EXHIBIT 99.1
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 2003
Atlanta, Georgia, October 16, 2003 -- Genuine Parts Company (NYSE: GPC) reported
sales and earnings for the third quarter and nine months ended September 30,
2003. Larry Prince, Chairman of the Board of Directors, announced today that
sales totaling $2.2 billion were up 2% compared to the third quarter of 2002.
Net income was $88 million, compared to $94 million for the third quarter of
2002. On a per share diluted basis, net income equaled $.51, compared to $.54
for the third quarter of 2002.
For the nine months ended September 30, 2003, sales totaled $6.4 billion, up 2%
as compared to the same period in 2002. Net income for the nine months, before
the cumulative effect of changes in accounting principles related to cash
consideration from vendors and goodwill as discussed below, was $266.9 million
compared to $277.1 million for the same period in the prior year, a decrease of
4%. On a per share diluted basis, net income for the period before the
cumulative effect of a change in accounting principle equaled $1.53. After
accounting changes recorded in the first quarter of 2003 and 2002 as discussed
below, net income was $247 million this year compared to a net loss of $118
million in the same period of the previous year. Earnings were $1.42 compared to
a loss of $.67 for the nine 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 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."
(Cont.)
Page 2
Mr. Prince further commented: "The Automotive Group improved revenues by 3% for
the quarter and by 2% for the nine months. S. P. Richards, our office products
company, was up 5% for the quarter and 4% for the nine months, showing steady
improvement. Motion Industries, our industrial group, was down 3% for the
quarter and down slightly for the nine months reflecting the contracting
manufacturing economy and declining capacity utilization. EIS, our electrical
group, was down 6% for the quarter and 8% for the nine months."
Mr. Prince concluded, "We are pleased with the initiatives in each segment and
we are committed to the execution of these plans. Our priorities will be
continued gradual sales improvement with close attention to operating costs and
margin improvement. We are also fortunate to have a strong balance sheet and
financial condition to support our activities as we move forward."
Mr. Prince added, "In the fourth quarter, we also plan to finalize the
acquisition of the NAPA Hawaii business, a long-standing NAPA distributor
headquartered in Honolulu, Hawaii and with annual sales of approximately $35
million. The acquisition of NAPA Hawaii offers us excellent growth opportunities
in their markets and we look forward to the contributions they will make to our
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 3081236. A replay will also be
available at 800-642-1687, conference ID 3081236, until 12:00 a.m. EST on
October 30, 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. 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.
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ------------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(000 omitted except per share data)
Net sales ........................................... $ 2,189,388 $ 2,156,759 $ 6,364,040 $ 6,265,426
Cost of goods sold .................................. 1,537,439 1,506,966 4,422,368 4,367,432
----------- ----------- ----------- -----------
651,949 649,793 1,941,672 1,897,994
Selling, administrative & other expenses ............ 506,903 494,633 1,503,404 1,442,220
----------- ----------- ----------- -----------
Income before income taxes .......................... 145,046 155,160 438,268 455,774
Income taxes ........................................ 56,713 61,133 171,363 178,673
----------- ----------- ----------- -----------
Net income before cumulative effect of
a change in accounting principle ................. 88,333 94,027 266,905 277,101
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 ................. $ 88,333 $ 94,027 $ 247,364 $ (117,989)
=========== =========== =========== ===========
Basic net income (loss) per common share:
Before cumulative effect of a change in
accounting principle ............................. $ .51 $ .54 $ 1.53 $ 1.59
Cumulative effect of a change in accounting principle -- -- (.11) (2.27)
----------- ----------- ----------- -----------
Basic net income (loss) ............................. $ .51 $ .54 $ 1.42 $ (.68)
=========== =========== =========== ===========
Diluted net income (loss) per common share:
Before cumulative effect of a change in
accounting principle ............................. $ .51 $ .54 $ 1.53 $ 1.58
Cumulative effect of a change in accounting principle -- -- (.11) (2.25)
----------- ----------- ----------- -----------
Diluted net income (loss) ........................... $ .51 $ .54 $ 1.42 $ (.67)
=========== =========== =========== ===========
Weighted average common shares outstanding .......... 173,948 174,709 173,995 174,347
Dilutive effect of stock options and
non-vested restricted stock awards ............... 481 542 492 812
----------- ----------- ----------- -----------
Weighted average common shares outstanding -
assuming dilution ................................ 174,429 175,251 174,487 175,159
=========== =========== =========== ===========
(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
(Unaudited)
Three month period ended Sept. 30, Nine month period ended Sept. 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
(in thousands)
Net sales:
Automotive $ 1,192,621 $ 1,155,395 $ 3,382,889 $ 3,302,625
Industrial 556,959 571,306 1,692,501 1,695,094
Office Products 375,875 359,568 1,095,149 1,048,924
Electrical/Electronic Materials 74,455 79,531 223,155 241,709
Other (1) (10,522) (9,041) (29,654) (22,926)
----------- ----------- ----------- -----------
Total net sales $ 2,189,388 $ 2,156,759 $ 6,364,040 $ 6,265,426
=========== =========== =========== ===========
Operating profit:
Automotive $ 103,007 $ 107,524 $ 290,269 $ 300,467
Industrial 34,201 38,955 110,620 125,986
Office Products 30,339 30,165 103,228 101,093
Electrical/Electronic Materials 1,890 1,128 5,403 1,048
----------- ----------- ----------- -----------
Total operating profit 169,437 177,772 509,520 528,594
Interest expense (12,982) (14,810) (40,026) (47,668)
Other, net (11,409) (7,802) (31,226) (25,152)
----------- ----------- ----------- -----------
Income before income taxes
and accounting changes $ 145,046 $ 155,160 $ 438,268 $ 455,774
=========== =========== =========== ===========
Capital expenditures $ 26,425 $ 20,523 $ 63,613 $ 46,505
=========== =========== =========== ===========
Depreciation and amortization $ 16,335 $ 16,698 $ 52,106 $ 52,997
=========== =========== =========== ===========
Current ratio 3.4/1 3.3/1
=========== ===========
Total debt to total capitalization 23.7% 25.6%
=========== ===========
(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
Sept. 30, Sept. 30,
2003 2002
---------- ----------
(Unaudited)
(in thousands)
CURRENT ASSETS
Cash and cash equivalents ............................................................. $ 31,476 $ 39,600
Trade accounts receivable ............................................................. 1,132,837 1,084,270
Inventories ........................................................................... 2,083,143 1,967,400
Prepaid and other current accounts .................................................... 77,885 65,655
---------- ----------
TOTAL CURRENT ASSETS ......................................................... 3,325,341 3,156,925
Goodwill and other intangible assets .................................................. 58,163 59,829
Other assets .......................................................................... 321,685 310,802
Total property, plant and equipment, net .............................................. 346,960 333,003
---------- ----------
TOTAL ASSETS .......................................................................... $4,052,149 $3,860,559
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable....................................................................... $ 667,846 $ 690,900
Current portion long-term debt and other borrowings ................................... 30,009 43,780
Income taxes .......................................................................... 41,510 36,692
Dividends payable ..................................................................... 51,303 50,657
Other current liabilities ............................................................. 179,135 144,712
---------- ----------
TOTAL CURRENT LIABILITIES .................................................... 969,803 966,741
Long-term debt ........................................................................ 671,658 675,266
Deferred income taxes ................................................................. 102,777 80,847
Minority interests in subsidiaries .................................................... 49,128 47,276
Common stock .......................................................................... 173,968 174,656
Retained earnings and other ........................................................... 2,084,815 1,915,773
---------- ----------
TOTAL SHAREHOLDERS' EQUITY ................................................... 2,258,783 2,090,429
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................................ $4,052,149 $3,860,559
========== ==========
(Cont.)
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended Sept. 30,
---------------
(in thousands)
2003 2002
---- ----
OPERATING ACTIVITIES:
Net income (loss) ............................................................................. $ 247,364 $(117,989)
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 ............................................................... 52,106 52,997
Other ....................................................................................... (32) 1,890
Changes in operating assets and liabilities ................................................. 7,004 (35,540)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................................................ 325,983 296,448
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ..................................................... (63,613) (46,505)
Other ......................................................................................... 7,237 (2,098)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES ............................................................ (56,376) (48,603)
FINANCING ACTIVITIES:
Net payments on credit facilities ............................................................. (90,034) (173,750)
Stock options exercised ....................................................................... 2,838 35,540
Dividends paid ................................................................................ (153,253) (152,979)
Purchase of stock ............................................................................. (17,677) (2,826)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES ............................................................ (258,126) (294,015)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................................. 11,481 (46,170)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................................. 19,995 85,770
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................................................... $ 31,476 $ 39,600
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