Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2015shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2015 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | GPC |
Entity Registrant Name | GENUINE PARTS CO |
Entity Central Index Key | 40,987 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 150,763,224 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 199,294 | $ 137,730 |
Trade accounts receivable, less allowance for doubtful accounts (2015 - $16,251; 2014 - $11,836) | 1,963,158 | 1,872,365 |
Merchandise inventories, net - at lower of cost or market | 2,967,724 | 3,043,848 |
Prepaid expenses and other current assets | 493,306 | 538,582 |
TOTAL CURRENT ASSETS | 5,623,482 | 5,592,525 |
Goodwill | 815,473 | 839,075 |
Other intangible assets, less accumulated amortization | 512,958 | 547,515 |
Deferred tax assets | 136,618 | 145,331 |
Other assets | 486,136 | 451,690 |
Property, plant and equipment, less accumulated depreciation (2015 - $899,927; 2014 - $869,083) | 628,461 | 670,102 |
TOTAL ASSETS | 8,203,128 | 8,246,238 |
CURRENT LIABILITIES: | ||
Trade accounts payable | 2,851,022 | 2,554,759 |
Current portion of debt | 125,000 | 265,466 |
Dividends payable | 92,905 | 88,039 |
Income taxes payable | 6,643 | 918 |
Other current liabilities | 688,498 | 674,933 |
TOTAL CURRENT LIABILITIES | 3,764,068 | 3,584,115 |
Long-term debt | 500,000 | 500,000 |
Pension and other post-retirement benefit liabilities | 248,709 | 329,531 |
Deferred tax liabilities | 62,419 | 72,479 |
Other long-term liabilities | 456,908 | 447,749 |
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 and Outstanding - 2015 - 150,763,224; 2014 - 153,113,042 | 150,763 | 153,113 |
Additional paid-in capital | 39,206 | 26,414 |
Retained earnings | 3,883,403 | 3,841,932 |
Accumulated other comprehensive loss | (914,586) | (720,211) |
TOTAL PARENT EQUITY | 3,158,786 | 3,301,248 |
Noncontrolling interests in subsidiaries | 12,238 | 11,116 |
TOTAL EQUITY | 3,171,024 | 3,312,364 |
TOTAL LIABILITIES AND EQUITY | $ 8,203,128 | $ 8,246,238 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 16,251 | $ 11,836 |
Property, plant and equipment, less allowance for depreciation | $ 899,927 | $ 869,083 |
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 | 150,763,224 | 153,113,042 |
Common stock, shares outstanding | 150,763,224 | 153,113,042 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Net sales | $ 3,921,802 | $ 3,985,909 | $ 11,598,254 | $ 11,519,193 |
Cost of goods sold | 2,752,577 | 2,802,487 | 8,137,880 | 8,071,973 |
Gross profit | 1,169,225 | 1,183,422 | 3,460,374 | 3,447,220 |
Operating expenses: | ||||
Selling, administrative, and other expenses | 834,372 | 850,156 | 2,492,537 | 2,486,162 |
Depreciation and amortization | 34,278 | 34,983 | 105,764 | 108,623 |
Total operating expenses | 868,650 | 885,139 | 2,598,301 | 2,594,785 |
Income before income taxes | 300,575 | 298,283 | 862,073 | 852,435 |
Income taxes | 112,559 | 107,767 | 317,674 | 306,708 |
Net income | $ 188,016 | $ 190,516 | $ 544,399 | $ 545,727 |
Basic net income per common share | $ 1.24 | $ 1.25 | $ 3.58 | $ 3.56 |
Diluted net income per common share | 1.24 | 1.24 | 3.56 | 3.53 |
Dividends declared per common share | $ 0.615 | $ 0.575 | $ 1.845 | $ 1.725 |
Weighted average common shares outstanding | 151,354 | 153,018 | 152,043 | 153,401 |
Dilutive effect of stock options and non-vested restricted stock awards | 789 | 1,080 | 847 | 1,062 |
Weighted average common shares outstanding - assuming dilution | 152,143 | 154,098 | 152,890 | 154,463 |
Comprehensive income | $ 82,931 | $ 95,077 | $ 350,024 | $ 496,528 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net income | $ 544,399 | $ 545,727 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 105,764 | 108,623 |
Share-based compensation | 13,582 | 12,641 |
Excess tax benefits from share-based compensation | (5,381) | (7,269) |
Changes in operating assets and liabilities | 237,623 | (70,399) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 895,987 | 589,323 |
INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (61,994) | (73,785) |
Acquisitions and other investing activities | (115,414) | (275,295) |
NET CASH USED IN INVESTING ACTIVITIES | (177,408) | (349,080) |
FINANCING ACTIVITIES: | ||
Proceeds from debt | 2,537,224 | 2,032,550 |
Payments on debt | (2,680,191) | (1,974,581) |
Share-based awards exercised, net of taxes paid | (6,030) | (8,266) |
Excess tax benefits from share-based compensation | 5,381 | 7,269 |
Dividends paid | (275,379) | (259,365) |
Purchases of stock | (225,175) | (95,546) |
NET CASH USED IN FINANCING ACTIVITIES | (644,170) | (297,939) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (12,845) | (3,660) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 61,564 | (61,356) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 137,730 | 196,893 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 199,294 | $ 135,537 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [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 December 31, 2014. Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 2014 Annual Report on Form 10-K. The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, customer sales returns, and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation, which is performed each year-end. Reserves for bad debts and customer sales returns are estimated and accrued on an interim basis based upon historical experience. Volume incentives are estimated based upon cumulative and projected purchasing levels. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the nine month period ended September 30, 2015 are not necessarily indicative of results for the entire year. The Company has evaluated subsequent events through the date the financial statements covered by this quarterly report were issued. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Note B – Segment Information Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) (in thousands) Net sales: Automotive $ 2,064,099 $ 2,099,518 $ 6,065,733 $ 6,108,429 Industrial 1,170,252 1,220,539 3,540,106 3,573,048 Office products 510,825 496,572 1,478,878 1,333,455 Electrical/electronic materials 196,837 193,321 573,584 561,686 Other (20,211 ) (24,041 ) (60,047 ) (57,425 ) Total net sales $ 3,921,802 $ 3,985,909 $ 11,598,254 $ 11,519,193 Operating profit: Automotive $ 201,986 $ 193,258 $ 560,070 $ 550,051 Industrial 90,081 95,262 266,726 273,740 Office products 36,406 33,318 107,431 98,447 Electrical/electronic materials 19,988 17,766 54,019 49,758 Total operating profit 348,461 339,604 988,246 971,996 Interest expense, net (5,055 ) (6,283 ) (16,056 ) (18,713 ) Other intangible assets amortization (8,545 ) (8,947 ) (25,945 ) (26,321 ) Other, net (34,286 ) (26,091 ) (84,172 ) (74,527 ) Income before income taxes $ 300,575 $ 298,283 $ 862,073 $ 852,435 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 Company’s condensed consolidated statements of income and comprehensive income. |
Other Comprehensive Loss
Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Other Comprehensive Loss | Note C – Other Comprehensive Loss The difference between comprehensive income and net income was due to foreign currency translation adjustments and pension and other post-retirement benefit adjustments, as summarized below. Three Months Ended Nine Months Ended 2015 2014 2015 2014 (in thousands) (in thousands) Net income $ 188,016 $ 190,516 $ 544,399 $ 545,727 Other comprehensive loss: Foreign currency translation (110,874 ) (94,957 ) (211,868 ) (56,318 ) Pension and other post-retirement benefit adjustments: Recognition of prior service credit, net of tax (240 ) (490 ) (721 ) (1,470 ) Recognition of actuarial loss, net of tax 6,029 4,424 18,214 13,005 Net actuarial loss, net of tax — (4,416 ) — (4,416 ) Total other comprehensive loss (105,085 ) (95,439 ) (194,375 ) (49,199 ) Comprehensive income $ 82,931 $ 95,077 $ 350,024 $ 496,528 The following tables present the changes in accumulated other comprehensive loss by component for the nine months ended September 30: 2015 Changes in Accumulated Other Pension and Foreign Total (in thousands) Beginning balance, January 1 $ (533,213 ) $ (186,998 ) $ (720,211 ) Other comprehensive loss before reclassifications, net of tax — (211,868 ) (211,868 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 17,493 — 17,493 Net current period other comprehensive income (loss) 17,493 (211,868 ) (194,375 ) Ending balance, September 30 $ (515,720 ) $ (398,866 ) $ (914,586 ) 2014 Changes in Accumulated Other Pension and Foreign Total (in thousands) Beginning balance, January 1 $ (360,036 ) $ (37,619 ) $ (397,655 ) Other comprehensive loss before reclassifications, net of tax (4,416 ) (56,318 ) (60,734 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 11,535 — 11,535 Net current period other comprehensive income (loss) 7,119 (56,318 ) (49,199 ) Ending balance, September 30 $ (352,917 ) $ (93,937 ) $ (446,854 ) The accumulated other comprehensive loss components related to the pension benefits are included in the computation of net periodic benefit income in the employee benefit plans footnote. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements | Note D – Recently Issued Accounting Pronouncements In February 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-02 , Consolidation (Topic 810): Amendments to the Consolidation Analysis As discussed in Note 1 of the Company’s notes to the consolidated financial statements in its 2014 Annual Report on Form 10-K, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers |
Credit Facility
Credit Facility | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Credit Facility | Note E – Credit Facility The Company has an amended multi-currency Syndicated Facility Agreement (the “Syndicated Facility”) dated June 19, 2015, which includes a $1.20 billion unsecured revolving line of credit with an option to increase the borrowing capacity by an additional $350.0 million and is scheduled to mature in June 2020 with two optional one year extensions. At September 30, 2015, approximately $125.0 million was outstanding under the Syndicated Facility and the Company was in compliance with all covenants thereunder. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note F – Share-Based Compensation As more fully discussed in Note 5 of the Company’s notes to the consolidated financial statements in its 2014 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 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 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. Most awards may be exercised or converted to shares not earlier than twelve months nor later than ten years from the date of grant. At September 30, 2015, total compensation cost related to nonvested awards not yet recognized was approximately $37.5 million, as compared to $28.8 million at December 31, 2014. The weighted-average period over which this compensation cost is expected to be recognized is approximately three years. The aggregate intrinsic value for SARs and RSUs outstanding at September 30, 2015 was approximately $105.1 million. At September 30, 2015, the aggregate intrinsic value for SARs and RSUs vested totaled approximately $59.3 million, and the weighted-average contractual lives for outstanding and exercisable SARs and RSUs were approximately six and five years, respectively. For the nine months ended September 30, 2015, $13.6 million of share-based compensation cost was recorded, as compared to $12.6 million for the same period in the prior year. On April 1, 2015, the Company granted approximately 711,000 SARs and 176,000 RSUs. Options to purchase approximately 1.3 million and 1.2 million shares of common stock were outstanding but excluded from the computation of diluted earnings per share for the three and nine month periods ended September 30, 2015, as compared to approximately 0.7 million and 0.6 million shares for the three and nine month periods ended September 30, 2014, respectively. These options were excluded from the computation of diluted net income per common share because the options’ exercise prices were greater than the average market price of the common stock. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Note G – Employee Benefit Plans Net periodic benefit income for the pension plans included the following components for the three months ended September 30: Pension Benefits 2015 2014 (in thousands) Service cost $ 2,293 $ 1,910 Interest cost 24,503 25,760 Expected return on plan assets (37,487 ) (36,208 ) Amortization of prior service credit (141 ) (468 ) Amortization of actuarial loss 9,528 6,745 Net periodic benefit income $ (1,304 ) $ (2,261 ) Net periodic benefit income for the pension plans included the following components for the nine months ended September 30: Pension Benefits 2015 2014 (in thousands) Service cost $ 7,083 $ 5,746 Interest cost 73,746 76,792 Expected return on plan assets (112,809 ) (108,639 ) Amortization of prior service credit (423 ) (1,400 ) Amortization of actuarial loss 28,769 19,953 Net periodic benefit income $ (3,634 ) $ (7,548 ) Pension benefits also include amounts related to a supplemental retirement plan. During the nine months ended September 30, 2015, the Company made a $38.7 million contribution to the pension plan. |
Guarantees
Guarantees | 9 Months Ended |
Sep. 30, 2015 | |
Guarantees [Abstract] | |
Guarantees | Note H – 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 controlling financial interests through ownership of a majority voting interest in the independents. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the guarantees. 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 entities’ 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 guarantees. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At September 30, 2015, the Company was in compliance with all such covenants. At September 30, 2015, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $309.7 million. These loans generally mature over periods from one to six years. In the event that the Company is required to make payments in connection with guaranteed obligations of the independents or the affiliates, the Company would obtain and liquidate certain collateral (e.g., accounts receivable and inventory) to recover all or a portion of the amounts paid under the guarantees. 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. As of September 30, 2015, the Company has recognized certain assets and liabilities amounting to $34.0 million each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the condensed consolidated balance sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note I – Fair Value of Financial Instruments The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit approximate their respective fair values based on the short-term nature of these instruments. At September 30, 2015, the carrying value and the fair value of fixed rate debt were approximately $500.0 million and $499.7 million, respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity. The carrying value of the fixed rate debt is included in “Long-term debt” in the accompanying condensed consolidated balance sheets. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Genuine Parts Company (the “Company”) for the year ended December 31, 2014. Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company’s 2014 Annual Report on Form 10-K. |
Use of Estimates | The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim condensed consolidated financial statements for inventory adjustments, the accrual of bad debts, customer sales returns, and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation, which is performed each year-end. Reserves for bad debts and customer sales returns are estimated and accrued on an interim basis based upon historical experience. Volume incentives are estimated based upon cumulative and projected purchasing levels. The estimates and assumptions for interim reporting may change upon final determination at year-end, and such changes may be significant. |
Segment Reporting | 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 Company’s condensed consolidated statements of income and comprehensive income. |
Recently Issued Accounting Pronouncements | In February 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-02 , Consolidation (Topic 810): Amendments to the Consolidation Analysis As discussed in Note 1 of the Company’s notes to the consolidated financial statements in its 2014 Annual Report on Form 10-K, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers |
Share-based Compensation, Option and Incentive Plans | As more fully discussed in Note 5 of the Company’s notes to the consolidated financial statements in its 2014 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 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 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. Most awards may be exercised or converted to shares not earlier than twelve months nor later than ten years from the date of grant. |
Consolidation, Variable Interest Entity | 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 controlling financial interests through ownership of a majority voting interest in the independents. The Company has no voting interest or equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the guarantees. 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 entities’ 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 guarantees. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At September 30, 2015, the Company was in compliance with all such covenants. 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 guarantees. 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. |
Fair Value of Financial Instruments | The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit approximate their respective fair values based on the short-term nature of these instruments. At September 30, 2015, the carrying value and the fair value of fixed rate debt were approximately $500.0 million and $499.7 million, respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity. The carrying value of the fixed rate debt is included in “Long-term debt” in the accompanying condensed consolidated balance sheets. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Summary of Segment Information | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) (in thousands) Net sales: Automotive $ 2,064,099 $ 2,099,518 $ 6,065,733 $ 6,108,429 Industrial 1,170,252 1,220,539 3,540,106 3,573,048 Office products 510,825 496,572 1,478,878 1,333,455 Electrical/electronic materials 196,837 193,321 573,584 561,686 Other (20,211 ) (24,041 ) (60,047 ) (57,425 ) Total net sales $ 3,921,802 $ 3,985,909 $ 11,598,254 $ 11,519,193 Operating profit: Automotive $ 201,986 $ 193,258 $ 560,070 $ 550,051 Industrial 90,081 95,262 266,726 273,740 Office products 36,406 33,318 107,431 98,447 Electrical/electronic materials 19,988 17,766 54,019 49,758 Total operating profit 348,461 339,604 988,246 971,996 Interest expense, net (5,055 ) (6,283 ) (16,056 ) (18,713 ) Other intangible assets amortization (8,545 ) (8,947 ) (25,945 ) (26,321 ) Other, net (34,286 ) (26,091 ) (84,172 ) (74,527 ) Income before income taxes $ 300,575 $ 298,283 $ 862,073 $ 852,435 |
Other Comprehensive Loss (Table
Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Comprehensive Income | The difference between comprehensive income and net income was due to foreign currency translation adjustments and pension and other post-retirement benefit adjustments, as summarized below. Three Months Ended Nine Months Ended 2015 2014 2015 2014 (in thousands) (in thousands) Net income $ 188,016 $ 190,516 $ 544,399 $ 545,727 Other comprehensive loss: Foreign currency translation (110,874 ) (94,957 ) (211,868 ) (56,318 ) Pension and other post-retirement benefit adjustments: Recognition of prior service credit, net of tax (240 ) (490 ) (721 ) (1,470 ) Recognition of actuarial loss, net of tax 6,029 4,424 18,214 13,005 Net actuarial loss, net of tax — (4,416 ) — (4,416 ) Total other comprehensive loss (105,085 ) (95,439 ) (194,375 ) (49,199 ) Comprehensive income $ 82,931 $ 95,077 $ 350,024 $ 496,528 |
Changes in Accumulated Other Comprehensive Loss | The following tables present the changes in accumulated other comprehensive loss by component for the nine months ended September 30: 2015 Changes in Accumulated Other Pension and Foreign Total (in thousands) Beginning balance, January 1 $ (533,213 ) $ (186,998 ) $ (720,211 ) Other comprehensive loss before reclassifications, net of tax — (211,868 ) (211,868 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 17,493 — 17,493 Net current period other comprehensive income (loss) 17,493 (211,868 ) (194,375 ) Ending balance, September 30 $ (515,720 ) $ (398,866 ) $ (914,586 ) 2014 Changes in Accumulated Other Pension and Foreign Total (in thousands) Beginning balance, January 1 $ (360,036 ) $ (37,619 ) $ (397,655 ) Other comprehensive loss before reclassifications, net of tax (4,416 ) (56,318 ) (60,734 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 11,535 — 11,535 Net current period other comprehensive income (loss) 7,119 (56,318 ) (49,199 ) Ending balance, September 30 $ (352,917 ) $ (93,937 ) $ (446,854 ) |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of Net Periodic Benefit Income for the Pension Plans | Net periodic benefit income for the pension plans included the following components for the three months ended September 30: Pension Benefits 2015 2014 (in thousands) Service cost $ 2,293 $ 1,910 Interest cost 24,503 25,760 Expected return on plan assets (37,487 ) (36,208 ) Amortization of prior service credit (141 ) (468 ) Amortization of actuarial loss 9,528 6,745 Net periodic benefit income $ (1,304 ) $ (2,261 ) Net periodic benefit income for the pension plans included the following components for the nine months ended September 30: Pension Benefits 2015 2014 (in thousands) Service cost $ 7,083 $ 5,746 Interest cost 73,746 76,792 Expected return on plan assets (112,809 ) (108,639 ) Amortization of prior service credit (423 ) (1,400 ) Amortization of actuarial loss 28,769 19,953 Net periodic benefit income $ (3,634 ) $ (7,548 ) |
Segment Information - Summary o
Segment Information - Summary of Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Total net sales | $ 3,921,802 | $ 3,985,909 | $ 11,598,254 | $ 11,519,193 |
Total operating profit | 348,461 | 339,604 | 988,246 | 971,996 |
Income before income taxes | 300,575 | 298,283 | 862,073 | 852,435 |
Operating Segments [Member] | Automotive [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 2,064,099 | 2,099,518 | 6,065,733 | 6,108,429 |
Total operating profit | 201,986 | 193,258 | 560,070 | 550,051 |
Operating Segments [Member] | Industrial [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 1,170,252 | 1,220,539 | 3,540,106 | 3,573,048 |
Total operating profit | 90,081 | 95,262 | 266,726 | 273,740 |
Operating Segments [Member] | Office Products [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 510,825 | 496,572 | 1,478,878 | 1,333,455 |
Total operating profit | 36,406 | 33,318 | 107,431 | 98,447 |
Operating Segments [Member] | Electrical/Electronic Materials [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 196,837 | 193,321 | 573,584 | 561,686 |
Total operating profit | 19,988 | 17,766 | 54,019 | 49,758 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | (20,211) | (24,041) | (60,047) | (57,425) |
Interest expense, net | (5,055) | (6,283) | (16,056) | (18,713) |
Other intangible assets amortization | (8,545) | (8,947) | (25,945) | (26,321) |
Other, net | $ (34,286) | $ (26,091) | $ (84,172) | $ (74,527) |
Other Comprehensive Loss - Comp
Other Comprehensive Loss - Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity [Abstract] | ||||
Net income | $ 188,016 | $ 190,516 | $ 544,399 | $ 545,727 |
Other comprehensive loss: | ||||
Foreign currency translation | (110,874) | (94,957) | (211,868) | (56,318) |
Pension and other post-retirement benefit adjustments: | ||||
Recognition of prior service credit, net of tax | (240) | (490) | (721) | (1,470) |
Recognition of actuarial loss, net of tax | 6,029 | 4,424 | 18,214 | 13,005 |
Net actuarial loss, net of tax | (4,416) | (4,416) | ||
Net current period other comprehensive income (loss) | (105,085) | (95,439) | (194,375) | (49,199) |
Comprehensive income | $ 82,931 | $ 95,077 | $ 350,024 | $ 496,528 |
Other Comprehensive Loss - Chan
Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Components of Accumulated Other Comprehensive Loss [Line Items] | ||||
Beginning balance | $ (720,211) | $ (397,655) | ||
Other comprehensive loss before reclassifications, net of tax | (211,868) | (60,734) | ||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 17,493 | 11,535 | ||
Net current period other comprehensive income (loss) | $ (105,085) | $ (95,439) | (194,375) | (49,199) |
Ending balance | (914,586) | (446,854) | (914,586) | (446,854) |
Pension and Other Post-Retirement Benefits [Member] | ||||
Components of Accumulated Other Comprehensive Loss [Line Items] | ||||
Beginning balance | (533,213) | (360,036) | ||
Other comprehensive loss before reclassifications, net of tax | (4,416) | |||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 17,493 | 11,535 | ||
Net current period other comprehensive income (loss) | 17,493 | 7,119 | ||
Ending balance | (515,720) | (352,917) | (515,720) | (352,917) |
Foreign Currency Translation [Member] | ||||
Components of Accumulated Other Comprehensive Loss [Line Items] | ||||
Beginning balance | (186,998) | (37,619) | ||
Other comprehensive loss before reclassifications, net of tax | (211,868) | (56,318) | ||
Net current period other comprehensive income (loss) | (211,868) | (56,318) | ||
Ending balance | $ (398,866) | $ (93,937) | $ (398,866) | $ (93,937) |
Credit Facility - Additional In
Credit Facility - Additional Information (Detail) - Syndicated Facility Agreement [Member] - USD ($) | Jun. 19, 2015 | Sep. 30, 2015 |
Line of Credit Facility [Line Items] | ||
Unsecured revolving line of credit facility | $ 1,200,000,000 | |
Line of credit facility amount option to increase additional borrowings | $ 350,000,000 | |
Credit facility agreement amendment date | Jun. 19, 2015 | |
Outstanding line of credit | $ 125,000,000 | |
Credit facility agreement, maturity date | Jun. 19, 2020 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | Apr. 01, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total compensation cost related to nonvested awards, unrecognized | $ 37.5 | $ 37.5 | $ 28.8 | |||
Weighted-average period to recognize compensation cost (in years) | 3 years | |||||
Aggregate intrinsic value for outstanding SARs and RSUs | $ 105.1 | $ 105.1 | ||||
Aggregate intrinsic value for vested SARs and RSUs | $ 59.3 | |||||
Weighted-average remaining contractual life for outstanding SARs and RSUs, in years | 6 years | |||||
Weighted-average remaining contractual life for exercisable SARs and RSUs, in years | 5 years | |||||
Share-based compensation cost | $ 13.6 | $ 12.6 | ||||
Outstanding options to purchase common shares not included in dilutive shares | 1,300,000 | 700,000 | 1,200,000 | 600,000 | ||
Minimum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based payment award granted vesting period range | 1 year | |||||
Share-based payment, awards exercise | 12 months | |||||
Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based payment award granted vesting period range | 5 years | |||||
Share-based payment, awards exercise | 10 years | |||||
Stock Appreciation Rights [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted, Shares | 711,000 | |||||
Restricted Stock Units [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted, Shares | 176,000 |
Employee Benefit Plans - Compon
Employee Benefit Plans - Components of Net Periodic Benefit Income for the Pension Plans (Detail) - Pension Benefits [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 2,293 | $ 1,910 | $ 7,083 | $ 5,746 |
Interest cost | 24,503 | 25,760 | 73,746 | 76,792 |
Expected return on plan assets | (37,487) | (36,208) | (112,809) | (108,639) |
Amortization of prior service credit | (141) | (468) | (423) | (1,400) |
Amortization of actuarial loss | 9,528 | 6,745 | 28,769 | 19,953 |
Net periodic benefit income | $ (1,304) | $ (2,261) | $ (3,634) | $ (7,548) |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Compensation and Retirement Disclosure [Abstract] | |
Contribution to the pension plan | $ 38.7 |
Guarantees - Additional Informa
Guarantees - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Guarantor Obligations [Line Items] | |
Total borrowings of the independents and affiliates subject to guarantee | $ 309.7 |
Guarantees related to borrowings, other assets | 34 |
Guarantees related to borrowings, other long-term liabilities | $ 34 |
Minimum [Member] | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations maturity | 1 year |
Maximum [Member] | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations maturity | 6 years |
Fair Value of Financial Instr27
Fair Value of Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value Disclosures [Abstract] | ||
Carrying value of fixed rate debt | $ 500,000 | $ 500,000 |
Fair value of fixed rate debt | $ 499,700 |