<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended September 30, 1994
_________________________
Commission File Number 1-5690
GENUINE PARTS COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-0254510
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 953-1700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes Y No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (the close of the period
covered by this report).
123,321,551
------------------------
(Shares of Common Stock)
1
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FORM 10-Q
PART 1 - Financial Information
Item 1 - Financial Statements
GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS Sept. 30, Dec. 31,
------ 1994 1993
--------- --------
(Unaudited)
CURRENT ASSETS (dollars in thousands)
- - --------------
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110,952 $ 123,231
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . 35,378 64,599
Trade accounts and notes receivable, less allowance
for doubtful accounts (1994-$8,665; 1993-$1,582) . . . . . . . . . . . . . . . 517,301 428,911
Inventories - at lower of cost (substantially last-in,
first-out method) or market . . . . . . . . . . . . . . . . . . . . . . . . . 894,395 879,154
Prepaid and other current items . . . . . . . . . . . . . . . . . . . . . . . . 11,996 10,299
--------- ----------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . 1,570,022 1,506,194
Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 137,672 133,364
Total property, plant and equipment, less allowance
for depreciation (1994-$192,455; 1993-$185,101) . . . . . . . . . . . . . . . 247,020 231,198
--------- ---------
$ 1,954,714 $ 1,870,756
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- - -------------------
Accounts and notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 286,549 $ 258,949
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,039 11,688
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,301 82,835
---------- ---------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . 390,889 353,472
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,899 12,265
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,365 37,980
Minority interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 24,201 21,776
SHAREHOLDERS' EQUITY
- - --------------------
Stated capital:
Preferred stock, par value - $1 per share
Authorized - 10,000,000 shares - None Issued . . . . . . . . . . . -0- -0-
Common stock, par value - $1 per share
Authorized - 450,000,000 shares
Issued - 1994: 123,321,551; 1993: 124,282,289 . . . . . . . . . . 123,322 124,282
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . -0- 2,566
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383,038 1,318,415
--------- ---------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . 1,506,360 1,445,263
--------- ---------
$ 1,954,714 $ 1,870,756
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
2
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FORM 10-Q
GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
1994 1993 1994 1993
---- ---- ---- ----
(000 omitted except per share data)
<S> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . $1,268,417 $1,144,839 $3,650,293 $3,288,929
Cost of goods sold . . . . . . . . . . . . . . . . 886,137 797,440 2,558,739 2,304,827
--------- --------- --------- ---------
382,280 347,399 1,091,554 984,102
Selling, administrative & other expenses . . . . . 262,732 239,301 752,494 678,899
--------- --------- --------- ---------
Income before income taxes and cumulative
effect of changes in accounting principles 119,548 108,098 339,060 305,203
Income taxes - Note C . . . . . . . . . . . . . . . 46,624 45,079 132,234 119,888
--------- --------- --------- ---------
Income before cumulative effect of changes
in accounting principles . . . . . . . . . 72,924 63,019 206,826 185,315
Cumulative effect of changes in accounting
principles, net of tax - Note B . . . . . . -- -- -- (1,055)
--------- --------- --------- ---------
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 72,924 $ 63,019 $ 206,826 $ 184,260
========= ========= ========= =========
Average common shares outstanding . . . . . . . . . 124,257 124,227 124,408 124,204
========= ========= ========= =========
Net income per common share . . . . . . . . . . . . $ .59 $ .51 $ 1.66 $ 1.48
========= ========= ========= =========
Dividends declared per common share . . . . . . . . $ .2875 $ .265 $ .8625 $ .795
========= ========= ========= =========
</TABLE>
See notes to consolidated condensed financial statements.
3
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FORM 10-Q
GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended Sept. 30,
---------------
(000 omitted)
1994 1993
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 206,826 $ 184,260
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . 27,466 25,907
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 2,425 2,219
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . . . . (88,390) (59,615)
Merchandise inventories . . . . . . . . . . . . . . . (15,241) (25,142)
Trade accounts payable . . . . . . . . . . . . . . . 27,600 26,539
Income taxes payable . . . . . . . . . . . . . . . . 3,460 (2,165)
Other operating assets and liabilities . . . . . . . 4,167 8,315
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . 168,313 160,318
INVESTING ACTIVITIES:
Sales (Purchases) of short-term investments, net . . . . . . . 29,221 (60,960)
Purchase of property, plant and equipment . . . . . . . . . . (45,238) (43,082)
Other investing activities . . . . . . . . . . . . . . . . . . (20,063) (2,107)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . (36,080) (106,149)
FINANCING ACTIVITIES:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . (104,520) (96,925)
Purchase of stock . . . . . . . . . . . . . . . . . . . . . . (42,633) -0-
Other financing activities . . . . . . . . . . . . . . . . . . 2,641 1,506
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES . . . . . . . . . . . . (144,512) (95,419)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . (12,279) (41,250)
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . 123,231 168,019
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . $ 110,952 $ 126,769
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
4
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of
management, all adjustments necessary to a fair statement of the operations of
the interim period have been made. These adjustments are of a normal recurring
nature. The results of operations for the nine months ended September 30,
1994, are not necessarily indicative of results for the entire year.
Note B - Accounting Changes
During the quarter ended March 31, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" which requires the projected
future costs of providing postretirement benefits, such as health care and life
insurance, be recognized as an expense as employees render service instead of
when benefits are paid. The Company has applied the new rules using the
cumulative effect method, resulting in a charge of $5,055,000 (net of income
taxes of $3,095,000).
Also during the quarter ended March 31, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". The
cumulative effect as of January 1, 1993, of adopting Statement 109 increased
net income by $4,000,000. As permitted by the Statement, prior year financial
statements have not been restated to reflect the impact of the change in
accounting method.
The adoption of Statements 106 and 109 did not have a material impact on the
Company's financial statements or its results of operations.
Note C - Tax Rate Change
During the quarter ended September 30, 1993, the maximum corporate federal
income tax rate was increased from 34% to 35%. The increase was retroactive to
January 1, 1993, resulting in a charge to income taxes of $3,052,000 in the
quarter ended September 30, 1993 or $.02 per common share. An additional
charge to income taxes of $950,000, or $.01 per common share, was recorded in
the quarter ended September 30, 1993 to reflect the impact of the rate increase
on deferred taxes in accordance with FAS Statement 109, described above in Note
(B).
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company reported record sales and earnings in the third quarter and for the
first nine months of 1994. Sales for the quarter were $1.3 billion, up 11%
over the same period in 1993. Net income in the quarter increased 16% to $72.9
million. On a per-share basis, net income for the quarter was $.59 versus $.51
in the same quarter of the prior year.
5
<PAGE> 6
FORM 10-Q
For the nine months ended September 30, 1994, sales totaled $3.65 billion, up
11% over the same period in 1993, while net income was $206.8 million, an
increase of 12%. Earnings per share were $1.66 for the first nine months of
1994 and $1.48 for the same period in 1993.
Sales for the Automotive Parts Group advanced 9% for the quarter and for the
first nine months reflecting the strength of the NAPA programs in the
marketplace. Sales for the Industrial Parts Group increased 16% for the
quarter and 13% for the nine months ended September 30, 1994, as industrial
production continues to increase. Our Office Products Group was up 12% for the
quarter and 15% for the nine month period, reflecting increased market share,
geographic expansion and an outstanding level of service. We continue to
believe that our sales growth in all three segments outperforms market growth.
Cost of goods sold decreased slightly as a percentage of net sales over the
same quarter the prior year. Selling, administrative and other expenses
increased 10% for the quarter; however, the percentage to net sales decreased
slightly due primarily to tight expense controls.
At their August 16, 1994 meeting, the Genuine Parts Company Board of Directors
approved a stock repurchase program which authorizes the Company to reacquire
up to 10 million shares of its common stock. To date, approximately 1.4
million shares have been repurchased.
During the quarter ended September 30, 1993, the maximum corporate federal
income tax rate was increased from 34% to 35%. The increase was retroactive to
January 1, 1993, resulting in a charge to income taxes of $3,052,000 in the
quarter ended September 30, 1993 or $.02 per common share. An additional
charge to income taxes of $950,000, or $.01 per common share, was recorded in
the quarter ended September 30, 1993 to reflect the impact of the rate increase
on deferred taxes in accordance with FAS Statement 109.
The first quarter results for 1993 included the net effect of adoption of FAS
106, "Employers' Accounting for Postretirement Benefits Other Than Pension", of
a charge of $5,055,000 (net of income taxes of $3,095,000) and an increase in
net income of $4,000,000 for the adoption of FAS 109, "Accounting for Income
Taxes". The adoption of FAS 106 and 109 did not have a material impact on the
Company's financial statements or its results of operations.
The ratio of current assets to current liabilities remains very good at 4.0/1,
and the Company's cash position is strong.
PART II
Item 4.
Exhibits and Reports on Form 8-K
(A) Exhibits
27 Financial Data Schedule (for SEC purposes only).
(B) No reports on Form 8-K were filed by the registrant during the
quarter ended September 30, 1994.
6
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FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Genuine Parts Company
-------------------------------------
(Registrant)
Date November 2, 1994 /s/ Jerry Nix
------------------------- --------------------------------------
Senior Vice President - Finance
/s/ George Kalafut
-------------------------------------
Executive Vice President - Finance and
Administration (Principal Financial
and Chief Accounting Officer)
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GENUINE PARTS COMPANY FOR THE QUARTER ENDED SEPTEMBER
30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 110,952
<SECURITIES> 35,378
<RECEIVABLES> 517,301
<ALLOWANCES> 8,665
<INVENTORY> 894,395
<CURRENT-ASSETS> 1,570,022
<PP&E> 247,020
<DEPRECIATION> 192,455
<TOTAL-ASSETS> 1,954,714
<CURRENT-LIABILITIES> 390,889
<BONDS> 12,899
<COMMON> 123,322
0
0
<OTHER-SE> 1,383,038
<TOTAL-LIABILITY-AND-EQUITY> 1,954,714
<SALES> 3,650,293
<TOTAL-REVENUES> 3,650,293
<CGS> 2,558,739
<TOTAL-COSTS> 2,558,739
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 339,060
<INCOME-TAX> 132,234
<INCOME-CONTINUING> 206,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 206,826
<EPS-PRIMARY> 1.66
<EPS-DILUTED> 1.66
</TABLE>
