Napa Auto Parts 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Napa Auto Parts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 71

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71

Table of Contents







oo





(Exact name of registrant as specified in its charter)
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

(Address of principal executive offices)

(Zip Code)


 
 
Common Stock, $1 par value per share New York Stock Exchange
 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes o No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer Accelerated filer oNon-accelerated filer oSmaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No
As of June 30, 2009, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately
$5,174,878,000 based on the closing sale price as reported on the New York Stock Exchange.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Common Stock, $1 par value per share 158,703,873 shares
Specifically identified portions of the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 19,
2010 are incorporated by reference into Part III of this Form 10-K.

Table of contents

  • Page 1
    ...aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $5,174,878,000 based on the closing sale price as reported on the New York Stock Exchange. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as...

  • Page 2
    ... replacement parts, office products and electrical/electronic materials. In 2009, business was conducted throughout the United States, in Canada and in Mexico from approximately 2,000 locations. As of December 31, 2009, the Company employed approximately 29,000 persons. As used in this report...

  • Page 3
    ... supply items. Each item is cataloged and numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers. Most orders are filled and shipped the same day as received. The majority of sales are on terms that require payment...

  • Page 4
    ...Company offers its NAPA AUTO PARTS store customers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, as well as marketing conferences and seminars, sales and advertising manuals...

  • Page 5
    ...use the federally registered trademark NAPA® as part of the trade name of their distribution centers and parts stores. The Company contributes to NAPA's national advertising program, which is designed to increase public recognition of the NAPA name and to promote NAPA product lines. The Company is...

  • Page 6
    ... from existing stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open account. Supply Agreements. Non-exclusive distributor agreements are in effect with most of the Industrial Parts Group's suppliers. The terms of these agreements...

  • Page 7
    ... and Heat Runnertm, two lines of climate control products; and Business Sourcetm, a line of basic office supplies available only to independent resellers. Segment Data . In each of the years ended December 31, 2009, 2008 and 2007, sales from the Company's Office Products Group were approximately 16...

  • Page 8
    ... inventory management. The Group's Integrated Supply offering also includes SupplyPro, an electronic vending dispenser used to eliminate costly tool cribs, or in-house stores, at customer warehouse facilities. Segment Data . In the year ended December 31, 2009, sales from the Company's Electrical...

  • Page 9
    ..., while a reading below 50 implies contracting manufacturing economy; and • the economy in general. We face Substantial Competition in the Industries in Which We Do Business The sale of automotive and industrial parts, office products and electronic materials is highly competitive and impacted by...

  • Page 10
    ...Company's headquarters and Automotive Parts Group headquarters are located in two adjacent office buildings owned by the Company in Atlanta, Georgia. The Company's Automotive Parts Group currently operates 58 NAPA Distribution Centers in the United States distributed among eight geographic divisions...

  • Page 11
    ... Company's common stock is traded on the New York Stock Exchange under the ticker symbol "GPC". The following table sets forth the high and low sales prices for the common stock as reported on the New York Stock Exchange and dividends per share of common stock paid during the last two fiscal years...

  • Page 12
    ... return of the Standard and Poor's 500 Stock Index and a peer group composite index structured by the Company as set forth below for the five year period that commenced December 31, 2004 and ended December 31, 2009. This graph assumes that $100 was invested on December 31, 2004 in Genuine Parts...

  • Page 13
    ... were 5,671 holders of record of the Company's common stock. The number of holders of record does not include beneficial owners of the common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries. Sales of Unregistered Segurities All of...

  • Page 14
    ... 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 2009, business was conducted throughout the United States, Puerto Rico, Canada and Mexico from approximately 2,000 locations...

  • Page 15
    ... in our share repurchase program during 2009 when compared to 2008. Accounts receivable decreased by approximately 3%, inventory was down by approximately 4% and accounts payable increased $85 million or 8% from the prior year, due primarily to improved payment terms with certain suppliers and the...

  • Page 16
    ...billion in 2009, a decrease of 18% compared to 2008. Through the first three quarters of the year, sales were especially weak for this group due to the effects of very low manufacturing activity, as evidenced by the reported levels of manufacturing industrial production and capacity utilization, and...

  • Page 17
    ... products and minimize material acquisition costs were generally offset by increasing competitive pricing pressures in the markets we serve. In 2009, our Office and Electrical business segments experienced vendor price increases. Industrial was flat and Automotive pricing was down for the year...

  • Page 18
    ... from 38.0% in 2007. The increase from the prior year rate was mainly due to a non-deductible expense associated with a Company retirement plan. Net Income Net income was $400 million in 2009, a decrease of 16% from $475 million in 2008. On a per share diluted basis, net income was $2.50 in...

  • Page 19
    ... fund the Company's operations, including working capital requirements, scheduled debt payments, interest payments, capital expenditures, benefit plan contributions, income tax obligations, dividends, share repurchases and contemplated acquisitions. The ratio of current assets to current liabilities...

  • Page 20
    ..., respectively, of the Company's common stock. We expect to remain active in our share repurchase program, but the amount and value of shares repurchased will vary annually. Notes and Other Borrowings The Company maintains a $350 million unsecured revolving line of credit with a consortium of...

  • Page 21
    ... goods specifying minimum quantities or set prices that exceed our expected requirements. 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...

  • Page 22
    ... prepared in accordance with U.S. generally accepted accounting principles. The preparation of our consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure...

  • Page 23
    ... expected years of future service of employees covered by the U.S. defined benefit pension plan. In July 2009, the Company announced changes to the U.S. postretirement benefit plan. Effective January 1, 2010, future retirees will no longer receive employer-provided medical benefits and current pre...

  • Page 24
    ..., competitive product, service and pricing pressures, including internet related initiatives, changes in financial markets, including particularly the capital and credit markets, impairment of financial institutions, the effectiveness of the Company's promotional, marketing and advertising programs...

  • Page 25
    ... by this report, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company's disclosure controls and procedures, as such term is defined...

  • Page 26
    ...-Risk Management and Employee Services from June 2000 to November 2004. Further information required by this item is set forth under the heading "Nominees for Director", under the heading "Corporate Governance - Code of Conduct and Ethics", under the heading "Corporate Governance -Board Committees...

  • Page 27
    ...(5) Genuine Parts Company Director's Deferred Compensation Plan, as amended (6) All of these shares are available for issuance pursuant to grants of full-value stock awards. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSW AND DIRECTOR INDEPENDENCE. Information required by this item is set...

  • Page 28
    ... Genuine Parts Company and subsidiaries are included in this Annual Report on Form 10-K. See, also, the Index to Consolidated Financial Statements on Page F-1. Report of independent registered public accounting firm on internal control over financial reporting Report of independent registered public...

  • Page 29
    ... to the Genuine Parts Company 1992 Stock Option and Incentive Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company's Annual Report on Form 10K, dated March 10, 2000.) Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated...

  • Page 30
    ...Form 10K, dated March 3, 2006.) Amendment No. 2 to the Genuine Parts Company Death Benefit Plan, dated November 9, 2005, effective April 1, 2005. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 3, 2006.) Genuine Parts Company 2006 Long-Term Incentive Plan...

  • Page 31
    .... Consent of Independent Registered Public Accounting Firm. Certification signed by Chief Executive Officer pursuant to SEC Rule 13a-14(a). Certification signed by Chief Financial Officer pursuant to SEC Rule 13a-14(a). Statement of Chief Executive Officer of Genuine Parts Company pursuant to 18...

  • Page 32
    ...to be signed on its behalf by the undersigned, thereunto duly authorized. GENUINE PTRTS COMPTNY /s/ Thomas C. Gallagher Thomas C. Gallagher Chairman, President and Chief Executive Officer 2/26/10 (Date) /s/ rerry W. Nix 2/26/10 rerry W. Nix (Date) Vice Chairman and Chief Financial and Accounting...

  • Page 33
    ... of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Dr. Mary B. Bullogk Dr. Mary B. Bullogk Director 2/15/10 (Date) /s/ rean...

  • Page 34
    ... STTTEMENT SCHEDULE Page Report of Management on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm on Financial Statements and Schedule Consolidated...

  • Page 35
    ... the policies or procedures may deteriorate. The Company's management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. In making this assessment, it used the criteria set...

  • Page 36
    ... of Management. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan...

  • Page 37
    ... audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Genuine Parts Company's internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of...

  • Page 38
    ... Current liabilities: Trade accounts payable Accrued compensation Other accrued expenses Dividends payable Income taxes payable Total current liabilities Long-term debt Pension and other post-retirement benefit liabilities Other long-term liabilities Equity: Preferred stock, par value $1 per share...

  • Page 39
    Table of Contents Genuine Parts Company and Subsidiaries Consolidated Statements of Ingome Year Ended Degember 31 2009 2008 2007 (In thousands, exgept per share amounts) Net sales Cost of goods sold Gross margin Operating expenses: Selling, administrative, and other expenses Depreciation and ...

  • Page 40
    ... instruments, net of income taxes of $184 Pension and postretirement benefit adjustment, net of income taxes of $24,278 Comprehensive income Cash dividends declared, $1.46 per share Stock options exercised, including tax benefit of $4,438 Stock-based compensation 170,530,874 - - - - - 530,262...

  • Page 41
    ... and amortization Excess tax expense (benefits) from share-based compensation Gain on sale of property, plant, and equipment Deferred income taxes Stock-based compensation Changes in operating assets and liabilities: Trade accounts receivable, net Merchandise inventories, net $ 399,575 90,411...

  • Page 42
    ... replacement parts, industrial replacement parts, office products, and electrical/electronic materials. The Company serves a diverse customer base through approximately 2,000 locations in North America and, therefore, has limited exposure from credit losses to any particular customer, region...

  • Page 43
    ... of increasing the volatility of the Company's earnings. Other Assets Other assets are comprised of the following: Degember 31 2009 2008 (In thousands) Retirement benefit assets Investment accounted for under the cost method Cash surrender value of life insurance policies Other Total other assets...

  • Page 44
    ... and the sale-leaseback transaction. Other taxes payable consists primarily of unrecognized tax benefits. Insurance liabilities consist primarily of reserves for the workers' compensation program. The Company carries various large risk deductible workers' compensation policies for the majority...

  • Page 45
    ... receivable and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. At December 31, 2009 and 2008, the fair value of fixed rate debt was approximately $533,000,000 and $491,000,000, respectively, based primarily on quoted prices...

  • Page 46
    ... average market price of common stock. Reclassifications Certain prior period amounts have been reclassified to conform to the current year presentation. Recently Issued Accounting Pronouncements In December 2007, the Financial Accounting Standards Board (FASB) issued guidance that establishes new...

  • Page 47
    ...to variable rates at December 31, 2009 and 2008. The weighted average interest rate on the Company's outstanding borrowings was approximately 5.45% at December 31, 2009 and 2008. The Company maintains a $350,000,000 unsecured revolving line of credit with a consortium of financial institutions that...

  • Page 48
    ... in the Agreement was an independent third-party limited liability company, which had as its sole member a publicly traded corporation. Properties acquired by the lessor were constructed and/or then leased to the Company under operating lease agreements. On June 26, 2009, the Agreement expired. In...

  • Page 49
    ...-free interest rate of 3.5% and 4.6%; dividend yield of 3.0% and 3.1%; annual historical volatility factor of the expected market price of the Company's common stock of 17% and 21%; an average expected life and estimated turnover based on the historical pattern of existing grants of six years and...

  • Page 50
    Table of Contents Genuine Parts Company and Subsidiaries Notes to Consolidated Finangial Statements - (Continued) (3) The exercise prices for options outstanding as of December 31, 2009 ranged from approximately $21 to $49. The weighted-average remaining contractual life of all options ...

  • Page 51
    ... for years ended prior to 2002. The Company is currently under audit in the United States and Canada. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the...

  • Page 52
    ...benefit pension plan. Curtailment accounting is required if an event eliminates, for a significant number of employees, the accrual of defined benefits for some or all of their future services. The Company also sponsors unfunded supplemental retirement plans covering employees in the U.S. and Canada...

  • Page 53
    ... Real estate 64% 64% 35% 35% 58% 39% 3% 1% 100% 1% 100% 100% The Company's benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. The pension plan strategy implemented by the Company's management...

  • Page 54
    ... long term rates of return. The Company's investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (50% S&P 500 Index, 5% Russell Mid Cap Index, 10% Russell 2000 Index, 5% MSCI EAFE Index, and 30% BarCap U.S. Govt/Credit). The...

  • Page 55
    ...during 2009 due to the following: Real Estate (In thousands) Balance, beginning of year Actual return on assets held at end of year Balance, end of year $ $ 5,449 (1,257) 4,192 Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company...

  • Page 56
    ... Genuine Parts Company and Subsidiaries Notes to Consolidated Finangial Statements - (Continued) Information about the expected cash flows for the pension plans and other post retirement benefit plans follows: Other Postretirement Benefits Expegted Gross Federal Subsidy (In thousands) Pension...

  • Page 57
    ... $37,616 (6,951) $30,665 $ $ 1,792 (1,059) 733 Pension Benefits 2008 2007 2009 Other Postretirement Benefits 2008 2007 Weighted average discount rate Rate of increase in future compensation levels Expected long-term rate of return on plan assets 6.97% 3.75% 8.00% 6.49% 3.75% 8.25% 6.00...

  • Page 58
    ... the reportable segments, certain of the Company's operating segments are aggregated since they have similar economic characteristics, products and services, type and class of customers, and distribution methods. The Company's automotive segment distributes replacement parts (other than body parts...

  • Page 59
    ... Company's operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters' facilities and equipment. For management purposes, net sales by segment exclude the effect of certain discounts, incentives, and freight billed to customers. The line item...

  • Page 60
    ... $ Capital expenditures: Automotive Industrial Office products Electrical/electronic materials Corporate 53,911 2,987 5,782 676 6,089 Total capital expenditures $ 69,445 $ $ 115,648 $ $ 68,062 5,695 8,893 1,550 1,514 85,714 Net sales: United States Canada Mexico Other $ 8,935,651 1,078...

  • Page 61
    ...Qualifying Tggounts Genuine Parts Company and Subsidiaries Balange at Beginning of Period Charged to Costs and Expenses Balange at Dedugtions End of Period Year ended December 31, 2007: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts Year ended December...

  • Page 62
    ... Consent of Independent Registered Public Accounting Firm. Certification signed by the Chief Executive Officer pursuant to SEC Rule 13a-14(a). Certification signed by the Chief Financial Officer pursuant to SEC Rule 13a-14(a). Statement of Chief Executive Officer of Genuine Parts Company pursuant to...

  • Page 63
    ... 2003, and executed November 11, 2003. Genuine Parts Company 2004 Annual Incentive Bonus Plan, effective January 1, 2004. Description of Director Compensation. Genuine Parts Company Stock Appreciation Rights Agreement. Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan. Amendment...

  • Page 64
    ...TOOL & SUPPLY, INC. S.P. RICHARDS COMPANY S.P.R. PROCUREMENT COMPANY SHUSTER CORPORATION DRAGO SUPPLY COMPANY 1ST CHOICE AUTO PARTS, INC. THE FLOWERS COMPANY GENERAL TOOL & SUPPLY GENUINE PARTS HOLDINGS, ULC GENUINE PARTS INVESTMENT COMPANY GPC MEXICO, S.A. de C.V. EIS de MEXICO EIS HOLDINGS (CANADA...

  • Page 65
    ...Parts Company 2006 Long-Term Incentive Plan; of our reports dated February 26, 2010, with respect to the consolidated financial statements and schedule of Genuine Parts Company and the effectiveness of internal control over financial reporting of Genuine Parts Company included in this Annual Report...

  • Page 66
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 67
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 68
    ... with the Annual Report of Genuine Parts Company (the "Company") on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas C. Gallagher, Chairman, President and Chief Executive Officer, certify, pursuant...

  • Page 69
    ...the Annual Report of Genuine Parts Company (the "Company") on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jerry W. Nix, Executive Vice President - Finance and Chief Financial Officer of the Company, certify...

  • Page 70

  • Page 71