Napa Auto Parts 2008 Annual Report Download

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G P C
2008 ANNUAL REPORT

Table of contents

  • Page 1
    G P C 2008 AnnuAl RePoRt

  • Page 2
    Year Net Sales Income Before Income Taxes Income Taxes Net Income Shareholders' Equity End of Year 1928 1929 1930 1931 ...2008 11,015,263,000 768,468,000 293,051,000 475,417,000 2,324,332,000 Financial information as reported in the Company's annual reports (includes discontinued operations...

  • Page 3
    ... shareholders - 4 business narratives - 6 selected financial data - 13 stock performance - 14 consolidated management's discussion and analysis - 16 report of management - 24 officers - 42 reports of independent registered public accountants - 25 board of directors - 44 shareholder information - IBC...

  • Page 4
    ... Paint and Refinishing Supplies tools and equipment Automotive Accessories Heavy Duty Parts these products cover substantially all domestic and foreign motor vehicle models. Web site: napaonline.com Headquarters: Atlanta, GA industrial parts group The Industrial Parts Group offers access to nearly...

  • Page 5
    ..., test equipment, safety and shop supplies, industrial products, and customized parts. Locations in U.S., Puerto Rico, Dominican Republic, Mexico and Canada: 33 Branches and 3 Fabrication Facilities Market Emphasis: By stocking a broad product line locally, offering a variety of inventory management...

  • Page 6
    ...the Board of Directors raised the cash dividend payable April 1, 2009 to an annual rate of $1.60 per share. This represents a 3% increase and 2009 will mark our 53rd consecutive year of increased dividends paid to our shareholders. operations For 2008, the Company's strongest sales improvements...

  • Page 7
    ... of executive roles in the print and office supplies industries, both in the U.S. and Canada. In his new position at S.P. Richards, Rick will be responsible for sales, marketing and the Canadian operations. Rick provides additional depth and strength to our Office Products Group management team...

  • Page 8
    ...component of our wholesale business and we continue to invest in trained personnel, tailored inventory and aggressive promotion. Specialized markets such as heavy duty, paint, body & equipment, farm and marine, tools & equipment and import parts offer us many growth opportunities. During 2008, we...

  • Page 9
    ... more effective selling, customer service and enhanced gross profit, inventory and staffing management tools. For the wholesale customer, the NAPA Business Systems Group continues to improve and support NAPA TRACS, a leading shop management system, and has made online ordering even easier via...

  • Page 10
    ...North American industrial distributor of Maintenance, Repair, and Operations (MRO) products including bearings, mechanical power transmission, industrial automation, hose, hydraulic and pneumatic components and industrial supplies. We provide a comprehensive product offering and specialized services...

  • Page 11
    ..., this program includes over 60 suppliers and offers real-time access to over $2 billion in product inventory. In addition, our internet site (motionindustries. com) provides customers with access to all the benefits of online lookup and ordering capabilities, as well as 24-hour customer service...

  • Page 12
    ...In 2008, S.P. Richards expanded its reach to new customers and markets via the acquisition of three regional U.S. distributors: O'Henry, Inc., PPI Wholesale Office Supplies and the midwest division of ActionEmco. Combined, these companies add approximately $90 million to our annual revenue base...

  • Page 13
    ... market share. group highlights -leading north american business products wholesaler -extensive fulfillment capabilities via 45 distribution centers in the U.S. and Canada -vast and growing assortment of office products and supplies -excellent customer service via specialized services, expert...

  • Page 14
    ... strategically located in North America that provide value added fabricated material to our customers. Combined, these locations offer our customers access to complete inventories, capable people and a comprehensive range of innovative logistics services. penetrating the solar market in 2008, and...

  • Page 15
    ...,660 2.25 1.20 44.06 500,000 2,544,377 $ 4,455,247 market price and dividend information High and Low Sales Price and Dividends per Common Share Traded on the New York Stock Exchange Sales Price of Common Shares Quarter High $46.28 45.83 44.20 40.62 2008 Low $38.30 39.68 39.34 29.92 High $50.75...

  • Page 16
    ... Peer Group was weighted to reflect the Company's annual net sales in each industry segment. Each industry segment of the Company comprised the following percentages of the Company's net sales for the fiscal years shown: Industry Segment Automotive Parts Industrial Parts Office Products...

  • Page 17
    ...) Year ended December 31, Net sales: Automotive Industrial Office products Electrical/electronic materials Other Total net sales Operating profit: Automotive Industrial Office products Electrical/electronic materials Total operating profit Interest expense, net Corporate...

  • Page 18
    management's discussion and analysis of financial condition and results of operations 2008 overview Genuine Parts Company is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials. The ...

  • Page 19
    ...addition, Industrial expanded its distribution network by opening four new locations and by adding another eight locations via five acquisitions. Office Group Net sales for S.P. Richards, our Office Products Group ("Office"), were $1.7 billion in 2008, down 2% compared to the prior year. 2008...

  • Page 20
    ... in the office products industry that began in the latter part of 2006 continued to pressure the operating margins at Office in 2007 and 2008, and we will likely face more moderation in demand over the next several quarters. As we work to better align our costs to revenues, our near term sales...

  • Page 21
    ... status of the Company's pension and other post-retirement plans in 2008. Accounts payable increased $20 million or 2% from the prior year, due primarily to improved payment terms with certain suppliers and the expansion of our procurement card program in 2008. The prior year's current portion of...

  • Page 22
    ... from 2007, when net cash provided by operating activities was especially strong at $641 million. Primarily, the change in 2008 was due to the $116 million net increase in cash used for working capital requirements, including accounts receivable, inventory and accounts payable, as well as the $31...

  • Page 23
    ... agreements. Our purchase orders are based on our current distribution needs and are fulfilled by our vendors within short time horizons. The Company does not have significant agreements for the purchase of inventory or other goods specifying minimum quantities or set prices that exceed our...

  • Page 24
    ... its vendors providing for inventory purchase incentives and advertising allowances. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels and advertising allowances upon fulfilling its obligations related to cooperative advertising programs...

  • Page 25
    ... 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 years ending...

  • Page 26
    ...operating effectiveness of internal control over financial reporting as of December 31, 2008. 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
    ... three years in the period ended December 31, 2008 of Genuine Parts Company and our report dated February 25, 2009 expressed an unqualified opinion thereon. Atlanta, Georgia February 25, 2009 report of independent registered public accounting firm on the financial statements The Board of Directors...

  • Page 28
    ... Current liabilities: Trade accounts payable Current portion of debt Accrued compensation Other accrued expenses Dividends payable Income taxes payable Total current liabilities Long-term debt Minority interests in subsidiaries Pension and other post-retirement benefit liabilities Other long-term...

  • Page 29
    ... (in thousands, 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 (income): Interest...

  • Page 30
    ... adjustment Pension and postretirement benefit adjustment, net of income taxes of $160,695 Comprehensive income Cash dividends declared, $1.56 per share Stock options exercised, net of income taxes of $586 Stock-based compensation Purchase of stock Balance at December 31, 2008 Common Stock Shares...

  • Page 31
    ... accounts receivable, net Merchandise 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
    ... parts, industrial replacement parts, office products, and electrical/electronic materials. The Company serves a diverse customer base through more than 2,000 locations in North America and, therefore, has limited exposure from credit losses to any particular customer, region, or industry...

  • Page 33
    ...in thousands) December 31, Retirement benefit assets Investment accounted for under the cost method Cash surrender value of life insurance policies Other Total other assets 2008 7,229 21,400 2007 The Company's post-employment benefit liabilities consist primarily of actuarially...

  • Page 34
    ... the years ended December 31, 2008, 2007, and 2006, respectively. Accounting for Legal Costs The Company's legal costs expected to be incurred in connection with loss contingencies are expensed as such costs are incurred. Stock Compensation The Company maintains various Long-Term Incentive Plans...

  • Page 35
    ... as of December 31, 2007 Additions Amortization Balance as of December 31, 2008 3. credit facilities Automotive $ 23,887 - 23,887 300 - 24,187 16,025 - $ 40,212 Goodwill Office Industrial Products $ 31,409 $ 2,131 31,409 2,131 13,593 45,002...

  • Page 36
    ... 2008 and 2007. Rental expense for operating leases was approximately $159,562,000 in 2008, $153,273,000 in 2007, and $147,727,000 in 2006. 5. stock options and restricted stock awards The Company maintains various Long-Term Incentive Plans, which provide for the granting of stock options, stock...

  • Page 37
    ... the price of the Company's stock on the date of grant. The total fair value of shares vested during the years ended December 31, 2008, 2007, and 2006, was $14.9 million, $10.5 million, and $6.9 million, respectively. A summary of the Company's stock option activity and related information is...

  • Page 38
    ...for tax purposes Pension liability not yet deducted for tax purposes Capital loss Valuation allowance Deferred tax liabilities related to: Employee and retiree benefits Inventory Property, plant and equipment Other Net deferred tax asset Current portion of...

  • Page 39
    ... was effective for publicly held companies for fiscal years ending after December 31, 2006. Other Postretirement Benefits 2008 2007 The Company's defined benefit pension plans cover substantially all of its employees in the U.S. and Canada. The plan covering U.S. employees is noncontributory...

  • Page 40
    ...Dividend payments received by the plan on Company stock totaled approximately $3,146,000 and $2,945,000 in 2008 and 2007, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services. The Company's benefit plan...

  • Page 41
    ... consist of: Other Postretirement Benefits 2008 2007 (in thousands) Pension Benefits 2008 2007 Information about the expected cash flows for the pension plans and other post retirement benefit plans follows: Other Postretirement Benefits Pension Employer Value Due to (in thousands...

  • Page 42
    ... return on plan assets Pension Benefits 2007 6.00% 3.75% 8.25% Other Postretirement Benefits 2008 2007 2006 5.75% - - 5.75% - - 5.75% - - 2008 6.49% 3.75% 8.25% 2006 5.75% 3.75% 8.25% An 8% annual rate of increase in the per capita cost of covered health care...

  • Page 43
    ... of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components, and related parts and supplies. The Company's office products segment distributes a wide variety of office products, computer supplies, office...

  • Page 44
    ... Executive Vice President - Operations Senior Vice President - Sales Senior Vice President - Chief Information Officer Senior Vice President - Stores Senior Vice President - AutoCare and Wholesale Marketing Senior Vice President - Merchandising and Product Strategy Vice President - Information...

  • Page 45
    ... President and Chief Executive Officer Executive Vice President - Finance Vice President - Sales and Marketing altrom import parts group (vancover, canada) Pascal J. Litscher Scott S. Mountford President - Altrom Canada President - Altrom America s. p. richards company (atlanta, ga) C. Wayne...

  • Page 46
    ... Board of Directors and Chief Executive Officer of Oxford Industries, Inc. Retired Managing Director, Global Automotive Research at Credit Suisse First Boston Vice Chairman and Chief Financial Officer Chairman of the Executive Committee Chief Executive Officer, President and Chief Operating Officer...

  • Page 47
    shareholder information stock listing Genuine Parts Company's common stock is traded on the New York Stock Exchange under the symbol "GPC". certifications Our Annual Report on Form 10-K includes the certifications of our chief executive officer and chief financial officer required by Sections 302 ...

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