What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-22 · 935 added, 1198 removed, 583 unchanged (79% of the section changed)

14 unchanged sentences

and Subsidiaries:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the

Exchange Act).

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act).

Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations.

Because of these inherent limitations, internal control over financial reporting

can provide only reasonable assurance with respect to financial statement preparation and presentation, and may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that

controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Because of these inherent limitations, internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation, and may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 .

In making this assessment, we used the criteria set

forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control - Integrated Framework.

assessment using those criteria, we concluded that, as of December 31, 2023, our internal control over financial reporting is effective.

Our independent registered public accounting firm, KPMG LLP, has audited our consolidated financial statements as of and for the year ended December 31, 2023 and has

also audited the effectiveness of our internal control over financial reporting as of December 31, 2023.

In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control - Integrated Framework.

Based on our assessment using those criteria, we concluded that, as of December 31, 2024 , our internal control over financial reporting is effective.

As permitted by SEC guidance, the scope of management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 excluded AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”), which we acquired in November 2024.

Nissens Automotive's total assets and net sales represented approximately 27% and 2%, respectively, of the consolidated total assets and net sales of Standard Motor Products, Inc.

as of and for the year ended December 31, 2024.

We are currently in the process of evaluating and integrating the acquired operations, processes and internal controls.

Our independent registered public accounting firm, KPMG LLP, has audited our consolidated financial statements as of and for the year ended December 31, 2024 and has also audited the effectiveness of our internal control over financial reporting as of December 31, 2024 .

KPMG’s report appears on the following pages of this “Item 8.

Financial Statements and Supplementary Data.”

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

2 unchanged sentences

Opinion on Internal Control Over Financial Reporting

We have audited Standard Motor Products, Inc and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria

established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission .

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on

criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of

the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and

the related notes and financial statement Schedule II, Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February 22, 2024 expres sed an unqualified opinion on those consolidated financial statements.

We have audited Standard Motor Products, Inc and Subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission .

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February 27, 2025 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Nissens Automotive during 2024, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, Nissens Automotive’s internal control over financial reporting associated with 27% of total assets and 2% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2024.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Nissens Automotive.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal

control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial

reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we

considered necessary in the circumstances.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the

preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of

effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

New York, New York

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Standard Motor Products, Inc.

and Subsidiaries’ (the “Company”) as of December 31, 2023 and 2022,

the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2023, and the related notes and financial statement

Schedule II Valuation and Qualifying Accounts (collectively, the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2023, in conformity with U.S.

and Subsidiaries’ (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2024, and the related notes and financial statement Schedule II Valuation and Qualifying Accounts (collectively, the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three‑year 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, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of

Sponsoring Organizations of the Treadway Commission, and our report da ted February 22, 2024 e xpressed an

unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

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 (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated

financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated 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.

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 consolidated 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 consolidated financial

statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of a 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.

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

Asbestos liability and litigation

As discussed i n Notes 1 and

23 to t he consolidated financial statements, the Company is involved in asbestos litigation and has a potential asbestos liability.

As discussed in Notes 1 and 23 to the consolidated financial statements, the Company is involved in asbestos litigation and has a potential asbestos liability.

As of December 31, 2024, the accrued asbestos liability was $94.6 million.

The Company’s

asbestos liability represents the low end of the actuarially determined range of the undiscounted liability for settlement payments and awards of asbestos related damages, excluding legal costs and any potential recovery from insurance

The Company’s asbestos liability represents the low end of the actuarially determined range of the undiscounted liability for settlement payments and awards of asbestos related damages, excluding legal costs and any potential recovery from insurance carriers.

We identified the assessment of the asbestos liability recorded as a critical audit matter.

This required subjective auditor judgment, due to the

nature of the estimate and assumptions, including the applicability of those assumptions to the current facts and circumstances, as well as judgments about future events and uncertainties.

Specialized skills were needed to evaluate the

Company’s key assumptions.

This required subjective auditor judgment, due to the nature of the estimate and assumptions, including the applicability of those assumptions to

the current facts and circumstances, as well as judgments about future events and uncertainties.

Specialized skills were needed to evaluate the Company’s key assumptions.

The key assumptions included future claim filings, closed with pay ratios, closed with pay lag patterns, settlement values, and large claims.

Minor changes to these key assumptions could have had a significant

effect on the Company’s assessment of the accrual for the asbestos liability.

Minor changes to these key assumptions could have had a significant effect on the Company’s assessment of the accrual for the asbestos liability.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating

effectiveness of certain internal controls related to the asbestos liability estimation process.

This included controls related to the key assumptions and the claims data utilized in the process, and the potential need for an updated

actuarial valuation.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the asbestos liability estimation process.

This included controls related to the key assumptions and the claims data utilized in the process, and the potential need for an updated actuarial valuation.

We evaluated the asbestos related legal cases settled during the year and the number of open cases as of year-end by reading letters received directly from the Company’s external and internal legal counsel.

selection of claims data used in the actuarial model by comparing the selection items to underlying claims documentation.

We involved an actuarial professional with specialized skills and knowledge, who assisted in evaluating (1) the future

claim filings assumption by developing an independent expectation and comparing it against the Company’s future claim filing assumption, and (2) the closed with pay ratios, closed with pay lag patterns, settlement values, and large claims by

comparing them to the Company’s historical experience.

We tested a selection of claims data used in the actuarial model by comparing the selection items to underlying claims documentation.

We involved an actuarial professional with specialized skills and knowledge, who assisted in evaluating (1) the future claim filings assumption by developing an independent expectation and comparing it against the Company’s future claim filing assumption, and (2) the closed with pay ratios, closed with pay lag patterns, settlement values, and large claims by comparing them to the Company’s historical experience.

Fair value of a tradename and customer relationships intangible assets acquired in the Nissens Automotive transaction

As discussed in Notes 1 and 2 to the consolidated financial statements, on November 1, 2024, the Company acquired all issued and outstanding shares of European automotive aftermarket parts supplier, AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (Nissens Automotive), which was accounted for as a business combination.

The purchase price was €366.8 million (approximately $397.1 million), of which, a preliminary estimated fair value of $76.7 million and $150.4 million was allocated to tradenames and customer relationships intangible assets, respectively.

The fair value measurements of the tradename and customer relationships intangible assets was determined using the multi-period excess earnings method and the relief-from-royalty method under the income approach for customer relationships and trade names, respectively.

We identified the evaluation of the acquisition-date preliminary fair values of the acquired tradename and the customer relationships intangible assets as a critical audit matter.

A high degree of subjective auditor judgement was required to evaluate the revenue growth rates, expected customer attrition rate, and the discount rate applied.

Changes in these assumptions could have a significant effect on the fair values.

Additionally, the evaluation of the discount rate and the attrition rate required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process.

This included controls related to the determination of the revenue growth rates, expected customer attrition rate, and discount rate used in the Company’s model.

We evaluated the revenue growth rates by comparing to Nissens Automotive’s historical financial results and forecasted revenue trends of certain peer companies and relevant industry data.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s discount rate by comparing it to an independently developed range of discount rates using publicly available market data for comparable entities

• evaluating the customer attrition rate by comparing it to attrition rates implied from the useful lives sourced from benchmarking similar transactions in the Company’s industry

We have served as the Company’s auditor since 2010.

3 unchanged sentences

AND SUBSIDIARIES

STATEMENTS OF

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

(Dollars in thousands,

except share and per share data)

(In thousands, except share and per share data) 2024 2023 2022

Net sales $ 1,463,849 $ 1,358,272 $ 1,371,815

Cost of sales 1,040,528 969,446 989,276

Gross profit 423,321 388,826 382,539

Selling, general and administrative expenses 335,104 293,583 276,626

8 unchanged sentences

Loss from discontinued operations, net of income tax benefit of $ 10,188 , $ 6,216 and $ 2,975

( 26,128 ) ( 28,996 ) ( 17,691 )

Net earnings 28,476 34,352 55,435

Net earnings attributable to noncontrolling interest

Net earnings attributable to SMP (a)

Net earnings attributable to SMP

Earnings from continuing operations

$ 27,500 $ 34,148 $ 55,351

Net earnings (loss) attributable to SMP

Continuing operations 53,628 63,144 73,042

Discontinued operations ( 26,128 ) ( 28,996 ) ( 17,691 )

Per share data attributable to SMP

Net earnings per common share – Basic:

Earnings from continuing operations

Net earnings attributable to SMP

$ 27,500 $ 34,148 $ 55,351

Per common share data

Continuing operations $ 2.46 $ 2.91 $ 3.37

Discontinued operations ( 1.20 ) ( 1.34 ) ( 0.82 )

Net earnings per common share – Basic

Net earnings per common share – Diluted:

Earnings from continuing operations

Net earnings attributable to SMP per common share $ 1.26 $ 1.57 $ 2.55

Continuing operations $ 2.41 $ 2.85 $ 3.30

Discontinued operations ( 1.17 ) ( 1.31 ) ( 0.80 )

Net earnings per common share – Diluted

Dividend declared per share

Average number of common shares

Average number of common shares and dilutive common shares

Net earnings attributable to SMP per common share 1.24 1.54 2.50

Dividends declared per common share $ 1.16 $ 1.16 $ 1.08

Weighted average number of common shares, basic 21,801,141 21,716,177 21,683,719

Weighted average number of common shares, diluted 22,237,060 22,161,341 22,139,981

(a) Throughout this Form 10-K, “SMP” refers to Standard Motor Products, Inc.

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,

(In thousands) 2024 2023 2022

Net earnings $ 28,476 $ 34,352 $ 55,435

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

Derivative instruments

Pension and postretirement plans

Foreign currency translation ( 20,973 ) 7,447 ( 8,222 )

Cash flow hedges 1,025 ( 924 ) 3,823

Postretirement benefit plans

( 11 ) ( 13 ) ( 15 )

Total other comprehensive income (loss), net of tax

( 19,959 ) 6,510 ( 4,414 )

Total comprehensive income 8,517 40,862 51,021

Comprehensive income (loss) attributable to noncontrolling interest, net of tax:

Foreign currency translation adjustments

Net earnings 976 204 84

Foreign currency translation ( 101 ) 14 ( 113 )

Comprehensive income (loss) attributable to noncontrolling interest, net of tax 875 218 ( 29 )

3 unchanged sentences

AND SUBSIDIARIES

BALANCE SHEETS

(Dollars in thousands,

except share data)

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data) 2024 2023

CURRENT ASSETS:

1 unchanged sentence

Accounts receivable, less allowances for discounts and expected credit losses of $ 5,472 and $ 8,045 in 2024 and 2023, respectively

210,719 160,282

Inventories 624,913 507,075

Unreturned customer inventories 16,163 18,240

3 unchanged sentences

Operating lease right-of-use assets 109,899 100,065

Goodwill 241,418 134,729

Customer relationships intangibles, net 210,430 76,017

Other intangibles, net 90,540 16,291

Deferred incomes taxes

Deferred income taxes 13,199 40,533

Investments in unconsolidated affiliates 24,842 24,050

Other assets 33,139 35,267

Total assets $ 1,814,126 $ 1,293,047

LIABILITIES AND STOCKHOLDERS’ EQUITY

17 unchanged sentences

Common Stock - par value $ 2.00 per share:

Authorized 30,000,000

shares, issued 23,936,036 shares

Authorized 30,000,000 shares, issued 23,936,036 shares

47,872 47,872

Capital in excess of par value 100,135 101,751

1 unchanged sentence

Accumulated other comprehensive income ( 25,832 ) ( 5,974 )

Treasury stock - at cost ( 2,018,982

shares and 2,350,377 shares in 2023

and 2022 , respectively)

Treasury stock - at cost ( 2,077,877 shares and 2,018,982 shares in 2024 and 2023, respectively)

( 81,815 ) ( 81,811 )

Total SMP stockholders’ equity 615,745 635,064

Noncontrolling interest

14,337 15,809

Total stockholders’ equity 630,082 650,873

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

1 unchanged sentence

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings $ 28,476 $ 34,352 $ 55,435

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

2 unchanged sentences

Increase (decrease) to allowance for expected credit losses 732 2,943 ( 757 )

Increase (decrease) to inventory reserves

Increase to inventory reserves 4,155 3,068 6,035

Customer bankruptcy charge — — 7,002

6 unchanged sentences

Change in assets and liabilities:

Decrease in accounts receivable

(Increase) decrease in accounts receivable ( 8,753 ) 7,965 6,916

(Increase) decrease in inventories ( 36,883 ) 29,494 ( 67,495 )

(Increase) in prepaid expenses and other current assets

(Increase) decrease in prepaid expenses and other current assets 856 ( 70 ) ( 5,509 )

Increase (decrease) in accounts payable 8,166 19,645 ( 48,604 )

2 unchanged sentences

Net cash provided by (used in) operating activities

76,693 144,260 ( 27,533 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions of and investments in businesses ( 372,491 ) ( 3,954 ) ( 1,934 )

Cash acquired in step acquisition

Cash acquired in acquisitions — 6,779 —

Capital expenditures ( 44,018 ) ( 28,633 ) ( 25,956 )

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under term loan

Repayments of term loan

Borrowings under term loans 211,457 — 100,000

Repayments of term loans ( 93 ) ( 5,000 ) ( 2,500 )

Net borrowings (repayments) under revolving credit facilities 180,671 ( 78,500 ) 16,702

5 unchanged sentences

Dividends paid to noncontrolling interest

( 2,347 ) ( 700 ) —

Net cash provided by (used in) financing activities

349,547 ( 109,611 ) 55,500

Effect of exchange rate changes on cash 4,343 2,427 ( 755 )

4 unchanged sentences

Cash paid during the year for:

Interest $ 14,044 $ 14,597 $ 9,892

Income taxes $ 19,841 $ 16,019 $ 25,015

See accompanying notes to consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2024, 2023 and 2022

(In thousands) Common

Excess of Par

1 unchanged sentence

Income (Loss)

(In thousands)

BALANCE AT DECEMBER 31, 2021 $ 47,872 $ 105,377 $ 532,319 $ ( 8,169 ) $ ( 75,819 ) $ 601,580 $ 11,047 $ 612,627

Noncontrolling interest in business acquired

Net earnings — — 55,351 — — 55,351 84 55,435

Other comprehensive loss, net of tax — — — ( 4,301 ) — ( 4,301 ) ( 113 ) ( 4,414 )

1 unchanged sentence

Purchase of treasury stock — — — — ( 29,656 ) ( 29,656 ) — ( 29,656 )

Dividends paid to noncontrolling interest

Stock-based compensation — ( 131 ) — — 8,309 8,178 — 8,178

1 unchanged sentence

BALANCE AT DECEMBER 31, 2022 47,872 105,615 564,242 ( 12,470 ) ( 95,239 ) 610,020 11,018 621,038

Noncontrolling interest in step acquisition — — — — — — 5,273 5,273

Net earnings — — 34,148 — — 34,148 204 34,352

Other comprehensive loss, net of tax — — — 6,496 — 6,496 14 6,510

Cash dividends paid — — ( 25,164 ) — — ( 25,164 ) — ( 25,164 )

Purchase of treasury stock

Dividends paid to noncontrolling interest — — — — — — ( 700 ) ( 700 )

Stock-based compensation — ( 3,880 ) — — 10,478 6,598 — 6,598

1 unchanged sentence

BALANCE AT DECEMBER 31, 2023 47,872 101,751 573,226 ( 5,974 ) ( 81,811 ) 635,064 15,809 650,873

Noncontrolling interest in step acquisition

Net earnings — — 27,500 — — 27,500 976 28,476

Other comprehensive loss, net of tax — — — ( 19,858 ) — ( 19,858 ) ( 101 ) ( 19,959 )

Cash dividends paid — — ( 25,341 ) — — ( 25,341 ) — ( 25,341 )

Purchase of treasury stock — — — — ( 10,428 ) ( 10,428 ) — ( 10,428 )

Dividends paid to noncontrolling interest — — — — — — ( 2,347 ) ( 2,347 )

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting

Principles of Consolidation

Summary of Significant Accounting Policies

Principles of Consolidation & Basis of Presentation

Stan dard Motor Products, Inc.

premium replacement parts in the automotive aftermarket, and a custom-engineered solutions provider to vehicle and equipment manufacturers in diverse non-aftermarket end markets.

Our automotive aftermarket is comprised of two segments, Vehicle Control and Temperature Control, while our Engineered Solutions segment offers a broad array of conventional and

future-oriented technologies in markets for commercial and light vehicles, construction, agriculture, power sports, marine, hydraulics and lawn and garden.

We sell our products primarily to retailers, warehouse distributors, original equipment

manufacturers and original equipment service part operations in the United States, Canada, Europe, Asia, Mexico and other Latin American countries .

The consolidated financial statements include our accounts and all domestic and international companies in which we have more than a 50 % equity ownership, except in instances where the minority shareholder maintains substantive participating rights, in which case we follow the equity method of accounting.

In instances where

we have more than a 50 % equity ownership and the minority shareholder does not maintain substantive participating rights, our

consolidated financial statements include the accounts of the company on a consolidated basis with its net income and equity reported at amounts attributable to both our equity position and that of the noncontrolling interest.

Investments in

unconsolidated affiliates are accounted for on the equity method, as we do not have a controlling financial interest but have the ability to exercise significant influence.

and its subsidiaries (referred to hereinafter in these notes to the consolidated financial statements as “we,” “us,” “our,” “SMP,” or the “Company”) is a leading manufacturer and distributor of premium replacement parts in the automotive aftermarket, and a custom-engineered solutions provider to vehicle and equipment manufacturers in diverse non-aftermarket end markets.

Our automotive aftermarket is comprised of three segments, Vehicle Control, Temperature Control and Nissens Automotive, while our Engineered Solutions segment offers a broad array of conventional and future-oriented technologies in markets for commercial and light vehicles, construction, agriculture, power sports, marine, hydraulics and lawn and garden.

We sell our products primarily to retailers, warehouse distributors, original equipment manufacturers and original equipment service part operations in the United States, Canada, Europe, Asia, Mexico and other Latin American countries.

In addition to our legacy SMP business, we acquired European automotive aftermarket parts supplier AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”) in a transaction which closed on November 1, 2024.

Nissens Automotive develops, manufactures and markets products within the areas of engine cooling, air conditioning climate systems, and engine efficiency within the automotive aftermarket industry, primarily in Europe.

Nissens Automotive will serve as our fourth business segment.

For further information and disclosures regarding the Nissens Automotive acquisition, refer to Note 2, "Business Combinations."

These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S.

GAAP") an d include our accounts and all domestic and international companies that we control.

In addition, we use the equity method, to include our share of the results of certain affiliates based on our economic interest, our ability to exercise significant influence over the operating or financial decisions of these affiliates or our ability to direct their economic resources.

We do not control these affiliates, as our ownership in these other affiliates is generally 50% or less.

All significant inter-company items have been eliminated.

Use of Estimates

T he preparation of consolidated

annual and quarterly financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent

assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

We have made a number of estimates and assumptions in the preparation of these

consolidated financial statements.

We can give no assurance that actual results will not differ from those estimates.

Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates,

or in the assumptions that we use in calculating the estimates, the uncertain future effects, if any, of disruptions in the supply chain caused by geo-political risks, future increases in interest rates, inflation, macroeconomic uncertainty, and

other unforeseen changes in the industry, or business, could materially impact the estimates, and may have a material adverse effect on our business, financial condition and results of operations.

Some of the more significant estimates include

allowances for expected credit losses, cash discounts, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, product liability exposures, asbestos,

environmental and litigation matters, valuation of deferred tax assets, share based compensation and sales returns and other allowances.

Reclassification

Certain prior period amounts in the accompanying consolidated financial statements and related notes have been reclassified to conform to the 2024 presentation.

Use of Estimates

The preparation of consolidated annual and quarterly financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

We have made a number of estimates and assumptions in the preparation of these consolidated financial statements.

We can give no assurance that actual results will not differ from those estimates.

Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates, or in the assumptions that we use in calculating the estimates, the uncertain future effects, if any, of disruptions in the supply chain caused by geo-political risks, future increases in interest rates, inflation, macroeconomic uncertainty, and other unforeseen changes in the industry, or business, could materially impact the estimates, and may have a material adverse effect on our business, financial condition and results of operations.

Some of the more significant estimates include allowances for expected credit losses, cash discounts, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, product liability exposures, asbestos, environmental and litigation matters, valuation of deferred tax assets, share based compensation and sales returns and other allowances.

Reportable Segments

Our business comprises of four operating segments – Vehicle Control, Temperature Control and Engineered Solutions from our legacy SMP business and a fourth operating segment, Nissens Automotive, which was created in the fourth quarter of 2024 as a result of our acquisition of Nissens Automotive.

Our operating segment structure aligns our operations with our strategic focus on diversifying our business, provides greater transparency into our positioning to capture

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reportable Segments

Beginning on January 1, 2023, we reorganized our business into three operating segments – Vehicle Control, Temperature Control and Engineered Solutions.

The new operating segment structure better aligns our operations with our

strategic focus on diversifying our business, provides greater transparency into our positioning to capture opportunities for growth in the future, and provides clarity regarding the unique dynamics and margin profiles of the markets served

by each segment.

Prior period segment results have been reclassified to conform to our operating segment reorganization.

For additional information related to our segment reorganization, see Note 8, “Goodwill and Acquired Intangible

Assets,” Note 21, “Industry Segment and Geographic Data” and Note 22, “Net Sales.”

opportunities for growth in the future, and provides clarity regarding the unique dynamics and margin profiles of the markets served by each segment.

Cash and Cash Equivalents

1 unchanged sentence

Allowance for Expected Credit Losses and Cash Discounts

We do not generally require collateral for our trade accounts

We do not generally require collateral for our trade accounts receivable.

Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future.

These allowances are established based on a combination of write-off history, supportable forecasts, aging analysis, and

specific account evaluations.

These allowances are established based on a combination of write-off history, supportable forecasts, aging analysis, and specific account evaluations.

When a receivable balance is known to be uncollectible, it is written off against the allowance for expected credit losses.

Cash discounts are provided based on an overall average experience rate applied to qualifying

accounts receivable balances.

Cash discounts are provided based on an overall average experience rate applied to qualifying accounts receivable balances.

Inventories are valued at the lower of cost and net realizable value.

Cost is determined on the first-in first-out basis.

Where appropriate, standard cost systems are

utilized for purposes of determining cost;

Where appropriate, standard cost systems are utilized for purposes of determining cost;

the standards are adjusted as necessary to ensure they approximate actual costs.

Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product

to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory.

also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand.

For inventory deemed to be obsolete, we provide a reserve on the full value of the

Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory.

We also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand.

For inventory deemed to be obsolete, we provide a reserve on the full value of the inventory.

Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates our estimate of future demand.

Future projected demand requires management judgment and is based upon (a) our review of

historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business.

Using rolling twelve month historical information, we estimate future demand on a continuous

Future projected demand requires management judgment and is based upon (a) our review of historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business.

Using rolling twelve month historical information, we estimate future demand on a continuous basis.

The historical volatility of such estimates has been minimal.

We maintain provisions for inventory reserves of $ 42.9 million

and $ 42.5 million as of December 31, 2023 and 2022, respectively .

We maintain provisions for inventory reserves of $ 43.7 million and $ 42.9 million as of December 31, 2024 and 2023, respectively.

We utilize cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps.

The production of air conditioning

compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers, or from returns pursuant to an exchange program with customers.

Under such exchange

programs, at the time of sale of air conditioning compressors, diesel injectors, and diesel pumps, we estimate the core expected to be returned from the customer and record the estimated return as unreturned customer inventory.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The production of air conditioning compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers, or from returns pursuant to an exchange program with customers.

Under such exchange programs, at the time of sale of air conditioning compressors, diesel injectors, and diesel pumps, we estimate the core expected to be returned from the customer and record the estimated return as unreturned customer inventory.

In addition, many of our customers can return inventory to us based upon customer warranty and overstock arrangements within customer specific limits.

products are sold, we accrue a liability for product warranties and overstock returns and record as unreturned customer inventory our estimate of anticipated customer returns.

Estimates are based upon historical information on the nature,

frequency and probability of the customer return.

At the time products are sold, we accrue a liability for product warranties and overstock returns and record an asset for unreturned customer inventory based on our estimate of anticipated customer returns.

Estimates are based upon historical information on the nature, frequency and probability of the customer return.

Unreturned core, warranty and overstock customer inventory is recorded at standard cost.

Revision to these estimates is made when necessary, based upon changes in these factors.

study trends of such claims.

We regularly study trends of such claims.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as

Property, plant and equipment are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows:

Estimated Life

25 to 33-1/2 years

Building improvements

10 to 25 years

Machinery and equipment

5 to 12 years

Tools, dies and auxiliary equipment

Furniture and fixtures

3 to 12 years

Buildings 25 to 33-1/2 years

Building improvements 10 to 25 years

Machinery and equipment 5 to 12 years

Tools, dies and auxiliary equipment 3 to 8 years

Furniture and fixtures 3 to 12 years

Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease.

Costs related to maintenance and repairs which do not

prolong the assets useful lives are expensed as incurred.

Costs related to maintenance and repairs which do not prolong the assets useful lives are expensed as incurred.

We assess our property, plant and equipment to be held and used for impairment when indicators are present that the carrying value may not be recoverable.

We determine if an arrangement is a lease at inception.

For operating leases, we include and report operating lease right-of-use (“ROU”) assets, sundry payables and

accrued expenses, and noncurrent operating lease liabilities on our consolidated balance sheet for leases with a term longer than twelve months.

Finance leases are reported on our consolidated balance sheets in property, plant and equipment,

current portion of other debt, and long-term debt.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the total lease payments over the

For operating leases, we include and report operating lease right-of-use (“ROU”) assets, sundry payables and accrued expenses, and noncurrent operating lease liabilities on our consolidated balance sheet for leases with a term longer than twelve months.

Finance leases are reported on our consolidated balance sheets in property, plant and equipment, current portion of other debt, and long-term debt.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the total lease payments over the lease term.

Our ROU assets represent the right to use an underlying leased asset over the existing lease term, and the corresponding lease liabilities represent our obligation to make lease payments arising from the lease agreement.

our leases do not provide for an implicit rate, we use our incremental borrowing rate based on the information available when determining the present value of our lease payments.

Our lease terms may include options to terminate, or extend, our

lease when it is reasonably certain that we will execute the option.

As most of our leases do not provide for an implicit rate, we use our incremental borrowing rate based on the information available when determining the present value of our lease payments.

Our lease terms may include options to terminate, or extend, our lease when it is reasonably certain that we will execute the option.

Lease agreements may contain lease and non-lease components, which are generally accounted for separately.

Operating lease expense is recognized on a straight-line basis over

the lease term.

Valuation of Long-Lived and Intangible Assets and Goodwill

At acquisition, we estimate and record

the fair value of purchased intangible assets, which primarily consist of customer relationships, trademarks and trade names, patents, developed technology and intellectual property, and non-compete agreements.

Intangible assets acquired through

business combinations are subject to potential adjustments within the measurement period, which is up to one year from the acquisition date.

Operating lease expense is recognized on a straight-line basis over the lease term.

Business Combinations and Intangible Assets Including Goodwill

The company accounts for business combinations using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are generally recorded at their acquisition date fair values.

At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consist of customer relationships, trademarks and trade names, and patents, developed technology and intellectual property.

Intangible assets acquired through business combinations are subject to potential adjustments within the measurement period, which is up to one year from the acquisition date.

Valuing intangible assets requires the use of significant estimates and assumptions.

As related to

valuing customer relationships, significant estimates and assumptions used include but are not limited to:

(1) forecasted revenues attributable to existing customers;

(2) forecasted earnings before interest and taxes (“EBIT”) margins;

customer attrition rates;

and (4) the discount rate.

Significant estimates and assumptions used in valuing customer relationships include but are not limited to:

(i) forecasted revenues attributable to existing customers;

(ii) forecasted margins;

(iii) customer attrition rates;

and (iv) the discount rate.

Identifiable intangible assets with finite lives are amortized over their useful lives generally on a straight-line basis.

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.

Goodwill and certain other intangible assets having indefinite

lives are not amortized to earnings, but instead are subject to periodic testing for impairment.

The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as a separately identifiable intangible asset.

Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.

Intangible assets determined to have definite lives are amortized over their remaining useful lives.

We believe that the fair value of acquired

identifiable net assets, including intangible assets, are based upon reasonable estimates and assumptions.

We believe that the fair value of acquired identifiable net assets, including intangible assets, are based upon reasonable estimates and assumptions.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We assess the impairment of long‑lived assets, identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value

may not be recoverable.

With respect to goodwill and identifiable intangible assets having indefinite lives, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value

is below its carrying amount.

Acquisition related costs, including advisory, legal, accounting, valuation and pre-close and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in selling, general and administrative expenses within the statement of operations.

The results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date.

We assess long‑lived assets, identifiable intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Factors we consider important, which could trigger an impairment review, include the following:

(a) significant underperformance relative to expected historical or projected future operating results;

(b) significant

changes in the manner of our use of the acquired assets or the strategy for our overall business;

(b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

and (c) significant negative industry or economic trends.

We review the fair values using the discounted cash flows method and market multiples.

When performing our evaluation of goodwill for impairment, if

we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative impairment test would not be required.

If we are unable to reach this conclusion, then

we would perform a goodwill quantitative impairment test.

In performing the quantitative test, the fair value of the reporting unit is compared to its carrying amount.

A charge for impairment is recognized by the amount by which the reporting

unit’s carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Identifiable intangible assets having indefinite lives are

reviewed for impairment on an annual basis using a methodology similar with that used to evaluate goodwill.

Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product

discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.

In reviewing intangible assets having definite lives and other long-lived assets for impairment, we

compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition.

When the estimated undiscounted future cash flows are less than their carrying amount,

an impairment loss is recognized equal to the difference between the assets fair value and their carrying value.

There are inherent assumptions and estimates used in

developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative impairment test would not be required.

If we are unable to reach this conclusion, then we would perform a quantitative impairment test.

In performing the quantitative impairment test, the fair value of the reporting unit is compared to its carrying amount.

A charge for impairment is recognized by the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Identifiable intangible assets having indefinite lives are reviewed for impairment on an annual basis using a methodology similar with that used to evaluate goodwill.

Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.

In reviewing intangible assets having definite lives and other long-lived assets for impairment, we compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition.

When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets fair value and their carrying value.

There are inherent assumptions and estimates used in developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of capital.

Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods.

These changes can result in future impairments.

In the event our

planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations.

In the event our planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations.

Foreign Currency Translation

1 unchanged sentence

dollars at year-end exchange rates.

Income statement accounts are translated using the average

exchange rates prevailing during the year.

The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) and remains there until the underlying foreign operation is liquidated or

substantially disposed of.

Foreign currency transaction gains or losses are recorded in the statement of operations under the caption “other non-operating income (expense), net.”

Income statement accounts are translated using the average exchange rates prevailing during the year.

The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) and remain there until the underlying foreign operation is liquidated or substantially disposed of.

Foreign currency transaction gains or losses are recorded in other non-operating income (expense), net in our statement of operations.

Revenue Recognition

We derive our revenue primarily from vehicle aftermarket sales in our Vehicle Control, Temperature Control and Nissens Automotive segments, and non-aftermarket sales in our Engineered Solutions Segment.

We recognize revenues when our performance obligation has been satisfied and the control of products has been transferred to a customer which typically occurs upon shipment.

Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of goods or provision of services.

The amount of consideration we receive and revenue we recognize depends on the marketing incentives, product warranty and overstock returns we offer to our customers.

For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue Recognition

We derive our revenue primarily from

vehicle aftermarket sales in our Vehicle Control and Temperature Control Segments, and non-aftermarket sales in our Engineered Solutions Segment.

We recognize revenues when our performance obligation has been satisfied and the control of products

has been transferred to a customer which typically occurs upon shipment.

Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of goods or providing services.

The amount of consideration we receive and revenue we recognize depends on the marketing incentives,

product warranty and overstock returns we offer to our customers.

For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use in our future remanufacturing

in our future remanufacturing activities.

Such deposit is not recognized as revenue at the time of the sale but rather carried as a core liability.

At the same time, we estimate the core expected to be returned from the customer and record the estimated return as unreturned

customer inventory.

At the same time, we estimate the core expected to be returned from the customer and record the estimated return as unreturned customer inventory.

The liability is extinguished when a core is actually returned to us, or at period end when we estimate and recognize revenue for the core deposits not expected to be returned.

We estimate and record provisions for cash

discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends.

Significant management judgments and estimates must be made and used in estimating sales returns

and allowances relating to revenue recognized in any accounting period.

We estimate and record provisions for cash discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends.

Significant management judgments and estimates are made in estimating sales returns and allowances relating to revenue recognized in any accounting period.

Product Warranty and Overstock Returns

Many of our products carry a warranty ranging from a 90 -day limited warranty to a lifetime limited warranty, which generally covers defects in materials or

workmanship and failure to meet industry published specifications and/or the result of installation error.

In addition to warranty returns, we also permit our customers to return new, undamaged products to us within customer-specific limits

(which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories.

At the time products are

sold, we accrue a liability for product warranties and overstock returns as a percentage of sales based upon estimates established using historical information on the nature,

frequency and average cost of the claim and the probability of the customer return.

Many of our products carry a warranty ranging from a 90-day limited warranty to a lifetime limited warranty, which generally covers defects in materials or workmanship and failure to meet industry published specifications and/or the result of installation error.

In addition to warranty returns, we also permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories.

At the time products are sold, we accrue a liability for product warranties and overstock returns as a percentage of sales based upon estimates established using historical information on the nature, frequency and average cost of the claim and the probability of the customer return.

At the same time, we record an estimate of anticipated customer returns as unreturned customer inventory.

Significant judgments and estimates must be made and

used in connection with establishing the sales returns and other allowances in any accounting period.

Significant judgments and estimates are made in connection with establishing the sales returns and other allowances in any accounting period.

Revision to these estimates is made when necessary, based upon changes in these factors.

2 unchanged sentences

New customer acquisition costs refer to arrangements pursuant to which we incur change-over costs to induce a new customer to switch from a competitor’s brand.

addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory commonly referred to as a stock lift.

New customer acquisition costs are recorded as a reduction to revenue when

In addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory commonly referred to as a stock lift.

New customer acquisition costs are recorded as a reduction to revenue when incurred.

Selling, General and Administration Expenses

Selling, general and administration expenses include shipping costs and advertising, which are expensed as incurred.

Shipping and handling charges, as well as freight to

customers, are included in distribution expenses as part of selling, general and administration expenses.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Financing Costs

Deferred financing costs represent costs incurred in conjunction with our debt financing activities.

Deferred financing costs related to our term loan and revolving

credit facilities are capitalized and amortized over the life of the related financing arrangement.

If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded

in the statement of operations under the caption other non-operating income (expense), net.

Shipping and handling charges, as well as freight to customers, are included in distribution expenses as part of selling, general and administration expenses.

Accounting for Income Taxes

Income taxes are calculated using the asset and liability method.

Deferred tax assets and liabilities are determined based on the estimated future tax effects of

temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates.

Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates.

We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized.

In determining whether a valuation

allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient

future taxable income will be generated to realize the deferred tax asset.

The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our

deferred tax assets will be recoverable.

level of valuation allowance which could materially impact our business, financial condition and results of operations.

The valuation allowance of $ 3.8 million as of December 31, 2023 is intended to provide for the uncertainty regarding the ultimate realization

foreign tax credit carryovers.

Based on these considerations, we believe it is more likely than not that we will realize the benefit of the net deferred tax asset of $ 40.5 million as of December 31, 2023 , which

is net of the remaining valuation allowance.

Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely

than not that the position will be sustained upon examination by a taxing authority.

For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater

than 50% likelihood of being realized upon ultimate settlement with a taxing authority.

In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset.

The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable.

In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations.

Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority.

For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.

The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available.

Such adjustments are recognized entirely in the period in which they are identified.

During the years ended December 31, 2023, 2022 and 2021 , we did not establish a liability

for uncertain tax positions.

Environmental Reserves

We are subject to various U.S.

Federal and state and local environmental laws and regulations and are involved in certain environmental remediation efforts.

and accrue our liabilities resulting from such matters based upon a variety of factors including the assessments of environmental engineers and consultants who provide estimates of potential liabilities and remediation costs.

Such estimates are

not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.

Potential recoveries from insurers or other third parties of environmental remediation

liabilities are recognized independently from the recorded liability, and any asset related to the recovery will be recognized only when the realization of the claim for recovery is deemed probable.

STANDARD MOTOR PRODUCTS, INC.

2 unchanged sentences

Asbestos Litigation

In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related

liabilities performed by an independent actuarial firm, our settlement amounts and whether there are any co-defendants, the jurisdiction in which lawsuits are filed, and the status and results of such claims.

As is our accounting policy, we

consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability;

and perform an actuarial evaluation in the third quarter of each year and whenever events or changes

in circumstances indicate that additional provisions may be necessary.

In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related liabilities performed by an independent actuarial firm, our settlement amounts and whether there are any co-defendants, the jurisdiction in which lawsuits are filed, and the status and results of such claims.

As is our accounting policy, we consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability;

and perform an actuarial evaluation in the third quarter of each year and whenever events or changes in circumstances indicate that additional provisions may be necessary.

The methodology used to project asbestos-related liabilities and costs in our actuarial study considered:

(1) historical data available from publicly available studies;

an analysis of our recent claims history to estimate likely filing rates into the future;

(3) an analysis of our currently pending claims;

(4) an analysis of our settlements and awards of asbestos-related damages to date;

and (5) an analysis of

closed claims with pay ratios and lag patterns in order to develop average future settlement values.

Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount

within the range of settlement payments and awards of asbestos-related damages was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an

adjustment is required.

(i) historical data available from publicly available studies;

(ii) an analysis of our recent claims history to estimate likely filing rates into the future;

(iii) an analysis of our currently pending claims;

(iv) an analysis of our settlements and awards of asbestos-related damages to date;

and (v) an analysis of closed claims with pay ratios and lag patterns in order to develop average future settlement values.

Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments and awards of asbestos-related damages was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.

Future legal costs are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations.

We plan to perform an annual actuarial evaluation during the third quarter of each year for the foreseeable future and whenever events or changes in circumstances indicate that additional provisions may be necessary.

Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can

give no assurance that additional provisions will not be required.

We will continue to monitor events and changes in circumstances surrounding these potential liabilities in determining whether to perform additional actuarial evaluations and

whether additional provisions may be necessary, which will reported in earnings (loss) from discontinued operations in the accompanying statement of operations.

At the present time, however, we do not believe that any additional provisions would

be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position.

Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can give no assurance that additional provisions will not be required.

We will continue to monitor events and changes in circumstances surrounding these potential liabilities in determining whether to perform additional actuarial evaluations and whether additional provisions may be necessary.

At the present time, however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position.

Loss Contingencies

We have loss contingencies, for such matters as legal claims and legal proceedings.

Establishing loss reserves for these matters requires estimates, judgment of risk

exposure and ultimate liability.

Establishing loss reserves for these matters requires estimates, judgment of risk exposure and ultimate liability.

We record provisions when the liability is considered probable and reasonably estimable.

Significant judgment is required for both the determination of probability and the determination as to whether an exposure

can be reasonably estimated.

Significant judgment is required for both the determination of probability and the determination as to whether an exposure can be reasonably estimated.

We maintain an ongoing monitoring and identification process to assess how the activities are progressing against the accrued estimated costs.

As additional information becomes available, we reassess our potential

liability related to these matters.

As additional information becomes available, we reassess our potential liability related to these matters.

Adjustments to the liabilities are recorded in the statement of operations in the period when additional information becomes available.

Such revisions of the potential liabilities could have a material adverse

effect on our business, financial condition or results of operations.

Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Concentrations of Credit Risk

Financial instruments that potentially subject us to

significant concentrations of credit risk consist principally of cash investments, accounts receivable and derivative financial instruments used to reduce our market risk for changes in interest rates on our variable rate borrowings.

cash investments with high quality financial institutions and limit the amount of credit exposure to any one institution.

Derivative financial instruments used to reduce our market risk for changes in interest rates on our variable rate

borrowings are entered into with high quality financial institutions, with their credit worthiness reviewed on a quarterly basis.

Although we are directly affected by developments in the vehicle parts industry, management does not believe

significant credit risk exists.

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, accounts receivable and derivative financial instruments used to reduce our market risk for changes in interest rates on our variable rate borrowings.

We place our cash investments with high quality financial institutions and limit the amount of credit exposure to any one institution.

Derivative financial instruments used to reduce our market risk for changes in interest rates on our variable rate borrowings are entered into with high quality financial institutions, with their credit worthiness reviewed on a quarterly basis.

Although we are directly affected by developments in the vehicle parts industry, management does not believe significant credit risk exists.

With respect to accounts receivable, such receivables are primarily from warehouse distributors and major retailers in the automotive aftermarket industry located in the U.S.

We perform ongoing credit evaluations of our customers’ financial conditions.

A significant portion of our net sales are concentrated from our three largest individual customers.

The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them, could have a materially adverse impact on our business, financial condition and results of operations.

For further information on net sales to our three largest customers and our concentration our customer risk, see Note 21, “Industry Segment and Geographic Data.”

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

With respect to accounts receivable, such receivables are primarily from warehouse distributors and major

retailers in the automotive aftermarket industry located in the U.S.

We perform ongoing credit evaluations of our customers’ financial conditions.

A significant portion of our net sales are concentrated from our three largest individual customers.

The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of

them, could have a materially adverse impact on our business, financial condition and results of operations.

In January 2023, one of our customers filed a petition for bankruptcy.

In connection with the bankruptcy filing, we evaluated our potential risk and exposure as related to our outstanding

accounts receivable balance from the customer as of December 31, 2022, and estimated our anticipated recovery.

As a result of our evaluation, we recorded a $ 7 million pre-tax charge during the year ended December 31, 2022 to reduce our accounts receivable balance to our estimated recovery.

The $ 7 million pre-tax charge was included in selling, general and administrative expenses in our consolidated statement of operation s.

The bankruptcy court proceedings have continued into

Although the courts have named us a “critical supplier,” the funds allocated to us have not yet been determined and, as such, we have not recorded an adjustment to the $ 7 million pre-tax charge previously recorded.

For further information on net sales to

our three largest customers and our concentration our customer risk, see Note 21, “Industry Segment and Geographic Data.”

Foreign Cash Balances

Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31, 2023

and 2022 were uninsured.

Foreign cash balances at December 31, 2023 and 2022 were $ 30.5 million and $ 18.5 million ,

respectively.

Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31, 2024 and 2023 were uninsured.

Foreign cash balances at December 31, 2024 and 2023 were $ 42.5 million and $ 30.5 million , respectively.

Derivative Instruments and Hedging Activities

We occasionally use derivative financial instruments to reduce our market risk for changes in interest rates on our variable rate

We occasionally use derivative financial instruments to reduce our market risk for changes in interest rates on our variable rate borrowings.

Derivative financial instruments are recorded at fair value in other current and long-term assets, and other current and long-term liabilities in the consolidated balance sheets.

For derivative financial instruments that have been

formally designated as cash flow interest rate hedges (“interest rate swap agreements”), provided that the hedging instrument is highly effective, the entire change in the fair value of the derivative will be deferred and recorded in

accumulated other comprehensive income (“AOCI”) in the consolidated balance sheets.

When the underlying hedged transaction is realized (i.e., when the interest payments on the underlying borrowing are recognized in the consolidated statements

of operations), the gain/loss included in AOCI is recorded in earnings and reflected on the same line as the gain/loss on the hedged item attributable to the hedged risk (i.e., interest expense).

At the inception of each transaction, we

formally document the hedge relationship, including the identification of the hedge instrument, the related hedged items, the effectiveness of the hedge, as well as its risk management objectives and strategies.

For derivative financial instruments that have been formally designated as cash flow hedges, provided that the hedging instrument is highly effective, the entire change in the fair value of the derivative will be deferred and recorded in accumulated other comprehensive income (“AOCI”) in the consolidated balance sheets.

When the underlying hedged transaction is realized (i.e., when the interest payments on the underlying borrowing are recognized in the consolidated statements of operations), the gain/loss included in AOCI is recorded in earnings and reflected on the same line as the gain/loss on the hedged item attributable to the hedged risk (i.e., interest expense for cash flow hedges of interest rate risk).

At the inception of each transaction, we formally document the hedge relationship, including the identification of the hedge instrument, the related hedged items, the effectiveness of the hedge, as well as its risk management objectives and strategies.

Recently Adopted Accounting Pronouncements

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This accounting standards update improves segment disclosure requirements, primarily through expanding the disclosures to include significant segment expenses incurred by the business.

To achieve these disclosures the following items are required by ASU 2023-07:

(i) 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;

(ii) the amount and description of the composition of other segment items to reconcile to segment profit and loss;

and (iii) the CODM’s title and position and how the CODM uses the reported segment measures to allocate resources.

Additionally, ASU 2023-07 requires interim disclosures of all reportable segment profit or loss and assets previously required annually by Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023 and as such we have expanded our disclosures in Note 21, "Industry Segment and Geographic Data ," of the notes to our consolidated financial statements and recast comparative periods .

Standards that are not yet adopted as of December 31, 2024

ASU 2023-09, Income Taxes (Topic 270):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 270):

Improvements to Income Tax Disclosures.

This accounting standards update will improve transparency and decision making usefulness of income tax disclosures.

ASU 2023-09 will expand the annual required income effective tax rate reconciliation disclosures to include disclosure of (i) eight specific categories of rate reconciling items;

(ii) additional information for reconciling items that meet or exceed a quantitative threshold;

and (iii) expand the required disclosures to include reconciling percentages as well as reported

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recently Issued Accounting Pronouncements

Standards that are not yet adopted as of December 31, 2023

Effective date

Effects on the financial statements or other significant matters

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

ASU 2023-07 will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an

interim and annual basis.

ASU 2023-07 expands segment disclosures by requiring disclosure of (1) 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;

(2) the amount and description of the composition of other segment items to reconcile to segment profit and loss;

and (3) the CODM’s title and

position and how the CODM uses the reported segment measures to allocate resources.

Additionally, ASU 2023-07 requires interim disclosures of all reportable segment profit or loss and assets previously required annually by Topic 280.

The ASU is effective

for the fiscal years beginning after December 15, 2023, which for us is December 31, 2024, and all subsequent interim periods, with full retrospective application required to all prior periods presented.

Additionally, ASU 2023-09 will expand required interim and annual disclosures of income taxes paid to include the disaggregation by federal, state and foreign jurisdictions, with expanded disclosures required annually.

The ASU is effective for annual reporting periods beginning after December 15, 2024, which for us is January 1, 2025, with full retrospective application required to all prior periods presented.

Early adoption is permitted.

The new standard will

require expanding our segment disclosure to include additional segment level information.

We are currently evaluating the full impact of adopting ASU 2023-07 on our consolidated financial statements, disclosures, processes and

On an ongoing basis, we will continue to assess the impact of the new standard through our planned date of adoption of December 31, 2024.

Income Taxes (Topic 270):

Improvements to Income Tax Disclosures

ASU 2023-09 will improve transparency and decision making usefulness of income tax disclosures.

ASU 2023-09 will expand the annual required income effective tax rate reconciliation disclosures to include disclosure of (1) eight specific

categories of rate reconciling items;

(2) additional information for reconciling items that meet or exceed a quantitative threshold;

and (3) expand the required disclosures to include reconciling percentages as well as reported

Additionally, the ASU 2023-09 will expand required interim and annual disclosures of income taxes paid to include the disaggregation by federal, state and foreign jurisdictions, with expanded disclosures required annually.

The ASU is effective for annual reporting periods beginning after December 15, 2024, which for us is January 1, 2025, with full retrospective

application required to all prior periods presented.

We are currently evaluating the full impact of adopting ASU 2023-09 on our consolidated financial statements, disclosures, processes and controls.

We will adopt the guidance when it becomes effective.

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

This accounting standards update seeks to provide investors and users of the financial statements with clearer information regarding companies' cost structures by disaggregating expense line items in the income statement.

ASU 2024-03 requires the following disclosures, in tabular format in the notes to the financial statements for public business entities, at each interim and annual reporting period:

(a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, (e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities that are already included in each relevant expense caption.

The ASU defines a relevant expense caption as an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e).

Furthermore, the ASU requires the disclosure table to include (i) certain amounts that are already required to be disclosed

GAAP in the same disclosure as the other disaggregation requirements, (ii) a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (iii) the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, which for us is January 1, 2027 and January 1, 2028, respectively.

The requirements will be applied prospectively with the option for retrospective application.

Early adoption is permitted.

The new standard will require expanding our interim and annual income tax disclosures in our financial statements.

We are currently evaluating the full

impact of adopting ASU 2023-09 on our consolidated financial statements, disclosures, processes and controls.

On an ongoing basis, we will continue to assess the impact of the new standard through our planned date of adoption of March 31,

We have reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a

material impact on the Company’s consolidated financial statements.

This new standard, once adopted, will require us to disclose expenses in a more detailed and granular way than we do in these consolidated financial statements.

We are currently evaluating the full impact of adopting ASU 2024-03 on our consolidated financial statements, disclosures, processes and controls.

We will adopt the guidance when it becomes effective.

We have reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s consolidated financial statements.

Business Combinations

Acquisition of Nissens Automotive

On November 1, 2024, we acquired all the issued and outstanding shares of European automotive aftermarket parts supplier, AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”) for € 366.8 million (approximately $ 397.1 million), the purchase price consideration, from Nordic private equity firm, Axcel V K/S, and the Nissen family.

The acquired Nissens Automotive business was paid for with cash funded by borrowing from our revolving credit facility and term loans, under the 2024 Credit Agreement.

The acquisition of Nissens Automotive, a leading European supplier of thermal management and engine efficiency products for the automotive aftermarket, aligns with our strategy to become an aftermarket leader in North America and Europe across our key product categories.

Through this acquisition, we will take advantage of collaboration for growth through cross-selling

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Business Acquisitions and Investments

2023 Increase in Equity Investment

Investment in Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

In April 2014, we

formed Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

(“Gwo Yng”), a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd., a China-based manufacturer of air conditioner accumulators, filter driers, hose assemblies

and switches.

We acquired our 50 % interest in the joint venture for approximately $ 14 million.

In March 2018, we acquired an additional 15 %

equity interest in the joint venture for RMB 26,475,583 (approximately $ 4.2 million), thereby increasing our equity interest in the joint venture to 65 %.

While we increased our equity interest in the joint venture to 65 %, the minority shareholder maintained substantive participating

rights that allowed it to participate in certain significant financial and operating decisions that occur in the ordinary course of business.

As a result, we continued to account for our investment in the joint venture under the equity method

of accounting.

In July 2023, we

acquired an additional 15 % equity interest in the joint venture for RMB 27,378,290 (approximately $ 4 million), thereby increasing our equity

interest in Gwo Yng to 80 %.

In connection with the transaction, we amended and restated the charter documents of Gwo Yng to remove

all minority shareholder substantive participating rights, giving SMP control of Gwo Yng.

As a result, as of the closing date of the transaction, Gwo Yng was accounted for as a business combination achieved in stages (“a step acquisition”).

Accordingly, commencing on the closing of the transaction, we reported the results of Gwo Yng on a consolidated basis with the minority ownership interest reported as a noncontrolling interest.

The following table summarizes the allocation of the

total step acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands):

Total purchase consideration (1)

Assets acquired and liabilities assumed:

opportunities as well as bi-directional synergies with significant savings potential.

The Nissens Automotive operating segment was created in the fourth quarter as a result of the acquisition.

As of February 27, 2025, the purchase price allocation is considered preliminary and was based upon a preliminary valuation.

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets acquired.

We determined the fair value of acquired intangible assets using the multi-period excess earnings method and the relief-from-royalty method under the income approach for customer relationships and trade names, respectively.

These methods generally forecast expected future net cash flows discretely associated with each of the identified intangible assets and adjust the forecasts to present value by applying a discount rate intended to reflect risk factors associated with the cash flows and the time value of money.

In addition to the consideration transferred to complete the transaction, we incurred closing and other acquisition related costs of $ 8 million recorded as selling, general and administrative costs within the statement of operations during the year ended December 31, 2024.

The following table summarizes the allocation of the acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands):

Total purchase consideration (a)

Cash and cash equivalents 24,620

Other current assets

Property, plant and equipment, net

Accounts receivable 48,460

Inventories 88,337

Unreturned customer inventories 1,820

Prepaid expenses and other current assets 1,033

Property, plant and equipment 29,048

Operating lease right-of-use assets 8,625

Intangible assets (2)

Long term investments and other assets

Current liabilities

Customer relationships intangibles (c)

Other intangibles (c)

Other assets 407

Total assets acquired 431,621

Current portion of term loan and other debt 1,749

Accounts payable 34,568

Sundry payables and accrued expenses 19,836

Accrued customer returns 3,360

Accrued rebates 24,732

Payroll and commissions 3,294

Long-term debt 14,423

Noncurrent operating lease liabilities 5,501

Fair value of acquired noncontrolling interest

Total purchase consideration allocated to net assets acquired

Total purchase

consideration is the sum of the fair value of the previously held equity investment interest in Gwo Yng of $ 17.7 million

and the cash paid of $ 4 million for the acquisition of the additional 15 % equity ownership interest.

Intangible assets

consists of customer relationships of $ 0.4 million and capitalized software of $ 0.1 million.

Other accrued liabilities 1,371

Deferred tax liabilities 37,870

Total liabilities assumed 146,704

Net assets acquired 284,917

(a) Total purchase consideration is the cash paid of $ 397.1 million for the acquisition.

(b) Goodwill is deductible for tax purposes

(c) Intangible assets comprise of capitalized computer software of $ 2.2 million and the following preliminary valuation of identifiable intangible assets (in thousands):

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible assets of $ 0.4 million consisting of customer relationships will be amortized on a straight-line basis over the estimated useful life of 10 years.

Goodwill of $ 2.2 million

was allocated to the Temperature Control and Engineered Solutions segments in the amounts of $ 1.2 million and $ 1 million, respectively.

The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce

associated with personal reputations.

Revenues from Gwo Yng

included in our consolidated statement of operations from the closing date of our 15 % equity increase in July 2023 through December

31, 2023 were not material.

2022 Increase in Equity Investment

Investment in Foshan Che Yijia New Energy Technology Co., Ltd.

In August 2019, we

acquired an approximate 29 % minority interest in Foshan Che Yijia New Energy Technology Co., Ltd.

(“CYJ”) for approximately $ 5.1 million.

CYJ is a manufacturer of automotive electric air conditioning compressors and is located in China.

We determined, at that time, that

due to a lack of a voting majority and other qualitative factors, we do not control the operations of CYJ and accordingly, our investment in CYJ would be accounted for under the equity method of accounting.

In October 2022, we

acquired an additional 3.55 % equity interest in CYJ for RMB 1.7 million (approximately $ 242,000 ), increasing our minority

ownership interest in CYJ from an approximate interest of 29 % to 33 %.

The additional acquired ownership interest in CYJ was paid for in cash funded by borrowings under our Credit Agreement with JPMorgan Chase Bank, N.A., as agent.

will continue to account for our minority interest in CYJ using the equity method of accounting.

2022 Business Acquisitions

Acquisition of Capital Stock of Kade Trading GmbH (“Kade”)

In October 2022, we

acquired 100 % of the capital stock of Kade Trading GmbH (“Kade”) headquartered in Glinde, Germany for Euros 2.7 million (approximately $ 2.7

million) plus a Euros 0.5 million (approximately $ 0.5 million) earn-out based upon Kade’s performance in 2024 and 2025.

Kade is a supplier across Europe of mobile temperature control components to commercial vehicle, passenger car and specialty equipment

markets and has been a distributor of products from our joint ventures including electric compressors, hose assemblies and receiver dryers, with annual sales of approximately $ 6 million.

The acquired Kade business, reported as part of our Engineered Solutions segment, was paid for with cash.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values (in thousands):

Purchase price

Gross Carrying Amount Weighted-Average Useful Life (in Years)

Customer relationships $ 150,400 16

Trade names - Nissens & AVA 75,600 Indefinite

Trade names - Highway 1,100 15

Other intangibles $ 227,100

Unaudited Supplemental Pro Forma Financial Information

The following unaudited supplemental pro forma information presents the combined results of operations for the years ended December 31, 2024 and 2023, respectively, as if the Nissens Automotive acquisition was completed on January 1, 2023.

The pro forma financial information presented below is for illustrative purposes and is not indicative of the operating results that would have been realized if the acquisition had been completed on January 1, 2023, nor is it indicative of future operating results (in thousands):

Year Ended December 31,

Net sales $ 1,704,858 $ 1,615,110

Net earnings attributable to SMP 39,907 18,870

The unaudited supplemental pro forma financial information includes adjustments for (i) amortization and depreciation totaling $ 3.4 million and $ 4.1 million for the years ended December 31, 2024 and 2023, respectively, that would have been recognized for the acquired intangible assets and the fair value adjustment of property, plant and equipment;

(ii) amortization expense for deferred financing costs of $ 14.5 million and $ 18.2 million for the years ended December 31, 2024 and 2023, respectively and (iii) the estimated income tax benefit on the unaudited pro forma financial adjustments.

The unaudited supplemental pro forma financial information assumes that the following were incurred during the year ended December 31, 2023:

(i) $ 9.4 million for amortization of the inventory fair-value adjustment, (ii) $ 1.6 million for acquisition related transaction costs, (iii) $ 1.8 million for employee retention bonus expense and (iv) the related estimated income tax benefits.

The pro forma financial information does not reflect any expected revenue or cost synergies.

Increase in Equity Investment - Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

In July 2023, we acquired an additional 15 % equity interest in our 65 % owned joint venture, Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

(“Gwo Yng”), for Chinese renminbi ("RMB") 27,378,290 (approximately $ 4 million), thereby increasing our equity interest in Gwo Yng to 80 %.

In connection with the transaction, we amended and restated the charter documents of Gwo Yng to remove all minority shareholder substantive participating rights, giving SMP control of Gwo Yng.

As a result, as of the closing date of the transaction, Gwo Yng was accounted for as a business combination achieved in stages (“a step acquisition”).

Accordingly, commencing on the closing of the transaction, we reported the results of Gwo Yng on a consolidated basis with the minority ownership interest reported as a noncontrolling interest.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the allocation of the total step acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands):

Total purchase consideration(a) $ 21,725

Assets acquired and liabilities assumed:

Cash and cash equivalents $ 6,779

Receivables 5,912

Inventories 5,945

Other current assets 528

Property, plant and equipment, net

Property, plant and equipment 2,924

Operating lease right-of-use assets 4,372

Intangible assets

Intangible assets(b) 532

Goodwill 2,208

Long term investments and other assets 7,257

Current liabilities ( 6,004 )

Noncurrent operating lease liabilities ( 3,455 )

Deferred income taxes

Net assets acquired

The other current

assets balance includes $ 1 million of cash acquired.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible assets

acquired of $ 2.4 million consist of customer relationships that will be amortized on a straight-line basis over the estimated useful

life of 15 years .

Incremental revenues

from the acquired Kade business included in our consolidated statement of operations for the year ended December 31, 2023 were $ 5

Subtotal 26,998

Fair value of acquired noncontrolling interest ( 5,273 )

Total purchase consideration allocated to net assets acquired $ 21,725

(a) Total purchase consideration is the sum of the fair value of the previously held equity investment interest in Gwo Yng of $ 17.7 million and the cash paid of $ 4 million for the acquisition of the additional 15 % equity ownership interest.

(b) Intangible assets consists of customer relationships of $ 0.4 million that will be amortized on a straight-line basis over the estimated useful life of 10 years and capitalized software of $ 0.1 million.

Goodwill of $ 2.2 million was allocated to the Temperature Control and Engineered Solutions segments in the amounts of $ 1.2 million and $ 1 million, respectively.

Restructuring and Integration Expenses

The aggregated liabilities included in “sundry payables and

accrued expenses” and “other accrued liabilities” in the consolidated balance sheet relating to the restructuring and integration activities as of and for the years ended December 31, 2023 and 2022, consisted of the following (in thousands):

Exit activity

liability at December 31 , 2021

Restructuring

and integration costs:

provided for during 2022 (1)

Cash payments

Reclassification of environmental and other liabilities

Exit activity

liability at December 31 , 2022

Restructuring

and integration costs:

provided for during 2023 (1) (2)

Separation Program

During the second quarter of 2024 we offered a voluntary retirement incentive package of severance and other benefit enhancements to eligible employees in the United States and Canada as part of our commitment to optimizing our cost structure and providing professional development opportunities to our employees.

The offer period ended on June 14, 2024.

During the third quarter of 2024, we expanded the program to include involuntary separations.

Costs primarily comprise of compensation expense and enhanced medical benefits, and are charged to restructuring and integration expenses in our statement of operations as a one-time termination benefit.

Voluntary retirement incentive costs were recognized when the employee accepted the offer or are being recognized over their remaining period of service based on the agreed retirement date.

We anticipate that the program will be substantially complete by the end of 2027.

Additional pre-tax restructuring costs related to the program are expected to be $ 0.6 million in 2025, $ 0.1 million in 2026 and an immaterial amount in 2027 for an aggregate cost of approximately $ 7.7 million.

Activity for year ended December 31, 2024 related to the separation program workforce reduction consisted of the following (in thousands):

Exit activity liability at December 31, 2023 $ —

Restructuring and integration costs:

Amounts provided for during 2024 (a) 7,116

Cash payments ( 2,485 )

Reclassification of environmental liability

Foreign currency exchange rate changes

Exit activity

liability at December 31 , 2023

Included in restructuring and integration costs in 2023 and 2022 is a $ 0.1 million and $ 0.2 million increase, respectively, in

environmental cleanup costs related to ongoing monitoring and remediation in connection with the prior closure of our manufacturing operations at our Long Island City, New York location.

The environmental liability has been reclassed to

accrued liabilities as of December 31, 2023 and 2022, respectively.

Restructuring and integration expenses incurred during the year

ended December 31, 2023 consist of $ 1.3 million in our Vehicle Control segment, $ 1.1 million in our Temperature Control segment and $ 0.2

million in our Engineered Solutions segment.

Restructuring Costs

Cost Reduction Initiative

During the fourth

quarter of 2022, to further our ongoing efforts to improve operating efficiencies and reduce costs, we announced plans for a reduction in our sales force, and initiated plans to relocate

certain product lines from our Independence, Kansas manufacturing facility and from our St.

Thomas, Canada manufacturing facility to our manufacturing facilities in Reynosa, Mexico .

Total restructuring expenses related to the initiative of approximately $ 2.5 million

and $ 1.5 million were incurred during the years ended December 31, 2023 and 2022, respectively.

Expenses for the year ended

December 31, 2023 consist of (1) expenses of approximately $ 0.7 million related to a further sales force reduction, (2) expenses of

approximately $ 1.3 million of employee severance and bonuses related to our product line relocations, and (3) expenses of

approximately $ 0.5 million related to the relocation of machinery and equipment to our manufacturing facilities in Reynosa,

Expenses for the year ended December 31, 2022 consist of (1) expenses of approximately $ 0.9 million related to our sales

force reduction, and (2) expenses of approximately $ 0.6 million consisting of employee severance related to our product line

Cash payments made under the initiative were $ 2.4 million during the year ended December 31, 2023.

restructuring costs related to the initiative, and expected to be incurred, are approximately $ 0.5 million.

We anticipate that the

Cost Reduction Initiative will be completed by the end of the second quarter of 2024 .

Stock-based compensation 150

Foreign currency translation ( 5 )

Exit activity liability at December 31, 2024 $ 4,776

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Plant Rationalization Programs

The 2016 Plant Rationalization Program, which included the shutdown and sale of our Grapevine, Texas facility, and the 2017 Orlando Rationalization Program, which

included the shutdown of our Orlando, Florida facility, have been completed.

Cash payments made of $ 16 ,000 during the year ended

December 31, 2022 consist of severance payments to former employees terminated in connection with these programs.

remaining aggregate liability related to these programs as of December 31, 2022.

Integration Costs

Particulate Matter Senso r (“Soot Sensor”) Product Line Relocation

In connection with our acquisitions in March 2021 and November 2021 of

certain soot sensor product lines from Stoneridge, Inc., we incurred certain integration expenses in connection with the relocation of certain inventory, machinery, and equip ment from Stoneridge’s facilities in

Lexington, Ohio and Tallinn, Estonia to our existing facilities in Independence, Kansas and Bialystok, Poland, respectively.

Integration expenses recognized and cash payments made of $ 144 ,000 during the year ended December 31, 2022 related to these relocation activities.The soot sensor product line relocation has been completed and there is no remaining aggregate liability related to the soot sensor product line relocation as of December 31, 2022.

(a) Restructuring and integration expenses incurred during the year ended December 31, 2024 consist of $ 3.8 million in our Vehicle Control segment, $ 0.8 million in our Temperature Control segment, $ 0.8 million in our Engineered Solutions segment and $ 1.7 million in our Other segment.

Cost Reduction Initiative

During the fourth quarter of 2022, to further our ongoing efforts to improve operating efficiencies and reduce costs, we announced plans for a reduction in our sales force, and initiated plans to relocate certain product lines from our Independence, Kansas manufacturing facility and from our St.

Thomas, Canada manufacturing facility to our manufacturing facilities in Reynosa, Mexico.

The cumulative restructuring expenses incurred to date for the program are $ 4.6 million.

We anticipate that the Cost Reduction Initiative will be substantially completed by the end of 2026.

Additional restructuring costs related to the initiative are expected to be immaterial.

Activity for the year ended ended December 31, 2024 related to the cost reduction initiative consisted of the following (in thousands):

Exit activity liability at December 31, 2022 $ 1,521 $ — $ 1,521

Restructuring and integration costs:

Amounts provided for during 2023 (a)

1,973 669 2,642

Cash payments (a)

( 1,803 ) ( 577 ) ( 2,380 )

Reclassification of environmental liability — ( 92 ) ( 92 )

Foreign currency translation 38 — 38

Exit activity liability at December 31, 2023 $ 1,729 $ — $ 1,729

Restructuring and integration costs:

Amounts provided for during 2024 (b)

Cash payments ( 1,632 ) ( 389 ) ( 2,021 )

Foreign currency translation ( 28 ) — ( 28 )

Exit activity liability at December 31, 2024 $ 232 $ — $ 232

(a) Includes $ 0.1 million of integration expenses recognized and cash payments made for the Particulate Matter Sensor Product Line Relocation program related to the relocation of inventory and equipment in connection with the 2021 acquisitions of certain product lines.

The program was completed in 2022.

(b) Restructuring and integration expenses incurred during the year ended December 31, 2024 consist of $ 0.4 million in our Vehicle Control segment, $ 0.1 million in our Temperature Control segment and an immaterial amount in our Engineered Solutions segment.

Restructuring and integration activities are included within "sundry payables and accrued expenses" and "other current liabilities" in the consolidated balance sheet.

Sale of Receivables

We are party to several supply chain financing arrangements, in which we may sell certain of our customers’

trade accounts receivable to such customers’ financial institutions.

We sell our undivided interests in certain of these receivables at our discretion when we determine that the cost of these arrangements is less than the cost of servicing our

receivables with existing debt.

We are party to several supply chain financing arrangements, in which we may sell certain of our customers’ trade accounts receivable to such customers’ financial institutions.

We sell our undivided interests in certain of these receivables at our discretion when we determine that the cost of these arrangements is less than the cost of servicing our receivables with existing debt.

Under the terms of the agreements, we retain no rights or interest, have no obligations with respect to the sold receivables, and do not service the receivables after the sale.

As such, these transactions

are being accounted for as a sale.

As such, these transactions are accounted for as a sale.

Pursuant to these agreements, we sold $ 884.7 million and $ 830.8 million of receivables for the years ended December 31, 2024 and 2023, respectively.

Receivables presented at financial institutions and not yet

collected as of December 31, 2023 were $ 4.5 million and remained in our accounts receivable balance as of that date.

There were no receivables presented at financial institutions and not yet collected as of December 31, 2022.

All receivables sold were reflected as a reduction of

accounts receivable in the consolidated balance sheet at the time of sale.

A charge in the amount of $ 46 million, $ 32 million and $ 11.5 million related to

the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, respectively.

To the extent that these arrangements are terminated, our financial condition, results of operations, cash flows and liquidity could be adversely affected by extended

payment terms, delays or failures in collecting trade accounts receivables.

The utility of the supply chain financing arrangements also depends upon a benchmark reference rate for the purpose of determining the discount rate applicable to each

If the benchmark reference rate increases significantly, we may be negatively impacted as we may not be able to pass these added costs on to our customers, which could have a material and adverse effect upon our financial condition,

results of operations and cash flows.

Receivables presented at financial institutions and not yet collected as of December 31, 2024 and December 31, 2023 were approximately $ 5.8 million and $ 4.5 million, respectively, and remained in our accounts receivable balance for those periods.

All receivables sold were reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale.

A charge in the amount of $ 48.5 million , $ 46 million and $ 32 million related

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, respectively.

To the extent that these arrangements are terminated, our financial condition, results of operations, cash flows and liquidity could be adversely affected by extended payment terms, delays or failures in collecting trade accounts receivables.

The utility of the supply chain financing arrangements also depends upon a benchmark reference rate for the purpose of determining the discount rate applicable to each arrangement.

(In thousands) 2024 2023

2 unchanged sentences

Raw materials 208,008 186,015

Subtotal 624,913 507,075

Unreturned customer inventories 16,163 18,240

12 unchanged sentences

Depreciation expense was $ 20.6 million in 2024 , $ 19.7 million in 2023 and $ 19 million in 2022.

Quantitative Lease Disclosures

We have operating and finance leases for our manufacturing facilities, warehouses, office space,

automobiles, and certain equipment.

Our leases have remaining lease terms of up to eleven years , some of which may include one or more five-year renewal options.

We have operating and finance leases for our manufacturing facilities, warehouses, office space, automobiles, and certain equipment.

Our leases have remaining lease terms of up to ten years , some of which may include one or more five-year renewal options.

We have not included any of the renewal options in our operating lease payments, as we concluded that it is not reasonably certain that we will exercise any of these renewal options.

Leases with an initial term of

twelve months or less are not recorded on the balance sheet.

Operating lease expense is recognized on a straight-line basis over the lease term.

Finance leases are not

Leases with an initial term of twelve months or

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables provide quantitative disclosures related to our operating leases and includes all

operating leases acquired from the date of the acquisition (in thousands) :

less are not recorded on the balance sheet.

Operating lease expense is recognized on a straight-line basis over the lease term.

Finance leases are not material.

The following tables provide quantitative disclosures related to our operating leases and includes all operating leases acquired from the date of the acquisition (in thousands, except where otherwise indicated):

Year Ended December 31,

Balance Sheet Information 2024 2023

3 unchanged sentences

Total operating lease liabilities $ 118,206 $ 106,113

Weighted Average Remaining Lease Term

Operating leases

Weighted Average Remaining Lease Term 7.7 years 8.3 years

Weighted Average Discount Rate 5.0 % 4.8 %

Operating leases

Year Ended December 31,

Expense and Cash Flow Information

Lease Expense

Operating lease expense (a)

Operating lease expense $ 19,993 $ 16,434

Variable and other lease expense (a)

Total lease costs $ 23,900 $ 19,706

(a) Variable and other lease expense relate to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less which are not material.

Year Ended December 31,

Supplemental Cash Flow Information

Cash paid for the amounts included in the measurement of lease liabilities $ 18,365 $ 12,099

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases (b)

Excludes expenses of approximately $ 3.3

million, $ 2.7 million and $ 2

million for the years ended December 31, 2023, 2022, and 2021, respectively, related to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less,

which is not material.

During the year ended December 31, 2023 includes $ 27.8 million of right-of-use

assets related to the lease modification and extension for our distribution center and office in Lewisville, Texas;

million of right-of-use assets related to the new distribution center in Shawnee, Kansas;

$ 4.4 million of right-of-use

assets obtained in Gwo Yng step-acquisition;

and $ 3.7 million of right-of-use assets related to our Reynosa, Mexico lease

Right-of-use assets obtained in exchange for new lease obligations (a)

$ 17,873 $ 66,014

(a) During the year ended December 31, 2024 includes $ 4.7 million of right-of-use assets related to the lease modification and extension for our manufacturing facility in Bialystok, Poland and $ 10.8 million of right-of-use assets related to the new lease agreement for our manufacturing facility in Reynosa, Mexico.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Minimum Lease Payments

At December 31, 2024, we are obligated to make minimum lease payments through 2034 , under operating leases, which are as follows (in thousands):

2025 $ 20,889

Thereafter 59,220

Total lease payments 144,753

Interest ( 26,547 )

Present value of lease liabilities $ 118,206

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill and Other Intangible Assets

We assess the impairment of long ‑ lived and identifiable intangibles assets and goodwill whenever

events or changes in circumstances indicate that the carrying value may not be recoverable.

With respect to goodwill, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the

fair value of a reporting unit is below its carrying amount.

When performing our evaluation of goodwill

for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative impairment test would not be required.

If we are unable to reach this

conclusion, then we would perform a goodwill quantitative impairment test.

In performing the quantitative test, the fair value of the reporting unit is compared to its carrying amount.

A charge for impairment is recognized by the amount by which

the reporting unit’s carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

In connection with our operating segment

reorganization, we reassessed our reporting units and reallocated goodwill from the reporting units that existed prior to the change to the new reporting units, using a relative fair value approach similar to that used when a portion of a

reporting unit is to be disposed of.

reporting units exceeded their respective carrying amounts and, therefore, no impairment charge was necessary.

completed our annual impairment test of goodwill as of December 31, 2023.

As of December 31, 2023, we performed a qualitative assessment of the likelihood of a goodwill impairment for the Vehicle Control, Temperature Control and Engineered

Solutions reporting units.

Based upon our qualitative assessment, we determined that it was not more likely than not that the fair value of the each of the Vehicle Control, Temperature Control and Engineered Solutions reporting units was less

than their respective carrying amounts.

As such, we concluded that the quantitative impairment test would not be required, and that there would be no required goodwill impairment charge as of December 31, 2023 at each of the reporting units.

While we concluded that we did no t have a goodwill impairment charge as of December 31, 2023, and we do not believe that future

impairments are probable, we will need to maintain the current ongoing performance levels at each of the Vehicle Control, Temperature Control and Engineered Solutions reporting units in future periods to sustain their goodwill carrying values.

We completed our annual impairment test of goodwill and indefinite-lived intangible assets as of December 31, 2024.

As of December 31, 2024, we qualitatively assessed whether it was more likely than not that the fair value of any of our reporting units was less than carrying value, and concluded that the quantitative impairment test would not be required, and no goodwill impairment charge was required as of December 31, 2024.

While we concluded that we did not have a goodwill impairment charge as of December 31, 2024, and we do not believe that future impairments are probable, we will need to maintain the current ongoing performance levels at each of our reporting units in future periods to sustain their goodwill and indefinite-lived intangible assets carrying values.

In connection with our operating segment reorganization on January 1, 2023, we reassessed our reporting units and reallocated goodwill from the reporting units that existed prior to the change to the new reporting units, using a relative fair value approach similar to that used when a portion of a reporting unit is to be disposed of.

We performed goodwill impairment tests as of January 1, 2023 on both the reporting units in place prior to the change and the new reporting units, and concluded that the estimated fair values of each of the reporting units exceeded their respective carrying amounts and, therefore, no impairment charge was necessary.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in the carrying values of goodwill by operating segment during the years ended December 31, 2023 and 2022 are as follows (in thousands):

Changes in the carrying values of goodwill by reporting unit during the years ended December 31, 2024 and 2023 are as follows (in thousands):

Control Temperature

Solutions Nissens Automotive Total

Balance as of December 31, 2022:

Goodwill $ 129,008 $ 11,474 $ 30,093 $ — $ 170,575

Accumulated impairment losses ( 38,488 ) — — — ( 38,488 )

90,520 11,474 30,093 — 132,087

Activity in 2023

Acquisition of Kade

Foreign currency exchange rate change

Step acquisition of Gwo Yng — 1,214 994 — 2,208

Foreign currency translation 286 42 106 — 434

Balance as of December 31, 2023:

Goodwill 129,294 12,730 31,193 — 173,217

Accumulated impairment losses ( 38,488 ) — — — ( 38,488 )

$ 90,806 $ 12,730 $ 31,193 $ — $ 134,729

Activity in 2024

Step acquisition of Gwo Yng

Foreign currency exchange rate change

Acquisition of Nissens Automotive — — — 112,194 112,194

Foreign currency translation ( 384 ) ( 62 ) ( 144 ) ( 4,915 ) ( 5,505 )

Balance as of December 31, 2024:

Goodwill $ 128,910 $ 12,668 $ 31,049 $ 107,279 $ 279,906

Accumulated impairment losses ( 38,488 ) — — — ( 38,488 )

$ 90,422 $ 12,668 $ 31,049 $ 107,279 $ 241,418

Acquired Intangible Assets

Acquired identifiable intangible assets as of December 31, 2023 and 2022 consist of:

(In thousands)

Acquired identifiable intangible assets as of December 31, 2024 and 2023 consist of (in thousands):

Customer relationships 303,547 159,641

3 unchanged sentences

Supply agreements 800 800

Leaseholds 160 160

Total acquired intangible assets $ 404,158 $ 186,899

Less accumulated amortization (1)

Less accumulated amortization(a) ( 106,304 ) ( 95,681 )

Net acquired intangible assets $ 297,854 $ 91,218

Applies to all intangible assets, except for a

related trademark/trade name totaling $ 2.6 million, which has an indefinite useful life and, as such, is not being amortized.

Total amortization expense for acquired

intangible assets was $ 8.5 million for the year ended December 31, 2023, $ 8.6 million for the year ended December 31, 2022, and $ 8.7 million for the year

ended December 31, 2021.

Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be $ 8.5

million for 2024, $ 8.5 million in 2025, $ 8.5

million in 2026, $ 8.4 million in 2027 and $ 54.7

million in the aggregate for the years 2028 through 2041.

For information related to identified

intangible assets acquired in the Kade acquisition and Gwo Yng step acquisition, see Note 2, “Business Acquisitions and Investments,” of the notes to our consolidated financial statements.

Other Intangible Assets

Other intangible assets include computer software.

Computer software as of December 31, 2023 and 2022 totaled $ 19.1 million and $ 18.7

million , respectively .

Total accumulated computer software amortization as of December 31, 2023 and 2022 was $ 18 million and $ 17.2 million, respectively.

Computer software is amortized

over its estimated useful life of 3 to 10 years .

Amortization expense for computer software was $ 0.8 million, $ 0.7 million and $ 0.3 million for the years ended December 31,

2023, 2022 and 2021, respectively.

(a) Applies to all intangible assets, except for trademarks/trade names totaling $ 74.9 million , which have indefinite useful lives and, as such, are not being amortized.

Total amortization expense for acquired intangible assets was $ 10 million for the year ended December 31, 2024, $ 8.5 million for the year ended December 31, 2023, and $ 8.6 million for the year ended December 31, 2022.

The following table summarizes the amortization expense on our intangible assets and the estimated amortization expenses in future periods based on the current estimated useful lives assigned to our intangible assets (in thousands):

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization Expense (a)

2029-2041 153,000

(a) Estimated amortization expenses based on the current estimated useful lives assigned to our intangible assets

For information related to identified intangible assets acquired in the Nissens acquisition, see Note 2, “Business Acquisitions and Investments,” of the notes to our consolidated financial statements.

Other Intangible Assets

Other intangible assets include computer software.

Computer software as of December 31, 2024 and 2023 totaled $ 21.4 million and $ 19.1 million , respectively.

Total accumulated computer software amortization as of December 31, 2024 and 2023 was $ 18.3 million and $ 18.0 million , respectively.

Computer software is amortized over its estimated useful life of 3 to 10 years .

Amortization expense for computer software was $ 0.8 million , $ 0.8 million and $ 0.7 million for the years ended December 31, 2024 , 2023 and 2022 , respectively.

Investments in Unconsolidated Affiliates

1 unchanged sentence

Foshan FGD SMP Automotive Compressor Co.

$ 19,994 $ 18,426

Foshan Che Yijia New Energy Technology Co., Ltd.

Orange Electronic Co.

Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

Ltd 2,447 2,496

Total $ 24,842 $ 24,050

Investment in Foshan FGD SMP Automotive Compressor Co.

In November 2017, we formed Foshan FGD SMP Automotive Compressor Co., Ltd., a 50 / 50 joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd.

China-based manufacturer of automotive belt driven air conditioning compressors.

We acquired our 50 % interest in the joint venture for

approximately $ 12.5 million.

We determined that due to a lack of a voting majority, and other qualitative factors, we do not control

the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.

During the years ended December 31, 2023 and 2022, we made purchases from the joint venture of

approximately $ 44.1 million and $ 43.5 million, respectively.

(“FGD”), a manufacturer of automotive belt driven air conditioning compressors based in China.

We acquired our 50 % interest in the joint venture for approximately $ 12.5 million.

We determined that due to a lack of a voting majority, and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.

During the years ended December 31, 2024 and 2023, we made purchases from the joint venture of approximately $ 60 million and $ 44.1 million, respectively.

Investment in Foshan Che Yijia New Energy Technology Co., Ltd.

In August 2019, we acquired an

approximate 29 % minority interest in Foshan Che Yijia New

Energy Technology Co., Ltd.

(“CYJ”) for approximately $ 5.1 million .

CYJ is a manufacturer of automotive electric air conditioning compressors and is located in China.

In August 2019, we acquired an approximate 29 % minority interest in Foshan Che Yijia New Energy Technology Co., Ltd.

(“CYJ”), a manufacturer of automotive electric air conditioning compressors based in China, for approximately $ 5.1 million.

In October 2022, we acquired an additional 3.55 % equity interest in CYJ for RMB 1.7 million (approximately $ 242,000 ), increasing our interest to approximately 33 %.

Our minority interest in CYJ is accounted for using the equity method of accounting.

In December 2021,

Standard Motor Products (Hong Kong), Ltd., (“SMP HK”), a subsidiary of Standard Motor Products, Inc., entered into an unsecured loan agreement with CYJ.

Under the terms of the loan agreement, CYJ shall have the right to borrow from SMP HK,

as lender, up to an aggregate principal amount of $ 4 million, with interest calculated on the basis of simple interest of five

percent ( 5 %) per annum and a maturity date of November 30, 2023 , subject to extension by SMP HK at its sole discretion.

During the years ended December 31, 2024 and 2023, purchases we made from CYJ were not material.

In December 2021, Standard Motor Products (Hong Kong), Ltd., (“SMP HK”), a subsidiary of Standard Motor Products, Inc., entered into an unsecured loan agreement with CYJ.

Under the terms of the loan agreement, CYJ shall have the right to borrow from SMP HK, as lender, up to an aggregate principal amount of $ 4 million, with interest calculated on the basis of simple interest of five percent ( 5 %) per annum and a maturity date of November 30, 2023, subject to extension by SMP HK at its sole discretion.

In September 2023, the loan agreement was extended through November 30, 2025.

Outstanding borrowings under the

loan agreement at December 31, 2023 were $ 4 million.

In October 2022, we

acquired an additional 3.55 % equity interest in CYJ for RMB 1.7 million (approximately $ 242,000 ), increasing our

minority ownership interest in CYJ from an approximate interest of 29 % to 33 %.

We will continue to account for our minority interest in CYJ using the equity method of accounting.

During the years ended December 31, 2023 and 2022, purchases we

made from CYJ were not material.

Investment in Orange Electronic Co.

In January 2013, we acquired a minority interest in Orange Electronic Co., Ltd.

(“Orange”) for $ 6.3 million.

Orange is a manufacturer of tire pressure monitoring system sensors and is located in Taiwan.

As of December 31, 2022, our minority interest in Orange of 19.4 % is accounted for using the equity method of accounting as we have the ability to exercise significant influence.

During the years ended

December 31, 2023 and 2022, we made purchases from Orange of approximately $ 3.2 million and $ 4.5 million, respectively.

Outstanding borrowings under the loan agreement at December 31, 2024 were $ 4.0 million .

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investment in Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

In April 2014, we formed Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co.

(“Gwo Yng”), a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd., a China-based manufacturer of air conditioner accumulators,

filter driers, hose assemblies and switches.

We acquired our 50 % interest in the joint venture for approximately $ 14 million.

In March 2018, we acquired an additional 15 % equity interest in the joint venture for RMB 26,475,583

(approximately $ 4.2 million), thereby increasing our equity interest in the joint venture to 65 %.

While we increased our equity interest in the joint venture to 65 %, the minority shareholder maintained substantive participating rights that allowed it to participate in certain significant financial and operating decisions that occur in the

ordinary course of business.

As a result, we continued to account for our investment in the joint venture under the equity method of accounting.

July 2023, we acquired an additional 15 % equity interest in the joint venture for RMB 27,378,290 (approximately $ 4 million), thereby increasing our

equity interest in Gwo Yng to 80 %.

In connection with the transaction, we amended and restated the charter documents of Gwo Yng to

remove all minority shareholder substantive participating rights, giving SMP control of Gwo Yng.

As a result, as of the closing date of the transaction, Gwo Yng will be accounted for as a business combination achieved in stages (“a step

acquisition”).

Accordingly, commencing on the closing of the transaction, we will report the results of Gwo Yng on a consolidated basis with the minority ownership interest reported as a noncontrolling interest.

the year ended December 31, 2023 and through the date of our step acquisition in July 2023, we made purchases from the joint venture of approximately $ 10.3

Purchases made from the joint venture approximated $ 16.2 million during the year ended December 13, 2022.

For additional information related to Gwo

Yng, see Note 2, “Business Acquisitions and Investments,” of the notes to our consolidated financial statements.

Investment in Orange Electronic Co.

In January 2013, we acquired a 19.4 % minority interest in Orange Electronic Co., Ltd.

(“Orange”), a manufacturer of tire pressure monitoring system sensors based in Taiwan, for $ 6.3 million.

Our minority interest in Orange is accounted for using the equity method of accounting as we have the ability to exercise significant influence.

During the years ended December 31, 2024 and 2023, we made purchases from Orange of approximately $ 1.4 million and $ 3.2 million, respectively.

(in thousands) 2024 2023

3 unchanged sentences

Deferred financing costs, net 1,702 1,125

Other 1,021 837

Total other assets, net $ 33,139 $ 35,267

Def erred compensation consists of assets held in a nonqualified defined contribution pension plan as of December 31, 2023 and 2022, respectively.

Long term investments as of

December 31, 2023 consist of certificates of deposit with original maturities in excess of twelve months .

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred compensation consists of assets held in a nonqualified defined contribution pension plan as of December 31, 2024 and 2023, respectively.

Long term investments as of December 31, 2024 consist of certificates of deposit with original maturities in excess of twelve months.

Credit Facilities and Long-Term Debt

Total debt outstanding is summarized as follows:

(In thousands)

Credit facility – term loan due 2027

Credit facility – revolver due 2027

Total debt outstanding is summarized as follows (in thousands):

2022 Credit Agreement:

Revolver $ — $ 63,500

Term loan — 92,500

2024 Credit Agreement:

Multi-currency revolver 244,171 —

dollar term loan(a) 198,287 —

Euro term loan(a) 102,908 —

Total debt $ 562,314 $ 156,211

Current maturities of debt $ 27,117 $ 5,029

Long-term debt 535,197 151,182

Term Loan and

Revolving Credit Facilities

In June 2022, the Company entered into a new Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (the “Credit

The Credit Agreement provides for a $ 500 million credit facility comprised of a $ 100 million term loan facility (the “term loan”) and a $ 400

million multi-currency revolving credit facility available in U.S.

Dollars, Euros, Sterling, Swiss Francs, Canadian Dollars and other currencies as agreed to by the administrative agent and the lenders (the “revolving facility”).

Agreement replaces and refinances the 2015 Credit Agreement.

Borrowings under the Credit Agreement were used to repay all outstanding borrowings under the 2015 Credit Agreement, and pay certain fees and expenses incurred in connection with the Credit

Agreement, with future borrowings used for other general corporate purposes of the Company and its subsidiaries.

The term loan amortizes in quarterly installments of 1.25 % in each of the first four years, and quarterly

installments of 2.5 % in the fifth year of the Credit Agreement.

The revolving facility has a $ 25 million sub-limit for the issuance of letters of credit and a $ 25 million sub-limit for the borrowing of swingline loans.

The maturity date is June 1, 2027 .

Company may request up to two one-year

extensions of the maturity date.

The Company may, upon the agreement of one or more then existing lenders or of additional financial institutions not currently party to the Credit Agreement, increase

the revolving facility commitments or obtain incremental term loans by an aggregate amount not to exceed (x) the greater of (i) $ 168

million or (ii) 100 % of consolidated EBITDA (as defined in the Credit Agreement) for the four fiscal quarters ended most recently

before such date, plus (y) the amount of any voluntary prepayment of term loans, plus (z) an unlimited amount so long as, immediately after giving effect thereto, the pro forma First Lien Net Leverage Ratio (as defined in the Credit Agreement)

does not exceed 2.5 to 1.0.

Term loan and revolver facility borrowings in U.S.

Dollars bear interest, at the Company’s election, at a rate per annum equal to Term SOFR plus 0.10 % plus an applicable margin, or an alternate base rate plus an applicable margin, where the alternate base rate is the greater of the prime

rate, the federal funds effective rate plus 0.50 %, and one-month Term SOFR plus 0.10 % plus 1.00 %.

Term loan borrowings were made at one-month

The applicable margin for the term benchmark borrowings ranges from 1.0 % to 2.0 %, and the applicable margin for alternate base rate borrowings ranges from 0 %

to 1.0 %, in each case, based on the total net leverage ratio of the Company and its restricted subsidiaries.

The Company may select

interest periods of one, three or nine months for Term SOFR borrowings.

Interest is payable at the end of the selected interest

period, but no less frequently than quarterly.

The Company’s obligations under the Credit Agreement are guaranteed by its material domestic subsidiaries (each, a “Guarantor”), and secured by a first priority

perfected security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions.

The collateral security described above also secures certain banking services

obligations and interest rate swaps and currency or other hedging obligations of the Company owing to any of the then existing lenders or any affiliates thereof.

Concurrently with the Company’s entry into the Credit Agreement, the Company also

entered into a seven year interest rate swap agreement with Wells Fargo Bank, N.A., Co-Syndication Agent and lender under the Credit

Agreement, on $ 100 million of borrowings under the Credit Agreement.

The interest rate swap agreement matures in May 2029.

Total debt $ 562,314 $ 156,211

(a) Amounts are shown net of unamortized deferred financing costs of $ 2.7 million at December 31, 2024.

Term Loans and Revolving Credit Facilities

In May 2024 and July 2024, the Company amended it's then-existing Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders ("2022 Credit Agreement"), to transition from the Canadian Dollar Offered Rate (“CDOR”) to the Canadian Overnight Repo Rate Average (“CORRA”) for benchmark borrowings denominated in Canadian dollars and to provide for a new $ 125 million term loan and the use of funds available under the revolving credit facility to finance the acquisition of Nissens Automotive and related transaction costs.

For additional information on our agreement to acquire Nissens Automotive see Note 2, “Business Combinations.”

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Outstanding borrowings at December 31, 2023 under the Credit Agreement were $ 156 million,

consisting of current borrowings of $ 5 million and long-term debt of $ 151 million;

while outstanding borrowings at December 31, 2022 were $ 239.5

million, consisting of current borrowings of $ 55 million and long-term debt of $ 184.5 million.

Letters of credit outstanding under the Credit Agreement were $ 2.3

million and $ 2.4 million at December 31, 2023 and 2022, respectively.

At December 31, 2023, the weighted average interest rate under our Credit Agreement was 5 %,

which consisted of $ 156 million in borrowings at 5 % under Term SOFR, adjusted for the impact of the interest rate swap agreement on $ 100 million of

At December 31, 2022, the weighted average interest rate under our Credit Agreement was 5.2 %, which consisted of $ 237 million in borrowings at 5.2 %

under Term SOFR, adjusted for the impact of the interest rate swap agreement on $ 100 million of borrowings, and an alternative base

rate borrowing of $ 2.5 million at 8 %.

During the year ended December 31, 2023, our average daily alternative base rate loan balance was $ 0.1 million, compared to a balance

of $ 5.6 million for the year ended December 31, 2022.

The Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers,

consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets.

In September 2024, the Company refinanced its existing 2022 Credit Agreement with a new five-year Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (“2024 Credit Agreement”).

The 2024 Credit Agreement matures on September 16, 2029 and provides for an approximately $ 750 million credit facility, comprised of (i) a $ 430 million multi-currency revolving credit facility ("global tranche");

(ii) a $ 10 million multi-currency revolving credit facility, available to one or more wholly-owned Danish subsidiaries of the Company ("Danish tranche");

(iii) a $ 200 million delayed draw term loan facility in U.S.

and (iv) a 100 million euros delayed draw term loan facility.

The revolving credit facility has a $ 25 million sublimit for the issuance of letters of credit, and a $ 30 million sublimit for the borrowing of swingline loans.

Borrowings under the 2024 Credit Agreement were used to repay all outstanding borrowings under the 2022 Credit Agreement and to finance the Company's acquisition of Nissens Automotive and related transaction costs, and will be used for general corporate purposes of the Company and its subsidiaries.

The term loans amortize in quarterly installments of 1.25 % in each of the first two years following the funding, 1.875 % for the next year, and 2.50 % in each quarter thereafter.

The Company may request up to two one-year extensions of the maturity date.

The Company may, subject to customary conditions, increase the global tranche or obtain incremental term loans in an aggregate amount not to exceed (x) the greater of (i) $ 168 million and (ii) 100 % of consolidated EBITDA for the four fiscal quarters ended most recently before such date, plus (y) any voluntary prepayment of term loans, plus (z) any amount that, after giving effect to the increase, the pro forma First Lien Net Leverage Ratio (as defined in the 2024 Credit Agreement) does not exceed 2.75 to 1.00.

The Company may also, subject to customary conditions, request to increase the Danish tranche by up to $ 5 million.

Borrowings bear interest at the applicable interest rate index selected by the Company based on the particular currency borrowed plus a credit spread adjustment depending on the index, and a margin ranging from 1.25 % to 2.25 % per annum based on the total net leverage ratio of the Company and its restricted subsidiaries.

The Company may select interest periods of one, three or six months depending on the index.

Interest is payable at the end of the selected interest period, but no less frequently than quarterly.

The Company may prepay the borrowings, in whole or in part, at any time without premium or penalty, subject to certain conditions.

The Company’s obligations under the 2024 Credit Agreement are guaranteed by its material domestic subsidiaries (each, a “Guarantor”), and secured by a first priority perfected security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions.

The collateral security described above also secures certain banking services obligations and interest rate swaps and currency or other hedging obligations of the Company owing to any of the then existing lenders or any affiliates thereof.

Outstanding borrowings at December 31, 2024 under the 2024 Credit Agreement were $ 545.4 million , net of deferred financing costs, consisting of current borrowings of $ 25.2 million and long-term debt of $ 520.1 million;

while outstanding borrowings at December 31, 2023, were $ 156 million, consisting of current borrowings of $ 5 million and long-term debt of $ 151 million.

Letters of credit outstanding under the Credit Agreement were $ 2.5 million and $ 2.3 million at December 31, 2024 and 2023, respectively.

At December 31, 2024, the weighted average interest rate on borrowings under the 2024 Credit Agreement was 5.6 % , primarily consisting of Term SOFR for borrowings in U.S.

dollars and EURIBOR for borrowings in euros, adjusted for the impact of the interest rate swap agreement on $ 100 million of the U.S.

dollar borrowings.

At December 31, 2023, the weighted average interest rate under our 2022 Credit Agreement was 5.0 %, under Term SOFR, adjusted for the impact of the interest rate swap agreement on $ 100 million of borrowings.

During the year ended December 31, 2024, our average daily alternative base rate loan balance was $ 0.7 million , compared to a balance of $ 0.1 million for the year ended December 31, 2023.

The 2024 Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets.

The 2024 Credit Agreement also contains customary events of default.

Polish Overdraft Facility

I n November 2023, our Polish subsidiary, SMP Poland sp.

z.o.o., further amended its overdraft

facility with HSBC Continental Europe (Spolka Akcyjna) Oddzial w Polsce.

The overdraft facility, as amended, provides for borrowings under the facility in Euros and U.S.

Under the amended terms, the overdraft facility provides for

borrowings of up to Zloty 30 million (approximately

$ 7.6 million) if borrowings are solely in Zloty, or up to 85 % of the Zloty 30 million limit (approximately $ 6.5 million) if borrowings are in Euros and/or U.S.

The overdraft facility has a maturity date in March 2024, with automatic three-month renewals until June 2027, subject to cancellation by either party, at its sole discretion, at least 30 days prior to the commencement of the three-month renewal period.

Borrowings under the amended overdraft facility will bear interest at a rate

equal to (1) the one month Warsaw Interbank Offered Rate (“WIBOR”) + 1.0 % for borrowings in Polish Zloty, (2) the one month Euro

Interbank Offered Rate (“EURIBOR”) + 1.0 % for borrowings in Euros, and (3) the Mid-Point of the Fed Target Range + 1.25 % for borrowings in U.S Dollars.

Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent

There were no borrowings outstanding under the overdraft facility at both December 31, 2023 and December 31, 2022 .

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Polish Overdraft Facility

In November 2023, our Polish subsidiary, SMP Poland sp.

z.o.o., further amended its overdraft facility with HSBC Continental Europe (Spolka Akcyjna) Oddzial w Polsce.

The overdraft facility, as amended, provides for borrowings under the facility in euros and U.S.

Under the amended terms, the overdraft facility provides for borrowings of up to Polish zloty 30 million (approximately $ 7.3 million) if borrowings are solely in Polish zloty, or up to 85 % of the Polish zloty 30 million limit (approximately $ 6.2 million) if borrowings are in euros and/or U.S.

The overdraft facility had an original maturity date in March 2024, with automatic three-month renewals until June 2027, subject to cancellation by either party, at its sole discretion, at least 30 days prior to the commencement of the three-month renewal period.

The facility automatically renewed in December 2024 to a March 2025 maturity date.

Borrowings under the amended overdraft facility will bear interest at a rate equal to (i) the one month Warsaw Interbank Offered Rate (“WIBOR”) + 1.0 % for borrowings in Polish zloty, (ii) the one month Euro Interbank Offered Rate (“EURIBOR”) + 1.0 % for borrowings in Euros, and (iii) the Mid-Point of the Fed Target Range + 1.25 % for borrowings in U.S dollars.

Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent company.

There were no borrowings outstanding under the overdraft facility at both December 31, 2024 and December 31, 2023.

Maturities of Debt

As of December 31, 2023, maturities of

debt through 2027, assuming no prepayments, are as follows (in thousands):

Revolving Credit Facility

Term Loan Facility

Polish Overdraft Facility and Other Debt

As of December 31, 2024, maturities of debt through 2038 , assuming no prepayments, are as follows (in thousands):

Multi-Currency Revolver U.S.

Dollar Term Loan

Euro Term Loan Other Debt Total

2025 $ 10,800 $ 9,516 $ 4,923 $ 1,878 $ 27,117

2026 — 9,606 4,973 1,146 15,725

2027 — 14,655 7,598 1,238 23,491

2028 — 19,703 10,221 1,177 31,101

2029 233,371 144,807 75,193 1,214 454,585

Thereafter — — — 10,295 10,295

Total $ 244,171 $ 198,287 $ 102,908 $ 16,948 $ 562,314

current maturities

( 10,800 ) ( 9,516 ) ( 4,923 ) ( 1,878 ) ( 27,117 )

Long-term debt

$ 233,371 $ 188,771 $ 97,985 $ 15,070 $ 535,197

Deferred Financing Costs

We have deferred financing costs of approximately $ 1.6 million and $ 2.1 million as of December 31, 2023 and 2022, resp ectively.

Deferred financing costs are related to our term loan and revolving credit facilities.

Deferred financing costs as of December 31, 2023, assuming no prepayments, are being amortized in the amounts of $ 0.5 million in 2024, $ 0.5 million

in 2025, $ 0.5 million in 2026 and $ 0.1

million in 2 027.

Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component (in thousands)

Postretirement

Benefit Costs

Balance at December 31, 2021 attributable to SMP

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Other comprehensive income, net

Balance at December 31, 2022 attributable to SMP

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

Other comprehensive income, net

Balance at December 31, 2023 attributable to SMP

Consists of the unrecognized loss relating to the change in fair value of the cash flow

interest rate hedge of $ 1.2 million ($ 0.9 million, net of tax) plus cash settlement receipts of $ 2.4 million ($ 1.7 million, net of tax) in the year ended December 31, 2023;

and the unrecognized gain relating to the change in fair value of the cash

flow interest rate hedge of $ 5.2 million ($ 3.8 million, net of tax) minus cash settlement payments of $ 42 ,000 ($ 31 ,000, net of tax) in the year December 31, 2022.

Deferred financing costs related to our term loan and revolving credit facilities were $ 4.8 million and $ 1.6 million as of December 31, 2024 and 2023, respectively.

In connection with the July 2024 amendment to our 2022 Credit Agreement and the 2024 Credit Agreement, we deferred financing costs of $ 5.1 million that will be amortized over the term of the borrowings, and expensed $ 1.4 million of pre-existing unamortized financing costs to interest expense in our consolidated statement of operations.

Deferred financing costs as of December 31, 2024, assuming no prepayments, are being amortized in the amounts of $ 1.2 million in 2025, $ 1.1 million in 2026, $ 1 million in 2027, $ 0.9 million in 2028, and $ 0.6 million in 2029.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reclassifications Out of Accumulated Other Comprehensive Income (in thousands):

Year Ended December 31,

Details About Accumulated Other Comprehensive Income Components

Derivative cash flow hedge:

Unrecognized gain (loss) (1)

Postretirement Benefit Plans:

Unrecognized gain (loss) (2)

Total before income tax

Income tax expense (benefit)

Total reclassifications attributable to SMP

Unrecognized accumulated other comprehensive income (loss) related to the cash flow interest rate hedge

is reclassified to earnings and reported as part of interest expense in our consolidated statements of operations when the interest payments on the underlying borrowings are recognized.

Unrecognized accumulated other comprehensive income (loss) related to our post retirement plans is

reclassified to earnings and included in the computation of net periodic postretirement benefit costs, which are included in other non-operating income (expense), net in our consolidated statements of operations (see Note 15,

“Employee Benefits,” for additional information).

Accumulated Other Comprehensive Income Attributable to SMP

Changes in Accumulated Other Comprehensive Income by Component (in thousands):

Cash Flow Hedges Postretirement Benefit Plans Total

Balance at December 31, 2022 $ ( 16,330 ) $ 3,823 $ 37 $ ( 12,470 )

Other comprehensive income before reclassifications 7,433 831 (a)

Amounts reclassified from accumulated other comprehensive income — ( 2,372 ) (b)

Net other comprehensive income (loss) 7,433 ( 1,541 ) ( 22 ) 5,870

Tax amounts — 617 9 626

Balance at December 31, 2023 $ ( 8,897 ) $ 2,899 $ 24 $ ( 5,974 )

Other comprehensive income before reclassifications ( 23,385 ) 2,893 (a)

Amounts reclassified from accumulated other comprehensive income — ( 2,524 ) (b)

Net other comprehensive income (loss) ( 23,385 ) 369 ( 18 ) ( 23,034 )

Tax amounts 2,513 656 7 3,176

Balance at December 31, 2024 $ ( 29,769 ) $ 3,924 $ 13 $ ( 25,832 )

(a) Consists of the unrecognized gain relating to the change in fair value of the cash flow interest rate hedges of $ 1.4 million ($ 1.0 million, net of tax) plus cash settlement receipts of $ 2.5 million ($ 1.9 million, net of tax) in the year ended December 31, 2024;

and the unrecognized loss relating to the change in fair value of the cash flow interest rate hedge of $ 1.2 million ($ 0.9 million, net of tax) plus cash settlement receipts of $ 2.4 million ($ 1.7 million, net of tax) in the year ended December 31, 2023.

(b) Unrecognized accumulated other comprehensive income (loss) related to the cash flow interest rate hedge is reclassified to earnings and reported as part of interest expense in our consolidated statements of operations when the interest payments on the underlying borrowings are recognized.

(c) Unrecognized accumulated other comprehensive income (loss) related to our post retirement plans is reclassified to earnings and included in the computation of net periodic postretirement benefit costs, which are included in other non-operating income (expense), net in our consolidated statements of operations.

Stockholders’ Equity

We have authority to issue 500,000 shares of preferred

stock, $ 20 par value, and our Board of Directors is vested with the authority to establish and designate any series of preferred, to fix

the number of shares therein and the variations in relative rights as between each series.

In December 1995, our Board of Directors established a new series of preferred shares designated as Series A Participating Preferred Stock.

The number of

shares constituting the Series A Preferred Stock is 30,000 .

The Series A Preferred Stock is designed to participate in dividends, ranks

senior to our common stock as to dividends and liquidation rights and has voting rights.

Each share of the Series A Preferred Stock shall entitle the holder to one thousand votes on all

matters submitted to a vote of the stockholders of the Company.

No such shares were outstanding at December 31, 2023 and 2022.

In March 2020, our Board of Directors authorized the purchase of up to $ 20 million of our common stock under a stock repurchase program.

Stock repurchases under this program, during the year ended December 31, 2021 were 150,273 shares of our common stock at a total cost of $ 6.5

million thereby completing the 2020 Board of Directors authorization.

In February 2021, our Board of Directors authorized the purchase of up to an additional $ 20 million of our common stock under a stock repurchase program.

Stock repurchases under this program during the year ended December 31, 2021 were 464,992 shares of our common stock at a total cost of $ 20

million, thereby completing the February 2021 Board of Directors authorization.

In October 2021, our Board of Directors authorized the purchase of up to an additional $ 30 million of our common stock under a stock repurchase program.

Stock repurchases under this program, during the year ended December 31, 2021 and

2022 were 7,000 and 692,067

shares of our common stock, respectively, at a total cost of $ 0.3 million and $ 29.7 million, respectively, thereby completing the October 2021 Board of Directors authorization.

In July 2022, our Board of Directors authorized the purchase of up to an additional

$ 30 million of our common stock under a new stock repurchase program.

Stock will be purchased under the program from time to time, in

the open market or through private transactions, as market conditions warrant.

To date, there have been no repurchases of our common

stock under the program.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In July 2022 , our Board of Directors authorized the purchase of up to $ 30 million of our common stock under a stock repurchase program.

Stock will be purchased under the program from time to time, in the open market or through private transactions, as market conditions warrant.

To date, there have been 321,229 shares repurchased for a total cost of $ 10.4 million, all of which occurred during the first half of 2024.

As of December 2023 there had been no repurchases of our common stock under the program.

Stock-Based Compensation Plans

Our stock-based compensation program is a broad-based program designed to attract and retain employees while also aligning employees’ interests with the interests of our

shareholders.

Our stock-based compensation program is a broad-based program designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders.

In addition, members of our Board of Directors participate in our stock-based compensation program in connection with their service on our board.

In May 2021, our Board of Directors and Shareholders approved an amendment and restatement to the 2016 Omnibus Incentive Plan (the “Plan”).

Under the Plan, which

terminates in May 2026, we are authorized to issue, among other things, shares of restricted and performance-based stock to eligible employees and restricted stock to directors of up to 2,050,000 shares;

and shares of restricted and performance-based stock to nonemployee directors of up to 350,000 shares.

Shares issued under the Plan that are cancelled, forfeited or expire by their terms are eligible to be granted again under the Plan.

The 2016 Omnibus Incentive Plan is the

only remaining plan available to provide stock-based incentive compensation to our employees, directors and other eligible persons.

Awards previously granted under the 2006 Omnibus Incentive Plan remain outstanding, while shares not yet granted

under the plan are not available for future issuance.

Under the Plan, which terminates in May 2026, we are authorized to issue, among other things, shares of restricted and performance-based stock to eligible employees and restricted stock to directors of up to 2,050,000 shares;

and shares of restricted and performance-based stock to non-employee directors of up to 350,000 shares.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

awards granted under the Plan that are cancelled, forfeited or expire by their terms are eligible to be granted again under the Plan.

The 2016 Omnibus Incentive Plan is the only remaining plan available to provide stock-based incentive compensation to our employees, directors and other eligible persons.

Awards previously granted under the 2006 Omnibus Incentive Plan remain outstanding, while shares not yet granted under the plan are not available for future issuance.

We account for our stock-based compensation plans in accordance with the provisions of FASB ASC 718, Stock Compensation , which requires that a company measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

The service period is

the period of time that the grantee must provide services to us before the stock-based compensation is fully vested.

The grant-date fair value of the award is recognized as an expense on a straight-line basis over the requisite service periods in

our consolidated statements of operations.

The service period is the period of time that the grantee must provide services to us before the stock-based compensation is fully vested.

The grant-date fair value of the award is recognized as an expense on a straight-line basis over the requisite service periods in our consolidated statements of operations.

Forfeitures are estimated at the time of grant based on historical trends in order to estimate the amount of share-based awards that will ultimately vest.

We monitor actual forfeitures for any subsequent

adjustment to forfeiture rates.

We monitor actual forfeitures for any subsequent adjustment to forfeiture rates.

Restricted Stock and Performance Share Grants

We currently grant shares of restricted stock to eligible employees and our independent directors and performance-based stock to eligible employees.

We grant eligible

employees two types of restricted stock (standard restricted shares and long-term retention restricted shares).

Standard restricted

shares granted to employees become fully vested no earlier than three years after the date of grant.

Long-term retention restricted

shares granted to selected executives vest at a 25 % rate on or within approximately two months of an executive reaching the ages of 60 and 63, and become fully vested on or within approximately two months of an executive reaching the age of 65.

Restricted shares granted to

directors become fully vested upon the first anniversary of the date of grant.

Performance-based shares issued to eligible employees are subject to a three-year

measuring period and the achievement of performance targets and, depending upon the achievement of such performance targets, they may become vested no earlier than three years after the date of grant.

Each period we evaluate the probability of achieving the applicable targets, and we adjust our accrual accordingly.

Restricted shares (other than

long-term retention restricted shares) and performance shares issued to certain key executives and directors are subject to a one or two year holding period upon the lapse of the vesting period.

Forfeitures on stock grants are estimated at 5 % for employees and 0 % for executives and directors based

upon our evaluation of historical and expected future turnover.

Prior to the time a restricted share becomes fully vested or a performance share is issued, the awardees cannot transfer, pledge, hypothecate or encumber such shares.

We grant eligible employees two types of restricted stock (standard restricted shares and long-term retention restricted shares).

Standard restricted shares granted to employees become fully vested generally no earlier than three years after the date of grant.

Long-term retention restricted shares granted to selected executives vest at a 25 % rate on or within approximately two months of an executive reaching the ages of 60 and 63, and become fully vested on or within approximately two months of an executive reaching the age of 65.

Restricted shares granted to directors become fully vested upon the first anniversary of the date of grant.

Performance-based shares issued to eligible employees are subject to a three-year measuring period and the achievement of performance targets and, depending upon the achievement of such performance targets, they may become vested generally no earlier than three years after the date of grant.

Each period we evaluate the probability of achieving the applicable targets, and adjust our accrual accordingly.

Restricted shares (other than long-term retention restricted shares) and performance shares issued to certain key executives and directors are subject to a one or two year holding period upon the lapse of the vesting period.

Forfeitures on stock grants are estimated at 5 % for employees and 0 % for executives and directors based upon our evaluation of historical and expected future turnover.

Before a restricted share becomes fully vested or a performance share is issued, the awardees cannot transfer, pledge, hypothecate or encumber such shares.

Prior to the time a restricted share is fully vested, the awardees have all other rights of a stockholder, including the right to vote (but do not receive dividends during the vesting period).

Prior to the time a performance share is issued, the

awardees shall have no rights as a stockholder.

Prior to the time a performance share is issued, the awardees have no rights as a stockholder.

All shares and rights are subject to forfeiture if certain employment conditions are not met.

At December 31, 2024, under the Plan, there were an aggregate of (a) 1,863,027 shares of restricted and performance-based stock grants issued, net of forfeitures, and (b) 186,973 shares of common stock available for future grants.

For the year ended December 31, 2024, 277,742 restricted and performance-based shares were granted ( 199,510 restricted shares and 78,232 performance-based shares).

In determining the grant date fair value, the stock price on the date of grant, as quoted on the New York Stock Exchange, was reduced by the present value of dividends expected to be paid on the shares issued and outstanding during the requisite service period, discounted at a risk-free interest rate.

The risk-free interest rate is based on the U.S.

Treasury rates at the date of grant with maturity dates approximately equal to the restriction or vesting period at the grant date.

In addition, a further discount for the lack of marketability reduced the fair value of grants issued to certain key executives and directors subject to the one or two year post vesting holding period.

Assumptions used in calculating the discount for the lack of marketability include an estimate of stock volatility, risk-free interest rate, and a dividend yield.

As related to restricted and performance stock shares, we recorded compensation expense of $ 5.8 million ( $ 4.3 million , net of tax), $ 6.2 million ( $ 4.8 million , net of tax) and $ 7.6 million ( $ 5.7 million , net of tax), for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table shows stock-based compensation unamortized compensation expense and the weighted-average periods over which the unamortized compensation expense is expected to be recognized:

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the amended and restated 2016 Omnibus Incentive Plan, 2,050,000

shares are authorized to be issued.

At December 31, 2023, under the plan, there were an aggregate of (a) 1,633,549 shares of restricted

and performance-based stock grants issued, net of forfeitures, and (b) 416,451 shares of common stock available for future grants.

the year ended December 31, 2023, 230,875 restricted and performance-based shares were granted ( 165,125 restricted shares and 65,750 performance-based shares).

In determining the grant date fair value, the stock price on the date of grant, as quoted on the New York Stock Exchange, was reduced by the present value of dividends

expected to be paid on the shares issued and outstanding during the requisite service period, discounted at a risk-free interest rate.

The risk-free interest rate is based on the U.S.

Treasury rates at the date of grant with maturity dates

approximately equal to the restriction or vesting period at the grant date.

In addition, a further discount for the lack of marketability reduced the fair value of grants issued to certain key executives and directors subject to the one or two year post vesting holding

Assumptions used in calculating the discount for the lack of marketability include an estimate of stock volatility, risk-free interest rate, and a dividend yield.

As related to restricted and performance stock shares, we recorded compensation expense of $ 6.2 million ($ 4.8 million, net of tax), $ 7.6 million ($ 5.7 million, net of tax)

and $ 9.1 million ($ 6.9

million, net of tax), for the years ended December 31, 2023, 2022 and 2021, respectively.

The unamortized compensation expense related to our restricted and performance-based shares was $ 13.3 million and $ 14.9 million at December 31, 2023 and 2022, respectively and

is expected to be recognized over a weighted average period of 4.1 years and 0.3 years for employees and directors, respectively, as of December 31, 2023 and over a weighted average period of 4.3 years and 0.3 years for employees and directors, respectively, as of

December 31, 2022.

Year ended December 31,

(in millions, except years) 2024 2023 2022

Unamortized compensation expense $ 13.5 $ 13.3 $ 14.9

Expected period to be recognized for employees 3.7 years 4.1 years 4.3 years

Expected period to be recognized for directors 0.3 years 0.3 years 0.3 years

Our restricted and performance-based share activity was as follows for the years ended December 31, 2024 and 2023:

3 unchanged sentences

Balance at December 31, 2022 880,829 $ 31.79

Granted 230,875 27.00

Vested ( 248,065 ) 36.30

Performance Shares Target Adjustment 29,137 36.30

Forfeited ( 11,800 ) 35.36

Balance at December 31, 2023 880,976 $ 29.48

Granted 277,742 24.25

Vested ( 181,430 ) 34.46

Performance Shares Target Adjustment ( 14,247 ) 39.28

Forfeited ( 34,017 ) 29.83

Balance at December 31, 2024 929,024 $ 26.82

The weighted-average grant date fair value

of restricted and performance-based shares outstanding as of December 31, 2023, 2022 and 2021 was $ 26 million (or $ 29.48 per share), $ 28 million (or $ 31.79 per share), and $ 28.2 million (or $ 34.92 per share), respectively.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average grant date fair value of restricted and performance-based shares outstanding as of December 31, 2024, 2023 and 2022 was $ 25.5 million (or $ 26.82 per share), $ 26 million (or $ 29.48 per share), and $ 28 million (or $ 31.79 per share), respectively.

Employee Benefits

1 unchanged sentence

We maintain various defined contribution plans, which include profit sharing, and provide retirement benefits for substantially all of our employees.

obligations, in connection with the plans which are funded in cash and typically contributed to the plans in March of the following year, are as follows (in thousands):

Matching obligations, in connection with the plans which are funded in cash and typically contributed to the plans in March of the following year, are as follows (in thousands):

Year ended December 31,

2024 $ 10,314

We maintain a defined contribution Supplemental Executive Retirement Plan for key employees.

Under the plan, these employees may elect to defer a portion of their

compensation and, in addition, we may at our discretion make contributions to the plan on behalf of the employees.

In March 2023 and 2022, contributions of $ 0.8 million were made related to calendar years 2022 and 2021, respectively.

Under the plan, these employees may elect to defer a portion of their compensation and, in addition, we may at our discretion make contributions to the plan on behalf of the employees.

In March 2024 and 2023, contributions of $ 0.6 million and $ 0.8 million were made related to calendar years 2023 and 2022, respectively.

As of December 31, 2024, we have recorded an obligation of $ 0.4 million for 2024.

We also have an Employee Stock Ownership Plan and Trust (“ESOP”) for employees who are not covered by a collective bargaining agreement.

In connection therewith, we

maintain an employee benefits trust to which we contribute shares of treasury stock.

In connection therewith, we maintain an employee benefits trust to which we contribute shares of treasury stock.

We are authorized to instruct the trustees to distribute such shares toward the satisfaction of our future obligations under the plan.

The shares held in trust

are not considered outstanding for purposes of calculating earnings per share until they are committed to be released.

The trustees will vote the shares in accordance with its fiduciary duties.

During 2023, we contributed to the trust an

additional 72,800 shares from our treasury and released 72,800 shares from the trust leaving 200 shares remaining in the trust as of

December 31, 2023.

The provision for expense in connection with the ESOP was approximately $ 3 million in 2023, $ 2.3 million in 2022 and $ 2.5 million in

Defined Benefit Pension Plan

We maintain a defined benefit unfunded Supplemental Executive Retirement Plan (“SERP”).

The SERP, as amended, is a defined benefit plan pursuant to which we will pay

supplemental pension benefits to certain key employees upon the attainment of a contractual participant’s payment date based upon the employees’ years of service and compensation.

As there are no current participants in the SERP, there was no benefit obligation outstanding related to the plan as of December 31, 2023 and 2022 and we recorded no expense related to the plan during the years ended December 31, 2023, 2022 and 2021.

Postretirement Medical Benefits

We provide certain medical and dental care benefits to 14

union employees.

The postretirement medical and dental benefit obligation for the former union employees as of December 31, 2023, and the net periodic benefit cost for our postretirement benefit plans for the years ended December 31,

2023, 2022 and 2021 were not material.

The shares held in trust are not considered outstanding for purposes of calculating earnings per

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Non-Operating Income (Expense), Net

The components of other non-operating income (expense), net are as follows:

share until they are committed to be released.

The trustees will vote the shares in accordance with its fiduciary duties.

During 2024 , we contributed to the trust an additional 68,700 shares from our treasury and released 68,700 shares from the trust leaving 200 shares remaining in the trust as of December 31, 2024.

The provision for expense in connection with the ESOP was approximately $ 2.8 million in 2024, $ 3.0 million in 2023 and $ 2.3 million in 2022.

Other Non-Operating Income, Net

The components of other non-operating income, net are as follows (in thousands):

Year Ended December 31,

(In thousands)

2024 2023 2022

Interest and dividend income $ 871 $ 517 $ 209

3 unchanged sentences

Total other non-operating income, net $ 6,877 $ 2,326 $ 4,814

Derivative Financial

Interest Rate Swap

We occasionally use

derivative financial instruments to reduce our market risk for changes in interest rates on our variable rate borrowings.

The principal financial instruments used for cash flow hedging purposes are interest rate swap agreements.

The interest rate

swaps effectively convert a portion of our variable rate borrowings under our existing facilities to a fixed rate based upon determined notional amount.

We do not enter into interest rate swap agreements, or other financial instruments, for

trading or speculative purposes.

2022, we entered into a seven year interest rate swap agreement with a notional amount of $ 100 million that is to mature in May 2029 .

rate swap agreement has been designated as a cash flow hedge of interest payments on $ 100 million of borrowings under our Credit

Under the terms of the swap agreement, we will receive monthly variable interest payments based on one month Term SOFR

and will pay interest based upon a fixed rate of 2.683 % per annum, adjusted upward for the credit spread adjustment in the Credit

Agreement of 0.10 % and the loan margin in the Credit Agreement of 1.25 % at December 31, 2023.

The fair value of the

interest rate swap agreement as of December 31, 2023 and December 31, 2022 was an asset of $ 3.9 million and $ 5.2 million, respectively, which has been deferred and recorded in accumulated other comprehensive income, net of income taxes, in our consolidated

balance sheet.

When the interest expense on the underlying borrowing is recognized, the deferred gain/loss in accumulated other comprehensive income is recorded in earnings as interest expense in the consolidated statements of operations.

perform quarterly hedge effectiveness assessments and anticipate that the interest rate swap will be highly effective throughout its term.

Derivative Instruments

As part of our risk management strategy, we occasionally use derivative instruments, including interest rate swaps, forward foreign exchange contracts and non-derivative instruments such as foreign currency denominated debt, to reduce our market risk for changes in interest rates and to manage foreign exchange rate risk.

The objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities.

Derivative instruments may be designated as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation (“net investment hedges”) or they may not be designated as hedging instruments.

Derivative instruments are recognized at fair value on a gross basis in the consolidated balance sheets.

The change in fair value of the derivative instruments is recognized in the consolidated statements of operations or consolidated statements of comprehensive income depending upon the type of hedge as further discussed below.

Cash flows from derivative programs are classified with the activities that correspond to the underlying hedged items in the consolidated statements of cash flows.

Due to the use of derivative instruments, we are exposed to the risk that our counterparties will fail to meet their contractual obligations.

To mitigate counterparty credit risk, we have a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and periodically reassess their creditworthiness.

We do not offset d erivative assets against liabilities in master netting agreements and there were no receivables or payables recognized on receipt or payment of cash collateral at December 31, 2024 and 2023 .

The interest rate swa ps effectively convert a portion of our variable rate borrowings under our existing facilities to a fixed rate based upon determined notional amount.

The forward foreign exchange contracts fix expected future cash flows in U.S.

dollar terms on certain transactions and foreign currency denominated debt is used to partially offsets the effects of foreign currency on our investments in certain foreign subsidiaries.

We do not enter into derivative instruments for trading or speculative purposes.

Cash Flow Hedges

In 2022, we entered into an interest rate swap agreement with a notional amount of $100 million that matures in May 2029.

The interest rate swap agreement is designated as a cash flow hedge of interest payments on $100 million of borrowings under our 2024 Credit Agreement.

Under the terms of the swap agreement, we will receive monthly variable interest payments based on one month Term SOFR and will pay interest based on a fixed rate of 2.683% per annum.

In October 2024, we entered into an interest rate swap agreement with an initial notional amount of €100 million that matures in March 2030.

At December 31, 2024, the notional amount was $ 103.9 million or € 100 million.

The interest rate swap agreement is designated as a cash flow hedge of interest payments on euro denominated borrowings under our 2024

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Agreement equal to the notional amount of the interest rate swap agreement.

The notional amount of the interest rate swap will decrease quarterly starting from June 2025.

Under the terms of the swap agreement, we will receive monthly variable interest payments based on one month EURIBOR and will pay interest based on a fixed rate of 2.11% per annum.

The fair value of the interest rate swap agreements as of December 31, 2024 was an asset of $ 5.4 million and a liability of $ 0.1 million and an asset of $ 3.9 million as of December 31, 2023, which has been deferred and recorded in accumulated other comprehensive income, net of income taxes, in our consolidated balance sheet.

When the hedged interest payment on the underlying borrowing is recognized in interest expense, the respective deferred gain/loss in accumulated other comprehensive income is reclassified to earnings as interest expense in the consolidated statements of operations.

The amount to be reclassified from accumulated other comprehensive income in the next twelve months is expected to be $ 1.3 million.

We perform quarterly hedge effectiveness assessments and anticipate that the interest rate swap will be highly effective throughout its term.

If it becomes probable that the hedged interest payment(s) will not occur, we immediately recognize the related deferred hedging gains/losses in earnings.

There were no such reclassifications during the year ended December 31, 2024.

Net Investment Hedge

At December 31, 2024, $ 202.5 million or € 195 million notional amount of euro-denominated debt is designated as a hedge of our net investment in Nissens Automotive's foreign operations whose functional currency is Danish kroner.

Provided the net investment hedge is highly effective, gains/losses are recorded as a currency translation adjustment in accumulated other comprehensive income in the consolidated balance sheet.

The gains/losses will subsequently be reclassified into earnings when the hedged net investment is either sold or substantially liquidated.

We recognized a gain of $ 9.7 million as a currency translation adjustment in other comprehensive income in 2024.

No gains or losses related to the net investment hedge were recognized in earnings in 2024.

Non-Designated Derivatives

In 2024, we realized losses of $ 2.5 million related to forward foreign exchange contracts that were used to economically hedge forecasted foreign currency transactions primarily related to our acquisition of Nissens Automotive.

The losses were recorded in selling, general and administrative expenses in the consolidated statement of operations.

There are no forward foreign exchange contracts outstanding at December 31, 2024 and 2023, respectively.

Fair Value Measurements

We follow a three-level

fair value hierarchy that prioritizes the inputs to measure fair value.

This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The three levels of inputs used to measure fair

value are as follows:

We follow a three-level fair value hierarchy that prioritizes the inputs to measure fair value.

This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The three levels of inputs used to measure fair value are as follows:

Quoted prices (unadjusted) for identical assets or liabilities in active markets as of the measurement date.

1 unchanged sentence

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market

unobservable inputs that reflect assumptions that market participants would use in pricing an asset or liability.

or other inputs that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect assumptions that market participants would use in pricing an asset or liability.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following is a summary of the estimated

fair values, carrying amounts, and classification under the fair value hierarchy of our financial instruments at December 31, 2023 and December 31, 2022 (in thousands):

December 31, 2023

December 31, 2022

Cash and cash equivalents (a)

Deferred compensation

Short term borrowings

Long-term debt

Cash flow interest rate swap

Long-term investments

As of December 31, 2023 cash and cash equivalents consist

of cash of $ 29.5 million and cash equivalents of $ 3 million, which are classified as Level 1 and Level 2, respectively, under the fair value hierarchy.

Cash and cash equivalents at December 31, 2022 consists solely of cash of $ 21.2 million, which is classified as Level 1 under the fair value hierarchy.

Cash equivalents consist of

certificates of deposit with original maturities of 3 months, or less.

The following is a summary of the estimated fair values, carrying amounts, and classification under the fair value hierarchy of our financial instruments at December 31, 2024 and December 31, 2023 (in thousands):

December 31, 2024 December 31, 2023

Fair Value Carrying

Cash and cash equivalents (a) Level 1/2 $ 44,426 $ 44,426 $ 32,526 $ 32,526

Deferred compensation Level 1 26,333 26,333 23,893 23,893

Short-term investments Level 2 6,956 6,956 — —

Long-term investments Level 2 93 93 7,468 7,468

Cash flow hedge interest rate swaps Level 2 5,409 5,409 3,939 3,939

Short term borrowings Level 1 27,117 27,117 5,029 5,029

Long-term debt Level 1 535,197 535,197 151,182 151,182

(a) As of December 31, 2024 cash and cash equivalents consist of cash of $ 44.4 million.

Ca sh and cash equivalents at December 31, 2023 consist of cash of $ 29.5 million and cash equivalents of $ 3 million , which are classified as Level 1 and Level 2, respectively, under the fair value hierarchy.

Cash equivalents consist of certificates of deposit with original maturities of 3 months, or less.

These securities are accounted for as held-to-maturity and recorded at amortized cost, which approximates their fair values at December 31, 2024.

The fair value of the

underlying assets held by the deferred compensation plan are based on the quoted market prices of the underlying funds which are held by registered investment companies.

The carrying value of our variable rate short-term borrowings and long-term

debt under our credit facilities approximates fair value as the variable interest rates in the facilities reflect current market rates.

The fair value of our cash flow interest rate swap agreement is obtained from an independent third party, is

based upon market quotes, and represents the net amount required to terminate the interest rate swap, taking into consideration market rates and counterparty credit risk.

Long-term investments consist of certificates of deposit with original

maturities in excess of twelve months.

The fair value of the underlying assets held by the deferred compensation plan are based on the quoted market prices of the underlying funds which are held by registered investment companies.

The carrying value of our variable rate short-term borrowings and long-term debt under our credit facilities approximates fair value as the variable interest rates in the facilities reflect current market rates.

The fair value of our cash flow interest rate swap agreement is obtained from an independent third party, is based upon market quotes, and represents the net amount required to terminate the interest rate swap, taking into consideration market rates and counterparty credit risk.

Long-term investments consist of certificates of deposit with original maturities in excess of twelve months.

These securities are accounted for as held-to-maturity and recorded at amortized cost, which approximates their fair values at December 31, 2024.

1 unchanged sentence

Year Ended December 31,

2024 2023 2022

Domestic $ 19,761 $ 15,422 $ 16,182

Foreign 11,254 9,224 8,669

Total current 31,015 24,646 24,851

Domestic ( 9,536 ) ( 5,769 ) 1,102

Foreign ( 2,094 ) ( 509 ) ( 747 )

Total deferred ( 11,630 ) ( 6,278 ) 355

4 unchanged sentences

Reconciliations between taxes at the U.S.

Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes

are as follows (in thousands):

Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Federal income tax rate of 21 %

$ 15,538 $ 17,160 $ 20,650

Increase (decrease) in tax rate resulting from:

6 unchanged sentences

Deferred tax assets:

Inventories $ 9,087 $ 10,493

Allowance for customer returns 17,854 13,083

1 unchanged sentence

Accrued salaries and benefits 13,564 11,816

Tax credit and NOL carryforwards

Tax credit and net operating loss carryforwards 5,690 5,968

Allowance for expected credit losses 3,586 3,567

73,823 65,702

Valuation allowance ( 4,849 ) ( 3,830 )

2 unchanged sentences

Intangible assets acquired, net of amortization 43,755 12,668

Depreciation 6,669 7,597

Interest rate swap agreement 1,345 990

Other 4,006 84

Total deferred tax liabilities 55,775 21,339

Net deferred tax assets $ 13,199 $ 40,533

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be

Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be

We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance

is warranted.

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized.

We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings.

Assumptions regarding future taxable income require significant judgment.

Our assumptions are consistent

with estimates and plans used to manage our business.

The valuation allowance of $ 3.8 million as of December 31,

2023 is intended to provide for uncertainty regarding the ultimate realization of our U.S.

foreign tax credit carryovers.

Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax

asset of $ 40.5 million as of December 31, 2023, which is net of the remaining valuation allowance.

At December 31, 2023, we have foreign

tax credit carryforwards of approximately $ 3.8 million that will expire in varying amounts by 2032 .

As related to the taxation of our foreign subsidiaries, we aggregate our foreign earnings and profits, and utilize allowable deductions and available foreign tax credits

in computing our U.S.

Notwithstanding the U.S.

taxation of these amounts, we intend to continue to invest most, or all, of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to

such amounts.

Our assumptions are consistent with estimates and plans used to manage our business.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In accordance with generally accepted accounting practices, we recognize in our financial statements only

those tax positions that meet the more-likely-than-not recognition threshold.

The valuation allowance of $ 4.8 million as of December 31, 2024 is intended to provide for uncertainty regarding the ultimate realization of our U.S.

foreign tax credit carryovers of $ 4.6 million that will expire in varying amounts by 2032, and foreign net operating losses of $ 0.2 million.

Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax asset of $ 13.2 million as of December 31, 2024, which is net of the remaining valuation allowance.

As related to the taxation of our foreign subsidiaries, we aggregate our foreign earnings and profits, and utilize allowable deductions and available foreign tax credits in computing our U.S.

Notwithstanding the U.S.

taxation of these amounts, we intend to continue to invest most of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

We recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold.

We establish tax reserves for uncertain tax positions that do not meet this threshold.

During the years ended December 31, 2023, 2022 and 2021, we did no t establish a liability for uncertain tax positions.

During the years ended December 31, 2024, 2023 and 2022, we did not establish a liability for uncertain tax positions.

We are subject to taxation in the U.S.

1 unchanged sentence

As of December 31, 2024, the Company is no longer subject to U.S.

Federal tax examinations

for years before 2020.

Federal tax examinations for years before 2021.

We remain subject to examination by state and local tax authorities for tax years 2020 through 2023.

jurisdictions have statutes of limitations generally ranging from 2 to 6 years.

Years still open to examination by foreign tax authorities in major jurisdictions include Canada ( 2019 onward), Hong Kong ( 2018 onward), China ( 2021 onward), Mexico ( 2019 onward),

Poland ( 2018 onward), Hungary ( 2018

onward), U.K.

( 2017 onward) and Germany ( 2019

Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years.

Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2020 onward), Hong Kong (2019 onward), China (2022 onward), Mexico (2018 onward), Poland (2019 onward), Hungary (2019 onward), Germany (2020 onward), Denmark (2019 onward) and Slovakia (2019 onward).

We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months;

2 unchanged sentences

We present two calculations of earnings per common share.

“Basic” earnings per common share equals net earnings attributable to SMP divided by weighted average

common shares outstanding during the period.

“Diluted” earnings per common share equals net earnings attributable to SMP divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive common

“Basic” earnings per common share equals net earnings attributable to SMP divided by weighted average common shares outstanding during the period.

“Diluted” earnings per common share equals net earnings attributable to SMP divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive common shares.

Potentially dilutive common shares that are anti-dilutive are excluded from net earnings per common share.

The following are reconciliations of the net earnings attributable to SMP and the shares used in calculating basic and dilutive net earnings per common share

attributable to SMP (in thousands, except per share data):

Year Ended December 31,

Net Earnings Attributable to SMP -

Earnings from continuing operations

Loss from discontinued operations

Net earnings attributable to SMP

Basic Net Earnings Per Common Share Attributable to SMP -

Earnings from continuing operations per common share

Loss from discontinued operations per common share

Net earnings per common share attributable to SMP

Weighted average common shares outstanding

Diluted Net Earnings Per Common Share Attributable to SMP -

Earnings from continuing operations per common share

Loss from discontinued operations per common share

Net earnings per common share attributable to SMP

Weighted average common shares outstanding

Plus incremental shares from assumed conversions:

Dilutive effect of restricted stock and performance-based stock

Weighted average common shares outstanding – Diluted

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The shares listed below were not included in the computation of diluted net earnings per common share attributable to SMP because to do so would have been anti-dilutive

for the periods presented or because they were excluded under the treasury method (in thousands):

The following are reconciliations of the net earnings attributable to SMP and the shares used in calculating basic and dilutive net earnings per common share attributable to SMP (in thousands, except share and per share data):

Year Ended December 31,

2024 2023 2022

Net earnings (loss) attributable to SMP

Continuing operations 53,628 63,144 73,042

Discontinued operations ( 26,128 ) ( 28,996 ) ( 17,691 )

Net earnings attributable to SMP $ 27,500 $ 34,148 $ 55,351

Basic net earnings (loss) per common share attributable to SMP

Continuing operations $ 2.46 $ 2.91 $ 3.37

Discontinued operations $ ( 1.20 ) $ ( 1.34 ) $ ( 0.82 )

Diluted net earnings (loss) per common share attributable to SMP

Continuing operations $ 2.41 $ 2.85 $ 3.30

Discontinued operations $ ( 1.17 ) $ ( 1.31 ) $ ( 0.80 )

Weighted average number of common shares, basic 21,801,141 21,716,177 21,683,719

Dilutive effect of restricted stock and performance-based stock 435,919 445,164 456,262

Weighted average number of common shares, diluted 22,237,060 22,161,341 22,139,981

The shares listed below were not included in the computation of diluted net earnings per common share attributable to SMP because to do so would have been anti-dilutive for the periods presented or because they were excluded under the treasury method (in thousands):

2024 2023 2022

Restricted and performance shares 285 280 292

Industry Segment and Geographic Data

Beginning on January 1, 2023, we reorganized our business into three operating segments

– Vehicle Control, Temperature Control and Engineered Solutions .

The new operating segment structure better aligns our operations with our strategic focus on diversifying our business, provides greater

transparency into our positioning to capture opportunities for growth in the future, and provides clarity regarding the unique dynamics and margin profiles of the markets served by each segment.

Vehicle Control is the new name for our Engine Management operating segment.

It includes our core automotive aftermarket business after carving out all

non-aftermarket business to our Engineered Solutions operating segment.

The Vehicle Control operating segment includes sales from ignition, emissions and fuel delivery, electrical and safety, and wire sets and other product categories.

Temperature Control is our ongoing automotive aftermarket operating segment, after the carve out of all non-aftermarket business to our Engineered Solutions

operating segment.

Temperature Control derives its sales from air conditioning system components and other thermal product categories.

Our Temperature Control operating segment is poised to benefit from the broader adoption of more complex air

conditioning systems that will provide passenger comfort regardless of the vehicle’s powertrain.

Engineered Solutions is a new operating segment created by carving out all non-aftermarket business from our prior Engine Management and Temperature Control

operating segments.

Our Engineered Solutions segment supplies custom-engineered solutions to vehicle and equipment manufacturers in highly diversified global end-markets such as commercial and light vehicles, construction, agriculture, power

sports and marine.

Our business is organized into four operating segments, Vehicle Control, Temperature Control, Engineered Solutions and Nissens Automotive, each of which focuses on a specific line of business.

Our automotive aftermarket business is comprised of three operating segments, Vehicle Control, Temperature Control and Nissens Automotive, while our Engineered Solutions operating segment offers a broad array of conventional and future-oriented technologies.

Nissens Automotive is a new operating segment created in the fourth quarter of 2024 comprising of our acquisition in November 2024.

The Vehicle Control operating segment includes sales from ignition emissions and fuel delivery, electrical and safety, and wire sets and other product categories to automotive aftermarket customers.

The Temperature Control operating segment includes sales from air conditioning system components and other thermal product categories to automotive aftermarket customers primarily in the United States, and is poised to benefit from the broader adoption of more complex air conditioning systems that will provide passenger comfort regardless of the vehicle's powertrain.

The Engineered Solutions operating segment includes sales of custom-engineered solutions to vehicle and equipment manufacturers in highly diversified global end-markets such as commercial and light vehicles, construction, agriculture, power sports and marine.

The Nissens Automotive operating segment includes sales of engine cooling, air conditioning system components and engine efficiency products to automotive aftermarket customers primarily in Europe.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1).

There are no intersegment sales among our operating segments.

Other consists of financial information related to the activities of our corporate headquarters function.

We identify our operating segments based on how our chief operating decision maker ("CODM"), our President and Chief Executive Officer, allocates resources, assesses performance and makes decisions.

The CODM uses operating income (loss) to allocate resources (including employees, property, and financial or capital resources) for each segment during the annual budget and forecasting process.

The CODM considers budget-to-actual and year-over-year variances on a monthly basis for the significant measure when making decisions about allocating capital and personnel to the segments.

The CODM also uses segment gross profit for evaluating product pricing and operating income (loss) to assess the performance for each segment by comparing the results with one another.

In addition to these measures, the CODM tracks expenses at a disaggregated level to understand the drivers of total operating expenses.

These include selling, general and administrative expenses, distribution expenses, supply chain financing expenses, restructuring and integration expenses, and any other special expense items.

In tracking these expenses separately, the CODM is able to identify opportunities for adjusting how the business uses funds to achieve greater profitability.

The accounting policies of each segment are the same as those described in Note 1, "Summary of Significant Accounting Policies".

The following tables contain financial information for each reportable operating segment (in thousands):

Year ended December 31, 2024 Vehicle Control Temperature Control Engineered Solutions Nissens Automotive Other Total

Net sales $ 762,560 $ 380,088 $ 285,456 $ 35,745 $ — $ 1,463,849

Cost of sales 518,475 262,296 235,537 24,220 — 1,040,528

Gross profit 244,085 117,792 49,919 11,525 — 423,321

Selling and marketing expenses 45,878 15,938 8,060 1,536 — 71,412

Distribution expenses 57,627 32,858 5,290 7,097 4,579 107,451

General and administration expenses 36,935 16,763 20,906 5,560 17,052 97,216

Supply chain financing expenses 32,090 16,449 — — — 48,539

Restructuring and integration expenses 4,249 847 843 — 1,729 7,668

Other expenses — — — 100 10,311 10,411

Total operating expenses 176,779 82,855 35,099 14,293 33,671 342,697

Operating income (loss) $ 67,306 $ 34,937 $ 14,820 $ ( 2,768 ) $ ( 33,671 ) $ 80,624

Other non-operating income, net 6,877

Interest expense 13,512

Earnings from continuing operations before income taxes $ 73,989

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year ended December 31, 2023 Vehicle Control Temperature Control Engineered Solutions Nissens Automotive Other Total

Net sales $ 737,932 $ 337,754 $ 282,586 $ — $ — $ 1,358,272

Cost of sales 499,717 241,927 227,802 — — 969,446

Gross profit 238,215 95,827 54,784 — — 388,826

Selling and marketing expenses 46,223 16,772 8,407 — — 71,402

Distribution expenses 54,401 30,467 4,989 — — 89,857

General and administration expenses 34,430 14,664 21,186 — 15,937 86,217

Supply chain financing expenses 30,558 15,473 — — — 46,031

Restructuring and integration expenses 1,276 1,108 258 — — 2,642

Other expenses — — — — — —

Total operating expenses 166,888 78,484 34,840 — 15,937 296,149

Operating income (loss) $ 71,327 $ 17,343 $ 19,944 $ — $ ( 15,937 ) $ 92,677

Other non-operating income, net 2,326

Interest expense 13,287

Earnings from continuing operations before income taxes $ 81,716

Year ended December 31, 2022 Vehicle Control Temperature Control Engineered Solutions Nissens Automotive Other Total

Net sales $ 750,571 $ 351,237 $ 270,007 $ — $ — $ 1,371,815

Cost of sales 518,304 252,323 218,649 — — 989,276

Gross profit 232,267 98,914 51,358 — — 382,539

Selling and marketing expenses 49,245 17,666 7,239 — — 74,150

Distribution expenses 54,081 29,868 4,377 — — 88,326

General and administration expenses 31,812 13,969 21,029 — 15,190 82,000

Supply chain financing expenses 21,480 10,557 — — — 32,037

Restructuring and integration expenses 1,496 395 — — — 1,891

Other expenses — — — — — —

Total operating expenses 158,114 72,455 32,645 — 15,190 278,404

Operating income (loss) $ 74,153 $ 26,459 $ 18,713 $ — $ ( 15,190 ) $ 104,135

Other non-operating income, net 4,814

Interest expense 10,617

Earnings from continuing operations before income taxes $ 98,332

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31,

Net sales (a):

Vehicle Control

Temperature Control

Engineered Solutions

Total net sales

2024 2023 2022

Depreciation and amortization

2 unchanged sentences

Engineered Solutions 9,608 9,966 9,557

Nissens Automotive 1,943 — —

Other 1,714 1,755 1,693

Total depreciation and amortization $ 31,413 $ 29,022 $ 28,298

Operating income (loss) :

Vehicle Control

Temperature Control

Engineered Solutions

Total operating income

Investment in unconsolidated affiliates

2 unchanged sentences

Engineered Solutions 1,999 1,843 11,698

Nissens Automotive — —

Total investment in unconsolidated affiliates $ 24,842 $ 24,050 $ 41,745

3 unchanged sentences

Engineered Solutions 9,721 12,095 6,489

Nissens Automotive 213 — —

Other 1,860 684 2,116

Total capital expenditures $ 44,018 $ 28,633 $ 25,956

Total assets :

Vehicle Control $ 659,607 $ 620,569 $ 618,789

1 unchanged sentence

Engineered Solutions 285,866 292,080 289,518

There are no intersegment sales

among our Vehicle Control, Temperature Control and Engineered Solutions operating segments.

Other consists of financial information related to the activities of our corporate headquarters function.

STANDARD MOTOR PRODUCTS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reconciliation of segment operating income to net earnings:

Year Ended December 31,

Nissens Automotive 482,773 — —

Other 109,664 105,741 92,485

Total assets $ 1,814,126 $ 1,293,047 $ 1,254,929

(in thousands) 2024 2023 2022

Operating income

Other non-operating income, net

Interest expense

Earnings from continuing operations before income taxes

Provision for income taxes

Earnings from continuing operations

Discontinued operations, net of tax

Long-lived assets (a)

(In thousands)

United States $ 378,557 $ 368,792 $ 326,199

Denmark 347,629 — —

Asia 67,406 75,869 76,766

Europe 59,909 $ 44,517 $ 38,351

Mexico 21,173 13,262 10,355

Canada 4,329 5,851 7,161

Total long-lived assets $ 879,003 $ 508,291 $ 458,832

Long-lived assets are attributed to countries based

upon the location of the assets.

Our three largest individual customers accounted for

approximately 59 % of our consolidated net sales in 2023.

2023, O’Reilly Auto Parts, AutoZone and NAPA accounted for 29 %, 16 % and 14 % of our consolidated net sales, respectively.

Net sales from each

of the customers were reported in our Vehicle Control and Temperature Control Segments.

The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them could have a material adverse impact on

our business, financial condition and results of operations.

(a) Long-lived assets are attributed to countries based upon the location of the assets.

Our three largest individual customers accounted for approximately 60.7 % of our consolidated net sales in 2024 .

During 2024 , O’Reilly Auto Parts, AutoZone and NAPA accounted for 28.4 % , 18.8 % and 13.5 % of our consolidated net sales, respectively.

Net sales from each of the customers were reported in our Vehicle Control and Temperature Control operating segments.

The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them could have a material adverse impact on our business, financial condition and results of operations.

In addition, any consolidation among our key customers may further increase our customer concentration risk.

For the disaggregation of our net sales from customers by major product group and geographic area within each of our operating segments, see Note 22, “Net Sales.”

Disaggregation of Net Sales

We disaggregate our net sales from contracts with customers by major product group and geographic area within each of our segments, as we believe it best depicts how

the nature, amount, timing and uncertainty of our net sales are affected by economic factors.

Major Product Group

The Vehicle Control operating segment generates its revenues from core aftermarket sales of ignition, emissions, and fuel delivery, electrical and safety, and wire sets

and other product categories.

The Temperature Control operating segment generates its revenue from aftermarket sales of air conditioning system components and other thermal products.

Engineered Solutions operating segment generates revenues from custom-engineered products to vehicle and equipment manufacturers in highly diversified global end-markets such as commercial and light vehicles, construction, agriculture, power

sports and marine.

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes consolidated net sales by major product group within each operating segment for the years ended December 31, 2023, 2022 and 2021 (in

We disaggregate our net sales from contracts with customers by major product group and geographic area within each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our net sales are affected by economic factors.

Major Product Group

The Vehicle Control operating segment generates its revenues from core aftermarket sales of ignition, emissions, and fuel delivery, electrical and safety, and wire sets and other product categories primarily in the United States.

The Temperature Control operating segment generates its revenue from aftermarket sales of air conditioning system components and other thermal products.

The Engineered Solutions operating segment generates revenues from custom-engineered products to vehicle and equipment manufacturers in highly diversified global end-markets such as commercial and light vehicles, construction, agriculture, power sports and marine.

The Nissens Automotive operating segment generates its revenues from aftermarket sales of engine cooling, air conditioning system components and engine efficiency products primarily in Europe.

The following table summarizes consolidated net sales by major product group within each operating segment for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Year Ended December 31,

2024 2023 2022

Vehicle Control

11 unchanged sentences

Light Vehicle 91,548 92,701 91,533

All Other 68,905 68,844 55,814

Total Engineered Solutions 285,456 282,586 270,007

Nissens Automotive

Engine Cooling 19,287 — —

Air Conditioning 9,214 — —

Engine Efficiency 7,244 — —

Total Nissens Automotive 35,745 — —

Total $ 1,463,849 $ 1,358,272 $ 1,371,815

Geographic Area

We sell our line of products primarily in the United States, with additional sales in Canada, Mexico, Europe, Asia and Latin America.

Sales are attributed to countries

based upon the location of the customer.

We sell our line of products primarily in the United States, with additional sales in Europe, Canada, Mexico, Asia and other foreign countries.

Sales are attributed to countries based upon the location of the customer.

Our sales are substantially denominated in U.S.

The following tables provide disaggregation of net sales information by geographic area within each operating segment for the years ended December 31, 2023, 2022 and

2021 (in thousands):

Year Ended December 31, 2023

Geographic Area:

United States

Other foreign

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2022

Geographic Area:

The following tables provide disaggregation of net sales information by geographic area within each operating segment for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Year Ended December 31, 2024 Vehicle

Engineered Solutions Nissens Automotive Other Total

United States $ 677,779 $ 360,858 $ 154,960 $ 2,213 $ — $ 1,195,810

Europe 1,118 176 53,682 31,757 — 86,733

Canada 37,683 16,707 31,027 82 — 85,499

Mexico 40,555 171 9,138 14 — 49,878

Asia 330 1,741 33,508 1,098 — 36,677

Other foreign 5,095 435 3,141 581 — 9,252

Year Ended December 31, 2021

Geographic Area:

Total $ 762,560 $ 380,088 $ 285,456 $ 35,745 $ — $ 1,463,849

Year Ended December 31, 2023 Vehicle

Nissens Automotive Other Total

United States $ 659,570 $ 319,904 $ 168,878 $ — $ — $ 1,148,352

Canada 36,088 17,081 25,689 — — 78,858

Europe 916 8 59,266 — — 60,190

Mexico 36,350 49 6,658 — — 43,057

Asia 351 526 19,522 — — 20,399

Other foreign 4,657 186 2,573 — — 7,416

Total $ 737,932 $ 337,754 $ 282,586 $ — $ — $ 1,358,272

Year Ended December 31, 2022 Vehicle

Nissens Automotive Other Total

United States $ 682,145 $ 335,281 $ 191,678 $ — $ — $ 1,209,104

Canada 35,233 14,596 16,762 — — 66,591

Europe 661 75 37,784 — — 38,520

Mexico 26,019 401 4,897 — — 31,317

Asia 2,408 63 16,715 — — 19,186

Other foreign 4,105 821 2,171 — — 7,097

Total $ 750,571 $ 351,237 $ 270,007 $ — $ — $ 1,371,815

Commitments and Contingencies

Total rent expense for the three years ended December 31, 2023 was as follows (in thousands):

expenses of approximately $ 3.3 million , $ 2.7 million, and $ 2

million for the years ended December 31, 2023, 2022 and 2021, respectively, related to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less,

which is no t material.

For our operating lease minimal rental payments that we are obligated to make, see Note 7, “Leases.”

We generally warrant our products against certain manufacturing and other defects.

These product warranties are provided for specific periods of time depending on the

nature of the product.

As of December 31, 2023 and 2022, we have accrued $ 21.1 million and $ 19.7 million, respectively, for estimated product warranty claims included in accrued customer returns.

The accrued product warranty costs are based primarily on historical

experience of actual warranty claims.

Warranty expense for each of the years 2023, 2022, and 2021 were $ 120 million, $ 112.5 million and $ 91.9 million, respectively.

The following table provides the changes in our product warranties:

(In thousands)

These product warranties are provided for specific periods of time depending on the nature of the product.

Accruals for estimated product warranty claims are included in accrued customer returns on the consolidated balance sheet.

The following table provides the changes in our product warranties (in thousands):

Balance, beginning of period $ 21,134 $ 19,667

7 unchanged sentences

As of December 31, 2024 and 2023, we had outstanding letters of credit with certain vendors aggregating approximately $ 2.5 million and $ 2.3 million, respectively.

These letters of

credit are being maintained as security for reimbursements to insurance companies and as security to the landlord of our administrative offices in Long Island City, New York.

The contract amount of the letters of credit is a reasonable estimate

of their value as the value for each is fixed over the life of the commitment.

These letters of credit are being maintained as security for reimbursements to insurance companies and as security to the landlord of our administrative offices in Long Island City, New York.

The contract amount of the letters of credit is a reasonable estimate of their value as the value for each is fixed over the life of the commitment.

Change of Control Arrangements

We have a change in control arrangement with one key

We have a change in control arrangement with one key officer.

In the event of a change of control (as defined in the agreement), the executive will receive severance payments and certain other benefits as provided in his agreement.

I n 1986, we acquired a brake business, which we subsequently sold in March 1998 and which is accounted

for as a discontinued operation in the accompanying statement of operations.

When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the

seller of the acquired brake business.

In 1986, we acquired a brake business, which we subsequently sold in March 1998 and which is accounted for as a discontinued operation in the accompanying statement of operations.

When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business.

In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed on or after September 2001.

Our ultimate exposure will depend upon the number of claims filed

against us on or after September 2001, and the amounts paid for settlements, awards of asbestos-related damages, and defense of such claims.

Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001, and the amounts paid for settlements, awards of asbestos-related damages, and defense of such claims.

At December 31, 2024, approximately 1,287 cases were outstanding for which we may be responsible for any related liabilities.

Since inception in September 2001

through December 31, 2023, the amounts paid for settled claims and awards of asbestos-related damages, including interest, were approximately $ 74.6

Since inception in September 2001 through December 31, 2024, the amounts paid for settled claims and awards of asbestos-related damages, including interest, were approximately $ 91.4 million .

We do not have insurance coverage for the indemnity and defense costs associated with the claims we face.

In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related

As is our accounting policy, we

consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability;

and perform an actuarial evaluation in the third quarter of each year and whenever events or changes

in circumstances indicate that additional provisions may be necessary.

As is our accounting policy, we consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability;

and perform an actuarial evaluation in the third quarter of each year and whenever events or changes in circumstances indicate that additional provisions may be necessary.

The methodology used to project asbestos-related liabilities and costs in our actuarial study considered:

(1) historical data available from publicly available studies;

analysis of our recent claims history to estimate likely filing rates into the future;

(3) an analysis of our currently pending claims;

(4) an analysis of our settlements and awards of asbestos-related damages to date;

and (5) an analysis of

closed claims with pay ratios and lag patterns in order to develop average future settlement values.

Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount

adjustment is required.

(i) historical data available from publicly available studies;

(ii) an analysis of our recent claims history to estimate likely filing rates into the future;

(iii) an analysis of our currently pending claims;

(iv) an analysis of our settlements and awards of asbestos-related damages to date;

and (v) an analysis of closed claims with pay ratios and lag patterns in order to develop average future settlement values.

In accordance with our policy to perform an annual actuarial evaluation in the third quarter of each year, an actuarial study was performed as of August 31, 2024.

The results of the August 31, 2024 study included an estimate of our undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs, ranging from $ 99.6 million to $ 210.8 million for the period through 2065.

The change from the prior year study, which was as of August 31, 2023, was a $ 15.6 million increase for the low end of the range and a $ 75.5 million increase for the high end of the range.

The increase in the estimated undiscounted liability from the prior year study at both the low end and high end of the range reflects our actual experience, our historical data and certain assumptions with respect to events that may occur in the future.

Based upon the results of the August 31, 2024 actuarial study, in September 2024 we increased our asbestos liability to $ 99.6 million , the low end of the range, and recorded an incremental pre-tax provision of $ 29.3 million in earnings (loss) from discontinued operations in the accompanying statement of operations.

Future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated, according to the August 31, 2024 study, to range from $ 49.8 million to $ 115.9 million for the period through 2065.

Total operating cash outflows related to discontinued operations, which include settlements, awards of asbestos-

STANDARD MOTOR PRODUCTS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In accordance with our policy to perform an annual actuarial evaluation in the third quarter of each year, an actuarial study was performed as of August 31, 2023 .

T he results of the August 31,

2023 study included an estimate of our undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs, ranging from $ 84 million to $ 135.3 million for the period through 2065 .

change from the prior year study, which was as of August 31, 2022, was a $ 15.2 million increase for the low end of the range and a $ 23.7 million increase for the high end of the range.

The increase in the estimated undiscounted liability from the prior year study at both the low

end and high end of the range reflects our actual experience, our historical data and certain assumptions with respect to events that may occur in the future.

Based upon the results of the August 31, 2023 actuarial study, in September 2023 we increased our asbestos liability to $ 84 million , the low end of the range, and recorded an incremental pre-tax provision of $ 23.8 million in earnings (loss) from discontinued operations in the accompanying

statement of operations.

range from $ 53.1 million to $ 105.2 million for the period through 2065 .

Total operating cash outflows related to discontinued operations, which include settlements, awards of asbestos-related damages and legal costs, net of taxes, were $ 11 million , $ 12 million and $ 8.8

million for the years ended December 31, 2023, 2022 and 2021 , respectively.

We plan to perform an annual actuarial evaluation during the third quarter of each year for the foreseeable future and whenever events or changes in circumstances

indicate that additional provisions may be necessary.

related damages and legal costs, net of taxes, were $ 15.3 million , $ 11 million and $ 12.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can give no assurance that additional provisions will not be required.

At the present time,

however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position.

At the present time, however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position.

Other Litigation

In connection with the aforementioned former brake business, we were subject to a legal

proceeding alleging a breach of contract claim of the related purchase agreement.

In May 2023, we were found liable for approximately $ 11

million and, as such, in the second quarter of 2023 we recorded a pre-tax provision of such amount in earnings (loss) from discontinued operations in the accompanying statement of operations.

However, in August 2023, we reached a final

settlement of the legal proceeding, in which we reduced our liability to $ 10.5 million.

In connection therewith, we reduced the

pre-tax provision to $ 10.5 million and recorded a $ 0.5 million credit in earnings (loss) from discontinued operations in the accompanying statement of operations.

Payment of such claim was made in early October 2023.

We are currently involved in various other legal claims and legal proceedings (some of which may involve substantial amounts), including claims related to commercial

disputes, product liability, employment, and environmental.

Although these legal claims and legal proceedings are subject to inherent uncertainties, based on our understanding and

evaluation of the relevant facts and circumstances, we believe that the ultimate outcome of these matters will not, either individually or in the aggregate, have a material adverse effect on our business, financial condition or results

of operations .

In connection with the aforementioned former brake business, we were subject to a legal proceeding alleging a breach of contract claim of the related purchase agreement.

In August 2023, we reached a final settlement in the amount of $ 10.5 million and payment was made in October 2023.

The full amount of the settlement was recorded $ 10.5 million in earnings (loss) from discontinued operations in the accompanying statement of operations in 2023.

We are currently involved in various other legal claims and legal proceedings (some of which may involve substantial amounts), including claims related to commercial disputes, product liability, employment, and environmental.

Although these legal claims and legal proceedings are subject to inherent uncertainties, based on our understanding and evaluation of the relevant facts and circumstances, we believe that the ultimate outcome of these matters will not, either individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations.

We may at any time determine that settling any of these matters is in our best interests, which settlement may include substantial payments.

Although we cannot

currently predict the specific amount of any liability that may ultimately arise with respect to any of these matters, we will record provisions when the liability is considered probable and reasonably estimable.

Significant judgment is required

in both the determination of probability and the determination as to whether an exposure can be reasonably estimated.

Although we cannot currently predict the specific amount of any liability that may ultimately arise with respect to any of these matters, we will record provisions when the liability is considered probable and reasonably estimable.

Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated.

As additional information becomes available, we reassess our potential liability related to these matters.

Such revisions of the

potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data