Napa Auto Parts 2014 Annual Report Download - page 12

delisted following the acquisition. Headquartered in Edmonton, Alberta, CSI is an independent national distrib-
utor of industrial supplies, including bearings and power transmission products, complete solutions for drilling
rigs and industrial and safety supplies. Its customers represent a broad cross-section of industries and are served
from 22 locations across Canada and one in the U.S., generating approximately $100 million in annual revenues.
Effective February 2, 2015, Motion acquired Miller Bearings, a regional industrial distributor of bearings,
power transmission products, industrial supplies, hydraulic and pneumatic components. Headquartered in
Orlando, Florida, Miller operates 17 branch locations throughout the state and one distribution center. In addi-
tion, Miller has an export office providing industrial MRO products to Puerto Rico, the Dominican Republic and
other Caribbean customers. Miller is expected to generate approximately $40 million in annual revenues.
The Industrial Parts Group provides customers with supply chain efficiencies achieved through the compa-
ny’s Inventory Management Solutions offering. This service provides inventory management, asset repair and
tracking, vendor managed inventory commonly referred to as VMI, as well as RFID asset management of the
customer’s inventory. Motion’s Energy Services Team routinely performs in-plant surveys and assessments,
helping customers reduce their energy consumption and finding opportunities for improved sustainability, ulti-
mately helping customers operate more profitably. Motion also provides a wide range of services and repairs
such as: gearbox and fluid power assembly repair, process pump assembly and repair, hydraulic drive shaft
repair, electrical panel assembly and repair, hose and gasket manufacture and assembly, as well as many other
value-added services. A highly developed supply chain with vendor partnerships and 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. These services and supply chain efficiencies assist Motion in meeting the cost savings
that many of its customers require and expect.
Distribution System. In North America, the Industrial Parts Group operated 523 branches, 15 distribution
centers and 39 service centers as of December 31, 2014. The distribution centers stock and distribute more than
260,000 different items purchased from more than 1,100 different suppliers. The service centers provide
hydraulic, hose and mechanical repairs for customers. Approximately 38% of 2014 total industrial product pur-
chases were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s branches
located in 49 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,
which are primarily industrial concerns. Products include such items as hoses, belts, bearings, pulleys, pumps,
valves, chains, gears, sprockets, speed reducers, electric motors, and industrial supplies. In recent years, Motion
expanded its offering to include systems and automation products in response to the increasing sophistication of
motion control and process automation for full systems integration of plant equipment. Manufacturing trends and
government policies have led to opportunities in the “green” and energy-efficient product markets, focusing on
product offerings such as energy-efficient motors and drives, recyclable and environmentally friendly parts and
supplies. The nature of this group’s business demands the maintenance of adequate inventories and the ability to
promptly meet demanding delivery requirements. Virtually all of the products distributed are installed by the
customer or used in plant and facility maintenance activities. Most orders are filled immediately from existing
stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open
account. Motion has ongoing purchase agreements with existing customers that represent approximately 50% of
the annual sales volume.
Supply Agreements. Non-exclusive distributor agreements are in effect with most of the Industrial Parts
Group’s suppliers. The terms of these agreements vary; however, it has been the experience of the Industrial
Parts Group that the custom of the trade is to treat such agreements as continuing until breached by one party or
until terminated by mutual consent. Motion has return privileges with most of its suppliers, which has protected
the Company from inventory obsolescence.
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