Genuine Parts Company Reports Quarterly Drop, Automotive Sales Up

Genuine Parts Company reported sales and earnings for the first quarter ended March 31, 2002.
Larry Prince, chairman of the board of directors, announced today that sales totaling $1.98 billion were down 4% compared to the first quarter of 2001. Net income, before the effect of a change in accounting principle discussed below, was $87 million, a decrease of 2.5% over $89.3 million for the first quarter of 2001 and, on a per share diluted basis, net income equaled 50 cents, down 4% compared to 52 cents reported in the comparable quarter of the prior year. After the cumulative effect of a change in accounting principle, the net loss for the quarter was $308.1 million, or $1.76 on a per share diluted basis. All figures in U.S. dollars.
Prince stated: “The Automotive Parts Group continued to show improvement with sales up 2% compared to the previous year. Fundamentals for the automotive aftermarket are sound and we were pleased to see our Automotive Parts operations report their fourth consecutive quarter of sales growth. Motion Industries, our Industrial Group, was down 6%, which is a slight improvement over their results for the past two quarters. Industrial production is starting to show small gains and this will have a positive impact for Motion as we look ahead. EIS, our Electrical/Electronic Group, was down 35% and even at this depressed level is showing a bit of improvement.
“S. P. Richards, our Office Products Group, was down 5% for the period and we anticipated a tough one for them. Last year their revenues were at record levels in the first quarter and they first started to feel the impact of the economy in the second half of the year.”
Prince further commented: “The company has completed its impairment testing for goodwill in conjunction with the new Statement of Financial Accounting Standards No. 142 `Goodwill and Other Intangible Assets.’ As a result, a non-cash charge of $395 million was recorded as of January 1, 2002 representing the cumulative effect of a change in accounting. Most of the goodwill written down is in connection with acquisitions made in 1998 and 1999 and under prior accounting standards would have been amortized over an extended period of time. Our outlook on the development of these operations remains positive, and at the same time our core NAPA operations in the U.S. as well as our U.S. Industrial operations and S. P. Richards were not affected by the change.”
Prince also announced: “The Board of Directors of the Company declared a regular quarterly dividend of 29 cents per share on the Company’s common stock. The dividend is payable July 1, 2002 to shareholders of record June 7, 2002.”
Prince concluded: “We expect to move our sales and earnings back into a positive growth position in 2002. We can’t be certain what the economy holds for us over the remainder of 2002. Our strategy will be to continue tight expense controls while maintaining an aggressive sales posture. The financial condition of the Company continues to be strong and cash flow remains sound.”