Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

7. Employee Benefit Plans

The Company’s defined benefit pension plans cover most of its employees in the U.S. and Canada. 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 2008, the U.S. defined benefit plan was amended to prohibit employees hired on or after March 1, 2008, from participating in the plan. The plan was also amended to freeze credited service for participants who do not meet certain age and length of service requirements as of December 31, 2008. However, the plan continues to reflect future pay increases for all participants.

In April 2009, the Company recorded a $4,298,000 noncash curtailment adjustment in connection with a reorganization, which reduced the expected years of future service of employees covered by the U.S. defined benefit pension plan. Curtailment accounting is required if an event eliminates, for a significant number of employees, the accrual of defined benefits for some or all of their future service.

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 31st for its pension and other postretirement benefit plans.

In July 2009, the Company announced changes to the U.S. postretirement benefit plan. Effective January 1, 2010, future retirees no longer receive employer-provided medical benefits and current pre-65 retirees no longer receive employer-provided post-65 medical benefits (beyond an access-only arrangement).

	Pension Benefits						Other Postretirement Benefits
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Changes in benefit obligation
Benefit obligation at beginning of year	$	1,689,011		$	1,502,084		$	12,329		$	13,511
Service cost		13,039			12,312			—			—
Interest cost		97,293			95,453			474			605
Plan participants’ contributions		3,887			3,672			3,412			3,787
Plan amendments		—			1,148			362			—
Actuarial loss (gain)		219,804			122,050			(3,911	)		340
Exchange rate changes		(4,656	)		7,082			—			—
Gross benefits paid		(59,979	)		(54,790	)		(5,326	)		(6,255	)
Less Federal subsidy		N/A			N/A			174			341
Benefit obligation at end of year	$	1,958,399		$	1,689,011		$	7,514		$	12,329

The benefit obligations for the Company’s U.S. pension plans included in the above were $1,775,994,000 and $1,542,469,000 at December 31, 2011 and 2010, respectively. The total accumulated benefit obligation for the Company’s defined benefit pension plans was approximately $1,756,546,000 and $1,526,951,000 at December 31, 2011 and 2010, respectively.

The assumptions used to measure the pension and other postretirement plan benefit obligations for the plans at December 31, 2011 and 2010, were:

	Pension Benefits						Other Postretirement Benefits
	2011			2010			2011			2010
Weighted-average discount rate		5.17	%		5.74	%		4.00	%		4.25	%
Rate of increase in future compensation levels		3.30	%		3.39	%		—			—

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.

	Pension Benefits						Other  Postretirement Benefits
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Changes in plan assets
Fair value of plan assets at beginning of year	$	1,439,711		$	1,216,415		$	—		$	—
Actual return on plan assets		31,528			175,967			—			—
Exchange rate changes		(3,598	)		7,131			—			—
Employer contributions		58,481			91,316			1,914			2,468
Plan participants’ contributions		3,887			3,672			3,412			3,787
Benefits paid		(59,979	)		(54,790	)		(5,326	)		(6,255	)
Fair value of plan assets at end of year	$	1,470,030		$	1,439,711		$	—		$	—

The fair values of plan assets for the Company’s U.S. pension plans included in the above were $1,320,036,000 and $1,294,348,000 at December 31, 2011 and 2010, respectively.

The asset allocations for the Company’s funded pension plans at December 31, 2011 and 2010, and the target allocation for 2012, by asset category were:

	Target Allocation 2012			Percentage of Plan Assets  at December 31
				2011			2010
Asset Category
Equity securities		69	%		69	%		70	%
Debt securities		31	%		31	%		30	%
		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 (50% S&P 500 Index, 5% Russell Mid Cap Index, 10% Russell 2000 Index, 5% MSCI EAFE Index, and 30% BarCap U.S. Govt/Credit).

The fair values of the plan assets as of December 31, 2011 and 2010, 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.

	2011
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Equity Securities
Common stocks — mutual funds — equity	$	348,909	$	348,909	$	—	$	—
Genuine Parts Company		123,436		123,436		—		—
Other stocks		546,995		546,995		—		—
Debt Securities
Short-term investments		38,968		38,968		—		—
Cash and equivalents		16,888		16,888		—		—
Government bonds		145,966		66,334		79,632		—
Corporate bonds		127,698		—		127,698		—
Asset-backed and mortgage-backed securities		21,441		—		21,441		—
Other-international		12,084		12,084		—		—
Municipal bonds		593		—		593		—
Mutual funds-fixed income		87,052		—		87,052		—
Total	$	1,470,030	$	1,153,614	$	316,416	$	—

	2010
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Equity Securities
Common stocks — mutual funds — equity	$	353,347	$	353,347	$	—	$	—
Genuine Parts Company		103,549		103,549		—		—
Other stocks		551,516		551,516		—		—
Debt Securities
Short-term investments		38,126		38,126		—		—
Cash and equivalents		26,976		26,976		—		—
Government bonds		105,764		48,191		57,573		—
Corporate bonds		122,749		—		122,749		—
Asset-backed and mortgage-backed securities		32,271		—		32,271		—
Other-international		13,583		13,583		—		—
Municipal bonds		1,914		—		1,914		—
Mutual funds-fixed income		89,916		—		89,916		—
Total	$	1,439,711	$	1,135,288	$	304,423	$	—

Equity securities include Genuine Parts Company common stock in the amounts of $123,436,000 (8.4% of total plan assets) and $103,549,000 (7.2% of total plan assets) at December 31, 2011 and 2010, respectively. Dividend payments received by the plan on Company stock totaled approximately $3,630,000 and $3,308,000 in 2011 and 2010, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.

There were no changes in the fair value measurement of plan assets using significant unobservable inputs (Level 3) during 2011 and the 2010 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 measuring 2012 pension cost or income is 7.84% 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
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Other long-term asset	$	4,374		$	4,405		$	—		$	—
Other current liability		(4,918	)		(4,403	)		(1,618	)		(2,824	)
Pension and other post-retirement liabilities		(487,825	)		(249,302	)		(5,896	)		(9,505	)
	$	(488,369	)	$	(249,300	)	$	(7,514	)	$	(12,329	)

Amounts recognized in accumulated other comprehensive loss consist of:

	Pension Benefits						Other Postretirement Benefits
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Net actuarial loss	$	999,189		$	741,190		$	14,588		$	20,207
Prior service credit		(37,172	)		(44,142	)		(9,445	)		(10,737	)
	$	962,017		$	697,048		$	5,143		$	9,470

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 2012, approximately $4,985,000 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 following table’s employer contributions reflect only the Company’s share of the benefit cost. The expected benefit payments show the Company’s cost without regard to income from federal subsidy payments received pursuant to the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). Expected federal subsidy payments, which reduce the Company’s cost for the plan, are shown separately.

Information about the expected cash flows for the pension plans and other post retirement benefit plans follows:

			Other Postretirement Benefits
	Pension Benefits		Gross		Expected  Federal Subsidy
	(In thousands)
Employer contribution
2012 (expected)	$	17,084	$	1,618	$	—
Expected benefit payments
2012	$	67,528	$	1,740	$	(122	)
2013		77,337		1,330		(70	)
2014		82,692		1,158		(56	)
2015		88,292		1,011		(53	)
2016		94,378		829		—
2017 through 2021		576,891		1,867		—

Net periodic benefit cost included the following components:

	Pension Benefits									Other Postretirement Benefits
	2011			2010			2009			2011			2010			2009
	(In thousands)									(In thousands)
Service cost	$	13,039		$	12,312		$	16,534		$	—		$	—		$	443
Interest cost		97,293			95,453			93,493			474			605			1,264
Expected return on plan assets		(124,150	)		(114,166	)		(113,370	)		—			—			—
Amortization of prior service credit		(6,970	)		(6,979	)		(7,010	)		(930	)		(1,059	)		(225	)
Amortization of actuarial loss		53,039			35,264			21,990			1,708			1,759			1,759
Curtailment gain		—			—			(4,298	)		—			—			—
Net periodic benefit cost	$	32,251		$	21,884		$	7,339		$	1,252		$	1,305		$	3,241

Other changes in plan assets and benefit obligations recognized in other comprehensive income are as follows:

	Pension Benefits									Other Postretirement Benefits
	2011			2010			2009			2011			2010			2009
	(In thousands)									(In thousands)
Current year actuarial loss (gain)	$	311,038		$	60,777		$	(125,816	)	$	(3,911	)	$	340		$	(1,190	)
Recognition of actuarial loss		(53,039	)		(35,264	)		(21,990	)		(1,708	)		(1,759	)		(1,759	)
Current year prior service cost (credit)		—			1,148			—			362			—			(13,182	)
Recognition of prior service cost		6,970			6,979			11,308			930			1,059			225
Total recognized in other comprehensive income	$	264,969		$	33,640		$	(136,498	)	$	(4,327	)	$	(360	)	$	(15,906	)
Total recognized in net periodic benefit cost and other comprehensive income	$	297,220		$	55,524		$	(129,159	)	$	(3,075	)	$	945		$	(12,665	)

The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2012 are as follows:

	Pension Benefits			Other Post- retirement Benefits
	(In thousands)
Actuarial loss	$	70,884		$	1,266
Prior service credit		(6,959	)		(930	)
Total	$	63,925		$	336

The assumptions used in measuring the net periodic benefit costs for the plans follow:

	Pension Benefits									Other  Postretirement Benefits
	2011			2010			2009			2011			2010			2009
Weighted average discount rate		5.74	%		6.54	%		6.97	%		4.25	%		5.20	%		5.79	%
Rate of increase in future compensation levels		3.39	%		3.75	%		3.75	%		—			—			—
Expected long-term rate of return on plan assets		7.87	%		8.00	%		8.00	%		—			—			—

A 7.75% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2010. The rate was assumed to decrease ratably to 4.75% at December 31, 2016, 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. Total plan expense for both plans was approximately $38,773,000 in 2011, $33,476,000 in 2010, and $31,783,000 in 2009.