Exhibit 99.1
FOR IMMEDIATE RELEASE
| Contact: | Jerry W. Nix, Executive Vice President — Finance | |
| (770) 612-2048 |
GENUINE PARTS COMPANY
REPORTS RESULTS FOR 2003
AND ANNOUNCES 48th CONSECUTIVE YEAR
INCREASE IN DIVIDENDS
Atlanta, Georgia, February 17, 2004 — Genuine Parts Company (NYSE: GPC) completed its 76th year of operations and reports sales and earnings for the year ended December 31, 2003.
Sales in 2003 were $8.4 billion, up 2.3% compared to the previous year. Net income for the year, before the cumulative effect of changes in accounting principles related to cash consideration from vendors and goodwill as discussed below, was $354 million, compared to $368 million, for the same period in the prior year, a decrease of 4%. Diluted earnings per share, excluding the cumulative effect adjustments, were $2.03 versus $2.10 per share in 2002, a decrease of 3%. After accounting changes recorded in the first quarter of 2003 and 2002 as discussed below, net income was $334 million, or $1.91 diluted income per share, compared to a net loss of $27.6 million, or $.16 diluted loss per share in 2002.
Larry Prince, Chairman of the Board of Directors, stated, “Total sales for 2003 reached a new record level for us, exceeding our previous high set in the year 2000. We are disappointed that earnings before the cumulative effect adjustments were not on the plus side, given our sales improvement. While we were able to do a commendable job of expense control, our gross profit margins before the reclassification of vendor consideration were below those of the previous year and negatively impacted our earnings picture.”
Mr. Prince added, “As you may recall, in the first quarter of 2003, the Company adopted Financial Accounting Standards Board’s EITF No. 02-16 related to the accounting treatment for cash consideration received from vendors. Under this new method, vendor allowances are generally considered a reduction in the cost of goods sold. As a result of EITF No. 02-16, a non-cash charge of $20 million was recorded as of January 1, 2003, representing the cumulative effect of a change in accounting principle. In addition, in the first quarter of 2002, we completed our impairment testing for goodwill in conjunction with the new provisions introduced in FASB Statement No. 142, resulting in a non-cash charge of $395 million.”
Fourth Quarter 2003
Sales increased 5% to $2.09 billion in the fourth quarter ended December 31, 2003, as compared to $1.99 billion for the same period in 2002. Diluted earnings per share in the fourth quarter were $.50 compared to the prior year of $.52 per share, a decrease of 4%.
(Cont.)
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Mr. Prince commented, “For the quarter, revenues in our Automotive Group were up 6%, a strong finish to the year and we were pleased to see the positive impact of our sales initiatives. Motion Industries, our Industrial Group, increased sales by 2% for the fourth quarter, and S. P. Richards, our Office Products Group, had an increase of 4% for the quarter. Sales for EIS, our Electrical Group, were up slightly for the fourth quarter, their first comparative increase in quite some time.”
Mr. Prince concluded, “We are optimistic that the stronger sales trend in the final quarter will carry over into 2004. GPC is in a position of market leadership in all our businesses, but we enter the new year with a determination and explicit plans to reach a higher level of growth.”
Dividends Increased 48 Consecutive Years
Genuine Parts Company also announced an increase of 2% in the regular quarterly cash dividend for 2004. On February 16, 2004, the Board of Directors increased the cash dividend payable to an annual rate of $1.20 per share compared with the previous dividend of $1.18 per share. The quarterly cash dividend of $.30 per share is payable April 1, 2004 to shareholders of record March 5, 2004.
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EST to discuss the results of the quarter, the year and the future outlook. Interested parties may listen by dialing 877-422-4780, conference ID 5086255. A replay will also be available at 800-642-1687 until 12:00 a.m. EST on March 2, 2004.
Forward Looking Statements
Statements in this release constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that its forward-looking statements involve risks and uncertainties. The Company undertakes no duty to update its forward-looking statements, which reflect the Company’s beliefs, expectations, and plans as of the present. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors include, but are not limited to, changes in general economic conditions, the growth rate of the market for the Company’s products and services, the ability to maintain favorable supplier arrangements and relationships, competitive product and pricing pressures, the effectiveness of the Company’s promotional, marketing and advertising programs, changes in laws and regulations, including changes in accounting and taxation guidance, the uncertainties of litigation, as well as other risks and uncertainties discussed from time to time in the Company’s filings with the Securities and Exchange Commission.
About Genuine Parts Company
Genuine Parts Company is a distributor of automotive replacement parts in the U.S., Canada and Mexico. The Company also distributes industrial replacement parts in the U.S. and Canada through its Motion Industries subsidiary. S. P. Richards Company, the Office Products Group, distributes product nationwide in the U.S. and in Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S. and Mexico.
(Cont.)
GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended Dec. 31, | Year Ended Dec. 31, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| (Unaudited) | |||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||
| Net sales | $ | 2,085,260 | $ | 1,993,501 | $ | 8,449,300 | $ | 8,258,927 | |||||||||
| Cost of goods sold | 1,404,316 | 1,337,317 | 5,826,684 | 5,704,749 | |||||||||||||
| 680,944 | 656,184 | 2,622,616 | 2,554,178 | ||||||||||||||
| Selling, administrative & other expenses | 547,469 | 506,222 | 2,050,873 | 1,948,442 | |||||||||||||
| Income before income taxes and accounting change | 133,475 | 149,962 | 571,743 | 605,736 | |||||||||||||
| Income taxes | 46,738 | 59,563 | 218,101 | 238,236 | |||||||||||||
| Net income before cumulative effect of a change in accounting principle | 86,737 | 90,399 | 353,642 | 367,500 | |||||||||||||
| Cumulative effect of a change in accounting principle (1) | — | — | (19,541 | ) | (395,090 | ) | |||||||||||
| Net income (loss) after cumulative effect of a change in accounting principle | $ | 86,737 | $ | 90,399 | $ | 334,101 | $ | (27,590 | ) | ||||||||
Basic Net Income (Loss) per Common Share: | |||||||||||||||||
| Before cumulative effect of a change in accounting principle | $ | .50 | $ | .52 | $ | 2.03 | $ | 2.11 | |||||||||
| Cumulative effect of a change in accounting principle (1) | — | — | (.11 | ) | (2.27 | ) | |||||||||||
| Basic net income (loss) | $ | .50 | $ | .52 | $ | 1.92 | $ | (.16 | ) | ||||||||
Diluted Net Income (Loss) per Common Share: | |||||||||||||||||
| Before cumulative effect of a change in accounting principle | $ | .50 | $ | .52 | $ | 2.03 | $ | 2.10 | |||||||||
| Cumulative effect of a change in accounting principle (1) | — | — | (.12 | ) | (2.26 | ) | |||||||||||
| Diluted net income (loss) | $ | .50 | $ | .52 | $ | 1.91 | $ | (.16 | ) | ||||||||
| Weighted average common shares outstanding | 173,994 | 174,434 | 173,995 | 174,369 | |||||||||||||
| Dilutive effect of stock options and non-vested restricted stock awards | 473 | 511 | 485 | 735 | |||||||||||||
| Weighted average common shares outstanding – assuming dilution | 174,467 | 174,945 | 174,480 | 175,104 | |||||||||||||
| (1) | On January 1, 2003 the Company recorded a non-cash charge related to the capitalization of certain vendor consideration in connection with the new Financial Accounting Standards Board’s EITF No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor”. In addition, on January 1, 2002 the Company recorded a non-cash charge related to goodwill impairment in conjunction with the new Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”. |
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
| Three months ended Dec. 31, | Year ended Dec. 31, | |||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| Net sales: | ||||||||||||||||||
| Automotive | $ | 1,094,619 | $ | 1,032,737 | $ | 4,477,508 | $ | 4,335,362 | ||||||||||
| Industrial | 561,446 | 551,030 | 2,253,947 | 2,246,124 | ||||||||||||||
| Office Products | 362,000 | 347,529 | 1,457,149 | 1,396,453 | ||||||||||||||
| Electrical/Electronic Materials | 74,463 | 74,117 | 297,618 | 315,826 | ||||||||||||||
| Other (1) | (7,268 | ) | (11,912 | ) | (36,922 | ) | (34,838 | ) | ||||||||||
| Total net sales | $ | 2,085,260 | $ | 1,993,501 | $ | 8,449,300 | $ | 8,258,927 | ||||||||||
| Operating profit: | ||||||||||||||||||
| Automotive | $ | 72,753 | $ | 81,304 | $ | 363,022 | $ | 381,771 | ||||||||||
| Industrial | 40,489 | 52,041 | 151,109 | 178,027 | ||||||||||||||
| Office Products | 40,035 | 39,819 | 143,263 | 140,912 | ||||||||||||||
| Electrical/Electronic Materials | 1,709 | 1,708 | 7,112 | 2,756 | ||||||||||||||
| Total operating profit | 154,986 | 174,872 | 664,506 | 703,466 | ||||||||||||||
| Interest expense | (11,512 | ) | (11,972 | ) | (51,538 | ) | (59,640 | ) | ||||||||||
| Other, net | (9,999 | ) | (12,938 | ) | (41,225 | ) | (38,090 | ) | ||||||||||
| Income before income taxes and accounting changes | $ | 133,475 | $ | 149,962 | $ | 571,743 | $ | 605,736 | ||||||||||
| Capital expenditures | $ | 10,291 | $ | 18,252 | $ | 73,904 | $ | 64,758 | ||||||||||
| Depreciation and amortization | $ | 16,907 | $ | 17,154 | $ | 69,013 | $ | 70,151 | ||||||||||
| Current ratio | 3.4/1 | 3.0/1 | ||||||||||||||||
| Total debt to total capitalization | 22.7 | % | 27.1 | % | ||||||||||||||
| (1) | Represents the net effect of discounts, incentives and freight billed reported as a component of net sales. |
(Cont.)
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| ASSETS | ||||||||||
| Dec. 31, | Dec. 31, | |||||||||
| 2003 | 2002 | |||||||||
| (in thousands) | ||||||||||
CURRENT ASSETS | ||||||||||
| Cash and cash equivalents | $ | 15,393 | $ | 19,995 | ||||||
| Trade accounts receivable | 1,084,874 | 1,039,843 | ||||||||
| Inventories | 2,140,811 | 2,144,787 | ||||||||
| Prepaid and other current accounts | 176,548 | 172,362 | ||||||||
| TOTAL CURRENT ASSETS | 3,417,626 | 3,376,987 | ||||||||
| Goodwill and other intangible assets | 58,028 | 58,705 | ||||||||
| Other assets | 297,851 | 292,312 | ||||||||
| Total property, plant and equipment, net | 342,992 | 333,051 | ||||||||
| TOTAL ASSETS | $ | 4,116,497 | $ | 4,061,055 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
| Accounts payable | $ | 706,609 | $ | 735,183 | ||||||
| Current portion long-term debt and other borrowings | 52,525 | 116,905 | ||||||||
| Income taxes | 18,575 | 21,366 | ||||||||
| Dividends payable | 51,331 | 50,557 | ||||||||
| Other current liabilities | 187,891 | 186,919 | ||||||||
| TOTAL CURRENT LIABILITIES | 1,016,931 | 1,110,930 | ||||||||
| Long-term debt | 625,108 | 674,796 | ||||||||
| Deferred income taxes | 114,533 | 97,912 | ||||||||
| Minority interests in subsidiaries | 47,642 | 47,408 | ||||||||
| Common stock | 174,045 | 174,381 | ||||||||
| Retained earnings and other | 2,138,238 | 1,955,628 | ||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 2,312,283 | 2,130,009 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,116,497 | $ | 4,061,055 | ||||||
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year | |||||||||||
| Ended Dec. 31, | |||||||||||
| (in thousands) | |||||||||||
| 2003 | 2002 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net income (loss) | $ | 334,101 | $ | (27,590 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Cumulative effect of a change in accounting principle | 19,541 | 395,090 | |||||||||
| Depreciation and amortization | 69,013 | 70,151 | |||||||||
| Other | 2,565 | 2,315 | |||||||||
| Changes in operating assets and liabilities | (23,035 | ) | (167,558 | ) | |||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 402,185 | 272,408 | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Purchase of property, plant and equipment | (73,904 | ) | (64,758 | ) | |||||||
| Other | (1,371 | ) | 4,095 | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (75,275 | ) | (60,663 | ) | |||||||
| FINANCING ACTIVITIES: | |||||||||||
| Net payments on credit facilities | (112,976 | ) | (101,069 | ) | |||||||
| Stock options exercised | 4,601 | 36,009 | |||||||||
| Dividends paid | (204,556 | ) | (201,150 | ) | |||||||
| Purchase of stock | (17,709 | ) | (11,615 | ) | |||||||
| NET CASH USED IN FINANCING ACTIVITIES | (330,640 | ) | (277,825 | ) | |||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (872 | ) | 305 | ||||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (4,602 | ) | (65,775 | ) | |||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 19,995 | 85,770 | |||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 15,393 | $ | 19,995 | |||||||
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