-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UxEMFOY6OKjpxT+fjHmnsOxQ9ChL6q43PgDQOwkM7EUDfab2PG0w6PljtZRPFr/B SxD5Ib7tt7JfrbVsx3HC5g== 0000950144-98-002466.txt : 19980311 0000950144-98-002466.hdr.sgml : 19980311 ACCESSION NUMBER: 0000950144-98-002466 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980310 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENUINE PARTS CO CENTRAL INDEX KEY: 0000040987 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLE SUPPLIES & NEW PARTS [5013] IRS NUMBER: 580254510 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-05690 FILM NUMBER: 98560870 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-K405 1 GENUINE PARTS 1 '=============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-5690 GENUINE PARTS COMPANY (Exact name of Registrant as specified in its Charter) GEORGIA 58-0254510 (State of Incorporation) (IRS Employer Identification No.) 2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (770) 953-1700. Securities registered pursuant to Section 12(b) of the Act and the Exchange on which such securities are registered: Common Stock, Par Value, $1 Per Share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [X] The aggregate market value of the Registrant's Common Stock (based upon the closing sales price reported by the New York Stock Exchange and published in The Wall Street Journal for February 12, 1998) held by non-affiliates as of February 12, 1998 was approximately $6,149,387,319. The number of shares outstanding of Registrant's Common Stock, as of February 12, 1998: 178,803,145. Documents Incorporated by Reference: - Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 1997, 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 20, 1998 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 1997, business was conducted throughout most of the United States, in western Canada and in Mexico from approximately 1,350 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 1997, 1996 and 1995 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.
1997 1996 1995 ---- ---- ---- NET SALES (in thousands) --------- Automotive Parts $ 3,071,153 $ 3,008,105 $ 2,804,086 Industrial Parts 1,853,270 1,677,859 1,509,566 Office Products 1,080,822 1,034,510 948,252 ----------- ----------- ----------- TOTAL NET SALES $ 6,005,245 $ 5,720,474 $ 5,261,904 =========== =========== =========== OPERATING PROFIT Automotive Parts $ 324,008 $ 321,852 $ 307,726 Industrial Parts 166,053 150,815 132,952 Office Products 110,663 103,309 93,888 ----------- ----------- ----------- TOTAL OPERATING PROFIT 600,724 575,976 534,566 Interest Expense (13,365) (8,498) (3,419) Corporate Expense (26,943) (29,057) (25,939) Equity in Income from Investees 6,730 9,398 8,298 Minority Interests (1,546) (2,586) (2,712) ----------- ----------- ----------- INCOME BEFORE INCOME TAXES $ 565,600 $ 545,233 $ 510,794 =========== =========== =========== IDENTIFIABLE ASSETS Automotive Parts $ 1,644,288 $ 1,495,106 $ 1,320,910 Industrial Parts 602,656 527,253 482,067 Office Products 383,452 379,394 360,456 ----------- ----------- ----------- TOTAL IDENTIFIABLE ASSETS 2,630,396 2,401,753 2,163,433 Corporate Assets 23,343 20,394 18,631 Equity Investments 100,624 99,484 92,068 ----------- ----------- ----------- TOTAL ASSETS $ 2,754,363 $ 2,521,631 $ 2,274,132 =========== =========== ===========
For additional information regarding industry data, see Page 21 of Annual Report to Shareholders for 1997. 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 and Mexico are not material. For additional information regarding foreign operations, see "Note 1 of Notes to Consolidated Financial Statements" on Page 26 of Annual Report to Shareholders for 1997. -2- 3 COMPETITION - GENERAL. The distribution business, which includes all segments of the Company's business, is highly competitive with the principal methods of competition being product quality, sufficiency of inventory, price and the ability to give the customer prompt and dependable service. The Company anticipates no decline in competition in any of its business segments in the foreseeable future. EMPLOYEES. As of December 31, 1997, the Company employed approximately 24,500 persons. AUTOMOTIVE PARTS GROUP. The Automotive Parts Group, the largest division of the Company, distributes automotive replacement parts and accessory items. The Company is the largest member of the National Automotive Parts Association ("NAPA"), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts. In addition to approximately 200,000 part numbers that are available, the Company, in conjunction with NAPA, offers complete inventory, accounting, cataloging, marketing, training and other programs in the automotive aftermarket. During 1997, the Company's Automotive Parts Group included NAPA automotive parts distribution centers and automotive parts stores ("auto parts stores" or "NAPA AUTO PARTS stores") owned in the United States by Genuine Parts Company; automotive parts distribution centers and auto parts stores in western Canada owned and operated by UAP/NAPA Automotive Western Partnership ("UAP/NAPA"), a general partnership in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest; auto parts stores in the United States operated by corporations in which Genuine Parts Company owned either a 51% or a 70% interest; distribution centers owned by Balkamp, Inc., a majority-owned subsidiary; rebuilding plants owned by the Company and operated by its Rayloc division; and automotive parts distribution centers and auto parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. ("Auto Todo"), a joint venture company in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest. The Company's NAPA automotive parts distribution centers distribute replacement parts (other than body parts) for substantially all motor vehicle makes and models in service in the United States, including imported vehicles, trucks, buses, motorcycles, recreational vehicles and farm vehicles. In addition, the Company distributes small engines and replacement parts for farm equipment and heavy duty equipment. The Company's inventories also include accessory items for such vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform their own maintenance and parts installation. Although the Company's domestic automotive operations purchase from more than 150 different suppliers, approximately 58% of 1997 automotive inventories were purchased from 10 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers which has protected the Company from inventory obsolescence. DISTRIBUTION SYSTEM. In 1997, Genuine Parts Company operated 62 domestic NAPA automotive parts distribution centers located in 38 states and approximately 750 domestic company-owned NAPA AUTO PARTS stores located in 43 states. At December 31, 1997, Genuine Parts Company owned a 51% interest in 136 corporations and a 70% interest in 5 corporations which operated 203 auto parts stores in 39 states. In Canada, Genuine Parts Company Ltd., a wholly-owned subsidiary, owns a 49% interest in UAP/NAPA which operated seven automotive parts distribution centers and 106 auto parts stores located in the provinces of Alberta, British Columbia, Manitoba and Saskatchewan and in the Yukon Territories. In addition, the Company has an approximate 23% interest in UAP Inc., a publicly traded Canadian corporation, which owns the other 51% interest in UAP/NAPA and further engages in the distribution of automotive parts primarily in eastern Canada. In Mexico, Auto Todo owns and operates 20 distribution centers and 23 auto parts stores. Auto Todo is licensed to and uses the NAPA(R) name in Mexico. The Company's investments in UAP/NAPA and Auto Todo are accounted for by the equity method of accounting. -3- 4 The Company's distribution centers serve approximately 4,900 independently owned NAPA AUTO PARTS stores located throughout the market areas served. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, these auto parts stores account for approximately 17% of the Company's total sales with no auto parts store or group of auto parts stores with individual or common ownership accounting for more than .3% of the total sales of the Company. PRODUCTS. Distribution centers have access to approximately 200,000 different parts and related supply items. Each item is cataloged and numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers. Most orders are filled and shipped the same day as received. The majority of sales are on terms which require payment within 30 days of the statement date. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA(R) name, a mark licensed to the Company by the National Automotive Parts Association. RELATED OPERATIONS. A majority-owned subsidiary of Genuine Parts Company, Balkamp, Inc. ("Balkamp"), distributes a wide variety of replacement parts and accessory items for passenger cars, heavy duty vehicles, motorcycles and farm equipment. In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions. Balkamp packages many of the approximately 24,000 part numbers which constitute the "Balkamp" line of products which are distributed to the members of the National Automotive Parts Association ("NAPA"). These products are categorized in 150 different product groups purchased from more than 400 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 five plants where certain small automotive parts are rebuilt. These products are distributed to the members of NAPA under the name Rayloc(R). Rayloc(R) is a mark licensed to the Company by NAPA. SEGMENT DATA. In the year ended December 31, 1997, sales from the Automotive Parts Group approximated 51% of the Company's net sales as compared to 53% in 1996 and 53% in 1995. SERVICE TO NAPA AUTO PARTS STORES. The Company believes that the quality and the range of services provided to its auto parts customers constitute a significant part of its automotive parts distribution system. Such services include fast and frequent delivery, obsolescence protection, parts cataloging (including the use of computerized NAPA AUTO PARTS catalogues) and stock adjustment through a continuing parts classification system which allows auto parts customers to return certain merchandise on a scheduled basis. The Company offers its NAPA AUTO PARTS store customers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, marketing conferences and seminars, sales and advertising manuals and training programs. Point of sale/inventory management is available through TAMS(R) (Total Automotive Management Systems), a computer system designed and developed by the Company for the NAPA AUTO PARTS store. In association with NAPA, the Company has developed and refined an inventory classification system to determine optimum distribution center and auto parts store inventory levels for automotive parts stocking based on automotive registrations, usage rates, production statistics, technological advances and other similar factors. This system, which undergoes continuous analytical review, is an integral part of the Company's inventory control procedures and comprises an important feature of the inventory management services which the Company makes available to its NAPA AUTO PARTS store customers. Over the last 10 years, losses to the Company from obsolescence have been insignificant, and the Company attributes this to the successful operation of its classification system which involves product return privileges with most of its suppliers. COMPETITION. In the distribution of automotive parts, the Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those which they build -4- 5 themselves), automobile dealers, warehouse clubs and large automotive parts retail chains. In addition, the Company competes with the distributing outlets of parts manufacturers, oil companies, mass merchandisers, including national retail chains, and with other parts distributors and jobbers. NAPA. The Company is a member of the National Automotive Parts Association, a voluntary association formed in 1925 to provide nationwide distribution of automotive replacement parts. NAPA, which neither buys nor sells automotive parts, functions as a trade association whose members in 1997 operated 71 distribution centers located throughout the United States, 62 of which were owned and operated by the Company. NAPA develops marketing concepts and programs 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 members use the federally registered trademark NAPA(R) as part of the trade name of their distribution centers and jobbing stores. The Company contributes to NAPA's national advertising which is designed to increase public recognition of the NAPA name and to promote NAPA product lines. The Company is a party, together with other members of NAPA and NAPA itself, to a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954. The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among several NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers. INDUSTRIAL PARTS GROUP The Industrial Parts Group distributes industrial replacement parts and related supplies throughout the United States, Canada and Mexico. This Group distributes industrial bearings and fluid transmission equipment, including hydraulic and pneumatic products, material handling components, agricultural and irrigation equipment and their related supplies. In 1997, the Company distributed industrial parts in the United States through Motion Industries, Inc. ("Motion"), headquartered in Birmingham, Alabama, and Motion's operating division, Berry Bearing Company ("Berry Bearing"), headquartered in Chicago, Illinois. Both Motion and Berry are wholly owned subsidiaries of the Company. In Canada, industrial parts are distributed by another of Motion's operating divisions, Motion (Canada), Inc. ["Motion (Canada)"], formerly Oliver Industrial Supply Ltd., a wholly owned subsidiary of Genuine Parts Holdings Ltd., headquartered in Lethbridge, Alberta. Genuine Parts Holdings Ltd. is a wholly owned subsidiary of the Company. Motion (Canada)'s service area is principally the provinces of Alberta, British Columbia, Manitoba and Saskatchewan. An affiliate relationship in Mexico allows Motion to provide the Mexican industrial sector with industrial parts. In October 1997, the Company completed the acquisitions of Utah Bearing and Fabrication Company and Colorado Bearing and Supply, Inc. Utah Bearing, based in Salt Lake City, distributes bearings and mechanical, electrical and fluid power components through 14 locations in Utah, New Mexico, Wyoming, Idaho and Oregon. Colorado Bearing and Supply has one location in Denver, Colorado. Utah Bearing and Colorado Bearing and Supply, Inc. are among the most successful independent power transmission distributors in the Rocky Mountain region. These branches have been added to the Industrial Parts Group. Additionally, Motion opened 12 new branches (including one in San Juan, Puerto Rico) raising the number of total industrial branches to 420 operating in 46 states. -5- 6 As of December 31, 1997, the Group served more than 150,000 customers in all types of industries located throughout the United States, Mexico and western Canada. DISTRIBUTION SYSTEM. In the United States, the Industrial Parts Group operates seven distribution centers, two re-distribution centers, 27 service centers for fluid power, electrical and special hose applications and 420 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 1997 total industrial purchases were made from 10 major suppliers. Sales are generated from the Group's branches located in 46 states, each of which has warehouse facilities that stock significant amounts of inventory representative of the lines of products used by customers in the respective market area served. In Canada, Motion (Canada) operates an industrial parts and agricultural supply distribution center for its nine branches serving the industrial and agricultural markets of Alberta, British Columbia, Manitoba and Saskatchewan in western Canada. Motion (Canada) also distributes irrigation systems and related supplies. PRODUCTS. The Industrial Parts Group distributes a wide variety of products to its customers, primarily industrial concerns, to maintain and operate plants, machinery and equipment. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers and electric motors. The nature of this Group's business demands the maintenance of large inventories and the ability to provide prompt and demanding delivery requirements. Virtually all of the products distributed are installed by the customer. Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open account. RELATED INFORMATION. Non-exclusive distributor agreements are in effect with most of the Group's suppliers. The terms of these agreements vary; however, it has been the experience of the Group that the custom of the trade is to treat such agreements as continuing until breached by one party, or until terminated by mutual consent. INTEGRATED SUPPLY. Motion's integrated supply solutions continued to gain momentum in 1997. Motion's integrated supply process not only reduces the costs associated with MRO (Maintenance, Repairs and Operation) inventory management, but also enables the manufacturing customer to focus on its core competency, free working capital associated with inventories, improve service levels to end-users, and allow management to focus on more strategic concerns. Motion's integrated supply process analyzes a customer's current operation to develop integration goals and then provides solutions based on industry's accepted best practices. SEGMENT DATA. In the year ended December 31, 1997, sales from the Company's Industrial Parts Group approximated 31% of the Company's net sales as compared to 29% in 1996 and 29% in 1995. COMPETITION. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, general line distributors and others who have developed or joined integrated supply programs. To a lesser extent, the Group competes with manufacturers that sell directly to the customer. OFFICE PRODUCTS GROUP The Office Products Group, operated through S. P. Richards Company ("S. P. Richards"), a wholly owned subsidiary of Genuine Parts Company headquartered in Atlanta, Georgia, is engaged in the wholesale distribution of a broad line of office and other products which are used in the daily operation of businesses, schools, offices and institutions. Office products fall into the general categories of computer supplies, imaging supplies, office machines, general office supplies, janitorial supplies, breakroom supplies, and office furniture. Lesker Office Furniture, a furniture only wholesaler acquired in 1993, operates from five branches in the Northeast. Horizon USA Data Supplies, Inc., acquired by the Company in 1995, is a computer supplies distributor headquartered in Reno, Nevada. -6- 7 In June 1997, the Company completed the purchase of the majority of the assets of Westwide Distributors, Inc., a Texas corporation, formerly operating an office supply distribution center in Albuquerque, New Mexico. When S. P. Richards Company began the operation of this office supply distribution center, it became its 39th office products distribution center. In November 1997, the Company opened its 40th business products distribution center in Davenport, Iowa. The Office Products Group distributes computer supplies including diskettes, printer supplies, printout paper and printout binders; office furniture to include desks, credenzas, chairs, chair mats, partitions, files and computer furniture; office machines to include telephones, answering machines, calculators, typewriters, shredders and copiers; and general office supplies to include copier supplies, desk accessories, business forms, accounting supplies, binders, report covers, writing instruments, note pads, envelopes, secretarial supplies, mailroom supplies, filing supplies, art/drafting supplies, janitorial supplies, breakroom supplies and audio visual supplies. The Office Products Group distributes more than 20,000 items to over 6,000 office supply dealers from 46 facilities located in 31 states. Approximately 57% of 1997 total office products purchases were made from 10 major suppliers. The Office Products Group 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 the Group's distribution centers which stock all cataloged products and have the capability to provide overnight delivery. While many recognized brand-name items are carried in inventory, S. P. Richards 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 and CompuCessory(TM) brand of computer supplies and accessories. SEGMENT DATA. In the year ended December 31, 1997, sales from the Company's Office Products Group approximated 18% of the Company's net sales as compared to 18% in 1996 and 18% in 1995. COMPETITION. In the distribution of office supplies to retail dealers, S. P. Richards competes with many other wholesale distributors as well as with manufacturers of office products and large national retail chains. * * * * * * * * * * 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 12, 1998, 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 59 Chairman of the Board of Directors and 1990/1989 Chief Executive Officer Thomas C. Gallagher 50 President and Chief Operating Officer 1990 Robert J. Breci 62 Executive Vice President 1987 George W. Kalafut 63 Executive Vice President-Finance and 1991 Administration * Keith M. Bealmear 51 Group Vice President 1994 Albert T. Donnon, Jr. 50 Group Vice President 1993 Edward Van Stedum 48 Senior Vice President-Human Resources 1996
* Also serves as the Company's Principal Financial and Accounting Officer. -7- 8 All executive officers except Mr. Van Stedum have been employed by and have served as officers of the Company for at least the last five years. Prior to his joining the Company in May, 1994, Mr. Van Stedum owned and operated a consulting company in Atlanta, Georgia, that performed various services for the Company's Personnel Department. ITEM 2. PROPERTIES. The Company's headquarters are located in one of two adjacent office buildings owned by Genuine Parts Company in Atlanta, Georgia. The Company's Automotive Parts Group currently operates 62 NAPA Distribution Centers in the United States distributed among eight geographic divisions. More than 90% of the distribution center properties are owned by the Company. At December 31, 1997, the Company owned 750 NAPA AUTO PARTS stores located in 43 states, and Genuine Parts Company owned either a 51% or 70% interest in 203 auto parts stores located in 39 states. Other than NAPA AUTO PARTS stores located within Company owned distribution centers, most of the auto parts stores were operated in leased facilities. In addition, UAP/NAPA, in which Genuine Parts Company owns a 49% interest, operated 106 auto parts stores in western Canada. The Company's Automotive Parts Group also operates three Balkamp distribution centers, five Rayloc rebuilding plants, and one transfer and shipping facility. The Company's Industrial Parts Group, operating through Motion and Berry Bearing Company, operates 7 distribution centers, 2 re-distribution centers, 27 service centers and 420 branches. Approximately 90% 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 9 branches, of which approximately 85% are operated in leased facilities. The Company's Office Products Group operates 46 facilities in the United States distributed among the Group's six geographic divisions. Approximately 75% of these facilities are operated in leased buildings. For additional information regarding rental expense on leased properties, see "Note 4 of Notes to Consolidated Financial Statements" on Page 27 of Annual Report to Shareholders for 1997. ITEM 3. LEGAL PROCEEDINGS. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Information required by this item is set forth under the heading "Market and Dividend Information" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. The Company has made no unregistered sales of securities during the year ended December 31, 1997. -8- 9 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, 1997, and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS. Information required by this item is set forth under the heading "Management's Discussion and Analysis" on Pages 19 and 20 of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOVE MARKET RISK. The Company has no significant market risk sensitive instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Information required by this item is set forth in the consolidated financial statements on Page 21 and Pages 23 through 30, in "Report of Independent Auditors" on Page 22, and under the heading "Quarterly Results of Operations" on Page 20, of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information required by this item is set forth under the headings "Nominees for Director" and "Members of the Board of Directors Continuing in Office" on Pages 2 through 4 of the definitive proxy statement for the Company's Annual Meeting to be held on April 20, 1998, 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 under the heading "Executive Compensation and Other Benefits" on Pages 7 through 9, and under the headings "Compensation Committee Interlocks and Insider Participation", "Compensation Pursuant to Plans" and "Termination of Employment and Change of Control Arrangements" on Pages 11 through 15 of the definitive proxy statement for the Company's Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. In no event shall the information contained in the definitive proxy statement for the Company's 1998 Annual Meeting on Pages 9 through 11 under the heading "Compensation and Stock Option Committee Report on Executive Compensation" or on Pages 16 and 17 under the heading "Performance Graph" be incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this item is set forth under the headings "Common Stock Ownership of Certain Beneficial Owners" and "Common Stock Ownership of Management" on Pages 5 through 7 of the definitive proxy statement for the Company's Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. -9- 10 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this item is set forth under the heading "Compensation Committee Interlocks and Insider Participation" on Pages 11 and 12 of the definitive proxy statement for the Company's 1998 Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report. (3) The following Exhibits are filed as part of this report in Item 14(c): Exhibit 3.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1998, and as amended April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989 and April 18, 1994. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 3.2 By-laws of the Company, as amended. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 5, 1993.) Exhibit 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and Trust Company Bank, as Rights Agent. (Incorporated herein by reference from the Company's Report on Form 8-K, dated November 20, 1989.) Exhibit 4.2 Specimen Common Stock Certificate. (Incorporated herein by reference from the Company's Registration Statement on Form S-1, Registration No. 33-63874.) Exhibit 10.1 * 1988 Stock Option Plan. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 9, 1988.) Exhibit 10.2 * Form of Amendment to Deferred Compensation Agreement, adopted February 13, 1989, between the Company and certain executive officers of the Company. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989.) Exhibit 10.3 * Form of Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company providing for a supplemental employee benefit upon a change in control of the Company. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989.) Exhibit 10.4 * Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 8, 1991.) Exhibit 10.5 * 1992 Stock Option and Incentive Plan, effective April 20, 1992. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 6, 1992.) -10- 11 Exhibit 10.6 * Restricted Stock Agreement dated March 31, 1994, between the Company and Larry L. Prince. (Incorporated herein by reference from the Company's Form 10-Q, dated May 6, 1994.) Exhibit 10.7 * Restricted Stock Agreement dated March 31, 1994, between the Company and Thomas C. Gallagher. (Incorporated herein by reference from the Company's Form 10-Q, dated May 6, 1994.) Exhibit 10.8 * The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.9 * Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1995. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.10 * Genuine Partnership Plan, as amended and restated January 1, 1994. (Incorporated herein by reference form the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.11 * Genuine Parts Company Pension Plan, as amended and restated effective January 1, 1989. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.12 * Amendment No. 1 to the Genuine Partnership Plan, effective September 1, 1995. (Incorporated herein by reference to the Company's Form 10-K, dated March 7, 1996.) Exhibit 10.13 * Amendment No. 1 to the Genuine Parts Company Pension Plan, effective April 1, 1995. (Incorporated herein by reference to the Company's Form 10-K, dated March 7, 1996.) Exhibit 10.14 * Amendment No. 2 to the Genuine Parts Company Pension Plan, dated September 28, 1995, effective January 1, 1995. (Incorporated herein by reference to the Company's Form 10-K, dated March 7, 1996.) Exhibit 10.15 * Genuine Parts Company Directors' Deferred Compensation Plan, effective November 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.16 * Amendment No. 3 to the Genuine Parts Company Pension Plan dated May 24, 1996, effective January 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.17 * Amendment No. 4 to the Genuine Parts Company Pension Plan dated December 3, 1996, effective January 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.18 * Amendment No. 2 to the Genuine Partnership Plan, dated December 3, 1996, effective November 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.19 * Amendment No. 4-A to the Genuine Parts Company Pension Plan, dated August 29, 1997, effective January 1, 1996. -11- 12 Exhibit 10.20 * Amendment No. 5 to the Genuine Parts Company Pension Plan, dated August 7, 1997. Exhibit 10.21 * Amendment No. 6 to the Genuine Parts Company Pension Plan, dated October 6, 1997, effective January 1, 1997. Exhibit 10.22 * Amendment No. 3 to the Genuine Partnership Plan, dated August 7, 1997. Exhibit 10.23 * Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, dated August 29, 1997, effective August 15, 1997. Exhibit 10.24 * Genuine Parts Company Death Benefit Plan, effective July 15, 1997. * Indicates executive compensation plans and arrangements. Exhibit 13 The following sections and pages of the 1997 Annual Report to Shareholders: - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Management's Discussion and Analysis on Pages 19 and 20 - Quarterly Results of Operations on Page 20 - Industry Data on Page 21 - Report of Independent Auditors on Page 22 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 23-30.
Exhibit 21 Subsidiaries of the Company Exhibit 23 Consent of Independent Auditors Exhibit 27 Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the last quarter of the fiscal year. (c) Exhibits. The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statement Schedules. The response to this portion of Item 14 is submitted as a separate section of this report. -12- 13 SIGNATURES. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. GENUINE PARTS COMPANY /S/ LARRY L. PRINCE 3/10/98 /S/ GEORGE W. KALAFUT 3/10/98 - ----------------------------------------------------- -------------------------------------------------- LARRY L. PRINCE (Date) GEORGE W. KALAFUT (Date) Chairman of the Board Executive Vice President - and Chief Executive Officer Finance and Administration and Principal Financial and Accounting Officer
-13- 14 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/ BRADLEY CURREY, JR. 2/16/98 /S/ JEAN DOUVILLE 2/16/98 - --------------------------------------------------- ------------------------------------------------ BRADLEY CURREY, JR. (Date) JEAN DOUVILLE (Date) Director Director Chairman of the Board and Chief Executive Officer of UAP Inc. /S/ ROBERT P. FORRESTAL 2/16/98 /S/ THOMAS C. GALLAGHER 2/16/98 - --------------------------------------------------- ------------------------------------------------ ROBERT P. FORRESTAL (Date) THOMAS C. GALLAGHER (Date) Director Director President and Chief Operating Officer /S/ J. HICKS LANIER 2/16/98 - --------------------------------------------------- ------------------------------------------------ J. HICKS LANIER WILLIAM A. PARKER (Date) Director Director /S/ LARRY L. PRINCE 2/16/98 /S/ ALANA S. SHEPHERD 2/16/98 - --------------------------------------------------- ------------------------------------------------ LARRY L. PRINCE (Date) ALANA S. SHEPHERD (Date) Director Director Chairman of the Board and Chief Executive Officer /S/ LAWRENCE G. STEINER 2/16/98 /S/ JAMES B. WILLIAMS 2/16/98 - --------------------------------------------------- ------------------------------------------------ LAWRENCE G. STEINER (Date) JAMES B. WILLIAMS (Date) Director Director
-14- 15 ANNUAL REPORT ON FORM 10-K ITEM 14(A)(1) AND (2), (C) AND (D) LIST OF FINANCIAL STATEMENTS CERTAIN EXHIBITS YEAR ENDED DECEMBER 31, 1997 GENUINE PARTS COMPANY ATLANTA, GEORGIA 16 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, 1997, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 1997 and 1996 Consolidated statements of income - Years ended December 31, 1997, 1996, and 1995 Consolidated statements of cash flows - Years ended December 31, 1997, 1996 and 1995 Notes to consolidated financial statements - December 31, 1997 All 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. 17 ANNUAL REPORT ON FORM 10-K ITEM 14(a)(3) LIST OF EXHIBITS The following Exhibits are filed as a part of this Report: 10.19* Amendment No. 4-A to the Genuine Parts Company Pension Plan, dated August 29, 1997, effective January 1, 1996. 10.20* Amendment No. 5 to the Genuine Parts Company Pension Plan, dated August 7, 1997. 10.21* Amendment No. 6 to the Genuine Parts Company Pension Plan, dated October 6, 1997, effective January 1, 1997. 10.22* Amendment No. 3 to the Genuine Partnership Plan, dated August 7, 1997. 10.23* Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, dated August 29, 1997, effective August 15, 1997. 10.24* Genuine Parts Company Death Benefit Plan, effective July 15, 1997. 13 The following Sections and Pages of Annual Report to Shareholders for 1997: - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Management's Discussion and Analysis on Pages 19 and 20 - Quarterly Results of Operations on Page 20 - Industry Data on Page 21 - Report of Independent Auditors on Page 22 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 23-30 21 Subsidiaries of the Company 23 Consent of Independent Auditors 27 Financial Data Schedule (for SEC use only) The following Exhibits are incorporated by reference as set forth in Item 14 on pages 10 and 11 of this Form 10-K: - 3.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1988, and as amended April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989 and April 18, 1994. - 3.2 By-laws of the Company, as amended. - 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and Trust Company Bank, as Rights Agent. 18 - 4.2 Specimen Common Stock Certificate. (Incorporated herein by reference form the Company's Registration Statement on Form S-1, Registration No. 33-63874). - 10.1* 1988 Stock Option Plan. - 10.2* Form of Amendment to Deferred Compensation Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company. - 10.3* Form of Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company providing for a supplemental employee benefit upon a change in control of the Company. - 10.4* Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. - 10.5* 1992 Stock Option and Incentive Plan, effective April 20, 1992. - 10.6* Restricted Stock Agreement dated March 31, 1994, between the Company and Larry L. Prince. - 10.7* Restricted Stock Agreement dated March 31, 1994, between the Company and Thomas C. Gallagher. - 10.8* The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993. - 10.9* Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1995. - 10.10* Genuine Partnership Plan, as amended and restated January 1, 1994. - 10.11* Genuine Parts Company Pension Plan, as amended and restated, effective January 1, 1989. - 10.12* Amendment No. 1 to the Genuine Partnership Plan, effective September 1, 1995. - 10.13* Amendment No. 1 to the Genuine Parts Company Pension Plan, effective April 1, 1995. - 10.14* Amendment No. 2 to the Genuine Parts Company Pension Plan, dated September 28, 1995, effective January 1, 1995. - 10.15* Genuine Parts Company Directors' Deferred Compensation Plan, effective November 1, 1996. - 10.16* Amendment No. 3 to the Genuine Parts Company Pension Plan, dated May 24, 1996, effective January 1, 1996. - 10.17* Amendment No. 4 to the Genuine Parts Company Pension Plan, dated December 3, 1996, effective January 1, 1996. - 10.18* Amendment No. 2 to the Genuine Partnership Plan, dated December 3, 1996, effective November 1, 1996. * Indicates executive compensation plans and arrangements. EX-10.19 2 AMEND #4-A TO GENUINE PARTS PENSION PLAN 1 Exhibit 10.19 AMENDMENT NO. 4-A TO THE GENUINE PARTS COMPANY PENSION PLAN This Amendment to the Genuine Parts Company Pension Plan is adopted by Genuine Parts Company (the "Company") through action of the Pension Committee, effective as of the date set forth herein. WITNESSETH: WHEREAS, the Company maintains the Genuine Parts Company Pension Plan (the "Plan"), as amended and restated effective January 1, 1989, and such Plan is currently in effect; and WHEREAS, the Amendment No. 4 to the Plan was submitted to the Internal Revenue Service for a determination letter; and WHEREAS, the Internal Revenue Service requested changes to Amendment #4; and WHEREAS, it was determined that to reduce confusion, the Plan should retain Amendment #4 (which was previously executed on December 3, 1996) and make the IRS requested changes in this Amendment #4-A; and WHEREAS, under Section 8.06(c), the Pension Committee has the authority to amend the Plan; NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as follows: 1. Section 4.10 is hereby deleted and a new Section 4.10 is substituted in lieu thereof as follows: 4.10 Grandfathered Retirement Benefits. (a) Any Participant who (a) was a Participant in any of the Predecessor Plans on December 31, 1983, (b) attained the age of 55 on or prior to January 1, 1984, and (c) retires on or after January 1, 1984 under Section 4.01, 4.02 or 4.04 shall automatically receive a Retirement Income hereunder which is the greater of (i) and (ii) where: (i) is the Retirement Income otherwise provided under Section 4.01, 4.02 or 4.04, whichever is applicable, and 2 (ii) is the benefit such Participant would have received under his respective Predecessor Plan assuming that the benefit formula in such Predecessor Plan as in effect on December 31, 1983 had remained in effect until such Participant's Retirement. For this purpose, the benefit formula of the Predecessor Plan shall reflect current requirements of law and limitations of law (e.g., current covered compensation tables, limitations of Code Section 401(a)(4), Code Section 415, Code Section 401(a)(17), etc.). (b) For purposes of determining whether any such Participant may retire under Section 4.02 and this Section 4.10, any such Participant who does not meet the age or service condition to elect Early Retirement may nonetheless retire under Section 4.02 and this Section 4.10 if he would have met the age and service early retirement conditions of his respective Predecessor Plan assuming such Predecessor Plan as in effect on December 31, 1983 had remained in effect until such Participant's Retirement. For purposes of determining such grandfathered retirement benefits, the Predecessor Plans as in effect on December 31, 1983, are attached hereto as Schedule F: S.P. Richards Company Pension Plan General Automotive Parts Pension Plan Pension Plan for Employees of Standard Unit Parts Corporation Retirement Plan for Employees of Balkamp, Inc. Restated NAPA Des Moines Warehouse Pension Plan. (c) The following modifications in the Plan shall apply to those Participants who are eligible for grandfathered retirement benefits under this Section 4.10: (i) The Normal Retirement Age under the Plan for a Participant eligible for grandfathered retirement benefits under the General Automotive Parts Pension Plan shall mean such Participant's 62nd birthday. (ii) Participants eligible for grandfathered retirement benefits under the S.P. Richards Company Pension Plan may elect to receive their Retirement Income in the form of a five years certain and life option in addition to the other optional forms provided in Article VI. However, the election of the five years and certain benefit option shall be subject to the provisions of Section 6.02. (d) The following special early retirement benefit shall apply to Participants who participated in the S.P. Richards Company Pension Plan on December 31, 1983 ("S.P. Richards Participant"). -2- 3 (i) An S.P. Richards Participant who had not attained age 55 on or prior to January 1, 1984 and who retires under Sections 4.01 or 4.02 (considering the rules of Section 4.10(b)) prior to January 1, 1993, shall receive a Retirement Income in accordance with the rules of Section 4.10(a). (ii) An S.P. Richards Participant who had not attained age 55 on or prior to January 1, 1984, and who retires under Sections 4.01 or 4.02 (considering the rules of Section 4.10(b)) shall receive a Retirement Income in accordance with Sections 4.01 or 4.02 (whichever is applicable). However, such Retirement Income shall be increased if such Participant would have received a greater benefit had the formula in the S.P. Richards Company Pension Plan applied instead of the formula in Sections 4.01 or 4.02. The amount of such increase shall be determined by first reducing the retirement benefit that would have been paid using the retirement formula in the S.P. Richards Company Pension Plan (with the adjustments described in Section 4.10(a) by the Retirement Income computed using the formula in Sections 4.01 or 4.02 above (whichever is applicable). Second, such difference shall then be multiplied by 66.67% for any such S.P. Richards Participant who retires during 1993 and by 33.33% for any such S.P. Richards Participant who retires during 1994. (iii) An S.P. Richards Participant who had not attained age 55 on or prior to January 1, 1994, and who retires under Sections 4.01 or 4.02 on or after January 1, 1995, shall receive a Retirement Income based solely on the formula set forth in Sections 4.01 or 4.02 above (whichever is applicable). 2. 1. A new Section 10.09 is hereby added to Plan as follows: 10.09 Forfeiture of Benefits where Recipient Cannot be Located. (a) Except as provided in Section 10.09(b) below, if the Plan may distribute a Participant's Accrued Benefit and the Employer has been unable to locate said Participant or his Beneficiary after taking such actions as are prudent under the circumstances to locate the Participant or Beneficiary, the Committee shall declare the Accrued Benefit to be a forfeiture. (b) Should a Participant or Beneficiary whose benefit has been forfeited under the provisions of Section 10.09(a) later be located, the Committee shall immediately direct the Trustee to commence payment of benefits to said Participant or his Beneficiary, according to the terms of the Plan. The Employer shall make up any resultant deficiency in the Trust Fund as soon as possible thereafter. -3- 4 3. The amendments described in Paragraph 1 and Paragraph 2 shall be effective January 1, 1996. Except as amended herein, the Plan shall remain in full force and effect. IN WITNESS WHEREOF, Genuine Parts Company, acting through the Pension Committee has caused this Amendment to Plan to be executed on the date shown below but effective as of the date indicated above. PENSION COMMITTEE TO THE GENUINE PARTS COMPANY PENSION PLAN By: /s/ George W. Kalafut -------------------------- Date: August 29, 1997 ------------------------ Attest: /s/ Frank M. Howard -------------------------- -4- EX-10.20 3 AMEND #5 TO GENUINE PARTS PENSION PLAN 1 Exhibit 10.20 AMENDMENT NO. 5 TO THE GENUINE PARTS COMPANY PENSION PLAN This Amendment to the Genuine Parts Company Pension Plan is adopted by Genuine Parts Company (the "Company") through action of the Pension Committee, effective as of the date set forth herein. WITNESSETH: WHEREAS, the Company maintains the Genuine Parts Company Pension Plan (the "Plan"), as amended and restated effective January 1, 1989, and such Plan is currently in effect; and WHEREAS, under Section 8.06(c), the Pension Committee has the authority to amend the Plan to comply with changes in law and to make other amendments that do not materially increase the costs associated with the Plan; and WHEREAS, the Company wishes to amend the Plan to reflect changes in law, to remove the Alternative Death Benefit (which benefit will be provided outside of the Plan through an insured arrangement) and to remove the offset for workers compensation; NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as follows: 1. Section 2.11(b) is hereby deleted and a new Section 2.11 is substituted therefor as follows: "(b) A married Participant's Beneficiary shall be his Spouse unless the terms of a qualified domestic relations order require payment to a non-Spouse Beneficiary. For purposes of this Section, revocation of prior Beneficiary designations will occur when a Participant; (i) files a valid designation with the Committee, or (ii) files a signed statement with the Committee evidencing his intent to revoke any prior designations." 2. Section 4.07(c) (dealing with offsets for Participants who receive payments under the Workers' Compensation laws of any State) is hereby deleted effective for Participants who terminate Employment on or after July 15, 1997. Participants who terminate Employment prior to July 15, 1997 shall be subject to the provisions of Section 4.07(c) as it existed immediately prior to July 15, 1997. 2 3. Section 5.02 is hereby deleted and a new Section 5.02 is substituted therefor as follows: "5.02. Alternate Death Benefit. (a) For Beneficiaries of certain Participants who died (i) prior to terminating Employment and (ii) prior to July 15, 1997, the Plan offered an Alternative Death Benefit. See Schedule F for the terms of the pre-July 15, 1997 Alternative Death Benefit. (b) Effective July 15, 1997, the Plan no longer provides the Alternative Death Benefit. Any references in the Plan to the Alternative Death Benefit shall apply only to those Participants who, prior to July 15, 1997, (i) satisfied the requirements of Section 5.02(a) above, (ii) satisfied the eligibility criteria set forth in Schedule F and (iii) satisfied any other eligibility requirement for the Alternative Death Benefit set forth in this Plan (see, for example, Section 5.01(f)). (c) The Company intends to establish a self-funded death benefit outside of the Plan to replace the Alternative Death Benefit (the "GPC Death Benefit"). If a surviving Spouse is otherwise entitled to the Pre-Retirement Survivor Annuity, the surviving Spouse may waive the Pre-Retirement Survivor Annuity and in lieu thereof elect the GPC Death Benefit (if otherwise available under the terms of the GPC Death Benefit). It is the purpose of this Section 5.02(c) that if an individual receives the GPC Death Benefit, no Pre-Retirement Survivor Annuity shall be payable under this Plan. 4. A new Schedule F is hereby added to the Plan as follows "SCHEDULE F ALTERNATIVE DEATH BENEFIT FOR CERTAIN PARTICIPANTS WHO DIED PRIOR TO JULY 15, 1997 (a) This Schedule F shall apply to a Participant's Beneficiary only if the Participant dies prior to July 15, 1997 and only if all of the following conditions are satisfied: (i) The Participant has earned 5 or more years of redited Service prior to his death; (ii) The Participant dies prior to terminating his Employment and prior to his Annuity Starting Date; - 2 - 3 (iii) In the case of a married Participant, either (1) the Participant receives the notice described in this Schedule F, the Spouse consents to the Participant's election of a non-Spouse Beneficiary and the Alternate Death Benefit, and the Spouse agrees to waive the Pre-Retirement Survivor Annuity of Section 5.01, or (2) following the Participant's death, the Spouse elects the Alternate Death Benefit in lieu of the Pre-Retirement Survivor Annuity. (b) The Alternate Death Benefit shall provide a monthly Retirement Income payable to the Participant's Beneficiary commencing on the first day of the month following the Participant's death and continuing only for a specified number of months as determined under the following table:
Complete Years of Credited Service at Number of Date of Death Months Payable ------------------- -------------- 5 but less than 10 12.5 10 but less than 15 25 15 or more 50
The monthly Retirement Income payable under the Alternate Death Benefit shall be determined as follows: (i) If the Participant dies prior to his Normal Retirement Date, the Beneficiary's Retirement Income shall equal the greater of (A) 30% of the Participant's current monthly Earnings or (B) 30% of the Participant's Average Earnings. (ii) If the Participant dies after his Normal Retirement Date, the Beneficiary's Retirement Income shall equal the Retirement Income the Participant would have received if the Participant had retired on the day before his death and elected the Life Annuity Option. However, in such case the maximum number of payments as determined pursuant to the table above shall be reduced by the number of months that have elapsed since the Participant's Normal Retirement Date. (c) Prior to electing the Alternate Death Benefit and prior to designating a non-Spouse Beneficiary, a married Participant must receive a written explanation of the Pre-Retirement Survivor Annuity. Such explanation shall contain comparable information as provided in the - 3 - 4 notice described in Section 6.02(d). The notice must be provided to the Participant during the "Applicable Period". The "Applicable Period" shall mean whichever of the following periods ends last: (i) The period beginning with the first Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year in which the Participant attains age 34; or (ii) A reasonable period of time ending after the Employee becomes a Participant. However, the Committee may provide such notice to the Participant prior to the Applicable Period. If the Participant receives the notice prior to the commencement of the Applicable Period, a second notice must be given to the Participant during the Applicable Period. (d) The Participant's Spouse must consent in writing on a form provided by the Plan Administrator in the presence of a Notary Public or Plan representative to the Participant's election of the Alternate Death Benefit and designation of a non-Spouse Beneficiary, if any. The Spouse's consent must acknowledge the effect of such consent and must specifically state the non-Spouse Beneficiary, if any, selected by the Participant. However, if the Participant establishes to the satisfaction of the Plan Administrator that his Spouse's consent cannot be obtained because he has no Spouse, because his Spouse cannot be located, or because of other circumstances as determined by applicable Treasury Regulations, the Committee may treat the Participant's election as an election for which spousal consent was obtained. A Spouse's consent, if given on or after the Plan Year in which the Participant attains age 35, shall be irrevocable. If, however, the Spouse's consent was given prior to such Plan Year, the Spouse's consent shall be void as of the first day of the Plan Year in which the Participant attains age 35. In such case, the Participant may again elect the Alternate Death Benefit and select a non-Spouse Beneficiary, provided the Participant's Spouse consents to such election in the manner provided in this paragraph (d). The Spouse's consent shall then be irrevocable. The Participant's election of the Alternate Death Benefit and the Spouse's consent to such election shall constitute a waiver of the Pre-Retirement Survivor Annuity. (e) A married Participant may revoke his designation of the Alternate Death Benefit and his designation of a non-Spouse Beneficiary at any time prior to his death. Furthermore, the Participant's election shall cease to be valid upon the remarriage of the Participant following the death or divorce of the Spouse giving the consent to the non-Spouse - 4 - 5 Beneficiary. If the Participant revokes his election of a non-Spouse Beneficiary or of the Alternate Death Benefit or if such election otherwise ceases to be valid, any death benefit payable shall be determined pursuant to Section 5.01. (f) A married Participant may elect the Alternate Death Benefit in lieu of the Pre-Retirement Survivor Annuity at any time before his Termination Date. However, if the Participant's Beneficiary is not entitled to receive the Alternate Death Benefit by virtue of the Participant's failure to complete five years of Credited Service or the Participant's death following his Termination Date, the Participant's Beneficiary for purposes of Article V shall be his Spouse and any death benefit available to such Spouse shall be determined pursuant to Section 5.01. (g) In the event of the death of a Beneficiary who survives the Participant and who, at his or her death, is receiving the Alternate Death Benefit, the remaining benefits, if any, shall be payable to a person designated by the Participant to receive the remaining benefits or, if no person was so designated, then to a person designated by the Beneficiary of the deceased Participant; provided, however, that if no person so designated be living upon the occurrence of such contingency, the remaining benefits, if any, shall be payable to the Spouse of the deceased Participant, if living; otherwise, to the descendants of the deceased Beneficiary per stirpes; or if none, to the legal representative of the estate of the deceased Beneficiary. (h) The Beneficiary may, prior to the commencement of benefits under this Schedule F, request that the Alternate Death Benefit be paid in the form of a lump sum. Such lump sum payment shall be the Actuarial Equivalent of the Beneficiary's Alternate Death Benefit. The Plan Administrator shall direct the Trustee to distribute the Alternate Death Benefit in the form selected by the Beneficiary." 5. Section 5.03 is hereby deleted and a new Section 5.03 is substituted in lieu thereof as follows: "5.03 Death After Normal Retirement Date but Prior to Delayed Retirement Date. (a) Notwithstanding any other provision of the Plan to the contrary, any Participant who remains in Employment after his Normal Retirement Date shall be entitled to elect an optional death benefit in lieu of the death benefits provided under Sections 5.01 or 5.02. The Participant shall elect such optional death benefit by selecting one of the - 5 - 6 following options on a form provided by the Plan Administrator for such purpose. (i) A death benefit equal to the monthly amount that would have been paid to the Participant's Beneficiary assuming the Participant had retired on the first day of the month preceding his death and had elected to receive Retirement Income under the Ten Years Certain and Life Option (See Section 6.02(a)(i)). Such death benefit shall be paid to the Participant's Beneficiary for a period of ten years commencing on the first day of the month following the Participant's death. (ii) A death benefit equal to the monthly amount that would have been paid to the Participant's Beneficiary assuming the Participant had retired on the first day of the month preceding his death and had elected to receive Retirement Income under the Joint and Last Survivor Option (See Section 6.02(a)(ii)) with the Participant's Beneficiary receiving 50%, 75%, or 100% (as designated by the Participant) of the monthly Retirement Income payable to the Participant during the Participant's lifetime. Such death benefit will be paid to the Participant's Beneficiary for the Beneficiary's lifetime beginning on the first day of the month following the Participant's death. (b) A married Participant's election of the optional death benefit provided by this Section 5.03 shall be void unless the Participant's Spouse (after receipt of the explanation of the Pre-Retirement Survivor Annuity described in Schedule F, Paragraph (c)) consents in writing on a form provided by the Plan Administrator in the presence of a Notary Public or Plan representative to the Participant's election of such optional death benefit. The Spouse's consent must acknowledge the effect of such consent and must specifically state the non-Spouse beneficiary, if any, selected by the Participant. However, if the Participant establishes to the satisfaction of the Plan Administrator that his Spouse's consent cannot be obtained because he has no Spouse, because his Spouse cannot be located, or because of other circumstances as determined by applicable Treasury Regulations, the Committee may treat the Participant's election as an election for which spousal consent was obtained. A Spouse's consent pursuant to this paragraph shall be irrevocable. (c) A married Participant may revoke his election of the optional death benefit provided by this Section 5.03 at any time prior to his Delayed Retirement Date. Furthermore, the Participant's election to receive such optional death benefit shall cease to be valid upon - 6 - 7 the remarriage of the Participant following the death or divorce of the Spouse giving the consent to such optional death benefit. If the Participant revokes his election or if such election otherwise ceases to be valid, any death benefit payable to the Participant's Spouse shall be determined pursuant to Section 5.01 unless the married Participant, with his Spouse's consent, elects the Alternate Death Benefit under Schedule F (or, if the Alternative Death Benefit is not available, the GPC Death Benefit described in Section 5.02)." 6. Section 6.03(a) is hereby deleted and a new Section 6.03(a) is substituted therefor as follows: "(a) In no event may the payment of Retirement Income commence later than the 60th day after the latest of the close of the Plan Year in which: (i) the Participant attains age 65; (ii) the fifth (5th) anniversary of the date the Participant commenced participation in this Plan; or (iii) the Participant's termination of Employment. Notwithstanding the foregoing, distribution to the Participant shall commence not later than April 1 following the calendar year in which the Participant attains age 70-1/2. However, if a Participant is not a 5% owner of an Employer (as defined in Code Section 401(a)(9) and the Treasury Regulations thereunder), such Participant's Retirement Income shall commence no later than April 1 following the calendar year in which he terminates his Employment. (The applicable commencement date described above, is referred to as the "required beginning date")." 7. A new Section 6.03(e) is hereby added to the Plan as follows: "(e) Although distribution of a Participant's Retirement Income is not required under this Section 6.03 until the Participant's required beginning date, to the extent (and only to the extent) the IRS or other applicable authority determines that a mandatory distribution under Code Section 401(a)(9) is a protected benefit under Code Section 411(d)(6), a Participant who is not a 5% owner (as defined in paragraph (a) above) may elect to be treated as a 5% owner for purposes of this Section 6.03 (e.g., such Participant may elect to commence distributions no later than April 1 following the calendar year in which the Participant attains age 70-1/2)." - 7 - 8 8. A new Section 10.10 is hereby added as follows: "10.10 Qualified Military Service. Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). It is the intent of this Section 10.10 to adopt the IRS model amendment set forth in Rev. Proc. 96-49 for the purposes set forth in such revenue procedure." 9. Section 12.07 is hereby deleted and a new Section 12.07 is substituted therefor as follows: "12.07 Combined Plan Limitation For Top-Heavy Years Repealed. Effective January 1, 2000, adjustments to the combined plan limitation of Code Section 415 for top heavy plans are repealed and no longer applicable." 10. Section 13.02 is hereby deleted and a new Section 13.02 is substituted therefor as follows: "13.02 Combined Plan Limitation Repealed. Effective January 1, 2000, the combined plan test of Code Section 415 is repealed and no longer applicable." 11. Article XIV (Highly Compensated Employees) is hereby deleted and a new Article XIV is substituted therefor as follows: "ARTICLE XIV 14.01 In General For the purposes of this Plan, the term "Highly Compensated Employee" is any active Employee described in Section 14.02 below and any Former Employee described in Section 14.03 below. Various definitions used in this Section are contained in Section 14.04. A Non-highly Compensated Employee is an Employee who is not a Highly Compensated Employee. - 8 - 9 14.02 Highly Compensated Employees (a) Look-Back Year. An Employee is a Highly Compensated Employee if during a Look Back Year the Employee: (1) is a 5 Percent Owner; or (2) receives Compensation in excess of $80,000 and is a member of the Top Paid Group. The dollar amount described above shall be increased annually as provided in Code Section 414(q)(1). (b) Current Year. An Employee is a Highly Compensated Employee if during a Current Year the Employee is a 5 Percent Owner. 14.03 Former Highly Compensated Employee A Former Employee is a Highly Compensated Employee if (applying the rules of Section 14.02(a) or (b)) the Former Employee was a Highly Compensated Employee during a Separation Year or during any Current Year ending on or after the Former Employee's 55th birthday. 14.04 Definitions The following special definitions shall apply to this Article 14: Current Year shall mean the current Plan Year. Employer for purposes of this Article 14 shall mean the Employer and its Affiliates. 5 Percent Owner shall mean any Employee who owns or is deemed to own (within the meaning of Code Section 318), more than five percent of the value of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of the Employer. Former Employee shall mean an Employee (i) who has incurred a Severance from Service Date or (ii) who remains employed by the Employer but who has not performed services for the Employer during the Current Year (e.g., an Employee on Authorized Leave of Absence). Look Back Year shall mean the Plan Year preceding the Current Year, or if the Employer elects (and such election is available to the Employer), the calendar year ending with or within the Current Year. - 9 - 10 Separation Year shall mean any of the following years: (1) An Employee who incurs a Separation from Service Date shall have a Separation Year in the Current Year in which such Separation from Service Date occurs; (2) An Employee who remains employed by the Employer but who temporarily ceases to perform services for the Employer (e.g., an Employee on Leave of Absence) shall have a Separation Year in the calendar year in which he last performs services for the Employer; (3) An Employee who remains employed by the Employer but whose Compensation for a calendar year is less than 50% of the Employee's average annual Compensation for the immediately preceding three calendar years (or the Employee's total years of employment, if less) shall have a Separation Year in such calendar year. However, such Separation Year shall be ignored if the Employee remains employed by the Employer and the Employee's Compensation returns to a level comparable to the Employee's Compensation immediately prior to such Separation Year. Top Paid Group shall mean the top 20% of all Employees ranked on the basis of Compensation received from the Employer during the applicable year. The number of Employees in the Top Paid Group shall be determined by ignoring Employees who are non-resident aliens, Employees who do not perform services for the Employer during the applicable year, Employees who do not satisfy the age and service exclusion provided in applicable Treasury Regulations and Employees who are covered by a collective bargaining agreement as provided in applicable Treasury Regulations. 14.05 Other Methods Permissible To the extent permitted by the Code, judicial decisions, Treasury Regulations and IRS pronouncements, the Committee may (without further amendment to this Plan) take such other steps and actions or adopt such other methods or procedures (in addition to those methods and procedures described in this Article 14) to determine and identify Highly Compensated Employees (including adopting alternative definitions of Compensation which satisfy Code Section 414(q)(7) and are uniformly applied)." - 10 - 11 12. Paragraph 2 of this Amendment shall be effective for Participants who terminate Employment on or after July 15, 1997. Paragraphs 1 and 3-5 of this Amendment shall be effective July 15, 1997. Paragraphs 6, 7 and 11 of this Amendment shall be effective January 1, 1997. Paragraph 8 of this Amendment shall be effective December 12, 1994 (the effective date of Code Section 414(u)). Paragraphs 9 and 10 of this Amendment shall be effective January 1, 2000. Except as amended herein, the Plan shall remain in full force and effect. IN WITNESS WHEREOF, Genuine Parts Company, acting through the Pension Committee has caused this Amendment to the Plan to be executed on the date shown below but effective as of the date indicated above. PENSION COMMITTEE TO THE GENUINE PARTS COMPANY PENSION PLAN By: /s/ George W. Kalafut -------------------------------- Date: August 8, 1997 ------------------------------- By: /s/ Edward J. Van Stedum --------------------------------- Date: August 11, 1997 ------------------------------- By: /s/ Jerry Nix --------------------------------- Date: August 7, 1997 ------------------------------- By: /s/ Frank M. Howard --------------------------------- Date: August 7, 1997 ------------------------------- - 11 - EX-10.21 4 AMEND #6 TO GENUINE PARTS PENSION PLAN 1 EXHIBIT 10.21 AMENDMENT NO. 6 TO THE GENUINE PARTS COMPANY PENSION PLAN This Amendment to the Genuine Parts Company Pension Plan is adopted by Genuine Parts Company (the "Company") through action of the Pension Committee, effective as of the date set forth herein. WITNESSETH: WHEREAS, the Company maintains the Genuine Parts Company Pension Plan (the "Plan"), as amended and restated effective January 1, 1989, and such Plan is currently in effect; and WHEREAS, under Section 8.06(c), the Pension Committee has the authority to amend Schedule B to the Plan; NOW, THEREFORE, BE IT RESOLVED that Schedule B is hereby deleted and a new Schedule B is substituted therefor as follows: "SCHEDULE B CREDIT FOR SERVICE WITH PREDECESSOR EMPLOYERS I. Participants employed by a predecessor employer not listed in Sections II or III below shall be deemed to have as their date of Employment for all purposes of this Plan, the date the predecessor employer was acquired by or merged into Genuine Parts Company. II. Participants employed by the following predecessor employers shall receive Credited Service for all purposes of this Plan beginning with their employment commencement date with that predecessor employer but subject to all the rules concerning crediting of service set forth in this Plan. 1. Clark Siviter Co. St. Petersburg, FL 2. Standard Parts Company Columbia, SC 3. Standard Unit Parts Company Normal, IL 2 Except that the benefits provided to Richard R. Mikulechy under this Plan shall be reduced by one hundred percent (100%) of the benefits provided under that certain Salary Continuation Agreement dated January 10, 1977 in the event of his retirement, death, disability or other termination of service; and Except that the benefits provided to Mark R. Larson under this Plan shall be reduced by one hundred percent (100%) of the benefits provided under that certain Salary Continuation Agreement dated January 10, 1977 in the event of his retirement, death, disability or other termination of service. 4. National Parts Service Inc. Hartford, CT Covering the following National Parts Service employees:
Name S.S. No. Employment Date ---- -------- --------------- Raymond Jensen ###-##-#### May 1, 1946 Charles A. Veci ###-##-#### July 1, 1952 Paul F. Baldi ###-##-#### August 27, 1960 Bernhardt E. Johnson ###-##-#### October 1, 1966 Jean L. Veillette ###-##-#### July 1, 1972 Paul R. Denis ###-##-#### July 26, 1974 Mark P. Taylor ###-##-#### January 17, 1980 Roy M. Robbins ###-##-#### June 16, 1980
5. General Automotive Parts Company and its subsidiaries 6. NAPA Des Moines Warehouse III. (a) Acquisitions Prior to January 1, 1994. Participants employed by those predecessor employers listed below that were acquired prior to January 1, 1994 shall be deemed to have as their date of Employment for all purposes of this Plan, the date the predecessor employer was acquired by or merged into Genuine Parts Company or its subsidiaries. However, after an employee of such predecessor employer becomes a Participant in the Plan by satisfying the requirements of Section 3.02, such Participant shall receive credit for all employment with such predecessor employer for purposes of (1) determining the Participant's vested percentage under Section 4.05(c); (2) determining whether a Participant has completed five years of Credited Service for the Disability Retirement provisions of Schedule D; and (3) determining the Participant's entitlement to Death Benefits under Article V and related sections of the Plan. -2- 3 (b) Acquisitions On or After January 1, 1994. Participants employed by those predecessor employers listed below that were acquired on or after January 1, 1994 shall receive credit under this Plan for all employment with such predecessor employer for purposes of (1) determining the Participant's vested percentage under Section 4.05(c); (2) determining whether a Participant has completed five years of Credited Service for the Disability Retirement provisions of Schedule D; and (3) determining the Participant's entitlement to Death Benefits under Article V and related sections of the Plan. (c) Important Restrictions. Credited Service granted under (a) or (b) below may be forfeited or disregarded in accordance with Section 2.18. Furthermore, no Credited Service shall be granted for employment with a predecessor employer if the granting of such Credited Service will adversely impact the tax qualified status of the Plan.
Name Employment Date ---- --------------- Odell Hardware Company January 1, 1980 Greensboro, NC Brooks-Noble Parts & Machine Co., Inc. August 1, 1981 Jackson, MS One Stop Auto Parts Inc. March 10, 1982 Lathan, NY One Stop Auto Parts Inc. March 16, 1983 Albany, NY E. E. Long Inc. September 1, 1984 Des Moines, IA Motor Parts & Supply April 1, 1986 Baton Rouge, LA Chattanooga Service Auto Center May 1, 1986 Chattanooga, TN Gerace Auto Parts December 1, 1986 Port Allen, LA
-3- 4 Lawwill Auto Parts September 1, 1987 Chattanooga, TN Smith Automotive Corp. August 1, 1990 (2 stores) Martinez, GA & Belvedere, SC Kings Parts Company, Inc. August 10, 1990 Lake Oswego, OR W.K. NAPA on Kensington, Inc. August 10, 1990 Elk Grove Village, IL Auto Parts, Inc. of Wilmington October 1, 1990 Wilmington, NC Carolina Auto Parts of Thomasville, Inc. October 1, 1990 Thomasville, NC Stokes Auto Parts, Inc. October 1, 1990 Thomasville, NC MGM Auto Parts, Inc. November 1, 1990 Kenmore, NY Wholesale Sationers Corp. December 1, 1990 Salt Lake City, UT (S.P. Richards) Santa Monica Auto Parts November 1, 1990 Santa Monica, CA Precise Industries, Inc. December 1, 1990 (2 Stores) Kingsport & Blountville, TN Automotive Service & Supply, Inc. December 1, 1990 (3 Stores) Kingsport, TN, Bristol & Abingdon, VA NAPA Auto Parts of Lombard, Inc. December 1, 1990 Lombard, IL Middleburg Parts and Hardware, Inc. December 31, 1990 Middleburg, FL
-4- 5 Strap Industries, Inc. March 1, 1991 Tempe, AZ Anderson's Parts March 1, 1991 Blue Springs, MO Evergreen Automotive Supply, Inc. May 1, 1991 Chicago, IL Heath Motor Supply Co. July 1, 1991 Panama City, FL Bryant Stooks - D.J.'s Auto Supply July 1, 1991 (2 Stores) Chandler and Mesa, AZ NAPA Auto Parts Store of John Nall August 1, 1991 South Milwaukee, WI Deer Park Automotive Parts, Inc. September 1, 1991 Mt. Carmel, OH T & L Auto Parts Company, Inc. October 1, 1991 (4 Stores) Fayetteville, NC B.W.P. Ltd. October 1, 1991 (2 Stores) Fayetteville, Roseboro, NC Auto Parts of Clinton October 1, 1991 Clinton, NC Byrd-Wood Parts Group, Inc. October 1, 1991 Fayetteville, NC Burien Auto Parts, Inc. October 1, 1991 (2 Stores) Seattle, WA B.N. Auto Parts Co. December 1, 1991 Marietta, GA Capital Automotive Parts, Inc. December 1, 1991 Milwaukee, WI Bill's Auto Supply, Inc. January 1, 1992 Milwaukee, WI
-5- 6 Bill's Auto Supply, Inc. January 1, 1992 Kansas City, MO Bald Hill Auto Parts, Inc. February 1, 1992 Warwick, RI Manton Auto Prats, Inc. February 1, 1992 Providence, RI Hudson Auto Parts February 1, 1992 Hudson, WI B&B Genuine Auto Parts, Inc. February 16, 1992 Canton, OH Jimmy's Auto Parts, Inc. March 1, 1992 Alpharetta, GA West Town Auto Parts, Inc. June 1, 1992 Knoxville, TN Lakeland Motor Parts, Inc. June 1, 1992 (2 Stores) Lakeland, FL Haas Auto Parts & Machine Co., Inc. June 1, 1992 Jeffersonville, IN Parts Dept. of Shakopee, Inc. June 1, 1992 Shakopee, MN HMH Automotive Parts, Inc. June 1, 1992 (2 Stores) Galesburg, Monmouth, IL Southern Parts & Electric, Inc. July 1, 1992 (4 Stores) Durham, NC Service Supply Co. of Douglasville, Inc. July 1, 1992 Douglasville, GA Service Supply Company of Dallas, Inc. July 1, 1992 Dallas, GA NAPA of Lemon Grove, Inc. August 1, 1992 La Mesa, CA
-6- 7 Whitewater Auto Supply, Inc. September 1, 1992 Janesville, WI Regalia Auto Parts, Inc. September 1, 1992 Seattle, WA Drexel Auto Parts, Inc. October 1, 1992 Huntsville, AL Warren Auto Supply, Inc. December 4, 1992 (2 Stores) Warren, OH Cal's Service Parts, Inc. January 1, 1993 (6 Stores) Boise, ID H & G Enterprises, Inc. January 1, 1993 Louisville, KY Kernersville Auto Parts, Inc. February 1, 1993 Kernersville, NC McCowen Enterprises, Inc. April 1, 1993 (2 Stores) Champaign & Urbana, IL Breese Company, Inc. May 1, 1993 (3 Stores, Iowa City, Muscatine & Coralville, IA) Young's Auto Supply Warehouse, Inc. July 1, 1993 Norfolk, VA Joliet Auto Supply, Inc. July 1, 1993 Joliet, IL Bryan - Rogers, Inc. August 1, 1993 (3 Stores) Tupelo, Baldwyn & Amory, MS Hyllberg Enterprises, Inc. August 1, 1993 Virginia Beach, VA Hager Auto & Industrial Parts, Inc. November 1, 1993 (2 Stores) Burlington & South Burlington, VT
-7- 8 Ballard Auto Parts, Inc. January 1, 1994 Cornelius, NC Service Parts of Hendersonville, Inc. January 1, 1994 Hendersonville, NC Power's Auto Parts, Inc. March 1, 1994 Williamsburg, VA Big J Auto Parts, Inc. March 14, 1994 Johnson City, TN Economy Auto Supply Co., Inc. April 1, 1994 Norfolk, VA Paul's Automotive, Inc. April 1, 1994 Toledo, OH Sulphur Springs Parts Co., Inc. June 1, 1994 Sulphur Springs, TX The Parts Place August 1, 1994 Gulfport, MS A & J Automotive Co. August 1, 1994 Dalton, GA Clewiston Auto Parts, Inc. September 1, 1994 Clewiston, FL Oregon City Auto Parts, Inc. October 1, 1994 Oregon City and Clackamas, OR Kiema Car Part, Inc. November 1, 1994 El Monte, CA Shoreline Auto Parts November 1, 1994 Seattle, WA Lockport Automotive Supply, Inc. December 1, 1994 Lockport, NY
-8- 9 Mircon, Inc. Scardsdale Auto Parts December 1, 1994 Scarsdale, NY Motor Parts Company December 1, 1994 Booneville, MS Davis & Wilmar, Inc. July 1, 1992 (Eligible to Begin Participation 5/1/93) The Parts, Inc. January 1, 1994 (Eligible to Begin Participation 1/1/95) Dade City Jobbing Group January 2, 1992 (Eligible to Begin Participation 1/1/94) Colorado Parts Company December 1, 1994 (4 stores) Ft. Collins, Loveland, Longmont, CO Serene Plaza Auto Parts December 1, 1994 Seattle, WA Atlantic Tracy Inc. November 1, 1995 Midcap Bearing June 1, 1995 Motion Equipment June 1, 1995 Power Drives & Bearings, Inc. October 1,1995 Auto Parts Companies of Topeka July 1, 1996 (Kansas City, Kansas) Auto Parts of Bonner Springs, Inc. July 1, 1996 (Bonner Springs, Kansas) Auto Parts of Holton, Inc. July 1, 1996 (Holton, Kansas) Auto Parts of Junction City, Inc. July 1, 1996 (Junction City, Kansas)
-9- 10 Auto Parts of Leavenworth, Inc. July 1, 1996 Leavenworth, Kansas Auto Parts of Salina, Inc. July 1, 1996 Salina, Kansas July 1, 1996 of Sedalia, Inc. July 1, 1996 Sedalia, Inc. Auto Parts West, Inc. July 1, 1996 Topeka, Kansas Auto Supply North, Inc. July 1, 1996 Topeka, Kansas Auto Parts of Eastboro, Inc. July 1, 1996 Topeka, Kansas Auto Partsmith, Inc. July 1, 1996 Topeka, Kansas Auto Parts of Wichita #1, Inc. July 1, 1996 Wichita, Kansas Auto Parts of Wichita #2, Inc. July 1, 1996 Wichita, Kansas Auto Parts of Wichita #3, Inc. July 1, 1996 Wichita, Kansas Auto Parts of St. Joe, Inc. July 1, 1996 St. Joseph, Missouri Friend's Motor Supply, Inc. June 30, 1997 Hastings, NE Standard Parts, Inc. June 5, 1997 (Monroe, LA) Utah Bearing and Fabrication, Inc. October 3,1997 Colorado Bearing and Supply, Inc. October 3, 1997
-10- 11 This amendment shall be effective January 1, 1997. Except as amended herein, the Plan shall remain in full force and effect. IN WITNESS WHEREOF, Genuine Parts Company, acting through the Pension Committee has caused this Amendment to Plan to be executed on the date shown below but effective as of the date indicated above. PENSION COMMITTEE TO THE GENUINE PARTS COMPANY PENSION PLAN By: /s/ George W. Kalafut -------------------------------- Date: October 8, 1997 ------------------------------ By: /s/ Edward J. Van Stedum -------------------------------- Date: October 9, 1997 ------------------------------ By: /s/ Jerry Nix -------------------------------- Date: October 6, 1997 ------------------------------ By: /s/ Frank M. Howard -------------------------------- Date: October 6, 1997 ------------------------------ -11- EX-10.22 5 AMEND #3 TO GENUINE PARTNERSHIP PLAN 1 EXHIBIT 10.22 AMENDMENT NUMBER THREE TO THE GENUINE PARTNERSHIP PLAN This Amendment to the Genuine Partnership Plan is adopted by Genuine Parts Company (the "Company"), effective as of the date set forth herein. WITNESSETH: WHEREAS, the Company maintains the Genuine Partnership Plan (the "Plan"), as amended and restated effective January 1, 1994, and such Plan is currently in effect; and WHEREAS, the Company desires to amend the Plan for various purposes including amendments to reflect changes in law; NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as follows: 1. Section 3.01 is deleted in its entirety, and a new Section 3.01 is substituted in lieu thereof, as follows: "3.01 Participation. (a) In General. If an Eligible Employee is normally scheduled to work twenty-four (24) or more hours per week ("Full-Time Employee"), such Eligible Employee shall participate in the Plan in accordance with Section 3.01(b) below. If an Eligible Employee is normally scheduled to work fewer than twenty-four (24) hours per week ("Part-Time Employee"), such Eligible Employee shall participate in the Plan in accordance with Section 3.01(c) below. (b) Full-Time Employees. An Eligible Employee who is a Full-Time Employee shall become a Participant in the Plan for the purposes described below as of the following dates: (1) For purposes of becoming eligible to make Pre-Tax Contributions and for all other purposes of the Plan related to making Pre-Tax Contributions (e.g., Investment Funds and elections) other than eligibility to receive an Employer Contribution and an allocation of forfeitures, the later of (i) the first day of the month after the Eligible Employee has completed three full months of Employment and attained age 18 or (ii) the date the Employee becomes a member of the class of Eligible Employees. (2) For purposes of becoming eligible to receive an Employer Contribution and share in the allocation of any forfeitures (see Article 5), the 2 EntryDate next following the later of (i) the date on which the Eligible Employee has both completed one Year of Eligibility Service and attained age 18 or (ii) the date the Employee becomes a member of the class of Eligible Employees. (c) Part-Time Employees. An Eligible Employee who is a Part-Time Employee shall become a Participant in the Plan for all purposes of the Plan on the Entry Date next following the later of (i) the date on which the Eligible Employee has both completed one Year of Eligibility Service and attained age 18 or (ii) the date the Employee becomes a member of the class of Eligible Employees. (d) Acquisitions. See Section 3.04 below for special rules that apply to new Employees following an acquisition." 2. Section 4.04 is hereby deleted and a new Section 4.04 is substituted therefor as follows: "Pre-Tax Contributions shall be deducted by the Employer from the Participant's Compensation and paid to the Trustee as promptly as possible but no later than fifteen days after the Employer retains the Pre-Tax Contributions (or such longer period of time granted by the Department of Labor or other government entity, agency or by an employee of such governmental entity or agency)." 3. Section 8.05(b) is hereby deleted and a new Section 8.05(b) is substituted therefor as follows: "(b) In no event may the distribution of a Participant's Account commence later than April 1 following the calendar year in which the Participant attains age 70-1/2. However, if a Participant is not a 5% owner of an Employer (as defined in Code Section 401(a)(9) and the Treasury Regulations thereunder), such Participant's Retirement Income shall commence no later than April 1 following the calendar year in which he terminates his Employment. (The applicable commencement date described above, is referred to as the "required beginning date")." Notwithstanding the preceding distribution requirements, a distribution on behalf of any Participant may be made in accordance with a benefit payment election executed before January 1, 1984 in a manner that satisfies the requirements of the transitional rule of Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982." -2- 3 4. A new Section 9.16 is hereby added to the Plan as follows: "9.16 Suspension of Loan Repayments During Military Service Loan repayments will be suspended under this Plan as permitted under Section 414(u)(4) of the Internal Revenue Code (e.g., suspension of loan repayments during a Participant's periods of military service as defined in Code Section 414(u))." 5. A new Section 12.03(d) is hereby added to the Plan as follows: "(d) In computing the Average Actual Deferral Percentage, the Employer may exclude Non-highly Compensated Employees who prior to the last day of the Plan Year have not yet attained age 21 or have not yet completed a Year of Eligibility Service (see Section 3.02) if the Employer satisfies a special coverage rule described below. The special coverage rule requires the Plan to satisfy the minimum coverage rules of Code Section 410(b)(4)(B) with respect to all Employees who are permitted to participate in the Plan but have not yet attained age 21 or have not yet completed a Year of Eligibility Service. This paragraph (d) shall be effective January 1, 1999." 6. Section 12.05(a) is hereby deleted and a new Section 12.05(a) is substituted therefor as follows: "(a) Pre-Tax Contributions exceeding the limitations of Section 12.03(a) ("Excess ADP Deferrals") and any income or loss allocable to such Excess ADP Deferral may be designated by the Committee as Excess ADP Deferrals and may be distributed to Highly Compensated Employees whose Accounts were credited with the largest dollar amount of Pre-Tax Contributions. In determining the amount of Excess ADP Deferrals for each Highly Compensated Employee, the Committee shall reduce the ADP for each Highly Compensated Employee as follows: (1) The amount of Salary Deferrals made by the Highly Compensated Employee(s) with the highest dollar amount of Salary Deferrals will be reduced until equal to the second highest amount of Salary Deferrals under the Plan; then -3- 4 (2) The amount of Salary Deferrals made by the two (or more) Highly Compensated Employees with the highest dollar amount of Salary Deferrals under the Plan will be reduced until equal to the third highest dollar amount of Salary Deferrals under the Plan; then (3) The steps described in (1) and (2) shall be repeated with respect to the third and successive highest Salary Deferrals under the Plan until the Plan has distributed all Excess ADP Deferrals." 7. A new Section 12.06(c) is hereby added to the Plan as follows: "(c) In computing the Average Actual Contribution Percentage, the Employer may exclude Non-highly Compensated Employees who prior to the last day of the Plan Year have not yet attained age 21 if the Employer satisfies a special coverage rule described below. The special coverage rule requires the Plan to satisfy the minimum coverage rules of Code Section 410(b)(4)(B) with respect to all Employees who are permitted to participate in the Plan but have not yet attained age 21. This paragraph (d) shall be effective January 1, 1999." 8. Article 13 is hereby deleted and a new Article 13 is substituted therefor as follows: "13.01 In General For the purposes of this Plan, the term "Highly Compensated Employee" is any active Employee described in Section 13.02 below and any Former Employee described in Section 13.03 below. Various definitions used in this Section are contained in Section 13.04. A Non-highly Compensated Employee is an Employee who is not a Highly Compensated Employee. 13.02 Highly Compensated Employees (a) Look-Back Year. An Employee is a Highly Compensated Employee if during a Look Back Year the Employee: (1) is a 5 Percent Owner; or (2) receives Compensation in excess of $80,000 and is a member of the Top Paid Group. The dollar amount described above shall be increased annually as provided in Code Section 414(q)(1). -4- 5 (b) Current Year. An Employee is a Highly Compensated Employee if during a Current Year the Employee is a 5 Percent Owner. 13.03 Former Highly Compensated Employee A Former Employee is a Highly Compensated Employee if (applying the rules of Section 13.02(a) or (b)) the Former Employee was a Highly Compensated Employee during a Separation Year or during any Current Year ending on or after the Former Employee's 55th birthday. 13.04 Definitions The following special definitions shall apply to this Article 13: Current Year shall mean the current Plan Year. Employer for purposes of this Article 13 shall mean the Employer and its Affiliates. 5 Percent Owner shall mean any Employee who owns or is deemed to own (within the meaning of Code Section 318), more than five percent of the value of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of the Employer. Former Employee shall mean an Employee (i) who has incurred a Severance from Service Date or (ii) who remains employed by the Employer but who has not performed services for the Employer during the Current Year (e.g., an Employee on Authorized Leave of Absence). Look Back Year shall mean the Plan Year preceding the Current Year, or if the Employer elects (and such election is available to the Employer), the calendar year ending with or within the Current Year. Separation Year shall mean any of the following years: (1) An Employee who incurs a Separation from Service Date shall have a Separation Year in the Current Year in which such Separation from Service Date occurs; (2) An Employee who remains employed by the Employer but who temporarily ceases to perform services for the Employer (e.g., an Employee on Leave of Absence) shall have a Separation Year in the calendar year in which he last performs services for the Employer; -5- 6 (3) An Employee who remains employed by the Employer but whose Compensation for a calendar year is less than 50% of the Employee's average annual Compensation for the immediately preceding three calendar years (or the Employee's total years of employment, if less) shall have a Separation Year in such calendar year. However, such Separation Year shall be ignored if the Employee remains employed by the Employer and the Employee's Compensation returns to a level comparable to the Employee's Compensation immediately prior to such Separation Year. Top Paid Group shall mean the top 20% of all Employees ranked on the basis of Compensation received from the Employer during the applicable year. The number of Employees in the Top Paid Group shall be determined by ignoring Employees who are non-resident aliens, Employees who do not perform services for the Employer during the applicable year, Employees who do not satisfy the age and service exclusion provided in applicable Treasury Regulations and Employees who are covered by a collective bargaining agreement as provided in applicable Treasury Regulations. 13.05 Other Methods Permissible To the extent permitted by the Code, judicial decisions, Treasury Regulations and IRS pronouncements, the Committee may (without further amendment to this Plan) take such other steps and actions or adopt such other methods or procedures (in addition to those methods and procedures described in this Article 13) to determine and identify Highly Compensated Employees (including adopting alternative definitions of Compensation which satisfy Code Section 414(q)(7) and are uniformly applied)." 9. Section 14.02 is hereby deleted and a new Section 14.02 is substituted therefor as follows: "14.02 Combined Plan Limitation Repealed. Effective January 1, 2000, the combined plan test of Code Section 415 is repealed and no longer applicable." 10. Section 14.03(c) is hereby deleted and a new Section 14.03(c) is substituted therefor as follows: "'Compensation' shall have the same meaning as defined in Section 13.04 (thereby including Pre-Tax Contributions under this Plan and salary deferrals -6- 7 under a Code Section 125 Cafeteria Plan in the definition of Compensation). This definition shall be effective January 1, 1998." 11. Section 15.04 is hereby deleted and a new Section 15.04 is substituted therefor as follows: "15.04 Combined Plan Limitation For Top-Heavy Years Repealed. Effective January 1, 2000, adjustments to the combined plan limitation of Code Section 415 for top heavy plans are repealed and no longer applicable." 12. A new Section 16.14 is hereby added to the Plan as follows: "16.14 Qualified Military Service Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). It is the intent of this Section 16.14 to adopt the IRS model amendment set forth in Rev. Proc. 96-49 for the purposes set forth in such revenue procedure." 13. Paragraphs 1 and 10 of this Amendment shall be effective January 1, 1998. Paragraph 2 of this Amendment shall be effective February 3, 1997. Paragraphs 3, 6 and 8 of this Amendment shall be effective January 1, 1997. Paragraphs 4 and 12 of this Amendment shall be effective December 12, 1994 (the effective date of Code Section 414(u)). Paragraphs 5 and 7 of this Amendment shall be effective January 1, 1999. Paragraphs 9 and 11 of this Amendment shall be effective January 1, 2000. Except as amended herein, the Plan shall remain in full force and effect. -7- 8 IN WITNESS WHEREOF, Genuine Parts Company, acting through the Committee has caused this Amendment to the Plan to be executed on the date shown below but effective as of the date indicated above. COMMITTEE TO THE GENUINE PARTNERSHIP PLAN By: /s/ George W. Kalafut ---------------------------------- Date: August 8, 1997 --------------------------------- By: /s/ Edward J. Van Stedum ---------------------------------- Date: August 11, 1997 --------------------------------- By: /s/ Jerry Nix ---------------------------------- Date: August 7, 1997 --------------------------------- By: /s/ Frank M. Howard ---------------------------------- Date: August 7, 1997 --------------------------------- -8- EX-10.23 6 AMEND #3 TO G.P. SUPPLEMENTAL RETIREMENT PLAN 1 EXHIBIT 10.23 AMENDMENT NO. 3 TO THE GENUINE PARTS COMPANY SUPPLEMENTAL RETIREMENT PLAN WHEREAS, the Compensation and Stock Option Committee of the Board of Directors of Genuine Parts Company desires to amend the Genuine Parts Company Supplemental Retirement Plan (the "Plan") as follows: NOW, THEREFORE, BE IT RESOLVED, that the following Amendments be adopted: 1. Section 3.01 is deleted in its entirety, and a new Section 3.01 is substituted in lieu thereof, as follows: "3.01 Calculation of Supplement. (a) Each Participant who terminates active employment with the Employer on or after his Normal or Delayed Retirement Date by reason of retirement or voluntary or involuntary termination shall, except as provided in Section 6.05, be entitled to a monthly supplemental retirement income ("Supplemental Retirement Income") equal to (1) minus (2), where (1) equals the monthly Normal or Delayed Retirement Income which Participant would be entitled to receive under the Pension Plan beginning on the Benefit Commencement Date (as defined in Section 3.02) if the benefit limitations of Code Sections 401(a)(17) and 415 as reflected in the Pension Plan were not in effect (measured in the form of a single life annuity payable in monthly installments for the Participant's life) and if the definition of Earnings under this Plan were used to compute the Participant's Normal or Delayed Retirement Income under the Pension Plan; (2) equals the monthly Normal or Delayed Retirement Income which Participant is actually entitled to receive under the Pension Plan beginning on the Benefit Commencement Date measured in the form of a single life annuity payable in monthly installments for the Participant's life. (b) Each Participant who terminates active employment with the Employer on or after his Early Retirement Date by reason of early retirement or voluntary or involuntary termination shall, except as provided in Section 6.05, be entitled to a monthly Supplemental Retirement Income equal to (1) minus (2), where 2 (1) equals the monthly Early Retirement Income which Participant would be entitled to receive under the Pension Plan beginning on the Benefit Commencement Date (as defined in Section 3.02) if the benefit limitations of Code Sections 401(a)(17) and 415 as reflected in the Pension Plan were not in effect (measured in the form of a single life annuity payable in monthly installments for the Participant's life) and if the definition of Earnings under this Plan were used to compute the Participant's Early Retirement Income under the Pension Plan; (2) equals the monthly Early Retirement Income which Participant is actually entitled to receive under the Pension Plan beginning on the Benefit Commencement Date measured in the form of a single life annuity payable in monthly installments for the Participant's life. (3) The Participant's benefit in (1) and (2) above shall be reduced by the early retirement reduction factors set forth in the Pension Plan (e.g., see Section 4.02) regardless of whether the Participant is entitled to an increased benefit under the Pension Plan by reason of terminating employment pursuant to an early retirement window. (c) Except as provided in Section 5.01, no payment of any kind shall be made under this Plan to any Participant who terminates active employment with the Employer prior to his Early Retirement Date. (d) In computing a Key Employee's benefit under this Plan, the Committee shall assume the Participant did not accrue a benefit under the Pension Plan (and did not receive any Earnings) during any calendar year in which the Key Employee did not accrue a benefit under this Plan (see Section 2.02)." 2. Section 3.02 is deleted in its entirety, and a new Section 3.02 is substituted in lieu thereof, as follows: "3.02 Benefit Commencement Date; Manner of Payment. The Employer shall commence payment of the Supplemental Retirement Income as of the Benefit Commencement Date and such benefit shall continue on a monthly basis for the Participant's lifetime and for any period thereafter provided for under the form of benefit elected by the Participant. The Benefit Commencement Date shall mean the day that Retirement Income is deemed to commence under the Pension Plan with respect to the Participant. The Supplemental Retirement Income shall be paid in the form elected by the Participant in his Joinder -2- 3 Agreement. In the event that the Participant fails to elect a form of payment, then the Supplemental Retirement Income shall be paid in the form of a 50% joint and survivor annuity if the Participant has a Spouse on the Benefit Commencement Date and in the form of a Life Annuity if the Participant does not have a Spouse on the Benefit Commencement Date. If the Supplemental Retirement Income is paid in a form other than a Life Annuity, then the amount of such benefit shall be adjusted so that it is the Actuarial Equivalent of the Life Annuity described in Section 3.01." 3. Section 2 of the Joinder Agreement to the Plan is deleted in its entirety, and a new Section 2 is substituted in lieu thereof, as follows: "2. Payments Contingent on Normal Retirement. Executive acknowledges and understands that Genuine Parts is obligated to provide benefits under the Plan only if Executive terminates active employment with Genuine Parts on or after the Executive's Early Retirement Date. For example, Genuine Parts Company is not obligated to provide payments under the Plan if the Executive (absent a change in control) terminates employment with Genuine Parts prior to his or her Early Retirement Date." 4. This Amendment shall be effective as of August 15, 1997. 5. Except as amended herein, the Plan shall continue in full force and effect. IN WITNESS WHEREOF, Genuine Parts Company has caused this Amendment to be executed by its duly authorized officer. GENUINE PARTS COMPANY By: /s/ George W. Kalafut ----------------------------------------- Title: C. F. O. GPC --------------------------------------- Date: August 29, 1997 ---------------------------------------- -3- - - EX-10.24 7 GENUINE PARTS COMPANY DEATH PLAN 1 EXHIBIT 10.24 GENUINE PARTS COMPANY DEATH BENEFIT PLAN 2 TABLE OF CONTENTS ARTICLE 1 -- INTRODUCTION.................................................... 1 ARTICLE 2 -- PLAN DEFINITIONS................................................ 1 Alternative Death Benefit........................................... 1 Annuity Starting Date............................................... 1 Average Earnings.................................................... 1 Beneficiary......................................................... 1 Company ............................................................ 1 Credited Service.................................................... 1 Earnings............................................................ 1 Effective Date...................................................... 1 Employee............................................................ 2 Employer............................................................ 2 Employment.......................................................... 2 Normal Retirement Age............................................... 2 Normal Retirement Date.............................................. 2 Participant......................................................... 2 Plan ........................................................... 2 Plan Administrator or Committee..................................... 2 Plan Year........................................................... 2 Trustee............................................................. 2 ARTICLE 3 -- ELIGIBILITY AND PARTICIPATION................................... 2 3.1 Eligibility.................................................... 2 3.2 Termination of Coverage........................................ 3 ARTICLE 4 -- BENEFITS........................................................ 3 4.1 Computation of Benefit......................................... 3 ARTICLE 5 -- PAYMENT OF BENEFITS............................................. 4 5.1 Form of Payment................................................ 4 5.2 Withholding.................................................... 4 ARTICLE 6 -- CLAIMS.......................................................... 4 6.1 General Information............................................ 4 ARTICLE 7 -- FUNDING......................................................... 4 7.1 Funding........................................................ 4 ARTICLE 8 -- PLAN ADMINISTRATION............................................. 4 8.1 Plan Administrator............................................. 4 8.2 Claims Procedure............................................... 5
3 8.3 Procedure For Appeals Of Denied Claims.......................... 6 8.4 Claim and Appeal Procedures Are Conditions Precedent to Benefits........................................... 6 ARTICLE 9 -- PLAN AMENDMENT AND TERMINATION................................... 7 9.1 Right to Amend or Terminate the Plan............................ 7 ARTICLE 10 -- MISCELLANEOUS................................................... 7 10.1 Construction................................................... 7 10.2 Governing Law.................................................. 7 10.3 Legal Process.................................................. 7 10.4 No Employment Rights........................................... 8 10.5 No Guarantee of Tax Consequences............................... 8 10.6 Rights to Assets............................................... 8 10.7 Conclusiveness of Records...................................... 8 10.8 Payment of Expenses............................................ 8 10.9 Right to Require Information and Reliance Thereon.............. 8 10.10 Mental or Physical Incompetency............................... 9 10.11 Assignment of Benefits........................................ 9 10.12 Inability to Locate Payee..................................... 9
-ii- 4 ARTICLE 1 -- INTRODUCTION Prior to July 15, 1997, Genuine Parts Company (the "Company") offered an Alternative Death Benefit to Beneficiaries of certain Participants under the Genuine Parts Company Pension Plan (the "Pension Plan"). Effective July 15, 1997, the Pension Plan ceased providing an Alternative Death Benefit with regard to Participants who died after July 15, 1997. To replace the Alternative Death Benefit, the Company adopted the Genuine Parts Company Death Benefit Plan (the "Plan"). The purpose of the Plan is to provide a death benefit to a Beneficiary of certain Participants upon a Participant's death. THIS DOCUMENT CONTAINS ALL PROVISIONS OF THE DEATH BENEFIT PLAN. ANY CONFLICT OR AMBIGUITY ARISING BETWEEN THIS DOCUMENT AND ANY OTHER DOCUMENT OR COMMUNICATION, INCLUDING BUT NOT LIMITED TO ANY SUMMARY PLAN DESCRIPTION, BROCHURE, OR ORAL OR VIDEO PRESENTATION, DESCRIBING THE RIGHTS, BENEFITS, OR OBLIGATIONS OF THE COMPANY AND EMPLOYEES UNDER THE DEATH BENEFIT PLAN SHALL BE RESOLVED IN FAVOR OF THIS PLAN DOCUMENT. ARTICLE 2 -- PLAN DEFINITIONS The following terms are used in the Plan. Each such term shall have the following meaning unless a different meaning is clearly required by the context. For purposes of this Plan, the singular shall be read as the plural, and the masculine gender shall include the feminine gender unless the context clearly requires otherwise. ALTERNATIVE DEATH BENEFIT shall have that meaning as defined in Section 5.02 of the Pension Plan in effect before July 15, 1997. ANNUITY STARTING DATE shall mean have that meaning as defined in the Pension Plan. AVERAGE EARNINGS shall mean the Participant's Average Earnings under the Pension Plan. BENEFICIARY shall mean the Participant's beneficiary as defined in the Pension Plan. COMPANY shall mean Genuine Parts Company and its successors or assigns who adopt this Plan. CREDITED SERVICE shall mean the Participant's number of years of Credited Service under the Pension Plan. EARNINGS shall have that meaning as defined in the Pension Plan. EFFECTIVE DATE shall mean July 15, 1997. 5 EMPLOYEE shall mean any person employed by the Employer. EMPLOYER shall mean the Company and any affiliated company whose employees participate in the Pension Plan. EMPLOYMENT shall mean the active service of an Employee with the Employer. NORMAL RETIREMENT AGE shall mean the Participant's 65th birthday or, if later, the fifth anniversary of the date the Participant commenced participation in the Pension Plan. NORMAL RETIREMENT DATE shall mean the first day of the month coincident with or next following the Participant's Normal Retirement Age. PARTICIPANT shall mean an Employee who becomes eligible to participate in the Pension Plan and who satisfies the requirements of Article 3 of this Plan. PLAN shall mean this Genuine Parts Company Death Benefit Plan, as amended from time to time. PLAN ADMINISTRATOR OR COMMITTEE shall mean the Pension Committee of the Genuine Parts Company Pension Plan or such other individual(s) designated by the Company's Board of Directors or the Board's Executive Committee. PLAN YEAR shall be the calendar year. TRUSTEE shall mean any institution or individual(s) who shall accept the appointment of the Committee to serve as Trustee pursuant to the Plan. ARTICLE 3 -- ELIGIBILITY AND PARTICIPATION 3.1 ELIGIBILITY A Beneficiary shall be eligible to receive benefits under this Plan only if all of the following conditions are satisfied: (a) The Participant has earned 3 or more years of Credited Service; (b) The Participant dies prior to terminating his Employment and prior to his Annuity Starting Date; and (c) The Participant (or his or her Beneficiary) is not entitled to or has waived his or her right to a death benefit under the Pension Plan. - 2- 6 3.2 TERMINATION OF COVERAGE Coverage under this Plan ends on the earliest of the following events: (a) The Participant is no longer eligible under Section 3.1; (b) The Plan is terminated; (c) The Plan is amended to cease coverage or eligibility for coverage with respect to a Participant or class of Participants. ARTICLE 4 -- BENEFITS 4.1 COMPUTATION OF DEATH BENEFIT Benefits under this Plan shall be equal to the following amount: (a) The Beneficiary's death benefit shall be the present value of the following hypothetical monthly benefits: (i) For a Participant with at least 3 but less than 10 complete years of Credited Service, the greater of (A) 30% of the Participant's current monthly Earnings as of the date immediately prior to the Participant's death, or (B) 30% of the Participant's Average Earnings, payable for 12.5 months. (ii) For a Participant with 10 but less than 15 complete years of Credited Service, the greater of (A) 30% of the Participant's current monthly Earnings as of the date immediately prior to the Participant's death, or (B) 30% of the Participant's Average Earnings, payable for 25 months; (iii) For a Participant with 15 or more complete years of Credited Service, the greater of (A) 30% of the Participant's current monthly Earnings as of the date immediately prior to the Participant's death, or (B) 30% of the Participant's Average Earnings, payable for 50 months. (b) Present value shall be determined using the actuarial assumptions set forth in the Pension Plan for determining single sum values. -3- 7 ARTICLE 5 -- PAYMENT OF BENEFITS 5.1 FORM OF PAYMENT. Payments under this Plan shall be made in lump sum cash amounts only as soon as administratively feasible (as determined by the Plan Administrator in its sole discretion). 5.2 WITHHOLDING. The Plan Administrator will withhold from any payment any income or employment taxes required to be withheld under applicable federal, state or local law. ARTICLE 6 -- CLAIMS 6.1 GENERAL INFORMATION Upon a Participant's death, the Participant's Beneficiary must contact the Plan Administrator in order to arrange for the submission of a claim for benefits. Once notification of death is received by the Plan Administrator, the Plan Administrator will supply the necessary forms for submitting a claim. ARTICLE 7 -- FUNDING 7.1 FUNDING The benefits provided under this Plan shall be paid from the Employer's general assets or from a trust designated by the Committee. ARTICLE 8 -- PLAN ADMINISTRATION 8.1 PLAN ADMINISTRATOR (A) RESPONSIBILITY OF PLAN ADMINISTRATOR. The Plan Administrator shall have total and exclusive responsibility to control, operate, manage and administer the Plan in accordance with its terms. (B) AUTHORITY OF THE PLAN ADMINISTRATOR. The Plan Administrator shall have all the authority that may be necessary or helpful to enable him to discharge his responsibilities with respect to the Plan. Without limiting the generality of the preceding sentence, the Plan Administrator shall have the exclusive right: to interpret the Plan ( to determine eligibility for coverage; to determine eligibility for benefits; to construe any ambiguous provision of -4- 8 the Plan; to correct any default, to supply any omission; to reconcile any inconsistency; and to decide any and all questions (including, but not limited to questions of fact) arising in the administration, interpretation, and application of the Plan. (C) DISCRETIONARY AUTHORITY. The Plan Administrator shall have full discretionary authority in all matters related to the discharge of his responsibilities and the exercise of his authority under the Plan including, without limitation, his construction of the terms of the Plan and his determination of eligibility for coverage and benefits. It is the intent of the Plan that the decisions of the Plan Administrator and his action with respect to the Plan shall be conclusive and binding upon all persons having or claiming to have any right or interest in or under the Plan and that no such decision or action shall be modified upon judicial review unless such decision or action is proven to be arbitrary or capricious. (D) DELEGATION OF AUTHORITY. The Plan Administrator may delegate some or all of his authority under the Plan to any person or persons provided that any such delegation shall be in writing. 8.2 CLAIMS PROCEDURE (A) CLAIMS SUBMISSION. A Beneficiary must submit a claim to the Plan Administrator at the time and in the manner provided under Section 6.1. The Plan Administrator has 90 days, following the date on which it receives the claim, to allow or deny the claim in whole or in part. Under special circumstances, the Plan Administrator may require an additional 90 days to make its decision. However, in order to require such additional 90 days, the Plan Administrator must notify the Beneficiary in writing within the first 90 day period that it requires an additional 90 days. (B) ALLOWANCE OF A CLAIM. If the claim is allowed in whole or in part, the Plan Administrator shall pay the benefit as provided in Article 5. (C) DENIAL OF A CLAIM. If a claim is denied in whole or in part, the Plan Administrator shall provide a written notice of the denial to the Beneficiary. The notice shall include the information described under Section 8.2(d). A claim is deemed denied in whole or in part when the Plan Administrator provides such notice to the Beneficiary. However, if the Plan Administrator fails to provide such notice to the Beneficiary within the period of time provided under Section 8.2(a), the claim is deemed denied on the last day of such period to the extent that it is not allowed by the Plan Administrator during such period. -5- 9 (D) NOTICE OF DENIAL. If the claim is denied in whole or in part, the Plan Administrator shall provide the Beneficiary with a written notice setting forth the following information: (1) The specific reason for the denial; (2) The specific provisions of the Plan on which the denial is based; (3) A description of any additional material or information necessary for the Beneficiary to perfect the claim, together with an explanation as to why such material or information is necessary; and (4) Information as to how the Beneficiary may submit the claim to the Plan Administrator for review. 8.3 PROCEDURE FOR APPEALS OF DENIED CLAIMS (A) RIGHT TO APPEAL. Any Beneficiary whose claim has been properly submitted to the Plan Administrator and whose claim has been denied in whole or in part by the Plan Administrator may file an appeal in writing with the Plan Administrator within 90 days after receipt by the Beneficiary of written notice of the denial or within 90 days after the claim is deemed denied. (B) RIGHT TO REVIEW DOCUMENTS, ETC. The Beneficiary or his representative (authorized to represent the Beneficiary pursuant to a written instrument which is satisfactory to the Plan Administrator) may review any pertinent documents and submit any issues or comments to the Plan Administrator. (C) DECISION OF PLAN ADMINISTRATOR. The Plan Administrator has 60 days, following the date on which he receives the appeal, to allow or deny the appeal in whole or in part. Under special circumstances, the Plan Administrator may require an additional 60 days to make his decision. However, in order to require such additional 60 days, the Plan Administrator must notify the Beneficiary in writing within the first 60 day period that he requires an additional 60 days. The Beneficiary shall be notified in writing of the decision of the Plan Administrator and the reasons therefore, including references to applicable Plan provisions. If the Beneficiary is not notified of the decision within 60 days (120 days under special circumstances), then the appeal is deemed denied. 8.4 CLAIM AND APPEAL PROCEDURES ARE CONDITIONS PRECEDENT TO BENEFITS The claim and appeal procedures described in the Plan are integral parts of the Plan and the entitlement of any Beneficiary to a benefit is subject to a condition precedent that such -6- 10 Beneficiary comply with the claim and appeal procedures in proper and timely fashion. It is the intent of the Plan that no benefit be paid and no denial of a benefit be subjected to judicial review unless the Beneficiary first complies fully with the claim procedures and, if the claim is denied or deemed denied, the appeal procedures described in the Plan. ARTICLE 9 -- PLAN AMENDMENT AND TERMINATION 9.1 RIGHT TO AMEND OR TERMINATE THE PLAN Although Genuine Parts Company intends to continue the Plan indefinitely, the Plan may be terminated, suspended or modified, in whole or in part, at any time for any reason by independent action of the Board or the Executive Committee of the Board. The Committee may also adopt any amendment to the Plan which (1) is required to comply with any applicable law or (2) does not materially increase the costs associated with the Plan. The procedure for terminating, suspending, or modifying the Plan is the adoption of a resolution to such effect. A resolution is considered adopted when a majority of the members of the Board or, if applicable, Committee, who are present approve of the resolution by vocal or written vote at a Board or Committee meeting, whichever is applicable. If no meeting is held, the resolution is in writing and signed by all the members of the Board or Committee. ARTICLE 10 -- MISCELLANEOUS 10.1 CONSTRUCTION Headings of articles, sections, subsections and paragraphs are inserted for convenience of reference; they are not part of this Plan and shall not be considered in construing it. Any reference herein to an article, section, subsection or paragraph shall be a reference to an article, section, subsection or paragraph of this Plan unless the context clearly indicates otherwise. The term "person" shall be construed to mean and include an individual (or natural person); an entity such as a corporation, partnership, trust or association; or a division or department of such an entity. 10.2 GOVERNING LAW This document shall be construed and governed in accordance with the laws of Georgia, except as such laws are preempted by applicable federal law. 10.3 LEGAL PROCESS The Plan Administrator is the designated agent for service of legal process. -7- 11 10.4 NO EMPLOYMENT RIGHTS Nothing contained in this Plan shall give any Employee the right to be retained in the employment of the Company or affect the right of the Company to dismiss any Employee. The adoption and maintenance of this Plan shall not constitute a contract between the Company and the Employee for consideration for, or inducement or condition of, the employment of the Employee. 10.5 NO GUARANTEE OF TAX CONSEQUENCES No person connected to the Plan in any capacity, including but not limited to the Employer, its affiliates, and the directors, officers and employees of the Employer and its affiliates, makes any representation, commitment or guarantee that any tax treatment, including, but not limited to federal, state and local, income, estate and gift tax treatment, will be applicable with respect to amounts paid to or for the benefit of a Participant or a Beneficiary in connection with this Plan, or that any such tax treatment will apply to or be available to a Participant or Beneficiary on account of any coverage or any action (including action permitted or required under the Plan) taken in connection with such coverage. 10.6 RIGHT TO ASSETS Neither the creation of any fund or accounts, nor the payment of benefits under this document shall be construed as giving any legal or equitable right to any Employee, former Employee or Beneficiary against the Employer, its officers or employees except as expressly provided herein. 10.7 CONCLUSIVENESS OF RECORDS The records of the Employer with respect to age, Credited Service, employment history, compensation, absences, illnesses and all other relevant matters shall be conclusive for purposes of the administration of, and the resolution of claims arising under this document. 10.8 PAYMENT OF EXPENSES The Employer may, but does not obligate itself to pay all or part of the expenses of administration of the Plan contained in this document and the expenses of the Administrator, and any other expenses incurred at the direction of the Administrator. 10.9 RIGHT TO REQUIRE INFORMATION AND RELIANCE THEREON The Employer and Plan Administrator shall have the right to require any Participant or Beneficiary to provide it and its agents with such information, in writing, and in such form as it may deem necessary to the administration of this document and may rely on that -8- 12 information in carrying out its duties hereunder. Any payment to a Participant or Beneficiary in accordance with the provisions of this document in good faith reliance upon any written information provided by the Participant and/or Beneficiary shall be in full satisfaction of all claims by the Participant and/or his Beneficiary. 10.10 MENTAL OR PHYSICAL INCOMPETENCY Every person receiving or claiming benefits under the Plan shall be presumed to be mentally and physically competent and of age until the Plan Administrator receives a written notice, in a form and manner acceptable to it, that such person is mentally or physically incompetent or a minor, and that a guardian, conservator or other person legally vested with the care of his estate has been court appointed. 10.11 ASSIGNMENT OF BENEFITS Benefits under this Plan may not be assigned; any attempt to assign benefits is void. 10.12 INABILITY TO LOCATE PAYEE If the Plan Administrator is unable to make payment to any Participant or other person to whom a payment is due under the Plan because he cannot ascertain the identity or whereabouts of such Participants or other person after reasonable efforts have been made to identify or locate such person such payment and all subsequent payments otherwise due to such Participant or other person shall be forfeited seven (7) years after the date any such payment first became due. 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 July 15, 1997. GENUINE PARTS COMPANY By: /s/ George W. Kalafut ----------------------------------- Title: Committee Chairman --------------------------------- Date: July 15, 1997 --------------------------------- Attest: /s/ Frank M. Howard - ---------------------------------- V. P. & Treasurer -9- EX-13 8 ANNUAL REPORT MDA 1 EXHIBIT 13 Selected Financial Data Genuine Parts Company and Subsidiaries
YEAR ENDED DECEMBER 31 ------------------------------------------------------------------------- IN THOUSANDS, EXCEPT PER SHARE DATA 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------ Net sales....................................... $6,005,245 $5,720,474 $5,261,904 $4,858,415 $4,384,294 cost of goods sold.............................. 4,178,642 4,002,971 3,654,703 3,343,699 3,023,038 Selling, administrative and other expenses...... 1,261,003 1,172,270 1,096,407 1,039,848 935,427 Income before income taxes...................... 565,600 545,233 510,794 474,868 425,829 Income taxes.................................... 223,203 215,157 201,626 186,320 166,961 Net income**.................................... $ 342,397 $ 330,076 $ 309,168 $ 288,548 $ 257,813 Average common shares outstanding during year*.. 179,592 181,567 183,923 186,062 186,326 Per common share:* Basic net income**......................... $ 1.91 $ 1.82 $ 1.68 $ 1.55 $ 1.38 Diluted net income**....................... 1.90 1.81 1.68 1.55 1.38 Dividends declared......................... .96 .89 .84 .77 .71 December 31 closing stock price............ 33.94 29.67 27.33 24.00 25.09 Long-term debt, less current maturities......... 209,490 110,241 60,607 11,431 12,265 Shareholders' equity............................ 1,859,468 1,732,054 1,650,882 1,526,165 1,445,263 Total assets.................................... $2,754,363 $2,521,631 $2,274,132 $2,029,471 $1,870,756 ----------------------------------------------------------------------
*Adjusted to reflect the three-for-two-stock split in 1997. **Net of cumulative effect of changes in accounting principles of $1,055 in 1993. Selected Ratio Analysis
YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------- IN % OF NET SALES 1997 1996 1995 1994 1993 - --------------------------------------------------------------------------------------------------------------------- Cost of goods sold......................... 69.58% 69.98% 69.46% 68.82% 68.95% Selling, administrative and other expenses. 21.00 20.49 20.84 21.40 21.34 Income before income taxes................. 9.42 9.53 9.71 9.77 9.71 Net income................................. 5.70 5.77 5.88 5.94 5.88 Rate earned on shareholders' equity at the beginning of each year..................... 19.77% 19.99% 20.26% 19.97% 19.59% --------------------------------------------------------------------
Market and Dividend Information High and Low Sales Price and Dividends per Share of Common Shares Traded on the New York Stock Exchange. Adjusted to reflect the three-for-two stock split in 1997.
SALES PRICE OF COMMON SHARES ---------------------------------------------------- 1997 1996 ------------------ ------------------ QUARTER HIGH LOW HIGH LOW - --------------------------------------------------------------------------------------------------- First....................................... $32.17 $28.67 $31.00 $26.67 Second...................................... 35.44 29.83 31.25 28.42 Third....................................... 35.88 30.00 30.92 27.67 Fourth...................................... 33.94 30.00 31.67 28.92 DIVIDENDS DECLARED PER SHARE ---------------------------------------------------- QUARTER 1997 1996 - --------------------------------------------------------------------------------------------------- First....................................... $ .24 $ .223 Second...................................... .24 .223 Third....................................... .24 .223 Fourth...................................... .24 .223
Number of Record Holders of Common Stock 7,992 18 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Genuine Parts Company and Subsidiaries December 31, 1997 Results of Operations: Net sales in 1997 increased for the 48th consecutive year to a record high of $6.0 billion. This was an increase of 5% over the prior year and compares with increases of 9% in 1996, and 8% in 1995. Sales for the Automotive Parts Group increased 2% in 1997 versus 7% in 1996, reflecting slow growth in the automotive aftermarket. Price increases for the Automotive Parts Group were .9% in 1997 and 1.3% in 1996. Sales for the Industrial Parts Group increased 10% in 1997 versus 11% in 1996, reflecting geographic growth through acquisitions and opening new branches and strong industrial production. Price increases for the Industrial Parts Group were 1.4% in 1997 and 2.5% in 1996. Sales for the Office Products Group increased 4% in 1997 compared with 9% in 1996, reflecting an extremely competitive industry. Price increases for the Office Products Group were less than 1% in 1997 and 1996. Costs of goods sold was 69.6% of net sales in 1997 compared to 70.0% in 1996 and 69.5% in 1995. Selling, administrative and other expenses increased 7.6% in 1997 and 6.9% in 1996 and was 21.0% of net sales in 1997 and 20.5% of net sales in 1996. The effective income tax rate was 39.5% in 1997, 1996, and 1995. Net income in 1997 increased 4% over 1996 and net income in 1996 increased 7% over 1995. Liquidity and Sources of Capital: The ratio of current assets to current liabilities was 3.8 to 1 at the close of 1997 with current assets amounting to 76% of total assets. Trade accounts receivable and inventories increased 10% and 7% respectively, while working capital increased 12%. The increase in working capital has been financed principally from the Company's cash flow generated by operations. At December 31, 1997, $36 million was outstanding under an unsecured revolving line of credit with a bank compared to $47 million outstanding at December 31, 1996. At December 31, 1997, the Company had the following unsecured term notes: $50 million, 5.98%, due 2000; $50 million, LIBOR plus .25%, due 2001; $50 million, 6.125%, due 2002; and $50 million, 5.98%, due 2002. At the August 16, 1994 meeting, the Board of Directors approved a stock repurchase program which authorizes the Company to reacquire up to 15 million shares of its Common Stock. To date, approximately 10.2 million shares have been repurchased. Existing credit facilities, current financial resources and anticipated funds from operations are expected to meet requirements for working capital in 1998. Capital expenditures during 1997 amounted to $90 million compared with $95 million in 1996 and $91 million in 1995. The amounts reflect the Earnings Per Share* in dollars Dividends Per Share* in dollars [GRAPH] [GRAPH] *Restated to reflect stock splits *Restated to reflect stock splits 19 3 Management's Discussion and Analysis of Financial Condition and Results of Operations Genuine Parts Company and Subsidiaries Company's continuing geographic expansion as well as the upgrading of existing facilities. It is anticipated that capital expenditures in 1998 will be approximately the same as 1997. Impact of Year 2000: The Company has completed an assessment of its computer software programs to determine their ability to function properly in the year 2000 and thereafter. Based on this assessment, the Company is in the process of modifying or replacing certain time-sensitive software programs to avoid a potential temporary inability to process transactions or engage in other normal business activities. The project is estimated to be completed well in advance of December 31, 1999, which is prior to any anticipated significant impact on the Company's operating systems from the Year 2000 issues. The costs of the project to date and the estimated costs to complete are not expected to be significant to the Company's consolidated financial position or results of operations. The Company believes that, upon completion of its ongoing project, the Year 2000 issues will not pose significant operational problems for its computer systems. Quarterly Results of Operations: Miscellaneous year-end adjustments resulted in increasing net income during the fourth quarter of 1997 and 1996 by approximately $26.6 million ($.15 per share) and $22.8 million ($.13 per share), respectively. The following is a summary of the quarterly results of operations for the years ended December 31, 1997 and 1996.
Three Months Ended - --------------------------------------------------------------------------------- March 31, June 30, Sept. 30, Dec. 31, - --------------------------------------------------------------------------------- 1997 (in thousands except for per share data) - ---- Net Sales............ $1,457,646 $1,510,456 $1,555,776 $1,481,367 Gross Profit......... 429,267 445,120 463,967 488,249 Net Income........... 76,595 83,741 83,712 98,349 Basic Net Income per Common Share....... .43 .47 .47 .55 Diluted Net Income per Common Share.............. .42 .46 .47 .55 1996 - ---- Net Sales............ $1,399,922 $1,444,873 $1,474,836 $1,400,843 Gross Profit......... 409,620 423,941 435,272 448,670 Net Income........... 73,874 80,813 81,552 93,837 Basic Net Income per Common Share....... .40 .44 .45 .52 Diluted Net Income per Common Share.............. .40 .44 .45 .52
Book Value Per Share* in dollars Market Value Per Share* in dollars [GRAPH] [GRAPH] *Restated to reflect stock splits *Restated to reflect stock splits 20 4 Industry Data Genuine Parts Company and Subsidiaries
Year Ended December 31 -------------------------------------------------------------- Dollars in thousands 1997 1996 1995 1994 1993 - --------------------------------------------------------------------------------------------------------------------------- Net sales: Automotive.......................................... $ 3,071,153 $ 3,008,105 $ 2,804,086 $ 2,693,961 $ 2,485,267 Industrial.......................................... 1,853,270 1,677,859 1,509,566 1,317,495 1,153,371 Office products..................................... 1,080,822 1,034,510 948,252 846,959 745,656 --------------------------------------------------------------- Total net sales.................................. $ 6,005,245 $ 5,720,474 $ 5,261,904 $ 4,858,415 $ 4,384,294 =============================================================== Operating profit: Automotive.......................................... $ 324,008 $ 321,852 $ 307,726 $ 304,164 $ 282,791 Industrial.......................................... 166,053 150,815 132,952 111,822 96,727 Office products..................................... 110,663 103,309 93,888 78,206 65,938 --------------------------------------------------------------- Total operating profit........................... 600,724 575,976 534,566 494,192 445,456 Interest expense....................................... (13,365) (8,498) (3,419) (1,321) (1,584) Corporate expense...................................... (26,943) (29,057) (25,939) (22,854) (20,405) Equity in income from investees........................ 6,730 9,398 8,298 7,224 4,452 Minority interests..................................... (1,546) (2,586) (2,712) (2,373) (2,090) --------------------------------------------------------------- Income before income taxes....................... $ 565,600 $ 545,233 $ 510,794 $ 474,868 $ 425,829 =============================================================== Identifiable assets: Automotive.......................................... $ 1,644,288 $ 1,495,106 $ 1,320,910 $ 1,223,416 $ 1,152,148 Industrial.......................................... 602,656 527,253 482,067 404,647 370,633 Office products..................................... 383,452 379,394 360,456 308,817 283,479 Corporate........................................... 23,343 20,394 18,631 5,950 6,731 Equity investments.................................. 100,624 99,484 92,068 86,641 57,765 --------------------------------------------------------------- Total assets..................................... $ 2,754,363 $ 2,521,631 $ 2,274,132 $ 2,029,471 $ 1,870,756 =============================================================== Depreciation and amortization: Automotive.......................................... $ 41,855 $ 35,360 $ 30,239 $ 26,588 $ 24,056 Industrial.......................................... 7,002 6,179 5,049 4,640 5,410 Office products..................................... 7,995 7,571 6,814 5,257 4,246 Corporate........................................... 2,015 1,335 1,132 889 708 --------------------------------------------------------------- Total depreciation and amortization.............. $ 58,867 $ 50,445 $ 43,234 $ 37,374 $ 34,420 =============================================================== Capital expenditures: Automotive.......................................... $ 68,305 $ 80,682 $ 67,643 $ 45,921 $ 39,502 Industrial.......................................... 13,451 7,330 12,132 4,164 2,779 Office products..................................... 6,069 5,652 10,587 13,547 12,378 Corporate........................................... 2,600 1,494 407 2,370 2,854 --------------------------------------------------------------- Total capital expenditures....................... $ 90,425 $ 95,158 $ 90,769 $ 66,002 $ 57,513 ===============================================================
Total Assets in millions of dollars Capital Expenditures in millions of dollars [GRAPH] [GRAPH] 21 5 Report of Independent Auditors Genuine Parts Company and Subsidiaries Board of Directors Genuine Parts Company We have audited the accompanying consolidated balance sheets of Genuine Parts Company and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1997. 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, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Atlanta, Georgia February 4, 1998 22 6 Consolidated Balance Sheets Genuine Parts Company and Subsidiaries
December 31 ----------------------------- Dollars in thousands 1997 1996 - ---------------------------------------------------------------------------------------------------------------------------- Assets Current Assets: Cash and cash equivalents......................................................... $ 72,823 $ 67,373 Trade accounts receivable......................................................... 686,551 622,836 Merchandise inventories........................................................... 1,321,597 1,233,820 Prepaid expenses and other current accounts....................................... 12,580 13,613 - ---------------------------------------------------------------------------------------------------------------------------- Total Current Assets 2,093,551 1,937,642 Investments and Other Assets (Notes 1 and 7)......................................... 288,298 237,994 Property, Plant and Equipment: Land ............................................................................ 49,025 44,662 Buildings, less allowance for depreciation (1997-$72,569; 1996-$69,273)........... 138,263 130,089 Machinery and equipment, less allowance for depreciation (1997-$186,065; 1996-$165,518)................................................. 185,226 171,244 - ---------------------------------------------------------------------------------------------------------------------------- Net Property, Plant and Equipment 372,514 345,995 ----------------------------- $ 2,754,363 $ 2,521,631 ============================= Liabilities and Shareholders' Equity Current Liabilities: Trade accounts payable............................................................ $ 405,141 $ 401,842 Revolving line of credit (Note 2)................................................. 36,000 47,000 Accrued compensation.............................................................. 38,967 41,325 Other accrued expenses............................................................ 19,022 22,189 Dividends payable................................................................. 43,436 40,258 Income taxes payable.............................................................. 14,372 15,765 - ---------------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 556,938 568,379 Long-Term Debt (Note 2).............................................................. 209,490 110,241 Deferred Income Taxes (Note 6)....................................................... 89,049 75,388 Minority Interests in Subsidiaries................................................... 39,418 35,569 Shareholders' Equity (Notes 1, 3 and 5): Preferred Stock, par value $1 per share-authorized 10,000,000 shares; none issued................................................. -- -- Common Stock, par value $1 per share-authorized 450,000,000 shares; issued 178,947,976 shares in 1997; 180,048,435 shares in 1996............................................ 178,948 180,048 Additional paid-in capital........................................................ -- -- Retained earnings................................................................. 1,680,520 1,552,006 - ---------------------------------------------------------------------------------------------------------------------------- Total Shareholders' Equity 1,859,468 1,732,054 ----------------------------- $ 2,754,363 $ 2,521,631 =============================
See accompanying notes. 23 7 Consolidated Statements of Income Genuine Parts Company and Subsidiaries
YEAR ENDED DECEMBER 31 ---------------------------------------------- Dollars in thousands, except per share data 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Net sales.................................................................. $ 6,005,245 $ 5,720,474 $ 5,261,904 Cost of goods sold......................................................... 4,178,642 4,002,971 3,654,703 ---------------------------------------------- 1,826,603 1,717,503 1,607,201 Selling, administrative and other expenses................................. 1,261,003 1,172,270 1,096,407 ---------------------------------------------- Income before income taxes................................................. 565,600 545,233 510,794 Income taxes (Note 6)...................................................... 223,203 215,157 201,626 ---------------------------------------------- Net Income ................................................................ $ 342,397 $ 330,076 $ 309,168 ============================================== Basic net income per common share.......................................... $ 1.91 $ 1.82 $ 1.68 ============================================== Diluted net income per common share........................................ $ 1.90 $ 1.81 $ 1.68 ============================================== Average common shares outstanding.......................................... 179,592 181,567 183,923 Dilutive effect of stock options and non-vested restricted stock awards.... 573 622 452 ---------------------------------------------- Average common shares outstanding--assuming dilution....................... 180,165 182,189 184,375 ==============================================
See accompanying notes. Consolidated Statements of Shareholders' Equity
Common Stock Additional Total ----------------------- Paid-In Retained Shareholders' Dollars in thousands Shares Amount Capital Earnings Equity - ----------------------------------------------------------------------------------------------------------------------------- Balance at January 1, 1995......................... 122,627,303 $122,627 $ -- $1,403,538 $1,526,165 Net income...................................... -- -- -- 309,168 309,168 Cash dividends declared......................... -- -- -- (154,411) (154,411) Stock options exercised......................... 149,827 150 3,955 -- 4,105 Purchase of stock............................... (1,021,551) (1,021) (9,835) (29,326) (40,182) Stock issued in connection with acquisitions.... 157,461 157 5,880 -- 6,037 -------------------------------------------------------------------- Balance at December 31, 1995....................... 121,913,040 121,913 -- 1,528,969 1,650,882 Net income...................................... -- -- -- 330,076 330,076 Cash dividends declared......................... -- -- -- (162,070) (162,070) Stock options exercised......................... 293,795 294 7,587 -- 7,881 Purchase of stock............................... (2,174,545) (2,175) (7,587) (84,953) (94,715) Three-for-two stock split....................... 60,016,145 60,016 -- (60,016) -- -------------------------------------------------------------------- Balance at December 31, 1996....................... 180,048,435 180,048 -- 1,552,006 1,732,054 Net income...................................... -- -- -- 342,397 342,397 Cash dividends declared......................... -- -- -- (172,334) (172,334) Stock options exercised, including tax benefit.. 656,443 657 12,270 -- 12,927 Purchase of stock............................... (2,427,927) (2,428) (32,784) (41,549) (76,761) Stock issued in connection with acquisitions.... 671,025 671 20,514 -- 21,185 -------------------------------------------------------------------- Balance at December 31, 1997....................... 178,947,976 $178,948 $ -- $1,680,520 $1,859,468 ====================================================================
See accompanying notes. 24 8 Consolidated Statements of Cash Flows Genuine Parts Company and Subsidiaries
YEAR ENDED DECEMBER 31 ------------------------------------- Dollars in thousands 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Operating Activities Net income.................................................................... $ 342,397 $ 330,076 $ 309,168 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................................... 58,867 50,445 43,234 Gain on sale of property, plant and equipment........................... (5,014) (786) (1,248) Provision for deferred taxes............................................ 13,843 13,930 12,340 Equity in income from investees......................................... (6,730) (9,398) (8,298) Income applicable to minority interests................................. 1,546 2,586 2,712 Changes in operating assets and liabilities: Trade accounts receivable............................................ (63,715) (57,531) (77,910) Merchandise inventories.............................................. (87,777) (106,364) (122,876) Prepaid expenses and other current accounts.......................... 1,033 13,333 (5,550) Trade accounts payable............................................... 3,299 70,138 15,115 Income taxes payable and other current liabilities................... (7,140) 21,586 (8,000) - --------------------------------------------------------------------------------------------------------------------------- (91,788) (2,061) (150,481) - --------------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 250,609 328,015 158,687 Investing Activities Purchase of property, plant and equipment..................................... (90,425) (95,158) (90,769) Proceeds from sale of property, plant and equipment........................... 11,580 4,385 4,836 Other investing activities.................................................... (23,915) (23,306) (18,199) - --------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (102,760) (114,079) (104,132) - --------------------------------------------------------------------------------------------------------------------------- Financing Activities Proceeds from revolving line of credit, net................................... (11,000) 2,000 45,000 Proceeds from long-term debt.................................................. 100,000 50,000 50,000 Payments on long-term debt.................................................... (712) (324) (1,167) Stock options exercised....................................................... 12,927 7,881 4,105 Dividends paid................................................................ (169,156) (160,214) (151,257) Purchase of stock............................................................. (76,761) (94,715) (40,182) Contributions from minority interests......................................... 2,303 4,555 790 - --------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Financing Activities (142,399) (190,817) (92,711) ------------------------------------- Net Increase (Decrease) in Cash and Cash Equivalents 5,450 23,119 (38,156) Cash and Cash Equivalents at Beginning of Year 67,373 44,254 82,410 ------------------------------------- Cash and Cash Equivalents at End of Year $ 72,823 $ 67,373 $ 44,254 ===================================== Supplemental disclosure of cash flow information Cash paid during the year for: Income taxes............................................................... $ 212,178 $ 187,809 $ 223,641 ===================================== Interest................................................................... $ 12,871 $ 8,405 $ 2,919 =====================================
See accompanying notes. 25 9 Notes to Consolidated Financial Statements Genuine Parts Company and Subsidiaries December 31, 1997 1. Summary of Significant Accounting Policies - - Principles of Consolidation The consolidated financial statements include the accounts of Genuine Parts Company and all of its subsidiaries (the "Company"). Income applicable to minority interests is included in other expenses. Significant intercompany accounts and transactions have been eliminated in consolidation. - - Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. - - Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. - - Investments The Company has a 23% ownership interest in UAP Inc., a Canadian automotive parts distributor and a 49% interest in a partnership formed by the Company and UAP Inc. Additionally, the Company has a 49% interest in Grupo Auto Todo, a partnership formed by the Company and Auto Todo, a Mexican automotive parts distributor. These investments are accounted for by the equity method of accounting and are not material in relation to the Company's consolidated financial statements. - - 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 $132,092,000 and $124,566,000 higher than reported at December 31, 1997 and December 31, 1996, 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. - - Long-Lived Assets Long-lived assets are periodically reviewed for impairment based on an assessment of future operations. The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. - - Net Income Per Common Share In 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share. Statement 128 replaced the calculation of primary and fully diluted net income per common share with basic and diluted net income per common share. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the year. The computation of diluted net income per common share includes the dilutive effect of stock options and non-vested restricted stock awards. Options to purchase 1,790,000 shares of common stock at $35 per share were outstanding during the second half of 1997 but were not included in the computation of diluted net income per common share because the options' exercise price was greater than the average market price of the common shares. - - New Accounting Standards In 1997, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 130, Reporting Comprehensive Income and No. 131, Disclosures about Segments of an Enterprise and Related Information. These statements, which are effective for fiscal years beginning after December 15, 1997, expand or modify disclosures and will have no impact 26 10 Notes to Consolidated Financial Statements Genuine Parts Company and Subsidiaries on the Company's consolidated financial position, results of operations or cash flows. 2. Credit Facilities The Company has a $100,000,000 unsecured revolving line of credit with a bank which matures in May 1998 and bears interest at the bank's cost of funds rate plus .10% (6.85% at December 31, 1997). At December 31, 1997 and 1996, $36,000,000 and $47,000,000, respectively, was outstanding under this line. The Company also has long term debt which consists of the following:
December 31, 1997 1996 - ----------------------------------------------------------- (in thousands) Five year, unsecured term notes: December 26, 1995, 5.98%, due 2000........................ $ 50,000 $ 50,000 December 27, 1996, Libor plus .25%, due 2001.................. 50,000 50,000 September 18, 1997, 6.125%, due 2002........................ 50,000 -- October 31, 1997, 5.98%, due 2002........................ 50,000 -- Other borrowings..................... 10,160 10,871 -------------------- 210,160 110,871 Current portion included in accrued expenses.................. 670 630 --------------------- $209,490 $110,241 =====================
Interest is paid monthly on the term notes. The 1997 term notes contain provisions whereby the rates may become variable (LIBOR plus .25%) in the year 2000, if such variable rates are higher. Total interest expense for all borrowings was $13,365,000, $8,498,000, and $3,419,000 in 1997, 1996, and 1995, respectively. The Company believes that the fair value of these financial instruments approximates the carrying value. 3. Shareholders' Equity The Company has a Shareholder Protection Rights Agreement which includes the distribution of 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. 4. 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, 1997 (in thousands):
1998............................................ $ 52,024 1999............................................ 40,115 2000............................................ 26,411 2001............................................ 16,884 2002............................................ 12,184 Subsequent to 2002.............................. 18,589 --------- $ 166,207 =========
Rental expense for operating leases was $65,137,000 in 1997; $61,259,000 in 1996; $58,146,000 in 1995. 5. Stock Options and Restricted Stock Awards The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related Interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under FASB Statement No. 123, "Accounting for Stock-Based Compensation," requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. Under the Genuine Parts Company 1988 Stock Option Plan and the Genuine Parts Company 1992 Stock Option and Incentive Plan, the Company has 27 11 Notes to Consolidated Financial Statements Genuine Parts Company and Subsidiaries authorized the grant of options of up to 750,000 and 6,750,000 shares of common stock, respectively. In accordance with stock option plans approved by shareholders, options are granted to key personnel for the purchase of the Company's stock at prices not less than the fair market value of the shares on the dates of grant. Most options may be exercised not earlier than twelve months nor later than ten years from the date of grant. Pro forma information regarding net income and earnings per share is required by Statement 123, which also requires that the information be determined as if the Company had accounted for its employee stock options granted subsequent to December 31, 1994 under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 1997 and 1996, respectively: risk-free interest rates of 6.4% and 6.3%; dividend yield of 2.5% and 2.7%; volatility factor of the expected market price of the Company's common stock of .12, and a weighted-average expected life of the option of 5.4 years and 7.3 years. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows (in thousands except for earnings per share information):
1997 1996 1995 - ---------------------------------------------------------- Pro forma net income...... $338,978 $329,387 $306,908 Pro forma basic net income per common share................... $1.89 $1.81 $1.67 Pro forma diluted net income per common share................... $1.88 $1.81 $1.66
A summary of the Company's stock option activity and related information are as follows:
1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Shares Exercise Shares Exercise Shares Exercise (000's) Price (000's) Price (000's) Price - ---------------------------------------------------------------------------------------------------------------------------- Outstanding at beginning of year........... 2,743 $23 3,318 $23 2,850 $21 Granted.................................... 1,790 35 18 31 750 27 Exercised.................................. (907) 20 (555) 19 (273) 18 Forfeited.................................. (38) 21 (38) 21 (9) 23 ------ ------ ------ Outstanding at end of year................. 3,588 $29 2,743 $23 3,318 $23 ====== ====== ====== Exercisable at end of year................. 1,363 $24 2,106 $23 2,006 $21 ====== ====== ====== Weighted-average fair value of options granted during the year................. $6.13 $6.31 $ 6.37 ====== ====== ====== Shares available for future grants......... 1,572 3,324 3,304 ====== ====== ======
28 12 Notes to Consolidated Financial Statements Genuine Parts Company and Subsidiaries Exercise prices for options exercised during 1997 ranged from approximately $20 to $26. Exercise prices for options outstanding as of December 31, 1997 ranged from approximately $17 to $35. The weighted-average remaining contractual life of those options is 8 years. On March 31, 1994, the Company entered into restricted stock agreements with two officers which provide for the award of up to 150,000 and 75,000 shares, respectively, during the period 1994 through 1998 based on the Company achieving certain increases in net income per common share and stock price levels. Through December 31, 1997, the two officers have earned 69,000 and 34,500 shares, respectively. The Company recognizes compensation expense equal to the fair market value of the stock on the award date over the remaining vesting period which expires on March 31, 2004. 6. Income Taxes Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities are as follows:
1997 1996 - ----------------------------------------------------------- (in thousands) Employee and retiree benefits........ $ 53,228 $40,885 Property, plant and equipment........ 25,704 24,052 Merchandise inventories.............. 1,311 1,730 Other ............................... 8,806 8,721 -------------------- $ 89,049 $75,388 ====================
The components of income tax expense are as follows:
1997 1996 1995 - ---------------------------------------------------------- (in thousands) Federal: Current................ $171,676 $164,585 $155,895 Deferred............... 13,843 13,930 12,340 State..................... 37,684 36,642 33,391 ------------------------------ $223,203 $215,157 $201,626 ==============================
The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:
1997 1996 1995 - ---------------------------------------------------------- (in thousands) Statutory rate applied to pre-tax income..... $197,960 $190,831 $178,778 Plus state income taxes, net of Federal tax benefit............... 24,494 23,818 21,704 Other ................... 749 508 1,144 ------------------------------ $223,203 $215,157 $201,626 ==============================
7. 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:
1997 1996 - ------------------------------------------------------------ (in thousands) Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $281,753 in 1997 and $266,263 in 1996 ............ $(291,650) $(274,607) ======================= Projected benefit obligation for service rendered to date........ (432,708) (413,657) Plan assets at fair value, primarily bonds and equity securities .... 590,733 487,753 ----------------------- Plan assets in excess of projected benefit obligation.............. 158,025 74,096 Unrecognized prior service cost.... (26,550) (20,794) Unrecognized net (gain) loss from past experience different from that assumed and effects of changes in assumptions.......... (2,232) 49,347 Unrecognized net transition obligation...................... 1,041 1,302 ---------------------- Net prepaid pension cost........... $ 130,284 $ 103,951 ======================
29 13 Notes to Consolidated Financial Statements Genuine Parts Company and Subsidiaries Net pension cost (income) included the following components:
1997 1996 1995 - ---------------------------------------------------------- (in thousands) Service cost........... $ 15,301 $ 13,723 $ 10,710 Interest cost.......... 30,147 28,431 26,032 Actual return on plan assets............. (105,772) (55,058) (90,127) Net amortization and deferral............ 55,568 12,202 51,622 -------------------------------- Net periodic pension (income) cost....... $ (4,756) $ (702) $ (1,763) ================================
Assumptions used in the accounting for the defined benefit plan are as follows:
1997 1996 1995 - --------------------------------------------------------------- Weighted-average discount rate........... 7.40% 7.40% 7.40% Rate of increase in future compensation levels..... 4.15% 4.40% 5.00% Expected long-term rate of return on assets..... 10.00% 9.75% 9.50%
The changes in the above assumptions had no significant effect on the projected benefit obligation at December 31, 1997 and 1996. At December 31, 1997, the plan held 845,111 shares of common stock of the Company with a market value of $28,680,959. 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 $3,953,000 in 1997, $3,743,000 in 1996, and $3,556,000 in 1995, respectively. 8. Industry Data The industry data for the past five years presented on page 21 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 throughout the United States. 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 from investees 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 and headquarters' facilities and equipment. 9. Stock Split On February 17, 1997, the Board of Directors approved a three-for-two stock split effected in the form of a 50% stock dividend and paid to shareholders of record on March 14, 1997. In connection with the stock dividend, $60,016,145 was transferred to common stock from retained earnings. All applicable amounts reflected herein give retroactive effect to the stock split. 30 EX-21 9 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY
JURISDICTION OF NAME % OWNED INCORPORATION - ---- ------- ------------- Balkamp 89.61 Indiana Berry Bearing Company 100.0 Illinois Genuine Parts Holdings, Ltd. 100.0 Alberta, Canada Genuine Parts Company, Ltd. 100.0 Alberta, Canada Oliver Industrial, Ltd. 100.0 Alberta, Canada GPC Mexico, S.A. de C.V. 100.0 Puebla, Mexico GPC Trading Corporation 100.0 Virgin Islands Manco Trucking 100.0 Illinois Motion Industries 100.0 Delaware Motion Industries (Canada), Inc. 100.0 Ottawa, Ontario S. P. Richards Company 100.0 Georgia Horizon Data Supply, Inc. 100.0 Nevada Horizon Data Corporation South 100.0 Florida 1st Choice Auto Parts, Inc. 51.0 Georgia A & M Parts, Inc. 51.0 Georgia Ann Arbor Auto Supply, Inc. 51.0 Georgia Antioch Automotive Supply, Inc. 51.0 Georgia Auto & Truck Parts of Santa Fe, Inc. 51.0 Georgia Auto Paint & Supply Co. of Lexington, Inc. 51.0 Georgia Auto Parts of Big Creek, Inc. 51.0 Georgia Auto Parts of Chanute, Incorporated 51.0 Georgia Auto Parts of Daytona, Inc. 51.0 Georgia Auto Parts of East Brunswick, Inc. 51.0 Georgia Auto Parts of Jupiter, Inc. 51.0 Georgia Auto Parts of Palmdale, Inc. 51.0 Georgia Autobahn Supply of River Falls, Inc. 51.0 Georgia Automotion Parts Corp. 51.0 Georgia Automotive Parts of Quitman, Inc. 51.0 Georgia Back Bay Auto Parts, Inc. 51.0 Georgia Bad Axe Auto Supply, Inc. 51.0 Georgia Big Horn Auto Parts, Inc. 51.0 Georgia Bonney Lake Auto & Truck Parts, Inc. 51.0 Georgia Brigham Automotive Supply, Inc. 51.0 Georgia C & O Auto Parts, Inc. 51.0 Georgia Cal-Davis Auto & Truck Parts, Inc. 51.0 Georgia Carolina Piedmont Corporation 51.0 Georgia Cass City Auto & Truck, Inc. 70.0 Georgia Cedar City Auto Parts, Inc. 51.0 Georgia Central Motor Parts, Inc. 51.0 Georgia Central Nebraska Supply Co. 51.0 Georgia Cereal City Auto Parts, Inc. 51.0 Georgia Chemung River Auto Supply, Inc. 51.0 Georgia CKT Motive Parts, Inc. 51.0 Georgia Clermont-Brown Automotive Supply, Inc. 51.0 Georgia
1 2 Clinton County Auto Supply, Inc. 51.0 Georgia Cochise Auto Parts, Inc. 51.0 Georgia College Station Auto Parts Co. 51.0 Georgia Colorado Motor Parts, Inc. 51.0 Georgia Copps Hill Auto Parts, Inc. 51.0 Georgia Creswell Auto & Truck Supply, Inc. 51.0 Georgia Cross Timbers Auto Supply, Inc. 51.0 Georgia Crystal River Auto Parts, Inc. 51.0 Georgia Diamond G Auto Parts of Beaumont, Inc. 51.0 Georgia East Tenn Automotive Supply, Inc. 51.0 Georgia El Campo Parts, Inc. 51.0 Georgia Elkton Auto Supply, Inc. 51.0 Georgia Fairfield Automotive Supply, Inc. 51.0 Georgia Farm Auto and Truck Parts, Inc. 51.0 Georgia First Choice Automotive, Inc. 100.0 Georgia First Class Auto Parts, Inc. 70.0 Georgia First Settlement Automotive, Inc. 51.0 Georgia Foothills Auto Supply, Inc. 51.0 Georgia Franklin County Supply, Inc. 51.0 Georgia Gainesville Auto Supply, Inc. 51.0 Georgia Gila Automotive Supply, Inc. 51.0 Georgia Glenwood Springs Auto Parts, Inc. 51.0 Georgia Gold Stream Auto Parts, Inc. 51.0 Georgia Grand Canyon Auto Supply, Inc. 51.0 Georgia Grand Prairie Auto Supply, Inc. 70.0 Georgia Grantsville Auto Parts, Inc. 51.0 Georgia Gray's Harbor Auto & Truck, Inc. 51.0 Georgia Great Miami Automotive Parts, Inc. 51.0 Georgia Grimm Management Resources, Inc. 51.0 Georgia Hanford Auto & Truck Parts, Inc. 51.0 Georgia Hansens Automotive Supply, Inc. 51.0 Georgia Hastings Auto Supply, Inc. 51.0 Georgia Heartland Automotive Parts 51.0 Georgia High Desert Automotive Supply, Inc. 51.0 Georgia Holton Auto Parts, Inc. 51.0 Georgia Hood Canal Auto Parts, Inc. 51.0 Georgia Houghton Lake Auto Supply, Inc. 51.0 Georgia Huntsville Parts & Equipment, Inc. 51.0 Georgia Hyland Hill Automotive Supply, Inc. 51.0 Georgia Innovative Parts, Incorporated 51.0 Georgia JBH Auto Supply, Incorporated 51.0 Georgia Kane Auto Parts, Inc. 51.0 Georgia L & P Automotive Supply, Inc. 51.0 Georgia Labelle Auto and Truck Supply, Inc. 51.0 Georgia Lake City Auto Parts, Inc. 51.0 Georgia Lake Havasu City Auto Parts, Inc. 51.0 Georgia Lana Lou Auto Parts, Inc. 51.0 Georgia Lauderdale County Supply, Inc. 51.0 Georgia Little Sioux Automotive Supply, Inc. 51.0 Georgia
2 3 Livonia Auto Supply, Inc. 51.0 Georgia Lodi Automotive Supply, Inc. 51.0 Georgia Luke's Auto Supply, Inc. 51.0 Georgia Marion Auto Supply, Inc. 51.0 Georgia Marion Automotive Parts, Incorporated 51.0 Georgia McKinney Parts, Inc. 51.0 Georgia McMinn County Automotive, Inc. 51.0 Georgia Mid-Town Auto & Machine Shop, Inc. 100.0 Georgia Mid-Valley Automotive, Inc. 51.0 Georgia Middletown Parts Unlimited, Inc. 51.0 Georgia Modesto Auto and Truck Parts, Inc. 51.0 Georgia Montana Motor Service, Inc. 51.0 Georgia Motor Innovations, Inc. 51.0 Georgia Muscatine Auto Parts, Inc. 100.0 Georgia N. V. Automotive Supply, Inc. 51.0 Georgia Nacogdoches Auto Parts, Inc. 51.0 Georgia Northwest Auto Parts, Inc. 51.0 Georgia Oberlin Auto Parts, Inc. 51.0 Georgia Outland Supply, Inc. 51.0 Georgia Overton County Parts Center, Inc. 51.0 Georgia Parts & Company of Selma, Inc. 51.0 Georgia Parts Connection, Inc. 51.0 Georgia Parts of Columbus, Inc. 51.0 Georgia Parts of Hillsville, Inc. 70.0 Georgia Parts Unlimited, Inc. 51.0 Georgia Peninsula Parts Company 51.0 Georgia Petoskey Automotive Center, Inc. 51.0 Georgia Pima Auto Supply, Inc. 51.0 Georgia Polyco Corporation 70.0 Georgia Port Charlotte Auto Supply, Inc. 51.0 Georgia Potomac Creek Auto Supply, Inc. 51.0 Georgia Prairie Hills Corp. 51.0 Georgia Preferred Parts Company 51.0 Georgia Prescott Auto Parts, Inc. 51.0 Georgia Pride City Auto Parts, Inc. 51.0 Georgia Pueblo Automotive, Inc. 51.0 Georgia Quality Auto Parts & Paint Supply, Inc. 51.0 Georgia Quality Auto Parts of Los Lunas, Incorporated 51.0 Georgia R.K.R., Inc. 51.0 Georgia Razorback Enterprises, Inc. 51.0 Georgia Rialto Auto Parts, Inc. 51.0 Georgia Rio Verde Auto Parts, Inc. 51.0 Georgia River Valley Auto Parts, Inc. 51.0 Georgia Riverside Auto Parts, Inc. 51.0 Georgia RKKC, Inc. 51.0 Georgia Rutherford Auto Parts 51.0 Georgia San Joaquin Parts Corporation, Inc. 51.0 Georgia San Juan Quality Parts, Inc. 51.0 Georgia Seaside Auto Parts, Inc. 51.0 Georgia Sevier County Automotive, Inc. 51.0 Georgia
3 4 Smithfield Auto Parts, Inc. 51.0 Georgia South Central Kansas Automotive, Inc. 51.0 Georgia Southern Indiana Parts, Inc. 51.0 Georgia Spooner Auto Parts, Inc. 51.0 Georgia Standard Motor Parts of Reidsville, Inc. 51.0 Georgia Sugar River Auto Parts, Inc. 51.0 Georgia Sumner Auto & Truck, Inc. 51.0 Georgia Sweet Home Auto & Truck Supply, Inc. 51.0 Georgia Terrebonne Parish Auto Parts, Inc. 51.0 Georgia The Carolina Ritchie Company 51.0 Georgia The Flowers Company 51.0 North Carolina The Parts House, Inc. 51.0 Georgia The Parts Store, Inc. 51.0 Georgia The Rock Parts Co. 70.0 Georgia The Wilbur Group, Inc. 51.0 Georgia Thousand Oaks Auto Parts, Inc. 51.0 Georgia Timberland Auto & Truck Parts, Inc. 51.0 Georgia TNT Supply, Inc. 51.0 Georgia Twin Lake Parts & Equipment, Inc. 51.0 Georgia Union County Auto Parts, Inc. 51.0 Georgia Uptergrove Auto Supply, Inc. 51.0 Georgia Vicksburg Automotive, Inc. 51.0 Georgia Viking Auto Parts, Inc. 51.0 Georgia Warren County Automotive, Inc. 51.0 Georgia Warrick Automotive Supply, Inc. 51.0 Georgia Watsonville Auto Supply, Inc. 51.0 Georgia West Monroe Auto Parts, Inc. 51.0 Georgia West Volusia Auto Supply, Inc. 51.0 Georgia Wharton Auto & Truck Parts, Inc. 51.0 Georgia Whitney Point Unit Parts, Inc. 51.0 Georgia Wisota Auto Parts, Inc. 51.0 Georgia Yorkville Automotive Supply, Inc. 51.0 Georgia
4 EX-23 10 CONSENT OF INDEPENDENT AUDITS 1 Exhibit 23 - Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Genuine Parts Company of our report dated February 4, 1998, included in the 1997 Annual Report to Shareholders of Genuine Parts Company. We also consent to the incorporation by reference in the Registration Statements of Genuine Parts Company listed below of our report dated February 4, 1998, with respect to the consolidated financial statements of Genuine Parts Company incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 1997. Registration Statement No. 33-30982 on Form S-8 pertaining to the 1988 Stock Option Plan Registration Statement No. 33-62512 on Form S-8 pertaining to the 1992 Stock Option and Incentive Plan Registration Statement No. 333-21969 on Form S-8 pertaining to the Directors' Deferred Compensation Plan /s/ Ernst & Young LLP Atlanta, Georgia March 6, 1998 EX-27 11 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GENUINE PARTS COMPANY FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1997 DEC-31-1997 72,823 0 686,551 1,849 1,321,597 2,093,551 372,514 258,634 2,754,363 556,938 209,490 0 0 178,948 1,680,520 2,754,363 6,005,245 6,005,245 4,178,642 4,178,642 1,247,638 0 13,365 565,600 223,203 342,397 0 0 0 342,397 1.91 1.90
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