Index to Financial Statements

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

 þ
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Or

 ¨For the fiscal year ended December 31, 2010
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to          

For the transition period from              to             

Commission file number: 1-5690

GENUINE PARTS COMPANY

(Exact name of registrant as specified in its charter)

Georgia 58-0254510
Georgia
58-0254510

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

2999 Circle 75 Parkway, Atlanta, Georgia
30339
(Address of principal executive offices) 30339
(Zip Code)

770-953-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, $1 par value per share New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  o¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  o¨    No  þ

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  þ    No  o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  o¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation 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 thisForm 10-K or any amendment to thisForm 10-K.    þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þAccelerated filer  o¨Non-accelerated filer  o¨Smaller reporting company  o¨

(Do not check if a smaller reporting company)

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).    Yes  o¨    No  þ

As of June 30, 2010,2013, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $6,009,155,000$11,558,411,000 based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

  
Class

Outstanding at February 10, 2011

18, 2013

Common Stock, $1 par value per share  157,656,559153,727,213 shares

Specifically identified portions of the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 18, 201128, 2014 are incorporated by reference into Part III of thisForm 10-K.

Index to Financial Statements

PART I.

TABLE OF CONTENTS

ITEM 1.
PART I.
ITEM 1. BUSINESS.
ITEM 1A. RISK FACTORS.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
ITEM 2. PROPERTIES.
ITEM 3. LEGAL PROCEEDINGS.
ITEM 4. [Removed and Reserved.]
PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
ITEM 9A. CONTROLS AND PROCEDURES.
ITEM 9B. OTHER INFORMATION.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EX-10.25
EX-10.26
EX-10.27
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENTBUSINESS.

PART I.
ITEM 1.BUSINESS.
Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials through our four operating segments, each described in more detail below. In 2010,2013, business was conducted from approximately 2,600 locations throughout the United States, in Canada and in Mexico from approximately 2,000 locations.and, effective April 1, 2013, Australia and New Zealand. As of December 31, 2010,2013, the Company employed approximately 29,50037,500 persons.

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.

Financial Information about Segments.    For financial information regarding segments as well as our geographic areas of operation, refer to Note 10 of Notes to Consolidated Financial Statements beginning onpage F-1.

Available Information..    The Company’s internet website can be found at www.genpt.com. The Company makes available, free of charge through its internet website, access to the Company’s annual reports onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K, proxy statements and other reports, and any amendments to these documents, as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”). Additionally, our corporate governance guidelines, codes of conduct and ethics, and charters of the Audit Committee and the Compensation, Nominating and Governance Committee of our Board of Directors, as well as information regarding our director nominating process and our procedure for shareholders and other interested parties to communicate with our Board of Directors, are available on our website.

In Part III of thisForm 10-K, we incorporate certain information by reference to our proxy statement for our 20112014 annual meeting of shareholders. We expect to file that proxy statement with the SEC on or about February 25, 2011,27, 2014, and we will make it available online at the same time athttp://www.proxydocs.com/gpc. Please refer to the proxy statement for the information incorporated by reference into Part III of this From 10-K when it is available.

AUTOMOTIVE PARTS GROUP

The Automotive Parts Group, the largest division of the Company, distributes automotive replacement parts and accessory items. In addition to nearly 450,000 available part numbers, the Company offers complete inventory, cataloging, marketing, training and other programs in the automotive aftermarket. The Company, as a result of its acquisition of Quaker City Motor Parts Co. in May 2012, is the largestsole member with approximately 95% ownership, of the National Automotive Parts Association (“NAPA”), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts. In addition to over 420,000 available part numbers, the Company, in conjunction with NAPA, offers complete inventory, cataloging, marketing, training and other programs in the automotive aftermarket.

During 2010,2013, 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 and operated in the United States by the Company; NAPA and Traction automotive parts distribution centers and auto parts stores in the United States and Canada owned and operated by the Company and NAPA Canada/UAP Inc. (“NAPA Canada/UAP”), awholly-owned subsidiary of the Company; auto parts stores and distribution centers in the United States operated by corporations in which the Company owned either a noncontrolling or controlling interest; auto parts stores in Canada operated by corporations in which UAP owns a 50% interest; import automotive parts distribution centers in the United States owned by the Company and operated by its Altrom America division; import automotive parts distribution centers in Canada owned and operated by Altrom Canada Corporation (“Altrom Canada”), awholly-owned subsidiary of the Company; distribution centers in the United States owned by Balkamp, Inc. (“Balkamp”), a wholly-owned subsidiary of the Company; rebuilding and distribution plantsfacilities in the United

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Index to Financial Statements

States owned by the Company and operated by its Rayloc division; and automotive parts distribution centers and automotive parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. (“Auto Todo”), a wholly-owned subsidiary of the Company.


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In addition, effective April 1, 2013, the Company completed the purchase of the remaining 70% stake of Exego Group, subsequently renamed GPC Asia Pacific, for approximately $590 million (USD), net of cash acquired of $70 million, and the assumption of approximately $230 million (USD) in net debt. The purchase was funded using a combination of cash on hand and borrowings under existing credit facilities. The Company had previously purchased a 30% stake in GPC Asia Pacific on January 1, 2012 for approximately $166 million (USD) in cash. GPC Asia Pacific, headquartered in Melbourne, Australia, is a leading aftermarket distributor of automotive replacement parts and accessories in Australasia, with annual revenues of approximately $1.1 billion (USD) and a company-owned store footprint of 460 locations across Australia and New Zealand. In 2012, the Company accounted for this investment under the equity method of accounting.

The Company has a 15% interest in Mitchell Repair Information (“MRIC”), a subsidiary of Snap-on Incorporated. MRIC is a leading automotive diagnostic and repair information company with over 40,000 North American subscribers linked to its services and information databases. MRIC’s core product, “MitchellON-DEMAND,” ON-DEMAND”, is a premier electronic repair information source in the automotive aftermarket.

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, SUVs, buses, motorcycles, recreational vehicles and farm vehicles. In addition, the Company distributes replacement parts for small engines, 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 approximately 100 different suppliers, approximately 52%50% of 20102013 automotive parts inventories were purchased from 10 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.

Distribution System..    In 2010,2013, the Company operated 5862 domestic NAPA automotive parts distribution centers located in 3941 states and approximately 1,0001,100 domestic company-owned NAPA AUTO PARTS stores located in 4246 states. At December 31, 2010,2013, the Company owned either a noncontrolling or controlling interest in twosix corporations, which operated approximately 19114 auto parts stores in three states, and a wholly-owned subsidiary corporation operating three distribution centers in twonine states.

NAPA Canada/UAP, founded in 1926, is a Canadian leader in the distribution and marketing of replacement parts and accessories for automobiles and trucks. NAPA Canada/UAP employs approximately 3,5003,800 people and operates a network of 12 distribution centers supplying approximately 590594 NAPA stores and 98104 Traction wholesalers. Traction is a supplier of parts to small and large fleet owners and operators and, together with NAPA stores, is a significant supplier to the mining and forestry industries. The NAPA stores and Traction wholesalers in Canada include approximately 189187 company owned stores, 3012 joint venture orventures and 28 progressive owners in which NAPA Canada/UAP owns a 50% interest and approximately 469471 independently owned stores. NAPA and Traction operations supply bannered installers and independent installers in all provinces of Canada, as well as networks of service stationstations and repair shops operating under the banners of national accounts. UAP is a licensee of the NAPA® name in Canada.

In Canada, Altrom Canada Corp. operates 1513 import automotive parts distribution centers. In the United States, Altrom America operates two import automotive parts distribution centers.

In Mexico, Auto Todo owns and operates 1011 distribution centers, four auto parts stores and four tire centers. Auto Todo is a licensee of the NAPA® name in Mexico.

In Australia and New Zealand, GPC Asia Pacific is leading distributor of automotive replacement parts and accessories. GPC Asia Pacific operates eight distribution centers, 399 Repco stores and 61 branches associated with the Ashdown Ingram, Motospecs and McLeod operations.

2

Index to Financial Statements

The Company’s domestic distribution centers serve approximately 4,7004,900 independently owned NAPA AUTO PARTS stores located throughout the United States. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, these independent automotive parts stores account for approximately 66%65% of the Company’s total U.S. Automotive sales and 27%24% of the Company’s total sales, with no automotive parts store or group of automotive parts stores with individual or common ownership accounting for more than 0.25% of the total sales of the Company.

Products..    Distribution centers have access to over 420,000446,000 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 they are received. The majority of sales are onpaid from statements with varied terms that require payment within 30 days of the statement date.and conditions. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA® name, a mark licensed to the Company by NAPA, which is important to the sales and marketing of these products. Traction sales also include products distributed under the HD Plus name, a proprietary line of automotive parts for the heavy duty truck market.


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Related Operations..    Balkamp, a wholly-owned subsidiary of the Company, 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 45,000 products, which constitute the “Balkamp” line of products that are distributed tothrough the members of NAPA.NAPA system. These products are categorized into over 250175 different product groupscategories purchased from approximately 600450 domestic suppliers and over 100 foreign manufacturers. Balkamp has two distribution centers located in Plainfield, Indiana, and West Jordan, Utah. In addition, Balkamp operates two Redistribution Centersredistribution centers that provide the NAPA system with over 1,9001,100 SKUs of oils chemicals and procurement items.chemicals. BALKAMP®, a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization. Balkamp has three distribution centers located in Indianapolis and Plainfield, Indiana, and West Jordan, Utah.

The Company, through its Rayloc division, operates four facilities where certain small automotive parts are rebuilt or distributed tothrough the members of NAPA system under the NAPA® brand name. Rayloc® is a mark licensed to the Company by NAPA.

The Company’s Heavy Vehicle Parts Group operates as TW Distribution, with one warehouse location in Atlanta, Georgia, which serves 2322 Traction Heavy Duty parts stores in the United States, of which 1514 are company-owned and eight are independently owned. This group distributes heavy vehicle parts through the NAPA system and direct to small fleet owners and operators.

Segment Data..    In the year ended December 31, 2010,2013, sales from the Automotive Parts Group were approximately 50%53% of the Company’s net sales, as compared to 52%49% in 20092012 and 48% in 2008.2011. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements set forth beginning onpage F-1.

Service to NAPA AUTO PARTS Stores..    The Company believes that the quality and the range of services provided to its automotive parts customers constitute a significant advantage for its automotive parts distribution system. Such services include fast and frequent delivery, obsolescence protection, parts cataloging (including the use of electronic NAPA AUTO PARTS catalogs) and stock adjustment through a continuing parts classification system which, as initiated by the Company from time to time, allows independent retailers (“jobbers”) 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, as well as marketing conferences and seminars, sales and advertising manuals and training programs. Point of sale/inventory management is available through TAMS® (Total Automotive Management Systems), a computer system designed and developed by the Company for the NAPA AUTO PARTS stores.

In association with NAPA, the

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

3

Index to Financial Statements

comprises an important feature of the inventory management services that the Company makes available to its NAPA AUTO PARTS store customers. Over the last 1020 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..    The automotive parts distribution business is highly competitive. The Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those that they build themselves), automobile dealers, warehouse clubs and large automotive parts retail chains. In addition, the Company competes with the distributing outlets of parts manufacturers, oil companies, mass merchandisers, including national retail chains, and with other parts distributors and retailers. The Automotive Parts Group competes primarily on product offering, service, brand recognition and price. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

NAPA..    The Company is athe sole 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


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sells automotive parts, functions as a trade association whose memberssole member in 20102013 owned and operated 6462 distribution centers located throughout the United States, 58 of which were owned and operated by the Company.States. NAPA develops marketing concepts and programs that may be used by its members.members which, at December 31, 2013, includes only the Company. It is not involved in the chain of distribution.

Among the automotive lines within the NAPA system that each NAPA memberthe Company purchases and distributes are certain lines designated, cataloged, advertised and promoted as “NAPA” lines. The members areCompany is not required to purchase any specific quantity of parts so designated and may, and do,does, purchase competitive lines from other supply sources.

The Company and the other NAPA members useuses the federally registered trademark NAPA® as part of the trade name of theirits distribution centers and parts stores. The Company contributes to NAPA’s national advertising program, which is designed to increase public recognition of the NAPA name and to promote NAPA product lines.

The Company is a party, together with otherthe former 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 severalthe Company and former 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 is operated as Motion Industries, Inc. (“Motion”), a wholly-owned subsidiary of the Company headquartered in Birmingham, Alabama. Motion distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission, industrial automation, hose, hydraulic and pneumatic components, industrial supplies and material handling products to MRO (maintenance, repair and operation) and OEM (original equipment manufacturer) customers throughout the United States, Canada and Mexico.

In Canada, industrial parts are distributed by Motion Industries (Canada), Inc. (“Motion Canada”) and BC Bearing Engineers Limited.. The Mexican market is served by Motion Mexico S de RL de CV (“Motion Mexico”). These organizations operate in the Company’s North American structure.

In March 2010, the Company acquired BC Bearing Engineers Limited and its wholly-owned subsidiary, US Bearings & Things, Inc., a long-established bearing and power transmission distributor. BC Bearing Engineers joined Motion Industries with 22 locations throughout western Canada, and U.S. Bearings & Things with 21 branches in the western United States. In 2010, the Company also acquired TechCan Services, a full-service asset repair, fabrication and engineering business located in Alberta, Canada.

As of December 31, 2010,2013, the Industrial Parts Group served more than 140,000150,000 customers in all types of industries located throughout North America, including the food and beverage, forest products, primary metal, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries; as well as strategically targeted specialty industries such as power generation, wastewater treatment facilities, wind power generation, solar power, government projects, pipelines, railroad, ports, and others. Motion services all manufacturing and processing industries with access to a database of 4.35.6 million parts. Additionally, late in 2010, Motion Industries was awardedprovides U.S. government agencies access to approximately 600,000 products and replacement parts through a Government Services Administration (GSA) schedule becomingschedule.

4

Index to Financial Statements

In the fourth quarter of 2013, Motion made two strategic acquisitions. Effective October 26, 2013, Motion acquired the stock of AST Bearings LLC (“AST”), with facilities in Montville, New Jersey and Irvine, California. AST is an industrial distributor specializing in high-precision, miniature and specialty bearings, bushings and related services, with annual revenues of approximately $35 million. Effective December 2, 2013, Motion acquired the assets of Paragon Service & Supply, Inc. (“Paragon”), located in Lima, Ohio. Paragon is a supplier to provide government agenciesdistributor of industrial cutting tools, abrasives and metal-working equipment, with approximately $15 million in annual revenues.

Effective January 31, 2014, Motion Canada acquired Commercial Solutions Inc. (“CSI”), which at that time was a public company traded on the Toronto Stock Exchange under the ticker symbol “CSA”. CSI’s shares were delisted following the acquisition. Headquartered in Edmonton, Alberta, CSI is an independent national distributor of industrial supplies, including bearings and power transmission products, complete solutions for drilling rigs and industrial and safety supplies. Its customers represent a broad cross-section of industries and are served from 22 locations across Canada and one in the U.S. accessCSI is expected to more than 985,000 product and replacement parts.

This groupgenerate approximately $100 million in annual revenues.

The Industrial Parts Group provides customers with supply chain efficiencies achieved through inventory management and logistical solutions coupled with Motion Industries’Motion’s vast product knowledge and system capabilities. The Company meets the MRO demand of a large and fragmented market with high levels of service in the areas of asset management, inventory and logistics management, product application and utilization management processes. A highly developed supply chain with vendor partnerships and customer connectivity are enhanced by Motion’s leadinge-business capabilities, such as MiSupplierConnect, which provides integration between the Company’s information technology network and suppliers’ systems, creating numerous benefits for both the supplier and customer.


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Distribution System..    In North America, the Industrial Parts Group operated 488511 branches, 915 distribution centers and 4642 service centers as of December 31, 2010.2013. The distribution centers stock and distribute more than 92,000240,000 different items purchased from more than 4681,100 different suppliers. The service centers provide hydraulic, hose and mechanical repairs for customers. Approximately 37%34% of 20102013 total industrial product purchases were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s branches located in 4749 states, Puerto Rico, nine provinces in Canada, and Mexico. Each branch has warehouse facilities that stock significant amounts of inventory representative of the products used by customers in the respective market area served.

Products..    The Industrial Parts Group distributes a wide variety of parts and products to its customers, primarily industrial concerns. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers, electric motors, and industrial supplies. In recent years, Motion expanded its offering to include systems and automation products in response to the increasing sophistication of motion control and process automation for full systems integration of plant equipment. Manufacturing trends and government policies have led to opportunities in the “green” and energy-efficient product markets, leading tofocusing on product offerings such as energy-efficient motors and drives, recyclable and environmentally friendly parts and supplies. The nature of this group’s business demands the maintenance of adequate inventories and the ability to promptly meet demanding delivery requirements. Virtually all of the products distributed are installed by the customer or used in plant and facility maintenance activities. 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. Motion has ongoing purchase agreements with existing customers that represent approximately 40%50% of the annual sales volume.

Supply Agreements..    Non-exclusive distributor agreements are in effect with most of the Industrial Parts Group’s suppliers. The terms of these agreements vary; however, it has been the experience of the Industrial Parts 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. The CompanyMotion has return privileges with most of its suppliers, which has protected the Company from inventory obsolescence.

Segment Data..    In the year ended December 31, 2010,2013, sales from the Company’s Industrial Parts Group approximated 31% of the Company’s net sales, as compared to 29%34% in 20092012 and 32%33% in 2008.2011. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements set forth beginning onpage F-1.

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Index to Financial Statements

Competition..    The industrial parts distribution business is highly competitive. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, general line distributors and others who provide similar services. To a lesser extent, the Industrial Parts Group competes with manufacturers that sell directly to the customer. The Industrial Parts Group competes primarily on the breadth of product offerings, service and price. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

OFFICE PRODUCTS GROUP

The Office Products Group, operated through S. P. Richards Company (“S. P. Richards”), a wholly owned subsidiary of the Company, is headquartered in Atlanta, Georgia. S. P. Richards is engaged in the wholesale distribution of a broad line of office and other business related products to business product resellers thatthrough a diverse customer base of resellers. These products are used in the daily operation ofhomes, businesses, schools, offices, and other institutions. Office products fall into the general categories of computer supplies, imaging products, office furniture, office machines, general office products, school supplies, cleaning, janitorial, sanitation and breakroom supplies, safety and security items, healthcare products and disposable food service products.

The Office Products Group is represented in Canada through S. P. Richards Canada, a wholly-owned subsidiary of the Company headquartered near Toronto, Ontario. S. P. Richards Canada services office product resellers throughout Canada from locations in Vancouver, Toronto, Calgary, Edmonton and Winnipeg.

Effective February 1, 2014, S. P. Richards acquired the assets of Garland C. Norris Company, Inc. (“GCN”), headquartered in Apex, North Carolina. GCN is a regional wholesale distributor of food service disposables and janitorial and cleaning supplies, with annual revenues of approximately $35 million.

Distribution System..    The Office Products Group distributes more than 50,00055,000 items to nearly 4,000 business productover 4,300 resellers and distributors throughout the United States and Canada from a network of 4341 distribution centers. In 2010, the Company completed the installation of new pick to voice technology in all U.S. distribution centers. In addition, new conveyors with inline scales and automated sortation were installed in four distribution centers and energy


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conservation projects creating better lighting, lower energy usage and usage of motion sensitive lighting were completed in 12 distribution centers. This group’s network of strategically located distribution centers provides overnight delivery of the Company’s comprehensive product offering. Approximately 50%47% of the Company’s 20102013 total office products purchases were made from 10 major suppliers.

The Office Products Group sells strictly to resellersa wide variety of office products.resellers. These resellers include independently owned office product dealers, national office product superstores and mass merchants, large contract stationers, mail order companies, Internet resellers, college bookstores, military base stores, office furniture dealers, value-added technology resellers, business machine dealers, janitorial and college bookstores.sanitation supply distributors, safety product resellers and food service distributors. Resellers are offered comprehensive marketing programs, which include print and electronic catalogs and flyers, electronic content for reseller websites, and education and training resources.

In addition, market analytics programs are made available to qualified resellers.

Products..    The Office Products Group distributes computer supplies including storage media, printer supplies and computer accessories; office furniture including desks, credenzas, chairs, chair mats, partitions, filesfile cabinets and computer furniture; office machines including telephones, answering machines, calculators, fax machines, multi-function copiers, printers, digital cameras, televisions, laminators and shredders; general office supplies including desk accessories, business forms, accounting supplies, binders, filing supplies, report covers, writing instruments, envelopes, note pads, copy paper, mailroom and shipping supplies, drafting supplies and audiovisual supplies; school supplies including bulletin boards, teaching aids and art supplies; healthcare products;products including exam room supplies and accessories; janitorial supplies includingand cleaning supplies, paper towels and trash can liners;supplies; safety supplies; disposable food service products; and breakroom supplies including napkins, utensils, snacks and beverages. S. P. Richards has return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.

While the Company’s inventory includes products from over 400nearly 600 of the industry’s leading manufacturers worldwide, S. P. Richards also markets products under its eight proprietary brands. These brands include: SPARCOSparcotmtm, an economical line of office supply basics; Compucessory®, a line of computer accessories; Lorelltmtm, a line of office furniture; NATURE SAVERNatureSaver®, an offering of recycled products; Elite Image®, a line of new and remanufactured toner cartridges, premium papers and labels; Integratmtm, a line of writing instruments; Genuine Joe®, a line

6

Index to Financial Statements

of cleaning and breakroom products; and Business Sourcetm®, a line of basic office supplies available only to independent resellers. The Company launched itsThrough the Company’s FurnitureAdvantagetmtm program, in 2010 whichS. P. Richards provides resellers with an additional 6,00011,000 furniture items made available to consumers in 7 to 10 business days. The Company also introduced PrintSmart

tm, a fully featured managed print solution allowing resellers to serve this growing segment of the market.

Segment Data..    In the year ended December 31, 2010,2013, sales from the Company’s Office Products Group approximated 15%12% of the Company’s net sales, as compared to 16%13% in 20092012 and 2008.14% in 2011. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements set forth beginning onpage F-1.

Competition..    The office products distribution business is highly competitive. In the distribution of its product offering to resellers, S. P. Richards competes with many other wholesale distributors, as well as with certain manufacturers of office products. S. P. Richards competes primarily on price, product offerings, service, marketing programs and brand recognition. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

ELECTRICAL/ELECTRONIC MATERIALS GROUP

The Electrical/Electronic Materials Group was formed on July 1, 1998 through the acquisition of EIS, Inc. (“EIS”), a wholly-owned subsidiary of the Company headquartered in Atlanta, Georgia. This Group distributes materials to more than 20,000 electrical and electronic manufacturers, as well as industrial assembly and specialty wire and cable markets in North America. With 3347 branch locations in the United States, Puerto Rico, the Dominican Republic, Mexico and Canada, this Group distributes over 100,000 items including wire and cable, insulating and conductive materials, assembly tools and test equipment. EIS also has threesix manufacturing facilities that provide custom fabricated parts.

In 2013, EIS made two strategic acquisitions. Effective August 1, 2013, EIS acquired the assets of Trient Technologies Inc., a fabricator of flexible materials with one location in Woodville, Wisconsin and annual revenues of approximately $9 million. Effective October 31, 2013, EIS acquired the assets of Tekra Corporation (“Tekra”), headquartered in New Berlin, Wisconsin. Tekra is an independent fabricator and coater of films and flexible materials with approximately $75 million in annual revenues.

Additionally, effective February 1, 2014, EIS acquired the assets of Electro-Wire, Inc. (“Electro-Wire”). Headquartered in Schaumburg, Illinois, Electro-Wire is a North American distributor and contract manufacturer of specialty wire and cable products with four locations in the U.S. and primarily serving the telecom and transit markets. Electro-Wire is expected to generate approximately $100 million in annual revenues.

Distribution System..    The Electrical/Electronic Materials Group provides distribution services to OEM’s, motor repair shops, specialty wire and cable users and a broad variety of industrial assembly markets. EIS actively utilizes itse-commerce Internet site to present its products to customers while allowing these on-line visitors to conveniently purchase from a large product assortment.


7

Electrical and electronic, industrial assembly, and wire and cable products are distributed from warehouse locations in major user markets throughout the United States, as well as in Mexico, Canada, Puerto Rico, and Canada. The Companythe Dominican Republic. EIS has return privileges with some of its suppliers, which have protected the Company from inventory obsolescence.

Products.    The Electrical/Electronic Materials Group distributes a wide variety of products to customers from over 350 vendors. These products include custom fabricated flexible materials that are used as components within a customer’s manufactured finished product in a variety of market segments. Among the products distributed and fabricated are such items as magnet wire, conductive materials, electrical wire and cable, insulating and shielding materials, assembly tools, test equipment, adhesives and chemicals, pressure sensitive tapes, solder, anti-static products, and thermal management products.products and coated films. To meet the prompt delivery demands of its customers, this Group maintains large inventories. The majority of sales are on open account. Approximately 45% of 20102013 total Electrical/Electronic Materials Group purchases were made from 10 major suppliers.

Integrated Supply..    The Electrical/Electronic Materials Group’s integrated supply programs are a part of the marketing strategy, as a greater number of customers — especially national accounts — are given the opportunity to participate in this low-cost, high-service capability. The Group developed AIMS (Advanced Inventory

7

Index to Financial Statements

Management System), a totally integrated, highly automated solution for inventory management. The Group’s Integrated Supply offering also includes SupplyPro,AIMS EASI, an electronic vending dispenser used to eliminate costly tool cribs, or in-house stores, at customer warehouse facilities.

Segment Data..    In the yearyears ended December 31, 2010,2013, 2012 and 2011, sales from the Company’s Electrical/Electronic Materials Group approximated 4% of the Company’s net sales, as compared to 3% in 2009 and 4% in 2008.sales. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements set forth beginning onpage F-1.

Competition.    The electrical and electronics distribution business is highly competitive. The Electrical/Electronic Materials Group competes with other distributors specializing in the distribution of electrical and electronic products, general line distributors and, to a lesser extent, manufacturers that sell directly to customers. EIS competes primarily on factors of price, product offerings, service and service.engineered solutions. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

ITEM 1A.RISK FACTORS.

FORWARD-LOOKING STATEMENTS

Some statements in this report, as well as in other materials we file with the SEC or otherwise release to the public and in materials that we make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. Forward-looking statements may relate, for example, to future operations, prospects, strategies, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated in our forward-looking statements as a result of various important factors. Such factors include, but are not limited to, those discussed below.

Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequentForms 10-Q,Form 8-K and other reports to the SEC.

Set forth below are the material risks and uncertainties that, if they were to occur, could materially and adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report and in the other public statements we make. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any


8

time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition, results of operations or the trading price of our securities.

Our business will be adversely affected if demand for our products slows.

Our business depends on customer demand for the products that we distribute. Demand for these products depends on many factors.

With respect to our automotive group, the primary factors are:

the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for maintenance and repair;

the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles;

• the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for maintenance and repair;
• the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles;
• the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles;
• gas prices, as increases in gas prices may deter consumers from using their vehicles;
• changes in travel patterns which may cause consumers to rely more on other transportation;
• restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and
• the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending.

the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles;

8

Index to Financial Statements

gas prices, as increases in gas prices may deter consumers from using their vehicles;

changes in travel patterns, which may cause consumers to rely more on other transportation;

restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and

the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending.

With respect to our industrial parts group, the primary factors are:

the level of industrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts;

changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy;

• the level of industrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts;
• changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies contracting manufacturing economy;
• the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas; and
• the economy in general.

the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas; and

the economy in general, which in declining conditions may cause reduced demand for industrial output.

With respect to our office products group, the primary factors are:

the increasing digitization of the workplace, as this impacts the need for certain office products;

the level of unemployment, especially as it relates to white collar and service jobs, as this impacts the need for office products; and

• the level of unemployment, especially as it relates to white collar and service jobs, as this impacts the need for business products; and
• the economy in general.

the economy in general, which in declining conditions may cause reduced demand for office products consumption.

With respect to our electrical/electronic materials group, the primary factors are:

• 

changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; and

• the economy in general.


9

the economy in general, which in declining conditions may cause reduced demand for industrial output.

Uncertainty and/or deterioration in general macro-economic conditions, including unemployment, inflation or deflation, high energy costs, uncertain credit markets, or other economic conditions, could have a negative impact on our business, financial condition, results of operations and cash flows.

Our business and operating results may in the future be adversely affected by uncertain global economic conditions, including instability in credit markets, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that could affect the global economy. Both our commercial and retail customers may experience deterioration of their financial resources, which could result in existing or potential customers delaying or canceling plans to purchase our products. Our vendors could experience similar conditions, which could impact their ability to fulfill their obligations to us. Future weakness in the global economy could adversely affect our results of operations, financial condition and cash flows in future periods.

We depend on our relationships with our vendors, and a disruption of our vendor relationships or a disruption in our vendors’ operations could harm our business.

As a distributor of automotive replacement parts, industrial parts, office products and electrical/electronic materials, our business depends on developing and maintaining close and productive relationships with our vendors. We depend

9

Index to Financial Statements

on our vendors to sell us quality products at favorable prices. Many factors outside our control, including, without limitation, raw material shortages, inadequate manufacturing capacity, labor disputes, transportation disruptions or weather conditions, could adversely affect our vendors’ ability to deliver to us quality merchandise at favorable prices in a timely manner. Furthermore, financial or operational difficulties with a particular vendor could cause that vendor to increase the cost of the products or decrease the quality of the products we purchase from it. Vendor consolidation could also limit the number of suppliers from which we may purchase products and could materially affect the prices we pay for these products. In our automotive business, the number of vendors could decrease considerably, and the prices charged to us by the remaining vendors could increase, to the extent that vehicle production slows due to a decline in consumer spending and, possibly, the failure of one or more of the large automobile manufacturers. We would suffer an adverse impact if our vendors limit or cancel the return privileges that currently protect us from inventory obsolescence.

We face substantial competition in the industries in which we do business.

The sale of automotive and industrial parts, office products and electrical materials is highly competitive and impacted by many factors, including name recognition, product availability, customer service, anticipating changing customer preferences, store location, and pricing pressures. Because we seek to offer competitive prices, if our competitors reduce their prices, we may be forced to reduce our prices, which could result in a material decline in our revenues and earnings. Increased competition among distributors of automotive and industrial parts, office products and electronic materials, including internet-related initiatives, could cause a material adverse effect on our results of operations. The Company anticipates no decline in competition in any of its four business segments in the foreseeable future.

In particular, the market for replacement automotive parts is highly competitive and subjects us to a wide variety of competitors. We compete primarily with national and regional auto parts chains, independently owned regional and local automotive parts and accessories stores, automobile dealers that supply manufacturer replacement parts and accessories, mass merchandisers and wholesale clubs that sell automotive products and regional and local full service automotive repair shops. Furthermore, the automotive aftermarket has experienced consolidation in recent years. Consolidation among our competitors could further enhance their financial position, provide them with the ability to provide more competitive prices to customers for whom we compete, and allow them to achieve increased efficiencies in their consolidated operations that enable them to more effectively compete for customers. If we are unable to continue to develop successful competitive strategies or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline.


10

We may not be able to successfully implement our business initiatives in each of our four business segments to grow our sales and earnings, which could adversely affect our business, financial condition, results of operations and cash flows.

We have implemented numerous initiatives in each of our four business segments to grow sales and earnings, including the introduction of new and expanded product lines, strategic acquisitions, geographic expansion (including through acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. If we are unable to implement these initiatives efficiently and effectively, or if these initiatives are unsuccessful, our business, financial condition, results of operations and cash flows could be adversely affected.

Successful implementation of these initiatives also depends on factors specific to the automotive parts industry and the other industries in which we operate and numerous other factors that may be beyond our control. In addition to the other risk factors contained in this “Item 1A. Risk Factors,”Factors”, adverse changes in the following factors could undermine our business initiatives and have a material adverse affect on our business, financial condition, results of operations and cash flows:

the competitive environment in our end markets may force us to reduce prices below our desired pricing level or to increase promotional spending;

our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner;

• the competitive environment in our end markets may force us to reduce prices below our desired pricing level or increase promotional spending;
• our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner;
• our ability to successfully enter new markets;
• our ability to effectively manage our costs;
• our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations; and
• the economy in general.

10

Index to Financial Statements

our ability to successfully enter new markets, including by successfully identifying and acquiring suitable acquisition targets in these new markets;

our ability to effectively manage our costs;

our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations; and

the economy in general.

Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs.

We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various actions. The damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this could have a material adverse affect on our business, financial condition, results of operations and cash flows.

Additionally, we are subject to numerous federal, state and local laws and governmental regulations relating to environmental protection, product quality standards, building and zoning requirements, as well as employment law matters. If we fail to comply with existing or future laws or regulations, we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital expenses could increase due to remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations.

ITEM 1B.UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2.PROPERTIES.PROPERTIES.

The Company’s headquarters and Automotive Parts Group headquarters are located in two adjacent office buildings owned by the Company in Atlanta, Georgia.

The Company’s Automotive Parts Group currently operates 5862 NAPA Distribution Centers in the United States distributed among eightten geographic divisions. Approximately 90% of the distribution center properties are owned by the Company. At December 31, 2010,2013, the Company operated approximately 1,0001,100 NAPA AUTO PARTS stores


11

located in 4246 states, and the Company owned either a noncontrolling or controlling interest in approximately 19114 additional auto parts stores located in threenine states. Other than NAPA AUTO PARTS stores located within Company owned distribution centers, the majority of the automotive parts stores in which the Company has an ownership interest wereare operated in leased facilities. In addition, NAPA Canada/UAP operates 12 distribution centers and approximately 189199 automotive parts and Traction stores in Canada, andexcluding any joint ventures. Auto Todo operates ten11 distribution centers and eight stores and tire centers in Mexico. These operations are conducted in leased facilities.
GPC Asia Pacific operates throughout Australia and New Zealand with eight distribution centers, 399 Repco stores and 61 branches associated with the Ashdown Ingram, Motospecs and McLeod operations. These distribution center, store and branch operations are conducted in leased facilities.

The Company’s Automotive Parts Group also operates threefour Balkamp distributiondistribution/redistribution centers, four Rayloc rebuilding and distribution facilities and two transfer and shipping facilities. Finally,Nearly all of the Balkamp and Rayloc operations are conducted in facilities owned by the Company. Altrom Canada operates 1513 import parts distribution centers and Altrom America operates two import parts distribution centers and thecenters. The Heavy Vehicle Parts Group operates one TW distribution center, which serves 2322 Traction stores of which 1514 are company owned and located in the US.U.S. These operations are operatedconducted in leased facilities.

The Company’s Industrial Parts Group, operating through Motion and Motion Canada, operates nine15 distribution centers, 4642 service centers and 488511 branches. Approximately 90% of these branches are operated in leased facilities.

11

Index to Financial Statements

The Company’s Office Products Group operates 3836 facilities in the United States and five facilities in Canada distributed among the Group’s five geographic divisions. Approximately 75% of these facilities are operated in leased buildings.

The Company’s Electrical/Electronic Materials Group operates in 3047 locations in the United States, one location in Puerto Rico, one location in the Dominican Republic, three locations in Mexico and one location in Canada. All of this Group’s 3653 facilities are operated in leased buildings except one facility, which is owned.

buildings.

We believe that our facilities on the whole are in good condition, are adequately insured, are fully utilized and are suitable and adequate for the conduct of our current operations.

For additional information regarding rental expense on leased properties, see Note 4 of Notes to Consolidated Financial Statements set forth beginning onpage F-1.

ITEM 3.LEGAL PROCEEDINGS.

The Company is subject to various legal and governmental proceedings, many involving routine litigation incidental to the businesses, including approximately 1,9003,000 product liability lawsuits resulting from its national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributed by the Company. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material adverse effect on the Company’s business, results of operations or financial condition.

ITEM 4.[Removed and Reserved.]MINE SAFETY DISCLOSURES.


Not applicable.

12

Index to Financial Statements

PART II..

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information Regarding Common Stock

The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol “GPC”. The following table sets forth the high and low sales prices for the common stock per quarter as reported on the New York Stock Exchange and dividends per share of common stock paid during the last two fiscal years:

                 
  Sales Price of Common Shares 
  2010  2009 
  High  Low  High  Low 
 
Quarter
                
First $43.63  $36.94  $39.82  $24.93 
Second  45.42   38.00   36.18   29.18 
Third  45.32   38.81   39.75   32.36 
Fourth  51.61   44.13   39.00   34.91 
         
  Dividends Declared per Share 
  2010  2009 
 
Quarter
        
First $0.41  $0.40 
Second  0.41   0.40 
Third  0.41   0.40 
Fourth  0.41   0.40 


   Sales Price of Common Shares 
   2013   2012 
   High   Low   High   Low 

Quarter

        

First

  $78.12    $64.43    $66.43    $60.84  

Second

   84.27     71.87     66.50     55.58  

Third

   85.41     77.80     65.18     58.73  

Fourth

   84.89     76.26     66.90     59.53  

   Dividends
Declared per
Share		 
    2013   2012 

Quarter

    

First

  $0.5375    $0.4950  

Second

   0.5375     0.4950  

Third

   0.5375     0.4950  

Fourth

   0.5375     0.4950  

13

Index to Financial Statements

Stock Performance Graph

Set forth below is a line graph comparing the yearly dollar change in the cumulative total shareholder return on the Company’s Common Stock against the cumulative total shareholder return of the Standard and Poor’s 500 Stock Index and a peer group composite index structured by the Company as set forth below for the five year period that commenced December 31, 20052008 and ended December 31, 2010.2013. This graph assumes that $100 was invested on December 31, 20052008 in Genuine Parts Company Common Stock, the S&P 500 Stock Index (the Company is a member of the S&P 500, and its cumulative total shareholder return went into calculating the S&P 500 results set forth in the graph) and the peer group composite index as set forth below and assumes reinvestment of all dividends.

Comparison of five year cumulative total shareholder return

Genuine Parts Company, S&P 500 Index and peer group composite index

                               
Cumulative Total Shareholder Return
                        
$ at Fiscal Year End  2005   2006   2007   2008   2009   2010 
Genuine Parts Company   100.00    111.40    112.03    95.20    100.16    140.73 
S&P 500   100.00    115.79    122.15    76.95    97.31    111.97 
Peer Index   100.00    107.58    116.74    56.79    143.06    144.85 
                               

Cumulative Total Shareholder Return
$ at Fiscal Year End		  2008   2009   2010   2011   2012   2013 

Genuine Parts Company

   100.00     105.22     147.87     182.23     195.48     263.01  

S&P 500

   100.00     126.46     145.50     148.58     172.35     228.17  

Peer Index

   100.00     142.97     207.35     199.05     227.70     321.78  

In constructing the peer group composite index (“Peer Index”) for use in the stock performance graph above, the Company used the shareholder returns of various publicly held companies (weighted in accordance with each company’s stock market capitalization at December 31, 20052008 and including reinvestment of dividends) that compete with the Company in three industry segments: automotive parts, industrial parts and office products (each group of companies included in the Peer Index as competing with the Company in a separate industry segment is hereinafter referred to as a “Peer Group”). Included in the automotive parts Peer Group are those companies making up the Dow Jones U.S. Auto Parts Index (the Company is a member of such industry group, and its individual shareholder return was included when calculating the Peer Index results set forth in the performance graph). Included in the industrial parts Peer Group are Applied Industrial Technologies, Inc. and Kaman Corporation and included in the office products Peer Group is United Stationers Inc. The Peer Index does not break out a separate electrical/electronic peer group due to the fact that there is currently no true market comparative to EIS. The electrical/electronic component of sales is redistributed to the Company’s other segments on a pro rata basis to calculate the final Peer Index.


14

Index to Financial Statements

In determining the Peer Index, each Peer Group was weighted to reflect the Company’s annual net sales in each industry segment. Each industry segment of the Company comprised the following percentages of the Company’s net sales for the fiscal years shown:
                         
Industry Segment 2005  2006  2007  2008  2009  2010 
 
Automotive Parts  51%  49%  49%  48%  52%  50%
Industrial Parts  29%  30%  31%  32%  29%  31%
Office Products  17%  17%  16%  16%  16%  15%
Electrical/Electronic Materials  3%  4%  4%  4%  3%  4%

Industry Segment

  2008  2009  2010  2011  2012  2013 

Automotive Parts

   48%   52%   50%   49%   49%   53% 

Industrial Parts

   32%   29%   31%   33%   34%   31% 

Office Products

   16%   16%   15%   14%   13%   12% 

Electrical/Electronic Materials

   4%   3%   4%   4%   4%   4% 

Holders

As of December 31, 2010,2013, there were 5,4835,071 holders of record of the Company’s common stock. The number of holders of record does not include beneficial owners of the common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

Sales of Unregistered Securities

All of our sales of securities in 2010 were registered under the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities

The following table provides information about the purchases of shares of the Company’s common stock during the three month period ended December 31, 2010:

                 
        Total Number of
  Maximum Number of
 
  Total
     Shares Purchased as
  Shares That May Yet
 
  Number of
  Average
  Part of Publicly
  be Purchased Under
 
  Shares
  Price Paid
  Announced Plans or
  the Plans or
 
Period Purchased(1)  per Share  Programs(2)  Programs 
 
October 1, 2010 through October 31, 2010  98,149  $46.53   33,393   16,063,252 
November 1, 2010 through November 30, 2010  146,866  $47.32   85,900   15,977,352 
December 1, 2010 through December 31, 2010  173,278  $50.69   875   15,976,477 
Totals  418,293  $48.53   120,168   15,976,477 
2013:

Period

  Total
Number of
Shares
Purchased(1)		   Average
Price  Paid
per Share		   Total Number  of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs(2)		   Maximum Number  of
Shares That May Yet
be Purchased Under
the Plans or
Programs		 

October 1, 2013 through October 31, 2013

   215,475    $78.66     214,400     11,065,142  

November 1, 2013 through November 30, 2013

   276,080    $80.71     220,547     10,844,595  

December 1, 2013 through December 31, 2013

   190,561    $81.31     176,216     10,668,379  

Totals

   682,116    $80.23     611,163     10,668,379  

(1)Includes shares surrendered by employees to the Company to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of stock options and/or tax withholding obligations.

(2)On August 21, 2006 and November 17, 2008, the Board of Directors announced that it had authorized and announced the repurchase of 15 million shares and 15 million shares, respectively.shares. The authorization for thesethis repurchase plansplan continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 1.010.7 million shares authorized in the repurchase2008 plan announced in 2006 and all 15 million shares authorized in 2008 remain available to be repurchased by the Company. There were no other publicly announced plans outstanding as of December 31, 2010.2013.


15

Index to Financial Statements
ITEM 6.SELECTED FINANCIAL DATA.

The following table sets forth certain selected historical financial and operating data of the Company as of the dates and for the periods indicated. The following selected financial data are qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes and other financial information set forth beginning onpage F-1, as well as in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.

                     
Year Ended December 31, 2010 2009 2008 2007 2006
    (In thousands, except per share data)  
 
Net sales $11,207,589  $10,057,512  $11,015,263  $10,843,195  $10,457,942 
Cost of goods sold  7,954,645   7,047,750   7,742,773   7,625,972   7,353,447 
Operating and non-operating expenses, net  2,491,161   2,365,597   2,504,022   2,400,478   2,333,579 
Income before taxes  761,783   644,165   768,468   816,745   770,916 
Income taxes  286,272   244,590   293,051   310,406   295,511 
Net income $475,511  $399,575  $475,417  $506,339  $475,405 
Weighted average common shares outstanding during year — assuming dilution  158,461   159,707   162,986   170,135   172,486 
Per common share:                    
Diluted net income $3.00  $2.50  $2.92  $2.98  $2.76 
Dividends declared  1.64   1.60   1.56   1.46   1.35 
December 31 closing stock price  51.34   37.96   37.86   46.30   47.43 
Long-term debt, less current maturities  250,000   500,000   500,000   250,000   500,000 
Total equity  2,802,714   2,629,372   2,393,378   2,782,946   2,610,707 
Total assets $5,465,044  $5,004,689  $4,786,350  $4,774,069  $4,496,984 

Year Ended December 31,

  2013   2012   2011   2010   2009 
   (In thousands, except per share data) 

Net sales

  $14,077,843    $13,013,868    $12,458,877    $11,207,589    $10,057,512  

Cost of goods sold

   9,857,923     9,235,777     8,852,837     7,954,645     7,047,750  

Operating and non-operating expenses, net

   3,175,616     2,759,159     2,715,234     2,491,161     2,365,597  

Income before taxes

   1,044,304     1,018,932     890,806     761,783     644,165  

Income taxes

   359,345     370,891     325,690     286,272     244,590  

Net income

  $684,959    $648,041    $565,116    $475,511    $399,575  

Weighted average common shares outstanding during year — assuming dilution

   155,714     156,420     157,660     158,461     159,707  

Per common share:

          

Diluted net income

  $4.40    $4.14    $3.58    $3.00    $2.50  

Dividends declared

   2.15     1.98     1.80     1.64     1.60  

December 31 closing stock price

   83.19     63.58     61.20     51.34     37.96  

Total debt, less current maturities

   500,000     250,000     500,000     250,000     500,000  

Total equity

   3,358,768     3,008,179     2,753,591     2,763,486     2,590,144  

Total assets

  $7,680,297    $6,807,061    $6,202,774    $5,788,227    $5,327,872  

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

Genuine Parts Company is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials. The Company hasWe have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. In 2010,2013, the Company conducted business throughout the United States, Canada, Australia, New Zealand, Mexico and Puerto Rico from approximately 2,0002,600 locations.

We recorded consolidated net sales of $11.2$14.1 billion for the year ended December 31, 2010,2013, an increase of 11%8% compared to $10.1$13.0 billion in 2009.2012. Consolidated net income for the year ended December 31, 20102013 was $476$685 million, up 19%6% from $400$648 million in 2009.2012. The improving market conditions in the industries that we serve combined with ourCompany’s internal growth initiatives, droveincluding the Company’s strongpositive impact of acquisitions, as well as effective cost management, which we discuss further below, served to drive our solid financial performance in 2010.

for the year, despite the challenging market conditions that were experienced by our non-automotive business segments.

The 11%8% sales growth in 20102013 follows a 9% decrease4.5% revenue increase in revenues in 20092012 and a 2%an 11% increase in revenues in 2008.2011. Our 19%6% increase in net income follows a 16% and 6% decrease15% increase in net income in 20092012 and 2008, respectively. Throughout thisa 19% increase in net income in 2011. In 2011, we experienced strong and steady growth in three year period, the Company has implemented a variety of initiatives in each of our four business segments, as conditions in these industries improved significantly from the depressed levels associated with the recessionary period of 2009. These favorable conditions began to moderate following the first quarter of 2012, which created a more challenging sales environment over the balance of the year. In 2013, we continued to experience difficult market conditions in the Industrial, Electrical/Electronic and Office industries, while the Automotive business performed reasonably well. Over the three year period of 2011 through 2013, our financial performance was positively impacted by a variety of initiatives we implemented to grow sales and earnings includingin each of our four

16

Index to Financial Statements

businesses. Examples of such initiatives include strategic acquisitions, the introduction of new and expanded product lines, geographic expansion, (including acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. The effects of the economic slowdown, which we began to experience in the final quarter of 2008, adversely impacted the benefit ofWe discuss these initiatives through 2009. In 2010, however, the recovering economy served to further support the benefits of our internal growth initiatives.

below.

With regard to the December 31, 20102013 consolidated balance sheet, the Company’s cash balance of $530$197 million was up $193 million or 57%down from $337cash of $403 million at December 31, 2009. This increase marks the second consecutive year the2012, due primarily to recent acquisitions in our Automotive, Industrial and Electrical/Electronic business segments during 2013, which are discussed further under Liquidity and Capital Resources. The Company has significantly improved itscontinues to maintain a strong cash position, and relates tosupported by the increase in net income in 2010 and an improvedongoing working capital position for both years.management in 2013. Accounts receivable increased by approximately 15%12%,


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relatively in-line with which is less than our sales increase in the fourth quarter of the year, and inventory was up slightly, includingby approximately 13%, or approximately 1% before the impact of acquisitions. Accounts payable increased $281$588 million or 26%35% from the prior year,year. The significant increase in this line item is due primarily to improved payment terms with certain suppliers and other ongoing payables initiatives such as a procurement card program.suppliers. Additionally, accounts payable associated with acquisitions accounted for approximately 10% of the increase. Total debt outstanding at December 31, 20102013 was unchanged$765 million, an increase of $265 million from $500 million at December 31, 2009.
2012.

RESULTS OF OPERATIONS

Our results of operations are summarized below for the three years ended December 31, 2010, 20092013, 2012 and 2008.

                 
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands except per share data) 
 
Net Sales $11,207,589  $10,057,512  $11,015,263     
Gross Profit  3,252,944   3,009,762   3,272,490     
Net Income  475,511   399,575   475,417     
Diluted Earnings Per Share  3.00   2.50   2.92     
2011.

   Year Ended December 31, 
   2013   2012   2011 
   (In thousands except per share data) 

Net Sales

  $14,077,843    $13,013,868    $12,458,877  

Gross Profit

   4,219,920     3,778,091     3,606,040  

Net Income

   684,959     648,041     565,116  

Diluted Earnings Per Share

   4.40     4.14     3.58  

Net Sales

Consolidated net sales for the year ended December 31, 20102013 totaled $11.2$14.1 billion, an 11%8% increase from 20092012 driven by an 18.5% increase in the Automotive segment, that was offset by a 1% sales decrease in our non-automotive businesses. Acquisitions, primarily in Automotive, but also in the Industrial and Electrical/Electronic businesses, contributed 7% to our total sales growth in all four of our business segments. The Industrial and Electrical business segments experienced the greatest percentage increasesincreased sales volume accounted for the year, as the manufacturing sectorremaining 1%. The impact of the economy was much strongerproduct inflation varied by business again in 2010 relative to 2009. These businesses also benefited from acquisitions in 2010. Sales for the Automotive business segment2013 and, cumulatively, prices were much improved in 2010 as well, primarily due to the benefits of well executed internal initiatives and the overall improvement in the economy. Cumulatively, prices in 2010 were up approximately 1%flat in the Automotive segment, up approximately 3%1% in the Industrial segment,and Electrical/Electronic segments and up approximately 4% in the Electrical segment and approximately flat0.5% in the Office segment.

The Company is well positioned to improve sales in 2014.

Consolidated net sales for the year ended December 31, 20092012 totaled $10.1$13.0 billion, a 9% decrease4.5% increase from 2008. Each2011 and driven by sales increases in three of our four business segments. Acquisitions in our Automotive and Electrical businesses experiencedcontributed 2% to our sales decreases, withgrowth and increased sales volume added approximately 2% to sales. The impact of product inflation varied by business, as, cumulatively, prices in 2012 were flat in the Automotive segment, up approximately 2% in the Industrial and Electrical business segments showing the most significant declines, as the manufacturing sector of the economy was severely impacted by the weak economic conditions, which we began to experiencesegment, flat in the latter part of 2008. The general weakness in demand resulting from lower consumer spendingElectrical/Electronic segment and industrial production and higher unemployment appeared to stabilize over the last half of 2009. Among the four quarters in 2009, the fourth quarter was the strongest period for sales in each business segment. Cumulatively, prices in 2009 were downup approximately 3% in the Automotive segment, approximately flat in the Industrial segment and up approximately 4% in the Office segment and 2% in the Electrical segment.

Automotive Group

Net sales for the Automotive Group (“Automotive”) were $5.6$7.5 billion in 2010,2013, an increase of 7%18.5% from 2009. Sales improved2012. The increase in 2010sales for the year was primarily due to the successful executionApril 1, 2013 acquisition of our sales initiativesGPC Asia Pacific, formerly Exego, and the stronger economy, which droveMay 1, 2012 acquisition of Quaker City Motor Parts Co. (“Quaker City”). Combined, these acquisitions contributed approximately 15% to sales. Additionally, Automotive achieved a positive comparable store sales increase of approximately 4%, offset slightly by the 0.5% negative impact of currency associated with our Canadian business. Automotive sales were not materially impacted by product inflation or the effect of currency associated with our Mexican businesses. In 2013, Automotive revenues were up 3% in the first quarter, then up 22% in the second and third quarters and up 25% in the fourth quarter. We believe that the

17

Index to Financial Statements

underlying fundamentals in the automotive aftermarket, including the overall aging of the vehicle population, remain solid and will serve to drive increased demand for automotive aftermarket maintenance and supply items.items in 2014. Based on these fundamentals and the internal growth initiatives in our Automotive business, we expect to grow our sales for this group again in 2014.

Net sales for Automotive were $6.3 billion in 2012, an increase of 4% from 2011. The increase in sales for the year was primarily due to the May 1, 2012 acquisition of Quaker City, which contributed approximately 3% to sales. Additionally, Automotive achieved a positive comparable store sales increase of slightly more than 1%. Automotive sales were not materially impacted by product inflation or the effect of currency associated with our Canadian and Mexican businesses. In 2012, Automotive revenues were up 6% in the first quarter, followed by 7% increasesthen up 4% in the second and third quarters, and a 9% increase in the fourth quarter. Other factors impacting our Automotive sales for the year include the effect of currency, which positively impacted sales by approximately 2%.

Automotive sales were $5.2 billion in 2009, a decrease of 2% from 2008. Sales were impacted by the soft economy in 2009, which reduced the overall level of consumer spending and, specifically, the demand for automotive maintenance and supply items. The first half of the year proved to be the most challenging, with Automotive sales down 7% and 5% in the first and second quarters, respectively. Sales were down 1%quarter, up 2.5% in the third quarter followed by a 6% increaseand up 5% in the fourth quarter. Other factors impacting our Automotive sales for the year include acquisitions, which had an approximately 1% positive effect on sales, and the effect of currency, which negatively impacted sales by approximately 2%.


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Industrial Group

Net sales for Motion Industries, our Industrial Group (“Industrial”), were $3.5$4.4 billion in 2010, an increase of 22%2013, down slightly compared to 2009. Several factors contributed2012. Sales volumes in this business were down approximately 1% from the prior year, while higher transaction values associated with product inflation added 1% to the sales increase for this group, including thein 2013. The slight positive impact of their internalon sales initiatives and the strong rebound in the manufacturing sector of the economy served by Industrial. Thisfrom acquisitions was evidencedoffset by the ongoing improvement in the manufacturing industrial production and capacity utilization indices, which this group tends to track. Also in 2010, sales were positively impacted by acquisitions, which accounted for approximately 5%slight negative impact of Industrial’s sales growth for the year. As a result of these several factors,currency associated with our Canadian business. Industrial revenues were up 9%down 2% in the first quarter of 2010,2013 , down 1% in the second quarter, down 2.5% in the third quarter and up 26%3% in the fourth quarter. We expect the recent acquisitions for this business segment, as well as other internal growth initiatives and relatively stable manufacturing indicators, to provide us ample growth opportunities for our Industrial business in 2014.

Net sales for Industrial, were $4.5 billion in 2012, an increase of 7% compared to 2011. The positive impact of Industrial’s internal sales initiatives, which drove higher sales volume, contributed 5% to sales. Higher transaction values in 2012 associated with product inflation added another 2% to sales. There was no material impact on sales from acquisitions and no effect of currency associated with our Canadian business. Industrial revenues were up 12% in the first quarter of 2012, up 8% in the second quarter, then up 29%4.5% and 24%2% in the third and fourth quarters, respectively.

Net sales were $2.9 billion in 2009, a decrease of 18% compared to 2008. Through the first three quarters of the year, sales were especially weak for this group due to the effects of very low manufacturing activity, as evidenced by the reported levels of manufacturing industrial production and capacity utilization and its negative impact on demand for industrial products. This weakness was widespread, as we experienced sales declines in nearly all of our major customer categories. The industrial indices we follow showed some early signs of stabilization in the third quarter and we observed a slight strengthening in these indicators as we entered the fourth quarter. Industrial sales were down 11% in the fourth quarter, which marked a significant improvement from the declines of the first three quarters of the year. In 2009, sales were positively impacted by several acquisitions, which contributed approximately 3% to sales for the year.

Office Group

Net sales for S.P.S. P. Richards, our Office Products Group (“Office”), were $1.6 billion in 2010, up slightly compared to the prior year. Office revenues stabilized2013, a 3% decrease in 2010 relative to prior year trends, although thesales from 2012. The industry-wide weakness in office products industry continuedconsumption, driven by the ongoing elevated levels of white collar unemployment and the declining demand for paper and paper-based office products due to experience soft marketworkplace digitization, continues to pressure this segment, and we do not expect any meaningful improvement in these conditions throughoutin the near future. Overall, sales volume in Office declined by approximately 3.5% for the year, as a resultoffset by the benefit of reduced business spending and the ongoing impactslightly higher transaction values associated with price inflation of elevated unemployment levels.0.5%. Sales decreased approximatelyby 1% in the first and second quarters, were flatquarter, 3% in the second and third quarters and 4% in the fourth quarter of 2013. Our focus in 2014 will be on market share initiatives, product line extensions and further diversification of our product and customer portfolios.

Net sales for Office were $1.7 billion in 2012, flat with revenues in 2011. Overall, sales volume in Office declined by 3% for the year, offset by higher transaction values associated with price inflation of approximately 3%. Sales decreased by 1% in the first, second and third quarters, and were up by 3% in the fourth quarter of 2010. The fourth quarter increase is significant, as the industry-wide slowdown in office products consumption has pressured this group for several years and the fourth quarter of 2010 marks the first positive sales comparison for Office since the second quarter of 2007.

Net sales were $1.6 billion in 2009, down 5% compared to 2008 and the third consecutive year of decreased revenues for Office. This three year sales trend reflects the negative impact of higher white collar and service unemployment on office products consumption, which has affected the office products industry since 2007. In 2009, sales improved sequentially, with decreases of 7%, 6%, 5% and 4% in the first, second, third and fourth quarters, respectively. For the year, sales were positively impacted by three acquisitions completed in 2008, which contributed nearly 3% to sales in Office. The increase in net sales due to acquisitions, as well as our sales initiatives, was more than offset by the prevailing poor conditions in the office products industry.
2012.

ElectricalElectrical/Electronic Group

Net sales for EIS, our Electrical and Electronic Group (“Electrical”Electrical/Electronic”), decreased to $569 million in 2013, down 2% from 2012. The decrease in revenues is attributable to several factors, as sales volume was down by 5% and copper pricing negatively impacted sales by 1% relative to 2012. These items were partially offset by a 3% positive sales contribution from acquisitions and the benefit of higher transaction values associated with 1% price inflation for the year. Sales for Electrical/Electronic decreased by 5% in the first quarter, 4% in the second quarter and 5% in the third quarter and were up 6% in the fourth quarter. Despite the slow market conditions for this segment in 2013, we expect the Electrical/Electronic business to benefit from its internal growth initiatives, a gradually improving manufacturing environment and the incremental revenue from their recently completed acquisitions in the periods ahead.

18

Index to Financial Statements

Net sales for Electrical/Electronic increased to $450$583 million in 2010,2012, up 30%4.5% from 2009. Electrical2011. The increase in revenues is due primarily to acquisitions, which contributed approximately 8% to our sales growth in 2012. A 2.5% decrease in sales volume and a 1% negative impact from copper pricing for the year served to offset this increase. Sales for Electrical/Electronic increased by 16%5% in the first quarter, and this was followed by increases of 32%were up 9% in the second quarter, 31%up 5% in the third quarter and 40%were down 2% in the fourth quarter. The revenue growth in 2010 was driven by our sales initiatives, which were strongly supported by manufacturing expansion during the year, as measured by the Institute for Supply Management’s Purchasing Managers Index. In addition, acquisitions in 2010 contributed approximately 9% to Electrical’s sales growth for the year.

Net sales decreased to $346 million in 2009, down 26% from 2008. Electrical sales declined by 25% in the first quarter, 34% in the second quarter and 30% in the third quarter. For the fourth quarter, sales were down 12%. Manufacturing contraction, as measured by the Institute for Supply Management’s Purchasing Managers Index, was evident through June and then began to stabilize and improve over the last half of the year. This factor explains the quarterly sales trends at Electrical in 2009. Acquisitions had less than a 1% positive impact on Electrical sales in 2009.


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Cost of Goods Sold

The Company includes in Cost of goods sold the actual cost of merchandise, which represents the vast majority of this line item. Other costs in Cost of goods sold include warranty costs and in-bound freight from the supplier, net of any vendor allowances and incentives. Cost of goods sold was $8.0$9.9 billion, $7.0$9.2 billion and $7.7$8.9 billion in 2010, 20092013, 2012 and 2008,2011, respectively. The 13%7% increase in cost of goods sold in 2013 from 2009 to 20102012 is directly related to the sales increase for the same period.period, as product inflation was relatively insignificant and actual costs were relatively unchanged from the prior year. Cost of goods sold represented 71.0%70.0% of net sales in 2010, 70.1%2013, 71.0 % of net sales in 20092012 and 70.3%71.1% of net sales in 2008.2011. The increase100 basis point decrease in cost of goods sold as a percent of net sales in 2010 relative to 2009 and 20082013 primarily reflects the positive gross margin impact of certain pricing adjustments implementedthe 100% company owned store model at GPC Asia Pacific. Other changes in Automotive during 2009 as well as ongoing competitive pricing pressurescost of goods sold, including the slight decrease in Office. These factors more than offset2012 from 2011, reflect our gross margin initiatives to enhance our pricing strategies, promote and sell higher margin products and minimize material acquisition costs.

In 2010, all four of our2013, the Industrial, Electrical/Electronic and Office business segments experienced slight vendor price increases, althoughincreases. In 2012, only the AutomotiveIndustrial and Office increases were relatively immaterial. In 2009, our Office and Electrical business segments experienced vendor price increases. Industrial was flat and Automotive pricing was down for the year. In 2008,2011, all four of our business segments experienced vendor price increases. In any year where we experience price increases, we are able to work with our customers to pass most of these along to them.

Operating Expenses

The Company includes in Selling, administrative and other expenses (“SG&A”), all personnel and personnel related costs at its headquarters, distribution centers and stores, which accounts for approximately 65% of total SG&A. Additional costs in SG&A include our facilities, delivery, marketing, advertising, legal and professional costs.

SG&A increased by $147$371 million or 7%approximately 14% to $2.4$3.0 billion in 2010,2013, representing 21.1%21.4% of net sales, which compares to 20.4% of net sales in 2012. Primarily, the increase in SG&A expenses as a percentage of net sales from the prior year is due to the 100% company owned store model at GPC Asia Pacific, which serves to increase both gross profit and SG&A expenses. Additionally, we experienced decreased expense leverage in 2013 associated with the weak sales environment in our non-automotive businesses throughout the year. These items were partially offset by a $54 million one-time gain, net of other expense adjustments, recorded to SG&A in the second quarter of 2013 as a purchase accounting adjustment associated with the April 1, 2013 acquisition of GPC Asia Pacific. Our management teams remain focused on properly managing the Company’s expenses and continuing to assess the appropriate cost structure in our businesses. Depreciation and amortization expense was $134 million in 2013, an increase of $36 million or 36% from 2012. This increase primarily relates to the depreciation for higher levels of capital expenditures and the amortization associated with acquisitions during the year. The provision for doubtful accounts was $9 million in 2013, an increase from $8 million in 2012. We believe the Company is adequately reserved for bad debts at December 31, 2013.

SG&A increased by $54 million or approximately 2% to $2.6 billion in 2012, representing 20.4% of net sales and down from 22.1%20.8% of net sales in 2009.2011. SG&A expenses as a percentage of net sales improved from the prior year due primarily to the benefit ofslightly greater expense leverage associated with the 11%our sales increase for the year. In addition,growth, combined with management’s ongoing cost control measures in areas such as personnel, freight, fleet and logisticslogistics. Excluding acquisitions, the Company’s headcount at December 31, 2012 decreased by approximately 1% from 2011. These expense initiatives have served to further improve the Company’s cost structure. After reducing the size of its workforce by approximately 12% during 2008 and 2009, the Company added back only 1% of that in 2010 (including acquisitions), despite the 11% increase in revenues. In total, of the estimated $70 million cost savings in 2009, the Company estimates that it added back approximately $20 million in costs in 2010, primarily associated with the increase in sales and earnings. Our management teams remain focused on the ongoing assessment of the appropriate cost structure in our businesses. Depreciation and amortization expense was $98 million in 2010 was $892012, an increase of $9 million down slightlyor 11% from 2009.2011. This increase primarily relates to the amortization associated with acquisitions during the year. The provision for doubtful accounts was $11$8 million in 2010,2012, down 61%$5 million or 40% from $28$13 million in 2009. The decrease in bad debt expense reflects a much improved collections environment in 2010 relative2011.

19

Index to the prior year. We believe the Company is adequately reserved for bad debts at December 31, 2010.
In 2009, SG&A was $2.2 billion, down $140 million or 6% from 2008 and representing 22.1% of net sales. This compared to 21.4% of net sales in 2008. This percentage increase was primarily due to the loss of expense leverage associated with the 9% sales decrease for the year. During 2009, management implemented extensive cost control initiatives to offset this loss of leverage. These measures eliminated approximately $70 million in operating costs and helped drive the decrease in absolute SG&A dollars for the year. Depreciation and amortization expense in 2009 was $90 million, up slightly from 2008. The provision for doubtful accounts was $28 million in 2009, up 17% from a $24 million bad debt expense in 2008.
Financial Statements

Total share-based compensation expense for the years ended December 31, 2010, 20092013, 2012 and 20082011 was $7.0$12.6 million, $8.6$10.7 million and $13.0$7.5 million, respectively. Refer to Note 5 of the Consolidated Financial Statements for further information regarding share-based compensation.

Non-Operating Expenses and Income

Non-operating expenses consist primarily of interest. Interest expense was $28$27 million in 2010 and 2009 and $322013, $20 million in 2008.2012 and $27 million in 2011. The decrease$7 million increase in interest expense relativein 2013 is due to 2008 ishigher debt levels incurred for the result ofGPC Asia Pacific acquisition. In November 2013, the Company renewed certain debt at a favorable interest rate and although the renewal did not materially reduce interest expense in 2013, the new interest rate will save approximately $4 million in annual interest expense beginning in 2014. In 2012, the Company benefited from an improved interest rate on certain long-term debt, effective November 2008.

2011, which reduced interest expense by $7 million from the prior year.

In “Other”, the net benefit of interest income, net of noncontrolling interests has increased in each of the last two years due primarily to our improved cash positionequity method investment income and the elimination of certain noncontrolling interests in 2009.

2013 was $13 million, a decrease of $3 million from 2012. These items had increased to $16 million in 2012, up approximately $8 million from 2011. This increase reflects the Company’s equity income recorded in 2012 for its 30% investment interest in GPC Asia Pacific.

Income Before Income Taxes

Income before income taxes was $762 million$1.0 billion in 2010,2013, an increase of 18.3%2.5% from $644 million in 2009.2012. As a percentage of net sales, income before income taxes was 6.8%7.4% in 2010, reflecting an increase from 6.4%2013 compared to 7.8% in 2009.2012. In


19

2009, 2012, income before income taxes of $644 million$1.0 billion was down 16.0%up 14% from $768$891 million in 20082011 and as a percentage of net sales was 6.4%7.8%, a decreasean increase from 7.0%7.1% in 2008.
2011.

Automotive Group

Automotive income before income taxes as a percentage of net sales, which we refer to as operating margin, increased to 7.5%was steady with the prior year at 8.6%. The changes in 2010 from 7.4% in 2009. The improvement ingross profit and operating margin for 2010 is attributedcosts as a percentage of net sales, which related primarily to the benefitacquisition of greater expense leverage associated with Automotive’s 7% sales increase forGPC Asia Pacific, were relatively neutral to operating profit during the year. Looking forward, Automotive’s initiatives to grow sales and control costs are intended to improve its operating margin in the years ahead.

Automotive’s operating margin increased to 8.6% in 2012 from 7.7% in 2011. The improvement in operating margin for 2012 is attributed primarily to effective cost controls and cost reductions implemented during the year. A slight increase in gross margin also positively impacted the operating margin.

Industrial Group

Industrial’s operating margin decreased to 7.2% in 2013 from 7.9% in 2012. The decrease in operating margin in 2013 is due to the combination of reduced expense leverage associated with the slight decrease in sales relative to the prior year and the decline in volume incentives for the year. These items were partially offset by effective cost control measures. Industrial has made several recent acquisitions which will positively impact this segment and will continue to focus on its many sales initiatives and cost controls to further improve its operating margin in the years ahead.

Automotive’s operating margin increased to 7.4% in 2009 from 7.2% in 2008. The improvement in operating margin for 2009 is attributed to the benefit of cost reduction measures implemented during 2008 and 2009.
Industrial Group

Industrial’s operating margin increaseddecreased to 7.3%7.9% in 20102012 from 5.6%8.1% in 2009.2011. The increasedecrease in operating margin in 20102012 is due to the combination of greaterreduced expense leverage associated with a 22%slower sales increase,growth relative to the prior year and the decline in volume incentives for the year. These items were partially offset by effective cost control measures.

Office Group

Office’s operating margin decreased to 7.5% in 2013 from 8.0% in 2012, primarily related to the reduced expense leverage associated with the decrease in sales for this segment relative to 2012. Previously, the operating margin at Office was relatively steady over the last few years, at 8.0% in 2012 and 7.9% in 2011. In each of these

20

Index to Financial Statements

periods, the cost savings and increased volume incentives. Industrialmeasures in the Office segment were somewhat offset by the ongoing gross margin pressures associated with the slow demand for office products across the industry. Office will continue to focus on its sales initiatives and cost controls to further improve its operating margin in the years ahead.

Industrial’s

Electrical/Electronic Group

Electrical/Electronic’s operating margin decreased to 5.6% in 2009 from 8.4% in 2008.2013 from 8.7% in 2012. The decreaseslight decline in operating margin in 2009 wasis primarily a reflectiondue loss of the extreme downturn in industrial demand that we began to experience in the fourth quarter of 2008. These conditions led to lower sales volumes in 2009, which severely impacted our expense leverage despite significantassociated with the sales decrease for this segment in 2013 relative to 2012. Electrical/Electronic will continue to focus on its sales initiatives and cost reduction efforts.

Office Group
Thecontrols to improve its operating margin in Officethe years ahead.

Electrical/Electronic’s operating margin increased to 8.0%8.7% in 20102012 from 7.7%7.3% in 2009.2011. The increase in operating margin in 2010 reflects2012 is primarily due to the positive impact of oureffective cost savings initiatives combinedmanagement as well as an improved gross margin. The improvement in gross margin reflects several factors, including higher margin business associated with the benefit of higher volume incentives from suppliers. The increase in incentives was due to our fourth quarter sales growthrecent acquisitions, and related increase in purchase volumes, which allowed us to achieve higher program growth tiers with suppliers.

The operating margin in Office was 7.7% in 2009, down from 8.3% in 2008. The prevailing weakness in the office products industry that began in 2007 continued to pressure the operating margin at Office in 2009.
Electrical Group
The operating margin in Electrical decreased to 6.9% in 2010 from 7.3% in 2009. The decrease in operating margin is mainly due to escalating copper prices during the year, which generally do not affect profit dollars, but negativelypositively impact margins, as the standard industry practice is to bill copper is generally billed to customersthe customer at cost. The margin pressures associated with this industry standard pricing practice for copper more than offset the benefits of a stronger manufacturing sector in 2010 and greater expense leverage associated with a 30% sales increase.
The operating margin in Electrical decreased to 7.3% in 2009 from 7.9% in 2008. The decrease in operating margin was primarily a function of weak market conditions. This factor outweighed the benefits of Electrical’s sales initiatives and expense savings.

Income Taxes

The effective income tax rate of 37.6%34.4% in 20102013 was down from 38.0%36.4% in 2009.2012. The decrease from 2009 is attributablereflects the favorable impact of a lower Australian tax rate applied to the pre-tax earnings of GPC Asia Pacific, as well as the favorable foreign income taxes fortax rate applied to the year.one-time acquisition gain recorded in the second quarter of 2013. The income tax rate decreased to 38.0%of 36.4% in 20092012 was down slightly from 38.1%36.6% in 2008. The decrease from the 2008 rate is mainly2011, primarily due to tax-free incomethe favorable impact of a retirement asset valuation adjustment in 2009 associated with a Company retirement plan.


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2012 relative to 2011.

Net Income

Net income was $476$685 million in 2010,2013, an increase of 19%6% from $400$648 million in 2009.2012. On a per share diluted basis, net income was $3.00$4.40 in 20102013 compared to $2.50$4.14 in 2009,2012, up 20%6%. Net income in 20102013 was 4.2%4.9% of net sales compared to 4.0%5.0% of net sales in 2009.

2012.

In connection with the acquisition of GPC Asia Pacific, the Company recorded one-time positive purchase accounting adjustments of $33 million or $0.21 per diluted share in 2013.

Net income of $400was $648 million in 2009 was down 16%2012, an increase of 15% from $475$565 million in 2008.2011. On a per share diluted basis, net income of $2.50was $4.14 in 2009 was down 14%2012 compared to $2.92$3.58 in 2008.2011, up 16%. Net income in 20092012 was 4.0%5.0% of net sales compared to 4.3%4.5% of net sales in 2008.

2011.

In December 2012, the Company’s U.S. Defined Benefit Plan was amended to reflect a hard freeze as of December 31, 2013. The Company recorded a one-time noncash curtailment gain of $23.5 million or $0.10 per diluted share in the fourth quarter of 2012 in connection with this amendment.

FINANCIAL CONDITION

Our cash balance of $530$197 million at December 31, 2010 was up $1932013 reflects a decrease of 51% compared to our cash balance of $403 million or 57% fromat December 31, 2009, due primarily to2012. In 2013, record levels of cash from operations provided by the increase in net income in 2010 and an improvedongoing working capital position relative to 2009.management was offset by approximately $712 million used for the acquisition of businesses and other investing activities. The Company’s accounts receivable balance at December 31, 20102013 increased by approximately 15%12% from the prior year, which reflectsis less than the Company’s 14%13% sales increase for the fourth quarter of 2010.2013. Inventory at December 31, 20102013 was up slightlyby approximately 13% from December 31, 2009,2012, which is well below the Company’s increase in sales and primarily attributable to acquisitions. Excluding acquisitions, inventory was up by approximately 1% from the prior year. Accounts payable increased $281$588 million or approximately 26%35% from December 31, 20092012 due primarily to increased inventory purchases related to the Company’s sales increase, improved payment terms with certain suppliers and other payables initiatives such as the ongoing expansionimpact of our procurement card program.the GPC Asia Pacific acquisition. Goodwill and other intangible assets increased by $38$492 million or 22%and $300, respectively, from December 31, 20092012 due to the Company’s acquisitions during the year.year, primarily GPC Asia Pacific. The change in our December 31, 2010 balance2013 balances for thedeferred tax assets, down $182 million, and pension

21

Index to Financial Statements

and other post-retirement benefits liabilities, down $41$433 million, or approximately 14% from December 31, 2009,2012, is primarily due to a change in funded status of the Company’s pension and other post-retirement plans in 2010 and a $912013. Finally, the change in our December 31, 2013 balance for other assets, down $241 million pension contribution duringor 38%, is primarily due to the year.

purchase of the remaining 70% interest in GPC Asia Pacific in 2013. Previously, the Company accounted for the 30% investment under the equity method of accounting, which was included in other assets in 2012.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s sources of capital consist primarily of cash flows from operations, supplemented as necessary by private issuances of debt and bank borrowings. We have $500$765 million of total debt outstanding at December 31, 2010,2013, of which $250 million matures in November 20112016 and is accounted for as current debt at December 31, 2010. The remaining $250 million matures in November 2013.December 2023. In addition, the Company has availableentered into a Syndicated Facility Agreement (the “Syndicated Facility”) for $850 million in September 2012, which replaced the $350 million unsecured revolving line of credit. No amounts werecredit that was scheduled to mature in December 2012. $265 million was outstanding under the Syndicated Facility or line of credit at December 31, 20102013 and 2009. The capital and credit markets were volatile over the last few years, although these conditions did not materially impact our access to these markets.no amount was outstanding at December 31, 2012. Currently, we believe that our cash on hand and available short-term and long-term sources of capital are sufficient to fund the Company’s operations, including working capital requirements, scheduled debt payments, interest payments, capital expenditures, benefit plan contributions, income tax obligations, dividends, share repurchases and contemplated acquisitions.

The ratio of current assets to current liabilities was 2.21.6 to 1 at December 31, 2010,2013 and before consideration of current debt, was 2.6 to 1. Thisthis compares to 2.91.9 to 1 at December 31, 2009.2012. Our liquidity position remains solid. The Company’s $500 million in total debt outstanding at December 31, 20102013 is unchangedup $265 million or 53% from 2009.

December 31, 2012 and primarily relates to the incremental borrowings utilized for the GPC Asia Pacific acquisition.

Sources and Uses of Net Cash

A summary of the Company’s consolidated statements of cash flows is as follows:

                     
  Year Ended December 31, Percent Change
Net Cash Provided by (Used in): 2010 2009 2008 2010 vs. 2009 2009 vs. 2008
    (In thousands)      
 
Operating Activities $678,663  $845,298  $530,309   (20)%  59%
Investing Activities  (172,348)  (264,420)  (214,334)  (35)%  23%
Financing Activities  (320,569)  (330,383)  (472,573)  (3)%  (30)%


21

   Year Ended December 31,  Percent Change 

Net Cash Provided by (Used in):

  2013  2012  2011  2013 vs. 2012  2012 vs. 2011 
   (In thousands)       

Operating Activities

  $1,056,731   $906,438   $624,927    17%   45% 

Investing Activities

   (825,579)   (651,867)   (231,497)   27%   182% 

Financing Activities

   (425,117)   (378,834)   (394,140)   12%   (4)% 

Net Cash Provided by Operating Activities:

The Company continues to generate cash and in 2013 net cash provided by operating activities totaled $679 million in 2010.$1.1 billion. This reflects a 20% decrease17% increase from 2009,2012 as, working capital ascollectively, trade accounts receivable, merchandise inventories and trade accounts payable net to a $278 million source of cash was $129in 2013 compared to a $208 million lesssource of cash in 2010 relative to 20092012. Additionally, net income and pension contributionsdepreciation and amortization in 20102013 increased by $35$37 million and $36 million, respectively, from 2009. These items were partially offset by a $76 million increase in net income.2012. Net cash provided by operating activities of $845was $906 million in 2009 represents2012, a 59%45% increase from 2008 and primarily relates to the $368 million net decrease in cash used for working capital requirements, including2011, as, collectively, trade accounts receivable, inventorymerchandise inventories and trade accounts payable netrepresented a $208 million source of the $76cash in 2012 compared to a $19 million decreaseuse of cash in 2011. Additionally, net income from 2008.

in 2012 increased by $83 million.

Net Cash Used in Investing Activities:

Net cash flow used in investing activities was $172$826 million in 20102013 compared to $264$652 million in 2009, a decrease2012, an increase of 35%27%. Cash used for acquisitions of businesses and other investing activities in 20102013 was $44$712 million, lessas previously discussed, or $154 million greater than in 2009, while2012. Capital expenditures of $124 million in 2013 increased by $22 million or 22% from 2012, but were within our estimate of $115 to $135 million, and we estimate that cash used for capital expenditures increased by $16 million for the year. The decreasein 2014 will be approximately $140 to $160 million. Net cash flow used in investing activities was primarily due$652 million in 2012 compared to a $73$231 million purchasein 2011, an increase of properties under a construction and lease agreement in 2009. This transaction also explains the increase in investing activities in 2009 from 2008, net of a $36 million decrease in capital expenditures in 2009 from 2008. 182%.

22

Index to Financial Statements

Cash used for acquisitions of businesses and other investing activities in 20092012 was $558 million, as previously discussed, or $421 million greater than in 2011. Capital expenditures of $102 million in 2012 were relatively consistent with 2008.

2011.

Net Cash Used in Financing Activities:

The Company used $321$425 million of cash in financing activities in 2010, a 3% decrease2013, up 12% from the $330$379 million used in financing activities in 2009.2012. Cash used in financing activities in 20092012 was down 30%$15 million or 4% from the $473$394 million used in 2008.2011. For the three years presented, net cash used in financing activities was primarily for dividends paid to shareholders and repurchases of the Company’s common stock. The Company paid dividends to shareholders of $258$326 million, $254$301 million and $252$276 million during 2010, 20092013, 2012 and 2008,2011, respectively. The Company expects this trend of increasing dividends to continue in the foreseeable future. During 2010, 20092013, 2012 and 2008,2011, the Company repurchased $75$121 million, $26$82 million and $273$122 million, respectively, of the Company’s common stock. We expect to remain active in our share repurchase program, but the amount and value of shares repurchased will vary annually.

vary.

Notes and Other Borrowings

The Company maintains a $350an $850 million unsecured revolving line of credit with a consortium of financial institutions, which matures in December 2012September 2017 and bears interest at LIBOR plus .30% (0.56%a margin, which is based on the Company’s leverage ratio (0.92% at December 31, 2010)2013). The Company also has the option under this agreement to increase its borrowing an additional $350 million, as well as an option to decrease the borrowing capacity or terminate the Syndicated Facility with appropriate notice. At December 31, 2010 and 2009, no2013, approximately $265 million was outstanding under this line of credit. No amounts were outstanding under thethis line of credit.credit at December 31, 2012. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of approximately $50$62 million and $61 million outstanding at December 31, 20102013 and 2009.

2012, respectively.

At December 31, 2010,2013, the Company had unsecured Senior Notes outstanding under a $500 million financing arrangementarrangements as follows: $250 million Series B, 6.23%series D and E senior unsecured notes, 3.35% fixed, due 2011;2016; and $250 million series F senior unsecured note, 4.67%notes, 2.99% fixed, due 2013.2023. These borrowings contain covenants related to a maximumdebt-to-capitalization ratio and certain limitations on additional borrowings. At December 31, 2010,2013, the Company was in compliance with all such covenants. The weighted average interest rate on the Company’s total outstanding borrowings was approximately 5.45%2.82% at December 31, 20102013 and 2009.4.01% at December 31, 2012. Total interest expense, net of interest income, for all borrowings was $26.6$24.3 million, $27.1$19.6 million and $29.8$24.6 million in 2010, 20092013, 2012 and 2008,2011, respectively.

Contractual and Other Obligations

In October 2007, the Company entered into a sale-leaseback transaction with a financial institution. In connection with the transaction, the Company sold certain automotive retail store properties and immediately leased the properties back over a lease term of twenty years. The lease was classified as an operating lease. Net proceeds from the transaction amounted to approximately $56 million. The Company realized a net gain of approximately $20 million, which was deferred and is being amortized over the lease term.


22

The following table shows the Company’s approximate obligations and commitments, including interest due on credit facilities, to make future payments under specified contractual obligations as of December 31, 2010:
2013:

Contractual Obligations

                     
  Payment Due by Period 
     Less Than
        Over
 
  Total  1 Year  1-3 Years  3-5 Years  5 Years 
  (In thousands) 
 
Credit facilities $548,329  $275,952  $272,377  $—  $— 
Capital leases  2,215   408   642   483   682 
Operating leases  505,043   124,370   168,553   84,023   128,097 
                     
Total contractual cash obligations $1,055,587  $400,730  $441,572  $84,506  $128,779 
                     

   Payment Due by Period 
   Total   Less Than
1 Year		   1-3 Years   3-5 Years   Over
5 Years		 
   (In thousands) 

Credit facilities

  $863,212    $280,508    $281,002    $14,950    $286,752  

Operating leases

   728,600     191,400     261,300     126,400     149,500  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total contractual cash obligations

  $1,591,812    $471,908    $542,302    $141,350    $436,252  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Due to the uncertainty of the timing of future cash flows associated with the Company’s unrecognized tax benefits at December 31, 2010,2013, the Company is unable to make reasonably reliable estimates of the period of

23

Index to Financial Statements

cash settlement with the respective taxing authorities. Therefore, $50$60 million of unrecognized tax benefits have been excluded from the contractual obligations table above. Refer to Note 6 of the Consolidated Financial Statements for a discussion on income taxes.

Purchase orders or contracts for the purchase of inventory and other goods and services are not included in our estimates. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current distribution needs and are fulfilled by our vendors within short time horizons. The Company does not have significant agreements for the purchase of inventory or other goods specifying minimum quantities or set prices that exceed our expected requirements.

The Company guarantees the borrowings of certain independently owned automotive parts stores (independents) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings. The following table shows the Company’s approximate commercial commitments as of December 31, 2010:

2013:

Other Commercial Commitments

                     
     Amount of Commitment Expiration per Period 
  Total Amounts
  Less Than
        Over
 
  Committed  1 Year  1-3 Years  3-5 Years  5 Years 
        (In thousands)       
 
Line of credit $—  $—  $—  $—  $  — 
Standby letters of credit  50,419   50,419   —   —   — 
Guaranteed borrowings of independents and affiliates  200,926   29,747   118,661   52,518   — 
                     
Total commercial commitments $251,345  $80,166  $118,661  $52,518  $— 
                     

   Total  Amounts
Committed		   Amount of Commitment Expiration per Period 
     Less Than
1  Year		   1-3 Years   3-5 Years   Over
5 Years		 
   (In thousands) 

Line of credit

  $—    $—    $—    $—    $—  

Standby letters of credit

   61,617     61,617     —     —     —  

Guaranteed borrowings of independents and affiliates

   258,703     92,190     165,251     1,262     —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial commitments

  $320,320    $153,807    $165,251    $1,262    $—  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

In addition, the Company sponsors defined benefit pension plans that may obligate us to make contributions to the plans from time to time. Contributions in 20102013 were $91$74 million. We expect to make a $52$51 million cash contribution to our qualified defined benefit plans in 2011,2014, and contributions required for 20112014 and future years will depend on a number of unpredictable factors including the market performance of the plans’ assets and future changes in interest rates that affect the actuarial measurement of the plans’ obligations.

Share Repurchases

In 2010,2013, the Company repurchased approximately 1.81.5 million shares and the Company had remaining authority to purchase approximately 16.010.7 million shares at December 31, 2010.


23

2013.

CRITICAL ACCOUNTING POLICIES

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We describe in this section certain critical accounting policies that require us to make significant estimates, assumptions and judgments. An accounting policy is deemed to be critical if it requires an accounting estimate to

24

Index to Financial Statements

be made based on assumptions about matters that are uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the preparation of the consolidated financial statements. For further information on the critical accounting policies, see Note 1 of the Consolidated Financial Statements.

Inventories — Provisions for Slow Moving and Obsolescence

The Company identifies slow moving or obsolete inventories and estimates appropriate loss provisions related thereto. Historically, these loss provisions have not been significant as the vast majority of the Company’s inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.

Allowance for Doubtful Accounts — Methodology

The Company evaluates the collectability of accounts receivable based on a combination of factors. Initially, theThe Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initialexperience and periodically adjusts this estimate is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2010, 20092013, 2012 and 2008,2011, the Company recorded provisions for bad debtsdoubtful accounts of $10.6$8.7 million, $28.5$8.0 million, and $23.9$13.2 million, respectively.

Consideration Received from Vendors

The Company enters into agreements at the beginning of each year with many of its vendors that provide for inventory purchase incentives. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accrues for the receipt of these incentives as part of its inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While management believes the Company will continue to receive consideration from vendors in 20112014 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future or that we will be able to achieve the specified volumes necessary to take advantage of such incentives.


24

Impairment of Property, Plant and Equipment and Goodwill and Other Intangible Assets

At least annually, the Company evaluates property, plant and equipment, goodwill and other intangible assets for potential impairment indicators. The Company’s judgments regarding the existence of impairment indicators are based on market conditions and operational performance, among other factors. Future events could cause the Company to conclude that impairment indicators exist and that assets associated with a particular operation are impaired. Evaluating for impairment also requires the Company to estimate future operating results and cash flows which require judgment by management. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations.

Employee Benefit Plans

The Company’s benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the Company’s pension plan assets. The pension plan investment strategy implemented by the Company’s management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, andas well as fiduciary standards. The long-term primary objectives for the pension plan funds are to provide for a reasonable amount of long-term growth of capital without undue exposure to risk, protect the assets from erosion of purchasing power and providepro-

25

Index to Financial Statements

vide investment results that meet or exceed the pension plan’s actuarially assumed long term rate of return. The Company’s investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (50%(49% S&P 500 Index, 5% Russell Mid Cap Index, 10%8% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index and 30%28% BarCap U.S. Govt/Credit).

We make several critical assumptions in determining our pension plan assets and liabilities and related pension expense. We believe the most critical of these assumptions are the expected rate of return on plan assets and the discount rate. Other assumptions we make relate to employee demographic factors such as rate of compensation increases, mortality rates, retirement patterns and turnover rates.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measuring 20112014 pension expense or income is 7.87%7.85% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships.

The discount rate is chosen as the rate at which pension obligations could be effectively settled and is based on capital market conditions as of the measurement date. We have matched the timing and duration of the expected cash flows of our pension obligations to a yield curve generated from a broad portfolio of high-quality fixed income debt instruments to select our discount rate. Based upon this cash flow matching analysis, we selected a weighted average discount rate for the plans of 5.74%5.10% at December 31, 2010.

2013.

Net periodic benefit cost for our defined benefit pension plans was $21.9$51.1 million, $7.3$26.8 million and $46.9$32.3 million for the years ended December 31, 2010, 20092013, 2012 and 2008,2011, respectively. The decreasing trendincrease in pension cost in 2013 from 2008 to 20092012 was primarily due to the curtailment and subsequent remeasurement which is discussed below, andgain recorded in connection with the 2012 amendment to the U.S. defined benefit pension plan. Such curtailment gain, net of the change in assumptions for the rate of return on plan assets theand discount rate, also accounts for the decrease in pension cost in 2012 from 2011. The 2012 amendment and the rate of compensation increases.related curtailment decreased benefit costs in 2012 and are discussed further below. Refer to Note 7 of the Consolidated Financial Statements for more information regarding employee benefit plans.

In April 2009,December 2012, the Company’s U.S. defined benefit plan was amended to reflect a hard freeze as of December 31, 2013. No further benefits were provided after this date for additional credited service or earnings and all participants became fully vested as of December 31, 2013. The Company recorded a $4.3$23.5 million non-cash curtailment adjustmentgain in December 2012 in connection with a reorganization, which reduced the expected years of future service of employees covered by the U.S. defined benefit pension plan.

In July 2009, the Company announced changes to the U.S. postretirement benefit plan. Effective January 1, 2010, future retirees no longer receive employer-provided medical benefits and current pre-65 retirees no longer receive employer-provided post-65 benefits (beyond an access-only arrangement).


25

this amendment.

QUARTERLY RESULTS OF OPERATIONS

The following is a summary of the quarterly results of operations for the years ended December 31, 20102013 and 2009:

                 
  Three Months Ended
  March 31, June 30, Sept. 30, Dec. 31,
  (In thousands except per share data)
 
2010
                
Net Sales $2,602,115  $2,847,186  $2,950,560  $2,807,728 
Gross Profit  760,475   822,310   853,031   817,128 
Net Income  100,609   124,467   131,785   118,650 
Earnings Per Share:                
Basic  .63   .79   .84   .75 
Diluted  .63   .78   .83   .75 
2009                
Net Sales $2,444,496  $2,535,045  $2,606,757  $2,471,214 
Gross Profit  732,201   744,855   765,246   767,460 
Net Income  89,159   103,610   107,639   99,167 
Earnings Per Share:                
Basic  .56   .65   .67   .62 
Diluted  .56   .65   .67   .62 
2012:

   Three Months Ended 
   March 31,   June 30,   Sept. 30,   Dec. 31, 
   (In thousands except per share data) 

2013

        

Net Sales

  $3,198,802    $3,675,997    $3,685,243    $3,517,801  

Gross Profit

   921,748     1,105,108     1,100,923     1,092,141  

Net Income

   144,389     216,357     173,746     150,467  

Earnings Per Share:

        

Basic

   .93     1.40     1.12     .98  

Diluted

   .93     1.39     1.12     .97  

2012

        

Net Sales

  $3,181,288    $3,337,836    $3,375,778    $3,118,966  

Gross Profit

   919,111     972,286     976,036     910,658  

Net Income

   146,255     168,618     172,943     160,225  

Earnings Per Share:

        

Basic

   .94     1.08     1.11     1.03  

Diluted

   .93     1.08     1.11     1.03  

26

Index to Financial Statements

We recorded the quarterly earnings per share amounts as if each quarter was a discrete period. As a result, the sum of the basic and diluted earnings per share will not necessarily total the annual basic and diluted earnings per share.

The preparation of interim consolidated financial statements requires management to make estimates and assumptions for the amounts reported in the interim condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim consolidated financial statements for the accrual of bad debts, inventory adjustments and discount(including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method), customer sales returns, and volume incentives earned, among others. Bad debts are accrued based on a percentage of sales, and volume incentives are estimated based upon cumulative and projected purchasing levels. Inventory adjustments are accrued on an interim basis and adjusted in the fourth quarter based on the annual October 31book-to-physical inventory adjustment.adjustment and LIFO valuation. The methodology and practices used in deriving estimates and assumptions for interim reporting typically resultsresult in adjustments upon accurate determination at year-end. The effect of these adjustments in 20102013 and 20092012 was not significant.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Although the Company does not face material risks related to interest rates and commodity prices, the Company is exposed to changes in foreign currency rates with respect to foreign currency denominated operating revenues and expenses.

Foreign Currency

The Company has translation gains or losses that result from translation of the results of operations of an operating unit’s foreign functional currency into U.S. dollars for consolidated financial statement purposes. The Company’s principal foreign currency exchange exposure is the Canadian dollar, which is the functional currency of our Canadian operations, and the Australian dollar, the functional currency of our Australasian operations. Foreign currency exchange exposure, particularly in regard to the Canadian and Australian dollar and, to a lesser extent, the Mexican peso, positivelynegatively impacted our results for the year ended December 31, 2010.

2013.

During 20102013 and 2009,2012, it was estimated that a 10% shift in exchange rates between those foreign functional currencies and the U.S. dollar would have impacted translated net sales by approximately $140$255 million and $104$176 million, respectively.


26

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this Item 8 is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning onpage F-1.

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.CONTROLS AND PROCEDURES.

Management’s conclusion regarding the effectiveness of disclosure controls and procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in SECRule 13a-15(e). Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

27

Index to Financial Statements

Management’s report on internal control over financial reporting

A report of management’s assessment of our internal control over financial reporting, as such term is defined in SECRule 13a-15(f), as of December 31, 20102013 is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning onpage F-1.

The attestation report called for by Item 308(b) ofRegulation S-K is incorporated herein by reference to the Report“Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting,Reporting”, which is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning onpage F-1.

Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter ended December 31, 20102013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.OTHER INFORMATION.

None.


27

28

Index to Financial Statements

PART III..

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

EXECUTIVE OFFICERS OF THE COMPANY.

Executive officers of the Company are elected by the Board of Directors and each serves at the pleasure of the Board of Directors until his successor has been elected and qualified, or until his earlier death, resignation, removal, retirement or disqualification. The current executive officers of the Company are:

Thomas C. Gallagher,age 63,66, has been President of the Company since 1990, Chief Executive Officer since August 2004 and Chairman of the Board since February 2005. Mr. Gallagher served as President of the Company from 1990 until January 2012 and Chief Operating Officer of the Company from 1990 until August 2004.

Jerry W. Nix,Paul D. Donahue, age 65, was appointed as57, has been a director of the Company and elected Vice-Chairman by the Board of Directors in November 2005. He is Executive Vice President-Finance and Chief Financial Officersince April 2012, was appointed President of the Company a position hein January 2012, and has heldserved as President of the Company’s U.S. Automotive Parts Group since 2000. Previously,July 2009. Mr. Nix held the position of Senior Vice President-Finance from 1990 to 2000.

Robert J. Susor, age 65, has been theDonahue served as Executive Vice President of the Company since 2003. Mr. Susor previously servedfrom August 2007 until his appointment as Senior Vice President-Market Development from 1991 to 2003. Mr. Susor will be retiring as of April 30, 2011.
Paul D. Donahue, age 54, was appointed President of the Automotive Parts Group in July 2009 and is also Executive Vice President of the Company, a position he has held since August 2007.2012. Previously, Mr. Donahue was President and Chief Operating Officer of S.P. Richards Company from 2004 to 2007 and was Executive Vice President — SalesPresident-Sales and Marketing in 2003, the year he joined the Company.

Carol B. Yancey, age 50, was appointed Executive Vice President, Chief Financial Officer and Corporate Secretary of the Company in March 2013. Ms. Yancey was Senior Vice President — Finance and Corporate Secretary from 2005 until her appointment as Executive Vice President — Finance in November 2012. Previously, Ms. Yancey was named Vice President of the Company in 1999 and Corporate Secretary in 1995.

R. Bruce Clayton, age 64,67, has been the Senior Vice President-Human Resources at the Company since November 2004. Previously, Mr. Clayton held the position of Vice President-Risk Management and Employee Services from June 2000 to November 2004.

William J. Stevens, age 65, has been the President and Chief Executive Officer of Motion Industries since 1997. Previously, Mr. Stevens was President and Chief Operating Officer from 1994 to 1997. In 1993, Mr. Stevens served as Executive Vice President.

Further information required by this item is set forth under the heading “Nominees for Director”, under the heading “Corporate Governance — Code of Conduct and Ethics”, under the heading “Corporate Governance -Board— Board Committees — Audit Committee”, under the heading “Corporate Governance — Director Nominating Process” and under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement and is incorporated herein by reference.

ITEM 11.EXECUTIVE COMPENSATION.

Information required by this item is set forth under the headings “Executive Compensation”, “Additional Information Regarding Executive Compensation”, “2010“2013 Grants of Plan-Based Awards”, “2010“2013 Outstanding Equity Awards at Fiscal Year-End”, “2010“2013 Option Exercises and Stock Vested”, “2010“2013 Pension Benefits”, “2010“2013 Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating and Governance Committee Report”, “Compensation, Nominating and Governance Committee Interlocks and Insider Participation” and “Director Compensation”“Compensation of Directors” of the Proxy Statement and is incorporated herein by reference.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Certain information required by this item is set forth below. Additional information required by this item is set forth under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Proxy Statement and is incorporated herein by reference.


28

29

Index to Financial Statements

Equity Compensation Plan Information

The following table gives information as of December 31, 20102013 about the common stock that may be issued under all of the Company’s existing equity compensation plans:

             
        (c)
 
        Number of Securities
 
        Remaining Available for
 
  (a)
  (b)
  Future Issuance Under
 
  Number of Securities to
  Weighted Average
  Equity Compensation
 
  be Issued upon Exercise
  Exercise Price of
  Plans (Excluding
 
  of Outstanding Options,
  Outstanding Options,
  Securities
 
Plan Category Warrants and Rights (1)  Warrants and Rights  Reflected in Column (a)) 
 
Equity Compensation Plans Approved by Shareholders:  2,993,367(2) $39.87   -0- 
   3,397,249(3) $41.64   4,498,872(5)
Equity Compensation Plans Not Approved by Shareholders:  62,002(4)  n/a   937,998 
             
Total
  6,452,618   —   5,436,870 

Plan Category

  (a)
Number of Securities  to
be Issued upon Exercise
of Outstanding Options,
Warrants and Rights(1)		  (b)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights		   (c)
Number of  Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities
Reflected in Column (a))		 

Equity Compensation Plans Approved by Shareholders:

   359,200(2)  $43.82     —  
   4,220,518(3)  $56.96     2,743,421(5) 

Equity Compensation Plans Not Approved by Shareholders:

   74,905(4)   n/a     925,095  
  

 

 

    

 

 

 

Total

   4,654,623    —     3,668,516  

(1)Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights.

(2)Genuine Parts Company 1999 Long-Term Incentive Plan, as amended

(3)Genuine Parts Company 2006 Long-Term Incentive Plan

(4)Genuine Parts Company Director’s Deferred Compensation Plan, as amended

(5)All of these shares are available for issuance pursuant to grants of full-value stock awards.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Information required by this item is set forth under the headings “Corporate Governance — Independent Directors” and “Transactions with Related Persons” of the Proxy Statement and is incorporated herein by reference.

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.

Information required by this item is set forth under the heading “Proposal 5.3. Ratification of Selection of Independent Auditors” of the Proxy Statement and is incorporated herein by reference.


29

30

Index to Financial Statements

PART IV..

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)  Documents filed as part of this report

(1)  Financial Statements

The following consolidated financial statements of Genuine Parts Company and subsidiaries are included in this Annual Report onForm 10-K. See, also, the Index to Consolidated Financial Statements onPage F-1.

Report of independent registered public accounting firm on internal control over financial reporting

Report of independent registered public accounting firm on the financial statements

Consolidated balance sheets — December 31, 20102013 and 2009

2012

Consolidated statements of income and comprehensive income — Years ended December 31, 2010, 20092013, 2012 and 2008

2011

Consolidated statements of equity — Years ended December 31, 2010, 20092013, 2012 and 2008

2011

Consolidated statements of cash flows — Years ended December 31, 2010, 20092013, 2012 and 2008

2011

Notes to consolidated financial statements — December 31, 2010

2013

(2)  Financial Statement Schedules

The following consolidated financial statement schedule of Genuine Parts Company and subsidiaries, set forth immediately following the consolidated financials statements of Genuine Parts Company and Subsidiaries, is filed pursuant to Item 15(c):

Schedule II — Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

(3)  Exhibits.

The following exhibits are filed as part of or incorporated by reference in this report. Exhibits that are incorporated by reference to documents filed previously by the Company under the Securities Exchange Act of 1934, as amended, are filed with the Securities and Exchange Commission under FileNo. 1-5690. The Company will furnish a copy of any exhibit upon request to the Company’s Corporate Secretary.

Exhibit 3.13.1  Amended and Restated Articles of Incorporation of the Company, as amended April 23, 2007. (Incorporated herein by reference from the Company’s Current Report onForm 8-K, dated April 23, 2007.)
Exhibit 3.23.2  By-lawsBy-Laws of the Company, as amended and restated August 20, 2007.November 18, 2013. (Incorporated herein by reference from the Company’s Current Report onForm 8-K, dated August 20, 2007.November 18, 2013.)
Exhibit 4.24.2  Specimen Common Stock Certificate. (Incorporated herein by reference from the Company’s Registration Statement onForm S-1, RegistrationNo. 33-63874.)
Exhibit 4.3Note Purchase Agreement, dated November 30, 2001, for the sale of Series A Senior Notes due November 30, 2008, and the sale of Series B Senior Notes due November 30, 2011. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2002.)

Instruments with respect to long-term debt where the total amount of securities authorized there under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request.

Exhibit 10.1*10.1*  The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 1995.)


30

31

Index to Financial Statements
Exhibit 10.2*10.2*  Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)
Exhibit 10.3*10.3*  Genuine Parts Company Death Benefit Plan, effective July 15, 1997. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 10, 1998.)
Exhibit 10.4*10.4*  Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, Form10-K, dated March 10, 2000.)
Exhibit 10.5*10.5*  The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.6*10.6*  Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 10, 2000.)
Exhibit 10.7*10.7*  Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2002.)
Exhibit 10.8*10.8*  Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 21, 2003.)
Exhibit 10.9*10.9*  Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.10*10.10*  Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.11*Description of Director Compensation. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)
Exhibit 10.12*Genuine Parts Company Stock Appreciation Rights Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)
Exhibit 10.13*10.11*  Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 28, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 2006.)
Exhibit 10.14*10.12*  Amendment No. 2 to the Genuine Parts Company Death Benefit Plan, dated November 9, 2005, effective April 1, 2005. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 2006.)
Exhibit 10.15*10.13*  Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. (Incorporated herein by reference from the Company’s Current Report onForm 8-K, dated April 18, 2006.)
Exhibit 10.16*10.14*  Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 28, 2007.)
Exhibit 10.17*10.15*  Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.18*10.16*  Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.19*10.17*  Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)

32

Index to Financial Statements
Exhibit 10.20*10.18*  Genuine Parts Company Performance Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)

31

Exhibit 10.21*10.19*  Genuine Parts Company Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.22*10.20*  SpecimenForm of Amended and Restated Change in Control Agreement, as amended and restated as of November 19, 2007.Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.23*10.21*  Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 27, 2009.)
Exhibit 10.24*10.22*  Genuine Parts Company 2009 Annual Incentive Bonus Plan, dated March 31, 2009, effective January 1, 2009. (Incorporated herein by reference from the Company’s Quarterly Report onForm 10-Q dated May 7, 2009).
Exhibit 10.25*10.23*  Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.26*10.24*  Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.27*10.25*  Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)
*Exhibit 10.26*Description of Director Compensation. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated August 4, 2011.)
Exhibit 10.27*Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.28*Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.29*Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated December 7, 2012, effective December 31, 2013. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.30*Form of Amendment to the Amended and Restated Change in Control Agreement. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 26, 2013.)
Exhibit 10.31*Genuine Parts Company Stock Appreciation Rights Agreement. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 26, 2013.)

*Indicates management contracts and compensatory plans and arrangements.

Exhibit 21  Subsidiaries of the Company.
Exhibit 23  Consent of Independent Registered Public Accounting Firm.
Exhibit 31.1  Certification signed by Chief Executive Officer pursuant to SECRule 13a-14(a).
Exhibit 31.2  Certification signed by Chief Financial Officer pursuant to SECRule 13a-14(a).

33

Index to Financial Statements
Exhibit 32.1  Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Exhibit 32.2  Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Exhibit 101  Interactive data files pursuant to Rule 405 ofRegulation S-T:
  i)(i) the Consolidated Balance Sheets as of December 31, 20102013 and 2009;2012; (ii) the Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2010, 20092013, 2012 and 2008;2011; (iii) the Consolidated Statements of Equity for the Years ended December 31, 2010, 20092013, 2012 and 2008;2011; (iv) the Consolidated Statements of Cash Flows for Years ended December 31, 2010, 20092013, 2012 and 2008;2011; (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text; and (vi) Financial Statement Schedule II -— Valuation and Qualifying Accounts.

(b)  Exhibits

See the response to Item 15(a)(3) above.

(c)  Financial Statement Schedules

See the response to Item 15(a)(2) above.

32

34

Index to Financial Statements

SIGNATURES.

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/ Thomas C. Gallagher  2/27/14   
/s/ Thomas C. GallagherCarol B. Yancey 2/25/1127/14  
/s/  Jerry W. Nix
2/25/11
Thomas C. Gallagher
 (Date)  Jerry W. NixCarol B. Yancey (Date)
Chairman President and Chief Executive Officer  Executive Vice ChairmanPresident and Chief Financial and Accounting Officer

35

Index to Financial Statements

Pursuant to the requirements of the Securities 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/    Dr. Mary B. Bullock
2/21/11
/s/  Jean Douville
2/21/11
Dr. Mary B. Bullock
(Date)Jean Douville(Date)
DirectorDirector
  2/17/14   
/s/  Thomas C. Gallagher
 2/21/11
/s/    George C. Guynn
2/21/11
Thomas C. Gallagher
(Date)George C. Guynn(Date)
DirectorDirector
Chairman, President and Chief Executive
Officer (Principal Executive Officer)Paul D. Donahue		  2/17/14  

Dr. Mary B. Bullock

 
/s/  John R. Holder
2/21/11
/s/  John D. Johns
2/21/11
John R. Holder
(Date)John D. Johns(Date)
DirectorDirector
/s/  Michael M. E. Johns
2/21/11
/s/  J. Hicks Lanier
2/21/11
Michael M. E. Johns
(Date)J. Hicks Lanier(Date)
DirectorDirector
/s/  Robert C. Loudermilk, Jr.
2/21/11
/s/  Wendy B. Needham
2/21/11
Robert C. Loudermilk, Jr.
(Date)Wendy B. Needham(Date)
DirectorDirector
/s/  Jerry W. Nix
2/21/11
/s/   Larry L. Prince
2/21/11
Jerry W. Nix
(Date)Larry L. Prince(Date)
DirectorDirector
Vice Chairman and Chief Financial Officer (Principal Financial and Accounting Officer)
/s/  Gary W. Rollins
2/21/11
Gary W. Rollins
 (Date)    
DirectorPaul D. Donahue  (Date)  

Director

Director
/s/    Jean Douville2/17/14/s/    Thomas C. Gallagher2/17/14

Jean Douville

(Date)Thomas C. Gallagher(Date)

Director

Director

Chairman and Chief Executive Officer (Principal Executive Officer)

/s/    George C. Guynn2/17/14/s/    John R. Holder2/17/14

George C. Guynn

(Date)John R. Holder(Date)

Director

Director
/s/    John D. Johns2/17/14/s/    Michael M. E. Johns2/17/14

John D. Johns

(Date)Michael M. E. Johns(Date)

Director

Director
/s/    Robert C. Loudermilk, Jr.2/17/14/s/    Wendy B. Needham2/17/14

Robert C. Loudermilk, Jr.

(Date)Wendy B. Needham(Date)

Director

Director
/s/    Jerry W. Nix2/17/14/s/    Gary W. Rollins2/17/14

Jerry W. Nix

(Date)Gary W. Rollins(Date)

Director

Director

36

Index to Financial Statements

ANNUAL REPORT ONFORM 10-K

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

   Page
 

Report of Management on Internal Control Over Financial Reporting

   F-2  

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

   F-3  

Report of Independent Registered Public Accounting Firm on Financial Statements and Schedule

   F-4  

Consolidated Balance Sheets as of December 31, 20102013 and 20092012

   F-5  

Consolidated Statements of Income and Comprehensive Income for the Years Ended December  31, 2010, 20092013, 2012 and 20082011

   F-6  

Consolidated Statements of Equity for the Years Ended December 31, 2010, 20092013, 2012 and 20082011

   F-7  

Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 20092013, 2012 and 20082011

   F-8  

Notes to Consolidated Financial Statements

   F-9  

Financial Statement Schedule II — Valuation and Qualifying Accounts

   S-1  


F-1

Index to Financial Statements

Report of Management

Genuine Parts Company

Management’s Responsibility for the Financial Statements

We have prepared the accompanying consolidated financial statements and related information included herein for the years ended December 31, 2010, 20092013, 2012 and 2008.2011. The opinion of Ernst & Young LLP, the Company’s independent registered public accounting firm, on those consolidated financial statements is included herein. The primary responsibility for the integrity of the financial information included in this annual report rests with management. Such information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances based on our best estimates and judgments and giving due consideration to materiality.

Management’s Report on Internal Control over Financial Reporting

The management of Genuine Parts Company and its subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRule 13a-15(f) under the Securities Exchange Act of 1934.

The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and to the board of directors regarding the preparation and fair presentation of the Company’s published consolidated financial statements. The Company’s internal control over financial reporting includes those policies and procedures that:

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management did not include the internal controls of GPC Asia Pacific, which was acquired on April 1, 2013, and is included in the Company’s 2013 consolidated balance sheet.

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010.

2013.

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework.” Based on this assessment, management concluded that, as of December 31, 2010,2013, the Company’s internal control over financial reporting was effective.

Ernst & Young LLP has issued an audit report on the Company’s operating effectiveness of internal control over financial reporting as of December 31, 2010.2013. This report appears onpage F-3.

Audit Committee Responsibility

The Audit Committee of Genuine Parts Company’s Board of Directors is responsible for reviewing and monitoring the Company’s financial reports and accounting practices to ascertain that they are within acceptable limits of sound practice in such matters. The membership of the Committee consists of non-employee Directors. At periodic meetings, the Audit Committee discusses audit and financial reporting matters and the internal audit function with representatives of financial management and with representatives from Ernst & Young LLP.

/s/  Jerry W. Nix
JERRY W. NIX
Vice Chairman

/s/    Carol B. Yancey

CAROL B. YANCEY

Executive Vice President and Chief Financial Officer

February 27, 2014

F-2

Index to Financial Officer
February 25, 2011
Statements


F-2

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

The Board of Directors and Shareholders of Genuine Parts Company and Subsidiaries

We have audited Genuine Parts Company’sCompany and Subsidiaries’ internal control over financial reporting as of December 31, 2010,2013, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (the COSO criteria). Genuine Parts Company’sCompany and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting section of the accompanying Report of Management. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of GPC Asia Pacific, which is included in the 2013 consolidated financial statements of Genuine Parts Company and constituted approximately 16% of total assets and approximately 23% of net assets, as of December 31, 2013 and constituted 6% of revenues and less than 1% of net income for the year then ended. Our audit of internal control over financial reporting of Genuine Parts Company also did not include an evaluation of the internal control over the financial reporting of this entity.

In our opinion, Genuine Parts Company and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010,2013, based on the COSO criteria.

criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 20102013 and 2009,2012, and the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 20102013 of Genuine Parts Company and Subsidiaries and our report dated February 25, 201127, 2014 expressed an unqualified opinion thereon.

/s/    Ernst & Young LLP

Atlanta, Georgia

February 25, 2011

27, 2014


F-3

Index to Financial Statements

Report of Independent Registered Public Accounting Firm on the Financial Statements

The Board of Directors and Shareholders of Genuine Parts Company and Subsidiaries

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 20102013 and 2009,2012, and the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2010.2013. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 20102013 and 2009,2012, and the consolidated results of itstheir operations and itstheir cash flows for each of the three years in the period ended December 31, 2010,2013, in conformity with U.S. generally accepted accounting principles.

Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Genuine Parts Company’sCompany and Subsidiaries’ internal control over financial reporting as of December 31, 2010,2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated February 25, 201127, 2014 expressed an unqualified opinion thereon.

/s/    Ernst & Young LLP

Atlanta, Georgia

February 25, 2011

27, 2014


F-4

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Consolidated Balance Sheets

         
  December 31 
  2010  2009 
  (In thousands, except share data and per share amounts) 
 
ASSETS
        
Current assets:        
Cash and cash equivalents $529,968  $336,803 
Trade accounts receivable, net  1,364,406   1,187,075 
Merchandise inventories, net  2,224,717   2,214,076 
Prepaid expenses and other current assets  295,796   294,874 
         
Total current assets  4,414,887   4,032,828 
Goodwill and other intangible assets, less accumulated amortization  209,548   171,532 
Deferred tax asset  157,392   167,722 
Other assets  199,087   147,583 
Property, plant, and equipment:        
Land  72,636   69,829 
Buildings, less allowance for depreciation (2010 — $174,134; 2009 — $171,903)  218,967   212,859 
Machinery and equipment, less allowance for depreciation (2010 — $555,053; 2009 — $519,272)  192,527   202,336 
         
Net property, plant, and equipment  484,130   485,024 
         
  $5,465,044  $5,004,689 
         
         
LIABILITIES AND EQUITY
Current liabilities:        
Trade accounts payable $1,374,930  $1,094,347 
Current portion of debt  250,000   — 
Accrued compensation  143,480   106,432 
Other accrued expenses  115,659   100,931 
Dividends payable  64,600   63,586 
Income taxes payable  23,145   42,988 
         
Total current liabilities  1,971,814   1,408,284 
Long-term debt  250,000   500,000 
Pension and other post-retirement benefit liabilities  258,807   300,197 
Other long-term liabilities  181,709   166,836 
Equity:        
Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued  —   — 
Common stock, par value $1 per share — authorized 450,000,000 shares; issued and outstanding 157,636,261 in 2010 and 158,917,846 shares in 2009  157,636   158,918 
Accumulated other comprehensive loss  (298,352)  (309,897)
Retained earnings  2,934,535   2,772,309 
         
Total parent equity  2,793,819   2,621,330 
Noncontrolling interests in subsidiaries  8,895   8,042 
         
Total equity  2,802,714   2,629,372 
         
  $5,465,044  $5,004,689 
         

   December 31 
         2013              2012       
   

(In Thousands, Except Share

Data and per Share Amounts)

 

Assets

   

Current assets:

   

Cash and cash equivalents

  $196,893   $403,095  

Trade accounts receivable, net

   1,664,819    1,490,028  

Merchandise inventories, net

   2,946,021    2,602,560  

Prepaid expenses and other current assets

   413,758    324,448  
  

 

 

  

 

 

 

Total current assets

   5,221,491    4,820,131  

Goodwill

   789,971    298,040  

Other intangible assets, less accumulated amortization

   499,385    199,799  

Deferred tax assets

   97,555    279,463  

Other assets

   401,834    643,263  

Property, plant, and equipment:

   

Land

   87,658    88,710  

Buildings, less accumulated depreciation (2013 — $251,541; 2012 — $237,504)

   281,408    266,694  

Machinery and equipment, less accumulated depreciation (2013 — $555,895;
2012 — $522,136)

   300,995    210,961  
  

 

 

  

 

 

 

Net property, plant, and equipment

   670,061    566,365  
  

 

 

  

 

 

 
  $7,680,297   $6,807,061  
  

 

 

  

 

 

 

Liabilities and equity

   

Current liabilities:

   

Trade accounts payable

  $2,269,671   $1,681,900  

Current portion of debt

   264,658    250,000  

Accrued compensation

   145,052    115,348  

Other accrued expenses

   411,680    359,395  

Dividends payable

   82,746    76,641  

Income taxes payable

   9,237    4,354  
  

 

 

  

 

 

 

Total current liabilities

   3,183,044    2,487,638  

Long-term debt

   500,000    250,000  

Pension and other post-retirement benefit liabilities

   140,171    572,988  

Deferred tax liabilities

   83,316    —  

Other long-term liabilities

   414,998    488,256  

Equity:

   

Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued

   —    —  

Common stock, par value $1 per share — authorized 450,000,000 shares; issued and outstanding 153,773,098 in 2013 and 154,841,438 shares in 2012

   153,773    154,841  

Additional paid-in capital

   14,935    —  

Accumulated other comprehensive loss

   (397,655)   (501,492) 

Retained earnings

   3,578,021    3,344,538  
  

 

 

  

 

 

 

Total parent equity

   3,349,074    2,997,887  

Noncontrolling interests in subsidiaries

   9,694    10,292  
  

 

 

  

 

 

 

Total equity

   3,358,768    3,008,179  
  

 

 

  

 

 

 
  $7,680,297   $6,807,061  
  

 

 

  

 

 

 

See accompanying notes.


F-5

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Consolidated Statements of Income and Comprehensive Income

             
  Year Ended December 31 
  2010  2009  2008 
  (In thousands, except per share amounts) 
 
Net sales $11,207,589  $10,057,512  $11,015,263 
Cost of goods sold  7,954,645   7,047,750   7,742,773 
             
Gross margin  3,252,944   3,009,762   3,272,490 
Operating expenses:            
Selling, administrative, and other expenses  2,366,667   2,219,935   2,359,829 
Depreciation and amortization  89,332   90,411   88,698 
Provision for doubtful accounts  10,597   28,463   23,883 
             
Total operating expenses  2,466,596   2,338,809   2,472,410 
Non-operating expenses (income):            
Interest expense  28,061   27,885   31,721 
Other  (3,496)  (1,097)  (109)
             
Total non-operating expenses  24,565   26,788   31,612 
Income before income taxes  761,783   644,165   768,468 
Income taxes  286,272   244,590   293,051 
             
Net income $475,511  $399,575  $475,417 
             
             
Basic net income per common share $3.01  $2.51  $2.93 
             
             
Diluted net income per common share $3.00  $2.50  $2.92 
             
             
Weighted average common shares outstanding  158,032   159,410   162,351 
Dilutive effect of stock options and non-vested restricted stock awards  429   297   635 
             
Weighted average common shares outstanding — assuming dilution  158,461   159,707   162,986 
             

   Year Ended December 31 
   2013  2012  2011 
   (In Thousands, Except per Share Amounts) 

Net sales

  $14,077,843   $13,013,868   $12,458,877  

Cost of goods sold

   9,857,923    9,235,777    8,852,837  
  

 

 

  

 

 

  

 

 

 

Gross margin

   4,219,920    3,778,091    3,606,040  

Operating expenses:

    

Selling, administrative, and other expenses

   3,019,036    2,648,430    2,594,372  

Depreciation and amortization

   133,957    98,383    88,936  

Provision for doubtful accounts

   8,691    8,047    13,248  
  

 

 

  

 

 

  

 

 

 

Total operating expenses

   3,161,684    2,754,860    2,696,556  

Non-operating expenses (income):

    

Interest expense

   26,971    20,482    27,036  

Other

   (13,039)   (16,183)   (8,358) 
  

 

 

  

 

 

  

 

 

 

Total non-operating expenses

   13,932    4,299    18,678  

Income before income taxes

   1,044,304    1,018,932    890,806  

Income taxes

   359,345    370,891    325,690  
  

 

 

  

 

 

  

 

 

 

Net income

  $684,959   $648,041   $565,116  
  

 

 

  

 

 

  

 

 

 

Basic net income per common share

  $4.43   $4.17   $3.61  
  

 

 

  

 

 

  

 

 

 

Diluted net income per common share

  $4.40   $4.14   $3.58  
  

 

 

  

 

 

  

 

 

 

Weighted average common shares outstanding

   154,636    155,413    156,656  

Dilutive effect of stock options and nonvested restricted stock awards

   1,078    1,007    1,004  
  

 

 

  

 

 

  

 

 

 

Weighted average common shares outstanding — assuming dilution

   155,714    156,420    157,660  
  

 

 

  

 

 

  

 

 

 

Net income

  $684,959   $648,041   $565,116  

Other comprehensive income (loss), net of tax:

    

Foreign currency translation adjustment

   (168,703)   23,846    (22,017) 

Pension and postretirement benefit adjustments, net of income taxes of 2013 — ($175,297) , 2012 — $26,465, and 2011 — $98,973

   272,540    (43,300)   (161,669) 
  

 

 

  

 

 

  

 

 

 

Other comprehensive income (loss), net of tax

   103,837    (19,454)   (183,686) 
  

 

 

  

 

 

  

 

 

 

Comprehensive income

  $788,796   $628,587   $381,430  
  

 

 

  

 

 

  

 

 

 

See accompanying notes.


F-6

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Consolidated Statements of Equity

                                 
           Accumulated
        Non-
    
        Additional
  Other
     Total
  controlling
    
  Common Stock  Paid-In
  Comprehensive
  Retained
  Parent
  Interests in
  Total
 
  Shares  Amount  Capital  Loss  Earnings  Equity  Subsidiaries  Equity 
  (In thousands, except share and per share amounts) 
 
Balance at January 1, 2008  166,065,250  $166,065  $—  $(123,715) $2,674,366  $2,716,716  $66,230  $2,782,946 
Net income  —   —   —   —   475,417   475,417   —   475,417 
Foreign currency translation adjustment  —   —   —   (112,150)  —   (112,150)  —   (112,150)
Pension and postretirement benefit adjustment, net of income taxes of $160,695  —   —   —   (242,697)  —   (242,697)  —   (242,697)
                                 
Comprehensive income                      120,570       120,570 
                                 
Cash dividends declared, $1.56 per share  —   —   —   —   (253,166)  (253,166)  —   (253,166)
Stock options exercised, net of income taxes of $586  157,643   158   77   —   —   235   —   235 
Share-based compensation  —   —   12,977   —   —   12,977   —   12,977 
Purchase of stock  (6,780,385)  (6,780)  (13,054)  —   (253,166)  (273,000)  —   (273,000)
Noncontrolling interest activities  —   —   —   —   —   —   2,816   2,816 
                                 
Balance at December 31, 2008  159,442,508   159,443   —   (478,562)  2,643,451   2,324,332   69,046   2,393,378 
Net income  —   —   —   —   399,575   399,575   —   399,575 
Foreign currency translation adjustment  —   —   —   77,963   —   77,963   —   77,963 
Pension and postretirement benefit adjustment, net of income taxes of $61,702  —   —   —   90,702   —   90,702   —   90,702 
                                 
Comprehensive income                      568,240       568,240 
                                 
Cash dividends declared, $1.60 per share  —   —   —   —   (254,995)  (254,995)  —   (254,995)
Stock options exercised, net of income taxes of $684  197,718   198   996   —   —   1,194   —   1,194 
Share-based compensation  —   —   8,578   —   —   8,578   —   8,578 
Purchase of stock  (722,380)  (723)  (9,574)  —   (15,722)  (26,019)  —   (26,019)
Noncontrolling interest activities  —   —   —   —   —   —   2,161   2,161 
Purchase of remaining noncontrolling interest in Balkamp, Inc.   —   —   —   —   —   —   (63,165)  (63,165)
                                 
Balance at December 31, 2009  158,917,846   158,918   —   (309,897)  2,772,309   2,621,330   8,042   2,629,372 
Net income  —   —   —   —   475,511   475,511   —   475,511 
Foreign currency translation adjustment  —   —   —   33,742   —   33,742   —   33,742 
Pension and postretirement benefit adjustment, net of income taxes of $(11,083)  —   —   —   (22,197)  —   (22,197)  —   (22,197)
                                 
Comprehensive income                      487,056       487,056 
                                 
Cash dividends declared, $1.64 per share  —   —   —   —   (258,912)  (258,912)  —   (258,912)
Stock options exercised, including tax benefit of $3,251  564,288   564   11,772   —   —   12,336   —   12,336 
Share-based compensation  —   —   7,016   —   —   7,016   —   7,016 
Purchase of stock  (1,845,873)  (1,846)  (18,788)  —   (54,373)  (75,007)  —   (75,007)
Noncontrolling interest activities  —   —   —   —   —   —   853   853 
                                 
Balance at December 31, 2010  157,636,261  $157,636  $—  $(298,352) $2,934,535  $2,793,819  $8,895  $2,802,714 
                                 

(In Thousands, Except Share and per Share Amounts)

  Common Stock  Additional
Paid-In
Capital		  Accumulated
Other
Comprehensive
(Loss) Income		  Retained
Earnings		  Total
Parent
Equity		  Non-
controlling
Interests in
Subsidiaries		  Total
Equity		 
       
       
 Shares  Amount       

Balance at January 1, 2011

  157,636,261   $157,636   $—   $(298,352)  $2,895,307   $2,754,591   $8,895   $2,763,486  

Net income

  —    —    —    —    565,116    565,116    —    565,116  

Other comprehensive loss, net of tax

  —    —    —    (183,686)   —    (183,686)   —    (183,686) 

Cash dividends declared, $1.80 per share

  —    —    —    —    (281,790)   (281,790)   —    (281,790) 

Stock options exercised, including tax benefit of $5,356

  443,170    443    3,864    —    —    4,307    —    4,307  

Share-based compensation

  —    —    7,547    —    —    7,547    —    7,547  

Purchase of stock

  (2,428,315)   (2,428)   (11,411)   —    (108,239)   (122,078)   —    (122,078) 

Noncontrolling interest activities

  —    —    —    —    —    —    689    689  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2011

  155,651,116    155,651    —    (482,038)   3,070,394    2,744,007    9,584    2,753,591  

Net income

  —    —    —    —    648,041    648,041    —    648,041  

Other comprehensive loss, net of tax

  —    —    —    (19,454)   —    (19,454)   —    (19,454) 

Cash dividends declared, $1.98 per share

  —    —    —    —    (307,603)   (307,603)   —    (307,603) 

Stock options exercised, including tax benefit of $11,018

  551,779    552    3,423    —    —    3,975    —    3,975  

Share-based compensation

  —    —    10,747    —    —    10,747    —    10,747  

Purchase of stock

  (1,361,457)   (1,362)   (14,170)   —    (66,294)   (81,826)   —    (81,826) 

Noncontrolling interest activities

  —    —    —    —    —    —    708    708  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2012

  154,841,438    154,841    —    (501,492)   3,344,538    2,997,887    10,292    3,008,179  

Net income

  —    —    —    —    684,959    684,959    —    684,959  

Other comprehensive income, net of tax

  —    —    —    103,837    —    103,837    —    103,837  

Cash dividends declared, $2.15 per share

  —    —    —    —    (332,322)   (332,322)   —    (332,322) 

Stock options exercised, including tax benefit of $12,905

  449,986    450    2,287    —    —    2,737    —    2,737  

Share-based compensation

  —    —    12,648    —    —    12,648    —    12,648  

Purchase of stock

  (1,518,326)   (1,518)   —    —    (119,154)   (120,672)   —    (120,672) 

Noncontrolling interest activities

  —    —    —    —    —    —    (598)   (598) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2013

  153,773,098   $153,773   $14,935   $(397,655)  $3,578,021   $3,349,074   $9,694   $3,358,768  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See accompanying notes.


F-7

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Consolidated Statements of Cash Flows

             
  Year Ended December 31 
  2010  2009  2008 
  (In thousands) 
 
Operating activities
            
Net income $475,511  $399,575  $475,417 
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization  89,332   90,411   88,698 
Excess tax (benefits) expense from share-based compensation  (3,251)  684   586 
Gain on sale of property, plant, and equipment  (1,685)  (3,757)  (2,086)
Deferred income taxes  11,994   27,899   (40,023)
Share-based compensation  7,016   8,578   12,977 
Changes in operating assets and liabilities:            
Trade accounts receivable, net  (140,562)  69,258   (19,695)
Merchandise inventories, net  44,865   194,743   (20,709)
Trade accounts payable  280,739   49,947   (14,307)
Other long-term assets  (48,423)  (28,506)  49,729 
Other, net  (36,873)  36,466   (278)
             
   203,152   445,723   54,892 
             
Net cash provided by operating activities  678,663   845,298   530,309 
Investing activities
            
Purchases of property, plant and equipment  (85,379)  (69,445)  (105,026)
Proceeds from sale of property, plant, and equipment  3,676   12,042   11,721 
Acquisition of businesses and other investments  (90,645)  (134,203)  (133,604)
Proceeds from disposal of businesses  —   —   12,575 
Purchase of properties under construction and lease agreement  —   (72,814)  — 
             
Net cash used in investing activities  (172,348)  (264,420)  (214,334)
Financing activities
            
Proceeds from debt  —   795,000   1,283,000 
Payments on debt  —   (795,000)  (1,283,000)
Stock options exercised  9,085   1,878   821 
Excess tax benefits (expense) from share-based compensation  3,251   (684)  (586)
Dividends paid  (257,898)  (253,558)  (251,808)
Purchase of stock  (75,007)  (26,019)  (273,000)
Changes in cash overdraft position  —   (52,000)  52,000 
             
Net cash used in financing activities  (320,569)  (330,383)  (472,573)
Effect of exchange rate changes on cash  7,419   18,531   (7,462)
             
Net increase (decrease) in cash and cash equivalents  193,165   269,026   (164,060)
Cash and cash equivalents at beginning of year  336,803   67,777   231,837 
             
Cash and cash equivalents at end of year $529,968  $336,803  $67,777 
             
Supplemental disclosures of cash flow information
            
Cash paid during the year for:            
Income taxes $275,979  $219,888  $338,859 
             
Interest $28,061  $27,626  $31,297 
             

   Year Ended December 31 
   2013  2012  2011 
   (In Thousands) 

Operating activities

    

Net income

  $684,959   $648,041   $565,116  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

   133,957    98,383    88,936  

Excess tax benefits from share-based compensation

   (12,905)   (11,018)   (5,356) 

Gain on sale of property, plant, and equipment

   (4,729)   (3,943)   (3,012) 

Deferred income taxes

   (21,622)   14,751    (2,337) 

Share-based compensation

   12,648    10,747    7,547  

Gain on GPC Asia Pacific equity investment

   (59,000)   —    —  

Changes in operating assets and liabilities:

    

Trade accounts receivable, net

   (116,080)   13,366    (85,011) 

Merchandise inventories, net

   (79,253)   (25,845)   (19,624) 

Trade accounts payable

   473,424    220,694    85,766  

Other short-term assets and liabilities

   (14,418)   (86,294)   (52,166) 

Other long-term assets and liabilites

   59,750    27,556    45,068  
  

 

 

  

 

 

  

 

 

 
   371,772    258,397    59,811  
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   1,056,731    906,438    624,927  

Investing activities

    

Purchases of property, plant and equipment

   (124,063)   (101,987)   (103,469) 

Proceeds from sale of property, plant, and equipment

   10,657    8,504    8,908  

Acquisition of businesses and other investing activities

   (712,173)   (558,384)   (136,936) 
  

 

 

  

 

 

  

 

 

 

Net cash used in investing activities

   (825,579)   (651,867)   (231,497) 

Financing activities

    

Proceeds from debt

   3,019,931    750,000    250,000  

Payments on debt

   (2,995,335)   (750,000)   (250,000) 

Stock options exercised

   (15,728)   (7,043)   (1,049) 

Excess tax benefits from share-based compensation

   12,905    11,018    5,356  

Dividends paid

   (326,217)   (300,983)   (276,369) 

Purchase of stock

   (120,673)   (81,826)   (122,078) 
  

 

 

  

 

 

  

 

 

 

Net cash used in financing activities

   (425,117)   (378,834)   (394,140) 

Effect of exchange rate changes on cash

   (12,237)   2,304    (4,204) 
  

 

 

  

 

 

  

 

 

 

Net decrease in cash and cash equivalents

   (206,202)   (121,959)   (4,914) 

Cash and cash equivalents at beginning of year

   403,095    525,054    529,968  
  

 

 

  

 

 

  

 

 

 

Cash and cash equivalents at end of year

  $196,893   $403,095   $525,054  
  

 

 

  

 

 

  

 

 

 

Supplemental disclosures of cash flow information

    

Cash paid during the year for:

    

Income taxes

  $342,372   $381,407   $317,748  
  

 

 

  

 

 

  

 

 

 

Interest

  $27,221   $20,416   $27,640  
  

 

 

  

 

 

  

 

 

 

See accompanying notes.


F-8

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2010

1.
1.  Summary of Significant Accounting Policies

Business

Genuine Parts Company and all of its majority-owned subsidiaries (the Company) is a distributor of automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials. The Company serves a diverse customer base through more than 2,000approximately 2,600 locations in North America and Australasia and, therefore, has limited exposure from credit losses to any particular customer, region, or industry segment. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company has evaluated subsequent events through the date the financial statements were issued.

Principles of Consolidation

The consolidated financial statements include all of the accounts of the Company. The net income attributable to noncontrolling interests is not material to the Company’s consolidated net income. Significant intercompanyIntercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements, in conformity with U.S. 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 and the differences could be material.

Revenue Recognition

The Company records revenue when the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the Company’s price to the customer is fixed and determinable and collectability is reasonably assured. Delivery is not considered to have occurred until the customer assumes the risks and rewards of ownership.

Foreign Currency Translation

The consolidated balance sheets and statements of income and comprehensive income of the Company’s foreign subsidiaries have been translated into U.S. dollars at the current and average exchange rates, respectively. The foreign currency translation adjustment is included as a component of accumulated other comprehensive (loss) income.

loss.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Trade Accounts Receivable and the Allowance for Doubtful Accounts

The Company evaluates the collectability of trade accounts receivable based on a combination of factors. Initially, theThe Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initialexperience and periodically adjusts this estimate is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than

F-9

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2010, 2009,2013, 2012, and 2008,2011, the Company recorded provisions for bad debtsdoubtful accounts of approximately $10,597,000, $28,463,000,$8,691,000, $8,047,000, and $23,883,000,$13,248,000, respectively. At December 31, 20102013 and 2009,2012, the allowance for doubtful accounts was approximately $15,599,000$14,423,000 and $16,590,000,$19,180,000, respectively.


F-9

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
Merchandise Inventories, Including Consideration Received From Vendors

Merchandise inventories are valued at the lower of cost or market. Cost is determined by thelast-in, first-out (LIFO) method for a majority of automotive parts, electrical/electronic materials, and industrial parts, and by thefirst-in, first-out (FIFO) method for office products and certain other inventories. If the FIFO method had been used for all inventories, cost would have been approximately $383,094,000$432,150,000 and $398,122,000$428,260,000 higher than reported at December 31, 20102013 and 2009,2012, respectively. During 2010,2013, 2012, and 2011 reductions in inventory levels in automotive parts inventories (2013 and 2012), industrial parts inventories (2013, 2012, and 2011), and electrical parts inventories (2012 and 2011) resulted in liquidations of LIFO inventory layers. The effect of the LIFO liquidation in 20102013, 2012, and 2011 was to reduce cost of goods sold by approximately $25,000,000. During 2009, reductions in inventory levels in industrial$5,000,000, $6,000,000, and electrical parts inventories resulted in liquidations of LIFO inventory layers. The effect of the LIFO liquidation in 2009 was to reduce cost of goods sold by approximately $22,000,000.

$16,000,000, respectively.

The Company identifies slow moving or obsolete inventories and estimates appropriate provisions related thereto. Historically, these losses have not been significant as the vast majority of the Company’s inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.

The Company enters into agreements at the beginning of each year with many of its vendors that provide for inventory purchase incentives. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accrues for the receipt of these incentives as part of its inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While management believes the Company will continue to receive consideration from vendors in 20112014 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of prepaid expenses and amounts due from vendors.

Goodwill and Other Intangible Assets

The Company reviews its goodwill and indefinite lived intangible assets annually in the fourth quarter, or sooner if circumstances indicate that the carrying amount may exceed fair value. The present value of future cash flows approach was used to determine any potential impairment. The Company determined that these assets weregoodwill was not impaired and, therefore, no impairments were recognized for the years ended December 31, 2010, 2009,2013, 2012, or 2008.2011. If an impairment occurs at a future date, it may have the effect of increasing the volatility of the Company’s earnings.

Other Assets
Other assets are comprised of the following:
         
  December 31 
  2010  2009 
  (In thousands) 
 
Retirement benefit assets $4,405  $7,642 
Deferred compensation benefits  17,205   15,490 
Investment accounted for under the cost method  21,400   21,400 
Cash surrender value of life insurance policies  68,348   59,890 
Other  87,729   43,161 
         
Total other assets $199,087  $147,583 
         


F-10

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Other Assets

Other assets are comprised of the following:

   December 31 
   2013   2012 
   (In Thousands) 

Retirement benefit assets

  $41,919    $4,021  

Deferred compensation benefits

   24,939     20,642  

Investments

   28,760     206,487  

Cash surrender value of life insurance policies

   95,094     78,860  

Customer sales returns inventories

   55,200     134,367  

Other long-term prepayments and receivables

   155,922     198,886  
  

 

 

   

 

 

 

Total other assets

  $401,834    $643,263  
  

 

 

   

 

 

 

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost. Buildings include certain leases capitalized at December 31, 2010 and 2009. Depreciation and amortization is primarily determined on a straight-line basis over the following estimated useful life of each asset: buildings and improvements, 10 to 40 years; machinery and equipment, 5 to 15 years.

Long-Lived Assets Other Than Goodwill

The Company assesses its long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. Impairment losses, if any, are measured based upon the difference between the carrying amount and the fair value of the assets.

Other Long-Term Liabilities

Other long-term liabilities are comprised of the following:

         
  December 31 
  2010  2009 
  (In thousands) 
 
Post-employment and other benefit liabilities $28,325  $26,311 
Obligations under capital and other leases  12,622   13,504 
Insurance liabilities  47,710   46,423 
Deferred gain on sale-leaseback  16,515   17,496 
Other taxes payable  49,097   39,973 
Other  27,440   23,129 
         
Total other long-term liabilities $181,709  $166,836 
         

   December 31 
   2013   2012 
   (In Thousands) 

Post-employment and other benefit/retirement liabilities

  $55,150    $35,273  

Insurance liabilities

   47,930     45,865  

Other lease obligations

   27,815     33,748  

Other taxes payable

   59,107     57,510  

Customer deposits

   65,826     161,936  

Other

   159,170     153,924  
  

 

 

   

 

 

 

Total other long-term liabilities

  $414,998    $488,256  
  

 

 

   

 

 

 

Self-Insurance

The Company’s post-employment and other benefit liabilities consist primarilyCompany is self-insured for the majority of actuarially determined obligations and deferred compensation plans. See Note 4group health insurance costs. A reserve for further discussion ofclaims incurred but not reported is developed by analyzing historical claims data provided by the Company’s obligations under capital leasesclaims admin-

F-11

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

istrators. These reserves are included in accrued expenses in the sale-leaseback transaction. Other taxes payable consists primarily of unrecognized tax benefits.

Insuranceaccompanying consolidated balance sheets as the expenses are expected to be paid within one year.

Long-term insurance liabilities consist primarily of reserves for the workers’ compensation program. TheIn addition, the Company carries various large risk deductible workers’ compensation policies for the majority of workers’ compensation liabilities. The Company records the workers’ compensation reserves based on an analysis performed by an independent actuary. The analysis calculates development factors, which are applied to total reserves as provided by the various insurance companies who underwrite the program. While the Company believes that the assumptions used to calculate these liabilities are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect workers’ compensation costs.

Self-Insurance

The Company is self-insured for the majority of group health insurance costs. A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by the Company’s claims administrators. While the Company believes that the assumptions used to calculate these liabilities are appropriate, significant differences from historical trends may materially impact financial results. These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.


F-11

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
Accumulated Other Comprehensive Loss(Loss) Income

Accumulated other comprehensive loss is comprised of the following:

         
  December 31 
  2010  2009 
  (In thousands) 
 
Foreign currency translation $129,255  $95,513 
Unrecognized net actuarial loss, net of tax  (460,937)  (444,156)
Unrecognized prior service credit, net of tax  33,330   38,746 
         
Total accumulated other comprehensive loss $(298,352) $(309,897)
         

   December 31 
   2013  2012 
   (In Thousands) 

Foreign currency translation

  $(37,619)  $131,084  

Unrecognized net actuarial loss, net of tax

   (366,454)   (644,244) 

Unrecognized prior service credit, net of tax

   6,418    11,668  
  

 

 

  

 

 

 

Total accumulated other comprehensive loss

  $(397,655)  $(501,492) 
  

 

 

  

 

 

 

The following table presents the changes in accumulated other comprehensive (loss) income by component for the year ended December 31, 2013:

   Changes in Accumulated Other Comprehensive
(Loss) Income by Component		 
   Pension
Benefits		  Other
Post-
Retirement
Benefits		  Foreign
Currency
Translation		  Total 
   (in Thousands) 

Beginning balance, January 1

  $(629,907)  $(2,669)  $131,084   $(501,492) 

Other comprehensive income (loss) before reclassifications, net of tax

   223,991    1,629    (168,703)   56,917  

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax

   46,837    83    —    46,920  
  

 

 

  

 

 

  

 

 

  

 

 

 

Net current period other comprehensive income (loss)

   270,828    1,712    (168,703)   103,837  
  

 

 

  

 

 

  

 

 

  

 

 

 

Ending balance, December 31

  $(359,079)  $(957)  $(37,619)  $(397,655) 
  

 

 

  

 

 

  

 

 

  

 

 

 

The accumulated other comprehensive loss components related to the pension benefits are included in the computation of net periodic benefit cost in the employee benefit plans footnote.

Fair Value of Financial Instruments

The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. At December 31, 20102013 and 2009,2012, the fair value of fixed rate debt was approximately $529,000,000$496,000,000 and $533,000,000,$516,000,000, respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity.

F-12

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Shipping and Handling Costs

Shipping and handling costs are classified as selling, administrative and other expenses in the accompanying consolidated statements of income and comprehensive income and totaled approximately $150,000,000, $120,000,000,$250,000,000, $220,000,000, and $140,000,000$190,000,000, for the years ended December 31, 2010, 2009,2013, 2012, and 2008,2011, respectively.

Advertising Costs

Advertising costs are expensed as incurred and totaled $36,800,000, $44,500,000,$57,900,000, $43,200,000, and $42,800,000$45,100,000 in the years ended December 31, 2010, 2009,2013, 2012, and 2008,2011, respectively.

Accounting for Legal Costs

The Company’s legal costs expected to be incurred in connection with loss contingencies are expensed as such costs are incurred.

Share-Based Compensation

The Company maintains various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), performance awards, dividend equivalents and other share-based awards. SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of the Company’s common stock on the date of exercise over the base value of the grant. The terms of such SARs require net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of the Company’s common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion of awards under these plans.

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


F-12

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
dilutive effect of stock options, stock appreciation rights and non-vestednonvested restricted stock awards options. Options to purchase approximately 4,500,000, 5,400,000630,000, 730,000, and 4,400,000850,000 shares of common stock ranging from $37$54 — $49$81 per share were outstanding at December 31, 2010, 20092013, 2012, and 2008,2011, respectively. These options were not included inexcluded from the computation of diluted net income per common share because the options’ exercise price was greater than the average market price of common stock.
stock in each respective year.

Recently IssuedAdopted Accounting Pronouncements

In June 2009,February 2013, the FASBFinancial Accounting Standards Board issued new guidance that addressesAccounting Standards Update (“ASU”) 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Under ASU 2013-02, an entity is required to provide information about the eliminationamounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the conceptfinancial statements or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income in the financial statements. ASU 2013-02 is effective for the Company’s interim and annual periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a qualifying special purpose entity. It also replacesmaterial impact on the quantitative-based risksconsolidated financial statements for the year ended December 31, 2013.

F-13

Index to Financial Statements

Genuine Parts Company and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the powerSubsidiaries

Notes to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, the guidance requires an ongoing assessment of whether a company is the primary beneficiary of the entity. The Company adopted the new guidance on January 1, 2010 and concluded that certain independently controlled automotive parts stores for which the Company guarantees debt are variable interest entities; however, the Company is not the primary beneficiary. These entities are discussed further in Note 8.

Consolidated Financial Statements — (Continued)

2.
2.  Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill during the years ended December 31, 2010, 2009,2013, 2012, and 20082011 by reportable segment, as well as other identifiable intangible assets, consisting primarily of customer relationship intangible assets, non-compete agreements, and trademarks, are summarized as follows (in thousands):

                         
  Goodwill       
           Electrical/
  Identifiable
    
        Office
  Electronic
  Intangible
    
  Automotive  Industrial  Products  Materials  Assets  Total 
 
Balance as of January 1, 2008 $24,187  $45,002  $2,131  $—  $11,133  $82,453 
Additions  19,767   25,834   8,423   2,870   27,548   84,442 
Amortization  —   —   —   —   (2,861)  (2,861)
Foreign currency translation  (3,742)  —   —   —   (1,467)  (5,209)
                         
Balance as of December 31, 2008  40,212   70,836   10,554   2,870   34,353   158,825 
Additions  2   5,518   —   —   6,679   12,199 
Amortization  —   —   —   —   (3,644)  (3,644)
Foreign currency translation  2,900   —   —   —   1,252   4,152 
                         
Balance as of December 31, 2009  43,114   76,354   10,554   2,870   38,640   171,532 
Additions  —   10,178   —   5,777   24,292   40,247 
Amortization  —   —   —   —   (4,737)  (4,737)
Foreign currency translation  1,157   278   —   —   1,071   2,506 
                         
Balance as of December 31, 2010 $44,271  $86,810  $10,554  $8,647  $59,266  $209,548 
                         

   Goodwill  Other
Intangible
Assets, Net		 
   Automotive  Industrial  Office
Products		   Electrical/
Electronic
Materials		   Total  

Balance as of January 1, 2012

  $43,705   $99,011   $10,554    $24,350    $177,620   $102,155  

Additions

   114,206    —    —     5,355     119,561    110,014  

Amortization

   —    —    —     —     —    (12,991) 

Foreign currency translation

   638    221    —     —     859    621  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

Balance as of December 31, 2012

   158,549    99,232    10,554     29,705     298,040    199,799  

Additions

   541,836    17,420    —     11,396     570,652    379,834  

Amortization

   —    —    —     —     —    (28,987) 

Foreign currency translation

   (78,205)   (516)   —     —     (78,721)   (51,261) 
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

Balance as of December 31, 2013

  $622,180   $116,136   $10,554    $41,101    $789,971   $499,385  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

The gross carrying amounts and accumulated amortization relating to other intangible assets at December 31, 2013 and 2012 is as follows (in thousands):

   2013   2012 
   Gross
Carrying
Amount		   Accumulated
Amortization		  Net   Gross
Carrying
Amount		   Accumulated
Amortization		  Net 

Customer relationships

  $412,634    $(59,686)  $352,948    $209,328    $(38,030)  $171,298  

Trademarks

   149,949     (5,018)   144,931     29,337     (1,944)   27,393  

Non-competition agreements

   7,306     (5,800)   1,506     4,483     (3,375)   1,108  
  

 

 

   

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 
  $569,889    $(70,504)  $499,385    $243,148    $(43,349)  $199,799  
  

 

 

   

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

Amortization expense for other intangible assets totaled $28,987,000, $12,991,000, and $6,774,000 for the years ended December 31, 2013, 2012, and 2011, respectively. Estimated other intangible assets amortization expense for the succeeding five years is as follows (in thousands):

2014

  $31,000  

2015

   30,000  

2016

   30,000  

2017

   30,000  

2018

   29,000  
  

 

 

 
  $150,000  
  

 

 

 

F-14

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

3.
3.  Credit Facilities

The principal amounts of the Company’s borrowings subject to variable rates totaled approximately $264,658,000 at December 31, 2013. There were no amounts subject to variable rates at December 31, 2010 and 2009.2012. The weighted average interest rate on the Company’s outstanding borrowings was approximately 5.45%2.82% at December 31, 20102013 and 2009.

4.01% at December 31, 2012.

The Company maintains a $350,000,000an $850,000,000 unsecured revolving line of credit with a consortium of financial institutions that matures in December 2012September 2017 and bears interest at LIBOR plus 0.30% (0.56%a margin, which is based on the Company’s leverage ratio (0.92% at December 31, 2010)2013).


F-13

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
The Company also has the option under this agreement to increase its borrowing an additional $200,000,000.$350,000,000, as well as an option to decrease the borrowing capacity or terminate the Syndicated Facility with appropriate notice. At December 31, 2013, approximately $264,658,000 was outstanding under this line of credit. No amounts were outstanding under this line of credit at December 31, 2010 and 2009. 2012.

Certain borrowings contain covenants relatedrequire the Company to comply with a financial covenant with respect to a maximumdebt-to-capitalization ratio and certain limitations on additional borrowings. ratio. At December 31, 2010,2013, the Company was in compliance with all such covenants. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of $50,419,000$61,617,000 and $50,403,000$61,119,000 outstanding at December 31, 20102013 and 2009,2012, respectively.

Amounts outstanding under the Company’s credit facilities consist of the following:

         
  December 31 
  2010  2009 
  (In thousands) 
 
Unsecured term notes:        
November 30, 2001, Series B Senior Notes, $250,000,000, 6.23% fixed, due November 30, 2011 $250,000  $250,000 
November 30, 2008, Senior Unsecured Notes, $250,000,000, 4.67% fixed, due November 30, 2013  250,000   250,000 
         
Total debt  500,000   500,000 
Less debt due within one year  250,000   — 
         
Long-term debt, excluding current portion $250,000  $500,000 
         
4.  Leased Properties
In June 2003, the Company completed an amended and restated master agreement

   December 31 
   2013   2012 
   (In Thousands) 

Unsecured revolving line of credit, $850,000,000, LIBOR plus 0.75% variable

  $264,658    $—  

Unsecured term notes:

    

November 30, 2008, Series C Senior Unsecured Notes, $250,000,000, 4.67% fixed, due November 30, 2013

   —     250,000  

November 30, 2011, Series D and E Senior Unsecured Notes, $250,000,000, 3.35% fixed, due November 30, 2016

   250,000     250,000  

December 2, 2013, Series F Senior Unsecured Notes, $250,000,000, 2.99% fixed, due December 2, 2023

   250,000     —  
  

 

 

   

 

 

 

Total debt

   764,658     500,000  

Less debt due within one year

   264,658     250,000  
  

 

 

   

 

 

 

Long-term debt, excluding current portion

  $500,000    $250,000  
  

 

 

   

 

 

 

F-15

Index to the $85,000,000 construction and lease agreement (the Agreement). The lessor in the Agreement was an independent third-party limited liability company, which had as its sole member a publicly traded corporation. Properties acquired by the lessor were constructedand/or then leased to the Company under operating lease agreements. On June 26, 2009, the Agreement expired. In accordance with the Agreement, the Company purchased the properties from the lessor for $72,814,000, including closing costs. The properties are included in property, plant, and equipment in the accompanying consolidated balance sheets.
Rent expense related to the Agreement is recorded under selling, administrative, and other expenses in our consolidated statements of income and was $489,000 and $2,586,000 for the years ended December 31, 2009, and 2008, respectively.
In October 2007, the Company entered into a sale-leaseback transaction with a financial institution. In connection with the transaction, the Company sold certain automotive retail store properties and immediately leased the properties back over a lease term of twenty years. The lease was classified as an operating lease. Net proceeds from the transaction amounted to approximately $56,000,000. The Company realized a net gain of approximately $20,000,000, which was deferred and is being amortized over the lease term. The unamortized portion of the deferred gain is included in other long-term liabilities in the accompanying consolidated balance sheets.
At December 31, 2010 and 2009, buildings include $3,080,000 and $11,550,000 with accumulated depreciation of $1,787,000 and $7,823,000, respectively, for capital leases of distribution centers and stores. Depreciation expense for capital leases was approximately $1,133,000, $1,828,000, and $2,267,000 in 2010, 2009, and 2008, respectively.
Financial Statements


F-14

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

4.Leased Properties

Future minimum payments, by year and in the aggregate, under the capital and noncancelable operating leases with initial or remaining terms of one year or more consisted ofwas approximately the following at December 31, 20102013 (in thousands):

         
  Capital
  Operating
 
  Leases  Leases 
 
2011 $408  $124,370 
2012  345   96,855 
2013  297   71,698 
2014  282   52,027 
2015  201   31,996 
Thereafter  682   128,097 
         
Total minimum lease payments  2,215  $505,043 
         
Amounts representing interest  (922)    
         
Present value of future minimum lease payments $1,293     
         

2014

  $191,400  

2015

   151,100  

2016

   110,200  

2017

   76,400  

2018

   50,000  

Thereafter

   149,500  
  

 

 

 

Total minimum lease payments

  $728,600  
  

 

 

 

Rental expense for operating leases was approximately $147,886,000 in 2010, $153,523,000 in 2009,$208,000,000, $158,200,000, and $159,562,000 in 2008.

$154,500,000 for 2013, 2012, and 2011, respectively.

5.
5.  Share-Based Compensation

At December 31, 2010,2013, total compensation cost related to nonvested awards not yet recognized was approximately $6,900,000.$26,000,000. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for options and RSUs outstanding at December 31, 20102013 and 20092012 was approximately $67,100,000$154,000,000 and $17,500,000,$90,300,000, respectively. The aggregate intrinsic value for options and RSUs vested totaled approximately $45,900,000$93,600,000 and $12,200,000$57,600,000 at December 31, 20102013 and 2009,2012, respectively. At December 31, 2010,2013, the weighted-average contractual life for outstanding and exercisable options and RSUs was six and five years, respectively. ForShare-based compensation cost of $12,648,000, $10,747,000, and $7,547,000, was recorded for the years ended December 31, 2010, 2009,2013, 2012, and 2008, $7,016,000, $8,578,000, and $12,977,000 of share-based compensation cost was recorded,2011, respectively. The total income tax benefit recognized in the consolidated statements of income and comprehensive income for share-based compensation arrangements was approximately $2,800,000, $3,400,000,$5,100,000, $4,300,000, and $5,200,000$3,000,000, for 2010, 2009,2013, 2012, and 2008,2011, respectively. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2010, 2009,2013, 2012, and 2008.

2011.

For the years ended December 31, 20102013, 2012 and 20082011 the fair value for options and SARs granted was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions, respectively: risk-free interest rate of 3.6%2.0%, 2.0%, and 3.5%3.6%; dividend yield of 4.6%3.2%, 3.3%, and 3.0%3.8%; annual historical volatility factor of the expected market price of the Company’s common stock of 19% and 17%;for each of the three years; an average expected life and estimated turnover based on the historical pattern of existing grants of eightapproximately seven years and 4.0% to 6.0%5.0%, respectively. The fair value of RSUs is based on the price of the Company’s stock on the date of grant. The Company had no grant activity for the year ended December 31, 2009. The total fair value of shares vested during the years ended December 31, 2010, 2009,2013, 2012, and 2008,2011, was $9,200,000, $13,200,000,$8,100,000, $6,700,000, and $14,900,000,$7,200,000, respectively.


F-15

F-16

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

A summary of the Company’s share-based compensation activity and related information is as follows:

         
  2010 
     Weighted-
 
     Average
 
     Exercise
 
  Shares (1)  Price (2) 
  (In thousands)    
 
Outstanding at beginning of year  6,749  $41 
Granted  1,126   43 
Exercised  (1,121)  34 
Forfeited  (363)  45 
         
Outstanding at end of year (3)  6,391  $42 
         
Exercisable at end of year  4,829  $42 
         
Shares available for future grants  4,499     
         

   2013 
   Shares (1)  Weighted-
Average
Exercise
Price (2)		 
   (In Thousands)    

Outstanding at beginning of year

   5,100   $50  

Granted

   900    77  

Exercised

   (1,335)   45  

Forfeited

   (85)   63  
  

 

 

  

Outstanding at end of year (3)

   4,580   $56  
  

 

 

  

Exercisable at end of year

   2,601   $48  
  

 

 

  

Shares available for future grants

   2,743   
  

 

 

  

(1)Shares includeRestricted Stock Units (RSUs).

(2)The weighted-average exercise price excludes RSUs.

(3)The exercise prices for options and SARs outstanding as of December 31, 20102013 ranged from approximately $32$37 to $49.$77. The weighted-average remaining contractual life of all options and SARs outstanding is approximately six years.

The weighted-average grant date fair value of options and SARs granted during the years 20102013, 2012, and 20082011 was $5.41$10.14, $7.96, and $5.78,$8.18, respectively. The Company had no grant activity for the year ended December 31, 2009. The aggregate intrinsic value of options exercised during the years ended December 31, 2010, 2009,2013, 2012, and 20082011 was $15,700,000, $4,700,000,$43,900,000, $41,500,000, and $5,000,000.

$25,100,000.

In 2010,2013, the Company granted approximately 1,002,000727,000 SARs and 124,000172,000 RSUs. In 2008,2012, the Company granted approximately 1,385,000858,000 SARs and 116,000145,000 RSUs.

In 2011, the Company granted approximately 1,028,000 SARs and 126,000 RSUs.

A summary of the Company’s nonvested share awards (RSUs) activity is as follows:

         
     Weighted-
 
     Average Grant
 
     Date Fair
 
Nonvested Share Awards (RSUs) Shares  Value 
  (In thousands)    
 
Nonvested at January 1, 2010  126  $42 
Granted  124   43 
Vested  (72)  44 
Forfeited  (7)  47 
         
Nonvested at December 31, 2010  171  $44 
         

Nonvested Share Awards (RSUs)

  Shares  Weighted-
Average Grant
Date Fair
Value		 
   (In Thousands)    

Nonvested at January 1, 2013

   316   $54  

Granted

   172    78  

Vested

   (18)   77  

Forfeited

   (26)   72  
  

 

 

  

Nonvested at December 31, 2013

   444   $62  
  

 

 

  

For the years ended December 31, 2010, 20092013, 2012, and 20082011 approximately $3,300,000, ($684,000),$12,900,000, $11,000,000, and ($586,000),$5,400,000, respectively, of excess tax benefits (expense) was classified as a financing cash inflow (outflow).

inflow.

F-17

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

6.
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. UndistributedAs of December 31, 2013, approximately $552,000,000 of cumulative undistributed earnings of the Company’s foreign subsidiaries areis considered to be indefinitely reinvested. As such, no U.S. federal and state income taxes have been provided thereon, and it is not practicable to determine the amount of the related


F-16

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
unrecognized deferred income tax liability. Significant components of the Company’s deferred tax assets and liabilities are as follows:
         
  2010  2009 
  (In thousands) 
 
Deferred tax assets related to:        
Expenses not yet deducted for tax purposes $163,367  $151,488 
Pension liability not yet deducted for tax purposes  279,204   267,544 
Capital loss  24,580   24,780 
Valuation allowance  (24,784)  (24,780)
         
   442,367   419,032 
         
Deferred tax liabilities related to:        
Employee and retiree benefits  178,806   150,294 
Inventory  72,767   79,327 
Property, plant and equipment  33,474   30,438 
Other  17,728   19,047 
         
   302,775   279,106 
         
Net deferred tax asset  139,592   139,926 
Current portion of deferred tax liability  17,800   27,796 
         
Non-current deferred tax asset $157,392  $167,722 
         

   2013  2012 
   (In Thousands) 

Deferred tax assets related to:

   

Expenses not yet deducted for tax purposes

  $343,156   $362,265  

Pension liability not yet deducted for tax purposes

   227,880    405,048  

Capital loss

   —    16,803  

Valuation allowance

   —    (16,803) 
  

 

 

  

 

 

 
   571,036    767,313  
  

 

 

  

 

 

 

Deferred tax liabilities related to:

   

Employee and retiree benefits

   188,235    205,268  

Inventory

   152,641    191,047  

Other intangible assets

   110,272    23,295  

Property, plant, and equipment

   53,751    41,130  

Other

   29,733    28,321  
  

 

 

  

 

 

 
   534,632    489,061  
  

 

 

  

 

 

 

Net deferred tax assets

   36,404    278,252  

Current portion of deferred tax (assets) liabilities

   (22,165)   1,211  
  

 

 

  

 

 

 

Noncurrent net deferred tax assets

  $14,239   $279,463  
  

 

 

  

 

 

 

The current portion of the deferred tax liability isassets and liabilities are included in prepaid expenses and other current assets and income taxes payable, respectively, in the consolidated balance sheets.

The components of income before income taxes are as follows:

   2013   2012   2011 
   (In Thousands) 

United States

  $850,866    $903,698    $784,841  

Foreign

   193,438     115,234     105,965  
  

 

 

   

 

 

   

 

 

 

Income before income taxes

  $1,044,304    $1,018,932    $890,806  
  

 

 

   

 

 

   

 

 

 

F-18

Index to Financial Statements

Genuine Parts Company has a capital loss carryforward of approximately $61,500,000 that will expire in 2013.

and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The components of income tax expense are as follows:

             
  2010  2009  2008 
  (In thousands) 
 
Current:            
Federal $221,770  $171,691  $261,250 
State  36,291   28,591   45,167 
Foreign  16,217   16,409   26,657 
Deferred  11,994   27,899   (40,023)
             
  $286,272  $244,590  $293,051 
             

   2013  2012   2011 
   (In Thousands) 

Current:

     

Federal

  $303,016   $288,135    $260,222  

State

   47,010    44,653     41,511  

Foreign

   30,941    23,352     26,294  

Deferred

   (21,622)   14,751     (2,337) 
  

 

 

  

 

 

   

 

 

 
  $359,345   $370,891    $325,690  
  

 

 

  

 

 

   

 

 

 

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:

             
  2010  2009  2008 
  (In thousands) 
 
Statutory rate applied to income $266,624  $225,458  $268,964 
Plus state income taxes, net of Federal tax benefit  24,621   20,977   25,831 
Capital loss  —   —   (30,038)
Capital loss — valuation allowance  —   —   24,787 
Other  (4,973)  (1,845)  3,507 
             
  $286,272  $244,590  $293,051 
             

   2013  2012  2011 
   (In Thousands) 

Statutory rate applied to income

  $365,506   $356,626   $311,782  

Plus state income taxes, net of Federal tax benefit

   28,823    30,227    26,790  

Earnings in jurisdictions taxed at rates different from the statutory US tax rate

   (37,873)   (17,419)   (13,443) 

Capital loss expiration

   16,803    —    —  

Reversal of capital loss valuation allowance

   (16,803)   —    —  

Other

   2,889    1,457    561  
  

 

 

  

 

 

  

 

 

 
  $359,345   $370,891   $325,690  
  

 

 

  

 

 

  

 

 

 

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 20062009 or subject tonon-United States income tax examinations for


F-17

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
years ended prior to 2002. The Company is currently under audit in the United States and Canada. Some audits may conclude in the next 12twelve months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next twelve months to previously recorded uncertain tax positions in connection with the audits. However, the Company does not anticipate total unrecognized tax benefits will significantly change during the year due to the settlement of audits and the expiration of statutes of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

             
  2010  2009  2008 
  (In thousands) 
 
Balance at beginning of year $33,322  $30,453  $28,329 
Additions based on tax positions related to the current year  4,243   5,648   5,822 
Additions for tax positions of prior years  3,493   993   1,068 
Reductions for tax positions for prior years  (624)  —   (190)
Reduction for lapse in statute of limitations  (451)  (2,779)  (4,193)
Settlements  (558)  (993)  (383)
             
Balance at end of year $39,425  $33,322  $30,453 
             

   2013  2012  2011 
   (In Thousands) 

Balance at beginning of year

  $45,455   $46,845   $39,425  

Additions based on tax positions related to the current year

   3,238    5,702    6,035  

Additions for tax positions of prior years

   3,759    2,172    7,966  

Reductions for tax positions for prior years

   (1,472)   (5,025)   (481) 

Reduction for lapse in statute of limitations

   (1,714)   (2,658)   (4,563) 

Settlements

   (2,076)   (1,581)   (1,537) 
  

 

 

  

 

 

  

 

 

 

Balance at end of year

  $47,190   $45,455   $46,845  
  

 

 

  

 

 

  

 

 

 

F-19

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The amount of gross tax effected unrecognized tax benefits, including interest and penalties, as of December 31, 20102013 and 20092012 was approximately $50,216,000$59,530,000 and $41,013,000,$58,020,000, respectively, of which approximately $18,189,000$18,287,000 and $15,129,000,$17,615,000, respectively, if recognized, would affect the effective tax rate. During the years ended December 31, 2010, 2009,2013, 2012, and 2008,2011, the Company paid interest and penalties of approximately $272,000, $363,000,$405,000, $493,000, and $815,000,$759,000, respectively. The Company had approximately $10,791,000$12,340,000 and $7,691,000$12,565,000 of accrued interest and penalties at December 31, 20102013 and 2009,2012, respectively. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

7.
7.  Employee Benefit Plans

The Company’s defined benefit pension plans cover most of its employees in the U.S. and Canada.Canada who meet eligibility requirements. The plan covering U.S. employees is noncontributory and benefits are based on the employees’ compensation during the highest five of their last ten years of credited service. The Canadian plan is contributory and benefits are based on career average compensation. The Company’s funding policy is to contribute an amount equal to the minimum required contribution under ERISA.applicable pension legislation. The Company may increase its contribution above the minimum if appropriate to its tax and cash position and the plans’ funded position.

In 2008,December 2012, the U.S. defined benefit plan was amended to prohibit employees hired on or after March 1, 2008 from participating in the plan. The plan was also amended toreflect a hard freeze credited service for participants who do not meet certain age and length of service requirements as of December 31, 2008. However, the plan continues to reflect future pay increases2013. Therefore, no further benefit accruals were provided after that date for additional credited service or earnings. In addition, all participants.

In April 2009, theparticipants will became fully vested as of December 31, 2013. The Company recordedrecognized a $4,298,000 non-cashone-time noncash curtailment adjustmentgain in 2012 of $23,507,000 in connection with a reorganization, which reduced the expected years of future service of employees covered by the U.S. defined benefit pension plan. Curtailment accounting is required if an event eliminates, for a significant number of employees, the accrual of defined benefits for some or all of their future service.
this amendment.

The Company also sponsors supplemental retirement plans covering employees in the U.S. and Canada and other postretirement benefit plans in the U.S.Canada. The Company uses a measurement date of December 31st31 for its pension plans.

Changes in benefit obligations for the years ended December 31, 2013 and other postretirement benefit plans.


F-18

2012 were:

   2013  2012 
   (In Thousands) 

Changes in benefit obligation

   

Benefit obligation at beginning of year

  $2,165,692   $1,958,399  

Service cost

   19,083    15,254  

Interest cost

   89,408    100,338  

Plan participants’ contributions

   3,543    3,962  

Plan amendments

   —    (4,217) 

Actuarial (gain) loss

   (164,784)   330,028  

Foreign currency exchange rate changes

   (13,893)   5,489  

Gross benefits paid

   (73,186)   (67,767) 

Acquired plan

   9,322    —  

Curtailments

   —    (175,794) 
  

 

 

  

 

 

 

Benefit obligation at end of year

  $2,035,185   $2,165,692  
  

 

 

  

 

 

 

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
In July 2009, the Company announced changes to the U.S. postretirement benefit plan. Effective January 1, 2010, future retirees no longer receive employer-provided medical benefits and current pre-65 retirees no longer receive employer-provided post-65 medical benefits (beyond an access-only arrangement).
                 
     Other Postretirement
 
  Pension Benefits  Benefits 
  2010  2009  2010  2009 
  (In thousands)  (In thousands) 
 
Changes in benefit obligation
                
Benefit obligation at beginning of year $1,502,084  $1,450,030  $13,511  $29,318 
Service cost  12,312   16,534   —   443 
Interest cost  95,453   93,493   605   1,264 
Plan participants’ contributions  3,672   3,219   3,787   3,735 
Plan amendments  1,148   —   —   (13,182)
Actuarial loss (gain)  122,050   (21,257)  340   (1,190)
Exchange rate changes  7,082   15,311   —   — 
Gross benefits paid  (54,790)  (48,027)  (6,255)  (7,349)
Less Federal subsidy  N/A   N/A   341   472 
Curtailments  —   (7,219)  —   — 
                 
Benefit obligation at end of year $1,689,011  $1,502,084  $12,329  $13,511 
                 
The benefit obligations for the Company’s U.S. pension plans included in the above were $1,542,469,000$1,838,810,000 and $1,382,677,000$1,955,414,000 at December 31, 20102013 and 2009,2012, respectively. The total accumulated benefit obligation for the Company’s defined benefit pension plans was approximately $1,526,951,000$2,017,619,000 and $1,315,266,000$2,112,134,000 at December 31, 20102013 and 2009,2012, respectively.

F-20

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The assumptions used to measure the pension and other postretirement plan benefit obligations for the plans at December 31, 20102013 and 2009,2012, were:

                 
     Other Postretirement
 
  Pension Benefits  Benefits 
  2010  2009  2010  2009 
 
Weighted-average discount rate  5.74%  6.54%  4.25%  5.20%
Rate of increase in future compensation levels  3.39%  3.75%  —   — 
A 7.75% annual rate of increase

   2013  2012 

Weighted-average discount rate

   5.10%   4.17% 

Rate of increase in future compensation levels

   3.04%   3.30% 

Changes in plan assets for the per capita cost of covered health care benefits was assumed onyears ended December 31, 2010. The rate was assumed to decrease ratably to 4.75% at December 31, 2016,2013 and thereafter.

                 
     Other Postretirement
 
  Pension Benefits  Benefits 
  2010  2009  2010  2009 
  (In thousands)  (In thousands) 
 
Changes in plan assets
                
Fair value of plan assets at beginning of year $1,216,415  $977,867  $—  $— 
Actual return on plan assets  175,967   211,000   —   — 
Exchange rate changes  7,131   16,028   —   — 
Employer contributions  91,316   56,328   2,468   3,614 
Plan participants’ contributions  3,672   3,219   3,787   3,735 
Benefits paid  (54,790)  (48,027)  (6,255)  (7,349)
                 
Fair value of plan assets at end of year $1,439,711  $1,216,415  $—  $— 
                 


F-19

2012 were:

   2013  2012 
   (In Thousands) 

Changes in plan assets

   

Fair value of plan assets at beginning of year

  $1,595,679   $1,470,030  

Actual return on plan assets

   336,151    168,491  

Foreign currency exchange rate changes

   (12,155)   4,498  

Employer contributions

   74,347    16,465  

Acquired plan

   8,684    —  

Plan participants’ contributions

   3,543    3,962  

Benefits paid

   (73,186)   (67,767) 
  

 

 

  

 

 

 

Fair value of plan assets at end of year

  $1,933,063   $1,595,679  
  

 

 

  

 

 

 

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
The fair values of plan assets for the Company’s U.S. pension plans included in the above were $1,294,348,000$1,745,769,000 and $1,092,787,000$1,425,047,000 at December 31, 20102013 and 2009,2012, respectively.

The asset allocations for the Company’s funded pension plans at December 31, 20102013 and 2009,2012, and the target allocation for 2011,2014, by asset category were:

             
  Target
  Percentage of Plan Assets at
 
  Allocation
  December 31 
  2011  2010  2009 
 
Asset Category
            
Equity securities  69%  70%  64%
Debt securities  31%  30%  35%
Real estate  0%  0%  1%
             
   100%  100%  100%
             

   Target
Allocation
2014		  Percentage of
Plan Assets  at
December 31		 
    2013  2012 

Asset Category

    

Equity securities

   71%   76%   68% 

Debt securities

   29%   24%   32% 
  

 

 

  

 

 

  

 

 

 
   100%   100%   100% 
  

 

 

  

 

 

  

 

 

 

The Company’s benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. The pension plan strategy implemented by the Company’s management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, as well as fiduciary standards. The long-term primary objectives for the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company’s investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (50%(49% S&P 500 Index, 5% Russell Mid Cap Index, 10%8% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index, and 30%28% BarCap U.S. Govt/Credit).

The fair values of the plan assets as of December 31, 20102013 and 2009,2012, by asset category, are shown in the tables below. Various inputs are considered when determining the value of the Company’s pension plan assets.

F-21

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).

The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bidand/or ask sides of the market for an investment as of the last day of the calendar plan year. Real estate value is based on the last appraised or interim valuation. The timing of the individual property appraisals is spread throughout the four quarters of the year.


F-20

   2013 
   Total   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		   Significant
Observable
Inputs
(Level 2)		   Significant
Unobservable
Inputs
(Level 3)		 
   (In Thousands) 

Equity Securities

        

Common stocks — mutual funds — equity

  $505,572    $505,572    $—    $—  

Genuine Parts Company

   167,788     167,788     —     —  

Other stocks

   791,728     791,728     —     —  

Debt Securities

        

Short-term investments

   59,058     59,058     —     —  

Cash and equivalents

   9,022     9,022     —     —  

Government bonds

   144,447     61,171     83,276     —  

Corporate bonds

   123,773     —     123,773     —  

Asset-backed and mortgage-backed securities

   19,345     —     19,345     —  

Other-international

   12,072     11,200     872     —  

Municipal bonds

   1,304     —     1,304     —  

Municipal funds-fixed income

   96,231     —     96,231     —  

Cash surrender value of life insurance policies

   2,723     —     —     2,723  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,933,063    $1,605,539    $324,801    $2,723  
  

 

 

   

 

 

   

 

 

   

 

 

 

F-22

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

                 
  2010 
     Quoted Prices
       
     in Active
       
     Markets for
  Significant
  Significant
 
     Identical
  Observable
  Unobservable
 
     Assets
  Inputs
  Inputs
 
  Total  (Level 1)  (Level 2)  (Level 3) 
     (In thousands)    
 
Equity Securities
                
Common stocks — mutual funds — equity $353,347  $353,347  $—  $  — 
Genuine Parts Company  103,549   103,549   —   — 
Other stocks  551,516   551,516   —   — 
Debt Securities
                
Short-term investments  38,126   38,126   —   — 
Cash & equivalents  26,976   26,976   —   — 
Government bonds  105,764   48,191   57,573   — 
Corporate bonds  122,749   —   122,749   — 
Asset-backed & mortgage backed securities  32,271   —   32,271   — 
Other-international  13,583   13,583   —   — 
Municipal bonds  1,914   —   1,914   — 
Mutual funds-fixed income  89,916   —   89,916   — 
                 
Total
 $1,439,711  $1,135,288  $304,423  $— 
                 
                 
  2009 
     Quoted Prices
       
     in Active
       
     Markets for
  Significant
  Significant
 
     Identical
  Observable
  Unobservable
 
     Assets
  Inputs
  Inputs
 
  Total  (Level 1)  (Level 2)  (Level 3) 
     (In thousands)    
 
Equity Securities
                
Common stocks — mutual funds — equity $258,124  $258,124  $—  $— 
Genuine Parts Company  76,563   76,563   —   — 
Other stocks  449,597   449,597   —   — 
Debt Securities
                
Short-term investments  42,201   42,201   —   — 
Cash & equivalents  294   294   —   — 
Government bonds  92,468   48,627   43,841   — 
Corporate bonds  155,535   —   155,535   — 
Asset-backed & mortgage backed securities  34,746   —   34,746   — 
Other-international  15,011   14,994   17   — 
Municipal bonds  785   —   785   — 
Mutual funds-fixed income  86,899   —   86,899   — 
Real Estate
                
Real estate  4,192   —   —   4,192 
                 
Total
 $1,216,415  $890,400  $321,823  $4,192 
                 

F-21

   2012 
   Total   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		   Significant
Observable
Inputs
(Level 2)		   Significant
Unobservable
Inputs
(Level 3)		 
   (In Thousands) 

Equity Securities

        

Common stocks — mutual funds — equity

  $342,846    $342,846    $—    $—  

Genuine Parts Company

   128,236     128,236     —     —  

Other stocks

   608,017     608,017     —     —  

Debt Securities

        

Short-term investments

   37,626     37,626     —     —  

Cash and equivalents

   45,719     45,719     —     —  

Government bonds

   166,413     74,707     91,706     —  

Corporate bonds

   127,824     —     127,824     —  

Asset-backed and mortgage-backed securities

   24,077     —     24,077     —  

Other-international

   10,188     10,188     —     —  

Municipal bonds

   532     —     532     —  

Municipal funds-fixed income

   101,578     —     101,578     —  

Cash surrender value of life insurance policies

   2,623     —     —     2,623  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,595,679    $1,247,339    $345,717    $2,623  
  

 

 

   

 

 

   

 

 

   

 

 

 

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
Equity securities include Genuine Parts Company common stock in the amounts of $103,549,000 (7.2%$167,788,000 (8.7% of total plan assets) and $76,563,000 (6.3%$128,236,000 (8.0% of total plan assets) at December 31, 20102013 and 2009,2012, respectively. Dividend payments received by the plan on Company stock totaled approximately $3,308,000$4,336,000 and $3,227,000$3,994,000 in 20102013 and 2009,2012, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.

The changes in the fair value measurement of plan assets using significant unobservable inputs (Level 3) during 20102013 and 20092012 were not material.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measuring 20112014 pension cost or income is 7.87%7.85% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships.

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31:

Amounts recognized in the consolidated balance sheets consist of:
                 
     Other Postretirement
 
  Pension Benefits  Benefits 
  2010  2009  2010  2009 
  (In thousands)  (In thousands) 
 
Other long-term asset $4,405  $7,642  $—  $— 
Other current liability  (4,403)  (3,595)  (2,824)  (3,030)
Pension and other post-retirement liabilities  (249,302)  (289,716)  (9,505)  (10,481)
                 
  $(249,300) $(285,669) $(12,329) $(13,511)
                 

   2013  2012 
   (In Thousands) 

Other long-term asset

  $41,919   $4,021  

Other current liability

   (5,976)   (5,402) 

Pension and other post-retirement liabilities

   (138,065)   (568,632) 
  

 

 

  

 

 

 
  $(102,122)  $(570,013) 
  

 

 

  

 

 

 

F-23

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Amounts recognized in accumulated other comprehensive loss (income) consist of:

                 
    Other Postretirement
  Pension Benefits Benefits
  2010 2009 2010 2009
  (In thousands) (In thousands)
 
Net actuarial loss $741,190  $715,678  $20,207  $21,625 
Prior service credit  (44,142)  (52,270)  (10,737)  (11,795)
                 
  $697,048  $663,408  $9,470  $9,830 
                 
For the pension benefits, the

   2013  2012 
   (In Thousands) 

Net actuarial loss

  $590,568   $1,043,089  

Prior service credit

   (3,074)   (10,612) 
  

 

 

  

 

 

 
  $587,494   $1,032,477  
  

 

 

  

 

 

 

The following table reflects the total benefits expected to be paid from the pension plans’ or the Company’s assets. Of the pension benefits expected to be paid in 2011,2014, approximately $4,405,000$5,978,000 is expected to be paid from employer assets. For pension benefits, expectedExpected employer contributions reflect amounts expected to be contributed to funded plans. For other postretirement benefits, the following table’s employer contributions reflect only the Company’s share of the benefit cost. The expected benefit payments show the Company’s cost without regard to income from federal subsidy payments received pursuant to the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). Expected federal subsidy payments, which reduce the Company’s cost for the plan, are shown separately.


F-22

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
Information about the expected cash flows for the pension plans and other post retirement benefit plans follows:
             
     Other Postretirement Benefits 
        Expected
 
  Pension Benefits  Gross  Federal Subsidy 
  (In thousands) 
 
Employer contribution
            
2011 (expected) $51,666  $ 2,823  $— 
Expected benefit payments
            
2011 $59,966  $2,975  $ (152)
2012  66,053   2,302   (147)
2013  72,723   1,882   (141)
2014  78,646   1,667   (135)
2015  84,549   1,484   (126)
2016 through 2020  521,897   4,115   (477)
follows (in thousands):

Employer contribution

  

2014 (expected)

  $50,605  

Expected benefit payments

  

2014

  $79,073  

2015

   88,704  

2016

   96,385  

2017

   104,225  

2018

   112,082  

2019 through 2023

   662,040  

Net periodic benefit cost included the following components:

                         
  Pension Benefits  Other Postretirement Benefits 
  2010  2009  2008  2010  2009  2008 
  (In thousands)  (In thousands) 
 
Service cost $12,312  $16,534  $53,311  $—  $443  $880 
Interest cost  95,453   93,493   90,300   605   1,264   1,614 
Expected return on plan assets  (114,166)  (113,370)  (114,690)  —   —   — 
Amortization of prior service (credit) cost  (6,979)  (7,010)  (24)  (1,059)  (225)  371 
Amortization of actuarial loss  35,264   21,990   17,962   1,759   1,759   1,616 
Curtailment gain  —   (4,298)  —   —   —   — 
                         
Net periodic benefit cost $21,884  $7,339  $46,859  $1,305  $3,241  $4,481 
                         

   2013  2012  2011 
   (In Thousands) 

Service cost

  $19,083   $15,254   $13,039  

Interest cost

   89,408    100,338    97,293  

Expected return on plan assets

   (133,816)   (128,208)   (124,150) 

Amortization of prior service credit

   (7,538)   (7,270)   (6,970) 

Amortization of actuarial loss

   83,934    70,161    53,039  

Curtailment gain

   —    (23,507)   —  
  

 

 

  

 

 

  

 

 

 

Net periodic benefit cost

  $51,071   $26,768   $32,251  
  

 

 

  

 

 

  

 

 

 

F-24

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Other changes in plan assets and benefit obligations recognized in other comprehensive (loss) income are as follows:

                         
  Pension Benefits  Other Postretirement Benefits 
  2010  2009  2008  2010  2009  2008 
        (In thousands)       
 
Current year actuarial loss (gain) $60,777  $(125,816) $488,384  $340  $(1,190) $1,282 
Recognition of actuarial loss  (35,264)  (21,990)  (17,962)  (1,759)  (1,759)  (1,616)
Current year prior service cost (credit)  1,148   —   (66,349)  —   (13,182)  — 
Recognition of prior service cost (credit)  6,979   11,308   24   1,059   225   (371)
                         
Total recognized in other comprehensive income $33,640  $(136,498) $404,097  $(360) $(15,906) $(705)
                         
Total recognized in net periodic benefit cost and other comprehensive income $55,524  $(129,159) $450,956  $945  $(12,665) $3,776 
                         


F-23

   2013  2012  2011 
   (In Thousands) 

Current year actuarial (gain) loss

  $(368,587)  $114,061   $311,038  

Recognition of actuarial loss

   (83,934)   (70,161)   (53,039) 

Current year prior service credit

   —    (4,217)   —  

Recognition of prior service credit

   7,538    30,777    6,970  
  

 

 

  

 

 

  

 

 

 

Total recognized in other comprehensive (loss) income

  $(444,983)  $70,460   $264,969  
  

 

 

  

 

 

  

 

 

 

Total recognized in net periodic benefit cost and other comprehensive (loss) income

  $(393,912)  $97,228   $297,220  
  

 

 

  

 

 

  

 

 

 

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
The estimated amounts that will be amortized from accumulated other comprehensive loss (income) into net periodic benefit cost in 20112014 are as follows:
         
     Other Post-
 
  Pension
  retirement
 
  Benefits  Benefits 
  (In thousands) 
 
Actuarial loss $50,543  $1,733 
Prior service credit  (6,956)  (1,059)
         
Total $43,587  $674 
         
follows in thousands:

Actuarial loss

  $26,606  

Prior service credit

   (1,904) 
  

 

 

 

Total

  $24,702  
  

 

 

 

The assumptions used in measuring the net periodic benefit costs for the plans follow:

                         
  Pension Benefits  Other Postretirement Benefits 
  2010  2009  2008  2010  2009  2008 
 
Weighted average discount rate  6.54%  6.97%  6.49%  5.20%  5.79%  5.75%
Rate of increase in future compensation levels  3.75%  3.75%  3.75%  —   —   — 
Expected long-term rate of return on plan assets  8.00%  8.00%  8.25%  —   —   — 
A 7.5% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2009. The rate was assumed to decrease ratably to 5% at December 31, 2014, and thereafter. The effect of a one-percentage-point change in the assumed health care cost trend rate is not significant.

   2013  2012  2011 

Weighted average discount rate

   4.17%   5.17%   5.74% 

Rate of increase in future compensation levels

   3.30%   3.30%   3.39% 

Expected long-term rate of return on plan assets

   7.83%   7.84%   7.87% 

The Company has two defined contribution plans that cover substantially all of its domestic employees. The Company’s matching contributions are determined based on the employee’s participation in the U.S. pension plan. PensionPrior to 2014, U.S. pension plan participants who continue earning credited service after 2008 receive a matching contribution of 20% of the first 6% of the employee’s salary. Other employees receive a matching contribution of 100% of the first 5% of the employee’s salary. In December 2012, the Company approved an amendment to merge the two plans effective January 1, 2014. Beginning in 2014, all employees will receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense for both plans was approximately $33,476,000$43,236,000 in 2010, $31,783,0002013, $43,155,000 in 2009,2012, and $7,252,000$38,773,000 in 2008.

2011.

8.
8.  Guarantees

The Company guarantees the borrowings of certain independently controlled automotive parts stores (independents) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). Presently, the independents are generally consolidated by unaffiliated enterprises that have a controlling financial interest through ownership of a majority voting interest in the entity.independent. The Company has no voting interest or other equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the guarantee. The Company has concluded that the independents are variable interest entities, but that the Company is not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the entity’s economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining

F-25

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

appropriate inventories, and store hours. Separately, the Company concluded the affiliates are not variable interest entities. The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At December 31, 2010,2013, the Company was in compliance with all such covenants.

At December 31, 2010,2013, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $200,900,000.$258,703,000. These loans generally mature over periods from one to six years. In the event that the Company is required to make payments in connection with guaranteed obligations of the


F-24

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
independents or the affiliates, the Company would obtain and liquidate certain collateral (e.g., accounts receivable and inventory) to recover all or a portion of the amounts paid under the guarantee. When it is deemed probable that the Company will incur a loss in connection with a guarantee, a liability is recorded equal to this estimated loss. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings.

The Company has accrued for guarantees related to the independents’ and affiliates’ borrowings as of December 31, 20102013 and 2009.2012. These liabilities are not material to the financial position of the Company and are included in other long-term liabilities in the accompanying consolidated balance sheets.

9.
9.  Acquisitions

During 2010,2013, the Company acquired fourone company each in the Automotive Group (including GPC Asia Pacific), Industrial Group, and Electrical/Electronic Materials Group for approximately $650,000,000, net of cash acquired. During 2012, the Company acquired one company in the Automotive Group (Quaker City Motor Parts Co.) for approximately $343,000,000, net of cash acquired. During 2011, the Company acquired three companies in the Industrial Group and Electrical Groupsone company in the Electrical/Electronic Materials Group for approximately $90,645,000. The$115,600,000.

For each acquisition, the Company allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for the acquired companies were included in the Company’s consolidated statements of income and comprehensive income beginning on their respective acquisition dates. The Company recorded approximately $40,247,000$950,000,000, $230,000,000 and $78,210,000 of goodwill and other intangible assets associated with the acquisitions.2013, 2012, and 2011 acquisitions, respectively.

For the 2013 acquisitions, other intangible assets acquired consisted of customer relationships of $235,000,000, trademarks of $141,000,000, and non-competition agreements of $4,000,000 with weighted average amortization lives of 15, 40, and 1 years, respectively. For the 2012 acquisitions, other intangible assets acquired consisted of customer relationships of $108,000,000 and trademarks of $2,000,000, with weighted average amortization lives of 15 and 40 years, respectively. For the 2011 acquisitions, other intangible assets acquired consisted of customer relationships of $37,378,000, trademarks of $12,100,000, and non-competition agreements of $650,000, with weighted average amortization lives of 15, 40, and 5 years, respectively.

Additional disclosures on the 2013 automotive acquisition of GPC Asia Pacific and the 2012 automotive acquisition of Quaker City Motor Parts Co. are provided below.

GPC Asia Pacific

The Company acquired a 30% investment in GPC Asia Pacific, formerly known as the Exego Group, for approximately $166,000,000 effective January 1, 2012. On April 1, 2013, the Company acquired the remaining 70% interest in GPC Asia Pacific for approximately $590,000,000, net of cash acquired of $70,000,000, and the

F-26

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

assumption of approximately $230,000,000 in debt. The acquisition was financed using a combination of cash on hand and borrowings under existing credit facilities. GPC Asia Pacific, which is headquartered in Melbourne, Australia, is a leading aftermarket distributor of automotive replacement parts and accessories in Australasia, with annual revenues of approximately $1,100,000,000 and a company-owned store footprint of more than 460 locations across Australia and New Zealand. This acquisition provides an opportunity for the Company to participate in the ongoing and significant growth opportunities in the Australasian aftermarket.

The Company recognized certain one-time positive purchase accounting pre-tax adjustments of approximately $33,000,000, or $0.21 net of taxes on a per share diluted basis, as a result of the acquisition. The net one-time purchase accounting adjustments consisted of a gain of approximately $59,000,000 related to remeasuring the 30% investment in GPC Asia Pacific held before the business combination to fair value, the post-closing sale of acquired inventory written up to fair value of $21,000,000 as part of the purchase price allocation, and certain negative adjustments of approximately $5,000,000.

Prior to the 70% acquisition, the Company accounted for the 30% investment under the equity method of accounting. The acquisition-date fair value of the 30% investment was approximately $234,000,000 and is included in the measurement of the consideration transferred. The difference between the acquisition-date fair value and the carrying amount of the equity method investment resulted in the recognition of a gain of approximately $59,000,000 on the acquisition date. The acquisition-date fair value was determined using a market and income approach with the assistance of a third party valuation firm.

As part of the allocation of purchase price described below, acquired inventory was written up to fair value, which was approximately $21,000,000 above the cost of the acquired inventory. Based on the inventory turn of the acquired inventories, the entire write-up was recognized in cost of goods sold during 2013.

The net $54,000,000 of one-time gain and other adjustments are included in the line item “Selling, administrative & other expenses” and the acquired inventory adjustment of $21,000,000 is included in “Cost of goods sold” in the consolidated statements of income and comprehensive income.

The acquisition date fair value of the consideration transferred totaled approximately $824,000,000, net of cash acquired of $70,000,000, which consisted of the following:

   April 1, 2013 
   (In Thousands) 

Cash

  $590,000  

Fair value of 30% investment held prior to business combination

   234,000  
  

 

 

 

Total

  $824,000  
  

 

 

 

F-27

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The Company is in the process of analyzing the estimated values of assets and liabilities acquired.acquired as of the acquisition date and is obtaining third-party valuations of certain intangible assets. The allocation of the purchase price is therefore preliminary and subject to revision.

During 2009,

   April 1, 2013 
   (In Thousands) 

Trade accounts receivable

  $94,000  

Merchandise inventory

   306,000  

Prepaid expenses and other current assets

   32,000  

Property and equipment

   59,000  

Intangible assets

   347,000  

Other assets

   24,000  
  

 

 

 

Total identifiable assets acquired

   862,000  

Current liabilities

   (223,000) 

Long-term debt

   (230,000) 

Deferred tax liabilities and other

   (117,000) 
  

 

 

 

Total liabilities assumed

   (570,000) 
  

 

 

 

Net identifiable assets acquired

   292,000  

Goodwill

   532,000  
  

 

 

 

Net assets acquired

  $824,000  
  

 

 

 

The acquired intangible assets of approximately $347,000,000 were provisionally assigned to customer relationships of $202,000,000, trademarks of $141,000,000, and non-compete agreements of $4,000,000, with weighted average amortization lives of 16, 40, and 1 year, respectively, for a total weighted average amortization life of 26 years. The fair value of the Company acquired eight companies inidentifiable intangible assets is provisional pending completion of the Industrialfinal valuations for these assets.

The estimated goodwill recognized as part of the acquisition is not tax deductible and Automotive Groups for approximately $71,038,000. The Company allocated the purchase pricehas been assigned to the assets acquiredautomotive segment. The goodwill is attributable primarily to expected synergies and the liabilities assumed based on their fair values asassembled workforce of their respective acquisition dates. GPC Asia Pacific.

The resultsamounts of operations for the acquired companies werenet sales and earnings of GPC Asia Pacific included in the Company’s consolidated statements of income beginningand comprehensive income from April 1, 2013 to December 31, 2013 were approximately $839,000,000 in net sales and net income of $0.43 on their respective acquisition dates. a per share diluted basis, respectively.

The Company recorded approximately $12,199,000 of goodwill and other intangible assets associated with the acquisitions.

On June 1, 2009, the Company acquired the remaining noncontrolling interest in its consolidated subsidiary, Balkamp, Inc., for approximately $63,165,000. The acquisition was accounted for as an equity transaction and the associated noncontrolling interest in the subsidiary’s equity was eliminated as part of the transaction.
During 2008, the Company acquired eleven companies in the Automotive, Industrial, Office Supply and Electrical/Electronic Groups for approximately $133,604,000. The Company allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for the acquired companies were included in the Company’sunaudited pro forma consolidated statements of income and comprehensive income of the Company as if GPC Asia Pacific had been included in the consolidated results of the Company for the years ended December 31, 2013 and 2012 would be estimated at $14,400,000,000 and $14,100,000,000 in net sales, respectively, and net income of $4.42 and $4.53 on a per share diluted basis, respectively. The pro forma information is not necessarily indicative of the results of operations that we would have reported had the transaction actually occurred at the beginning of these periods, nor is it necessarily indicative of future results.

The adjustments to the pro forma amounts include, but are not limited to, applying the Company’s accounting policies, amortization related to fair value adjustments to intangible assets, one-time purchase accounting adjustments, interest expense on their respective acquisition dates.related debt, and any associated tax effects.

F-28

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Quaker City Motor Parts

On May 1, 2012 the Company acquired Quaker City Motor Parts Co. (“Quaker City”) for $343,000,000, net of cash acquired. Quaker City, headquartered in Middleton, Delaware, is a long-standing NAPA distributor with annual revenues of approximately $300,000,000. Quaker City serves approximately 260 auto parts stores, of which approximately 135 are company-owned. The Company recorded approximately $84,442,000 of goodwillfunded the acquisition with cash on hand and other intangible assets associated with these acquisitions.

short-term borrowings under credit facilities.

10.
10.  Segment Data

The Company’s reportable segments consist of automotive, industrial, office products, and electrical/electronic materials. Within the reportable segments, certain of the Company’s operating segments are aggregated since they have similar economic characteristics, products and services, type and class of customers, and distribution methods.

The Company’s automotive segment distributes replacement parts (other than body parts) for substantially all makes and models of automobiles, trucks, and other vehicles.

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.


F-25

Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
The Company’s electrical/electronic materials segment distributes a wide variety of electrical/electronic materials, including insulating and conductive materials for use in electronic and electrical apparatus.

Inter-segment 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, amortization, and noncontrolling interests. Approximately $68,200,000, $38,900,000,$193,400,000, $115,200,000 and $49,900,000$106,000,000 of income before income taxes was generated in jurisdictions outside the United States for the years ended December 31, 2010, 2009,2013, 2012, and 2008,2011, respectively. Net sales and net long-lived assets by country relate directly to the Company’s operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.

F-29

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

For management purposes, net sales by segment exclude the effect of certain discounts, incentives, and freight billed to customers. The line item “other” represents the net effect of the discounts, incentives, and freight billed to customers whichthat are reported as a component of net sales in the Company’s consolidated statements of income and comprehensive income.


F-26

   2013  2012  2011  2010  2009 
   (In Thousands) 

Net sales:

      

Automotive

  $7,489,186   $6,320,882   $6,061,424   $5,608,101   $5,225,389  

Industrial

   4,429,976    4,453,574    4,173,574    3,521,863    2,885,782  

Office products

   1,638,618    1,686,690    1,689,368    1,641,963    1,639,018  

Electrical/electronic materials

   568,872    582,820    557,537    449,770    345,808  

Other

   (48,809)   (30,098)   (23,026)   (14,108)   (38,485) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total net sales

  $14,077,843   $13,013,868   $12,458,877   $11,207,589   $10,057,512  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating profit:

      

Automotive

  $641,492   $540,678   $467,806   $421,109   $387,945  

Industrial

   320,720    352,119    337,628    255,616    162,353  

Office products

   122,492    134,441    134,124    131,746    126,104  

Electrical/electronic materials

   47,584    50,910    40,663    30,910    25,254  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating profit

   1,132,288    1,078,148    980,221    839,381    701,656  

Interest expense, net

   (24,330)   (19,619)   (24,608)   (26,598)   (27,112) 

Corporate expense

   (34,667)   (26,606)   (58,033)   (46,263)   (26,735) 

Intangible asset amortization

   (28,987)   (12,991)   (6,774)   (4,737)   (3,644) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income taxes

  $1,044,304   $1,018,932   $890,806   $761,783   $644,165  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Assets:

      

Automotive

  $4,009,244   $3,411,252   $3,218,931   $3,177,644   $3,148,876  

Industrial

   1,162,697    1,130,877    1,100,024    955,241    865,431  

Office products

   708,944    731,564    700,720    694,166    619,612  

Electrical/electronic materials

   156,780    137,237    129,933    113,757    76,716  

Corporate

   353,276    898,292    773,391    637,871    445,705  

Goodwill and other intangible assets

   1,289,356    497,839    279,775    209,548    171,532  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets

  $7,680,297   $6,807,061   $6,202,774   $5,788,227   $5,327,872  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

F-30

Index to Financial Statements

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

                     
  2010  2009  2008  2007  2006 
  (In thousands) 
 
Net sales:                    
Automotive $5,608,101  $5,225,389  $5,321,536  $5,311,873  $5,185,080 
Industrial  3,521,863   2,885,782   3,514,661   3,350,954   3,107,593 
Office products  1,641,963   1,639,018   1,732,514   1,765,055   1,779,832 
Electrical/electronic materials  449,770   345,808   465,889   436,318   408,138 
Other  (14,108)  (38,485)  (19,337)  (21,005)  (22,701)
                     
Total net sales $11,207,589  $10,057,512  $11,015,263  $10,843,195  $10,457,942 
                     
Operating profit:                    
Automotive $421,109  $387,945  $385,356  $413,180  $399,931 
Industrial  255,616   162,353   294,652   281,762   257,022 
Office products  131,746   126,104   144,127   156,781   166,573 
Electrical/electronic materials  30,910   25,254   36,721   30,435   22,630 
                     
Total operating profit  839,381   701,656   860,856   882,158   846,156 
Interest expense, net  (26,598)  (27,112)  (29,847)  (21,056)  (26,445)
Corporate expense  (45,451)  (24,913)  (55,119)  (38,300)  (44,341)
Intangible asset amortization  (4,737)  (3,644)  (2,861)  (1,118)  (463)
Other expense  (812)  (1,822)  (4,561)  (4,939)  (3,991)
                     
Income before income taxes $761,783  $644,165  $768,468  $816,745  $770,916 
                     
Assets:                    
Automotive $2,854,461  $2,825,693  $2,799,901  $2,785,619  $2,625,846 
Industrial  955,241   865,431   1,025,292   969,666   910,734 
Office products  694,166   619,612   638,854   659,838   669,303 
Electrical/electronic materials  113,757   76,716   95,655   101,419   105,623 
Corporate  637,871   445,705   67,823   175,074   123,224 
Goodwill and other intangible assets  209,548   171,532   158,825   82,453   62,254 
                     
Total assets $5,465,044  $5,004,689  $4,786,350  $4,774,069  $4,496,984 
                     
Depreciation and amortization:                    
Automotive $63,942  $65,554  $65,309  $65,810  $52,565 
Industrial  7,208   7,611   7,632   8,565   7,941 
Office products  9,737   9,685   9,825   9,159   9,518 
Electrical/electronic materials  1,414   1,666   1,572   1,566   1,394 
Corporate  2,294   2,251   1,499   1,484   1,542 
Intangible asset amortization  4,737   3,644   2,861   1,118   463 
                     
Total depreciation and amortization $89,332  $90,411  $88,698  $87,702  $73,423 
                     
Capital expenditures:                    
Automotive $46,888  $53,911  $72,628  $91,359  $111,644 
Industrial  4,307   2,987   7,575   8,340   6,187 
Office products  29,866   5,782   9,539   13,294   6,002 
Electrical/electronic materials  1,957   676   1,406   2,340   904 
Corporate  2,361   6,089   13,878   315   1,307 
                     
Total capital expenditures $85,379  $69,445  $105,026  $115,648  $126,044 
                     
Net sales:                    
United States $9,793,820  $8,935,651  $9,716,029  $9,609,225  $9,314,970 
Canada  1,327,552   1,078,799   1,219,759   1,158,515   1,071,095 
Mexico  100,325   81,547   98,812   96,460   94,578 
Other  (14,108)  (38,485)  (19,337)  (21,005)  (22,701)
                     
Total net sales $11,207,589  $10,057,512  $11,015,263  $10,843,195  $10,457,942 
                     
Net long-lived assets:                    
United States $398,318  $402,937  $352,314  $337,136  $353,315 
Canada  80,978   78,502   67,731   85,532   72,556 
Mexico  4,834   3,585   3,220   3,321   3,389 
                     
Total net long-lived assets $484,130  $485,024  $423,265  $425,989  $429,260 
                     

F-27

   2013  2012  2011  2010  2009 
   (In Thousands) 

Depreciation and amortization:

      

Automotive

  $76,238   $60,630   $60,252   $63,942   $65,554  

Industrial

   8,751    8,307    7,495    7,208    7,611  

Office products

   10,166    10,837    9,999    9,737    9,685  

Electrical/electronic materials

   1,904    1,733    1,554    1,414    1,666  

Corporate

   7,911    3,885    2,862    2,294    2,251  

Intangible asset amortization

   28,987    12,991    6,774    4,737    3,644  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total depreciation and amortization

  $133,957   $98,383   $88,936   $89,332   $90,411  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Capital expenditures:

      

Automotive

  $97,735   $67,482   $61,795   $46,888   $53,911  

Industrial

   8,808    13,015    9,851    4,307    2,987  

Office products

   9,297    16,013    22,036    29,866    5,782  

Electrical/electronic materials

   1,730    1,029    1,762    1,957    676  

Corporate

   6,493    4,448    8,025    2,361    6,089  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total capital expenditures

  $124,063   $101,987   $103,469   $85,379   $69,445  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net sales:

      

United States

  $11,594,713   $11,299,291   $10,791,303   $9,793,820   $8,935,651  

Canada

   1,560,799    1,616,921    1,571,733    1,327,552    1,078,799  

Australasia

   839,353    —    —    —    —  

Mexico

   131,787    127,754    118,867    100,325    81,547  

Other

   (48,809)   (30,098)   (23,026)   (14,108)   (38,485) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total net sales

  $14,077,843   $13,013,868   $12,458,877   $11,207,589   $10,057,512  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net long-lived assets:

      

United States

  $503,882   $466,473   $411,193   $398,318   $402,937  

Canada

   99,135    93,496    84,210    80,978    78,502  

Australasia

   60,614    —    —    —    —  

Mexico

   6,430    6,396    4,801    4,834    3,585  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total net long-lived assets

  $670,061   $566,365   $500,204   $484,130   $485,024  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

F-31

Index to Financial Statements

Annual Report onForm 10-K

Item 15(c)15(a)

Schedule

Schedule Of Valuation And Qualifying Accounts Disclosure

Financial Statement Schedule II — Valuation and Qualifying Accounts

Genuine Parts Company and Subsidiaries

                 
  Balance at
  Charged
     Balance at
 
  Beginning
  to Costs
     End
 
  of Period  and Expenses  Deductions  of Period 
 
Year ended December 31, 2008:                
Reserves and allowances deducted from asset accounts:                
Allowance for uncollectible accounts $15,520,805  $23,882,674  $(20,815,910)1 $18,587,569 
Year ended December 31, 2009:                
Reserves and allowances deducted from asset accounts:                
Allowance for uncollectible accounts $18,587,569  $28,463,029  $(30,460,819)1 $16,589,779 
Year ended December 31, 2010:                
Reserves and allowances deducted from asset accounts:                
Allowance for uncollectible accounts $16,589,779  $10,597,432  $(11,588,299)1 $15,598,912 

   Balance at
Beginning
of Period		   Charged
to Costs
and Expenses		   Deductions(1)  Balance at
End
of Period		 

Year ended December 31, 2011:

       

Reserves and allowances deducted from asset accounts:

       

Allowance for doubtful accounts

  $15,598,912    $13,247,731    $(11,930,188)  $16,916,455  

Year ended December 31, 2012:

       

Reserves and allowances deducted from asset accounts:

       

Allowance for doubtful accounts

  $16,916,455    $8,046,605    $(5,782,870)  $19,180,190  

Year ended December 31, 2013:

       

Reserves and allowances deducted from asset accounts:

       

Allowance for doubtful accounts

  $19,180,190    $8,691,000    $(13,448,190)  $14,423,000  

(1)
1UncollectibleDoubtful accounts written off, net of recoveries.


S-1

Index to Financial Statements

ANNUAL REPORT ONFORM 10-K

INDEX OF EXHIBITS

The following exhibits are filed (or furnished, if so indicated) herewith as a part of this Report:

     
 10.25* Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010.
 10.26* Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated January 1, 2009, dated November 16, 2010, effective January 1, 2011.
 10.27* Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011.
 21  Subsidiaries of the Company.
 23  Consent of Independent Registered Public Accounting Firm.
 31.1 Certification signed by the Chief Executive Officer pursuant to SECRule 13a-14(a).
 31.2 Certification signed by the Chief Financial Officer pursuant to SECRule 13a-14(a).
 32.1 Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
 32.2 Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
 101  Interactive data files pursuant to Rule 405 ofRegulation S-T.

  21Subsidiaries of the Company.
  23Consent of Independent Registered Public Accounting Firm.
  31.1Certification signed by the Chief Executive Officer pursuant to SEC Rule 13a-14(a).
  31.2Certification signed by the Chief Financial Officer pursuant to SEC Rule 13a-14(a).
  32.1Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
  32.2Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101Interactive data files pursuant to Rule 405 of Regulation S-T.

The following exhibits are incorporated by reference as set forth in Item 15 of thisForm 10-K:

— 3.13.1  Amended and Restated Articles of Incorporation of the Company, amended April 23, 2007.
— 3.23.2  By-Laws of the Company as amended and restated August 20, 2007.November 18, 2013.
— 4.24.2  Specimen Common Stock Certificate.
— 4.3Note Purchase Agreement dated November 30, 2001.

Instruments with respect to long-term debt where the total amount of securities authorized there under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request.

— 10.1*10.1*  The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993.
— 10.2*10.2*  Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996.
— 10.3*10.3*  Genuine Parts Company Death Benefit Plan, effective July 15, 1997.
— 10.4*10.4*  Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999.
— 10.5*10.5*  The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996.
— 10.6*10.6*  Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999.
— 10.7*10.7*  Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001.
— 10.8*10.8*  Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001.
— 10.9*10.9*  Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003.
— 10.10*10.10*  Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003.
— 10.11*Description of Director Compensation.
— 10.12*Genuine Parts Company Stock Appreciation Rights Agreement.
— 10.13*10.11*  Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan.
— 10.14*10.12*  Amendment No. 2 to the Genuine Parts Company Death Benefit Plan.

— 10.15*10.13*  Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006.

Index to Financial Statements
— 10.16*10.14*  Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006.
— 10.17*10.15*  Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008.
— 10.18*10.16*  Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008.
— 10.19*10.17*  Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007.
— 10.20*10.18*  Genuine Parts Company Performance Restricted Stock Unit Award Agreement.
— 10.21*10.19*  Genuine Parts Company Restricted Stock Unit Award Agreement.
— 10.22*10.20*  SpecimenForm of Amended and Restated Change in Control Agreement, as amended and restated as of November 19, 2007.Agreement.
— 10.23*10.21*  Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009.
— 10.24*10.22*  Genuine Parts Company 2009 Annual Incentive Bonus Plan, dated March 31, 2009, effective January 1, 2009.
* — 10.23*Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010.
— 10.24*Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated January 1, 2009, dated November 16, 2010, effective January 1, 2011.
— 10.25*Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011.
— 10.26*Description of Director Compensation.
— 10.27*Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012.
— 10.28*Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012.
— 10.29*Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated January 1, 2009, dated December 7, 2012, effective December 31, 2013.
— 10.30*Form of amendment to the Amended and Restated Change in Control Agreement.
— 10.31*Genuine Parts Company Stock Appreciation Rights Agreement.

*Indicates management contracts and compensatory plans and arrangements.

Index to Financial Statements

BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY

Board of Directors

Dr. Mary B. Bullock

Executive Vice Chancellor of Duke Kunshan University and President Emerita of Agnes Scott  College

Paul D. Donahue

President

Jean Douville

Chairman of the Board of Directors of UAP Inc.

Thomas C. Gallagher

Chairman and Chief Executive Officer

George C. “Jack” Guynn

Retired President and Chief Executive Officer of the Federal Reserve Bank of Atlanta

John R. Holder

Chairman and Chief Executive Officer of Holder Properties

John D. Johns

Chairman, President & Chief Executive Officer of Protective Life Corporation

Michael M. E. Johns, MD

Professor, Emory School of Medicine and Rollins School of Public Health; Chancellor and Executive Vice President of Health Affairs Emeritus, Emory University

Robert C. “Robin” Loudermilk, Jr.

President and Chief Executive Officer of The Loudermilk Companies, LLC

Wendy B. Needham

Retired Managing Director, Global Automotive Research at Credit Suisse First Boston

Jerry W. Nix

Retired Chief Financial Officer

Gary W. Rollins

Vice Chairman and Chief Executive Officer of Rollins Inc.

Corporate Officers

Thomas C. Gallagher

Chairman and Chief Executive Officer

Paul D. Donahue

President

Carol B. Yancey

Executive Vice President, Chief Financial Officer and Corporate Secretary

Treg S. Brown

Senior Vice President — Planning and Acquisitions

Charles A. Chesnutt

Senior Vice President — Technology and Process Improvement

R. Bruce Clayton

Senior Vice President — Human Resources

Frank M. Howard

Senior Vice President and Treasurer

James R. Neill

Senior Vice President — Employee Development and Human Resource Services

Michael D. Orr

Senior Vice President — Operations and Logistics

Scott C. Smith

Senior Vice President — Corporate Counsel

Lisa K. Hamilton

Vice President — Benefits and Communications

David A. Haskett

Vice President and Corporate Controller

Philip C. Johnson

Vice President — Compensation

Sidney G. Jones

Vice President — Investor Relations

Karl J. Koenig

Vice President — Real Estate and Construction

Napoleon B. Rutledge, Jr.

Vice President and Assistant Treasurer

Eric N. Sundby

Vice President — Information Technology

Matthew P. Brigham

Assistant Vice President — Treasury Services

Christopher T. Galla

Assistant Vice President and Senior Counsel

Jessica E. Morgan

Assistant Vice President — Risk Management

Christine E. Powell

Assistant Vice President — Financial Analysis

Robert L. Swann

Assistant Vice President — Internal Audit and Compliance

Jennifer L. Ellis

Associate Counsel and Assistant Secretary

U.S. Automotive Parts Group

Paul D. Donahue

President

Lee A. Maher

Executive Vice President and Chief Operating Officer

Glenn M. Chambers

Executive Vice President — Operations

Scott W. LeProhon

Executive Vice President — Merchandising and Product Strategy

Daniel F. Askey

Senior Vice President — Sales

Todd P. Helms

Senior Vice President — Human Resources

Gregory N. Miller

Senior Vice President and Chief Financial Officer

J. Richard Borman

Vice President — Supply Chain and Logistics

Michael A. Briggs

Vice President — Retail Product Management and Merchandising

Byron H. Frantz

Vice President — Wholesale Product Management

Michael J. Fusaro

Vice President — Process Improvement — Distribution

Richard A. Geiger

Vice President — Finance

Mark W. Hohe

Vice President — Store Operations

Karen E. Kreider

Vice President and Chief Information Officer

Jett W. Kuntz

Vice President — Integrated Business Solutions

David B. Nicki

Vice President — NAPA Tools and Equipment Sales

J. Michael Phillips

Vice President — Organizational Development

Bret A. Robyck

Vice President — AutoCare Sales

Vickie S. Smith

Vice President — Human Resources

Gaylord M. Spencer

Vice President — Marketing Strategy

Michael L. Swartz

Vice President — Inventory & Procurement

Dennis P. Tolivar

Vice President — Major Accounts

Index to Financial Statements

Divisions

M. Todd McMurtrie

Vice President — Atlantic Division

Grant L. Morris

Vice President — Central Division

Michael J. Kelleher

Vice President — Eastern Division

Gregg T. Sargent

Vice President — Florida Operations

Kevin E. Herron

Vice President — Midwest Division

Eric G. Fritsch

Vice President — Mountain Division

Christopher R. Agostino

Vice President — Quaker City Division

Patrick A. Wolfe

Vice President — Southern Division

Stuart A. Kambury

Vice President — Southwest Division

Bradley A. Shaffer

Vice President — Western Division

Heavy Vehicle Parts Group (Atlanta, GA)

D. Gary Silva

President

Greg A. Lancour

Vice President — Operations

Rayloc (Atlanta, GA)

William J. Westerman III

President

Michael S. Gaffney II

Vice President — Operations

Chris C. Koenigshof

Vice President — Human Resources

Joseph W. Lashley

Vice President — Information Services

Scott J. Rolf

Vice President — Sales and Marketing

Balkamp, Inc. (Indianapolis, IN)

D. Tip Tollison

President

Frank C. Amato

Executive Vice President

Mary F. Knudsen

Vice President — Finance and Treasurer

Grupo Auto Todo (Puebla, Mexico)

Juan Lujambio

President and Chief Executive Officer

Jorge Otero

Executive Vice President — Finance

Juan Quintal

Vice President and General Manager NAPA Mexico

Altrom Import Parts Group (Vancouver, Canada)

Patrick K. Nichol

President

NAPA Canada/UAP Inc. (Montreal, Canada)

Jean Douville

Chairman of the Board

Robert Hattem

President and Chief Executive Officer

Sylvie Leduc

Executive Vice President — Heavy Vehicle Parts Division

Alain Masse

Executive Vice President — NAPA Operations

John Buckley

Senior Regional Vice President — Auto Parts Division

Daniel Dallaire

Vice President — Human Resources

Joseph P. Herauf

Vice President — Sales

Thomas Hunt

Vice President — Product Development

Mark Miron

Vice President — Distribution and Logistics

Frank Pipito

Vice President — Finance and Secretary

GPC Asia Pacific (Melbourne, Australia)

John L. Moller

Managing Director

Mark G. Brunton

Executive General Manager — Repco New Zealand

Wayne F. Bryant

Executive General Manager — Repco Australia, Sales and Operations

Rob Cameron

Executive General Manager — Automotive Specialist Group

Gary T. Dunwell

Executive General Manager — Repco Australia, Merchandising and Strategic Marketing

Cary D. Laverty

Executive General Manager — Legal and Commercial

Lincoln P. McFayden

Executive General Manager — McLeod Accessories

J. Scott Mosteller

Executive General Manager — Logistics and Technology

Craig Sandiford

Executive General Manager — Human Resources

Mark B. Sookias

Executive General Manager — Motospecs

Julian Buckley

Chief Financial Officer

Index to Financial Statements

EIS, Inc. (Atlanta, GA)

Robert W. Thomas

President and Chief Executive Officer

Alexander Gonzalez

Senior Vice President — Electrical and Electronics

Larry L. Griffin

Senior Vice President — Fabrication and Coating

William C. Knight

Senior Vice President — Logistics and Operations

Peter F. Sheehan

Senior Vice President — Specialty Wire and Cable

Matthew C. Tyser

Senior Vice President — Finance and Secretary

Derek B. Goshay

Vice President — Human Resources

Motion Industries (Birmingham, AL)

William J. Stevens

Chairman and Chief Executive Officer

Timothy P. Breen

President and Chief Operating Officer

G. Harold Dunaway, Jr.

Executive Vice President — Finance & Administration and Secretary

Austin W. Amos

Senior Vice President & Group Executive — Midwest

Randall P. Breaux

Senior Vice President — Marketing, Strategic Planning and Product Support

Richard W. Burmester

Senior Vice President & Group Executive — Southwest

Anthony G. Cefalu

Senior Vice President & Group Executive — Central and Hose & Rubber

Ellen H. Holladay

Senior Vice President, Chief Information Officer and Operational Excellence Officer

Scott A. MacPherson

Senior Vice President — Sales

Mark W. Sheehan

Senior Vice President — OEM, Global Sourcing, Automation & Process Pumps

Gerald V. Sourbeer

Senior Vice President & Group Executive — Southeast

Kevin P. Storer

Senior Vice President & Group Executive — West and President — Motion Mexico

Mark R. Thompson

Senior Vice President — Corporate Accounts

Randy R. Till

Senior Vice President & Group Executive — East

Darryl J. Britain

Vice President — Technology Process, Support and Communications

Frederick H. “Ted” Cowie

Vice President — Sales — Safety Products

Zahirudin K. Hameer

Vice President — Inventory Management

Billy W. Hamilton

Vice President — Human Resources

M. Keith Knight

Vice President — Business Systems

N. Joe Limbaugh

Vice President — Operations

Douglas R. Osborne

Vice President — MI Services

C. Jeff Rouse

Vice President — Government Sales and Export

Brandon C. Scordino

Vice President — Technology Planning and Development

James R. Summers

Vice President — Systems Assurance & Data Center Operations

J. Marvin Walker

Vice President — Finance

James F. Williams

Vice President — Corporate Purchasing and Distribution Centers

Michael D. Harper

Treasurer

Dermot R. Strong

President — Motion Canada

S. P. Richards Company (Atlanta, GA)

C. Wayne Beacham

Chairman of the Board and Chief Executive Officer

Richard T. Toppin

President and Chief Operating Officer

Steven E. Lynn

Senior Vice President — Merchandising

G. Henry Martin

Senior Vice President — Human Resources

Donald C. Mikolasy

Senior Vice President — Sales

James F. O’Brien

Senior Vice President — Marketing

J. Phillip Welch, Jr.

Senior Vice President — Finance and CFO

Dennis J. Arnold

Vice President — Furniture

John K. Burgess

Vice President — Sales

Thomas E. Dunmon, Jr.

Vice President — Finance and Controller

Dennis J. Flynn

Vice President — Supply Chain

E. Chadwick Lee

Vice President — New Market Development

Charles E. Macpherson

Vice President — Strategic Pricing

Tom C. Maley

Vice President — Business Development & Analytics

Brian M. McGill

Vice President — Information Technology & CIO

James C. Moseley

Vice President — Information Systems

John R. Reagan

Vice President — Merchandising

Jason R. Smith

Vice President — Sales — Emerging Markets

Thomas M. Testa

Vice President — Sales

Chris F. Whiting

Vice President — Cleaning and Breakroom Supply

Bryan A. Wight

Vice President — Sales — Independent Dealer Channel

Lester P. Christian

Vice President — Southeast Division

Bryan T. Hall

Vice President — South Central Division

Gregory L. Nissen

Vice President — Western Division

Ray J. Sreca

Vice President — Northeast Division

Richard A. Wiltz

Vice President — North Central Division

Peter R. Dalglish

Managing Director — S. P. Richards Canada

Index to Financial Statements