Genuine Parts Company Reports Sales and Earnings for Second Quarter and First Half of 2003
ATLANTA--July 17, 2003--Genuine Parts Company 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."
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 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 a.m. EDT on July 31, 2003.
Forward Looking Statements
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 Ended Six Months Ended
June 30, 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".
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
(Unaudited)
Three month period ended Six month period ended
June 30, 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.
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
========== ==========
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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