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Genuine Parts Company : Reports Record Sales and Earnings for the Third Quarter Ended September 30, 2011

10/18/2011 | 09:10am US/Eastern
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ATLANTA, Oct. 18, 2011 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the third quarter and nine months ended September 30, 2011. Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $3.3 billion were up 11% compared to the third quarter of 2010. Net income for the quarter was $151.8 million, an increase of 15% from $131.8 million recorded in the same period of the previous year. Earnings per share on a diluted basis were 97 cents, up 17% compared to 83 cents for the third quarter last year.

(Logo: http://photos.prnewswire.com/prnh/20081002/CLTH108LOGO)

For the nine months ended September 30, 2011, sales totaled $9.4 billion, up 12% compared to the same period in 2010. Net income for the nine months was $430.2 million, an increase of 21% from $356.9 million recorded in the previous year. Earnings per share on a diluted basis were $2.72, up 21% compared to $2.25 for the same period last year.

In review of the quarter, Mr. Gallagher commented, "We are pleased to report another period of record sales and earnings for Genuine Parts Company. The Automotive Group posted its fourth consecutive quarter of 9% sales growth. Automotive's strong and consistent growth reflects the positive impact of our sales initiatives and the sound fundamentals that continue to be evident in the automotive aftermarket. Our Industrial and Electrical businesses once again produced the strongest growth among our four business segments. Sales for Motion Industries, our Industrial Group, reached over $1 billion for the second straight quarter and were up 18%. EIS, our Electrical Group, generated a 22% sales increase. Both Motion Industries and EIS sell into the manufacturing sector of the economy, which has performed well over the last seven quarters and current customer demand continues to be encouraging. S.P. Richards, our Office Products Group, showed a 3% sales increase for the quarter, marking their fourth consecutive period of sales growth. This positive sales trend is encouraging and reflects the ongoing benefits of their internal growth initiatives, as demand across the office products industry remains relatively weak."

Mr. Gallagher added, "Our balance sheet as of September 30, 2011 remains in excellent condition. We ended the period with cash of $535 million and we continue to generate strong cash flows as a result of our working capital, asset management and cost reduction initiatives. Our strong cash position offers us tremendous opportunities and we continue to use our cash in several key areas to maximize the total return to shareholders. Our priorities for cash remain the dividends paid to shareholders, the ongoing reinvestment back into each of our four businesses, strategic acquisitions and share repurchases."

Mr. Gallagher concluded, "We are pleased with the record level of sales and earnings achieved in the third quarter and for the first nine months in 2011. Turning to the last quarter of the year, we remain optimistic that our businesses will show continued progress. While we are aware of the general economic factors that could lead to more challenging market conditions, our management team remains committed to sustaining good revenue growth, further improving operating margins, generating solid cash flows and maintaining a strong balance sheet."

Conference Call

Genuine Parts Company will hold a conference call today at 11:00 a.m. Eastern time to discuss the results of the quarter and the future outlook. Interested parties may listen to the call on the Company's website, www.genpt.com, by clicking "Investor Services", or by dialing toll-free at 877-331-5106, conference ID 14714880. A replay will also be available on the Company's website or by dialing toll-free at 855-859-2056, conference ID 14714880, two hours after the completion of the conference call until 12:00 a.m. Eastern time on November 1, 2011.

Forward Looking Statements

Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission (SEC) or otherwise release to the public and in materials that we make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. Forward-looking statements may relate, for example, to future operations, prospects, strategies, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, slowing demand for the Company's products, changes in general economic conditions, including, unemployment, inflation or deflation, high energy costs, uncertain credit markets and other macro-economic conditions, the ability to maintain favorable vendor arrangements and relationships, disruptions in our vendors' operations, competitive product, service and pricing pressures, the Company's ability to successfully implement its business initiatives in each of its four business segments, the uncertainties and costs of litigation, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2010 and from time to time in the Company's subsequent filings with the SEC.

Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, Form 8-K and other reports to the SEC.

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 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
                       CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                      Three Months Ended           Nine Months Ended
                                      Sept. 30,                        Sept. 30,
                                           2011        2010        2011        2010
                                           ----        ----        ----        ----
                                                        (Unaudited)
                                           (in thousands, except per share data)

    Net sales                        $3,285,560  $2,950,560  $9,444,742  $8,399,861
    Cost of goods sold                2,337,028   2,097,529   6,731,302   5,964,045
                                      ---------   ---------   ---------   ---------
    Gross profit                        948,532     853,031   2,713,440   2,435,816


    Operating expenses:
    Selling,
     administrative &
     other expenses                     679,967     618,449   1,965,871   1,792,997
    Depreciation and
     amortization                        21,465      22,093      66,938      67,422
                                         ------      ------      ------      ------
                                        701,432     640,542   2,032,809   1,860,419


    Income before income
     taxes                              247,100     212,489     680,631     575,397
    Income taxes                         95,268      80,704     250,472     218,536
                                         ------      ------     -------     -------
    Net income                         $151,832    $131,785    $430,159    $356,861
                                       ========    ========    ========    ========


    Basic net income per
     common share                          $.97        $.84       $2.74       $2.26
    Diluted net income
     per common share                      $.97        $.83       $2.72       $2.25


    Weighted average
     common shares
     outstanding                        156,206     157,573     157,024     158,197
    Dilutive effect of
     stock options and
       non-vested
        restricted stock
        awards                              942         407         965         398
                                            ---         ---         ---         ---
    Weighted average
     common shares
     outstanding -
       assuming dilution                157,148     157,980     157,989     158,595
                                        =======     =======     =======     =======



                          GENUINE PARTS COMPANY and SUBSIDIARIES
                       SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS

                                   Three Months Ended        Nine Months Ended Sept.
                                       Sept. 30,                       30,
                                     2011        2010           2011           2010
                                     ----        ----           ----           ----
                                                     (Unaudited)
                                                   (in thousands)

    Net sales:
       Automotive              $1,611,333  $1,481,294     $4,601,272     $4,231,367
       Industrial               1,089,826     921,162      3,140,855      2,606,697
       Office
        Products                  447,310     434,513      1,297,965      1,246,984
       Electrical/
        Electronic
        Materials                 143,342     117,290        419,936        324,167
       Other (1)                   (6,251)     (3,699)       (15,286)        (9,354)
                                   ------      ------        -------         ------
          Total net
           sales               $3,285,560  $2,950,560     $9,444,742     $8,399,861
                               ==========  ==========     ==========     ==========

    Operating
     profit:
       Automotive                $141,233    $124,059       $377,927       $338,986
       Industrial                  97,191      72,856        248,489        181,820
       Office
        Products                   27,204      26,657         95,975         93,670
       Electrical/
        Electronic
        Materials                  11,138       8,393         30,380         22,156
                                   ------       -----         ------         ------
       Total
        operating
        profit                    276,766     231,965        752,771        636,632
       Interest
        expense, net               (6,244)     (6,562)       (18,980)       (19,988)
       Other, net                 (23,422)    (12,914)       (53,160)       (41,247)
                                  -------     -------        -------        -------
          Income before
           income taxes          $247,100    $212,489       $680,631       $575,397
                                 ========    ========       ========       ========

    Capital
     expenditures                 $22,184     $31,019        $63,932        $58,931
                                  =======     =======        =======        =======

    Depreciation
     and
     amortization                 $21,465     $22,093        $66,938        $67,422
                                  =======     =======        =======        =======


    (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
                      -------------------------------------


                                                  Sept. 30,     Sept. 30,
                                                        2011          2010
                                                        ----          ----
                                                         (Unaudited)
                                                       (in thousands)
    ASSETS
    CURRENT ASSETS
    Cash and cash equivalents                       $534,801      $531,731
    Trade accounts receivable, net                 1,531,046     1,394,870
    Merchandise inventories, net                   2,250,309     2,182,413
    Prepaid expenses and other current assets        330,157       282,287
                                                     -------       -------

       TOTAL CURRENT ASSETS                        4,646,313     4,391,301

    Goodwill and other intangible assets, less
     accumulated amortization                        277,924       207,237
    Deferred tax asset                               153,319       152,248
    Other assets                                     227,615       184,548
    Net property, plant and equipment                479,547       478,436
                                                     -------       -------

    TOTAL ASSETS                                  $5,784,718    $5,413,770
                                                  ==========    ==========

    LIABILITIES AND EQUITY
    CURRENT LIABILITIES
    Trade accounts payable                        $1,587,326    $1,371,718
    Current portion of debt                          250,000             -
    Income taxes payable                              44,812        46,144
    Dividends payable                                 70,134        64,584
    Other current liabilities                        288,388       238,439
                                                     -------       -------

       TOTAL CURRENT LIABILITIES                   2,240,660     1,720,885

    Long-term debt                                   250,000       500,000
    Retirement and other post-retirement
     benefit liabilities                             212,876       239,326
    Other long-term liabilities                      189,791       175,777

    Common stock                                     155,653       157,535
    Retained earnings and other                    3,051,467     2,880,155
    Accumulated other comprehensive loss            (325,392)     (268,502)
                                                    --------      --------
       TOTAL PARENT EQUITY                         2,881,728     2,769,188

    Noncontrolling interests in subsidiaries           9,663         8,594
                                                       -----         -----

       TOTAL EQUITY                                2,891,391     2,777,782
                                                   ---------     ---------

    TOTAL LIABILITIES AND EQUITY                  $5,784,718    $5,413,770
                                                  ==========    ==========



                         GENUINE PARTS COMPANY and SUBSIDIARIES
                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -----------------------------------------------

                                                                Nine Months Ended
                                                                    Sept. 30,
                                                                  2011        2010
                                                                  ----        ----
                                                                  (Unaudited)
                                                                 (in thousands)

    OPERATING ACTIVITIES:
       Net income                                             $430,159    $356,861
       Adjustments to reconcile net income to net
        cash provided by operating activities:
       Depreciation and amortization                            66,938      67,422
       Share-based compensation                                  5,835       4,674
       Excess tax benefits from share-based
        compensation                                            (2,446)     (1,500)
       Other                                                      (952)        663
       Changes in operating assets and liabilities              (2,126)    140,302
                                                                ------     -------

    NET CASH PROVIDED BY OPERATING ACTIVITIES                  497,408     568,422

    INVESTING ACTIVITIES:
       Purchases of property, plant and equipment              (63,932)    (58,931)
       Acquisitions and other                                 (105,129)    (83,080)
                                                              --------     -------

    NET CASH USED IN INVESTING ACTIVITIES                     (169,061)   (142,011)

    FINANCING ACTIVITIES:
       Stock options exercised                                   1,638       7,177
       Excess tax benefits from share-based
        compensation                                             2,446       1,500
       Dividends paid                                         (206,236)   (193,313)
       Purchase of stock                                      (113,359)    (69,438)
                                                              --------     -------

    NET CASH USED IN FINANCING ACTIVITIES                     (315,511)   (254,074)

    EFFECT OF EXCHANGE RATE CHANGES ON CASH                     (8,003)     22,591
                                                                ------      ------

    NET INCREASE IN CASH AND CASH EQUIVALENTS                    4,833     194,928

    CASH AND CASH EQUIVALENTS AT BEGINNING OF
     PERIOD                                                    529,968     336,803
                                                               -------     -------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD                $534,801    $531,731
                                                              ========    ========


SOURCE Genuine Parts Company

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