<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995 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 X 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).
122,770,435
-----------
(Shares of Common Stock)
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<PAGE> 2
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
---- ----
(Unaudited)
(in thousands)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
- --------------
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,705 $ 82,410
Trade accounts receivable, less allowance
for doubtful accounts (1995 - $5,839; 1994 - $1,600) . . . . . . . . . . . . . . . . 569,211 487,395
Inventories - at lower of cost (substantially last-in,
first-out method) or market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,025,776 1,004,580
Prepaid and other current accounts . . . . . . . . . . . . . . . . . . . . . . . . . 31,931 21,396
------------- -------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,659,623 1,595,781
Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,769 175,658
Total property, plant and equipment, less allowance
for depreciation (1995 - $200,491; 1994 - $192,081) . . . . . . . . . . . . . . . . . 278,109 258,032
------------- -------------
$ 2,129,501 $ 2,029,471
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- -------------------
Accounts payable and notes payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 339,846 $ 316,589
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,121 11,482
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,511 94,337
------------- -------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 450,478 422,408
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,184 11,431
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,540 44,540
Minority interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 26,512 24,927
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 - 1995 - 122,770,435; 1994 - 122,627,303 . . . . . . . . . . . . . . . 122,770 122,627
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,844 -0-
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,470,173 1,403,538
------------- -------------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . 1,596,787 1,526,165
------------- -------------
$ 2,129,501 $ 2,029,471
============= =============
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE> 3
FORM 10-Q
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
(000 omitted except per share data)
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . $ 1,308,712 $ 1,219,801 $ 2,589,942 $ 2,381,876
Cost of goods sold . . . . . . . . . . . . . . 917,756 856,984 1,816,432 1,672,602
------------- ------------- ------------- -------------
390,956 362,817 773,510 709,274
Selling, administrative & other expenses . . . 267,307 246,406 536,315 489,762
------------- ------------- ------------- -------------
Income before income taxes . . . . . . . . . . 123,649 116,411 237,195 219,512
Income taxes . . . . . . . . . . . . . . . . . 48,718 45,400 93,228 85,610
------------- ------------- ------------- -------------
NET INCOME . . . . . . . . . . . . . . . . . . $ 74,931 $ 71,011 $ 143,967 $ 133,902
============= ============= ============= =============
Average common shares outstanding . . . . . . . 122,758 124,501 122,715 124,485
============= ============= ============= =============
Net income per common share . . . . . . . . . . $ .61 $ .57 $ 1.17 $ 1.08
============= ============= ============= =============
Dividends declared per common share . . . . . . $ .315 $ .2875 $ .63 $ .575
============= ============= ============= =============
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
FORM 10-Q
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------
(000 omitted)
1995 1994
---- ----
<S> <C> <C>
Cash Provided By:
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 143,967 $ 133,902
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,634 18,125
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,585 1,824
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . (81,816) (69,896)
Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (21,196) (14,117)
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . (36,480) 22,096
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,639 (966)
Other operating assets and liabilities . . . . . . . . . . . . . . . . . . (11,441) (2,334)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . 17,892 88,634
INVESTING ACTIVITIES:
Purchase of short-term investments, net of proceeds from sale and maturity . . . -0- 147
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . (43,256) (29,056)
Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,566) 1,680
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . (56,822) (27,229)
FINANCING ACTIVITIES:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73,905) (68,724)
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,130 2,058
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . (10,775) (66,666)
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . (49,705) (5,261)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . 82,410 123,231
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 32,705 $ 117,970
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE> 5
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 six months ended June 30, 1995, are
not necessarily indicative of results for the entire year.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Genuine Parts Company (the "Company") reported record sales and earnings in the
second quarter of 1995. Sales for the quarter were $1.3 billion, up 7% over
the same period in 1994. Net income in the quarter advanced 6% to $74.9
million. On a per-share basis, net income in the quarter was $.61 versus $.57
in the same quarter of the prior year.
For the six months ended June 30, 1995, sales totaled $2.6 billion, up 9% over
the first half of 1994, while net income was $144 million, an increase of 8%.
Earnings per share were $1.17 for the first six months of 1995 and $1.08 for
the same period in 1994.
Sales for the Automotive Parts Group advanced 5% for the quarter and 5% for the
first six months, reflecting increased demand attributed to ongoing NAPA
marketing programs and favorable fundamentals such as vehicle age and usage
levels. Sales for the Industrial Parts Group increased 13% for the quarter and
16% for the six months ended June 30, 1995, as industrial production continues
at a healthy level with high capacity utilization in many industries. The
Office Products Group was up 8% for the quarter and 10% for the six month
period, reflecting a response to innovative marketing programs, outstanding
service levels and geographic expansion. 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 8.5% for the quarter and 9.5% for
the six months. The percentage of selling, administrative and other expenses
to net sales increased slightly, due mostly to increased salaries, employee
benefits and expenses associated with the automotive total growth strategy.
The ratio of current assets to current liabilities remains very good at 3.7 to
1 and the Company's cash position is good.
PART II - OTHER INFORMATION
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1995 Annual Meeting of Shareholders of the Company was held on April 17,
1995, pursuant to notice given to shareholders of record on February 10, 1995,
at which date there were 122,635,533 shares of Common Stock outstanding. At
the Annual Meeting, the shareholders elected four Class III directors with
terms to expire at the 1998 Annual Meeting. As to the following named
individuals, the holders of 101,938,286 shares of the Company's Common Stock
voted in favor of their election, the holders of 71,313 shares voted against,
the holders of 479,006 shares abstained, and there were no broker non-votes:
Class III
---------
Jean Douville
J. Hicks Lanier
Larry L. Prince
Alana S. Shepherd
The following individual's term of office as a director continued after the
Annual Meeting:
Class I Class II
------- --------
Bradley Currey, Jr. William A. Parker, Jr.
Thomas C. Gallagher John J. Scalley
Gardner E. Larned James B. Williams
Lawrence G. Steiner
5
<PAGE> 6
FORM 10-Q
The shareholders approved the Genuine Parts Company Annual Incentive Bonus
Plan. The holders of 94,940,933 shares of Common Stock voted in favor of the
plan, holders of 7,048,927 voted against, holders of 499,745 abstained, and
there were no broker non-votes.
The shareholders also ratified the selection of Ernst & Young as independent
auditors of the Company for 1995. The holders of 102,244,171 shares of Common
Stock voted in favor of the ratification, holders of 132,319 shares voted
against, holders of 125,956 shares abstained, and there were no broker
non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibit is filed as part of this report:
Exhibit 10.13 * Genuine Parts Company Annual Incentive Bonus Plan
dated as of February 24, 1995, as approved by the
Shareholders of the Company at the annual meeting
on April 17, 1995
Exhibit 27 Financial Data Schedule (for SEC use only)
* Indicates executive compensation plans and arrangements.
(b) No reports on Form 8-K were filed by the registrant during the
quarter ended June 30, 1995.
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 July 31, 1995 /s/ Jerry W. Nix
------------- -----------------
Jerry W. Nix
Senior Vice President - Finance
/s/ George W. Kalafut
---------------------
George W. Kalafut
Executive Vice President - Finance and
Administration (Principal Financial and
Accounting Officer)
6
<PAGE> 1
EXHIBIT 10.13
GENUINE PARTS COMPANY
ANNUAL INCENTIVE BONUS PLAN
1. PURPOSE
The purpose of the Genuine Parts Company Annual Incentive Bonus Plan
(the "Plan") is to permit Genuine Parts Company (the "Company"), through awards
of annual incentive compensation, to attract and retain qualified management
employees and to motivate such management employees to achieve maximum
profitability and stockholder returns. The Plan is designed and intended to
comply with Section 162(m) of the Internal Revenue Code of 1986, as amended,
and the regulations and interpretations promulgated thereunder (the "Code"),
and all provisions hereof shall be construed in a manner to so comply.
2. ADMINISTRATION
The Plan shall be administered by the Compensation and Stock Option
Committee of the Company's Board of Directors, or any other committee of the
Company's Board of Directors that the Company's Board of Directors determines
shall administer the Plan which consists of at least two outside directors of
the Company and satisfies the requirements of Section 162(m) of the Code (the
"Committee"). The Committee shall have full authority to interpret the Plan,
to establish rules and regulations relating to the operation of the Plan, to
determine the Performance Goals (as defined herein) and the amount of any
Bonuses (as defined herein) and to make all other determinations and take all
other actions necessary or appropriate for the proper administration of the
Plan. The Committee's interpretation of the Plan, and all actions taken within
the scope of its authority, shall be final and binding.
3. ELIGIBILITY
The individuals entitled to receive cash awards under the Plan
("Bonuses") for any fiscal year during the term of the Plan shall be the
executive officers of the Company and any other employee(s) of the Company or
its subsidiaries, if any, which the Committee, as of the Determination Date (as
defined herein), reasonably believes may be deemed to be a "covered
employee(s)" for such fiscal year under Section 162(m) of the Code (the
"Participants").
4. DETERMINATION OF PERFORMANCE GOALS AND SALARY PERCENTAGES
4.1 Each Participant in the Plan shall be eligible to receive
Bonuses in connection with a particular fiscal year during the term of the Plan
if the Company attains certain performance goals ("Performance Goals") set
every year by the Committee.
4.2 Not later than ninety (90) days after the commencement of any
fiscal year and while the outcome of the Company's performance in relationship
to the Performance Goals is still substantially uncertain (the "Determination
Date"), the Committee shall adopt in writing certain Performance Goals based
upon the Company achieving for that fiscal year (i) certain levels of pre-tax
return on the Company's shareholders' equity as of the beginning of the fiscal
year (the "Profit Goals"), (ii) certain levels of aggregate sales (the "Sales
Goals"), and (iii) certain inventory management targets (the "Inventory
Goals").
<PAGE> 2
4.3 On the Determination Date, the Committee also sets in writing
the amount of Bonuses to be awarded under the Plan for that fiscal year by
setting a percentage of each Participant's salary that will be awarded to a
Participant if the Company achieves a particular Performance Goal or group of
Performance Goals. No Bonuses will be paid under the Plan unless the Company's
actual pre-tax return on the Company's shareholders' equity as of the beginning
of the fiscal year equals or exceeds a minimum Profit Goal set by the
Committee.
4.4 The Committee may for certain individual Participants, in its
sole discretion, set Performance Goals based upon a division or divisions of
the Company achieving Profit, Sales and Inventory Goals set by the Committee.
5. CALCULATION OF BONUSES; CERTIFICATION
As soon as reasonably practicable after the close of each fiscal year
in which any Participant is participating in the Plan, the Committee shall
determine with respect to each Participant (i) whether and the extent to which
the Performance Goals for such fiscal year have been met, and (ii) the amount
of any resulting Bonuses to be paid under the Plan. The Committee shall then
certify in writing (i) the amounts of such Bonuses and (ii) that the relevant
Performance Goals and other requirements of the Plan relating to such Bonuses
were satisfied.
6. LIMITATIONS WITH RESPECT TO BONUSES
6.1 No Participant shall have any right to receive payment of any
Bonus unless the Participant remains in the employ of the Company or its
subsidiaries through the end of the fiscal year to which such Bonus relates;
provided, however, that the Committee may, in its sole discretion, pay all or
part of a Bonus to any Participant whose employment with the Company or its
subsidiaries is terminated at any time prior to the end of the fiscal year to
which such Bonus relates by reason of death or disability. Any such
determination of the Committee shall be final and conclusive.
6.2 The Committee may, in its sole discretion, reduce the amount
of any Bonus otherwise payable under the Plan.
6.3 In no event shall an individual Participant receive Bonuses
under the Plan in connection with any one fiscal year which in the aggregate
are in excess of $1,000,000.
7. PAYMENT OF BONUSES
Each Participant shall receive a Bonus hereunder promptly after the
Committee has certified in writing under Section 5 that the relevant
Performance Goals and other requirements of the Plan were satisfied in
connection with such Bonus.
-2-
<PAGE> 3
8. AMENDMENTS
The Committee may amend this Plan at any time, provided that no such
amendment shall be effective which (i) alters the types of Performance Goals
specified in Section 4.2, or (ii) otherwise causes the loss of any tax
deduction to the Company under Section 162(m) of the Code, unless such
amendment is submitted to the shareholders of the Company.
9. TERM; TERMINATION
9.1 Subject to Sections 9.2 and 11, the Plan shall be effective
for the five year period beginning on January 1, 1995 and ending on December
31, 1999.
9.2 The Board of Directors of the Company may terminate this Plan
at any time.
10. MISCELLANEOUS PROVISIONS
10.1 The Company shall have the right to deduct at the time of
payment of any Bonus any amounts required by law to be withheld for the payment
of taxes or otherwise.
10.2 Except where federal law is applicable, the provisions of the
Plan shall be governed by and construed in accordance with the laws of the
State of Georgia.
10.3 If any provision of this Plan is found to be illegal or
invalid or would cause any Bonus not to constitute performance-based
compensation under Section 162(m) of the Code, the Committee shall have
discretion to sever that provision from this Plan and, thereupon, such
provision shall not be deemed to be a part of this Plan.
10.4 Nothing in the Plan shall confer upon a Participant the right
to continue in the employ of the Company or any of its subsidiaries or shall
limit in any way the right of the Company and/or its subsidiaries to terminate
such Participant's employment.
10.5 No Participant shall have any claim to be granted a Bonus
under the Plan, and there is no obligation for uniformity of treatment for
Participants.
10.6 The Plan shall be unfunded. The Company shall not be required
to establish any separate or special fund or to make any other segregation of
assets to assure the payment of any Bonus under the Plan.
11. EFFECTIVE DATE
If approved by the shareholders of the Company at the Company's 1995
Annual Meeting of Shareholders, the Plan shall be deemed effective as of
January 1, 1995. If this Plan is not approved by the shareholders of the
Company at the 1995 Annual Meeting of Shareholders, this Plan shall terminate
and no Bonuses shall be paid hereunder.
-3-
<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 JUNE 30,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 32,705
<SECURITIES> 0
<RECEIVABLES> 569,211
<ALLOWANCES> 5,839
<INVENTORY> 1,025,776
<CURRENT-ASSETS> 1,659,623
<PP&E> 278,109
<DEPRECIATION> 200,491
<TOTAL-ASSETS> 2,129,501
<CURRENT-LIABILITIES> 450,478
<BONDS> 11,184
<COMMON> 122,770
0
0
<OTHER-SE> 1,474,017
<TOTAL-LIABILITY-AND-EQUITY> 2,129,501
<SALES> 2,589,942
<TOTAL-REVENUES> 2,589,942
<CGS> 1,816,432
<TOTAL-COSTS> 1,816,432
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 237,195
<INCOME-TAX> 93,228
<INCOME-CONTINUING> 143,967
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143,967
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
