| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| Georgia | 58-0254510 | |
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| 2999 | 30339 | |
| (Address of principal executive offices) | (Zip Code) | |
770-953-1700
Title of Each Class | Name of Each Exchange on Which Registered | |
| Common Stock, $1 par value per share | New York Stock Exchange | |
Large accelerated filer þ | Accelerated filer | Non-accelerated filer | Smaller reporting company | |||
(Do not check if a smaller reporting company) | ||||||
Class | Outstanding at February | |
| Common Stock, $1 par value per share | ||
. BUSINESS. subsidiary of the Company; and an automotive parts distribution center and automotive parts stores in Mexico, owned and operated by Autopartes NAPA Mexico centers and six branches. These include the expanded footprints for these businesses resulting from the Auto-Camping and Olympus acquisitions discussed earlier. As discussed earlier, GPC Asia Pacific expanded its footprint with the 2016 acquisitions of Covs Parts, AMX and ASL. comprises an important feature of the inventory management services that the Company makes available to its NAPA AUTO PARTS store customers. Over the last 25 years, losses to the Company from obsolescence have been insignificant and the Company attributes this to the successful operation of its classification system, which involves product return privileges with most of its suppliers. $90 million. revenues. at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition, results of operations or the trading price of our securities. the competitive environment in our end markets may force us to reduce prices below our desired pricing level or to increase promotional spending; our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner; our ability to effectively manage our costs; our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations; our ability to identify and successfully implement appropriate technological, the economy in general. the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for maintenance and repair; the number of vehicles in the automotive fleet, a function of new vehicle sales and vehicle scrappage rates, as a steady or growing total vehicle population supports the continued demand for maintenance and repair; the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles; the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles; gas prices, as increases in gas prices may deter consumers from using their vehicles; changes in travel patterns, which may cause consumers to rely more on other transportation; restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending. the level of industrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts; changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas, which subsequently reduces demand for our products; the economy in general, which in declining conditions may cause reduced demand for industrial output. the increasing digitization of the workplace, as this negatively impacts the need for certain office products; the level of unemployment, especially as it relates to white collar and service jobs, as high unemployment reduces the need for office products; the level of office vacancy rates, as high vacancy rates reduces the need for office products; and the economy in general, which in declining conditions may cause reduced demand for office products consumption. changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; and competitors reduce their prices, we may be forced to reduce our prices, which could result in a material decline in our revenues and earnings. Increased competition among distributors of automotive and industrial parts, office products and electronic materials, including loss, disclosure or misappropriation of or access to our customers’ information. As threats related to cyber security breaches develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure. Mexico, Auto Todo operates 11 distribution centers and facilities and the remainder are Company owned. buildings and the remainder are Company owned. 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, 2015 through October 31, 2015 November 1, 2015 through November 30, 2015 December 1, 2015 through December 31, 2015 Totals Year Ended December 31, Net sales Cost of goods sold Operating and non-operating expenses, net Income before taxes Income taxes Net income Weighted average common shares outstanding during year — assuming dilution Per common share: Diluted net income Dividends declared December 31 closing stock price Total debt, less current maturities Total equity Total assets new 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. the prior year periods. 2014. 2014. growth, while also driving cost savings. 2017. 2016 decreased from 37.2% in 2015. The decrease in rate primarily reflects the Company's lower mix of U.S. earnings in 2016, which is taxed at a higher rate relative to our foreign operations. Additionally, the more favorable retirement asset valuation adjustment in 2016 relative to 2015 resulted in the decrease in rate. 2015. 2015, due primarily to the 19 acquisitions made in 2016. Net Cash Provided by (Used in): Operating Activities Investing Activities Financing Activities respectively. 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. 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. 2015 Net sales Gross profit Net income Earnings per share: Basic Diluted 2014 Net sales Gross profit Net income Earnings per share: Basic Diluted 2015: 2016. 2015. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Timothy P. Breen, age Plan Category Equity Compensation Plans Approved by Shareholders: Equity Compensation Plans Not Approved by Shareholders: Total 2015 2014 2014 2014 2016 Director Director Director Director Director Director 2016. CAROL B. YANCEY 27, 2017 27, 2017 27, 2017 (In Thousands, Except Share Data and per Share Amounts) 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 (2015 — $282,804; 2014 — $270,946) Machinery and equipment, less accumulated depreciation (2015 — $620,113; Net property, plant, and equipment Liabilities and equity Current liabilities: Trade accounts payable Current portion of debt Accrued compensation Other current liabilities 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 150,081,474 shares in 2015 and 153,113,042 shares in 2014 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 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 2015 — $5,335, 2014 — $112,993, and Other comprehensive (loss) income, net of tax Comprehensive income Common Stock Balance at January 1, 2013 Net income Other comprehensive income, net of tax Cash dividends declared, $2.15 per share Share-based awards 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 Share-based awards exercised, including tax benefit of $17,766 Share-based compensation Purchase of stock Noncontrolling interest activities Balance at December 31, 2014 Net income Other comprehensive loss, net of tax Cash dividends declared, $2.46 per share Share-based awards exercised, including tax benefit of $7,024 Share-based compensation Purchase of stock Noncontrolling interest activities Balance at December 31, 2015 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 Share-based awards exercised, net of taxes paid 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 increase (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 expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2016, 2015, Subsidiaries 2014. 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 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, 2015 2015: sheet. the preliminary assessments are subject to change. Goodwill and Other Intangible Assets Balance as of January 1, 2014 Additions Amortization Foreign currency translation Balance as of December 31, 2014 Additions Amortization Foreign currency translation Balance as of December 31, 2015 Customer relationships Trademarks Non-competition agreements 2016 2017 2018 2019 2020 Unsecured revolving line of credit, $1,200,000,000, 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 2016 2017 2018 2019 2020 Thereafter 2016 2017 2018 2019 2020 Thereafter Total minimum lease payments Subsidiaries 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 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. Subsidiaries Nonvested Share Awards (RSUs) Nonvested at January 1, 2015 Granted Vested Forfeited Nonvested at December 31, 2015 December 31, Deferred tax assets related to: Expenses not yet deducted for tax purposes Pension liability not yet deducted for tax purposes Deferred tax liabilities related to: Employee and retiree benefits Inventory Other intangible assets Property, plant, and equipment Other Net deferred tax assets Current portion of deferred tax assets Noncurrent net deferred tax assets United States Foreign Income before income taxes 2016 Current: Federal State Foreign Deferred Statutory rate applied to income Plus state income taxes, net of Federal tax benefit Earnings in jurisdictions taxed at rates different from the statutory US tax rate Foreign tax credit Capital loss expiration Reversal of capital loss valuation allowance Other Balance at beginning of year Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions for tax positions for prior years Reduction for lapse in statute of limitations Settlements Balance at end of year Changes in benefit obligation Benefit obligation at beginning of year Service cost Interest cost Plan participants’ contributions Actuarial (gain) loss Foreign currency exchange rate changes Gross benefits paid Benefit obligation at end of year Weighted-average discount rate Rate of increase in future compensation levels Subsidiaries Changes in plan assets Fair value of plan assets at beginning of year Actual return on plan assets Foreign currency exchange rate changes Employer contributions Plan participants’ contributions Benefits paid Fair value of plan assets at end of year 2015, the aggregate benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets were as follows: Asset Category Equity securities Debt securities undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company’s investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark 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. Equity Securities Common stocks — mutual funds — equity Genuine Parts Company common stock Other stocks Debt Securities Short-term investments Cash and equivalents Government bonds Corporate bonds Asset-backed and mortgage–backed securities Convertible securities Other-international Municipal bonds Mutual funds — fixed income Other Cash surrender value of life insurance policies Total Equity Securities Common stocks — mutual funds — equity Genuine Parts Company common stock Other stocks Debt Securities Short-term investments Cash and equivalents Government bonds Corporate bonds Asset-backed and mortgage–backed securities Convertible securities Other-international Municipal bonds Mutual funds — fixed income Other Options and futures Cash surrender value of life insurance policies Total 2016 Other long-term asset Other current liability Pension and other post-retirement liabilities Net actuarial loss Prior service credit Employer contribution 2016 (expected) Expected benefit payments: 2016 2017 2018 2019 2020 2021 through 2025 Service cost Interest cost Expected return on plan assets Amortization of prior service credit Amortization of actuarial loss Net periodic benefit (income) cost Current year actuarial loss (gain) Recognition of actuarial loss Recognition of prior service credit Total recognized in other comprehensive income (loss) Total recognized in net periodic benefit (income) cost and other comprehensive income (loss) Actuarial loss Prior service credit Total Weighted average discount rate Rate of increase in future compensation levels Expected long-term rate of return on plan assets 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, Cash Fair value of 30% investment held prior to business combination Total Trade accounts receivable Merchandise inventory Prepaid expenses and other current assets Property and equipment Intangible assets Other assets Total identifiable assets acquired Current liabilities Long-term debt Deferred tax liabilities and other Total liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired Net sales: Automotive Industrial Office products Electrical/electronic materials Other Total net sales Operating profit: Automotive Industrial Office products Electrical/electronic materials Total operating profit Interest expense, net Corporate expense Intangible asset amortization Income before income taxes Assets: Automotive Industrial Office products Electrical/electronic materials Corporate Goodwill and other intangible assets Total assets Depreciation and amortization: Automotive Industrial Office products Electrical/electronic materials Corporate Intangible asset amortization Total depreciation and amortization Capital expenditures: Automotive Industrial Office products Electrical/electronic materials Corporate Total capital expenditures Net sales: United States Canada Australasia Mexico Other Total net sales Net property, plant, and equipment: United States Canada Australasia Mexico Total net property, plant, and equipment 2016 Year ended December 31, 2013: Reserves and allowances deducted from asset accounts: Allowance for doubtful accounts Year ended December 31, 2014: Reserves and allowances deducted from asset accounts: Allowance for doubtful accounts Year ended December 31, 2015: Reserves and allowances deducted from asset accounts: Allowance for doubtful accountsITEM 1.BUSINESS.2015,2016, business was conducted from approximately 2,6502,670 locations throughout the United States, Canada, Mexico, Australia and New Zealand. As of December 31, 2015,2016, the Company employed approximately 39,60040,000 persons.20162017 annual meeting of shareholders. We expect to file that proxy statement with the SEC on or about February 26, 2016,27, 2017, and we will make it available online at the same time at http://www.proxydocs.com/gpc. Please refer to the proxy statement for the information incorporated by reference into Part III of this Form 10-K when it is available.474,000500,000 available part numbers, the Company offers complete inventory, cataloging, marketing, training and other programs in the automotive aftermarket. The Company is the sole member of the National Automotive Parts Association (“NAPA”), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts.2015,2016, the Company’s Automotive Parts Group included NAPA automotive parts distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”) owned and operated in the United States by the Company; NAPA and Traction automotive parts distribution centers and auto parts stores in the United States and Canada owned and operated by the Company and NAPA Canada/UAP Inc. (“NAPA Canada/UAP”), a wholly-owned subsidiary of the Company; auto parts stores and distribution centers in the United States operated by corporations in which the Company owned either a noncontrolling or controlling interest; auto parts stores in Canada operated by corporations in which UAP owns a 50% interest; Repco and other automotive parts distribution centers, branches and auto parts stores in Australia and New Zealand owned and operated by GPC Asia Pacific, a wholly-owned subsidiary of the Company; import automotive parts distribution centers in the United States owned by the Company and operated by its Altrom America division; import automotive parts distribution centers in Canada owned and operated by Altrom Canada Corporation (“Altrom Canada”), a wholly-owned subsidiary of the Company; distribution centers in the United States owned by Balkamp, Inc. (“Balkamp”), a wholly-owned subsidiary of the Company; distribution facilities in the United States owned by the Company and operated by its Rayloc division; automotive parts distribution centers and automotive parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. (“Auto Todo”), a wholly-owned(“("NAPA Mexico”Mexico"), a wholly-owned subsidiary of the Company.Company’sCompany's network of U.S. automotive parts stores was expanded in 20152016 via the acquisition of selectvarious store groups located in various regions of the United States. Further, the Company's import automotive parts businesses were supplemented by the acquisitions of Olympus and Auto-Camping in February and July, 2016, respectively. As original equipment import parts distributors, Olympus operates in the U.S. from six locations, while Auto-Camping operates from 20 locations across Canada. Additionally, the Company added six new locations to its heavy vehicle parts operations with the acquisition of Global Parts in May 2016. Finally, the GPC Asia Pacific automotive business acquired Auto Electrics Australia (“AEA”)three businesses in 2016 to further expand its automotive distribution network. In March, this business acquired Covs Parts, a leading distributor of original equipment and Global Automotive (“Global”)aftermarket automotive parts, mining and industrial consumable and truck products, with 21 locations across Western Australia. GPC Asia Pac also acquired AMX and ASL in AprilJune and August, 2015,September 2016, respectively. AEAAMX is a specialist supplierfour store Melbourne basedrotating electricalaftermarket motorcycle parts and accessories, which complements the existing McLeod business. ASL is a 15 branch New Zealand based distributor of automotive aftermarket products, while Global has a regional network of six stores.primarily to the commercial industry. Collectively, these new store groups and automotive businesses are expected to generate annual revenues of approximately $35$235 million USD.ON-DEMAND”,ON-DEMAND,” is a premier electronic repair information source in the automotive aftermarket.49%48% of 20152016 automotive parts inventories were purchased from 10 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.2015,2016, the Company operated 5957 domestic NAPA automotive parts distribution centers located in 4041 states and approximately 1,100 domestic company-owned NAPA AUTO PARTS stores located in 45 states. The Company also operated domestically onethree TW Distribution heavy duty parts distribution centercenters and 1420 company-owned Traction Heavy Duty parts stores located in four states. The Traction operations are discussed further below in Related Operations. At December 31, 2015,2016, the Company owned either a noncontrolling or controlling interest in sixseven corporations, which operated approximately 114152 auto parts stores in nine12 states.4,9004,800 independently owned NAPA AUTO PARTS stores located throughout the United States. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, sales to these independent automotive parts stores account for approximately 63%60% of the Company’s total U.S. Automotive sales and 23% of the Company’s total sales, with no automotive parts store or group of automotive parts stores with individual or common ownership accounting for more than 0.31%0.38% of the total sales of the Company.3,9003,700 people and operates a network of 9 NAPA automotive parts distribution centers, three heavy duty parts distribution centers and one fabrication/remanufacturing facility supplying approximately 601595 NAPA stores and 105107 Traction wholesalers. The NAPA stores and Traction wholesalers in Canada include approximately 181176 company owned stores, 1211 joint ventures and 3025 progressive owners in which NAPA Canada/UAP owns a 50% interest and approximately 483490 independently owned stores. NAPA and Traction operations supply bannered installers and independent installers in all provinces of Canada, as well as networks of service stations and repair shops operating under the banners of national accounts. UAP is a licensee of the NAPA® name in Canada.threefour import automotive parts distribution centers and 1029 branches. In the United States, Altrom America operates two import automotive parts distribution centers.eight11 distribution centers, 417474 Repco and other banner stores and 80 branches associated with the Ashdown Ingram, Motospecs, McLeod and RDA Brakes operations.fourtwo auto parts stores and fourthree tire centers. NAPA Mexico owns and operates one distribution center and eleven10 auto parts stores. Auto Todo and NAPA Mexico are licensees of the NAPA® name in Mexico.474,000500,000 different parts and related supply items. Each item is cataloged and numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers. Most orders are filled and shipped the same day as they are received. The majority of sales are paid from statements with varied terms and conditions. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA® name, a mark licensed to the Company by NAPA, which is40,00042,000 products, which constitute the “Balkamp” line of products that are distributed through the NAPA system. These products are categorized into over 238 different product categories purchased from approximately 438 domestic suppliers and over 100 foreign manufacturers. Balkamp has two distribution centers located in Plainfield, Indiana, and West Jordan, Utah. In addition, Balkamp operates two redistribution centers that provide the NAPA system with over 1,125 SKUs of oils and chemicals. BALKAMP®, a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization.one warehouse location in Atlanta, Georgia, which serves 21three heavy vehicle automotive parts distribution centers and 27 Traction Heavy Duty parts stores in the United States,States. Twenty of which 14these stores are company-owned and seven are independently owned. This group, which expanded its U.S. footprint with the acquisition of Global Parts in 2016, as discussed earlier, distributes heavy vehicle parts through the NAPA system and direct to small and large fleet owners and operators.2015,2016, sales from the Automotive Parts Group were approximately 52%53% of the Company’s net sales, as compared to 52% in 2015 and 53% in 2014 and 2013.2014. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements beginning on page F-1.and whose sole member in 20152016 owned and operated 5957 distribution centers located throughout the United States. NAPA develops marketing concepts and programs that may be used by its members which, at December 31, 2015,2016, includes only the Company. It is not involved in the chain of distribution.2015,2016, the Industrial Parts Group served more than 150,000300,000 customers in all types of industries located throughout North America, including the food and beverage, forest products, primary metals, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries; as well as strategically targeted specialty industries such as power generation, wastewater treatment facilities, alternative energy, government, transportation, ports, and others. Motion services all manufacturing and processing industries with access to a database of 6.56.9 million parts. Additionally, Motion provides U.S. government agencies access to approximately 400,000 products and replacement parts through a Government Services Administration (GSA) schedule.FebruaryMarch 1, 2015,2016, Motion expandedenhanced its product and service offering in Alaska with the acquisition of Oil & Gas Supply, locatedtwo complementary industrial distribution companies, Epperson and Company and Missouri Power Transmission. Epperson and Company, with three locations and based in Anchorage, Alaska. We expect this businessTampa, Florida, specializes in material handling products and services. Missouri Power Transmission, with 15 locations and based in St. Louis, Missouri, distributes power transmission equipment and industrial supplies. Combined, these two companies are expected to generate $2-3approximately $50 million in annual revenues.Effective February 2, 2015, Motion acquired Miller Bearings, a regional industrial distributor of bearings, power transmission products, industrial and safety supplies, hydraulic and pneumatic components. Headquartered in Orlando, Florida, Miller operates 17 branch locations throughout the state and one distribution center. addition, Miller has an export office providing industrial MRO products to Puerto Rico, the Dominican Republic and other Caribbean customers. Miller generates approximately $40 million in annual revenues and is operated as Miller Industrial Solutions, a division of Motion Industries.In 2015,2016, the Industrial Parts Group also acquired Lake Erie AbrasiveColmar Belting Company and Tool (“LEAT”)OBBCO Safety and Moss Rubber. LEAT wasSupply. Colmar Belting, acquired on SeptemberApril 1, 2015,2016, and located in South Boston, Massachusetts, is a distributor of abrasive tooling for the manufacturing industry. Moss Rubber wasbelting, bearing and power transmission products. OBBCO Safety and Supply, acquired DecemberAugust 1, 2015, and2016, is a Chesapeake, Virginia, based industrial safety supply distributor. Combined, we expect Colmar and OBBCO to generate approximately $30 million in annual revenues.rubber products including hose, belting, fittingsautomation and control, specializing in pneumatics, motion control, industrial networking, machine safety, robotics and related products. LEATindustrial parts. With five sales offices and Moss Rubber are expectedthree stocking branches, we expect Braas to generate annual revenues of approximately $30 million and $8 million, respectively.company’sCompany’s Inventory Management Solutions offering. This service provides inventory management, asset repair and tracking, vendor managed inventory commonly referred to as VMI, as well as RFID asset management of the customer’s inventory. Motion’s Energy Services Team routinely performs in-plant surveys and assessments, helping customers reduce their energy consumption and finding opportunities for improved sustainability, ultimately helping customers operate more profitably. Motion also provides a wide range of services and repairs such as: gearbox and fluid power assembly repair, process pump assembly and repair, hydraulic drive shaft repair, electrical panel assembly and repair, hose and gasket manufacture and assembly, as well as many other value-added services. A highly developed supply chain with vendor partnerships and connectivity are enhanced by Motion’s leading e-business capabilities, such as MiSupplierConnect, which provides integration between the Company’s information technology network and suppliers’ systems, creating numerous benefits for both the supplier and customer. These services and supply chain efficiencies assist Motion in meeting the cost savings that many of its customers require and expect.533483 branches, 1513 distribution centers and 4643 service centers as of December 31, 2015.2016. The distribution centers stock and distribute more than 260,000275,000 different items purchased from more than 1,0251,050 different suppliers. The service centers provide hydraulic, hose and mechanical repairs for customers. Approximately 33%45% of 2015 total industrial product purchases in 2016 were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s branches located in 49 states, Puerto Rico, nine provinces in Canada, and Mexico. Each branch hasProducts. The Industrial Parts Group distributes a wide variety of parts and products to its customers, which are primarily industrial concerns. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers, electric motors, and industrial supplies. In recent years, Motion expanded its offering to include systems and automation products in response to the increasing sophistication of motion control and process automation for full systems integration of plant equipment. Manufacturing trends and government policies have led to opportunities in the “green” and energy-efficient product markets, focusing on product offerings such as energy-efficient motors and drives, recyclable and environmentally friendly parts and supplies. The nature of this group’s business demands the maintenance of adequate inventories and the ability to promptly meet demanding delivery requirements. Virtually all of the products distributed are installed by the customer or used in plant and facility maintenance activities. Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open account. Motion has ongoing purchase agreements with existing customers that represent approximately 50% of the annual sales volume.hashave protected the Company from inventory obsolescence.yearyears ended December 31, 2016 and 2015, sales from the Company’s Industrial Parts Group approximated 30% of the Company’s net sales, as compared to 31% in 2014 and 2013.2014. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements beginning on page F-1.“SPR”"SPR"), a wholly-owned subsidiary of the Company, is headquartered in Atlanta, Georgia. S. P. Richards is engaged in the wholesale distribution of a broad line of office and other business related products through a diverse customer base of resellers. These products are used in homes, businesses, schools, offices, and other institutions. Office products fall into the general categories of office furniture, technology products, general office, and school supplies, cleaning, janitorial and breakroom supplies, safety and security items, healthcare products and disposable food service products.January 2, 2015,June 1, 2016, S. P. Richards acquired JAL Associates Inc. (“JAL”expanded its products and services in the Facilities, Breakroom and Safety ("FBS"). JALcategory with the acquisition of The Safety Zone. The Safety Zone, headquartered in Guilford, Connecticut, is a regional wholesalerdirect importer and distributor of office furniture with estimatedsupplies and devices for safety, janitorial, medical, food service and food processing applications, and is complementary to previous acquisitions in this category, including Impact Products, Malt Industries and Garland C. Norris. Its broad customer base of more than 2,300 distributors is served from eight distribution centers in the U.S. and one in Canada. We expect this business to generate annual revenues of $12approximately $180 million. This business was consolidated into SPR’s operations in Baltimore, Maryland; Cranbury, New Jersey; and Richmond, Virginia during 2015.MayJuly 1, 2015,2016, S. P. Richards acquiredfurther expanded its capabilities in the commercial productsFBS category with the acquisition of certain assets within the Janitorial and Sanitation ("Jan/San") business of Dinesol Plastics, locatedRochester Midland Corporation. This business supplies a variety of Jan/San accessories to more than 400 distributors, primarily in Niles, Ohio. This acquisition further expands SPR’s food service and janitorial product offeringNorth America, and is expected to generate annual revenues of approximately $3 million.Effective October 1, 2015, S. P. Richards acquired Malt Industries (“Malt”), a leading wholesale distributor of protective apparel located in Purvis, Mississippi. Malt is expected to generate annual revenues of approximately $20 million.62,00069,000 items to over 6,3009,300 resellers and distributors throughout the United States and Canada from a network of 4556 distribution centers. This group’s network of strategically located distribution centers provides overnight delivery of the Company’s comprehensive product offering. Approximately 41%44% of the Company’s 2015 total office products purchases in 2016 were made from 10 major suppliers.value-addedvalue-add technology resellers, businessworld classworld-class market analytics programs are made available to qualified resellers.700850 of the industry’s leading manufacturers worldwide, S. P. Richards also markets products under its nine proprietary brands. These brands include: Sparco™Sparco™, an economical line of office supply basics; Compucessory®, a line of computer accessories; Lorell®, a line of office furniture; NatureSaver®, an offering of recycled products; Elite Image®, a line of new and remanufactured toner cartridges, premium papers and labels; Integra™Integra™, a line of writing instruments; Genuine Joe®, a line of cleaning and breakroom products; Business Source®, a line of basic office supplies available only to independent resellers; and Lighthouse, a brand of janitorial and cleaning products offered through the GCN business. The Company’s Impact and MaltThe Safety Zone businesses also offer an additional series of proprietary brands including ProGuard® and ,ProMax® and The Safety Zone that are product based and solution-specific oriented. Through the Company’s FurnitureAdvantage™FurnitureAdvantage™ program, S. P. Richards provides resellers with an additional 16,000 furniture items made available to consumers in 7 to 10 business days.yearyears ended December 31, 2016 and 2015, sales from the Company’s Office Products Group approximated 13% of the Company’s net sales, as compared to 11% in 2014 and 12% in 2013.2014. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements beginning on page F-1.4938 branch locations and seven fabrication facilities in the United States, Puerto Rico, the Dominican Republic, Mexico and Canada, EIS distributes over 100,000 items including wire, cable and connectivity solutions, insulating and conductive materials, assembly tools and test equipment. EIS also hasEIS' seven light manufacturingfabrication facilities that provide custom fabricated parts and specialty coated materials.April 1, 2015,October 31, 2016, EIS acquired Connect Air International, Inc. (“Connect Air”Communications Products and Services ("CPS") headquartered in Seattle, Washington. Connect Air is, a leading North American specialty distributor of low-voltage wireplant product solutions for both aerial and underground broadband cable usedand wireless network infrastructure. This business further strengthens EIS' cable operations in building applications, primarily HVAC (heating, ventilations and air-conditioning), security and fire alarm systems. Connect Air has six sales offices and warehouses across the United Stateswestern U.S. and is expected to generate approximately $12 million in annual revenues of approximately $30 million.OEM’s,OEMs, motor repair shops and a variety of industrial assembly markets, as well as specialty wire and cable users in market segments such as Telecom and Broadband, Marine, Security and Industrial, as well as a broad variety of industrial assembly markets.Industrial. EIS actively utilizes its e-commerce Internet site to present its products to customers while allowing these on-line visitors to conveniently purchase from a large product assortment.4002,000 suppliers. These products include custom fabricated flexible materials that are used as components within a customer’s manufactured finished product in a variety of market segments. Among the products distributed and fabricated are such items as magnet wire, conductive materials, electrical wire and cable, insulating and shielding materials, assembly tools, test equipment, adhesives and chemicals, pressure sensitive tapes, solder, anti-static products, thermal management products and2015 total Electrical/Electronic Materials Group purchases in 2016 were made from 10 major suppliers.AIMS™AIMS (Advanced Inventory Management Solutions System)Solutions), a totally integrated, highly automated solutionsuite of solutions for inventory management. EIS’ Integrated Supply offering also includes AIMS EASI,Dispense, an electronic vending dispenser used to eliminate costly tool cribs, or in-house stores, at customer warehouse facilities.yearsyear ended December 31, 2015 and 2014,2016, sales from the Company’s Electrical/Electronic Materials Group approximated 5%4% of the Company’s net sales, as compared to 4%5% in 2013.2015 and 2014. For additional segment information, see Note 10 of Notes to Consolidated Financial Statements beginning on page F-1.ITEM 1A.RISK FACTORS.improvements;digital andinternet-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.our automotive business, the number of vendors could decrease considerably, and the prices chargedaddition,actions.reasons. The damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.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.ITEM 1B.UNRESOLVED STAFF COMMENTS.ITEM 2.PROPERTIES.headquarterscorporate and Automotive Parts Group headquarters are located in two office buildings owned by the Company in Atlanta, Georgia.5957 NAPA Distribution Centers in the United States distributed among teneight geographic divisions. Approximately 90% of the distribution center properties are owned by the Company. At December 31, 2015,2016, the Company operated approximately 1,100 NAPA AUTO PARTS stores located in 45 states, and the Company owned either a noncontrolling or controlling interest in 114152 additional auto parts stores in nine12 states. Other than NAPA AUTO PARTS stores located within Company owned distribution centers, the majority of the automotive parts193187 automotive parts and Traction stores in Canada. Ineightfive automotive parts stores and tire centers, and NAPA Mexico operates one distribution center and eleven10 automotive parts stores. These operations in both Canada and Mexico are conducted in leased facilities. GPC Asia Pacific operates throughout Australia and New Zealand with eight11 distribution centers, 417474 Repco and other banner auto parts stores and 80 branches associated with the Ashdown Ingram, Motospecs, McLeod and RDA Brakes operations. These distribution center, store and branch operations are conducted in leased facilities.13four import parts distribution centers and 29 branches, and Altrom America operates two import parts distribution centers.centers and six branches. The Heavy Vehicle Parts Group operates onethree TW distribution center,centers, which serves 21serve 27 Traction stores of which 1420 are company owned and located in the U.S. These operations are conducted in leased facilities.1513 distribution centers, 4643 service centers and 533483 branches. Approximately 90% of these locations are operated in leased facilities.4050 facilities in the United States and fivesix facilities in Canada distributed among the Group’s fivefour geographic divisions. Approximately 75% of these facilities are operated in leased buildings.5039 locations in the United States, one location in Puerto Rico, one location in the Dominican Republic, three locations in Mexico and one location in Canada. All of this Group’s 5645 facilities are operated in leased buildings.forto conduct the conductbusiness of our current operations.ITEM 3.LEGAL PROCEEDINGS.2,5502,420 product liability lawsuits resulting from its national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributed by the Company. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material effect on the Company’s business, results of operations or financial condition.4.5.MINE SAFETY DISCLOSURES.Not applicable.PART II.ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.SECURITIES. Sales Price of Common Shares 2015 2014 High Low High Low $ 108.07 $ 91.74 $ 90.00 $ 76.50 94.74 89.17 89.05 83.43 91.02 78.76 90.20 82.15 92.32 79.77 109.00 84.99 Dividends
Declared per
Share 2015 2014 $ 0.6150 $ 0.5750 0.6150 0.5750 0.6150 0.5750 0.6150 0.5750 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 20102011 and ended December 31, 2015.2016. This graph assumes that $100 was invested on December 31, 20102011 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.
2010 2011 2012 2013 2014 2015 100.00 123.27 132.23 177.90 233.78 193.71 100.00 102.11 118.45 156.81 178.28 180.74 100.00 95.67 108.60 155.29 161.38 150.26 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 20102011 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 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. 2010 2011 2012 2013 2014 2015 50 % 49 % 49 % 53 % 53 % 52 % 31 % 33 % 34 % 31 % 31 % 30 % 15 % 14 % 13 % 12 % 11 % 13 % 4 % 4 % 4 % 4 % 5 % 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 % 2015,2016, there were 4,8164,689 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.2015: 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 14,932 $ 88.37 250 7,042,868 298,349 $ 88.33 290,028 6,752,840 519,400 $ 86.45 480,843 6,271,997 832,681 $ 87.16 771,121 6,271,997 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 6.34.3 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, 2015.2016.ITEM 6.SELECTED FINANCIAL DATA. 2015 2014 2013 2012 2011 (In thousands, except per share data) $ 15,280,044 $ 15,341,647 $ 14,077,843 $ 13,013,868 $ 12,458,877 10,724,192 10,747,886 9,857,923 9,235,777 8,852,837 3,432,171 3,476,022 3,175,616 2,759,159 2,715,234 1,123,681 1,117,739 1,044,304 1,018,932 890,806 418,009 406,453 359,345 370,891 325,690 $ 705,672 $ 711,286 $ 684,959 $ 648,041 $ 565,116 152,496 154,375 155,714 156,420 157,660 $ 4.63 $ 4.61 $ 4.40 $ 4.14 $ 3.58 2.46 2.30 2.15 1.98 1.80 85.89 106.57 83.19 63.58 61.20 250,000 500,000 500,000 250,000 500,000 3,159,242 3,312,364 3,358,768 3,008,179 2,753,591 $ 8,144,771 $ 8,246,238 $ 7,680,297 $ 6,807,061 $ 6,202,774 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 7.7.OPERATIONS.OPERATIONS.20152016 throughout the United States, Canada, Australia, New Zealand, Mexico and Puerto Rico from approximately 2,6502,670 locations.2015, down2016, an increase of 0.4% compared to sales in 2014.2015. Consolidated net income for the year ended December 31, 2016 was $687 million, down 3% from $706 million in 2015. The Company’s growth strategy, and in particular the initiatives 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.$706 million, down by 1% from $711 millionand 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. 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 support our underlying progressincome for thethat year.The relatively unchanged sales results for 2015 compare to a 9% sales increase in 2014 and an 8% sales increase in 2013. Net income in 2014 increased by 4% and was up 6% in 2013. In 2014, improved market conditions relative to the prior year drove sales and earnings growth in each of our four business segments. In 2013, we experienced difficult market conditions in the Industrial, Electrical/Electronic and Office industries, while the Automotive business performed reasonably well. Over the three year period of 20132014 through 2015,2016, our financial performance was positively impacted byreflects a variety of initiatives the Company implemented to grow sales and earnings across our businesses. Examples of such initiatives include strategic acquisitions, the introduction of20152016 consolidated balance sheet, the Company’s cash balance of $212$243 million compares to cash of $138$212 million at December 31, 2014.2015. The Company continues to maintain a strong cash position, supported by relatively steady net income and effective asset management in 2015.management. Accounts receivable decreasedincreased by approximately 3%6%, which compares to an approximate 4%3% sales decreaseincrease in the fourth quarter of the year, and inventory was downup by approximately 1%.7%, including the impact of acquisitions. Accounts payable increased $267$260 million or 10%9% from the prior year, due primarily to improved payment terms with certain suppliers. Total debt outstanding at December 31, 20152016 was $625$875 million, downan increase from total debt of $765$625 million at December 31, 2014.2014 and 2013. Year Ended December 31, 2015 2014 2013 (In thousands except per share data) $ 15,280,044 $ 15,341,647 $ 14,077,843 4,555,852 4,593,761 4,219,920 705,672 711,286 684,959 4.63 4.61 4.40 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 currency.currency translation. The impact of product inflationinflation/deflation varied by business in 2015 and, cumulatively, prices were down 0.2% in the Automotive segment, up approximately 0.9% in the Industrial segment, up approximately 0.6% in the Office segment and down approximately 1.7% in the Electrical/Electronic segment. The Company is well positioned with strategic plans in place to grow sales in 2016.Consolidated net sales for the year ended December 31, 2014 totaled $15.3 billion, a 9% increase from 2013 and driven by revenue growth in each of our four business segments. The increase in sales volume and acquisitions across our four businesses each contributed 5% to our total sales growth, while currency negatively impacted total sales by 1%. The impact of product inflation varied by business in 2014 and, cumulatively, prices were flat in the Automotive segment, up approximately 1.5% in the Industrial segment, up approximately 1.4% in the Office segment and up approximately 0.3% in the Electrical/Electronic segment. We believe that 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 solid and will serve to drive sustained demand for automotive aftermarket maintenance and supply items in 2016. Despite the expectation for continued headwinds associated with the strong U.S. dollar and related impact of currency, we expect these fundamentals and the internal growth initiatives in our Automotive business to drive sales growth for this group in 2016.Net sales for Automotive were $8.1 billion in 2014, an increase of 8% from 2013. The increase in sales for the year consists of a positive comparable store sales increase of approximately 6% and approximately 4% fromacquisitions. These increases were offset by a 2% 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, Automotive revenues were up 23% in the first quarter, up 5% in the second quarter and up 4% 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 expect the tough industrial economy to persist well into 2016, although we do have multiple initiatives in place to help us grow our market share and overcome these challenges.Net sales for Industrial were $4.8 billion in 2014, an increase of 8% from 2013. Sales volumes in Industrial were up approximately 4.5% 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 revenues 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 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 2016.Net sales for Office were $1.8 billion in 2014, an increase of 10% from 2013. The increase in sales reflects a 4% increase in sales volume, a 1.4% increase in higher transaction values associated with price inflation and a 5% contribution from acquisitions. These items were offset by the slight negative impact of currency associated with our Canadian operations. In 2014, Office experienced improving industry conditions, as evidenced by consistently stronger new jobs reports relative to 2013 as well as a strengthening U.S. GDP. These conditions combined with new business with a primary customer, effective July 1, 2014, served to drive the increased sales volume for the year. Sales were unchanged in the first quarter, up 4% in the second quarter, up 15% in the third quarter and up 22% in the fourth quarter of 2014. As this business is dependent on the manufacturing segment of the economy, we expectsupplier,suppliers, net of any vendor allowances and incentives. Cost of goods sold was $10.74 billion in 2016, $10.72 billion in 2015 and $10.75 billion in 2014 and $9.86 billion in 2013.2014. Cost of goods sold in 20152016 and 20142015 changed from the prior year periods in accordance with the related percentage change in sales for the same periods. For these periods, total 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 and, 70.0% of net sales in 2013 and, as a percent of net sales, increaseddecreased slightly in 2016 from 2015, while increasing slightly in 2015 from 20142014.also in 2014, from 2013.In 2015, 2014 and 2013, the Industrial and Office business segments experienced slight vendor price increases. In 2014, and 2013, the Electrical/Electronic business also 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.teams’teams' focus on properly managing the Company’s expenses. We also continue to assess the optimal cost structure in our businesses. Depreciation and amortization expense was $142 million in 2015, a decrease of approximately $6 million or 4% from 2014. The provision for doubtful accounts was $12 million in 2015, up from $7 million in 2014. We believe the Company is adequately reserved for bad debts at December 31, 2015.SG&A increased by $286 million or approximately 9% to $3.31 billion in 2014, representing 21.6% of net sales, which compares to 21.5% of net sales in 2013. The increase in SG&A expenses as a percentage of net sales from the prior year primarily reflects the $54 million one-time gain, net of other expense adjustments, recorded to SG&A in the second quarter of 2013 as a purchase accounting adjustment associated with the April 1, 2013 acquisition of GPC Asia Pacific. Our management teams remain focused on properly managing the Company’s expenses and continuing to assess the appropriate cost structure in our businesses. Depreciation and amortization expense was $148 million in 2014, an increase of $14 million or 11% from 2013. This increase relates to higher depreciation and the amortization associated with acquisitions in both 2014 and 2013. The provision for doubtful accounts was $7 million in 2014, down from $9 million in 2013.and 2013 was $19.7 million, $17.7 million $16.2 million and $12.6$16.2 million, respectively. Refer to Note 5 of the Consolidated Financial Statements for further information regarding share-based compensation.2014 and $272014. The $1 million decrease in 2013.interest expense in 2016 reflects the more favorable interest rate on certain debt, which was renewed in November 2016. This was partially offset by new long-term debt, which commenced in July 2016. The $3 million decrease in interest expense in 2015 reflects the impact of lower outstanding debt levels during the year relative to 2014. The $2 million decrease in interest expense in 2014 reflects the favorable interest rate on certain debt, which was renewed in November 2013.20152016 was $21$26 million, a $2$5 million increase from the prior year due to higher interest income earned in 20152016 relative to 2014.2015. These items were $21 million in 2015, an increase from $19 million in 2014, down from $222014. The $2 million in 2013. The decrease of $3 millionincrease from the prior year was due to lowerhigher interest income earned in 20142015 relative to 2013.2015, a slight increase2016, down 4% from 2014.2015. As a percentage of net sales, income before income taxes was 7.0% in 2016 compared to 7.4% in 2015 compared to 7.3% in 2014.2015. In 2014,2015, income before income taxes of $1.1 billion was up 7%slightly from 20132014 and as a percentage of net sales was 7.3%7.4% compared to 7.4%7.3% in 2013.increaseddecreased to 8.8% in 2016 from 9.1% in 2015 from 8.7%2015. This group's loss of expense leverage due to weak comparable sales in 2014. This group’s initiatives to improve its gross margin and effectively manage its costs positively impacted Automotive’sthe U.S. was the primary factor in Automotive's decline in operating profit during the year. Looking forward, planned initiatives to grow sales, further improve its operating margin in the years ahead.2014 was up slightly 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.2014. The challenging market conditions for this business are expected to persist well into 2016. However, Industrial has multiple initiatives in place to help us overcome these challenges.Industrial’sthe prior year.improveddecreased to 7.8%5.9% in 20142016 from 7.2%7.3% in 2013, as the combination of greater expense leverage2015, primarily due to gross margin pressures associated with lower supplier incentives and the increasedeleveraging of expenses due to comparable sales declines in this group's core office supplies business. Office enters 2017 intensely focused on its initiatives to further diversify its business and drive sales and generally improving gross margins, primarily related to the increase in volume incentives, positively impacted operating profit in 2014.Office Groupthe year. Office will continue to focus on its sales initiatives and cost control measures in 2016.Office’s2015.7.4%8.5% in 2014, down2016 from 7.5%9.3% in 2013, primarily related2015, as changes in product mix pressured gross margins and operating expenses were deleveraged due to the lower operating margin generated by new business with a large primary customer. This wascomparable sales decrease for the year. These items were partially offset by greater expense leverage driven by this group’s overall sales increase in 2014.Electrical/Electronic GroupElectrical/Electronic’s operating margin increasedcost savings initiatives to 9.3% in 2015 from 8.8% in 2014, as higher margin acquisitions, declining copper prices and effective cost management positively impacted the operating margins for this group.consolidate locations during 2016. Electrical/Electronic will continue to focus on its sales initiatives and cost controls to further improve its operating margin in 2016.from 8.4% in 2013, primarily due to greater expense leverage associated with this group’s sales increasethe positive impact of higher margin acquisitions, declining copper prices and effective cost management.2014.Income TaxesCompany’sCompany'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 retirement asset valuation adjustment in 2015 relative to 2014 impacted the increase in rate.Thetax ratewas $687 million in 2016, a decrease of 36.4%3% from $706 million in 2014 increased from 34.4%2015. On a per share diluted basis, net income was $4.59 in 2013. The increase2016, down 1% compared to $4.63 in rate is primarily due2015. Net income was 4.5% of net sales in 2016 compared to the favorable tax rate applied to the one-time gain associated with the GPC Asia Pacific acquisition recorded4.6% of net sales in 2013. Additionally, the Company’s retirement asset valuation adjustment was less favorable in 2014 relative to 2013. The higher mix of U.S. earnings, taxed at a higher rate relative to our foreign operations, also contributed to the increase in the 2014 tax rate.Net IncomeNet income was $711in 2014, an increase of 4% from $685 million in 2013. On a per share diluted basis, net income was $4.61 in 2014 comparedat December 31, 2016 compares to $4.40 in 2013, up 5%. Net income in 2014 was 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.FINANCIAL CONDITIONOurour cash balance of $212 million at December 31, 2015, compares to our cash balance of $138 million at December 31, 2014, as discussed further below. The Company’s accounts receivable balance at December 31, 2015 decreased2016 increased by approximately 3%6% from the prior year. This compares to the Company’s 4%3% sales decreaseincrease for the fourth quarter of 2015,2016, and we are satisfied with the quality and collectability of our accounts receivable. Inventory at December 31, 2015 decreased2016 increased by1%7% from December 31, 20142015, primarily due to acquisitions, and accounts payable increased $267$260 million or approximately 10%9% from December 31, 20142015 due primarily to improved payment terms with certain suppliers.$625$875 million of total debt outstanding at December 31, 2015,2016, 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 consortium of financial institutions for $1.2 billion, of which approximately $125$325 million and $265$125 million were outstanding under the line of credit at December 31, 20152016 and 2014,2015, 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.1.6 to 1 at December 31, 2014. Ourour liquidity position remains solid. The Company’s total debt outstanding at December 31, 2015 is down $1402016 increased by $250 million or 18%40% from December 31, 2014. Year Ended December 31, Percent Change 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 (In thousands) $ 1,159,373 $ 790,145 $ 1,056,731 47 % (25 )% (263,627 ) (386,715 ) (825,579 ) (32 )% (53 )% (806,074 ) (455,440 ) (425,117 ) 77 % 7 % 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 % 20152016 net cash provided by operating activities totaled $1.2 billion.$946 million. This reflects a 47% increasean 18% decrease from 2014,2015, 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 compared to a $34 million use of cash in 2014.2015. Net cash provided by operating activities was $790 million$1.2 billion in 2014,2015, a 25% decrease47% increase from 20132014 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. This decline was partially offset by the increase in net income and depreciation and amortization of $26 million and $14 million, respectively, in 2014. We estimate that cash used for capital expenditures in 2016 will be approximately $140 to $160 million. Net cash flow used in investing activities was $387 million in 2014 compared to $826 million in 2013, a decrease of 53%. Cash used for acquisitions of businesses and other investing activities in 2014 was $288 million, or $424 million less than in 2013. Capital expenditures of $108 million in 2014 decreased by $16 million or 13% from 2013, and were slightly lower than our estimate of $120 to $130 million for the year.$806$322 million of cash in financing activities in 2016, down 60% from the $806 million used in financing activities in 2015. Cash used in financing activities in 2015 was up 77% from the $455 million used in financing activities in 2014. Cash used in financing activities in 2014 was up $30 million or 7% from the $425 million used in 2013. 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 during 2016, 2015 and $326 million during 2015, 2014, and 2013, respectively. The Company expects this trend of increasing dividends to continue in the foreseeable future. During 2016, 2015 2014 and 2013,2014, the Company repurchased $181 million, $292 million $96 million and $121$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. 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 also included payments on debt of approximately $140 million net of debt proceeds.20202021 with twoan optional one year extensionsextension and bears interest at LIBOR plus a margin, which is based on the Company’s leverage ratio (1.17%(1.52% at December 31, 2015)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 facility with appropriate notice. At December 31, 2016 and 2015, and2014, approximately $125$325 million and $265$125 million were outstanding under this line of credit, respectively. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of approximately $65 million and $63 million outstanding at December 31, 2016 and 2015, and 2014.2015,2016, 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, 2015,2016, the Company was in compliance with all such covenants. The weighted average interest rate on the Company’s total outstanding borrowings was approximately 2.39% at December 31, 2016 and 2.76% at December 31, 2015 and 2.46% at December 31, 2014.2015. Total interest expense, net of interest income, for all borrowings was $19.5 million, $20.4 million and $24.2 million in 2016, 2015 and $24.3 million in 2015, 2014, and 2013, respectively.2015: Payment Due by Period Total Less Than
1 Year 1-3 Years 3-5 Years Over
5 Years (In thousands) $ 693,300 $ 390,900 $ 15,000 $ 15,000 $ 272,400 767,900 207,800 281,400 126,400 152,300 $ 1,461,200 $ 598,700 $ 296,400 $ 141,400 $ 424,700 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 2015,2016, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $18$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.2015: Amount of Commitment Expiration per Period Total Amounts
Committed Less Than
1 Year 1-3 Years 3-5 Years Over
5 Years (In thousands) $ — $ — $ — $ — $ — 62,874 62,874 — — — 332,632 130,218 123,028 79,386 — $ 395,506 $ 193,092 $ 123,028 $ 79,386 $ — 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 $ — 20152016 were $55$54 million. We expect to make $49$48 million in cash contributions to our qualified defined benefit plans in 2016,2017, and contributions required for 20162017 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.2015,2016, the Company repurchased approximately 3.32.0 million shares and the Company had remaining authority to purchase approximately 6.34.3 million shares at December 31, 2015.2014 and 2013,2014, the Company recorded provisions for doubtful accounts of approximately $11.5 million, $12.4 million, and $7.2 million, and $8.7 million, respectively.20162017 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.20162017 pension expense or income is 7.83%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.4.82%4.26% at December 31, 2015.(income) costincome for our defined benefit pension plans was ($5.8)$13.4 million, ($9.6)$5.8 million and $51.1$9.6 million for the years ended December 31, 2016, 2015 2014 and 2013,2014, respectively. The income associated with the pension plans in 2016, 2015 and 2014 reflects the impact of the hard freeze effective December 31, 2013. Refer to Note 7 of the Consolidated Financial Statements for more information regarding employee benefit plans.20152016 and 2014: Three Months Ended March 31, June 30, Sept. 30, Dec. 31, (In thousands except per share data) $ 3,736,051 $ 3,940,401 $ 3,921,802 $ 3,681,790 1,112,819 1,178,330 1,169,225 1,095,478 161,010 195,373 188,016 161,273 1.05 1.28 1.24 1.07 1.05 1.28 1.24 1.07 $ 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 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 20152016 and 20142015 was not significant.ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.2015.20152016 and 2014,2015, 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 $252$262 million and $258$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 $393 million in 2016 and $378 million in 2015 and $388 million in 2014.2015. 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 and $517 million in 2014.ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.9.9.DISCLOSURE.DISCLOSURE.ITEM 9A.CONTROLS AND PROCEDURES.20152016 is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning on page F-1.20152016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.ITEM 9B.OTHER INFORMATION.ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE., age 68, 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 2004.59,60, 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, and2012. Previously, Mr. Donahue served as President of the Company’s U.S. Automotive Parts Group from July 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.52,53, 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 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.James R. Neill, age 54, was appointed Senior Vice President of Human Resources of the Company in April 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 2007.55,56, 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 U.S. 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.“2015“2016 Grants of Plan-Based Awards”, “2015“2016 Outstanding Equity Awards at Fiscal Year-End”, “2015“2016 Option Exercises and Stock Vested”, “2015“2016 Pension Benefits”, “2015“2016 Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating 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.12.12.MATTERS.MATTERS.20152016 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)) 46,000 (2) $ 44.20 — 4,134,845 (3) $ 70.97 — — (4) n/a 10,000,000 (6) 85,284 (5) n/a 914,716 4,266,129 — 10,914,716 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 (4)(3) Genuine Parts Company 2015 Incentive Plan (5)(4) Genuine Parts Company Directors’Directors' Deferred Compensation Plan, as amended(6)(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 ACCOUNTANT FEES AND SERVICES.ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.20152016 and 20142014 and 20132014 and 20132014 and 20132015Exhibit 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.) Exhibit 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.) Exhibit 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 10.26* 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 10.27* 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 10.28* Form of Executive Officer Change in Control Agreement. (Incorporated herein by reference from the Company’sCompany'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, 20152016 and 2014;2015; (ii) the Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2016, 2015 2014 and 2013;2014; (iii) the Consolidated Statements of Equity for the Years ended December 31, 2016, 2015 2014 and 2013;2014; (iv) the Consolidated Statements of Cash Flows for Years ended December 31, 2016, 2015 2014 and 2013;2014; (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text; and (vi) Financial Statement Schedule II — Valuation and Qualifying Accounts./s/ Thomas C. GallagherPaul D. Donahue2/27/2017 2/26/2016/s/ Carol B. Yancey 2/ 26/201627/2017 Thomas C. GallagherPaul D. Donahue (Date) Carol B. Yancey (Date) ChairmanPresident and Chief Executive Officer Executive Vice President and Chief Financial and Accounting Officer /s/ Thomas C. GallagherPaul D. Donahue2/20/2017 2/15/2016/s/ Carol B. Yancey 2/ 15/201620/2017 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/ 15/2016/s/ Elizabeth W. Camp2/15/201620/2017 Dr. Mary B. BullockThomas C. Gallagher (Date) Elizabeth W. CampDr. Mary B. Bullock (Date) Director /s/ Paul D. Donahue /s/ Elizabeth W. Camp 2/ 15/201620/2017 /s/ Jean DouvilleGary P. Fayard 2/ 15/201620/2017 Paul D. DonahueElizabeth W. Camp (Date) Jean DouvilleGary P. Fayard (Date) Director /s/ Gary P. Fayard /s/ John R. Holder 2/ 15/201620/2017 /s/ John R. HolderDonna W. Hyland 2/ 15/201620/2017 Gary P. FayardJohn R. Holder (Date) John R. HolderDonna W. Hyland (Date) Director /s/ Donna W. Hyland /s/ John D. Johns 2/ 15/201620/2017 /s/ John D. JohnsRobert C. Loudermilk, Jr. 2/ 15/201620/2017 Donna W. HylandJohn D. Johns (Date) John D. JohnsRobert C. Loudermilk, Jr. (Date) Director /s/ Robert C. Loudermilk, Jr. /s/ Wendy B. Needham 2/ 15/201620/2017 /s/ Wendy B. NeedhamJerry W. Nix 2/ 15/201620/2017 Robert C. Loudermilk, Jr.Wendy B. Needham (Date) Wendy B. NeedhamJerry W. Nix (Date) Director /s/ Jerry W. Nix /s/ Gary W. Rollins 2/ 15/201620/2017 /s/ Gary W. RollinsE. Jenner Wood, III 2/ 15/201620/2017 JerryGary W. NixRollins (Date) Gary W. RollinsE. Jenner Wood, III (Date) Director /s/ E. Jenner Wood, III 2/15/2016E. Jenner Wood, III(Date)Director Page 2014, and 2013.2014. 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.2015.2015,2016, the Company’s internal control over financial reporting was effective.2015.2016. This report appears on page F-3./s/ Carol B. Yancey Executive Vice President and Chief Financial Officer 26, 20162015,2016, 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.2015,2016, based on the COSO criteria.20152016 and 2014,2015, 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, 20152016 of Genuine Parts Company and Subsidiaries and our report dated February 26, 201627, 2017 expressed an unqualified opinion thereon.26, 201620152016 and 2014,2015, 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, 2015.2016. 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.20152016 and 2014,2015, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 20152016 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.2015,2016, 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, 201627, 2017 expressed an unqualified opinion thereon.26, 2016 December 31 2015 2014 $ 211,631 $ 137,730 1,822,419 1,872,365 2,999,966 3,043,848 521,300 538,582 5,555,316 5,592,525 840,582 839,075 521,213 547,515 118,525 145,331 460,918 451,690 85,450 87,651 267,446 281,824
2014 — $598,137) 295,321 300,627 648,217 670,102 $ 8,144,771 $ 8,246,238 $ 2,821,526 $ 2,554,759 375,000 265,466 148,265 165,291 503,268 510,560 92,595 88,039 3,940,654 3,584,115 250,000 500,000 284,235 329,531 50,684 72,479 459,956 447,749 — — 150,081 153,113 41,353 26,414 (930,618 ) (720,211 ) 3,885,751 3,841,932 3,146,567 3,301,248 12,675 11,116 3,159,242 3,312,364 $ 8,144,771 $ 8,246,238 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 Year Ended December 31 2015 2014 2013 (In Thousands, Except per Share Amounts) $ 15,280,044 $ 15,341,647 $ 14,077,843 10,724,192 10,747,886 9,857,923 4,555,852 4,593,761 4,219,920 3,277,390 3,314,030 3,028,028 141,675 148,313 133,957 12,373 7,192 8,691 3,431,438 3,469,535 3,170,676 21,662 25,088 26,971 (20,929 ) (18,601 ) (22,031 ) 733 6,487 4,940 1,123,681 1,117,739 1,044,304 418,009 406,453 359,345 $ 705,672 $ 711,286 $ 684,959 $ 4.65 $ 4.64 $ 4.43 $ 4.63 $ 4.61 $ 4.40 151,667 153,299 154,636 829 1,076 1,078 152,496 154,375 155,714 $ 705,672 $ 711,286 $ 684,959 (207,986 ) (149,379 ) (168,703 )
2013 — ($175,297) (2,421 ) (173,177 ) 272,540 (210,407 ) (322,556 ) 103,837 $ 495,265 $ 388,730 $ 788,796 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 Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Total
Parent
Equity Non-
controlling
Interests in
Subsidiaries Total
Equity Shares Amount 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 — — — — 705,672 705,672 — 705,672 — — — (210,407 ) — (210,407 ) — (210,407 ) — — — — (372,840 ) (372,840 ) — (372,840 ) 229,958 230 (2,778 ) — — (2,548 ) — (2,548 ) — — 17,717 — — 17,717 — 17,717 (3,261,526 ) (3,262 ) — — (289,013 ) (292,275 ) — (292,275 ) — — — — — — 1,559 1,559 150,081,474 $ 150,081 $ 41,353 $ (930,618 ) $ 3,885,751 $ 3,146,567 $ 12,675 $ 3,159,242 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 Year Ended December 31 2015 2014 2013 (In Thousands) $ 705,672 $ 711,286 $ 684,959 141,675 148,313 133,957 (7,024 ) (17,766 ) (12,905 ) (3,189 ) (3,719 ) (4,729 ) 35,544 54,319 (21,622 ) 17,717 16,239 12,648 — — (59,000 ) 1,974 (225,178 ) (116,080 ) (21,821 ) (100,820 ) (79,253 ) 331,419 292,257 473,424 967 15,616 (14,418 ) (43,561 ) (100,402 ) 59,750 453,701 78,859 371,772 1,159,373 790,145 1,056,731 (109,544 ) (107,681 ) (124,063 ) 8,618 8,866 10,657 (162,701 ) (287,900 ) (712,173 ) (263,627 ) (386,715 ) (825,579 ) 3,862,224 2,727,924 3,019,931 (4,005,191 ) (2,735,862 ) (2,995,335 ) (9,572 ) (22,051 ) (15,728 ) 7,024 17,766 12,905 (368,284 ) (347,271 ) (326,217 ) (292,275 ) (95,946 ) (120,673 ) (806,074 ) (455,440 ) (425,117 ) (15,771 ) (7,153 ) (12,237 ) 73,901 (59,163 ) (206,202 ) 137,730 196,893 403,095 $ 211,631 $ 137,730 $ 196,893 $ 352,153 $ 408,604 $ 342,372 $ 23,687 $ 25,155 $ 27,221 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 201520161.Summary of Significant Accounting Policies2,6502,670 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.Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 20152014, and 2013,2014, the Company recorded provisions for doubtful accounts of approximately $11,515,000, $12,373,000, $7,192,000, and $8,691,000,$7,192,000, respectively. At December 31, 20152016 and 2014,2015, the allowance for doubtful accounts was approximately $15,557,000 and $10,693,000, and $11,836,000, respectively.$438,510,000$426,760,000 and $434,790,000$438,510,000 higher than reported at December 31, 2016 and 2015, respectively. During 2016 and 2014, respectively. During 2014 and 2013, reductions in inventory levels in automotive parts inventories (2013) and industrial parts inventories (2014 and 2013) resulted in liquidations of LIFO inventory layers. The effect of the LIFO liquidations in 20142016 and 20132014 was to reduce cost of goods sold by approximately $6,000,000 and $8,000,000, respectively. There were no LIFO liquidations in 2015.$5,000,000, respectively.20162017 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future.2014, and 2013.2015 December 31 2015 2014 (In Thousands) $ 3,336 $ 4,247 28,488 27,828 28,351 29,139 105,213 105,227 72,814 67,400 35,000 29,000 187,716 188,849 $ 460,918 $ 451,690 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 2015 2014 (In Thousands) $ 54,034 $ 57,754 33,979 48,569 37,642 40,040 15,495 18,947 85,552 81,496 35,000 29,000 198,254 171,943 $ 459,956 $ 447,749 Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 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 2015 2014 (In Thousands) $ (394,984 ) $ (186,998 ) (540,018 ) (538,614 ) 4,384 5,401 $ (930,618 ) $ (720,211 ) 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 ) 20152016 and 2014: 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 ) (25,558 ) (111 ) (207,986 ) (233,655 ) 23,412 (164 ) — 23,248 (2,146 ) (275 ) (207,986 ) (210,407 ) $ (534,215 ) $ (1,419 ) $ (394,984 ) $ (930,618 ) Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 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 ) (income) costincome in the employee benefit plans footnote.20152016 and 2014,2015, the fair value of fixed rate debt was approximately $501,000,000$549,000,000 and $505,000,000,$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, 20152016, the carrying value of fixed rate debt was $550,000,000 and 2014,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, $270,000,000,$230,000,000, $240,000,000, and $250,000,000,$230,000,000, for the years ended December 31, 2016, 2015, and 2014, and 2013, respectively.$71,300,000, and $57,900,000$71,300,000 in the years ended December 31, 2016, 2015, and 2014, and 2013, respectively.610,000, and 630,000610,000 shares of common stock ranging from $77$87 — $92$100 per share were outstanding at December 31, 2016, 2015, 2014, and 2013,2014, respectively. These options were excluded from the computation of diluted net income per common share because the options’ exercise prices were greater than the average market prices of common stock in each respective year.Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015No. 2014-9,2014-09, Revenue from Contracts with Customers (“ASU 2014-9”) (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 exchangeis effective for those goodsinterim and services. ASU 2014-9annual reporting periods beginning after December 15, 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 effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. In August 2015, the FASB issued ASU No. 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, that deferred the effective date by one year to December 15, 2017 for interimbusiness units and annual reporting periods beginning after that date. The FASB permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currentlyare 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 ASU 2014-9 onthe transition decision.financial statementsrevenues upon adoption. The Company will continue to evaluate the impacts of the pending adoption of ASU 2014-09 and related disclosures.will beis effective for the Company’sCompany'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.andor related disclosures.In November 2015, the FASB issued ASU 2015-17,Balance Sheet Classification of Deferred Taxes, which amends the existing guidance201520162.Goodwill and Other Intangible Assets20152016 and 20142015 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 $ 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 5,030 18,696 8,891 20,335 52,952 38,596 — — — — — (34,878 ) (49,866 ) (1,579 ) — — (51,445 ) (30,020 ) $ 555,003 $ 136,079 $ 56,499 $ 93,001 $ 840,582 $ 521,213 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 20152016 and 20142015 is as follows (in thousands): 2015 2014 Gross
Carrying
Amount Accumulated
Amortization Net Gross
Carrying
Amount Accumulated
Amortization Net $ 494,516 $ (115,636 ) $ 378,880 $ 477,484 $ (88,923 ) $ 388,561 153,346 (11,922 ) 141,424 166,507 (8,654 ) 157,853 5,765 (4,856 ) 909 6,062 (4,961 ) 1,101 $ 653,627 $ (132,414 ) $ 521,213 $ 650,053 $ (102,538 ) $ 547,515 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, and $28,987,000$36,867,000 for the years ended December 31, 2016, 2015, 2014, and 2013,2014, respectively. Estimated other intangible assets amortization expense for the succeeding five years is as follows (in thousands): $ 35,000 35,000 35,000 34,000 34,000 $ 173,000 2017 $ 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, 20153.Credit Facilities$125,000,000$325,000,000 and $265,466,000$125,000,000 at December 31, 20152016 and 2014,2015, respectively. The weighted average interest rate on the Company’s outstanding borrowings was approximately 2.76%2.39% and 2.46%2.76% at December 31, 2016 and 2015, and 2014, respectively.20202021 with twoan optional one year extensionsextension and bears interest at LIBOR plus a margin, which is based on the Company’s leverage ratio (1.17%(1.52% at December 31, 2015)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 facility with appropriate notice. At December 31, 2016 and 2015, approximately $325,000,000 and 2014, approximately $125,000,000 and $265,466,000 were outstanding under this line of credit, respectively.2015,2016, 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 $62,874,000$64,930,000 and $62,515,000$62,874,000 outstanding at December 31, 2016 and 2015, and 2014, respectively. December 31 2015 2014 (In Thousands) $ 125,000 $ 265,466 250,000 250,000 250,000 250,000 625,000 765,466 375,000 265,466 $ 250,000 $ 500,000 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 $ 375,000 — — — — 250,000 $ 625,000 2017 $ 325,000 2018 — 2019 — 2020 — 2021 50,000 Thereafter 500,000 $ 875,000 Genuine Parts Company and Subsidiaries4.Notes to Consolidated Financial Statements — (Continued)Leased PropertiesDecember 31, 20154.Leased Properties20152016 (in thousands): $ 207,800 163,100 118,300 78,000 48,400 152,300 $ 767,900 2017 $ 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 2015, 2014, respectively.2013, respectively.5.Share-Based Compensation2015,2016, total compensation cost related to nonvested awards not yet recognized was approximately $33,000,000.$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 SARs and RSUs outstanding at December 31, 20152016 and 20142015 was approximately $104,000,000$104,200,000 and $198,100,000,$104,000,000, respectively. The aggregate intrinsic value for SARs and RSUs vested totaled approximately $65,000,000$62,000,000 and $116,200,000$65,000,000 at December 31, 20152016 and 2014,2015, respectively. At December 31, 2015,2016, the weighted-average contractual life for outstanding and exercisable SARs and RSUs was six and five years, respectively. Share-based compensation costs of $19,719,000, $17,717,000, $16,239,000, and $12,648,000,$16,239,000, were recorded for the years ended December 31, 2016, 2015, 2014, and 2013,2014, respectively. The total income tax benefits recognized in the consolidated statements of income and comprehensive income for share-based compensation arrangements were approximately $7,900,000, $7,100,000, and $6,500,000 for 2016, 2015, and $5,100,000 for 2015, 2014, and 2013, respectively. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2016, 2015, 2014, or 2013.2014, and 2013,2014, the fair values for SARs granted were estimated using a Black-Scholes option pricing model with the following weighted-average assumptions, respectively: risk-free interest rate of 2.0%1.6%, 2.8%2.0%, and 2.0%2.8%; dividend yield of 2.6%2.7%, 2.8%2.6%, and 3.2%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 5.4%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 were $18,200,000, $15,200,000, and 2013 were $15,200,000, $13,800,000, and $8,100,000, respectively.Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 2015 Shares (1) Weighted-
Average
Exercise
Price (2) (In Thousands) 3,923 $ 64 887 92 (540 ) 54 (89 ) 81 4,181 $ 71 2,437 $ 61 10,000 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) 20152016 ranged from approximately $42 to $92.$100. The weighted-average remaining contractual life of all SARs outstanding is approximately sixseven years.2013 was $13.53, $13.77, and $10.14, respectively. The aggregate intrinsic value of SARs and RSUs exercised during the years ended December 31, 2016, 2015, and 2014 was $48,200,000, $30,100,000, and 2013 was $30,100,000, $65,200,000, respectively.$43,900,000, respectively. In 2013, thegranted approximately 727,000 SARs and 172,000 RSUs. Shares Weighted-
Average Grant
Date Fair
Value (In Thousands) 420 $ 72 176 92 (123 ) 62 (40 ) 76 433 $ 82 Nonvested Share Awards (RSUs) Shares (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 2013 approximately $7,000,000, $17,800,000, and $12,900,000,$17,766,000, respectively, of excess tax benefits were classified as financing cash inflows.6.Income TaxesGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)2015December 31, 2015,2016, the Company has not provided Federal income taxes on approximately $623,000,000$697,000,000 of undistributed earnings of its foreign subsidiaries. The Company intends to reinvest these earnings to fund expansion in these and other markets outside the U.S. Accordingly, the Company has not provided any provision for income tax expense in excess of foreign jurisdiction income tax requirements relative to such undistributed earnings in the accompanying consolidated financial statements. Due to the complexities associated with the hypothetical calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequence that may arise due to the distribution of these earnings, the Company has concluded it is not practicable to determine the unrecognized deferred tax liability related to the undistributed earnings.In November 2015, the FASB issued ASU 2015-17,Balance Sheet Classification of Deferred Taxes, which amends the existing guidance to require presentation of deferred tax assets and liabilities as noncurrent within a classified statement of financial position. The Company adopted the guidance, on a prospective basis, at December 31, 2015. 2015 2014 (In Thousands) $ 318,368 $ 337,792 347,263 341,904 665,631 679,696 249,126 227,926 147,199 152,913 111,305 105,482 58,496 59,600 31,664 30,641 597,790 576,562 67,841 103,134 — (30,282 ) $ 67,841 $ 72,852 The current portion of the deferred tax assets and liabilities are included in prepaid expenses and other current assets and other current liabilities, respectively, in the consolidated balance sheet at December 31, 2014. 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 2015 2014 2013 (In Thousands) $ 1,004,919 $ 978,824 $ 850,866 118,762 138,915 193,438 $ 1,123,681 $ 1,117,739 $ 1,044,304 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 2015 2015 2014 2013 (In Thousands) $ 309,403 $ 224,591 $ 303,016 45,460 43,513 47,010 27,602 84,030 30,941 35,544 54,319 (21,622 ) $ 418,009 $ 406,453 $ 359,345 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 2015 2014 2013 (In Thousands) $ 393,288 $ 391,209 $ 365,506 32,295 32,646 28,823 (13,684 ) (3,453 ) (37,873 ) (264 ) (20,170 ) — — — 16,803 — — (16,803 ) 6,374 6,221 2,889 $ 418,009 $ 406,453 $ 359,345 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 20092012 or subject to non-United States income tax examinations for years ended prior to 2008.2010. The Company is currently under audit in the United States and Canada. Some audits may conclude in the next twelve months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next twelve months to previously recorded uncertain tax positions in connection with the audits. However, the Company does not anticipate total unrecognized tax benefits will significantly change during the year due to the settlement of audits and the expiration of statutes of limitations. 2015 2014 2013 (In Thousands) $ 17,581 $ 47,190 $ 45,455 1,969 3,303 3,238 61 6,415 3,759 (3,152 ) (851 ) (1,472 ) (425 ) (481 ) (1,714 ) (219 ) (37,995 ) (2,076 ) $ 15,815 $ 17,581 $ 47,190 Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 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 20152016 and 20142015 was approximately $17,684,000$17,176,000 and $19,497,000,$17,684,000, respectively, of which approximately $9,317,000$9,615,000 and $11,106,000,$9,317,000, respectively, if recognized, would affect the effective tax rate. During 2014, the Company settled certain transfer pricing methodologies with tax authorities, and on a consolidated basis, the difference, in related payments and refunds and the amount reflected in the tax reserves, was not material.2014, and 2013,2014, the Company paid interest and penalties of approximately $5,000, $1,051,000, $14,000,000, and $405,000,$14,000,000, respectively. The Company had approximately $1,746,000$1,848,000 and $1,916,000$1,746,000 of accrued interest and penalties at December 31, 20152016 and 2014,2015, respectively. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.7.Employee Benefit Plansarewere employed after December 31, 2013 became fully vested as of December 31, 2013. The Canadian plan is contributory and benefits are based on career average compensation. The Company’s funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. The Company may increase its contribution above the minimum, if appropriate to its tax and cash position and the plans’ funded position.(income) cost.income. The discount rate for the pension plans is calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments. The bond matching approach reflects the process that would be used to settle the pension obligations. The expected return on plan assets is based on a calculated market-related value of plan assets, where gains and losses on plan assets are amortized over a five year period and accumulate in other comprehensive income. Other non-investment unrecognized gains and losses are amortized in future net income based on a “corridor” approach, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year. The unrecognized gains and losses in excess of the corridor criteria are amortized over the average future lifetime or service of plan participants, depending on the plan. These assumptions are updated at each annual measurement date.and 2014 were: 2015 2014 (In Thousands) $ 2,352,094 $ 2,035,185 8,562 7,824 98,088 102,465 2,838 3,526 (139,573 ) 346,875 (35,082 ) (18,697 ) (87,571 ) (125,084 ) $ 2,199,356 $ 2,352,094 Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015The 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. 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 $2,012,935,000$2,105,665,000 and $2,135,827,000$2,012,935,000 at December 31, 20152016 and 2014,2015, respectively. The total accumulated benefit obligation for the Company’s defined benefit pension plans in the U.S. and Canada was approximately $2,179,626,000$2,281,648,000 and $2,328,489,000$2,179,626,000 at December 31, 2016 and 2015, and 2014, respectively. 2016 2015 Weighted-average discount rate 4.26 % 4.82 % Rate of increase in future compensation levels 3.14 % 3.12 % 2014, were: 2015 2014 4.82 % 4.26 % 3.12 % 3.07 % and 2014 were: 2015 2014 (In Thousands) $ 2,021,837 $ 1,933,063 (45,529 ) 174,652 (33,382 ) (17,616 ) 54,543 53,296 2,838 3,526 (87,571 ) (125,084 ) $ 1,912,736 $ 2,021,837 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 $1,731,368,000$1,760,713,000 and $1,819,747,000$1,731,368,000 at December 31, 2016 and 2015, respectively.2014, respectively. 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 20152016 and 2014,2015, and the target allocation for 2016,2017, by asset category were: Target
Allocation
2016 Percentage of
Plan Assets at
December 31 2015 2014 71 % 69 % 70 % 29 % 31 % 30 % 100 % 100 % 100 % 2016 2015 Asset Category Equity securities 71 % 70 % 69 % Debt securities 29 % 30 % 31 % 100 % 100 % 100 % Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015(49%(47% S&P 5008%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).20152016 and 2014,2015, by asset category, are shown in the tables below. Various inputs are considered when determining the value of the Company’s pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). 2015 Total Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) (In Thousands) $ 349,852 $ 349,852 $ — $ — 173,363 173,363 — — 793,229 792,624 — 605 46,195 46,195 — — 2,978 2,978 — — 193,436 109,559 83,877 — 172,119 — 172,119 — 27,510 — 27,510 — 434 — 434 — 21,137 20,785 352 — 5,857 — 5,857 — 123,895 — 123,895 — 2,731 — — 2,731 $ 1,912,736 $ 1,495,356 $ 414,044 $ 3,336 2016 Total Assets Measured at NAV (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 2015 2014 Total Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) (In Thousands) $ 366,716 $ 366,716 $ — $ — 215,477 215,477 — — 822,782 822,782 — — 41,882 41,882 — — 8,921 8,921 — — 192,413 96,480 95,933 — 178,214 — 178,214 — 27,756 — 27,756 — 633 — 633 — 25,137 21,815 3,322 — 6,435 — 6,435 — 132,752 — 132,752 — 7 7 — — 2,712 — — 2,712 $ 2,021,837 $ 1,574,080 $ 445,045 $ 2,712 2015 Total Assets Measured at NAV (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 $173,363,000 (9%$192,841,000 (10% of total plan assets) and $215,477,000 (11%$173,363,000 (9% of total plan assets) at December 31, 20152016 and 2014,2015, respectively. Dividend payments received by the plan on Company stock totaled approximately $5,308,000 and $4,965,000 in 2016 and $4,650,000 in 2015, and 2014, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.20152016 and 20142015 were not material.20162017 pension cost or income is 7.83%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.Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 2015 2014 (In Thousands) $ 3,336 $ 4,247 (7,432 ) (6,740 ) (282,524 ) (327,764 ) $ (286,620 ) $ (330,257 ) 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 ) 2015 2014 (In Thousands) $ 882,464 $ 875,788 (1,814 ) (2,436 ) $ 880,650 $ 873,352 2016 2015 (In Thousands) Net actuarial loss $ 1,003,247 $ 882,464 Prior service cost (credit) 672 (1,814 ) $ 1,003,919 $ 880,650 2016,2017, approximately $7,382,000$8,206,000 is expected to be paid from employer assets. Expected employer contributions below reflect amounts expected to be contributed to funded plans. Information about the expected cash flows for the pension plans follows (in thousands): $ 49,000 $ 93,000 102,000 109,000 116,000 124,000 703,000 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 (income) costincome included the following components: 2015 2014 2013 (In Thousands) $ 8,562 $ 7,824 $ 19,083 98,088 102,465 89,408 (150,130 ) (144,746 ) (133,816 ) (565 ) (1,890 ) (7,538 ) 38,197 26,791 83,934 $ (5,848 ) $ (9,556 ) $ 51,071 �� Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 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 ) 2015 2014 2013 (In Thousands) $ 44,930 $ 312,011 $ (368,587 ) (38,197 ) (26,791 ) (83,934 ) 565 638 7,538 $ 7,298 $ 285,858 $ (444,983 ) $ 1,450 $ 276,303 $ (393,912 ) 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 costincome in 20162017 are as follows in thousands: $ 31,146 (430 ) $ 30,716 Actuarial loss $ 37,870 Prior service credit (349 ) Total $ 37,521 (income) costincome for the plans follow: 2015 2014 2013 4.26 % 5.10 % 4.17 % 3.07 % 3.04 % 3.30 % 7.85 % 7.85 % 7.83 % 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, and $43,236,000 in 2013.8.GuaranteesGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 20152015,2016, the Company was in compliance with all such covenants.2015,2016, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $332,632,000.$431,286,000. These loans generally mature over periods from one to six years. In the event that the Company is required to make payments in connection with guaranteed obligations of the independents or the affiliates, the Company would obtain and liquidate certain collateral (e.g., accounts receivable and inventory) to recover all or a portion of the amounts paid under the guarantee. When it is deemed probable that the Company will incur a loss in connection with a guarantee, a liability is recorded equal to this estimated loss. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings.$35,000,000$42,000,000 and $29,000,000$35,000,000 for the guarantees related to the independents’ and affiliates’ borrowings at December 31, 20152016 and 2014,2015, respectively. These assets and liabilities are included in other assets and other long-term liabilities in the consolidated balance sheets.9.AcquisitionsDuringDuringA significant portion of the 2014 the Companycompanies acquired included two companies each in the Automotive Parts Group, Office Products Group, and Electrical/Electronic Materials Group and one company in the Industrial Group for approximately $260,000,000, net of cash acquired. During 2013, the Company acquired one company each in the Automotive Group (including GPC Asia Pacific), Industrial Group, and Electrical/Electronic Materials Group for approximately $650,000,000, net of cash acquired.$200,000,000 and $950,000,000$200,000,000 of goodwill and other intangible assets associated with the 2016, 2015, 2014, and 20132014 acquisitions, respectively. For the 2013 acquisitions, other intangible assets acquired consisted of customer relationships of $235,000,000, trademarks of $141,000,000, and non-competition agreements of $4,000,000 with weighted average amortization lives of 15, 40, and 1 years, respectively.Additional disclosure on the 2013 automotive acquisition of GPC Asia Pacific is provided below.GPC Asia PacificThe 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 remaining2015201670% 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 $1,000,000,000 and a company-owned store footprint of approximately 500 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) $ 590,000 234,000 $ 824,000 Genuine Parts Company and SubsidiariesSegment DataNotes to Consolidated Financial Statements — (Continued)December 31, 2015The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date. April 1, 2013 (In Thousands) $ 94,000 306,000 31,000 59,000 347,000 24,000 861,000 (224,000 ) (230,000 ) (125,000 ) (579,000 ) 282,000 542,000 $ 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 year ended December 31, 2013 would be estimated at $14,400,000,000 in net sales and net income of $4.42 on a per share diluted basis. 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 this period, 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.10.Segment DataGenuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015$138,900,000 and $193,400,000$138,900,000 of income before income taxes was generated in jurisdictions outside the United States for the years ended December 31, 2016, 2015, 2014, and 2013,2014, respectively. Net sales and net property, plant and equipment by country relate directly to the Company’s operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.Genuine Parts Company and SubsidiariesNotes to Consolidated Financial Statements — (Continued)December 31, 2015 2015 2014 2013 2012 2011 (In Thousands) $ 8,015,098 $ 8,096,877 $ 7,489,186 $ 6,320,882 $ 6,061,424 4,646,689 4,771,080 4,429,976 4,453,574 4,173,574 1,937,629 1,802,754 1,638,618 1,686,690 1,689,368 750,770 739,119 568,872 582,820 557,537 (70,142 ) (68,183 ) (48,809 ) (30,098 ) (23,026 ) $ 15,280,044 $ 15,341,647 $ 14,077,843 $ 13,013,868 $ 12,458,877 $ 729,152 $ 700,386 $ 641,492 $ 540,678 $ 467,806 339,180 370,043 320,720 352,119 337,628 140,866 133,727 122,492 134,441 134,124 70,151 64,884 47,584 50,910 40,663 1,279,349 1,269,040 1,132,288 1,078,148 980,221 (20,354 ) (24,192 ) (24,330 ) (19,619 ) (24,608 ) (100,436 ) (90,242 ) (34,667 ) (26,606 ) (58,033 ) (34,878 ) (36,867 ) (28,987 ) (12,991 ) (6,774 ) $ 1,123,681 $ 1,117,739 $ 1,044,304 $ 1,018,932 $ 890,806 $ 4,293,290 $ 4,275,298 $ 4,009,244 $ 3,411,252 $ 3,218,931 1,143,952 1,224,735 1,162,697 1,130,877 1,100,024 831,546 835,592 708,944 731,564 700,720 191,866 196,400 156,780 137,237 129,933 322,323 327,623 353,276 898,292 773,391 1,361,794 1,386,590 1,289,356 497,839 279,775 $ 8,144,771 $ 8,246,238 $ 7,680,297 $ 6,807,061 $ 6,202,774 2015 2015 2014 2013 2012 2011 (In Thousands) $ 70,112 $ 77,645 $ 76,238 $ 60,630 $ 60,252 9,960 9,906 8,751 8,307 7,495 10,922 10,728 10,166 10,837 9,999 2,933 2,658 1,904 1,733 1,554 12,870 10,509 7,911 3,885 2,862 34,878 36,867 28,987 12,991 6,774 $ 141,675 $ 148,313 $ 133,957 $ 98,383 $ 88,936 $ 77,504 $ 78,537 $ 97,735 $ 67,482 $ 61,795 13,998 12,442 8,808 13,015 9,851 12,323 11,135 9,297 16,013 22,036 2,824 3,003 1,730 1,029 1,762 2,895 2,564 6,493 4,448 8,025 $ 109,544 $ 107,681 $ 124,063 $ 101,987 $ 103,469 $ 12,843,078 $ 12,565,329 $ 11,594,713 $ 11,299,291 $ 10,791,303 1,395,695 1,583,075 1,560,799 1,616,921 1,571,733 992,064 1,133,620 839,353 — — 119,349 127,806 131,787 127,754 118,867 (70,142 ) (68,183 ) (48,809 ) (30,098 ) (23,026 ) $ 15,280,044 $ 15,341,647 $ 14,077,843 $ 13,013,868 $ 12,458,877 $ 495,073 $ 495,452 $ 503,882 $ 466,473 $ 411,193 79,023 98,939 99,135 93,496 84,210 65,289 65,707 60,614 — — 8,832 10,004 6,430 6,396 4,801 $ 648,217 $ 670,102 $ 670,061 $ 566,365 $ 500,204 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 $ 19,180,190 $ 8,691,000 $ (13,448,190 ) $ 14,423,000 $ 14,423,000 $ 7,192,000 $ (9,779,000 ) $ 11,836,000 $ 11,836,000 $ 12,373,000 $ (13,516,000 ) $ 10,693,000 Deductions(1) 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. 21 Subsidiaries of the Company. 23 Consent of Independent Registered Public Accounting Firm. 31.1 Certification signed by the Chief Executive Officer pursuant to SEC Rule 13a-14(a). 31.2 Certification signed by the Chief Financial Officer pursuant to SEC Rule 13a-14(a). 32.1 Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2 Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 101 Interactive data files pursuant to Rule 405 of Regulation S-T. — 3.1 Amended and Restated Articles of Incorporation of the Company, amended April 23, 2007. — 3.2 By-Laws of the Company as amended and restated November 18, 2013. — 4.2 Specimen Common Stock Certificate. — 10.1* The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. — 10.2* Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. — 10.3* Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. — 10.4* Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. — 10.5* Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. — 10.6* Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 28, 2005, effective January 1, 2006. — 10.7* Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. — 10.8* Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. — 10.9* Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012. — 10.10* The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. — 10.11* Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. — 10.12* Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. — 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. — 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. — 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. — 10.16* Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003. — 10.17* Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. — 10.18* Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012 — 10.19* Description of Director Compensation. — 10.20* Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001. — 10.21* Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. — 10.22* Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. — 10.23* Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. — 10.24* Genuine Parts Company 2015 Incentive Plan, effective November 17, 2014. — 10.25* Genuine Parts Company Performance Restricted Stock Unit Award Agreement. — 10.26* Genuine Parts Company Restricted Stock Unit Award Agreement. — 10.27* Genuine Parts Company Stock Appreciation Rights Agreement. —10.28* Form of Executive Officer Change in Control Agreement. * Indicates management contracts and compensatory plans and arrangements. 