-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, FG+4/C5UntcGJSyyM6PBTrd+vJr0mB/6pEnpfdaU2X0kczuKjKBGp5p5/vkcjLGK RxxopRlxELAfvwGvus8OnQ== 0000950144-94-000672.txt : 19940325 0000950144-94-000672.hdr.sgml : 19940325 ACCESSION NUMBER: 0000950144-94-000672 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENUINE PARTS CO CENTRAL INDEX KEY: 0000040987 STANDARD INDUSTRIAL CLASSIFICATION: 5013 IRS NUMBER: 580254510 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-05690 FILM NUMBER: 94517567 BUSINESS ADDRESS: STREET 1: 2999 CIRCLE 75 PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 4049531700 MAIL ADDRESS: STREET 1: 2999 CIRCLE 75 PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 10-K 1 GENUINE PARTS FORM 10-K - 12-31-93 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required) ________ For the Fiscal Year Ended: Commission File No. 1-5690 December 31, 1993 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 30339 Atlanta, Georgia (Zip Code) (Address of Principal Executive Offices) Registrant's telephone number, including area code: (404) 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 on February 18, 1994) held by non-affiliates as of February 18, 1994 was approximately $4,233,262,728. The number of shares outstanding of Registrant's Common Stock, as of February 18, 1994: 124,464,667. Documents Incorporated by Reference: -Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 1993, 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 18, 1994 are incorporated by reference into Part III. 2 PART I. ITEM I. BUSINESS. Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts and office products. In 1993, business was conducted throughout most of the United States and in western Canada from more than 1,100 operations. As used in this report, the "Company" refers to Genuine Parts Company and its subsidiaries, except as otherwise indicated by the context; and the terms "automotive parts" and "industrial parts" refer to replacement parts in each respective category. Industry Segment Data. The following table sets forth the net sales, operating profit and identifiable assets for the fiscal years 1993, 1992 and 1991 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. The figures have been restated to give effect to the acquisition of Berry Bearing Company and affiliates on January 29, 1993, which was accounted for as a pooling of interests, and is described in Note 2 of "Notes to Consolidated Financial Statements" on Page 23 of the Annual Report to Shareholders for 1993, which is incorporated herein by reference.
1993 1992 1991 ---- ---- ---- NET SALES (in thousands) --------- Automotive Parts $ 2,485,267 $ 2,318,761 $ 2,188,698 Industrial Parts 1,153,371 1,082,428 1,021,019 Office Products 745,656 615,562 554,019 --------- --------- --------- TOTAL NET SALES $ 4,384,294 $ 4,016,751 $ 3,763,736 ========= ========= ========= OPERATING PROFIT ---------------- Automotive Parts $ 282,791 $ 262,422 $ 260,818 Industrial Parts 96,727 87,493 76,922 Office Products 65,938 50,967 45,112 --------- --------- --------- TOTAL OPERATING PROFIT 445,456 400,882 382,852 Interest Expense (1,584) (1,871) (5,434) Corporate Expense (20,405) (17,577) (18,662) Equity in Income 4,452 2,513 4,000 Minority Interests (2,090) (1,537) (1,638) --------- --------- --------- INCOME BEFORE INCOME TAXES $ 425,829 $ 382,410 $ 361,118 ========= ========= ========= IDENTIFIABLE ASSETS ------------------- Automotive Parts $ 1,152,148 $ 1,040,191 $ 926,617 Industrial Parts 370,633 354,547 338,054 Office Products 283,479 228,802 201,036 --------- --------- --------- TOTAL IDENTIFIABLE ASSETS 1,806,260 1,623,540 1,465,707 Corporate Assets 6,731 27,333 57,197 Equity Investments 57,765 56,430 54,612 --------- --------- --------- TOTAL ASSETS $ 1,870,756 $ 1,707,303 $ 1,577,516 ========= ========= =========
For additional information regarding industry data, see Page 27 of Annual Report to Shareholders for 1993. The majority of the Company's revenue, profitability and identifiable assets are attributable to the Company's operations in the United States. Revenue, profitability and identifiable assets in Canada are not material. For additional information regarding foreign operations, see "Note 1 of Notes to Consolidated Financial Statements" on Page 23 of Annual Report to Shareholders for 1993. Competition - General. The distribution business, which includes all segments of the Company's business, is highly competitive with the principal methods of -2- 3 competition being product quality, sufficiency of inventory, price and the ability to give the customer prompt and dependable service. The Company believes many of its competitors have greater financial resources and are more broadly based than the Company. The Company anticipates no decline in competition in any of its business segments in the foreseeable future. Employees. As of December 31, 1993, the Company employed approximately 20,575 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 the more than 143,000 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. As of December 31, 1993, the Company's Automotive Parts Group included NAPA automotive parts distribution centers and automotive parts stores ("jobbing stores" or "jobbers") owned in the United States by Genuine Parts Company and Davis & Wilmar, Inc., a wholly owned subsidiary, automotive parts distribution centers and jobbing stores in western Canada owned and operated by UAP/NAPA Automotive Western Partnership ("UAP/NAPA"), a general partnership in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest, jobbing stores in the United States operated by corporations in which Genuine Parts Company owned a 51% interest, distribution centers owned by Balkamp, Inc., a majority owned subsidiary, and rebuilding plants owned by the Company and operated by its Rayloc division. 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 73% of 1993 automotive inventories were purchased from 20 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers which has protected the Company from inventory obsolescence. Distribution System. As of December 31, 1993, Genuine Parts Company operated 63 domestic NAPA automotive parts distribution centers located in 36 states and 654 domestic company-owned jobbing stores located in 39 states. Davis & Wilmar, Inc. operated 2 NAPA automotive parts distribution centers in Pennsylvania and West Virginia and 29 jobbing stores in its trading area. In addition, Genuine Parts Company owned a 51% interest in 42 corporations which operated 59 jobbing stores in 26 states. In Canada, Genuine Parts Company Ltd., a wholly owned subsidiary, owns a 49% interest in UAP/NAPA which operated 8 automotive parts distribution centers and 81 jobbing stores located in the provinces of Alberta, British Columbia and Saskatchewan and in the Yukon Territories. The Company's investment in UAP/NAPA is accounted for by the equity method of accounting; therefore, the sales figures of UAP/NAPA are not included in the Company's financial statements. The Company's distribution centers serve approximately 5,069 independently owned jobbing stores located throughout the market areas served. Jobbing stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, these jobbing stores account for approximately 42% of the Company's total sales with no jobbing store or group of jobbing stores with individual or -3- 4 common ownership accounting for more than .004% of the Company's total sales. Products. Distribution centers carry approximately 143,000 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. Related Operations. A majority owned subsidiary of Genuine Parts Company, Balkamp, Inc.("Balkamp"), distributes a wide variety of replacement parts and accessory items for passenger cars, heavy duty vehicles, motorcycles and farm equipment. In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions. Balkamp packages many of the approximately 20,000 part numbers which constitute the "Balkamp" line of products which are distributed to the members of the National Automotive Parts Association ("NAPA"). These products are categorized in 150 different product groups purchased from more than 600 suppliers. All Balkamp items are cataloged separately to provide single source convenience for NAPA customers. BALKAMP(R), a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization. Balkamp has three distribution centers located in Indianapolis, Indiana, Greenwood, Mississippi, and West Jordan, Utah. The Company, through its Rayloc division, also operates six plants where certain small automotive parts are rebuilt. These products are distributed to the members of NAPA under the name Rayloc(R). Segment Data. In the year ended December 31, 1993, sales from the Automotive Parts Group approximated 57% of the Company's net sales as compared to 58% for both 1992 and 1991. Service to Jobbers. The Company believes that the quality and the range of services provided to its jobber 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 Jobber catalogues) and stock adjustment through a continuing parts classification system which allows jobber customers to return certain merchandise on a scheduled basis. The Company offers jobbers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, marketing conferences and seminars, sales and advertising manuals and training programs. Point of sale/inventory management is available through TAMS(R) (Total Automotive Management Systems), a computer system designed and developed by the Company for the NAPA Jobber. In association with NAPA, the Company has developed and refined an inventory classification system to determine optimum distribution center and jobbing store inventory levels for automotive parts stocking based on automotive registrations, usage rates, production figures, technological advances and other similar factors. This system, which undergoes continuous analytical review, is an integral part of the Company's inventory control procedures and comprises an important feature of the inventory management services which the Company makes available to its jobber 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. 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 the national retail chains, and with other parts distributors and jobbers. -4- 5 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 operate 74 distribution centers located throughout the United States, 65 of which are owned and operated by the Company. NAPA develops marketing concepts and programs which may be used by its members. It is not involved in the chain of distribution. Among the automotive lines which each NAPA member purchases and distributes are certain lines designated, cataloged, advertised and promoted as "NAPA" lines. The members are not required to purchase any specific quantity of parts so designated and may, and do, purchase competitive lines from other supply sources. The Company and the other NAPA member use the federally registered trademark NAPA(R) as part of the trade name of their distribution centers and jobbing stores. The Company contributes to the Association's national advertising which is designed to increase public recognition of the "NAPA" name and to promote "NAPA" product lines. The Company is a party, together with other members of NAPA and NAPA itself, to a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954. The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among several NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting jobbers or determining the number and location of, or arrangements with, jobbers. INDUSTRIAL PARTS GROUP The Industrial Parts Group distributes industrial replacement parts and related supplies. This Group distributes industrial bearings and fluid transmission equipment, including hydraulic and pneumatic products, material handling components, agricultural and irrigation equipment and their related supplies. In 1993, the Company distributed industrial parts in the United States through Motion Industries, Inc. ("Motion"), headquartered in Birmingham, Alabama and Berry Bearing Company and its affiliates (the "Berry Companies"), headquartered in Chicago, Illinois. Motion and each of the Berry Companies are wholly owned subsidiaries of the Genuine Parts Company. In Canada, industrial parts are distributed by Oliver Industrial Supply Ltd., a wholly owned subsidiary of Genuine Parts Holdings Ltd., headquartered in Lethbridge, Alberta. As of December 31, 1993, the Group served more than 150,000 customers in all types of industries located throughout the United States, and in Canada, principally in the Provinces of Alberta, Manitoba and Saskatchewan. Distribution System. In the United States, the Industrial Parts Group operates 5 distribution centers, two re-distribution centers, 10 service centers for fluid power and special hose applications and approximately 300 branches. Distribution centers stock and distribute more than 200,000 different items purchased from over 250 different suppliers. The Group's re-distribution centers serve as collection points for excess inventory collected from its branches for re-distribution to those branches which need the inventory. Approximately 60% of 1993 total industrial purchases were made from 13 major suppliers. Sales are generated from the Group's branches located in 36 states, each of which has warehouse facilities, which stock significant amounts of inventory representative of the lines of products used by customers in the respective market area served. In Canada, Oliver Industial Supply Ltd. ("Oliver") operates an industrial parts and agricultural supply distribution center for its seven branches serving the industrial and agricultural markets of Alberta, British Columbia, Manitoba and Saskatchewan in western Canada. In addition to industrial parts and agricultural supplies, Oliver distributes irrigation systems and related supplies. Products. The Industrial Parts Group distributes a wide variety of products to its customers, primarily industrial concerns, to maintain and operate plants, -5- 6 machinery and equipment. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers and electric motors. The nature of this Group's business demands the maintenance of large inventories and the ability to provide prompt and demanding delivery requirements. Virtually all of the products distributed are installed by the customer. Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open account. Related Information. Non-exclusive distributor agreements are in effect with most of the Group's suppliers. The terms of these agreements vary; however, it has been the experience of the Group that the custom of the trade is to treat such agreements as continuing until breached by one party, or until terminated by mutual consent. Segment Data. In the year ended December 31, 1993, sales from the Company's Industrial Parts Group approximated 26% of the Company's net sales as compared to 27% in both 1992 and 1991. Competition. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, as well as with general line distributors. To a lesser extent, the Group competes with manufacturers that sell directly to the customer. OFFICE PRODUCTS GROUP The Office Products Group, through S. P. Richards Company ("S.P. Richards"), a wholly owned subsidiary of Genuine Parts Company headquartered in Atlanta, Georgia, is engaged in the wholesale distribution of a broad line of office products which are used in the daily operation of businesses, schools, offices and institutions. Office products fall into the general categories of computer supplies, office furniture, office machines and general office supplies. Computer supplies include diskettes, printer supplies, printout paper and printout binders. Office furniture includes desks, credenzas, chairs, chair mats, partitions, files and computer furniture. Office machines include telephones, answering machines, calculators, typewriters, shredders and copiers. General office supplies 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 and audio visual supplies. S. P. Richards Company distributes more than 17,000 items to over 8,000 office supply dealers from 41 distribution centers located in 28 states. Approximately 62% of 1993 total office products purchases were made from 14 major suppliers. Effective November 1, 1993, S.P. Richards acquired all of the assets of Lesker Office Furniture, an office furniture wholesaler with four distribution centers in Pennsylvania, New Jersey, Virginia and Ohio. S. P. Richards Company sells to qualified resellers of office products. Customers are offered comprehensive marketing programs which include flyers, other promotional material and personalized product catalogs. The marketing programs are supported by all S. P. Richards' distribution centers which stock all cataloged products and have the capability to provide overnight delivery. While many recognized brand-name items are carried in inventory, S. P. Richards Company also markets items produced for it under its own SPARCO(R) brand name, as well as its NATURE SAVER(R) brand of recycled products. Segment Data. In the year ended December 31, 1993, sales from the Company's Office Products Group approximated 17% of the Company's net sales as compared to 15% in both 1992 and 1991. Competition. In the distribution of office supplies to retail dealers, S. P. Richards Company competes with many other wholesale distributors as well as with manufacturers of office products and large national retail chains. -6- 7 * * * * * * * * 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 21, 1994, 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.
Year First Assumed Name Age Position of Office Position - ---- --- ------------------ ---------- Larry L. Prince 55 Chairman of the Board of Directors and Chief Executive Officer 1990/1989 Thomas C. Gallagher 46 President and Chief Operating Officer 1990 George W. Kalafut 60 Executive Vice President-Finance and Administration * 1991 John J. Scalley 63 Executive Vice President 1986 Keith M. Bealmear 47 Group Vice President 1994 Robert J. Breci 58 Group Vice President 1987 Albert T. Donnon, Jr 46 Group Vice President 1993 Louis W. Rice, Jr 67 Senior Vice President-Personnel 1981
* Also serves as the Company's Principal Financial Officer. All executive officers have been employed by and have served as officers of the Company for at least the last five years. 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 operates 65 NAPA Distribution Centers in the United States distributed among nine geographic divisions. More than 90% of these distribution centers are owned by the Company. At December 31, 1993, the Company owned 683 jobbing stores located in 40 states, and Genuine Parts Company owned a 51% interest in 59 jobbing stores located in 26 states. Other than jobbing stores located within Company owned distribution centers, most of the jobbing stores were operated in leased facilities. In addition, UAP/NAPA, in which Genuine Parts Company owns a minority interest, operated 81 jobbing stores in Western Canada. The Company's Automotive Parts Group also operates three Balkamp distribution centers, six Rayloc rebuilding plants, two transfer and shipping facilities and a Rayloc warehouse. The Company's Industrial Parts Group, operating through Motion and the Berry Companies, operates five distribution centers, two re-distribution centers, 10 service centers and approximately 300 branches. Approximately 80% of these branches are operated in leased facilities. In addition, the Industrial Parts Group operates an industrial parts and agricultural supply distribution center in Western Canada for its seven branches of which approximately 85% are operated in leased facilities. The Company's Office Products Group operates 41 distribution centers in the United States distributed among the Group's five geographic divisions. Approximately 75% of these distribution centers are operated in leased facilities. For additional information regarding rental expense on leased properties, see "Note 5 of Notes to Consolidated Financial Statements" on Page 24 of -7- 8 Annual Report to Shareholders for 1993. ITEM 3. LEGAL PROCEEDINGS. Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable. PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK- HOLDER MATTERS. Information required by this item is set forth under the heading "Market and Dividend Information" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1993, and is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. Information required by this item is set forth under the heading "Selected Financial Data" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1993, and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Information required by this item is set forth under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" on Page 26 of Annual Report to Shareholders for the year ended December 31, 1993, and is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Information required by this item is set forth in the consolidated financial statements on Pages 20 through 25 and Page 27, in "Report of Independent Auditors" on Page 19, and under the heading "Quarterly Results of Operations" on Page 27, of the Annual Report to Shareholders for the year ended December 31, 1993, 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 on Pages 1 through 6, -8- 9 and Page 16 of the definitive proxy statement for the Company's Annual Meeting to be held on April 18, 1994, and is incorporated herein by reference. Certain information about Executive Officers of the Company is included in Item 1 of Part I of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION. Information required by this item is set forth on Page 5, and on Pages 7 through 16 of the definitive proxy statement for the Company's Annual Meeting to be held on April 18, 1994, and is incorporated herein by reference. In no event shall the information contained in the definitive proxy statement for the Company's 1994 Annual Meeting on Pages 9 through 11 under the heading "Compensation and Stock Option Committee Report on Executive Compensation" or on Pages 15 and 16 under the heading "Performance Graph" be incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this item is set forth on Pages 5 and 6 of the definitive proxy statement for the Company's Annual Meeting to be held on April 18, 1994, and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this item is set forth on Page 16 of the definitive proxy statement for the Company's Annual Meeting to be held on April 18, 1994, and is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-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 3.1.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1988, and as amended April 17, 1989. (Incorporated herein by reference from the Company's Quarterly Report on Form 10-Q, dated May 8, 1989). Exhibit 3.1.2 Amendment to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 12, 1990). 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 -9- 10 from the Company's Report on Form 8-K, dated November 20, 1989). Exhibit 10.1 * Incentive Stock Option Plan. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 12, 1982). Exhibit 10.2 * 1988 Stock Option Plan. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 9, 1988). Exhibit 10.3 * Form of Amendment to Executive Supplemental Retirement Income Agreement adopted February 13, 1989, between the Company and William C. Hatcher. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989). Exhibit 10.4 * 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 10.5 * 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 10.6 * Genuine Parts Company Partnership Plan, effective July 1, 1988. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989). Exhibit 10.7 * 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 10.8 * 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 10.9 * The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. * Indicates executive compensation plans and arrangements Exhibit 13 The following sections and pages of the 1993 Annual Report to Shareholders: -10- 11 - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Report of Independent Auditors of Page 19 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 20 - 25 - Management's Discussion and Analysis of Financial Condition and Results of Operations on Page 26 - Industry Data Information on Page 27 - Quarterly Results of Operations on Page 27 Exhibit 22 Subsidiaries of the Company Exhibit 24 Consent of Independent Auditors (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. 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 3/4/94 /s/George W. Kalafut 3/4/94 - ------------------------------------- ------------------------------------ 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 Officer -11- 12 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. /s/James R. Courim 2/21/94 /s/William A. Parker 2/21/94 - ------------------------------------- ------------------------------------ James R. Courim (Date) William A. Parker (Date) Director Director /s/Bradley Currey, Jr. 2/21/94 /s/Larry L. Prince 2/21/94 - ------------------------------------- ------------------------------------ Bradley Currey, Jr. (Date) Larry L. Prince (Date) Director Director Chairman of the Board and Chief Executive Officer /s/Jean Douville 2/21/94 /s/John J. Scalley 2/21/94 - ------------------------------------- ------------------------------------ Jean Douville (Date) John J. Scalley (Date) Director Director Chairman of the Board and Executive Vice President Chief Executive Officer UAP INC. /s/John B. Ellis 2/21/94 /s/Alana S. Shepherd 2/21/94 - ------------------------------------- ------------------------------------ John B. Ellis (Date) Alana S. Shepherd (Date) Director Director /s/Thomas C. Gallagher 2/21/94 /s/Lawrence G. Steiner 2/21/94 - ------------------------------------- ------------------------------------ Thomas C. Gallagher (Date) Lawrence G. Steiner (Date) Director Director President and Chief Operating Officer /s/E. Reginald Hancock 2/21/94 /s/James B. Williams 2/21/94 - ------------------------------------- ------------------------------------ E. Reginald Hancock (Date) James B. Williams (Date) Director Director /s/Gardner E. Larned 2/21/94 - ------------------------------------- Gardner E. Larned (Date) Chairman of the Board and Chief Executive Officer of Berry Bearing Company and Its Affiliates -12- 13 ANNUAL REPORT ON FORM-10-K ITEM 14(a)(1) AND (2), (c) AND (d) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE CERTAIN EXHIBITS FINANCIAL STATEMENT SCHEDULE YEAR ENDED DECEMBER 31, 1993 GENUINE PARTS COMPANY ATLANTA, GEORGIA 14 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, 1993, are incorporated by reference in Item 8: Consolidated balance sheets -- December 31, 1993 and 1992 Consolidated statements of income -- Years ended December 31, 1993, 1992 and 1991 Consolidated statements of shareholders' equity -- Years ended December 31, 1993, 1992 and 1991 Consolidated statements of cash flows -- Years ended December 31, 1993, 1992 and 1991 Notes to consolidated financial statements -- December 31, 1993 The following consolidated financial statement schedule of Genuine Parts Company and subsidiaries is included in Item 14(d): Schedule IX - Short-term borrowings 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. 15 ANNUAL REPORT ON FORM 10-K ITEM 14(a)(3) LIST OF EXHIBITS The following Exhibits are filed as a part of this Report: 10.9* The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993 13 The following Sections and Pages of Annual Report to Shareholders for 1993: - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Report of Independent Auditors on Page 19 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 20-25 - Management's Discussion and Analysis of Financial Condition and Results of Operations on Page 26 - Industry Data Information on Page 27 - Quarterly Results of Operations on Page 27 22 Subsidiaries of the Company 24 Consent of Independent Accountants The following Exhibits are incorporated by reference as set forth in Item 14 on pages 9 and 10 of this Form 10-K: - 3.1.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1988, and as amended April 17, 1989. - 3.1.2 Amendment to the Articles of Incorporation of the Company, dated as of November 20, 1989. - 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. - 10.1* Incentive Stock Option Plan. - 10.2* 1988 Stock Option Plan. - 10.3* Form of Amendment to Executive Supplemental Retirement Income Agreement adopted February 13, 1989, between the Company and William C. Hatcher and Earl Dolive. - 10.4* Form of Amendment to Deferred Compensation Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company. - 10.5* 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. - 10.6* Genuine Parts Company Partnership Plan, effective July 1, 1988. 16 - 10.7* Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. - 10.8* 1992 Stock Option and Incentive Plan, effective April 20, 1992. * Indicates executive compensation plans and arrangements EX-10.9 2 TAX DEFERRED SAVINGS PLAN 1 EXHIBIT 10.9 THE GENUINE PARTS COMPANY TAX-DEFERRED SAVINGS PLAN ARTICLE 1 ESTABLISHMENT OF PLAN 1.01 Background of Plan. Genuine Parts Company hereby establishes, effective as of January 1, 1993, a deferred compensation plan known as The Genuine Parts Company Tax-Deferred Savings Plan. The purpose of the Plan is to help the Company retain employees of outstanding ability. 1.02 Status of Plan. The Plan is intended to be a nonqualified, unfunded plan of deferred compensation under the Internal Revenue Code of 1986, as amended. Also, because the only persons who may participate in this Plan are members of a select group of management or highly compensated employees, this Plan of deferred compensation is not subject to Parts 2, 3 and 4 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974. 1.03 Establishment of Trust. The Company has established a trust to fund benefits provided under the terms of the Plan ("Trust"). It is intended that the transfer of assets into the Trust will not generate taxable income (for federal income tax purposes) to the Participants until such assets are actually distributed or otherwise made available to the Participants. ARTICLE 2 DEFINITIONS Certain terms of this Plan have defined meanings which are set forth in this Article and which shall govern unless the context in which they are used clearly indicates that some other meaning is intended. Account. The bookkeeping account to which compensation is deferred by a Participant shall be recorded and in which income or loss shall be credited in accordance with the Plan. Beneficiary. Any person or persons designated by a Participant, in accordance with procedures established by the Committee, to receive benefits hereunder in the event of the Participant's death. If any Participant shall fail to designate a Beneficiary or shall designate a Beneficiary who shall fail to survive the Participant, distribution of benefits will be made in accordance with the payment distribution rules set forth in the Genuine Partnership Plan. 2 Bonus. A Participant's bonus paid as part of a Company bonus program for executives and other key employees. The term bonus does not include extraordinary payments to a Participant and does not include a Participant's wages or salary unless the Plan Committee designates such payments as a Bonus for purposes of this Plan. Any such designation must be made in advance of the Participant earning such payment. Committee. The Plan Committee is the Committee that will administer and interpret the terms of the Plan. Company. Genuine Parts Company and its corporate successors. Compensation & Stock Option Committee. The Compensation & Stock Option Committee of the Board of Directors of the Company. Effective Date. January 1, 1993. Election Form. A form substantially the same as the form attached to this Plan as Exhibit A. Key Employee. Any full-time employee of the Company designated as a Key Employee by the Plan Committee. Participant. Any Key Employee who is participating in this Plan. Plan. The Genuine Parts Company Tax-Deferred Savings Plan as set forth in this document together with any subsequent amendments hereto. Termination of Service. A Key Employee who has ceased to serve as an employee of the Company for any reason. ARTICLE 3 PARTICIPATION 3.01 Participation. (a) In General. The only persons who may participate in this Plan are Key Employees of the Company who are designated as such by the Plan Committee. Upon becoming eligible to participate, a Key Employee must complete an Election Form. The Key Employee's participation shall commence on the date specified in this Article 3. Even though a Key Employee may be a Participant in this Plan, the Participant shall not be entitled to any benefit hereunder unless such Participant has properly completed an Election Form and deferred the receipt of his or her Bonus pursuant to the Plan. - 2 - 3 (b) Completion of Election Form. A Key Employee may participate in the Plan after delivering a properly completed and signed Election Form to the Committee. The Election Form shall be signed and delivered to the Committee prior to the first day of the calendar year with respect to which the Bonus will be earned. The Key Employee's participation in the Plan will be effective as of the first day of the calendar year which commences after the Committee's receipt of the Key Employee's Election Form. (c) Election After Plan is Approved. Notwithstanding paragraph (b), any Election Form which is delivered to the Committee within thirty days of the Company's approval of the Plan and prior to the end of the calendar year in which such approval is given shall be valid and shall apply to the Bonus which would ordinarily be paid to the Participant in the following calendar year. However, such bonus deferral shall be limited to the amount or percentage set forth in Section 4.01. (d) Voluntary Termination of Election Form. A Participant may terminate his or her Election Form at any time. If a Participant terminates his or her Election Form, however, the Participant may not execute a new Election Form to defer his or her Bonus for the remainder of the calendar year in which the Participant's Election Form is terminated. However, effective as of the first day of the following calendar year or the first day of any subsequent calendar year, the Participant may execute a new Election Form and thereby defer the receipt of any future Bonus attributable to the Participant's employment. Such Election Form shall be effective only for Bonus applicable to the Participant's employment after the first day of the calendar year following the Committee's receipt of the Participant's Election Form. (e) Continuation of Election Form. A Participant shall have the right to modify the dollar amount or percentage of his or her Bonus which is deferred under the Plan prior to the commencement of each calendar year. If the Participant fails to execute a new Election Form prior to the commencement of the new calendar year, the Participant's Election Form in effect during the previous calendar year shall continue in effect during the new calendar year. (f) Automatic Termination of Election Form. The Participant's Election Form will automatically terminate at (i) the Participant's Termination of Service, (ii) the date the Plan Committee determines that the Participant is no longer a Key Employee under the Plan, (iii) the termination of the Plan, or (iv) when benefits are paid out in accordance with the distribution rules established by the participant in his or her Election Form. - 3 - 4 (g) Nothing contained in the Plan shall be deemed to give any Key Employee the right to be retained as an employee of the Company. ARTICLE 4 PLAN BENEFITS 4.01 Deferred Bonus. A Key Employee may elect to defer any dollar amount or percentage of his or her Bonus in accordance with the terms of the Plan and the Election Form. However, for the Bonuses paid in 1994, a Key Employee may elect to defer a maximum of 50% of the Key Employee's Bonus. For bookkeeping purposes, the amount of the Bonus which the Key Employee elects to defer pursuant to this Plan shall be transferred to and held in individual Accounts. 4.02 Investment. The Committee shall direct the investment of all Accounts. As of the last day of each calendar quarter and on such other dates selected by the Committee, the Committee shall credit each Participant's Account with earnings, losses and changes in fair market value experienced by the investment alternative selected by the Committee. 4.03 Form of Payment. (a) Payment Election. Payment of Plan benefits shall commence on the date the Participant selects on the Election Form. Any date selected by the Participant must be at least two calendar years following the date the Bonus would ordinarily be paid. If the participant fails to select a benefit commencement date on the Election Form, the participant's account shall commence to be distributed on the first regular business day of the fourth month following the Participant's Termination of Service. For example, if a Participant has a Termination of Service on January 12, payment of plan benefits would commence on May 1 (the fourth month following January 12). (b) Optional Forms of Payment. The amount of the Participant's Account shall be paid to the Participant either in a lump sum or in a number of approximately equal annual installments designated by the Participant on the Election Form. Such annual installments may be for 5 years, 10 years or 15 years. If the Participant fails to designate a payment method in the Election Form, the Participant's Account shall be distributed in a lump sum. (c) Multiple Elections. A Participant may elect a different payment commencement date for each Bonus deferred under this Plan. In addition, a Participant may elect a different payment form for each Bonus deferred under this Plan. The Committee shall - 4 - 5 establish sub-accounts within a Participant's Account (to the extent necessary) to identify the portion of a Participant's Account that will be distributed as of the dates and in the form the Participant designates in the Election Form. A Participant may not modify or otherwise revoke the benefit commencement date and payment form designated on an Election Form after the Participant delivers such Election Form to the Committee. (d) Acceleration of Payment. If a Participant elects an installment distribution and the annual installment payment elected by the Participant would result in an annual payment of less than $5,000, the Committee shall accelerate payment of the Participant's benefits over a lesser number of whole years (but in increments of 5 or 10 years) so that the annual amount paid is at least $5,000. If payment of the Participant's benefits over a 5 year period will not provide annual payments of at least $5,000, the Participant's Account shall be paid in a lump sum. (e) Payment to Beneficiary. Upon the Participant's death, all unpaid amounts held in the Participant's Account shall be paid to the Participant's beneficiary in the same benefit payment form the Participant elected on the Election Form and in accordance with the payment distribution rules set forth in this Plan. Such payment will be commence to be paid on the first business day of the fourth month following the Participant's death. 4.04 Financial Hardship. The Committee may, in its sole discretion, accelerate the making of payment to a Participant of an amount reasonably necessary to handle a severe financial hardship of a sudden and unexpected nature due to causes not within the control of the Participant. Such payment may be made even if the Participant has not incurred a Termination of Service. All financial hardship distributions shall be made in a lump sum. Such payments will be made on a first-in, first-out basis so that the oldest Bonus deferred under the Plan shall be deemed distributed first in a financial hardship. 4.05 Payment to Minors and Incapacitated Persons. In the event that any amount is payable to a minor or to any person who, in the judgment of the Committee, is incapable of making proper disposition thereof, such payment shall be made for the benefit of such minor or such person in any of the following ways as the Committee, in its sole discretion, shall determine: (a) By payment to the legal representative of such minor or such person; (b) By payment directly to such minor or such person; - 5 - 6 (c) By payment in discharge of bills incurred by or for the benefit of such minor or such person. The Committee shall make such payments without the necessary intervention of any guardian or like fiduciary, and without any obligation to require bond or to see to the further application of such payment. Any payment so made shall be in complete discharge of the Plan's obligation to the Participant and his or her Beneficiaries. 4.06 Application for Benefits. The Committee may require a Participant or Beneficiary to complete and file certain forms as a condition precedent to receiving the payment of benefits. The Committee may rely upon all such information given to it, including the Participant's current mailing address. It is the responsibility of all persons interested in receiving a distribution pursuant to the Plan to keep the Committee informed of their current mailing addresses. 4.07 Designation of Beneficiary. Each Participant from time to time may designate any person or persons (who may be designated contingently or successively and who may be an entity other than a natural person) as his or her Beneficiary or Beneficiaries to whom the Participant's Account is to be paid if the Participant dies before receipt of all such benefits. Each Beneficiary designation shall be on the form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. Each Beneficiary designation filed with the Committee will cancel all Beneficiary designations previously filed with the Committee. The revocation of a Beneficiary designation, no matter how effected, shall not require the consent of any designated Beneficiary. ARTICLE 5 FUNDING OF PLAN 5.01 The benefits provided by this Plan shall be paid from the general assets of the Company or as otherwise directed by the Company. To the extent that any Participant acquires the right to receive payments under the Plan (from whatever source), such right shall be no greater than that of an unsecured general creditor of the Company. Participants and their Beneficiaries shall not have any preference or security interest in the assets of the Company other than as a general unsecured creditor. - 6 - 7 ARTICLE 6 ADMINISTRATION OF THE PLAN 6.01 The Committee shall have complete control of the administration of the Plan with all powers necessary to enable it to properly carry out the provisions of the Plan. In addition to all implied powers and responsibilities necessary to carry out the objectives of the Plan, the Committee shall have the following specific powers and responsibilities: (1) To construe the Plan and to determine all questions arising in the administration, interpretation and operation of the Plan; (2) To designate participants in the Plan; (3) To determine the benefits of the Plan to which any Participant, Beneficiary or other person may be entitled; (4) To keep records of all acts and determinations of the Committee, and to keep all such records, books of accounts, data and other documents as may be necessary for the proper administration of the Plan; (5) To prepare and distribute to all Participants and Beneficiaries information concerning the Plan and their rights under the Plan; (6) To do all things necessary to operate and administer the Plan in accordance with its provisions. ARTICLE 7 AMENDMENT AND TERMINATION 7.01 The Compensation & Stock Option Committee reserves the right to modify, alter, amend, or terminate the Plan, at any time and from time to time, without notice, to any extent deemed advisable; provided, however, that no such amendment or termination shall (without the written consent of the Participant, if living, and if not, the Participant's Beneficiary) adversely affect any benefit under the Plan which has accrued with respect to the Participant or Beneficiary as of the date of such amendment or termination regardless of whether such benefit is in pay status. Notwithstanding the foregoing, no amendment, modification, alteration, or termination of this Plan may be given effect with respect to any Participant without the consent of such Participant if such amendment, modification, alteration, or termination is adopted during the six-month period prior to a Change of Control or during the two-year period following a Change of Control. - 7 - 8 ARTICLE 8 CHANGE IN CONTROL 8.01 Change of Control. (a) Notwithstanding any other provisions in this Plan, in the event there is a Change of Control of the Company as defined in subsection (c) of this Section 8.01, any Participant whose employment is terminated on account of such Change of Control may, at the discretion of the Compensation & Stock Option Committee, receive an immediate lump sum payment of the Participant's Account balance. For purposes of this Section 8.01(a), a Participant's employment shall be considered to have "terminated on account of such Change of Control" only if the Participant's employment with the Employer is terminated without cause during the 24 month period following the Change of Control. (b) Notwithstanding any other provisions in this Plan, in the event there is a change of control of the Company as defined in subsection (c) of this Section 8.01, any Participant who has commenced receiving installment distributions from the Company may, at the discretion of the Compensation & Stock Option Committee immediately receive a lump sum payment in an amount equal to the unpaid balance of the Participant's Account. (c) A Change of Control of the Company shall mean a change of control of a nature that would require to be reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"). In addition, whether or not required to be reported thereunder, a Change of Control shall be deemed to have occurred at such time as (i) any "person" (as that term is used in Section 13(d)(2) of the Exchange Act) is or becomes the beneficial owner (as defined in rule 13(d)-3 of the Exchange Act) directly or indirectly of securities representing 20% or more of the combined voting power for election of directors of the then outstanding securities of the Company or any successor of the Company (ii) during any period of two consecutive years or less individuals who at the beginning of such period constituted the board of directors of the Company cease, for any reason, to constitute at least a majority of the board of directors, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii) the shareholders of the Company approve any merger or consolidation as a result of which the capital stock of the Company shall be changed, converted or exchanged (other than a merger with a - 8 - 9 wholly-owned subsidiary of the Company) or any liquidation of the Company or any sales or other disposition of 50% or more of the assets or earning power of the Company; or (iv) the shareholders of the Company approve any merger or consolidation to which the Company is a party as a result of which the persons who were shareholders of the Company immediately prior to the effective date of the merger or consolidation shall have beneficial ownership of less than 50% of the combined voting power for election of directors of the surviving corporation following the effective date of such merger or consolidation. Notwithstanding any provisions in this subparagraph (c), in the event the Company and a Participant agree prior to any event which would otherwise constitute a Change of control, that such event shall not constitute a Change of Control, then for purposes of this Plan there shall be no such Change of Control upon that event. ARTICLE 9 MISCELLANEOUS 9.01 Headings. The headings and sub-headings in this Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 9.02 Spendthrift Clause. None of the benefits, payments, proceeds or distribution under this Plan shall be subject to the claim of any creditor of any Participant or Beneficiary, or to any legal process by any creditor of such Participant or Beneficiary, and none of them shall have any right to alienate, commute, anticipate or assign any of the benefits, payments, proceeds or distributions under this Plan except to the extent expressly provided herein to the contrary. 9.03 Merger. The Plan shall not be automatically terminated by the Company's acquisition by, merger into, or sale of substantially all of its assets to any other organization, but the Plan shall be continued thereafter by such successor organization. All rights to amend, modify, suspend or terminate the Plan shall be transferred to the successor organization, effective as of the date of the combination or sale. 9.04 Release. Any payment to Participant or Beneficiary, or to their legal representatives, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Committee and the Company, any of whom may require such Participant, Beneficiary, or legal representative, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Committee, or the Company, as the case may be. - 9 - 10 9.05 Governing Law. The Plan shall be governed by the laws of the State of Georgia. 9.06 Costs of Collection; Interest. In the event the Participant collects any part or all of the payments due under this Plan by or through a lawyer or lawyers, the Company will pay all costs of collection, including reasonable legal fees incurred by the Participant. In addition, the Company shall pay to the Participant interest on all or any part of the payments that are not paid when due at a rate equal to the Prime Rate as announced by Trust Company Bank or its successors from time to time. 9.07 Successors and Assigns. This Plan shall be binding upon the successors and assigns of the parties hereto. IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed and its seal to be hereunto affixed on the date indicated below, but effective as of January 1, 1993. GENUINE PARTS COMPANY By: /s/ -------------------------------- Title: ----------------------------- Date: ------------------------------ [CORPORATE SEAL] Attest: - ------------------------------------ - 10 - 11 (LOGO) GENUINE TAX-DEFERRED SAVINGS PLAN PARTS 1993 PARTICIPATION AGREEMENT COMPANY Complete this form before December 31, 1993, and return to Frank Howard in Atlanta. Please print. PERSONAL INFORMATION Name: ____________________________________________________________________________________________________________________________ Home Address: ____________________________________________________________________________________________________________________ City: ____________________________________________ State: __________________________________ ZIP Code: _______________________ Social Security Number: __________________________ Daytime Phone: __________________________ Office Location: ________________ PARTICIPATION CHOICE I wish to participate in the Genuine Parts Company Tax-Deferred Savings Plan during the 1993 calendar year. I wish to defer a portion of the annual bonus that I earn during 1993 that I would otherwise receive in February, 1994. I understand that I may rescind this participation agreement at any time during 1993, but that I may not change it in any other way. I wish to defer receiving ________________ percent (a whole percent from 1 to 50) of the annual bonus I earn during 1993. LENGTH OF DEFERRAL I wish to defer receiving this amount until (check one): / / ___________________ (this date must be in 1996 or later). / / I retire or otherwise terminate employment. PAYMENT METHOD I wish to receive this deferral (check one): / / in a lump sum. / / in installments over 5 years. / / in installments over 10 years. / / in installments over 15 years. BENEFICIARY DESIGNATION Upon my death, I understand that my account balance will be payable to my beneficiary in the payment method chosen on this form. I name the following individual(s) (or trust) as my primary beneficiary(ies) and have stated the percentage payable (not to exceed 100% in total). In the event no primary beneficiary survives me to recieve my account balance, I name the following individual(s) (or trust) as my contingent beneficiary(ies) and have stated the percentage payable (not to exceed 100% in total). Use separate page if you name more than two in each category. I also understand that if no primary or contingent beneficiary survives me that my account balance will be paid to my beneficiary under the Genuine Partnership Plan. I also understand that I may have only one beneficiary designation in effect for my entire benefit form the plan, and that the beneficiary designation on this form revokes all prior beneficiary designations I have made under this plan. PRIMARY BENEFICIARY Name: ______________________________________ Relationship to You: ____________________ Social Security Number: _________________ Address: ______________________________________________________________________________ Percentage Payable: _____________________ Name: ______________________________________ Relationship to You: ____________________ Social Security Number: _________________ Address: ______________________________________________________________________________ Percentage Payable: _____________________ CONTINGENT BENEFICIARY Name: ______________________________________ Relationship to You: ____________________ Social Security Number: _________________ Address: ______________________________________________________________________________ Percentage Payable: _____________________ Name: ______________________________________ Relationship to You: ____________________ Social Security Number: _________________ Address: ______________________________________________________________________________ Percentage Payable: _____________________ SIGNATURE I have received and reviewed a summary of the plan provisions, and I have a full understanding of the benefits offered under the plan. I further understand all the terms and conditions of participating in the plan and receiving benefits under the plan. I understand that my own elective deferrals and investment earnings may be forfeited in favor of the Company's creditors in the event of the Company's bankruptcy. I further understand that my contributions to this plan will have an effect on my W-2 cash compensation amount. I also understand it is to my advantage to maximize my contributions to the Genuine Partnership Plan before contributing any amounts to this plan. While I understand that this plan is intended as a mechanism to allow me to defer all or a portion of my annual bonus until I receive my deferred amount(s), I understand that the Company does not guarantee favorable tax consequences, and that I have been advised to consult my own tax advisor about the advisability of my participation in the plan and its tax effects. Employee Signature: ________________________________________________________________________ Date: ______________________________ TO BE COMPLETED BY THE COMPANY Effective Date: ___________________________________________ For the Plan Committee: _____________________________________________ Make a copy of your completed form for your records
EX-13 3 ANNUAL REPORT ON FORM 10-K 1 EXHIBIT 13 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- SELECTED FINANCIAL DATA (restated to give effect to pooling of interests)
- --------------------------------------------------------------------------------------------------------------------------- Year Ended December 31 (in thousands except per share data) 1993 1992 1991 1990 1989 - --------------------------------------------------------------------------------------------------------------------------- Net sales $4,384,294 $4,016,751 $3,763,736 $ 3,660,443 $3,485,289 Cost of goods sold 3,023,038 2,781,731 2,612,059 2,543,951 2,433,393 Selling, administrative and other expenses 935,427 852,610 790,559 755,051 704,423 Income before income taxes 425,829 382,410 361,118 361,441 347,473 Income taxes 166,961 145,440 137,154 137,718 132,210 Net income** $ 257,813 $ 236,970 $ 223,964 $ 223,723 $ 215,263 Average common shares outstanding during year* 124,217 124,085 123,980 125,262 125,750 Per common share*: Net income** $ 2.08 $ 1.91 $ 1.81 $ 1.79 $ 1.71 Dividends declared 1.06 1.00 .97 .92 .80 December 31 closing stock price 37.63 34.00 32.50 25.33 28.00 Long-term debt, less current maturities 12,265 13,043 12,658 16,369 17,168 Shareholders' equity 1,445,263 1,316,372 1,211,716 1,122,182 1,058,238 Total assets $1,870,756 $1,707,303 $1,577,516 $ 1,488,412 $1,426,708 - ---------------------------------------------------------------------------------------------------------------------------
* Adjusted to reflect the three-for-two split in 1992. ** Net of cumulative effect of changes in accounting principles of $1,055 in 1993. SELECTED RATIO ANALYSIS (restated to give effect to pooling of interests)
Year Ended December 31 1993 1992 1991 1990 1989 - --------------------------------------------------------------------------------------------------------------------------- (In % of net sales) Cost of goods sold 68.95% 69.25% 69.40% 69.50% 69.82% Selling, administrative and other expenses 21.34 21.23 21.00 20.63 20.21 Income before income taxes 9.71 9.52 9.60 9.87 9.97 Net income 5.88 5.90 5.95 6.11 6.18 Rate earned on shareholders' equity at the beginning of each year 19.59% 19.56% 19.96% 21.14% 22.62% - ----------------------------------------------------------------------------------------------------------------------------
MARKET AND DIVIDEND INFORMATION High and Low Sales Price and Dividends Declared per Share of Common Shares Traded on the New York Stock Exchange. Adjusted to reflect the three-for-two stock split in 1992.
Sales Price of Common Shares ---------------------------------------------------- Quarter 1993 1992 - ------- ---------------------------------------------------- High Low High Low ---------------------------------------------------- First $37.25 $32.88 $33.67 $29.50 Second 37.38 33.50 33.50 30.33 Third 38.25 34.50 32.50 29.50 Fourth 39.00 34.88 34.75 29.00 Dividends Declared per Share ---------------------------------------------------- 1993 1992 ---------------------------------------------------- First $.265 $.25 Second .265 .25 Third .265 .25 Fourth .265 .25 Number of Record Holders of Common Stock 7,594
18 2 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 1993 and 1992, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1993. 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, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in Note 1 to the financial statements, in 1993 the Company changed its method of accounting for postretirement benefits and income taxes. /s/ Ernst & Young Atlanta, Georgia February 7, 1994 19 3 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) December 31 ASSETS 1993 1992 - -------------------------------------------------------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents $ 123,231 $ 168,019 Short-term investments, at cost, which approximates market value 64,599 12,010 Trade accounts receivable 428,911 403,152 Merchandise inventories 879,154 787,692 Prepaid expenses and other current accounts 10,299 8,886 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 1,506,194 1,379,759 Investments and Other Assets (Notes 1 and 8) 133,364 116,723 Property, Plant and Equipment Land 28,109 25,353 Buildings, less allowance for depreciation (1993-$56,839; 1992-$54,164) 103,146 95,485 Machinery and equipment, less allowance for depreciation (1993-$128,262; 1992-$118,956) 99,943 89,983 - ------------------------------------------------------------------------------------------------------------------------------- NET PROPERTY, PLANT AND EQUIPMENT 231,198 210,821 - ------------------------------------------------------------------------------------------------------------------------------- $ 1,870,756 $1,707,303 =============================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES Trade accounts payable $ 258,949 $ 240,630 Current maturities on long-term debt 797 823 Accrued compensation 30,883 28,312 Accrued expenses 18,222 8,563 Dividends payable 32,933 31,098 Income taxes payable 10,167 10,140 Deferred income taxes 1,521 2,248 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 353,472 321,814 LONG-TERM DEBT, less current maturities 12,265 13,043 DEFERRED INCOME TAXES 37,980 37,153 MINORITY INTERESTS IN SUBSIDIARIES 21,776 18,921 SHAREHOLDERS' EQUITY (Notes 2, 3, 4 and 6): Preferred Stock, par value $1 a share-authorized 10,000,000 shares; none issued Common Stock, par value $1 a share-authorized 150,000,000 shares; issued 124,282,289 shares in 1993; 124,163,089 shares in 1992 124,282 124,163 Additional paid-in capital 2,566 -- Retained earnings 1,318,415 1,192,209 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 1,445,263 1,316,372 - ------------------------------------------------------------------------------------------------------------------------------- $ 1,870,756 $1,707,303 ===============================================================================================================================
See accompanying notes. 20 4 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME
- -------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31 (dollars in thousands except per share data) 1993 1992 1991 - -------------------------------------------------------------------------------------------------------------------------------- Net sales $4,384,294 $4,016,751 $3,763,736 Cost of goods sold 3,023,038 2,781,731 2,612,059 - -------------------------------------------------------------------------------------------------------------------------------- 1,361,256 1,235,020 1,151,677 Selling, administrative and other expenses 935,427 852,610 790,559 - -------------------------------------------------------------------------------------------------------------------------------- Income before income taxes and cumulative effect of changes in accounting principles 425,829 382,410 361,118 Income taxes (Note 7) 166,961 145,440 137,154 - -------------------------------------------------------------------------------------------------------------------------------- Income before cumulative effect of changes in accounting principles 258,868 236,970 223,964 Cumulative effect of changes in accounting principles, net of tax (Note 1) 1,055 -- -- - -------------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 257,813 $ 236,970 $ 223,964 ================================================================================================================================ Net income per common share $ 2.08 $ .91 $ 1.81 ================================================================================================================================ Average common shares outstanding during the year 124,217 124,085 123,980 ================================================================================================================================
See accompanying notes. Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------------- Common Stock Additional Treasury Stock Total ------------------------ Paid-In Retained --------------------- Shareholders' (dollars in thousands except per share data) Shares Amount Capital Earnings Shares Amount Equity - ----------------------------------------------------------------------------------------------------------------------------------- Balance at January 1, 1991 80,405,339 $ 80,405 $ 9,449 $1,057,083 4,048,236 $(113,837) $1,033,100 Retirement of GPC treasury stock (4,048,236) (4,048) (9,449) (100,340) (4,048,236) 113,837 -0- Adjustment for beginning Berry retained earnings -0- -0- -0- 86,075 -0- -0- 86,075 Equivalent shares of pooled companies 6,391,021 6,391 -0- (3,384) -0- -0- 3,007 - ---------------------------------------------------------------------------------------------------------------------------------- Balance at January 1, 1991 as restated 82,748,124 82,748 -0- 1,039,434 -0- -0- 1,122,182 Net income -0- -0- -0- 223,964 -0- -0- 223,964 Cash dividends declared -0- -0- -0- (110,558) -0- -0- (110,558) Purchase and retirement of stock (120,600) (121) -0- (4,295) -0- -0- (4,416 Stock options exercised 42,680 43 -0- 872 -0- -0- 915 Repurchase of shares by pooled companies prior to merger -0- -0- -0- (10,273) -0- -0- (10,273) Cash dividends declared by pooled companies prior to merger -0- -0- -0- (10,098) -0- -0- (10,098) - ---------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1991 82,670,204 82,670 -0- 1,129,046 -0- -0- 1,211,716 Net income -0- -0- -0- 236,970 -0- -0- 236,970 Cash dividends declared -0- -0- -0- (114,508) -0- -0- (114,508) Three-for-two stock split 41,350,036 41,350 -0- (41,395) -0- -0- (45) Stock options exercised 142,849 143 -0- 3,270 -0- -0- 3,413 Repurchase of shares by pooled companies prior to merger -0- -0- -0- (4,895) -0- -0- (4,895) Cash dividends declared by pooled companies prior to merger -0- -0- -0- (16,279) -0- -0- (16,279) - ---------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1992 124,163,089 124,163 -0- 1,192,209 -0- -0- 1,316,372 Net income -0- -0- -0- 257,813 -0- -0- 257,813 Cash dividends declared -0- -0- -0- (131,681) -0- -0- (131,681) Stock options exercised 119,200 119 2,566 74 -0- -0- 2,759 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1993 124,282,289 $124,282 $ 2,566 $1,318,415 -0- $ -0- $1,445,263 ==================================================================================================================================
See accompanying notes. 21 5 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31 (dollars in thousands) 1993 1992 1991 - --------------------------------------------------------------------------------------------------------------------------------- Operating Activities Net income $257,813 $236,970 $223,964 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,420 31,687 30,595 Gain on sale of property, plant and equipment (1,342) (895) (899) Provision for deferred taxes 5,990 3,896 4,281 Equity in income from UAP (2,531) (1,738) (1,629) Equity in income from partnership (1,921) (775) (2,371) Income applicable to minority interests 2,090 1,537 1,638 Changes in operating assets and liabilities: Trade accounts receivable (25,759) (33,455) (12,582) Merchandise inventories (91,462) (60,614) (21,408) Prepaid expenses and other current accounts (1,413) 488 (1,372) Trade accounts payable 18,319 22,090 3,919 Income taxes payable and other current liabilities 6,367 (12,987) 15,577 - --------------------------------------------------------------------------------------------------------------------------------- (57,242) (50,766) 15,749 - --------------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 200,571 186,204 239,713 Investing Activities Acquisition of Davis & Wilmar, Inc., net of cash acquired of $3,556 -0- (28,444) -0- Purchase of property, plant and equipment (57,513) (31,585) (28,273) Proceeds from sale of property, plant and equipment 4,831 3,862 2,811 Purchase of short-term investments (64,599) (12,010) (10,626) Proceeds from sale and maturity of short-term investments 12,010 17,698 5,928 Other investing activities (12,962) (9,696) (12,903) - --------------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (118,233) (60,175) (43,063) Financing Activities Borrowings on notes payable -0- -0- 6,372 Repayment of notes payable -0- -0- (32,258) Payments on long-term debt (804) (5,954) (1,422) Stock options exercised 2,759 3,368 915 Dividends paid (129,846) (127,338) (119,518) Purchase of stock -0- (4,896) (14,691) Contributions from minority interests 765 822 667 - --------------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (127,126) (133,998) (159,935) - --------------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (44,788) (7,969) 36,715 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 168,019 175,988 139,273 - --------------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $123,231 $168,019 $175,988 ================================================================================================================================= Supplemental disclosure of cash flow information Cash paid during the year for: Income taxes $160,944 $154,498 $122,233 ================================================================================================================================= Interest $ 1,587 $ 1,890 $ 5,454 =================================================================================================================================
See accompanying notes. 22 6 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1993 - -------------------------------------------------------------------------------- 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. CASH EQUIVALENTS: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. INVESTMENTS: On August 27, 1992, the Company paid approximately $5.5 million to increase its ownership in UAP Inc., a Canadian automotive parts distributor, from 20% to 24%. The Company also has a 49% interest in a partnership formed by the Company and UAP Inc. These investments are accounted for by the equity method of accounting. INVENTORIES: Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for substantially all automotive parts, and certain industrial parts, and by the first-in, first-out (FIFO) method for all other inventories. If the FIFO method had been used for all inventories, cost would have been $100,772,000 and $93,123,000 higher than reported at December 31, 1993 and December 31, 1992, 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. STOCK OPTIONS: Proceeds from the sale of stock under options are credited to common stock at par value and the excess of the option price over par value is credited to additional paid-in capital. INTEREST INCOME: Interest income (1993 - $6,273,000; 1992 - $7,538,000; 1991 - $9,674,000) has been deducted from selling, administrative and other expenses. FOREIGN OPERATIONS: Canadian operations represent less than five percent of consolidated amounts. Translation adjustments are not significant. INCOME TAXES: Deferred income taxes principally arise from the use of accelerated depreciation methods for a portion of property, plant and equipment and the use of different pension valuation and inventory methods for income tax purposes. ACCOUNTING CHANGES: Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires the projected future costs of providing postretirement benefits, such as health care and life insurance, be recognized as an expense as employees render service instead of when benefits are paid. The Company has applied the new rules using the cumulative effect method, resulting in a charge of $5,055,000 (net of income taxes of $3,095,000). Also effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The cumulative effect as of January 1, 1993, of adopting Statement 109 increased net income by $4,000,000. The adoption of Statements 106 and 109 did not have a material impact on the Company's financial statements or results of operations. NET INCOME PER COMMON SHARE: Net income per common share is based on the weighted average number of shares of common stock outstanding during each year. Options outstanding under the Company's stock option plan would not materially dilute net income per share and, therefore, have not been included in the computation. RECLASSIFICATIONS: Certain reclassifications have been made to the 1992 financial statements to conform to the current year presentation. 2. ACQUISITIONS On June 30, 1992, the Company acquired all of the outstanding common stock of Davis & Wilmar, Inc., an automotive parts distributor, for $32 million. The acquisition has been recorded using the purchase method of accounting. On January 29, 1993, the Company completed its merger of Berry Bearing Company and certain affiliated companies into the Company. The Berry Companies distribute industrial replacement parts and related supplies throughout the Midwestern United States. The Company issued 9,586,531 shares of common stock for all of the outstanding common stock of the Berry Companies. This transaction has been accounted for as a pooling of interests and, accordingly, the accompanying financial statements have been retroactively combined to include the accounts of the pooled companies. A reconciliation of amounts previously reported by Genuine Parts and the Berry Companies follows, in thousands: Berry Year ended Genuine Parts Companies December 31, As Reported As Reported Restated ------------------------------------------------------------- 1992 Sales $3,668,814 $347,937 $4,016,751 Net Income 219,788 17,182 236,970 1991 Sales 3,434,642 329,094 3,763,736 Net Income 207,677 16,287 223,964 Operations of the pooled companies in 1993 prior to the merger were not significant. 23 7 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. STOCK SPLIT On February 17, 1992, the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, payable to shareholders of record on March 16, 1992. The par value of the shares issued was charged to retained earnings. All references in the financial statements with regard to average number of shares of common stock and related prices, dividends and per share amounts have been restated to reflect the three-for-two stock split. 4. SHAREHOLDERS' EQUITY On November 20, 1989, the Company's Board of Directors approved a Shareholder Protection Rights Agreement and distributed Rights to common shareholders. The Rights entitle the holder, upon occurrence of certain events, to purchase additional stock of the Company. The Rights will be exercisable only if a person, group or company acquires 20% or more of the Company's common stock or commences a tender offer that would result in ownership of 30% or more of the common stock. The Company is entitled to redeem each Right for one cent. 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, 1993 (in thousands): 1994 $ 45,171 1995 34,840 1996 23,605 1997 15,406 1998 11,013 Subsequent to 1998 21,816 - ---------------------------------- $151,851 ================================== Rental expense for operating leases was $48,935,000 in 1993; $47,033,000 in 1992, and $45,758,000 in 1991. 6. STOCK OPTIONS In accordance with stock option plans approved by the shareholders, options are granted to key personnel for the purchase of the Company's common stock at prices not less than the fair market value of the shares on the dates of grant. Most options may be exercised not earlier than twelve months nor later than ten years from the date of grant. On April 20, 1992, the shareholders approved the 1992 Stock Option and Incentive Plan which provides for 4,500,000 shares of common stock to be available for granting of incentive and nonqualified stock options to key employees. Further information relating to the options is as follows: Shares Option Price ---------------------------------- Per Share 1993 1992 1991 - ----------------------------------------------------------------------------- Outstanding at January 1 $19.66 to $26.88 1,432,850 798,556 619,164 Granted 26.88 to 37.06 235,700 858,900 324,450 Exercised 19.66 to 26.88 (150,749) (206,481) (133,058) Cancelled 22.79 to 30.31 (21,500) (18,125) (12,000) - ----------------------------------------------------------------------------- Outstanding at December 31 22.58 to 37.06 1,496,301 1,432,850 798,556 ============================================================================= Exercisable at December 31 22.58 to 31.92 1,014,843 520,316 442,076 ============================================================================= Shares available for future grants 3,520,856 3,735,056 86,456 ============================================================================= 7. INCOME TAXES Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities as of December 31, 1993 are as follows (in thousands): Property, plant and equipment $15,944 Employee and retiree benefits 15,793 Merchandise inventories 6,243 Other 1,521 - ----------------------------------------- $39,501 ========================================= The components of income tax expense are as follows: - ----------------------------------------------------------- (in thousands) 1993 1992 1991 - ----------------------------------------------------------- Federal: Current $132,298 $116,772 $108,825 Deferred 5,990 3,896 4,281 State 28,673 24,772 24,048 - ----------------------------------------------------------- $166,961 $145,440 $137,154 =========================================================== The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes were as follows: - --------------------------------------------------------------------- (in thousands) 1993 1992 1991 - --------------------------------------------------------------------- Statutory rate applied to pre-tax income $149,040 $130,019 $122,780 Plus state income taxes, net of Federal tax benefit 18,637 16,350 15,872 - --------------------------------------------------------------------- 167,677 146,369 138,652 Other items less than 5% of the amount computed using the statutory Federal income tax rate (716) (929) (1,498) - --------------------------------------------------------------------- $166,961 $145,440 $137,154 ===================================================================== 24 8 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. The following table sets forth the plan's funded status and amounts recognized in the Company's financial statements at December 31: - ------------------------------------------------------------------ (in thousands) 1993 1992 - ------------------------------------------------------------------ Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $202,994 in 1993, and $164,755 in 1992 $(207,707) $(186,183) ================================================================== Projected benefit obligation for service rendered to date $(339,271) $(292,172) Plan assets at fair value, primarily insurance contracts, U.S. Government securities and equity securities 344,217 310,148 - ------------------------------------------------------------------ Plan assets in excess of projected benefit obligation 4,946 17,976 Unrecognized net loss from past experience different from that assumed and effects of changes in assumptions 36,942 12,501 Unrecognized net transition obligation 2,083 2,343 - ------------------------------------------------------------------ Net prepaid pension cost $ 43,971 $ 32,820 ================================================================== Net pension cost (income) included the following components at December 31: - ----------------------------------------------------------------------------- (in thousands) 1993 1992 1991 - ----------------------------------------------------------------------------- Service cost $ 9,498 $ 10,775 $ 10,050 Interest cost 23,192 23,909 22,111 Actual return on plan assets (35,190) (21,080) (43,031) Net amortization and deferral 2,353 (5,870) 19,527 - ----------------------------------------------------------------------------- Net periodic pension cost (income) $ (147) $ 7,734 $ 8,657 ============================================================================= Effective January 1, 1993, the Company began insuring new long-term disability claims under a policy separate from the pension plan, resulting in a decrease in net pension cost of approximately $7,000,000 during 1993. Assumptions used in the accounting for the defined benefit plan as of December 31 were: - ------------------------------------------------------------ 1993 1992 1991 - ------------------------------------------------------------ Weighted-average discount rate 7.50% 8.75% 8.75% Rate of increase in future compensation levels 5.75% 5.75% 5.75% Expected long-term rate of return on assets 10.00% 10.00% 10.00% ============================================================ The change in the weighted-average discount rate assumption resulted in a $56,200,000 increase in the projected benefit obligation at December 31, 1993. At December 31, 1993, the plan held 534,997 shares of common stock of the Company with a market value of $20,129,262. 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 $2,712,000 in 1993, $2,212,000 in 1992, and $2,128,000 in 1991, respectively. 9. INDUSTRY DATA The industry data for the past five years presented in the Exhibit on page 27 is an integral part of these financial statements. The Company is primarily engaged in the distribution of merchandise, principally automotive and industrial replacement parts, and office supplies. In the automotive industry, the Company distributes replacement parts (other than body parts) for substantially all makes and models of domestically manufactured automobiles, most domestically manufactured trucks and buses, and most vehicles manufactured outside the United States. In addition, this segment of the business includes the rebuilding of some automotive parts and the distribution of replacement parts for certain types of farm equipment, motorcycles, motorboats and small engines. The Company's industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components, and related parts and supplies. The Company's office products segment distributes a wide variety of office products, computer supplies, office furniture and business electronics. Intersegment sales are not significant. Operating profit for each industry segment is calculated as net sales less operating expenses excluding general corporate expenses, interest expense, equity in income of investments and minority interests. Identifiable assets by industry are those assets that are used in the Company's operations in each industry. Corporate assets are principally cash, cash equivalents, short-term investments and headquarter's facilities and equipment. 25 9 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDIITION AND RESULTS OF OPERATIONS December 31, 1993 - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS: Net sales in 1993 increased for the 44th consecutive year to a record high of $4.4 billion. This was an increase of 9% over the prior year and compares with increases of 7% in 1992, and 3% in 1991. Sales for the Automotive Parts Group increased 7% in 1993 versus 6% in 1992, reflecting the slight improvement of the economy, an improved sales environment in the automotive aftermarket, and the strength of NAPA programs in the marketplace. Sales for the Industrial Parts Group increased 7% in 1993 versus 6% in 1992 due to plant and equipment revitalization resulting from an improved economy and the strength of its sales and service programs. Sales for the Office Products Group increased 21% in 1993 compared with 11% in 1992 reflecting geographic expansion, improved service and marketing programs and expansion of product lines. Costs of goods sold improved slightly as a percentage of net sales in each of the past two years. Selling, administrative and other expenses increased each year, and the percentage to net sales has increased slightly each year, due primarily to increased salaries and wages and employee benefits. Effective January 1, 1993, the Company began insuring new long-term disability claims under a policy separate from the pension plan, resulting in a pre-tax decrease in net pension cost during 1993 of approximately $7 million. The effective income tax rate was 39.2% in 1993 and 38.0% in 1992 and 1991. The effective tax rate in 1993 reflects the increase in the federal tax rate from 34% to 35% effective January 1, 1993. Consolidated net income in 1993 increased 9% over 1992 net income. Net income in 1992 increased 6% over 1991. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires the projected future costs of providing postretirement benefits, such as health care and life insurance, be recognized as an expense as employees render service instead of when benefits are paid. The Company has applied the new rules using the cumulative effect method, resulting in a charge of $5,055,000 (net of income taxes of $3,095,000). Also effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The cumulative effect as of January 1, 1993, of adopting Statement 109 increased net income by $4,000,000. The adoption of Statements 106 and 109 did not have a material impact on the Company's financial statements or results of operations. Additionally, effective December 31, 1993, the Company changed the weighted-average discount rate assumption for the pension plan from 8.75% to 7.50%. This change resulted in a $56,200,000 increase in the projected benefit obligation at December 31, 1993. LIQUIDITY AND SOURCES OF CAPITAL: The ratio of current assets to current liabilities was 4.3 at the close of 1993 with current assets amounting to 81% of total assets. Trade accounts receivable and inventories increased 6% and 12% respectively, while working capital increased 9%. The increase in working capital has been financed principally from the Company's cash flow generated by operations. Current financial resources and anticipated funds from operations are expected to meet requirements for working capital in 1994. Capital expenditures during 1993 amounted to $58 million compared with $32 million in 1992 and $28 million in 1991. The increase in 1993 reflects the Company's continuing geographic expansion as well as the upgrading of their existing facilities. Additionally, capital expenditures in 1992 and 1991 reflect the Company's response to the difficult business environment and the overall economy. It is anticipated that capital expenditures in 1994 will be approximately the same as 1993. On January 29, 1993, 9,586,531 shares of common stock were issued for all of the outstanding common stock of Berry Bearing Company and certain affiliated companies. This transaction has been accounted for as a pooling of interests; and accordingly, the financial statements have been retroactively combined to include the accounts of the pooled companies. On June 30, 1992, the Company paid approximately $32 million for all the issued and outstanding capital stock of Davis & Wilmar, Inc. Davis & Wilmar serves approximately 150 NAPA Auto Parts stores from NAPA Distribution Centers in Altoona, Pennsylvania and Bridgeport, West Virginia. On August 27, 1992, the Company paid approximately $5.5 million for an additional 4% equity interest in UAP Inc., a Canadian automotive parts distributor. The Company now has a 24% equity interest in UAP, which is being accounted for on the equity method of accounting. INFLATION: Price increases in the Automotive Parts Group were approximately 1% in 1993 as sales increased 7%. The Industrial Parts Group had a sales increase of 7% and price increases of approximately 3%. The Office Products Group had a sales increase of 21% and price increases of less than 1%. Price increases in the Automotive Group were approximately 2% in 1992 as sales increased 6%. The Industrial Parts Group had a sales increase of 6% and price increases of approximately 2%. The Office Products Group had a sales increase of 11% and price increases of less than 1%. The charges to operations for depreciation represent the allocation of historical costs incurred over past years and are significantly less than if they were based on the current cost of productive capacity being consumed. Assets acquired in prior years will, of course, be replaced at higher costs, but this will take place over many years. 26 10 Genuine Parts Company and Subsidiaries - -------------------------------------------------------------------------------- INDUSTRY DATA
- ----------------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) 1993 1992 1991 1990 1989 - ----------------------------------------------------------------------------------------------------------------------------------- Net sales Automotive $2,485,267 $2,318,761 $2,188,698 $2,117,464 $2,010,755 Industrial 1,153,371 1,082,428 1,021,019 1,019,227 958,668 Office products 745,656 615,562 554,019 523,752 515,866 - ----------------------------------------------------------------------------------------------------------------------------------- Total net sales $4,384,294 $4,016,751 $3,763,736 $3,660,443 $3,485,289 - ----------------------------------------------------------------------------------------------------------------------------------- Operating profit Automotive $ 282,791 $ 262,422 $ 260,818 $ 252,862 $ 247,920 Industrial 96,727 87,493 76,922 80,578 74,116 Office products 65,938 50,967 45,112 45,606 44,863 - ----------------------------------------------------------------------------------------------------------------------------------- Total operating profit 445,456 400,882 382,852 379,046 366,899 Interest expense (1,584) (1,871) (5,434) (5,411) (5,796) Corporate expense (20,405) (17,577) (18,662) (14,448) (16,369) Equity in income 4,452 2,513 4,000 3,814 4,299 Minority interests (2,090) (1,537) (1,638) (1,560) (1,560) - ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes $ 425,829 $ 382,410 $ 361,118 $ 361,441 $ 347,473 - ----------------------------------------------------------------------------------------------------------------------------------- Identifiable assets Automotive $1,152,148 $1,040,191 $ 926,617 $ 875,324 $ 795,185 Industrial 370,633 354,547 338,054 337,418 328,635 Office products 283,479 228,802 201,036 186,815 181,759 Corporate 6,731 27,333 57,197 43,881 79,095 Equity investments 57,765 56,430 54,612 44,974 42,034 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $1,870,756 $1,707,303 $1,577,516 $1,488,412 $1,426,708 - ----------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization Automotive $ 24,056 $ 21,905 $ 20,301 $ 19,436 $ 15,986 Industrial 5,410 5,286 5,732 5,450 4,918 Office products 4,246 3,752 3,794 3,727 3,314 Corporate 708 744 768 964 1,198 - ----------------------------------------------------------------------------------------------------------------------------------- Total depreciation and amortization $ 34,420 $ 31,687 $ 30,595 $ 29,577 $ 25,416 - ----------------------------------------------------------------------------------------------------------------------------------- Capital expenditures Automotive $ 39,502 $ 24,272 $ 22,381 $ 33,190 $ 32,438 Industrial 2,779 2,553 2,479 8,586 9,271 Office products 12,378 3,395 3,055 3,488 12,351 Corporate 2,854 1,365 358 845 464 - ----------------------------------------------------------------------------------------------------------------------------------- Total capital expenditures $ 57,513 $ 31,585 $ 28,273 $ 46,109 $ 54,524 - -----------------------------------------------------------------------------------------------------------------------------------
Present tax laws do not allow deductions for adjustments for the impact of inflation. Thus, taxes are levied on the Company at rates which, in real terms, exceed established statutory rates. In general, during periods of inflation, this tax policy results in a tax on shareholders' investment in the Company. QUARTERLY RESULTS OF OPERATIONS: Miscellaneous year-end adjustments resulted in increasing net income during the fourth quarter of 1993 and 1992 by approximately $16,206,000 ($.13 per share) and $13,155,000 ($.11 per share), respectively. The following is a summary of the quarterly results of operations for the years ended December 31, 1993 and 1992. The quarterly results have been adjusted to reflect the Company's acquisition of the Berry Companies in a transaction accounted for as a pooling of interests. Three Months Ended - -------------------------------------------------------------------- March 31, June 30, Sept. 30, Dec. 31, - -------------------------------------------------------------------- 1993 (in thousands except per share data) Net Sales $1,037,914 $1,106,176 $1,144,839 $1,095,365 Gross Profit 310,421 326,282 347,399 377,154 Net Income 55,336 65,905 63,019 73,553 Net Income per Common Share .45 .53 .51 .59 1992 Net Sales $ 959,071 $1,013,596 $1,049,422 $ 994,662 Gross Profit 286,666 298,626 314,309 335,419 Net Income 51,452 60,098 59,706 65,714 Net Income per Common Share .41 .48 .48 .53 27 EX-22 4 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 22 SUBSIDIARIES OF THE COMPANY Jurisdiction of Name % Owned Incorporation - ---- ------- ------------- Balkamp, Inc. 89.61 Indiana Berry Bearing Company 100.0 Illinois Bearing Service Company 100.0 Kentucky Bearings Manufacturing Company 100.0 Illinois Bearings Service Company 100.0 Illinois Bearings Service Company, Inc. 100.0 Indiana BBC - Berry Bearing Company 100.0 Illinois Berry Bearing Company, Inc. 100.0 Indiana Illinois Bearing Company 100.0 Illinois Wisconsin Bearing Company 100.0 Illinois Davis & Wilmar, Inc. 100.0 Pennsylvania Genuine Parts Holdings, Ltd. 100.0 Province of Alberta, Canada Motion Industries, Inc. 100.0 Delaware Parts Incorporated, Inc. 100.0 Alaska S. P. Richards Company 100.0 Georgia Alamogordo Parts & Supply, Inc. 51.0 Georgia AmLynch, Inc. 100.0 Georgia Best Auto Parts, Inc. 51.0 Georgia Blocker Automotive Supply, Inc. 51.0 Georgia Boerner Enterprises, Inc. 51.0 Georgia Brigham Automotive Supply, Inc. 51.0 Georgia Bulldog Auto Parts, Inc. 51.0 Georgia 2 Bullock Automotive, Inc. 51.0 Georgia Clermont-Brown Automotive Supply, Inc. 51.0 Georgia C & O Auto Parts, Inc. 51.0 Georgia First Choice Automotive, Inc. 51.0 Georgia Franklin County Sypply, Inc. 51.0 Georgia Gila Automotive Supply, Inc. 51.0 Georgia Greco Auto & Truck Parts, Inc. 51.0 Georgia Hansens Automotive Supply, Inc. 51.0 Georgia Jones Parts Company, Inc. 51.0 Georgia L & P Automotive Supply, Inc. 51.0 Georgia Lana Lou Auto Parts, Inc. 51.0 Georgia Landry Supply, Inc. 51.0 Georgia Luke's Auto Supply, Inc. 51.0 Georgia Middletown Parts Unlimited, Inc. 51.0 Georgia Nelson Enterprises, Inc. 51.0 Georgia North Shore Automotive, Inc. 51.0 Georgia Oberlin Auto Parts, Inc. 51.0 Georgia Parts & Company of Selma, Inc. 51.0 Georgia Parts of Ringgold, Inc. 51.0 Georgia Petoskey Automotive Center, Incorporated 51.0 Georgia Plymouth-Rock Auto Parts, Inc. 51.0 Georgia P.M.A. Associates, Inc. 51.0 Georgia Port Charlotte Auto Supply, Inc. 51.0 Georgia Price Automotive Supply, Inc. 51.0 Georgia Pride City Auto Parts, Inc. 51.0 Georgia Rasmussen Auto Supply, Inc. 51.0 Georgia Rome Auto Parts, Inc. 51.0 Georgia 3 Rutherford Automotive, Inc. 51.0 Georgia Sanchez Truck & Auto Parts, Inc. 51.0 Georgia Sevier County Auto Parts, Inc. 51.0 Georgia Slidell Parts Warehouse, Inc. 51.0 Georgia TNT Supply, Inc. 51.0 Georgia Uptergrove Auto Supply, Inc. 51.0 Georgia Warren County Automotive, Inc. 51.0 Georgia Wisota Auto Parts, Inc. 51.0 Georgia EX-24 5 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 24 - 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 7, 1994, included in the 1993 Annual Report to Shareholders of Genuine Parts Company. Our audits also included the financial statement schedule of Genuine Parts Company listed in Item 14(a). 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 Statement (Form S-8 Number 33-30982) pertaining to the Genuine Parts Company 1988 Stock Option Plan and in the Registration Statement (Form S-8 Number 33-62512) pertaining to the Genuine Parts Company 1992 Stock Option and Incentive Plan of our report dated February 7, 1994, with respect to the financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Genuine Parts Company. ERNST & YOUNG Atlanta, Georgia March 22, 1994 2 SCHEDULE IX - SHORT-TERM BORROWINGS GENUINE PARTS COMPANY AND SUBSIDIARIES
- ----------------------------------------------------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E COL. F - ----------------------------------------------------------------------------------------------------------------------------------- WEIGHTED MAXIMUM AMOUNT AVERAGE AMOUNT WEIGHTED AVERAGE CATEGORY OF AGGREGATE SHORT- BALANCE AT END AVERAGE OUTSTANDING DURING OUTSTANDING (2) INTEREST RATE (3) TERM BORROWINGS OF PERIOD INTEREST RATE THE PERIOD DURING THE PERIOD DURING THE PERIOD - ----------------------------------------------------------------------------------------------------------------------------------- (Amounts in Thousands) Year ended December 31, 1993: Notes payable to bank (1) $ -- -- $ -- $ -- -- Year ended December 31, 1992: Notes payable to bank (1) -- -- -- -- -- Year ended December 31, 1991: Notes payable to bank (1) -- -- 42,834 32,305 10.6
(1) Notes payable to bank represent a fixed rate, note payable and other additional borrowings under a line-of-credit arrangement. (2) The average amount outstanding during the period was computed by dividing the total of month-end outstanding principal balances by 12. (3) The weighted average interest rate during the period was computed by dividing the actual interest expense by average short-term debt outstanding. -----END PRIVACY-ENHANCED MESSAGE-----