Napa Auto Parts 2006 Annual Report Download

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Genuine Parts Company
2006 Annual Report

Table of contents

  • Page 1
    Genuine Parts Company 2006 Annual Report

  • Page 2
    ...437,434,000 2,544,377,000 2,693,957,000 2006 10,457,942,000 770,916,000 295,511,000 475,405,000 2,549,991,000 Financial information as reported in the Company's annual reports (includes discontinued operations) *Excludes facility consolidation and impairment charges **Excludes cumulative...

  • Page 3
    ... Reports of Independent Registered Public Accountants Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Board of Directors and Officers Shareholder Information...

  • Page 4
    ...companies throughout North America and in all industry segments. Service Capabilities Include: 24/7/365 product delivery Application and design Repair and fabrication Inventory management and Logistics Quality processes (ISO) Training programs Technical expertise E-business technologies Asset repair...

  • Page 5
    ... Business Machines Desk Accessories Healthcare Supplies Office Furniture Consumer Electronics School Supplies Writing Instruments Paper Products Market Advantage: Offers quality products, excellent service and innovative marketing programs and dealer services - established over rich history...

  • Page 6
    ... During 2006, there were a number of management changes and promotions that we would like to share with you. G. Thomas Braswell, our Senior Vice President - Information Technology, retired from the Company in February 2007. Tom's impressive career at Genuine Parts Company spans over 40 years and...

  • Page 7
    ...such as Information Technology and Telecommunications, as well as Strategic Planning and Business Development. He has distinguished himself over his career and for the last ten years Keith has held several key executive management positions with BellSouth Corporation in Atlanta, Georgia. Keith is...

  • Page 8
    ... aftermarket parts, equipment and supplies. Our market extends throughout North America. NAPA Canada/UAP Inc. is one of Canada's leading automotive distributors as well as Canada's largest independent heavy vehicle parts distributor. Th e operating programs and marketing initiatives utilized in...

  • Page 9
    ...Service Center programs, which provide business tools and support to one of the nation's largest independent automotive service and repair networks. Th e NAPA Major Accounts Program assists the NAPA AUTO PARTS stores in securing preferred vendor agreements with nationally recognized companies...

  • Page 10
    ... IS A LEADING NORTH AMERICAN INDUSTRIAL DISTRIBUTOR OF BEARINGS; MECHANICAL, INDUSTRIAL AUTOMATION, ELECTRICAL, PNEUMATIC AND HYDRAULIC REPLACEMENT PARTS; HOSE AND RUBBER PRODUCTS; AND INDUSTRIAL SUPPLY PRODUCTS. WE PROVIDE A COMPREHENSIVE PRODUCT OFFERING AND SPECIALIZED SERVICES TO WELL OVER...

  • Page 11
    ... includes additional acquisitions of this type. Specialized Service Offerings Our specialized service offerings include Cost Management Processes (CMP), Asset and Repair Tracking program (ART), Storeroom and Replenishment Tracking (START) and Motion Institute Training Center. CMP delivers...

  • Page 12
    ..., SCHOOL SUPPLIES, BUSINESS MACHINES, WRITING INSTRUMENTS, DESK ACCESSORIES, PAPER PRODUCTS AND HEALTHCARE SUPPLIES. Th e company's comprehensive array of specialized services, logistical capabilities and marketing programs create value for our customers, including independent resellers...

  • Page 13
    ...operations and profitability; human resources and training; national distribution; and furniture support services. Many of these educational and management tools are delivered over the internet through SPR University, a convenient and cost effective on-line training platform available to dealers...

  • Page 14
    ... opportunities and make 2007 another good year for the Company. 2006 Highlights 12 20% increaSe in revenueS new proDuctS geographic expanSion key account Development proprietary inventory management SyStemS (aimS) proDuct, technical anD Service SolutionS StrengtheneD aS "one Source" Supplier

  • Page 15
    ... in conjunction with the Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets." Market Price and Dividend Information High and Low Sales Price and Dividends per Common Share Traded on the New York Stock Exchange Quarter First Second Third...

  • Page 16
    ... publicly held companies (weighted in accordance with each company's stock market capitalization at December 31, 2001 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...

  • Page 17
    ... Office products Electrical/electronic materials Corporate T otal capital expenditures Net sales: United States Canada Mexico Other T otal net sales Net long-lived assets: United States Canada Mexico Total net long-lived assets 2006...

  • Page 18
    ..., 2006, the Company implemented a variety of growth initiatives, including the introduction of new and expanded product lines, geographic expansion, sales to new markets, enhanced customer marketing programs and cost savings initiatives. Each of our business segments participated in developing these...

  • Page 19
    ...prior year. Among our business groups, Office is our most steady performer from year to year, and in 2006, product and customer expansion efforts and the continued development of effective marketing programs and dealer services helped to drive this group's progress. Although its rate of sales growth...

  • Page 20
    ... are offset by ongoing product and customer expansion efforts and the continued development of effective marketing programs and dealer services. Office operating margins were 9.5% in 2005, down from 9.8% in 2004. The success of this Group's sales initiatives was offset by pricing pressures, which...

  • Page 21
    ...No. 158 Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. Liquidity and Capital Resources The ratio of current assets to current liabilities was 3.2 to 1 at December 31, 2006 compared to 3.0 to 1 at December 31, 2005. Our cash position remains strong. The Company had...

  • Page 22
    ..., in Company stock. We plan to remain active in our share repurchase program, but the amount and value of shares repurchased will vary annually. While no borrowings were repaid in 2006 or 2005, the Company repaid variable rate borrowings of approximately $177 million in 2004. Long-term debt of...

  • Page 23
    ...the market performance of the plans' assets and future changes in interest rates that affect the actuarial measurement of the plans' obligations. On April 19, 1999, our Board of Directors authorized the repurchase of 15 million shares of our common stock, and on August 21, 2006, the Board authorized...

  • Page 24
    ...Financial Statements for more information regarding employee benefit plans. On September 29, 2006, the Financial Accounting Standards Board issued SFAS No. 158 Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. SFAS No. 158 was effective for public companies for fiscal...

  • Page 25
    ...rate of the market for the Company's products and services, the ability to maintain favorable supplier arrangements and relationships, competitive product and pricing pressures, including internet related initiatives, the effectiveness of the Company's promotional, marketing and advertising programs...

  • Page 26
    ... operating effectiveness of internal control over financial reporting as of December 31, 2006. This report appears on page 25. 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...

  • Page 27
    .... 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Genuine Parts Company's internal control over financial reporting as...

  • Page 28
    ... taxes payable Total current liabilities Long-term debt Deferred income taxes Minority interests in subsidiaries Other long-term liabilities Shareholders' equity: Preferred stock, par value $1 per share - authorized 10,000,000 shares; none issued Common stock, par value...

  • Page 29
    ..., except per share amounts) Year ended December 31, Net sales Cost of goods sold Gross margin Operating expenses: Selling, administrative and other expenses Depreciation and amortization Provision for doubtful accounts Total operating expenses Non-operating expenses...

  • Page 30
    ...Change in minimum pension liability, net of income taxes of $5,079 - Comprehensive income Cash dividends declared, $1.20 per share - Stock options exercised, including tax benefit of $6,073 1,498,002 Stock based compensation - Purchase of stock (578,381...

  • Page 31
    ... inventories, net Trade accounts payable Other long-term assets Other, net Net cash provided by operating activities Investing activities Purchases of property, plant and equipment Proceeds from sale of property, plant, and equipment Acquisition of businesses...

  • Page 32
    ... specified volume purchasing levels or other criteria. The Company accrues for the receipt of inventory purchase incentives and advertising allowances as part of its inventory cost based on cumulative purchases of inventory to date and projected inventory purchases through the end of the year, or...

  • Page 33
    ... discussion of the Company's obligations under capital leases. (in thousands) December 31, Retirement benefit assets Investment accounted for under the cost method Cash surrender value of life insurance policies Deferred tax asset Other Total other assets 2006 $ 12,951 21...

  • Page 34
    ... 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, 2006 and 2005, the fair market value of fixed rate long-term debt was approximately...

  • Page 35
    ... net periodic benefit cost will be recognized in accumulated other comprehensive (loss) income, net of tax effects, until they are amortized as a component of net periodic cost. SFAS No. 158 is effective for publicly-held companies for fiscal years ending after December 15, 2006. The Company adopted...

  • Page 36
    ... other share-based awards. The Company issues new shares upon option exercise under these plans. Effective January 1, 2003, the Company prospectively adopted the fair value method of accounting for stock compensation. The Company recognizes compensation expense based on the straight-line method for...

  • Page 37
    ...income and income per share if the fair value based method had been applied to all outstanding and unvested awards in each period (in thousands, except per share amounts): Year Ended December 31, Net income, as reported Add: Stock-based employee compensation expense related to option grants after...

  • Page 38
    ... of the Company's stock option activity and related information is as follows: Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits for deductions resulting from the exercise of stock options as operating cash flows in the consolidated statements of cash flows. SFAS...

  • Page 39
    ... obligation at beginning of year Service cost Interest cost Plan participants' contributions Plan amendments Actuarial loss Exchange rate (gain) loss Gross benefits paid Less: federal subsidy Benefit obligation at end of year 2006 Pension Benefits 2005 $ 1,035,858 41...

  • Page 40
    ...the per capita cost of covered health care benefits was assumed on December 31, 2006. The rate was assumed to decrease ratably to 5% on December 31, 2010 and thereafter. At December 31, 2006 and 2005, the plan held 2,016,932 shares of common stock of the Company with a market value of approximately...

  • Page 41
    ... in other long-term assets Accumulated other comprehensive (loss) income related to the additional minimum liability Amounts recognized in accumulated other comprehensive (loss) income consist of: (in thousands) Net actuarial loss Prior service cost Pension Benefits 2006 $ 12...

  • Page 42
    ... benefit costs for the plans follow: (in thousands) Weighted average discount rate Rate of increase in future compensation levels Expected long-term rate of return on plan assets Health care cost trend covered charges 2006 5.75% 3.75% 8.25% - Pension Benefits...

  • Page 43
    ... years ending December 31, 2006, 2005, and 2004, 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. For management...

  • Page 44
    ...- Finance and Corporate Secretary Vice President - Planning and Acquisitions Vice President - Compensation and Benefits Vice President - Investor Relations Vice President - Real Estate and Construction RAYLOC (ATLANTA, GA) J. Richard Borman President Damon E. Elmore Vice President - Human Resources...

  • Page 45
    ... - Corporate Accounts Vice President - Corporate Services and Sales Support Grupo Auto Todo (Puebla, Mexico) Juan Lujambio President and Chief Executive Officer Jorge Otero Miguel A. Rodriguez Executive Vice President - Finance Vice President - Sales and Marketing Motion Industries (Canada), Inc...

  • Page 46
    ... executive officer that he is not aware of any violation of New York Stock Exchange corporate governance listing standards. Investor Relations Inquiries from security analysts and investment professionals should be directed to the Company's investor relations contacts: Mr. Jerry Nix, Chief Financial...

  • Page 47

  • Page 48
    Genuine Parts Company 2999 Circle 75 Parkway Atlanta, GA 30339 770 953 1700 www.genpt.com