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Letter to the Editor

Genuine Parts Company Reports Record Results for 2004 and Appointment of CEO to Chairman

Sales in 2004 were $9.1 billion, up 8 percent compared to 2003. Net income for the year was $395.6 million, an increase of 12 percent 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 percent 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 percent compared to 2003.

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."

Sales increased 8 percent 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 percent compared to 50 cents per share for the fourth quarter of 2003.

Tom Gallagher commented, "For the quarter, revenues in our Automotive Group were up 6 percent. Motion Industries, our Industrial Group, increased sales by 13 percent, and EIS, our Electrical/Electronics Group, was up 9 percent. 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 percent."

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."

Genuine Parts Company also announced an increase of 4 percent in the regular quarterly cash dividend for 2005. GPC has paid a cash dividend every year since going public in 1948 and this recent increase makes the 49th consecutive year.

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.

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."

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."

©2005 Collision Repair Industry INSIGHT
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