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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000 Commission File Number 1-5690
GENUINE PARTS COMPANY
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(Exact name of registrant as specified in its charter)
GEORGIA 58-0254510
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770)953-1700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (the close of the period covered
by this report).
174,954,362
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(Shares of Common Stock)
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PART I - Financial Information
Item 1 - Financial Statements
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS June 30, Dec. 31,
2000 1999
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(Unaudited)
(in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents .................................................. $ 53,224 $ 45,735
Trade accounts receivable, less allowance
for doubtful accounts (2000 - $12,520; 1999 - $6,929) ..................... 1,122,953 1,006,663
Inventories - at lower of cost (substantially last-in,
first-out method) or market ................................................ 1,733,618 1,771,789
Prepaid and other current accounts ......................................... 42,255 71,016
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TOTAL CURRENT ASSETS .............................................. 2,952,050 2,895,203
Goodwill, less accumulated amortization (2000 - $32,267; 1999 - $25,286) ... 432,200 440,299
Other assets ............................................................... 228,629 180,627
Total property, plant and equipment, less allowance
for depreciation (2000 - $419,074; 1999 - $403,021) ........................ 408,754 413,543
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$ 4,021,633 $ 3,929,672
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ........................................................... $ 663,024 $ 581,010
Current portion of long-term debt and other borrowings ..................... 170,304 133,056
Income taxes ............................................................... 18,553 28,032
Dividends payable .......................................................... 48,599 45,355
Other current liabilities .................................................. 76,453 128,559
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TOTAL CURRENT LIABILITIES ......................................... 976,933 916,012
Long-term debt ............................................................. 699,813 702,417
Deferred income taxes ...................................................... 87,466 87,466
Minority interests in subsidiaries ......................................... 44,251 46,260
SHAREHOLDERS' EQUITY
Stated capital:
Preferred Stock, par value - $1 per share
Authorized - 10,000,000 shares - None Issued ........................ -0- -0-
Common Stock, par value - $1 per share
Authorized - 450,000,000 shares
Issued - 2000 - 174,954,362; 1999 - 177,275,602 ..................... 174,954 177,276
Additional paid-in capital ................................................. -0- -0-
Accumulated other comprehensive income ..................................... (10,119) (6,857)
Retained earnings .......................................................... 2,048,335 2,007,098
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TOTAL SHAREHOLDERS' EQUITY ........................................ 2,213,170 2,177,517
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$ 4,021,633 $ 3,929,672
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</TABLE>
See notes to condensed consolidated financial statements.
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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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2000 1999 2000 1999
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(000 omitted except per share data)
<S> <C> <C> <C> <C>
Net sales .............................. $2,135,502 $2,022,894 $4,213,506 $3,924,251
Cost of goods sold ..................... 1,518,599 1,432,837 3,008,649 2,783,304
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616,903 590,057 1,204,857 1,140,947
Selling, administrative & other expenses 456,076 436,798 891,301 845,194
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Income before income taxes ............. 160,827 153,259 313,556 295,753
Income taxes ........................... 64,234 60,690 125,234 117,118
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NET INCOME ............................. $ 96,593 $ 92,569 $ 188,322 $ 178,635
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Basic net income per common share ...... $ .55 $ .52 $ 1.07 $ 1.00
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Diluted net income per common share .... $ .55 $ .52 $ 1.06 $ .99
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Dividends declared per common share .... $ .275 $ .26 $ .55 $ .52
========== ========== ========== ==========
Average common shares outstanding ...... 176,340 179,032 176,557 179,458
Dilutive effect of stock options and
non-vested restricted stock awards .. 369 557 317 563
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Average common shares outstanding,
assuming dilution ................... 176,709 179,589 176,874 180,021
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</TABLE>
See notes to condensed consolidated financial statements.
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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
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(000 omitted)
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................................................ $ 188,322 $ 178,635
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ....................................................... 47,374 42,798
Other ............................................................................... (829) (446)
Changes in operating assets and liabilities ......................................... (29,162) (19,509)
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NET CASH PROVIDED BY OPERATING ACTIVITIES ................................................ 205,705 201,478
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ............................................. (34,388) (38,325)
Acquisitions of businesses and other investing activities ............................. (37,155) (103,858)
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NET CASH USED IN INVESTING ACTIVITIES .................................................... (71,543) (142,183)
FINANCING ACTIVITIES:
Proceeds from credit facilities, net of payments ...................................... 34,644 111,264
Dividends paid ........................................................................ (94,795) (91,195)
Purchase of stock ..................................................................... (66,522) (51,104)
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NET CASH USED IN FINANCING ACTIVITIES .................................................... (126,673) (31,035)
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NET INCREASE IN CASH AND CASH EQUIVALENTS ................................................ 7,489 28,260
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......................................... 45,735 84,972
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CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................................... $ 53,224 $ 113,232
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</TABLE>
See notes to condensed consolidated financial statements.
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NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of management,
all adjustments necessary to a fair statement of the operations of the interim
period have been made. These adjustments are of a normal recurring nature. The
results of operations for the six months ended June 30, 2000, are not
necessarily indicative of results for the entire year.
Note B - Segment Information
<TABLE>
<CAPTION>
Three month period ended June 30, Six month period ended June 30,
2000 1999 2000 1999
--------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net sales:
Automotive $ 1,085,836 $ 1,058,482 $ 2,091,146 $ 1,999,832
Industrial 590,416 543,792 1,184,764 1,066,295
Office Products 319,450 290,491 657,034 600,494
Electrical/Electronic Materials 139,800 130,129 280,562 257,630
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Total net sales $ 2,135,502 $ 2,022,894 $ 4,213,506 $ 3,924,251
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Operating profit:
Automotive $ 107,712 $ 107,947 $ 195,982 $ 191,540
Industrial 48,028 43,797 97,842 87,652
Office Products 28,040 24,868 66,113 59,851
Electrical/Electronic Materials 6,938 5,740 13,271 11,380
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Total operating profit 190,718 182,352 373,208 350,423
Interest expense (16,023) (13,375) (31,182) (25,818)
Other, net (13,868) (15,718) (28,470) (28,852)
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Income before income taxes $ 160,827 $ 153,259 $ 313,556 $ 295,753
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</TABLE>
Note C - Comprehensive Income
Total comprehensive income was $185,060,000 and $184,951,000 for the six month
periods ended June 30, 2000 and 1999, respectively.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Genuine Parts Company (the "Company") reported record sales and earnings in the
second quarter of 2000. Sales for the quarter were $2.1 billion, up 6% over the
same period in 1999. Net income in the quarter advanced 4% to $96.6 million. On
a per-share diluted basis, net income in the quarter was $.55 versus $.52 in the
same quarter of the prior year, an increase of 6%.
For the six months ended June 30, 2000, sales totaled $4.2 billion, up 7% over
the first half of 1999, while net income was $188.3 million, an increase of 5%.
Diluted earnings per share were $1.06 for the first six months of 2000 and $.99
for the same period in 1999, an increase of 7%.
Sales for the Automotive Parts Group increased 3% for the quarter. The sales
increase is reflective of the general softness in the automotive aftermarket.
Sales for the Industrial Parts Group increased 9% for the quarter reflecting
continued improvement in the overall industrial market and industrial
production. The Office Products Group was up 10% for the quarter reflecting unit
share gain, increased product offerings and enhanced marketing programs. The
Electrical/Electronic Materials Group increased sales by 7%, reflecting
increased market share and continued emphasis on sales growth. Cost of goods
sold increased slightly as a percentage of net sales compared to the same
quarter of the prior year. Selling, administrative and
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other expenses increased 4% for the quarter and the percentage of selling,
administrative and other expenses to net sales decreased slightly, reflecting
improved operating efficiencies.
The ratio of current assets to current liabilities remains very good at 3.02 to
1 and the Company's cash position is good.
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,
electronic marketing, changes in laws and regulations, including changes in
accounting and taxation guidance, the uncertainties of litigation, as well as
other risks and uncertainties discussed from time to time in the Company's
filings with the Securities and Exchange Commission.
PART II - OTHER INFORMATION
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 2000 Annual Meeting of Shareholders of the Company was held on April 17,
2000, pursuant to notice given to shareholders of record on February 10, 2000,
at which date there were 176,801,292 shares of Common Stock outstanding. At the
Annual Meeting, the shareholders elected three Class II directors with terms to
expire at the 2003 Annual Meeting. As to the following named individuals, the
holders of 152,815,193 shares of the Company's Common Stock voted as follows:
<TABLE>
<CAPTION>
Class II For Withhold Authority
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<S> <C> <C>
Richard W. Courts, II 148,940,716 3,874,477
Larry L. Prince 148,950,941 3,864,252
James B. Williams 148,305,028 4,510,165
</TABLE>
The following individuals' term of office as a director continued after the
Annual Meeting:
<TABLE>
<CAPTION>
Class II Class III
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<S> <C>
Bradley Currey, Jr. Jean Douville
Robert P. Forrestal J. Hicks Lanier
Thomas C. Gallagher Alana S. Shepherd
Lawrence G. Steiner Stephen R. Kendall
</TABLE>
The shareholders also ratified the selection of Ernst & Young LLP as independent
auditors of the Company for 2000. The holders of 150,511,087 shares of Common
Stock voted in favor of the ratification, holders of 1,806,439 shares voted
against, holders of 497,667 shares abstained, and there were no broker
non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit 3.1 Restated Articles of Incorporation of the Company
(incorporated herein by reference from the Company's
Annual Report on Form 10-K, dated March 3, 1995).
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Exhibit 3.2 Bylaws of the Company, as amended (incorporated herein
by reference from the Company's Annual Report on Form
10-K, dated March 5, 1993).
Exhibit 27 Financial Data Schedule (for SEC use only).
(b) No reports on Form 8-K were filed by the registrant during the quarter
ended June 30, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Genuine Parts Company
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(Registrant)
Date July 31, 2000 /s/ Jerry W. Nix
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Jerry W. Nix
Executive Vice President - Finance
(Principal Financial and Accounting Officer)
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