Genuine Parts Company Reports Sales and Earnings for Second Quarter and First Half of 2004
ATLANTA--July 15, 2004--Genuine Parts Company reported sales and earnings for the second quarter and six months ended June 30, 2004. Larry Prince, Chairman of the Board of Directors, announced today that sales totaling $2.3 billion were up 7% compared to the second quarter of 2003. Net income was $101.1 million, an increase of 12%, compared to $90.1 million for the second quarter of 2003. On a per share diluted basis, net income was 58 cents, up 12% compared to 52 cents for the second quarter last year.For the six months ended June 30, 2004, sales totaled $4.5 billion, up 8% compared to the same period in 2003. Net income for the six months was $201.3 million, an increase of 13% over $178.6 million recorded in the previous year before the cumulative effect of an accounting change adopted January 1, 2003. Earnings per share on a diluted basis were $1.15, up 13% compared to $1.02 for the same period last year before the accounting change. In accordance with the Financial Accounting Standards Board's EITF 02-16 affecting the accounting treatment of cash consideration received from vendors, a non-cash charge of $20 million was recorded as of January 1, 2003, representing the cumulative effect of a change in accounting principle. After the cumulative effect adjustment in 2003, net income for the six months ended June 30, 2004 was up 27% and diluted earnings per share were up 26% compared to the six months ended June 30, 2003.
Mr. Prince stated: "Our second quarter results continued the positive direction established in the first quarter with both sales and earnings reaching record levels. We were again pleased to see each of our four business segments contribute to our success in the quarter."
Mr. Prince further commented: "Sales for Motion Industries, our Industrial Group, and EIS, our Electrical/Electronics Group, were especially strong. Both of these companies serve the manufacturing sector, which is currently experiencing a strong recovery from earlier periods. Motion's sales grew by 11% for the quarter and EIS was up 17%. Automotive sales were up 4% for the period and S.P. Richards, our Office Products Group, improved by 5%. It is interesting to note over a period of time how the diversity of our various businesses brings us strength and balance. The splendid performance we are now seeing at Motion and EIS is a clear statement to this idea."
Mr. Prince concluded: "We have a number of positives working for us as we move into the second half of 2004. The diversity of our Company in four sound industries gives us great balance and we expect to see continued improvement. Our Balance Sheet remains in excellent shape to support the continued growth ahead of us and we believe the final half of 2004 will be a good one for Genuine Parts Company."
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/Electronics 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 June 30, Six Months Ended June 30,
--------------------------- --------------------------
2004 2003 2004 2003
-------------- ------------ ---------- --------------
(in thousands, except per share data)
Net sales $ 2,297,686 $2,152,794 $ 4,494,677 $ 4,174,652
Cost of goods
sold 1,604,621 1,501,411 3,114,701 2,884,929
-------------- ------------ ---------- --------------
693,065 651,383 1,379,976 1,289,723
Selling,
administrative
& other
expenses 529,132 503,356 1,053,646 996,501
-------------- ------------ ---------- --------------
Income before
income taxes
and cumulative
effect of a
change in
accounting
principle 163,933 148,027 326,330 293,222
Income taxes 62,787 57,879 124,985 114,650
-------------- ------------ ---------- --------------
Net income
before
cumulative
effect of a
change in
accounting
principle 101,146 90,148 201,345 178,572
Cumulative
effect of a
change in
accounting
principle (1) -- -- -- (19,541)
-------------- ------------ ---------- --------------
Net income $ 101,146 $ 90,148 $ 201,345 $ 159,031
============== ============ ========== ==============
Basic net
income per
common share:
Before
cumulative
effect of a
change in
accounting
principle $ .58 $ .52 $ 1.15 $ 1.03
Cumulative
effect of a
change in
accounting
principle -- -- -- (.12)
-------------- ------------ ---------- --------------
Basic net
income $ .58 $ .52 $ 1.15 $ .91
============== ============ ========== ==============
Diluted net
income per
common share:
Before
cumulative
effect of a
change in
accounting
principle $ .58 $ .52 $ 1.15 $ 1.02
Cumulative
effect of a
change in
accounting
principle -- -- -- (.11)
-------------- ------------ ---------- --------------
Diluted net
income $ .58 $ .52 $ 1.15 $ .91
============== ============ ========== ==============
Weighted
average common
shares
outstanding 174,829 173,895 174,575 174,019
Dilutive effect
of stock
options and
non-vested
restricted
stock awards 815 565 694 498
-------------- ------------ ---------- --------------
Weighted
average common
shares
outstanding -
assuming
dilution 175,644 174,460 175,269 174,517
============== ============ ========== ==============
(1) On January 1, 2 003 the Company recorded a non-cash charge
related to the capitalization of certain vendor consideration in
connection with the Financial Accounting Standards Board's EITF No.
02-16, "Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor".
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
(Unaudited)
Three month period Six month period
ended June 30, ended June 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(in thousands)
Net sales:
Automotive $1,218,695 $1,167,797 $2,345,246 $2,190,268
Industrial 629,402 565,912 1,237,906 1,135,542
Office Products 372,354 355,448 759,144 719,274
Electrical/Electronic
Materials 85,827 73,283 168,906 148,700
Other (1) (8,592) (9,646) (16,525) (19,132)
---------- ---------- ---------- ----------
Total net sales $2,297,686 $2,152,794 $4,494,677 $4,174,652
========== ========== ========== ==========
Operating profit:
Automotive $ 109,492 $ 103,832 $ 202,753 $ 187,262
Industrial 38,179 33,232 84,298 76,419
Office Products 32,694 31,333 76,448 72,889
Electrical/Electronic
Materials 4,300 1,916 7,520 3,513
---------- ---------- ---------- ----------
Total operating
profit 184,665 170,313 371,019 340,083
Interest expense (9,870) (13,350) (19,847) (27,044)
Other, net (10,862) (8,936) (24,842) (19,817)
---------- ---------- ---------- ----------
Income before
income taxes and
accounting
change $ 163,933 $ 148,027 $ 326,330 $ 293,222
========== ========== ========== ==========
Capital expenditures $ 13,514 $ 11,529 $ 25,571 $ 37,188
========== ========== ========== ==========
Depreciation and
amortization $ 16,998 $ 18,740 $ 33,191 $ 35,771
========== ========== ========== ==========
Current ratio 3.0/1 3.4/1
========== ==========
Total debt to total
capitalization 20.5% 26.6%
========== ==========
(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,
2004 2003
----------------------
(Unaudited)
(in thousands)
CURRENT ASSETS
Cash and cash equivalents $ 127,732 $ 21,942
Trade accounts receivable 1,173,766 1,138,389
Inventories 2,139,207 2,044,336
Prepaid and other current accounts 110,937 84,776
---------- ----------
TOTAL CURRENT ASSETS 3,551,642 3,289,443
Goodwill and other intangible assets 57,850 58,297
Other assets 319,735 334,771
Total property, plant and equipment, net 332,863 338,982
---------- ----------
TOTAL ASSETS $4,262,090 $4,021,493
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 772,563 $ 624,476
Current portion long-term debt and other
borrowings 127,172 130,818
Income taxes 45,386 24,105
Dividends payable 52,483 51,297
Other current liabilities 173,897 150,392
---------- ----------
TOTAL CURRENT LIABILITIES 1,171,501 981,088
Long-term debt 500,000 671,682
Deferred income taxes 113,254 100,597
Minority interests in subsidiaries 51,514 48,559
Common stock 174,993 173,936
Retained earnings and other 2,250,828 2,045,631
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 2,425,821 2,219,567
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,262,090 $4,021,493
========== ==========
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months
Ended June 30,
--------------------
(in thousands)
2004 2003
--------- ---------
OPERATING ACTIVITIES:
Net income $ 201,345 $ 159,031
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of a change in accounting
principle -- 19,541
Depreciation and amortization 33,191 35,771
Other 1,656 (2,242)
Changes in operating assets and liabilities 1,483 (66,186)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 237,675 145,915
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (25,571) (37,188)
Other -- (863)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (25,571) (38,051)
FINANCING ACTIVITIES:
Net (payments) proceeds on credit facilities (21,900) 10,999
Stock options exercised 28,918 1,401
Dividends paid (103,667) (101,946)
Purchase of stock (3,116) (16,371)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (99,765) (105,917)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 112,339 1,947
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,393 19,995
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 127,732 $ 21,942
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