488)
						$	271,892					$	425,824					$	389,901

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The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:

(in thousands)						2024						2023						2022
Statutory rate applied to income (1)						$	246,953					$	365,892					$	330,246
Plus state income taxes, net of Federal tax benefit						31,495						48,573						59,593
Taxation of foreign operations, net (2)						3,201						4,666						3,347
Valuation allowance						412						2,911						(7,153)
Other (3)						(10,169)						3,782						3,868
						$	271,892					$	425,824					$	389,901

*(1)*U.S. statutory rates applied to income are as follows: 2024, 2023 and 2022 at 21%.

*(2)*Our effective tax rate reflects the impact of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.

*(3)*Includes investment benefits and associated unrecognized tax benefits.

We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.

We, or one of our subsidiaries, file income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2020 or subject to foreign income tax examinations for years ended prior to 2013. We are currently under audit in some of our state and foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recognized in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recognized uncertain tax positions in connection with the audits; however, we do not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(in thousands)						2024						2023						2022
Balance at beginning of year						$	20,527					$	19,621					$	19,501
Additions based on tax positions related to the current year						15,493						2,584						1,475
Additions for tax positions of prior years						3,462						1,752						89
Reductions for tax positions for prior years						(542)						(70)						(523)
Reduction for lapse in statute of limitations						(2,203)						(2,713)						(921)
Settlements						(547)						(647)						—
Balance at end of year						$	36,190					$	20,527					$	19,621

The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2024 and 2023 was approximately $37 million and $22 million, respectively, of which approximately $35 million and $20 million, respectively, if recognized, would affect the effective tax rate.

During the tax years ended December 31, 2024, 2023 and 2022, we paid, received refunds, or accrued insignificant interest and penalties. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2024, we estimate that we have an outside basis difference in certain foreign subsidiaries of approximately $1.4 billion, which includes the cumulative undistributed earnings from our foreign subsidiaries. We continue to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.

15. Guarantees

We guarantee the borrowings of certain independently controlled automotive parts stores and businesses

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(“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”). Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a majority voting interest in the independents. We have no voting interest or equity conversion rights in any of the independents. We do not control the independents or the affiliates but receive a fee for the guarantees. We have concluded that the independents are variable interest entities, but that we are not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entities’ economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, we concluded that the affiliates are not variable interest entities. During the year ended December 31, 2024, we acquired all of the remaining affiliates, which are consolidated in our financial statements. Our maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to our guarantees. While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants. At December 31, 2024, we were in compliance with all such covenants.

At December 31, 2024, the total borrowings of the independents subject to guarantee by us were approximately $575 million, a decrease from $954 million at December 31, 2023. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, we have had no significant losses in connection with guarantees of independents’ borrowings and the current expected credit loss reserve is not material. As of December 31, 2024, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.

We have recognized certain assets and liabilities amounting to $41 million and $59 million for the guarantees related to the independents’ and affiliates’ borrowings at December 31, 2024 and 2023, respectively. These assets and liabilities are included in other assets and other long-term liabilities in the consolidated balance sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.

16. Commitments and Contingencies

Legal Matters

We are subject to various claims and lawsuits, principally in the United States, and regulatory proceedings worldwide. The liabilities recognized on these claims and other matters are based on the best available information and assumptions that we believe are reasonable. While litigation of any type contains an element of uncertainty, we believe that our insurance coverage and our defense, and ultimate resolution of pending and reasonably anticipated claims will not have a material adverse effect on our business, results of operations or financial condition.

Asbestos-Related Product Liability and Insurance Receivable

We maintain a liability for probable and estimable claims and settlements associated with our distribution and sales of asbestos-containing brake and friction products sold primarily before 1991. These claims and settlements are unrelated to our ongoing operations, revenue generating activities, and business strategy.

We regularly conduct a comprehensive legal review of our asbestos liability. We review recent and historical claims data, including, (i) the number of pending claims filed, (ii) the nature and mix of those claims (e.g., disease type, plaintiff type, geography), (iii) the costs to resolve pending claims, and (iv) trends in filing rates and in costs to resolve claims (collectively, the “Claims Data”). We also consider the known latency periods for common asbestos diseases when projecting future filing trends and claims. We provide the Claims Data to a third-party actuarial specialist with expertise in determining the impact of Claim Data on future filing trends and costs. The actuarial specialist assists us in estimating the costs to resolve pending and future claims. We use this analysis to develop our estimate of probable liability on a discounted basis, using risk-free interest rates derived from market data about monetary assets with maturities comparable to those of the projected liability.

Developments may occur that could affect our estimate of asbestos-related product liability and actual results may differ under different assumptions or conditions. These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the estimate, including the number of future claims, the nature and

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mix of those claims, and the average cost of resolving claims (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other codefendants and insurers. Complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state. Our estimate has been impacted by adverse inflation trends, a backlog of claims building up from court closures during the COVID-19 pandemic, and an evolving legal and product liability environment.

As a result of our comprehensive legal review, we increased the liability by $57 million in 2024. We have 2,768 pending asbestos lawsuits as of December 31, 2024. The amount accrued for pending and future claims was $256 million as of December 31, 2024, which represented our best estimate of the liability within our calculated range of $219 million to $313 million, discounted using a discount rate of 4.58%. The amount accrued for pending and future claims was $244 million as of December 31, 2023, which represented our best estimate of the liability within our calculated range of $196 million to $277 million, discounted using a discount rate of 3.88%. Our undiscounted product liability was $336 million and $308 million as of December 31, 2024 and December 31, 2023, respectively.

We hold insurance policies that cover some asbestos settlements and defense costs. Annually, we conduct an insurance exhaustion study to model expected recoveries for pending and future claims, and we adjust the insurance receivable balance to reflect the present value of these recoveries. Our receivable for estimated insurance recoveries related to pending and future claims was $44 million and $46 million as of December 31, 2024 and December 31, 2023, respectively.

Environmental Liabilities

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed an applied threshold not to exceed $1 million. Applying this threshold, there are no environmental matters to disclose for this period.

17. Restructuring and Other Costs

In February 2024, we approved and initiated a global restructuring initiative designed to better align our assets and further improve the efficiency of the business. This initiative includes an announced voluntary retirement offer in the U.S., along with a rationalization and optimization of certain distribution centers, stores and other facilities. The initiative was approved and funded by our corporate office and therefore these costs are not allocated to our segments. We expect to substantially complete the initiative by the end of 2025.

For the year ended 2024, we incurred total costs of $221 million related to our global restructuring initiative. The table below summarizes the activity related to these costs for the year ended December 31, 2024.

(in thousands)						Year Ended December 31, 2024
Cost of goods sold						$	7,487
Restructuring and other costs						213,520
Total costs						$	221,007

In light of evolving business and market conditions, we are expanding our restructuring initiatives and now expect to incur an additional $150 to $180 million of costs in 2025 as we complete this initiative. In total, we expect to incur costs of between $370 million and $400 million related to our global restructuring initiative in 2024 and 2025.

The estimated charges that we expect to incur are subject to a number of assumptions, and actual amounts may differ materially from such estimates. We may also incur additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of these initiatives.

(in thousands)						Severance and other employee costs						Other restructuring costs (1)						Total
Liability as of January 1, 2024						$	—					$	—					$	—
Restructuring and other costs						90,851						122,669						213,520
Cash payments						(69,739)						(100,433)						(170,172)
Non-cash charges						3,198						(21,311)						(18,113)
Translation						(480)						1						(479)
Liability as of December 31, 2024						$	23,830					$	926					$	24,756

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*(1)*Amount reflects professional fees, accelerated rent, facility closure costs, moving expenses and asset impairment costs that are attributable to our restructuring. Amount excludes a $7 million non-cash charge reflected in cost of goods sold for inventory liquidated rather than moved during facility consolidation in connection with the restructuring.

18. Subsequent Events

A/R Sales Agreement

On January 3, 2025, GPC amended its A/R Sales Agreement to renew the $1 billion facility for one year. The benchmark rate, Bloomberg Short-term Bank Yield Index, was replaced with the Secured Overnight Financing Rate.