1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ================================== FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1996 Commission File Number 1-5690 ------------- ------ GENUINE PARTS COMPANY --------------------- (Exact name of registrant as specified in its charter) GEORGIA 58-0254510 ------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2999 CIRCLE 75 PARKWAY, ATLANTA, GEORGIA 30339 - ---------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770)953-1700 ------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (the close of the period covered by this report). 121,207,364 ----------- (Shares of Common Stock)
2 FORM 10-Q PART 1 - FINANCIAL INFORMATION Item 1 - Financial Statements GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> ASSETS June 30, Dec. 31, ------ 1996 1995 ---- ---- (Unaudited) (in thousands) <S> <C> <C> CURRENT ASSETS - -------------- Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,522 $ 44,254 Trade accounts receivable, less allowance for doubtful accounts (1996 - $6,163; 1995 - $2,104) . . . . . . . . . . . . . . . . . 647,506 565,305 Inventories - at lower of cost (substantially last-in, first-out method) or market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,139,583 1,127,456 Prepaid and other current accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 22,662 26,946 ----------- ---------- TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870,273 1,763,961 Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,013 206,932 Total property, plant and equipment, less allowance for depreciation (1996 - $224,570; 1995 - $209,797) . . . . . . . . . . . . . . . . . . 317,624 303,239 ----------- ---------- $ 2,399,910 $2,274,132 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES - ------------------- Accounts payable and notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 448,715 $ 376,704 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,808 1,807 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,636 38,401 Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,655 58,612 ----------- ---------- TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560,814 475,524 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,540 60,607 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,691 58,690 Minority interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 30,513 28,429 SHAREHOLDERS' EQUITY - -------------------- Stated capital: Preferred Stock, par value - $1 per share Authorized - 10,000,000 shares - None Issued . . . . . . . . . . . . . . . . . . -0- -0- Common Stock, par value - $1 per share Authorized - 450,000,000 shares Issued - 1996 - 121,207,364; 1995 - 121,913,040 . . . . . . . . . . . . . . . . . 121,207 121,913 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,179 -0- Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,561,966 1,528,969 ----------- ---------- TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . 1,689,352 1,650,882 ----------- ---------- $ 2,399,910 $2,274,132 =========== ========== </TABLE> See notes to condensed consolidated financial statements. 2
3 FORM 10-Q GENUINE PARTS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <TABLE> <CAPTION> Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- (000 omitted except per share data) <S> <C> <C> <C> <C> Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 1,444,873 $ 1,308,712 $ 2,844,795 $2,589,942 Cost of goods sold . . . . . . . . . . . . . . . . . . 1,020,932 917,756 2,011,234 1,816,432 --------- --------- --------- --------- 423,941 390,956 833,561 773,510 Selling, administrative & other expenses . . . . . . . 290,366 267,307 577,880 536,315 --------- --------- --------- --------- Income before income taxes . . . . . . . . . . . . . . 133,575 123,649 255,681 237,195 Income taxes . . . . . . . . . . . . . . . . . . . . . 52,762 48,718 100,994 93,228 --------- --------- --------- --------- NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 80,813 $ 74,931 $ 154,687 $ 143,967 ========= ========= ========= ========= Average common shares outstanding . . . . . . . . . . . 121,402 122,758 121,604 122,715 ========= ========= ========= ========= Net income per common share . . . . . . . . . . . . . . $ .67 $ .61 $ 1.27 $ 1.17 ========= ========= ========= ========= Dividends declared per common share . . . . . . . . . . $ .335 $ .315 $ .67 $ .63 ========= ========= ========= ========= </TABLE> See notes to condensed consolidated financial statements. 3
4 FORM 10-Q GENUINE PARTS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) <TABLE> <CAPTION> Six Months Ended June 30, -------------- (000 omitted) <S> <C> <C> Cash Provided By: 1996 1995 ---- ---- OPERATING ACTIVITIES: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $154,687 $ 143,967 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,559 20,634 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,084 1,585 Changes in operating assets and liabilities: Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82,201) (81,816) Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,127) (21,196) Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,011 (36,480) Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,001 2,639 Other operating assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,720) (11,441) -------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,294 17,892 INVESTING ACTIVITIES: Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . (41,473) (43,256) Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,551) (13,566) -------- --------- NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43,024) (56,822) FINANCING ACTIVITIES: Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,189) (73,905) Purchase of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,266) -0- Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34,547) 63,130 -------- --------- NET CASH USED IN FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (154,002) (10,775) -------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . 16,268 (49,705) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . 44,254 82,410 -------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,522 $ 32,705 ======== ========= </TABLE> See notes to condensed consolidated financial statements. 4
5 FORM 10-Q NOTES TO FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. However, in the opinion of management, all adjustments necessary to a fair statement of the operations of the interim period have been made. These adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 1996, are not necessarily indicative of results for the entire year. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Genuine Parts Company (the "Company") reported record sales and earnings in the second quarter of 1996. Sales for the quarter were $1.4 billion, up 10% over the same period in 1995. Net income in the quarter advanced 8% to $80.8 million. On a per-share basis, net income in the quarter was $.67 versus $.61 in the same quarter of the prior year. For the six months ended, June 30, 1996, sales totaled $2.8 billion, up 10% over the first half of 1995, while net income was $155 million, an increase of 7.5%. Earnings per share were $1.27 for the first six months of 1996 and $1.17 for the same period in 1995. Sales for the Automotive Parts Group advanced 8% for the quarter and 7% for the first six months, reflecting increased demand attributed to ongoing NAPA marketing programs and favorable fundamentals such as vehicle age and usage levels. Sales for the Industrial Parts Group increased 13% for the quarter and 12% for the six months ended June 30, 1996, as industrial production continues at a healthy level with high capacity utilization in many industries. The Office Products Group was up 15% for the quarter and 14% for the six month period, reflecting a response to innovative marketing programs, outstanding service levels and geographic expansion. Cost of goods sold increased slightly as a percentage of net sales over the same quarter the prior year. Selling, administrative and other expenses increased 9% for the quarter and 8% for the six months. The percentage of selling, administrative and other expenses to net sales decreased slightly, due mostly to improved expense control. The ratio of current assets to current liabilities remains very good at 3.3 to 1 and the Company's cash position is good. PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The 1996 Annual Meeting of Shareholders of the Company was held on April 15, 1996, pursuant to notice given to shareholders of record on February 9, 1996, at which date there were 121,869,968 shares of Common Stock outstanding. At the Annual Meeting, the shareholders elected four Class I directors with terms to expire at the 1999 Annual Meeting. As to the following named individuals, the holders of 103,842,640 shares of the Company's Common Stock voted in favor of their election, the holders of 1,383,767 shares withheld authority for their election. Class I ------- Bradley Currey, Jr. Robert P. Forrestal Thomas C. Gallagher Lawrence G. Steiner The following individual's term of office as a director continued after the Annual Meeting: Class II Class III -------- --------- William A. Parker, Jr. Jean Douville John J. Scalley J. Hicks Lanier James B. Williams Larry L. Prince Alana S. Shepherd
6 FORM 10-Q The shareholders also ratified the selection of Ernst & Young LLP as independent auditors of the Company for 1996. The holders of 105,033,097 shares of Common Stock voted in favor of the ratification, holders of 48,824 shares voted against, holders of 144,486 shares abstained, and there were no broker non-votes. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of this report: Exhibit 3.1 Restated Articles of Incorporation of the Company (incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995). Exhibit 3.2 Bylaws of the Company, as amended (incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 5, 1993). Exhibit 27 Financial Data Schedule (for SEC use only). (b) No reports on Form 8-K were filed by the registrant during the quarter ended June 30, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Genuine Parts Company --------------------- (Registrant) Date July 30, 1996 /s/ Jerry W. Nix ------------- --------------------------------------- Jerry W. Nix Senior Vice President - Finance /s/ George W. Kalafut --------------------------------------- George W. Kalafut Executive Vice President - Finance and Administration (Principal Financial and Accounting Officer) 6