Genuine Parts Company Reports Sales and Earnings for Second Quarter and First Half of 2002
ATLANTA--July 18, 2002--Genuine Parts Company reported sales and earnings for the second quarter and six months ended June 30, 2002.Larry Prince, Chairman of the Board of Directors, announced today that sales totaling $2.1 billion were up 1% compared to the second quarter of 2001. Net income was $96 million, compared to $95 million for the second quarter of 2001. On a per share diluted basis, net income equaled $.55, even with the comparable quarter of the prior year.
During the six months ended June 30, 2002, sales totaled $4.1 billion, down slightly as compared to the same period in 2001. Net income for the six months, before the cumulative effect of a change in accounting principle related to goodwill, was $183 million compared to $184 million for the same period in the prior year. On a per share diluted basis, net income for the period before the cumulative effect of a change in accounting principle equaled $1.05.
Mr. Prince stated: "Our results by business segment were also very much in line with our expectations and each showed improvement for the quarter. Automotive sales were up approximately 2.5%, which represents five consecutive quarters of sales growth following a few periods of being down a bit. We believe this trend of improvement will continue and possibly strengthen further in the third quarter. Fundamentals driving the business remain sound and we are selectively adding a number of both company owned and independently owned NAPA stores as industry consolidation continues. We believe that S.P. Richards, our Office Products Group, had their toughest period in the first quarter and we felt they would bounce back. They were able to accomplish this and were up 1% for the second quarter, which shows real strength in a tough economic environment for their industry. We believe they will do even better in the third quarter."
Mr. Prince further commented: "Our Industrial Group, Motion Industries, was slightly ahead for the quarter following five quarters of decline. This is a significant change for us since the Industrial Group is such a major part of our company representing 27% of GPC's revenues. Some of Motion's improvement can be attributed to share gain in a highly fragmented market. In addition, industrial production has started to show improvement, which is beneficial to Motion's activity. Their marketplace remains a fragile one but we expect Motion to show additional gains in the periods ahead. EIS, our Electrical/Electronics Group, was down 17% in the quarter, a decline but not as steep as in previous periods."
Mr. Prince concluded: "We begin the second half of 2002 in excellent financial condition and with tight expense controls in place. We are extremely pleased to have reduced our debt by $173 million since year-end and our cash flow is strong. Our challenge is to generate sales growth over the coming months in a marketplace that remains less than vibrant. We have confidence that our GPC team can accomplish this with our goal being steady and gradual improvement for the balance of 2002."
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 888-666-1297, conference ID 4531809. A replay will also be available at 800-642-1687, conference ID 4531809, until 12 a.m. EDT on July 25, 2002.
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 Six Months
Ended June 30, Ended June 30,
------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
(000 omitted except per share data)
Net sales $2,130,924 $2,118,976 $4,108,667 $4,173,948
Cost of goods sold 1,486,692 1,475,999 2,860,466 2,907,812
--------- --------- --------- ---------
644,232 642,977 1,248,201 1,266,136
Selling, administrative
& other expenses 486,520 485,164 947,587 959,534
--------- --------- --------- ---------
Income before income
taxes 157,712 157,813 300,614 306,602
Income taxes 61,665 63,125 117,540 122,641
--------- --------- --------- ---------
Net income before cumulative
effect of a change in
accounting principle 96,047 94,688 183,074 183,961
Cumulative effect of a change
in accounting principle -- -- (395,090) --
--------- --------- --------- ---------
Net income (loss) after
cumulative effect of a
change in accounting
principle $ 96,047 $ 94,688 $(212,016) $183,961
========= ========= ========= =========
Earnings Per Common Share:
Income before
accounting change $ .55 $ .55 $1.05 $ 1.07
Cumulative effect of a
change in accounting
principle -- -- (2.27) --
--------- --------- --------- ---------
Net income (loss) per
common share $ .55 $ .55 $(1.22) $ 1.07
========= ========= ========= =========
Earnings Per Common
Share - Assuming Dilution:
Income before
accounting change $ .55 $ .55 $1.05 $ 1.06
Cumulative effect of a change
in accounting principle -- -- (2.26) --
--------- --------- --------- ---------
Net income (loss) per
common share -
assuming dilution $ .55 $ .55 $(1.21) $ 1.06
========= ========= ========= =========
Average common shares
outstanding 174,445 172,483 174,163 172,286
Dilutive effect of stock
options and non-vested
restricted stock awards 903 878 945 810
--------- --------- --------- ---------
Average common shares
outstanding -
assuming dilution 175,348 173,361 175,108 173,096
========= ========= ========= =========
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
--------------------------------------------
(Unaudited)
Three month period Six month period
ended June 30, ended June 30,
2002 2001 2002 2001
---------------------- -------------------
(in thousands)
Net sales:
Automotive $1,148,572 $1,121,981 $2,147,230 $2,104,805
Industrial 572,618 572,114 1,123,788 1,156,043
Office Products 336,599 333,143 689,356 703,862
Electrical/Electronic
Materials 80,558 96,962 162,178 221,647
Other (1) (7,423) (5,224) (13,885) (12,409)
--------- --------- --------- ---------
Total net sales $2,130,924 $2,118,976 $4,108,667 $4,173,948
========== ========== ========== ==========
Operating profit:
Automotive $ 108,648 $109,807 $ 192,943 $ 191,774
Industrial 44,502 44,047 87,031 89,269
Office Products 29,854 30,073 70,928 73,705
Electrical/Electronic
Materials 600 1,639 (80) 6,844
--------- --------- --------- ---------
Total operating
profit 183,604 185,566 350,822 361,592
Interest expense (16,409) (15,097) (32,858) (30,782)
Other, net (9,483) (12,656) (17,350) (24,208)
--------- --------- --------- ---------
Income before income
taxes $ 157,712 $ 157,813 $ 300,614 $306,602
========== ========== ========== ==========
Capital expenditures $ 14,540 $11,456 $ 25,982 $ 23,570
========== ========== ========== ==========
Depreciation and
amortization $ 17,882 $ 24,104 $ 36,299 $ 47,142
========== ========== ========== ==========
Current ratio 3.3/1 3.1/1
===== =====
Total debt to total capitalization 25.9% 27.9%
===== =====
(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
June 30, June 30,
2002 2001
-----------------------------
(Unaudited)
(in thousands)
CURRENT ASSETS
Cash and cash equivalents $24,549 $45,685
Trade accounts receivable 1,112,717 1,131,433
Inventories 1,921,481 1,796,781
Prepaid and other current accounts 74,908 58,896
------ ------
TOTAL CURRENT ASSETS 3,133,655 3,032,795
Goodwill and other intangible assets 59,363 453,448
Other assets 301,885 294,270
Total property, plant and equipment, net 332,577 370,725
------- -------
TOTAL ASSETS $3,827,480 $4,151,238
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $689,987 $ 628,618
Current portion long-term debt and
other borrowings 44,782 198,046
Income taxes 34,215 22,168
Dividends payable 50,581 49,185
Other current liabilities 139,918 81,556
------- ------
TOTAL CURRENT LIABILITIES 959,483 979,573
Long-term debt 675,407 709,939
Deferred income taxes 81,898 72,859
Minority interests in subsidiaries 46,906 45,664
Common stock 174,729 172,589
Retained earnings and other 1,889,057 2,170,614
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 2,063,786 2,343,203
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $3,827,480 $ 4,151,238
========= =========