Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Jerry W. Nix, Executive Vice President - Finance
(770) 612-2048
GENUINE PARTS COMPANY
REPORTS FIRST QUARTER RESULTS
AND DECLARES REGULAR QUARTERLY DIVIDEND
Atlanta, Georgia, April 17, 2003 -- Genuine Parts Company (NYSE: GPC) reported
sales and earnings for the first quarter ended March 31, 2003. Larry Prince,
Chairman of the Board of Directors, announced today that sales totaling $2.02
billion were up 2% compared to the first quarter of 2002. Net income, before the
effect of changes in accounting principles discussed below, was $88.4 million,
an increase of 2% over $87 million for the first quarter of 2002 and, on a per
share diluted basis, net income equaled 51 cents, up 2% compared to 50 cents
reported in the comparable quarter of the prior year. After accounting changes
for the first quarter of 2002 and 2003 as discussed below, net income was $69
million this year compared to a net loss of $308 million in the previous year.
Earnings per share were 39 cents compared to a loss of $1.76 last year.
Mr. Prince stated: "There have been a number of accounting changes coming
forward from the Financial Accounting Standards Board in recent times. As you
may recall 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. This was recorded as of
January 2002 as a cumulative effect of a change in accounting principle. Now,
effective January 1, 2003, all companies including GPC are required to adopt the
Financial Accounting Standards Board's EITF No. 02-16 affecting the accounting
treatment of cash consideration received from vendors. This encompasses certain
advertising and promotional allowances, catalog support and other cash support
arrangements that normally exist among retailers and distributors with their
vendors.
"GPC has in certain instances accounted for funds of this type as a reduction in
our SG&A, an approved method and in compliance with generally accepted
accounting principles. Under the 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, representing the
cumulative effect of a change in accounting principle."
Page 2
Mr. Prince further commented: "The Automotive Group improved revenues by 2% for
the quarter and this was the seventh consecutive quarter of sales growth for our
automotive parts operations. Both Motion Industries, our industrial group, and
S.P. Richards, our office products company, were up 3% for the quarter showing
steady improvement. EIS, our electrical group, was down 8% and in line with our
expectations as they continue to make progress."
Mr. Prince also announced: "The Board of Directors of the Company declared a
regular quarterly dividend of 29.5 cents per share on the Company's common
stock. The dividend is payable July 1, 2003 to shareholders of record June 6,
2003."
Mr. Prince concluded: "We plan to continue to push hard to outperform all of the
markets we are operating in. Our balance sheet remains strong and we currently
have tight expense controls in place. We continue to be an excellent cash
generator. We look forward to reporting continued improvement to you as 2003
progresses."
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 9502099. A replay will also be
available at 800-642-1687 two hours after the completion of the conference call
until 12:00 a.m. Eastern Time on May 1, 2003.
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., Canada and Mexico 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.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
Three Months Ended March 31,
2003 2002
----------- -----------
(in thousands, except per share data)
Net Sales ................................................................... $ 2,021,858 $ 1,977,743
Cost of goods sold .......................................................... 1,383,518 1,373,774
----------- -----------
638,340 603,969
Selling, administrative & other expenses .................................... 493,145 461,067
----------- -----------
Income before income taxes and cumulative effect of a change in
accounting principle ..................................................... 145,195 142,902
Income taxes ................................................................ 56,771 55,875
----------- -----------
Net income before cumulative effect of a change in accounting principle ..... 88,424 87,027
Cumulative effect of a change in accounting principle (1) ................... (19,541) (395,090)
----------- -----------
Net income (loss) ........................................................... $ 68,883 $ (308,063)
=========== ===========
Basic net income (loss) per common share:
Before cumulative effect of a change in accounting principle ............. $ .51 $ .50
Cumulative effect of a change in accounting principle (1) ................ (.11) (2.27)
----------- -----------
Basic net income (loss) .................................................. $ .40 $ (1.77)
=========== ===========
Diluted net income (loss) per common share:
Before cumulative effect of a change in accounting principle ............. $ .51 $ .50
Cumulative effect of a change in accounting principle (1) ................ (.12) (2.26)
----------- -----------
Diluted net income (loss) per common share ............................... $ .39 $ (1.76)
=========== ===========
Weighted average common shares outstanding .................................. 174,146 173,877
Dilutive effect of stock options and non-vested restricted stock awards ..... 456 1,005
----------- -----------
Weighted average common shares outstanding - assuming dilution .............. 174,602 174,882
=========== ===========
(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 for Cash 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".
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
--------------------------------------------
(Unaudited)
Three month period ended March 31,
2003 2002
----------- -----------
(In thousands)
Net sales:
Automotive $ 1,022,471 $ 998,659
Industrial 569,630 551,169
Office Products 363,826 352,757
Electrical/Electronic 75,417 81,620
Other (1) (9,486) (6,462)
----------- -----------
Total net sales $ 2,021,858 $ 1,977,743
=========== ===========
Operating profit (loss):
Automotive $ 83,430 $ 83,988
Industrial 43,187 42,644
Office Products 41,556 41,266
Electrical/Electronic 1,597 (680)
----------- -----------
Total operating profit 169,770 167,218
Interest expense (13,694) (16,449)
Other, net (10,881) (7,867)
----------- -----------
Income before income taxes and accounting changes $ 145,195 $ 142,902
=========== ===========
Capital expenditures $ 25,659 $ 11,442
=========== ===========
Depreciation and amortization $ 17,031 $ 18,417
=========== ===========
Current ratio 3.3 3.4
=========== ===========
Total debt to total capitalization 28.3% 28.1%
=========== ===========
(1) Represents the net effect of discounts, incentives and freight billed
reported as a component of net sales.
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, March 31,
2003 2002
---------- ----------
(Unaudited)
(in thousands)
CURRENT ASSETS
Cash and cash equivalents ............................. $ 25,030 $ 56,358
Trade accounts receivable ............................. 1,110,334 1,088,018
Inventories ........................................... 2,057,917 1,864,095
Prepaid and other current accounts .................... 77,881 59,565
---------- ----------
TOTAL CURRENT ASSETS ......................... 3,271,162 3,068,036
Goodwill and other intangible assets .................. 58,932 60,052
Other assets .......................................... 300,944 289,502
Total property, plant and equipment, net .............. 346,520 337,435
---------- ----------
TOTAL ASSETS .......................................... $3,977,558 $3,755,025
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ...................................... $ 596,255 $ 613,392
Current portion long-term debt and other borrowings ... 172,540 50,750
Income taxes .......................................... 54,096 43,751
Dividends payable ..................................... 51,360 50,468
Other current liabilities ............................. 130,183 144,623
---------- ----------
TOTAL CURRENT LIABILITIES .................... 1,004,434 902,984
Long-term debt ........................................ 674,733 735,461
Deferred income taxes ................................. 99,441 60,985
Minority interests in subsidiaries .................... 47,967 46,110
SHAREHOLDERS' EQUITY
Common stock .......................................... 173,848 174,247
Retained earnings and other ........................... 1,977,135 1,835,238
---------- ----------
TOTAL SHAREHOLDERS' EQUITY ................... 2,150,983 2,009,485
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............ $3,977,558 $3,755,025
========== ==========
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
----------------------------
(in thousands)
2003 2002
-------- ---------
OPERATING ACTIVITIES:
Net income (loss) .......................................... $ 68,883 $(308,063)
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 ............................ 17,031 18,417
Other .................................................... (62,565) 1,908
Changes in operating assets and liabilities .............. (462) 12,830
-------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ..................... 42,428 120,182
INVESTING ACTIVITIES:
Purchase of property, plant and equipment .................. (25,659) (11,442)
Other ...................................................... (863) -0-
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES ......................... (26,522) (11,442)
FINANCING ACTIVITIES:
Proceeds on credit facilities, net of payments ............. 55,998 (106,559)
Stock options exercised .................................... 628 20,180
Dividends paid ............................................. (51,126) (51,539)
Purchase of stock .......................................... (16,371) (234)
-------- ---------
NET CASH USED IN FINANCING ACTIVITIES ......................... (10,871) (138,152)
-------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......... 5,035 (29,412)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............. 19,995 85,770
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................... $ 25,030 $ 56,358
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