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Letter to the Editor
Thursday October 31
FinishMaster Announces Third Quarter Financial Results
FinishMaster, Inc., the distributor of automotive paints and related accessories, reported that net income for the third quarter ended September 30, 2002 was $3,144,000, or $0.40 per share, compared to net income of $1,619,000, or $0.21 per share, in the prior year period. On an SFAS No. 142 comparable basis, adjusted net income in the prior year period was $2,537,000, or $0.33 per share.Net income for the quarter increased by $1,525,000 compared to the prior year period as a result of higher net sales and gross margin dollars, and lower amortization expense and interest expense. The increase in net sales was due to same store sales growth and acquisitions. Same store sales growth for the quarter was 1.5 percent.
Higher gross margin dollars were driven solely by increased sales volume. Less favorable purchasing opportunities decreased gross margins realized as a percentage of net sales. Operating, selling and G&A expenses as a percentage of net sales declined to 28.2 percent from 29.0 percent in the prior year quarter. Lower amortization expense was due primarily to the adoption of SFAS No. 142, effective January 1, 2002, which eliminates the amortization of goodwill and intangible assets with indefinite useful lives. Lower effective interest rates and average outstanding borrowings resulted in the decrease in interest expense for the quarter.
For the nine months ended September 30, 2002, net income was $9,932,000, or $1.27 per share, compared to net income of $4,440,000, or $0.58 per share, in the prior year period. On an SFAS No. 142 comparable basis, adjusted net income in the prior year period was $6,731,000, or $0.88 per share.
Net income for the nine months ended September 30, 2002 increased $5,492,000 as a result of higher net sales, a stable gross margin rate, improved operating, selling and G&A expenses as a percentage of net sales, and lower amortization and interest expenses.
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