1 '=============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-5690 GENUINE PARTS COMPANY (Exact name of Registrant as specified in its Charter) GEORGIA 58-0254510 (State of Incorporation) (IRS Employer 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. Securities registered pursuant to Section 12(b) of the Act and the Exchange on which such securities are registered: Common Stock, Par Value, $1 Per Share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [X] The aggregate market value of the Registrant's Common Stock (based upon the closing sales price reported by the New York Stock Exchange and published in The Wall Street Journal for February 12, 1998) held by non-affiliates as of February 12, 1998 was approximately $6,149,387,319. The number of shares outstanding of Registrant's Common Stock, as of February 12, 1998: 178,803,145. Documents Incorporated by Reference: - Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 1997, are incorporated by reference into Parts I and II. - Portions of the definitive proxy statement for the Annual Meeting of Shareholders to be held on April 20, 1998 are incorporated by reference into Part III. ==============================================================================
2 PART I. ITEM I. BUSINESS. Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts and office products. In 1997, business was conducted throughout most of the United States, in western Canada and in Mexico from approximately 1,350 operations. As used in this report, the "Company" refers to Genuine Parts Company and its subsidiaries, except as otherwise indicated by the context; and the terms "automotive parts" and "industrial parts" refer to replacement parts in each respective category. INDUSTRY SEGMENT DATA. The following table sets forth the net sales, operating profit and identifiable assets for the fiscal years 1997, 1996 and 1995 attributable to each of the Company's groups of products which the Company believes indicate segments of its business. Sales to unaffiliated customers are the same as net sales. <TABLE> <CAPTION> 1997 1996 1995 ---- ---- ---- NET SALES (in thousands) --------- <S> <C> <C> <C> Automotive Parts $ 3,071,153 $ 3,008,105 $ 2,804,086 Industrial Parts 1,853,270 1,677,859 1,509,566 Office Products 1,080,822 1,034,510 948,252 ----------- ----------- ----------- TOTAL NET SALES $ 6,005,245 $ 5,720,474 $ 5,261,904 =========== =========== =========== OPERATING PROFIT Automotive Parts $ 324,008 $ 321,852 $ 307,726 Industrial Parts 166,053 150,815 132,952 Office Products 110,663 103,309 93,888 ----------- ----------- ----------- TOTAL OPERATING PROFIT 600,724 575,976 534,566 Interest Expense (13,365) (8,498) (3,419) Corporate Expense (26,943) (29,057) (25,939) Equity in Income from Investees 6,730 9,398 8,298 Minority Interests (1,546) (2,586) (2,712) ----------- ----------- ----------- INCOME BEFORE INCOME TAXES $ 565,600 $ 545,233 $ 510,794 =========== =========== =========== IDENTIFIABLE ASSETS Automotive Parts $ 1,644,288 $ 1,495,106 $ 1,320,910 Industrial Parts 602,656 527,253 482,067 Office Products 383,452 379,394 360,456 ----------- ----------- ----------- TOTAL IDENTIFIABLE ASSETS 2,630,396 2,401,753 2,163,433 Corporate Assets 23,343 20,394 18,631 Equity Investments 100,624 99,484 92,068 ----------- ----------- ----------- TOTAL ASSETS $ 2,754,363 $ 2,521,631 $ 2,274,132 =========== =========== =========== </TABLE> For additional information regarding industry data, see Page 21 of Annual Report to Shareholders for 1997. The majority of the Company's revenue, profitability and identifiable assets are attributable to the Company's operations in the United States. Revenue, profitability and identifiable assets in Canada and Mexico are not material. For additional information regarding foreign operations, see "Note 1 of Notes to Consolidated Financial Statements" on Page 26 of Annual Report to Shareholders for 1997. -2-
3 COMPETITION - GENERAL. The distribution business, which includes all segments of the Company's business, is highly competitive with the principal methods of competition being product quality, sufficiency of inventory, price and the ability to give the customer prompt and dependable service. The Company anticipates no decline in competition in any of its business segments in the foreseeable future. EMPLOYEES. As of December 31, 1997, the Company employed approximately 24,500 persons. AUTOMOTIVE PARTS GROUP. The Automotive Parts Group, the largest division of the Company, distributes automotive replacement parts and accessory items. The Company is the largest member of the National Automotive Parts Association ("NAPA"), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts. In addition to approximately 200,000 part numbers that are available, the Company, in conjunction with NAPA, offers complete inventory, accounting, cataloging, marketing, training and other programs in the automotive aftermarket. During 1997, 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 in the United States by Genuine Parts Company; automotive parts distribution centers and auto parts stores in western Canada owned and operated by UAP/NAPA Automotive Western Partnership ("UAP/NAPA"), a general partnership in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest; auto parts stores in the United States operated by corporations in which Genuine Parts Company owned either a 51% or a 70% interest; distribution centers owned by Balkamp, Inc., a majority-owned subsidiary; rebuilding plants owned by the Company and operated by its Rayloc division; and automotive parts distribution centers and auto parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. ("Auto Todo"), a joint venture company in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest. The Company's NAPA automotive parts distribution centers distribute replacement parts (other than body parts) for substantially all motor vehicle makes and models in service in the United States, including imported vehicles, trucks, buses, motorcycles, recreational vehicles and farm vehicles. In addition, the Company distributes small engines and replacement parts for farm equipment and heavy duty equipment. The Company's inventories also include accessory items for such vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform their own maintenance and parts installation. Although the Company's domestic automotive operations purchase from more than 150 different suppliers, approximately 58% of 1997 automotive inventories were purchased from 10 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers which has protected the Company from inventory obsolescence. DISTRIBUTION SYSTEM. In 1997, Genuine Parts Company operated 62 domestic NAPA automotive parts distribution centers located in 38 states and approximately 750 domestic company-owned NAPA AUTO PARTS stores located in 43 states. At December 31, 1997, Genuine Parts Company owned a 51% interest in 136 corporations and a 70% interest in 5 corporations which operated 203 auto parts stores in 39 states. In Canada, Genuine Parts Company Ltd., a wholly-owned subsidiary, owns a 49% interest in UAP/NAPA which operated seven automotive parts distribution centers and 106 auto parts stores located in the provinces of Alberta, British Columbia, Manitoba and Saskatchewan and in the Yukon Territories. In addition, the Company has an approximate 23% interest in UAP Inc., a publicly traded Canadian corporation, which owns the other 51% interest in UAP/NAPA and further engages in the distribution of automotive parts primarily in eastern Canada. In Mexico, Auto Todo owns and operates 20 distribution centers and 23 auto parts stores. Auto Todo is licensed to and uses the NAPA(R) name in Mexico. The Company's investments in UAP/NAPA and Auto Todo are accounted for by the equity method of accounting. -3-
4 The Company's distribution centers serve approximately 4,900 independently owned NAPA AUTO PARTS stores located throughout the market areas served. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, these auto parts stores account for approximately 17% of the Company's total sales with no auto parts store or group of auto parts stores with individual or common ownership accounting for more than .3% of the total sales of the Company. PRODUCTS. Distribution centers have access to approximately 200,000 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 received. The majority of sales are on terms which require payment within 30 days of the statement date. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA(R) name, a mark licensed to the Company by the National Automotive Parts Association. RELATED OPERATIONS. A majority-owned subsidiary of Genuine Parts Company, Balkamp, Inc. ("Balkamp"), distributes a wide variety of replacement parts and accessory items for passenger cars, heavy duty vehicles, motorcycles and farm equipment. In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions. Balkamp packages many of the approximately 24,000 part numbers which constitute the "Balkamp" line of products which are distributed to the members of the National Automotive Parts Association ("NAPA"). These products are categorized in 150 different product groups purchased from more than 400 suppliers. All Balkamp items are cataloged separately to provide single source convenience for NAPA customers. BALKAMP(R), a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization. Balkamp has three distribution centers located in Indianapolis, Indiana, Greenwood, Mississippi, and West Jordan, Utah. The Company, through its Rayloc division, also operates five plants where certain small automotive parts are rebuilt. These products are distributed to the members of NAPA under the name Rayloc(R). Rayloc(R) is a mark licensed to the Company by NAPA. SEGMENT DATA. In the year ended December 31, 1997, sales from the Automotive Parts Group approximated 51% of the Company's net sales as compared to 53% in 1996 and 53% in 1995. SERVICE TO NAPA AUTO PARTS STORES. The Company believes that the quality and the range of services provided to its auto parts customers constitute a significant part of its automotive parts distribution system. Such services include fast and frequent delivery, obsolescence protection, parts cataloging (including the use of computerized NAPA AUTO PARTS catalogues) and stock adjustment through a continuing parts classification system which allows auto parts customers to return certain merchandise on a scheduled basis. The Company offers its NAPA AUTO PARTS store customers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, marketing conferences and seminars, sales and advertising manuals and training programs. Point of sale/inventory management is available through TAMS(R) (Total Automotive Management Systems), a computer system designed and developed by the Company for the NAPA AUTO PARTS store. In association with NAPA, the Company has developed and refined an inventory classification system to determine optimum distribution center and auto parts store inventory levels for automotive parts stocking based on automotive registrations, usage rates, production statistics, technological advances and other similar factors. This system, which undergoes continuous analytical review, is an integral part of the Company's inventory control procedures and comprises an important feature of the inventory management services which the Company makes available to its NAPA AUTO PARTS store customers. Over the last 10 years, losses to the Company from obsolescence have been insignificant, and the Company attributes this to the successful operation of its classification system which involves product return privileges with most of its suppliers. COMPETITION. In the distribution of automotive parts, the Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those which they build -4-
5 themselves), automobile dealers, warehouse clubs and large automotive parts retail chains. In addition, the Company competes with the distributing outlets of parts manufacturers, oil companies, mass merchandisers, including national retail chains, and with other parts distributors and jobbers. NAPA. The Company is a member of the National Automotive Parts Association, a voluntary association formed in 1925 to provide nationwide distribution of automotive replacement parts. NAPA, which neither buys nor sells automotive parts, functions as a trade association whose members in 1997 operated 71 distribution centers located throughout the United States, 62 of which were owned and operated by the Company. NAPA develops marketing concepts and programs which may be used by its members. It is not involved in the chain of distribution. Among the automotive lines which each NAPA member purchases and distributes are certain lines designated, cataloged, advertised and promoted as "NAPA" lines. The members are not required to purchase any specific quantity of parts so designated and may, and do, purchase competitive lines from other supply sources. The Company and the other NAPA members use the federally registered trademark NAPA(R) as part of the trade name of their distribution centers and jobbing stores. The Company contributes to NAPA's national advertising which is designed to increase public recognition of the NAPA name and to promote NAPA product lines. The Company is a party, together with other members of NAPA and NAPA itself, to a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954. The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among several NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers. INDUSTRIAL PARTS GROUP The Industrial Parts Group distributes industrial replacement parts and related supplies throughout the United States, Canada and Mexico. This Group distributes industrial bearings and fluid transmission equipment, including hydraulic and pneumatic products, material handling components, agricultural and irrigation equipment and their related supplies. In 1997, the Company distributed industrial parts in the United States through Motion Industries, Inc. ("Motion"), headquartered in Birmingham, Alabama, and Motion's operating division, Berry Bearing Company ("Berry Bearing"), headquartered in Chicago, Illinois. Both Motion and Berry are wholly owned subsidiaries of the Company. In Canada, industrial parts are distributed by another of Motion's operating divisions, Motion (Canada), Inc. ["Motion (Canada)"], formerly Oliver Industrial Supply Ltd., a wholly owned subsidiary of Genuine Parts Holdings Ltd., headquartered in Lethbridge, Alberta. Genuine Parts Holdings Ltd. is a wholly owned subsidiary of the Company. Motion (Canada)'s service area is principally the provinces of Alberta, British Columbia, Manitoba and Saskatchewan. An affiliate relationship in Mexico allows Motion to provide the Mexican industrial sector with industrial parts. In October 1997, the Company completed the acquisitions of Utah Bearing and Fabrication Company and Colorado Bearing and Supply, Inc. Utah Bearing, based in Salt Lake City, distributes bearings and mechanical, electrical and fluid power components through 14 locations in Utah, New Mexico, Wyoming, Idaho and Oregon. Colorado Bearing and Supply has one location in Denver, Colorado. Utah Bearing and Colorado Bearing and Supply, Inc. are among the most successful independent power transmission distributors in the Rocky Mountain region. These branches have been added to the Industrial Parts Group. Additionally, Motion opened 12 new branches (including one in San Juan, Puerto Rico) raising the number of total industrial branches to 420 operating in 46 states. -5-
6 As of December 31, 1997, the Group served more than 150,000 customers in all types of industries located throughout the United States, Mexico and western Canada. DISTRIBUTION SYSTEM. In the United States, the Industrial Parts Group operates seven distribution centers, two re-distribution centers, 27 service centers for fluid power, electrical and special hose applications and 420 branches. Distribution centers stock and distribute more than 200,000 different items purchased from over 250 different suppliers. The Group's re-distribution centers serve as collection points for excess inventory collected from its branches for re-distribution to those branches which need the inventory. Approximately 60% of 1997 total industrial purchases were made from 10 major suppliers. Sales are generated from the Group's branches located in 46 states, each of which has warehouse facilities that stock significant amounts of inventory representative of the lines of products used by customers in the respective market area served. In Canada, Motion (Canada) operates an industrial parts and agricultural supply distribution center for its nine branches serving the industrial and agricultural markets of Alberta, British Columbia, Manitoba and Saskatchewan in western Canada. Motion (Canada) also distributes irrigation systems and related supplies. PRODUCTS. The Industrial Parts Group distributes a wide variety of products to its customers, primarily industrial concerns, to maintain and operate plants, machinery and equipment. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers and electric motors. The nature of this Group's business demands the maintenance of large inventories and the ability to provide prompt and demanding delivery requirements. Virtually all of the products distributed are installed by the customer. 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. RELATED INFORMATION. Non-exclusive distributor agreements are in effect with most of the Group's suppliers. The terms of these agreements vary; however, it has been the experience of the Group that the custom of the trade is to treat such agreements as continuing until breached by one party, or until terminated by mutual consent. INTEGRATED SUPPLY. Motion's integrated supply solutions continued to gain momentum in 1997. Motion's integrated supply process not only reduces the costs associated with MRO (Maintenance, Repairs and Operation) inventory management, but also enables the manufacturing customer to focus on its core competency, free working capital associated with inventories, improve service levels to end-users, and allow management to focus on more strategic concerns. Motion's integrated supply process analyzes a customer's current operation to develop integration goals and then provides solutions based on industry's accepted best practices. SEGMENT DATA. In the year ended December 31, 1997, sales from the Company's Industrial Parts Group approximated 31% of the Company's net sales as compared to 29% in 1996 and 29% in 1995. COMPETITION. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, general line distributors and others who have developed or joined integrated supply programs. To a lesser extent, the Group competes with manufacturers that sell directly to the customer. OFFICE PRODUCTS GROUP The Office Products Group, operated through S. P. Richards Company ("S. P. Richards"), a wholly owned subsidiary of Genuine Parts Company headquartered in Atlanta, Georgia, is engaged in the wholesale distribution of a broad line of office and other products which are used in the daily operation of businesses, schools, offices and institutions. Office products fall into the general categories of computer supplies, imaging supplies, office machines, general office supplies, janitorial supplies, breakroom supplies, and office furniture. Lesker Office Furniture, a furniture only wholesaler acquired in 1993, operates from five branches in the Northeast. Horizon USA Data Supplies, Inc., acquired by the Company in 1995, is a computer supplies distributor headquartered in Reno, Nevada. -6-
7 In June 1997, the Company completed the purchase of the majority of the assets of Westwide Distributors, Inc., a Texas corporation, formerly operating an office supply distribution center in Albuquerque, New Mexico. When S. P. Richards Company began the operation of this office supply distribution center, it became its 39th office products distribution center. In November 1997, the Company opened its 40th business products distribution center in Davenport, Iowa. The Office Products Group distributes computer supplies including diskettes, printer supplies, printout paper and printout binders; office furniture to include desks, credenzas, chairs, chair mats, partitions, files and computer furniture; office machines to include telephones, answering machines, calculators, typewriters, shredders and copiers; and general office supplies to include copier supplies, desk accessories, business forms, accounting supplies, binders, report covers, writing instruments, note pads, envelopes, secretarial supplies, mailroom supplies, filing supplies, art/drafting supplies, janitorial supplies, breakroom supplies and audio visual supplies. The Office Products Group distributes more than 20,000 items to over 6,000 office supply dealers from 46 facilities located in 31 states. Approximately 57% of 1997 total office products purchases were made from 10 major suppliers. The Office Products Group sells to qualified resellers of office products. Customers are offered comprehensive marketing programs which include flyers, other promotional material and personalized product catalogs. The marketing programs are supported by all the Group's distribution centers which stock all cataloged products and have the capability to provide overnight delivery. While many recognized brand-name items are carried in inventory, S. P. Richards Company also markets items produced for it under its own SPARCO(R) brand name, as well as its NATURE SAVER(R) brand of recycled products and CompuCessory(TM) brand of computer supplies and accessories. SEGMENT DATA. In the year ended December 31, 1997, sales from the Company's Office Products Group approximated 18% of the Company's net sales as compared to 18% in 1996 and 18% in 1995. COMPETITION. In the distribution of office supplies to retail dealers, S. P. Richards competes with many other wholesale distributors as well as with manufacturers of office products and large national retail chains. * * * * * * * * * * EXECUTIVE OFFICERS OF THE COMPANY. The table below sets forth the name and age of each person deemed to be an executive officer of the Company as of February 12, 1998, the position or office held by each and the period during which each has served as such. Each executive officer is elected by the Board of Directors and serves at the pleasure of the Board of Directors until his successor has been elected and has qualified, or until his earlier death, resignation, removal, retirement or disqualification. <TABLE> <CAPTION> YEAR FIRST ASSUMED NAME AGE POSITION OF OFFICE POSITION - ---- --- ------------------ -------- <S> <C> <C> <C> Larry L. Prince 59 Chairman of the Board of Directors and 1990/1989 Chief Executive Officer Thomas C. Gallagher 50 President and Chief Operating Officer 1990 Robert J. Breci 62 Executive Vice President 1987 George W. Kalafut 63 Executive Vice President-Finance and 1991 Administration * Keith M. Bealmear 51 Group Vice President 1994 Albert T. Donnon, Jr. 50 Group Vice President 1993 Edward Van Stedum 48 Senior Vice President-Human Resources 1996 </TABLE> * Also serves as the Company's Principal Financial and Accounting Officer. -7-
8 All executive officers except Mr. Van Stedum have been employed by and have served as officers of the Company for at least the last five years. Prior to his joining the Company in May, 1994, Mr. Van Stedum owned and operated a consulting company in Atlanta, Georgia, that performed various services for the Company's Personnel Department. ITEM 2. PROPERTIES. The Company's headquarters are located in one of two adjacent office buildings owned by Genuine Parts Company in Atlanta, Georgia. The Company's Automotive Parts Group currently operates 62 NAPA Distribution Centers in the United States distributed among eight geographic divisions. More than 90% of the distribution center properties are owned by the Company. At December 31, 1997, the Company owned 750 NAPA AUTO PARTS stores located in 43 states, and Genuine Parts Company owned either a 51% or 70% interest in 203 auto parts stores located in 39 states. Other than NAPA AUTO PARTS stores located within Company owned distribution centers, most of the auto parts stores were operated in leased facilities. In addition, UAP/NAPA, in which Genuine Parts Company owns a 49% interest, operated 106 auto parts stores in western Canada. The Company's Automotive Parts Group also operates three Balkamp distribution centers, five Rayloc rebuilding plants, and one transfer and shipping facility. The Company's Industrial Parts Group, operating through Motion and Berry Bearing Company, operates 7 distribution centers, 2 re-distribution centers, 27 service centers and 420 branches. Approximately 90% of these branches are operated in leased facilities. In addition, the Industrial Parts Group operates an industrial parts and agricultural supply distribution center in western Canada for its 9 branches, of which approximately 85% are operated in leased facilities. The Company's Office Products Group operates 46 facilities in the United States distributed among the Group's six geographic divisions. Approximately 75% of these facilities are operated in leased buildings. For additional information regarding rental expense on leased properties, see "Note 4 of Notes to Consolidated Financial Statements" on Page 27 of Annual Report to Shareholders for 1997. ITEM 3. LEGAL PROCEEDINGS. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Information required by this item is set forth under the heading "Market and Dividend Information" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. The Company has made no unregistered sales of securities during the year ended December 31, 1997. -8-
9 ITEM 6. SELECTED FINANCIAL DATA. Information required by this item is set forth under the heading "Selected Financial Data" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS. Information required by this item is set forth under the heading "Management's Discussion and Analysis" on Pages 19 and 20 of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOVE MARKET RISK. The Company has no significant market risk sensitive instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Information required by this item is set forth in the consolidated financial statements on Page 21 and Pages 23 through 30, in "Report of Independent Auditors" on Page 22, and under the heading "Quarterly Results of Operations" on Page 20, of Annual Report to Shareholders for the year ended December 31, 1997, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information required by this item is set forth under the headings "Nominees for Director" and "Members of the Board of Directors Continuing in Office" on Pages 2 through 4 of the definitive proxy statement for the Company's Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. Certain information about Executive Officers of the Company is included in Item 1 of Part I of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION. Information required by this item is set forth under the heading "Executive Compensation and Other Benefits" on Pages 7 through 9, and under the headings "Compensation Committee Interlocks and Insider Participation", "Compensation Pursuant to Plans" and "Termination of Employment and Change of Control Arrangements" on Pages 11 through 15 of the definitive proxy statement for the Company's Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. In no event shall the information contained in the definitive proxy statement for the Company's 1998 Annual Meeting on Pages 9 through 11 under the heading "Compensation and Stock Option Committee Report on Executive Compensation" or on Pages 16 and 17 under the heading "Performance Graph" be incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this item is set forth under the headings "Common Stock Ownership of Certain Beneficial Owners" and "Common Stock Ownership of Management" on Pages 5 through 7 of the definitive proxy statement for the Company's Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. -9-
10 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this item is set forth under the heading "Compensation Committee Interlocks and Insider Participation" on Pages 11 and 12 of the definitive proxy statement for the Company's 1998 Annual Meeting to be held on April 20, 1998, and is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report. (3) The following Exhibits are filed as part of this report in Item 14(c): Exhibit 3.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1998, and as amended April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989 and April 18, 1994. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 3.2 By-laws of the Company, as amended. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 5, 1993.) Exhibit 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and Trust Company Bank, as Rights Agent. (Incorporated herein by reference from the Company's Report on Form 8-K, dated November 20, 1989.) 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 * 1988 Stock Option Plan. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 9, 1988.) Exhibit 10.2 * Form of Amendment to Deferred Compensation Agreement, adopted February 13, 1989, between the Company and certain executive officers of the Company. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989.) Exhibit 10.3 * Form of Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company providing for a supplemental employee benefit upon a change in control of the Company. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989.) Exhibit 10.4 * Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 8, 1991.) Exhibit 10.5 * 1992 Stock Option and Incentive Plan, effective April 20, 1992. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 6, 1992.) -10-
11 Exhibit 10.6 * Restricted Stock Agreement dated March 31, 1994, between the Company and Larry L. Prince. (Incorporated herein by reference from the Company's Form 10-Q, dated May 6, 1994.) Exhibit 10.7 * Restricted Stock Agreement dated March 31, 1994, between the Company and Thomas C. Gallagher. (Incorporated herein by reference from the Company's Form 10-Q, dated May 6, 1994.) Exhibit 10.8 * The Genuine Parts Company Restated 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 10.9 * Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1995. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.10 * Genuine Partnership Plan, as amended and restated January 1, 1994. (Incorporated herein by reference form the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.11 * Genuine Parts Company Pension Plan, as amended and restated effective January 1, 1989. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 1995.) Exhibit 10.12 * Amendment No. 1 to the Genuine Partnership Plan, effective September 1, 1995. (Incorporated herein by reference to the Company's Form 10-K, dated March 7, 1996.) Exhibit 10.13 * Amendment No. 1 to the Genuine Parts Company Pension Plan, effective April 1, 1995. (Incorporated herein by reference to the Company's Form 10-K, dated March 7, 1996.) Exhibit 10.14 * Amendment No. 2 to the Genuine Parts Company Pension Plan, dated September 28, 1995, effective January 1, 1995. (Incorporated herein by reference to the Company's Form 10-K, dated March 7, 1996.) Exhibit 10.15 * Genuine Parts Company Directors' Deferred Compensation Plan, effective November 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.16 * Amendment No. 3 to the Genuine Parts Company Pension Plan dated May 24, 1996, effective January 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.17 * Amendment No. 4 to the Genuine Parts Company Pension Plan dated December 3, 1996, effective January 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.18 * Amendment No. 2 to the Genuine Partnership Plan, dated December 3, 1996, effective November 1, 1996. (Incorporated herein by reference to the Company's Form 10-K, dated March 10, 1997.) Exhibit 10.19 * Amendment No. 4-A to the Genuine Parts Company Pension Plan, dated August 29, 1997, effective January 1, 1996. -11-
12 Exhibit 10.20 * Amendment No. 5 to the Genuine Parts Company Pension Plan, dated August 7, 1997. Exhibit 10.21 * Amendment No. 6 to the Genuine Parts Company Pension Plan, dated October 6, 1997, effective January 1, 1997. Exhibit 10.22 * Amendment No. 3 to the Genuine Partnership Plan, dated August 7, 1997. Exhibit 10.23 * Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, dated August 29, 1997, effective August 15, 1997. Exhibit 10.24 * Genuine Parts Company Death Benefit Plan, effective July 15, 1997. * Indicates executive compensation plans and arrangements. Exhibit 13 The following sections and pages of the 1997 Annual Report to Shareholders: <TABLE> <S> <C> - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Management's Discussion and Analysis on Pages 19 and 20 - Quarterly Results of Operations on Page 20 - Industry Data on Page 21 - Report of Independent Auditors on Page 22 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 23-30. </TABLE> Exhibit 21 Subsidiaries of the Company Exhibit 23 Consent of Independent Auditors Exhibit 27 Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the last quarter of the fiscal year. (c) Exhibits. The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statement Schedules. The response to this portion of Item 14 is submitted as a separate section of this report. -12-
13 SIGNATURES. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. GENUINE PARTS COMPANY <TABLE> <S> <C> /S/ LARRY L. PRINCE 3/10/98 /S/ GEORGE W. KALAFUT 3/10/98 - ----------------------------------------------------- -------------------------------------------------- LARRY L. PRINCE (Date) GEORGE W. KALAFUT (Date) Chairman of the Board Executive Vice President - and Chief Executive Officer Finance and Administration and Principal Financial and Accounting Officer </TABLE> -13-
14 Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. <TABLE> <S> <C> /S/ BRADLEY CURREY, JR. 2/16/98 /S/ JEAN DOUVILLE 2/16/98 - --------------------------------------------------- ------------------------------------------------ BRADLEY CURREY, JR. (Date) JEAN DOUVILLE (Date) Director Director Chairman of the Board and Chief Executive Officer of UAP Inc. /S/ ROBERT P. FORRESTAL 2/16/98 /S/ THOMAS C. GALLAGHER 2/16/98 - --------------------------------------------------- ------------------------------------------------ ROBERT P. FORRESTAL (Date) THOMAS C. GALLAGHER (Date) Director Director President and Chief Operating Officer /S/ J. HICKS LANIER 2/16/98 - --------------------------------------------------- ------------------------------------------------ J. HICKS LANIER WILLIAM A. PARKER (Date) Director Director /S/ LARRY L. PRINCE 2/16/98 /S/ ALANA S. SHEPHERD 2/16/98 - --------------------------------------------------- ------------------------------------------------ LARRY L. PRINCE (Date) ALANA S. SHEPHERD (Date) Director Director Chairman of the Board and Chief Executive Officer /S/ LAWRENCE G. STEINER 2/16/98 /S/ JAMES B. WILLIAMS 2/16/98 - --------------------------------------------------- ------------------------------------------------ LAWRENCE G. STEINER (Date) JAMES B. WILLIAMS (Date) Director Director </TABLE> -14-
15 ANNUAL REPORT ON FORM 10-K ITEM 14(A)(1) AND (2), (C) AND (D) LIST OF FINANCIAL STATEMENTS CERTAIN EXHIBITS YEAR ENDED DECEMBER 31, 1997 GENUINE PARTS COMPANY ATLANTA, GEORGIA
16 Form 10-K - Item 14(a)(1) and (2) Genuine Parts Company and Subsidiaries Index of Financial Statements The following consolidated financial statements of Genuine Parts Company and subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 1997, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 1997 and 1996 Consolidated statements of income - Years ended December 31, 1997, 1996, and 1995 Consolidated statements of cash flows - Years ended December 31, 1997, 1996 and 1995 Notes to consolidated financial statements - December 31, 1997 All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
17 ANNUAL REPORT ON FORM 10-K ITEM 14(a)(3) LIST OF EXHIBITS The following Exhibits are filed as a part of this Report: 10.19* Amendment No. 4-A to the Genuine Parts Company Pension Plan, dated August 29, 1997, effective January 1, 1996. 10.20* Amendment No. 5 to the Genuine Parts Company Pension Plan, dated August 7, 1997. 10.21* Amendment No. 6 to the Genuine Parts Company Pension Plan, dated October 6, 1997, effective January 1, 1997. 10.22* Amendment No. 3 to the Genuine Partnership Plan, dated August 7, 1997. 10.23* Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, dated August 29, 1997, effective August 15, 1997. 10.24* Genuine Parts Company Death Benefit Plan, effective July 15, 1997. 13 The following Sections and Pages of Annual Report to Shareholders for 1997: - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Management's Discussion and Analysis on Pages 19 and 20 - Quarterly Results of Operations on Page 20 - Industry Data on Page 21 - Report of Independent Auditors on Page 22 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 23-30 21 Subsidiaries of the Company 23 Consent of Independent Auditors 27 Financial Data Schedule (for SEC use only) The following Exhibits are incorporated by reference as set forth in Item 14 on pages 10 and 11 of this Form 10-K: - 3.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1988, and as amended April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989 and April 18, 1994. - 3.2 By-laws of the Company, as amended. - 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and Trust Company Bank, as Rights Agent.
18 - 4.2 Specimen Common Stock Certificate. (Incorporated herein by reference form the Company's Registration Statement on Form S-1, Registration No. 33-63874). - 10.1* 1988 Stock Option Plan. - 10.2* Form of Amendment to Deferred Compensation Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company. - 10.3* Form of Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company providing for a supplemental employee benefit upon a change in control of the Company. - 10.4* Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. - 10.5* 1992 Stock Option and Incentive Plan, effective April 20, 1992. - 10.6* Restricted Stock Agreement dated March 31, 1994, between the Company and Larry L. Prince. - 10.7* Restricted Stock Agreement dated March 31, 1994, between the Company and Thomas C. Gallagher. - 10.8* The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993. - 10.9* Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1995. - 10.10* Genuine Partnership Plan, as amended and restated January 1, 1994. - 10.11* Genuine Parts Company Pension Plan, as amended and restated, effective January 1, 1989. - 10.12* Amendment No. 1 to the Genuine Partnership Plan, effective September 1, 1995. - 10.13* Amendment No. 1 to the Genuine Parts Company Pension Plan, effective April 1, 1995. - 10.14* Amendment No. 2 to the Genuine Parts Company Pension Plan, dated September 28, 1995, effective January 1, 1995. - 10.15* Genuine Parts Company Directors' Deferred Compensation Plan, effective November 1, 1996. - 10.16* Amendment No. 3 to the Genuine Parts Company Pension Plan, dated May 24, 1996, effective January 1, 1996. - 10.17* Amendment No. 4 to the Genuine Parts Company Pension Plan, dated December 3, 1996, effective January 1, 1996. - 10.18* Amendment No. 2 to the Genuine Partnership Plan, dated December 3, 1996, effective November 1, 1996. * Indicates executive compensation plans and arrangements.