FOR IMMEDIATE RELEASE
| Contact: | Jerry W. Nix, Executive Vice President — Finance (770) 612-2048 |
GENUINE PARTS COMPANY
REPORTS SALES AND EARNINGS FOR
THIRD QUARTER AND NINE MONTHS OF 2004
Atlanta, Georgia, October 15, 2004 — Genuine Parts Company (NYSE: GPC) reported sales and earnings for the third quarter and nine months ended September 30, 2004. Larry Prince, Chairman of the Board of Directors, announced today that sales totaling $2.3 billion were up 7% compared to the third quarter of 2003. Net income was $97.9 million, an increase of 11% compared to $88.3 million for the third quarter of 2003. On a per share diluted basis, net income equaled 56 cents compared to 51 cents for the third quarter of last year.
For the nine months ended September 30, 2004, sales totaled $6.8 billion, up 8% compared to the same period in 2003. Net income for the nine months was $299.2 million, an increase of 12% compared to $266.9 million for the same period in the prior year before the cumulative effect of an accounting change adopted January 1, 2003. Earnings per share on a diluted basis were $1.71, up 12% compared to $1.53 for the same period last year before the accounting change. In accordance with the Financial Accounting Standards Board’s EITF 02-16 affecting the accounting treatment of cash consideration received from vendors, a non-cash charge of $20 million was recorded as of January 1, 2003, representing the cumulative effect of a change in accounting principle. After the cumulative effect adjustment in 2003, net income for the nine months ended September 30, 2004 was up 21% and diluted earnings per share were up 20% compared to the nine months ended September 30, 2003.
Mr. Prince stated, “Sales and earnings for the third quarter reached record levels for the period and continued the positive pattern established early in 2004. We were again pleased to see growth in all our business groups providing balance to our results.”
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Mr. Prince further commented, “All four segments contributed significantly to our results with sales for Motion Industries, our Industrial Group, and EIS, our Electrical/Electronics Group, continuing to be especially strong. The manufacturing sector, which is their customer base, is moving ahead at a healthy rate and our companies are giving them excellent service. Motion’s sales grew by 14% for the quarter and EIS was up 15%. Sales for the Automotive Parts Group were up 3% for the period and S.P. Richards, our Office Products Group, improved by 8%. We are pleased with this trend as we move into the fourth quarter and we will be pushing hard to produce a strong finish to the year.”
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EDT to discuss the results of the quarter and the future outlook. Interested parties may listen by dialing 877-422-4780, conference ID 1132388. A replay will also be available at 800-642-1687, conference ID 1132388, until 12:00 a.m. EST on October 29, 2004.
Forward Looking Statements
Various statements in this release may constitute forward-looking statements. Actual results 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 in 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.
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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 2,349,283 | $ | 2,189,388 | $ | 6,843,960 | $ | 6,364,040 | ||||||||
| Cost of goods sold | 1,649,890 | 1,537,439 | 4,764,591 | 4,422,368 | ||||||||||||
| 699,393 | 651,949 | 2,079,369 | 1,941,672 | |||||||||||||
| Selling, administrative & other expenses | 541,675 | 506,903 | 1,595,321 | 1,503,404 | ||||||||||||
| Income before income taxes | 157,718 | 145,046 | 484,048 | 438,268 | ||||||||||||
| Income taxes | 59,825 | 56,713 | 184,810 | 171,363 | ||||||||||||
| Net income before cumulative effect of a change in accounting principle | 97,893 | 88,333 | 299,238 | 266,905 | ||||||||||||
| Cumulative effect of a change in accounting principle (1) | — | — | — | (19,541 | ) | |||||||||||
| Net income | $ | 97,893 | $ | 88,333 | $ | 299,238 | $ | 247,364 | ||||||||
Basic net income per common share: | ||||||||||||||||
| Before cumulative effect of a change in accounting principle | $ | .56 | $ | .51 | $ | 1.71 | $ | 1.53 | ||||||||
| Cumulative effect of a change in accounting principle | — | — | — | (.11 | ) | |||||||||||
| Basic net income | $ | .56 | $ | .51 | $ | 1.71 | $ | 1.42 | ||||||||
Diluted net income per common share: | ||||||||||||||||
| Before cumulative effect of a change in accounting principle | $ | .56 | $ | .51 | $ | 1.71 | $ | 1.53 | ||||||||
| Cumulative effect of a change in accounting principle | — | — | — | (.11 | ) | |||||||||||
| Diluted net income | $ | .56 | $ | .51 | $ | 1.71 | $ | 1.42 | ||||||||
| Weighted average common shares outstanding | 174,792 | 173,948 | 174,648 | 173,995 | ||||||||||||
| Dilutive effect of stock options and non-vested restricted stock awards | 1,021 | 481 | 842 | 492 | ||||||||||||
| Weighted average common shares outstanding – assuming dilution | 175,813 | 174,429 | 175,490 | 174,487 | ||||||||||||
| (1) | On January 1, 2003 the Company recorded a non-cash charge related to the capitalization of certain vendor consideration in connection with the Financial Accounting Standards Board’s EITF No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor”. |
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GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
(Unaudited)
| Three month period ended Sept. 30, | Nine month period ended Sept. 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net sales: | ||||||||||||||||
| Automotive | $ | 1,229,943 | $ | 1,192,621 | $ | 3,575,189 | $ | 3,382,889 | ||||||||
| Industrial | 636,693 | 556,959 | 1,874,599 | 1,692,501 | ||||||||||||
| Office Products | 406,101 | 375,875 | 1,165,245 | 1,095,149 | ||||||||||||
| Electrical/Electronic Materials | 85,357 | 74,455 | 254,263 | 223,155 | ||||||||||||
| Other (1) | (8,811 | ) | (10,522 | ) | (25,336 | ) | (29,654 | ) | ||||||||
| Total net sales | $ | 2,349,283 | $ | 2,189,388 | $ | 6,843,960 | $ | 6,364,040 | ||||||||
| Operating profit: | ||||||||||||||||
| Automotive | $ | 101,942 | $ | 103,007 | $ | 304,695 | $ | 290,269 | ||||||||
| Industrial | 40,851 | 34,201 | 125,149 | 110,620 | ||||||||||||
| Office Products | 32,203 | 30,339 | 108,651 | 103,228 | ||||||||||||
| Electrical/Electronic Materials | 3,780 | 1,890 | 11,300 | 5,403 | ||||||||||||
| Total operating profit | 178,776 | 169,437 | 549,795 | 509,520 | ||||||||||||
| Interest expense | (9,307 | ) | (12,982 | ) | (29,154 | ) | (40,026 | ) | ||||||||
| Other, net | (11,751 | ) | (11,409 | ) | (36,593 | ) | (31,226 | ) | ||||||||
| Income before income taxes and accounting change | $ | 157,718 | $ | 145,046 | $ | 484,048 | $ | 438,268 | ||||||||
| Capital expenditures | $ | 20,979 | $ | 26,425 | $ | 46,550 | $ | 63,613 | ||||||||
| Depreciation and amortization | $ | 16,584 | $ | 16,335 | $ | 49,775 | $ | 52,106 | ||||||||
| Current ratio | 2.9/1 | 3.4/1 | ||||||||||||||
| Total debt to total capitalization | 20.2 | % | 23.7 | % | ||||||||||||
| (1) | Represents the net effect of discounts, incentives and freight billed reported as a component of net sales. |
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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| ASSETS | ||||||||
| | ||||||||
| Sept. 30, 2004 | Sept. 30, 2003 | |||||||
| (in thousands) | ||||||||
CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 284,704 | $ | 31,476 | ||||
| Trade accounts receivable | 1,166,533 | 1,132,837 | ||||||
| Inventories | 2,163,049 | 2,083,143 | ||||||
| Prepaid and other current accounts | 113,578 | 77,885 | ||||||
| TOTAL CURRENT ASSETS | 3,727,864 | 3,325,341 | ||||||
| Goodwill and other intangible assets | 57,761 | 58,163 | ||||||
| Other assets | 312,994 | 321,685 | ||||||
| Total property, plant and equipment, net | 339,397 | 346,960 | ||||||
| TOTAL ASSETS | 4,438,016 | 4,052,149 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| | ||||||||
CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 836,883 | $ | 667,846 | ||||
| Current portion long-term debt and other borrowings | 125,841 | 30,009 | ||||||
| Income taxes | 60,869 | 41,510 | ||||||
| Dividends payable | 52,425 | 51,303 | ||||||
| Other current liabilities | 218,054 | 179,135 | ||||||
| TOTAL CURRENT LIABILITIES | 1,294,072 | 969,803 | ||||||
| Long-term debt | 500,000 | 671,658 | ||||||
| Deferred income taxes | 113,259 | 102,777 | ||||||
| Minority interests in subsidiaries | 52,091 | 49,128 | ||||||
| Common stock | 174,630 | 173,968 | ||||||
| Retained earnings and other | 2,303,964 | 2,084,815 | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 2,478,594 | 2,258,783 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 4,438,016 | 4,052,149 | ||||||
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GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months | ||||||||
| Ended September 30, | ||||||||
| 2004 | 2003 | |||||||
| (in thousands) | ||||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 299,238 | $ | 247,364 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Cumulative effect of a change in accounting principle | — | 19,541 | ||||||
| Depreciation and amortization | 49,775 | 52,106 | ||||||
| Other | 3,337 | (32 | ) | |||||
| Changes in operating assets and liabilities | 117,857 | 7,004 | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 470,207 | 325,983 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchase of property, plant and equipment | (46,550 | ) | (63,613 | ) | ||||
| Other | — | 7,237 | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (46,550 | ) | (56,376 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Net payments on credit facilities | (9,559 | ) | (90,034 | ) | ||||
| Stock options exercised | 31,649 | 2,838 | ||||||
| Dividends paid | (156,150 | ) | (153,253 | ) | ||||
| Purchase of stock | (20,286 | ) | (17,677 | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | (154,346 | ) | (258,126 | ) | ||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 269,311 | 11,481 | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 15,393 | 19,995 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 284,704 | $ | 31,476 | ||||
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