UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

 þ
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

Or

 ¨For the fiscal year ended December 31, 2008
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto

For the transition period from              to             

Commission filenumber: 1-5690

GENUINE PARTS COMPANY

(Exact name of registrant as specified in its charter)

Georgia 58-0254510
Georgia

(State or other jurisdiction of

incorporation or organization)

 58-0254510

(I.R.S. Employer

Identification No.)

2999 Circle 75 Parkway, Atlanta, Georgia
30339
(Address of principal executive offices) 30339
(Zip Code)

770-953-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, $1 par value per share New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  o¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  o¨    No  þ

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  þ    No  o¨

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation 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 thisForm 10-K or any amendment to thisForm 10-K.  þ

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 definitionthe definitions of “large accelerated filer”,filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer  þAccelerated filer  o¨Non-accelerated filer  o¨Smaller reporting company  o¨

(Do not check if a smaller reporting company)

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).    Yes  o¨    No  þ

As of June 30, 2008,2011, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $6,228,135,000$8,282,081,000 based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

  
Class

Outstanding at February 12, 2009

16, 2012

Common Stock, $1 par value per share  159,442,764155,772,475 shares

Specifically identified portions of the Company’s 2008 Annual Report are incorporated by reference into Parts I and II of thisForm 10-K and specifically identified portions of the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 20, 200923, 2012 are incorporated by reference into Part III of thisForm 10-K.

PART I.

TABLE OF CONTENTS

ITEM 1.
PART I.
ITEM 1. BUSINESS.
ITEM 1A. RISK FACTORS.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
ITEM 2. PROPERTIES.
ITEM 3. LEGAL PROCEEDINGS.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
ITEM 9A. CONTROLS AND PROCEDURES.
ITEM 9B. OTHER INFORMATION.
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
SIGNATURES.
Item 15(c)
INDEX OF EXHIBITS
EX-10.36
EX-13
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2BUSINESS.

PART I.
ITEM 1.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, office products and electrical/electronic materials.materials through our four operating segments, each described in more detail below. In 2008,2011, business was conducted throughout the United States, in Canada and in Mexico from approximately 2,0001,900 locations. As of December 31, 2011, the Company employed approximately 29,800 persons.

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.

Financial Information about Segments.    For financial information regarding segments as well as our geographic areas of operation, refer to “Segment Data” and to Note 1011 of Notes to Consolidated Financial Statements in the Company’s 2008 Annual Report, both of which are filed as part of Exhibit 13 to this report and both incorporated herein by reference.

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, 2008, the Company employed approximately 30,300 persons.
beginning on page F-1.

Available Information.    The Company’s internet website can be found at www.genpt.com. The Company makes available, free of charge through its internet website, access to the Company’s annual reportreports onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K, proxy statementstatements and other reports, as amended,and any amendments to these documents, as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”). Additionally, our corporate governance guidelines, codes of conduct and ethics, and charters of the Audit Committee and the Compensation, Nominating and Governance Committee of our Board of Directors, as well as information regarding our director nominating process and our procedure for shareholders and other interested parties to communicate with our Board of Directors, are available on our website. We will furnish copies of all of the above information free of charge upon request to our Corporate Secretary.

In Part III of thisForm 10-K, we incorporate certain information by reference to our proxy statement for our 20092012 annual meeting of shareholders. We expect to file that proxy statement with the SEC on or about February 27, 2009,2012, and we will make it available online at the same time athttp://www.proxydocs.com/gpc. Please refer to the proxy statement for the information incorporated by reference into Part III of this From 10-K when it is available.

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, with approximately 95% ownership, of the National Automotive Parts Association (“NAPA”), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts. In addition to over 380,000435,000 available part numbers, the Company, in conjunction with NAPA, offers complete inventory, cataloging, marketing, training and other programs in the automotive aftermarket.

During 2008,2011, the Company’s Automotive Parts Group included NAPA automotive parts distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”) owned and operated in the United States by the Company; NAPA and TRACTIONTraction automotive parts distribution centers and auto parts stores in the United States and Canada owned and operated by the Company and NAPA Canada/UAP Inc. (“NAPA Canada/UAP”), a wholly-owned subsidiary of the Company; auto parts stores and distribution centers in the United States operated by corporations in which the Company owned either a minoritynoncontrolling or majoritycontrolling interest; auto parts stores in Canada operated by corporations in which UAP owns a 50% interest; import automotive parts distribution centers in the United States owned by the Company and operated by its Altrom America division; import automotive parts distribution centers in Canada owned and operated by Altrom Canada Corporation (“Altrom Canada”), a wholly-owned subsidiary of the Company; distribution centers in the United States owned by Balkamp, Inc. (“Balkamp”), a majority-ownedwholly-owned subsidiary of the Company; rebuilding and distribution plantsfacilities in the United States owned by the Company and operated by its Rayloc division; and automotive parts distribution


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centers and automotive parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. (“Auto Todo”), a wholly-owned subsidiary of the Company.
Effective January 

1 2008, the Company increased its ownership interest in Altrom Canada Corp. and Altrom America Corp. to 100%. At December 31, 2008, the import automotive parts distribution centers in Canada are operated by Altrom Canada Corp., a wholly-owned subsidiary of the Company, headquartered in Vancouver, British Columbia, Canada. The import automotive parts distribution centers in the United States are operated by Altrom America, a division of the Company.

During the first quarter of 2008, the Company sold all of its interests in Johnson Industries, a wholly-owned subsidiary that provided automotive supplies, primarily to large fleets and new car dealers.

The Company has a 15% interest in Mitchell Repair Information (“MRIC”), a subsidiary of Snap-on Incorporated. MRIC is a leading automotive diagnostic and repair information company with over 40,000 North American subscribers linked to its services and information databases. MRIC’s core product, “Mitchell ON-DEMAND,”ON-DEMAND”, is a premier electronic repair information source in the automotive aftermarket.

Effective January 1, 2012, the Company purchased a 30% investment in the Exego Group (“Exego”) for approximately $150 million (US$) in cash. Exego, headquartered in Melbourne, Australia, is a leading aftermarket distributor of automotive parts and accessories in Australasia with annual revenues of approximately $1 billion (US$) and a company-owned store footprint of more than 430 locations across Australia and New Zealand. In accordance with the purchase agreement, the Company has the option to acquire the remaining 70% interest in Exego if Exego meets certain earnings thresholds, which the Company believes will occur within a two to three year timeframe; however, there can be no guarantee that such thresholds will be met or, if they are met, whether the Company would exercise its purchase option. As a 30% stakeholder, the Company’s return on its investment will be accounted for as noncontrolling investment income.

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, SUVs, buses, motorcycles, recreational vehicles and farm vehicles. In addition, the Company distributes replacement parts for small engines, 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 90approximately 100 different suppliers, approximately 52%51% of 20082011 automotive parts inventories were purchased from 10 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers, which hashave protected the Company from inventory obsolescence.

Distribution System.    In 2008,2011, the Company operated 58 domestic NAPA automotive parts distribution centers located in 39 states and approximately 1,100950 domestic company-owned NAPA AUTO PARTS stores located in 4342 states. At December 31, 2008, Genuine Parts2011, the Company owned either a minoritynoncontrolling or majoritycontrolling interest in threefour corporations, which operated approximately 1947 auto parts stores in three states, and a subsidiary corporation operating three distribution centers in threefour states.

NAPA Canada/UAP, founded in 1926, is a Canadian leader in the distribution and marketing of replacement parts and accessories for automobiles and trucks. NAPA Canada/UAP employs approximately 3,6003,500 people and operates a network of 12 distribution centers and three branches supplying approximately 590596 NAPA stores and 92 TRACTION97 Traction wholesalers. TRACTIONTraction is a supplier of parts to small and large fleet owners and operators and, together with NAPA stores, is a significant supplier to the mining and forestry industries. TheseThe NAPA stores and Traction wholesalers in Canada include approximately 208184 company owned stores, 2132 joint venture or progressive owners in which NAPA Canada/UAP owns a 50% interest and approximately 454477 independently owned stores. NAPA and TRACTIONTraction operations supply bannered installers and independent installers in all provinces of Canada, as well as networks of service station and repair shops operating under the banners of national accounts. UAP is a licensee of the NAPA® name in Canada.

In Canada, Altrom Canada Corp. operates 15 import automotive parts distribution centers. In the United States, Altrom America operates two import automotive parts distribution centers.

In Mexico, Auto Todo owns and operates nine11 distribution centers, four auto parts stores and four tire centers. Auto Todo is a licensee of the NAPA® name in Mexico.

The Company’s domestic distribution centers serve approximately 4,8004,750 independently owned NAPA AUTO PARTS stores located throughout the market areas served in the United States. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, these independent automotive parts stores account for approximately 24%66% of the Company’s total U.S. Automotive sales and 27% of the Company’s total sales, with no automotive parts store or group of automotive parts stores with individual or common ownership accounting for more than 0.25% of the total sales of the Company.


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Products.    Distribution centers have access to over 380,000435,000 different parts and related supply items. Each item is cataloged and numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers. Most orders are filled and shipped the same day as they are received. The majority of sales are onpaid from statements with varied terms that require payment within 30 days of the statement date.and conditions. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA® name, a mark licensed to the Company by NAPA.
NAPA, which is important to the sales and marketing of these products. Traction sales also include products distributed under the HD Plus name, a proprietary line of automotive parts for the heavy duty truck market.

Related Operations.    Balkamp, a wholly-owned subsidiary of the Company, 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 43,00058,000 products, which constitute the “Balkamp” line of products that are distributed to the members of NAPA. These products are categorized into over 220250 different product groups purchased from approximately 600 domestic suppliers and 100 foreign manufacturers. Balkamp has two distribution centers located in Plainfield, Indiana, and West Jordan, Utah. In addition, Balkamp operates two Redistribution Centersredistribution centers that provide NAPA with over 1,000 SKUs of oils, chemicals and procurement items. BALKAMP®, a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization. Balkamp has four distribution centers located in Indianapolis and Plainfield, Indiana, Greenwood, Mississippi and West Jordan, Utah.

The Company, through its Rayloc division, also operates threefour facilities where certain small automotive parts are rebuilt or distributed to the members of NAPA under the NAPA® brand name. Rayloc® is a mark licensed to the Company by NAPA.

The Company’s Heavy Vehicle Parts Group operates as TW Distribution, with one warehouse location in Atlanta, Georgia, which serves 1823 Traction Heavy Duty parts stores of which 13 are owned and located in the United States.States, of which 15 are company-owned and eight are independently owned. This group distributes heavy vehicle parts through the NAPA system and direct to small fleet owners and operators.

Segment Data.    In the year ended December 31, 2008,2011, sales from the Automotive Parts Group were approximately 48%49% of the Company’s net sales, as compared to 49%50% in 20072010 and 2006.

52% in 2009. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1.

Service to NAPA AUTO PARTS Stores.    The Company believes that the quality and the range of services provided to its automotive parts customers constitute a significant advantage for its automotive parts distribution system. Such services include fast and frequent delivery, obsolescence protection, parts cataloging (including the use of electronic NAPA AUTO PARTS catalogs) and stock adjustment through a continuing parts classification system which, as initiated by the Company from time to time, allows independent retailers (“jobbers”) 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, as well as marketing conferences and seminars, sales and advertising manuals and training programs. Point of sale/inventory management is available through TAMS® (Total Automotive Management Systems), a computer system designed and developed by the Company for the NAPA AUTO PARTS stores.

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 that the Company makes available to its NAPA AUTO PARTS store customers. Over the last 1020 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 ofThe automotive parts thedistribution business is highly competitive. The Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers

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as well as those that they build 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 retailers.


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The Automotive Parts Group competes primarily on product offering, service, brand recognition and price. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

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 20082011 operated 64 distribution centers located throughout the United States, 58 of which were owned and operated by the Company. NAPA develops marketing concepts and programs that may be used by its members. It is not involved in the chain of distribution.

Among the automotive lines that 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® as part of the trade name of their distribution centers and parts stores. The Company contributes to NAPA’s national advertising program, 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 is operated as Motion Industries, Inc. (“Motion”), a wholly-owned subsidiary of the Company headquartered in Birmingham, Alabama. Motion distributes industrial replacement parts and related supplies throughout the United Statessuch as bearings, mechanical and Canada. This group distributes bearings, mechanicalelectrical power transmission, industrial automation, hose, hydraulic and pneumatic components, industrial supplies and material handling products. The Industrial Parts Group continuesproducts to enhance communicationMRO (maintenance, repair and process activities through three distinct programs: motionindustries.com, an internet-based procurement system; MiSupplierConnect, a manufacturer communicationoperation) and fulfillment system; and inMotion, an internal employee communication source and operational reporting system.

The Company distributes industrial parts inOEM (original equipment manufacturer) customers throughout the United States, through Motion Industries, Inc. (“Motion”), headquartered in Birmingham, Alabama. Motion is a wholly owned subsidiary of the Company. Canada and Mexico.

In Canada, industrial parts are distributed by Motion Industries (Canada), Inc. (“Motion Canada”), an operating group and BC Bearing Engineers Limited. The Mexican market is served by Motion Mexico, S. de R.L. de C.V. (“Motion Mexico”). These organizations operate in the Company’s North American structure.

During 2008, Motion

In January 2011, the Company acquired the assets of DragoDayton Supply Company with eight locations, Mill Supply Corporation with five locations,& Tool and Monroe Rubber and Plastic Supply with one location. All of the acquired companies areD.P. Brown, two U.S. distributors of industrial supplies and belting and power transmission parts and supplies, respectively. In July 2011, the Company acquired Tarrant Hydraulics, a U.S. distributor in the United States.

hydraulics and associated services business.

As of December 31, 2008,2011, the Industrial Parts Group served more than 100,000150,000 customers in all types of industries located throughout the United States and Canada,North America, including the food and beverage, forest products, primary metal, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries.

industries; as well as strategically targeted specialty industries such as power generation, wastewater treatment facilities, wind power generation, solar power, government projects, pipelines, railroad, ports, and others. Motion services all manufacturing and processing industries with access to a database of 4.8 million parts. Additionally, Motion provides U.S. government agencies access to approximately 585,000 products and replacement parts through a Government Services Administration (GSA) schedule.

The Industrial Parts Group provides customers with supply chain efficiencies achieved through inventory management and logistical solutions coupled with Motion’s vast product knowledge and system capabilities. The

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Company meets the MRO demand of a large and fragmented market with high levels of service in the areas of asset management, inventory and logistics management, product application and utilization management processes. A highly developed supply chain with vendor partnerships and customer connectivity are enhanced by Motion’s leading e-business capabilities, such as MiSupplierConnect, which provides integration between the Company’s information technology network and suppliers’ systems, creating numerous benefits for both the supplier and customer.

Distribution System.    In North America, the Industrial Parts Group operates 472operated 473 branches, 10 distribution centers and 3653 service centers as of December 31, 2008.2011. The distribution centers stock and distribute more than 80,000109,000 different items purchased from more than 250900 different suppliers. The service centers provide hydraulic, hose and mechanical repairs for customers. Approximately 44%32% of 20082011 total industrial product purchases were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s branches located in 47 states, Puerto Rico, and, nine provinces in Canada.Canada, and Mexico. Each branch has warehouse facilities that stock significant amounts of inventory representative of the lines of products used by customers in the respective market area served.

Motion Canada operates two distribution centers for the 47 Canadian branches serving industrial and agricultural markets.

Products.    The Industrial Parts Group distributes a wide variety of parts and products to its customers, primarily industrial concerns, to maintain and operate plants, machinery and equipment.concerns. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers, electric motors, and electric motors.industrial supplies. In recent years, Motion expanded its offering to include systems and automation products in response to the increasing sophistication of motion control and process automation for full systems integration of plant equipment. Manufacturing trends and government policies have led to opportunities in the “green” and energy-efficient product markets, focusing on product offerings such as energy-efficient motors and drives, recyclable and environmentally friendly parts and supplies. The


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nature of this group’s business demands the maintenance of largeadequate inventories and the ability to promptly meet demanding delivery requirements. Virtually all of the products distributed are installed by the customer.customer or used in plant and facility maintenance activities. Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open account.
Motion has ongoing purchase agreements with existing customers that represent approximately 38% of the annual sales volume.

Supply Agreements.    Non-exclusive distributor agreements are in effect with most of the Industrial Parts Group’s suppliers. The terms of these agreements vary; however, it has been the experience of the Industrial Parts 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. The CompanyMotion has return privileges with most of its suppliers, which has protected the Company from inventory obsolescence.

Segment Data.    In the year ended December 31, 2008,2011, sales from the Company’s Industrial Parts Group approximated 32%33% of the Company’s net sales, as compared to 31% in 20072010 and 30%29% in 2006.

2009. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1.

Competition.    The industrial parts distribution business is highly competitive. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, general line distributors and others who provide similar services. To a lesser extent, the Industrial Parts Group competes with manufacturers that sell directly to the customer.

The Industrial Parts Group competes primarily on the breadth of product offerings, service and price. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

OFFICE PRODUCTS GROUP

The Office Products Group, operated through S. P. Richards Company (“S. P. Richards”), a wholly owned subsidiary of the Company, is headquartered in Atlanta, Georgia. S. P. Richards is engaged in the wholesale distribution of a broad line of office and other business related products to business product resellers that are used in the daily operation of businesses, schools, offices and other institutions. Office products fall into the general categories of computer supplies, imaging products, office furniture, office machines, general office products, school supplies, cleaning and breakroom supplies, and healthcare products.

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The Office Products Group is represented in Canada through S. P. Richards Canada, a wholly-owned subsidiary of the Company and is headquartered near Toronto, Ontario. S. P. Richards Canada services office product resellers throughout Canada from locations in Vancouver, Toronto, Calgary, Edmonton and Winnipeg.

In 2008, S. P. Richards acquired the assets of three regional distributors: O’Henry, Inc. in North Carolina; the midwest division of Action/Emco Wholesale in Grand Rapids, Michigan; and PPI Wholesale Office Supplies located in southern California. Action/Emco and O’Henry distribute general office supplies and furniture, and PPI Wholesale is engaged in the distribution of general office and school supplies.

Distribution System.    The Office Products Group distributes more than 50,000 items to over 7,0004,000 business product resellers throughout the United States and Canada from a network of 4542 distribution centers. In 2011, the Company relocated its Dallas operation to a highly automated, state of the art facility and it completed energy conservation projects to create better lighting and lower energy requirements in 10 distribution centers. This group’s network of strategically located distribution centers provides overnight delivery of the Company’s comprehensive product offering. Approximately 55%50% of the Company’s 20082011 total office products purchases were made from 10 major suppliers.

The Office Products Group sells strictly to resellers of office products. These resellers include independently owned office product dealers, national office product superstores and mass merchants, large contract stationers, mail order companies, Internet resellers and college bookstores. Resellers are offered comprehensive marketing programs, which include print and electronic catalogs and flyers, electronic content for reseller websites, and education and training resources.

In addition, market analytics programs are made available to qualified resellers.

Products.    The Office Products Group distributes computer supplies including storage media, printer supplies and computer accessories; office furniture including desks, credenzas, chairs, chair mats, partitions, filesfile cabinets and computer furniture; office machines including telephones, answering machines, calculators, fax machines, multi-function copiers, printers, digital cameras, televisions, laminators and shredders; general office supplies including desk accessories, business forms, accounting supplies, binders, filing supplies, report covers, writing instruments, envelopes, note pads, copy paper, mailroom supplies, drafting supplies and audiovisual supplies; school supplies including bulletin boards, teaching aids and art supplies; healthcare products;products including exam room supplies and accessories; janitorial supplies including cleaning supplies, paper towels and trash can liners;liners and safety supplies; and breakroom supplies including napkins, utensils, snacks and


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beverages. S. P. Richards has return privileges with most of its suppliers, which hashave protected the Company from inventory obsolescence.

While the Company’s inventory includes products from over 400nearly 600 of the industry’s leading manufacturers worldwide, S. P. Richards also markets nineproducts under its eight proprietary brands of items.brands. These brands include: SPARCOSparco®TM, an economical line of office supply basics; Compucessorytm®, a line of computer accessories; LorellTM, a line of office furniture; NATURE SAVERNatureSaver®, an offering of recycled products; Elite Imagetm®, a line of new and remanufactured toner cartridges, premium papers and labels; IntegraTM, a line of writing instruments; Genuine Joe®, a line of cleaning and breakroom products; and Atlantic Breeze and Heat Runner, two linesBusiness Source®, a line of climate control products.

basic office supplies available only to independent resellers. Through the Company’s FurnitureAdvantageTM program, S. P. Richards provides resellers with an additional 7,000 furniture items made available to consumers in 7 to 10 business days. The Company also offers PrintSmartTM, a fully featured managed print solution allowing resellers to serve the changing needs of the print environment.

Segment Data.    In each of the yearsyear ended December 31, 2008 and 2007,2011, sales from the Company’s Office Products Group were approximately 16%approximated 14% of the Company’s net sales, as compared to 17%15% in 2006.

2010 and 16% in 2009. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1.

Competition.    The office products distribution business is highly competitive. In the distribution of office suppliesits product offering to retail dealers,resellers, S. P. Richards competes with many other wholesale distributors, as well as with certain manufacturers of office products.

S. P. Richards competes primarily on price, product offerings, service, marketing programs and brand recognition. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

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ELECTRICAL/ELECTRONIC MATERIALS GROUP

The Electrical/Electronic Materials Group was formed on July 1, 1998 through the acquisition of EIS, Inc. (“EIS”), a wholly-owned subsidiary of the Company headquartered in Atlanta, Georgia. This Group distributes materials to more than 20,000 electrical and electronic manufacturers in North America. With 3339 branch locations in the United States, Puerto Rico, the Dominican Republic, Mexico and Canada, this Group distributes over 100,000 items fromincluding wire and cable, insulating and conductive materials, to assembly tools and test equipment. EIS also has three manufacturing facilities that provide custom fabricated parts.

During 2008, EIS

In August 2011, the Company acquired the assets of C.H. Clowers Supply Company, an electrical distribution company,Cobra Wire and Cable, Inc., a specialty wire and cable distributor with one location in Pine Bluff, Arkansas. Clowers is a complementary acquisition, which enhances the ability of EIS to distribute materials in the state of Arkansas.

three U.S. locations.

Distribution System.    The Electrical/Electronic Materials Group provides distribution services to original equipment manufacturers,OEM’s, motor repair shops, specialty wire and cable users and a broad variety of industrial assembly markets. EIS actively utilizes itsE-commerce e-commerce Internet site to present its products to customers while allowing these on-line visitors to conveniently purchase from a large product assortment.

Electrical and electronic products are distributed from warehouse locations in major user markets throughout the United States, as well as in Mexico and Canada. The CompanyEIS has return privileges with some of its suppliers, which hashave protected the Company from inventory obsolescence.

Products.    The Electrical/Electronic Materials Group distributes a wide variety of products to customers from over 350 vendors. These products include custom fabricated flexible materials that are used as components within a customer’s manufactured finished product in a variety of market segments. Among the products distributed and fabricated are such items as magnet wire, conductive materials, electrical wire and cable, insulating and shielding materials, assembly tools, test equipment, adhesives and chemicals, pressure sensitive tapes, solder, anti-static products and thermal management products. To meet the prompt delivery demands of its customers, this Group maintains large inventories. The majority of sales are on open account. Approximately 45% of 20082011 total Electrical/Electronic Materials Group purchases were made from 10 major suppliers.

Integrated Supply.    The Electrical/Electronic Materials Group’s integrated supply programs are a part of the marketing strategy, as a greater number of customers — especially national accounts — are given the opportunity to participate in this low-cost, high-service capability. The Group developed AIMS (Advanced Inventory Management System), a totally integrated, highly automated solution for inventory management. The Group’s Integrated Supply offering also includes SupplyPro, an electronic vending dispenser used to eliminate costly tool cribs, or in-house stores, at customer warehouse facilities.

Segment Data.    In each of the years ended December 31, 2008, 20072011 and 2006,2010, sales from the Company’s Electrical/Electronic Materials Group approximated 4% of the Company’s net sales.


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sales, as compared to 3% in 2009. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1.

Competition.    The electrical and electronics distribution business is highly competitive. The Electrical/Electronic Materials Group competes with other distributors specializing in the distribution of electrical and electronic products, general line distributors and, to a lesser extent, manufacturers that sell directly to customers.
EIS competes primarily on factors of price, product offerings and service. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.”

ITEM 1A..RISK FACTORS.

FORWARD-LOOKING STATEMENTS

Some statements in this report, as well as in other materials we file with the 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-

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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 in our forward-looking statements as a result of various important factors. Such factors include, but are not limited to, those discussed below.

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 Forms 10-Q, Form 8-K and other reports to the SEC.

Set forth below are somethe material risks and uncertainties that, if they were to occur, could materially and adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report and in the other public statements we make. Our forward-looking statementsPlease be aware that these risks may relate, for example,change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our future operations, prospects, strategies,business, financial condition, economic performance (including growth and earnings), industry conditions andresults of operations or the trading price of our securities.

Our business will be adversely affected if demand for our products and services. While we believe that our expectationsslows.

Our business depends on customer demand for the futureproducts that we distribute. Demand for these products depends on many factors.

With respect to our automotive group, the primary factors are:

the number of miles vehicles are reasonabledriven annually, as higher vehicle mileage increases the need for maintenance and repair;

the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles;

the number of vehicles in viewcurrent service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles;

gas prices, as increases in gas prices may deter consumers from using their vehicles;

changes in travel patterns, which may cause consumers to rely more on other transportation;

restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and

the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending.

With respect to our industrial parts group, the primary factors are:

the level of currently available information, you are cautioned notindustrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts;

changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy;

the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas; and

the economy in general, which in declining conditions may cause reduced demand for industrial output.

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With respect to place undue relianceour office products group, the primary factors are:

the level of unemployment, especially as it relates to white collar and service jobs, as this impacts the need for business products; and

the economy in general, which in declining conditions may cause reduced demand for office products consumption.

With respect to our electrical/electronic materials group, the primary factors are:

changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; and

the economy in general, which in declining conditions may cause reduced demand for industrial output.

Uncertainty and/or deterioration in general macro-economic conditions, including unemployment, inflation or deflation, high energy costs, uncertain credit markets, or other economic conditions, could have a negative impact on our forward-looking statements, duebusiness, financial condition, results of operations and cash flows.

Our business and operating results may in partthe future be adversely affected by uncertain global economic conditions, including instability in credit markets, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that could affect the global economy. Both our commercial and retail customers may experience deterioration of their financial resources, which could result in existing or potential customers delaying or canceling plans to purchase our products. Our vendors could experience similar conditions, which could impact their ability to fulfill their obligations to us. Future weakness in the risk factors below.

Forward-looking statements made herein, as well asglobal economy could adversely affect our results of operations, financial condition and cash flows in materials we file with the SEC or otherwise release to the public, including materials that we make availablefuture periods.

We depend on our websiterelationships with our vendors, and verbal statements made by senior officers to analysts, investors, the media and others, are subject to the safe harbor provisionsa disruption of the Private Securities Litigation Reform Act of 1995. 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 subjectsour vendor relationships or a disruption in our subsequentForms 10-Q,10-K,8-K and other reports to the SEC.

We Depend On Our Relationships with Our Vendors, and a Disruption of Our Vendor Relationships or a Disruption in Our Vendors’ Operations Could Harm Our Businessvendors’ operations could harm our business.

As a distributor of automotive replacement parts, industrial parts, office products and electrical/electronic materials, our business depends on developing and maintaining close and productive relationships with our vendors. We depend on our vendors to sell us quality products at favorable prices. Many factors outside our control, may harmincluding, without limitation, raw material shortages, inadequate manufacturing capacity, labor disputes, transportation disruptions or weather conditions, could adversely affect our relationships with our vendors. For example,vendors’ ability to deliver to us quality merchandise at favorable prices in a timely manner. Furthermore, financial or operational difficulties with a particular vendor could cause that vendor to increase the cost of the products or decrease the quality of the products we purchase from it. Vendor consolidation could also limit the number of suppliers from which we may purchase products and could materially affect the prices we pay for these products. Also, consolidation among automotive parts or industrial parts and office product suppliers could disrupt our relationship with some vendors. In our automotive business, the number of vendors could decrease considerably, and the prices charged to us by the remaining vendors could increase, asto the extent that vehicle production slows due to thea decline in consumer spending and, possibly, the failure of one or more of the large automobile manufacturers. We would suffer an adverse impact if our vendors limit or cancel the return privileges that currently protect us from inventory obsolescence. A disruption of our vendor relationships or a disruption in our vendors’ operations could have a material adverse effect on our business and results of operations.

Our Business Likely Will Continue To Be Impacted By Declining Economic Conditions

Our business and results of operations may continue to be adversely impacted by declining global, national and local economic conditions and their impact on levels of consumer, commercial and industrial spending. These economic conditions have deteriorated significantly in recent months. Some of the factors that have contributed to recent reduced levels of spending include conditionsWe face substantial competition in the residential real estate and mortgage markets, conditionsindustries in the automobile industry, increases in fuel and other energy costs, labor and healthcare costs, access to credit, high unemployment rates, declining consumer confidence and other macroeconomic factors. These factors had a material adverse effect on demand for the Company’s products and services and on the Company’s financial condition and operating results in the fourth quarter of 2008. The current difficult economic climate is not expected to improve significantly in the near term, and the resulting low levels of consumer, commercial and industrial spending could continue to result in weakened demand for the products of all of our business groups for the foreseeable future.


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which we do business.

Our Business Will Be Adversely Affected If Demand for Our Products Slows
Our business depends on customer demand for the products that we distribute. Demand for these products depends on many factors.
With respect to our automotive group, the primary factors are:
• the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for maintenance and repair;
• the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranty or maintenance offered on new vehicles;
• the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles;
• gas prices, as increases in gas prices may deter consumers from using their vehicles;
• changes in travel patterns which may cause consumers to rely more on other transportation;
• restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and
• the economy generally.
With respect to our industrial parts group, the primary factors are:
• the level of industrial production and manufacturing capacity utilization, as these indices impact the need for industrial replacement parts;
• changes in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies contracting manufacturing economy; and
• the economy in general.
With respect to our office products group, the primary factors are :
• the level of unemployment especially as it relates to white collar and service jobs, as this impacts the need for business products; and
• the economy in general.
With respect to our electrical/electronic materials group, the primary factors are:
• changes in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies contracting manufacturing economy; and
• the economy in general.
We Face Substantial Competition in the Industries in Which We Do Business
The sale of automotive and industrial parts, office products and electronicelectrical materials is highly competitive and impacted by many factors, including name recognition, product availability, customer service, anticipating changing customer preferences, store location, and pricing pressures. Because we seek to offer competitive prices, if our competitors reduce their prices, we may be forced to reduce our prices, which could result in a material decline in our revenues and earnings. Increased competition among distributors of automotive and industrial parts, office products and electronic materials, including internet-related initiatives, could cause a material adverse effect on our results of operations.
The Company anticipates no decline in competition in any of its four business segments in the foreseeable future.


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In particular, the market for replacement automotive parts is highly competitive and subjects us to a wide variety of competitors. We compete primarily with national and regional auto parts chains, independently owned regional and local automotive parts and accessories stores, automobile dealers that supply manufacturer replacement parts and accessories, mass merchandisers and wholesale clubs that sell automotive products and regional and local full service automotive repair shops. Furthermore, the automotive aftermarket has experienced consolidation in recent years. Consolidation among our competitors could further enhance their financial position, provide them with the ability to provide more competitive prices to customers for whom we compete, and allow them to achieve increased efficiencies in their consolidated operations that enable them to more effectively compete for customers. If we are unable to continue to develop successful competitive strategies including internet related initiatives, or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline.

The Impairment of Financial Institutions Could Adversely Affect Us

The capital and credit markets have been experiencing volatility and disruption for more than twelve months. In the past several months, volatility and disruptions have increased and recently reached unprecedented levels. We have exposuremay not be able to counterparties with which we routinely execute transactions. Such counterparties include commercial banks, insurance companies, investment funds and other financial institutions, some of which may be exposed to bankruptcy or liquidity risks. While we have not realized any significant losses to date, a bankruptcy or illiquidity event by onesuccessfully implement our business initiatives in each of our significant counterpartiesfour business segments to grow our sales and earnings, which could materially and adversely affect our access to capital, future business, andfinancial condition, results of operations.operations and cash flows.

We have implemented numerous initiatives in each of our four business segments to grow sales and earnings, including the introduction of new and expanded product lines, geographic expansion (including acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. If we are unable to implement these initiatives efficiently and effectively, or if these initiatives are unsuccessful, our business, financial condition, results of operations and cash flows could be adversely affected.

Successful implementation of these initiatives also depends on factors specific to the automotive parts industry and the other industries in which we operate and numerous other factors that may be beyond our control. In addition to the other risk factors contained in this “Item 1A. Risk Factors”, adverse changes in the following factors could undermine our business initiatives and have a material adverse affect on our business, financial condition, results of operations and cash flows:

the competitive environment in our end markets may force us to reduce prices below our desired pricing level or to increase promotional spending;

our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner;

our ability to successfully enter new markets;

our ability to effectively manage our costs;

our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations; and

the economy in general.

Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs.

We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various actions. The damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this could have a material adverse affect on our business, financial condition, results of operations and cash flows.

Additionally, we are subject to numerous federal, state and local laws and governmental regulations relating to environmental protection, product quality standards, building and zoning requirements, as well as employment law matters. If we fail to comply with existing or future laws or regulations, we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital expenses could increase due to remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations.

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ITEM 1B..UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2..PROPERTIES.

The Company’s headquarters and Automotive Parts Group headquarters are located in two adjacent office buildings owned by the Company in Atlanta, Georgia.

The Company’s Automotive Parts Group currently operates 58 NAPA Distribution Centers in the United States distributed among eight geographic divisions. Approximately 90% of the distribution center properties are owned by the Company. At December 31, 2008,2011, the Company operated approximately 1,100950 NAPA AUTO PARTS stores located in 4342 states, and the Company owned either a minoritynoncontrolling or majoritycontrolling interest in approximately 1947 additional auto parts stores and three distribution centers located in sixfour states. Other than NAPA AUTO PARTS stores located within Company owned distribution centers, the majority of the automotive parts stores in which the Company has an ownership interest were operated in leased facilities. In addition, NAPA Canada/UAP operates 12 distribution centers and approximately 229184 automotive parts and TRACTIONTraction stores in Canada, and Auto Todo operates nineeleven distribution centers and eight stores and tire centers in Mexico. These operations are operatedconducted in leased facilities.

The Company’s Automotive Parts Group also operates four Balkamp distribution/redistribution centers, four Rayloc distribution centers, one Rayloc rebuilding and distribution facilityfacilities and two transfer and shipping facilities. Finally,Nearly all of the Balkamp and Rayloc operations are conducted in facilities owned by the Company. Altrom Canada operates 15 import parts distribution centers and Altrom America operates two import parts distribution centers and thecenters. The Heavy Vehicle Parts Group operates one TW distribution center, which serves 1823 Traction stores of which 1315 are company owned and located in the US.U.S. These operations are operatedconducted in leased facilities.

The Company’s Industrial Parts Group, operating through Motion and Motion Canada, operates 10ten distribution centers, 3653 service centers and 472473 branches. Approximately 90% of these branches are operated in leased facilities.

The Company’s Office Products Group operates 4037 facilities in the United States and five facilities in Canada distributed among the Group’s five geographic divisions. Approximately 75% of these facilities are operated in leased buildings.

The Company’s Electrical/Electronic Materials Group operates in 3036 locations in the United States, one location in Puerto Rico, one location in the Dominican Republic, three locations in Mexico and one location in Canada. All of this Group’s 3642 facilities are operated in leased buildings except one facility, which is owned.

We believe that our facilities on the whole are in good condition, are adequately insured, are fully utilized and are suitable and adequate for the conduct of our current operations.

For additional information regarding rental expense on leased properties, see Note 4 of Notes to Consolidated Financial Statements beginning on the Company’s 2008 Annual Report.


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page F-1.

ITEM 3..LEGAL PROCEEDINGS.

The Company is subject to various legal and governmental proceedings, many involving routine litigation incidental to the businesses, including approximately 1,5002,100 product liability lawsuits resulting from its national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributed by the Company. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material adverse effect on the Company’s business, results of operations or financial condition.

ITEM 4..SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSMINE SAFETY DISCLOSURES..

Not applicable.

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PART II..

ITEM 5..MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES..

Market Information Regarding Common Stock

Certain information required

The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol “GPC”. The following table sets forth the high and low sales prices for the common stock per quarter as reported on the New York Stock Exchange and dividends per share of common stock paid during the last two fiscal years:

   Sales Price of Common Shares 
   2011   2010 
   High   Low   High   Low 

Quarter

        

First

  $55.70    $49.86    $43.63    $36.94  

Second

   55.99     49.74     45.42     38.00  

Third

   57.66     46.10     45.32     38.81  

Fourth

   62.21     48.53     51.61     44.13  

         Dividends
Declared  per
Share		 
          2011   2010 

Quarter

        

First

  $0.45    $0.41  

Second

   0.45     0.41  

Third

   0.45     0.41  

Fourth

   0.45     0.41  

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Stock Performance Graph

Set forth below is a line graph comparing the yearly dollar change in the cumulative total shareholder return on the Company’s Common Stock against the cumulative total shareholder return of the Standard and Poor’s 500 Stock Index and a peer group composite index structured by this item isthe Company as set forth underbelow for the heading “Market Pricefive year period that commenced December 31, 2006 and Dividend Information”ended December 31, 2011. This graph assumes that $100 was invested on December 31, 2006 in Genuine Parts Company Common Stock, the S&P 500 Stock Index (the Company is a member of the S&P 500, and its cumulative total shareholder return went into calculating the S&P 500 results set forth in the graph) and the peer group composite index as set forth below and assumes reinvestment of all dividends.

Comparison of five year cumulative total shareholder return

Genuine Parts Company, S&P 500 Index and peer group composite index

Cumulative Total Shareholder Return

$ at Fiscal Year End

  2006   2007   2008   2009   2010   2011 

Genuine Parts Company

   100.00     100.59     85.47     89.90     126.34     155.73  

S&P 500

   100.00     105.49     66.46     84.04     96.70     98.74  

Peer Index

   100.00     116.22     66.39     94.66     137.31     131.82  

In constructing the peer group composite index (“Peer Index”) for use in the stock performance graph above, the Company used the shareholder returns of various publicly held companies (weighted in accordance with each company’s stock market capitalization at December 31, 2006 and including reinvestment of dividends) that compete with the Company in three industry segments: automotive parts, industrial parts and office products (each group of companies included in the Peer Index as competing with the Company in a separate industry segment is hereinafter referred to as a “Peer Group”). Included in the automotive parts Peer Group are those companies making up the Dow Jones U.S. Auto Parts Index (the Company is a member of such industry group, and its individual shareholder return was included when calculating the Peer Index results set forth in the performance graph). Included in the industrial parts Peer Group are Applied Industrial Technologies, Inc. and Kaman Corporation and included in the office products Peer Group is United Stationers Inc. The Peer Index does not break out a separate electrical/electronic peer group due to the fact that there is currently no true market comparative to EIS. The electrical/electronic component of sales is redistributed to the Company’s 2008 Annual Reportother segments on a pro rata basis to calculate the final Peer Index.

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In determining the Peer Index, each Peer Group was weighted to reflect the Company’s annual net sales in each industry segment. Each industry segment of the Company comprised the following percentages of the Company’s net sales for the fiscal years shown:

Industry Segment

  2006  2007  2008  2009  2010  2011 

Automotive Parts

   49%   49%   48%   52%   50%   49% 

Industrial Parts

   30%   31%   32%   29%   31%   33% 

Office Products

   17%   16%   16%   16%   15%   14% 

Electrical/Electronic Materials

   4%   4%   4%   3%   4%   4% 

Holders

As of December 31, 2011, there were 5,324 holders of record of the Company’s common stock. The number of holders of record does not include beneficial owners of the common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and is incorporated herein by reference.

other fiduciaries.

Sales of Unregistered Securities

All of our sales of securities in 20082011 were registered under the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

The following table provides information about the purchases of shares of the Company’s common stock during the three month period ended December 31, 2008:

                 
        Total Number of
    
        Shares Purchased
    
  Total
     as Part of
  Maximum Number of
 
  Number of
  Average
  Publicly
  Shares That May Yet Be
 
  Shares
  Price Paid
  Announced Plans
  Purchased Under the Plans
 
Period
 Purchased(1)  Per Share  or Programs(2)  or Programs 
 
October 1, 2008 through October 31, 2008  1,121,821  $36.31   1,121,821   3,639,830 
November 1, 2008 through November 30, 2008  109,410  $36.02   94,100   18,545,730 
December 1, 2008 through December 31, 2008  23,241  $37.49   1,000   18,544,730 
                 
Totals  1,254,472  $36.31   1,216,921   18,544,730 
                 
2011:

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		 

October 1, 2011 through October 31, 2011

   402,713    $53.97     174,890     13,548,681  

November 1, 2011 through November 30, 2011

   61,812    $58.22     -0-     13,548,681  

December 1, 2011 through December 31, 2011

   131,073    $59.60     519     13,548,162  

Totals

   595,598    $55.65     175,409     13,548,162  

(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 August 21, 2006 and November 17, 2008, the Board of Directors announced that it had authorized the repurchase of 15 million shares and 15 million shares, respectively, and such repurchase plans were announced on August 21, 2006 and November 17, 2008, respectively.shares. The authorization for thesethis repurchase plansplan continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 3.513.5 million shares authorized in the repurchase2008 plan announced in 2006 remain available to be repurchased by the Company. There were no other publicly announced plans outstanding as of December 31, 2008.2011.


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ITEM 6..SELECTED FINANCIAL DATA.
Information required

The following table sets forth certain selected historical financial and operating data of the Company as of the dates and for the periods indicated. The following selected financial data are qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes and other financial information beginning on page F-1, as well as in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this item is set forth under the heading “Selected Financial Data” in the Company’s 2008 Annual Report and is incorporated herein by reference.

report.

Year Ended December 31,

  2011   2010   2009   2008   2007 
   (In thousands, except per share data) 

Net sales

  $12,458,877    $11,207,589    $10,057,512    $11,015,263    $10,843,195  

Cost of goods sold

   8,852,837     7,954,645     7,047,750     7,742,773     7,625,972  

Operating and non-operating expenses, net

   2,715,234     2,491,161     2,365,597     2,504,022     2,400,478  

Income before taxes

   890,806     761,783     644,165     768,468     816,745  

Income taxes

   325,690     286,272     244,590     293,051     310,406  

Net income

  $565,116    $475,511    $399,575    $475,417    $506,339  

Weighted average common shares outstanding during year — assuming dilution

   157,660     158,461     159,707     162,986     170,135  

Per common share:

          

Diluted net income

  $3.58    $3.00    $2.50    $2.92    $2.98  

Dividends declared

   1.80     1.64     1.60     1.56     1.46  

December 31 closing stock price

   61.20     51.34     37.96     37.86     46.30  

Long-term debt, less current maturities

   500,000     250,000     500,000     500,000     250,000  

Total equity

   2,792,819     2,802,714     2,629,372     2,393,378     2,782,946  

Total assets

  $5,879,591    $5,465,044    $5,004,689    $4,786,350    $4,774,069  

ITEM 7..MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..
Information required

OVERVIEW

Genuine Parts Company is a service organization engaged in the distribution of automotive parts, industrial 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. In 2011, the Company conducted business throughout the United States, Canada, Mexico and Puerto Rico from approximately 1,900 locations.

We recorded consolidated net sales of $12.5 billion for the year ended December 31, 2011, an increase of 11% compared to $11.2 billion in 2010. Consolidated net income for the year ended December 31, 2011 was $565 million, up 19% from $476 million in 2010. The favorable market conditions in the industries that we serve combined with our internal growth initiatives drove the Company’s strong performance in 2011.

The 11% sales growth in 2011 follows an 11% increase in revenues in 2010 and a 9% decrease in revenues in 2009. Our 19% increase in net income follows a 19% increase and 16% decrease in net income in 2010 and 2009, respectively. Throughout this three year period, the Company has implemented a variety of initiatives in each of its four business segments to grow sales and earnings, including the introduction of new and expanded product lines, geographic expansion (including acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. The recovering economy served to further support the benefits of our internal growth initiatives in 2011 and 2010. In 2009, however, the effects of the economic slowdown, which we began to experience in the final quarter of 2008, adversely impacted the benefit of these initiatives.

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With regard to the December 31, 2011 consolidated balance sheet, the Company’s cash balance of $525 million was consistent with cash of $530 million at December 31, 2010. The Company’s strong cash position was supported by the increase in net income and ongoing working capital management in 2011. Accounts receivable increased by approximately 7%, relatively in-line with our sales increase in the fourth quarter of the year and inventory was up by less than 2%, including acquisitions. Accounts payable increased $66 million or 5% from the prior year. The Company has increased this line item over the last several years due primarily to the combination of increased purchases, improved payment terms with certain suppliers and other ongoing payables initiatives. Total debt outstanding at December 31, 2011 was unchanged from $500 million at December 31, 2010.

RESULTS OF OPERATIONS

Our results of operations are summarized below for the three years ended December 31, 2011, 2010 and 2009.

   Year Ended December 31, 
   2011   2010   2009 
   (In thousands except per share data) 

Net Sales

  $12,458,877    $11,207,589    $10,057,512  

Gross Profit

   3,606,040     3,252,944     3,009,762  

Net Income

   565,116     475,511     399,575  

Diluted Earnings Per Share

   3.58     3.00     2.50  

Net Sales

Consolidated net sales for the year ended December 31, 2011 totaled $12.5 billion, an 11% increase from 2010 driven by sales growth in all four of our business segments for the second consecutive year. The Industrial and Electrical business segments experienced the greatest percentage increases for the year, as the manufacturing sector of the economy held steady and strong in 2011. These businesses also benefited from acquisitions in 2011. Sales for the Automotive business segment also continued their positive trend in 2011, primarily due to the benefits of well executed internal initiatives and the overall solid fundamentals in the automotive aftermarket. Cumulatively, prices in 2011 were up approximately 3% in the Automotive segment, up approximately 4% in the Industrial segment, up approximately 5% in the Electrical segment and up approximately 2% in the Office segment.

Consolidated net sales for the year ended December 31, 2010 totaled $11.2 billion, an 11% increase from 2009. All four of our business segments showed sales growth for the year. The Industrial and Electrical business segments had the greatest percentage increases for 2010, as the manufacturing sector of the economy was much stronger in 2010 relative to 2009. These businesses also benefited from acquisitions in 2010. Sales for the Automotive business segment were much improved in 2010 as well, primarily due to the benefits of well executed internal initiatives and the overall improvement in the economy. Cumulatively, prices in 2010 were up approximately 1% in the Automotive segment, up approximately 3% in the Industrial segment, up approximately 4% in the Electrical segment and approximately flat in the Office segment.

Automotive Group

Net sales for the Automotive Group (“Automotive”) were $6.1 billion in 2011, an increase of 8% from 2010. Sales improved in 2011 due to the successful execution of our sales initiatives and the ongoing solid fundamentals in the automotive aftermarket, including the overall aging of the vehicle populations. The positive fundamentals serve to drive increased demand for automotive aftermarket maintenance and supply items. Automotive revenues were up 9% in the first, second and third quarters, and were up 6% in the fourth quarter. Other factors impacting our Automotive sales for the year include the effect of currency associated with our Canadian and Mexican businesses, which positively impacted sales by approximately 1%.

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Net sales for Automotive were $5.6 billion in 2010, an increase of 7% from 2009. Sales improved in 2010 due to the successful execution of our sales initiatives and the stronger economy, which drove increased demand for automotive maintenance and supply items. Automotive revenues were up 6% in the first quarter, followed by 7% increases in the second and third quarters, and a 9% increase in the fourth quarter. Other factors impacting our Automotive sales for the year include the effect of currency, which positively impacted sales by approximately 2%.

Industrial Group

Net sales for Motion Industries, our Industrial Group (“Industrial”), were $4.2 billion in 2011, an increase of 19% compared to 2010. Several factors contributed to the sales increase for this group, including the positive impact of their internal sales initiatives and the continued strength in the manufacturing sector of the economy served by Industrial. This was evidenced by the reported growth in the manufacturing industrial production and capacity utilization indices, which this group tends to track. Also in 2011, sales were positively impacted by acquisitions, which accounted for approximately 3% of Industrial’s sales growth for the year, and the effect of currency associated with our Canadian business, which positively impacted sales by less than 1%. As a result of these several factors, Industrial revenues were up 24% in the first quarter of 2011, up 19% in the second quarter, then up 18% and 13% in the third and fourth quarters, respectively.

Net sales for Industrial were $3.5 billion in 2010, an increase of 22% compared to 2009. The positive impact of their internal sales initiatives and the strong rebound in the manufacturing sector of the economy served by Industrial contributed to the sales increase for this group. This was evidenced by the ongoing improvement in the manufacturing industrial production and capacity utilization indices. Also in 2010, sales were positively impacted by acquisitions, which accounted for approximately 5% of Industrial’s sales growth for the year. As a result of these several factors, Industrial revenues were up 9% in the first quarter of 2010, up 26% in the second quarter, then up 29% and 24% in the third and fourth quarters, respectively.

Office Group

Net sales for S. P. Richards, our Office Products Group (“Office”), were $1.7 billion in 2011, up 3% from 2010. Office revenues began to stabilize in 2010 relative to prior year trends, and this group was able to make further progress in 2011. We were pleased to report growth for this business, despite the ongoing difficult environment for the office products industry, which we attribute to the generally slow recovery of white collar employment levels in the U.S. Sales increased approximately 5%, 4% and 3% in the first, second and third quarters, respectively, and were down 1% in the fourth quarter of 2011.

Net sales for Office were $1.6 billion in 2010, up slightly compared to the prior year. Office revenues stabilized in 2010, although the office products industry continued to experience soft market conditions throughout the year as a result of reduced business spending and the ongoing impact of elevated unemployment levels. Sales decreased approximately 1% in the first and second quarters, were flat in the third quarter and were up by 3% in the fourth quarter of 2010. The fourth quarter increase was significant, as the industry-wide slowdown in office products consumption had pressured this group for several years and the fourth quarter of 2010 marked the first positive sales comparison for Office since the second quarter of 2007.

Electrical Group

Net sales for EIS, our Electrical and Electronic Group (“Electrical”), increased to $558 million in 2011, up 24% from 2010. Our sales initiatives and the continued manufacturing expansion during the year, as measured by the Institute for Supply Management’s Purchasing Managers Index, were the primary sales drivers in 2011. In addition, acquisitions in 2011 contributed approximately 11% to Electrical’s sales growth, and the effect of copper pricing had a 3% positive sales impact for the year. Electrical sales increased by 39% in the first quarter, and this was followed by increases of 28% in the second quarter, 22% in the third quarter and 10% in the fourth quarter.

Net sales for Electrical increased to $450 million in 2010, up 30% from 2009. Electrical sales increased by 16% in the first quarter, 32% in the second quarter, 31% in the third quarter and 40% in the fourth quarter. The

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revenue growth in 2010 was driven by our sales initiatives, which were strongly supported by manufacturing expansion during the year, as measured by the Institute for Supply Management’s Purchasing Managers Index. In addition, acquisitions in 2010 contributed approximately 9% to Electrical’s sales growth for the year.

Cost of Goods Sold

Cost of goods sold was $8.9 billion, $8.0 billion and $7.0 billion in 2011, 2010 and 2009, respectively. The 11% increase in cost of goods sold from 2010 to 2011 is set forthdirectly related to the sales increase for the same period. Cost of goods sold represented 71.1% of net sales in 2011, 71.0 % of net sales in 2010 and 70.1% of net sales in 2009. The increase in cost of goods sold as a percent of net sales for 2011 and 2010 relative to 2009 reflects the impact of certain pricing adjustments implemented in Automotive as well as ongoing competitive pricing pressures in Industrial and Office. These factors more than offset our gross margin initiatives to enhance our pricing strategies, promote and sell higher margin products and minimize material acquisition costs, hence the lower gross margin levels over the last two years.

In 2011, all four of our business segments experienced vendor price increases for the second consecutive year, although, in 2010, the Automotive and Office increases were relatively immaterial. In 2009, our Office and Electrical business segments experienced vendor price increases, while Industrial was flat and Automotive pricing was down for the year. In any year where we experience price increases, we are able to work with our customers to pass most of these along to them.

Operating Expenses

Selling, administrative and other expenses (“SG&A”) increased by $228 million or 10% to $2.6 billion in 2011, representing 20.8% of net sales and down from 21.1% of net sales in 2010. SG&A expenses as a percentage of net sales improved from the prior year due primarily to the benefit of greater expense leverage associated with the second consecutive 11% sales increase. In addition, management’s ongoing cost control measures in areas such as personnel, freight, fleet and logistics have served to further improve the Company’s cost structure. After reducing the size of its workforce by approximately 12% during 2008 and 2009, the Company has only added back approximately 2% of that over the two year period of 2011 and 2010 (including acquisitions). Our management teams remain focused on properly managing the Company’s expenses and continuing to assess the appropriate cost structure in our businesses. Depreciation and amortization expense in 2011 was $89 million, relatively in-line with 2010. The provision for doubtful accounts was $13 million in 2011, up nearly $3 million or 25% from $11 million in 2010. The increase in bad debt expense is primarily a function of the increase in sales for the year and not due to collections issues. We believe the Company is adequately reserved for bad debts at December 31, 2011.

SG&A increased by $147 million or 7% to $2.4 billion in 2010, representing 21.1% of net sales and down from 22.1% of net sales in 2009. SG&A expenses as a percentage of net sales improved from the prior year due primarily to the benefit of greater expense leverage associated with the 11% sales increase for the year. In addition, management’s ongoing cost control measures in areas such as personnel, freight, fleet and logistics have served to further improve the Company’s cost structure. After reducing the size of its workforce by approximately 12% during 2008 and 2009, the Company added back only 1% of that in 2010 (including acquisitions). In total, of the estimated $70 million cost savings in 2009, the Company estimates that it added back approximately $20 million in costs in 2010, primarily associated with the increase in sales and earnings. Depreciation and amortization expense in 2010 was $89 million, down slightly from 2009. The provision for doubtful accounts was $11 million in 2010, down 61% from $28 million in 2009. The decrease in bad debt expense reflects a much improved collections environment in 2010 relative to the prior year.

Total share-based compensation expense for the years ended December 31, 2011, 2010 and 2009 was $7.5 million, $7.0 million, and $8.6 million, respectively. Refer to Note 5 of the Consolidated Financial Statements for further information regarding share-based compensation.

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Non-Operating Expenses and Income

Non-operating expenses consist primarily of interest. Interest expense was $27 million in 2011 and $28 million in 2010 and 2009. The $1 million decrease in interest expense relative to 2010 and 2009 is the result of an improved interest rate on certain long-term debt, effective November 2011.

In “Other”, interest income net of noncontrolling interests has increased in each of the last two years due primarily to our improved cash position and the elimination of certain noncontrolling interests in 2009.

Income Before Income Taxes

Income before income taxes was $891 million in 2011, an increase of 17% from $762 million in 2010. As a percentage of net sales, income before income taxes was 7.1% in 2011, reflecting an increase from 6.8% in 2010. In 2010, income before income taxes of $762 million was up 18% from $644 million in 2009 and as a percentage of net sales was 6.8%, an increase from 6.4% in 2009.

Automotive Group

Automotive income before income taxes as a percentage of net sales, which we refer to as operating margin, increased to 7.7% in 2011 from 7.5% in 2010. The improvement in operating margin for 2011 is attributed to the benefit of greater expense leverage associated with Automotive’s 8% sales increase for the year. Automotive’s initiatives to grow sales and control costs are intended to further improve its operating margin in the years ahead.

Automotive’s operating margin increased to 7.5% in 2010 from 7.4% in 2009. The improvement in operating margin for 2010 is attributed to the benefit of greater expense leverage associated with Automotive’s 7% sales increase for the year.

Industrial Group

Industrial’s operating margin increased to 8.1% in 2011 from 7.3% in 2010. The increase in operating margin in 2011 is due to the combination of greater expense leverage associated with a 19% sales increase, Industrial’s second straight year of strong double-digit sales growth, the ongoing benefits of recent cost savings and increased volume incentives. Industrial will continue to focus on its sales initiatives and cost controls to further improve its operating margin in the years ahead.

Industrial’s operating margin increased to 7.3% in 2010 from 5.6% in 2009. The increase in operating margin in 2010 was due to the combination of greater expense leverage associated with a 22% sales increase, cost savings and increased volume incentives.

Office Group

Office’s operating margin decreased slightly to 7.9% in 2011 from 8.0% in 2010. The decrease in operating margin in 2011 primarily reflects the continued pressures on gross margin in this industry, due to the slower pace of the economic recovery and office employment. These pressures were partially offset by the positive impact of Office’s cost savings initiatives.

Office’s operating margin increased to 8.0% in 2010 from 7.7% in 2009 and reflects the positive impact of our cost savings initiatives combined with the benefit of higher volume incentives from suppliers. The increase in incentives was due to our fourth quarter sales growth and related increase in purchase volumes, which allowed us to achieve higher program growth tiers with suppliers.

Electrical Group

Electrical’s operating margin increased to 7.3% in 2011 from 6.9% in 2010. The increase in operating margin in 2011 is due to the combination of greater expense leverage associated with a 24% sales increase, its second straight year of strong double-digit sales growth, and the ongoing benefits of effective cost controls. The improvement from these areas was partially offset by the increase in copper prices during the year. Electrical will continue to focus on its sales initiatives and cost controls to further improve its operating margin in the years ahead.

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Electrical’s operating margin decreased to 6.9% in 2010 from 7.3% in 2009. The decrease in operating margin was mainly due to escalating copper prices during the year, which generally do not affect profit dollars, but negatively impact margins as copper is generally billed to customers at cost. The margin pressures associated with this industry standard pricing practice for copper more than offset the benefits of a stronger manufacturing sector in 2010 and greater expense leverage associated with a 30% sales increase.

Income Taxes

The effective income tax rate of 36.6% in 2011 was down from 37.6% in 2010. The decrease from 2010 is primarily attributable to a favorable adjustment recorded in the first quarter of 2011 associated with the expiration of the statute of limitations related to certain international taxes. The income tax rate decreased to 37.6% in 2010 from 38.0% in 2009. The decrease from 2009 is attributable to favorable foreign income taxes for the year.

Net Income

Net income was $565 million in 2011, an increase of 19% from $476 million in 2010. On a per share diluted basis, net income was $3.58 in 2011 compared to $3.00 in 2010, up 19%. Net income in 2011 was 4.5% of net sales compared to 4.2% of net sales in 2010.

Net income was $476 million in 2010, an increase of 19% from $400 million in 2009. On a per share diluted basis, net income was $3.00 in 2010 compared to $2.50 in 2009, up 20%. Net income in 2010 was 4.2% of net sales compared to 4.0% of net sales in 2009.

FINANCIAL CONDITION

Our cash balance of $525 million at December 31, 2011 was relatively consistent with our cash balance at December 31, 2010, supported by the increase in net income in 2011 and ongoing working capital management. The Company’s accounts receivable balance at December 31, 2011 increased by approximately 7% from the prior year, which reflects the Company’s 7% sales increase for the fourth quarter of 2011. Inventory at December 31, 2011 was up by less than 2% from December 31, 2010, which is well below the Company’s increase in sales and primarily attributable to acquisitions. Accounts payable increased $66 million or approximately 5% from December 31, 2010 due primarily to increased inventory purchases related to the Company’s sales increase. Goodwill and other intangible assets increased by $70 million or 34% from December 31, 2010 due to the Company’s acquisitions during the year. The change in our December 31, 2011 balances for deferred taxes, up $94 million or 59%, as well as pension and other post-retirement benefits liabilities, up $235 million or approximately 91% from December 31, 2010, is primarily due to a change in funded status of the Company’s pension and other post-retirement plans in 2011, net of $58 million in pension contributions during the year.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s sources of capital consist primarily of cash flows from operations, supplemented as necessary by private issuances of debt and bank borrowings. We have $500 million of total debt outstanding at December 31, 2011, of which $250 million matures in November 2013 and $250 million matures in November 2016. In addition, the Company has available a $350 million unsecured revolving line of credit. No amounts were outstanding under the heading “Management’sline of credit at December 31, 2011 and 2010. The capital and credit markets were volatile over the last few years, although these conditions did not materially impact our access to these markets. Currently, we believe that our cash on hand and available short-term and long-term sources of capital are sufficient to fund the Company’s operations, including working capital requirements, scheduled debt payments, interest payments, capital expenditures, benefit plan contributions, income tax obligations, dividends, share repurchases and contemplated acquisitions.

The ratio of current assets to current liabilities was 2.5 to 1 at December 31, 2011, and this compares to 2.2 to 1 at December 31, 2010. Before consideration of current debt outstanding at December 21, 2010, the ratio of current assets to current liabilities was 2.6 to 1. Our liquidity position remains solid. The Company’s $500 million in total debt outstanding at December 31, 2011 is unchanged from 2010.

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Sources and Uses of Net Cash

A summary of the Company’s consolidated statements of cash flows is as follows:

   Year Ended December 31,  Percent Change 

Net Cash Provided by (Used in):

  2011  2010 2009  2011 vs. 2010  2010 vs. 2009 
   (In thousands)       

Operating Activities

  $624,927   $678,663 $845,298    (8)%   (20)% 

Investing Activities

   (231,497)  (172,348)  (264,420)   34 %   (35)% 

Financing Activities

   (394,140)  (320,569)  (330,383)   23 %   (3)% 

Net Cash Provided by Operating Activities:

The Company continues to generate cash and net cash provided by operating activities totaled $625 million in 2011. This reflects an 8% decrease from 2010, as, collectively, trade accounts receivable, merchandise inventories and trade accounts payable represented a $19 million use of cash in 2011 compared to a $185 million source of cash in 2010. This was partially offset by a $90 million increase in net income. Net cash provided by operating activities of $679 million in 2010 represents a 20% decrease from 2009, as, collectively, trade accounts receivable, merchandise inventories and trade accounts payable as a source of cash was $129 million less in 2010 relative to 2009 and pension contributions in 2010 increased by $35 million from 2009. These items were partially offset by a $76 million increase in net income.

Net Cash Used in Investing Activities:

Net cash flow used in investing activities was $231 million in 2011 compared to $172 million in 2010, an increase of 34%. Cash used for acquisitions of businesses and other investing activities in 2011 were $46 million greater than in 2010, and capital expenditures increased by $18 million. Net cash flow used in investing activities was $172 million in 2010 compared to $264 million in 2009, a decrease of 35%. Cash used for acquisitions of businesses in 2010 was $44 million less than in 2009, while capital expenditures increased by $16 million for the year. The decrease in investing activities was primarily due to a $73 million purchase of properties under a construction and lease agreement in 2009.

Net Cash Used in Financing Activities:

The Company used $394 million of cash in financing activities in 2011, a 23% increase from the $321 million used in financing activities in 2010. In 2010, the $321 million of cash used in financing activities was down 3% from the $330 million used in 2009. For the three years presented, net cash used in financing activities was primarily for dividends paid to shareholders and repurchases of the Company’s common stock. The Company paid dividends to shareholders of $276 million, $258 million and $254 million during 2011, 2010 and 2009, respectively. The Company expects this trend of increasing dividends to continue in the foreseeable future. During 2011, 2010 and 2009, the Company repurchased $122 million, $75 million and $26 million, respectively, of the Company’s common stock. We expect to remain active in our share repurchase program, but the amount and value of shares repurchased will vary.

Notes and Other Borrowings

The Company maintains a $350 million unsecured revolving line of credit with a consortium of financial institutions, which matures in December 2012 and bears interest at LIBOR plus .30% (0.60% at December 31, 2011). At December 31, 2011 and 2010, no amounts were outstanding under the line of credit. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of approximately $54 million and $50 million outstanding at December 31, 2011 and 2010, respectively.

At December 31, 2011, the Company had unsecured senior notes outstanding under a $500 million financing arrangement as follows: $250 million series C senior unsecured note, 4.67% fixed, due 2013; and $250 million series D and E senior unsecured notes, 3.35% fixed, due 2016. These borrowings contain covenants

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related to a maximum debt-to-capitalization ratio and certain limitations on additional borrowings. At December 31, 2011, the Company was in compliance with all such covenants. The weighted average interest rate on the Company’s total outstanding borrowings was approximately 4.01% at December 31, 2011 and 5.45% at December 31, 2010. Total interest expense, net of interest income, for all borrowings was $24.6 million, $26.6 million and $27.1 million in 2011, 2010 and 2009, respectively.

Contractual and Other Obligations

The following table shows the Company’s approximate obligations and commitments, including interest due on credit facilities, to make future payments under specified contractual obligations as of December 31, 2011:

Contractual Obligations

   Payment Due by Period 
   Total   Less Than
1 Year		   1-3 Years   3-5 Years   Over
5 Years		 
   (In thousands) 

Credit facilities

  $563,554    $20,050    $277,452    $266,052    $—  

Operating leases

   553,306     134,842     189,028     90,216     139,220  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total contractual cash obligations

  $1,116,860    $154,892    $466,480    $356,268    $139,220  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Due to the uncertainty of the timing of future cash flows associated with the Company’s unrecognized tax benefits at December 31, 2011, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $60 million of unrecognized tax benefits have been excluded from the contractual obligations table above. Refer to Note 6 of the Consolidated Financial Statements for a discussion on income taxes.

Purchase orders or contracts for the purchase of inventory and other goods and services are not included in our estimates. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current distribution needs and are fulfilled by our vendors within short time horizons. The Company does not have significant agreements for the purchase of inventory or other goods specifying minimum quantities or set prices that exceed our expected requirements.

The Company guarantees the borrowings of certain independently owned automotive parts stores (independents) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings. The following table shows the Company’s approximate commercial commitments as of December 31, 2011:

Other Commercial Commitments

   Total  Amounts
Committed		   Amount of Commitment Expiration per Period 
     Less Than
1 Year		   1-3 Years   3-5 Years   Over
5 Years		 
   (In thousands) 

Line of credit

  $—    $—    $—    $—    $—  

Standby letters of credit

   53,703     53,703     —     —     —  

Guaranteed borrowings of independents and affiliates

   217,166     54,880     135,950     26,336     —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial commitments

  $270,869    $108,583    $135,950    $26,336    $  —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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In addition, the Company sponsors defined benefit pension plans that may obligate us to make contributions to the plans from time to time. Contributions in 2011 were $58 million. We expect to make a $17 million cash contribution to our qualified defined benefit plans in 2012, and contributions required for 2012 and future years will depend on a number of unpredictable factors including the market performance of the plans’ assets and future changes in interest rates that affect the actuarial measurement of the plans’ obligations.

Share Repurchases

In 2011, the Company repurchased approximately 2.4 million shares and the Company had remaining authority to purchase approximately 13.5 million shares at December 31, 2011.

CRITICAL ACCOUNTING POLICIES

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We describe in this section certain critical accounting policies that require us to make significant estimates, assumptions and judgments. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the preparation of the consolidated financial statements. For further information on the critical accounting policies, see Note 1 of the Consolidated Financial Statements.

Inventories — Provisions for Slow Moving and Obsolescence

The Company identifies slow moving or obsolete inventories and estimates appropriate loss provisions related thereto. Historically, these loss provisions have not been significant as the vast majority of the Company’s 2008 Annual Reportinventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.

Allowance for Doubtful Accounts — Methodology

The Company evaluates the collectability of accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2011, 2010 and 2009, the Company recorded provisions for doubtful accounts of $13.2 million, $10.6 million, and $28.5 million, respectively.

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Consideration Received from Vendors

The Company enters into agreements at the beginning of each year with many of its vendors that provide for inventory purchase incentives. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accrues for the receipt of these incentives as part of its inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While management believes the Company will continue to receive consideration from vendors in 2012 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future or that we will be able to achieve the specified volumes necessary to take advantage of such incentives.

Impairment of Property, Plant and Equipment and Goodwill and Other Intangible Assets

At least annually, the Company evaluates property, plant and equipment, goodwill and other intangible assets for potential impairment indicators. The Company’s judgments regarding the existence of impairment indicators are based on market conditions and operational performance, among other factors. Future events could cause the Company to conclude that impairment indicators exist and that assets associated with a particular operation are impaired. Evaluating for impairment also requires the Company to estimate future operating results and cash flows which require judgment by management. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations.

Employee Benefit Plans

The Company’s benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the Company’s pension plan assets. The pension plan investment strategy implemented by the Company’s management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, as well as fiduciary standards. The long-term primary objectives for the pension plan funds are to provide for a reasonable amount of long-term growth of capital without undue exposure to risk, protect the assets from erosion of purchasing power and provide investment results that meet or exceed the pension plan’s actuarially assumed long term rate of return. The Company’s investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (50% S&P 500 Index, 5% Russell Mid Cap Index, 10% Russell 2000 Index, 5% MSCI EAFE Index, and 30% BarCap U.S. Govt/Credit).

We make several critical assumptions in determining our pension plan liabilities and related pension expense. We believe the most critical of these assumptions are the expected rate of return on plan assets and the discount rate. Other assumptions we make relate to employee demographic factors such as rate of compensation increases, mortality rates, retirement patterns and turnover rates.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measuring 2012 pension expense or income is 7.84% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships.

The discount rate is chosen as the rate at which pension obligations could be effectively settled and is incorporated hereinbased on capital market conditions as of the measurement date. We have matched the timing and duration of the expected cash flows of our pension obligations to a yield curve generated from a broad portfolio of high-quality fixed income debt instruments to select our discount rate. Based upon this cash flow matching analysis, we selected a weighted average discount rate for the plans of 5.17% at December 31, 2011.

Net periodic benefit cost for our defined benefit pension plans was $32.3 million, $21.9 million and $7.3 million for the years ended December 31, 2011, 2010 and 2009, respectively. The increase in pension cost in 2011 from 2010 reflects the change in assumptions for the rate of return on plan assets, the discount rate and the rate of compensation increases. The increase in pension cost in 2010 from 2009 was primarily due to the curtailment and subsequent remeasurement of the U.S. defined benefit pension plan in 2009 and the change in assumptions for the rate of return on plan assets, the discount rate and the rate of compensation increases. The 2009

24

curtailment and subsequent remeasurement decreased benefit costs in 2009 and are discussed further below. Refer to Note 7 of the Consolidated Financial Statements for more information regarding employee benefit plans.

In April 2009, the Company recorded a $4.3 million non-cash curtailment adjustment in connection with a plan reorganization, which reduced the expected years of future service of employees covered by reference.

the U.S. defined benefit pension plan.

In July 2009, the Company announced changes to the U.S. postretirement benefit plan. Effective January 1, 2010, future retirees no longer receive employer-provided medical benefits and current pre-65 retirees no longer receive employer-provided post-65 benefits (beyond an access-only arrangement).

QUARTERLY RESULTS OF OPERATIONS

The following is a summary of the quarterly results of operations for the years ended December 31, 2011 and 2010:

   Three Months Ended 
   March 31,   June 30,   Sept. 30,   Dec. 31, 
   (In thousands except per share data) 

2011

        

Net Sales

  $2,974,198    $3,184,984    $3,285,560    $3,014,135  

Gross Profit

   848,794     916,114     948,532     892,600  

Net Income

   126,515     151,812     151,832     134,957  

Earnings Per Share:

        

Basic

   .80     .97     .97     .87  

Diluted

   .80     .96     .97     .86  

2010

        

Net Sales

  $2,602,115    $2,847,186    $2,950,560    $2,807,728  

Gross Profit

   760,475     822,310     853,031     817,128  

Net Income

   100,609     124,467     131,785     118,650  

Earnings Per Share:

        

Basic

   .63     .79     .84     .75  

Diluted

   .63     .78     .83     .75  

We recorded the quarterly earnings per share amounts as if each quarter was a discrete period. As a result, the sum of the basic and diluted earnings per share will not necessarily total the annual basic and diluted earnings per share.

The preparation of interim consolidated financial statements requires management to make estimates and assumptions for the amounts reported in the interim condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim consolidated financial statements for the accrual of bad debts, inventory adjustments and discount and volume incentives earned, among others. Bad debts are accrued based on a percentage of sales, and volume incentives are estimated based upon cumulative and projected purchasing levels. Inventory adjustments are accrued on an interim basis and adjusted in the fourth quarter based on the annual September and October book-to-physical inventory adjustments. The methodology and practices used in deriving estimates and assumptions for interim reporting typically result in adjustments upon accurate determination at year-end. The effect of these adjustments in 2011 and 2010 was not significant.

ITEM 7A..QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..
Information

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.

25

Foreign Currency

The Company has translation gains or losses that result from translation of the results of operations of an operating unit’s foreign functional currency into U.S. dollars for consolidated financial statement purposes. The Company’s principal foreign currency exchange exposure is the Canadian dollar, which is the functional currency of our Canadian operations. Foreign currency exchange exposure particularly in regard to the Canadian dollar and, to a lesser extent, the Mexican peso, positively impacted our results for the year ended December 31, 2011.

During 2011 and 2010, it was estimated that a 10% shift in exchange rates between those foreign functional currencies and the U.S. dollar would have impacted translated net sales by approximately $169 million and $140 million, respectively.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this itemItem 8 is set forth under the heading “Management’s Discussion and Analysisin a separate section of Financial Condition and Results of Operations” and in Note 3 of Notesthis report. See “Index to Consolidated Financial Statements in the Company’s 2008 Annual Report and is incorporated herein by reference.

Financial Statement Schedules” beginning on page F-1.

ITEM 9.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required by this item is set forth in Consolidated Financial Statements, Notes to Consolidated Financial Statements, “Report of Independent Registered Public Accounting Firm on the Financial Statements” and “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting” and under the heading “Quarterly Results of Operations” in the Company’s 2008 Annual Report and is incorporated herein by reference.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A..CONTROLS AND PROCEDURES.

Management’s conclusion regarding the effectiveness of disclosure 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 Company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in SECRule 13a-15(e). Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s 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 in the Company’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management’s report on internal control over financial reporting

A report of management’s assessment of our internal control over financial reporting, as such term is defined in SEC Rule 13a-15(f), as of December 31, 20082011 is set forth underin a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning on page F-1.

The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the heading “Management’s Report“Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting”, which is set forth in the Company’s 2008 Annual Reporta separate section of this report. See “Index to Consolidated Financial Statements and is incorporated herein by reference.

Financial Statement Schedules” beginning on page F-1.

Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter ended December 31, 20082011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


12

ITEM 9B.OTHER INFORMATION.

None.

26

PART III.

ITEM 10.
ITEM 9B.OTHER INFORMATION.
None.
PART III.
ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE..

EXECUTIVE OFFICERS OF THE COMPANY..

Executive officers of the Company are elected by the Board of Directors and each serves at the pleasure of the Board of Directors until his successor has been elected and qualified, or until his earlier death, resignation, removal, retirement or disqualification. The current executive officers of the Company are:

Thomas C. Gallagher,age 61,64, has been President of the Company since 1990, Chief Executive Officer since August 2004 and Chairman of the Board since February 2005. Mr. Gallagher served as President of the Company from 1990 until January 2012 and Chief Operating Officer of the Company from 1990 until August 2004.

Jerry W. Nix, age 63,66, was appointed as a director of the Company and elected Vice-Chairman by the Board of Directors in November 2005. He is Executive Vice President-Finance and Chief Financial Officer of the Company, a position he has held since 2000. Previously, Mr. Nix held the position of Executive Vice President — Finance from 2000 to 2005 and Senior Vice President-Finance from 1990 to 2000.

Robert J. SusorPaul D. Donahue, age 63,55, was appointed President of the Company in January 2012, and has beenserved as President of the Company’s U.S. Automotive Parts Group since July 2009. Mr. Donahue served as Executive Vice President of the Company since 2003. Mr. Susor previously servedfrom August 2007 until his appointment as Senior Vice President-Market Development from 1991 to 2003.

Paul D. Donahue, age 52, was appointed Executive Vice President of the Company in August 2007.January. Previously, Mr. Donahue was President and Chief Operating Officer of S.P.S. P. Richards Company from 2004 to 2007 and was Executive Vice President — Sales and Marketing in 2003, the year he joined the Company. Prior to S. P. Richards, Mr. Donahue was President of Sanford North America, a division of Newell Rubbermaid, from 1999 to 2002.

Larry R. SamuelsonBruce Clayton, age 62, was appointed President65, has been the Senior Vice President-Human Resources at the Company since November 2004. Previously, Mr. Clayton held the position of the Automotive Parts Group in January 2004. Mr. Samuelson previously served as President, Chief Operating OfficerVice President-Risk Management and Chief Executive Officer of NAPA Canada/UAP Inc.Employee Services from FebruaryJune 2000 to JanuaryNovember 2004.

Further information required by this item is set forth under the heading “Nominees for Director”, under the heading “Corporate Governance — Code of Conduct and Ethics”, under the heading “Corporate Governance -Board Committees-AuditCommittees — Audit Committee”, under the heading “Corporate Governance — Director Nominating Process” and under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement and is incorporated herein by reference.

ITEM 11..EXECUTIVE COMPENSATION..

Information required by this item is set forth under the headings “Executive Compensation”, “Additional Information Regarding Executive Compensation”, “2008 Summary Compensation”, “2008“2011 Grants of Plan-Based Awards”, “2008“2011 Outstanding Equity Awards at Fiscal Year-End”, “2008“2011 Option Exercises and Stock Vested”, “2008“2011 Pension Benefits”, “2008“2011 Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating and Governance Committee Report”, “Compensation, Nominating and Governance Committee Interlocks and Insider Participation”, and “Audit Committee Report”“Compensation of Directors” of the Proxy Statement. All such information in the Proxy Statement and is incorporated herein by reference, except that the information contained in the Proxy Statement under the heading “Compensation, Nominating and Governance Committee Report” or under the heading “Audit Committee Report” is specifically not so incorporated herein by reference.


13

ITEM 12..SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS..

Certain information required by this item is set forth below. Additional information required by this item is set forth under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Proxy Statement and is incorporated herein by reference.

27

Equity Compensation Plan Information

The following table gives information as of December 31, 20082011 about the common stock that may be issued under all of the Company’s existing equity compensation plans:

             
        (c)
 
        Number of Securities
 
        Remaining Available for
 
        Future Issuance Under
 
  (a)
  (b)
  Equity Compensation
 
  Number of Securities to
  Weighted Average
  Plans (Excluding
 
  be Issued Upon Exercise
  Exercise Price of
  Securities
 
  of Outstanding Options,
  Outstanding Options,
  Reflected in Column
 
Plan Category
 Warrants and Rights(1)  Warrants and Rights  (a)) 
 
Equity Compensation Plans Approved by Shareholders:  175,912(2) $30.25   -0- 
   4,543,464(3) $36.85   -0- 
   2,751,513(4) $42.31   5,169,837(6)
Equity Compensation Plans Not Approved by Shareholders:  51,186(5)  n/a   939,394 
             
Total
  7,522,075   —   6,109,231 

Plan Category

 (a)
Number of Securities  to
be Issued upon Exercise
of Outstanding Options,
Warrants and Rights (1)		  (b)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights		  (c)
Number of  Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities
Reflected in Column (a))		 

Equity Compensation Plans Approved by Shareholders:

  2,054,240(2)  $40.75    —  
  3,932,579(3)  $45.03    3,404,799(5) 

Equity Compensation Plans Not Approved by Shareholders:

  50,724(4)   n/a    933,860  
 

 

 

   

 

 

 

Total

  6,037,543    —    4,338,659  

(1)Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights.

(2)Genuine Parts Company 1992 Stock Option and Incentive Plan, as amended
(3)Genuine Parts Company 1999 Long-Term Incentive Plan, as amended

(4)(3)Genuine Parts Company 2006 Long-Term Incentive Plan

(5)(4)Genuine Parts Company Director’s Deferred Compensation Plan, as amended

(6)(5)All of these shares are available for issuance pursuant to grants of full-value stock awards.

ITEM 13..CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Information required by this item is set forth under the headings “Corporate Governance — Independent Directors” and “Transactions with Related Persons” of the Proxy Statement and is incorporated herein by reference.

ITEM 14..PRINCIPAL ACCOUNTANTACCOUNTING FEES AND SERVICES.

Information required by this item is set forth under the heading “Proposal 2.3. Ratification of Selection of Independent Auditors” of the Proxy Statement and is incorporated herein by reference.


14

28

PART IV.

PART IV.
ITEM 15..EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)   Documents filed as part of this report

(1)   Financial Statements

The following consolidated financial statements of Genuine Parts Company and subsidiaries and related reports of the Company’s independent registered public accounting firm,are included in thethis Annual Report are incorporated herein by reference.

on Form 10-K. See, also, the Index to Consolidated Financial Statements on Page F-1.

Report of independent registered public accounting firm on internal control over financial reporting

Report of independent registered public accounting firm on the financial statements

Consolidated balance sheets — December 31, 20082011 and 2007

2010

Consolidated statements of income — Years ended December 31, 2008, 20072011, 2010 and 2006

2009

Consolidated statements of shareholders’ equity — Years ended December 31, 2008, 20072011, 2010 and 2006

2009

Consolidated statements of cash flows — Years ended December 31, 2008, 20072011, 2010 and 2006

2009

Notes to consolidated financial statements — December 31, 2008

2011

(2)  Financial Statement Schedules

The following consolidated financial statement schedule of Genuine Parts Company and subsidiaries, set forth immediately following the signature pageconsolidated financial statements of this report,Genuine Parts Company and Subsidiaries, is filed pursuant to Item 15(c):

Schedule II — Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

(3)  Exhibits.

The following exhibits are filed as part of or incorporated by reference in this report. Exhibits that are incorporated by reference to documents filed previously by the Company under the Securities Exchange Act of 1934, as amended, are filed with the Securities and Exchange Commission under FileNo. 1-5690. The Company will furnish a copy of any exhibit upon request to the Company’s Corporate Secretary.

Exhibit 3.13.1  Amended and Restated Articles of Incorporation of the Company, as amended April 23, 2007. (Incorporated herein by reference from the Company’s Current Report onForm 8-K, dated April 23, 2007.)
Exhibit 3.23.2  By-laws of the Company, as amended and restated August 20, 2007. (Incorporated herein by reference from the Company’s Current Report onForm 8-K, dated August 20, 2007.)
Exhibit 4.24.2  Specimen Common Stock Certificate. (Incorporated herein by reference from the Company’s Registration Statement onForm S-1, RegistrationNo. 33-63874.)
Exhibit 4.3Note Purchase Agreement, dated November 30, 2001, for the sale of Series A Senior Notes due November 30, 2008, and the sale of Series B Senior Notes due November 30, 2011. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2002.)

Instruments with respect to long-term debt where the total amount of securities authorized there under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request.

Exhibit 10.1*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 onForm 10-K, dated March 15, 1989.)


15

Exhibit 10.2*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.)
Exhibit 10.3*10.1*  The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 1995.)

29

Exhibit 10.4*10.2*  Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)
Exhibit 10.5*10.3*  Genuine Parts Company Death Benefit Plan, effective July 15, 1997. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 10, 1998.)
Exhibit 10.6*Restricted Stock Agreement dated February 25, 1999, between the Company and Thomas C. Gallagher. (Incorporated herein by reference from the Company’sForm 10-Q, dated May 3, 1999.)
Exhibit 10.7*Amendment to the Genuine Parts Company 1992 Stock Option and Incentive Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 10, 2000.)
Exhibit 10.8*10.4*  Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, Form10-K, dated March 10, 2000.)
Exhibit 10.9*10.5*  The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.10*10.6*  Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 10, 2000.)
Exhibit 10.11*10.7*  Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2002.)
Exhibit 10.12*10.8*  Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 21, 2003.)
Exhibit 10.13*Amendment to the Genuine Parts Company 1992 Stock Option and Incentive Plan, dated November 19, 2001, effective November 19, 2001. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 21, 2003.)
Exhibit 10.14*Genuine Parts Company Supplemental Retirement Plan, as amended and restated effective January 1, 2003, and executed October 22, 2003. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.15*Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, dated October 27, 2003, effective January 1, 2003. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.16*10.9*  Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.17*10.10*  Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 8, 2004.)
Exhibit 10.18*Genuine Parts Company 2004 Annual Incentive Bonus Plan, effective January 1, 2004. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)
Exhibit 10.19*Description of Director Compensation. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)
Exhibit 10.20*10.11*  Genuine Parts Company Stock Appreciation Rights Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 7, 2005.)

16

Exhibit 10.21*10.12*  Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 28, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 2006.)
Exhibit 10.22*Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, dated November 9, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 2006.)
Exhibit 10.23*Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, dated December 28, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 2006.)
Exhibit 10.24*10.13*  Amendment No. 2 to the Genuine Parts Company Death Benefit Plan, dated November 9, 2005, effective April 1, 2005. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated March 3, 2006.)
Exhibit 10.25*10.14*  Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. (Incorporated herein by reference from the Company’s Current Report onForm 8-K, dated April 18, 2006.)
Exhibit 10.26*10.15*  Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 28, 2007.)
Exhibit 10.27*Amendment No. 4 to the Genuine Parts Company Supplemental Retirement Plan, dated November 28, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.28*10.16*  Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.29*10.17*  Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)

30

Exhibit 10.30*Amendment to the Genuine Parts Company 2004 Annual Incentive Bonus Plan, dated March 27, 2007, effective March 27, 2007. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.31*Amendment No. 2 to the Genuine Parts Company 2004 Annual Incentive Bonus Plan, dated November 19, 2007, effective November 19, 2007. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.32*10.18*  Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.33*10.19*  Genuine Parts Company Performance Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.34*10.20*  Genuine Parts Company Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.35*10.21*  Specimen Change in Control Agreement, as amended and restated as of November 19, 2007. (Incorporated herein by reference from the Company’s Annual Report onForm 10-K, dated February 29, 2008.)
Exhibit 10.36*10.22*  Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 27, 2009.)
*Exhibit 10.23*Genuine Parts Company 2009 Annual Incentive Bonus Plan, dated March 31, 2009, effective January 1, 2009. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q dated May 7, 2009).
Exhibit 10.24*Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.25*Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.26*Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.)
Exhibit 10.27*Description of Director Compensation. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated August 4, 2011.)

*Indicates management contracts and compensatory plans and arrangements.

17

Exhibit 13The following sections and pages of the Company’s Annual Report to Shareholders for the year ended December 31, 2008:
— Selected Financial Data on Page 13
— Market and Dividend Information on Page 13
— Segment Data on Page 15
— Management’s Discussion and Analysis of Financial Condition and Results of Operations on Pages16-23
— Quarterly Results of Operations on Page 23
— Management’s Report on Internal Control over Financial Reporting on Page 24
— Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting on Page 25
— Report of Independent Registered Public Accounting Firm on the Financial Statements on Page 25
— Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages26-41
Exhibit 21  Subsidiaries of the Company.
Exhibit 23  Consent of Independent Registered Public Accounting Firm.
Exhibit 31.131.1  Certification signed by Chief Executive Officer pursuant to SECRule 13a-14(a).
Exhibit 31.231.2  Certification signed by Chief Financial Officer pursuant to SECRule 13a-14(a).
Exhibit 32.132.1  Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Exhibit 32.232.2  Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Exhibit 101Interactive data files pursuant to Rule 405 of Regulation S-T:
i) the Consolidated Balance Sheets as of December 31, 2011 and 2010; (ii) the Consolidated Statements of Income for the Years ended December 31, 2011, 2010 and 2009; (iii) the Consolidated Statements of Equity for the Years ended December 31, 2011, 2010 and 2009; (iv) the Consolidated Statements of Cash Flows for Years ended December 31, 2011, 2010 and 2009; (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text; and (vi) Financial Statement Schedule II - Valuation and Qualifying Accounts.

31

(b)  Exhibits

See the response to Item 15(a)(3) above.

(c)  Financial Statement Schedules

See the response to Item 15(a)(2) above.

18

32

SIGNATURES.

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

/s/ Thomas C. Gallagher

  2/27/12   
/s/  Thomas C. Gallagher
  2/27/09

/s/ Jerry W. Nix

 2/27/0912
Thomas C. Gallagher
 (Date)  Jerry W. Nix (Date)
Chairman President and Chief Executive Officer  

Vice Chairman and Chief Financial and

Accounting Officer

Pursuant to the requirements of the Securities 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.

/s/    Dr. Mary B. Bullock
2/16/09
/s/  Richard W. Courts II
2/16/09
Dr. Mary B. Bullock
(Date)Richard W. Courts II(Date)
DirectorDirector
  2/20/12   
/s/    Jean Douville2/16/09
/s/  Thomas C. Gallagher
2/16/09
Jean Douville
(Date)Thomas C. Gallagher(Date)
DirectorDirector
  2/20/12  
/s/  George C. Guynn

Dr. Mary B. Bullock

 2/16/09
/s/  John D. Johns
2/16/09
George C. Guynn
(Date)John D. Johns(Date)
DirectorDirector
/s/  Michael M.E. Johns
2/16/09
/s/  J. Hicks Lanier
2/16/09
Michael M. E. Johns
(Date)J. Hicks Lanier(Date)
DirectorDirector
/s/  Wendy B. Needham
2/16/09
/s/  Jerry W. Nix
2/16/09
Wendy B. Needham
(Date)Jerry W. Nix(Date)
DirectorDirector
/s/  Larry L. Prince
2/16/09
/s/  Gary W. Rollins
2/16/09
Larry L. Prince
(Date)Gary W. Rollins(Date)
DirectorDirector
/s/  Lawrence G. Steiner
2/16/09
Lawrence G. Steiner
 (Date)    
DirectorJean Douville  (Date)

Director

Director
/s/    Thomas C. Gallagher2/20/12/s/    George C. Guynn2/20/12

Thomas C. Gallagher

(Date)George C. Guynn(Date)

Director

Chairman and Chief Executive
Officer (Principal Executive Officer)

Director
/s/    John R. Holder2/20/12/s/    John D. Johns2/20/12

John R. Holder

Director

(Date)

John D. Johns

Director

(Date)
/s/    Michael M. E. Johns2/20/12/s/    J. Hicks Lanier2/20/12

Michael M. E. Johns

(Date)J. Hicks Lanier(Date)

Director

Director
/s/    Robert C. Loudermilk, Jr.2/20/12/s/    Wendy B. Needham2/20/12

Robert C. Loudermilk, Jr.

(Date)Wendy B. Needham(Date)

Director

Director
/s/    Jerry W. Nix2/20/12/s/    Gary W. Rollins2/20/12

Jerry W. Nix

(Date)Gary W. Rollins(Date)

Director

Vice Chairman and Chief Financial Officer

(Principal Financial and Accounting Officer)

Director

ANNUAL REPORT ON FORM 10-K

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

Page

Report of Management on Internal Control Over Financial Reporting

F-2

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

F-3

Report of Independent Registered Public Accounting Firm on Financial Statements and Schedule

F-4

Consolidated Balance Sheets as of December 31, 2011 and 2010

F-5

Consolidated Statements of Income for the Years Ended December 31, 2011, 2010 and 2009

F-6

Consolidated Statements of Equity for the Years Ended December 31, 2011, 2010 and 2009

F-7

Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009

F-8

Notes to Consolidated Financial Statements

F-9

Financial Statement Schedule II — Valuation and Qualifying Accounts

S-1  

F-1

Report of Management

Genuine Parts Company

Management’s Responsibility for the Financial Statements

We have prepared the accompanying consolidated financial statements and related information included herein for the years ended December 31, 2011, 2010 and 2009. The opinion of Ernst & Young LLP, the Company’s independent registered public accounting firm, on those consolidated financial statements is included herein. The primary responsibility for the integrity of the financial information included in this annual report rests with management. Such information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances based on our best estimates and judgments and giving due consideration to materiality.

Management’s Report on Internal Control over Financial Reporting

The management of Genuine Parts Company and its subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.

The Company’s internal control system was desig+ned to provide reasonable assurance to the Company’s management and to the board of directors regarding the preparation and fair presentation of the Company’s published consolidated financial statements. The Company’s internal control over financial reporting includes those policies and procedures that:

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011.

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework”. Based on this assessment, management concluded that, as of December 31, 2011, the Company’s internal control over financial reporting was effective.

Ernst & Young LLP has issued an audit report on the Company’s operating effectiveness of internal control over financial reporting as of December 31, 2011. This report appears on page F-3.

Audit Committee Responsibility

The Audit Committee of Genuine Parts Company’s Board of Directors is responsible for reviewing and monitoring the Company’s financial reports and accounting practices to ascertain that they are within acceptable limits of sound practice in such matters. The membership of the Committee consists of non-employee Directors. At periodic meetings, the Audit Committee discusses audit and financial reporting matters and the internal audit function with representatives of financial management and with representatives from Ernst & Young LLP.

/s/    Jerry W. Nix

JERRY W. NIX

Vice Chairman and Chief Financial Officer

February 27, 2012

F-2

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

The Board of Directors and Shareholders of Genuine Parts Company and Subsidiaries

We have audited Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Genuine Parts Company and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting section of the accompanying Report of Management. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Genuine Parts Company and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based onthe COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, equity, and cash flows for each of the three years in the period ended December 31, 2011 of Genuine Parts Company and Subsidiaries and our report dated February 27, 2012 expressed an unqualified opinion thereon.

/s/    Ernst & Young LLP

Atlanta, Georgia

February 27, 2012

F-3

Report of Independent Registered Public Accounting Firm on the Financial Statements

The Board of Directors and Shareholders of Genuine Parts Company and Subsidiaries

We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, equity, and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the Index at Item 15(c). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Genuine Parts Company and Subsidiaries at December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2012 expressed an unqualified opinion thereon.

/s/    Ernst & Young LLP

Atlanta, Georgia

February 27, 2012

F-4

Genuine Parts Company and Subsidiaries

Consolidated Balance Sheets

  December 31 
  2011  2010 
  (In thousands, except per
share data and per share
amounts)		 

Assets

  

Current assets:

  

Cash and cash equivalents

 $525,054   $529,968  

Trade accounts receivable, net

  1,461,011    1,364,406  

Merchandise inventories, net

  2,261,997    2,224,717  

Prepaid expenses and other current assets

  328,534    295,796  
 

 

 

  

 

 

 

Total current assets

  4,576,596    4,414,887  

Goodwill and other intangible assets, less accumulated amortization

  279,775    209,548  

Deferred tax asset

  250,906    157,392  

Other assets

  272,110    199,087  

Property, plant, and equipment:

  

Land

  74,332    72,636  

Buildings, less allowance for depreciation (2011 — $183,785; 2010 — $174,134)

  217,240    218,967  

Machinery and equipment, less allowance for depreciation (2011 — $548,605; 2010 — $555,053)

  208,632    192,527  
 

 

 

  

 

 

 

Net property, plant, and equipment

  500,204    484,130  
 

 

 

  

 

 

 
 $5,879,591   $5,465,044  
 

 

 

  

 

 

 

Liabilities and equity

  

Current liabilities:

  

Trade accounts payable

 $1,440,762   $1,374,930  

Current portion of debt

  —    250,000  

Accrued compensation

  149,102    143,480  

Other accrued expenses

  116,921    115,659  

Dividends payable

  70,021    64,600  

Income taxes payable

  35,267    23,145  
 

 

 

  

 

 

 

Total current liabilities

  1,812,073    1,971,814  

Long-term debt

  500,000    250,000  

Pension and other post-retirement benefit liabilities

  493,721    258,807  

Other long-term liabilities

  280,978    181,709  

Equity:

  

Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued

  —    —  

Common stock, par value $1 per share — authorized 450,000,000 shares; issued and outstanding 155,651,116 in 2011 and 157,636,261 shares in 2010

  155,651    157,636  

Accumulated other comprehensive loss

  (482,038)   (298,352) 

Retained earnings

  3,109,622    2,934,535  
 

 

 

  

 

 

 

Total parent equity

  2,783,235    2,793,819  

Noncontrolling interests in subsidiaries

  9,584    8,895  
 

 

 

  

 

 

 

Total equity

  2,792,819    2,802,714  
 

 

 

  

 

 

 
 $5,879,591   $5,465,044  
 

 

 

  

 

 

 

See accompanying notes.

F-5

Genuine Parts Company and Subsidiaries

Consolidated Statements of Income

   Year Ended December 31 
   2011  2010  2009 
   (In thousands, except per share amounts) 

Net sales

  $12,458,877   $11,207,589   $10,057,512  

Cost of goods sold

   8,852,837    7,954,645    7,047,750  
  

 

 

  

 

 

  

 

 

 

Gross margin

   3,606,040    3,252,944    3,009,762  

Operating expenses:

    

Selling, administrative, and other expenses

   2,594,372    2,366,667    2,219,935  

Depreciation and amortization

   88,936    89,332    90,411  

Provision for doubtful accounts

   13,248    10,597    28,463  
  

 

 

  

 

 

  

 

 

 

Total operating expenses

   2,696,556    2,466,596    2,338,809  

Non-operating expenses (income):

    

Interest expense

   27,036    28,061    27,885  

Other

   (8,358)   (3,496)   (1,097) 
  

 

 

  

 

 

  

 

 

 

Total non-operating expenses

   18,678    24,565    26,788  

Income before income taxes

   890,806    761,783    644,165  

Income taxes

   325,690    286,272    244,590  
  

 

 

  

 

 

  

 

 

 

Net income

  $565,116   $475,511   $399,575  
  

 

 

  

 

 

  

 

 

 

Basic net income per common share

  $3.61   $3.01   $2.51  
  

 

 

  

 

 

  

 

 

 

Diluted net income per common share

  $3.58   $3.00   $2.50  
  

 

 

  

 

 

  

 

 

 

Weighted average common shares outstanding

   156,656    158,032    159,410  

Dilutive effect of stock options and nonvested restricted stock awards

   1,004    429    297  
  

 

 

  

 

 

  

 

 

 

Weighted average common shares outstanding — assuming dilution

   157,660    158,461    159,707  
  

 

 

  

 

 

  

 

 

 

See accompanying notes.

F-6

Genuine Parts Company and Subsidiaries

Consolidated Statements of Equity

(In thousands, except share and per share amounts)

  Common Stock  Additional
Paid-In
Capital		  Accumulated
Other
Comprehensive
Loss		  Retained
Earnings		  Total
Parent
Equity		  Non-
controlling
Interests in
Subsidiaries		  Total
Equity		 
  Shares  Amount       

Balance at January 1, 2009

  159,442,508   $159,443   $—   $(478,562)  $2,643,451   $2,324,332   $69,046   $2,393,378  

Net income

  —    —    —    —    399,575    399,575    —    399,575  

Foreign currency translation adjustment

  —    —    —    77,963    —    77,963    —    77,963  

Pension and postretirement benefit adjustment, net of income taxes of $61,702

  —    —    —    90,702    —    90,702    —    90,702  
      

 

 

   

 

 

 

Comprehensive income

       568,240     568,240  
      

 

 

   

 

 

 

Cash dividends declared, $1.60 per share

  —    —    —    —    (254,995)   (254,995)   —    (254,995) 

Stock options exercised, net of income taxes of $684

  197,718    198    996    —    —    1,194    —    1,194  

Share-based compensation

  —    —    8,578    —    —    8,578    —    8,578  

Purchase of stock

  (722,380)   (723)   (9,574)   —    (15,722)   (26,019)   —    (26,019) 

Noncontrolling interest activities

  —    —    —    —    —    —    2,161    2,161  

Purchase of remaining noncontrolling interest in Balkamp, Inc.

  —    —    —    —    —    —    (63,165)   (63,165) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2009

  158,917,846    158,918    —    (309,897)   2,772,309    2,621,330    8,042    2,629,372  

Net income

  —    —    —    —    475,511    475,511    —    475,511  

Foreign currency translation adjustment

  —    —    —    33,742    —    33,742    —    33,742  

Pension and postretirement benefit adjustment, net of income taxes of $(11,083)

  —    —    —    (22,197)   —    (22,197)   —    (22,197) 
      

 

 

   

 

 

 

Comprehensive income

       487,056     487,056  
      

 

 

   

 

 

 

Cash dividends declared, $1.64 per share

  —    —    —    —    (258,912)   (258,912)   —    (258,912) 

Stock options exercised, including tax benefit of $3,251

  564,288    564    11,772    —    —    12,336    —    12,336  

Share-based compensation

  —    —    7,016    —    —    7,016    —    7,016  

Purchase of stock

  (1,845,873)   (1,846)   (18,788)   —    (54,373)   (75,007)   —    (75,007) 

Noncontrolling interest activities

  —    —    —    —    —    —    853    853  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2010

  157,636,261    157,636    —    (298,352)   2,934,535    2,793,819    8,895    2,802,714  

Net income

  —    —    —    —    565,116    565,116    —    565,116  

Foreign currency translation adjustment

  —    —    —    (22,017)   —    (22,017)   —    (22,017) 

Pension and postretirement benefit adjustment, net of income taxes of $(98,973)

  —    —    —    (161,669)   —    (161,669)   —    (161,669) 
      

 

 

   

 

 

 

Comprehensive income

       381,430     381,430  
      

 

 

   

 

 

 

Cash dividends declared, $1.80 per share

  —    —    —    —    (281,790)   (281,790)   —    (281,790) 

Stock options exercised, including tax benefit of $5,356

  443,170    443    3,864    —    —    4,307    —    4,307  

Share-based compensation

  —    —    7,547    —    —    7,547    —    7,547  

Purchase of stock

  (2,428,315)   (2,428)   (11,411)   —    (108,239)   (122,078)   —    (122,078) 

Noncontrolling interest activities

  —    —    —    —    —    —    689    689  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2011

  155,651,116   $155,651   $—   $(482,038)  $3,109,622   $2,783,235   $9,584   $2,792,819  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See accompanying notes.

F-7

Genuine Parts Company and Subsidiaries

Consolidated Statements of Cash Flows

   Year Ended December 31 
   2011  2010  2009 
   (In thousands) 

Operating activities

    

Net income

  $565,116   $475,511   $399,575  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

   88,936    89,332    90,411  

Excess tax (benefits) expense from share-based compensation

   (5,356)   (3,251)   684  

Gain on sale of property, plant, and equipment

   (3,012)   (1,685)   (3,757) 

Deferred income taxes

   (2,337)   11,994    27,899  

Share-based compensation

   7,547    7,016    8,578  

Changes in operating assets and liabilities:

    

Trade accounts receivable, net

   (85,011)   (140,562)   69,258  

Merchandise inventories, net

   (19,624)   44,865    194,743  

Trade accounts payable

   85,766    280,739    49,947  

Other long-term assets

   (12,943)   (48,423)   (28,506) 

Other, net

   5,845    (36,873)   36,466  
  

 

 

  

 

 

  

 

 

 
   59,811    203,152    445,723  
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   624,927    678,663    845,298  

Investing activities

    

Purchases of property, plant and equipment

   (103,469)   (85,379)   (69,445) 

Proceeds from sale of property, plant, and equipment

   8,908    3,676    12,042  

Acquisition of businesses and other investing activities

   (136,936)   (90,645)   (134,203) 

Purchase of properties under construction and lease agreement

   —    —    (72,814) 
  

 

 

  

 

 

  

 

 

 

Net cash used in investing activities

   (231,497)   (172,348)   (264,420) 

Financing activities

    

Proceeds from debt

   250,000    —    795,000  

Payments on debt

   (250,000)   —    (795,000) 

Stock options exercised

   (1,049)   9,085    1,878  

Excess tax benefits (expense) from share-based compensation

   5,356    3,251    (684) 

Dividends paid

   (276,369)   (257,898)   (253,558) 

Purchase of stock

   (122,078)   (75,007)   (26,019) 

Changes in cash overdraft position

   —    —    (52,000) 
  

 

 

  

 

 

  

 

 

 

Net cash used in financing activities

   (394,140)   (320,569)   (330,383) 

Effect of exchange rate changes on cash

   (4,204)   7,419    18,531  
  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash and cash equivalents

   (4,914)   193,165    269,026  

Cash and cash equivalents at beginning of year

   529,968    336,803    67,777  
  

 

 

  

 

 

  

 

 

 

Cash and cash equivalents at end of year

  $525,054   $529,968   $336,803  
  

 

 

  

 

 

  

 

 

 

Supplemental disclosures of cash flow information

    

Cash paid during the year for:

    

Income taxes

  $317,748   $275,979   $219,888  
  

 

 

  

 

 

  

 

 

 

Interest

  $27,640   $28,061   $27,626  
  

 

 

  

 

 

  

 

 

 

See accompanying notes.

F-8

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2011

1.Summary of Significant Accounting Policies

Business

Genuine Parts Company and all of its majority-owned subsidiaries (the Company) is a distributor of automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials. The Company serves a diverse customer base through approximately 1,900 locations in North America and, therefore, has limited exposure from credit losses to any particular customer, region, or industry segment. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company has evaluated subsequent events through the date the financial statements were issued.

Principles of Consolidation

The consolidated financial statements include all of the accounts of the Company. The net income attributable to noncontrolling interests is not material to the Company’s consolidated net income. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates and the differences could be material.

Revenue Recognition

The Company records revenue when the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the Company’s price to the customer is fixed and determinable and collectability is reasonably assured. Delivery is not considered to have occurred until the customer assumes the risks and rewards of ownership.

Foreign Currency Translation

The consolidated balance sheets and statements of income of the Company’s foreign subsidiaries have been translated into U.S. dollars at the current and average exchange rates, respectively. The foreign currency translation adjustment is included as a component of accumulated other comprehensive loss.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Trade Accounts Receivable and the Allowance for Doubtful Accounts

The Company evaluates the collectability of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could

F-9

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

result in higher than expected defaults, and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2011, 2010, and 2009, the Company recorded provisions for doubtful accounts of approximately $13,248,000, $10,597,000, and $28,463,000, respectively. At December 31, 2011 and 2010, the allowance for doubtful accounts was approximately $16,916,000 and $15,599,000, respectively.

Merchandise Inventories, Including Consideration Received From Vendors

Merchandise inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for a majority of automotive parts, electrical/electronic materials, and industrial parts, and by the first-in, first-out (FIFO) method for office products and certain other inventories. If the FIFO method had been used for all inventories, cost would have been approximately $422,178,000 and $383,094,000 higher than reported at December 31, 2011 and 2010, respectively. During 2011, 2010, and 2009 reductions in inventory levels in industrial parts inventories and electrical parts inventories (2009) resulted in liquidations of LIFO inventory layers. The effect of the LIFO liquidation in 2011, 2010, and 2009 was to reduce cost of goods sold by approximately $16,000,000, $25,000,000, and $22,000,000, respectively.

The Company identifies slow moving or obsolete inventories and estimates appropriate provisions related thereto. Historically, these losses have not been significant as the vast majority of the Company’s inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur.

The Company enters into agreements at the beginning of each year with many of its vendors that provide for inventory purchase incentives. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accrues for the receipt of these incentives as part of its inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year. While management believes the Company will continue to receive consideration from vendors in 2012 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of prepaid expenses and amounts due from vendors.

Goodwill and Other Intangible Assets

The Company reviews its goodwill and indefinite lived intangible assets annually in the fourth quarter, or sooner if circumstances indicate that the carrying amount may exceed fair value. The present value of future cash flows approach was used to determine any potential impairment. The Company determined that these assets were not impaired and, therefore, no impairments were recognized for the years ended December 31, 2011, 2010, or 2009. If an impairment occurs at a future date, it may have the effect of increasing the volatility of the Company’s earnings.

F-10

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Other Assets

Other assets are comprised of the following:

   December 31 
   2011   2010 
   (In thousands) 

Retirement benefit assets

  $4,374    $4,405  

Deferred compensation benefits

   18,218     17,205  

Investments

   27,810     27,810  

Cash surrender value of life insurance policies

   70,109     68,348  

Other long-term prepayments and receivables

   151,599     81,319  
  

 

 

   

 

 

 

Total other assets

  $272,110    $199,087  
  

 

 

   

 

 

 

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost. Buildings include certain leases capitalized at December 31, 2011 and 2010. Depreciation and amortization is primarily determined on a straight-line basis over the following estimated useful life of each asset: buildings and improvements, 10 to 40 years; machinery and equipment, 5 to 15 years.

Long-Lived Assets Other Than Goodwill

The Company assesses its long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. Impairment losses, if any, are measured based upon the difference between the carrying amount and the fair value of the assets.

Other Long-Term Liabilities

Other long-term liabilities are comprised of the following:

   December 31 
   2011   2010 
   (In thousands) 

Post-employment and other benefit/retirement liabilities

  $35,797    $34,044  

Insurance liabilities

   45,509     47,710  

Other lease obligations

   34,186     29,137  

Other taxes payable

   56,366     49,097  

Other

   109,120     21,721  
  

 

 

   

 

 

 

Total other long-term liabilities

  $280,978    $181,709  
  

 

 

   

 

 

 

Self-Insurance

The Company is self-insured for the majority of group health insurance costs. A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by the Company’s claims administrators. These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.

F-11

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Long-term insurance liabilities consist primarily of reserves for the workers’ compensation program. In addition, the Company carries various large risk deductible workers’ compensation policies for the majority of workers’ compensation liabilities. The Company records the workers’ compensation reserves based on an analysis performed by an independent actuary. The analysis calculates development factors, which are applied to total reserves as provided by the various insurance companies who underwrite the program. While the Company believes that the assumptions used to calculate these liabilities are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect workers’ compensation costs.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is comprised of the following:

   December 31 
   2011  2010 
   (In thousands) 

Foreign currency translation

  $107,238   $129,255  

Unrecognized net actuarial loss, net of tax

   (617,623)   (460,937) 

Unrecognized prior service credit, net of tax

   28,347    33,330  
  

 

 

  

 

 

 

Total accumulated other comprehensive loss

  $(482,038)  $(298,352) 
  

 

 

  

 

 

 

Fair Value of Financial Instruments

The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. At December 31, 2011 and 2010, the fair value of fixed rate debt was approximately $509,000,000 and $529,000,000, respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity.

Shipping and Handling Costs

Shipping and handling costs are classified as selling, administrative and other expenses in the accompanying consolidated statements of income and totaled approximately $190,000,000, $180,000,000, and $150,000,000 for the years ended December 31, 2011, 2010, and 2009, respectively.

Advertising Costs

Advertising costs are expensed as incurred and totaled $45,100,000, $36,800,000, and $44,500,000 in the years ended December 31, 2011, 2010, and 2009, respectively.

Accounting for Legal Costs

The Company’s legal costs expected to be incurred in connection with loss contingencies are expensed as such costs are incurred.

Share-Based Compensation

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 Company’s 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

F-12

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of the Company’s common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion of awards under these plans.

Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the year. The computation of diluted net income per common share includes the dilutive effect of stock options, stock appreciation rights and nonvested restricted stock awards options. Options to purchase approximately 850,000, 4,500,000, and 5,400,000 shares of common stock ranging from $37 — $54 per share were outstanding at December 31, 2011, 2010, and 2009, respectively. These options were excluded in the computation of diluted net income per common share because the options’ exercise price was greater than the average market price of common stock in each respective year.

2.Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill during the years ended December 31, 2011, 2010, and 2009 by reportable segment, as well as other identifiable intangible assets, consisting primarily of customer relationship intangible assets, noncompete agreements, and trademarks, are summarized as follows (in thousands):

   Goodwill        
   Automotive  Industrial  Office
Products		   Electrical/
Electronic
Materials		   Identifiable
Intangible
Assets		  Total 

Balance as of January 1, 2009

  $40,212   $70,836   $10,554    $2,870    $34,353   $158,825  

Additions

   2    5,518    —     —     6,679    12,199  

Amortization

   —    —    —     —     (3,644)   (3,644) 

Foreign currency translation

   2,900    —    —     —     1,252    4,152  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

Balance as of December 31, 2009

   43,114    76,354    10,554     2,870     38,640    171,532  

Additions

   —    10,178    —     5,777     24,292    40,247  

Amortization

   —    —    —     —     (4,737)   (4,737) 

Foreign currency translation

   1,157    278    —     —     1,071    2,506  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

Balance as of December 31, 2010

   44,271    86,810    10,554     8,647     59,266    209,548  

Additions

   —    12,379    —     15,703     50,128    78,210  

Amortization

   —    —    —     —     (6,774)   (6,774) 

Foreign currency translation

   (566)   (178)   —     —     (465)   (1,209) 
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

Balance as of December 31, 2011

  $43,705   $99,011   $10,554    $24,350    $102,155   $279,775  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

 

3.Credit Facilities

There were no amounts subject to variable rates at December 31, 2011 and 2010. The weighted average interest rate on the Company’s outstanding borrowings was approximately 4.01% and 5.45% at December 31, 2011 and 2010, respectively.

The Company maintains a $350,000,000 unsecured revolving line of credit with a consortium of financial institutions that matures in December 2012 and bears interest at LIBOR plus 0.30% (0.60% at December 31, 2011). The Company also has the option under this agreement to increase its borrowing an additional

F-13

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

$200,000,000. No amounts were outstanding under this line of credit at December 31, 2011 and 2010. Certain borrowings contain covenants related to a maximum debt-to-capitalization ratio and certain limitations on additional borrowings. At December 31, 2011, the Company was in compliance with all such covenants. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of $53,703,000 and $50,419,000 outstanding at December 31, 2011 and 2010, respectively.

Amounts outstanding under the Company’s credit facilities consist of the following:

   December 31 
   2011   2010 
   (In thousands) 

Unsecured term notes:

    

November 30, 2001, Series B Senior Notes, $250,000,000, 6.23% fixed, due November 30, 2011

  $—    $250,000  

November 30, 2008, Series C Senior Unsecured Notes, $250,000,000, 4.67% fixed, due November 30, 2013

   250,000     250,000  

November 30, 2011, Series D and E Senior Unsecured Notes, $250,000,000, 3.35% fixed, due November 30, 2016

   250,000     —  
  

 

 

   

 

 

 

Total debt

   500,000     500,000  

Less debt due within one year

   —     250,000  
  

 

 

   

 

 

 

Long-term debt, excluding current portion

  $500,000    $250,000  
  

 

 

   

 

 

 

4.Leased Properties

In June 2003, the Company completed an amended and restated master agreement to the $85,000,000 construction and lease agreement (the Agreement). The lessor in the Agreement was an independent third-party limited liability company, which had as its sole member a publicly traded corporation. Properties acquired by the lessor were constructed and/or then leased to the Company under operating lease agreements. On June 26, 2009, the Agreement expired. In accordance with the Agreement, the Company purchased the properties from the lessor for $72,814,000, including closing costs. The properties are included in property, plant, and equipment in the accompanying consolidated balance sheets.

Future minimum payments, by year and in the aggregate, under the noncancelable operating leases with initial or remaining terms of one year or more consisted of the following at December 31, 2011 (in thousands):

2012

  $134,842  

2013

   108,000  

2014

   81,028  

2015

   53,432  

2016

   36,784  

Thereafter

   139,220  
  

 

 

 

Total minimum lease payments

  $553,306  
  

 

 

 

Rental expense for operating leases was approximately $154,500,000 in 2011, $147,886,000 in 2010, and $153,523,000 in 2009.

F-14

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

5.Share-Based Compensation

At December 31, 2011, total compensation cost related to nonvested awards not yet recognized was approximately $15,900,000. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for options and RSUs outstanding at December 31, 2011 and 2010 was approximately $110,300,000 and $67,100,000, respectively. The aggregate intrinsic value for options and RSUs vested totaled approximately $77,800,000 and $45,900,000 at December 31, 2011 and 2010, respectively. At December 31, 2011, the weighted-average contractual life for outstanding and exercisable options and RSUs was six and four years, respectively. For the years ended December 31, 2011, 2010, and 2009, $7,547,000, $7,016,000, and $8,578,000 of share-based compensation cost was recorded, respectively. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was approximately $3,000,000, $2,800,000, and $3,400,000 for 2011, 2010, and 2009, respectively. There have been no modifications to valuation methodologies or methods during the years ended December 31, 2011, 2010, and 2009.

For the years ended December 31, 2011 and 2010 the fair value for options and SARs granted was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions, respectively: risk-free interest rate of 3.6% and 3.6%; dividend yield of 3.8% and 4.6%; annual historical volatility factor of the expected market price of the Company’s common stock of 19% and 19%; an average expected life and estimated turnover based on the historical pattern of existing grants of approximately eight years and 5.0% to 6.0%, respectively. The fair value of RSUs is based on the price of the Company’s stock on the date of grant. The Company had no grant activity for the year ended December 31, 2009. The total fair value of shares vested during the years ended December 31, 2011, 2010, and 2009, was $7,200,000, $9,200,000, and $13,200,000, respectively.

A summary of the Company’s share-based compensation activity and related information is as follows:

   2011 
   Shares (1)  Weighted-
Average
Exercise
Price (2)		 
   (In thousands)    

Outstanding at beginning of year

   6,391   $42  

Granted

   1,154    54  

Exercised

   (1,486)   40  

Forfeited

   (72)   44  
  

 

 

  

Outstanding at end of year (3)

   5,987   $45  
  

 

 

  

Exercisable at end of year

   4,118   $43  
  

 

 

  

Shares available for future grants

   3,405   
  

 

 

  

(1)Shares includeRestricted Stock Units (RSUs).

(2)The weighted-average exercise price excludes RSUs.

(3)The exercise prices for options and SARs outstanding as of December 31, 2011 ranged from approximately $32 to $54. The weighted-average remaining contractual life of all options and SARs outstanding is approximately six years.

The weighted-average grant date fair value of options and SARs granted during the years 2011 and 2010 was $8.18 and $5.41, respectively. The Company had no grant activity for the year ended December 31, 2009. The aggregate intrinsic value of options exercised during the years ended December 31, 2011, 2010, and 2009 was $25,100,000, $15,700,000, and $4,700,000.

F-15

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

In 2011, the Company granted approximately 1,028,000 SARs and 126,000 RSUs. In 2010, the Company granted approximately 1,002,000 SARs and 124,000 RSUs.

A summary of the Company’s nonvested share awards (RSUs) activity is as follows:

Nonvested Share Awards (RSUs)

  Shares  Weighted-
Average Grant
Date Fair
Value		 
   (In thousands)    

Nonvested at January 1, 2011

   171   $44  

Granted

   126    54  

Vested

   (59)   49  

Forfeited

   (16)   48  
  

 

 

  

Nonvested at December 31, 2011

   222   $48  
  

 

 

  

For the years ended December 31, 2011, 2010, and 2009 approximately $5,400,000, $3,300,000, and ($684,000), respectively, of excess tax benefits (expense) was classified as a financing cash inflow (outflow).

6.Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested. As such, no U.S. federal and state income taxes have been provided thereon, and it is not practicable to determine the amount of the related unrecognized deferred income tax liability. Significant components of the Company’s deferred tax assets and liabilities are as follows:

   2011  2010 
   (In thousands) 

Deferred tax assets related to:

   

Expenses not yet deducted for tax purposes

  $200,698   $163,367  

Pension liability not yet deducted for tax purposes

   377,846    279,204  

Capital loss

   16,803    24,580  

Valuation allowance

   (16,803)   (24,784) 
  

 

 

  

 

 

 
   578,544    442,367  
  

 

 

  

 

 

 

Deferred tax liabilities related to:

   

Employee and retiree benefits

   188,206    178,806  

Inventory

   66,044    72,767  

Property, plant, and equipment

   47,413    33,474  

Other

   43,225    17,728  
  

 

 

  

 

 

 
   344,888    302,775  
  

 

 

  

 

 

 

Net deferred tax asset

   233,656    139,592  

Current portion of deferred tax liability

   17,250    17,800  
  

 

 

  

 

 

 

Noncurrent net deferred tax asset

  $250,906   $157,392  
  

 

 

  

 

 

 

F-16

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The current portion of the deferred tax liability is included in income taxes payable in the consolidated balance sheets. The Company has a capital loss carryforward of approximately $42,000,000 that will expire in 2013.

The components of income tax expense are as follows:

   2011  2010   2009 
   (In thousands) 

Current:

     

Federal

  $260,222   $221,770    $171,691  

State

   41,511    36,291     28,591  

Foreign

   26,294    16,217     16,409  

Deferred

   (2,337)   11,994     27,899  
  

 

 

  

 

 

   

 

 

 
  $325,690   $286,272    $244,590  
  

 

 

  

 

 

   

 

 

 

The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:

   2011  2010  2009 
   (In thousands) 

Statutory rate applied to income

  $311,782   $266,624   $225,458  

Plus state income taxes, net of Federal tax benefit

   26,790    24,621    20,977  

Other

   (12,882)   (4,973)   (1,845) 
  

 

 

  

 

 

  

 

 

 
  $325,690   $286,272   $244,590  
  

 

 

  

 

 

  

 

 

 

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2008 or subject to non-United States income tax examinations for years ended prior to 2002. The Company is currently under audit in the United States and Canada. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next twelve months to previously recorded uncertain tax positions in connection with the audits. However, the Company does not anticipate total unrecognized tax benefits will significantly change during the year due to the settlement of audits and the expiration of statutes of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

   2011  2010  2009 
   (In thousands) 

Balance at beginning of year

  $39,425   $33,322   $30,453  

Additions based on tax positions related to the current year

   6,035    4,243    5,648  

Additions for tax positions of prior years

   7,966    3,493    993  

Reductions for tax positions for prior years

   (481)   (624)   —  

Reduction for lapse in statute of limitations

   (4,563)   (451)   (2,779) 

Settlements

   (1,537)   (558)   (993) 
  

 

 

  

 

 

  

 

 

 

Balance at end of year

  $46,845   $39,425   $33,322  
  

 

 

  

 

 

  

 

 

 

The amount of gross tax effected unrecognized tax benefits, including interest and penalties, as of December 31, 2011 and 2010 was approximately $59,532,000 and $50,216,000, respectively, of which approximately $18,966,000 and $18,189,000, respectively, if recognized, would affect the effective tax rate. During the

F-17

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

years ended December 31, 2011, 2010, and 2009, the Company paid interest and penalties of approximately $759,000, $272,000, and $363,000, respectively. The Company had approximately $12,687,000 and $10,791,000 of accrued interest and penalties at December 31, 2011 and 2010, respectively. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

7.Employee Benefit Plans

The Company’s defined benefit pension plans cover most of its employees in the U.S. and Canada. The plan covering U.S. employees is noncontributory and benefits are based on the employees’ compensation during the highest five of their last ten years of credited service. The Canadian plan is contributory and benefits are based on career average compensation. The Company’s funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. The Company may increase its contribution above the minimum if appropriate to its tax and cash position and the plans’ funded position.

In 2008, the U.S. defined benefit plan was amended to prohibit employees hired on or after March 1, 2008, from participating in the plan. The plan was also amended to freeze credited service for participants who do not meet certain age and length of service requirements as of December 31, 2008. However, the plan continues to reflect future pay increases for all participants.

In April 2009, the Company recorded a $4,298,000 noncash curtailment adjustment in connection with a reorganization, which reduced the expected years of future service of employees covered by the U.S. defined benefit pension plan. Curtailment accounting is required if an event eliminates, for a significant number of employees, the accrual of defined benefits for some or all of their future service.

The Company also sponsors supplemental retirement plans covering employees in the U.S. and Canada and other postretirement benefit plans in the U.S. The Company uses a measurement date of December 31st for its pension and other postretirement benefit plans.

In July 2009, the Company announced changes to the U.S. postretirement benefit plan. Effective January 1, 2010, future retirees no longer receive employer-provided medical benefits and current pre-65 retirees no longer receive employer-provided post-65 medical benefits (beyond an access-only arrangement).

   Pension Benefits  Other Postretirement
Benefits		 
   2011  2010  2011  2010 
   (In thousands)  (In thousands) 

Changes in benefit obligation

     

Benefit obligation at beginning of year

  $1,689,011   $1,502,084   $12,329   $13,511  

Service cost

   13,039    12,312    —    —  

Interest cost

   97,293    95,453    474    605  

Plan participants’ contributions

   3,887    3,672    3,412    3,787  

Plan amendments

   —    1,148    362    —  

Actuarial loss (gain)

   219,804    122,050    (3,911)   340  

Exchange rate changes

   (4,656)   7,082    —    —  

Gross benefits paid

   (59,979)   (54,790)   (5,326)   (6,255) 

Less Federal subsidy

   N/A    N/A    174    341  
  

 

 

  

 

 

  

 

 

  

 

 

 

Benefit obligation at end of year

  $1,958,399   $1,689,011   $7,514   $12,329  
  

 

 

  

 

 

  

 

 

  

 

 

 

F-18

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The benefit obligations for the Company’s U.S. pension plans included in the above were $1,775,994,000 and $1,542,469,000 at December 31, 2011 and 2010, respectively. The total accumulated benefit obligation for the Company’s defined benefit pension plans was approximately $1,756,546,000 and $1,526,951,000 at December 31, 2011 and 2010, respectively.

The assumptions used to measure the pension and other postretirement plan benefit obligations for the plans at December 31, 2011 and 2010, were:

   Pension
Benefits		  Other
Postretirement
Benefits		 
   2011  2010  2011  2010 

Weighted-average discount rate

   5.17%   5.74%   4.00%   4.25% 

Rate of increase in future compensation levels

   3.30%   3.39%   —    —  

An 8.00% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2011. The rate was assumed to decrease ratably to 4.80% at December 31, 2019, and thereafter.

   Pension Benefits  Other  Postretirement
Benefits		 
   2011  2010  2011  2010 
   (In thousands)  (In thousands) 

Changes in plan assets

     

Fair value of plan assets at beginning of year

  $1,439,711   $1,216,415   $—   $—  

Actual return on plan assets

   31,528    175,967    —    —  

Exchange rate changes

   (3,598)   7,131    —    —  

Employer contributions

   58,481    91,316    1,914    2,468  

Plan participants’ contributions

   3,887    3,672    3,412    3,787  

Benefits paid

   (59,979)   (54,790)   (5,326)   (6,255) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Fair value of plan assets at end of year

  $1,470,030   $1,439,711   $—   $—  
  

 

 

  

 

 

  

 

 

  

 

 

 

The fair values of plan assets for the Company’s U.S. pension plans included in the above were $1,320,036,000 and $1,294,348,000 at December 31, 2011 and 2010, respectively.

The asset allocations for the Company’s funded pension plans at December 31, 2011 and 2010, and the target allocation for 2012, by asset category were:

   Target
Allocation
2012		  Percentage of
Plan Assets  at
December 31		 
    2011  2010 

Asset Category

    

Equity securities

   69%   69%   70% 

Debt securities

   31%   31%   30% 
  

 

 

  

 

 

  

 

 

 
   100%   100%   100% 
  

 

 

  

 

 

  

 

 

 

The Company’s benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. The pension plan strategy implemented by the Company’s management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, as well as fiduciary standards. The long-term primary objectives for

F-19

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company’s investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (50% S&P 500 Index, 5% Russell Mid Cap Index, 10% Russell 2000 Index, 5% MSCI EAFE Index, and 30% BarCap U.S. Govt/Credit).

The fair values of the plan assets as of December 31, 2011 and 2010, by asset category, are shown in the tables below. Various inputs are considered when determining the value of the Company’s pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.) Level 3 represents significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).

The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year.

   2011 
   Total   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		   Significant
Observable
Inputs
(Level 2)		   Significant
Unobservable
Inputs
(Level 3)		 
   (In thousands) 

Equity Securities

        

Common stocks — mutual funds — equity

  $348,909    $348,909    $—    $—  

Genuine Parts Company

   123,436     123,436     —     —  

Other stocks

   546,995     546,995     —     —  

Debt Securities

        

Short-term investments

   38,968     38,968     —     —  

Cash and equivalents

   16,888     16,888     —     —  

Government bonds

   145,966     66,334     79,632     —  

Corporate bonds

   127,698     —     127,698     —  

Asset-backed and mortgage-backed securities

   21,441     —     21,441     —  

Other-international

   12,084     12,084     —     —  

Municipal bonds

   593     —     593     —  

Mutual funds-fixed income

   87,052     —     87,052     —  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,470,030    $1,153,614    $316,416    $  —  
  

 

 

   

 

 

   

 

 

   

 

 

 

F-20

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

   2010 
   Total   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		   Significant
Observable
Inputs
(Level 2)		   Significant
Unobservable
Inputs
(Level 3)		 
   (In thousands) 

Equity Securities

        

Common stocks — mutual funds — equity

  $353,347    $353,347    $—    $—  

Genuine Parts Company

   103,549     103,549     —     —  

Other stocks

   551,516     551,516     —     —  

Debt Securities

        

Short-term investments

   38,126     38,126     —     —  

Cash and equivalents

   26,976     26,976     —     —  

Government bonds

   105,764     48,191     57,573     —  

Corporate bonds

   122,749     —     122,749     —  

Asset-backed and mortgage-backed securities

   32,271     —     32,271     —  

Other-international

   13,583     13,583     —     —  

Municipal bonds

   1,914     —     1,914     —  

Mutual funds-fixed income

   89,916     —     89,916     —  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,439,711    $1,135,288    $304,423    $  —  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities include Genuine Parts Company common stock in the amounts of $123,436,000 (8.4% of total plan assets) and $103,549,000 (7.2% of total plan assets) at December 31, 2011 and 2010, respectively. Dividend payments received by the plan on Company stock totaled approximately $3,630,000 and $3,308,000 in 2011 and 2010, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.

There were no changes in the fair value measurement of plan assets using significant unobservable inputs (Level 3) during 2011 and the 2010 changes were not material.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measuring 2012 pension cost or income is 7.84% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships.

F-21

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31:

Amounts recognized in the consolidated balance sheets consist of:

   Pension Benefits  Other Postretirement
Benefits		 
   2011  2010  2011  2010 
   (In thousands)  (In thousands) 

Other long-term asset

  $4,374   $4,405   $—   $—  

Other current liability

   (4,918)   (4,403)   (1,618)   (2,824) 

Pension and other post-retirement liabilities

   (487,825)   (249,302)   (5,896)   (9,505) 
  

 

 

  

 

 

  

 

 

  

 

 

 
  $(488,369)  $(249,300)  $(7,514)  $(12,329) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Amounts recognized in accumulated other comprehensive loss consist of:

   Pension Benefits  Other Postretirement
Benefits		 
   2011  2010  2011  2010 
   (In thousands)  (In thousands) 

Net actuarial loss

  $999,189   $741,190   $14,588   $20,207  

Prior service credit

   (37,172)   (44,142)   (9,445)   (10,737) 
  

 

 

  

 

 

  

 

 

  

 

 

 
  $962,017   $697,048   $5,143   $9,470  
  

 

 

  

 

 

  

 

 

  

 

 

 

For the pension benefits, the following table reflects the total benefits expected to be paid from the plans’ or the Company’s assets. Of the pension benefits expected to be paid in 2012, approximately $4,985,000 is expected to be paid from employer assets. For pension benefits, expected employer contributions reflect amounts expected to be contributed to funded plans. For other postretirement benefits, the following table’s employer contributions reflect only the Company’s share of the benefit cost. The expected benefit payments show the Company’s cost without regard to income from federal subsidy payments received pursuant to the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). Expected federal subsidy payments, which reduce the Company’s cost for the plan, are shown separately.

Information about the expected cash flows for the pension plans and other post retirement benefit plans follows:

       Other Postretirement Benefits 
   Pension Benefits    Gross    Expected
 Federal Subsidy 		 
   (In thousands) 

Employer contribution

      

2012 (expected)

  $17,084    $1,618    $—  

Expected benefit payments

      

2012

  $67,528    $1,740    $(122) 

2013

   77,337     1,330     (70) 

2014

   82,692     1,158     (56) 

2015

   88,292     1,011     (53) 

2016

   94,378     829     —  

2017 through 2021

   576,891     1,867     —  

F-22

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Net periodic benefit cost included the following components:

   Pension Benefits  Other Postretirement Benefits 
   2011  2010  2009  2011  2010  2009 
   (In thousands)  (In thousands) 

Service cost

  $13,039   $12,312   $16,534   $—   $—   $443  

Interest cost

   97,293    95,453    93,493    474    605    1,264  

Expected return on plan assets

   (124,150)   (114,166)   (113,370)   —    —    —  

Amortization of prior service credit

   (6,970)   (6,979)   (7,010)   (930)   (1,059)   (225) 

Amortization of actuarial loss

   53,039    35,264    21,990    1,708    1,759    1,759  

Curtailment gain

   —    —    (4,298)   —    —    —  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net periodic benefit cost

  $32,251   $21,884   $7,339   $1,252   $1,305   $3,241  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Other changes in plan assets and benefit obligations recognized in other comprehensive income are as follows:

   Pension Benefits  Other Postretirement Benefits 
   2011  2010  2009  2011  2010  2009 
   (In thousands)  (In thousands) 

Current year actuarial loss (gain)

  $311,038   $60,777   $(125,816)  $(3,911)  $340   $(1,190) 

Recognition of actuarial loss

   (53,039)   (35,264)   (21,990)   (1,708)   (1,759)   (1,759) 

Current year prior service cost (credit)

   —    1,148    —    362    —    (13,182) 

Recognition of prior service cost

   6,970    6,979    11,308    930    1,059    225  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total recognized in other comprehensive income

  $264,969   $33,640   $(136,498)  $(4,327)  $(360)  $(15,906) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total recognized in net periodic benefit cost and other comprehensive income

  $297,220   $55,524   $(129,159)  $(3,075)  $945   $(12,665) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2012 are as follows:

   Pension
Benefits		  Other Post-
retirement
Benefits		 
   (In thousands) 

Actuarial loss

  $70,884   $1,266  

Prior service credit

   (6,959)   (930) 
  

 

 

  

 

 

 

Total

  $63,925   $336  
  

 

 

  

 

 

 

The assumptions used in measuring the net periodic benefit costs for the plans follow:

   Pension Benefits   Other  Postretirement
Benefits		 
   2011   2010   2009   2011  2010  2009 

Weighted average discount rate

   5.74%    6.54%    6.97%    4.25%   5.20%   5.79% 

Rate of increase in future compensation levels

   3.39%    3.75%    3.75%    —    —    —  

Expected long-term rate of return on plan assets

   7.87%    8.00%    8.00%    —    —    —  

F-23

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

A 7.75% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2010. The rate was assumed to decrease ratably to 4.75% at December 31, 2016, and thereafter. The effect of a one-percentage-point change in the assumed health care cost trend rate is not significant.

The Company has two defined contribution plans that cover substantially all of its domestic employees. The Company’s matching contributions are determined based on the employee’s participation in the U.S. pension plan. Pension plan participants who continue earning credited service after 2008 receive a matching contribution of 20% of the first 6% of the employee’s salary. Other employees receive a matching contribution of 100% of the first 5% of the employee’s salary. Total plan expense for both plans was approximately $38,773,000 in 2011, $33,476,000 in 2010, and $31,783,000 in 2009.

8.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 entity. The Company has no voting interest or other 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 entity’s 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 Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At December 31, 2011, the Company was in compliance with all such covenants.

At December 31, 2011, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $217,200,000. These loans generally mature over periods from one to six years. In the event that the Company is required to make payments in connection with guaranteed obligations of the independents or the affiliates, the Company would obtain and liquidate certain collateral (e.g., accounts receivable and inventory) to recover all or a portion of the amounts paid under the guarantee. When it is deemed probable that the Company will incur a loss in connection with a guarantee, a liability is recorded equal to this estimated loss. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings.

The Company has accrued for guarantees related to the independents’ and affiliates’ borrowings as of December 31, 2011 and 2010. These liabilities are not material to the financial position of the Company and are included in other long-term liabilities in the accompanying consolidated balance sheets.

9.Acquisitions

During 2011, the Company acquired three companies in the Industrial Group and one company in the Electrical/Electronic Materials Group for approximately $115,600,000. During 2010, the Company acquired four companies in the Industrial and Electrical/Electronic Materials Groups for approximately $90,645,000. During 2009, the Company acquired eight companies in the Industrial and Automotive Groups for approximately $71,038,000.

F-24

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The Company allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for the acquired companies were included in the Company’s consolidated statements of income beginning on their respective acquisition dates. The Company recorded approximately $78,210,000, $40,247,000, and $12,199,000 of goodwill and other intangible assets associated with the 2011, 2010, and 2009 acquisitions, respectively. The Company is in the process of analyzing the estimated values of assets and liabilities acquired for certain 2011 acquisitions. The allocation of the purchase price is therefore preliminary and subject to revision.

On June 1, 2009, the Company acquired the remaining noncontrolling interest in its consolidated subsidiary, Balkamp, Inc., for approximately $63,165,000. The acquisition was accounted for as an equity transaction and the associated noncontrolling interest in the subsidiary’s equity was eliminated as part of the transaction.

10.Subsequent Event

Effective January 1, 2012, the Company acquired a 30% investment in the Exego Group for approximately $150,000,000. The acquisition was funded with the Company’s cash on hand. Based on the terms of the 30% investment, an additional payment may be required, but it is not expected to be material. The Exego Group, which is headquartered in Melbourne, Australia, is a leading aftermarket distributor of automotive replacement parts and accessories in Australasia, with annual revenues of approximately $1,000,000,000 and a company-owned store footprint of more than 430 locations across Australia and New Zealand. The Company has an option to acquire the remaining 70% of Exego at a later date contingent upon Exego achieving certain earnings thresholds. However, there can be no guarantee that such thresholds will be met or, if they are met, whether the company would exercise its purchase option.

11.Segment Data

The Company’s reportable segments consist of automotive, industrial, office products, and electrical/electronic materials. Within the reportable segments, certain of the Company’s operating segments are aggregated since they have similar economic characteristics, products and services, type and class of customers, and distribution methods.

The Company’s automotive segment distributes replacement parts (other than body parts) for substantially all makes and models of automobiles, trucks, and other vehicles.

The Company’s industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components, and related parts and supplies.

The Company’s office products segment distributes a wide variety of office products, computer supplies, office furniture, and business electronics.

The Company’s electrical/electronic materials segment distributes a wide variety of electrical/electronic materials, including insulating and conductive materials for use in electronic and electrical apparatus.

Inter-segment sales are not significant. Operating profit for each industry segment is calculated as net sales less operating expenses excluding general corporate expenses, interest expense, equity in income from investees, amortization, and noncontrolling interests. Approximately $106,000,000, $68,200,000, and $38,900,000 of income before income taxes was generated in jurisdictions outside the United States for the years ended December 31, 2011, 2010, and 2009, respectively. Net sales and net long-lived assets by country relate directly to the Company’s operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.

F-25

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

For management purposes, 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 that are reported as a component of net sales in the Company’s consolidated statements of income.

   2011  2010  2009  2008  2007 
   (In thousands) 

Net sales:

      

Automotive

  $6,061,424   $5,608,101   $5,225,389   $5,321,536   $5,311,873  

Industrial

   4,173,574    3,521,863    2,885,782    3,514,661    3,350,954  

Office products

   1,689,368    1,641,963    1,639,018    1,732,514    1,765,055  

Electrical/electronic materials

   557,537    449,770    345,808    465,889    436,318  

Other

   (23,026)   (14,108)   (38,485)   (19,337)   (21,005) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total net sales

  $12,458,877   $11,207,589   $10,057,512   $11,015,263   $10,843,195  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating profit:

      

Automotive

  $467,806   $421,109   $387,945   $385,356   $413,180  

Industrial

   337,628    255,616    162,353    294,652    281,762  

Office products

   134,124    131,746    126,104    144,127    156,781  

Electrical/electronic materials

   40,663    30,910    25,254    36,721    30,435  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating profit

   980,221    839,381    701,656    860,856    882,158  

Interest expense, net

   (24,608)   (26,598)   (27,112)   (29,847)   (21,056) 

Corporate expense

   (56,971)   (45,451)   (24,913)   (55,119)   (38,300) 

Intangible asset amortization

   (6,774)   (4,737)   (3,644)   (2,861)   (1,118) 

Other expense

   (1,062)   (812)   (1,822)   (4,561)   (4,939) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income taxes

  $890,806   $761,783   $644,165   $768,468   $816,745  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Assets:

      

Automotive

  $2,895,748   $2,854,461   $2,825,693   $2,799,901   $2,785,619  

Industrial

   1,100,024    955,241    865,431    1,025,292    969,666  

Office products

   700,720    694,166    619,612    638,854    659,838  

Electrical/electronic materials

   129,933    113,757    76,716    95,655    101,419  

Corporate

   773,391    637,871    445,705    67,823    175,074  

Goodwill and other intangible assets

   279,775    209,548    171,532    158,825    82,453  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets

  $5,879,591   $5,465,044   $5,004,689   $4,786,350   $4,774,069  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

F-26

Genuine Parts Company and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

  2011  2010  2009  2008  2007 
  (In thousands) 

Depreciation and amortization:

     

Automotive

 $60,252   $63,942   $65,554   $65,309   $65,810  

Industrial

  7,495    7,208    7,611    7,632    8,565  

Office products

  9,999    9,737    9,685    9,825    9,159  

Electrical/electronic materials

  1,554    1,414    1,666    1,572    1,566  

Corporate

  2,862    2,294    2,251    1,499    1,484  

Intangible asset amortization

  6,774    4,737    3,644    2,861    1,118  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total depreciation and amortization

 $88,936   $89,332   $90,411   $88,698   $87,702  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Capital expenditures:

     

Automotive

 $61,795   $46,888   $53,911   $72,628   $91,359  

Industrial

  9,851    4,307    2,987    7,575    8,340  

Office products

  22,036    29,866    5,782    9,539    13,294  

Electrical/electronic materials

  1,762    1,957    676    1,406    2,340  

Corporate

  8,025    2,361    6,089    13,878    315  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total capital expenditures

 $103,469   $85,379   $69,445   $105,026   $115,648  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net sales:

     

United States

 $10,791,303   $9,793,820   $8,935,651   $9,716,029   $9,609,225  

Canada

  1,571,733    1,327,552    1,078,799    1,219,759    1,158,515  

Mexico

  118,867    100,325    81,547    98,812    96,460  

Other

  (23,026)   (14,108)   (38,485)   (19,337)   (21,005) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total net sales

 $12,458,877   $11,207,589   $10,057,512   $11,015,263   $10,843,195  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net long-lived assets:

     

United States

 $411,193   $398,318   $402,937   $352,314   $337,136  

Canada

  84,210    80,978    78,502    67,731    85,532  

Mexico

  4,801    4,834    3,585    3,220    3,321  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total net long-lived assets

 $500,204   $484,130   $485,024   $423,265   $425,989  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

F-27

Annual Report onForm 10-K

Item 15(c)

Schedule Valuation and Qualifying Accounts

Financial Statement Schedule II — Valuation and Qualifying Accounts

Genuine Parts Company and Subsidiaries

                 
  Balance at
 Charged
   Balance at
  Beginning
 to Costs
   End
  of Period and Expenses Deductions of Period
 
Year ended December 31, 2006:                
Reserves and allowances deducted from asset accounts:                
Allowance for uncollectible accounts $11,385,684  $16,472,494  $(14,402,108)1 $13,456,070 
Reserve for facility consolidations $1,580,000   -0-  $(1,580,000)2  -0- 
Year ended December 31, 2007:                
Reserves and allowances deducted from asset accounts:                
Allowance for uncollectible accounts $13,456,070  $13,513,715  $(11,448,980)1 $15,520,805 
Year ended December 31, 2008:                
Reserves and allowances deducted from asset accounts:                
Allowance for uncollectible accounts $15,520,805  $23,882,674  $(20,815,910)1 $18,587,569 

   Balance at
Beginning
of Period		   Charged
to Costs
and Expenses		   Deductions   Balance at
End
of Period		 

Year ended December 31, 2009:

        

Reserves and allowances deducted from asset accounts:

        

Allowance for doubtful accounts

  $18,587,569    $28,463,029    $(30,460,819)(1)    $16,589,779  

Year ended December 31, 2010:

        

Reserves and allowances deducted from asset accounts:

        

Allowance for doubtful accounts

  $16,589,779    $10,597,432    $(11,588,299)(1)    $15,598,912  

Year ended December 31, 2011:

        

Reserves and allowances deducted from asset accounts:

        

Allowance for doubtful accounts

  $15,598,912    $13,247,731    $(11,930,188)(1)    $16,916,455  

(1)
1UncollectibleDoubtful accounts written off, net of recoveries.
2Facility Consolidation expense paid.

S-1

ANNUAL REPORT ONFORM 10-K

INDEX OF EXHIBITS

The following exhibits are filed (or furnished, if so indicated) herewith as a part of this Report:

10.36*Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009.
13The following sections and pages of the Company’s Annual Report to Shareholders for the year ended December 31, 2008:

  21—  Selected Financial Data on Page 13Subsidiaries of the Company.
  23
  — Market and Dividend Information on Page 13
— Segment Data on Page 15
— Management’s Discussion and Analysis of Financial Condition and Results of Operations onPages 16-23
— Quarterly Results of Operations on Page 23
— Management’s Report on Internal Control over Financial Reporting on Page 24
— ReportConsent of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting on Page 25Firm.
  31.1Certification signed by the Chief Executive Officer pursuant to SEC Rule 13a-14(a).
  31.2—  Report of Independent Registered Public Accounting Firm onCertification signed by the Chief Financial Statements on Page 25Officer pursuant to SEC Rule 13a-14(a).
  32.1Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
  32.2—  ConsolidatedStatement of Chief Financial Statements and NotesOfficer of Genuine Parts Company pursuant to Consolidated Financial Statements on Pages26-4118 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101Interactive data files pursuant to Rule 405 of Regulation S-T.
     
 21  Subsidiaries of the Company.
 23  Consent of Independent Registered Public Accounting Firm.
 31.1 Certification signed by the Chief Executive Officer pursuant to SECRule 13a—14(a).
 31.2 Certification signed by the Chief Financial Officer pursuant to SECRule 13a-14(a).
 32.1 Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
 32.2 Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

The following exhibits are incorporated by reference as set forth in Item 15 of thisForm 10-K:

— 3.13.1  Amended and Restated Articles of Incorporation of the Company, amended April 23, 2007.
— 3.23.2  By-Laws of the Company as amended and restated August 20, 2007.
— 4.24.2  Specimen Common Stock Certificate.
—  4.3Note Purchase Agreement dated November 30, 2001.

Instruments with respect to long-term debt where the total amount of securities authorized thereunderthere under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request.

— 10.1*Form of Amendment to Deferred Compensation Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company.
—  10.2*1992 Stock Option and Incentive Plan, effective April 20, 1992.
—  10.3*10.1*  The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993.
— 10.4*10.2*  Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996.
— 10.5*10.3*  Genuine Parts Company Death Benefit Plan, effective July 15, 1997.
—  10.6*Restricted Stock Agreement dated February 25, 1999, between the Company and Thomas C. Gallagher.
— 10.7*10.4*  Amendment to the Genuine Parts Company 1992 Stock Option and Incentive Plan, dated April 19, 1999, effective April 19, 1999.

—  10.8*AmendmentNo. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999.
— 10.9*10.5*  The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996.
— 10.10*10.6*  Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999.
— 10.11*10.7*  Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001.
— 10.12*10.8*  Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001.
—  10.13*Amendment to the Genuine Parts Company 1992 Stock Option and Incentive Plan, dated November 19, 2001, effective November 19, 2001.
— 10.14*Genuine Parts Company Supplemental Retirement Plan, as amended and restated effective January 1, 2003, and executed October 22, 2003.
—  10.15*Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, dated October 27, 2003, effective January 1, 2003.
—  10.16*10.9*  Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003.
— 10.17*10.10*  Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003.

—  10.18*Genuine Parts Company 2004 Annual Incentive Bonus Plan, effective January 1, 2004.
— 10.19*Description of Director Compensation
—  10.20*10.11*  Genuine Parts Company Stock Appreciation Rights Agreement.
— 10.21*10.12*  Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan.
— 10.22*Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan.
—  10.23*Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan.
—  10.24*10.13*  Amendment No. 2 to the Genuine Parts Company Death Benefit Plan.
— 10.25*10.14*  Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006.
— 10.26*10.15*  Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006.
— 10.27*Amendment No. 4 to the Genuine Parts Company Supplemental Retirement Plan, dated November 28, 2007, effective January 1, 2008.
—  10.28*10.16*  Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008.
— 10.29*10.17*  Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008.
— 10.30*Amendment to the Genuine Parts Company 2004 Annual Incentive Bonus Plan, dated March 27, 2007, effective March 27, 2007.
—  10.31*Amendment No. 2 to the Genuine Parts Company 2004 Annual Incentive Bonus Plan, dated November 19, 2007, effective November 19, 2007.
—  10.32*10.18*  Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007.
— 10.33*10.19*  Genuine Parts Company Performance Restricted Stock Unit Award Agreement.
— 10.34*10.20*  Genuine Parts Company Restricted Stock Unit Award Agreement.
— 10.35*10.21*  Specimen Change in Control Agreement, as amended and restated as of November 19, 2007.
— 10.22*Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009.
*— 10.23*Genuine Parts Company 2009 Annual Incentive Bonus Plan, dated March 31, 2009, effective
January 1, 2009.
— 10.24*Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010.
— 10.25*Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated January 1, 2009, dated November 16, 2010, effective January 1, 2011.
— 10.26*Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011.
— 10.27*Description of Director Compensation.

*Indicates management contracts and compensatory plans and arrangements.

BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY

BOARD OF DIRECTORS

Dr. Mary B. Bullock

President Emerita of Agnes Scott College

Jean Douville

Chairman of the Board of Directors of UAP Inc.

Thomas C. Gallagher

Chairman and Chief Executive Officer

George C. “Jack” Guynn

Retired President and Chief Executive Officer of the Federal Reserve Bank of Atlanta

John R. Holder

Chairman and Chief Executive Officer of Holder Properties

John D. Johns

Chairman, President & Chief Executive Officer of Protective Life Corporation

Michael M. E. Johns, MD

Chancellor of Emory University and Executive Vice President for Health Affairs, Emeritus

J. Hicks Lanier

Chairman of the Board of Directors and Chief Executive Officer of Oxford Industries, Inc.

Robert C. “Robin” Loudermilk, Jr.

President and Chief Executive Officer of The Loudermilk Companies, LLC

Wendy B. Needham

Retired Managing Director, Global Automotive Research at Credit Suisse First Boston

Jerry W. Nix

Vice Chairman and Chief Financial Officer

Gary W. Rollins

President and Chief Executive Officer of Rollins Inc.

Corporate Officers

Thomas C. Gallagher

Chairman and Chief Executive Officer

Jerry W. Nix

Vice Chairman and Chief Financial Officer

Paul D. Donahue

President

Treg S. Brown

Senior Vice President — Planning and Acquisitions

Charles A. Chesnutt

Senior Vice President — Technology and Process Improvement

R. Bruce Clayton

Senior Vice President — Human Resources

Frank M. Howard

Senior Vice President and Treasurer

Michael D. Orr

Senior Vice President — Operations and Logistics

Scott C. Smith

Senior Vice President — Corporate Counsel

Carol B. Yancey

Senior Vice President — Finance and Corporate Secretary

Philip C. Johnson

Vice President — Compensation

Sidney G. Jones

Vice President — Investor Relations

Karl J. Koenig

Vice President — Real Estate and Construction

Eric N. Sundby

Vice President — Information Technology

David A. Haskett

Assistant Vice President and Corporate Controller

Napoleon B. Rutledge, Jr.

Assistant Vice President — Internal Audit

U.S. Automotive Parts Group

Paul D. Donahue

President

Lee A. Maher

Executive Vice President and Chief Operating Officer

Glenn M. Chambers

Executive Vice President — Operations

Scott W. LeProhon

Executive Vice President — Merchandising and Product Strategy

Daniel F. Askey

Senior Vice President — Sales

Todd P. Helms

Senior Vice President — Human Resources

Gregory N. Miller

Senior Vice President and Chief Financial Officer

W. Larry Bevil

Vice President — Information Systems

J. Richard Borman

Vice President — Supply Chain and Logistics

Michael A. Briggs

Vice President — Retail Product Management and Merchandising

Byron H. Frantz

Vice President — Wholesale Product Management

Michael J. Fusaro

Vice President — Process Improvement — Distribution

Richard A. Geiger

Vice President — Finance

Mark W. Hohe

Vice President — Store Operations

David B. Nicki

Vice President — NAPA Tools and Equipment Sales

J. Michael Phillips

Vice President — Organizational Development

Bret A. Robyck

Vice President — AutoCare Sales

Gaylord M. Spencer

Vice President — Marketing Strategy

Michael L. Swartz

Vice President — Inventory & Procurement

Dennis P. Tolivar

Vice President — Major Accounts

DIVISIONS

M. Todd McMurtrie

Vice President — Atlantic Division

Grant L. Morris

Vice President — Central Division

Michael J. Kelleher

Vice President — Eastern Division

Gregg T. Sargent

Vice President — Florida Division

Kevin E. Herron

Vice President — Midwest Division

Eric G. Fritsch

Vice President — Mountain Division

Patrick A. Wolfe

Vice President — Southern Division

Stuart A. Kambury

Vice President — Southwest Division

Bradley A. Shaffer

Vice President — Western Division

Heavy Vehicle Parts Group (Atlanta, GA)

D. Gary Silva

President

Greg A. Lancour

Vice President — Operations

Rayloc (Atlanta, GA)

William J. Westerman III

President

Damon E. Elmore

Vice President — Human Resources

Michael S. Gaffney II

Vice President — Marketing

Joseph W. Lashley

Vice President — Information Services

Debbie E. Niffin

Vice President — Finance

Balkamp, Inc. (Indianapolis, IN)

D. Tip Tollison

President

Frank C. Amato

Executive Vice President

Mary F. Knudsen

Vice President — Finance and Treasurer

Grupo Auto Todo (Puebla, Mexico)

Juan Lujambio

President and Chief Executive Officer

Jorge Otero

Executive Vice President — Finance

Altrom Import Parts Group (Vancouver, Canada)

Scott S. Mountford

President — Altrom North America

Dean P. Medwid

Vice President and General Manager — Altrom Canada

NAPA Canada/UAP Inc. (Montreal, Canada)

Jean Douville

Chairman of the Board

Robert Hattem

President and Chief Operating Officer

Alain Masse

Executive Vice President — Heavy Vehicle Parts Division

Daniel Dallaire

Vice President — Human Resources

Joseph P. Herauf

Vice President — Sales

Thomas Hunt

Vice President — Product Development

Mark Miron

Vice President — Distribution & Logistics

Frank Pipito

Vice President — Finance & Secretary

EIS, Inc. (Atlanta, GA)

Robert W. Thomas

President and Chief Executive Officer

Alexander Gonzalez

Senior Vice President — Electrical and Assembly

Larry L. Griffin

Senior Vice President — Marketing

Thomas A. Jones

Senior Vice President — Manufacturing

William C. Knight

Senior Vice President — Logistics and Operations

David T. Quinn

Senior Vice President — Seacoast Electric Division

Peter F. Sheehan

Senior Vice President — Specialty Wire and Cable

Matthew C. Tyser

Senior Vice President — Finance and Secretary

Motion Industries (Birmingham, AL)

William J. Stevens

President and Chief Executive Officer

Timothy P. Breen

Executive Vice President and Chief Operating Officer – U.S.

G. Harold Dunaway, Jr.

Executive Vice President — Finance & Administration and Secretary

Randall P. Breaux

Senior Vice President – Marketing, Strategic Planning and Product Support

Anthony G. Cefalu

Senior Vice President and Group Executive — Central and Hose & Rubber

Ellen H. Holladay

Senior Vice President, Chief Information Officer and Operational Excellence Officer

R. David James

Senior Vice President — Business Development

Scott A. MacPherson

Senior Vice President - Sales

Kenneth L. McGrew

Senior Vice President and Chief Operating Officer — Industrial Supplies

James R. Neill

Senior Vice President — Human Resources

Mark W. Sheehan

Senior Vice President and President – Motion Mexico

Kevin P. Storer

Senior Vice President & Group Executive — West

Gerald V. Sourbeer

Senior Vice President and Group Executive — Southeast

Mark R. Thompson

Senior Vice President — Corporate Accounts

Randy R. Till

Senior Vice President & Group Executive - East

John D. Walters

Senior Vice President & Group Executive — Southwest

Zahirudin K. Hameer

Vice President — Inventory Management

M. Keith Knight

Vice President — Business Systems

Douglas R. Osborne

Vice President and Director – Operational Excellence

C. Jeff Rouse

Vice President — Government Sales and Export

Brandon C. Scordino

Vice President — Technology Planning and Development

James R. Summers

Vice President — Systems Assurance & Data Center Operations

J. Marvin Walker

Vice President — Finance

James F. Williams

Vice President — Corporate Purchasing

Dermot R. Strong

President – Motion Canada

S. P. Richards Company (Atlanta, GA)

C. Wayne Beacham

Chairman of the Board and Chief Executive Officer

Richard T. Toppin

President and Chief Operating Officer

Steven E. Lynn

Senior Vice President — Merchandising

Donald C. Mikolasy

Senior Vice President — Sales

James F. O’Brien

Senior Vice President — Marketing

Dennis J. Arnold

Vice President — Furniture

John K. Burgess

Vice President — Sales

E. Chadwick Lee

Vice President — Logistics

Charles E. Macpherson

Vice President — Strategic Pricing

Tom C. Maley

Vice President — Business Development & Analytics

G. Henry Martin

Vice President — Human Resources

Brian M. McGill

Vice President — Information Systems & CIO

James C. Moseley

Vice President — Information Systems

John R. Reagan

Vice President — Merchandising

Thomas M. Testa

Vice President — Sales

J. Phillip Welch, Jr.

Vice President — Finance, Controller, Secretary and Treasurer

Chris F. Whiting

Vice President — Cleaning and Breakroom Supply

Bryan A. Wight

Vice President — Sales — Emerging Markets

Lester P. Christian

Vice President — Southeast Division

Bryan T. Hall

Vice President — South Central Division

Gregory L. Nissen

Vice President — Western Division

James P. O’Connor

Vice President — Northeast Division

Richard A. Wiltz

Vice President — North Central Division

Peter R. Dalglish

Managing Director — S. P. Richards Canada