Napa Auto Parts 2007 Annual Report Download - page 6

We฀are฀pleased฀to฀report฀that฀2007฀was฀another฀year฀of฀record฀sales฀and฀earnings,฀marking฀
80฀years฀of฀continued฀progress฀for฀Genuine฀Parts฀Company.
Total฀sales฀for฀2007฀rose฀to฀$10.8฀billion,฀an฀increase฀of฀4%฀compared฀to฀2006.฀Net฀earnings฀
for฀the฀year฀were฀$506฀million,฀an฀increase฀of฀7%฀compared฀to฀2006,฀and฀earnings฀per฀share฀
were฀$2.98,฀up฀8%.฀฀
With฀these฀results,฀we฀have฀now฀increased฀sales฀in฀57฀of฀the฀last฀58฀years฀and฀increased฀profits฀
in฀45฀of฀the฀last฀47฀years.฀We฀are฀proud฀of฀this฀steady฀and฀consistent฀growth฀pattern฀and฀฀
we฀are฀optimistic฀about฀our฀prospects฀for฀continued฀progress฀in฀the฀year฀ahead.
to our shareholders
Financial฀Strength
In 2007, we were able to further strengthen our balance sheet and
the Company is in excellent financial condition. We generated
strong cash flows once again during the year, with cash from
operations improving to over $640 million and, after deducting
dividends and capital expenditures, free cash flow was a solid
$283 million. At December 31, 2007, our total debt was $500
million, which was unchanged from the prior year, and represents
15.5% of total capitalization.
During the year, we used our cash to repurchase 5.0 million
shares of our Company stock. We continue to view this as a good
use of cash and, as of December 31, 2007, we have 10.3 million
shares available for repurchase under our current program. We will
continue to make opportunistic share repurchases in 2008. We also
invested $116 million in capital expenditures in our businesses and
we returned $243 million to shareholders through dividends paid
in 2007.
Dividends
e Company has paid a cash dividend to shareholders every
year since going public in 1948, and in 2007 we increased our
dividend by 8% to $1.46 per share. e Board of Directors, at
its meeting on February 18, 2008, once again raised the cash
dividend payable April 1, 2008 by 7% to an annual rate of $1.56
per share, or 52% of our 2007 earnings. 2008 will mark our 52nd
consecutive year of increased dividends paid to our shareholders.
Progress฀In฀Operations
As mentioned earlier in our remarks, the Company was able to
show improvement in both sales and earnings once again in 2007.
Revenue growth of 4%, however, was below our targeted annual
growth range of 6%-8%. e Industrial and Electrical/Electronic
segments were able to achieve the desired revenue growth in 2007,
as they have for the past several years, while Automotive and
Office Products encountered more difficult market circumstances.
For the fourth consecutive year, the Company’s strongest sales
improvement came from our two business segments serving the
manufacturing sector of the economy. Motion Industries, our
industrial distribution company, had another very good year, with
sales increasing 8%. is follows three consecutive years of 11%
sales increases. is group has participated in the continued
strength of the industrial markets we serve, as measured by the
Industrial Production and Manufacturer Capacity Utilization
indices. EIS, our Electrical/Electronic segment, also benefited
from the strength in the manufacturing sector, reporting a 7%
increase in sales for the year. As with the Industrial Group, 2007
was the fourth consecutive year of strong growth from the Elec-
trical/Electronic segment and both Motion and EIS have initia-
tives in place to support another year of solid progress in 2008.
e Automotive Parts Group, our largest business group, increased
sales by 2% in 2007. While this level of growth does not meet
our expectations for the longer term, we remain encouraged by
jerry฀w.฀nix฀-฀
vice฀chairman฀and฀chief฀
financial฀officer
thomas฀c.฀gallagher฀-฀
chairman,฀president฀and฀
chief฀executive฀officer
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