<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
For the Quarterly Period Ended March 31, 1999 Commission File Number 1-5690
-------------- ------
</TABLE>
GENUINE PARTS COMPANY
---------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-0254510
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 953-1700
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (the close of the period
covered by this report).
179,062,976
-----------
(Shares of Common Stock)
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<PAGE> 2
FORM 10-Q
PART 1 - Financial Information
Item 1 - Financial Statements
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS Mar. 31, Dec. 31,
1999 1998
---- ----
(Unaudited)
(in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ...................................................... $ 148,797 $ 84,972
Trade accounts receivable, less allowance
for doubtful accounts (1999 - $4,404; 1998 - $5,019) ........................... 990,153 907,561
Inventories - at lower of cost (substantially last-in,
first-out method) or market .................................................... 1,680,375 1,660,233
Prepaid and other current accounts ............................................. 39,385 30,591
---------- ----------
TOTAL CURRENT ASSETS .................................................. 2,858,710 2,683,357
Goodwill, less accumulated amortization (1999 - $15,271 ; 1998 - $12,578) ...... 398,748 344,733
Other assets ................................................................... 193,631 168,282
Total property, plant and equipment, less allowance
for depreciation (1999 - $369,292; 1998 - $355,574) ............................ 416,814 404,008
---------- ----------
$3,867,903 $3,600,380
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................................................... $ 541,082 $ 509,532
Current portion long-term debt and other borrowings ............................ 259,027 156,316
Income taxes ................................................................... 47,491 21,837
Dividends payable .............................................................. 46,419 44,776
Other current liabilities ...................................................... 80,450 85,948
---------- ----------
TOTAL CURRENT LIABILITIES ............................................. 974,469 818,409
Long-term debt ................................................................. 672,070 588,640
Deferred income taxes .......................................................... 94,956 94,956
Minority interests in subsidiaries ............................................. 47,577 45,043
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 - 1999 - 179,062,976; 1998 - 179,505,151 ......................... 179,063 179,505
Additional paid-in capital ..................................................... 5,501 19,989
Accumulated other comprehensive income ......................................... (2,328) (3,110)
Retained earnings .............................................................. 1,896,595 1,856,948
---------- ----------
TOTAL SHAREHOLDERS' EQUITY ............................................ 2,078,831 2,053,332
---------- ----------
$3,867,903 $3,600,380
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 3
FORM 10-Q
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
(000 omitted except per share data)
<S> <C> <C>
Net sales ...................................................................... $1,901,357 $1,533,138
Cost of goods sold ............................................................. 1,350,467 1,086,402
---------- ----------
550,890 446,736
Selling, administrative & other expenses ....................................... 408,396 314,508
---------- ----------
Income before income taxes ..................................................... 142,494 132,228
Income taxes ................................................................... 56,428 52,230
---------- ----------
NET INCOME ..................................................................... $ 86,066 $ 79,998
========== ==========
Basic net income per common share .............................................. $ .48 $ .45
========== ==========
Diluted net income per common share ........................................... $ .48 $ .45
========== ==========
Dividends declared per common share ............................................ $ .26 $ .25
========== ==========
Average common shares outstanding .............................................. 179,784 178,822
Dilutive effect of stock options and non-vested restricted stock awards ........ 508 733
---------- ----------
Average common shares outstanding - assuming dilution .......................... 180,292 179,555
========== ==========
</TABLE>
3
<PAGE> 4
FORM 10-Q
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended Mar. 31,
--------------
(000 omitted)
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................................................ $ 86,066 $ 79,998
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ....................................................... 22,740 16,485
Other ............................................................................... 2,534 974
Changes in operating assets and liabilities ......................................... (40,711) (21,971)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................................................ 70,629 75,486
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ............................................. (20,376) (20,035)
Acquisitions of businesses and other investing activities ............................. (85,669) 10,862
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES .................................................... (106,045) (9,173)
FINANCING ACTIVITIES:
Proceeds from lines of credit and other borrowings, net of payments ................... 186,141 5,000
Dividends paid ........................................................................ (44,776) (43,436)
Purchase of stock ..................................................................... (46,693) (8,789)
Other financing activities ............................................................ 4,569 6,899
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ...................................... 99,241 (40,326)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................................ 63,825 25,987
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......................................... 84,972 72,823
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................................... $ 148,797 $ 98,810
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
FORM 10-Q
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 three months ended March 31, 1999 are
not necessarily indicative of results for the entire year.
Note B - Segment Information
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED MARCH 31
1999 1998
---------------------------------
(In thousands)
<S> <C> <C>
Net sales:
Automotive $ 941,350 $ 743,599
Industrial 522,503 499,685
Office products 310,003 289,854
Electrical/electronic materials 127,501 --
--------------------------------
Total net sales $1,901,357 $1,533,138
================================
Operating profit:
Automotive $ 82,976 $ 69,547
Industrial 43,795 42,595
Office products 35,840 32,817
Electrical/electronic materials 5,640 --
--------------------------------
Total operating profit 168,071 144,959
Interest expense (12,443) (3,918)
Other, net (13,134) (8,813)
--------------------------------
Income before income taxes $ 142,494 $ 132,228
================================
</TABLE>
Note C - Comprehensive Income
Total comprehensive income was $86,848,000 and $79,220,000 for the three month
periods ended March 31, 1999 and 1998, respectively.
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
first quarter of 1999. Sales for the quarter were $1.9 billion, up 24% over the
same period in 1998. Net income in the quarter advanced 8% to $86.1 million. On
a per-share diluted basis, net income in the quarter was 48 cents versus
45 cents in the same quarter of the prior year, an increase of 7%.
Sales would have increased 6% in the first quarter of 1999, excluding the impact
of acquisitions made after March 31, 1998. Sales for the Automotive Parts Group
increased 27% for the quarter and increased 7%, excluding the impact of
acquisitions in 1999. The sales increase is attributed to increased market
share, improved market conditions and the impact of acquisitions. Sales for the
Industrial Parts Group increased 4.6% for the quarter reflecting continued slow
growth in various industrial markets, such as steel, food and paper. The Office
Products Group was up 7% for the quarter reflecting slight improvement in market
conditions in the office products industry. EIS, the Electrical/Electronic
Materials Group acquired on July 1,1998, had sales of $127 million in the first
quarter of 1999. Cost of goods sold increased slightly as a percentage of net
sales compared to the same quarter of the prior year. Selling, administrative
and other expenses increased 30% for the quarter (7% increase excluding
acquisitions) and the percentage of selling, administrative and other expenses
to net sales increased slightly, reflecting increased salaries, acquisition
costs and costs of upgrading/improving facilities.
The ratio of current assets to current liabilities is 2.9 to 1 and the Company's
cash position is good.
5
<PAGE> 6
FORM 10-Q
Impact of Year 2000
The Year 2000 problem is the result of computer programs written using two
digits (rather than four) to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000, which could result in miscalculations
or system failures.
The Company is continuing its assessments of the impact of the Year 2000 across
its business and operations, including its customer and vendor base. The
Company has substantially completed its identification of information
technology systems that are not Year 2000 compliant and is in the process of
implementing a comprehensive initiative to make its information technology
systems ("IT systems") and its non-information technology systems ("non-IT
systems"), including embedded electronic circuits in equipment, building
security, product handling and environmental controls, Year 2000 compliant. The
initiative covers the following three phases: (1) identification of all IT and
non-IT systems and an assessment of repair requirements, (2) repair of the
identified IT and non-IT systems, and (3) testing of the IT and non-IT systems
repaired to determine correct manipulation of dates and date-related data. As
of December 31, 1998, the Company has substantially completed phase (1) of its
initiative and has begun phases (2) and (3). The Company anticipates that it
will substantially complete phase (2) by the end of the second quarter of
fiscal 1999 at which time it will complete its final testing phase. The Company
expects the final testing phase to be complete by third quarter of 1999.
To date, the Company has not identified any IT or non-IT system that presents a
material risk of not being Year 2000 ready or for which a suitable alternative
cannot be implemented. However, as the initiative moves further into the
testing phase, it is possible that the Company may identify potential risks of
Year 2000 disruption. It is also possible that such a disruption could have a
material adverse effect on the financial condition and results of operations.
In addition, if any third parties who provide goods or services or that are
customers that are critical to the Company's business activities fail to
appropriately address their Year 2000 issues, there could be a material adverse
effect on the Company's financial condition and results of operations. The
Company is still in the process of modifying or replacing certain
time-sensitive software programs and other date sensitive devices to avoid a
potential inability to process transactions or engage in other normal business
activities.
The Company has initiated formal communications with substantially all of its
significant business partners to evaluate their Year 2000 compliance plans and
status of readiness, including upgrading of embedded technology devices in
products the Company purchases. These communications include determining the
extent to which the Company is vulnerable to those third parties' failure to
remedy their own Year 2000 conversion issues. However, there can be no guarantee
that the systems of other companies on which the Company's system rely will be
timely converted or that a failure to convert by another company or a conversion
that is incompatible with the Company's systems would not have a material
adverse effect on the Company.
The Company is in the process of identifying and prioritizing any embedded
technology devices which may be deemed to be mission critical or that tend to
have a significant impact on normal operations. The Company has developed a
separate plan to upgrade these higher priority embedded technology devices.
Management currently expects these activities to be substantially complete by
mid 1999.
The Company could potentially experience disruptions to some aspects of its
various activities and operations as a result of non-compliant systems utilized
by the Company or unrelated third parties. Contingency plans are, therefore,
under development to mitigate the extent of any such potential disruption to
business operations.
The Company is utilizing both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. The total estimated
cost of the Year 2000 project is estimated between $7 million and $10 million
and is being funded through operating cash flows. These costs are not expected
to be material to the Company's consolidated results of operations. Of the total
project cost, approximately $3 million is attributable to the purchase of new
software or equipment, which will be capitalized. The remaining $4 million to $7
million is expensed as incurred. To date, the Company has expensed approximately
$4.5 million related to the assessment of and preliminary efforts in connection
with its Year 2000 project. The costs attributable to the Year 2000 exclude
costs incurred by the Company for replacement of hardware and implementation of
new systems which were undertaken for operating reasons. The implementation of
new systems has been in progress for the past three to five years.
The costs of the Year 2000 project and the date which the Company plans to
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events including
the continued availability of certain resources, third party modification plans
and other factors. There can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
6
<PAGE> 7
FORM 10-Q
Forward-Looking Statements:
The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe
harbor for forward-looking statements made by or on behalf of the Company. The
Company and its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in our Company's
filings with the Securities and Exchange Commission and in our reports to
shareholders. All statements which address operating performance, events or
developments that we expect or anticipate will occur in the future, including
statements relating to revenue, market share and net income growth, or
statements expressing general optimism about future operating results, are
forward-looking statements within the meaning of the Act. The forward-looking
statements are and will be based on management's then current views and
assumptions regarding future events and operating performance. There are many
factors which could cause actual results to differ materially from those
anticipated by statements made herein. Such factors include, but are not
limited to, changes in general economic conditions, the growth rate of the
market for the Company's products and services, the ability to maintain
favorable supplier arrangements and relationships, competitive product and
pricing pressures, the effectiveness of the Company's promotional, marketing
and advertising programs, the Company's ability to discover and correct
potential Year 2000 issues and the ability of third parties to appropriately
address their Year 2000 issues, changes in laws and regulations, including
changes in accounting and taxation guidance, the uncertainties of litigation,
as well as other risks and uncertainties discussed from time to time in the
Company's filings with the Securities and Exchange Commission.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
During the first quarter of 1999, the Company issued an aggregate of
approximately 942,809 shares of Company stock in connection with the acquisition
of three companies. This number of shares is subject to change based upon
closing amount settlements, indemnification obligations and the satisfaction of
earnout thresholds. All such shares were issued in transactions exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended,
and the regulations thereunder. Such acquisitions were: Johnson Industries, Inc.
which closed on January 5, 1999, Morse Auto Supply which closed on January 6,
1999 and H.A. Holden, Inc. which closed on January 15, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
<TABLE>
<S> <C>
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 10.31 *Restricted Stock Agreement dated February 25, 1999
between the Company and Larry L. Prince.
Exhibit 10.32 *Restricted Stock Agreement dated February 25, 1999
between the Company and Thomas C. Gallagher.
Exhibit 27 Financial Data Schedule (for SEC use only).
</TABLE>
*Indicates executive compensation plans and arrangements.
(b) No reports on Form 8-K were filed by the registrant during the quarter
ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Genuine Parts Company
----------------------------------------
(Registrant)
Date May 3, 1999 /s/ Jerry Nix
----------- ----------------------------------------
Jerry W. Nix
Senior Vice President - Finance
/s/ George W. Kalafut
----------------------------------------
George W. Kalafut
Executive Vice President - Finance and
Administration (Principal Financial and
Accounting Officer)
7
<PAGE> 1
EXHIBIT 10.31
GENUINE PARTS COMPANY
1999 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
Grantee: LARRY PRINCE
Number of Shares: 150,000
Date: February 25, 1999
1. Agreement to Award Restricted Stock. Subject to the
satisfaction of the conditions specified in Section 2 hereof, Genuine Parts
Company (the "Company") hereby agrees to award to Larry L. Prince ("Grantee"),
under its 1999 Long-Term Incentive Plan ("Plan"), up to a maximum of One
Hundred Fifty Thousand (150,000) shares of Stock, such shares to be awarded to
Grantee as Restricted Stock pursuant to the terms of the Plan and this
Restricted Stock Agreement (this "Agreement"). The Plan is incorporated herein
by reference and made a part of this Agreement, and any term used in this
Agreement and not defined herein shall have the meaning set forth in the Plan.
Grantee shall have no rights as a shareholder of Company with respect to any of
the shares of Stock subject hereto prior to the awarding of such shares
pursuant to Section 2 below.
2. Conditions for Award of Restricted Stock.
(a) A maximum of 75,000 shares of Restricted Stock will
be awarded to Grantee if the Company's Stock achieves specified target prices
(the "Stock Price Targets"). The Company will be deemed to have achieved a
Stock Price Target, and shares of Restricted Stock will be awarded to the
Grantee, on the date on which the average Fair Market Value (as defined in the
Plan) of the Stock over a period of twenty (20) consecutive trading days (days
on which shares of Stock are actually traded on the New York Stock Exchange)
first equals or exceeds the Stock Price Target (the "Stock Price Award Dates").
The Grantee will be awarded the following number of shares of
Restricted Stock on the Stock Price Award Dates upon the Company's achievement
of the following Stock Price Targets:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Stock Price Target Shares of Restricted Stock Awarded
------------------ ----------------------------------
--------------------------------------------------------------------
<S> <C>
$34.36 15,000
--------------------------------------------------------------------
$39.47 15,000
--------------------------------------------------------------------
$45.34 15,000
--------------------------------------------------------------------
$52.08 15,000
--------------------------------------------------------------------
$59.81 15,000
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</TABLE>
<PAGE> 2
(b) A maximum of 75,000 shares of Restricted Stock will
be awarded to Grantee if the Company achieves certain earnings per share
targets (the "EPS Targets"). The Company's earnings per share ("EPS") shall be
deemed to be the Company's "net income per common share" as reported in the
Company's annual audited consolidated financial statements. The determination
of whether the Company has achieved the EPS Targets, and the award of shares of
Restricted Stock to the Grantee based thereon, shall be made immediately upon
the conclusion of the annual audit closing conference with the Company's
independent auditors if such auditors have provided to Company management at
that conference an unqualified opinion on the Company's fiscal year end audited
consolidated financial statements (the "EPS Award Dates").
The Grantee will be awarded the following number of shares of
Restricted Stock on the EPS Award Dates upon the Company's achievement during
fiscal years 1999, 2000, 2001, 2002 and 2003 of the following EPS Targets:
For fiscal year 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Number of Shares of
Earnings Per Share Restricted Stock Awarded
- ------------------ ------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to $2.18 (1998 EPS plus 10%) 15,000
- ---------------------------------------------------------------------------------------------------
Greater than or equal to $2.16 (1998 EPS plus 9%) but less 13,500
than $2.18
- ---------------------------------------------------------------------------------------------------
Greater than or equal to $2.14 (1998 EPS plus 8%) but less 12,000
than $2.16
- ---------------------------------------------------------------------------------------------------
Less than $2.14 0
- ---------------------------------------------------------------------------------------------------
</TABLE>
For each of fiscal year 2000, 2001, 2002 and 2003:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Number of Shares of
Earnings Per Share Restricted Stock Awarded
- ------------------ ------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to the prior fiscal year EPS plus 10% 15,000
- ---------------------------------------------------------------------------------------------------
Greater than or equal to the prior fiscal year EPS plus 9% 13,500
but less than the prior fiscal year EPS plus 10%
- ---------------------------------------------------------------------------------------------------
Greater than or equal to the prior fiscal year EPS plus 8% 12,000
but less than the prior fiscal year EPS plus 9%
- ---------------------------------------------------------------------------------------------------
Less than the prior fiscal year EPS plus 8% 0
- ---------------------------------------------------------------------------------------------------
</TABLE>
(c) For the purposes of determining the Company's EPS
and the EPS Targets hereunder, actual figures shall be rounded up or down, as
appropriate, to the second decimal place (with $0.005 to be rounded up to
$0.01).
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<PAGE> 3
(d) All Stock Price Targets and EPS Targets, and the
number of shares of Restricted Stock to be awarded hereunder, shall be adjusted
to reflect any adjustment of shares of Stock as described in Section 14.1 of
the Plan.
3. Restricted Period. Subject to the provisions of Sections 9
and 10 of this Agreement, the Restricted Period with respect to the shares of
Restricted Stock awarded to the Grantee under Section 2 shall commence on the
respective Award Dates for such shares and shall terminate at 5:00 p.m.,
Eastern Standard Time, on February 25, 2009, the tenth anniversary of the date
of this Agreement.
4. Issuance of Shares. The Company shall issue a certificate for
an appropriate number of shares of Stock awarded to the Grantee as Restricted
Stock pursuant to Section 2 of this Agreement on the relevant Award Date. The
Company shall issue a separate certificate for each award of shares of
Restricted Stock under Section 2. Each certificate issued for shares awarded to
the Grantee under this Agreement shall be registered in the name of the Grantee
and shall be deposited with the Company or its designee in an escrow account,
together with stock powers or other instruments of transfer to be provided and
appropriately endorsed in blank by the Grantee as of the relevant Award Date.
Each such certificate shall bear a legend in substantially the following form:
This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture and restrictions against
transfer) contained in the Genuine Parts Company
1999 Long-Term Incentive Plan and a Restricted Stock
Agreement between the registered owner of the shares
represented hereby and Genuine Parts Company.
Release from such terms and conditions shall be made
only in accordance with the provisions of such Plan
and Agreement, copies of which are on file in the
office of the Secretary of Genuine Parts Company.
5. Release of Shares. Subject to the provisions of Sections 9
and 10 of this Agreement, the Company, provided that the Grantee remains in the
employment of the Company or a Subsidiary during the entirety of the applicable
Restricted Period, shall release from escrow and deliver to the Grantee or the
legal representative of the Grantee, as appropriate, free of the legend
described in Section 4 above, the certificate evidencing shares of Restricted
Stock awarded under Section 2 as promptly as practicable following the date the
Restricted Period expires with respect to such Restricted Stock.
6. Restrictions on Transfer of Shares. Restricted Shares awarded
under the Plan, and the right to vote such shares and to receive dividends
thereon, may not, except as otherwise provided in the Plan, be sold, assigned,
transferred, exchanged, pledged or otherwise encumbered during the Restricted
Period applicable to such shares, and no such sale, assignment, transfer,
exchange, pledge or encumbrance, whether made or created by voluntary act of
the Grantee or of any agent of such Grantee or by operation of law, shall be
recognized by, or be binding upon or shall in any manner affect the rights
- 3 -
<PAGE> 4
of, the Company or any agent or any custodian holding certificates for such
shares during the applicable Restricted Period.
7. Rights of Grantee During Restricted Periods. Except as
otherwise provided in the Plan, the Grantee shall, during the applicable
Restricted Periods, have all of the other rights of a common shareholder with
respect to Restricted Shares awarded to the Grantee under Section 2 including,
without limitation, the right to receive cash dividends, if any, as may be
declared on such shares from time to time, and the right to vote (in person or
by proxy) such shares at any meeting of shareholders of the Company. Any shares
of Stock issued to Grantee as a dividend with respect to Restricted Stock
awarded hereunder shall have the same status and bear the same legend as the
Restricted Stock and shall be held in escrow, if the relevant Restricted Stock
is held in escrow, unless otherwise determined by the Committee.
8. Termination of Employment. Subject to Section 10 of this
Agreement, upon the termination of Grantee's employment with the Company
("Termination"), other than in connection with a Change in Control or Grantee's
Retirement, Disability or death (as such terms are defined in Section 9(b)
hereof), (i) all of Grantee's rights to future awards of Restricted Stock upon
achievement of Stock Price Targets or EPS Targets on Award Dates subsequent to
the date of Termination shall terminate without the payment of any
consideration by the Company, (ii) all shares of Restricted Stock theretofore
awarded to the Grantee for which the Restricted Period has not terminated prior
to such Termination shall be forfeited by the Grantee to the Company without
the payment of any consideration by the Company, and (iii) all unissued shares
of Stock reserved for issuance to Grantee pursuant to Section 14 hereof shall
be released from such reservation. In such event, neither the Grantee nor any
successors, heirs, assigns, or personal representatives of the Grantee shall
thereafter have any further rights or interest in such shares, and the
Grantee's name shall thereupon be deleted from the list of the Company's
shareholders with respect to such shares.
9. Change of Control, Retirement, Disability or Death.
(a) Upon a Change in Control, the Retirement or
Disability of the Grantee, or the Grantee's death while in the employment of
the Company or a Subsidiary, (i) all of Grantee's rights to future awards of
Restricted Stock upon achievement of Stock Price Targets or EPS Targets on
Award Dates subsequent to the date of Termination shall terminate without the
payment of any consideration by the Company, and (ii) the Restricted period to
which any shares of Restricted Stock awarded to the Grantee under Section 2 are
subject shall expire as of the date of the Change in Control or Grantee's
Retirement, Disability or death. In such event, the Company shall release from
escrow and deliver to the Grantee or the legal representative of the Grantee,
as appropriate, the certificate(s) representing the relevant Restricted Stock
free of restrictive legend in accordance with Section 5 hereof.
(b) For the purposes of this Agreement, the following
terms shall have the following meanings: (i) a Change in Control shall have the
meaning specified in
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<PAGE> 5
Section 3.1(d) of the Plan; (ii) "Retirement" shall mean normal retirement as
defined in the Company's Pension Plan or in any modification thereof or
successor thereto; and (iii) "Disability" shall have the meaning specified in
Section 3.1(i) of the Plan.
10. Committee Acceleration Power. Notwithstanding any other
provisions of the Plan or this Agreement, the Committee shall be authorized in
its discretion, based upon its review and evaluation of the performance of the
Company and its Subsidiaries, to accelerate the release to the Grantee of
Restricted Stock subject to this Agreement upon such terms and conditions as
the Committee may deem advisable.
11. Federal Income Tax Matters. The Grantee, upon award of the
shares of Restricted Stock under Section 2, shall be authorized to make an
election to be taxed upon such award under Section 83(b) of the Code. To effect
such election, the Grantee may file an appropriate election with the Internal
Revenue Service within thirty (30) days after such awards of the Restricted
Stock hereunder and otherwise in accordance with applicable Treasury
Regulations.
The Grantee recognizes that, pursuant to Section 16.3 of the
Plan, the Company may require the Grantee to remit to the Company an amount
sufficient to satisfy any federal, state or local withholding tax liability in
connection with the agreement to award, award of, or release from escrow of the
shares of Restricted Stock granted hereunder.
12. Continued Employment Not Presumed. Neither (i) the Plan, (ii)
the agreement to award, award or vesting of Restricted Stock under this
Agreement nor (iii) this Agreement, shall give Grantee a right to continued
employment by the Company or its Subsidiaries or affect the right of the
Company and its Subsidiaries to terminate the employment of Grantee with or
without cause.
13. Grantee's Covenant. The Grantee hereby agrees to use his best
efforts to provide services to the Company in a workmanlike manner and to
promote the Company's interests.
14. Reservation of Shares. As of the date of this Agreement, the
Company shall reserve for issuance 150,000 shares of its Stock to be issued
pursuant to the terms of this Agreement. If the Grantee's rights with respect
to the unissued shares of Restricted Stock subject to this Agreement terminate
pursuant to Section 8 or Section 9 hereof, then such unissued shares of Stock
shall no longer be reserved for issuance pursuant to this Agreement.
15. Plan Controls. In the event of any actual or alleged conflict
between the provisions of the Plan and the provisions of this Agreement, the
provisions of the Plan shall be controlling and determinative.
16. Successors. This Agreement shall be binding upon any
successor of the Company, in accordance with the terms of this Agreement and
the Plan.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, Genuine Parts Company, acting by and through its
duly authorized officers, has caused this Restricted Stock Agreement to be
executed, and the Grantee has executed this Restricted Stock Agreement, all as
of the day and year first above written.
GENUINE PARTS COMPANY
By: /s/ George W. Kalafut
-----------------------------------
Name: George W. Kalafut
----------------------------
Title: Exec Vice Pres Finance
----------------------------
ATTEST:
/s/ Carol Yancey
- -----------------------------------
Name: /s/ Carol Yancey
----------------------------
Title: Corp. Secretary
----------------------------
GRANTEE
/s/ Larry L. Prince
--------------------------------------
LARRY PRINCE
- 6 -
<PAGE> 1
EXHIBIT 10.32
GENUINE PARTS COMPANY
1999 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
Grantee: TOM GALLAGHER
Number of Shares: 75,000
Date: February 25, 1999
1. Agreement to Award Restricted Stock. Subject to the
satisfaction of the conditions specified in Section 2 hereof, Genuine Parts
Company (the "Company") hereby agrees to award to Thomas C. Gallagher
("Grantee"), under its 1999 Long-Term Incentive Plan ("Plan"), up to a maximum
of Seventy-Five Thousand (75,000) shares of Stock, such shares to be awarded to
Grantee as Restricted Stock pursuant to the terms of the Plan and this
Restricted Stock Agreement (this "Agreement"). The Plan is incorporated herein
by reference and made a part of this Agreement, and any term used in this
Agreement and not defined herein shall have the meaning set forth in the Plan.
Grantee shall have no rights as a shareholder of Company with respect to any of
the shares of Stock subject hereto prior to the awarding of such shares
pursuant to Section 2 below.
2. Conditions for Award of Restricted Stock.
(a) A maximum of 37,500 shares of Restricted Stock will
be awarded to Grantee if the Company's Stock achieves specified target prices
(the "Stock Price Targets"). The Company will be deemed to have achieved a
Stock Price Target, and shares of Restricted Stock will be awarded to the
Grantee, on the date on which the average Fair Market Value (as defined in the
Plan) of the Stock over a period of twenty (20) consecutive trading days (days
on which shares of Stock are actually traded on the New York Stock Exchange)
first equals or exceeds the Stock Price Target (the "Stock Price Award Dates").
The Grantee will be awarded the following number of shares of
Restricted Stock on the Stock Price Award Dates upon the Company's achievement
of the following Stock Price Targets:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Stock Price Target Shares of Restricted Stock Awarded
------------------ ----------------------------------
-------------------------------------------------------------------
<S> <C>
$34.36 7,500
-------------------------------------------------------------------
$39.47 7,500
-------------------------------------------------------------------
$45.34 7,500
-------------------------------------------------------------------
$52.08 7,500
-------------------------------------------------------------------
$59.81 7,500
-------------------------------------------------------------------
</TABLE>
<PAGE> 2
(b) A maximum of 37,500 shares of Restricted Stock will
be awarded to Grantee if the Company achieves certain earnings per share
targets (the "EPS Targets"). The Company's earnings per share ("EPS") shall be
deemed to be the Company's "net income per common share" as reported in the
Company's annual audited consolidated financial statements. The determination
of whether the Company has achieved the EPS Targets, and the award of shares of
Restricted Stock to the Grantee based thereon, shall be made immediately upon
the conclusion of the annual audit closing conference with the Company's
independent auditors if such auditors have provided to Company management at
that conference an unqualified opinion on the Company's fiscal year end audited
consolidated financial statements (the "EPS Award Dates").
The Grantee will be awarded the following number of shares of
Restricted Stock on the EPS Award Dates upon the Company's achievement during
fiscal years 1999, 2000, 2001, 2002 and 2003 of the following EPS Targets:
For fiscal year 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Number of Shares of Restricted
Earnings Per Share Stock Awarded
- ------------------ ------------------------------
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to $2.18 (1998 EPS plus 10%) 7,500
- ---------------------------------------------------------------------------------------------------------
Greater than or equal to $2.16 (1998 EPS plus 9%) but less 6,750
than $2.18
- ---------------------------------------------------------------------------------------------------------
Greater than or equal to $2.14 (1998 EPS plus 8%) but less 6,000
than $2.16
- ---------------------------------------------------------------------------------------------------------
Less than $2.14 0
- ---------------------------------------------------------------------------------------------------------
</TABLE>
For each of fiscal year 2000, 2001, 2002 and 2003:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Number of Shares of
Earnings Per Share Restricted Stock Awarded
- ------------------ ------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to the prior fiscal year EPS plus 10% 7,500
- ---------------------------------------------------------------------------------------------------
Greater than or equal to the prior fiscal year EPS plus 9% 6,750
but less than the prior fiscal year EPS plus 10%
- ---------------------------------------------------------------------------------------------------
Greater than or equal to the prior fiscal year EPS plus 8% 6,000
but less than the prior fiscal year EPS plus 9%
- ---------------------------------------------------------------------------------------------------
Less than the prior fiscal year EPS plus 8% 0
- ---------------------------------------------------------------------------------------------------
</TABLE>
(c) For the purposes of determining the Company's EPS
and the EPS Targets hereunder, actual figures shall be rounded up or down, as
appropriate, to the second decimal place (with $0.005 to be rounded up to
$0.01).
- 2 -
<PAGE> 3
(d) All Stock Price Targets and EPS Targets, and the
number of shares of Restricted Stock to be awarded hereunder, shall be adjusted
to reflect any adjustment of shares of Stock as described in Section 14.1 of
the Plan.
3. Restricted Period. Subject to the provisions of Sections 9
and 10 of this Agreement, the Restricted Period with respect to the shares of
Restricted Stock awarded to the Grantee under Section 2 shall commence on the
respective Award Dates for such shares and shall terminate at 5:00 p.m.,
Eastern Standard Time, on February 25, 2009, the tenth anniversary of the date
of this Agreement.
4. Issuance of Shares. The Company shall issue a certificate for
an appropriate number of shares of Stock awarded to the Grantee as Restricted
Stock pursuant to Section 2 of this Agreement on the relevant Award Date. The
Company shall issue a separate certificate for each award of shares of
Restricted Stock under Section 2. Each certificate issued for shares awarded to
the Grantee under this Agreement shall be registered in the name of the Grantee
and shall be deposited with the Company or its designee in an escrow account,
together with stock powers or other instruments of transfer to be provided and
appropriately endorsed in blank by the Grantee as of the relevant Award Date.
Each such certificate shall bear a legend in substantially the following form:
This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture and restrictions against
transfer) contained in the Genuine Parts Company
1999 Long-Term Incentive Plan and a Restricted Stock
Agreement between the registered owner of the shares
represented hereby and Genuine Parts Company.
Release from such terms and conditions shall be made
only in accordance with the provisions of such Plan
and Agreement, copies of which are on file in the
office of the Secretary of Genuine Parts Company.
5. Release of Shares. Subject to the provisions of Sections 9
and 10 of this Agreement, the Company, provided that the Grantee remains in the
employment of the Company or a Subsidiary during the entirety of the applicable
Restricted Period, shall release from escrow and deliver to the Grantee or the
legal representative of the Grantee, as appropriate, free of the legend
described in Section 4 above, the certificate evidencing shares of Restricted
Stock awarded under Section 2 as promptly as practicable following the date the
Restricted Period expires with respect to such Restricted Stock.
6. Restrictions on Transfer of Shares. Restricted Shares awarded
under the Plan, and the right to vote such shares and to receive dividends
thereon, may not, except as otherwise provided in the Plan, be sold, assigned,
transferred, exchanged, pledged or otherwise encumbered during the Restricted
Period applicable to such shares, and no such sale, assignment, transfer,
exchange, pledge or encumbrance, whether made or created by voluntary act of
the Grantee or of any agent of such Grantee or by operation of law, shall be
recognized by, or be binding upon or shall in any manner affect the rights
- 3 -
<PAGE> 4
of, the Company or any agent or any custodian holding certificates for such
shares during the applicable Restricted Period.
7. Rights of Grantee During Restricted Periods. Except as
otherwise provided in the Plan, the Grantee shall, during the applicable
Restricted Periods, have all of the other rights of a common shareholder with
respect to Restricted Shares awarded to the Grantee under Section 2 including,
without limitation, the right to receive cash dividends, if any, as may be
declared on such shares from time to time, and the right to vote (in person or
by proxy) such shares at any meeting of shareholders of the Company. Any shares
of Stock issued to Grantee as a dividend with respect to Restricted Stock
awarded hereunder shall have the same status and bear the same legend as the
Restricted Stock and shall be held in escrow, if the relevant Restricted Stock
is held in escrow, unless otherwise determined by the Committee.
8. Termination of Employment. Subject to Section 10 of this
Agreement, upon the termination of Grantee's employment with the Company
("Termination"), other than in connection with a Change in Control or Grantee's
Retirement, Disability or death (as such terms are defined in Section 9(b)
hereof), (i) all of Grantee's rights to future awards of Restricted Stock upon
achievement of Stock Price Targets or EPS Targets on Award Dates subsequent to
the date of Termination shall terminate without the payment of any
consideration by the Company, (ii) all shares of Restricted Stock theretofore
awarded to the Grantee for which the Restricted Period has not terminated prior
to such Termination shall be forfeited by the Grantee to the Company without
the payment of any consideration by the Company, and (iii) all unissued shares
of Stock reserved for issuance to Grantee pursuant to Section 14 hereof shall
be released from such reservation. In such event, neither the Grantee nor any
successors, heirs, assigns, or personal representatives of the Grantee shall
thereafter have any further rights or interest in such shares, and the
Grantee's name shall thereupon be deleted from the list of the Company's
shareholders with respect to such shares.
9. Change of Control, Retirement, Disability or Death.
(a) Upon a Change in Control, the Retirement or
Disability of the Grantee, or the Grantee's death while in the employment of
the Company or a Subsidiary, (i) all of Grantee's rights to future awards of
Restricted Stock upon achievement of Stock Price Targets or EPS Targets on
Award Dates subsequent to the date of Termination shall terminate without the
payment of any consideration by the Company, and (ii) the Restricted period to
which any shares of Restricted Stock awarded to the Grantee under Section 2 are
subject shall expire as of the date of the Change in Control or Grantee's
Retirement, Disability or death. In such event, the Company shall release from
escrow and deliver to the Grantee or the legal representative of the Grantee,
as appropriate, the certificate(s) representing the relevant Restricted Stock
free of restrictive legend in accordance with Section 5 hereof.
(b) For the purposes of this Agreement, the following
terms shall have the following meanings: (i) a Change in Control shall have the
meaning specified in
- 4 -
<PAGE> 5
Section 3.1(d) of the Plan; (ii) "Retirement" shall mean normal retirement as
defined in the Company's Pension Plan or in any modification thereof or
successor thereto; and (iii) "Disability" shall have the meaning specified in
Section 3.1(i) of the Plan.
10. Committee Acceleration Power. Notwithstanding any other
provisions of the Plan or this Agreement, the Committee shall be authorized in
its discretion, based upon its review and evaluation of the performance of the
Company and its Subsidiaries, to accelerate the release to the Grantee of
Restricted Stock subject to this Agreement upon such terms and conditions as
the Committee may deem advisable.
11. Federal Income Tax Matters. The Grantee, upon award of the
shares of Restricted Stock under Section 2, shall be authorized to make an
election to be taxed upon such award under Section 83(b) of the Code. To effect
such election, the Grantee may file an appropriate election with the Internal
Revenue Service within thirty (30) days after such awards of the Restricted
Stock hereunder and otherwise in accordance with applicable Treasury
Regulations.
The Grantee recognizes that, pursuant to Section 16.3 of the
Plan, the Company may require the Grantee to remit to the Company an amount
sufficient to satisfy any federal, state or local withholding tax liability in
connection with the agreement to award, award of, or release from escrow of the
shares of Restricted Stock granted hereunder.
12. Continued Employment Not Presumed. Neither (i) the Plan, (ii)
the agreement to award, award or vesting of Restricted Stock under this
Agreement nor (iii) this Agreement, shall give Grantee a right to continued
employment by the Company or its Subsidiaries or affect the right of the
Company and its Subsidiaries to terminate the employment of Grantee with or
without cause.
13. Grantee's Covenant. The Grantee hereby agrees to use his best
efforts to provide services to the Company in a workmanlike manner and to
promote the Company's interests.
14. Reservation of Shares. As of the date of this Agreement, the
Company shall reserve for issuance 75,000 shares of its Stock to be issued
pursuant to the terms of this Agreement. If the Grantee's rights with respect
to the unissued shares of Restricted Stock subject to this Agreement terminate
pursuant to Section 8 or Section 9 hereof, then such unissued shares of Stock
shall no longer be reserved for issuance pursuant to this Agreement.
15. Plan Controls. In the event of any actual or alleged conflict
between the provisions of the Plan and the provisions of this Agreement, the
provisions of the Plan shall be controlling and determinative.
16. Successors. This Agreement shall be binding upon any
successor of the Company, in accordance with the terms of this Agreement and
the Plan.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, Genuine Parts Company, acting by and through its
duly authorized officers, has caused this Restricted Stock Agreement to be
executed, and the Grantee has executed this Restricted Stock Agreement, all as
of the day and year first above written.
GENUINE PARTS COMPANY
By: /s/ George W. Kalafut
----------------------------------
Name: George W. Kalafut
----------------------------
Title: Exec Vice Pres Finance
----------------------------
ATTEST:
/s/ Carol Yancey
- ---------------------------------
Name: Carol Yancey
--------------------------
Title: Corp. Secretary
--------------------------
GRANTEE
/s/ Tom Gallagher
--------------------------------------
TOM GALLAGHER
- 6 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GENUINE PARTS COMPANY FOR THE THREE MONTHS ENDED MARCH
31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 148,797
<SECURITIES> 0
<RECEIVABLES> 990,153
<ALLOWANCES> 4,447
<INVENTORY> 1,680,375
<CURRENT-ASSETS> 2,858,710
<PP&E> 416,814
<DEPRECIATION> 378,791
<TOTAL-ASSETS> 3,867,903
<CURRENT-LIABILITIES> 974,469
<BONDS> 672,070
0
0
<COMMON> 179,063
<OTHER-SE> 1,899,768
<TOTAL-LIABILITY-AND-EQUITY> 3,867,903
<SALES> 1,901,357
<TOTAL-REVENUES> 1,901,357
<CGS> 1,350,467
<TOTAL-COSTS> 408,396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,443
<INCOME-PRETAX> 142,494
<INCOME-TAX> 56,428
<INCOME-CONTINUING> 86,066
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,066
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
