Genuine Parts Company (NAPA)Reports Sales and Earnings for Third Quarter and Nine Months of 2003
ATLANTA--Oct. 1, 20036, 2003--Genuine Parts Company 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."
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 AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, 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)
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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 recor ded 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".
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
(Unaudited)
Three month period Nine month period
ended Sept. 30, 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, in centives and freight
billed rep orted as a component of net sales.
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
========== ==========
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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