10-Q 1 gpc-20210930.htm 10-Q gpc-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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, 
ATLANTA,GA30339
(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 142,421,748 shares of common stock outstanding as of October 18, 2021.






PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$919,097 $990,166 
Trade accounts receivable, less allowance for doubtful accounts (2021 – $44,807; 2020 – $36,622)
1,888,253 1,556,966 
Merchandise inventories, net 3,748,418 3,506,271 
Prepaid expenses and other current assets1,226,416 1,060,360 
Total current assets7,782,184 7,113,763 
Goodwill1,890,821 1,917,477 
Other intangible assets, less accumulated amortization1,409,886 1,498,257 
Deferred tax assets43,726 65,658 
Property, plant and equipment, less accumulated depreciation (2021 – $1,315,825; 2020 – $1,268,170)
1,107,374 1,162,043 
Operating lease assets1,040,724 1,038,877 
Other assets700,223 644,140 
Total assets$13,974,938 $13,440,215 
Liabilities and equity
Current liabilities:
Trade accounts payable$4,819,084 $4,128,084 
Current portion of debt 160,531 
Dividends payable116,356 114,043 
Other current liabilities1,601,883 1,491,426 
Total current liabilities6,537,323 5,894,084 
Long-term debt2,432,539 2,516,614 
Operating lease liabilities781,750 789,294 
Pension and other post–retirement benefit liabilities254,727 265,687 
Deferred tax liabilities222,467 212,910 
Other long-term liabilities549,574 543,623 
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 – 2021 – 142,503,493 shares; 2020 – 144,354,335 shares
142,503 144,354 
Additional paid-in capital118,223 117,165 
Retained earnings3,995,537 3,979,779 
Accumulated other comprehensive loss(1,073,086)(1,036,502)
Total parent equity3,183,177 3,204,796 
Noncontrolling interests in subsidiaries13,381 13,207 
Total equity3,196,558 3,218,003 
Total liabilities and equity$13,974,938 $13,440,215 
See accompanying notes to condensed consolidated financial statements.
2

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)

 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2021202020212020
Net sales$4,818,849 $4,370,086 $14,067,301 $12,285,839 
Cost of goods sold3,108,082 2,842,020 9,126,614 8,079,108 
Gross profit1,710,767 1,528,066 4,940,687 4,206,731 
Operating expenses:
Selling, administrative and other expenses1,338,768 1,140,156 3,883,241 3,254,442 
Depreciation and amortization72,121 69,097 218,377 203,084 
Provision for doubtful accounts4,284 5,633 14,230 23,452 
Restructuring costs 10,968  39,009 
Goodwill impairment charge   506,721 
Total operating expenses1,415,173 1,225,854 4,115,848 4,026,708 
Non-operating (income) expenses:
Interest expense14,958 25,788 50,127 72,218 
Other(18,338)(21,241)(79,728)(46,017)
Total non-operating (income) expenses(3,380)4,547 (29,601)26,201 
Income before income taxes298,974 297,665 854,440 153,822 
Income taxes70,389 64,747 211,649 162,059 
Net income (loss) from continuing operations228,585 232,918 642,791 (8,237)
Net loss from discontinued operations (5,387) (192,069)
Net income (loss)$228,585 $227,531 $642,791 $(200,306)
Dividends declared per common share$0.8150 $0.7900 $2.4450 $2.3700 
Basic earnings (loss) per share:
Continuing operations$1.60 $1.61 $4.47 $(0.06)
Discontinued operations (0.03) (1.33)
Basic earnings (loss) per share$1.60 $1.58 $4.47 $(1.39)
Diluted earnings (loss) per share:
Continuing operations$1.59 $1.61 $4.44 $(0.06)
Discontinued operations (0.04) (1.33)
Diluted earnings (loss) per share$1.59 $1.57 $4.44 $(1.39)
Weighted average common shares outstanding142,871 144,273 143,826 144,528 
Dilutive effect of stock options and non-vested restricted stock awards718 762 796  
Weighted average common shares outstanding – assuming dilution143,589 145,035 144,622 144,528 
See accompanying notes to condensed consolidated financial statements.
3


GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Net income (loss)$228,585 $227,531 $642,791 $(200,306)
Other comprehensive (loss) income, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2021 — $11,328 and $25,494; 2020 — $22,896 and $19,451, respectively
(82,574)34,063 (75,738)(36,951)
Cash flow hedge adjustments, net of income taxes in 2021 — $1,384 and $4,151; 2020 — $1,313 and $4,731, respectively
3,741 3,550 11,223 (12,792)
Pension and postretirement benefit adjustments, net of income taxes in 2021 — $3,425 and $10,280; 2020 — $2,998 and $9,023, respectively
9,301 8,187 27,931 24,479 
Other comprehensive (loss) income, net of income taxes(69,532)45,800 (36,584)(25,264)
Comprehensive income (loss)$159,053 $273,331 $606,207 $(225,570)
See accompanying notes to condensed consolidated financial statements.
4

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

Three Months Ended September 30, 2021
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
July 1, 2021143,301,673 $143,302 $111,972 $(1,003,554)$3,982,159 $3,233,879 $11,266 $3,245,145 
Net income— — — — 228,585 228,585 — 228,585 
Other comprehensive loss, net of tax— — — (69,532)— (69,532)— (69,532)
Cash dividend declared, $0.8150 per share
— — — — (116,486)(116,486)— (116,486)
Share-based awards exercised2,256 1 (69)— — (68)— (68)
Share-based compensation— — 6,320 — — 6,320 — 6,320 
Purchase of stock(800,436)(800)— — (98,721)(99,521)— (99,521)
Noncontrolling interest activities— — — — — — 2,115 2,115 
September 30, 2021142,503,493 $142,503 $118,223 $(1,073,086)$3,995,537 $3,183,177 $13,381 $3,196,558 

Nine Months Ended September 30, 2021
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2021144,354,335 $144,354 $117,165 $(1,036,502)$3,979,779 $3,204,796 $13,207 $3,218,003 
Net income— — — — 642,791 642,791 — 642,791 
Other comprehensive loss, net of tax— — — (36,584)— (36,584)— (36,584)
Cash dividend declared, $2.4450 per share
— — — — (351,606)(351,606)— (351,606)
Share-based awards exercised385,419 385 (19,783)— — (19,398)— (19,398)
Share-based compensation— — 20,841 — — 20,841 — 20,841 
Purchase of stock(2,236,261)(2,236)— — (281,650)(283,886)— (283,886)
Cumulative effect from adoption of ASU 2019-12 (1)— — — — 6,223 6,223 — 6,223 
Noncontrolling interest activities— — — — — — 174 174 
September 30, 2021142,503,493 $142,503 $118,223 $(1,073,086)$3,995,537 $3,183,177 $13,381 $3,196,558 



5

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(UNAUDITED)

Three Months Ended September 30, 2020
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
July 1, 2020144,264,189$144,264 $107,819 $(1,212,372)$3,809,564 $2,849,275 $21,613 $2,870,888 
Net income— — — — 227,531 227,531 — 227,531 
Other comprehensive income, net of tax— — — 45,800 — 45,800 — 45,800 
Cash dividend declared, $0.7900 per share
— — — — (113,982)(113,982)— (113,982)
Share-based awards exercised25,464 26 (990)— — (964)— (964)
Share-based compensation— — 6,420 — — 6,420 — 6,420 
Noncontrolling interest activities— — — — — — (920)(920)
September 30, 2020144,289,653 $144,290 $113,249 $(1,166,572)$3,923,113 $3,014,080 $20,693 $3,034,773 

Nine Months Ended September 30, 2020
(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, 2020145,378,158 $145,378 $98,777 $(1,141,308)$4,571,860 $3,674,707 $20,793 $3,695,500 
Net loss— — — — (200,306)(200,306)— (200,306)
Other comprehensive loss, net of tax— — — (25,264)— (25,264)— (25,264)
Cash dividend declared, $2.3700 per share
— — — — (342,426)(342,426)— (342,426)
Share-based awards exercised47,939 48 (1,802)— — (1,754)— (1,754)
Share-based compensation— — 16,274 — — 16,274 — 16,274 
Purchase of stock(1,136,444)(1,136)— — (94,583)(95,719)— (95,719)
Cumulative effect from adoption of ASU 2016-13 (2)— — — — (11,432)(11,432)— (11,432)
Noncontrolling interest activities— — — — — — (100)(100)
September 30, 2020144,289,653 $144,290 $113,249 $(1,166,572)$3,923,113 $3,014,080 $20,693 $3,034,773 

(1)The Company adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, during the first quarter of 2021.
(2)The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, during the first quarter of 2020.
See accompanying notes to condensed consolidated financial statements.
6

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months Ended September 30,
(in thousands)20212020
Operating activities:
Net income (loss)$642,791 $(200,306)
Net loss from discontinued operations (192,069)
Net income (loss) from continuing operations642,791 (8,237)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization218,377 203,084 
Loss on software disposal61,063  
Share-based compensation20,841 16,274 
Excess tax (benefits) deficiencies from share-based compensation(6,667)375 
Goodwill impairment charge 506,721 
Realized currency and other divestiture losses 11,356 
Changes in operating assets and liabilities71,791 697,611 
Net cash provided by operating activities from continuing operations1,008,196 1,427,184 
Investing activities:
Purchases of property, plant and equipment(138,206)(105,428)
Proceeds from sale of property, plant and equipment24,184 11,675 
Proceeds from divestitures of businesses16,687 382,737 
Acquisitions of businesses and other investing activities(142,567)(59,062)
Net cash (used in) provided by investing activities from continuing operations(239,902)229,922 
Financing activities:
Proceeds from debt242,332 1,888,622 
Payments on debt(403,126)(2,466,031)
Share-based awards exercised(19,398)(1,754)
Dividends paid(349,293)(339,294)
Purchases of stock(283,886)(95,719)
Other financing activities(5,353)(15,032)
Net cash used in financing activities from continuing operations(818,724)(1,029,208)
Cash flows from discontinued operations:
Net cash provided by operating activities from discontinued operations 13,323 
Net cash used in investing activities from discontinued operations (11,131)
Net cash provided by financing activities from discontinued operations  
Net cash provided by discontinued operations 2,192 
Effect of exchange rate changes on cash and cash equivalents(20,639)(6,959)
Net (decrease) increase in cash and cash equivalents(71,069)623,131 
Cash and cash equivalents at beginning of period990,166 276,992 
Cash and cash equivalents at end of period$919,097 $900,123 
See accompanying notes to condensed consolidated financial statements.
7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
1. 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. On June 30, 2020, the Company completed the divestiture of its Business Products Group. Refer to the acquisitions, divestitures and discontinued operations footnote for more information. The Company's results of operations for the Business Products Group are reported as discontinued operations and all information related to the discontinued operations has been excluded from the notes to the condensed consolidated financial statements for all periods presented. Net income from discontinued operations for each period includes all costs that are directly attributable to these businesses and excludes certain corporate overhead costs that were previously allocated. Additionally, revenue from freight services provided by the Automotive Parts Group are grossed up and recast in continuing operations in each period because those sales are continuing with the discontinued operations after the divestiture. 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, 2020. Accordingly, the unaudited condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 2020 Annual Report on Form 10-K.
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, the Company makes estimates and assumptions in its 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 the Company’s financial results for the interim periods have been made. These adjustments are of a normal recurring nature.
The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of results for the year ended December 31, 2021. The Company's results of operations continued to improve in 2021 relative to the same period of 2020 as a result of several positive trends caused by the global response to the coronavirus (“COVID-19”) outbreak, which was declared a pandemic in March 2020. In particular, as widespread vaccine distribution continued, we have seen economic recovery in many of the markets where we operate and a significant uptick in consumer mobility. However, the Company's operations remain vulnerable to the continuing negative economic effects caused by the pandemic. The extent to which the pandemic impacts the Company will depend on numerous factors and future developments that the Company cannot predict, including the severity of the virus; the occurrence of additional waves or spikes in infection rates, including the spread of variant strains; the duration of the outbreak; governmental, business or other actions taken in response to the pandemic and the efficacy of these actions, including partial or complete shut downs, travel restrictions, and shelter-in-place orders among other actions; the effectiveness and distribution of COVID-19 vaccines; the ability of the global population to access such vaccines; impacts on customer demand, impacts on the Company's supply chain including the impact of higher shipping-related charges as a result of port slowdowns or congestion, and its ability to attract talent and keep operating locations open.
The Company has evaluated subsequent events through the date the unaudited condensed consolidated financial statements covered by this quarterly report were issued.

8

2. Segment Information
The following table presents a summary of the Company's reportable segment financial information from continuing operations:
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net sales:
Automotive$3,204,534 $2,960,379 $9,353,998 $8,038,863 
Industrial1,614,315 1,409,707 4,713,303 4,246,976 
Total net sales$4,818,849 $4,370,086 $14,067,301 $12,285,839 
Segment profit:
Automotive$281,150 $266,124 $807,586 $627,608 
Industrial165,754 125,620 441,459 348,481 
Total segment profit446,904 391,744 1,249,045 976,089 
Interest expense, net(14,167)(25,221)(47,853)(69,965)
Intangible asset amortization(25,311)(24,223)(78,239)(70,219)
Corporate expense(47,389)(33,379)(130,029)(117,053)
Other unallocated costs (1)(61,063)(11,256)(138,484)(565,030)
Income before income taxes from continuing operations$298,974 $297,665 $854,440 $153,822 
(1)The following table presents a summary of the other unallocated costs:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Other unallocated costs:
Loss on software disposal (2)$(61,063)$ $(61,063)$ 
Product liability damages award (3)  (77,421) 
Goodwill impairment charge (4)   (506,721)
Restructuring costs (5) (10,968) (39,009)
Realized currency loss (6)   (11,356)
Gain on insurance proceeds related to SPR Fire (7)   13,448 
Transaction and other costs (8) (288) (21,392)
Total other unallocated costs$(61,063)$(11,256)$(138,484)$(565,030)
(2)Adjustment reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies. Refer to the property, plant and equipment footnote to the condensed consolidated financial statements for more information.
(3)Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim. Refer to the commitments and contingencies footnote to the condensed consolidated financial statements for more information.
(4)Adjustment reflects the 2020 goodwill impairment charge related to the Company's European reporting unit.
(5)Adjustment reflects restructuring costs related to the execution of certain restructuring actions across the Company's subsidiaries primarily targeted at simplifying the organizational structures and distribution networks implemented by the Company in October 2019 (the “2019 Cost Savings Plan”). The costs are
9

primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations.
(6)Adjustment reflects realized currency losses related to divestitures.
(7)Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs related to the S.P. Richards Headquarters and Distribution Center.
(8)Adjustment reflects $8,490 of incremental costs associated with COVID-19 for the nine months ended September 30, 2020 and costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred relating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things.
Net sales are disaggregated by geographical region for each of the Company’s reportable segments, as the Company deems this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:
 Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
North America:
Automotive$2,100,250 $1,934,503 $6,039,617 $5,381,566 
Industrial1,493,618 1,295,717 4,362,792 3,937,640 
Total North America $3,593,868 $3,230,220 $10,402,409 $9,319,206 
Australasia:
Automotive$374,167 $355,874 $1,130,744 $911,595 
Industrial120,697 113,990 350,511 309,336 
Total Australasia$494,864 $469,864 $1,481,255 $1,220,931 
Europe – Automotive$730,117 $670,002 $2,183,637 $1,745,702 
Total net sales$4,818,849 $4,370,086 $14,067,301 $12,285,839 
3. Accumulated Other Comprehensive Loss
The following tables present the changes in accumulated other comprehensive loss (“AOCL”) by component for the nine months ended September 30:
 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2021$(692,868)$(30,007)$(313,627)$(1,036,502)
Other comprehensive loss before reclassifications  (75,738)(75,738)
Amounts reclassified from accumulated other comprehensive loss27,931 11,223  39,154 
Other comprehensive income (loss), net of income taxes27,931 11,223 (75,738)(36,584)
Ending balance, September 30, 2021$(664,937)$(18,784)$(389,365)$(1,073,086)
10

 Changes in Accumulated Other
Comprehensive Loss by Component
 Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2020$(704,415)$(20,671)$(416,222)$(1,141,308)
Other comprehensive loss before reclassifications (21,248)(48,307)(69,555)
Amounts reclassified from accumulated other comprehensive loss24,479 8,456 11,356 44,291 
Other comprehensive income (loss), net of income taxes24,479 (12,792)(36,951)(25,264)
Ending balance, September 30, 2020$(679,936)$(33,463)$(453,173)$(1,166,572)
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 (loss) in the same period that the related pre-tax AOCL reclassifications are recognized.
4. 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”). The Company considers the applicability and impact of all ASUs and has determined that any recently adopted accounting pronouncements did not have a material impact on the Company's condensed consolidated financial statements and all recent accounting pronouncements not yet adopted are not applicable or are expected to have an immaterial impact on the Company's condensed consolidated financial statements.
5. Property, Plant and Equipment
During the third quarter of 2021, the Company reconsidered its approach to an internally developed software project due to a change in management strategy related to advances in alternative technologies. The Company decided to dispose of the software project as of September 30, 2021. As a result, the Company recognized $61,063 of selling, administrative and other expense related to the disposal of this software.
6. Employee Benefit Plans
Net periodic benefit income from the Company's pension plans included the following components:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Service cost$3,043 $3,012 $9,185 $8,919 
Interest cost17,915 20,942 53,783 62,732 
Expected return on plan assets(38,755)(38,550)(116,345)(115,483)
Amortization of prior service cost172 173 516 519 
Amortization of actuarial loss12,465 11,130 37,430 33,340 
Net periodic benefit income$(5,160)$(3,293)$(15,431)$(9,973)
Service cost is recorded in selling, administrative and other expenses in the condensed consolidated statements of income (loss) while all other components are recorded within other non-operating (income) expenses. Pension benefits also include amounts related to supplemental retirement plans.
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7. Guarantees
The Company guarantees the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which the Company has 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. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates but receives a fee for the guarantees. The Company has concluded that the independents are variable interest entities, but that the Company is 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, the Company concluded that the affiliates are not variable interest entities. The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantees. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants. At September 30, 2021, the Company was in compliance with all such covenants.
As of September 30, 2021, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $895,636. These loans generally mature over periods from one to six years. The Company regularly monitors 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 the Company is required to make payments in connection with these guarantees, the Company 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. The Company recognizes 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, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of September 30, 2021, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
As of September 30, 2021, the Company has recognized certain assets and liabilities amounting to $80,000 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 the Company's noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from the Company's current expected credit loss reserve.
8. Debt
On September 30, 2021, the Company entered into the first amendment to the Syndicated Facility Agreement (the "Unsecured Revolving Credit Facility"), dated as of October 30, 2020. The interest rates were amended to reduce the applicable rate by 12.5 basis points (resulting in a rate of LIBOR + 112.5 basis points) and the LIBOR floor from 0.5% to 0.0%. The amendment also extended the maturity by one year to September 30, 2026.
9. Accounts Receivable Sales Agreement
The Company has an accounts receivable sales agreement (the “A/R Sales Agreement”) to sell short-term receivables from certain customer trade accounts to an unaffiliated financial institution on a revolving basis. The A/R Sales Agreement has a 3 year term, which the Company intends to renew.
As part of the A/R Sales Agreement, the Company continuously sells 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 institution. The Company controls and therefore consolidates the SPE in its condensed consolidated financial statements.
The SPE transferred ownership and control of certain receivables that met certain qualifying cond