Genuine Parts Company Annual Report 2012

Plain-text annual report

GENUINE PARTS COMPANY Our 85th Year Annual Report 2012 YEAR 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 NET SALES INCOME BEFORE INCOME TAXES INCOME TAXES NET INCOME TOTAL EQUITY END OF YEAR $ 75,129 227,978 339,732 402,463 482,525 629,751 904,580 1,035,477 1,299,185 1,520,199 1,858,252 3,180,241 3,928,342 6,109,724 6,592,707 8,205,316 10,084,893 11,355,633 19,237,291 18,531,472 20,729,280 19,845,875 24,447,042 26,244,669 28,468,962 29,731,105 30,744,504 34,073,288 41,325,377 48,140,313 56,504,293 71,581,580 75,010,726 80,533,146 90,248,450 96,651,445 120,313,692 171,545,228 175,132,785 204,893,008 245,443,798 303,455,677 340,036,395 387,138,252 450,500,768 501,189,438 572,833,282 678,353,280 846,192,692 942,958,756 1,148,632,000 1,337,468,000 1,431,713,000 1,584,642,000 1,936,524,000 2,068,231,000 2,303,594,000 2,332,544,000 2,394,072,000 2,606,246,000 2,941,963,000 3,161,198,000 3,319,394,000 3,434,642,000 3,668,814,000 4,384,294,000 4,858,415,000 5,261,904,000 5,697,592,000 5,981,224,000 6,587,576,000 7,950,822,000 8,369,857,000 8,220,668,000 8,258,927,000 8,449,300,000 9,097,267,000 9,783,050,000 10,457,942,000 10,843,195,000 11,015,263,000 10,057,512,000 11,207,589,000 12,458,877,000 13,013,868,000 $ -2,570 8,027 15,666 21,516 16,839 34,614 52,115 38,503 70,234 72,622 78,305 136,902 176,301 348,690 337,252 430,634 489,547 532,944 1,621,541 1,088,967 1,176,590 1,067,096 1,454,832 1,168,405 1,416,235 1,408,213 1,642,148 1,921,777 2,473,384 3,328,598 4,251,175 6,001,005 5,661,551 6,491,113 7,107,524 7,210,807 9,324,827 12,262,510 12,409,363 14,918,758 19,330,334 24,228,557 28,163,228 33,897,667 36,104,767 42,088,098 50,234,298 63,552,088 79,321,897 88,365,511 105,070,000 121,953,000 133,996,000 154,271,000 193,560,000 200,822,000 234,713,000 245,203,000 240,565,000 262,068,000 290,445,000 321,877,000 333,219,000 335,027,000 353,998,000 425,829,000 474,868,000 510,794,000 545,233,000 565,600,000 589,117,000 628,067,000 646,750,000 603,813,000* 605,736,000 571,743,000 635,919,000 709,064,000 770,916,000 816,745,000 768,468,000 644,165,000 761,783,000 890,806,000 1,018,932,000 $ - 599 1,158 1,857 2,787 6,160 10,159 7,140 13,187 17,647 18,185 27,320 50,505 149,020 204,234 260,084 310,082 323,302 650,060 429,045 438,498 420,175 636,275 601,386 744,330 736,190 864,331 1,020,148 1,309,667 1,752,800 2,261,582 3,165,042 2,988,000 3,481,000 3,795,000 3,850,000 4,620,000 5,890,000 6,030,000 7,272,000 10,362,000 13,240,000 14,600,000 16,966,000 18,200,000 21,280,000 25,408,000 32,650,000 40,538,000 44,918,000 53,429,000 58,808,000 64,545,000 74,471,000 92,552,000 97,188,000 115,046,000 118,962,000 119,013,000 113,776,000 109,072,000 122,389,000 126,623,000 127,350,000 134,210,000 166,961,000 186,320,000 201,626,000 215,157,000 223,203,000 233,323,000 250,445,000 261,427,000 242,289,000* 238,236,000 218,101,000 240,367,000 271,630,000 295,511,000 310,406,000 293,051,000 244,590,000 286,272,000 325,690,000 370,891,000 $ -2,570 7,428 14,508 19,659 14,052 28,454 41,956 31,363 57,047 54,975 60,120 109,582 125,796 199,670 133,018 170,550 179,465 209,642 971,481 659,922 738,092 646,921 818,557 567,019 671,905 672,023 777,817 901,629 1,163,717 1,575,798 1,989,593 2,835,963 2,673,551 3,010,113 3,312,524 3,360,807 4,704,827 6,372,510 6,379,363 7,491,411 8,794,941 10,778,467 13,290,852 16,535,006 17,567,931 20,341,677 24,005,057 29,981,108 37,763,166 42,243,015 50,263,000 61,715,000 67,833,000 77,543,000 100,167,000 103,634,000 119,667,000 126,241,000 121,552,000 148,292,000 181,373,000 199,488,000 206,596,000 207,677,000 219,788,000 257,813,000 288,548,000 309,168,000 330,076,000 342,397,000 355,794,000 377,622,000 385,323,000 361,524,000* 367,500,000** 353,642,000** 395,552,000 437,434,000 475,405,000 506,339,000 475,417,000 399,575,000 475,511,000 565,116,000 648,041,000 $ 38,756 49,837 60,591 78,097 90,187 109,025 149,176 171,238 185,119 240,140 358,621 476,750 623,521 738,536 859,449 1,032,182 1,202,955 1,415,974 2,379,001 3,029,334 4,005,910 4,372,831 4,966,086 5,325,561 5,647,553 6,022,077 6,449,894 7,001,523 7,815,241 8,969,272 10,807,320 13,285,215 14,967,697 17,142,687 19,213,273 21,189,880 29,268,289 45,565,926 47,308,163 55,679,256 63,649,275 77,437,679 85,290,945 95,476,147 108,053,465 121,548,638 137,156,965 163,092,941 206,861,402 233,641,292 275,127,000 320,706,000 359,889,000 410,689,000 581,915,000 636,218,000 701,113,000 729,231,000 758,493,000 760,256,000 863,159,000 971,764,000 1,033,100,000 1,126,718,000 1,235,366,000 1,445,263,000 1,526,165,000 1,650,882,000 1,732,054,000 1,859,468,000 2,053,332,000 2,177,517,000 2,260,806,000 2,345,123,000 2,130,009,000 2,312,283,000 2,544,377,000 2,693,957,000 2,549,991,000 2,716,716,000 2,324,332,000 2,629,372,000 2,802,714,000 2,792,819,000 3,008,179,000 Financial information as reported in the Company’s annual reports (includes discontinued operations) *Excludes facility consolidation and impairment charges **Excludes cumulative effect adjustment GENUINE PARTS COMPANY Genuine Parts Company, founded in 1928, is 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 2,000 operations and has approximately 31,900 employees. 4% 13% 34% 49% GPC NET SALES BY SEGMENT BY THE NUMBERS $13.5 13 12.5 12 11.5 11 10.5 10 9.5 9 S N O I L L I B $4.25 S R A L L O D 4.00 3.75 3.50 3.25 3.00 2.75 2.50 2.25 2.00 $1,000 $900 S N O I L L I M 800 700 600 500 400 300 200 100 0 SALES EARNINGS PER SHARE FINANCIAL HIGHLIGHTS CASH FROM OPERATIONS Net Sales Income Before Income Taxes Income Taxes Net Income Shareholders’ Equity Rate Earned on Shareholders’ Equity at the Beginning of the Year Average Common Shares Outstanding-Assuming Dilution Per Common Share: Diluted Net Income 2012 Increase 2011 Increase 2010 $13,013,868,000 1,018,932,000 370,891,000 648,041,000 3,008,179,000 23.5% 4% 14% 14% 15% 9% - $12,458,877,000 890,806,000 325,690,000 565,116,000 2,753,591,000 20.4% 11% $11,207,589,000 17% 761,783,000 14% 286,272,000 19% 475,511,000 0% 2,763,486,000 18.4% - 156,420,000 - 157,660,000 - 158,461,000 Dividends Declared $1.98 10% $1.80 10% $4.14 16% $3.58 19% $3.00 $1.64 TO OUR SHAREHOLDERS We are pleased to report that 2012 was another year of record sales and earnings for Genuine Parts Company. Total Company sales were $13.0 billion and this represents a 4.5% increase compared to 2011. Net earnings for the year were $648 million, which is a 15% increase compared to 2011, and earnings per share were $4.14 compared to $3.58 in the prior year, up 16%. The record level of earnings achieved in 2012 reﬂects the third consecutive year of double-digit earnings growth for the Company. We are proud of this accomplishment and pleased to share with you the good job that has been done by the GPC Team again this year. owned. Strategic acquisitions remain an important part of our ongoing growth strategy in each of our businesses and we anticipate additional acquisition opportunities in the year ahead. We also repurchased approximately 1.4 million shares of our Company stock in 2012 and we continue to view this as a good use of our cash. As of December 31, 2012, we were authorized to repurchase up to an additional 12.2 million shares, and we expect to continue making opportunistic share repurchases during 2013. OPERATIONS Revenue growth in 2012 proved to be more challenging as the year progressed. After being up 7% in the ﬁrst quarter, total Company revenue was up 5% in the second quarter and up 3% in the third and fourth quarters, and is reﬂective of slowing industry trends across each of our business segments. However, despite these industry trends, we were pleased to report respectable sales growth in three of our four businesses in 2012. The Automotive Group, our largest segment at 49% of 2012 revenues, reported a 4% sales increase for the year. Solid progress in NAPA AutoCare and Major Accounts, our two primary commercial initiatives, combined with the incremental volume from the Quaker City acquisition, were the primary drivers of our growth in 2012. We believe that the underlying fundamentals supporting demand in the automotive aftermarket remain favorable as we enter 2013. And, based on these positive industry fundamentals, combined with our internal growth initiatives, we are optimistic for another year of solid growth in our automotive business. Motion Industries, our industrial distribution company, represents 34% of our 2012 revenues, and this group increased sales by 7% for the year. The sales growth at Motion continues to be driven by the combination of effective growth initiatives and a generally healthy industrial economy, although we did observe slower levels of manufacturing growth over the last nine months of 2012, relative to 2010 and 2011. That said, manufacturing activity in North America appears stable today, and we expect 2013 to be another good year for our Industrial Group. Staying within the manufacturing segment of the economy, EIS, our electrical/electronic distribution company, represents 4% of our 2012 revenues and showed sales up 5% for the year. We anticipate another year of reasonable growth for EIS in 2013. L-R: Thomas C. Gallagher Chairman and Chief Executive Ofﬁcer; Paul D. Donahue President; Jerry W. Nix Vice Chairman and Chief Financial Ofﬁcer FINANCIAL STRENGTH Genuine Parts Company further strengthened its ﬁnancial condition in 2012 with increased net income, an expanded operating margin and a continued emphasis on effectively managing the balance sheet. Our ongoing asset management and working capital initiatives helped us to maintain a strong cash position, with cash of approximately $403 million at December 31, 2012. For the year, cash from operations totaled a record $906 million and, after dividends paid of $301 million and capital expenditures of $102 million, our free cash ﬂow was $503 million, also a new record for us. At December 31, 2012, our total debt was $500 million, which was unchanged from the prior year and continues to represent a modest 14% of total capitalization. During 2012, we added three new business investments to our operations, which positively impacted our overall results for the year. Effective January 1, 2012, the Company invested in a 30% stake in Exego, a leading Australasian aftermarket distributor with 430 locations across Australia and New Zealand and annual revenues of approximately $1 billion (US$). We were encouraged by the returns on this investment for the year. On February 1, 2012, we acquired Light Fabrication, a small strategic bolt on acquisition for our Electrical Group. Finally, on May 1, 2012, the Company acquired Quaker City Motor Parts Company, a long-standing NAPA distributor with annual revenues of approximately $300 million and headquartered in Middletown, Delaware. Quaker City was the last non-GPC owned NAPA member and serves close to 270 NAPA AUTO PARTS stores in the Mid-Atlantic states, of which approximately 140 are company S.P. Richards, our Ofﬁce Products Group, represents 13% of our 2012 revenues. This group reported ﬂat revenues in 2012 relative to 2011, as the industry-wide slowdown in ofﬁce products consumption continues to pressure this segment. On a positive note, the Ofﬁce Group produced its strongest sales results for the year in the fourth quarter, up 3%. We expect to face ongoing challenging conditions in the ofﬁce products industry again in 2013, and will rely on our internal sales initiatives for growth in this segment. 2 GPC DIRECTORS In April of 2013, J. Hicks Lanier will retire from our Board of Directors. Mr. Lanier is the Chairman of the Board of Directors of Oxford Industries, Inc. and its recently retired Chief Executive Ofﬁcer of 35 years. Hicks has served as a Director of our Company since 1995 and his wisdom and counsel over the years has helped us immensely. His presence on the Board will be missed, and we extend our sincerest gratitude and appreciation for his service. MANAGEMENT Over the last year, there were a number of management changes and promotions that we would like to share with you. First, we want to recognize Jerry W. Nix, our Vice Chairman and Chief Financial Ofﬁcer, who has announced his retirement, effective March 1, 2013. Jerry has served in most every ﬁnancial role in the Company over his 34 year career with us, including the last 13 years as CFO. His many contributions have been instrumental to the signiﬁcant growth and strong ﬁnancial performance of the Company over this time period. Jerry will remain on our Board and we look forward to his continued counsel in that role. We are forever grateful to Jerry for his dedicated service to Genuine Parts and wish him the very best for the future. We are pleased to tell you that upon Jerry’s announcement to retire, Carol B. Yancey was elected Executive Vice President of Finance and Corporate Secretary, and will assume the role of Chief Financial Ofﬁcer of the Company in March of this year. Ms. Yancey has held a variety of key ﬁnancial roles over her 22 year career with the Company and along the way has developed a tremendous acumen for both the fundamental and ﬁnancial aspects of the Company. Carol’s proven leadership and ﬁnancial expertise make her the right choice for this important position and we look forward to her many future contributions. We also want to advise you that at our November 2012 Board meeting, the Directors elected Lisa K. Hamilton to Vice President of Beneﬁts and Communications, David A. Haskett to Vice President and Corporate Controller and Napoleon B. Rutledge to Vice President and Assistant Treasurer. All three of these individuals have been with the Company for many years, and their well deserved promotions serve to strengthen our corporate human resources and ﬁnance teams. CONCLUSION We are proud of our many accomplishments throughout the organization in 2012, including another year of record sales and earnings for GPC. As we turn our focus to the new year, the effective internal growth initiatives across each of our four businesses, including plans for international expansion in automotive, give us sound reason to believe the Company is well positioned to take advantage of the positive opportunities we see ahead of us. We remain committed to our core objectives of growing sales and earnings, showing continued operating margin improvement, generating solid cash ﬂows and maintaining a strong balance sheet. Further progress in each of these important areas will keep the Company moving ahead and they will help to ensure another successful year in 2013. We want to take this opportunity to express our appreciation to our employees, customers, vendors and shareholders for their commitment to and ongoing support of Genuine Parts Company. Respectfully submitted, Thomas C. Gallagher Chairman and Chief Executive Ofﬁcer Jerry W. Nix Vice Chairman and Chief Financial Ofﬁcer Paul D. Donahue President February 26, 2013 DIVIDENDS 1.64 1.80 1.60 1.56 The Company has paid a cash dividend to shareholders every year since going public in 1948, and on February 18, 2013 the Board of Directors raised the cash dividend payable April 1, 2013 to an annual rate of $2.15 per share, up 9% from $1.98 in 2012. 1.46 1.35 1.25 1.20 This marks our 57th consecutive year of increased dividends paid to our shareholders. 2.15 1.98 DIVIDENDS PER SHARE in dollars 3 AUTOMOTIVE PARTS GROUP 49% OF TOTAL GPC NET SALES The Automotive Parts Group, the largest division of GPC, distributes automotive replacement parts, accessory items and service items throughout North America. Parts are sold primarily under the NAPA brand name, widely recognized for quality parts, quality service and knowledgeable people. This Group Operates: In the U.S.: 64 NAPA Distribution Centers 4 Balkamp Distribution Centers 4 Rayloc Facilities 2 Altrom Import Parts Distribution Centers 1 TW Heavy Vehicle Parts Distribution Center 1,100 Company Owned NAPA AUTO PARTS stores 15 TRACTION Heavy Duty Parts stores In Canada: 211 NAPA and Heavy Vehicle Facilities 14 Altrom Canada Import Parts Distribution Centers In Mexico: 19 Auto Todo Facilities In total, serves approx. 6,000 NAPA AUTO PARTS stores throughout the U.S. and approx. 700 wholesalers in Canada. These stores sell to both the Retail (DIY) and Commercial (DIFM) automotive aftermarket customer. MAJOR PRODUCTS: Access to over 427,000 items including: Automotive Replacement Parts Farm and Marine Supplies Paint and Reﬁnishing Supplies Tools and Equipment Automotive Accessories These products cover substantially all domestic and foreign motor vehicle models. Heavy Duty Parts Web site: napaonline.com Headquarters: Atlanta, GA OFFICE PRODUCTS GROUP 13% OF TOTAL GPC NET SALES The Ofﬁce Products Group distributes more than 50,000 items to nearly 4,000 business products resellers throughout the United States and Canada from a network of 41 distribution centers. Customers include independent business product resellers, large contract stationers, national ofﬁce supply superstores, mail order distributors, internet resellers and college bookstores. Locations: 34 Full-Stocking Distribution Centers 2 Furniture Only Distribution Centers 5 S.P. Richards Canada Distribution Centers MAJOR PRODUCTS: General Ofﬁce Supplies Technology Supplies and Accessories Ofﬁce Furniture Cleaning and Breakroom Supplies PROPRIETARY BRANDS OF PRODUCTS: Sparco Brand ofﬁce supplies Compucessory computer accessories Nature Saver recycled paper products Genuine Joe cleaning and breakroom supplies Business Source basic ofﬁce supplies Business Machines School Supplies Healthcare Products Safety & Industrial Products Lorell ofﬁce furniture Elite Image printer supplies Integra writing instruments Web site: sprichards.com Headquarters: Atlanta, GA 4 INDUSTRIAL PARTS GROUP 34% OF TOTAL GPC NET SALES The Industrial Parts Group offers access to more than 4.8 million industrial replacement parts and related supplies and serves over 150,000 MRO and OEM customers throughout North America and in all types of industries. These include the food and beverage, forest products, primary metal, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries. Strategically targeted specialty industries include power generation, wastewater treatment facilities, wind power generation, solar power, government projects, pipelines, railroads and ports, among others. Locations in U.S., Canada, Mexico and Puerto Rico: 14 Distribution Centers 509 Branches 50 Service Centers SERVICE CAPABILITIES INCLUDE: 24/7/365 product delivery Repair and fabrication Quality processes (ISO) Technical expertise Asset repair tracking MAJOR PRODUCTS: Bearings Mechanical and Electrical Power Transmission Industrial Automation Hose Hydraulic and Pneumatic Components Industrial Supplies Material Handling Application and design Inventory management and Logistics Training programs E-business technologies Storeroom and replenishment tracking Web site: motionindustries.com Headquarters: Birmingham, AL ELECTRICAL/ELECTRONIC MATERIALS GROUP 4% OF TOTAL GPC NET SALES The Electrical/Electronic Materials Group distributes process materials, production supplies, industrial MRO and value added fabricated parts to more than 20,000 customers, including original equipment manufacturers, motor repair shops and a broad variety of industrial assembly and specialty wire/cable markets in North America. Products cover over 100,000 items including wire and cable, insulating and conductive materials, assembly tools and test equipment. Locations in U.S., Canada , Mexico, Puerto Rico and Dominican Republic: 41 Branches and 4 Fabrication Facilities MAJOR PRODUCTS: Adhesives, Silicone and Encapsulants Hand Tools/Soldering Equipment Static Control Products Insulating Papers Solder and Chemicals Electrical Wire and Cable Magnet Wire Pressure Sensitive Tapes EMI/RFI Shielding Motors and Bearings Varnish and Resins Industrial MRO Materials Web site: eis-inc.com Headquarters: Atlanta, GA UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K Í ‘ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 Or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-5690 GENUINE PARTS COMPANY (Exact name of registrant as specified in its charter) Georgia (State or other jurisdiction of incorporation or organization) 2999 Circle 75 Parkway, Atlanta, Georgia (Address of principal executive offices) 58-0254510 (I.R.S. Employer Identification No.) 30339 (Zip Code) 770-953-1700 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $1 par value per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘ 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 ‘ No Í 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 Í No ‘ 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 Regu- lation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Í No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not con- tained 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. Í 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 Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ (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 ‘ No Í As of June 30, 2012, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $9,048,947,000 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. Class Outstanding at February 14, 2013 Common Stock, $1 par value per share 154,868,013 shares Specifically identified portions of the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 22, 2013 are incorporated by reference into Part III of this Form 10-K. ITEM 1. BUSINESS. PART I. Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials through our four operating segments, each described in more detail below. In 2012, business was conducted throughout the United States, in Canada and in Mexico from approximately 2,000 loca- tions. As of December 31, 2012, the Company employed approximately 31,900 persons. As used in this report, the “Company” refers to Genuine Parts Company and its subsidiaries, except as other- wise indicated by the context; and the terms “automotive parts” and “industrial parts” refer to replacement parts in each respective category. Financial Information about Segments. For financial information regarding segments as well as our geo- graphic areas of operation, refer to Note 11 of Notes to Consolidated Financial Statements beginning on page F-1. Available Information. The Company’s internet website can be found at www.genpt.com. The Company makes available, free of charge through its internet website, access to the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other reports, and any amendments to these documents, as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”). Additionally, our corporate governance guide- lines, codes of conduct and ethics, and charters of the Audit Committee and the Compensation, Nominating and Governance Committee of our Board of Directors, as well as information regarding our director nominating process and our procedure for shareholders and other interested parties to communicate with our Board of Direc- tors, are available on our website. In Part III of this Form 10-K, we incorporate certain information by reference to our proxy statement for our 2013 annual meeting of shareholders. We expect to file that proxy statement with the SEC on or about Febru- ary 26, 2013, and we will make it available online at the same time at http://www.proxydocs.com/gpc. Please refer to the proxy statement for the information incorporated by reference into Part III of this Form 10-K when it is available. AUTOMOTIVE PARTS GROUP The Automotive Parts Group, the largest division of the Company, distributes automotive parts and accessory items. In addition to over 427,000 available part numbers, the Company offers complete inventory, cataloging, marketing, training and other programs in the automotive aftermarket. The Company, as a result of its acquisition of Quaker City Motor Parts Co. in May 2012, is now the sole member of the National Automotive Parts Association (“NAPA”), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts. During 2012, the Company’s Automotive Parts Group included NAPA automotive parts distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”) owned and operated in the United States by the Company; NAPA and Traction automotive parts distribution centers and auto parts stores in the United States and Canada owned and operated by the Company and NAPA Canada/UAP Inc. (“NAPA Canada/UAP”), a wholly-owned subsidiary of the Company; auto parts stores and distribution centers in the United States operated by corporations in which the Company owned either a noncontrolling or controlling inter- est; auto parts stores in Canada operated by corporations in which UAP owns a 50% interest; import automotive parts distribution centers in the United States owned by the Company and operated by its Altrom America divi- sion; import automotive parts distribution centers in Canada owned and operated by Altrom Canada Corporation (“Altrom Canada”), a wholly-owned subsidiary of the Company; distribution centers in the United States owned by Balkamp, Inc. (“Balkamp”), a wholly-owned subsidiary of the Company; distribution facilities in the United States owned by the Company and operated by its Rayloc division; and automotive parts distribution centers and automotive parts stores in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. (“Auto Todo”), a wholly-owned subsidiary of the Company. 1 The Company has a 15% interest in Mitchell Repair Information (“MRIC”), a subsidiary of Snap-on Incorporated. MRIC is a leading automotive diagnostic and repair information company with over 40,000 North American subscribers linked to its services and information databases. MRIC’s core product, “Mitchell ON- DEMAND”, is a premier electronic repair information source in the automotive aftermarket. Effective January 1, 2012, the Company acquired a 30% investment in the Exego Group (“Exego”) for approximately $166 million (US$) in cash. Exego, headquartered in Melbourne, Australia, is a leading after- market distributor of automotive replacement parts and accessories in Australasia, with annual revenues of approximately $1 billion (US$) and a company-owned store footprint of more than 430 locations across Australia and New Zealand. In accordance with the purchase agreement, the Company has an option to acquire the remain- ing 70% interest in Exego at a later date, contingent upon Exego meeting certain earnings thresholds. In 2012, the Company accounted for this investment under the equity method of accounting. Effective May 1, 2012, the Company acquired Quaker City Motor Parts Co. (“Quaker City”) for approx- imately $343 million, net of cash acquired. Quaker City, headquartered in Middletown, Delaware, was a long standing NAPA distributor with annual revenues of approximately $300 million. Quaker City serves approx- imately 270 auto parts stores, of which approximately 140 are company-owned. The Company funded the acquisition with cash on hand and short-term borrowings under credit facilities. The Company’s NAPA automotive parts distribution centers distribute replacement parts (other than body parts) for substantially all motor vehicle makes and models in service in the United States, including imported vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles and farm vehicles. In addition, the Company distributes replacement parts for small engines, farm equipment and heavy duty equipment. The Company’s inventories also include accessory items for such vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform their own maintenance and parts installation. Although the Company’s domestic automotive operations purchase from approximately 100 different suppliers, approximately 53% of 2012 automotive parts inventories were purchased from 10 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers, which have protected the Company from inventory obsolescence. Distribution System. In 2012, the Company operated 64 domestic NAPA automotive parts distribution centers located in 41 states and approximately 1,100 domestic company-owned NAPA AUTO PARTS stores located in 46 states. At December 31, 2012, the Company owned either a noncontrolling or controlling interest in ten corporations, which operated approximately 58 auto parts stores in eight states. NAPA Canada/UAP, founded in 1926, is a Canadian leader in the distribution and marketing of replacement parts and accessories for automobiles and trucks. NAPA Canada/UAP employs approximately 3,600 people and operates a network of 12 distribution centers supplying approximately 595 NAPA stores and 103 Traction wholesalers. Traction is a supplier of parts to small and large fleet owners and operators and, together with NAPA stores, is a significant supplier to the mining and forestry industries. The NAPA stores and Traction wholesalers in Canada include approximately 184 company owned stores, 13 joint ventures and 27 progressive owners in which NAPA Canada/UAP owns a 50% interest and approximately 474 independently owned stores. NAPA and Traction operations supply bannered installers and independent installers in all provinces of Canada, as well as networks of service stations and repair shops operating under the banners of national accounts. UAP is a licensee of the NAPA® name in Canada. In Canada, Altrom Canada operates 14 import automotive parts distribution centers. In the United States, Altrom America operates two import automotive parts distribution centers. In Mexico, Auto Todo owns and operates 11 distribution centers, four auto parts stores and four tire centers. Auto Todo is a licensee of the NAPA® name in Mexico. The Company’s domestic distribution centers serve approximately 4,900 independently owned NAPA AUTO PARTS stores located throughout the United States. NAPA AUTO PARTS stores, in turn, sell to a wide 2 variety of customers in the automotive aftermarket. Collectively, these independent automotive parts stores account for approximately 65% of the Company’s total U.S. Automotive sales and 25% of the Company’s total sales, with no automotive parts store or group of automotive parts stores with individual or common ownership accounting for more than 0.25% of the total sales of the Company. Products. Distribution centers have access to over 427,000 different parts and related 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 they are received. The majority of sales are paid from statements with varied terms and conditions. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA® name, a mark licensed to the Company by NAPA, which is important to the sales and marketing of these prod- ucts. Traction sales also include products distributed under the HD Plus name, a proprietary line of automotive parts for the heavy duty truck market. Related Operations. Balkamp, a wholly-owned subsidiary of the Company, distributes a wide variety of replacement parts and accessory items for passenger cars, heavy-duty vehicles, motorcycles and farm equipment. In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions. Balkamp packages many of the 63,000 products, which constitute the “Balkamp” line of products that are distributed through the NAPA system. These products are categorized into over 240 different product groups purchased from approx- imately 450 domestic suppliers and 100 foreign manufacturers. Balkamp has two distribution centers located in Plainfield, Indiana, and West Jordan, Utah. In addition, Balkamp operates two redistribution centers that provide the NAPA system with over 1,500 SKUs of oils, chemicals and procurement items. BALKAMP®, a federally registered trademark, is important to the sales and marketing promotions of the Balkamp organization. The Company, through its Rayloc division, operates four facilities where certain small automotive parts are distributed through the NAPA system under the NAPA® brand name. Rayloc® is a mark licensed to the Com- pany by NAPA. The Company’s Heavy Vehicle Parts Group operates as TW Distribution, with one warehouse location in Atlanta, Georgia, which serves 23 Traction Heavy Duty parts stores in the United States, of which 15 are company-owned and eight are independently owned. This group distributes heavy vehicle parts through the NAPA system and direct to small fleet owners and operators. Segment Data. In the years ended December 31, 2012 and 2011, sales from the Automotive Parts Group were approximately 49% of the Company’s net sales, as compared to 50% in 2010. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1. Service to NAPA AUTO PARTS Stores. The Company believes that the quality and the range of services provided to its automotive parts customers constitute a significant advantage for its automotive parts distribution system. Such services include fast and frequent delivery, parts cataloging (including the use of electronic NAPA AUTO PARTS catalogs) and stock adjustment through a continuing parts classification system which, as ini- tiated by the Company from time to time, allows independent retailers (“jobbers”) to return certain merchandise on a scheduled basis. The 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 is available through TAMS® (Total manuals and training programs. Point of sale/inventory management Automotive Management Systems), a computer system designed and developed by the Company for the NAPA AUTO PARTS stores. The Company, has developed and refined an inventory classification system to determine optimum dis- tribution center and auto parts store inventory levels for automotive parts stocking based on automotive registra- tions, usage rates, production statistics, technological advances and other similar factors. This system, which undergoes continuous analytical review, is an integral part of the Company’s inventory control procedures and the Company comprises inventory management important services feature that the an of 3 makes available to its NAPA AUTO PARTS store customers. Over the last 20 years, losses to the Company from obsolescence have been insignificant and the Company attributes this to the successful operation of its classi- fication system, which involves product return privileges with most of its suppliers. Competition. The automotive parts distribution business is highly competitive. The Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those that they build themselves), automobile dealers, warehouse clubs and large automotive parts retail chains. In addition, the Company competes with the distributing outlets of parts manufacturers, oil compa- nies, mass merchandisers, including national retail chains, and with other parts distributors and retailers. The Automotive Parts Group competes primarily on product offering, service, brand recognition and price. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.” NAPA. The Company is the sole member of the National Automotive Parts Association, a voluntary association formed in 1925 to provide nationwide distribution of automotive parts. NAPA, which neither buys nor sells automotive parts, functions as a trade association whose members in 2012 owned and operated 64 dis- tribution centers located throughout the United States. NAPA develops marketing concepts and programs that may be used by its members which, at December 31, 2012, includes only the Company. It is not involved in the chain of distribution. Among the automotive lines within the NAPA system that the Company purchases and distributes are cer- tain lines designated, cataloged, advertised and promoted as “NAPA” lines. The Company is not required to purchase any specific quantity of parts so designated and may, and does, purchase competitive lines from other supply sources. The Company uses the federally registered trademark NAPA® as part of the trade name of its 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 the former members of NAPA, 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 the Company and former 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 cus- tomers or determining the number and location of, or arrangements with, auto parts customers. INDUSTRIAL PARTS GROUP The Industrial Parts Group is operated as Motion Industries, Inc. (“Motion”), a wholly-owned subsidiary of the Company headquartered in Birmingham, Alabama. Motion distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission, industrial automation, hose, hydraulic and pneumatic components, industrial supplies and material handling products to MRO (maintenance, repair and operation) and OEM (original equipment manufacturer) customers throughout the United States, Canada and Mexico. In Canada, industrial parts are distributed by Motion Industries (Canada), Inc. (“Motion Canada”). The Mexican market is served by Motion Mexico S de RL de CV (“Motion Mexico”). These organizations operate in the Company’s North American structure. As of December 31, 2012, the Industrial Parts Group served more than 150,000 customers in all types of industries located throughout North America, including the food and beverage, forest products, primary metal, pulp and paper, mining, automotive, oil and gas, 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 manu- facturing and processing industries with access to a database of 4.8 million parts. Additionally, Motion provides U.S. government agencies access to approximately 585,000 products and replacement parts through a Govern- ment Services Administration (GSA) schedule. 4 The Industrial Parts Group provides customers with supply chain efficiencies achieved through inventory management and logistical solutions coupled with Motion’s 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 proc- esses. 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 operated 509 branches, 14 distribution centers and 50 service centers as of December 31, 2012. The distribution centers stock and distribute more than 240,000 different items purchased from more than 1,100 different suppliers. The service centers provide hydraul- ic, hose and mechanical repairs for customers. Approximately 50% of 2012 total industrial product purchases were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s branches located in 48 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. 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. Segment Data. In the year ended December 31, 2012, sales from the Company’s Industrial Parts Group approximated 34% of the Company’s net sales, as compared to 33% in 2011 and 31% in 2010. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1. Competition. The industrial parts distribution business is highly competitive. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, general line distributors and others who provide similar services. To a lesser extent, the Industrial Parts Group competes with manufacturers that sell directly to the customer. The Industrial Parts Group competes primarily on the breadth of product offerings, serv- ice and price. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.” OFFICE PRODUCTS GROUP The Office Products Group, operated through S. P. Richards Company (“S. P. Richards”), a wholly owned subsidiary of the Company, is headquartered in Atlanta, Georgia. S. P. Richards is engaged in the wholesale dis- tribution of a broad line of office and other business related products through a diverse customer base of resellers. These products are used in homes, businesses, schools, offices, and other institutions. Office products 5 fall into the general categories of computer supplies, imaging products, office furniture, office machines, general office products, school supplies, cleaning and breakroom supplies, safety and security items, and healthcare products. The Office Products Group is represented in Canada through S. P. Richards Canada, a wholly-owned sub- sidiary of the Company headquartered near Toronto, Ontario. S. P. Richards Canada services office product resellers throughout Canada from locations in Vancouver, Toronto, Calgary, Edmonton and Winnipeg. Distribution System. The Office Products Group distributes more than 50,000 items to over 4,000 business product resellers throughout the United States and Canada from a network of 41 distribution centers. In 2012, the Company merged its Greensboro and Charlotte, North Carolina operations into one highly automated, state-of- the-art facility. This group’s network of strategically located distribution centers provides overnight delivery of the Company’s comprehensive product offering. Approximately 50% of the Company’s 2012 total office prod- ucts purchases were made from 10 major suppliers. The Office Products Group sells to a wide variety of resellers of business products. These resellers include independently owned office product dealers, national office product superstores and mass merchants, large con- tract stationers, mail order companies, internet resellers, college bookstores, military base stores, office furniture dealers, value-added technology resellers, business machine dealers, janitorial and sanitation supply distributors and safety product resellers. Resellers are offered comprehensive marketing programs, which include print and electronic catalogs and flyers, electronic content for reseller websites, and education and training resources. In addition, market analytics programs are made available to qualified resellers. Products. The Office Products Group distributes computer supplies including storage media, printer sup- plies and computer accessories; office furniture including desks, credenzas, chairs, chair mats, partitions, file cabinets and computer furniture; office machines including telephones, answering machines, calculators, fax machines, multi-function copiers, printers, digital cameras, televisions, laminators and shredders; general office supplies including desk accessories, business forms, accounting supplies, binders, filing supplies, report covers, writing instruments, envelopes, note pads, copy paper, mailroom supplies, drafting supplies and audiovisual supplies; school supplies including bulletin boards, teaching aids and art supplies; healthcare products including exam room supplies and accessories; janitorial supplies including cleaning supplies, paper towels and trash can liners and safety supplies; and breakroom supplies including napkins, utensils, snacks and beverages. S. P. Richards has return privileges with most of its suppliers, which have protected the Company from inventory obsolescence. While the Company’s inventory includes products from nearly 600 of the industry’s leading manufacturers worldwide, S. P. Richards also markets products under its eight proprietary brands. These brands include: Spar- co™, an economical line of office supply basics; Compucessory®, a line of computer accessories; Lorell™, a line of office furniture; NatureSaver®, an offering of recycled products; Elite Image®, a line of new and remanufac- tured toner cartridges, premium papers and labels; Integra™, a line of writing instruments; Genuine Joe®, a line of cleaning and breakroom products; and Business Source®, a line of basic office supplies available only to independent resellers. Through the Company’s FurnitureAdvantage™ program, S. P. Richards provides resellers with an additional 7,000 furniture items made available to consumers in 7 to 10 business days. The Company also offers PrintSmart™, a fully featured managed print solution allowing resellers to serve the changing needs of the print environment. Segment Data. In the year ended December 31, 2012, sales from the Company’s Office Products Group approximated 13% of the Company’s net sales, as compared to 14% in 2011 and 15% in 2010. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1. Competition. The office products distribution business is highly competitive. In the distribution of its product offering to resellers, S. P. Richards competes with many other wholesale distributors, as well as with certain manufacturers of office products. S. P. Richards competes primarily on price, product offerings, service, marketing programs and brand recognition. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.” 6 ELECTRICAL/ELECTRONIC MATERIALS GROUP The Electrical/Electronic Materials Group was formed on July 1, 1998 through the acquisition of EIS, Inc. (“EIS”), a wholly-owned subsidiary of the Company headquartered in Atlanta, Georgia. This Group distributes materials to more than 20,000 electrical and electronic manufacturers, as well as industrial assembly and spe- cialty wire/cable markets in North America. With 41 branch locations in the United States, Puerto Rico, the Dominican Republic, Mexico and Canada, this Group distributes over 100,000 items including wire and cable, insulating and conductive materials, assembly tools and test equipment. EIS also has four manufacturing facili- ties that provide custom fabricated parts. Effective February 1, 2012, the Company acquired Light Fabrications Inc., a fabricator of flexible materials with one U.S. location in Rochester, New York and annual revenues of approximately $18 million. Distribution System. The Electrical/Electronic Materials Group provides distribution services to OEM’s, motor repair shops, specialty wire and cable users and a broad variety of industrial assembly markets. EIS actively utilizes its e-commerce Internet site to present its products to customers while allowing these on-line visitors to conveniently purchase from a large product assortment. Electrical and electronic, industrial assembly, and wire/cable products are distributed from warehouse loca- tions in major user markets throughout the United States, as well as in Mexico, Canada, Puerto Rico, and the Dominican Republic. EIS has return privileges with some of its suppliers, which have protected the Company from inventory obsolescence. Products. The Electrical/Electronic Materials Group distributes a wide variety of products to customers from over 350 vendors. These products include custom fabricated flexible materials that are used as components within a customer’s manufactured finished product in a variety of market segments. Among the products dis- tributed and fabricated are such items as magnet wire, conductive materials, electrical wire and cable, insulating and shielding materials, assembly tools, test equipment, adhesives and chemicals, pressure sensitive tapes, solder, anti-static products and thermal management products. To meet the prompt delivery demands of its customers, this Group maintains large inventories. The majority of sales are on open account. Approximately 45% of 2012 total Electrical/Electronic Materials Group purchases were made from 10 major suppliers. Integrated Supply. The Electrical/Electronic Materials Group’s integrated supply programs are a part of the marketing strategy, as a greater number of customers — especially national accounts — are given the oppor- tunity to participate in this low-cost, high-service capability. The Group developed AIMS (Advanced Inventory Management System), a totally integrated, highly automated solution for inventory management. The Group’s Integrated Supply offering also includes AIMS EASI, an electronic vending dispenser used to eliminate costly tool cribs, or in-house stores, at customer warehouse facilities. Segment Data. In the years ended December 31, 2012, 2011 and 2010, sales from the Company’s Elec- trical/Electronic Materials Group approximated 4% of the Company’s net sales. For additional segment information, see Note 11 of Notes to Consolidated Financial Statements beginning on page F-1. Competition. The electrical and electronics distribution business is highly competitive. The Electrical/ Electronic Materials Group competes with other distributors specializing in the distribution of electrical and elec- tronic products, general line distributors and, to a lesser extent, manufacturers that sell directly to customers. EIS competes primarily on factors of price, product offerings, service and engineered solutions. Further information regarding competition in the industry is set forth in “Item 1A. Risk Factors — We Face Substantial Competition in the Industries in Which We Do Business.” ITEM 1A. RISK FACTORS. FORWARD-LOOKING STATEMENTS Some statements in this report, as well as in other materials we file with the SEC or otherwise release to the public and in materials that we make available on our website, constitute forward-looking statements that are 7 subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. Forward- looking statements may relate, for example, to future operations, prospects, strategies, financial condition, eco- nomic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated in our forward-looking statements as a result of various important factors. Such factors include, but are not limited to, those discussed below. Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-Q, 8-K and other reports to the SEC. Set forth below are the material risks and uncertainties that, if they were to occur, could materially and adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report and in the other public statements we make. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, finan- cial condition, results of operations or the trading price of our securities. Our business will be adversely affected if demand for our products slows. Our business depends on customer demand for the products that we distribute. Demand for these products depends on many factors. With respect to our automotive group, the primary factors are: • the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for main- tenance and repair; • the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the war- ranty or maintenance offered on new vehicles; • the number of vehicles in current service that are six years old and older, as these vehicles are typically no longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair than newer vehicles; • gas prices, as increases in gas prices may deter consumers from using their vehicles; • changes in travel patterns, which may cause consumers to rely more on other transportation; • restrictions on access to diagnostic tools and repair information imposed by the original vehicle manu- facturers or by governmental regulation, as consumers may be forced to have all diagnostic work, repairs and maintenance performed by the vehicle manufacturers’ dealer networks; and • the economy generally, which in declining conditions may cause consumers to defer vehicle maintenance and repair and defer discretionary spending. With respect to our industrial parts group, the primary factors are: • the level of industrial production and manufacturing capacity utilization, as these indices reflect the need for industrial replacement parts; • changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; • the consolidation of certain of our manufacturing customers and the trend of manufacturing operations being moved overseas; and 8 • the economy in general, which in declining conditions may cause reduced demand for industrial output. With respect to our office products group, the primary factors are: • the level of unemployment, especially as it relates to white collar and service jobs, as this impacts the need for business products; and • the economy in general, which in declining conditions may cause reduced demand for office products consumption. With respect to our electrical/electronic materials group, the primary factors are: • changes in manufacturing reflected in the level of the Institute for Supply Management’s Purchasing Managers Index, as an index reading of 50 or more implies an expanding manufacturing economy, while a reading below 50 implies a contracting manufacturing economy; and • the economy in general, which in declining conditions may cause reduced demand for industrial output. Uncertainty and/or deterioration in general macro-economic conditions, including unemployment, inflation or deflation, high energy costs, uncertain credit markets, or other economic conditions, could have a neg- ative impact on our business, financial condition, results of operations and cash flows. Our business and operating results may in the future be adversely affected by uncertain global economic conditions, including instability in credit markets, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that could affect the global economy. Both our commercial and retail customers may experience deterioration of their financial resources, which could result in existing or potential customers delaying or canceling plans to purchase our products. Our vendors could experi- ence similar conditions, which could impact their ability to fulfill their obligations to us. Future weakness in the global economy could adversely affect our results of operations, financial condition and cash flows in future periods. We depend on our relationships with our vendors, and a disruption of our vendor relationships or a dis- ruption in our vendors’ operations could harm our business. As a distributor of automotive parts, industrial parts, office products and electrical/electronic materials, our business depends on developing and maintaining close and productive relationships with our vendors. We depend on our vendors to sell us quality products at favorable prices. Many factors outside our control, including, with- out limitation, raw material shortages, inadequate manufacturing capacity, labor disputes, transportation dis- ruptions or weather conditions, could adversely affect our vendors’ ability to deliver to us quality merchandise at favorable prices in a timely manner. Furthermore, financial or operational difficulties with a particular vendor could cause that vendor to increase the cost of the products or decrease the quality of the products we purchase from it. Vendor consolidation could also limit the number of suppliers from which we may purchase products and could materially affect the prices we pay for these products. In our automotive business, the number of ven- dors could decrease considerably, and the prices charged to us by the remaining vendors could increase, to the extent that vehicle production slows due to a decline in consumer spending and, possibly, the failure of one or more of the large automobile manufacturers. We would suffer an adverse impact if our vendors limit or cancel the return privileges that currently protect us from inventory obsolescence. We face substantial competition in the industries in which we do business. The sale of automotive and industrial parts, office products and electrical materials is highly competitive and impacted by many factors, including name recognition, product availability, customer service, anticipating changing customer preferences, store location, and pricing pressures. Because we seek to offer competitive prices, if our competitors reduce their prices, we may be forced to reduce our prices, which could result in a material decline in our revenues and earnings. Increased competition among distributors of automotive and industrial parts, office products and electronic materials, including internet-related initiatives, could cause a material adverse effect on our results of operations. The Company anticipates no decline in competition in any of its four business segments in the foreseeable future. 9 In particular, the market for replacement automotive parts is highly competitive and subjects us to a wide variety of competitors. We compete primarily with national and regional auto parts chains, independently owned regional and local automotive parts and accessories stores, automobile dealers that supply manufacturer replace- ment parts and accessories, mass merchandisers and wholesale clubs that sell automotive products and regional and local full service automotive repair shops. Furthermore, the automotive aftermarket has experienced con- solidation in recent years. Consolidation among our competitors could further enhance their financial position, provide them with the ability to provide more competitive prices to customers for whom we compete, and allow them to achieve increased efficiencies in their consolidated operations that enable them to more effectively compete for customers. If we are unable to continue to develop successful competitive strategies or if our com- petitors develop more effective strategies, we could lose customers and our sales and profits may decline. We may not be able to successfully implement our business initiatives in each of our four business segments to grow our sales and earnings, which could adversely affect our business, financial condition, results of operations and cash flows. including the introduction of new and expanded product We have implemented numerous initiatives in each of our four business segments to grow sales and earn- ings, lines, geographic expansion (including acquisitions), sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. If we are unable to implement these initiatives efficiently and effectively, or if these ini- tiatives are unsuccessful, our business, financial condition, results of operations and cash flows could be adversely affected. Successful implementation of these initiatives also depends on factors specific to the automotive parts industry and the other industries in which we operate and numerous other factors that may be beyond our control. In addition to the other risk factors contained in this “Item 1A. Risk Factors”, adverse changes in the following factors could undermine our business initiatives and have a material adverse affect on our business, financial condition, results of operations and cash flows: • the competitive environment in our end markets may force us to reduce prices below our desired pricing level or to increase promotional spending; • our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner; • our ability to successfully enter new markets; • our ability to effectively manage our costs; • our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations; and • the economy in general. Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs. We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various actions. The damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this could have a material adverse affect on our business, financial condition, results of operations and cash flows. Additionally, we are subject to numerous federal, state and local laws and governmental regulations relating to environmental protection, product quality standards, building and zoning requirements, as well as employment law matters. If we fail to comply with existing or future laws or regulations, we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital expenses could increase due to remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations. 10 ITEM 1B. UNRESOLVED STAFF COMMENTS. Not applicable. ITEM 2. PROPERTIES. The Company’s headquarters and Automotive Parts Group headquarters are located in two office buildings owned by the Company in Atlanta, Georgia. The Company’s Automotive Parts Group currently operates 64 NAPA Distribution Centers in the United States distributed among ten geographic divisions. Approximately 90% of the distribution center properties are owned by the Company. At December 31, 2012, the Company operated approximately 1,100 NAPA AUTO PARTS stores located in 46 states, and the Company owned either a noncontrolling or controlling interest in 58 additional auto parts stores in eight states. Other than NAPA AUTO PARTS stores located within Company owned distribution centers, the majority of the automotive parts stores in which the Company has an ownership interest are operated in leased facilities. In addition, NAPA Canada/UAP operates 12 distribution centers and approximately 184 automotive parts and Traction stores in Canada, excluding any joint ventures. Auto Todo operates eleven distribution centers and eight stores and tire centers in Mexico. These operations are primarily conducted in leased facilities. The Company’s Automotive Parts Group also operates four Balkamp distribution/redistribution centers, four Rayloc distribution facilities and two transfer and shipping facilities. Nearly all of the Balkamp and Rayloc oper- ations are conducted in facilities owned by the Company. Altrom Canada operates 14 import parts distribution centers and Altrom America operates two import parts distribution centers. The Heavy Vehicle Parts Group operates one TW distribution center, which serves 23 Traction stores of which 15 are company owned and located in the U.S. These operations are conducted in leased facilities. The Company’s Industrial Parts Group, operating through Motion and Motion Canada, operates 14 dis- tribution centers, 50 service centers and 509 branches. Approximately 90% of these branches are operated in leased facilities. The Company’s Office Products Group operates 36 facilities in the United States and five facilities in Canada distributed among the Group’s five geographic divisions. Approximately 75% of these facilities are operated in leased buildings. The Company’s Electrical/Electronic Materials Group operates in 39 locations in the United States, one location in Puerto Rico, one location in the Dominican Republic, three locations in Mexico and one location in Canada. All of this Group’s 45 facilities are operated in leased buildings except one facility, which is owned. We believe that our facilities on the whole are in good condition, are adequately insured, are fully utilized and are suitable and adequate for the conduct of our current operations. For additional information regarding rental expense on leased properties, see Note 4 of Notes to Con- solidated Financial Statements beginning on page F-1. ITEM 3. LEGAL PROCEEDINGS. The Company is subject to various legal and governmental proceedings, many involving routine litigation incidental to the businesses, including approximately 3,000 product liability lawsuits resulting from its national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts distributed by the Company. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material effect on the Company’s business, results of operations or financial condition. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 11 PART II. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Regarding Common Stock The 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 per quarter as reported on the New York Stock Exchange and dividends per share of common stock paid during the last two fiscal years: Sales Price of Common Shares 2012 2011 High Low High Low Quarter First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $66.43 66.50 65.18 66.90 $60.84 55.58 58.73 59.53 $55.70 55.99 57.66 62.21 $49.86 49.74 46.10 48.53 Quarter First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends Declared per Share 2012 2011 $0.495 0.495 0.495 0.495 $0.450 0.450 0.450 0.450 12 Stock Performance Graph Set forth below is a line graph comparing the yearly dollar change in the cumulative total shareholder return on the Company’s Common Stock against the cumulative total shareholder 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, 2007 and ended December 31, 2012. This graph assumes that $100 was invested on December 31, 2007 in Genuine Parts Company Common Stock, the S&P 500 Stock Index (the Company is a member of the S&P 500, and its cumulative total shareholder return went into calculating the S&P 500 results set forth in the graph) and the peer group composite index as set forth below and assumes reinvest- ment of all dividends. Comparison of five year cumulative total shareholder return Genuine Parts Company S&P 500 Peer Index S R A L L O D 200 180 160 140 120 100 80 60 40 20 0 2007 2008 2009 2010 2011 2012 Genuine Parts Company, S&P 500 Index and peer group composite index Cumulative Total Shareholder Return $ at Fiscal Year End Genuine Parts Company S&P 500 Peer Index 2007 100.00 100.00 100.00 2008 84.96 63.00 56.86 2009 89.37 79.67 81.33 2010 2011 2012 125.59 154.82 166.05 91.67 93.60 108.58 117.88 113.08 129.44 In constructing the peer group composite index (“Peer Index”) for use in the stock performance graph above, the Company used the shareholder returns of various publicly held companies (weighted in accordance with each company’s stock market capitalization at December 31, 2007 and including reinvestment of dividends) that compete with the Company in three industry segments: automotive parts, industrial parts and office products (each group of companies included in the Peer Index as competing with the Company in a separate industry segment is hereinafter referred to as a “Peer Group”). Included in the automotive parts Peer Group are those companies making up the Dow Jones U.S. Auto Parts Index (the Company is a member of such industry group, and its individual shareholder return was included when calculating the Peer Index results set forth in the performance graph). Included in the industrial parts Peer Group are Applied Industrial Technologies, Inc. and Kaman Corporation and included in the office products Peer Group is United Stationers Inc. The Peer Index does not break out a separate electrical/electronic peer group due to the fact that there is currently no true market comparative to EIS. The electrical/electronic component of sales is redistributed to the Company’s other seg- ments on a pro rata basis to calculate the final Peer Index. 13 In determining the Peer Index, each 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 2007 2008 2009 2010 2011 2012 Automotive Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Industrial Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Office Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Electrical/Electronic Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holders 49% 48% 52% 50% 49% 49% 31% 32% 29% 31% 33% 34% 16% 16% 16% 15% 14% 13% 4% 4% 4% 4% 4% 3% As of December 31, 2012, there were 5,246 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 Securities All of our sales of securities in 2012 were registered under the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities The following table provides information about the purchases of shares of the Company’s common stock during the three month period ended December 31, 2012: Period October 1, 2012 through October 31, 2012 . . . November 1, 2012 through November 30, Total Number of Shares Purchased(1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs 79,924 $60.47 75,700 12,491,202 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415,748 $61.20 303,145 12,188,057 December 1, 2012 through December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,127 665,799 $64.26 $61.90 1,352 380,197 12,186,705 12,186,705 (1) Includes shares surrendered by employees to the Company to satisfy tax withholding obligations in con- nection with the vesting of shares of restricted stock, the exercise of stock options and/or tax withholding obligations. (2) On November 17, 2008, the Board of Directors announced that it had authorized the repurchase of 15 million shares. The authorization for this repurchase plan continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 12.2 million shares authorized in the 2008 plan remain available to be repurchased by the Company. There were no other pub- licly announced plans as of December 31, 2012. 14 ITEM 6. SELECTED FINANCIAL DATA. The following table sets forth certain selected historical financial and operating data of the Company as of the dates and for the periods indicated. The following selected financial data are qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes and other financial information beginning on page F-1, as well as in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report. Year Ended December 31, 2012 2011 2010 2009 2008 Net sales . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . . . . . . Operating and non-operating expenses, net . . . . . . . . . . . . . . . . . . Income before taxes . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . Weighted average common shares outstanding during year — assuming dilution . . . . . . . . . . . . . . Per common share: Diluted net income . . . . . . . . . . . . . Dividends declared . . . . . . . . . . . . . December 31 closing stock price . . Long-term debt, less current $13,013,868 9,235,777 2,759,159 1,018,932 370,891 648,041 156,420 4.14 1.98 63.58 $ $ (In thousands, except per share data) $11,207,589 7,954,645 $12,458,877 8,852,837 $10,057,512 7,047,750 $11,015,263 7,742,773 2,715,234 890,806 325,690 565,116 2,491,161 761,783 286,272 475,511 $ 2,365,597 644,165 244,590 399,575 $ 2,504,022 768,468 293,051 475,417 $ 157,660 158,461 159,707 162,986 $ 3.58 1.80 61.20 $ 3.00 1.64 51.34 $ 2.50 1.60 37.96 2.92 1.56 37.86 $ $ maturities . . . . . . . . . . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . 250,000 3,008,179 $ 6,807,061 500,000 2,753,591 $ 6,202,774 250,000 2,763,486 $ 5,788,227 500,000 2,590,144 $ 5,327,872 500,000 2,354,150 $ 5,109,533 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW Genuine Parts Company is a service organization engaged in the distribution of automotive parts, industrial parts, office products and electrical/electronic materials. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. In 2012, the Company conducted business throughout the United States, Canada, Mexico and Puerto Rico from approximately 2,000 locations. We recorded consolidated net sales of $13.0 billion for the year ended December 31, 2012, an increase of 4.5% compared to $12.5 billion in 2011. Consolidated net income for the year ended December 31, 2012 was $648 million, up 15% from $565 million in 2011. The Company’s internal growth initiatives and effective cost management, which we discuss further below, served to drive our solid financial performance for the year, despite the slowing industry trends across our businesses as the year progressed. The 4.5% sales growth in 2012 follows an 11% increase in revenues in both 2010 and 2011. Our 15% increase in net income follows a 19% increase in net income in 2010 and 2011. Throughout the two year period preceding 2012, we experienced strong and steady growth in three of our four business segments, as conditions in these industries improved significantly from the depressed levels experienced in 2009. These favorable con- ditions began to moderate following the first quarter of 2012, which created a more challenging sales environ- ment over the balance of the year. Over the three year period of 2010 through 2012, our financial performance was also positively impacted by a variety of initiatives we implemented to grow sales and earnings in each of our four businesses. Examples of such initiatives include strategic acquisitions, the introduction of new and expanded 15 product lines, geographic expansion, sales to new markets, enhanced customer marketing programs and a variety of gross margin and cost savings initiatives. We discuss these initiatives further below. With regard to the December 31, 2012 consolidated balance sheet, the Company’s cash balance of $403 million was down from cash of $525 million at December 31, 2011, due primarily to two investments in our automotive business during 2012, which are discussed further under Liquidity and Capital Resources. The Company’s strong cash position was supported by the increase in net income and ongoing working capital man- agement in 2012. Accounts receivable increased by approximately 2%, which is below our sales increase in the fourth quarter of the year, and inventory was up by just under 7%, primarily from acquisitions. Accounts payable increased $241 million or 17% from the prior year. The significant increase in this line item is due primarily to improved payment terms with certain suppliers. Total debt outstanding at December 31, 2012 was unchanged from $500 million at December 31, 2011. RESULTS OF OPERATIONS Our results of operations are summarized below for the three years ended December 31, 2012, 2011 and 2010. Year Ended December 31, 2012 2011 2010 Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . Net Sales (In thousands except per share data) $12,458,877 3,606,040 565,116 3.58 $13,013,868 3,778,091 648,041 4.14 $11,207,589 3,252,944 475,511 3.00 Consolidated net sales for the year ended December 31, 2012 totaled $13.0 billion, a 4.5% increase from 2011 and driven by sales increases in three of our four business segments. Acquisitions in our Automotive and Electrical businesses contributed 2% to our sales growth and increased sales volume added approximately 2% to sales. The impact of product inflation varied by business, as, cumulatively, prices in 2012 were flat in the Auto- motive segment, up approximately 2% in the Industrial segment, flat in the Electrical segment and up approx- imately 3% in the Office segment. The Company is well positioned to improve sales again in 2013. Consolidated net sales for the year ended December 31, 2011 totaled $12.5 billion, an 11% increase from 2010. The Company showed sales growth in all four of our business segments in 2011. The increase in total sales volume for the year added approximately 9% to sales, while acquisitions and the effect of currency associated with our Canadian and Mexican businesses each contributed 1% as well. Cumulatively, prices in 2011 were up approximately 3% in the Automotive segment, up approximately 4% in the Industrial segment, up approximately 5% in the Electrical segment and up approximately 2% in the Office segment. Automotive Group Net sales for the Automotive Group (“Automotive”) were $6.3 billion in 2012, an increase of 4% from 2011. The increase in sales for the year was primarily due to the May 1, 2012 acquisition of Quaker City Motor Parts Co. (“Quaker City”), which contributed approximately 3% to sales. Additionally, Automotive achieved a positive comparable store sales increase of slightly more than 1%. Automotive sales were not materially impacted by product inflation or the effect of currency associated with our Canadian and Mexican businesses. In 2012, Automotive revenues were up 6% in the first quarter, then up 4% in the second quarter, up 2.5% in the third quarter and up 5% in the fourth quarter. We believe that the underlying fundamentals in the automotive aftermarket, including the overall aging of the vehicle populations, remain solid and will serve to drive increased demand for automotive aftermarket maintenance and supply items in 2013. Based on these fundamentals and the internal growth initiatives in our Automotive business, we expect to grow our sales for this group again in 2013. 16 Net sales for Automotive were $6.1 billion in 2011, an increase of 8% from 2010. Sales improved in 2011 due primarily to positive comparable stores sales growth of approximately 6%. Other factors impacting our Automotive sales for the year include higher transaction value associated with product inflation, which con- tributed approximately 1%, and the effect of currency associated with our Canadian and Mexican businesses, which positively impacted sales by approximately 1%. Automotive revenues were up 9% in the first, second and third quarters, and were up 6% in the fourth quarter. Industrial Group Net sales for Motion Industries, our Industrial Group (“Industrial”), were $4.5 billion in 2012, an increase of 7% compared to 2011. The positive impact of their internal sales initiatives, which drove higher sales volume, contributed 5% to sales. Higher transaction values in 2012 associated with product inflation added another 2% to sales. There was no material impact on sales from acquisitions and no effect of currency associated with our Canadian business, as in the prior year. The relative steadiness in the manufacturing sector of the economy served by Industrial was evidenced by sustained levels of manufacturing industrial production and capacity uti- lization for the year, overall, which this group tends to track. These indices did, however, show some slowing over the second half of 2012 relative to the first half. Consistent with this trend, Industrial revenues were up 12% in the first quarter of 2012, up 8% in the second quarter, then up 4.5% and 2% in the third and fourth quarters, respectively. We anticipate a stable manufacturing environment in the near term and this will provide us oppor- tunities to grow our Industrial business in 2013. Net sales for Industrial, were $4.2 billion in 2011, an increase of 19% compared to 2010. Factors con- tributing to the sales increase for this group include the positive impact of their internal sales initiatives, which drove sales volumes up approximately 11%. Also in 2011, sales were positively impacted by higher transaction values associated with product inflation of approximately 4%, acquisitions, which accounted for approximately 3% of Industrial’s sales growth for the year and the effect of currency associated with our Canadian business, which positively impacted sales by less than 1%. Industrial revenues were up 24% in the first quarter of 2011, up 19% in the second quarter, then up 18% and 13% in the third and fourth quarters, respectively. Office Group Net sales for S. P. Richards, our Office Products Group (“Office”), were $1.7 billion in 2012, flat with rev- enues in 2011. The industry-wide slowdown in office products consumption, which continues to pressure this segment, reflects the ongoing elevated levels of white collar unemployment, which the industry tends to track. In addition, other industry trends such as the declining demand for paper and paper based office products are neg- atively impacting the office products industry. Overall, sales volume in Office declined by 3% for the year, offset by higher transaction values associated with price inflation of approximately 3%. Sales decreased by 1% in the first, second and third quarters, and were up 3% in the fourth quarter of 2012. We expect to improve our sales volumes in 2013, as the economy recovers further and white collar unemployment declines. Net sales for Office were $1.7 billion in 2011, up 3% from 2010. Office revenues began to stabilize in 2010 relative to prior year trends, and this group was able to make further progress in 2011. Higher transaction values due to product inflation of approximately 2% contributed to our sales growth. We were also pleased to report a 1% increase in sales volume for this business, despite the ongoing difficult environment for the office products industry, which we attribute to the generally slow recovery of white collar employment levels in the U.S. Sales increased approximately 5%, 4% and 3% in the first, second and third quarters, respectively, and were down 1% in the fourth quarter of 2011. Electrical Group Net sales for EIS, our Electrical and Electronic Group (“Electrical”), increased to $583 million in 2012, up 4.5% from 2011. The increase in revenues is due primarily to acquisitions, which contributed approximately 8% to our sales growth in 2012. A 2.5% decrease in sales volume and a 1% negative impact from copper pricing for the year served to offset this increase. Electrical’s customer base experienced slightly weaker manufacturing 17 expansion during the year, as measured by the Institute for Supply Management’s Purchasing Managers Index. Sales for Electrical increased by 5% in the first quarter, and were up 9% in the second quarter, up 5% in the third quarter and were down 2% in the fourth quarter. Based on the underlying assumption for stronger manufacturing expansion in 2013, the Company currently anticipates another year of reasonable growth in the Electrical busi- ness. Net sales for Electrical increased to $558 million in 2011, up 24% from 2010. Acquisitions contributed approximately 11% to Electrical’s sales growth, and the effect of copper pricing had a 3% positive sales impact for the year. The increase in sales volume, supported by continued manufacturing expansion during the year, contributed 5% to sales in 2011 and product inflation, which resulted in higher transaction values, added another 5% to sales. Electrical sales increased by 39% in the first quarter, followed by increases of 28% in the second quarter, 22% in the third quarter and 10% in the fourth quarter. Cost of Goods Sold The Company includes in Cost of Goods sold the actual cost of merchandise, which represents the vast majority of this line item. Other costs in Cost of Goods sold include warranty costs and in-bound freight from the supplier, net of any vendor allowances and incentives. Cost of goods sold was $9.2 billion, $8.9 billion and $8.0 billion in 2012, 2011 and 2010, respectively. The 4% increase in cost of goods sold from 2011 to 2012 is directly related to the sales increase for the same period, as actual costs remained steady. Cost of goods sold represented 71.0% of net sales in 2012, 71.1 % of net sales in 2011 and 71.0% of net sales in 2010. The slight decrease in cost of goods sold as a percent of net sales for 2012 reflects our gross margin initiatives to enhance our pricing strategies, promote and sell higher margin products and minimize material acquisition costs. In 2011, these initiatives were offset by the negative impact of certain pricing adjustments implemented in Automotive as well as ongoing competitive pricing pressures in the Industrial and Office businesses, hence the lower gross margin level in 2011 when compared to 2010. In 2012, only the Industrial and Office business segments experienced vendor price increases. In the pre- vious two years, all four of our business segments experienced vendor price increases although, in 2010, the Automotive and Office increases were relatively immaterial. In any year where we experience price increases, we are able to work with our customers to pass most of these along to them. Operating Expenses The Company includes in Selling, administrative and other expenses (“SG&A”), all personnel and personnel related costs at its headquarters, distribution centers and stores, which accounts for approximately 60% of total SG&A. Additional costs in SG&A include our facility, delivery, marketing, advertising, legal and professional costs. SG&A increased by $54 million or approximately 2% to $2.6 billion in 2012, representing 20.4% of net sales and down from 20.8% of net sales in 2011. SG&A expenses as a percentage of net sales improved from the prior year due to slightly greater expense leverage associated with our sales growth, combined with manage- ment’s ongoing cost control measures in areas such as personnel, freight, fleet and logistics. Excluding acquis- itions, the Company’s headcount at December 31, 2012 decreased by approximately 1% from 2011. These expense initiatives have served to further improve the Company’s cost structure. Our management teams remain focused on properly managing the Company’s expenses and continuing to assess the appropriate cost structure in our businesses. Depreciation and amortization expense was $98 million in 2012, an increase of $9 million or 11% from 2011. This increase primarily relates to the amortization associated with acquisitions during the year. The provision for doubtful accounts was $8 million in 2012, down $5 million or 40% from $13 million in 2011. We believe the Company is adequately reserved for bad debts at December 31, 2012. SG&A increased by $228 million or 10% to $2.6 billion in 2011, representing 20.8% of net sales and down from 21.1% of net sales in 2010. SG&A expenses as a percentage of net sales improved from the prior year due primarily to the benefit of greater expense leverage associated with the second consecutive 11% sales increase for the year. In addition, management’s ongoing cost control measures served to further improve the Company’s cost structure. After reducing the size of its workforce by approximately 12% during 2008 and 2009, the Com- pany has only added back approximately 2% of that over the two year period of 2011 and 2010 (including 18 acquisitions). Depreciation and amortization expense in 2011 was $89 million, relatively in-line with 2010. The provision for doubtful accounts was $13 million in 2011, up nearly $3 million or 25% from $11 million in 2010. The increase in bad debt expense was primarily a function of the increase in sales for the year and not due to collections issues. Total share-based compensation expense for the years ended December 31, 2012, 2011 and 2010 was $10.7 million, $7.5 million and $7.0 million, respectively. Refer to Note 5 of the Consolidated Financial State- ments for further information regarding share-based compensation. Non-Operating Expenses and Income Non-operating expenses consist primarily of interest. Interest expense was $20 million in 2012, $27 million in 2011 and $28 million in 2010. The declining trend in interest expense over the past two years is the result of an improved interest rate on certain long-term debt, effective November 2011. In “Other”, interest income and noncontrolling interests in 2012 increased by approximately $8 million from 2011. This increase reflects the Company’s equity income recorded in 2012 for its 30% investment interest in Exego. Income Before Income Taxes Income before income taxes was $1.0 billion in 2012, an increase of 14% from $891 million in 2011. As a percentage of net sales, income before income taxes was 7.8% in 2012, reflecting an increase from 7.1% in 2011. In 2011, income before income taxes of $891 million was up 17% from $762 million in 2010 and as a percentage of net sales was 7.1%, an increase from 6.8% in 2010. Automotive Group Automotive income before income taxes as a percentage of net sales, which we refer to as operating margin, increased to 8.6% in 2012 from 7.7% in 2011. The improvement in operating margin for 2012 is attributed pri- marily to effective cost controls and cost reductions implemented during the year. A slight increase in gross margin also positively impacted their operating margin. Automotive’s initiatives to grow sales and control costs are intended to further improve its operating margin in the years ahead. Automotive’s operating margin increased to 7.7% in 2011 from 7.5% in 2010. The improvement in operat- ing margin for 2011 is attributed to the benefit of greater expense leverage associated with Automotive’s 8% sales increase for the year. Industrial Group Industrial’s operating margin decreased to 7.9% in 2012 from 8.1% in 2011. The decrease in operating margin in 2012 is due to the combination of reduced expense leverage associated with slower sales growth rela- tive to the prior year and the decline in volume incentives for the year. These items were partially offset by effec- tive cost control measures. Industrial will continue to focus on its sales initiatives and cost controls to further improve its operating margin in the years ahead. Industrial’s operating margin increased to 8.1% in 2011 from 7.3% in 2010. The increase in operating mar- gin in 2011 was due to the combination of greater expense leverage associated with a 19% sales increase, cost savings and increased volume incentives. Office Group Office’s operating margin has been relatively steady over the last three years, at 8.0% in 2012, 7.9% in 2011 and 8.0% in 2010. In each of these three periods, the cost savings measures in the Office segment were somewhat offset by the ongoing gross margin pressures associated with the slow demand for office products across the industry. Office will continue to focus on its sales initiatives and cost controls to further improve its operating margin in the years ahead. 19 Electrical Group Electrical’s operating margin increased to 8.7% in 2012 from 7.3% in 2011. The increase in operating mar- gin in 2012 is primarily due to the positive impact of effective cost management as well as an improved gross margin. The improvement in gross margin reflects several factors, including higher margin business associated with recent acquisitions, and the decrease in copper prices during the year, which generally do not affect profit dollars, but positively impact margins, as the standard industry practice is to bill copper to the customer at cost. Electrical will continue to focus on its sales initiatives and cost controls to further improve its operating margin in the years ahead. Electrical’s operating margin increased to 7.3% in 2011 from 6.9% in 2010. The increase in operating mar- gin was due to the combination of greater expense leverage associated with a 24% sales increase and the ongoing benefits of effective cost controls. The improvement in these areas was partially offset by the increase in copper prices during the year, which negatively impacted margins. Income Taxes The effective income tax rate of 36.4% in 2012 was down slightly from 36.6% in 2011, primarily due to the favorable impact of a retirement asset valuation adjustment in 2012 relative to 2011. The income tax rate decreased to 36.6% in 2011 from 37.6% in 2010. The decrease from 2010 is primarily attributable to a favorable adjustment recorded in the first quarter of 2011 associated with the statute of limitations related to international taxes. Net Income Net income was $648 million in 2012, an increase of 15% from $565 million in 2011. On a per share diluted basis, net income was $4.14 in 2012 compared to $3.58 in 2011, up 16%. Net income in 2012 was 5.0% of net sales compared to 4.5% of net sales in 2011. In December 2012, the Company’s U.S. Defined Benefit Plan was amended to reflect a hard freeze as of December 31, 2013. The Company recorded a one-time noncash curtailment gain of $23.5 million in connection with this amendment. Net income was $565 million in 2011, an increase of 19% from $476 million in 2010. On a per share diluted basis, net income was $3.58 in 2011 compared to $3.00 in 2010, up 19%. Net income in 2011 was 4.5% of net sales compared to 4.2% of net sales in 2010. FINANCIAL CONDITION Our cash balance of $403 million at December 31, 2012 was down approximately $122 million from our cash balance at December 31, 2011. In 2012, cash provided by the increase in net income and ongoing working capital management was offset by approximately $530 million used for the Exego investment and Quaker City and Light Fabrication acquisitions. The Company’s accounts receivable balance at December 31, 2012 increased by approximately 2% from the prior year, which is less than the Company’s 3.5% sales increase for the fourth quarter of 2012. Inventory at December 31, 2012 was up by approximately 7% from December 31, 2011, which is primarily attributable to acquisitions. Excluding acquisitions, inventory was up by approximately 2% from the prior year. Accounts payable increased $241 million or approximately 17% from December 31, 2011 due primar- ily to improved payment terms with certain suppliers. Goodwill and other intangible assets increased by $218 million or 78% from December 31, 2011 due to the Company’s acquisitions during the year. The change in our December 31, 2012 balances for pension and other post-retirement benefits liabilities, up $79 million or approximately 16% from December 31, 2011, is primarily due to a change in funded status of the Company’s pension and other post-retirement plans in 2012. LIQUIDITY AND CAPITAL RESOURCES The Company’s sources of capital consist primarily of cash flows from operations, supplemented as neces- sary by private issuances of debt and bank borrowings. We have $500 million of total debt outstanding at 20 December 31, 2012, of which $250 million matures in November 2013 and $250 million matures in November 2016. In addition, the Company entered into a Syndicated Facility Agreement (the “Syndicated Facility”) for $850 million in September 2012, which replaced the $350 million unsecured revolving line of credit that was scheduled to mature in December 2012. No amounts were outstanding under the Syndicated Facility or line of credit at December 31, 2012 and 2011, respectively. The capital and credit markets were volatile over the last few years, although these conditions did not materially impact our access to these markets. Currently, we believe that our cash on hand and available short-term and long-term sources of capital are sufficient to fund the Compa- ny’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 was 1.9 to 1 at December 31, 2012, and, before consideration of current debt outstanding at December 31, 2012, the ratio of current assets to current liabilities was 2.2 to 1. This compares to 2.4 to 1 at December 31, 2011. Our liquidity position remains solid. The Company’s $500 million in total debt outstanding at December 31, 2012 is unchanged from 2011. Sources and Uses of Net Cash A summary of the Company’s consolidated statements of cash flows is as follows: Year Ended December 31, Percent Change Net Cash Provided by (Used in): 2012 2011 2010 2012 vs. 2011 2011 vs. 2010 Operating Activities . . . . . . . . . . . . . . . . . . . . . . Investing Activities . . . . . . . . . . . . . . . . . . . . . . Financing Activities . . . . . . . . . . . . . . . . . . . . . . $ 906,438 (651,867) (378,834) (In thousands) $ 624,927 (231,497) (394,140) $ 678,663 (172,348) (320,569) 45% 182% (4)% (8)% 34% 23% Net Cash Provided by Operating Activities: The Company continues to generate cash and net cash provided by operating activities totaled $906 million in 2012. This reflects a 45% increase from 2011, as, collectively, trade accounts receivable, merchandise inventories and trade accounts payable represented a $208 million source of cash in 2012 compared to a $19 million use of cash in 2011. Additionally, net income in 2012 increased by $83 million. Net cash provided by operating activities was $625 million in 2011, an 8% decrease from 2010, as, collectively, trade accounts receivable, merchandise inventories and trade accounts payable represented a $19 million use of cash in 2011 compared to a $185 million source of cash in 2010. This was offset by a $90 million increase in net income. Net Cash Used in Investing Activities: Net cash flow used in investing activities was $652 million in 2012 compared to $231 million in 2011, an increase of 182%. Cash used for acquisitions of businesses and other investing activities in 2012 was $558 mil- lion, as previously discussed, or $421 million greater than in 2011. Capital expenditures of $102 million in 2012 were relatively consistent with 2011, and we estimate that cash used for capital expenditures in 2013 will be approximately $115 to $135 million. Net cash flow used in investing activities was $231 million in 2011 com- pared to $172 million in 2010, an increase of 34%. Cash used for acquisitions of businesses and other investing activities in 2011 was $46 million greater than in 2010, and capital expenditures increased by $18 million for the year. Net Cash Used in Financing Activities: The Company used $379 million of cash in financing activities in 2012, down 4% from the $394 million used in financing activities in 2011. Cash used in financing activities in 2011was up $74 million or 23% from the $321 million used in 2010. For the three years presented, net cash used in financing activities was primarily for dividends paid to shareholders and repurchases of the Company’s common stock. The Company paid dividends 21 to shareholders of $301 million, $276 million and $258 million during 2012, 2011 and 2010, respectively. The Company expects this trend of increasing dividends to continue in the foreseeable future. During 2012, 2011 and 2010, the Company repurchased $82 million, $122 million and $75 million, 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. Notes and Other Borrowings The Company maintains an $850 million unsecured revolving line of credit with a consortium of financial institutions, which matures in September 2017 and bears interest at LIBOR plus a margin, which is based on the Company’s leverage ratio (0.96% at December 31, 2012). The Company also has the option under this agreement to increase its borrowing an additional $350 million, as well as an option to decrease the borrowing capacity or terminate the Syndicated Facility with appropriate notice. At December 31, 2012 and 2011, no amounts were outstanding under the line of credit. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of approximately $61 million and $54 million out- standing at December 31, 2012 and 2011, respectively. At December 31, 2012, the Company had unsecured Senior Notes outstanding under a $500 million financ- ing arrangement as follows: $250 million series C senior unsecured note, 4.67% fixed, due 2013; and $250 million series D and E senior unsecured notes, 3.35% fixed, due 2016. These borrowings contain covenants related to a maximum debt-to-capitalization ratio and certain limitations on additional borrowings. At December 31, 2012, the Company was in compliance with all such covenants. The weighted average interest rate on the Company’s total outstanding borrowings was approximately 4.01% at December 31, 2012 and December 31, 2011. Total interest expense, net of interest income, for all borrowings was $19.6 million, $24.6 million and $26.6 million in 2012, 2011 and 2010, respectively. Contractual and Other Obligations The following table shows the Company’s approximate obligations and commitments, including interest due on credit facilities, to make future payments under specified contractual obligations as of December 31, 2012: Contractual Obligations Payment Due by Period Total Less Than 1 Year 1-3 Years 3-5 Years Over 5 Years Credit facilities . . . . . . . . . . . . . . . . . . . . . Operating leases . . . . . . . . . . . . . . . . . . . . $ 543,504 590,100 $269,077 136,900 (In thousands) $ 16,750 194,700 $257,677 105,000 $ — 153,500 Total contractual cash obligations . . . . . . . $1,133,604 $405,977 $211,450 $362,677 $153,500 Due to the uncertainty of the timing of future cash flows associated with the Company’s unrecognized tax benefits at December 31, 2012, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $58 million of unrecognized tax benefits have been excluded from the contractual obligations table above. Refer to Note 6 of the Consolidated Financial State- ments for a discussion on income taxes. Purchase orders or contracts for the purchase of inventory and other goods and services are not included in our estimates. We are not able to determine the aggregate amount of such purchase orders that represent con- tractual obligations, as purchase orders may represent authorizations to purchase rather than binding 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 speci- fying minimum quantities or set prices that exceed our expected requirements. 22 The Company guarantees the borrowings of certain independently owned automotive parts stores (independents) and certain other affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee. To date, the Company has had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings. The fol- lowing table shows the Company’s approximate commercial commitments as of December 31, 2012: Other Commercial Commitments Amount of Commitment Expiration per Period Total Amounts Committed Less Than 1 Year 1-3 Years 3-5 Years Over 5 Years Line of credit . . . . . . . . . . . . . . . . . . . . . . . . . Standby letters of credit . . . . . . . . . . . . . . . . . Guaranteed borrowings of independents and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 61,119 61,119 — $ — $ — — — — (In thousands) — $ 231,500 61,400 169,100 1,000 — Total commercial commitments . . . . . . . . . . $292,619 $122,519 $169,100 $1,000 $ — In addition, the Company sponsors defined benefit pension plans that may obligate us to make contributions to the plans from time to time. Contributions in 2012 were $16 million. We expect to make a $70 million cash contribution to our qualified defined benefit plans in 2013, and contributions required for 2013 and future years will depend on a number of unpredictable factors including the market performance of the plans’ assets and future changes in interest rates that affect the actuarial measurement of the plans’ obligations. Share Repurchases In 2012, the Company repurchased approximately 1.4 million shares and the Company had remaining authority to purchase approximately 12.2 million shares at December 31, 2012. CRITICAL ACCOUNTING POLICIES General Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted account- ing 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 of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily appa- rent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We describe in this section certain critical accounting policies that require us to make significant estimates, assumptions and judgments. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the prepara- tion of the consolidated financial statements. For further information on the critical accounting policies, see Note 1 of the Consolidated Financial Statements, including our revised interpretation relating to accounting for potential sales returns of automotive parts. 23 Inventories — Provisions for Slow Moving and Obsolescence The Company identifies slow moving or obsolete inventories and estimates appropriate loss provisions related thereto. Historically, these loss provisions have not been significant as the vast majority of the Company’s inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur. Allowance for Doubtful Accounts — Methodology The Company evaluates the collectability of accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dis- persed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2012, 2011 and 2010, the Company recorded provisions for doubtful accounts of $8.0 million, $13.2 million, and $10.6 million, respectively. Consideration Received from Vendors The Company enters into agreements at the beginning of each year with many of its vendors that provide for inventory purchase incentives. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accrues for the receipt of these 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. While management believes the Company will continue to receive consideration from vendors in 2013 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future or that we will be able to achieve the specified volumes necessary to take advantage of such incentives. Impairment of Property, Plant and Equipment and Goodwill and Other Intangible Assets At least annually, the Company evaluates property, plant and equipment, goodwill and other intangible assets for potential impairment indicators. The Company’s judgments regarding the existence of impairment indicators are based on market conditions and operational performance, among other factors. Future events could cause the Company to conclude that impairment indicators exist and that assets associated with a particular oper- ation are impaired. Evaluating for impairment also requires the Company to estimate future operating results and cash flows which require judgment by management. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. Employee Benefit Plans The Company’s benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the Company’s pension plan assets. The pension plan investment strat- egy implemented by the Company’s management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, as well as fiduciary standards. The long-term primary objectives for the pension plan funds are to provide for a reasonable amount of long-term growth of capital without undue exposure to risk, protect the assets from erosion of purchasing power and pro- vide investment results that meet or exceed the pension plan’s actuarially assumed long term rate 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 (49% S&P 500 Index, 5% Russell Mid Cap Index, 8% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index and 28% BarCap U.S. Govt/Credit). 24 We make several critical assumptions in determining our pension plan liabilities and related pension expense. We believe the most critical of these assumptions are the expected rate of return on plan assets and the discount rate. Other assumptions we make relate to employee demographic factors such as rate of compensation increases, mortality rates, retirement patterns and turnover rates. Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measuring 2013 pension expense or income is 7.83% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships. The discount rate is chosen as the rate at which pension obligations could be effectively settled and is based on capital market conditions as of the measurement date. We have matched the timing and duration of the expected cash flows of our pension obligations to a yield curve generated from a broad portfolio of high-quality fixed income debt instruments to select our discount rate. Based upon this cash flow matching analysis, we selected a weighted average discount rate for the plans of 4.17% at December 31, 2012. Net periodic benefit cost for our defined benefit pension plans was $26.8 million, $32.3 million and $21.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. The decrease in pension cost in 2012 from 2011 was primarily due to the curtailment gain recorded in connection with the 2012 amendment to the U.S. defined benefit pension plan, offset by the change in assumptions for the rate of return on plan assets and discount rate. The increase in pension cost in 2011 from 2010 reflects the change in assumptions for the rate of return on plan assets, the discount rate and the rate of compensation increases. The 2012 amendment and related curtailment decreased benefit costs in 2012 and are discussed further below. Refer to Note 7 of the Consolidated Financial Statements for more information regarding employee benefit plans. In December 2012, the Company’s U.S. defined benefit plan was amended to reflect a hard freeze as of December 31, 2013. No further benefits will be provided after that date for additional credited service or earnings and all participants will become fully vested as of December 31, 2013. The Company recorded a $23.5 million non-cash curtailment gain in December 2012 in connection with this amendment. QUARTERLY RESULTS OF OPERATIONS The following is a summary of the quarterly results of operations for the years ended December 31, 2012 and 2011: 2012 Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings Per Share: Three Months Ended March 31, June 30, Sept. 30, Dec. 31, (In thousands except per share data) $3,181,288 919,111 146,255 $3,337,836 972,286 168,618 $3,375,778 976,036 172,943 $3,118,966 910,658 160,225 Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 .93 1.08 1.08 1.11 1.11 1.03 1.03 2011 Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings Per Share: $2,974,198 848,794 126,515 $3,184,984 916,114 151,812 $3,285,560 948,532 151,832 $3,014,135 892,600 134,957 Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 .80 .97 .96 .97 .97 .87 .86 25 We recorded the quarterly earnings per share amounts as if each quarter was a discrete period. As a result, the sum of the basic and diluted earnings per share will not necessarily total the annual basic and diluted earnings per share. The preparation of interim consolidated financial statements requires management to make estimates and assumptions for the amounts reported in the interim condensed consolidated financial statements. Specifically, the Company makes estimates and assumptions in its interim consolidated financial statements for the accrual of bad debts, inventory adjustments and discount and volume incentives earned, among others. Bad debts are accrued based on a percentage of sales, and volume incentives are estimated based upon cumulative and pro- jected purchasing levels. Inventory adjustments are accrued on an interim basis and adjusted in the fourth quarter based on the annual September and October book-to-physical inventory adjustments. The methodology and prac- tices used in deriving estimates and assumptions for interim reporting typically result in adjustments upon accu- rate determination at year-end. The effect of these adjustments in 2012 and 2011 was not significant. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Although the Company does not face material risks related to interest rates and commodity prices, the Company is exposed to changes in foreign currency rates with respect to foreign currency denominated operating revenues and expenses. Foreign Currency The Company has translation gains or losses that result from translation of the results of operations of an operating unit’s foreign functional currency into U.S. dollars for consolidated financial statement purposes. The Company’s principal foreign currency exchange exposure is the Canadian dollar, which is the functional cur- rency of our Canadian operations. Foreign currency exchange exposure particularly in regard to the Canadian dollar and, to a lesser extent, the Mexican peso, negatively impacted our results for the year ended December 31, 2012. During 2012 and 2011, it was estimated that a 10% shift in exchange rates between those foreign functional currencies and the U.S. dollar would have impacted translated net sales by approximately $176 million and $169 million, respectively. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by this Item 8 is set forth in a separate section of this report. See “Index to Con- solidated Financial Statements and Financial Statement Schedules” beginning on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 9A. CONTROLS AND PROCEDURES. Management’s conclusion regarding the effectiveness of disclosure controls and procedures As of the end of the period covered 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 in SEC Rule 13a-15(e). Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized 26 and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumu- lated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Management’s report on internal control over financial reporting A report of management’s assessment of our internal control over financial reporting, as such term is defined in SEC Rule 13a-15(f), as of December 31, 2012 is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning on page F-1. The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting”, which is set forth in a separate section of this report. See “Index to Consolidated Financial Statements and Financial Statement Schedules” beginning on page F-1. Changes in internal control over financial reporting There have been no changes in the Company’s internal control over financial reporting during the Compa- ny’s fourth fiscal quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. 27 PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. EXECUTIVE OFFICERS OF THE COMPANY. Executive officers of the Company are elected by the Board of Directors and each serves at the pleasure of the Board of Directors until his successor has been elected and qualified, or until his earlier death, resignation, removal, retirement or disqualification. The current executive officers of the Company are: Thomas C. Gallagher, age 65, has been Chief Executive Officer since August 2004 and Chairman of the Board since February 2005. Mr. Gallagher served as President of the Company from 1990 until January 2012 and Chief Operating Officer of the Company from 1990 until August 2004. Jerry W. Nix, age 67, was appointed as a director of the Company and elected Vice-Chairman by the Board of Directors in November 2005. He is Chief Financial Officer of the Company, a position he has held since 2000. Mr. Nix will be retiring as Chief Financial Officer effective March 1, 2013. Previously, Mr. Nix held the position of Executive Vice President – Finance from 2000 to 2005 and Senior Vice President- Finance from 1990 to 2000. Paul D. Donahue, age 56, was appointed President of the Company in January 2012, and has served as President of the Company’s U.S. Automotive Parts Group since July 2009. Mr. Donahue served as Execu- tive Vice President of the Company from August 2007 until his appointment as President in January. Pre- viously, Mr. Donahue was President and Chief Operating Officer of S.P. Richards Company from 2004 to 2007 and was Executive Vice President-Sales and Marketing in 2003, the year he joined the Company. R. Bruce Clayton, age 66, has been the Senior Vice President-Human Resources at the Company since November 2004. Previously, Mr. Clayton held the position of Vice President-Risk Management and Employee Services from June 2000 to November 2004. William J. Stevens, age 64, has been the President and Chief Executive Officer of Motion Industries since 1997. Previously, Mr. Stevens was President and Chief Operating Officer from 1994 to 1997. In 1993, Mr. Stevens served as Executive Vice President. 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 — Audit Committee”, under the heading “Corporate Governance — Director Nominating Process” and under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” of the Proxy Statement and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Information required by this item is set forth under the headings “Executive Compensation”, “Additional Information Regarding Executive Compensation”, “2012 Grants of Plan-Based Awards”, “2012 Outstanding Equity Awards at Fiscal Year-End”, “2012 Option Exercises and Stock Vested”, “2012 Pension Benefits”, “2012 Nonqualified Deferred Compensation”, “Post Termination Payments and Benefits”, “Compensation, Nominating and Governance Committee Report”, “Compensation, Nominating and Governance Committee Interlocks and Insider Participation” and “Compensation of Directors” of the Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Certain information required by this item is set forth below. Additional information required by this item is set forth under the headings “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Proxy Statement and is incorporated herein by reference. 28 Equity Compensation Plan Information The following table gives information as of December 31, 2012 about the common stock that may be issued under all of the Company’s existing equity compensation plans: (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category Equity Compensation Plans Approved by Shareholders: . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Compensation Plans Not Approved by Shareholders: . . . . . . . . . . . . . . . . . . . . . . . . . . 70,343(4) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,169,873 870,117(2) 4,229,413(3) $43.19 $50.96 n/a — — 2,961,055(5) 929,657 3,890,712 (1) Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights. (2) Genuine Parts Company 1999 Long-Term Incentive Plan, as amended (3) Genuine Parts Company 2006 Long-Term Incentive Plan (4) Genuine Parts Company Director’s Deferred Compensation Plan, as amended (5) All of these shares are available for issuance pursuant to grants of full-value stock awards. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Information required by this item is set forth under the headings “Corporate Governance — Independent Directors” and “Transactions with Related Persons” of the Proxy Statement and is incorporated herein by refer- ence. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Information required by this item is set forth under the heading “Proposal 3. Ratification of Selection of Independent Auditors” of the Proxy Statement and is incorporated herein by reference. 29 PART IV. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Documents filed as part of this report (1) Financial Statements The following consolidated financial statements of 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 accounting firm on the financial statements Consolidated balance sheets — December 31, 2012 and 2011 Consolidated statements of income and comprehensive income — Years ended December 31, 2012, 2011 and 2010 Consolidated statements of equity — Years ended December 31, 2012, 2011 and 2010 Consolidated statements of cash flows — Years ended December 31, 2012, 2011 and 2010 Notes to consolidated financial statements — December 31, 2012 (2) Financial Statement Schedules The following consolidated financial statement schedule of Genuine Parts Company and subsidiaries, set forth immediately following the consolidated financials statements of Genuine Parts Company and Subsidiaries, is filed pursuant to Item 15(c): Schedule II — Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (3) Exhibits. The following exhibits are filed as part of or incorporated by reference in this report. Exhibits that are incorporated by reference to documents filed previously by the Company under the Securities Exchange Act of 1934, as amended, are filed with the Securities and Exchange Commission under File No. 1-5690. The Company will furnish a copy of any exhibit upon request to the Company’s Corporate Secretary. Exhibit 3.1 Exhibit 3.2 Exhibit 4.2 Amended and Restated Articles of Incorporation of the Company, as amended April 23, 2007. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 23, 2007.) By-laws of the Company, as amended and restated August 20, 2007. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated August 20, 2007.) Specimen Common Stock Certificate. (Incorporated herein by reference from the Company’s Registration Statement on Form S-1, Registration No. 33-63874.) Instruments with respect to long-term debt where the total amount of securities authorized there under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request. Exhibit 10.1* The Genuine Parts Company Tax-Deferred Savings Plan, effective January 1, 1993. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 3, 1995.) 30 Exhibit 10.2* Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 7, 2005.) Exhibit 10.3* Genuine Parts Company Death Benefit Plan, effective July 15, 1997. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 10, 1998.) Exhibit 10.4* Exhibit 10.5* Exhibit 10.6* Exhibit 10.7* Exhibit 10.8* Exhibit 10.9* Exhibit 10.10* Exhibit 10.11* Exhibit 10.12* Exhibit 10.13* Exhibit 10.14* Exhibit 10.15* Exhibit 10.16* Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report on Form10-K, dated March 10, 2000.) The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 8, 2004.) Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 10, 2000.) Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 7, 2002.) Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 21, 2003.) Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 8, 2004.) Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2003, and executed November 11, 2003. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated March 8, 2004.) Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 28, 2005, effective January 1, 2006. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, 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, effective April 17, 2006. (Incorporated herein by reference from the Company’s Current Report on Form 8-K, dated April 18, 2006.) Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. (Incorporated herein by reference from the Compa- ny’s Annual Report on Form 10-K, dated February 28, 2007.) Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) 31 Exhibit 10.17* Exhibit 10.18* Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) Genuine Parts Company Performance Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) Exhibit 10.19* Genuine Parts Company Restricted Stock Unit Award Agreement. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) Exhibit 10.20* Form of Amended and Restated Change in Control Agreement. (Incorporated herein by refer- ence from the Company’s Annual Report on Form 10-K, dated February 29, 2008.) Exhibit 10.21* Exhibit 10.22* Exhibit 10.23* Exhibit 10.24* Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 27, 2009.) Genuine Parts Company 2009 Annual Incentive Bonus Plan, dated March 31, 2009, effective January 1, 2009. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q dated May 7, 2009). Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.) Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.) Exhibit 10.25* Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. (Incorporated herein by reference from the Company’s Annual Report on Form 10-K, dated February 25, 2011.) Exhibit 10.26* Description of Director Compensation. (Incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q, dated August 4, 2011.) Exhibit 10.27* Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012. Exhibit 10.28* Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012. Exhibit 10.29* Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated December 7, 2012, effective December 31, 2013. Exhibit 10.30* Form of Amendment to the Amended and Restated Change in Control Agreement. Exhibit 10.31* Genuine Parts Company Stock Appreciation Rights Agreement. * Indicates management contracts and compensatory plans and arrangements. Exhibit 21 Exhibit 23 Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 32.2 Subsidiaries of the Company. 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 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32 Exhibit 101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 2012 and 2011; (ii) the Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2012, 2011 and 2010; (iii) the Consolidated Statements of Equity for the Years ended December 31, 2012, 2011 and 2010; (iv) the Consolidated Statements of Cash Flows for Years ended December 31, 2012, 2011 and 2010; (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text; and (vi) Financial Statement Schedule II — Valuation and Qualifying Accounts. (b) Exhibits See the response to Item 15(a)(3) above. (c) Financial Statement Schedules See the response to Item 15(a)(2) above. 33 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES. GENUINE PARTS COMPANY /s/ Thomas C. Gallagher Thomas C. Gallagher Chairman and Chief Executive Officer 2/26/13 (Date) /s/ Jerry W. Nix Jerry W. Nix Vice Chairman and Chief Financial and Accounting Officer 2/26/13 (Date) 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. Bullock Dr. Mary B. Bullock Director Jean Douville /s/ Jean Douville Director /s/ George C. Guynn George C. Guynn Director John D. Johns /s/ John D. Johns Director J. Hicks Lanier /s/ J. Hicks Lanier Director /s/ Wendy B. Needham Wendy B. Needham Director /s/ Gary W. Rollins Gary W. Rollins Director /s/ Paul D. Donahue Paul D. Donahue Director /s/ Thomas C. Gallagher Thomas C. Gallagher Director Chairman and Chief Executive Officer (Principal Executive Officer) John R. Holder /s/ John R. Holder Director /s/ Michael M. E. Johns Michael M. E. Johns Director /s/ Robert C. Loudermilk, Jr. Robert C. Loudermilk, Jr. Director Jerry W. Nix /s/ Jerry W. Nix Director Vice Chairman and Chief Financial Officer (Principal Financial and Accounting Officer) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) 2/18/13 (Date) ANNUAL REPORT ON FORM 10-K INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE 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 Balance Sheets as of December 31, 2012 and 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Equity for the Years Ended December 31, 2012, 2011 and 2010 . . . . . . . . . . . . Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010 . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statement Schedule II — Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page F-2 F-3 F-4 F-5 F-6 F-7 F-8 F-9 S-1 F-1 Genuine Parts Company Management’s Responsibility for the Financial Statements Report of Management We have prepared the accompanying consolidated financial statements and related information included herein for the years ended December 31, 2012, 2011 and 2010. The opinion of Ernst & Young LLP, the Compa- ny’s independent registered public accounting firm, on those consolidated financial statements is included herein. The primary responsibility for the integrity of the financial information included in this annual report rests with management. Such information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances based on our best estimates and judgments and giving due consideration to materiality. Management’s Report on Internal Control over Financial Reporting The management of Genuine Parts Company and its subsidiaries (the “Company”) is responsible for estab- lishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and to the board of directors regarding the preparation and fair presentation of the Company’s pub- lished consolidated financial statements. The Company’s internal control over financial reporting includes those policies and procedures that: i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the trans- actions and dispositions of the assets of the Company; ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with 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, 2012. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework.” Based on this assessment, management concluded that, as of December 31, 2012, the Company’s internal control over financial reporting was effective. Ernst & Young LLP has issued an audit report on the Company’s operating effectiveness of internal control over financial reporting as of December 31, 2012. This report appears on page F-3. 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 and accounting practices to ascertain that they are within acceptable limits of sound practice in such matters. The membership of the Committee consists of non-employee Directors. At periodic meetings, the Audit Committee discusses audit and financial reporting matters and the internal audit function with representatives of financial management and with representatives from Ernst & Young LLP. /s/ Jerry W. Nix JERRY W. NIX Vice Chairman and Chief Financial Officer February 26, 2013 F-2 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting The Board of Directors and Shareholders of Genuine Parts Company and Subsidiaries We have audited Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Genuine Parts Company and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting section of the accompanying Report of Management. Our responsibility is to express an opinion on the company’s internal control over finan- cial 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 and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the compa- ny’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect mis- statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that con- trols may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, Genuine Parts Company and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2012 of Genuine Parts Company and Sub- sidiaries and our report dated February 26, 2013 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Atlanta, Georgia February 26, 2013 F-3 Report of Independent Registered Public Accounting Firm on the Financial Statements The Board of Directors and Shareholders of Genuine Parts Company and Subsidiaries We have audited the accompanying consolidated balance sheets of Genuine Parts Company and Subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assess- ing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the con- solidated financial position of Genuine Parts Company and Subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Genuine Parts Company and Subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Com- mittee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2013 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Atlanta, Georgia February 26, 2013 F-4 Genuine Parts Company and Subsidiaries Consolidated Balance Sheets December 31 2012 2011 (In thousands, except share data and per share amounts) Assets Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 403,095 1,490,028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivable, net 2,602,560 Merchandise inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,448 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 525,054 1,461,011 2,440,111 328,534 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets, less accumulated amortization . . . . . . . . . . . . . . . Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant, and equipment: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Buildings, less allowance for depreciation (2012 — $237,504; 2011 — $226,396) . . Machinery and equipment, less allowance for depreciation (2012 — $522,136; 2011 — $505,994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,820,131 497,839 279,463 643,263 4,754,710 279,775 261,608 406,477 88,710 266,694 210,961 566,365 74,332 233,242 192,630 500,204 $6,807,061 $6,202,774 Liabilities and equity Current liabilities: Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,681,900 250,000 Current portion of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,348 Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,395 Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,641 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,354 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,487,638 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572,988 Pension and other post-retirement benefit liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488,256 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity: $1,440,762 — 149,102 331,582 70,021 21,081 2,012,548 500,000 493,721 442,914 Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common stock, par value $1 per share — authorized 450,000,000 shares; issued and outstanding 154,841,438 in 2012 and 155,651,116 shares in 2011 . . . . . . . . . . . . . Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total parent equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,997,887 10,292 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,008,179 2,753,591 $6,807,061 $6,202,774 See accompanying notes. F-5 — — 154,841 (501,492) 3,344,538 155,651 (482,038) 3,070,394 2,744,007 9,584 Genuine Parts Company and Subsidiaries Consolidated Statements of Income and Comprehensive Income Year Ended December 31 2012 2011 2010 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses: (In thousands, except per share amounts) $12,458,877 8,852,837 $11,207,589 7,954,645 $13,013,868 9,235,777 3,778,091 3,606,040 3,252,944 Selling, administrative, and other expenses . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,648,430 98,383 8,047 2,594,372 88,936 13,248 2,366,667 89,332 10,597 Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-operating expenses (income): 2,754,860 2,696,556 2,466,596 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,482 (16,183) Total non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic net income per common share . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted net income per common share . . . . . . . . . . . . . . . . . . . . . . . . Weighted average common shares outstanding . . . . . . . . . . . . . . . . . Dilutive effect of stock options and nonvested restricted stock 4,299 1,018,932 370,891 648,041 4.17 4.14 $ $ $ $ $ $ 27,036 (8,358) 18,678 890,806 325,690 565,116 3.61 3.58 $ $ $ 28,061 (3,496) 24,565 761,783 286,272 475,511 3.01 3.00 155,413 156,656 158,032 awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,007 1,004 429 Weighted average common shares outstanding — assuming dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,420 157,660 158,461 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income (loss), net of tax: Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . Pension and postretirement benefit adjustments, net of income taxes of 2012 — $26,465, 2011 — $98,973, and 2010 — $11,083 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 648,041 $ 565,116 $ 475,511 23,846 (22,017) 33,742 (43,300) (161,669) (22,197) Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . (19,454) (183,686) 11,545 Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 628,587 $ 381,430 $ 487,056 See accompanying notes. F-6 Genuine Parts Company and Subsidiaries Consolidated Statements of Equity (In thousands, except share and per share amounts) Common Stock Shares Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non- controlling Interests in Subsidiaries Total Equity Balance at January 1, 2010 . . . . . . . . . 158,917,846 $158,918 $ — $(309,897) — — $2,733,081 $2,582,102 475,511 475,511 $ 8,042 — $2,590,144 475,511 564,288 — (1,845,873) 564 — (1,846) 11,772 7,016 (18,788) — — — — — — — — — — — — — — 155,651 — — — — — Net income . . . . . . . . . . . . . . . . . . . Other comprehensive income, net of tax . . . . . . . . . . . . . . . . . . . . . . Cash dividends declared, $1.64 per share . . . . . . . . . . . . . . . . . . . . . . Stock options exercised, including tax benefit of $3,251 . . . . . . . . . . Share-based compensation . . . . . . . Purchase of stock . . . . . . . . . . . . . . Noncontrolling interest activities . . . . . . . . . . . . . . . . . . . tax . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends declared, $1.80 per share . . . . . . . . . . . . . . . . . . . . . . Stock options exercised, including tax benefit of $5,356 . . . . . . . . . . Share-based compensation . . . . . . . Purchase of stock . . . . . . . . . . . . . . Noncontrolling interest activities . . . . . . . . . . . . . . . . . . . Balance at December 31, 2010 . . . . . . 157,636,261 — Net income . . . . . . . . . . . . . . . . . . . Other comprehensive loss, net of 157,636 — 443,170 — (2,428,315) 443 — (2,428) 3,864 7,547 (11,411) Balance at December 31, 2011 . . . . . . 155,651,116 — Net income . . . . . . . . . . . . . . . . . . . Other comprehensive loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends declared, $1.98 per share . . . . . . . . . . . . . . . . . . Stock options exercised, including tax benefit of $11,018 . . . . . . . . . . . . . . . . . . . . Share-based compensation . . . . . Purchase of stock . . . . . . . . . . . . . Noncontrolling interest activities . . . . . . . . . . . . . . . . . . . 551,779 — (1,361,457) 552 3,423 — 10,747 (14,170) (1,362) — — — — — — — — — — — — — — — 11,545 — 11,545 — — — — — (258,912) (258,912) — — (54,373) 12,336 7,016 (75,007) — — (298,352) — 2,895,307 565,116 2,754,591 565,116 (183,686) — (183,686) — — — — — (281,790) (281,790) — — (108,239) 4,307 7,547 (122,078) — — (482,038) — 3,070,394 648,041 2,744,007 648,041 (19,454) — (19,454) (307,603) (307,603) — — (66,294) 3,975 10,747 (81,826) — — — — — — — — — — 11,545 (258,912) 12,336 7,016 (75,007) 853 8,895 — 853 2,763,486 565,116 — — — — — (183,686) (281,790) 4,307 7,547 (122,078) 689 9,584 — 689 2,753,591 648,041 — — — — — (19,454) (307,603) 3,975 10,747 (81,826) — — 708 708 Balance at December 31, 2012 . . . . . 154,841,438 $154,841 $ — $(501,492) $3,344,538 $2,997,887 $10,292 $3,008,179 See accompanying notes. F- 7 Genuine Parts Company and Subsidiaries Consolidated Statements of Cash Flows Operating activities Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefits from share-based compensation . . . . . . . . . . . . . . . Gain on sale of property, plant, and equipment . . . . . . . . . . . . . . . . . . . Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in operating assets and liabilities: Trade 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 and other investing activities . . . . . . . . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing activities Proceeds from debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefits from share-based compensation . . . . . . . . . . . . . . . . . . . Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . Year Ended December 31 2012 2011 2010 (In thousands) $ 648,041 $ 565,116 $ 475,511 98,383 (11,018) (3,943) 14,751 10,747 13,365 (25,845) 220,694 (45,248) (13,489) 88,936 (5,356) (3,012) (2,337) 7,547 89,332 (3,251) (1,685) 11,994 7,016 (85,011) (19,624) 85,766 (12,943) 5,845 (140,562) 44,865 280,739 (48,423) (36,873) 258,397 59,811 203,152 906,438 624,927 678,663 (101,987) 8,504 (558,384) (103,469) 8,908 (136,936) (85,379) 3,676 (90,645) (651,867) (231,497) (172,348) 750,000 (750,000) (7,043) 11,018 (300,983) (81,826) (378,834) 2,304 (121,959) 525,054 250,000 (250,000) (1,049) 5,356 (276,369) (122,078) (394,140) (4,204) (4,914) 529,968 — — 9,085 3,251 (257,898) (75,007) (320,569) 7,419 193,165 336,803 Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 403,095 $ 525,054 $ 529,968 Supplemental disclosures of cash flow information Cash paid during the year for: Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 381,407 $ 317,748 $ 275,979 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,416 $ 27,640 $ 28,061 See accompanying notes. F-8 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements December 31, 2012 1. Summary of Significant Accounting Policies Business Genuine Parts Company and all of its majority-owned subsidiaries (the Company) is a distributor of automo- tive 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, or industry segment. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collater- al. The Company has evaluated subsequent events through the date the financial statements were issued. Principles of Consolidation The consolidated financial statements include all of the accounts of the Company. The net income attribut- able to noncontrolling interests is not material to the Company’s consolidated net income. Intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates and the differences could be material. Revenue Recognition The Company records revenue when the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the Company’s price to the customer is fixed and determinable and collectability is reasonably assured. Delivery is not considered to have occurred until the customer assumes the risks and rewards of ownership. Customer Sales Returns Subsequent to September 30, 2012, the Company reconsidered its interpretation of the authoritative liter- ature related to accounting for potential sales returns of automotive parts sold by the NAPA distribution busi- nesses in its automotive segment. Upon review, the Company concluded that there was an error in the Company’s method of accounting for such potential sales returns. The error is not material to any individual year, but material on a cumulative basis and, therefore, an adjustment to correct the cumulative effect of the error, as calculated at December 31, 2012, has been reflected on the Company’s consolidated balance sheets and is summarized below as of December 31, 2011. The consolidated statements of income and comprehensive income for 2012, 2011, and 2010 presented herein have not been adjusted because the impact of the correction of the error is not material to these financial statements. The effect of the understatement of inventory (included in merchandise inventories, net and other assets) and customer deposits (included in accrued expenses and other long-term liabilities) resulted in an adjustment to the consolidated balance sheet increasing both assets and liabilities with the net result being an immaterial impact on working capital. The impact on retained earnings, net of deferred taxes, is $39,228,000, or less than 2% of consolidated equity as of December 31, 2012 and 2011. Retained earnings as of January 1, 2010 has been adjusted by $39,228,000 on the consolidated statements of equity. The impact on net income was less than $3,000,000, or less than 1% of consolidated net income for each of the years ended December 31, 2012, 2011, F-9 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) and 2010; therefore, the Company recorded the errors arising in these three years as of January 1, 2010. The impact on the consolidated statements of cash flows was considered immaterial for each of the years ended December 31, 2012, 2011, and 2010. Merchandise inventories, net . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total parent equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign Currency Translation December 31, 2011 As Previously Reported $2,261,997 4,576,596 250,906 272,110 $5,879,591 $ 116,921 35,267 1,812,073 280,978 3,109,622 2,783,235 2,792,819 $5,879,591 Adjustment As Revised (In thousands) $178,114 178,114 10,702 134,367 $323,183 $214,661 (14,186) 200,475 161,936 (39,228) (39,228) (39,228) $323,183 $2,440,111 4,754,710 261,608 406,477 $6,202,774 $ 331,582 21,081 2,012,548 442,914 3,070,394 2,744,007 2,753,591 $6,202,774 The consolidated balance sheets and statements of income and comprehensive income of the Company’s for- eign subsidiaries have been translated into U.S. dollars at the current and average exchange rates, respectively. The foreign currency translation adjustment is included as a component of accumulated other comprehensive loss. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Trade Accounts Receivable and the Allowance for Doubtful Accounts The Company evaluates the collectability of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on histor- ical bad debt experience. This initial estimate is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts. For the years ended December 31, 2012, 2011, and 2010, the Company recorded provisions for doubtful accounts of approx- imately $8,047,000, $13,248,000, and $10,597,000, respectively. At December 31, 2012 and 2011, the allowance for doubtful accounts was approximately $19,180,000 and $16,916,000, respectively. Merchandise Inventories, Including Consideration Received From Vendors Merchandise inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for a majority of automotive parts, electrical/electronic materials, and industrial parts, and by the F-10 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) first-in, first-out (FIFO) method for office products and certain other inventories. If the FIFO method had been used for all inventories, cost would have been approximately $428,260,000 and $422,178,000 higher than reported at December 31, 2012 and 2011, respectively. During 2012, 2011, and 2010 reductions in inventory levels in automotive parts inventories (2012), industrial parts inventories, and electrical parts inventories (2012 and 2011) resulted in liquidations of LIFO inventory layers. The effect of the LIFO liquidation in 2012, 2011, and 2010 was to reduce cost of goods sold by approximately $6,000,000, $16,000,000, and $25,000,000, respectively. The Company identifies slow moving or obsolete inventories and estimates appropriate provisions related thereto. Historically, these losses have not been significant as the vast majority of the Company’s inventories are not highly susceptible to obsolescence and are eligible for return under various vendor return programs. While the Company has no reason to believe its inventory return privileges will be discontinued in the future, its risk of loss associated with obsolete or slow moving inventories would increase if such were to occur. The Company enters into agreements at the beginning of each year with many of its vendors that provide for inventory purchase incentives. Generally, the Company earns inventory purchase incentives upon achieving specified volume purchasing levels or other criteria. The Company accrues for the receipt of these 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. While management believes the Company will continue to receive consideration from vendors in 2013 and beyond, there can be no assurance that vendors will continue to provide comparable amounts of incentives in the future. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of prepaid expenses and amounts due from vendors. Goodwill and Other Intangible Assets The Company reviews its goodwill and indefinite lived intangible assets annually in the fourth quarter, or sooner if circumstances indicate that the carrying amount may exceed fair value. The present value of future cash flows approach was used to determine any potential impairment. The Company determined that these assets were not impaired and, therefore, no impairments were recognized for the years ended December 31, 2012, 2011, or 2010. If an impairment occurs at a future date, it may have the effect of increasing the volatility of the Company’s earnings. Other Assets Other assets are comprised of the following: Retirement benefit assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred compensation benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash surrender value of life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . Customer sales returns inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term prepayments and receivables . . . . . . . . . . . . . . . . . . . . . . . . . December 31 2012 2011 (In thousands) $ 4,021 20,642 206,487 78,860 134,367 198,886 $ 4,374 18,218 27,810 70,109 134,367 151,599 Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $643,263 $406,477 F-11 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Property, Plant, and Equipment Property, plant, and equipment are stated at cost. Depreciation and amortization is primarily determined on a straight-line basis over the following estimated useful life of each asset: buildings and improvements, 10 to 40 years; machinery and equipment, 5 to 15 years. Long-Lived Assets Other Than Goodwill The Company assesses its long-lived assets other than goodwill for impairment whenever facts and circum- stances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. Impairment losses, if any, are measured based upon the difference between the carrying amount and the fair value of the assets. Other Long-Term Liabilities Other long-term liabilities are comprised of the following: Post-employment and other benefit/retirement liabilities . . . . . . . . . . . . . . . . . Insurance liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31 2012 2011 (In thousands) $ 35,273 45,865 33,748 57,510 161,936 153,924 $ 35,797 45,509 34,186 56,366 161,936 109,120 Total other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $488,256 $442,914 Self-Insurance The Company is self-insured for the majority of group health insurance costs. A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by the Company’s claims admin- istrators. These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year. Long-term insurance liabilities consist primarily of reserves for the workers’ compensation program. In addition, the Company carries various large risk deductible workers’ compensation policies for the majority of workers’ compensation liabilities. The Company records the workers’ compensation reserves based on an analy- sis performed by an independent actuary. The analysis calculates development factors, which are applied to total reserves as provided by the various insurance companies who underwrite the program. While the Company believes that the assumptions used to calculate these liabilities are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect workers’ compensation costs. F-12 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Accumulated Other Comprehensive Loss Accumulated other comprehensive loss is comprised of the following: December 31 2012 2011 (In thousands) Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized net actuarial loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized prior service credit, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . $ 131,084 (644,244) 11,668 $ 107,238 (617,623) 28,347 Total accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . $(501,492) $(482,038) Fair Value of Financial Instruments The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. At December 31, 2012 and 2011, the fair value of fixed rate debt was approximately $516,000,000 and $509,000,000, respectively. The fair value of fixed rate debt is designated as Level 2 in the fair value hierarchy (i.e., significant observable inputs) and is based primarily on the discounted value of future cash flows using current market interest rates offered for debt of similar credit risk and maturity. Shipping and Handling Costs Shipping and handling costs are classified as selling, administrative and other expenses in the accompanying consolidated statements of income and comprehensive income and totaled approximately $220,000,000, $190,000,000, and $180,000,000 for the years ended December 31, 2012, 2011, and 2010, respectively. Advertising Costs Advertising costs are expensed as incurred and totaled $43,200,000, $45,100,000, and $36,800,000 in the years ended December 31, 2012, 2011, and 2010, 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. Share-Based Compensation The Company maintains various long-term incentive plans, which provide for the granting of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), performance awards, dividend equivalents and other share-based awards. SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of the Company’s common stock on the date of exercise over the base value of the grant. The terms of such SARs require net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of the Company’s common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion of awards under these plans. F-13 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Net Income per Common Share Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the year. The computation of diluted net income per common share includes the dilutive effect of stock options, stock appreciation rights and nonvested restricted stock awards options. Options to purchase approximately 730,000, 850,000, and 4,500,000 shares of common stock ranging from $42 — $63 per share were outstanding at December 31, 2012, 2011, and 2010, respectively. These options were excluded from the computation of diluted net income per common share because the options’ exercise price was greater than the average market price of common stock in each respective year. Recently Adopted Accounting Pronouncements In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income, which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate, but consecutive statements for annual periods. Additionally, ASU 2011-05 eliminates the option to present comprehensive income and its components as part of the statement of equity. ASU 2011-05 was effective for the Company’s interim and annual periods beginning after December 15, 2011. The adoption of ASU 2011-05 only changed the manner of comprehensive income presentation in the consolidated financial statements for the years ended December 31, 2012, 2011, and 2010. The adoption of this ASU had no impact on the Company’s reported financial position, cash flows, or results of operations in the consolidated financial statements. 2. Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill during the years ended December 31, 2012, 2011, and 2010 by reportable segment, as well as other identifiable intangible assets, are summarized as follows (in thousands): Goodwill Automotive Industrial Office Products Electrical/ Electronic Materials Other Intangible Assets, Net Total Balance as of January 1, 2011 . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . $ 44,271 $86,810 — 12,379 — — (178) (566) $10,554 $ 8,647 — 15,703 — — — — $ 59,266 50,128 (6,774) (465) $209,548 78,210 (6,774) (1,209) Balance as of December 31, 2011 . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . 43,705 114,206 — 638 99,011 — — 221 10,554 — — — 24,350 5,355 102,155 110,014 — (12,991) 621 — 279,775 229,575 (12,991) 1,480 Balance as of December 31, 2012 . . . . . . . . $158,549 $99,232 $10,554 $29,705 $199,799 $497,839 F-14 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) The gross carrying amounts and accumulated amortization relating to other intangible assets at December 31, 2012 and 2011 is as follows (in thousands): 2012 2011 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Customer relationships . . . . . . . . . . . . Trademarks . . . . . . . . . . . . . . . . . . . . . Non-competition agreements . . . . . . . $209,328 29,337 4,483 $(38,030) (1,944) (3,375) $171,298 $100,921 26,996 5,416 27,393 1,108 $(26,098) (1,197) (3,883) $ 74,823 25,799 1,533 $243,148 $(43,349) $199,799 $133,333 $(31,178) $102,155 Amortization expense for other intangible assets totaled $12,991,000, $6,774,000, and $4,737,000 for the years ended December 31, 2012, 2011, and 2010, respectively. Estimated other intangible assets amortization expense for the succeeding five years is as follows (in thousands): 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,500 15,300 15,100 14,600 14,200 $74,700 3. Credit Facilities There were no amounts subject to variable rates at December 31, 2012 and 2011. The weighted average interest rate on the Company’s outstanding borrowings was approximately 4.01% at December 31, 2012 and 2011. The Company maintains an $850,000,000 unsecured revolving line of credit with a consortium of financial institutions that matures in September 2017 and bears interest at LIBOR plus a margin, which is based on the Company’s leverage ratio (0.96% at December 31, 2012). The Company also has the option under this agreement to increase its borrowing an additional $350,000,000, as well as an option to decrease the borrowing capacity or terminate the Syndicated Facility with appropriate notice. No amounts were outstanding under this line of credit at December 31, 2012 and 2011. Certain borrowings require the Company to comply with a financial covenant with respect to a maximum debt-to-capitalization ratio. At December 31, 2012, the Company was in compliance with all such covenants. Due to the workers’ compensation and insurance reserve requirements in certain states, the Company also had unused letters of credit of $61,119,000 and $53,703,000 outstanding at December 31, 2012 and 2011, respectively. F-15 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Amounts outstanding under the Company’s credit facilities consist of the following: December 31 2012 2011 (In thousands) Unsecured term notes: November 30, 2008, Series C Senior Unsecured Notes, $250,000,000, 4.67% fixed, due November 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 $250,000 November 30, 2011, Series D and E Senior Unsecured Notes, $250,000,000, 3.35% fixed, due November 30, 2016 . . . . . . . . . . . . . . . . 250,000 250,000 Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less debt due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 250,000 500,000 — Long-term debt, excluding current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 $500,000 4. Leased Properties Future minimum payments, by year and in the aggregate, under the noncancelable operating leases with ini- tial or remaining terms of one year or more was approximately the following at December 31, 2012 (in thousands): 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $136,900 110,300 84,400 62,800 42,200 153,500 Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $590,100 Rental expense for operating leases was approximately $158,200,000, $154,500,000, and $147,886,000, for 2012, 2011, and 2010, respectively. 5. Share-Based Compensation At December 31, 2012, total compensation cost related to nonvested awards not yet recognized was approx- imately $20,400,000. The weighted-average period over which this compensation cost is expected to be recog- nized is approximately three years. The aggregate intrinsic value for options and RSUs outstanding at December 31, 2012 and 2011 was approximately $90,300,000 and $110,300,000, respectively. The aggregate intrinsic value for options and RSUs vested totaled approximately $57,600,000 and $77,800,000 at December 31, 2012 and 2011, respectively. At December 31, 2012, the weighted-average contractual life for outstanding and exercisable options and RSUs was six and five years, respectively. Share-based compensation cost of $10,747,000, $7,547,000, and $7,016,000, was recorded for the years ended December 31, 2012, 2011, and 2010, respectively. The total income tax benefit recognized in the consolidated statements of income and compre- hensive income for share-based compensation arrangements was approximately $4,300,000, $3,000,000, and $2,800,000, for 2012, 2011, and 2010, respectively. There have been no modifications to valuation method- ologies or methods during the years ended December 31, 2012, 2011, and 2010. For the years ended December 31, 2012, 2011 and 2010 the fair value for options and SARs granted was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions, F-16 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) respectively: risk-free interest rate of 2.0%, 3.6%, and 3.6%; dividend yield of 3.3%, 3.8%, and 4.6%; annual historical volatility factor of the expected market price of the Company’s common stock of 19% for each of the three years; an average expected life and estimated turnover based on the historical pattern of existing grants of approximately seven years and 5.0% to 6.0%, respectively. The fair value of RSUs is based on 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, 2012, 2011, and 2010, was $6,700,000, $7,200,000, and $9,200,000, respectively. A summary of the Company’s share-based compensation activity and related information is as follows: Outstanding at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding at end of year (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercisable at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares available for future grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 Shares (1) (In thousands) 5,987 1,003 (1,834) (56) 5,100 2,993 2,961 Weighted- Average Exercise Price (2) $45 63 41 52 $50 $45 (1) Shares include Restricted Stock Units (RSUs). (2) The weighted-average exercise price excludes RSUs. (3) The exercise prices for options and SARs outstanding as of December 31, 2012 ranged from approximately $37 to $63. The weighted-average remaining contractual life of all options and SARs outstanding is approx- imately six years. The weighted-average grant date fair value of options and SARs granted during the years 2012, 2011, and 2010 was $7.96, $8.18, and $5.41, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2012, 2011, and 2010 was $41,500,000, $25,100,000, and $15,700,000. In 2012, the Company granted approximately 858,000 SARs and 145,000 RSUs. In 2011, the Company granted approximately 1,028,000 SARs and 126,000 RSUs. In 2010, the Company granted approximately 1,002,000 SARs and 124,000 RSUs. A summary of the Company’s nonvested share awards (RSUs) activity is as follows: Nonvested Share Awards (RSUs) Nonvested at January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares (In thousands) 222 145 (40) (11) Nonvested at December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Weighted- Average Grant Date Fair Value $48 63 51 49 $54 F-17 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) For the years ended December 31, 2012, 2011, and 2010 approximately $11,000,000, $5,400,000, and $3,300,000, respectively, of excess tax benefits was classified as a financing cash inflow. 6. Income Taxes Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Approximately $382,000,000 of undistributed earnings of the Company’s foreign subsidiaries is considered to be indefinitely reinvested. As such, no U.S. federal and state income taxes have been provided thereon, and it is not practicable to determine the amount of the related unrecognized deferred income tax liability. Significant components of the Company’s deferred tax assets and liabilities are as follows: Deferred tax assets related to: Expenses not yet deducted for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . Pension liability not yet deducted for tax purposes . . . . . . . . . . . . . . . . . . . Capital loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $362,265 405,048 16,803 (16,803) $347,605 377,846 16,803 (16,803) 2012 2011 (In thousands) Deferred tax liabilities related to: Employee and retiree benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767,313 725,451 205,268 191,047 41,130 51,616 188,206 188,063 47,413 43,225 489,061 466,907 Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current portion of deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278,252 1,211 258,544 3,064 Noncurrent net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $279,463 $261,608 The current portion of the deferred tax liability is included in income taxes payable in the consolidated bal- ance sheets. The Company has a capital loss carryforward of approximately $42,000,000 that will expire in 2013. The components of income before income taxes are as follows: United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 903,698 115,234 (In thousands) $784,841 105,965 $693,580 68,203 Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,018,932 $890,806 $761,783 2012 2011 2010 F-18 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) The components of income tax expense are as follows: 2012 2011 2010 (In thousands) Current: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $288,135 44,653 23,352 14,751 $260,222 41,511 26,294 (2,337) $221,770 36,291 16,217 11,994 $370,891 $325,690 $286,272 The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows: Statutory rate applied to income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus state income taxes, net of Federal tax benefit Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $356,626 30,227 (15,962) (In thousands) $311,782 26,790 (12,882) $266,624 24,621 (4,973) 2012 2011 2010 $370,891 $325,690 $286,272 The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2008 or subject to non-United States income tax examina- tions 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 twelve 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 effect, if any, of the amount of such change during the next twelve months to previously recorded uncertain tax positions in connection with the audits. However, the Company does not anticipate total unrecognized tax benefits will significantly change dur- ing the year due to the settlement of audits and the expiration of statutes of limitations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions based on tax positions related to the current year . . . . . . . Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . Reductions for tax positions for prior years . . . . . . . . . . . . . . . . . . . . Reduction for lapse in statute of limitations . . . . . . . . . . . . . . . . . . . Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 2011 2010 $46,845 5,702 2,172 (5,025) (2,658) (1,581) (In thousands) $39,425 6,035 7,966 (481) (4,563) (1,537) $33,322 4,243 3,493 (624) (451) (558) Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,455 $46,845 $39,425 The amount of gross tax effected unrecognized tax benefits, including interest and penalties, as of December 31, 2012 and 2011 was approximately $58,020,000 and $59,532,000, respectively, of which approx- imately $17,615,000 and $18,966,000, respectively, if recognized, would affect the effective tax rate. During the years ended December 31, 2012, 2011, and 2010, the Company paid interest and penalties of approximately F-19 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) $493,000, $759,000, and $272,000, respectively. The Company had approximately $12,565,000 and $12,687,000 of accrued interest and penalties at December 31, 2012 and 2011, respectively. The Company recognizes poten- tial interest and penalties related to unrecognized tax benefits as a component of income tax expense. 7. Employee Benefit Plans The Company’s defined benefit pension plans cover employees in the U.S. and Canada who meet eligibility requirements. The plan covering U.S. employees is noncontributory and benefits are based on the employees’ compensation during the highest five of their last ten years of credited service. The Canadian plan is contributory and benefits are based on career average compensation. The Company’s funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. The Company may increase its contribution above the minimum if appropriate to its tax and cash position and the plans’ funded position. In December 2012, the U.S. defined benefit plan was amended to reflect a hard freeze as of December 31, 2013. Therefore, no further benefit accruals will be provided after that date for additional credited service or earnings. In addition, all participants will become fully vested as of December 31, 2013. The Company recorded a one-time noncash curtailment gain of $23,507,000 in connection with this amendment. The Company also sponsors supplemental retirement plans covering employees in the U.S. and Canada and other postretirement benefit plans in the U.S. The Company uses a measurement date of December 31 for its pension and other postretirement benefit plans. Changes in benefit obligation Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan participants’ contributions . . . . . . . . . . . . . . . Plan amendments . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . Exchange rate changes . . . . . . . . . . . . . . . . . . . . . . Gross benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . Less Federal subsidy . . . . . . . . . . . . . . . . . . . . . . . Curtailments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension Benefits Other Postretirement Benefits 2012 2011 2012 2011 (In thousands) $1,958,399 15,254 100,338 3,962 (4,217) 330,028 5,489 (67,767) N/A (175,794) $1,689,011 13,039 97,293 3,887 — 219,804 (4,656) (59,979) N/A — $ 7,514 — 267 3,074 — (370) — (5,112) 105 — $12,329 — 474 3,412 362 (3,911) — (5,326) 174 — Benefit obligation at end of year . . . . . . . . . . . . . . $2,165,692 $1,958,399 $ 5,478 $ 7,514 The benefit obligations for the Company’s U.S. pension plans included in the above were $1,955,414,000 and $1,775,994,000 at December 31, 2012 and 2011, respectively. The total accumulated benefit obligation for the Company’s defined benefit pension plans was approximately $2,112,134,000 and $1,756,546,000 at December 31, 2012 and 2011, respectively. F-20 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) The assumptions used to measure the pension and other postretirement plan benefit obligations for the plans at December 31, 2012 and 2011, were: Pension Benefits Other Postretirement Benefits 2012 2011 2012 2011 Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of increase in future compensation levels . . . . . . . . . . . . . . . . . . . . 4.17% 5.17% 3.05% 4.00% 3.30% 3.30% — — A 7.60% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2012. The rate was assumed to decrease ratably to 4.80% at December 31, 2019, and thereafter. Pension Benefits Other Postretirement Benefits 2012 2011 2012 2011 (In thousands) Changes in plan assets Fair value of plan assets at beginning of year . . . . Actual return on plan assets . . . . . . . . . . . . . . . . . . Exchange rate changes . . . . . . . . . . . . . . . . . . . . . . Employer contributions . . . . . . . . . . . . . . . . . . . . . Plan participants’ contributions . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,470,030 168,491 4,498 16,465 3,962 (67,767) $1,439,711 31,528 (3,598) 58,481 3,887 (59,979) $ — $ — — — 1,914 3,412 (5,326) — — 2,038 3,074 (5,112) Fair value of plan assets at end of year . . . . . . . . . . $1,595,679 $1,470,030 $ — $ — The fair values of plan assets for the Company’s U.S. pension plans included in the above were $1,425,047,000 and $1,320,036,000 at December 31, 2012 and 2011, respectively. The asset allocations for the Company’s funded pension plans at December 31, 2012 and 2011, and the tar- get allocation for 2013, by asset category were: Asset Category Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Target Allocation 2013 Percentage of Plan Assets at December 31 2012 2011 71% 29% 68% 69% 32% 31% 100% 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 is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada, as well as fiduciary standards. The long-term primary objectives for the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed 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 (49% S&P 500 F-21 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Index, 5% Russell Mid Cap Index, 8% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index, and 28% BarCap U.S. Govt/Credit). The fair values of the plan assets as of December 31, 2012 and 2011, by asset category, are shown in the tables below. Various inputs are considered when determining the value of the Company’s pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year. 2012 Quoted Prices in Active Markets for Identical Assets (Level 1) Total Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands) Equity Securities Common stocks — mutual funds — equity . . . . . . . . . . . . Genuine Parts Company . . . . . . . . . . . . . . . . . . . . . . . . . . . Other stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt Securities Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset-backed and mortgage-backed securities . . . . . . . . . . Other-international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Municipal funds-fixed income . . . . . . . . . . . . . . . . . . . . . . Cash surrender value of life insurance policies . . . . . . . . . . $ 342,846 128,236 608,017 $ 342,846 128,236 608,017 $ — — — $ — — — 37,626 45,719 166,413 127,824 24,077 10,188 532 101,578 2,623 37,626 45,719 74,707 — — 91,706 — 127,824 24,077 — — 10,188 532 — — 101,578 — — — — — — — — — — 2,623 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,595,679 $1,247,339 $345,717 $2,623 F-22 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) 2011 Quoted Prices in Active Markets for Identical Assets (Level 1) Total Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands) Equity Securities Common stocks — mutual funds — equity . . . . . . . . . . . . Genuine Parts Company . . . . . . . . . . . . . . . . . . . . . . . . . . . Other stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt Securities Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset-backed and mortgage-backed securities . . . . . . . . . . Other-international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mutual funds-fixed income . . . . . . . . . . . . . . . . . . . . . . . . . $ 348,909 123,436 546,995 $ 348,909 123,436 546,995 $ — — — $ — — — 38,968 16,888 145,966 127,698 21,441 12,084 593 87,052 38,968 16,888 66,334 — — 79,632 — 127,698 21,441 — — 12,084 — 593 87,052 — — — — — — — — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,470,030 $1,153,614 $316,416 $ — Equity securities include Genuine Parts Company common stock in the amounts of $128,236,000 (8.0% of total plan assets) and $123,436,000 (8.4% of total plan assets) at December 31, 2012 and 2011, respectively. Dividend payments received by the plan on Company stock totaled approximately $3,994,000 and $3,630,000 in 2012 and 2011, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services. The changes in the fair value measurement of plan assets using significant unobservable inputs (Level 3) during 2012 and the 2011 changes were not material. Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measur- ing 2013 pension cost or income is 7.83% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships. The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31: Amounts recognized in the consolidated balance sheets consist of: Pension Benefits Other Postretirement Benefits 2012 2011 2012 2011 Other long-term asset . . . . . . . . . . . . . . . . . . . . . . . . . Other current liability . . . . . . . . . . . . . . . . . . . . . . . . . Pension and other post-retirement liabilities . . . . . . . $ $ 4,021 (5,402) (568,632) (In thousands) 4,374 (4,918) (487,825) $ — $ — (1,122) (1,618) (4,356) (5,896) $(570,013) $(488,369) $(5,478) $(7,514) F-23 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Amounts recognized in accumulated other comprehensive loss consist of: Pension Benefits Other Postretirement Benefits 2012 2011 2012 2011 (In thousands) Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . $1,043,089 (10,612) $999,189 (37,172) $12,963 (8,515) $14,588 (9,445) $1,032,477 $962,017 $ 4,448 $ 5,143 For the pension benefits, the following table reflects the total benefits expected to be paid from the plans’ or the Company’s assets. Of the pension benefits expected to be paid in 2013, approximately $5,471,000 is expected to be paid from employer assets. For pension benefits, expected employer contributions reflect amounts expected to be contributed to funded plans. For other postretirement benefits, the employer contributions in the table below reflect only the Company’s share of the benefit cost. Information about the expected cash flows for the pension plans and other postretirement benefit plans follows: Pension Benefits Other Postretirement Benefits (In thousands) Employer contribution 2013 (expected) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,099 $1,122 Expected benefit payments 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 through 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,390 86,670 91,697 97,333 103,708 612,723 $1,122 965 824 644 451 1,232 Net periodic benefit cost included the following components: Pension Benefits Other Postretirement Benefits 2012 2011 2010 2012 2011 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . Amortization of prior service credit . . . . . . . . . Amortization of actuarial loss . . . . . . . . . . . . . Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . $ 15,254 100,338 (128,208) (7,270) 70,161 (23,507) $ 13,039 97,293 (124,150) (6,970) 53,039 — (In thousands) $ 12,312 95,453 (114,166) (6,979) 35,264 — $ — $ — $ — 605 474 — — (1,059) (930) 1,759 1,708 — — 267 — (930) 1,254 — Net periodic benefit cost . . . . . . . . . . . . . . . . . $ 26,768 $ 32,251 $ 21,884 $ 591 $1,252 $ 1,305 F-24 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows: Pension Benefits Other Postretirement Benefits 2012 2011 2010 2012 2011 2010 (In thousands) Current year actuarial loss (gain) . . . . . . . . . . . . Recognition of actuarial loss . . . . . . . . . . . . . . . . . . . . . . Current year prior service (credit) cost . . . . . . . . . . Recognition of prior service credit $114,061 (70,161) (4,217) 30,777 $311,038 (53,039) — 6,970 $ 60,777 (35,264) 1,148 6,979 $ (371) $(3,911) $ (1,254) — 930 (1,708) 362 930 340 (1,759) — 1,059 Total recognized in other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,460 $264,969 $ 33,640 $ (695) $(4,327) $ (360) Total recognized in net periodic benefit cost and other comprehensive income (loss) . . . . . $ 97,228 $297,220 $ 55,524 $ (104) $(3,075) $ 945 The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2013 are as follows: Pension Benefits Other Post- retirement Benefits (In thousands) Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $84,572 (7,598) $1,124 (956) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $76,974 $ 168 The assumptions used in measuring the net periodic benefit costs for the plans follow: Pension Benefits Other Postretirement Benefits 2012 2011 2010 2012 2011 2010 Weighted average discount rate . . . . . . . . . . . . . . . . . . . . Rate of increase in future compensation levels . . . . . . . . . Expected long-term rate of return on plan assets . . . . . . . 5.17% 5.74% 6.54% 4.00% 4.25% 5.20% 3.30% 3.39% 3.75% — 7.84% 7.87% 8.00% — — — — — An 8.00% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2011. The rate was assumed to decrease ratably to 4.80% at December 31, 2019, and thereafter. The effect of a one-percentage-point change in the assumed health care cost trend rate is not significant. The Company has two defined contribution plans that cover substantially all of its domestic employees. The Company’s matching contributions are determined based on the employee’s participation in the U.S. pension plan. Pension plan participants who continue earning credited service after 2008 receive a matching contribution of 20% of the first 6% of the employee’s salary. Other employees receive a matching contribution of 100% of the first 5% of the employee’s salary. In December 2012, the Company approved an amendment to merge the two plans effective January 1, 2014. Beginning in 2014, all employees will receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense for both plans was approximately $43,155,000 in 2012, $38,773,000 in 2011, and $33,476,000 in 2010. F-25 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) 8. Guarantees 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 (affiliates). Presently, the independents are generally consolidated by unaffiliated enterprises that have a control- ling financial interest through ownership of a majority voting interest in the entity. The Company has no voting interest or other equity conversion rights in any of the independents. The Company does not control the independents or the affiliates, but receives a fee for the guarantee. The Company has concluded that the independents are variable interest entities, but that the Company is not the primary beneficiary. Specifically, the equity holders of the independents have the power to direct the activities that most significantly impact the enti- ty’s economic performance including, but not limited to, decisions about hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring and maintaining appropriate inventories, and store hours. Separately, the Company concluded the affiliates are not variable inter- est entities. The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to the Company’s guarantee. While such borrowings of the independents and affiliates are outstanding, the Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain limitations on additional borrowings. At December 31, 2012, the Company was in compliance with all such covenants. At December 31, 2012, the total borrowings of the independents and affiliates subject to guarantee by the Company were approximately $231,500,000. These loans generally mature over periods from one to six years. In the event that the Company is required to make payments in connection with guaranteed obligations of the independents or the affiliates, the Company would obtain and liquidate certain collateral (e.g., accounts receiv- able and inventory) to recover all or a portion of the amounts paid under the guarantee. When it is deemed prob- able that the Company will incur a loss in connection with a guarantee, a liability is recorded equal to this estimated loss. To date, losses in connection with guarantees of independents’ and affiliates’ borrowings. the Company has had no significant The Company has accrued for guarantees related to the independents’ and affiliates’ borrowings as of December 31, 2012 and 2011. These liabilities are not material to the financial position of the Company and are included in other long-term liabilities in the accompanying consolidated balance sheets. 9. Acquisitions On May 1, 2012 the Company acquired Quaker City Motor Parts Co. (“Quaker City”) for $343,000,000, net of cash acquired. Quaker City, headquartered in Middleton, Delaware, is a long-standing NAPA distributor with annual revenues of approximately $300,000,000. Quaker City serves approximately 270 auto parts stores, of which approximately 140 are company-owned. The Company funded the acquisition with cash on hand and short-term borrowings under credit facilities. During 2011, the Company acquired three companies in the Industrial Group and one company in the Elec- trical/Electronic Materials Group for approximately $115,600,000. During 2010, the Company acquired four companies in the Industrial and Electrical/Electronic Materials Groups for approximately $90,645,000. The Company allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for the acquired companies were included in the Company’s consolidated statements of income and comprehensive income beginning on their respective acquisition dates. The Company recorded approximately $230,000,000, $78,210,000, and $40,247,000 of goodwill and other intangible assets associated with the 2012, 2011, and 2010 acquisitions, respectively. The Company is in the process of analyzing the estimated values of assets and liabilities acquired as of the acquisition F-26 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) date for the Quaker City acquisition and is obtaining third-party valuations of certain tangible and intangible assets. The acquisition accounting is therefore preliminary and subject to revision. For the 2012 acquisitions, other intangible assets acquired consisted of customer relationships of $108,000,000 and trademarks of $2,000,000, with weighted average amortization lives of 15 and 40 years, respectively. For the 2011 acquisitions, other intangible assets acquired consisted of customer relationships of $37,378,000, trademarks of $12,100,000, and non-competition agreements of $650,000, with weighted average amortization lives of 15, 40, and 5 years, respectively. For the 2010 acquisitions, other intangible assets acquired consisted of customer relationships of $16,688,000, trademarks of $7,104,000, and non-competition agreements of $500,000, with weighted average amortization lives of 14, 40, and 5 years, respectively. 10. Equity Investment Effective January 1, 2012, the Company acquired a 30% investment in the Exego Group for approximately $165,600,000. The acquisition was funded with the Company’s cash on hand. The Exego Group, which is head- quartered in Melbourne, Australia, is a leading aftermarket distributor of automotive replacement parts and accessories in Australasia, with annual revenues of approximately $1,000,000,000 and a company-owned store footprint of more than 430 locations across Australia and New Zealand. The Company has an option to acquire the remaining 70% of Exego at a later date contingent upon Exego achieving certain earnings thresholds. The Company has accounted for the 30% investment under the equity method of accounting. 11. Segment Data The Company’s reportable segments consist of automotive, industrial, office products, and electrical/ electronic materials. Within 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) for substantially all makes and models of automobiles, trucks, and other vehicles. The Company’s industrial segment distributes a wide variety 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 furniture, and business electronics. The Company’s electrical/electronic materials segment distributes a wide variety of electrical/electronic materials, including insulating and conductive materials for use in electronic and electrical apparatus. Inter-segment sales are not significant. Operating profit for each industry segment is calculated as net sales less operating expenses excluding general corporate expenses, interest expense, equity in income from investees, amortization, and noncontrolling interests. Approximately $115,200,000, $106,000,000 and $68,200,000 of income before income taxes was generated in jurisdictions outside the United States for the years ended December 31, 2012, 2011, and 2010, respectively. Net sales and net long-lived assets by country relate directly to the Company’s operations in the respective country. Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment. F-27 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) For management purposes, net sales by segment exclude the effect of certain discounts, incentives, and freight billed to customers. The line item “other” represents the net effect of the discounts, incentives, and freight billed to customers that are reported as a component of net sales in the Company’s consolidated statements of income and comprehensive income. 2012 2011 2010 2009 2008 (In thousands) Net sales: Automotive . . . . . . . . . . . . . . . . . . . Industrial . . . . . . . . . . . . . . . . . . . . . Office products . . . . . . . . . . . . . . . . Electrical/electronic materials . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . $ 6,320,882 4,453,574 1,686,690 582,820 (30,098) $ 6,061,424 4,173,574 1,689,368 557,537 (23,026) $ 5,608,101 3,521,863 1,641,963 449,770 (14,108) $ 5,225,389 2,885,782 1,639,018 345,808 (38,485) $ 5,321,536 3,514,661 1,732,514 465,889 (19,337) Total net sales . . . . . . . . . . . . . . . . . . . $13,013,868 $12,458,877 $11,207,589 $10,057,512 $11,015,263 Operating profit: Automotive . . . . . . . . . . . . . . . . . . . Industrial . . . . . . . . . . . . . . . . . . . . . Office products . . . . . . . . . . . . . . . . Electrical/electronic materials . . . . . $ $ 540,678 352,119 134,441 50,910 . . . . . . . . . . . . . Total operating profit Interest expense, net . . . . . . . . . . . . . . Corporate expense . . . . . . . . . . . . . . . . Intangible asset amortization . . . . . . . . Other expense . . . . . . . . . . . . . . . . . . . 1,078,148 (19,619) (25,668) (12,991) (938) $ 467,806 337,628 134,124 40,663 980,221 (24,608) (56,971) (6,774) (1,062) $ 421,109 255,616 131,746 30,910 839,381 (26,598) (45,451) (4,737) (812) $ 387,945 162,353 126,104 25,254 701,656 (27,112) (24,913) (3,644) (1,822) 385,356 294,652 144,127 36,721 860,856 (29,847) (55,119) (2,861) (4,561) Income before income taxes . . . . . . . . $ 1,018,932 $ 890,806 $ 761,783 $ 644,165 $ 768,468 Assets: Automotive . . . . . . . . . . . . . . . . . . . Industrial . . . . . . . . . . . . . . . . . . . . . Office products . . . . . . . . . . . . . . . . Electrical/electronic materials . . . . . Corporate . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible $ 3,411,252 1,130,877 731,564 137,237 898,292 $ 3,218,931 1,100,024 700,720 129,933 773,391 $ 3,177,644 955,241 694,166 113,757 637,871 $ 3,148,876 865,431 619,612 76,716 445,705 $ 3,123,084 1,025,292 638,854 95,655 67,823 assets . . . . . . . . . . . . . . . . . . . . . . 497,839 279,775 209,548 171,532 158,825 Total assets . . . . . . . . . . . . . . . . . . . . . $ 6,807,061 $ 6,202,774 $ 5,788,227 $ 5,327,872 $ 5,109,533 F-28 Genuine Parts Company and Subsidiaries Notes to Consolidated Financial Statements — (Continued) 2012 2011 2010 2009 2008 (In thousands) Depreciation and amortization: $ Automotive . . . . . . . . . . . . . . . . . . . Industrial . . . . . . . . . . . . . . . . . . . . . Office products . . . . . . . . . . . . . . . . Electrical/electronic materials . . . . . Corporate . . . . . . . . . . . . . . . . . . . . . Intangible asset amortization . . . . . . $ 60,630 8,307 10,837 1,733 3,885 12,991 $ 60,252 7,495 9,999 1,554 2,862 6,774 $ 63,942 7,208 9,737 1,414 2,294 4,737 $ 65,554 7,611 9,685 1,666 2,251 3,644 65,309 7,632 9,825 1,572 1,499 2,861 Total depreciation and amortization . . $ 98,383 $ 88,936 $ 89,332 $ 90,411 $ 88,698 Capital expenditures: $ Automotive . . . . . . . . . . . . . . . . . . . Industrial . . . . . . . . . . . . . . . . . . . . . Office products . . . . . . . . . . . . . . . . Electrical/electronic materials . . . . . Corporate . . . . . . . . . . . . . . . . . . . . . $ 67,482 13,015 16,013 1,029 4,448 $ 61,795 9,851 22,036 1,762 8,025 $ 46,888 4,307 29,866 1,957 2,361 $ 53,911 2,987 5,782 676 6,089 72,628 7,575 9,539 1,406 13,878 Total capital expenditures . . . . . . . . . . $ 101,987 $ 103,469 $ 85,379 $ 69,445 $ 105,026 Net sales: United States . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . Mexico . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . $11,299,291 1,616,921 127,754 (30,098) $10,791,303 1,571,733 118,867 (23,026) $ 9,793,820 1,327,552 100,325 (14,108) $ 8,935,651 1,078,799 81,547 (38,485) $ 9,716,029 1,219,759 98,812 (19,337) Total net sales . . . . . . . . . . . . . . . . . . . $13,013,868 $12,458,877 $11,207,589 $10,057,512 $11,015,263 Net long-lived assets: United States . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . Mexico . . . . . . . . . . . . . . . . . . . . . . . $ $ 466,473 93,496 6,396 411,193 84,210 4,801 $ $ 398,318 80,978 4,834 $ 402,937 78,502 3,585 352,314 67,731 3,220 Total net long-lived assets . . . . . . . . . . $ 566,365 $ 500,204 $ 484,130 $ 485,024 $ 423,265 F-29 Item 15(a) Annual Report on Form 10-K Financial Statement Schedule II — Valuation and Qualifying Accounts Genuine Parts Company and Subsidiaries Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period Year ended December 31, 2010: Reserves and allowances deducted from asset accounts: Allowance for doubtful accounts . . . . . . . . . Year ended December 31, 2011: Reserves and allowances deducted from asset accounts: Allowance for doubtful accounts . . . . . . . . . Year ended December 31, 2012: Reserves and allowances deducted from asset accounts: Allowance for doubtful accounts . . . . . . . . . $16,589,779 $10,597,432 $(11,588,299)(1) $15,598,912 $15,598,912 $13,247,731 $(11,930,188)(1) $16,916,455 $16,916,455 $ 8,046,605 $ (5,782,870)(1) $19,180,190 (1) Doubtful accounts written off, net of recoveries. S-1 ANNUAL REPORT ON FORM 10-K INDEX OF EXHIBITS The following exhibits are filed (or furnished, if so indicated) herewith as a part of this Report: 10.27* 10.28* 10.29* Amendment No. 2 to the Genuine Parts Company Director’s Deferred Compensation Plan, dated December 7, 2012, effective December 7, 2012. Amendment No. 8 to the Genuine Parts Company Tax-Deferred Savings Plan, dated December 7, 2012, effective December 7, 2012. Amendment No. 3 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated January 1, 2009, dated December 7, 2012, effective December 31, 2013. 10.30* Form of Amendment to the Amended and Restated Change in Control Agreement. 10.31* Genuine Parts Company Stock Appreciation Rights Agreement. 21 23 31.1 31.2 32.1 32.2 Subsidiaries of the Company. 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 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). Statement of Chief Financial Officer of Genuine Parts Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 101 Interactive data files pursuant to Rule 405 of Regulation S-T. The following exhibits are incorporated by reference as set forth in Item 15 of this Form 10-K: — 3.1 — 3.2 — 4.2 Amended and Restated Articles of Incorporation of the Company, amended April 23, 2007. By-Laws of the Company as amended and restated August 20, 2007. Specimen Common Stock Certificate. Instruments with respect to long-term debt where the total amount of securities authorized there under does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis have not been filed. The Registrant agrees to furnish to the Commission a copy of each such instrument upon request. — 10.1* The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993. — 10.2* Amendment No. 1 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 1, 1996, effective June 1, 1996. — 10.3* Genuine Parts Company Death Benefit Plan, effective July 15, 1997. — 10.4* — 10.5* — 10.6* — 10.7* — 10.8* Amendment No. 2 to the Genuine Parts Company Tax-Deferred Savings Plan, dated April 19, 1999, effective April 19, 1999. The Genuine Parts Company Original Deferred Compensation Plan, as amended and restated as of August 19, 1996. Amendment to the Genuine Parts Company Original Deferred Compensation Plan, dated April 19, 1999, effective April 19, 1999. Amendment No. 3 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2001, effective July 1, 2001. Genuine Parts Company 1999 Long-Term Incentive Plan, as amended and restated as of November 19, 2001. — 10.9* — 10.10* Amendment No. 4 to the Genuine Parts Company Tax-Deferred Savings Plan, dated June 5, 2003, effective June 5, 2003. Genuine Parts Company Directors’ Deferred Compensation Plan, as amended and restated effec- tive January 1, 2003, and executed November 11, 2003. — 10.11* Amendment No. 5 to the Genuine Parts Company Tax-Deferred Savings Plan. — 10.12* Amendment No. 2 to the Genuine Parts Company Death Benefit Plan. — 10.13* Genuine Parts Company 2006 Long-Term Incentive Plan, effective April 17, 2006. — 10.14* — 10.15* — 10.16* — 10.17* Amendment to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 20, 2006, effective November 20, 2006. Amendment No. 1 to the Genuine Parts Company Directors’ Deferred Compensation Plan, dated November 19, 2007, effective January 1, 2008. Amendment No. 6 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 28, 2007, effective January 1, 2008. Amendment No. 2 to the Genuine Parts Company 2006 Long-Term Incentive Plan, dated November 19, 2007, effective November 19, 2007. — 10.18* Genuine Parts Company Performance Restricted Stock Unit Award Agreement. — 10.19* Genuine Parts Company Restricted Stock Unit Award Agreement. — 10.20* Form of Amended and Restated Change in Control Agreement. — 10.21* — 10.22* — 10.23* — 10.24* — 10.25* Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009. Genuine Parts Company 2009 Annual Incentive Bonus Plan, dated March 31, 2009, effective January 1, 2009. Amendment No. 1 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated August 16, 2010, effective August 16, 2010. Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, as amended and restated January 1, 2009, dated November 16, 2010, effective January 1, 2011. Amendment No. 7 to the Genuine Parts Company Tax-Deferred Savings Plan, dated November 16, 2010, effective January 1, 2011. — 10.26* Description of Director Compensation. * Indicates management contracts and compensatory plans and arrangements. SUBSIDIARIES OF THE COMPANY (as of December 31, 2012) EXHIBIT 21 Name BALKAMP, INC. EIS, INC. EIS DOMINICAN REPUBLIC, LLC GPC FINANCE COMPANY GPC PROCUREMENT COMPANY NATIONAL AUTOMOTIVE PARTS ASSOCIATION MOTION INDUSTRIES, INC. S.P. RICHARDS COMPANY SPR PROCUREMENT COMPANY SHUSTER CORPORATION 1ST CHOICE AUTO PARTS, INC. THE FLOWERS COMPANY GENERAL TOOL & SUPPLY GENUINE PARTS INVESTMENT COMPANY GPC MEXICO, S.A. de C.V. GRUPO AUTO TODO S.A. de C.V. ELECTRICAL INSULATION SUPPLIERS de MEXICO, % Owned 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 51.0% 46.5% 100.0% 100.0% 100.0% 100.0% Jurisdiction of Incorporation INDIANA GEORGIA GEORGIA DELAWARE GEORGIA MICHIGAN DELAWARE GEORGIA GEORGIA GEORGIA GEORGIA NORTH CAROLINA OREGON DELAWARE PUEBLA, MEXICO PUEBLA, MEXICO S.A. de C.V. EIS HOLDINGS (CANADA) INC. POLIFIBRA CANADA (1987) INC. MOTION INDUSTRIES (CANADA), INC. MOTION — MEXICO, S. de R.L. de C.V. S. P. RICHARDS CO. CANADA INC. UAP INC. GARANAT INC. UAPRO INC. UNITED AUTO PARTS (Eastern) LTD. SERVICES FINANCIERS UAP INC. WTC PARTS CANADA PIECES DE CAMION DE LA BEAUCE GPC GLOBAL SOURCING LIMITED GENUINE PARTS SOURCING (SHENZHEN) COMPANY LIMITED ALTROM CANADA CORP. GENUINE PARTS AUSTRALIA PTY LIMITED EXEGO GROUP PTY LIMITED EIS-GPC SERVICIOS de MEXICO, S. de R.L. De C.V. RIEBE’S AUTO PARTS, LLC AUTOPARTSPROS, LLC ADAMS AUTO PARTS, LLC BANGOR MOTOR PARTS MOTOR PARTS OF CARROLL COUNTY, INC. POTOMAC AUTO PARTS, INC. REISTERSTOWN AUTO PARTS, INC. WILLIAMSPORT AUTOMOTIVE, INC. ONTARIO, CANADA OTTAWA, ONTARIO GUADALAJARA, MEXICO 100.0% GUADALAJARA, JALISCO, MEXICO 100.0% BRITISH COLUMBIA, CANADA 100.0% 100.0% 100.0% 100.0% BRITISH COLUMBIA, CANADA 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 90.0% 100.0% QUEBEC, CANADA FEDERAL, CANADA FEDERAL, CANADA ONTARIO, CANADA QUEBEC, CANADA FEDERAL, CANADA QUEBEC, CANADA HONG KONG, CHINA SHENZHEN, CHINA VICTORIA, AUSTRALIA VICTORIA, AUSTRALIA 100.0% 100.0% BRITISH COLUMBIA, CANADA 100.0% 30.0% 100.0% GUADALAJARA, JALISCO, MEXICO 20.0% 20.0% 90.0% 79.0% 75.8% 79.0% 79.0% 79.0% GEORGIA GEORGIA DELAWARE PENNSYLVANIA MARYLAND MARYLAND MARYLAND PENNSYLVANIA Exhibit 23 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements: (1) Registration Statement No. 333-21969 on Form S-8 pertaining to the Genuine Parts Company Direc- tors’ Deferred Compensation Plan, (2) Registration Statement No. 333-76639 on Form S-8 pertaining to the Genuine Parts Company 1999 Long-Term Incentive Plan, and (3) Registration Statement No. 333-133362 on Form S-8 pertaining to the Genuine Parts Company 2006 Long-Term Incentive Plan; of our reports dated February 26, 2013, with respect to the consolidated financial statements and schedule of Genuine Parts Company and Subsidiaries and the effectiveness of internal control over financial reporting of Genuine Parts Company and Subsidiaries included in this Annual Report (Form 10-K) for the year ended December 31, 2012. /s/ Ernst & Young LLP Atlanta, Georgia February 26, 2013 EXHIBIT 31.1 CERTIFICATIONS I, Thomas C. Gallagher, certify that: 1. I have reviewed this annual report on Form 10-K of Genuine Parts Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining dis- closure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over finan- cial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the 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 a sig- nificant role in the registrant’s internal control over financial reporting. Date: February 26, 2013 /s/ Thomas C. Gallagher Thomas C. Gallagher Chairman and Chief Executive Officer EXHIBIT 31.2 CERTIFICATIONS I, Jerry W. Nix, certify that: 1. I have reviewed this annual report on Form 10-K of Genuine Parts Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining dis- closure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over finan- cial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the 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 a sig- nificant role in the registrant’s internal control over financial reporting. Date: February 26, 2013 /s/ Jerry W. Nix Jerry W. Nix Vice Chairman and Chief Financial Officer EXHIBIT 32.1 STATEMENT OF CHIEF EXECUTIVE OFFICER OF GENUINE PARTS COMPANY PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO § 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Genuine Parts Company (the “Company”) on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas C. Gallagher, Chairman and Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) The information contained in the Report fairly presents, in all material respects, the financial con- dition and results of operations of the Company. /s/ Thomas C. Gallagher Thomas C. Gallagher Chairman and Chief Executive Officer February 26, 2013 EXHIBIT 32.2 STATEMENT OF CHIEF FINANCIAL OFFICER OF GENUINE PARTS COMPANY PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO § 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Genuine Parts Company (the “Company”) on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jerry W. Nix, Vice Chairman and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowl- edge: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) The information contained in the Report fairly presents, in all material respects, the financial con- dition and results of operations of the Company. /s/ Jerry W. Nix Jerry W. Nix Vice Chairman and Chief Financial Officer February 26, 2013 BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY BOARD OF DIRECTORS Dr. Mary B. Bullock Paul D. Donahue Jean Douville Thomas C. Gallagher George C. “Jack” Guynn John R. Holder John D. Johns Michael M. E. Johns, MD J. Hicks Lanier Robert C. “Robin” Loudermilk, Jr. Wendy B. Needham Jerry W. Nix Gary W. Rollins Executive Vice Chancellor of Duke Kunshan University and President Emerita of Agnes Scott College President Chairman of the Board of Directors of UAP Inc. Chairman and Chief Executive Officer Retired President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Chairman and Chief Executive Officer of Holder Properties Chairman, President & Chief Executive Officer of Protective Life Corporation Chancellor and Executive Vice President of Health Affairs Emeritus, Emory University Chairman of the Board of Directors of Oxford Industries, Inc. President and Chief Executive Officer of The Loudermilk Companies, LLC Retired Managing Director, Global Automotive Research at Credit Suisse First Boston Vice Chairman and Chief Financial Officer Vice Chairman and Chief Executive Officer of Rollins Inc. Corporate Officers Thomas C. Gallagher Jerry W. Nix Paul D. Donahue Carol B. Yancey Treg S. Brown Charles A. Chesnutt R. Bruce Clayton Frank M. Howard Michael D. Orr Scott C. Smith Lisa K. Hamilton David A. Haskett Philip C. Johnson Sidney G. Jones Karl J. Koenig Napoleon B. Rutledge, Jr. Eric N. Sundby Matthew P. Brigham Jessica E. Morgan Robert L. Swann Christine E. Powell Jennifer L. Ellis U.S. Automotive Parts Group Paul D. Donahue Lee A. Maher Glenn M. Chambers Scott W. LeProhon Daniel F. Askey Todd P. Helms Gregory N. Miller Karen E. Salem J. Richard Borman Michael A. Briggs Byron H. Frantz Michael J. Fusaro Richard A. Geiger Mark W. Hohe David B. Nicki J. Michael Phillips Bret A. Robyck Vickie S. Smith Gaylord M. Spencer Michael L. Swartz Dennis P. Tolivar Chairman and Chief Executive Officer Vice Chairman and Chief Financial Officer President Executive Vice President — Finance and Corporate Secretary Senior Vice President — Planning and Acquisitions Senior Vice President — Technology and Process Improvement Senior Vice President — Human Resources Senior Vice President and Treasurer Senior Vice President — Operations and Logistics Senior Vice President — Corporate Counsel Vice President — Benefits and Communications Vice President and Corporate Controller Vice President — Compensation Vice President — Investor Relations Vice President — Real Estate and Construction Vice President and Assistant Treasurer Vice President — Information Technology Assistant Vice President — Treasury Services Assistant Vice President — Risk Management Assistant Vice President — Internal Audit and Compliance Assistant Vice President — Financial Analysis Associate Counsel and Assistant Secretary President Executive Vice President and Chief Operating Officer Executive Vice President — Operations Executive Vice President — Merchandising and Product Strategy Senior Vice President — Sales Senior Vice President — Human Resources Senior Vice President and Chief Financial Officer Chief Information Officer Vice President — Supply Chain and Logistics Vice President — Retail Product Management and Merchandising Vice President — Wholesale Product Management Vice President — Process Improvement — Distribution Vice President — Finance Vice President — Store Operations Vice President — NAPA Tools and Equipment Sales Vice President — Organizational Development Vice President — AutoCare Sales Vice President — Human Resources Vice President — Marketing Strategy Vice President — Inventory & Procurement Vice President — Major Accounts DIVISIONS M. Todd McMurtrie Grant L. Morris Michael J. Kelleher Gregg T. Sargent Kevin E. Herron Eric G. Fritsch Patrick A. Wolfe Stuart A. Kambury Bradley A. Shaffer Vice President — Atlantic Division Vice President — Central Division Vice President — Eastern Division Vice President — Florida Operations Vice President — Midwest Division Vice President — Mountain Division Vice President — Southern Division Vice President — Southwest Division Vice President — Western Division Quaker City Motor Parts Christopher R. Agostino President Heavy Vehicle Parts Group (Atlanta, GA) D. Gary Silva Greg A. Lancour President Vice President — Operations Rayloc (Atlanta, GA) William J. Westerman III Michael S. Gaffney II Chris C. Koenigshof Joseph W. Lashley Debbie E. Niffin President Vice President — Marketing Vice President — Human Resources Vice President — Information Services Vice President — Finance Balkamp, Inc. (Indianapolis, IN) D. Tip Tollison Frank C. Amato Mary F. Knudsen President Executive Vice President Vice President — Finance and Treasurer Grupo Auto Todo (Puebla, Mexico) Juan Lujambio Jorge Otero Juan Quintal President and Chief Executive Officer Executive Vice President — Finance Vice President — Sales and Marketing Altrom Import Parts Group (Vancouver, Canada) Dean P. Medwid Vice President and General Manager NAPA Canada/UAP Inc. (Montreal, Canada) Jean Douville Robert Hattem Sylvie Leduc Alain Masse John Buckley Daniel Dallaire Joseph P. Herauf Thomas Hunt Mark Miron Frank Pipito Chairman of the Board President and Chief Executive Officer Executive Vice President — Heavy Vehicle Parts Division Executive Vice President — NAPA Operations Senior Regional Vice President — Auto Parts Division Vice President — Human Resources Vice President — Sales Vice President — Product Development Vice President — Distribution and Logistics Vice President — Finance and Secretary EIS, Inc. (Atlanta, GA) Robert W. Thomas Alexander Gonzalez Larry L. Griffin Thomas A. Jones William C. Knight Peter F. Sheehan Matthew C. Tyser Derek B. Goshay President and Chief Executive Officer Senior Vice President — Electrical and Assembly Senior Vice President — Marketing Senior Vice President — Manufacturing Senior Vice President — Logistics and Operations Senior Vice President — Specialty Wire and Cable Senior Vice President — Finance and Secretary Vice President — Human Resources Motion Industries (Birmingham, AL) William J. Stevens Timothy P. Breen President and Chief Executive Officer Executive Vice President and Chief Operating Officer — U.S. G. Harold Dunaway, Jr. Executive Vice President — Finance & Administration and Secretary Randall P. Breaux Anthony G. Cefalu Ellen H. Holladay Scott A. MacPherson Kenneth L. McGrew James R. Neill Mark W. Sheehan Gerald V. Sourbeer Kevin P. Storer Mark R. Thompson Randy R. Till Zahirudin K. Hameer M. Keith Knight Douglas R. Osborne C. Jeff Rouse Brandon C. Scordino James R. Summers J. Marvin Walker James F. Williams Michael D. Harper Dermot R. Strong Senior Vice President — Marketing, Strategic Planning and Product Support Senior Vice President & Group Executive — Central and Hose & Rubber Senior Vice President, Chief Information Officer and Operational Excellence Officer Senior Vice President — Sales Senior Vice President & Group Executive — Southwest Senior Vice President — Human Resources Senior Vice President and President — Motion Mexico Senior Vice President & Group Executive — Southeast Senior Vice President & Group Executive — West Senior Vice President — Corporate Accounts Senior Vice President & Group Executive — East Vice President — Inventory Management Vice President — Business Systems Vice President — MI Services Vice President — Government Sales and Export Vice President — Technology Planning and Development Vice President — Systems Assurance & Data Center Operations Vice President — Finance Vice President — Corporate Purchasing Treasurer President — Motion Canada S. P. Richards Company (Atlanta, GA) C. Wayne Beacham Richard T. Toppin Steven E. Lynn G. Henry Martin Donald C. Mikolasy James F. O’Brien J. Phillip Welch, Jr. Dennis J. Arnold John K. Burgess Chairman of the Board and Chief Executive Officer President and Chief Operating Officer Senior Vice President — Merchandising Senior Vice President — Human Resources Senior Vice President — Sales Senior Vice President — Marketing Senior Vice President — Finance and CFO Vice President — Furniture Vice President — Sales Thomas E. Dunmon, Jr. Vice President — Finance and Controller E. Chadwick Lee Vice President — Logistics Charles E. Macpherson Vice President — Strategic Pricing Tom C. Maley Brian M. McGill James C. Moseley James P. O’Connor John R. Reagan Jason R. Smith Thomas M. Testa Chris F. Whiting Bryan A. Wight Lester P. Christian Bryan T. Hall Gregory L. Nissen Ray J. Sreca Richard A. Wiltz Peter R. Dalglish Vice President — Business Development & Analytics Vice President — Information Technology & CIO Vice President — Information Systems Vice President — Business Development Vice President — Merchandising Vice President — Sales — Emerging Markets Vice President — Sales Vice President — Cleaning and Breakroom Supply Vice President —Sales — Independent Dealer Channel Vice President — Southeast Division Vice President — South Central Division Vice President — Western Division Vice President — Northeast Division Vice President — North Central Division Managing Director — S. P. Richards Canada ® SHAREHOLDER INFORMATION GENUINE PARTS COMPANY Our 85th Year STOCK LISTING Genuine Parts Company’s common stock is traded on the New York Stock Exchange under the symbol “GPC”. STOCK TRANSFER AGENT, REGISTRAR OF STOCK, DIVIDEND DISBURSING AGENT AND OTHER SHAREHOLDER SERVICES Communications concerning share transfer requirements, duplicate mailings, direct deposit of dividends, lost certiﬁcates or dividend checks or change of address should be directed to the Company’s transfer agent at: COMPUTERSHARE POST OFFICE BOX 43078 PROVIDENCE, RHODE ISLAND 02940-3078 800.568.3476 DIVIDEND REINVESTMENT PLAN Shareholders can build their investments in Genuine Parts Company through a low-cost plan for automatically reinvesting dividends and by making optional cash purchases of the Company’s stock. FOR ENROLLMENT INFORMATION, WRITE TO THE STOCK TRANSFER AGENT LISTED ABOVE OR SHAREHOLDER RELATIONS AT THE COMPANY ADDRESS. INVESTOR RELATIONS Inquiries from security analysts and investment professionals should be directed to the Company’s investor relations contacts: CAROL B. YANCEY, EXECUTIVE VICE PRESIDENT - FINANCE, OR SID JONES, VICE PRESIDENT - INVESTOR RELATIONS, AT 770.953.1700. ANNUAL SHAREHOLDERS’ MEETING The 2013 annual meeting of the shareholders of Genuine Parts Company will be held at the Executive Ofﬁces of the Company, 2999 Circle 75 Parkway, Atlanta, Georgia at 10:00 a.m. on Monday, April 22, 2013. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP - Atlanta, Georgia GENERAL COUNSEL Alston & Bird LLP - Atlanta, Georgia EXECUTIVE OFFICES GENUINE PARTS COMPANY 2999 CIRCLE 75 PARKWAY ATLANTA, GEORGIA 30339 770.953.1700 GENUINE PARTS COMPANY 2999 CIRCLE 75 PARKWAY ATLANTA, GA 30339 770.953.1700 www.genpt.com

Continue reading text version or see original annual report in PDF format above