FOR IMMEDIATE RELEASE
Contact: Jerry W. Nix, Executive Vice President - Finance
(770) 612-2048
GENUINE PARTS COMPANY
REPORTS SALES AND EARNINGS FOR
SECOND QUARTER AND FIRST HALF OF 2003
Atlanta, Georgia, July 17, 2003 -- Genuine Parts Company (NYSE: GPC) reported
sales and earnings for the second quarter and six months ended June 30, 2003.
Larry Prince, Chairman of the Board of Directors, announced today that sales
totaling $2.15 billion were up 1% compared to the second quarter of 2002. Net
income was $90 million, compared to $96 million for the second quarter of 2002.
On a per share diluted basis, net income equaled $.52.
For the six months ended June 30, 2003, sales totaled $4.2 billion, up 2% as
compared to the same period in 2002. Net income for the six months, before the
cumulative effect of changes in accounting principles related to cash
consideration from vendors and goodwill as discussed below, was $178.6 million
compared to $183.1 million for the same period in the prior year, a decrease of
2%. On a per share diluted basis, net income for the period before the
cumulative effect of a change in accounting principle equaled $1.02. After
accounting changes recorded in the first quarter of 2003 and 2002 as discussed
below, net income was $159 million this year compared to a net loss of $212
million in the previous six months. Earnings were $.91 compared to a loss of
$1.21 for the six months in 2002.
Mr. Prince stated: "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 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."
(Cont.)
Page 2
Mr. Prince further commented: "The Automotive Group improved revenues by 2% for
the quarter and for the six months and this was the eighth consecutive quarter
of sales growth for our automotive parts operations. S. P. Richards, our office
products company, was up 6% for the quarter and 4% for the six months, showing
steady improvement. Motion Industries, our industrial group, was down 1% for the
quarter and up 1% for the six months reflecting the contracting manufacturing
economy and declining capacity utilization. EIS, our electrical group, was down
9% for the quarter and 8% for the six months."
Mr. Prince concluded: "We are pleased with the initiatives in each segment and
we are committed to the execution of these plans. Our balance sheet remains in
excellent shape and we continue to generate strong cash flows. We remain
optimistic about the long-term sales and earnings growth opportunities for
Genuine Parts Company."
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 1511156. A replay will also be
available at 800-642-1687, conference ID 1511156, until 12:00 a.m. EDT on July
31, 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.
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- ------------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(000 omitted except per share data)
Net sales ........................................... $ 2,152,794 $ 2,130,924 $ 4,174,652 $ 4,108,667
Cost of goods sold .................................. 1,501,411 1,486,692 2,884,929 2,860,466
----------- ----------- ----------- -----------
651,383 644,232 1,289,723 1,248,201
Selling, administrative & other expenses ............ 503,356 486,520 996,501 947,587
----------- ----------- ----------- -----------
Income before income taxes .......................... 148,027 157,712 293,222 300,614
Income taxes ........................................ 57,879 61,665 114,650 117,540
----------- ----------- ----------- -----------
Net income before cumulative effect of
a change in accounting principle ................. 90,148 96,047 178,572 183,074
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 ................. $ 90,148 $ 96,047 $ 159,031 $ (212,016)
=========== =========== =========== ===========
Basic net income (loss) per common share:
Before cumulative effect of a change in
accounting principle ............................. $ .52 $ .55 $ 1.03 $ 1.05
Cumulative effect of a change in accounting principle -- -- (.12) (2.27)
----------- ----------- ----------- -----------
Basic net income (loss) ............................. $ .52 $ .55 $ .91 $ (1.22)
=========== =========== =========== ===========
Diluted net income (loss) per common share:
Before cumulative effect of a change in
accounting principle ............................. $ .52 $ .55 $ 1.02 $ 1.05
Cumulative effect of a change in accounting principle -- -- (.11) (2.26)
----------- ----------- ----------- -----------
Diluted net income (loss) ........................... $ .52 $ .55 $ .91 $ (1.21)
=========== =========== =========== ===========
Weighted average common shares outstanding .......... 173,895 174,445 174,019 174,163
Dilutive effect of stock options and
non-vested restricted stock awards ............... 565 903 498 945
----------- ----------- ----------- -----------
Weighted average common shares outstanding -
assuming dilution ................................ 174,460 175,348 174,517 175,108
=========== =========== =========== ===========
(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".
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
--------------------------------------------
(Unaudited)
Three month period ended June 30, Six month period ended June 30,
2003 2002 2003 2002
--------------------------------- -------------------------------
(in thousands)
Net sales:
Automotive $ 1,167,797 $ 1,148,572 $ 2,190,268 $ 2,147,230
Industrial 565,912 572,618 1,135,542 1,123,788
Office Products 355,448 336,599 719,274 689,356
Electrical/Electronic Materials 73,283 80,558 148,700 162,178
Other (1) (9,646) (7,423) (19,132) (13,885)
----------- ----------- ----------- -----------
Total net sales $ 2,152,794 $ 2,130,924 $ 4,174,652 $ 4,108,667
=========== =========== =========== ===========
Operating profit (loss):
Automotive $ 103,832 $ 108,648 $ 187,262 $ 192,943
Industrial 33,232 44,502 76,419 87,031
Office Products 31,333 29,854 72,889 70,928
Electrical/Electronic Materials 1,916 600 3,513 (80)
----------- ----------- ----------- -----------
Total operating profit 170,313 183,604 340,083 350,822
Interest expense (13,350) (16,409) (27,044) (32,858)
Other, net (8,936) (9,483) (19,817) (17,350)
----------- ----------- ----------- -----------
Income before income taxes
and accounting changes $ 148,027 $ 157,712 $ 293,222 $ 300,614
=========== =========== =========== ===========
Capital expenditures $ 11,529 $ 14,540 $ 37,188 $ 25,982
=========== =========== =========== ===========
Depreciation and amortization $ 18,740 $ 17,882 $ 35,771 $ 36,299
=========== =========== =========== ===========
Current ratio 3.4/1 3.3/1
=========== ===========
Total debt to total capitalization 26.6% 25.9%
=========== ===========
(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
June 30, June 30,
2003 2002
---------------------------
(Unaudited)
(in thousands)
CURRENT ASSETS
Cash and cash equivalents ................................................. $ 21,942 $ 24,549
Trade accounts receivable ................................................. 1,138,389 1,112,717
Inventories ............................................................... 2,044,336 1,921,481
Prepaid and other current accounts ........................................ 84,776 74,908
---------- ----------
TOTAL CURRENT ASSETS ............................................. 3,289,443 3,133,655
Goodwill and other intangible assets ...................................... 58,297 59,363
Other assets .............................................................. 334,771 301,885
Total property, plant and equipment, net .................................. 338,982 332,577
---------- ----------
TOTAL ASSETS .............................................................. $4,021,493 $3,827,480
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .......................................................... $ 624,476 $ 689,987
Current portion long-term debt and other borrowings ....................... 130,818 44,782
Income taxes .............................................................. 24,105 34,215
Dividends payable ......................................................... 51,297 50,581
Other current liabilities ................................................. 150,392 139,918
---------- ----------
TOTAL CURRENT LIABILITIES ........................................ 981,088 959,483
Long-term debt ............................................................ 671,682 675,407
Deferred income taxes ..................................................... 100,597 81,898
Minority interests in subsidiaries ........................................ 48,559 46,906
Common stock .............................................................. 173,936 174,729
Retained earnings and other ............................................... 2,045,631 1,889,057
---------- ----------
TOTAL SHAREHOLDERS' EQUITY ....................................... 2,219,567 2,063,786
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................ $4,021,493 $3,827,480
========== ==========
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months
Ended June 30,
------------------------
(in thousands)
2003 2002
--------- ---------
OPERATING ACTIVITIES:
Net income (loss) ...................................................................... $ 159,031 $(212,016)
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 ........................................................ 35,771 36,299
Other ................................................................................ (2,242) 6,538
Changes in operating assets and liabilities .......................................... (66,186) (20,509)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................................................. 145,915 205,402
INVESTING ACTIVITIES:
Purchase of property, plant and equipment .............................................. (37,188) (25,982)
Other .................................................................................. (863) -0-
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES ..................................................... (38,051) (25,982)
FINANCING ACTIVITIES:
Net proceeds (payments) on credit facilities ........................................... 10,999 (173,421)
Stock options exercised ................................................................ 1,401 35,291
Dividends paid ......................................................................... (101,946) (102,236)
Purchase of stock ...................................................................... (16,371) (275)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES ..................................................... (105,917) (240,641)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................................... 1,947 (61,221)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......................................... 19,995 85,770
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................................ $ 21,942 $ 24,549
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