Fourth Quarter 2005

Genuine Parts Company Reports Record Results for 2005; Sales Increased 8%, EPS Increased 11%

Feb 21, 2006
11:16am

Contact: Jerry W. Nix, Vice Chairman and Chief Financial Officer
(770) 612-2048

Atlanta, Georgia, February 21, 2006 -- Genuine Parts Company (NYSE: GPC) completed its 78th year of operations and reports record sales and earnings for the year ended December 31, 2005. 

Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that sales in 2005 were $9.8 billion, up 8% compared to 2004. Net income for the year was $437.4 million, an increase of 11% compared to $395.6 million in 2004. Earnings per share on a diluted basis were $2.50, up 11% compared to $2.25 in 2004.

Mr. Gallagher stated, “We are pleased to report that 2005 was another record year for the Company. With these results, we have now increased sales in 55 of the last 56 years and increased profits in 43 of the last 45 years. This is a record that we are proud of and we feel that it shows the stability and consistency of Genuine Parts Company.”

Mr. Gallagher added, “It is also important to note that through continued focus on asset management and the generation of strong cash flows, our financial condition was further strengthened in 2005.”
 

Fourth Quarter 2005

Sales increased 7% to $2.41 billion in the fourth quarter ended December 31, 2005, compared to $2.25 billion for the same period in 2004. Diluted earnings per share in the fourth quarter were 63 cents, up 15% compared to 55 cents per share for the fourth quarter of 2004.

Mr. Gallagher commented, “For the quarter, revenues in our Automotive Group were up 5%. Motion Industries, our Industrial Group, increased sales by 9%, and EIS, our Electrical/Electronics Group, was up 6%. Sales for S.P. Richards, our Office Products Group, improved by 10%, their strongest quarter for revenue growth in 2005.”

Mr. Gallagher concluded, “As we look back over 2005, we are pleased with the progress that was made throughout our Company. We enter 2006 with optimism and enthusiasm and with a commitment throughout our organization to strive for further improvement in the year ahead. Our focus, across all of our business segments, is to maintain our level of revenue growth, further improve our operating margins, and continue to enhance our asset management and working capital efficiencies.” 
 

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 4921359. A replay will also be available at 800-642-1687, conference ID 4921359, until 12:00 a.m. EST on March 7, 2006.
 

Forward Looking Statements

Some 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 time. 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, including internet related initiatives, 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 business products nationwide in the U.S. and Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S., Canada and Mexico.
 


 

GENUINE PARTS COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

 

  Three Months Ended Dec. 31, Year Ended Dec. 31,
  2005 2004 2005 2004
                     (Unaudited)
         
  (in thousands, except per share data)
     
Net sales $2,409,689 $2,253,307 $9,783,050 $9,097,267
Cost of goods sold 1,621,842 1,502,953 6,718,964 6,267,544
  787,847 750,354 3,064,086 2,829,723
Selling, administrative & other        
expenses 610,930 598,483 2,355,022 2,193,804
Income before income taxes 176,917 151,871 709,064 635,919
Income taxes 67,924 55,557 271,630 240,367
         
Net income $108,993 $96,314 $437,434 $395,552
         
Basic net income per common share $0.63 $0.55 $2.51 $2.26
         
Diluted net income per common        
share $0.63 $0.55 $2.50 $2.25
         
Weighted average common shares        
outstanding 173,263 174,804 174,054 174,687
         
Dilutive effect of stock options and        
non-vested restricted stock awards 843 1,281 953 973
         
Weighted average common shares        
outstanding – assuming dilution 174,106 176,085 175,007 175,660


 
 
 

GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS

  Three Months Ended Dec.31, Year Ended Dec.31,
  2005 2004 2005 2004
                       (Unaudited)
                
                (in thousands, except ratio analysis)
Net Sales:        
   Automotive $1,220,639 $1,164,072 $5,013,460 $4,739,261
   Industrial 695,167 636,998 2,795,699 2,511,597
   Office Products 412,072 375,633 1,662,393 1,540,878
   Electrical/Electronic Materials 86,435 81,342 341,513 335,605
   Other (1) (4,624) (4,738) (30,015) (30,074)
      Total net sales $2,409,689 $2,253,307 $9,783,050 $9,097,267
         
Operating profit:        
   Automotive $83,856 $91,320 $398,494 $396,015
   Industrial 61,934 48,611 214,222 173,760
   Office Products 42,132 42,166 157,408 150,817
   Electrical/Electronic Materials 4,754 3,311 17,470 14,611
   Total operating profit 192,676 185,408 787,594 735,203
   Interest expense (6,195) (8,106) (29,564) (37,260)
   Other, net (9,564) (25,431) (48,966) (62,024)
      Income before income taxes $176,917 $151,871 $709,064 $635,919
         
Capital expenditures $26,404 $25,526 $85,714 $72,077
         
Depreciation and amortization $14,100 $12,432 $65,529 $62,207
         
Current ratio     3.0/1 3.2/1
         
Total debt to total capitalization     15.7% 16.5%
         
     
(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

 

  December 31, December 31,
  2005 2004
 
                    
                      (in thousands)
ASSETS    
CURRENT ASSETS    

Cash and cash equivalents

$188,911 $134,940

Trade accounts receivable

1,186,865 1,123,900

Inventories

2,216,542 2,198,957

Prepaid expenses and other current assets

214,564 175,687
     

TOTAL CURRENT ASSETS

3,806,882 3,633,484

Goodwill and other intangible assets

62,717 57,672

Other assets

509,644 384,703

Total property, plant and equipment, net

392,295 379,388
     

TOTAL ASSETS

$4,771,538 $4,455,247
     

LIABILITIES AND SHAREHOLDERS’ EQUITY

   

CURRENT LIABILITIES

   

Trade accounts payable

$973,615 $856,653

Other borrowings

881 968

Income taxes payable

36,296 42,932

Dividends payable

54,150 52,495

Other current liabilities

184,162 179,667
     

TOTAL CURRENT LIABILITIES

1,249,104 1,132,715
     

Long-term debt

500,000 500,000

Other long-term liabilities

114,623 110,078

Deferred income taxes

156,807 115,683

Minority interests in subsidiaries

57,047 52,394

Common stock

173,033 174,965

Retained earnings and other

2,520,924 2,369,412
     

TOTAL SHAREHOLDERS' EQUITY

2,693,957 2,544,377
     

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$4,771,538 $4,455,247

 

 
 
 

GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

              Year Ended Dec. 31,
  2005 2004
                    
                    (in thousands)
     
OPERATING ACTIVITIES:    
  Net income $437,434 $395,552
  Adjustments to reconcile net income to net cash provided by    
  operating activities:    
  Depreciation and amortization 65,529 62,207
  Other 3,271 2,688
  Changes in operating assets and liabilities (65,717) 94,789
     
NET CASH PROVIDED BY OPERATING ACTIVITIES 440,517 555,236
     
INVESTING ACTIVITIES:    
  Purchase of property, plant and equipment (85,714) (72,077)
  Other 15,540 4,122
     
NET CASH USED IN INVESTING ACTIVITIES (70,174) (67,955)
     
FINANCING ACTIVITIES:    
  Net payments on credit facilities (87) (176,801)

  Stock options exercised

17,725 37,523
  Dividends paid (215,868) (208,575)
  Purchase of stock (119,239) (21,475)
     
NET CASH USED IN FINANCING ACTIVITIES (317,469) (369,328)
     
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,097 1,594
     
NET INCREASE IN CASH AND CASH EQUIVALENTS 53,971 119,547
     
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 134,940 15,393
     
CASH AND CASH EQUIVALENTS AT END OF PERIOD $188,911 $134,940

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