Genuine Parts Company Reports Results for 2002 and Announces 47th Consecutive Year Increase in Dividends
ATLANTA--Feb. 18, 2003--Genuine Parts Company completed its 75th year of operations and reports sales and earnings for the year ended December 31, 2002.Sales in 2002 were $8.26 billion, up slightly compared to the previous year. Net income excluding the cumulative effect of a change in accounting principle related to goodwill increased to $368 million, compared to $362 million, excluding unusual charges, recorded in the prior year. Diluted earnings per share for 2002, excluding the 2002 cumulative effect adjustment and the 2001 unusual items, were $2.10 versus $2.08 per share in 2001, an increase of 1%. After the cumulative effect of a change in accounting principle recorded in 2002 and unusual charges in 2001, the net loss was $27.6 million, or $.16 diluted loss per share, compared to net income of $297.1 million, or $1.71 diluted earnings per share in 2001.
Larry Prince, Chairman of the Board of Directors, said: "We would characterize the year of 2002 as another challenging one but with a number of positives to report for Genuine Parts Company. First, we can report that both sales and earnings, before an accounting change, increased for the year. The increases were modest but returned us to the pattern of improving our results as we have done consistently through the years. Secondly, we can report that we remain financially strong and with a balance sheet that will support our opportunities and activities for the future."
Fourth Quarter 2002
Sales increased 2.4% to $1.99 billion in the fourth quarter ended December 31, 2002, as compared to $1.95 billion for the same period in 2001. Diluted earnings per share in the fourth quarter were $.52 compared to the prior year of $.51 per share, excluding the 2001 unusual charges.
Mr. Prince commented, "For the quarter, revenues in our Automotive Group were up 1%. Both Motion Industries and S.P. Richards, our Industrial and Office Products segments, produced revenue increases of 5% in the final quarter and outpaced market growth in their industries. EIS, our Electrical segment, was down 6% for the final quarter, and while we never like decreases, this was their smallest in a number of quarters and the worst certainly seems to be behind us for this business group."
Mr. Prince stated, "Despite facing a difficult economy with no immediate signs of substantial improvement, we look ahead to 2003 with plans for continued growth in both sales and earnings. Most of our gains will come from organic growth and increased unit volume as we do not anticipate material acquisitions in our businesses and we expect only modest price increases. We are fortunate to be market leaders in each of our four business segments, and the markets we serve remain highly fragmented. Growth opportunities are there for us and we are optimistic that we can achieve market share gains as we look ahead."
Dividends Increased 47 Consecutive Years
Genuine Parts Company also announced an increase of 2% in the regular quarterly cash dividend for 2003. On February 17, 2003, the Board of Directors increased the cash dividend payable to an annual rate of $1.18 per share compared with the previous dividend of $1.16 per share. The quarterly cash dividend of $.295 per share is payable April 1, 2003 to shareholders of record March 7, 2003.
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EST to discuss the results of the quarter, the year and the future outlook. Interested parties may listen by dialing 877-422-4780, conference ID 8306689. A replay will also be available at 800-642-1687 until 12:00 a.m. EST on February 25, 2003.
Forward Looking Statements
Statements in this release constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that its forward-looking statements involve risks and uncertainties. The Company undertakes no duty to update its forward-looking statements, which reflect the Company's beliefs, expectations, and plans as of the present. Actual results or events 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
Three Months Ended Year Ended Dec. 31,
Dec. 31,
------------------ -------------------
2002 2001 2002 2001
---- ---- ---- ----
(Unaudited)
(in thousands, except per share data)
Net sales $1,993,501 $1,947,529 $8,258,927 $8,220,668
Cost of goods sold 1,337,317 1,322,483 5,704,749 5,699,174
--------- --------- --------- ---------
656,184 625,046 2,554,178 2,521,494
Selling, administrative
& other expenses 506,222 508,739 1,948,442 1,951,559
Facility consolidation and
impairment charges (1) -- 73,922 -- 73,922
--------- --------- --------- ---------
Income before income taxes
and accounting change 149,962 42,385 605,736 496,013
Income taxes 59,563 17,415 238,236 198,866
--------- --------- --------- ---------
Net income before cumulative effect of a change
in accounting principle 90,399 24,970 367,500 297,147
Cumulative effect of a change in
accounting principle (2) -- -- (395,090) --
--------- --------- --------- ---------
Net income (loss) $90,399 $24,970 $(27,590) $297,147
========= ========= ========= =========
Earnings Per Common Share:
Income before unusual charges
and accounting change $.52 $.52 $2.11 $2.09
Unusual charges (1) -- (.38) -- (.37)
--------- --------- --------- ---------
Income before accounting change .52 .14 2.11 1.72
Cumulative effect of a change
in accounting principle (2) -- -- (2.27) --
--------- --------- --------- ---------
Net income (loss) per
common share $.52 $.14 $(.16) $1.72
========= ========= ========= =========
Earnings Per Common Share - Assuming Dilution:
Income before unusual charges
and accounting change $.52 $.51 $2.10 $2.08
Unusual charges (1) -- (.37) -- (.37)
--------- --------- --------- ---------
Income before accounting change .52 .14 2.10 1.71
Cumulative effect of a change
in accounting principle (2) -- -- (2.26) --
--------- --------- --------- ---------
Net income (loss) per
common share $.52 $.14 $(.16) $1.71
========= ========= ========= =========
Average common shares
outstanding 174,434 173,389 174,369 172,765
Dilutive effect of stock options and non-vested
restricted stock awards 511 1,006 735 868
--------- --------- --------- ---------
Average common shares outstanding -
assuming dilution 174,945 174,395 175,104 173,633
========= ========= ========= =========
(1) In 2001, unusual charges reported in the fourth quarter related to
facilities consolidation, technology impairment and inventory related
exit costs totaled $107.8 million, or $64.4 million net of income
taxes.
(2) 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
Three months ended Year ended Dec. 31,
Dec. 31,
2002 2001 2002 2001
---- ---- ---- ----
(Unaudited)(In thousands)
Net sales:
Automotive $1,032,737 $1,026,897 $4,335,362 $4,252,913
Industrial 551,030 523,797 2,246,124 2,234,241
Office Products 347,529 332,008 1,396,453 1,379,859
Electrical/Electronic Materials74,117 78,510 315,826 387,771
Other (1) (11,912) (13,683) (34,838) (34,116)
--------- --------- --------- ---------
Total net sales $1,993,501 $1,947,529 $8,258,927 $8,220,668
========= ========= ========= =========
Operating profit:
Automotive $81,304 $81,139 $381,771 $378,162
Industrial 52,041 47,381 178,027 172,208
Office Products 39,819 38,467 140,912 141,762
Electrical/Electronic Materials 1,708 (3,640) 2,756 3,229
--------- --------- --------- ---------
Total operating profit 174,872 163,347 703,466 695,361
Interest expense (11,972) (14,679) (59,640) (59,416)
Other, net (12,938) (11,431) (38,090) (45,080)
Facility consolidation and
impairment (2) -- (94,852) -- (94,852)
--------- --------- --------- ---------
Income before income taxes
and accounting change $149,962 $42,385 $605,736 $496,013
========= ========= ========= =========
Capital expenditures $18,252 $6,503 $64,758 $41,944
========= ========= ========= =========
Depreciation and amortization $17,154 $16,875 $70,151 $85,793
========= ========= ========= =========
Current ratio 3.1/1 3.4/1
===== =====
Total debt to total capitalization 27.1% 27.6%
===== =====
(1) Represents the net effect of discounts, incentives and freight
billed reported as a component of net sales.
(2) Represents unusual charges reported in the fourth quarter 2001
related to facilities consolidation, technology impairment and
inventory related exit costs.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
Dec. 31, Dec. 31,
2002 2001
---------------------
(in thousands)
CURRENT ASSETS
Cash and cash equivalents $19,995 $85,770
Trade accounts receivable 1,039,843 1,010,728
Inventories 2,144,787 1,890,037
Prepaid and other current accounts 131,150 159,677
--------- ---------
TOTAL CURRENT ASSETS 3,335,775 3,146,212
Goodwill and other intangible assets 58,705 442,078
Other assets 292,312 273,224
Total property, plant and equipment, net 333,051 345,132
--------- ---------
TOTAL ASSETS $4,019,843 $4,206,646
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $735,183 $644,084
Current portion long-term debt and
other borrowings 116,799 57,190
Income taxes 21,366 --
Dividends payable 50,557 49,413
Other current liabilities 145,813 168,494
--------- ---------
TOTAL CURRENT LIABILITIES 1,069,718 919,181
Long-term debt 674,796 835,580
Deferred income taxes 97,912 60,985
Minority interests in subsidiaries 47,408 45,777
Common stock 174,381 173,474
Retained earnings and other 1,955,628 2,171,649
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 2,130,009 2,345,123
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,019,843 $4,206,646
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