Genuine Parts Company Reports Results for 2003 and Announces 48Th Consecutive Year Increase in Dividends
ATLANTA--Feb. 1, 20047, 2004--Genuine Parts Company completed its 76th year of operations and reports sales and earnings for the year ended December 31, 2003.Sales in 2003 were $8.4 billion, up 2.3% compared to the previous year. Net income for the year, before the cumulative effect of changes in accounting principles related to cash consideration from vendors and goodwill as discussed below, was $354 million, compared to $368 million, for the same period in the prior year, a decrease of 4%. Diluted earnings per share, excluding the cumulative effect adjustments, were $2.03 versus $2.10 per share in 2002, a decrease of 3%. After accounting changes recorded in the first quarter of 2003 and 2002 as discussed below, net income was $334 million, or $1.91 diluted income per share, compared to a net loss of $27.6 million, or $.16 diluted loss per share in 2002.
Larry Prince, Chairman of the Board of Directors, stated, "Total sales for 2003 reached a new record level for us, exceeding our previous high set in the year 2000. We are disappointed that earnings before the cumulative effect adjustments were not on the plus side, given our sales improvement. While we were able to do a commendable job of expense control, our gross profit margins before the reclassification of vendor consideration were below those of the previous year and negatively impacted our earnings picture."
Mr. Prince added, "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."
Fourth Quarter 2003
Sales increased 5% to $2.09 billion in the fourth quarter ended December 31, 2003, as compared to $1.99 billion for the same period in 2002. Diluted earnings per share in the fourth quarter were $.50 compared to the prior year of $.52 per share, a decrease of 4%.
Mr. Prince commented, "For the quarter, revenues in our Automotive Group were up 6%, a strong finish to the year and we were pleased to see the positive impact of our sales initiatives. Motion Industries, our Industrial Group, increased sales by 2% for the fourth quarter, and S. P. Richards, our Office Products Group, had an increase of 4% for the quarter. Sales for EIS, our Electrical Group, were up slightly for the fourth quarter, their first comparative increase in quite some time."
Mr. Prince concluded, "We are optimistic that the stronger sales trend in the final quarter will carry over into 2004. GPC is in a position of market leadership in all our businesses, but we enter the new year with a determination and explicit plans to reach a higher level of growth."
Dividends Increased 48 Consecutive Years
Genuine Parts Company also announced an increase of 2% in the regular quarterly cash dividend for 2004. On February 16, 2004, the Board of Directors increased the cash dividend payable to an annual rate of $1.20 per share compared with the previous dividend of $1.18 per share. The quarterly cash dividend of $.30 per share is payable April 1, 2004 to shareholders of record March 5, 2004.
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 5086255. A replay will also be available at 800-642-1687 until 12:00 a.m. EST on March 2, 2004.
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. and Canada 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 Dec. 31, Year Ended Dec. 31,
------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------
Net sales $2,085,260 $1,993,501 $8,449,300 $8,258,927
Cost of goods
sold 1,404,316 1,337,317 5,826,684 5,704,749
---------- ---------- ---------- ----------
680,944 656,184 2,622,616 2,554,178
Selling,
administrative
& other
expenses 547,469 506,222 2,050,873 1,948,442
---------- ---------- ---------- ----------
Income before
income taxes and
accounting
change 133,475 149,962 571,743 605,736
Income taxes 46,738 59,563 218,101 238,236
---------- ---------- ---------- ----------
Net income before
cumulative effect of
a change in
accounting
principle 86,737 90,399 353,642 367,500
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 $ 86,737 $ 90,399 $ 334,101 $ -27,590
========== ========== ========== ==========
Basic Net Income(Loss)
per Common Share:
Before cumulative effect
of a change in
accounting
principle $0.50 $0.52 $2.03 $2.11
Cumulative effect
of a change in
accounting
principle (1) -- -- -0.11 -2.27
------- ----- ------ ------
Basic net income
(loss) $0.50 $0.52 $1.92 ($0.16)
========== ========== ========== ==========
Diluted Net Income (Loss)
per Common Share:
Before cumulative
effect of a
change in
accounting
principle $0.50 $0.52 $2.03 $2.10
Cumulative
effect of a
change in
accounting
principle (1) -- -- -0.12 -2.26
------- ----- ------ ------
Diluted net
income (loss) $0.50 $0.52 $1.91 ($0.16)
========== ========= ========== ==========
Weighted average
common shares
outstanding 173,994 174,434 173,995 174,369
Dilutive effect of stock
options and
non-vested
restricted
stock awards 473 511 485 735
---------- ---------- ---------- ----------
Weighted average
common shares
outstanding -
assuming
dilution 174,467 174,945 174,480 175,104
========== ========== ========== ==========
(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 (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
--------------------------------------------
Three months ended Dec. 31, Year ended Dec. 31,
2003 2002 2003 2002
-----------------------------------------------------
(Unaudited) (In thousands)
Net sales:
Automotive $1,094,619 $1,032,737 $4,477,508 $4,335,362
Industrial 561,446 551,030 2,253,947 2,246,124
Office Products 362,000 347,529 1,457,149 1,396,453
Electrical/Electronic
Materials 74,463 74,117 297,618 315,826
Other (1) -7,268 -11,912 -36,922 -34,838
-----------------------------------------------
Total net sales $2,085,260 $1,993,501 $8,449,300 $8,258,927
===============================================
Operating profit:
Automotive $72,753 $81,304 $363,022 $381,771
Industrial 40,489 52,041 151,109 178,027
Office Products 40,035 39,819 143,263 140,912
Electrical/Electronic
Materials 1,709 1,708 7,112 2,756
-----------------------------------------------
Total operating
profit 154,986 174,872 664,506 703,466
Interest expense -11,512 -11,972 -51,538 -59,640
Other, net -9,999 -12,938 -41,225 -38,090
-----------------------------------------------
Income before income
taxes and accounting
changes $133,475 $149,962 $571,743 $605,736
===============================================
Capital
expenditures $10,291 $18,252 $73,904 $64,758
===============================================
Depreciation
and amortization $16,907 $17,154 $69,013 $70,151
===============================================
Current ratio 3.4/1 3.0/1
======================
Total debt to
total capitalization 22.70% 27.10%
======================
(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
--------------
Dec. 31, Dec. 31,
2003 2002
-------------------------
(in thousands)
CURRENT ASSETS
---------------
Cash and cash
equivalents $ 15,393 $ 19,995
Trade accounts
receivable 1,084,874 1,039,843
Inventories 2,140,811 2,144,787
Prepaid and other
current accounts 176,548 172,362
---------- ----------
TOTAL CURRENT ASSETS 3,417,626 3,376,987
Goodwill and other
intangible assets 58,028 58,705
Other assets 297,851 292,312
Total property, plant and
equipment, net 342,992 333,051
--------- ----------
TOTAL ASSETS $4,116,497 $4,061,055
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
-------------------
Accounts payable $ 706,609 $ 735,183
Current portion
long-term debt
and other borrowings 52,525 116,905
Income taxes 18,575 21,366
Dividends payable 51,331 50,557
Other current
liabilities 187,891 186,919
---------- ----------
TOTAL CURRENT
LIABILITIES 1,016,931 1,110,930
Long-term debt 625,108 674,796
Deferred income
taxes 114,533 97,912
Minority
interests in
subsidiaries 47,642 47,408
Common stock 174,045 174,381
Retained earnings and
other 2,138,238 1,955,628
---------- ----------
TOTAL SHAREHOLDERS'
EQUITY 2,312,283 2,130,009
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,116,497 $4,061,055
========== ==========
GENUINE PARTS COMPANY AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------
Year
Ended Dec. 31,
------------
(in thousands)
2003 2002
-------------------------
OPERATING ACTIVITIES:
Net income(loss) $ 334,101 $ -27,590
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 69,013 70,151
Other 2,565 2,315
Changes in operating
assets and liabilities -23,035 -167,558
--------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 402,185 272,408
INVESTING ACTIVITIES:
Purchase of property,
plant and equipment -73,904 -64,758
Other -1,371 4,095
------- -------
NET CASH USED IN INVESTING
ACTIVITIES -75,275 -60,663
FINANCING ACTIVITIES:
Net payments on credit
facilities -112,976 -101,069
Stock options exercised 4,601 36,009
Dividends paid -204,556 -201,150
Purchase of stock -17,709 -11,615
------- -------
NET CASH USED IN FINANCING
ACTIVITIES -330,640 -277,825
EFFECT OF EXCHANGE
RATE CHANGES ON CASH -872 305
------- -------
NET DECREASE IN CASH AND
CASH EQUIVALENTS -4,602 -65,775
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 19,995 85,770
------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 15,393 $ 19,995
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