Genuine Parts Company Reports Third Quarter Results - Sales Up 3%, Net Income Up 7%
ATLANTA--Oct. 17, 2002--Genuine Parts Company reported sales and earnings for the third quarter ended September 30, 2002.Larry Prince, Chairman of the Board of Directors, announced today that sales totaling $2.2 billion were up 3% as compared to the third quarter of 2001. Net income was $94 million, an increase of 7% from $88.2 million for the third quarter of 2001. On a per share diluted basis, net income equaled 54 cents, as compared to 51 cents in the third quarter of 2001.
During the nine months ended September 30, 2002, sales totaled $6.3 billion, which were flat with the same period in 2001. Net income for the nine months, before the cumulative effect of a change in accounting principle related to goodwill, was $277.1 million, an increase of 2%, compared to $272.2 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 related to goodwill, equaled $1.58, as compared to $1.57 reported in 2001.
Mr. Prince stated: "We were encouraged by the results in each of our business segments with all showing continued progress. Automotive sales were up 3% for the quarter and were led by a 4% gain in our NAPA U.S. Automotive Parts Group. We expect this picture of gradual improvement to continue in the fourth quarter with gains in the 3% to 4% range for our Automotive Group."
Mr. Prince further commented: "S.P. Richards, our Office Products Group, recorded our strongest gain with sales improving by 5% in the quarter. We believe this was reflective of their own sales and marketing efforts more so than industry improvement and we are pleased with their progress. EIS, our Electrical/Electronics Group, was down 9%, which is another step in the right direction following the 17% decline reported in the second period. We believe their fourth quarter will show further improvement. Motion Industries, our Industrial Group, was up 3% for the period and this is their second consecutive quarter to report an increase and we would expect to see continued growth in the fourth quarter."
Mr. Prince concluded: "We enter the final period of 2002 with circumstances very similar to those reported to you at mid-year. Our balance sheet remains in excellent shape and we are doing a reasonably good job of managing our expenses. We will be making every effort to improve even further as we move through the final quarter. We will also be pushing hard on the sales side as we move into the remaining months of the year. We appreciate the efforts of the entire GPC team and are encouraged as we enter the final quarter."
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 5680223. A replay will also be available at 800-642-1687, ID 5680223, until 12:00 a.m. EDT on October 24, 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 Nine Months
Ended Sept. 30, Ended Sept. 30,
--------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
(in thousands, except per share data)
Net sales $2,156,759 $2,099,191 $6,265,426 $6,273,139
Cost of goods sold 1,506,966 1,468,879 4,367,432 4,376,691
--------- --------- --------- ---------
649,793 630,312 1,897,994 1,896,448
Selling, administrative
& other expenses 494,633 483,286 1,442,220 1,442,820
--------- --------- --------- ---------
Income before income taxes 155,160 147,026 455,774 453,628
Income taxes 61,133 58,810 178,673 181,451
--------- --------- --------- ---------
Net income before cumulative effect of a change
in accounting principle 94,027 88,216 277,101 272,177
Cumulative effect of a change in
accounting principle -- -- (395,090) --
--------- --------- --------- ---------
Net income (loss) after cumulative effect of a change
in accounting principle $ 94,027 $ 88,216 $ (117,989)$ 272,177
========= ========= ========= =========
Earnings Per Common Share:
Income before accounting
change $ .54 $ .51 $ 1.59 $ 1.58
Cumulative effect of a change
in accounting principle -- -- (2.27) --
--------- --------- --------- ---------
Net income (loss) per
common share $ .54 $ .51 $ (.68)$ 1.58
========= ========= ========= =========
Earnings Per Common Share - Assuming Dilution:
Income before accounting
change $ .54 $ .51 $ 1.58 $ 1.57
Cumulative effect of a change
in accounting principle -- -- (2.25) --
--------- --------- --------- ---------
Net income (loss) per common
share - assuming dilution $ .54 $ .51 $ (.67)$ 1.57
========= ========= ========= =========
Average common shares
outstanding 174,709 173,081 174,347 172,554
Dilutive effect of stock options and non-vested
restricted stock awards 542 901 812 847
--------- --------- --------- ---------
Average common shares outstanding -
assuming dilution 175,251 173,982 175,159 173,401
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GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
(Unaudited)
Three month period Nine month period
ended Sept. 30, ended Sept. 30,
2002 2001 2002 2001
---- ---- ---- ----
(In thousands)
Net sales:
Automotive $1,155,395 $1,121,211 $3,302,625 $3,226,016
Industrial 571,306 554,401 1,695,094 1,710,444
Office Products 359,568 343,989 1,048,924 1,047,851
Electrical/Electronic Materials 79,531 87,614 241,709 309,261
Other (1) (9,041) (8,024) (22,926) (20,433)
--------- --------- --------- ---------
Total net sales $2,156,759 $2,099,191 $6,265,426 $6,273,139
========= ========= ========= =========
Operating profit:
Automotive $ 107,524 $ 105,250 $ 300,467 $ 297,023
Industrial 38,955 35,558 125,986 124,827
Office Products 30,165 29,590 101,093 103,295
Electrical/Electronic Materials 1,128 25 1,048 6,869
--------- --------- --------- ---------
Total operating profit 177,772 170,423 528,594 532,014
Interest expense (14,810) (13,956) (47,668) (44,737)
Other, net (7,802) (9,441) (25,152) (33,649)
--------- --------- --------- ---------
Income before income taxes $ 155,160 $ 147,026 $ 455,774 $ 453,628
========= ========= ========= =========
Capital expenditures $ 20,524 $ 11,871 $ 46,506 $ 35,441
========= ========= ========= =========
Depreciation and amortization$ 16,698 $ 21,776 $ 52,997 $ 68,918
========= ========= ========= =========
Current ratio 3.3/1 3.0/1
===== =====
Total debt to total capitalization 25.6% 25.1%
===== =====
(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 Sept. 30, Sept. 30,
2002 2001
-------- --------
(Unaudited)
(in thousands)
CURRENT ASSETS
Cash and cash equivalents $ 39,600 $ 108,914
Trade accounts receivable 1,084,270 1,085,419
Inventories 1,967,400 1,763,518
Prepaid and other current accounts 65,655 53,016
------ ------
TOTAL CURRENT ASSETS 3,156,925 3,010,867
Goodwill and other intangible assets 59,829 451,191
Other assets 310,802 281,694
Total property, plant and equipment, net 333,003 359,872
------- -------
TOTAL ASSETS $3,860,559 $4,103,624
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 690,900 $ 606,129
Current portion long-term debt and other borrowings 43,780 163,883
Income taxes 36,692 91,164
Dividends payable 50,657 49,345
Other current liabilities 144,712 94,370
------- ------
TOTAL CURRENT LIABILITIES 966,741 1,004,891
Long-term debt 675,266 627,259
Deferred income taxes 80,847 58,176
Minority interests in subsidiaries 47,276 46,305
Common stock 174,656 173,213
Retained earnings and other 1,915,773 2,193,780
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 2,090,429 2,366,993
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,860,559 $4,103,624
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