Document and Company Informatio
Document and Company Information (USD $) | ||
In Thousands, except Share data | 6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
|
Document And Company Information [Abstract] | ||
Entity Registrant Name | GENUINE PARTS COMPANY | |
Entity Central Index Key | 0000040987 | |
Document Type | 10-Q | |
Document Period End Date | 2009-06-30 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $6,228,135,000 | |
Entity Common Stock, Shares Outstanding | 159,530,937 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
CURRENT ASSETS | ||
Cash and cash equivalents | $238,589 | $67,777 |
Trade accounts receivable, less allowance for doubtful accounts (2009 - $25,343; 2008 - $18,588) | 1,239,318 | 1,224,525 |
Merchandise inventories, net - at lower of cost (substantially last-in, first-out method) or market | 2,215,709 | 2,316,880 |
Prepaid expenses and other current assets | 222,399 | 262,238 |
TOTAL CURRENT ASSETS | 3,916,015 | 3,871,420 |
Goodwill and intangible assets, less accumulated amortization | 166,683 | 158,825 |
Deferred tax asset | 160,581 | 218,503 |
Other assets | 124,358 | 114,337 |
Property, plant and equipment, less allowance for depreciation (2009 - $660,205; 2008 - $628,532) | 487,307 | 423,265 |
TOTAL ASSETS | 4,854,944 | 4,786,350 |
CURRENT LIABILITIES | ||
Trade accounts payable | 1,063,260 | 1,009,423 |
Income taxes payable | 44,687 | 24,685 |
Dividends payable | 63,813 | 62,148 |
Other current liabilities | 240,807 | 190,847 |
TOTAL CURRENT LIABILITIES | 1,412,567 | 1,287,103 |
Long-term debt | 500,000 | 500,000 |
Other long-term liabilities | 121,168 | 103,264 |
Retirement and other post-retirement benefit liabilities | 305,525 | 502,605 |
EQUITY: | ||
Preferred stock, par value - $1 per share, Authorized - 10,000,000 shares - None issued | 0 | 0 |
Common stock, par value - $1 per share, Authorized - 450,000,000 shares, Issued - 2009 - 159,530,937; 2008 - 159,442,508 | 159,531 | 159,443 |
Retained earnings | 2,708,629 | 2,643,451 |
Additional paid-in capital | 6,675 | 0 |
Accumulated other comprehensive loss | (366,973) | (478,562) |
TOTAL PARENT EQUITY | 2,507,862 | 2,324,332 |
Noncontrolling interests in subsidiaries | 7,822 | 69,046 |
TOTAL EQUITY | 2,515,684 | 2,393,378 |
TOTAL LIABILITIES AND EQUITY | $4,854,944 | $4,786,350 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Thousands, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Allowance for doubtful accounts | $25,343 | $18,588 |
Allowance for depreciation | $660,205 | $628,532 |
Preferred stock, par value | 1 | 1 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | 1 | 1 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 159,530,937 | 159,442,508 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Net sales | $2,535,045 | $2,873,485 | $4,979,541 | $5,612,958 |
Cost of goods sold | 1,790,190 | 2,021,272 | 3,502,485 | 3,941,262 |
Gross profit | 744,855 | 852,213 | 1,477,056 | 1,671,696 |
Operating expenses: | ||||
Selling, administrative & other expenses | 556,394 | 614,485 | 1,121,406 | 1,219,603 |
Depreciation and amortization | 22,411 | 22,017 | 44,932 | 44,701 |
Total operating expenses | 578,805 | 636,502 | 1,166,338 | 1,264,304 |
Income before income taxes | 166,050 | 215,711 | 310,718 | 407,392 |
Income taxes | 62,440 | 82,638 | 117,949 | 150,776 |
Net income | $103,610 | $133,073 | $192,769 | $256,616 |
Basic net income per common share | 0.65 | 0.81 | 1.21 | 1.56 |
Diluted net income per common share | 0.65 | 0.81 | 1.21 | 1.56 |
Dividends declared per common share | 0.4 | 0.39 | 0.8 | 0.78 |
Weighted average common shares outstanding | 159,513 | 163,411 | 159,479 | 164,194 |
Dilutive effect of stock options and non-vested restricted stock awards | 253 | 716 | 225 | 705 |
Weighted average common shares outstanding - assuming dilution | 159,766 | 164,127 | 159,704 | 164,899 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
OPERATING ACTIVITIES: | ||
Net income | $192,769 | $256,616 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 44,932 | 44,701 |
Share-based compensation | 4,739 | 6,559 |
Excess tax benefits from share-based compensation | 0 | (287) |
Other | 1,657 | 804 |
Changes in operating assets and liabilities | 244,734 | (31,193) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 488,831 | 277,200 |
INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (36,955) | (44,330) |
Acquisitions and other | (107,405) | (53,656) |
NET CASH USED IN INVESTING ACTIVITIES | (144,360) | (97,986) |
FINANCING ACTIVITIES: | ||
Stock options exercised | 2,160 | 1,355 |
Excess tax benefits from share-based compensation | 0 | 287 |
Dividends paid | (125,926) | (125,054) |
Changes in cash overdraft position | (52,000) | 0 |
Purchase of stock | (136) | (151,104) |
NET CASH USED IN FINANCING ACTIVITIES | (175,902) | (274,516) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 2,243 | (691) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 170,812 | (95,993) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 67,777 | 231,837 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $238,589 | $135,844 |
Basis of Presentation
Basis of Presentation | |
6 Months Ended
Jun. 30, 2009 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note A Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Genuine Parts Company (the Company) for the year ended December31, 2008. Accordingly, the condensed consolidated financial statements and related disclosures herein should be read in conjunction with the 2008 Annual Report on Form 10-K. The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates in its interim consolidated financial statements for the accrual of bad debts, inventory adjustments, discounts 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 book to physical inventory adjustment. The estimates for interim reporting may change upon final determination at year-end, and such changes may be significant. In the opinion of management, all adjustments necessary for a fair presentation of the Companys financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the three and six months ended June30, 2009 are not necessarily indicative of results for the entire year. |
Segment Information
Segment Information | |
6 Months Ended
Jun. 30, 2009 | |
Segment Information [Abstract] | |
Segment Information | Note B Segment Information Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 (in thousands) (in thousands) Net sales: Automotive $ 1,360,037 $ 1,428,513 $ 2,579,165 $ 2,734,400 Industrial 701,228 898,069 1,437,729 1,779,282 Office products 406,134 430,807 818,882 873,199 Electrical/electronic materials 80,609 122,584 166,742 236,885 Other (12,963 ) (6,488 ) (22,977 ) (10,808 ) Total net sales $ 2,535,045 $ 2,873,485 $ 4,979,541 $ 5,612,958 Operating profit: Automotive $ 117,777 $ 115,514 $ 205,184 $ 206,158 Industrial 31,443 76,569 65,618 145,561 Office products 33,661 37,363 72,389 81,295 Electrical/electronic materials 5,090 9,893 10,758 18,903 Total operating profit 187,971 239,339 353,949 451,917 Interest expense, net (6,752 ) (7,332 ) (13,848 ) (14,486 ) Other, net (15,169 ) (16,296 ) (29,383 ) (30,039 ) Income before income taxes $ 166,050 $ 215,711 $ 310,718 $ 407,392 Net sales by segment exclude the effect of certain discounts, incentives and freight billed to customers. The line item Other represents the net effect of the discounts, incentives and freight billed to customers, which is reported as a component of net sales in the Companys condensed consolidated statements of income. |
Comprehensive Income
Comprehensive Income | |
6 Months Ended
Jun. 30, 2009 | |
Comprehensive Income [Abstract] | |
Comprehensive Income | Note C Comprehensive Income Comprehensive income was $304.4million and $251.5million for the six months ended June30, 2009 and 2008, respectively. The difference between comprehensive income and net income was due to foreign currency translation adjustments and retirement and other post-retirement benefit adjustments as required by Statement of Financial Accounting Standards (SFAS) No.158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS No.158), as summarized below: Six Months Ended June 30, 2009 2008 (in thousands) Net income $ 192,769 $ 256,616 Other comprehensive income (loss): Foreign currency translation 22,323 (11,503 ) Retirement and other post-retirement benefit adjustments: Recognition of prior service (credit)cost, net of tax (5,028 ) 198 Recognition of actuarial loss, net of tax 9,266 6,178 Net actuarial gain, net of tax 85,028 Total other comprehensive income (loss) 111,589 (5,127 ) Comprehensive income $ 304,358 $ 251,489 Comprehensive income for the three months ended June30, 2009 and 2008 totaled $228.6million and $142.4million, respectively. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | |
6 Months Ended
Jun. 30, 2009 | |
Recently Issued Accounting Pronouncements [Abstract] | |
Recently Issued Accounting Pronouncements | Note D Recently Issued Accounting Pronouncements On September15, 2006, the Financial Accounting Standards Board (FASB) issued SFAS No.157, Fair Value Measurements (SFAS No.157). SFAS No.157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. SFAS No.157 does not expand the use of fair value in any new circumstances. In accordance with FASB Staff Position 157-2, the Company adopted SFAS No.157 for its financial assets and liabilities as of January1, 2008 and for its non-financial assets and liabilities as of January1, 2009. SFAS No.157 did not have a significant impact on the condensed consolidated financial statements. In December2007, the FASB issued SFAS No.141 (Revised 2007), Business Combinations (SFAS No.141(R)). Under SFAS No.141(R), an acquiring entity is required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No.141(R) changes the accounting treatment and disclosure for certain specific items in a business combination. SFAS No.141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December15, 2008. The Company adopted SFAS No.141(R) on January1, 2009. SFAS No.141(R) did not have a significant impact on the condensed consolidated financial statements. In December2007, the FASB issued SFAS No.160, Noncontrolling Interests in Consolidated Financial StatementsAn Amendment of ARB No.51 (SFAS No.160). SFAS No.160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement requires that noncontrolling minority interests be reported as equity instead of a liability on the balance sheet. Additionally, it requires disclosure of consolidated net income attributable to the parent and to the noncontrolling interest on the face of the income statement. SFAS No.160 is effective for fiscal years beginning on or after December15, 2008. The Company adopted SFAS No.160 on January1, 2009 and reclassified $69million of noncontrolling minority interest from liabilities to equity on the December31, 2008 condensed consolidated balance sheet. Refer to Note J for a description of the Companys acquisition of a substantial portion of the noncontrolling interest during the three months ended June30, 2009. The net income attributable to noncontrolling interests is not material to the Companys consolidated net income and is, therefore, included in selling, administrative other expenses on the accompanying condensed consolidated statements of income. In December2008, the FASB issued FASB Staff Position (FSP) 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets (FSP 132(R) -1). This FSP amends SFAS No.132(R) to provide guidance on an employers disclosures about plan assets of a defined benefit pension or other postretirement plan on investment policies and strate |
Share Based Compensation
Share Based Compensation | |
6 Months Ended
Jun. 30, 2009 | |
Share-Based Compensation [Abstract] | |
Share-Based Compensation | Note E Share-Based Compensation As more fully discussed in Note 5 of the Companys notes to the consolidated financial statements in the 2008 Annual Report on Form 10-K, the Company maintains various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), performance awards, dividend equivalents and other share-based awards. SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of the Companys common stock on the date of exercise over the base value of the grant. The terms of such SARs require net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of the Companys common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion of awards under these plans. Most awards may be exercised or converted to shares not earlier than twelve months nor later than ten years from the date of grant. At June30, 2009, total compensation cost related to nonvested awards not yet recognized was approximately $9.7million, as compared to $19.6million at December31, 2008. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for options, SARs and RSUs outstanding at June30, 2009 was approximately $12.5 million. At June30, 2009 the aggregate intrinsic value for options, SARs and RSUs vested totaled approximately $5.4million, and the weighted-average contractual life for outstanding and exercisable options, SARs and RSUs was approximately six years. For the six months ended June30, 2009, $4.7million of share-based compensation cost was recorded, as compared to $6.6million for the same period in the prior year. The Company had no grant activity for the six months ended June30, 2009. |
Employee Benefit Plans
Employee Benefit Plans | |
6 Months Ended
Jun. 30, 2009 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | Note F Employee Benefit Plans Net periodic benefit cost included the following components for the three months ended June30: Other Post-retirement Pension Benefits Benefits 2009 2008 2009 2008 (in thousands) Service cost $ 4,117 $ 13,348 $ 190 $ 220 Interest cost 23,330 22,640 426 404 Expected return on plan assets (28,262 ) (28,763 ) Curtailment gain (4,298 ) Amortization of prior service (credit)cost (1,744 ) (3 ) 93 93 Amortization of actuarial loss 5,515 4,506 426 404 Net periodic benefit cost $ (1,342 ) $ 11,728 $ 1,135 $ 1,121 Net periodic benefit cost included the following components for the six months ended June30: Other Post-retirement Pension Benefits Benefits 2009 2008 2009 2008 (in thousands) Service cost $ 8,488 $ 26,689 $ 380 $ 440 Interest cost 46,812 45,269 852 808 Expected return on plan assets (56,038 ) (57,509 ) Curtailment gain (4,298 ) Amortization of prior service (credit)cost (3,546 ) (7 ) 186 186 Amortization of actuarial loss 14,451 9,010 852 808 Net periodic benefit cost $ 5,869 $ 23,452 $ 2,270 $ 2,242 Pension benefits also include amounts related to a supplemental retirement plan. During the six months ended June30, 2009, the Company contributed $52.9million to the pension plan. In the three months ended June30, 2009, the Company recorded a $4.3million non-cash curtailment adjustment in accordance with SFAS No.88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, (SFAS No.88) in connection with a reorganization consisting of individually insignificant reductions of expected years of future service of employees covered by the defined benefit pension plan. SFAS No.88 requires curtailment accounting if an event eliminates, for a significant number of employees, the accrual of defined benefits for some or all of their future services. In connection with this event, plan assets and liabilities were remeasured during the three months ended June30, 2009, resulting in a reduction to retirement and other post-retirement benefit liabilities of $141.7million. |
Guarantees
Guarantees | |
6 Months Ended
Jun. 30, 2009 | |
Guarantees [Abstract] | |
Guarantees | Note G Guarantees The Company guarantees the borrowings of certain independently controlled automotive parts stores (independents) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). Presently, the independents are generally consolidated by unaffiliated enterprises that have a controlling financial interest through ownership of a majority voting interest in the 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 it is not the primary beneficiary with respect to any of the independents and that the affiliates are not variable interest entities, as defined in FIN No.46(R). The Companys maximum exposure to loss as a result of its involvement with these independents and affiliates is equal to the total borrowings subject to the Companys guarantee. Certain borrowings of the independents and affiliates contain covenants similar to those included in the $350million unsecured revolving line of credit agreement, as more fully discussed in Note 3 of the Companys notes to the consolidated financial statements in the 2008 Annual Report on Form 10-K. At June30, 2009, the Company was in compliance with all such covenants. At June30, 2009, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $195.4million. These loans generally mature over periods from one to ten 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. In accordance with FIN No.45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN No.45) and based on available information, the Company has accrued for those guarantees related to the independents and affiliates borrowings as of June30, 2009. These liabilities are not material to the financial position of the Company and are included in other long-term liabilities in the accompanying condensed consolidated balance sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | |
6 Months Ended
Jun. 30, 2009 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note H Fair Value of Financial Instruments The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. At June30, 2009, the fair value of fixed rate debt was approximately $519.1million, based primarily on quoted prices for similar instruments. The fair value of fixed rate debt was estimated by calculating the present value of anticipated cash flows. The discount rate used was an estimated borrowing rate for similar debt instruments with like maturities. |
Subsequent Events
Subsequent Events | |
6 Months Ended
Jun. 30, 2009 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note I Subsequent Events Pursuant to SFAS No.165, the Company has evaluated subsequent events during the period beginning July1, 2009 through August6, 2009, the date the financial statements were issued. The Company concluded that there were no events or transactions occurring during this period that required recognition or disclosure in the accompanying condensed consolidated financial statements. |
Acquisitions
Acquisitions | |
6 Months Ended
Jun. 30, 2009 | |
Acquisitions [Abstract] | |
Acquisitions | Note J Acquisitions For the six months ended June30, 2009, the Company acquired six companies in the Industrial and Automotive Groups for approximately $44million. The acquisitions were accounted for in accordance with SFAS No.141(R) and, accordingly, 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 Companys condensed consolidated statements of income beginning on their respective acquisition dates. The Company recorded approximately $8million of goodwill and other intangible assets associated with the acquisitions. On June1, 2009, the Company acquired the remaining noncontrolling interest in its consolidated subsidiary, Balkamp, Inc., for approximately $63million. The acquisition was accounted for as an equity transaction in accordance with SFAS No.160. The associated noncontrolling interest in the subsidiarys equity was eliminated as part of the transaction. |
Leased Properties
Leased Properties | |
6 Months Ended
Jun. 30, 2009 | |
Leased Properties [Abstract] | |
Leased Properties | Note K Leased Properties On June26, 2009, the $85.0million construction and lease agreement (the Agreement), as more fully discussed in Note 4 of the Companys notes to the consolidated financial statements in the 2008 Annual Report on Form 10-K, expired. The Company notified the lessor of its intention to purchase the properties subject to the Agreement for approximately $73.0million, including closing costs, paid in July2009. The properties and their associated liability have been included in property, plant, and equipment and other current liabilities in the accompanying condensed consolidated balance sheet. |