Napa Auto Parts 2003 Annual Report Download

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GENUINE PARTS COMPANY
Annual Report 2003

Table of contents

  • Page 1
    G ENUINE PARTS C OMPANY Annual Report 2003

  • Page 2
    ... and general industrial supplies. This allows customers to consolidate purchases and effectively manage inventories. Web site: motionindustries.com Headquarters: Birmingham, Alabama Major Products: Filing Supplies Janitorial and Breakroom Supplies Computer Supplies and Accessories Business Machines...

  • Page 3
    ... A SERVICE ORGANIZATION ENGAGED IN THE DISTRIBUTION OF AUTOMOTIVE REPLACEMENT PARTS, INDUSTRIAL REPLACEMENT PARTS, OFFICE PRODUCTS AND ELECTRICAL/ELECTRONIC MATERIALS. THE COMPANY SERVES NUMEROUS CUSTOMERS FROM MORE THAN 1,800 OPERATIONS AND HAS APPROXIMATELY 30,800 EMPLOYEES. FINANCIAL HIGHLIGHTS...

  • Page 4
    ... payable April 1, 2 LARRY L. PRINCE Chairman of the Board THOMAS C. GALLAGHER President Operating Officer. Paul was previously the Executive Vice President of Sales and Marketing. In August 2003, the Board of Directors elected Robert J. Susor as Executive Vice President of Genuine Parts Company...

  • Page 5
    ... Parts Division. In February 2004, George W. Kalafut, Executive Vice President, retired from Genuine Parts after over 25 years of service with the Company. George joined Motion Industries in 1979 and was a member of their management team for 11 years prior to being promoted to our GPC Headquarters...

  • Page 6
    ... and distributed under the name Rayloc. In addition, we operate Johnson Industries, one of the nation's largest independent distributors of ACDelco, Motorcraft and other aftermarket parts, equipment and supplies. 4 Outside the U.S., our market reach extends into Canada and Mexico. NAPA Canada/UAP...

  • Page 7
    ... 50 new Company-owned and 50 new independent NAPA AUTO PARTS stores. A key factor in this expansion is NAPA's Integrated Business Solutions (IBS), a sophisticated 5 • level of inventory management for large customers. We will continue to grow the number of IBS locations we service. NAPA AutoCare...

  • Page 8
    ... 422 branches, 9 distribution centers and 32 service centers throughout the U.S. and Canada. Service offerings include 24/7/365 product delivery, application and design, and repair and fabrication services, inventory man- agement and logistics expertise. Customer access to over 3 million parts...

  • Page 9
    ... education classes to develop knowledge and skills in sales, management, and operations • Product training, industry specific process training, and industrial certification programs for employees and customers. LOOKING AHEAD Motion Industries has established a market leading product and service...

  • Page 10
    ... and Canada. From a network of 44 distribution centers, the Company supplies it customers with an array of business products including filing supplies, office furniture, janitorial and breakroom supplies, computer supplies and accessories, consumer electronics, school supplies, business machines...

  • Page 11
    ... will continue to build our growth strategy around our quality product offering, strong marketing programs, and superior dealer services. We will also nurture our many valued supplier and customer 9 relationships by understanding their needs and creating profitable business solutions to meet or...

  • Page 12
    ... MANUFACTURER OF CRITICAL PRODUCTS FOR THE ELECTRICAL AND ELECTRONIC MANUFACTURING AND REPAIR MARKETS. WE ARE PURSUING NEW OPPORTUNITIES TO SERVE CUSTOMERS IN THE UNITED STATES, CANADA AND MEXICO WITH WORLD-CLASS MATERIALS AND SERVICES. During 2003, EIS was focused on improving our sales trends of...

  • Page 13
    ... before the 2001 Charges was $2.08. MARKET AND DIVIDEND INFORMATION High and Low Sales Price and Dividends per Share of Common Shares Traded on the New York Stock Exchange Sales Price of Common Shares Quarter High $31.88 33.66 33.45 33.20 2003 Low $27.43 30.70 30.03 30.78 High $38.08 37.80 33.63 32...

  • Page 14
    ... Capital expenditures: Automotive Industrial Office products Electrical/electronic materials Corporate Total capital expenditures Net sales: United States Canada Mexico Other Total net sales Net long-lived assets: United States Canada Mexico Total net long-lived assets 2003 $ 4,477,508 2,253,947...

  • Page 15
    ... a service organization engaged in the distribution of automotive replacement parts, industrial replacement 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 2003, business was...

  • Page 16
    ... associated with new store openings were only partially offset by cost reductions associated with distribution center closings and other headcount reductions. Industrial Group Industrial operating margins decreased from 7.9% in 2002 to 6.7% in 2003, as lower levels of vendor discounts and volume...

  • Page 17
    ...consolidations in each of the Company's business segments. In 2001, the Company identified certain distribution, branch and retail facilities that were to be closed prior to December 31, 2002. The Company appropriately accrued the estimated lease obligation from the planned exit date through the end...

  • Page 18
    ... Company. SHARE REPURCHASES On April 19, 1999, the Board authorized the repurchase of 15 million shares. Through December 31, 2003, approximately 8.4 million shares have been repurchased under this authorization. CRITICAL ACCOUNTING ESTIMATES General Management's Discussion and Analysis of Financial...

  • Page 19
    ... related to cooperative advertising programs. The Company accrues for the receipt of inventory purchase 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, and, in the case of advertising...

  • Page 20
    ...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 21
    ... and the internal audit function with representatives of financial management and with representatives from Ernst & Young LLP. JERRY W. NIX Executive Vice President Finance and Chief Financial Officer February 3, 2004 REPORT OF INDEPENDENT AUDITORS Board of Directors Genuine Parts Company We have...

  • Page 22
    ... and cash equivalents Trade accounts receivable Merchandise inventories Prepaid expenses and other assets Total Current Assets Goodwill and Intangible Assets, less accumulated amortization Other Assets Property, Plant and Equipment: Land Buildings, less allowance for depreciation (2003 - $111,646...

  • Page 23
    ...in thousands, except per share data) Year ended December 31, Net sales Cost of goods sold 2003 $ 8,449,300 ...accounting principle Diluted net income (loss) Weighted average common shares outstanding Dilutive effect of stock options and non-vested restricted stock awards Weighted average common shares...

  • Page 24
    ... instruments, net of income taxes of $6,990 Comprehensive income Cash dividends declared, $1.18 per share Stock options exercised, including tax benefit Purchase of stock Balance at December 31, 2003 172,389,688 $ 172,390 - - - - $ - - - $ (13,041) - (12,252) $2,101,457 297,147 - $2,260...

  • Page 25
    ... and liabilities: Trade accounts receivable Merchandise inventories Trade accounts payable 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 and other...

  • Page 26
    ... parts, industrial replacement parts, office products and electrical/electronic materials. The Company serves a diverse customer base through more than 1,800 locations in North America and, therefore, has limited exposure from credit losses to any particular customer or industry segment. The Company...

  • Page 27
    ... pension asset, an investment accounted for under the cost method and in 2002, also included certain costs of internal-use information systems under development. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is primarily determined on a straight-line...

  • Page 28
    ...expenses. Under the new method, vendor allowances for advertising and catalog related programs are generally considered a reduction of cost of goods sold. On January 1, 2003, the Company adopted EITF 02-16 and recorded a non-cash charge of $19.5 million, net of a $13.6 million tax benefit, ($.11 and...

  • Page 29
    ..., the Company adopted SFAS No. 141 and SFAS No. 142. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations. SFAS No. 142 requires that entities assess the fair value of the net assets underlying all acquisition-related goodwill on a reporting unit basis...

  • Page 30
    ...consolidations in each of the Company's business segments. In 2001, the Company identified certain distribution, branch and retail facilities that were to be closed prior to December 31, 2002. The Company appropriately accrued the estimated lease obligation from the planned exit date through the end...

  • Page 31
    ...months nor later than ten years from the date of grant. Pro forma information regarding net income and earnings per share is required by SFAS 123, as amended, determined as if the Company had accounted for its employee stock options granted subsequent to December 31, 1994 under the fair value method...

  • Page 32
    ... certain increases in net income per common share and stock price levels. Through December 31, 2003, the two officers have earned 15,000 and 7,500 shares, respectively. The Company recognizes compensation expense equal to the fair market value of the stock on the award date over the remaining...

  • Page 33
    ... securities Real estate and other At December 31, 2003 and 2002, the Company-sponsored pension plan held 1,619,480 shares of common stock of the Company with a market value of approximately $53,767,000 and $49,880,000, respectively. Dividend payments received by the plan on Company stock totaled...

  • Page 34
    ...meet or exceed the pension plan's actuarially assumed long term rate of return. Based on the investment policy for the pension plan, as well as an asset study that was performed based on the Company's asset allocations and future expectations, the expected rate of return on plan assets for measuring...

  • Page 35
    ... classified as a reduction to operating profit of the office products segment for management reporting purposes. Additionally, for management purposes, net sales by segment excludes the effect of certain discounts, incentives and freight billed to customers. The line item "other" represents the net...

  • Page 36
    ... Executive Vice President Vice President - Product Management Vice President - New Business Development Vice President - Electrical Sales Vice President - Human Resources WESTERN GROUP Daniel F. Askey Bradley A. Shaffer Cary Carter Group Vice President Division Vice President - Distribution Regional...

  • Page 37
    ... West/Corporate Marketing & Sales Ellen H. Holladay Senior Vice President and Chief Information Officer MOTION INDUSTRIES (CANADA), INC. (TORONTO, ONTARIO) William J. Stevens Chairman of the Board Mark W. Sheehan President and Chief Executive Officer S. P. RICHARDS COMPANY (ATLANTA, GA) C. Wayne...

  • Page 38
    ...Department Genuine Parts Company 2999 Circle 75 Parkway Atlanta, Georgia 30339 INVESTOR RELATIONS Inquiries from security analysts and investment professionals should be directed to the Company's investor relations contact: Mr. Jerry Nix, Executive Vice President-Finance and Chief Financial Officer...

  • Page 39
    ... 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 NET SALES $ 75,129 227,978 339,732 402,463 482,525 629,751 904...000 2,130,009,000 2,312,283,000 Financial Information As Reported In The Company's Annual Reports (includes discontinued operations) *Excludes facility consolidation...

  • Page 40
    G ENUINE PARTS C OMPANY 2999 Circle 75 Parkway Atlanta, GA 30339 770 953 1700 www.genpt.com