UNITED STATES
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 September 30, 2014
OR
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission file number: 1-5690
GENUINE PARTS
COMPANY
(Exact name of registrant as specified in its charter)
|
|
|
GEORGIA |
|
58-0254510 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
|
|
2999 CIRCLE 75 PARKWAY, ATLANTA, GA |
|
30339 |
(Address of principal executive offices) |
|
(Zip Code) |
(770) 953-1700
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer |
|
x |
|
Accelerated filer |
|
¨ |
|
|
|
|
Non-accelerated filer |
|
¨ (Do not check if a smaller reporting company) |
|
Smaller reporting company |
|
¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
|
|
|
Class |
|
Outstanding at September 30, 2014 |
Common Stock, $1.00 par value per share |
|
152,856,646 Shares |
PART I - FINANCIAL INFORMATION
Item 1. |
Financial Statements |
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2014 |
|
|
2013 |
|
|
|
(unaudited) |
|
|
|
|
|
|
(in thousands, except share
and per share data) |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
135,537 |
|
|
$ |
196,893 |
|
Trade accounts receivable, less allowance for doubtful accounts (2014 $19,486; 2013 $14,423) |
|
|
1,976,056 |
|
|
|
1,664,819 |
|
Merchandise inventories, net at lower of cost or market |
|
|
3,014,102 |
|
|
|
2,946,021 |
|
Prepaid expenses and other current assets |
|
|
459,682 |
|
|
|
413,758 |
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|
|
|
|
|
|
|
|
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TOTAL CURRENT ASSETS |
|
|
5,585,377 |
|
|
|
5,221,491 |
|
|
|
|
Goodwill |
|
|
869,219 |
|
|
|
789,971 |
|
Other intangible assets, less accumulated amortization |
|
|
575,137 |
|
|
|
499,385 |
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Deferred tax assets |
|
|
90,539 |
|
|
|
97,555 |
|
Other assets |
|
|
558,932 |
|
|
|
401,834 |
|
Property, plant and equipment, less allowance for depreciation (2014 $863,644; 2013 $807,436) |
|
|
662,253 |
|
|
|
670,061 |
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|
|
|
|
|
|
|
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TOTAL ASSETS |
|
$ |
8,341,457 |
|
|
$ |
7,680,297 |
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|
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|
|
|
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|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
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CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
2,549,193 |
|
|
$ |
2,269,671 |
|
Current portion of debt |
|
|
335,394 |
|
|
|
264,658 |
|
Dividends payable |
|
|
87,906 |
|
|
|
82,746 |
|
Income taxes payable |
|
|
24,481 |
|
|
|
9,237 |
|
Other current liabilities |
|
|
638,808 |
|
|
|
556,732 |
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
|
3,635,782 |
|
|
|
3,183,044 |
|
Long-term debt |
|
|
500,000 |
|
|
|
500,000 |
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Pension and other postretirement benefit liabilities |
|
|
135,407 |
|
|
|
140,171 |
|
Deferred tax liabilities |
|
|
79,690 |
|
|
|
83,316 |
|
Other long-term liabilities |
|
|
482,430 |
|
|
|
414,998 |
|
|
|
|
EQUITY: |
|
|
|
|
|
|
|
|
Preferred stock, par value - $1 per share |
|
|
|
|
|
|
|
|
Authorized 10,000,000 shares None issued |
|
|
-0- |
|
|
|
-0- |
|
Common stock, par value - $1 per share |
|
|
|
|
|
|
|
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Authorized 450,000,000 shares |
|
|
|
|
|
|
|
|
Issued 2014 152,856,646; 2013 153,773,098 |
|
|
152,857 |
|
|
|
153,773 |
|
Additional paid-in capital |
|
|
26,365 |
|
|
|
14,935 |
|
Retained earnings |
|
|
3,764,807 |
|
|
|
3,578,021 |
|
Accumulated other comprehensive loss |
|
|
(446,854 |
) |
|
|
(397,655 |
) |
|
|
|
|
|
|
|
|
|
TOTAL PARENT EQUITY |
|
|
3,497,175 |
|
|
|
3,349,074 |
|
Noncontrolling interests in subsidiaries |
|
|
10,973 |
|
|
|
9,694 |
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|
|
|
|
|
|
|
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TOTAL EQUITY |
|
|
3,508,148 |
|
|
|
3,358,768 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
8,341,457 |
|
|
$ |
7,680,297 |
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
2
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
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Three Months Ended Sept. 30, |
|
|
Nine Months Ended Sept. 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
(unaudited) |
|
|
|
(in thousands, except per share data) |
|
Net sales |
|
$ |
3,985,909 |
|
|
$ |
3,685,243 |
|
|
$ |
11,519,193 |
|
|
$ |
10,560,042 |
|
Cost of goods sold |
|
|
2,802,487 |
|
|
|
2,584,320 |
|
|
|
8,071,973 |
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|
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7,432,263 |
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
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|
Gross profit |
|
|
1,183,422 |
|
|
|
1,100,923 |
|
|
|
3,447,220 |
|
|
|
3,127,779 |
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|
|
|
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|
Operating expenses: |
|
|
|
|
|
|
|
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|
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|
|
|
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Selling, administrative and other expenses |
|
|
850,156 |
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|
|
793,957 |
|
|
|
2,486,162 |
|
|
|
2,221,096 |
|
Depreciation and amortization |
|
|
34,983 |
|
|
|
35,220 |
|
|
|
108,623 |
|
|
|
98,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
885,139 |
|
|
|
829,177 |
|
|
|
2,594,785 |
|
|
|
2,319,168 |
|
|
|
|
|
|
Income before income taxes |
|
|
298,283 |
|
|
|
271,746 |
|
|
|
852,435 |
|
|
|
808,611 |
|
Income taxes |
|
|
107,767 |
|
|
|
98,000 |
|
|
|
306,708 |
|
|
|
274,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net income |
|
$ |
190,516 |
|
|
$ |
173,746 |
|
|
$ |
545,727 |
|
|
$ |
534,492 |
|
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|
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|
Basic net income per common share |
|
$ |
1.25 |
|
|
$ |
1.12 |
|
|
$ |
3.56 |
|
|
$ |
3.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Diluted net income per common share |
|
$ |
1.24 |
|
|
$ |
1.12 |
|
|
$ |
3.53 |
|
|
$ |
3.43 |
|
|
|
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|
|
|
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|
Dividends declared per common share |
|
$ |
.575 |
|
|
$ |
.5375 |
|
|
$ |
1.725 |
|
|
$ |
1.6125 |
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
153,018 |
|
|
|
154,567 |
|
|
|
153,401 |
|
|
|
154,835 |
|
|
|
|
|
|
Dilutive effect of stock options and non- vested restricted stock awards |
|
|
1,080 |
|
|
|
1,096 |
|
|
|
1,062 |
|
|
|
1,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding assuming dilution |
|
|
154,098 |
|
|
|
155,663 |
|
|
|
154,463 |
|
|
|
155,917 |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
95,077 |
|
|
$ |
192,317 |
|
|
$ |
496,528 |
|
|
$ |
454,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
3
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended September 30, |
|
|
|
2014 |
|
|
2013 |
|
|
|
(unaudited) |
|
|
|
(in thousands) |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
545,727 |
|
|
$ |
534,492 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
108,623 |
|
|
|
98,072 |
|
Share-based compensation |
|
|
12,641 |
|
|
|
8,932 |
|
Excess tax benefits from share-based compensation |
|
|
(7,269 |
) |
|
|
(12,020 |
) |
Other |
|
|
1,267 |
|
|
|
(50,608 |
) |
Changes in operating assets and liabilities |
|
|
(71,666 |
) |
|
|
258,617 |
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
589,323 |
|
|
|
837,485 |
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(73,785 |
) |
|
|
(84,146 |
) |
Acquisitions and other investing activities |
|
|
(275,295 |
) |
|
|
(614,109 |
) |
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
|
(349,080 |
) |
|
|
(698,255 |
) |
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from debt |
|
|
2,032,550 |
|
|
|
2,094,550 |
|
Payments on debt |
|
|
(1,974,581 |
) |
|
|
(1,990,204 |
) |
Share-based awards exercised, net of taxes paid |
|
|
(8,266 |
) |
|
|
(14,313 |
) |
Excess tax benefits from share-based compensation |
|
|
7,269 |
|
|
|
12,020 |
|
Dividends paid |
|
|
(259,365 |
) |
|
|
(243,262 |
) |
Purchase of stock |
|
|
(95,546 |
) |
|
|
(71,738 |
) |
|
|
|
|
|
|
|
|
|
NET CASH USED IN FINANCING ACTIVITIES |
|
|
(297,939 |
) |
|
|
(212,947 |
) |
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
|
(3,660 |
) |
|
|
(8,508 |
) |
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(61,356 |
) |
|
|
(82,225 |
) |
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
|
196,893 |
|
|
|
403,095 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
|
$ |
135,537 |
|
|
$ |
320,870 |
|
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
4
NOTES TO CONDENSED CONSOLIDATED 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 required by accounting principles generally accepted in the United States for complete financial statements. Except as disclosed herein, there has been no material change in the information
disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Genuine Parts Company (the Company) for the year ended December 31, 2013. Accordingly, the unaudited interim condensed
consolidated financial statements and related disclosures herein should be read in conjunction with the Companys 2013 Annual Report on Form 10-K.
The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated
financial statements. Specifically, the Company makes estimates and assumptions in its interim condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, customer sales returns, and volume incentives earned,
among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (LIFO) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual
book to physical inventory adjustment and LIFO valuation, which is performed each year-end. Reserves for bad debts and customer sales returns are estimated and accrued on an interim basis based upon historical experience. Volume incentives are
estimated based upon cumulative and projected purchasing levels. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant.
In the opinion of management, all adjustments necessary for a fair presentation of the Companys financial results for the interim periods have been
made. These adjustments are of a normal recurring nature. The results of operations for the nine month period ended September 30, 2014 are not necessarily indicative of results for the entire year. The Company has evaluated subsequent events
through the date the financial statements covered by this quarterly report were issued.
Note B - Segment Information
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|
|
Three Months Ended Sept. 30, |
|
|
Nine Months Ended Sept. 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
$ |
2,099,518 |
|
|
$ |
2,016,076 |
|
|
$ |
6,108,429 |
|
|
$ |
5,572,415 |
|
Industrial |
|
|
1,220,539 |
|
|
|
1,110,309 |
|
|
|
3,573,048 |
|
|
|
3,344,421 |
|
Office products |
|
|
496,572 |
|
|
|
430,457 |
|
|
|
1,333,455 |
|
|
|
1,252,857 |
|
Electrical/electronic materials |
|
|
193,321 |
|
|
|
142,818 |
|
|
|
561,686 |
|
|
|
424,973 |
|
Other |
|
|
(24,041 |
) |
|
|
(14,417 |
) |
|
|
(57,425 |
) |
|
|
(34,624 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
3,985,909 |
|
|
$ |
3,685,243 |
|
|
$ |
11,519,193 |
|
|
$ |
10,560,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
$ |
193,258 |
|
|
$ |
180,166 |
|
|
$ |
550,051 |
|
|
$ |
487,591 |
|
Industrial |
|
|
95,262 |
|
|
|
79,596 |
|
|
|
273,740 |
|
|
|
247,382 |
|
Office products |
|
|
33,318 |
|
|
|
28,094 |
|
|
|
98,447 |
|
|
|
91,054 |
|
Electrical/electronic materials |
|
|
17,766 |
|
|
|
12,625 |
|
|
|
49,758 |
|
|
|
35,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit |
|
|
339,604 |
|
|
|
300,481 |
|
|
|
971,996 |
|
|
|
861,324 |
|
Interest expense, net |
|
|
(6,283 |
) |
|
|
(7,031 |
) |
|
|
(18,713 |
) |
|
|
(18,236 |
) |
Other intangible assets amortization |
|
|
(8,947 |
) |
|
|
(7,726 |
) |
|
|
(26,321 |
) |
|
|
(20,487 |
) |
Other, net |
|
|
(26,091 |
) |
|
|
(13,978 |
) |
|
|
(74,527 |
) |
|
|
(13,990 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
298,283 |
|
|
$ |
271,746 |
|
|
$ |
852,435 |
|
|
$ |
808,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by segment exclude the effect of certain discounts, incentives and freight billed to customers. The line item
Other represents the net effect of the discounts, incentives and freight billed to customers, which is reported as a component of net sales in the Companys condensed consolidated statements of income and comprehensive income.
5
Note C - Other Comprehensive Income (Loss)
The difference between comprehensive income and net income was due to foreign currency translation adjustments and pension and other
post-retirement benefit adjustments, as summarized below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sept. 30, |
|
|
Nine Months Ended Sept. 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Net income |
|
$ |
190,516 |
|
|
$ |
173,746 |
|
|
$ |
545,727 |
|
|
$ |
534,492 |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
(94,957 |
) |
|
|
5,369 |
|
|
|
(56,318 |
) |
|
|
(116,900 |
) |
|
|
|
|
|
Pension and other post-retirement benefit adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of prior service credit, net of tax |
|
|
(490 |
) |
|
|
(1,314 |
) |
|
|
(1,470 |
) |
|
|
(3,956 |
) |
Recognition of actuarial loss, net of tax |
|
|
4,424 |
|
|
|
12,726 |
|
|
|
13,005 |
|
|
|
38,906 |
|
Net actuarial (loss) gain, net of tax |
|
|
(4,416 |
) |
|
|
1,790 |
|
|
|
(4,416 |
) |
|
|
1,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive (loss) income |
|
|
(95,439 |
) |
|
|
18,571 |
|
|
|
(49,199 |
) |
|
|
(80,160 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
95,077 |
|
|
$ |
192,317 |
|
|
$ |
496,528 |
|
|
$ |
454,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables present the changes in accumulated other comprehensive (loss) income by component for the nine months
ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
Changes in Accumulated Other Comprehensive (Loss) Income by Component |
|
|
|
Pension and Other Post- Retirement Benefits |
|
|
Foreign Currency Translation |
|
|
Total |
|
|
|
(in thousands) |
|
Beginning balance, January 1 |
|
$ |
(360,036 |
) |
|
$ |
(37,619 |
) |
|
$ |
(397,655 |
) |
|
|
|
|
Other comprehensive income (loss) before reclassifications, net of tax |
|
|
(4,416 |
) |
|
|
(56,318 |
) |
|
|
(60,734 |
) |
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax |
|
|
11,535 |
|
|
|
|
|
|
|
11,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
7,119 |
|
|
|
(56,318 |
) |
|
|
(49,199 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, September 30 |
|
$ |
(352,917 |
) |
|
$ |
(93,937 |
) |
|
$ |
(446,854 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
Changes in Accumulated Other Comprehensive (Loss) Income by Component |
|
|
|
Pension and Other Post- Retirement Benefits |
|
|
Foreign Currency Translation |
|
|
Total |
|
|
|
(in thousands) |
|
Beginning balance, January 1 |
|
$ |
(632,576 |
) |
|
$ |
131,084 |
|
|
$ |
(501,492 |
) |
Other comprehensive income (loss) before reclassifications, net of tax |
|
|
1,790 |
|
|
|
(116,900 |
) |
|
|
(115,110 |
) |
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax |
|
|
34,950 |
|
|
|
|
|
|
|
34,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
36,740 |
|
|
|
(116,900 |
) |
|
|
(80,160 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, September 30 |
|
$ |
(595,836 |
) |
|
$ |
14,184 |
|
|
$ |
(581,652 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The accumulated other comprehensive (loss) income components related to the pension benefits are included in the computation
of net periodic benefit (income) cost in the employee benefit plans footnote.
Note D Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with
Customers (ASU 2014-09), which creates a single, comprehensive revenue recognition model for all contracts with customers. The updated standard requires an entity to recognize revenue to reflect the transfer of promised goods or
services to customers at an amount that the entity expects to be entitled to in exchange for those goods and services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and may
be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as 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. Early adoption is not permitted. The Company is currently evaluating the impact of ASU 2014-09 on the
Companys consolidated financial statements and related disclosures.
Note E Share-Based Compensation
As more fully discussed in Note 5 of the Companys notes to the consolidated financial statements in its 2013 Annual Report on
Form 10-K, the Company maintains various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), performance awards,
dividend equivalents and other share-based awards. SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of the Companys common stock on the date of
exercise over the base value of the grant. The terms of such SARs require net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of the Companys common stock at a
future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion of awards
under these plans. Most awards may be exercised or converted to shares not earlier than twelve months nor later than ten years from the date of grant. At September 30, 2014, total compensation cost related to nonvested awards not yet recognized
was approximately $33.0 million, as compared to $26.0 million at December 31, 2013. 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 September 30, 2014 was approximately $155.9 million. At September 30, 2014, the aggregate intrinsic value for SARs and RSUs vested totaled approximately $98.0 million, and the weighted-average contractual life for
outstanding and exercisable SARs and RSUs was approximately six and five years, respectively. For the nine months ended September 30, 2014, $12.6 million of share-based compensation cost was recorded, as compared to $8.9 million for the same
period in the prior year. On April 1, 2014, the Company granted approximately 680,000 SARs and 165,000 RSUs.
7
Options to purchase approximately 0.7 million and 0.6 million shares of common stock were outstanding
but excluded from the computation of diluted earnings per share for the three and nine month periods ended September 30, 2014, and remained unchanged as compared to the same three and nine month periods of the prior year, respectively. These
options were excluded from the computation of diluted net income per common share because the options exercise price was greater than the average market price of the common stock.
Note F Employee Benefit Plans
Net periodic benefit (income) cost for the pension plans included the following components for the three months ended September 30:
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits |
|
|
|
2014 |
|
|
2013 |
|
|
|
(in thousands) |
|
Service cost |
|
$ |
1,910 |
|
|
$ |
4,798 |
|
Interest cost |
|
|
25,760 |
|
|
|
22,219 |
|
Expected return on plan assets |
|
|
(36,208 |
) |
|
|
(33,414 |
) |
Amortization of prior service credit |
|
|
(468 |
) |
|
|
(1,884 |
) |
Amortization of actuarial loss |
|
|
6,745 |
|
|
|
20,535 |
|
|
|
|
|
|
|
|
|
|
Net periodic benefit (income) cost |
|
$ |
(2,261 |
) |
|
$ |
12,254 |
|
|
|
|
|
|
|
|
|
|
Net periodic benefit (income) cost for the pension plans included the following components for the nine months ended
September 30:
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits |
|
|
|
2014 |
|
|
2013 |
|
|
|
(in thousands) |
|
Service cost |
|
$ |
5,746 |
|
|
$ |
14,735 |
|
Interest cost |
|
|
76,792 |
|
|
|
67,017 |
|
Expected return on plan assets |
|
|
(108,639 |
) |
|
|
(100,427 |
) |
Amortization of prior service credit |
|
|
(1,400 |
) |
|
|
(5,670 |
) |
Amortization of actuarial loss |
|
|
19,953 |
|
|
|
62,744 |
|
|
|
|
|
|
|
|
|
|
Net periodic benefit (income) cost |
|
$ |
(7,548 |
) |
|
$ |
38,399 |
|
|
|
|
|
|
|
|
|
|
Pension benefits also include amounts related to a supplemental retirement plan. During the nine months ended
September 30, 2014, the Company made a $38.7 million contribution to the pension plan.
Note G Guarantees
The Company guarantees the borrowings of certain independently controlled automotive parts stores (independents) and certain
other affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). Presently, the independents are generally consolidated by unaffiliated enterprises that have a controlling financial interest through
ownership of a majority voting interest in the independent. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the
guarantee. The Company has concluded that the independents are variable interest entities, but that the Company is not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most
significantly impact the entitys economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring
and maintaining appropriate inventories, and store hours. Separately, the Company concluded the affiliates are not variable interest entities. The Companys 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 Companys 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 September 30, 2014, the Company was in compliance with all such covenants.
At September 30, 2014, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $283.3 million.
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
8
portion of the amounts paid under the guarantee. When it is deemed probable that the Company will incur a loss in connection with a guarantee, a liability is recorded equal to this estimated
loss. To date, the Company has had no significant losses in connection with guarantees of independents and affiliates borrowings.
The Company
has accrued for guarantees related to the independents and affiliates borrowings as of September 30, 2014. These liabilities are not material to the financial position of the Company and are included in Other long-term
liabilities in the accompanying condensed consolidated balance sheets.
Note H Fair Value of Financial Instruments
The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade
accounts payable, and borrowings under the line of credit approximate their respective fair values based on the short-term nature of these instruments. At September 30, 2014, the carrying value and the fair value of fixed rate debt were
approximately $500.0 million and $506.3 million, 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. The carrying value of the fixed rate debt is included in Long-term debt in the accompanying condensed consolidated balance sheet.
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
The
following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes contained herein and with the audited consolidated financial statements, accompanying notes, related information
and Managements Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2013.
Forward-Looking Statements
Some statements in this
report, as well as in other materials we file with the Securities and Exchange Commission (SEC) or otherwise release to the public and in materials that we make available on our website, constitute forward-looking statements that are subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. Forward-looking statements may relate, for
example, to future operations, prospects, strategies, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautions that its forward-looking statements
involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or
events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, slowing demand for the Companys products, changes in general economic conditions, including,
unemployment, inflation or deflation, high energy costs, uncertain credit markets and other macro-economic conditions, the ability to maintain favorable vendor arrangements and relationships, disruptions in our vendors operations, competitive
product, service and pricing pressures, the Companys ability to successfully implement its business initiatives in each of its four business segments, the Companys ability to successfully integrate its acquired businesses, the
uncertainties and costs of litigation, as well as other risks and uncertainties discussed in the Companys Annual Report on Form 10-K for 2013 and from time to time in the Companys subsequent filings with the SEC.
Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as
required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent reports on Forms 10-K, 10-Q, 8-K and other reports to the SEC.
Overview
Genuine Parts Company is a service organization
engaged in the distribution of automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials. The Company has a long tradition of growth dating back to 1928, the year we were founded in Atlanta,
Georgia. During the nine months ended September 30, 2014, business was conducted throughout the United States, Canada, Australia, New Zealand, Mexico and Puerto Rico from approximately 2,600 locations.
9
For the three months ended September 30, 2014, the Company recorded consolidated net income of $190.5
million compared to consolidated net income of $173.7 million, an increase of 10% from the same three month period in the prior year. For the nine months ended September 30, 2014, we recorded consolidated net income of $545.7 million
compared to consolidated net income of $534.5 million in the same period last year, an increase of 2%.
In association with the April 1, 2013
acquisition of the remaining 70% interest in GPC Asia Pacific, the Companys initial 30% investment was remeasured and, net of certain one-time purchase accounting adjustments, amounted to a pre-tax income adjustment of approximately $36
million recorded in the second quarter of 2013. In accounting for the adjustments, approximately $18 million in costs were recorded to cost of goods sold and a $54 million gain, net of expenses, was recorded to selling, administrative &
other expenses. The adjustments recorded in the second quarter of 2013, combined with the lower tax rate for the remeasurement, favorably impacted diluted earnings per share in the second quarter of 2013 by $0.22. Additionally, a pre-tax expense
adjustment of $3 million or $.01 diluted earnings per share, was recorded in the third quarter of 2013. Before the one-time adjustments in 2013, net income for the nine months of $545.7 million was up 9% compared to the same period in 2013. Earnings
per share on a diluted basis of $3.53 were up 10% compared to the same period in 2013, excluding the adjustment.
The Company continues to focus on a
variety of initiatives to facilitate continued growth including strategic acquisitions, the introduction of 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.
Sales
Sales
for the third quarter of 2014 were $3.99 billion, an increase of 8% compared to $3.69 billion for the same period in 2013. For the nine months ended September 30, 2014, sales were $11.52 billion, an increase of 9% compared to $10.56 billion in
the same period of the prior year.
Sales for the Automotive Parts Group increased 4% in the third quarter of 2014 and 10% for the nine months ended
September 30, 2014, as compared to the same periods in the previous year. The increase in this groups revenues for the three months ended September 30, 2014 was due to organic sales growth, offset by a negative foreign currency
impact of approximately 1% associated with the sales from our Australian and Canadian businesses. For the nine months ended September 30, 2014, the 10% increase in this groups revenues was due to the 5% accretive impact of the
Companys acquisitions and core sales growth of approximately 6%, offset by an unfavorable foreign currency impact of approximately 1%. In the quarters ahead, we anticipate increased sales growth in the Automotive Parts Group due primarily to
the Companys initiatives to drive organic growth.
The Industrial Products Groups sales increased by 10% and 7% for the three and nine month
periods ended September 30, 2014, respectively, as compared to the same periods in 2013. The sales increase for the three months ended September 30, 2014 reflects an approximate 3% accretive impact from the Companys acquisitions,
with the remaining 8% representing organic sales growth, offset by a negative 1% foreign currency impact. The sales increase for the nine months ended September 30, 2014 reflect an approximate 3% accretive impact from the Companys
acquisitions and 5% organic sales growth, offset by an unfavorable foreign currency impact of approximately 1%. The Industrial Products Group experienced improved demand patterns in the three months ended September 30, 2014 as compared to the
same period in 2013. We expect the current industry conditions, as well as internal sales initiatives and acquisitions to support continued revenue growth for this group in the quarters ahead.
Sales for the Office Products Group increased 15% and 6% for the three and nine month periods ended September 30, 2014, as compared to the same periods
in 2013, respectively. The increase in this groups revenues for the quarter ended September 30, 2014 is due to the 7% accretive impact of acquisitions, with the additional 8% growth in the three months ended September 30, 2014
representing organic sales growth. The sales increase for the nine months ended September 30, 2014 reflects an approximate 4% accretive impact of acquisitions and 2% organic sales growth. We expect internal sales initiatives and acquisitions to
support revenue growth for this group in the quarters ahead despite the industry-wide slowdown in office product consumption.
Sales for the
Electrical/Electronic Materials Group increased 35% and 32% for the three and nine month periods ended September 30, 2014, as compared to the same periods of the previous year, respectively. The increase in this groups revenues for the
quarter and nine months ended September 30, 2014 was due to the accretive impact of the Companys acquisitions. Our focused growth initiatives should enable this group to report gradual organic revenue improvement and moderately strong
revenue increases from their recently completed acquisitions in the quarters ahead.
10
Industry pricing was basically flat in the Automotive and ElectricalElectronic Materials segments and increased
by approximately 1% in the Industrial Products and Office Products segments for the nine month period ended September 30, 2014.
Cost of Goods
Sold/Expenses
Cost of goods sold for the third quarter of 2014 was $2.80 billion, an 8% increase from $2.58 billion for the third quarter of 2013. As
a percentage of net sales, cost of goods sold increased to 70.3% of net sales for the three month period ended September 30, 2014, as compared to 70.1% for the same period of the prior year. For the nine months ended September 30, 2014,
cost of goods sold was $8.07 billion, a 9% increase from $7.43 billion for the same period last year, and as a percent of sales decreased to 70.1% compared to 70.4%. The increase in cost of goods sold for the three and nine month periods ended
September 30, 2014 primarily relates to the sales increase for those periods as compared to the same three and nine month periods of the prior year. For the nine months ended September 30, 2014, the decrease in cost of goods sold as a
percentage of net sales primarily relates to the one-time cost recorded to cost of goods sold associated with the 2013 acquisition of the remaining 70% interest in GPC Asia Pacific as previously discussed. In addition, the Company has a lower cost
of goods sold and a higher level of operating costs at the GPC Asia Pacific business due to its 100% owned store-based model, as compared to the Companys other automotive businesses. The Companys cost of goods sold include the impact of
GPC Asia Pacific for the nine months ended September 30, 2014, as compared to six months ended September 30, 2013. The Companys cost of goods sold includes the total cost of merchandise sold, including freight expenses associated
with moving merchandise from our vendors to our distribution centers and retail stores, vendor income and inventory adjustments. Gross profit as a percentage of net sales may fluctuate based on (i) changes in merchandise costs and related
vendor income or vendor pricing, (ii) variations in product and customer mix, (iii) price changes in response to competitive pressures and (iv) physical inventory and LIFO adjustments.
Total operating expenses of $885.1 million decreased to 22.2% of net sales for the third quarter of 2014 compared to $829.2 million, or 22.5% of sales for the
same period of the prior year. For the nine months ended September 30, 2014, these expenses totaled $2.59 billion, or 22.5% of sales, an increase from $2.32 billion, or 22.0% of sales for the same period in the prior year. The increase in
operating expenses as a percentage of net sales for the nine months ended September 30, 2014 reflects the impact of the one-time acquisition gain, net of expenses, recorded to selling, administrative & other expenses in the three month
period ended June 30, 2013, as previously discussed. In addition, the Company has a higher level of operating costs at GPC Asia Pacific due to its 100% owned store-based model. The Companys cost saving initiatives, including the
Companys pension plan freeze effective January 1, 2014, have partially offset these increases. We continue to focus on effectively managing the costs in our business with ongoing investments in technology and supply chain initiatives
primarily associated with freight and logistics.
The Companys operating expenses are substantially comprised of compensation and benefit related
costs for personnel. Other major expense categories include facility occupancy costs for headquarters, distribution center and store operations, insurance costs, accounting, legal and professional services, transportation and delivery costs, travel
and advertising. Managements ongoing cost control measures in these areas have served to improve the Companys overall cost structure.
Operating Profit
Operating profit of $339.6 million
increased to 8.5% of net sales for the three months ended September 30, 2014, compared to $300.5 million or 8.2% of net sales for the same three month period of the prior year. For the nine months ended September 30, 2014, operating profit
of $972.0 million increased to 8.4% of net sales, compared to $861.3 million or 8.2% of net sales in the same period in 2013. The increase in operating profit as a percentage of net sales for the three and nine month periods ended September 30,
2014 is primarily due to the Companys increased revenues and related expense leverage, as well as cost savings including savings from the Companys pension plan freeze effective January 1, 2014.
The Automotive Parts Groups operating profit increased 7% in the third quarter of 2014 and its operating profit margin increased to 9.2%, as compared to
8.9% in the same three month period of the prior year. For the nine months ended September 30, 2014, operating profit increased 13% compared to the same period of the prior year, and the operating profit margin increased to 9.0% compared to
8.8% for the same period last year. The Industrial Products Groups operating profit increased 20% in the third quarter of 2014 compared to the third quarter of 2013, and the operating profit margin for this group increased to 7.8% compared to
7.2% for the same period of the previous year. Operating profit for the Industrial Products Group increased by 11% for the nine month period ended September 30, 2014, compared to the same period in 2013, and the operating profit margin
increased to 7.7% compared to 7.4% for the same period in 2013.
11
The Office Products Groups operating profit increased 19% in the third quarter of 2014 compared to the same three month period in 2013, and the operating profit margin for this group
increased to 6.7% compared to 6.5% for the same three month period of 2013. For the nine months ended September 30, 2014, the Office Products Groups operating profit increased 8% compared to the same period of the prior year and the
operating profit margin increased to 7.4% compared to 7.3% for the for the same period in 2013. The Electrical/Electronic Materials Group increased its operating profit by 41% in the third quarter, and its operating profit margin increased to 9.2%
compared to 8.8% in the third quarter of the previous year. Operating profit for the Electrical/Electronic Materials Group increased by 41% for the nine month period ended September 30, 2014, compared to the same period in 2013, and the
operating profit margin increased to 8.9% compared to 8.3% for the same nine month period in 2013. For the three and nine month periods ended September 30, 2014, operating profit margin for each of the Automotive, Industrial, Office Products
and Electrical/Electronic Materials Groups improved due to cost savings and improved expense leverage on increased revenues.
Income Taxes
The effective income tax rate remained unchanged at 36.1% for the three month period ended September 30, 2014, compared to the same three month period
ended September 30, 2013. The effective income tax rate was 36.0% for the nine month period ended September 30, 2014, compared to 33.9% for the same period in 2013. The rate increase in the nine month period ended September 30, 2014
reflects the favorable tax rate applied to the one-time acquisition gain recorded in the three month period ended June 30, 2013.
Net Income
Net income for the three months ended September 30, 2014 was $190.5 million, an increase of 10%, as compared to $173.7 million for the same three
month period of 2013. On a per share diluted basis, net income was $1.24, an increase of 11% as compared to $1.12 for the third quarter of 2013. Net income for the nine months ended September 30, 2014, was $545.7 million, an increase of 2% from
$534.5 million recorded in the same period of the previous year. Net income on a per share diluted basis for the nine months ended September 30, 2014, was $3.53, as compared to $3.43 for the same period in 2013. Net income and earnings per
share on a diluted basis for the three and nine month periods ended September 30, 2013, include the one-time acquisition gain, net of expenses previously discussed.
Before the one-time adjustments in 2013 as previously discussed, net income for the nine month period ended September 30, 2014 of $545.7 million was up
9% and earnings per share on a diluted basis of $3.53 were up 10% as compared to the same nine month period of the previous year excluding the adjustments.
Financial Condition
The Companys cash balance of
$135.5 million at September 30, 2014 decreased $61.4 million or 31% from December 31, 2013. For the nine months ended September 30, 2014, the Company has used $275.3 million for acquisitions and other investing activities, $259.4
million for dividends paid to the Companys shareholders, $73.8 million for investments in the Company via capital expenditures and $95.5 million for share repurchases.
Accounts receivable increased $311.2 million or 19% from December 31, 2013, which is due to the Companys overall sales increase and acquisitions.
Inventory increased $68.1 million or 2% compared to the inventory balance at December 31, 2013, as inventory from acquisitions was marginally offset by planned inventory reductions. Accounts payable increased $279.5 million or 12% from
December 31, 2013, primarily due to acquisitions and more favorable payment terms negotiated with our vendors in the nine month period ended September 30, 2014. The Companys debt is discussed below.
Liquidity and Capital Resources
Total debt increased
$70.7 million, or 9%, from December 31, 2013, due to incremental borrowings under the Companys $850 million unsecured revolving line of credit primarily related to the Companys acquisitions. The line of credit matures in September
2017 and bears interest at LIBOR plus various margins, which is based on the Companys leverage ratio. At September 30, 2014, $335.4 million was outstanding under the line of credit.
The remaining debt outstanding is at fixed rates of interest and remains unchanged at $500.0 million as of September 30, 2014, compared to
December 31, 2013. The fixed rate debt is comprised of two notes of $250.0 million each, due in November 2016 and December 2023, carrying an interest rate of 3.35% and 2.99%, respectively. At September 30, 2014, the Company was in
compliance with all covenants connected with these borrowings.
12
The ratio of current assets to current liabilities was 1.5 to 1 at September 30, 2014, as compared to 1.6 to
1 at December 31, 2013.
The Company currently believes existing lines of credit and cash generated from operations will be sufficient to fund
anticipated operations, including share repurchases, if any, for the foreseeable future.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers
(ASU 2014-09), which creates a single, comprehensive revenue recognition model for all contracts with customers. The updated standard requires an entity to recognize revenue to reflect the transfer of promised goods or services to
customers at an amount that the entity expects to be entitled to in exchange for those goods and services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and may be adopted
either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as 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. Early adoption is not permitted. The Company is currently evaluating the impact of ASU 2014-09 on the Companys
consolidated financial statements and related disclosures.
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
Although the Company does not face material
risks related to interest rates and commodity prices, the Company is exposed to changes in foreign currency rates with respect to foreign currency denominated operating revenues and expenses. The Company has translation gains or losses that result
from translation of the results of operations of an operating units foreign functional currency into U.S. dollars for consolidated financial statement purposes. The Companys principal foreign currency exchange exposures are the
Australian dollar and Canadian dollar, which are the functional currency of our Australian and Canadian operations. As previously noted under Sales, foreign currency exchange exposure, particularly in regard to the Australian dollar and
Canadian dollar, negatively impacted our results for the three and nine month periods ended September 30, 2014. There have been no other material changes in market risk from the information provided in the Companys 2013 Annual Report on
Form10-K.
Item 4. |
Controls and Procedures |
As of the end of the period covered by this report, an evaluation was performed
under the supervision and with the participation of the Companys management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Companys disclosure controls and procedures. Based on
that evaluation, the Companys CEO and CFO concluded that the Companys disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be
disclosed by the Company in the reports that it files or furnishes under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and that
such information is accumulated and communicated to the Companys management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
There have been no changes in the Companys internal control over financial reporting identified in connection with the evaluation required by paragraph
(d) of Rule 13a-15 of the SEC that occurred during the Companys last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
PART II - OTHER INFORMATION
In addition to the other information set forth in this report, you should carefully
consider the factors discussed in Part I, Item 1A. Risk Factors in our 2013 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2013 Annual Report on
Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating
results.
13
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
Purchases of Equity Securities by the
Issuer and Affiliated Purchasers
The following table provides information about the Companys purchases of shares of the Companys common stock
during the quarter:
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total Number of Shares Purchased (1) |
|
|
Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs |
|
July 1, 2014 through July 31, 2014 |
|
|
227,509 |
|
|
$ |
84.73 |
|
|
|
220,000 |
|
|
|
9,813,749 |
|
|
|
|
|
|
August 1, 2014 through August 31, 2014 |
|
|
298,986 |
|
|
$ |
83.94 |
|
|
|
239,400 |
|
|
|
9,574,349 |
|
|
|
|
|
|
September 1, 2014 through September 30, 2014 |
|
|
74,335 |
|
|
$ |
88.08 |
|
|
|
37,000 |
|
|
|
9,537,349 |
|
|
|
|
|
|
Totals |
|
|
600,830 |
|
|
$ |
84.75 |
|
|
|
496,400 |
|
|
|
9,537,349 |
|
(1) |
Includes shares surrendered by employees to the Company to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of stock options and/or tax withholding
obligations. |
(2) |
On November 17, 2008, the Board of Directors announced that it had authorized the repurchase of 15 million shares. The authorization for this repurchase plan continues until all such shares have been
repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 9.5 million shares authorized in the 2008 plan remain available to be repurchased by the Company. There were no other publicly announced plans
as of September 30, 2014. |
14
|
(a) |
The following exhibits are filed or furnished as part of this report: |
|
|
|
Exhibit 3.1 |
|
Amended and Restated Articles of Incorporation of the Company, dated April 23, 2007 (incorporated herein by reference from Exhibit 3.1 to the Companys 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 Exhibit 3.2 to the Companys Current Report on Form 8-K dated November 18, 2013) |
|
|
Exhibit 31.1 |
|
Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Executive Officer - filed herewith |
|
|
Exhibit 31.2 |
|
Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Financial Officer - filed herewith |
|
|
Exhibit 32.1 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer furnished herewith |
|
|
Exhibit 32.2 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer furnished herewith |
|
|
Exhibit 101 |
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at September 30, 2014 and December 31, 2013; (ii) the Condensed Consolidated Statements of Income and Comprehensive Income
for the three and nine month periods ended September 30, 2014 and 2013; (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013; and (iv) the Notes to the Condensed Consolidated Financial
Statements |
15
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: November 6, 2014 |
|
|
|
|
|
/s/ Carol B. Yancey |
|
|
|
|
|
|
Carol B. Yancey |
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and Accounting Officer) |
16
EXHIBIT 31.1
CERTIFICATIONS
I, Thomas C. Gallagher, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Genuine Parts Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and |
|
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: November 6, 2014
|
/s/ Thomas C. Gallagher |
Thomas C. Gallagher |
Chairman and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, Carol B. Yancey, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Genuine Parts Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and |
|
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: November 6, 2014
|
/s/ Carol B. Yancey |
Carol B. Yancey |
Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) |
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
In connection with the Quarterly Report of Genuine Parts Company (the Company) on Form 10-Q for the quarter ended
September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Thomas C. Gallagher, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as
adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
|
1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
/s/ Thomas C. Gallagher |
Thomas C. Gallagher |
Chairman and Chief Executive Officer
November 6, 2014 |
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
In connection with the Quarterly Report of Genuine Parts Company (the Company) on Form 10-Q for the quarter ended
September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Carol B. Yancey, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
|
1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
/s/ Carol B. Yancey |
Carol B. Yancey |
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and Accounting Officer)
November 6, 2014 |
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