Napa Auto Parts 2009 Annual Report Download - page 5

Table of Contents
Among the automotive lines that each NAPA member purchases and distributes are certain lines designated, cataloged, advertised
and promoted as “NAPA” lines. The members are not required to purchase any specific quantity of parts so designated and may, and do,
purchase competitive lines from other supply sources.
The Company and the other NAPA members 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 a party, together with other members of NAPA and NAPA itself, to a consent decree entered by the Federal District
Court in Detroit, Michigan, on May 4, 1954. The consent decree enjoins certain practices under the federal antitrust laws, including the
use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among several NAPA members,
fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting parts
customers or determining the number and location of, or arrangements with, auto parts customers.
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The Industrial Parts Group, operated as Motion Industries, Inc. (“Motion”), is a wholly-owned subsidiary of the Company
headquartered in Birmingham, Alabama. Motion distributes MRO (maintenance, repair, and operation) industrial replacement parts and
related supplies such as bearings, mechanical power transmission, industrial automation, hose, hydraulic and pneumatic components,
industrial supplies and material handling products throughout the United States, Canada and Mexico.
In Canada, industrial parts are distributed by Motion Industries (Canada), Inc. (“Motion Canada”) and the Mexican market is
served by Motion Mexico S de RL de CV (“Motion Mexico”). Both organizations operate in the Company’s North American structure
In 2009, the Company acquired General Tool and Supply with six locations and it is a supplier of industrial parts and supplies in
the United States.
As of December 31, 2009, the Industrial Parts Group served more than 120,000 customers in all types of industries located
throughout North America, including the food, forest products, primary metal, paper, mining, automotive, petrochemical and
pharmaceutical industries; as well as strategically targeted specialty industries such as power generation, wastewater treatment facilities,
wind power generation, solar power, government projects, pipelines, railroad, ports, and others. Motion services all manufacturing and
processing industries with access to a database of 4.1 million parts.
This group provides customers with supply chain efficiencies, achieved through inventory management and logistical solutions
coupled with Motion Industries’ vast product knowledge and system capabilities. The Company meets the MRO demand of a large and
fragmented market with high levels of service in the areas of asset management, inventory and logistics management, product application
and utilization management processes. A highly developed supply chain with vendor partnerships and customer connectivity are
enhanced by Motion’s leading e-business capabilities, such as MiSupplierConnect, which provides integration between the Company’s
information technology network and suppliers’ systems, creating numerous benefits for both the supplier and customer.
Distribution System. In North America, the Industrial Parts Group operates 458 branches, 7 distribution centers and 36 service
centers as of December 31, 2009. The distribution centers stock and distribute more than 80,000 different items purchased from more
than 460 different suppliers. The service centers provide hydraulic, hose and mechanical repairs for customers. Approximately 38% of
2009 total industrial product purchases were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s
branches located in 47 states, Puerto Rico, nine provinces in Canada, and Mexico. Each branch has warehouse facilities that stock
significant amounts of inventory representative of the products used by customers in the respective market area served.
Products. The Industrial Parts Group distributes a wide variety of parts and products to its customers, primarily industrial
concerns, to maintain and operate plants, machinery and equipment. Products include such items as hoses, belts, bearings, pulleys,
pumps, valves, chains, gears, sprockets, speed reducers, electric motors, and
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