Genuine Parts Company Reports Sales and Earnings for Third Quarter and Nine Months of 2004
ATLANTA--Oct. 1, 20045, 2004--Genuine Parts Company reported sales and earnings for the third quarter and nine months ended September 30, 2004. Larry Prince, Chairman of the Board of Directors, announced today that sales totaling $2.3 billion were up 7% compared to the third quarter of 2003. Net income was $97.9 million, an increase of 11% compared to $88.3 million for the third quarter of 2003. On a per share diluted basis, net income equaled 56 cents compared to 51 cents for the third quarter of last year.For the nine months ended September 30, 2004, sales totaled $6.8 billion, up 8% compared to the same period in 2003. Net income for the nine months was $299.2 million, an increase of 12% compared to $266.9 million for the same period in the prior year before the cumulative effect of an accounting change adopted January 1, 2003. Earnings per share on a diluted basis were $1.71, up 12% compared to $1.53 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 nine months ended September 30, 2004 was up 21% and diluted earnings per share were up 20% compared to the nine months ended September 30, 2003.
Mr. Prince stated, "Sales and earnings for the third quarter reached record levels for the period and continued the positive pattern established early in 2004. We were again pleased to see growth in all our business groups providing balance to our results."
Mr. Prince further commented, "All four segments contributed significantly to our results with sales for Motion Industries, our Industrial Group, and EIS, our Electrical/Electronics Group, continuing to be especially strong. The manufacturing sector, which is their customer base, is moving ahead at a healthy rate and our companies are giving them excellent service. Motion's sales grew by 14% for the quarter and EIS was up 15%. Sales for the Automotive Parts Group were up 3% for the period and S.P. Richards, our Office Products Group, improved by 8%. We are pleased with this trend as we move into the fourth quarter and we will be pushing hard to produce a strong finish to the year."
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 in 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
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
2004 2003 2004 2003
---- ---- ---- ----
(in thousands, except per share data)
Net sales $2,349,283 $2,189,388 $6,843,960 $6,364,040
Cost of goods sold 1,649,890 1,537,439 4,764,591 4,422,368
---------- ---------- ---------- ----------
699,393 651,949 2,079,369 1,941,672
Selling, administrative &
other expenses 541,675 506,903 1,595,321 1,503,404
---------- ---------- ---------- ----------
Income before income taxes 157,718 145,046 484,048 438,268
Income taxes 59,825 56,713 184,810 171,363
---------- ---------- ---------- ----------
Net income before
cumulative effect of a
change in accounting
principle 97,893 88,333 299,238 266,905
Cumulative effect of a
change in accounting
principle (1) -- -- -- (19,541)
---------- ---------- ---------- ----------
Net income $ 97,893 $ 88,333 $ 299,238 $ 247,364
========== ========== ========== ==========
Basic net income per
common share:
Before cumulative effect
of a change in accounting
principle $ .56 $ .51 $ 1.71 $ 1.53
Cumulative effect of a
change in accounting
principle -- -- -- (.11)
---------- ---------- ---------- ----------
Basic net income $ .56 $ .51 $ 1.71 $ 1.42
========== ========== ========== ==========
Diluted net income per
common share:
Before cumulative effect
of a change in
accounting principle $ .56 $ .51 $ 1.71 $ 1.53
Cumulative effect of a
change in accounting
principle -- -- -- (.11)
---------- ---------- ---------- ----------
Diluted net income $ .56 $ .51 $ 1.71 $ 1.42
========== ========== ========== ==========
Weighted average common
shares outstanding 174,792 173,948 174,648 173,995
Dilutive effect of stock
options and non-vested
restricted stock awards 1,021 481 842 492
---------- ---------- ---------- ----------
Weighted average common
shares outstanding -
assuming dilution 175,813 174,429 175,490 174,487
========== ========== ========== ==========
(1) On January 1, 2003 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 Nine month period
ended Sept. 30, ended Sept. 30,
2004 2003 2004 2003
-------------------- --------------------
(in thousands)
Net sales:
Automotive $1,229,943 $1,192,621 $3,575,189 $3,382,889
Industrial 636,693 556,959 1,874,599 1,692,501
Office Products 406,101 375,875 1,165,245 1,095,149
Electrical/Electronic
Materials 85,357 74,455 254,263 223,155
Other (1) (8,811) (10,522) (25,336) (29,654)
---------- ---------- ---------- ----------
Total net sales $2,349,283 $2,189,388 $6,843,960 $6,364,040
========== ========== ========== ==========
Operating profit:
Automotive $ 101,942 $ 103,007 $ 304,695 $ 290,269
Industrial 40,851 34,201 125,149 110,620
Office Products 32,203 30,339 108,651 103,228
Electrical/Electronic
Materials 3,780 1,890 11,300 5,403
---------- ---------- ---------- ----------
Total operating
profit 178,776 169,437 549,795 509,520
Interest expense (9,307) (12,982) (29,154) (40,026)
Other, net (11,751) (11,409) (36,593) (31,226)
---------- ---------- ---------- ----------
Income before
income taxes and
accounting
change $ 157,718 $ 145,046 $ 484,048 $ 438,268
========== ========== ========== ==========
Capital expenditures $ 20,979 $ 26,425 $ 46,550 $ 63,613
========== ========== ========== ==========
Depreciation and
amortization $ 16,584 $ 16,335 $ 49,775 $ 52,106
========== ========== ========== ==========
Current ratio 2.9/1 3.4/1
========== ==========
Total debt to total
capitalization 20.2% 23.7%
========== ==========
(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
(Unaudited)
ASSETS
Sept. 30, Sept. 30,
2004 2003
--------------------
(in thousands)
CURRENT ASSETS
Cash and cash equivalents $ 284,704 $ 31,476
Trade accounts receivable 1,166,533 1,132,837
Inventories 2,163,049 2,083,143
Prepaid and other current accounts 113,578 77,885
TOTAL CURRENT ASSETS 3,727,864 3,325,341
Goodwill and other intangible assets 57,761 58,163
Other assets 312,994 321,685
Total property, plant and equipment, net 339,397 346,960
---------- ----------
TOTAL ASSETS $4,438,016 $4,052,149
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 836,883 $ 667,846
Current portion long-term debt and other
borrowings 125,841 30,009
Income taxes 60,869 41,510
Dividends payable 52,425 51,303
Other current liabilities 218,054 179,135
---------- ----------
TOTAL CURRENT LIABILITIES 1,294,072 969,803
Long-term debt 500,000 671,658
Deferred income taxes 113,259 102,777
Minority interests in subsidiaries 52,091 49,128
Common stock 174,630 173,968
Retained earnings and other 2,303,964 2,084,815
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 2,478,594 2,258,783
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $4,438,016 $4,052,149
========== ==========
GENUINE PARTS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months
Ended September 30,
2004 2003
(in thousands)
OPERATING ACTIVITIES:
Net income $ 299,238 $ 247,364
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 49,775 52,106
Other 3,337 (32)
Changes in operating assets and liabilities 117,857 7,004
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 470,207 325,983
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (46,550) (63,613)
Other -- 7,237
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (46,550) (56,376)
FINANCING ACTIVITIES:
Net payments on credit facilities (9,559) (90,034)
Stock options exercised 31,649 2,838
Dividends paid (156,150) (153,253)
Purchase of stock (20,286) (17,677)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (154,346) (258,126)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 269,311 11,481
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,393 19,995
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 284,704 $ 31,476
======== ========