Genuine Parts Reports 2004 Results
ATLANTA--Feb. 2, 20052, 2005--Genuine Parts Company completed its 77th year of operations and reports record sales and earnings for the year ended December 31, 2004.Sales in 2004 were $9.1 billion, up 8% compared to 2003. Net income for the year was $395.6 million, an increase of 12% compared to $353.6 million in 2003 before the cumulative effect of an accounting change adopted January 1, 2003. Earnings per share on a diluted basis were $2.25, up 11% compared to $2.03 in 2003 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 and diluted earnings per share in 2004 were up 18% compared to 2003.
Mr. Larry Prince stated, "We achieved record levels of sales and earnings in 2004 and it was a year that we can be proud of for a number of reasons. First, all four of our business segments contributed to our success in a significant and positive way. We also improved on our gross margins, operating expenses as a percentage of sales and operating margins. In addition, we strengthened our balance sheet with the generation of $555 million in operating cash flow and with total debt reduced by $177 million."
Fourth Quarter 2004
Sales increased 8% to $2.25 billion in the fourth quarter ended December 31, 2004, compared to $2.09 billion for the same period in 2003. Diluted earnings per share in the fourth quarter were 55 cents, up 10% compared to 50 cents per share for the fourth quarter of 2003.
Mr. Tom Gallagher commented, "For the quarter, revenues in our Automotive Group were up 6%. Motion Industries, our Industrial Group, increased sales by 13%, and EIS, our Electrical/Electronics Group, was up 9%. Both of these business segments continue to benefit from the improved economic conditions across their manufacturing customer base. Sales for S. P. Richards, our Office Products Group, improved by 4%."
Mr. Gallagher concluded, "In 2004, the Company was able to pick up the revenue pace with solid strategies and good execution. Today, we find ourselves in the position of needing to do it again with the same spirit and intensity that we had going for us in 2004. We believe all the plans are in place to do this and we look forward to 2005."
Dividends Increased 49 Consecutive Years
Genuine Parts Company also announced an increase of 4% in the regular quarterly cash dividend for 2005. On February 21, 2005, the Board of Directors increased the cash dividend payable to an annual rate of $1.25 per share compared with the previous dividend of $1.20 per share. The quarterly cash dividend of $.3125 per share is payable April 1, 2005 to shareholders of record March 11, 2005. GPC has paid a cash dividend every year since going public in 1948 and this recent increase makes the 49th consecutive year.
Board Appoints CEO to Chairman
Genuine Parts Company also announced that on February 21, 2005, the Board of Directors elected Thomas C. Gallagher, President and CEO, to the additional position of Chairman of the Board. Mr. Prince stated, "Tom is known and held in high esteem by all constituencies of our Company, including our employees, customers and shareholders. He has been a member of the GPC team for 34 years, and for 15 of those he served as President and COO prior to his election to CEO last year. There is no person more ideally suited to lead Genuine Parts Company in the coming years and we have pride and confidence in this important development."
Mr. Prince added, "My own plans include retirement from day to day activities and management at Genuine Parts Company on March 31, 2005. It will be my privilege to continue to serve as a Director on the GPC Board and Chairman of the Executive Committee. It has been an honor to be part of this splendid organization for 46 years and my interest will always be directed toward the success and well being of GPC."
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 Year Ended
Dec. 31, Dec. 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(Unaudited)
(in thousands, except per share data)
Net sales $2,253,307 $2,085,260 $9,097,267 $8,449,300
Cost of goods sold 1,502,953 1,404,316 6,267,544 5,826,684
---------- ---------- ---------- ----------
750,354 680,944 2,829,723 2,622,616
Selling, administrative &
other expenses 598,483 547,469 2,193,804 2,050,873
---------- ---------- ---------- ----------
Income before income taxes
and accounting change 151,871 133,475 635,919 571,743
Income taxes 55,557 46,738 240,367 218,101
---------- ---------- ---------- ----------
Net income before
cumulative effect of a
change in accounting
principle 96,314 86,737 395,552 353,642
Cumulative effect of a
change in accounting
principle (1) -- -- -- (19,541)
---------- ---------- ---------- ----------
Net income after
cumulative effect of a
change in accounting
principle $ 96,314 $ 86,737 $ 395,552 $ 334,101
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Basic Net Income per
Common Share:
Before cumulative effect
of a change in accounting
principle $ .55 $ .50 $ 2.26 $ 2.03
Cumulative effect of a
change in accounting
principle (1) -- -- -- (.11)
---------- ---------- ---------- ----------
Basic net income $ .55 $ .50 $ 2.26 $ 1.92
========== ========== ========== ==========
Diluted Net Income per
Common Share:
Before cumulative effect
of a change in accounting
principle $ .55 $ .50 $ 2.25 $ 2.03
Cumulative effect of a
change in accounting
principle (1) -- -- -- (.12)
---------- ---------- ---------- ----------
Diluted net income $ .55 $ .50 $ 2.25 $ 1.91
========== ========== ========== ==========
Weighted average common
shares outstanding 174,804 173,994 174,687 173,995
Dilutive effect of stock
options and non-vested
restricted stock awards 1,281 473 973 485
---------- ---------- ---------- ----------
Weighted average common
shares outstanding -
assuming dilution 176,085 174,467 175,660 174,480
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(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".
GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
Dec. 31, Dec. 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(Unaudited)
(in thousands, except ratio analysis)
Net sales:
Automotive $1,164,072 $1,094,619 $4,739,261 $4,477,508
Industrial 636,998 561,446 2,511,597 2,253,947
Office Products 375,633 362,000 1,540,878 1,457,149
Electrical/Electronic
Materials 81,342 74,463 335,605 297,618
Other (1) (4,738) (7,268) (30,074) (36,922)
---------- ---------- ---------- ----------
Total net sales $2,253,307 $2,085,260 $9,097,267 $8,449,300
========== ========== ========== ==========
Operating profit:
Automotive $ 91,320 $ 72,753 $ 396,015 $ 363,022
Industrial 48,611 40,489 173,760 151,109
Office Products 42,166 40,035 150,817 143,263
Electrical/Electronic
Materials 3,311 1,709 14,611 7,112
---------- ---------- ---------- ----------
Total operating profit 185,408 154,986 735,203 664,506
Interest expense (8,106) (11,512) (37,260) (51,538)
Other, net (25,431) (9,999) (62,024) (41,225)
---------- ---------- ---------- ----------
Income before
income taxes and
accounting change $ 151,871 $ 133,475 $ 635,919 $ 571,743
========== ========== ========== ==========
Capital expenditures $ 25,526 $ 10,291 $ 72,077 $ 73,904
========== ========== ========== ==========
Depreciation and
amortization $ 12,432 $ 16,907 $ 62,207 $ 69,013
========== ========== ========== ==========
Current ratio 3.2/1 3.5/1
========== ==========
Total debt to total
capitalization 16.5% 22.7%
========== ==========
(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
Dec. 31, Dec. 31,
2004 2003
---------- ----------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 134,940 $ 15,393
Trade accounts receivable 1,123,900 1,084,874
Inventories 2,198,957 2,140,811
Prepaid expenses and other current assets 175,687 161,132
---------- ----------
TOTAL CURRENT ASSETS 3,633,484 3,402,210
Goodwill and other intangible assets 57,672 58,028
Other assets 384,703 324,726
Total property, plant and equipment, net 379,388 342,992
---------- ----------
TOTAL ASSETS $4,455,247 $4,127,956
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 856,653 $ 706,609
Current portion long-term debt and other
borrowings 968 52,525
Income taxes payable 42,932 18,575
Dividends payable 52,495 51,331
Other current liabilities 179,667 138,298
---------- ----------
TOTAL CURRENT LIABILITIES 1,132,715 967,338
Long-term debt 500,000 625,108
Other long-term liabilities 110,078 61,052
Deferred income taxes 115,683 114,533
Minority interests in subsidiaries 52,394 47,642
Common stock 174,965 174,045
Retained earnings and other 2,369,412 2,138,238
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 2,544,377 2,312,283
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,455,247 $4,127,956
========== ==========
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Dec. 31,
2004 2003
--------- ---------
(in thousands)
OPERATING ACTIVITIES:
Net income $ 395,552 $ 334,101
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 62,207 69,013
Other 2,688 2,565
Changes in operating assets and liabilities 94,789 (23,035)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 555,236 402,185
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (72,077) (73,904)
Other 4,122 (1,371)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (67,955) (75,275)
FINANCING ACTIVITIES:
Net payments on credit facilities (176,801) (112,976)
Stock options exercised 37,523 4,601
Dividends paid (208,575) (204,556)
Purchase of stock (21,475) (17,709)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (369,328) (330,640)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,594 (872)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 119,547 (4,602)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,393 19,995
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 134,940 $ 15,393
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