11
Index to Financial Statements
our revenues and earnings. Increased competition among distributors of automotive and industrial parts, office products and electronic materials, including internet-related initiatives,increased availability among digital and e-commerce providers across the markets in which we do business, 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.
12
Index to Financial Statements
We recognize the growing demand for business-to-business and business-to-customer e-commerce options, and we could lose business if we fail to provide the e-commerce options our customers wish to use.
Our success in e-commerce depends on our ability to accurately identify the products to make available through e-commerce platforms across our business segments, and to establish and maintain such platforms to provide the highest level of data security to our customers on and through the platforms our customers wish to use (including mobile) with rapidly changing technology in a highly competitive environment.
13
Index to Financial Statements
facilities and the remainder are Company owned.
buildings and the remainder are Company owned.
14
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Quarter First Second Third Fourth Quarter First Second Third Fourth Cumulative Total Shareholder Return $ at Fiscal Year End Genuine Parts Company S&P 500 Peer Index Industry Segment Automotive Parts Industrial Parts Office Products Electrical/Electronic Materials Period October 1, 2014 through October 31, 2014 November 1, 2014 through November 30, 2014 December 1, 2014 through December 31, 2014 Totals Sales Price of Common Shares 2014 2013 High Low High Low $ 90.00 $ 76.50 $ 78.12 $ 64.43 89.05 83.43 84.27 71.87 90.20 82.15 85.41 77.80 109.00 84.99 84.89 76.26 Dividends
Declared per
Share 2014 2013 $ 0.5750 $ 0.5375 0.5750 0.5375 0.5750 0.5375 0.5750 0.5375 15Index to Financial Statements Sales Price of Common Shares 2016 2015 High Low High Low Quarter First $ 99.59 $ 76.50 $ 108.07 $ 91.74 Second 101.28 92.25 94.74 89.17 Third 105.97 95.96 91.02 78.76 Fourth 100.34 86.61 92.32 79.77 2016 2015 Quarter First $ 0.6575 $ 0.6150 Second 0.6575 0.6150 Third 0.6575 0.6150 Fourth 0.6575 0.6150 20092011 and ended December 31, 2014.2016. This graph assumes that $100 was invested on December 31, 20092011 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.
2009 2010 2011 2012 2013 2014 100.00 140.54 173.21 185.79 250.00 328.51 100.00 115.06 117.49 136.29 180.43 205.13 100.00 144.77 138.70 158.95 224.44 232.47 2011 2012 2013 2014 2015 2016 Genuine Parts Company 100.00 107.26 144.33 189.66 157.15 179.62 S&P 500 100.00 116.00 153.57 174.60 177.01 198.18 Peer Index 100.00 113.25 162.10 168.26 156.33 171.76 20092011 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.Essendant. 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.16Index to Financial Statements 2009 2010 2011 2012 2013 2014 52 % 50 % 49 % 49 % 53 % 53 % 29 % 31 % 33 % 34 % 31 % 31 % 16 % 15 % 14 % 13 % 12 % 11 % 3 % 4 % 4 % 4 % 4 % 5 % Industry Segment 2011 2012 2013 2014 2015 2016 Automotive Parts 49 % 49 % 53 % 53 % 52 % 53 % Industrial Parts 33 % 34 % 31 % 31 % 30 % 30 % Office Products 14 % 13 % 12 % 11 % 13 % 13 % Electrical/Electronic Materials 4 % 4 % 4 % 5 % 5 % 4 % 2014,2016, there were 4,9624,689 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.2014: 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 195,555 $ 93.94 200 9,537,149 191,680 $ 99.76 — 9,537,149 55,080 $ 104.88 3,626 9,533,523 442,315 $ 97.83 3,826 9,533,523 Period October 1, 2016 through October 31, 2016 204,350 $ 89.50 203,664 4,477,891 November 1, 2016 through November 30, 2016 211,071 $ 88.73 209,064 4,268,827 December 1, 2016 through December 31, 2016 79,435 $ 98.08 8,585 4,260,242 Totals 494,856 $ 90.55 421,313 4,260,242 (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 November 17, 2008, the Board of Directors announced that it had authorized the repurchase of 15 million shares. The authorization for this repurchase plan continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 9.54.3 million shares authorized in the 2008 plan remain available to be repurchased by the Company. There were no other publicly announced plans as of December 31, 2014.2016.
17
Index to Financial StatementsITEM 6.SELECTED FINANCIAL DATA.
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 beginning on page 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,
2014 2013 2012 2011 2010 (In thousands, except per share data) Net sales
$ 15,341,647 $ 14,077,843 $ 13,013,868 $ 12,458,877 $ 11,207,589 Cost of goods sold
10,747,886 9,857,923 9,235,777 8,852,837 7,954,645 Operating and non-operating expenses, net
3,476,022 3,175,616 2,759,159 2,715,234 2,491,161 Income before taxes
1,117,739 1,044,304 1,018,932 890,806 761,783 Income taxes
406,453 359,345 370,891 325,690 286,272 Net income
$ 711,286 $ 684,959 $ 648,041 $ 565,116 $ 475,511 Weighted average common shares outstanding during year — assuming dilution
154,375 155,714 156,420 157,660 158,461 Per common share:
Diluted net income
$ 4.61 $ 4.40 $ 4.14 $ 3.58 $ 3.00 Dividends declared
2.30 2.15 1.98 1.80 1.64 December 31 closing stock price
106.57 83.19 63.58 61.20 51.34 Total debt, less current maturities
500,000 500,000 250,000 500,000 250,000 Total equity
3,312,364 3,358,768 3,008,179 2,753,591 2,763,486 Total assets
$ 8,246,238 $ 7,680,297 $ 6,807,061 $ 6,202,774 $ 5,788,227
Year Ended December 31, 2016 2015 2014 2013 2012 (In thousands, except per share data) Net sales $ 15,339,713
$ 15,280,044
$ 15,341,647
$ 14,077,843
$ 13,013,868
Cost of goods sold 10,740,106
10,724,192
10,747,886
9,857,923
9,235,777
Operating and non-operating expenses, net 3,525,267
3,432,171
3,476,022
3,175,616
2,759,159
Income before taxes 1,074,340
1,123,681
1,117,739
1,044,304
1,018,932
Income taxes 387,100
418,009
406,453
359,345
370,891
Net income $ 687,240
$ 705,672
$ 711,286
$ 684,959
$ 648,041
Weighted average common shares outstanding during year — assuming dilution 149,804
152,496
154,375
155,714
156,420
Per common share: Diluted net income $ 4.59
$ 4.63
$ 4.61
$ 4.40
$ 4.14
Dividends declared 2.63
2.46
2.30
2.15
1.98
December 31 closing stock price 95.54
85.89
106.57
83.19
63.58
Total debt, less current maturities 550,000
250,000
500,000
500,000
250,000
Total equity 3,207,356
3,159,242
3,312,364
3,358,768
3,008,179
Total assets $ 8,859,400
$ 8,144,771
$ 8,246,238
$ 7,680,297
$ 6,807,061
Year Ended December 31, | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
Net sales | $ | 15,341,647 | $ | 14,077,843 | $ | 13,013,868 | $ | 12,458,877 | $ | 11,207,589 | ||||||||||
Cost of goods sold | 10,747,886 | 9,857,923 | 9,235,777 | 8,852,837 | 7,954,645 | |||||||||||||||
Operating and non-operating expenses, net | 3,476,022 | 3,175,616 | 2,759,159 | 2,715,234 | 2,491,161 | |||||||||||||||
Income before taxes | 1,117,739 | 1,044,304 | 1,018,932 | 890,806 | 761,783 | |||||||||||||||
Income taxes | 406,453 | 359,345 | 370,891 | 325,690 | 286,272 | |||||||||||||||
Net income | $ | 711,286 | $ | 684,959 | $ | 648,041 | $ | 565,116 | $ | 475,511 | ||||||||||
Weighted average common shares outstanding during year — assuming dilution | 154,375 | 155,714 | 156,420 | 157,660 | 158,461 | |||||||||||||||
Per common share: | ||||||||||||||||||||
Diluted net income | $ | 4.61 | $ | 4.40 | $ | 4.14 | $ | 3.58 | $ | 3.00 | ||||||||||
Dividends declared | 2.30 | 2.15 | 1.98 | 1.80 | 1.64 | |||||||||||||||
December 31 closing stock price | 106.57 | 83.19 | 63.58 | 61.20 | 51.34 | |||||||||||||||
Total debt, less current maturities | 500,000 | 500,000 | 250,000 | 500,000 | 250,000 | |||||||||||||||
Total equity | 3,312,364 | 3,358,768 | 3,008,179 | 2,753,591 | 2,763,486 | |||||||||||||||
Total assets | $ | 8,246,238 | $ | 7,680,297 | $ | 6,807,061 | $ | 6,202,774 | $ | 5,788,227 | ||||||||||
| Year Ended December 31, | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Net sales | $ | 15,339,713 | $ | 15,280,044 | $ | 15,341,647 | $ | 14,077,843 | $ | 13,013,868 | |||||||||
| Cost of goods sold | 10,740,106 | 10,724,192 | 10,747,886 | 9,857,923 | 9,235,777 | ||||||||||||||
| Operating and non-operating expenses, net | 3,525,267 | 3,432,171 | 3,476,022 | 3,175,616 | 2,759,159 | ||||||||||||||
| Income before taxes | 1,074,340 | 1,123,681 | 1,117,739 | 1,044,304 | 1,018,932 | ||||||||||||||
| Income taxes | 387,100 | 418,009 | 406,453 | 359,345 | 370,891 | ||||||||||||||
| Net income | $ | 687,240 | $ | 705,672 | $ | 711,286 | $ | 684,959 | $ | 648,041 | |||||||||
| Weighted average common shares outstanding during year — assuming dilution | 149,804 | 152,496 | 154,375 | 155,714 | 156,420 | ||||||||||||||
| Per common share: | |||||||||||||||||||
| Diluted net income | $ | 4.59 | $ | 4.63 | $ | 4.61 | $ | 4.40 | $ | 4.14 | |||||||||
| Dividends declared | 2.63 | 2.46 | 2.30 | 2.15 | 1.98 | ||||||||||||||
| December 31 closing stock price | 95.54 | 85.89 | 106.57 | 83.19 | 63.58 | ||||||||||||||
| Total debt, less current maturities | 550,000 | 250,000 | 500,000 | 500,000 | 250,000 | ||||||||||||||
| Total equity | 3,207,356 | 3,159,242 | 3,312,364 | 3,358,768 | 3,008,179 | ||||||||||||||
| Total assets | $ | 8,859,400 | $ | 8,144,771 | $ | 8,246,238 | $ | 7,680,297 | $ | 6,807,061 | |||||||||
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
and expanded product lines, geographic expansion, sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. We discuss these initiatives further below. 2015. Net Sales Gross Profit Net Income Diluted Earnings Per Share 2014. for sustainable long-term growth. quarter. The manufacturing indices we track in this group progressively weakened throughout 2015, which correlates to lower demand among our customer base and, in particular, those customers dependent on exports as well as the oil and gas sector. quarter, relative to the prior year periods. 2014. 2016. 2014. year relative to 2014. 2015 relative to 2014. 2014. 2017. 2017. acquisitions, declining copper prices and effective cost management. rate. 2015. each of 2015 and 2014. 2015, due primarily to the 19 acquisitions made in 2016. Net Cash Provided by (Used in): Operating Activities Investing Activities Financing Activities 2014. 2016: Credit facilities Operating leases Total contractual cash obligations 2016: Line of credit Standby letters of credit Guaranteed borrowings of independents and affiliates Total commercial commitments 2016. 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. 2016. 2014 Net Sales Gross Profit Net Income Earnings Per Share: Basic Diluted 2013 Net Sales Gross Profit Net Income Earnings Per Share: Basic Diluted 2015: 2016. 2015. A 20% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately $524 million in 2016 and $504 million in 2015. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. and Governance Committee Report”, “Compensation, Nominating and Governance Committee Interlocks and Insider Participation” and “Compensation of Directors” of the Proxy Statement and is incorporated herein by reference. Plan Category Equity Compensation Plans Approved by Shareholders: Equity Compensation Plans Not Approved by Shareholders: Total 2015 2014 2014 2014 2016 Exhibits Director Director Director John D. Johns Director Director Director 2016. CAROL B. YANCEY Assets Current assets: Cash and cash equivalents Trade accounts receivable, net Merchandise inventories, net Prepaid expenses and other current assets Total current assets Goodwill Other intangible assets, less accumulated amortization Deferred tax assets Other assets Property, plant, and equipment: Land Buildings, less accumulated depreciation (2014 — $270,946; 2013 — $251,541) Machinery and equipment, less accumulated depreciation (2014 — $598,137; Net property, plant, and equipment Liabilities and equity Current liabilities: Trade accounts payable Current portion of debt Accrued compensation Other accrued expenses Dividends payable Total current liabilities Long-term debt Pension and other post-retirement benefit liabilities Deferred tax liabilities Other long-term liabilities 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 153,113,042 in 2014 and 153,773,098 shares in 2013 Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total parent equity Noncontrolling interests in subsidiaries Total equity Net sales Cost of goods sold Gross margin Operating expenses: Selling, administrative, and other expenses Depreciation and amortization Provision for doubtful accounts Total operating expenses Non-operating expenses (income): Interest expense Other Total non-operating expenses (income) Income before income taxes Income taxes Net income Basic net income per common share Diluted net income per common share Weighted average common shares outstanding Dilutive effect of stock options and nonvested restricted stock awards Weighted average common shares outstanding — assuming dilution Net income Other comprehensive (loss) income, net of tax: Foreign currency translation adjustment Pension and postretirement benefit adjustments, net of income taxes of 2014 — $112,993, 2013 — ($175,297), and 2012 — $26,465 Other comprehensive (loss) income, net of tax Comprehensive income Balance at January 1, 2012 Net income Other comprehensive loss, net of tax Cash dividends declared, $1.98 per share Stock options exercised, including tax benefit of $11,018 Share-based compensation Purchase of stock Noncontrolling interest activities Balance at December 31, 2012 Net income Other comprehensive income, net of tax Cash dividends declared, $2.15 per share Stock options exercised, including tax benefit of $12,905 Share-based compensation Purchase of stock Noncontrolling interest activities Balance at December 31, 2013 Net income Other comprehensive loss, net of tax Cash dividends declared, $2.30 per share Stock options exercised, including tax benefit of $17,766 Share-based compensation Purchase of stock Noncontrolling interest activities Balance at December 31, 2014 Operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Excess tax benefits from share-based compensation Gain on sale of property, plant, and equipment Deferred income taxes Share-based compensation Gain on GPC Asia Pacific equity investment Changes in operating assets and liabilities: Trade accounts receivable, net Merchandise inventories, net Trade accounts payable Other short-term assets and liabilities Other long-term assets and liabilities Net cash provided by operating activities Investing activities Purchases of property, plant and equipment Proceeds from sale of property, plant, and equipment Acquisition of businesses and other investing activities Net cash used in investing activities Financing activities Proceeds from debt Payments on debt Stock options exercised Excess tax benefits from share-based compensation Dividends paid Purchase of stock Net cash used in financing activities Effect of exchange rate changes on cash Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosures of cash flow information Cash paid during the year for: Income taxes Interest Summary of Significant Accounting Policies 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, Subsidiaries 2016 Retirement benefit assets Deferred compensation benefits Investments Cash surrender value of life insurance policies Customer sales returns inventories Guarantees related to borrowings Other long-term prepayments and receivables Total other assets Post-employment and other benefit/retirement liabilities Insurance liabilities Other lease obligations Other taxes payable Customer deposits Guarantees related to borrowings Other Total other long-term liabilities Foreign currency translation Unrecognized net actuarial loss, net of tax Unrecognized prior service credit, net of tax Total accumulated other comprehensive loss Beginning balance, January 1, 2014 Other comprehensive loss before reclassifications, net of tax Amounts reclassified from accumulated other comprehensive loss, net of tax Net current period other comprehensive loss Ending balance, December 31, 2014 Beginning balance, January 1, 2013 Other comprehensive income (loss) before reclassifications, net of tax Amounts reclassified from accumulated other comprehensive income (loss), net of tax Net current period other comprehensive income (loss) Ending balance, December 31, 2013 2015: sheet. 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. 2014-09, Goodwill and Other Intangible Assets Balance as of January 1, 2013 Additions Amortization Foreign currency translation Balance as of December 31, 2013 Additions Amortization Foreign currency translation Balance as of December 31, 2014 Customer relationships Trademarks Non-competition agreements 2015 2016 2017 2018 2019 Unsecured revolving line of credit, $850,000,000, LIBOR plus 0.75% variable Unsecured term notes: November 30, 2011, Series D and E Senior Unsecured Notes, $250,000,000, 3.35% fixed, due November 30, 2016 December 2, 2013, Series F Senior Unsecured Notes, $250,000,000, 2.99% fixed, due December 2, 2023 Total debt Less debt due within one year Long-term debt, excluding current portion 2015 2016 2017 2018 2019 Thereafter Total minimum lease payments Subsidiaries 2016, 2015, or 2014. Outstanding at beginning of year Granted Exercised Forfeited Outstanding at end of year (3) Exercisable at end of year Shares available for future grants 20142016 throughout the United States, Canada, Australia, New Zealand, Mexico and Puerto Rico from approximately 2,6002,670 locations.2014,2016, an increase of 9%0.4% compared to $14.1 billionsales in 2013.2015. Consolidated net income for the year ended December 31, 20142016 was $711$687 million, up 4%down 3% from $685$706 million in 2013. Before2015. The Company’s growth strategy, and in particular the one-timeinitiatives to expand our global footprint via strategic acquisitions, served to offset the challenging sales environment that persisted in our U.S. markets during 2016. We were also focused on ongoing measures to improve gross margins and control costs, although the loss of leverage due to weak comparable sales trends increased our expenses as a percentage of sales and negatively impacted earnings growth.adjustment in 2013 related2015 was down by 1% and increased by 4% in 2014. Our revenue and earnings in 2015 reflect a 3% negative impact of currency translation and after adjusting for this factor, the Company produced an increase in both sales and net income for that year. In 2014, improved market conditions relative to the acquisition of GPC Asia Pacific, net income was up 9%. The Company’s internal growth initiatives, including the positive impact of acquisitions, as well as effective cost management, which we discuss further below, served to drive our solid financial performance for the year. Each of our four business segments positively contributed to both ourprior year drove sales and earnings growth in 2014.The 9% sales growth in 2014 follows an 8% revenue increase in 2013 and a 4.5% increase in revenues in 2012. The increase in net income in 2014 follows a 6% increase in net income in 2013 and a 15% increase in net income in 2012. In 2012, we experienced a relatively challenging sales environment and, in 2013, we continued to experience difficult market conditions in the Industrial, Electrical/Electronic and Office industries, while the Automotiveeach of our four business performed reasonably well.segments. Over the three year period of 20122014 through 2014,2016, our financial performance was positively impacted byreflects a variety of initiatives wethe Company implemented to grow sales and earnings in each ofacross our four businesses. Examples of such initiatives include strategic acquisitions, the introduction of new18Index to Financial Statements20142016 consolidated balance sheet, the Company’s cash balance of $138$243 million compares to cash of $197$212 million at December 31, 2013.2015. The Company continues to maintain a strong cash position, supported by the increase inrelatively steady net income and effective asset management in 2014.management. Accounts receivable increased by approximately 12%6%, which compares to a 9%an approximate 3% sales increase in the fourth quarter of the year, and inventory was up by approximately 3%7%, or 1% beforeincluding the impact of acquisitions. Accounts payable increased $285$260 million or 13%9% from the prior year, due primarily to improved payment terms with certain suppliers. Total debt outstanding at December 31, 20142016 was $765$875 million, consistent withan increase from total debt of $625 million at December 31, 2013.2014, 20132016, 2015 and 2012. Year Ended December 31, 2014 2013 2012 (In thousands except per share data) $ 15,341,647 $ 14,077,843 $ 13,013,868 4,593,761 4,219,920 3,778,091 711,286 684,959 648,041 4.61 4.40 4.14 Year Ended December 31, 2016 2015 2014 (In thousands except per share data) Net sales $ 15,339,713 $ 15,280,044 $ 15,341,647 Gross profit 4,599,607 4,555,852 4,593,761 Net income 687,240 705,672 711,286 Diluted earnings per share 4.59 4.63 4.61 20142016 totaled $15.3 billion, up slightly from 2015. 2016 net sales included a 9% increase2.4% contribution from 2013 and drivenacquisitions, net of store closures, offset by revenue growth in each of our four business segments. The increasea 1.1% decrease in sales volume and acquisitions across our four businesses each contributed 5% to our total sales growth, whilean approximate 0.5% negative impact of currency negatively impacted total sales by 1%translation. Additionally, the Company experienced overall product deflation of approximately 0.3%. The impact of product inflationinflation/deflation varied by business in 2014 and, cumulatively,2016, as prices were flatdown 0.7% in the Automotive segment, up approximately 1.5%0.4% in the Industrial segment, up approximately 1.4%0.3% in the Office segment and updown approximately 0.3%1.2% in the Electrical/Electronic segment. The Company, with its global growth initiatives and measures to control rising costs and manage assets, is well positioned to improve sales in 2015.20132015 totaled $14.1$15.3 billion, an 8%down slightly from 2014. 2015 net sales included a 1.5% increase in sales volume and a 1% contribution from 2012 drivenacquisitions, offset by an 18.5% increase in the Automotive segment and 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 and increased sales volume accounted for the remaining 1%.approximate 3% negative impact of currency translation. The impact of product inflationinflation/deflation varied by business in 20132015 and, cumulatively, prices were flatdown 0.2% in the Automotive segment, up approximately 1%0.9% in the Industrial and Electrical/Electronic segments andsegment, up approximately 0.5%0.6% in the Office segment and down approximately 1.7% in the Electrical/Electronic segment.2014, an2016, a 1% increase of 8% from 2013.2015. The increase in sales for the year consists of an approximate 1% comparable sales increase and a 1% contribution from acquisitions, less an approximate 1% negative impact of currency translation associated with our automotive businesses in Canada, Australasia and Mexico. Automotive sales were negatively impacted by product deflation of 0.7%, which is included in the comparable sales increase. In 2016, total Automotive revenues were up 2% in the first quarter, down 1% in the second quarter, up 1.5% in the third quarter and up 2% in the fourth quarter. The underlying fundamentals in the automotive aftermarket, including the overall number and age of the vehicle population as well as the positive increase in miles driven, remain supportive of sustainedcomparable storecore sales increase of approximately 6%3.5% and approximately 4%a slight benefit from acquisitions. These increases wereCombined, the approximate 4% growth was offset by a 2%5% negative impact of currency associated with our automotive businesses in Canada, Australasia and Mexico. Automotive sales were not materially impacted by product inflation. In 2014,2015, Automotive revenues were up 23%flat in the first quarter, up 5% in theand second quarterquarters and up 4%down 2% in the third and fourth quarters. The first quarter sales increase includes the impact of the GPC Asia Pacific acquisition, which was anniversaried on April 1, 2014. We believe that the underlying fundamentals in the automotive aftermarket, including the overall number and age of the vehicle population, remain solid and will serve to drive sustained demand for automotive aftermarket maintenance and supply items in 2015. Based on these fundamentals and the internal growth initiatives in our Automotive business, we expect to grow our sales for this group again in 2015.19Index to Financial StatementsNet sales for Automotive were $7.5 billion in 2013, an increase of 18.5% from 2012. The increase in sales for the year was primarily due to the April 1, 2013 acquisition of GPC Asia Pacific, formerly Exego, and the May 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.$4.8$4.6 billion in 2014, an2016, basically unchanged from 2015. An approximate 2.6% decrease in sales volumes and a slight negative impact of currency translation associated with our Canadian and Mexican operations were partially offset by higher transaction values associated with 0.4% product inflation and approximately 2% in sales from acquisitions. Industrial revenues were down 2.5% in the first quarter of 2016, down 2% in the second quarter and down 1% in the third quarter. These quarterly declines were followed by a 4% sales increase in the fourth quarter. The sequential improvement in this group's sales performance correlates to the growing strength in the industrial economy, as evidenced by economic indicators such as Manufacturing Industrial Production and the Purchasing Managers Index. In addition, the energy sector, which had contracted throughout 2015 and the first half of 8%2016 began to stabilize over the last half of 2016. Looking ahead to 2017, we believe the Industrial business is well positioned for profitable growth.2013.2014. Sales volumes in Industrial were updown approximately 4.5%4% from the prior year, while higher transaction values associated with product inflation added 1.5% and acquisitions contributed approximately 3% to sales in 2014. These items were offset by a 1% negative impact of currency associated with our Canadian business. Industrial revenuesand Mexican operations also contributed to the decline in sales. These items were up 4% in the first quarter of 2014, up 7% in the second quarter and up 10% in the third and fourth quarters. We expect the internal growth initiatives and relatively healthy industry conditions to provide us additional growth opportunities for our Industrial business in 2015.Net sales for Industrial were $4.4 billion in 2013, down slightly compared to 2012. Sales volumes in this business were down approximately 1% from the prior year, whilepartially offset by higher transaction values associated with product inflation, which added an approximate 1% to sales, and 1% in 2013. The slight positive impact on sales from acquisitions was offset by the slight negative impact of currency associated with our Canadian business.acquisitions. Industrial revenues were down 2%up 3% in the first quarter of 2013,2015, down 1%2% in the second quarter, down 2.5%4% in the third quarter and up 3%down 7.5% in the fourth quarter of 2013.$1.8$2.0 billion in 2014,2016, an increase of 10%2% from 2013.2015. The increase in sales reflects an approximate 7% contribution from acquisitions and a 0.3% increase in higher transaction values associated with price inflation. These items were offset by an approximate 6% decrease in sales volume. Sales were down 3% in the first quarter, up 1% in the second quarter, up 5% in the third quarter and up 4% in the fourth quarter of 2016. Overall, this growth was driven by our strategy to further diversify the Office business in the large and growing Facilities, Breakroom and Safety Supplies (FBS) category. We expect this diversification strategy and the execution of our core sales initiatives to drive this group's growth in 2017.1.4%0.6% increase in higher transaction values associated with price inflation and a 5%3% contribution from acquisitions. These items were offset by the slightan approximate 0.5% negative impact of currency associated with our Canadian operations. In 2014,2015, Office experienced improvingrelatively stable industry conditions, as evidenced by consistently strongerthe steady growth in new jobs reports relative to 2013 as well as a strengthening U.S. GDP.throughout the year. These conditions combined with new business withfrom a primary customer, effectivewhich anniversaried on July 1, 2014,2015, served to drive the increasedincrease in sales volume for the year. Sales were unchangedup 17% in the first quarter, up 4%14% in the second quarter, up 15%3% in the third quarter and up 22%down 2% in the fourth quarter of 2014. We will continue to focus on our growth initiatives, including the ongoing diversification of product and customer portfolios, market share gains and acquisitions to further improve the Office business in 2015.Net sales for Office were $1.6 billion in 2013, a 3% decrease in sales from 2012. The industry-wide weakness in office products consumption, driven by the ongoing elevated levels of white collar unemployment, and the declining demand for paper and paper- based office products due to workplace digitization, continued to pressure this segment throughout 2013. Overall, sales volume in Office declined by approximately 3.5% for the year, offset by the benefit of slightly higher transaction values associated with price inflation of 0.5%. Sales decreased by 1% in the first quarter, 3% in the second and third quarters and 4% in the fourth quarter of 2013.$739$716 million in 2014,2016, a decrease of 5% from 2015. The decrease in sales consists of an approximate 4% decline in sales volume, a 1.2% decrease from lower transaction values associated with price deflation and a 0.5% negative sales impact of copper pricing. These items were partially offset by an approximate 1% contribution from acquisitions. Sales for Electrical/Electronic decreased by 3% in the first quarter, 5% in the second quarter, 9% in the third quarter and were unchanged in the fourth quarter, relative to the prior year periods. The manufacturing segment of the economy was relatively weak in 2016, which pressured demand across the markets served by this business. As discussed earlier, however, these conditions improved in the fourth quarter of the year and we expect further improvement in 2017, which bodes well for the future growth at EIS.30%1.5% from 2013.2014. The increase in sales consists of an increase in sales volume of approximately 1% and a 29% sales5% contribution from acquisitions. The benefit of higheracquisitions, offset by a 1.7% headwind from lower transaction values associated with slight price inflation for the year was offset by thedeflation, a 1% negative sales impact of copper pricing.pricing and a 1% decrease in sales volume. Sales for Electrical/Electronic increased by 30% in the first quarter, 32% in the second quarter, 35% in the third quarter and 23% in the fourth quarter. We expect a gradually improving customer climate to support stronger underlying sales growth for the Electrical/Electronic business in 2015.20Index to Financial StatementsNet sales for Electrical/Electronic decreased to $569 million in 2013, down 2% from 2012. The decrease in revenues was 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%2% in the third quarter and were up 6%unchanged in the fourth quarter.Costcost of goods sold the actual cost of merchandise, which represents the vast majority of this line item. Other items in Costcost of goods sold include warranty costs and in-bound freight from the supplier,suppliers, net of any vendor allowances and incentives. Cost of goods sold was $10.7 billion, $9.9 billion and $9.2$10.74 billion in 2014, 20132016, $10.72 billion in 2015 and 2012, respectively. The 9% and 7% increases$10.75 billion in cost2014. Cost of goods sold in 20142016 and 2015 changed from 2013 and 2013 from 2012, respectively, are directlythe prior year periods in accordance with the related to thepercentage change in sales increase for the same periods. For these periods, astotal product inflation or deflation was relatively insignificant and actual costs were relatively unchanged from the prior year. Cost of goods sold represented 70.0% of net sales in 2016, 70.2% of net sales in 2015 and 70.1% of net sales in 2014 70.0% of net sales in 2013 and, 71.0% of net sales in 2012. Cost of goods sold as a percent of net sales, decreased slightly in 2014 is relatively consistent with 2013. The 100 basis point decrease2016 from 2015, while increasing slightly in cost of goods sold as a percent of net sales in 20132015 from 2012 primarily reflects the positive gross margin impact of the 100% company owned store model at GPC Asia Pacific.20142016, 2015 and 2013,2014, the Industrial Office and Electrical/ElectronicOffice business segments experienced slight vendor price increases. In 2012, only2014, the Industrial and OfficeElectrical/Electronic business segmentsalso experienced a slight vendor price increases.increase. In any year where we experience price increases, we are able to work with our customers to pass most of these along to them.Selling,selling, administrative and other expenses (“SG&A”), all personnel and personnel-related costs at its headquarters, distribution centers, stores and stores,branches, which accounts for approximately 65% of total SG&A. Additional costs in SG&A include our facilities, delivery, marketing, advertising, technology, legal and professional costs.$286$93 million or approximately 9% to $3.3 billion in 2014, representing 21.6%3% from 2015. This represents 22.0% of net sales which comparescompared to 21.5%21.4% of net sales in 2013.2015. The increase in SG&A expenses from the prior year reflect the year one costs associated with our 19 acquisitions, as well as the impact of higher cost, and higher gross margin, models at select acquisitions. The increase in SG&A expenses as a percentage of net sales from the prior year primarily reflectsreflect the $54 million one-time gain, netloss of other expense adjustments, recordedleverage due to SG&Anegative comparable sales 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 remainour U.S. Automotive, Industrial, Office and Electrical/Electronic businesses. To offset these increases, we implemented enhanced cost control measures and are intensely focused on properly managingassessing the Company’s expenses and continuing to assess the appropriateoptimal cost structure in our businesses. Depreciation and amortization expense was $148$147 million in 2014,2016, an increase of $14approximately $6 million or 11%4% from 2013. This increase relates to higher depreciation and the amortization associated with acquisitions in both 2014 and 2013.2015. The provision for doubtful accounts was $7$12 million in 2014, down2016, a decrease of $1 million from $9 million in 2013.2015. We believe the Company is adequately reserved for bad debts at December 31, 2014.increasedof $3.28 billion in 2015 decreased by $371$37 million or approximately 14% to $3.0 billion in 2013, representing 21.5%1% from 2014. This represents 21.4% of net sales, whichand compares favorably to 20.4%21.6% of net sales in 2012. Primarily, the increase2014. The decrease in SG&A expenses as a percentage of net sales from the prior year is due toreflect the 100% company owned store model at GPC Asia Pacific, which serves to increase both gross profitpositive impact of our cost control measures and SG&Aour management teams' focus on properly managing the Company’s 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. Depreciation and amortization expense was $134$142 million in 2013, an increase2015, a decrease of $36approximately $6 million or 36%4% from 2012. This increase primarily relates to the depreciation for higher levels of capital expenditures and the amortization associated with acquisitions during the year.2014. The provision for doubtful accounts was $9$12 million in 2013, an increase2015, up from $8$7 million in 2012.21Index to Financial Statements2013 and 2012 was $16.2$19.7 million, $12.6$17.7 million and $10.7$16.2 million, respectively. Refer to Note 5 of the Consolidated Financial Statements for further information regarding share-based compensation.2014, $27 million in 2013 and $20 million in 2012.2014. The $2$1 million decrease in interest expense in 20142016 reflects the more favorable interest rate on certain debt, which was renewed in November 2013.2016. This was partially offset by new long-term debt, which commenced in July 2016. The $7$3 million increasedecrease in interest expense in 2013 is due to higher2015 reflects the impact of lower outstanding debt levels incurred forduring the GPC Asia Pacific acquisition.20142016 was $19$26 million, a decrease of $3$5 million increase from the prior year due to lowerhigher interest income earned in 20142016 relative to 2013.2015. These items were $22$21 million in 2013, down approximately2015, an increase from $19 million in 2014. The $2 million increase from 2012, as this line reflected the Company’s equityprior year was due to higher interest income recordedearned in 2012 for its 30% investment interest in GPC Asia Pacific.2014, an increase of 7%2016, down 4% from 2013.2015. As a percentage of net sales, income before income taxes was 7.3%7.0% in 20142016 compared to 7.4% in 2013.2015. In 2013,2015, income before income taxes of $1.0$1.1 billion was up 2.5%slightly from 20122014 and as a percentage of net sales was 7.4% compared to 7.8%7.3% in 2012.increaseddecreased to 8.8% in 2016 from 9.1% in 2015. This group's loss of expense leverage due to weak comparable sales in the U.S. was the primary factor in Automotive's decline in operating profit during the year. Looking forward, planned initiatives to grow sales,2014, a slight increase from 8.6% in 2013.2014. The change in gross margin and operating costs as a percentage of net sales positively impacted operating profit during the year. Looking forward, Automotive’sgrowconsolidate locations during 2016. These savings were partially offset by continued pressure on operating expenses associated with the decrease in comparable sales for the year. Industrial implemented multiple initiatives to overcome the challenging sales environment and control costs are intendedis well positioned to improve itstheir operating margin in the years ahead.Automotive’s operating margin of 8.6% in 2013 was steady with the prior year. The changes in gross profit and operating costs as a percentage of net sales, which related primarily to the acquisition of GPC Asia Pacific, were relatively neutral to operating profit during the year.Industrial GroupIndustrial’s operating margin improved to 7.8% in 2014 from 7.2% in 2013, as the combination of greater expense leverage associated with the increase in sales and generally improving gross margins, primarily related to the increase in volume incentives positively impacted operating profit in 2014. Industrial will continue to focus on its many sales initiatives and cost control measures to further improve its operating margin in 2015.7.2%7.3% in 20132015 from 7.9%7.8% in 2012. The decrease2014, as the decline in operating marginsales for the year resulted in 2013 was due to the combination oflower volume incentives, which pressured gross margins, and reduced expense leverage associated with the slight decrease in sales relative to the prior yearyear.declinedeleveraging of expenses due to comparable sales declines in volume incentivesthis group's core office supplies business. Office enters 2017 intensely focused on its initiatives to further diversify its business and drive sales growth, while also driving cost savings.effective cost control measures.Office GroupOffice’s operating margin decreasedsavings initiatives to 7.4% in 2014, down from 7.5% in 2013, primarily related to the lower operating margin generated by new business with a large primary customer. This was partially offset by greater expense leverage driven by this group’s overall sales increase in 2014. Office will continue to focus on its sales initiatives and cost controls to maintain its operating margin in 2015.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 2012.22Index to Financial StatementsElectrical/Electronic GroupElectrical/Electronic’s operating margin increased to 8.8% in 2014 from 8.4% in 2013, primarily due to greater expense leverage associated with this group’s sales increase in 2014.consolidate locations during 2016. Electrical/Electronic will continue to focus on its sales initiatives and cost controls to further improve its operating margin in 2015.was 8.4%increased to 9.3% in 2013, down2015 from 8.7%8.8% in 2012. The decline in operating2014, primarily due to the positive impact of higher margin reflects the loss of expense leverage associated with the sales decrease for this segment in 2013 relative to 2012.36.4%36.0% in 2014 increased2016 decreased from 34.4%37.2% in 2013.2015. The increasedecrease in rate is primarily due toreflects the favorable tax rate applied to the one-time gain associated with the GPC Asia Pacific acquisition recorded in 2013. Additionally, the Company’s retirement asset valuation adjustment was less favorable in 2014 relative to 2013. The higherCompany's lower mix of U.S. earnings in 2016, which is taxed at a higher rate relative to our foreign operations, also contributedoperations. Additionally, the more favorable retirement asset valuation adjustment in 2016 relative to the increase2015 resulted in the 2014 taxdecrease in rate.In 2013, the34.4% was down37.2% in 2015 increased from 36.4% in 2012.2014. The decreaseincrease in rate primarily reflects the Company's higher mix of U.S. earnings in 2015, which is taxed at a higher rate relative to our foreign operations. To a lesser extent, the less favorable impact ofretirement asset valuation adjustment in 2015 relative to 2014 impacted the lower Australian tax rate applied to the pre-tax earnings of GPC Asia Pacific, as well as the favorable tax rate applied to the one-time acquisition gainincrease in 2013.$711$687 million in 2014, an increase2016, a decrease of 4%3% from $685$706 million in 2013.2015. On a per share diluted basis, net income was $4.61$4.59 in 20142016, down 1% compared to $4.40$4.63 in 2013, up 5%.2015. Net income was 4.5% of net sales in 2014 was2016 compared to 4.6% of net sales compared to 4.9% of net sales in 2013.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. Before the impact of these adjustments, net income in 2014 was up 9% from 2013, and on a per share diluted basis, net income was up 10% from 2013.$685$706 million in 2013, an increase2015, a decrease of 6%1% from $648$711 million in 2012.2014. On a per share diluted basis, net income was $4.40$4.63 in 20132015, up slightly compared to $4.14$4.61 in 2012, up 6%.2014. Net income in 2013 was 4.9% of net sales compared to 5.0%4.6% of net sales in 2012.$138$243 million at December 31, 20142016 compares to our cash balance of $197$212 million at December 31, 2013.2015, as discussed further below. The Company’s accounts receivable balance at December 31, 20142016 increased by approximately 12%6% from the prior year, greater thanyear. This compares to the Company’s 9%3% sales increase for the fourth quarter of 2014, however,2016, and we are satisfied with the quality and collectability of our accounts receivable. Inventory at December 31, 20142016 increased by3%7% from December 31, 20132015, primarily due to acquisitions, and excluding acquisitions, was up by approximately 1% from the prior year. Accountsaccounts payable increased $285$260 million or approximately 13%9% from December 31, 20132015 due primarily to improved payment terms with certain suppliers. Combined, goodwill and other intangible assets increased by $97 million or 8% from December 31, 2013 due to the Company’s acquisitions during the year. The change in our December 31, 2014 balances for deferred tax assets, which increased $48 million, and pension and other post-retirement benefits liabilities, up $189 million from December 31, 2013, is primarily due to changes in the discount rate, as well as recent changes in the mortality assumptions used for the Company’s pension plans in 2014.$765$875 million of total debt outstanding at December 31, 2014,2016, of which $50 million matures in July 2021, $250 million matures in December 2023 and $250 million matures in November 2016 and $250 million matures in December 2023.2026. In addition, the Company has an unsecured revolving line of credit with a Syndicated Facility Agreement (the “Syndicated Facility”)consortium of financial institutions for23Index to Financial Statements$850 million, $1.2 billion, of which approximately $265$325 million wasand $125 million were outstanding under the Syndicated Facility or line of credit at December 31, 20142016 and 2013.2015, respectively. 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.1.61.4 to 1 at December 31, 20142016 and 2013. Our2015, and our liquidity position remains solid. The Company’s total debt outstanding at December 31, 2014 is unchanged2016 increased by $250 million or 40% from December 31, 2013. Year Ended December 31, Percent Change 2014 2013 2012 2014 vs. 2013 2013 vs. 2012 (In thousands) $ 790,145 $ 1,056,731 $ 906,438 (25 )% 17 % (386,715 ) (825,579 ) (651,867 ) (53 )% 27 % (455,440 ) (425,117 ) (378,834 ) 7 % 12 % Year Ended December 31, Percent Change Net Cash Provided by (Used in): 2016 2015 2014 2016 vs. 2015 2015 vs. 2014 (In thousands) Operating activities $ 946,078 $ 1,159,373 $ 790,145 (18 )% 47 % Investing activities (593,999 ) (263,627 ) (386,715 ) 125 % (32 )% Financing activities (322,406 ) (806,074 ) (455,440 ) (60 )% 77 % 20142016 net cash provided by operating activities totaled $790$946 million. This reflects a 25%an 18% decrease from 20132015, as the collective change in trade accounts receivable, merchandise inventories and trade accounts payable represented a $123 million source of cash in 2016 compared to a $312 million source of cash in 2015. Net cash provided by operating activities was $1.2 billion in 2015, a 47% increase from 2014 due primarily to the change in trade accounts receivable, merchandise inventories and trade accounts payable, which, collectively, net to a $312 million source of cash in 2015 compared to a $34 million use of cash in 2014 compared to a $278 million source of cash in 2013. Net cash provided by operating activities was $1.1 billion in 2013, a 17% increase from 2012, as, collectively, trade accounts receivable, merchandise inventories and trade accounts payable represented a $278 million source of cash in 2013 compared to a $208 million source of cash in 2012. Additionally, net income and depreciation and amortization increased by $37 million and $36 million, respectively, in 2013.$387$594 million in 20142016 compared to $826$264 million in 2013,2015, a decrease of 53%.125% increase. Cash used for acquisitions of businesses and other investing activities in 20142016 was $288$462 million, or $424$299 million lessmore than in 2013.2015. Capital expenditures of $108$161 million in 2014 decreased by $162016 were $51 million or 13% from 2013, and were slightly lowermore than in 2015, which was at the high end of our original estimate of $120$140 to $130$160 million for the year. We estimate that cash used for capital expenditures in 20152017 will be approximately $125$145 to $145$165 million. Net cash flow used in investing activities was $826$264 million in 20132015 compared to $652$387 million in 2012, an increase2014, a decrease of 27%32%. Cash used for acquisitions of businesses and other investing activities in 20132015 was $712$163 million, or $154$125 million greaterless than in 2012. Additionally, capital2014. Capital expenditures of $124$110 million in 2013 increased by $22 million or 22%2015 were relatively unchanged from 2012, which was within2014, and were slightly lower than our original estimate of $115$125 to $135$145 million for the year.$455$322 million of cash in financing activities in 2014, up 7%2016, down 60% from the $425$806 million used in financing activities in 2013.2015. Cash used in financing activities in 20132015 was up $46 million or 12%77% from the $379$455 million used in 2012.2014. 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 $387 million, $368 million and $347 million $326 millionduring 2016, 2015 and $301 million during 2014, 2013 and 2012, respectively. The Company expects this trend of increasing dividends to continue in the foreseeable future. During 2014, 20132016, 2015 and 2012,2014, the Company repurchased $96$181 million, $121$292 million and $82$96 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.24 In 2016, net cash used in financing activities was partially offset by approximately $250 million in net proceeds from debt. In 2015, net cash used in financing activities included payments on debt of approximately $140 million net of debt proceeds.
an $850 milliona $1.2 billion unsecured revolving line of credit with a consortium of financial institutions, which matures in September 2017June 2021 with an optional one year extension and bears interest at LIBOR plus a margin, which is based on the Company’s leverage ratio (0.92%(1.52% at December 31, 2014)2016). 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 Facilityfacility with appropriate notice. At December 31, 20142016 and 2013,2015, approximately $265$325 million wasand $125 million were outstanding under this line of credit.credit, respectively. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of approximately $63$65 million and $62$63 million outstanding at December 31, 20142016 and 2013,2015, respectively.2014,2016, the Company had unsecured Senior Notes outstanding under financing arrangement as follows: $250$50 million series D and EG senior unsecured notes, 3.35%2.39% fixed, due 2016; and2021; $250 million series F senior unsecured notes, 2.99% fixed, due 2023.2023; and $250 million series H senior unsecured notes, 2.99% fixed, due 2026. These borrowings contain covenants related to a maximum debt-to-capitalization ratio and certain limitations on additional borrowings. At December 31, 2014,2016, the Company was in compliance with all such covenants. The weighted average interest rate on the Company’s total outstanding borrowings was approximately 2.46%2.39% at December 31, 20142016 and 2.82%2.76% at December 31, 2013.2015. Total interest expense, net of interest income, for all borrowings was $19.5 million, $20.4 million and $24.2 million $24.3 millionin 2016, 2015 and $19.6 million in 2014, 2013 and 2012, respectively.2014: Payment Due by Period Total Less Than
1 Year 1-3 Years 3-5 Years Over
5 Years (In thousands) $ 849,500 $ 281,300 $ 273,300 $ 15,000 $ 279,900 792,800 214,000 288,600 134,900 155,300 $ 1,642,300 $ 495,300 $ 561,900 $ 149,900 $ 435,200 Payment Due by Period Total 1-3 Years 3-5 Years (In thousands) Credit facilities $ 1,006,300 $ 341,100 $ 32,300 $ 81,800 $ 551,100 Operating leases 865,000 232,300 315,000 145,200 172,500 Total contractual cash obligations $ 1,871,300 $ 573,400 $ 347,300 $ 227,000 $ 723,600 2014,2016, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $19$17 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.25Index to Financial Statements2014: Amount of Commitment Expiration per Period Total Amounts
Committed Less Than
1 Year 1-3 Years 3-5 Years Over
5 Years (In thousands) $ — $ — $ — $ — $ — 62,515 62,515 — — — 284,842 164,700 119,728 414 — $ 347,357 $ 227,215 $ 119,728 $ 414 $ — Amount of Commitment Expiration per Period 1-3 Years 3-5 Years (In thousands) Line of credit $ — $ — $ — $ — $ — Standby letters of credit 64,930 64,930 — — — Guaranteed borrowings of independents and affiliates 431,286 126,877 179,225 125,184 — Total commercial commitments $ 496,216 $ 191,807 $ 179,225 $ 125,184 $ — 20142016 were $53$54 million. We expect to make a $50$48 million in cash contributioncontributions to our qualified defined benefit plans in 2015,2017, and contributions required for 20152017 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.2014,2016, the Company repurchased approximately 1.12.0 million shares and the Company had remaining authority to purchase approximately 9.54.3 million shares at December 31, 2014.loss provisionslosses have not been significant as the vast majority of the Company’s26Index to Financial Statements2014, 20132016, 2015 and 2012,2014, the Company recorded provisions for doubtful accounts of approximately $11.5 million, $12.4 million, and $7.2 million, $8.7 million, and $8.0 million, respectively.20152017 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.(49%(47% S&P 500 Index, 5% Russell Mid Cap Index, 8%7% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index, 3% MSCI Emerging Market Net, and 28% BarCap U.S. Govt/Credit).expense.income. 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. Refer to Note 7 of the Consolidated Financial Statements for more information regarding these assumptions.27Index to Financial Statements20152017 pension expense or income is 7.84%7.82% 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.2014.(income) costincome for our defined benefit pension plans was ($9.6)$13.4 million, $51.1$5.8 million and $26.8$9.6 million for the years ended December 31, 2014, 20132016, 2015 and 2012,2014, respectively. The income associated with the pension plans in 2016, 2015 and 2014 reflects the impact of the 2012 amendment tohard freeze the U.S. defined benefit pension plan, effective December 31, 2013. Additionally, the increase in pension cost in 2013 from 2012 was primarily due to the curtailment gain recorded in connection with the 2012 amendment to the U.S. defined benefit pension plan. The 2012 amendment and 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 December 2012, the Company’s U.S. defined benefit plan was amended20142016 and 2013: Three Months Ended March 31, June 30, Sept. 30, Dec. 31, (In thousands except per share data) $ 3,624,897 $ 3,908,387 $ 3,985,909 $ 3,822,454 1,084,630 1,179,168 1,183,422 1,146,541 157,484 197,727 190,516 165,559 1.02 1.29 1.25 1.08 1.02 1.28 1.24 1.07 $ 3,198,802 $ 3,675,997 $ 3,685,243 $ 3,517,801 921,748 1,105,108 1,100,923 1,092,141 144,389 216,357 173,746 150,467 .93 1.40 1.12 .98 .93 1.39 1.12 .97 Three Months Ended March 31, June 30, Sept. 30, Dec. 31, (In thousands except per share data) 2016 Net sales $ 3,718,267 $ 3,899,638 $ 3,941,743 $ 3,780,065 Gross profit 1,104,471 1,165,452 1,198,601 1,131,083 Net income 158,025 191,369 185,326 152,520 Earnings per share: Basic 1.06 1.28 1.24 1.03 Diluted 1.05 1.28 1.24 1.02 2015 Net sales $ 3,736,051 $ 3,940,401 $ 3,921,802 $ 3,681,790 Gross profit 1,112,819 1,178,330 1,169,225 1,095,478 Net income 161,010 195,373 188,016 161,273 Earnings per share: Basic 1.05 1.28 1.24 1.07 Diluted 1.05 1.28 1.24 1.07 28Index to Financial Statements20142016 and 20132015 was not significant.ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.2014.20142016 and 2013,2015, 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 $258$262 million and $255$252 million, respectively. A 15% shift in exchange rates between those functional currencies and the U.S. dollar would have impacted translated net sales by approximately $388$393 million in 20142016 and $382$378 million in 2013.ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.None.ITEM 9A.CONTROLS AND PROCEDURES.29Index to Financial Statements20142016 is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning on page F-1.20142016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.ITEM 9B.OTHER INFORMATION.None.30ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.67, has been69, was appointed Executive Chairman in May 2016. Previously. Mr. Gallagher was Chief Executive Officer sincefrom August 2004 to April 2016 and has been 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 2004.58,60, was appointed Chief Executive Officer of the Company in May 2016. Mr. Donahue has been President of the Company since January 2012 and a director of the Company since April 2012, was appointed President of the Company in January 2012, and has2012. Previously, Mr. Donahue served as President of the Company’s U.S. Automotive Parts Group sincefrom July 2009.2009 to February 1, 2016. Mr. Donahue served as Executive Vice President of the Company from August 2007 until his appointment as President in 2012. Previously, Mr. Donahue was President and Chief Operating Officer of S.P. Richards Company from 2004 to 2007 and was Executive Vice President-Sales and Marketing in 2003, the year he joined the Company.51, was appointed53, has been Executive Vice President and Chief Financial Officer of the Company since March 2013, and also held the additional title of Corporate Secretary of the Company in March 2013.up to February 2015. 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 1995.53,55, was appointed Senior Vice President of Human Resources of the Company effectivein April 1, 2014. Mr. Neill was Senior Vice President of Employee Development and HR Services from April 2013 until his appointment as Senior Vice President of Human Resources of the Company. Previously, Mr. Neill served as the Senior Vice President of Human Resources at Motion Industries from 2008 to 2013. Mr. Neill was Vice President of Human Resources at Motion from 2006 to 2007.William J. Stevens, age 66, has been the Chairman of Motion Industries since 2013 and was Chairman and Chief Executive Officer from 2013 to 2014. Previously, Mr. Stevens was President and Chief Executive Officer from 1997 to 2013 and President and Chief Operating Officer from 1994 to 1997. In 1993, Mr. Stevens served as Executive Vice President. Mr. Stevens has announced his retirement as Chairman of Motion Industries effective March 1, 2015.Timothy P. Breen, age 54, was appointed President and Chief Executive Officer of Motion Industries in November 2014. Mr. Breen was President and Chief Operating Officer from 2013 until his appointment as President and Chief Executive Officer. Previously, Mr. Breen was the Executive Vice President and Chief Operating Officer from 2012 to 2013. Mr. Breen was the Senior Vice President of Motion’s US Operations from 2011 to 2012 and was Senior Vice President and Group Executive from 2008 to 2011. Mr. Breen served as Vice President of Motion Industries from 2000 to 2008.ITEM 11.EXECUTIVE COMPENSATION.“2014“2016 Grants of Plan-Based Awards”, “2014“2016 Outstanding Equity Awards at Fiscal Year-End”, “2014“2016 Option Exercises and Stock Vested”, “2014“2016 Pension Benefits”, “2014“2016 Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating31Index to Financial Statements20142016 about the common stock that may be issued under all of the Company’s existing equity compensation plans: (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)) 88,600 (2) $ 44.12 — 3,834,748 (3) $ 64.93 2,717,947 (5) 80,283 (4) n/a 919,717 4,003,631 — 3,637,664 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: 3,010,146 (2) $ 74.13 — 867,920 (3) $ 99.72 9,132,080 (5) Equity Compensation Plans Not Approved by Shareholders: 91,097 (4) n/a 908,903 Total 3,969,163 — 10,040,983 (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)(2)Genuine Parts Company 2006 Long-Term Incentive Plan (3) Genuine Parts Company 2015 Incentive Plan (4) Genuine Parts Company Director’sDirectors' 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.ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.32ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.subsidiariesSubsidiaries are included in this Annual Report on Form 10-K. See, also, the Index to Consolidated Financial Statements on Page F-1.20142016 and 20132014, 20132016, 2015 and 20122014, 20132016, 2015 and 20122014, 20132016, 2015 and 20122014subsidiaries,Subsidiaries, set forth immediately following the consolidated financialsfinancial statements of Genuine Parts Company and Subsidiaries, is filed pursuant to Item 15(c):inapplicable,not applicable, and therefore have been omitted.Exhibits.Exhibit 3.1 Amended and Restated Articles of Incorporation of the Company, as amended April 23, 2007. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 23, 2007.) Exhibit 3.2 By-Laws of the Company, as amended and restated November 18, 2013. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated November 18, 2013.) Exhibit 4.2 Specimen Common Stock Certificate. (Incorporated herein by reference from the Company’s Registration Statement on Form S-1, Registration No. 33-63874.) Exhibit 10.1* The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 3, 1995.) 33Exhibit 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 on Form 10-K, dated March 7, 2005.) Exhibit 10.3* 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 on Form10-K, dated March 10, 2000.) Exhibit 10.4* 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 on Form 10-K, dated March 7, 2002.) Exhibit 10.5* 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 on Form 10-K, dated March 8, 2004.) Exhibit 10.6* 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 on Form 10-K, dated March 3, 2006.) Exhibit 10.7* 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 on Form 10-K, dated February 29, 2008.) Exhibit 10.8* 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 10.9* 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 10.10* 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 on Form 10-K, dated March 8, 2004.) Exhibit 10.11* 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 on Form 10-K, dated March 10, 2000.) Exhibit 10.12* 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 on Form 10-K, dated February 27, 2009.) Exhibit 10.13* 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 10.14* 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 10.15* 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 10.16* 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 on Form 10-K, dated March 8, 2004.) 34Exhibit 10.17* 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 on Form 10-K, dated February 29, 2008.) Exhibit 10.18* 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 10.19* Description of Director Compensation. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated May 7, 2014.) Exhibit 10.20* 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 on Form 10-K, dated March 21, 2003.) Exhibit 10.21* Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 18, 2006.) Exhibit 10.22* 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 on Form 10-K, dated February 28, 2007.) Exhibit 10.23* 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 on Form 10-K, dated February 29, 2008.) Exhibit 10.24* Genuine Parts Company 2015 Incentive Plan, effective November 17, 2014. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 28, 2015.) Exhibit 10.25* Genuine Parts Company Performance Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated May 7, 2014.) Exhibit 10.25*10.26* Genuine Parts Company Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) Exhibit 10.26*10.27* 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.) Exhibit 10.27*10.28* Form of Executive Officer Change in Control Agreement. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated February 26, 2015) * 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 SEC Rule 13a-14(a). Exhibit 31.2 Certification signed by Chief Financial Officer pursuant to SEC Rule 13a-14(a). 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 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 20142016 and 2013;2015; (ii) the Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2014, 20132016, 2015 and 2012;2014; (iii) the Consolidated Statements of Equity for the Years ended December 31, 2014, 20132016, 2015 and 2012;2014; (iv) the Consolidated Statements of Cash Flows for Years ended December 31, 2014, 20132016, 2015 and 2012;2014; (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text; and (vi) Financial Statement Schedule II — Valuation and Qualifying Accounts.35/s/ Thomas C. GallagherPaul D. Donahue2/27/2017 2/26/15/s/ Carol B. Yancey 2/ 26/1527/2017 Thomas C. GallagherPaul D. Donahue (Date) Carol B. Yancey (Date) ChairmanPresident and Chief Executive Officer Executive Vice President and Chief Financial and Accounting Officer 36/s/ Thomas C. GallagherPaul D. Donahue2/20/2017 2/16/15/s/ Carol B. Yancey 2/ 16/1520/2017 Thomas C. GallagherPaul D. Donahue (Date) Carol B. Yancey (Date) Chairman Executive Vice President and Chief Financial and Accounting Officer (Principal Financial and Accounting Officer) /s/ Thomas C. Gallagher 2/20/2017 /s/ Dr. Mary B. Bullock 2/ 16/15/s/ Paul D. Donahue2/16/1520/2017 Dr. Mary B. BullockThomas C. Gallagher (Date) Paul D. DonahueDr. Mary B. Bullock (Date) Director /s/ Jean Douville /s/ Elizabeth W. Camp 2/ 16/1520/2017 /s/ Gary P. Fayard 2/ 16/1520/2017 Jean DouvilleElizabeth W. Camp (Date) Gary P. Fayard (Date) Director /s/ George C. Guynn /s/ John R. Holder 2/ 16/1520/2017 /s/ John R. HolderDonna W. Hyland 2/ 16/1520/2017 George C. GuynnJohn R. Holder (Date) John R. HolderDonna W. Hyland (Date) Director /s/ John D. Johns 2/20/2017 2/16/15/s/ Michael M. E. JohnsRobert C. Loudermilk, Jr. 2/ 16/1520/2017 (Date) Michael M. E. JohnsRobert C. Loudermilk, Jr. (Date) Director /s/ Robert C. Loudermilk, Jr. /s/ Wendy B. Needham 2/ 16/1520/2017 /s/ Wendy B. NeedhamJerry W. Nix 2/ 16/1520/2017 Robert C. Loudermilk, Jr.Wendy B. Needham (Date) Wendy B. NeedhamJerry W. Nix (Date) Director /s/ Jerry W. Nix /s/ Gary W. Rollins 2/ 16/1520/2017 /s/ Gary W. RollinsE. Jenner Wood, III 2/ 16/1520/2017 JerryGary W. NixRollins (Date) Gary W. RollinsE. Jenner Wood, III (Date) Director /s/ E. Jenner Wood, III 2/16/15E. Jenner Wood, III(Date)Director37 Page F-12014, 20132016, 2015, and 2012.2014. 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.subsidiariesSubsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.2014.2014,2016, the Company’s internal control over financial reporting was effective.2014.2016. This report appears on page F-3./s/ Carol B. Yancey Executive Vice President and Chief Financial Officer 26, 2015F-227, 2017
2014,2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Genuine Parts Company 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.2014,2016, based on the COSO criteria.20142016 and 2013,2015, 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, 20142016 of Genuine Parts Company and Subsidiaries and our report dated February 26, 201527, 2017 expressed an unqualified opinion thereon.26, 2015F-327, 2017
20142016 and 2013,2015, 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, 2014.2016. 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.20142016 and 2013,2015, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2014,2016 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.2014,2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 201527, 2017 expressed an unqualified opinion thereon.26, 2015F-427, 2017
December 31 2014 2013 (In Thousands, Except Share
Data and per Share Amounts) $ 137,730 $ 196,893 1,872,365 1,664,819 3,043,848 2,946,021 538,582 413,758 5,592,525 5,221,491 839,075 789,971 547,515 499,385 145,331 97,555 451,690 401,834 87,651 87,658 281,824 281,408
2013 — $555,895) 300,627 300,995 670,102 670,061 $ 8,246,238 $ 7,680,297 $ 2,554,759 $ 2,269,671 265,466 264,658 165,291 145,052 510,560 420,917 88,039 82,746 3,584,115 3,183,044 500,000 500,000 329,531 140,171 72,479 83,316 447,749 414,998 — — 153,113 153,773 26,414 14,935 (720,211 ) (397,655 ) 3,841,932 3,578,021 3,301,248 3,349,074 11,116 9,694 3,312,364 3,358,768 $ 8,246,238 $ 7,680,297 December 31 2016 2015 Assets Current assets: Cash and cash equivalents $ 242,879 $ 211,631 Trade accounts receivable, net 1,938,562 1,822,419 Merchandise inventories, net 3,210,320 2,999,966 Prepaid expenses and other current assets 556,670 521,300 Total current assets 5,948,431 5,555,316 Goodwill 956,153 840,582 Other intangible assets, less accumulated amortization 618,510 521,213 Deferred tax assets 132,652 118,525 Other assets 475,530 460,918 Property, plant, and equipment: Land 92,046 85,450 Buildings, less accumulated depreciation (2016 — $292,049; 2015 — $282,804) 314,268 267,446 321,810 295,321 Net property, plant, and equipment 728,124 648,217 $ 8,859,400 $ 8,144,771 Liabilities and equity Current liabilities: Trade accounts payable $ 3,081,111 $ 2,821,526 Current portion of debt 325,000 375,000 Accrued compensation 142,942 148,265 Other current liabilities 597,513 503,268 Dividends payable 97,584 92,595 Total current liabilities 4,244,150 3,940,654 Long-term debt 550,000 250,000 Pension and other post-retirement benefit liabilities 341,510 284,235 Deferred tax liabilities 48,326 50,684 Other long-term liabilities 468,058 459,956 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 148,410,422 shares in 2016 and 150,081,474 shares in 2015 148,410 150,081 Additional paid-in capital 56,605 41,353 Accumulated other comprehensive loss (1,013,021 ) (930,618 ) Retained earnings 4,001,734 3,885,751 Total parent equity 3,193,728 3,146,567 Noncontrolling interests in subsidiaries 13,628 12,675 Total equity 3,207,356 3,159,242 $ 8,859,400 $ 8,144,771 F-5 Year Ended December 31 2014 2013 2012 (In Thousands, Except per Share Amounts) $ 15,341,647 $ 14,077,843 $ 13,013,868 10,747,886 9,857,923 9,235,777 4,593,761 4,219,920 3,778,091 3,314,030 3,028,028 2,656,530 148,313 133,957 98,383 7,192 8,691 8,047 3,469,535 3,170,676 2,762,960 25,088 26,971 20,482 (18,601 ) (22,031 ) (24,283 ) 6,487 4,940 (3,801 ) 1,117,739 1,044,304 1,018,932 406,453 359,345 370,891 $ 711,286 $ 684,959 $ 648,041 $ 4.64 $ 4.43 $ 4.17 $ 4.61 $ 4.40 $ 4.14 153,299 154,636 155,413 1,076 1,078 1,007 154,375 155,714 156,420 $ 711,286 $ 684,959 $ 648,041 (149,379 ) (168,703 ) 23,846 (173,177 ) 272,540 (43,300 ) (322,556 ) 103,837 (19,454 ) $ 388,730 $ 788,796 $ 628,587 Year Ended December 31 2016 2015 2014 (In Thousands, Except per Share Amounts) Net sales $ 15,339,713 $ 15,280,044 $ 15,341,647 Cost of goods sold 10,740,106 10,724,192 10,747,886 Gross margin 4,599,607 4,555,852 4,593,761 Operating expenses: Selling, administrative, and other expenses 3,370,833 3,277,390 3,314,030 Depreciation and amortization 147,487 141,675 148,313 Provision for doubtful accounts 11,515 12,373 7,192 Total operating expenses 3,529,835 3,431,438 3,469,535 Non-operating (income) expenses: Interest expense 21,084 21,662 25,088 Other (25,652 ) (20,929 ) (18,601 ) Total non-operating (income) expenses (4,568 ) 733 6,487 Income before income taxes 1,074,340 1,123,681 1,117,739 Income taxes 387,100 418,009 406,453 Net income $ 687,240 $ 705,672 $ 711,286 Basic net income per common share $ 4.61 $ 4.65 $ 4.64 Diluted net income per common share $ 4.59 $ 4.63 $ 4.61 Weighted average common shares outstanding 149,051 151,667 153,299 Dilutive effect of stock options and nonvested restricted stock awards 753 829 1,076 Weighted average common shares outstanding — assuming dilution 149,804 152,496 154,375 Net income $ 687,240 $ 705,672 $ 711,286 Other comprehensive loss, net of tax: Foreign currency translation adjustment (8,957 ) (207,986 ) (149,379 ) Pension and postretirement benefit adjustments, net of income taxes of 2016 — $50,144; 2015 — $5,335; 2014 — $112,993 (73,446 ) (2,421 ) (173,177 ) Other comprehensive loss, net of tax (82,403 ) (210,407 ) (322,556 ) Comprehensive income $ 604,837 $ 495,265 $ 388,730 F-6 Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Total
Parent
Equity Non-
controlling
Interests in
Subsidiaries Total
Equity Shares Amount 155,651,116 $ 155,651 $ — $ (482,038 ) $ 3,070,394 $ 2,744,007 $ 9,584 $ 2,753,591 — — — — 648,041 648,041 — 648,041 — — — (19,454 ) — (19,454 ) — (19,454 ) — — — — (307,603 ) (307,603 ) — (307,603 ) 551,779 552 3,423 — — 3,975 — 3,975 — — 10,747 — — 10,747 — 10,747 (1,361,457 ) (1,362 ) (14,170 ) — (66,294 ) (81,826 ) — (81,826 ) — — — — — — 708 708 154,841,438 154,841 — (501,492 ) 3,344,538 2,997,887 10,292 3,008,179 — — — — 684,959 684,959 — 684,959 — — — 103,837 — 103,837 — 103,837 — — — — (332,322 ) (332,322 ) — (332,322 ) 449,986 450 2,287 — — 2,737 — 2,737 — — 12,648 — — 12,648 — 12,648 (1,518,326 ) (1,518 ) — — (119,154 ) (120,672 ) — (120,672 ) — — — — — — (598 ) (598 ) 153,773,098 153,773 14,935 (397,655 ) 3,578,021 3,349,074 9,694 3,358,768 — — — — 711,286 711,286 — 711,286 — — — (322,556 ) — (322,556 ) — (322,556 ) — — — — (352,564 ) (352,564 ) — (352,564 ) 474,800 475 (4,760 ) — — (4,285 ) — (4,285 ) — — 16,239 — — 16,239 — 16,239 (1,134,856 ) (1,135 ) — — (94,811 ) (95,946 ) — (95,946 ) — — — — — — 1,422 1,422 153,113,042 $ 153,113 $ 26,414 $ (720,211 ) $ 3,841,932 $ 3,301,248 $ 11,116 $ 3,312,364 Common Stock Shares Amount Balance at January 1, 2014 153,773,098 $ 153,773 $ 14,935 $ (397,655 ) $ 3,578,021 $ 3,349,074 $ 9,694 $ 3,358,768 Net income — — — — 711,286 711,286 — 711,286 Other comprehensive loss, net of tax — — — (322,556 ) — (322,556 ) — (322,556 ) Cash dividends declared, $2.30 per share — — — — (352,564 ) (352,564 ) — (352,564 ) Share-based awards exercised, including tax benefit of $17,766 474,800 475 (4,760 ) — — (4,285 ) — (4,285 ) Share-based compensation — — 16,239 — — 16,239 — 16,239 Purchase of stock (1,134,856 ) (1,135 ) — — (94,811 ) (95,946 ) — (95,946 ) Noncontrolling interest activities — — — — — — 1,422 1,422 Balance at December 31, 2014 153,113,042 153,113 26,414 (720,211 ) 3,841,932 3,301,248 11,116 3,312,364 Net income — — — — 705,672 705,672 — 705,672 Other comprehensive loss, net of tax — — — (210,407 ) — (210,407 ) — (210,407 ) Cash dividends declared, $2.46 per share — — — — (372,840 ) (372,840 ) — (372,840 ) Share-based awards exercised, including tax benefit of $7,024 229,958 230 (2,778 ) — — (2,548 ) — (2,548 ) Share-based compensation — — 17,717 — — 17,717 — 17,717 Purchase of stock (3,261,526 ) (3,262 ) — — (289,013 ) (292,275 ) — (292,275 ) Noncontrolling interest activities — — — — — — 1,559 1,559 Balance at December 31, 2015 150,081,474 150,081 41,353 (930,618 ) 3,885,751 3,146,567 12,675 3,159,242 Net income — — — — 687,240 687,240 — 687,240 Other comprehensive loss, net of tax — — — (82,403 ) — (82,403 ) — (82,403 ) Cash dividends declared, $2.63 per share — — — — (391,852 ) (391,852 ) — (391,852 ) Share-based awards exercised, including tax benefit of $12,021 340,703 341 (4,467 ) — — (4,126 ) — (4,126 ) Share-based compensation — — 19,719 — — 19,719 — 19,719 Purchase of stock (2,011,755 ) (2,012 ) — — (179,405 ) (181,417 ) — (181,417 ) Noncontrolling interest activities — — — — — — 953 953 Balance at December 31, 2016 148,410,422 $ 148,410 $ 56,605 $ (1,013,021 ) $ 4,001,734 $ 3,193,728 $ 13,628 $ 3,207,356 F-7 Year Ended December 31 2014 2013 2012 (In Thousands) $ 711,286 $ 684,959 $ 648,041 148,313 133,957 98,383 (17,766 ) (12,905 ) (11,018 ) (3,719 ) (4,729 ) (3,943 ) 54,319 (21,622 ) 14,751 16,239 12,648 10,747 — (59,000 ) — (225,178 ) (116,080 ) 13,366 (100,820 ) (79,253 ) (25,845 ) 292,257 473,424 220,694 15,616 (14,418 ) (86,294 ) (100,402 ) 59,750 27,556 78,859 371,772 258,397 790,145 1,056,731 906,438 (107,681 ) (124,063 ) (101,987 ) 8,866 10,657 8,504 (287,900 ) (712,173 ) (558,384 ) (386,715 ) (825,579 ) (651,867 ) 2,727,924 3,019,931 750,000 (2,735,862 ) (2,995,335 ) (750,000 ) (22,051 ) (15,728 ) (7,043 ) 17,766 12,905 11,018 (347,271 ) (326,217 ) (300,983 ) (95,946 ) (120,673 ) (81,826 ) (455,440 ) (425,117 ) (378,834 ) (7,153 ) (12,237 ) 2,304 (59,163 ) (206,202 ) (121,959 ) 196,893 403,095 525,054 $ 137,730 $ 196,893 $ 403,095 $ 408,604 $ 342,372 $ 381,407 $ 25,155 $ 27,221 $ 20,416 Year Ended December 31 2016 2015 2014 (In Thousands) Operating activities Net income $ 687,240 $ 705,672 $ 711,286 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 147,487 141,675 148,313 Excess tax benefits from share-based compensation (12,021 ) (7,024 ) (17,766 ) Gain on sale of property, plant, and equipment (15,237 ) (3,189 ) (3,719 ) Deferred income taxes 33,226 35,544 54,319 Share-based compensation 19,719 17,717 16,239 Changes in operating assets and liabilities: Trade accounts receivable, net (53,544 ) 1,974 (225,178 ) Merchandise inventories, net (64,214 ) (21,821 ) (100,820 ) Trade accounts payable 240,717 331,419 292,257 Other short-term assets and liabilities 37,271 967 15,616 Other long-term assets and liabilities (74,566 ) (43,561 ) (100,402 ) 258,838 453,701 78,859 Net cash provided by operating activities 946,078 1,159,373 790,145 Investing activities Purchases of property, plant and equipment (160,643 ) (109,544 ) (107,681 ) Proceeds from sale of property, plant, and equipment 28,811 8,618 8,866 Acquisition of businesses and other investing activities (462,167 ) (162,701 ) (287,900 ) Net cash used in investing activities (593,999 ) (263,627 ) (386,715 ) Financing activities Proceeds from debt 4,350,000 3,862,224 2,727,924 Payments on debt (4,100,000 ) (4,005,191 ) (2,735,862 ) Share-based awards exercised, net of taxes paid (16,147 ) (9,572 ) (22,051 ) Excess tax benefits from share-based compensation 12,021 7,024 17,766 Dividends paid (386,863 ) (368,284 ) (347,271 ) Purchase of stock (181,417 ) (292,275 ) (95,946 ) Net cash used in financing activities (322,406 ) (806,074 ) (455,440 ) Effect of exchange rate changes on cash 1,575 (15,771 ) (7,153 ) Net increase (decrease) in cash and cash equivalents 31,248 73,901 (59,163 ) Cash and cash equivalents at beginning of year 211,631 137,730 196,893 Cash and cash equivalents at end of year $ 242,879 $ 211,631 $ 137,730 Supplemental disclosures of cash flow information Cash paid during the year for: Income taxes $ 374,865 $ 352,153 $ 408,604 Interest $ 19,043 $ 23,687 $ 25,155 F-8201420161.Summary of Significant Accounting Policies2,6002,670 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.F-9Index to Financial StatementsGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 20142014, 2013,2016, 2015, and 2012,2014, the Company recorded provisions for doubtful accounts of approximately $7,192,000, $8,691,000,$11,515,000, $12,373,000, and $8,047,000,$7,192,000, respectively. At December 31, 20142016 and 2013,2015, the allowance for doubtful accounts was approximately $11,836,000$15,557,000 and $14,423,000,$10,693,000, respectively.$434,790,000$426,760,000 and $432,150,000$438,510,000 higher than reported at December 31, 20142016 and 2013,2015, respectively. During 2014, 2013,2016 and 20122014, reductions in inventory levels in automotive parts inventories (2013 and 2012), industrial parts inventories (2014, 2013, and 2012), and electrical parts inventories (2012) resulted in liquidations of LIFO inventory layers. The effect of the LIFO liquidations in 2014, 2013,2016 and 20122014 was to reduce cost of goods sold by approximately $6,000,000 and $8,000,000, $5,000,000,respectively. There were no LIFO liquidations in 2015.$6,000,000, respectively.20152017 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future.2014, 2013, or 2012.F-102016, 2015, and 2014.
2014 December 31 2014 2013 (In Thousands) $ 4,247 $ 41,919 27,828 24,939 29,139 28,760 105,227 95,094 67,400 55,200 29,000 29,000 188,849 126,922 $ 451,690 $ 401,834 December 31 2016 2015 (In Thousands) Retirement benefit assets $ 6,721 $ 3,336 Deferred compensation benefits 29,222 28,488 Investments 28,793 28,351 Cash surrender value of life insurance policies 106,251 105,213 Customer sales returns inventories 68,160 72,814 Guarantees related to borrowings 42,000 35,000 Other long-term prepayments and receivables 194,383 187,716 Total other assets $ 475,530 $ 460,918 December 31 2014 2013 (In Thousands) $ 57,754 $ 55,150 48,569 47,930 40,040 27,815 18,947 59,107 81,496 65,826 29,000 29,000 171,943 130,170 $ 447,749 $ 414,998 F-11Index to Financial StatementsGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2014 December 31 2016 2015 (In Thousands) Post-employment and other benefit/retirement liabilities $ 56,723 $ 54,034 Insurance liabilities 37,608 33,979 Other lease obligations 39,221 37,642 Other taxes payable 16,997 15,495 Customer deposits 79,528 85,552 Guarantees related to borrowings 42,000 35,000 Other 195,981 198,254 Total other long-term liabilities $ 468,058 $ 459,956 December 31 2014 2013 (In Thousands) $ (186,998 ) $ (37,619 ) (538,614 ) (366,454 ) 5,401 6,418 $ (720,211 ) $ (397,655 ) December 31 2016 2015 (In Thousands) Foreign currency translation $ (403,941 ) $ (394,984 ) Unrecognized net actuarial loss, net of tax (611,333 ) (540,018 ) Unrecognized prior service credit, net of tax 2,253 4,384 Total accumulated other comprehensive loss $ (1,013,021 ) $ (930,618 ) tables presenttable presents the changes in accumulated other comprehensive loss by component for the years endingended on December 31, 20142016 and 2013: Changes in Accumulated Other Comprehensive
Loss by Component Pension
Benefits Other
Post-
Retirement
Benefits Foreign
Currency
Translation Total (In Thousands) $ (359,079 ) $ (957 ) $ (37,619 ) $ (397,655 ) (193,182 ) (39 ) (149,379 ) (342,600 ) 20,192 (148 ) — 20,044 (172,990 ) (187 ) (149,379 ) (322,556 ) $ (532,069 ) $ (1,144 ) $ (186,998 ) $ (720,211 ) F-12Index to Financial StatementsGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2014 Changes in Accumulated Other Comprehensive
Loss by Component Pension
Benefits Other
Post-
Retirement
Benefits Foreign
Currency
Translation Total (In Thousands) $ (629,907 ) $ (2,669 ) $ 131,084 $ (501,492 ) 223,991 1,629 (168,703 ) 56,917 46,837 83 — 46,920 270,828 1,712 (168,703 ) 103,837 $ (359,079 ) $ (957 ) $ (37,619 ) $ (397,655 ) Total (In Thousands) Beginning balance, January 1, 2015 $ (532,069 ) $ (1,144 ) $ (186,998 ) $ (720,211 ) Other comprehensive loss before reclassifications, net of tax (25,558 ) (111 ) (207,986 ) (233,655 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 23,412 (164 ) — 23,248 Net current period other comprehensive loss (2,146 ) (275 ) (207,986 ) (210,407 ) Ending balance, December 31, 2015 (534,215 ) (1,419 ) (394,984 ) (930,618 ) Other comprehensive (loss) income before reclassifications, net of tax (92,758 ) 15 (8,957 ) (101,700 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 19,505 (208 ) — 19,297 Net current period other comprehensive loss (73,253 ) (193 ) (8,957 ) (82,403 ) Ending balance, December 31, 2016 $ (607,468 ) $ (1,612 ) $ (403,941 ) $ (1,013,021 ) costincome in the employee benefit plans footnote.20142016 and 2013,2015, the fair value of fixed rate debt was approximately $505,000,000$549,000,000 and $496,000,000,$501,000,000, 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. At December 31, 20142016, the carrying value of fixed rate debt was $550,000,000 and 2013,is included in long-term debt in the consolidated balance sheet. At December 31, 2015, the carrying value of fixed rate debt was $500,000,000 and is included in current portion of debt and long-term debt in the consolidated balance sheets.$270,000,000, $250,000,000,$230,000,000, $240,000,000, and $220,000,000,$230,000,000, for the years ended December 31, 2016, 2015, and 2014, 2013, and 2012, respectively.$71,300,000, $57,900,000,$66,900,000, $75,000,000, and $43,200,000$71,300,000 in the years ended December 31, 2016, 2015, and 2014, 2013, and 2012, respectively.F-13Index to Financial StatementsGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2014610,000, 630,000,1,290,000, 1,280,000, and 730,000610,000 shares of common stock ranging from $63$87 — $87$100 per share were outstanding at December 31, 2014, 2013,2016, 2015, and 2012,2014, respectively. These options were excluded from the computation of diluted net income per common share because the options’ exercise price wasprices were greater than the average market priceprices of common stock in each respective year.ReclassificationsCertain prior period amounts have been reclassified to conform to the current year presentations.February 2013,May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting 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 amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the financial 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 material impact on the consolidated financial statements for the years ended December 31, 2014 and December 31, 2013.In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers (“ASU 2014-09”) (Topic 606), which createswill create a single, comprehensive revenue recognition model for allrecognizing revenue from contracts with customers. The updated standard requires an entity to recognize revenue to reflect the transfer of promised goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods and services. ASU 2014-09 is effective for fiscal years,interim and interimannual reporting periods within those years, beginning after December 15, 2016,2017 and may be adopted either retrospectively or on a modified retrospective basis wherebybasis. The core principle of the new standard wouldis that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be appliedentitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others.contracts and existingstandard update related to the recognition of revenue from contracts with remaining performance obligations ascustomers. The Company primarily sells goods and recognizes revenue at point of sale or delivery and this will not change under the new standard. We are completing an analysis of revenue streams at each of the business units and are evaluating the impact the new standard may have on revenue recognition. In addition, the Company is evaluating recently issued guidance on practical expedients as part of the transition decision.date,for the Company's interim and annual periods beginning after December 15, 2015. The adoption of ASU 2015-02 did not have an impact on the Company’s consolidated financial statements or related disclosures.cumulative catch-up adjustment recorded toterm greater than twelve months. Expanded disclosures with additional qualitative and quantitative information will also be required. This guidance is effective for interim and annual reporting periods beginning retained earnings at the effective date for existing contracts with remaining performance obligations. Earlyafter December 15, 2018 and early adoption is not permitted. The new standard must be adopted using a modified retrospective transition. The Company is currently evaluating the impact of ASU 2014-092016-02 on its consolidated financial statements and related disclosures, but the Company does believe the adoption of this standard will have a significant impact on the consolidated balance sheets. As disclosed in the leased properties footnote, future minimum payments under noncancelable operating leases are approximately $865,000,000 and the Company does believe the adoption of this standard will have a significant impact on the consolidated balance sheets.andor related disclosures.F-14201420162.Goodwill and Other Intangible Assets20142016 and 20132015 by reportable segment, as well as other identifiable intangible assets, are summarized as follows (in thousands): Goodwill Other
Intangible
Assets, Net Automotive Industrial Office
Products Electrical/
Electronic
Materials Total $ 158,549 $ 99,232 $ 10,554 $ 29,705 $ 298,040 $ 199,799 541,836 17,420 — 11,396 570,652 379,834 — — — — — (28,987 ) (78,205 ) (516 ) — — (78,721 ) (51,261 ) 622,180 116,136 10,554 41,101 789,971 499,385 20,404 3,577 37,054 31,565 92,600 110,129 — — — — — (36,867 ) (42,745 ) (751 ) — — (43,496 ) (25,132 ) $ 599,839 $ 118,962 $ 47,608 $ 72,666 $ 839,075 $ 547,515 Goodwill Automotive Industrial Total Balance as of January 1, 2015 $ 599,839 $ 118,962 $ 47,608 $ 72,666 $ 839,075 $ 547,515 Additions 5,030 18,696 8,891 20,335 52,952 38,596 Amortization — — — — — (34,878 ) Foreign currency translation (49,866 ) (1,579 ) — — (51,445 ) (30,020 ) Balance as of December 31, 2015 555,003 136,079 56,499 93,001 840,582 521,213 Additions 56,518 36,267 25,609 901 119,295 139,982 Amortization — — — — — (40,870 ) Foreign currency translation (3,963 ) 247 (8 ) — (3,724 ) (1,815 ) Balance as of December 31, 2016 $ 607,558 $ 172,593 $ 82,100 $ 93,902 $ 956,153 $ 618,510 20142016 and 20132015 is as follows (in thousands): 2014 2013 Gross
Carrying
Amount Accumulated
Amortization Net Gross
Carrying
Amount Accumulated
Amortization Net $ 477,484 $ (88,923 ) $ 388,561 $ 412,634 $ (59,686 ) $ 352,948 166,507 (8,654 ) 157,853 149,949 (5,018 ) 144,931 6,062 (4,961 ) 1,101 7,306 (5,800 ) 1,506 $ 650,053 $ (102,538 ) $ 547,515 $ 569,889 $ (70,504 ) $ 499,385 2016 2015 Net Net Customer relationships $ 603,966 $ (150,350 ) $ 453,616 $ 494,516 $ (115,636 ) $ 378,880 Trademarks 180,416 (16,154 ) 164,262 153,346 (11,922 ) 141,424 Non-competition agreements 5,098 (4,466 ) 632 5,765 (4,856 ) 909 $ 789,480 $ (170,970 ) $ 618,510 $ 653,627 $ (132,414 ) $ 521,213 $36,867,000, $28,987,000,$40,870,000, $34,878,000, and $12,991,000$36,867,000 for the years ended December 31, 2014, 2013,2016, 2015, and 2012,2014, respectively. Estimated other intangible assets amortization expense for the succeeding five years is as follows (in thousands): $ 34,000 34,000 34,000 34,000 33,000 $ 169,000 F-152017 $ 42,848 2018 42,614 2019 42,110 2020 41,462 2021 41,167 $ 210,201 Genuine Parts Company and Subsidiaries3.Notes to Consolidated Financial Statements — (Continued)Credit FacilitiesDecember 31, 20143.Credit Facilities$265,466,000$325,000,000 and $264,658,000$125,000,000 at December 31, 20142016 and 2013,2015, respectively. The weighted average interest rate on the Company’s outstanding borrowings was approximately 2.46%2.39% and 2.82%2.76% at December 31, 20142016 and 2013,2015, respectively.an $850,000,000a $1,200,000,000 unsecured revolving line of credit with a consortium of financial institutions, thatwhich matures in September 2017June 2021 with an optional one year extension and bears interest at LIBOR plus a margin, which is based on the Company’s leverage ratio (.92%(1.52% at December 31, 2014)2016). The Company also has the option under this agreement to increase its borrowing an additional $350,000,000, as well as an option to decrease the borrowing capacity or terminate the Syndicated Facilityfacility with appropriate notice. At December 31, 20142016 and 2013,2015, approximately $265,466,000$325,000,000 and $264,658,000$125,000,000 were outstanding under this line of credit, respectively.2014,2016, 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 $62,515,000$64,930,000 and $61,617,000$62,874,000 outstanding at December 31, 20142016 and 2013,2015, respectively. December 31 2014 2013 (In Thousands) $ 265,466 $ 264,658 250,000 250,000 250,000 250,000 765,466 764,658 265,466 264,658 $ 500,000 $ 500,000 4.Leased Properties December 31 2016 2015 (In Thousands) Unsecured revolving line of credit, $1,200,000,000, LIBOR plus 0.75% variable $ 325,000 $ 125,000 Unsecured term notes: November 30, 2011, Series D and E Senior Unsecured Notes, $250,000,000, 3.35% fixed, due November 30, 2016 — 250,000 July 29, 2016, Series G Senior Unsecured Notes, $50,000,000, 2.39% fixed, due July 29, 2021 50,000 — December 2, 2013, Series F Senior Unsecured Notes, $250,000,000, 2.99% fixed, due December 2, 2023 250,000 250,000 November 30, 2016, Series H Senior Unsecured Notes, $250,000,000, 2.99% fixed, due November 30, 2026 250,000 — Total debt 875,000 625,000 Less debt due within one year 325,000 375,000 Long-term debt, excluding current portion $ 550,000 $ 250,000 2017 $ 325,000 2018 — 2019 — 2020 — 2021 50,000 Thereafter 500,000 $ 875,000 20142016 (in thousands): $ 214,000 167,600 121,000 81,500 53,400 155,300 $ 792,800 F-16Index to Financial StatementsGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 20142017 $ 232,300 2018 182,100 2019 132,900 2020 89,700 2021 55,500 Thereafter 172,500 Total minimum lease payments $ 865,000 $208,000,000,for 2016, 2015, and $158,200,000 for 2014, 2013,respectively.2012, respectively.5.Share-Based Compensation2014,2016, total compensation cost related to nonvested awards not yet recognized was approximately $28,800,000.$34,600,000. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for optionsSARs and RSUs outstanding at December 31, 20142016 and 20132015 was approximately $198,100,000$104,200,000 and $154,000,000,$104,000,000, respectively. The aggregate intrinsic value for optionsSARs and RSUs vested totaled approximately $116,200,000$62,000,000 and $93,600,000$65,000,000 at December 31, 20142016 and 2013,2015, respectively. At December 31, 2014,2016, the weighted-average contractual life for outstanding and exercisable optionsSARs and RSUs was six and five years, respectively. Share-based compensation costcosts of $19,719,000, $17,717,000, and $16,239,000, $12,648,000, and $10,747,000, waswere recorded for the years ended December 31, 2014, 2013,2016, 2015, and 2012,2014, respectively. The total income tax benefitbenefits recognized in the consolidated statements of income and comprehensive income for share-based compensation arrangements waswere approximately $7,900,000, $7,100,000, and $6,500,000 $5,100,000,for 2016, 2015, and $4,300,000, for 2014, 2013, and 2012, respectively. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2014, 2013, and 2012.2014, 20132016, 2015, and 20122014, the fair valuevalues for options and SARs granted waswere estimated using a Black-Scholes option pricing model with the following weighted-average assumptions, respectively: risk-free interest rate of 2.8%1.6%, 2.0%, and 2.0%2.8%; dividend yield of 2.8%2.7%, 3.2%2.6%, and 3.3%2.8%; annual historical volatility factor of the expected market price of the Company’s common stock of 19% for each of the three years; an average expected life and estimated turnover based on the historical pattern of existing grants of approximately seven years and 5.0%6.2%, respectively. The fair value of RSUs is based on the price of the Company’s stock on the date of grant. The total fair value of shares vested during the years ended December 31, 2016, 2015, and 2014 2013,were $18,200,000, $15,200,000, and 2012, was $13,800,000, $8,100,000, and $6,700,000, respectively. 2014 Shares (1) Weighted-
Average
Exercise
Price (2) (In Thousands) 4,580 $ 56 845 87 (1,392 ) 49 (110 ) 71 3,923 $ 64 2,141 $ 55 2,718 2016 Shares (1) (In Thousands) Outstanding at beginning of year 4,181 $ 71 Granted 894 100 Exercised (1,045 ) 59 Forfeited (152 ) 91 Outstanding at end of year (3) 3,878 $ 79 Exercisable at end of year 2,171 $ 70 Shares available for future grants 9,132 (1) Shares include Restricted Stock Units (RSUs). (2) The weighted-average exercise price excludes RSUs. (3) options and SARs outstanding as of December 31, 20142016 ranged from approximately $42 to $87.$100. The weighted-average remaining contractual life of all options and SARs outstanding is approximately seven years.
F-17
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
170,000 RSUs. In 2015, the Company granted approximately 711,000 SARs and 176,000 RSUs. In 2014, the Company granted approximately 680,000 SARs and 165,000 RSUs. In 2013, the
Subsidiaries
Nonvested Share Awards (RSUs) | Shares | Weighted- Average Grant Date Fair Value | ||||||
| (In Thousands) | ||||||||
Nonvested at January 1, 2014 | 444 | $ | 62 | |||||
Granted | 165 | 87 | ||||||
Vested | (125 | ) | 53 | |||||
Forfeited | (64 | ) | 77 | |||||
|
| |||||||
Nonvested at December 31, 2014 | 420 | $ | 72 | |||||
|
| |||||||
| Nonvested Share Awards (RSUs) | Shares | Weighted- Average Grant Date Fair Value | ||||
| (In Thousands) | ||||||
| Nonvested at January 1, 2016 | 433 | $ | 82 | |||
| Granted | 170 | 100 | ||||
| Vested | (140 | ) | 73 | |||
| Forfeited | (55 | ) | 86 | |||
| Nonvested at December 31, 2016 | 408 | $ | 92 | |||
inflows.
F-18
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
| 2014 | 2013 | |||||||
| (In Thousands) | ||||||||
Deferred tax assets related to: | ||||||||
Expenses not yet deducted for tax purposes | $ | 337,792 | $ | 343,156 | ||||
Pension liability not yet deducted for tax purposes | 341,904 | 227,880 | ||||||
|
|
|
| |||||
| 679,696 | 571,036 | |||||||
|
|
|
| |||||
Deferred tax liabilities related to: | ||||||||
Employee and retiree benefits | 227,926 | 188,235 | ||||||
Inventory | 152,913 | 152,641 | ||||||
Other intangible assets | 105,482 | 110,272 | ||||||
Property, plant, and equipment | 59,600 | 53,751 | ||||||
Other | 30,641 | 29,733 | ||||||
|
|
|
| |||||
| 576,562 | 534,632 | |||||||
|
|
|
| |||||
Net deferred tax assets | 103,134 | 36,404 | ||||||
Current portion of deferred tax assets | (30,282 | ) | (22,165 | ) | ||||
|
|
|
| |||||
Noncurrent net deferred tax assets | $ | 72,852 | $ | 14,239 | ||||
|
|
|
| |||||
The current portion of the deferred tax assets and liabilities are included in prepaid expenses and other current assets and other accrued expenses, respectively, in the consolidated balance sheets.
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Deferred tax assets related to: | |||||||
| Expenses not yet deducted for tax purposes | $ | 345,195 | $ | 318,368 | |||
| Pension liability not yet deducted for tax purposes | 397,391 | 347,263 | |||||
| 742,586 | 665,631 | ||||||
| Deferred tax liabilities related to: | |||||||
| Employee and retiree benefits | 276,256 | 249,126 | |||||
| Inventory | 141,181 | 147,199 | |||||
| Other intangible assets | 120,689 | 111,305 | |||||
| Property, plant, and equipment | 61,666 | 58,496 | |||||
| Other | 58,468 | 31,664 | |||||
| 658,260 | 597,790 | ||||||
| Net deferred tax assets | $ | 84,326 | $ | 67,841 | |||
| 2014 | 2013 | 2012 | ||||||||||
| (In Thousands) | ||||||||||||
United States | $ | 978,824 | $ | 850,866 | $ | 903,698 | ||||||
Foreign | 138,915 | 193,438 | 115,234 | |||||||||
|
|
|
|
|
| |||||||
Income before income taxes | $ | 1,117,739 | $ | 1,044,304 | $ | 1,018,932 | ||||||
|
|
|
|
|
| |||||||
| 2016 | 2015 | 2014 | |||||||||
| (In Thousands) | |||||||||||
| United States | $ | 934,476 | $ | 1,004,919 | $ | 978,824 | |||||
| Foreign | 139,864 | 118,762 | 138,915 | ||||||||
| Income before income taxes | $ | 1,074,340 | $ | 1,123,681 | $ | 1,117,739 | |||||
| 2014 | 2013 | 2012 | ||||||||||
| (In Thousands) | ||||||||||||
Current: | ||||||||||||
Federal | $ | 224,591 | $ | 303,016 | $ | 288,135 | ||||||
State | 43,513 | 47,010 | 44,653 | |||||||||
Foreign | 84,030 | 30,941 | 23,352 | |||||||||
Deferred | 54,319 | (21,622 | ) | 14,751 | ||||||||
|
|
|
|
|
| |||||||
| $ | 406,453 | $ | 359,345 | $ | 370,891 | |||||||
|
|
|
|
|
| |||||||
F-19
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
| 2016 | 2015 | 2014 | |||||||||
| (In Thousands) | |||||||||||
| Current: | |||||||||||
| Federal | $ | 284,199 | $ | 309,403 | $ | 224,591 | |||||
| State | 41,083 | 45,460 | 43,513 | ||||||||
| Foreign | 28,593 | 27,602 | 84,030 | ||||||||
| Deferred | 33,225 | 35,544 | 54,319 | ||||||||
| $ | 387,100 | $ | 418,009 | $ | 406,453 | ||||||
| 2014 | 2013 | 2012 | ||||||||||
| (In Thousands) | ||||||||||||
Statutory rate applied to income | $ | 391,209 | $ | 365,506 | $ | 356,626 | ||||||
Plus state income taxes, net of Federal tax benefit | 32,646 | 28,823 | 30,227 | |||||||||
Earnings in jurisdictions taxed at rates different from the statutory US tax rate | (3,453 | ) | (37,873 | ) | (17,419 | ) | ||||||
Foreign tax credit | (20,170 | ) | — | — | ||||||||
Capital loss expiration | — | 16,803 | — | |||||||||
Reversal of capital loss valuation allowance | — | (16,803 | ) | — | ||||||||
Other | 6,221 | 2,889 | 1,457 | |||||||||
|
|
|
|
|
| |||||||
| $ | 406,453 | $ | 359,345 | $ | 370,891 | |||||||
|
|
|
|
|
| |||||||
| 2016 | 2015 | 2014 | |||||||||
| (In Thousands) | |||||||||||
| Statutory rate applied to income | $ | 376,019 | $ | 393,288 | $ | 391,209 | |||||
| Plus state income taxes, net of Federal tax benefit | 29,211 | 32,295 | 32,646 | ||||||||
| Earnings in jurisdictions taxed at rates different from the statutory US tax rate | (18,057 | ) | (13,684 | ) | (3,453 | ) | |||||
| Foreign tax credit | (482 | ) | (264 | ) | (20,170 | ) | |||||
| Other | 409 | 6,374 | 6,221 | ||||||||
| $ | 387,100 | $ | 418,009 | $ | 406,453 | ||||||
| 2014 | 2013 | 2012 | ||||||||||
| (In Thousands) | ||||||||||||
Balance at beginning of year | $ | 47,190 | $ | 45,455 | $ | 46,845 | ||||||
Additions based on tax positions related to the current year | 3,303 | 3,238 | 5,702 | |||||||||
Additions for tax positions of prior years | 6,415 | 3,759 | 2,172 | |||||||||
Reductions for tax positions for prior years | (851 | ) | (1,472 | ) | (5,025 | ) | ||||||
Reduction for lapse in statute of limitations | (481 | ) | (1,714 | ) | (2,658 | ) | ||||||
Settlements | (37,995 | ) | (2,076 | ) | (1,581 | ) | ||||||
|
|
|
|
|
| |||||||
Balance at end of year | $ | 17,581 | $ | 47,190 | $ | 45,455 | ||||||
|
|
|
|
|
| |||||||
| 2016 | 2015 | 2014 | |||||||||
| (In Thousands) | |||||||||||
| Balance at beginning of year | $ | 15,815 | $ | 17,581 | $ | 47,190 | |||||
| Additions based on tax positions related to the current year | 2,184 | 1,969 | 3,303 | ||||||||
| Additions for tax positions of prior years | 1,317 | 61 | 6,415 | ||||||||
| Reductions for tax positions for prior years | (1,369 | ) | (3,152 | ) | (851 | ) | |||||
| Reduction for lapse in statute of limitations | (2,516 | ) | (425 | ) | (481 | ) | |||||
| Settlements | (241 | ) | (219 | ) | (37,995 | ) | |||||
| Balance at end of year | $ | 15,190 | $ | 15,815 | $ | 17,581 | |||||
F-20
Index to Financial Statements
Genuine Parts Company$1,848,000 and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
and $12,340,000$1,746,000 of accrued interest and penalties at December 31, 20142016 and 2013,2015, respectively. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
| 2014 | 2013 | |||||||
| (In Thousands) | ||||||||
Changes in benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 2,035,185 | $ | 2,165,692 | ||||
Service cost | 7,824 | 19,083 | ||||||
Interest cost | 102,465 | 89,408 | ||||||
Plan participants’ contributions | 3,526 | 3,543 | ||||||
Actuarial loss (gain) | 346,875 | (164,784 | ) | |||||
Foreign currency exchange rate changes | (18,697 | ) | (13,893 | ) | ||||
Gross benefits paid | (125,084 | ) | (73,186 | ) | ||||
Acquired plan | — | 9,322 | ||||||
|
|
|
| |||||
Benefit obligation at end of year | $ | 2,352,094 | $ | 2,035,185 | ||||
|
|
|
| |||||
The actuarial loss incurred in the year ended December 31, 2014 is primarily attributable to a lower discount rate, as well as changes in the mortality assumptions.
F-21
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Changes in benefit obligation | |||||||
| Benefit obligation at beginning of year | $ | 2,199,356 | $ | 2,352,094 | |||
| Service cost | 7,746 | 8,562 | |||||
| Interest cost | 104,485 | 98,088 | |||||
| Plan participants’ contributions | 2,585 | 2,838 | |||||
| Actuarial loss (gain) | 139,851 | (139,573 | ) | ||||
| Foreign currency exchange rate changes | 5,449 | (35,082 | ) | ||||
| Gross benefits paid | (154,676 | ) | (87,571 | ) | |||
| Plan amendments | 2,063 | — | |||||
| Benefit obligation at end of year | $ | 2,306,859 | $ | 2,199,356 | |||
| 2014 | 2013 | |||||||
Weighted-average discount rate | 4.26 | % | 5.10 | % | ||||
Rate of increase in future compensation levels | 3.07 | % | 3.04 | % | ||||
| 2016 | 2015 | ||||
| Weighted-average discount rate | 4.26 | % | 4.82 | % | |
| Rate of increase in future compensation levels | 3.14 | % | 3.12 | % | |
| 2014 | 2013 | |||||||
| (In Thousands) | ||||||||
Changes in plan assets | ||||||||
Fair value of plan assets at beginning of year | $ | 1,933,063 | $ | 1,595,679 | ||||
Actual return on plan assets | 174,652 | 336,151 | ||||||
Foreign currency exchange rate changes | (17,616 | ) | (12,155 | ) | ||||
Employer contributions | 53,296 | 74,347 | ||||||
Acquired plan | — | 8,684 | ||||||
Plan participants’ contributions | 3,526 | 3,543 | ||||||
Benefits paid | (125,084 | ) | (73,186 | ) | ||||
|
|
|
| |||||
Fair value of plan assets at end of year | $ | 2,021,837 | $ | 1,933,063 | ||||
|
|
|
| |||||
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Changes in plan assets | |||||||
| Fair value of plan assets at beginning of year | $ | 1,912,736 | $ | 2,021,837 | |||
| Actual return on plan assets | 146,022 | (45,529 | ) | ||||
| Foreign currency exchange rate changes | 5,172 | (33,382 | ) | ||||
| Employer contributions | 53,663 | 54,543 | |||||
| Plan participants’ contributions | 2,585 | 2,838 | |||||
| Benefits paid | (154,676 | ) | (87,571 | ) | |||
| Fair value of plan assets at end of year | $ | 1,965,502 | $ | 1,912,736 | |||
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Aggregate benefit obligation | $ | 2,131,550 | $ | 2,186,412 | |||
| Aggregate fair value of plan assets | 1,783,472 | 1,896,456 | |||||
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Aggregate accumulated benefit obligation | $ | 2,086,711 | $ | 2,167,216 | |||
| Aggregate fair value of plan assets | 1,760,713 | 1,896,456 | |||||
| Target Allocation 2015 | Percentage of Plan Assets at December 31 | |||||||||||
| 2014 | 2013 | |||||||||||
Asset Category | ||||||||||||
Equity securities | 71 | % | 70 | % | 76 | % | ||||||
Debt securities | 29 | % | 30 | % | 24 | % | ||||||
|
|
|
|
|
| |||||||
| 100 | % | 100 | % | 100 | % | |||||||
|
|
|
|
|
| |||||||
Target Allocation 2017 | Percentage of Plan Assets at December 31 | |||||||
| 2016 | 2015 | |||||||
| Asset Category | ||||||||
| Equity securities | 71 | % | 70 | % | 69 | % | ||
| Debt securities | 29 | % | 30 | % | 31 | % | ||
| 100 | % | 100 | % | 100 | % | |||
F-22
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
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 (49%(47% S&P 500
Certain investments are measured at fair value using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy.
| 2014 | ||||||||||||||||
| 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 | $ | 366,716 | $ | 366,716 | $ | — | $ | — | ||||||||
Genuine Parts Company | 215,477 | 215,477 | — | — | ||||||||||||
Other stocks | 822,782 | 822,782 | — | — | ||||||||||||
Debt Securities | ||||||||||||||||
Short-term investments | 41,882 | 41,882 | — | — | ||||||||||||
Cash and equivalents | 8,921 | 8,921 | — | — | ||||||||||||
Government bonds | 192,413 | 96,480 | 95,933 | — | ||||||||||||
Corporate bonds | 178,214 | — | 178,214 | — | ||||||||||||
Asset-backed and mortgage-backed securities | 27,756 | — | 27,756 | — | ||||||||||||
Convertible securities | 633 | — | 633 | — | ||||||||||||
Other-international | 25,137 | 21,815 | 3,322 | — | ||||||||||||
Municipal bonds | 6,435 | — | 6,435 | — | ||||||||||||
Municipal funds-fixed income | 132,752 | — | 132,752 | — | ||||||||||||
Other | ||||||||||||||||
Options and futures | 7 | 7 | — | — | ||||||||||||
Cash surrender value of life insurance policies | 2,712 | — | — | 2,712 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 2,021,837 | $ | 1,574,080 | $ | 445,045 | $ | 2,712 | ||||||||
|
|
|
|
|
|
|
| |||||||||
F-23
| 2016 | |||||||||||||||||||
| Total | Assets Measured at NAV | 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 | $ | 384,103 | $ | 114,182 | $ | 269,921 | $ | — | $ | — | |||||||||
| Genuine Parts Company common stock | 192,841 | — | 192,841 | — | — | ||||||||||||||
| Other stocks | 793,101 | — | 793,007 | — | 94 | ||||||||||||||
| Debt Securities | |||||||||||||||||||
| Short-term investments | 55,607 | — | 55,607 | — | — | ||||||||||||||
| Cash and equivalents | 15,995 | — | 15,995 | — | — | ||||||||||||||
| Government bonds | 157,303 | — | 102,468 | 54,835 | — | ||||||||||||||
| Corporate bonds | 192,457 | — | — | 192,457 | — | ||||||||||||||
| Asset-backed and mortgage–backed securities | 8,872 | — | — | 8,872 | — | ||||||||||||||
| Convertible securities | 216 | — | — | 216 | — | ||||||||||||||
| Other-international | 24,613 | — | 20,868 | 3,745 | — | ||||||||||||||
| Municipal bonds | 9,272 | — | — | 9,272 | — | ||||||||||||||
| Mutual funds—fixed income | 128,367 | 82,394 | — | 45,973 | — | ||||||||||||||
| Other | |||||||||||||||||||
| Cash surrender value of life insurance policies | 2,755 | — | — | — | 2,755 | ||||||||||||||
| Total | $ | 1,965,502 | $ | 196,576 | $ | 1,450,707 | $ | 315,370 | $ | 2,849 | |||||||||
| 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 | — | ||||||||||||
Other | ||||||||||||||||
Cash surrender value of life insurance policies | 2,723 | — | — | 2,723 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1,933,063 | $ | 1,605,539 | $ | 324,801 | $ | 2,723 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2016
| 2015 | |||||||||||||||||||
| Total | Assets Measured at NAV | 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 | $ | 349,852 | $ | 107,441 | $ | 242,411 | $ | — | $ | — | |||||||||
| Genuine Parts Company common stock | 173,363 | — | 173,363 | — | — | ||||||||||||||
| Other stocks | 793,229 | — | 792,624 | — | 605 | ||||||||||||||
| Debt Securities | |||||||||||||||||||
| Short-term investments | 46,195 | — | 46,195 | — | — | ||||||||||||||
| Cash and equivalents | 2,978 | — | 2,978 | — | — | ||||||||||||||
| Government bonds | 193,436 | — | 109,559 | 83,877 | — | ||||||||||||||
| Corporate bonds | 172,119 | — | — | 172,119 | — | ||||||||||||||
| Asset-backed and mortgage–backed securities | 27,510 | — | — | 27,510 | — | ||||||||||||||
| Convertible securities | 434 | — | — | 434 | — | ||||||||||||||
| Other-international | 21,137 | — | 20,785 | 352 | — | ||||||||||||||
| Municipal bonds | 5,857 | — | — | 5,857 | — | ||||||||||||||
| Mutual funds—fixed income | 123,895 | 83,241 | — | 40,654 | — | ||||||||||||||
| Other | |||||||||||||||||||
| Cash surrender value of life insurance policies | 2,731 | — | — | — | 2,731 | ||||||||||||||
| Total | $ | 1,912,736 | $ | 190,682 | $ | 1,387,915 | $ | 330,803 | $ | 3,336 | |||||||||
| 2014 | 2013 | |||||||
| (In Thousands) | ||||||||
Other long-term asset | $ | 4,247 | $ | 41,919 | ||||
Other current liability | (6,740 | ) | (5,976 | ) | ||||
Pension and other post-retirement liabilities | (327,764 | ) | (138,065 | ) | ||||
|
|
|
| |||||
| $ | (330,257 | ) | $ | (102,122 | ) | |||
|
|
|
| |||||
F-24
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Other long-term asset | $ | 6,721 | $ | 3,336 | |||
| Other current liability | (8,206 | ) | (7,432 | ) | |||
| Pension and other post-retirement liabilities | (339,872 | ) | (282,524 | ) | |||
| $ | (341,357 | ) | $ | (286,620 | ) | ||
2016
| 2014 | 2013 | |||||||
| (In Thousands) | ||||||||
Net actuarial loss | $ | 875,788 | $ | 590,568 | ||||
Prior service credit | (2,436 | ) | (3,074 | ) | ||||
|
|
|
| |||||
| $ | 873,352 | $ | 587,494 | |||||
|
|
|
| |||||
| 2016 | 2015 | ||||||
| (In Thousands) | |||||||
| Net actuarial loss | $ | 1,003,247 | $ | 882,464 | |||
| Prior service cost (credit) | 672 | (1,814 | ) | ||||
| $ | 1,003,919 | $ | 880,650 | ||||
Employer contribution | ||||
2015 (expected) | $ | 50,000 | ||
Expected benefit payments: | ||||
2015 | $ | 87,000 | ||
2016 | 95,000 | |||
2017 | 103,000 | |||
2018 | 111,000 | |||
2019 | 118,000 | |||
2020 through 2024 | 692,000 | |||
| Employer contribution | |||
| 2017 (expected) | $ | 48,000 | |
| Expected benefit payments: | |||
| 2017 | $ | 109,000 | |
| 2018 | 116,000 | ||
| 2019 | 122,000 | ||
| 2020 | 127,000 | ||
| 2021 | 133,000 | ||
| 2022 through 2026 | 721,000 | ||
| 2014 | 2013 | 2012 | ||||||||||
| (In Thousands) | ||||||||||||
Service cost | $ | 7,824 | $ | 19,083 | $ | 15,254 | ||||||
Interest cost | 102,465 | 89,408 | 100,338 | |||||||||
Expected return on plan assets | (144,746 | ) | (133,816 | ) | (128,208 | ) | ||||||
Amortization of prior service credit | (1,890 | ) | (7,538 | ) | (7,270 | ) | ||||||
Amortization of actuarial loss | 26,791 | 83,934 | 70,161 | |||||||||
Curtailment gain | — | — | (23,507 | ) | ||||||||
|
|
|
|
|
| |||||||
Net periodic benefit (income) cost | $ | (9,556 | ) | $ | 51,071 | $ | 26,768 | |||||
|
|
|
|
|
| |||||||
F-25
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
| 2016 | 2015 | 2014 | |||||||||
| (In Thousands) | |||||||||||
| Service cost | $ | 7,746 | $ | 8,562 | $ | 7,824 | |||||
| Interest cost | 104,485 | 98,088 | 102,465 | ||||||||
| Expected return on plan assets | (156,832 | ) | (150,130 | ) | (144,746 | ) | |||||
| Amortization of prior service credit | (432 | ) | (565 | ) | (1,890 | ) | |||||
| Amortization of actuarial loss | 31,641 | 38,197 | 26,791 | ||||||||
| Net periodic benefit income | $ | (13,392 | ) | $ | (5,848 | ) | $ | (9,556 | ) | ||
| 2014 | 2013 | 2012 | ||||||||||
| (In Thousands) | ||||||||||||
Current year actuarial loss (gain) | $ | 312,011 | $ | (368,587 | ) | $ | 114,061 | |||||
Recognition of actuarial loss | (26,791 | ) | (83,934 | ) | (70,161 | ) | ||||||
Current year prior service credit | — | — | (4,217 | ) | ||||||||
Recognition of prior service credit | 638 | 7,538 | 30,777 | |||||||||
|
|
|
|
|
| |||||||
Total recognized in other comprehensive income (loss) | $ | 285,858 | $ | (444,983 | ) | $ | 70,460 | |||||
|
|
|
|
|
| |||||||
Total recognized in net periodic benefit (income) cost and other comprehensive income (loss) | $ | 276,303 | $ | (393,912 | ) | $ | 97,228 | |||||
|
|
|
|
|
| |||||||
| 2016 | 2015 | 2014 | |||||||||
| (In Thousands) | |||||||||||
| Current year actuarial loss | $ | 152,415 | $ | 44,930 | $ | 312,011 | |||||
| Recognition of actuarial loss | (31,641 | ) | (38,197 | ) | (26,791 | ) | |||||
| Current year prior service cost | 2,063 | — | — | ||||||||
| Recognition of prior service credit | 432 | 565 | 638 | ||||||||
| Total recognized in other comprehensive income (loss) | $ | 123,269 | $ | 7,298 | $ | 285,858 | |||||
| Total recognized in net periodic benefit income and other comprehensive income (loss) | $ | 109,877 | $ | 1,450 | $ | 276,303 | |||||
Actuarial loss | $ | 38,893 | ||
Prior service credit | (566 | ) | ||
|
| |||
Total | $ | 38,327 | ||
|
|
| Actuarial loss | $ | 37,870 | |
| Prior service credit | (349 | ) | |
| Total | $ | 37,521 | |
| 2014 | 2013 | 2012 | ||||||||||
Weighted average discount rate | 5.10 | % | 4.17 | % | 5.17 | % | ||||||
Rate of increase in future compensation levels | 3.04 | % | 3.30 | % | 3.30 | % | ||||||
Expected long-term rate of return on plan assets | 7.85 | % | 7.83 | % | 7.84 | % | ||||||
| 2016 | 2015 | 2014 | ||||||
| Weighted average discount rate | 4.82 | % | 4.26 | % | 5.10 | % | ||
| Rate of increase in future compensation levels | 3.12 | % | 3.07 | % | 3.04 | % | ||
| Expected long-term rate of return on plan assets | 7.83 | % | 7.85 | % | 7.85 | % | ||
2014.
F-26
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining 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, 2014,2016, the Company was in compliance with all such covenants.
As of December 31, 2014 and 2013, the
During
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
F-27
70% interest in GPC Asia Pacific for approximately $590,000,000, net of cash acquired of $70,000,000, and the 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 approximately 480 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. Both approaches were given equal weight in the conclusion of fair value, which the Company believes is a reasonable approach. For the market approach, the Company utilized companies that are comparable in line of business, size, operating performance, and financial condition to GPC Asia Pacific to develop a market multiple. For the income approach, the Company utilized GPC Asia Pacific’s projected cash flows, an appropriate discount rate, and an expected long-term growth rate. For both approaches, the Company applied discounts for lack of control and lack of marketability.
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 and 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 for the year ended December 31, 2013.
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-28
Index to Financial Statements
Genuine Parts Company and SubsidiariesSegment Data
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.
| April 1, 2013 | ||||
| (In Thousands) | ||||
Trade accounts receivable | $ | 94,000 | ||
Merchandise inventory | 306,000 | |||
Prepaid expenses and other current assets | 31,000 | |||
Property and equipment | 59,000 | |||
Intangible assets | 347,000 | |||
Other assets | 24,000 | |||
|
| |||
Total identifiable assets acquired | 861,000 | |||
Current liabilities | (224,000 | ) | ||
Long-term debt | (230,000 | ) | ||
Deferred tax liabilities and other | (125,000 | ) | ||
|
| |||
Total liabilities assumed | (579,000 | ) | ||
Net identifiable assets acquired | 282,000 | |||
Goodwill | 542,000 | |||
|
| |||
Net assets acquired | $ | 824,000 | ||
|
| |||
The acquired intangible assets of approximately $347,000,000 were 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 goodwill recognized as part of the acquisition is not tax deductible and has been assigned to the automotive segment. The goodwill is attributable primarily to expected synergies and the assembled workforce of GPC Asia Pacific.
The amounts of net sales and earnings of GPC Asia Pacific included in the Company’s consolidated statements of income and 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 a per share diluted basis, respectively.
The unaudited 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 acquisition related debt, and any associated tax effects.
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
F-29
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
annual revenues of approximately $300,000,000. Quaker City serves approximately 260 auto parts stores, of which approximately 140 are company-owned. The Company funded the acquisition with cash on hand and short-term borrowings under credit facilities.
F-30
Index to Financial Statements
Genuine Parts Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2014
| 2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
Net sales: | ||||||||||||||||||||
Automotive | $ | 8,096,877 | $ | 7,489,186 | $ | 6,320,882 | $ | 6,061,424 | $ | 5,608,101 | ||||||||||
Industrial | 4,771,080 | 4,429,976 | 4,453,574 | 4,173,574 | 3,521,863 | |||||||||||||||
Office products | 1,802,754 | 1,638,618 | 1,686,690 | 1,689,368 | 1,641,963 | |||||||||||||||
Electrical/electronic materials | 739,119 | 568,872 | 582,820 | 557,537 | 449,770 | |||||||||||||||
Other | (68,183 | ) | (48,809 | ) | (30,098 | ) | (23,026 | ) | (14,108 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net sales | $ | 15,341,647 | $ | 14,077,843 | $ | 13,013,868 | $ | 12,458,877 | $ | 11,207,589 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating profit: | ||||||||||||||||||||
Automotive | $ | 700,386 | $ | 641,492 | $ | 540,678 | $ | 467,806 | $ | 421,109 | ||||||||||
Industrial | 370,043 | 320,720 | 352,119 | 337,628 | 255,616 | |||||||||||||||
Office products | 133,727 | 122,492 | 134,441 | 134,124 | 131,746 | |||||||||||||||
Electrical/electronic materials | 64,884 | 47,584 | 50,910 | 40,663 | 30,910 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total operating profit | 1,269,040 | 1,132,288 | 1,078,148 | 980,221 | 839,381 | |||||||||||||||
Interest expense, net | (24,192 | ) | (24,330 | ) | (19,619 | ) | (24,608 | ) | (26,598 | ) | ||||||||||
Corporate expense | (90,242 | ) | (34,667 | ) | (26,606 | ) | (58,033 | ) | (46,263 | ) | ||||||||||
Intangible asset amortization | (36,867 | ) | (28,987 | ) | (12,991 | ) | (6,774 | ) | (4,737 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income before income taxes | $ | 1,117,739 | $ | 1,044,304 | $ | 1,018,932 | $ | 890,806 | $ | 761,783 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Assets: | ||||||||||||||||||||
Automotive | $ | 4,275,298 | $ | 4,009,244 | $ | 3,411,252 | $ | 3,218,931 | $ | 3,177,644 | ||||||||||
Industrial | 1,224,735 | 1,162,697 | 1,130,877 | 1,100,024 | 955,241 | |||||||||||||||
Office products | 835,592 | 708,944 | 731,564 | 700,720 | 694,166 | |||||||||||||||
Electrical/electronic materials | 196,400 | 156,780 | 137,237 | 129,933 | 113,757 | |||||||||||||||
Corporate | 327,623 | 353,276 | 898,292 | 773,391 | 637,871 | |||||||||||||||
Goodwill and other intangible assets | 1,386,590 | 1,289,356 | 497,839 | 279,775 | 209,548 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 8,246,238 | $ | 7,680,297 | $ | 6,807,061 | $ | 6,202,774 | $ | 5,788,227 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
F-31
| 2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
Depreciation and amortization: | ||||||||||||||||||||
Automotive | $ | 77,645 | $ | 76,238 | $ | 60,630 | $ | 60,252 | $ | 63,942 | ||||||||||
Industrial | 9,906 | 8,751 | 8,307 | 7,495 | 7,208 | |||||||||||||||
Office products | 10,728 | 10,166 | 10,837 | 9,999 | 9,737 | |||||||||||||||
Electrical/electronic materials | 2,658 | 1,904 | 1,733 | 1,554 | 1,414 | |||||||||||||||
Corporate | 10,509 | 7,911 | 3,885 | 2,862 | 2,294 | |||||||||||||||
Intangible asset amortization | 36,867 | 28,987 | 12,991 | 6,774 | 4,737 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total depreciation and amortization | $ | 148,313 | $ | 133,957 | $ | 98,383 | $ | 88,936 | $ | 89,332 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Capital expenditures: | ||||||||||||||||||||
Automotive | $ | 78,537 | $ | 97,735 | $ | 67,482 | $ | 61,795 | $ | 46,888 | ||||||||||
Industrial | 12,442 | 8,808 | 13,015 | 9,851 | 4,307 | |||||||||||||||
Office products | 11,135 | 9,297 | 16,013 | 22,036 | 29,866 | |||||||||||||||
Electrical/electronic materials | 3,003 | 1,730 | 1,029 | 1,762 | 1,957 | |||||||||||||||
Corporate | 2,564 | 6,493 | 4,448 | 8,025 | 2,361 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total capital expenditures | $ | 107,681 | $ | 124,063 | $ | 101,987 | $ | 103,469 | $ | 85,379 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net sales: | ||||||||||||||||||||
United States | $ | 12,565,329 | $ | 11,594,713 | $ | 11,299,291 | $ | 10,791,303 | $ | 9,793,820 | ||||||||||
Canada | 1,583,075 | 1,560,799 | 1,616,921 | 1,571,733 | 1,327,552 | |||||||||||||||
Australasia | 1,133,620 | 839,353 | — | — | — | |||||||||||||||
Mexico | 127,806 | 131,787 | 127,754 | 118,867 | 100,325 | |||||||||||||||
Other | (68,183 | ) | (48,809 | ) | (30,098 | ) | (23,026 | ) | (14,108 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net sales | $ | 15,341,647 | $ | 14,077,843 | $ | 13,013,868 | $ | 12,458,877 | $ | 11,207,589 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net long-lived assets: | ||||||||||||||||||||
United States | $ | 495,452 | $ | 503,882 | $ | 466,473 | $ | 411,193 | $ | 398,318 | ||||||||||
Canada | 98,939 | 99,135 | 93,496 | 84,210 | 80,978 | |||||||||||||||
Australasia | 65,707 | 60,614 | — | — | — | |||||||||||||||
Mexico | 10,004 | 6,430 | 6,396 | 4,801 | 4,834 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net long-lived assets | $ | 670,102 | $ | 670,061 | $ | 566,365 | $ | 500,204 | $ | 484,130 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
F-32
2016
| 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| (In Thousands) | |||||||||||||||||||
| Net sales: | |||||||||||||||||||
| Automotive | $ | 8,111,511 | $ | 8,015,098 | $ | 8,096,877 | $ | 7,489,186 | $ | 6,320,882 | |||||||||
| Industrial | 4,634,212 | 4,646,689 | 4,771,080 | 4,429,976 | 4,453,574 | ||||||||||||||
| Office products | 1,969,405 | 1,937,629 | 1,802,754 | 1,638,618 | 1,686,690 | ||||||||||||||
| Electrical/electronic materials | 715,650 | 750,770 | 739,119 | 568,872 | 582,820 | ||||||||||||||
| Other | (91,065 | ) | (70,142 | ) | (68,183 | ) | (48,809 | ) | (30,098 | ) | |||||||||
| Total net sales | $ | 15,339,713 | $ | 15,280,044 | $ | 15,341,647 | $ | 14,077,843 | $ | 13,013,868 | |||||||||
| Operating profit: | |||||||||||||||||||
| Automotive | $ | 715,154 | $ | 729,152 | $ | 700,386 | $ | 641,492 | $ | 540,678 | |||||||||
| Industrial | 336,608 | 339,180 | 370,043 | 320,720 | 352,119 | ||||||||||||||
| Office products | 117,035 | 140,866 | 133,727 | 122,492 | 134,441 | ||||||||||||||
| Electrical/electronic materials | 60,539 | 70,151 | 64,884 | 47,584 | 50,910 | ||||||||||||||
| Total operating profit | 1,229,336 | 1,279,349 | 1,269,040 | 1,132,288 | 1,078,148 | ||||||||||||||
| Interest expense, net | (19,525 | ) | (20,354 | ) | (24,192 | ) | (24,330 | ) | (19,619 | ) | |||||||||
| Corporate expense | (94,601 | ) | (100,436 | ) | (90,242 | ) | (34,667 | ) | (26,606 | ) | |||||||||
| Intangible asset amortization | (40,870 | ) | (34,878 | ) | (36,867 | ) | (28,987 | ) | (12,991 | ) | |||||||||
| Income before income taxes | $ | 1,074,340 | $ | 1,123,681 | $ | 1,117,739 | $ | 1,044,304 | $ | 1,018,932 | |||||||||
| Assets: | |||||||||||||||||||
| Automotive | $ | 4,601,150 | $ | 4,293,290 | $ | 4,275,298 | $ | 4,009,244 | $ | 3,411,252 | |||||||||
| Industrial | 1,292,063 | 1,143,952 | 1,224,735 | 1,162,697 | 1,130,877 | ||||||||||||||
| Office products | 907,119 | 831,546 | 835,592 | 708,944 | 731,564 | ||||||||||||||
| Electrical/electronic materials | 203,334 | 191,866 | 196,400 | 156,780 | 137,237 | ||||||||||||||
| Corporate | 281,071 | 322,323 | 327,623 | 353,276 | 898,292 | ||||||||||||||
| Goodwill and other intangible assets | 1,574,663 | 1,361,794 | 1,386,590 | 1,289,356 | 497,839 | ||||||||||||||
| Total assets | $ | 8,859,400 | $ | 8,144,771 | $ | 8,246,238 | $ | 7,680,297 | $ | 6,807,061 | |||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| (In Thousands) | |||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||
| Automotive | $ | 65,372 | $ | 70,112 | $ | 77,645 | $ | 76,238 | $ | 60,630 | |||||||||
| Industrial | 10,371 | 9,960 | 9,906 | 8,751 | 8,307 | ||||||||||||||
| Office products | 11,398 | 10,922 | 10,728 | 10,166 | 10,837 | ||||||||||||||
| Electrical/electronic materials | 2,967 | 2,933 | 2,658 | 1,904 | 1,733 | ||||||||||||||
| Corporate | 16,509 | 12,870 | 10,509 | 7,911 | 3,885 | ||||||||||||||
| Intangible asset amortization | 40,870 | 34,878 | 36,867 | 28,987 | 12,991 | ||||||||||||||
| Total depreciation and amortization | $ | 147,487 | $ | 141,675 | $ | 148,313 | $ | 133,957 | $ | 98,383 | |||||||||
| Capital expenditures: | |||||||||||||||||||
| Automotive | $ | 73,339 | $ | 77,504 | $ | 78,537 | $ | 97,735 | $ | 67,482 | |||||||||
| Industrial | 27,383 | 13,998 | 12,442 | 8,808 | 13,015 | ||||||||||||||
| Office products | 12,072 | 12,323 | 11,135 | 9,297 | 16,013 | ||||||||||||||
| Electrical/electronic materials | 5,710 | 2,824 | 3,003 | 1,730 | 1,029 | ||||||||||||||
| Corporate | 42,139 | 2,895 | 2,564 | 6,493 | 4,448 | ||||||||||||||
| Total capital expenditures | $ | 160,643 | $ | 109,544 | $ | 107,681 | $ | 124,063 | $ | 101,987 | |||||||||
| Net sales: | |||||||||||||||||||
| United States | $ | 12,822,320 | $ | 12,843,078 | $ | 12,565,329 | $ | 11,594,713 | $ | 11,299,291 | |||||||||
| Canada | 1,390,979 | 1,395,695 | 1,583,075 | 1,560,799 | 1,616,921 | ||||||||||||||
| Australasia | 1,104,511 | 992,064 | 1,133,620 | 839,353 | — | ||||||||||||||
| Mexico | 112,968 | 119,349 | 127,806 | 131,787 | 127,754 | ||||||||||||||
| Other | (91,065 | ) | (70,142 | ) | (68,183 | ) | (48,809 | ) | (30,098 | ) | |||||||||
| Total net sales | $ | 15,339,713 | $ | 15,280,044 | $ | 15,341,647 | $ | 14,077,843 | $ | 13,013,868 | |||||||||
| Net property, plant, and equipment: | |||||||||||||||||||
| United States | $ | 561,164 | $ | 495,073 | $ | 495,452 | $ | 503,882 | $ | 466,473 | |||||||||
| Canada | 81,260 | 79,023 | 98,939 | 99,135 | 93,496 | ||||||||||||||
| Australasia | 79,413 | 65,289 | 65,707 | 60,614 | — | ||||||||||||||
| Mexico | 6,287 | 8,832 | 10,004 | 6,430 | 6,396 | ||||||||||||||
| Total net property, plant, and equipment | $ | 728,124 | $ | 648,217 | $ | 670,102 | $ | 670,061 | $ | 566,365 | |||||||||
| Balance at Beginning of Period | Charged to Costs and Expenses | Deductions(1) | Balance at End of Period | |||||||||||||
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 | |||||||
Year ended December 31, 2014: | ||||||||||||||||
Reserves and allowances deducted from asset accounts: | ||||||||||||||||
Allowance for doubtful accounts | $ | 14,423,000 | $ | 7,192,000 | $ | (9,779,000 | ) | $ | 11,836,000 | |||||||
Balance at Beginning of Period | Charged to Costs and Expenses | Deductions(1) | Balance at End of Period | ||||||||||||
| Year ended December 31, 2014: | |||||||||||||||
| Reserves and allowances deducted from asset accounts: | |||||||||||||||
| Allowance for doubtful accounts | $ | 14,423,000 | $ | 7,192,000 | $ | (9,779,000 | ) | $ | 11,836,000 | ||||||
| Year ended December 31, 2015: | |||||||||||||||
| Reserves and allowances deducted from asset accounts: | |||||||||||||||
| Allowance for doubtful accounts | $ | 11,836,000 | $ | 12,373,000 | $ | (13,516,000 | ) | $ | 10,693,000 | ||||||
| Year ended December 31, 2016: | |||||||||||||||
| Reserves and allowances deducted from asset accounts: | |||||||||||||||
| Allowance for doubtful accounts | $ | 10,693,000 | $ | 11,515,000 | $ | (6,651,000 | ) | $ | 15,557,000 | ||||||
| (1) | Doubtful accounts written off, net of recoveries. |
