<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997 Commission File Number 1-5690
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GENUINE PARTS COMPANY
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(Exact name of registrant as specified in its charter)
GEORGIA 58-0254510
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770)953-1700
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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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (the close of the period
covered by this report).
180,089,519
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(Shares of Common Stock)
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<PAGE> 2
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------ June 30, Dec. 31,
1997 1996
---- ----
(Unaudited)
(in thousands)
CURRENT ASSETS
- --------------
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,081 $ 67,373
Trade accounts receivable, less allowance
for doubtful accounts (1997 - $6,453; 1996 - $1,771) . . . . . . . . . . . . . . . . . . . . 691,638 622,836
Inventories - at lower of cost (substantially last-in,
first-out method) or market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,232,656 1,233,820
Prepaid and other current accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,522 13,613
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TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,018,897 1,937,642
Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,022 237,994
Total property, plant and equipment, less allowance
for depreciation (1997 - $251,929; 1996 - $234,791) . . . . . . . . . . . . . . . . . . . . . 358,549 345,995
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$2,616,468 $2,521,631
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- -------------------
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 402,077 $ 401,842
Revolving line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000 47,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,136 15,765
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,214 40,258
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,655 63,514
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TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591,082 568,379
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,276 110,241
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,388 75,388
Minority interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,536 35,569
SHAREHOLDERS' EQUITY
- --------------------
Stated capital:
Preferred Stock, par value - $1 per share
Authorized - 10,000,000 shares - None Issued . . . . . . . . . . . . . . . . . . . . . -0- -0-
Common Stock, par value - $1 per share
Authorized - 450,000,000 shares
Issued - 1997 - 180,089,519; 1996 - 180,048,435 . . . . . . . . . . . . . . . . . . . 180,090 180,048
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,621,096 1,552,006
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TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,801,186 1,732,054
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$2,616,468 $2,521,631
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</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 3
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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1997 1996 1997 1996
-------- -------- ---------- ----------
(000 omitted except per share data)
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 1,510,456 $ 1,444,873 $ 2,968,102 $ 2,844,795
Cost of goods sold . . . . . . . . . . . . . . . . . . 1,065,336 1,020,932 2,093,715 2,011,234
--------- --------- --------- -----------
445,120 423,941 874,387 833,561
Selling, administrative & other expenses . . . . . . . 306,705 290,366 609,410 577,880
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Income before income taxes . . . . . . . . . . . . . . 138,415 133,575 264,977 255,681
Income taxes . . . . . . . . . . . . . . . . . . . . . 54,674 52,762 104,641 100,994
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NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 83,741 $ 80,813 $ 160,336 $ 154,687
========= ========= ========= ===========
Average common shares outstanding - Note B . . . . . . 180,018 182,103 179,980 182,407
========= ========= ========= ===========
Net income per common share - Note B . . . . . . . . . $ .47 $ .44 $ .89 $ .85
========= ========= ========= ===========
Dividends declared per common share - Note B . . . . . $ .24 $ .22 $ .48 $ .45
========= ========= ========= ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-----------------
(000 omitted)
Cash Provided By:
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 160,336 $ 154,687
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,014 23,559
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,967 2,084
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (68,802) (82,201)
Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,164 (12,127)
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 112,011
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 19,001
Other operating assets and liabilities . . . . . . . . . . . . . . . . . . . . . (24,768) (3,720)
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NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . 100,517 213,294
INVESTING ACTIVITIES:
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . (47,127) (41,473)
Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,531 (1,551)
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NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,596) (43,024)
FINANCING ACTIVITIES:
Proceeds from revolving line of credit, net . . . . . . . . . . . . . . . . . . . . . . 38,000 (40,000)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83,450) (79,189)
Purchase of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,693) (40,266)
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,930 5,453
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NET CASH USED IN FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,213) (154,002)
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NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . 7,708 16,268
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . 67,373 44,254
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CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . $ 75,081 $ 60,522
========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of
management, all adjustments necessary to a fair statement of the operations of
the interim period have been made. These adjustments are of a normal recurring
nature. The results of operations for the six months ended June 30, 1997, are
not necessarily indicative of results for the entire year.
Note B - Stock Split
The retroactive effect of a March 1997 three-for-two stock split effected in
the form of a 50% stock dividend has been accounted for in the reported figures
for the preceding year.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Genuine Parts Company (the "Company") reported record sales and earnings in the
second quarter of 1997. Sales for the quarter were $1.5 billion, up 5% over
the same period in 1996. Net income in the quarter advanced 4% to $83.7
million. On a per-share basis, net income in the quarter was $.47 versus $.44
in the same quarter of the prior year, an increase of 7%.
For the six months ended, June 30, 1997 sales totaled $2.97 billion, up 4% over
the first half of 1996, while net income was $160.3 million, an increase of 4%.
Earnings per share were $.89 for the first six months of 1997 and $.85 for the
same period in 1996, an increase of 5%.
Sales for the Automotive Parts Group advanced 2% for the quarter and for the
first six months, reflecting a very competitive business climate. Sales for
the Industrial Parts Group increased 10% for the quarter and 9% for the six
months ended June 30, 1997, reflecting outstanding service, sound marketing
programs and strategic customer alliances. The Office Products Group was up 4%
for the quarter and 3% for the six month period, reflecting a rapidly changing
and competitive environment. Cost of goods sold increased slightly as a
percentage of net sales over the same periods the prior year. Selling,
administrative and other expenses increased 6% for the quarter and 5% for the
six months. The percentage of selling, administrative and other expenses to
net sales for the quarter and for the six month period increased slightly, due
mostly to increased salaries, employee benefits, and store upgrade expenses.
The ratio of current assets to current liabilities remains very good at 3.4 to
1 and the Company's cash position is good.
PART II - OTHER INFORMATION
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1997 Annual Meeting of Shareholders of the Company was held on April 21,
1997, pursuant to notice given to shareholders of record on February 11, 1997,
at which date there were 119,879,085 shares of Common Stock outstanding. At
the Annual Meeting, the shareholders elected three Class II directors with
terms to expire at the 2000 Annual Meeting. As to the following named
individuals, the holders of 103,827,904 shares of the Company's Common Stock
voted in favor of their election, and the holders of 1,079,598 shares withheld
authority for their election.
Class II
William A. Parker, Jr.
John J. Scalley
James B. Williams
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<PAGE> 6
The following individual's term of office as a director continued after the
Annual Meeting:
<TABLE>
<S> <C>
Class I Class III
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Bradley Currey, Jr. Jean Douville
Robert P. Forrestal J. Hicks Lanier
Thomas C. Gallagher Larry L. Prince
Lawrence G. Steiner Alana S. Shepherd
</TABLE>
The shareholders also ratified the selection of Ernst & Young LLP as
independent auditors of the Company for 1997. The holders of 104,546,221
shares of Common Stock voted in favor of the ratification, holders of 65,367
shares voted against, holders of 295,914 shares abstained, and there were no
broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit 3.1 Restated Articles of Incorporation of the Company
(incorporated herein by reference from the Company's
Annual Report on Form 10-K, dated March 3, 1995).
Exhibit 3.2 Bylaws of the Company, as amended (incorporated herein by
reference from the Company's Annual Report on Form 10-K,
dated March 5, 1993).
Exhibit 27 Financial Data Schedule (for SEC use only).
(b) No reports on Form 8-K were filed by the registrant during the quarter
ended June 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Genuine Parts Company
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(Registrant)
Date July 30, 1997 /s/ Jerry W. Nix
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Jerry W. Nix
Senior Vice President - Finance
/s/ George W. Kalafut
---------------------------------------
George W. Kalafut
Executive Vice President - Finance and
Administration (Principal Financial and
Accounting Officer)
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GENUINE PARTS COMPANY FOR THE QUARTER ENDED JUNE 30,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 75,081
<SECURITIES> 0
<RECEIVABLES> 691,638
<ALLOWANCES> 6,453
<INVENTORY> 1,232,656
<CURRENT-ASSETS> 2,018,897
<PP&E> 358,549
<DEPRECIATION> 251,929
<TOTAL-ASSETS> 2,616,468
<CURRENT-LIABILITIES> 591,082
<BONDS> 110,276
0
0
<COMMON> 180,090
<OTHER-SE> 1,621,096
<TOTAL-LIABILITY-AND-EQUITY> 2,616,468
<SALES> 2,968,102
<TOTAL-REVENUES> 2,968,102
<CGS> 2,093,715
<TOTAL-COSTS> 609,410
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 264,977
<INCOME-TAX> 104,641
<INCOME-CONTINUING> 160,336
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 160,336
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
</TABLE>
