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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
<TABLE>
<C> <S>
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. 1-5690
</TABLE>
GENUINE PARTS COMPANY
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
GEORGIA 58-0254510
(State of Incorporation) (IRS Employer Identification No.)
</TABLE>
2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (770) 953-1700.
Securities registered pursuant to Section 12(b) of the Act and the Exchange
on which such securities are registered:
Common Stock, Par Value, $1 Per Share
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Registrant's Common Stock (based upon the
closing sales price reported by the New York Stock Exchange and published in The
Wall Street Journal for February 9, 1996) held by non-affiliates as of February
9, 1996 was approximately $5,000,416,444.
The number of shares outstanding of Registrant's Common Stock, as of
February 9, 1996: 121,869,968.
Documents Incorporated by Reference:
--Portions of the Annual Report to Shareholders for the fiscal year ended
December 31, 1995, are incorporated by reference into Parts I and II.
--Portions of the definitive proxy statement for the Annual Meeting of
Shareholders to be held on April 15, 1996 are incorporated by reference
into Part III.
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PART I. ITEM I. BUSINESS.
Genuine Parts Company, a Georgia corporation incorporated on May 7,
1928, is a service organization engaged in the distribution of automotive
replacement parts, industrial replacement parts and office products. In 1995,
business was conducted throughout most of the United States and in western
Canada from more than 1250 operations. As used in this report, the "Company"
refers to Genuine Parts Company and its subsidiaries, except as otherwise
indicated by the context; and the terms "automotive parts" and "industrial
parts" refer to replacement parts in each respective category.
Industry Segment Data. The following table sets forth the net sales, operating
profit and identifiable assets for the fiscal years 1995, 1994 and 1993
attributable to each of the Company's groups of products which the Company
believes indicate segments of its business. Sales to unaffiliated customers
are the same as net sales.
<TABLE>
<CAPTION>
1995 1994 1993
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NET SALES (in thousands)
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<S> <C> <C> <C>
Automotive Parts $ 2,804,086 $ 2,693,961 $ 2,485,267
Industrial Parts 1,509,566 1,317,495 1,153,371
Office Products 948,252 846,959 745,656
----------- ----------- -----------
TOTAL NET SALES $ 5,261,904 $ 4,858,415 $ 4,384,294
=========== =========== ===========
OPERATING PROFIT
----------------
Automotive Parts $ 307,726 $ 304,164 $ 282,791
Industrial Parts 132,952 111,822 96,727
Office Products 93,888 78,206 65,938
----------- ----------- -----------
TOTAL OPERATING PROFIT 534,566 494,192 445,456
Interest Expense (3,419) (1,321) (1,584)
Corporate Expense (25,939) (22,854) (20,405)
Equity in Income 8,298 7,224 4,452
Minority Interests (2,712) (2,373) (2,090)
----------- ----------- -----------
INCOME BEFORE
INCOME TAXES $ 510,794 $ 474,868 $ 425,829
=========== =========== ===========
IDENTIFIABLE ASSETS
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Automotive Parts $ 1,320,910 $ 1,223,416 $ 1,152,148
Industrial Parts 482,067 404,647 370,633
Office Products 360,456 308,817 283,479
----------- ----------- -----------
TOTAL IDENTIFIABLE ASSETS 2,163,433 1,936,880 1,806,260
Corporate Assets 18,631 5,950 6,731
Equity Investments 92,068 86,641 57,765
----------- ----------- -----------
TOTAL ASSETS $ 2,274,132 $ 2,029,471 $ 1,870,756
=========== =========== ===========
</TABLE>
For additional information regarding industry data, see Page 27 of
Annual Report to Shareholders for 1995.
The majority of the Company's revenue, profitability and identifiable
assets are attributable to the Company's operations in the United States.
Revenue, profitability and identifiable assets in Canada and Mexico are not
material. For additional information regarding foreign operations, see "Note 1
of Notes to Consolidated Financial Statements" on Page 23 of Annual Report to
Shareholders for 1995.
Competition - General. The distribution business, which includes all segments
of the Company's business, is highly competitive with the principal methods of
competition being product quality, sufficiency of inventory, price and the
ability to give the customer prompt and dependable service. The Company
anticipates no decline in competition in any of its business segments in the
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foreseeable future.
Employees. As of December 31, 1995, the Company employed approximately 22,500
persons.
AUTOMOTIVE PARTS GROUP.
The Automotive Parts Group, the largest division of the Company,
distributes automotive replacement parts and accessory items. The Company is
the largest member of the National Automotive Parts Association ("NAPA"), a
voluntary trade association formed in 1925 to provide nationwide distribution
of automotive parts. In addition to approximately 165,000 part numbers that
are available, the Company, in conjunction with NAPA, offers complete
inventory, accounting, cataloging, marketing, training and other programs in
the automotive aftermarket.
During 1995, the Company's Automotive Parts Group included NAPA
automotive parts distribution centers and automotive parts stores ("auto parts
stores" or "NAPA Auto Parts stores") owned in the United States by Genuine
Parts Company; automotive parts distribution centers and auto parts stores in
western Canada owned and operated by UAP/NAPA Automotive Western Partnership
("UAP/NAPA"), a general partnership in which a wholly owned subsidiary of
Genuine Parts Company owns a 49% interest; auto parts stores in the United
States operated by corporations in which Genuine Parts Company owned a 51%
interest; distribution centers owned by Balkamp, Inc., a majority-owned
subsidiary; rebuilding plants owned by the Company and operated by its Rayloc
division; and automotive parts distribution centers and auto parts stores in
Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. ("Auto Todo"), a
joint venture company in which a wholly owned subsidiary of Genuine Parts
Company owns a 49% interest.
The Company's NAPA automotive parts distribution centers distribute
replacement parts (other than body parts) for substantially all motor vehicle
makes and models in service in the United States, including imported vehicles,
trucks, buses, motorcycles, recreational vehicles and farm vehicles. In
addition, the Company distributes small engines and replacement parts for farm
equipment and heavy duty equipment. The Company's inventories also include
accessory items for such vehicles and equipment, and supply items used by a
wide variety of customers in the automotive aftermarket, such as repair shops,
service stations, fleet operators, automobile and truck dealers, leasing
companies, bus and truck lines, mass merchandisers, farms, industrial concerns
and individuals who perform their own maintenance and parts installation.
Although the Company's domestic automotive operations purchase from more than
150 different suppliers, approximately 76% of 1995 automotive inventories were
purchased from 20 major suppliers. Since 1931, the Company has had return
privileges with most of its suppliers which has protected the Company from
inventory obsolescence.
Distribution System. In 1995, Genuine Parts Company operated 64 domestic NAPA
automotive parts distribution centers located in 38 states and 740 domestic
company-owned NAPA Auto Parts stores located in 43 states. In August 1995, the
Company's operations at the NAPA Normal, Illinois, Distribution Center were
consolidated into the NAPA Chicago Distribution Center in Naperville, Illinois.
The Normal facility was closed. In addition, at December 31, 1995, Genuine
Parts Company owned a 51% interest in 61 corporations which operated 83 auto
parts stores in 29 states.
In Canada, Genuine Parts Company Ltd., a wholly-owned subsidiary, owns
a 49% interest in UAP/NAPA which operated 9 automotive parts distribution
centers and 115 auto parts stores located in the provinces of Alberta, British
Columbia, Manitoba and Saskatchewan and in the Yukon Territories. In addition,
the Company has an approximate 23% interest in UAP Inc., a publicly traded
Canadian corporation, which owns the other 51% interest in UAP/NAPA and further
engages in the distribution of automotive parts primarily in eastern Canada.
In Mexico, Auto Todo owns and operates 12 distribution centers and 27 auto
parts stores. Auto Todo is not licensed to and does not use the NAPA(R) name
in Mexico. The Company's investments in UAP/NAPA and Auto Todo are accounted
for by the equity method of accounting.
The Company's distribution centers serve approximately 5,000
independently
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owned NAPA Auto Parts stores located throughout the market areas served. NAPA
Auto Parts stores, in turn, sell to a wide variety of customers in the
automotive aftermarket. Collectively, these auto parts stores account for
approximately 39% of the Company's total sales with no auto parts store or
group of auto parts stores with individual or common ownership accounting for
more than .4% of the total sales of the Company.
Products. Distribution centers carry approximately 165,000 different parts and
related supply items. Each item is cataloged and numbered for identification
and accessibility. Significant inventories are carried to provide for fast and
frequent deliveries to customers. Most orders are filled and shipped the same
day as received. The majority of sales are on terms which require payment
within 30 days of the statement date. The Company does not manufacture any of
the products it distributes. The majority of products are distributed under
the NAPA(R) name, a mark licensed to the Company by the National Automotive
Parts Association.
Related Operations. A majority-owned subsidiary of Genuine Parts Company,
Balkamp, Inc.("Balkamp"), distributes a wide variety of replacement parts and
accessory items for passenger cars, heavy duty vehicles, motorcycles and farm
equipment. In addition, Balkamp distributes service items such as testing
equipment, lubricating equipment, gauges, cleaning supplies, chemicals and
supply items used by repair shops, fleets, farms and institutions. Balkamp
packages many of the approximately 20,000 part numbers which constitute the
"Balkamp" line of products which are distributed to the members of the National
Automotive Parts Association ("NAPA"). These products are categorized in 150
different product groups purchased from more than 600 suppliers. All Balkamp
items are cataloged separately to provide single source convenience for NAPA
customers. BALKAMP(R), a federally registered trademark owned by NAPA and
licensed to Balkamp, is important to the sales and marketing promotions of the
Balkamp organization. Balkamp has three distribution centers located in
Indianapolis, Indiana, Greenwood, Mississippi, and West Jordan, Utah.
The Company, through its Rayloc division, also operates six plants
where certain small automotive parts are rebuilt. These products are
distributed to the members of NAPA under the name Rayloc(R). Rayloc(R) is a
mark licensed to the Company by the NAPA.
Segment Data. In the year ended December 31, 1995, sales from the Automotive
Parts Group approximated 53% of the Company's net sales as compared to 56% in
1994 and 57% in 1993.
Service to NAPA Auto Parts Stores. The Company believes that the quality and
the range of services provided to its auto parts customers constitute a
significant part of its automotive parts distribution system. Such services
include fast and frequent delivery, obsolescence protection, parts cataloging
(including the use of computerized NAPA Auto Parts catalogues) and stock
adjustment through a continuing parts classification system which allows auto
parts customers to return certain merchandise on a scheduled basis. The
Company offers its NAPA Auto Parts store customers various management aids,
marketing aids and service on topics such as inventory control, cost analysis,
accounting procedures, group insurance and retirement benefit plans, marketing
conferences and seminars, sales and advertising manuals and training programs.
Point of sale/inventory management is available through TAMS(R) (Total
Automotive Management Systems), a computer system designed and developed by the
Company for the NAPA Auto Parts store.
In association with NAPA, the Company has developed and refined an
inventory classification system to determine optimum distribution center and
auto parts store inventory levels for automotive parts stocking based on
automotive registrations, usage rates, production figures, technological
advances and other similar factors. This system, which undergoes continuous
analytical review, is an integral part of the Company's inventory control
procedures and comprises an important feature of the inventory management
services which the Company makes available to its NAPA Auto Parts store
customers. Over the last 10 years, losses
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to the Company from obsolescence have been insignificant, and the Company
attributes this to the successful operation of its classification system which
involves product return privileges with most of its suppliers.
Competition. In the distribution of automotive parts, the Company competes
with automobile manufacturers (some of which sell replacement parts for
vehicles built by other manufacturers as well as those which they build
themselves), automobile dealers, warehouse clubs and large automotive parts
retail chains. In addition, the Company competes with the distributing outlets
of parts manufacturers, oil companies, mass merchandisers, including national
retail chains, and with other parts distributors and jobbers.
NAPA. The Company is a member of the National Automotive Parts Association, a
voluntary association formed in 1925 to provide nationwide distribution of
automotive replacement parts. NAPA, which neither buys nor sells automotive
parts, functions as a trade association whose members currently operate 72
distribution centers located throughout the United States, 63 of which are
owned and operated by the Company. NAPA develops marketing concepts and
programs which may be used by its members. It is not involved in the chain of
distribution.
Among the automotive lines which each NAPA member purchases and
distributes are certain lines designated, cataloged, advertised and promoted as
"NAPA" lines. The members are not required to purchase any specific quantity
of parts so designated and may, and do, purchase competitive lines from other
supply sources.
The Company and the other NAPA members use the federally registered
trademark NAPA(R) as part of the trade name of their distribution centers and
jobbing stores. The Company contributes to NAPA's national advertising which
is designed to increase public recognition of the "NAPA" name and to promote
"NAPA" product lines.
The Company is a party, together with other members of NAPA and NAPA
itself, to a consent decree entered by the Federal District Court in Detroit,
Michigan, on May 4, 1954. The consent decree enjoins certain practices under
the federal antitrust laws, including the use of exclusive agreements with
manufacturers of automotive parts, allocation or division of territories among
several NAPA members, fixing of prices or terms of sale for such parts among
such members, and agreements to adhere to any uniform policy in selecting parts
customers or determining the number and location of, or arrangements with, auto
parts customers.
INDUSTRIAL PARTS GROUP
The Industrial Parts Group distributes industrial replacement parts
and related supplies. This Group distributes industrial bearings and fluid
transmission equipment, including hydraulic and pneumatic products, material
handling components, agricultural and irrigation equipment and their related
supplies.
In 1995, the Company distributed industrial parts in the United States
through Motion Industries, Inc. ("Motion"), headquartered in Birmingham,
Alabama, and Berry Bearing Company ("Berry Bearing"), headquartered in Chicago,
Illinois. Motion and Berry Bearing are wholly owned subsidiaries of the
Genuine Parts Company. In Canada, industrial parts are distributed by Oliver
Industrial Supply Ltd., a wholly owned subsidiary of Genuine Parts Holdings
Ltd., headquartered in Lethbridge, Alberta. Genuine Parts Holdings Ltd. is a
wholly owned subsidiary of the Company.
On June 9, 1995, September 30, 1995, and October 31, 1995 the Company
completed the acquisitions of Midcap Bearing Corporation, Power Drives &
Bearings, Inc., and Atlantic/Tracy, Inc., respectively. Midcap Bearing
Corporation is a distributor of bearings and mechanical, electrical and fluid
power components headquartered in San Antonio, Texas, and the operator of 17
branches in Texas and New Mexico. Power Drives & Bearings, Inc. is
headquartered in Omaha, Nebraska, and operates 6 branches. Atlantic/Tracy,
Inc. is headquartered in Somerville, Massachusetts, and operates 11 branches.
All three companies distribute products similar to those distributed by the
Company's Industrial Parts Group and all three companies have been merged into
the
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Company's Motion Industries, Inc. subsidiary.
As of December 31, 1995, the Group served more than 150,000 customers
in all types of industries located throughout the United States, and in Canada,
principally in the Provinces of Alberta, Manitoba and Saskatchewan.
Distribution System. In the United States, the Industrial Parts Group operates
5 distribution centers, two re-distribution centers, 10 service centers for
fluid power and special hose applications and over 370 branches. Distribution
centers stock and distribute more than 200,000 different items purchased from
over 250 different suppliers. The Group's re-distribution centers serve as
collection points for excess inventory collected from its branches for re-
distribution to those branches which need the inventory. Approximately 50% of
1995 total industrial purchases were made from 15 major suppliers. Sales are
generated from the Group's branches located in 43 states, each of which has
warehouse facilities, which stock significant amounts of inventory
representative of the lines of products used by customers in the respective
market area served.
In Canada, Oliver Industrial Supply Ltd. ("Oliver") operates an
industrial parts and agricultural supply distribution center for its seven
branches serving the industrial and agricultural markets of Alberta, British
Columbia, Manitoba and Saskatchewan in western Canada. In addition to
industrial parts and agricultural supplies, Oliver distributes irrigation
systems and related supplies.
Products. The Industrial Parts Group distributes a wide variety of products to
its customers, primarily industrial concerns, to maintain and operate plants,
machinery and equipment. Products include such items as hoses, belts,
bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers and
electric motors. The nature of this Group's business demands the maintenance
of large inventories and the ability to provide prompt and demanding delivery
requirements. Virtually all of the products distributed are installed by the
customer. Most orders are filled immediately from existing stock and
deliveries are normally made within 24 hours of receipt of order. The majority
of all sales are on open account.
Related Information. Non-exclusive distributor agreements are in effect with
most of the Group's suppliers. The terms of these agreements vary; however, it
has been the experience of the Group that the custom of the trade is to treat
such agreements as continuing until breached by one party, or until terminated
by mutual consent.
Segment Data. In the year ended December 31, 1995, sales from the Company's
Industrial Parts Group approximated 29% of the Company's net sales as compared
to 27% in 1994 and 26% in 1993.
Competition. The Industrial Parts Group competes with other distributors
specializing in the distribution of such items, as well as with general line
distributors. To a lesser extent, the Group competes with manufacturers that
sell directly to the customer.
OFFICE PRODUCTS GROUP
The Office Products Group, through S. P. Richards Company ("S.P.
Richards"), a wholly owned subsidiary of Genuine Parts Company headquartered in
Atlanta, Georgia, is engaged in the wholesale distribution of a broad line of
office products which are used in the daily operation of businesses, schools,
offices and institutions. Office products fall into the general categories of
computer supplies, office machines, general office supplies, janitorial
supplies, breakroom supplies, and office furniture. Lesker Office Furniture, a
furniture only wholesaler acquired in 1993, operates from 5 branches in the
Northeast. In 1995, a new Lesker branch was opened in New England. On May 22,
1995, the Company completed the acquisition of Horizon USA Data Supplies, Inc.
Horizon USA Data Supplies, Inc., is a computer supplies distributor
headquartered in Reno,
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Nevada with three locations.
The Group distributes computer supplies including diskettes, printer
supplies, printout paper and printout binders; office furniture to include
desks, credenzas, chairs, chair mats, partitions, files and computer furniture;
office machines to include telephones, answering machines, calculators,
typewriters, shredders and copiers; and general office supplies to include
copier supplies, desk accessories, business forms, accounting supplies,
binders, report covers, writing instruments, note pads, envelopes, secretarial
supplies, mailroom supplies, filing supplies, art/drafting supplies, janitorial
supplies, breakroom supplies and audio visual supplies.
The Office Products Group distributes more than 20,000 items to over
6,000 office supply dealers from 43 distribution centers located in 30 states.
The newest distribution center opened in 1995 in Pittsburgh, Pennsylvania.
Approximately 53% of 1995 total office products purchases were made from 14
major suppliers.
The Office Products Group sells to qualified resellers of office
products. Customers are offered comprehensive marketing programs which include
flyers, other promotional material and personalized product catalogs. The
marketing programs are supported by all the Group's distribution centers which
stock all cataloged products and have the capability to provide overnight
delivery.
While many recognized brand-name items are carried in inventory, S. P.
Richards Company also markets items produced for it under its own SPARCO(R)
brand name, as well as its NATURE SAVER(R) brand of recycled products.
Segment Data. In the year ended December 31, 1995, sales from the Company's
Office Products Group approximated 18% of the Company's net sales as compared
to 17% in 1994 and in 1993.
Competition. In the distribution of office supplies to retail dealers, S. P.
Richards competes with many other wholesale distributors as well as with
manufacturers of office products and large national retail chains.
* * * * * * * *
Executive Officers of the Company. The table below sets forth the name and age
of each person deemed to be an executive officer of the Company as of February
19, 1996, the position or office held by each and the period during which each
has served as such. Each executive officer is elected by the Board of
Directors and serves at the pleasure of the Board of Directors until his
successor has been elected and has qualified, or until his earlier death,
resignation, removal, retirement or disqualification.
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Year First
Assumed
Name Age Position of Office Position
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<S> <C> <C> <C>
Larry L. Prince 57 Chairman of the Board of Directors
and Chief Executive Officer 1990/1989
Thomas C. Gallagher 48 President and Chief Operating Officer 1990
George W. Kalafut 62 Executive Vice President-Finance and
Administration * 1991
John J. Scalley 65 Executive Vice President 1986
Keith M. Bealmear 49 Group Vice President 1994
Robert J. Breci 60 Group Vice President 1987
Albert T. Donnon, Jr 48 Group Vice President 1993
Louis W. Rice, Jr 69 Senior Vice President-Personnel 1981
</TABLE>
* Also serves as the Company's Principal Financial Officer.
All executive officers have been employed by and have served as
officers of the Company for at least the last five years.
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ITEM 2. PROPERTIES.
The Company's headquarters are located in one of two adjacent office
buildings owned by Genuine Parts Company in Atlanta, Georgia.
The Company's Automotive Parts Group currently operates 63 NAPA
Distribution Centers in the United States distributed among nine geographic
divisions. More than 90% of the distribution center properties are owned by
the Company. At December 31, 1995, the Company owned 740 NAPA Auto Parts
stores located in 43 states, and Genuine Parts Company owned a 51% interest
in 83 auto parts stores located in 29 states. Other than NAPA Auto Parts
stores located within Company owned distribution centers, most of the auto
parts stores were operated in leased facilities. In addition, UAP/NAPA, in
which Genuine Parts Company owns a 49% interest, operated 115 auto parts stores
in Western Canada. The Company's Automotive Parts Group also operates three
Balkamp distribution centers, six Rayloc rebuilding plants, two transfer and
shipping facilities and a Rayloc warehouse.
The Company's Industrial Parts Group, operating through Motion and
Berry Bearing Company, operates 5 distribution centers, 2 re-distribution
centers, 10 service centers and over 370 branches. Approximately 80% of these
branches are operated in leased facilities. In addition, the Industrial Parts
Group operates an industrial parts and agricultural supply distribution center
in Western Canada for its 7 branches of which approximately 85% are operated in
leased facilities.
The Company's Office Products Group operates 43 distribution centers
in the United States distributed among the Group's six geographic divisions.
Approximately 75% of these distribution centers are operated in leased
facilities.
For additional information regarding rental expense on leased
properties, see "Note 4 of Notes to Consolidated Financial Statements" on Page
24 of Annual Report to Shareholders for 1995.
ITEM 3. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
HOLDER MATTERS.
Information required by this item is set forth under the
heading "Market and Dividend Information" on Page 18 of Annual Report to
Shareholders for the year ended December 31, 1995, and is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this item is set forth under the
heading "Selected Financial Data" on Page 18 of Annual Report to Shareholders
for the year ended December 31, 1995, and is incorporated herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Information required by this item is set forth under the
heading "Management's Discussion and Analysis" on Page 26 of Annual Report to
Shareholders for the year ended December 31, 1995, and is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth in the
consolidated financial statements on Pages 20 through 25 and Page 27, in
"Report of Independent Auditors" on Page 19, and under the heading "Quarterly
Results of Operations" on Page 26, of the Annual Report to Shareholders for the
year ended December 31, 1995, and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item is set forth under the
headings "Nominees for Director" and "Members of the Board of Directors
Continuing in Office" on Pages 2 through 4 of the definitive proxy statement
for the Company's Annual Meeting to be held on April 15, 1996, and is
incorporated herein by reference. Certain information about Executive
Officers of the Company is included in Item 1 of Part I of this Annual Report
on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is set forth under the
heading "Executive Compensation and Other Benefits" on Pages 6 through 8, and
under the headings "Compensation Committee Interlocks and Insider
Participation", "Compensation Pursuant to Plans" and "Termination of Employment
and Change of Control Arrangements" on Pages 11 through 14 of the definitive
proxy statement for the Company's Annual Meeting to be held on April 15, 1996,
and is incorporated herein by reference. In no event shall the information
contained in the definitive proxy statement for the Company's 1996 Annual
Meeting on Pages 9 through 11 under the heading "Compensation and Stock Option
Committee Report on Executive Compensation" or on Pages 15 and 16 under the
heading "Performance Graph" be incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is set forth under the
headings "Common Stock Ownership of Certain Beneficial Owners" and "Common
Stock Ownership of Management" on Pages 4, 5, and 6 of the definitive proxy
statement for the Company's Annual Meeting to be held on April 15, 1996, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is set forth under the
heading "Certain Relationships and Related Transactions" on Page 16 of the
definitive proxy statement for the Company's Annual Meeting to be held on April
15, 1996,
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and is incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C>
(a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this
report.
(3) The following Exhibits are filed as part of this report in Item 14(c):
Exhibit 3.1 Restated Articles of Incorporation of the Company, dated as of April 18,
1988, and as amended April 17, 1989 and amendments to the Restated
Articles of Incorporation of the Company, dated as of November 20, 1989 and
April 18, 1994. (Incorporated herein by reference from the Company's
Annual Report on Form 10-K, dated March 3, 1995).
Exhibit 3.2 By-laws of the Company, as amended. (Incorporated herein by reference from
the Company's Annual Report on Form 10-K, dated March 5, 1993).
Exhibit 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989,
between the Company and Trust Company Bank, as Rights Agent.
(Incorporated herein by reference from the Company's Report on Form 8-K,
dated November 20, 1989).
Exhibit 4.2 Specimen Common Stock Certificate. (Incorporated herein by reference from
the Company's Registration Statement on Form S-1, Registration No. 33-
63874).
Exhibit 10.1 * 1988 Stock Option Plan. (Incorporated herein by reference from the
Company's Annual Meeting Proxy Statement, dated March 9, 1988).
Exhibit 10.2 * Form of Amendment to Deferred Compensation Agreement, adopted February 13,
1989, between the Company and certain executive officers of the Company.
(Incorporated herein by reference from the Company's Annual Report on Form
10-K, dated March 15, 1989).
Exhibit 10.3 * Form of Agreement adopted February 13, 1989, between the Company and
certain executive officers of the Company providing for a supplemental
employee benefit upon a change in control of the Company. (Incorporated
herein by reference from the Company's Annual Report on Form 10-K, dated
March 15, 1989).
Exhibit 10.4 * Genuine Parts Company Supplemental Retirement Plan, effective January 1,
1991. (Incorporated herein by reference from the
</TABLE>
-10-
<PAGE> 11
<TABLE>
<S> <C>
Company's Annual Report on Form 10-K, dated March 8, 1991).
Exhibit 10.5 * 1992 Stock Option and Incentive Plan, effective April 20, 1992.
(Incorporated herein by reference from the Company's Annual Meeting Proxy
Statement, dated March 6, 1992).
Exhibit 10.6 * Restricted Stock Agreement dated March 31, 1994, between the Company and
Larry L. Prince. (Incorporated herein by reference from the Company's Form
10-Q, dated May 6, 1994).
Exhibit 10.7 * Restricted Stock Agreement dated March 31, 1994, between the Company and
Thomas C. Gallagher. (Incorporated herein by reference from the Company's
Form 10-Q, dated May 6, 1994).
Exhibit 10.8 * The Genuine Parts Company Restated Tax-Deferred Savings Plan, January 1,
1993. (Incorporated herein by reference from the Company's Annual Report
on Form 10-K, dated March 3, 1995).
Exhibit 10.9 * Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan,
effective January 1, 1995. (Incorporated herein by reference from the
Company's Annual Report on Form 10-K, dated March 3, 1995).
Exhibit 10.10 * Genuine Partnership Plan, as amended and restated January 1, 1994.
(Incorporated herein by reference from the Company's Annual Report on Form
10-K, dated March 3, 1995).
Exhibit 10.11 * Genuine Parts Company Pension Plan, as amended and restated effective
January 1, 1989. (Incorporated herein by reference from the Company's
Annual Report on Form 10-K, dated March 3, 1995).
Exhibit 10.12 * Amendment No. 1 to the Genuine Partnership Plan, effective September 1,
1995.
Exhibit 10.13 * Amendment No. 1 to the Genuine Parts Company Pension Plan, effective April
1, 1995.
Exhibit 10.14 * Amendment No. 2 to the Genuine Parts Company Pension Plan, dated September
28, 1995, effective January 1, 1995.
* Indicates executive compensation plans and arrangements
Exhibit 13 The following sections and pages of the 1995 Annual Report to
Shareholders:
</TABLE>
-11-
<PAGE> 12
<TABLE>
<S> <C>
- Selected Financial Data on Page 18
- Market and Dividend Information on Page 18
- Report of Independent Auditors on Page 19
- Consolidated Financial Statements and Notes to
Consolidated Financial Statements on Pages 20-25
- Management's Discussion and Analysis on Page 26
- Quarterly Results of Operations on Page 26
- Industry Data on Page 27
Exhibit 21 Subsidiaries of the Company
Exhibit 23 Consent of Independent Auditors
Exhibit 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the last quarter of
-------------------
the fiscal year.
(c) Exhibits. The response to this portion of Item 14 is submitted as a separate section of this report.
--------
(d) Financial Statement Schedules. The response to this portion of Item 14 is submitted as a separate
-----------------------------
section of this report.
</TABLE>
SIGNATURES.
Pursuant to the requirements of Section 13 or 15(d) 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
<TABLE>
<S> <C>
/s/Larry L. Prince 3/7/96 /s/George W. Kalafut 3/7/96
- ------------------------------------- ------------------------------------
Larry L. Prince (Date) George W. Kalafut (Date)
Chairman of the Board Executive Vice President -
and Chief Executive Officer Finance and Administration and
Principal Financial and Accounting
Officer
</TABLE>
-12-
<PAGE> 13
Pursuant to the requirements of the Securities and Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
/s/ Bradley Currey, Jr. 2/19/96 /s/ Larry L. Prince 2/19/96
- ------------------------------------- ------------------------------------
Bradley Currey, Jr. (Date) Larry L. Prince (Date)
Director Director
Chairman of the Board and
Chief Executive Officer
/s/ Jean Douville 2/19/96 /s/ John J. Scalley 2/19/96
- ------------------------------------- ------------------------------------
Jean Douville (Date) John J. Scalley (Date)
Director Director
Chairman of the Board and Executive Vice President
Chief Executive Officer UAP Inc.
/s/ Thomas C. Gallagher 2/19/96 /s/ Alana S. Shepherd 2/19/96
- ------------------------------------- ------------------------------------
Thomas C. Gallagher (Date) Alana S. Shepherd (Date)
Director Director
President and Chief Operating Officer
/s/ J. Hicks Lanier 2/19/96 /s/ Lawrence G. Steiner 2/19/96
- ------------------------------------- ------------------------------------
J. Hicks Lanier (Date) Lawrence G. Steiner (Date)
Director Director
/s/ James B. Williams 2/19/96
- ------------------------------------ ------------------------------------
Gardner E. Larned (Date) James B. Williams (Date)
Director Director
Chairman of the Board
Berry Bearing Company
- ------------------------------------
William A. Parker (Date)
Director
</TABLE>
-13-
<PAGE> 14
Annual Report on Form 10-K
Item 14(a)(1) and (2), (c) and (d)
List of Financial Statements
Certain Exhibits
Year ended December 31, 1995
Genuine Parts Company
Atlanta, Georgia
<PAGE> 15
Form 10-K - Item 14(a)(1) and (2)
Genuine Parts Company and Subsidiaries
Index of Financial Statements
The following consolidated financial statements of Genuine Parts Company and
subsidiaries, included in the annual report of the registrant to its
shareholders for the year ended December 31, 1995, are incorporated by
reference in Item 8:
Consolidated balance sheets - December 31, 1995 and 1994
Consolidated statements of income - Years ended December 31, 1995, 1994,
and 1993
Consolidated statements of shareholders' equity - Years ended December 31,
1995, 1994, and 1993
Consolidated statements of cash flows - Years ended December 31, 1995,
1994, and 1993
Notes to consolidated financial statements - December 31, 1995
All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
<PAGE> 16
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(3)
LIST OF EXHIBITS
The following Exhibits are filed as a part of this Report:
10.12* Amendment No. 1 to the Genuine Partnership Plan, effective September 1,
1995.
10.13* Amendment No. 1 to the Genuine Parts Company Pension Plan, effective
April 1, 1995.
10.14* Amendment No. 2 to the Genuine Parts Company Pension Plan, dated
September 28, 1995, effective January 1, 1995.
13 The following Sections and Pages of the Annual Report to Shareholders for
1995:
- Selected Financial Data on Page 18
- Common Stock Market and Dividend Information
on Page 18
- Report of Independent Auditors on Page 19
- Consolidated Financial Statements and Notes to Consolidated
Financial Statements on Pages 20-25
- Management's Discussion and Analysis of Financial Condition
and Results of Operations on Page 26
- Quarterly Results of Operations on Page 26
- Industry Data on Page 27
21 Subsidiaries of the Company
23 Consent of Independent Accountants
27 Financial Data Schedule (for SEC use only)
The following Exhibits are incorporated by reference as set forth
in Item 14 on pages 10 and 11 of this Form 10-K:
<TABLE>
<S> <C>
- 3.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1988, and as amended
April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated
as of November 20, 1989 and April 18, 1994.
- 3.2 By-laws of the Company, as amended.
- 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and
Trust Company Bank, as Rights Agent.
- 4.2 Specimen Common Stock Certificate. (Incorporated herein by reference from the Company's
Registration Statement on Form S-1, Registration No. 33-63874).
- 10.1* 1988 Stock Option Plan.
- 10.2* Form of Amendment to Deferred Compensation Agreement adopted February 13, 1989, between the
Company and certain executive officers of the Company.
- 10.3* Form of Agreement adopted February 13, 1989, between the Company and certain executive officers
of the Company providing for a supplemental employee benefit upon a change in control of the
Company.
</TABLE>
<PAGE> 17
<TABLE>
<S> <C>
- 10.4* Genuine Parts Company Supplemental Retirement Plan,
effective January 1, 1991.
- 10.5* 1992 Stock Option and Incentive Plan, effective
April 20, 1992.
- 10.6* Restricted Stock Agreement dated March 31, 1994, between the
Company and Larry L. Prince.
- 10.7* Restricted Stock Agreement dated March 31, 1994, between the
Company and Thomas C. Gallagher.
- 10.8* The Genuine Parts Company Restated Tax-Deferred Savings Plan,
effective January 1, 1993
- 10.9 * Amendment No. 2 to the Genuine Parts Company Supplemental
Retirement Plan, effective January 1,
1995.
- 10.10* Genuine Partnership Plan, as amended and restated January 1,
1994.
- 10.11* Genuine Parts Company Pension Plan, as amended and restated
effective January 1, 1989.
* Indicates executive compensation plans and arrangements
</TABLE>
<PAGE> 1
EXHIBIT 10.12
AMENDMENT NUMBER ONE TO THE
GENUINE PARTNERSHIP PLAN
This Amendment to the Genuine Partnership Plan is adopted by Genuine
Parts Company (the "Company"), effective as of the date set forth herein.
W I T N E S S E T H:
WHEREAS, the Company maintains the Genuine Partnership Plan (the
"Plan"), as amended and restated effective January 1, 1994, and such Plan is
currently in effect; and
WHEREAS, the Company wishes to use a look back year for purposes of
determining highly compensated employees; and
NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as
follows:
1.
Section 6.06(b) is deleted in its entirety, and a new Section 6.06(b)
is substituted in lieu thereof, as follows:
"6.06(b) Account Balance as of December 31, 1993. Prior to the
Effective Date, a Participant's Account (other than his
Matching Employer Contribution Account) was invested in the
fixed income fund. During the 1994 Plan Year and during the
period beginning January 1, 1995 and ending August 31, 1995, a
Participant may direct the Committee to transfer up to 25% of
his pre-1994 Account that was invested in the fixed income
fund to any of the other available Investment Funds.
Beginning September 1, 1995, a Participant may direct the
Committee to transfer any whole percent of his pre-1994
Account that was invested in the fixed income fund to any of
the other available Investment Funds."
2.
Section 13.02 is deleted in its entirety, and a new Section 13.02 is
substituted in lieu thereof, as follows:
"13.02 Highly Compensated Employees.
(a) Look-Back Year. An Employee is a Highly Compensated
Employee if during a Look Back Year the Employee:
(1) is a 5 Percent Owner;
<PAGE> 2
(2) receives Compensation in excess of $75,000;
(3) receives Compensation in excess of $50,000
and is a member of the Top Paid Group; or
(4) is an Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(b) Determination Year. An Employee is a Highly
Compensated Employee if during a Determination Year
the Employee:
(1) is a 5 Percent Owner; or
(2) is one of the 100 Employees who receives the
most Compensation from the Employer during
the Determination Year and during the
Determination Year (A) receives Compensation
in excess of $75,000; (B) receives
Compensation in excess of $50,000 and is a
member of the Top Paid Group; or (C) is an
Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(c) Election to Use Simplified Method.
(1) If elected by the Committee (which election
may change from year to year), an Employee's
status as a Highly Compensated Employee shall
be determined pursuant to the simplified
method described in Code Section 401(q)(12).
(2) If the Committee elects to use the simplified
method for the Look Back Year, an Employee's
status during the Look Back Year shall be
determined by substituting "$50,000" for
"$75,000" in subsection (a)(2) and by
ignoring the provisions of subsection (a)(3).
(3) If the Committee elects to use the simplified
method for the Determination Year, an
Employee's status for the Determination Year
shall be determined by substituting "$50,000"
for "$75,000" in subsection (b)(2)(A) and by
ignoring the provisions of subsection
(b)(2)(B).
(4) The Committee may make separate elections for
both Look Back Year and for the Determination
Year.
- 2 -
<PAGE> 3
(5) The simplified method may not be elected for
a given year unless (i) at all times during
such year the Employer maintained significant
business activities and employed Employees in
at least two significantly separate
geographic areas and (ii) the Employer
satisfies all other conditions prescribed by
the Secretary of the Treasury or his delegate
as a prerequisite for electing the simplified
method."
3.
Paragraph 1 of this Amendment shall be effective September 1, 1995.
Paragraph 2 of this Amendment shall be effective January 1, 1995. Except as
amended herein, the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, Genuine Parts Company has caused this Amendment to
the Plan to be executed on the date shown below, but effective as of the dates
indicated above.
GENUINE PARTS COMPANY
By: /s/ George W. Kalafut
-----------------------------
Date: September 28, 1995
---------------------------
Attest: /s/ Frank M. Howard
-----------------------------
- 3 -
<PAGE> 1
EXHIBIT 10.13
AMENDMENT NO. 1 TO THE
GENUINE PARTS COMPANY PENSION PLAN
This Amendment to the Genuine Parts Company Pension Plan is adopted by
Genuine Parts Company (the "Company") through action of the Pension Committee,
effective as of the date set forth herein.
W I T N E S S E T H:
WHEREAS, the Company maintains the Genuine Parts Company Pension Plan
(the "Plan"), as amended and restated effective January 1, 1989, and such Plan
is currently in effect; and
WHEREAS, under Section 8.06(c), the Pension Committee has the
authority to amend the Plan to comply with changes in law and to make other
amendments that do not materially increase the costs associated with the Plan;
and
WHEREAS, under the Retirement Protection Act, the interest rate under
Section 417(e)(3) of the Internal Revenue Code (i.e., the interest rate used to
determine a lump sum distribution) has been changed; and
WHEREAS, the Pension Committee wishes to amend the Plan to comply with
amended Code Section 417(e)(3) and to make certain other changes;
NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as
follows:
1.
Section 2.03(c) is hereby deleted and a new Section 2.03(c) is
substituted therefor as follows:
"(c) Lump Sum Distributions Before April 1, 1995. For purposes of
computing single sum values, the interest rate shall be the
interest rate which would be applied by the Pension Benefit
Guaranty Corporation for purposes of determining the present
value of the Participant's benefits under the Plan if the Plan
had terminated on January 1 of the applicable Plan Year with
insufficient assets to provide benefits guaranteed by the
Pension Benefit Guaranty Corporation on that date.
Lump Sum Distributions After April 1, 1995. Notwithstanding
the preceding paragraph, for lump sum distributions made on or
after April 1, 1995, a lump sum distribution will be
determined based on the Applicable Mortality Table and the
Applicable Interest Rate as defined immediately below:
<PAGE> 2
(1) Applicable Mortality Table. The term "Applicable Mortality
Table" means the table prescribed by the secretary of the
Treasury based on the prevailing Commissioner's Standard Table
(described in Section 807(d)(6)(A) of the Internal Revenue
Code) used to determine reserves or group annuity contracts
issued on the date as of which present value is being
determined (without regard to any other subparagraph of
Section 807(d)(5) of the Internal Revenue Code).
(2) Applicable Interest Rate. For lump sum distributions made on
or after April 1, 1995, the term "Applicable Interest Rate"
means the annual rate of interest on 30-year Treasury
securities for the month of December that precedes the
beginning of the Plan Year in which such distribution occurs.
(Note that the December rates are published in January)."
2.
The phrase "The Pension Committee shall have the right to amend any
and all of the provisions of the Plan;" set forth in Section 9.01 is hereby
deleted and the following phrase is substituted therefor as follows: "The
Compensation and Stock Option Committee (or the Pension Committee to the extent
permitted by Section 8.06(c)) shall have the right, at any time, to amend any
or all of the provisions of the Plan;".
3.
Paragraph 1 shall be effective for lump sum distributions made on or
after April 1, 1995. The Amendment set forth in Paragraph 2 shall be effective
on January 1, 1989. Except as amended herein, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, Genuine Parts Company, acting through the Pension
Committee, has caused this Amendment to the Plan to be executed on the date
shown below, but effective as of the dates indicated above.
PENSION COMMITTEE TO THE
GENUINE PARTS COMPANY
PENSION PLAN
By: /s/ George W. Kalafut
-----------------------------
Date: April 25, 1995
---------------------------
Attest: /s/ Frank M. Howard
-----------------------------
- 2 -
<PAGE> 1
EXHIBIT 10.14
AMENDMENT NO. 2 TO THE
GENUINE PARTS COMPANY PENSION PLAN
This Amendment to the Genuine Parts Company Pension Plan is adopted by
Genuine Parts Company (the "Company") through action of the Pension Committee,
effective as of the date set forth herein.
W I T N E S S E T H:
WHEREAS, the Company maintains the Genuine Parts Company Pension Plan
(the "Plan"), as amended and restated effective January 1, 1989, and such Plan
is currently in effect; and
WHEREAS, under Section 8.06(c), the Pension Committee has the
authority to amend the Plan to comply with changes in law and to make other
amendments that do not materially increase the costs associated with the Plan;
and
WHEREAS, the Company wishes to use a look back year for purposes of
determining highly compensated employees; and
WHEREAS, the employees of M&B, Inc. (Lesker Office Furniture) (the
"Predecessor Employer") received distributions of their accrued benefit under
the Predecessor Employer's retirement plan, and the Company intended for M&B,
Inc. (Lesker Office Furniture) employees to receive service credit under this
Plan for vesting purposes only; and
WHEREAS, the Company wishes to correct a typographical error under
Schedule B of the Plan regarding the proper service crediting for M&B, Inc.
(Lesker Office Furniture) employees; and
NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as
follows:
1.
Section 14.02 is deleted in its entirety, and a new Section 14.02 is
substituted in lieu thereof, as follows:
"14.02 Highly Compensated Employees.
(a) Look-Back Year. An Employee is a Highly Compensated
Employee if during a Look Back Year the Employee:
(1) is a 5 Percent Owner;
(2) receives Compensation in excess of $75,000;
<PAGE> 2
(3) receives Compensation in excess of $50,000
and is a member of the Top Paid Group; or
(4) is an Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(b) Determination Year. An Employee is a Highly
Compensated Employee if during a Determination Year
the Employee:
(1) is a 5 Percent Owner; or
(2) is one of the 100 Employees who receives the
most Compensation from the Employer during
the Determination Year and during the
Determination Year (A) receives Compensation
in excess of $75,000; (B) receives
Compensation in excess of $50,000 and is a
member of the Top Paid Group; or (C) is an
Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(c) Election to Use Simplified Method.
(1) If elected by the Committee (which election
may change from year to year), an Employee's
status as a Highly Compensated Employee shall
be determined pursuant to the simplified
method described in Code Section 401(q)(12).
(2) If the Committee elects to use the simplified
method for the Look Back Year, an Employee's
status during the Look Back Year shall be
determined by substituting "$50,000" for
"$75,000" in subsection (a)(2) and by
ignoring the provisions of subsection (a)(3).
(3) If the Committee elects to use the simplified
method for the Determination Year, an
Employee's status for the Determination Year
shall be determined by substituting "$50,000"
for "$75,000" in subsection (b)(2)(A) and by
ignoring the provisions of subsection
(b)(2)(B).
(4) The Committee may make separate elections for
both Look Back Year and for the Determination
Year.
- 2 -
<PAGE> 3
(5) The simplified method may not be elected for
a given year unless (i) at all times during
such year the Employer maintained significant
business activities and employed Employees in
at least two significantly separate
geographic areas and (ii) the Employer
satisfies all other conditions prescribed by
the Secretary of the Treasury or his delegate
as a prerequisite for electing the simplified
method."
2.
Schedule B is amended to delete Section II, Item 7 only.
3.
Schedule B is amended to add the following to Section III:
" Name Employment Date
---- ---------------
M&B, Inc. (Lesker Office Furniture) November 1, 1993"
4.
The Amendment set forth in Paragraph 1 shall be effective January 1,
1995. The Amendment set forth in Paragraphs 2 and 3 shall be effective on
January 1, 1989. Except as amended herein, the Plan shall remain in full force
and effect.
IN WITNESS WHEREOF, Genuine Parts Company, acting through the Pension
Committee, has caused this Amendment to the Plan to be executed on the date
shown below, but effective as of the dates indicated above.
PENSION COMMITTEE TO THE
GENUINE PARTS COMPANY
PENSION PLAN
By: /s/ George W. Kalafut
-----------------------------
Date: September 28, 1995
---------------------------
Attest: /s/ Frank M. Howard
-----------------------------
- 3 -
<PAGE> 1
EXHIBIT 13
SELECTED FINANCIAL DATA
Genuine Parts Company and Subsidiaries
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1993 1992 1991
====================================================================================================================
<S> <C> <C> <C> <C> <C>
(in thousands except per share data)
Net sales ....................................... $5,261,904 $4,858,415 $4,384,294 $4,016,751 $3,763,736
Cost of goods sold .............................. 3,654,703 3,343,699 3,023,038 2,781,731 2,612,059
Selling, administrative and other expenses ...... 1,096,407 1,039,848 935,427 852,610 790,559
Income before income taxes ...................... 510,794 474,868 425,829 382,410 361,118
Income taxes .................................... 201,626 186,320 166,961 145,440 137,154
Net income** .................................... $ 309,168 $ 288,548 $ 257,813 $ 236,970 $ 223,964
Average common shares outstanding during year* .. 122,615 124,041 124,217 124,085 123,980
Per common share*:
Net income** .................................. $ 2.52 $ 2.33 $ 2.08 $ 1.91 $ 1.81
Dividends declared ............................ 1.26 1.15 1.06 1.00 .97
December 31 closing stock price ............... 41.00 36.00 37.63 34.00 32.50
Long-term debt, less current maturities ......... 60,607 11,431 12,265 13,043 12,658
Shareholders' equity ............................ 1,650,882 1,526,165 1,445,263 1,316,372 1,211,716
Total assets .................................... $2,274,132 $2,029,471 $1,870,756 $1,707,303 $1,577,516
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*Adjusted to reflect the three-for-two split in 1992.
**Net of cumulative effect of changes in accounting principles of $1,055 in
1993.
SELECTED RATIO ANALYSIS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1993 1992 1991
============================================================================================
<S> <C> <C> <C> <C> <C>
(In % of net sales)
Cost of goods sold ............................... 69.46% 68.82% 68.95% 69.25% 69.40%
Selling, administrative and other expenses ....... 20.84 21.40 21.34 21.23 21.00
Income before income taxes ....................... 9.71 9.77 9.71 9.52 9.60
Net income ....................................... 5.88 5.94 5.88 5.90 5.95
Rate earned on shareholders' equity at the beginning
of each year ..................................... 20.26% 19.97% 19.59% 19.56% 19.96%
- --------------------------------------------------------------------------------------------
</TABLE>
MARKET AND DIVIDEND INFORMATION
High and Low Sales Price and Dividends Declared per Share of Common Shares
Traded on the New York Stock Exchange.
<TABLE>
<CAPTION>
Sales Price of Common Shares
- -------------------------------------------------------------------------------------------------------
Quarter 1995 1994
=======================================================================================================
High Low High Low
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First $40.00 $35.50 $39.38 $33.75
Second 40.38 37.50 36.88 33.63
Third 40.88 36.25 37.38 34.13
Fourth 42.00 38.88 37.00 33.88
</TABLE>
<TABLE>
<CAPTION>
Dividends Declared per Share
- ---------------------------------------------------------------------------------------
1995 1994
=======================================================================================
<S> <C> <C>
First ..................................... $.315 $.2875
Second .................................... .315 .2875
Third ..................................... .315 .2875
Fourth .................................... .315 .2875
Number of Record Holders of Common Stock .. 8,076
</TABLE>
18
<PAGE> 2
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Genuine Parts Company
We have audited the accompanying consolidated balance sheets of Genuine
Parts Company and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Genuine Parts
Company and subsidiaries at December 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993
the Company changed its method of accounting for post-retirement benefits other
than pensions and income taxes.
/s/ Ernst & Young LLP
Atlanta, Georgia
February 5, 1996
19
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
GENUINE PARTS COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
- -------------------------------------------------------------------------------------------------------------------------
December 31 1995 1994
=========================================================================================================================
ASSETS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ............................................................. $ 44,254 $ 82,410
Trade accounts receivable ............................................................. 565,305 487,395
Merchandise inventories ............................................................... 1,127,456 1,004,580
Prepaid expenses and other current accounts ........................................... 26,946 21,396
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,763,961 1,595,781
INVESTMENTS AND OTHER ASSETS (Notes 1 and 7) .......................................... 206,932 175,658
PROPERTY, PLANT AND EQUIPMENT
Land .................................................................................. 38,844 32,152
Buildings, less allowance for depreciation
(1995-$63,507; 1994-$60,176) ........................................................ 119,580 106,608
Machinery and equipment, less allowance for
depreciation (1995-$146,290; 1994-$131,905) ......................................... 144,815 119,272
- -------------------------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 303,239 258,032
- -------------------------------------------------------------------------------------------------------------------------
$2,274,132 $2,029,471
=========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Trade accounts payable ................................................................ $ 331,704 $ 316,589
Revolving line of credit (Note 2) ..................................................... 45,000 --
Current maturities on long-term debt .................................................. 590 933
Accrued compensation .................................................................. 33,802 37,790
Accrued expenses ...................................................................... 24,220 20,368
Dividends payable ..................................................................... 38,401 35,246
Income taxes payable .................................................................. 1,807 11,482
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 475,524 422,408
LONG-TERM DEBT, less current maturities (Note 2) ...................................... 60,607 11,431
DEFERRED INCOME TAXES (Note 6) ........................................................ 58,690 44,540
MINORITY INTERESTS IN SUBSIDIARIES .................................................... 28,429 24,927
SHAREHOLDERS' EQUITY (Notes 1, 3 and 5)
Preferred Stock, par value $1 a share-authorized
10,000,000 shares; none issued
Common Stock, par value $1 a share-authorized
450,000,000 shares; issued 121,913,040 shares
in 1995; 122,627,303 shares in 1994 ................................................. 121,913 122,627
Additional paid-in capital ............................................................ -- --
Retained earnings ..................................................................... 1,528,969 1,403,538
- -------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 1,650,882 1,526,165
- -------------------------------------------------------------------------------------------------------------------------
$2,274,132 $2,029,471
=========================================================================================================================
</TABLE>
See accompanying notes.
20
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
Genuine Parts Company and Subsidiaries
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
================================================================================================================================
<S> <C> <C> <C>
Net sales........................................................................... $5,261,904 $4,858,415 $4,384,294
Cost of goods sold.................................................................. 3,654,703 3,343,699 3,023,038
- --------------------------------------------------------------------------------------------------------------------------------
1,607,201 1,514,716 1,361,256
Selling, administrative and other expenses.......................................... 1,096,407 1,039,848 935,427
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of changes
in accounting principles.......................................................... 510,794 474,868 425,829
Income taxes (Note 6)............................................................... 201,626 186,320 166,961
- --------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of changes in accounting principles................. 309,168 288,548 258,868
Cumulative effect of changes in accounting principles, net of tax (Note 1).......... -- -- 1,055
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME.......................................................................... $309,168 $288,548 $257,813
================================================================================================================================
Net income per common share......................................................... $2.52 $2.33 $2.08
================================================================================================================================
Average common shares outstanding during the year................................... 122,615 124,041 124,217
================================================================================================================================
</TABLE>
See accompanying notes.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Genuine Parts Company and Subsidiaries
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Common Stock Additional Total
------------------------ Paid-In Retained Shareholders'
(dollars in thousands) Shares Amount Capital Earnings Equity
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993.................. 124,163,089 $124,163 $ -- $1,192,209 $1,316,372
Net income.............................. -- -- -- 257,813 257,813
Cash dividends declared................. -- -- -- (131,681) (131,681)
Stock options exercised................. 119,200 119 2,566 74 2,759
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993................ 124,282,289 124,282 2,566 1,318,415 1,445,263
Net income.............................. -- -- -- 288,548 288,548
Cash dividends declared................. -- -- -- (142,602) (142,602)
Stock options exercised................. 192,613 193 4,175 -- 4,368
Purchase of stock....................... (2,011,000) (2,011) (6,741) (61,593) (70,345)
Stock issued for acquisitions........... 163,401 163 -- 770 933
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994................ 122,627,303 122,627 -- 1,403,538 1,526,165
Net income.............................. -- -- -- 309,168 309,168
Cash dividends declared................. -- -- -- (154,411) (154,411)
Stock options exercised................. 149,827 150 3,955 -- 4,105
Purchase of stock....................... (1,021,551) (1,021) (9,835) (29,326) (40,182)
Stock issued for acquisitions........... 157,461 157 5,880 -- 6,037
- ---------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995................ 121,913,040 $121,913 $ -- $1,528,969 $1,650,882
=====================================================================================================================
</TABLE>
See accompanying notes.
21
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
Genuine Parts Company and Subsidiaries
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Year Ended December 31 1995 1994 1993
===================================================================================================================================
<S> <C> <C> <C>
Operating Activities
Net income ........................................................................... $309,168 $288,548 $257,813
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ................................................... 43,234 37,374 34,420
Gain on sale of property, plant and equipment ................................... (1,248) (158) (1,342)
Provision for deferred taxes .................................................... 12,340 6,699 5,990
Equity in income from investees ................................................. (8,298) (7,224) (4,452)
Income applicable to minority interests ......................................... 2,712 2,373 2,090
Changes in operating assets and liabilities:
Trade accounts receivable .................................................... (77,910) (58,484) (25,759)
Merchandise inventories ...................................................... (122,876) (125,426) (91,462)
Prepaid expenses and other current accounts .................................. (5,550) (11,097) (1,413)
Trade accounts payable ....................................................... 15,115 57,641 18,319
Income taxes payable and other current liabilities ........................... (8,000) 8,708 6,367
- -----------------------------------------------------------------------------------------------------------------------------------
(150,481) (89,594) (57,242)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 158,687 198,954 200,571
Investing Activities
Investment in Grupo Auto Todo ........................................................ -- (26,009) --
Purchase of property, plant and equipment ............................................ (90,769) (66,002) (57,513)
Proceeds from sale of property, plant and equipment .................................. 4,836 2,885 4,831
Purchase of short-term investments ................................................... -- -- (64,599)
Proceeds from sale and maturity of short-term investments ............................ -- 64,599 12,010
Other investing activities ........................................................... (18,199) (9,062) (12,962)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (104,132) (33,589) (118,233)
Financing Activities
Proceeds from revolving line of credit, net .......................................... 45,000 -- --
Proceeds from long-term debt ......................................................... 50,000 -- --
Payments on long-term debt ........................................................... (1,167) (698) (804)
Stock options exercised .............................................................. 4,105 4,368 2,759
Dividends paid ....................................................................... (151,257) (140,289) (129,846)
Purchase of stock .................................................................... (40,182) (70,345) --
Contributions from minority interests ................................................ 790 778 765
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (92,711) (206,186) (127,126)
- -----------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (38,156) (40,821) (44,788)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 82,410 123,231 168,019
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 44,254 $ 82,410 $123,231
===================================================================================================================================
Supplemental disclosure of cash flow information
Cash paid during the year for:
Income taxes ...................................................................... $223,641 $178,307 $160,944
===================================================================================================================================
Interest .......................................................................... $ 2,919 $ 1,333 $ 1,587
===================================================================================================================================
</TABLE>
See accompanying notes.
22
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Genuine Parts Company and Subsidiaries
December 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of Genuine Parts Company and all of its subsidiaries (the "Company").
Income applicable to minority interests is included in other expenses.
Significant intercompany accounts and transactions have been eliminated in
consolidation.
USE OF ESTIMATES: The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results
may differ from those estimates.
CASH EQUIVALENTS: The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
INVESTMENTS: The Company has a 23% ownership interest in UAP Inc., a Canadian
automotive parts distributor and a 49% interest in a partnership formed by the
Company and UAP Inc.
On October 1, 1994, the Company paid approximately $26 million to acquire
a 49% interest in Grupo Auto Todo, a partnership formed by the Company and Auto
Todo, a Mexican automotive parts distributor.
These investments are accounted for by the equity method of accounting and
represent less than five percent of consolidated amounts. Translation
adjustments are not material.
INVENTORIES: Inventories are valued at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for substantially all
automotive parts, and certain industrial parts, and by the first-in, first-out
(FIFO) method for all other inventories. If the FIFO method had been used for
all inventories, cost would have been $114,381,000 and $102,077,000 higher than
reported at December 31, 1995 and December 31, 1994, respectively.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated on the
basis of cost. Depreciation is determined principally on a straight-line basis
over the estimated useful life of each asset.
LONG-LIVED ASSETS: In March 1995, the FASB issued Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company will adopt
Statement 121 in the first quarter of 1996 and, based on current circumstances,
does not believe the effect of adoption will be material.
STOCK OPTIONS: Proceeds from the sale of stock under options are credited to
common stock at par value and the excess of the option price over par value is
credited to additional paid-in capital.
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognizes no compensation expense for the stock option grants.
ACCOUNTING CHANGES: Effective January 1, 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 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) in 1993.
Also effective January 1, 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 1993 net
income by $4,000,000.
NET INCOME PER COMMON SHARE: Net income per common share is based on the
weighted average number of shares of common stock outstanding during each year.
Options outstanding under the Company's stock option plan would not materially
dilute net income per share and, therefore, have not been included in the
computation.
2. CREDIT FACILITIES
In June 1995, the Company obtained a $100,000,000 unsecured revolving line of
credit with a bank which matures in May 1996 and bears interest at the bank's
cost of funds rate plus .10% (5.98% as of December 31, 1995). At December 31,
1995, $45,000,000 was outstanding under this line.
In December 1995, the Company converted $50,000,000 of amounts outstanding
under the line of credit into an unsecured term note which matures in December
2000, and bears interest at a fixed rate of 5.98%. Other long-term debt of
$10,607,000 and $11,431,000 at December 31, 1995 and 1994, respectively,
consists of various industrial development
23
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. CREDIT FACILITIES (CONTINUED)
bonds and other obligations which bear interest at varying rates and mature at
varying dates through 2004.
The Company believes that the fair value of these financial instruments
approximates the carrying value.
3. SHAREHOLDERS' EQUITY
The Company has a Shareholder Protection Rights Agreement which includes the
distribution of Rights to common shareholders. The Rights entitle the holder,
upon occurrence of certain events, to purchase additional stock of the Company.
The Rights will be exercisable only if a person, group or company acquires 20%
or more of the Company's common stock or commences a tender offer that would
result in ownership of 30% or more of the common stock. The Company is entitled
to redeem each Right for one cent.
4. LEASED PROPERTIES
The Company leases land, buildings and equipment. Certain land and building
leases have renewal options generally for periods ranging from two to ten
years. Future minimum payments, by year and in the aggregate, under the
noncancellable operating leases with initial or remaining terms of one year
or more consisted of the following at December 31, 1995 (in thousands):
<TABLE>
<S> <C>
1996 ....................... $50,524
1997 ....................... 36,932
1998 ....................... 27,207
1999 ....................... 19,483
2000 ....................... 13,971
Subsequent to 2000 ......... 27,789
----------------------------------------------------------
$175,906
==========================================================
</TABLE>
Rental expense for operating leases was $58,146,000 in 1995; $53,913,000
in 1994; $48,935,000 in 1993.
5. STOCK OPTIONS
In accordance with stock option plans approved by the shareholders, options are
granted to key personnel for the purchase of the Company's common stock at
prices not less than the fair market value of the shares on the dates of grant.
Most options may be exercised not earlier than twelve months nor later than ten
years from the date of grant. Further information relating to the options is as
follows:
<TABLE>
<CAPTION> Shares
Option Price -------------------------------
Per Share 1995 1994 1993
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at
January 1 .... $23.21 to $37.06 1,900,077 1,496,301 1,432,850
Granted ...... 34.38 to 39.56 500,500 693,000 235,700
Exercised .... 23.21 to 37.06 (182,098) (272,887) (150,749)
Cancelled .... 25.25 to 35.69 (6,191) (16,337) (21,500)
-------------------------------------------------------------------
Outstanding at
December 31 .. 24.50 to 39.56 2,212,288 1,900,077 1,496,301
===================================================================
Exercisable at
December 31 .. 24.50 to 37.06 1,336,990 770,774 1,014,843
===================================================================
Shares available
for future grants 2,199,884 2,694,193 3,520,856
===================================================================
</TABLE>
On March 31, 1994, the Company entered into restricted stock agreements
with two officers which provide for the award of up to 100,000 and 50,000
shares, respectively, during the period 1994 through 1998 based on the Company
achieving certain increases in earnings per share and stock price levels. The
officers earned 8,000 and 4,000 shares, and 10,000 and 5,000 shares for the
years ended December 31, 1995 and 1994, respectively. The Company recognizes
compensation expense equal to the fair market value of the stock on the award
date over the remaining vesting period which expires on March 31, 2004.
6. INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of the assets and liabilities for financial
reporting purposes and amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities are as follows:
<TABLE>
<CAPTION>
<S> <C>
1995 1994
--------------------------------------------------------------------------
(in thousands)
Employee and retiree benefits $27,775 $17,301
Property, plant and equipment 19,966 17,231
Merchandise inventories ..... 4,039 6,855
Other ....................... 6,910 3,153
--------------------------------------------------------------------------
$58,690 $44,540
==========================================================================
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Federal:
Current ................... $155,895 $148,282 $132,298
Deferred .................. 12,340 6,699 5,990
State ....................... 33,391 31,339 28,673
--------------------------------------------------------------------------
$201,626 $186,320 $166,961
==========================================================================
</TABLE>
The reasons for the difference between total tax expense and the amount
computed by applying the statutory Federal income tax rate to income before
income taxes were as follows:
<TABLE>
<S> <C>
1995 1994 1993
(in thousands)
------------------------------------------------------------
Statutory rate applied to
pre-tax income .............. $178,778 $166,204 $149,040
Plus state income taxes,
net of Federal tax benefit .. 21,704 20,370 18,637
Other ........................ 1,144 (254) (716)
------------------------------------------------------------
$201,626 $186,320 $166,961
============================================================
</TABLE>
7. EMPLOYEE BENEFIT PLANS
The Company's noncontributory defined benefit pension plan covers substantially
all of its employees. The benefits are based on an average of the employees'
compensation during five of their last ten years of credited service. The
Company's funding policy is to contribute amounts deductible for income
24
<PAGE> 8
tax purposes. Contributions are intended to provide not only for benefits
attributed for service to date but also for those expected to be earned in the
future.
The following table sets forth the plan's funded status and amounts
recognized in the Company's financial statements at December 31:
<TABLE>
<CAPTION> 1995 1994
- -----------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit obligation,
including vested benefits of $244,256
in 1995 and $201,029 in 1994..................... $(251,245) $(205,808)
===================================================================================
Projected benefit obligation for service
rendered to date ................................ $(394,974) $(315,368)
Plan assets at fair value, primarily
bonds and equity securities 436,846 346,303
- -----------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation .............................. 41,872 30,935
Unrecognized prior service cost.................... (23,657) (26,520)
Unrecognized net loss from past
experience different from that
assumed and effects of changes
in assumptions .................................. 62,835 51,926
Unrecognized net transition obligation ............ 1,562 1,822
- -----------------------------------------------------------------------------------
Net prepaid pension cost .......................... $82,612 $58,163
===================================================================================
</TABLE>
Net pension cost (income) included the following components at December 31:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Service cost .................. $10,710 $12,247 $9,498
Interest cost ................. 26,032 25,002 23,192
Actual return on plan
assets ..................... (90,127) 3,578 (35,190)
Net amortization and
deferral ................... 51,622 (36,606) 2,353
- -------------------------------------------------------------------------------------------------------
Net periodic pension
cost (income) .............. $(1,763) $4,221 $(147)
=======================================================================================================
</TABLE>
Assumptions used in the accounting for the defined benefit plan as of
December 31 were:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted-average
discount rate ............... 7.40% 8.40% 7.50%
Rate of increase in future
compensation levels ......... 5.00% 5.00% 5.75%
Expected long-term rate
of return on assets ......... 9.50% 9.50% 10.00%
</TABLE>
The changes in the above assumptions resulted in a net $66,200,000
increase in the projected benefit obligation at December 31, 1995 and a
$37,400,000 decrease at December 31, 1994.
At December 31, 1995, the plan held 534,997 shares of common stock of the
Company with a market value of $21,935,000.
The Company has a defined contribution plan which covers substantially all
of its employees. The Company's contributions are determined based on 20% of
the first 6% of the covered employee's salary. Total plan expense was
approximately $3,556,000 in 1995, $3,364,000 in 1994, and $2,712,000 in 1993,
respectively.
8. INDUSTRY DATA
The industry data for the past five years presented in the Exhibit on page 27
is an integral part of these financial
statements.
The Company is primarily engaged in the distribution of merchandise,
principally automotive and industrial replacement parts, and office supplies
throughout the United States. In the automotive industry, the Company
distributes replacement parts (other than body parts) for substantially all
makes and models of domestically manufactured automobiles, most domestically
manufactured trucks and buses, and most vehicles manufactured outside the
United States. In addition, this segment of the business includes the
rebuilding of some automotive parts and the distribution of replacement parts
for certain types of farm equipment, motorcycles, motorboats and small engines.
The Company's industrial segment distributes a wide variety of industrial
bearings, mechanical and fluid power transmission equipment, including
hydraulic and pneumatic products, material handling components, and related
parts and supplies.
The Company's office products segment distributes a wide variety of office
products, computer supplies, office furniture and business electronics.
Intersegment sales are not significant. Operating profit for each industry
segment is calculated as net sales less operating expenses excluding general
corporate expenses, interest expense, equity in income from investees and
minority interests. Identifiable assets by industry are those assets that are
used in the Company's operations in each industry. Corporate assets are
principally cash, cash equivalents and headquarters' facilities and equipment.
25
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
Genuine Parts Company and Subsidiaries
December 31, 1995
RESULTS OF OPERATIONS:
Net sales in 1995 increased for the 46th consecutive year to a record high of
$5.3 billion. This was an increase of 8% over the prior year and compares with
increases of 11% in 1994, and 9% in 1993. Sales for the Automotive Parts Group
increased 4% in 1995 versus 8% in 1994, reflecting increased market share,
aggressive advertising and redesigned stores, offset by the soft automotive
aftermarket. Price increases for the Automotive Parts Group were less than 2%
in 1995 and there were no price increases in 1994. Sales for the Industrial
Parts Group increased 15% in 1995 versus 14% in 1994 reflecting geographic
expansion and strong industrial production and factory utilization. Price
increases for the Industrial Parts Group were slightly less than 5% in 1995 and
approximately 3% in 1994. Sales for the Office Products Group increased 12% in
1995 compared with 14% in 1994 reflecting increased market share, continued
geographic expansion, and improved service level. Price increases for the
Office Products Group were approximately 2% in 1995 and less than 1% in 1994.
Costs of goods sold was 69.5% of net sales in 1995 compared to 68.8% in
1994 and 69.0% in 1993. While selling, administrative and other expenses
increased each year, the percentage to net sales remained approximately the
same. The effective income tax rate was 39.5% in 1995 and 39.2% in 1994 and in
1993. Net income in 1995 increased 7% over 1994 net income. Net income in
1994 increased 12% over 1993.
Effective January 1, 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 effective January 1, 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 change in accounting method.
Effective December 31, 1995, the Company changed the weighted average
discount rate for the Pension Plan from 8.40% to 7.40%, resulting in a net
$66,200,000 increase in the projected benefit obligation.
LIQUIDITY AND SOURCES OF CAPITAL:
The ratio of current assets to current liabilities was 3.7 at the close of 1995
with current assets amounting to 78% of total assets. Trade accounts
receivable and inventories increased 16% and 12% respectively, while working
capital increased 10%. The increase in working capital has been financed
principally from the Company's cash flow generated by operations. At December
31, 1995, $45,000,000 was outstanding under an unsecured revolving line of
credit with a bank. In December 1995 the Company converted $50,000,000 of
amounts outstanding under the line of credit into an unsecured term note which
matures in December 2000 and bears interest at a fixed rate of 5.98%. The
amounts borrowed have principally been used to finance the Company's stock
repurchase program. At the August 16, 1994 meeting, the Board of Directors
approved a stock repurchase program which authorizes the Company to acquire up
to 10 million shares of its Common Stock. To date, approximately 3 million
shares have been repurchased. Existing credit facilities, current financial
resources and anticipated funds from operations are expected to meet
requirements for working capital in 1996. Capital expenditures during 1995
amounted to $91 million compared with $66 million in 1994 and $58 million in
1993. The increases reflect the Company's continuing geographic expansion as
well as the upgrading of existing facilities. It is anticipated that capital
expenditures in 1996 will be approximately the same as 1995.
QUARTERLY RESULTS OF OPERATIONS:
Miscellaneous year-end adjustments resulted in increasing net income during the
fourth quarter of 1995 and 1994 by approximately $20,093,000 ($.16 per share)
and $18,353,000 ($.15 per share), respectively.
The following is a summary of the quarterly results of operations for the
years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended
- ----------------------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
- ----------------------------------------------------------------------------
1995 (in thousands except per share data)
- ----------------
<S> <C> <C> <C> <C>
Net Sales ...... $1,281,230 $1,308,712 $1,362,481 $1,309,481
Gross Profit ... 382,554 390,956 408,495 425,196
Net Income ..... 69,036 74,931 76,952 88,249
Net Income per
Common Share .56 .61 .63 .72
1994
- ----------------
Net Sales ...... $1,162,075 $1,219,801 $1,268,417 $1,208,122
Gross Profit ... 346,457 362,817 382,280 423,162
Net Income ..... 62,891 71,011 72,924 81,722
Net Income per
Common Share. .51 .57 .59 .66
</TABLE>
26
<PAGE> 10
INDUSTRY DATA
Genuine Parts Company and Subsidiaries
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(dollars in thousands) 1995 1994 1993 1992 1991
=====================================================================================================
Net sales
Automotive ............................. $2,804,086 $2,693,961 $2,485,267 $2,318,761 $2,188,698
Industrial ............................. 1,509,566 1,317,495 1,153,371 1,082,428 1,021,019
Office products ........................ 948,252 846,959 745,656 615,562 554,019
- -----------------------------------------------------------------------------------------------------
Total net sales ...................... $5,261,904 $4,858,415 $4,384,294 $4,016,751 $3,763,736
- -----------------------------------------------------------------------------------------------------
Operating profit
Automotive ............................. $307,726 $304,164 $282,791 $262,422 $260,818
Industrial ............................. 132,952 111,822 96,727 87,493 76,922
Office products ........................ 93,888 78,206 65,938 50,967 45,112
- -----------------------------------------------------------------------------------------------------
Total operating profit ............... 534,566 494,192 445,456 400,882 382,852
Interest expense ........................ (3,419) (1,321) (1,584) (1,871) (5,434)
Corporate expense ....................... (25,939) (22,854) (20,405) (17,577) (18,662)
Equity in income ........................ 8,298 7,224 4,452 2,513 4,000
Minority interests ...................... (2,712) (2,373) (2,090) (1,537) (1,638)
- -----------------------------------------------------------------------------------------------------
Income before income taxes ........... $510,794 $474,868 $425,829 $382,410 $361,118
- -----------------------------------------------------------------------------------------------------
Identifiable assets
Automotive ............................. $1,320,910 $1,223,416 $1,152,148 $1,040,191 $926,617
Industrial ............................. 482,067 404,647 370,633 354,547 338,054
Office products ........................ 360,456 308,817 283,479 228,802 201,036
Corporate .............................. 18,631 5,950 6,731 27,333 57,197
Equity investments ..................... 92,068 86,641 57,765 56,430 54,612
- -----------------------------------------------------------------------------------------------------
Total assets ......................... $2,274,132 $2,029,471 $1,870,756 $1,707,303 $1,577,516
- -----------------------------------------------------------------------------------------------------
Depreciation and amortization
Automotive ............................. $30,239 $26,588 $24,056 $21,905 $20,301
Industrial ............................. 5,049 4,640 5,410 5,286 5,732
Office products ........................ 6,814 5,257 4,246 3,752 3,794
Corporate .............................. 1,132 889 708 744 768
- -----------------------------------------------------------------------------------------------------
Total depreciation and amortization .. $43,234 $37,374 $34,420 $31,687 $30,595
- -----------------------------------------------------------------------------------------------------
Capital expenditures
Automotive ............................. $67,643 $45,921 $39,502 $24,272 $22,381
Industrial ............................. 12,132 4,164 2,779 2,553 2,479
Office products ........................ 10,587 13,547 12,378 3,395 3,055
Corporate .............................. 407 2,370 2,854 1,365 358
- -----------------------------------------------------------------------------------------------------
Total capital expenditures ........... $90,769 $66,002 $57,513 $31,585 $28,273
- -----------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Jurisdiction of
Name % Owned Incorporation
---- ------- -------------
<S> <C> <C>
Balkamp, Inc. 89.61 Indiana
Berry Bearing Company 100.0 Illinois
Genuine Parts Holdings, Ltd. 100.0 Province of
Alberta, Canada
GPC Mexico, S.A. de C. V. 100.0 Mexico
GPC Trading Corporation 100.0 Virgin Islands
Motion Industries, Inc. 100.0 Delaware
S. P. Richards Company 100.0 Georgia
Horizon USA Data Supplies, Inc. 100.0 Nevada
Alamogordo Parts & Supply, Inc. 51.0 Georgia
Ann Arbor Auto Supply, Inc. 51.0 Georgia
Antioch Automotive Supply, Inc. 51.0 Georgia
Auto Paint and Supply Company
of Lexington, Inc. 51.0 Georgia
Auto Parts of Big Creek, Inc. 51.0 Georgia
Auto Parts of Daytona, Inc. 51.0 Georgia
Best Auto Parts, Inc. 51.0 Georgia
Brigham Automotive Supply, Inc. 51.0 Georgia
Bulldog Auto Parts, Inc. 51.0 Georgia
Calcutta Auto Supply, Inc. 51.0 Georgia
Central Motor Parts, Inc. 51.0 Georgia
CKT Motive Parts, Inc. 51.0 Georgia
Clermont-Brown Automotive Supply, Inc. 51.0 Georgia
C & O Auto Parts, Inc. 51.0 Georgia
Cross Timbers Auto Supply, Inc. 51.0 Georgia
Fairfield Automobile Supply, Inc. 51.0 Georgia
First Choice Automotive, Inc. 51.0 Georgia
First Settlement Automotive, Inc. 51.0 Georgia
1st Choice Auto Parts, Inc. 51.0 Georgia
</TABLE>
<PAGE> 2
EXHIBIT 21 (cont.)
<TABLE>
<S> <C> <C>
Franklin County Supply, Inc. 51.0 Georgia
Gila Automotive Supply, Inc. 51.0 Georgia
Grand Canyon Auto Supply, Inc. 51.0 Georgia
Hansens Automotive Supply, Inc. 51.0 Georgia
Hastings Auto Supply, Inc. 51.0 Georgia
Huntsville Parts & Equipment, Inc. 51.0 Georgia
J.B.H. Auto Supply Incorporated 51.0 Georgia
L & P Automotive Supply, Inc. 51.0 Georgia
Lake Havasu City Auto Parts, Inc. 51.0 Georgia
Lana Lou Auto Parts, Inc. 51.0 Georgia
Lauderdale County Supply, Inc. 51.0 Georgia
Lodi Automotive Supply, Inc. 51.0 Georgia
Luke's Auto Supply, Inc. 51.0 Georgia
Malden Auto Supply, Inc. 51.0 Georgia
Mid-town Auto & Machine Shop, Inc. 51.0 Georgia
McKinney Parts, Inc. 51.0 Georgia
McMinn County Automotive, Inc. 51.0 Georgia
Middletown Parts Unlimited, Inc. 51.0 Georgia
Nelson Enterprises, Inc. 51.0 Georgia
Oberlin Auto Parts, Inc. 51.0 Georgia
Parts & Company of Selma, Inc. 51.0 Georgia
Petoskey Automotive Center, Incorporated 51.0 Georgia
P.M.A. Associates, Inc. 51.0 Georgia
Port Charlotte Auto Supply, Inc. 51.0 Georgia
Prescott Auto Parts, Inc. 51.0 Georgia
Price Automotive Enterprises, Inc. 100.0 Georgia
Pride City Auto Parts, Inc. 51.0 Georgia
Quality Auto Parts & Paint Supply, Inc. 51.0 Georgia
R.K.R., Inc. 51.0 Georgia
Rasmussen Auto Supply, Inc. 51.0 Georgia
Riverside Auto Parts, Inc. 51.0 Georgia
River Valley Auto Parts, Inc. 51.0 Georgia
Rome Auto Parts, Inc. 51.0 Georgia
</TABLE>
<PAGE> 3
EXHIBIT 21 (cont.)
<TABLE>
<S> <C> <C>
Rutherford Automotive, Inc. 51.0 Georgia
Sanchez Truck & Auto Parts, Inc. 51.0 Georgia
Sevier County Auto Parts, Inc. 100.0 Georgia
Slidell Parts Warehouse, Inc. 51.0 Georgia
Sumner Auto & Truck, Inc. 51.0 Georgia
Sweet Home Auto & Truck Supply, Inc. 51.0 Georgia
TAG Automotive, Inc. 51.0 Georgia
TNT Supply, Inc. 51.0 Georgia
Uptergrove Auto Supply, Inc. 51.0 Georgia
Warren County Automotive, Inc. 51.0 Georgia
Wisota Auto Parts, Inc. 51.0 Georgia
</TABLE>
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Genuine Parts Company of our report dated February 5, 1996, included in the
1995 Annual Report to Shareholders of Genuine Parts Company.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 Number 33-30982) pertaining to the Genuine Parts Company 1988 Stock
Option Plan and in the Registration Statement (Form S-8 Number 33-62512)
pertaining to the Genuine Parts Company 1992 Stock Option and Incentive Plan of
our report dated February 5, 1996, with respect to the consolidated financial
statements of Genuine Parts Company incorporated by reference in the Annual
Report (Form 10-K) for the year ended December 31, 1995.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 19, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 44,254
<SECURITIES> 0
<RECEIVABLES> 565,305
<ALLOWANCES> 2,104
<INVENTORY> 1,127,456
<CURRENT-ASSETS> 1,763,961
<PP&E> 303,239
<DEPRECIATION> 209,797
<TOTAL-ASSETS> 2,274,132
<CURRENT-LIABILITIES> 475,524
<BONDS> 60,607
0
0
<COMMON> 121,913
<OTHER-SE> 1,528,969
<TOTAL-LIABILITY-AND-EQUITY> 2,274,132
<SALES> 5,261,904
<TOTAL-REVENUES> 5,261,904
<CGS> 3,654,703
<TOTAL-COSTS> 3,654,703
<OTHER-EXPENSES> 1,092,988
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,419
<INCOME-PRETAX> 510,794
<INCOME-TAX> 201,626
<INCOME-CONTINUING> 309,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 309,168
<EPS-PRIMARY> 2.52
<EPS-DILUTED> 2.52
</TABLE>
