Good morning. My name is [Brittany] and I will be your conference operator today. At this time I would like to welcome everyone to the Genuine Parts Company first quarter 2009 earnings release conference call. (Operator Instructions) I would now like to turn the conference over to Carol Yancey, Senior Vice President of Finance and Corporate Secretary. Ma’am, you may begin your conference.

Thank you. Good morning and thank you for joining us today for the Genuine Parts first quarter conference call to discuss our earnings results and the outlook for 2009. Before we begin this morning, please be advised that this call may involve forward-looking statements such as projections of revenue, earnings, capital structure, and other financial items; statements on the plans and objectives of the company or its management; statements of future economic performance and the assumptions underlying these statements regarding the company and its business. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest SEC filings. The company assumes no obligation to update any forward-looking statements made during this call. We will begin this morning with remarks from Tom Gallagher, our Chairman, President and CEO. Tom?

Thank you Carol, and I would like to add my welcome to each of you on the call today and to say that we appreciate you taking the time to be with us this morning. As we customarily do, Jerry Nix, our Vice Chairman and Chief Financial Officer and I will split the duties on this call, and once we’ve concluded our remarks we will look forward to answering any questions that you may have. Earlier this morning we released our first quarter 2009 results and hopefully you’ve had an opportunity to review them, but for those who may not have seen the numbers yet a quick recap shows that sales for the quarter were $2.444 billion which was down 11%. Net income was $89.2 million which was down 28% and earnings per share were $0.56 this year compared to $0.75 in the first quarter of 2008 and the EPS decrease was 25%. As we said in our conference call back in February, we felt that the first half of 2009 would be the most challenging for us and the first quarter results certainly lived up to the expectations. All four of our business segments had sales and profit decreases in the quarter, but the biggest variances from our plans came in the Industrial and Electrical segments, with Automotive and Office Products ending the quarter about where we had expected. In looking at the individual businesses, Automotive was down 7% of sales in the quarter. Currency exchange had a negative impact on our results in Canada and Mexico, and we had one less sales day in the quarter. If we take these two factors into consideration, Automotive was down 1% on a comparative basis. Now that’s not to suggest that we’re satisfied with our Automotive results because we clearly are…

Thank you Tom. Good morning. We appreciate you joining us on the call today. We’ll first review the income statement and segment information, then touch on a few key balance sheet and other financial items. Tom will come back on for a brief recap, and then we’ll the call up to your questions. A review of the income statement shows the following. Total sales for the first quarter in 2009 were down approximately 11% to $2.4 billion, just slightly shy of our projected range for the quarter when we reported back in mid-February. This also includes the loss of one business day in ’09 compared to the first quarter ’08, which accounts for about 1% of the decrease. At this level of revenue you can see we continue to have our work cut out for us as we look to improve on these results over the balance of 2009. Gross profit in the quarter basically flat at 29.95% to sales compared to 29.91 in the first quarter last year. The benefits of inflation and our margin initiative are somewhat offset by the competitive pricing pressures associated with the lower demand and the difficult economic conditions which continue to impact the markets in the first quarter. For the year through March, our cumulative price which represents supplier increases to us were 1.0% in Automotive negative, plus 0.2% in Industrial, plus 2.2% in Office Products and we were flat in the Electrical. Now let’s look at SG&A. For the first quarter SG&A as a percent to sales increased just over 1% to 23.0% versus 22.92% in the first quarter of ’08. Primarily the increase is associated with a loss of expense leverage in the quarter due to the decrease in sales from last year. Outside of the sales impact, we knew getting…

Thank you Jerry. So that’s a recap of our first quarter results. On the revenue side, we came through the quarter about where we thought we would in Automotive and Office Products, not where we want to be in either case but about in line with our expectations. Industrial and Electrical had larger decreases than we had anticipated, however, and we ended the quarter just below the 6 to 10% revenue guidance that we had provided in our February call. On the earnings side at $0.56 per share we were pleased to fall well within the $0.45 to $0.60 range provided in the February call. Now as far as the remainder of the year is concerned, we continue to remain on the cautious side. While our expectation is for Automotive to show gradual sequential revenue improvement over the remainder of the year, and for Office Products to remain about where they are for a few more quarters, there is still a fair degree of uncertainty about the levels of demand in the Electrical and Industrial segments in the quarters ahead. We just don’t know if we are at or near the bottom in each of these businesses at this time. With that in mind, we’re going to leave the guidance provided in our February call unchanged. At that time we said that we expected revenues to be down 5 to 8% for the full year and earnings per share to be in the $2.25 to $2.75 range. We continue to feel that these remain realistic expectations in the current environment. At this point we would like to open the call up to your questions and we’ll turn it back over to Brittany. Brittany?

(Operator Instructions) Your first question comes from John Murphy - Merrill Lynch.

On your cost cutting efforts your closing $50 to $60 million up for the full year. I’m just wondering as we look at the results in the first quarter how much of that was achieved in the first quarter? Did you get to sort of this 100% run rate in realization or is there more coming in the next few quarters?

We did not achieve 25% of $15 million in the first quarter. We did achieve a little of it. We’re probably between $5 and $10 million cost reduction. It would have been more of that had we not had the offset with the severance pay and also we had the hit for the retirement plan charge of $3 million so it did reflect in the first quarter as much as it will going forward.

And then when we look at the cash conservation in the first quarter on CapEx and very low level of share buybacks, I mean is that just you taking a conservative stance and should we expect that, you know, to continue going through the course of the year? Or, you know, will we see CapEx ramp up and really what would a maintenance CapEx level be as we look at the business going forward?

Our CapEx for the year we’re still thinking it’ll be in the $60 to $75 million range going forward. And so far that’s going to be in technology and has some improvement and some upgrade in utility equipment and so forth. In the current climate we’re not building new facilities and to answer your question yes we are conserving cash and that’s the reason for not buying the shares but we have some potential acquisitions that we’re looking at, and we wouldn’t be interested in going out and borrowing any money to make those acquisitions in this climate. So that’s the reason for the conservation of the cash.

So it’s more to keep dry powder as opposed to a real concern that there’s a need to husband cash right now?

Absolutely.

In the fourth quarter there were certainly some conflicting data points in the, you know, decline in your Automotive revenue in the fourth quarter continued in the first quarter and there was some concern toward the end of last year that there might be some market share losses in the Automotive business, you know, given some of your competitors printed up positive comps in the fourth quarter. You know, the market indicators, we’d have to believe that, you know, that the after market was actually down in aggregate in the fourth quarter and certainly down in the first quarter. So your numbers seem to jive with what we’re seeing, but there is that conflicting data out there. I mean, can you see anything going on in your market share shifts? And I know you guys specifically mentioned some weakness in your fleet business. Is there anything going on in the market that you can tell or is it just general market weakness that you’re experiencing?

John, I’ll answer that or try to anyway. You know, we see several things happening and having an influence on our performance over the last two quarters. One thing, keep in mind is that our same store sales performance was actually quite good compared to what we saw happening with others up through the third quarter of last year. We did in fact slip in the fourth quarter and our same store sales performance in the first quarter is not where we would like it to be nor where we think it will be going forward. I would say that we probably did lose a little bit of share temporarily in Q4 and in the first quarter of this year. But we’ve taken a hard look at the business and we’ve learned some things along the way. Number one, we’ve confirmed in our minds that we’ve got an extraordinarily strong capable and dedicated group of people who want our Automotive operations to perform at the levels that they’re expected. And we’ve confirmed also that the underlying business is actually good. Fundamentally, this is a good business to be in. It’s in a slower period right now, but medium and long term we feel good about the prospects in Automotive. I think what we found as we looked at the business pretty carefully is that there were a couple of key product categories that we needed to do some pricing adjustment on in order to position us competitively in the marketplace. Things like rotors, calipers, rod control would be examples of product categories we felt that we might have gotten a little bit out of alignment on, and steps have been taken to correct all of that. And those programs are fresh out into the field now. We have a couple…

Your next question comes from Matthew Fassler - Goldman Sachs.

A couple of questions on the operating margin performance by business. It looks like in Automotive that the EBIT margin year-on-year was actually quite good considering the self performance that you showed. You could say the same in Office Supply and maybe the opposite to some degree in Industrial where granted it’s hard to gauge what’s appropriate with the kind of sales that you took. You fell a bit short of our number. So if you could contrast your success, I guess on costs in particular and any other dynamic by business that would have driven those operating margin results.

Matt I’ll take a stab at that and then Jerry can jump in, but I think across all four of the businesses we’ve got very active cost containment initiatives going on, and all four have contributed in a meaningful way. Jerry mentioned earlier that one of the initiatives is to keep our headcount in line with the revenue production. And we did have a headcount reduction again in the first quarter, but the effect of that will not be felt really until the second quarter and beyond because of accrued benefit and severance payments to the folks. So we’ve got a little bit further to go before we see the benefit of that. Other things are happening across all of the businesses. Our facility rationalizations and consolidations, as a for instance in the Automotive we opened 65 new stores in the quarter but we actually consolidated or closed 94 of them. So we had a net reduction in store count of 29, most of those being company owned stores, 27 of those were company owned stores. And again there’s no benefit associated with that until we get into quarters two and beyond. We’ve done a lot of route optimization on our transportation routes out of each of the businesses. The main problem in Industrial and the Electrical businesses is the degree of reduction in the revenue side. We just could not de-leverage quickly enough to catch up with the 16% revenue decline and a 25% revenue decline in Electrical. And as I mentioned in my comments, as the quarter progressed the revenue declines actually accelerated in both of those businesses. So it was a challenging quarter, but we’ll catch up with it on the expense side in the not too distant future.

I might mention we’re not used to dealing in negative numbers period, but much less numbers that are this negative in the Industrial and in the Electrical. And so we are kind of chasing the number. We’re not sure what an acceptable expense level is. We’re certainly not happy with a 4.6% operating margin in Industrial and that, you now, cost structure will be adjusted going forward. But the basic expenses that we’re looking to reduce are in all business units are pretty much the same. It’s in the line with freight and headcount, facility rationalization and all of those things that Tom mentioned.

Second question relates to the Automotive, I think essentially comp store sales at company owned stores. You said I guess it was only for the DIY or walk through business where you give a 1% number. [Inaudible] it was overall, you said Automotive was down 1% on a comparative basis. Where was that at comparative number in Q4 just so we can compare the trend from Q4 to Q1?

It was about the same. We were just modestly better in the first quarter of this year, Matt. But it’d be easier just to say it was the same.

So the common drags on both periods I guess were currency, it sounds like it was the biggest one. I know the calendar route was a modest drag here in the first quarter.

That’s right. We had one less day and that’s about 1.6% by our calculation.

And there’s a great deal more currency I guess in Automotive than anywhere else in your company?

There is. And it cost us about 5% in the quarter.

And then the last question I would ask relates to just April and you talked about the deceleration in Industrial linked businesses intensifying really into March. Any sense you can give us on April in any of the businesses would be very helpful.

In the Industrial business we think that our expectation for the quarter, second quarter in Industrial, is about where we ended the first quarter. Maybe slightly weaker, but not dramatically so. In the Electrical business our expectation is to be down at least as much as we were in the first quarter and maybe a little bit more based upon what we see right now. Office Products should remain relatively stable and Automotive we would look for just a slight improvement in the second quarter.

Your next question comes from Anthony Cristello - BB & T Capital Markets. Anthony Cristello - BB & T Capital Markets: I guess sort of on the line of questioning that Matt had, when you look at where you see perhaps trends on the Industrial and some of the other categories that are likely to at least remain weak here for the foreseeable future, do you anticipate the level of cost savings that you’ve identified to be able to offset what will be sort of a, more of a deterioration in the revenue? Or at some point does one, you know, take – do you actually get more de-leverage from the sale side? Or do you do enough on the cost side to come through to cover that?

It’s a balancing act. I mean, it’s a balancing act because we don’t want to go so far that we can’t service the business we have and lose it to competition or lose the revenue. We’re not sure at this point because we haven’t been in this territory before but I can tell you we do feel like we’ve got more costs we’re going to have to take out. Another part of this in Industrial and Electrical is because in those businesses you get volume incentives, and if we were reducing our inventories and reducing our purchasing because of the lack of sales, then that has an impact as well. So it really is difficult or impossible for us to answer where that new operating margin’s going to be for ’09. Certainly, you know, this is not going to last forever and it’ll cycle back out and we’ll get those margins back up to where they were, but it’s impossible for us to answer where they’re going to be here for the next couple of quarters.

I might try to add something that perhaps will be helpful, and that is when we started to see the businesses slow in the early part of the fourth quarter last year, each of the businesses built cost reduction plans, very specific, very detailed. All of them implemented on those plans and did a good job with that. But as we saw the business was decelerating even more in Industrial and Electrical, they had built contingency plans to take more costs out, which they have been working on, and they continue to refine the contingency planning to try to catch up with the declining revenue. So as Jerry said, we’ve got a good bit more to go but our folks are pretty determined that they’re going to get to where they need to be. Anthony Cristello - BB & T Capital Markets: Has there been any change in how you compensate your employees? I mean, has there been more incentive given to profit dollars and hitting reduced budgets? Or are you just not – I mean, I’m just wondering from a compensation structure, short of saying hey here’s the new budget, we’ve got to save costs, but what’s the priority or the focus been across each division when it comes to that as well?

Well, our plans are built specifically within each of the businesses and they’re put together with specific recognition of what responsibilities the individual may have. But if you look at any one of the businesses, the management teams at the senior levels are heavily compensated on an incentive plan and it’s heavily skewed toward the profitability and the return on investment in those businesses. So we have not changed the plans as much as you’re asking, I don’t think, because we’ve always been heavily dependent upon profitability performance which takes into consideration the revenue and the net profit for that business. Anthony Cristello - BB & T Capital Markets: One last question and maybe this is for Jerry. When you look at the revenue decline, how much positive impact did you have on revenue this year from an acquired business standpoint?

We probably would have had 1 to 2% on the acquisitions, but that was all traded off with the currency exchange for our Canadian and Mexican operations. Anthony Cristello - BB & T Capital Markets: Is currency – has that started to work a little bit back into your favor as this quarter progresses?

Modestly in March, but not where we would like to see it.

Your next question comes from Himanshu Patel - J.P. Morgan.

Hi. This is Ryan Brinkman for Himanshu Patel. I know you discussed margins a bit already, but I was wondering if you could make some specific comments related to the rather benign [decrimentals] at the Automotive segment this quarter. Specifically, you know, how should we think about the sustainability of the more non-variable portion of the costs that were taken out this quarter? And might decrimentals be as benign moving forward as they were in the quarter for this segment?

Well, one of the things that happened is our margins in the Automotive in the first quarter last year were not as good as we like for them to be, and we had a couple of unusual things in there. We had the sale of Johnson Industries was in there. We also had the closure of one of our rebuilding plants was in there. So that’s helped some, but the Automotive folks, their revenue was impacted earlier than any of the other business segments and they started taking the costs out earlier. And they didn’t have for the headcount reduction they didn’t have the impact for the severance that the other business units had. I think, you know, we hope to see continued improvement in the margins and I don’t know if we’ll see 0.04% of an increase in the Automotive margin each quarter, but we think we can continue to take costs out there and see some improvement. The key to that is going to be to get the revenue growth back.

Your next question comes from Keith Hughes - Suntrust Robinson Humphrey.

Thank you. Earlier you talked about pricing in Automotive being negative 1%. Is that the impact of your pricing actions on the items you mentioned earlier or is that just a generic decline across the board?

It is a cumulative pricing that we received from our manufacturers from January 1 through the first quarter. So it’s not a full impact on our revenue growth, but that is a factor because we pass on pricing increases or decreases.

Okay.

Keith, that’s manufacturer related and it has nothing to do with any specific actions that we may have taken in the marketplace.

Now the specific actions you took, how much of the product portfolio are we talking about here? Small number? Big number?

It depends upon the definition of small or big. I mean, we’re talking tens of millions of dollars, but we’re not talking $50 or $100 million.

And within the Industrial business, the cost cuts there, is that something we’ll start to see in the second quarter the benefit or is that more of a second half of the year?

I think we’ll start to see some of it feed through in the second quarter, and then it’ll continue on through the remainder of the year because they’re into their contingency planning in terms of getting costs out as well.

And final question. You talked about your fleet sales being hurt within the Automotive segment. Was that due to loss of customers or just customers business being down year-over-year?

No, customers business being down. Contraction in that category.

Your next question comes from Michael Ward - Soleil-Ward Transportation.

Jerry, you mentioned I think that you had a pension contribution of $53 million? Is that correct?

That’s correct. Yes.

Was that a required contribution or was it voluntary?

No, it was required. We, you know, we have a policy internally that we’re going to have our pension plan fully funded. And with the retirees and all the pension plan has generated in 2008 that got down. And then we had an actuarial calculation done that said we needed to make a $53 million contribution to get it back to an acceptable funded status. And that’s what that was for.

And where did that show up on your cash flow statement? Was that just in the operating cash flow number there?

Yes it was.

And your assumptions for the year – your free cash flow assumptions include that contribution?

Yes they do.

Your next question comes from Gregory Melich - Morgan Stanley.

A couple of questions. One, I wanted to follow up on the auto pricing a bit. The number you gave, if you were to split that into commodity products versus more hard parts is there a discernible difference just given how much oil has fallen?

It might be more heavily skewed toward some of the petrol chemical type products. We’ve seen some deceleration in pricing there over the quarter.

I might point out that that’s across all product categories within the Automotive. And it may be that we had some price increases for certain product categories and decreases for others. That’s a net number across all product categories within the Automotive.

But if you took out sort of the commodity chemicals, it still would have been down. Is that fair?

We don’t know that granular information on it, but unless you do, Tom. I’m not sure that I can answer that.

I’d say it probably was down just a bit.

And then getting a little deeper into the Office Products side, could you give us a bit more color from the top line perspective as to how the national accounts are doing versus some of the independents?

Well, we can tell you what our business is with them. The independent business was down 5% in the quarter, and our major account business was down high teens in the quarter.

And just a reminder, that’s similar to the trend in the fourth quarter?

No, the fourth quarter we actually were modestly up with the independents and the majors it’s a little bit softer. But the big difference was with the independents. Our independent business last year, Greg, was up 1% if I remember correctly and our major account business was down mid double digits last year.

So sequentially the bigger swing you saw was with independents.

Yes. In the quarter.

And then finally, with the actions you’re taking particularly in Auto, how should we think about that in terms of impact in gross margin versus SG&A going forward? I mean, you take a lot of action. It sounds like a lot of that is still coming through on SG&A but if you’re taking pricing actions should we expect gross margin to be harder to grow going forward?

I would say that our gross may lag the revenue just slightly, but not materially, because we’ve got initiatives to protect the gross profit in other ways as well.

Your last question comes from [Brian Bonheimer] – Gabelli and Company. Brian Bonheimer – Gabelli and Company: Are you guys seeing across the board any deterioration or distress in the independent distributors, whether its in the Office Products division or with MRO products in the Industrial side?

When you say distress – Brian Bonheimer – Gabelli and Company: Opportunities for you to potentially gain share, not through consolidation but rather just less competition being around to compete with.

I think there may be some of that yes and I think that may surface in all four of the industries quite honestly, but especially in the industries that are more highly fragmented. We see some evidence of that starting to surface currently. Brian Bonheimer – Gabelli and Company: Any particular line that and just how impactful this could be from a revenue perspective for you going forward?

No, I don’t think we could quantify that honestly. I think it’d be difficult, because we don’t know specifically the size of some of these companies nor do we know which ones in particular may be under more stress. But we see some evidence in the marketplace that some of this may be going on. Brian Bonheimer – Gabelli and Company: Okay. Thank you again. All of my questions have been answered.

All right. Thank you.

Thank you Brian. Brittany, thank you. We appreciate everybody joining us on the call today and we appreciate your continued interest in and support of Genuine Parts Company and we look forward to talking with you in the future.

This concludes today’s conference call. You may now disconnect.