10-Q 1 gpc-20220630.htm 10-Q gpc-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 1-5690
  __________________________________________ 
GENUINE PARTS COMPANY
(Exact name of registrant as specified in its charter)
   __________________________________________ 
GA58-0254510
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2999 WILDWOOD PARKWAY, 30339
ATLANTA,GA
(Address of principal executive offices) (Zip Code)
678-934-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of each exchange on which registered
Common Stock, $1.00 par value per shareGPCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
There were 141,430,948 shares of common stock outstanding as of July 25, 2022.




1

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)June 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$519,131 $714,701 
Trade accounts receivable, less allowance for doubtful accounts (2022 – $57,413; 2021 – $44,425)
2,235,453 1,797,955 
Merchandise inventories, net 4,296,191 3,889,919 
Prepaid expenses and other current assets1,475,493 1,353,847 
Total current assets8,526,268 7,756,422 
Goodwill2,538,240 1,915,307 
Other intangible assets, less accumulated amortization1,853,222 1,406,401 
Property, plant and equipment, less accumulated depreciation (2022 – $1,370,095; 2021 – $1,339,706)
1,236,859 1,234,399 
Operating lease assets1,067,614 1,053,689 
Other assets1,015,984 985,884 
Total assets$16,238,187 $14,352,102 
Liabilities and equity
Current liabilities:
Trade accounts payable$5,409,587 $4,804,939 
Current portion of debt14,118  
Dividends payable126,716 115,876 
Other current liabilities1,743,439 1,660,768 
Total current liabilities7,293,860 6,581,583 
Long-term debt3,304,223 2,409,363 
Operating lease liabilities800,672 789,175 
Pension and other post–retirement benefit liabilities263,314 265,134 
Deferred tax liabilities407,763 280,778 
Other long-term liabilities514,792 522,779 
Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; none issued
  
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2022 – 141,280,841 shares; 2021 – 142,180,683 shares
141,281 142,181 
Additional paid-in capital123,388 119,975 
Accumulated other comprehensive loss(953,228)(857,739)
Retained earnings4,329,115 4,086,325 
Total parent equity3,640,556 3,490,742 
Noncontrolling interests in subsidiaries13,007 12,548 
Total equity3,653,563 3,503,290 
Total liabilities and equity$16,238,187 $14,352,102 
See accompanying notes to condensed consolidated financial statements.
2

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except per share data)2022202120222021
Net sales$5,602,414 $4,783,738 $10,897,049 $9,248,452 
Cost of goods sold3,641,615 3,094,633 7,110,303 6,018,532 
Gross profit1,960,799 1,689,105 3,786,746 3,229,920 
Operating expenses:
Selling, administrative and other expenses1,364,015 1,349,309 2,767,994 2,544,473 
Depreciation and amortization85,890 73,960 173,259 146,256 
Provision for doubtful accounts2,899 5,037 7,393 9,946 
Total operating expenses1,452,804 1,428,306 2,948,646 2,700,675 
Non-operating expense (income):
Interest expense, net20,248 15,362 40,098 33,686 
Other(3,820)(24,170)(19,281)(59,907)
Total non-operating expense (income)16,428 (8,808)20,817 (26,221)
Income before income taxes491,567 269,607 817,283 555,466 
Income taxes119,038 73,111 198,916 141,260 
Net income$372,529 $196,496 $618,367 $414,206 
Dividends declared per common share$0.8950 $0.8150 $1.7900 $1.6300 
Basic earnings per share$2.63 $1.36 $4.36 $2.87 
Diluted earnings per share$2.62 $1.36 $4.34 $2.85 
Weighted average common shares outstanding141,581 144,211 141,747 144,312 
Dilutive effect of stock options and non-vested restricted stock awards723 772 835 846 
Weighted average common shares outstanding – assuming dilution142,304 144,983 142,582 145,158 
See accompanying notes to condensed consolidated financial statements.
3


GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Net income$372,529 $196,496 $618,367 $414,206 
Other comprehensive (loss) income, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2022 — $31,638 and $40,049; 2021 — $7,019 and $14,166, respectively
(159,078)7,131 (116,946)6,836 
Cash flow hedge adjustments, net of income taxes in 2022 — $1,383 and $2,767 ; 2021 — $1,383 and $2,767, respectively
3,741 3,741 7,482 7,482 
Pension and postretirement benefit adjustments, net of income taxes in 2022 — $2,580 and $5,160; 2021 — $3,434 and $6,855, respectively
6,986 9,334 13,975 18,630 
Other comprehensive (loss) income, net of income taxes(148,351)20,206 (95,489)32,948 
Comprehensive income$224,178 $216,702 $522,878 $447,154 
See accompanying notes to condensed consolidated financial statements.
4

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Three Months Ended June 30, 2022
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
April 1, 2022141,627,749 $141,628 $126,064 $(804,877)$4,132,925 $3,595,740 $12,136 $3,607,876 
Net income— — — — 372,529 372,529 — 372,529 
Other comprehensive income, net of tax— — — (148,351)— (148,351)— (148,351)
Cash dividend declared, $0.895 per share
— — — — (126,716)(126,716)— (126,716)
Share-based awards exercised, including tax benefit of $2,423
30,588 30 (13,387)— — (13,357)— (13,357)
Share-based compensation— — 10,711 — — 10,711 — 10,711 
Purchase of stock(377,496)(377)— — (49,623)(50,000)— (50,000)
Noncontrolling interest activities— — — — — — 871 871 
June 30, 2022141,280,841 $141,281 $123,388 $(953,228)$4,329,115 $3,640,556 $13,007 $3,653,563 

Six Months Ended June 30, 2022
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2022142,180,683$142,181 $119,975 $(857,739)$4,086,325 $3,490,742 $12,548 $3,503,290 
Net income— — — — 618,367 618,367 — 618,367 
Other comprehensive income, net of tax— — — (95,489)— (95,489)— (95,489)
Cash dividend declared, $1.79 per share
— — — — (253,607)(253,607)— (253,607)
Share-based awards exercised, including tax benefit of $3,137
49,258 49 (14,469)— — (14,420)— (14,420)
Share-based compensation— — 17,882 — — 17,882 — 17,882 
Purchase of stock(949,100)(949)— — (121,970)(122,919)— (122,919)
Noncontrolling interest activities— — — — — — 459 459 
June 30, 2022141,280,841 $141,281 $123,388 $(953,228)$4,329,115 $3,640,556 $13,007 $3,653,563 

5

Three Months Ended June 30, 2021
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
April 1, 2021144,458,057 $144,458 $117,867 $(1,023,760)$4,085,998 $3,324,563 $11,546 $3,336,109 
Net income— — — — 196,496 196,496 — 196,496 
Other comprehensive income, net of tax— — — 20,206 — 20,206 — 20,206 
Cash dividend declared, $0.815 per share
— — — — (117,406)(117,406)— (117,406)
Share-based awards exercised, including tax benefit of $4,863
279,441 280 (14,181)— — (13,901)— (13,901)
Share-based compensation— — 8,286 — — 8,286 — 8,286 
Purchase of stock(1,435,825)(1,436)— — (182,929)(184,365)— (184,365)
Noncontrolling interest activities— — — — — — (280)(280)
June 30, 2021143,301,673 $143,302 $111,972 $(1,003,554)$3,982,159 $3,233,879 $11,266 $3,245,145 

Six Months Ended June 30, 2021
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2021144,354,335$144,354 $117,165 $(1,036,502)$3,979,779 $3,204,796 $13,207 $3,218,003 
Net income— — — — 414,206 414,206 — 414,206 
Other comprehensive income, net of tax— — — 32,948 — 32,948 — 32,948 
Cash dividend declared, $1.63 per share
— — — — (235,120)(235,120)— (235,120)
Share-based awards exercised, including tax benefit of $6,627
383,163 384 (19,714)— — (19,330)— (19,330)
Share-based compensation— — 14,521 — — 14,521 — 14,521 
Purchase of stock(1,435,825)(1,436)— — (182,929)(184,365)— (184,365)
Cumulative effect from adoption of ASU 2019-12 (1)— — — — 6,223 6,223 — 6,223 
Noncontrolling interest activities— — — — — — (1,941)(1,941)
June 30, 2021143,301,673 $143,302 $111,972 $(1,003,554)$3,982,159 $3,233,879 $11,266 $3,245,145 

(1)We adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, during the first quarter of 2021.
See accompanying notes to condensed consolidated financial statements.

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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Six Months Ended June 30,
(in thousands)20222021
Operating activities:
Net income$618,367 $414,206 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization173,259 146,256 
Share-based compensation17,882 14,521 
Gain on sale of real estate(102,803) 
Intangible asset impairment17,061  
Excess tax benefits from share-based compensation(3,137)(6,627)
Changes in operating assets and liabilities70,356 136,074 
Net cash provided by operating activities790,985 704,430 
Investing activities:
Purchases of property, plant and equipment(152,976)(89,993)
Proceeds from sale of property, plant and equipment140,841 22,065 
Proceeds from divestitures of businesses26,102 13,705 
Acquisitions of businesses and other investing activities(1,557,420)(97,168)
Net cash used in investing activities(1,543,453)(151,391)
Financing activities:
Proceeds from debt3,850,642 31,599 
Payments on debt(2,872,124)(142,295)
Share-based awards exercised(14,420)(19,330)
Dividends paid(242,767)(231,627)
Purchases of stock(122,919)(184,365)
Other financing activities(13,901)(2,159)
Net cash provided by (used in) financing activities584,511 (548,177)
Effect of exchange rate changes on cash and cash equivalents(27,613)(7,639)
Net decrease in cash and cash equivalents(195,570)(2,777)
Cash and cash equivalents at beginning of period714,701 990,166 
Cash and cash equivalents at end of period$519,131 $987,389 
See accompanying notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Genuine Parts Company (the “Company,” “we,” “our,” “us,” or “its”) for the year ended December 31, 2021. Accordingly, the unaudited condensed consolidated financial statements and related disclosures herein should be read in conjunction with our 2021 Annual Report on Form 10-K. Significant accounting policies and other disclosures normally provided have been omitted since they are disclosed in our Annual Report and have not changed.
The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements. Specifically, we make estimates and assumptions in our unaudited condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, credit losses on guaranteed loans, customer sales returns, and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation. Reserves for bad debts, credit losses on guaranteed loans and customer sales returns are estimated and accrued on an interim basis based on a consideration of historical experience, current conditions, and reasonable and supportable forecasts. Volume incentives are estimated based upon cumulative and projected purchasing levels.
In the opinion of management, all adjustments necessary for a fair presentation of our financial results for the interim periods have been made. These adjustments are of a normal recurring nature. We have reclassified certain prior period amounts to conform to the current period presentation. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of results for the year ended December 31, 2022. We have evaluated subsequent events through the date the unaudited condensed consolidated financial statements covered by this quarterly report were issued.
Recent Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”). We consider the applicability and impact of all ASUs and have determined that any recently adopted accounting pronouncements did not have a material impact on our condensed consolidated financial statements and all recent accounting pronouncements not yet adopted are not applicable or are expected to have an immaterial impact on our condensed consolidated financial statements.
Debt
1.750% and 2.750% Senior Notes Offering
On January 6, 2022, we issued $500 million of unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022.
We utilized the proceeds from these offerings to repay borrowings under our Revolving Credit Facility, which were incurred to finance a significant portion of the Kaman Distribution Group ("KDG") acquisition.
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Derivatives and Hedging
The following table summarizes the classification and carrying amounts of derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):
June 30, 2022December 31, 2021
InstrumentBalance Sheet ClassificationNotionalBalanceNotionalBalance
Net investment hedges:
Forward contractsPrepaid expenses and other current assets$1,406,950$172,393$925,810$73,819
Forward contractOther current liabilities$$$235,180$2,935
Foreign currency debt Long-term debt700,000$730,870700,000$792,820
The tables below present gains and losses related to designated net investment hedges:
Gain (Loss) Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)2022202120222021
Three Months Ended June 30,
Forward contracts$66,986 $(13,329)$7,565 $6,574 
Foreign currency debt 50,190 (12,670)— — 
Total$117,176 $(25,999)$7,565 $6,574 
Gain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)2022202120222021
Six Months Ended June 30,
Forward contracts$86,380 $24,186 $15,130 $13,148 
Foreign currency debt 61,950 28,280 — — 
Total$148,330 $52,466 $15,130 $13,148 
Fair Value of Financial Instruments
As of June 30, 2022 the fair value of our senior unsecured notes was approximately $3 billion, which are designated as Level 2 in the fair value hierarchy.
Guarantees
We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”). While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants. At June 30, 2022, we were in compliance with all such covenants.
As of June 30, 2022, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $902 million. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents and affiliates that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, we have not had significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of June 30, 2022, there are no material guaranteed loans for
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which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
As of June 30, 2022, we have recognized certain assets and liabilities amounting to $71 million each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the condensed consolidated balance sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.
Earnings Per Share
We maintain various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards. Certain outstanding options are not included in the diluted earnings per share calculation because their inclusion would have been anti-dilutive.
The following table summarizes anti-dilutive shares outstanding:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Anti-dilutive shares outstanding45618674899
2. Segment Information
The following table presents a summary of our reportable segment financial information:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Net sales:
Automotive$3,467,494 $3,196,299 $6,743,115 $6,149,464 
Industrial2,134,920 1,587,439 4,153,934 3,098,988 
Total net sales$5,602,414 $4,783,738 $10,897,049 $9,248,452 
Segment profit:
Automotive$322,553 $290,758 $587,126 $526,436 
Industrial225,472 150,413 413,825 275,705 
Total segment profit548,025 441,171 1,000,951 802,141 
Interest expense, net(20,248)(15,362)(40,098)(33,686)
Intangible asset amortization(39,630)(27,384)(79,324)(52,928)
Corporate expense(73,312)(51,397)(115,063)(82,640)
Other unallocated income (expenses) (1)76,732 (77,421)50,817 (77,421)
Income before income taxes$491,567 $269,607 $817,283 $555,466 
(1)     The following table presents a summary of the other unallocated income and expenses:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Other unallocated costs:
Gain on sale of real estate (2)$102,803 $ $102,803 $ 
Gain on insurance proceeds (3)$873 $ $1,507 $ 
Product liability damages award (4) (77,421) (77,421)
Transaction and other costs (5)(26,944) (53,493) 
Total other unallocated costs$76,732 $(77,421)$50,817 $(77,421)
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(2)    Adjustment reflects a gain on the sale of real estate that had been leased to S.P. Richards.
(3)    Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.
(4)    Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.
(5)    Adjustment primarily reflects legal and professional, restructuring, lease termination and other costs associated with the January 3, 2022 acquisition and subsequent integration of KDG. These costs also include a $17 million impairment charge driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Refer to the acquisition footnote for more information regarding the acquisition.
Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
North America:
Automotive$2,302,008 $2,076,562 $4,432,881 $3,939,367 
Industrial2,021,297 1,469,775 3,931,730 2,869,174 
Total North America $4,323,305 $3,546,337 $8,364,611 $6,808,541 
Australasia:
Automotive$398,940 $388,708 $777,849 $756,577 
Industrial113,623 117,664 222,204 229,814 
Total Australasia$512,563 $506,372 $1,000,053 $986,391 
Europe – Automotive$766,546 $731,029 $1,532,385 $1,453,520 
Total net sales$5,602,414 $4,783,738 $10,897,049 $9,248,452 
3. Accounts Receivable Sales Agreement
Under our accounts receivable sales agreement (the "A/R Sales Agreement"), we continuously sell designated pools of receivables as they are originated by us and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”). The A/R Sales Agreement has a three year term, which we intend to renew.
We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institution by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institution so that the total principal amount outstanding of receivables sold is approximately $1 billion at any point in time (which is the maximum amount allowed under the agreement as amended on January 3, 2022).
Total principal amount outstanding of receivables sold is approximately $1 billion and $800 million as of June 30, 2022 and December 31, 2021, respectively. The amount of receivables pledged as collateral as of June 30, 2022 and December 31, 2021 is approximately $1.1 billion and $973 million, respectively.
The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Receivables sold to the financial institution and derecognized$2,242,273 $1,888,942 $4,478,718 $3,816,873 
Cash collected on sold receivables$2,242,274 $1,888,940 $4,278,729 $3,816,868 
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Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by operating activities in the condensed consolidated statements of cash flows. The SPE incurs fees due to the unaffiliated financial institution related to the accounts receivable sales transactions. Those fees, which are immaterial, are recorded within other non-operating expense (income) in the condensed consolidated statements of income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institution any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of June 30, 2022 and December 31, 2021 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.
4. Employee Benefit Plans
Net periodic benefit income from our pension plans included the following components for our pension benefits:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Service cost$2,586 $3,101 $5,202 $6,142 
Interest cost18,849 17,962 37,716 35,868 
Expected return on plan assets(37,646)(38,858)(75,318)(77,590)
Amortization of prior service cost172 172 344 344 
Amortization of actuarial loss9,275 12,509 18,554 24,965 
Net periodic benefit income$(6,764)$(5,114)$(13,502)$(10,271)
Service cost is recorded in selling, administrative and other expenses in the condensed consolidated statements of income while all other components are recorded within other non-operating expense (income). Pension benefits also include amounts related to supplemental retirement plans.
5. Acquisitions
We acquired several businesses, including KDG, for approximately $1.6 billion, net of cash acquired, during the six months ended June 30, 2022. For the six months ended June 30, 2021, acquisitions totaled $98 million, net of cash acquired.
During the six months ended June 30, 2022, we recognized approximately $238 million and $550 million of revenue, net of store closures, related to our Automotive and Industrial acquisitions, respectively. The results of operations for acquired businesses are included in our condensed consolidated statements of income beginning on their respective acquisition dates.
For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. Excluding KDG, for the six months ended June 30, 2022 and June 30, 2021, we recorded approximately $185 million and $70 million of goodwill and other intangible assets associated with acquisitions. Other intangible assets acquired consisted primarily of customer relationships with a weighted average amortization lives of 20 years.
KDG Acquisition
On January 3, 2022, we, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash. KDG, which is headquartered in Bloomfield, Connecticut, is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to MRO and OEM customers. KDG has approximately 1,700 employees with approximately 220 locations across the United States and Puerto Rico. As of January 3, 2022, KDG had estimated annual revenues of approximately $1 billion.
The net cash consideration transferred of approximately $1.3 billion is net of the estimated cash acquired of approximately $30 million.
The KDG acquisition was financed using a combination of borrowings under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement and $109 million of cash.
The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition date as well as adjustments made to the acquisition accounting during the six months ended June
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30, 2022 (referred to as the "measurement period adjustments"). The measurement period adjustments primarily resulted from revisions to the valuation of certain tangible and intangible assets. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets. We are in the process of analyzing the estimated values of all assets acquired and liabilities assumed as of the acquisition date, including, among other things, obtaining valuations of certain tangible and intangible assets, as well as the fair value of certain contracts and the determination of certain tax balances. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations, tax accounting and leases.
As of January 3, 2022
(in thousands)Initial BalanceMeasurement Period AdjustmentsAs Adjusted
Trade accounts receivable$156,000 $ $156,000 
Merchandise inventories166,000 (1,000)165,000 
Prepaid expenses and other current assets39,000 (2,000)37,000 
Property, plant and equipment26,000 (2,000)24,000 
Operating lease assets49,000 (5,000)44,000 
Other assets1,000  1,000 
Other intangible assets592,000 4,000 596,000 
Goodwill574,000 (6,000)568,000 
Total assets acquired1,603,000 (12,000)1,591,000 
Trade accounts payable85,000  85,000 
Other current liabilities32,000