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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-5690
GENUINE PARTS COMPANY
(Exact name of Registrant as specified in its Charter)
GEORGIA 58-0254510
(State of Incorporation) (IRS Employer 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.
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. [ ]
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 11, 1999) held by non-affiliates as of
February 11, 1999 was approximately $5,431,852,750.
The number of shares outstanding of Registrant's Common Stock, as of
February 11, 1999: 179,536,256
Documents Incorporated by Reference:
- Portions of the Annual Report to Shareholders for the fiscal
year ended December 31, 1998, 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 19, 1999 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, office products and
electrical/electronic materials. In 1998, business was conducted throughout most
of the United States, in Canada and in Mexico from approximately 1,700
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.
SEGMENT DATA. The following table sets forth various segment data for the fiscal
years 1998, 1997 and 1996 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>
1998 1997 1996
----------- ----------- -----------
(in thousands)
NET SALES
---------
<S> <C> <C> <C>
Automotive Parts $ 3,262,406 $ 3,071,153 $ 3,008,105
Industrial Parts 2,008,789 1,853,270 1,677,859
Office Products 1,122,420 1,080,822 1,034,510
Electrical/Electronic Materials 220,417 -- --
----------- ----------- -----------
TOTAL NET SALES $ 6,614,032 $ 6,005,245 $ 5,720,474
=========== =========== ===========
OPERATING PROFIT
----------------
Automotive Parts $ 343,629 $ 325,188 $ 322,956
Industrial Parts 176,456 166,367 151,129
Office Products 113,821 110,793 103,439
Electrical/Electronic Materials 12,030 -- --
----------- ----------- -----------
TOTAL OPERATING PROFIT 645,936 602,348 577,524
Interest Expense (20,096) (13,365) (8,498)
Corporate Expense (32,186) (26,943) (29,057)
Equity in Income from Investees 3,329 6,730 9,398
Goodwill Amortization (5,157) (1,624) (1,548)
Minority Interests (2,709) (1,546) (2,586)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES $ 589,117 $ 565,600 $ 545,233
=========== =========== ===========
ASSETS
------
Automotive Parts $ 1,966,774 $ 1,623,644 $ 1,478,023
Industrial Parts 671,454 584,356 524,998
Office Products 442,220 380,804 376,616
Electrical/Electronic Materials 147,074 -- --
Corporate Assets 18,385 18,611 15,662
Goodwill and Equity Investments 354,473 146,948 126,332
----------- ----------- -----------
TOTAL ASSETS $ 3,600,380 $ 2,754,363 $ 2,521,631
=========== =========== ===========
Net Sales
---------
United States $ 6,535,020 $ 5,977,012 $ 5,697,053
Canada 79,012 28,233 23,421
----------- ----------- -----------
Total Net Sales $ 6,614,032 $ 6,005,245 $ 5,720,474
=========== =========== ===========
Net Property, Plant And Equipment
---------------------------------
United States $ 345,049 $ 370,751 $ 344,002
Canada 58,959 1,763 1,993
----------- ----------- -----------
Total Net Property, Plant and Equipment $ 404,008 $ 372,514 $ 345,995
=========== =========== ===========
</TABLE>
For additional information regarding segment data, see Page 26 of Annual Report
to Shareholders for 1998.
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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
foreseeable future.
EMPLOYEES. As of December 31, 1998, the Company employed approximately 32,000
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 200,000 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 1998, 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"); auto parts stores in the United States operated by corporations in
which Genuine Parts Company owned either a 51% or a 70% 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. In
December, 1998, the Company acquired UAP Inc. UAP Inc. is Canada's leading
automotive parts distributor and was a joint venture partner with the Company
for ten years.
In January, 1999, the Company completed another addition to the
Automotive Parts Group with the acquisition of Johnson Industries, Inc. Johnson
Industries, an independent distributor of ACDelco, Motorcraft, and other
automotive supplies, was founded in 1924. The Atlanta, Georgia based company has
distribution facilities in Atlanta, Harrisburg, Pennsylvania, and Dallas, Texas,
as well as small operations in Santiago, Chile and Monterrey, Mexico. Johnson
stocks 50,000 SKU's and sells primarily to large fleets and new car dealers.
Being an industry leader who is extremely service oriented, they offer the
Company significant growth opportunity.
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 58% of 1998 automotive inventories were
purchased from 10 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 1998, Genuine Parts Company operated 62 domestic NAPA
automotive parts distribution centers located in 38 states and approximately 750
domestic company-owned NAPA AUTO PARTS stores located in 43 states. At December
31, 1998, Genuine Parts Company owned a 51% interest in 178 corporations and a
70% interest in five corporations which operated 254 auto parts stores in 37
states.
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UAP, founded in 1926, is a Canadian leader in the distribution,
marketing, and rebuilding of replacement parts and accessories for automobiles,
trucks, and industrial machinery. UAP has annual sales of approximately $765
million Canadian ($500 million US) and employs approximately 5,300 people. UAP
operates a network of 16 distribution centers supplying approximately 650
UAP/NAPA auto parts wholesalers. These include approximately 250 company owned
stores, 25 joint venture or progressive owners, and approximately 375
independently owned stores. UAP supplies bannered installers and independent
installers in all provinces of Canada, as well as networks of service stations
and repair shops operating under the banners of national accounts. UAP is
licensed to and uses the NAPA(R) name in Canada.
In Mexico, Auto Todo owns and operates 18 distribution centers and 18
auto parts stores. Auto Todo is licensed to and uses the NAPA(R) name in Mexico.
The Company's 49% interest in Auto Todo is accounted for by the equity method of
accounting.
The Company's distribution centers serve approximately 4,850
independently 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 independent auto parts stores
account for approximately 29% 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 0.3% of the total sales of the Company.
PRODUCTS. Distribution centers have access to approximately 200,000 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 NAPA.
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 24,000 part numbers which constitute the
"Balkamp" line of products which are distributed to the members of NAPA. These
products are categorized in 150 different product groups purchased from more
than 400 suppliers. In addition to the Balkamp line of products, Balkamp
distributes approximately 100 part numbers of nationally branded consumer
appearance products through their Automotive Redistribution Center. These
products are cataloged separately for convenience for NAPA customers.
BALKAMP(R), a federally registered trademark, 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 five plants
where certain small automotive parts are rebuilt. These products are distributed
to the members of NAPA under both the NAPA and Rayloc(R) brand names. Rayloc(R)
is a mark licensed to the Company by NAPA.
SEGMENT DATA. In the year ended December 31, 1998, sales from the Automotive
Parts Group approximated 49% of the Company's net sales as compared to 51% in
1997 and 53% in 1996.
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 catalogs) 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
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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 statistics, 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 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 in 1998 operated 71
distribution centers located throughout the United States, 62 of which were
owned and operated by the Company. NAPA develops marketing concepts and programs
that may be used by its members. It is not involved in the chain of
distribution.
Among the automotive lines that 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 program,
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 throughout the United States, Canada and Mexico. This Group
distributes industrial bearings and power transmission equipment replacement
parts, including hydraulic and pneumatic products, material handling components,
agricultural and irrigation equipment and their related supplies.
In 1998, the Company distributed industrial parts in the United States
through Motion Industries, Inc. ("Motion"), headquartered in Birmingham,
Alabama, and Motion's operating division, Berry Bearing Company ("Berry
Bearing"), headquartered in Chicago, Illinois. Motion is a wholly owned
subsidiary of the Company. On January 1, 1999, Berry Bearing was merged into
Genuine Parts Company. In Canada, industrial parts are distributed by another of
Motion's operating divisions, Motion Industries (Canada), Inc. ["Motion
(Canada)"], comprised of the former Oliver Industrial Supply Ltd. and Premier
Industrial Division of UAP Inc., both
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wholly owned subsidiaries of Genuine Parts Holdings Ltd., which is a wholly
owned subsidiary of the Company. Motion (Canada)'s service area includes seven
provinces of Alberta, British Columbia, Manitoba, Newfoundland, Ontario, Quebec,
and Saskatchewan. An affiliate relationship in Mexico allows Motion to provide
the Mexican industrial sector with industrial parts.
In January 1998 the Industrial Group doubled its Canadian operations
through the acquisition of the Premier Industrial Division of UAP Inc. which
consisted of nine branches. Motion Industries expanded its presence in the
Pacific Northwest with the acquisition in April of Cascade Bearing and
Hydraulics with its two locations at Yakima and Pasco. In October, the Company
also completed acquisition of Blytheville Bearing and Supply Company of
Blytheville, Arkansas, and Hub Tool & Supply, Inc. of Wichita, Kansas.
Additionally, Motion opened 15 new branch locations throughout the United States
and Canada in 1998.
As of December 31, 1998, the Group served more than 165,000 customers
in all types of industries located throughout the United States, Mexico and
Canada.
DISTRIBUTION SYSTEM. In the United States, the Industrial Parts Group operates
446 locations including: eight distribution centers, two re-distribution
centers, and 31 service centers for fluid power, electrical and special hose
applications. The distribution centers stock and distribute more than 200,000
different items purchased from more than 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 61% of 1998 total industrial purchases were made from
10 major suppliers. Sales are generated from the Group's branches located in 46
states and seven provinces in Canada. Each branch has warehouse facilities that
stock significant amounts of inventory representative of the lines of products
used by customers in the respective market area served.
Motion (Canada) operates an industrial parts and agricultural supply
distribution center for the 21 Canadian locations serving industrial and
agricultural markets. Motion (Canada) also 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.
INTEGRATED SUPPLY. Motion's integrated supply solutions continued to gain
momentum in 1998, during which the Company's integrated supply group trademarked
its name TRICOM -- the system, the service, the solution to differentiate and
build brand distinction. Motion's integrated supply process not only reduces the
costs associated with MRO (Maintenance, Repair and Operation) inventory
management, but also enables the manufacturing customer to focus on its core
competency, free working capital associated with inventories, improve service
levels to end-users, and allow management to focus on more strategic concerns.
Motion's integrated supply process analyzes a customer's current operation to
develop integration goals and then provides solutions based on industry's
accepted best practices.
SEGMENT DATA. In the year ended December 31, 1998, sales from the Company's
Industrial Parts Group approximated 31% of the Company's net sales as compared
to 31% in 1997 and 29% in 1996.
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COMPETITION. The Industrial Parts Group competes with other distributors
specializing in the distribution of such items, general line distributors and
others who have developed or joined integrated supply programs. To a lesser
extent, the Group competes with manufacturers that sell directly to the
customer.
OFFICE PRODUCTS GROUP.
The Office Products Group, operated through S. P. Richards Company ("S.
P. Richards"), a wholly owned subsidiary of the Company, is headquartered in
Atlanta, Georgia. S. P. Richards is engaged in the wholesale distribution of a
broad line of office and other products which are used in the daily operation of
businesses, schools, offices and institutions. Office products fall into the
general categories of computer supplies, imaging supplies, office machines,
general office supplies, janitorial supplies, breakroom supplies, and office
furniture. Horizon USA Data Supplies, Inc., acquired by the Company in 1995, is
a computer supplies distributor headquartered in Reno, Nevada.
In August 1998, the Company completed the purchase of the Canada based
Norwestra Sales (1992), Inc. Norwestra, with its headquarters near Vancouver,
British Columbia, services office product resellers throughout Western Canada.
The Office Products 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 48 facilities located in 31 states and Western
Canada. Approximately 58% of 1998 total office products purchases were made from
10 major suppliers.
The Office Products Group sells to 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 also markets items produced for it under its own SPARCO(R) brand name,
as well as its NATURE SAVER(R) brand of recycled products and CompuCessory(TM)
brand of computer supplies and accessories.
SEGMENT DATA. In the year ended December 31, 1998, sales from the Company's
Office Products Group approximated 17% of the Company's net sales as compared to
18% in 1997 and 18% in 1996.
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.
ELECTRICAL/ELECTRONIC MATERIALS GROUP.
The Electrical/Electronic Materials Group was formed on July 1, 1998
through the acquisition of EIS, Inc. ("EIS"). This Group distributes materials
for the manufacture and repair of electrical and electronic apparatus. With
branch locations in 42 cities nationwide and in Mexico, this Group stocks over
100,000 items, from insulating and conductive materials to assembly tools and
test equipment,. This Group also has three manufacturing facilities that provide
custom fabricated parts and one manufacturing plant that produces printed
circuit board drillroom products. The Electrical/Electronic Materials Group is
an important single source to original equipment manufacturers, repair shops,
the electronic assembly market, and printed circuit board manufacturers.
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In 1998, the Company distributed electrical materials through EIS,
headquartered in Atlanta, Georgia. Electronic materials were distributed through
EIS's operating divisions, Com-Kyl, headquartered in Sunnyvale, CA, and
CircuitSupply, headquartered in San Francisco, CA. EIS, Com-Kyl and
CircuitSupply are wholly owned subsidiaries of EIS.
In 1998, EIS acquired NTI, Scottsdale Tool & Supply, and Electronic
Tool Company. NTI (New Technologies, Inc.), of Hartford, CT supplies the
Northeast United States with printed circuit manufacturing materials. This
acquisition made EIS one of the largest distributors of these products in that
market. Scottsdale Tool & Supply is headquartered in Phoenix, AZ with locations
in El Paso, TX; Dallas, TX; San Diego, CA; Albuquerque, NM; Denver, CO; Nogales,
AZ; and Guadalajara, Mexico. Scottsdale sells production aids and supplies to
the electronic assembly marketplace. Electronic Tool Company (ETCO) is
headquartered in New York and also sells production aids and supplies to the
electronic assembly marketplace. In January 1999, the Company completed
acquisitions of H. A. Holden, Inc. ("Holden"), and Summit Insulation Supply
("Summit"). Holden, a national distributor of materials and parts to the motor
repair industry, has distribution facilities in Atlanta, GA; Charlotte, NC;
Philadelphia, PA; Houston, TX; Sacramento, CA; Denver, CO; and Miami, FL.
Summit, a regional distributor and fabricator of electrical insulation materials
to manufacturers of transformers and electric motors, is headquartered in
Memphis, TN, and serves 20-30 large original equipment manufacturers in the
Southeast. Summit also has a small location in Harlingen, TX, which services
Mexico. The Group has a strategy to continue to "roll up" its markets and
consolidate the service base for the benefit of both EIS customers and suppliers
and plans to make future acquisitions within the markets the Group serves.
PRODUCTS. The Electrical/Electronic Materials Group distributes a wide variety
of products to customers from over 400 vendors. Products include such items as
magnet wire, copper clad laminate, conductive materials, insulating and
shielding materials, assembly tools, test equipment, adhesives and chemicals,
pressure sensitive tapes, solder, anti-static products, and thermal management
products. To meet the prompt delivery demands of its customers, this Group
maintains large inventories. The majority of sales are on open account.
Approximately 67% of 1998 total Electrical/Electronic Materials Group purchases
were made from 10 major suppliers.
INTEGRATED SUPPLY. The Electrical/Electronic Materials Group's integrated supply
programs are expected to grow in 1999, as a greater number of
customers--especially national accounts--are given the opportunity to
participate in this low-cost, high-service capability. Over the past year, the
Group developed AIMS (Advanced Inventory Management System), a totally
integrated, highly automated solution for inventory management. This year AIMS
will be added to the Group's Integrated Supply offering. This bar code driven
system is a cost effective alternative to the traditional labor intensive
inventory management process.
SEGMENT DATA. In the year ended December 31, 1998 sales from the Company's
Electrical/Electronic Materials Group approximated 3% of the Company's sales.
COMPETITION. The Electrical/Electronic Materials Group competes with other
distributors specializing in the distribution of electrical and electronic
products, general line distributors, and, to a lesser extent, manufacturers that
sell directly to customers.
* * * * * * * * * *
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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
11, 1999, 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.
<TABLE>
<CAPTION>
YEAR FIRST ASSUMED
NAME AGE POSITION OF OFFICE POSITION
- ---- --- ------------------ --------
<S> <C> <C> <C>
Larry L. Prince 60 Chairman of the Board of Directors and 1990/1989
Chief Executive Officer
Thomas C. Gallagher 51 President and Chief Operating Officer 1990
Robert J. Breci 63 Executive Vice President 1987
George W. Kalafut 64 Executive Vice President-Finance and Administration * 1991
Robert E. McKenna 54 President-U.S. Automotive Parts Group 1998
Keith M. Bealmear 52 Group Vice President 1994
Glenn M. Chambers 42 Group Vice President 1998
Albert T. Donnon, Jr. 51 Group Vice President 1993
Edward Van Stedum 49 Senior Vice President-Human Resources 1996
</TABLE>
* Also serves as the Company's Principal Financial and Accounting Officer.
All executive officers except Mr. Van Stedum and Mr. McKenna have been
employed by and have served as officers of the Company for at least the last
five years. Prior to his joining the Company in May, 1994, Mr. Van Stedum owned
and operated a consulting company in Atlanta, Georgia, that performed various
services for the Company's Personnel Department. Prior to his joining the
Company in January, 1998, Mr. McKenna served as Chairman of the Board of
Directors and President of NAPA, a position he held for the past 14 years.
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 62 NAPA
Distribution Centers in the United States distributed among eight geographic
divisions. Approximately 90% of the distribution center properties are owned by
the Company. At December 31, 1998, the Company owned approximately 750 NAPA AUTO
PARTS stores located in 43 states, and the Company owned either a 51% or 70%
interest in 254 additional auto parts stores located in 37 states. Other than
NAPA AUTO PARTS stores located within Company owned distribution centers, most
of the auto parts stores in which the Company has an ownership interest were
operated in leased facilities. In addition, UAP operated 16 distribution centers
and approximately 275 auto parts stores in Canada. The Company's Automotive
Parts Group also operates three Balkamp distribution centers and one
redistribution center, five Rayloc rebuilding plants, and two transfer and
shipping facilities.
The Company's Industrial Parts Group, operating through Motion and
Motion (Canada), operates 8 distribution centers, 2 redistribution centers, 31
service centers and 405 branches. Approximately 90% of these branches are
operated in leased facilities.
The Company's Office Products Group operates 47 facilities in the
United States and 1 facility in Canada distributed among the Group's six
geographic divisions. Approximately 75% of these facilities are operated in
leased buildings.
The Company's Electrical/Electronic Materials Group operates in 42
cities in the United States and Mexico. All of this Group's 46 facilities are
operated in leased buildings except its Cleveland facility, which is owned.
For additional information regarding rental expense on leased
properties, see "Note 5 of Notes to Consolidated Financial Statements" on Page
32 of Annual Report to Shareholders for the year ended 1998.
-9-
<PAGE> 10
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 STOCKHOLDER
MATTERS.
Information required by this item is set forth under the heading
"Market and Dividend Information" on Page 21 of Annual Report to Shareholders
for the year ended December 31, 1998, and is incorporated herein by reference.
The Company has made no unregistered sales of securities during the year ended
December 31, 1998.
On July 1, 1998, the Company acquired EIS, Inc. and subsidiaries
("EIS") for a combination of cash and stock valued at approximately
$180,000,000, which includes certain non competition agreements. On the closing
date of the EIS acquisition, the Company issued approximately 1,963,881 shares
of Company common stock to the EIS shareholders and the Company issued options
to acquire approximately 659,524 shares of Company common stock. In addition,
on March 31, 2000 approximately 575,566 additional shares of GPC Common Stock
may be issued to former EIS shareholders, subject to reduction for
indemnification claims. All such shares were issued in a transaction exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, and the regulations thereunder.
ITEM 6. SELECTED FINANCIAL DATA.
Information required by this item is set forth under the heading
"Selected Financial Data" on Page 21 of Annual Report to Shareholders for the
year ended December 31, 1998, and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Information required by this item is set forth under the heading
"Management's Discussion and Analysis" on Pages 23, 24 and 25 of Annual Report
to Shareholders for the year ended December 31, 1998, and is incorporated herein
by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOVE MARKET RISK.
The Company has no significant market risk sensitive instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth in the consolidated
financial statements on Pages 26 through 35, in "Report of Independent Auditors"
on Page 22, and under the heading "Quarterly Results of Operations" on Page 25,
of Annual Report to Shareholders for the year ended December 31, 1998, 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 19, 1999, 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.
-10-
<PAGE> 11
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is set forth under the heading
"Executive Compensation and Other Benefits" on Pages 8 and 9, 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 12 through 15 of the definitive proxy statement
for the Company's Annual Meeting to be held on April 19, 1999, and is
incorporated herein by reference. In no event shall the information contained in
the definitive proxy statement for the Company's 1999 Annual Meeting on Pages 9
through 11 under the heading "Compensation and Stock Option Committee Report on
Executive Compensation" or on Pages 16 and 17 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 5 through 7 of the definitive proxy statement
for the Company's Annual Meeting to be held on April 19, 1999, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is set forth under the heading
"Compensation Committee Interlocks and Insider Participation" on Page 12 of the
definitive proxy statement for the Company's 1999 Annual Meeting to be held on
April 19, 1999, and is incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(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, 1998, 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.)
Instruments with respect to long-term debt where the total amount
of securities authorized thereunder does not exceed 10% of the total
assets of the Registrant and its subsidiaries on a consolidated basis
have not been filed. The Registrant agrees to furnish to the
Commission a copy of each such instrument upon request.
Exhibit 10.1 * 1988 Stock Option Plan. (Incorporated herein by
reference from the Company's Annual Meeting Proxy
Statement, dated March 9, 1988.)
-11-
<PAGE> 12
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 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, effective 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
form 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. (Incorporated herein by
reference to the Company's Form 10-K, dated March 7,
1996.)
Exhibit 10.13 * Amendment No. 1 to the Genuine Parts Company Pension
Plan, effective April 1, 1995. (Incorporated herein
by reference to the Company's Form 10-K, dated March
7, 1996.)
Exhibit 10.14 * Amendment No. 2 to the Genuine Parts Company Pension
Plan, dated September 28, 1995, effective January 1,
1995. (Incorporated herein by reference to the
Company's Form 10-K, dated March 7, 1996.)
-12-
<PAGE> 13
Exhibit 10.15 * Genuine Parts Company Directors' Deferred
Compensation Plan, effective November 1, 1996.
(Incorporated herein by reference to the Company's
Form 10-K, dated March 10, 1997.)
Exhibit 10.16 * Amendment No. 3 to the Genuine Parts Company Pension
Plan dated May 24, 1996, effective January 1, 1996.
(Incorporated herein by reference to the Company's
Form 10-K, dated March 10, 1997.)
Exhibit 10.17 * Amendment No. 4 to the Genuine Parts Company Pension
Plan dated December 3, 1996, effective January 1,
1996. (Incorporated herein by reference to the
Company's Form 10-K, dated March 10, 1997.)
Exhibit 10.18 * Amendment No. 2 to the Genuine Partnership Plan,
dated December 3, 1996, effective November 1, 1996.
(Incorporated herein by reference to the Company's
Form 10-K, dated March 10, 1997.)
Exhibit 10.19 * Amendment No. 4-A to the Genuine Parts Company
Pension Plan, dated August 29, 1997, effective
January 1, 1996.
Exhibit 10.20 * Amendment No. 5 to the Genuine Parts Company Pension
Plan, dated August 7, 1997.
Exhibit 10.21 * Amendment No. 6 to the Genuine Parts Company Pension
Plan, dated October 6, 1997, effective January 1,
1997.
Exhibit 10.22 * Amendment No. 3 to the Genuine Partnership Plan,
dated August 7, 1997.
Exhibit 10.23 * Amendment No. 3 to the Genuine Parts Company
Supplemental Retirement Plan, dated August 29, 1997,
effective August 15, 1997.
Exhibit 10.24 * Genuine Parts Company Death Benefit Plan, effective
July 15, 1997.
Exhibit 10.25 * Amendment No. 4 to the Genuine Partnership Plan,
dated August 19, 1998, effective January 1, 1998.
Exhibit 10.26 * Amendment No. 5 to the Genuine Partnership Plan,
dated December 7, 1998, effective January 1, 1999.
Exhibit 10.27 * Amendment No. 6 to the Genuine Partnership Plan,
dated December 7, 1998, effective January 1, 1994.
Exhibit 10.28 * Amendment No. 7 to the Genuine Parts Company Pension
Plan, dated August 19, 1998, effective January 1,
1998.
Exhibit 10.29 * Genuine Parts Company 1999 Long-Term Incentive Plan.
Exhibit 10.30 * Genuine Parts Company 1999 Annual Incentive Bonus
Plan.
* Indicates executive compensation plans and arrangements.
-13-
<PAGE> 14
Exhibit 13 The following sections and pages of the 1998 Annual
Report to Shareholders:
- Selected Financial Data on Page 21
- Market and Dividend Information on Page 21
- Management's Discussion and Analysis on Pages 23-25
- Quarterly Results of Operations on Page 25
- Segment Data on Page 26
- Report of Independent Auditors on Page 22
- Consolidated Financial Statements and Notes to
Consolidated Financial Statements on Pages 26-35.
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.
-14-
<PAGE> 15
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
/S/ LARRY L. PRINCE 3/10/99 /S/ GEORGE W. KALAFUT 3/10/99
- ---------------------------------- -----------------------------------------
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
-15-
<PAGE> 16
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/ RICHARD W. COURTS II 2/15/99 /S/ BRADLEY CURREY, JR. 2/15/99
- ----------------------------------------------------- ----------------------------------------------------
RICHARD W. COURTS II (Date) BRADLEY CURREY, JR. (Date)
Director Director
/S/ JEAN DOUVILLE 2/15/99 /S/ ROBERT P. FORRESTAL 2/15/99
- ----------------------------------------------------- ----------------------------------------------------
JEAN DOUVILLE (Date) ROBERT P. FORRESTAL (Date)
Director Director
/S/ THOMAS C. GALLAGHER 2/15/99 /S/ STEPHEN R. KENDALL 2/15/99
- ----------------------------------------------------- ----------------------------------------------------
THOMAS C. GALLAGHER (Date) STEPHEN R. KENDALL (Date)
Director Director
President and Chief Operating Officer
/S/ J. HICKS LANIER 2/15/99 /S/ LARRY L. PRINCE 2/15/99
- ----------------------------------------------------- ----------------------------------------------------
J. HICKS LANIER LARRY L. PRINCE (Date)
Director Director
Chairman of the Board and Chief Executive Officer
/S/ ALANA S. SHEPHERD 2/15/99 /S/ LAWRENCE G. STEINER 2/15/99
- ----------------------------------------------------- ----------------------------------------------------
ALANA S. SHEPHERD (Date) LAWRENCE G. STEINER (Date)
Director Director
/S/ JAMES B. WILLIAMS 2/15/99
- -----------------------------------------------------
JAMES B. WILLIAMS (Date)
Director
</TABLE>
-16-
<PAGE> 17
ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(3)
LIST OF EXHIBITS
The following Exhibits are filed as a part of this Report:
10.25* Amendment No. 4 to the Genuine Partnership Plan, dated August 19, 1998,
effective January 1, 1998.
10.26* Amendment No. 5 to the Genuine Partnership Plan, dated December 7,
1998, effective January 1, 1999.
10.27* Amendment No. 6 to the Genuine Partnership Plan, dated December 7,
1998, effective January 1, 1994.
10.28* Amendment No. 7 to the Genuine Parts Company Pension Plan, dated August
19, 1998, effective January 1, 1998.
10.29* Genuine Parts Company 1999 Long-Term Incentive Plan.
10.30* Genuine Parts Company 1999 Annual Incentive Bonus Plan.
13 The following Sections and Pages of Annual Report to Shareholders for
1998:
- Selected Financial Data on Page 21
- Market and Dividend Information on Page 21
- Management's Discussion and Analysis on Pages 23-25
- Quarterly Results of Operations on Page 25
- Segment Data on Page 26
- Report of Independent Auditors on Page 22
- Consolidated Financial Statements and Notes to Consolidated
Financial Statements on Pages 26-35
21 Subsidiaries of the Company
23 Consent of Independent Auditors
27 Financial Data Schedule (for SEC use only).
The following Exhibits are incorporated by reference as set forth in Item 14 on
pages 11-13 of this Form 10-K:
- 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 form the Company's Registration Statement on Form
S-1, Registration No. 33-63874).
Instruments with respect to long-term debt where the total amount of
securities authorized thereunder does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis have not been filed.
The Registrant agrees to furnish to the Commission a copy of each such
instrument upon request.
<PAGE> 18
- 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.
- 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.
- 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.
- 10.15* Genuine Parts Company Directors' Deferred Compensation Plan,
effective November 1, 1996.
- 10.16* Amendment No. 3 to the Genuine Parts Company Pension Plan,
dated May 24, 1996, effective January 1, 1996.
- 10.17* Amendment No. 4 to the Genuine Parts Company Pension Plan,
dated December 3, 1996, effective January 1, 1996.
- 10.18* Amendment No. 2 to the Genuine Partnership Plan, dated
December 3, 1996, effective November 1, 1996.
- 10.19* Amendment No. 4-A to the Genuine Parts Company Pension Plan,
dated August 29, 1997, effective January 1, 1996.
- 10.20* Amendment No. 5 to the Genuine Parts Company Pension Plan,
dated August 7, 1997.
- 10.21* Amendment No. 6 to the Genuine Parts Company Pension Plan,
dated October 6, 1997, effective January 1, 1997.
- 10.22* Amendment No. 3 to the Genuine Partnership Plan, dated
August 7, 1997.
- 10.23* Amendment No. 3 to the Genuine Parts Company Supplemental
Retirement Plan, dated August 29, 1997, effective August 15,
1997.
- 10.24* Genuine Parts Company Death Benefit Plan, effective July 15,
1997.
* Indicates executive compensation plans and arrangements.
<PAGE> 19
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, 1998
GENUINE PARTS COMPANY
ATLANTA, GEORGIA
<PAGE> 20
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, 1998, are incorporated by reference
in Item 8:
Consolidated balance sheets - December 31, 1998 and 1997
Consolidated statements of income - Years ended December 31, 1998,
1997, and 1996
Consolidated statements of cash flows - Years ended December 31, 1998,
1997 and 1996
Notes to consolidated financial statements - December 31, 1998
The following consolidated financial statement schedule of Genuine Parts Company
and subsidiaries is included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other 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> 21
Annual Report on Form 10-K
Item 14(d)
Financial Statement Schedule II - Valuation and Qualifying Accounts
Genuine Parts Company and Subsidiaries
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Balance at Charged Balance at
Beginning to Costs Other End
of Period and Expenses Additions(1) Deductions(2) of Period
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996:
Reserves and allowances deducted
from
asset accounts:
Allowance for uncollectible accounts $2,103,895 $6,144,340 $ -- $(6,477,054)(2) $1,771,181
Year ended December 31, 1997:
Reserves and allowances deducted
from
asset accounts:
Allowance for uncollectible accounts 1,771,181 8,311,045 -- (8,233,116)(2) 1,849,110
Year ended December 31, 1998:
Reserves and allowances deducted
from
asset accounts:
Allowance for uncollectible accounts $1,849,110 $7,484,733 $3,499,025(1) $(7,813,966)(2) $5,018,902
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
(1) Allowance for uncollectible accounts related to significant acquisitions.
(2) Uncollectible accounts written off, net of recoveries.
<PAGE> 1
EXHIBIT NO. 10.25
AMENDMENT NO. 4
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.
WITNESSETH:
WHEREAS, the Company maintains the Genuine Parts Company Pension Plan
(the "Plan"), as amended and restated effective January 1, 1994, and such Plan
is currently in effect; and
WHEREAS, the Company desires to amend Schedule B of the Plan;
NOW, THEREFORE, BE IT RESOLVED that Schedule B is hereby deleted and a
new Schedule B is substituted therefor as follows:
"SCHEDULE B
Credit for Service with Predecessor Employers
I. General Rule - No Past Service. Unless otherwise identified in Part II
below, an Employee will not receive Credited Service or Years of Eligibility
Service under this Plan for any purpose. Instead (unless otherwise required by
law) Hours of Service worked for a predecessor employer prior to the Designation
Date shall be ignored.
II. Definition of Past Service Credit. If Employees who were previously
employed by a predecessor employer are granted past service credit (as noted
below), such Employees who are employed by an Employer on the Designation Date
shall receive Credited Service and Years of Eligibility Service under this Plan
beginning with the employment commencement date with the predecessor employer,
but subject to all of the rules concerning crediting of service and Breaks in
Service set forth in this Plan.
<TABLE>
<CAPTION>
Extent of Credit for Service
Name Designation Date with Predecessor Company
---- ---------------- ------------------------
<S> <C> <C> <C>
1. Odell Hardware Company 7/1/88 Past Service Credit Granted
("Odell")
2. Clark Siviter 7/1/88 Past Service Credit Granted
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
3. Brooks-Noble Parts 7/1/88 Past Service Credit Granted
& Machine Co., Inc.
4. General Automotive Parts 7/1/88 Past Service Credit Granted
Company and its subsidiaries
("General Automotive")
5. Standard Unit Parts 7/1/88 Past Service Credit Granted
Corporation including
its subsidiary Manco,
Inc. ("Standard Unit
Parts")
6. NAPA Des Moines 7/1/88 Past Service Credit Granted
Warehouse ("Des Moines")
</TABLE>
III. (a) Acquisitions Prior to January 1, 1994.
Participants employed by the following predecessor employers that were
acquired prior to January 1, 1994, shall not receive Past Service Credit as of
the date the predecessor employer was acquired by or merged into Genuine Parts
Company. However, after an employee of such predecessor employer becomes a
Participant in the Plan by satisfying the requirements of Section 3.01, such
Participant shall receive Credited Service for all employment with such
predecessor employer effective as of the Employment Date indicated below
provided such individuals were employed by an Employer (as determined by the
Committee) on the Employment Date.
(b) Acquisitions On or After January 1, 1994.
Participants employed by the following predecessor employers that were
acquired on or after January 1, 1994 shall receive Credited Service and credit
for participation purposes under Article III for all employment with such
predecessor employer effective as of the Employment Date indicated below
provided such individuals were employed by an Employer (as determined by the
Committee) on the Employment Date.
(c) Important Restrictions.
Credited Service granted under (a) or (b) above may be forfeited or
disregarded in accordance with the definition of Credited Service set forth in
Article II. Furthermore, no Credited Service shall be granted for employment
with a predecessor employer if the granting of such Credited Service will
adversely impact the tax qualified status of the Plan.
-2-
<PAGE> 3
Davis & Wilmar, Inc. May 1, 1993
Pittsburg, PA (Acquired 7/1/92)
M&B, Inc. (Lesker Office Supplies, Inc.) November 1, 1993
Charlotte, NC
The Parts, Inc. January 1, 1995
Anchorage, AK (Acquired 1/1/94)
Dade City Jobbing Group January 1, 1994
Dade City, FL (Acquired 1/2/92)
Atlantic Tracy Inc. November 1, 1995
Summerville, MA
Midcap Bearing Corporation June 1, 1995
San Antonio, TX
Motion Equipment, Inc. June 1, 1995
Houston, TX
Power Drives & Bearings, Inc. October 1,1995
Omaha, NB
Friend's Motor Supply, Inc. June 30, 1997
Hastings, NE
Utah Bearing and Fabrication, Inc. October 3,1997
Salt Lake City, UT
Colorado Bearing and Supply, Inc. October 3, 1997
Denver, CO
Quality Auto Supply of Alaska, Inc. April 1, 1998
Palmer, AK
Berry Bearing Company /Tom Steel Div. January 1, 1998
Lyons, IL (Acquired 2/93)
Cascade Bearings April 1, 1998
Yakima, WA
Horizon U.S.A. Data Supplies, Inc. August 1, 1998
Reno, NV (Acquired on 4/1/95)
Berry Bearing Company (all divisions October 1, 1998
other than Tom Steel Division) (Acquired 2/93)
Lyons, IL"
-3-
<PAGE> 4
FURTHER RESOLVED, that the amount of "$3,500" set forth in
ss.8.01(c)(i) shall be changed to read "$5,000."
This amendment shall be effective January 1, 1998. Except as amended
herein, the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, Genuine Parts Company, acting through the Committee
has caused this Amendment to the Plan to be executed on the date shown below but
effective as of the date indicated above.
COMMITTEE TO THE
GENUINE PARTNERSHIP PLAN
By: /s/ George W. Kalafut
-------------------------------
Date: August 19, 1998
------------------------------
By: /s/ Edward J. Van Stedum
-------------------------------
Date: August 19, 1998
------------------------------
By: /s/ Jerry Nix
-------------------------------
Date: August 19, 1998
------------------------------
By: /s/ Frank M. Howard
-------------------------------
Date: August 19, 1998
------------------------------
-4-
<PAGE> 1
EXHIBIT NO. 10.26
AMENDMENT NO. 5
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.
WITNESSETH:
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, pursuant to Section 11.01, the Company has reserved the right
to amend the Plan through action of the Committee for the Plan;
NOW, THEREFORE, BE IT RESOLVED the Plan is hereby amended as follows:
1.
Section 4.05 is deleted in its entirety, and a new Section 4.05 is
substituted in lieu thereof, as follows:
"4.05 Rollover Contribution.
(a) Without regard to any limitation on contributions set
forth in this Article, an Eligible Employee shall be
permitted, if the Committee consents (based on
non-discriminatory criteria), to transfer to the
Trustee during any Plan Year additional property
acceptable to the Trustee, provided such property:
(1) was received by the Eligible Employee from a
Qualified Plan maintained by a previous
employer of the Eligible Employee and
qualifies as a rollover contribution within
the meaning of Code ss. 402(a)(5) or
(2) was received by the Eligible Employee from
an individual retirement account or
individual retirement annuity and qualifies
as a rollover contribution within the
meaning of Code ss. 408(d)(3)(A)(ii).
(b) Such property shall be held by the Trustee in the
Employee's Rollover Account. All such amounts so held
shall at all times be fully vested and
nonforfeitable. Such amounts shall be distributed
<PAGE> 2
to the Employee upon Termination Date in the manner
provided in Article 8.
(c) See Section 8.07 regarding the right of a Participant
to request a trustee to trustee transfer of the
Participant's Account in lieu of a distribution of
such Account.
(d) Notwithstanding the foregoing, any Eligible Employee
who elects to make a Rollover Contribution to the
Plan pursuant to this Section 4.05 shall not be
considered a Participant for any other purpose under
this Plan until such Eligible Employee has satisfied
the applicable eligibility requirements of Section
3.01."
2.
Section 5.03(a) is deleted in its entirety, and a new Section 5.03(a)
is substituted in lieu thereof as follows:
"5.03 Form and Timing of Contributions.
(a) Employer Contributions shall be made in cash or in
Qualifying Employer Securities. Employer Matching
Contributions shall be delivered to the Trustee as
soon as administratively feasible but no later than
the date prescribed by the Code for filing the
Employer's federal income tax return, including
authorized extensions. Qualified Nonelective
Contributions shall be delivered to the Trustee on or
before the last day of the twelfth month following
the close of the Plan Year to which the contribution
relates."
3.
Section 5.04 is deleted in its entirety, and a new Section 5.04 is
substituted in lieu thereof, as follows:
"5.04 Forfeitures.
Forfeitures shall first be applied to restore amounts
previously forfeited pursuant to Section 7.05(c). Next,
forfeitures shall be used to pay expenses of the Plan which
may be paid by the Plan in accordance with the provisions of
ERISA. Thereafter any remaining forfeitures shall be allocated
on the last day of the Plan Year (unless the Committee directs
an earlier allocation) equally on a per capita basis among the
Employer Matching Contribution Accounts of all Participants
who made an Elective Deferral during the Plan Year in which
the forfeitures are allocated. See Section 7.05 to determine
when a forfeiture of a Participant's Account occurs. See
Section 3.01(b)(2) and Section 5.05 for additional eligibility
requirements."
-2-
<PAGE> 3
4.
Sections 6.06(b) and (c) are deleted in their entirety, and new
Sections 6.06(b) and (c) are substituted in lieu thereof, as follows:
"(b) Initial Investment Direction. Effective January 1, 1999, a
Participant's initial investment election must allocate his
entire Account in 1% increments among the Investment Funds, as
of the date of the directive, and all subsequent contributions
to each sub-account for so long as the election remains in
effect. For a period of time prior to January 1, 1999,
allocations among the Investment Funds were made in 10%
increments. An Employee who fails to make a proper investment
election by the deadline established by the Committee for such
purpose, shall be deemed to have elected the "Default
Enrollment Election" which allocates 100% of his Account in
the Default Fund (i.e., the Fixed Income Fund or other
Investment Fund which, in the opinion of the Committee, best
preserves the principal amount of the Participant's Account).
Furthermore, effective January 1, 1999, the initial investment
of each newly eligible Participant's Account shall
automatically be made to the Default Fund until such
Participant directs the investment of his or her Account.
(c) Subsequent Elections. Investment elections will remain in
effect until changed by a new election. Effective January 1,
1999, new elections may be made in 1% increments by a
Participant once each calendar month and shall be effective as
of the date the investment directive is delivered to the
Committee (or its designee), pursuant to the rules and
regulations established by the Committee and which are applied
in a consistent and nondiscriminatory manner. For a period of
time prior to January 1, 1999, a Participant may make a new
election to modify his investment elections in 10% increments
once each calendar quarter. New elections may change future
allocations to the Participant's Account, may reallocate
between the Investment Funds any amounts previously credited
to the Participant's Account, or may leave the allocation of
such prior amounts unchanged."
5.
Section 8.01(a) is deleted in its entirety, and a new Section 8.01(a)
is substituted in lieu thereof, as follows:
"(a) Termination of Employment. If a Participant has a Termination
Date other than on account of death, the Participant's Account
will commence to be distributed as soon as administratively
feasible following the Committee's
-3-
<PAGE> 4
receipt of the Participant's written request for a
Distribution, but in no event later than 60 days following the
end of the Plan Year in which such Participant requests a
Distribution of his Account. Such request shall be made on a
form provided by the Committee. See Section 8.01(c) for
circumstances where the Participant's consent to a
Distribution is not required."
6.
Section 9.13 is deleted in its entirety, and a new Section 9.13 is
substituted in lieu thereof, as follows:
"9.13 Directed Investment.
A Participant who requests a loan shall be deemed to have
directed the Committee to invest assets held in his Account by
the amount of the loan, and until such loan is repaid, such
loan shall be considered a directed investment of the
Participant's Account hereunder. The Plan monies which are
used to fund the Participant loan shall be withdrawn from the
Participant's Account in the following order (and principal
and interest loan repayments shall be added back to such
Accounts in the same order):
(a) the Pre-Tax Contribution Account;
(b) the Rollover Account;
(c) the Qualified Nonelective Contribution Account; and
(d) the Prior Employer Account.
Within each such Account the monies which are used to fund the
Participant loan shall be withdrawn on a pro rata basis
according to the value of the Investment Funds in which such
Account was invested. Principal and interest payments on the
loan will be allocated to the Participant's Investment Funds
according to the Participant's investment election at the time
of the payment. Prior to January 1, 1999, loans could also be
made from a Participant's Employer Matching Contribution
Account. If a loan was made out of the Participant's Employer
Matching Contribution Account, repayment of principal and
interest attributable to such Account shall be allocated to
the Participant's Common Stock Fund."
-4-
<PAGE> 5
7.
This amendment shall be effective January 1, 1999. Except as amended
herein, the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, Genuine Parts Company, acting through the Committee
has caused this Amendment to the Plan to be executed on the date shown below but
effective as of the date indicated above.
COMMITTEE TO THE
GENUINE PARTNERSHIP PLAN
By: /s/ George W. Kalafut
------------------------------------
Date: December 7, 1998
-----------------------------------
By: /s/ Jerry Nix
------------------------------------
Date: December 7, 1998
-----------------------------------
By: /s/ Edward J. Van Stedum
------------------------------------
Date: December 7, 1998
-----------------------------------
By: /s/ Frank M. Howard
------------------------------------
Date: December 7, 1998
-----------------------------------
-5-
<PAGE> 1
EXHIBIT NO. 10.27
AMENDMENT NO. 6
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.
WITNESSETH:
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, pursuant to Section 11.01, the Company has reserved the right
to amend the Plan through action of the Committee for the Plan;
NOW, THEREFORE, BE IT RESOLVED the Plan is hereby amended as follows:
1.
A new Schedule C is hereby added to the Plan in the form attached
hereto.
2.
Except as amended herein, the Plan shall remain in full force and
effect.
IN WITNESS WHEREOF, Genuine Parts Company, acting through the Committee
has caused this Amendment to the Plan to be executed on the date shown below but
effective as of the date indicated above.
COMMITTEE TO THE
GENUINE PARTNERSHIP PLAN
By: /s/ George W. Kalafut
-------------------------------
Date: December 7, 1998
------------------------------
<PAGE> 2
SCHEDULE C
PRIOR EMPLOYER ACCOUNTS
Any defined term used in this Schedule C shall have the same meaning as
ascribed to it in the Plan, unless otherwise defined in this Schedule C.
I. Additional Forms of Benefits for Former Participants in the Genuine
Parts 401(k) Plan for the Dade City Jobbing Group
A. Background. As of December 31, 1993, the Genuine Parts 401(k)
Plan for the Dade City Jobbing Group effective as of January 1, 1993 (the "Dade
City Plan") was frozen. The Dade City Plan was subsequently merged into the
Plan. Accounts established under the Dade City Plan shall constitute Prior
Employer Accounts.
B. Eligibility of Former Participants in the Dade City Plan to
Receive Additional Forms of Benefits. Effective as of merger into the Plan,
former participants in the Dade City Plan ("Dade City Participants") who became
Participants in this Plan may elect to receive, in addition to the benefits
offered under the Plan, a distribution from their Prior Employer Accounts as
follows:
(i) upon reaching the Dade City Plan's early retirement
date, which can be the first day of any month within
10 years of a Dade City Participant's Normal
Retirement Date;
(ii) a qualified joint and 100% survivor annuity;
(iii) a life annuity;
(iv) a life annuity with a guarantee of 120 monthly
payments;
(v) a contingent 50% or 100% annuitant option; or
(vi) a monthly annuity, if a Dade City Participant
terminates employment with the Company before he
would have been eligible to retire under the Dade
City Plan.
-2-
<PAGE> 3
II. Additional Forms of Benefits for Former Participants in the Davis &
Wilmar, Inc. Retirement Savings Plan
A. Background. The Davis & Wilmar, Inc. Retirement Savings Plan
effective as of May 1, 1993 (the "Davis & Wilmar Plan") was frozen. The Davis &
Wilmar Plan was merged into the Plan effective December 31, 1994, as part of
Genuine Parts Company's acquisition of Davis & Wilmar, Inc. Accounts established
under the Davis & Wilmar Plan shall constitute Prior Employer Accounts.
B. Eligibility of Former Participants in the Davis & Wilmar Plan
to Receive Additional Forms of Benefits. Effective as of December 31, 1994,
former participants in the Davis & Wilmar Plan who became Participants in this
Plan, or their surviving spouse (as applicable), may elect to receive, in
addition to the benefits offered under the Plan, a distribution from such
participants' Prior Plan Accounts as follows:
(i) an annuity, or
(ii) a qualified pre-retirement 100% survivor annuity.
III. Additional Forms of Benefits for Former Participants in the Parts, Inc.
401(k) Plan
A. Background. As of January 1, 1995, the Parts, Inc. 401(k) Plan
effective as of January 1, 1989 (the "Parts, Inc. Plan") was frozen. The Parts,
Inc. Plan was merged into the Plan as part of Genuine Parts Company's
acquisition of Parts, Inc. Accounts established under the Parts, Inc. Plan shall
constitute Prior Employer Accounts.
B. Eligibility of Former Participants in the Parts, Inc. Plan to
Receive Additional Forms of Benefits. Effective January 1, 1995, former
participants in the Parts, Inc. Plan who became Participants in this Plan
("Parts, Inc. Participants") may elect to receive, in addition to the benefits
offered under this Plan, a distribution from their Prior Employer Accounts as
follows:
(i) on or after attaining the Parts, Inc. Plan's normal
retirement age which is age 60; or
(ii) in quarterly, semi-annual or annual installments
extending over a period certain not to exceed the
Parts Inc. Participant's life expectancy or the joint
life and last survivor expectancy of such participant
and his designated beneficiary.
-3-
<PAGE> 4
IV. Additional Forms of Benefits for Former Participants in the
I.M.S./Horizon 401(k) Plan
A. Background. Genuine Parts Company's acquired International
Media & Supplies, Inc. and Horizon U.S.A. Data Supplies, Inc. ("Horizon") on
April 28, 1995. The I.M.S. Horizon Plan was continued to be maintained by
Horizon although the plan was amended to only permit participation by non-highly
compensated employees. The I.M.S./Horizon Plan was merged into the Plan
effective August 1, 1998. Accounts established under the I.M.S./Horizon Plan
shall constitute Prior Employer Accounts.
B. Eligibility of Former Participants in the I.M.S./Horizon Plan
to Receive Additional Forms of Benefits. Effective August 1, 1998, former
participants in the I.M.S./Horizon Plan who became Participants in the Plan
("I.M.S./Horizon Participants"), or their surviving spouses (as applicable), may
elect to receive, in addition to the benefits offered under the Plan, a
distribution from their Prior Employer Accounts as follows:
(i) upon termination of employment for reasons other than
death, disability or retirement, an I.M.S./Horizon
Participant may receive a distribution of his Prior
Plan Account on or after the last day of the Plan
Year coincident with or next following his
termination of employment;
(ii) on or after the I.M.S./Horizon Plan's early
retirement date, which is any date coincident with or
next following attainment of age 60 and completion of
seven years of service under the I.M.S./Horizon Plan;
(iii) a joint and 50% survivor annuity;
(iv) a joint and 75% survivor annuity;
(v) a joint and 100% survivor annuity;
(vi) a life annuity;
(vii) in quarterly, semi-annual or annual cash installments
extending over a period certain not to exceed the
I.M.S./Horizon Participant's life expectancy or the
joint life and last survivor expectancy of such
participant and his designated beneficiary (a
designated beneficiary shall have the right to reduce
the period over which installment payments shall be
made);
(viii) an annuity extending over a period certain not to
exceed the I.M.S./Horizon Participant's life
expectancy or the joint life and
-4-
<PAGE> 5
last survivor expectancy of such participant and his
designated beneficiary; or
(ix) a qualified pre-retirement survivor annuity.
Furthermore, any security interest held by the I.M.S./Horizon Plan by reason of
an outstanding loan to an I.M.S./Horizon Participant shall be taken into account
in determining the amount of any pre-retirement survivor annuity.
V. Additional Forms of Benefits for Former Participants in the Motion
Equipment, Inc. 401(k) Profit Sharing Plan
A. Background. The Motion Equipment, Inc. 401(k) Profit Sharing
Plan ("Motion Plan") has been merged into the Plan. Accounts established under
the Motion Plan shall constitute Prior Employer Accounts.
B. Eligibility of Former Participants in the Motion Plan to
Receive Additional Forms of Benefits. Effective as of the merger of the Motion
Plan into this Plan, former participants in the Motion Plan who became
Participants in this Plan ("Motion Participants") may elect to receive, in
addition to the benefits offered under this Plan, a distribution from their
Prior Employer Accounts as follows:
(i) on or after attaining the Motion Plan's early
retirement age, which is age 59-1/2;
(ii) on or after attaining the Motion Plan's normal
retirement age, which is age 62;
(iii) in a lump-sum distribution in-kind, or part in cash
and part in-kind; or
(iv) in installments payable in cash or in-kind, over a
period certain not to exceed the Motion Participant's
life expectancy or the joint life and last survivor
expectancy of such participant and his designated
beneficiary.
VI. Additional Forms of Benefits for Former Participants in the Midcap
Bearing Corporation Profit Sharing Plan
A. Background. The Midcap Bearing Profit Sharing Plan effective
as of January 1, 1995 (the "Midcap Plan") has been merged into this Plan.
Accounts established under the Midcap Plan shall constitute Prior Employer
Accounts.
-5-
<PAGE> 6
B. Eligibility of Former Participants in the Midcap Plan to
Receive Additional Forms of Benefits. Effective as of the merger of the Midcap
Plan into this Plan, former participants in the Midcap Plan who became
Participants in this Plan ("Midcap Participants") may elect to receive, in
addition to the benefits offered under this Plan, a distribution from their
Prior Employer Accounts as follows:
(i) on or after attaining the Midcap Plan's early
retirement age, which is age 59-1/2;
(ii) on or after attaining the Midcap Plan's normal
retirement age, which is age 62;
(iii) in a lump-sum distribution in-kind, or part in cash
and part in-kind; or
(iv) in installments payable in cash or in-kind, over a
period certain not to exceed the Midcap Participant's
life expectancy or the joint life and last survivor
expectancy of such participant and his designated
beneficiary.
COMMITTEE TO THE GENUINE
PARTNERSHIP PLAN
By: /s/ Frank M. Howard
--------------------------------------
Frank Howard, Authorized Member of the
Committee
Date: December 7, 1998
------------------------------------
-6-
<PAGE> 1
Exhibit No. 10.28
AMENDMENT NO. 7 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.
WITNESSETH:
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 Schedule B to the Plan;
NOW, THEREFORE, BE IT RESOLVED that Schedule B is hereby deleted and a
new Schedule B is substituted therefore as follows:
"SCHEDULE B
CREDIT FOR SERVICE WITH PREDECESSOR EMPLOYERS
I. Participants employed by a predecessor employer not listed in Sections
II or III below shall be deemed to have as their date of Employment for
all purposes of this Plan, the date the predecessor employer was
acquired by or merged into Genuine Parts Company.
II. Participants employed by the following predecessor employers shall
receive Credited Service for all purposes of this Plan beginning with
their employment commencement date with that predecessor employer but
subject to all the rules concerning crediting of service set forth in
this Plan.
1. Clark Siviter Co.
St. Petersburg, FL
2. Standard Parts Company
Columbia, SC
3. Standard Unit Parts Company
Normal, IL
<PAGE> 2
Except that the benefits provided to Richard R. Mikulecky under
this Plan shall be reduced by one hundred percent (100%) of the
benefits provided under that certain Salary Continuation
Agreement dated January 10, 1977 in the event of his retirement,
death, disability or other termination of service; and
Except that the benefits provided to Mark R. Larson under this
Plan shall be reduced by one hundred percent (100%) of the
benefits provided under that certain Salary Continuation
Agreement dated January 10, 1977 in the event of his retirement,
death, disability or other termination of service.
4. National Parts Service Inc.
Hartford, CT
Covering the following National Parts Service employees:
<TABLE>
<CAPTION>
Name S.S. No. Employment Date
---- -------- ---------------
<S> <C> <C>
Raymond Jensen ###-##-#### May 1, 1946
Charles A. Veci ###-##-#### July 1, 1952
Paul F. Baldi ###-##-#### August 27, 1960
Bernhardt E. Johnson ###-##-#### October 1, 1966
Jean L. Veillette ###-##-#### July 1, 1972
Paul R. Denis ###-##-#### July 26, 1974
Mark P. Taylor ###-##-#### January 17, 1980
Roy M. Robbins ###-##-#### June 16, 1980
</TABLE>
5. General Automotive Parts Company and its subsidiaries
6. NAPA Des Moines Warehouse
III. (a) Acquisitions Prior to January 1, 1994.
Participants employed by those predecessor employers listed below that
were acquired prior to January 1, 1994 shall be deemed to have as their
date of Employment for all purposes of this Plan, the date the
predecessor employer was acquired by or merged into Genuine Parts
Company or its subsidiaries. However, after an employee of such
predecessor employer becomes a Participant in the Plan by satisfying
the requirements of Section 3.02, such Participant shall receive credit
for all employment with such predecessor employer for purposes of (1)
determining the Participant's vested percentage under Section 4.05(c);
(2) determining whether a Participant has completed five years of
Credited Service for the Disability Retirement provisions of Schedule
D; and (3) determining the Participant's entitlement to Death Benefits
under Article V and related sections of the Plan. However, to receive
such credit, the Employee must be actively
-2-
<PAGE> 3
employed by an Employer (as determined by the Committee) on the
Employment Date.
(b) Acquisitions On or After January 1, 1994.
Participants employed by those predecessor employers listed below that
were acquired on or after January 1, 1994 shall receive credit under
this Plan for all employment with such predecessor employer for
purposes of (1) determining the Participant's vested percentage under
Section 4.05(c); (2) determining whether a Participant has completed
five years of Credited Service for the Disability Retirement provisions
of Schedule D (not available to acquisitions on or after January 1,
1993); and (3) determining the Participant's entitlement to Death
Benefits under Article V and related sections of the Plan (not
available to acquisitions on or after July 15, 1997). However, to
receive such credit, the employee must be actively employed by an
Employer (as determined by the Committee) on the Employment Date.
Employees of the following predecessor employers that were acquired on
or after January 1, 1994 and who are actively employed by an Employer
(as determined by the Committee) on the Employment Date will receive
credit for their employment with the predecessor employer for
determining whether such Employees have satisfied the participation
requirements of Article III.
(c) Important Restrictions.
Credited Service granted under (a) or (b) above may be forfeited or
disregarded in accordance with Section 2.18 or other provisions of the
Plan. Furthermore, no Credited Service shall be granted for employment
with a predecessor employer if the granting of such Credited Service
will adversely impact the tax qualified status of the Plan.
<TABLE>
<CAPTION>
Name Employment Date
---- ---------------
<S> <C>
Odell Hardware Company January 1, 1980
Greensboro, NC
Brooks-Noble Parts & Machine Co., Inc. August 1, 1981
Jackson, MS
One Stop Auto Parts Inc. March 10, 1982
Lathan, NY
One Stop Auto Parts Inc. March 16, 1983
Albany, NY
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C>
E. E. Long Inc. September 1, 1984
Des Moines, IA
Motor Parts & Supply April 1, 1986
Baton Rouge, LA
Chattanooga Service Auto Center May 1, 1986
Chattanooga, TN
Gerace Auto Parts December 1, 1986
Port Allen, LA
Lawwill Auto Parts September 1, 1987
Chattanooga, TN
Smith Automotive Corp. August 1, 1990
(2 stores) Martinez, GA & Belvedere, SC
Kings Parts Company, Inc. August 10, 1990
Lake Oswego, OR
W.K. NAPA on Kensington, Inc. August 10, 1990
Elk Grove Village, IL
Auto Parts, Inc. of Wilmington October 1, 1990
Wilmington, NC
Carolina Auto Parts of Thomasville, Inc. October 1, 1990
Thomasville, NC
Stokes Auto Parts, Inc. October 1, 1990
Thomasville, NC
MGM Auto Parts, Inc. November 1, 1990
Kenmore, NY
Wholesale Sationers Corp. December 1, 1990
Salt Lake City, UT (S.P. Richards)
Santa Monica Auto Parts November 1, 1990
Santa Monica, CA
Precise Industries, Inc. December 1, 1990
(2 Stores) Kingsport & Blountville, TN
</TABLE>
-4-
<PAGE> 5
<TABLE>
<S> <C>
Automotive Service & Supply, Inc. December 1, 1990
(3 Stores) Kingsport, TN, Bristol & Abingdon, VA
NAPA Auto Parts of Lombard, Inc. December 1, 1990
Lombard, IL
Middleburg Parts and Hardware, Inc. December 31, 1990
Middleburg, FL
Strap Industries, Inc. March 1, 1991
Tempe, AZ
Anderson's Parts March 1, 1991
Blue Springs, MO
Evergreen Automotive Supply, Inc. May 1, 1991
Chicago, IL
Heath Motor Supply Co. July 1, 1991
Panama City, FL
Bryant Stooks - D.J.'s Auto Supply July 1, 1991
(2 Stores) Chandler and Mesa, AZ
NAPA Auto Parts Store of John Nall August 1, 1991
South Milwaukee, WI
Deer Park Automotive Parts, Inc. September 1, 1991
Mt. Carmel, OH
T & L Auto Parts Company, Inc. October 1, 1991
(4 Stores) Fayetteville, NC
B.W.P. Ltd. October 1, 1991
(2 Stores) Fayetteville, Roseboro, NC
Auto Parts of Clinton October 1, 1991
Clinton, NC
Byrd-Wood Parts Group, Inc. October 1, 1991
Fayetteville, NC
Burien Auto Parts, Inc. October 1, 1991
(2 Stores) Seattle, WA
</TABLE>
-5-
<PAGE> 6
<TABLE>
<S> <C>
B.N. Auto Parts Co. December 1, 1991
Marietta, GA
Capital Automotive Parts, Inc. December 1, 1991
Milwaukee, WI
Bill's Auto Supply, Inc. January 1, 1992
Milwaukee, WI
Bill's Auto Supply, Inc. January 1, 1992
Kansas City, MO
Bald Hill Auto Parts, Inc. February 1, 1992
Warwick, RI
Manton Auto Prats, Inc. February 1, 1992
Providence, RI
Hudson Auto Parts February 1, 1992
Hudson, WI
B&B Genuine Auto Parts, Inc. February 16, 1992
Canton, OH
Jimmy's Auto Parts, Inc. March 1, 1992
Alpharetta, GA
West Town Auto Parts, Inc. June 1, 1992
Knoxville, TN
Lakeland Motor Parts, Inc. June 1, 1992
(2 Stores) Lakeland, FL
Haas Auto Parts & Machine Co., Inc. June 1, 1992
Jeffersonville, IN
Parts Dept. of Shakopee, Inc. June 1, 1992
Shakopee, MN
HMH Automotive Parts, Inc. June 1, 1992
(2 Stores) Galesburg, Monmouth, IL
Southern Parts & Electric, Inc. July 1, 1992
(4 Stores) Durham, NC
</TABLE>
-6-
<PAGE> 7
<TABLE>
<S> <C>
Service Supply Co. of Douglasville, Inc. July 1, 1992
Douglasville, GA
Service Supply Company of Dallas, Inc. July 1, 1992
Dallas, GA
NAPA of Lemon Grove, Inc. August 1, 1992
La Mesa, CA
Whitewater Auto Supply, Inc. September 1, 1992
Janesville, WI
Regalia Auto Parts, Inc. September 1, 1992
Seattle, WA
Drexel Auto Parts, Inc. October 1, 1992
Huntsville, AL
Warren Auto Supply, Inc. December 4, 1992
(2 Stores) Warren, OH
Cal's Service Parts, Inc. January 1, 1993
(6 Stores) Boise, ID
H & G Enterprises, Inc. January 1, 1993
Louisville, KY
Kernersville Auto Parts, Inc. February 1, 1993
Kernersville, NC
McCowen Enterprises, Inc. April 1, 1993
(2 Stores) Champaign & Urbana, IL
Breese Company, Inc. May 1, 1993
(3 Stores, Iowa City, Muscatine & Coralville, IA)
Young's Auto Supply Warehouse, Inc. July 1, 1993
Norfolk, VA
Joliet Auto Supply, Inc. July 1, 1993
Joliet, IL
Bryan - Rogers, Inc. August 1, 1993
(3 Stores) Tupelo, Baldwyn & Amory, MS
</TABLE>
-7-
<PAGE> 8
<TABLE>
<S> <C>
Hyllberg Enterprises, Inc. August 1, 1993
Virginia Beach, VA
Hager Auto & Industrial Parts, Inc. November 1, 1993
(2 Stores) Burlington & South Burlington, VT
M&B, Inc. (Lesker Office Supplies, Inc.) November 1, 1993
Charlotte, NC
Ballard Auto Parts, Inc. January 1, 1994
Cornelius, NC
Service Parts of Hendersonville, Inc. January 1, 1994
Hendersonville, NC
Power's Auto Parts, Inc. March 1, 1994
Williamsburg, VA
Big J Auto Parts, Inc. March 14, 1994
Johnson City, TN
Economy Auto Supply Co., Inc. April 1, 1994
Norfolk, VA
Paul's Automotive, Inc. April 1, 1994
Toledo, OH
Sulphur Springs Parts Co., Inc. June 1, 1994
Sulphur Springs, TX
The Parts Place August 1, 1994
Gulfport, MS
A & J Automotive Co. August 1, 1994
Dalton, GA
Clewiston Auto Parts, Inc. September 1, 1994
Clewiston, FL
Oregon City Auto Parts, Inc. October 1, 1994
Oregon City and Clackamas, OR
Kiema Car Part, Inc. November 1, 1994
El Monte, CA
</TABLE>
-8-
<PAGE> 9
<TABLE>
<S> <C>
Shoreline Auto Parts November 1, 1994
Seattle, WA
Lockport Automotive Supply, Inc. December 1, 1994
Lockport, NY
Mircon, Inc. Scardsdale Auto Parts December 1, 1994
Scarsdale, NY
Motor Parts Company December 1, 1994
Booneville, MS
Davis & Wilmar, Inc. May 1, 1993
Pittsburg, PA (Acquired 7/1/92)
The Parts, Inc. January 1, 1995
Anchorage, AK (Acquired 1/1/94)
Dade City Jobbing Group January 1, 1994
Dade City, FL (Acquired 1/2/92)
Colorado Parts Company December 1, 1994
(4 stores) Ft. Collins, Loveland,
Longmont, CO
Serene Plaza Auto Parts December 1, 1994
Seattle, WA
Atlantic Tracy Inc. November 1, 1995
Summerville, MA
Midcap Bearing Corporation June 1, 1995
San Antonio, TX
Motion Equipment, Inc. June 1, 1995
Houston, TX
Power Drives & Bearings, Inc. October 1,1995
Omaha, NB
Auto Parts Companies of Topeka July 1, 1996
Kansas City, KS
Auto Parts of Bonner Springs, Inc. July 1, 1996
Bonner Springs, KS
</TABLE>
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<TABLE>
<S> <C>
Auto Parts of Holton, Inc. July 1, 1996
Holton, KS
Auto Parts of Junction City, Inc. July 1, 1996
Junction City, KS
Auto Parts of Leavenworth, Inc. July 1, 1996
Leavenworth, KS
Auto Parts of Salina, Inc. July 1, 1996
Salina, KS
Auto Parts of Sedalia, Inc. July 1, 1996
Sedalia, KS
Auto Parts West, Inc. July 1, 1996
Topeka, KS
Auto Supply North, Inc. July 1, 1996
Topeka, KS
Auto Parts of Eastboro, Inc. July 1, 1996
Topeka, KS
Auto Partsmith, Inc. July 1, 1996
Topeka, KS
Auto Parts of Wichita #1, Inc. July 1, 1996
Wichita, KS
Auto Parts of Wichita #2, Inc. July 1, 1996
Wichita, KS
Auto Parts of Wichita #3, Inc. July 1, 1996
Wichita, KS
Auto Parts of St. Joe, Inc. July 1, 1996
St. Joseph, MO
Friend's Motor Supply, Inc. June 30, 1997
Hastings, NE
Standard Parts, Inc. June 5, 1997
Monroe, LA
</TABLE>
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<TABLE>
<S> <C>
Utah Bearing and Fabrication, Inc. October 3,1997
Salt Lake City, UT
Colorado Bearing and Supply, Inc. October 3, 1997
Denver, CO
Quality Auto Supply of Alaska, Inc. April 1, 1998
Palmer, AK
Berry Bearing Company /Tom Steel Div. January 1, 1998
Lyons, IL (Acquired 2/93)
Cascade Bearings April 1, 1998
Yakima, WA
Horizon U.S.A. Data Supplies, Inc. August 1, 1998
Reno, NV (Acquired on 4/1/95)
Berry Bearing Company (all divisions October 1, 1998
other than Tom Steel Division) (Acquired 2/93)
Lyons, IL
</TABLE>
FURTHER RESOLVED, that the amount of "$3,500" set forth in Section 6.04
(Small Payments) shall be changed to read "$5,000."
This amendment shall be effective January 1, 1998. Except as amended
herein, the Plan shall remain in full force and effect.
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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 date indicated above.
PENSION COMMITTEE TO THE
GENUINE PARTS COMPANY
PENSION PLAN
By: /s/ George W. Kalafut
---------------------------------
Date: August 19, 1998
-------------------------------
By: /s/ Edward J. Van Stedum
---------------------------------
Date: August 19, 1998
-------------------------------
By: /s/ Jerry Nix
---------------------------------
Date: August 19, 1998
-------------------------------
By: /s/ Frank M. Howard
---------------------------------
Date: August 19, 1998
-------------------------------
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<PAGE> 1
Exhibit No. 10.29
GENUINE PARTS COMPANY
1999 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the Genuine Parts Company 1999 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
Genuine Parts Company (the "Company"), by linking the personal interests of its
employees, officers and directors to those of Company shareholders and by
providing such persons with an incentive for outstanding performance. The Plan
is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of employees, officers and directors
upon whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent. Accordingly, the Plan permits the
grant of incentive awards from time to time to selected employees, officers and
directors.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of the date upon
which it shall be approved by the shareholders of the Company.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:
(a) "Award" means any Option, Restricted Stock Award,
Performance Unit Award, or Other Stock-Based Award, or any other right
or interest relating to Stock or cash, granted to a Participant under
the Plan.
(b) "Award Agreement" means any written agreement, contract,
or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means and includes each of the
following:
<PAGE> 2
(1) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 25%
or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by a
Person who is on the Effective Date the beneficial owner of
25% or more of the Outstanding Company Voting Securities, (ii)
any acquisition directly from the Company, (iii) any
acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company, or (v) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii)
of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(3) Consummation of a reorganization, merger,
consolidation or share exchange or sale or other disposition
of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally
in the election of directors of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Voting Securities, and (ii) no Person
(excluding
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<PAGE> 3
any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the
combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (iii)
at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Company" means Genuine Parts Company, a Georgia
corporation.
(h) "Covered Employee" means a covered employee as defined in
Code Section 162(m)(3).
(i) "Disability" shall mean any illness or other physical or
mental condition of a Participant that renders the Participant
incapable of performing his customary and usual duties for the Company,
or any medically determinable illness or other physical or mental
condition resulting from a bodily injury, disease or mental disorder
which, in the judgment of the Committee, is permanent and continuous in
nature. The Committee may require such medical or other evidence as it
deems necessary to judge the nature and permanency of the Participant's
condition. Notwithstanding the above, with respect to an Incentive
Stock Option, Disability shall mean Permanent and Total Disability as
defined in Section 22(e)(3) of the Code.
(j) "Effective Date" has the meaning assigned such term in
Section 2.1.
(k) "Fair Market Value", on any date, means (i) if the Stock
is listed on a securities exchange or is traded over the Nasdaq
National Market, the closing sales price on such exchange or over such
system on such date or, in the absence of reported sales on such date,
the closing sales price on the immediately preceding date on which
sales were reported, or (ii) if the Stock is not listed on a securities
exchange or traded over the Nasdaq National Market, the mean between
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<PAGE> 4
the bid and offered prices as quoted by Nasdaq for such date, provided
that if it is determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will be
determined by such other method as the Committee determines in good
faith to be reasonable.
(l) "Incentive Stock Option" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(m) "Non-Qualified Stock Option" means an Option that is not
an Incentive Stock Option.
(n) "Option" means a right granted to a Participant under
Article 7 of the Plan to purchase Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(o) "Other Stock-Based Award" means a right, granted to a
Participant under Article 12, that relates to or is valued by reference
to Stock or other Awards relating to Stock.
(p) "Parent" means a corporation which owns or beneficially
owns a majority of the outstanding voting stock or voting power of the
Company. For Incentive Stock Options, the term shall have the same
meaning as set forth in Code Section 424(e).
(q) "Participant" means a person who, as an employee, officer
or director of the Company or any Subsidiary, has been granted an Award
under the Plan.
(r) "Performance Unit" means a right granted to a Participant
under Article 9, to receive cash, Stock, or other Awards, the payment
of which is contingent upon achieving certain performance goals
established by the Committee.
(s) "Plan" means the Genuine Parts Company 1999 Long-Term
Incentive Plan, as amended from time to time.
(t) "Restricted Stock Award" means Stock granted to a
Participant under Article 10 that is subject to certain restrictions
and to risk of forfeiture.
(u) "Stock" means the $1.00 par value common stock of the
Company and such other securities of the Company as may be substituted
for Stock pursuant to Article 14.
(v) "Subsidiary" means any corporation, limited liability
company, partnership or other entity of which a majority of the
outstanding voting stock or
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<PAGE> 5
voting power is beneficially owned directly or indirectly by the
Company. For Incentive Stock Options, the term shall have the meaning
set forth in Code Section 424(f).
(w) "1933 Act" means the Securities Act of 1933, as amended
from time to time.
(x) "1934 Act" means the Securities Exchange Act of 1934, as
amended from time to time.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Compensation and
Stock Option Committee of the Board or, at the discretion of the Board from time
to time, by the Board. The Committee shall consist of two or more members of the
Board. It is intended that the directors appointed to serve on the Committee
shall be "non-employee directors" (within the meaning of Rule 16b-3 promulgated
under the 1934 Act) and "outside directors" (within the meaning of Code Section
162(m) and the regulations thereunder) to the extent that Rule 16b-3 and, if
necessary for relief from the limitation under Code Section 162(m) and such
relief is sought by the Company, Code Section 162(m), respectively, are
applicable. However, the mere fact that a Committee member shall fail to qualify
under either of the foregoing requirements shall not invalidate any Award made
by the Committee which Award is otherwise validly made under the Plan. The
members of the Committee shall be appointed by, and may be changed at any time
and from time to time in the discretion of, the Board. During any time that the
Board is acting as administrator of the Plan, it shall have all the powers of
the Committee hereunder, and any reference herein to the Committee (other than
in this Section 4.1) shall include the Board.
4.2 ACTION BY THE COMMITTEE. For purposes of administering the Plan,
the following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Parent or Subsidiary, the Company's independent certified public accountants, or
any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
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<PAGE> 6
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
under the Plan, including but not limited to, the exercise price, grant
price, or purchase price, any restrictions or limitations on the Award,
any schedule for lapse of forfeiture restrictions or restrictions on
the exercisability of an Award, and accelerations or waivers thereof,
based in each case on such considerations as the Committee in its sole
discretion determines;
(e) Accelerate the vesting or lapse of restrictions of any
outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines;
(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(h) Decide all other matters that must be determined in
connection with an Award;
(i) Establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Plan;
(j) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided herein.
4.4. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
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<PAGE> 7
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
14.1, the aggregate number of shares of Stock reserved and available for Awards
or which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Performance Unit Award) shall be 9,000,000, of
which not more than 10% may be granted as Awards of Restricted Stock or
unrestricted Stock Awards.
5.2. LAPSED AWARDS. To the extent that an Award is canceled,
terminates, expires or lapses for any reason, any shares of Stock subject to the
Award will again be available for the grant of an Award under the Plan and
shares subject to Awards settled in cash will be available for the grant of an
Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to
the contrary (but subject to adjustment as provided in Section 14.1), the
maximum number of shares of Stock with respect to one or more Options that may
be granted during any one calendar year under the Plan to any one Participant
shall be 500,000. The maximum fair market value (measured as of the date of
grant) of any Awards other than Options that may be received by any one
Participant (less any consideration paid by the Participant for such Award)
during any one calendar year under the Plan shall be $7,500,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are
employees, officers or directors of the Company or a Parent or Subsidiary.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock
under an Option shall be determined by the Committee, provided that the
exercise price for any Option shall not be less than the Fair Market
Value as of the date of the grant.
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<PAGE> 8
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part. The Committee also shall determine the performance or
other conditions, if any, that must be satisfied before all or part of
an Option may be exercised. The Committee may waive any exercise
provisions at any time in whole or in part based upon factors as the
Committee may determine in its sole discretion so that the Option
becomes exerciseable at an earlier date.
(c) PAYMENT. The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements), and the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants; provided that if shares of Stock surrendered in payment
of the exercise price were themselves acquired otherwise than on the
open market, such shares shall have been held by the Participant for at
least six months.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a
written Award Agreement between the Company and the Participant. The
Award Agreement shall include such provisions, not inconsistent with
the Plan, as may be specified by the Committee.
(e) ADDITIONAL OPTIONS UPON EXERCISE. The Committee may, in
its sole discretion, provide in an Award Agreement, or in an amendment
thereto, for the automatic grant of a new Option to any Participant who
delivers shares of Stock as full or partial payment of the exercise
price of the original Option. Any new Option granted in such a case (i)
shall be for the same number of shares of Stock as the Participant
delivered in exercising the original Option, (ii) shall have an
exercise price of 100% of the Fair Market Value of the surrendered
shares of Stock on the date of exercise of the original Option (the
grant date for the new Option), and (iii) shall have a term equal to
the unexpired term of the original Option.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock
shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option shall not be less than the Fair Market Value as
of the date of the grant.
(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse
under the earliest of the following circumstances; provided, however,
that the
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<PAGE> 9
Committee may, prior to the lapse of the Incentive Stock Option under
the circumstances described in paragraphs (3), (4) and (5) below,
provide in writing that the Option will extend until a later date, but
if Option is exercised after the dates specified in paragraphs (3), (4)
and (5) below, it will automatically become a Non-Qualified Stock
Option:
(1) The Incentive Stock Option shall lapse as of the
option expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years
after it is granted, unless an earlier time is set in the
Award Agreement.
(3) If the Participant terminates employment for any
reason other than as provided in paragraph (4) or (5) below,
the Incentive Stock Option shall lapse, unless it is
previously exercised, three months after the Participant's
termination of employment; provided, however, that if the
Participant's employment is terminated by the Company for
cause or by the Participant without the consent of the
Company, the Incentive Stock Option shall (to the extent not
previously exercised) lapse immediately.
(4) If the Participant terminates employment by
reason of his Disability, the Incentive Stock Option shall
lapse, unless it is previously exercised, one year after the
Participant's termination of employment.
(5) If the Participant dies while employed, or during
the three-month period described in paragraph (3) or during
the one-year period described in paragraph (4) and before the
Option otherwise lapses, the Option shall lapse one year after
the Participant's death. Upon the Participant's death, any
exercisable Incentive Stock Options may be exercised by the
Participant's beneficiary, determined in accordance with
Section 13.6.
Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an
Option after termination of employment, the Option may be exercised
only with respect to the shares that were otherwise vested on the
Participant's termination of employment.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market
Value (determined as of the time an Award is made) of all shares of
Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.00.
(e) TEN PERCENT OWNERS. No Incentive Stock Option shall be
granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the
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<PAGE> 10
Company or any Parent or Subsidiary unless the exercise price per share
of such Option is at least 110% of the Fair Market Value per share of
Stock at the date of grant and the Option expires no later than five
years after the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an
Incentive Stock Option may be made pursuant to the Plan after the day
immediately prior to the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant or, in
the case of the Participant's Disability, by the Participant's guardian
or legal representative.
(h) DIRECTORS. The Committee may not grant an Incentive Stock
Option to a non-employee director. The Committee may grant an Incentive
Stock Option to a director who is also an employee of the Company or
Parent or Subsidiary but only in that individual's position as an
employee and not as a director.
ARTICLE 9
PERFORMANCE UNITS
9.1. GRANT OF PERFORMANCE UNITS. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Units gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Units are granted, in
whole or in part, as the Committee shall establish at grant or thereafter. The
Committee shall set performance goals and other terms or conditions to payment
of the Performance Units in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Units
that will be paid to the Participant.
9.3. OTHER TERMS. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
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<PAGE> 11
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Committee at
the time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Company; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
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<PAGE> 12
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 14.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made, and after taking into account the tax, securities and accounting
effects of such an exchange.
13.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option granted in tandem with the Incentive Stock Option exceed
a period of ten years from the date of its grant (or, if Section 7.2(e) applies,
five years from the date of its grant).
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and
any applicable law or Award Agreement, payments or transfers to be made by the
Company or a Parent or Subsidiary on the grant or exercise of an Award may be
made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
13.5. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or a Parent or Subsidiary, or
shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Parent or Subsidiary. No unexercised
or restricted Award shall be assignable or transferable by a Participant other
than by will or the laws of descent and distribution or, except in the case of
an Incentive Stock Option, pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award
under the Plan; provided, however, that the Committee may (but need not) permit
other transfers where the Committee concludes that such transferability (i) does
not result in accelerated taxation, (ii) does not cause any Option intended to
be an incentive stock option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any factors
deemed relevant,
-12-
<PAGE> 13
including without limitation, any state or federal tax or securities laws or
regulations applicable to transferable Awards.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
13.8. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise
provided in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, and other Awards in the nature of rights that may be
exercised shall become fully exercisable and all restrictions on outstanding
Awards shall lapse; provided, however that such acceleration will not occur if,
in the opinion of the Company's accountants, such acceleration would preclude
the use of "pooling of interest" accounting treatment for a Change in Control
transaction that (a) would otherwise qualify for such accounting treatment, and
(b) is contingent upon qualifying for such accounting treatment. To the extent
that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options.
13.9. ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options and other
Awards in the nature of rights that may be exercised to be fully exercisable,
and/or all restrictions on all outstanding Awards to have lapsed, in each case,
as of such date as the Committee may, in its sole discretion, declare, which may
be on or before the consummation of such transaction or event. To the extent
that this provision causes Incentive Stock Options to exceed the
-13-
<PAGE> 14
dollar limitation set forth in Section 7.2(d), the excess Options shall be
deemed to be Non-Qualified Stock Options.
13.10. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an
event has occurred as described in Section 13.8 or 13.9 above, the Committee may
in its sole discretion at any time determine that all or a portion of a
Participant's Options and other Awards in the nature of rights that may be
exercised shall become fully or partially exercisable, and/or that all or a part
of the restrictions on all or a portion of the outstanding Awards shall lapse,
in each case, as of such date as the Committee may, in its sole discretion,
declare. The Committee may discriminate among Participants and among Awards
granted to a Participant in exercising its discretion pursuant to this Section
13.10.
13.11 EFFECT OF ACCELERATION. If an Award is accelerated under Section
13.8 or 13.9, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.
13.12. PERFORMANCE GOALS. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Company (or one or more Subsidiaries or divisions
of the Company) of a specified target return, or target growth in return, on
equity or assets, (b) the Company's stock price, (c) the achievement by the
Company (or one or more Subsidiaries or divisions of the Company) of a specified
target, or target growth in, revenues, net income (which may be on a pre-tax or
after-tax basis) or earnings per share, (d) the achievement of objectively
determinable goals with respect to service or product delivery, service or
product quality, sales, inventory management, customer satisfaction, meeting
budgets and/or retention of employees, or (e) any combination of the goals set
forth in (a) through (d) above. If an Award is made on such basis, the Committee
shall establish goals not later than ninety (90) days after the beginning of the
period for which such performance goal relates (or such other date as may be
permitted or required under Code Section 162(m) or the regulations thereunder)
and the Committee may for any reason reduce (but not increase) any Award,
notwithstanding the achievement of a specified goal. Any payment of an Award
granted with performance goals shall be conditioned on the written certification
of the Committee in each case that the performance goals and any other material
conditions were satisfied.
13.13. TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by
-14-
<PAGE> 15
the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Company to one of its Parents or Subsidiaries, transfers from a Parent
or Subsidiary to the Company, or transfers from one Parent or Subsidiary to
another Parent or Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the
Stock, the authorization limits under Section 5.1 and 5.4 shall be increased
proportionately, and the shares of Stock then subject to each Award shall be
increased proportionately without any change in the aggregate purchase price
therefor. In the event the Stock shall be changed into or exchanged for a
different number or class of shares of stock or securities of the Company or of
another corporation, whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, the authorization limits under Section 5.1 and 5.4 shall be
adjusted proportionately, and there shall be substituted for each such share of
Stock then subject to each Award the number and class of shares into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award, or, subject
to Section 15.2, there shall be made such other equitable adjustment as the
Committee shall approve.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the
Committee may, at any time and from time to time, amend, modify or terminate the
Plan without shareholder approval; provided, however, that the Board or
Committee may condition any amendment or modification on the approval of
shareholders of the Company if such approval is necessary or deemed advisable
with respect to tax, securities or other applicable laws, policies or
regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that, subject to the terms of the
applicable Award Agreement, such amendment, modification or termination shall
not, without the Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination, and provided
further that, except as otherwise permitted in the Plan, the exercise price of
any Option may not be reduced and the original term of any Option may not be
extended. No termination, amendment, or modification of the Plan shall adversely
affect any Award previously granted under the Plan, without the written consent
of the Participant.
-15-
<PAGE> 16
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or eligible participant shall
have any claim to be granted any Award under the Plan, and neither the Company
nor the Committee is obligated to treat Participants or eligible participants
uniformly.
16.2. NO SHAREHOLDER RIGHTS. No Award gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require that any
such withholding requirement be satisfied, in whole or in part, by withholding
shares of Stock having a Fair Market Value on the date of withholding equal to
the amount required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.
16.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Parent or Subsidiary to terminate any Participant's employment or status as
an officer or director at any time, nor confer upon any Participant any right to
continue as an employee, officer or director of the Company or any Parent or
Subsidiary.
l6.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Parent or
Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable law,
each member of the Committee shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or
-16-
<PAGE> 17
Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall
be taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the Company
or any Parent or Subsidiary unless provided otherwise in such other plan.
16.8. EXPENSES. The expenses of administering the Plan shall be borne
by the Company and its Parents or Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
16.10. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
16.11. FRACTIONAL SHARES. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock paid under the Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, and the Company
may restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
16.13. GOVERNING LAW. To the extent not governed by federal law, the
Plan and all Award Agreements shall be construed in accordance with and governed
by the laws of the State of Georgia.
16.14 ADDITIONAL PROVISIONS. Each Award Agreement may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of this
Plan.
-17-
<PAGE> 18
The foregoing is hereby acknowledged as being the Genuine Parts Company
1999 Long-Term Incentive Plan as adopted by the Board of Directors of the
Company on February 15, 1999 and approved by the Company's shareholders on April
19, 1999.
Genuine Parts Company
By: /s/ George W. Kalafut
---------------------------
Its: Executive Vice President - Finance & Administration
------------------------------------------------------
-18-
<PAGE> 1
Exhibit No. 10.30
SUMMARY OF THE PROPOSED
GENUINE PARTS COMPANY 1999 ANNUAL INCENTIVE BONUS PLAN
February 15, 1999
The Genuine Parts Company 1999 Annual Incentive Bonus Plan (the "Bonus
Plan") will be a replacement for the existing Genuine Parts Company Annual
Incentive Bonus Plan (the "Predecessor Plan"), which is scheduled to expire on
December 31, 1999.
The Bonus Plan provides for the payment of annual monetary awards to
each participant equal to a percentage of such participant's base salary based
upon the achievement by the Company of certain "Performance Goals" as discussed
below. The Bonus Plan is intended to preserve the Company's federal income tax
deduction for annual bonus payments under the Bonus Plan to "covered employees"
(as defined below) during the years 1999 to 2003 by meeting the requirements for
performance-based compensation under Section 162(m) of the Code. The Bonus Plan
will be effective as of January 1, 1999 and has a term of five (5) years,
subject to earlier termination by the Board of Directors.
The following is a summary of the Bonus Plan.
ELIGIBILITY. Participation in the Bonus Plan is limited to the
executive officers of the Company and any other employee(s) of the Company or
its subsidiaries which the Committee, at the time it sets Performance Goals for
a particular year, reasonably believes may be deemed to be a "covered employee"
for such year under Code Section 162(m), as the same may be amended from time to
time. Under Code Section 162(m), a covered employee currently is defined as any
individual who, on the last day of the taxable year, is (i) the chief executive
officer of the Company or acting in that capacity, or (ii) one of the four
highest compensated officers of the Company (other than the chief executive
officer) determined pursuant to the executive compensation rules under the
Securities Exchange Act of 1934.
PERFORMANCE GOALS. Each participant in the Bonus Plan shall be eligible
to receive bonuses in connection with a particular fiscal year during the term
of the Bonus Plan if the Company (or, for certain executive officers, one or
more subsidiaries or divisions of the Company) meets or exceeds certain
performance goals ("Performance Goals") set every year by the Committee. Not
later than ninety (90) days after the commencement of any fiscal year during the
term of the Bonus Plan (or such other date as may be permitted or required by
the Code), the Committee will set in writing Performance Goals based upon (a)
the achievement by the Company (or one or more subsidiaries or divisions of the
Company) of a specified target return, or target growth in return, on equity or
assets, (b) the Company's stock price, (c) the achievement by the Company (or
one or more subsidiaries or divisions of the Company) of a specified target, or
target growth in, revenues, net income (which may be on a pre-tax or after-tax
basis) or earnings per share, (d) the achievement of objectively determinable
goals with respect to service or product delivery, service or product quality,
sales, inventory management, customer satisfaction, meeting budgets and/or
retention of employees, or (e) any combination of the goals set forth in (a)
through (d) above. At the time the Committee sets the Performance Goals for a
particular fiscal year, it also sets in writing the percentages of each
participant's salary which will be awarded to such participant if the Company
(or one or more subsidiaries or divisions of the Company, as applicable)
achieves the various Performance Goals.
<PAGE> 2
LIMITATION OF BENEFITS. In no event shall any participant receive bonus
payments under the Bonus Plan in connection with any one fiscal year which
exceed $2,000,000.
PLAN ADMINISTRATION. The Bonus Plan will be administered by the
Compensation and Stock Option Committee. The Committee shall set the Performance
Goals in connection with each fiscal year during the term of the Bonus Plan. The
Committee may amend the Bonus Plan at any time, provided that no such amendment
may, without the approval of the shareholders of the Company, change the
material terms of a Performance Goal or effect such other change that would
cause the loss of any tax deduction to the Company under Code Section 162(m)
absent shareholder approval. Payments under the Bonus Plan shall be made
promptly after the Committee certifies in writing that the relevant Performance
Goals and other terms of the Bonus Plan were satisfied in connection with such
payments. Notwithstanding the above, the Committee may, in its discretion,
reduce the amount of compensation otherwise payable to participants under the
Bonus Plan.
-2-
<PAGE> 1
EXHIBIT 13
GENUINE PARTS COMPANY
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
- --------------------------------------------------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT PER SHARE DATA 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $6,614,032 $6,005,245 $5,720,474 $5,261,904 $4,858,415
Cost of goods sold 4,611,525 4,178,642 4,002,971 3,654,703 3,343,699
Selling, administrative and other expenses 1,413,390 1,261,003 1,172,270 1,096,407 1,039,848
Income before income taxes 589,117 565,600 545,233 510,794 474,868
Income taxes 233,323 223,203 215,157 201,626 186,320
Net income $ 355,794 $ 342,397 $ 330,076 $ 309,168 $ 288,548
Average common shares outstanding during
year - assuming dilution* 180,081 180,165 182,189 184,375 186,494
Per common share:*
Diluted net income $ 1.98 $ 1.90 $ 1.81 $ 1.68 $ 1.55
Dividends declared 1.00 .96 .89 .84 .77
December 31 closing stock price 33.44 33.94 29.67 27.33 24.00
Long-term debt, less current maturities 588,640 209,490 110,241 60,607 11,431
Shareholders' equity 2,053,332 1,859,468 1,732,054 1,650,882 1,526,165
Total assets $3,600,380 $2,754,363 $2,521,631 $2,274,132 $2,029,471
==========================================================================
</TABLE>
*Adjusted to reflect the three-for-two stock split in 1997
SELECTED RATIO ANALYSIS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
- -----------------------------------------------------------------------------------------------------------------------
IN % OF NET SALES 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost of goods sold 69.72% 69.58% 69.98% 69.46% 68.82%
Selling, administrative and other expenses 21.37 21.00 20.49 20.84 21.40
Income before income taxes 8.91 9.42 9.53 9.71 9.77
Net income 5.38 5.70 5.77 5.88 5.94
Rate earned on shareholders' equity
at the beginning of each year 19.13% 19.77% 19.99% 20.26% 19.97%
================================================================
</TABLE>
MARKET AND DIVIDEND INFORMATION
High and Low Sales Price and Dividends per Share of Common Shares Traded on the
New York Stock Exchange.
Adjusted to reflect the three-for-two stock split in
1997.
<TABLE>
<CAPTION>
SALES PRICE OF COMMON SHARES
- ----------------------------------------------------------------------------------------------
QUARTER 1998 1997
- ----------------------------------------------------------------------------------------------
High Low High Low
<S> <C> <C> <C> <C>
First $38.25 $32.44 $32.17 $28.67
Second 38.00 32.75 35.44 29.83
Third 35.50 29.88 35.88 30.00
Fourth 33.94 28.25 33.94 30.00
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS DECLARED PER SHARE
- ----------------------------------------------------------------------------------------------
1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
First $.25 $.24
Second .25 .24
Third .25 .24
Fourth .25 .24
</TABLE>
Number of Record Holders of Common Stock: 7,449
21
<PAGE> 2
GENUINE PARTS COMPANY
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, 1998 and 1997, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Atlanta, Georgia
February 3, 1999
22
<PAGE> 3
GENUINE PARTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
December 31, 1998
RESULTS OF OPERATIONS:
Net sales in 1998 increased for the 49th consecutive year to a record high of
$6.6 billion. This was an increase of 10% over the prior year amount of $6.0
billion and compares with increases of 5% in 1997, and 9% in 1996. Sales would
have increased approximately 6% in 1998 excluding acquisitions completed in
1998. Sales for the Automotive Parts Group increased 6% in 1998 versus 2% in
1997, reflecting slightly improved conditions in the automotive aftermarket and
the effect of acquisitions. Price increases for the Automotive Parts Group were
flat in 1998 and .9% in 1997. Sales for the Industrial Parts Group increased 8%
in 1998 versus 10% in 1997, reflecting slowing growth in industrial production
and an overall downturn in the economy in certain industrial markets such as
steel, food and paper. Price increases for the Industrial Parts Group were 1% in
1998 and 1.4% in 1997. Sales for the Office Products Group increased 4% in 1998
and in 1997, reflecting continued consolidation in the office products industry
and very aggressive competition. Price increases for the Office Products Group
were less than 1% in 1998 and in 1997. Price increases for the
Electrical/Electronics Group, which was acquired on July 1, 1998, were less than
1% in 1998.
Cost of goods sold was 69.7% of net sales in 1998 compared to 69.6% in
1997 and 70.0% in 1996. Selling, administrative and other expenses increased 12%
in 1998 to $1.4 billion (8% increase, excluding 1998 acquisitions) and 8% in
1997 and was 21.4% of net sales in 1998, 21.0% of net sales in 1997, and 20.5%
of net sales in 1996. The effective income tax rate was 39.6% in 1998 and 39.5%
in 1997 and 1996. Net income as a percent of net sales was 5.4% in 1998, 5.7% in
1997, and 5.8% in 1996. Net income in 1998 increased 4% to $355.8 million over
1997 net income of $342.4 million, and net income in 1997 increased 4% over
1996. Diluted earnings per share were $1.98 in 1998 compared to $1.90 in 1997
for an increase of 4%.
On July 1, 1998, the Company acquired EIS, Inc., a distributor of
electrical/electronic materials, for a combination of cash and stock valued at
$180 million. In addition, on December 1, 1998, the Company acquired UAP Inc., a
Montreal, Canada based automotive parts distributor, for $231 million in cash.
Both transactions were accounted for under the purchase method of accounting.
Goodwill related to these acquisitions was approximately $267 million. In
addition, goodwill amortization was $5.1 million for 1998 compared to $1.6
million for 1997.
LIQUIDITY AND SOURCES OF CAPITAL:
The ratio of current assets to current liabilities was 3.3 to 1 at the close of
1998 with current assets amounting to 75% of total assets. Trade accounts
receivable and inventories increased 32% and 26% respectively, while working
capital increased 21%. Excluding the impact of acquisitions made in 1998, the
increases in accounts receivable, inventory and working capital would have been
9%, 4% and 9%, respectively. The increase in working capital has been financed
principally from the Company's cash flows generated by operations. At December
31, 1998, $95 million was outstanding under an unsecured revolving line of
credit with a bank compared to $36 million outstanding at December 31, 1997. At
December 31, 1998, the Company had the following unsecured term notes:$50
million, 5.98%, due 2000; $50 million, 5.95%, due 2001; $50 million, 6.125%, due
2002; $50 million, 5.98%, due 2002; $50 million, LIBOR plus .25%, due 2005; $50
million, LIBOR plus .25%, due 2008; and $231 million, LIBOR plus .55%, due 2003.
In 1998, the Company obtained a $200,000,000 line of credit and a $200,000,000
revolving line of credit each maturing in
EARNINGS PER SHARE*
<TABLE>
<CAPTION>
in dollars
- -------------------------------------------------------------------------------------
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.14 1.19 1.21 1.27 1.38 1.55 1.68 1.81 1.90 1.98
</TABLE>
*Restated to reflect stock splits
DIVIDENDS PER SHARE*
<TABLE>
<CAPTION>
in dollars
- -------------------------------------------------------------------------------------
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.53 0.61 0.65 0.67 0.71 0.77 0.84 0.89 0.96 1.00
</TABLE>
*Restated to reflect stock splits
23
<PAGE> 4
GENUINE PARTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
December, 2003. Interest on these lines is charged at the one month
LIBOR plus .55%(5.61% as of December 31, 1998) and is reset quarterly based on
the Company's leverage ratio. No amounts were outstanding at December 31, 1998
under these lines of credit. In addition, the weighted average interest rate on
the Company's outstanding borrowings was approximately 5.7% and 6.2% at December
31, 1998 and 1997, respectively. Total interest expense for all borrowings was
$20,096,000 in 1998, $13,365,000 in 1997 and $8,498,000 in 1996.
In addition, the Company had the following significant Canadian dollar
denominated borrowings translated into U.S. dollars at December 31, 1998:line of
credit, 5.62%, due 2003, $47 million outstanding and secured line of credit, $49
million, banker's acceptance rate plus .22%.
On August 16, 1994, the Board of Directors approved a stock repurchase
program which authorized the Company to reacquire up to 15 million shares of its
Common Stock. Through December 31, 1998, approximately 12.6 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 1999. Capital expenditures during 1998 amounted to $88 million
compared with $90 million in 1997 and $95 million in 1996. The amounts reflect
the Company's continuing geographic expansion as well as the upgrading of
existing facilities. It is anticipated that capital expenditures in 1999 will be
approximately the same as 1998.
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 the end of the 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 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 develop
24
<PAGE> 5
GENUINE PARTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
ment 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 will be expensed as incurred during the
current fiscal year and next fiscal year. To date, the Company has expensed
approximately $3 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.
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.
QUARTERLY RESULTS OF OPERATIONS:
Miscellaneous year-end adjustments resulted in increasing net income during the
fourth quarter of 1998 and 1997 by approximately $27.7 million ($.15 per share)
and $26.2 million ($.15 per share), respectively. Miscellaneous year-end
adjustments primarily relate to changes in management's estimates and
assumptions related to the valuation of inventory, the calculation of volume
purchasing rebates earned and other adjustments to judgmental reserves which
cannot be accurately determined until the end of the year.
The following is a summary of the quarterly results of operations for
the years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
Three Months Ended
- -------------------------------------------------------------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
- -------------------------------------------------------------------------------------------------------------------
1998 (in thousands except for per share data)
<S> <C> <C> <C> <C>
Net Sales $1,533,138 $1,619,383 $1,760,102 $1,701,409
Gross Profit 446,736 477,403 514,425 563,943
Net Income 79,998 85,884 86,139 103,773
Basic Net Income per
Common Share .45 .48 .48 .58
Diluted Net Income
per Common Share .45 .48 .48 .58
1997
Net Sales $1,457,646 $1,510,456 $1,555,776 $1,481,367
Gross Profit 429,267 445,120 463,967 488,249
Net Income 76,595 83,741 83,712 98,349
Basic Net Income per
Common Share .43 .47 .47 .55
Diluted Net Income
per Common Share .42 .46 .47 .55
</TABLE>
25
<PAGE> 6
GENUINE PARTS COMPANY
SEGMENT DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales:
Automotive $3,262,406 $3,071,153 $3,008,105 $2,804,086 $2,693,961
Industrial 2,008,789 1,853,270 1,677,859 1,509,566 1,317,495
Office products 1,122,420 1,080,822 1,034,510 948,252 846,959
Electrical/electronic materials 220,417 -- -- -- --
----------------------------------------------------------------------------------
Total net sales $6,614,032 $6,005,245 $5,720,474 $5,261,904 $4,858,415
==================================================================================
Operating profit:
Automotive $ 343,629 $ 325,188 $ 322,956 $ 308,818 $ 304,979
Industrial 176,456 166,367 151,129 133,016 111,855
Office products 113,821 110,793 103,439 93,997 78,291
Electrical/electronic materials 12,030 -- -- -- --
----------------------------------------------------------------------------------
Total operating profit 645,936 602,348 577,524 535,831 495,125
Interest expense (20,096) (13,365) (8,498) (3,419) (1,321)
Corporate expense (32,186) (26,943) (29,057) (25,939) (22,854)
Equity in income from investees 3,329 6,730 9,398 8,298 7,224
Goodwill amortization (5,157) (1,624) (1,548) (1,265) (933)
Minority interests (2,709) (1,546) (2,586) (2,712) (2,373)
----------------------------------------------------------------------------------
Income before income taxes $ 589,117 $ 565,600 $ 545,233 $ 510,794 $ 474,868
==================================================================================
Assets:
Automotive $1,966,774 $1,623,644 $1,478,023 $1,304,211 $1,205,981
Industrial 671,454 584,356 524,998 479,652 404,131
Office products 442,220 380,804 376,616 357,821 307,585
Electrical/electronic materials 147,074 -- -- -- --
Corporate 18,385 18,611 15,662 12,876 5,950
Goodwill and equity investments 354,473 146,948 126,332 119,572 105,824
----------------------------------------------------------------------------------
Total assets $3,600,380 $2,754,363 $2,521,631 $2,274,132 $2,029,471
==================================================================================
Depreciation and amortization:
Automotive $ 43,637 $ 40,675 $ 34,265 $ 29,147 $ 25,773
Industrial 8,619 6,688 5,860 4,985 4,607
Office products 8,391 7,865 7,437 6,705 5,172
Electrical/electronic materials 1,508 -- -- -- --
Corporate 1,993 2,015 1,335 1,132 889
Goodwill 5,157 1,624 1,548 1,265 933
----------------------------------------------------------------------------------
Total depreciation and amortization $ 69,305 $ 58,867 $ 50,445 $ 43,234 $ 37,374
==================================================================================
Capital expenditures:
Automotive $ 69,154 $ 68,305 $ 80,682 $ 67,643 $ 45,921
Industrial 6,972 13,451 7,330 12,132 4,164
Office products 6,901 6,069 5,652 10,587 13,547
Electrical/electronic materials 4,688 -- -- -- --
Corporate 546 2,600 1,494 407 2,370
----------------------------------------------------------------------------------
Total capital expenditures $ 88,261 $ 90,425 $ 95,158 $ 90,769 $ 66,002
==================================================================================
Net sales:
United States $6,535,020 $5,977,012 $5,697,053 $5,241,653 $4,841,294
Canada 79,012 28,233 23,421 20,251 17,121
----------------------------------------------------------------------------------
Total net sales $6,614,032 $6,005,245 $5,720,474 $5,261,904 $4,858,415
==================================================================================
Net property, plant and equipment:
United States $ 345,049 $ 370,751 $ 344,002 $ 301,418 $ 256,338
Canada 58,959 1,763 1,993 1,821 1,694
----------------------------------------------------------------------------------
Total net property, plant
and equipment $ 404,008 $ 372,514 $ 345,995 $ 303,239 $ 258,032
==================================================================================
</TABLE>
26
<PAGE> 7
GENUINE PARTS COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 84,972 $ 72,823
Trade accounts receivable 907,561 686,551
Merchandise inventories 1,660,233 1,321,597
Prepaid expenses and other current accounts 30,591 12,580
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,683,357 2,093,551
Goodwill, less accumulated amortization (1998--$12,578; 1997--$7,421) 344,733 62,091
Other assets 168,282 226,207
PROPERTY, PLANT AND EQUIPMENT:
Land 40,238 49,025
Buildings, less allowance for depreciation (1998--$85,107; 1997--$72,569) 131,712 138,263
Machinery and equipment, less allowance for depreciation
(1998--$270,467; 1997--$186,065) 232,058 185,226
- ---------------------------------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 404,008 372,514
----------------------------
$3,600,380 $2,754,363
============================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 509,532 $ 405,141
Current portion of long-term debt and other borrowings 156,316 36,670
Accrued compensation 54,696 38,967
Other accrued expenses 31,252 18,352
Dividends payable 44,776 43,436
Income taxes payable 21,837 14,372
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 818,409 556,938
LONG-TERM DEBT 588,640 209,490
DEFERRED INCOME TAXES 94,956 89,049
MINORITY INTERESTS IN SUBSIDIARIES 45,043 39,418
SHAREHOLDERS' EQUITY:
Preferred Stock, par value $1 per share--authorized
10,000,000 shares; none issued -- --
Common Stock, par value $1 per share--authorized
450,000,000 shares; issued 179,505,151 shares
in 1998; 178,947,976 shares in 1997 179,505 178,948
Additional paid-in capital 19,989 --
Accumulated other comprehensive income (3,110) --
Retained earnings 1,856,948 1,680,520
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,053,332 1,859,468
----------------------------
$3,600,380 $2,754,363
============================
</TABLE>
See accompanying notes.
27
<PAGE> 8
GENUINE PARTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
- -----------------------------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $6,614,032 $6,005,245 $5,720,474
Cost of goods sold 4,611,525 4,178,642 4,002,971
------------------------------------------
2,002,507 1,826,603 1,717,503
Selling, administrative and other expenses 1,413,390 1,261,003 1,172,270
------------------------------------------
Income before income taxes 589,117 565,600 545,233
Income taxes 233,323 223,203 215,157
------------------------------------------
NET INCOME $ 355,794 $ 342,397 $ 330,076
==========================================
Basic net income per common share $ 1.98 $ 1.91 $ 1.82
==========================================
Diluted net income per common share $ 1.98 $ 1.90 $ 1.81
==========================================
Average common shares outstanding 179,416 179,592 181,567
Dilutive effect of stock options and non-vested restricted stock awards 665 573 622
------------------------------------------
Average common shares outstanding--assuming dilution 180,081 180,165 182,189
==========================================
</TABLE>
See accompanying notes.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
---------------------- PAID-IN COMPREHENSIVE RETAINED SHAREHOLDERS'
DOLLARS IN THOUSANDS SHARES AMOUNT CAPITAL INCOME EARNINGS EQUITY
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 121,913,040 $ 121,913 $ -- $ -- $ 1,528,969 $ 1,650,882
Net income -- -- -- -- 330,076 330,076
-----------
Comprehensive income -- -- -- -- -- 330,076
-----------
Cash dividends declared -- -- -- -- (162,070) (162,070)
Stock options exercised,
including tax benefit 293,795 294 7,587 -- -- 7,881
Purchase of stock (2,174,545) (2,175) (7,587) -- (84,953) (94,715)
Three-for-two stock split 60,016,145 60,016 -- -- (60,016) --
---------------------------------------------------------------------------------------
Balance at December 31, 1996 180,048,435 180,048 -- -- 1,552,006 1,732,054
Net income -- -- -- -- 342,397 342,397
-----------
Comprehensive income -- -- -- -- -- 342,397
-----------
Cash dividends declared -- -- -- -- (172,334) (172,334)
Stock options exercised,
including tax benefit 656,443 657 12,270 -- -- 12,927
Purchase of stock (2,427,927) (2,428) (32,784) -- (41,549) (76,761)
Stock issued in connection
with acquisitions 671,025 671 20,514 -- -- 21,185
---------------------------------------------------------------------------------------
Balance at December 31, 1997 178,947,976 178,948 -- -- 1,680,520 1,859,468
Net income -- -- -- -- 355,794 355,794
Foreign currency translation
adjustment -- -- -- (3,110) -- (3,110)
-----------
Comprehensive income -- -- -- -- -- 352,684
-----------
Cash dividends declared -- -- -- -- (179,366) (179,366)
Stock options exercised,
including tax benefit 284,153 284 5,465 -- -- 5,749
Purchase of stock (2,311,580) (2,312) (74,023) -- -- (76,335)
Stock issued in connection
with acquisitions 2,584,602 2,585 88,547 -- -- 91,132
---------------------------------------------------------------------------------------
Balance at December 31, 1998 179,505,151 $ 179,505 $ 19,989 $(3,110) $ 1,856,948 $ 2,053,332
=======================================================================================
</TABLE>
See accompanying notes.
28
<PAGE> 9
GENUINE PARTS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
- --------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $355,794 $342,397 $330,076
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 69,305 58,867 50,445
Gain on sale of property, plant and equipment (1,664) (5,014) (786)
Provision for deferred taxes 10,379 13,843 13,930
Equity in income of investees (3,329) (6,730) (9,398)
Income applicable to minority interests 2,709 1,546 2,586
Changes in operating assets and liabilities:
Trade accounts receivable (74,165) (63,715) (57,531)
Merchandise inventories (107,290) (87,777) (106,364)
Other current assets (3,372) 1,033 13,333
Trade accounts payable 14,158 3,299 70,138
Other current liabilities 21,760 (7,140) 21,586
- --------------------------------------------------------------------------------------------------------------------------------
(71,509) (91,788) (2,061)
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 284,285 250,609 328,015
INVESTING ACTIVITIES
Purchase of property, plant and equipment (88,261) (90,425) (95,158)
Proceeds from sale of property, plant and equipment 67,522 11,580 4,385
Acquisition of businesses, net of cash acquired (310,911) (16,045) (413)
Other investing activities 6,088 (7,870) (22,893)
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (325,562) (102,760) (114,079)
FINANCING ACTIVITIES
Proceeds from lines of credit and other borrowings 841,000 849,000 566,808
Payments on lines of credit and other borrowings (782,000) (860,000) (564,808)
Proceeds from long-term debt 332,359 100,000 50,000
Payments on long-term debt (92,175) (712) (324)
Stock options exercised 5,749 12,927 7,881
Dividends paid (178,027) (169,156) (160,214)
Purchase of stock (76,335) (76,761) (94,715)
Contributions from minority interests 2,905 2,303 4,555
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 53,476 (142,399) (190,817)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (50) -- --
----------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,149 5,450 23,119
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 72,823 67,373 44,254
----------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 84,972 $ 72,823 $ 67,373
========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $200,280 $212,178 $187,809
========================================
Interest $ 18,867 $ 12,871 $ 8,405
========================================
</TABLE>
See accompanying notes.
29
<PAGE> 10
GENUINE PARTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
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.
Foreign Currency Translation
The balance sheets and statements of income of the Company's foreign
subsidiaries have been translated into U.S. dollars at the current and average
exchange rates, respectively.
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 49% interest in Grupo Auto Todo, a partnership formed by the
Company and Auto Todo, a Mexican automotive parts distributor. This investment
is accounted for by the equity method of accounting and is not material in
relation to the Company's consolidated financial statements. This investment is
included in other assets in the accompanying consolidated balance sheets. Until
December 1, 1998, the Company had approximately a 23% ownership interest in UAP
Inc., a Canadian automotive parts distributor, and 51% and 49% ownership
interests in two separate partnerships formed by the Company and UAP Inc. On
December 1, 1998, the Company acquired the remaining stock of UAP Inc. See Note
2.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for a majority of automotive parts,
electrical/electronic materials, 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 $152,032,000 and
$154,461,000 higher than reported at December 31, 1998 and December 31, 1997,
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.
Goodwill
Goodwill, which represents the excess of the purchase price paid over the fair
value of the net assets acquired in connection with business acquisitions, is
amortized over a period of 40 years.
Long-Lived Assets
Long-lived assets, including goodwill, are periodically reviewed for impairment
based on an assessment of future operations. The Company records impairment
losses 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.
Other Assets
Other assets consists of a prepaid pension asset, equity investments, and other
prepaid expenses.
Fair Value of Financial Instruments
The carrying amount reflected in the consolidated balance sheets for cash, cash
equivalents, accounts receivable, long-term debt and other borrowings
approximate their respective fair values.
Revenue Recognition
The Company recognizes revenues from product sales upon shipment to its
customers.
Net Income Per Common Share
Basic net income per common share is computed by dividing net income by the
weighted average number of common shares outstanding during the year. The
computation of diluted net income per common share includes the dilutive effect
of stock options and non-vested restricted stock awards. Options to purchase
1,790,000 shares of common stock at $35 per share were outstanding during 1998
and the second half of 1997 but were not included in the computation of diluted
net income per common share because the options' exercise price was greater than
the average market price of the common shares. Options to purchase 748,312
shares of common stock at an average exercise price of approximately $7 per
share issued in connection with a July 1, 1998 acquisition have been included in
the computation of diluted net income per share since the date of the
acquisition.
Comprehensive Income
As of January 1, 1998, the Company adopted Financial Accounting Standards Board
("FASB") Statement 130, Reporting Comprehensive Income. Statement 130
establishes new rules for the reporting and display of comprehensive income and
its components. Statement 130 requires foreign currency translation adjustments
and other items to be included in other comprehensive income. There were no
significant differences between net income and comprehensive income in 1997 and
1996.
Segment Information
On December 31, 1998, the Company adopted FASB Statement 131, Disclosures About
Segments of an Enterprise and Related
30
<PAGE> 11
GENUINE PARTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Information. The new rules establish revised standards for public companies
relating to the reporting of financial and descriptive information about their
operating segments in financial statements. The adoption of Statement 131 did
not affect the Company's primary financial statements.
New Accounting Pronouncements
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and for Hedging Activities. The statement requires the Company to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
derivatives are either offset against the change in fair value assets,
liabilities, or firm commitments through earnings or recognized in comprehensive
income until the hedged item is recognized in earnings. The ineffective portion
of a derivative's change in fair value will be immediately recognized in
earnings. The Company plans to adopt Statement No. 133 in 2000, however,
management does not expect its adoption to have a significant impact on the
Company's financial position or results of operations.
2. ACQUISITIONS
On July 1, 1998, the Company acquired EIS, Inc. and subsidiaries ("EIS"), a
distributor of electrical/electronic materials for a combination of cash and
stock valued at approximately $180,000,000, which includes certain non compete
agreements. On December 1, 1998, the Company acquired the remaining outstanding
shares of UAP Inc., a Montreal, Canada-based automotive parts distributor, for
cash totaling approximately $231,000,000. Both transactions were accounted for
under the purchase method of accounting. Goodwill, representing the excess of
the purchase price over the fair value of the net assets acquired, totaled
approximately $266,782,000.
The Company also made other individually insignificant acquisitions
during 1998 which were accounted for under the purchase method and resulted in
goodwill totaling approximately $21,017,000. The purchase price allocation for
all such acquisitions is preliminary. All acquired businesses are included in
the Company's consolidated statements of income from the dates of acquisition.
The following table summarizes the Company's unaudited pro forma
results of operations as if the 1998 acquisitions had occurred on January 1,
1997:
<TABLE>
<CAPTION>
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C>
Pro forma net sales $7,351,037 $7,055,103
Pro forma net income $ 359,133 $ 344,681
Pro forma basic net income
per common share $ 2.00 $ 1.92
Pro forma diluted net income
per common share $ 1.99 $ 1.91
</TABLE>
The pro forma results presented above include adjustments to reflect
interest expense on borrowings for the acquisitions, amortization of assets
acquired including intangibles, and the effect on weighted average outstanding
shares of common stock and stock options issued in connection with certain
acquisitions.
These pro forma unaudited results of operations do not purport to
represent what the Company's actual results of operations would have been if the
acquisitions had occurred on January 1, 1997, and should not serve as a forecast
of the Company's operating results for any future periods. The pro forma
adjustments are based solely upon certain assumptions that management believes
are reasonable under the circumstances at this time.
3. CREDIT FACILITIES
In 1998, the Company obtained a $200,000,000 line of credit and a $200,000,000
revolving line of credit each maturing in December, 2003. Interest on these
lines is charged at the one month Libor plus .55% (5.61% as of December 31,
1998) and is reset quarterly based on the Company's leverage ratio. No amounts
were outstanding at December 31, 1998 under these lines of credit.
Amounts outstanding under the Company's other credit facilities consist
of the following:
<TABLE>
<CAPTION>
December 31
IN THOUSANDS 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR DENOMINATED BORROWINGS:
Unsecured revolving lines of credit,
$100,000,000, federal funds rate plus
.10%, due May 1999 $ 95,000 $ 36,000
Unsecured term notes:
December 26, 1995, 5.98% fixed,
due December 2000 50,000 50,000
December 27, 1996, 5.95% fixed
until March 2000, then variable,
due December 2001 50,000 50,000
September 18, 1997, 6.125% fixed,
due September 2002 50,000 50,000
October 31, 1997, 5.98% fixed,
due October 2002 50,000 50,000
July 1, 1998, Libor plus .25%,
due July 2005 50,000 --
October 1, 1998, Libor plus .25%,
due October 2008 50,000 --
December 1, 1998, Libor plus .55%,
due December 2003 231,367 --
Other borrowings 12,259 10,160
CANADIAN DOLLAR DENOMINATED BORROWINGS
TRANSLATED INTO U.S. DOLLARS:
Unsecured revolving lines of credit,
$130,700,000, 5.62% average rate,
due May 2003 47,706 --
Unsecured demand loan, Libor plus .25% 9,611 --
Line of credit, $49,013,000, secured by
accounts receivable, Banker's Acceptance
rate plus .22%, cancelable on 30 days
notice or due March 2003 49,013 --
----------------------
744,956 246,160
Current portion of long-term debt
and other borrowings 156,316 36,670
----------------------
$588,640 $209,490
======================
</TABLE>
The principal amount of the Company's borrowings which were subject to
variable rates totaled approximately $532,697,000 and $36,000,000 at December
31, 1998 and 1997,
31
<PAGE> 12
GENUINE PARTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
respectively. In addition, the weighted average interest rate on the Company's
outstanding borrowings was approximately 5.7% and 6.2% at December 31, 1998 and
1997, respectively.
Amounts outstanding under the Company's $130,700,000 unsecured
revolving lines of credit are subject to interest rate swap agreements in the
notional amount of approximately $45,700,000 at December 31, 1998. In the
aggregate, such interest rate swap agreements have a weighted average fixed rate
of 5.67% and maturity dates from 1999 to 2003.
Any differences paid or received on interest rate swap agreements are
recognized as adjustments to interest expense over the life of each swap,
thereby adjusting the effective rate on the underlying obligation. The fair
value of these interest rate swap agreements, which is based on quoted prices
for those or similar instruments, is not material at December 31, 1998.
Interest is paid monthly on the term notes. The 1997 term notes contain
provisions whereby the rates may become variable (Libor plus .25%) in the year
2000, if such variable rates are higher. The $231,367,000 term note also
contains various restrictive covenants including, among other items, a provision
whereby the Company must maintain a debt to equity ratio not greater than 50%.
Total interest expense for all borrowings was $20,096,000 in 1998; $13,365,000
in 1997 and $8,498,000 in 1996.
Approximate maturities under the Company's credit facilities are as
follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1999 $156,316
2000 53,000
2001 53,000
2002 103,000
2003 279,640
Subsequent to 2003 100,000
--------
$744,956
========
</TABLE>
4. SHAREHOLDERS' EQUITY
The Company has a Shareholder Protection Rights Agreement which includes the
distribution of Rights to common shareholders under certain defined
circumstances. 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.
5. 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, 1998 (in thousands):
<TABLE>
<S> <C>
1999 $ 79,695
2000 62,463
2001 45,543
2002 33,795
2003 23,651
Subsequent to 2003 91,557
--------
$336,704
========
</TABLE>
In November 1998, the Company sold land and buildings with a carrying
value of approximately $50,000,000 under a sale leaseback arrangement. The
annual payment associated with the corresponding lease is $6,660,000. A gain of
approximately $10,000,000 was deferred and is being amortized over the term of
the lease. Rental expense for operating leases was $76,834,000 in 1998;
$65,137,000 in 1997; and $61,259,000 in 1996.
6. STOCK OPTIONS AND RESTRICTED STOCK AWARDS
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation," requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
The Company has authorized the grant of options of up to 6,750,000
shares of common stock. In accordance with stock option plans approved by
shareholders, options are granted to key personnel for the purchase of the
Company's 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.
Pro forma information regarding net income and earnings per share is
required by Statement 123, which also requires that the information be
determined as if the Company had accounted for its employee stock options
granted subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996, respectively: risk-free interest rates of 6.4%
and 6.3%; dividend yield of 2.5% and 3%; volatility factor of the expected
market price of the Company's common stock of .12, and a weighted-average
expected life of the option of 5.4 years and 7.3 years. No options were granted
during 1998.
32
<PAGE> 13
GENUINE PARTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands except per share amounts):
<TABLE>
<CAPTION>
1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net income $351,875 $338,978 $329,387
Pro forma basic net income per common share $ 1.96 $ 1.89 $ 1.81
Pro forma diluted net income per common share $ 1.95 $ 1.88 $ 1.81
</TABLE>
A summary of the Company's stock option activity and related
information are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
(000's) Price (000's) Price (000's) Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 3,588 $ 29 2,743 $23 3,318 $23
Granted -- -- 1,790 35 18 31
Issued in connection with acquisitions 748 7 -- -- -- --
Exercised (413) 24 (907) 20 (555) 19
Forfeited (96) 35 (38) 21 (38) 21
----- ----- -----
Outstanding at end of year 3,827 $ 26 3,588 $29 2,743 $23
===== ===== =====
Exercisable at end of year 2,792 $ 26 1,363 $24 2,106 $23
===== ===== =====
Weighted-average fair value of options
granted during the year $ -- $ 6.13 $ 6.31
===== ===== =====
Shares available for future grants 1,726 1,572 3,324
===== ===== =====
</TABLE>
Exercise prices for options exercised during 1998 ranged from
approximately $21 to $26. Exercise prices for options outstanding as of December
31, 1998 ranged from approximately $17 to $35, except for 748,312 options
granted in connection with the 1998 acquisition of EIS discussed in Note 2 for
which the range is $0.54 to $16. The weighted-average remaining contractual life
of those options is approximately 7 years.
On March 31, 1994, the Company entered into restricted stock agreements
with two officers which provide for the award of up to 150,000 and 75,000
shares, respectively, during the period 1994 through 1998 based on the Company
achieving certain increases in net income per common share and stock price
levels. Through December 31, 1998, the two officers have earned 84,000 and
42,000 shares, respectively. 99,000 shares which were forfeited under this plan
became available for grants under the Company's 1992 Stock Option and Incentive
Plan in 1998. 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.
7. INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of 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>
IN THOUSANDS 1998 1997
- --------------------------------------------------------------
<S> <C> <C>
Employee and retiree benefits $57,642 $53,228
Property, plant and equipment 25,728 25,704
Other 11,586 10,117
---------------------
$94,956 $89,049
=====================
</TABLE>
33
<PAGE> 14
GENUINE PARTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1998 1997 1996
- --------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $184,397 $171,676 $164,585
Deferred 10,379 13,843 13,930
State 38,547 37,684 36,642
--------------------------------
$233,323 $223,203 $215,157
================================
</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
are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1998 1997 1996
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate applied to
pre-tax income $206,191 $197,960 $190,831
Plus state income taxes, net
of Federal tax benefit 25,056 24,494 23,818
Other 2,076 749 508
---------------------------------------
$233,323 $223,203 $215,157
=======================================
</TABLE>
8. 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 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.
Pension benefits include amounts related to a supplemental retirement plan.
<TABLE>
<CAPTION>
Pension Benefits Other Postretirement Benefits
IN THOUSANDS 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGES IN BENEFIT OBLIGATION
Net benefit obligation at beginning of year $ 454,083 $ 433,625 $ 2,999 $ 3,821
Service cost 16,427 15,631 (76) (48)
Interest cost 34,629 31,650 138 242
Plan participants' contributions -- -- 2,359 2,100
Plan amendments -- (9,241) -- --
Actuarial loss (gain) 82,711 (445) (711) --
Gross benefits paid (20,982) (17,137) (3,282) (3,116)
----------------------------------------------------------
Net benefit obligation at end of year $ 566,868 $ 454,083 $ 1,427 $ 2,999
==========================================================
CHANGES IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 590,733 $ 487,753 $ -- $ --
Actual return on plan assets 69,848 97,277 -- --
Employer contributions 7,840 22,840 924 1,016
Plan participants' contribution -- -- 2,358 2,100
Gross benefits paid (20,982) (17,137) (3,282) (3,116)
----------------------------------------------------------
Fair value of plan assets at end of year $ 647,439 $ 590,733 $ -- $ --
==========================================================
</TABLE>
The following table sets forth the funded status of the plans and the
amount recognized in the balance sheet at December 31.
<TABLE>
<CAPTION>
Pension Benefits Other Postretirement Benefits
IN THOUSANDS 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Funded status at end of year $ 80,572 $ 136,608 $(1,427) $(2,999)
Unrecognized net actuarial loss 76,433 4,796 (2,799) (2,269)
Unrecognized prior service cost (18,020) (20,885) -- --
Unrecognized net transition obligation 781 1,041 -- --
-----------------------------------------------------------
Net amount recognized at end of year $ 139,766 $ 121,560 $(4,226) $(5,268)
===========================================================
</TABLE>
Net pension cost (income) included the following components:
<TABLE>
<CAPTION>
Pension Benefits Other Postretirement Benefits
IN THOUSANDS 1998 1997 1996 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 16,427 $ 15,631 $ 13,991 $ (76) $ (48) $ 55
Interest cost 34,629 31,650 29,548 138 242 452
Expected return on plan assets (59,123) (47,957) (41,806) -- -- --
Amortization of unrecognized transition obligation 260 260 260 -- -- --
Amortization of prior service cost (2,865) (2,409) (2,018) -- -- --
Amortization of actuarial loss (gain) 471 1,214 1,711 (180) (140) --
-------------------------------------------------------------------------
Net periodic pension (income) cost $(10,201) $ (1,611) $ 1,686 $(118) $ 54 $507
=========================================================================
</TABLE>
34
<PAGE> 15
GENUINE PARTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Assumptions used in the accounting for the defined benefit plans and
postretirement plan are as follows:
<TABLE>
<CAPTION>
Pension Benefits Other Postretirement Benefits
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-average discount rate 7.10% 7.40% 7.10% 7.40%
Rate of increase in future compensation levels 4.15% 4.15% -- --
Expected long-term rate of return on assets 10.00% 10.00% -- --
Health care cost trend on covered charges -- -- 8.25% 8.75%
</TABLE>
Effect of a one percentage point change in the 1998 assumed health care
cost trend:
<TABLE>
<CAPTION>
Decrease Increase
- -----------------------------------------------------------------------------
<S> <C> <C>
Total service and interest cost components
on net periodic postretirement health care
benefit cost $ (116) $ 49
Accumulated postretirement benefit
obligation for health care benefits (1,164) 1,606
</TABLE>
The increase in the net benefit obligation at the end of the year was
primarily due to the decrease in the weighted-average discount rate from 7.4% to
7.1%.
At December 31, 1998, the Company sponsored pension plan held 863,995
shares of common stock of the Company with a market value of $28,889,830.
Dividend payments received by the plan on Company stock totaled $840,000 and
$797,000 in 1998 and 1997, respectively. Fees paid during the year for services
rendered by parties-in-interest were based on customary and reasonable rates for
such services.
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 $4,491,000 in 1998, $3,953,000 in 1997, and $3,743,000 in 1996,
respectively.
9. SEGMENT DATA
The segment data for the past five years presented on page 26 is an
integral part of these financial statements.
The Company is primarily engaged in the distribution of merchandise,
principally automotive and industrial replacement parts, office supplies, and
electrical/electronic materials throughout the United States, Canada and Mexico.
In the automotive segment, the Company distributes replacement parts
(other than body parts) for substantially all makes and models of automobiles,
trucks and buses. 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.
The Company's electrical/electronic materials segment distributes a
wide variety of electrical/electronic materials, including insulating and
conductive materials for use in electronic and electrical apparatus.
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,
goodwill amortization and minority interests. Net property, plant and equipment
by country relate directly to the Company's operations in the respective
country. Corporate assets are principally cash, cash equivalents and
headquarters' facilities and equipment.
35
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
JURISDICTION OF
NAME % OWNED INCORPORATION
- ---- ------- -------------
<S> <C> <C>
Balkamp 89.61 Indiana
EIS, Inc. 100.0 Georgia
Genuine Parts Holdings, Ltd. 100.0 Alberta, Canada
Genuine Parts Company, Ltd. 100.0 Alberta, Canada
GPC Mexico, S.A. de C.V. 100.0 Puebla, Mexico
GPC Trading Corporation 100.0 Virgin Islands
Horizon Data Supply, Inc. 100.0 Nevada
Manco Trucking 100.0 Illinois
MJDH Holdings Ltd. 100.0 British Columbia/Canada
Motion Industries, Inc. 100.0 Delaware
Motion Industries (Canada), Inc. 100.0 Ottawa, Ontario
Norwestra Holdings 100.0 Alberta, Canada
Norwestra Sales (1992), Inc. 100.0 British Columbia/Canada
S. P. Richards Company 100.0 Georgia
UAP Inc. 100.0 Quebec, Canada
1st Choice Auto Parts, Inc. 51.0 Georgia
A & M Parts, Inc. 51.0 Georgia
Ann Arbor Auto Supply, Inc. 51.0 Georgia
Auto & Truck Parts of Santa Fe, Inc. 51.0 Georgia
Auto Paint & Supply Co. of Lexington, Inc. 51.0 Georgia
Auto Parts of Chanute Incorporated 51.0 Georgia
Auto Parts of Daytona, Inc. 51.0 Georgia
Auto Parts of East Brunswick, Inc. 51.0 Georgia
Auto Parts of Jupiter, Inc. 51.0 Georgia
Auto Parts of Palmdale, Inc. 51.0 Georgia
Autobahn Supply of River Falls, Inc. 51.0 Georgia
Automotion Parts Corp. 70.0 Georgia
Automotive Parts of Quitman, Inc. 70.0 Georgia
Back Bay Auto Parts, Inc. 51.0 Georgia
Bad Axe Auto Supply, Inc. 51.0 Georgia
Bay View Auto Parts, Inc. 70.0 Georgia
Big Horn Auto Parts, Inc. 51.0 Georgia
Big Twin Automotive, Inc. 51.0 Georgia
Boone County Automotive, Inc. 51.0 Georgia
Brookings Auto Parts, Inc. 51.0 Georgia
C&O Auto Parts, Inc. 51.0 Georgia
Cal-Davis Auto & Truck Parts, Inc. 51.0 Georgia
Carolina Lowcountry, Inc. 70.0 Georgia
Carolina Piedmont Corporation 51.0 Georgia
Cascade Auto & Truck Supply, Inc. 51.0 Georgia
Cass City Auto & Truck, Inc. 70.0 Georgia
Cedar City Auto Parts, Inc. 51.0 Georgia
Central Nebraska Supply Co. 51.0 Georgia
Cereal City Auto Parts, Inc. 51.0 Georgia
Chemung River Auto Supply, Inc. 51.0 Georgia
Clermont-Brown Automotive Supply, Inc. 51.0 Georgia
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Clinton County Auto Supply, Inc. 51.0 Georgia
Cochise Auto Parts, Inc. 51.0 Georgia
College Station Auto Parts Co. 51.0 Georgia
Colorado Motor Parts, Inc. 51.0 Georgia
Copps Hill Auto Parts, Inc. 51.0 Georgia
Cornerstone Automotive Products, Inc. 51.0 Georgia
Creswell Auto & Truck Supply, Inc. 51.0 Georgia
Cross Timbers Auto Supply, Inc. 51.0 Georgia
Crystal River Auto Parts, Inc. 51.0 Georgia
Dalton Auto, Truck, and Industrial Parts, Inc. 70.0 Georgia
Diamond G Auto Parts of Beaumont, Inc. 51.0 Georgia
East Tenn Automotive Supply, Inc. 51.0 Georgia
El Campo Parts, Inc. 51.0 Georgia
Elkton Auto Supply, Inc. 51.0 Georgia
Emerald Valley Auto Parts, Inc. 51.0 Georgia
Fairfield Automotive Supply, Inc. 51.0 Georgia
Farm Auto and Truck Parts, Inc. 51.0 Georgia
First Class Auto Parts, Inc. 70.0 Georgia
First Settlement Automotive, Inc. 51.0 Georgia
Foothills Auto Supply, Inc. 51.0 Georgia
Franklin County Supply, Inc. 51.0 Georgia
Gainesville Auto Supply, Inc. 51.0 Georgia
Gateway Auto Parts, Inc. 51.0 Georgia
Gila Automotive Supply, Inc. 51.0 Georgia
Glenwood Springs Auto Parts, Inc. 51.0 Georgia
Gold Stream Auto Parts, Inc. 51.0 Georgia
Grand Canyon Auto Supply, Inc. 51.0 Georgia
Grand Prairie Auto Supply, Inc. 70.0 Georgia
Grants Truck & Auto Supply, Inc. 51.0 Georgia
Grantsville Auto Parts, Inc. 51.0 Georgia
Gray's Harbor Auto & Truck, Inc. 51.0 Georgia
Great Miami Automotive Parts, Inc. 51.0 Georgia
Greene Country Auto Parts, Inc. 51.0 Georgia
Grimm Management Resources, Inc. 51.0 Georgia
Groundhog Auto Parts, Inc. 51.0 Georgia
Hanford Auto & Truck Parts, Inc. 51.0 Georgia
Hansens Automotive Supply, Inc. 51.0 Georgia
Heartland Automotive Parts 51.0 Georgia
Hertford County Auto Parts, Inc. 51.0 Georgia
Highline Auto Parts, Inc. 51.0 Georgia
Holton Auto Parts, Inc. 51.0 Georgia
Hood Canal Auto Parts, Inc. 51.0 Georgia
Houghton Lake Auto Supply, Inc. 51.0 Georgia
Huntington - Whitley Auto Parts, Inc. 51.0 Georgia
Huntsville Parts & Equipment, Inc. 51.0 Georgia
Hyland Hill Automotive Supply, Inc. 51.0 Georgia
Innovative Parts, Incorporated 51.0 Georgia
Kane Auto Parts, Inc. 51.0 Georgia
Kent-Kangley Auto Parts, Inc. 51.0 Georgia
Keystone Central Auto Parts, Inc. 51.0 Georgia
Labelle Auto and Truck Supply, Inc. 51.0 Georgia
Lake City Auto Parts, Inc. 51.0 Georgia
Lake County Automotive, Inc. 51.0 Georgia
Lake Havasu City Auto Parts, Inc. 51.0 Georgia
Lana Lou Auto Parts, Inc. 51.0 Georgia
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Lauderdale County Supply, Inc. 51.0 Georgia
Little Sioux Automotive Supply, Inc. 51.0 Georgia
Livonia Auto Supply, Inc. 51.0 Georgia
Lodi Automotive Supply, Inc. 51.0 Georgia
Longland Corp. 51.0 Georgia
Louisville Auto Supply, Inc. 51.0 Georgia
Luke's Auto Supply, Inc. 51.0 Georgia
Marion Auto Supply, Inc. 51.0 Georgia
Marion Automotive Parts, Incorporated 51.0 Georgia
McMinn County Automotive, Inc. 51.0 Georgia
Middleton Auto & Truck Parts, Inc. 51.0 Georgia
Midland Auto and Truck Supply, Inc. 70.0 Georgia
Mid-Valley Automotive, Inc. 51.0 Georgia
Modesto Auto and Truck Parts, Inc. 51.0 Georgia
Montana Motor Service, Inc. 51.0 Georgia
Motor Innovations, Inc. 51.0 Georgia
N. V. Automotive Supply, Inc. 51.0 Georgia
Nacogdoches Auto Parts, Inc. 100.0 Georgia
Napa Valley Auto Parts, Inc. 51.0 Georgia
Northwest Auto Parts, Inc. 51.0 Georgia
Oscoda Auto and Truck Parts, Inc. 51.0 Georgia
Outland Supply, Inc. 51.0 Georgia
Overton County Parts Center, Inc. 51.0 Georgia
Paradise Auto Parts, Inc. 51.0 Georgia
Parts & Company of Selma, Inc. 51.0 Georgia
Parts Connection, Inc. 70.0 Georgia
Parts of Columbus, Inc. 51.0 Georgia
Parts of Hillsville, Inc. 70.0 Georgia
Parts Unlimited, Inc. 51.0 Georgia
Payette River Parts Corp. 51.0 Georgia
Peninsula Parts Company 51.0 Georgia
Petoskey Automotive Center, Inc. 100.0 Georgia
Pima Auto Supply, Inc. 100.0 Georgia
Polyco Corporation 70.0 Georgia
Port Charlotte Auto Supply, Inc. 51.0 Georgia
Potomac Creek Auto Supply, Inc. 51.0 Georgia
Prairie Hills Corp. 51.0 Georgia
Preferred Parts Company 51.0 Georgia
Prescott Auto Parts, Inc. 51.0 Georgia
Pro Choice Automotive, Inc. 51.0 Georgia
Pueblo Automotive, Inc. 51.0 Georgia
Quality Auto Parts & Paint Supply, Inc. 51.0 Georgia
Quality Auto Parts of Los Lunas, Incorporated 51.0 Georgia
R.K.R., Inc. 51.0 Georgia
Razorback Enterprises, Inc. 51.0 Georgia
Rhinelander Auto Parts, Inc. 51.0 Georgia
Rialto Auto Parts, Inc. 51.0 Georgia
Rigby Auto Supply, Inc. 51.0 Georgia
Rio Verde Auto Parts, Inc. 51.0 Georgia
Riverside Auto Parts, Inc. 51.0 Georgia
RKKC, Inc. 51.0 Georgia
Roseburg Auto & Truck Supply, Inc. 51.0 Georgia
San Joaquin Parts Corporation, Inc. 51.0 Georgia
San Juan Quality Parts, Inc. 51.0 Georgia
Sanilac Auto and Truck Parts, Inc. 51.0 Georgia
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Seaside Auto Parts, Inc. 51.0 Georgia
Sequim Automotive Parts Company 51.0 Georgia
Sequoia Auto & Truck Parts, Inc. 51.0 Georgia
Service First Auto, Inc. 51.0 Georgia
Smithfield Auto Parts, Inc. 70.0 Georgia
Smithfield Auto Supply, Inc. 51.0 Georgia
South Burlington Auto Parts, Inc. 51.0 Georgia
South Burlinton Auto Parts, Inc. 51.0 Georgia
South Central Kansas Automotive, Inc. 51.0 Georgia
Southern Indiana Parts, Inc. 51.0 Georgia
Spanish Fork Auto Supply, Inc. 51.0 Georgia
Spooner Auto Parts, Inc. 100.0 Georgia
Standard Motor Parts of Reidsville, Inc. 51.0 Georgia
Sugar River Auto Parts, Inc. 51.0 Georgia
Sumner Auto & Truck, Inc. 51.0 Georgia
Sun Valley Auto Parts, Inc. 51.0 Georgia
Sweet Home Auto & Truck Supply, Inc. 51.0 Georgia
Terrebonne Parish Auto Parts, Inc. 51.0 Georgia
The Carolina Ritchie Company 51.0 Georgia
The Flowers Company 51.0 North Carolina
The Parts House, Inc. 51.0 Georgia
The Parts Store, Inc. 51.0 Georgia
The Rock Parts Co. 70.0 Georgia
The Wilbur Group, Inc. 51.0 Georgia
Thousand Oaks Auto Parts, Inc. 51.0 Georgia
Timberland Auto & Truck Parts, Inc. 51.0 Georgia
TNT Supply, Inc. 51.0 Georgia
Tri-Mount, Inc. 70.0 Georgia
Twin Lake Parts & Equipment, Inc. 51.0 Georgia
Union County Auto Parts, Inc. 51.0 Georgia
Uptergrove Auto Supply, Inc. 51.0 Georgia
Vicksburg Automotive, Inc. 51.0 Georgia
Viking Auto Parts, Inc. 51.0 Georgia
Warren County Automotive, Inc. 51.0 Georgia
Warrick Automotive Supply, Inc. 51.0 Georgia
Watsonville Auto Supply, Inc. 51.0 Georgia
West Branch Auto Supply, Inc. 51.0 Georgia
West Marion County Auto Parts and Accessories, Inc. 70.0 Georgia
West Monroe Auto Parts, Inc. 51.0 Georgia
West Volusia Auto Supply, Inc. 51.0 Georgia
Wharton Auto & Truck Parts, Inc. 51.0 Georgia
White County Auto Supply, Inc. 51.0 Georgia
Whitney Point Unit Parts, Inc. 51.0 Georgia
Yorkville Automotive Supply, Inc. 51.0 Georgia
</TABLE>
<PAGE> 1
Exhibit 23
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 3, 1999, included in the
1998 Annual Report to Shareholders of Genuine Parts Company.
Our audits also included the financial statement schedule of Genuine Parts
Company listed in Item 14(d). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
of Genuine Parts Company listed below of our report dated February 3, 1999, 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, 1998.
- - Registration Statement No. 33-62512 on Form S-8 pertaining to the 1992
Stock Option and Incentive Plan
- - Registration Statement No. 333-21969 on Form S-8 pertaining to the
Directors' Deferred Compensation Plan
- - Registration Statement No. 333-61611 on Form S-8 pertaining to the
Assumed Stock Options Under the Electrical Insulation Suppliers, Inc.
1993 Incentive Plan
/s/ Ernst & Young LLP
Atlanta, Georgia
March 8, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GENUINE PARTS COMPANY FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 84,972
<SECURITIES> 0
<RECEIVABLES> 907,561
<ALLOWANCES> 5,019
<INVENTORY> 1,660,233
<CURRENT-ASSETS> 2,683,357
<PP&E> 404,008
<DEPRECIATION> 355,574
<TOTAL-ASSETS> 3,600,380
<CURRENT-LIABILITIES> 818,409
<BONDS> 588,640
0
0
<COMMON> 179,505
<OTHER-SE> 1,873,827
<TOTAL-LIABILITY-AND-EQUITY> 3,600,380
<SALES> 6,614,032
<TOTAL-REVENUES> 6,614,032
<CGS> 4,611,525
<TOTAL-COSTS> 4,611,525
<OTHER-EXPENSES> 1,393,294
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,096
<INCOME-PRETAX> 589,117
<INCOME-TAX> 233,323
<INCOME-CONTINUING> 355,794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 355,794
<EPS-PRIMARY> 1.98
<EPS-DILUTED> 1.98
</TABLE>
