2018 Annual Report

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, 2018 2017 2016 2015 2014 (In thousands, except per share data) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,735,073 $16,308,801 $15,339,713 $15,280,044 $15,341,647 Cost of goods sold . . . . . . . . . . . . . . . . . . . . 12,751,286 11,402,403 10,740,106 10,724,192 10,747,886 Operating and non-operating expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,908,175 3,897,130 3,525,267 3,432,171 3,476,022 Income before taxes . . . . . . . . . . . . . . . . . . . 1,075,612 1,009,268 1,074,340 1,123,681 1,117,739 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . 265,138 392,511 387,100 418,009 406,453 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 810,474 $ 616,757 $ 687,240 $ 705,672 $ 711,286 Weighted average common shares outstanding during year — assuming dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,241 147,701 149,804 152,496 154,375 Per common share: Diluted net income . . . . . . . . . . . . . . . . . . $ 5.50 $ 4.18 $ 4.59 $ 4.63 $ 4.61 Dividends declared . . . . . . . . . . . . . . . . . 2.88 2.70 2.63 2.46 2.30 December 31 closing stock price . . . . . . . 96.02 95.01 95.54 85.89 106.57 Total debt, less current maturities . . . . . . . . 2,432,133 2,550,020 550,000 250,000 500,000 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . 3,471,991 3,464,156 3,207,356 3,159,242 3,312,364 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $12,683,040 $12,412,381 $ 8,859,400 $ 8,144,771 $ 8,246,238 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 replacement parts, industrial parts and electrical specialty materials and business products. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. The Company conducted business in 2018 throughout the North America, Australia, New Zealand, the U.K., France, Germany, Poland, and Puerto Rico from approximately 3,100 locations. For the periods presented, the Company operates in three business segments: Automotive, Industrial, and Business Products. Effective in 2018, EIS, Inc., formerly our Electrical and Electronic business segment, was combined with Motion Industries and is now identified as the Electrical Specialties Group of Motion Industries. As a result, the Industrial segment is comprised of Motion Industries and EIS, Inc. and the results from prior periods have been combined, accordingly. The combination of these two segments provides strong economies of scale and greater operating efficiencies, which we intend to leverage. The opportunity to build synergies by shar- ing talent, physical resources, greater size and scale, and value-added expertise in each respective market channel is highly compelling. We recorded consolidated net sales of $18.7 billion for the year ended December 31, 2018, an increase of 14.9% compared to sales in 2017. Consolidated net income for the year ended December 31, 2018 was $810.5 million and diluted net income per share was $5.50. Adjusted net income was $836.1 million for the year ended December 31, 2018, and adjusted diluted net income per share was $5.68. Adjusted net income and adjusted diluted net income per share, both non-GAAP measures, exclude the impact of transaction and other costs primarily related to the Company’s acquisition of AAG and the attempted transaction to spin-off the Busi- ness Products Group, net of a termination fee received. See “Non-GAAP Measures.” 18

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